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

Saturday, June 10, 2017

week ending Jun 10

 Five Questions About the Fed's $4.5 Trillion Balance Sheet - The Federal Reserve is getting ready to "normalize" the size of its $4.5 trillion balance sheet. A lot is at stake. Simply maintaining that over-sized stack of bonds makes the Fed a big player in the markets for Treasury and mortgage-backed securities. Investors and traders are anxious for information about how the central bank intends to pull back. "There are so many different parameters by which they could set this process," said Tom Simons, a senior economist at Jefferies LLC in New York. "There's a wide range of market implications as a result for what the public supply of Treasuries is going to be and how liquid the MBS market is going to be."  At the moment, when a bond in that portfolio matures or gets paid back early, the Fed reinvests the returned principal. To shrink the balance sheet, all the Fed has to do is stop reinvesting. But the idea of halting that process all at once makes the Fed nervous about possibly disrupting markets. Stopping now would shrink the portfolio by about $280 billion over the last seven months of 2017, and by about $650 billion in 2018, according to Walter Schmidt, the Chicago-based senior vice president at FTN Financial, and data from The Yield Book. At their May meeting, policy makers backed a plan to reduce each month's reinvestments by a set, and as-yet undecided, dollar amount. That sum will roll off the balance sheet and any maturities above the cap will be plowed back into the market. As long as that goes smoothly, the cap would then rise every three months until it reached a ceiling, or steady state, of monthly run-offs. That still leaves a number of crucial unanswered questions.

  • Question 1: When will the draw-down start?
  • Question 2: Where will the Fed set the caps for monthly run-offs?
  • Question 3: How long will all this take?
  • Question 4: What will the mix be in the run-down between Treasuries and MBS?
  • Question 5: How big will the balance sheet be when they’re done?

Fed Watch: Fed Just Sort Of Confident About Full Employment - Over at Project Syndicate, Brad DeLong takes issue with Fed policy decisions. Importantly, he identifies, correctly, that the Fed's forecasting record in recent years has been less than optimal. Much less. The repeated optimism that inflation will soon revert to target is a most significant problem for a central bank with a formal inflation target. On this point the Fed has faced disappointment time and time again. Brad is correct in his summary that the Fed needs to reassess its forecasting methodology to ensure that it is not biased toward high inflation forecasts. That said, I believe the issue is not quite as severe as Brad believes. In particular, I think this may be a bit unfair: The FOMC’s blind spot stems from the fact that it is relying more on its assessment of the labor market, which it considers to be at or above “full employment,” than on noisy month-to-month inflation data. But “full employment” is a rather tenuous and unreliable construct. It has now been 20 years since economists Douglas Staiger, James Stock, and Mark Watson showed that Fed policymakers should not be so confident in estimates of “full employment.” And yet, for some reason, the Fed community has not let this essential message sink in. I think there is actually quite a bit of uncertainty among Fed officials about the exact level of full employment. To be sure, policymakers repeatedly argue that they believe they are near full employment. But first, take that into context of changing estimates of full employment:  Clearly policymakers are willing to change their minds as new information becomes available. Second, if they were fairly inflexible regarding their estimates of full employment and the implications for inflation, they would have raised rates after unemployment fell to 6.5% - the threshold for maintaining zero rates under the Evans Rule. Third, and probably most importantly, if they clung to a strict confidence in their estimates of full employment, they would have long ago abandoned their gradual approach to raising interest rates. As of now, the unemployment rate at 4.3% is a full 0.4 percentage points below the median estimate of the longer run unemployment rate and below the 4.5-5.0% range of estimates of that measure. Moreover, job growth remains strong enough to drive the unemployment rate further down. So if they were very confident of their estimates of full employment, Fed officials would be much more concerned that they had already fallen behind the inflation curve. They would be raising rates at every meeting, not just an expected three times this year.

The Fed Needs a Better Inflation Target - Narayana Kocherlakota --Today, a group of economists published a letter urging the U.S. Federal Reserve to consider a monumental change in policy: raising its target for inflation above the current 2 percent. I signed the letter. Here's why. The inflation target helps define how much stimulus the Fed can deliver when it lowers interest rates to zero (a boundary below which the central bank has been unwilling to go). In a higher-inflation environment, a nominal fed funds rate of zero results in a lower real, net-of-anticipated-inflation rate -- the rate that economists typically see as most relevant for consumer and business decisions. If, for example, people expect inflation to be 3 percent, then a zero nominal rate translates into a negative 3 percent real rate -- a full percentage point lower than the Fed could achieve if expected inflation were 2 percent.Experience suggests that the Fed could use the added ammunition. During the most recent period of near-zero interest rates, the U.S. unemployment rate remained above 5 percent for nearly seven and a half years (from May 2008 to September 2015). Chair Janet Yellen has suggested that, if another recession takes the Fed to the zero lower bound, the unemployment rate might stay above 5 percent for close to five years. To put it mildly, these aren't desirable outcomes.  The issue is all the more important because periods of zero nominal rates are likely to be more frequent. In a recent Brookings Institution paper, Fed staffers Michael Kiley and John Roberts conclude that changes in economic conditions -- specifically, a lowering of the "natural" interest rate consistent with full employment and stable inflation -- might require the Fed to be at the zero lower bound about 30 percent to 40 percent of the time.All this argues for a higher inflation target. But that's not the only change worth contemplating. The Fed should also consider adopting a time horizon for achieving its target -- something many central banks do. Without such a benchmark, the Fed is free to undershoot (or overshoot) for many years at a time. This creates uncertainty that can weigh on economic growth.

Is 2 percent too low?: Rethinking the Fed’s arbitrary inflation target to avoid another Great Recession – Summary: The end of 2017 will mark 10 years since the beginning of the Great Recession. The terrible damage it inflicted on American families should inspire deep thinking about how policymakers should try to avoid and manage future economic crises. All major tenets of macroeconomic stabilization policy (the set of policies to keep economic growth, price levels, and unemployment stable) should be subject to this rigorous evaluation, even those that have seemed near-sacrosanct in the recent past. This paper argues that the very low inflation rate currently targeted by the Federal Reserve as a long-term macroeconomic policy goal (2 percent annual inflation) should be reassessed in light of economic developments over the past two decades. Specifically, this paper shows that we need a higher inflation target because it will make conventional monetary policy more effective in fighting recessions and spurring recoveries during periods when nominal interest rates are near-zero. If we raise the inflation target above 2 percent, this greatly increases the probability that the next recession will be shorter and the recovery faster, not just because it will allow inflation-adjusted interest rates to be lowered further, but because it will be easier for households to climb out from under overhanging debt. Following are the key findings that support this case:

  • Over the past 15 years almost the entire developed world has at some point hit recessionary periods with short-term interest rates at 0, and it will likely happen again.
    1. Since the 1990s, the zero lower bound (ZLB) problem—when short-term interest rates are at zero and thus cannot be cut further—has moved from being a textbook curiosity to a clear and present danger. In recent years, several advanced economies have entered prolonged spells at the ZLB, and research has shown that episodes of hitting the ZLB are not as rare and short-lived as once predicted (Hess et al. 2011; Rachel and Smith 2015).
    2. The economic factors underlying the increased likelihood of hitting the ZLB are well-understood and unlikely to reverse in the future, making it imperative that policymakers factor this higher probability into their thinking going forward. These factors include rising inequality, aging populations, and global savings gluts.
  • We need to enter the next recession with space for lowering real short-term rates; a higher inflation target will give us that space.

 "Nothing Else Matters": Central Banks Have Bought A Record $1.5 Trillion In Assets In 2017 --One month ago, when observing the record low vol coupled with record high stock prices, we reported a stunning statistic: central banks have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, "the largest CB buying on record" according to Bank of America. Today BofA's Michael Hartnett provides an update on this number: he writes that central bank balance sheets have now grown to a record $15.1 trillion, up from $14.6 trillion in late April, and says that "central banks have bought a record $1.5 trillion in assets YTD." The latest data means that contrary to previous calculations, central banks are now injecting a record $300 billion in liquidity per month, above the $200 billion which Deutsche Bank recently warned is a "red-line" indicator for risk assets. This, as we said last month, is why "nothing else matters" in a market addicted to what is now record central bank generosity. What is ironic is that this unprecedented central bank buying spree comes as a time when the global economy is supposedly in a "coordinated recovery" and when the Fed, and more recently, the ECB and BOJ have been warning about tighter monetary conditions, raising rates and tapering QE. To this, Hartnett responds that "Fed hikes next week & "rhetorical tightening" by ECB & BoJ beginning, but we fear too late to prevent Icarus" by which he means that no matter what central banks do, a final blow-off top in the stock market is imminent. He is probably correct, especially when looking at the "big 5" tech stocks, whose performance has an uncanny correlation with the size of the consolidated central bank balance sheet.

Hedge Fund CIO: "Normally The Fed Would End This Bubble, But It Can't This Time For One Reason" -- In his latest weekend notes, One River Asset Management CIO, Eric Peters, picks up where BofA's Mike Hartnett left off on Friday when he said that the "QE Monster" will only end when "the Wall Street bubble" finally shocks the Fed. Yes, but what will "end it", or better yet, what will "shock" Yellen and company out of their complacency? To this, Peters' response is that the Fed finds itself in a big "quandary" not so much due to the S&P500, and overall asset levels, which even Yellen now admits "pose risks to financial stability" as per the latest FOMC Minutes, but due to China:“The real credit excesses haven’t been created here, they’ve formed in China, which leaves the Fed in a quandary.” Much as the Fed would like to have jurisdiction over every corner of global finance, they no longer control China. He's right: with rates on various Chinese debt instruments surging in recent months, as Beijing cracks down on shadow banking, any further tightening by the Fed may or may not impact the momentum-chasers that have sent Amazon above $1,000, but it will certainly have a dramatic impact on China's cost of funding, which in turn would unleash the next deflationary shockwave around the globe, sending global rates tumbling once again as the reflationary, rate hike frenzy fizzles, and forces the Fed to promptly cut rates back to zero (if not negative). Here is the quick and dirty from Eric Peters:“Classic late-cycle action,” said the CIO. “Vol-compression, loosening financial conditions, and a pain-trade that tilts forever higher,” he continued. “Normally the Fed ends it. Hiking aggressively, flattening the curve, widening credit spreads, and then the economy rolls.”But this cycle is not quite like the others.“The real credit excesses haven’t been created here, they’ve formed in China, which leaves the Fed in a quandary.” Much as the Fed would like to have jurisdiction over every corner of global finance, they no longer control China.  Now that the Chinese have retaken control, economic volatility is more likely to come from within. “The warning sign for real problems will be a material decline in house price appreciation.”

 10-Year Treasury Yield Sinks As Futures Price In A Rate Hike - Fed funds futures are pricing in a near certainty of a rate hike at next week’s FOMC meeting, although you wouldn’t know it by looking at the 10-year Treasury yield, which has been sinking like a stone in recent weeks.The benchmark 10-year rate fell to 2.14% yesterday (June 6), a seven-month low, based on daily data via By contrast, the policy sensitive 2-year yield has remained relatively stable, inching down to 1.30%, but that’s close to an eight-year high. The elevated 2-year rate aligns with a roughly 96% probability that the Fed will announce another increase in interest rates on June 14, based on expectations via futures data published by the CME Group (as of early trading on June 7). The only mystery: Why is the 10-year yield contesting this forecast?One theory that’s resonating with traders is that the appetite for hedging has surged ahead of tomorrow’s UK elections and scheduled testimony of former FBI director James Comey’s testimony in the US Senate – two events that, in theory, could ramp up geopolitical risk by a hefty degree, depending on the results.Political tensions in the Middle East have also increased this week in the wake of announcements by Saudi Arabia, Egypt and seven other countries in the Gulf region to sever ties with Qatar, the world’s biggest exporter of liquefied natural gas and a key US ally as a base of air operations in that corner of the world. CNN calls the news “the biggest political crisis to hit the Middle East in years.”One byproduct of the shifting alliances in the Gulf is a sharp increase in the price of gold, which is considered a safe haven in many parts of the world. The spot price of the precious metal surged to just below $1,300 an ounce on Tuesday, a seven-month high. As for the slide in the 10-year yield, note that this decline has been accompanied by similar moves in long-dated Treasuries. Meantime, rates at the 2-year maturity and below are holding at or near recent highs. In other words, the Treasury yield curve continues to flatten.

Slowdown? Recession Indicators as of June 5, 2017 -- Menzie Chinn  -- As the prospects for a fiscal stimulus fade, and the prospects for protectionist backlash remain, some observers ponder whether growth will stall before it gets started.  Figure 1: Nonfarm payroll employment for January (blue), February (red), March (green), April (black), and May (blue), in thousands, seasonally adjusted, all on a log scale. Source: BLS, various releases. Here are five of the key indicators that the NBER Business Cycle Dating Committee (BCDC) have referred to in the past. Figure 2: Log nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers, in Ch.2009$ (green), manufacturing and trade sales, in Ch.2009$ (black), and monthly GDP, in Ch.2009$ (bold teal), all normalized to 2014M11=0.  . Most indicators are rising, albeit slower in some cases. Term spreads are not indicative of a recession. Figure 3: Ten year constant maturity minus two year constant maturity Treasury yields (blue), ten year minus three month yields (red), in percentage points. NBER defined recession dates shaded gray. . However, the fact that the spreads have reverted to roughly pre-election levels is indicative of a downward revision of growth prospects.

US Q2 GDP Estimates Continue To Project Stronger Growth -- US economic activity for the second quarter is on track to accelerate, according to several estimates. The official GDP report for Q2 is due in late-July, which means that there’s still a fair amount of uncertainty about the outlook for the final set of numbers for the current quarter. For the moment, however, most estimates continue to project a solid rebound following a sluggish 1.2% increase in Q1.  The Atlanta Fed’s GDPNow model is one of the stronger estimates at the moment, anticipating real seasonally adjusted annualized growth of 3.4% in Q2. By contrast, the 1.4% projection via IHS Markit’s US Composite PMI represents one of the softer forecasts, based on the methodology outlined here. A survey of economists published on Monday by the National Association for Business Economists sees a strong pickup in growth for Q2. “The weakness in the first quarter is expected to be temporary, with real gross domestic product growth projected to bounce back to an annualized rate of 3.1% in the second quarter of 2017, and to about a 2.5% pace in the second half of the year,” says NABE President Stuart Mackintosh.Survey data for the services sector also paints an upbeat profile for Q2, based on yesterday’s release of the ISM Non-Manufacturing Index for May. The index dipped to 56.9 last month, down from 57.5 in April, but the latest reading still reflects solid growth in services, the main driver of US economic activity and employment. “Although the non-manufacturing sector’s growth rate dipped in May, the sector continues to reflect strength, buoyed by the strong rate of growth in the Employment Index,” says Anthony Nieves, chair of ISM. “The majority of respondents’ comments continue to indicate optimism about business conditions and the overall economy.”

GDP Forecast Continues To Drop -- 2Q17 To 3% -- GDP Now-- June 9, 2017 -- Latest forecast: 3.0 percent — June 9, 2017The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 3.0 percent on June 9, down from 3.4 percent on June 2.  The forecast for second-quarter real GDP growth fell from 3.4 percent to 3.1 percent on June 5 after the U.S. Census Bureau's manufacturing report and the incorporation of motor vehicle sales estimates released by the U.S. Bureau of Economic Analysis on the prior business day. The forecast of the contribution of inventory investment to second-quarter growth declined from 0.87 percentage points to 0.77 percen tage points after this morning's wholesale trade report from the Census Bureau.

 David Rosenberg: This Is The Most Profound Shift The US Economy Has Ever Seen --This year, the first Baby Boomers turned 70, and that spells trouble for the economy and financial markets.Speaking at Mauldin Economics’ Strategic Investment Conference, chief economist and strategist for Gluskin Sheff, David Rosenberg, dissected the wide-ranging implications of the wave of Baby Boomers now retiring. “1.5 million Boomers turn 70 [each year] for the next 15 years. This is a depressant for growth. Research has shown once you hit this age, you cut back on your spending.”Findings from RAND Corporation show that on average, a person’s consumption drops by 37.5% when they enter retirement. Given that consumption accounts for 70% of US economic activity, this is a major deflationary force.Rosenberg goes on to say, “what makes this situation more acute is that only half of the Boomers that would like to retire, and this is why they can’t retire, have less than $100,000 in liquidity.”This huge funding gap in pensions has two major consequences for the economy and financial markets in the near term. “Because [Boomers] are living longer and they need the cash flow, they’re staying in the job market longer and displacing younger workers. The fastest employment growth now is people over the age of 65.”

Ben Bernanke explains what Donald Trump gets wrong on the economy - Donald Trump is at heart a nostalgia president, promising Americans the rebirth of a particularly iconic class of vanishing coal and factory jobs. “The mines are starting to open up,” he said last week, announcing he was pulling the United States out of a global climate accord.   Most serious economists will tell you coal jobs aren’t coming back in any great number, unless natural gas prices spike unexpectedly. There’s more debate over how many manufacturing jobs could return but very little expectation that the industry could return to 1950s levels, when three out of every 10 US employees worked in a factory. (It’s less than one in 10 today.)  Ben Bernanke writes starkly about this in a new afterword to the paperback version of his book The Courage to Act, which is a memoir of his chairmanship of the Federal Reserve through the financial crisis and its aftermath. Trump’s economic promises “were aimed at invoking his supporters’ yearning for a (partly mythical) past,” Bernanke writes. But “the problem with promising to roll back the clock is that, whatever its symbolic attractions, it’s hardly practical.”  Bernanke doubled down on that point in an extended interview last month, from his post-Fed offices at the Brookings Institution think tank. He painted a picture of an economy that has evolved past Trump’s retro vision — and which probably doesn’t need the massive tax cut stimulus that the president has made the centerpiece of his revivalist pitch. “We’re just simply never going to go back to the 1950s and the 1960s in terms of coal mining jobs and assembly line jobs in the auto industry and so on,” Bernanke said, “because technology and the global markets have moved on from that. And so I think it’s a mistake to try to restore jobs that may have been good jobs in the past.” Over the course of a 75-minute interview, Bernanke pronounced the economy to be near full employment; worried about partisanship coloring confidence surveys; proclaimed slowdowns in productivity and economic mobility the great challenges of the era; assessed Trump’s tax and health care proposals; and riffed on the Laffer Curve and his newfound pleasure in blogging. The interview is edited for length. But it’s still long, wonky, and fun.

Trump's Budget Projections "Bear Little Or No Resemblance To Reality" - Ron Paul --President Donald Trump's proposed budget has generated hysteria among the American left. Prominent progressives have accused the president and his allies of wanting to kill children, senior citizens, and other vulnerable Americans. The reaction of the president’s allies - including some conservatives who should know better - is equally detached from reality as they hail Trump for launching a major assault on the welfare state and making the hard choices necessary to balance the budget.  President Trump’s budget does eliminate some unnecessary and unconstitutional programs such as the Overseas Private Investment Corporation, and the National Endowment for the Arts. However, it largely leaves the welfare-warfare state intact. In fact, this so-called “radical” budget does not even cut domestic spending! Instead, it plays the old DC game of reducing “the projected rate of growth.” For example, under Trump’s budget, Medicaid spending increases from $378 billion this year to $525 billion in 2027. Only in the bizzaro world of Washington, DC can a 38 percent increase be considered a cut.President Trump's budget combines phony cuts in domestic spending with real increases in military spending. Specifically, the budget increases the military budget by $23 billion over the next ten years. Trump claims that the increase is necessary to reverse the damage done to our military by sequestration. But, despite the claims of the military-industrial complex and its defenders in Congress, on K Street, and in the media, military spending has increased over the past several years, especially when the "off-budget" Overseas Contingency Operations funding is added to the "official" budget.The restrained American First policy promoted by candidate Trump does not require a large and expansive military that literally spans the globe. This budget is the latest indication that President Trump is embracing the neocon foreign policy that candidate Trump correctly denounced.The budget also relies on rosy scenario economic projections of three percent growth without even a mild economic recession to justify the claim that the federal budget will achieve balance in a decade. This claim bears little or no resemblance to reality.

 Democrats Plot Debt Ceiling Fight And Government Shut Down To Thwart Trump Tax Cuts -- After 8 years of bashing Republicans for using debt ceiling votes as leverage to try to force spending cuts, Democrats now seem intent upon doing pretty much the same thing, well, at least the 'using the debt ceiling as leverage' part.  In fact, after repeatedly calling for a 'clean' debt ceiling vote (i.e. one without attached conditions) House minority leader Nancy Pelosi recently hinted, in her typical incoherent manner no less, that Democrats may now be looking into using the debt ceiling vote as leverage to thwart Trump's forthcoming tax proposals. "I don't have any intention of lifting the debt ceiling to enable the Republicans to give another tax break to the wealthy in our country.  To further exacerbate the challenge that is created when they have their trickle down economics." "The president keeps saying 'the tax bill is moving through Congress,' it doesn't exist.  It doesn't exist.  So you understand the frustration.  It doesn't exist.  There is no tax bill moving through Congress." As Bloomberg points out, Democrats have been the key to passing 'clean' debt ceiling increases in the past but hypocrisy is not a concept that is well understood in Washington D.C.It’s unclear how this would work in practice, but Democratic aides in both chambers said they are discussing possible strategies to tie the debt ceiling to blocking tax cuts.Such an approach would be a significant change for Democrats, who have spent the past eight years arguing that debt ceiling increases should be free from conditions, and could further complicate efforts to raise t he government’s borrowing authority when the current limit is reached later this year.

 The bottleneck in Rex Tillerson’s State Department - POLITICO: When former Secretary of State Condoleezza Rice, who successfully promoted Rex Tillerson for her old job during the presidential transition, tried to reach him last month, it was an aide to his chief of staff Margaret Peterlin who called back, asking what Rice wanted to discuss. The episode illustrates the difficulty even close allies are having reaching Tillerson, a diplomatic and political novice, as they try to help him find his footing at the State Department. While the former ExxonMobil chief has developed a close relationship with President Donald Trump, he hasn’t done the same with his own staff or experienced outside advisers, choosing instead to lean heavily on Peterlin and policy chief Brian Hook, according to 11 current and former administration officials as well as national security experts who interact regularly with the department. Story Continued Below The officials say the pair, friends who worked together in the George W. Bush administration, have cut career staff out of decision-making in an attempt to combat the sort of leaks that have hobbled the White House — and have isolated Tillerson from some of the people who could help him succeed. It’s a setup that risks limiting his effectiveness as he learns the arts of Washington politics and global diplomacy, State Department veterans warned. “Since he doesn’t come with the kind of background [of George] Shultz or Condi Rice or Colin Powell or Warren Christopher, he is particularly in need of being sure he can mobilize the expertise that is in the State Department,” said L. Paul Bremer, who served as chief of staff to former Secretary of State Henry Kissinger and worked for five other secretaries of state.

The $110 billion arms deal to Saudi Arabia is fake news – Brookings - I’ve spoken to contacts in the defense business and on the Hill, and all of them say the same thing: There is no $110 billion deal. Instead, there are a bunch of letters of interest or intent, but not contracts. Many are offers that the defense industry thinks the Saudis will be interested in someday. So far nothing has been notified to the Senate for review. The Defense Security Cooperation Agency, the arms sales wing of the Pentagon, calls them “intended sales.” None of the deals identified so far are new, all began in the Obama administration.None of the deals identified so far are new, all began in the Obama administration.An example is a proposal for sale of four frigates (called multi-mission surface combatant vessels) to the Royal Saudi navy. This proposal was first reported by the State Department in 2015. No contract has followed. The type of frigate is a derivative of a vessel that the U.S. Navy uses but the derivative doesn’t actually exist yet. Another piece is the Terminal High Altitude Air Defense system (THAAD) which was recently deployed in South Korea. The Saudis have expressed interest in the system for several years but no contracts have been finalized. Obama approved the sale in principle at a summit at Camp David in 2015. Also on the wish list are 150 Black Hawk helicopters. Again, this is old news repackaged. What the Saudis and the administration did is put together a notional package of the Saudi wish list of possible deals and portray that as a deal. Even then the numbers don’t add up. It’s fake news. Moreover, it’s unlikely that the Saudis could pay for a $110 billion deal any longer, due to low oil prices and the two-plus years old war in Yemen. President Obama sold the kingdom $112 billion in weapons over eight years, most of which was a single, huge deal in 2012 negotiated by then-Secretary of Defense Bob Gates. To get that deal through Congressional approval, Gates also negotiated a deal with Israel to compensate the Israelis and preserve their qualitative edge over their Arab neighbors. With the fall in oil prices, the Saudis have struggled to meet their payments since.

Trump Takes Credit for Saudi Move Against Qatar, a U.S. Military Partner - NYT — President Trump thrust himself into a bitter Persian Gulf dispute on Tuesday, taking credit for Saudi Arabia’s move to isolate its smaller neighbor, Qatar, and rattling his national security staff by upending a critical American strategic relationship.  In a series of tweets, Mr. Trump said his call for an end to the financing of radical groups had prompted Saudi Arabia and four other countries to act this week against Qatar, a tiny, energy-rich emirate that is arguably America’s most important military outpost in the Middle East. “During my recent trip to the Middle East I stated that there can no longer be funding of Radical Ideology,” he wrote in a midmorning post. “Leaders pointed to Qatar — look!”  Qatar has long been accused of funneling money to the Muslim Brotherhood — which has officially forsworn violence but is still accused of terrorism by some countries — as well as to radical groups in Syria, Libya and other Arab nations. But it is also home to two major American command posts, including a $60 million center from which the United States and its allies conduct their air war on Islamic State militants in Iraq and Syria.  Those contradictory roles may explain the mixed signals the administration sent after Saudi Arabia’s unexpected move. Secretary of State Rex W. Tillerson and Defense Secretary Jim Mattis initially tried on Monday to smooth over the rift, with Mr. Tillerson offering to play peacemaker and Mr. Mattis insisting it would have no effect on the campaign against the Islamic State. Less than 12 hours later, however, Mr. Trump discarded that approach by putting his thumb on the scale firmly in Saudi Arabia’s favor. His tweets, which a senior White House official said were not a result of any policy deliberation, sowed confusion about America’s strategy and its intentions toward a key military partner. “So good to see the Saudi Arabia visit with the King and 50 countries already paying off,” Mr. Trump wrote. “They said they would take a hard line on funding.” He added, “Perhaps this will be the beginning of the end to the horror of terrorism!”

Trump’s Qatar Blunder - The American Conservative - The blockade of Qatar I mentioned yesterday just received a very public stamp of approval from the president: During my recent trip to the Middle East I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar – look! — Donald J. Trump (@realDonaldTrump) June 6, 2017 The official U.S. position before today was that Washington was proposing to mediate the dispute between the different states, and urged all parties to seek de-escalation of the crisis. That was the line coming from both Tillerson and Mattis yesterday. The al-Udeid base in Qatar is important for ongoing anti-ISIS operations, and Mattis insisted that the rift between Qatar and its neighbors would have no effect on the war: In regards to the implications for the counter-ISIS fight, I am positive there will be no implications coming out of this dramatic situation at all, and I say that based on the commitment that each of these nations…have made to this fight.   Then Trump pops off this morning and effectively endorses what the Saudis, UAE, Bahrain, and Egypt have done. That makes it less likely that there will de-escalation. Once again, there appears to have been no consultation with his top Cabinet members before making this statement, and I find it hard to believe that either Tillerson or Mattis thinks that Trump should have said this publicly right now (or at all). The Saudis et al. probably assumed that Trump’s Riyadh speech gave them a tacit green light to do what they wanted, but Trump’s latest remarks must have removed all doubt that they have Washington’s support to blockade and starve Qatar into submission. The more worrying thing about this statement is that Trump’s opinion of Qatar’s activities seems to be guided entirely by what other leaders told him about their government. Last month in Riyadh, Trump boasted that the U.S.-Qatari relationship was “extremely good” and that he and the emir would be discussing the purchase of “beautiful military equipment” made in the U.S. That was unfortunate in its own way, but it shows how different Trump’s view of Qatar was a few weeks ago. As I said before, Qatar is responsible for supporting jihadist and Islamist groups abroad, but they are hardly the only government in the region that has done so. Judging from Trump’s statement, he is simply taking Qatar’s neighbors at their self-serving word and he is letting himself–and the U.S.–be used to legitimize their vendettas.

Trump reverses course in Qatar call -- President Donald Trump changed course on Qatar Wednesday, a day after praising a move by other Gulf nations to sever diplomatic relations with Doha, which hosts a US military base crucial to the fight against ISIS. In a phone call with the Qatari Emir, Trump extended an olive branch, offering to help the parties resolve their differences by inviting them to a White House meeting if necessary. The outreach came as US officials told CNN they were observing increased Qatari military activity as the country placed its forces on the highest state of alert over fears of an military incursion.Trump's new tone echoed that of his secretaries of Defense and State, who emphasized Tuesday the need for Gulf unity and the importance of the US partnership with Qatar, home to the Al Udeid Air Base, the main regional center for air missions against ISIS. Trump's phone call Wednesday made for a stark contrast to a series of tweets he sent Tuesday, in which he appeared to throw his weight behind the effort by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, along with Yemen, the Maldives and Libya, to ostracize Qatar. Referring to his May trip to the region, Trump tweeted that it was "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!"  In a description of the Wednesday call, the White House said Trump "emphasized the importance of all countries in the region working together to prevent the financing of terrorist organizations and stop the promotion of extremist ideology." 

Mapping Where Where U.S. Troops Are Based In The Middle East -- On Monday, Saudi Arabia, the UAE, Yemen, Libya's eastern-based government and the Maldives cut diplomatic ties with Qatar, creating a new crisis in the Arab world. U.S. President Donald Trump quickly waded into the row, lambasting Qatar in a series of tweets. Joining the Gulf states in labeling Qatar a funder of extremism, Trump tweeted that his visit to Saudi Arabia "was already paying off" and that Monday's developments could mark the "beginning of the end to the horror of terrorism." However, as Statista's Nial McCarthy notes, despite Trump's tweets and his accusations against Qatar, the country actually plays host to the largest U.S. base in the Middle East. Located southwest of Doha, Al Udeid Air Base hosts an estimated 10,000 U.S. troops and the facility has been proven crucial in the fight against ISIS. Qatar invested $1 billion in constructing the base and it's also home to the the U.S. Combined Air Operations Center, responsible for coordinating U.S. and allied air power across the Middle East,particularly in airspace over Iraq, Syria and Afghanistan.  Indeed, the base is likely to become even more important in the coming weeks as a U.S. backed alliance of Kurdish and Arab fighters gain traction in their offensive towards the ISIS stronghold of Raqqa. In the wake of Monday's events and Trump's comments, the Defense Department praised Qatar for hosting the base and its "enduring commitment to regional security". State Department spokeswoman Heather Nauert said "we recognize that Qatar has made great efforts to stop the financing of terrorism but they still have a lot of work to do." The following infographic highlights just how important Qatar is to the U.S. presence in the Middle East.

Trump 'May Not Have Known' U.S. Has 11,000 Troops in Qatar When He Bashed the Country on Twitter --Donald Trump “may not have known” that Qatar is home to the biggest U.S. military base in the Middle East when he praised Gulf nations for severing diplomatic relations with the nation, MSNBC reports.Brian Williams on @MSNBC says a source tells him and @NicolleDWallace they're not sure Trump knew there were Americans stationed in Qatar.— Kyle Griffin (@kylegriffin1) June 8, 2017  MSNBC reporting White House sources says Trump "may not have known" the US has troops based in Qatar. — Simon Marks (@SimonMarksFSN) June 8, 2017 Trump on Monday praised the decision by Saudi Arabia, the United Arab Emirates, Bahrain , Egypt, Yemen, Libya and the Maldives to cut off ties with the Doha, a move reportedly sparked by a fake news story Qatar officials have emphatically denied. The president appeared to champion the severed diplomatic ties in a series of tweets on Tuesday. During my recent trip to the Middle East I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar - look! … 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! — Donald J. Trump (@realDonaldTrump) June 6, 2017 That tweetstorm prompted a rapid escalation as Qatar feared a military incursion from Saudi Arabia. In a phone call Wednesday, Trump reached out to the Qatari Emir to offer the administration’s assistance in smoothing out relations with other Middle Eastern nations. As CNN reports, the olive branch came as US officials warned Qatar was placing its police force on the highest level of alert. Qatar is home to Al Udeid Air Base, one of the most crucial stations in the fight against ISIS. It houses around 11,000 U.S. troops.

Tillerson Tells Arab States To Lift Qatar Blockade: "It's Hindering The Campaign Against ISIS"-- Secretary of State Rex Tillerson called on the Saudi Arabia-led coalition, which includes UAE, Bahrain and Egypt and others, to lift its blockade of Qatar, saying that the cutoff is hindering the fight against the (Qatar-funded) Islamic State. Tillerson also said the blockade had led to food shortages and forced families to uproot themselves and pull their children from school. “We believe there are unintended consequences, especially during this holy month of Ramadan but they can be addressed immediately,” Tillerson said. MOMENTS AGO: Secretary of State Rex Tillerson makes statement on The secretary of state said the Emir of Qatar has made progress in countering terrorism but needs to do more.  He added that after speaking to Gulf nations, he believes the countries involved in the dispute - all U.S. allies - are stronger together, and “the elements of a solution are available.” Even so, he said, Qatar must do more to combat extremism. The Qatar crisis - the result of Saudi Arabia and its Arab allies severing diplomatic ties as well as land, sea and air travel with Qatar - has thrust the U.S. into a delicate position, because of its alliances with all sides, and because Qatar hosts the nerve center for U.S. air operations in the Middle East, including the fight against Islamic State. Making this more awkward is the widespread knowledge that both Qatar and Saudi Arabia are the biggest sponsors of terrorism in the region. Separately Qatar's foreign minister, Sheikh Mohammed bin Abdulrahman Al Thani, said that sanctions imposed upon his country violate international law, calling the moves by Saudi Arabia and other Arab nations an "unjust siege."  German Foreign Minister Sigmar Gabriel said it was important to prevent any "further escalation" and that Germany was willing to help with any negotiations, noting that other diplomatic efforts were already being made by the U.S., Kuwait and others, and that he was "optimistic" they would be able to organize talks.

Trump just slammed US ally Qatar an hour after his administration defended it -- President Donald Trump doubled down on his war of words with one of America's top Middle East allies, publicly undercutting one of his own senior aides and potentially threatening the future of a vital US military base.   At a press conference with the president of Romania on Friday, President Trump slammed the country of Qatar, which hosts 11,000 US military personnel at its Al Udeid Air Base and is currently the target of a multi-country diplomatic boycott and blockade in the Middle East led by Saudi Arabia.  “The nation of Qatar, unfortunately, has been a funder of terrorism at a very high level,” Trump said. “I've decided, along with Secretary of State Rex Tillerson, our great generals, and military people, the time has come to call on Qatar to end its funding. They have to end that funding. And its extremist ideology in terms of funding.” But just an hour earlier, Tillerson was publicly defending Qatar. Speaking to reporters at the State Department, he called for the countries that had severed ties with Qatar to "immediately take steps to de-escalate the situation and put forth a good faith effort to resolve the grievances they have with each other.” He argued that the boycott impeded US military efforts, and was also objectionable on “humanitarian” grounds.  The completely divergent stances echoed the diplomatic chaos we saw earlier this week when the president departed sharply from the lines that Tillerson and the US ambassador to Qatar took in the immediate aftermath of the boycott. On Monday, Saudi Arabia, Bahrain, the United Arab Emirates and Egypt cut off ties to Qatar by land, water, and air in a tightly coordinated move, claiming that it was backing terrorist activity in the region. The US ambassador to Qatar, Dana Shell Smith, tried to appeal for calm on Twitter by drawing attention to the US’s past statements of support for Qatar’s work in combating terrorism financing and highlighting the “great partnership” between the US and Qatar.  Tillerson also weighed in on behalf of Qatar, encouraging dialogue and cooperation between the states in the region. “We certainly would encourage the parties to sit down together and address these differences,” Tillerson said in Australia on Monday. “If there’s any role that we can play in terms of helping them address those, we think it is important that the [Gulf Cooperation Council] remain unified.” (The GCC is the club of Persian Gulf nations that Saudi Arabia, Bahrain, the UAE, and Qatar are a part of.)

Trump national security team blindsided by NATO speech - When President Donald Trump addressed NATO leaders during his debut overseas trip little more than a week ago, he surprised and disappointed European allies who hoped — and expected — he would use his speech to explicitly reaffirm America’s commitment to mutual defense of the alliance’s members, a one-for-all, all-for-one provision that looks increasingly urgent as Eastern European members worry about the threat from a resurgent Russia on their borders.That part of the Trump visit is known. What’s not is that the president also disappointed — and surprised — his own top national security officials by failing to include the language reaffirming the so-called Article 5 provision in his speech. National Security Adviser H.R. McMaster, Defense Secretary Jim Mattis and Secretary of State Rex Tillerson all supported Trump doing so and had worked in the weeks leading up to the trip to make sure it was included in the speech, according to five sources familiar with the episode. They thought it was, and a White House aide even told the New York Times the day before the line was definitely included. It was not until the next day, Thursday, May 25, when Trump started talking at an opening ceremony for NATO’s new Brussels headquarters, that the president’s national security team realized their boss had made a decision with major consequences — without consulting or even informing them in advance of the change. “They had the right speech and it was cleared through McMaster,” said a source briefed by National Security Council officials in the immediate aftermath of the NATO meeting. “As late as that same morning, it was the right one.” Added a senior White House official, “There was a fully coordinated other speech everybody else had worked on” — and it wasn’t the one Trump gave. “They didn’t know it had been removed,” said a third source of the Trump national security officials on hand for the ceremony. “It was only upon delivery.”

Trump Team’s Shifts Jolt Some Allies and Soothe Others — President Trump scrambled American diplomacy on two fronts on Friday, delivering a stinging rebuke of Qatar at the very moment his secretary of state was trying to mend fences in the Persian Gulf, while at the same time reaffirming support for NATO two weeks after he had declined to do so.Unpredictable as always, Mr. Trump’s comments cut in two directions: He appeared to undermine Secretary of State Rex W. Tillerson, who has thrown himself into an effort to mediate a resolution to the bitter dispute between Qatar and several of its neighbors, chiefly Saudi Arabia.But he also soothed NATO allies by explicitly reaffirming Article 5, the clause that commits members to defend any ally under attack. Mr. Trump conspicuously avoided making that pledge at a meeting at NATO headquarters in Brussels two weeks ago, opening a rift with allies that widened after he pulled the United States out of the Paris climate accord.Yet the pattern of sudden reversals in the Trump administration’s diplomacy was most pronounced in the Middle East.On Friday afternoon, Mr. Tillerson called for a “calm and thoughtful dialogue” to resolve the deepening dispute among Sunni Muslim states in the Persian Gulf. Barely an hour later, Mr. Trump’s comments were anything but that. He accused Qatar of being a “funder of terror at a very high level” and demanded that the tiny, energy-rich nation cut off that money flow to rejoin the circle of responsible nations.“We had a decision to make,” Mr. Trump declared at a Rose Garden news conference with the president of Romania, Klaus Iohannis. “Do we take the easy road or do we take a hard but necessary action?” he said. “We have to stop the funding of terrorism.” A senior administration official insisted that Mr. Trump was “on the same page” as his secretary of state, even distributing a page to reporters on Air Force One that showed their statements on Qatar side by side. He also disputed that Mr. Trump’s comments about Article 5 represented a reversal, arguing, as the White House has before, that the president had already effectively endorsed it.  But on Qatar, a senior adviser to Mr. Tillerson, R.C. Hammond, suggested a difference in emphasis — if not ultimate goal — between the two men. “The president is focused on ending terrorism; the secretary is focused on diplomacy that will return G.C.C. focus to fighting terrorism,” he said, referring to the Gulf Cooperation Council, a loose association of mostly Sunni Arab states.

 Trump's Tweets 'Official Statements,' Spicer Says - NBC News: — It's official — the president's tweets, that is. White House Press Secretary Sean Spicer said Tuesday that Trump's tweets should be taken as official statements, contradicting other White House officials who have tamped down on the official nature of the tweets in recent days."The president is president of the United States," Spicer said, "so they are considered official statements by the president of the United States."  As it was during his candidacy, Trump's Twitter usage has been a cornerstone of his presidency — often offering a window into his thinking, sometimes at the expense of his administration's own messaging. Despite bipartisan complaints about his continued 140-character habit, Trump has persisted in making his views known on social media. The FAKE MSM is working so hard trying to get me not to use Social Media. They hate that I can get the honest and unfiltered message out.— Donald J. Trump (@realDonaldTrump) June 6, 2017The president often respond to major global events on Twitter. In the immediate aftermath of the recent London terror attack, Trump used the platform to pick a fight with London Mayor Sadiq Khan while also posting support for the U.K. after the attack. The White House even blasts the tweets to other social media platforms, posting graphics of the tweets on Instagram or even celebrating longer tweet storms in videos uploaded to Trump's Facebook page.

 Trump is finding it easier to tear down old policies than to build his own - WaPo - Builder-turned-president Donald Trump has in many ways made good on his promise to be a political wrecking ball.Last week, he withdrew the United States from the Paris climate accord. He has worked to roll back dozens of health, environment, labor and financial rules put in place by former president Barack Obama, and he scrapped a far-reaching trade deal with Asia as one of his first acts in office. But he and his fellow Republicans have made little progress in building an affirmative agenda of their own, a dynamic that will be on display when Congress returns this week with few major policies ready to advance. Voters are still waiting for progress on the $1 trillion package of infrastructure projects Trump promised, the wall along the Southern border he insisted could be quickly constructed and the massive tax cuts he touted during the campaign. Even debate over health-care reform is largely focused on eliminating key parts of the Affordable Care Act and allowing states to craft policies in their place. After being the “party of no” during the Obama years, Republicans are trying to figure out what they want to achieve in this unexpected Trump era — beyond just rolling back what Obama did.“We are in an ugly era of people who do not understand what the legislative branch is even for,” said Andy Karsner, who served as assistant secretary of energy for efficiency and renewable energy in the George W. Bush administration.The Trump administration and Republican leadership in Congress, Karsner said, “have no skill set, they have no craftsmanship. They have no connection to the time when people passed legislation.” 

White House to ramp up infrastructure effort in coming days | TheHill: The White House will kick its major infrastructure initiative into high gear next week with a string of high-profile events aimed at ramping up support for one of President Trump’s chief campaign promises. The administration had been under increasing pressure to show progress on the $1 trillion rebuilding package, which Trump broadly outlined in his budget proposal last week. While work on the infrastructure proposal has been underway for months, next week will mark the administration's most public effort yet to sell stakeholders, lawmakers and the public on Trump’s plan. Still, the full legislative package likely won’t be unveiled until later this summer. In the meantime, the White House will start to flesh out more details about the proposal over the next week.ADVERTISEMENT“We’ve had some achievements to date … but we’re really formally launching the things we’re doing,” said Gary Cohn, Trump's National Economic Council director, during a press call on Friday. “Next week we’re going to announce a few very interesting things.” The week will kick off with Trump signing a list of formal “legislative principles” in the oval office related to air traffic control reform, which will be sent to Congress. Trump will then deliver remarks in the White House Rose Garden about his vision for separating air traffic control from the federal government – an idea that has been billed as a way to speed up modernization efforts, but one that has run into a buzz saw of opposition on Capitol Hill. While Trump already endorsed the spin-off proposal in his budget request, the signing of principles will serve as the clearest signal to date about how serious the president is about putting some muscle behind the long-stalled effort. Officials also said the principles are expected to be far more specific than what was included in the budget blueprint, though they declined to offer further details. 

Trump plans week-long focus on infrastructure, starting with privatizing air traffic control -- WaPo -- President Trump will seek to put a spotlight on his vows to privatize the nation’s air traffic control system and spur $1 trillion in new investment in roads, waterways and other infrastructure with a week-long series of events starting Monday at the White House. The events — billed as “infrastructure week” — are part of a stepped-up effort since the president’s return a week ago from his first foreign trip to show that the White House remains focused on its agenda, despite cascading headlines about investigations into his administration’s ties to Russia. The president has invited executives from major airlines to join him as he kicks off the week with one of his more controversial plans: spinning off the air traffic control functions of the Federal Aviation Administration to a nonprofit corporation. It’s an idea that has been tried many times before, dating back to the Clinton administration and, most recently, last year in legislation championed by Rep. Bill Shuster (R-Pa.), chairman of the House Transportation Committee. His bill never made it to the Senate, where several key GOP members resisted the idea of transferring government assets to a corporation. Advocates of the idea argue that privatization would speed up glacial efforts by the FAA to modernize a system that still relies on land-based radar at a time when other countries have switched to GPS systems that allow more direct routes at lower costs. (Claritza Jimenez/The Washington Post) The Trump administration is hoping that with a Republican president, the objections of GOP senators will subside. While a formal introduction of most of Trump’s infrastructure plans are probably months away, the White House plans to send its principles for overhauling the air traffic control system to Congress separately this week. 

As the Trump administration kicks off “infrastructure week”, remember that its recent budget is an absolute disaster for public investment  -- Back in March, the Trump administration released its “skinny” budget. The skinny budget laid out the administration’s priorities for the next two years of discretionary spending. This skinny budget made absolutely disastrous cuts to nondefense discretionary (NDD) spending. This matters to most Americans because the NDD portion of the budget is where the vast majority of public investment is funded.NDD spending is already on an extraordinarily austere path under current law. The Congressional Budget Office (CBO) estimates that by 2027 NDD budget authority as a percentage of GDP will fall by one-fifth, reaching a historic low of 2.4 percent. Trump’s skinny budget wanted us to get to this anemic level by next year.And the details of the recently released full ten-year budget are far worse. The Trump administration’s budget would cut NDD budget authority as a percentage of GDP by 56 percent, slashing it to an unprecedented 1.4 percent of GDP by 2027. CBO estimates that NDD spending will account for just 13 percent of all federal spending over the next ten years, but half of it is public investment. The full Trump budget would be an unprecedented disaster for public investment.This highlights the enormous gap between Trump administration rhetoric about boosting infrastructure investment and the reality of their policies. Trump campaigned on a $1 trillion infrastructure proposal, but has never backed this up with a real plan. First, the campaign’s original plan was simply not serious, and would not have led to anywhere near $1 trillion in net new investment forthcoming. Next, the skinny budget cut the Department of Transportation by 13 percent. And these are not just cuts to some abstract bureaucracy, included are cuts to actual infrastructure funding. About 21 percent of those cuts come from ending the TIGER discretionary grants program that fund state-level infrastructure projects.

Trump’s infrastructure plans are empty promises not backed by money - It has been declared “infrastructure week” by the Trump administration. On the face of it, that should be excellent news. The U.S. economy would benefit enormously from an ambitious increase in public investment, including infrastructure investment. Such investment would create jobs and finally lock-in genuine full employment in the near-term, and would provide a needed boost to productivity growth (or how much income and output each hour of work generates in the economy) in the medium-term. Further, infrastructure investments would ensure that we do not leave future generations a deficit of underinvestment and deferred maintenance of public assets.This clear need is why we at EPI have been such enthusiastic backers of the Congressional Progressive Caucus (CPC) plan to boost infrastructure investment. The CPC investment plan is up to the scale of the problem, and it confronts the need to make these investments head-on, without accounting gimmicks or magical thinking about where the money for these investments will come from.Despite being long-standing and loud proponents of the need for more infrastructure investment, however, we cannot say we expect much from the Trump administration’s infrastructure week. Why not? Because the most common theme in the Trump administration’s approach to infrastructure is pure obfuscation about how it will be paid for. If you’re not willing to say forthrightly how you’re going to pay for infrastructure investments, you really cannot be serious about it. As the old adage goes, “show me your budget and I’ll tell you what you value”. The recently released Trump federal budget plan guts infrastructure, period.    Read the link—the damage the Trump budget would do to public investment and infrastructure is staggering. This alone should make any open-minded person extraordinarily skeptical of their claims to value infrastructure spending.

Trump Says U.S. Can No Longer Accept Crumbling Infrastructure --President Donald Trump said on Wednesday that Americans can no longer live with crumbling locks, dams, roads and bridges and outlined a plan to leverage $1 trillion in investment in U.S. infrastructure.Speaking at a marina in Cincinnati on the banks of the Ohio River with a coal barge behind him, Trump vowed that “America wants to build.”“America must have the best, fastest and most reliable infrastructure anywhere in the world,” he said. “We cannot accept these conditions any longer.’’Trump did not provide any new details of his plan. His budget proposal for fiscal 2018 calls for $200 billion in direct federal spending over the next 10 years to spur at least $800 billion in spending by states, municipalities and private entities that together own most U.S. infrastructure.The White House has not detailed the source of the $200 billion or the breakdown in spending. The administration has said a full legislative package could be ready by the third quarter.Democrats, some Republicans and groups representing the nation’s governors and mayors have said much more than $200 billion in direct federal spending over 10 years is needed to meet the nation’s needs -- and that relying on states, municipalities and the private sector won’t get needed work done.Calling Congressional Democrats “obstructionists,” Trump nonetheless said Wednesday he wants them to help pass his infrastructure plan. “I’m calling on all Democrats and Republicans to join together, if that’s possible, in the great rebuilding of America,’’ Trump said.

Why Trump’s Infrastructure Plan Is Good for Wall Street but Bad for America - Bernie Sanders - Donald Trump’s so-called infrastructure plan is a huge giveaway to Wall Street that fails to create the millions of jobs we need to modernize our roads, bridges, water systems, rail, airports, levees and dams.At a time when the American Society of Civil Engineers says we need to spend $2 trillion above current spending levels just to get our infrastructure back to a state of good repair, Trump actually cuts direct federal spending on our crumbling infrastructure by nearly $145 billion over the next decade. This would force state and local governments to shoulder more of the financial burden for our infrastructure needs at a time when they can least afford it.Just like Trump’s “health care” bill is actually a $231 billion tax cut for the top 2 percent, his infrastructure plan would create $200 billion in new tax loopholes and other giveaways for wealthy investors, and it would reward corporations that have stashed their profits overseas with huge tax cuts.Under Trump’s proposal, billionaires on Wall Street, wealthy campaign contributors and even foreign governments would receive hundreds of billions in tax breaks to purchase our highways, airports, and water treatment plants. They would then be allowed to impose huge new tolls and fees on the backs of American commuters and homeowners.The reality is that Trump’s plan to sell off our nation’s highways, bridges, and other vital infrastructure to Wall Street, private investors, and foreign governments is an old idea that does not work.Trump’s plan to rebuild America relies heavily on the use of public-private partnerships to finance infrastructure projects with private equity capital. Such financing, whether through private equity or traditional tax-exempt municipal bonds, is repaid by ordinary citizens through a combination of taxes and user fees. Private equity financing is markedly more expensive than traditional government financing, however — by as much as three to six times. Considering the scale of infrastructure development under consideration, that difference could be enormous. For example: the charge for a $100 million-dollar investment using traditional government bond financing (at 3 percent, over 30 years) is about $90 million. For private equity capital, at a 15 percent return, the total skyrockets to $450 million.

 Trump may restrict length of environmental reviews under infrastructure plan | TheHill: The Trump administration may enforce restrictions on the length of environmental reviews as part of an effort to streamline the project approval process in his $1 trillion infrastructure package. Transportation Secretary Elaine Chao, speaking at a Competitive Enterprise Institute dinner Wednesday evening, outlined some of the broad details of Trump’s rebuilding proposal. The plan is expected to roll back regulations that can slow down transportation projects and streamline the lengthy construction approval and permitting process, with the goal of bringing the timeline from as long as 10 years down to two years. Chao said the administration’s infrastructure task force has already identified dozens of potential proposals to “cut red tape and reduce time delays and cost burdens.” One idea is to allow steps in the permitting process to occur simultaneously instead of sequentially. Another idea under consideration is enforcing the page-limit restrictions on environmental reports, which Chao said can reach tens of thousands of pages. “Streamlining the regulatory process not only cuts costs, it can improve the environmental outcomes by delivering infrastructure improvements more quickly,” she said. “Resources will be spent on actual environmental mitigation, rather than stacks of paperwork.”

 Private Toll Operators Salivate Over Donald Trump's Infrastructure Plan - Investors are hoping to seize upon the $1 trillion infrastructure plan proposed by President Donald Trump to transform the nation’s highways, bridges, and tunnels into assets they can monetize by adding tolls and other user fees. The Trump infrastructure plan, which the administration plans to roll out this week, is centered on the idea of “asset recycling,” which refers to the process of securing new infrastructure spending by leasing the operations of existing public property to private operators. The privatization-centered scheme has the nation’s largest toll operators salivating. Transurban, Cintra, and TransCore, three major toll operators, have retained federal lobbyists to influence the upcoming plan. Transurban, which operates Washington-area Beltway tolls, has been accused of price gouging and predatory debt collection practices. In one lawsuit, a driver claimed that she was charged $3,413.75 for unpaid tolls, fees, and fines after Transurban failed to accept her initial payment for $104.15 for missing tolls on the Beltway toll lanes. Washington Post writer Fredrick Kunkle assailed Transurban for “price gouging” after the company hiked its rates to $30 during a winter snowstorm. During an investor day presentation last month, Transurban’s Jennifer Aument, in charge of North America operations for the Australian company, hailed the Trump infrastructure plan as an opportunity for toll operators like Transurban to expand. Watch:

Trump Using Failed Australian “Asset Recycling” to Justify Mass Privatizations --Yves Smith -  I hadn’t devoted much blog space to Trump’s infrastructure plans because his version 1.0 was not going to lead to much activity of any sort. It was not going to be based on any Federal spending. Instead, it relied on the use of equity tax credits. As we wrote, not only was that a small market, but the deals in it are bespoke, meaning the financings take a long time to get done. That would add even more time to the usually drawn-out process of devising projects, bidding out the various contracts, and lining up the various pieces of the financing. In other words, even based on the default assumption that many of the deals would not be good deals, not many would be completed, hence any harm would be fairly limited.But now Trump is attempting to use infrastructure spending, which is everyone’s favorite idea for boosting growth in the US right now, as a Trojan horse for large scale privatizations. The ruse here is to call its ‘asset recycling” and depict it as a vehicle for creating more infrastructure spending. Mind you, this central element wasn’t included in the White House’s 6 page napkin doodle; you had to get that critical bit of information the press conference, as reported by the Washington Post:Trump advisers said that to entice state and local governments to sell some of their assets, the administration is considering paying them a bonus. The proceeds of the sales would then go to other infrastructure projects. Australia has pursued a similar policy, which it calls “asset recycling,” prompting the 99-year lease of a state-owned electrical grid to pay for improvements to the Sydney Metro, among other projects.As the cross post below describes in sordid detail, the Australian asset recycling program was widely seen as a big failure, even among the Liberals, as in the conservative, pro-business party.That isn’t the only thing not to like about the latest iteration of Trump’s infrastructure headfake. the new position paper says the Administration is only going to spend $200 billion in 10 years, which is peanuts. That means he’s relying on way too much in the way of Wall-Street enriching financial gimmickry, which means higher costs and fees, which means more rent extraction from the general public.

Trump's 'infrastructure week' goes off the rails | TheHill: The White House's self-proclaimed "infrastructure week" has generated a flurry of headlines on nearly everything else. But much of the derailment on the infrastructure rollout has been of President Trump's own making. He repeatedly veered off message in tweets and infrastructure-themed speeches, flouting some of White House staffers’ carefully laid plans. The White House launched a weeklong infrastructure initiative designed to ramp up support for Trump’s $1 trillion rebuilding proposal, which has yet to be fully released but remains a top priority for the president. The administration has been under increasing pressure to show progress on the package, especially as officials seek to move past Comey’s abrupt firing and the investigation into Russian interference in the 2016 election. Aides planned out a string of high-profile events to draw attention to different components of Trump’s plan, ranging from waterways and airports to roads and bridges. During a press call announcing infrastructure week, White House officials sounded hopeful that they could build the consensus needed to move the proposal through Congress. “We absolutely do feel that the infrastructure package can be accomplished this year,” an administration official told reporters last Friday. “We are working every day to that end.” But hours before the infrastructure event kicked off at the White House on Monday, Trump fired off a series of tweets that blamed his Justice Department for writing a second “watered down” version of his travel ban, labeled Democrats as “obstructionists,” and slammed London’s mayor following a terrorist attack in the city. By the time Trump unveiled plans to modernize air traffic control in the East Room at 11:30 a.m., the main narrative dominating the news cycle centered on the various feuds that Trump had ignited on social media.

Goldman Sachs CEO trolls Trump: 'How did infrastructure week go?' | TheHill - Goldman Sachs CEO Lloyd Blankfein on Friday poked fun at the Trump administration's plans to focus on infrastructure this week, which were overshadowed by fallout over former FBI Director James Comey's dramatic testimony on Capitol Hill. "Just landed from China, trying to catch up.... How did 'infrastructure week' go?" Blankfein tweeted.  Just landed from China, trying to catch up.... How did "infrastructure week" go? — Lloyd Blankfein (@lloydblankfein) June 9, 2017   The Goldman Sachs CEO has jabbed at Trump before. In joining Twitter earlier this month, Blankfein used his first message posted to the social media platform to rip Trump's decision to withdraw from the international Paris climate accord. The White House's self-declared "infrastructure week" this week was overshadowed by Comey's gripping testimony before the Senate Intelligence Committee on Thursday, where he accused Trump's administration of lying about him and the FBI. Even before Comey appeared before lawmakers, Comey confirmed several reports in a pre-written congressional statement released Wednesday detailing his past interactions with Trump that he said bothered him and that many have criticized as inappropriate.  The administration's weekly infrastructure initiative, which was aimed at ginning up support for Trump's $1 trillion rebuilding proposal, was drowned out by various feuds Trump had ignited on social media.

Trump’s Economic Plan Suggests an Attempt to Invoke an Earlier America -  Trump’s agenda prioritizes industries that powered the American economy in the mid-20th century: particularly manufacturing, fossil fuel extraction, and construction. In the process, Trump is sublimating—if not opposing—the needs of the sectors likely to drive more growth through the 21st century: information technology, professional services, clean energy, entertainment, education, tourism, health care. Trump is betting on industries that remain important components of the U.S. economy, but whose greatest contribution to American prosperity is behind them. He consistently slights the industries whose greatest contributions lie ahead. If Democrats can resist the temptation of reflexive anti-business populism, Trump is offering them a huge opportunity symbolized by last week’s widespread condemnation of his Paris withdrawal from cutting-edge companies and corporate leaders including Apple, Google, Amazon, Microsoft, Tesla, and General Electric. When Trump talks about the economy, manufacturing and fossil fuel production usually take first billing, followed by construction—the target of this week’s infrastructure proposals. He typically cites these industries to justify imposing trade barriers or abandoning trade deals, restricting immigration, and rolling back environmental regulations, particularly on energy production and the carbon emissions linked to climate change. It’s far from certain Trump’s agenda will benefit these industries as uniformly as he claims. The federal International Trade Association has calculated that about one-fourth of manufacturing jobs are tied to exports, even more for key sectors including aerospace, computers, and chemicals. If Trump’s confrontational approach to trade provokes retaliation from other nations, those exports—and the jobs they support—could be lost. Likewise, Trump’s push to unravel former President Barack Obama’s agenda for confronting climate change may boost coal and oil production at the price of suppressing lower-carbon alternatives like solar, wind, natural gas, and nuclear power that already cumulatively employ far more people.

Factories Won’t Bring Back the American Dream --“One of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants,” Trump said he told Apple’s chief executive officer, Tim Cook.That sums up the economic vision of the Trump administration. The president and his advisers are convinced more factories can cure the trade deficits, lackluster growth, and (supposed) joblessness plaguing the U.S. economy. Trump has vowed to lure back plants that departed for cheaper locales such as China or Mexico and sanction companies that dare to leave. The result, he claims, will be investments that revitalize down-on-their-luck communities and American economic vitality. “We will bring back our jobs,” he pledged in his inauguration speech. “We will bring back our dreams.”The president, though, is plain wrong. Factories won’t restore the American dream. That’s because they don’t contribute as much to the economy as they once did, despite all the fuss politicians make over them. Chasing them with pro-factory policies will not only fail to bring the benefits Trump has promised but could also hurt the very middle-class families they’re designed to help. A die-hard conviction remains among many Americans that the more an economy manufactures, the stronger it is. Some workers feel that making steel or cars is more respectable than stacking shelves at a Gap, and the Trump administration readily agrees. Calling steel “critical to both our economy and our military,” the president signed an executive order in late April that in all likelihood will lead to curbs on imports to protect U.S. mills. Peter Navarro, one of Trump’s key economic advisers, argues that bringing factories back from foreign countries will shore up the nation’s growth and security. “One of the goals of the Trump administration is to reclaim all of the supply-chain and manufacturing capability that would otherwise exist if the playing field were level,” he recently said.

Trump’s biggest obstacle in getting things done: Trump - Thanks to their boss’ own relentless actions, White House officials and allies are having a rough time moving on from ousted FBI Director James Comey’s testimony and focusing anew on fulfilling campaign promises. On Friday, President Donald Trump boasted of his vindication, accused Comey of lying and hinted, through his attorney, that he would file complaints against the former FBI director for leaking information about their private conversations involving the investigation into whether Trump associates joined Russia in meddling in the presidential election.“He's a leaker,” a defiant Trump said at a Rose Garden news conference. “But yesterday showed no collusion, no obstruction. That was an excuse by the Democrats who lost an election that some people think they shouldn't have lost.”Trump said he would be willing to speak with special counsel Robert Mueller under oath to discuss the conversations with Comey. The president declined again to say whether he is recording conversations in the White House, something he said previously he may have done.The afternoon news conference capped a day that began when Trump aides who were downright giddy that the president did not respond to Comey’s testimony directly Thursday – at their own urging — became clearly disappointed that he reverted back to Twitter to criticize Comey early Friday. And while Trump insisted he wanted to “get back to running our great country” his actions particularly frustrated Republicans eager to pass legislation now that they control both the White House and Congress for the first time in 10 years. “Republicans on the Hill are desperate for the president’s self made distractions to cease and for him to focus on policy achievements,” said Rob Stutzman, a Republican political strategist based in Sacramento, California. “They would prefer a world where the RNC isn't spending it’s resources to slime Jim Comey, but rather promoting health care reform, a tax overhaul and the virtue of deregulation.”

Lawmakers take aim at Trump’s Interior budget | TheHill: Interior Secretary Ryan Zinke defended the Trump administration’s budget request for the department as “what a balanced budget looks like” in the face of bipartisan criticism on Thursday. Members of a House Appropriations Committee subcommittee raised a handful of complaints about the $10.6 billion budget request for the Interior Department. The budget proposal is $1.6 billion, or 13 percent, lower than current levels, and it slashes funding from programs members said Thursday they support. “The budget is unacceptable, and I expect colleagues on both sides of the aisle to reject it,” said Rep. Betty McCollum (D-Minn.), the ranking Democrat on the subcommittee. She slammed the budget for its “appalling” funding cuts for climate change research and mitigation and said it “puts profits of oil companies above the public good.” Democrats also took aim at Trump’s proposal to allow oil drilling in the Arctic National Wildlife Refuge and to explore for oil in the Atlantic Ocean, as well as the administration’s effort to reform the federal monument designation program. Republicans had concerns of their own. Rep. Ken Calvert (R-Calif.) the chairman of the subcommittee, said he was upset about cuts to earthquake early notification systems, while Appropriations Chairman Rodney Frelinghuysen (R-N.J.) raised objections to National Park Service and Fish and Wildlife spending measures. Rep. Hal Rogers (R-Ky.) said he was “flabbergasted” by a Trump administration proposal to end funding for a workforce redevelopment pilot program for coal country. Zinke, though, said the budget is a “starting point,” and that he hoped to increase energy development revenues that could pay for other agency priorities. “This is what a balanced budget looks like,” he said, noting President Trump’s full budget aims to be balanced by 2027, though it makes aggressive economic growth assumptions. 

Obama Unwittingly Handed Trump a Weapon to Cripple the Health Law - NYT — Obama administration officials knew they were on shaky ground in spending billions of dollars on health insurance subsidies without clear authority. But they did not think a long-shot court challenge by House Republicans was cause for deep concern. For one thing, they would be out of office by the time a final ruling in the case, filed in 2014, was handed down. They also believed that a preliminary finding against the administration would ultimately be tossed out. Finally, they figured that President Hillary Clinton could take care of the problem, if necessary. Well, they are out of office, Mrs. Clinton is not president and the uncertain status of the cost-sharing payments now looms as the biggest threat to the stability of the insurance exchanges created under the Affordable Care Act. A dubious decision made by the previous White House has handed the current administration a powerful weapon to wield against the health care legislation that it despises.“The administration should not have found an appropriation where none existed,” said Nicholas Bagley, a University of Michigan law professor who has studied and written about the issue. “The Obama administration argument that the Affordable Care Act included an appropriation for the cost-sharing payments never held water.” Judge Rosemary M. Collyer agreed with that assertion last year. She ruled that the Obama administration had no explicit authority to pay as much as $130 billion over 10 years to insurance companies to cover out-of-pocket health costs for millions of lower-income Americans obtaining insurance on the new health exchanges. At the same time, she found that the Republican-led House had the standing to sue the administration — a potentially far-reaching decision that many constitutional law experts predicted would be overturned on appeal, causing the suit to be dismissed.  Then November’s election upended all the calculations. Donald J. Trump won, and his interest in defending the executive branch against the House lawsuit was nonexistent given his antipathy for the health care law. But neither he nor congressional Republicans were in any hurry to drop the appeal initiated by the Obama administration because that would mean the subsidies would be immediately cut off, throwing the health insurance market into turmoil. Instead, the lawsuit has been essentially suspended and the payments have become a new bargaining chip in Washington. The administration is essentially doling them out on a month-to-month basis while Republicans struggle to come together on their own health care replacement plan.

 Republican Senators at Odds Over Medicaid in Obamacare Reform Push - Yves Smith - The Republicans may still manage to find a way to deliver one of the big promises to voters, that of Obamacare reform. We had been skeptical, simply because the House Freedom Caucus has succeeded in getting a tough enough version of the bill passed, and there would not be enough Senators who would be willing to risk their political futures by taking such a hard core position.  However, an additional possible point of failure has emerged: the difficulty in reaching agreement even among Senators. The issue is that some Republican Senators are from states that embraced Obamacare’s Medicaid expansion. Those Senators are understandably loath to vote for cutting health care benefits, since it would make for easy fodder for a challenger. As the Wall Street Journal explainsStates that expanded Medicaid under the law are anxious not to see people lose health coverage or state budgets squeezed. States that didn’t expand Medicaid are reluctant to see other states benefit financially for making a choice they considered irresponsible.  There are about an equal numbers of red states in each camp.   Ugh, from the dealmakers’ perspective. A couple of Republican insiders had opined that Obamacare reform needed to be settled by July at the latest, since it was perceived as critical to have it put to bed early and well before 2018 campaign dynamics slowed the legislative calendar. The Journal confirms that view. It reports that the intent is for the Senate to resolve its impasse before the July 4 recess so that both chambers can hash out differences before the end of July.  Both sides are trying to find a way to square the circle, such as by stealth cuts, such as increases that lag the inflation rate, or by allowing Medicaid expansion states to wind back their programs on an attenuated timetable: Some conservative strategists said the best course for a deal on Medicaid is to restrict federal funding to a set amount for each person enrolled but allow states to retain more generous eligibility rules for a longer period. Such a proposal could represent a net win for states that opted not to expand the program, while allowing states that did to figure out how to offer coverage for people who qualify according the standards they want to set. Another concept being discussed is cutting off federal Medicaid funding for people with incomes above the poverty level, and moving those people into subsidized private-insurance plans, people familiar with the conversations said. As we know from Obamacare, if you have a low income, even a subsidized insurance policy can break your household budget. The CBO scoring of whatever plan the Senate settles upon, assuming they can get to an agreement, will also have a big impact on the reconciliation talks. Any “end Obamacare” bill has to reduce the number of people covered. If the press blowback is strong, that may stiffen the Senate negotiators’ position relative to their House counterpart, which would increase the odds of a stalemate.

Anthem Drops Obamacare In Ohio: 300,000 Without Insurance? Gruber Strikes Again - House Speaker Paul Ryan’s attempt to replace Obamacare was sheer madness. Left alone, Obamacare was imploding anyway. Republicans should have waited for Democrats to beg them to “do something”. Bloomberg reports Insurer’s Obamacare Exit Could Leave 300,000 Without Options.Anthem Inc.’s decision to quit Ohio’s Obamacare market will leave 13,000 people without any coverage option under the program next year. That number may rise to 300,000 if the health insurer follows suit in the rest of the states where it sells.Anthem, which currently oversees Affordable Care Act plans for about 1.1 million people in 14 states, is one of the largest of the multistate insurers that hasn’t pulled back sharply from selling individual plans in the ACA. In April, it said it was “assessing our market footprint in 2018,” and on Tuesday the company said it would leave Ohio. Currently, there are more than 30,000 people with Obamacare plans who are projected not to have an insurer under the program next year,according to data compiled by Bloomberg. An Anthem exit would raise that number to 300,000 people in seven states. Anthem’s Ohio exit will leave 20 counties in the state without an Affordable Care Act coverage option in 2018. Blue Cross Blue Shield of Kansas City said last month it will pull out of the exchange in Missouri, leaving 25 bare counties and about 18,500 people without an ACA coverage option. Humana Inc. said earlier this year it would pull out from all 11 states next year where it currently sells ACA plans. Aetna Inc. said in May it would do the same, also announcing plans to abandon the few remaining states where it had been selling ACA coverage. UnitedHealth Group Inc., the largest U.S. insurer, has already exited ACA exchanges in most of the states where it sold plans. Some small and regional insurers have pulled out of states or counties as well. If Anthem decided to leave the exchanges nationwide, another 310 counties could be without ACA plans in Colorado, Georgia, Kentucky, Missouri, Nevada and Virginia in addition to Ohio, bringing the total number of bare counties to 355. Anthem did file a rate request in Virginia for next year but could still decide not to sell there.  The New York Times explains in Bare Market: What Happens if Places Have No Obamacare Insurers?

McConnell whips Senate GOP back in line on Obamacare repeal - POLITICO: For a day at least, Senate Majority Leader Mitch McConnell has his party’s beleaguered efforts to repeal Obamacare back on track. After two weeks of increasingly dour assessments from Republicans on the party’s stalled health care efforts, Senate Republicans emerged from more than two hours of meeting with a fresh burst of optimism that they could actually pass a bill to repeal and replace the health law. Sen. Lindsey Graham went into Tuesday’s party lunch predicting that the Republican effort to gut Obamacare was “more likely to fail than not.” He emerged singing a different tune: The health care overhaul he heard about contains “promising proposals” and he was for holding a vote this month after the Congressional Budget Office weighs in and the party’s idea are put into legislative form. “Now I say promising, but I don’t know what it looks like legislatively … the key word is promising,” Graham said. “There better be [a vote this month], because this is not like fine wine, it does not get better with age.” Ditto Sen. Bill Cassidy (R-La.), who has been outspoken about his concerns on the direction the party has taken, but now says he is feeling increasingly comfortable and "very encouraged" by Republicans' plans. "Of course it's not everything I want, but that's life," Cassidy told reporters Tuesday.

What’s the Cost of Keeping Corrupt Pharma-Stooge Senators Like Patty Murray in Office? -- The answer to the headline question is — across all industries and monopoly protection schemes regulated and allowed by Congress, easily more than $100 billion per year. That’s the dollar price of keeping “fake progressives” like Cory Booker and Patty Murray well-fed and happy in Washington, D.C. Over $100 billion. Per year. Let’s look at the cost to the American people of supporting “fake progressives” like those listed above by looking at just one industry, one monopoly protection scheme — prescription drugs prices. Readers of DWT recently learned that: Cory Booker helped the Republican predators kill his drug reimportation bill, a bill killed by Cory and a dozen other Democrats putting their donors before their constituents. Matt Taibbi has been on fire lately. His newest Rolling Stone essay, Republicans and Democrats Continue to Block Drug Reimportation— After Publicly Endorsing It, makes the not so subtle point that “the one true bipartisan instinct in Washington is caving to rich industries.” The piece accurately calls Booker a “fake liberal.” That label also applies to several more on the list above. Patty Murray, for example, is a “fake liberal.” So is Maria Cantwell. Both were instrumental, for example, in getting Fast Track, the needed precursor to the horrible TPP trade deal, passed in the Senate. The question has to be asked. At what price do progressives defend corrupt senators like this and protect their Senate positions, simply because they are our corrupt senators— corrupt Democratic senators? At what point do progressives say No to people like these? As Matt Taibbi points out in the referenced article (all emphasis mine):In 2015, for instance, the 20 largest drug companies made a collective $124 billion in profits.All the industry needs to protect those sums is the continued cooperation of Congress.So naturally it spends money– not a lot by industry standards, but a ton by the standards of the ludicrously cheap dates we call federal politicians— to make sure they always have just enough dependable people in office to block change. Most of that $124 billion — profit, mind you; not revenue — came out of our pockets. Taibbi again:The entire pharmaceutical industry is floated by a protectionist racket. Drugs that are in fact very cheap to make are kept artificially expensive– we have drugs that cost $1,000 a pill here in America that sell for $4 in India, for instance. This is the price you pay … per year … to keep Patty Murray and her kind in office. Do you feel you’re getting a fair return for your own investment in her career?

Trump administration rolls out social media vetting of visa applicants -- Visa applicants who the US State Department suspects may pose a danger if allowed into the country will be required to provide their social media handles on a new application (PDF) the government just unveiled. The new vetting, the State Department said, would likely ensnare about 0.5 percent of visa applicants annually—the equivalent of roughly 65,000 people. The screening would apply to visa applicants "who have been determined to warrant additional scrutiny in connection with terrorism or other national security-related visa ineligibilities," according to a notice in the Federal Register by the State Department.  In all, applicants that the government deems suspicious would be required to disclose (PDF) their previous passport numbers, five years of social media handles, telephone numbers, and e-mail addresses. The plan also calls for US-bound travelers to supply 15 years of biographical data. The Office of Management and Budget approved the new procedure on May 23 as part of President Donald Trump's plan to enhance the vetting process for visa applicants. It was included as part of a Trump immigration executive order that contained a temporary ban on people from several Muslim-majority nations. Trump's travel order has been halted by a federal appeals court. The Trump administration asked the US Supreme Court on Thursday to reverse that decision. The appeals court, however, did not disturb Trump's call for harsher visa vetting procedures.

Trump: I am calling it a ‘TRAVEL BAN!’ | TheHill: President Trump early Monday made clear the intent of a blocked executive order on immigration now being appealed to the Supreme Court. “People, the lawyers and the courts can call it whatever they want, but I am calling it what we need and what it is, a TRAVEL BAN!” he tweeted.Trump also said in a series of tweets that the Department of Justice (DOJ) should have fought for his original order, instead of “watered down, politically correct version" submitted to the Supreme Court. He said the DOJ should ask for an expedited Supreme Court hearing for the “watered down Travel Ban" and then seek a “much tougher version.” Trump in his final tweet on the subject said his administration is "EXTREME VETTING" people now coming into the U.S. "The courts are slow and political!" he added.Administration officials had rejected the characterization that Trump’s executive order was a travel ban, instead saying it was a vetting system to keep America safe. Trump over the weekend reignited the debate over the topic in the wake of a London terror attack in which seven people were killed and almost 50 others injured. In a tweet on Saturday, Trump renewed his call for the courts to approve his revised executive order, which would temporarily bar nationals from six predominately Muslim countries from entering the U.S. "We need to be smart, vigilant and tough," Trump said. "We need the courts to give us back our rights. We need the Travel Ban as an extra level of safety!" 

Implications of the President’s Muslim Travel Ban - Menzie Chinn  -- Since the President has acknowledged that the intent of his restrictions on entry of individuals from certain countries is actually a “travel ban”, it is of interest to assess the impact on foreign travel to the United States, and consequent impact on the US economy. Note that while the correlation is not very high, it is interesting that international enplanements (both incoming and outgoing) have trended sideways since 2016M11, even as world industrial production has risen. We will have additional insights (for March) on June 11th. US News and World Report: A new study finds international tourism to the U.S. has dropped in the Donald Trump era. America’s share of international tourism saw a 16 percent decline in March when compared to the same month last year, according a data analysis released on Wednesday by Foursquare, a technology company with a focus on location intelligence. The decline dates to October 2016, … according to the study. The decline has been steady with leisure tourism-related traffic to the U.S. falling an average of 11 percent between October and March, compared to the same period a year before. Conversely, Foursquare analysts found tourism in the rest of the world increased 6 percent year-over-year during that same period. Justin Fox/Bloomberg is a skeptical that we have already seen a big economic impact on the US economy, and I agree it is early to judge. On the other hand, the graph he presents on foreign spending in the US is sobering.   For context, the April 2017 figure is about 0.9 ppts of GDP.

Donald Trump undermines his lawyers’ case for the travel ban - Economist -- A series of tweets on the morning of June 5th could doom his March 6th executive order banning travel from several Muslim countries, scuttling one of his central campaign promises. How could a few tweets undermine the president’s policy? By supplying fresh evidence of the very points the order’s detractors have been citing in court. Mr Trump’s advocates—highly skilled, hard-working lawyers at the Department of Justice—have been striving to explain to federal judges across the land why the president’s unprecedented effort to ban travel from six Muslim-majority nations is not the so-called Muslim ban he called for in December 2015, or even a “ban” at all. They’ve resorted to redundancy for emphasis: it’s not just a “pause”, but a “temporary pause” on travel from these countries. And it is rooted not in bias or animosity against Muslims but in the sober calculation of multiple executive agencies that vetting procedures of travellers from Iran, Libya, Somalia, Sudan, Syria and Yemen need to be re-evaluated for the sake of national security. In the course of a few minutes, the president subverted this case point by point. First, using upper case letters and an exclamation point for emphasis, Mr Trump clarified how the order should be understood: “People, the lawyers and the courts can call it whatever they want, but I am calling it what we need and what it is, a TRAVEL BAN!” This suggests Mr Trump would not be satisfied with merely reviewing vetting procedures; he wants to keep people from certain places out of the country, full stop. And by preferring “ban” to “pause”, he is indicating the 90-day prohibition may be a prelude to a more enduring change in policy. Second, Mr Trump harked back to his original order from January 27th, a haphazardly crafted document that applied to America’s lawful permanent residents and caused chaos at American airports by effectively rescinding visas from incoming travellers at 35,000 feet. “The Justice Dept. should have stayed with the original Travel Ban”, Mr Trump tweeted, “not the watered down, politically correct version they submitted” to the Supreme Court. Admitting that the first ban was not politically correct implies that both it and the second order unconstitutionally target Muslims, even if animus in the latter is slightly better cloaked: “No one thinks that targeting countries that posed an actual threat would be politically incorrect”.

Exclusive: Trump targets illegal immigrants who were given reprieves from deportation by Obama -- In September 2014, Gilberto Velasquez, a 38-year-old house painter from El Salvador, received life-changing news: The U.S. government had decided to shelve its deportation action against him. Last month, things changed again for the painter, who has lived in the United States illegally since 2005 and has a U.S.-born child. He received news that the government wanted to put his deportation case back on the court calendar, citing another shift in priorities, this time by President Donald Trump. The Trump administration has moved to reopen the cases of hundreds of illegal immigrants who, like Velasquez, had been given a reprieve from deportation, according to government data and court documents reviewed by Reuters and interviews with immigration lawyers. Trump signaled in January that he planned to dramatically widen the net of illegal immigrants targeted for deportation, but his administration has not publicized its efforts to reopen immigration cases. It represents one of the first concrete examples of the crackdown promised by Trump and is likely to stir fears among tens of thousands of illegal immigrants who thought they were safe from deportation. While cases were reopened during the Obama administration as well, it was generally only if an immigrant had committed a serious crime, immigration attorneys say. The Trump administration has sharply increased the number of cases it is asking the courts to reopen, and its targets appear to include at least some people who have not committed any crimes since their cases were closed. Between March 1 and May 31, prosecutors moved to reopen 1,329 cases, according to a Reuters' analysis of data from the Executive Office of Immigration Review, or EOIR. The Obama administration filed 430 similar motions during the same period in 2016.

 Megyn Kelly’s Putin Interview: Russian President Says CIA Could Have Hacked US Presidential Election -- Just a day after saying that "patriotic" Russian hackers might have meddled with the 2016 U.S. presidential election, Russian President Vladimir Putin, in an interview with NBC's Megyn Kelly, suggested that those hackers could have come from "anywhere." He said it is likely that those hackers were from the U.S. and might have shifted the blame toward Russia. According to Kelly, Putin also hinted that it is possible CIA could have framed Russia for the hacking.  A day after referring to hackers as "artists" who are creative in their work and choose their targets according to their mood, Putin said they could be anywhere. "They can even be hackers, by the way, in the United States who very skillfully and professionally shifted the blame, as we say, onto Russia. Can you imagine something like that? In the midst of a political battle? By some calculations it was convenient for them to release this information, so they released it, citing Russia," the president said. Kelly also moderated a panel at the International Economic Forum that included Putin.   Kelly's interview with Putin came at a time when the House and Senate intelligence committees are probing the alleged interference by Russians in the U.S. presidential election. Several of President Donald Trump's close aides, including his son-in-law and senior adviser Jared Kushner, will be questioned over their Russian links. While addressing the forum Friday, Putin also said the hacking accusations against his country were nothing more than "harmful gossip," and that it was damaging international relations and the global economy, reports said.

Do you even understand what you’re asking?’: Putin and Megyn Kelly have a heated exchange over Trump-Russia ties -- Russian President Vladimir Putin got into a heated exchange with NBC News anchor Megyn Kelly on Sunday after Kelly asked him to address the growing controversy involving President Donald Trump and his associates' ties to Russia.  During the interview, which aired on "Sunday Night with Megyn Kelly," Kelly asked Putin about the reported conversations between Trump campaign officials and Russia's ambassador to the US, Sergey Kislyak, and reports that Trump's senior adviser Jared Kushner asked to set up a secret back channel between Trump and Moscow.  Kelly pointed out that there were two investigations by Congress and another by the FBI into the Trump campaign's ties to Russia and that the FBI investigation was being spearheaded by a special counsel, Robert Mueller.  "You've said that your ambassador, Kislyak, was just doing his job, right? So, what exactly was discussed in those meetings?" Kelly asked.    "There were no meetings. I — you understand? There were no meetings," Putin said. "When I saw this, my jaw dropped."  Kelly replied: "No meetings between Ambassador Kislyak and anybody from the Trump campaign?"  "I have no idea," Putin said, becoming increasingly agitated as he continued. "I'm being completely honest with you. I don't know. The routine job of an ambassador — do you think that from all over the world or from the United States, the ambassador reports to me every day who he meets with or what they discuss there?"   He continued: "That's complete nonsense. Do you even understand what you're asking or not?"

 As Russia probe grinds on, Trump struggles to gain traction on agenda | Reuters: The investigation into alleged ties between President Donald Trump’s election campaign and Russia is threatening to dampen already flagging momentum for the president’s legislative agenda of rolling back Obamacare and overhauling the tax code. With the Senate convening on Monday and the House of Representatives on Tuesday for a legislative sprint leading up to an August recess, the spotlight is on James Comey, the FBI director fired by Trump on May 9. Comey, who will appear before the Senate Intelligence Committee on Thursday, will be grilled on whether Trump tried to get him to back off an investigation into alleged ties between the president's 2016 campaign and Russia. Trump, a Republican, has called the Russia probe a "witch hunt" designed to undermine the legitimacy of his electoral win. The Russia matter presents a double-barreled threat to congressional Republicans: It could impede healthcare and tax initiatives that already were languishing and it could hurt efforts to hold onto their majorities in the House and Senate in 2018 midterm elections. "It's an enormous distraction and it creates uncertainty," said veteran Republican Representative Tom Cole in a telephone interview. "It casts a pall over the political system and slows things down. You don’t want to slow things down when you have all three levers of power," Cole said, referring to the White House, Senate and House.

White House orders agencies to ignore Democrats’ oversight requests - POLITICO: The White House is telling federal agencies to blow off Democratic lawmakers' oversight requests, as Republicans fear the information could be weaponized against President Donald Trump. At meetings with top officials for various government departments this spring, Uttam Dhillon, a White House lawyer, told agencies not to cooperate with such requests from Democrats, according to Republican sources inside and outside the administration. Story Continued Below It appears to be a formalization of a practice that had already taken hold, as Democrats have complained that their oversight letters requesting information from agencies have gone unanswered since January, and the Trump administration has not yet explained the rationale. The declaration amounts to a new level of partisanship in Washington, where the president and his administration already feels besieged by media reports and attacks from Democrats. The idea, Republicans said, is to choke off the Democratic congressional minorities from gaining new information that could be used to attack the president. "You have Republicans leading the House, the Senate and the White House," a White House official said. "I don't think you'd have the Democrats responding to every minority member request if they were in the same position." A White House spokeswoman said the policy of the administration is “to accommodate the requests of chairmen, regardless of their political party.” There are no Democratic chairmen, as Congress is controlled by Republicans.

House Ethics Complaints Filed Against Paul Ryan And Devin Nunes For Obstruction Of Justice - Despite having recused himself from the Trump Russia investigation, Republican House Intelligence Chairman Devin Nunes continues to be making headlines over the investigation. This time it has led to a House Ethics complaint against him, launched by the Democratic Coalition. A House Ethics complaint on obstruction of justice has also been filed against Speaker of the House of Representatives Paul Ryan, for not doing anything about Devin Nunes’ obvious interference with an investigation he should be nowhere near.There’s been a lot of talk this week about subpoenas coming out of the House Intelligence Committee on the Trump Russia investigation. This is a good thing. But it’s not a good thing that Devin Nunes has been at the center of this talk since he has recused himself from the investigation over ethics problems.A recusal means a recusal. Devin Nunes should be nowhere near subpoenas in the House Intelligence investigation, and yet he is. The New York Times reports that on Thursday of this past week, Devin Nunes became the center of a firestorm of criticism for refusing to give up subpoena power in the Trump Russia investigation. He’s not just receiving public criticism now, he’s now the subject of a House ethics complaint.On Wednesday, Devin Nunes issued three supboenas to law enforcement and the intelligence community asking for information about the unmasking of Trump associates that were the subjects of incidental collections in wiretaps. Devin Nunes is in a clear violation of House rules on this.

Jeff Bezos, Amazon, Washington Post and the CIA - The first profitable year for Amazon was 2013. Fourth quarter profits were $239 million and $274 million for the year. The year before, Amazon posted a loss for 2012 of $39 million. What happened to make 2013 so much better than the year before? Amazon won a $600 million cloud computer contract from the CIA. That was the difference – more than the difference. Later that year, Jeff Bezos bought the Washington Post for $250 million. To put that another way, Bezos used less than half the money he got from the CIA to buy the Washington Post. Do you think that was a sweetheart deal? I do. And like others, I believe it’s something Americans should know about. For instance, the Washington Post often quotes unnamed CIA sources in its reporting. Yet, the Post doesn’t disclose that the CIA paid the owner of the paper more than twice what it cost to buy it.Who was CIA director when this deal with the Washington Post was finalized? John Brennan. He’s the former CIA director, named by Barack Obama, who testified to Congress in March that Russia “brazenly interfered” in U.S. elections, including actively contacting members of Donald Trump’s campaign – but he stopped shy of dubbing it “collusion.” It was Brennan, a good friend of Obama’s, who said he believed the contacts were numerous enough to alert the FBI, which began its probe into Trump associates that same July, according to previous congressional testimony from then-FBI Director James B. Comey. The Washington Post has been on the Russian-Trump story like white on rice ever since – along with the New York Times, CNN, ABC News, CBS News, NBC News and the rest of the pack of jackals. This investigation has been going on since 2016, yet no evidence has been found to support the “collusion.” Wouldn’t you like to see an investigation into the collusion between John Brennan, Jeff Bezos, Amazon, the Washington Post and the CIA? I sure would. 

 Comey to be pressed on whether Trump interfered with Russia probe | Reuters: Former FBI Director James Comey will be grilled on whether President Donald Trump tried to get him to back off an investigation into alleged ties between the Trump campaign and Russia, key U.S. senators said on Sunday ahead of Comey's testimony this week on Capitol Hill. Comey, who was leading the Federal Bureau of Investigation's probe into alleged Russian meddling in last year's U.S. presidential election, was fired by Trump last month, four years into his 10-year term. The move sparked accusations that Trump dismissed Comey to hinder that investigation and stifle questions about possible collusion between his campaign and Russia. "I want to know what kind of pressure - appropriate, inappropriate - how many conversations he had with the president about this topic?" Senator Mark Warner, the top Democrat on the Senate Intelligence Committee, told CBS's "Face the Nation" program on Sunday. The former FBI chief is due to testify on Thursday before the intelligence committee as part of its own Russia-related investigation. After Comey's dismissal, news reports emerged that Trump asked Comey to end the probe into former national security adviser Michael Flynn during a February meeting in the Oval Office, the day after Flynn was fired for misrepresenting his contacts with the Russian ambassador. The account, first reported by the New York Times, was based on a memo Comey wrote after the meeting. The Comey memo caused alarm on Capitol Hill and raised questions about whether Trump tried to interfere with a federal investigation. "It would be unthinkable if the president actually did what was reported, asked FBI Director Comey to, in effect, back off of at least the investigation into General Flynn," Warner said.

Comey Releases Prepared Remarks: "I Hope You Can See Your Way To Letting This Go... I Need Loyalty" -- Ahead of tomorrow's much-anticipated testimony, former FBI Director James Comey has released his prepared remarks. Full Prepared Remarks below...highlights are bolded..

Five takeaways from that explosive Senate Intel hearing - CNN - The nation's top intelligence chiefs were supposed to spend Wednesday talking about foreign surveillance, but were instead grilled for more than two hours by senators angry at stonewalling over questions about President Donald Trump's influence in the Russia probe.Republicans and Democrats on the panel examined and cross-examined the group -- picking over their answers repeatedly. Director of National Intelligence Dan Coats, National Security Agency Director Michael Rogers, Deputy Attorney General Rod Rosenstein and acting FBI Director Andrew McCabe spent much of the hearing explaining the different reasons they wouldn't answer questions.By the end of the hearing, Senate Intelligence Chairman Richard Burr, R-North Carolina, delivered a clear message to the Trump administration -- they can't avoid answering to Congress forever. Here are the top five takeaways from Wednesday's hearing.

  • 1. Coats and Rogers wouldn't say whether Trump asked them to interfere in the Russia investigation. Wednesday's hearing did nothing to settle questions of Trump's reported attempts to curb the federal Russia probe and, instead, only increased the intensity of questions.
  • 2. The White House can block their testimony. As Coats repeatedly said that he would not answer their questions in public, he added that he would answer in a classified session. But, halfway through the hearing, he later offered an important caveat: "I do have to work through the legal counsel at the White House relative to whether they are going to executive, ah exercise executive," Coats said, before cutting himself off. Rogers followed up, saying, "I likewise respond as the DNI (director of national intelligence) has."
  • 3. Democrats are angry and attacking, but Republicans are unhappy too
  • 4. Trump did not find much support in the room Wednesday. The Wednesday hearing was regarding the surveillance program at the center of Trump'sclaims that he had his "wires tapped" by former President Barack Obama. And Trump had a handful of sympathetic Republican senators on the panel, including Arkansas Sen. Tom Cotton, who has frequently supported Trump.
  • 5. Comey's testimony will only add to questions of how much Trump pressured investigators. Wednesday's hearing was a blockbuster in its own right -- but Comey's written testimony,released Wednesday by the Senate intelligence committee, shows that Trump was intensely interested in top officials rebutting the Russia stories in public.

Ex-FBI head Comey accuses Trump of pressure on Russia probe | Reuters: Former FBI Director James Comey said on Wednesday that U.S. President Donald Trump asked him to drop an investigation of former national security adviser Michael Flynn as part of a probe into Russia's alleged meddling in the 2016 presidential election. In written testimony, Comey said Trump told him at a meeting in the White House in February: "I hope you can see your way clear to letting this go, to letting Flynn go." The testimony from Comey, who will appear in person before a Senate panel on Thursday, puts more pressure on the Republican whose presidency has been overshadowed by allegations that Moscow helped him win last year's election. But Trump, through his outside counsel, said he felt "completely and totally vindicated" by the account. "The president is pleased that Mr. Comey has finally publicly confirmed his private reports that the president was not under investigation in any Russian probe," Marc Kasowitz, Trump's attorney, said in a statement. Trump fired Flynn in February in a controversy over contacts between the retired general and the Russian ambassador to the United States. The FBI has been investigating Flynn as it looks into allegations of links between Russia and the Trump campaign. In his statement, posted on the Senate Intelligence Committee's website, Comey said Trump also called him on March 30 to say he had nothing to do with Russia and asked what "we could do to lift the cloud" of the FBI's Russia investigation.

Comey’s dramatic account on Trump rocks Washington | TheHill: President Trump repeatedly sought to influence the FBI’s investigation into Russian election meddling before firing James Comey as the bureau’s director, according to blockbuster testimony that Comey is set to deliver Thursday to the Senate Intelligence Committee. Comey’s riveting opening statement details multiple interactions with the president, including a January dinner at the White House where Trump said he needed and expected the FBI director’s loyalty. The one-on-one dinner, Comey felt, was an attempt to create “some sort of patronage relationship” with the president — something that “concerned me greatly, given the FBI’s traditionally independent status.”Following that discussion, Trump on several occasions raised the Russia investigation with Comey in ways that unnerved him. On Feb. 14, Trump cleared the Oval Office after a counterterrorism meeting to speak with Comey alone, according to the testimony. Trump then asked Comey to “let go” of any investigation into former national security adviser Michael Flynn, who had been forced to resign the previous day for misleading Vice President Pence about his conversations with the Russian ambassador. At the time, Comey felt the president was requesting only that he drop any investigation into Flynn related to a December phone call with the Russian ambassador — not “the broader investigation into Russia or possible links to his campaign.” During a later phone call with Trump on March 30, a conversation not previously reported, the president complained to Comey that the investigation into ties between his campaign and Russia was hampering his agenda and asked “what we could do.” Trump pressed Comey during that call to “get out” the fact that the president himself was not a target of the counterintelligence investigation, according to Comey.

Ryan: It was 'obviously' inappropriate for Trump to ask Comey for loyalty | TheHill: House Speaker Paul Ryan(R-Wis.) said on Wednesday that it was "obviously" inappropriate for President Trump to ask for former FBI Director James Comey's loyalty. "Obviously, I don't think that it is," Ryan told MSNBC's Greta Van Susteren, when asked whether he thought it was appropriate for a president to ask for an FBI director's loyalty. Ryan's comments came hours after Comey's opening statement for his Thursday testimony to the Senate Intelligence Committee was made public. In the statement, Comey recounts a one-on-one dinner with Trump at the White House in January, in which the president told him, "'I need loyalty, I expect loyalty.'" According to his account, Comey explained why the FBI director should remain independent and not pledge his loyalty to the president, telling him that doing so could cause problems for the president down the line. Ryan seemed to echo Comey's calls for an independent FBI and Justice Department, saying it was "very, very critical" that the nation's top cop remain unaffected by White House influence or loyalty pledges to the president. Comey is set to testify before the Senate Intelligence Committee on Thursday, marking his first such appearance since Trump abruptly fired him last month. 

Director James Comey testimony before the Senate Intelligence Committee on Russian interference in the 2016 U.S. presidential election.  C-SPAN with transcript

Lawyer: Trump feels ‘completely and totally vindicated’ by Comey’s testimony - Donald Trump’s attorney says the president feels ‘‘completely and totally vindicated’’ by former FBI Director James Comey’s statement to the Senate intelligence committee that he told Trump he was not personally under investigation. Marc Kasowitz said in a statement Wednesday, ‘‘The President is pleased that Mr. Comey has finally publicly confirmed his private reports that the President was not under investigation in any Russian probe.’’ Advertisement He says: ‘‘The President feels completely and totally vindicated. He is eager to continue to move forward with his agenda.’’ Comey’s opening statement, made public a day before he is set to testify, states that he informed Trump that he was not personally under investigation, validating the president’s previous claims that Comey told him was not the target of the probe. 

Comey’s testimony kind of proves Trump right. It also damns him entirely. - When President Donald Trump fired FBI Director James Comey on May 9, one line in his letter stuck out as odd: “I greatly appreciate you informing me, on three separate occasions, that I am not under investigation.” And now we know why Trump put that line in the letter to begin with: Comey wasn’t saying it often enough in public for Trump’s liking, so Trump said it for him. The testimony provided by Comey in advance of a Senate Intelligence Committee hearing Thursday morning, detailing several one-on-one conversations he had with Trump about the Russia investigation (and a related investigation into former National Security Adviser Mike Flynn), might seem to support Trump on this front. There are, in fact, three conversations in which Comey recounts telling Trump that he is not at present being investigated in the Russia probe. Not being investigated isn’t the same as being proven innocent. But the language Comey uses is consistent with what Trump said in the letter, though not with the implication that Trump was free and clear of any possible interest from the FBI.Trump and Republicans are reading the testimony as proof not only that Trump was honest in his letter, but that people need to stop making so much of the Russia investigation because the president’s own hands are clean. Comey had perfectly good reasons for not publicly divulging details of an ongoing counterterrorism investigation. Trump wasn’t cleared in the investigation; just because it hadn’t yet identified him as a person of interest didn’t mean that the FBI wouldn’t find new evidence pointing to him down the road. In his testimony, Comey indicates he didn’t want to tell the public anything he’d feel the need to take back. To him, it was better not to say that Trump wasn’t under investigation to begin with than to have to go before the public a second time to say that now he was. But he never explained this to Trump — and Trump appears to have fixated on the fact that he wasn’t under investigation as the panacea that would magically dispel the “cloud” hanging over his head due to the Russia investigation. When Comey wouldn’t divulge that, Trump did it himself — by firing Comey. 

Comey Testifies AG Lynch 'Pressured' Him To Use Clinton Campaign Language; "It Gave Me A Queasy Feeling" -- In perhaps the most stunning section of former FBI Director Comey's testimony today, he detailed his interaction with then Attorney General Loretta Lynch about his specific language about the Clinton Email "investigation."  For the first time, former FBI Director James Comey, who is testifying today before the Senate Intelligence Committee, said that President Obama's Attorney General Loretta Lynch asked him to downplay the Hillary Clinton's email scandal... As DailyCaller notes, Comey said Lynch instructed Comey not to call the criminal investigation into the Clinton server a criminal investigation. Instead, Lynch told Comey to call it a “matter,” Comey said, “which confused me.” Comey cited that pressure from Lynch to downplay the investigation as one of the reasons he held a press conference to recommend the Department of Justice not seek to indict Clinton. Still, we note that despite his admission that the conversation "gave me a queasy feeling,"Comey went ahead and followed her orders because "that was not a hill i wanted to die on..."

What We Learned, And Didn’t, From Comey Testimony -- We learned a few things from former FBI director James Comey’s testimony this morning before the Senate Intelligence Committee.

  • * Earlier reports about Comey’s memos about his interactions with President Trump left open the possibility that he had made such notes throughout his career. This morning, he said that he did not write the memos as a matter of course but as a preemptive defense against the possibility that Trump would lie about those interactions.
  • * We got an on-the-record confirmation by Comey that Trump had indeed asked for his loyalty -- something that was promptly disputed by a source who spoke off the record to the Associated Press. Comey also stood by the claim that Trump had suggested that Comey abandon the FBI's investigation of former National Security Adviser Michael Flynn. When asked whether he had done that “in any way, shape, or form,” Trump has previously said no.
  • * Trump’s former National Security Adviser Michael Flynn is under criminal investigation, Comey confirmed.
  • * Comey said that he expected Attorney General Jeff Sessions to recuse himself from the investigation into Russian intervention in the 2016 elections, and that Comey could not explain in open hearings all the reasons he expected that recusal. That’s a major blow to Sessions’s credibility, and a spur to further investigations by Congress and journalists.
  • * Everything Comey has said is consistent with one theory of the case: Trump believes that he is guiltless of any collusion with Russia and was frustrated that Comey wouldn’t say there was no evidence he had done anything wrong.
  • * Comey reported that Trump had encouraged him to find out if anyone in his orbit had acted improperly with the Russians.
  • * We can infer from Comey’s refusal to comment in open session about the “Steele dossier” that he does not (and that the FBI at the time Comey departed did not) consider it entirely discredited.
  • * Comey doesn’t have good answers to some questions: If he felt it was necessary to issue a public statement that Clinton had not knowingly broken any laws by setting up and using her server, why couldn’t he issue a public statement saying Trump was not under a criminal investigation? 1 Why didn’t he push back more vigorously if he felt Trump was trying to corrupt the FBI? After he was fired, why did he have a friend leak Comey's memo recounting a meeting with Trump instead of just releasing it himself? Why can’t he make the memo public now?
  • * Comey confirmed reports that Loretta Lynch, the attorney general at the tail end of the Obama administration, had told him to refer to the FBI’s inquiry into Clinton’s private server as a “matter” rather than as an “investigation.”

What we didn’t get from the public part of these hearings is anything that will cause pro-Trump or anti-Trump partisans to reconsider their basic positions. The president’s Republican defenders are still able to make four accurate points in his defense. 1) The president has the legal authority to order the FBI to shut down an investigation. 2) What the president actually said was more ambiguous than, “Shut down this investigation.” 3) We are nowhere close to having proof of the elements of the crime of obstruction of justice. 4) Trump may not have been aware of how unusual it is for a president to exert pressure on the FBI about its investigations.

James Comey’s Remarkable Story About Donald Trump -- President Trump appears to be guilty of obstruction of justice. That’s the only rational conclusion to be reached if James Comey’s opening statement for his planned testimony before the Senate Intelligence Committee, on Thursday, is to be believed.  The statement, alongside other established facts, doesn’t just lay out evidence; it tells a story. In this tale, the President knows how much power he possesses and dangles it before those who serve him. The F.B.I. director was in the middle of a ten-year term, which was designed to give him some insulation from political pressure, but there was a catch: Trump could still fire him. And Trump clearly knew it, as he repeatedly demanded Comey’s personal loyalty. An early conversation, on January 27th, over dinner in the Green Room of the White House, set the tone: Comey was to answer to Trump, or the F.B.I. director would be gone. As Comey put it, he saw that Trump was trying to set up a “patronage relationship.”Soon enough, Trump called on Comey’s loyalty. The President was worried about the F.B.I.’s Russia investigation, and he wanted a premature exoneration from Comey. The director hedged, clearly uncomfortable with the demand, but finally told Trump, in rather convoluted ways, that he was not a subject of the investigation—at least not yet. But the Russia probe continued to worry the President, and soon he had more demands. The climax of Comey’s statement is his cinematic recounting of a meeting with the President in the Oval Office on February 14, 2017. The drama begins after the meeting, when the President instructs the other officials present, including Vice-President Mike Pence, to leave the room. Trump even takes the extraordinary step of asking the Attorney General, Jeff Sessions, who was Comey’s boss, to go, in order to allow the President to speak with the director alone. Trump then shoos Jared Kushner, his son-in-law, out of the Oval Office, too. (When Reince Priebus, the chief of staff, looks in, a while later, Trump also asks him to stay out of the conversation.) This insistence on a one-on-one meeting suggests what prosecutors like to call “consciousness of guilt.” All these high-ranking officials had clearance to hear anything that Trump might want to say to the director, so the fact that the President wanted them out of earshot would seem to indicate that he knew that what he was telling Comey was wrong—that it was, indeed, an obstruction of justice.

Trump claims 'total and complete vindication' from 'leaker' Comey - Donald Trump broke a nearly two-day silence on Twitter Friday morning to slam James Comey as a “leaker” the day after the ousted FBI director’s blockbuster testimony before Congress. Trump claimed “total and complete vindication” from the Senate Intelligence Committee’s hearing, in which Comey accused him of “lies” and requesting the FBI end a criminal investigation. Despite so many false statements and lies, total and complete vindication...and WOW, Comey is a leaker! — Donald J. Trump (@realDonaldTrump) June 9, 2017  Surprising many, Trump had remained silent on Twitter throughout the day on Thursday, when Washington was riveted by Comey's first public comments since the president fired him early last month.  Comey said he believed Trump terminated him over the FBI's investigation into Russian meddling in the 2016 election. His testimony included the revelation that he authorized a close friend to leak to the press a memo describing a meeting with Trump in which the president asked him to "let go" of the probe into former national security adviser Michael Flynn. "I didn't do it myself for a variety of reasons, but I asked him to because I thought that might prompt the appointment of a special counsel," Comey said. Trump's team pounced on the revelation. In a statement read to reporters, Marc Kasowitz, the president's outside attorney, slammed the "leak" and categorically denied that Trump ever "directed or suggested" that Comey stop investigating anyone.

THE MEMO: Bruised by Comey, Trump avoids catastrophe | TheHill: As the smoke begins to clear from James Comey’s dramatic testimony on Capitol Hill, one thing has become clear: It was bad for President Trump — but it could have been worse. The fired FBI director delivered several gut-punches to Trump and his administration, but there was no knockout blow. Comey’s testimony enflamed Democrats and progressives, whose appetite to impeach Trump is growing by the day. But for that to become a realistic possibility, Republicans would need to desert the president. There were few signs of that happening around the dais of the Senate Intelligence Committee. While the Republican members did not challenge the veracity of Comey’s testimony, they appeared skeptical of some of his interpretations of his interactions with Trump. None suggested they believed the president had obstructed justice. Still, the political world has been shaken and much remains uncertain. The foundations had been laid the day before, when Comey’s opening statement was released. The seven-page document was full of vivid detail, including Comey’s account of an Oval Office meeting with Trump on Feb. 14, the day after Michael Flynn resigned as national security advisor. On that occasion, Comey said, the president told him Flynn was a “good guy” and expressed the wish that “I hope you can let this go,” an apparent reference to the FBI investigation into Flynn, which encompassed his call with a Russian ambassador after the election. 

Comey Obliterates NY Times' Fake News: "Story Was Almost Entirely Wrong" -- For those of you who continue to consume anonymously-sourced news from the likes of CNN, NYT, WAPO, etc, as pure fact and a perfect substitute for actual, unbiased journalism, while blindly ignoring the overwhelming evidence which continues to suggest these outlets are simply pushing a sensationalized narrative aimed at bringing down an administration of which they disapprove, please consider Comey's testimony from earlier today in which he describes a February NY Times story, which alleged numerous contacts between Trump associates and Russia, as "almost entirely wrong"

    • Cotton:  "On February 14 the New York Times published a story, the headline of which was "Trump Campaign Aides Had Repeated Contacts With Russian Intelligence."  You were asked earlier whether that was an inaccurate statement and you said you said 'in the main.'  Would it be fair to characterize the story as 'almost entirely wrong?'"
    • Comey: "Yes."

#Comey says that NYT story claiming that the Trump campaign had repeated contacts with Russia was "ENTIRELY WRONG" For those who missed it, we covered the original New York Times article in a post entitled "NYTimes Reports Trump Aides' "Repeated Contact" With Russian Intel Officials, Admits No Collusion Discovered." Meanwhile, in earlier testimony with Senator Risch, Comey further explained why anonymously sourced stories can often be pure "nonsense."

    • Risch:  "So the American people can understand this, that report by the New York Times was not true, is that a fair statement?"
    • Comey:  "In the main it was not true.  And, again, all of you know this, maybe the American people do not, the challenge, and I'm not picking on reporters, about writing stories about classified information is, the people talking about it often don't really know what's going on and those of us who actually know what's going on are not talking about it. And we don't call the press to say 'hey, you got that thing wrong about his sensitive topic.'" ""I mentioned to the chairman the nonsense around what influenced me to make the July 5th Statement.  Nonsense, but I can't go explaining why it's nonsense."

    New York Times stands by story James Comey called into question - Former FBI Director James Comey's testimony on Thursday backed up some of the anonymous-sourced news reports about the FBI, but Comey took exception to one specific New York Times story from February."In the main, it was not true," Comey told the Senate Intelligence Committee, disputing a February 14 story titled "Trump Campaign Aides Had Repeated Contacts With Russian Intelligence." Comey's comment was part of a broader media critique. But The Times shot back a few hours after his testimony, saying it has found "no evidence that any prior reporting was inaccurate." Comey never specified what portions of the story were supposedly wrong. In a statement, The Times said, "Neither the F.B.I., nor Mr. Comey would comment or elaborate on what Mr. Comey believes to be incorrect. Should they provide more information, we would review that as well." At issue is the reliability of anonymous sources and the judgment of news organizations who report information from these sources. Media critics, particularly pro-Trump voices on the right, have been skeptical and sometimes downright hostile toward news outlets that have relied on anonymous sources for information about ongoing probes into Russian interference in the 2016 election. The news organizations say they have to protect their sources in some situations.  But journalists have occasionally been led astray by sources, resulting in corrections or clarifications to stories.

    Trump punches back, accuses Comey of lying to Congress (AP) — Punching back a day after his fired FBI director’s damaging testimony, President Donald Trump on Friday accused James Comey of lying to Congress and said he was “100 percent” willing to testify under oath about their conversations. Trump cryptically refused to say whether those private exchanges were taped — a matter at the heart of the conflicting accounts of what passed between them at a time when Comey was leading an FBI investigation into Russia’s interference in the presidential election and its ties to the Trump campaign. He asserted that nothing in Comey’s testimony to the Senate pointed to collusion with Russia or obstruction of justice. “Yesterday showed no collusion, no obstruction,” Trump said. He further denied ever asking Comey for his “loyalty,” contradicting Comey’s detailed sworn testimony about a private dinner the two men had in the White House. “No I didn’t say that,” Trump stated abruptly, taking questions at a joint press conference with Romanian President Klaus Iohannis in the Rose Garden. Asked if he would make that denial under oath, he said: “100 percent.” Trump’s aides have dodged questions about whether conversations relevant to the Russia investigation have been recorded, and so did the president, in series of teases. “Well, I’ll tell you about that maybe sometime in the very near future,” Trump said. Pressed on the issue, he insisted he wasn’t “hinting anything,” before adding: “Oh you’re going to be very disappointed when you hear the answer, don’t worry.”

    Trump's Lawyer Will File Leak Complaint Against Comey -- President Trump's outside counsel, Marc Kasowitz, will file a leak complaint regarding former FBI Director James Comey's leaked memos with the Department of Justice, a source close to the outside legal team tells NBC News, NBC reports. Kasowitz is expected to file the complaint with the DOJ's Inspector General and the Senate Judiciary Committee after Comey testified Thursday that he allowed a personal friend to leak unclassified memos of his conversations with the president to news outlets in hopes it would trigger the appointment of a special counsel."I asked a friend of mine to share the content of a memo with the reporter," Comey said during yesterday's Senate hearing. "I didn’t do it myself for a variety of reasons, but I asked him to because I thought that might prompt the appointment of a special counsel."As was revealed later in the day, Comey's friend was Columbia Law Professor Dan Richman.It was not clear if Comey was also the source of numerous other leaks originating at the FBI. Some republicans took issue with the fact that while the FBI had leaked much of the details of the FBI's ongoing investigation into Russia meddling, nobody had "leaked" that there was no ongoing probe against Trump personally. In a statement after Comey's testimony Thursday afternoon, Kasowitz labeled Comey as "one of these leakers" who are "actively attempting to undermine the president" and strongly suggested that federal authorities investigate Comey's leaks — even though the memo that Comey gave to a friend was not classified and was turned over after he was fired.

    Trump committed no crime. Democrats need to get over it. - Before the angry mob of breathless Democrats gets too spun up and ahead of itself, the anti-Trumpers should calm down and try to absorb just how preposterous it is to suggest that President Trump may have committed a criminal offense by supposedly obstructing justice during the Russia/Michael Flynn investigation.Consider for a moment what would have happened if Trump had placed an op-ed in a prominent newspaper, arguing that the investigation into his campaign and former national security adviser Flynn was misguided, a wasteful use of government resources, and that he thought it should stop. To do so would be foolish, but not criminal. Similarly, what if the president paraded up and down Pennsylvania Avenue in front of the Justice Department with a bullhorn shouting, “Stop the Flynn investigation!”?It would be unwise and inappropriate, but no one would say the president committed a crime. And he certainly could not be charged with obstruction of justice.So, if the president’s wishes about an investigation can be loud and public, how is it possible that he violated the law by having a private conversation with a member of his own administration? How can it be that a bold position made in public would be legal, yet an arguably reserved position made in private is somehow considered criminal?When it comes to obstructing justice before an audience, does size matter? I would love to hear from lawyers about this.Anyway, everyone should also carefully consider the arguments made by constitutional scholar Alan Dershowitz. Dershowitz presented some compelling legal insight. “The president,” he writes, “is the head of the unified executive branch of government, and the Justice Department and the FBI work under him and he may order them to do what he wishes.” Former FBI director James B. Comey likewise confirmed during yesterday’s testimony that, “as a legal matter, [the] president is the head of the executive branch and could direct, in theory, we have important norms against this, but direct that anybody be investigated or anybody not be investigated. I think he has the legal authority because all of us ultimately report in the executive branch up to the president.” “Norms” are important, and Trump is not big on playing by the rules, but that does not mean he has broken a law.

    House Intel Committee Tells Trump To Hand Over Comey Tapes "If They Exist" --Moments after an exchange between Trump and a reporter during a White House press conference, in which the president refused to publicly state if the "Comey tapes" exist - while insinuating that they do  - and that Trump will reveal an answer shortly... Reporter: "And you seem to be hinting that there are recordings of those conversations."Trump:  "I'm not hinting anything.  I'll tell you about it over a very short period of time....Oh, you're going to be very disappointed when you hear the answer. Don't worry."  ... the House Intel Committee formally requested that the White House produce any tapes (or memos) of such a conversation - if they in fact  exist - and that Trump hand them over within two weeks. House Intel Cmte tells the White House to hand over the tapes by June 23—if they exist. Kapur (@sahilkapur) June 9, 2017 Full statement from the House Intel Committee: — Today, Reps. Mike Conaway and Adam Schiff announced that they sent two letters related to the House Permanent Select Committee on Intelligence Russia Investigation.First, the Committee wrote to former Federal Bureau of Investigation Director James Comey to request any notes or memoranda in his possession memorializing  Comey to request any notes or memoranda in his possession memorializing discussions Comey had with President Trump.Second, the Committee wrote a letter to White House Counsel Don McGahn, requesting that he inform the Committee whether any White House recordings or memoranda of Comey's conversations with President Trump now exist or have in the past. To the extent they exist now, the Committee's letter asks that copies of such materials be produced to the Committee by June 23. And so the drama between Trump and Comey, which appeared to be on its way out, just got a fresh lease on life, with Friday, June 23 now set to be the next media frenzy day.

    Conflicts of Interest and Ethics: Robert Mueller and James Comey --  Coleen Rowley - Commentators display amnesia when they describe former FBI Directors Robert Mueller and James Comey as stellar and credible law enforcement figures.  Although these Hoover successors, now occupying center stage in the investigation of President Trump, have been hailed for their impeccable character by much of official Washington, the truth is, as top law enforcement officials of the Bush administration (Mueller as FBI Director and James Comey as Deputy Attorney General), both presided over post 9-11 cover-ups and secret abuses of the Constitution, enabled Bush-Cheney fabrications to launch wrongful wars, and exhibited plain vanilla incompetence. TIME Magazine would probably have not called my own disclosures a “bombshell memo” to the Joint Intelligence Committee Inquiry in May 2002 if it had not been for Mueller’s having so misled everyone after 9-11. Although he bore no personal responsibility for intelligence failures before the attack, since he only became FBI Director a week before, Mueller denied or downplayed the significance of warnings that had poured in yet were all ignored or mishandled during the spring and summer of 2001. Bush administration officials had circled the wagons and refused to publicly own up to what the 9-11 Commission eventually concluded, “that the system had been blinking red.” Failures to read, share or act upon important intelligence, which a FBI agent witness termed “criminal negligence” in later trial testimony, were therefore not fixed in a timely manner. (Actually some failures were never fixed.) Worse, Bush and Cheney used that post 9-11 period of obfuscation to “roll out” their misbegotten “war on terror,” which only served to exponentially increase worldwide terrorism. In the aftermath of the attacks, Mueller directed the “post 9-11 round-up” of around 1000 immigrants who mostly happened to be in the wrong place (NYC area) at the wrong time, as FBI Headquarters encouraged more and more detentions for what seemed to be essentially PR purposes. Field offices were required to report daily the number of detentions in order to supply grist for FBI press releases about FBI “progress” in fighting terrorism. Consequently, some of the detainees were brutalized and jailed for up to a year despite the fact that none turned out to be terrorists. Long before he became FBI Director, serious questions existed about Mueller’s role as Acting U.S. Attorney in Boston in effectively enabling decades of corruption and covering up of the FBI’s elicit deals with mobster Whitey Bulger and other “top echelon” informants who committed numerous murders and crimes.  Current media applause omits the fact that former FBI Director Mueller was the top official in charge of the Anthrax terror fiasco investigation into the 2001 murders, which targeted an innocent man (Steven Hatfill) whose lawsuit eventually forced the FBI to pay $5 million in compensation. Mueller’s FBI was also severely criticized by Department of Justice Inspector Generals finding the FBI overstepped the law improperly serving hundreds of thousands of “national security letters” to obtain private (and irrelevant) metadata on citizens, and for infiltrating nonviolent anti-war groups under the guise of investigating “terrorism.”

     Deutsche Bank asks for more time for U.S. query on Trump, Russia: source | Reuters: Germany's largest bank has asked for more time to respond to a request from Democrats on a U.S. House of Representatives panel for details about U.S. President Donald Trump's possible ties to Russia, a person familiar with the matter said on Monday. Deutsche Bank's external counsel sent a letter dated Friday June 2 to the Democrats saying it needed additional time, the source told Reuters. The person spoke on condition of anonymity and declined to specify how much more time the bank's counsel needed. Several Democrats on the U.S. House Financial Services Committee sent a letter last month to John Cryan, chief executive officer of Deutsche Bank, seeking details that might show if Trump's loans for his real estate business were backed by the Russian government. The letter asked for details of internal reviews of Trump's transactions and gave the German bank until Friday to respond. Deutsche Bank has declined to comment about any business dealings with Trump. The Republican president is mired in controversy over FBI and congressional probes into alleged Russian meddling in the 2016 U.S. presidential election and potential collusion between Moscow and the Trump campaign. Moscow has denied the allegations, and Trump has denied any collusion. Maxine Waters, Democrat representative for California and a member of the committee, was one of the original letter's five signatories. She confirmed through a staff member on Monday that Deutsche did not provide "substantive responses to our requests"."Congress remains in the dark on whether loans Deutsche Bank made to President Trump were guaranteed by the Russian government, or were in any way connected to Russia," the Democrats wrote in their request to Deutsche Bank. "It is critical that you provide this committee with the information necessary to assess the scope, findings and conclusions of your internal reviews," they said. 

    Deutsche Bank Says It Can’t Share Information on Trump Dealings -- Deutsche Bank said it can’t comply with a request to hand over information related to its relationship with Donald Trump and trades from the bank’s Moscow operation as political opponents seek to probe the U.S. President’s links with Russia. The lender is required by law to maintain confidentiality of non-public customer information, Deutsche Bank lawyers said in a letter responding to a request from five Democratic Party lawmakers to hand over its findings on loans made to Trump and trades made from Moscow. Known as the “mirror trading” scandal, the trades helped move about $10 billion out of the country. “Deutsche Bank, like other financial institutions, is not permitted to disclose details related to its customers,” lawyers Steven R. Ross and Leslie B. Kiernan of Akin Gump said in a letter published on the bank’s website Friday. “This is true even if the individual is a government official or well-known person, and even in circumstances where the individual has made some disclosure regarding their relationship with their banking institution.” The bank’s relationship with Trump has come under heightened public scrutiny since the former real-estate tycoon was elected president in November. Several Democratic members of Congress, led by Representative Maxine Waters of California on the House Financial Services Committee, have started public attempts aimed at pressuring Deutsche Bank to reveal details on its dealings with Trump, largely citing concerns that the administration may treat the German lender’s executives more leniently. The same group of Democrats demanded in March that Representative Jeb Hensarling, chairman of the committee, hold a hearing to explore the bank’s conduct in the Russian mirror-trading scandal, as part of an effort to ensure that the Justice Department investigation wasn’t influenced by the lender’s relationship with Trump. “President Trump’s conflict of interest with Deutsche Bank...may undermine the independence and impartiality of the Department’s ongoing investigation and diminish the likelihood that Deutsche Bank and its senior leadership will be brought to justice,” the lawmakers wrote in March. The mirror-trading scheme allowed some of the bank’s wealthy clients in Moscow to convert rubles into western currency through the simultaneous purchase and sale of publicly traded shares, investigators have found. While Deutsche Bank has reached settlements on the Russia deals with several financial watchdogs, it has yet to conclude the probe that is being conducted by the DOJ. As part of those settlements, the New York Department of Financial Services fined the bank $425 million and mandated an independent monitor to review its anti-money laundering programs.

    Sessions offered to resign before Trump’s trip abroad - POLITICO: Attorney General Jeff Sessions offered his resignation to President Donald Trump amid Trump’s rising frustration with the series of events that culminated in the appointment of a special counsel to investigate his campaign’s contacts with Russian officials during last year’s election. Trump ultimately refused Sessions’ offer, which came just before Trump embarked on his first international trip in late May, according to a person who regularly speaks with Sessions. This person said the attorney general offered to resign out of a sense of obligation because he was aware of how angered Trump was about his decision to recuse from the Russia investigations in March. White House spokeswoman Sarah Huckabee Sanders did not respond to a request for comment about Sessions’ resignation offer. Justice Department spokeswoman Sarah Isgur Flores declined to comment.In recent days however, and with fired FBI Director James Comey’s Thursday testimony to the Senate Intelligence Committee set to once again put the spotlight on the Russia investigation, the White House and Trump have declined to give Sessions a vote of confidence.  Trump has continuously — sometimes publicly — expressed his frustration with Sessions’ decision to formally step back from any investigation of Russian election interference. A day after Sessions announced his recusal, Trump gathered his senior aides in the Oval Office for a meeting, during which he fumed about Sessions’ decision.

    Jeff Sessions offered to quit during exchange with Trump (CNN) President Donald Trump and Attorney General Jeff Sessions have had a series of heated exchanges in the last several weeks after Sessions recused himself from the Russia probe, a source close to Sessions told CNN Tuesday. A senior administration official said that at one point, Sessions expressed he would be willing to resign if Trump no longer wanted him there. The frustration comes at a critical juncture for Trump. Former FBI Director James Comey is set to testify Thursday about his private discussions with Trump and the Russia investigation has lapped into the White House, with questions about the President's son-in-law and adviser, Jared Kushner. Tuesday afternoon, White House press secretary Sean Spicer declined to say whether Trump has confidence in Sessions. "I have not had a discussion with him about that," Spicer said. As of 9 p.m. ET Tuesday, the White House still was unable to say whether or not the President backs his attorney general, a White House official said. The official said they wanted to avoid a repeat of what happened when Kellyanne Conway said Trump had confidence in Flynn only to find out hours later that the national security adviser had been pushed out. Sessions recused himself from the Russia probe in March, shortly after The Washington Post reported on undisclosed meetings between him and the Russian ambassador to the US, Sergey Kislyak. Sessions remains at the Justice Department, where a spokeswoman told CNN that he is not stepping down.

    Aides pressuring Trump not to fire Sessions: report | TheHill: President Trump is facing pressure from aides not to fire Attorney General Jeff Sessions, Reuters reported Wednesday. Aides have warned the president that ousting his longtime political ally and top law enforcement official would only add to the controversies mounting around his administration in the wake of his decision to fire FBI Director James Comey last month. "That's the advice he's been given. But he might not listen to that advice," the source told Reuters. Sessions reportedly recently offered to resign, telling the president that he needed the freedom to perform his job, though Trump ultimately did not accept the offer. Trump is said to be upset by Sessions' decision in March to recuse himself from all matters regarding the Justice Department's ongoing investigation into Russian election meddling and possible coordination between the Trump campaign and Moscow. The president is also said to blame Sessions for Deputy Attorney General Rod Rosenstein's decision last month to appoint a special counsel to oversee the Russia investigation. While the appointment took both Trump and Sessions by surprise, the president has pointed the finger at Sessions' recusal. But despite the pressure, one source noted that Trump does not always stick to the advice of his aides and associates.

    Russian Bank Chairman Met With Kushner, Citigroup and JPMorgan Chase -- Pam Martens - Headline writers at the New York Times need to sharpen their pencils. Yesterday’s New York edition carried a front page article that links two of the biggest Wall Street banks, Citigroup and JPMorgan Chase, to the Jared Kushner affair with the Russian banker, Sergey Gorkov, Chairman of the state-owned Russian bank Vnesheconombank (VEB) which has been under U.S. sanctions since 2014.  But readers would have missed that completely if they only read the softball headline, which failed to mention either bank.Everyone on Wall Street has been waiting for the next shoe to drop in the Jared Kushner episode. Kushner is under FBI and Congressional probes over allegations that he met in December with Gorkov while simultaneously attempting to set up a secret channel to communicate with Russia using its equipment inside its own embassy – ostensibly to thwart U.S. intelligence snooping. Kushner then failed to list that meeting, as well as one or more meetings with the Russian Ambassador, Sergey Kislyak, on his form for security clearance until the meetings became public knowledge.That shoe has now dropped. Wall Street On Parade reported on May 30 that some of the biggest names on Wall Street are sitting with hundreds of millions of dollars of that sanctioned Russian bank’s bonds and notes in their mutual fund portfolios. (See related article below.) Yesterday, the New York Times reported that when Gorkov came to Manhattan to meet with Kushner in December, he also “met with bankers at JPMorgan Chase, Citigroup and another, unidentified American financial institution.” The article notes that “Goldman Sachs bankers also tried to arrange a meeting but ultimately had a scheduling conflict.” The Times’ reporters are quick to note that the meetings with the U.S. banks are not outlawed by the sanctions but then the paper of record climbs out on a very shaky limb, writing: “Citi and JPMorgan had long, established relationships clearing financial transactions for VEB in the United States, activities not affected by the sanctions.” According to our read of the exact language of the sanctions, any transactions between U.S. banks and VEB may well be unlawful or, at the very least, frowned upon by the U.S. government. 

     Kushners Hunting Hard for a Loan to Pay Back Chinese Investors - The Kushner family real estate company is seeking a $250 million loan to pay back Chinese investors in a New Jersey luxury tower but finding some major U.S. banks wary of the controversies around its White House links and the visa program used to attract the investors. Kushner Cos. is sending out feelers for the loan against its 50-story Trump Bay Street in Jersey City. It would keep $50 million and use the rest to repay the investors and pay off a mortgage on the building, according to a person familiar with the negotiations who asked not to be identified because the talks are private. The company, which belongs to the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser, funded about a quarter of the $194-million development through the EB-5 visa program that grants wealthy foreigners green cards in exchange for investing in U.S. projects. Some large U.S. banks are shying away from the transaction because of the property’s connection to Kushner and the visa program, the person said. Unregulated lenders and non-U.S. banks will probably step into the breach. A Kushner Cos. spokesman declined to comment. The EB-5 program requires a foreigner to invest at least $500,000 in a project that helps an area with high unemployment or in need of development in exchange for a permanent resident visa. Lawmakers in Washington have been pushing for EB-5 changes for several years, calling for stricter oversight to guard against fraud and provide better access to economically strapped regions. Senator Chuck Grassley, an Iowa Republican, has introduced bipartisan legislation to end the program. Last month, Trump renewed the program through September. 

    Trump Funneled Cancer Charity Money to His Businesses, Associates  --David Farenthold of The Washington Post even won the Pulitzer Prize solely for his reporting on Trump's charitable (mis)givings, which included using $20,000 of his foundation's money to purchase a portrait of himself. Such shady practices apparently weren't limited to his own charity. According to a report released Tuesday by Forbes, once his son Eric's charity golf tournament started raising a substantial amount of money for St. Jude Children's Research Hospital, which specializes in pediatric cancer, Trump began charging for the use of Trump Organization golf courses, and, ultimately, funneling the money the tournament raised into other charities that benefited Trump's business interests. Eric Trump, who first hosted the Eric Trump Foundation golf invitational in 2007, has always maintained that he is able to hold the event on Trump Organization courses free of charge, and that much of the food, drinks, entertainment and equipment is either comped or paid for by sponsors. According to tax filings obtained by Forbes, the event expenses averaged around $50,000 for each of its first four years.Then, in 2011, the cost rose to $142,000. This was allegedly because Trump learned that the course was being used without charge, and became upset. "Mr. Trump had a cow," Ian Gillule, a former membership and marketing director at Trump National Westchester, told Forbes. "He flipped. He was like, 'We're donating all of this stuff, and there's no paper trail? No credit?' And he went nuts. He said, 'I don't care if it's my son or not—everybody gets billed.'"  Trump then essentially laundered money through the tournament by having his foundation donate to his son, in order to cover the event fees that the Trump Organization was now being paid. From Forbes:

    Trump’s new American Idea hotel chain should “alarm” every American - Eric Trump and his brother Donald Trump Jr. are looking to cash in on their father’s presidency, and they’ll be doing so with their creation of a new three-star hotel chain. Branded “American Idea,” the Trump Organization’s newest venture will consist of patriotic-themed affordable hotels — perfect for the white working class President Donald Trump theoretically appealed to on the campaign trail. However many questions surrounding Trump’s potential conflicts of interest still remain, and experts have expressed constitutional as well as tax policy concerns because of the close-knit relationship between the Trump Organization and the Oval Office — especially after the recent revelation that the president has been discussing profit reports with his sons, according to multiple news reports. The chain will debut with three hotels in Mississippi, a state President Donald Trump won by 18 percentage points, according to the New York Times. But Eric Danziger, the chief executive of the Trump Organization’s hotels division insists the business model has nothing to do with politics.

    Eric Trump: Dems ‘not even people’ | TheHill: President Trump’s son Eric Trump on Tuesday said Democrats are “not even people” to him after their obstruction of his father’s agenda. “I’ve never seen hatred like this,” he said on Fox News’s “Hannity” Tuesday night. “To me, they’re not even people. It’s so, so sad. Morality’s just gone, morals have flown out the window and we deserve so much better than this as a country." “You see the Democratic Party, they’re imploding. They’re imploding. They became obstructionists because they have no message of their own.” Trump additionally criticized the Democratic National Committee’s (DNC) leadership without directly naming Chairman Tom Perez. “You see the head of the DNC, who is a total whack job,” he told host Sean Hannity. “There’s no leadership there.” “They lost the [2016 presidential] election that they should have won because they spent seven times the amount of money that my father spent.” Democrats have tried capitalizing on liberal dissatisfaction with Trump’s administration and its agenda despite Republicans controlling the White House and both chambers of Congress. Rep. Al Green (D-Texas) has emerged as a vocal critic of Trump and is reportedly readying the articles of impeachment that mark the first official step of any congressional bid to remove a sitting president. 

    DOJ: Trump can accept payments from foreign governments | TheHill: Lawyers for the Justice Department are arguing that President Trump isn’t violating a Constitutional provision that bars federal officials from accepting payments from foreign governments because the clause doesn’t apply to certain transactions. In a new brief asking a judge to throw out a lawsuit brought against Trump by ethics watchdog Citizens for Responsibility and Ethics in Washington (CREW), DOJ lawyers contend that the foreign emoluments clause doesn’t apply to “fair-market commercial transactions” like payments for hotel rooms and golf club fees, according to Bloomberg. Trump administration lawyers also argue that CREW and other plaintiffs lack legal standing to bring the case against Trump and that Congress, not the court system, should determine whether Trump is in violation of the emoluments clause.CREW filed the lawsuit during Trump’s first week in office “to stop President Trump from violating the Constitution by illegally receiving payments from foreign governments." "We did not want to get to this point. It was our hope that President Trump would take the necessary steps to avoid violating the Constitution before he took office," CREW Executive Director Noah Bookbinder said at the time. "He did not. His constitutional violations are immediate and serious, so we were forced to take legal action." The lawsuit has since added several new plaintiffs, including an association of restaurants and restaurant workers and a woman who books banquet halls for Washington, D.C., hotels. 

    Trump Capitalism: Monetizing the Presidency - Pam Martens  --The media’s focus on the Russian investigation has over shadowed the simple truth of what is going on here. Donald Trump’s life has been defined by one paramount goal: making deals for personal enrichment. At 70 years of age, this man is not going to change his stripes — as he and his family have proven time and time again since he prevailed in the November election. The first clue came on October 26, 2016 – less than two weeks before the Presidential election. Presidential candidate Trump utilized his taxpayer-funded Secret Service contingent to oversee a ribbon-cutting ceremony at his new Trump International Hotel which was opening at the Old Post Office in Washington, D.C., just two blocks from the White House. Among his 300 invited guests was Senator Jeff Sessions, the man he would later name to head the U.S. Justice Department. Trump’s daughter, Ivanka, captured the event perfectly with this statement: “With the exception of 1600 Pennsylvania Avenue, this is the most coveted piece of real estate in Washington, D.C.” That Trump thumbs his nose at the rule of law when it comes to his own personal enrichment is suggested in his refusal to follow the norms of blind trusts for his business holdings. Senator Elizabeth Warren and Congressman Elijah Cummings wrote to the Government Accountability Office (GAO) in November as follows: “A qualified blind trust, which must be approved by the Office of Government Ethics, would allow Mr. Trump to forgo reporting the details of some assets in his financial disclosures. The Ethics in Government Act explicitly prohibits Mr. Trump’s children from managing such a trust. The Act requires that, ‘Any officer or employee of a trustee or other entity who is involved in the management or control of the trust of a qualified trust’ not be ‘a relative of any interested party.’ To date, there has been no information released to the public indicating that Mr. Trump has prepared a blind trust.” Then there was the gag-worthy lawsuit that provided a window into how Melania Trump viewed her opportunities as the First Lady of America. The First Lady sued the Daily Mail newspaper for defamation after her husband was inaugurated. In the lawsuit, she described in detail her money-making opportunities as First Lady: “Plaintiff’s brand, and licensing, marketing and endorsement opportunities caused by the publication of Mail Online’s defamatory article, is multiple millions of dollars. Plaintiff had the unique, once-in-a-lifetime opportunity, as an extremely famous and well-known person, as well as a former professional model and brand spokesperson, and successful businesswoman, to launch a broad-based commercial brand in multiple product categories, each of which could have garnered multi-million dollar business relationships for a multi-year term during which Plaintiff is one of the most photographed women in the world.

    Intelligence Contractor Is Charged in First Leak Case Under Trump — An intelligence contractor was charged with sending a classified report about Russia’s interference in the 2016 election to the news media, the Justice Department announced Monday, the first criminal leak case under President Trump.The case showed the department’s willingness to crack down on leaks, as Mr. Trump has called for in complaining that they are undermining his administration. His grievances have contributed to a sometimes tense relationship with the intelligence agencies he now oversees.The Justice Department announced the case against the contractor, Reality Leigh Winner, 25, about an hour after the national-security news outlet The Intercept published the apparent document, a May 5 intelligence report from the National Security Agency.The report described two cyberattacks by Russia’s military intelligence unit, the G.R.U. — one in August against a company that sells voter registration-related software and another, a few days before the election, against 122 local election officials. The Intercept said the N.S.A. report had been submitted anonymously. But shortly after its article was published, the Justice Department said that the F.B.I. had arrested Ms. Winner at her house in Augusta, Ga., on Saturday. It also said she had confessed to an agent that she had printed out a May 5 intelligence file and mailed it to an online news outlet. It was not immediately clear who is serving as the defense lawyer for Ms. Winner, who has been charged under the Espionage Act.

    What We Know About Alleged Russia-Hacking-Report Leaker Reality Winner - On Monday evening, the Intercept published what appears to be a May 5 intelligence report from the National Security Agency that describes two cyberattacks carried out by Russian government hackers against employees of a company that provides technical support to state voting agencies, which occurred shortly before the 2016 election. (The Intercept’s Sam Biddle noted, “There’s nothing in the NSA report indicating the actual voting machines or vote tabulations were compromised” — though this certainly opens up a whole new dimension in the ongoing investigation into Russia’s election meddling and potential contact with the Trump campaign.)About an hour after the report was published, the Justice Department announced that 25-year-old Reality Leigh Winner, a government contractor, has been charged with taking classified material from a government facility and mailing it to a news outlet. Here’s what we know about the case so far.  Winner is a contractor with Pluribus International Corporation, working in a U.S. government facility in Georgia, according to the criminal complaint. She’s been working in that location since mid-February and had top-secret clearance.The Intercept is not named in the complaint, but it says the government became aware of the breach when a news outlet reached out to an unnamed government agency about an upcoming story in late May. According to the search warrant affidavit, a reporter tried to verify the document with a government contractor with whom he had a previous relationship. The reporter texted photos of the report on May 24, saying he received it in the mail, and it was postmarked “Augusta, Georgia.” The contractor initially told the reporter the document appeared to be fake, but they reported the interaction to the government agency anyway. The reporter later informed the contractor that an official at the agency had verified the documents.  Investigators noted that the pages were creased, which suggested they were printed out, then carried out of a secure facility and sent to the media outlet. An internal probe determined only six people had printed the document, including Winner. The employees’ desk computers were searched, and investigators found Winner was the only one who had email contact with the news outlet in question. Winner was charged under the Espionage Act and faces up to ten years in prison for leaking classified information.

    WikiLeaks Offers $10,000 To Get Intercept Reporter Behind NSA Story Terminated ---Once upon a time Wikileaks was the go to service for any aspiring leakers. Also, once upon a time Wikileaks was on (somewhat) friendly terms with the Intercept, a website which reportedly focuses on government security in the name of protecting the public interest. All that ended overnight, when in the ongoing drama over anti-Trump NSA contractor Reality Winner, who leaked a top secret document allegedly "exposing" attempted GRU interference in the US election not to Wikileaks but to the Intercept, Julian Assange's organization offered a $10,000 reward aimed at getting the reporter behind The Intercept's story fired, after it was revealed that the source behind the story has been arrested. As reported last night, the DOJ announced that it had arrested Reality Leigh Winner, a 25-year-old government contractor (who was very clearly not a Donald Trump fan) for leaking the classified documents to the Intercept.  Investigators were able to find Winner in part, according to a government court filings, because of clues gained when an Intercept reporter showed the leaked report to the government. WikiLeaks tweeted late Monday night it would pay a $10,000 bounty "for information leading to the public exposure & termination of [the] 'reporter' who asked a government agency to verify a leaked report without removing possibly incriminating evidence about its leaker. 

    Edward Snowden Issues Statement On Arrest Of NSA Leaker Reality Winner - One day after the DOJ announced the arrest of NSA leaker Reality Leigh Winner for distributing top secret NSA files to The Intercept, the "original NSA leaker" Edward Snowden, who has been proactive in advocating for whistleblower rights in the years since he himself disclosed countless NSA documents exposing the extent of to which the NSA spied on America's own population, has now given an official statement through the Freedom of the Press Foundation on Winner's arrest, expressing concern about the charges brought against her. "The prosecution of any journalistic source without due consideration by the jury as to the harm or benefit of the journalistic activity is a fundamental threat to the free press." His full statement is below:

    Hey Intercept, Something is Very Wrong with Reality Winner and the NSA Leak - An NSA document purporting to show Russian military hacker attempts to access a Florida company which makes voter registration software is sent anonymously to The Intercept. A low-level NSA contractor, Reality Winner, above, is arrested almost immediately. What’s wrong with this picture? A lot. Start with the question of who benefits — cui bono— same as detectives do when assessing a crime.

      • — Trump looks bad as another trickle of information comes out connecting something Russian to something 2016 election. Intelligence community (IC) looks like they are onto something, a day or so before ousted FBI Director James Comey testifies before Congress on related matters.
      • — The Intercept looks like it contributed to burning a source. Which potential leaker is going to them in the future? If potential leakers are made to think twice, another win for the IC.
      • — The FBI made an arrest right away, nearly simultaneous to the publication, with the formal charges coming barely an hour after The Intercept published. The bust is sure thing according to the very publicly released information. No Ed Snowden hiding out in Russia this time. IC looks good here.
      • — More evidence is now in the public domain that the Russians are after our election process. Seems as if the IC has been right all along.

    Now let’s look at what we know so far about how this happened.

    Leaked NSA Report Short on Facts, Proves Little in ‘Russiagate’ Case - Winner, perhaps emboldened by the recent spate of highly classified leaks related to allegations of collusion between the Trump administration and Russia, allegedly made the unfortunate (and illegal) decision to anonymously mail a copy of the highly classified document to The Intercept, an online magazine that specializes in publishing leaked material. U.S. government investigators reportedly uncovered her responsibility for the leak, and Winner was arrested. The NSA document—titled “Russia/Cybersecurity: Main Intelligence Directorate Actors [Redacted] Target U.S. Companies and Local U.S. Government Officials Using Voter Registration-Themed Emails, Spoof Election-Related Products and Services, Research Absentee Ballot Email Addresses; August to November 2016”—provides, on its face, a damning indictment of the Russians. Following in the footsteps of the Dec. 29, 2016, White House statement announcing sanctions targeting Russia, and the CIA-FBI-NSA joint national intelligence assessment on Russia’s influence campaign targeting the 2016 election, the NSA analysis makes blanket assertions of the involvement of the Russian GRU in the cyberattack on the election. The opening paragraph of the leaked NSA document states: Russian General Staff Main Intelligence Directorate actors … executed cyber espionage operations against a named U.S. company in August 2016, evidently to obtain information on elections-related software and hardware solutions. … The actors likely used data obtained from that operation to … launch a voter registration-themed spear-phishing campaign targeting U.S. local government organizations.  The strength of this assertion, however, collapses when one examines the colored chart that accompanied the text of the report detailing the “Spear-Phishing Campaign TTPs used Against U.S. and Foreign Government Entities” (TTPs are tactics, techniques and procedures). Nothing in the document’s confirmed information links it to the GRU. The GRU attribution is presented for contextual purposes only. It is an inferred command relationship to a redacted cyberoperations management capability that is linked to the confirmed cyberoperators only through analysis (i.e., best guess), not fact.The NSA document, both in its title and text, is therefore misleading in the extreme. There is simply no fact-based information provided in the report that confirms that the events reported on were being organized and managed by the Russian GRU, despite the document’s assertions otherwise. This lack of confirmation of any fact-based linkage between the GRU and the cyberattacks on the 2016 election in the NSA document is striking in another regard. The NSA has always been assumed to be the agency that possessed “smoking gun” evidence when it came to Russian attribution in the cyberattacks on the American electoral process.

    ‘I want to burn the White House down’: NSA leaker Reality Winner, 25, is DENIED bail as prosecutors claim she may have stolen more top secret information, was fascinated with Islamic terrorism and planned to play the ‘pretty, white girl’ card in court -  Reality Winner portrayed little emotion in court Thursday as she was denied bond in her federal espionage case after the government alleged that she may have stolen other top secret information and poses an ongoing risk to national security.The Air Force veteran, 25, is accused of mailing a classified report on a Russian military intelligence cyber-attack in 2016 to a news website. She entered a plea of not guilty before Judge Brian K. Epps at U.S. District Court in downtown Augusta, Georgia on Thursday afternoon after she was charged with a single count of 'willful retention and transmission of national defense information'.Winner was brought into court, in an orange jumpsuit with her hair braided in a top knot, by two federal marshalls. Her hands were cuffed behind her back and she appeared to stand to attention when addressed by the judge. She spoke only to respond: 'Yes, your honor' in a soft voice.The prosecution made its case for Winner to be detained based on evidence that one prosecutor called 'downright frightening'. The prosecution alleged that Winner is 'extremely intelligent' and may have removed information from a 'Top Secret computer on a USB drive' while she was on active duty and stated that the thumb drive has not been located.  The government is also concerned about what other intelligence Winner possesses as she told her mother in a recorded phone conversation from prison that she 'screwed up' over those 'documents'.The prosecution stated that Winner had a fascination with the Middle East and Islamic terrorism. The government claimed that they had found handwritten notes during a search at Winner's home which appeared to sympathize with Osama bin Laden and other terrorists.Authorities claim another handwritten statement found during a search of Winner's home allegedly read: 'I want to burn the White House down and go live in Kurdistan.'  Prosecutors said in recorded jailhouse calls that Winner told her mother how to play her side of the story in the media. They also said in a phone call she made to her sister that she was confident in how to 'play the court' during her bond hearing. 

    Thousands of millennials straight out of high school work for the NSA with top secret information -  Reality Leigh Winner, a 25-year-old National Security Agency contractor, reportedly confessed to an FBI agent this week that she was behind the leak of a document claiming that hackers connected to Russian military intelligence tried to breach US voting systems days before the 2016 election. Winner was arrested in Georgia on Saturday and charged with leaking top-secret intelligence to a news outlet, and she confessed on Monday. In the time since her identity was made public, a number of questions have been raised about how she gained top-secret security clearance and obtained access to such sensitive information. It's not unusual for government contractors to have top-secret clearance, said Bob Deitz, former top counsel at the NSA. "When you're hired for a position that requires a security clearance, you must receive that clearance," Deitz said. As a contractor for the NSA with Pluribus International, Winner was granted that clearance. It's also common for the NSA to hire younger professionals, like 25-year-old Winner, to do sensitive work for the agency. "The vast majority of people who do the National Security Agency's intercept work, who translate and analyze — most of them are fresh out of high school," intelligence historian Matthew Aid told NBC News. "There are thousands of 18 to 21-year-olds doing critically important and secret work around the world." Deitz echoed that assessment and said that there are plenty of people with top-secret clearances who are recent college graduates. Edward Snowden, the NSA contractor who leaked top-secret documents about the US spying on Americans, was 29 years old in 2013 at the time of the leaks.

    Lobbyists, industry lawyers were granted ethics waivers to work in Trump administration — Lance Leggitt helped collect $400,000 in fees last year while working as a lobbyist to try to influence Medicare policy at the Department of Health and Human Services — an agency where he now serves as chief of staff. Under an executive order signed by President Trump in January, lobbyists were banned from that kind of government work. But Mr. Leggitt is among a half dozen officials across the federal government who have been granted special waivers to disregard ethics rules, according to a new set of documents released Wednesday. “Mr. Leggitt brings a unique blend of substantive health care expertise to HHS,” his waiver said. The disclosures offer additional evidence that lobbyists and industry executives who can now shape policies benefiting their former clients and companies have been allowed to work in the Trump administration, even with the president’s vow to “drain the swamp” of influence peddling.The documents were made public in response to a demand by the Office of Government Ethics for details on how the Trump administration is enforcing the ethics policies. One unexpected outcome was proof that the Obama administration, despite a much touted promise to make all of its ethics waivers public, stopped providing them to the Office of Government Ethics. As a result, three Obama-era waivers — two from the Justice Department and one from the State Department — that should already be public are being released for the first time. Walter M. Shaub Jr., the head of the Office of Government Ethics, said the discovery of these Obama-era waivers showed that his requests for these documents — which covered a one-year period and not just the Trump administration — were not political. In total, 17 of the 27 waivers he is making public were granted during the final months of the Obama administration.

    People of Integrity Won’t Work for President Trump - William K. Black --Rupert Murdoch controls the Wall Street Journal and Fox News.  Even before he acquired the WSJ its editorial board was known for its members’ ultra-right wing fervor.  The acquisition intensified that fervor.  The editorial board’s fervor has infected the WSJ’s news pages.  That is the context essential to understanding the significance of its June 6, 2017 editorial eviscerating President Donald Trump.  They entitled their editorial “The Buck Stops Everywhere Else.”  Here is the most damning paragraph.   .If this pattern continues, Mr. Trump may find himself running an Administration with no one but his family and the Breitbart staff. People of talent and integrity won’t work for a boss who undermines them in public without thinking about the consequences. And whatever happened to the buck stops here? The WSJ was shaming Trump with the title of its editorial and the line “whatever happened to the buck stops here?”  The editorial was accusing him of moral cowardice.  The specific context was Trump’s tweeted attacks on his Department of Justice for his revised executive order on refugees.  Trump, of course, signed that revised executive order. The WSJ rubbed in Trump’s moral cowardice by publishing the print version of its editorial on the anniversary of D-Day.  In comparison with giants like Eisenhower and Truman, Trump comes across as vanishingly small.  Trump was a rich man’s son who could afford a doctor who wrote up a bogus physical infirmity to allow him to escape the draft.  (Trump is so lazy that in an interview he could not even remember which leg his phantom bone spurs supposedly impaired.  He was unable to walk long distances, except on a golf course.)

    Trump to nominate Christopher Wray as next FBI director - President Trump announced Wednesday that he would nominate Christopher A. Wray — a white-collar criminal defense attorney who led the Justice Department’s Criminal Division during the George W. Bush administration — to serve as the next FBI director.Trump posted the announcement on Twitter, declaring Wray a “man of impeccable credentials.” His appointment would still have to be confirmed by the Senate, which is sure to scrutinize Trump’s nominee intensely. Wray, now a partner at King & Spalding, led the Justice Department’s Criminal Division from 2003 to 2005, and his firm biography says that he “helped lead the Department’s efforts to address the wave of corporate fraud scandals and restore integrity to U.S. financial markets.” He oversaw the president’s corporate fraud task force and oversaw the Enron Task Force. Before that, he worked in a variety of other Justice Department roles, including as a federal prosecutor in Atlanta. More recently, he has served as attorney for New Jersey Gov. Chris Christie (R), a Trump ally. He also represented the Swiss bank Credit Suisse AG in a tax evasion case that ended in a $2.6 billion settlement with U.S. authorities. In 2014, the bank pleaded guilty to conspiring to aid and assist U.S. taxpayers in filing false income tax returns.

    Christopher Wray Firmly Embedded in Corporate Crime Bar --Christopher Wray, President Trump’s nominee to be the next director of the Federal Bureau of Investigation, is firmly embedded in the corporate crime bar. And his fellow members of the bar are coming out of the woodwork to praise him. “Chris Wray is a superb and serious lawyer with a strong moral compass,” said Leslie Caldwell, head of the Justice Department’s Criminal Division under President Obama. “Having served under Chris when I was Director of the Enron Task Force, I witnessed first-hand his deep respect for the Department of Justice and the FBI, as well as his strong commitment to public service.  The country is lucky to have someone of Chris’s caliber serve in such an important role.”“Chris is super smart, a great lawyer and highly experienced,” said Larry Thompson, former Deputy Attorney General under President Bush. “He will serve the Department of Justice and Federal Bureau of Investigation well.  I worked with Chris for a number of years and always had complete confidence in him.  He simply doesn’t make mistakes. We are lucky he decided to reenter public service.”And Mary Jo White, former chair of the Securities and Exchange Commission, said Wray is “a great choice for FBI Director.” Wray himself was head of the Criminal Division under President Bush and was for years a partner at King & Spalding in Washington, D.C. In a 2006 interview with Corporate Crime Reporter, Wray defended his former boss Larry Thompson, whose now famous memo led to a slew of corporate settlements with deferred and non prosecution agreements.At the time, it was rare to find a corporate crime defense lawyer publically defending the way the system has worked post-Thompson memo and Holder memo. But Wray was present at the creation.

    FBI Nominee Christopher Wray Runs into Conflict Issues - Pam Martens -  President Donald Trump announced his nomination of Christopher Wray to take over James Comey’s job as Director of the FBI in a Tweet on June 7, the day before Comey’s much anticipated testimony before the Senate Intelligence Committee. In the Tweet, Trump called Wray a “man of impeccable credentials,” which, undoubtedly, he is. He is also a man with a maze of conflicts of interests. It appears that someone has tried to scrub some of those conflicts from the official web site of the Justice Department. For example, try this Justice Department press release link, which now turns up a dead page. ( )  Fortunately for our readers, Google has cached the press release which is dated February 19, 2004. The opening sentence includes all three names making headlines today – Comey, Wray and Robert Mueller, the newly appointed Special Counsel who will investigate the Trump campaign’s ties to Russia and the firing by President Trump of James Comey as FBI Director. At the time of this press release, the three men were attached at the hip as part of George W. Bush’s Corporate Fraud Taskforce. All three men are quoted in this press release, as follows: “This indictment marks an important milestone in the life of the President’s Corporate Fraud Task Force,’ said Deputy Attorney General James B. Comey, who heads the Task Force. ‘The indictment alleges that Jeffrey Skilling and other Enron executives concocted a massive, complex scheme to give shareholders and the investing public the false appearance of financial strength and security at a time when Enron was, in fact, failing. Our investigators were able to cut through the maze of paperwork and financial trickery to get to the bottom of the scheme and charge Skilling, once the top executive at Enron, with fraud and other crimes that contributed to Enron’s collapse.’“The indictment of Enron’s CEO shows that we will follow the evidence wherever it leads — even to the top of the corporate ladder,’ said Assistant Attorney General Christopher Wray of the Criminal Division. ‘No corporate executive — not even the CEO — is above the law. The Department of Justice and our Task Force partners will work tirelessly to hold accountable all those who participate in corporate fraud, no matter how devious the scheme, and no matter how highly placed the perpetrators.’ “The FBI continues to investigate allegations of fraud, particularly with regard to corporations that victimize innocent investors,’ said FBI Director Robert Mueller. “The Enron’s Task Force’s probe and today’s indictment represents both a substantial step for justice and strong continued action on the part of the FBI’s Corporate Fraud Initiative.’ ”  Why would Donald Trump be comfortable with Wray as an FBI Director when he had previously worked closely as a colleague to Comey? Why is the Justice Department comfortable naming Mueller as the Special Counsel to investigate the Trump-Russia matter when his law firm, WilmerHale, is representing Trump’s daughter, Ivanka, and her husband, Jared Kushner?

    Ex-Obama Officials Find There’s No Place Like Their Old Law Firms -- When a new administration comes to Washington, top government regulators flock to the exits to find new jobs, but they seldom have to look very far.A few parlay their experience into corporate counsel jobs or trade up to a more rarefied law firm than the one they had left earlier.But most of them, like Eric H. Holder Jr., the former United States attorney general, or Mary Jo White, former chairwoman of the Securities and Exchange Commission, simply return to their previous law firms.In the latest high-profile transition, the law firm Zuckerman Spaeder has welcomed back Aitan D. Goelman, who was enforcement director at the Commodity Futures Trading Commission until February. In his regulatory role, Mr. Goelman oversaw cases using new enforcement powers authorized by the Dodd-Frank Act and other legislation that grew out of the 2008 economic crisis.  Mr. Goelman will be a firm partner in Washington focusing on the securities, commodities and derivatives industries, internal investigations and defense of cross-jurisdictional regulatory and criminal matters. The revolving door between government and law firms is decades old, as the newest political overseers arriving in Washington recruit their own legal hands for savvy counsel to prevent — or rescue them from — misdeeds or mistakes. And, as white-collar practices at major law firms have been booming in the wake of the regulatory overhauls that followed the economy’s 2008 crisis, that swinging door typically means a big payday for most lawyers.

    Business Chafes at Uncertainty Created by Unfilled Seats on Regulatory Commissions -- naked capitalism by Jerri-lynn Scofield --  The Wall Street Journal ran a short article yesterday, As Seats Go Unfilled on Federal Panels, Businesses Face Uncertainty, discussing the problem many businesses face– regulatory uncertainty– due to failure to fill many seats on regulatory commissions. The article devotes much space to the Federal Trade Commission (FTC), which, uniquely in its 102-year history, has only two of five commissioners seated. According to the WSJ:“The design of the FTC doesn’t contemplate three vacancies,” said Jon Leibowitz, a former FTC chairman who is now a partner with Davis Polk & Wardwell LLP. “A lot of companies are trying to sort through how to deal with a two-person commission.” As the WSJ reports, day-to-day policy-making at many regulatory agencies has ground to a halt– as they lack the necessary minimum number of commissioners to conduct their affairs. In addition to the situation at the FTC, three of five seats are also unfilled at the Commodity Futures Trading Commission (CFTC) and Federal Energy Regulatory Commission (FERC). Two of five commissioner positions are vacant at the Federal Communications Commission (FCC), the National Labor Relations Board (NLRB), and the Securities and Exchange Commission (SEC). As the WSJ summarizes: Similar stories are unfolding across official Washington, as the unexpected election victory by President Donald Trump and a slow transition process added to the usual disruption triggered when power changes hands. While some of the positions were unfilled even before Mr. Trump took office, left open by tradition for the next president to fill, they could remain empty for more months, making 2017 a year of prolonged uncertainty for businesses eager for clarity from regulators. In contrast to the system for filling vacancies in federal judgeships, the design of the relevant authorizing statutes does not permit dominance by one political party to result in the packing of these commissions with a unanimous slate of commissioners who share the same party affiliation. Generally, no more than three (out of five) seats can be held by members of any one political party, and the tenures of each appointment are staggered. This system is supposed to allow for a certain continuity between policy-making, in spite of who holds the White House and which party holds control of each house of Congress.  But when positions are unfilled, the result is stasis.

    White House plans to nominate Otting for comptroller of the currency: The Trump administration announced plans for long-delayed nominations to key posts, including tapping former One West CEO Joseph Otting for comptroller of the currency. Otting, whose name first began being floated for the role back in March, worked closely with Treasury Secretary Steven Mnuchin at One West, which Mnuchin purchased in 2009. The Office of the Comptroller of the Currency is an independent agency within the Treasury and is responsible for overseeing the nation's biggest banks, including Bank of America, JPMorgan and Wells Fargo. The position is expected to play a significant role in carrying out U.S. President Donald Trump's promise to roll back regulations — including doing a "number" on the sweeping law known as Dodd-Frank that was implemented following the 2008 financial crisis. Senate confirmation is required for the role. Trump has received criticism for moving slowly on a series of senior political appointments, a delay he used a tweet on Monday to blame on Democrats in Congress, despite Republicans controlling both the House and Senate. Trump has formally nominated 63 of the 559 positions which require Senate confirmation, with 39 confirmed, 16 awaiting nominations and 441 lacking any nominee, according to the Partnership for Public Service. Those totals didn't appear to include the nine planned nominations announced late Monday. Other planned nominations announced on Tuesday included Owen West, a former marine and a Goldman Sachs alum, to be the assistant secretary of defense for special operations and low intensity conflict.  By improving the Fed’s ability to control interest rates relative to the pre-crisis situation, when the Fed did not have the ability to pay interest on reserves, IOER reduces interest rate volatility in normal times and especially in crisis times. It is hard to argue that increased volatility and uncertainty are bad for economic activity.

    This word “deregulation.” I don’t think it does what you think it does. - Jared Bernstein - A quick note on “deregulation,” which is the other half of the mantra, i.e., the phony growth recipe–“tax cuts and deregulation”–you hear endlessly repeated in uninformed DC conversations. I’ve been in these conversations for decades and I have no idea what these people are talking about and neither do they. What, specifically, do they want to “deregulate?” What evidence do they have that to do so would be pro-growth? Obviously, they’re just hand waving. To take a timely example, the House is about to vote on the “Choice Act” today, designed to repeal most of the regs in Dodd-Frank. The bill will likely clear the House but needs D votes in the Senate where, hopefully, it is likely to come up short. Now, consider this, from yesterday’s WSJ, touting favorable conditions in financial and credit markets:The banking system is more resilient because of the regulations since 2008, as firms shifted away from short-term borrowings without collateral…Instead, banks are issuing longer-term debt in the low-yield environment as a way to reduce rollover risk, the risk from having to replace maturing debt. “The risk is that funding would run away for the banks in time of market stress,’’ said Steve Kang, interest rate strategist at Citigroup who specializes in money markets. ”Less reliance on short-term funding means more stable funding for banks and there is still lots of liquidity in the system.” It’s one example of a regulation having its intended impact–I was there at the creation of Dodd-Frank, and I assure you, this was one of its targets–one that in this case, is boosting market stability and pushing back of the Minsky’esque risk underpricing that regularly occurs around this time in the cycle. One could surely find counterexamples, and believe me, I’m sure there is brush to be cleared in our regulatory system. But sweeping allegations are meaningless. You’ve got to get down to cases, and when you do, you will find that many regulations are there for a good reason and they’re working as intended.

     The Durbin amendment: The ultimate double whammy | TheHill: The Financial CHOICE Act, which begins to untangle the web of harmful rules that Dodd Frank put in place, is likely to pass the House this week. That’s very good news for community banks and credit unions, but it doesn’t mean Congress’s work on financial reform is done. One CHOICE Act provision, repeal of the Durbin amendment, was left behind. That’s why, after wrapping up the CHOICE Act, the House Financial Services Committee must go back and pass Durbin amendment repeal again. It’s already done so in two separate congresses—because it’s the right thing to do. Repeal will help the community financial institutions that are the backbone of our economy. And it will prevent the retail industry from continuing to pick the pockets of consumers.The Durbin amendment is a double whammy: not only have consumers failed to see savings as promised—only one percent of retailers cut prices after Durbin, which means merchants so far have pocketed $42 billion—consumers also have lost banking benefits like debit card rewards. Meanwhile, credit unions and community banks have taken a hit to their interchange revenue because of the Durbin amendment. The price control provision is the most talked about part of the Durbin amendment, but the routing mandate is just as harmful. This provision requires unaffiliated payment networks be added to debit cards. That might sound good in theory, but it is really a backdoor price control that sets off a race to the bottom. Think of it this way: the price control provision and the routing mandate allowed retailers to pad their bottom line, and consumers and the banks—particularly community banks—paid for it. The routing provision is not about injecting choice into the payments system, it’s about who gets to choose. It used to be community financial institutions and their customers who decided where a transaction was routed. Today, it’s merchants. And with merchants in charge, it becomes a race to $0, with reduced quality and transaction safety to boot.   How would retailers like it if Washington let customers decide how much to pay for a television, the season’s hottest toy, or a gallon of gas?

    House Republicans Are Trying to Pass the Most Dangerous Wall Street Deregulation Bill Ever -- From the earliest days of his campaign, Donald Trump has opposed the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Obama-era financial reform law passed in response to the 2008 financial crisis. Trump has characterized it as a “disaster” that has created obstacles for the financial sector and hurt growth. In April, he repeated his promise to gut the existing law. “We’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some, obviously, but getting rid of many,” Trump said in a meeting with top executives during a “Strategic and Policy CEO Discussion,” which included the leaders of major companies like Walmart and Pepsi. He added, “For the the bankers in the room, they’ll be very happy.” The Republican Congress shares Trump’s dislike of Dodd-Frank and this week, the House plans to vote on the Financial CHOICE Act, a Dodd-Frank overhaul bill that will, as promised, make banks and Wall Street “very happy” if it becomes law, while undoing numerous financial safeguards for regular Americans. (CHOICE is an acronym for “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.”) The bill, sponsored by Rep. Jeb Hensarling (R-Texas), takes aim at some of Dodd-Frank’s main achievements: It guts rules intended to protect mortgage borrowers and military veterans, and restrict predatory lenders. It also weakens the Consumer Financial Protection Bureau’s ability to oversee and enforce consumer protection laws against banks around the country—upending a mix of powers that have helped the CFPB recover nearly $12 billion for 29 million individuals since opening its doors in July 2011. The bill also weakens or outright cuts a number of bank regulations enacted through Dodd-Frank to keep risky investing behavior in check in order to avoid the economic devastation of another financial crisis or taxpayer-funded bailout.

     Senate Dems optimistic about bipartisan approach to reg relief — The Senate Banking Committee may pass a number of small legislative proposals to help banks and credit unions but the panel is still figuring out what sort of package can ultimately be agreed upon, top Democrats said Tuesday. “On Dodd-Frank, I think there is a number of very narrowly crafted proposals that we could pass tomorrow,” said Sen. Heidi Heitkamp, D-N.D., a member of the panel.

    House passes sweeping bill to strip back financial rules | TheHill: The House passed the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act, 233-186, along party lines. The bill is not expected to pass the Senate. Sponsored by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), the CHOICE Act is the most ambitious Republican effort to roll back the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010. Republicans have long targeted Dodd-Frank, saying it has created a crushing regulatory burden that suffocates small businesses and banks while empowering unaccountable bureaucrats. “Dodd-Frank represents the greatest imposition on our business enterprises than all Obama-era regulations combined,” Hensarling said Thursday morning in a briefing with reporters. “In many respects, it was not a response to the financial crisis, but a grab bag of leftist ideas that were waiting on the shelf for quite some time.” Democrats have fiercely defended Dodd-Frank. They say the bill has held Wall Street accountable for the risky investment practices that caused the crisis and protected Americans from predatory lending and abusive financial firms. "It's shameful that Republicans have voted to do the bidding of Wall Street at the expense of Main Street and our economy,” said Rep. Maxine Waters (Calif.), the ranking Democrat on the Financial Services Committee. “They are setting the stage for Wall Street to run amok and cause another financial crisis. I urge my colleagues in the Senate not to move on this deeply harmful bill." The CHOICE Act would roll back much of the Dodd-Frank regulations long targeted by Republicans. It would allow banks that reach certain cash thresholds an off-ramp from Dodd-Frank, reduce the frequency of federal stress tests and restrain oversight powers of several federal agencies that the 2010 law expanded. 

    House Passes Financial Choice Act, Rollback Of Dodd-Frank - House Republicans voted Thursday to deliver on their promise to repeal Dodd-Frank — the massive set of Wall Street regulations President Barack Obama signed into law after the 2008 financial crisis. In a near party-line vote, the House approved a bill, dubbed the Financial Choice Act, which scales back or eliminates many of the post-crisis banking rules. The legislation is the brainchild of House Financial Services Committee Chairman Jeb Hensarling, R-Texas. "Dodd-Frank represents the greatest regulatory burden on our economy, more so than all the other Obama-era regulations combined," Hensarling told reporters Wednesday. "There is a better way: economic growth for all; bank bailouts for none." Hensarling's nearly 600-page bill would defang Dodd-Frank by repealing the so-called Volcker Rule, which prevents government-insured banks from making risky bets with investments. It would also scrap a requirement, which goes into effect Friday, that retirement advisers put their clients' interests ahead of their own.In perhaps the biggest partisan flashpoint, the bill aims to scale back the authority of the Consumer Financial Protection Bureau to regulate large banks and payday lenders. The CFPB was created under Dodd-Frank and is designed to operate as an independent watchdog with a single director. Hensarling considers its structure to be undemocratic.Comey Accuses White House Of 'Lies, Plain And Simple' About His Firing "To think in a democracy that one un-elected individual can functionally decide what credit cards go in our wallets, what mortgages we can have on our home, whether or not we even have a checking account. I mean, that's just anathema to me to the founding principles of this republic," Hensarling said while speaking last month at the right-leaning American Enterprise Institute. Financial reform advocates argue the Choice Act would leave the U.S. economy vulnerable to another financial crisis. 

    Bill to Erase Some Dodd-Frank Banking Rules Passes in House — The House approved legislation on Thursday to erase a number of core financial regulations put in place by the 2010 Dodd-Frank Act, as Republicans moved a step closer to delivering on their promises to eliminate rules that they claim have strangled small businesses and stagnated the economy. The vote is a significant step for a measure that still faces long odds of becoming law because of the slim majority that Republicans hold in the Senate. Even Wall Street lobbyists and lawyers were pessimistic about the chances of the bill, the Financial Choice Act. “There is zero chance that the Choice Act survives” in its current form in the Senate, said Matthew Dyckman, a lawyer in the financial services practice at Goodwin. Yet the bill’s passage in the House, by 233 to 186, keeps alive the Republican Party’s dream of unwinding one of President Barack Obama’s signature accomplishments. The vote quickly drew the ire of Democrats who argued that Republicans were giving a handout to Wall Street while putting everyday investors at risk. The bill has maintained a low profile compared with Republican plans on health care and taxes, but rolling back Dodd-Frank represents a major part of the Republican agenda. The Trump administration hopes that by unshackling businesses from burdensome regulations, renegotiating trade deals and cutting tax rates, it can help the economy grow faster and well-paying jobs will become more plentiful. “Ultimately the Financial Choice Act is a jobs bill,” Speaker Paul D. Ryan said on the House floor on Thursday. “It is why we were sent here, to look out for the people who work hard and do the right thing.” The House vote comes before a Treasury Department report due in the coming days that will detail the Trump administration’s plans for easing financial regulations. And a lighter regulatory touch is already expected as a result of the administration’s appointments of banking industry veterans to serve as financial regulators. The bill passed the House with only Republican support. But it is possible that bipartisan backing could emerge for parts of the legislation or for fixes to Dodd-Frank that could eventually become law. 

    Senate appears long way off from reg relief -- As the House moved Thursday to pass a sweeping regulatory reform bill, senators on both sides of the aisle paid lip service to offering relief to community banks and credit unions without offering many specifics over what might be included in their version. Several moderate Democrats, including Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, emphasized that reform is necessary Senators on both sides of the aisle paid lip service Thursday to giving relief to community banks and credit unions, but didn't appear closer to specifics of what would be in a bill.

    ‘Still a victory’: Why a House reg relief bill matters, despite Senate opposition - The House voted 233-186 along mostly party lines to pass the Financial Choice Act, a sweeping bill that would dismantle most of the Dodd-Frank law. The bill was hailed by the White House and Republicans as making good on their pledge to repeal and replace Dodd-Frank, but it is highly unlikely to clear the Senate given Democratic opposition. Yet clearing the bill through one chamber has both practical and symbolic value, proving House Republicans are united in their rollback of financial regulations and giving baseline legislative language that the Senate might select in a more modest legislative package.   “It’s still a victory,” said Rep. Warren Davidson, R-Ohio. “We’d love 60-plus senators to say, ‘You guys are dead on, we love it,’ and the next week the president’s signing it. Next best thing? We’ll take the closest to that we can get.”   They may not be able to get much. Senate Banking Committee leaders are discussing individual provisions of the Choice Act, including looking at asset thresholds that trigger more supervisory standards and exemptions for small institutions from the Volcker Rule. That is a far cry from most of the Choice Act, which touches on virtually every part of the financial system. The bill’s central element is an “off-ramp” that allows banks that have an average leverage ratio of at least 10% to opt out of various Dodd-Frank regulations — particularly capital and liquidity requirements. There are other pieces of the Financial Choice Act that could become law. The 600-page bill is composed of many other narrow measures that have already passed the House panel, some of which have bipartisan support.  Rep. Brad Sherman, D-Calif., has identified a dozen of them that pertain to mortgage and business credit, among other things, and has called for Financial Services Committee Chairman Jeb Hensarling to separate those provisions which could pass in a bipartisan fashion.  Yet many of the Choice Act’s provisions are controversial. Chief among them is a dramatic restructuring of the Consumer Financial Protection Bureau, including an elimination of its supervision and rule writing authority, a limitation of its ability to police unfair and abusive acts and eliminating the bureau’s independent funding via the Federal Reserve. The bill would also rename the bureau the Consumer Law Enforcement Agency and give it a dual mandate to include increasing access to credit and financial products rather than only ensuring consumer safety. The CFPB provisions in particular stand little chance in the Senate, where Democrats have been united against major changes to the agency. Republicans in that chamber could attempt to defund the CFPB through the reconciliation process, which only requires a majority vote, but doing so carries political risks and may create practical problems for financial institutions.  Democrats and progressives have been able to rally behind the CFPB, which remains politically popular even in polls taken by conservatives.

    The G.O.P. Plan to Unleash Wall Street - Republicans in the House of Representatives passed the Choice Act on Thursday, a sweeping deregulation of the financial sector. It passed 233-186, with no Democratic support. One Republican, Walter Jones of North Carolina, voted no. This bill rolls back or weakens most of the protections put in place since the 2008 financial crisis through President Barack Obama’s Dodd-Frank Act.Though it is very unlikely to gain the 60 votes it needs to pass in the Senate, important parts of it could pass through the budget reconciliation process. But even if it goes nowhere, it reveals a Republican Party that is focused on destroying reform based on a false narrative of the crisis, largely to the benefit of the financial sector. What passed today is a surgical strike, gutting specific parts of the reforms that have been effective in preventing another crisis.Take the Consumer Financial Protection Bureau, one of the strongest pieces of Dodd-Frank, which has brought transparency to previously opaque financial markets. It has applied enforcement and accountability not just to consumer financial products but also to markets where consumers are the financial product, like mortgage servicing, debt collection and credit scoring. Before the crisis, consumer protection was fragmented across 10 regulators, and because it was everyone’s job, it was nobody’s job. This meant no agency built the expertise or interest in standing up for consumers and, worse, there would be a race to the bottom in enforcement, with financial firms seeking out the most lax regulators. The C.F.P.B. solved these institutional problems by consolidating enforcement in a dedicated agency. That feature is exactly what the Choice Act targets. The act would gut the C.F.P.B.’s supervisory authority, sending it back to regulators who missed the crisis and recreating the broken pre-crisis regulatory structure. With this authority, the C.F.P.B. has returned about $12 billion from bad bank behavior to 29 million citizens. The Choice Act would repeal the C.F.P.B.’s ability to stop unfair, deceptive and abusive acts and practices — an authority that was essential, for example, in going after Wells Fargo’s creation of fake accounts for its clients. But Choice goes far beyond this. The Dodd-Frank rollback is shaped by a false diagnosis of the financial crisis, by which the crisis posed no problems to the American economy.

      People in states represented by the cosponsors of the CHOICE Act lose $12.1 billion each year due to conflicted retirement advice -- Yesterday, the Financial CHOICE Act of 2017 passed the House of Representatives along party lines, with 233 Republicans and no Democrats voting in favor of the bill, and 185 Democrats and one Republican voting against it. In the event it were to also pass the Senate and become law, the CHOICE Act would do profound, broad-based damage to the future financial security of America’s working families. Among the many damaging things the bill does is to repeal of the Conflict of Interest rule, aka the “fiduciary” rule. The fiduciary rule is the regulation that requires that financial professionals advising retirement savers act in the best interest of their clients—like doctors and lawyers are already required to do. The rule prohibits financial advisers from doing things like steering clients into investments that provide the adviser a higher commission but provide the client a lower rate of return. This rule is sorely needed—conservative estimates put the cost to retirement savers of “conflicted” advice at $17 billion a year. It is noteworthy that today is the day that the fiduciary rule was implemented. This is a huge win for retirement savers, though this big step forward comes with a couple of glaring catches.

    Hope for banks as Justice Department punts on swipe fee case - Score one for the payments industry. In the never-ending fight over who should bear the cost of processing credit and debit card transactions, retailers seemed to gain the upper hand last month when Congress decided against trying to remove caps on swipe fees. But U.S. banks and payments firms earned a win of their own last week when the Department of Justice opted to drop its appeal of a closely watched case centering on whether merchants should be allowed to encourage the use of particular cards.

    What if a clearinghouse fails? | Brookings Institution -- Editor's Note:This report is part of the Series on Financial Markets and Regulations and was produced by the Brookings Center on Regulation and Markets.  The new clearing requirements were one of the more widely applauded features of the 2010 Dodd-Frank Act.  With good reason.  Prior to the Great Recession, most derivatives transactions were unregulated and undisclosed.  Under the Dodd-Frank Act, clearinghouses now guaranty many swaps by serving as a buyer to every seller and a seller to every buyer.  If one of these buyers or sellers fails, the clearinghouse can step into the gap, thus limiting the risk that the failure will interfere with the financial markets.  But what if the clearinghouse itself topples?  The Dodd-Frank Act authorizes regulators to designate a clearinghouse as systemically important, and provides a source of emergency funding.1 But the law doesn’t say what happens if the clearinghouse fails.  This may be the single greatest weakness of the new financial architecture. Several of the clearinghouses themselves are now systemically important.2 They need a blueprint for failure, just as systemically important banks do. In contrast to Europe, where clearinghouse resolution has received considerable attention,3 the regulatory gap is not addressed in the Choice Act or in alternative calls for reform in the United States.

    How Global Audit Firms Are Using Their Lobbying Clout to Dilute Sarbanes-Oxley Reforms - The dirty world of tax evasion and avoidance involves all sorts of unpleasant and anti-social characters, none more so than the professional enablers who devise avoidance schemes, market these schemes to their clients, lobby governments for special treatments and permissive laws, and generally play the role for tax dodgers that Tom Hagen played for The Godfather. Deloitte is one of these enablers, in fact one the global top 20, so it’s disturbing to read that according to this recent article by financial journalist Francine McKenna, Deloitte is taking the lead in lobbying for dilution of key parts of the US Sarbanes-Oxley Act (2002) relating to regulation of auditors.  According to McKenna: . . auditors and the AICPA, their trade association, (are) taking advantage of the “Trump” window to roll back Sarbanes-Oxley reforms. The industry is targeting the strict SOX auditor independence rules and the authority of the Public Company Accounting Oversight Board, the industry regulator established after Enron and its auditor, Arthur Andersen, collapsed. The international accounting and audit industries have not exactly covered themselves in glory in recent decades.  Quite the opposite: audit failures have been rife and spectacular, not least the failure to spot the impending collapse of Lehman Bros and many other financial institutions that bellyed-up during the great financial crisis.  Our colleague Professor Prem Sikka has explored these failures at length here, here and here.  As McKenna notes, it was the behaviour of failed accounting giant Arthur Andersen, one of the then Big Five, which led to the inclusion in Sarbanes-Oxley of a prohibition on auditors from also offering consulting services:Arthur Andersen’s focus on its lucrative consulting versus its audit of Enron was the catalyst for critics to succeed in getting prohibitions against consulting to audit clients into the Sarbanes-Oxley law. The service restrictions prohibit audit firms from providing non-audit services such as internal audit outsourcing services, financial information systems design and implementation, and bookkeeping to an audit client including company affiliates. Sensible provisions, given the overlapping conflicts of interest that are rife in the financial services sector, though in practice they were largely ignored: The Big 4 firms are up to their necks in independence violations that haven’t yet been investigated by the regulators, and are keen to change the rules before the latter come knocking on their doors.

     CFPB's Cordray threatened with contempt charges by House panel - The House Financial Services Committee is threatening to file contempt charges against Consumer Financial Protection Bureau Director Richard Cordray for allegedly lying about the bureau's investigation into the Wells Fargo scandal.In a 15-page report released Tuesday by Republican staff, the committee claimed that the CFPB has not produced records showing that it conducted a full investigation of Wells’ branch sales practices or that it was aware of problems with phony accounts before the L.A. city attorney took action against the bank. The report appears aimed at proving that Cordray lied to Congress in April when he testified that the CFPB had conducted an "independent and comprehensive" investigation and that the agency was already tracking Wells' sales practices."No records or other information before the committee corroborate this claim," the report stated.  Lying to Congress could be used as a basis for President Trump to fire Cordray "for cause," the legal standard in the Dodd-Frank Act. (A court case challenging that standard, which could allow the president to dismiss a CFPB director at will, is under appeal.)The CFPB said it was "reviewing the report." "As we have previously stated, the CFPB learned from whistleblowers about potential problems at Wells Fargo in mid-2013, just two years after opening our doors," a spokesman said in a statement to American Banker. "Director Cordray has provided a public account of the timeline on which our investigation unfolded, and our order publicly details our findings against Wells Fargo.”The report, "Was the Cop on the Beat?," claimed that Cordray had failed to properly respond to the committee's subpoena. As a result, the report said, the panel’s chairman, Rep. Jeb Hensarling, R-Texas, should "initiate contempt proceedings against Director Cordray unless the CFPB produces all responsive records." The report also recommended that Hensarling should issue deposition subpoenas to CFPB employees to investigate Cordray.

    Is CFPB being stretched thin by litigation? --Litigation is soaking up a significant share of resources at the Consumer Financial Protection Bureau, which faces at least a dozen cases challenging its constitutionality and a surging number of legal disputes to its enforcement actions. Many smaller companies that traditionally would have rolled over and settled with the agency appear emboldened to fight given the political and legal uncertainty hanging over the CFPB. Firms are hoping to get enforcement actions dismissed or, possibly, relief from the Trump administration.

    How CFPB lawsuit puts spotlight on other agencies’ independence  -- — The Consumer Financial Protection Bureau is in the direct crosshairs of a federal lawsuit questioning the bureau's leadership structure. But in a larger context, it might be the independence of all federal agencies on trial. The full D.C. Circuit Court of Appeals heard oral arguments last month in the case claiming the CFPB's single-director structure violates constitutional norms on executive power. But the lawsuit is prompting broader questions over whether other agencies and departments also exercise too much power independent of the president.

    CFPB reverses course on key part of debt collection proposal - In a big win for third-party debt collectors, the Consumer Financial Protection Bureau said Thursday that banks and other first-party creditors are responsible for the accuracy of information on consumer debts. The about-face by Richard Cordray, the CFPB's director, is a significant change for the bureau's overhaul of the debt collection industry. Cordray said the CFPB realized the difficulty of requiring that third-parties have accurate information on debts they did not originate.

    Watch out for this surprise credit-card charge, the CFPB warns - MarketWatch: Consumers, beware of confusing retail credit cards. That’s the message from the Consumer Financial Protection Bureau on Thursday. The agency said it has sent letters to major retail credit card companies to reconsider a pricing method some of them are using because it may “lack transparency to consumers.” The CFPB also said consumers can file complaints about credit cards to the Bureau online. “Deferred interest” means they offer no interest for a set period of time, as long as the balance is paid in full by the end of that promotional period. For consumers who are able to pay that balance off, a deferred-interest card can then be a viable option. The problem, the bureau said: Many consumers do not realize they will be charged interest retroactively on all the purchase made during the promotional period if they do not pay the balance in full. And it may not be clear from reading the cards’ terms that this is the case.That’s because the card companies charge consumers accrued interest on that promotional balance from the time they made a purchase. For example, a customer might use a deferred-interest card to make a $1,000 purchase. The promotional period may last, for example, one year. If he or she pays back all but $100 of that amount, she would be charged one full year’s worth of interest on the $1,000 charge. And since many retail deferred-interest cards have interest rates of 25% or more, those charges could be significant. That makes “deferred-interest” credit cards different from zero interest credit cards. A zero-percent interest credit card will not add interest to the balance of the purchase made during the promotional period, until after that period is over, and the balance is not paid. At that point, a zero interest card would charge interest on the remaining balance. (In this example, the remaining $100, but not the full original $1,000). 

    What should replace cash? Let the market decide -- Cash is the most widely used payment system on the planet, in spite of commercial and government efforts to eliminate it. A six-year-old and a Kalahari bushman will happily accept a $100 bill. In the 21st century, two “wars” are being waged against cash, one by commercial payment systems like Mastercard and Visa and banks, the other by governments. The first is laudatory, the second at least somewhat troubling.  In April 2017, there was a whopping $1.5 trillion in cash in circulation, roughly 8% of U.S. GDP employed planetwide. In 2012, Federal Reserve economist Ruth Judson estimated that half of U.S. currency and two-thirds of $100 bills circulated abroad.   Consumers and businesses use Mastercard and Visa in lieu of cash because they’re convenient and secure, and offer ready access to cash and credit worldwide, record keeping, and often rich rewards. Merchants accept them because they deliver guaranteed payment, boost spend, reduce breakage, are efficient and people want to pay with them.  Cash has limitations. Carrying or storing it can be dangerous. If lost or stolen, it’s gone. It’s hard to send distances and awkward to spend online, though companies such as Amazon — through “Amazon Cash” — and PayNearMe enable consumers to pay with cash online.   The second war on cash is being waged by the state.  Governments have a mix of four objectives: (1) to improve payment efficiency and thereby economic productivity, (2) to curtail tax avoidance, (3) to reduce illegal commerce, and/or (4) to enable negative interest rates to become an effective policy tool for central banks. Unlike commercial payment systems, governments use sticks rather than carrots. While electronic payments are more efficient, the real issue is who should decide what’s the best payment instrument for a transaction, private parties or the state? Some merchants won’t accept cash. Some only accept cash. Most accept both. That should be their call, not government’s.  Displacing cash in countries with large grey economies, otherwise legal commerce conducted in cash to avoid taxes, is difficult. It varies enormously based on tax rates and attitudes on tax avoidance. In 2007, the grey economy ranged from 8.1% of the total economy for Switzerland and 8.4% for the US, to 26.5% for Greece and 26.8% for Italy, to a whopping 62.7% for Zimbabwe and 63.5% for Bolivia. .

     The future of authentication is biometrics. No other model competes – BankThink - Biometric authentication has become something of a go-to metaphor for bleeding-edge, bulletproof security thanks in no small part to the whims of Hollywood. Iris scanners, after all, make for great movies. Sadly, reality is always different from the big screen. The last five years have lifted biometrics out of “Mission Impossible” and dropped the authentication method into the lives of everyday consumers. From consumers logging into their telephone banking via their voices or signing into their smartphones via their fingerprints, biometrics is fast assuming a central role in digital identity management. But security breaches, while unfortunate, have underlined that biometrics is far from infallible and, most certainly, is not an overnight solution to the world’s digital ID problems.  Neither is biometric authentication toothless, however. Biometrics could give real punch to banks’ security mix and address an urgent need in authenticating users digitally. Indeed, the recent proliferation of digital services and cloud-based platforms — each requiring independent user verification — is making mincemeat of the username and password model. Ubiquity compels even a diligent person to reuse at least some login credentials, which dramatically increases the security implications of a hack. Already, many of the most popular cloud-based services automate this practice by enabling users to apply their “unique” logins to a variety of other accounts (a process known as single sign-in or social login). The risk posed by this kind of identity federation is obvious: a hacker needs only to crack one login credential to gain access to all of the user’s associated accounts. Various services exist to help mitigate this vulnerability (think password vaults and management applications); however, these are temporary solutions at best. The days of usernames and passwords are numbered.

    Should banks be in the business of ‘surveillance capitalism’? - Google’s tracking of credit card purchases and linking them to users’ online profiles and search patterns raises a number of knotty questions for banks.The tech giant says it just wants to show advertisers that the ads they placed led to sales, and there’s no reason to doubt the company’s intention. But if consumers understood that their card transaction data was being sold to Google, would they sanction this? Or would they ask the banks and card issuers that collect and store their transaction data to think carefully and perhaps ask their consent before passing this information over to third parties? These questions are relevant to banks because they are complicit in the march toward “surveillance capitalism” — a world where consumers’ every move is recorded without their knowledge and the information is monetized.Although it is seldom talked about, some banks sell customer data to third parties. Banks also feed customer data to data aggregators such as Yodlee, which anonymize and sell that information to third parties such as hedge funds. The hedge funds use it to predict company performance and make trading decisions. Mastercard and Visa also sell card transaction data to third parties.Most banks have a vested interest in making sure customer data is not misused in any way, since they incur a lot of the costs of fraud, such as card reissuance and credit monitoring, said Al Raymond, specialist leader, privacy and data protection at Deloitte and former head of U.S. privacy at TD Bank.“They want to stay close to the data, as the ounce of surveillance prevention more than outweighs the pound of cure,” Raymond said. “Staying close to the customer is a very real, and recent goal, since large banks are trying to fight off the threat from smaller, nimbler fintech players that are chipping away at bank customers, particularly the millennial segment.” U.S. banks can’t sell raw consumer data to third parties unless they provide the customer with a notice and an opportunity to opt out. In some states, customers have to opt in. They can sell anonymized data, with all personally identifiable information stripped out or hashed.  But even anonymized data raises at least three privacy issues.

    • 1. Anonymized data can be de-anonymized.  In a report published in April, Stanford and Princeton researchers described how they linked de-identified web browsing histories to social media profiles using only publicly available data.
    • 2. Even if it remains anonymized, consumers don’t know how their data is being used.
    • 3. If you try to explain to consumers how their data is being used, they probably won’t read the explanation. Banks have to provide privacy notices that disclose what they do with customer data, but often the useful information is buried in legalese.  Lacey pointed out that Apple’s iTunes agreement runs 3,600 words on 27 pages. “No one reads it,” he said.

    Bank execs now bullish on public blockchains, survey finds - Public blockchains, historically seen as a nonstarter for banks, are winning fans in the financial industry. This sentiment is among the at-times surprising findings of a new study from Cognizant, a technology consulting firm. Over the past two years, banks have come to accept blockchain technology as a useful—and potentially transformative—innovation. Even so, most have tended to dismiss digital currencies and the public, open-source blockchains to which they belong in favor of private ledger systems. But Cognizant's study reveals that attitudes may be shifting. Eighty-six percent of survey respondents said they believe that public blockchains will gain greater prominence over the next five years, whereas only 80% said they believe the same about private blockchains. This isn't a massive discrepancy, but given that the respondents were 1,520 executives from 578 financial services firms, it is more significant than it appears.  And the shift in opinion may reflect more than simply greater awareness or understanding of public blockchains such as bitcoin and Ethereum. It could also reflect dramatic changes in the facts on the ground. The total market for cryptocurrencies and blockchain tokens has exploded in recent months, surpassing $100 billion in value—more than five times its value at the beginning of 2017. Bitcoin, the most popular cryptocurrency, spent much of 2015 and 2016 in the doldrums, leading many corporate leaders to count it out even while embracing its underlying technology. Yet bitcoin has recently surged to new all-time highs, increasing from about from about $1,000 in January to more than $2,900 in June. Even while shattering previous records, however, bitcoin's share of the overall cryptocurrency market has fallen, as competing systems have begun to capture the attention of technologists, investors and speculators alike. Bitcoin is also facing what may be its greatest test yet, with a technical debate over how to scale the network threatening to split the currency into two competing versions this summer. Most finance executives now think that blockchain technology—whether public or private—will be crucial to the financial industry's future. Ninety-one percent of executives in Cognizant's survey said it will be "either critical or important to their firm's future." Nearly half of respondents think it will "fundamentally transform" their industry.

    TIAA ventures into robo advising in Main Street push -- TIAA, the nearly 100-year-old retirement and insurance company, is starting an online robo-adviser this week, making it the latest firm to use automated advice to win customers in a rapidly changing asset-management industry.The new offering will offer passive index and exchange-traded funds that track markets as well as active ones that seek to outperform benchmarks, according to a statement from the company Tuesday. It will also include a strategy that invests with socially responsible criteria. Like other digital-advice platforms in the industry, TIAA's allows customers to input their financial objectives and risk tolerance within minutes and receive portfolio recommendations. Chief Executive Officer Roger Ferguson, a former Federal Reserve vice chairman, has been trying to expand the customer base of TIAA, which is known for offering retirement products to teachers, and making acquisitions to reach more retail investors. Last year, he agreed to a $2.5 billion deal to acquire EverBank Financial Corp., primarily an online bank. And he bought MyVest, a San Francisco-based technology firm that specializes in wealth management and assisting broker-dealers and banks, which the firm said helped accelerate the launch of the new robo-adviser.

     Treasury report praises CDFI program that Trump would cancel  — A report quietly released by the Treasury Department last week supports the performance of the Bank Enterprise Award program, saying there is “clear evidence” it helps recipients provide financial services to the most underserved communities.  But the White House has proposed to cut the BEA program — along with the rest of the Community Development Financial Institution programs operated by the Treasury — because it argued that they have achieved their goals and outlived their purpose.

    FASB opens door — slightly — to changes in loan-loss reserves -- Financial institutions will have another chance to voice concerns about a planned accounting rule change for loan-loss reserves. The Financial Accounting Standards Board has reconvened the group that met several times before it adopted its Current Expected Credit Loss standard last June. The meeting, which will take place Monday in Norwalk, Conn., is intended to address some recent stakeholder questions, a FASB spokeswoman said.

    Interest on Fed reserves is the wrong market policy to criticize: BankThink -  There is a considerable debate in the world of economics and finance about the efficacy of the Federal Reserve’s payments of “interest on excess reserves” held at the central bank. Norbert Michel at the Heritage Foundation and George Selgin at the Cato Institute, vociferous critics of the practice, claim that the 1% now paid in interest on excess reserves (IOER) is constraining bank lending. In fact, there is nothing that supports this thesis.  Properly viewed, the Federal Reserve System is the alter ego of the U.S. Treasury. The Fed does not earn “profits” from its holdings of Treasury debt, but simply forgives part of the obligations of the United States, subtracts its operating expenses, and remits the balance back to the Treasury.  In 2008, when Congress gave the Fed the power to pay IOER deposited with the Fed, it was simply creating a new short-duration, risk-free asset class. Excess reserves compete with Treasury obligations and other short-duration investment assets with low or zero risk weighting for bank capital purposes. The 1% that the Fed now pays on IOER is a bit higher than the 0.8% available on T-bills maturing in the next four weeks, but does this constrain bank lending? Absolutely not. In the theoretical realm of economics, the Fed’s 1% payment of IOER may seem significant. But, especially since it is a true risk-free asset, the relevant comparison for this rate is against other short-term investments with similar risk profiles. Excess reserves on deposit with the Fed are cash, so if the bank finds a better use for the funds, there is nothing to prevent a change in asset allocation. When considering the asset-liability management of a bank, there are basically three buckets: lending, investing and trading. The fact that the bank can earn 1% on excess reserves with the Fed — with a zero capital weight — is certainly relevant to the investment function of the institution, but the lending side of the house is unlikely to even consider it. More important to lending are the internal exposure risk limits for different asset classes, the overall leverage of the institution versus regulatory limits, and the net runoff of existing loans.

    Why paying interest on reserves is good for lending -- In a recent op-ed, Norbert Michel of the Heritage Foundation and George Selgin of the Cato Institute argue that the Federal Reserve should stop paying interest on excess reserves (IOER) because it reduces bank lending and will increase the odds of a recession. I disagree. As I will explain, for any given level of market interest rates, paying interest on reserves improves the ability of the Fed to conduct monetary policy, which reduces volatility and encourages growth.  Paying interest on reserves does not, as Michel and Selgin argue, “encourage banks to park money at the Fed instead of lending to businesses and household.” The Fed’s influence on bank lending to businesses and households comes through the level of market interest rates, and the central bank achieves a given interest rate level through a combination of setting the quantity of reserves and the level of IOER. While the Fed can, of course, achieve its interest rate objective without IOER — as it did prior to the crisis — such a policy works less well, especially in a crisis, with a corresponding cost to the economy. Reserve balances are deposits held by banks at the central bank. Paying interest on those balances is a standard monetary policy tool used by 13 of the 14 largest central banks to help keep market interest rates near their respective targets.   The Fed has indicated that it will soon start allowing its balance sheet to shrink by partially ceasing to reinvest principal payments. This process is expected to start sometime this year. As noted in a recent blog post, I agree with Michel and Selgin that the economy would be best-served if the Fed returned to conducting monetary policy with a small balance sheet, in a manner similar to how it did before the crisis. Where we disagree is that I think the Fed should retain and continue to use IOER.

     Bankers at odds over GSE recapitalization proposal -- ICBA backs a plan to recapitalize Fannie and Freddie through retained earnings and public offerings, but other groups see it as a self-interested proposal to help GSE stockholders.   A new proposal to recapitalize Fannie Mae and Freddie Mac so the two housing enterprises can exit conservatorship is dividing the banking industry.  The Independent Community Bankers of America supports the plan developed by the investment banking firm Moelis & Co. LLC that would recapitalize the two government-sponsored enterprises within four years. Unlike most other housing reform proposals, it would not require legislation.

    It’s not just banks with a stake in achieving regulatory relief   -- As Washington focuses on former FBI Director James Comey’s testimony this week, something else will be happening in the nation’s capital that will have a far greater impact on the U.S. economy. Congress and the administration will both take initial steps to fix regulatory rules that are hurting banks’ ability to serve their customers and communities, and are holding back economic growth.The first move this week will come from the administration. As soon as this week, the Treasury Department is to release a much-anticipated report on potential reforms to bank regulation that could free up more resources for lending, reduce artificial barriers between banks and their customers, and give Americans more choices about their financial future. The report comes in response to President Trump’s executive order on “core principles for regulating the U.S. financial system.” While we don’t know what’s in the final report, ideally it will articulate several areas where reform is much-needed, such as capital requirements, liquidity and mortgage regulations. These are not esoteric topics. Consider a few examples:

    • Unnecessarily complex mortgage rules have driven many community banks out of the mortgage market. One small bank in Iowa — a single example of many — stopped making home loans because the software it would have had to purchase to meet new Dodd-Frank Act paperwork requirements would have overwhelmed what it earns in making those mortgages. These rules also place emphasis on one-size-fits-all product features that make it difficult for bankers to provide customized home loans.
    • Customers are clamoring for small-dollar, affordable personal loans to handle emergencies or cover transitions between work, and bankers have long responded, with most banks offering small personal loans, in many cases as a special convenience to customers. But regulators have discouraged banks from providing some popular products and have pending proposals that would exclude more than half of community banks’ small-dollar loan programs and make them economically impossible — ironically, pushing customers toward riskier, under-the-table sources of funding.
    • A wave of global rules implemented after the financial crisis sought to address the problems that led to a cash crunch during the crisis. Worryingly, those rules — developed at a global level for global banks — actually make the U.S. financial system less resilient. For example, by narrowly defining what counts as the high-quality liquid assets banks are required to hold, the rules strongly encourage banks to hold onto limited assets in a crisis instead of lending while making it harder for banks to accept deposits — thus potentially making the crisis even worse.

    FHA premium reduction remains on hold: Carson — The financial condition of the Federal Housing Administration's mortgage insurance fund has "stabilized," according to Housing Secretary Ben Carson. But that does not mean he's ready to cut FHA premiums again. Testifying this week at a Senate Appropriations subcommittee, Carson said he does not want to "go back" to the situation in 2011, when the FHA fund nearly depleted its capital reserves. The ratio of reserves to insured mortgages fell to 0.24%, well below the 2% statutory minimum.

    Goldman: "Prices and Risks in Commercial Real Estate" -- A few excerpts from a research note by Goldman Sachs economists Spencer Hill and Daan Struyven: Seven Years of Feast: Prices and Risks in Commercial Real Estate  Commercial real estate prices have increased 76% in real terms over the last seven years and are now above pre-crisis levels. At the same time, elevated supply growth, demand risks, and rapid credit growth in some subsectors suggest additional focus on the asset class is warranted ... we believe commercial real estate valuations are becoming increasingly stretched and are now moderately overvalued – between 0.5 and 0.9 standard deviations rich – even after taking into account the lofty levels of other assets classes. .. [W]e think it’s important to note two key distinctions between the CRE market today and that of 2006. First, lending standards appear meaningfully tighter today ... Second, valuations do not look nearly as stretched today, with the extent of overvaluation 2-3x larger in 2006  [W]hile we believe commercial real estate markets were reasonably valued during most of this expansion, our models now suggest they could be moderately overvalued – even taking into account the lofty level of other assets classes. Furthermore, the combination of higher interest rates and potentially unfavorable supply & demand dynamics suggest heightened risk that the misvaluation could worsen. Indeed, these developments could ultimately become the catalysts that produce such a repricing. CR Note: there are several warning signs for commercial real estate.  As an example, even as the economy approaches full employment - and the demand for office space will likely slow - new construction is still strong and vacancy rates are already high.    This graph, based on data from Reis, shows the office vacancy rate starting in 1980 (prior to 1999 the data is annual). Reis reported the vacancy rate was at 15.8% in Q1.  The office vacancy rate is at the lowest level since early 2009, but remains elevated. Slowing office demand, more supply and an already high vacancy rate imply weaker fundamentals going forward. 

    Is all the talk of the death of the mall overdone? - Talk of the demise of the shopping mall may be overdone, according to Fitch Ratings, which on Monday took a neutral stance on retail REITS, or real estate investment trusts, the entities that own and manage malls and rent space to tenants. Mall REITs are popular with investors for their attractive dividend yields. But the sector has come under pressure this year amid a wave of closure announcements from department store chains, sporting retailers and teen clothing retailers, among others. The retail sector is going through a period of severe retrenchment as it responds to the challenge from Inc. AMZN, -0.82% as well as changing consumer behavior and spending habits.But Fitch is upbeat that bricks-and-mortar stores will continue to exist and attract shoppers, despite the inroads made by Amazon into just about every category. The ratings agency expects that about 70% of retail sales will still take place in a physical store in 2020, down from 80% today.“Consumers by and large still enjoy shopping as a leisure activity, plus a significant portion of online sales are connected with a store visit,” Fitch Managing Director Steven Marks wrote in the first issue of the agency’s new Equity REIT Handbook. Some mall REITS, particularly class B, will struggle to grow rents as they lose tenants, he said. But Fitch is overall neutral on the sector, a position that is considerably less bearish than others. Outside of retail, REITS in the office and industrial space have healthier fundamentals and can expect to perform better, said Marks. A softening of demand for space is not expected to pressure rents, while jobs growth should buoy tech employment-oriented markets.

    Nomura traders in ultimate bet won't testify at fraud trial -- Three former Nomura Holdings mortgage-bond traders accused of cheating their customers called no witnesses in their defense against fraud charges, betting that prosecutors’ evidence is too weak to convict them.Lawyers for the three traders — Ross Shapiro, Michael Gramins, and Tyler Peters — have said they will tell jurors that the prosecution failed to prove its case beyond a reasonable doubt and, in fact, some of government’s witnesses helped their clients. None of the defendants took the stand.The government rested its case Tuesday in Hartford, Conn., after presenting eight witnesses, including former Nomura junior traders who said they were trained to lie in bond negotiations and customers who testified they had been duped. Closing arguments are expected to begin later this week, and jurors may begin deliberating by the end of the week.The trio are among more than a half-dozen bond professionals who have been charged with misrepresenting prices to customers. The crackdown on abuses in the bond market began with the arrest of former Jefferies LLC managing director Jesse Litvak in January 2013. Litvak was sentenced last month to two years in prison.Attorneys for the ex-Nomura traders have contended that their clients were negotiating with highly sophisticated professionals who consulted their own models when deciding whether to trade and only pulled the trigger when the price was right. Guy Petrillo, an attorney for Shapiro, said earlier in the trial that Nomura’s customers got the "best available price" during the deals at issue, receiving the exact bonds they sought."No one was bamboozled or snookered," Petrillo said. "All of the buying and selling was done by some of the most financially successful hedge-fund and money-management firms in the world, each managing billions of dollars."

     HSBC officially completes obligations under the National Mortgage Settlement -- After a little more than a year, HSBC officially completed its obligations under the National Mortgage Settlement, according to the latest update from Joseph Smith, monitor of the National Mortgage Settlement. Earlier this year, Smith’s office announced HSBC finished its consumer relief requirement under the settlement, providing more than $371 million in consumer relief. This latest update gives the final report from Smith’s office on HSBC, noting that the company did not fail any metrics for the third and fourth quarters of 2016 and has satisfied its obligations under the settlement.The settlement dates back to February 2016 when HSBC agreed to a $601 million settlement with a series of federal agencies and nearly every state over charges that the bank engaged in mortgage origination, servicing and foreclosure abuses.“HSBC has completed its obligations to the NMS,” Smith said. “The servicer will continue to remain accountable to servicing-related rules issued and enforced by the CFPB.”As monitor, Smith evaluates HSBC using the 34 metrics, or tests, detailed in the settlement. These metrics determine whether the servicers adhere to the 304 servicing standards, or rules, contained in the NMS. The chart below shows the 34 metrics that HSBC was tested on.

    Fay Servicing to pay $1.15M to settle CFPB's dual tracking claims -- Fay Servicing will pay $1.15 million in borrower restitution and fines to settle Consumer Financial Protection Bureau allegations that it engaged in so-called foreclosure dual tracking and failed to keep borrowers informed about loss mitigation efforts. Chicago-based Fay Servicing violated Regulation X of the Real Estate Settlement Procedures Act and other consumer protection laws by taking "prohibited foreclosure actions against certain borrowers" and failing "to have policies and procedures reasonably designed to provide required foreclosure protections," the CFPB alleged in a consent order Wednesday.

    Senate Democrats Target Trump's Proposed HUD Budget Cuts -Democrats on the Senate Banking Committee Tuesday grilled President Donald Trump’s nominee for deputy secretary of housing and urban development over the administration’s proposed steep cuts to HUD programs.At her confirmation hearing, HUD deputy secretary nominee Pamela Patenaude said multiple times that she supports the entirety of Trump’s budget. But Patenaude emphasized that she was not involved in the drafting process.Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio), the panel’s ranking member, pointed to the Trump budget’s plan to eliminate the Community Development Block Grant, a decades-old program aimed largely at boosting affordable housing and reducing blight.  Patenaude told Warren she would support “reforms” to the program. She noted that cuts to the program were proposed during the two previous presidential administrations, largely over concerns the program doesn’t effectively target beneficiaries. Trump’s budget, released last month, says the program “is not well-targeted to the poorest populations and has not demonstrated a measurable impact on communities.”Brown also noted Patenaude, a HUD official in the George W. Bush administration, would be making critical policy and funding recommendations to HUD Secretary Ben Carson.  “Let’s just put this gently: Your knowledge and expertise far exceeds your boss’s — I think that’s generally believed,” Brown said in reference to Carson, who worked as a neurosurgeon before retiring and entering politics. “He will be listening to you — What will you say to him about this budget?”  Patenaude responded that she could be counted on to “advocate for programs that work and are effective.” She then reiterated her support for the Trump budget.

    Black Knight Mortgage Monitor: "Q1 2017 Originations Fall 34 Percent, Led By 45 Percent Drop in Refinance Lending" --  Black Knight Financial Services (BKFS) released their Mortgage Monitor report for April today. According to BKFS, 4.08% of mortgages were delinquent in April, down from 4.24% in April 2016. BKFS also reported that 0.85% of mortgages were in the foreclosure process, down from 1.17% a year ago. This gives a total of 4.93% delinquent or in foreclosure.  Press Release: Black Knight’s Mortgage Monitor: Q1 2017 Originations Fall 34 Percent, Led By 45 Percent Drop in Refinance Lending; Despite Recent Rate Softening, Home Affordability Remains Near Post-Recession Low  This month, Black Knight looked at Q1 2017 purchase and refinance originations, finding significant quarterly declines in volume among both. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, the declines are rooted in the upward interest rate shift seen in Q4 2016. “Overall, first lien mortgage originations fell by 34 percent in the first quarter of 2017,” said Graboske. “As expected, the decline was most pronounced in the refinance market, which saw a 45 percent decline from Q4 2016 and were down 20 percent from last year. They also made up a smaller share of overall originations than in the past; just 45 percent of total Q1 originations were refinances vs. 54 percent in Q4 2016. Purchase originations were also down 21 percent from Q4 2016, although the first quarter is historically the calendar-year low for such lending. Purchase lending was up year-over-year, but the three percent annual growth is a marked decline from Q4 2016’s 12 percent, and marks the slowest growth rate Black Knight has observed in more than three years – going back to Q4 2013. At that point in time, interest rates had risen abruptly – very similarly to what we saw at the end of 2016 – and originations slowed considerably. The same dynamic is at work here.

    CoreLogic: "3.1 million Homes were still in negative equity" at end of Q1 2017 --From CoreLogic: CoreLogic® Reports Nearly 9 Million Borrowers Have Regained Equity Since the Height of the Crisis in 2011Rising home prices led to improvements in home equity, with 91 thousand residential properties regaining equity in Q1 2017. The number of mortgaged residential properties with equity is now at 48.2 million.  An additional 0.6 million properties would regain equity if home prices rose another 5 percent. CoreLogic® analysis indicates that approximately 3.1 million homes, or 6.1 percent of all residential properties with a mortgage, were still in negative equity at the end of the first quarter of 2017. Negative equity means that a borrower owes more on a home than it is worth. These properties may be referred to as underwater or upside down. On states: "Nevada [12.4%, down from 17.5% in Q1 2016], Florida [11.1%, down from 15.0%], Illinois [10.5%], New Jersey [10.2%], and Connecticut [9.9%] account for 32.6 percent of negative equity in the United States."Note: The share of negative equity is still high in Nevada and Florida, but down from a year ago.

     MBA: Mortgage Applications Increase in Latest Weekly Survey -- From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey Mortgage applications increased 7.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 2, 2017. This week’s results included an adjustment for the Memorial Day holiday. ... The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 10 percent from one week earlier to its highest level since May 2010. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 6 percent higher than the same week one year ago. ...  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.17 percent, with points decreasing to 0.32 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The first graph shows the refinance index since 1990. Refinance activity will not increase significantly unless rates fall sharply. The second graph shows the MBA mortgage purchase index.  Even with the increase in mortgage rates late last year, purchase activity is still up 6% year-over-year.

    30 Year Fixed Mortgage Rates Fall Below 4% --From Matthew Graham at Mortgage News Daily: Mortgage Rates Unexpectedly Fall to 2017 Lows (Again)Mortgage rates unexpectedly fell to new 7-month lows today, following bond market gains in the overnight hours (Asian and European trading sessions).  The average lender is now quoting conventional 30yr fixed rates in the high 3% range on top tier scenarios.  The range is fairly wide between lenders as some were better positioned for these market movements than others.  That means the same scenario could see a rate as low as 3.75% at one lender and 4.125% at another with the same closing costs.  It continues to be the case that Thursday's events have the biggest potential to push rates higher or lower.Here is a table from Mortgage News Daily: Home Loan Rates  View More Refinance Rates

     CoreLogic: House Prices up 6.9% Year-over-year in April --Notes: This CoreLogic House Price Index report is for April. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.9 Percent in April 2017Home prices nationwide, including distressed sales, increased year over year by 6.9 percent in April 2017 compared with April 2016 and increased month over month by 1.6 percent in April 2017 compared with March 2017, according to the CoreLogic HPI.Mortgage rates in April dipped back to their lowest level since November of last year, spurring home-buying activity,” said Dr. Frank Nothaft, chief economist for CoreLogic. “In some metro areas, there has been a bidding frenzy as multiple contracts are placed on a single home. This has led home-price growth to outpace rent gains. Nationally, home prices were up 6.9 percent over the last year, while rent growth for single-family rental homes recorded a 3 percent rise through April, according to the CoreLogic Single-Family Rental Index.”“Interest rates on fixed-rate mortgages are down by one-fourth of a percentage point since mid-March, just in time to support the spring home-buying season,” said Frank Martell, president and CEO of CoreLogic. “Some metro areas have low for-sale inventory, short time-on-market trends and homes that sell above the list price. Geographically, gains were strongest in the West with Washington and Utah posting double-digit gains.”  This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100. The index was up 1.6% in April (NSA), and is up 6.9% over the last year. This index is not seasonally adjusted, and this was another strong month-to-month increase. The index is still 1.8% below the bubble peak in nominal terms (not inflation adjusted). The second graph shows the YoY change in nominal terms (not adjusted for inflation). The YoY increase had been moving sideways over the last two years, but might have picked up recently (the recent pickup could be revised away). The year-over-year comparison has been positive for over five consecutive years since turning positive year-over-year in February 2012.

     Zillow Forecast: "Zillow’s April Case-Shiller forecast expects growth of 5.6 percent in the national index" -- The Case-Shiller house price indexes for March were released last week. 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: April Case-Shiller Forecast: Tapping on the BrakesHome prices will finally catch a break in April, when Zillow’s April Case-Shiller forecast expects growth of 5.6 percent in the national index, slightly slower than its 5.8 percent year-over-year climb in March. The seasonally adjusted month-over-month pace also is forecast to drop, to 0.2 percent in April following a 0.3 percent climb in March.Annual growth in the smaller 10- and 20-city indices — which was flat in March — is expected to accelerate slightly: The 10-city forecast is for a 5.4 percent gain in annual growth for April, following 5.2 percent annual growth in March. The 20-city index is projected to gain 6.1 percent in April, below its 5.9 percent annual gain in March.The 10-city index is forecast to climb a seasonally adjusted 0.5 percent in April from March, following 0.9 percent monthly growth between February and March. Growth in the 20-city index is expected to slow on a seasonally adjusted, month-over-month basis, rising 0.6 percent in April after a 0.9 percent climb in March.Zillow’s April Case-Shiller forecast is shown below. These forecasts are based on [last week’s] March Case-Shiller data release and the April 2017 Zillow Home Value Index. The April S&P CoreLogic Case-Shiller Indices will not be officially released until Tuesday, June 27.The year-over-year change for the Case-Shiller National index will probably be smaller in April than in March.

    Home-Flippers Reliance On Leverage Rises To Highest Level In 9 Years - In the latest sign that the US housing market has peaked after an astounding post-crisis run-up, a report by ATTOM Data Solutions showed that the number of homes flipped by speculators fell to its lowest level in two years. The report showed that 43,615 single family homes and condos were flipped nationwide during the first quarter of 2017, the lowest number since the first quarter of 2015. However, even as the number of flipped homes has fallen, their share of total real-estate transactions has actually risen. During the first quarter, they accounted for 6.7% of all transactions, up from 5.8% in the fourth quarter of 2016, and unchanged from the same period a year earlier. “The business of financing for home flippers continued to grow in the first quarter of 2017 even as the home flipping rate plateaued compared to a year ago and average home flipping returns decreased for the second consecutive quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Home flippers financed an estimated $3.5 billion in purchases for homes flipped during the quarter, up from $3.3 billion in the previous quarter and up from $2.4 billion a year ago to the highest level since the fourth quarter of 2007 — a more than nine-year high.” The explosion in home valuations in urban markets like Brooklyn, Washington D.C. and San Francisco has inspired real-estate speculators to search for the next big score, with the highest percentage of home flips completed with the aid of outside financing occurring in Colorado Springs, Colorado (69.3 percent); Denver, Colorado (54.8 percent); Seattle, Washington (51.6 percent); Boston, Massachusetts (51.3 percent); and Providence, Rhode Island (47.3 percent).

    Leading Index for Commercial Real Estate Increases in May -- Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.   From Dodge Data Analytics: Dodge Momentum Index Resumes Growth in May  Following a dip in April, the Dodge Momentum Index advanced 4.0% in May to 139.1 (2000=100) from its revised April reading of 133.7. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. In May, the commercial component of the Momentum Index increased 4.8% to an eight-and-a-half year high, which suggests that construction activity for commercial buildings will continue to rise over the next year, even with signs of decelerating improvement in market fundamentals (occupancies and rents). The institutional component of the Momentum Index rose 2.9% in May, making a partial rebound after pulling back 12.0% in April.  This graph shows the Dodge Momentum Index since 2002. The index was at 139.1 in May, up from 133.7 in April.  The index is up solidly year-over-year. According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further increases in CRE spending over the next year.

    Hotels: Hotel Occupancy up Year-over-Year -- From STR: US hotel results for week ending 27 May The U.S. hotel industry reported positive results in the three key performance metrics during the week of 21-27 May 2017, according to data from STR. In comparison with the week of 22-28 May 2016, the industry recorded the following:
    • Occupancy: +0.5% to 70.3%
    • Average daily rate (ADR): +2.5% to US$127.47
    • Revenue per available room (RevPAR): +3.1% to US$89.67
    The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

    Fed's Flow of Funds: Household Net Worth increased in Q1 - The Federal Reserve released the Q1 2017 Flow of Funds report today: Flow of Funds. According to the Fed, household net worth increased in Q1 2017 compared to Q4 2016: The net worth of households and nonprofits rose to $94.8 trillion during the first quarter of 2017. The value of directly and indirectly held corporate equities increased $1.3 trillion and the value of real estate increased $0.5 trillion. Household net worth was at $94.8 trillion in Q1 2017, up from $92.5 trillion in Q4 2016.  The Fed estimated that the value of household real estate increased to $23.5 trillion in Q1. The value of household real estate is now above the bubble peak in early 2006 - but not adjusted for inflation, and this also includes new construction. The first graph shows Households and Nonprofit net worth as a percent of GDP.  Household net worth, as a percent of GDP, is higher than the peak in 2006 (housing bubble), and above the stock bubble peak. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations. This graph shows homeowner percent equity since 1952.  Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.  In Q1 2017, household percent equity (of household real estate) was at 58.3% - up from Q4, and the highest since Q1 2006. This was because of an increase in house prices in Q1 (the Fed uses CoreLogic). Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So the approximately 50+ million households with mortgages have far less than 58.3% equity - and about 3 million homeowners still have negative equity. The third graph shows household real estate assets and mortgage debt as a percent of GDP. Mortgage debt increased by $44 billion in Q1. Mortgage debt has declined by $1.22 trillion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates). The value of real estate, as a percent of GDP, was up in Q1, and  is above the average of the last 30 years (excluding bubble).  However, mortgage debt as a percent of GDP, continues to decline.

    Household Net Worth Hits A Record $95 Trillion ... There Is Just One Catch --In the Fed's latest Flow of Funds report, today the Fed released the latest snapshot of the US "household" sector as of March 31, 2017. What it revealed is that with $110.0 trillion in assets and a modest $15.2 trillion in liabilities, the net worth of the average US household rose to a new all time high of $94.835 trillion, up $2.4 trillion as a result of an estimated $500 billion increase in real estate values, but mostly $1.78 trillion increase in various stock-market linked financial assets like corporate equities, mutual and pension funds, as the stock market continued to soar to all time highs .At the same time, household borrowing rose by only $36 billion from $15.1 trillion to $15.2 trillion, the bulk of which was $9.8 trillion in home mortgages. The breakdown of the total household balance sheet as of Q2 is shown below.And while it would be great news if wealth across America had indeed risen as much as the chart above shows, the reality is that there is a big catch: as shown previously, virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans. As a reminder, from the CBO's latest Trends in Family Wealth analysis, here is a breakdown of the above chart by wealth group, which sadly shows how the "average" American wealth is anything but.

    Mortgage Equity Withdrawal slightly negative in Q1 -- The following data is calculated from the Fed's Flow of Funds data (released today) and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW" - and normal principal payments and debt cancellation (modifications, short sales, and foreclosures).  For Q1 2017, the Net Equity Extraction was a negative $7 billion, or a negative 0.02% of Disposable Personal Income (DPI) .  Note that seasonally, Q1 is the usually the weakest quarter of the year equity extraction.This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method. Note: This data is impacted by debt cancellation and foreclosures, but much less than a few years ago. The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding increased by $44 billion in Q4. The Flow of Funds report also showed that Mortgage debt has declined by $1.22 trillion since the peak. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance. With a slower rate of debt cancellation, MEW will likely be positive going forward.

     Consumers Hit The Brakes: Smallest Increase In Consumer Credit In 6 Years -- In the latest red flag for the US economy, moments ago the Fed reported that consumer credit for the month of April rose a paltry $8.2 billion, barely half the consensus estimate of $15.5 billion, and 40% of march's $19.5 billion. This was the lowest monthly increase in consumer credit going back nearly 6 years to August 2011. The increasingly obvious downward trendline in crediting is hardly indicative of a confident consumer. While revolving, i.e. credit card, debt rose a modest $1.5 billion, far below the increase in the prior two months... ... it was the sharp slowdown in non-revolving consumer credit, which rose just $6.7 billion, suggesting that either student or auto loans had virtually ground to a halt.  While the reason for the unexpected sharp slowdown is not immediately clear, a chart of sources of consumer credit reveeals that the US government, long a dominant source of consumer debt, has virtually disappeared.

    Trump’s America Is Facing a $13 Trillion Consumer Debt Hangover -- After bingeing on credit for a half decade, U.S. consumers may finally be feeling the hangover.  Americans faced with lackluster income growth have been financing more of their spending with debt instead. There are early signs that loan burdens are growing unsustainably large for borrowers with lower incomes. Household borrowings have surged to a record $12.73 trillion, and the percentage of debt that is overdue has risen for two consecutive quarters. And with economic optimism having lifted borrowing rates since the election and the Federal Reserve expected to hike further, it’s getting more expensive for borrowers to refinance. Some companies are growing worried about their customers. Public Storage said in April that more of its self-storage customers now seem to be under stress. Credit card lenders including Synchrony Financial and Capital One Financial Corp. are setting aside more money to cover bad loans. Consumer product makers including Nestle SA posted slower sales growth last quarter, particularly in the U.S.  Companies may have reason to be concerned. Consumer spending notched its weakest gain in the first quarter since the end of 2009, a problem in an economy where consumers account for 70 percent of spending, though analysts expect the dip to be transitory. And debt delinquencies are rising even as the job market shows signs of strength. “We’ve conditioned American consumers to use debt to close the gap between their wages and their spending. When the Fed hikes, riskier borrowers are going to get pinched first.”Since the 2008 financial crisis, the Fed has kept rates low to encourage companies and consumers to borrow more and spur economic growth. Much of the gains in household debt since 2012 have come from student loans, auto debt and credit cards. Over that time, wage growth has averaged around 2.2 percent a year, and the pace has been slowing for much of this year. 

    Credit Card Defaults Surge Most Since Financial Crisis -- In late April, after some disturbing monthly charge-off reports from major credit card vendors, we reported that according to the latest data from the S&P/Experian Bankcard Default Index, as of March 2017, the default rate on US credit cards had jumped to 3.31%, an increase of 13% from a year ago, and the highest default rate since June 2013. The troubling deterioration prompted Moody's to pen its own report yesterday titled "Spike in Charge-off Rates Indicates a Slide in Underwriting Standards" and as Moody's analyst Warren Kornfelf writes, the steep increase in credit card charge-off rates in 1Q’17 and 4Q’16 was the largest since 2009, and indicates that "strong underwriting standards in place since the financial crisis have deteriorated, potentially rapidly." According to Moody's, the "the size of the jump was surprising in light of the ongoing strength of the US employment market" unless of course the BLS is chronically, for political reasons or otherwise, misreporting the real dynamics in the labor market, or else the even more chronic failure of rale wages to rise means increasingly more Americans can not even make their minimum credit card payments. First quarter charge-offs were highest for Capital One Financial, First National of Nebraska and Synchrony Financial (unrated), whose portfolios were already the weakest performing. Charge-offs at Capital One, First National of Nebraska and Synchrony rose to 5.31% (up 1.08% year-over-year), 4.21% (up 0.71%) and 5.40% (up 0.56%), respectively. Capital One especially stood out, as its Q1 charge-offs almost reached their historical average while Discover and First National of Nebraska’s climbed to just over 80% of theirs; Citigroup rose to about 70%.

    Google Now Tracks Your Credit Card Purchases and Connects Them to Its Online Profile of You --Google’s new ability to match people’s offline credit card purchases to their online lives is a stunning display of surveillance capitalism in action.  The capability, which Google unveiled this week, allows the company to connect the dots between the ads that it shows its users and what they end up actually buying. This is a crucial link for Google’s business that, for all of the company’s inventiveness, remains a matter of attracting users to its predominantly free services, collecting user data, and leveraging that data to sell advertising. If Google can show that someone who saw an ad for a furniture store in Google Maps, say, then went and made a big purchase at that store, the store’s owner is much more likely to run more ads.  Of course, Google has been able to track your location using Google Maps for a long time. Since 2014, it has used that information to provide advertisers with information on how often people visit their stores. But store visits aren’t purchases, so, as Google said in a blog post on its new service for marketers, it has partnered with “third parties” that give them access to 70 percent of all credit and debit card purchases.  So, if you buy stuff with a card, there’s a less than one-in-three chance that Google doesn’t know about it.  Given how few “anonymous” data points are required to identify an individual from credit card data, it’s hard to believe that linking people’s behavior on services as diverse as Gmail, YouTube, Google Maps, and others to offline buying habits couldn’t result in someone’s privacy being compromised, especially if it ever fell into the hands of hackers.

    Boeing Studies Planes Without Pilots, Plans Experiments Next Year -- "Boeing has begun researching the possibility of commercial-passenger jets that will fly without pilots, using artificial intelligence guiding automated controls to make decisions in flight," reports Seattle Times. The company is planning experimental flights, without passengers, for next year. From the report: "The basic building blocks of the technology are clearly available," said Mike Sinnett, former chief systems engineer on the 787 Dreamliner and now vice president at Boeing responsible for innovative future technologies, at a briefing before the Paris Air Show. "There's going to be a transition from the requirement to have a skilled aviator operate the airplane to having a system that operates the vehicle autonomously, if we can do that with the same level of safety," Sinnett said. Sinnett said Boeing's research is driven by the pilot shortage worldwide that is only going to become more acute. In the next two decades, Boeing forecasts a demand for about 40,000 new commercial jets, roughly doubling the world fleet.

    Why Car Companies Are Hiring Computer Security Experts - It started about seven years ago. Iran’s top nuclear scientists were being assassinated in a string of similar attacks: Assailants on motorcycles were pulling up to their moving cars, attaching magnetic bombs and detonating them after the motorcyclists had fled the scene. In another seven years, security experts warn, assassins won’t need motorcycles or magnetic bombs. All they’ll need is a laptop and code to send driverless cars careering off a bridge, colliding with a driverless truck or coming to an unexpected stop in the middle of fast-moving traffic. Automakers may call them self-driving cars. But hackers call them computers that travel over 100 miles an hour. “These are no longer cars,” said Marc Rogers, the principal security researcher at the cybersecurity firm CloudFlare. “These are data centers on wheels. Any part of the car that talks to the outside world is a potential inroad for attackers.” Those fears came into focus two years ago when two “white hat” hackers — researchers who look for computer vulnerabilities to spot problems and fix them, rather than to commit a crime or cause problems — successfully gained access to a Jeep Cherokee from their computer miles away. They rendered their crash-test dummy (in this case a nervous reporter) powerless over his vehicle and disabling his transmission in the middle of a highway.  Still, the research by Mr. Miller and Mr. Valasek came at a steep price for Jeep’s manufacturer, Fiat Chrysler, which was forced to recall 1.4 million of its vehicles as a result of the hacking experiment. It is no wonder that Mary Barra, the chief executive of General Motors, called cybersecurity her company’s top priority last year. Now the skills of researchers and so-called white hat hackers are in high demand among automakers and tech companies pushing ahead with driverless car projects. Criminals have not yet shown they have found back doors into connected vehicles, though for years, they have been actively developing, trading and deploying tools that can intercept car key communications.But as more driverless and semiautonomous cars hit the open roads, they will become a more worthy target. Security experts warn that driverless cars present a far more complex, intriguing and vulnerable “attack surface” for hackers. Each new “connected” car feature introduces greater complexity, and with complexity inevitably comes vulnerability.Twenty years ago, cars had, on average, one million lines of code. The General Motors 2010 Chevrolet Volt had about 10 million lines of code — more than an F-35 fighter jet. Today, an average car has more than 100 million lines of code. Automakers predict it won’t be long before they have 200 million. When you stop to consider that, on average, there are 15 to 50 defects per 1,000 lines of software code, the potentially exploitable weaknesses add up quickly.

    Morgan Stanley Warns Of "Unprecedented Buyer's Strike" In Autos; Slashes Car Sales Forecast -- Morgan Stanley's auto team, led by analyst Adam Jonas, seems to be convinced that the auto trade is officially over prompting him to slash over 11 million units from his North American SAAR forecast over the next 4 years.  Jonas attributes his controversial call to the fact thatOEMs have been so aggressive in implementing policies designed to pull forward sales(e.g. longer loan terms, higher loan mix to subprime borrowers, etc.) that they've actually started to pressure used car prices to the point that they're cannibalizing new sales. We had held to a ‘higher-for-longer’ thesis on the assumption that the OEMs could keep pulling forward demand from the future… For several years, we have expressed our concern over the sustainability of used car values and powerful forces that could drive a multiyear cyclical decline, impairing the ability for consumers to transact and the willingness of financial institutions to lend as aggressively as in the past. Up to this point, we had believed that competitive forces, particularly the ability of the captive finance subs to find new ways to lower the monthly payment and put 'money on the hood’, would help extend the US auto volume cycle a few more years to new heights.

    U.S. wholesale inventories post biggest drop in more than a year -- U.S. wholesale inventories fell more steeply in April than the government had previously estimated, posting their biggest drop in more than a year as sales also fell sharply. The Commerce Department said on Friday that wholesale inventories fell 0.5 percent in April after increasing 0.1 percent in March. The department reported last month that wholesale inventories slipped 0.3 percent in April. Automotive inventories fell 1.4 percent while petroleum inventories dropped 5.0 percent, their biggest fall since December 2015. Paper inventories fell 1.8 percent in the category's biggest drop since January 2013. Wholesale stocks of electrical goods also slipped 0.1 percent while machinery inventories were flat. Sales at wholesalers fell 0.4 percent in April after falling 0.2 percent in March. Sales of electrical goods rose 0.7 percent while those of machinery fell 0.8 percent. Auto sales were up 1.3 percent. At April's sales pace it would take wholesalers 1.28 months to clear shelves, unchanged from March.

    Wholesale Trade Report Worse Than Expected: 2nd Quarter Recovery Thesis Nearly Dead -- The second-quarter recovery fantasy took another smack in the face today with wholesale trade data. Sales fell 0.4% and inventories fell 0.5%. In addition, the Census Department revised March inventories from 0.2% to 0.1%. The Econoday consensus estimate was for inventories to decline 0.3%. In yet another negative for second-quarter GDP, wholesale inventories fell a sharper-than-expected 0.5 percent in April. The draw is centered in autos but also includes other durable goods and nondurable goods as well. Sales at the wholesale level were weak, down 0.4 percent in the month and justifying the inventory draw. The wholesale stock-to-sales ratio holds unchanged at a still lean 1.28. Careful inventory management is a plus for the economy but in this case points to caution. When combined with a sizable draw in retail inventories and only a small build for factory inventories, today’s data point to the first draw in total business inventories since October last year (inventory draw is a negative in the GDP calculation). Final and revised inventory data for April will be released next week with the business inventories report.

    AAR: Rail Traffic increased in May - From the Association of American Railroads (AAR) Rail Time Indicators. May 2017 was a good month for U.S. rail traffic. Total originated carloads were up 8.4% (99,290) over May 2017 thanks to big increases for coal (up 19.6% in May), grain (up 24.5%), and crushed stone, gravel, and sand (up 15.3%, thanks to frac sand). ... [Intermodal]: It was the second best May in history (slightly behind 2015) in terms of average weekly intermodal volume. Year-to-date intermodal in 2017 through May was the highest in history, fractionally ahead of 2015.  This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Dark blue is 2017.  Rail carloads have been weak over the last decade due to the decline in coal shipments. U.S. rail carloads rose 8.4% (99,290 carloads) in May 2017 over May 2016. The-glass-is-half-full types will point out that this is the seventh straight year-over-year monthly gain for total carloads, something that hasn’t happened since the seven months ending in January 2015 (see the chart below right). The glassis-half-empty types, though, will point out that average weekly total carloads in May 2017 (257,215) were the third lowest for May since 1988, when our data begin. (Only May 2009 and May 2016 were lower.)  The second graph is for intermodal traffic (using intermodal or shipping containers): U.S. rail intermodal volume in May 2017 was 1,339,417 containers and trailers, up 4.6%, or 58,665 units, over May 2016. Weekly average intermodal volume in May 2017 (267,883 units) was the second best for May in history (slightly behind 2015).

    Factory orders post first drop in five months --New orders for U.S.-made goods fell in April for the first time in five months and orders for capital equipment were not as weak as previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.2 percent, the Commerce Department said on Monday after an upwardly revised 1.0 percent increase in March. Economists polled by Reuters had forecast factory orders falling 0.2 percent in April after a previously reported 0.5 percent increase in March. Factory orders were up 4.4 percent from a year ago. Manufacturing, which accounts for about 12 percent of the U.S. economy, is being supported by a recovery in the energy sector that has led to demand for oil and gas drilling equipment. But a slowdown in motor vehicle sales could hurt production in the coming months. The government reported on Friday that employment at motor vehicles and parts manufacturers fell by 1,500 jobs in May. A manufacturing survey last week showed a measure of factory activity steady in May after two straight months of declines. Monday's report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - edging up 0.1 percent instead of being unchanged as reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, nudged up 0.1 percent instead of the previously reported 0.1 percent decrease.

    Factory Orders a 2nd Quarter Disappointment: “High-Flying” Regional Nonsense --Hard data for the second quarter continues to suffer despite diffusion indexes that have generally performed better. Put more credence on the hard data.Factory orders in April declined -.2% in line with the Econoday consensus.The Census Department revised March up from 0.2% to 1.0%, but that is mostly a mirage of aircraft orders that will impact production years from now. Also, February new orders were revised lower, taking away half of March’s gain.The weak run of second-quarter data continues with April’s 0.2 percent decline in factory orders. The durable goods component fell 0.8 percent in the month reflecting a give back in aircraft orders and wide weakness for most readings. Orders for non-durable goods rose 0.4 percent reflecting moderate gains for food and energy.The ex-transportation reading, which excludes aircraft, managed only a 0.1 percent gain in the month with core capital goods orders (nondefense ex-aircraft) also up only 0.1 percent. April’s shipments of core capital goods, which are an input into second-quarter GDP, also rose only 0.1 percent which is another negative in this report. And only a marginal positive for GDP is a 0.1 percent rise in total inventories. Total shipments were unchanged in the month keeping the inventory-to-shipments ratio unchanged at 1.38.Positives in the report include a 0.6 percent rise for motor vehicle orders and a 1.6 percent rise for computers. Also total unfilled orders, which contracted through most of last year, are up 0.2 percent for a second straight small gain.Another positive in the report is an upward revision to March factory orders which now stand at 1.0 percent following February’s 0.8 percent gain. But the prior gains were driven by aircraft as the ex-transportation reading could move only modestly higher. The factory sector is not living up to the promise of the high-flying regional reports and, instead of accelerating this year, now appears to be struggling. The factory sector is not just now struggling. Rather, Econoday is just now noticing. Other than one report on industrial production, nearly everything has struggled.

    ISM Non-Manufacturing Index decreased to 56.9% in May --The April ISM Non-manufacturing index was at 56.9%, down from 57.5% in April. The employment index increased in May to 57.8%, from 51.4%. Note: Above 50 indicates expansion, below 50 contraction.   From the Institute for Supply Management:May 2017 Non-Manufacturing ISM Report On Business® "The NMI® registered 56.9 percent, which is 0.6 percentage point lower than the April reading of 57.5 percent. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 60.7 percent, 1.7 percentage points lower than the April reading of 62.4 percent, reflecting growth for the 94th consecutive month, at a slower rate in May. The New Orders Index registered 57.7 percent, 5.5 percentage points lower than the reading of 63.2 percent in April. The Employment Index increased 6.4 percentage points in May to 57.8 percent from the April reading of 51.4 percent. The Prices Index decreased 8.4 percentage points from the April reading of 57.6 percent to 49.2 percent, indicating prices decreased in May for the first time after 13 consecutive months of increasing. According to the NMI®, 17 non-manufacturing industries reported growth. Although the non-manufacturing sector’s growth rate dipped in May, the sector continues to reflect strength, buoyed by the strong rate of growth in the Employment Index. The majority of respondents’ comments continue to indicate optimism about business conditions and the overall economy."

    Markit Services PMI Up Again in May --The May US Services Purchasing Managers' Index conducted by Markit came in at 53.6 percent, up 0.5 percent from the April estimate. The consensus was for 54.1 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.  Here is the opening from the latest press release:Growth of business activity in the US service sector accelerated slightly in May, reaching a three-month high. This extended the current period of activity growth to 15 months.The seasonally adjusted Business Activity Index continued to run above the crucial 50.0 no-change mark during May. A reading of 53.6, up from 53.1 in April, signalled the largest rise in overall activity since February. [Press Release]  Here is a snapshot of the series since mid-2012.

    Services Surveys Indicate "Modest Pace Of Economic Growth" So Far In Q2 As New Orders Tumble - Despite disappointing expectations, May Final Services PMI rose for the second month in a row with job creation and new orders accelerating, but as Markit notes, "the PMI surveys for manufacturing and services collectively indicate only a modest pace of economic growth so far in the second quarter." While PMI popped a little, ISM also disappointed and fell back from its April rebound, with a big drop in prices paid and new orders (but  surge in employment). The full ISM breakdown shows 6 categories declined: new orders, business activity/production; deliveries; prices; export orders, imports; and 4 categories rose:employment, inventories, backlogs, inventory sentiment… New Orders dumped...  So it seems tumbling new orders are good for employment...  Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said“Although service sector business activity picked up in May, the PMI surveys for manufacturing and services collectively indicate only a modest pace of economic growth so far in the second quarter.“However, the key message from the PMI is that the economy is enjoying steady, albeit unspectacular, growth, and that the pace of expansion has been slowly lifting higher in recent months.“Hiring meanwhile remains on a firm footing, with the survey’s employment indicators running at levels consistent with around 160,000 jobs added to the economy in May.“In another sign of the economy’s underlying steady expansion, average prices charged for goods and services is running at the second highest in almost two years, indicating that rising demand is helping restore some pricing power.”Based on the composite PMI, US Q2 growth is on target for around 2%...

    Interest rates, PMI services, Factory orders, ISM services - Warren Mosler - If rates go up when loan demand is strong enough so the borrowing continues, the added loan payments flow back to earnings for the lender, and govt. pays more interest, so it can all not only keep going but accelerate. However, if demand is weak, and rates go up as they did late last year due to anticipation of Fed hikes, borrowing and spending can decelerate, as per the charts: The weak run of second-quarter data continues with April’s 0.2 percent decline in factory orders. The durable goods component fell 0.8 percent in the month reflecting a give back in aircraft orders and wide weakness for most readings. Orders for non-durable goods rose 0.4 percent reflecting moderate gains for food and energy. The ex-transportation reading, which excludes aircraft, managed only a 0.1 percent gain in the month with core capital goods orders (nondefense ex-aircraft) also up only 0.1 percent. April’s shipments of core capital goods, which are an input into second-quarter GDP, also rose only 0.1 percent which is another negative in this report. And only a marginal positive for GDP is a 0.1 percent rise in total inventories. Total shipments were unchanged in the month keeping the inventory-to-shipments ratio unchanged at 1.38. Positives in the report include a 0.6 percent rise for motor vehicle orders and a 1.6 percent rise for computers. Also total unfilled orders, which contracted through most of last year, are up 0.2 percent for a second straight small gain. Another positive in the report is an upward revision to March factory orders which now stand at 1.0 percent following February’s 0.8 percent gain. But the prior gains were driven by aircraft as the ex-transportation reading could move only modestly higher. The factory sector is not living up to the promise of the high-flying regional reports and, instead of accelerating this year, now appears to be struggling. "

     Employment Situation: Maybe a Little Softer than I Thought  - Menzie Chinn -A couple of days ago, I noted that most indicators showed continued growth. Quarterly Census of Employment and Wages figures released today indicate a slightly softer employment situation at end of 2016 than is represented by the establishment series. From Wells Fargo: The Quarterly Census of Employment and Wages (QCEW) is a detailed count of employment and wages derived from the unemployment insurance tax rolls and serve as the basis for the annual revisions to the monthly employment series. The latest data, which are available through December, show hiring slowed a bit more abruptly than previously thought during the second half of last year. The fourth quarter QCEW data show year-to-year job growth slowing to just 1.2 percent at year-end 2016, or some 0.3 percentage points less than the monthly establishment payroll series. Moreover, the QCEW data show the pace of job growth decelerating more sharply during the second half of last year and shed new light on the slowdown in nonfarm payroll growth over the past three months, which has seen the average gain in nonfarm employment slow to just 120,700 jobs per month. The QCEW series also provide new insights into the lack of wage growth.

    Weekly Initial Unemployment Claims decrease to 245,000 - The DOL reported: In the week ending June 3, the advance figure for seasonally adjusted initial claims was 245,000, a decrease of 10,000 from the previous week's revised level. The previous week's level was revised up by 7,000 from 248,000 to 255,000. The 4-week moving average was 242,000, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 1,750 from 238,000 to 239,750. The previous week was revised up by 7,000.  The following graph shows the 4-week moving average of weekly claims since 1971.

    BLS: Job Openings "increased to a series high" in April --From the BLS: Job Openings and Labor Turnover Summary The number of job openings increased to a series high of 6.0 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires decreased to 5.1 million and separations edged down to 5.0 million. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.1 percent and 1.1 percent, respectively. ...  The number of quits edged down to 3.0 million (-111,000) in April. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. This series started in December 2000. The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent employment report was for May. Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs. Jobs openings increased in April to 6.044 million from 5.785 million in March. Job openings are at a new series high. The number of job openings (yellow) are up 7% year-over-year. Quits are up 4 year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits"). This is another solid report.

    Record Job Openings Not As Impressive As It Sounds --I'm seeing a lot of headlines about a record high number of job openings.  While it's technically true that the number of job openings (as reported in the Job Openings and Labor Turnover Survey from the US Bureau of Labor Statistics) is at a record high, this statement needs lots and lots and lots of qualification. The most important qualification is that the data only go back to December 2000.  If you were paying attention at the time, you remember that the dotcom bubble had already burst, and the US economy was heading into a recession.  And the subsequent housing boom wasn't really a broad hiring boom, so the JOLTS data don't give us an appropriate comparison for record job openings. The second qualification is that the US economy has gotten larger over time, and the raw number of job openings largely reflects this scale increase rather than a boom in hiring.  The job openings rate is 4%, which is high for the series but has already been hit twice (July 2015 and July 2016).
    The third qualification is that the jump in job openings in April was mostly in hotel and restaurant businesses, so it isn't a broad-based increase. To put April's report in perspective, I estimated the job openings rate going back to 1951.  Prior to 1997, the estimates are based on the Conference Board's newspaper Help Wanted Index, normalized by total non-farm payrolls.  From 1997 to 2000, I adjusted the Help Wanted Index to reflect the increasing market share of online job advertising.  And I linked these data with the JOLTS data (which I use since December 2000) to allow interpreting the earlier data in terms of job openings rate.

    Why Aren’t American Teenagers Working Anymore? - This summer American teenagers should find it a little easier to get a job—if they want one. The U.S. unemployment rate fell to 4.3 percent in May, the lowest in 16 years, so teens started looking for summer jobs in the best labor market since the tech boom of the early 2000s. The May unemployment rate for 16- to 19-year-olds was 14.3 percent, but teens usually find it harder to find jobs than their more experienced elders. Back in 2009, the teenage jobless rate hit 27 percent. A CareerBuilder survey of 2,587 employers released last month found that 41 percent were planning to hire seasonal workers for the summer, up from 29 percent last year. But the unemployment rate measures joblessness only among people who are actively looking for work. And many American teens aren't.For Baby Boomers and Generation X, the summer job was a rite of passage. Today's teenagers have other priorities. Teens are likeliest to be working in July, according to data from the Bureau of Labor Statistics that's not seasonally adjusted. In July of last year, 43 percent of 16- to 19-year-olds were either working or looking for a job. That's 10 points lower than in July 2006. In 1988 and 1989, the July labor force participation rate for teenagers nearly hit 70 percent.Whether you're looking at summer jobs or at teen employment year-round, the work trends for teenagers show a clear pattern over the last three decades. When recessions hit, in the early 1990s, early 2000s, and from 2007 to 2009, teen labor participation rates plunge. As the economy recovers, though, teen labor doesn't bounce back. The BLS expects the teen labor force participation rate to drop below 27 percent in 2024, or 30 points lower than the peak seasonally adjusted rate in 1989.   ‘

    Elderly Americans Are Taking Their Grandkids' Summer Jobs -- Compared with their peers in the European periphery, American teenagers looking for a part-time job this summer are in an enviable position: With the unemployment rate at a post-crisis low and demand for seasonal workers set to rise by more than 10 percentage points compared with last year, they shouldn’t have much trouble finding work, Bloomberg reported.However, despite these encouraging circumstances, the teenage workforce participation rates are already at their lowest levels in more than a decade – and they’re expected to keep falling. The Bureau of Labor Statistics expects the workforce participation rate among teens to break below 27 percent in 2024, or 30 points lower than the peak seasonally adjusted rate in 1989.  Why? Because teens these days are facing stiff competition from Americans over the age of 65 – i.e. their parents and grandparents. As Bloomberg reports: American teens are “being crowded out of the workforce by older Americans, now working past 65 at the highest rates in more than 50 years.”Of course, senior citizen aren’t the only demographic group vying for the service-industry jobs once coveted as a rite of passage among American teens. Immigrants have also taken some of those jobs, as Bloomberg reports. “Why aren't teens working? Lots of theories have been offered: They're being crowded out of the workforce by older Americans, now working past 65 at the highest rates in more than 50 years. Immigrants are competing with teens for jobs; a 2012 study found that less educated immigrants affected employment for U.S. native-born teenagers far more than for native-born adults.”

     U.S. Supreme Court to settle major cellphone privacy case | Reuters: Police officers for the first time could be required to obtain warrants to get data on the past locations of criminal suspects based on cellphone use under a major case on privacy rights in the digital age taken up by the U.S. Supreme Court on Monday. The justices agreed to hear an appeal by a man convicted in a series of armed robberies in Ohio and Michigan with the help of past cellphone location data who contends that without a warrant from a court such data amounts to an unreasonable search and seizure under the U.S. Constitution's Fourth Amendment. Cellphone location records are becoming increasingly important to police in criminal investigations, with authorities routinely requesting and receiving this information from wireless providers. Police helped establish that the man at the center of the case, Timothy Carpenter, was near the scene of the robberies at Radio Shack and T-Mobile stores by securing past "cell site location information" from his cellphone carrier that tracked which local cellphone towers relayed his calls. The case reaches the high court amid growing scrutiny of the surveillance practices of U.S. law enforcement and intelligence agencies amid concern among lawmakers across the political spectrum about civil liberties and police evading warrant requirements. The legal fight has raised questions about how much companies protect the privacy rights of their customers. The big four wireless carriers receive tens of thousands of requests a year from law enforcement for what is known as "cell site location information," or CSLI. The requests are routinely granted. 

    After Legalizing Weed, Unemployment In Colorado Has Collapsed To Record Lows - Three years after legalizing cannabis, Colorado has the lowest unemployment rate in the country. “While the national unemployment rate dropped to 4.3 percent in May, the lowest since 2001, Colorado’s jobless rate is the nation’s lowest at 2.3 percent,” CNBC reportedMonday. According to Governor John Hickenlooper, multiple factors have contributed to Colorado’s job growth, including the state’s business-friendly policies. He touts the state’s very low business tax rate, noting Colorado has “one of the lowest business income tax levels at just a little over 4.6 percent.” This approach has helped create over 60,000 jobs in the clean energy sector, a fact that should please both business and environmental advocates.One of the main factors in Colorado’s successful economy, however, is undeniably the cannabis industry.Last year, cannabis generated $1.3 billion in profit, which yielded nearly $200 million in tax revenue that the state is using for various programs, including education, substance abuse and cannabis awareness programs for youth, and even the Attorney General’s office. ZH: As the following chart shows, since Colorado Amendement 64 was passed (leading to legalization in Jan 2014), Colarado's unemployment rate has accelerated lower dramatically faster than the nation... and at 2.3%, Colarado is at a record low

    Puerto Rico prepares to vote on statehood -Puerto Ricans will head to the polls Sunday to determine whether they want to convert their U.S. territory into a state. Even if they vote for statehood, Congress seems unlikely to add a 51st star to the U.S. flag anytime soon. The referendum fulfills a campaign promise made by Puerto Rico Gov. Ricardo Rosselló, who believes the financial benefit of full statehood would help solve the island's economic woes. The island is drowning under $74 billion in debts and $49 billion in pension liabilities, which forced Congress to create an oversight board that filed a form of bankruptcy protection for Puerto Rico in May. Rosselló is pushing hard for the vote, even signing a measure this week that authorizes him to choose two senators and five representatives and send them to Washington to demand statehood, a strategy Tennessee employed to join the union in the 18th century. But few believe Congress would go along even if Puerto Ricans overwhelmingly vote for statehood. Edwin Meléndez, director of the Center for Puerto Rican Studies at Hunter College in New York, said becoming a state would lead to a massive transfer of money from Washington to San Juan. While Puerto Ricans are exempt from the U.S. federal income tax, they still pay Social Security and Medicare taxes but receive less federal funding than people living in U.S. states. Statehood would change that dramatically. A 2010 Government Accountability Office report found that the federal government would need to pay up to $12 billion a year in government services to the new state while only getting $2.3 billion back in income tax. That $2.3 billion would probably be far lower now, Meléndez said, because of the island's spiraling finances, its high unemployment and a population exodus to the U.S. mainland that has further shrunken Puerto Rico's tax base.

    Puerto Rico highway creditors take 'clawback' fight to court -- A lawyer for Puerto Rico's financial oversight panel on Monday said the bankrupt island's highway authority could run out of cash if it continues to pay all its debt, and signaled big repayment cuts for the authority's creditors.Attorney Martin Bienenstock made the comments at a court hearing related to Puerto Rico's bankruptcy, at which a creditor of the Highway and Transportation Authority, or HTA, sought to block the island's use of "clawbacks" - diverting toll revenue out of HTA's coffers. HTA bondholders have a lien on that revenue, and want to keep getting paid.But "once they take the money, we have no money to operate the highway authority," Bienenstock said in a Manhattan courtroom on Monday. Judge Laura Taylor Swain scheduled a trial on the dispute for Aug. 8, in the Puerto Rican capital San Juan.Eric Brunstad, an attorney for HTA creditor Peaje Investments, said HTA would be able to function while paying debt. "The parade of horribles is not so," Brunstad said. The diversions, or "clawbacks," were imposed by the U.S. territory's government last year to keep Puerto Rico afloat as it battled $70 billion in debt, a 45 percent poverty rate and near-insolvent healthcare and pension systems. They applied to several public agencies, including HTA. Now in bankruptcy, Puerto Rico - and the federal board appointed by U.S. Congress to manage its finances - will have to defend the clawbacks against creditors who have called them illegal.The validity of the clawbacks will help determine the recoveries of bondholders of the affected agencies, and the liability of companies that insure those bonds, like Assured  Guaranty

    Trump Targets Food Stamps With Proposed Fee On Retailers - Trump's proposal to overhaul the U.S. food stamp program, or the Supplemental Nutrition Assistance Program (SNAP) as it's currently known, has brought with it a widely overlooked fee that could end up costing food retailers billions.  Per MSN:That provision is a new fee that the White House wants to charge retailers that accept food stamps, which is now known as the Supplemental Nutrition Assistance Program.The Office of Management and Budget said the fee would be assessed when stores sign up and would require renewal after five years. The budget office said the amount would depend on the size and type of retailer, but the president's budget estimates that the fee would generate $2.4 billion in revenue over the next decade.An OMB official described the fee as "modest" and "reasonable," emphasizing that some large retailers redeem a billion dollars or more in food stamp benefits each year."Although a small number of stores may choose to leave the program rather than pay the fee, we do not expect that this will affect access to authorized stores," the official said.Of course, the fee is likely intended to cut down on the wildly unmanageable 260,000 different retailers that opt into the program each year.  That said, the biggest financial impact will accrue to traditional grocery  stores, dollar stores and supercenters (aka Walmart) which collectively account for well over 80% of the $66BN in annual SNAP benefits. The overhaul also proposes reducing overall expenditures on SNAP, a program which Budget Director Mick Mulvaney described as "a formula for waste and growth rates and costs that are simply unsustainable."

    Alabama Sees 85% Drop In Food Stamp Participation After Work Requirements Reinstated --13 Alabama counties experienced some 'shocking' results, or maybe not depending on your natural level of cycism, when they decided to once again require able-bodied food stamp recipients, without dependents, to be employed and/or engaged in a job-training program in order to participate in the program for more than 3 months over a 3-year period. As background, Alabama, like many states, lifted their work/training requirements associated with food stamp benefits after the great recession.  That said, starting Jan. 1, 2017 the last of Alabama's 13 counties reinstated those requirements and they promptly experienced an 85% decline in taxpayer-funded food subsidies.  Per previously exempted Alabama counties saw an 85 percent drop in food stamp participation after work requirements were put in place on Jan. 1, according to the Alabama Department of Human Resources.During the economic downturn of 2011-2013, several states - including Alabama - waived the SNAP work requirements in response to high unemployment. It was reinstituted for 54 counties on Jan. 1, 2016 and for the remaining 13 on Jan. 1, 2017. As of April 2017, the highest jobless rate among the 13 previously excluded counties was in Wilcox County, which reported a state-high unemployment rate of 11.7 percent, down more than 11 percentage points from the county's jobless rate for the same month of 2011. As of Jan. 1, 2017, there were 13,663 able-bodied adults without dependents receiving food stamps statewide. That number dropped to 7,483 by May 1, 2017. Among the 13 counties, there were 5,538 adults ages 18-50 without dependents receiving food stamps as of Jan. 1, 2017. That number dropped to 831 - a decline of about 85 percent - by May 1, 2017.  Statewide, the number of able-bodied adults receiving food stamps in Alabama fell by almost 35,000 since Jan. 1, 2016.  Meanwhile, with each recipient receiving about $126 a month in benefits, that equates to over $50 million in annual savings for taxpayers based on just the state of Alabama alone. 

     Staggering Number Of Homeless In LA Shows How Tough It Is To Get By - The number of homeless people in Los Angeles is skyrocketing. In just one year, the figures revealed that the homeless population in the city grew 20% while the numbers for the wider Los Angeles County were even higher at 23%. As if looking at those numbers isn’t cringeworthy enough, The Los Angeles Homeless Services Authority reported Wednesday that 6,000 homeless young people were tallied across the county in January, a 61% increase over the 2016 total. Most of the young people are ages 18 to 24. All the youth shelters have waiting lists and affordable housing is tough to find, even with a rent voucher, according to Heidi Calmus of Covenant House California, an international youth homeless services agency with a branch in Hollywood. “The system is overwhelmed,” Calmus said Tuesday night as she and a colleague, Nick Semensky, delivered toiletry bags and sandwiches to young people living in the streets. Despite efforts to combat the problem, the number of homeless continue to go up. In 2015 authorities declared a public emergency as the numbers sleeping on the streets soared. City officials committed $100 million to tackle the problem. It’s safe to say that whatever is being done right now is not working. Los Angeles County Supervisor Janice Hahn described the figures as “staggering.” “Homelessness in LA County has grown at a shocking rate,” she said in a statement. “Even as work is being done to get thousands of people off the street and into housing, more and more people are becoming homeless. It is clear that if we are going to end the homeless crisis, we need to stem the overwhelming tide of people falling into homelessness.” But it isn’t that easy. Experts are placing the blame on soaring rents and a high cost of living as the two major factors. According to, a 900 square foot furnished apartment will cost over $2400 per month. Los Angeles Mayor Eric Garcetti said there was “no sugarcoating the bad news”. “It’s impossible to wrap your head around the numbers,” he told reporters, adding that soaring rents and the city’s high cost of living were partly to blame. “We can’t let rents double every year,” he told reporters. Mayor Garcetti is correct in that you cannot sugarcoat these numbers. In its latest report, the LAHSA said there were 57,794 people homeless in the county during its survey in January, compared to 46,874 in 2016. In the city there were 34,189 with no permanent roof over their heads, the report said, compared to 28,464 the year before.

     Starved School Budgets Across the US: A Symptom of Education Funding Crisis -- This week’s disturbing news that Oklahoma schools are so poorly funded some of them may move from five days a week to four got a lot of people’s attention, including my colleague Richard Eskow, who called this an example of “the Republican party’s sickness of the soul.” Unfortunately, the illness is highly contagious.  The contagion stems from revenue shortfalls in states that counted on money that never materialized – at least 29 states, according to Education Week. Although unemployment rates have generally declined in these states, and economies have improved since the Great Recession, lawmakers in many of these states also decided to enact tax cuts and to do nothing about stagnating wages, so income tax and sales tax revenues flattened or even dipped. Governors in these states say education finance is a priority – at least according to an annual survey of them.  But obviously, these state leaders forgot the revenue side of the equation. Oops! State lawmakers’ inability to do basic arithmetic is having painful impacts on schools, teachers, and children. Oklahoma is indeed the poster child for the negative consequences. “Funding for classrooms has been shrinking for years,” reports the Washington Post, “slicing away hundreds of millions of dollars in annual revenue.” The shift to four-day weeks is not the only consequence of the financial crisis. Art and music programs have been cut, teachers are getting laid off, and those teachers who are left are the worst paid in the nation. But Oklahoma is just an extreme point on a long continuum of bad.  Somewhere else on that continuum lies North Carolina, where lawmakers passed legislation to lower class sizes in the early grades – arguably a good thing – but then failed to provide schools funding to hire more teachers necessary to meet the new class size mandates. Years of financial backsliding in The Tar Heel state has reduced local school budgets to skin and bones, according to local school officials, but many state lawmakers continue to talk about cutting taxes.  State lawmakers in Kansas have, for years, addressed repeated budget shortfalls with tax cuts that have lead to yet more budget shortfalls. (Why does anyone find this surprising?) Many schools ran out of money and had to close early. In other districts, class sizes ballooned, art and science programs disappeared, and parents had to pay fees for their children to play sports.

    Why Schools Still Can't Put Segregation Behind Them -- A federal district court judge has decided that Gardendale -- a predominantly white city in the suburbs of Birmingham, Alabama -- can move forward in its effort to secede from the school district that serves the larger county. The district Gardendale is leaving is 48 percent black and 44 percent white. The new district would be almost all white.The idea that a judge could allow this is unfathomable to most, but the case demonstrates in the most stark terms that school segregation is still with us. While racial segregation in US schools plummeted between the late 1960s and 1980, it has steadily increased ever since -- to the the point that schools are about as segregated today as they were 50 years ago.As a former school desegregation lawyer and now a scholar of educational inequality and law, I have both witnessed and researched an odd shift to a new kind of segregation that somehow seems socially acceptable. So long as it operates with some semblance of furthering educational quality or school choice, even a federal district court is willing to sanction it.  While proponents of the secession claim they just want the best education for their children and opponents decry the secession as old-school racism, the truth is more complex: Race, education and school quality are inextricably intertwined.  Thirty-seven percent of our public schools are basically one-race schools– nearly all white or all minority. In New York, two out of three black students attend a school that is 90 to 100 percent minority. The Gardendale parents argued their motivations were not about race at all, but just ensuring their kids had access to good schools. The evidence pointed in the other direction: In language rarely offered by modern courts, the judge found, at the heart of the secession, "a desire to control the racial demographics of [its] public schools" by "eliminat[ing]… black students [from] Gardendale schools." Still, these findings were not enough to stop the secession. As in many other cases over the past two decades, the judge conceded to resegregation, speculating that if she stopped the move, innocent parties would suffer: Black students who stayed in Gardendale would be made to feel unwelcome and those legitimately seeking educational improvements would be stymied.

    Senators Question DeVos on Connection to Heartland Institute's Mailing to Educators Denying Climate Science - Four Democratic senators sent a letter to Education Sec. Betsy DeVos this week calling out her support of President Trump's decision to pull out of Paris . The letter points out that DeVos has not commented "on any administration decisions or policies outside of the purview of the Department of Education" except for Paris, which she praised in a statement last week. The senators raised concerns over a Heartland Institute -funded campaign to distribute climate denier literature to every public school science teacher in the country, and questioned if DeVos or her staff had contact with the Heartland Institute on climate science issues. The senator's—Sheldon Whitehouse, Brian Schatz, Elizabeth Warren and Edward Markey—wrote in the letter: "It is our sincere hope that neither White House staff nor Department of Education officials have turned to the Heartland Institute on the issues of climate change and climate science, or had any roll in this mailing to educators." The senator's asked Education Sec. DeVos to answer the following four questions:

    • 1. Have any staff members at the Department of Education had contact with individuals associated with the Heartland Institute on climate, science, or science education issues? If so, on what dates did these consultations occur and who did they involve?
    • 2. If the answer to the previous question is yes, please provide copies of all relevant correspondence between you and any Department of Education staff and representatives of the Heartland Institute.
    • 3. Are you or any members of your staff aware of discussions between White House staff members and individuals associated with the Heartland Institute? If so, what were the dates and topics of these conversations and who did they involve?
    • 4. Are any informational resources currently provided through Department of Education )e.g. What Works Clearing House, Teaching Resources page, etc.) created in collaboration with, or reviewed by, anyone associated with the Heartland Institute?

    American schools teach climate change differently in every state — except these 19 --    The deeply partisan divide on the issue of climate change has set public schools as a battleground in the fight. Seemingly innocuous standard-setting — which usually entails dryly-worded learning benchmarks for students — has become a political issue that plays out at the state level. Public K-12 education standards are set at the state, and not federal level, which means there are normally 50 different sets of standards for learning in the 50 different states. However, a group of states has recently signed up to adopt the same learning goals: the Next Generation Science Standards (NGSS).   This means that 19 states plus the District of Columbia now have the same standards for teaching the earth sciences and about climate change.  The NGSS unequivocally links human activities to climate change.  "Human activities, such as the release of greenhouse gases from burning fossil fuels, are major factors in the current rise in Earth’s mean surface temperature (global warming)," one of the disciplinary core ideas in the NGSS reads. "Reducing the level of climate change and reducing human vulnerability to whatever climate changes do occur depend on the understanding of climate science, engineering capabilities, and other kinds of knowledge, such as understanding of human behavior and on applying that knowledge wisely in decisions and activities," it continues. That concept, mandated to be taught in the NGSS, is controversial in the science standard-setting universe. In science education, "the two topics that arouse the most discontent and controversy are climate change and evolution," Glenn Branch, deputy director of the National Center for Science Education, told Business Insider. The NGSS has emerged as the "gold standard" in science learning, according to Branch.

    The Silicon Valley Billionaires Remaking America’s Schools - - In San Francisco’s public schools, Marc Benioff, the chief executive of Salesforce, is giving middle school principals $100,000 “innovation grants” and encouraging them to behave more like start-up founders and less like bureaucrats.In Maryland, Texas, Virginia and other states, Netflix’s chief, Reed Hastings, is championing a popular math-teaching program where Netflix-like algorithms determine which lessons students see.And in more than 100 schools nationwide, Mark Zuckerberg, Facebook’s chief, is testing one of his latest big ideas: software that puts children in charge of their own learning, recasting their teachers as facilitators and mentors.In the space of just a few years, technology giants have begun remaking the very nature of schooling on a vast scale, using some of the same techniques that have made their companies linchpins of the American economy. Through their philanthropy, they are influencing the subjects that schools teach, the classroom tools that teachers choose and fundamental approaches to learning.The involvement by some of the wealthiest and most influential titans of the 21st century amounts to a singular experiment in education, with millions of students serving as de facto beta testers for their ideas. Some tech leaders believe that applying an engineering mind-set can improve just about any system, and that their business acumen qualifies them to rethink American education.“They are experimenting collectively and individually in what kinds of models can produce better results,” said Emmett D. Carson, chief executive of Silicon Valley Community Foundation, which manages donor funds for Mr. Hastings, Mr. Zuckerberg and others. “Given the changes in innovation that are underway with artificial intelligence and automation, we need to try everything we can to find which pathways work.”  But the philanthropic efforts are taking hold so rapidly that there has been little public scrutiny.

    Voucher program helps well-off Vermonters pay for prep school at public expense (via ProPublica) — A self-made Vermonter, Glenn Bowman has sent both his children to out-of-state prep schools. His son plays lacrosse and football at Phillips Exeter Academy in New Hampshire, and his daughter studied advanced dance at Deerfield Academy in Massachusetts.As the owner of a successful soapstone company that's been featured on Martha Stewart and mentioned in The New York Times, Bowman could pay the $50,000-plus annual tuitions at each school out of his own pocket, he said.But he doesn’t have to.Because Londonderry, the small town where the Bowmans live, has no high school, they qualify for Vermont’s voucher program, the nation’s oldest. It contributes about $15,000 a year toward each tuition, ultimately saving Bowman more than $100,000 overall on his children’s high school educations.Bowman chose not to enroll his children in a public school in a nearby town, which the voucher could also have paid for. “Unfortunately, public schools are left dealing with the lowest common denominator and that leaves high-performing kids like mine in a tough place,” he told ProPublica. “You do the best you can for your kids. I can do this and so I do.”Vermont’s voucher program is a microcosm of what could happen across the country if school-choice advocates such as Education Secretary Betsy DeVos achieve their vision. By subsidizing part of the cost of private schools in or out of state, it broadens options for some Vermonters while diverting students from public education and disproportionately benefiting wealthier families like the Bowmans.Vermont vouchers have been used to send students to ski academies, out-of-state art schools and even foreign boarding schools, such as the Sigtunaskolan School in Sweden, whose alumni include Sweden’s current king and former prime minister. Vermont paid more than $40 million in vouchers to more than 60 private schools last year, including more than $1.3 million to out-of-state schools, according to data received from the state’s education agency through a public-records request. Of the almost 2,800 Vermonters who use publicly funded vouchers to go to private schools in state, 22.5 percent qualify for free or reduced price lunch, according to state education data.  By contrast, 38.3 percent of public school students in Vermont have family incomes low enough to qualify them for the lunch discount.“Families with higher socioeconomic status are opting into the private schools,” Nicole Mace, executive director of the Vermont School Boards Association, said in an interview. “If those dollars are going to subsidize a family who could otherwise afford a private school, that is not the best use of taxpayer dollars."

    Bank and credit card fees cost college kids $795 million - CNBC -U.S. college students shell out more than $795 million a year on bank and credit card fees, according to a new report. That's money that could be better spent on tuition and books. About 85 percent of undergrads have a checking account, yet that doesn't mean they are banking wisely. The average college student overdrafts more than twice a year, according to personal finance site NerdWallet, and coughs up $35 in fees each time. With more than 11 million full-time undergrads as of 2016, that's potentially more than $722 million wasted annually in overdraft fees alone. In addition, about one-third of college students have also paid a credit card bill late. With late-payment fees on student cards similarly averaging $35 a pop, that's another $73 million out the window, the report said. And in most cases, these fees are entirely avoidable — even for students who haven't taken Accounting 101. For starters, no one should spend more than what's in his or her bank account. Signing up for low-balance text alerts helps account holders avoid overdraft fees. Or, if bank customers opt out of overdraft coverage, their cards will likely be rejected if they try to make a purchase or ATM withdrawal and don't have enough cash in their accounts to cover it. (However, in that case they could be hit with a nonsufficient funds fee, so customers should be sure to check their bank's terms when opening an account.) Alternatively, pennywise students can choose a bank that caps fees or doesn't charge them at all. Liz Weston, NerdWallet columnist and author of "Your Credit Score," recommends looking into an online-only bank, which can be less expensive and more forgiving than the brick-and-mortar branch on campus.

     Exclusive Test Data: Many Colleges Fail to Improve Critical-Thinking Skills -  Results of a standardized measure of reasoning ability show many students fail to improve over four years—even at some flagship schools, according to a Wall Street Journal analysis of nonpublic results.Freshmen and seniors at about 200 colleges across the U.S. take a little-known test every year to measure how much better they get at learning to think. The results are discouraging.At more than half of schools, at least a third of seniors were unable to make a cohesive argument, assess the quality of evidence in a document or interpret data in a table, The Wall Street Journal found after reviewing the latest results from dozens of public colleges and universities that gave the exam between 2013 and 2016. (See full results.) At some of the most prestigious flagship universities, test results indicate the average graduate shows little or no improvement in critical thinking over four years. Some of the biggest gains occur at smaller colleges where students are less accomplished at arrival but soak up a rigorous, interdisciplinary curriculum.For prospective students and their parents looking to pick a college, it is almost impossible to figure out which schools help students learn critical thinking, because full results of the standardized test, called the College Learning Assessment Plus, or CLA+, are seldom disclosed to the public. This is true, too, of similar tests. Some academic experts, education researchers and employers say the Journal’s findings are a sign of the failure of America’s higher-education system to arm graduates with analytical reasoning and problem-solving skills needed to thrive in a fast-changing, increasingly global job market. In addition, rising tuition, student debt and loan defaults are putting colleges and universities under pressure to prove their value.

    Data Contradicts Washington Post’s Social Security Disability Welfare Cheating Story - Matt Bruenig - Terrence McCoy has a long piece in the Washington Post about multi-generational disability. Or, more accurately, a piece about one family McCoy spent a few days with. The only parts of the piece that try to quantify multi-generational disability make very little sense. From the article: As the number of working-age Americans receiving disability rose from 7.7 million in 1996 to 13 million in 2015, so did the number of households with multiple family members on disability, climbing from an estimated 525,000 in 2000 to an estimated 850,000 in 2015, according to a Post analysis of census data. The analysis is probably an undercount.The first problem is that “multiple family members” is not the same thing as “family members from different generations.” Two spouses would count. Two siblings would count. And so on. The second problem is that you can be “on disability” without being disabled if you have a disabled parent. When a parent is receiving SSDI benefits, each child they have will receive a benefit equal to 50 percent of their parent’s benefit, subject to an overall family benefit limit. Children do not need to be disabled to receive this benefit. They receive it simply because their parent is disabled. The third problem is that the household counts for 2000 and 2015 should be divided by the number of households in the country to convey the real magnitude of the change. In 2000, there were 104.7 million households, meaning that 0.5 percent of households had multiple family members on disability. In 2015, there were 124.6 million households, meaning that 0.7 percent fell into this category. That’s the crisis, apparently. I used the same American Community Survey file to produce a similar calculation as the one made in the piece. For my calculation, I kept things really simple. I isolated two types of households: 1) those with disabled children in them but no disabled adults, and 2) those with disabled children and disabled adults in them. Then I divided the number of households described by (1) and (2) by the total number of households in the file.

    Federal Judge To Decide If Illinois Should Speed Up Payments To Medicaid - A federal judge in Chicago signaled Tuesday that she would mandate the Illinois state government to pay Medicaid providers faster, bumping more than a billion dollars in late payments to the front of an already long line of unpaid bills.While no formal decision was made in court, U.S. District Court Judge Joan Lefkow is expected to issue a ruling Wednesday. Her decision could further complicate the state’s struggle to pay down a more than $14 billion bill backlog as the state enters its third year without a budget. The ongoing political war between Democratic legislative leaders and Republican Gov. Bruce Rauner already had the state struggling to prioritize payments to vendors and agencies that provide other critical services.“I don’t see myself telling the comptroller anything but ‘you have to pay,’” Lefkow said to attorneys in court Tuesday.Prioritizing Medicaid payments during the budget impasse could have big consequences due to the sheer size of the program: The joint state-federal health care system for poor people represents the single most expensive service Illinois provides. The state partially reimburses doctors who see low-income patients for the health care they provide.But in court documents filed last month, attorneys for Medicaid patients argued the state is in violation of Lefkow’s earlier ruling because of the late reimbursement payments. The call for faster reimbursements came from doctors, health care organizations and a group of managed care organizations, or MCOs, which all say they may not be able to continue serving Medicaid patients at all if the state doesn’t reimburse them faster.

    Illinois Gets June 20 Deadline to Boost Medicaid Funding - Illinois must increase payments to Medicaid providers despite an ongoing budget impasse, after a U.S. District Court judge on Wednesday ruled the minimal payments made by the state do not comply with federal consent decrees. Judge Joan Lefkow ordered renewed negotiations between Illinois and health care advocates for the poor, setting a June 20 deadline to be in "substantial compliance" with the decrees. Lawyers representing the state's 3 million Medicaid recipients had asked the judge to give precedence to payments to managed care organizations participating in the state and federal health care program for the poor and disabled over the state fully funding other priorities, including debt service on bonds and pensions. Lefkow said Illinois Comptroller Susana Mendoza, who pays the state's bills, has not offered a "lawful basis" for not paying the Medicaid providers the $2 billion they are owed. "Although the court means no disrespect to the comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court’s previous orders," the judge's latest order stated.Illinois is limping toward the June 30 end of a second-straight fiscal year without a complete spending plan due to a political stalemate between its Republican governor and Democrats who control the legislature. Lawmakers ended their spring session on May 31 without a fiscal 2018 budget deal, triggering downgrades that pushed Illinois' credit ratings from S&P and Moody's Investors Service to a step above junk. As a result of the stalemate, Illinois' backlog of unpaid bills reached $14.9 billion this week. 

    New York Health Insurers Ask for 16.6% Boost to Obamacare Rates -- Health insurers in New York are seeking another year of hefty premium increases for their Affordable Care Act plans, adding fuel to the debate over the law’s future. Insurers are seeking to boost their premiums 16.6 percent on average for 2018, the state Department of Financial Services said Wednesday. While that’s not as high as the 18 percent hike they requested last year, it’s still a substantial increase in cost for New Yorkers who don’t get help from subsidies under Obamacare. The companies are grappling with an uncertain future for Obamacare as they craft their plans for next year, and rate increases have varied widely among states. Republicans in Congress are working to repeal portions of the health law, while President Donald Trump has called Obamacare a failure and raised doubts about whether he’d pay subsidies known as cost-sharing reductions to insurers. Meanwhile, major insurers including Aetna Inc. and Humana Inc. have largely exited the health law’s markets. In New York, 16 insurers submitted rate filings in the individual Obamacare market, and the requested increases ranging from 4.4 percent to 47.3 percent, depending on the insurer. The state regulator can require the companies to adjust their requests. Last year, after adjustment, the regulator allowed for a 16.6 percent hike. The state provided little information on what’s behind the increases, and the insurers’ filings weren’t immediately available online. But insurers and regulators in other states have laid the blame for some of their premium increases on uncertainty from Washington. The key questions include whether the Trump administration will enforce the requirement, known as the individual mandate, that all people buy health insurance, and whether it’ll pay the subsidies.  The wide range across states and companies is a testament to the the haziness of the market.

    States scramble to prevent ObamaCare exodus | TheHill: Insurance commissioners are pulling out all the stops to keep insurers from leaving their states amid uncertainty over ObamaCare's future. They are offering insurers new, previously unheard of flexibilities to try to keep them in the market. But the effort faces an uphill climb, given the Trump administration's wobbling over whether it will continue federal payments that compensate insurers for subsidizing out-of-pocket costs for lower-income households. There's also the question of whether Congress will repeal ObamaCare this year.Insurers are skittish and pleading for certainty from Washington. They want assurances that they will continue to receive cost-sharing reduction payments from the federal government, which total about $7 billion this year. But no such promise appears forthcoming, prompting insurance commissioners to try and hold things together with later filing deadlines for enrollment and new concessions to insurers. “As a regulator, instead of being rigid on timelines, the type of pricing I’m going to want, I’m being more open about this,” said John Franchini, New Mexico’s insurance superintendent. “I’m trying to be more flexible to give them confidence that if things change, we as regulators will be flexible with them.” The biggest fear of the insurance commissioners is having every carrier pull out of a market, leaving people with no ObamaCare plans to buy. It’s a situation that hasn’t happened before, but could happen this year. 

    Nearly 40 percent of job-based health plans are 'high-deductible,' study says - -- High-deductible health plans are gaining ground among U.S. adults with employer-sponsored health insurance coverage. But too often, enrollees say high out-of-pocket costs are causing them to skip or delay needed medical care, a new government report finds. Nearly 40 percent of adults with job-based coverage were enrolled in a high-deductible plan in 2016, the report said. That's up from just over 26 percent in 2011, according to the National Center for Health Statistics, a unit of the U.S. Centers for Disease Control and Prevention. Increasingly, employers are adding high-deductible health plans to the menu of health plan choices they offer employees, or they're replacing traditional offerings with high-deductible plans, said Paul Fronstin, who was not involved in the report. He's director of the nonpartisan Employee Benefit Research Institute's health research and education program. "If you're not in a high-deductible health plan, that could be what you see next open-enrollment season," Fronstin said. "It's perhaps the easiest way to manage your costs as an employer."The move toward high-deductible plans isn't just about asking people to pay more out of pocket, he explained. Employers still pay the lion's share of employee health plan premiums, he said. "It's about getting people to think differently about their health care -- to get people to have more skin in the game," Fronstin said. But the report released June 6 also revealed a potentially worrisome aspect of these plans. People with job-based high-deductible plans were more likely to forgo or delay needed medical care than adults in traditional health plans that have low or no deductibles. While the proportions of people having problems are low, the difference is significant: 8.5 percent versus 4.1 percent, the report said. 

    The Numbers Are In: A Single-Payer Health System in California Would Cover Everyone and Save Tens of Billions a Year -- Almost all Californians and California businesses will see lower health care costs under a single-payer system, according to a fiscal analysis presented Wednesday by the bill’s sponsor and the California Nurses Association. The exceptions are the top 10 percent, individuals making $340,000 or more annually; and the most profitable firms, where a proposed tax surcharge on earnings could exceed savings from no longer paying for their employees' health plans. The analysis was done by a team led by Robert Pollin, the co-director of the Political Economy Research Institute at the University of Massachusetts and a former UC Riverside faculty member. At a Sacramento press conference, he explained how a single-payer system would enable all Californians to be completely covered. That includes 3.7 million currently uninsured residents and another 12 million who are underinsured, meaning they cannot afford their policy’s co-pays and deductibles. The universal coverage would be paid for by combining all government healthcare subsidies, which accounts for about 70 percent of California’s current spending, and by two proposed tax increases: a 2.3 percent gross receipt taxes on businesses (which kicks in after the first $2 million in earnings and which exempts small businesses); and a 2.3 percent increase in the sales tax, with exemptions for necessities such as food, housing, utilities, and other services. Those combined revenue streams would raise an estimated $400 billion annually to pay for universal coverage under a single-payer system. Today, Californians spend about $370 billion annually in an insurance-dominated system that leaves 40 percent of the state's  population underinsured or without any insurance at all. “Families will pay less for health care. The average middle-class family will see their out-of-pocket costs fall by 9 percent.” Most businesses will also save money, Pollin explained, because they will no longer be paying for their employees' health care. Even with the proposed gross receipts tax exempting the first $2 million, typical California businesses employing 10 to 19 people would see costs fall by 13.8 percent, he said.

    A Health Care Bargain  -- In a prior post, I wrote about a report from the California Senate Appropriations Committee that estimated the cost of a proposed single-payer system in the state. The report concluded that, under the single-payer plan, health expenditures in the state would be around $400 billion per year, or 15% of California’s GDP.Although many covered this as a ridiculously high figure, it is actually quite cheap relative to the US as a whole, which currently spends 18% of its GDP on health care. For those not reflexively afraid of large numbers, it is clear that this cost is definitely doable and is quite a bargain for the benefits the single-payer plan is said to provide.After that report came out, a new, more detailed cost estimate was provided by economists at the University of Massachusetts Amherst. The methods in the UMass paper are mercifully easy to follow.The cost estimate basically works like this:

    1. Determine the current level of health expenditures in the state using the national health expenditure database. This includes spending on hospitals, physicians/clinics, pharmaceuticals, dental care, nursing homes, home health care, and insurance administration. This figure is $368.5 billion.
    2. From there, they determine how much health care utilization would increase under single payer. They assume that uninsured people would double their health care utilization and that underinsured people would increase their health care utilization by 15%. They inflate the spending of those groups of people by these percentages (adjusted slightly for the age composition of the two groups) and arrive at a new figure for total health expenditures in the state: $404.1 billion.
    3. From there, they determine how much savings a single-payer system could deliver over the current system. They estimate that savings on administrative costs would reduce total spending by 6.7%, that savings on pharmaceutical drugs would reduce total spending by 3.4%, that savings from switching to Medicare reimbursement rates would reduce total spending by 2.9%, and that savings on unnecessary services, inefficiently delivered services, prevention, and fraud would reduce total spending by 5%. In total, then, the cost savings trim 18% off the figure in (2), giving a final estimate of $331 billion, or 12.5% of GDP.

    Needless to say, this cost is quite a bit lower than the one estimated previously by the Senate Appropriations Committee. If the costs really would just be 12.5% of GDP, then that means California’s health sector size would shrink to around the OECD average.

    CDC: Americans with High Deductible Health Plans Skyrocket since ACA - According to a recent study by the National Center for Health Statistics at the U.S. Centers for Disease Control and Prevention (CDC), the percentage of privately insured American adults aged 18 to 64 with high deductible health plans (HDHP) has risen from 26.3 in 2011 to 39.3 percent in 2016. This represents an increase of almost 50 percent in HDHP insured people. According to the report, “In 2016, HDHP was defined as a health plan with an annual deductible of at least $1,300 for self-only coverage or $2,600 for family coverage.”The report tracks both employer-provided policies and policies purchased by individuals, and both groups are seeing significant recent increases in use of HDHPs. This is not surprising because HDHPs are less expensive than health insurance policies with lower deductibles and other patient-paid out-of-pocket costs. However, HDHPs become expensive when used, as the higher deductibles, copays, and other expenses like potentially higher prescription drug costs can easily overwhelm a typical person or family’s budget.An unanticipated medical bill o f at least $1,300 represents a crisis for many Americans. AsNPQ recently reported, consumer debt is at an all time high, currently $12.7 trillion. “Almost two-thirds of Americans can’t weather a $500 emergency without borrowing or cutting back on other spending.” For people with chronic conditions and other ongoing healthcare needs, the annual deductible becomes a regular expense. The study reports that the percentage of privately insured adults aged 18–64 with HDHPs who report having problems paying their medical bills is 50 percent higher than those with traditional health plans, centered almost exclusively in patients who have employer-supplied health insurance (presumably, if an individual is choosing to purchase an HDHP, they have the ability to cover the patient’s share of healthcare expenses under the plan).

    The Doctor Is In. Co-Pay? $40,000. - NYT -- When John Battelle’s teenage son broke his leg at a suburban soccer game, naturally the first call his parents made was to 911. The second was to Dr. Jordan Shlain, the concierge doctor here who treats Mr. Battelle and his family.  “You don’t want that leg set by an E.R. doc at a local medical center. You want it set by the head of orthopedics at a hospital in the city.” Within minutes, the ambulance was on the Golden Gate Bridge, bound for California Pacific Medical Center, one of San Francisco’s top hospitals. Dr. Shlain was there to meet them when they arrived, and the boy was seen almost immediately by an orthopedist with decades of experience. For Mr. Battelle, a veteran media entrepreneur, the experience convinced him that the annual fee he pays to have Dr. Shlain on call is worth it, despite his guilt over what he admits is very special treatment.  “I feel badly that I have the means to jump the line,” he said. “But when you have kids, you jump the line. You just do. If you have the money, would you not spend it for that?” Increasingly, it is a question being asked in hospitals and doctor’s offices, especially in wealthier enclaves in places like Los Angeles, Seattle, San Francisco and New York. And just as a virtual velvet rope has risen between the wealthiest Americans and everyone else on airplanes, cruise ships and amusement parks, widening inequality is also transforming how health care is delivered. Indeed, as many Americans struggle to pay for health care — or even, with the future of the Affordable Care Act in question on Capitol Hill, face a loss of coverage — this corner of what some doctors call the medical-industrial complex is booming: boutique doctors and high-end hospital wards.

    Foreign-born doctors, many in underserved areas, are worried about their jobs - WaPo --Just a few months ago, the future appeared promising and certain for Sunil Sreekumar Nair. A British citizen, he was completing a residency in internal medicine at a Brooklyn hospital and had accepted a job in a hospital near Fort Smith, Ark., a rural area with a severe shortage of doctors.  Then the Trump administration announced that it was suspending the 15-day expedited process to obtain an H-1B visa, a program that allows U.S. employers to temporarily employ foreign-born workers in specialty fields such as medicine and information technology. Now Nair may not receive his visa for at least eight months, long after he is supposed to show up for his new job in Arkansas. The Arkansas hospital has offered to keep the job open for him, but Nair isn’t even sure he’ll be able to stay in the country after his original visa expires with the end of his medical residency in June.  In addition to suspending the expedited application process, President Trump in April ordered a review of the entire H-1B program. The uncertainty swirling around the H-1B program is creating problems for parts of the country that have difficulty attracting American physicians. “For us, this has been a very positive program that has brought health care to areas of Wisconsin that would otherwise go without,” said Lisa Boero, legal counsel for the the Marshfield Clinic Health System, which operates more than 50 facilities in central and northern Wisconsin. Hospitals in distressed urban neighborhoods also rely on foreign-born graduates of medical schools to fill residencies that might otherwise go vacant. “Who else is going to do the work if we lost them?” asked Conrad Fischer, director of the medical residency program at Brookdale University Hospital and Medical Center in Brooklyn, where Nair is chief medical resident. “We would have to close down.”

    Emergency rooms can be incredibly unfair to the poorest patients - Imagine you’re rushed into an emergency room with a heart problem. The doctor says you need an electrocardiogram to check your heartbeat. You ask about the price — and no one can give it to you. Turns out you might end up paying anywhere between $18 and $317 for the test, depending on the hospital and your insurance. And if you happen to be uninsured or a minority patient, you’re more likely to end up getting dinged with a higher hospital bill. Welcome to the arcane and arbitrary world of billing practices at US hospitals today, as detailed in a new JAMA Internal Medicine study. The researchers, from the Johns Hopkins School of Public Health, uncovered wild variation in the charging practices of hospital emergency rooms, and found that vulnerable patients — uninsured people, minority groups — are more likely to be hit with the highest bills. These charging practices aren’t the result of evil schemes on the part of hospital billing departments. Instead, they’re set by hospital “chargemasters” — computer software that adjusts the prices for hospital services with the goal of hitting certain profit targets. The prices are based on expected collection rates, and tend to fluctuate day to day. They’re also pretty random, the researchers found, but trend toward minorities and the uninsured getting gouged the most.  Few people pay the total amount on a hospital bill because most of us have some form of insurance that covers the costs minus a negotiated discount that’s worked out between the hospital and the insurance company.  But people who wind up in hospitals without insurance, or at hospitals outside their insurance network, don’t have the benefit of that discount. That means patients end up getting stuck with the sticker price.

    Outcry Over EpiPen Prices Hasn’t Made Them Lower - A few weeks ago, after some particularly incompetent parenting on my part (nuts in the dessert, a rushed trip to an emergency room after my child’s allergic reaction), I visited the local pharmacy to fill an EpiPen prescription. You might recall EpiPen as last year’s poster child for out-of-control drug prices. Though this simple medical device contains only about $1 of the drug epinephrine, the company that sells it, Mylan, earned the public’s enmity and lawmakers’ scrutiny after ratcheting up prices to $609 a box. Outraged parents, presidential candidates and even both parties in Congress managed to unite to attack Mylan for the price increases. By August, the company, which sells thousands of drugs and says it fills one in every 13 American prescriptions, was making mea culpas and renewing its promise to “do what’s right, not what’s easy,” as the company’s mission statement goes. So I was surprised when my pharmacist informed me, months after those floggings and apologies had faded from the headlines, that I would still need to pay $609 for a box of two EpiPens. Not quite. What’s more, Mylan is back in the news. On Wednesday, regulators said the company had most likely overcharged Medicaid by $1.27 billion for EpiPens. The same day, a group of pension funds announced that they hoped to unseat much of Mylan’s board for “new lows in corporate stewardship,” including paying the chairman $97 million in 2016, more than the salaries of the chief executives at Disney, General Electric and Walmart combined. 

    Why Amazon should keep prescription drugs off its voluminous shelves -- Amazon’s incredible growth has come from expanding into more and more areas of the economy, providing its customers with speedy delivery of everything from socks and books to lawn chairs and computers. One category it has yet to enter, however, is prescription drugs.  Amazon wants to change that and dispense drugs alongside its hundreds of millions of other wares. Would this be a good thing for consumers and the health care system?  The biggest online retailer’s entry into this market may lead to efficiency gains, but the cost would be dear in terms of further severing the link between patients and actual pharmacists. Research, including my own, shows that patients need more face-to-face time with pharmacists, not less.  Mail-order pharmacies harnessing the raw efficiency of mass-filling prescriptions began to boom in the 1980s. In 2013, about 39 percent of customers said they refilled their prescription by mail order, up from an estimated 6 percent in 1990. Clearly it costs less per unit of labor for prescriptions to be filled in a centralized facility with industrial pill counting technology and with auto-refills of medication than when prescriptions are filled manually in the store by a local pharmacist triggered by a patient calling the pharmacy.  Consumers say they like the convenience of mail-order pharmacies, which is likely one of the reasons Amazon is getting serious about entering the $450 billion market for prescription drugs.  What is missing from the discussion is that prescription drugs are not socks or refrigerators. When consumers take drugs, they become patients, not just customers.  While prescription drugs hold the promise of preventing disease and treating symptoms, they can maim or even kill if not used correctly. In 1993, for example, medication-related errors led to about 7,400 deaths, more than double the number of fatalities in 1983, according to a review of death certifications. Unfortunately, they’re the latest data available, but most likely the number is higher today.  A key reason for these errors seems to be a lack of communication. A 2003 report noted that better communication among physicians, pharmacists and nurses could prevent 86 percent of the most serious medication errors, which suggests shifting more drug dispensation to a centralized facility from local pharmacies would worsen the problem.

    Creators of the Faked Planned Parenthood Videos Charged With 15 Felonies, Sentenced to Prison -- Two of the individuals responsible for the anti-abortion and anti-planned parenthood recordings of Planned Parenthood employees have been charged with 15 felonies, according to The Associated Press. The two were heavily involved in the recordings that attempted to expose what they believed to be damning evidence against the very popular healthcare organization, although many view their efforts as a bid to mislead and smear the company. The names of these two are Daniel Daleidan and Sandra Merrit. The two set up a fake biomedical research company which they called the “Center for Medical Process.” The two have been charged with 15 counts of recordings of individuals without first receiving their consent, and one of criminal conspiracy. If Daniel and Sandra are convicted, they will face several thousands of dollars worth of fines or even several years in prison. Their fake company, the Center for Medical Process, had released several videos showing Planned Parenthood in the act of selling fetal tissue as medical waste to the fake firm. Planned Parenthood has since defended their statements, saying they were not selling baby parts, but instead negotiating for transport reimbursement of the tissues, which they say are used for medical research into solutions for HIV/AIDS. However, many Republicans including the former HP CEO Carly Fiorina and Senator Ted Cruz of Texas continue to express that they disagree, and that baby parts were being sold. Fiorina even continually referenced a supposed portion of a video where the abortionist had stated that the child, born alive, must be kept alive to harvest its viable parts. However, nothing in the released footage showed this graphic scene. Republicans continued to use this “evidence” to launch investigations into Planned Parenthood using taxpayer dollars. A million dollars later, none of these investigations revealed any wrongdoing. Regardless of a lack of proof, the Republicans continue to pursue any avenue possible to defund Planned Parenthood.

    Drug Deaths in America Are Rising Faster Than Ever - — Drug overdose deaths in 2016 most likely exceeded 59,000, the largest annual jump ever recorded in the United States, according to preliminary data compiled by The New York Times. The death count is the latest consequence of an escalating public health crisis: opioid addiction, now made more deadly by an influx of illicitly manufactured fentanyl and similar drugs. Drug overdoses are now the leading cause of death among Americans under 50.Although the data is preliminary, the Times’s best estimate is that deaths rose 19 percent over the 52,404 recorded in 2015. And all evidence suggests the problem has continued to worsen in 2017. Because drug deaths take a long time to certify, the Centers for Disease Control and Prevention will not be able to calculate final numbers until December. The Times compiled estimates for 2016 from hundreds of state health departments and county coroners and medical examiners. Together they represent data from states and counties that accounted for 76 percent of overdose deaths in 2015. They are a first look at the extent of the drug overdose epidemic last year, a detailed accounting of a modern plague. The initial data points to large increases in drug overdose deaths in states along the East Coast, particularly Maryland, Florida, Pennsylvania and Maine. In Ohio, which filed a lawsuit last week accusing five drug companies of abetting the opioid epidemic, we estimate overdose deaths increased by more than 25 percent in 2016.  From a distance, it would be easy to paint Akron — “Rubber Capital of the World” — as a stereotypical example of Rust Belt decay. In 2016, Summit County had 312 drug deaths, according to Gary Guenther, the county medical examiner’s chief investigator — a 46 percent increase from 2015 and more than triple the 99 cases that went through the medical examiner’s office just two years before. There were so many last year, Mr. Guenther said, that on three separate occasions the county had to request refrigerated trailers to store the bodies because they’d run out of space in the morgue. It’s not unique to Akron. Coroners’ offices throughout the state are being overwhelmed.

    Drug Overdoses Now The Leading Killer Of American Adults Under 50 -- The opioid crisis that is ravaging urban and suburban communities across the US claimed an unprecedented 59,000 lives last year, according to preliminary data gathered by the New York Times. If accurate, that’s equivalent to a roughly 19% increase over the approximately 52,000 overdose deaths recorded in 2015, the NYT reported last year. Overdoses, made increasingly common by the introduction of fentanyl and other powerful synthetic opioids into the heroin supply, are now the leading cause of death for Americans under 50. And all evidence suggests the problem has continued to worsen in 2017. One coroner in Western Pennsylvania told a local newspaper that his office is literally running out of room to store the bodies, and that it was recently forced to buy a larger freezer. The initial data points to large increases in these types of deaths in states along the East Coast, particularly Maryland, Florida, Pennsylvania and Maine. In Ohio, which filed a lawsuit last week accusing five drug companies of abetting the opioid epidemic, the Times estimated that overdose deaths increased by more than 25 percent in 2016. In some Ohio counties, deaths from heroin have virtually disappeared. Instead, the primary culprit is fentanyl or one of its many analogues. In Montgomery County, home to Dayton, of the 100 drug overdose deaths recorded in January and February, only three people tested positive for heroin; 97 tested positive for fentanyl or another analogue.

    The Addicts Next Door - Michael Barrett and Jenna Mulligan, emergency paramedics in Berkeley County, West Virginia, recently got a call that sent them to the youth softball field in a tiny town called Hedgesville. It was the first practice of the season for the girls’ Little League team, and dusk was descending. Barrett and Mulligan drove past a clubhouse with a blue-and-yellow sign that read “Home of the Lady Eagles,” and stopped near a scrubby set of bleachers, where parents had gathered to watch their daughters bat and field. Two of the parents were lying on the ground, unconscious, several yards apart. As Barrett later recalled, the couple’s thirteen-year-old daughter was sitting behind a chain-link backstop with her teammates, who were hugging her and comforting her. The couple’s younger children, aged ten and seven, were running back and forth between their parents, screaming, “Wake up! Wake up!” When Barrett and Mulligan knelt down to administer Narcan, a drug that reverses heroin overdoses, some of the other parents got angry. “You know, saying, ‘This is bullcrap,’ ” Barrett told me. “ ‘Why’s my kid gotta see this? Just let ’em lay there.’ ” After a few minutes, the couple began to groan as they revived. Adults ushered the younger kids away. From the other side of the backstop, the older kids asked Barrett if the parents had overdosed. “I was, like, ‘I’m not gonna say.’ The kids aren’t stupid. They know people don’t just pass out for no reason.” During the chaos, someone made a call to Child Protective Services.  At this stage of the American opioid epidemic, many addicts are collapsing in public—in gas stations, in restaurant bathrooms, in the aisles of big-box stores. Brian Costello, a former Army medic who is the director of the Berkeley County Emergency Medical Services, believes that more overdoses are occurring in this way because users figure that somebody will find them before they die. “To people who don’t have that addiction, that sounds crazy,” he said. “But, this is survival to them.’ They’re struggling with using but not wanting to die.”

    Botched measles campaign kills 15 children in South Sudan: Fifteen young children have died in a measles vaccination campaign that saw kids as young as 12-years-old administering the vaccines, according to the South Sudan government.The deaths occurred in the rural and remote Nachodokopele village, Kauto County in South Sudan, and prompted an immediate investigation by the National Adverse Events Following Immunization (AEFI) Committee, supported by WHO and UNICEF.  Investigators found that all the 15 children who died were under the age of 5-years-old. The cause of death was determined to be "severe sepsis/toxicity" resulting from contaminated vaccine used at the measles campaign event. The real tragedy, as Relief Web points out is that this whole incident could have been avoided.  The Health Ministry is blaming the deaths on "human error," but it actually goes deeper than just an error, though. The WHO and UNICEF investigators discovered that one syringe was used to vaccinate all the children over a period of four days. The investigation also found that the vaccine had been stored the whole time without benefit of refrigeration, reports the Associated Press.  There was no evidence that WHO-approved immunization safety standards were being used. The reuse of the reconstitution syringe causes it to become contaminated which in turn contaminates the measles vaccine vials and infects the vaccinated children.

    Neuroscientists rewire brain of one species to have connectivity of another -- Scientists at Georgia State University have rewired the neural circuit of one species and given it the connections of another species to test a hypothesis about the evolution of neural circuits and behavior. Neurons are connected to each other to form networks that underlie behaviors. Drs. Akira Sakurai and Paul Katz of Georgia State's Neuroscience Institute study the brains of sea slugs, more specifically nudibranchs, which have large neurons that form simple circuits and produce simple behaviors. In this study, they examined how the brains of these sea creatures produce swimming behaviors. They found that even though the brains of two species -- the giant nudibranch and the hooded nudibranch -- had the same neurons, and even though the behaviors were the same, the wiring was different.  The researchers blocked some of the connections in the giant nudibranch using curare, a paralyzing poison used on blow darts by indigenous South Americans. This prevented the brain of the giant nudibranch from producing the pattern of impulses that would normally cause the animal to swim. Then, they inserted electrodes into the neurons to create artificial connections between the brain cells that were based on connections from the hooded nudibranch. The brain was able to produce rhythmic, alternating activity that would underlie the swimming behavior, showing these two species produce their swimming behavior using very different brain mechanisms.

    Baby teeth link autism and heavy metals, NIH study suggests - Baby teeth from children with autism contain more toxic lead and less of the essential nutrients zinc and manganese, compared to teeth from children without autism, according to an innovative study funded by the National Institute of Environmental Health Sciences (NIEHS), part of the National Institutes of Health. The researchers studied twins to control genetic influences and focus on possible environmental contributors to the disease. The findings, published June 1 in the journal Nature Communications, suggest that differences in early-life exposure to metals, or more importantly how a child’s body processes them, may affect the risk of autism.The differences in metal uptake between children with and without autism were especially notable during the months just before and after the children were born. The scientists determined this by using lasers to map the growth rings in baby teeth generated during different developmental periods.The researchers observed higher levels of lead in children with autism throughout development, with the greatest disparity observed during the period following birth. They also observed lower uptake of manganese in children with autism, both before and after birth. The pattern was more complex for zinc. Children with autism had lower zinc levels earlier in the womb, but these levels then increased after birth, compared to children without autism. The researchers note that replication in larger studies is needed to confirm the connection between metal uptake and autism.

    No unborn baby is safe from toxic pollutants -- The womb is no longer a safe place for babies, as the placenta, amniotic fluid, and umbilical cord are unable to filter out contaminants. Babies are born pre-infected and pre-polluted by chemicals that we adults have created and dispersed. According to Frederica Perrera, a professor and director of the Columbia Center for Children’s Environmental Health, there has been a notable increase in development problems in children worldwide that parallels the increase in toxic contaminants in water, air, soil, and consumer goods, as well as the mounting effects of global warming. She writes in the New York Times: “The Centers for Disease Control and Prevention finds dozens of toxic chemicals, pollutants and metals in pregnant women, many of which are also found in cord blood of newborns. These include pesticides sprayed in inner-city buildings and on crops, flame retardants used in furniture, combustion-related air pollutants from fossil-fuel-burning power plants and vehicles, lead, mercury and plasticizers. All have been shown in epidemiologic studies in the United States and elsewhere to be capable of damaging developing brains, especially while babies are exposed in utero or in their early life.” Research shows that climate change is increasing the incidence of infectious diseases, malnutrition, heat-related sicknesses, and mental trauma from catastrophic natural disasters. All of these factors, Perrera writes, “can directly or indirectly affect early brain development, the cognitive and behavioral functioning of children and their ability to learn.”

    Meat packer blames ABC's 'pink slime' for nearly killing company | Reuters: ABC News' characterization of a South Dakota meat processor's ground-beef product as "pink slime" almost put Beef Products Inc out of business, BPI's lawyer said on Monday in the opening salvo of a closely watched trial. The $5.7 billion lawsuit pitting big agriculture against big media is the first major court challenge against a media company since accusations of “fake news” by U.S. President Donald Trump and his supporters have become part of the American vernacular. The trial is expected to run eight weeks. BPI claims ABC, a unit of Walt Disney Co, and its reporter Jim Avila defamed the company by using the term “pink slime” and making errors and omissions in its 2012 reporting. But ABC lawyer Dane Butswinkas said "pink slime" was a common term, used more than 3,800 times in the media prior to ABC's reports. In the aftermath of ABC's broadcasts, BPI closed three of its four processing plants and said its revenue dropped 80 percent to $130 million. "That success took about 30 years to succeed and it took ABC less than 30 days to severely damage the company," a lawyer for BPI, Dan Webb, said in court. Butswinkas countered that BPI had already lost multiple customers for LFTB, including major fast food chains, prior to the ABC reports, due to unhappiness with the product. ABC has said its coverage was accurate and deserved protection under the U.S. Constitution's First Amendment which guarantees freedom of religion, speech and the right to a free press. ABC denies any wrongdoing and is confident its reporting will be "fully vindicated," a lawyer for ABC and Avila, Kevin Baine of Williams & Connolly, has said.

    Food poisoning warning: Hepatitis E found in European pig products - Cases of hepatitis E virus – which attacks the liver and in extreme cases can paralyse and kill – are rising, Dr Harry Dalton told a conference in Liverpool. The gastroenterologist at Royal Cornwall Hospital Trust said the vast majority of cases can be tracked to European pig products such as hams and salamis. HEV is particularly dangerous for the elderly, the pregnant and people with suppressed immune systems. Public Health England said that confirmed or reported cases rose from 368 in 2010 to 1,244 last year. Its scientists added there was “a trend towards more severe and prolonged illness”. A joint Food Standards Agency and European Food Safety Authority workshop has found that there are up to 100,000 foodborne HEV infections a year in England alone – most of which are not recognised.It said Public Health England had found that infection was associated with eating processed pork. Though up to 90 per cent of British pigs may carry the virus Dr Dalton said the human health problem is caused by European meat. He said the origin of the virus in patients can be traced at a molecular level. And 80 per cent of cases now can be traced back to European pig products. He said: “I call it the Brexit virus. It attacks the liver and nerves, with a peak in May. It is particularly dangerous for people with suppressed immune systems such as those who have had organ transplants and possibly cancer.” 

    Roundup Revealed: Glyphosate in Our Food System - Rising use of glyphosate, the world's most heavily applied herbicide, is putting people at risk of significant health problems, according to a report released Tuesday by As You Sow .  Glyphosate is applied frequently to the most popular crops in the U.S., including corn, soybeans and wheat, and has been found in many common food products including "all-natural" Quaker Oats . The report, Roundup Revealed: Glyphosate in Our Food System , raises concerns about the health and environmental impacts of current glyphosate use, gaps in the regulation of pesticides and how large chemical companies are promoting the use of glyphosate.  The report consolidates years of research, cutting through to the heart of the controversy over glyphosate. One key finding showed that glyphosate is increasingly being sprayed on crops just before harvest to dry out ("desiccate") the plants to speed up harvest operations . This practice results in greater residues of glyphosate in foods. The report's analysis finds that in 2015, nearly a third of U.S. wheat was treated with glyphosate, likely through pre-harvest use in most cases. A recent biomonitoring study revealed that 93 percent of Americans tested had glyphosate in their bodies.   In 2015, glyphosate was was classified as a probable carcinogen by the world's leading cancer authority, the World Health Organization's International Agency for Research on Cancer. Recent research suggests that glyphosate is likely to cause other chronic health impacts , including disruption of the body's endocrine system.  American regulators are dismissing key scientific data and continuing to raise the allowable limits for glyphosate residue in food, leaving the population at risk of health harms. The widespread use of glyphosate is also creating environmental problems, including herbicide-resistant weeds and reduced biodiversity. For too long, pesticides have been the foundation of agriculture, with glyphosate as the cornerstone; the cracks in this system run deep.

    Herbicide-tolerant sugarbeets accounted for 98 percent of sugarbeet acreage by 2013 (with graph) | USDA -- The United States produced about 8 million metric tons of sugar in 2013. Over half of that sugar came from sugarbeets. However, weed infestations can reduce yields, lower forage quality, and increase the severity of insect infestations. Compared to conventional sugarbeets, planting genetically engineered, herbicide-tolerant (GE HT) sugarbeets simplifies weed management. Specific herbicide (such as glysophate) applications kill weeds but then leave the GE HT sugarbeets growing. Studies suggest that farmers who plant GE HT sugarbeets can increase yields, while reducing the costs of weed management. Once introduced commercially in 2008, U.S. farmers adopted GE HT sugarbeets quickly. That year, farmers planted GE HT sugarbeets on about 60 percent of all sugarbeet acreage; by 2009, that number had grown to 95 percent. As of 2013, approximately 1.1 million acres of GE HT sugarbeets (98 percent of all sugarbeet acreage), with a production value of over $1.5 billion, were harvested in the United States. Minnesota, North Dakota, Idaho, and Michigan accounted for over 80 percent of sugarbeet production that year. This chart is based on the ERS report The Adoption of Genetically Engineered Alfalfa, Canola, and Sugarbeets in the United States, released November 2016.

    7,000 Kansas Farmers vs. Syngenta Over GMO Corn Dispute -- Thousands of Kansas farmers claimed in district court in Kansas City on Monday that Swiss agribusiness giant Syngenta rushed its genetically modified ( GMO ) corn seed to the U.S. market in 2010 before getting China's approval for imports, which rejected shipments of the corn over GMO contamination and caused turmoil in commodity markets.   As Bloomberg explains, the plaintiffs claim that "this move, coupled with U.S. corn farmers' inability to regain a foothold in China once other countries filled the void, almost wiped out the U.S. corn market for several years and continues to depress corn prices even today."  The plaintiffs are seeking $200 million in lost sales, plus punitive damages. "Every bushel of corn grown in this country is worth less today than it would have been had Syngenta" waited for China to approve the product, plaintiffs lawyer Scott Powell told jurors.  According to court filings cited by the Associated Press , Syngenta knew Chinese approval was going to be a problem but aggressively marketed its MIR162 corn anyway. Per the AP: "Court papers show that Syngenta initially assured stakeholders that China would approve MIR162 in time for the 2011 crop. But the date kept slipping. Some exporters sent shipments containing the trait to China anyway. After two years of accepting them, China began rejecting them in late 2013." Syngenta's MIR162 corn, aka Agrisure Viptera, is genetically engineered to resist pests such as earworms, cutworms, armyworms and corn borers. China did not approve the trait until 2014. The Basel-based company denies wrongdoing over its product, contending that it was a 2013 corn glut, not China's rejection, that impacted U.S. corn prices. "Syngenta acted responsibly when it began selling Viptera in 2010," company attorney Michael Brock said in his opening statement. "It was a product that farmers wanted and needed."  A slew of related trials are pending, with around 350,000 U.S. corn growers claiming up to $13 billion in losses, Bloomberg noted.

     Slugging It Out With a New Contender in the GMOs Debate -  I had never met the entomologist John Tooker before he opened his door at Penn State, where I was giving a lecture this April, and invited me into his office.  “I thought it might be worth meeting,” he said, “because I read the piece where you said GMOs had decreased the amount of insecticide used.”  As long-time Grist readers know, I’ve explored this topic in depth. Over the last few decades, farmers have been using more of a type of insecticide called neonicotinoids, or neonics for short.  Neonics are mostly used as seed coatings. They’re one part in a cocktail of fungicides, insecticides, and beneficial microbes swaddling nearly every seed that modern farmers stick in the ground — GMO seeds and non-GMO alike. But, Tooker argues that the increase in genetically modified crops is what’s really causing the use of neonics to skyrocket, to the point that just about every kernel of field corn planted in the United States is coated with this class of insecticides. The reaction to the widespread use of neonics, like so much in agriculture today, has been polarized and divisive. Farmers love them.  Those ground treatments and sprays kill beneficial insects along with the pests. But a tiny drop of neonics applied right to the seed casing gets sucked into the plant as it grows. Bugs that chomp down on the neonic-infused leaves get a killer dose of the chemical. What’s not to love? Environmentalists, by contrast, see neonics as a catastrophe that is wiping out valuable pollinators and other beneficial insects along with their target pets. Greens point to studies that suggest farmers gain little to no economic benefit from seed treatments. There’s some evidence — in Europe, at least — of a marked decline in many insect populations, although data on what’s causing this remains scant. (I go deeper here, if you want more background on the bee crisis and its possible causes.)  Farmers can’t see any downside to neonic seed treatments. Environmentalists can’t see any upside. When people can’t see the other side of any debate, they become vulnerable to a form of blindness. Which is what made me wonder: Has everyone become so blinkered that we’re unable to see what Tooker sees, and there really is a massive, under-the-radar increase in insecticide use?

    7 States Challenge Trump EPA Over Toxic Pesticide - The fight to ban chlorpyrifos has been heating up this week. Natural Resources Defense Council, together with a coalition of advocacy groups—and now seven state attorneys general —are ramping up the pressure on Trump's U.S. Environmental Protection Agency (EPA) to ban a pesticide linked to learning disabilities in children. It is widely used on food crops in the U.S., including kid favorites like apples, oranges and strawberries . Most recently, the attorneys general of New York, California, Washington, Maine, Maryland, Massachusetts and Vermont formally requested that EPA take immediate action to ban chlorpyrifos in a filing made public today. The states argued that Trump EPA's refusal to ban this pesticide from food crops—despite the agency's own analysis finding it too dangerous for children—must be overturned.  Chlorpyrifos residues widely found on fruits and vegetables, according to the state AGs, put the residents of their states at risk and represent a source of exposure difficult for states to address due to national, and international, markets for food. They call on EPA to fulfill its "legal responsibility to protect Americans from unsafe residues on food, and particularly to protect infants and children against potential neuro-developmental and other adverse effects." In filing formal objections, the state AGs join forces with public health, farmworker and environmental advocates—including NRDC—that also filed a formal administrative appeal with the EPA yesterday, urging the agency to ban the chemical and challenging the agency on its continued use after EPA scientists have determined it to be unsafe. After close to a decade of extensive scientific review, EPA experts found widespread risk to children from contaminated air, water and residues on food.

    Georgia peach crop faces nearly 80 percent loss this year (AP) — Georgia's peach crop is suffering much worse than expected after an overly warm winter and a hard freeze in early spring.Agriculture Commissioner Gary Black told The Atlanta Journal-Constitution ( ) Tuesday that nearly 80 percent of the state's peach crop has been wiped out because of the weather.Black says the lack of peaches could mean a shorter season for Georgia consumers. He says farmers probably won't ship out of state.Initially, farmers hoped to salvage about 70 percent of the crop.The newspaper reports that the loss, combined with a blow to this year's blueberry crop, could mean a $300 million hit to farmers. The peach crop issue has been worse in neighboring South Carolina, where Black says he's told more than 85 percent of the crop was lost.

    Brave Police Save Town From Man Selling Veggies --It is the simplest, most basic aspect of life: you need food, so you grow some vegetables. If you have extra you sell them on a street corner to your neighbors, and if you live in California you get arrested for it.  Licensing is when the government takes a right from you, and sells it back. This California man failed to purchase his rights back from the state. But the poor police had pictures taken of them while arresting the man, and now they are hearing from the public about their unjust actions.The Sheriff’s Department of Alameda County Florida responded on Facebook to the public outrage, including thousands of criticisms posted to their Facebook page.Selling food on street corners violates county ordinances and public health codes. Persistent street vending harms local businesses, especially small, start-up food vendors…There you have it, from the horse’s mouth in plain black and white: the point of licenses is protection. You pay to play, if you don’t pay off the city and county, they will send their hired thugs to rough you up and demand the protection money.  It harms local businesses: apparently it is the government’s job to make sure there is no competition for certain businesses. God forbid the consumer has a choice. And why isn’t this guy’s produce selling operation considered a small, start-up street vendor? Simple because he didn’t pay for his rights.

    7 Years of Work on Food Forest Destroyed Over Permit - Imagine working for seven years to build a community food forest. It would be a very fulfilling project to take a neighborhood and transform it into a living food source full of fruit trees, luscious vines, and edible ground cover.And imagine all your hard work being torn away in an instant by the city council. Literally torn away; what would you be thinking and feeling as they sent landscaping crews to tear out the trees, some with fruit still one them, and grind them into wood chips. Unfortunately, what could only be a feeling of utter exasperation and crushing disbelief was forced upon residents of Sunshine Coast, Australia. The people of a section of the city banded together to transform 11 city blocks into a food forest of which at least 200 people enjoyed the fruits. The city council felled an entire stretch of this Urban Food Street, even preventing residents from collecting the fruit before the destruction. Councillor Ted Hungerford said the felling of the trees was disappointing, but the council was left with no option after a resident had not applied for a permit, nor opted to relocate the trees to private property. He said the requirement for a free permit and public liability insurance applied throughout the region, and so far 23 residents had fulfilled those requirements. Some residents said they didn’t even know about the requirements, but that hardly matters. What matters is that some bullies in the local government care more about pieces of paper than human beings. They care more about protecting their worthless pathetic City Council jobs, and probably imagine themselves quite the adept local governors. Clearly, they are out of touch with reality. Because the city claims ownership over the property in front of people’s homes where a sidewalk would go, they were required to get permits to have fruit trees in that space — and most everyone did. However, because one resident didn’t apply for a permit, the entire area was leveled.

    U.S. Pays Farmers Billions To Save The Soil. But It’s Blowing Away -- Soil has been blowing away from the Great Plains ever since farmers first plowed up the prairie. It reached crisis levels during the Dust Bowl of the 1930s, when windblown soil turned day into night. In recent years, dust storms have returned, driven mainly by drought. But Shook — and others — say farmers are making the problem worse by taking land where grass used to grow and plowing it up, exposing vulnerable soil. "The first soil storm that I saw was in 2013. That was about the height of all the grassland conversion that was happening in this area," he says. This is where federal policy enters the picture. Most of that grassland was there in the first place because of a taxpayer-funded program. The U.S. Department of Agriculture rents land from farmers across the country and pays them to grow grass, trees and wildflowers in order to protect the soil and also provide habitat for wildlife. It's called the Conservation Reserve Program, or CRP. Ten years ago, there was more land in the CRP than in the entire state of New York. In North Dakota, CRP land covered 5,000 square miles. But CRP agreements only last 10 years, and when farming got more profitable about a decade ago, farmers in North Dakota pulled more than half of that land out of the CRP to grow crops like corn and soybeans. Across the country, farmers decided not to re-enroll 15.8 million acres of farmland in the CRP when those contracts expired between 2007 and 2014. Environmentalist Craig Cox wants this on-again, off-again cycle of land protection to end. Cox is in charge of advocacy and research on agricultural policy at the Environmental Working Group. The EWG just released a report calling for big changes in how the Department of Agriculture spends billions of dollars in conservation money. According to Cox, when farmers decide to take land out of the CRP, it means that most of the money spent on environmental improvements on that land is wasted. He says that instead of renting land for 10 years, the government should buy more easements — legal restrictions ensuring, for instance, that a farmer cannot plow a piece of land for the next 30 years ... or forever.

    Photos: Here's what climate change looks like to Uganda's coffee farmers -- If you've ever bought coffee labeled "Uganda" and wondered what life is like in that faraway place where the beans were grown, now's your chance to see how climate change has affected the lives of Ugandan coffee farmers — through their own eyes. Rising temperatures and prolonged drought can make coffee trees less productive and increase their exposure to pests and diseases. This is especially a problem in Uganda, where nearly all of the coffee is produced by small farmers who have little access to irrigation or other modern farming conveniences. Coffee is by far the country's most valuable industry: It accounts for one-fifth of export revenue, and about 1 in 5 Ugandans rely on it for part or all of their income. Yet climate change could slash the country's coffee production in half by 2050 —a loss worth $1.2 billion, according to a 2015 economic analysis commissioned by the Ugandan government. Because Uganda is a relatively small player in the global coffee market, disruptions there won't necessarily affect the price of your morning joe in the U.S. But within the country, a disturbing new reality is taking root. To find out exactly how Uganda's coffee farmers view their experience of climate change, I recently equipped a dozen of them with disposable cameras.

    Environmental Protection and Africa's Cities - Africa's cities are growing rapidly, which presents both an environmental problem and a policy opportunity. The problem is that many of these cities already have severe environmental issues. The opportunity is that because these cities are much smaller than they will be in a few decades, there are opportunities now to guide and shape their growth in ways that can be much more cost-effective than trying to clean up the mess after it has already happened. Roland White et al explore these issues in a World Bank report, Greening Africa's Cities : Enhancing the Relationship between Urbanization, Environmental Assets, and Ecosystem Services (May 2017). On the patterns of urbanization in Africa, they write:"Urbanization in Africa began later than in any other global region and, at a level of about approximately 40%, Africa remains the least urbanized region in the world. However, as indicated in Figure 3, this is rapidly changing: SSA’s cities have grown at an average rate of close to 4.0% per year over the past twenty years, and are projected to grow between 2.5% and 3.5% annually from 2015 to 2055 (Figure 3). By contrast, globally the average annual urban population growth rate is projected to be between 1.44% and 1.84% from 2015 to 2030 (WHO 2015). From an environmental perspective, this has two important implications. On the one hand, most of Africa’s urban space has yet to emerge. Much of the area which will eventually be covered by the built environment has not yet been constructed and populated. Crucial natural assets – and significant biodiversity – thus remain intact in areas to which cities will eventually spread. On the other hand, this is changing quickly: pressures on the natural environment in and around cities are escalating steadily and these assets are increasingly under serious threat."  "For the entire region the proportion of urban residents with access to sanitation was estimated to be only 37% in 2010. Solid waste coverage also remains very limited with collection rates for many African cities at below 50% ..." Here's a figure showing particulate concentrations in a range of cities. You think some cities in China have problems with air pollution? On this measure, a number of cities in Africa are considerably worse.

    Brazil's environment risks political capsize - Tenney Naumer - Brazil faces an unpredictable political crisis as the country's president fights demands for him to leave office. And as the price of his survival, he is making damaging concessions on Brazil's environment. President Michel Temer is facing calls to resign after the owners of Brazil’s biggest meat-packing industry, JBS, alleged he had been involved in bribery and the obstruction of justice.  To retain support in congress, he is now working with the powerful farmers’ lobby, the bancada ruralista, which wants to reduce conservation areas and weaken environmental licensing laws.He hopes to cling to power by making concessions to the bancada. In exchange for support from the Parliamentary Agriculture Front (FPA), the bancada’s formal name, he tore up the government’s project for modernising the environmental licensing law, telling lobby members they could present whatever amendments to it they liked.So a congressional committee is now about to approve a radically different version of the government’s original proposal for a new General Licensing Law. Dubbed “flex licensing”, it dispenses with the need for licences in some of the areas where they are most needed – large–scale cattle ranching, mining in protected areas, and even roadbuilding in the Amazon, one of the biggest causes of deforestation. Once past the committee stage, it will be voted into law in a plenary session.This is a serious blow to the environment minister, José Sarney Filho, who spent a year negotiating a more reasonable version of the bill with environmentalists, farmers and industry. Nevertheless, he has chosen to remain in the government, although his party, the Greens, together with several other small parties, has decided to abandon the ruling coalition in protest at President Temer’s alleged involvement in corrupt practices. The minister says he has decided to stay in order to defend the “cause of sustainability and the green economy", and his achievements.   The political turmoil has left Sarney Filho powerless to stop the tide of anti-conservation legislation being tabled by the farmers’ lobby in their desire to open up to economic exploration previously protected land like indigenous areas and national parks.

    20 million starving to death: inside the worst famine since World War -- In February, the United Nations estimated that 100,000 South Sudanese were starving, and that 5 million more — 42 percent of the country’s population — have such limited access to proper food that they don’t know where their next meal is coming from. More recent figures are not available yet, but aid agencies fear the situation could be much worse now. There are two things you need to understand about the famine decimating South Sudan, the world’s newest country and one that came into existence largely because of enormous assistance from the US. First, South Sudan isn’t the only country in the region facing mass starvation. A potentially historic famine is also threatening Nigeria, Somalia, and Yemen. Far from Western eyes and far from the headlines, an estimated 20 million people in those four countries are at risk of dying due to a lack of food. The UN has already officially declared a full-fledged famine in parts of South Sudan and warned that the other three countries will suffer mass death from food and water shortages if “prompt and sustained humanitarian intervention” doesn’t happen soon. Second, these famines weren’t caused by natural disasters like crop failures or droughts. They were man-made — the direct result of the bloody wars and insurgencies raging in all four countries.  The upshot is that the current famines, unlike others in recent history, could have potentially been prevented.

    New Report Investigates Failures, Costs and Dangers of Biofuels | Global Justice Ecology Project -- First-generation biofuels from corn, sugar, palm oil and soya are linked to deforestation and land conversion, competition with food, loss of biodiversity, land grabs and human rights abuses; along with reliance upon genetically engineered crops. But we are told that the “next generation” of ligno-cellulosic and algal fuels, made from “non food” biomass, will be better. Researchers are engineering trees and crops to produce massive amounts of biomass designed for refinery processes, and are manipulating the genome of microbes, including micro-algae to secrete oils, enzymes and other chemicals of commercial and industrial interest. This is a primary focus of biotechnology, with a massive wave of new patent applications and the lure of large profits. But these engineered organisms are largely unregulated and poorly understood. They pose a serious threat to ecosystems and human health if they are released or escape into nature, which is inevitable.After at least a century of unsuccessful attempts to turn solid biomass into liquid biofuels through the use of heat and pressure, researchers and companies are focussing on biotechnology as key to cellulosic biofuel production and to a wider bioeconomy. This includes the use of potent new biotechnology tools, i.e. synthetic biology (aka “new breeding technologies”). Even after decades of research, there is no commercial production of ligno-cellulosic and algal biofuels. Companies are turning instead to using their genetically engineered organisms to production small quantities of high end consumer goods – expensive cosmetics, flavorings, nutraceuticals and various coproducts to maintain their profit margins. Some genetically engineered microorganisms are also being used to make conventional corn ethanol production more efficient. Taxpayers are footing the bill, strung along by grossly hyped up claims about new technological breakthroughs just over the horizon – breakthroughs that will finally provide a clean, green and sustainable path to “consumerism as usual.” However, there is little basis for assuming that ligno-cellulosic and algal biofuels, if they were to ever be produced on a commercial scale, would in fact represent any improvement over first generation biofuels, since they too require land, water and agrochemicals as well as genetically engineered microbes. 

    How climate change helped Lyme disease invade America - Yale epidemiology researcher Katharine Walter studies Lyme disease, the tick-borne illness that’s spreading frighteningly quickly in the Eastern and Midwestern US, due in part to climate change. Lyme cases have more than doubled since the 1990s, and the number of counties that are now deemed high-risk for Lyme has increased by more than 320 percent in the same period. 2017 is also shaping up to be a particularly bad year for Lyme.   “These effects of climate change will be felt globally, but also here in the US,” Walter said, “and here in New York, in Trump’s backyard.”   New York state is an epicenter for Lyme. More than 90 percent of cases in the Northeast, upper Midwest, and mid-Atlantic. And it’s why New York Sen. Chuck Schumer has been calling on the federal government to more aggressively tackle Lyme. But Trump’s policies on climate change, Walter said, will likely do the opposite, and make climate-sensitive infectious diseases like Lyme even more common. Here are four things to know as we enter the season for the disease.

    • 1) Lyme disease spreads to people through tick bites — but the disease can be really hard to diagnose.  Lyme is the most common vector-borne disease in the US, more common West Nile or the Zika virus. But unlike Zika, which is transmitted from mosquitoes to humans, Lyme reaches people through tick bites after circulating through a chain of other species. The bacteria typically live in mice, chipmunks, birds, and deer in wooded areas. And these are all animals that ticks feast on.
    • 2) Lyme disease has become increasingly common
    • 3) A major reason for the uptick in Lyme incidence: global warming The Environmental Protection Agency tracks the number of Lyme cases, along with heat-related deaths and severe weather events, as an indicator of global warming.  That’s because researchers think climate change is another major driver of the trend — and they expect the situation to get much worse during the 21st century.
    • 4) 2017 is expected to be a very bad year for Lyme. There are other factors that influence how far Lyme can spread: plentiful acorn seasons. It may sound weird, but it’s another fascinating aspect of the ecology that helps Lyme proliferate — and why 2017 is shaping up to be a very bad year for the disease.

    There's an Algae Bloom The Size of Mexico in The Arabian Sea Right Now, And It's Not Good -- An algae bloom the size of Mexico has appeared in the Arabian Sea, thanks to a growing 'dead zone' in the Gulf of Oman.It's not the first time the build-up of green slime has appeared during the winter months, but the bloom now stretches all the way from the shores of Oman on the west, to India and Pakistan on the east, turning the waves "almost guacamole-like", according to a NASA biologist. And it's not a good sign for the local ecosystem. While these algae blooms might look pretty from space or at night - they're the same 'sea sparkles' that are responsible for bioluminescence - up close, they can have serious consequences.  Not only do they smell and look terrible, putting tourists off visiting local beaches, but these blooms can trigger the release of ammonia that poisons nearby marine life. This Mexico-sized bloom is now forming twice a year in the Arabian Sea, and NASA satellite images show that it's growing. The algae bloom is caused by Noctiluca scintillans - often called sea sparkles - which are microscopic dinoflagellates. These dinoflagellates are strange, tiny creatures that feed on plankton and suck up energy from the Sun via microscopic algae living within their cells.In a typical marine ecosystem, they make up just a small part of the food chain. But when there's a build-up of plankton, they can form massive blooms that begins to dominate the local area. And that's not great for the environment. "When the [sea sparkles'] cell breaks down, ammonia is released, and the massive bloom could become a deadly cloud,"   "It can change the flavour of the water and it's noxious to fish ... As creatures go, it's more of the unwanted kind. In extreme cases it can cause fish kills; it does it all over the world,"  That's a massive threat for local industry, seeing as fishing sustains around 120 million people living on the edge of the Arabian Sea.But what's really concerning is the fact that these dinoflagellate blooms weren't regularly seen until the past decade or so, and now are becoming increasingly common around the planet - particularly in the Arabian Sea.

    Climate change raises new risk: Are inland bridges too low? (AP) - Climate change is often seen as posing the greatest risk to coastal areas. But the nation's inland cities face perils of their own, including more intense storms and more frequent flooding. Even as President Donald Trump has announced his intention for the U.S. to withdraw from a global climate agreement, many of the nation's river communities are responding to climate change by raising or replacing bridges that suddenly seem too low to stay safely above water. The reconstructed bridges range from multi-lane structures that handle heavy traffic loads to small rural spans traversed by country school buses and farmers shuttling between their fields. The bridges are being raised even in states such as Texas, where political leaders have long questioned whether climate change is real. In Milwaukee, bridges have been raised as part of $400 million in flood-management projects across a metro area with 28 communities. In Reno, Nevada, officials spent about $18 million to replace a bridge over the Truckee River last year and plan to replace three more after flood-danger projections were increased by up to 15 percent.No one tracks how many communities are raising bridges or replacing them with higher ones, but the Federal Emergency Management Agency says it's now routinely providing money for this purpose, although no dollar total is available. Typically, more than 1,500 bridges are reconstructed each year for an assortment of reasons. Schwab said he's sure hundreds and possibly thousands of bridge-raising projects have been completed recently or are planned. A cursory check by the AP in a handful of states found at least 20 locations where bridges have been raised or construction will begin soon. FEMA is now finalizing a rule that states that floods "are expected to be more frequent and more severe over the next century due in part to the projected effects of climate change." That could mean higher costs for a country that sustained more than $260 billion in flood damage between 1980 and 2013. 

     ‘A once in a lifetime opportunity.’ Who made money off the Oroville Dam crisis? -- The helicopters alone cost more than $100,000 a day at one point. Weeks of dredging debris ran to more than $22 million. And on the day after the massive evacuation, as the crisis was peaking, the state spent $3,902 on breakfasts and lunches for emergency workers. The fracture of Oroville Dam’s main flood-control spillway created a near-catastrophe, spawned multiple investigations and left lawmakers and locals grumbling about the state’s stewardship of the structure. One group isn’t complaining, though: the dozens of concrete and gravel contractors, trucking firms, engineering consultants and others that have been paid millions to help the state clean up the mess. “It was a tremendous opportunity for us … a once-in-a-lifetime opportunity,” said Jeff Lund of Lund Construction Co. in North Highlands, which helped excavate debris from the river channel beneath the crumpled spillway. Lund said his firm was paid about $5 million for its work at Oroville. Well over $400 million will have been spent by the time Oroville’s facilities are restored. The single biggest jackpot belongs to Kiewit Corp. of Omaha, Neb., the construction colossus that won the $275 million contract to repair the battered spillway over the next two years.  Kiewit’s big payout represents only a fraction of the financial windfall created by the Oroville crisis. Thousands of pages of invoices and receipts submitted to the state Department of Water Resources, released to The Sacramento Bee under a Public Records Act request, provide a vivid picture of how the 4-month-old emergency has generated work for all manner of companies, many of them from Northern California.

    Historic Heat Wave Sweeps Asia, the Middle East and Europe -- During the last week of May, an impressive dome of overheated air with an isotherm of 35°C (95°F) at 850 hpa (approximately 5,000 feet) extended across the Strait of Hormuz near southern Iran and southwestern Pakistan. In places where this air was being forced downward, the extreme heat allowed for strong compressional warming that produced exceptional surface temperatures. On May 28, after a minimum temperature of 34.5°C (94°F), the high temperature in the Western Pakistani town of Turbat reached 53.5°C (128.3°F) in mid-afternoon. This tied the all-time highest temperature ever recorded in Pakistan, and the world record of highest temperature for May--both set in Moen Jo Daro on May 26, 2010. There is a controversy about the correct maximum temperature in Turbat, though. It was reported by the Pakistan Meteorological Department as 53.5°C (the precision of the thermometer is 0.5°C, like in most Pakistani stations), but the temperature was later rounded to 54.0°C (129.2°F.) If that is correct, it would tie the highest reliable temperature ever recorded in the planet, the 54.0°C reading set on July 21, 2016 in Mitribah, Kuwait.  A dome of high pressure from Morocco extended over Western Europe beginning on May 24, then moved north and then east. As a result, monthly records of highest temperatures were widespread in Spain, France, Belgium, Netherlands, Ireland, Norway, Germany and Austria. Very high temperatures were also set in the Alps, with an amazing 5.8°C (42.4°F) on May 27 on the top of Italy’s Col Major (elevation 4750 meters or 15,584 feet), just at the side of Mount Blanc. In particular, two national records for the month of May were broken: in Norway with 32.2°C (90°F) at Tinnsjø on May 27, and in Austria with 35.0°C (95°F) at Horn on May 31.  An intense heat wave caused by downslope winds from the Laotian mountains towards the Vietnamese coast affected the area around Vietnam’s capital of Hanoi in early June, particularly between June 2 - 4. The central observatory of Lang on June 4 recorded 41.5°C (106.7°F), destroying its previous all-time record of 40.4°C, set in 1971. On June 4, the district of Ha Dong (which hosts an international weather station representative of Hanoi) recorded 42.5°C (108.5°F), by far the highest temperature ever recorded in the Hanoi area. ( In the central area of Hanoi, near Hoan Kiem Lake, the humidity is usually higher than its surroundings, and the combination of temperatures as high as 41°C (105.8°F) with humidity values near 50% made the heat index an unbearable 55°C (131°F).

    Global warming effect: More heat wave deaths as temperatures rise across India -  Hindustan Times: Rising summer temperatures are leading to more heat-related deaths in India. As parts of India reel under a heat wave, a study has said summer temperatures had gone up by more than 0.5 degrees Celsius on an average over five decades, and that this rise has increased the probability of deaths caused by heat by 146%. The study by University of California, Irvine (UCI) with co-authors from the Indian Institute of Technology – Bombay (IIT-B) and IIT-Delhi, analysed daily temperatures from 395 weather stations between 1960 and 2009, and the death rates during those years. They found there were more heat wave days, and that duration of heat waves had increased by 25% in most regions. There was a moderate rise in summer temperatures, but this made it one-and-a -half times more likely for a heatwave that could kill more than 100 people. The study, ‘Increasing probability of mass mortality during Indian heat waves’ was published in the journal Science Advances on Tuesday. A heat wave is when temperatures rise above 40°Celsius in the plains and 30° Celsius in the hills, and is more than four degrees above the normal for the period being studied. High temperatures not only affects health, but also decreases the quality of the air you breathe, lowers crop yields, increases energy consumed and makes droughts worse. The study found there were more (by 50%) heat waves in southern and western India between 1985 and 2009, when compared to 1960 and 1984.Heatwave deaths almost doubled from 1,300 in 2010 to 2,500 in 2015.     

    A climate chain reaction: Major Greenland melting could devastate crops in Africa   - As melting Greenland glaciers continue to pour ice into the Arctic Ocean, we have more than the rising seas to worry about, scientists say. A new study suggests that if it gets large enough, the influx of freshwater from the melting ice sheet could disrupt the flow of a major ocean current system, which in turn could dry out Africa’s Sahel, a narrow region of land stretching from Mauritania in the west to Sudan in the east.The consequence could be devastating agricultural losses as the area’s climate shifts. And in the most severe scenarios, tens of millions of people could be forced to migrate from the area.“The implications, when expressed in terms of vulnerability of the population in the region are really dramatic and bring home just how sensitive livelihoods are in this region to climatic change,” said Christopher Taylor, a meteorologist at the Center for Ecology and Hydrology in the United Kingdom and an expert on the West African climate, who was not involved with the new research.The study, published Monday in the journal Proceedings of the National Academy of Sciences, uses a climate change model to investigate the influence of different amounts of ice loss from Greenland, corresponding to different amounts of global sea level rise, on the western Sahel’s climate system. Prior studies have suggested that this region may be particularly vulnerable to climatic changes produced by disruptions in the ocean.  The idea is that large volumes of meltwater from Greenland have the potential to slow down a major system of ocean currents known as the Atlantic Meridional Overturning Circulation, or AMOC. Experts have described it as a kind of giant conveyor belt, which carries warm water from the equator to the Arctic and cooler water back down south. This transport of heat influences atmospheric processes and helps regulate climate and weather throughout the Atlantic region.

    NASA: Greenland Ice Loss 2002-2016 (video from NASA) Link:  The mass of the Greenland ice sheet has rapidly declined in the last several years due to surface melting and iceberg calving. Research based on observations from the NASA/German Aerospace Center’s twin Gravity Recovery and Climate Experiment (GRACE) satellites indicates that between 2002 and 2016, Greenland shed approximately 280 gigatons of ice per year, causing global sea level to rise by 0.03 inches (0.8 millimeters) per year. These images, created from GRACE data, show changes in Greenland ice mass since 2002. Orange and red shades indicate areas that lost ice mass, while light blue shades indicate areas that gained ice mass. White indicates areas where there has been very little or no change in ice mass since 2002.  In general, higher-elevation areas near the center of Greenland experienced little to no change, while lower-elevation and coastal areas experienced up to 13.1 feet (4 meters) of ice mass loss (expressed in equivalent-water-height: dark red) over a 14-year period. The largest mass decreases of up to 11.8 inches (30 centimeters) equivalent-water-height per year occurred along the West Greenland coast. The average flow lines (grey), created from satellite radar interferometry, of Greenland’s ice converge into the locations of prominent outlet glaciers and coincide with areas of high mass loss.

    Trump Buys Into Putin Plan To Melt The Arctic | HuffPost: –- The genius of Vladimir Putin is that he makes his aims crystal clear, as clear as a block of ice in the Arctic. Ice and cold have always defined and limited his vast country. For centuries the chief Russian geopolitical imperative was the search for “warm-water” ports to its south. Now the grand aim is to allow global climate change to melt the Arctic and turn the water at the top of the world into a lucrative oil and gas field, as well as a network of efficient new sea lines Russia will control.Putin, in essence, is gaining U.S. backing for his vision as his pal, President Donald Trump, signals that America will withdraw from the Paris Agreement on combating climate change.The Russian leader has made no secret of his plan. In fact, he has proclaimed it from the literal rooftop of the world, most recently at a conference on the future of the Arctic region in March. “Climate change brings in more favorable conditions and improves the economic potential of this region,” Putin said told CNBC while attending the International Arctic Forum in Arkhangelsk, Russia. “Today, Russia’s GDP is the result of the economic activity of this region.”Russia planted a flag on the floor of the Arctic Sea in 2007 and claimed most of it based on an extensive continental shelf beneath. 

    Why Trump Actually Pulled Out Of Paris - POLITICO Magazine: Donald Trump’s decision to withdraw from the Paris climate agreement was not really about the climate. And despite his overheated rhetoric about the “tremendous” and “draconian” burdens the deal would impose on the U.S. economy, Trump’s decision wasn’t really about that, either. America’s commitments under the Paris deal, like those of the other 194 cooperating nations, were voluntary. So those burdens were imaginary. No, Trump’s abrupt withdrawal from this carefully crafted multilateral compromise was a diplomatic and political slap: It was about extending a middle finger to the world, while reminding his base that he shares its resentments of fancy-pants elites and smarty-pants scientists and tree-hugging squishes who look down on real Americans who drill for oil and dig for coal. He was thrusting the United States into the role of global renegade, rejecting not only the scientific consensus about climate but the international consensus for action, joining only Syria and Nicaragua (which wanted an even greener deal) in refusing to help the community of nations address a planetary problem. Congress doesn’t seem willing to pay for Trump’s border wall—and Mexico certainly isn’t—so rejecting the Paris deal was an easier way to express his Fortress America themes without having to pass legislation.Trump’s move won’t have much impact on emissions in the short term, and probably not even in the long term. His claims that the Paris agreement would force businesses to lay off workers and consumers to pay higher energy prices were transparently bogus, because a nonbinding agreement wouldn’t force anything. But Trump’s move to abandon it will have a huge impact on the global community’s view of America, and of a president who would rather troll the free world than lead it. 

    Turning against Trump: how the Chinese covered the climate pact exit --  President Trump’s decision to withdraw the United States from the Paris climate change accord drew criticism from leaders around the world. In China, the government seized the moment to cast doubt on American democracy and promote an image of China as a responsible superpower. Here’s how the state-controlled news media covered Mr. Trump’s decision and what the portrayal suggests about China’s efforts to extend influence across the globe.  《今日关注》 20170602 退出《巴黎协定》 美国将失去世界领导地位? | CCTV-4 Video by CCTV中文国际Mr. Trump’s withdrawal from the Paris agreement gave fresh material to one of the state media’s favorite propaganda themes: the idea that Western democracy is flawed, chaotic and prone to social strife.The news media highlighted protests and criticism of Mr. Trump in the United States, suggesting that America was facing a crisis. In the video above, shown on the state channel CCTV, an announcer likens Mr. Trump’s decision to an earthquake. He asks, “Will the already divided America become even more torn apart?” Images of protesters loom in the background. Commentators pointed to the disarray of the 2016 presidential election as evidence of the perils of democracy. Now they are showcasing the political divisions among Americans under Mr. Trump as evidence of the decline of the United States. Mr. Trump has many fans in China, where he is known for his business acumen and ostentatious displays of wealth.  But Mr. Trump’s decision to withdraw from the climate agreement provoked widespread fury. On social media, news outlets referred to Mr. Trump as a “public enemy of the world,” saying he was endangering the health of the planet. On Weibo, a Twitter-like service, a CCTV post portrayed Mr. Trump as childish and impulsive in a fake chat with current and former world leaders.

    Michael Bloomberg pledges his own money to help U.N. after Trump pulls out of Paris climate deal -   Former New York City mayor Michael Bloomberg has promised to provide up to $15 million in funding that he says the United Nations will lose because of President Trump’s decision to pull out from the landmark Paris climate deal. The billionaire’s charitable organization, Bloomberg Philanthropies, on Thursday pledged to shoulder the United States’ share in the operating costs of the U.N. Framework Convention on Climate Change, the organization’s climate negotiating body in charge of helping developing countries fulfill environmental requirements under the 2015 pact. “Americans are not walking away from the Paris Climate Agreement. Just the opposite — we are forging ahead,” Bloomberg said in a statement.. “Mayors, governors, and business leaders from both political parties are signing onto a statement of support that we will submit to the UN — and together, we will reach the emission reduction goals that the U.S. made in Paris in 2015.” Patricia Espinosa, executive secretary of the U.N. Framework Convention on Climate Change, applauded Bloomberg for the contribution. “While funding from governments remains central to our work, this kind of support is crucial for the work of the Secretariat to assist nations in their efforts to implement their commitments under the Paris Climate Change Agreement,” Espinosa said in a statement. Bloomberg’s pledge comes as the U.S. Conference of Mayors, a bipartisan group of more than 1,000 mayors, denounced Trump’s decision and affirmed their cities’ commitment to meet climate-change goals by reducing greenhouse gas emissions locally — even without the participation of the federal government. 

    Trump climate move could divert FDI, spark litigation: U.N. | Reuters: U.S. President Donald Trump's decision to pull out of the Paris climate accord will affect foreign direct investment (FDI) and may lead to investor-state disputes, the head of investment at the U.N. trade and development agency UNCTAD said on Friday. James Zhan, senior director of investment and enterprise at UNCTAD, told reporters that U.S. policy was an important influence in the global pattern of FDI flows such as crossborder corporate mergers and investment in start-up projects abroad. "We cannot quantify it but we see there will be an important impact on global FDI and on FDI into the U.S. as well," he said, referring to Trump's announcement. Many countries have signed up to investment treaties that protect the rights of companies, allowing firms to sue a government in an ad hoc arbitration if they feel their rights have been abused, such as by a change in the legal basis on which their investment was made. So-called investor-state dispute settlement (ISDS) is intended to reassure investors but it is controversial because it gives companies rights over governments, and has led to huge payouts, such as Ecuador's agreement to pay Occidental Petroleum Corp roughly $980 million for seizing one of its oil fields. The full impact of Trump's decision still depended on whether other countries would follow the U.S. lead and decide to withdraw from the pact, he said. Many countries had already put policies in place relating to the Paris deal, he added. "And now what are they going to do? Are they going to adjust for that? Investors have already envisaged the investment prospects and the business prospects and the potential benefit from the policies that have been put in place."So far no countries have said they will follow Trump's lead, which has been widely condemned, with China and Europe pledging to unite to save "Mother Earth" in the face of Trump's decision to take the world's second largest carbon polluter out of the Paris climate change pact. 

    What Exiting The Paris Agreement Means For U.S. Utilities - Jeremy Grantham, a pillar of the Boston investment community and one of the most respected investors in the U.S., commented on the clean energy movement that: “I think it’s happen-ing much faster than most well-educated business people in America realize. Because the science is being deliberately obfuscated in the U.S., the consequences are being obscured as well.”The Financial Times concluded that President Trump was trying to “unwind” President Obama’s clean energy policies, but that "in the rest of the world… the future of green power appears assured.” Presi-dent Trump does not think so, apparently. Attempts by various segments of the business community to keep the U.S. in the Paris agreement seem to show that they may see an opportunity in climate mitigation.Industry researchers predict solar electric power generation will be even more competitively priced (vis a vis fossil generation) by 2020, reaching three cents per kwh. And, they predict, solar power com-bined with battery storage could provide electric grid competitive services by 2030. If correct, the problems of coal and natural gas suppliers to the electric industry will derive mainly from economics and not government policies. Removing the U.S. from the Paris agreement will have little impact on fuel mix or competitive advantage.But it actually gets worse. Despite the President's action, a growing reliance on renewable energy sug-gests that a significant percentage of electric utility equipment presently in use, no matter how recent-ly installed and "undepreciated", will be at risk from technological obsolescence. Stated another way, a new technology with zero fuel costs might produce the identical commodity product as the old plants, electricity, but at a lower overall cost--all considerations of externalities and carbon taxes aside for the moment--which would make renewables all the more compelling. Let’s consider whether the U.K.-based Financial Times story is correct in the sense that political leaders here in the U.S. refuse to appreciate the gravity of global climate issues, or simply don’t understand green energy and are engaged in a sort of energy-related American exceptionalism.

    In the Withdrawal from the Paris Climate Agreement, the Koch Brothers’ Campaign Becomes Overt - If there was any lingering doubt that a tiny clique of fossil-fuel barons has captured America’s energy and environmental policies, it was dispelled last week, when the Trump Administration withdrew from the Paris climate accord. Surveys showed that a majority of Americans in literally every state wanted to remain within the agreement, and news reports established that the heads of many of the country’s most successful and iconic Fortune 100 companies, from Disney to General Electric, did, too. Voters and big business were arrayed against leaving the climate agreement. Yet despite the majority’s sentiment, a tiny—and until recently, almost faceless—minority somehow prevailed.How this happened is no longer a secret. The answer, as the New York Times reported, on Sunday, is “a story of big political money.” It is, perhaps, the most astounding example of influence-buying in modern American political history. As the climate scientist Michael Mann put it to me in my book “Dark Money,” when attempting to explain why the Republican Party has moved in the opposite direction from virtually the rest of the world, “We are talking about a direct challenge to the most powerful industry that has ever existed on the face of the Earth. There’s no depth to which they’re unwilling to sink to challenge anything threatening their interests.” For most of the world’s population, the costs of inaction on climate change far outweigh that of action. But for the fossil-fuel industry, he said, “It’s like the switch from whale oil in the nineteenth century. They’re fighting to maintain the status quo, no matter how dumb.” Until recently, those buying the fealty of the Republican Party on these issues tried to hide their sway, manipulating politics from the wings. But what became clear this past weekend is that they Charles and David Koch remain anonymous no longer.

    Withdrawing from the Paris deal takes four years. Our next president could join again in 30 days - While President Trump has vowed to formally withdraw from the Paris climate agreement, sparking international outrage, it doesn’t necessarily mean the end of U.S. involvement forever. A future president could have us back in the agreement in as little as 30 days, legal experts say. Under the rules of the Paris agreement, parties are allowed to exit and reenter as they choose, although withdrawing is a much lengthier legal process than returning. And there are no provisions stipulating how much time has passed after withdrawal before a nation can begin the process of rejoining the agreement. “A subsequent president would thus be able to submit a document stating the United States’ intention to become a party to the Agreement as soon as she or he wanted to,” Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia Law School, said in an email to The Washington Post — although he added that such an action is certainly outside the norm. “Countries don’t typically withdraw from complex international agreements that they led the way in negotiating,” he said.   According to the rules of the Paris agreement, nations wishing to exit must first submit a document to the United Nations specifying their intent to withdraw. However, this is permitted only after three years have passed since the agreement entered into force — and that date was Nov. 4, 2016. This means that the U.S. can submit its written notice Nov. 4, 2019, at the earliest. After that, the rules specify that the official withdrawal will take effect exactly one year later at the earliest, or potentially on a later date of the party’s choosing.In that intervening year, a nation may decide to cancel its withdrawal at any point, said Maria Manguiat, a climate expert with the United Nations Environment Program’s Law Division. “It doesn’t make the country look very good, but legally it’s entitled to do that,” she told The Washington Post. Altogether, if Trump acted as quickly as possible to withdraw from the agreement, the process could be completed Nov. 4, 2020, at the earliest. That’s the day after the next presidential election.

    Germany accuses Theresa May of being ‘complicit’ in Trump policies putting Europe at risk - Germany has accused Theresa May of being “complicit” in some of Donald Trump’s which they claim is putting Europe’s security at risk. In a damning speech, Vice Chancellor Sigmar Gabriel claimed all world leaders who fail to “determinedly oppose” the US President’s stance on climate change, religion and war are equally accountable. He roundly condemned Mr Trump’s policies, and launched an implicit attack on the British Prime Minister – who has ignored calls to convince Donald Trump to keep the US in the Paris Agreement. And Mr Gabriel made clear there is a growing political divide between the European Union and America, with the UK hanging on the sidelines.Mr Gabriel said: “Whoever accelerates climate change by not protecting the environment adequately, whoever sells more weapons into war zones, whoever does not choose to resort to politics to resolve religious conflicts is putting peace in Europe at risk.“The Trump administration wants to end climate deals, distribute more arms in crisis region and prevent people of some religions from traveling into [the US].  “If we Europeans don’t determinedly oppose this today, then the flows of migration into Europe will only become greater. “Whoever does not oppose these US policies is making themselves complicit.”In contrast Ms May has talked ‘special relationship’ between the US and UK stronger. She has also been accused of being Mr Trump’s “mole” in the EU, ahead of the Brexit negotiations. 

    France 'corrects' White House video on Paris accord -  Al Jazeera: Foreign ministry releases edited version of White House video that said Paris climate deal was bad for American jobs. A day after Donald Trump decided to pull the United States out of the Paris climate deal, the French government has cheekily hit back by releasing a pointed fact check of the US president's claims about the landmark agreement.France's finance ministry posted a tweet with an embedded link to a video that amounted to a wry, but very public rebuttal of Trump's assertions.On Thursday, the White House had tweeted, "The Paris Accord is a bad deal for Americans," and linked to a video which said the agreement "undermines" US competitiveness and jobs, was "badly negotiated" by former President Barack Obama and "accomplishes little." In its surprise response on Friday, France's foreign ministry tweeted, "We've seen the @WhiteHouse video about the #ParisAccord. We disagree - so we've changed it."We've seen the @WhiteHouse video about the #ParisAccord. We disagree – so we've changed it. #MakeThePlanetGreatAgain.— France Diplomacy (@francediplo_EN) June 2, 2017 Its own edited video uses the same format - background, font, images and music - as the White House but includes what French officials believe are the facts to debunk the White House claims.

    Donald Trump’s Triumph of Stupidity - Spiegel -- Until the very end, they tried behind closed doors to get him to change his mind. For the umpteenth time, they presented all the arguments -- the humanitarian ones, the geopolitical ones and, of course, the economic ones. They listed the advantages for the economy and for American companies. They explained how limited the hardships would be. German Chancellor Angela Merkel was the last one to speak, according to the secret minutes taken last Friday afternoon in the luxurious conference hotel in the Sicilian town of Taormina -- meeting notes that DER SPIEGEL has been given access to. Leaders of the world's seven most powerful economies were gathered around the table and the issues under discussion were the global economy and sustainable development. The newly elected French president, Emmanuel Macron, went first. It makes sense that the Frenchman would defend the international treaty that bears the name of France's capital: The Paris Agreement. "Climate change is real and it affects the poorest countries," Macron said. Then, Canadian Prime Minister Justin Trudeau reminded the U.S. president how successful the fight against the ozone hole had been and how it had been possible to convince industry leaders to reduce emissions of the harmful gas.Finally, it was Merkel's turn. Renewable energies, said the chancellor, present significant economic opportunities. "If the world's largest economic power were to pull out, the field would be left to the Chinese," she warned. Xi Jinping is clever, she added, and would take advantage of the vacuum it created. Even the Saudis were preparing for the post-oil era, she continued, and saving energy is also a worthwhile goal for the economy for many other reasons, not just because of climate change. But Donald Trump remained unconvinced.  Trump's withdrawal is a catastrophe for the climate. The U.S. is the second-largest emitter of greenhouse gases -- behind China -- and is now no longer part of global efforts to put a stop to climate change. It's America against the rest of the world, along with Syria and Nicaragua, the only other countries that haven't signed the Paris deal. But the effects on the geopolitical climate are likely to be just as catastrophic. Trump's speech provided only the most recent proof that discord between the U.S. and Europe is deeper now than at any time since the end of World War II.

    85 percent of the top science jobs in Trump’s government don’t even have a nominee -- Presidents invariably encounter key moments where they need to rely on scientific expertise. George W. Bush faced an anthrax attack after 9/11 and Hurricane Katrina. Barack Obama faced the Gulf of Mexico oil spill and the Ebola outbreak. Now President Trump has made a momentous decision about climate change.“When the crisis occurs, whether it’s an oil well blowout or an emerging disease or a tunnel collapse at a nuclear facility, that’s too late to get up to speed,” said Rush Holt, the chief executive of the American Association for the Advancement of Science. “You want people who are up to speed before the crisis occurs.”Trump is facing science-focused problems and issues with a key limitation: lack of staffing. As of June 6, Trump had announced a nominee for just seven, or 15 percent, of 46 top science posts in the federal government that require Senate confirmation, according to a Post analysis.This failure to fill top science jobs across the federal government has become even more pointed in light of his Paris choice. Recaps of Trump’s decision-making process have highlighted many influences upon it, but none of them principally scientific in nature. It’s also not clear whom he would consult for advice about climate change: Trump has not appointed a presidential science adviser, nor has he appointed a head of the National Oceanic and Atmospheric Administration, a lead federal agency that focuses on climate change science, or a chair of the White House Council on Environmental Quality.

    If Trump gets his way, world may not know if US emissions rise -  President Donald Trump’s critics argue that pulling the U.S. out of the Paris climate accord will lead to an increase in greenhouse gas emissions.If Trump has his way, the world may never know.The president’s budget request to Congress would eliminate or gut core programs across the federal government that track the heat-trapping gases. If those cuts go ahead, the government may not be able to tell if emissions are rising or falling."The first step in any decent regulatory program is a requirement for monitoring," David Doniger, director of the climate and clean air program at the Natural Resources Defense Council, said in an interview. "If you don’t know what’s there, it’s harder for the public or the regulators to do anything about it."Stephen Cole, a spokesman for NASA, which is slated under the president’s proposed budget to lose money for a satellite-based carbon-measuring system, said the cut reflects budget constraints. "NASA remains committed to studying our home planet and the universe, but we are reshaping our focus within the resources available to us," he said in an email.Whether the cuts happen will depend on Congress, and the degree to which Republicans share Trump’s priorities. Critics of government climate efforts, meanwhile, support the administration’s cuts, calling emissions-monitoring programs a waste of taxpayers’ money. "This doesn’t necessarily need to be housed within the federal government," said Nick Loris, a research fellow for the Heritage Foundation. "If the private sector wants to continue to pursue greenhouse gas monitoring, that’s fine."

    6 Ways NOAA Budget Cuts Will Impact Weather Reporting -- At a time when storms are getting more destructive, floods more devastating and people and property more vulnerable, accurate weather forecasting is more critical than ever. Which is why the Trump administration's brazen proposal to slash funding for the National Oceanic and Atmospheric Administration's (NOAA) most important forecasting and storm prediction programs has set off alarms in recent days. In all, the president wants to slash the agency's budget by 16 percent.  Having spent more than six years as a NOAA scientist, I know there are ways to become more efficient and make government work better. Many dedicated professionals within the agency would be eager to partner with the administration to develop that kind of action plan. Except, efficiency is not what this proposal is about. Rather, it blatantly disregards science and how it protects lives and property.  Here are a few of the NOAA budget lowlights, and why they could matter to you:

    • 1. Delays Hurricane Forecast Improvements. Several NOAA programs are developing advanced modeling to make weather and storm forecasts more accurate and reliable. But the same week NOAA called for an above-average season of hurricane activity, the Trump administration requested a $5 million funding cut for these important programs.
    • 2. Eliminates Critical Tornado Warning Program
    • 3. Terminates Arctic Research Protecting Fishermen.  The president wants to cut a total of $6 million from two NOAA programs that support improvements to sea ice modeling and predictions, along with a program that models vulnerabilities among ecosystems and fisheries.
    • 4. Closes Lab Tracking Mercury Pollution, Fallout. NOAA's Air Resources Laboratory researches how mercury and other harmful materials travel through the atmosphere and fall to Earth. The lab's models also help emergency agencies and the aviation industry minimize and respond to pollution disasters such as radioactive fallout or anthrax attacks.  And yet, the administration has requested a $4.7 million decrease to close the entire lab.
    • 5. Slows Flood Forecasting Improvements A $3.1 million cut would slow upgrades to the National Water Model, an initiative hailed as a "game changer" for flood prediction when it launched in 2016.
    • 6. Scales Back Forecasts of El Niño. A $26 million cut targets programs that monitor the tropical Pacific Ocean and help forecasters predict El Niño and other global environmental weather patterns. Such cuts would make it much harder to anticipate short-term climate events such as drought, excessive flooding and other extreme weather.

       How G.O.P. Leaders Came to View Climate Change as Fake Science -- It is difficult to reconcile the Republican Party of 2008 with the party of 2017, whose leader, President Trump, has called global warming a hoax, reversed environmental policies that Mr. McCain advocated on his run for the White House, and this past week announced that he would take the nation out of the Paris climate accord, which was to bind the globe in an effort to halt the planet’s warming. The Republican Party’s fast journey from debating how to combat human-caused climate change to arguing that it does not exist is a story of big political money, Democratic hubris in the Obama years and a partisan chasm that grew over nine years like a crack in the Antarctic shelf, favoring extreme positions and uncompromising rhetoric over cooperation and conciliation. “Most Republicans still do not regard climate change as a hoax,”, “it’s become yet another of the long list of litmus test issues that determine whether or not you’re a good Republican.” Since Mr. McCain ran for president on climate credentials that were stronger than his opponent Barack Obama’s, the scientific evidence linking greenhouse gases from fossil fuels to the dangerous warming of the planet has grown stronger.  That scientific consensus was enough to pull virtually all of the major nations along. Conservative-leaning governments in Britain, France, Germany and Japan all signed on to successive climate change agreements.  Yet when Mr. Trump pulled the United States from the Paris accord, the Senate majority leader, the speaker of the House and every member of the elected Republican leadership were united in their praise.  Those divisions did not happen by themselves. Republican lawmakers were moved along by a campaign carefully crafted by fossil fuel industry players, most notably Charles D. and David H. Koch, the Kansas-based billionaires who run a chain of refineries (which can process 600,000 barrels of crude oil per day) as well as a subsidiary that owns or operates 4,000 miles of pipelines that move crude oil.

      Climate Change: “It Depends on How We They Value Time” - naked capitalism - Yves here. This short post makes a point that can’t be stated strongly enough: the way that economic concepts and methodologies are applied to situations where they are inappropriate, producing garbage-in, garbage out results. Sandwichman discusses the use of the finance concept, the time value of money, to climate change. The basic idea of the time value of money is that someone who has money expects to get a return if they give the money to another party with a promise to get it back in the future. That line of thinking undergrids financial analysis and capital budgeting. Michael Hudson has described how unworkable this becomes when indebtedness becomes significant on a societal level. The interest payments eat into productive activity, which in ancient times led to periodic debt jubilees. The modern solution was bankruptcy, where the debt is written down to some level the borrower can pay (or forgiven if the borrower has nothing left, such as in Chapter 7 bankruptcies). However, no one goes into a cost of capital analysis when their teen daughter gets pregnant, wants an abortion, and needs the Bank of Parents to pay for it, or when someone had a heart attack and needs a bypass to survive. Nor do we do cost of capital analyses when giving time and money to community and charitable activities.

      Senators accuse DeVos of ‘quick about-face’ on climate change - A conservative think tank that does not believe in human-induced climate change has been sending to tens of thousands of K-12 and college science teachers materials that reject basic principles on which nearly all climate scientists agree — and now, some U.S. senators are asking Education Secretary Betsy DeVos whether staff members in her department have anything to do with it.The Education Department did not  respond to a query about the letter sent by Democratic Sens. Sheldon Whitehouse of Rhode Island, Brian Schatz of Hawaii, Elizabeth Warren of Massachusetts and Edward J. Markey of Massachusetts. The reason the senators are asking, they said, is because DeVos issued a statement last week — her first about any non-education-related White House actions — in support of President Trump’s decision to pull the United States out of the landmark Paris climate agreement (which all countries had signed except Syria and Nicaragua). The Michigan billionaire said in her statement:“The announcement made today by the President is one more example of his commitment to rolling back the unrealistic and overreaching regulatory actions by the previous Administration. President Trump is making good on his promise to put America and American workers first.” Shortly after she issued the statement, DeVos was asked by reporters whether she believes in human-caused climate change. She responded, “Certainly, the climate changes. Yes.” Then, asked what should be done about it, she responded: “I don’t have any answer. I’m here to talk about students in schools today.” The senators reacted with a letter that accuses DeVos of having done a “quick about-face” from statements she had made in her February confirmation hearing before the Senate.

      Nobody at White House will say whether Trump believes in climate change | Reuters: Nobody at the White House was able to say on Friday whether President Donald Trump believes in climate change. It was a burning question the day after Trump announced that he had decided to withdraw the United States from the Paris climate accord. Trump in recent years has expressed skepticism about whether climate change is real, sometimes calling it a hoax. But since becoming president, he has not offered an opinion. Reporters have asked several senior officials about Trump's view, but have not gotten an answer. "I have not had an opportunity to have that discussion," White House spokesman Sean Spicer told reporters. Environmental Protection Agency Administrator Scott Pruitt gave his own view on the subject, saying he believes human activity plays a role in global warming, but measuring that contribution with precision is difficult. But speaking to reporters at the White House, Pruitt declined to directly answer questions about whether the president still believed global warming was "a hoax." Pruitt, asked if he himself believed climate change is occurring, said he has indicated that "human activity contributes to it in some manner. Measuring with precision, from my perspective, the degree of human contribution is very challenging." Trump counselor Kellyanne Conway was asked on ABC's "Good Morning America" show whether Trump believed in climate change. She said he believes in clean air and water and a clean environment.Pressed, on Trump's view, she said: "You should ask him that. And I hope you have your chance."

      'President Trump believes the climate is changing': Ambassador Haley | Reuters: U.S. President Donald Trump "believes the climate is changing," U.S. Ambassador to the United Nations Nikki Haley said on Saturday after Trump's decision to take the United States out of the Paris climate accord sparked dismay across the world. "President Trump believes the climate is changing and he believes pollutants are part of the equation," Haley said during an excerpt of a CNN interview released on Saturday. The interview will be broadcast on CNN's "State of the Union" on Sunday. Trump "knows that it's changing and that the U.S. has to be responsible for it and that's what we're going to do," Haley said. On Thursday, Trump announced the United States would withdraw from the Paris climate change pact, tapping into his "America First" campaign theme. He said participating in the pact would undermine the U.S. economy, wipe out jobs, weaken national sovereignty and put his country at a permanent disadvantage. "Just because the U.S. got out of a club doesn't mean we aren't going to care about the environment," Haley said.

      Tillerson: Trump isn't 'walking away' from climate change issue - POLITICO: Secretary of State Rex Tillerson on Monday said the president is still committed to addressing climate change even though he withdrew from the Paris climate pact last week. “He’s not walking away from it — he’s simply walking away from what he felt was an agreement that did not serve the American people well,” Tillerson said, according to his remarks released by the State Department. The secretary of state spoke in Sydney alongside Secretary of Defense James Mattis in their first joint appearance in a foreign country. Tillerson said President Donald Trump is interested in “perhaps a new construct of an agreement” and believes climate change “is still important and that he wants to stay engaged on the issue.” Trump on Thursday vowed to pull out of the Paris climate agreement, saying it puts the U.S. at a “very big economic disadvantage.” He also said he’s open to renegotiating the agreement, though France, Germany, Italy and the United Nations stated after Trump withdrew that the pact isn’t renegotiable.

      Hawaii enacts law committing to goals of Paris climate accord | Reuters: Hawaii has become the first U.S. state to enact legislation to bring its environmental standards in line with the Paris climate accord, officials said on Wednesday, less than a week after President Donald Trump announced that the United States would withdraw from the global agreement. Hawaii Governor David Ige signed a bill on Tuesday requiring state officials to plan a response to climate change that aligns the state with the standards and goals of the Paris pact, according to Scott Glenn, an environmental adviser to the governor. "People come to Hawaii to enjoy its environment," Glenn said. "When climate change is threatening our reefs and threatening our weather ... then it's threatening our economy, too.” Although Hawaii already has strong environmental rules, the new law is the first to directly refer to the standards of the Paris agreement, said Glen Andersen, who tracks energy and climate issues at the National Conference of State Legislatures. Along with setting climate change as a priority for the state, the bill creates a state commission dedicated to studying climate change and putting out detailed plans for responding both to sea-level rise and climate change as a whole, with the stipulation that the plans align with the Paris agreement. Trump said on Thursday that the landmark 2015 climate agreement threatened millions of jobs and productivity, and that he would start a multi-year process to withdraw from the deal, which has been signed by almost every other nation on Earth. The governors of Washington, California and New York on the same day announced the creation of a "climate alliance” of states that would remain committed to the Paris goals. Ige joined the alliance on Friday.

      Lawmakers move to protect funding for climate change research | TheHill: A bipartisan group of lawmakers is urging appropriators not to cut funding from one of the federal government’s climate change research accounts. In a letter penned by Reps. Don Young(R-Alaska) and Jared Polis (D-Colo.), the members told appropriators to preserve the $25.3 million in funding for the National and Regional Climate Adaptation Science Centers. The program, established in 2008 during the George W. Bush administration, provides climate-related research to fish and wildlife managers as a way to help them “prepare for, respond to, and reduce the negative consequences of climate extremes,” according to the letter. The Trump administration has requested $17.3 million for the program in 2018, a $7.9 million cut from current levels. In a letter to Reps. Ken Calvert (R-Calif.) and Betty McCollum (D-Minn.), the chairman and ranking member of the Appropriations Committee’s Interior and Environment panel, the members said the program has “helped natural and cultural resource managers assess climate-related vulnerabilities in their local jurisdictions as a first step in enhancing preparedness.” “We support the reputable and important work of the [Department of Interior’s] National and Regional Climate Adaptation Science Centers," they wrote. “We understand that their return-on-investment is large and we encourage continued stable support and full funding for the program.” The Trump administration proposed slashing funding for several science research accounts in its 2018 budget request, which lawmakers are beginning to consider this week. 

      UK Lobbied European Union To Weaken Climate Rules -- Leaked documents obtained by Greenpeace’s Energydesk reveal that the UK Government lobbied the European Union to weaken its own energy regulations on the very same day that UK Prime Minister Theresa May triggered Article 50, the country’s ‘Brexit’ out of the EU. According to the leaked documents obtained by Energydesk, UK Ministers, part of the British delegation that is formally part of the Department for Exiting the EU, attempted to weaken rules and regulations set out by the EU for energy efficiency and renewable energy governance. Specifically, the UK provided a series of ‘amendments’ it recommends be made to EU regulations that only serve to reduce key renewable energy and energy efficiency targets proposed by the European Commission, make them non-binding and give Member States a lot more leeway to wiggle, or even scrap them altogether (in some cases). “The government is trying to lock the rest of the EU into weaker energy policies, just as we are leaving,” added Hannah Martin, Greenpeace UK’s Head of energy.

      Theresa May accused of being ‘Donald Trump’s mole’ in Europe after UK tries to water down EU climate change policy - Theresa May has been accused of being Donald Trump’s “mole” in Europe after leaked documents showed the UK attempted to water down EU policies designed to tackle climate change.While other European politicians have made clear to the Republican billionaire that his denial of climate science is a problem, the Prime Minister has remained resolutely silent on the issue.Her visit to Washington – when the two leaders were pictured holding hands – was widely regarded as an attempt to build a strong relationship with Mr Trump, despite concerns about his attitudes towards women, migrants, Islam, Vladimir Putin’s Russia and other issues.The leaked documents, obtained by Greenpeace’s Energydesk, show the UK tried to make a policy designed to improve energy efficiency – reducing greenhouse gas emissions and making goods cheaper to run for consumers – voluntary rather than mandatory. It also essentially argued EU member states should be allowed to make no progress at all towards a 2030 target on renewable energy until the last moment. Barry Gardiner, the shadow International Trade Secretary, who speaks on climate change issues as a result of Ms May’s decision to scrap the dedicated climate change Cabinet post, told The Independent: “After the G7 [meeting], the word was put out that six countries were on track, pursuing the objective of the Paris Agreement. Only one country, America, was out of step. “That simply has been proven not to be the case by this leak, which shows Donald Trump actually has a mole within the EU and that mole is the UK.“The UK is, behind the scenes, trying to water down the commitments and make them voluntary instead of mandatory.”

      EU climate laws undermined by Polish and Czech revolt - East European EU states are mounting a behind-the-scenes revolt against the Paris Agreement, blocking key measures needed to deliver the pledge that they signed up to 18 months ago. Under the climate accord, Europe promised to shave 40% off its emissions by 2030. But documents seen by Climate Home show that Visegrad countries are trying to gut, block or water down all of these efforts, in a rearguard manoeuvre that mirrors president Donald Trump’s rollback of climate policy in Washington. Energy efficiency is supposed to make up around half of Europe’s emissions reductions by 2030, but a Czech proposal could cut energy saving obligations from a headline 1.5% a year figure to just 0.35% in practice.  Below the radar, Poland has also launched a manoeuvre that may block the EU’s winter package in its entirety – particularly a planned limit on power plant emissions – if it is signed up to by a third of EU parliaments, or 10-13 states. The EU’s various wings will eventually thrash out a compromise between the commission’s original proposal – which was calibrated to meet the Paris pledge – and the counter-proposals designed to weaken this.

       EU, China trade spat blocks climate statement -- The European Union and China warned U.S. President Donald Trump on Friday he was making a major error by withdrawing from the Paris climate pact, but the pair failed to agree a formal climate statement because of divisions over trade. Speaking alongside Chinese Premier Li Keqiang, the EU's Donald Tusk said efforts to reduce pollution and combat rising sea levels would now continue without the United States. But a spat on trade and steel production underscored the differences in a sometimes difficult EU-China relationship. "We are convinced that yesterday's decision by the United States to leave the Paris agreement is a big mistake," Tusk, who chairs EU summits as the head of the European Council, told a news conference with Li and the EU's chief executive Jean-Claude Juncker. "The fight against climate change, and all the research, innovation and technological progress it will bring, will continue, with or without the U.S.," Tusk said. In their meeting, the three leaders committed to cutting back on fossil fuels, developing more green technology and helping raise funds to help poorer countries cut their emissions, but a dispute about trade ties scuppered plans for a formal joint statement. Despite what officials described as a warm meeting, China and the European Union could not agree on a broader final communique meant to focus on a range of other issues discussed at the talks, including a commitment to free trade and measures needed to reduce a global steel glut.According to one person present at the summit, China's insistence on a reference that the European Union will eventually recognize China as an economy driven by the market, not the state, blocked the final 60-point statement. That also meant there could be no agreement on a formal pledge to work together to reduce global steel production.

      NY prosecutor says Exxon needs to hand over documents on climate change risk -- New York Attorney General Eric Schneiderman wants a state court to make oil giant Exxon Mobil turn over more documents in an investigation into whether the company lied to investors about the risks of climate change policy. Schneiderman launched the investigation of Exxon in 2015, claiming that the company was downplaying climate change and the problems that could arise for the company because of it in a way that defrauded investors.Exxon, one of the top US companies by market capitalization and also one of the top five polluters in the US, has claimed that complying with current subpoenas from the state’s top prosecutor is unduly burdensome.The court filing today (PDF) claims that New York’s investigation so far “has uncovered significant evidence of potential materially false and misleading statements by Exxon” concerning how the oil giant calculated the cost of greenhouse gas (GHG) emissions in its investment decisions.According to the attorney general, Exxon was assuring its investors that it was using a “proxy cost” for GHGs, including any fees or penalties that governments might impose to mitigate the impact of climate change, to calculate the viability of certain investments. However, the filing claims the company directed its employees to ignore the proxy cost or apply it in unrealistic ways to make those investments seem better than they were. "Exxon's own documents suggest that if Exxon had applied the proxy cost it promised to shareholders, at least one substantial oil sands project may have projected a financial loss, rather than a profit, over the course of the project’s original timeline," the filing claims. The attorney general also claimed that “Exxon may still be in the midst of perpetrating an ongoing fraudulent scheme on investors and the public."

      Groups Sue Trump's EPA for Rolling Back Climate Standards -- The Sierra Club and its allies sued the U.S. Environmental Protection Agency (EPA) administrator Scott Pruitt today for delaying crucial safeguards that reduce climate pollution, smog-forming compounds and air toxins from oil and gas facilities. This action represents the first lawsuit against the Trump administration for rolling back EPA climate standards.  Unfortunately, there will surely be many more lawsuits to come: Trump's decision last week to withdraw the U.S. from the Paris climate accord —egged on by Scott Pruitt—demonstrates the crass and reckless disregard this president has for public health and the environment (to say nothing of his contempt for science , diplomacy and even smart business sense).  This same disregard is apparent in Pruitt's decision to suspend these critical leak detection and repair ("LDAR") requirements for the oil and gas sector, which were finalized under the Obama administration and were scheduled to take effect last Saturday. Pruitt has moved to delay these vital protections by 90 days on legally baseless grounds, and is planning to delay them indefinitely after that. We anticipate that the U.S. Court of Appeals for the D.C. Circuit, where we filed our case, will strike down this lawless action.  A little background on the LDAR program is in order. Leaking oil and gas equipment is one of the country's biggest sources of methane pollution, a dangerous greenhouse gas that is 87 times more powerful than carbon dioxide at warming the planet. We won't be able to curb the worst effects of climate change unless we limit harmful methane emissions from the oil and gas sector. In addition, when they leak methane, these same equipment parts emit smog- and soot-forming volatile organic compounds, which cause serious lung and heart problems, and air toxins like benzene and formaldehyde, known human carcinogens.

      Lawsuits are challenging almost all Trump’s environmental offensives | Fusion: Since January, the Trump administration has taken swift steps to dismantle numerous climate and environmental priorities established under the Obama administration, including the repeal of multiple environmental regulations. And environmentalists are fighting back—by way of the courts, that is. Just about every environment-related action the Trump administration has taken has been met with a legal challenge. Trump is no stranger to litigation—reports suggest he was sued thousands of times as part of his career in real estate before ever becoming president. But since assuming office, he’s also been met with record-setting numbers of legal challenges. In his first two weeks as president alone, his administration was sued more than 50 times, mostly over the travel ban he implemented shortly after his inauguration. By March, reports suggest the number of lawsuits had risen above 100. A major reason for the high rate of litigation has to do with the president’s generous use of executive orders, often in ways that environmental and social groups feel oversteps his authority, according to Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia Law School. The travel ban is perhaps the most high-profile example of these. What we’ve seen with Trump is an attempt to really use the executive order to create whole new policies.“Executive orders tend to be directives from the president to administrative agencies to carry out internal tasks,” he said. “On occasion, they’re used to set broader policy agendas. But what we’ve seen with Trump is an attempt to really use the executive order to create whole new policies. And some of the policies that these executive orders are seeking to create are at direct odds with the statutes that provide the executive branch with its authority to take any action at all.” 

      Pruitt Tables EPA Order on GE to Remove PCBs From River - This past May, U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt raised some eyebrows when he issued a memorandum insisting he be personally involved in decisions regarding Superfund cleanups that cost $50 million or more.  Now we might know why he made that move. As noted by Public Employees for Environmental Responsibility (PEER), one of Pruitt's first acts under the memo was tabling an October 2016 EPA order that General Electric (GE) spend $613 million to remove PCBs (polychlorinated biphenyls) that the company's plant in Pittsfield dumped into the Housatonic River in western Massachusetts from the 1930s to the 1970s. Before Pruitt was tapped to head the EPA, GE appealed the EPA's order last fall, criticizing it for being too costly, as it required the excavation of contaminated soils within a 10-mile stretch of the river from Pittsfield to Lenox. Officials with the company considered the government's 13-year " Rest of River " plan a violation of an earlier settlement, and noted that more than $500 million had been spent since the 1990s to clean two miles of the river closest to the plant.  But now, the Boston-based industrial giant might have a powerful, business-friendly ally in the Trump administration. The new EPA chief is inviting GE to negotiate a new compromise, PEER said.  "Pruitt has positioned himself to hand out multi-million dollar favors to corporate polluters subject to almost no review," stated PEER New England Director Kyla Bennett, a former EPA scientist and attorney, adding that Superfund is Pruitt's sole affirmative or non-rollback initiative. "The main way to 'streamline' these inherently contentious and costly cleanups is offer responsible industries sweetheart deals they can't refuse."

      Business leaders push back against Trump’s energy research cuts | TheHill: A group of business and energy industry leaders is pushing back against President Trump’s proposed cuts to federal energy research and development programs. More than a dozen executives sent a letter Thursday to congressional budget and appropriations leaders asking that they prioritize energy research and development — and make sure that it is sufficiently funded. They asked Appropriations Committee and Budget Committee leaders to “invest in America’s economic and energy future by funding vital programs in energy research and development at the Department of Energy.”The letter was signed by executives including Christopher Crane of Exelon Corp., Bruce Culpepper of Shell Oil Co., Thomas Donohue of the Chamber of Commerce and Tom Fanning of Southern Co. Trump’s first budget proposal, released last month, sought massive cuts to key Energy Department research and development programs, including a 36.5 percent cut in nuclear research, 58 percent in fossil fuel technology and a 35 percent reduction in science and energy innovation, as well as eliminating the Advanced Research Projects Agency - Energy and its $306 million budget. While the letter does not explicitly mention that budget proposal, it depicts federal energy investment as an important piece of how energy innovation happens. “Leveraging its expertise, the private sector has invested billions of dollars to commercialize new energy technologies. Critical to this process is the feedstock supplied by federal investments, especially in early-stage and high-risk research,” they wrote. 

       U.S. airlines affirm aviation emissions deal after Trump's Paris pullout | Reuters: U.S. airlines on Tuesday affirmed their support for a plan to curb emissions from flights, under review by the administration of President Donald Trump who recently decided to take the country out of Paris climate change accord. Several U.S. airlines and industry groups said they back the global aviation agreement approved by 70 countries, including the United States, to curb greenhouse gases from international flights. Trump said on Thursday the United States would withdraw from the landmark 2015 Paris pact to fight climate change, raising questions about whether he would also seek to back out of the 2021 voluntary phase of the airlines agreement. Air Transport Action Group told reporters at an industry gathering in Cancun, Mexico, on Tuesday that the deal was less costly for carriers than navigating around multiple regional or national rules. Airlines for America, the trade group for major U.S. carriers, said in response to queries from Reuters that it remained committed to the agreement brokered by the International Civil Aviation Organization (ICAO). At the Mexico event this week, the International Air Transport Association (IATA) and carriers like American Airlines (AAL.O) and United Airlines (UAL.N) reiterated their support for the deal. A U.S. State Department spokeswoman said in an email that the aviation agreement was under review, as were all regulatory policies agreed by the Obama administration. There is no deadline for action, she said.Under the global deal, airlines will buy carbon credits from environmental projects around the world to offset growth in emissions from international commercial flights. 

      In Trump Country, Renewable Energy Is Thriving - Two years ago, Kansas repealed a law requiring that 20 percent of the state’s electric power come from renewable sources by 2020, seemingly a step backward on energy in a deeply conservative state.Yet by the time the law was scrapped, it had become largely irrelevant. Kansas blew past that 20 percent target in 2014, and last year generated more than 30 percent of its power from wind. The state may be the first in the country to hit 50 percent wind generation in a year or two, unless Iowa gets there first.Some of the fastest progress  on clean energy is occurring in states led by Republican governors and legislators, and states carried by Donald J. Trump in the presidential election.The five states that get the largest percentage of their power from wind turbines — Iowa, Kansas, South Dakota, Oklahoma and North Dakota — all voted for Mr. Trump. So did Texas, which produces the most wind power in absolute terms. In fact, 69 percent of the wind power produced in the country comes from states that Mr. Trump carried in November. Renewable energy that produces no carbon dioxide emissions is not solely a coastal, blue-state phenomenon. From Georgia to the Dakotas, business and political leaders are embracing clean energy sources even as the Trump administration pushes for more exploitation of oil, gas and coal. These red states are not motivated by a sudden desire to reduce greenhouse gas emissions. Nor are they joining solidly Democratic New York, Washington and California in defending the Paris climate agreement that President Trump walked away from last week. Instead, their leaders see tapping the wind, and to a lesser degree the sun, as an economic strategy.

      If you thought getting Mexico to pay for the wall couldn’t get weirder, you were wrong -  President Trump has come up with a new idea on how to cover the costs for a proposed border wall between the United States and Mexico: build it with solar panels. At a White House meeting Tuesday, Trump floated the concept of “beautiful structures,” 40 to 50 feet high, that generate clean electricity from the sun — and would help cover the cost of the project, according to comments reported by Axios. The U.S. border with Mexico is almost 2,000 miles long. Trump has said his wall, designed to prevent immigrants from crossing into the United States illegally, will cover 1,000 miles, with natural obstacles doing the rest of the work. That's a lot of solar panels, potentially generating a significant amount of energy. But the realities of building a 1,000-mile wall covered with solar panels — and then getting that electricity to market on either side of the border — are not so simple.With few actual details about the design of the wall, the cost of building it or the price that would be paid for the electricity, it is difficult to make any realistic conclusions about the impact of Trump’s solar wall — assuming it ever gets built.  Predictions vary dramatically based on what assumptions about solar wall construction are factored in to the calculations. Tom Gleason, owner and founder of a company that submitted a proposal to build a solar border wall, has said that his design could generate two megawatts of electricity per hour, would cost about $6 million per mile to build and would pay for itself in 20 years.  An estimate from Elemental Energy, a solar installation firm based in Portland, Ore., found that 1,000 miles of solar wall could generate 2,657 gigawatt hours of electricity annually, which would be worth $106 million. But  the wall design itself could prove problematic for a solar-panel installation, according to an analysis in the Financial Times. Fixing the panels vertically could lead to an efficiency loss of around 50 percent, the analysis says, with the angle at which the sun would hit the wall losing an additional 10 percent in efficiency. Given that an average solar panel operates at about 20 percent efficiency, and factoring a few other challenges, this leaves the solar border wall operating at just 8 percent efficiency. That's a big disadvantage. Then there is the question of finding a market for any electricity that would be generated by a solar wall in a remote section of the country.

      Why Do Federal Subsidies Make Renewable Energy So Costly? -- On a total dollar basis, wind has received the greatest amount of federal subsidies. Solar is second. Wind and solar together get more than all other energy sources combined. However, based on production (subsidies per kWh of electricity produced), solar energy, has gotten over ten times the subsidies of all other forms of energy sources combined, including wind (see figure). According to the Energy Information Administration (EIA) and the University of Texas, from 2010 through 2013, federal renewable energy subsidies increased by 54%, from $8.6 billion to $13.2 billion, despite the fact that total federal energy subsidies declined by 23%, from $38 billion to $29 billion. Subsidies then decreased dramatically from 2013 to 2016, because:

      • • tax incentives expired for biofuels,
      • • the American Recovery and Reinvestment Act (ARRA) stimulus funds were used up,
      • • energy assistance funds decreased,
      • • there was a 15% decrease in fossil fuel subsidies from $4.0 billion to $3.4 billion, and
      • • a 12% decrease in nuclear subsidies from $1.9 billion to $1.7 billion.

      But the subsidies for nuclear and fossil fuels are indirect subsidies like decommissioning and insurance assistance, leasing of federal lands, and other externalities, unlike the subsidies for renewables which are directly for the production of electricity and directly affect cost and pricing. Within the renewables, electricity-related subsidies increased more than 50% for wind and solar, whereas conservation, end-use, and biofuel subsidies deceased more than 50%. This is unfortunate since conservation and efficiency usually yield great results with little cost or infrastructure requirements. The Institute for Energy Research and the University of Texas calculated the subsidies per unit of energy produced, or cents per kWh. This is a more relevant number for comparing different energy sources as it normalizes to the amount of energy produced (see figure above). Between 2010 and 2016, subsidies for solar were between 10¢ and 88¢ per kWh and subsidies for wind were between 1.3¢ and 5.7¢ per kWh. Subsidies for coal, natural gas and nuclear are all between 0.05¢ and 0.2¢ per kWh over all years.

      50% RE in the UK – the Ugly Facts - National Grid has reported, that for the first time, over 50% of UK electricity came from renewable electricity (RE) on 7th June. Is this a cause for celebration or not? With biomass generators being subsidised to the tune of £43/MWh and offshore wind producers to the tune of £89/MWh (source Drax), this effectively doubles generation costs. I imagine that the RE generators will be breaking out the Champagne. While if you are a hard-pressed, energy poor pensioner, you are probably wishing you’d bought another blanket. The celebratory way the BBC has broken this news you’d think they were in the employ of the fat cat renewables generators and not the British public. This must change! I begin with Roger Harrabin’s report from the BBC  and follow with a detailed analysis of UK generation on 7 th June together with my opinions on these events. The BBC… Renewable sources of energy have generated more electricity than coal and gas in the UK for the first time. National Grid reported that, on Wednesday lunchtime, power from wind, solar, hydro and wood pellet burning supplied 50.7% of UK energy. Add in nuclear, and by 2pm low carbon sources were producing 72.1% of electricity in the UK. Wednesday lunchtime was perfect for renewables – sunny and windy at the same time. Records for wind power are being set across Northern Europe. The National Grid, the body that owns and manages the power supply around the UK, said in a tweet: “For the first time ever this lunchtime wind, nuclear and solar were all generating more than both gas and coal combined.” On Tuesday, a tenth of the UK’s power was coming from offshore wind farms – a newcomer on the energy scene whose costs have plummeted far faster than expected. So much power was being generated by wind turbines, in fact, that prices fell to a tenth of their normal level. Environmentalists will salute this new record as a milestone towards the low carbon economy. Critics of renewable energy sources will point to the disruption renewables cause to the established energy system. At the time of Wednesday’s record, 1% of demand was met by storage; this will have to increase hugely as the UK moves towards a low-carbon electricity system. 

      U.S. aid agency under scrutiny for renewable energy loans in Chile -- The U.S. government is auditing a foreign aid program that loaned almost $1 billion to renewable energy projects in Chile – including solar farms in such deep financial trouble that the loans may never be fully repaid, according to people familiar with the matter. The Office of Inspector General for the U.S. Agency for International Development (USAID OIG) is examining approximately $890 million of loans approved by the Overseas Private Investment Corporation (OPIC), it confirmed in an emailed statement after inquiries by Reuters. The audit, which began in 2016 and has not been previously reported, is centered on OPIC’s decision to fund five Chilean solar farms and a hydroelectric project in 2013 and 2014. OPIC, which aims to advance U.S. interests by lending to overseas business ventures, has come under fire from critics who say private banks are best suited to make investment decisions and that it places too much emphasis on renewable energy. U.S. President Donald Trump proposed cutting funding for any new OPIC projects in his 2018 budget outline released last week.  If OPIC's funding is cut, it will be due in part to questions about investments such as its loans to the Chilean solar projects. At least three of its five solar projects have started restructuring their debt, according to two people familiar with the projects' finances. They said OPIC's losses on the solar deals are likely to exceed $160 million. OPIC in a statement said it was confident it would recover the loans over the coming decades, but acknowledged its original timeline for repayments had changed. The agency, which emphasized that most of its worldwide projects are on firm financial footing, added that it would assess the OIG's recommendations once the audit is complete.

      Germany accuses Audi of cheating on emissions tests  - Audi also installed emission-cheating software in some 24,000 luxury models, according to German Transport Minister Alexander Dobrindt. His admission follows ructions at Volkswagen over health-damaging exhaust gases.Dobrindt announced Thursday that the luxury carmaker had been told to recall its A8 and A7 models fitted with V6 and V8 diesel motors and sold between 2009 and 2013 in Europe. The minister said he had spoken with chief executive of Audi's parent company Volkswagen, Matthias Müller, earlier on Thursday. In March, Audi's chief executive Rupert Stadler had said that all aspects of the company's operations were being reviewed as a result of the affair. Germany's tabloid newspaper Bild said Müller had been "summoned" to the transport ministry in Berlin. The Volkswagen subsidiary was under pressure to present a concept for the refitting of affected vehicles by 12 June to reduce pollutants, Bild said. 

      Study reveals that green incentives could actually be increasing CO2 emissions - Globally, from China and Germany to the United States, electric vehicle (EV) subsidies have been championed as an effective strategy to boost production of renewable technology and reduce greenhouse gas emissions (GHG).  But a new study by Concordia economics professor Ian Irvine shows that subsidizing EVs in the North American context will not reduce GHG emissions in the short-term, and may even increase them—at a cost to taxpayers.Recently published in Canadian Public Policy, Irvine's study compared the incentives for producing EVs that are found in the Corporate Average Fuel Economy (CAFE) standards, North America's fuel-efficiency regulations, with new EV subsidy policies in Ontario, Quebec and British Columbia.He found that, while the subsidies encourage the production of more EVs, they undermine the efficiency requirements of existing incentives for conventional vehicles. This results in a zero or negative near-term GHG benefit."Sometimes you have more than one policy aimed at a particular goal, and usually those policies are complementary," Irvine notes. "But in this case, they work at cross purposes." In 2012, CAFE was amended to require manufacturers to continuously reduce the average carbon dioxide (CO2) emissions of their fleets by five per cent a year between 2017 and 2025.  Typically, the amount of CO2 each vehicle is allowed to emit is related to its footprint, defined as the area between its wheels. However, Irvine says, because the annual GHG reduction targets are organized on an average fleet-wide basis, manufacturers are allowed some flexibility in how they distribute the annual efficiency improvements within and across different vehicle categories.

      Canada Pushes For Zero Emission Vehicle Strategy - On Friday, Marc Garneau, Minister of Transport and Navdeep Bains,Manage Articles Minister of Innovation, Science and Economic Development, announced that the government is now creating a national strategy to increase the number of zero-emission vehicles (ZEVS) on Canadian roads by 2018. Partners include provinces and territories, industry, consumer and non-government organizations, and academia. Qualifying ZEVs include battery electric, plug-in hybrid, and fuel cell vehicles.Canada sees a two-fold benefit in going this route, supporting emissions reductions and economic gains. The policy points to greenhouse gas reductions being supported with transportation making up 24 percent of carbon emissions in Canada. On the economic front, it’s seen as a way of creating more high paying middle-class jobs to manufacture, market, and support more ZEVs in country.Those participating in the national Advisory Group will look into critical issues in five key areas: vehicle supply, cost and benefits of ownership, infrastructure readiness, public awareness, and clean growth and clean jobs. It’s also influenced by the previously adopted Pan-Canadian Framework on Clean Growth and Climate Change aimed at hitting national targets for overall 2030 emissions reductions. The national government would like to coordinate several projects being carried out at the province level. Quebec has played a leading role, hosting the international Electric Vehicle Symposium (EVS29) in Montreal last year. Garneau and Bains made the announcement at an electric vehicle show in Montreal last week. The province of Quebec, and Canada overall, have been influenced by California’s zero emission vehicle policy tied into hitting greenhouse gas emissions reductions in part through the state’s low carbon fuel standard. That guideline is based on reducing carbon emissions in vehicles 10 percent by a given timeline. It’s considered to be technology and fuel neutral, allowing stakeholders to choose their own alternative fuels to meet the requirement. Electric vehicles have been the leading technology in California to meet mandates on emissions reductions.

      Coal industry begs Congress to save carbon capture from Trump -  Coal companies who once thought president Donald Trump an ally in the search for next-generation technology are now looking to Congress to save them from the White House.In his first budget proposal to Congress, Trump shocked coal advocates by suggesting a steep cut to carbon capture and storage (CCS) research funding. In all, Trump floated a 77% cut, down to $31 million in fiscal year 2018.Meanwhile, Trump’s announcement of a withdrawal from the Paris climate deal last week has thrown up barriers between US companies and a potentially lucrative international market for CCS projects that some agencies say are necessary to meet climate goals.The moves contrast with campaign images of Trump touting coal miners as the archetypal American worker and repeated references to “clean coal” on the campaign trail.Since the announcements, coal companies are being deferential to the White House, but quietly shifting their emphasis to Congress to save CCS funding in the budget.Rick Curtsinger, a spokesman for coal company Cloud Peak Energy, said that Trump has been “extremely supportive of America’s coal miners” and that he “has a difficult task in prioritising issues and balancing the budget.”But, Curtsinger added in a n email: “We are hopeful that Congress will support the further development and commercialisation of the carbon capture technology that we believe is necessary for coal to be able to play a long-term role in providing secure, reliable, and affordable electricity while addressing concerns about CO2 and climate.”

      China, the King of Coal, Is Getting Gassy - With factories and power plants across China burning half the world’s coal, the government’s latest targets for using more natural gas to ease the country’s worsening air pollution seemed too ambitious. Though gas remains a small and expensive component in China’s fuel mix, demand is rising faster than expected for domestic and imported supplies. In April, consumption was 22 percent higher than the same month in 2016, and the total for the first four months of the year is up more than 12 percent, data from the National Development and Reform Commission show. The results are encouraging analysts to upgrade their demand forecasts and may signal the government is on track to reach its goal of getting as much as 10 percent of its energy from gas by 2020. It’s also bolstering the outlook for hundreds of billions of dollars in possible investments by companies as far away as Russia, Australia and the U.S. to build gas pipelines and export infrastructure to feed the growing Chinese market. “China’s targets are looking more and more achievable,” said Laban Yu, head of Asia oil and gas equity research at Jefferies Group LLC in Hong Kong. “It has nothing to do with China’s economy, or natural gas and coal prices. It’s policy driven, and it’s about whether the government is serious about doing what it says it will do.” Unlike the U.S., where cheap and ample supplies of gas led to a surge in use by power plants and factories that now exceeds coal, China’s domestic output costs more to produce and the country relies on long-distance imports, including liquefied natural gas carried by tankers. Government-set prices are among the highest in the world, leaving no incentive to switch unless pushed by regulation.

      India, Once a Coal Goliath, Is Fast Turning Green — Just a few years ago, the world watched nervously as India went on a building spree of coal-fired power plants, more than doubling its capacity and claiming that more were needed. Coal output, officials said, would almost triple, to 1.5 billion tons, by 2020. India’s plans were cited by American critics of the Paris climate accord as proof of the futility of advanced nations trying to limit their carbon output. But now, even as President Trump pulls the United States out of the pact, India has undergone an astonishing turnaround, driven in great part by a steep fall in the cost of solar power.Experts now say that India not only has no need of any new coal-fired plants for at least a decade, given that existing plants are running below 60 percent of capacity, but that after that it could rely on renewable sources for all its additional power needs.Rather than building coal-fired plants, it is now canceling many in the early planning stages. And last month, the government lowered its annual production target for coal to 600 million tons from 660 million. The sharp reversal, welcome news to world leaders trying to avert the potentially deadly effects of global warming, is a reflection both of the changing economics of renewable energy and a growing environmental consciousness in a country with some of the worst air pollution in the world. What India does matters, because it is the world’s third-largest emitter of greenhouse gases, behind China and the United States. And its energy needs are staggering — nearly one-quarter of its population has no electricity and many others get it only intermittently. With India’s power needs expected to grow substantially as its economy continues to expand, its energy use will heavily influence the world’s chances of containing the greenhouse gases that scientists believe are driving global warming.

       Vietnam Turns to Coal -- Shaken by news that Vietnam had confirmed plans to build another 40 gigawatts worth of coal-fired power plants by 2030, World Bank President  Jim Yong Kim ad-libbed a few lines into a May 2016 speech to an audience of government and business leaders. “If Vietnam goes forward with 40GW of coal, if the entire region implements the coal-based plans right now, I think we are finished,” Kim said. “That would spell disaster for us and our planet.” The people in Hanoi who make energy policy were very likely startled to learn that what Vietnam does or does not do as it develops its energy sector has world-shaking importance. In a mere quarter century Vietnam has raced from the back of the Third World pack to middle-income status. In the process, however, Vietnam’s economic growth has had an outsized environmental impact; between 1991 and 2012, the country’s GDP grew by 315 percent, while its greenhouse gas emissions rose by 937 percent. Now that China, which took the “capitalist road” a decade earlier than Vietnam, is stepping up to the challenge of climate change and taking bold steps to clean its air, its neighbor Vietnam risks becoming the new pariah polluter.

      South Korea plans energy U-turn away from coal, nuclear | Reuters: A proposed energy U-turn by South Korea's new government would put the environment at the center of energy policy, shifting one of the world's staunchest supporters of coal and nuclear power toward natural gas and renewables. If implemented, the ambitious plans by the world's fourth biggest coal importer and No.2 liquefied natural gas (LNG) buyer will have a big impact on producers. South Korea's LNG imports could jump by more than 50 percent by 2030, while coal shipments could peak as early as next year. But experts warn that any move to halt construction of a raft of new coal and nuclear plants, many of which are already being built, could threaten energy security, spark claims for massive compensation and push up electricity prices. The plan by the new administration of left-leaning President Moon Jae-in which took power in early May would move a notable laggard in renewables toward green energy, responding to public concerns over air pollution and nuclear safety. "The government can't neglect people's demands and in the long term it's right to pursue clean and safe energy. But there will be many challenges," said Sonn Yang-Hoon, Economics Professor at Incheon National University. South Korea, Asia's fourth-largest economy, gets 70 percent of its electricity from thermal coal and nuclear reactors, and offers tax benefits to both sectors to ensure abundant electricity at affordable prices.

      Ten new nuclear reactors went online in 2016, bringing capacity to highest level ever - Ten new nuclear reactors began generating electricity in 2016, which brought net nuclear capacity to the highest level in history, according to the 2017 edition of the International Atomic Energy Agency’s (IAEA) Nuclear Power Reactors in the World report. As of December 31, 2016, 448 reactors were operating worldwide with a net capacity of 391 gigawatts (GW) of electricity. This is the second year in a row that 10 reactors came online, which is the highest number since the 1980s, according to the report. “This demonstrates the important role that nuclear power continues to play in meeting growing energy demand throughout the world.”  Three reactors were permanently shut down and 61 nuclear reactors were under construction during 2016. Two reactors remain in long-term shutdown.

      Regional Officials to Ask Trump Administration to End Uranium Mining Ban Near Grand Canyon --  A draft letter backed by officials in Arizona and Utah is urging the Trump administration to review the uranium mining ban near the Grand Canyon. The letter, which is expected to be sent to Interior Sec. Ryan Zinke on Monday, asks the department to completely overturn the Obama-era environmental protections.  The 20-year ban was issued in 2012 by former Sec. of Interior Ken Salazar. It prohibits new claims for mining in the region, which includes more than 1 million acres of public land adjacent to the Grand Canyon. The ban, however, does not restrict existing mines, four of which continue within just a few miles of the rim of the Colorado River. The U.S. Geological Survey (USGS) has completed many reports on the safety of the water in the region, which helped lead to the ban. In 2010, they found that 15 springs and five wells contained concentrations of uranium that exceeded drinking water limits. Also in 2010, the USGS found radioactive dust several hundred feet from the Kanab North Mine Site at more than 10 times the background concentration for uranium, according to Grand Canyon Trust .  But the draft letter to be sent by the Mohave County board and other regional leaders says that the ban is unlawful and stifles the economic growth of the mining industry. A second letter, planned to also be sent on Monday, will ask the federal government to rollback national monument protections for popular tourist destinations, including the Vermilion Cliffs area in northern Arizona and the Sonoran Desert near Phoenix.

      Grand Canyon at risk as Arizona officials ask Trump to end uranium mining ban -- A coalition of influential officials in Arizona and Utah is urging the Trump administration to consider rolling back Obama-era environmental protections that ban new uranium mining near the Grand Canyon. They argue that the 20-year ban that came into effect in 2012 is unlawful and stifles economic opportunity in the mining industry. But supporters of the ban say new mining activity could increase the risk of uranium-contaminated water flowing into the canyon. Past mining in the region has left hundreds of polluted sites among Arizona’s Navajo population, leading to serious health consequences, including cancer and kidney failure. The new appeal to the Trump administration appears in the draft of a letter expected to be sent on Monday to the US interior secretary, Ryan Zinke, by the Mohave County board of supervisors, whose region borders the north side of the Grand Canyon in Arizona. Similar letters are being drawn up by other regional leaders in neighboring county governments in southern Utah, to be sent to Washington by the end of the week, according to officials. The Mohave County leaders also plan to dispatch a second letter on Monday asking the federal government to scrap national monument protections for lands of natural wonder “throughout Arizona”, claiming their designation is unconstitutional and prevents economic development of coal, oil and gas deposits. Utah leaders will follow with letters requesting the government shrink national monuments in southern Utah, such as Bears Ears and Grand Escalante, in order to open up a greater area for mineral exploitation, the Guardian has learned. The battle to restore mining activity near the Grand Canyon is part of broader push by conservatives to roll back protections on America’s 640m acres of public land. Earlier this year, Congress reversed the Bureau of Land Management’s “Planning 2.0” rule, an Obama-era initiative that gave the public greater input on how land should be used. At the same time, Zinke has ended the moratorium on federal coal leases while pledging to open up public lands to greater oil and gas extraction. Trump has also ordered Zinke to review 27 national monument designations and report as to whether some parks might be reversed or reduced in size.

      New Law Could Declare Nuclear Reactors To Be ‘Green Energy’-- Connecticut lawmakers have proposed legislation to save in-state nuclear reactors by classifying them as green energy, which would allow them to better compete with heavily subsidized wind and solar power. The Republican-backed bill allows nuclear power to participate in a state green energy power markets since it doesn’t generate carbon dioxide (CO2) emissions. Last year, electricity prices in New England hit near-historic lows, forcing nuclear reactors to effectively pay to remain operational. Unions, business groups and some environmentalists support the legislation, arguing that keeping the reactors running would save the local economy from collapse and help the environment. Many environmentalists oppose the legislation, however, arguing it would make it harder for wind and solar power to compete.

      Nuclear Regulators’ Flawed Analysis Leaves Millions at Risk From Radioactive Fires - As the United States continues to grapple with long-term storage of highly radioactive spent fuel from the nation's nuclear power plants, science watchdogs are warning of serious flaws with the current storage method, which involves densely packing the combustible spent fuel assemblies under at least 20 feet of water in pools located at individual plants while awaiting creation of a permanent repository. The warning came in the May 26 issue of the journal Science, in a policy forum article titled "Nuclear safety regulation in the post-Fukushima era: Flawed analyses underlie lax US regulation of spent fuel." The authors are physicists Edwin Lyman of the Union of Concerned Scientists' Global Security Program and Michael Schoeppner and Frank von Hippel of Princeton University's Program on Science and Global Security. Following the 2011 disaster at Japan's Fukushima Daiichi nuclear power plant, the US Nuclear Regulatory Commission (NRC) ordered a comprehensive review of regulations. While the buildings that housed the Fukushima plant's spent fuel pools were destroyed, the spent fuel fortunately remained covered with enough water to keep the metal cladding that encloses the uranium from catching fire. Scientists working for the NRC estimated that a fire in one of the plant's pools would have dramatically increased the amount of radioactive pollution released and could have led to the forced long-term relocation of between 1.6 million and 35 million people from Japan's East Coast rather than 150,000. The NRC adopted a number of safety upgrades after the Fukushima disaster but rejected a measure to end dense packing of the 90 spent fuel pools located at nuclear plants across the US -- a technique utilities use to reduce storage costs. But the authors say the screening process failed to adequately account for the impacts of "large-scale land contamination events" from spent fuel pool fires. The NRC's own technical evaluation estimated that a fire in a densely packed spent fuel pool at the Peach Bottom plant in Pennsylvania just north of the Maryland border would require the evacuation of 4.1 million people from an area of over 9,400 square miles. "Unless the NRC improves its approach to assessing risks and benefits of safety improvements -- by using more realistic parameters in its quantitative assessments and also taking into account societal impacts -- the United States will remain needlessly vulnerable to such disasters," the authors warned.

      Fukushima Remains "A Nuclear Radiation Nightmare", In Pictures --"This is an accident that does not exist in the past tense, but in the present progressive form," exclaimed Fukushima Gov. Masao Uchibori earlier in March, criticizing Japanese Prime Minister Shinzo Abe for not explicitly the disaster in his annual speech. “It’s not possible to avoid using the important and significant terms of the nuclear plant accident of nuclear power disaster.” As IBTimes's Juliana Rose Pignataro notes (and exposes in the images below), it's been an uphill battle for the coastal prefecture of Fukushima, Japan, since an earthquake and tsunami devastated the region in 2011, causing a nuclear disaster at its power plant. Six years later, workers are still battling to decommission the plant, where radiation is deadly. Officials expect the cleaning won’t be finished for decades.

      British Think Tank Warns Hackers Could Access Nuclear Subs, Fears "Catastrophic Exchange Of Warheads" -- Cyber security has become a preeminent issue in the modern world. That’s because so much of our standard of living is now reliant on computers that can often be easily hacked. Computers may make our lives easier, but they’ve given our civilization a whole new vulnerability to worry about. Our privacy, our infrastructure, and our financial systems are now at the mercy of hackers.But those threats pale in comparison the vulnerability of our nuclear arsenals. Yes, you read that correctly. You’d think that the nuclear arsenals fielded by Western governments would have levels of security that are so tight, that they’d be virtually impossible to hack, but that’s not the case. According to the British American Security Information Council think tank, the UK’s Trident nuclear submarines are certainly vulnerable to hackers, contrary to the claims of the government.“Submarines on patrol are clearly air-gapped, not being connected to the internet or other networks, except when receiving (very simple) data from outside. As a consequence, it has sometimes been claimed by officials that Trident is safe from hacking. But this is patently false and complacent,” they say in the report.Even if it were true that a submarine at sea could not be attacked digitally, the report points out that the vessels are only at sea part of the time and are vulnerable to the introduction of malware at other points, such as during maintenance while docked at the Faslane naval base in Scotland. The report says: “Trident’s sensitive cyber systems are not connected to the internet or any other civilian network. Nevertheless, the vessel, missiles, warheads and all the various support systems rely on networked computers, devices and software, and each of these have to be designed and programmed. All of them incorporate unique data and must be regularly upgraded, reconfigured and patched.”

      First-ever 'Ohio Human Rights Tribunal' held in Athens - The first human-rights and environmental-justice hearing ever held in Ohio took place in Athens Saturday. The hearing was part of a tribunal process on impacts of fracking as a human-rights issue. Sixteen presenters from around Ohio testified to a panel of four citizen judges at the First United Methodist Church in Athens, providing more than six hours of testimony. The event is part of the Permanent People’s Tribunal on Fracking (, which is gathering testimony from around the world to deliver to the Permanent People’s Tribunal and the United Nations. The Athens hearing, one of two planned for Ohio, was initiated by Teresa Mills, director of Buckeye Environmental Network (the former Buckeye Forest Council), and organized with support from Torch Can Do!, the grassroots group founded by residents living in and near Torch in eastern Athens County, and a grant from the Center for Health, Environment, and Justice (CHEJ). Torch is the site of one of the largest fracking-waste injection facilities in Ohio. A second hearing will be held in northeast Ohio in July, according to a news release from organizers of Saturday’s event. In the release, Mills explained why she’s organizing the hearings. “Ohio communities and grassroots organizations are intervening to try to halt what we believe are clear human-rights abuses by our state and federal governments.” She maintains that Appalachian Ohio being targeted for waste injection is an environmental-justice and human-rights issue. “U.S. EPA is tolerating indisputably inadequate public participation and enforcement in low-income, rural Appalachian Ohio where injection wells and waste storage and disposal facilities are being sited rapidly and recklessly by Ohio Department of Natural Resources (ODNR),” she said in the release.

      Another Reason to Halt Rover Pipeline: It's a Climate Disaster - As controversy swirls around a string of spills and air and water violations caused by Energy Transfer Partners' construction of the Rover gas pipeline , a study released Wednesday underlines another reason federal regulators should halt the project: It will fuel a massive increase in climate pollution.A new analysis by Oil Change International finds that, if the Rover Pipeline is built, it will cause as much greenhouse gas pollution as 42 coal -fired power plants—some 145 million metric tons per year. The study slams the Federal Energy Regulatory Commission (FERC) for using chronically outdated assumptions to sweep this significant climate impact under the rug in its environmental review of the project.As the biggest new pipeline being built to carry fracked gas out of the Appalachian Basin, the Rover Pipeline is the biggest climate disaster of them all," said Lorne Stockman, senior research analyst at Oil Change International and the lead author of the study."After Trump's malicious pullout from the Paris climate accord, challenging each new pipeline is all the more important," he added. "While FERC remains in a state of denial, it's increasingly clear that gas pipelines are a bridge to climate destruction. They increase access to gas that we can't afford to burn and stall the transition to clean energy and efficiency solutions we need."  The climate findings bolster mounting calls for federal regulators to shut down all construction of the Rover Pipeline and revisit its permit decision by conducting a supplemental environmental review. The project would carry 3.25 billion cubic feet of gas per day from Pennsylvania and West Virginia through Ohio and Michigan, and link up to hubs that service export markets.

      Appalachia natural gas production outlook. - For years now, U.S. Northeast natural gas production growth has been paced by the availability of pipeline takeaway capacity out of the Marcellus/Utica shales. Midstream companies have been racing to build the infrastructure to support drilling and rising supply in the region. And, until now, it was safe to assume that as new pipeline projects come online, volumes would grow to fill them in short order. But over the next couple of years, that may flip:  takeaway capacity additions could soon outpace supply increases, and producers might not be able to keep up. Today, we provide an update of RBN’s Northeast gas production scenarios. In this series, we have been revisiting our analysis of Northeast natural gas production compared to takeaway capacity pipeline expansions out of Appalachia. As we noted in Part 1 of this series, a lot has changed since late 2014 when we cataloged the numerous expansions planned to resolve the transportation constraints plaguing Marcellus/Utica producers (see the RBN Drill-Down report “50 Ways to Leave the Marcellus”). At the time, midstream companies were still scrambling to keep up with rising supply and the resulting need for producers to access demand markets outside the Northeast. Since then, more than a dozen pipeline projects have come online and production has climbed nearly 5 Bcf/d to just under 23 Bcf/d in recent months, from about 18 Bcf/d in late 2014. And the Northeast has flipped from net importing gas from other U.S. regions and Canada in 2014 to sending more than 9.0 Bcf/d on average out of the area in the past two months.

      U.S. natural gas prices tumble as power producers switch back to coal: Kemp | Reuters : U.S. natural gas prices have tumbled by more than 10 percent since late May as hedge funds start to liquidate a near-record bullish position accumulated in the expectation of a tighter market that failed to materialize.  Prior to the selloff, hedge fund managers held a record ratio of 5 long positions for every 1 short position, a warning sign that their position had become overstretched and was at risk from a reversal. Fund managers have been more bullish on U.S. gas than any other energy commodity in the expectation that increasing exports plus the start up of new gas-fired power plants would tighten gas stocks. But the rise in gas prices over the last 15 months has gradually rebalanced the market by incentivizing more gas production and encouraging power producers to switch back from gas to coal at the margin. The number of rigs drilling for gas is up by 100 from its low in August 2016, according to oilfield services company Baker Hughes, in response to a doubling in gas prices. In addition, the number of rigs drilling for oil has risen by more than 400 since May 2016, and many of these oil wells are producing large volumes of associated gas since February 2016. Gas output is still down compared with year ago levels but the pace of decline has slowed and there are indications that production is about to start rising.At the same time, higher gas prices are rationing consumption by electricity generators, especially owners of combined-cycle plants that operate as baseload and consume large volumes of fuel. 

      How This Energy Company's Deep Influence Is Tainting Atlantic Coast Pipeline Approval Process -- There is a growing political scandal in Virginia regarding the ubiquitous influence of the state's largest energy company, Dominion Energy, and it's raising fundamental questions about the integrity of the governor's office and state regulators who will decide the fate of the proposed Atlantic Coast Pipeline . Dominion's longstanding exercise of power and influence in Virginia is no secret—the company is the largest corporate donor to state candidates. But a new report by the Public Accountability Initiative documents in one place the company's extensive, revolving door relationships with the very regulators charged with issuing permits for this controversial, $5 billion fracked-gas project. The Atlantic Coast Pipeline is a joint venture of Dominion, Duke Energy and Southern Company, but Dominion is the leading owner and will operate the pipeline if it goes ahead.  The project, which would source fracked gas from West Virginia, plans to traverse the Allegheny Highlands bordering West Virginia and Virginia, cut a large swath through Virginia to the Hampton Roads area, and branch south into North Carolina. The new report details how Dominion's influence penetrates every level of state government, from Department of Environmental Quality (DEQ) officials, through General Assembly members on both sides of the aisle, to the governor's mansion. These relationships are fundamental to the fate of the pipeline.  

      As US energy policy pendulum swings, Trump looks to Arctic and Atlantic drilling (podcast) - Capitol Crude talks to Ali Zaidi, who served for eight years in the Obama administration, about an area where the economic and environmental concerns collide for the oil and gas industry: offshore. Zaidi, senior advisor at Morrison Foerster, most recently served the Obama administration as the White House Office of Management and Budget associate director for natural resources, energy and science. Speaking with senior oil editor Brian Scheid, he touches on the Trump administration's plans to expand offshore drilling and other possible regulatory rollbacks around methane emissions and fracking. Could changes result in nationwide standards, or will a patchwork of state standards continue? And can Obama's energy legacy be affected by changes from the current administration?

      Trump proposes seismic tests for Atlantic oil drilling | TheHill: The Trump administration is set to propose allowing several companies to use seismic air guns to search for oil and gas reserves beneath the floor of the Atlantic Ocean. According to a Federal Register notice set for publication on Tuesday, the National Marine Fisheries Service is asking for Marine Mammal Protection Act permits allowing five companies to conduct the seismic surveys with the air guns, which are considered dangerous to certain types of marine wildlife. The Obama administration had blocked that testing. But President Trump signed an executive order in April that aims to open the door to more offshore drilling. Currently, there are no drilling rigs off the east coast of the U.S., and it will take years of testing to locate the oil.Interior Secretary Ryan Zinke followed up on the executive order with an order of his own on May 11 setting in motion the seismic testing. “You should be excited,” Zinke told attendees at an offshore drilling conference in Houston last month. “If you’re in the oil and gas and energy segment in this society … the stars are lined up,” he said. “We’re going to make jobs, we’re going to bring the economy ahead.” Environmentalists, who have long fought against Atlantic drilling, blasted the seismic testing proposal on Monday. The Southern Environmental Law Center called seismic testing “risky” and said it would “pave the way for offshore drilling, which would be a direct hit to our economy, environment, communities and way of life.” “The American people own these Atlantic waters. This is the first step towards drilling them,” 

      Trump Names BP Oil Spill Lawyer as Top Environmental Attorney - President Donald Trump announced Tuesday his intention to nominate Jeffrey Bossert Clark —who defended BP in lawsuits surrounding the 2010 Deepwater Horizon oil spill and challenged the Obama administration over greenhouse gas rules on behalf of the U.S. Chamber of Commerce—to head the Justice Department's Environment and Natural Resources Division.  Clark is a partner in the Washington, DC office of Kirkland & Ellis LLP and once served in George W. Bush's administration from 2001 to 2005 as a deputy assistant attorney general for the Justice Department's Environment and Natural Resources Division.   InsideClimate News described Clark as a "climate policy foe" who has "repeatedly argued that it is inappropriate to base government policymaking on the scientific consensus presented by the Intergovernmental Panel on Climate Change [IPCC]."According to the publication, "One of the legal briefs he signed is such a comprehensive compendium of thoroughly debunked denial of the scientific consensus that it stands as a classic of the genre, replete with condemnations not just of the EPA but of the IPCC, whose work the petitioners tried to persuade the court to rule out of bounds. A series of podcasts and papers he has written on The Federalist Society website continue his arguments against the endangerment finding and climate science more broadly." Clark has also criticized the U.S. Environmental Protection Agency (EPA) for concluding in late 2009 that carbon dioxide and other greenhouse gases threatens the public health and the environment and should be regulated under the Clean Air Act. As Clark wrote in a 2010 blog post over the EPA's endangerment finding, "When did America risk coming to be ruled by foreign scientists and apparatchiks at the United Nations?"

      Greens sue EPA over paused Obama methane pollution regulation | TheHill: A coalition of environmental groups on Monday sued the Trump administration, saying that it violated the law last week in pausing an Obama administration methane pollution rule for the oil and natural gas industry. The lawsuit to save the Environmental Protection Agency’s (EPA) methane rule is the first court action against a Trump administration policy related to climate change. Groups including the Natural Resources Defense Council (NRDC) and the Sierra Club said the EPA illegally skipped the required process when it put a 90-day halt on the standards to limit methane pollution, a greenhouse gas around 80 times as powerful as carbon dioxide.The greens are asking the Court of Appeals for the District of Columbia Circuit to step in immediately and block the EPA from halting the rule “In its haste to do favors for its polluter cronies, the Trump EPA has broken the law,” Meleah Geertsma, a senior NRDC attorney, said in a statement. “The Trump administration does not have unlimited power to put people’s health in jeopardy with unchecked, unilateral executive action like this,” she said. An EPA spokeswoman declined to comment on the lawsuit, saying it is agency policy not to comment on ongoing litigation. The EPA said last week that it would pause for 90 days the standards mandating pneumatic pumps at oil and natural gas well sites to reduce methane emissions, along with the certification standards for those pumps, while it considers whether to formally repeal the rule entirely. The agency had previously paused the rule’s provision regarding fugitive methane emissions and methane monitoring. The regulation was a piece of former President Obama’s wide-ranging strategy to reduce methane emissions across numerous industries. It included an EPA rule to reduce methane pollution from landfills and an Interior Department rule regarding oil and natural gas drilling on federal land, both of which the respective agencies are working to repeal.

       Court asks EPA to justify pausing Obama pollution rule | TheHill: A federal court is asking the Environmental Protection Agency to explain why it has the authority to pause an Obama administration methane pollution rule. The Court of Appeals for the District of Columbia Circuit said Tuesday that it is giving the EPA until June 15 to respond to a lawsuit filed Monday by environmental groups, who say the agency’s action halting the rule was illegal. At issue is a rule the Obama administration made final last year setting standards that oil and natural gas drillers must follow to monitor and reduce emissions of methane from drilling. Methane is a greenhouse gas about 80 times more potent than carbon dioxide and is the main component of natural gas. The lawsuit was the first court challenge of a Trump administration rollback of a climate change regulation. The green groups, including the Environmental Defense Fund and the Sierra Club, say the EPA doesn’t have the authority to halt the regulation, and are asking for an immediate order from the court mandating that the agency not pause it. The EPA said in a Federal Register filing that made the pause official on Monday that it would pause the rule for 90 days while it considers whether to initiate a full regulatory process to repeal it. In the filing, agency officials cited a provision in the Clean Air Act that allows 90-day administrative stays for regulations under certain circumstances.

      Worst Hurricane Season In A Decade Threatens Gulf Coast Production --2017 could be an “above-normal” year for large hurricanes, according to the National Oceanic and Atmospheric Administration (NOAA), a potential problem for Gulf Coast oil drillers and refiners.  NOAA puts the odds of an “above-normal” season for hurricanes at 45 percent, while the chances of a normal and below-normal season are at 35 and 20 percent, respectively. In fact, they said that there is a 70 percent likelihood of 11 to 17 named storms, which are storms that have 39 mile-per-hour winds or higher. About 5 to 9 of those could become hurricanes (winds of 74 mph or higher); 2 to 4 of which could become major hurricanes (winds of 111 mph or higher). The average season (which runs from June through November) tends to have just 12 named storms, so the potential for 17 named storms puts the 2017 hurricane season in more treacherous territory."We're expecting a lot of storms this season," Gerry Bell, lead seasonal hurricane forecaster with NOAA’s Climate Prediction Center, told reporters."Whether it's above normal or near normal, that's a lot of hurricanes."Part of the reason for the expected uptick in hurricane activity is because the El Nino phenomenon is not expected to show up. El Ninos tend to suppress hurricanes. Also, sea-surface temperatures are above-average, which contributes to stronger storms. There has been a decade-long lull in major hurricanes that have struck the U.S., but there is a growing probability that that changes this year. That should be cause for concern for the oil and gas industry, much of which is located along the Gulf Coast. In 2005, Hurricanes Katrina and Rita, which struck the Gulf Coast within a couple of weeks of each other, destroyed 115 oil platforms and damaged 52 others, leading to the “near total shut-down of the Gulf’s offshore oil and gas production,” according to the Bureau of Safety and Environmental Enforcement. While the effects were mostly temporary, nine months later as much as 22 percent of oil production and 13 percent of gas production in federal waters remained offline.

      Take It to the Limit - More Crude Projects in Corpus, and a Look at Big Ship Access to the Port  -- By the early 2020s, crude oil flows from the Permian to Corpus Christi are likely to increase by at least several hundred thousand barrels a day and may well rise by more than one million barrels a day. That can only happen, though, if new pipeline capacity is in place to move crude from West Texas to the coast and if enough crude-related infrastructure — storage, distribution pipelines, marine docks, etc. — is developed in Corpus to receive, move and load all that oil. Docks and ship-channel depth are particularly important; the bigger the vessels that Corpus marine terminals can handle, the more competitive Permian crude will be in far-away markets like Asia. Today we continue our series on the build-out of crude infrastructure in South Texas’s largest port and consider Corpus’s ability to load Suezmax-class vessels and maybe even Very Large Crude Carriers (VLCCs). The focus of this blog series has been on the ripple effects that burgeoning crude-oil production growth in the Permian’s Midland and Delaware basins in West Texas and southeastern New Mexico are having on Corpus Christi. In Part 1 we discussed the facts that under RBN’s Growth Scenario, Permian production — already at 2.3 million barrels per day (MMb/d) — is forecast to rise by at least another 1.4 MMb/d by 2022, and that most of the new pipeline capacity under development to transport that incremental output is headed straight to Corpus. Why?  Well, for one thing, Corpus is closer than Houston.  And beyond that, many Permian producers believe that their light, sweet crude will likely be more valued in Corpus, where the oil can either feed local refineries or be loaded onto ships destined for export markets.

      US oil producers race to build infrastructure while nationwide protests mount - North American oil and gas producers are rushing to build new pipelines as part of a bid to gain more power in the international oil and gas markets, but they are running into fierce opposition at home.Activists may have lost the battle to block the Dakota Access Pipeline (DAPL) — on May 14, thousands of barrels of fracked crude oil began flowing to a terminal in Illinois and then down toward the US Gulf Coast — but Native and climate change activists say the struggle against DAPL was just one battle in a much longer war. At least a dozen more conflicts are erupting across America as companies race to lay pipelines. Campaigners warn the US is becoming a “petrostate.” They say US climate commitments, and the very health of the planet, are at stake. Industry’s determination to build is equally intense. During the DAPL protests in North Dakota, private security companies used surprisingly harsh tactics: dog attacks, hoses that doused protesters in subfreezing temperatures, metal detention cages modeled on dog kennels, plus numbers scrawled on the forearms of the people they arrested. These struck many as tactics from another era or another country. Why was North Dakota so intent on not losing the fight over the pipeline? It turns out, officials were protecting a grand plan worth tens of billions of dollars. In that plan, DAPL is North Dakota’s linchpin. It allows a glut of fracked oil from the massive Bakken formation to flow southeast toward the US Gulf Coast. Bakken oil is part of what boosters call the “North American petroleum renaissance.” The US is now the world’s third-largest producer of crude oil, pumping more than Iran and Iraq combined. North Dakota Republican Congressman Kevin Cramer says that means opportunity. “We have the potential to produce all we need and then some,” Cramer says. “I view us as a North American energy bloc that rivals, if not exceeds, the global market potential of OPEC.” 

      Will last year's Dakota Access Pipeline protests affect future projects? -  Energy Transfer Partners reports the Dakota Access Pipeline will have about a dozen employees in each of the four states it operates, including IL. The Dakota Access Pipeline has started shipping oil on Thursday to contractors between North Dakota and IL, the Associated Press reported. Crude oil transported through the pipeline is sourced from six terminal locations in the North Dakota counties of Mountrail, McKenzie and Williams. The Oceti Sakowin camp, the main protest camp closest to the pipeline, was cleared in February following an emergency evacuation order signed by North Dakota Gov. Doug Burgum. It is expected to transport approximately 520,000 barrels of oil daily. The full pipeline, from the Bakken to the Gulf, cost almost $5 billion. ETP said earlier this month that the $3.8 billion pipeline would begin transporting crude on June 1 to fulfill contracts with shippers. Calling themselves the water keepers, protesters noted the potential danger to the Missouri River and its tributaries should the pipeline rupture. "Now that the Dakota Access Pipeline is fully operational, we find it more urgent than ever that the courts and administration address the risks posed to the drinking water of millions of American citizens". But President Trump approved the easement weeks after taking office, spurring Energy Transfer to quickly resume construction.Since then, momentum has swung in the pipeline developer's favor.The start of operations does not mark the end of the legal battle, Archambault said

      Oil is flowing in the Dakota Access Pipeline, but Iowa opponents still think they can shut it down -  Although oil has begun flowing through the controversial Dakota Access Pipeline, Iowa activists aren't giving up their battle against the $3.8 billion project.The 30-inch diameter pipeline started commercially shipping oil on June 1 and has a capacity to transport about 520,000 barrels of oil daily.But appeals are still pending with the Iowa Supreme Court that opponents see as offering glimmers of hope that the pipeline can still be shut down."If any of these court rulings go our way, things could change," said Ed Fallon of Des Moines, a former state legislator who heads Bold Iowa, an activist group that opposes the pipeline because of concerns involving the environment, property rights and other issues.The Dakota Access Pipeline route extends 1,168 miles from North Dakota’s Bakken and Three Forks oil-production areas to a distribution hub at Patoka, Ill.The Iowa section runs diagonally for 346 miles through 18 counties from far northwest Iowa to the state's southeast corner.The Davis-Brown Law firm of Des Moines is representing Iowa landowners who have appealed to the Iowa Supreme Court over the use of eminent domain to build the pipeline through their farms.In addition, the Sierra Club of Iowa is appealing to the state's high court over the Iowa Utilities Board's decision to grant a pipeline permit to Dakota Access. Polk County District Judge Jeffrey Farrell ruled against the plaintiffs in a consolidated case decided in February.   But the Iowa Supreme Court has denied a motion by Dakota Access to dismiss the case. The justices are expected to rule later this year or early in 2018.

      Still No Approved Route for Keystone XL in Nebraska as Resistance Mounts - "Trump administration approves Keystone XL pipeline," the headlines blared. It was March 24, only two months after he'd taken office, when it appeared that President Trump had cleared the way for the long-contested tar sands conduit with a stroke of his pen.  In reality, summarily declaring that the pipeline is in the national interest—despite a seven-year U.S. State Department review process that had concluded the opposite —won't magically bring it to life. The president, together with TransCanada, the energy company behind the Keystone XL pipeline, still have many obstacles to overcome before Canadian tar sands crude can flow through KXL and into the United States. The first formidable hurdle they face is the state of Nebraska, which TransCanada has treated with contempt in recent years. First, the company drew the pipeline's route through the heart of the state's fragile Sand Hills ecosystem. Confronted by environmental concerns, TransCanada said that rerouting the pipeline would be " impossible ." Mounting resistance, however, forced the oil giant to relent and nudge the proposed route around some of the most sensitive parts of the Sand Hills. The pipeline would still, however, run through the important Ogallala aquifer —one of our largest underground stores of freshwater, which would be at significant risk in the event of a leak. Now that the controversial tar sands pipeline has been reactivated by President Trump's decision, TransCanada must obtain the consent of the Nebraska Public Service Commission and secure easements from the landowners along the proposed route through the Cornhusker State. It will not be smooth sailing. Six weeks after Trump's announcement, Nebraskans flocked in chartered buses to a public hearing the commission convened in York, where opponents steeply outnumbered supporters, as the Omaha World-Herald reported. In August, there will be five additional days of hearings in Lincoln, where formal intervenors, such as landowners along the route, environmental groups and labor unions, will get their chance to testify. (The Nebraska Public Service Commission also has an online form to collect comments.)  If, despite these objections, TransCanada obtains approval from the commission, it will most likely be forced to win easements from landowners through the eminent domain process. Some of the holdouts who have refused to sell permission to build on their properties claim to have turned down offers as high as $300,000 .

      Study correlates links between Oklahoma quakes, wastewater disposal - Seismic activity grew in central Oklahoma in the 18 months leading up to Dec. 31, 2015, but declined markedly during the following year as the state began to regulate oil and gas wastewater disposal more aggressively, the US Department of Energy’s Fossil Energy Office (FEO) reported. Decreased oil and gas production in response to falling prices also played a part, it added. FEO’s National Energy Technology Laboratory, the University of Oklahoma, and the Oklahoma Geological Survey (OGS) jointly studied seismic events in the Sooner State, where earthquakes grew markedly from the 1980s through 2008. The final report, which the OGS released on June 6, found that more than 95% of the quakes in 2015 occurred in two main regions representing about 17% of Oklahoma’s total land area:

      • • A central zone east of the major Nemaha Fault comprising parts of nine counties mostly north of Oklahoma City and west of Tulsa.
      • • A northwestern zone west of the same fault, comprising parts of six counties.

      Oil and gas wastewater disposal in the two regions increased considerably from July 1, 2014, to Dec. 31, 2015, as the number of seismic events grew, researchers found. Earthquakes with magnitudes greater than 3.0 rose from 579 in 2014 to 903 in 2015, then decreased to 623 in 2016, they reported. The reduction in seismic events correlated to decreased wastewater injection, partly due to Oklahoma Corporation Commission regulatory actions and partly because oil and gas production declined from 2015 to 2016 in response to falling prices, the study said. Using a denser network of seismometers and high-resolution gravity and magnetic measurements, researchers could detect and locate more precisely all 2.0 magnitude or greater earthquakes in Oklahoma, FEO said. Accurate locations are critical, since 50% of the earthquakes that occur in Oklahoma are on faults that were not identified previously, including one that the team discovered near Cushing.

       Another Fracking Time Bomb Lurks Beneath U.S. --You've heard about the earthquakes, the controversial claims of flammable tap water, the potential contamination of streams, lakes and drinking water aquifers, but the system that's supposed to pay for these calamities may itself be a pending disaster. Most states protect taxpayers from cleanup costs by requiring oil and gas producers to buy a surety bond that will pay in the event of a disaster. But those bond amounts, nearly everywhere in the U.S., are woefully inadequate to pay likely cleanup costs, said Ryan Kellogg, a professor of public policy at the University of Chicago. "In just about any state the bond amounts are absolutely laughable," Kellogg said Friday, calling the system a sham. "The bond amounts are minuscule compared to what reclamation costs often turn out to be." And reclamation projects are likely to multiply in coming decades as the more than 1.7 million fracked wells in the United States age. The Mineral Leasing Act requires a bond of $10,000 for a single lease on federal land. With an average of five wells per lease, that comes to $2,000 per well. That number was set in 1960 and has never been increased, according to economists, even to adjust for inflation. Yet a well blowout can cost tens of millions of dollars to clean up, according to various studies of this issue. A well that's merely orphaned—abandoned without being properly sealed—costs about $13,000 to reclamate. Sometimes, the responsible party disappears by the time cleanup costs become evident. 

      Minnesota to open 22 meetings on disputed Enbridge pipeline — Minnesota regulators are getting ready to open a series of 22 public meetings on an oil pipeline project that opponents have dubbed the next Dakota Access pipeline struggle. Enbridge Energy is seeking approval to replace its aging Line 3 pipeline across northern Minnesota. The meetings along the proposed route are meant to give the public a chance to comment on the draft environmental review for the project, which was released last month. The first two meetings are scheduled for Tuesday, and a final decision from Minnesota isn’t expected until next year. Calgary, Alberta-based Enbridge built Line 3 in the 1960s to carry Canadian crude to its terminal in Superior, Wisconsin. It runs from Hardisty, Alberta, to Enbridge’s terminal in Clearbrook in northwestern Minnesota, to Superior. Most of the U.S. portion of the route is in Minnesota, though it also clips a corner of North Dakota. Enbridge proposed the $7.5 billion replacement project because the deteriorating pipeline is now restricted to 390,000 barrels per day. The replacement would restore the original capacity of 760,000 barrels per day. The company says the existing Line 3 is in an already crowded corridor. It says the best way to replace it is to follow the existing path as far as Clearbrook, then take a new more southerly route to Superior. The draft review looks at the proposed route as well as four alternative paths but does not recommend one over the other. The new route would cut through Mississippi River headwaters region and the pristine lake country of northern Minnesota where Native Americans harvest wild rice and hold treaty rights.Tribal groups say Enbridge’s preferred route risks oil spills in sensitive areas, and the six Ojibwe bands in the Minnesota Chippewa Tribe are preparing their own environmental impact statement. Environmental groups also oppose the project because Line 3 carries Canadian tar sands crude, which takes more energy to produce than conventional oil. 

       Trump says infrastructure plan will speed approvals, cut regulations -- US President Donald Trump said Wednesday that he was focused on reducing "burdensome" federal regulations and streamlining the approval and permitting process for oil and natural gas pipelines and other infrastructure projects. "They're getting approved so fast," Trump said during a televised speech in Cincinnati, Ohio.Trump credited his administration with approving the Keystone XL and Dakota Access pipelines. "Nobody thought any politician would have the guts to approve that final leg," said Trump, claiming that he has received no "heat" for approving the Dakota Access pipeline.Joined by US coal, steel and petroleum industry executives, Trump gave his speech along the banks of the Ohio River with barges carrying "West Virginia coal" in the background.The speech was intended to detail his administration $1 trillion infrastructure plan, but Trump offered few details. "America wants to build," he said.

      North Dakota oil industry shows signs of a rebound | Star Tribune: North Dakota’s oil country boomed to unprecedented heights earlier this decade, transforming the state, beckoning legions of workers from Minnesota and rippling in other ways across the economy of the upper Midwest. Then, as swiftly as it erupted, it crashed, victim of steps by Saudi Arabia and other countries to boost their production. Prices dropped from around $100 a barrel in 2014 to $30 early last year, bringing big financial losses for companies that had invested heavily in North Dakota production and bankrupting some of them outright. Jobs vanished. Now there are strong signs of a rebound. Drillers are bringing rigs back. Some companies are scrounging to find enough workers, an about-face for an industry that shed almost half its jobs during the bust. “I don’t think it’s as robust as we’d like it to be. But it is definitely improving.” The optimism remains tentative, as price and production levels would need to rise a lot more to rival the days of the boom. Newer fields in Texas and New Mexico are the hot spots in U.S. shale oil right now, drawing investment that might otherwise flow to North Dakota, the nation’s No. 2 oil producing state. Nonetheless, North Dakota players that survived the crash started getting more active last fall, when major oil-producing nations agreed to output cuts that pushed prices back over $50 a barrel. Companies have worked to boost productivity, getting leaner to cope with current price levels.There are now 51 drilling rigs in North Dakota — well below the high of 218 in December 2012 — but up from a low of 27 in May 2016. 

      Five High-Intensity Fracks Reported Over The Weekend -- A Reader Suspected This -- June 5, 2017 - I will come back to this later when I have a bit more time, but here's the "raw" data. This is quite spectacular. Four EOG wells and one CLR well:

      • 31756, 1,163, CLR, Maryland 5-16H, Catwalk, 38 stages, 17 million lbs; TD, 23,027 feet, t12/16; cum 80K 4/17;
      • 32512, 1,505, EOG, Mandaree 30-0706H, Squaw Creek, 37 stages, 17 million lbs sand; TD, 20,495 feet, t12/16; cum 157K 4/17; (19004)
      • 32513, 1,910, EOG, Mandaree 24-0706H, Squaw Creek, 44 stages, 28 million lbs sand; TD, 20,483 feet, t12/16; cum 228K 4/17; 19004)
      • 28435, 871, EOG, Fertile 55-0333H, Parshall, Fertile 55-0333H, frack data not yet available, t12/16; cum 60K 4/17;
      • 32514, 1,355, EOG, Mandaree 31-0706H, Squaw Creek, 46 stages, 29 million lbs; TD, 20,914 feet, t12/16; cum 247K 4/16; (19004)

      Standing Rock Sioux Tribe Wins Prestigious Award + $1 Million Investment to Transition Away From Fossil Fuels -- The Wallace Global Fund awarded the inaugural Henry A. Wallace Award and a $250,000 prize to the Standing Rock Sioux Tribe for its unyielding courage in the fight against the Dakota Accs Pipeline , and its dedication to transitioning to renewable energy . In addition to the $250,000 prize, the tribe will receive up to a $1 million investment from the Wallace Global Fund to support its transition toward fossil fuel independence. The award was presented to Tribal Chairman David Archambault II at an award ceremony in New York on Thursday; a donor and investor lunch briefing followed the ceremony to highlight solar and wind energy projects underway at the Standing Rock Reservation. The Henry A. Wallace Award was established in 2017 by the Wallace Global Fund to lift up the extraordinary courage and will it takes to stand up to oppressive corporate and political power. Henry A. Wallace was a visionary and progressive advocate who served as the 33rd vice president of the U.S. under President Franklin D. Roosevelt. "Our foundation is guided by my grandfather's framing of a mighty struggle that continues to this day: protecting the interests of what he called the 'common man'—ordinary people—against the oppressive combination of corporate and governmental power. Democracy, he said, 'must put human beings first and dollars second,'" said Scott Wallace, co-chair of the Wallace Global Fund.  "This award in his honor is intended to recognize the type of extraordinary courage that ordinary people can summon to fight such abuses of power. No one represents such courage better than the Standing Rock Sioux Tribe. And never has such courage been more essential to the health of our democracy than right now."

      88 Energy shares jump as it prepares for Icewine#2 fracking after completing log analysis - 88 Energy Limited saw its shares jump 11% higher today on news the AIM-listed firm is preparing for the artificial stimulation or fracking of its Icewine#2 well in Alaska and flow testing after successful completing log analysis. The company said it no longer needs to carry out micro stimulation after gaining enough insights in to the stress profile and pore pressure of the HRZ shale, which appears higher than previously expected..  Artificial stimulation is scheduled to take place on 17 June with the flow testing by the end of the month or early July.88 Energy said the fracking would test whether complex artificial fracture systems can be created within the HRZ via the proposed stimulation.These complex fracture systems are evident in the best performing shale plays as they result in maximised stimulation rock volume, which directly impacts potential flow rates.Similarly, whilst substantial work has been done on thermal maturity, the exact gas oil ratio is difficult to predict prior to a flow test.The company interprets that the vast majority of the HRZ sweetspot has been captured irrespective of any uncertainty, due to the large acreage position.  Icewine-2 is expected to provide further insight into the scale of the HRZ shale discovery. Significantly, it will be fracked and flow tested to determine the commercial potential of the shale, which is estimated to hold billions of barrels of oil.

      EIA STEO highlights: US oil output nears new record -- US crude oil production will, for the first time in nearly 50 years, climb to 10 million b/d by March 2018, the US Energy Information Administration said Tuesday. Such a level would mark the highest daily US production rate since November 1970, when production climbed to nearly 10.05 million b/d and averaged about 9.64 million b/d for that year, according to government data. The November 1970 figure remains the all-time high."Increased drilling activity in US tight oil basins, especially those located in Texas, is the main contributor to oil production growth, as the total number of active rigs drilling for oil in the United States has more than doubled over the past 12 months," Howard Gruenspecht, the EIA's acting administrator, said in a statement.In its latest Short-Term Energy Outlook, EIA said it sees US crude output averaging 9.33 million b/d this year and 10.01 million b/d in 2018."Growth in US production has been the largest contributor to the 800,000 b/d of non-OPEC liquids supply growth from January through May 2017," the EIA said in its report. "Continued increases in drilling activity in US shale basins, particularly a recent resumption in production growth from the Eagle Ford region in Texas, support production growth throughout the forecast," it said. The number of US oil-directed active rigs fell as low as 316 in May 2016, but has since more than doubled to 733 rigs this month.

      Oil-Weighted E&Ps Profit from Higher Prices, Shifts in Strategy -- After posting significant pretax operating losses in 2015-16, U.S. oil-weighted exploration and production companies returned to profitability in the first quarter of 2017. The 180-degree turnaround in peer group results was driven not only by higher oil prices, but by major strategic and operational shifts. Most of the 21 E&Ps we’ve been tracking responded to the plunge in revenue that started nearly three years ago by optimizing their portfolios, shedding properties with higher breakeven costs to focus on core unconventional plays and implementing operational efficiencies that led to sharply lower drilling and completion costs. Today we discuss how, with higher cash flows and profits, crude oil producers are ramping up their 2017 capital spending to generate long-term production growth. We analyzed in depth the ongoing transformation of the U.S. E&P sector in Piranha!, a new market study of 43 U.S. E&Ps. Of that universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. 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 - U.S. E&Ps Return to Profitability After Posting Massive Losses in 2015-16. Now, we analyze the first-quarter financial results of the 21 companies that make up our Oil-Weighted U.S. E&P peer group.

      Grains of sand: How fracking has caused a surge in demand for one of the world’s oldest commodities -- Of the million-odd horizontal wells scattered around North America, most use frac sand that comes from a rich seam of so-called “white silica” sand that cuts beneath the Great Lakes region in Wisconsin. It is prized for the superior quality of its grains, which are said to more effectively lodge themselves into shale rock fractures, allowing producers to boost well performance. “You need sand that’s very round, very hard and very pure,” says Thomson, whose company owns a mine and processing facility in Wisconsin. “There’s sand everywhere in North America but generally it lacks one of those three characteristics.” Thomson estimates Wisconsin white silica, sometimes called “Ottawa White,” supplies roughly 90 per cent of the Canadian frac sand market. And all of that sand is meets tight specifications: Samples are sent to far-off laboratories to be tested for crush resistance, consistency, shape and the concentration levels of quartz minerals, all according to specific American Petroleum Institute (API) standards. Demand for frac sand is expected to double in the coming years as oil producers focus on wringing as much oil and gas as possible from every well. That has kicked off a race among sand suppliers to take advantage, either by developing new mines in Canada or by shipping product from the U.S. Midwest.While chronically low commodity prices have reduced drilling activity in recent years, producers continue to squeeze tremendous volumes of oil and gas from hard rock formations. That has placed more attention on the market for frac sand, which is expected to total between US$850 and US$950 million in Canada in 2017, according to IHS Markit. In the Montney Formation of northern B.C. and Alberta, producers in 2013 used an average of around 500 pounds of sand per foot of a horizontal well; today that number is closer to 1,000 pounds, according to research by RS Energy Group. And wells are getting longer: horizontal wells now stretch around 9,000 feet, compared to 5,000 feet just four years ago. 

      Are Super Rigs The Driver Behind The New Shale Boom? -- Cost cuts and efficiency—the two key ingredients of the U.S. shale’s recipe for surviving the worst of the downturn—have led to drillers now employing a growing number of rigs capable of reducing the time needed for drilling a well and for moving from one area to another.The U.S. shale patch has been increasingly using the so-called super-spec rigs, a more advanced type of drilling machine, since the shale resurgence began at the end of last year, helped—inadvertently—by OPEC’s production cut deal that pushed oil to a more stable, around-US$50, price. The market was particularly unimpressed with OPEC extending the output cuts into March next year, while U.S. shale continues to increase production by the week, having found ways to get more bang for the buck and be profitable at a US$50 oil price. “OPEC’s market influence is highly questionable,” While OPEC is trying to ‘fix’ the price of oil and the level of global inventories and assert its influence on the market, the number of active oil and gas rigs in the United States rose for the nineteenth straight week as of the last count on May 26. Combined, the total oil and gas rig count in the US stands at 908 rigs, or 504 above the count a year ago. Tulsa-based Helmerich & Payne, for example, said in its latest results release that its U.S. land operations’ contracted rig count increased by 41 rigs from December 31, 2016 to March 31, 2017, to stand at 177 rigs. Helmerich & Payne has just bought Motive Drilling Technologies in a push toward automation, and possibly, autonomy. A number of the U.S. active rigs are of the super-spec kind, like one of Houston-based oilfield services company Patterson-UTI Energy that can drill a well in under ten days, or a week less than the average shale patch drilling time back in 2010. The rig can support a fully-loaded Boeing 747, and can ‘walk’ the dozen feet between well sites on its four 10-ton feet.

      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. Last month, gas deliveries to Sabine Pass averaged just below 2.1 Bcf/d, due in part to lower feedgas volumes from mid-to-late month. In late May, Cheniere requested authorization from the Federal Energy Regulatory Commission to begin introducing feedgas and refrigerants to Train 4, which is one of the final milestones before bringing a liquefaction facility into commercial operation.

      Japan LNG buyers pay $5.70/MMBtu for spot cargoes contracted in May: METI  - Japanese LNG buyers paid an average $5.70/MMBtu for spot cargoes contracted in May, unchanged from $5.70/MMBtu in April, the Ministry of Economy, Trade and Industry said Friday. The ministry does not disclose the delivery months of the cargoes. JKM averaged $5.589/MMBtu in May, reflecting spot deals for June and July delivery cargoes. METI also said the average price of cargoes delivered into Japan in May was $5.70/MMBtu, down from $5.90/MMBtu in April. The JKM for May delivery cargoes averaged $5.454/MMBtu. JKM meandered throughout the assessment period, starting at $5.55/MMBtu on March 16 and ended at $5.525/MMBtu on April 13.

       Crude Export Habits Could Factor Into OPEC's Oil Balancing Act -- Although crude exports figure heavily in its namesake, the Organization of Petroleum Exporting Countries may be oblivious to their relevance now that the United States is back in the market.After a 40-year absence, the United States began shipping its crude around the world in January 2016, but the importance of the occasion is something OPEC hasn’t quite grappled with, experts say. Rather, OPEC’s focus remains on revenue, if not market share, to keep the world’s crude supply and demand in balance. And once the nine-month extension of production cuts expires next March – and if global oil benchmarks still haven’t busted through to remain above $50 for a significant period of time – the club may see that it was simply not enough.More than 1 million barrels of oil are leaving U.S. ports each day, noted Jamie Webster, senior director at the BCG Center for Energy Impact. Petroleum product exports are north of 3 million barrels of oil per day.“Right now, it’s not something they want to bring into their general discussions, even if it is the reality,” he said. “One thing about OPEC you have to always understand is that they are a low consensus organization – they are just like the U.S. Congress in that – and they are reactive versus proactive. They don’t generally start making moves seeing that something is going to be changing X or Y; they make a move after something pushes them.”And for its own exports, OPEC loads only started to slow in May, said Antoine Halff, senior research scholar at the Center of Global Energy Policy at Columbia University, in his commentary, ‘OPEC’s Catch 22?’ “April loadings were at a peak, and overall shipments since January have failed to indicate any significant drop compared to October levels,” he noted, reflecting on figures from ClipperData. “Exports are generally assumed to broadly track production level, though,” Halff said. “Regardless of production levels, OPEC’s success in conveying a narrative of market control since last fall seems at variance with its impact on physical crude supplies.”

      U.S. Begins Importing Iraqi Oil After Saudis Cut Exports -- The United States has begun importing Iraqi oil at a rate of 1.1 million barrels per day toreplace export cuts announced by Saudi Arabia late last month, new figures compiled by Bloomberg show. New data from the Department of Energy suggests that during the first week of June, Iraqi oil entered the U.S. at the quickest rate in the past five years – marking the first time the nation’s exports exceeded those from Saudi Arabia over the same time period. In late May, Riyadh announced its plans to purposely reduce exports to the United States to force a reduction in the latter’s sizeable inventories, which are preventing a greater rise in global oil prices, according to Saudi Oil Minister Khalid Al-Falih. Earlier that same month, Saudi Aramco said it would cut crude supplies to China, South Korea, and South East Asia by 1 million barrels each. The nations exports to Indian buyers in June were set to decline by just over 3 million barrels, and supplies to Japan will drop by just under 1 million barrels this month, according to a Reuters’ source. The Organization of Petroleum Exporting Countries’ (OPEC) deal to reduce production does not set limits on the amount any member country can export to its customers. This is why Saudi cargoes to the U.S. in recent months have totaled 1.21 million barrels a day – the highest rates since 2014, the year of the oil price crash. As the de facto leader and largest producer of OPEC, Saudi Arabia has cut its production the most of any member of the bloc. But stubbornly high fossil fuel inventories - which have been maintained worldwide, but are most readily measured in the U.S. due to open customs data – have prevented the measures from buttressing oil prices in a lasting way. Importer nations have opted to take advantage of low oil prices to stock up for the future.

      Canadian oil and gas could trump Trump in NAFTA talks -- Canadian oil and gas could become a “trump card” in Canada’s renegotiation of the North American Free Trade Agreement with the United States, former Canadian ambassador to the United States Derek Burney said in Calgary Friday. Burney, who has been advising Justin Trudeau’s government on NAFTA along with former Prime Minister Brian Mulroney, told shareholders of TransCanada Corp., of which he is member of the board of directors, that “there will be no surrender” by Canada to the administration of Donald Trump despite his insistence the U.S. will get a better deal, or will tear up the pact altogether. Speaking to reporters after the meeting, Burney said U.S. refiners would rather import heavy oil from Canada than from unstable suppliers like Venezuela, even as American production of oil and gas from shale formations is growing. That makes Canadian energy a “strength” that bolsters its negotiating position.

      Mexico Oil, Gas Reserves Drop 6% In 2016 -- Mexico’s hydrocarbon reserves shed 6 percent last year to 16.77 billion barrels of oil equivalent, the country’s energy industry regulator CNH said yesterday, as quoted by Reuters. The decline came in spite of an increase in crude oil discoveries because of a drop in new gas deposit discoveries, CNH said.The 6-percent decline concerns so-called P2 reserves – proven and probable. P3 reserves, which also include possible oil and gas content in prospective deposits, also fell in 2016, by 1.1 percent to 25.86 billion barrels of oil equivalent.At the moment, Reuters notes, Mexico is pumping a bit more than 2 million barrels of oil daily and needs a 100-percent replacement rate of its reserves to just maintain it. The country, however, has plans to boost this to more than 2.6 million barrels – the rate, at which Brazil was pumping oil as of last October. As part of these plans, earlier this month Mexico’s deputy energy minister Aldo Flores Quiroga announced that the ministry has invited oil companies to suggest offshore deposits they would like to develop. The nominations are due to be announced in June, and the blocks will be tendered in December—a year after Mexico awarded exploration licenses for nine offshore blocks to companies such as Chevron, BP, Exxon, and the China National Offshore Oil Corp., as well as Statoil and Petronas.

      White House Considers Sanctions Against Venezuela Oil Sector --Washington is studying options for imposing sanctions against Venezuela’s energy sector as a way of pressuring the South American country’s government to step down. No decision has been made yet, however, two sources from the Trump administration told Reuters. It may never be made, given all the questions surrounding such a move. For one thing, sanctions may well have the opposite effect and solidify Maduro’s power – the Venezuelan president is accusing the U.S. of working with the opposition to topple the government. For another, if the U.S. imposes sanctions, this will almost certainly lead to a humanitarian crisis, which nobody wants. There are also practical considerations, centering on the fact that the U.S. imports oil from the Venezuela. In March, it accounted for 8 percent of total crude imports, third after Canada and Saudi Arabia. For Venezuela, the U.S. is the biggest buyer of its oil.  According to Reuters, the shape the sanctions could take range from a blanket ban on crude oil imports from Venezuela, which will quickly put Venezuela’s oil industry in a coma, to banning PDVSA from doing business in the U.S., and to only banning it from taking part in U.S. government tenders. The latter option is the softest.  The U.S. has already imposed sanctions on certain individuals from the government of Nicolas Maduro, including his vice president, and eight justices from the Supreme Court. There are also grounds for wider ones: corruption and indirect human rights abuse, the White House officials told Reuters.

      Three new natural gas deals for BP underscore move toward low-carbon future - British oil major BP continues to shift toward natural gas, on Friday announcing three different deals to boost gas production. The first, off the coast of Trinidad & Tobago, unlocked about 2 trillion cubic feet of gas in place. The second sanctions development of four wells and production of about 600 million cubic feet of gas per day in BP’s new Angelin project off the southeast coast of Trinidad. Then the company announced a deal with the Russian energy giant Rosneft to cooperate on the exploration, production, sale and purchase of gas in Europe. BP continues to transition to what it sees as a low carbon future. On Wednesday, the company’s number-two executive, deputy CEO Lamar McKay, extolled the importance of the shift. BP, McKay said, wants to see a price on carbon, the expansion of natural gas production and renewable energy, investment in low-carbon innovation and technology start-ups, and more energy-efficient industry and consumer behavior. “BP has long believed that energy production and environmental protection are not mutually exclusive,” McKay said at the fourth annual Greater Houston Partnership State of Energy address.

      Norway braces for strike; oil, natural gas output of 443,500 boe/d would be hit -- Norway is set to see oil and gas production of some 443,500 b/d of oil equivalent shut in from Sunday should talks to avert a workers' strike fail, the Norwegian Oil and Gas Association said Friday. Talks are now underway between the association and the Lederne union over pay and conditions. Production at six fields would be affected if the talks fail to resolve the deadlock. The fields are: Draugen, Goliat, Gudrun, Oseberg East, Kvitebjorn and Valemon. "All these installations will have to shut down in the event of a conflict, causing a total loss of 443,500 boe/d," the association said. "A possible strike cannot begin until Sunday at the earliest," it said. The impact on Norway's gas production from the strike would be around 30 million cu m/d, according to Platts Analytics' Eclipse Energy. That is around 8.5% of Norway's current daily gas production of around 350 million cu m/d. The biggest impact would be to gas output at Kvitebjorn and Valemon, which produce some 20 million cu m/d and 7 million cu m/d, respectively. Earlier in the week, talks between the Norwegian Oil and Gas Association and another union, Industri Energi, representing a much bigger body of members, reached a deal on pay and conditions. Norwegian workers have in recent years gone out on strike on several occasions, hitting its oil and natural gas production. The association's lead negotiator, Jan Hodneland, said the industry was still in a challenging environment because of lower prices.

      US, Brazil and North Sea ‘benefitting most’ from Opec cuts - Last week, Opec prolonged to March 2018 an original November deal that saw the cartel and non-cartel members reduce production by 1.8m barrels a day. As Opec cuts take effect, non-Opec countries have been filling the growing gap in Asian oil demand, said Vortexa chief executive Fabio Kuhn. Crude oil exports to Asia from the US, Brazil and the North Sea have jumped 55% in the first four months of 2017, according to analysis by Vortexa, the oil markets analytics platform. US crude exports to Asia have increased almost sevenfold compared to the same time period last year, with the US now averaging 222,000 barrels per day, according to data from the platform. Brazilian exports have seen a more than 50% increase for the same time period, now supplying an average of 588,000 barrels a day to the region. “Asia’s demand for oil has also taken a significant amount of North Sea barrels away from their traditional European market, with an average of 398,000 barrels a day going to Asia in the first four months of 2017,” Kuhn said. “If the Americans are satisfied that they can have energy independence on their own, I am not going to dispute that,” Burney said. “I don’t buy it. I don’t see it. And I don’t think the refiners see it that way. I think they would prefer the kind of commitments they are negotiating already” with Canada. Burney was a key player in both NAFTA and the U.S.-Canada Free Trade Agreement.

      Taiwan set to import first cargo of US Gulf Coast Crude - Opportunities to export US crude to new destinations are now emerging as logistics constraints ease, making arbitrage economics more and more favorable. Higher exports come as OPEC and non-OPEC members have recently agreed to extend their production cuts by another nine months from June.The lifting of the ban on US crude exports at the end of December 2015 has seen US crude exported far and wide over the last year and a half. Opportunities to export US crude to new destinations are now emerging as logistics constraints ease, making arbitrage economics more and more favourable. These higher exports come as OPEC and non-OPEC members have recently agreed to extend their production cuts by another nine months from June, taking the export reductions until March 2018.In February, the US exported a record-high 1.1 million b/d of crude oil, 30% of which went to China. In March, data for which is the latest available, this fell slightly to 834,000 b/d although it was still significantly higher than the roughly 470,000 b/d of outflows in 2015 when the US still had a crude export ban before the ban was lifted at the end of 2015.Since the latest OPEC agreement was reached, the Middle East crude complex has moved steadily higher as the market priced in the prospect of cuts in term crude supplies from OPEC producers.The premium of benchmark Dubai crude over WTI has widened in recent months. Coupled with the inverted spread between WTI and Dubai have been relatively low freight rates further stimulating arbitrage economics. This in turn has led to Asian refiners looking even closer at buying US crude.

      China's May crude oil imports soar on increased buying by state-owned refiners - Buying by state-owned refiners pushed up China's crude oil imports in May 15.4% year on year to 37.2 million mt, or 8.8 million b/d, but analysts said they expected crude inflows to ease in June due to high stocks. Imports in May rose 4.7% month on month, preliminary data released Thursday by the General Administration of Customs showed. The imports are the second highest level ever after 9.21 million b/d imported in March this year. "The increase was mainly from state-owned refiners as crude arrivals for independent refiners declined from April," said Hou Rui, an analyst with S&P Global Platts' China Oil Analytics. Independent refineries in China's eastern Shandong and Hebei provinces imported 8.43 million mt, or 1.99 million b/d, of crude oil in May, down 3% from April despite a 46% year-on-year increase, Platts data showed. He added that most of the cargoes for the state-owned refiners were booked in March when oil prices were low. The monthly average Platts Dated Brent and Platts Dubai crude assessments were $51.56/b and $51.20/b respectively in March, a four-month low. "Refinery outages remained high in May, so the incremental barrels are likely to flow into storage for use in June," Hou said.

      Analysis: OPEC/non-OPEC deal unlikely to alter crude strategy for Asia - The deal by OPEC and non-OPEC countries to extend output cuts is unlikely to lead to any fall in crude inflows into Asia from the region's main suppliers, who will ensure they keep their key markets well supplied as they strive to maintain market share and limit the prospect of the region being flooded with arbitrage cargoes. Market participants and experts were of the view that the move by OPEC and 11 non-OPEC producers to extend production cuts by nine months -- a move that would keep nearly 1.8 million b/d of crude oil off the market through March 2018 -- would not be big enough to throttle the supply strategy of major exporters and prevent them from meeting the needs of their traditional Asian buyers. Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp (Jogmec), said some OPEC producers in the Middle East won't be able to afford to reduce supplies to Asia -- instead they may boost shipments to meet peak demand needs. "We may see an increase in supplies, even without an increase in production in the summer," he added.  Some traders said that it could be a testing moment for OPEC producers to maintain their output cuts as agreed, as they battle for market share in Asia amid the approaching peak demand season.

      Rosneft ready to step up crude output if Opec deal falters  - Russia’s largest oil company has served notice that it will step up production in the event of a sudden end to the agreement among major crude producers to curb output in an effort to prop up prices.  In a rare interview, Igor Sechin, Rosneft’s chief executive, said the company was closely monitoring output from US shale producers, amid debate in the oil market over whether the Opec-led agreement’s effectiveness is waning.  “Well, if the question is how Opec is going to exit from these arrangements: abruptly,” Mr Sechin said. “We will also be prepared. If something goes wrong, we will not let them occupy our markets. We’ll defend ourselves.”

      Saudis Blowing Smoke - It was a dismal day for OPEC when it met in Vienna to extend its output deal. Despite an agreement to limit supply for another nine months -- a move it had signaled well in advance -- the price of crude fell by around 5 percent. The one bright moment came when Saudi Energy Minister Khalid Al-Falih announced that his country would cut crude sales to the U.S. Prices rallied briefly, adding as much as 50 cents. But a closer look at his comments reveals they may lack teeth. Unless the Saudis get serious about depriving customers of crude they want to buy, pessimism on OPEC's ability to rebalance the market is warranted. Here's what he actually said during the press conference after the meeting between the group and its friends on May 25: "As a result of certain marketing developments, including separating the assets of Motiva and Aramco focusing on the Port Arthur refinery, you will see a marked decline of Saudi Aramco exports into the U.S."  The Motiva assets were a joint venture between Saudi Aramco and Shell that was actually dissolved at the start of May, with Aramco retaining the Port Arthur refinery in Texas and Shell taking the Norco and Convent plants in Louisiana. The split leaves Shell free to source feedstock for its refineries from anywhere it wishes, but Norco and Convent process very little Saudi crude anyway. U.S. Department of Energy data show that imports by the two plants averaged just 33,000 barrels a day over the year to March, less than 3 percent of total U.S. crude purchases from the kingdom. So changed marketing arrangements there won't do much to dent the flow of Saudi exports to America.The Port Arthur refinery is a different story. Its imports over the same period averaged 238,000 barrels a day, or 21 percent of all Saudi crude sales to the U.S. However, it is unlikely that Saudi Aramco will switch its diet to other grades given that it's geared to processing its own crude. After all, as Al-Falih also said in that same press conference: "The U.S. market is a key market for Saudi Aramco...So we cannot, and will not, withdraw completely from the U.S."

      Oil Bears Can't Look to Libya as Expat Exodus Slows Recovery | Rigzone The rapid increase in Libya’s oil production is heading toward a hard ceiling. Crude output in the politically fragmented country has more than doubled in the past year to exceed 800,000 barrels a day, according to the state-run National Oil Corp., as fighting and labor unrest at ports and fields have subsided. But with foreign staff of international companies staying away, analysts from Energy Aspects Ltd. to Wood Mackenzie Ltd. say Libya’s ability to pump more oil will soon reach a limit -- and won’t be enough to upset an oversupplied market. “You’ve got a cumulative buildup of technical issues, shortages of equipment, and increasingly reports of damage to facilities,” Richard Mallinson of London-based Energy Aspects said by phone. The North African country will struggle to push production above 900,000 barrels a day in the coming months, he said. “Without bringing in the expertise to carry out deeper maintenance, there’s only so much local teams are able to do.” Libya was exempted from output cuts that the Organization of Petroleum Exporting Countries and allied producers agreed to in an effort to curb a global glut and support prices. The nation has announced plans to boost production to 1.3 million barrels a day by the end of the year. Output and exports collapsed after the 2011 revolt against former leader Moammar Al Qaddafi, when the country with Africa’s largest crude reserves pumped about 1.6 million barrels a day. Crude prices rebounded early on Monday after a Saudi-led coalition cut diplomatic ties with Qatar, escalating a crisis that started over the Persian Gulf emirate’s relationship with Iran. Benchmark Brent crude gained as much as 1.6 percent, reversing a slump last week amid concern that rising U.S. output would undercut supply curbs by OPEC and its partners. Brent later surrendered gains, falling 66 cents to $49.29 a barrel at 2:48 p.m. in London. 

      OPEC to assess need for deep oil output cuts in July: Saudi's Falih - OPEC and non-OPEC producers have only just agreed to extend their crude oil production cut deal through to March next year, but one of the key architects of the agreement, Saudi Arabia's Khalid al-Falih said Saturday he will consider the need for deeper output cuts in July. Falih was optimistic that the deal struck between OPEC and non-OPEC producers May 25 would begin to start bearing fruit by the end of June. "I think we have to wait. We have to see the market and I think by the end of June, in July we will see that the action we have taken has a big impact," "If for some reason we need to do more, we will consider to do more including extension ... bigger cuts," Falih said, adding "Nothing is off the table but today nothing is on the table either." Saudi Arabia and Russia played a key role in negotiations between OPEC and non-OPEC producers to cut output by 1.8 million b/d from January 1. On May 25, the 24 producing countries participating in the deal agreed to extend it through March 2018. The aim is to bring global crude oil stock levels back down to their five-year average. A five-country monitoring committee overseeing the deal will meet in Russia over July 22-24. The next OPEC and non-OPEC meeting is set for November 30. Falih said he hoped compliance to the agreement in May would be even better than April, when the committee reported 102% overall adherence to the cuts. "I know that Russia achieved more than 100% [by cutting 305,000 b/d]. We are more than 100%," Falih added. The pair are the world's two biggest oil producers with a combined output of around 20 million b/d.

      Russia, Saudi Arabia energy ties heading to new level – podcast - Russian and Saudi relations are emerging in the wider energy sphere and how these deepening ties feed into the whole OPEC/non-OPEC cooperation is begging the question as to whether one is a precursor to the other, according to associate editorial director Paul Hickinand managing editor Nadia Rodova. Meanwhile, the pain of political barriers on the European side is often little talked about and is a new theme, with the focus usually on Russia, which seems to be coping with them so far.

      Hedge funds keep it cagey on oil drawdown prospects- Hedge fund managers continued to square up positions after the OPEC meeting on May 25 left oil production allocations unchanged for another nine months. Money managers increased their combined net long position in the three main Brent and WTI futures and options contracts by 20 million barrels in the week to May 30. Fund managers also increased their net long position in U.S. gasoline by 7 million barrels and in U.S. heating oil by 6 million barrels, analysis of position data published by regulators and exchanges showed. But most of these position changes were driven by the closure of previous bearish short positions rather than the creation of new bullish longs. Short positions in crude, gasoline and heating oil were cut by 27 million barrels, 6 million barrels and 8 million barrels respectively for a total decrease of 41 million barrels. By contrast, long positions in crude and heating oil were cut by 8 million and 2 million barrels respectively, while gasoline longs rose by a mere 1 million barrels, making for a total reduction of 9 million barrels. Hedge fund positions in crude and refined products are fairly close to neutral (allowing for the persistent long bias among money managers as a whole, especially in crude). Fund managers hold 3.4 long positions in crude for every 1 short position, up from a recent low of 2.35 but well down from the mid-April high of 5.8, let alone the record 10.3 reached in mid-February. It has been a tough start to the year for most fund managers, with big bullish positions in February and April repaid only with a painful decline in prices. Crude oil prices have generally remained under pressure in recent days, with little sign of concerted buying despite plenty of bullish talk. Most fund managers have therefore retreated to the market sidelines, waiting to see if the long-promised drawdown in global stocks will eventually materialise in the third quarter.

      Oil prices finish lower after Middle East countries cut Qatar ties - Oil prices finished lower Monday as Saudi Arabia and three other countries cut ties with Qatar, raising uncertainty about Middle East oil production. Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates all severed diplomatic ties with Doha on Monday, accusing it of meddling in their internal affairs and backing terrorism, which the country denies. On the New York Mercantile Exchange, July West Texas Intermediate crude fell 26 cents, or 0.6%, to settle at $47.40 a barrel. August Brent crude on London's ICE Futures exchange slipped 48 cents, or 1%, to $49.47 a barrel. The settlements for both benchmark crudes were the lowest in just under a month. Oil prices had reversed a gain of more than 1% seen earlier in the European session and in Asian trading. “Generally, increased tensions in the Middle East props up oil prices with a fear bid, but the dynamic of this Qatar issue is different because it is largely between Saudi Arabia and Iran,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch. “The likelihood of military action between the two major OPEC members is pretty slim which means that the chances of production outages is also low,” he said. “The rift, however, is jeopardizing the global production agreement as rising tensions between OPEC members could result in the entire quota-policy-deal falling apart.” 

      Oil falls 1 percent on fears Mideast rift could harm OPEC cuts --Oil prices fell nearly 1 percent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with top liquefied natural gas (LNG) and condensate shipper Qatar, accusing it of supporting extremism and undermining regional stability. The news initially pushed Brent crude prices up as much as 1.6 percent as geopolitical fears rippled through the market. But August Brent prices ended the session 48 cents or 0.96 percent lower at $49.47 a barrel. U.S. West Texas Intermediate futures settled 26 cents or 0.55 percent lower at $47.40. U.S. gasoline futures led the energy complex lower, falling about 2.5 percent to settle at $1.5381 a gallon, on technical selling, brokers said. With production capacity of about 600,000 barrels per day (bpd), Qatar's crude output ranks as one of the smallest among the Organization of the Petroleum Exporting Countries, but tension within the cartel could weaken the supply deal aimed at supporting prices. "While we would not want to read too much into this in terms of looming trouble for OPEC, the fact that Qatar's stance towards Iran is a key element in this issue does make for a potentially more complicated setup at future meetings should the issue not have been resolved in due time," JBC Energy analysts said in a note. The deal has shown little indication of significantly denting exports. While OPEC supplies dipped between February and April, a report on Monday by Thomson Reuters Oil Research said OPEC shipments likely jumped to 25.18 million bpd in May, up over 1 million bpd from April. Brent futures have fallen more than 8 percent from their open on May 25, when OPEC opted to extend production cuts into 2018. Outside of OPEC, South Sudan will drill 30 new wells this year and significantly boost oil output as it chases a peak 350,000 bpd target by mid-2018, the petroleum minister said on Monday.  

      Bearish News Mounts For Oil Markets - In a seemingly contrarian move, oil prices have fallen 5 percent since OPEC member states agreed to a 9-month extension on production cuts. And as Libya ramps up production, the U.S. pulls out of the Paris Climate Agreement and Qatar is excluded from the GCC, the market is awash with bearish news.  The U.S. oil and gas markets all slipped lower-- near the 2017 low of $46--after Saudi Arabia, Egypt, Bahrain, Yemen, Libya and the Maldives severed diplomatic ties with Doha over allegations of meddling with their internal affairs and supporting several terrorist groups. There are widespread fears that Qatar might retaliate by disrupting the latest oil production deal. That, however, remains to be seen because Qatar ships just 618k bbl/day, or ~2 percent of OPEC output. Qatar though is the world's largest exporter of liquified natural gas, shipping one-third of global LNG supply. The dispute has so far not caused any disruptions in the region's energy sector since Qatar's gas supplies are still going through the 3.2B cf/day Dolphin pipeline. In a seemingly bizarre move, oil prices plunged as much as 4 percent after OPEC and non-OPEC members, including Russia, agreed to extend the current oil production cuts through March 2018. The price action though is not as strange as it first looks. OPEC is merely interested in keeping a floor under prices and appears satisfied with current production levels which have yielded a considerable revenue improvement for cartel members. The market, however, was looking for deeper cuts so as to bring down inventory levels and offer solid ground for a sustained recovery. U.S. rig count climbed for the 20th consecutive week, a record for the industry, according to the latest weekly survey by Baker Hughes. Oil rigs increased by 11 to 733 while gas rigs fell by 3 to 182. That's more than double last year's comparable readings of 325 and 82 active oil and gas rigs, respectively. There are growing fears that increasing U.S. output will frustrate efforts by OPEC to lower global inventory levels.   The U.S. is, however, not the only country that OPEC has to contend with in its efforts to control production. Libya, an OPEC member itself, has been ramping up oil exports, and could hit 1 million barrels per day in a matter of weeks. Sustained production at that level will offset at least one-third of OPEC cuts, implying that it might take considerably longer than the targeted nine months to bring down inventories to acceptable levels. With some luck, the country's decaying infrastructure and fragile peace might prove enough to limit its ability to continue beefing up production.

      WTI/RBOB Drop After Biggest Gasoline Build In 5 Months --Following last week's biggest crude build since 2016, API reports another large crude draw (seemingly confirming refinery run rates remain high), but WTI/RBOB prices slipped lower on an unexpectedly large build in Gasoline (and Distillates). Genscape reported a 750k draw at Cushing last week... API:

        • Crude -4.62mm (-3.25 exp) -0 9th weekly build in a row :
        • Cushing -1.56mm (-593k exp) - biggest draw since Oct '16
        • Gasoline +4.08mm (-50k exp) - biggest build since Jan '17
        • Distillates +1.75mm

        Following last week's biggest build since 2016, API reported a 9th weekly draw in Crude but Gasoline saw its biggest build since Jan 2017, very much against the recent trend... Notably WTI rallied back today (on weak dollar) to recover the post-Qatar losses...(despite EIA upping its 2018 US Crude output estimate above 10mm b/d for the first time...EIA sees US crude production at 9.81mbpd (was 9.74) in December 2017 and at 10.29mbpd in December 2018...) but once the API data printed both WTI and RBOB started to fade...

        Oil Prices Rise Following Another Big Inventory Draw --The American Petroleum Institute (API) reported a draw of 4.62 million barrels in United States crude oil inventories, compared to analyst expectations that markets would see a draw of only 3.5 million barrels for the week ending June 2. This week’s draw, according to the API, is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks. Oil markets have been, for the last couple of weeks, cautious and slow to react to the positive news of crude oil inventory draws. This week, the news comes on the back of uneasiness in the oil market as Saudi Arabia and a few other Arab nations—which include OPEC members UAE and Libya—severed diplomatic ties with LNG heavyweight Qatar, citing that the country had sponsored terrorism and destabilizing the region.While analysts predict that the action taken by the Arab nations against Qatar will have little effect on the oil industry as it was unlikely to disrupt the status quo of the oil production cuts of which Qatar is a part of, it has created logistical concerns, and there are reports that LNG buyers are changing shipping plans to avoid the blacklisted country. Still, WTI barrel prices failed to go much beyond $48.  WTI was trading at $48.10 at 2:30pm EST, up 1.48 percent on the day—with Brent trading at $50.05 per barrel, or 1.17 percent up since open. Both benchmarks are below last week’s levels.The upward movement on gasoline inventories was a disappointment, climbing 4.08 million barrels this week, according to the API. Distillate inventories also rose this week by 1.75 million barrels, while inventories at the Cushing, Oklahoma, site fell by 1.56 million barrels.

        WTI/RBOB Tumble After Surprise Builds Across Entire Energy Complex - WTI/RBOB extended their losses after API's surprise gasoline build headlines overnight, and DOE data was even worse with surprise builds in crude, gasoline, and the biggest distillates build in 5 months. Production in the Lower 48 fell for the first time in 17 weeks (but very marginally). The reaction in oil and gasoline prices was abrupt... So far this week... Genscape reported a 750k draw at Cushing last week...  DOE reported:

        • Crude +3.925mm (-3.25 exp) - biggest build in 3 months
        • Cushing -1.444mm (-450k exp) - biggest draw in 4 months
        • Gasoline +3.324mm (-50k exp) - biggest build in 2 months
        • Distillates +4.355mm (+650k exp) - biggest build in 5 months

        After last week's biggest crude draw since 2016, expectations continued to point to more draws but API's overnight build in gasoline surprised many. High refining processing rates have eaten into the crude glut, but they risk moving it downstream into products, and DOE confirms that is now backing up the chain once again... with major builds in crude, gasoline, and distillates...

        Oil prices fall on surprise rise in US crude stockpiles: Oil prices slid nearly 5 percent on Wednesday after the U.S. government reported an unexpected increase in crude inventories, fanning fears that output cuts by major world oil producers have not drained a global glut very much. Crude stocks in the United States grew 3.3 million barrels to 513 million barrels, according to the U.S. Energy Information Administration (EIA). That confounded forecasters who had predicted a drop of 3.5 million barrels, especially a day after preliminary data from the American Petroleum Institute indicated an even bigger drop. Gasoline inventories also unexpectedly rose, imports increased, and exports dropped, the EIA data showed. Brent crude prices were at $48.27 per barrel at 2:35 p.m. ET (1835 GMT), down $1.85, or 3.7 percent. U.S. light crude prices were at $45.72 per barrel, down 5.1 percent.Gasoline stocks rose by 3.3 million barrels, compared with analysts' expectations in a Reuters poll for a 580,000 barrels gain. Distillate stockpiles, which include diesel and heating oil, rose by 4.4 million barrels, versus expectations for a 281,000 barrels increase, the EIA data showed.The EIA data also showed a drop in gasoline demand of about a half million barrels a day, a surprising development given that the data reflected the start of the summer driving season following the Memorial Day holiday.U.S. gasoline futures fell about 3.7 percent after the data was released.Oil futures had already been lower earlier on Tuesday on renewed concerns about the efficacy of OPEC-led production cuts, as tensions rose within the export group over Qatar and U.S. output continues to grow.The U.S. Energy Information Administration (EIA) said on Tuesday U.S. crude oil production could hit a record 10 million bpd next year, up from 9.3 million bpd now, putting it nearly on a par with top exporter Saudi Arabia. In the nearer term, with fuel production and consumption largely balanced according to the EIA, the market is focused on inventories, which remain bloated.

        Oil futures tumble after EIA data shows across-the-board builds --Oil futures fell sharply Wednesday after US Energy Information Administration data showed weekly builds in crude, gasoline and distillate stocks, with NYMEX July crude down $2.47 to settle at $45.72/b. After eight straight weekly draws, crude stocks rose 3.295 million barrels last week to 513.207 million barrels, raising the surplus to the five-year average to 109.847 million barrels. Analysts surveyed Monday by S&P Global Platts were looking for crude stocks to have declined 3.5 million barrels last week. American Petroleum Institute data released Tuesday evening showed crude stocks drawing 4.6 million barrels last week. "The market was primed for another sizable US crude stock draw but then the DOE reported a large crude stock build instead," DNB Bank oil market analyst Torbjorn Kjus said in a note.ICE August Brent settled $2.06 lower Wednesday at $48.06/b.Crude runs fell by 283,000 b/d last week to 17.227 million b/d, while imports rose 356,000 b/d to 8.341 million b/d, pushing stocks higher."It was clearly a bearish report mitigated a little bit by the first drop in US production in some time, but that's more likely a temporary glitch than long-term drop," said Kyle Cooper, consultant at ION Energy. Output from the Lower 48 states fell 20,000 b/d to 8.815 million b/d, EIA estimated. That was only the second weekly decline so far this year. The oil complex's drop Wednesday "comes after recent volatility in response to a fresh diplomatic rift between Qatar and a coalition of countries led by Saudi Arabia, and skepticism over the [nine-month] OPEC cut extension," Citi Research analysts said in a note.

        JP Morgan Slashes Its 2018 Oil Price Forecast By $11 - Major banks have started slashing their oil price forecasts for this year and next, as the six-month OPEC deal failed to rebalance the markets and cuts were extended into March 2018. U.S. shale production is expected to continue growing through this year and into next year. Meanwhile, JP Morgan sees OPEC’s extension deal as having no exit strategy, with the cartel not communicating what its end game is.“Neither the length of the extension, nor the compliance rate of its participants, concerns me as much as OPEC’s lack of an exit strategy. If OPEC really has the courage behind their convictions, then the optimal decision would have been to extend cuts through the end of 2018,” Ebele Kemery, head of energy investing at JP Morgan, said on the day on which OPEC announced they would roll over the cuts.  Last week, Goldman Sachs cut its Brent price forecast for this year to US$55.39 per barrel from its previous estimate of US$56.76 a barrel. It also revised down its WTI projections to US$52.92 from US$54.80 a barrel. Just days before that, Goldman said that it sees the oil glut returning after OPEC’s deal expires.For 2018, it was JP Morgan that made the most drastic cut to its oil price projections, expecting not only U.S. shale to continue roaring back at OPEC, but also the cartel’s deal falling apart by the end of this year.  JP Morgan slashed its 2018 WTI forecast by US$11—from US$53.50 to US$42. The price projection for Brent was also axed, by US$10, from US$55.50 to US$45.  “We assume that the OPEC/non-OPEC deal collapses at the end of 2017, as cheating becomes untenable for core OPEC members. Consequently, the 2018 oil market balance now points to rapid builds in inventories which, absent continued OPEC support, should depress oil prices,

        Oil's plunge hints at broader market signal: slow down, shale -- Oil prices edged up a few cents early Thursday, but still languished below $46 a barrel after plunging the previous day on rising U.S. fuel stockpiles. Market observers pegged Wednesday's 5-percent plunge on the unexpected increase in oil and gasoline storage tanks, which overshadowed tensions in the Middle East, the attack in Iran and disastrous economic conditions in Venezuela, an OPEC producer. But some analysts note that even over the past few weeks, with U.S. oil inventories steadily declining – a bullish new development – oil prices had trouble staying above $50 a barrel for long. They're beginning to interpret the bearish sentiment as a broader message about rising oil production in the U.S. shale plays. "If the market's telling you anything, it's saying, 'E&P guys, slow down,'" said David Pursell, an analyst at investment bank Tudor, Pickering, Holt & Co. "Investors are more worried about whether the market can absorb this slug of growth from U.S. shale." Tudor Pickering projects U.S. oil production will grow by 1.2 million barrels a day in 2018. But would the market prefer something more like growth of 800,000 barrels a day? "A lot," Pursell said. At this point, with U.S. oil-production growth already baked in for 2017, it would take a sustained drop in oil prices in the range of $40 to $45 a barrel to slow next year's gains, the analyst said.

        Is $50 Oil Still Realistic? - Oil prices have plunged back to levels not seen since OPEC announced its original production cut deal last November. Prices have been falling since the group extended their cuts for another nine months, a two-week slide that puts WTI back in the mid-$40s.The underlying factors for the price drop are the same as before: U.S. shale production continues to rise; inventories remain elevated; and the markets are concerned that the OPEC cuts are not doing enough to drain the surplus.But, in fact, the outlook has grown a bit darker more recently, as downside risks to the market have grown.The immediate spark to the sharp percent selloff in crude oil prices on Wednesday came from the unexpectedly bearish EIA inventory report, which surprised market analysts. The report was especially bad news because both crude oil and gasoline inventories increased by 3.3 million barrels each at a time when stocks typically decline heading into the driving season. The increase ended several consecutive weeks of drawdowns and poured cold water on any hopes of swift rebound in prices – WTI and Brent dropped roughly 5 percent.That comes after the EIA issued a statement saying that it is growing more confident that U.S. oil production will surge past 10 million barrels per day (mb/d) by 2018, which would be an all-time record for the United States. Piling on, the EIA said that it expects relatively unimpressive drawdowns in inventories this year, projecting declines of just 0.2 mb/d worldwide in 2017. And in what should be very worrying for OPEC and other oil bulls, the EIA also sees inventories rising again in 2018 by 0.1 mb/d.But the oil market also has some other immediate problems. Nigeria has presented downside risks to oil prices for quite some time, although the threat was latent for most of this year. Everyone knew that Nigeria’s disrupted pipelines and export terminals could come back at some point.That day has finally arrived. Royal Dutch Shell just lifted its force majeure on its Forcados oil shipments on Tuesday, paving the way for a flood of new supply. The Forcados shipments – an estimated 250,000 barrels per day – have been offline for more than a year. Nigeria is set to add the equivalent of one-fifth of the size of the OPEC cuts back into the market.  One wildcard over the past few days was the severing of diplomatic ties by several Gulf States with Qatar over the latter’s support for terrorism. Saudi Arabia, the UAE, Bahrain and Egypt cut diplomatic ties with Qatar, a move that temporarily rattled the oil market. The initial reaction from market analysts was that any tension in the Middle East is always bullish for crude. If Qatari shipments were disrupted for some reason, that would erase some supply. But the flip side is that hostility between fellow OPEC members could undermine mutual trust, threatening to derail compliance with the production cuts. That would be decidedly bearish for oil prices.

        OPEC compliance 117% over Jan-May among members with caps: Platts survey -  OPEC crude output in May rose 270,000 b/d to 32.12 million b/d, according to an S&P Global Platts survey released Tuesday, driven by sharp output recoveries in Libya and Nigeria, both of which are exempt from the organization's production cut agreement. May production rose despite very high compliance from both Saudi Arabia and Angola, as Iraqi output also rose steeply. This was the first time since October that OPEC observed a month-on-month rise in production, as output from Libya and Nigeria surged to multi-year highs. Libya and Nigeria's combined January-May average output of 2.312 million b/d is now 101,000 b/d higher than their October levels, the benchmark month against which the rest of OPEC members' cuts are determined, according to the Platts survey.With production in these countries expected to continue to grow this summer as they recover from militancy-related outages, OPEC faces a tricky period in its attempt to accelerate the market's rebalancing.

        Pessimism Sweeps The Oil Markets -  Oil prices got crushed mid-week after the EIA reported a surprising increase in both crude oil and gasoline inventories, a terrible sign that points to ongoing problems with oversupply. WTI and Brent dropped by 5 percent, with WTI sinking back into the mid-$40s. The selloff slowed at the end of the week, but oil traders seem to be looking for some direction.   The OPEC cuts probably put a floor beneath prices, with few analysts predicting substantial price losses from here, but there is also not a lot of confidence that a rally is imminent. “Unless data are released that make the latest inventory build appear an anomaly, oil prices are hardly likely to make any lasting recovery,” Commerzbank wrote in a note. PVM Oil Associates strategist Tamas Varga also sounded downbeat. “I've been quite bullish for the second half of this year, based on supply and demand balances and I would still not give up on that idea, that rebalancing is going to start in the second half,” Varga said this week. “But if Nigerian and Libyan production is picking up as well as they are now, then slowly, I am probably going to have to start changing my mind.”  "If the market's telling you anything, it's saying, 'E&P guys, slow down,'" said David Pursell, an analyst at investment bank Tudor, Pickering, Holt & Co. "Investors are more worried about whether the market can absorb this slug of growth from U.S. shale." The investment bank says that shale is probably on its way to strong growth this year, but if prices stay between $40 and $45 then it could derail the production growth in 2018. "That $10 makes a big difference," Pursell said. The severing of ties by several Gulf States with Qatar raised concerns about supply interruptions. But Royal Dutch Shell and ExxonMobil said that exports of LNG from Qatar have not been affected. The row between Qatar and its neighbors over the alleged support of terrorism, at this point, does not appear to be a major risk to the oil and gas market. 

        Analysis: Oil-rich Texas really isn't the new Saudi Arabia  - It is a time of crisis, or at least near-crisis, in the Persian Gulf. An alliance led by Saudi Arabia has cut ties with and blockaded neighbor Qatar, in part for being too friendly with Iran. Terrorists have struck in Tehran, and Iran's Revolutionary Guard Corps blamed the Saudis. The longtime protector/hegemon of the region, the U.S., has been giving conflicting signals, its leadership preoccupied with other matters back home. You might think oil markets would be freaking out about all this. They're not. Oil prices are down about 4 percent since the Qatar news broke early Monday. Explaining the short-term moves of the oil market (or the stock market, or the bond market) is generally a pointless endeavor. In this case, a U.S. Energy Information Agency report showing higher-than-expected inventories of gasoline and oil has gotten most of the credit/blame for the price drop. But the fact that markets haven't freaked out about the tensions in the Gulf fits well with a longer-run narrative: that the U.S. shale oil industry has supplanted Saudi Arabia as the key swing producer in the oil market. That is, it's producers in Texas and a few other states that are setting oil prices with their decisions to stop or start drilling, not Organization of Petroleum Exporting Countries oil ministers with their decisions to raise or lower production quotas. And lately, U.S. producers have been doing a lot of drilling.  If they can make a profit, they'll drill -- and oil markets seem to have increasingly come to expect that they will compensate for any cuts in supply from elsewhere. So they yawn at a crisis in the Persian Gulf. It's an understandable enough response. But it should probably make us all a little uneasy. Whenever everybody in the oil business agrees that the world works one way, it tends to start working differently. Production increases from the U.S. may have been enough to make up for cutbacks by Saudi Arabia, but the U.S. is in no position to take over Saudi Arabia's overall role in the world oil market. The U.S. produces a lot of oil these days, but it still consumes more than twice that amount -- and most of the world's other major economies are even more dependent on oil imports. Bloomberg Gadfly's Liam Denning had a wonderfully disconcerting column last week on the role that the U.S. Navy has played since World War II in making the global oil market possible. If American politicians decide to stop underwriting that extremely useful service, strange things could start happening. They may even be happening now.

        Oil rises as Nigerian pipeline leak overshadows supply worries | Reuters: Oil prices rose on Friday after a pipeline stoppage in Nigeria, but crude still ended the week down nearly 4 percent on persistent worries about global oversupply. Brent crude oil settled up 29 cents at $48.15 a barrel. U.S. crude futures rose 19 cents to $45.83 a barrel. Both benchmarks posted weekly declines of nearly 4 percent, pressured by big U.S. inventories and heavy worldwide flows. "I don't think it's anything more than a temporary stabilization," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut, adding that traders were short-covering ahead of the weekend. "The increases in production will still drag us lower," he said. The Shell Development Company of Nigeria declared force majeure on Nigerian Bonny light crude oil after someone drilled a hole into the Trans Niger Pipeline, causing a leak. Nigeria has typically been Africa's largest oil exporter but rebel activity and government mismanagement have caused slowdowns and stoppages. The leak shows "the production trend in Nigeria is far from stable," said Carsten Fritsch, senior commodity analyst at Commerzbank. Oil markets have been under pressure in part because Nigeria and Libya, the two members of the Organization of the Petroleum Exporting Countries exempt from output cuts, were boosting production.

         U.S. oil-rig count posts another weekly climb, up 21 weeks in a row -- Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil climbed by 8 to 741 this week. That marked a 21st weekly rise in a row. The total active U.S. rig count, which includes oil and natural-gas rigs, increased by 11 to 927, according to Baker Hughes. Traders showed little reaction to the data, with July West Texas Intermediate crude  up 31 cents, or 0.7%, at $45.95 a barrel on the New York Mercantile Exchange, nearly unchanged from $45.97 before the data.

        BHI: Oklahoma, New Mexico leaders in 11-unit US rig count gain -  Oklahoma’s Cana Woodford and the New Mexico Permian served as the primarily catalysts behind the 21st consecutive US rig count increase.Baker Hughes Inc.’s tally of active rigs for the week ended June 9 jumped 11 units to 927, up 523 since a nadir in recent BHI data on May 20-27, 2016, and its highest level since May 1, 2015. Since May 27, 2016, the count has risen in all but 5 weeks (OGJ Online, June 2, 2017). Over the past 21 weeks, it has climbed 268 units.Oil-directed rigs rose 8 units to 741, up 425 since May 27, 2016, and its highest point since Apr. 10, 2015. Gas-directed rigs increased 3 units to 185, up 104 since last Aug. 26 in their own rebound. One rig considered unclassified remained drilling this week.US oil production during the week ended June 2 declined 24,000 b/d to average 9.32 million b/d, according to data from the US Energy Information Administration. The Lower 48 fell 20,000 b/d while Alaska dropped 4,000 b/d.In the June edition of its Short-Term Energy Outlook, however, EIA said this week that it expects US oil production in 2018 to average 10 million b/d, surpassing the previous annual production record of 9.6 million b/d set in 1970 (OGJ Online, June 7, 2017).Production is forecast to ramp up in particular during this year’s fourth quarter with a quarter-over-quarter expansion of 330,000 b/d. The agency maintains a forecast of 9.3 million b/d for 2017.The rising production through 2018 is supported by continued increases in drilling activity in shale regions, particularly in Texas where the Permian remains red hot and the Eagle Ford has resumed output growth, EIA said.Onshore rigs gained 13 units this week to 902, bolstered as usual by rigs drilling horizontally, which increased 9 units to 780, up 466 since May 20-27, 2016. Horizontal rigs now represent 84.1% of the total rig count. Rigs drilling directionally declined 2 units to 66. Offshore rigs and those drilling in inland waters each dropped 1 unit to 22 and 3, respectively.

        New US Shale Play Emerges As Rig Count Rises For 21st Week In A Row --Crude production from the Lower 48 dropped marginally last week, despite rising rig counts...  And in the last week oil rig counts rose once again (21st week in a row) up 8 to 741 - highest since April 2015 - notably given the lagged response to prices, we might expect the rig count rises to slow here. But, while the Permian has dominated the conversation in recent months,'s Irinia Slav explains the next big US shale play... Media coverage of the U.S. shale oil and gas industry makes it sound like the Permian is the only place where things are happening. Everybody is buying acreage in the Permian, selling acreage in other shale plays, and production costs are falling the fastest in that same Permian.True as this may be, this shale play is by no means the only one where production is growing. In fact, oil and gas output across the shale patch has been growing, as the Energy Information Administration’s latest drilling productivity report shows. And that’s not all because there is a new actor on stage: Powder River Basin in Wyoming. Now, in its May drilling productivity report the EIA confirmed what media have been saying: the Permian is the hottest spot in the shale patch, with a 71,000-bpd increase in output in April. This hottest spot was followed by the Eagle Ford, which some see as a declining play but if we are to believe EIA data, it is far from a decline: drillers there added 36,000 bpd to total output in April.  Bakken, which the EIA last year said will become the largest source of tight oil and gas in the U.S., added 6,000 bpd to daily production, with Niobrara added 7,000 bpd. Even the Marcellus and Utica plays, which are more famous for their gas, are yielding more crude, with both adding 1,000 bpd to overall output in April. Now for the new player in the field, which is in fact not new at all. Bloomberg’s Alex Nussbaum calls Wyoming’s (and Montana’s) Powder River Basin “a home to cattle ranches and coal mines.” Yet until the 2014 price crash, the PRB was one of the shale oil basins that were growing at the fastest rate. Then prices tanked and drillers started getting out.Now drillers are returning to the PBR. Crude oil production in the basin jumped to 1,000 bpd of oil equivalent over the last 12 months from less than 800 barrels and a major drilling expansion is on the way. EOG, Chesapeake, and Devon Energy are planning to spend a combined US$600 million in that part of Wyoming, and pipeline operators are eager to expand in that direction. The reason: land prices are much lower than those in the Permian, for the moment. It’s all about early birds catching worms, and the earlier a bird is the better because prices in Powder River are already rising. A year ago, Nussbaum says, drilling permits went for less than US$1,000 per acre. Now, an acre costs US$17,000.

        Egypt, Saudi Arabia, UAE and Bahrain cut ties with Qatar over terror links -  Four Arab nations have cut diplomatic ties to Qatar, further deepening a rift among Gulf Arab nations over that country's support for Islamist groups and its relations with Iran. Bahrain, Egypt, Saudi Arabia and the United Arab Emirates all announced they would withdraw their diplomatic staff from Qatar, a gas-rich nation that will host the 2022 FIFA World Cup and is home to a major US military base. Saudi Arabia also said Qatari troops would be pulled from the ongoing war in Yemen. The countries also were ejecting Qatar's diplomats from their territories. The Qatari government has not responded to the severing of diplomatic ties, though it has previously denied funding extremist groups. All the nations also said they planned to cut air and sea traffic. Saudi Arabia said it also would shut its land border with Qatar, effectively cutting off the country from the rest of the Arabian Peninsula. It wasn't immediately clear how the announcement would affect Qatar Airways, one of the region's major long-haul carriers that routinely flies through Saudi airspace. On 27 May, Qatar's ruling emir, Tamim bin Hamad Al Thani, called Iranian President Hasan Rouhani to congratulate him on his re-election. The call was a clear, public rebuttal of Saudi Arabia's efforts to force Qatar to fall in line against the Shiite-ruled nation, which the Sunni kingdom sees as its No. 1 enemy and a threat to regional stability. Qatar shares a massive offshore gas field with the Islamic Republic. Qatar is also home to the sprawling al-Udeid Air Base, which is home to the US military's Central Command and some 10,000 American troops. It wasn't clear if the decision would affect American military operations. Central Command officials and the Pentagon did not immediately respond to a request for comment. Saudi Arabia said it took the decision to cut diplomatic ties due to Qatar's “embrace of various terrorist and sectarian groups aimed at destabilising the region” including the Muslim Brotherhood, al-Qaeda, Isis and groups supported by Iran in the kingdom's restive eastern province of Qatif. Egypt's Foreign Ministry accused Qatar of taking an “antagonist approach” toward Egypt and said “all attempts to stop it from supporting terrorist groups failed.” 

        Trump Blows Up The Gulf Cooperation Council (GCC) Well, maybe it has blown itself up, but Trump’s supposedly triumphant visit to Saudi Arabia looks to have exacerbated underlying tensions within the six-member Gulf Cooperation Council (GCC), whose members include Saudi Arabia (KSA), Kuwait,Qatar, Bahrain, the United Arab Emirates (UAE), and Oman. This was the part of Trump’s overseas trip that most US media has accepted as being a nearly great performance without any goofups (the trip steadily going downhill after that), with him getting over $100 billion in arms sales to the Saudis, and, aside from theatrics like sword dancing and holding glowing globes, getting to lecture 50 Muslim Arab leaders about what to do about terrorism, while also supporting their Sunni animus against Iran, this last part being what has led to the most recent problems. According to Francis Ghiles of OpenDemocracy, the split has opened up dramatically thanks to Trump siding strongly with the most hawkishly anti-Iran members of the GCC. Those nations happen to be Saudi Arabia and the UAE, both of which are actively involved in the disastrously bogged-down war in Yemen, where evidence is weak that Iran is even providing anything significant to the Houthis who currently control northern Yemen and the capital of Sana’a and are Zaydi Shia. Many reports show a major humanitarian disaster unfolding in that nation, which appears to be in the process of splitting into at least three, if not four, failed pieces, with the UAE apparently supporting South Yemen secessionists who recently took control of the airport in Aden (not clear what Saudis think of that,; this last bit not in any of the linked posts). The key players are Saudi Deputy Crown Prince, Mohammed bin Salman (MbS), and the Abu Dhabi Crown Sheikh Mohammed bin Zayed (Abu Dhabi one of the 7 emirates in the UAE), both of whom have gotten close to Jared Kushner. Another nation more or less in their camp, if not quite as close to Kushner, is Bahrain, home to a US naval base, where the ruling minority Sunni monarchy killed a bunch of peacefully demonstrating Shia a few days after Trump left Riyadh, having promised not to “lecture” them about human rights (although he was prepared to lecture US allies in Europe about all sorts of things). So the big news that Ulrichsen presents is a bizarre campaign in various social media and regular media, especially in KSA and UAE against Qatar, claiming that its Emir Tammim made a speech on May 23 to a graduating group of military cadets in which he supposedly said that Iran was a “stabilizing presence in the Gulf,” that Hama was the legitimate ruler of Gaza, and complained about “tense” relations with the Trump administration.. A serious irony is that to the extent this is all about Qatar being insufficiently anti-Iran, especially in Yemen, Qatar sent 1000 troops to Yemen in 2014 at the special request of Mohammed bin Zayed (MbZ), who apparently personally lobbied Tammim hard on this.

        Trump Says Arab Leaders Accused Qatar of Funding Extremism -- President Donald Trump said Mideast leaders he met last month accused Qatar of financing extremism, remarks that analysts say may deepen Doha’s isolation as it faces unprecedented punitive measures from a Saudi-led alliance. “During my recent trip to the Middle East I stated that there can no longer be funding of Radical Ideology,” Trump said on Twitter Tuesday. “Leaders pointed to Qatar - look!” Trump’s comment came a day after the White House said the president wanted to “de-escalate” the crisis and is committed to holding talks with all parties. The kingdom and three regional allies -- the United Arab Emirates, Egypt and Bahrain -- accused their fellow Gulf Cooperation Council member of supporting a range of violent groups, from proxies of Shiite Muslim Iran to the Sunni militants of al-Qaeda and Islamic State. They suspended flights and sea travel to Qatar, ordering Qatari diplomats and citizens out.  “Trump’s “tweet fuels more conflict, increases tensions and will be used by those who are trying to demonize Qatar,” Qatar has dismissed the Saudi charges as baseless, and said the Saudis are seeking to dominate the region. The crisis pits U.S. allies against each other, disrupting trade, flights and business activity in one of the world’s most strategically important regions. The Saudi-led action has prompted some analysts to openly speculate about the possibility of regime change in Qatar, the No. 1 exporter of liquefied natural gas, whose sovereign wealth fund owns stakes in global companies from Barclays Plc to Credit Suisse Group.Qatar’s influence goes beyond money. It’s also a home to the forward headquarters of CENTCOM, the U.S. military’s central command in the region. “It’s not a coincidence for the spat between Qatar and Saudi Arabia to erupt right after Trump’s visit to the region,” Sinan Ulgen, a visiting scholar at Carnegie Europe, said by phone. “Saudi Arabia and the U.A.E. have decided to put pressure on Qatar, which so far has seemed to refrain from pursuing equally harsh policies toward Iran. Trump’s latest tweet is a reflection of his anti-Iran stance.”

        Arab powers sever Qatar ties, citing support for militants | Reuters: The Arab world's biggest powers cut ties with Qatar on Monday, accusing it of support for Islamist militants and Iran, and reopening a festering wound two weeks after U.S. President Donald Trump's demand for Muslim states to fight terrorism. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed diplomatic relations with Qatar in a coordinated move. Yemen, Libya's eastern-based government and the Maldives joined later. Transport links shut down, triggering supply shortages. Qatar, a small peninsular nation of 2.5 million people that has a large U.S. military base, denounced the action as predicated on lies about it supporting militants. It has often been accused of being a funding source for Islamists, as has Saudi Arabia. Iran, long at odds with Saudi Arabia and a behind-the-scenes target of the move, blamed Trump's visit last month to Riyadh and called for the sides to overcome their differences. "What is happening is the preliminary result of the sword dance," tweeted Hamid Aboutalebi, deputy chief of staff to Iranian President Hassan Rouhani, referring to Trump's joining in a traditional dance with the Saudi king at the meeting. Closing all transport links with Qatar, the three Gulf states gave Qatari visitors and residents two weeks to leave, and Saudi Arabia, Bahrain and Egypt banned Qatari planes from landing and forbade them from crossing their air space. Qatar's stock market index sank 7.3 percent, with some of the market's top blue chips hardest hit, and some Egyptian banks said they were suspending dealing with Qatari banks. The UAE and Saudi Arabia stopped exports of white sugar to Qatar, a potential hit to consumers during the holy month of Ramadan, when demand is high. Some residents in Qatar began stockpiling food and supplies, an expatriate said.

        The $1bn hostage deal that enraged Qatar’s Gulf rivals - Qatar paid up to $1bn to release members of its royal family who were kidnapped in Iraq while on a hunting trip, according to people involved in the hostage deal — one of the triggers behind Arab states’ dramatic decision to cut ties with the government in Doha.Commanders of militant groups and government officials in the region told the Financial Times that Doha spent the money in a transaction that secured the release of 26 members of a Qatari falconry party in southern Iraq and about 50 militants captured by jihadis in Syria. By their telling, Qatar paid off two of the most frequently blacklisted forces of the Middle East in one fell swoop: an al-Qaeda affiliate fighting in Syria and Iranian security officials. The deal, which was concluded in April, heightened concerns among Qatar’s neighbours about the small gas-rich state’s role in a region plagued by conflict and bitter rivalries. And on Monday, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain took the extraordinary step of cutting off diplomatic ties and transport links to Qatar, alleging the country fuels extremism and terrorism.  “The ransom payments are the straw that broke the camel’s back,” said one Gulf observer.

        The GCC States Led By Saudi Arabia Will Collapse Into Oblivion -- Emboldened by U.S. backing Saudi Arabia launched a campaign to finally subjugate Qatar into client state status. The plan has now reached a high point. A few hours ago Bahrain, Egypt, the United Arab Emirates and Saudi Arabia severed all ties with Qatar. All sea- and airspace have been closed for Qatari traffic and the land-routes severed. All Qataris will have to leave those countries within 14 days. Qatari diplomats were given just 48 hours.The immediate consequences are huge. Some 37 million passengers cross through Doha each year. But Qatar Airways now has to fly through Iranian, Iraqi and Turkish airspace to reach Europe. (If the situation persists the UAE owned Emirates Airways will likely order a huge bunch of new planes.) Half of the food in Qatar comes via Saudi Arabia through Qatar's only land border. 600-800 trucks per day can no longer pass. The 19 flights per day between Doha and Dubai are called off.  Oil prices rose some 1.6% and the Qatari stock exchange tanked. The reasons for the immediate spat are manifold. It has only little to do with Iran.  The Saudis accuse Qatar of supporting terrorists. That is like Britain accusing the U.S. of imperialism, or the mafia cutting ties with the mob over gangsterism. As Joe Biden remarked (vid) when still Vice President, both Wahhabi countries, Qatar and Saudi Arabia, have been funding and fueling terrorism in Syria, Iraq and elsewhere. But the Saudi view is that the more "liberal" Qatar is simply supporting the "wrong" kind of terrorists. The Qatari government and its mouthpiece Al-Jazeera installed and supported the Muslim Brotherhood government in Egypt. The Saudis put that government down by financing a military coup against it. Qatar is supporting the Muslim Brotherhood government of Turkey. It is supporting the Palestinian Hamas, also a Muslim Brotherhood affiliate. Qatar is financing various al-Qaeda aligned groups in Libya, Syria and Afghanistan. The Taliban have their only diplomatic mission in Doha. Until recently the Saudis have been financing ISIS. They are now mainly back at financing various other Jihadi groups in Syria under CIA control. The UAE is sponsoring the Libyan general Hiftar who is fighting Qatari supported al-Qaeda aligned groups. The Saudis are making nice with Israel and have no interest in the Palestinian cause which Qatar supports. There are diverting interests in hydrocarbons. Qatar is the world's biggest exporter of natural gas - a serious competition to Saudi oil exports. It has recently intensified its relations with other producers and customers in the Gulf region and beyond.

        The Qatar Turmoil Fallout: Flights, Food, Football And More --Today's stunning expulsion of Qatar from the Saudi "circle of friends" prompted some analysts to ask if in Qatar's immediate futures is a departure from OPEC. In a note by Mitsubishi UFJ, the bank notes that “a full-fledged confrontation will, without any doubt, put pressure on the current compliance rate of OPEC members to the adherence of the 9-month agreement to cut production" and adds that "whilst Qatar’s pledge was only to cut 30,000 barrels to 628,000 barrels (as part of the OPEC agreement), there are potential risks of Qatar leaving OPEC which could significantly impact oil prices." That said, the political fallout for Qatar, and its remaining allies, could have broader implications than merely the collapse of the already dying oil cartel; as MUFJ notes “a rapprochement between Iran and Qatar would be a vast security risk to the U.S. military" while closure of land/sea/air contacts could have adverse "implications for the airlines, shipping and road freight industries." According to analysts and pundits cited by the BBC, the biggest threats facing the tiny but rich nation, with a population of 2.7 million, include food, flights, construction, people, trade and... football.  As reported overnight, Abu Dhabi's Etihad Airways and Dubai's Emirates are suspending all flights to and from Doha, starting from Tuesday morning. Both carriers operate four daily return flights to Doha. Budget carriers FlyDubai and Air Arabia are also cancelling routes to Doha, with other airlines, including Bahrain's Gulf Air and Egyptair expected to follow suit. It comes after Saudi Arabia, the UAE, Bahrain and Egypt all said they would stop flights in and out of Qatar, and close their airspace to the country's airline, Qatar Airways.

        Qatar's dispute with Arab states puts LNG market on edge | Reuters: Saudi Arabia and key allies on Monday cut ties with Qatar, the world's top seller of liquefied natural gas (LNG), stoking concern over any supply disruptions to neighboring countries spilling over into global gas markets. Saudi Arabia, along with the United Arab Emirates and Egypt - both highly reliant on Qatari gas via pipeline and LNG - and Bahrain said they would sever all ties including transport links with Qatar, an escalation on past diplomatic spats. They accuse Qatar, which supplies roughly a third of global LNG - natural gas that has been converted to liquid form for export - of supporting extremism. U.S. Secretary of State Rex Tillerson, who accompanied President Donald Trump on his trip to Saudi Arabia last month, was CEO of Exxon Mobil - Qatar's key Western partner in building its giant LNG export plants. As the rift lifted oil prices, LNG traders took a wait-and-see approach, alert to potential disruption of regional energy flows but erring on the assumption that any trade shocks could be contained given well supplied global markets.Qatar's top clients in Japan and India quickly received reassurances that supplies would continue as usual. Within hours of the diplomatic break, the UAE barred all vessels coming to or from Qatar using its popular anchorage point off Fujairah. The ban impacts about six LNG vessels linked to Qatar now anchored in the Fujairah zone which may need to be moved out, according to shipping data on Thomson Reuters. But there was little sign yet of LNG supply being hit. "I cannot see this impacting exports of Qatari LNG outside the Arab world at all and it won't likely impact LNG and gas pipeline exports within the Arab world either," Morten Frisch, an independent LNG and gas industry consultant, said. Still, traders startled by the development began to plan for all eventualities, especially any upsets to piped gas supplies from Qatar to the UAE. The UAE consumes 1.8 billion cubic feet/day of Qatari gas via the Dolphin pipeline, and has LNG purchase agreements with its neighbor, leaving it doubly exposed to tit-for-tat measures, industry sources and traders said.So far flows through Dolphin are unaffected but traders say even a partial shutdown would ripple through global gas markets by forcing the UAE to seek replacement LNG supply just as its domestic demand peaks. 

         LNG traders evaluate impact of Saudi-led diplomatic blockade of Qatar - LNG traders are bracing for potential disruption following moves by Saudi Arabia, Bahrain, Egypt, Libya, Yemen and the UAE to cut diplomatic ties with Qatar, the world's largest LNG supplier.Saudi Arabia's decision early Monday to break diplomatic ties, consular relations as well as land, air and sea contacts with Qatar over terrorism and extremism funding claims were followed by similar moves from the other five countries, according to media reports.
        Qatar exported 78.8 million mt of LNG in 2016, more than 30% of a total global supply of 257.8 million mt, according to Platts Analytics, and an increasing share of its production is being delivered to emerging Middle Eastern buyers, including Egypt, Jordan and the UAE. Any disruption to Qatari LNG supply could have a significant impact on pricing, regional trade flows and energy security in Egypt, which imports most of its LNG from Qatar, a Singapore-based trader said.More than 60% of Egypt's LNG imports in 2016 -- 4.61 million mt of a total 7.26 million mt -- were sourced from Qatar and delivered as part of supply contracts between Egyptian Natural Gas Holding, or EGAS, and several traders and portfolio sellers."Cargoes would have to come from somewhere, including the Atlantic or Australia," the trader said."We might see some increase in prices for Egypt deliveries, whereas Qatar might have some additional volumes that can be shown into other Middle East countries and the Far East, but that would upset some shipping arrangements in the near future," the trader added. The impact on Qatar would be less severe, an Atlantic trader said, because it could cope with possible sanctions on its LNG exports into Egypt and the UAE by lifting the destination restrictions currently banning its FOB offtakers from delivering Qatari volumes into its long-term markets in Asia.

        Saudi Arabia's power play leaves Qatar with little room to maneuver - The Saudi dispute with Qatar is rooted in the region’s two biggest power plays. That a usually reluctant Riyadh would choose to open a highly public feud with the tiny Gulf state so soon after hosting Donald Trump and 40 other world leaders stems from a deliberate calculation within the ruling House of Saud that now is the time to consolidate its status.  Trump’s visit marked a return to business as usual for a bilateral relationship that had remained solid until Barack Obama’s second term. Until then, the US had underwritten the regional order for almost 70 years, assessing – contentiously – that the Saudi leadership had been a plank of regional stability. The pivot to Iran, which offered Tehran regional legitimacy in return for agreeing to wind back its nuclear programme, changed all that. For three years, a troubled Riyadh felt as though its wings had been clipped.  Unable to guarantee the backing of a superpower, it looked on as Iran made gains in Syria, Iraq and Lebanon while also reaching out to other allies such as Egypt – and Qatar Successive US administrations had known what they were going to get with the Saudis and most of the Gulf. That has increasingly not been the case with Qatar. The former British protectorate, now the world’s wealthiest country per capita, had not played by the same rules, especially vis a vis its approach to Iran and the Muslim Brotherhood. Riyadh and Abu Dhabi viewed both as subversive threats and its complaints about Qatar’s ongoing dealings had routinely been rebuffed. Doha had also dabbled with Israel, Hamas, al-Qaida and the Taliban, keeping a stake in many of the region’s troublespots – ostensibly to maintain relevance – while assuming a disproportionate clout that might act as a safeguard if cornered.

        German Foreign Minister Voices Support for Qatar, Bashes Trump - Germany’s Foreign Minister Sigmar Gabriel criticized the treatment of Qatar by other major Arab nations in an interview with Handelsblatt, likening it to a “Trumpization” of relations. “Apparently, Qatar is to be isolated more or less completely and hit existentially,” Mr. Gabriel said. “Such a Trumpization of treatment is particularly dangerous in a region already plagued by crisis.”The foreign minister and German vice chancellor warned of a further worsening of the conflict, which saw several Arab countries sever ties with Qatar in a coordinated action on Monday, accusing the Gulf state of supporting Iran and Islamist groups. “A further escalation would serve nobody. The Middle East is a political and a military powder keg. Religious, ethnic, political and ideological conflicts are now also dividing the Gulf monarchies,” Mr. Gabriel said, adding that he was very concerned over the “situation’s dramatic escalation” and its impact on the entire region.Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed relations with Qatar and closed their airspace to commercial flights on Monday, in the worst split between powerful Arab states in decades. Qatar vehemently denies the accusations against it. US President Donald Trump on Tuesday took to Twitter, saying Arab states had told him about their disputes with Qatar during a recent trip abroad. “During my recent trip to the Middle East I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar – look!,” Mr. Trump tweeted.Mr. Gabriel criticized the US president’s Middle East policy. “The latest gigantic military deals by US President Trump with the Gulf monarchies are exacerbating the risk of a new arms build-up,” he said. “That is the completely wrong policy approach and certainly not that of Germany.” Mr. Trump had sealed a $110 billion arms deal with Saudi Arabia when he visited the kingdom in May as part of his first trip abroad. Mr. Gabriel said the nuclear deal with Iran, brokered by Germany and its allies in 2015, had averted the risk of an arms race in the region for the time being. He added that Berlin counted on talks to resume soon, allowing for a diplomatic resolution of the conflict in light of the region’s severe challenges, such as the fight against extremist group Islamic State, the Syrian War, the impact of climate change and the demographic development. “A profound fight among neighbors is actually the last thing anyone needs in this situation,” the foreign minister, who will soon meet his Saudi Arabian colleague, Adel Al-Jubeir, said.

        The Saudi Prince, the Sheikh and a Gulf Renegade - The choreographed statements by Saudi Arabia and three allies to quarantine Qatar at just after 6 a.m. on June 5 were not signed, but there was no mistake about who was behind them. The move to halt air and sea transport and shut the tiny Gulf nation’s only land border carried the fingerprints of two of the Arab world's most powerful leaders: Saudi Arabia’s young deputy crown prince, Mohammed bin Salman, and Sheikh Mohamed bin Zayed, the de facto head of the United Arab Emirates. The coordinated action underscores the growing authority of both men, whose countries control vast amounts of oil wealth and buy weapons from the U.S. They’ve been using both to mold the Middle East in recent years by supporting leaders and groups they like and opposing those they don’t. And now they have the explicit backing of President Donald Trump as he tries to toughen the U.S. stance on Iran. The stated aim was to crack down on the “Iranian sponsored terrorism” they said Qatar helps finance. Trump said on Twitter on Tuesday that Middle East leaders essentially told him as much during his visit to Saudi Arabia last month. Turning the screws on the world’s richest country per capita thanks to its abundant reserves of natural gas put the Saudis and Emiratis in direct confrontation with a country that remains a key American ally, and which hosts the U.S. Central Command. It also allows Bin Salman and Bin Zayed to send a clear message to their 37-year-old Qatari counterpart, Sheikh Tamim bin Hamad Al Thani: In this neighborhood, we run the show. 

        "Forget Terrorism": The Real Reason Behind The Qatar Crisis Is Natural Gas --According to the official narrative, the reason for the latest Gulf crisis in which a coalition of Saudi-led states cut off diplomatic and economic ties with Qatar, is because - to everyone's "stunned amazement" - Qatar was funding terrorists, and after Trump's recent visit to Saudi Arabia in which he urged a crackdown on financial support of terrorism, and also following the FT's report that Qatar has directly provided $1 billion in funding to Iran and al-Qaeda spinoffs, Saudi Arabia finally had had enough of its "rogue" neighbor, which in recent years had made ideologically unacceptable overtures toward both Shia Iran and Russia.  However, as often happens, the official narrative is traditionally a misdirection from the real underlying tensions. The real reason behind the diplomatic fallout may be far simpler, and once again has to do with a long-running and controversial topic, namely Qatar's regional natural gas dominance.Recall that many have speculated (with evidence going back as far back as 2012) that one of the reasons for the long-running Syria proxy war was nothing more complex than competing gas pipelines, with Qatar eager to pass its own pipeline, connecting Europe to its vast natural gas deposits, however as that would put Gazprom's monopoly of European LNG supply in jeopardy, Russia had been firmly, and violently, against this strategy from the beginning and explains Putin's firm support of the Assad regime and the Kremlin's desire to prevent the replacement of the Syrian government with a puppet regime.

        Gulf States Launch Naval Blockade Of Qatar - In what has emerged as the most significant escalation to result from the Qatar diplomatic crisis - which pits two of OPEC’s largest oil producers, Saudi Arabia and the UAE, against the world’s biggest exporter of liquefied natural gas and further disrupts stability in the region -  the biggest Middle East oil and container ports banned all vessels sailing to and from Qatar from using their facilities. According to a notice posted on the website of Inchcape Shipping, Saudi Arabian and Bahraini authorities closed off all of their ports to Qatari-flagged vessels or ships traveling to or coming from the Persian Gulf state, in what can be described as a quasi-naval blockade.  As Bloomberg adds, container and oil terminals in the United Arab Emirates also closed off traffic to any ships touching Qatar. Saudi Arabia’s eastern coast is home to the port of Ras Tanura, which state-owned Saudi Arabian Oil Co. says is the biggest crude terminal in the world. Jebel Ali port, the region’s biggest container terminal, will be restricted from Tuesday until further notice, its operator Dubai’s DP World Ltd. said in an emailed statement according to Bloomberg. In the U.A.E., DP World operates Jebel Ali along with Dubai’s Mina Rashid and Mina Al Hamriya ports. Elsewhere, government-owned Abu Dhabi National Oil closed its crude and refined-product ports to any vessels to or from Qatar. The port at Fujairah, a main oil transit and refined product hub, said Monday it was closed to Qatar-linked traffic. For now, shipping at Egyptian ports was operating normally as of Tuesday, according to Inchcape. The company also said the Suez Canal Authority has advised that there aren’t restrictions on vessels in the waterway since it is an international route. Separately, Bloomberg also reported that A.P. Moller-Maersk A/S, which owns the world’s biggest container line, said it can no longer get cargo to Qatar as a result of the Saudi-imposed blockade of transport to and from the Gulf state. Though the situation remains “very fluid,” with updates expected throughout the coming hours, Maersk Line expects “disruptions to our Qatar services,” spokesman Mikkel Elbek Linnet said in an emailed statement on Tuesday. For now, “we have confirmation that we will not be able to move cargo to or from Qatar,” he said.

        Saudis issue 24hr Ultimatum for Qatar to comply to 10 demands, or else -- Shortly after imposing a naval blockade in the immediate  aftermath of the Qatar diplomatic crisis, one which left the small Gulf nation not only politically isolated and with severed ties to its neighbors but potentially locked out of maritime trade and crippling its oil and LNG exports, on Tuesday SkyNews Arabia reported that Saudi Arabia has given Qatar a 24 hours ultimatum, starting tonight, to fulfill 10 conditions that have been conveyed to Kuwait, which is currently involved in the role of a mediator between Saudi and Qatar.  According to media report, among the key demands by Saudi Arabia is that Qatar end all ties Muslim Brotherhood and Hamas. While there was little additional information on the Ultimatum and more importantly what happens should Qatar not comply, Al Jazeera reported that Kuwait's emir, Sheikh Sabah Al Ahmad Al Jaber Al Sabah, left Saudi Arabia on Tuesday after holding mediation talks with the Saudi King Salman bin Abdul Aziz to try to defuse an escalating crisis between Arab countries and Qatar. No details were given on the talks.  n addition to Saudi Arabia's aggressive approach, Egypt's Foreign Ministry accused Qatar of taking an "antagonist approach" towards Cairo and said "all attempts to stop it from supporting terrorist groups failed". Qatar denied the allegations, with a Foreign Ministry statement describing them as "baseless" on Monday.  peaking to Al Jazeera, analyst Giorgio Cafiero of Gulf State Analytics, a geopolitical risk consultancy based in Washington, DC, said: "I think the Kuwaitis as well as Omanis ... fear the prospects of these tensions escalating in ways which could undermine the interest of all six members of the GCC. He added that if tension escalates, some have warned of a "military confrontation".

        These are the 10 Saudi demands, according to Al Jazeera’s Faisal Edroos:

        1. Immediately break diplomatic relations with Iran.
        2. Expel all Hamas members.
        3. Freeze bank accounts of Hamas members and stop dealing with them.
        4. Expel all Muslim Brotherhood members from Qatar.
        5. Expel anti-GCC elements.
        6. End support of ‘terrorist organisations.’
        7. Stop interfering in Egyptian affairs.
        8. Cease broadcasting the Al Jazeera news channel.
        9. Apologise to all Gulf governments for ‘abuses’ by Al Jazeera.
        10. Qatar must pledge that will not carry out any actions that contradict the policies of the GCC and adhere to its charter.

        UAE Threatens 15 Years Jail Time For Publishing Statements Sympathetic To Qatar -- The United Arab Emirates declared on Wednesday that anyone publishing statements sympathetic to Qatar could be punished with up to 15 years in prison, and said it would deny entry to anyone with a Qatari passport or resident visa. UAE officials denounced Qatar’s alleged support for state-sponsored terrorism, in keeping with the official narrative of the crisis. UAE Minister of State for Foreign Affairs Anwar Gargash threatened more curbs if necessary, according to Reuters, saying Qatar needed to make "iron-clad" commitments to change policies on funding militants. Qatar denies any connection with terrorism."Strict and firm action will be taken against anyone who shows sympathy or any form of bias towards Qatar, or against anyone who objects to the position of the United Arab Emirates, whether it be through the means of social media, or any type of written, visual or ver bal form," UAE Attorney-General Hamad Saif al-Shamsi said.On top of a possible jail term, offenders could also be hit with a fine of at least 500,000 dirhams, the newspaper said, citing a statement to Arabic-language media. Since the diplomatic row erupted, slogans against and in support of Qatar have dominated Twitter in Arabic, a platform used widely in the Arab world, particularly in Saudi Arabia.The Saudis continue to pile pressure on Qatar with Foreign Minister Adel Al-Jubeir on Wednesday said Qatar must deliver on the promises it made during the 2014 situation.“We want to see Qatar implement the promises it made a few years back with regard to its support of extremist groups, to its hostile media and interference in affairs of other countries” he told reporters in Paris as cited by Al Jazeera.

        Qatar Puts Armed Forces On Highest State Of Alert Over Fears Of Imminent Military Incursion -- Yesterday's news that Saudi Arabia has issued an ultimatum to Qatar, listing ten demands among which that Qatar end all ties with the Muslim Brotherhood and Hamas, has prompted a dramatic response by the small Gulf nation, and according to a just released report by Arabic CNN (and confirmed locally) US officials have said they have observed increased Qatari military activity as the country placed its forces "on the highest state of alert" over fears of an imminent military incursion. The sources add that the Qatari military has brought up 16 Leopard tanks out of storage in Doha in preparation for a potential military incursion by surrounding Gulf states. Furthermore, the Qatari Ministry of Defense reportedly also sent a letter to Saudi, UAE and Bahraini governments, saying they would fire on any naval ships from those countries that enter into its waters, a US official said. US officials have said the situation in Qatar has not affected US military operations and security in Qatar. The escalation comes at the same time as president Donald Trump allegedly changed course on Qatar, a day after praising a move by other Gulf nations to sever diplomatic relations with Doha, which hosts a US military base crucial to the fight against ISIS. CNN reports that in a phone call with the Qatari Emir, Trump "extended an olive branch," offering to help the parties resolve their differences by inviting them to a White House meeting if necessary.In a description of the Wednesday call, the White House said Trump "emphasized the importance of all countries in the region working together to prevent the financing of terrorist organizations and stop the promotion of extremist ideology."Trump's latest flip flop echoed that of his secretaries of Defense and State, who emphasized Tuesday the need for Gulf unity and the importance of the US partnership with Qatar, home to the Al Udeid Air Base, the main regional center for air missions against ISIS.

        The Saudis Demand Total Surrender But Qatar Will Not Fold - Many people believe that Qatar will soon give in to recent Saudi demands and threats. I first thought so too but have changed my opinion. Qatar will likely hold out way longer than anyone assumes and fight more intensive and much longer than foreseen. The Saudi "young leader" has now given Qatar 24 hours to submit to 10 demands. These include (unconfirmed) the dismantling of Al Jazeera, breaking off of all diplomatic relations with Iran and (the Israeli demand of) ending all support for the Muslim Brotherhood and especially Hamas. The Saudis threaten with a military invasion.  But Qatar is not like Bahrain where 1,000 Saudi troops could easily take over to save a dictator from a mostly unarmed uprising of its people. It has way more resources and capable allies on its side and recent news shows that it knows how to use them. Two days ago we extensively described the complex conflict between Qatar and some of its neighbors that has recently been escalating. Saudi Arabia and the United Arab Emirates are the main forces on one side, joined yesterday by Donald Trump but not by the Pentagon. On the other side is Qatar, geographically isolated and seemingly without any real allies even though it hosts a very large U.S. command center and air-base. The conflict has been simmering for years. Qatar has a strong media arm with Al Jazeera TV and other prominent news outlets. Qatar and its media support the political Islam of the Muslim Brotherhood which won elections in Egypt before being kicked out in a Saudi financed military coup. The ruling Turkish AK Party is a Muslim Brotherhood branch as is Hamas in Palestine. Muslim Brotherhood parties have thereby proven that it's possible to have an Islam(ist) aligned government without a hereditary dictatorship. Their pure existence de-legitimates the al-Saud clan and other dictatorial family enterprises in the wider Middle East. The Saudis currently lack money. Oil prices are too low to finance the needs of its 26 million people and the exorbitant expenditures of its ruling family. The Qatari gas fields would be a very profitable extension of their oil empire. The UAE would like to take over strategic Qatari islands in the Gulf (and the hydrocarbon fields around them). Taking over Qatar would bring both countries into a better position to fight their presumed enemy in Iran.

        Turkey Lines Up Behind Qatar as Gulf Crisis Fault Lines Deepen - Turkey criticized Saudi-led efforts to isolate ally Qatar, deepening the fault lines in a crisis that has engulfed one of the world’s most strategically important regions.In defending Qatar, President Recep Tayyip Erdogan joined a growing list of Middle East nations resisting Saudi Arabia’s push for a united regional front against the gas-rich emirate, whose maverick policies have vexed the kingdom for years. On Wednesday, the head of NATO’s second-largest army offered to try to mend the rift, which has created havoc at airports and seaports, and added new tinder to the already combustible Middle East by challenging the authority of Qatar’s ruler, Sheikh Tamim bin Hamad Al Thani.“I’d like to say that we don’t find sanctions against Qatar right,” Erdogan said at a gathering in the Turkish capital, Ankara, late Tuesday. “The most appropriate way for the Gulf Cooperation Council countries to solve their internal issues is through dialogue.”“We are ready to do everything to resolve other countries’ problems with Qatar,” he added.Turkey and Qatar have close ties, and Erdogan has sided with the emirate against Saudi Arabia in supporting the Muslim Brotherhood in Egypt and Hamas militants in the Gaza Strip. Qatar is a major investor in Turkey’s $857 billion economy, with interests in media, financial and defense companies, and Turkey is building a base in the emirate.

        Turkey Fast-Tracks Bill Approving Troop Deployment To Qatar --In the ongoing diplomatic crisis between Qatar and its Gulf/Arab peers, which is either the result of Saudi nat gas envy or - for those who watch CNN - Russian hacking, Turkey has emerged as a vocal  supporter of the small but wealthy state.  On Tuesday, Turkish President Recep Erdogan defended Qatar, saying he personally would have intervened if accusations that the tiny Gulf emirate supports "terrorism" were true and said he intends to "develop" ties with the embattled Gulf state hit by sanctions from Saudi Arabia and its allies.    "Let me say at the outset that we do not think the sanctions against Qatar are good," Erdogan said in a speech in Ankara."Turkey will continue and will develop our ties with Qatar, as with all our friends who have supported us in the most difficult moments," he added in reference to last year's failed coup. The support puts Turkey in a complicated position because while the NATO member has close ties with Qatar it also has good relations with the other Gulf states, especially Saudi Arabia.   Turkey's support for Qatar also has ideological reasons as in the past both both have provided support for the Muslim Brotherhood in Egypt and backed rebels fighting to overthrow Syrian President Bashar al-Assad.Erdogan was careful not to criticise Riyadh, calling on the member nations of the Gulf Cooperation Council to "resolve their differences through dialogue".

        Revealed: Secret details of Turkey’s new military pact with Qatar - According to the news outlet Intelligence Online, the head of Turkey's National Intelligence Organisation made multiple trips to Doha in December to cement a secret pledge that Ankara would protect Qatar from external military threats. In return, Doha would help offset Ankara's strained relations with Moscow following Turkey's downing of a Russian jet. Qatar would shore up the Turkish economy due to the loss of Russian tourists – estimated at some $3bn - as well as provide gas export guarantees if Moscow turns off the taps.While the economic assistance is a typical sweetener by Gulf states securing bilateral agreements, it is the defence pledge that is of greatest significance. Whether the pledge has been actually signed has not been reported outside of Intelligence Online. There is no mention of it in the comprehensive agreement that was signed in December, but talks are reportedly ongoing.“Turkey and Qatar are in the process of devising a possible 'Status of Forces Agreement'. In the deliberations that are said to be under way, the two sides would have discussed the incorporation of a casus foederis ["case for the alliance"] clause in the agreement,” said Dr Eyup Ersoy, an international relations expert at Turkey's Bilkent University.“However, first, this clause, if agreed upon, could be confidential and may not be revealed to the public. Second, the substance of the clause, again if agreed upon, would be qualified. For example, it may read that Turkey will provide diplomatic and military assistance to the extent possible in case of armed aggression against Qatar. In other words, it may not be unequivocal and unconditional.”As such, the agreement may not be overly different from unwritten pledges by the UK and the US to aid the Gulf states in the advent of an attack, last evidenced in the 1990 Gulf War. What is clear from the comprehensive agreement is that the Turkish base will be under Qatari control, with the possibility for Qatar to establish a base in Turkey.While the agreement states that Turkey is to cover the Qatari base's expenses, there are no details about overall costs. “Since the base is to be under Qatari military structure, it is simply a Qatari base put to the use of the Turkish military, so Doha will bear the financial costs of it,” said Ersoy.

        The Qatar Crisis  --The Qatar crisis soon may become even more dangerous: Turkey’s parliament is expected to fast-track on Wednesday a draft bill allowing its troops to be deployed to a Turkish military base in Qatar, officials from the ruling AK Party and the nationalist opposition said.The move appears to support the Gulf Arab country as it faces diplomatic and trade isolation from some of the biggest Middle Eastern powers. Meanwhile, Qatar is negotiating with both Iran and Turkey for food and water supplies in response to the Saudi-Emirati-led attempt to blockade and isolate the country. Iran’s foreign minister is in Ankara to meet with President Erdogan today. Both governments have an incentive to help Qatar out of its present jam. Iran stands to gain influence and improve its ties with Qatar while frustrating the designs of the Saudis and Emiratis, and Turkey has an interest in keeping Qatar’s support for the Muslim Brotherhood in place, and both have their own reasons to be opposed to Saudi-led power plays in any case. The Saudi-led bloc may have assumed that it could present Qatar with a fait accompli and force it to make concessions without much difficulty, but if these moves are any indication Qatar’s government is not going to capitulate so easily. Once again, the Saudis and their allies have assumed they could rack up an easy victory and haven’t considered how things could go wrong. Turkish and Iranian support for Qatar raises the prospect of a prolonged standoff with increasing risks for all parties. The possible deployment of Turkish forces is presumably intended to discourage Saudi adventurism, but it might very well precipitate the escalation it is meant to deter.  Qatar has been given a list of demands that it has to meet to end the blockade, but it can’t agree to all of those demands (including the shuttering of Al Jazeera) without suffering complete humiliation. If Qatar can count on support from some other regional governments, it isn’t likely to bow to pressure. The U.S. should oppose any attempt to resolve the crisis with force. Unfortunately, the president has already given the Saudis and Emiratis so many green lights to do whatever they want that it may now be too late to rein them in.

        Why Saudi Arabia and Its Allies Suddenly Cut Ties to Qatar - Qatar is unexpectedly under siege from its neighbours. Led by Saudi Arabia and the United Arab Emirates, supported by Egypt, Bahrain and Yemen, the five Arab states have cut diplomatic relations with Qatar, severed land, air and sea travel and are expelling Qatari citizens who have 48 hours to depart.The Saudis and their allies are demanding, in effect, that Qatar end its independent foreign policy and tame or close down its television station, Al Jazeera. They claim that Qatar is complicit with Iran in supporting terrorism, though Qatar is one of the loose coalition of Sunni states supporting forces hostile to Iran in Syria and Yemen. Saudi Arabia and Qatar have long been rivals and, despite Qatar’s small size, its great wealth and vast gas reserves have given it great influence. It backed the Arab Spring with its wealth and media outlets, supporting the Muslim Brotherhood in Egypt and Hamas in Gaza.  What has changed in the Gulf to precipitate a crisis now? The answer is that the Trump wrecking ball passed through the region last month and the US President’s unreserved backing for Saudi Arabia, and in particularly for deputy Crown Prince Mohammed bin Salman, has disturbed the regional balance of forces. It has already emboldened the Sunni monarchy in Bahrain to crush the last Shia resistance to its dominance, killing five protesters in one village and closing down the only remaining independent newspaper.Much more seriously, Mr Trump’s unqualified support for the Sunni monarchies and autocrats during his two-day visit to Riyadh emboldened the kingdom to start a second and, it hopes, final round in its confrontation with Qatar. Mr Trump may not have intended to touch off this latest crisis when he aggressively and inaccurately demonised Iran and by implication the Shia as the source of all terrorism in the Middle East and North Africa. But his words were interpreted by the Saudis as enabling them to move against Qatar though it is home to a major US base. It will be difficult for Qatar to withstand what amounts to a form of siege. Under Mr Trump, the degree of protection it can expect from the US is uncertain and Prince Mohammed bin Salman, eager to secure his own path to the Saudi throne, cannot afford a failure. He may even want to go the limit and eliminate Qatar as an independent state, the first time this has happened in the Gulf since Saddam Hussein invaded Kuwait in 1990.

        Qatar in talks with Turkey and Iran to provide food, water: official | Reuters: Qatar is in talks with Iran and Turkey to secure food and water supplies amid concerns of possible shortages two days after its biggest suppliers, the United Arab Emirates and Saudi Arabia, cut trade and diplomatic ties with the import-dependent country. "We are in talks with Turkey and Iran and other countries," said the official, who spoke on condition of anonymity due to the sensitivity of the subject, adding that the supplies would be brought in through Qatar Airways cargo flights. The official said there were enough grain supplies in the market in Qatar to last four weeks and that the government also had large strategic food reserves in Doha.

        Qatar crisis grows as Arab nations draw up terror sanctions list - Saudi Arabia and its Gulf allies have sanctioned a dozen organisations and 59 people it accuses of links to Islamist militancy – a number of them Qataris or with links to Qatar – escalating the diplomatic crisis in the region.The publication of the sanctions list comes amid increasing efforts by Saudi Arabia, the United Arab Emirates, Egypt and Bahrain to diplomatically and physically isolate the tiny but wealthy Gulf state of Qatar, which has been subjected to a series of co-ordinated measures in the past five days. The move was announced as Turkey’s president, Recep Tayyip Erdoğan, approved new legislation – rushed through the Turkish parliament the day before – for increased military cooperation with Qatar, including the potential deployment of Turkish troops. Turkey’s Hurriyet newspaper reported that the initial deployment would be a military assessment team arriving in the coming days to consider reinforcing a 90-strong mission already based in Doha. On Friday, Qatar’s foreign minister described the blockade as a violation of international law and said there was an attempt to mobilise international opinion against the Gulf emirate.  “These procedures that were taken have clear violations of international law and international humanitarian law. They will not have a positive impact on the region but a negative one,” Sheikh Mohammed bin Abdulrahman al-Thani told a joint news conference with his German counterpart during a visit to Germany.The previous day al-Thani gave a defiant interview with al-Jazeera, repeatedly denying that his country funded extremists and vowing not to back down in the face of the Saudi-led campaign.“We are not ready to surrender, and we will never be ready to surrender the independence of our foreign policy,” he said, adding that Qatar’s residents need not fear food shortages.Al-Thani also rejected any notion of shutting down the Qatar-based al-Jazeera satellite news network, suggested as a demand of the Arab nations.  Included on the sanctions list – which was denounced as “baseless and without foundation in fact” by Qatar – are the Qatari-funded Qatar Charity and Eid Charity and several prominent figures including businessmen, politicians and senior members of the ruling family, one a former interior minister.

        Qatar crisis grows as Arab nations draw up terror sanctions list - Saudi Arabia and its Gulf allies have sanctioned a dozen organisations and 59 people it accuses of links to Islamist militancy – a number of them Qataris or with links to Qatar – escalating the diplomatic crisis in the region. The publication of the sanctions list comes amid increasing efforts by Saudi Arabia, the United Arab Emirates, Egypt and Bahrain to diplomatically and physically isolate the tiny but wealthy Gulf state of Qatar, which has been subjected to a series of co-ordinated measures in the past five days. The move was announced as Turkey’s president, Recep Tayyip Erdoğan, approved new legislation – rushed through the Turkish parliament the day before – for increased military cooperation with Qatar, including the potential deployment of Turkish troops. Turkey’s Hurriyet newspaper reported that the initial deployment would be a military assessment team arriving in the coming days to consider reinforcing a 90-strong mission already based in Doha. On Friday, Qatar’s foreign minister described the blockade as a violation of international law and said there was an attempt to mobilise international opinion against the Gulf emirate. “These procedures that were taken have clear violations of international law and international humanitarian law. They will not have a positive impact on the region but a negative one,” Sheikh Mohammed bin Abdulrahman al-Thani told a joint news conference with his German counterpart during a visit to Germany.The previous day al-Thani gave a defiant interview with al-Jazeera, repeatedly denying that his country funded extremists and vowing not to back down in the face of the Saudi-led campaign.“We are not ready to surrender, and we will never be ready to surrender the independence of our foreign policy,” he said, adding that Qatar’s residents need not fear food shortages.Al-Thani also rejected any notion of shutting down the Qatar-based al-Jazeera satellite news network, suggested as a demand of the Arab nations.  Included on the sanctions list – which was denounced as “baseless and without foundation in fact” by Qatar – are the Qatari-funded Qatar Charity and Eid Charity and several prominent figures including businessmen, politicians and senior members of the ruling family, one a former interior minister.

        Saudis Have a Lot to Lose in Qatar Fight, Even If They Win -  Saudi Arabia dwarfs Qatar on almost any measure, yet there are plenty of ways the tussle between the Gulf neighbors could end up hurting the world’s biggest oil exporter -- even if it wins. All week the Saudis and their allies have ratcheted up pressure on Qatar, cutting diplomatic ties and imposing a blockade by land, sea and air. The stated goal is to force Qatar to stop cozying up to Saudi Arabia’s rival Iran and bankrolling Islamist groups across the region. Qatar says it’s being punished for things it didn’t do, and the U.S. signaled Friday that it wants the embargo eased. The disagreement over Qatar is longstanding. The scale of the current crisis is new, and it’s erupted into a Middle East already polarized by war. Saudi Arabia has struggled to impose its will in Syria and Yemen. Now discord has spread to the inner circle of Gulf monarchies, at a time when the Saudis and their young Prince Mohammed bin Salman are urgently seeking foreign investment to modernize an oil-dependent economy. “Most worrying is that Saudi Arabia and the U.A.E. may repeat the mistakes that were made when the Saudi leadership decided to launch a war in Yemen,” “They had no clear political strategy, based their action on false assumptions, have incurred heavy financial costs and a growing human toll, and are probably now worse off in terms of their security.” As in other regional clashes, external powers are being drawn into the Gulf quarrel, not all of them on Saudi Arabia’s side. Turkey has accelerated pre-existing plans to deploy some troops to Qatar, and Iran offered alternative transport routes and supplies of staple goods that can no longer be imported from Saudi Arabia. Their backing reduces the chance of a quick Saudi victory. 

        In "Clear Escalation", Arab Countries Release List Of Terrorists Supported By Qatar -- In what commentators have dubbed a "clear escalation", moments ago Arab states including Saudi Arabia, UAE, Egypt and Bahrain, have released a list that designates 59 individuals and 12 entities in Qatar as terrorist. The complete list of those named includes Qataris, Jordanians, Egyptians, Kuwaitis, Libyans.The four countries released the names in “light of their commitment to fighting terrorism, drying up their sources of funding, combating extremist ideology and its dissemination and working together to eradicate it and immunize communities,” according to a statement made available to Al Arabiya.“As a result of the continued violation by the authorities in Doha of the obligations and agreements signed by them, including the pledge not to support or harbor elements or organizations that threaten the security of states and to ignore the repeated contacts that they called upon to fulfill what they had signed in the Riyadh Agreement of 2013, its implementing mechanism and the supplementary agreement in 2014; The four States have agreed to classify 59 individuals and 12 entities on their prohibited lists of terrorists, which will be updated in succession and announced,” the statement added.  Which is ironic because as some have point out, we now live in a world in which terrorist are ratting out other terrorists, and all because of Trump's recent trip to the middle east. The list of designated individuals:

        How Saudi Arabia and allies strong-armed Qatar, blindsided U.S. | Reuters: One of the first signs of the crisis in which four Arab states have cut ties with Qatar came in a phone call from an anxious government adviser to a Reuters journalist early on May 24. In the 6.00 a.m. call, he denied Qatar's emir made comments reported by the state-run news agency criticizing hostility to Iran, sympathizing with three Islamist groups, accusing Saudi Arabia of adopting an extremist ideology that fosters terrorism and suggesting Donald Trump may not last long as U.S. president. The adviser repeated a statement released hours earlier which said the news agency had been hacked, seeming unaware that Reuters had already reported the denial. The unusual timing of the call and the adviser's haste to get the message across pointed to Qatar's deep concern about the impact the remarks attributed to the emir could have. As anger mounted in Saudi Arabia and the United Arab Emirates, Qatar's foreign minister tried to limit the fallout. Sheikh Mohammed bin Abdulrahman al-Thani told a news conference that Qatar, host to the biggest U.S. military base in the Middle East, wanted to maintain brotherly ties with its powerful neighbors in a region critical to world energy supplies. To outside observers, it was unclear whether the Qatar News Agency had indeed been hacked or whether an editor had published remarks which the emir later regretted saying. But to Qatar's neighbors the question was irrelevant: the comments reflected the broad lines of Qatar's independent-minded foreign policy, which critics say has destabilized the region through its alliance with Islamist armed groups and cordial ties with Iran. Officials in the Gulf say the comments marked a turning point, prompting Saudi Arabia, Egypt, Bahrain and the United Arab Emirates to cut relations with Qatar in the biggest diplomatic shock in the region for years.

        Qatar crisis: The deep diplomatic tensions behind the row -- The underlying tensions between Qatar and three of her Gulf neighbours in particular have been visible for two decades. This is a region largely of absolute monarchs - kings or emirs - who have in common a very firm grip on politics at home, to head off any dissent which could represent a threat to their individual regime survival.But the emir of Qatar pursues a series of policies which simply don't fit into the rigid orthodoxy expected by most of the others, notably Saudi Arabia, the superpower of Sunni Islam.His unconventional foreign policy is seen as a threat to Sunni solidarity, particularly because the emir and his ministers promote dialogue and a search for good relations with the rival regional superpower, Shia Muslim Iran.Saudi Arabia is deeply hostile to that approach and now feels empowered to turn that hostility to action, in the certain knowledge that a new president, Donald Trump, is at Saudi King Salman's side.The core charge laid against Qatar as justification for this week's new and punitive blockade is the country's alleged funding of religious extremists, including the secret arming of some jihadi groups.Those are charges rejected by Qatar's government and similar ones have also been levelled in the past at many of those now condemning the country, notably Saudi Arabia. But the single most powerful motive behind the blockade may be a quite different one: the desire to rein in, or even to close down, one of the emir of Qatar's most cherished projects - the global television news channels of Al-Jazeera.  He sees Al-Jazeera as an agent of positive change across the Arab world, opening up political debate, reporting on the challenges from ordinary people from the street, so evident during the "Arab Spring". However odd, even hypocritical it may seem for an absolute monarch in Qatar, a country devoid of elected politicians, to champion the cause of disaffected citizens demanding change elsewhere, that is a large part of what drives this emir, set on what he regards as a path of Middle East modernisation. His fellow autocrats see things quite differently, in Egypt as well as the Gulf. There, President Sisi drove the Muslim Brotherhood out of elected government and to near oblivion, branding them as intolerable Islamists. Al-Jazeera was painted as a propagandist for the Brotherhood. That's a portrayal other leaders who have been challenged by the station are happy to endorse, leaving the broadcaster as now another substantial target of the action against Qatar.

        Terror in Tehran, Qatar Spat, and Race for Syria-Iraq Border: the Washington ‘Swamp’ Gives Green Light for Saudi Arabia’s Jihad Agenda - This week’s attacks in Tehran, for which the Islamic State (ISIS) promptly claimed responsibility, are at this writing the latest incidents to roil the troubled waters in an increasingly turbulent «Broader Middle East». They will not be the last. The terror in Tehran comes as the threats from Saudi Arabia against Qatar on the surreal charge of supporting terrorism have reached a fever pitch. Observers openly discuss the possibility of a coup against the ruling Sheikh Tamim bin Hamаd al-Thani, or even a Saudi invasion. Regarding a possible regime change, Saudi media note that Tamim’s father, Hamаd, came to power in a coup against his father; coups are not rare in Qatari history, and there’s always another al-Thani brother, cousin, or nephew who could be installed as a suitable puppet for Riyadh. As for an invasion, keep in mind that Qatar was a part of the first and second Saudi states (defunct in 1818 and 1891, respectively) and could end up that way again. Given depressed oil prices and Qatar’s massive natural gas reserves, the Saudis would welcome a quick and lucrative diversification of their portfolio. Qatar has placed its armed forces on the highest state of alert. Meanwhile, in Syria, on June 6, U.S. planes for the second time put in an airstrike on pro-government forces near the al-Tanf border crossing with Iraq, near Jordan. The stated purpose was to protect U.S.-supported «moderate» jihadists in a «de-confliction zone» unilaterally declared by Washington. The U.S. also has reportedly established a presence at al-Zkuf, another border point to the north and east, with the obvious aim of blocking any link-up of Syrian and Iraqi forces fighting against ISIS. This coincided with announced launch of an offensive to capture ISIS’s nominal capital at Raqqa, spearheaded by the U.S.-sponsored Syrian Democratic Forces – of which the main element by far is the Kurdish YPG, denounced as PKK terrorists by America’s unreliable NATO ally Turkey.All three of these destabilizing developments stem from a common root: the agenda of Saudi Arabia to further its Wahhabist agenda of violence and intolerance, which are notorious even by the inhumane standards prevailing in the Islamic world.  Worse, that agenda has gotten a major boost from U.S. President Donald Trump’s ill-advised visit to Riyadh last month, where he pledged what amounts to unlimited military and political support to 31-year-old Minister of Offense Defense and Deputy Crown Prince Muhammad bin Salman, who is effectively the country’s ruler in the name of his doddering father, King Salman.

        The Pivot? Qatar Foreign Minister To Visit Moscow On Saturday --With Gulf tensions still rising, and culminating with last night's report on Arabia CNN that Qatar has put its armed forces on the highest military preparedness level, the small nation may be preparing to unveil its "Eastern pivot": moments ago Russia's RIA news agency reported that the Qatari foreign minister Sheikh Mohammed bin Abdulrahman bin Jassim Al-Thani will Visit Moscow on Saturday where he will hold talks with Russian Foreign Minister Sergei Lavrov."Negotiations will be held on Saturday," a Russian foreign ministry official said. However, Kremlin spokesman Dmitry Peskov said that Vladimir Putin does not yet plan to meet with al-Thani.  Meanwhile according to a Nomura research reports, Russia and the U.S. may become the biggest beneficiaries among LNG producers from the dispute between Qatar and its Gulf neighbors. Nomura's Gordon Kwan writes that a big part of Qatar’s finances come from international investors, indicating the spat in Mideast may negatively affect sentiment of new projects or expansions based in Qatar.That may put some Qatar LNG projects on hold as foreign investors may opt to put their finance on hold, as reported by Bloomberg. At the extreme, Egypt can shut off the Suez Canal and allow only some ships to pass through, impacting Qatar vessels loaded with gas on route to Europe, at a time when consumption is picking up for gas in the region. As demand rises in Europe, the region will likely need to buy more gas from other nations, with Russia and U.S. likely to become biggest beneficiaries as the two nations are more reliable suppliers of gas.

        Yemen cholera cases pass 100,000 amid 'unprecedented' epidemic -The number of suspected cases of cholera resulting from a severe outbreak in Yemen has passed 100,000, the World Health Organization says. A total of 798 deaths associated with the disease have been recorded in 19 out of 22 provinces since 27 April. The charity Oxfam said the epidemic was killing one person almost every hour. Yemen's health, water and sanitation systems are collapsing after two years of war between government forces and the rebel Houthi movement. Cholera is an acute diarrhoeal infection caused by ingestion of food or water contaminated with the bacterium Vibrio cholera. Most of those infected will have no or mild symptoms but, in severe cases, the disease can kill within hours if left untreated. The authorities in the rebel-controlled capital Sanaa, which has recorded the highest number of cases, declared a state of emergency on 14 May. More than half of the country's health facilities are no longer functioning, with almost 300 having been damaged or destroyed in the fighting. Health and sanitation workers have not been paid for eight months; only 30% of required medical supplies are being imported into the country; rubbish collection in the cities is irregular; and more than 8 million people lack access to safe drinking water and proper sanitation. The OCHA said the risk of the epidemic spreading further was compounded by the rainy season, widespread food insecurity and malnutrition. The war has left 18.8 million of Yemen's 28 million people needing humanitarian assistance and almost 7 million on the brink of famine. 

        Turkey and Baghdad condemn 'irresponsible' Iraqi Kurdistan referendum | Middle East Eye: Turkey's prime minister has denounced an "irresponsible" decision by Iraqi Kurdistan to hold an independence referendum in September. The Kurdistan Regional Government (KRG), with which Turkey is otherwise a close regional ally, announced this week that it would vote on whether to split from the rest of Iraq and form an independent region. The move has alarmed Turkey, which has long been worried about the effect of an independent Kurdish state on their own restive Kurdish population. "We have enough problems in our region. We believe it is not correct to create a new area of conflict," Binali Yildirim told reporters. "We believe this is a decision that has been made irresponsibly." In his statement, the Turkish foreign ministry said it was committed to preserving Iraq's territorial integrity and political unity "We believe that the announcement by the (Iraqi Kurdish region) to hold an independence referendum on September 25... will constitute a grave mistake," it added. Turkey has been engaged in a guerilla war with the Kurdistan Workers Party (PKK) since 1984 which has claimed over 40,000 lives. Although the PKK is ideologically opposed to the Kurdistan Democratic Party (KDP), the biggest party in the Kurdistan Regional Government - and the PKK no longer officially supports an independent Kurdish state - Ankara stills fears the possible outcome of Kurdish self-determination. Baghdad also rejected the legitimacy of the unilateral referendum call. "No party can on its own decide the fate of Iraq, in isolation from the other parties," government spokesman Saad al-Hadithi said in a statement on Friday. "Iraq is constitutionally a democratic, federal country with full sovereignty (..) Any measure from any side in Iraq should be based on the constitution.'' The decision to hold the referendum was taken on Wednesday, during a meeting between KRG President Massoud Barzani and other political leaders. However, both the anti-corruption Gorran movement and Islamic Group, which combined have 30 seats out of the 111-seat KRG parliament, boycotted the meeting. 

        Saudis storm social media in support of Kurdistan Independence: On Friday, Saudi Arabi social media users initiated the #SaudiforKurdistan hashtag to express their support for the upcoming referendum in Kurdistan Region. September 25, 2017, was set on Wednesday as the date for Kurdistan Region independence referendum. Even though governments of neighboring countries have disapproved of the move, people around the world expressed support for the Kurdish cause on their social media accounts. Some believe that launching the #SaudiWithKurdistan campaign was in response to the Turkish support for Qatar. In the meantime, top Kurdish politician Ilham Ahmed, who is currently on a visit to Washington to discuss the ongoing Raqqa operation expressed Syrian Kurds' support for Saudi Arabia. “Saudi Arabia is an important power in the region and it must play its role in promoting stability in Syria. We are ready to cooperate with Saudi,” she said. The United States stated on Thursday that it appreciates the "legitimate aspirations" of the people in Iraqi Kurdistan. Germany warned on Thursday against Erbil taking a unilateral decision. Iraq disapproved of the decision. “Any decision that concerns the future of Iraq must take into consideration the constitutional texts as it is an Iraqi decision,” Saad al-Hadithi, the spokesperson of PM Abadi said. Turkey also called the decision a grave mistake. Turkish Prime Minister Binali Yildirim told reporters on Friday that holding the referendum is irresponsible, and that the region had enough problems. Kurds are arguably the largest stateless nation in the world. Estimated to be over 40 million, Kurd's ancient land after the first world war was divided between several countries, mainly Turkey, Iraq, Iran, and Syria. The creation of a Kurdish state has long been a dream for almost all Kurds around the world. 

        At Least 12 Killed in Pair of Terrorist Attacks in Iran - Armed assailants, including some disguised as women, stunned Iran on Wednesday with brazen attacks on the Parliament building and the tomb of its revolutionary founder, the worst terrorist strike to hit the Islamic republic in years. At least 12 people were killed and 46 were wounded in the near-simultaneous assaults, which lasted for hours, clearly took Iran’s elite security forces by surprise and shattered the self-proclaimed image of calm in a turbulent region. The six known attackers also were killed, official news media said, and five suspects were reported detained. Their identities were not made clear. “We will avenge the blood of those martyred in today’s terrorism attacks,” said Brig. Gen. Hossein Salami, deputy commander of the Islamic Revolutionary Guards Corps, the country’s powerful paramilitary force.In a statement, the Revolutionary Guards appeared to blame Saudi Arabia and the United States for the assaults even as responsibility for them was asserted by the Islamic State, the Sunni extremist group that has taken credit for terrorist attacks around the world in the past few weeks.If the Islamic State’s claim is true, that would be its first successful attack in Iran, which is predominantly Shiite Muslim and regarded by Sunni militants as a nation of heretics. Iranian-backed forces in Iraq and Syria are helping battle the Islamic State.Eleven people died in the Parliament building assault, and one at the mausoleum of Ayatollah Ruhollah Khomeini, father of the 1979 revolution, whose shrine is a magnet for visitors. Four of the assailants were killed at the Parliament building, official news media said, and two at the mausoleum. Five were men, and one mausoleum assailant was a woman.The audacity of the assaults, and the hours it took to end them, suggested that Iranian security officials had been caught unprepared — especially for what seemed like a coordinated plan conceived well in advance.

        Patrick Cockburn: U.S. & Russia Bomb Syria’s Civilians When They Could Help End its War - naked capitalism - Jerri-Lynn here: This Real News Network interview with veteran Middle East correspondent Patrick Cockburn of The Independent analyzes the latest developments in Syria and says the war could end if the U.S., Saudi Arabia, Russia, and Iran were willing to make an agreement. That seems to say the least, unlikely, given what occurred during Trump’s recent orb-grasping, sword-dancing visit to Riyadh– especially the record arms deal. But I always make time for Cockburn, who has been reporting for decades from the Middle East. (video & transcript)

        US defies Moscow, strikes Syrian Army in Syria: The US military has again struck at the Syrian army in Syria. US jets attacked a group of Syrian armored vehicles. By their own claims they destroyed or damaged all of them. This is the fourth time US forces have attacked Syrian government forces in Syria, the third time since Donald Trump became president, and the second time since the current stand off over US presence in southern Syria at al-Tanf developed. The US claims the Syrians were within 55 kilometers of the US base at al-Tanf, Syria which made them a fair target. But the 55 kilometer exclusion zone is a unilateral American invention. It has no grounding in law or common sense. What is worse—as the US air force was bombing the Syrian army—US-backed rebels were bragging about attacking Syrian forces sitting just outside the 55 kilometer perimeter with their artillery. For some reason the unilaterally-proclaimed "deconfliction zone" cuts only one way — the Syrian army may not drive past it, but the CIA-backed rebels may come as close to the government forces as they please. Russia warned the first time the US struck at the Syrians in the al-Tanf region that such attacks were "absolutely unacceptable". Apparently its warning was not taken seriously. Bottom line is that US has de facto now carved out a piece of Syria as its occupation zone where government forces will be kept from, but which US-paid "rebels" may use as staging points for attacks against the army.

        Why are U.S.-led coalition airstrikes killing friendly troops? - It was nearly midnight Oct. 5, and the air was thick with smoke from fires militants had set at nearby oil fields. The Sunni fighters, allied with the U.S.-led coalition fighting to drive the jihadis out of Mosul, withdrew to an abandoned house to regroup.   The last thing Ali Hussein Khalaf remembers was another fighter asking him for more ammunition. Khalaf reached for the bullets, and a week and a half later he woke up in a hospital. The house had been hit by friendly fire from a coalition airstrike. Everyone on the 19-man unit had been killed except for Khalaf.   “It was so difficult for me to hear that. We were like one family, sharing the same mattress, fighting on the front lines,” Khalaf, 26, said last month at his home near Khara’ib Jabr, a village of 2,000. He said he always felt comfortable with air support from the coalition. “We trust them,” he said. Although there has been widespread debate over hundreds of civilian casualties associated with coalition airstrikes in Iraq and Syria, little is known about so-called friendly fire deaths and injuries. The coalition does not release monthly information about them, as it does strikes that kill civilians.  The London-based nonprofit monitoring group Airwars said it found 40 reported friendly fire strikes in Iraq and Syria since 2014. Although Islamic State may have tried to inflate the numbers through propaganda, at least 19 of the strikes have been reported by multiple sources, Woods said.

        Why Qatar matters to China, in spite of Gulf isolation | South China Morning Post: Qatar may be just a small, gas-rich peninsula in the Middle East, but it’s been making waves this week after eight nations announced they would cut diplomatic ties with the country, citing its terrorism links. The move has the potential to hurt Chinese president Xi Jinping’s ambitions in the region for his massive “Belt and Road” trade plan, and could disrupt the travel plans of mainland tourists. But the links between Qatar and China run much deeper than the modern Silk Road. Ongoing problems with the Gulf states could end up impacting broader trade, investment and infrastructure planning. China is working to negotiate a free trade agreement with the Gulf Cooperation Council, which includes Qatar. Unfortunately for China, which first started negotiating the agreement back in 2004, the bloc also includes Bahrain, Saudi Arabia and the United Arab Emirates, all of which cut diplomatic ties with Qatar on Monday. If the members can’t sort out their differences, the China-GCC trade deal will be groundless.Total two-way trade between China and Qatar tripled between 2008 and 2013 to about US$11.5 billion, according to Reuters. Last year, Qatar supplied 19 per cent of China’s imports of liquefied natural gas, according to IHS Fairplay, making Qatar China’s second-largest supplier of gas after Australia. In 2015, Qatar imported US$3.77 billion in goods from China, much of it consumer, machinery or electrical goods, according to the World Bank. Statistics from the Central Intelligence Agency show China accounted for 11.9 per cent of Qatar’s trade in 2015, making the Middle Kingdom Qatar’s top trading partner. 

        Pressured by Trump, missile tests, China finally cuts off all North Korean coal imports (AFP) - North Korea's global coal exports sunk to zero in April, UN data showed, as China choked off imports from Pyongyang to ramp up pressure on its nuclear-armed neighbour. China -- the North's sole major ally and economic lifeline -- announced in February a suspension of coal imports from the North, choking-off a key source of hard currency for Pyongyang, which has rattled the region with an increasingly aggressive weapons programme. Data recently updated on the United Nations Security Council website showed a sharp fall in coal shipped from the North to one unnamed country, plunging from 1.4 million tonnes, worth $126 million, in January to zero in April. The data, based on member states' voluntary reports, did not explicitly name China. But it may assuage the administration of US President Donald Trump, which has leant heavily on Beijing to help rein in Pyongyang.Tension is high on the Korean peninsula as the North has staged two atomic tests and dozens of missile launches since the beginning of last year, showing gradual upgrade in its missile capabilities. The UN Security Council last Friday unanimously adopted a US-drafted resolution imposing new targeted sanctions on a handful of North Korean officials and entities, a move Pyongyang said was "mean". China supported that decision but has made it clear that a push for talks -- and not more sanctions -- is its priority, calling for a resumption of six-party negotiations that have been dormant since 2009. Washington says it is willing to enter into talks with Pyongyang, but only if it halts its missile and nuclear tests. Under UN resolutions North Korea is barred from using nuclear and ballistic missile technology. The North is already under layers of sanctions for past violations of the resolutions.

        U.S. says China likely to build more overseas bases, maybe in Pakistan | Reuters: A Pentagon report released on Tuesday singled out Pakistan as a possible location for a future Chinese military base, as it forecast that Beijing would likely build more bases overseas after establishing a facility in the African nation of Djibouti. The prediction came in a 97-page annual report to Congress that saw advances throughout the Chinese military in 2016, funded by robust defense spending that the Pentagon estimated exceeded $180 billion. That is higher than China's official defense budget figure of 954.35 billion yuan ($140.4 billion). Chinese leaders, the U.S. report said, appeared committed to defense spending hikes for the "foreseeable future," even as economic growth slows. The report repeatedly cited China's construction of its first overseas naval base in Djibouti, which is already home to a key U.S. military base and is strategically located at the southern entrance to the Red Sea on the route to the Suez Canal. "China most likely will seek to establish additional military bases in countries with which it has a longstanding friendly relationship and similar strategic interests, such as Pakistan," the report said. Djibouti's position on the northwestern edge of the Indian Ocean has fueled worries in India that it would become another of China's 'string of pearls' of military alliances and assets ringing India, including Bangladesh, Myanmar and Sri Lanka. The report did not address India's potential reaction to a Chinese base in Pakistan.

         China Trade Data Beats As Crude Demand Surges (Ahead Of Maintenance) -- Thanks to a 13% surge in crude imports (as refiners prepare for maintenance season), China's trade surplus hit its highest since Jan (though -4% YoY). Imports (+14.8% YoY) and Exports (+8.7% YoY) both beat expectations. China’s overseas shipments accelerated in May from a year earlier, as Bloomberg suggests global demand shows signs of picking up.Exports rose 8.7 percent in May in dollar terms, the customs administration said Thursday. Imports increased 14.8 percent, leaving a trade surplus of $40.81 billion dollars. (In yuan terms, exports rose 15.5 percent and imports surged 22.1 percent, bringing the trade balance to 281.6 billion yuan.) A brighter international outlook may provide support to the world’s largest trading nation, with the World Trade Organization saying it expects trade to “expand moderately” in the second quarter. Still, after a robust start to the year, the domestic economy is displaying some signs of weakening momentum. The official factory gauge held up in May, but a private gauge signaled contraction for the first time in 11 months. China and the U.S. announced a deal in May to promote Chinese access for U.S. natural gas, financial services and beef as an "early harvest" of a 100-day review of the bilateral trade relationship that’s due to wrap up in July. China also vowed it will import $2 trillion from neighbors participating in its Belt and Road Initiative in the coming five years.

        China’s Continent-Spanning Trains Are Running Half-Empty -- If one image has come to define the Belt and Road Initiative (BRI), China’s ambitious, amorphous project of overseas investment, it’s the railway. Every few months or so, the media praises a new line that will supposedly connect a Chinese city with a European capital. Today it’s Budapest. Yesterday it was London. They are the newest additions to China’s iron network of transcontinental railway routes spanning Eurasia. But the vast majority of these routes are economically pointless, unlikely to operate at a profit, and driven far more by political need than market demand. In that, they’re representative of the BRI as a whole — far more driven by China’s need to promote its image, and to pander to domestic political interests, than to meet commercial demands.The myriad trade routes that once made up the ancient silk roads were driven by raw commercial need. Traders made the dangerous journeys across steppe, mountain, and desert because of the prospect of riches. That’s not the case today. Chongqing-Duisburg, Yiwu-London, Yiwu-Madrid, Zhengzhou-Hamburg, Suzhou-Warsaw, and Xi’an-Budapest are among the more than 40 routes that now connect China with Europe. Yet out of all these, only Chongqing-Duisburg, connecting China with Germany, was created out of a genuine market need. The other routes are political creations by Beijing to nourish its relations with European states like Poland, Hungary, and Britain.The Chongqing-Duisburg route has been described as a benchmark for the “Belt,” the part of the project that crosses Eurasia by land. (The “Road” is a series of nominally linked ports with little coherence.) But paradoxically enough, the Chongqing-Duisburg route was created before Chinese President Xi Jinping announced what has become his flagship project, then “One Belt, One Road” and now the BRI. It was an existing route reused and redeveloped by Hewlett-Packard and launched in 2011 to halve the time it took for the computing firm’s laptops to reach Europe from China by sea.Chongqing-Duisburg could have been an example of how to create a profitable route. But instead it became political fodder. The first railway was logistically developed by HP, but the development of the routes that followed has been driven by the Chinese government. A new brand, China Railway Express, has been created as an umbrella for the 40-something Chinese routes. While the branding was a good move, expanding the number wasn’t. Unlike the HP route, in which trains arrived in Europe full of laptops and other gadgets, the containers on the new routes come to Europe full of low-tech Chinese products — but they leave empty, as there’s little worth transporting by rail that Chinese consumers want. With only half the route effectively being used, the whole trip often loses money. For Chinese companies that export toys, home products, or decorations, the maritime route is far more profitable, because it comes at half the price tag even though it’s slower.

        Alibaba Founder Jack Ma’s Net Worth Went Up $2.8 Billion Overnight - Jack Ma's net worth increased $2.8 billion overnight as Alibaba's forecast sales growth topped analysts' estimates. Ma, now the richest person in Asia and Alibaba's chairman, now has a net worth of $41.8 billion, according to Bloomberg. Ma's net worth has already grown by $8.5 billion this year alone, and stands as the 14th wealthiest person in the world.Alibaba is the largest e-commerce company in China.The company saw a forecast revenue growth of 45 to 49%. Shares rose 13% to a record high as well, prompting Ma's net worth growth, Bloomberg reported. The company is also moving into other services including music streaming and video. Ma founded Alibaba in 1998.

        China uncovers massive underground network of Apple employees selling customers’ personal data --Chinese authorities say they have uncovered a massive underground operation involving the sale of Apple users’ personal data. Twenty-two people have been detained on suspicion of infringing individuals’ privacy and illegally obtaining their digital personal information, according to a statement Wednesday from police in southern Zhejiang province. The suspects allegedly used an internal company computer system to gather users’ names, phone numbers, Apple IDs, and other data, which they sold as part of a scam worth more than 50 million yuan (US$7.36 million). The statement referred to “domestic employees of Apple” but it was unclear whether they were directly employed by the company or by Apple suppliers or vendors. It also did not specify whether the data belonged to Chinese or foreign Apple customers. An Apple spokesman declined to comment on the matter. The local police did not respond to requests for comment.

        In Major Blow To Washington, South Korea Suspends Deployment Of US Antimissile System - In a stunning blow for US diplomacy in the Pacific rim region, Yonhap reported that South Korea’s newly elected president, Moon Jae-in said he has suspended the deployment of American THAAD anti-missile defense system, a major concession to China and a significant break with the United States on policy toward North Korea. “We are not saying the two launchers and other equipment that has already been deployed should be withdrawn. But those that have yet to be deployed will have to wait,” a senior presidential office official said, according to the news agency. The remarks come as the presidential office is examining an allegation South Korea’s defense ministry may have kept the delivery of four further Thaad launchers secret in an attempt to protect the project from an environmental impact evaluation, Yonhap said.As noted previously, the THAAD missile defense system has been controversial in South Korea where thousands have protested the deployment, while also drawing sharp criticism from China, which views the system’s radar as a threat to the regional balance of power. In response to the initial deployment, Beijing had taken retaliatory economic measures against Seoul, including curtailing the flow of Chinese tourists and punishing South Korean companies in China. The defense system officially went into operation late last month on an abandoned golf course in Seongju, 135 miles southeast of Seoul, when two of six launchers were installed. United States military officials have said that the system is already “operational and has the ability to intercept North Korean missiles.” During his presidential campaign, Moon who won the South Korean presidency last month and has adopted a conciliatory pose in the ongoing North Korean conflict, complained that the United States and the previous South Korean administration rushed to deploy Thaad before the election.Moon's decision to suspend the installation will strain relations with the White House, which has taken a hard line in confronting North Korea and its nuclear weapons program. It could also raise concerns about United States efforts to present a tough, unified position with Japan and South Korea against the North. Even more striking is that Moon also suggested that South Korea must “learn to say no” to Washington. He has already signaled a softening stance toward North Korea by encouraging aid groups to visit the country, although the North has rejected those offers since Seoul supported new United Nations sanctions.

        North Korea fires suspected land-to-ship missiles as South Korea delays THAAD | Reuters: North Korea fired what appeared to be several land-to-ship missiles off its east coast on Thursday, South Korea's military said, a day after the South postponed full deployment of a controversial U.S. anti-missile system designed to deter a North Korean attack. The launches, the latest in a fast-paced series of missile tests defying world pressure to rein in its weapons program, come less than a week after the United Nations Security Council passed fresh sanctions on the reclusive state. South Korea on Wednesday said it will hold off on installing remaining components of the U.S. Terminal High Altitude Area Defense (THAAD) system that has angered North Korea's main ally, China, amid early signs of easing tensions between the two countries. The missiles were launched Thursday morning from the North Korean coastal city of Wonsan and flew about 200 km (124 miles), South Korea's Office of Joint Chiefs of Staff said in a statement. Under third-generation leader Kim Jong Un, North Korea has been conducting missile tests at an unprecedented pace in an effort to develop an intercontinental ballistic missile (ICBM) capable of hitting the mainland United States. Compared to the different types of ballistic missiles Pyongyang has recently tested, the missiles launched on Thursday are considered to be more defensive in nature, designed to defend against threats such as enemy warships.

        "It's Like Buying A Dream" Japanese and South Korean Investors Fuel Bitcoin's Meteoric Rise --- Bitcoin’s 150% surge since the beginning of the year has caught the attention of “Mrs. Watanabe,” the metaphorical Japanese housewife investor, and a legion of South Korean retirees who’re hoping to escape rock-bottom interest rates by investing in cryptocurrencies, according to Reuters. Retail investors in Asia, many of whom are already regular investors in stock and futures markets, are turning to bitcoin in droves. Trading volume on Asia-based exchanges exploded following a Japanese law that officially designated bitcoin as legal currency. And now that the largest Chinese exchanges have reinstated customer withdrawals, the bitcoin market in China will likely stabilize, and the price will likely rise as a result.Bitcoin was recently trading in South Korea at a $400 premium to its value on US-based exchanges, in part due to tough money-laundering rules that make it difficult to move bitcoin in and out of those markets, Reuters reports.One of the retail traders interviewed by Reuters said she started with bitcoin because she’s worried she won’t be able to rely on her pension."After I first heard about the bitcoin scheme, I was so excited I couldn't sleep. It's like buying a dream," said Mutsuko Higo, a 55-year-old Japanese social insurance and labor consultant who bought around 200,000 yen ($1800) worth of bitcoin in March to supplement her retirement savings.""Everyone says we can't rely on Japanese pensions anymore," she said. "This worries me, so I started bitcoins." Another trader noted that most South Korean buyers see bitcoin as an investment; few plan to use it for payments purposes.

        Militants in Philippines had planned to set up an Islamist enclave | Reuters: Islamist militants locked in an urban battle with troops in the southern Philippines had planned to carve out an enclave of their own, officials said on Wednesday after the emergence of a video showing their leaders in a secret strategy meeting. The footage, found on a mobile phone as government forces closed in on the fighters in Marawi City, showed a group of men in a room discussing how they would take hostages from a school, seal off roads and capture a highway into the lakeside town. "There was indeed a bigger plan and it was supposed to wreak more havoc," military spokesman Restituto Padilla told a news conference after the video became public. The battle for Marawi has raised concern that Islamic State, on a back foot in Syria and Iraq, is building a regional base on the Philippine island of Mindanao that could pose a threat to neighboring Indonesia, Malaysia and Singapore too. Officials have said that, among the several hundred militants who seized the town on May 23, there were about 40 foreigners from Indonesia and Malaysia but also fighters from India, Saudi Arabia, Morocco and Chechnya. The strike on Marawi City suggested to many that pro-Islamic State outfits wanted to establish the town as a Southeast Asian ‘wilayat’ – or governorate - for the radical group, a view reinforced by the video footage.

        Demonetisation has Exposed Flaws in the Way India Measures Economic Growth -- GDP growth in the fourth quarter of the previous financial year, 2016-17, has turned out to be below the expectation of most economic analysts. The median forecast of 36 economists polled by Reuters showed a growth rate of 7.1%. The official figure of 6.1% is below the lowest prediction of 6.5%. But the surprise is that the actual number should have been even lower than 6.1%, given the ground reality. Surveys showed in December and January that demonetisation, the biggest economic event of 2016-17, had severely dented major parts of the economy. Prime Minister Narendra Modi had announced that there would be pain for 50 days and later modified it to say that the pain would become less after 50 days. What was the pain felt by the people? People, instead of going to work, stood in lines at the banks. In the harsh winter months, people with quilts queued up during the night and slept in the lines outside the banks. Many lost work and had to go back to their villages. The demand for MGNREGS work shot up in December and January. While Rs 38,000 crore had been allotted for it in the previous budget, the actual expected expenditure was Rs 47,500 crores. The extra demand was Rs 9,500 crore, which translates over two months to 150% increase in monthly expenditure. Many small and cottage businesses closed down, affecting output and employment. Jamshedpur, Aligarh, Ludhiana and so on reported large scale impact on their industries. Reports were of small traders, wholesale markets and transporters being adversely affected. Even sales of luxury cars dipped for the first time in 25 years. The economy consists of two parts: the organised and the unorganised. It is the unorganised sector which was badly hit by the demonetisation-induced shortage of cash. The RBI has not yet released figures for how much of the old currency has come back but this author’s analysis shows that by January 13, 98% of the Rs 15.44 lakh crores of demonetised notes had come back into the banks. However, by then, the currency in circulation with the public had only come to half of November 8, 2016 levels, which is when demonetisation started. Even by the end of April, remonetisation had taken the currency in circulation back to only 80% of what it was on November 8, 2016.

        Beef prices rise on India cattle sale ban: India’s move to ban the slaughter of its cattle has sent global beef prices higher in recent days, amid concerns of reduced supply from the world’s biggest exporter of the meat by volume. India’s government last week decided to ban the sale of cattle — which include cows and buffalo — for slaughter at livestock markets. The government said the order was aimed at preventing uncontrolled and unregulated animal trade. The decision applies throughout the country, effectively cutting off the supply of meat for processors, challenging an industry that exports roughly $US4 billion ($5.4bn) worth of beef annually, according to official data. The rules are being challenged in courts by several state governments, and could take many weeks to take full effect, but some investors are already betting that worldwide beef supply could become tighter. On Friday, the Australian Eastern Young Cattle Indicator — the benchmark for Australian cattle prices — ended up nearly 0.8 per cent. In the US, live cattle futures on the Chicago Mercantile Exchange soared to their upper limit, rising 2.5 per cent, with the India ban contributing to the price gains, analysts said. “There has been a lot of market chatter around this and the Australian market has been bid up particularly,” said Tobin Gorey, a Commonwealth Bank of Australia analyst. Cattle prices have started to recover in recent months as global supplies have tightened with increasing beef consumption. However, prices are still well below historic highs as US production remains strong, and Australian cattle numbers have started to recover following recent droughts.Analysts are unclear on the extent of the global impact should India’s beef exports end. The issue is complicated by the fact that exported Indian beef — largely sourced from water buffalo — is a low-end product so it often doesn’t compete directly with products from other major exporters such as the US, Australia and Brazil. India is predominantly of the Hindu religion and much of the population doesn’t eat meat from cows, which is considered holy, while the export of cow beef is banned. However, this doesn’t extend to the country’s extensive water buffalo population, although many Hindus don’t eat buffalo, either. 

        Will the Environment Ministry order really ruin leather and meat processing industries? -- Off the dusty road, behind the glass front of a rather ordinary building, hundreds of workers are bent over pieces of brown leather. They are cutting them into 22 different shapes that make a Bugatti shoe. Some are crimping the slices; others are skiving them; a few are stitching insoles and sliding socks, they are preparing the German brand’s winter collection. But this is Dawar Footwear Industries at Sikandra in Agra. One of the leather hubs of the country, Agra exported footwear worth Rs 4,000 crore in 2015-16. Puran Dawar, chairman of Dawar Footwear Industries that produces shoes for Bugatti, Benetton and Lumberjack, among others, has been a hassled man for a week now, since the news broke about the Environment Ministry’s notification restricting the sale of cattle for slaughter in animal markets.  “This is fatal for the leather industry,” says Dawar, who is also regional chairman (north) of the Council for Leather Exports (CLE). “Before taking such a decision, there should have been consultations with the stakeholders. They can regulate slaughtering, they shouldn’t ban it.” His company, he claims, makes 1.2 million pairs of shoes every year, using about 3.5 million square feet of leather. It employs 1,500 workers, most of them Jatavs and some Muslims, and has a turnover of Rs 150 crore. Animals are primarily killed for meat, hide is only a byproduct of that, he says. “If slaughter is stopped, where will we get our raw material from? We want the entire notification rolled back.”

        Using a bulldozer to drive in a nail: The new cattle rules are a lot like demonetisation - - The genesis of the Centre’s controversial new cattle trade rules that ban the sale of cattle meant for slaughter at markets is only just starting to become clear. Though the rules themselves have been quietly in the public domain for months now, it is now evident that the policy snowballed from attempting to contain cattle smuggling on the Nepal border to effectively changing slaughter rules nation-wide. And, as Vivian Fernandes points out, the spirit of the move seems similar to Narendra Modi’s demonetisation announcement in November. The government’s decision to withdraw all currency notes of Rs 500 and Rs 1,000 in order to combat black money, counterfeit notes and terror funding resulted in widespread economic distress.  The new rules on trade of cattle slaughter also began with illegalities. A Public Interest Litigation filed by an animal rights activist in the Supreme Court pointed out that a large number of the buffaloes being slaughtered at Nepal’s Gadhimai festival are illegally transported across the border from India. The PIL argued that both the sacrifice itself, as well as the transport of the animals, constituted unwarranted suffering that the Indian government should stop.  As the case proceeded through the judicial process, it got tagged with another PIL, this time from a cow protection group. The group complained about illegal cattle smuggling on India’s Bangladesh border, where thousands of animals are slipped across through territory that has proved to be dangerous for man and animal. Indeed, the Indo-Bangladesh border is one of India’s most deadly borders for humans, despite cordial relations between the countries, in part because of the activities of smugglers.  Two committees set up by the Supreme Court to look into these matters decided that they could not solve the problem right on the border. They noted that animals that reached the border had often been sold multiple times at different markets, most with woeful conditions, and that even those cattle seized by authorities are often recirculated back into the hands of smugglers. They concluded that action had to be taken, and the committees suggested better regulation not just at the border but at animal markets further inland.

        Afghan government funding Taliban-run schools as militant group attempts rebrand - The Afghan government is funding schools and hospitals run by the Taliban as the militant group seeks to establish itself as a legitimate administration in large swathes of the country, a new film has found.   A report by a BBC team granted rare access to the group’s stronghold in Helmand province found the Taliban has been forced to present itself as somewhat modernised since Afghans have grown used to government services and a different way of life after the group was ousted from official power. The Taliban has grown in confidence three years since Western troops withdrew from the country.  “They are trying to set up a mini-state – if not the actual state – in Helmand,” Auliya Atrafi, a journalist from the BBC Afghan service who made the film, told the Telegraph.    “In the evening when we sat with the elders and the local leaders, they asked us: ‘Where do you think we will be in 10 years time?’ We knew what they were thinking. They see themselves in ten years time as the government.”  The Taliban swept to power in 1996, ending a brutal civil war that followed the Soviet Union’s withdrawal from Afghanistan in 1989. They imposed a harsh version of sharia law, including public executions and mutilations, forbidding women from taking part in public life, and banning television.  The group was overthrown by Nato intervention after the September 11 attacks in 2001, but have made gains since Western troops withdrew two years ago.  It now controls more than 80 percent of Helmand Province, where hundreds of British soldiers died fighting the group.  Mr Atrafi, a native of Helmand, spent more than a year negotiating access to Taliban-held areas. He and his team were eventually allowed to spend four days under the watchful eyes of Taliban minders in Sangin and Musa Qala, the group’s defacto capital.

        'Literal Colonialism': Blackwater Founder Calls For "American Viceroy" To Rule Afghanistan - In what one commentator called “sheer 19th century bloodlust and thirst for empire,” Erik Prince, founder of the private mercenary firm Blackwater, argued in The Wall Street Journal this week that the United States should deploy an “East India Company approach” in Afghanistan.The country, he wrote, should be run by “an American viceroy who would lead all U.S. government and coalition efforts - including command, budget, policy, promotion, and contracting - and report directly to the president.” Prince continued:In Afghanistan, the viceroy approach would reduce rampant fraud by focusing spending on initiatives that further the central strategy, rather than handing cash to every outstretched hand from a U.S. system bereft of institutional memory.Prince insists that these are “cheaper private solutions,” but such privatization would also be a boon for military contractors. As one critic noted, it is hardly surprising that a “war profiteer sees profit opportunity in war.” Blackwater, the private military company Prince founded in 1997—which now operates under the name Academi—made a fortune off the invasion of Iraq. In 2007, a New York Times editorial noted that Blackwater had “received more than $1 billion” in no-bid contracts from the Bush administration; that same year, Blackwater contractors shot and killed more than a dozen civilians in what came to be known as the Nisour Square massacre.  But “war profiteering” doesn’t quite capture the scope of Prince’s vision for Afghanistan. Despite the fact that private contractors have a long record of abuse and deadly criminality, Prince believes that they should have a stronger presence in a war that has spanned nearly 16 years and cost trillions of dollars. Such a recommendation, combined with Prince’s invocation of the East India Company - a vestige of the British empire that “conquered, subjugated, and plundered vast tracts of south Asia for a century,” in the words of historian William Dalrymple - amounts to a call for “literal colonialism,” says Anil Kalhan, chair of the New York City Bar Association’s International Human Rights Committee. Prince’s past connections to President Donald Trump indicate that his advice could potentially have some measure of influence on the White House.

        South Africa Unexpectedly Plunges Into Recession -- Despite expectations (among 19 'economists') that growth would be up 1.0% in Q1, South African GDP tumbled 0.7% (the second drop in a row) pushing the nation back into recession after eight years. The median of 19 economists’ estimates in a Bloomberg survey was for 1 percent expansion. There was only one forecast for a contraction. This was a four standard deviation miss... Indicating contraction for the second quarter in a row - technically signaling a recession -  as all bar two industries sectors." The Rand retraced some its recent gains on the GDP print...

        Venezuela looks to sell discounted $5B in bonds - -- Venezuela is attempting to resell at a deep discount $5 billon of bonds it originally issued in December through a Chinese brokerage as it struggles to squeeze through a tightening cash crunch, according to investors who were offered the bonds. The move is the country's latest extraordinary move to raise funds after being shut out of the international debt market in recent years as its oil-rich socialist economy crumbles. But even bond funds that specialize in distressed debt are hesitating to buy in because of concerns about the irregularities surrounding the deal and questions from opposition lawmakers about its legality. While much of Wall Street sees default as a matter of time, the offer could appeal to investors willing to take on the risk in exchange for potentially significant returns. Goldman Sachs Group Inc. recently paid $865 million for $2.8 billion in Venezuelan bonds in a transaction that drew widespread condemnation from rivals of embattled President Nicolas Maduro, who accused the New York bank of helping finance his increasingly authoritarian and isolated administration. "It's like they're having a going-out-of-business sale," said Russ Dallen, partner at the brokerage Caracas Capital Markets. "And that's what buyers should be worried about. Either they're really desperate or they're just filling up their credit card with no plans of paying back."

        VENZ36: Insult to Injury - Less than a week after perhaps the dirtiest financing deal in Venezuela’s history, the WSJ is reporting a bigger, badder monster is on its way. Citing several US-based hedge funds, Matt Wirz, Kejal Vyas and Carolyn Cui report the Maduro government is using Chinese brokerage Haitong Securities to market the mother of all fire-sales:  Five billion dollars face value of VENZ 6.5% 2036 bonds for the ridiculously low price of 20 – TWENTY – cents on the dollar.  It’s hard to come up with appropriate metaphors at this point. Last week, Muci wrote that selling the PDVSA 22s at 31 cents was like selling the electric wiring in your own house for scrap to get high on meth. This? Well…this is whatever it is you do to get high next, after the heater’s gone, after the furniture’s gone, after there’s no more wiring to hawk and you need to get high right fucking now. Selling these bonds at 20 cents on the dollar is obscene. Yesterday, comparable bonds maturing in 2038 were trading for 45 cents. That the bond is pricing at less than half the going rate is a clear indication that the buyer knows full well that the bonds and their sale probably isn‘t even legal.For starters, the buyer gets a ludicrous current yield of 33% in dollars – meaning they recover a third of the investment every single year from coupons alone. In just three years, the buyer will get all their money back and then they’ll get their money back again every three years thereafter, over and over until 2036… at which point they’ll get five times their original $1bn when the bond amortizes. In total, the buyers of these bonds are slated to get a 1018% total return or 11.2x their money back. In other words, Venezuela will get $1bn today and pay out $11.2 billion thorough 2036. That is, of course, assuming that the bonds get paid back.

        Indebted Canadians using 'homes as ATMs,' consumer agency warns -  Canadians are borrowing against their homes in increasing numbers and many are not making regular payments against the principal, adding financial stress to households already carrying a record level of debt, a consumer agency warned on Wednesday. The number of households that have taken a home equity line of credit (HELOC) on top of their mortgage has soared nearly 40 percent since 2011, the Financial Consumer Agency of Canada said in a report that stoked concerns about consumer debt linked to Canada's slowing housing market. "At a time when consumers are carrying record amounts of debt, the persistence of HELOC debt may add stress to the financial well-being of Canadian households," the agency's commissioner, Lucie Tedesco, said in a statement. "HELOCs may lead Canadians to use their homes as ATMs, making it easier for them to borrow more than they can afford," she added. Outstanding HELOC balances reached C$211 billion ($156.2 billion)in 2016, according to the report. There are about three million HELOC accounts in Canada, with an average outstanding balance of C$70,000. Canada's debt-to-income ratio has risen to record levels in recent quarters to levels surpassing those seen in the United States prior to the 2008-09 housing crash, and policymakers have repeatedly warned that households are vulnerable to an unforeseen event or economic shock. The report by the consumer agency showed some 40 percent of consumers do not make regular payments toward their HELOC principal, and most consumer do not repay their HELOC in full until they sell their home.

        NATO Splinters: Germany Says "Has No Choice But To Pull Out" Troops From Turkey's Incirlik Airbase -- Diplomatic relations between NATO members Germany and Turkey hit rock bottom on Monday when Germany's foreign minister Sigmar Gabriel said his country has no choice but to begin the process of pulling its forces out of Turkey's Incirlik air force base as the Turkish government will not allow all German lawmakers to visit troops there. "Turkey has made clear that, for domestic political reasons, it cannot approve visits of all lawmakers," Gabriel told a news conference after meeting Turkish Foreign Minister Mevlut Cavusoglu in Ankara. The scandal erupted last Thursday, when Turkey's foreign minister said it is not possible to allow German lawmakers to visit troops stationed at Turkey's Incirlik air base now, although he said Ankara may reconsider if it sees "positive steps" from Berlin. It was not immediately clear just what Turkey's "demands" or expectations, monetary or otherwise, were from Merkel for it to change its view. Ties between the NATO allies deteriorated sharply in the run-up to Turkey's April 16 referendum that handed President Tayyip Erdogan stronger presidential powers.    Fast forward to Monday morning, when cracks in NATO's unity, if not its brand new steel-and-glass headquarters emerged, when speaking in a press conference in Ankara with German Foreign Minister Sigmar Gabriel, Turkish Foreign Minister Mevlut Cavusoglu said German lawmakers can visit a military base in Konya, but not the main NATO base, Incirlik, in southern Turkey.  Cavusoglu said Turkey-Germany ties are in a distressed period, blaming PKK activity in Germany and saying the presence of followers of Gulen movement are harming relations. In comments via live translation to Turkish, Gabriel said German military can’t constitutionally remain at a base abroad if lawmakers cannot visit them and said that since its operations are approved by parliament, German lawmakers must be able to visit the Bundeswehr, Gabriel added. "Turkey must understand that in this situation, we must transfer German soldiers out of Incirlik," he said. "In this situation, the Bundestag (parliament) will ask the government to find another location for the German soldiers in Incirlik."

        Merkel Makes an Enemy -- Not since 2011, when Italian premier Silvio Berlusconi was captured on a wiretap disparaging the size of her backside, has Angela Merkel suffered so grievously from the boorishness of allies. Donald Trump, on his first diplomatic visit to Europe, strong-armed the prime minister of Montenegro. He neglected to praise Article 5 of the NATO charter in a speech. He lectured European leaders about the need to contribute more to Western defense. These lapses, if they were lapses, don't seem like biggies. But the Western media have treated them as if they were the biggest diplomatic catastrophe since the Austrian ultimatum to Serbia. Merkel seems to agree. At a beery Bavarian campaign meeting on Sunday, May 28, she threw oil on the fire. "The times when we could fully rely on others are kind of over," she said. "I experienced that in the last few days, so I can only say, we Europeans really need to take our fate into our own hands—naturally in friendship with the U.S.A. . . . " It sounded like she was declaring Germany's intention, on the basis of a lack of confidence in Donald Trump, to pull the countries of continental Europe out of the transatlantic alliance. Trump took it that way. On Tuesday morning, May 30, he fired off an angry tweet: "We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change."  Merkel's defenders were quick to say Trump had gone too far. She was a friend of the United States. She had backed the Iraq war. It's only logical that as America moves from being a custodian of global order to pursuing the interests of "America First," there will be slack to pick up. Perhaps, three months away from election, she was showing her usual political mastery, playing to the gallery with a bit of subtle anti-Americanism. Perhaps she was even trying to help Trump, by finding a way to coax the Trump-hating German public to spend more on the military.  Trump was right to sense that Merkel means business. Since November Merkel has made Trump swallow one insult after another.   Her participation in a forum in Germany with former president Barack Obama during Trump's NATO summit visit was a humiliation. Worse, the insults were delivered to a gallery of like-minded Trump-haters in a tone of knowing, nodding confidence that he would be too slow-witted to pick up on them. But egotists are always attentive when the talk is about them. It may be that Merkel has simply misplayed Trump. More likely she sought his enmity. She seems to have acquired it, along with Spielraum for her government and some potential problems for her country.

         Pregnant refugees are paying German men to claim paternity of their children to gain EU residency - Up to 700 men in Berlin are claiming to be the fathers of refugees’ babies in exchange for cash, German prosecutors alleged Tuesday. According to the German broadcaster rbb , pregnant refugees from Vietnam, Africa and Eastern Europe are applying for asylum in Germany.To help this process along, they are paying up to 5,000 euros, or roughly $5,600, to German men to claim they are the father of their baby.That would automatically make the baby a German (and EU) citizen at birth, and allow the mother to stay in the country, incidentally gaining access to welfare benefits. But the men shirk responsibility for the child after birth, prosecutors say.It looks unseemly, but it is legal under German law. And thanks to a brand-new European court ruling , people who are not EU citizens but who are the parents of an EU citizen are considered to have a legal right to residence, giving them a way to bypass the immigration system in some cases.“We are talking about a large number of cases which we come across every month,” said Berlin prosecutor Martin Steltner. “In some cases we have people who have claimed fatherhood for over ten babies.”According to prosecutors, most of the men involved in the scheme are unemployed. Rbb found that one 28-year-old German whose Facebook account shows he sympathizes with Germany’s neo-Nazi party claimed paternity for a Vietnamese child. In another case, rbb discovered 70 Vietnamese women living in one house who had paid for a German man to claim paternity of their child. Prosecutors say that the scheme is used across the country.

        Shock Waves Spread from Spain’s New Banking Crisis By Don Quijones, Spain & Mexico, editor at Wolf Street. The shares of Spain’s sixth biggest bank, Banco Popular, plunged 36% this week to €0.43, reducing the bank’s market capitalization to €1.7 billion. Just three weeks ago, when there was still a glimmer of hope that things could be turned around, it was worth almost double that. Its shares traded at €15 ten years ago, before the collapse of Spain’s mind-boggling housing bubble that left Popular holding billions of euros of real estate assets.Popular may not be a systemically important institution, but it’s nonetheless an institution of great import. It has the largest portfolio of small business customers in Spain and enjoys the patronage of one of Spain’s most influential institutions, Opus Dei. Its well-heeled members are among the bank’s most important shareholders and investors, and they stand to lose a lot of money if a last-minute buyer is not found soon.This is an outcome that can no longer be discounted, especially after reports emerged on Thursday that senior officials of the ECB’s regulatory arm, the Single Supervisory Mechanism, had warned the bank could be wound down if it fails to find a buyer. But the EU agency charged with overseeing bank failures later issued a statement saying it “never issues warnings about banks.”But the damage has already been done. And it’s not just Opus Dei, or Popular’s thousands of long-suffering retail investors, that could end up paying a heavy price. Popular’s investors also include PIMCO, one of the world’s largest asset managers, which owned €279 million of Popular’s outstanding €1.25 billion of face value in AT1 bonds at the end of March, making it by far the largest holder at the time.These AT1 bonds go by another more familiar name: contingent convertible bonds, or Co-Co bonds. These are financial instruments that pay high coupons, because they come with a high risk, designed as they are to absorb losses at times of distress, by converting to equity or being written down when the lender’s capital ratio falls below a certain point.Popular’s second batch of Co-Cos, worth €750 million, dropped to 59 cents on the euro, the lowest point ever reached by a bank Co-Co bond.  So far, despite their high-risk nature, no AT1 bond has ever been bailed in. But Popular, as a mid-sized bank that has arguably exhausted all its possibilities of resurrection, is in a terribly weak position.

        Italy faces borrowing shock when ECB removes support, warns Pimco - ITALY faces a “horror” scenario when the European Central Bank winds down its bond buying programme in a move that risks sparking a surge in the country’s borrowing costs, according to one of the world’s largest bond managers. The Pacific Investment Management Company (Pimco) said the ECB’s €60bn (£53bn)-a-month quantitative easing (QE) programme was “very supportive” for countries such as Italy and Portugal and had helped to limit volatility in these countries. Andrew Balls, chief investment officer for global fixed income, said removing that support was likely to push up bond yields in a country that has struggled to implement reforms and reduce its massive debt pile amid weak growth. The thing which fills me with horror is an environment where the ECB has finished QE, Italy does need support, and the message is you need to go to the eurozone’s bail-out fundAndrew Balls, Pimco Italian 10-year benchmark borrowing costs currently stand at around 2.2pc, compared with 0.2pc in Germany and close to 3pc in Portugal. Mr Balls said funding Italy at these rates “doesn’t look particularly attractive” considering the risks facing the eurozone’s third largest economy. He said removal of ECB support raised the risk that Italy could be forced into a bail-out programme if its borrowing costs rose to unsustainable levels, even though the country has long lived within its means excluding debt interest costs. “The thing which fills me with horror is an environment where the ECB has finished QE, Italy does need support, and the message is you need to go to the European Stability Mechanism [the eurozone’s bail-out fund],” said Mr Balls. “Replaying the events of a few years ago with Portugal, Greece and others in the case of Italy would be an event that would raise an awful lot of risk - and you’d want to get paid a lot more than a 2pc return over 10 years to take that risk.” While Pimco believes an Italian exit from the eurozone is “not our baseline”, Mr Balls added: “It doesn’t seem terribly unlikely either”. 

        Amount of euro zone bonds with sub-zero yields hits 2017 high -- The amount of euro zone government debt with negative yields has risen to its highest level so far this year after France elected a president seen as relatively market-friendly and the European Central Bank's bond-buying scheme keeps borrowing costs low. Tradeweb data released on Monday showed nearly 46 percent of the more than 7 trillion euros ($8 trillion) of the bloc's government debt had yields below zero at the end of May. Analysts said France's voting for centrist Emmanuel Macron as president in May allowed shorter-dated bond yields in the euro zone's second biggest economy to drop. Added to that, the ECB's bond-buying scheme and the view that the bank is unlikely to rush into scaling back purchases even as growth picks up is putting persistent downward pressure on yields. "One thing that may have helped that statistic is that political risk out of France has been priced out and allowed a bigger share of bonds in this market, one of the biggest in the euro zone, to trade negative," Mizuho rates strategist Antoine Bouvet said. Of about 7.3 trillion euros of debt in the system, about 3.3 trillion yielded less than zero at the end of last month, according to Tradeweb. That is highest share since December and is up from around 44 percent at the end of April. Tradeweb's data shows almost 27 percent of euro zone government bonds yield less than the ECB's deposit rate of minus 0.4 percent, also the highest share since December.French five-year bond yields had traded above zero for much of March and April but dipped back into negative territory after Macron's win in the first leg of elections on April 23 eased concerns about French political risks. ECB policymakers meanwhile are expected to take a more benign view of the economy when they meet this Thursday. But the bank is not expected to start scaling back its stimulus too soon given that inflation is weak, helping to keep a large chunk of the bloc's short-dated bond yields below zero percent. 

        EU Competition Commissioner Vestager Targets Unaccountable Facebook Algos as Threat at Launch of New “Pro-Democracy” Movement - Yves Smith - The EU has now officially taken up arms against Facebook. Yesterday in Brussels, European Commissioner for Competition Margrethe Vestager gave the keynote address at the kickoff of a new pro-democracy initiative called ALL for Democracy. Although it’s hard to know how this new group will evolve, the agenda for the half-day inaugural shows an effort to draw on the expertise of union and corporate representatives, political organizers and activists, journalists, government officials, and academics across Europe. What is striking about this initiative is that it makes no bones about seeing Facebook as a power center that is a threat to democracy due to its ability to sway opinion. The causes include its lack of accountability and its “code as law” approach of relying on algorithms.

        Turin bomb scare sparks stampede, leaving 1,500 injured - More than 1,500 people were injured, three seriously, after a bomb scare triggered a stampede among Juventus fans watching the Champions League final in Turin, local authorities said Sunday.In an update on Saturday's dramatic events in a square packed with supporters watching the Cardiff match on a giant screen, the local prefecture said 1,527 had been treated for mainly minor injuries.Three people were in a serious condition, including a young boy of Chinese origin who was crushed after tripping as he tried to run."We were buried under bodies," his sister told reporters outside the hospital where he was reported to be in a coma with chest injuries.AFP reporters who witnessed the scenes said the panic seemed to have been triggered by fireworks, followed by one or more people shouting that a bomb had exploded -- a notion that quickly filtered through the crowd.The incident compounded a miserable night for fans of Turin-based Juventus, who lost the final 4-1 to Real Madrid.It also underlined the impact recent acts of terror are having on a jittery public across Europe, and the dilemmas now faced by organisers of any mass gathering of people following the Bataclan, Paris and Manchester concert attacks.

        Saudi Arabia Lavishes Conservative U.K. Officials With Plum Consultancies -  New figures released by British Parliament show that, at a time when U.K. Prime Minister Theresa May’s ties to Saudi Arabia have become an election issue, conservative government officials and members of Parliament were lavished with money by the oil-rich Saudi government with gifts, travel expenses, and consulting fees. Tory lawmakers received the cash as the U.K. backs Saudi Arabia’s brutal war against Yemen, the poorest country in the Middle East. Labour leader Jeremy Corbyn has made the U.K.’s uneasy alliance with the Saudis an election issue, with voters going to the polls on June 8. The Tories’ ties to Saudi Arabia, Labour leaders charge, have resulted in record weapons sales — conservative governments have licensed £3.3 billion ($4.2 billion) in arms sales to the Saudi military since the onset of the Yemen campaign — and a reluctance to criticize human rights abuses. While Tory politicians have defended the arms sales to Saudis as a move to shore up Britain’s allies in the region, Tory members of Parliament have collected £99,396 ($128,035) in gifts, travel expenses, and consulting fees from the government of Saudi Arabia since the Yemen war began. Some of the the Saudi kingdom’s largesse came in the form of gifts. Then-Foreign Secretary Philip Hammond, now the Chancellor of the Exchequer who has come under fire for defending a mass execution in Saudi Arabia that included a nonviolent government critic, accepted a watch from the Saudi ambassador worth £1,950 ($2,514). Tory MP Charlotte Leslie, who has presided over parliamentary debate regarding foreign policy in the Middle East, received a food basket from the Saudi Embassy with an estimated value of £500 ($644). The Saudi Arabian government has also picked up the tab for four expense-paid junkets taken by Tory lawmakers to visit the kingdom since the Yemen war began. The costs for accommodation, travel, and meals for the lawmakers range from £2,888 ($3,724) to £6,722 ($8,668). At least 18 conservative lawmakers have participated in the trips, according to the register of financial interests.

        Home Office may not publish terrorist funding report amid claims it focuses on Saudi Arabia  - The Independent: An investigation into the foreign funding of extremist Islamist groups may never be published, the Home Office has admitted. The inquiry commissioned by David Cameron, was launched as part of a deal with the Liberal Democrats in December 2015, in exchange for the party supporting the extension of British airstrikes against Isis into Syria. But although it was due to be published in the spring of 2016, it has not been completed and may never be made public due to its "sensitive" contents. It is thought to focus on Saudi Arabia, which the UK recently approved £3.5bn worth of arms export licences to.  A spokesperson from the Home Office told The Independent a decision on the publication of the report would be taken “after the election by the next government”.But in a separate interview with The Guardian, a spokesperson said the report may never be published, describing its contents were “very sensitive”. Tom Brake, the Liberal Democrat foreign affairs spokesman, has written a letter to the Prime Minister pressing her on when the report will be published and what steps she proposes to take to address “one of the root causes of violent extremism in the UK”. “You will agree with me that the protection of our country, of the British people, is the most important job of any government," he wrote. "Certainly, more important than potential trade deals with questionable regimes, which appear to be the only explanation for your reticence. “When will this report be finished and published? And what steps do you propose to take to address one of the root causes of violent extremism in the UK?” Mr Brake accused Ms May of adopting a “short-sighted approach” to the funding of violent Islamist groups in the UK and urged that those who fund them should be called out publicly.

        London Attacker Appeared In British "The Jihadist Next Door" Terrorism Documentary In 2016 -- One of the terrorists who attacked London on Saturday, killing seven people and wounding dozens more, had been previously known to police and MI5, the Financial Times reported.Khuram Shazad Butt, 27, had been investigated in 2015, the same year he was filmed praying in front of an ISIS flag at Regent’s Park in 2015, according to the Financial Times.  Britain’s top counter-terrorism officer, assistant commissioner Mark Rowley admitted that Butt had been investigated in 2015 and that a member of the public had also called the anti-terrorism hotline to raise concerns. But Rowley said no evidence had been found of attack planning or criminality and the investigation dropped into the “lower echelons” of priorities for counter terrorism investigators, the FT reported.  The footage, eventually broadcast on Channel 4 in a documentary called "The Jihadist Next Door" on British jihadis, identified the Pakistani-born Butt as a zealous Islamist. The footage showed him in the company of leading figures from the now-banned al-Muhajeroune network. Police named the second attacker as Rachid Redouane, 30, who claimed to be Moroccan and Libyan. He was not known to police and MI5 before the attack on Saturday. Rowley said that he had seen "nothing to show that a poor decision has been made," according to the FT, adding that the second individual was known to police. The report raised concerns about police and intelligence agencies' abilities to monitor suspected radical Islamist cells in the UK. Also on Monday, the Telegraph reported that local police had been monitoring a cell of suspected terrorists in East London - that report followed the arrest on Sunday of 12 people, among them seven women – all of them in Barking and other parts of east London, where at least one of Saturday’s killers was believed to have lived. Those arrested were aged from 19 to 60. So far, the perpetrators of all three terror attacks in the UK this year had been known to police, raising questions about police and intelligence agencies' abilities to keep the UK safe from terror attacks. That includes twenty-three year old Salman Abedi, the perpetrator of last week's attack at Manchester Arena, which killed at least 22 people attending a concert by American singer Ariana Grande.

        UK Outraged After Trump Repeatedly Slams London Mayor, Risking Diplomatic Scandal --It was just over a week ago that the WSJ reported that upon Trump's return from his first international trip, White House lawyers may force the president to finally put away his cell phone, and revoke his twitter privileges. In retrospect, this appears to have been "fake news", because since returning Trump has continued his daily tweetstorm barrage, only this time instead of dealing with domestic issues, Trump has lashed out at foreign targets and this time he risks provoking a diplomatic row with the UK and, according to Bloomberg, embarrassing Theresa May ahead of a general election, as he continued his mockery of London Mayor Sadiq Khan over a terrorist attack that killed seven people.The first time the president went after Khan, one of Britain’s most prominent Muslims, was on Sunday following the mayor’s statement that people had “no reason to be alarmed." In an interview with the BBC, Khan said that the “threat level remains at severe” but that there is “no need to be alarmed” at the heavier-than-usual police presence in the streets. British police have been conducting raids throughout the city and have made dozens of arrests. Instead, Trump accused Khan of saying there was “no need to be alarmed” by the terrorist attacks.At least 7 dead and 48 wounded in terror attack and Mayor of London says there is "no reason to be alarmed!"— Donald J. Trump (@realDonaldTrump) June 4, 2017 Trump refused to back down under criticism, accusing the mainstream media of downplaying the terror attack and covering for the London mayor.  On Monday, Trump again lashed out at the mayor, slamming Khan: “Pathetic excuse by London Mayor Sadiq Khan who had to think fast on his ‘no reason to be alarmed’ statement,” the president tweeted. Mainstream media -- or MSM -- “is working hard to sell it!”

        Theresa May Urges Global Internet Regulation "To Deprive Terrorists Of 'Safe Spaces'" -- Speaking to the public following the attacks in London last night - the third such terorist incident since March - UK Prime Minister Theresa May proposed Sunday that the UK work with democratic allies to root out extremist groups from the internet and social media. Here’s May: “We cannot allow this ideology the safe space it needs to breed, yet that is precisely what the internet, and the big companies that provide internet-based services provide.” We need to work with allies, democratic governments to reach international agreements to regulate cyberspace to prevent the spread of extremist and terrorism planning,” May said. “And we need to do everything we can at home to reduce the risks of extremism online.” Western tech firm, May believes, should do more to censor and police extremist content. But who would be qualified to determine what is and isn't fit for publication? It seems there's a danger that unpopular views and political opinions that don't fit with the mainstream narrative could also be swept up in this type of censorship...and to a degree they already have. For example, Twitter suspended WND for its reporting on the suspicious death of former DNC staffer Seth Rich. “We need to work with...democratic governments to reach international agreements to regulate cyberspace..." - Theresa May As the Verge reported, this isn’t the first time that May has made calls to regulate internet behavior. In 2012, then-Home Secretary May drafted a bill that would force internet service providers to retain user data for up to a year. That bill was blocked, but she worked to introduce similar legislation in subsequent years. Last month, May’s Conservative Party included its intent to enact internet regulations that are designed to combat online extremism and to protect the public from abusive and offensive materials. The Prime Minister also said Britain was too tolerant of extremism and that "pluralistic" British values had to be established as superior.

        Theresa May Vows To Rip Up Human Rights Laws To "Restrict The Freedom Of Terrorist Suspects" --Following a series of devastating attacks in the U.K. and mounting criticism of her counter-terrorism record, Theresa May has vowed to do whatever necessary, if re-elected later this week, to "restrict the freedom and movements of terrorist suspects" even it means ripping up "human rights laws that get in the way."  Among other things, the Prime Minister has said she will make it easier to deport foreign terror suspects and will extend existing laws that restrict the freedom of British suspects on whom authorities "have enough evidence to know they present a threat, but not enough evidence to prosecute them in full in court." Per The Telegraph:"When I stood on the steps of Downing Street after the London attack I said enough is enough and things have got to change.""We need to take on the ideology that unites and motivates the perpetrators of these attacks."“We should do even more to restrict the freedom and the movements of terrorist suspects when we have enough evidence to know they present a threat, but not enough evidence to prosecute them in full in court.""And if human rights laws get in the way of doing these things, we will change those laws to make sure we can do them." "If I am elected as Prime Minister on Thursday, I can tell you that this vital work begins on Friday."

         Dear Great Britain – Blame Your Intelligence Agencies & Government, Not The Internet -- As we have noted numerous times in recent months, increasingly draconian ‘Big Brother’ counter-terrorism tactics are being implemented around the world, and in the wake of the third terrorist attack in weeks in England, Prime Minister Theresa May is calling for new Internet regulations and the suppression of digital tools that facilitate online “safe spaces” where attacks can be coordinated... with reports overnight that May is considering new powers to block access to extremist websites if internet companies fail to act over online radicalisation. But, as Liberty Blitzkrieg's Mike Krieger notes, the dishonest and dangerous response of Theresa May’s UK government to the horrific terrorist attacks of the past month is unfortunately all too common when it comes to those in power. Rather than look inward at the glaring shadiness and corruption inherent throughout UK government polices, its “leaders” are looking to use these barbaric acts as a excuse to push through an authoritarian and illiberal expansion of state power. Specifically, Theresa May’s government is despicably using the attacks to push for regulation and censorship of the internet. As reported by the Independent: New international agreements should be introduced to regulate the internet in the light of the London Bridge terror attack, Theresa May has said. The Prime Minister said introducing new rules for cyberspace would “deprive the extremists of their safe spaces online” and that technology firms were not currently doing enough. “We cannot allow this ideology the safe space it needs to breed – yet that is precisely what the internet, and the big companies that provide internet-based services provide,” Ms May said. The Conservative manifesto pledges regulation of the internet, including forcing internet providers to participate in counter-extremism drives and making it more difficult to access pornography. Silly me, I thought this was about terrorism.

         Exit polls point to disaster for Theresa May as voters punish Tories: Theresa May’s gamble on a snap election appeared to have dramatically backfired on Thursday night, after exit polls showed her quest for a “stronger mandate” to deliver Brexit had been rejected by voters, leaving her future as prime minister in doubt.A BBC exit poll released as polls closed at 10pm suggested the Tories were expected to be the biggest party but would fall 12 short of an overall majority; it would probably leave the Tories trying to form a minority government.The initial projection gave Mrs May’s Conservatives 314 seats, Labour 266, SNP 34 and Liberal Democrats 14. In the outgoing parliament, the Tories had 331 seats; a governing party needs 326 out of 650 seats for a majority…The prime minister’s campaign had been criticised as lacklustre but her relentless focus on Brexit and appeal to ordinary working families looked set to deliver big Tory victories across Labour’s heartland. But early signs were that the Conservative advance into Labour seats in the midlands and north had been thwarted, following a spirited campaign from Jeremy Corbyn, the Labour leader, who appeared to have boosted his party’s seat haul from 232 in 2015.

        Exit Polls Show Voters Rejecting May’s Meanspirted Message, Tories to Lose Majority -  Yves Smith -  YouGov’s polling appears to have been proven correct again. It was the only poll to suggest consistently that the Tories would lose their majority. While YouGov predicted a more dramatic result than the exit polls now suggest, a loss for the Tories would be a reversal no pundits anticipated, and is sure to bring the knives out with the Tory party, which heretofore was presumed to continue leading in an unstable minority party. The assumption was that that in turn would produce dynamics that would force new elections in two years or less. But Brexit complicates these already fraught dynamics. YouGov’s last poll was that the Tories would capture only 302 seats, versus the other forecast pointing to 350 seats or more. The exit polls now forecast the Tories at 314 seats. The Financial Times points out that in recent years, the 10:00 PM exit polls have pegged the majority party’s seat count pretty well, with the biggest error at 15 seats:Per the Telegraph, most final results should start coming in at 3AM with the picture pretty well firmed up by 5AM. The Guardian’s live blog show that a seat reporting a final count after the exit polls went from Conservative to Labour, the opposite of what the exit polls forecasted: The Telegraph has pulled out the fainting couch: Exit polls point to shock hung Parliament. From its FAQ on a hung parliament: What is a hung parliament? When no party has won enough seats to have a majority in the House of Commons. With 650 seats in the House of Commons, a government needs the support of 326 MPs to have a working majority. Since Sinn Féin don’t take their seats and abstain from voting in Parliament, the practical threshold for a Westminster majority drops to 323. If no one gets a majority, who will be prime minister on Friday 9 June? Theresa May. In a hung parliament, the incumbent prime minister stays in office until it is decided who will attempt to form a new government. According to the Cabinet Manual, the closest thing Britain has to a rulebook here, the incumbent PM is entitled to attempt to form a government then stay in office until Parliament meets, when she can ask MPs to approve her Queen’s Speech.

        Corbyn’s ‘gobsmacking’ result confounds critics - Jeremy Corbyn has confounded his critics by increasing the Labour party’s share of the House of Commons after the UK’s general election. With just one constituency left to declare its results, Labour is on track to make a net gain of 29 seats, taking its total from 232 to 261. “I am gobsmacked, everyone is,” said one senior party figure.After the election ended in a hung parliament, Mr Corbyn urged Theresa May to step down as prime minister, saying that she had called the election to win a mandate. “Well the mandate she’s got is lost Conservative seats, lost votes, lost support and lost confidence. I would have thought that is enough for her to go, actually,” he said. The public had had enough of “austerity politics” and wanted an end to cuts in public expenditure, he said.The party is unlikely to be able to piece together a “progressive alliance” with smaller centre-left parties to form a government. However, the result marks a big improvement on that achieved by Ed Miliband in 2015, both in terms of seats and vote share.  The slew of Labour seat gains had been seen as virtually impossible five weeks ago, when the party was 25 points behind the Tories in the polls. It came after a successful election campaign which played to Mr Corbyn’s strengths.

        It Looks Like No One Has Won The UK General Election. WTF Happens Now? - The UK is waking up to an election result that not many people expected – including Theresa May, who called a snap election to increase her majority and now looks like she'll be left with no majority at all. To win an election outright, a party must in theory secure 326 of 650 seats in the House of Commons, gaining a (very slim) majority and earning the right to form the next government. As it stands, while the Conservatives are predicted to come very close to this total, with a forecasted 318 seats, they will not exceed it. Labour's performance is set to strongly outperform expectations but will leave the party well short of the 326 total, with a predicted 262 seats. So, if no one has a majority, what happens now? For now, Theresa May is still prime minister.As the incumbent prime minister, Theresa May is entitled to stay in Number 10 until it's clear she has no prospect of forming a working government and someone else does. This also means – on paper at least – that she has the first right to attempt to form a government by persuading other parties to either enter coalition with her or back her up on key votes.However, there is nothing stopping other parties conducting talks at the same time to see if they can come to some sort of rival arrangement. If it became clear one of these could create a majority, May would be obliged to resign and let someone else enter Number 10.In practice, civil servants in the Cabinet Office will work frenetically behind the scenes seeing what deals different parties will or won't do, and will offer to host talks and discussions for any parties that want to carry them out.Theresa May has the right to force a party that says it can form a government to prove it before she has to resign, though may not opt to do this in practice. This would be done by the party offering a vote in the House of Commons saying MPs had confidence in that government. The earliest this could happen would be Tuesday 13 June. If Jeremy Corbyn were to hold this vote and win, Theresa May would step down and Corbyn would enter 10 Downing Street.If this step wasn't taken, Theresa May (or any acting Conservative leader) would have another week to work something out. The crunch moment would come at the Queen's Speech, in which the government lays out its legislative programme. If the Conservatives couldn't pass that vote, they would step down as government, and Corbyn, as leader of the next largest party, would become prime minister – but he'd then have to pass a vote himself. If he too fails to get a Queen's Speech passed within two weeks, the UK would be forced to have another general election. Yep: another. This would likely fall sometime in August.

        Nicola Sturgeon: I will help Jeremy Corbyn become Prime Minister in a hung parliament - Nicola Sturgeon has said she would help Jeremy Corbyn become Prime Minister by ordering SNP MPs to support him on an “issue-by-issue” basis if the General Election results in a hung parliament.The First Minister said she would expect “all sorts of deals” between her party and Labour if the Tories lose their majority, amid concerns that Mr Corbyn will cave in to her demand for a second independence referendum.Although she ruled out a formal coalition, she said she would want the Nationalists to be part of a “progressive alternative to a Conservative government” that put Mr Corbyn in 10 Downing Street.Kezia Dugdale, the Scottish Labour leader, insisted her party would refuse to strike any form of deal with the SNP but admitted a minority Corbyn government would end up relying on Nationalist votes to pass legislation and its Budgets. The Conservatives said Ms Sturgeon’s intervention underlined “the very real risk” that Mr Corbyn will be Prime Minister on Friday next week propped up by “coalition of chaos”, while in charge of both Brexit and the country’s economic security.The First Minister’s invitation comes amid opinion polls showing the Tories’ once commanding lead has been decimated and Mr Corbyn confirming he would “open discussions” with the Scottish Government over a second independence referendum if he becomes Prime Minister.Emily Thornberry, Labour’s Shadow Foreign Secretary, has said her party would try and form a minority government after next week’s election and challenge the SNP to help Mr Corbyn or face explaining to their supporters why they were letting the Tories back into government.  However, the prospect of a Labour government propped up by the SNP mortified many English voters in the 2015 election, helping David Cameron win an unexpected majority.Ms Sturgeon has previously said she does not think Mr Corbyn is a "credible" alternative Prime Minister but, speaking on BBC Radio 4’s Today programme, the SNP leader made clear she was willing to put him in 10 Downing Street. The First Minister said: “I've said very clearly, I said this many times during the 2015 election, that if there was to be a hung parliament – if the parliamentary arithmetic allowed it – then I would want the SNP to be part of a progressive alternative to a Conservative government.

        Election debacle leaves UK government in a minority on eve of Brexit talks | Reuters: British Prime Minister Theresa May said she would lead a minority government backed by a small Northern Irish party after she lost an election gamble days before the start of talks on Britain's departure from the European Union. May called the snap election confident her Conservative Party would increase its majority and strengthen her hand in the Brexit talks. Instead, Thursday's vote damaged her authority and made her negotiating position more vulnerable to criticism. "I'm sorry for all those candidates and hard working party workers who weren't successful," May said on Friday after a surprise resurgence by the main opposition Labour Party under its leftwing leader Jeremy Corbyn. "As I reflect on the results I will reflect on what we need to do in the future to take the party forward." With all 650 seats declared, the Conservatives had won 318 seats, the Labour Party had 262 seats, followed by the pro-independence Scottish National Party on 34. May now risks more opposition to her Brexit plans from inside and outside her party, though a party source said leading the Conservatives was seen as too much of a poisoned chalice for her to face an immediate challenge. "She's staying, for now," the source told Reuters.After noon, May was driven from her official Downing Street residence to Buckingham Palace to ask Queen Elizabeth for permission to form a government - a formality under the British system. Her office said later that the key finance, foreign, Brexit, interior and defense ministers would remain unchanged. Further announcements were expected on Saturday. The socially conservative, pro-Brexit Democratic Unionist Party's 10 seats give the right-wing Conservatives a fragile but workable majority, which May said would allow her to negotiate a successful exit from the EU. 

        Theresa May stares into the abyss after election disaster -- Theresa May was clinging to power today but at the mercy of her cabinet, opponents in her party and the ten Democratic Unionist Party MPs she needs to form a minority government. A diminished prime minister was forced to promise Philip Hammond — the chancellor she was planning to sack — a greater say over Brexit as she faced up to the realities of having lost her absolute majority in an election she was under no pressure to call.The results put the Tories on 318 seats, down 13 and well short of the 326 needed to be sure of governing alone. Jeremy Corbyn also defied predictions to end with 262 seats, up 32, increasing Labour’s vote share by more than any of the party’s leaders since 1945. The SNP lost 19 seats to end up with 35 and the Liberal Democrats won 12, up 3. After consulting the Queen yesterday, Mrs May said that she would seek to run a minority government with “our friends and allies” in the DUP to provide “certainty”, adding: “This will allow us to come together as a country and channel our energies towards a successful Brexit deal.” Formal Brexit talks would start as planned the week after next, she said, giving no indication that she would change Britain’s negotiating position. The DUP fell short of confirming its support for a Tory minority, however. The election result leaves Mrs May dependent on 12 new Tory MPs representing Scottish seats, making Ruth Davidson, the party’s leader north of the border, a key figure in the new parliament. Ms Davidson called for an “open not closed” Brexit, believed to be a reference to keeping Britain in the single market. She also hinted at disquiet over deals with the socially conservative DUP, tweeting a link to a speech that she made in support of gay marriage. Mrs May’s statement outside No 10 was criticised by Tories as “tone deaf” and “devoid of humanity”. Hours later she made a TV appearance to express contrition for an electoral gamble that has plunged her party and country into uncertainty. The apologetic appearance was predicted by Graham Brady, chairman of the backbench 1922 Committee, prompting speculation that she had been advised to show contrition. Mr Hammond agreed to stay on in No 11 in an encounter described as “very tricky” in which he challenged Mrs May over briefings that he had faced the sack. Allies denied he had demanded the resignations of her two chiefs of staff, Nick Timothy and Fiona Hill. He is thought to have discussed Brexit and other policy issues in his meeting with the prime minister. 

        What connects Brexit, the DUP, dark money and a Saudi prince? -- If Northern Ireland were a normal democracy, the election campaign would be dominated by a single question: how did the Democratic Unionist Party end up advancing the cause of a united Ireland through its support for Brexit?  To recap briefly: two days before the Brexit referendum last June, the Metro freesheet in London and other British cities came wrapped in a four-page glossy propaganda supplement urging readers to vote Leave. Bizarrely, it was paid for by the DUP, even though Metro does not circulate in Northern Ireland. At the time, the DUP refused to say what the ads cost or where the money came from. We’ve since learned that the Metro wraparound cost a staggering £282,000 (€330,000) – surely the biggest single campaign expense in the history of Irish politics. For context, the DUP had spent about £90,000 (€106,000) on its entire campaign for the previous month’s assembly elections. But this was not all: the DUP eventually admitted that this spending came from a much larger donation of £425,622 (€530,000) from a mysterious organisation, the Constitutional Research Council.  The mystery is not why someone seeking to influence the Brexit vote would want to do so through the DUP. Disgracefully, Northern Ireland is exempt from the UK’s requirements for the sources of large donations to be declared. The mystery, rather, is who were the ultimate sources of this money and why was it so important to keep their identities secret. The Constitutional Research Council is headed by a Scottish conservative activist of apparently modest means, Richard Cook. It has no legal status, membership list or public presence and there is no reason to believe that Cook himself had half a million euro to throw around. But the DUP has been remarkably incurious about where the money ultimately came from. Peter Geoghegan (sometimes of this parish) and Adam Ramsay of the excellent openDemocracy website did some digging and what they’ve come up with is, to put it mildly, intriguing. What they found is that Richard Cook has a history of involvement with a very senior and powerful member of the Saudi royal family, who also happens to have been a former director of the Saudi intelligence agency. In April 2013, Cook jointly founded a company called Five Star Investments with Prince Nawwaf bin Abdul Aziz al Saud. The prince, whose address is given as a royal palace in Jeddah, is listed on the company’s initial registration as the holder of 75 per cent of the shares. Cook had 5 per cent. The other 20 per cent of the shares belonged to a man called Peter Haestrup, a Danish national with an address in Wiltshire, whose own colourful history we must leave aside for reasons of space.

        EU fears Brexit delay, uncertainty after shock UK vote | Asia Times: European Union leaders fear British Prime Minister Theresa May’s shock loss of her majority in the snap election she called will delay Brexit talks due to start this month and raise the risk of negotiations failing. Guenther Oettinger, Germany’s European Commissioner, said it was unclear negotiations could be launched on Monday, June 19, as planned. The talks, which the EU hopes will deliver a legally smooth British departure, or ‘Brexit’, in March 2019, are likely to be more uncertain without a strong British negotiating partner, he added. Another EU official in Brussels said it was too early to speculate on how the bloc would react to a change in Britain’s demands for its withdrawal. “Let’s see if the next government changes its position on Brexit,” the official said as results confirmed May could no longer command a majority in parliament. May faced calls to quit on Friday after her election gamble to win a stronger mandate backfired, leaving no single party with a clear claim to power. Readers can view a graphic on the poll here. Having campaigned against Brexit last year May took over the Conservative party after David Cameron lost last June’s Brexit referendum and delivered her terms for withdrawal in March. These include a clean break from the EU’s single market and customs union. May then called a snap election hoping for a bigger majority to strengthen her hand in negotiations.

        EU ‘ready’ to move forward with May on Brexit, says Merkel | TheHill: The European Union is “ready” to move forward on Britain’s planned exit from the union despite U.K. Prime Minister Theresa May’s stunning loss of her majority in parliament this week, according to German Chancellor Angela Merkel."We want to negotiate quickly, we want to stick to the time plan, and so at this point I don't think there is anything to suggest these negotiations cannot start as was agreed,” Merkel said Friday, according to multiple reports. "I assume that Britain, from what I heard from the prime minister today, wants to stick to its negotiating plan,” Merkel said. "We will try to defend the interests of our 27 members states, and Great Britain will defend its own interests.” May called this week’s snap election in hopes of garnering a strong mandate for the so-called Brexit negotiations and shoring up the Conservative party’s majority. However, the election ended in a major blow to the party when the opposition Labour Party, led by Jeremy Corbyn, picked up 29 seats in Parliament. The loss for her party is expected to weaken May’s hand in negotiating the U.K's exit from the European Union. Those talks are expected to begin later this month. 

        Ruth Davidson planning Scottish Tory breakaway as she challenges Theresa May’s Brexit plan -- Ruth Davidson is to defy Theresa May’s plans for a hard Brexit and tear her Scottish party away from English control after the UK Tories’ disastrous General Election result. Amid a growing clamour among senior Tories in London for Ms Davidson to be given a top position in the UK party, her aides are working on a deal that would see the Scottish party break away to form a separate organisation. It would maintain a close relationship with the English party – they have been joined together as part of the United Kingdom Conservative and Unionist Party since 1965 - and its 13 MPs would take the Tory whip at the Commons. Although it has been mooted for some time, the imminent split between the Scottish and English parties is a direct result of a dramatic deterioration in relations between the Scottish Tory hierarchy in Edinburgh and 10 Downing Street.Fresh from her success in winning an extra 12 Scottish seats in Thursday’s election, at the same time as the Prime Minister was losing 21 constituencies in England, Ms Davidson also vowed to use her Commons votes to prioritise the single market over curbing immigration. This is certain to split Tory ranks as Mrs May has pledged to take the UK out of both the single market and the EU customs union as part of her Brexit negotiations, which begin next week.But after notching up the biggest Tory victory in Scotland in nearly 40 years, the Scottish party leader said that the election result did not give the Prime Minister a mandate to take Britain out of the single market.  Ms Davidson also signalled her opposition to Mrs May’s deal with the DUP in blunt fashion by tweeting a link to the same-sex marriage lecture she gave at Amnesty 's Pride lecture in Belfast last year.   She is engaged to Jen Wilson, an Irish Catholic Christian who campaigned during the Republic's same-sex marriage referendum, is a practising Christian herself and has said she would like to get married in a local church. Her views could not be further from those of the DUP, a staunch opponent of same-sex marriage and supporter of the “traditional” definition of marriage. Last night, Ms Davidson said she had sought and received assurances from the Prime Minister that she would try to advance gay rights in Northern Ireland despite the DUP's record.

        Another Reason For Brexodus? English Syphilis Cases Soar To Highest In 80 Years - It's not just bankers that are leaving the UK, broad-based Brexodus continues as EU citizens flee the apparently sinking-ship and now, courtesy of the latest report from Public Health England, they have another good reason to leave 'Ol Blighty - cases of syphilis have reached their highest level since 1949, new figures have shown. After the Brexit referendum, more EU citizens are leaving Britain, while less Europeans are coming in. As the latest figures from the Office for National Statistics show, 2016 brought 84,000 less migrants, compared to the previous year. Statista's Fabian Moebus points out that the net migration of 248,000 people is the lowest number of yearly newcomers in over three years. Immigration from EU countries decreased by 43,000 people while emigration increased by 31,000, which makes Europeans the main factor behind the trend with a net change of minus 74,000.  And now might be an opportune time for 'young' Europeans to 'Brexodus' some more, as Sky News reports, in 2016, there were 5,920 diagnoses of syphilis - an increase of 12% from the previous year and almost double the 3,001 recorded in 2012. Dr Michael Brady, medical director at sexual health charity the Terrence Higgins Trust, said:"Today's figures show unacceptably high rates of STIs. "We're facing huge challenges, such as the continued rise of syphilis and ongoing concerns around drug-resistant gonorrhoea, and we urgently need to address the nation's poor sexual health and rates of STIs in those most at risk."

        Central Bank Digital Currency: DLT, or not DLT? That is the question -- The topics of central bank digital currency (CBDC) and distributed ledger technology (DLT) are often implicitly linked. The genesis of recent interest in CBDC was the emergence of private digital currencies, like Bitcoin, which often leads to certain assumptions about the way a CBDC might be implemented – i.e. that it would also need to use a form of blockchain or DLT. But would a CBDC really need to use DLT? In this post I explain that it may not be necessary to use DLT for a CBDC, but I also consider some of the reasons why it could still be desirable.  At its simplest, a UK CBDC would be a form of widely available, electronic sterling, issued by the central bank (think ‘electronic cash’). It’s important for central banks to determine exactly what might motivate them to ever issue CBDC – the Bank of England has published some research questions considering the potential monetary policy, financial stability, macroeconomic, and financial system impacts, as well as the technological feasibility. A number of other central banks are also considering questions related to CBDC (including Canada, the ECB, Sweden and China). In this post, I focus solely on the technology that might underlie a CBDC. The motivation will be essential in determining the necessary features, and therefore the technical requirements, of any CBDC. Much of this is still uncertain, although there are a number of high level features that are reasonably safe to assume for any variant of a CBDC, including: scalability, confidentiality, resilience and security.  DLT refers to a family of technologies that use a distributed group of participants to collectively maintain a shared, replicated and synchronised record, without reliance on a single central party or centralised data storage. One specific example of DLT is the blockchain technology that was introduced by Bitcoin over 8 years ago. Traditional centralised systems, by contrast, rely on a trusted central party to maintain the record. A CBDC might use a form of DLT, or it could be centralised. Various options should be assessed against a number of requirements. The risks and benefits of centralised systems are already fairly well understood, so an interesting area of research is exploring the possible risks and benefits of using DLT for a CBDC.

        More on Bitcoin and the conditions for a takeover of fiat money -- Something I did not stress about the likelihood of a crypto-currency takeover in my Alphaville post that I should have done, and which cropped up in a Twitter exchange with Joe Weisenthal, relates to the fact that in theory, and even in history, the unit of account and medium of exchange can differ/have differed.So, here, the question I started with was the low likelihood that Bitcoin or similar might take over soon, given the small value of currency in circulation relative to the value of paper US dollars. [100bn compared to 1.4trn].In this 2000 paper by Woodford he explains how the central bank could retain control of monetary policy, even if people stop using central bank money as a medium of exchange or store of value, simply by central bank money remaining the unit of account.Analogy:  if central banks were given the power to define the metre in a textile based economy, then even without being the monopoly supplier of money they could pump up the business cycle by lengthening the metre.  Textile suppliers would have temporarily fixed prices per metre of cloth.  [Which amount to amounts of goods they would accept directly, or indirectly, in exchange for a metre of cloth].The lengthening of the metre would pump up demand for cloth [which was now cheaper in terms of goods per old metre!  Still with this?] in the same way that an increase in the money supply reduces the real price of fix-price goods in a conventional model economy.  We don’t yet broaden out central bank empires to defining the metre, but we could contemplate it one day:  we’d have to include the kilo, litre, and presumably also allow central banks to define the time unit so that the otherwise weightless/dimensionless service economy could be controlled.

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