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Saturday, June 17, 2017

week ending Jun 17

Fed getting new rules of road ready for balance sheet unwind - Federal Reserve officials surprised some onlookers by unveiling a rough plan for balance sheet runoff in the minutes for their May meeting. They were so on top of things, in fact, that many economists think more formal guidelines could come as early as this week."It could be June, it could be July — I certainly would not expect it to be any later than July," said Lou Crandall, chief economist at Wrightson ICAP. "The process is moving very quickly."To avoid unsettling financial markets, the Fed wants to clearly communicate its unwind strategy well in advance, and the next step in that process is releasing a fresh version of its "Policy Normalization Principles." Minutes of the Fed's May meeting both foreshadowed an update to the principles and provided details on how the unwinding might proceed by describing a staff plan to slow the reinvestment of maturing securities via gradually rising caps.Officials will continue their discussion about how and when to start shrinking their $4.5 trillion balance sheet during a meeting on Tuesday and Wednesday in Washington at which they are also widely expected to raise rates.If the central bank releases up-to-date guidelines this week, it's unlikely to include much color beyond what the minutes have already laid out. Even so, such a step could serve as a signal that the Fed's planning process is making progress, suggesting the central bank could be ready to release details on caps and unwind timing before much longer."They're a lot closer to pulling the trigger on this than people think," said Stephen Stanley, chief economist at Amherst Pierpont Securities in New York. "Changing the principles document in June would be one way to signal that, if they were so inclined."There's little consensus on exactly where the caps will be set. Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., has said the Fed will start with $8 billion in Treasuries and $4 billion in mortgage-backed securities before ultimately raising them to $32 billion and $16 billion. Steven Friedman, senior economist at BNP Paribas Asset Management, expects the first cap to be set at $10 billion for Treasuries and $5 billion for MBS, going up eventually to $40 billion and $20 billion. In its May meeting minutes, the Fed said "policy makers agreed that the Committee's Policy Normalization Principles and Plans should be augmented soon to provide additional details about the operational plan to reduce the Federal Reserve's securities holdings over time."

FOMC Ahead – Duy - The recent inflation data doesn't exactly support the Federal Reserve’s monetary tightening plans. Chair Janet Yellen and her colleagues will surely take note of the weakness at this week’s Federal Open Market Committee meeting, but they will downplay any such concerns as transitory. At the moment, low unemployment remains the focus…FOMC participants will follow the logic of San Francisco Federal Reserve Bank President John Williams and attribute recent inflation trends to “special factors,” notably the decline in cellular service prices as measured by the Bureau of Labor Statistics. With this explanation in hand, they will hold firm to their medium term projections that anticipate inflation will soon return to target. The stability of those forecasts is more important for the anticipated course of policy than recent inflation deviations. With weak inflation explained away, central bankers will turn their attention to the second part of their dual mandate, maximum sustainable employment. With the unemployment rate dropping to 4.3 percent in May, below their year-end forecast of 4.5 percent and well below their 4.7 percent longer-run median projection and implied estimate of full employment, the Fed faces a challenge: How much should they lower their estimate of the natural rate of unemployment?  If one wanted to make a case for raising interest rates, I guess this is it. But on this important question of how much should they lower their estimate of the natural rate of unemployment, can we pose it this way? Should we not be looking at the 60% employment to population ratio comparing it to where it would be at full employment – say 62%? Then we would not need to pretend like John Williams is doing that the low inflation is just temporary. No – it is explained by a still weak labor market.

Federal Reserve Raises Benchmark Interest Rate for Third Time in 6 Months — The Federal Reserve has raised its benchmark interest rate for the third time in six months, providing its latest vote of confidence in a slow-growing but durable economy. The Fed also announced plans to start gradually paring its bond holdings later this year, which could cause long-term rates to rise.The increase in the short-term rate by a quarter-point to a still-low range of 1 percent to 1.25 percent could lead to higher borrowing costs for consumers and businesses and slightly better returns for savers.The central bank chose to raise rates again despite an economic slowdown at the start of 2017, which it predicts will prove temporary. It foresees one additional rate hike this year, unchanged from its previous forecast. It gave no hint of when that might occur.The latest Fed rate hike, announced in a statement after a policy meeting, comes as the U.S. economy is growing only sluggishly. Even so, many of the barometers the Fed monitors most closely have given it the confidence to keep gradually lifting still-low borrowing rates toward their historic norms.Though it assesses the overall economy, the Fed's mandates are to maximize employment and stabilize prices. And hiring in the United States remains solid if slowing, with employment at a 16-year-low of 4.3 percent — even below the level that the Fed associates with full employment. Inflation has been more problematic, having long stayed below the central bank's 2 percent target rate. Recent data have suggested that inflation may even be slowing further. But Fed officials have said they think inflation will soon pick up along with the economy.

Fed raises rates, unveils balance sheet cuts in sign of confidence - Reuters - The Federal Reserve raised interest rates on Wednesday for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year, signaling its confidence in a growing U.S. economy and strengthening job market. In lifting its benchmark lending rate by a quarter percentage point to a target range of 1.00 percent to 1.25 percent and forecasting one more hike this year, the Fed seemed to largely brush off a recent run of mixed economic data. The U.S. central bank's rate-setting committee said the economy had continued to strengthen, job gains remained solid and indicated it viewed a recent softness in inflation as largely transitory. The Fed also gave a first clear outline on its plan to reduce its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession. It expects to begin the normalization of its balance sheet this year, gradually ramping up the pace. The plan, which would feature halting reinvestments of ever-larger amounts of maturing securities, did not specify the overall size of the reduction. "What I can tell you is that we anticipate reducing reserve balances and our overall balance sheet to levels appreciably below those seen in recent years but larger than before the financial crisis," Fed Chair Janet Yellen said in a press conference following the release of the Fed's policy statement. She added that the balance sheet normalization could be put into effect "relatively soon." The initial cap for the reduction of the Fed's Treasuries holdings would be set at $6 billion per month, increasing by $6 billion increments every three months over a 12-month period until it reached $30 billion per month. For agency debt and mortgage-backed securities, the cap will be $4 billion per month initially, rising by $4 billion at quarterly intervals over a year until it reached $20 billion per month.

 FOMC Statement: 25bps Rate Hike --Note: The FOMC also released an Implementation Note: Decisions Regarding Monetary Policy ImplementationFOMC Statement: Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely. In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

Parsing the Fed: How the June Statement Changed From May - The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving. The following tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the June statement compared with May.

June FOMC Announcement: Rate Hike and Balance Sheet Plans - June's FOMC meeting concluded today and the meeting announcement revealed an interest rate hike of .25% to bring the Federal Funds target to between 1 and 1.25%. Additionally, we also learned that the FOMC anticipates one more rate in 2017, 3 more in 2018, and the beginning of a balance sheet reduction effort starting this year. Of course, the balance sheet reduction is actually just a taper in the amount of reinvestment. Since they are simply slowing down how much in assets they are buying every month, the balance sheet will still be increasing. There are still concerns at the FOMC (and in monetary officialdom in general) that the devaluation of our purchasing power (colloquially known as "inflation") is not occurring rapidly enough. From their own statistics, which exclude things most important to consumers such as food and energy, price inflation dipped a bit to 1.7%. This, of course, is an utter outrage to the experts.We also got more specific detail about the balance sheet plan, which as we have said all year is going to be the primary narrative of the second half of 2017 in place of interest rate hike talks. Bloomberg reports:In a separate statement on Wednesday, the Fed spelled out the details of its plan to allow the balance sheet to shrink by gradually rolling off a fixed amount of assets on a monthly basis. The initial cap will be set at $10 billion a month: $6 billion from Treasuries and $4 billion from mortgage-backed securities.The caps will increase every three months by $6 billion for Treasuries and $4 billion for MBS until they reach $30 billion and $20 billion, respectively.Officials didn’t reveal the exact timing of when the process will begin this year, as well as specifically how large the portfolio might be when finished.On the interest rate decision it was Minneapolis Fed President Neel Kashkari who once again dissented, preferring no change. He is one of the more dovish members of the Fed, preferring to see the core inflation rate (according to Fed-p referred statistics) solidly above 2% before additional rate hikes.   The next FOMC meeting is at the end of July, but no rate hikes are expected again until September.

Fed Reveals Balance Sheet "Normalization" Schedule: Will Reduce Reinvestments By $10BN/Month -- Coming in earlier than many expected, the Fed for the first time laid out how it plans to "normalize" its balance sheet which it expects to reduce by trimming reinvestments in TSYs at a rate of $6Bn/month initially, and MBS at $4Bn/month, or a total of $10bn/month, and will increase the reinvestment caps in steps of 10bn at 3 month intervals over 12 months until it reaches a total 50bn per month. Indicatively this is well below Goldman's expectation of $10bn and $5bn initial caps for TSYs and MBS, as we showed over the weekend. As its said in the addendum to the materials, “the Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated” with directions to read a Policy Addendum. As the Fed further explains, the reinvestment cap will hit TSYs at the tune of $6Bn per month initially, and MBS at $4Bn:

  • for payments of principal that the Federal Reserve receives from maturing Treasury securities, the Committee anticipates that the cap will be USD6bn per month initially and will increase in steps of USD6bn at 3m intervals over 12m until it reaches 30bn per month.
  • For payments of principal that the Federal Reserve receives from its holdings of agency debt and mortgage-backed securities, the Committee anticipates that the cap will be $4 billion per month initially and will increase in steps of $4 billion at three-month intervals over 12 months until it reaches $20 billion per month.

This level of detail provided is the main surprise so far and what traders are most focused on, because as Citi notes, it as moving forward the chances for a balance sheet announcement from December. More questions on how soon implementation would follow. Indicatively, this is what Goldman expected: Process for phasing out reinvestment: The May minutes signaled that the committee will preannounce a schedule of gradually increasing caps to limit the amounts of securities that can run off in any given month. Our assumption is that that the initial caps are $10 billion a month for UST and $5 billion a month for MBS. The caps would rise each quarter by $10 billion and $5 billion to $40 billion and $20 billion respectively. Caps allow for a gradual runoff and deal with the variability associated with MBS prepayment and the irregular monthly schedule of maturing assets. The caps will remain in place after the phase-in but then only bind in roughly a third of the months for Treasuries until mid-2020 when the balance sheet reaches its projected terminal size.

Fed balance-sheet reduction not scaring anyone - James Hamilton - Today the Federal Reserve announced that it is increasing its target for the fed funds rate to a new range of 1 to 1.25%, a development that surprised no one. But something that was not heralded in advance was the announcement that the Fed intends to “begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.” The Fed spelled out in detail exactly what that will entail. Sometime later this year, the Fed will begin limiting the amount of maturing Treasury securities and mortgage-backed securities that it reinvests, initially bringing its balance sheet down by $10 billion each month as its holdings are redeemed. Those amounts will gradually increase each month until after a year balance-sheet reduction reaches a pace of $50 billion per month. That compares with a net increase of $100B/month on the way up during QE1. Given current Fed security holdings of $4.2 trillion, this would reduce the Fed’s security holdings by about 14% per year once it gets into full swing. So far, nothing has actually changed on the Fed’s balance sheet– the Fed just announced that it will likely do something later this year. However, much of the evidence for the effects of the Fed’s initial program of increasing the size of its balance sheet is based on how interest rates responded when various announcements were first made. We often saw that when the Fed announced a plan to buy more securities, the interest rate on 10-year Treasuries fell, consistent with the view that the large-scale asset purchases were succeeding in their goal of bringing interest rates down. Yesterday’s announcement gives us one more data point to add to that set of observations. So how much did interest rates go up when the Fed announced its plans to start selling? Here’s what happened to the yield on 10-year Treasuries as measured by the TNX contract on the Chicago Board Options Exchange (divide by 10 to translate into the annual interest rate in percentage points). Rather than go up, the 10-year yield actually fell 6 basis points today.

Is the Fed fighting an old war? -- Jared Bernstein - As expected, as their meeting concluded yesterday, Federal Reserve Chair Janet Yellen and company decided to raise the benchmark interest rate they control by one-quarter of a percentage point. The question is: why? She was, of course, asked about this in lots of different ways in her press conference. [Pause here for a moment and consider the substantive difference between a Yellen press conference and a Spicer press conference. Kinda makes you shudder.] Specifically, journalists reasonably wanted to know what was up with the rate hikes given how low inflation has been. Sure, we’re closing in on full employment, but the Fed’s preferred inflation gauge, the core PCE, is below their 2 percent inflation target and slowing. It’s decelerated from 1.8 percent in the first two months of this year to 1.6 percent in the last two months. That’s the opposite of what you’d expect if tight labor markets were juicing price growth, and a legitimate reason not to tap the growth brakes with another rate bump.Chair Yellen, as you’d expect, made a coherent case about not getting “behind the curve” and thus tapping the brakes now to avoid slamming them later. She talked about one-time factors dampening price growth, predicting that as soon as these faded, inflation would firm up and begin to reflect the tight labor market. Coherent, but not very convincing. Economist Joe Gagnon, though he considers the rate hike to be “reasonable” based on other indicators he cites, bemoaned the ad-hockery of Fed’s inflation analysis: Is the FOMC revisiting the bad old days of the 1970s, when it tried to explain away inflation that was too high by pointing to a seemingly endless stream of one-off factors? The [core PCE] already excludes volatile food and energy prices. We certainly do not want to get on the slippery slope of excluding ever more categories with price movements the FOMC does not like. A bit of ad-hockery and one-offery might be okay but for the following picture. The black line is the Q4/Q4 change in the core PCE, and the dotted lines are the Fed’s projections of future inflation with each projection labeled by its date of publication (I left a few out for clarity, but they followed the same pattern). It’s a pretty clear picture of hope over experience. The Fed keeps projecting that inflation will climb to their 2 percent target, while actual inflation keeps ignoring their predictions.

Goldman's Take On The FOMC: Taper In September, Next Rate Hike In December -- When in doubt about the Fed's policies, or their implementation, always go right to the source of Fed ideas, Goldman Sachs, which moments ago published its post-mortem on today's FOMC statement, noting that the "post-meeting statement included modest upgrades to its description of growth but acknowledged the moderation in job growth and the decline in inflation, and it continued to describe risks to the outlook as “roughly balanced.” The statement noted that the Committee expects to begin the process of balance sheet normalization this year, and an updated set of normalization principles clarified the series of caps. Taken together, Goldman continues to expect the announcement of balance sheet normalization in September and a return to rate hikes in December.Main points from the report:

  1. The FOMC raised the funds rate target range to 1-1.25%, as widely expected. The median dot in the Summary of Economic Projections continued to show three hikes in both 2017 and 2018. The post-meeting statement included modest upgrades to its description of growth, continued to note the decline in the unemployment rate, but acknowledged the moderation in job growth and the decline in inflation. However, the statement continued to note that core inflation is running only “somewhat” below 2%, a more hawkish reference than we had expected. The statement continued to describe risks to the outlook as “roughly balanced.” Minneapolis Fed President Neel Kashkari dissented against the hike, in line with our expectations.
  2. The statement noted that the committee expects to begin the process of balance sheet normalization “this year.” The addenda to the statement provided additional guidance on the potential size of the “caps” for treasuries and mortgage backed securities, which could rise from initial levels of $6bn and $4bn, respectively, to peak caps of $30bn and $20bn. We think the language adopted – which dropped the condition “until the normalization of the level of the federal funds rate is well under way” included in the May minutes and the inclusion of specific dollar figures – make the start of balance sheet runoff in September more likely.
  3. The changes to the Summary of Economic Projections were a touch more hawkish than our expectations following the soft May CPI report. GDP growth in 2017 was upgraded a tenth to 2.2%, and the path for the unemployment rate was lowered significantly to 4.3% this year and 4.2% in 2018-2019, and NAIRU came down a tenth to 4.6%. Core PCE inflation for this year was lowered to 1.7% but was unchanged at 2.0% for next year. The funds rate projections were relatively stable, but the median and mode for 2019 declined by 0.1pp and 0.2pp respectively. Taken together, we continue to expect the announcement of balance sheet normalization in September and a return to rate hikes in December.

Is Inflation Strong Enough To Warrant Another Rate Hike? -- The Federal Reserve is conducting a grand experiment in monetary policy that’s set to continue in tomorrow’s policy statement, which is expected to roll out another hike in interest rates. The experiment is tightening policy when inflation and employment growth are still low and perhaps heading lower. In previous tightening cycles, pricing pressure and the year-over-year growth trend in private-sector payrolls was higher if not rising. When the Fed raised interest rates during 2004-2006, for example, private payrolls accelerated from roughly an annual rate of 1.5% to 2.4% and the Fed’s preferred measure of inflation (core Personal Consumption Expenditures) increased from 2.0% to 2.5%. By contrast, core PCE inflation is currently below the Fed’s 2.0% target and ticking lower, dipping to 1.5% for the year through April – the lowest in more than a year. Private employment growth edged higher in last month’s update, rising to 1.8% vs. the year-earlier level. But it’s unclear if the deceleration trend that’s been unfolding over the last two years has run its course. The peak for this cycle: a 2.6% annual increase through February 2015. The ideal scenario that the Fed seems to projecting: the economy continues to expand at a moderate pace, perhaps picking up a bit of speed, while inflation stabilizes just below or near the 2% target. In that case, the tailwind gives the central bank sufficiently strong macro conditions to continue lifting interest rates, albeit gradually. This outlook is strengthened by recognizing that recession risk remains low these days and economists are expecting that second-quarter GDP growth will rebound. CNBC’s June 9 survey of forecasters shows growth picking up to 2.9% in Q2 from Q1’s weak 1.1% rise.The question is whether forward momentum is strong enough to overcome tighter policy? Probably, at least for now. Fed funds futures are pricing in a 96% probability that tomorrow’s FOMC statement will unveil a rate hike, based on CME data this morning. When the dust clears, the Fed’s target rate is projected to rise to 25 basis points to a 1.0%-to-1.25% target range.That’s still a low rate, but some analysts think the central bank is courting trouble by trying to adhere to a 2% inflation target. Last week, 20 economists published an open letter to the Fed that recommends a higher mark.

Lack of Inflation - The Federal Reserve's Latest Concern -- A recent speech given in Tokyo by St. Louis Federal Reserve Bank President, James Bullard, looks at one of the great concerns facing the Federal Reserve, the lack of inflationary pressures in the U.S. economy.  You may ask, why would this be a problem?  After all, wouldn't it be great if the price of goods and services remained steady or even declined?  In the world of central banking, any signs that prices could drop is considered extremely dangerous because of the impact of dropping demand on the economy. Let's look at deflation for a moment.  In our inflationary world, we've grown accustomed to purchasing goods and services when we want them because, in our reality, the price of the good or service is likely to rise in the future so there is no need to postpone our purchase.  In a deflationary world, there is motivation to postpone purchasing a good or service since the price is likely to drop in the future.  This lack of immediacy means that demand drops along with prices, slowing down economic growth.  As well, inflation helps reduce debt because debt is paid with future dollars that are cheaper, in other words, the debt is "inflated away".  In a deflationary environment, the opposite is true; debt becomes more expensive in the future, a scenario that sends shudders through the hallowed halls of governments and businesses around the globe. In James Bullard's latest speech, he looks at recent developments in inflation.  It is particularly interesting that he gave this speech in Japan, a nation that has suffered from a prolonged period of ultra-low and even negative inflation (deflation) as shown on this graphic:  Despite the Bank of Japan's best efforts, they have simply been unable to prod the Japanese economy back into an inflationary pattern. Now, let's get back to the topic of this posting; James Bullard's view on inflation in the United States.  Here is a graphic from his presentation showing how the expectation of inflation has weakened substantially since the beginning of 2017:

Key Measures Show Inflation mostly below 2% in May - The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning: According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in May. The 16% trimmed-mean Consumer Price Index rose 0.1% (1.2% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.   Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers fell 0.1% (-1.5% annualized rate) in May. The CPI less food and energy rose 0.1% (0.8% annualized rate) on a seasonally adjusted basis.  Note: The Cleveland Fed released the median CPI details for May here. Motor fuel declined 55% in May annualized.This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.3%, the trimmed-mean CPI rose 1.9%, and the CPI less food and energy rose 1.7%. Core PCE is for April and increased 1.5% year-over-year. On a monthly basis, median CPI was at 2.2% annualized, trimmed-mean CPI was at 1.2% annualized, and core CPI was at 0.8% annualized. Using these measures, inflation was soft again in May.  Overall these measures are mostly below the Fed's 2% target (Median CPI is slightly above).

May 2017 CPI and our benevolent monetary overlords -- Well, here we go.CPI less food, energy, and shelter, is down to 0.6%, TTM. It looks like shelter inflation might have peaked too. The three month drop in the non-shelter core measure is the worst drop since the BLS began tracking it in the 1960s. Down about 0.5% since February. And the Fed raised rates. This is different than the last recession, though. Things aren't lined up the same. We're still raising rates, so rate-sensitive things may still be similar to a 2005 or early 2006 time frame. That has me a little confused. I'd like to take some positions that would benefit from falling rates, and the yield curve is already moving down. But, if the Fed will push short term rates up one or more times, it muddies the water a bit, because the entire curve tends to react to those moves, if only temporarily. Employment still seems relatively strong. Flows are holding up pretty well. That also looks like 2005 or 2006. Inflation looks like the middle of 2007. General credit is still growing, it seems. But, bank credit is flat as a pancake, which is usually a coincident indicator. Even without these inflation indicators, I would be a little nervous to see rates being pushed up with bank lending so weak. I think the Fed is committed to recessionary policy at this point. If (when) they push rates up to much, I don't think they will be quick in reversing their decision, either. It's a matter of when the various moving parts affect different markets, though. When do interest rates decline? When does the labor market turn sour? I don't think we will see much downward movement in home prices, housing starts, or equity prices unless things get really bad. And, I still am having a hard time coming up with a detailed forecast for some of the other markets. If signals turn south over the next couple of months, maybe the Fed will hold off. But, the Fed sees this softness as temporary, and if some inflation measures have been temporarily down and bounce back, the Fed might see that as cover to raise again, maybe even in September. I would expect that to lead to a fairly immediate flattening of the yield curve, after which it would be a matter of time before the Fed relents and lowers rates. It used to be common for rates to peak and fairly quickly be lowered again. But, lately, the Fed seems to like to sit at the peak rate level for a while before they are willing to lower rates in reaction to economic softness. I think that's because Closed Access creates a sense among the public that nominal stability only benefits existing asset owners, so there is a strange demand for instability. I don't see that changing in this cycle.

US Bond Market Week in Review: The Fed is Missing the Inflation Picture: On Wednesday, the Fed voted to raise interest rates 25 basis points. To support their argument, they observed that “the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined.” The following charts use data from the latest BLS employment report: The 3 and 6 month moving averages of establishment job growth (top and bottom chart, respectively) are moving lower – the 3 month, more so. Several Fed governors have argued diminishing establishment growth is sign of a maturing jobs market. While the latest employment report was somewhat concerning, the low level of the 4-week moving average of initial jobless and labor utilization (which implies that workers could re-enter the job market) indicate the current labor market is taut and that additional employees could re-enter the job market. Prices are a different story. In the FOMC release, the Fed first observes, “Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term.” Yet the Fed hedge's their bets in several other places. They first note inflation has been weak: “On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.” And as for future inflation developments, the Fed stated,” The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal.” They made no such statement about the labor market. The absence of concern about the jobs market indicates the Fed may be more worried about inflation than they want to let on. And they have reason to be concerned. Consider the following 2 charts from the latest inflation report: 

The Controversy Over Inflation - Annie Lowrey - This week, the Federal Reserve decided to raise interest rates, a move intended to slow the economy down. It makes some sense. The current spell of growth has lasted for nearly 100 months. The jobless rate is down to 4.3 percent, and less than 2 percent in some metro areas. Wages are increasing, though not by much more than inflation. The monthly jobs numbers continue to look decent. As such, as expected, the Fed raised its benchmark rate by a quarter of a percentage point, from 1 to 1.25 percent.But there is one main indicator that does not signal an economy getting hot—and it is one that the Fed is supposed to be keeping an eye on just as closely as it keeps an eye on employment. That is inflation. Price increases have proven remarkably, persistently sluggish, with inflation lower than the Fed itself says it would like it to be. The central bank currently has an inflation target of 2 percent, and yet, excluding volatile food and energy prices, as the Fed likes to do, inflation is a few tenths of a percentage point below that mark—and falling, no less.This poses a quandary for the Fed, and about the Fed. Why is inflation so low if the economy looks so good, judging by other metrics? And why would the Fed raise rates—cooling the economy off and potentially keeping thousands of workers from joining the labor force, getting a gig, or getting a raise—given that inflation is so low?The root causes of today’s low rates of price growth might be mostly benign. The Fed itself argues that the sluggishness is in part due to temporary or one-time price drops, and thus not something to get worried about. “The recent lower reading on inflation [has] been driven significantly by what appears to be one-off reductions in certain categories of prices such as wireless telephone services and prescription drugs,” Janet Yellen, the Fed chair, said at a press conference this week. International factors might be at play, too. The strength of the dollar, ample cheap imports from abroad, technological change, and the slow growth of the global economy might be helping to hold inflation down. “Progress toward reaching our 2 percent inflation objective has been slow over the past several years,” said Robert Kaplan of the Dallas Fed. “I believe this has likely been due to a rising dollar and weaker energy prices, as well as a number of persistent secular forces, such as globalization and technology-enabled disruption.”

Fed Officials Can't See What's Right In Front Of Them - While the Federal Reserve has an explicit dual mandate to keep prices stable and maintain full employment, they have unofficially taken on new goals like maintaining financial stability. Bernanke, Yellen, and other officials have noted how traditional monetary policy is a limited and blunt tool to accomplish this goal, which is why the Fed has, in recent years, exercised and flexed its regulatory muscle. The Minnesota District Bank president, Neel Kashkari, recently wrote an article about the dilemma the Fed faces regarding asset bubbles and whether or not they should be met with raising interest rates. He summarizes in five points:

  1. It is really hard to spot bubbles with any confidence before they burst. 
  2. The Fed has limited policy tools to stop a bubble from growing, even if we thought we spotted one. 
  3. The costs of making policy mistakes can be very high, so we must proceed with caution. 
  4. What we can and must do is ensure that the financial system is strong enough to withstand the inevitable bursting of a bubble. And finally, 
  5. monetary policy should be used only as a last resort to address asset prices, because the costs to the economy of such a policy response are potentially so large.

In an addendum to his article, he admits that it is possible artificially low interest rates increase the probability of asset bubbles forming: “low rates ... could make bubbles more likely to form in the first place.” He laments that there is no economic theory to back this up, to the unending frustration of Austrian economists everywhere. Indeed, F. A. Hayek won a Nobel Prize in economics in part for his work on a business cycle theory that blames central banks for causing, among other things, bubbles. Despite the lack of representation in Federal Reserve and government offices, the theory is not as controversial as it is made out to be. Just a week before Kashkari’s post, Bloomberg.com published an article on a bubble in the automobile industry that singled out the cause of increased subprime auto loans: “While caution may be good for banks’ balance sheets, it doesn’t offer much relief for automakers, who relied on cheap credit to fuel a seven-year stretch of booming sales.”

What Trump Told Yellen In The Oval Office (Next To Gary Cohn) --  A WSJ article is making the rounds which recounts the interactions between Trump and Janet Yellen - who it turns out were born two months apart in neighboring boroughs of New York City - according to which despite Donald Trump’s fierce criticisms of the Federal Reserve in the final weeks of the 2016 election campaign "the nation’s two most powerful economic-policy players—the president and the leader of the central bank—are "off to a surprisingly smooth start." According to the WSJ "weeks after his inauguration, President Trump held court with Fed Chairwoman Janet Yellen in the Oval Office. Seated behind the office’s Resolute desk, he told her she was doing a good job, according to people familiar with the exchange.  Ms. Yellen sat across from Mr. Trump in a chair next to  Gary Cohn, Mr. Trump’s chief economic adviser, who has emerged as the key intermediary in the unfolding relationship with the Fed." While the conversation took place long before Trump's subsequent interview with the WSJ in which he once again had good words for Yellen, and suggested that low rates and a weak dollar are the way to go, the WSJ reports that "the president told Ms. Yellen he considered her, like himself, a “low-interest-rate” person. During a roughly 15-minute conversation, they discussed how economic policy might help the millions of Americans who felt left behind during the postcrisis recovery."Which is odd, because during his campaign Trump on several occasions extolled the virtues of higher rates, especially in a nation in which yield-starved retirees are forced to seek extra employment or speculate in the stock market just to make ends meet.  Also, as the WSJ notes, "Mr. Trump’s April comments marked a reversal from last year, when he accused Ms. Yellen of keeping rates low to help Democrats."

Q2 GDP Forecasts --From Merrill Lynch: We revised down our official 2Q GDP forecast to 2.5%, essentially marking-to market. 1Q is tracking a tenth higher to 1.1%.  From the Altanta Fed: GDPNow The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 3.0 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. From the NY Fed Nowcasting ReportThe New York Fed Sta ff Nowcast stands at 2.3% for 2017:Q2 and 1.8% for 2017:Q3.

Latest GDP Forecast, 2Q17 -- 3.2% -- June 14, 2017 -- Latest forecast: 3.2 percent — June 14, 2017: The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 3.2 percent on June 14, up from 3.0 percent on June 9.  The forecast for second-quarter real consumer spending growth increased from 3.0 percent to 3.2 percent after this morning's retail sales report from the U.S. Census Bureau and this morning's Consumer Price Index release from the U.S. Bureau of Labor Statistics.

U.S. Economy at Risk from Trump’s Poll Numbers -Pam Martens - A new poll is out from the Associated Press/NORC Center for Public Affairs Research at the University of Chicago. It doesn’t bode well for Donald Trump’s presidency nor for the U.S. economy. Despite Wall Street’s century-old propaganda campaign to convince Washington that it controls the levers to economic growth in the U.S., and thus must be placated on its every desire, informed citizens understand that economic power rests in the hands of the consumer in a nation where two-thirds of GDP is consumer spending. Likewise, consumer confidence in the President of the United States impacts one’s willingness to open the purse strings and buy. The thinking is: if the country is headed in the wrong direction, how safe is my job? Perhaps I should stop spending and put money away for a rainy day. The new poll shows that 64 percent of Americans disapprove of the job Trump is doing. Particularly troubling for a democracy, 65 percent say he doesn’t respect the country’s institutions and traditions. On specific issues, 66 percent disapprove of his handling of health care; 64 percent disapprove of his handling of climate change; 63 percent disapprove of his handling of foreign policy; 60 percent disapprove of his handling of immigration and 55 percent disapprove of how he’s handling the economy. The poll comes on the heels of data out of the Federal government showing worrying economic trends. Job growth in May fell sharply with a tepid 138,000 new jobs created versus an anticipated growth of 185,000 jobs according to data released by the Department of Labor on June 2. Retail sales also declined in May. The U.S. Commerce Department reported yesterday that retail sales fell 0.3 percent in May versus an expected gain of 0.1 percent. Consumer confidence isn’t getting any boost from Congress either. The only political body in Washington with a lower approval rating than the President is Congress. According to the poll, 75 percent of Americans disapprove of the way Congress is doing its job. 

Treasury Snapshot: Possible Reversal Continues - Let's take a closer look at recent activity in US Treasuries. The yield on the 10-year note ended the day at 2.21% and the 30-year bond closed at 2.86%, well off their interim highs. Here is a table showing the yields highs and lows and the FFR since 2007 as of today's close.The 2-10 yield spread is now at 0.86%. The chart below shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since the pre-recession days of equity market peaks in 2007. A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is a long look since 1965, starting well before the 1973 Oil Embargo that triggered the era of "stagflation" (economic stagnation with inflation). The trendline (the red one) connects the interim highs following those stagflationary years. The red line starts with the 1987 closing high on the Friday before the notorious Black Monday market crash. The S&P 500 fell 5.16% that Friday and 20.47% on Black Monday.

Is A Tightening Yield Spread Still A Warning Sign For The Economy? = Tim Duy, a professor at the University of Oregon, reminds that “recent history suggests that the greatest risk of recession occurs if the Fed continues to tighten after the initial inversion of the yield curve, which happened prior to the last two recessions.” The curve isn’t inverted, but it’s getting close. Meantime, the Fed is widely expected to lift interest rates again today, laying the groundwork for squeezing the curve a bit more.  Consider the 10-year/2-year Treasury yield spread, which fell to 83 basis points yesterday (June 13), based on daily data via Treasury.gov. That’s the smallest spread since last October and slightly below the long-term average of 93 basis points over the past four decades. The recent decline in the spread is a byproduct of a higher 2-year yield and a falling 10-year yield. The two yields had been tracking each other closely up until March, when each went their separate ways. The 2-year yield remained relatively stable, with a slight upside bias, while the benchmark 10-year rate declined. As of yesterday, the 2-year yield, currently at 1.38%, is close to its highest level since the last recession. Meantime, the 2.21% 10-year rate is near a seven-month low and far below its 4% post-recession high. Reviewing how the entire yield curve has changed since last year’s close highlights the tightening bias of late. Rates on the short end of the curve up through the 2-year maturity are at or near the highest levels since the recession ended in mid-2009. Maturities from 5-year up, by contrast, are at middling levels and have fallen so far this year.

Bond Market Doomsayers Sound Alarm as Margin of Safety Vanishes -- Look around the $14 trillion U.S. Treasury market, and you’d be hard-pressed to find anything to suggest investors are even remotely concerned about the possibility of a selloff. Bond yields keep falling day after day, bullish bets have soared and volatility has all but vanished. At the same time, traders foresee inflation subdued for decades and seem to have bought into the idea the Federal Reserve will take its time to trim its crisis-era bond investments. To Binky Chadha, that’s a recipe for disaster.  Chadha, the chief global strategist at Deutsche Bank’s U.S. securities unit, is part of a group of die-hard bond bears who say Treasuries have become unhinged from reality and yields have nowhere to go but up. Like many before him, he points to all the obvious signs investors seem to be ignoring: higher benchmark interest rates, wage pressures that will lead to faster inflation, worsening budget deficits that will result in more debt issuance. “This is just not sustainable,” said Chadha, who sees yields on 10-year Treasuries reaching 3.25 percent by year-end, from 2.19 percent now. Bill Gross, who runs the $2 billion Janus Henderson Global Unconstrained Bond Fund, chimed in on Wednesday, saying U.S. financial markets are at the highest risk levels since before the 2008 financial crisis.Of course, Wall Street’s best and brightest have been sounding the alarm for years now, only to see yields keep falling. And while it’s questionable whether bond traders could have foreseen all the seemingly unrelated reasons beyond monetary policy and the U.S. economy (bad weather, China’s slowdown, plunge in oil, Brexit, North Korea, etc.) that have conspired to keep Treasuries in demand, the simple fact remains that the bull case is still intact.

10-Year Treasury Yield Drops Despite Fed Rate Hike - The Federal Reserve on Wednesday hiked interest rates again, asserting that moderate economic growth will continue for the foreseeable future. But confidence appeared to be in short supply via the benchmark 10-year Treasury yield, which slumped amid rising demand for this safe-haven asset.   Tighter monetary policy doesn’t usually promote a robust round of bond purchases, but yesterday’s trading broke with tradition. The 10-year yield fell for the first time in over week, dropping six basis points to 2.15% yesterday (June 15), close to a seven-month low, based on daily data via Treasury.gov. As recently as mid-March, the 10-year rate was above 2.60%.  The latest slide in the 10-year continued to squeeze the yield spread. The widely followed 10-year/2-year spread, for instance, fell to 80 basis point, the lowest since last September. The net result: a flatter Treasury curve generally. The shift is conspicuous this year, with short rates up to the 2-year maturity rising year to date while yields for 5-years-plus maturities have fallen since last year’s close.  A flatter yield curve has traditionally been a warning sign for the economy, although only an inverted curve – short rates above long rates – is an outright danger sign that a new recession is near. By that standard, the Treasury market is currently forecasting softer growth but no recession. Fed Chair Yellen reasoned that raising interest rates – yesterday’s increase lifted the central bank’s benchmark by a quarter point to a 1.0%-to-1.25% range – is warranted due to ongoing economic growth. Yesterday’s decision “reflects the progress the economy has made and is expected to make toward maximum employment and price stability,” she explained in a press conference. But she also left the impression that the Fed is eager to raise rates, in part, to preserve the ability to cut when the next recession strikes. The rationale is also bound up with the logic that leaving rates too low for too long might back the Fed into a corner if economic growth and/or inflation accelerates, which would force a series sharp rate hikes in a relatively short period. In turn, that could trigger a recession, Yellen said. Gradually raising rates, by contrast, minimizes the danger. One could interpret that line of thinking as an admission that current economic conditions don’t merit a rate hike. There’s certainly some evidence in support of that view. Headline consumer price inflation in May fell below the Fed’s 2.0% target for the first time in six months.

Treasury debt held by the public -- James Hamilton --How much does the U.S. government owe? The number that is subject to the recurrent debt-ceiling wrangling includes intra-government debts that the Treasury is imputed to owe to other Federal government operations. Digging a little deeper into these numbers, we find from Table 6 in the November 2015 Monthly Statement of the Public Debt that the Civil Service Retirement and Disability Fund increased its holdings of Treasury securities by $139 billion that month– a 19% increase. This is a defined-benefit retirement program that Federal employees pay into, which, like Social Security, has so far had an inflow of funds greater than payments, with the surplus used to invest in Treasury securities. Federal employees also have the option of investing their own money in a Thrift Savings Plan, similar to a 401(K). The holdings of the Thrift Savings Plan in Treasury securities jumped up $207 billion in November 2015. The explanation for this lies in the extraordinary measures that the Treasury has come to rely on when Congress does not authorize an increase in the debt ceiling, as was the case in the fall of 2015 and as we are facing again now. When Congress has called for spending in excess of tax receipts (as it did in both instances), of course something has to give whether or not Congress has separately authorized additional borrowing. The Civil Service Retirement Fund and Thrift Savings Fund are two of the main cookies in the jar that the Treasury has relied on to square the circle. Specifically, during a “debt issuance suspension period,” the Treasury temporarily suspends reinvestments of these funds in new Treasury securities. Here’s the description on page 16 of the Civil Service Retirement Fund’s 2015 annual report of what this meant:  instead the amount suspended, $140.6 billion for the CSRDF, was recorded in Fund Balance with Treasury instead of Investments in Government Securities, which I interpret as replacing Treasury debt with more I.O.U.’s, as a way to artificially reduce the volume of officially acknowledged Treasury debt. Of course CRSDF was perfectly willing to “buy” $140 B in new securities once the shenanigans were lifted when the debt ceiling was eased in November, namely converting the Fund Balance back into regular Treasury obligations.I draw two lessons from all this. First, users of the recent federal debt data need to be very careful– off-balance-sheet asterisks are more important than ever. To update Everett Dirksen, a hundred billion here and a hundred billion there, and pretty soon you’re talking real money. Second, the peculiar U.S. political theater, in which our elected representatives pretend that the decision of how much to borrow can be separated from the decision of how much to tax and spend, are making the U.S. look more like a third-world country every day.

Deficit rises as spending on Medicaid and defense increases -- The U.S. budget deficit rose to $88.4 billion in May from $53 billion a year earlier, as government spending in areas, such as Medicaid and defense, rose at a faster pace than revenue. Receipts from individual and corporate taxes rose 7 percent last month from May 2016 to $240 billion, the Treasury Department said Monday. Meanwhile, spending leapt 19 percent to $329 billion. Tax revenue is rising, but at a slower pace than in previous years and by less than the Congressional Budget Office has forecast. That partly reflects slower growth in the economy and hiring. With the unemployment rate low, fewer workers are available to take open jobs. Meanwhile, the deficit has increased to $433 billion in the first eight months of this budget year from $405 billion last year. Medicaid costs have risen 3 percent, partly because the Obama administration’s Affordable Care Act has brought more people in the program. Defense spending jumped 17 percent in May but has been flat this year. The government has also spent $35 billion more this year on interest on its debt, a gain of 14 percent, Treasury said. That is mostly because inflation has picked up a bit since last summer, which pushes up interest payments on the government’s inflation-adjusted bonds, known as TIPS. 

US Government Spending Surges 17% Pushing May Deficit 70% Higher; There Is Just One Problem - When the Treasury reported its monthly receipts and outlays data for the month of May at 2pm today, it was more of the same: far more spending than receipts, resulting in a 68.4% surge in the US budget deficit compared to a year ago. Specifically, outlays of $329 billion soared 19% compared to a year ago, offset by a modest 7% increase in receipts, resulting in a $88.4 billion deficit in May, more than the $87 consensus estimate, and well above the $52.5 billion a year earlier. The reason: government spending in areas such as Medicaid and defense rose at a far faster pace than revenue. Year-to-date, the US deficit was $433 billion for the first 8 months of the year compared to $405b last year, with year-to-date receipts rising 1.4%, or roughly 60% of the 2.3% increase in outlays. There was one silver lining: after contracting for 4 consecutive months at the beginning of the year, 12-month cumulative government receipts managed to eek out two consecutive months of growth, and rose 0.4% in May.There was a notable footnote: the Treasury received $8.4b from the Fed in May in deposits of earnings, and $56.5 billion year-to-date as the biggest Pyramid scheme of all time continued, with the Fed remitting billions to the Treasury, artificially boosting the government's "tax revenues." And yet, despite the ongoing growth in the US budget deficit as tax receipts fail to keep up with government spending, a problem has emerged: as shown in the chart below, on an LTM basis, government outlays - the same outlays which soared during the financial crisis to pull the US out of the 2008/2009 hole - have been sliding, and after growing at a 5% annual pace three years ago, are almost back at the flatline as the government, believe it or not, is not spending nearly enough to keep the economy growing.

Mnuchin: Debt ceiling won’t hit until early September | TheHill: The government will be able to keep paying its debts through at least the beginning of September, Treasury Secretary Steven Mnuchin told a House panel on Monday. Mnuchin did not give lawmakers a hard deadline for when the debt ceiling needed to be raised but said it could wait until after Congress’s August recess. “If for whatever reason Congress does not act before August, we do have backup plans that we can fund the government,” he told the House Appropriations Subcommittee on Financial Services and General Government. “That is not the timeframe that would create a serious problem,” he added. Mnuchin did not provide any details on “backup plans” for managing the nation’s debt. The Treasury secretary reiterated his preference for raising the debt ceiling before the August recess and for doing a “clean” hike that would not pair the debt bill with spending cuts or other budgetary reforms, as many Republicans would like to do. An early September deadline would pose challenges for Congress if it is a hard deadline. Lawmakers are not scheduled to return to Washington until after Labor Day, which would give them precious few legislative days to deal with raising the debt limit if the deadline is in early September. In the past, failure to act as the debt ceiling deadline approached put markets on edge, raising borrowing costs and losing the U.S. its perfect credit rating from S&P. Last week, S&P kept its outlook for the U.S. stable.

"The Sooner We Do It, The Better": Congress Should Raise Debt Ceiling Before August Recess, Mnuchin Says -- Treasury Secretary Steven Mnuchin reiterated his preference for the debt ceiling to be raised before lawmakers break for August recess during testimony before the House Appropriations Committee on Monday.Here’s Bloomberg’s summary of what was said during the hearing:

    • Can’t imagine a scenario that the debt ceiling isn’t raised
    • Mnuchin urges Congress to align the timing of raising the debt cap with the budget process
    • Markets don’t want Congress to wait to raise the debt ceiling
    • “The sooner we do it the better, there are events in the world that could make it more difficult to borrow”
    • The debt ceiling should not be a Republican or Democrat issue, it should be an acknowledgment “that we have spent the money, we have to fund the government”

    Mnuchin did not give lawmakers a hard deadline for when the debt ceiling needed to be raised but said it could wait until after Congress’s August recess, the Hill reported.“We’ve run lots of models, there are lots of assumptions. I am comfortable saying we can fund through the beginning of September,” adding he’d “prefer not to give a range at this time”“If we don’t raise beforehand, I will provide updated numbers based” on revenue flows Mnuchin added that the Treasury has "backup plans" that would allow it to fund the government should Congress fail to raised the borrowing limit, though he declined to elaborate on exactly what those plans might be. Mnuchin also expressed his preference for doing a “clean” hike that would not pair the debt bill with spending cuts or other budgetary reforms, as many Republicans would prefer.

    Coming Mother Of All Debt Ceiling Crises - David Stockman - While the Imperial City is frozen in the Second Coming of Comey, it doesn’t mean that the Washington spending machine is on pause. In fact, the Treasury’s cash balance yesterday stood at only $153 billion — down by $130 billion just since the tax season peak was reached on April 25th. Uncle Sam has been burning cash at a rate of $3.2 billion per calendar day since then and has no more room to borrow. That’s because the public debt ceiling is frozen at its March 15th level ($19.808 trillion) and the mavens at the Treasury Building have run out of borrowing gimmicks. The countdown to the mother of all debt ceiling crises is now well underway — with the nation’s net debt sitting at $19.69 trillion. That figure, in turn, is up nearly $500 billion since FY 2016 ended on September 30 with the net debt at $19.22 trillion. We itemize this torrent of red ink not merely to lament the nation’s dire fiscal plight, but to document a practical point. It will be impossible to pay Uncle Sam’s bills in full after Labor Day unless the debt ceiling is raised well the $20 trillion mark.  Exactly 36 years ago, Washington stood on another symbolic threshold — that is, raising the debt ceiling over the $1 trillion mark for the first time. Back in October 1981, however, the Gipper was in the Oval Office at the peak of his popularity. He got the debt ceiling over the symbolic barrier at that time because he could still credibly promise that the budget would be balanced within three years. That was after his already enacted tax cuts became fully effective and the already enacted spending reductions took hold. The nation’s balance sheet then was relatively pristine compared to what it is at present. Even at $1 trillion, the public debt amounted to just 30%of GDP — a far cry from the 106% ratio presently.As my colleague Lee Adler has pointed out, Treasury tax collections have slowed to a crawl. Overall collections are barely even with prior year, and even withholding payments are now coming in at barely 2% on a year/year basis. That is far below the built-in spending growth rate of about 4% — and says nothing to the big increases for defense, law enforcement, border control and infrastructure being sought be the Trump White House.

    Debt ceiling still a thing, says world, wearily - From Credit Suisse, who expect cash to run out in early October: We think markets may well be able to continue without too much consternation through most of July, but if it becomes apparent that Congress will head out on its August recess – which lasts the entirety of that month – having made no progress, then fears of a delayed or missed payment should start to build. While some market swings are going to be difficult to position for until closer to any perceived deadline, some expressions – such as switches out of coupons with mid-September to mid-October payments and into those that should be better insulated – are relatively limited risk ways to position early, in our view.…Amid what is essentially early-stage positioning by the administration and party leadership, Treasury Secretary Mnuchin asserted that while they would prefer a clean raise before Congress departs in August, the government should have room through September, and has contingencies in case the debt limit is not addressed. For those readers who recall prior debt ceiling showdowns, this may evoke memories of ideas such as prioritizing payments, selling gold, or minting a trillion dollar platinum coin. Back in 2013 we discussed our views around potential options that the president and Treasury may (or may not) have at their disposal in the event that the debt ceiling is not addressed in time. Of course, should it reach a point where we are having serious discussions about which of those “super extraordinary measures” might be deployed, markets will not be sitting idly by. In the next section, we look back at past episodes in an effort to tease out how markets are likely to behave this time around.

    The Republicans Have No Workable Plan for the Debt Ceiling - The Washington Post headline is direct enough: White House without a plan to address debt ceiling. The debt ceiling may be far from the sexiest news item available to write about right now, but it’s important enough that it should be getting a lot more attention. If the ceiling is not raised in the relatively near future, probably by some time in September at the latest, the country will be unable to pay all its debts and our credit rating will collapse. Given the centrality of U.S. debt to the global economy, this could trigger a worldwide economic contraction or depression. If that doesn’t concern you, it’s also possible that some benefits programs will have to suspend their payments, meaning our most vulnerable citizens will be put at risk. Raising the ceiling is theoretically simple. All it requires is a brief bill that authorizes the government to issue more debt. It’s been done in the past too many times to count, and usually without a ton of fanfare or controversy. During the Obama Era, however, the Republicans got it in their head that they could force the Democratic president to accept cuts he would otherwise veto by threatening to blow up the global economy. They concocted a variety of risibly false talking points to go along with this strategy, including that it was really about concern for the level of borrowing rather than resistance to how the money was spent, and a feigned reassurance that nothing too bad would result even if we did default.  Unfortunately for Trump, a lot of Republicans began to believe these talking points and now there are a lot of congresspeople who won’t raise the debt ceiling for him without getting concessions on spending as well as on other extraneous concerns. One difference between now and the Obama years is that the Republicans are no longer dealing with a Democratic president. They don’t need to use this strong-arm tactic to shape or influence the budget. They also can’t necessarily depend on Democrats anymore in the minority to provide the lion’s share of votes for raising the debt ceiling. In essence, they’ve gone from blackmailing their political opponents to blackmailing themselves.

    Don’t be fooled, Trump’s budget proposal is very much ‘undead’ – Brookings - It is easy to understand why many thought that the Trump budget would fail. Until recently, one Republican senator after another exuded pessimism that the GOP could deliver on its top priority, to repeal and replace Obamacare. Prospects for genuine tax reform, if anything, seemed even worse. Divisions among Republicans on tax policy run deep, and they were—and are—getting no leadership from a still-understaffed Administration that released a one-page, 15-line, statement of tax policy intent that it calls a ‘plan.’ Perhaps the most important reason for the ‘dead-on-arrival’ pronouncements was the sheer savagery of the budget itself, which proposed to carve three-fifths of the proposed $4.3 trillion cuts in spending from programs that serve people with low and moderate incomes. The abrupt revival of prospects for repealing Obamacare should wake up those who think that the rest of the budget initiatives are dead. Enacting other elements of the Trump budget poses fewer challenges. Even if Donald Trump’s self-guided safari into the wilds of governmental chaos continues, much of his budget could still become law. The key is the Senate rule that protects from filibuster legislation that implements instructions in a budget resolution directing Congressional committees to achieve certain spending and revenue targets. If the named committees do not deliver, a so-called ‘reconciliation bill’ cannot be filibustered, which means it can pass the Senate by a simple majority.  To see why ‘reconciliation’ dramatically improves prospects for the Trump budget, consider his proposal to cut Supplemental Nutrition Assistance Program (SNAP, the new name for Food Stamps). Under SNAP, the federal government provides low-income families and individuals with debit cards for food purchases.  The Trump budget proposes to cut SNAP spending by $190 billion over ten years. Most of the savings would result because some program costs would be shifted to states—10 percent in 2020, rising to 25 percent in 2023. This cost shift would save the federal budget an estimated $116 billion over ten years. Various other changes would cut federal spending an additional $74 billion over ten years. One would extend work requirements in current law, so that SNAP recipients could receive benefits for only three months every three years if they did not work, even in states with unemployment rates up to 10 percent and that did not provide work opportunities. That change would deny benefits to roughly 1 million people. Another would terminate the SNAP minimum benefit, $16 per month, for 2 million people, mostly elderly or disabled recipients.  Similar SNAP cuts have long been a staple of House Republican budgets.

     Stockman Slams Trump Administration's Budget Projections As "Fantasy" -- (video) David Stockman joined Bloomberg Markets to discuss President Donald Trump’s latest budget projections. After the White House and current Office of Management and Budget director Mick Mulvaney released various statements on the budget proposal viability conversations already began within the GOP and Congress.When prompted by host David Gura over his thoughts, even reflecting on former Treasury Secretary Summers comments that the budget is ludicrously optimistic, David Stockman did not mince words speaking on Washington.“I think it is fantasy land. They have been kicking the can so long that the magnitude of the problem is almost insuperable. They just imagine options, they imagine policy mixes that have no chance in the world of happening.”“Not only does this budget project all of this GDP, which can’t happen, it also says we’re going to have what they’ve laid out as a $7.5 trillion gross tax cut over ten years. They’ve identified 15% on the corporate rate, 15% on the pass through and doubled the standard deduction along with all of the rest of the proposals. Yet they say they’re going to pay for it with 100% offset so that there’s no revenue loss.” During the conversation the Bloomberg host then inserted that the budget offers a “double count” with reference to the math completed by the Administration. Stockman remarked,“Sure, I’m all for a broader base, lower rates – that’s what Reagan did in 1986. But how are you going to come with $7.5 trillion of offsets, when you have the K-Street lobbyists lined up from one end of the swamp to the other. The big dollars are really beyond reach.”

    Budget Director Mulvaney Releases Phase 1 Of Plan To Slash Government Waste --The White House Office of Management and Budget Director Mick Mulvaney announced earlier today 'Phase 1' of the Trump administration’s plans for a massive government reorganization, a move meant to increase the efficiency and productivity of the federal government.In a memo published here, Mulvaney detailed plans to rescind or modify many of the requirements placed on federal agencies by the OMB. The office’s logic is rather straightforward: far too often agencies are required to spend more time and energy complying with menial tasks, rather than spending time allocating taxpayer dollars to effectively and efficiently carry out their missions.From administration to administration, agencies have been asked to respond to hundreds of guidance documents related to management areas such as information technology (IT), human capital, acquisition, financial management, and real property. Too often, burdensome tasks have piled up without consideration of whether the requirements collectively make sense. In many cases, agencies are asked to spend more time and resources complying with low-value activities versus allocating taxpayer dollars to meet their core agency mission.In support of the President's Management Agenda and the belief that the Federal Government can - and should- operate more effectively and efficiently, the Office of Management and Budget (OMB) is taking action to identify low-value, duplicative, and obsolete activities that can be ended.Through this Memorandum, OMB begins providing relief to agencies by rolling back these requirements and allowing those who know their agencies best - agency managers - manage operations, adopt best practices, and find the best way possible to reduce costs and minimize staff hours responding to duplicative and burdensome reporting requirements.

    Five Democrat Votes Allow Trump's Saudi Weapons Deal To Clear Senate --A bipartisan bid to block President Trump's recently negotiated $110 billion in arms sales to Saudi Arabia failed in the Senate. The effort to stop the weapons sales, authored by Senators Rand Paul and Chris Murphy, fell short on a 47-53 vote, with four Republicans joining most Democrats in voting against it and five Democrats voting to preserve deals that will arm the Saudi Kingdom with some of the most sophisticated equipment available. The five democrats who made the passage of the weapons deal possible were Sens. Bill Nelson, Claire McCaskill, Joe Manchin, Joe Donnelly and Mark Warner. Despite the failure, Politico notes that Paul and Murphy fared better on Tuesday than they did last year in a similar effort to block a Saudi arms sale under former President Barack Obama, thanks entirely to new Democratic supporters: it's curious how ideology changes ones outlook on lethal weaponry. "Regardless of whether the number is 48 or 51 or 45" in favor of blocking the deals, Murphy told reporters before the vote, "this is an important message to the Saudis that we are all watching. And if they continue to target civilians and they continue to stop humanitarian aid from getting into Yemen, this vote will continue to go in the wrong direction for them." Paul said after the vote that he and Murphy would discuss possible future attempts to block Trump's arms deals to Riyadh, warning that senators are growing more concerned about the civilian toll in a Yemen conflict that is pitting Saudi-backed government forces against rebel factions reportedly supported by Iran.  Before that happens, Paul told reporters, "there needs to be a period of time to see if there's a change in Saudi warfare tactics."

    Qatar on the Back Foot: Even Without “Shock and Awe” Trump’s Foreign Policy Lurks Behind Renewed Crisis in the Middle East -  As part of his first major foray in hands-on foreign policy, US President Trump has recently made a show of visiting Saudi Arabia in the tried and tested tradition of American statesmen looking to cement a lucrative alliance. Trump’s arms deal with Riyadh is a case in point, something that carries over from his “progressive” predecessor’s commitment to a “business as usual” approach to both US aggression overseas and the propping up of regional allies. A question is what else was agreed to between Washington and Riyadh, especially in light of Trump’s earlier (and frequent) denouncement of their mutual adversary, Iran?  I’d say a lot. Much of Trump’s well publicised diplomatic shenanigans have fixated on the question of terrorism. Rather than taking the logical step and equating violent fundamentalism with the oft mentioned Wahhabism of Saudi Arabia itself, however, Trump took aim at Iran, presumably hoping to score diplomatic points with Riyadh by pouring fire on a shared enemy.This makes sense in that to query Saudi Arabia’s role in the proliferation of authoritarianism at home and violence abroad would only serve to alienate a stalwart US ally. For US foreign policy to suddenly base itself on ethical parameters rather than economic/strategic priories is wishful thinking. What is interesting (and realistic) is how Trump’s targeting of Iran may have tied in to Riyadh’s decision to take action again Doha, itself presumably the “weakest link” in an assortment of powers more at ease with the Islamic Republic than some might like.Indeed, according to pro-US, pro-Saudi coverage, Qatar has allegedly been attempting to “have it both ways” in regional politics, dishonestly posing as a power friendly to the Washington/Riyadh alliance whilst also maintaining unacceptably close ties to Iran and the Palestinian resistance. What’s more, the “Islamist regime” in Ankara has enjoyed too much support from a Qatar clearly unappreciative of the redoubled threat Turkey now allegedly poses to regional security. Taking a closer look at the needs and aspirations of “allies” (presumably Washington and Riyadh) is the only solution. This is no doubt a position endorsed by the American President and one very much welcomed elsewhere.Yet this one sided narrative omits a few choice facts. For one, Doha has proven itself more than willing to co-operate with Riyadh when it comes to shared foreign policy goals, having contributed sizeable military assets to the latter’s much deplored bombardment of Yemen. To maintain that Qatar is attempting to sit tight and play Iran and the Saudi’s off against the other makes little sense, if only due to the fact that Qatari soldiers were until very recently participating in Riyadh’s own foreign policy (mis)adventures.

    Fixing Trump’s Qatar Blunder (He’s Not Helping) - The focus on James Comey’s Senate testimony last week overshadowed another alarming development connected to Donald Trump’s presidency: the breakup between Saudi Arabia and three Arab partners 1 on one side and Qatar, a staunch U.S. ally, on the other. The trouble was caused by Trump, who got played by the Saudis and then bragged about it on Twitter. The challenge now is to figure out how to walk back the brewing diplomatic mini-disaster without a public reversal by Trump – a step he has shown no inclination to take. To understand what’s happened – and how to fix it -- you have to start with Qatar, which hosts a huge U.S. airbase for missions to Afghanistan, Syria, and Iraq. Until now, Qatar has played the role of a modest regional counterbalance against Saudi domination of the Persian Gulf. Crucially, it hosts Al-Jazeera, the leading Arabic satellite news network. The Saudis’ nominal excuse for breaking diplomatic and trade ties with Qatar was its sponsorship of terror. But the real reason was that Trump’s comments on his visit to Saudi Arabia in May gave the kingdom an excuse to take steps against a rival whom it considers a thorn in its side and a dangerous source of critical news. Trump didn’t mean to cause the break – at least not at first. Indeed, it’s clear from his comments on Twitter last week that he was outwitted by the Saudis. During his Middle East trip, Trump says he told Arab leaders that he wanted a stop to “funding of radical ideology.” 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 In ordinary Trumpian discourse, that language presumably referred to the promotion of the rigid Saudi Wahhabi strain of Islam through mosques, preachers, schools and study fellowships. But the leaders present, Trump tweeted, immediately pointed to Qatar. Trump wasn’t quick enough to realize that this was a way of deflecting attention from the Saudis while dangling the possibility of action against Qatar. So he took the bait. That gave Saudi Arabia enough confidence in Trump’s backing to lash out at Qatar – something it had previously refrained from doing because of the close U.S. military alliance with that country.

    Economists' View of Qatar Cutoff Is a Little Scary – Tyler Cohen - One major reason Qatar has maintained its independence is protection from the U.S., dating from the Persian Gulf War.  As part of the arrangement, the U.S. has a significant military base there. . Yet President Trump himself took credit for the Saudi pressure, and later maintained his support for a "hard but necessary action" against Qatar. If Trump gets his way, the Qataris will probably have to accede to some of the demands, or seek Iranian or perhaps Turkish intervention on their behalf. Those scenarios are difficult to game out, but American security guarantees would fall precipitously in value, especially as they might apply to small, vulnerable countries. Typically, if you put a major military base in a country, there is a general expectation you will not actively work to subvert the sovereignty of the host government. But right now the U.S. is violating that understanding. Now imagine you are the leadership of Singapore, which faces political pressure from a much larger China and Indonesia. Singapore also hosts a significant American military base. You will think twice about the benefits you once expected from this arrangement. Kuwait and Bahrain, too, will be reconsidering their options. Other vulnerable countries with American military bases include South Korea, Kosovo, Greece and Djibouti. Yet other nations, such as Taiwan, do not host American military forces, but rely in part on the potential for American military assistance. In sum, many more countries will feel less secure, and many of these countries will most likely court additional favor with their local or regional hegemons, which are typically less liberal influences than the U.S. In the Middle East and Gulf, for instance, Turkey and Iran stand to gain in influence.Once commitments to smaller, more vulnerable countries weaken, larger alliances get tested as well, as virtually everyone seeks to clarify or disambiguate their commitments. Given Trump’s periodic reluctance to affirm the U.S.’s Article 5 commitment to defending NATO, it isn’t hard to imagine a major and fairly sudden collapse of American credibility overseas. Yet another scary element is that relatively few Western observers had identified Qatar as a major pending trouble spot, and so global vulnerability may worse than we had thought. All of a sudden, the stakes are frighteningly high.

     Israel, Saudi, UAE team up in anti-Qatar lobbying move - US legislation threatening to sanction Qatar for its support of "Palestinian terror" was sponsored by 10 legislators who received more than $1m over the last 18 months from lobbyists and groups linked to Israel, Saudi Arabia, and theUnited Arab Emirates.  The bill was introduced to the US House of Representatives on May 25, but the text wasn't available until Friday morning, hours after Saudi Arabia, UAE, and Egypt put 59 people and 12 institutions linked to Qatar on a "terror list".  The nations abruptly ended diplomatic relations with Qatar on Monday, accusing Doha of supporting "extremism" and siding with their regional rival Iran. "Hamas has received significant financial and military support from Qatar," the Palestinian International Terrorism Support Prevention Act of 2017, also known as HR 2712, said. It went on to list sanctions including an end of exports of defence technologies, arms, and loans or financing totalling more than $10m. "The coordination between hawkish pro-Israel groups and UAE and Saudi Arabia has been going on for quite some time," Parsi told Al Jazeera. What is new, he continued, is pro-Israel groups such as the Foundation for Defense of Democracies "coming out with pro-Saudi [articles] and lobbying for them on Capitol Hill".  Israel, Egypt and Saudi Arabia all view the Muslim Brotherhood, an Islamist political group, as a threat. The Brotherhood was the ideological base for Hamas, the Islamist rulers of the besieged Gaza Strip that have fought three wars with the Israelis. The Saudis demand that Qatar stop supporting the Muslim Brotherhood and Hamas in a move that aligns with Egyptian and Israeli policy. Israel's influence on US policymakers is clear. HR 2712's sponsors received donations totalling $1,009,796 from pro-Israel individuals and groups for the 2016 election cycle alone, according to data collected by the Center for Responsive Politics 

    Qatar Signs $12 Billion Deal for U.S. F-15 Jets Amid Gulf Crisis -- Qatar will sign a deal to buy as many as 36 F-15 jets from the U.S. as the two countries navigate tensions over President Donald Trump’s backing for a Saudi-led coalition’s move to isolate the country for supporting terrorism. Qatari Defense Minister Khalid Al-Attiyah and his U.S. counterpart, Jim Mattis, completed the $12 billion agreement on Wednesday in Washington, according to the Pentagon. The sale “will give Qatar a state of the art capability and increase security cooperation and interoperability between the United States and Qatar,” the Defense Department said in a statement. Congress last year approved a sale of as many as 72 F-15s in an agreement valued at as much as $21 billion, providing authorization for the deal completed Wednesday. But that was before Qatar’s neighbors, including Saudi Arabia and United Arab Emirates, severed diplomatic, trade and transport links last week in a move they said was aimed at isolating the country for its support of terrorist groups and Iran. The F-15 sale highlights the complex position the Trump administration finds itself in, forced to balance its focus on fighting terrorism against regional rivalries between key allies. Qatar hosts the regional headquarters for U.S. Central Command, which includes a state-of-the-art air base the U.S. depends on to target Islamic State. “It is confusing, and the worst thing you want to do in a heated, delicate situation like this is to give mixed messages,”  Qatar’s Defense Ministry said the deal would create 60,000 jobs in 42 U.S. states while reducing the burden on U.S. forces. The F-15 accord will lead to “closer strategic collaboration in our fight to counter violent extremism and promote peace and stability in our region and beyond,” the ministry said Wednesday in a statement.

    When Somebody Called “Mad Dog” Is The Only Adult In The Room -  In the last few days it has come to pass that twice US Secretary of Defense, James “Mad Dog” Mattis has shown himself to be the only adult in the room in the Trump administration.  His first such exhibition of adulthood came during the bizarre spectacle of Trump’s first full televised cabinet meeting.  Trump openly demanded verbal obeisance from those assembled, promptly delivered by all but one in the room, with some of them embarrassingly effusive, such as Reince Priebus declaring it to be a “blessing” to serve Trump.  Ugh.  Even SecState Tillerson chimed in with a relatively perfunctory bit of praise for Trump.  Only Mad Dog Mattis refused to go along, making a statement praising US military personnel around the world without a single word about Trump. And then we have the under reported event yesterday that I saw on Juan Cole’s blog that Mattis signed a $12 billion dollar deal for F-15s with Qatar.  Now I am not in general a big fan of  these Middle East arms deals with anybody, but in this case this blatantly goes against Trump’s absolutely stupid and probably corrupt (Saudis paid $270,000 in hotel bills at Trump’s hotel in Washington since Trump took office) support for the Saudi move to blockade Qatar and pressure it into  going along with Saudi aggression in Yemen and more generally against Iran.  Both Tillerson and Mattis made verbal statements last week arguing for a more balanced approach there, only to have Trump double down on supporting this very stupid policy.  Tillerson is  not able to cut deals independently supporting Qatar, but Mad Dog Mattis has just done so. Maybe Trump will fire him, but I kind of think that maybe even he is not quite that stupid in the current circumstances.  So there we have it, having to thank somebody nicknamed “Mad Dog” twice in a few  days for being the much-needed adult in the room.

    Emirati ambassador to Trump: Remove US airbase from Qatar | TheHill: The United Arab Emirates' ambassador to the United States wants President Trump to use the U.S. airbase in Qatar as a political tool to press the country's government on supporting extremism. “The air base is a very nice insurance policy against any additional pressure,” Ambassador Yousef al-Otaiba said Tuesday. “Maybe someone in Congress should have a hearing and just say, you know, ’Should we consider moving it?’” Last week, a Saudi-led coalition of Arab nations cut off all diplomatic ties with Qatar and accused the country's government of supporting terrorists across the Middle East. Doha has denied the charges, but that wasn't enough for Emirati officials. “We’ve gotten fed up. We’ve had enough,” Otaiba said. According to Otaiba, the U.S. airbase in Qatar has given cover for the country's government to continue supporting instability in the Middle East unabated. “If I want to be honest, I think the reason action hasn’t been taken against Qatar is because of the air base,” Otaiba said.

    Emails Expose How Saudi Arabia And UAE Work The U.S. Media To Push For War -- A highly influential top Emirati diplomat heaped praise on a prominent Washington Post columnist for writing pro-Saudi propaganda, a leaked email shows.Yousef al-Otaiba, the United Arab Emirates’ ambassador to the United States, applauded journalist David Ignatius for his writing on Saudi Arabia. Ignatius is notorious for fawning coverage of the kingdom, promoting its supposed efforts at reform and taking its line on regional conflicts without a shred of skepticism. The relationship between the UAE’s man in Washington and one of the Beltway’s top pundits is especially notable in light of the conflict that has erupted in the Persian Gulf. A steadily escalating rift between the Gulf states erupted into an all-out media war this June, leading to the alleged hacking of Qatari state media source and the hacking of Otaiba’s personal email account. Before long, the conflict became a siege as Saudi Arabia and its ally, the UAE, suspended diplomatic and economic ties with Qatar, and even imposed a de facto blockade on the country.With the Trump administration alternating between support for the siege and halting opposition to its escalation, Saudi Arabia and the UAE are demanding Qatar to cut off support for the Muslim Brotherhood and to break its ties with Iran. President Trump took credit for the policy, which he implied was an intentional U.S.-led strategy. Saudi Arabia has used the political turmoil to deflect from its own complicity in supporting Salafi-jihadist group, portraying violent Islamist extremism as a uniquely Qatari problem. (U.S. government intelligence, on the other hand, has acknowledged that both of its Gulf clients Saudi Arabia and Qatar have supported ISIS and al-Qaeda.)

    Trump Gives Pentagon Unilateral Authority To Set Afghan Troop Levels --  President Donald Trump has has given the Pentagon unilateral authority to set troop levels in Afghanistan, the WSJ and Reuters reported overnight, clearing the way for the military to intensify its fight against the Taliban and opening the door for future troop increases requested by Defense Secretary Jim Mattis. While no immediate decision had been made about the troop levels, which are now set at about 8,400, the Pentagon is currently weighing plans to send between 3,000 and 5,000 additional troops.The news comes after Mattis said in testimony to the Senate Armed Services Committee that "We are not winning in Afghanistan right now. And we will correct this as soon as possible." Mattis said the Taliban were "surging" at the moment, something he said he intended to address.The decision is similar to one announced in April that applied to U.S. troop levels in Iraq and Syria, and came as Mattis warned Congress the U.S.-backed Afghan forces were not beating the Taliban despite more than 15 years of war. After the official announcement control over troop decisions to the Pentagon, expected to be announced on Wednesday, sets the stage for U.S. commanders to decide to reverse course in Afghanistan and begin sending more forces to the country after years of reductions in the hope that Kabul could handle internal threats on its own, the WSJ notes.According to the WSJ, the White House decision to cede authority to Mr. Mattis is another reflection of Mr. Trump’s push to give the military wide latitude around the world. The White House has already given the Pentagon more power to carry out strikes in Yemen and Somalia. Mr. Trump removed a cap on troop levels in Iraq. And he approved Pentagon plans to send more U.S. troops and firepower into Syria to fight Islamic State.The top U.S. commander in Afghanistan has been urging the Trump administration for months to send more troops to Afghanistan. But a decision to do so has met with resistance from some members of the Trump administration, who are wary of being dragged back into a fight that could require more forces, firepower and money. A former U.S. official told Reuters such a decision might allow the White House to argue that it was not micromanaging as much as the administration of former President Barack Obama was sometimes accused of doing. Critics say delegating too much authority to the military does not shield Trump from political responsibility during battlefield setbacks and could reduce the chances for diplomats to warn of potential blowback from military decisions.

    Report: U.S. To Send Nearly 4,000 Troops To Afghanistan -- A U.S. administration official has been quoted as saying the Pentagon will send almost 4,000 additional troops to Afghanistan, hoping to break a stalemate in the 16-year war. The unidentified official said on June 15 that the decision could be announced as early as next week, according to the Associated Press. The bulk of the extra forces will train and advise Afghan troops, the official said, while a smaller number would be assigned to counterterror operations against the Taliban and Islamic State group. Asked about the report, a Pentagon spokesman said, "No decisions have been made." U.S. Defense Secretary Jim Mattis told U.S. lawmakers on June 15 that President Donald Trump has given him the authority to establish troop levels in Afghanistan. U.S. media have reported that Mattis will recommend sending another 3,000-5,000 U.S. troops to break what he has called a "stalemate" between U.S.-backed government forces and the Taliban. The United States currently has about 8,400 troops in Afghanistan.

    The US Taxpayers Have Spent Enough on the War in Afghanistan - The United States faces no existential threat from Afghanistan. The potential for terrorist plots launching from Afghanistan are minuscule compared to the costs, military degradation, and fomenting of retaliatory hatred that comes from US deployments there. The 9/11 attacks, designed and launched from Afghanistan, were significant to be sure, yet as Sun Tzu teaches in chapter 8 of the Art of War, we should not count on the enemy not coming, but on our preparedness to defend. Preventing a 9/11 style attack does not require invading another country, but in dissolving the artificial restrictions that prevent captains, crews, and travelers from defending themselves, and what is theirs, while in transit. Further, as Americans are constitutionally obliged to provide for their own security, benefiting, at best, by supplemental efforts orchestrated by the federal architecture, the defensive mandate allows for no public expenditures to benefit anyone other than taxpaying constituents. In other words, and to paraphrase Madison, the US federal government has no authority to spend from the public treasury on objects of benevolence for Afghans. The eradication of Al Qaeda through targeted strikes or bounties may have been at one time a legitimate political goal, yet that ship has long sailed past and now the American enterprise is sinking in the swamp of nation building. If Afghanistan is as rich in minerals and valuable resources as is purported, indeed the international division of labor would benefit by an improved security environment that allows for their cultivation. Yet, investing in a commercial venture to first secure and then operate in these industries is the proper field of market actors, ideally in compliance with local governance and cooperating with legitimate property owners that see the benefits of such endeavors. Again, the taxpayers of coalition nations have no obligation to bankroll these efforts. In this way, those who invest and assume risk to operate in austere environments deserve the rewards of doing what others lacked the vision and fortitude to do. Only in this way, would profit be well earned.

    Trump’s Darling -- Al-Qaida fighters' will was to be broken through waterboarding, sleep deprivation or humiliation through forced nudity until they could be turned into valuable sources in the "war on terror," which had been declared by the U.S. after the 2001 attacks on New York and Washington in 2001. Gina Haspel, a 45-year-old intelligence agent, was to carry out the first torture sessions in Thailand. Fifteen years later, in 2017, President Donald Trump would appoint Haspel as the CIA's deputy director. This week, human rights lawyers at the European Center for Constitutional and Human Rights (ECCHR) in Berlin submitted a filing about former agent Haspel to supplement a December 2014 criminal complaint over the CIA's extraordinary renditions and torture program it lodged with the Federal Public Prosecutor in Karlsruhe. The new information could create additional pressure for the Karlsruhe-based office to act. Thus far, the Federal Public Prosecutor has rejected calls to file any charges against Americans responsible for the torture – be it then-Secretary of Defense Rumsfeld for incidents inside Abu Ghraib, former CIA head George Tenet or the intelligence agents at the National Security Agency (NSA) who eavesdropped on the German chancellor's mobile phone. When it comes to relations with the United States, Germany seems to have a habit of looking the other way.  But the qualities of this case suggest it could be different. For the first time, a criminal complaint has been filed against a torturer who is still with the CIA. In another first, the person in question is directly tied to the current U.S. administration.

    Rand Paul: Think Twice Before Sanctioning Iran - Recently, the U.S. Senate considered new sanctions against Iran regarding ballistic missiles and the funding of terrorism. These are important matters, and we should discuss them. Iran is certainly part of this problem. But we should also discuss the larger picture. We are currently in the middle of an agreement regarding nuclear power and proliferation with Iran that, so far, both sides say has been kept. The issues in the sanctions bill are not subject to that agreement. So unilateral action outside the current agreement, even for legitimate purposes, must be carefully weighed. What does this action do to the prospects of ensuring compliance with the agreement?It has been said in the debate so far that we do not care what Tehran thinks, or if they think this is an abrogation of the nuclear agreement. Well, let’s consider that statement. If we do not care what they think, why are we trying to influence their behavior? What are sanctions if not a hope to change their way of thinking?If they react in one way by saying, “We are going to get out of the nuclear agreement,” that would be a pretty important and dramatic step. I am not saying they will. They might, though, and we ought to have at least thought through that scenario and understand that, while we will not condone or acquiesce to their opinion, we do care about it because that is what we are trying to change. We are trying to change their attitude toward continued expansion of their ballistic missile program.As I read through these new Iran sanctions, there are several areas that strike me as curious. I find it intriguing that every one of these areas could equally apply to Saudi Arabia. As we look at the ballistic missile section, we recall that Saudi Arabia also has ballistic missiles, the Dong Feng-3s and -21s. Where are they pointed? Tel Aviv and Tehran. Our CIA inspected the DF-21s and said they are not currently nuclear capable. But are they convertible? Are they nuclear capable? Yeah, they are nuclear capable, and they are pointed at Israel and Iran.

    Iran Claims To Have Proof Of  "Direct US Support" For ISIS -- Days after Trump issued a characteristically undiplomatic statement on last week's s terrorist attack in Iran by ISIS which killed 17 people and which the US president accused Tehran of basically provoking by stating that "states that sponsor terrorism risk falling victim to the evil they promote", which prompted Iran to slam the "repugnant WH statement... as Iranians counter terror backed by US clients.... Iranian people reject such US claims of friendship", on Sunday senior Iranian officials responded by accusing the US of supporting the Islamic State and effectively forming an alliance with it, claiming that Tehran possesses documents to prove the allegations.  The deputy Chief of Staff of the Iranian Armed Forces Major General Mostafa Izadi, said that Iran is "facing a proxy warfare in the region as a new trick by the arrogant powers against the Islamic Republic," according to Fars News Agency. "As the Supreme Leader of the Islamic Revolution (Ayatollah Seyed Ali Khamenei) said, we possess documents and information showing the direct supports by the US imperialism for this highly disgusting stream (the ISIL) in the region which has destroyed the Islamic countries and created a wave of massacres and clashes," he added. So far, however, Iran has yet to present any evidence.

    Senate reaches deal on Russia sanctions | TheHill: The Senate has clinched a wide-ranging bipartisan agreement to slap new financial penalties on Russia and limit President Trump's ability to lift sanctions without giving Congress a chance to weigh in. "It's as comprehensive as we could make it, and it's going to be a very good piece of legislation," Sen. Bob Corker(R-Tenn.) told reporters on Monday night, shortly after Majority Leader Mitch McConnell imposes new sanctions including "malicious cyber activity" on behalf of Moscow, individuals supplying weapons to Syrian President Bashar Assad's government or individuals tied to Russia's intelligence and defense sectors.The deal would also give Congress 30 days—or 60 days around the August recess—to review and potentially block Trump from lifting or relaxing Russia sanctions. It would also codify the sanctions on Russia imposed by executive order by the Obama administration and allow the Trump administration to impose new sanctions on sectors of the Russian economy. Senators filed the deal late Monday night to a separate Iran sanctions bill currently being debated on the floor. Both are likely to be voted on this week, marking a significant shift from even last month, when top Republicans appeared wary of moving forward with such sanctions. The formal announcement of the deal comes after Corker told reporters earlier Monday evening that negotiators had reached an agreement, capping off roughly a week of negotiations with staffers and senators talking around the clock about how to add new financial penalties on Russia, limit Trump's ability to lift current sanctions, or both. 

    Senate Approves Russia Sanctions, Limiting Trump’s Oversight - In an overwhelming vote of 97-2, the U.S. Senate approved a new round of sanctions on Russia in response to the nation’s likely interference in the 2016 U.S. presidential election, as well as its involvement in the Syrian civil war. The deal also prevents President Trump from loosening or rolling back restrictions on Russia without Congress’s approval, representing one of the most significant GOP-enforced checks on the president to date. Only two GOP senators, Utah’s Mike Lee and Kentucky’s Rand Paul, voted against the sanctions. Maryland Senator Chris Van Hollen, a democrat, was absent for the vote.The decision comes amid an ongoing investigation to determine whether members of the Trump administration colluded with Russian officials to influence the results of the election—and could signal a growing bipartisan concern over Trump’s reported sympathy toward Russia. On Tuesday, ahead of the vote, Senate Minority Leader Chuck Schumer said the Trump administration “has been too eager—far too eager, in my mind—to put sanctions relief on the table.” He added that the new sanctions will “send a powerful, bipartisan statement that Russia and any other nation who might try to interfere with our elections will be punished.” Before Tuesday, the U.S. had already imposed sanctions on Russia for its annexation of Crimea and aggressive military action in Ukraine. The latest round of sanctions expands the list of blacklisted businesses and individuals in Russia, targeting anyone “conducting malicious cyber activity on behalf of the Russian government.” The sanctions also pertain to those supplying weapons to the government of Syrian President Bashar al-Assad, who is backed by Russia. The U.S. has frequently accused the Assad regime of carrying out human rights abuses, the latest of which reportedly involved cremating the remains of thousands of hanged prisoners. Finally, the sanctions target Russia’s mining, metal, shipping, and railway sectors, parts of its energy sector, and individuals who have conducted business with its intelligence or defense sectors.

    Germany, Austria Slam US Sanctions Against Russia, Warn Of Collapse In Relations - Less than a day after the Senate overwhelmingly voted to impose new sanctions against the Kremlin, on Thursday Germany and Austria - two of Russia's biggest energy clients in Europe - slammed the latest U.S. sanctions against Moscow, saying they could affect European businesses involved in piping in Russian natural gas. Shortly after the Senate voted Wednesday to slap new sanctions on key sectors of Russia's economy over "interference in the 2016 U.S. elections" and aggression in Syria and Ukraine, in a joint statement Austria's Chancellor Christian Kern and Germany's Foreign Minister Sigmar Gabriel said it appeared that the US bill aimed at securing US energy jobs and pushing out Russian gas deliveries to Europe.   Gabriel and Kern also accused the U.S. of having ulterior motives in seeking to enforce the energy blockade, which they said is trying to help American natural gas suppliers at the expense of their Russian rivals. And they warned the threat of fining European companies participating in the Nord Stream 2 project "introduces a completely new, very negative dimension into European-American relations." In their forceful appeal, the two officials urged the United States to back off from linking the situation in Ukraine to the question of who can sell gas to Europe. "Europe's energy supply is a matter for Europe, and not for the United States of America," Kern and Gabriel said.  Some Eastern European countries, including Poland and Ukraine, fear the loss of transit revenue if Russian gas supplies don't pass through their territory anymore once the new pipeline is built. While the diplomats said that it was important for Europe and the US to form a united front on the issue of Ukraine, "we can't accept the threat of illegal and extraterritorial sanctions against European companies," the two officials warned citing a section of the bill that calls for the United States to continue to oppose the Nord Stream 2 pipeline that would pump Russian gas to Germany beneath the Baltic Sea. According to AP, half of the cost of the new pipeline is being paid for by Russian gas giant Gazprom, while the other half is being shouldered by a group including Anglo-Dutch group Royal Dutch Shell, French provider Engie, OMV of Austria and Germany's Uniper and Wintershall.

    Kremlin says Russia will not heed U.S. calls to free protesters | Reuters: The Kremlin said on Tuesday that Russian authorities would not pay attention to U.S. calls to release anti-government demonstrators who were detained on Monday during protests organized by opposition leader Alexei Navalny. "We disagree when the question is put this way. This is not the sort of calls we should be listening to," Kremlin spokesman Dmitry Peskov told a conference call with reporters. The United States condemned Russia's crackdown on anti-corruption protesters on Monday, calling on Moscow to release "peaceful" demonstrators detained by the police. Peskov said the authorities had not acted against protesters who had agreed their actions in advance. "As for those who indulged in provocative actions, breaking the law, in this case the authorities took action against them in full compliance with our legislation," said Peskov. He also said that Russia took a negative view of a U.S. Senate deal on wider sanctions against Russia. U.S. senators reached an agreement on Monday on legislation imposing new sanctions on Russia, including a provision that would prevent the White House from easing, suspending or ending sanctions without congressional approval.

    U.S. Plans Charges Against Erdogan Security Guards - -- Two men have been arrested in connection to a brawl between Turkish President Recep Tayyip Erdogan's security guards and protesters in Washington and charges are planned against a dozen guards, officials said on June 14. The melee outside the Turkish ambassador's residence during Erdogan's visit to the United States last month strained U.S.-Turkish relations. Eleven people were hurt in what Washington's police chief described as a "brutal attack" on peaceful protesters. Washington police said that Sinan Narin of Virginia was accused of felony aggravated assault, while the second man, Eyup Yildirim of New Jersey, faces two felony assault charges. Media said both were among the protesters during last month's fracas. Yildirim is in custody in New Jersey. His attorney David Holman said Yildirim is a business owner with three kids and ties to the local community and has received death threats over the incident. The clash happened as Erdogan arrived at the ambassador's residence after a White House meeting with President Donald Trump on May 16. The Turkish Embassy has blamed the violence on demonstrators linked to the outlawed Kurdistan Workers Party, which Turkey and the United States consider a terrorist group -- a charged denied by the protesters. Media reported that law enforcement officials plan to announce charges on June 15 against a dozen members of the Turkish president's security detail. Washington Mayor Muriel Bowser and Police Chief Peter Newsham are scheduled to hold a news conference on the incident. The U.S. State Department said it is committed to holding those responsible for the violence accountable.

    North Korea 'most urgent' threat to security: Mattis | Reuters: U.S. Defense Secretary Jim Mattis said on Monday that North Korea's advancing missile and nuclear programs were the "most urgent" threat to national security and that its means to deliver them had increased in speed and scope. "The regime’s nuclear weapons program is a clear and present danger to all, and the regime’s provocative actions, manifestly illegal under international law, have not abated despite United Nations’ censure and sanctions," Mattis said in a written statement to the House Armed Services Committee. "The most urgent and dangerous threat to peace and security is North Korea," the statement added. "North Korea's continued pursuit of nuclear weapons and the means to deliver them has increased in pace and scope." Earlier this month, the U.N. Security Council expanded targeted sanctions against North Korea after its repeated missile tests, adopting the first such resolution agreed by the United States and China since President Donald Trump took office. The U.S. focus on North Korea has been sharpened by dozens of North Korean missile launches and two nuclear bomb tests since the beginning of last year and by Pyongyang's vow to develop a nuclear-tipped intercontinental ballistic missile capable of hitting the U.S. mainland. Mattis, speaking before the panel, warned of the potential losses in the case of conflict with North Korea. "It would be a war like nothing we have seen since 1953 and we would have to deal with it with whatever level of force was necessary ... It would be a very, very serious war," Mattis said.

    U.S. weighs sanctions on countries doing business with North Korea | Reuters: The United States is weighing imposing sanctions on countries that do business with North Korea and looking for ways to revive strained relations with Russia, U.S. Secretary of State Rex Tillerson said on Tuesday. At a committee hearing, he also defended President Donald Trump's plans for steep reductions in U.S. spending on diplomacy and foreign aid. Senators from both major parties charged that such cuts would ultimately hurt America. At the start Tillerson told lawmakers that North Korea had released Otto Warmbier, a U.S. university student held captive for 17 months, and the United States was seeking the release of three other detained Americans. Washington has sought to increase economic and political pressure on Pyongyang because of its nuclear and ballistic missile programs. The North has conducted five nuclear tests and is believed to be making progress toward an intercontinental ballistic missile that could hit the United States. Tillerson said Washington is discussing North Korea with all of its allies, and seeing some response from China, its biggest trading partner. He said North Korea would top the agenda at next week's high-level talks between U.S. and Chinese officials. Tillerson said the United States would have to work with other countries to deny North Korea access to basics such as oil and will have to consider whether to impose sanctions on those doing business with North Korea. "We are in a stage where we are moving into this next effort of, 'Are we going to have to, in effect, start taking secondary sanctions because countries we have provided information to have not, or are unwilling, or don’t have the ability to do that?'" Tillerson told the Senate Foreign Relations Committee.

    EXCLUSIVE: Trump officials considered 'ultimatum' to Cuba | TheHill: The Trump administration considered severing diplomatic relations with Cuba before deciding on narrower changes to former President Barack Obama’s policy, according to documents obtained exclusively by The Hill. During a high-level National Security Council (NSC) meeting last month, officials weighed the possibility of issuing an “all or nothing” ultimatum to the Cuban government to improve its human-rights situation. If the changes were not adopted by a set deadline, the U.S. would revert to its Cold War-era Cuba policy, wiping out Obama’s historic rapprochement with the Communist nation.The step would have entailed sweeping measures, such as cutting off formal diplomatic relations, shuttering the U.S. Embassy in Havana and “stopping all bilateral engagement,” according to an NSC memo that was circulated to senior decisionmakers at key Cabinet agencies in advance of a decision on the policy change. The U.S. also would have reinstated trade and travel restrictions on Cuba and may have set in motion a process to reclassify the island as a state sponsor of terrorism. Another option listed in the memo was reinstating the “wet foot, dry foot” policy that allowed any Cubans who arrive on American soil to remain and seek permanent residency. But that possibility was never seriously discussed, according to a source familiar with the conversations. U.S. law enforcement officials strongly objected to such a change out of concern it could spark a wave of Cuban migration, the source said. 

    What went wrong with the F-35, Lockheed Martin’s Joint Strike Fighter? -The F-35 was billed as a fighter jet that could do almost everything the U.S. military desired, serving the Air Force, Marine Corps and Navy – and even Britain’s Royal Air Force and Royal Navy – all in one aircraft design. It’s supposed to replace and improve upon several current – and aging – aircraft types with widely different missions. It’s marketed as a cost-effective, powerful multi-role fighter airplane significantly better than anything potential adversaries could build in the next two decades. But it’s turned out to be none of those things. Officially begun in 2001, with roots extending back to the late 1980s, the F-35 program is nearly a decade behind schedule, and has failed to meet many of its original design requirements. It’s also become the most expensive defense program in world history, at around US$1.5 trillion before the fighter is phased out in 2070. The unit cost per airplane, above $100 million, is roughly twice what was promised early on. Even after President Trump lambasted the cost of the program in February, the price per plane dropped just $7 million – less than 7 percent. And yet, the U.S. is still throwing huge sums of money at the project. Essentially, the Pentagon has declared the F-35 “too big to fail.” As a retired member of the U.S. Air Force and current university professor of finance who has been involved in and studied military aviation and acquisitions, I find the F-35 to be one of the greatest boondoggles in recent military purchasing history. The Pentagon is trying to argue that just because taxpayers have flushed more than $100 billion down the proverbial toilet so far, we must continue to throw billions more down that same toilet. That violates the most elementary financial principles of capital budgeting, which is the method companies and governments use to decide on investments. So-called sunk costs, the money already paid on a project, should never be a factor in investment decisions. Rather, spending should be based on how it will add value in the future. Keeping the F-35 program alive is not only a gross waste in itself: Its funding could be spent on defense programs that are really useful and needed for national defense, such as anti-drone systems to defend U.S. troops.

    Mattis: ‘No Enemy’ Has Done More Harm to Military Readiness Than Congress: In a marathon series of congressional hearings in the second week of June 2017, U.S. Defense Secretary James Mattis warned of looming threats to U.S. national security from terror groups, Russia, Iran, North Korea, and even climate change. But his harshest warning concerned... Congress. Mattis blasted the legislative branch for failing to pass budgets on time and refusing to repeal the arbitrary budget caps that lawmakers passed into law in 2011 as part of the Budget Control Act, aka “sequestration.” “In the past, by failing to pass a budget on time or eliminate the threat of sequestration, Congress sidelined itself from its active constitutional oversight role,” Mattis said at all three of his hearings, reading from a prepared statement. “It has blocked new programs, prevented service growth, stalled industry initiative, and placed troops at greater risk.” “Despite the tremendous efforts of this committee,” Mattis added, separately addressing the House and Senate appropriations committees and the House armed services committee, “Congress as a whole has met the present challenge with lassitude, not leadership.” The Budget Control Act capped all federal discretionary spending—basically, all budget lines except health and retirement entitlements—through the 2021 fiscal year. The way the caps are calculated is complex. To put it simply, the government required itself to eliminate $2.4 trillion in planned spending over 10 years starting in 2011.The caps have translated into lower budgets than the Defense Department deems necessary to pay troops, operate equipment and develop and buy new technology. Yes, the Pentagon still spends about $600 billion annually, not counting funding for frontline operations. But that number should be tens of billions higher, Mattis and other senior military officials have argued. 

    45 Dead After Oxygen Sucked Out Of Room During Pentagon Planning Session - An entire Joint Planning Group (JPG) died from asphyxiation after a planner and a future operations officer sucked all the oxygen out of the room during a half-hour argument over the meaning of the phrase “direct support,” sources confirmed today.“Our first responders were on the scene within ten minutes,” said Fort Myer Fire Department Spokesman Scott Fuller. “But first they had to conduct mission analysis, Course of Action development, and preparation of a Rescue Commander’s Estimate in PowerPoint.”Sources reported that this took more than two precious hours, and by then, many of the 45 service members in the room were deceased.“We did find several people still breathing,” said Fuller. “But when we questioned them about the difference between constraints and limitations, their answers were incoherent. What’s more, none of them displayed any disruptive thinking capability.”

    Trump gives Priebus until July 4th to clean up White House - POLITICO: President Donald Trump has set a deadline of July 4 for a shakeup of the White House that could include removing Reince Priebus as his chief of staff, according to two administration officials and three outside advisers familiar with the matter. Although Trump has set deadlines for staff changes before, only to let them pass without pulling the trigger, the president is under more scrutiny than ever regarding the sprawling Russia investigation, which is intensifying the pressure on his White House team. Days after his return from his first foreign trip late last month, Trump berated Priebus in the Oval Office in front of his former campaign manager Corey Lewandowski and deputy campaign manager David Bossie for the dysfunction in the White House, according to multiple sources familiar with the conversation. Trump had been mulling bringing on Bossie as his deputy White House chief of staff and Lewandowski as a White House senior adviser with a portfolio that includes Russia, but he told the two at that meeting that they would not be joining the White House until Priebus had a fair chance to clean up shop, according to the sources. “I’m giving you until July 4,” Trump said, according to a person with knowledge of the conversation. “I don’t want them to come into this mess. If I’m going to clean house, they will come in as fresh blood.”White House press secretary Sean Spicer, in a statement on Sunday, disputed the idea that Priebus is facing a July 4 deadline. “Whoever is saying that is either a liar or out of the loop,” Spicer said. 

    The Worst of Donald Trump’s Toxic Agenda Is Lying in Wait – A Major U.S. Crisis Will Unleash It -- Naomi Klein --During the presidential campaign, some imagined that the more overtly racist elements of Donald Trump’s platform were just talk designed to rile up the base, not anything he seriously intended to act on. But in his first week in office, when he imposed a travel ban on seven majority-Muslim countries, that comforting illusion disappeared fast. Fortunately, the response was immediate: the marches and rallies at airports, the impromptu taxi strikes, the lawyers and local politicians intervening, the judges ruling the bans illegal. The whole episode showed the power of resistance, and of judicial courage, and there was much to celebrate. Some have even concluded that this early slap down chastened Trump, and that he is now committed to a more reasonable, conventional course.That is a dangerous illusion.It is true that many of the more radical items on this administration’s wish list have yet to be realized. But make no mistake, the full agenda is still there, lying in wait. And there is one thing that could unleash it all: a large-scale crisis. Large-scale shocks are frequently harnessed to ram through despised pro-corporate and anti-democratic policies that would never have been feasible in normal times. It’s a phenomenon I have previously called the “Shock Doctrine,” and we have seen it happen again and again over the decades, from Chile in the aftermath of Augusto Pinochet’s coup to New Orleans after Hurricane Katrina. As Milton Friedman wrote long ago, “Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” Survivalists stockpile canned goods and water in preparation for major disasters; these guys stockpile spectacularly anti-democratic ideas.

    Docket Number USTR-2017-0006 COMMENTS CONCERNING THE PROPOSED RENEGOTIATION OF THE NORTH AMERICAN FREE TRADE AGREEMENT  JUNE 12, 2017 Public Citizen welcomes the opportunity to comment on the Office of the U.S. Trade Representative’s (USTR) proposal to enter into renegotiations of the North American Free Trade Agreement (NAFTA). We have conducted extensive analysis of U.S. trade and investment agreements and their outcomes, starting in 1991 during the initial NAFTA negotiations. President Donald Trump has labeled NAFTA “the worst trade deal in the history of the country.” He promised to renegotiate it to bring down our large, persistent NAFTA deficit and to create manufacturing jobs here. He pledged to withdraw from it if he could not “get a much better deal for our workers.” NAFTA set a new – and now proven failed – trade agreement model. It was a radical break from past agreements that focused on traditional trade matters, such as tariff and quota elimination. NAFTA is rigged with investor protections and other incentives to offshore jobs as well as special interest provisions that have resulted in damage to most Americans’ interests as workers and consumers. To stop this damage and to create a new model for U.S. trade agreements, NAFTA must be replaced – not tweaked. Yet, some in the administration, including repeatedly the official who President Trump has said will lead trade policy, Commerce Secretary Wilbur Ross, suggest the “starting point” for renegotiations is the terms of the Trans-Pacific Partnership (TPP). Not only was the TPP based on expanding the damaging model established with NAFTA, but President Trump declared the TPP a disaster and formally withdrew from the deal, which could not obtain majority support in Congress. Failing to remove NAFTA’s damaging provisions and adding TPP terms will make NAFTA worse for working people. Monthly government data will show whether a revised NAFTA delivers on the deficit reduction and job creation President Trump promised. Moving those numbers will require eliminating NAFTA’s investor protections that promote job and investment offshoring, reversing its ban on Buy American procurement and adding terms that raise Mexican wage levels and environmental standards, among other changes. Absent a major redo that can stop NAFTA’s ongoing damage, it is better to have no NAFTA than an agreement that maintains NAFTA’s current investment, procurement, and other terms that directly harm working people. That is the case because NAFTA is causing significant ongoing damage for working people, healthy communities and a clean environment here and in Mexico and Canada.

     Tax evaders exposed: why the super-rich are even richer than we thought - The statistics on inequality – those used, for instance, in Thomas Piketty’s bestseller, Capital in the Twenty-First Centuryonly include the income and wealth the taxman sees. So how high is inequality when also accounting for what he doesn’t see? Recent leaks from tax havens suggest the gap between the rich and the rest is even wider than we think. Tax records are invaluable for the study of economic inequality. They contain detailed information about the income (and, in some countries, wealth) of taxpayers. Much of this information comes directly from employers and banks, and is therefore reliable. And because tax records exist as far back as the early 20th century, they can be used to shed light on the long-term evolution of inequality. The graphs published on the World Wealth and Income Database, for example, show just how powerfully this information can inform the public debate. The top 1% income share is now closely scrutinised by journalists and policymakers in the US, where the rise of inequality has been particularly extreme; it even gave the Occupy movement its motto: “We are the 99%.”  But for all their merits, tax data raise an obvious issue: by their very nature, they entirely miss tax evasion. Is this a serious problem? That depends: if tax evasion is equally prevalent among rich and poor, measured inequality will be unaffected. But if the rich dodge taxes more than others, tax records will underestimate inequality.  Before now, there hadn’t been any attempts to address the measurement of global tax evasion systematically. The reason is simple: the lack of comprehensive information about who skirts taxes. The key data source used in rich countries to study tax evasion is random tax audits – but these audits do not capture tax evasion by the very wealthy, because few of them are audited, and because random audits fail to detect sophisticated forms of evasion involving shell companies and hidden accounts.  In our recent study, however, we exploited a massive trove of data leaked from HSBC Switzerland, the so-called HSBC files, to fill this gap.

    Scam alert: Trump’s $1tn ‘infrastructure plan’ is a giveaway to the rich - At a roundtable discussion with state transportation officials on Friday, Donald Trump said America’s ageing roads, bridges, railways, and water systems were being “scoffed at and laughed” at. He pledged that they “will once again be the envy of the world”. This seems to be a core theme for Trump: America’s greatness depends on others envying us rather than scoffing and laughing at us. To be sure, America is in dire need of vast investments in infrastructure. The country suffers from overflowing sewage drains, crumbling bridges, rusting railroad tracks, outworn roads, and public transportation systems rivaling those of third-world nations. The American Society of Civil Engineers, giving America’s overall infrastructure a grade of D-plus, says we would need to spend $3.6tn by 2020 to bring it up to par. The problem isn’t that we’re being laughed at. It’s that we’re spending hours in traffic jams, disrupted flights, and slow-moving trains. And we’re sacrificing billions in lost productivity, avoidable public health problems, and increased carbon emissions. But what Donald Trump is proposing won’t help. It’s nothing but a huge and unnecessary tax giveaway to the rich. His “$1tn infrastructure plan”, unveiled last week, doesn’t amount to $1tn of new federal investment in infrastructure. It would commit $200bn of federal dollars over ten years, combined with about $800bn of assorted tax breaks to get developers to build things instead of the federal government doing it. And it’s hardly a plan. It’s not much more than a page of talking points. Worse, its underlying principle is deeply flawed. It boils down to a giant public subsidy to developers and investors, who would receive generous tax credits in return for taking on the job. Which means the rest of us would have to pay higher taxes or get fewer services in order to make up for the taxes the developers and investors would no longer pay. 

     Democrats use Flint residents as props to push phony infrastructure plan - A coalition of protest groups in the orbit of the Democratic Party called a press conference last week attended by Flint residents to promote the Congressional Progressive Caucus’ (CPC) infrastructure program being advanced as a supposed alternative to the Trump administration’s infrastructure proposal.The CPC, a self-styled “progressive” faction of the Democratic Party, is pushing its 21st Century New Deal for Jobs which it claims to be “a bold jobs and infrastructure package.”The CPC proposed $2 trillion budget over ten years ostensibly will cover everything from rebuilding roads, bridges, waterways, ports, dams, levees, public schools, transportation and even high-speed internet facilities, and updated Veteran and Federal Aviation Authority facilities.The CPC says the effort would be paid for by closing unspecified corporate tax loopholes, enacting other tax reforms and by repatriating funds held by US companies overseas. Minnesota Democratic Congressman Keith Ellison is quoted on the CPC’s web site: “It’s about replacing the pipes in Flint that poisoned an entire community, making our roads and bridges safer, and rebuilding crumbling schools.“As Democrats, we believe we must improve the lives of millions of hardworking families, putting millions of Americans to work at good jobs, and make our tax system fairer by making the wealthiest pay their fair share. The Republican infrastructure plan is nothing more than another tax break for millionaires and billionaires.”What hogwash! The CPC plan has no chance of being enacted. Further, the proposal to close tax loopholes is a dodge that has been used by Democratic and Republican administrations going back to Ronald Reagan to avoid any real inroads on the income of the super rich.

     What is in Trump’s $200 billion infrastructure plan? - Trump’s infrastructure plan was released late last month as part of his proposed 2018 budget. The vague proposal, which according to his administration will be worked out in detail by the fall of this year, will lead to the mass sell-off of public infrastructure throughout the country while simultaneously slashing the transportation budget. The plan earmarks $200 billion over 10 years. Though there are no details yet, a Trump administration memo suggests that the bulk of the money will be given to states and local governments as incentives for privatizing public infrastructure. Moreover, more than $200 billion will simultaneously be cut from the transportation budget. This will likely hurt, among other programs, Amtrak, the national passenger rail service, potentially shutting it down, and TIGER, a program that gives state grants to fund infrastructure projects. Trump’s dubious plan will not repair or upgrade the decrepit and outmoded American infrastructure and transit systems. The proposal will force the public to pay new tolls and fees for basic transportation needs with no guarantees that the monopolies that control the roads will maintain them properly. The true beneficiaries of Trump’s plan are a handful of financial parasites and corporate conglomerates that will rake in the cash from this unprecedented transaction. Everything about the plan stinks of a disastrous con job. Trump ran for president on the promise that he would bring $1 trillion in infrastructure spending to the decaying and broken infrastructure of the United States. It is notable then that his administration has essentially slipped this into the 2018 budget without any mention of it to the public. The deal is too rotten to show more publicly. The heart of the deal seems to be the encouragement of something known as P3, that is a public-private partnership schemes. The plan has most notably been tested in Australia, where it is known as the “Asset Recycling Initiative.”    Australian critics of ‘asset recycling’ say it is basically ‘selling a hospital to build a road,’ with the federal government bribing local governments with incentive payments in order to sell off public assets.” 

    Trump Move on Job Training Brings ‘Skills Gap’ Debate to the Fore – NYTimes - President Trump is taking one the most concrete steps of his presidency on Thursday to address the employment prospects of workers left behind by the current economic expansion. In doing so, he also joins a long-running and occasionally contentious debate over whether those workers have the skills they need to land desirable job.  Mr. Trump’s action comes in the form of an executive order expanding federally funded apprenticeship programs. The order would create a category of programs that industry groups and other third parties could develop and then submit for Labor Department approval, rather than working within existing department guidelines.“Apprenticeships place students into great jobs without the crippling debt of traditional four-year college degrees,” Mr. Trump said. “Instead apprentices earn while they learn.”Mr. Trump would redirect over $100 million of federal job training money to pay for the new apprenticeships, supplementing $90 million in funding for the existing program. Corporate groups hailed the idea of expanding apprenticeship programs and making them more flexible, arguing that apprenticeships are a reliable path to good-paying jobs in sectors like retail and hospitality for those who could no longer support themselves in production sectors like manufacturing.The administration’s interest in apprenticeships stands in contrast to the cutbacks for other forms of job training in its budget proposal, involving far larger sums. The Association of Community College Trustees said that while it welcomed Thursday’s move, it remained worried about “the severe cuts proposed to federal work force and education programs.”Underlying the relatively modest size and scope of Mr. Trump’s proposal is a much bigger idea about why workers who have lost good-paying jobs that do not require a college degree are struggling to find work at comparable wages. In the eyes of the president and many corporate leaders, the crux of the problem is skills — the proposition that employers are eager to fill millions of good-paying jobs that workers lack the skills to perform.

    Can Trump’s “Apprentice” model fix infrastructure and create jobs? – Brookings -- Following a week-long focus on infrastructure, President Trump revealed few additional details on his long-awaited $1 trillion plan. His announcement to privatize air traffic control and the steps he outlined to streamline infrastructure permitting rehashed ideas that have been around for some time. However, one interesting new point did emerge: an infrastructure workforce training initiative. In a short set of visuals released by the White House, the initiative proposes to focus on skills-based apprenticeship education and support up to one million apprentices over two years. While the initiative lacks many specifics, it represents one of the more tangible infrastructure goals spelled out by the administration up to this point–and may offer insight into a broader range of workforce development efforts still to come.  But can Trump, perhaps best known for his experience on “The Apprentice” when dealing with labor market issues, design and deliver a program that tackles the infrastructure investment gap while providing clearer pathways to economy opportunity?  The initial evidence seems less than promising. First, his budget’s proposed cuts to federal job training programs do not square with his more recent and ambitious pronouncements. Second, the lack of clarity on what these apprenticeship efforts would exactly entail is also concerning, including how any new efforts would gel with existing federal programs and how they would ultimately identify the specific workers (and skillsets) to be prioritized. Yet if this week’s announcement is really just a starting point, it is an opportune time to design a new federal infrastructure apprenticeship program from the ground up. Ideally, such a program would respond to the depth and breadth of opportunities present in this segment of the labor market, based on several guiding principles:

    • Scale to national needs.
    • Broaden infrastructure’s scope.
    • Design flexible training programs.
    • Integrate with other public and private peers.

     Tort Reform Bills Are Silently Advancing Through Congress - Republican lawmakers have been trying, unsuccessfully, to pass tort reform laws in the United States for decades. House Republicans are now taking advantage of the attention focused on other issues to quietly advance several tort reform bills.A tort is an action or infringement that causes loss, harm and/or injury, leading to civil legal liability. Tort reform refers to changing or altering the ground rules of tort-based lawsuits by bringing in a financial limit maximum for pain and suffering and/or punitive damages. Tort reform may also involve restricting these types of lawsuits under the auspices of a Statue of Repose or Statute of Limitations. Tort reform makes it more challenging to file a lawsuit and to get a jury trial, and it places limits on awards injured plaintiffs may receive in a lawsuit. Opponents of tort reform claim that it harms the victim twice, once as a result of another’s negligence and again when an award to cope with injuries is reduced, potentially affecting lifetime care. Tort reform seriously limits the chances Americans have to file lawsuits seeking compensation for injuries. Tort reform is not new. It has been a popular issue for Republicans for many decades. Tort reform debate returns on a cyclical basis and fades away, only to reappear later. With the election of Donald Trump, tort reform has made another appearance in the House, with the Republicans introducing and passing a number of bills. The legislation attempts to introduce caps on medical malpractice awards and restrict those who wish to file a class action lawsuit. Given what appears to be the political drive to reduce awards for injury victims seeking compensation for negligence, what are the reasons for the current re-emergence of tort reform? Large business groups and the U.S. Chamber of Commerce have suggested courts are entertaining fraudulent and frivolous lawsuits. Opponents to reform ask: If the lawsuits are frivolous or fraudulent, then how would they get to court in the first place? Lawyers often hesitate to take cases without evidence and a sound basis for believing they have a chance to prevail. 

    Senate GOP won't release draft health care bill - - Senate Republicans are working to finish their draft health care bill, but have no plans to publicly release it, according to two senior Senate GOP aides. "We aren't stupid," said one of the aides. One issue is that Senate Republicans plan to keep talking about it after the draft is done: "We are still in discussions about what will be in the final product so it is premature to release any draft absent further member conversations and consensus." Why it matters: Democratic senators are already slamming Republicans for the secrecy of their bill writing process, and this isn't going to help. Republicans are sure to release the bill at some point, but it's unclear when — and they want to vote on it in the next three weeks, before the July 4 recess. What to watch What to watch: When the bill is finished, it'll be sent to the Congressional Budget Office. It'll take CBO about two weeks to evaluate and score a draft bill. Senate Republicans then want to vote on the bill before the July 4th recess. The draft bill had been expected to be finished tonight, but aides say the timing has slipped. "Conversations with CBO continue" but there are no new announcements about timing, said Don Stewart, a spokesman for Majority Leader Mitch McConnell, when asked about these plans.

    Republicans’ Secretive Plan for Health Care - NYT - While many Americans make sense of James Comey’s testimony on his meetings with President Trump, Republican senators are quietly moving toward something that has been their party’s goal for nearly eight years: dismantling the Affordable Care Act. The question, of course, is how they plan to replace it. Republicans in the Senate will need 50 votes to pass their version of the American Health Care Act. Several senators have expressed reservations about the House version of the bill, which withdraws federal support for Planned Parenthood and rolls back the Medicaid expansion accomplished by the A.C.A.. Despite the lack of consensus within the party, Senator Mitch McConnell, the majority leader, on Wednesday began the process of fast-tracking the bill under Rule 14, which enables the Senate to bypass the committee process and instead move the bill on to the Senate calendar for a vote as soon as it is ready. This will allow the legislation to move much as it did in the House – swiftly and secretively. The Senate aims to vote by the end of the month, and will probably do so with no hearings. This stands in stark contrast to the process leading up to the passage of the Affordable Care Act, which included over 100 congressional hearings..  The A.H.C.A.’s fast-tracking is not driven by necessity, but rather by the concern that a more transparent legislative process would lay bare the reality that the bill, if passed, would cause millions of Americans to lose their health insurance and drive up costs for millions of others. With only 20 percent of Americans supporting the A.H.C.A. (and only 8 percent believing the Senate should pass the House version of the bill), and support for Obamacare at an all-time high, Senate Republicans are in a bind. While abandoning the A.H.C.A. in favor of fixing Obamacare would reflect the will of the majority of the American people, it would require abandoning a central campaign pledge to the Republican base and result in an untenable reconciliation process with the more conservative House. But pursuit of a deeply unpopular policy that is likely to have disastrous health and economic consequences for millions could be far costlier as the Republicans face the possibility of a stinging defeat in 2018.

    The Senate’s three tools on health care: Sabotage, speed and secrecy - Senate Majority Leader Mitch McConnell (R-Ky.) had a problem when the American Health Care Act arrived from the House last month. What to do with a bill that is clogging your agenda but only 8 percent of Americans want you to pass and members of your own caucus swore was dead on arrival? McConnell couldn’t have missed the town halls filled with angry Americans who rely on Medicaid and see the Affordable Care Act’s protections for those with preexisting conditions as a godsend. The House bill — which the Congressional Budget Office estimates would cause 23 million to lose coverage and end those protections for many — threatened all of that. Faced with that reality, McConnell put a plan in place to pass something close to the House bill using three simple tools: sabotage, speed and secrecy.

    • Sabotage: Given the unpopularity of the AHCA, Republicans have just one argument: Obamacare has failed. The GOP premise is “bad” beats “dead.” The problem is the facts don’t support this. Medicaid — which accounts for the bulk of the ACA coverage expansion — is successful, popular and bipartisan. By acting fast, McConnell hopes to minimize the continuing and mounting evidence of sabotage as insurers file rates in places such as North Carolina and Pennsylvania that explicitly break out the specific impact of Trump’s sabotage.
    • Speed: As he watched House members scrupulously avoid constituents while on recess, McConnell clearly recognized that his best bet would be to hold a vote before the July 4 recess in hopes this would minimize pressure on vulnerable senators such as Nevada’s Dean Heller — who won his seat by a mere 12,000 votes in a state where more than 200,000 will lose Medicaid coverage.  So last week McConnell deployed Rule XIV, a fast-track procedure that bypasses the committee process and moves the bill directly to the floor.
    • Secrecy. None of this will work if the content of the bill cannot be kept secret for as long as possible. A small group of Republicans is amending the House bill behind close doors. And for all the talk of having the Senate start over and fix the bad House bill, their reported changes appear to be minimal, and to follow the blueprint laid out by Senate Majority Whip John Cornyn (R-Tex.) that: “80 percent of what the House did we’re likely to do.” The ACA’s expansion of Medicaid would end. The caps on Medicaid spending imposed by the House bill would remain. With state approval, insurers would still be able to offer Swiss cheese policies that drop benefits people with preexisting conditions need most.

    The Senate Hides Its Trumpcare Bill Behind Closed Doors – NYT editorial - A coterie of Republicans is planning to have the Senate vote before July 4 on a bill that could take health insurance away from up to 23 million people and make changes to the coverage of millions of others. And they are coming up with the legislation behind closed doors without holding hearings, without consulting lawmakers who disagree with them and without engaging in any meaningful public debate. There is no mystery why the Senate majority leader, Mitch McConnell, is trying to push this bill through quickly. The legislation would repeal major provisions of the Affordable Care Act. Opening it to scrutiny before a vote would be the congressional equivalent of exposing a vampire to sunlight.  That is one mistake Mr. McConnell, a master of the Senate’s dark arts, is not about to make. As one Republican aide put it to Axios on Monday, “We aren’t stupid.” Better to pass a terrible bill in the cover of darkness just as the House did with its version, the American Health Care Act, in the hopes that critics do not have much time to raise a stink. And then there is President Trump, who is standing ready to applaud whatever turkey the Senate produces as long as it gives him a chance to claim a win. Mr. McConnell’s strategy belies the disingenuous Republican complaint that Democrats jammed the A.C.A., or Obamacare, into law in 2010 without sufficient analysis or discussion. The Republican effort to undo the A.C.A. bears no resemblance whatsoever to that much more thorough exercise. Congress and the Obama administration spent a year on health care reform from March 2009 to March 2010. The House and Senate came up with several competing bills, held dozens of hearings, accepted Republican amendments and spent countless hours soliciting feedback from public interests groups and the health care industry. The Congressional Budget Office produced several reports to analyze the various proposals and the legislation that ultimately became law. By contrast, instead of public drafts and hearings, we now have to settle for a series of leaks from Capitol Hill about what is or isn’t in the bill. On one day, news organizations might be told that Mr. McConnell’s health care working group (which happens to be composed entirely of men) has found ways to win over more moderate senators like Rob Portman of Ohio by agreeing to phase out the expansion of Medicaid more slowly than the House bill would. Such a policy would mean that millions would still lose coverage but not as quickly as in the House version.

    Cruz Goes From ‘Lucifer’ to Dealmaker in Health-Care Overhaul -  Ted Cruz is trying a radically new role: dealmaker. The first-term senator from Texas is seeking to unite warring wings of the Republican Party around an effort to kill Obamacare and is showing a new willingness to compromise with colleagues to devise a replacement plan. It’s a significant departure for the formerly obstructionist Cruz, who lost the Republican presidential contest to Donald Trump and has long had icy relations with other lawmakers. Cruz once called Majority Leader Mitch McConnell a liar on the Senate floor, and former Republican House Speaker John Boehner once called Cruz “Lucifer in the flesh” and the most “miserable son of a bitch” he had ever worked with. His most notable legislative accomplishment so far has been to help force a shutdown of the government for 16 days in 2013 in an unsuccessful effort to strip funding from Obamacare. Cruz, 46, said Trump’s election and Republican control of the government prompted him to change his approach. These days, he’s negotiating regularly with McConnell and other senators. "The entire world changed on election day," Cruz said in one of several recent interviews. "My focus today is on delivering results and not wasting this historic opportunity."Fellow Republicans say they’re pleased with Cruz’s current approach. Senator John Cornyn, the Republican whip and fellow Texas senator, called his health-care efforts "constructive." "I like the way Senator Cruz has been conducting himself," Cornyn said. Whether he’ll be able to help bridge the Republican divide, given that his previous behavior left a strong distaste with a number of lawmakers, remains to be seen. McConnell has said Republicans are nearing the introduction of their health-care plan. But some GOP senators have said they’re skeptical about whether their party can pass a bill.

    GOP Senate leaders aim to bring health-care legislation to the floor by end of June - Senate Republican leaders are aiming to bring a major revision to the nation’s health-care laws to the Senate floor by the end of June even as lingering disagreements, particularly over Medicaid, threaten to derail their efforts, several Republicans familiar with the effort said Thursday. President Trump and Senate Majority Leader Mitch McConnell (R-Ky.) are pressing for an ambitious timeline to complete the bill, although it is being drafted in the Senate with little assistance from the White House. The push has been laden with secrecy — and rank-and-file Republican senators are increasingly frustrated that McConnell and a small group of GOP aides are crafting a bill behind closed doors. “My primary concern is writing a bill and not having enough time to analyze it,” Sen. Ron Johnson (R-Wis.) said in an interview this week. “I don’t want to get jammed.” Asked to describe his concerns with the process, Johnson quipped, “How much time do you have?” Impassioned policy disputes have flared among some GOP senators in large group meetings at which McConnell has floated ideas from the drafting process. But those disputes have not deterred him from the goal of a floor vote before the July 4 recess, said the Republicans familiar with the process, who spoke on the condition of anonymity to talk candidly about private conversations. In public this week, McConnell and other Republican leaders have hedged their aggressive timeline. But, as McConnell’s team sees it, the options have all been vetted. Now, the difficult decisions about what to put in and leave out of the final bill are all that remain. “We’ve been dealing with this issue for seven years,” McConnell said this week. “We’re now working on coming up with a solution.” Another X factor is Trump’s shifting position on the legislation. Just this week, he called the House version “mean” — causing concern about how forcefully he will support the Senate bill in the coming weeks. By all accounts, the Senate bill will be dramatically different from the measure that emerged from the House in May, and it is entirely unknown how and whether the two chambers can reconcile their differences and actually enact legislation revising the Affordable Care Act, known commonly as Obamacare. 

    US Senate health bill drafted in secrecy: A conspiracy against the health care of millions - The US Senate is moving forward with its drafting of legislation to repeal and replace the Affordable Care Act (ACA) behind closed doors. Little information has been revealed about the contents of the bill being drawn up by the Senate’s 13-member “working group,” aside from several leaks to the media. Senate Republicans plan to bring the legislation to a floor vote without a single committee hearing, and without a formal, open drafting session. They hope to pass the bill by an expedited reconciliation procedure, which requires only a simple majority and avoids the possibility of a filibuster by Senate Democrats. Only a small group of senators know what is in the bill. Those being kept in the dark include not only Democrats, but Republicans who are not in the working group. An aide to one of those senators in the group told Axios that no draft would released because “we aren’t stupid,” an apparent allusion to the draconian features contained within it, including the gutting of Medicaid and its attack on the health care of millions of poor, older and sick Americans. The apparent plan is to send the finalized Senate bill to the Congressional Budget Office (CBO) for scoring before it is then released to the press and the public, with a goal of a vote on the Senate floor before July 4. The House Republicans’ bill, the American Health Care Act (AHCA), is deeply unpopular. Recent Public Policy Polling shows that only 24 percent of voters support the AHCA and 55 percent oppose it. Senate Republicans are well aware that a bill that bears any resemblance to the AHCA will face similar public opposition. The secrecy surrounding the bill has been bolstered by a significant curtailing of on-camera interviews within the Capitol. According to the Washington Post, the prohibition of televised interviews was issued Tuesday at the point when senators were reportedly going to be informed about some of the features of the bill at a luncheon on Capitol Hill. The prohibition apparently came from the Senate Rules Committee. 

    I’ve covered Obamacare since day one. I’ve never seen lying and obstruction like this - Sarah Kliff - Republicans do not want the country to know what is in their health care bill. This has become more evident each day, as the Senate plots out a secretive path toward Obamacare repeal — and top White House officials (including the president) consistently lie about what the House bill actually does.  There was even a brief moment Tuesday where Senate Republicans flirted with the idea of banning on-camera interviews in congressional hallways, a plan quickly reversed after outcry from the press. “The extreme secrecy is a situation without precedent, at least in creating health care law” writes Julie Rovner, who has covered health care politics since 1986 and is arguably the dean of the DC health care press corps.  I don’t have quite as long of a tenure as Rovner, but I have been covering health care politics since Democrats began debating the Affordable Care Act in 2009. It’s become obvious to me, particularly this week, that Republicans plan to move more quickly and less deliberatively than Democrats did in drafting the Affordable Care Act. They intend to do this despite repeatedly and angrily criticizing the Affordable Care Act for being moved too quickly and with too little deliberation.  My biggest concern isn’t the hypocrisy; there is plenty of that in Washington. It’s that the process will lead to devastating results for millions of Americans who won’t know to speak up until the damage is done. So far, the few details that have leaked out paint a picture of a bill sure to cover millions fewer people and raise costs on those with preexisting conditions. The plan is expected to be far-reaching, potentially bringing lifetime limits back to employer-sponsored coverage, which could mean a death sentence for some chronically ill patients who exhaust their insurance benefits.

    Why The GOP Is So Hell-Bent On Passing An Unpopular Health Care Bill -- Congressional Republicans and President Trump seem hell-bent on pushing through a bill to replace parts of the Affordable Care Act. “Duh,” you say, “the Republicans have been promising to repeal Obamacare since literally the day it was passed.” But here’s where things get interesting. We tend to assume political parties want to get their policy goals adopted, but also to stay in power. Republicans won control of Congress in 2010 in part because Democrats pushed through a health care bill that the plurality of voters did not approve of, according to several major polls from that time. The Republicans are doing the same thing now, only their health care bill is significantly more unpopular than the ACA was in 2010. So why are Republicans so determined to pass a bill that they already seem to know is not popular and could hurt them in next year’s elections? It’s almost impossible to determine exactly what drives a politician’s actions, we can still identify four likely reasons that Republicans are pushing so hard on health care.

    • 1. Promise keeping There is a common view that politicians make promises, get elected and then don’t try to follow through. Wrong. Political science studies show that American presidents actually do try to implement most of the agenda they campaigned on. The academic research is not as conclusive about members of the Congress, but Politifact found that in 2010, House Republicans campaigned on a 21-page set of proposals and brought nearly all of those ideas up for votes.
    • 2. Satisfying activists and donors. One main school of political scientists defines a political party as consisting of three parts: the party’s voters, its elected officials, and the “party-as-organization,” meaning the groups that support and influence the party, including powerful labor unions on the Democratic side and groups like the National Rifle Association for the GOP.
    • 3. Ideology. The current GOP rhetoric about Obamacare — that its markets in many states are collapsing and that therefore Republicans must enact a bill reforming the legislation and rescuing Americans who may be left without coverage — is misleading. While Trump and others in his party are eager to paint Obamacare as collapsing under its own weight, some insurance companies are publicly saying that one of main reasons they are abandoning the Obamacare marketplaces is that they are not sure that the Trump administration will take steps to support them. And the Republicans’ AHCA bill includes cuts to Medicaid, which has nothing to do with the Obamacare marketplaces.
    • 4. Annoying liberals “Conservative politics is now less about ideas or accomplishments than it is about making the right enemies cry out in anguish,” wrote Charles Sykes, a longtime conservative radio talk show host, in a recent New York Times op-ed titled “If Liberals Hate Him, Then Trump Must Be Doing Something Right.”

    I feel like I’m losing my mind. What are Republican Senators trying to do? ==  Aaron Carroll - You’ve probably already read a million thought pieces on how the Republican Senate AHCA bill is being written totally in secret, no one knows what’s in it, etc. So I’m not going to bother with that. But this exchange, in a revealing post over at Vox  where reporters asked Republican Senators to explain their bill, has me losing my mind:

    • Tara Golshan, Vox: Generally, what are the big problems this bill is trying to solve?
    • John McCain: Almost all of them. They’re trying to get to 51 votes.
    • Tara Golshan: Policy-wise. What are the problems in the American health care system this is trying to solve — and is the bill doing that right now?
    • John McCain: Well, it’s whether you have full repeal, whether you have partial repeal, whether you have the basis of it. It’s spread all over.
    • Tara Golshan: But based on the specifics of the bill you have heard so far, is it solving the problems in the health care system?
    • John McCain: What I hear is that we have not reached consensus. That’s what everybody knows.
    • Tara Golshan: Right, but outside of getting the votes. From what you hear of the actual legislation being written is it solving the problems you see —
    • John McCain: It’s not being written. Because there’s no consensus.
    • Tara Golshan: But generally speaking, what are the big problems it is trying to solve?
    • John McCain: You name it. Everything from the Repeal caucus, which as you know they have made their views very clear — Rand Paul, etc. And then there are the others on the other side of the spectrum that just want to make minor changes to the present system. There’s not consensus.

    Five times Tara Golshan (who deserves some sort of an award) asks Senator McCain what the bill is trying to do, what problems it’s trying to solve. FIVE TIMES. And, five times, Senator McCain can only discuss the difficulties of getting to 50 votes. Fifty Republican votes, mind you.  There’s literally no discussion of cost, of quality, of access. No mention of premiums or deductibles or even taxes. No concerns about anything even remotely related to healthcare at all. I can’t tell if he didn’t want to answer, or if actual healthcare literally didn’t cross his mind. Some days I despair.

    Obamacare “Reform” May Be Going Pear-Shaped in the Senate --  Yves Smith - The last few days there have been worried reports about how the Republicans had gone into a secret huddle and were rumored to be on their way to coming up with Obamacare “reform”. Mind you, even though we have been critics of Obamacare (its clearest benefit has been Medicaid expansion, but residents of many states are left out), we do not underestimate the ability of Republicans to make it worse, particularly when that’s the point. But our view has long been that anything that would satisfy the House Freedom Caucus crazies extremists, who have enough seats to be able to deny Republicans a majority vote, would not fly in the Senate. Gerrymandering has created Congressional districts where elections are settled in primaries. Too often for Republicans, being more rabidly right wing is the royal road to victory. By contrast, enough Senators hail from big or biggish states with sufficiently diverse economic and social profiles that bowing to Freedom Caucus dictates would be political suicide.   The latest news reports suggest that the Republicans can’t even get their act together in the Senate to agree on a bill.  Recall that the Republicans have only a two seat majority in the Senate. They can’t afford much in the way of defections. Even though Republican Senators were trying to craft a more moderate version of the bill than the one that passed the House, there are enough hard core conservatives in the Senate to make that difficult, if not impossible. From the Wall Street Journal: No Republicans have taken a fixed position for or against the bill, in part because its language hasn’t yet been finalized. But President Donald Trump’s recent private disparagement of the bill passed by the House last month as too stingy suggests the Senate legislation is likely to only tilt more toward the chamber’s centrists. That’s making it a harder sell for conservative senators including Rand Paul of Kentucky and Mike Lee of Utah…  Outside conservative groups, fearing that Senate GOP leaders are watering down the House bill’s Medicaid savings and rollback of ACA regulations, have meanwhile begun speaking out more forcefully in recent days. “Everything we’re hearing right now is frustrating and concerning to us,”   Time weighs against getting a bill passed. Generally speaking, protracted negotiations are failure prone. And here, the Republicans know it behooves them to get their act together, yet they seem unable to.  Making things more fraught, insurers have until June 21 to decide what insurance they will sell on specific state Obamacare marketplaces.

    Murkowski: 'I just truly do not know' if I can support GOP health bill | TheHill: Sen. Lisa Murkowski (R-Alaska), a potential key swing vote on an ObamaCare repeal-and-replace plan, isn’t sure she could support the emerging Senate Republican healthcare bill. When asked Thursday if she had confidence she could eventually support a bill, Murkowski said she didn’t know. “I just truly do not know, because I don’t know where it’s going,” she said. Murkowski wouldn’t commit when asked if she would support a seven-year phaseout of the Medicaid expansion, which some moderate GOP senators are pushing. Nor would she say whether she would support a slower phaseout or a faster one. “My position on Medicaid expansion and my support for it hasn’t changed," Murkowski said. The Alaska Republican has previously said she wouldn’t vote to repeal the Medicaid expansion if the Alaska state Legislature wants to keep it. And she was one of four senators who sent a letter to Majority Leader Mitch McConnell(R-Ky.) in early March saying they couldn't support a bill that didn't have protections for people in the Medicaid expansion population. A group of moderate Republican senators led by Rob Portman (Ohio) want to gradually phase out federal funding for Medicaid expansion over a seven-year period from 2020 to 2027. 

    Governors from both parties slam House ObamaCare bill, call for bipartisan Senate approach | TheHill: A bipartisan group of governors is calling on the Senate to adopt a bipartisan approach on healthcare while denouncing the ObamaCare repeal bill that passed the House. Senate Republicans are currently moving forward with crafting a repeal bill that they expect will only get GOP votes, arguing that Democrats are not interested in compromise. But the governors are instead calling for an approach where both parties work together. “While we certainly agree that reforms need to be made to our nation’s health care system, as Governors from both sides of the political aisle, we feel that true and lasting reforms are best approached by finding common ground in a bipartisan fashion,” the governors wrote in a letter to Senate leaders of both parties. Pennsylvania Gov. Tom Wolf (D), Ohio Gov. John Kasich (R), Montana Gov. Steve Bullock (D), Nevada Gov. Brian Sandoval (R), Colorado Gov. John Hickenlooper (D), Massachusetts Gov. Charlie Baker (R) and Louisiana Gov. John Bel Edwards (D) signed the letter. Kasich and Sandoval are particularly notable for their warning against the current Senate GOP approach, given that senators from their states, Rob Portman Rob Portman (R-Ohio) and Dean Heller (R-Nev.), are key votes on the bill. Kasich’s office said the governor has been in regular touch with Portman on the healthcare bill. The governors sharply criticized the House-passed ObamaCare repeal bill. “Improvements should be based on a set of guiding principles, included below, which include controlling costs and stabilizing the market, that will positively impact the coverage and care of millions of Americans, including many who are dealing with mental illness, chronic health problems, and drug addiction,” the governors write. 

    Think Your Liberal Governor Will Protect You From Trumpcare? You’re Wrong.- When House Republicans passed a controversial health care bill that would allow states to opt out of Obamacare’s protections for people with preexisting conditions, some GOP lawmakers sought to assure voters that few states would actually take them up on the offer.  Those protections, after all, are one of the most popular parts of the 2010 health care law; 70 percent of Americans oppose the idea of letting states do away with them. But if the GOP bill becomes law, many states will indeed eliminate preexisting-condition protections and/or at least some of Obamacare’s requirements that insurance plans cover a range of standard treatments, including maternity care and mental health. Under the GOP bill, even progressive states might have to take drastic measures to prevent their health insurance markets from exploding. In order to win over hardcore conservatives in the House, Republican leaders added an amendment that would allow any state to rewrite Obamacare’s “essential health benefits.” States could also end “community rating,” the requirement that insurance companies charge the same premiums in a given area without discriminating against folks with preexisting conditions. If a state waived community rating, insurance companies would still be required to sell insurance policies to sick people, but the insurers could charge whatever price they wanted. The likely result: Insurance would simply become unaffordable for people with expensive medical conditions. Experts say states would likely face enormous pressure to adopt at least some of the waiver options. In part, that would arise from insurance company lobbying; the industry spent tens of millions lobbying at the federal level in 2016 alone. “Insurers would be putting pressure on states, saying, ‘We can’t operate in this market. We won’t participate at all unless you start rolling back these protections,'” 

     Nearly 2 million have dropped out of Obamacare since 2017 enrollment - Nearly 2 million people haven’t paid for Obamacare coverage they selected during the 2017 enrollment season that ended on Jan. 31, the Trump administration said Monday in a report that argues Americans are clamoring for more affordable options.The Centers for Medicare and Medicaid Services said only 10.3 million of the 12.2 million people who signed up on the Affordable Care Act’s exchanges had paid the premiums necessary to keep their coverage as of March 15.The Obama administration last fall estimated that 11.4 million individuals would hold effectuated coverage on an average monthly basis over the course of 2017, meaning actual enrollment is falling short of that target, though initial sign-ups fell short of expectations to begin with.Democrats say President Trump is actively sabotaging the markets by failing to promote or fully enforce the law, though the Centers for Medicare and Medicaid Services said the numbers underscored inherent problems in the 2010 law itself — and the need to repeal and replace it.“Consumers are sending a clear message that cost and affordability are major factors in their decision to cancel or terminate coverage,” CMS Administrator Seema Verma said.  The administration’s statements marked a dramatic shift in tone from the Obama era, when the administration characterized such attrition as a natural part of enrollment cycles. Last year, about 12.7 million selected plans on the exchanges, yet enrollment slid to 11.1 million by the end of March.

    Trump Loses Travel Ban Ruling in Appeals Court - A second federal appeals court has ruled against President Trump’s revised travel ban, delivering on Monday the latest in a string of defeats for the administration’s efforts to limit travel from several predominantly Muslim countries. The administration has already sought a Supreme Court review of a similar decision issued last month by the United States Court of Appeals for the Fourth Circuit, in Richmond, Va. Monday’s decision came from the United States Court of Appeals for the Ninth Circuit, in San Francisco.The two courts employed different reasoning to arrive at the same basic conclusion. The Fourth Circuit said the revised executive order violated the First Amendment’s prohibition of government establishment of religion.The Ninth Circuit, by contrast, rested its conclusions on statutory grounds. It said Mr. Trump had exceeded the authority Congress granted him in making national security judgments in the realm of immigration without adequate justification. “The order does not offer a sufficient justification to suspend the entry of more than 180 million people on the basis of nationality,” the Ninth Circuit’s opinion said. “National security is not a ‘talismanic incantation’ that, once invoked, can support any and all exercise of executive power.” The decision, from a three-judge panel, was unanimous. It was issued jointly by Judges Michael Daly Hawkins, Ronald M. Gould and Richard A. Paez. All three were appointed by President Bill Clinton.The ruling affirmed most of a March decision from Judge Derrick K. Watson, of the Federal District Court in Hawaii. But the appeals court narrowed the injunction issued by Judge Watson in a significant way.The appeals court said Judge Watson had erred in barring the administration from conducting internal reviews of its vetting procedures while the case moved forward.

    The 9th Circuit just decreed that Trump’s Twitter feed is a legally binding stream of consciousness -  Buried in a footnote in the 9th U.S. Circuit Court of Appeals’ unanimous opinion upholding the bulk of the injunction blocking Donald Trump’s travel ban, there is a moment of reckoning in which the panel addresses whether the president’s tweets constitute binding statements of executive intent. In making a determination that the second version of the executive order exceeds the statutory authority granted to the president, the panel finds that the order “does not provide a rationale explaining why permitting entry of nationals from the six designated countries under current protocols would be detrimental to the interests of the United States.” The panel then drops a footnote to add the following observation about the president’s actual intentions in enacting the order:Indeed, the President recently confirmed his assessment that it is the “countries” that are inherently dangerous, rather than the 180 million individual nationals of those countries who are barred from entry under the President’s “travel ban.” See Donald J. Trump (@realDonaldTrump), Twitter (June 5, 2017, 6:20 PM), https://twitter.com/realDonaldTrump/status/871899511525961728 (“That’s right, we need a TRAVEL BAN for certain DANGEROUS countries, not some politically correct term that won’t help us protect our people!”) (emphasis in original). Put aside for a second the legal glory that lies in that “emphasis in original,” a parenthetical that does so much work while doing nothing at all. What’s really vital is that the footnote also does away with the claim that such tweets should be ignored or swept aside, noting a CNN piece that reported “the White House Press Secretary’s confirmation that the President’s tweets are ‘considered official statements by the President of the United States.’ ” The question of how seriously the courts should be taking the president’s informal and spontaneous tweets is a serious one, and—as was discussed on this week’s Amicus podcast—a question that hasn’t thus far been treated with great rigor. In a new article on presidential speech and the courts, Cardozo Law School’s Kate Shaw notes that the judicial branch shouldn’t take casual presidential comments too seriously. She argues, however, that there is a subset of cases in which presidential speech reflects a clear manifestation of intent to enter the legal arena, among them cases touching on foreign relations or national security and those in which government purpose constitutes an element of a legal test. Based in part on Sean Spicer’s assurance that Trump’s tweets are official statements, the per curiam panel of the 9th Circuit has just ruled that the president’s Twitter commentary clearly falls in the category of speech that belongs in the legal arena.

    17 AGs File Supreme Court Brief Opposing Trump Immigration Ban --Shortly after the 9th Circuit Court of Appeals ruled against Trump's "revised" travel ban in a largely moot decision as the White House already had appealed to the Supreme Court, moments ago 17 Attorneys General led by NY AG Eric Schneiderman, announced they are filing an amicus brief with the Supreme Court in opposition to Trump's "Muslim Ban." Attorneys General also filed suit against President Trump’s first and second immigration bans. The AGs also argue that "this is not the right time for the Supreme Court to hear this case", an attempt to squash Trump's appeal before it is even heard.“Since Day One, Attorneys General have not hesitated to fight back against President Trump’s unlawful and unconstitutional executive orders, bringing legal action in courts around the country to successfully stop both the first and second bans,” said Attorney General Eric Schneiderman. “As we’ve argued, President Trump’s second executive order is just a Muslim Ban by another name – and the courts have agreed.In a subsequent tweet, Schneiderman said "I became a lawyer to fight for our Constitution and our country. I’m going to keep fighting for you, every day and every way we can."I became a lawyer to fight for our Constitution and our country. I’m going to keep fighting for you, every day and every way we can.— Eric Schneiderman (@AGSchneiderman) June 12, 2017In the press released filed by the NY AG, Schneiderman explains that the case – IRAP v. Trump – was originally brought by the American Civil Liberties Union (ACLU) and the National Immigration Law Center (NILC). In March, a federal court in Maryland blocked key parts of President Trump’s immigration ban; last month, the Fourth Circuit Court of Appeals upheld the suspension of the ban. More from the press release:

    Supreme Court weighs fate of Trump travel ban order | TheHill: It’s decision time for the Supreme Court when it comes to President Trump’s travel ban. The justices in the coming days must decide whether to lift the temporary injunction on the ban and whether to hear the government’s appeal of lower court rulings that stopped the policy from taking effect. The order, which Trump signed in March, would ban most nationals from six predominantly Muslim countries from entering the United States for 90 days. The administration said the countries — Iran, Libya, Somalia, Sudan, Syria and Yemen — are at heightened risk for terrorism. Critics have fought the policy tooth and nail in court, calling it unconstitutional. If the court decides to take up the case, some expect that the justices will schedule a special sitting to hear oral arguments before they break for the summer at the end of the month or in early July. “I don’t think they will put it off until next term. It’s too big of a case and too important,” said Hans von Spakovsky, a senior legal fellow at the conservative Heritage Foundation. “If they do, they will have chickened out, from a political standpoint.” Carl Tobias, a professor at the University of Richmond School of Law, said a special sitting this summer is unlikely but not inconceivable. He said the court could nonetheless grant the government’s request to stay the lower court rulings, which would allow the ban to go forward, and then hear the case next term.

    Economic impact of US immigration policies in the Age of Trump - During his first hundred days in office, President Trump signed several immigration-related Executive Orders (EOs). These could imply substantive changes to US immigration policies. The stance of these executive actions is in line with the aggressively anti-immigrant positions expressed during the electoral campaign. Two EOs have restricted travel from some Muslim-majority countries – but they have been challenged in the judicial court system and eventually blocked. One has revamped the system for deportation of illegal immigrants and another has pushed forward with plans to extend the wall along the US-Mexico border. Still another EO promotes the ‘Buy American and Hire American’ principle and promises to overhaul the H-1B visa programme, making it harder for US companies to hire foreign temporary workers. Without real legislative action, which would take significant time and effort due to the need for Congressional approval, the power of these executive measures is limited. However, they all point in the direction of implementing a much more restrictive immigration policy relative to previous – both Democrat and Republican – administrations. This column, taken from a recent VoxEU eBook, assesses the likely economic impact of such a change in policy. It argues that what is really needed is improved efficiency, flexibility, and allowing more freedom to individuals and markets, including the labour market – not the imposition of more restrictions and constraints.

    The Economic and Social Outcomes of Refugees in the United States: Evidence from the ACS - NBER Working Paper No. 23498 - Using data from the 2010-2014 American Community Survey, we use a procedure suggested by Capps et al. (2015) to identify refugees from the larger group of immigrants to examine the outcomes of refugees relocated to the U.S. Among young adults, we show that refugees that enter the U.S. before age 14 graduate high school and enter college at the same rate as natives. Refugees that enter as older teenagers have lower attainment with much of the difference attributable to language barriers and because many in this group are not accompanied by a parent to the U.S. Among refugees that entered the U.S. at ages 18-45, we follow respondents’ outcomes over a 20-year period in a synthetic cohort. Refugees have much lower levels of education and poorer language skills than natives and outcomes are initially poor with low employment, high welfare use and low earnings. Outcomes improve considerably as refugees age. After 6 years in the country, these refugees work at higher rates than natives but they never attain the earning levels of U.S.-born respondents. Using the NBER TAXSIM program, we estimate that refugees pay $21,000 more in taxes than they receive in benefits over their first 20 years in the U.S.

     The dark psychology of dehumanization, explained - Nour Kteily is a psychologist at Northwestern University whose research is about understanding one of the darkest, most ancient, and most disturbing mental programs encoded into our minds: dehumanization, the ability to see fellow men and women as less than human.  In Kteily’s studies, participants — typically groups of mostly white Americans — are shown this (scientifically inaccurate) image of a human ancestor slowly learning how to stand on two legs and become fully human. And then they are told to rate members of different groups — such as Muslims, Americans, and Swedes — on how evolved they are on a scale of 0 to 100.  Many people in these studies give members of other groups a perfect score, 100, fully human. But many others give others scores putting them closer to animals.  “We have this incredible capacity for cooperation; it’s what makes us human in many ways,” Kteily says. “And yet we have this capacity for othering.”  And that conclusion is opening a Pandora’s box of revelations about the new wave of intolerance toward Muslims and immigrants in America under President Donald Trump — and what it could bring about. “Dehumanization doesn’t only occur in wartime,” says Nick Haslam, a psychologist who is the world’s current leading expert on the topic. “It’s happening right here, right now. And every day, good people who don’t see themselves as being prejudiced bigots are nevertheless falling prey to it.”   Dehumanization is a mental loophole that lets us harm other people.

    The Internet needs paid fast lanes, anti-net neutrality senator says -- This week, the head of the Federal Communications Commission and a Republican US senator each called net neutrality a "slogan" that solves no real problems, with the senator also arguing that the Internet should have paid fast lanes."It’s a great slogan," FCC Chairman Ajit Pai said, when asked by a radio host what net neutrality is. "But in reality what it involves is Internet regulation, and the basic question is, 'Do you want the government deciding how the Internet is run?'" Pai, who is touring midwestern states to meet with rural ISPs about broadband deployment, appeared with Sen. Ron Johnson (R-Wis.) on WTMJ Radio in Milwaukee on Monday. You can listen to the interview here (hat tip to Stop the Cap)."As chairman Pai said, net neutrality is a slogan," Johnson said. "What you really want is an expansion of high-speed broadband, and in order to do that you have to create the incentives for those smaller ISPs to invest. They don’t really control their own fiber if the government tells them exactly how they’re going to use their investment." Because of net neutrality rules, "there’s less incentive to invest, so we’ll have less high-speed broadband," Johnson said. While the FCC wrote the current net neutrality rules and is considering undoing them, there are also net neutrality proposals in Congress. That means Johnson could play a role in shaping future rules (if there are any).

    Did Comey Violate Laws In Leaking The Trump Memo? - One of the most interesting new disclosures in the Comey hearing was the admission by former FBI Director James Comey that he intentionally used a “friend” on the Columbia law faculty to leak his memos to the media.  Comey says that he did so to force the appointment of a Special Counsel. However, those memos could be viewed as a government record and potential evidence in a criminal investigation.  Notably, Columbia Law School Professor Daniel Richman on a faculty webpage reads that he is “currently an adviser to FBI Director James B. Comey.” Richman specializes in criminal law and criminal procedure. The problem is that Comey’s description of his use of an FBI computer to create memoranda to file suggests that these are arguably government documents.    The admission of leaking the memos is problematic given the overall controversy involving leakers undermining the Administration. Indeed, it creates a curious scene of a former director leaking material against the President after the President repeatedly asked him to crack down on leakers. Besides being subject to Nondisclosure Agreements, Comey falls under federal laws governing the disclosure of classified and nonclassified information.  Assuming that the memos were not classified (though it seems odd that it would not be classified even on the confidential level), there is 18 U.S.C. § 641 which makes it a crime to steal, sell, or convey “any record, voucher, money, or thing of value of the United States or of any department or agency thereof.”There are also ethical and departmental rules against the use of material to damage a former represented person or individual or firm related to prior representation. The FBI website states: Dissemination of FBI information is made strictly in accordance with provisions of the Privacy Act; Title 5, United States Code, Section 552a; FBI policy and procedures regarding discretionary release of information in accordance with the Privacy Act; and other applicable federal orders and directives.”

    Mueller’s Investigation of Obstruction of Justice: The Next Steps - James Comey’s written and oral testimony before the Senate Intelligence Committee raises many legal, ethical, and political questions that will have to be pondered in the coming days. But focusing just on the specific question of whether President Trump attempted to obstruct justice, what are the likely next steps in special counsel Robert Mueller’s investigation? The answer is that Mueller will first pursue all available investigative avenues to corroborate (or not) Comey’s account before deciding whether to seek an interview of President Trump himself. Mueller needs to test Comey’s account first to see if it holds up and, if he ultimately decides to interview Trump, he will want to be as well-prepared as possible for that encounter. Even if Mueller concludes that Trump cannot be criminally prosecuted in the absence of impeachment, it would behoove him to pursue the investigation now while the evidence is still fresh and in the event there are others, aside from Trump, who were involved in these potential acts of obstruction. Ultimately, the evidentiary standard Mueller would consider in deciding whether charges are warranted is whether he “believes that the admissible evidence is sufficient to obtain and sustain a guilty verdict by an unbiased trier of fact.” (quoting from 9-27.220 of the U.S. Attorney’s Office Manual of the Department of Justice). Although the possibility that Trump sought to impede the broader Russia investigation is not foreclosed, for now Comey’s testimony has likely focused the obstruction inquiry onto Trump’s particular efforts to impede the investigation into potential crimes committed by former National Security Advisor Michael Flynn, and in particular the now famous February 14, 2017 meeting at the White House at which, after clearing the room of all other senior advisors, Trump asked Comey to let the Flynn investigation go. Comey’s testimony about the circumstances and details of that meeting, in that he took Trump’s words to be “a direction — to get rid of this investigation,” and that acceding to it would mean terminating the investigation, set forth evidence satisfying the elements for obstruction of justice (a prima facie case).

    Donald Trump’s secret isn’t that he lies. It’s that he crowds out the truth. - Ezra Klein -- Donald Trump understands, better than any politician I’ve ever seen, that the question isn’t whether you’re winning the argument — it’s whether you’re dominating and driving the coverage of the argument. And that is his strategy in responding to former FBI Director James Comey’s searing testimony. Trump means to take back control of the storyline. But he doesn’t intend to win the argument, or even offer a persuasive counterargument or narrative of events. Instead, his strategy is to crowd out coverage of Comey’s arguments and force the media to cover bullshit. . Matthew Yglesias recently wrote a brilliant essay arguing that Donald Trump is a bullshitter, not a liar. Yglesias is using “bullshit” as a technical term, working off Princeton University philosopher Harry Frankfurt’s seminal book On Bullshit, which distinguishes the liar, who is trying to persuade us of a false truth, from the bullshitter, who cares little for persuasion so long as he is achieving his other ends. As Frankfurt writes: For the bullshitter, however, all these bets are off: he is neither on the side of the true nor on the side of the false. His eye is not on the facts at all, as the eyes of the honest man and of the liar are, except insofar as they may be pertinent to his interest in getting away with what he says. He does not care whether the things he says describe reality correctly. He just picks them out, or makes them up, to suit his purpose. Step back and assess the contradictory things Trump is asking us to believe:

    • Trump’s first point is that Comey is a liar (and, since he was testifying under oath before the Senate, a perjurer). It is not just Trump making this case. White House staff have said that Trump, among other things, never asked for Comey’s loyalty, and that the ex-FBI director is making his story up. No one really believes this, but then, that’s not the point.
    • Trump’s second point is that even though Comey is a liar trying to frame Trump, his testimony is believable as a complete and total vindication for Trump, though what Trump is being completely and totally vindicated of is unclear.
    • Trump’s third point is that Comey “is a leaker.”

    It would be a mistake to think of what Trump is doing here as persuasion. He is not trying to offer a more consistent or credible account of events than Comey did. He is not marshaling evidence that disproves Comey’s testimony, or offering alternative explanations for the interactions Comey recorded.

    The Madness of King Donald - Donald J. Trump, the 45th president of the United States, has not been in office for very long, but already the contours and characteristics of his rule have become clear. Rather than govern conventionally, through officers of state appointed for their competence and experience and with the agreement, however reluctant, of Congress, he has chosen to gather round him an informal coterie of friends, advisors, and relatives — many of them, like himself, without any experience of government at all — while railing against the restrictions imposed on him by constitutional arrangements such as the independence of the press and the judiciary. Trump’s entourage resembles nothing more closely than the court of a hereditary monarch, with informal structures of rule elbowing aside more formal ones. Trump did, after all, win widespread support in the electorate by promising precisely this: shaking up, bypassing or overthrowing the Washington establishment and trying something new. The result, however, has been chaos and confusion, contradiction and paralysis. It has become clear that the president of the United States is someone who does not read his briefs; who does not take the advice of experts in the intelligence field or indeed in any other; who fires off brief statements without thinking whether they are consistent with his administration’s declared policies; who is seemingly incapable of putting together a coherent sentence with a subject, a verb, and an object; who is apt to give away state secrets to a foreign power; and who seems to have no respect either for the truth or for the Constitution (not least in respect of freedom of religion and freedom of speech). He may not be mad, but a growing number of commentators allege that Trump is suffering from dementia, or is mentally subnormal, or is suffering from a personality disorder of some kind. In a situation where a head of state is incapable of carrying out his duties properly, what guidance can history offer us? The relevant history isn’t so much the history of the presidency of the United States, where no incumbent has ever been successfully removed from office by Congress, but rather the history of incompetent — or allegedly incompetent — rulers at other times and in other parts of the world. What happens when a political elite concludes that the real or titular head of state has to be deposed in the interests of the country as a whole? Of course, given Trump’s leadership style, the pertinent question might be narrowed down further: What happens when a monarch is judged as mentally unfit to rule? 

    COVFEFE Act would make social media a presidential record | TheHill -- Rep. Mike Quigley (D-Ill.) introduced legislation Monday to classify presidential social media posts — including President Trump's much-discussed tweets — as presidential records. The Communications Over Various Feeds Electronically for Engagement (COVFEFE) Act, which has the same acronym as an infamous Trump Twitter typo last month, would amend the Presidential Records Act to include "social media." Presidential records must be preserved, according to the Presidential Records Act, which would make it potentially illegal for the president to delete tweets. "President Trump’s frequent, unfiltered use of his personal Twitter account as a means of official communication is unprecedented. If the President is going to take to social media to make sudden public policy proclamations, we must ensure that these statements are documented and preserved for future reference. Tweets are powerful, and the President must be held accountable for every post," said Quigley in a statement. Most people took the "covfefe" tweet to be a typo, although press secretary Sean Spicer told the media that the term was used intentionally. "The president and a small group of people know exactly what he meant," he said. 

    Top Dem Donor Calls On Lawmakers To Take Up Trump Impeachment | HuffPost: One of the Democratic Party’s top donors is urging lawmakers to begin impeachment proceedings for President Donald Trump. Tom Steyer, the wealthy environmentalist turned super PAC funder, has penned a letter laying out the case that Trump has met the definition of obstruction of justice, and compelling lawmakers to act accordingly.“The clear and undisputed facts about Mr. Trump’s attempt to impede an FBI investigation demand an immediate impeachment inquiry by the House of Representatives,” Steyer writes. “The facts that we know already exceed standards for presidential impeachment for obstruction of justice set in 1974 and 1998.”Written as a plea to Republicans, Steyer’s letter is likely to fall on deaf ears. GOP lawmakers tend not to take directives from major Democratic funders. But within Democratic circles, it represents an important legitimization of the impeachment push. To date, Democratic leadership has left impeachment talk to the far corners of the party, fearful that anything more would risk turning off voters. Indeed, operatives tasked with regaining seats in Congress have openly stated that they prefer that discussion be on health care reform rather than removing the president from office. Steyer isn’t part of the party fringe. He is a major player within the moneyed ranks. And in stating forcefully that he believes Trump has met the standards of impeachment, he is signaling to lawmakers that there is support for the idea not just among their grassroots supporters but among the donor class too. His full letter is both HERE and below:

    The Impeach-Trump Conspiracy | The American Conservative: Pressed by Megyn Kelly on his ties to President Trump, an exasperated Vladimir Putin blurted out, “We had no relationship at all. … I never met him. … Have you all lost your senses over there?” Yes, Vlad, we have. Consider the questions that have convulsed this city since the Trump triumph, and raised talk of impeachment. Did Trump collude with Russians to hack the DNC emails and move the goods to WikiLeaks, thus revealing the state secret that DNC chair Debbie Wasserman Schultz was putting the screws to poor Bernie Sanders? If not Trump himself, did campaign aides collude with the KGB? Now, given that our NSA and CIA seemingly intercept everything Russians say to Americans, why is our fabled FBI, having investigated for a year, unable to give us a definitive yes or no? The snail’s pace of the FBI investigation explains Trump’s frustration. What explains the FBI’s torpor? If J. Edgar Hoover had moved at this pace, John Dillinger would have died of old age. We hear daily on cable TV of the “Trump-Russia” scandal. Yet, no one has been charged with collusion, and every intelligence official, past or prevent, who has spoken out has echoed ex-acting CIA Director Mike Morrell: “On the question of the Trump campaign conspiring with the Russians here, there is smoke, but there is no fire, at all. … There’s no little campfire, there’s no little candle, there’s no spark.” Where are the criminals? Where is the crime?

    Are We Nearing Civil War?  - Patrick Buchanan -President Trump may be chief of state, head of government and commander in chief, but his administration is shot through with disloyalists plotting to bring him down.We are approaching something of a civil war where the capital city seeks the overthrow of the sovereign and its own restoration.Thus far, it is a nonviolent struggle, though street clashes between pro- and anti-Trump forces are increasingly marked by fistfights and brawls. Police are having difficulty keeping people apart. A few have been arrested carrying concealed weapons.That the objective of this city is to bring Trump down via a deep state-media coup is no secret. Few deny it.Last week, fired Director of the FBI James Comey, a successor to J. Edgar Hoover, admitted under oath that he used a cutout to leak to The New York Times an Oval Office conversation with the president. Goal: have the Times story trigger the   appointment of a special prosecutor to bring down the president.Comey wanted a special prosecutor to target Trump, despite his knowledge, from his own FBI investigation, that Trump was innocent of the pervasive charge that he colluded with the Kremlin in the hacking of the DNC.Comey’s deceit was designed to enlist the police powers of the state to bring down his president. And it worked. For the special counsel named, with broad powers to pursue Trump, is Comey’s friend and predecessor at the FBI, Robert Mueller.As Newt Gingrich said Sunday: “Look at who Mueller’s starting to hire. … (T)hese are people that … look to me like they’re … setting up to go after Trump … including people, by the way, who have been reprimanded for hiding from the defense information into major cases. …“This is going to be a witch hunt.”

    Secret Service Says It Doesn't Have A Copy Of The Fabled "Comey Tape" -- In a development that may disappoint former FBI Director James Comey, and will certainly displease the press, the Secret Service said Monday that it doesn’t have any audio copies or transcripts of tapes recorded in the Trump White House, the Wall Street Journal reported. “In response to your request, the Secret Service has conducted a reasonable search for responsive records,” the agency told WSJ. “It appears, from a review of Secret Service’s main indices, that there are no records pertaining to your request that are referenced in these indices.” Such records would typically be subject to the Presidential Records Act, and turned over to the National Archives and Records Administration at the end of a president’s time in office, a topic which gained prominence earlier today when an Illinois Rep. filed the "COVFEFE Act" to preserve all of Trump's tweets for records purposes. In the past, the Secret Service handled White House recording systems for previous presidents, including Richard Nixon and JFK. Trump told reporters in the White House Rose Garden during a press conference Friday that he’d reveal the truth about whether the rumored Comey tape exists in “the very near future.” The president cryptically added “Oh, you’re going to be very disappointed when you hear the answer, don’t worry.” The agency’s disclosure - made in response to a freedom of information request filed by the Journal on May 15 - naturally doesn’t exclude the possibility that tapes might’ve been made by other sources like President Donald Trump himself. Trump has hinted that he might’ve recorded a conversation involving his ex-FBI nemesis that was at the center of the latter’s testimony before the Senate Intelligence Committee last week. Comey, who famously responded “Lordy, I hope there are tapes” in response to a question during last week’s public testimony, has maintained that a tape or transcript would corroborate his account of a conversation between him and President Trump in which, Comey alleges, the President pushed him to drop the agency’s investigation into former National Security Advisers alleged dealings with Russian entities.  Ironically, Trump previously tweeted that Comey "better hope there are no tapes", a statement which allegedly prompted Comey to leak the contents of his memo to the NYT.

    Putin offers political asylum to Comey | TheHill: Russian president Vladimir Putin on Thursday offered to give political asylum to former FBI Director James Comey, poking at tensions between Comey and President Trump. “If Comey will be under the threat of political persecution, we are ready to accept him here,” Putin said at a press conference, according to Russian state media outlet TASS. Comey testified last week that Trump pressured him to "let go" of the FBI investigation into former national security adviser Michael Flynn, before Trump fired him. Comey acknowledged leaking his personal memos about his conversations with Trump to the media, which the White House has seized on to attack the former FBI head's credibility. Putin compared Comey's decision to leak details of conversations with Trump to the actions of Edward Snowden, the National Security Agency leaker who was granted asylum by Russia. “This is strange. How then is the director of the FBI any different from Snowden? He is not a head of the special services, but a human rights activist,” Putin said. The U.S. intelligence community concluded last year that Russia interfered in the presidential election specifically to help Trump win. The Justice Department, FBI and Senate and House Intelligence committees are all investigating Russian election meddling as well as potential links between Trump and the Kremlin.

    Sessions: Suggestion of collusion with Russians an 'appalling and detestable lie' | TheHill: Attorney General Jeff Sessions on Tuesday afternoon emphatically denied any knowledge of or involvement in collusion with the Russian government to help swing the 2016 election. In a fiery opening statement given to the Senate Intelligence Committee, Sessions also denied rumors that he had a third, previously unreported private meeting with Russian Ambassador Sergey Kislyak during the campaign. Press reports had suggested that the meeting might have occurred at a Russia-friendly foreign policy speech given at the Mayflower Hotel in Washington in 2016.“I did not have any private meetings nor do I recall any conversations with any Russian officials at the Mayflower Hotel,” Sessions said. “I do not have any recollection of meeting or talking to the Russian ambassador or any other Russian official. If any brief interaction occurred in passing with Russian ambassador, I do not remember.” His voice rising, Sessions fired back on any suggestion that he may have been involved in any coordination between the Kremlin and the Trump campaign — currently the focus of the federal investigation into Russian interference in the election. “I was your colleague in this body for 20 years and the suggestion that I participated in any collusion, that I was aware of any collusion with the Russian government to hurt this country that I have served with honor for 35 years, to undermine the integrity of our democratic process, is an appalling and detestable lie.” 

    Jeff Sessions testifies: Refuses to say whether he spoke to Trump about Comey's handling of Russia investigation -- Attorney General Jeff Sessions repeatedly refused to answer questions from senators Tuesday about his private conversations with President Trump, including whether he spoke to Trump about former FBI director James B. Comey’s handling of the investigation into possible coordination between the Trump campaign and Russia during the 2016 presidential race.In a number of testy exchanges with members of the Senate Intelligence Committee, Sessions said he would not answer many of their questions because of a long-standing Justice Department policy that he said protects private conversations between Cabinet secretaries and the president.The attorney general confirmed elements of Comey’s dramatic testimony before the same panel last week while disputing others. Sessions said he was in an Oval Office meeting in February with Comey and Trump when the president said he wanted to speak to Comey privately — and he acknowledged that Comey came to talk to him the next day about the meeting. At other times, though, Sessions frequently said he couldn’t recall specifics, particularly when asked about his meetings with Russian officials during the 2016 campaign. Above all, Sessions, who served as a senator from Alabama before taking the attorney general post, tried to clear his name and win the sympathy of his former colleagues. The attorney general seemed to understand the import of each of his words as the highest-ranking Trump administration official so far to testify publicly on the FBI investigation and Comey’s firing. During one line of questioning by Sen. Kamala D. Harris (D-Calif.), he told her in a flash of anger not to rush his answers because “you’ll accuse me of lying” and said she was making him “nervous.” Sessions took particular aim at news reports about a possible meeting he had with a Russian official during an April 2016 event at the Mayflower Hotel in Washington, where Trump gave a pro-Russia speech. He acknowledged being at the event and said he had conversations with people there, but did not remember any conversations with Russian Ambassador Sergey Kislyak. “If any brief interaction occurred in passing with the Russian ambassador during that reception, I do not remember it,” Sessions said.

    Highlights from Attorney General Jeff Sessions's Senate Testimony - Attorney General Jeff Sessions took questions from the Senate Intelligence Committee on Tuesday. Democrats took issue with his refusing to answer certain questions on the basis of executive privilege. Attorney General Jeff Sessions engaged in highly contentious testimony before the Senate Intelligence Committee on Tuesday, with Democrats pressing him on his conversations with President Trump related to the investigation of Russian meddling in the 2016 election. He called any suggestion that he colluded with Russians during the election an “appalling” lie. “Please, colleagues, hear me on this,” he said. Here are highlights from the nearly three-hour session:

    • • After coming under fire for failing to disclose his interactions with the Russian ambassador during his confirmation hearing, Mr. Sessions was determined to provide his version of events — and he did not waste any time. “I have never met with or had any conversations with any Russians or any foreign officials concerning any type of interference with any campaign or election in the United States,” he said during his opening statement.
    • • Mr. Sessions denied meeting with Russian officials at the Mayflower Hotel in Washington in April 2016, adding that he could not “recall” any such private conversations with the Russian ambassador, Sergey I. Kislyak, there. “If any brief interaction occurred in passing with the Russian ambassador, I do not remember it,” he said.
    • • Mr. Sessions contested the assertion of James B. Comey, who was fired as F.B.I. director, before the committee last week that the attorney general had not responded when Mr. Comey asked him not to leave him alone with Mr. Trump again.
    • • Mr. Sessions repeatedly refused to discuss his conversations with Mr. Trump about the Russia investigation or Mr. Comey’s firing beyond what was in his recommendation memo about ousting Mr. Comey, which the White House released. Democratic senators reacted angrily, noting that Mr. Trump had not invoked executive privilege to bar such testimony. Mr. Sessions argued that it was a longstanding practice not to disclose confidential conversations with the president that would potentially be subject to executive privilege, but several senators said that was not a legal basis to refuse to answer their questions.
    • • Seizing on a criticism others have made of Mr. Comey, Mr. Sessions emphasized that Mr. Comey had not told him why he was uncomfortable being alone with Mr. Trump — specifically, that Mr. Trump had asked him to drop the investigation into Michael T. Flynn, his former national security adviser
    • • Mr. Sessions made it clear that he did not take kindly to the insinuations and accusations arising from the fact that he previously failed to disclose meetings with Mr. Kislyak. And he came to the committee in large part to defend himself against what he called “an appalling and detestable lie” that he had colluded with Russian officials. “I recused myself from any investigation into the campaign for president, but I did not recuse myself from defending my honor against scurrilous and false accusations,” he said.

    Trump confidant: 'I think he’s considering perhaps terminating the special counsel' | PBS - President Donald Trump could be weighing the termination of special counsel Robert Mueller from his oversight of the federal Russia investigation, Christopher Ruddy, CEO of the conservative Newsmax Media and a friend of President Trump, told PBS NewsHour’s Judy Woodruff on Monday. “I think he’s considering perhaps terminating the special counsel. I think he’s weighing that option,” Ruddy said when asked by Woodruff whether the president was prepared to let the special counsel pursue the Russia investigation. “I think it’s pretty clear by what one of his lawyers said on television recently.” “I personally think it would be a very significant mistake,” Ruddy added. The comments come the day before Attorney General Jeff Sessions is set to testify before the Senate Intelligence Committee, the same panel before which former FBI director James Comey appeared last week. In his testimony June 8, Comey detailed his meetings with Trump before he was fired May 9, including conversations in which the president referred to the Russia investigations as a cloud over his presidency. Comey also detailed conversations in which he said the president told him he hoped the director could “let go” of investigations into former National Security Adviser Michael Flynn’s contacts with Russia. Ruddy told Woodruff that Trump was optimistic after the Comey hearing and “generally felt he had won a victory.” “Director Comey’s testimony once again proved that there was no obstruction” of the Russia investigations, Ruddy said, adding the president and his top aides felt that some people in Washington were trying to undermine Trump’s agenda by focusing on the investigations.  Ruddy also said Mueller was under consideration for the director of the FBI before he was appointed special counsel, as reported earlier by NPR.

    White House: "Trump Has No Intention" To Fire Mueller -- Hopefully putting to rest another narrative in which the press went off on a wild goose chase, after the CEO of Newsmax Chris Ruddy first said in an interview on Monday that he thoughtTrump was considering firing the special prosecutor on the Russia investigation, Robert Mueller, and then the NYT boldly followed, the White House said late on Tuesday that President Trump has “no intention” to fire Mueller.On AF-1, @SHSanders45 told reporters Pres Trump has "no intention" to fire Robert Mueller as special counsel, though he has the right to. — Mark Knoller (@markknoller) June 14, 2017“While the president has the right to, he has no intention to do so,” White House spokeswoman Sarah Huckabee Sanders (who earlier today was rumored would soon be replacing Sean Spicer) told reporters flying with Trump back to Washington from a day trip to Wisconsin.Despite Trump's lack of commentary on the matter - and Trump would have quickly made it very clear if he indeed wanted Mueller out in one of his morning tweetstorms - some rank-and-file Republicans on Tuesday, gripped by the media frenzy, voiced concerns that ousting Mueller a month after Trump fired FBI Director James Comey would appear as obstruction of justice. Somehow the fact that Trump originally conceded to the appointment of a special prosecutor was lost on most.Mueller was appointed by the Justice Department to helm the investigation after Trump abruptly fired Comey – who was the one previously leading the Russia probe – in early May. Mueller's hiring was meant to ensure the probe would be conducted without interference.  Meanwhile, not helping was Newt Gingrich, who said he spoke with Trump on Monday night and raised questions about the fairness of the Mueller-led probe. Gingrich noted that at least four members of Mueller's team had donated to Democratic presidential campaigns and groups, saying it’s “time to rethink” Mueller’s role.

    Top aides talked Trump out of firing Mueller: report | TheHill: President Trump was considering firing Robert Mueller as special counsel leading the investigation of Russian interference in the 2016 election but was talked down by top aides, according to a new report. The New York Times reported Tuesday that Trump was angered by reports that Mueller was close to fired FBI Director James Comey and entertained the idea of firing the special counsel. Sources told The Times that staff worked to talk Trump out of firing Mueller, what they viewed would have been a disastrous decision for the administration. According to the report, Trump has told staff, visitors and advisers over the last week that he thought Mueller was part of a "witch hunt" against him.On Tuesday night White House spokeswoman Sarah Huckabee Sanders told reporters flying with Trump on Air Force One that the president wasn't going to fire Mueller, tamping down such rumors. “While the president has the right to, he has no intention to do so,” Sanders told reporters flying with Trump back to Washington from a day trip to Wisconsin. However, White House sources told The Times that Trump is hard to predict, and they cannot be sure he won't fire Mueller. Others who had spoken with Trump Tuesday said that the president's ambiguity on Mueller was intentional and that the possibility of being fired would help keep Mueller in line. 

    Mueller Seeks to Talk to Intelligence Officials, Hinting at Inquiry of Trump — Robert S. Mueller III, the special counsel examining Russia’s meddling in the 2016 election, has requested interviews with three high-ranking current or former intelligence officials, the latest indication that he will investigate whether President Trump obstructed justice, a person briefed on the investigation said on Wednesday. Mr. Mueller wants to question Dan Coats, the director of national intelligence; Adm. Michael S. Rogers, the head of the National Security Agency; and Richard Ledgett, the former N.S.A. deputy director.  None of the men were involved with Mr. Trump’s campaign. But recent news reports have raised questions about whether Mr. Trump requested their help in trying to get James B. Comey, then the F.B.I. director, to end an investigation into the president’s former national security adviser, Michael T. Flynn. Last week, Mr. Coats and Admiral Rogers declined to answer questions before Congress about the matter. Mr. Mueller’s office has also asked the N.S.A. for any documents or notes related to the agency’s interactions with the White House as part of the Russia investigation, according to an intelligence official. The Washington Post first reported on Wednesday that Mr. Mueller had requested the interviews with the intelligence officials. It has been clear since Mr. Mueller was appointed last month that he was likely to scrutinize the president’s actions. Mr. Trump has said he is willing to be interviewed by Mr. Mueller’s agents, and Mr. Comey said he was sure that the special counsel would investigate the possibility of obstruction. In recent days, Mr. Trump is said to have considered firing Mr. Mueller but to have been talked out of it by aides. If the president is under investigation for obstruction, a move to fire Mr. Mueller would prove more complicated politically. The F.B.I.’s gathering information about the possibility of a crime does not necessarily mean prosecutors are building a case against the president. In the early stages of investigations, F.B.I. agents typically want to gather all the facts. Agents then present those facts to prosecutors, who decide whether they want to take the case. Mr. Mueller’s requests are among his first publicly known acts since he took over the investigation last month, after it was publicly revealed that Mr. Comey had written a memo about how Mr. Trump asked him to halt the inquiry into his fired national security adviser, Mr. Flynn. In testimony on Capitol Hill last week, Mr. Comey said Mr. Mueller had a copy of that memo and several others Mr. Comey had written about his interactions with Mr. Trump.

    Special counsel Robert Mueller is investigating Donald Trump for possible obstruction of justice - The special counsel overseeing the investigation into Russia’s role in the 2016 election is interviewing senior intelligence officials as part of a widening probe that now includes an examination of whether President Trump attempted to obstruct justice, officials said. The move by special counsel Robert S. Mueller III to investigate Trump’s conduct marks a major turning point in the nearly year-old FBI investigation, which until recently focused on Russian meddling during the presidential campaign and on whether there was any coordination between the Trump campaign and the Kremlin. Investigators have also been looking for any evidence of possible financial crimes among Trump associates, officials said. Trump had received private assurances from then-FBI Director James B. Comey starting in January that he was not personally under investigation. Officials say that changed shortly after Comey’s firing. Five people briefed on the interview requests, speaking on the condition of anonymity because they were not authorized to discuss the matter publicly, said that Daniel Coats, the current director of national intelligence, Mike Rogers, head of the National Security Agency, and Rogers’s recently departed deputy, Richard Ledgett, agreed to be interviewed by Mueller’s investigators as early as this week. The investigation has been cloaked in secrecy, and it is unclear how many others have been questioned by the FBI.

    Trump’s Legal Peril Deepens as Mueller Expands Scope of Probe   - Special Counsel Robert Mueller’s move to investigate whether Donald Trump sought to get the FBI to back off from a probe of his former national security adviser has angered the president and raised the stakes in the inquiry of Russian meddling in the U.S. election. “They made up a phony collusion with the Russians story, found zero proof, so now they go for obstruction of justice on the phony story. Nice,” Trump said on Twitter Thursday morning. He decried a “witch hunt” that he said is being “led by some very bad and conflicted people!” Although White House officials tried earlier this week to tamp down speculation that Trump might try to fire Mueller, the escalating conflict led members of Congress of both parties to warn Trump Thursday against the temptation to do so. “It would be a catastrophic mistake, but he doesn’t have the authority to do it,” Republican Senator Susan Collins of Maine told reporters. She noted that Deputy Attorney General Rod Rosenstein, who appointed Mueller, told senators this week that only he could dismiss the special counsel. Republican Richard Burr of North Carolina, chairman of the Senate Intelligence Committee, who met with the special counsel a day earlier, said, “I have a lot of confidence in Mueller.” Rosenstein named Mueller as special counsel last month to lead the inquiry into Russia’s meddling in last year’s U.S. presidential campaign and whether anyone close to Trump colluded in that effort. Trump fired FBI Director James Comey last month, citing the Russia investigation as the reason. Tensions escalated with Mueller’s latest moves. He is planning to interview two top U.S. intelligence officials about whether Trump sought their help to get the FBI to back off a related probe of former National Security Adviser Michael Flynn, according to three people familiar with the inquiry. That suggests Mueller is examining the president’s own conduct, which may include whether Trump tried to obstruct justice. 

    Trump lashes out over probe into possible obstruction of justice | Reuters: U.S. President Donald Trump lashed out on Thursday after a report that he was under investigation into possible obstruction of justice, dismissing as "phony" the notion his campaign colluded with any Russian effort to sway the 2016 U.S. presidential election. "They made up a phony collusion with the Russians story, found zero proof, so now they go for obstruction of justice on the phony story. Nice," Trump wrote on Twitter, later repeating his accusation that the probe is a "witch hunt." The Washington Post, citing unidentified officials, reported on Wednesday that special counsel Robert Mueller is investigating the Republican president for possible obstruction of justice. Former Federal Bureau of Investigation Director James Comey told Congress last week he believed Trump fired him in May to undermine the agency's Russia investigation. Mueller was named by Deputy Attorney General Rod Rosenstein eight days after Comey's dismissal to lead the Russia investigation as a special counsel, a position created to conduct investigations when a normal Justice Department probe would present a conflict of interest or in other extraordinary circumstances. A source familiar with the Mueller investigation confirmed the Post report, saying an examination of possible obstruction of justice charges was "unavoidable" given Comey's testimony, although the issue may not become the main focus of the probe. Examining such possible charges will allow investigators to interview key administration figures including Attorney General Jeff Sessions, Rosenstein and possibly Trump himself, the source told Reuters.

    Mueller, Known for Being Above the Fray, Is Now in the Thick of It -  NYT — Robert S. Mueller III managed in a dozen years as F.B.I. director to stay above the partisan fray, carefully cultivating a rare reputation for independence and fairness. But his appointment as special counsel overseeing the Trump-Russia investigation has thrown him into the middle of the most charged political brawl of his career — especially since his early hires include several prosecutors who have donated to Democratic candidates in the past. “You are witnessing the single greatest WITCH HUNT in American political history — led by some very bad and conflicted people!” President Trump wrote on Twitter on Thursday morning. The president’s supporters and conservative news outlets have echoed his message that Mr. Mueller’s investigation is unjustified and its staff biased against Mr. Trump. Veterans of past Washington battles on the borders of law and politics said that the president’s pushback was to be expected, but that its ferocity and timing were unusual. Just one month into the job, Mr. Mueller has not yet finished hiring staff members or installing a computer network — deliberately segregated from the main Justice Department — in the Patrick Henry Building in downtown Washington.  “It’s early in the game to begin to impugn the prosecutors,” said Philip Allen Lacovara, a Watergate prosecutor and a Republican. “It’s a pre-emptive nuclear strike. If you’re afraid of what the prosecutors are going to find out, you try to debunk anything they might come up with in advance by attacking them.” At least for now, Mr. Mueller is not responding to the president’s salvos or allowing his staff to answer them. Peter Carr, a spokesman for Mr. Mueller, said his office had imposed “stringent controls to prohibit unauthorized disclosures that deal severely with any member who engages in this conduct.” The office declined to make public a comprehensive list of whom Mr. Mueller has hired. But Mr. Carr confirmed several names that have trickled out. They include three current Justice Department or F.B.I. officials: Andrew Weissmann, who had led the fraud section of the department’s Criminal Division, served as general counsel to the F.B.I. when Mr. Mueller was its director, and previously led the Enron task force; Michael R. Dreeben, a deputy solicitor general who specializes in appellate issues involving criminal law; and Lisa C. Page, an F.B.I. lawyer who was a trial lawyer in the Criminal Division’s organized crime section.

    Aides describe Trump yelling at TV sets over Russia probe: report | TheHill: President Trump has been described by advisers and confidents as angry over the probe into possible ties between his campaign and Russia, yelling at television sets at the White House with coverage of the probe, according to an Associated Press report Friday. Trump has been insisting that he is the target of a conspiracy to discredit and possibly end his presidency, according to the report. The president has publicly lamented the Russia probe in recent tweets, calling it a "witch hunt" in various tweets. Trump has also apparently expressed frustration with Deputy Attorney General Rod Rosenstein, the person who appointed the special counsel last month to lead the Russia probe following Trump's decision to fire FBI Director James Comey. Trump said Friday that he was under investigation over his firing of Comey, saying he was being investigated "by the man who told me to fire the FBI Director." 

    Starr: "No," Obstruction Case Against Trump Not Proven; Sessions On Solid Constitutional Ground - On CNN Thursday, former independent counsel in the Clinton-Lewinski investigation Kenneth Starr said it does not look like there is a clean obstruction of justice case to make against President Trump."It's too soon to tell from what I have seen and, of course, we don't know a whole lot," Starr said of the allegation. "The answer is no, but it is going to be investigated and so we will soon know. Obstruction of justice is really a very hard crime to make out. It's not just you want the investigation to go away, you suggest that the investigation goes away. You've got take really affirmative action.""Director Comey said in his testimony that even though the expression was 'hope' he took it as a directive. But what we know is he didn't do anything about it, right? That is, he did not dismiss the investigation or curtail the investigation. There's an expression of hope so it becomes an interpretation and I think it's just a very hard case to make out and, you know, that's a good thing for all of us. Crimes should be difficult to prove," Starr said on CNN's New Day.  Starr also said Attorney General Jeff Sessions was right to not answer questions relating to the president because he was "protecting executive privilege" in case the president wanted to use it. Starr cited a Supreme Court case that would uphold the argument. "It was a difficult middle ground but the attorney general was exactly right. He was protecting executive privilege, he wasn't asserting it, and so it's a fine distinction but it's an important distinction," Starr said. "I think the open session point was just the embarrassment factor and it becomes headlines that the attorney general wasn't answering the question. But the attorney general was on solid [constitutional ground]," he said of the Sessions Senate hearing.

    Republicans Go On Offensive Against Mueller; Call For 'Special Counsel' To Investigate AG Lynch Last night, after Trump launched yet another furious tweetstorm intended to expose the double standard applied in the Hillary investigation compared to the Russia probe, we noted that Republicans might be well served to stop sitting around twiddling their thumbs and actually go on the offensive against an investigation that has obviously morphed into mass hysteria courtesy of free-flowing leaks from a conflicted "intelligence community" intent upon bringing down a presidency.  Now, according to a note this morning from The Hill, Republicans seem to be doing just that with several members of the GOP calling on the Special Counsel to look into whether former Attorney General Loretta Lynch illegally meddled in the Hillary investigation when she met with Bill Clinton on the tarmac in Phoenix and/or instructed Comey to refer to his case as a"matter" rather than an "investigation." Rather than wasting resources on investigating Trump, the GOP says the special counsel must look into whether former attorney general Loretta Lynch meddled with the FBI’s criminal investigation into Hillary Clinton’s email server. Comey testified that Lynch told him to downplay the seriousness of the FBI’s email server investigation.

    Rosenstein Says He May Need To Recuse Himself In Russia Probe: ABC -- This morning is becoming very chaotic for Deputy Attorney General Rod Rosenstein, a man who has historically maintained a very low profile at the Department of Justice.  After issuing a rather uncharacteristic and cryptic statement last night urging Americans not to trust "anonymously-sourced" new stories (a statement that many have speculated is attributable toWapo's latest anonymously-sourced headline from last night) and being blasted by President Trump this morning, ABC is reporting that Rosenstein has privately acknowledged that he may need to recuse himself in Mueller's Russia probe.The senior Justice Department official with ultimate authority over the special counsel's probe of Russia's alleged meddling in the 2016 election has privately acknowledged to colleagues that he may have to recuse himself from the matter, which he took charge of only after Attorney General Jeff Sessions' own recusal, sources tell ABC News. Those private remarks from Deputy Attorney General Rod Rosenstein are significant because they reflect the widening nature of the federal probe, which now includes a preliminary inquiry into whether President Donald Trump attempted to obstruct justice when he allegedly tried to curtail the probe and then fired James Comey as FBI director.

    Mike Pence Lawyers Up -- Vice President Mike Pence has hired an outside lawyer to represent him during the Russia investigation, a sign that key members of the administration are gearing up for a protracted legal tug-of-war with Congress and Special Counsel Robert Mueller. According to The Washington Post, Pence tapped prominent Virginia attorney Richard Cullen to serve as his outside counsel in the ongoing congressional and criminal probes. Cullen comes with a strong background in criminal-justice matters: He previously served as the state’s attorney general and as the chief federal prosecutor in its prestigious Eastern District in the 1990s before returning to private practice. The Post said Pence spent “several weeks” interviewing potential candidates, suggesting he began the process shortly after Trump ousted former FBI Director James Comey on May 9.There have been no indications that Pence himself is a subject of or person of interest in any aspect of the sprawling Russia investigation, including questions of whether Trump committed obstruction of justice. But his possible presence at the White House during key moments to date could make him a potential witness as federal investigators delve into Trump’s treatment of the inquiry. Mueller could interview the vice president about what he saw before and after the firings of both former National-Security Adviser Michael Flynn in February and Comey in May, for example.  Hiring Cullen runs counter to the advice Marc Kasowitz, a Manhattan-based corporate attorney and Trump’s longtime legal fixer, reportedly gave to White House staff after the president hired him as outside counsel last month for the Russia probe. According to The New York Times, Kasowitz recently told worried staffers it wasn’t yet necessary to hire private attorneys, even as Mueller’s inquiry and congressional investigations continue to intensify. Bringing in outside counsel is common for top executive-branch officials when a criminal or congressional inquiry sets its sights on the president or his inner circle, even for those not under investigation for wrongdoing. Top aides in the Bill Clinton and George W. Bush administrations paid hefty legal fees to the lawyers who represented them for years during the Whitewater and Monica Lewinsky probes and the Valerie Plame investigation.

    Trump's personal lawyer hires attorney: report | TheHill: President Trump's personal lawyer, Michael Cohen, has hired his own attorney as the special counsel investigation into Russian election interference progresses, NBC News reported Friday. Cohen has hired Washington, D.C., attorney Stephen M. Ryan, according to NBC's Katy Tur. A source told Tur that Cohen will testify before the House Intelligence Committee on Sept. 5, adding that the testimony was delayed due to "scheduling and logistics." Tur also reported that Michael Caputo, a communications adviser brought on board the Trump campaign by Paul Manafort, has been contacted by the FBI. Caputo has also hired his own attorney — former New York state Attorney General Dennis Vacco. Caputo was asked in May to testify before the House Intelligence Committee. 

    Why Is Robert Mueller Probing Jared Kushner's Finances? - Jared Kushner’s business endeavors in the dog-eat-dog world of New York City real estate helped endear him to his father-in-law, President Trump. Now those complex dealings are reportedly under scrutiny by federal investigators as part of the sprawling Russia investigation.The Washington Post reported Thursday that Special Counsel Robert Mueller’s team is probing “finance and business dealings” by Kushner, former National-Security Adviser Michael Flynn, and former Trump campaign chairman Paul Manafort as part of its broader investigation into whether Trump campaign officials colluded with Moscow during the 2016 election to undermine Hillary Clinton’s presidential bid. All three men have repeatedly denied any wrongdoing, and Trump himself has castigated the investigation as a “witch hunt” concocted by political opponents to delegitimize his electoral victory.Jamie Gorelick, Kushner’s private attorney, downplayed the news in a statement to the Post. “It would be standard practice for the Special Counsel to examine financial records to look for anything related to Russia,” he said. “Mr. Kushner previously volunteered to share with Congress what he knows about Russia-related matters. He will do the same if he is contacted in connection with any other inquiry.”  The Post did not offer details on which business deals of Kushner’s had drawn investigators’ attention. Its account noted that previous reports had said federal agents were looking into his December meeting with Sergey Gorkov, an influential Russian banker and the chairman of state-owned Vnesheconombank, the country’s largest bank. The Post also did not indicate whether the inquiry was part of a routine examination of Kushner’s finances or if reflected something more serious on Mueller’s part.

    Billionaire Chairman Of Chinese Conglomerate Anbang, Linked To Jared Kushner, Has Been Detained -- Anbang Insurance, China's hyperacquisitive insurance rollup, which was responsible for a sizable portion of China's merger spree between 2014 and 2016, and which has since been accused of being a money laundering vehicle, of wreaking "havoc" with the Chinese insurance market, and was a potential investor in Jared Kushner's 666 Fifth Avenue building until the deal fell apart in March, announced that its billionaire Chairman Wu Xiaohui, is "unable to perform his duties" due to personal reasons, confirming Chinese media reports that the tycoon had recently been detained by authorities. On Tuesday, China's Caijing reported that Wu - whose net worth was recently estimated at over $1 billion - was taken away by Chinese authorities, citing unidentified people. The report said that officials from the China Insurance Regulatory Commission met with a small group of Anbang staff on June 10 and didn’t provide specific reasons for Wu being taken. Curiously the report, which did not explain if Wu was assisting with a government investigation or was himself the target of a price, was later deleted from the magazine’s website. A person familiar with the matter told the South China Morning Post that Wu had been “assisting relevant investigations” and previously had always returned to his office or home after a few hours of questioning. Wu hasn’t returned since he was taken away at the end of last week, the person said. Last week, the FT reported that Wu was barred by Chinese authorities from leaving the country, however Anbang denied the report.   Xiaohui led Anbang’s rapid rise and abrupt emergence in the international business arena,  where the company became known for its ambitious takeover bids. In October of 2014, Anbabg bought the Waldorf Astoria in New York for $1.95 billion, a record for a single American hotel, and later closed the property while it converts most of the rooms to luxury condominiums. In early 2016, Anbang agreed to buy Strategic Hotels & Resorts, owner of 16 high-end hotels in the U.S., from Blackstone for about $6.5 billion. One hotel next to a major naval base later dropped out of the purchase amid national security concerns. About the same time as Anbang agreed to the Strategic purchase, it made a surprise $14 billion offer for Starwood Hotels & Resorts Worldwide, starting a bidding war with Marriott International Inc.  Most notably, Anbang had been in talks to invest in the proposed redevelopment of 666 Fifth Ave. in New York, the marquee building of Kushner Cos., the family company of President Donald Trump’s son-in-law Jared Kushner. Talks broke off in March.

    Trump promotes Hannity's 'deep state' monologue | TheHill: President Trump shared a tweet from Fox News host Sean Hannity on Friday promoting the conservative commentator's monologue focusing on taking action against "deep state" actors. Trump retweeted Hannity's message promoting his show, which included an appearance from former Speaker Newt Gingrich (R-Ga.), another Trump ally who blasted the special counsel investigating possible ties between Trump's campaign and Russia.  #Hannity Starts in 30 minutes with @newtgingrich and my monologue on the Deep State’s allies in the media — Sean Hannity (@seanhannity) June 17, 2017   “This week alone, we've seen unprecedented and potentially criminal leaks from the deep state to the liberal Washington Post,” Hannity said in his opening monologue. Hannity claimed that holdovers from the Obama administration – whom he and others on the right have characterized as part of a so-called "deep state" aimed at undermining Trump – were “creating collateral damage” for the country and slowing Trump’s agenda. “Here's the problem, whoever is leaking this information to the media, they need to be arrested, they need to be prosecuted. Everyone of them needs to be put in jail,” he said. “These people have now become a clear and present danger to this country and to you,” Hannity said. 

     Leaked NSA Report Is Short on Facts, Proves Little in 'Russiagate' Case  - By all accounts, Reality Leigh Winner is an intelligent, committed professional who served for six years in the U.S. Air Force as a Farsi and Pashto linguist, specializing in communications intercept operations and analysis conducted on behalf of the National Security Agency (NSA).  Sometime in early May, Winner reportedly accessed a top-secret NSA analysis detailing intelligence on Russian cyberactivity targeting the 2016 U.S. presidential election. Media reports indicate that Winner, prior to starting her new job, had an extensive social media presence, with numerous posts critical of Donald Trump and expressing fury over his repeated minimization of alleged Russian electoral interference. The NSA document details specific cyberattack activities attributed to actors working on behalf of the Russian military’s Main Intelligence Directorate (Glavnoye Razvedyvatel’noye Upravleniye, or GRU). 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. She now faces up to 10 years in prison. It is not known whether Winner feels that the potential consequences of her actions were worth the effort. The release of the document has invigorated the Russian hacking hysteria before former FBI Director James Comey’s much-ballyhooed testimony before Congress. The issue of Russian meddling is expected to be a prominent focus of the Comey hearing, with significant attention placed on the role of the GRU in orchestrating the events detailed in the report. But upon closer scrutiny, the NSA document allegedly leaked by Winner reinforces assertions made by President Trump that the Russia story is fake news.

    Russian Cyber Hacks on U.S. Electoral System Far Wider Than Previously Known - Russia’s cyberattack on the U.S. electoral system before Donald Trump’s election was far more widespread than has been publicly revealed, including incursions into voter databases and software systems in almost twice as many states as previously reported. The scope and sophistication so concerned Obama administration officials that they took an unprecedented step -- complaining directly to Moscow over a modern-day “red phone.” In October, two of the people said, the White House contacted the Kremlin on the back channel to offer detailed documents of what it said was Russia’s role in election meddling and to warn that the attacks risked setting off a broader conflict. The new details, buttressed by a classified National Security Agency document recently disclosed by the Intercept, show the scope of alleged hacking that federal investigators are scrutinizing as they look into whether Trump campaign officials may have colluded in the efforts. But they also paint a worrisome picture for future elections: The newest portrayal of potentially deep vulnerabilities in the U.S.’s patchwork of voting technologies comes less than a week after former FBI Director James Comey warned Congress that Moscow isn’t done meddling. A spokeswoman for the Federal Bureau of Investigation in Washington declined to comment on the agency’s probe. Russian officials have publicly denied any role in cyber attacks connected to the U.S. elections, including a massive “spear phishing” effort that compromised Hillary Clinton’s campaign and the Democratic National Committee, among hundreds of other groups. President Vladimir Putin said in recent comments to reporters that criminals inside the country could have been involved without having been sanctioned by the Russian government.

    Feinstein: "Congress Should Investigate If Lynch Pressured Comey To Cover For Hillary Clinton" In a surprisingly non-partsian take by Dianne Feinstein, the top Democrat on the Senate Judiciary Committee, the California senator said that Congress should investigate whether, as we discussed previously following Comey' dramatic testimony last Thursda, former Attorney General Loretta Lynch pressured former FBI Director James Comey to cover for Hillary Clinton's presidential campaign. "I think we need to know more about that," Feinstein told Briana Keilar on CNN's State of the Union, adding that "there's only way to know about it, and that's to have the Judiciary Committee take a look at that."As we noted last Thursday, Comey testified last Thursday that it gave him a "queasy" feeling after Lynch asked him to characterize his probe into Clinton's emails as a "matter," rather than an investigation. He told the Senate Intelligence Committee that such a request would match the wording of Clinton's campaign.  Feinstein said she would've also felt queasy."I would have a queasy feeling, too, though, to be candid with you," the longtime Senate Democrat said. She added that an investigation separate from the ongoing probe into Russian interference in the election is needed."I don't think we should mix the two," she added. That said, when asked who do you believe, Trump or Comey, Feinstein said that “At this point, the FBI director”

    Ex-U.S. Attorney Bharara tells of 'unusual' calls he received from Trump | Reuters: Former U.S. Attorney Preet Bharara revealed on Sunday that he received a handful of "unusual" phone calls from Donald Trump after the November election that made him feel uncomfortable, and said he was fired after declining to take the third call. Speaking on ABC News' "This Week" in his first televised interview since Trump fired him in March as the top federal prosecutor in Manhattan, Bharara said he believed Trump's calls to him violated the usual boundaries between the executive branch and independent criminal investigators. "It's a very weird and peculiar thing for a one-on-one conversation without the attorney general, without warning between the president and me or any United States attorney who has been asked to investigate various things and is in a position hypothetically to investigate business interests and associates of the president," Bharara said. He added that during President Barack Obama's tenure, Obama never called him directly.Bharara said on Sunday that Trump called him twice after the November election "ostensibly just to shoot the breeze." "It was a little bit uncomfortable, but he was not the president. He was only the president-elect," Bharara said. The third call, however, came two days after Trump's inauguration. That time, he said, he refused to call back. "The call came in. I got a message. We deliberated over it, thought it was inappropriate to return the call. And 22 hours later I was asked to resign along with 45 other people," he said. 

    The Koch Brothers Want To Rewrite The Constitution. They May Succeed. - The Wisconsin Assembly voted to call for a constitutional convention on Wednesday in a 54-41 vote. The Assembly also passed separate legislation that set the process for selecting convention delegates, and limited those delegates to voting on amendments related to balancing the budget.  While that in itself is surprising — the American people have never exercised their legally enshrined right to convene a new Constitutional convention — what’s more surprising is that pro-business groups with ties to the Koch brothers have pushed for similar legislation in more than 30 states, and they’ve been remarkably successful: A dozen states have passed bills calling for a convention that would produce an altered Constitution that would likely limit federal spending and power. According to Article V of the Constitution, just two thirds (34) of the 50 state legislatures need to call for a convention for the purposes of “proposing constitutional amendments” (no governor’s signature is required). Those amendments would then need to be ratified by three quarters of the states, currently 38, to become law. But beyond those very basic requirements, nobody knows what the rules for a convention would be, since one hasn’t occurred since the original in 1787. That single instance, Constitutional law experts warn, provides a harrowing precedent: Delegates tore up the Articles of Confederation they had convened to improve, and produced a whole new governing document.

    Republican leader in critical condition after shooter attacks GOP baseball practice -- U.S. Rep. Steve Scalise, the third-ranking Republican in House leadership, was in critical condition late Wednesday night after a gunman targeted GOP lawmakers and aides in a chaotic attack at a baseball field that stoked fear among lawmakers about their safety in an increasingly charged political environment.According to the hospital treating Scalise, the bullet traveled across the lawmaker’s pelvis, fracturing bones and injuring internal organs. After immediate surgery, bleeding remains severe and Scalise will need additional operations.Two Capitol Hill police officers, a congressional aide and a Republican lobbyist also were shot and injured in a melee during a practice session for the Republican baseball team ahead of an annual bipartisan charity game, scheduled for Thursday.The shooter, identified as James T. Hodgkinson, died in the hospital. He was from Belleville, Illinois, and the local news organization, the Belleville News-Democrat, reported that he belonged to number of anti-Republican groups, including one called “Terminate the Republican Party.” He also was a Bernie Sanders campaign volunteer at one point, prompting the former presidential candidate to go to the Senate floor and state that he was “sickened by this despicable act.”The shooting and its aftermath produced a rare moment of bipartisanship on Capitol Hill, with Speaker Paul Ryan and Minority Leader Nancy Pelosi taking the House floor to deliver messages of national solidarity. Ryan said “we are united in our shock, united in our anguish,” and Pelosi added that “we are not one Caucus or the other in this House today.” Some refused to play by the script, with House Speaker Newt Gingrich telling Fox News that the shooting reflected “an increasing intensity of hostility on the left.” By contrast, President Trump delivered a television address that did not point fingers and instead offered a tribute to Scalice and others injured.

    Eyewitness footage of congressional baseball shooting – Politico

    Suspect Reportedly Asked "Are Those Republicans Or Democrats" Before Starting To Shoot - Today's dramatic shooting attack on Congressmen during an early morning baseball practice appears to have been politically motivated. According to RealClearNews reporter Rebecca Berg, "Rep. Jeff Duncan plans to give a statement to police regarding a conversation he had with the shooter before leaving practice early" and she notes that "The man was wearing running clothes, asked Duncan: "Are those Republicans or Democrats out there practicing?"  "I'm told Rep. Jeff Duncan plans to give a statement to police regarding a conversation he had with the shooter before leaving practice early … The man was wearing running clothes, asked Duncan: "Are those Republicans or Democrats out there practicing?" Per source familiar. — Rebecca Berg (@rebeccagberg) June 14, 2017  Fox confirms, quoting Rep. DeSantis according to whom, the "Man Asked Whether Republicans or Dems Were on Field Before Scalise Shooting" Rep. DeSantis: Man Asked Whether Republicans or Dems Were on Field Before Scalise Shooting @foxandfriends https://t.co/BhVapqddNW — FoxNewsInsider (@FoxNewsInsider) June 14, 2017

    Attack Tests Movement Sanders Founded -— The most ardent supporters of Senator Bernie Sanders have long been outspoken about their anger toward Republicans — and in some cases toward Democrats. Their idol, the senator from Vermont, has called President Trump a “demagogue” and said recently that he was “perhaps the worst and most dangerous president in the history of our country.” Now, in Mr. Sanders’s world, his fans have something concrete to grapple with: James T. Hodgkinson, a former volunteer for Mr. Sanders’s presidential campaign, is suspected of opening fire on Republican lawmakers practicing baseball in Alexandria, Va. That shooting on Wednesday, which wounded four people, may prove to be an unexpected test for a movement born out of Mr. Sanders’s left-wing, populist politics and a moment for liberals to figure out how to balance anger at Mr. Trump with inciting violence. “Both sides need to look in the mirror,” said Nina Turner, a former Ohio state senator who campaigned for Mr. Sanders and is working on a new think tank started by the senator’s wife. “We have to decide what kind of language we are going to use in our political discourse.” Mr. Sanders has advocated what he has called a peaceful political revolution. On Wednesday, he acknowledged that Mr. Hodgkinson, 66, of Belleville, Ill., had been a volunteer on his campaign and said he was praying for the recovery of Representative Steve Scalise, Republican of Louisiana, and the other victims. “I am sickened by this despicable act,” Mr. Sanders said in a statement. “Let me be as clear as I can be. Violence of any kind is unacceptable in our society, and I condemn this action in the strongest possible terms.

    Blaming Bernie Sanders or progressives for congressional baseball shooting is preposterous - Bernie Sanders from the floor of the U.S. Senate Wednesday spoke out firmly against the horrific shooting that took place at a congressional baseball practice. Sanders, in his remarks, also acknowledged early reports that the alleged shooter, James Hodgkinson, was said to be a volunteer for his presidential campaign. In today's gotcha culture, thousands of statements are now being tweeted blaming Bernie, blaming progressives, blaming the Democratic Party, blaming the Julius Caesar play, blaming everything and everybody imaginable for this shooting. First off, Bernie is as close to a pacifist hippy as we have in the Senate. The man worshiped the ground Dr. King walked on and has been an advocate for non-violent protests and boycotts his entire life. He has never advocated violence against Donald Trump, against conservatives, or even suggested that we should consider violence as a worthwhile tactic as we fight against problematic policies. This notion that Bernie, of all people, had anything to do with Wednesday's violence is foolhardy, unintelligent and poorly considered. Secondly, the progressive movement in general is a movement about organizing and empowering people for systemic political change. I am a part of this movement. I was a volunteer for Bernie's presidential campaign. To this very day I work directly with several dozen progressive grassroots organizations fighting for real change in this country. I've attended and hosted and contributed to hundreds of meetings with these organizations. Not once, publicly or privately, did a single person in a single meeting I was a part of ever suggest, explicitly or implicitly, that someone should go do what James Hodgkinson allegedly did today. Period.

    Attorneys general to sue over foreign payments to Trump hotels | Asia Times: The attorneys general of Maryland and the District of Columbia plan to file a lawsuit on Monday alleging that foreign payments to President Donald Trump’s businesses violated the US Constitution, according to a source familiar with the situation. Trump already faces a similar lawsuit brought in January by plaintiffs including an ethics nonprofit group. However, the case from two Democratic attorneys general could stand a better chance in court as the first government action over allegations that Trump, a Republican, violated the Constitution’s so-called emoluments clause.Democratic attorneys general have taken a lead role in challenging Trump policies, successfully blocking executive orders restricting travel from some Muslim-majority countries. They are also resisting efforts to roll back environmental regulations and insurance subsidies under the Affordable Care Act. A spokesman for Maryland’s attorney general, Brian Frosh, declined to comment on the latest emoluments case. DC attorney general Karl Racine and a spokeswoman for the US Department of Justice could not immediately be reached for comment. 

    Nearly 200 Democrats sue Trump citing emoluments clause violation | TheHill: Democratic members of Congress on Wednesday sued President Trump in federal court, claiming he had violated the emoluments clause of the Constitution by accepting foreign funds through the Trump business, without Congressional approval. The Washington Post broke the news early Wednesday morning, reporting that 196 lawmakers had joined the complaint, more than any lawmakers ever to sign on to sue a president. Sen. Richard Blumenthal  (D-Conn.) led the filing in federal district court, and said Tuesday that while no Republicans had joined the lawsuit, they were welcome to do so. Rep. John Conyers Jr. (D-Mich.) led the legal effort in the House. "Trump has conflicts of interest in at least 25 countries, and it appears he’s using his presidency to maximize his profits," Coyers told Reuters Wednesday. The Post obtained an advanced copy of the complaint, which argues that the "foreign emoluments clause" in the Constitution requires the president to get the "consent of Congress" before accepting gifts. The suit also alleges that the Trump empire gives foreign governments an incentive to give Trump businesses special treatment. The 37-page filing comes a day after the attorneys general of Maryland and Washington, D.C., said they will seek Trump’s tax returns in a lawsuit over foreign payments to his D.C.-based hotel. Maryland Attorney General Brian Frosh said he and his D.C. counterpart, Karl Racine, will seek Trump’s personal financial information — including his tax returns — in a lawsuit alleging the president has committed “unprecedented constitutional violations.” Frosh and Racine filed a lawsuit against Trump on Monday, claiming his ownership of the Trump International Hotel in D.C. violates two Constitutional clauses barring elected officials from receiving personal gifts and payments. 

    Party On! Congressional Democrats Pile On to Another Bogus Emoluments Clause Lawsuit - naked capitalism by Jerri-lynn Scofield -  The New York Times reports that nearly 200 congressional Democrats sued Trump in federal court today, arguing that he accepted funds from foreign governments and thereby contravened the (foreign) emoluments clause of the U.S Constitution, as reported in Democratic Lawmakers Sue Trump Over Foreign State Payments to Businesses. Democrats continue to pursue a line of similarly misguided suits, as I’ve discussed before, see Senate Democrats Discuss Doubling Down on Losing Strategy of Suing Trump on Emoluments, Law Profs Sue Trump, Alleging Violation of the Emoluments Clause, and US Constitution’s Emoluments Clause: a Nothingburger for Trump.  These suits allege that activities that arise out of Trump’s business holdings violate the emoluments clause of the U.S. Constitution, found in Article 1, Section 9, and that states that “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” Now, as problematic as these conflicts of interest may be, as I’ve written before, beginning in this December post, US Constitution’s Emoluments Clause: a Nothingburger for Trump, the basic hurdle that those wishing to use the US legal system to shut down Trump’s alleged violations of the emoluments clause must clear is to establish that they have standing to sue. As I’ve written before, “Just because something’s unconstitutional, doesn’t mean that any such unconstitutional activity will necessarily be prevented, precluded, or punished.” This often comes as a surprise to non-lawyers, but the reality is that the US legal system strictly limits who can sue. Persons must have standing in order to bring a suit.  To have standing to sue, plaintiffs must be involved in an actual case or controversy–   plaintiffs must have suffered a particularized injury in order to prevail in a lawsuit. This provision prevents someone from bringing a suit arguing, hypothetically, that as a taxpayer, s/he has been harmed by a general policy of the US government.

    JP Morgan pulls NBC ads over Alex Jones interview: report | TheHill: J.P. Morgan Chase has pulled local television and online advertisements from the NBC network until after host Megyn Kelly’s interview with Alex Jones airs next Sunday, according to The Wall Street Journal. The newspaper cited an individual familiar with the matter, who said J.P. Morgan Chase does not want its advertisements to air around promotions for the Jones interview. The report came hours after J.P. Morgan’s chief marketing officer said she was “repulsed” by the network’s decision to air an interview with the Infowars founder. “As an advertiser, I'm repulsed that @megynkelly would give a second of airtime to someone who says Sandy Hook and Aurora are hoaxes. Why?” Kristin Lemkau wrote on Twitter. The decision to broadcast an interview with Jones, who is known for promoting conspiracy theories around the 9/11 terrorist attacks and mass shootings, has received criticism since a preview aired Sunday evening. Kelly defended the interview with Jones, arguing the radio host’s influence with President Trump makes it the network’s job to “shine a light” on him. “POTUS's been on & praises @RealAlexJones' show. He's giving Infowars a WH press credential. Many don't know him; our job is 2 shine a light,” Kelly wrote on Twitter.

    Alex Jones Implores NBC Not To Air Interview With 'Liar' Megyn Kelly, JP Morgan Pulls Ads -- JP Morgan has pulled advertisements from NBC's Sunday Night With Megyn Kelly, after the network uploaded a teaser of an upcoming interview with Infowars host Alex Jones scheduled to run on Father's Day. The segment features Jones defending his position that there are enough inconsistencies with the official story of the 2012 massacre at Sandy Hook Elementary to warrant further investigation.Kelly's interview comes on the heels of recent attacks on alternative news - including Mike Cernovich, Jack Posobiec, and most recently the Gateway Pundit. In response to the promo video, Jones said that Megyn Kelly had lied to him about the purpose of the interview.They were here from 9:30 in the morning to almost 11 at night. And Megyn Kelly lied to me several weeks before she came here, and she said that the interview was not going to be about Sandy Hook and the mass shooting there, and it was not going to be about pizzagate - these other issues that the media always obsesses on and misrepresents what I've said and what I've done. She said, "oh, we might mention those but it's really just a profile on you."  Then Jones says 'it all clicked today' - that all of the Sandy Hook questions Megyn Kelly had been asking, along with questions about fatherhood, made Alex suspect that 'Lawyer' Megyn is crafting an emotional hit piece in advance of the interview's airing on Father's Day. This led Alex to implore NBC to shelf the interview.

    "Nobody In Power Is Paying Attention To How Close We Are To The Edge" -- Kunstler As our politicos creep deeper into a legalistic wilderness hunting for phantoms of Russian collusion, nobody pays attention to the most dangerous force in American life: the unraveling financialization of the economy. Financialization is what happens when the people-in-charge “create” colossal sums of “money” out of nothing — by issuing loans, a.k.a. debt — and then cream off stupendous profits from the asset bubbles, interest rate arbitrages, and other opportunities for swindling that the artificial wealth presents. It was a kind of magic trick that produced monuments of concentrated personal wealth for a few and left the rest of the population drowning in obligations from a stolen future. The future is now upon us.Financialization expressed itself in other interesting ways, for instance the amazing renovation of New York City (Brooklyn especially). It didn’t happen just because Generation X was repulsed by the boring suburbs it grew up in and longed for a life of artisanal cocktails. It happened because financialization concentrated immense wealth geographically in the very few places where its activities took place — not just New York but San Francisco, Washington, and Boston — and could support luxuries like craft food and brews. Quite a bit of that wealth was extracted from asset-stripping the rest of America where financialization was absent, kind of a national distress sale of the fly-over places and the people in them. That dynamic, of course, produced the phenomenon of President Donald Trump, the distilled essence of all the economic distress “out there” and the rage it entailed. The people of Ohio, Indiana, and Wisconsin were left holding a big bag of nothing and they certainly noticed what had been done to them, though they had no idea what to do about it, except maybe try to escape the moment-by-moment pain of their ruined lives with powerful drugs.And then, a champion presented himself, and promised to bring back the dimly remembered wonder years of post-war well-being — even though the world had changed utterly — and the poor suckers fell for it.

    Trump earns $598M as Mar-a-Lago profits spike | TheHill: President Trump earned $598 million in income last year, according to his personal financial disclosure report released by the Office of Government Ethics on Friday evening. The financial report captures a mixed financial performance for the president's assets over the last year. The documents show that Trump has a minimum net worth of $1.1 billion, including more than $320 million in debts. Trump has five liabilities worth $50 million or more, such as the lease on his Washington D.C. hotel.While Mar-a-Lago, the Palm Beach, Fla. country club he's dubbed the "Winter White House," saw a nearly $8 million increase in revenue — a 25 percent increase from last year — other golf courses had unchanged revenues. Mar-a-Largo has also doubled the amount a person must pay to be a member over the past year. Unlike his other Florida club, Trump’s Miami golf club, the Trump National Doral, lost money over the last year. In 2015, it brought in $132 million. During 2016, though, it saw revenues fall to $115 million. But Trump Corporation, the president's management company, jumped from a revenue of $6.5 million in 2015 to about $18 million during 2016. Although royalties for his book "Art of the Deal" also at least doubled, revenues for condo sales in his swanky properties decreased. At Trump Park Avenue, for example, condo sales in 2015 totaled $44.3 million. Last year, those sales only reached $29.9 million — a 33 percent decrease — documents say. In the last year, Trump opened the doors to his Washington D.C. hotel in the historic Old Post Office building. His financial disclosure says that he made nearly $20 million in revenue. In 2015, Trump's airline — Tag Air — which leases a 757 from one of his businesses, earned $3.7 million in revenue. The next year, it reported earning $7.7 million in revenue and travel reimbursements. Trump used Tag Air to travel during the campaign. 

    Trump, Republicans Make Bogus Case for Bank Deregulation as Senate Certain to Curtail House Dodd Frank “Reform” -  Yves Smith -- We’ve argued from the crisis onward that the limited re-regulation of banking that took place was inadequate. But the Republicans are whinging that banks nevertheless are being treated badly despite a lack of evidence behind virtually all of their claims.  The effort to give already-overly-coddled banks an even better deal is lumbering forward. The House last week passed a “Financial Choice” Act which sought to dismantle large parts of Dodd Frank. We won’t dwell on that because the Senate is certain to nix large portions of it. However, as we were drafting this post, the Wall Street Journal published a story saying that the Trump Administration is supporting one of the worst ideas in this bill, that of cutting back the power of the Consumer Financial Protection Bureau. From its account: The Trump administration will recommend limits on the U.S. consumer-finance regulator and a reassessment of a broad range of banking rules in a report to be released as early as Monday, according to people familiar with the matter. The report is around 150 pages and makes recommendations on policy goals, without laying out a specific process for achieving them, these people said. It is harshly critical of the Consumer Financial Protection Bureau and recommends that the bureau be stripped of its authority to examine financial institutions, people familiar with the matter said. By law, the bureau has the authority to enforce consumer laws as well as to examine individual firms on a continuing basis. Yves here. It’s going to be interesting to see how exactly the Treasury lambastes the CFPB given that the Wells Fargo fake accounts fraud would never have been blown open in the absence of the CFPB’s complaint database. The Journal reports that the Treasury document will recommend that banks with less than $10 billion in assets be exempt from the Volcker Rule and includes a section on what bank regulators could to on their own. This is particularly important since the recent Fed governor in charge of large bank supervision, Danny Tarullo, fought the banks hard to get some important reforms implemented, the most important being higher capital levels.  John Dizard of the Financial Times over the weekend pointed out that opponents of bank deregulation may be missing the real game by focusing on the effort to roll back Dodd Frank rather than the Administration’s planned Fed appointments. From his article: Financial deregulation is not entirely dependent on a repeal of much of the last administration’s Dodd-Frank law….much of Dodd-Frank will remain. Nobody wants to be identified as the Goldman Sachs candidate in the next election… Trump appointments to the Federal Reserve Board and to executive-branch financial regulatory positions are, so far, following someone’s coherent plan…

    Nomi Prins: Breaking Up The Banks Is Easier Than You Might Think -- Donald, listen, whatever you’ve done so far, whatever you’ve messed up, there’s one thing you could do that would make up for a lot.  It would be huge!  Terrific!  It could change our world for the better in a big-league way! It could save us all from economic disaster!  And it isn’t even hard to grasp or complicated to do.   It’s like installing a traffic light at a dangerous intersection to avoid deaths. In 1933, when the Glass-Steagall Act was passed, it helped break up the biggest banks of the day and for good reason: they had had a major hand in triggering the most disastrous economic depression our country ever experienced.Certain divisions of those banks were no longer allowed to coexist with others. The law split the parts of banks that placed bets by creating and trading certain risky securities and those that took deposits and provided loans.  In other words, it ensured that the investment bank and the commercial bank would no longer cohabit. Put another way, it separated bankers with a heinous gambling habit from those who only wanted a secure nest egg. It was simplicity itself.After 1933, the gamblers and savers went their separate ways, which proved a boon for the economy and the financial system for nearly seven decades. […] Then along came the bizarre 2016 presidential election campaign during which, strangely enough, Democrats and Republicans found one issue on which they had some common ground: the banking system.  Key figures in both parties agreed that it was time to stop the investment bank and the commercial bank from commingling. The Democratic National Committee platform offered a similar message. “Banks,” it said, “should not be able to gamble with taxpayers’ deposits or pose an undue risk to Main Street. Democrats support a variety of ways to stop this from happening, including an updated and modernized version of Glass-Steagall as well as breaking up too-big-to-fail financial institutions that pose a systemic risk to the stability of our economy.”The Republican National Committee wasted even fewer words making the point in theirplatform: “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.” And it didn’t even suggest that the act should be “modernized” or mention a “twenty-first-century” version that didn’t do what the twentieth century one had done. For the first time since its repeal, in other words, a return to the Glass-Steagall Act had bipartisan support. It couldn’t have been simpler, right? Two parties, one idea: split banks into two pieces. But then, as if you hadn’t already guessed, it got complicated. 

    Without Glass-Steagall, America Will Fail - Paul Craig Roberts -- For 66 years the Glass-Steagall act reduced the risks in the banking system. Eight years after the act was repealed, the banking system blew up threatening the international economy. US taxpayers were forced to come up with $750 billion dollars, a sum much larger than the Pentagon’s budget, in order to bail out the banks. This huge sum was insufficient to do the job. The Federal Reserve had to step in and expand its balance sheet by $4 trillion in order to protect the solvency of banks declared “too big to fail.”The enormous increase in the supply of dollars known as Quantitative Easing inflated financial asset prices instead of the consumer price index. This rise in bond and stock prices is a major cause of the worsening income and wealth distribution in the United States. The economic polarization has undercut the image and reality of the US as a land of opportunity and has introduced political and economic instability into the life of the country. These are huge costs and for the benefit only of the rich who were already rich. Americans know that the nonsense from the US Bureau of Labor Statistics about a 4.3% unemployment rate and an abundance of new jobs is fake news. The BLS gets the low rate of unemployment by not counting the millions of discouraged workers who cannot find employment. If you haven’t looked for a job in the last 4 weeks, you are not considered unemployed.  It makes perfect sense to separate commercial from investment banking. The taxpayer insured deposits of commercial banking should not serve as backing for investment banking’s creation of risky financial instruments, such as subprime and other derivatives. The US government understood that in 1933, but no longer did in 1999. This deterioration in government competence has cost America dearly.

    The Choice Act is not a community banking bill | American Banker - The cornucopia of proposals in the Financial Choice Act — recently passed by the House — to roll back crisis-era regulations is being touted as vital for community banks. To hear the bill’s author, Rep. Jeb Hensarling, R-Texas, tell it, community banks are in an existential crisis due to onerous Dodd-Frank regulations. But this rhetoric is divorced from two key realities: First, most of the provisions in the Choice Act do not apply to the vast majority of community banks; the legislation’s main beneficiaries are elite megabanks. Second, the challenges faced by community banks largely predate and are unrelated to the post-crisis regulatory regime. The bill passed by House Republicans, which includes some of the same relief approaches called for in the Treasury Department’s regulatory report unveiled Monday, is a 600-page juggernaut that would run roughshod over consumers, Main Street businesses and small banks in favor of Wall Street. In seeking to repeal significant aspects of Dodd-Frank, the Choice Act would: nullify key shareholder rights for all but the largest investors in public companies; undermine the neutrality and effectiveness of the Consumer Financial Protection Bureau, an agency that has provided a whopping $11.7 billion in restitution to exploited consumers in six short years; eliminate the Federal Deposit Insurance Corp.’s “orderly liquidation authority” — intended to help the FDIC manage the next banking crisis — in favor of having bankruptcy courts handle the cleanup of large failures; and invalidate the Volcker Rule, thereby recreating pre-2008 Wall Street incentives for depository institutions to engage in rampant speculation using customer deposits and Federal Reserve largess. That these changes are being sold as rescuing struggling community banks is galling.For one thing, the connection between Dodd-Frank and the demise of community banking has been greatly exaggerated. According to an FDIC study, the core profitability of community banks has returned to pre-2008 levels despite the fact that the current economic recovery is the most sluggish since World War II. U.S. commercial-bank lending is enjoying a 70-year high, and has risen consistently since 2010. Indeed, community bank profits are actually up relative to big banks. The fact is that much of the regulation targeted by the Choice Act is plainly inapplicable to community banks.

    Dodd-Frank or the Choice Act? Take the best parts of both – BankThink -The Financial Choice Act sailed through the House of Representatives recently, part of a legislative effort to roll back large parts of the Dodd-Frank Act of 2010. While the legislation is right to do away with the overly burdensome regulations of Dodd-Frank, it is wrong to leave government without adequate tools to protect the financial system. The Choice Act offers a clever solution that should be sensible for all but the largest banks. The bill’s “off-ramp” exempts banks that are financed with enough tangible equity, as a percentage of assets, from many of the regulatory rules of Dodd-Frank. This idea is logical. If a bank is well capitalized, the benefits of regulation are smaller, because moral-hazard concerns are less important and bank equity holders are more likely to make efficient lending decisions. But the Choice Act offers this same off-ramp to large systemic banks, which is a mistake: Some banks are just too interconnected and complex with multidimensional risks and opaque financial leverage for the off-ramp’s simple ratio of capital to assets to provide sufficient protection to the financial system. They need enhanced oversight. And the Choice Act’s specific capital requirement of 10% is at the low end of what should be considered for these firms. Similarly, while the Choice Act can be commended for its focus on regulatory relief, the bill goes off the rails as it pertains to the identification and management of systemic risk. Sticking to a rigid ideology, the legislation views the existence of “systemically important financial institutions” (SIFIs) as resulting solely from the implicit government guarantees associated with designating them. Indeed, the Choice Act would roll back systemic risk regulation by not allowing SIFI designation of these nonbanks. In our view, several Dodd-Frank regulations need to stay in place: First and foremost is the annual stress test applied to all SIFIs. Because stress tests can uncover threats to the system as a whole when large financial firms are collectively under duress, reducing the testing frequency would substantially weaken one of the most effective tools for controlling systemic risk. Eliminating stress tests as part of the off-ramp could invite risk-taking that eventually fuels another severe financial crisis. Second, the authors of the Choice Act argue that “risk-weighted” capital ratios have failed and choose instead a simple leverage ratio to measure bank resilience. While we are sympathetic to the difficulty of choosing risk weights, a simple leverage ratio merely sets the same risk weight across all assets; as a result, lending to a safe versus a near-bankrupt company would be treated equally. A more sensible plan would be to insist that the largest banks satisfy a risk-weighted capital ratio along with the off-ramp’s 10% leverage ratio. Third, as the recent financial crisis demonstrated, complex firms need enhanced supervision because these institutions have large off-balance-sheet exposures and potentially hidden leverage, depending on their derivatives positions and capital treatment.

    Trump Administration Welshes on “Repeal Dodd Frank” Promise, Does Not Back Key Elements of House Bill; Seeks to Give Banks Lots of Other Goodies -- Yves Smith - After having promised banks to get rid of Dodd Frank, which was never a strong enough bill to have a significant impact on profits or industry structure, Trump didn’t even back the House version of the bill to crimp Dodd Frank. But you’d never know that from the cheerleading from bank lobbyists upon the release of a 147 page document by the Treasury yesterday, the first of a series describing the gimmies that the Administration seeks to lavish on banks. As we’ll touch on below, the document repeatedly asserts that limited bank lending post crisis to noble causes like small businesses was due to oppressive regulations. We wrote extensively at the time that small business surveys showed that small businesses then overwhelmingly weren’t interested in borrowing and hiring. Businessmen don’t expand operations because money is cheap, they expand because they see a commercial opportunity.  But the even bigger lie at the heart of this effort is the idea that the US will benefit from giving more breaks to its financial sector. As we’ve written, over the last few years, more and more economists have engaged in studies with different methodologies that come to the same conclusion: an oversized financial sector is bad for growth, and pretty much all advanced economies suffer from this condition. The IMF found that the optimal level of financial development was roughly that of Poland. The IMF said countries might get away with having a bigger banking sector and pay no growth cost if it was regulated well. Needless to say, with the banking sector already so heavily subsidized that it cannot properly be considered to be a private business, deregulating with an eye to increasing its profits is driving hard in the wrong direction.  Nevertheless, despite faithfully repeating dubious bank taking points, the Treasury document isn’t as far-reaching as the headlines would have you believe. First, for the most part, it seeks to weaken already underwhelming post crisis reforms rather than undo them entirely. Second, the Treasury finesse is to focus on making changes that for the most part don’t require legislative approval. But even that isn’t likely to happen soon with Trump not having taking control of many parts of the bureaucracy. And some regulations aren’t easy to change. For instance, banks actually do have some legitimate grounds for complaining about the Volcker Rule, and the Treasury devoted a section to it in this document. However, the bogus justification for weakening the Volcker Rule is that it has reduced market liquidity. First, that is merely (and always) asserted; the Fed hoovering up the most liquid securities, and the ones most often used for repo financing, namely Treasuries and top rated mortgage backed securities, played a big role. And more important, highly liquid markets are not necessary for commerce or investment. On top of that, as Bloomberg stresses, it will be harder to get regulatory reforms than you’d think, particularly on the Volcker Rule:

    Cheat sheet: Treasury's extensive reg relief wish list – American Banker — The Treasury Department released its highly anticipated report on revamping financial industry regulations late Monday, including many expected recommendations while also offering up some surprises. In some respects, the report echoes a bill passed by the House last week, including a leverage ratio “off-ramp” from many post-crisis rules, a significant paring back of the Federal Reserve’s stress testing program and a reconsideration of many of the international standards the U.S. follows.   “It’s a little bit different from Choice Act, but does seem to dovetail with the Choice Act.” But the report also has some surprises. It calls for the U.S. to implement the remaining aspects of the Basel III standards, including capital floors, calls for Congress to expand the authority of the Financial Stability Oversight Board and seeks additional flexibility for community development financial institutions, a class of community bank whose grant budgets the administration sought to zero out in the 2018 federal budget. It also toys with new ideas while not fully fleshing them out, including a “coordinated examination force” for community banks and suggesting a “restructuring” of regulators without detailing exactly what would be entailed.Treasury Secretary Steven Mnuchin said in a statement accompanying the report that the report was designed to maximize consumer choice and spur growth that will help all Americans.“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy,” Mnuchin said. “We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products — while ensuring taxpayer-funded bailouts are truly a thing of the past.” But the administration’s critics have already panned the proposal as a giveaway to the banking industry. Sen. Sherrod Brown, D-Ohio, the top Democrat on the Senate Banking Committee, blasted the report, citing the disproportionate representation of banks and banking organizations among those consulted as evidence that it does not have the average American’s needs at heart. Brown said the Treasury consulted with 244 banking groups, compared with 14 consumer advocates.

    Trump Lays Out "Highly Anticipated" Plan To Overhaul Bank Rules - Nearly four months after Donald Trump signed an executive order calling for a review of Wall Street regulations, the administration has laid out part one of its plans for reforming the system in a detailed report released by the Treasury Department late Monday. Some of the more notable proposals in the highly-anticipated report - the first in a series that will detail the administration’s thinking on how it plans to proceed with paring back post-crisis regulations in the financial services industry – include: adjusting the annual stress tests, easing trading rules (i.e., gutting the Volcker Rule), and paring back the power of the watchdogs  - like the Consumer Financial Protection Bureau. The Treasury said its plan was designed to spur lending and job growth by making regulation ‘more efficient’ and less burdensome, according to Bloomberg although in reality it simply caters to the "requests" of Wall Street, which has been limited in its activities since Dodd-Frank, most notanly prop trading, although in most cases banks, like Goldman, have found simply loopholes around the Volcker Rule. Also of note, "unlike the bill passed last week by House Republicans, the report consistently calls for most Obama-era rules to be dialed back, not scrapped." In a statement released along with the report, Treasury Secretary Steven Mnuchin said that while the administration backs congressional efforts to roll back Dodd-Frank, the report focuses on actions that can be taken without involving Congress. In fact, between 70 and 80% of its recommended reforms can be made unilaterally through federal agencies' independent rulemaking authorities. The report is extremely critical of the fledgling agency, accusing it of being “unaccountable” and possessing “unduly broad regulatory powers.” To rein in the bureau, the Treasury report calls for the president to be able to fire its director for any reason, not just for cause as is now the case, as Bloomberg noted.

     A summary of significant Treasury proposals that *don’t* require Congress -- The US Treasury’s recommendations for financial regulation generally look like a reasonable banker’s wish list — not an Elizabeth Warren proposal, but not unexpected.It’s important to keep in mind that most of them can’t be implemented by Treasury alone. In fact, many require Congressional approval, so their future is far from certain.  They also don’t constitute formal proposals.Still, there are some key changes that only require the cooperation of the Federal Reserve and bank regulators. And that’s more likely, because of personnel turnover. Daniel Tarullo has left the Fed, so a Republican president will appoint his successor, who should be the next vice chair of supervision. FDIC Chair Martin Gruenberg’s term is up in November. The OCC is currently being run by acting director Keith Noreika, a Trump appointee, as nominee Joseph Otting hasn’t been confirmed by the Senate. So before we debate the merits of these changes, here’s a summary of notable proposals that are actually, you know, feasible. From the report‘s very handy Appendix B:

    Treasury Secretary Mnuchin Wants to Put a Bigger Blindfold on Consumers - Pam Martens - The next leg of the insatiable Wall Street heist has begun under the new U.S. Treasury Secretary Steven Mnuchin. Under the guise of empowering Americans “to make independent financial decisions,” the Treasury released its set of recommendations for financial reform on Monday. Far from empowering Americans, the new recommendations would effectively place a bigger blindfold on consumers, blocking further their ability to differentiate between serially corrupt financial institutions on Wall Street and those that make an effort at playing by the rules. (The latter being an almost extinct species.)Wall Street’s fingerprints are all over the Treasury recommendations. The report has singled out for particular scalpel treatment the Consumer Financial Protection Bureau (CFPB), which Wall Street loathes because of its independence. The acronym “CFPB” appears 315 times in the 147-page report. One passage reads as follows:“A significant restructuring in the authority and execution of regulatory responsibilities by the CFPB is necessary. The CFPB was created to pursue an important mission, but its unaccountable structure and unduly broad regulatory powers have led to predictable regulatory abuses and excesses. The CFPB’s approach to rulemaking and enforcement has hindered consumer access to credit, limited innovation, and imposed unduly high compliance burdens, particularly on small institutions. Treasury’s recommendations include: making the Director of the CFPB removable at will by the President or, alternatively, restructuring the CFPB as an independent multi-member commission or board; funding the CFPB through the annual appropriations process; adopting reforms to ensure that regulated entities have adequate notice of CFPB interpretations of law before subjecting them to enforcement actions; and curbing abuses in investigations and enforcement actions.”Not one negative accusation in the above passage is accurate. The CFPB has done a Herculean job of preventing the little guy in America from being further fleeced by Wall Street, mortgage servicers and lenders, student loan purveyors, debt collectors, credit card companies and so forth. As for making the Director of the CFPB “removable at will by the President,” our readers should consider how this has worked out for the FBI.  As for structuring the CFPB as a “multi-member commission or board” one need only look at the unfilled empty seats on existing regulatory bodies to see how that gambit can be gamed.

    Fed finds common ground with Treasury on reg relief — Federal Reserve Chair Janet Yellen offered limited praise Wednesday for a report issued by the Treasury Department earlier this week that recommends sweeping changes to the post-crisis regulatory framework. Speaking during a press conference accompanying the meeting of the Fed’s Federal Open Market Committee, Yellen called it a "complicated document" that she has yet to fully review, but suggested that she shared many of its objectives, including reducing regulatory burden without sacrificing safety and soundness. 

    Small and midsized banks could get regulatory relief from Senate. Wall Street? Probably not -- The Senate could reduce regulations for small and midsized banks, but Wall Street may be out of luck. House Republicans and the Trump administration want a major rollback of the 2010 Dodd-Frank financial reform law, including changes that would help the nation’s largest banks. But as debate shifts to the Senate, those changes are likely to be scaled back significantly because Republicans lack the votes to push many of them through.“We will have an easier time getting bipartisan agreement at the smaller size level of institution,” Senate Banking Committee Chairman Mike Crapo (R-Idaho) told an industry trade group this week. “As you move up the size level for institutions, the ability to get bipartisan agreement diminishes. But it doesn’t go away.” Crapo is working with the committee’s top Democrat, Sen. Sherrod Brown of Ohio, on a bill revising Dodd-Frank law that could draw enough Democratic support to prevent a filibuster.Now the effort of the two senators is in the spotlight after the House passed a financial regulatory overhaul bill on June 8 and Treasury Secretary Steven T. Mnuchin weighed in with a lengthy report on Monday. Brown vowed he and his fellow Democrats would not loosen the reins on large banks. “Based on the current Wall Street reform debate, the activity in the House and the report put out by Treasury earlier this week, I am concerned that some seem to have forgotten that we even had a financial crisis at all,” Brown declared at a committee hearing Thursday. “Let me be clear: Proposals to weaken oversight of the biggest banks have no place in this committee’s process,” he said. One of the key targets of the House bill and the Treasury report is the Consumer Financial Protection Bureau, which would have its authority gutted. The changes include making its director subject to removal by the president for any reason, eliminating the independent funding stream so Congress could reduce its budget, and stripping the agency of its ability to send supervisors into banks to make sure they are complying with consumer protection laws. For Brown and Senate Democrats, changes like that amount to a poison pill for any legislation.

    Trump OCC chief will stay away from big banks to avoid conflict - The new acting chief of one of Washington’s major banking regulators has agreed to stay away from issues involving dozens of former legal clients, including 14 banks that the agency oversees, according to his ethics agreement. Keith Noreika, who represented lenders as a private lawyer, plans to recuse himself from matters related to JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc., firms the Office of the Comptroller of the Currency regulates. Democratic lawmakers had already questioned whether Noreika’s close ties to the industry would prevent him from being an impartial watchdog. The ethics disclosure, released by the OCC Friday, lays out the scope of his potential conflicts for the first time. “How can he possibly do his job when he can’t regulate these entities?” Senator Chris Van Hollen, a Maryland Democrat, said in a Friday statement. “Not to mention the fact that he stands to profit from all of these relationships the moment he finishes his work at the OCC.”   Noreika became comptroller of the currency on a temporary basis last month, leaving his law practice to run the agency until a permanent leader is confirmed by the Senate.   Noreika will follow all applicable federal ethics rules when he leaves government, said Bryan Hubbard, an OCC spokesman. That includes a permanent ban on representing banks before any agency if he dealt with an issue pertaining to the firm while at the OCC. Noreika will also be barred for two years from representing clients on matters that were “pending under his official responsibility during the last year of his federal service,” Hubbard said. In private practice, Noreika earned almost $3.3 million working at two law firms over the past 16 months or so, according to his financial disclosure form, which was also released Friday. His nearly 80 legal clients ranged from Wall Street banks to private equity firms to financial trade associations. The Trump administration’s decision to use an unusual personnel maneuver to name Noreika to the OCC post also has drawn scrutiny from Democrats, who are concerned that he isn’t following the same ethics rules as full-time officials. Noreika was appointed as a “special government employee,” a status meant for workers who are expected to serve for 130 days over the course of a year. Under the designation, which hasn’t traditionally been used to hire top regulators, Noreika doesn’t have to sign the ethics pledge that President Donald Trump requires of his appointees. The pledge includes a five-year lobbying ban for former officials. 

    Even under Trump, SEC unsympathetic to reg relief for CLOs -- The Trump administration’s anti-regulatory agenda has yet to permeate the Securities and Exchange Commission, which remains opposed to relief for collateralized loan obligations. Hoping for a more sympathetic ear, the Loan Syndications and Trading Association wants to reinstate a federal lawsuit that seeks to overturn, or at least modify, ‘skin-in-the-game’ rules for CLOs.

    Quants Dominate The Market; Unexpectedly They Are Also Badly Underperforming It -- Two days ago, JPM's head quant revealed a stunning observation: "Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders." In short, markets are now "a quant's world", with carbon-based traders looking like a slow anachronism from a bygone era. Bloomberg confirmed as much today, when looking at another striking divergence between quant funds and traditional, discretionary managers: "systematic strategies have barely budged from near-record participation in U.S. stocks. Meanwhile, fundamental equity long-short managers can’t afford to be anything but picky, considering the market’s narrow leadership. The result: the largest gap on record between humans’ and computers’ gross exposure to U.S. equities, data compiled by Credit Suisse Group AG show." As the chart below shows, and confirms what JPM already revealed, "for now, systematic traders are the dominating force in markets."So in light of near record exposure, and a market that continues to grind higher to all time highs, one would expect the average quant to be having a banner year. One would be wrong,because as the WSJ's Greg Zuckerman reports "this year is shaping up to be a dismal one for so-called quant funds, typically some of Wall Street’s hottest investors." Some examples:

    The Blow-Off Top Is Here: Second Largest Weekly Inflows To Wall Street In History --For confirmation that the market is now in its "blow off top" phase, contrary to claims that the market keeps "climbing a wall of worry" and that the "money on the sidelines" refuses to enter, look no further than the latest BofA "flow show" in which Michael Hartnett reports that capital markets just saw their biggest week of equity inflows since the US election ($24.6bn), another chunky inflow to bonds ($9.0bn), which combines to "the second largest week of inflows to Wall Street ever (largest was $35.5bn in Dec'2014)."  Unfortunately for active managers, the news was anything but good because for another week in a row, the big winner was ETFs with $26.3bn equity ETF inflow vs $1.7bn outflow from equity mutual funds, while fixed income saw 4.8bn bond ETF inflows vs $4.2bn into bond mutual funds; seven equity ETFs (SPY, IVV, IWM, VO, VTI, XLF, VUG) & one bond ETF (EMB) had inflows >$1bn Another winner according to BofA: "yield": investors are still piling into "high-yielding" fixed income product with inflows to IG, HY, EM debt = $35bn past 4 weeks, fastest pace since Feb'15 (Chart 2)

     IBM unveils new Watson tools to help banks manage compliance, AML -— IBM is set to announce new tools on Wednesday aimed at reducing the compliance burden of financial institutions for combating money laundering, and a host of other regulatory requirements and sifting through the mounds of data they collect by using Watson, its cognitive computer. Watson has absorbed regulations from 200 different sources and been briefed on 60,000 regulatory citations as well as trained by former regulators who work for Promontory Financial Group, a subsidiary of IBM.

    Fintech, Central Banking and Digital Currency -- How will financial innovation alter the role of central banks? As the structure of banking and finance changes, what will happen to the mechanisms and frameworks for setting monetary and financial policy? Over the past several decades, with the development of inflation targeting, central banks have delivered price stability. And, improved prudential policies are making the financial system more resilient. Will fintech—ranging from the use of electronic platforms to algorithm-driven transactions that supplant the traditional provision and implementation of financial services—change any of this? This is a very broad topic, some of which we have written about in previous posts. For example, we are skeptical that peer-to-peer lending will replace significant portions of the credit system. And, while we have expressed a hopeful view of the blockchain technology—a reasonably efficient way to track ownership—it is hard to see private digital currencies like Bitcoin making significant inroads (aside from as a vehicle for the evasion of capital controls, money laundering rules, and the like). We have also expressed our view that paper currency is a key aspect how we organize our society, so we should think long and hard before we get rid of it.  But, in the end, there is still much that we do not know and still hope to understand.  With that in mind, this post considers an innovation suggested by Barrdear and Kumhof at the Bank of England: that central banks should offer universal, unlimited access to deposit accounts. What would this “central bank digital currency” mean for the financial system? Does it make sense for central banks to compete with commercial banks in providing deposit accounts? We doubt it. It is not an accident that—at virtually every central bank—only commercial banks today have interest-bearing deposits. And there are reasons that central banks that once offered private accounts no longer do. Changing this would pose a risk of destabilizing the financial system.

    How I missed the point of bitcoin | American Banker - Nearly five years ago, I wrote a BankThink post about bitcoin that emphasized the network’s then-low costs and near-real-time settlement. Bitcoin was an obscure phenomenon at the time, and what I missed was that as the currency’s popularity grew, the peer-to-peer system’s limited throughput would undermine those two particular benefits. I stand by my old headline: “Lightning fast, dirt cheap: bitcoin shows what banking could be.” (Emphasis added here.) Whether bitcoin could sustain the low latency and low fees of the early days was beside the point. Surely centralized systems — which don’t require computers distributed across the globe to reach consensus on the state of a ledger — should allow real-time, low-cost payments in the 21st century. And perhaps bitcoin helped push that toward reality. Five years ago, such a goal was scarcely on the horizon in the U.S. This was years before Zelle or the Federal Reserve’s Faster Payments Task Force. The automated clearing house didn’t even provide ubiquitous same-day settlement between bank accounts then. Nevertheless, it’s fair to say that like a blindfolded person feeling the trunk of an elephant and thinking it’s a snake, I didn’t quite have the big picture in 2012. The most important thing about bitcoin, the characteristic the gives the lie to the oft-repeated claim that it’s “a solution in search of a problem,” is not the speed or the cost of transactions. Nor is it the pseudonymous nature of bitcoin addresses, a privacy feature that voyeurs, gossips and stalking exes (as well as law enforcement) can circumvent by analyzing the flow of funds on the public blockchain. It’s certainly not the exchange rate with the dollar, which has had a bumpy ride but recently hit another all-time high of $3,000.  No, the key thing about bitcoin is its censorship-resistance — something that I only obliquely touched on in my original post, when I mentioned that the currency could be used to purchase drugs on the dark web or send donations to WikiLeaks, which was then operating under a blockade by the major payment networks. Censorship-resistance solves a real problem, and not just for drug dealers or ransomware attackers. Centralization may offer certain efficiencies, but it also creates single points of failure that are vulnerable to political or social pressure.

    Citigroup casts wide net on blockchain | American Banker -- Citigroup’s new partnership with Nasdaq is an indication that the New York bank is pushing hard to find ways to make commercial use of blockchain technology, a top Citi executive said Tuesday. Citigroup and Nasdaq will use distributed ledger technology to expand and improve securities payments both across borders and for private companies. Blockchain is a distributed ledger system that was originally developed for use with bitcoin. Integrating these technologies can help banks improve liquidity in private securities and increase operational efficiencies.

    ‘We’re in production’: Bank execs on the state of play for blockchain -- Think of getting blockchain up and running in banking as a journey, not a destination.  That was the message Tuesday from leading voices on distributed ledger technology. As banks begin to explore the promises of the blockchain — from reducing operational costs to verifying digital identities — much of the industry is eagerly awaiting a flashy debut. But it’s not that simple, according to big-bank executives who spoke in New York at American Banker’s Blockchains + Digital Currencies conference. Designing new systems for trading and payments requires a long road of pilot programs, cybersecurity checks and data-privacy assurances. It also involves a nearly constant race to keep up with a rapidly evolving field.   The industry is getting closer to using the blockchain on a large scale, but executives must ensure "it’s not just a rush to production for a press release’s sake," said Amber Baldet, blockchain program lead at JPMorgan Chase.  In other words, getting the blockchain into production will not involve flipping a switch. Instead, developing systems that will protect client funds and stand the test of time involves a constant state of development and production in innovation labs across the industry. “It’s easy to just say, 'Are we there yet?', as if there’s just some arbitrary milepost that we passed, and all of a sudden everyone is using the distributed ledger,” said Amber Baldet, the blockchain program lead at JPMorgan Chase. “If you look at it as more of this type of journey, it’s a little bit frustrating to be asked, ‘Are you in production yet?’ Because we’re certainly working on it, but the technology is changing so fast.” Angus Champion de Crespigny, senior manager for financial services at EY, agreed. “I also get asked: ‘When is blockchain going to be ready?’ And I feel like it’s like, ‘When is the internet going to be ready?’” As Baldet put it: “It’s bitcoin and Ethereum. We’re in production.”

    Delaware blockchain measure seeks to change 'very base' of financial system - On Aug. 1 private companies incorporated in Delaware might be able to start issuing and tracking shares of stock on a distributed ledger. The new system, in which companies and shareholders could enjoy the benefits of electronic trading while retaining direct ownership of their shares, would be established thanks to an amendment currently making its way through Delaware's state legislature. Delaware, which takes pride in being the "First State," has long been a home to American corporations, at least in terms of legal jurisdiction. Two-thirds of the Fortune 500 are incorporated there. Delaware's move to promote the use of distributed-ledger technology in stock trading is "tremendously forward-thinking," says Marco Santori of the law firm Cooley, and it could have "reverberations nationally," says Andrea Tinianow, left, a state economic development official. They spoke on a panel moderated by IBM's Kathryn Harrison.  So the idea of distributed-ledger equities was destined to be realized first in Delaware, says Andrea Tinianow, director of corporate and international development at Global Delaware, the state's international marketing initiative. "It was kismet," she said. "It was meant to happen." The initiative has been underway for more than a year. To brainstorm the legal framework, she teamed up with Marco Santori, a partner and head of the blockchain technology practice at Cooley, a New York law firm. In May 2016 the governor of Delaware announced that his state was officially moving to make it possible for private and publicly traded stocks to live and trade on a blockchain.

    Better isn’t good enough in improving global payments systems -- It’s often easy for payments professionals to lose touch with the impact of what our institutions do every day to support not only the world economy, but also individuals. Perhaps as a byproduct of losing touch, we have done too little to leverage transformational changes in technology to improve the overall client experience. We simply haven’t done nearly enough.  On a global scale, payments remain too slow and costly, and lack basic transparency, predictability and can’t be tracked, end to end, so that all interested parties have access to the latest status information. Some other industries solved these challenges years ago. Imagine sending an important package to a critical destination and having no idea when it would arrive, how much it would cost to send and what condition it would be in upon receipt. Or, imagine landing in a foreign country and not being able to make a call to your loved ones, or the call taking hours to be connected, or not knowing how much it would cost. As consumers, we used to accept this level of service, but no more. Yet in many ways, this is akin to the level of service offered by the payments industry, particularly when moving funds across borders. As service providers, we can no longer accept this standard.Payments professionals need to raise the bar and create a global, real-time payment experience for our clients — anyone to anyone — with full transparency into the status of payments in process and full disclosure as to end-to-end cost to all parties in a payment transaction. I believe that the primary obstacle to delivering this improved experience is not technology — it’s having the collective vision and will to make it happen. As an industry, we need to demonstrate our desire to deliver the absolute best experience to our clients in keeping with a real-time, always-on, global economy. Without question, creating such a global, timely and transparent experience will require industrywide collaboration and some transformative changes.

    Small banks shying away from tech at their own risk -- Community banks remain resistant to new technology despite increased threats from bigger institutions and nonbanks. Such hesitancy was on display earlier this year when the Florida Bankers Association canceled a fintech conference marketed to bank CEOs and other executives — due to a lack of interest. The association's decision left bankers such as Drew Saito disappointed. “I was shocked,” Saito, a senior vice president in charge of South Florida expansion at First Green Bank in Fort Lauderdale, said during a presentation at American Banker’s 2017 Blockchains + Digital Currencies conference in New York. “My chief technology officer, the CEO of the bank and I were planning on attending,” Saito added. “What I thought of as the [association’s] most important conference … they just got rid of it.” Saito’s experience epitomizes small banks' unwillingness to learn about new technology, much less adopt it. The level of tech spending at community banks hasn’t changed much in recent years, based on research by the Federal Reserve and the Conference of State Bank Supervisors. About 31% of bankers surveyed in 2016 planned to spend an amount equivalent to 0.15% or more of total assets in technology, or a negligible rise from a year earlier. That approach could prove problematic for community bankers, with Saito drawing comparisons to the demise of the video rental chain Blockbuster. For instance, he said distributed ledger technology is evolving quicker than the implementation of the smart phone or the Internet. 

     How Badly Must a C.E.O. Behave Before His Pay Is Clawed Back? - Gretchen Morgenson - United Airlines’ contempt for customers was on full display in April, when it dragged a passenger from an overbooked plane, bloodying him in the process. Since then, shares of United Continental Holdings, the airline’s parent, have rebounded smartly, so perhaps investors consider the incident an anomaly. But those who do may want to check out a lawsuit unfolding in Delaware Chancery Court, one that involves the former chief executive of United and a prime figure in the Bridgegate scandal that has dogged Gov. Chris Christie of New Jersey. The facts of the case reflect a similar disdain for United’s shareholders by the corporate board members who are supposed to serve them. At the heart of the lawsuit is the refusal by United’s directors to retrieve any of the $28.6 million received by Jeffery A. Smisek, United’s former chief executive, when he was defenestrated in 2015 amid a federal corruption investigation. It centered on United’s reinstatement of a money-losing air route between Newark Liberty International Airport and Columbia, S.C. United had canceled the route but re-established it at the behest of David Samson, then the chairman of the Port Authority of New York and New Jersey, who had a vacation home near Columbia. Mr. Samson, whose position gave him great sway over Newark Airport, wanted access to convenient flights to his second home. He had threatened to bar United from building a crucial hangar on-site if it did not start flying to Columbia. Mr. Smisek approved the restoration of the route “outside of United’s normal processes,” federal investigators said. The same day, the Port Authority approved the airline’s hangar project. These charming details came out during the so-called Bridgegate scandal of 2013, when New Jersey officials with ties to Mr. Christie closed lanes leading to the George Washington Bridge, causing traffic jams apparently designed as political payback. In 2014, Mr. Samson resigned from the Port Authority; days later, United halted the Newark-Columbia route, which had lost the company almost $1 million, Securities and Exchange Commission documents show. But that was not the end of the story.

    Supreme Court sides with banks in debt servicing case — Banks and other firms collecting defaulted debt originated by another company are not subject to the kinds of restrictions placed on third-party debt collectors, the Supreme Court ruled Monday in a unanimous decision.  Delivering his first opinion since joining the court in April, Justice Neil Gorsuch said in Henson, et al., v. Santander that the plain language of the Fair Debt Collection Practices Act firmly defines a “debt collector” — to whom the law’s restrictions apply — as one who is seeking to collect “debts owed … another,” as opposed to creditors seeking to collect on their own defaulted debts.

    Opinion analysis: Gorsuch's first opinion confirms exemption of debt buyers from Fair Debt Collection Practices Act -- This morning brought the first opinion from Justice Neil Gorsuch, explaining the decision of a unanimous court in Henson v. Santander Consumer USA that the Fair Debt Collection Practices Act does not apply to debt buyers – entities that buy and collect defaulted consumer debt. Perhaps this was not Gorsuch’s favorite case of the April argument calendar; it was the first argument in which he did not ask a question. But it does present the customary criteria for a first opinion: a unanimous decision in a case lacking great controversy. What makes the opinion more important than the decision it reflects is its first glimpse of Gorsuch’s style: Does it tell us anything useful about the approach he will take to drafting his opinions? Obviously one unanimous majority opinion in a straightforward statutory case is a small and unrepresentative sample, but at the risk of over-reading today’s offering, I would suggest that the two most salient features of this particular opinion are an effort to craft memorable prose – some may regard it as purple – and a commitment to taking seriously all of the arguments of the losing party. As suggested above, the case presents a basic question under the Fair Debt Collection Practices Act: whether the statute applies to the recently emerging industry of “debt buyers,” large entities that purchase the debts they collect instead of limiting themselves to providing collection services to the lenders that originated the defaulted obligations. The dispute turns on the oddity that the statute regulates debt collection, but only by debt collectors, not the originators of the debt. Sensibly or not, Congress decided that federal supervision was appropriate not for original lenders, but only for third-party collectors arguably less likely to have an ongoing relationship with the debtor. This case involves neither of those groups, but rather an entity that (at least for the customers involved here) buys debts previously originated by others and then collects them on its own behalf.

    Plain Meaning Rolls On in Gorsuch's First [Credit Related] Opinion -- It was not at all surprising that, for his first (traditionally unanimous) opinion, in Henson v. Santander, the new Justice Gorsuch took on the relatively simple and low-key issue of the definition of "debt collector" in the Fair Debt Collection Practices Act. It was also not surprising that he hewed quite closely to the approach of his predecessor in basing his decision on the "plain meaning" of the words in the statute, complete with grammatical analysis of past participles and participial adjectives (the example adduced, "burnt toast," might describe how the consumer protection industry will view this latest ruling). The FDCPA is as simple as it appears, the Court confirmed:  if you're collecting a (consumer) debt owed to someone else, then you're a debt collector; if you're collecting on a debt owed to you, for your own account, you're not a debt collector, even if, as in Santander's case, you bought the debt from the original creditor with the intention of collecting it for an arbitrage profit later. The notion that Congress did not foresee the debt buying industry and its explosive growth when it wrote the FDCPA in the 1960s, and it certainly would have wanted to constrain abusive collections practices by debt buyers as much as by debt collectors was ... wait for it ... a matter for the present Congress to clarify. You can almost see Scalia whispering in Gorsuch's (or his clerk's) ear as the opinion is drafted. Well, at least there's something to be said for predictability.

    Two court decisions, one big blow for cities’ lawsuits against megabanks -- Two recent court decisions may be complicating cities’ efforts to sue banks for predatory lending. While the courts have affirmed cities’ right to file predatory lending suits, they are also now holding them to a much higher standard in proving that banks knowingly steered minority borrowers into high-cost home loans.

    U.S. Weeks Away From A Recession According To Latest Loan Data --While many "conventional" indicators of US economic vibrancy and strength have lost their informational and predictive value over the past decade (GDP fluctuates erratically especially in Q1, employment is the lowest this century yet real wage growth is non-existent, inflation remains under the Fed's target despite its $4.5 trillion balance sheet and so on), one indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon. This can be seen on both the linked chart, and the one zoomed in below, which shows the uncanny correlation between loan growth and economic recession. And while we have repeatedly documented the sharp decline in US Commercial and Industrial loan growth over the past few months (most recently in "We Now Know "Who Hit The Brakes" As Loan Creation Crashes To Six Year Low") as US loans have failed to post any material increase in over 30 consecutive weeks, suddenly the US finds itself on the verge of an ominous inflection point.After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, - the lowest since 2011 - after slowing to 2.3% and 1.8% in the previous two weeks.

    Wolf Richter: This Toxic Trifecta for Auto Loans is Fueling #Carmageddon -  Wolf Richter --Institutional investors that manage other people’s money grabbed subprime auto-loan backed securities because of their slightly higher yields. These bonds are backed by subprime auto loans that have been sliced and diced and repackaged and stamped with high credit ratings. But those issued in 2015 may end up the worst performing ever in the history of auto-loan securitizations, Fitch warned.  And then there are those issued in 2016. They haven’t had time to curdle. The 2015 vintage that Fitch rates is now experiencing cumulative net losses projected to reach 15%, exceeding the peak loss rates during the Financial Crisis. Fitch Ratings’ Auto Loan Annualized Net Loss Index shows the strong seasonality, with either May or June forming the low point each year and the winter months forming the peaks. A terrible trend took off in 2014. The winter peak last year occurred in November with a net annualized loss of 10.9%. The latest data point is for April, at 7.8%, up from 7.4% last year. The index peaked in February 2009 at 13.1%. The trend is pointing that way (via Fitch Ratings ABS, cited by Bloomberg: The 2015 vintage has been prone to high loss severity from a weaker wholesale market and little-to-no equity in loan contracts at default due to extended-term lending, a trend which was not as apparent in the recessionary vintages. So let’s see. Negative equity hits all-time record. The average negative equity in vehicles that were traded in for new vehicles during Q1 2017 has reached $5,195 per trade, the highest ever, according to Edmunds data, cited by AutoWeek. The percentage of trade-ins with negative equity has surged to 32.8%, also the highest ever! Average negative equity exceeded $4,000 in Q3 2013 and hasn’t looked back. This negative equity in the trade is then rolled into the new loan, thus increasing the negative equity in that vehicle from the first second, which sends net losses soaring in the event of default. Why is negative equity such a growing phenomenon? Because of the toxic trifecta in the auto industry, now happening:

    • Lengthening loan terms. The average new-vehicle loan term in Q1 2017 reached a record of 69 months, up from 64 months in 2011, according to Edmunds data.
    • Rising transaction prices. Vehicle prices have surged in general. And consumers buy more expensive models because low interest rates and longer loan terms make this possible by keeping the payments down.
    • Falling used-vehicle values. The seasonally adjusted Used Vehicle Price Index is now down over 13% from its peak in mid-2014 and at the lowest level since September 2010

    Banklike data security rules for retailers would reduce breaches -- Target’s recent settlement with 47 states and the District of Columbia over the retailer’s 2013 data breach is in addition to $202 million in legal fees and other expenses resulting from the breach, in which hackers stole data from up to 40 million credit and debit cards of shoppers who had visited Target stores during the holiday season.  With hacking and data breaches on the rise, it is more important than ever for merchants to protect their customers’ personal financial information. New reports surface almost weekly of the sneaky methods used by hackers, like skimmers and malware, to steal credit card numbers and other identification for their criminal activities. It is time for merchants to take data security more seriously and invest in their customers’ safety. As of June 6, there have already been over 700 data breaches in 2017, exposing over 10.8 million records, according to the Identity Theft Resource Center. Retailers are among some of the biggest targets, and restaurants and hotels are increasingly falling victim, too. Today's consumers choose to pay with credit cards and other electronic payment methods at places they frequent on a regular basis, trusting that large corporations have security protocols in place. Some companies may have invested time and money in new infrastructure to protect consumer information, but retailers are not held to the same data security standards as the financial sector, which is subject to regulation and oversight by the federal government.The hotel industry was affected by a massive data breach that surfaced on May 4. Sabre Corp., a Texas technology company that provides reservation software to more than 32,000 hotels worldwide, was notified of unauthorized access to payment information, and quickly scrambled to close the loophole in their data security system. Sabre still does not know how much information was compromised. Just last week, Sears announced that payment systems for its Kmart stores had been infected with malware. Though Sears says the attack was identified and contained, it did confirm that customers’ credit card information was compromised.

     U.S. financial bureau weighs further changes to prepaid card rule -- The U.S. consumer financial watchdog is looking into adjusting its rule on the prepaid cards often found in racks at grocery stores to address industry concerns and make it safer to use digital versions of the cards. The agency, the Consumer Financial Protection Bureau (CFPB), also said on Thursday it is considering further postponing the rule's effective date, when companies must fully comply with its requirements, after delaying it in April for six months. The CFPB, which is charged with protecting individuals against fraud, late last year, after two years of drafting work, issued the rule for an industry projected to reach $112 billion in 2018. It requires greater disclosures and overdraft limits for cards sold by companies such as Mastercard Inc and Greendot. Recent feedback, though, led the CFPB to consider making adjustments, said its director, Richard Cordray, in a statement. In one adjustment, customers would have to register accounts in order to receive full protections against fraud and errors. Some companies said they would have trouble giving those benefits to unregistered accounts. In the other, protections would be extended to digital wallets on smartphones that can link to prepaid accounts. The rule faced criticism in Congress, where Republican Senator David Perdue of Georgia proposed repealing it earlier this year. Perdue said his objections stem from his belief the CFPB has too much power. Some rule critics also say it is too detailed and costly to implement.

    Cordray fights back against House Republican contempt threat - — A House Financial Services Committee report sharply criticizing the Consumer Financial Protection Bureau’s handling of the Wells Fargo phony-accounts scandal was biased and left out key information, according to Richard Cordray, the agency’s director.  In a letter to panel Chairman Jeb Hensarling, R-Texas, Cordray attempted to rebut the Republican majority staff report, which had called for him to possibly be held in contempt for failure to properly comply with the committee’s investigation. Cordray detailed the CFPB’s efforts to provide information with the committee, claiming that the panel’s report left out key details. “The staff report selectively mentions only some of the communications between the Committee and the Consumer Bureau,” Cordray wrote. The committee’s GOP staff released a 15-page report two weeks ago that concluded that Cordray lied to Congress when he told the committee during an April hearing that his agency’s investigation was “independent and comprehensive." It also accused the CFPB of withholding key documents. But Cordray said neither of those claims is true. In the first case, he said, the disagreement “seems to stem from differing interpretation of the terms 'independent' and ‘comprehensive.' " “As I see it, the Consumer Bureau worked with the Los Angeles City Attorney office and the OCC to ascertain the facts and resolve the issues. So we were not operating 'independently' in the sense that we operate in other cases where we are the lone government agency involved,” Cordray said. “We had an obligation to make our own independent judgement about the underlying facts and whether they could be sufficiently verified and commended for purposed of either filing a complaint or framing an order. We did that.”

    Close loopholes for online lenders, N.Y. regulator urges Albany - Online lenders are evading New York regulations by claiming their loans are “made” by federally chartered or out-of-state partner banks, the state’s top financial regulator told lawmakers in Albany Monday. Maria Vullo, superintendent of the New York State Department of Financial Services, urged legislators to clarify the statutory definition of “making loans” to include a wider range of companies.

     Wells Fargo Is Accused of Making Improper Changes to Mortgages - Gretchen Morgensen, NYT - Even as Wells Fargo was reeling from a major scandal in its consumer bank last year, officials in the company’s mortgage business were putting through unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits contend.The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would extend the terms of borrowers’ loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more.Any change to a payment plan for a person in bankruptcy is subject to approval by the court and the other parties involved. But Wells Fargo put through big changes to the home loans without such approval, according to the lawsuits.The changes are part of a trial loan modification process from Wells Fargo. But they put borrowers in bankruptcy at risk of defaulting on the commitments they have made to the courts, and could make them vulnerable to foreclosure in the future. A spokesman for Wells Fargo, Tom Goyda, said the bank strongly denied the claims made in the lawsuits and particularly disputed how the complaints characterized the bank’s actions. Wells Fargo contends that the borrowers and the bankruptcy courts were notified. “Modifications help customers stay in their homes when they encounter financial challenges,” Mr. Goyda said, “and we have used them to help more than one million families since the beginning of 2009.” According to court documents, Wells Fargo has been putting through unrequested changes to borrowers’ loans since 2015. During this period, the bank was under attack for its practice of opening unwanted bank and credit card accounts for customers to meet sales quotas.  It is unclear how many unsolicited loan changes Wells Fargo has put through nationwide, but seven cases describing the conduct have recently arisen in Louisiana, New Jersey, North Carolina, Pennsylvania and Texas. In the North Carolina court, Wells Fargo produced records showing it had submitted changes on at least 25 borrowers’ loans since 2015.

    New HMDA Regs Require Banks to Collect Lots of Data...That They Already Have – Adam Levitin, Credit Slips - The Home Mortgage Disclosure Act  of 1975 is a key piece of fair lending legislation.  It requires mortgage lenders to report data on loan applications and loans funded that enables both government and private groups to monitor lending patterns for violations of the Fair Housing Act and Equal Credit Opportunity Act (as well as state fair lending laws).  In 2015 the CFPB adopted a new HMDA rule that would expand the number of data fields collected by some 25 fields, effective Jan. 1, 2018.  This is being decried as an unreasonable burden on small institutions and a bipartisan collection of Senators on the Senate Banking Committee have proposed a bill that would exempt financial institutions that made less than 500 open-end loans or 500 close-end loans in each of the previous two years from the new HMDA reporting requirements.   There's no question that the new HMDA requirements add something to financial institutions regulatory burden. But a look at what these requirements are shows that the burden is really de minimis.  It's not going to make-or-break a small financial institution.  Below is a list of all 25 new data fields.  As you will see, after each one I have indicated whether it is data that is already required for the TILA-RESPA Integrated Disclosure (TRID) or would normally be in a loan underwriting file.  If it is in either, then it is simply a matter of having adequate software to plug that data into HMDA reporting.  Asking a bank to have integrated mortgage underwriting and reporting software doesn't seem like an unreasonable request, but none of this is stuff that should take very long to do even by hand-entry of data (something I've done plenty of). I've dotted all my i's and crossed my t's here, but the bottom line is this.  Almost every piece of information required under the new HMDA rule is already being collected by the lender for either its own underwriting purposes or for compliance with other regulatory requirements.  In other words, this just ain't a big deal.   The CFPB itself estimates (see p. 66308) per the Paperwork Reduction Act requirement that for truly small banks total HMDA compliance costs (which includes existing costs) will be between 143 and 173 hours of time annually.  Even at $100/hr (which is far more than a compliance staffer at a small bank makes), this would total, at most, $17,300 annually.

    Mall Tenants Seek Shorter Leases As America's Relics Of The 80's Teeter On The Brink --As if things weren't bad enough for America's mall owners, what with the having to filling their retail space with high schools, grocers and churches, it seems that retailers have grown so uncertain about the future of these 1980s relics that they're only willing to sign 1-2 leases these days.As Bloomberg points out this morning, leases renewals used to be 5-10 years in length but are increasingly only being signed with 1-2 year terms.  Meanwhile, thousands of stores are closing each year and it's only expected to get worse over time.After more than a dozen bankruptcies this year contributed to thousands of store closures, visibility for the industry is so poor that retailers are pushing for lease renewals as short as a year or two -- down from five to 10 years.“You’re certainly seeing the renewals geared toward the shorter term, rather than the five-year renewal,” said Andrew Graiser, head of A&G Realty Partners. Retailers are now struggling to figure out how many stores they actually need, he added, and landlords are looking at them “with a much closer eye than they did before.”Somewhere between 9,000 and 10,000 stores will close in the U.S. this year, said Garrick Brown, vice president of Americas retail research for commercial broker Cushman & Wakefield -- more than twice as many as the 4,000 last year. He sees this figure rising to about 13,000 next year.“Everyone’s trying to figure out where the bottom of the market’s going to be,” Brown said. He estimates it could occur in 2018 or early 2019.

    New GSE proposal seeks to fill capital void -- The latest entrant in the GSE reform debate addresses these issues and deserves serious consideration by policymakers. “Blueprint for Restoring Safety and Soundness to the GSEs” — created by Moelis & Co. — lays out a feasible way to raise upward of $180 billion and establish strong regulatory standards so that Fannie and Freddie will never again require a taxpayer-funded bailout. The Blueprint accepts the reality that large banks, mortgage insurers and other sources of capital cannot replace Fannie and Freddie. Accordingly, rather than try to create a new, elaborate and untested secondary mortgage market architecture, the proposal envisions using the current de-risked, slimmed-down and better-regulated GSEs with strong capital reserves appropriate for the post-financial-crisis era. Fannie and Freddie are now in the ninth year of a government-run conservatorship that was supposed to be temporary. With the infusion of $187 billion of temporary capital from taxpayers during the 2008-9 financial crisis, the GSEs were stabilized and returned to profitability. However, with an amendment to the terms of the conservatorship in 2012 that is commonly referred to as the Net Worth Sweep, Fannie and Freddie have been required to send their respective earnings and accumulated capital reserves to Treasury each quarter. These dividend payments now exceed an impressive $265 billion but have left Fannie and Freddie with zero reserves against future losses. The Blueprint envisions the U.S. Treasury retaining these receipts and then raising an additional $75 to $100 billion through the Treasury’s exercise of the warrants it holds for 79.9% of common stock of Fannie and Freddie. There is strong precedent for this based on how Treasury dealt with AIG and Ally Financial. With retained earnings, financial support from existing shareholders and sales of new stock into the markets, the Blueprint lays out a realistic path to raise up to $180 billion in core capital to support Fannie and Freddie going forward and to scale back the government’s support.

     Senate Banking Committee advances HUD Deputy Secretary nominee Pam Patenaude -- Pam Patenaude is one step closer to being Housing and Urban Development Deputy Secretary, the right-hand position to HUD Secretary Ben Carson.The Senate Banking Committee advanced President Donald Trump’s nomination of Patenaude late Wednesday, passing it on to the full Senate for approval. As deputy secretary, Patenaude would hold the true position of power at HUD, as the deputy secretary handles most of the day-to-day operations, while the HUD secretary is the public face of the department. David Stevens, president and CEO of the Mortgage Bankers Association applauded the approval, saying, “I want to congratulate Pam for being approved by the Senate Banking Committee to be the next Deputy Secretary of Housing and Urban Development.”“I know from the many years we have worked together that her knowledge of real-estate finance and deep background, experience and understanding of housing issues will serve her well. I can think of nobody more well suited for this position and I encourage the full Senate to move swiftly to confirm her nomination,” said Stevens. Despite mixed reaction to Carson being selected as HUD Secretary, both sides of the aislewelcomed the nomination of Patenaude thanks to her long history and background in the housing market. Many of the biggest trade groups in the housing industry, including the Mortgage Bankers Association, the National Association of Realtors, and the National Association of Home Builders, commended the Trump administration for its choice and recommended that the Senate approve Patenaude for the position.

    A new style: HUD Secretary Ben Carson hits social media to talk budget cuts  - Under Trump’s budget proposal, HUD’s funding would decrease about 13.2% to $40.68 billion.That decrease would lead to the elimination of several community development programs, including: Community Development Block Grant Program, Choice Neighborhoods Initiative, HOME Investment Partnerships Program, and the Self-Help Homeownership Opportunity Program.So, to no surprise, they’re not the biggest supporters of the program.But, Carson still stands with the president, saying “We have to stop the bleeding if we’re going to get healing,” according to an article in The Guardian over the Senate hearing.From the article:While the atmosphere at the hearing was largely congenial, Democratic senators voiced their strong disapproval of the suggested downsizing of the department. Collins described the cuts in her opening remarks as “stinging” and said she was “deeply troubled” by them.“It would be much nicer if we just had an infinite pot of money, but we don’t,” he said.“This has been forced on us,” he said of the budget. “The old paradigm is the government rides in on a white horse with buckets of money and says, ‘build these facilities for these people’.” The new paradigm, he said, would involve the government providing seed money for new projects and attracting investments from not-for-profit groups and the private sector. For one tense moment, the article noted, Sen. Brian Schatz, D-Hawaii, argued in response to Carson that the budget “is not forced upon us, except that it is the priority of this administration to cut taxes in the amount of anywhere from $1tn to $5tn over the next 10 years”. But to Carson, the situation was in fact “forced upon us by years of fiscal irresponsibility,” the article stated.

    Carson Sets Sights on Millennial Homebuyers -Without swift intervention, millennials could become “a lost generation of homeownership,” according to Dr. Ben Carson, Secretary of the U.S. Department of Housing and Urban Development.In his opening remarks at the National Housing Symposium in Washington, D.C. on Friday, Carson called homeownership a “lost dream” for many millennials—even ones who are creditworthy. “All of us have heard the stories about millennials living at home, renting, or sharing rooms,” Carson said. “And many of these people are creditworthy but feel excluded from the possibility of homeownership. You can understand the frustration. It cuts across an entire age group.” Ultimately, he said, “we must create a viable entryway for more creditworthy millennials.” “I worry that millennials may become a lost generation for homeownership. We must find a reasonable, prudent path to link millennials with investors and lenders – and the housing market itself.”  According to Carson, condominiums are often a buyer’s first foray into homeownership—and making these condos more affordable may open the door for more millennials.The Federal Housing Administration changed its owner-occupancy standards from 50 percent to 35 percent in November, which Carson said will “allow more people, including millennials, to use FHA to buy a condo.” The Housing Opportunity through Modernization Act of 2016 authorized the FHA to lower owner-occupancy standards in certain circumstances, in order to spur more condominium development.An upcoming increase to Fannie Mae’s debt-to-income-ratio requirements could also put homebuying more within reach for millennials. The government-sponsored enterprise will up its DTI ratio from 45 to 50 starting July 29.“Such an action would help millennials, although FHA loans would remain an attractive, powerful option,” according to Carson.Still, Carson said, despite the promise of these government efforts, the nation can’t rely on them as the sole pathway to homeownership.

    Millennial Mortgage Brokers Are Reviving "The Lost Art" Of Selling People Homes They Cannot Afford -- Nearly a decade after the collapse of the subprime mortgage market wrecked the US economy and ushered in one of the worst financial crises in modern history, lenders are once again courting borrows with less-than-ideal credit, the Wall Street Journal reports. And while post-crisis regulations have generally prevented the largest banks from reentering this market, smaller mortgage brokers who work to connect non-bank lenders with borrowers are leveraging their experience in writing these incredibly risky loans – a practice WSJ glibly describes as “a lost art" - to help revive their dying industry. Fundloans, a mortgage broker that specializes in subprime lending, is building a team of twenty-somethings who were in high school when the crisis struck – a team that includes 25-year-old Brandon Boyd, who left his job as a salesman at a Calvin Klein outlet to join the firm after its founder, Jon Maddux, recruited him off the store’s showroom floor. Here’s WSJ: Boyd, a 25-year-old account executive at FundLoans in a beach town outside of San Diego, is at the cusp of effort to bring back an army of salespeople who once powered the mortgage industry and, some say, contributed to the housing crisis."I knew a mortgage was a loan for a house,” said Boyd, who was recruited by his boss, Jon Maddux, after selling him a Calvin Klein suit at a local outdoor mall. “I came in just a blank slate.”   Mortgage brokers were vilified during the crisis for their shoddy lending practices, which included falsify loan applications. Today, most banks won't work with brokers because they're too difficult to monitor. Instead of banks, it's small and midsize independent lenders who are helping to revive the once-moribund mortgage broker industry. Nonbank lenders that typically cater to riskier borrowers say they need brokers to fan out across the country and arrange mortgages to people with lower credit scores, or who can’t prove their income through a typical tax return.

    Foreclosure, Delinquency Data Tumble to 10-Year Low -  Mortgage delinquencies fell to a 10-year low in March, according to property information provider CoreLogic, the lowest readings since the nation began to feel the grip of the worst housing crisis since the Depression. Irvine, California-based CoreLogic said delinquent mortgages, early-stage delinquencies and foreclosure rates all declined, as the focus of the housing recovery shifts toward addressing tight housing inventory and affordability.“Early-stage mortgage performance continues to improve at a steady pace, especially for 30-59-day delinquencies which fell to 1.7 percent, the lowest rate for any month since January 2000,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Late-stage serious delinquency rates continue to decline, falling to their lowest levels since November 2007.” CoreLogic’s monthly Loan Performance Insights Report found that nationally, 4.4% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in March 2017. That is a decline of 0.8 percentage points from 5.2% in the same period a year ago. The foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.8%, compared with 1.0% in March 2016. The serious delinquency rate, defined as 90 days or more past due including loans in foreclosure, was 2.1%, down from 2.7% in March of last year. Early-stage delinquencies, defined as 30-59 days past due, fell to 1.7 % in March 2017, down from 1.9% in March 2016. The share of mortgages that were 60 to 89 days past due in March 2017 was 0.59%, down slightly from 0.63% in March 2016. 

    Foreclosure filings increase 5% in May: Attom --The number of homes with a foreclosure filing increased 5% in May over the previous month, as properties entering the process also increased by 5%. There were 81,495 properties that had a foreclosure filing at the end of the month, compared with 77,049 in April, according to Attom Data Solutions. Filings were down 19% compared with May 2016 and there has been 20 consecutive months with a year-over-year decline.

     MBA: Mortgage Applications Increase in Latest Weekly Survey - From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey: Mortgage applications increased 2.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 9, 2017. Last week’s results included an adjustment for the Memorial Day holiday. ... The Refinance Index increased 9 percent from the previous week to the highest level since November 2016. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 19 percent compared with the previous week and was 8 percent higher than the same week one year ago. ...  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.13 percent from 4.14 percent, with points increasing to 0.35 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity increased as rates declined, but will not increase significantly unless rates fall well below 4%. The second graph shows the MBA mortgage purchase index. Even with the increase in mortgage rates late last year, purchase activity is still up 8% year-over-year.

     Mortgage "Rates Drop to 8-Month Lows" -- From Matthew Graham at Mortgage News Daily: Rates Drop to 8-Month Lows Mortgage rates fell convincingly today, though not all lenders adjusted rates sheets in proportion to the gains seen in bond markets (which underlie rate movement).  Those gains came early, with this morning's economic data coming in much weaker than expected.  Markets were especially sensitive to the Consumer Price Index (an inflation report) which showed core annual inflation at 1.7% versus a median forecast of 1.9%.  [30 Year fixed at 3.875%]. .. [T]he day ended with most lenders offering their lowest rates in exactly 8 months ( a few days following the presidential election).

    What Housing Recovery? Real Home Prices Still 16% Below 2007 Peak  --Since the financial crisis, home equity has gone from being America’s biggest driver of (illusory) wealth to one of the biggest sources of economic inequality.And while the post-crisis recovery has returned the national home price index to its highs from early 2007, most of this rise was generated by a handful of urban markets like New York City and San Francisco, leaving most Americans behind.To wit: home prices in the 10 most expensive metro areas have risen 63% since 2000, while home prices in the 10 cheapest areas have gained just 3.6%, according to Harvard’s annual State of the Nation’s Housing report. And while nominal prices may have returned to their pre-recession levels, when you adjust for inflation, real prices are as much as 16 percent below past peaks.Despite seven years of rock-bottom interest rates, valuations in 3 out of 5 metropolitan areas remain below their pre-recession peak. Outside, of a few rich coastal cities, the only advantage that this “housing recovery” has brought is that some homes remain affordable for some Americans. However, thanks to the disproportionate rise in home valuations in certain densely populated areas, the number of Americans paying more than 50% of their income in rent is near a record high.US house prices rose 5.6 percent in 2016, finally surpassing the high reached nearly a decade earlier. Achieving this milestone reduced the number of homeowners underwater on their mortgages to 3.2 million by year’s end, a remarkable drop from the 12.1 million peak in 2011.But as Bloomberg reports, nationally, just 1 in 3 homes has recovered peak value.Meanwhile, in the country’s most densely-populated markets, housing supplies are incredibly tight following nearly a decade of historically low construction.The lack of inventory for sale is evident in both the new and existing segments of the market. In 2016, the typical new home for sale was on the market for 3.3 months, well below the 5.1 months averaged since recordkeeping began in 1988. Meanwhile, only 1.65 million existing homes were for sale in 2016, the lowest count in 16 years. And with sales volumes picking up, the inventory represented just 3.6 months of supply, an 11-year low.

    Update: Real Estate Agent Boom and Bust --Way back in 2005, I posted a graph of the Real Estate Agent Boom. Here is another update to the graph.The graph shows the number of real estate licensees in California.The number of agents peaked at the end of 2007 (housing activity peaked in 2005, and prices in 2006).  The number of salesperson's licenses is off 30% from the peak, and is increasing again (up 5.2% from low). The number of salesperson's licenses has increased to July 2004 levels. Brokers' licenses are off 12.4% from the peak and have only fallen to March 2006 levels, but are still slowly declining (down almost 1% year-over-year). We are seeing a pickup in Real Estate licensees in California, although the number of Brokers is still declining.

    Land of the grown adults living at home: 5 reasons why California will continue to have millions of Millennials living at home. California has millions of young adults living at home with parents because they are unable to venture out into an expensive rental or a dilapidated crap shack costing close to $1 million.  It is interesting to see many articles written by baby boomers sporting beer guts and how Millennials are “destroying” many industries like chain restaurants (i.e., TGIFs, Buffalo Wild Wings, etc) or retail stores (i.e., Sears, K-Mart, etc), or are simply not buying homes.  Of course Millennials have different habits.  And getting stuck with an absurd 30-year mortgage on a dump is not a big aspiration for many.  They are more into health and wellness, life experiences, and many are delaying marriage.  So why do they need a home?  The data is backing all of this up of course contrary to the house humpers that continue to sing the praises of $1 million crap shacks.  California is in a major rental revolution.  And Millennials will continue to live at home in mass for a few reasons.

    • Reason #1 – Demographics. If you are a Millennial in California you are more likely to live at home.  This is simply how things are playing out.  Take a look at this chart:
    • Reason #2 – Failed Savings for Down payments. When rents are incredibly high it is hard to stash away money for a down payment.  For example, the typical house in Orange County is getting close to $700,000.  So a standard 20 percent down payment is going to be $140,000. 
    • Reason #3 – Buying Power is Already Maxed Out.  We’ve been in a low interest rate environment for well over a decade.  Rates can only go up.  So every little ounce that can be milked out of the market has already been done.
    • Reason #4 – Millennials are Different. Millennials don’t have the same desire of buying a home and pumping out 3 or 4 kids like older generations.  Ironically many are now living back at home in their late 20s, 30s, and even 40s.
    • Reason #5 – Lower Home turnover. As it turns out, many current home owners are just reaching break even.  Since many thought their homes were piggybanks they are now left having to delay retirement since guess what?  You can’t live off the equity until you sell! 

    Housing Starts decreased to 1.092 Million Annual Rate in May -- From the Census Bureau: Permits, Starts and Completions  Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,092,000. This is 5.5 percent below the revised April estimate of 1,156,000 and is 2.4 percent below the May 2016 rate of 1,119,000. Single-family housing starts in May were at a rate of 794,000; this is 3.9 percent below the revised April figure of 826,000. The May rate for units in buildings with five units or more was 284,000.  Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,168,000. This is 4.9 percent below the revised April rate of 1,228,000 and is 0.8 percent below the May 2016 rate of 1,178,000. Single-family authorizations in May were at a rate of 779,000; this is 1.9 percent below the revised April figure of 794,000. Authorizations of units in buildings with five units or more were at a rate of 358,000 in May. The first graph shows single and multi-family housing starts for the last several years.Multi-family starts (red, 2+ units) decreased in May compared to April.  Multi-family starts are down 23% year-over-year.Multi-family is volatile and has been down significantly over the last few months.Single-family starts (blue) decreased in May, and are up 8.5% year-over-year.  The second graph shows total and single unit starts since 1968.  The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low), Total housing starts in May were well below expectations, and March and April were revised down.    Most of the recent weakness has been due to multi-family.  This is a weak report.

    New Residential Building Permits: May Figure Lowest in Over 12 Months The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for May new residential building permits. The latest reading of 1.168M was a decrease from 1.228M in April and below the Investing.com forecast of 1.250M.Here is the opening of this morning's monthly report: Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,168,000. This is 4.9 percent (±0.9 percent) below the revised April rate of 1,228,000 and is 0.8 percent (±1.1 percent)* below the May 2016 rate of 1,178,000. Single-family authorizations in May were at a rate of 779,000; this is 1.9 percent (±1.0 percent) below the revised April figure of 794,000. Authorizations of units in buildings with five units or more were at a rate of 358,000 in May. Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,092,000. This is 5.5 percent (±11.9 percent)* below the revised April estimate of 1,156,000 and is 2.4 percent (±11.4 percent)* below the May 2016 rate of 1,119,000. Single-family housing starts in May were at a rate of 794,000; this is 3.9 percent (±10.4 percent)* below the revised April figure of 826,000. The May rate for units in buildings with five units or more was 284,000. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

    Comments on May Housing Starts --The housing starts report released this morning showed starts were down 5.5% in May compared to April, and were down 2.4% year-over-year compared to May 2016.  This was a weak report and was well below the consensus forecast.Note that multi-family starts are volatile month-to-month, and has seen wild swings over the last year - and has been especially weak over the last few months. However, single family starts - although down in May compared to April - were up 8.5% year-over-year.
    This first graph shows the month to month comparison between 2016 (blue) and 2017 (red).  Starts were down 2.4% in May 2017 compared to May 2016, and starts are up 3.2% year-to-date.  Note that single family starts are up 7.2% year-to-date, and the weakness (as expected) has been in multi-family starts. My guess is starts will increase around 3% to 7% in 2017.  Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).  These graphs use a 12 month rolling total for NSA starts and completions.

    This is a Big Deal: housing permits and starts now a long leading negative -- I'll have more to say next week, but let me just drop this right now: this morning's housing report was a Big Deal. FRED doesn't have the graphs yet, but here are the numbers from the Census Bureau cite. Graph of starts and permits: Note both have turned down significantly this year. Table of housing starts: The three month rolling average of starts, which smooths out the volatility, is at a 12 month low. the three month rolling average of single family starts is at a six month low. Table of housing permits: The much more stable single family permits is at the median value for the last 12 months. Total permits are at a 12 month low. In the past it has taken a decline of -175,000+ in permits to be consistent with the onset of recession. Today was -132,000 under January's high. I have been expecting a slowdown, based on the jump in interest rates since the Presidential election last November. It has clearly arrived, and it is significant enough to tip my rating of the housing market as a long leading indicator all the way to negative, pending next week's report on single family home sales, which becomes all the more important.

    NAHB: Builder Confidence decreased to 67 in June - The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 67 in June, down from 69 in May. Any number above 50 indicates that more builders view sales conditions as good than poor. From NAHB: Builder Confidence Remains Solid in JuneBuilder confidence in the market for newly-built single-family homes weakened slightly in June, down two points to a level of 67 from a downwardly revised May reading of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). “Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” All three HMI components posted losses in June but remain at healthy levels. The components gauging current sales conditions fell two points to 73 while the index charting sales expectations in the next six months dropped two points to 76. Meanwhile, the component measuring buyer traffic also moved down two points to 49.  Looking at the three-month moving averages for regional HMI scores, the Midwest and South each edged one point lower to 67 and 70, respectively. The Northeast and West both dropped two points to 46 and 76, respectively.

    Michigan Consumer Sentiment: June Preliminary Down from May, Disappoints Forecast --The University of Michigan Preliminary Consumer Sentiment for June came in at 93.5, down from the May Final reading of 97.1. Investing.com had forecast 97.1. Surveys of Consumers chief economist, Richard Curtin, makes the following comments:The modest early June drop of 2.6 points in the Sentiment Index masks a much larger decline since June 8th. Prior to that date the Sentiment Index had averaged 97.7, but since June 8th, the Index fell to 86.7, a decline of 11.0 points. While this break corresponds with James Comey's testimony, only a few consumers spontaneously referred to him or his testimony when asked to explain their views. Importantly, the decline was observed across all political parties, but the loss in confidence among self-identified Republicans since June 8th was larger than among Democrats (9.2 vs. 6.8 Index-points), with Independents showing the greatest falloff (11.5 Index-points). The size of the partisan difference between Democrats and Republicans in the Expectations Index, however, was largely unchanged (55.6 Index-points prior to June 8th, and 51.2 after). The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans. Fortunately, a strong job market, improved household income and wealth have provided a financial buffer against rising uncertainties. Nonetheless, consumers have become less optimistic about the future course of the domestic economy. Even with the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% for all of 2017. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy

    US credit card debt to surpass $1 trillion this year, report says - Credit card debt in the United States is $8,038 per household or $940.2 billion total, according to the latest report from the Federal Reserve.That number is up from $885.4 billion at the same time in 2016.That $940 billion comes after a big reduction in the first quarter when people typically use annual salary bonus payouts and financially motivated New Year’s resolutions to knock down debt.The rest of the year, however, the United States uses its time spending and adding to the debt. An analysis from WalletHub is predicting an additional $60 billion in new credit card debt in 2017, which would easily push the United States over the $1 trillion mark.

    Restaurant Sales, Traffic Tumble: "The Industry Hasn't Reported A Positive Month Since February 2016" --There appeared to be a glimmer of hope for the restaurant industry last month, when despite ongoing negative restaurant sales and traffic performance in April, BlackBox Intelligence Executive Director, Victor Fernandez said that "there are some reasons to be cautiously optimistic about the second quarter, at least in terms of improvement over what we’ve seen in the recent past" adding that "the move of the Easter holiday meant that April’s results were likely softer than they would have been without this shift, meaning spending in restaurants was probably a little stronger than the numbers show."Alas, any trace of optimism was doused with the latest BlackBox snapshot report (based on weekly sales data from over 27,000 restaurant units, and 155 brands representing $67 billion dollars in annual revenue) which found that May was another disappointing month for chain restaurants by virtually all measures.Same-store sales were down -1.1%, which represents a 0.1% decline from April. At the same time, same-store traffic "growth" also dropped by -3.0% in May, down 3.2% on a rolling 3 month basis. Although traffic results improved from prior month, the growth in check average was lower than it has been in recent months, causing the fall in sales growth vs. March and April. More concerning is that the restaurant industry has not reported a month of positive sales since February of 2016, according to BlackBox.

    Retail Sales decreased 0.3% in May --On a monthly basis, retail sales decreased 0.3 percent from April to May (seasonally adjusted), and sales were up 3.8 percent from May 2016.
    From the Census Bureau report: Advance estimates of U.S. retail and food services sales for May 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $473.8 billion, a decrease of 0.3 percent from the previous month, and 3.8 percent above May 2016. ... The March 2017 to April 2017 percent change was unrevised at 0.4 percent. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were down 0.1% in May.The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by3.7% on a YoY basis. The decrease in May was below expectations. A disappointing report.

    May Retail Sales: Down 0.3% MoM, Below Expectations - The Census Bureau's Advance Retail Sales Report for May released this morning showed a slight decrease over the April figures. Headline sales came in at -0.3% month-over-month to one decimal. Today's headline number was below the Investing.com consensus of 0.1%. Core sales (ex Autos) also came in at -0.3% MoM and the April Core was revised upward.Here is the introduction from today's report:Advance estimates of U.S. retail and food services sales for May 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $473.8 billion, a decrease of 0.3 percent (±0.5 percent)* from the previous month, and 3.8 percent (±0.9 percent) above May 2016. Total sales for the March 2017 through May 2017 period were up 4.4 percent (±0.7 percent) from the same period a year ago. The March 2017 to April 2017 percent change was unrevised at 0.4 percent (±0.1 percent).Retail trade sales were down 0.3 percent (±0.5 percent)* from April 2017, and up 4.0 percent (±0.7 percent) from last year. Building Material and Garden Equipment and Supplies Dealers were up 10.8 percent (±1.8 percent) from May 2016, while Nonstore Retailers were up 10.2 percent (±1.8 percent) from last year. [view full report] The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

    Retail Sales Tumble Most Since January 2016 As Gasoline, Electronics Sales Slump --This is not supposed to happen...  Headline retail sales tumbled 0.3% MoM in May, the biggest drop since January 2016 (and all the weather-related malarkey that was blamed on).Core retail sales also dropped the same...  The breakdown show a big tumble in Electronics and appliance stores, along with gasoline prices.This is the weakest YoY retail sales growth since the election and continues to signal that despite record high stock market indices, all is not at all well in 'Murica.

    Auto loan delinquencies rise as drivers splurge on pricey cars: Chasing that new car smell has led some car buyers to drive off with more than they bargained for. Low interest rates and low unemployment, along with loosened lending standards and greater new car sales incentives, have contributed to a boom in car leasing and auto financing. Americans are now spending more on their cars, but less out of pocket, and taking on more debt than they can afford. That, along with increased subprime lending — which is more profitable because lenders can charge much higher interest rates — has led to a recent increase in the number of drivers falling behind on their car loans, according to the Federal Reserve Bank of New York. Auto loan delinquencies rose more than any other category in last year's fourth quarter, according to the most recent data from the American Bankers Association. The ABA's Consumer Credit Delinquency Bulletin tracks 11 loan categories, including home equity lines of credit, auto loans and credit cards. The report defines a delinquency as a payment that's 30 days or more overdue. Leasing or loans now finance nearly 90 percent of retail car sales in the U.S., according to global asset manager Standard Life Investments. Altogether, more than 33 percent of American households are making car payments, according to a separate Pew Charitable Trusts study, with over $1 trillion in auto loans now outstanding.

    Consumer Price Index: Headline & Core Below 2%  -- The Bureau of Labor Statistics released the May Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 1.87%, down from 2.20% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.73%, down from the previous month's 1.88%. Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.9 percent.A decrease in the energy index was the main contributor to the monthly decrease in the all items index. The energy index fell 2.7 percent, led by a decline of 6.4 percent in the gasoline index. The food index rose 0.2 percent, due to increases in four of the six major grocery store food group indexes. The index for all items less food and energy rose 0.1 percent in May, as it did in April. The shelter index increased 0.2 percent over the month. However, many indexes declined in May, including those for apparel, airline fares, communication, and medical care services.The all items index rose 1.9 percent for the 12 months ending May, a smaller increase than the 2.2- percent rise for the 12 months ending April. This month’s increase is still a larger rise than the 1.6- percent average annual increase over the past 10 years. The index for all items less food and energy rose 1.7 percent over the previous 12 months; this compares to a 1.8-percent average annual increase over the past decade. The energy index rose 5.4 percent over the last year, while the food index increased 0.9 percent. [More…] Investing.com was looking for a 0.1% increase MoM in seasonally adjusted Headline CPI and 0.2% in Core CPI. Year-over-year forecasts were 2.0% for Headline and 1.9% for Core. The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.

    May Producer Price Index: Final Demand Unchanged --Today's release of the May Producer Price Index (PPI) for Final Demand came in at 0.0% month-over-month seasonally adjusted, down from last month's 0.5%. It is at 2.4% year-over-year, down from 2.5% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.3% MoM, down from 0.4% the previous month and is up 2.1% YoY. Investing.com MoM consensus forecasts were for 0.1% headline and 0.2% core. Here is the summary of the news release on Final Demand:The Producer Price Index for final demand was unchanged in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.5 percent in April and edged down 0.1 percent in March. (See table A.) On an unadjusted basis, the final demand index increased 2.4 percent for the 12 months ended in May.Within final demand in May, a 0.3-percent increase in the index for final demand services offset a 0.5-percent decline in prices for final demand goods. Prices for final demand less foods, energy, and trade services fell 0.1 percent in May, the first decline since a similar 0.1-percent decrease in May 2016. For the 12 months ended May 2017, the index for final demand less foods, energy, and trade services moved up 2.1 percent. More… The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

    Core Producer Prices Rise At Fastest Pace In 3 Years, Above Fed Mandate --For the first time in 3 years, Core Producer Prices have risen at a faster pace than The Fed's mandated 2% target. May PPI (ex food and energy) rose 2.1% year-over-year, the highest since May 2014, as goods prices tumbled (gasoline, motor vehicles, fresh fruit) while services costs (retailer and wholesaler prices, and residential lending) jumped.May 2014 was the last time that Core PPI (Ex Food and Energy)... The breakdown shows a notable drop in Energy prices MoM with good prices tumbling as service costs jumping...

      • Final demand goods: Prices for final demand goods moved down 0.5 percent in May, the largest decrease since a 0.6-percent drop in February 2016. Most of the May decline can be attributed to the index for final demand energy, which fell 3.0 percent. Prices for final demand foods decreased 0.2 percent. In contrast, the index for final demand goods less foods and energy edged up 0.1 percent.
      • Product detail: The May decrease in the index for final demand goods was led by an 11.2-percent drop in gasoline prices. The indexes for fresh and dry vegetables, jet fuel, fresh fruits and melons, motor vehicles, and home heating oil also fell. Conversely, the index for pharmaceutical preparations rose 0.6 percent. Prices for beef and veal and for electric power also increased.
      • Final demand services: Prices for final demand services rose 0.3 percent in May following a 0.4-percent advance in April. The May increase can be attributed to the index for final demand trade services, which moved up 1.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) In contrast, prices for final demand services less trade, transportation, and warehousing fell 0.1 percent, and the index for final demand transportation and warehousing services declined 0.5 percent.
      • Product detail: About half of the May increase in the index for final demand services can be traced to margins for fuels and lubricants retailing, which rose 16.1 percent. The indexes for apparel, footwear, and accessories retailing; machinery and equipment wholesaling; residential real estate loans (partial); automobiles and automobile parts retailing; and food wholesaling also moved higher. Conversely, prices for guestroom rental decreased 5.2 percent. The indexes for airline passenger services and food retailing also moved lower.

    U.S. Business Inventories Down in April | Fox Business: Inventories decreased by 0.2% to a seasonally adjusted $1.854 trillion, the Commerce Department said Wednesday. Economists surveyed by Dow Jones Newswires had forecast a 0.2% decrease. Sales, meanwhile, were unchanged from a month earlier. The inventory-to-sales ratio, which measures how many months it would take for firms to deplete inventories at the current sales pace, was unchanged at 1.37 in April. Retailers decreased stockpiles by 0.2%, wholesalers were down 0.5% and manufacturers up 0.1%.

    Q2 GDP In Trouble As Business Inventories Tumble In April --Adding further pain to Q2 GDP hope, April Business Inventories tumbled 0.2% MoM in April (following Wholesale Inventories decline). This is the biggest drop since November 2015.

    • Manufacturers inventories rose 0.1% m/m in April after rising 0.2% prior month
    • Wholesalers inventories fell 0.5% m/m in April after rising 0.1% prior month
    • Retailers inventories fell 0.2% m/m in April after rising 0.2% prior month

    The November spike in inventories is now long gone... Inventories-to-Sales stagnated in April but remain in a recession-signalling mode…Not a good sign for Q2 GDP.

    LA area Port Traffic increased in May -- Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic. The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).  To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.  On a rolling 12 month basis, inbound traffic was up 0.2% compared to the rolling 12 months ending in April.   Outbound traffic was down 0.4 compared to 12 months ending in April.  The downturn in exports in 2015 was probably due to the slowdown in China and the stronger dollar.  Now exports are picking up again,  The 2nd graph is the monthly data (with a strong seasonal pattern for imports).  Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year.  

     US distribution and warehouse space scarcer and pricier: US shippers looking to secure more warehouse and distribution space over the coming months should expect to pay more and have fewer choices. National vacancy rates in the first quarter hit a 17-year low and average rental rates are up 10 percent from a year ago in the hottest coastal markets. The average price of industrial real estate at the end of 2016 was $6.47 per square foot, although prices vary widely by region. Industrial real estate rates near the three largest US ports — Long Beach, Los Angeles and New York and New Jersey — rose at least 10 percent year-over-year in the first three month of 2017, according to Jones Lang LaSalle, as displayed on the JOC.com Market Data Hub. Average rental rate increases at other major distribution markets were strong but not as steep within the same period, with rates up 6 percent in Seattle and 4.5 percent in the Dallas-Fort Worth market. “Nationwide, there’s simply little to no industrial product available,” Jones Lang LaSalle stated in its US Industrial Outlook 2017. “The market is on fire today for industrial property owners,” the report stated. From the perspective of tenants, those conditions “pose unique challenges,” JLL stated. The dearth of available industrial space exists even though the construction and delivery of new properties is accelerating. “The construction pipeline continues to grow, with a 29 percent increase over the fourth quarter in build-to-suit properties,” according to JLL. There is an estimated 247 million square feet of new industrial space slated for delivery nationwide in the coming months, which is a 10-year high. By 2018, almost 1 billion square feet of space will have been delivered over the previous five years.

    Industrial Production Unchanged in May From the Fed: Industrial production and Capacity Utilization - Industrial production was unchanged in May following a large increase in April and smaller increases in February and March. Manufacturing output declined 0.4 percent in May; the index is little changed, on net, since February. The indexes for mining and utilities posted gains of 1.6 percent and 0.4 percent, respectively, in May. At 105.0 percent of its 2012 average, total industrial production in May was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector edged down 0.1 percentage point in May to 76.6 percent, a rate that is 3.3 percentage points below its long-run (1972–2016) average. This graph shows Capacity Utilization. This series is up 10.0 percentage points from the record low set in June 2009 (the series starts in 1967). Capacity utilization at 76.6% is 3.3% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007. The second graph shows industrial production since 1967. Industrial production was unchanged in May at 105.0. This is 20.6% above the recession low, and is close to the pre-recession peak. This was below expectations.

    Empire State Manufacturing Survey: Index Bounces Back in June, Better Than Forecast -- This morning we got the latest Empire State Manufacturing Survey, which bounced back from the previous month. The diffusion index for General Business Conditions at 19.8 was a jump of 20.8 from the previous month's -1.0.  The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state. Here is the opening paragraph from the report. Business activity rebounded strongly in New York State, according to firms responding to the June 2017 Empire State Manufacturing Survey. The headline general business conditions index shot up twenty-one points to 19.8, its highest level in more than two years. The new orders index posted a similar increase, rising twenty-three points to 18.1, and the shipments index advanced to 22.3. The inventories index climbed to 7.7, indicating a rise in inventory levels, and labor market indicators pointed to a modest increase in employment and hours worked. The pace of input price increases was unchanged, while selling price increases picked up somewhat. Looking ahead, firms remained optimistic about the six-month outlook. [source] Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

    Just Released: June Regional Business Surveys Paint a Mixed Picture – NY Fed - Yesterday’s June Empire State Manufacturing Survey pointed to a significant increase in regional manufacturing activity. However, our parallel survey for the region’s service sector, the June Business Leaders Survey, released today, paints a somewhat dreary picture of regional service-sector activity. These two surveys, taken together, suggest that economic conditions in the New York-Northern New Jersey region are mixed.  The two business surveys are designed to provide timely indications of regional economic conditions. In particular, the surveys’ headline indexes, which reflect respondents’ views about recent changes in business activity, are widely followed as regional indicators. But these indexes can also give some clues as to the outlook for the national economy. (Those who are not familiar with the surveys or how the indexes are computed can view methodology for both the services and manufacturing surveys.)  The manufacturing sector survey for June was unambiguously positive: after dipping to a level near zero last month, the headline general business conditions index surged to its highest mark in almost three years, and most of the measures of both current and expected activity also gave very positive signals. Aside from a temporary lull in May, the Empire Survey has pointed to an ongoing expansion in manufacturing activity in New York State that has lasted for several months.  While the manufacturing sector is certainly important, the service sector accounts for a much larger share of regional economic activity. And on the services side of the ledger, things don’t look quite as bright. Since the beginning of this year, the headline index for the Business Leaders Survey has been barely positive, meaning that more survey panelists say activity is increasing than say it is decreasing, but only by a small margin. Even so, this modestly positive reading is an improvement from where the index was during the second half of last year, when it was consistently below zero.

    Philly Fed Manufacturing Index: Firms Continue to Expect Growth --The Philly Fed's Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed's National Activity Index.The latest Manufacturing Index came in at 27.6, down from last month's 38.8 and has been positive for eleven consecutive months. The 3-month moving average came in at 29.5, down from 31.2 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 31.3, a decline from the previous month's 34.8.Today's 27.6 headline number came in above the 24.0 forecast at Investing.com.Here is the introduction from the survey released today:Regional manufacturing continues to expand, according to results from the June Manufacturing Business Outlook Survey. The diffusion index for general activity fell from its reading in May but remained positive and continued to reflect growth. Although many of the future indicators also declined, firms continue to expect growth over the next six months. About one-third of the firms expect to add to their payrolls through the end of the year. (Full Report)The first chart below gives us a look at this diffusion index since 2000, which shows us how it has behaved in proximity to the two 21st century recessions. The red dots show the indicator itself, which is quite noisy, and the 3-month moving average, which is more useful as an indicator of coincident economic activity. We can see periods of contraction in 2011 and 2012, and a shallower contraction in 2013. 2015 saw a contraction with an improvement in 2016. In the next chart, we see the complete series, which dates from May 1960. For proof of the high volatility of the headline indicator, note that the average absolute monthly change across this data series is 7.7.

    Earlier: NY and Philly Manufacturing Surveys Suggest Solid Growth in June --Earlier, from the NY Fed: Empire State Manufacturing SurveyBusiness activity rebounded strongly in New York State, according to firms responding to the June 2017 Empire State Manufacturing Survey. The headline general business conditions index shot up twenty-one points to 19.8, its highest level in more than two years. The new orders index posted a similar increase, rising twenty-three points to 18.1, and the shipments index advanced to 22.3.The inventories index climbed to 7.7, indicating a rise in inventory levels, and labor market indicators pointed to a modest increase in employment and hours worked. The pace of input price increases was unchanged, while selling price increases picked up somewhat. Looking ahead, firms remained optimistic about the six-month outlook. And from the Philly Fed: June 2017 Manufacturing Business Outlook SurveyRegional manufacturing continues to expand, according to results from the June Manufacturing Business Outlook Survey. ... The index for current manufacturing activity in the region decreased from a reading of 38.8 in May to 27.6 this month ... Firms reported overall increases in manufacturing employment this month, but the current employment index fell 1 point. The index has remained positive for seven consecutive months. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

     New York Fed Soars To Highest Since Sept 2014, Philly Fed Also Beats - In a much needed confirmation that Janet Yellen did not make a policy mistake by hiking rates yesterday, moments ago both the Empire State and Philly Feds smashed expectations, with the first printing at the highest level since September 2014 of 19.8, above the expected 4, and well above May's -1 contraction print, while the Philly Fed posted at 27.6, also beating consensus estimates of 24, if a drop from last month's 38.8. The New York Fed breakdown:

    • Prices paid fell to 20 vs 20.9
    • New orders rose to 18.1 vs -4.4
    • Number of employees fell to 7.7 vs 11.9
    • Work hours rose to 8.5 vs 7.5
    • Inventory rose to 7.7 vs -0.7

    Meanwhile over in Philadelphia:

    • June prices paid fell to 23.6 vs 24.2
    • New orders rose to 25.9 vs 25.4
    • Employment fell to 16.1 vs 17.3
    • Shipments fell to 28.5 vs 39.1
    • Delivery time rose to 13.9 vs 6.4
    • Inventories rose to 5.8 vs 1.4
    • Prices received rose to 20.6 vs 15.3
    • Unfilled orders rose to 14.0 vs 9.0
    • Average workweek fell to 20.5 vs 21.7
    • Six-month outlook fell to 31.3 vs 34.8
    • Six-month outlook for capex fell to 28.6 vs 32.6

    NFIB Small Business Survey: Index Continues Surge in May - The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for May came in at 104.5, unchanged from the previous month. The index is at the 96th percentile in this series. Today's number came in below the Investing.com forecast of 105.2.Here is an excerpt from the opening summary of the news release.Small business confidence shot up to near record levels last November and is still flying high, according to the latest National Federation of Independent Business (NFIB) Index of Small Business Optimism.“The remarkable surge in optimism that began last year right after the election shows no signs of slowing down” said NFIB President and CEO Juanita Duggan. “Small business owners are highly encouraged by the President’s regulatory reform agenda, and they remain optimistic there will be tax reform and health-care reform. This is a policy-driven phenomenon.”The Index for May matched its strong performance in April of 104.5. That means the Index has been at a historically high level for six straight months. Five of the Index components posted a gain, four declined, and one remained unchanged. The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.

     Weekly Initial Unemployment Claims decrease to 237,000 --The DOL reportedIn the week ending June 10, the advance figure for seasonally adjusted initial claims was 237,000, a decrease of 8,000 from the previous week's unrevised level of 245,000. The 4-week moving average was 243,000, an increase of 1,000 from the previous week's unrevised average of 242,000.   The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

    The Labor Market Conditions Index Down Again in May -  The latest update of the Labor Market Conditions Index for May is at 2.7, down from April's revised 3.7.The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The cumulative index (discussed below) is currently at its post-recession peak.  The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We've highlighted recessions with callouts for its value the month recessions begin and for the latest index value. As we readily see, with the exception of the second half of the double-dip recession in the early 1980s, sustained contractions in this indicator is a rather long leading indicator for recessions. It is more useful as a general gauge of employment health. Note that in the most recent FOMC minutes for March 14-15, the phrase "labor market conditions" was used ten times. Maximum employment, after all, is one of the Fed's twin mandates. Interestingly enough, the FEDS Notes article announcing the indicator doesn't chart the complete series with monthly granularity. Instead, the authors use a column chart to show blocks of six-month averages for the two halves of each calendar year since 1977. This approach further supports the use of the indicator as a general gauge of health. Here is our larger version of the same graphic model.

     BLS: Unemployment Rates Lower in 9 states in May, Four States at New Series Lows --From the BLS: Regional and State Employment and Unemployment Summary Unemployment rates were lower in May in 9 states, higher in 3 states, and stable in 38 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Twenty-two states had jobless rate decreases from a year earlier and 28 states and the District had little or no change. Colorado had the lowest unemployment rate in May, 2.3 percent, followed by North Dakota, 2.5 percent. The rates in Arkansas (3.4 percent), Mississippi (4.9 percent), Oregon (3.6 percent), and Washington (4.5 percent) set new series lows. (All state series begin in 1976.) Alaska and New Mexico had the highest jobless rates, 6.7 percent and 6.6 percent, respectively.

    Unemployment hits record low in seven states | TheHill: Seven years after hitting the depths of the worst recession in modern history, the rebounding economy is sending unemployment rates to record lows in a handful of states across the nation. California’s unemployment rate is down to 4.7 percent, the lowest rate since the Bureau of Labor Statistics (BLS) began measuring state economic conditions in 1976. Colorado’s unemployment rate has hit a new low, at 2.3 percent. In Arkansas, the 3.4 percent rate is a record. The phenomenon is bipartisan, and bicoastal: Republican states like Mississippi (4.9 percent) and North Dakota (2.5 percent) notched new lows. So did the Democratic bastions of Oregon (3.6 percent) and Washington (4.5 percent). Nationally, the unemployment rate stands at 4.3 percent, down half a percentage point since January. In states, the rate ranges from highs of 6.7 percent in Alaska and 6.6 percent in New Mexico to Colorado’s low of 2.3 percent. Twenty-two states have seen their unemployment rates fall significantly over the last year. In 13 states, the unemployment rate has fallen by more than a full percentage point, including in Wyoming and West Virginia, where the unemployment rates fell by a point and a half. The movement in Wyoming and West Virginia is significant, too, because it represents a reversal from rising unemployment rates caused by low energy prices. Both states experienced higher unemployment rates as coal and oil prices tumbled, even while the rest of the country recovered. 

     By rescinding the persuader rule, Trump is once again siding with corporate interests over working people -- EPI - Yesterday, the Trump administration took yet another step against working people by announcing that the Department of Labor (DOL) will rescind its “persuader rule,” which would have helped level the playing field for workers by letting them know the source of the anti-union messages they receive during union drives. Unions help union and nonunion workers in countless ways. They raise wages, make workplaces safer, and close the gender pay gap. Most importantly, unions let workers have their voices heard on the job. The ability of people to join together to negotiate for better working conditions and pay is even more important in an era of forced arbitration, where women who are sexually harassed often cannot get justice in a courtroom and workers who are being cheated out of minimum wage often cannot file class action lawsuits. All workers deserve a voice in their workplaces, and a union is one of the best ways for working people to make sure they are getting treated fairly on the job. But many employers fight unionization efforts at every turn, by hiring professional anti-union consultants—“persuaders”—to bust their employees’ organizing drives with sophisticated anti-union campaigns. Union-busting firms promise to equip employers with “campaign strategies” and “opposition research,” and produce anti-union videos, websites, posters, buttons, T-shirts, and PowerPoint presentations for employers to deploy against their workers’ unionizing efforts. Employers spend large amounts of money to hire anti-union consultants—sometimes hundreds of thousands of dollars.

    In virtually unprecedented move, Trump Solicitor General switches sides in Murphy Oil case - Today, the Acting Solicitor General switched the government’s position in National Labor Relations Board v. Murphy Oil USA, Inc, from arguing in favor of working people to arguing in favor of big business. The move is deeply disappointing, and represents a stark departure from standard practice. It is the clearest indication yet of where the Trump administration stands: with corporate interests and against working people. The Murphy Oil case is significant for workers. It will determine whether mandatory arbitration agreements with individual workers that prevent them from pursuing work-related claims collectively are prohibited by the National Labor Relations Act (NLRA). These agreements have become increasingly common. The NLRA guarantees workers the right to join together to improve their terms and conditions of employment and prohibits employers from interfering with or restraining the exercise of these rights. In Murphy Oil, the National Labor Relations Board is arguing that agreements that force workers to waive their right to pursue work-related claims on a class or collective basis interfere with workers’ rights under the NLRA and are prohibited. The Solicitor General argued this position just last October, and there has been no change in the law since then. As a matter of fact, just last month the United States Court of Appeals for the Sixth Circuit held that these mandatory arbitration agreements and class action waivers are prohibited by the NLRA. The only thing that has changed is the administration. It is worth noting how unprecedented this move is. The most recent example of the Solicitor General changing positions is a Reagan administration-era case, Bob Jones University v. United States. In that case, the government changed its position to advocate in favor of an institution’s right to adopt racially discriminatory policies while enjoying tax exempt status. It was a shameful switch. And, the Solicitor General lost. Today’s decision is also shameful. The Acting Solicitor General is arguing against workers’ rights to join together to advocate for better wages and working conditions. Like the Bob Jones University about-face, this switch, puts the Acting Solicitor General and the Trump administration on the wrong side of history and, hopefully, the wrong side of the Supreme Court in this important case.

    America's Amazon Problem - To understand the depth and breadth of Jeff Bezos’ ambitions for the company he built, type www.relentless.com into your browser. The domain Bezos registered in 1994 will redirect to Amazon, the company aptly, and ambitiously, nicknamed The Everything Store. He tells his shareholders that the company will act like an aggressive startup — that at Amazon, it is always Day One. Like Google and Facebook, Amazon uses technology and data to sidestep traditional restrictions on monopoly power. Our lives are increasingly organized by the platforms these companies run, platforms which now mediate the way we communicate and engage in commerce with each other. We are living in a world organized by tech monopolists, a change in power relationships that no one voted for but has been imposed upon us nonetheless.Now, Bezos is attempting to add more power to his empire with the surprise announcement that the company will pay $13.7 billion for Whole Foods Market. Amazon will now have a store footprint in neighborhoods across America. Our communities and the way we engage in commerce will change. Imagine walking into a Whole Foods store and seeing different prices depending on whether you are a member of Amazon Prime — or seeing different prices depending on any other way that you interact with Amazon.   It is what the company does when it opens up stores. For instance, Amazon is creating a chain of physical book stores to take the place of the book stores the company destroyed. In these stores, there are no price tags at all: You scan the items with your phone and have a price delivered to you, personalized by Amazon. Why wouldn’t Amazon extend this to Whole Foods? “Our goal with Amazon Prime, make no mistake,” says Amazon CEO Jeff Bezos, “is to make sure that if you are not a Prime member, you are being irresponsible.”

    Uber Weighs Leave of Absence for Top Executive - NYT — Facing accusations that Uber executives turned a blind eye to sexual harassment and other corporate misbehavior, the ride-hailing service’s board moved on Sunday to shake up the company’s leadership, ahead of the release this week of an investigation’s findings on its troubled culture. Uber directors were weighing a three-month leave of absence for Travis Kalanick, the chief executive who built the start-up into a nearly $70 billion entity, according to three people with knowledge of the board’s agenda. In addition, a representative for Uber’s board said the directors “unanimously voted” to adopt all of the recommendations made in a report by the former attorney general Eric H. Holder Jr., who was retained to investigate the company’s culture. One of the recommendations included the departure of a top lieutenant to Mr. Kalanick, Emil Michael, said the people with knowledge of the board’s agenda, who spoke on the condition of anonymity because the discussions were confidential. The moves would scale back the involvement of Mr. Kalanick and strip him of an ally, a turnabout for a chief executive who had been hailed as an innovator and a role model. The changes would also further destabilize the leadership at Uber, which has upended the transportation industry worldwide, at a time when rivals are trying to capitalize on the company’s woes.  Mr. Kalanick, 40, proposed the idea of taking time off after a boating accident last month that killed his mother and sent his father to the hospital. Given those circumstances, Mr. Kalanick, who has worked nonstop since Uber’s founding in 2009, had told people he might need a break. Still, if he were to take leave, it could be perceived as a repudiation of the aggressiveness that he has brought to Uber.

    What is the Minimum Wage that Will Employ Everyone? - It is official, the unemployment rate in the US has dropped to its lowest level in 16 years. Economists all around the country must be tapping themselves in the back and buying each other drinks in congratulations, right? Wrong. Despite the official drop in joblessness, we have a decline in labor participation, an increase in the “skill gap” in the labor force (i.e. unemployed workers’ skills do not match those needed by open jobs) and, arguably most importantly, wages that fail to rise fast enough. For starters, the latest reports show that the year-over-year wage growth rate has been stagnating; it reached 2.5 percent since last year, which is just marginally above inflation. It is difficult to determine exactly why people drop out of the labor force, but we can speculate that some do so because of the lack of pay increases. Whatever the reason, the dropout is a significant part of the declining unemployment rate—e.g. the May report shows that 429,000 people dropped out of the labor force. A nation with a population that is actively leaving the labor force and that deals with stagnant wages is a nation facing serious socioeconomic problems.  The problem at hand, then, is a question economists have been dealing with for ages: how can we increase earnings and employment at the same time? Common economic understanding would argue that we have to choose between higher wages and more jobs. The main argument against minimum wage hikes is that it would increase unemployment. That claim is factually untrue (just look at Seattle) and there are a number of ways to address the issue. At The Minskys we have tackled this topic several times, and shown that a decent minimum wage does not have to reduce the number of jobs out there. One way to have both is with a Job Guarantee (JG) program.

    The Universal Basic Income Discussion  - What’s at stake: the concept of a Universal Basic Income (UBI), an unconditional transfer paid to each individual, was prominent earlier this year when Finland announced a pilot project. It’s now back in the discussion as the OECD published a report illustrating costs and distributional implications for selected countries. We review the most recent contributions on this topic. The OECD recently published a policy brief and a methodological note looking into the cost and benefits of adopting Basic Income (BI) as a policy option. The simplest way of introducing a BI would be to take existing cash benefits paid to those of working age and to spread total expenditure on these benefits equally across all those aged below normal retirement age. The resulting BI amount would be very much lower than the poverty line for a single individual. Therefore, without any additional taxes, a budget-neutral BI will be very far from eradicating poverty. The OECD  simulations for four countries (Finland, France, Italy and the UK) show that although a universal basic income is simple, existing benefits are not, and replacing them with a single flat rate benefit produces complex patterns of gains and losses. Those receiving social insurance benefits would normally lose out from the replacement of those with a universal basic income at GMI levels. Those not qualifying from any social benefit under existing policies would benefit as long as the increase in benefits exceeds the corresponding increase in their taxes. Lower-income households are more likely to receive means-tested income support so they are actually less likely to gain from a BI set at a similar level to GMl.

     Ominous signs for states as revenue targets missed | TheHill: Two out of every three states in America took in less tax revenue than expected this year, the worst performance since the depths of the recession, and twenty states expect to address budget shortfalls in the coming year. The new data, contained in three reports released by state budget analysts this week, raise concerns that states could face a new round of belt-tightening — and that another economic slowdown could be just around the corner. The reports cite a variety of factors behind the revenue slowdowns, from falling commodity prices to the rising costs of government services. Some of the slowdown also likely comes from wealthy taxpayers and corporations, which have delayed some tax payments until next year in hopes that tax reform proposals will pass Congress. Thirty-three states will miss revenue projections in Fiscal Year 2017, according to the National Association of State Budget Officers. That’s the highest number of states to miss revenue targets since 2010, during the middle of the recession, when 36 states missed projections. In total, states anticipate revenues falling short by $12 billion. Most of the shortfall comes from sales tax collections, which are projected to be down $6.6 billion. That troubles some economists because sales taxes are traditionally the most stable revenue sources for states. State corporate income tax collections are running about $2.8 billion, or 5.7 percent, below projections. Personal income tax collections are down $2.7 billion, 0.8 percent, and preliminary reports from April suggest those numbers are likely to continue to decline. Analysts say that’s a sign high-income earners are deferring tax payments in anticipation of federal tax reform.

    Puerto Rico votes in favor of statehood | TheHill: Puerto Rico voted overwhelmingly in favor of statehood on Sunday in a referendum that begins the steps toward sending representatives to Washington, D.C. According to the Wall Street Journal, 97 percent voted for statehood, though turnout was only about 23 percent. One and a half percent voted for independence from the United States, according to Decision Desk HQ, while 1.3 percent voted to keep the current status of a territory of the United States. Puerto Rico will now put its "Tennessee plan" into action, meaning its governor will choose two senators and five representatives to go to Washington, D.C., to request statehood. President Trump signaled during his presidential campaign that he is open to Puerto Rico officially becoming a state. Puerto Rico previously voted in favor of becoming a state in 2012, but statehood opponents said the voter turnout was not high enough to accurately reflect will of the Puerto Rican people. Some fear that they will make the same case this time around.

    Unable To Pay Bills, Illinois Sends "Dear Contractor" Letter Telling Firms To Halt Road Work On July 1 - The state of Illinois has not passed a budget for close to three years. Arguably it’s just as well because Illinois budgets for decades have been nothing but a moth-eaten collection of lies, one time deficits repeated endlessly, and financial wizardrystatements designed to disguise Illinois’ real problems: failure to rein in spending coupled with a very business unfriendly environment. As Illinois’ bond rating careens towards junk, Illinois Unpaid Bills Jumped to $14.3 Billion. Today, the state told contractors to halt roadwork other than that required for safety. I do not have a link, but here is the letter in image form. This does not raise much alarm in Illinois has these kinds of letters went out last year as well. It’s simply business as usual in Illinois. My IDOT contact, who wishes to be left unnamed, reports … Last year when they did this the extra work bill to the state cost millions of taxpayer dollars. At the last minute, the shutdown was averted but not until the shutdown measures were employed and thus extra cost was due to contractors and consultants. Look out for the Road Builders Association to come out with an estimate of what it will cost this time around after the letter today. Last year, the supplier for paper and toilet paper had not been paid and thus various offices were reportedly cut off of supply. IDOT employees were going to have to work from home due to the potential unsanitary conditions.

    Powerball To Dump Illinois Over "Lack Of Budget" -- As if Illinois didn't have enough to worry about between an imminent downgrade to junk (as soon as July 1), soaring debt costs, insolvent pension funds, and roads that may soon resemble the lunar surface, today in the latest insult to a relentless series of injuries, the lottery itself is about to dump Illinois.  According to the Sun Times, the Multi-State Lottery Association, the organization that runs the Powerball lottery and Mega Millions games, will drop Illinois at the end of June without a budget agreement. Since Illinois has been unable to compromise on a budget for the past two years, and not even the threat of being the first US state in history of being "junked" has prompted a compromise, it most likely means that Illinois resident have just two more weeks of "get rich quick" opportunities, before they are cut off from the rest of America.Speaking on Thursday, Illinois Lottery spokesman Jason Schaumburg confirmed that the games will be dropped without a state budget. He said the association has had discussions since 2015 about dropping Illinois, but this is the first time the group has taken action. He called it “another example of why the General Assembly needs to deliver a balanced budget to the governor." Alas, if the recent surge in Illinois GO debt yields..... or the threat of a default in the face of almost $15 billion in unpaid bills has failed to convinced the General Assembly, we doubt this will.

    Could Illinois be the first state to file for bankruptcy? - Illinois residents may feel some solidarity with the likes of Puerto Rico and Detroit. A financial crunch is spiraling into a serious problem for Illinois lawmakers, prompting some observers to wonder if the state might make history by becoming the first to go bankrupt. At the moment, it's impossible for a state to file for bankruptcy protection, which is only afforded to counties and municipalities like Detroit. Chapter 9 bankruptcy protection could be extended to states if Congress took up the issue, although Stanford Law School professor Michael McConnell noted in an article last year that he believed the precedents are iffy for extending the option to states. Nevertheless, Illinois is in a serious financial pickle, which is why radical options such as bankruptcy are being floated as potential solutions.   Ratings agency Moody's Investor Service earlier this month downgraded Illinois' general obligation bonds to its lowest investment grade rating, citing the state's growing pile of unpaid bills and its mounting pension deficit. Illinois, by the way, has the lowest credit rating of any state. Lower ratings mean higher borrowing costs, since lenders view such borrowers as riskier bets."Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance, allowing a backlog of bills to approach $15 billion, or about 40 percent of the state's operating budget," the agency noted. As noted by the Fiscal Times, Illinois is the only state that's been operating without a balanced and complete budget for almost two years.  "We're like a banana republic. We can't manage our money," Gov. Bruce Rauner said after the Illinois Legislature failed to produce a full 2017 budget earlier this month.

     How Illinois became America's failed state - Illinois has compiled $14.6 billion in unpaid bills. It’s running a deficit of $6 billion, and its pension liability has soared to $130 billion.  That’s not the worst of it. The state’s nearly two-year failure to pass a budget has sent its bond ratings careening toward junk level, downgraded a staggering eight notches below most other states. With university enrollments plummeting, large-scale social service agencies shuttering and the Chicago Public Schools forced to borrow just to stay open through the end of this school year, Illinois is beginning to devolve into something like a banana republic — and it’s about to have the most expensive election the state has ever seen.Democrats have flooded the primary to challenge GOP Gov. Bruce Rauner, with billionaire J.B. Pritzker among them. Pritzker has already poured $14 million into his campaign for a general election that’s still 15 months away. The state of Illinois has been running without an operating budget for 712 days, and the Illinois General Assembly and Governor Bruce Rauner again failed to reach an agreement before the most recent deadline, May 31. "Illinois is operating in a way 49 other states would never try to operate," Laurence Msall, president of the nonpartisan Civic Federation, told Politico. "There is permanent damage that is being done that will take decades to repair." The state has $14.6 billion worth of unpaid bills, a $6 billion deficit, a $130 billion pension liability and a bond rating near junk. Politico explains how the crisis started as "ego-laden brawl" between Rauner and Democratic house speaker Michael Madigan and analyzes what the implications are for the 2018 gubernatorial race and the state's future.

     Street sale: Houston offers city property to raise cash? - The city council of Houston, Texas has approved selling or swapping almost $2 million worth of city streets and utility easements in a move to close a $123 million budget shortfall.  The first such sale was in the Manchester area, where the council abandoned and sold several streets and easements to the nearby Valero refinery for $1.4 million, according to the Houston Chronicle.  The oil giant already owns the blocks immediately surrounding its facility. The move will allow the company to expand and build an office facility, warehouse, and security building and to add parking farther away from the central plant. A second example is the selling of five streets and an easement to Houston’s Milby High School, valued at $431,000. Instead of cash, the city is prepared to do a land swap for three miles of territory north of Milby. Selling easements – the right to use someone’s land or property for a specific purpose – and strips of city land has become commonplace by Houston City Council to balance six of the last seven budgets. In wealthiest US state, taxing the rich no longer works https://t.co/6RuUAMemY5 In May, the council approved the $5.2 billion budget, with $2.4 billion coming from the general fund that is supported by residents’ taxes and that funds most basic services such as police, fire, trash pickup, parks and libraries, according to the Houston Chronicle. The general fund budget aims to spend about $35 million more than the current one, due partly to a $51 million rise in debt costs. For the first time in about 15 years, the budget fully funds the city's pension costs, thanks to the reform bill Mayor Sylvester Turner successfully pushed through Austin and that Gov. Greg Abbott signed Wednesday while the council was in session. The city has been spending more than it brings in for years, a structural gap driven chiefly by soaring pensions costs, and in recent years a spike in debt payments. Debt payments for past public projects have risen by more than half over the last five years, to $346 million in 2015, and are projected to reach $411 million in 2020.

    Senate slashes $1B from state budget, including cuts to prisons, Medicaid - COLUMBUS – Senate Republicans slashed $1 billion from the state's proposed two-year budget, cutting money from Medicaid and prisons as part of their plan to keep the state in the black. Cuts would include $200 million from Medicaid, $20 million from the state's prisons, at least three percent from many state agencies' budgets and dozens of earmarks.Republicans, who control the Ohio Senate, did add $6.4 million to tackle the state's drug epidemic, bringing the total to more than $176 million, Senate President Larry Obhof announced Monday.  "Let me be clear, this budget is not pain-free," said Obhof, R-Medina.  Under the Senate changes, school districts statewide would receive a little more money and fewer districts would face cuts than in Kasich's proposal. Still, 162 of Ohio's 610 school districts, including Sycamore Community schools and Princeton City schools in Hamilton County, would lose money over two years.  GOP lawmakers spoke little about tax cuts Monday. The budget crunch prevented GOP leaders from making the sweeping changes Gov. John Kasich proposed and Republican lawmakers promoted in previous years. The governor, in his final budget, proposed cutting income taxes and taxing more services under the sales tax. He wanted higher taxes on beer and wine, tobacco products and the oil and gas drilling practice called fracking. House Republicans rejected those ideas in April and Senate Republicans weren't interested in reviving them.  

    Federal judges order California to expand prison releases - LA Times -- Federal judges on Friday ordered California to launch a new parole programthat could free more prisoners early, ruling the state had failed to fully implement an order last February intended to reduce unconstitutional crowding. The judges, for a second time, ordered that all nonviolent second-strike offenders be eligible for parole after serving half their sentence. They told corrections officials to submit new plans for that parole process by Dec. 1, and to implement them beginning January. "The record contains no evidence that defendants cannot implement the required parole process by that date, 11 months after they agreed to do so 'promptly,'" the judges wrote in Friday's order. Corrections department spokeswoman Deborah Hoffman said the agency would comply with the order.But the federal judicial panel did not take action on other steps it had ordered California to take last February. Those include increasing the sentence reductions minimum-custody inmates can earn for good behavior and participation in rehabilitation and education programs. Most of those prisoners now work as groundskeepers, janitors and in prison kitchens, with wages that range from 8 cents to 37 cents per hour. Lawyers for Attorney General Kamala Harris had argued in court that if forced to release these inmates early, prisons would lose an important labor pool.

    “Flat Earthers” -- President Trump has proposed budget cuts to programs and the departments running them. Amongst those departments impacted by Trump’s proposals is the Department of Education and it’s Office of Civil Rights. “ The DOE Department of Civil Rights function is to investigate discrimination complaints in school districts across the nation and create standards for responding to allegations of sexual assault and harassment.” Trump’s decreased budget would force cuts in departmental staffing making it more difficult to investigate complaints and also enforcing the law. As the new Secretary of the DOE, Betsy DeVos proposes giving more power to states and communities in an effort to allow them to make decisions based upon local needs. This sounds good in the telling of it as people living in these communities would probably know what is needed for their schools. Often times what is ignored in state policy, is the favoring of wealthier districts over poor districts, majority citizens over minority citizens, the disabled, and those needing special education in order to learn. These are costly additions to a budget and local citizens do not like to pay taxes. Nowhere else can this be seen more vividly as it is in DeVos’s home state of Michigan where Detroit and Flint needs are played off against richer school districts. In her recent appearance in front of the Senate Education Committee, DeVos is proposing a “leap-of-faith” proposal of states getting the needs of public and private school educational correct without oversight or direction by the DOE. In a “Return of DeVos-2″ visit to the Senate Education Committee, she discusses along similar lines a proposal of allowing states to determine if private schools accepting publically funded vouchers can be allowed to discriminate amongst students. Again DeVos claims the states know better than the DOE about what is needed and necessary locally. In which case, why would we need a DOE Office of Civil Rights if states protected the needs of all students? That is sound reasoning; although historically, states do not protect all students and many fall through the cracks without the oversight. Not liking the pushback from Democrats and those arguing back against her push to expand school of choice with no oversight, DeVos goes on to call those who oppose the program “flat-earthers” accusing those who find fault with and question her programs lacing vision and refusing to face the facts.” Some of her comments during this last meeting with the Senate Education Committee were quite revealing. Perhaps if during her nomination process, if these remarks she made had come out then, others might have voted against her.

    DeVos Says More Money Won't Help Schools; Research Says Otherwise -- Education Secretary Betsy DeVos made it clear, appearing before a Senate Appropriations subcommittee Tuesday, that she sees no connection between school funding and school performance. As evidence, she criticized the Obama Administration's $7 billion grant program to improve struggling schools, an effort that yielded no significant impacts in test scores or graduation rates."The notion that spending more money is going to bring about different results is ill-placed and ill-advised," DeVos said in an exchange with Louisiana Republican John Kennedy.This is a decades-old debate in education. To be sure, spending more in troubled schools won't automatically lead to better student outcomes. But, when the dollars are spent wisely and consistently, research suggests, they can have a profound effect in the classroom. Last year, as part of the School Money project, the NPR Ed Team collaborated with 20 reporters across the country to explore how states pay for their schools and to answer some fundamental questions, including this one: "Can More Money Fix America's Schools?"With that very question back in the headlines, we thought we'd revisit what we came up with.

    Will Chicago Become the Epicenter of Charter School Unionization? -- In a move sure to worry neoliberal education reformers, unionized charter school teachers in Chicago are voting this week on whether to formally join forces with the most militant teachers’ union in the country.  The proposed merger—which would be a potential first in the country—would see the more than 1,000 member Chicago Alliance of Charter Teachers and Staff (ChiACTS), Local 4343 of the American Federation of Teachers (AFT), amalgamate into a single union local with the nearly 30,000-member Chicago Teachers Union (CTU), AFT Local 1. ChiACTS president Chris Baehrend said the potential merger “helps all Chicago teachers fight together on the same issues.” Formed in 2009, ChiACTS is at the national forefront of organizing charter schools. Its members are not only winning union recognition across the city, but also showing a willingness to withhold their labor to win fair contracts, much like their counterparts in the CTU.Since October, ChiACTS teachers have come close to going on strike at UNO, ASPIRA and Passages charter schools. But all three walkouts—which would have been the first charter school teacher strikes in history—were avoided by last-minute contract agreements. In the words of Illinois Network of Charter Schools president Andrew Broy, “Chicago has become the epicenter of charter union organizing in the country.” Though the CTU is undoubtedly opposed to the expansion of charter schools, as evidenced by the union’s successful effort to win a cap on new charters last fall, its leaders say they are dedicated to building teacher-to-teacher solidarity. “Charter schools are here; they’re not going anywhere,” CTU president Karen Lewis recently said, continuing: “It’s the management companies we have the issues with, not the charter teachers, not the students, not the parents. The key is, organize people to fight for fairer conditions of work, and then that’s good for everybody.”

    High Schools Drop "Valedictorian" Distinction Fearing Lower-Ranked Kids May Feel 'Triggered' --We've spent a fair amount of time over the past several years writing about the 'participation trophy generation' (a.k.a. "millennials) and, more specifically, how their inflated sense of entitlement and self-worth, irrespective of work effort and/or innate talent, would not serve them well in the real world.  You see millennials, despite what your enabling handlers (a.k.a. "educators") have told you your whole life, people here in the real world couldn't care any less about your feelings, think your 'Gender Studies' degree was a complete waste of your parents' money, will not promote you just because anything less would be a 'triggering' event and do not recognize your standing to demand 'safe spaces'. In fact, taking a moment to truly internalize the following quote from our favorite movie would serve you well.  “Listen up maggots. You are not special. You are not a beautiful or unique snowflake. You're the same decaying organic matter as everything else. We are the all singing, all dancing crap of the world.  We are all part of the same compost heap.”And, while we've been forced to write post after post detailing the lunacy of your behavior as you frolic aimlessly on the campuses of liberal bastions of higher indoctrination across this great country, growing more and more sickened with each new display of entitlement, we have to say that your efforts to eliminate high school rankings is a new low, even for you. Unfortunately, as the AP points out today, that is exactly what seems to be happening at high schools all around the country as the title of "valedictorian" is being eliminated and/or bestowed upon so many kids in each graduating class that it's rendered meaningless.One school in Tennessee awarded the "valedictorian" title to 48 kids, or roughly 25% of the entire graduating class.

    Study of the Week: Trade Schools Are No Panacea  - You will likely have encountered the common assertion that we need to send people into trade schools to address problems like college dropout rates and soft labor markets for certain categories of workers. As The Atlantic recently pointed out, the idea that we need to be sending more people to trade and tech schools has broad bipartisan, cross-ideological appeal. This argument has a lot of different flavors, but it tends to come down to the claim that we shouldn’t be sending everyone to college (I agree!) and that instead we should be pushing more people into skilled trades. Oftentimes this is encouraged as an apprenticeship model over a schooling model. I find there’s far more in the way of narrative force behind these claims than actual proof. It just sounds good – we need to get back to making things, to helping people learn how to build and repair! But… where’s the evidence?  Well, there’s a big new study out that looks in a much more rigorous way – and the results aren’t particularly encouraging. Today’s Study of the Week looks at how workers who attend vocational schools perform relative to those who attend general education schools. Like the recent Study of the Week on the impact of universal free school breakfast, this study uses a difference-in-difference approach to explore causation, again because it’s impossible to do an experiment with this type of question – you can’t exactly tell people that your randomization has sorted them into a particular type of schooling and potentially life-long career path, after all. The primary data they use is the International Adult Literacy Survey, a very large, metadata-robust survey with demographic, education, and employment data from 18 countries, gather from 1994 to 1998. (The authors restrict their analysis to the 11 countries that have robust vocational education systems in place.) The age of the data is unfortunate, but there’s little reason to believe that the analysis here would have changed dramatically, and the data set is so rich with variables (and thus the potential to do extensive checks for robustness and bias) that it’s a good resource. What do they find? In broad strokes, vocational/tech training helps you get a job right out of school, but hurts you as you go along later in life:

    College attendance drops after widespread job loss - -- When states suffer a widespread loss of jobs, the damage extends to the next generation, where college attendance drops among the poorest students, says new research from Duke University.As a result, states marked by shuttered factories or dormant mines also show a widening gap in college attendance between rich and poor, the authors write. Yet simple economics aren't the only factor at play, the authors write. Poor students in economically stricken states don't avoid college simply because they can't afford it. Instead, widespread job losses trigger adolescent emotional problems and poor academic performance, which, in turn, puts college out of reach, say the authors, whose research is published in the June 16 issue of Science.  "Job loss has led to increased inequality in college-going not just because people lose income, but because they are stressed out," said Duke economist Elizabeth Ananat, one of the paper's lead authors. "Losing your job is traumatic, and even if a community is adding new jobs, jobs aren't interchangeable."  Some economists promote higher education as the natural remedy. According to this view, inequality will disappear as more young people choose college rather than "following their parents' footsteps to the now-closed factory," the authors write. The new study tests that theory empirically, and finds it flawed.

    Four Reasons Why College Degrees Are Becoming Useless - Students are running out of reasons to pursue higher education. Here are four trends documented in recent articles:

    • Graduates have little to no improvement in critical thinking skills. The Wall Street Journal reported on the troubling results of the College Learning Assessment Plus test (CLA+), administered in over 200 colleges across the US. According to the WSJ, “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 outcomes were the worst in large, flagship schools: “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.”
    • Shouting matches have invaded campuses across the country. It seems that developing critical thinking skills has taken a backseat to shouting matches in many US colleges. At Evergreen State College in Washington, student protests have hijacked classrooms and administration. Protesters took over the administration offices last month, and have disrupted classes as well. It has come to the point where enrollment has fallen so dramatically that government funding is now on the line.
    • Trade schools and self-study offer better outcomes for many. College dropouts are doing just fine, bucking the stereotype. Some determined young people are skipping college altogether to pursue their business ideas. Many are also choosing trade schools, which require less time and tuition money, but graduates end up with a specific set of skills. Trade school graduates leave school prepared for the industry they enter, where they can earn much higher wages than many four-year degree-holders.
    • Tuition is increasing, but future earnings are decreasing. In another recent WSJ article, we see the financial consequences of these trends. While tuition keeps climbing across the country, the prospective earnings of graduates aren’t keeping up. There is a lot of variation across colleges and majors, but the overall trend is that the returns to a four-year degree are decreasing. Since students are just getting started in life, it means that they must borrow to pay for these expensive degrees that don’t guarantee higher earnings. Total student loans are at $1.3 trillion and climbing. These loans have no collateral and cannot be dissolved through bankruptcy.

     U.S. Women Disproportionately Burdened by Student Debt - American women owe nearly twice as much of the nation’s $1.3 trillion in student loan debt as men do, according to a recent study. Since the 1950s, major strides have been made to shrink the gender gap in enrollment at American colleges and universities, and today, women make up 57 percent of college students in the United States. But despite these gains, women face disproportionate burdens when it comes to student loan debt—a lifelong economic disadvantage that can weigh down graduates for decades after they’ve earned their degrees. The student loan debt crisis is frequently cited as one of the primary reasons millennials are waiting longer than previous generations to move out of their parents’ homes, have children and get married. According to an American Association of University Women study, women are facing these challenges at higher rates than men.The reasons behind this discrepancy stem from a number of interrelated factors, including the unremitting gender wage gap. Today, women earn 10 percent less than men when taking into account factors including occupation, experience and education. Women graduating with bachelor’s degrees this year earned on average $17.88 per hour, while men earned $20.87, making it harder for women to repay loans.Women are also more likely to attend for-profit schools, which are often convenient for working mothers, but less generous with financial aid, and which do not teach skills that lead to upward economic mobility.“It’s a systemic problem,” Kevin Miller, a researcher at the American Association of University Women, told the Boston Globe.According to the same study, African-American women with bachelor’s degrees are particularly weighed down with debt, on average facing over $29,000 in student loans.The average American woman graduating from a four-year college or university carries $21,000 in college debt, about $1,500  more than the average American man.

    Who loses disability insurance when it’s harder to apply? - The rise in the number of Americans on disability insurance is sparking increased concern about the program. Some critics complain that the Social Security Disability Insurance (SSDI) program has become too generous, drawing workers into the program who could otherwise find work. These critics believe that the federal program is now too easy to join and that restricting access to the program would result in healthy individuals not joining the program. Recent research, however, finds that merely making it more difficult to apply for disability insurance pushes away applicants who are more likely to be accepted into the program—lower-income individuals and those with lower levels of education. The paper looks at how the closure of Social Security field offices affects how many people apply for disability programs and the changes in the kinds of people who apply for the program. Using administrative data from the Social Security Administration, the authors can see what happened to SSDI applications and the number of SSDI recipients in ZIP codes closest to the closed offices. What actually happened when the closest Social Security field offices closed and the cost of applying increased? The number of applications dropped quite a bit, 11 percent after a few quarters, and stayed at that lower level. At the same time, the number of recipients of disability insurance in ZIP codes near the closed field offices dropped 13 percent and also remained low. The fact that the number of recipients dropped more than the number of applicants—the difference is statistically significant—means that the people not applying were more likely to have been accepted if they had applied. Deshpande and Li also find that the field office closings discouraged people with lower education levels and low earnings levels from applying. The results of this research show that instead of increasing targeting efficiency, the increase in application costs actually decreases that form of efficiency. The program is less likely to reach the people who would be more likely to need to tap disability insurance and those most likely to need it. The people affected the most at this margin are seemingly exactly the people for whom the disability insurance program is designed. These results are hard to mesh with critics’ view that disability insurance should be more restrictive. Doing so could be harmful for the people who need help the most.

    Almost Half of Americans Die Nearly Broke --Via: USA Today: Americans aren’t known for being great savers. In a recent GoBankingRates study, 69% of adults admitted to having less than $1,000 in the bank, while 34% said they actually don’t have any savings at all. But apparently, this collective lack of savings doesn’t get all that much better with age. A study by the National Bureau of Economic Research found not so long ago that almost half of Americans die nearly broke. Of the general population, 46% of retirees die with savings of $10,000 or less. But that number climbs to 57% among retirees who are single.Now when we take other assets, like homes, into account, the picture gets a bit less bleak. Still, 57% of single-adult households and 50% of  widowed households had no housing equity to show for when they died. The problem is that dying nearly broke isn’t just a matter of denying one’s beneficiaries an inheritance. Rather, it points to a frightening degree of financial vulnerability during retirement. If seniors are passing without much in the way of assets, it means that in the years leading up to their death, they’re ill equipped to handle a major unexpected expense, such as a significant medical bill. In fact, in that same GoBankingRates survey, only 37% of seniors 65 and older claimed to have $1,000 or more in the bank.

    Iowa May Be First State with No Health Insurers on Exchange: Iowa could be the first state in the nation with no health insurance company willing to offer policies on its Affordable Care Act exchange next year unless President Donald Trump’s administration approves a stopgap proposal, Iowa Insurance Commissioner Doug Ommen said. Ommen said he and officials from two major Iowa insurance carriers met last week with Centers for Medicare & Medicaid Services officials in Washington to pitch a proposal that would save the Iowa market from collapsing.Several counties in Missouri, Ohio and Washington state have no insurer for next year, but Iowa would be the first state to lose all insurers on an ACA exchange. “While legislation appears to slowly be moving at the federal level, it is unlikely any changes to the ACA will be enacted in time to keep Iowa’s individual health insurance market from a total collapse leaving nearly 72,000 individuals with zero options to purchase health insurance for 2018,” Ommen said in the proposal to federal officials. He is seeking a waiver from the ACA that would allow Iowa to reallocate federal subsidies currently used to lower costs for low-income and older participants. He proposes using them to entice younger people into the insurance market and using federal reinsurance dollars to help insurers absorb high-cost claims. Ommen said thousands of young healthier people have fled the Iowa market as insurance rates increased, leaving a higher number of older, sicker people in a smaller individual market pool. That drove up costs and left insurance companies losing millions of dollars. Minnesota-based Medica is the only company offering coverage across Iowa that hasn’t announced that it will stop selling health insurance on the ACA exchange next year. Ommen said the company indicated it’s likely to drop out if changes aren’t made soon. 

     Pursuing Health Equity - If equity is one dimension of what the Institute of Medicine (IOM) defined as health care quality, what are the obligations of the health care sector to achieve health equity? Early evidence of health disparities led to a focus on the health care system—the roles of bias and discrimination, as captured by the title of the 2003 IOM report Unequal Treatment. Yet as Steven Woolf points out in his lead paper, growing understanding of the role of social factors in determining health outcomes makes it clear that achieving equity requires widening the lens. This month’s Health Affairs examines health equity from both perspectives: equity in care, and the relationship between social factors and health equity.  Evidence of inequity often comes in the form of gaps in access or inadequate care for disadvantaged groups. William Schpero and colleagues take a different approach, comparing receipt of low-value services by Medicare recipients across racial/ethnic groups. Their findings suggest a complex picture, what they call “a possible double jeopardy for minority patients: Long understood to be at risk of receiving less effective care, they also appear to be often at risk of receiving more ineffective care.”  Renee Hsia and colleagues document the life-or-death consequences of disparities in mortality after a heart attack for blacks and whites in California. They find that when hospitals were on ambulance diversion—reflecting overcrowded conditions—blacks experienced mortality rates as much as 19 percent higher than whites. A more optimistic story emerges from an analysis of surgical mortality by Winta Mehtsun and colleagues. They find declining rates of thirty-day postoperative mortality among black and white Medicare recipients, with larger declines for blacks yielding a reduction in racial disparities.

    Drug crisis is pushing up death rates for almost all groups of Americans - WaPo -- The opioid epidemic that has ravaged life expectancy among economically stressed white Americans is taking a rising toll among blacks, Hispanics and Native Americans, driving up the overall rate of death among Americans in the prime of their lives. Since the beginning of this decade, death rates have risen among people between the ages of 25 and 44 in virtually every racial and ethnic group and almost all states, according to a Washington Post analysis. The death rate among African Americans is up 4 percent, Hispanics 7 percent, whites 12 percent and Native Americans 18 percent. The rate for Asian Americans also has increased, but at a level that is not statistically significant. The jump in death rates has been driven in large measure by drug overdoses and alcohol abuse, according to The Post’s analysis of mortality data from the U.S. Centers for Disease Control and Prevention. “What it reflects is an out-of-control epidemic right now,” “It’s affecting the economy. It’s affecting the entire community. This is an absolute call to action for public health.” “These are people who are in the most productive years of their lives — the years where they’re supposed to be raising kids and becoming leaders of the next generation.” The Post confirmed the contours of the rise in death rates with CDC officials. The rate is adjusted for the nation’s changing age profile, and every five-year age group (for example, 35 to 39, or 40 to 44) showed an increase in mortality. Preliminary data from the first half of 2016 suggests that the trend is continuing, said Robert Anderson, chief of mortality statistics for the CDC. “I think we’re in for another steep increase in the drug overdose deaths overall,” Anderson said. 

    Drug crisis pushes up mortality rate for Americans in their prime - A recent analysis of Centers for Disease Control (CDC) records by the Washington Post points to a growing mortality rate for 25- to 45-year-olds across nationalities and ethnicities. For the first time, mortality rates are increasing without respect to geographic or racial boundaries, a harsh reflection of the widespread economic decline of America’s workers. According to the Post ’s analysis, alcohol-related deaths increased among white, black, and Hispanic Americans. Homicide, the leading cause of death for young African-Americans, has risen steadily since 2010. However, among all these factors, the juggernaut of the opioid epidemic appears to be driving most of the increasing mortality rates among 25- to 44-year-olds. Well in advance of Barack Obama’s 2016 pronouncement that “things have never been better” for America, opioid-related deaths were skyrocketing. According to the CDC, the number of opioid overdoses has quadrupled since 1999. The rate of deaths from drug overdoses has steadily increased, jumping from 14.1 percent in the second quarter of 2014 to 15.2 percent in 2015. By the CDC’s most recent estimates, there was a 19 percent increase between 2015 and 2016. The agency estimates more than 59,000 people died from drug overdoses in 2016. This is greater than the number of American casualties for the duration of the Vietnam War.

    Opioids Killed More People In One Ohio County Last Year Than Car Accidents, Homicides, & Suicides Combined -- As the national opioid crisis rages in the midwest and along the northern and mid-Atlantic states, Cuyahoga County has reported yet another disturbing statistic about the growing death toll from one of America’s most pressing health crises: Last year, deaths from drug overdoses in the county – the bulk of which were caused by powerful synthetic opioids like fentanyl –surpassed deaths from homicides, suicides and car crashes combined.The county medical examiner’s office in Cuyahoga, which abuts the southern shore of the Ohio River, said the country, which is centered around Cleveland, recorded 666 overdose deaths lasts year.  Officials see no end in sight to the crisis and are projecting deaths to climb in 2017, according to the Cleveland.com."What we've seen over the beginning of 2017 is it's getting off to a start that's worse than 2016," Cuyahoga County Medical Examiner Dr. Thomas Gilson said last week in a news release.Here’s a rundown of data from the county medical examiner’s office, as compiled by Cleveland.com. The powerful synthetic opioid fentanyl was a factor in 399 of the 666 overdose deaths reported last year. Prevalence of these synthetic drugs has risen sharply since 2013 when it was involved in just five deaths. Another reason for the spike in deaths is that fentanyl is sometimes being mixed in with other drugs, usually heroin but also sometimes cocaine. The 399 fentanyl deaths reported last year included 117 deaths caused by fentanyl alone and 141 caused by a mix of fentanyl and heroin. Sixty-eight deaths were caused by a mix of fentanyl and cocaine, and 73 were caused by a mix of fentanyl, heroin and cocaine. Two other powerful fentanyl analogues, Carfentanil and acetyl fentanyl, were responsible for 54 and 43 deaths, statistics show.

    Are we taking the drug overdose epidemic seriously? -- I recently argued that: The drug overdose epidemic is a public health catastrophe in the same class as AIDS. Arguably, it’s worse. Annual deaths by drug overdose are substantially higher than the worst year of the AIDS epidemic. The current very rapid increase in deaths by drug overdose shows no signs of slowing. Drug overdose is now the leading cause of death for Americans under 50. AIDS never achieved that.If you measure the magnitude of an epidemic by the sum of the years of life lost by the victims, drug overdoses compete with cancer, not just AIDS. Many more Americans die of cancer (about 600,000) than drug overdose (an expected 60,000 in 2017). But more than half of cancer deaths occur in people 75 years or older (UK data). The average drug overdose victim dies in his or her early 40s and loses many more years of life. Are we responding to the drug overdose epidemic in a way that is commensurate to these facts? I don’t think the NIH is. The 2017 NIH Budget request slides presented by Director Francis Collins discussed:

    • The National Cancer Moonshot.
    • The Precision Medicine Initiative.
    • The Brain Initiative.
    • AIDS research.
    • Alzheimer’s research.

    These are all great things to do with federal dollars. But it’s remarkable that Collins did not mention drug or alcohol abuse or the current epidemic. Why aren’t we focused on this epidemic? It’s the same problem that plagued the early years of AIDS. The victims were stigmatized and those not in their families or neighbourhoods didn’t take their deaths seriously.

    Lead Detected In 20% Of Baby Food Samples, Surprising Even Researchers - Kaiser Health News - Pediatricians and public health researchers know they have to be on the lookout for lead exposure from paint chips and contaminated drinking water. A new report suggests food — particularly baby food — could be a problem, too. The Environmental Defense Fund, in an analysis of 11 years of federal data, found detectable levels of lead in 20 percent of 2,164 baby food samples. The toxic metal was most commonly found in fruit juices such as grape and apple, root vegetables such as sweet potatoes and carrots, and cookies such as teething biscuits. The organization’s primary focus was on the baby foods because of how detrimental lead can be to child development. “Lead can have a number of effects on children and it’s especially harmful during critical windows of development,” said Dr. Aparna Bole, pediatrician at University Hospitals Rainbow Babies and Children’s Hospital in Cleveland, who was not involved with the report. “The largest burden that we often think about is neurocognitive that can occur even at low levels of lead exposure.” Lead can cause problems with attention and behavior, cognitive development, the cardiovascular system and immune system, Bole said. The samples studied were not identified by brand, and the levels of lead are thought to be relatively low. Still, according to the Centers for Disease Control and Prevention, no safe blood lead level in children has been identified. In a draft report released earlier this year, the Environmental Protection Agency estimated that over 5 percent of children consume more than 6 micrograms per day of lead — the maximum daily intake level set by the Food and Drug Administration in 1993 — in their diet. This surprised Tom Neltner, Environmental Defense Fund’s chemicals policy director, who has spent 20 years researching and working to reduce lead exposures. His further analysis of the EPA report was that food is the major source of lead exposure in two-thirds of toddlers. 

    Toddlers Who Drink Milk Alternatives May Be Shorter; Difference is small, about a half inch at age 3 - WebMD --- Young children who drink soy, almond or other milk "alternatives" may be a bit shorter than kids who drink cow's milk, a new study suggests. Researchers found that among more than 5,000 Canadian children, a 3-year-old who drank three cups of non-cow's milk each day was, typically, a half inch shorter than a child who drank the same amount of cow's milk.The study -- which was funded by the Canadian government and St. Michael's Hospital Foundation -- doesn't prove that parents' milk choices were the culprit.For one, there could have been differences in the children's overall diets, too, said lead researcher Dr. Jonathon Maguire.But, he said, the nutritional content in different milk substitutes vary widely. And it's "reasonable to hypothesize" that some shortchange children on protein, fat and other nutrients, said Maguire, a pediatrician at St. Michael's Hospital in Toronto.A pediatric nutrition specialist who wasn't involved in the study agreed."With the exception of soy milk, other (non-dairy) products contain almost no protein," said Erin Corrigan, a registered dietitian at Nicklaus Children's Hospital, in Miami.When it comes to fat, she said, coconut milk has a relatively higher amount. But many cow's milk alternatives contain little fat -- which may be fine for an adult, but not for a toddler, Corrigan said. Plus, she added, the calcium from milk alternatives is generally not as well-absorbed as the calcium in cow's milk.

    The Tragedy of ‘Mountain Dew Mouth’ and the U.S.’s Insane Approach to Dental Care -- In a region long undergoing a cultural and economic crisis, Appalachia’s thirst for Mountain Dew is perhaps the lesser of many evils. Opioid addiction, smoking, chewing tobacco, lack of access to municipal water systems, and the necessary preoccupation with getting food on the table over worrying about nutritional value are also having an enormous effect on people’s teeth. The soda is ruining teeth, in an epidemic known as “Mountain Dew-mouth.” The acid causes erosion and the sugar abets decay. “I would see a lot of kids who had a mouth full of rotting teeth,” Dr. Edwin Smith, a traveling dentist who drove his mobile dental truck for 12 years throughout Kentucky, told CNN last September. “They were in pain, and they’d be hurting at school.” In Kentucky, the state with highest proportion of adults under 65 without teeth, Smith has witnessed the extremes of Mountain Dew-mouth—toddlers with baby teeth filled with cavities, kids who won’t brush their teeth because of inflamed gums, and teenagers who have pulled out their own rotting teeth with pliers. Other forces are at play. Hundreds of prescription medications, as well as chewing tobacco and cigarettes, cause dry mouth, preventing the natural flow of saliva and making teeth more susceptible to decay. Use of these substances is rampant in Appalachia; a single Kentucky county filled prescriptions for over 2 million doses of painkillers last year, which is about 150 doses for every man, woman and child. Kentucky is also the state with the most smokers, followed closely by West Virginia, according to a Gallup study. On top of that, without municipal water systems, people rely on well water, which is unfluoridated—or they drink more Mountain Dew to quench their thirst. Nearly half of the people in Kentucky, and 25 percent of the national population, depend exclusively on well water, posing a threat to natural resources as well as people’s teeth. With 26 percent of preschool-age kids suffering from tooth decay and 15 percent of young adults extracting a tooth because of erosion, Mountain Dew-mouth in Appalachia has created one of the worst dental health problems in the United States.   Medicaid, the joint federal-state health care program that provides health coverage for 72 million people, reckons dental benefits as optional for adults, leaving it up to states to decide. While Medicaid, as the medical safety net for the poor, should provide help for those with dental needs who cannot afford to pay, only 15 states offer full dental benefits and five states offer nothing at all, as reported in a study by Pew.

    Warning: EPA Fighting to Keep Water Fluoridated --Why does it seem like the one time you want the government to do something, they aren’t interested? Supposedly, the EPA exists in part to protect public health. So you might think they would want to get harmful chemicals out of the drinking supply, or at very least, prevent them from being added. Yet despite mountains of evidence that fluoride is not only ineffective at preventing tooth decay when ingested but actually harmful to the human body, the EPA is still fighting to propagate public poisoning.A lawsuit has been filed against the EPA by various watchdog organizations dedicated to removing fluoride from public drinking supplies. They want to force the EPA to ban the intentional addition of fluoride into drinking water supplies. The lawsuit lays out all the evidence amassed about the harmful effects of fluoride, as well as the evidence that it is not necessary or beneficial to be ingested. It states that it has been disproven that fluoride helps prevent tooth decay when ingested, as thought when it was first introduced into drinking supplies in 1940.It is now universally recognized by dental researchers, including the Centers for Disease Control (CDC) Oral Health Division, that fluoride’s primary benefit comes from topical application. Fluoride does not need to be swallowed, therefore, to prevent tooth decay.Whereas fluoride’s benefit to teeth comes from topical contact, fluoride’s health risks come from ingestion.

    Interactive Map Shows If Your Tap Water Is Contaminated With PFCs - The known extent of the contamination of U.S. communities with PFCs continues to expand with no end in sight. PFCs, also known as PFASs, are highly fluorinated toxic chemicals that have been linked to cancer, thyroid disease, weakened immunity and other health problems.  New research from Environmental Working Group (EWG) and Northeastern University in Boston details PFC pollution in tap water supplies for 15 million Americans in 27 states and from more than four dozen industrial and military sources from Maine to California.  EWG and the Social Science Environmental Health Research Institute at Northeastern collaborated to produce an interactive map that combines federal drinking water data and information on all publicly documented cases of PFAS pollution from manufacturing plants, military air bases, civilian airports and fire training sites.   On the map, blue circles show public water systems where PFCs were detected in public drinking water systems – the larger the circle, the more people served by the system. Clicking on a circle brings up detailed information, including contamination levels. Red dots indicate a contamination site in Northeastern's PFAS Contamination Site Tracker.

    Michigan Health Director Charged With Involuntary Manslaughter for Role in Flint Water Crisis -- Nick Lyon, the head of Michigan's health department, has been charged with involuntary manslaughter in connection to the Flint water crisis. The charges were announced in a Flint court on Wednesday. Lyon is the highest-ranking official in Gov. Rick Snyder's administration to be charged in state Attorney General Bill Schuette's investigation. According to the Associated Press and local news outlets, Lyon is accused of failing to alert the public about the area's Legionnaires' disease outbreak that has been tied to Flint River's corrosive water. Lyon's failure to act resulted in the death of at least one person, 85-year-old Robert Skidmore, authorities said. There were nearly 100 cases of Legionnaires' disease in the Flint area, including 12 deaths, in 2014 and 2015. Jeff Seipenko, a special agent with the attorney general, told a judge that Lyon was personally briefed in January 2015 but "took no action to alert the public of a deadly" outbreak until nearly a year later.  Involuntary manslaughter is punishable by up to 15 years in prison. Lyon was also charged with misconduct in office.

    Will Cape Fear Become the Next Flint, Michigan as DuPont Dumps GenX Into River? -- In February, DuPont and its spinoff Chemours finally agreed to pay out the $670+ million settlement stemming from their toxic chemical Perfluorooctanoic acid (PFOA), commonly known as C8. The chemical was shown to cause kidney, pancreatic, liver and testicular cancer , high cholesterol (hypercholesterolemia), pregnancy issues, including preeclampsia, thyroid disease and ulcerative colitis in thousands of cases.   The carcinogenic chemical was used to manufacture Polytetrafluoroethylene (PTFE), known as Teflon. Teflon is most commonly used as a non-stick coating found in cookware. But by 2003, DuPont had dumped almost 2.5 million pounds of C8 from its Washington Works plant into the mid-Ohio River Valley area. To date, the chemical has been found in drinking water in 27 states. This all took place even 53 years after DuPont classified C8 as a toxin.   Now, it appears that the chemical that DuPont and Chemours have relied on to replace C8 in Teflon may be just as bad. Known as GenX, the new chemical has been known by the U.S. Environmental Protection Agency ( EPA ) to have negative health effects since at least 2006. Yet, the unregulated chemical has been continuously dumped into the Cape Fear River in North Carolina since 2009. Ring of Fire's Mike Papantonio addressed DuPont's deception with Ed Schultz on "News with Ed": (video)  In a series The Teflon Toxin published by The Intercept, it was revealed that DuPont filed numerous reports confirming the risks of GenX. In experiments, rats were shown to develop cancer, kidney and liver disease, various tumors, as well as other negative health effects, all very similar to the effects of C8. Still, DuPont's researchers claim that "these tumor findings are not considered relevant for human risk assessment."  Detailing just how terrible GenX can be, The Columbus Dispatch reported in February that:  DuPont reported that a 1963 study of those substances showed that adult rats given 7,500 milligrams died gasping, convulsive deaths within three hours. Those that received smaller doses survived with slightly enlarged livers. A 2013 report stated that rats given a much lower dose of GenX developed tumors in some organs. The report stated that "these tumor findings are not considered relevant for human risk assessment."

    Mosquitoes test positive for West Nile virus in Ohio | WKYC.com: (AP) - Health officials say mosquitoes trapped in an area of central Ohio have tested positive for the West Nile virus. Franklin County Public Health says the infected mosquito pool is in Norwich Township near the Columbus suburb of Hilliard. Health officials say the pool was identified in a surveillance of traps set up to monitor the mosquito population. Health officials are reminding people to wear insect repellant containing DEET, limit outdoor activity at dusk and dawn and empty all standing water around their homes. Symptoms experienced by about 20 to 30 percent of people infected with the virus include fever, headache, body aches, joint pain, vomiting, diarrhea and rash. Most survive. Symptoms of more severe disease can include high fever, neck stiffness, disorientation, coma, tremors, seizures and paralysis.

    Climate change pushing tropical diseases toward Arctic  - He'd gone for a swim in the Gulf of Mexico, whose warm waters, it turned out, would soon kill him. The 31-year-old man arrived at Parkland Memorial Hospital in Dallas three days after his dip in the Atlantic. Crushing pain was radiating from his new calf tattoo—an image of hands clasping a cross along with the phrase "Jesus is my life." He had a fever and dangerously low blood pressure. Black blisters appeared around his ankles. His kidneys and lungs began shutting down. Gangrenous tissue splotched his hips and toes. Within two months, he was dead.  The culprit, a meddlesome bacterium called Vibrio vulnificus, occurs naturally in warm ocean water. It can seep into scrapes or fresh wounds, including those from tattoo needlework. Infections like the one that killed this man in 2016 have appeared sporadically for years in warm seas from Texas to Maryland. But as greenhouse gases boost temperatures across the globe, rare pathogens like these from hotter parts of the planet are now creeping toward the poles, creating new risks for people. Deadly warm-water Vibrio illnesses are on the rise, now appearing even near the Arctic Circle. "We are seeing lots of new hospitable areas opening up for these bacteria," says Craig Baker-Austin, a Vibrio expert who runs the United Kingdom's Centre for Environment, Fisheries and Aquaculture Sciences Laboratory in southern England. "Climate change is essentially driving this process, especially warming." It's no secret that climate change can spread illnesses such as West Nile virus, Zika, and malaria, as rising temperatures push disease-carrying mosquitoes into new places, from the highlands of Ethiopia to the United States. But warm temperatures and shifting weather patterns work in subtle ways, too. Changes in precipitation, wind, or heat are shifting the threat posed by other human illnesses, from cholera to a rare freshwater brain-eating amoeba to rodent-driven infections like hantavirus. And the importance of all these changes are only growing more significant.

    Monsanto Accuses IARC Scientist of Withholding Glyphosate Data in Cancer Risk Assessment -- The controversy over the health risks of glyphosate , the active ingredient in Monsanto's weedkiller Roundup, has taken a surprising turn. Dr. Aaron Blair— a lead researcher on the International Agency for Research on Cancer (IARC) committee that classified glyphosate as "probably carcinogenic"—has been accused of " deliberately " withholding unpublished research that he admitted would have altered the cancer agency's widely cited 2015 review . The news comes as a surprising development in light of Monsanto's multi-district cancer lawsuits . Plaintiffs across the U.S. claim that they or their loved ones developed non-Hodgkin's lymphoma due to exposure to glyphosate, pointing to the IARC cancer classification. But a new Reuters investigation could rock the ongoing cases. Citing obtained documents, reporter Kate Kelland writes: "Blair knew the unpublished research found no evidence of a link between glyphosate and cancer. In a sworn deposition given in March this year in connection with the case, Blair also said the data would have altered IARC's analysis. He said it would have made it less likely that glyphosate would meet the agency's criteria for being classed as 'probably carcinogenic.'"   The IARC never considered the data because the agency has a rule against using unpublished data to asses a substance's carcinogenicity. The data came from the Agricultural Health Study (AHS), on which Blair was a senior researcher, and sat unpublished for two years before IARC assessed glyphosate. He told Reuters that the information was not published in time because there was too much to fit into one scientific paper.

    Backyard chickens blamed for salmonella outbreaks. Do not snuggle with them, CDC says. – The Denver Post: Just this year, the Centers for Disease Control and Prevention says, eight separate salmonella outbreaks linked to contact with pet poultry have taken place in the United States, sickening more than 370 people in 47 states and hospitalizing 71. No one has died in 2017 – yet. In 2016, a record 895 people who consorted with fowl came down with the nausea, vomiting, abdominal cramps and fever that characterize this infection, and three of them did not survive.So the CDC is once again telling flock owners to hold back on the heavy petting. That’s not a metaphor: An agency study on the rise of these outbreaks found last year that nearly half of the hundreds of salmonella patients surveyed acknowledged “snuggling” baby birds, and 46 percent said they allowed their poultry in the house. As backyard bird husbandry has spread throughout urban areas where poultry was previously confined to the dinner plate, many owners have come to see the animals as less food source than adored pet. A proposed ban on backyard flocks in Washington was recently scrapped after passionate opposition from chicken owners, supporters and some city council members. But in a new advisory on the current outbreaks, the CDC repeats that cohabitation with poultry is not a good idea, no matter how cuddly and house-trained the birds might be. In particular, chickens, geese and the like should not be in spots where food is prepared and consumed, because their germs can transfer from feathers to casseroles and right into your gut. The agency’s alert contains lots of other advice for keepers of flocks. Among the most important is hand-washing or hand-sanitizing after touching poultry or fresh eggs, which can also carry bacteria. But don’t wash the eggs, because cold water can push bacteria inside of them; instead, brush or wipe them off. Elderly people should not touch backyard birds, nor should small children, who are more likely to get seriously ill from salmonella, the CDC says. This year, more than a third of those who got sick were under 5. 

    Proposed Rule Would Permit China to Export Poultry Products to U.S. - The Trump administration will publish a proposed rule Friday that would permit the People's Republic of China (PRC) to export its own poultry products to the U.S. It is doing so because U.S. Department of Agriculture (USDA) claims that the PRC's food safety inspection system is equivalent to ours. The decision comes on the heels of the PRC agreeing to resume importing U.S. beef after a 14-year ban. We can't let trade trump food safety. While China will get U.S. beef that underwent strong food safety regulatory oversight, U.S. consumers will be subject to imports from a country whose own public health officials admit has weak food safety enforcement.  The PRC has experienced numerous avian influenza outbreaks that have led to the death of hundreds of thousands of birds. Some of the strains have been so virulent that they have killed humans that came into contact with infected poultry. At last count, there have been 268 reported human deaths since October 2016. In February, a multinational group of scientists published a study in which they found that antibiotic strains of pathogens run rampant in Chinese poultry.  Food safety scandals have continued to plague the PRC in recent years. In 2008, dairy products tainted with melamine killed six infants and caused 300,000 Chinese consumers to be hospitalized. Other food safety violations include food processing establishments recovering and reusing used cooking oil from street gutters; another food processor marinating duck meat in sheep urine in order to pass it off as lamb meat, another meat merchant marinating pork in chemicals to disguise it as beef; and companies manufacturing and exporting poultry-flavored pet treats tainted with toxins that sickened thousands of pets in the U.S.  What makes the proposed rule even more odious is that the PRC had decided to designate in advance two plants operated by Cargill as being able to export Chinese poultry products to the U.S., should the rule be finalized. Cargill is now reportedly trying to qualify to sell its U.S. beef to China—a win for Cargill, but a big loss for consumers.  To make matters worse, processed poultry from the PRC will not be subject to country of origin labeling requirements, leaving consumers completely in the dark about what they are buying and feeding to their families.

    Canada is using genetics to make cows less gassy-  J.P. Brouwer, along with his father and two brothers at Sunalta Farms in central Alberta, runs the first commercial dairy farm contributing data to the Genome Canada project. One part of the project aims to increase feed efficiency—growing cows as big as possible with as little food as possible—and reduce emissions of methane, a greenhouse gas that traps 30 times more heat per molecule than carbon dioxide. Eight years after scientists from the National Institutes of Health and the US Department of Agriculture sequenced the first cow genome, this project is trying to turn that information into more profitable, environmentally friendly cattle.  Bovine livestock are responsible for about 9.5 percent of global greenhouse gas output, according to the Food and Agriculture Organization of the United Nations. Farmers are trying to reduce those emissions with lots of different strategies, starting with their diets. Researchers have tried adding flaxseed oil, garlic, juniper berries, and even seaweed to cow feed. Some scientists at Pennsylvania State University are even genetically modifying the bacteria in cow guts. Simpler tweaks can have an impact, too: Vaccinating cows against common viruses mean fewer cows die, letting farmers focus on raising fewer, healthier cows that live long into adulthood—creating less methane as a result. But scientists are also tweaking the cows themselves. The Genome Canada project, led by Filippo Miglior at the University of Guelph and Paul Stothard at the University of Alberta, harnesses labs in the US, UK, Denmark, Australia, and Switzerland to help identify cows that produce fewer greenhouse gases, with the ultimate goal of distributing the responsible genes—conveniently transported in the form of bull semen—to areas that don’t have the resources to develop their own greener cows.

    Resistance to last-ditch antibiotic has spread farther than anticipated - Nature - Eighteen months ago, a gene that confers resistance to colistin — known as an ‘antibiotic of last resort’ — emerged in bacteria from pigs in China. Since then, the resistance gene, called mcr-1, has been found around the world at an alarming rate, according to several presentations at the American Society for Microbiology (ASM) meeting in New Orleans, Louisiana, last week. In some places, nearly 100% of farm animals carry mcr-1, and an increasing number of people do as well. The gene’s spread is one of the clearest examples of how antibiotic use on farms can lead to resistance in human infections, says Lance Price, an antibiotic researcher at George Washington University in Washington DC. Colistin has been around since the 1950s, but was rarely used in people because it causes kidney problems. Instead, many countries use it to promote growth in livestock — a practice that seems to have selected for colistin-resistant bacteria. That’s a problem, because physicians have increasingly turned to colistin over the past decade to treat patients who don’t respond to other antibiotics.   Colistin-resistance genes evolve naturally in bacteria, but public-health experts started to worry when researchers in China reported1 last year that mcr-1 had moved from the bacterial genome on to a plasmid: a circular piece of DNA that can hop between species of bacteria.Some evidence suggests that plasmids carrying mcr-1 have existed on farms for decades, and that researchers are seeing the plasmid and the gene now only because they’re looking for them2. But their occurence does seem to be increasing. An analysis of gut bacteria in 8,000 human faecal samples collected over five years from Guangzhou, China, discovered mcr-1 in 497 samples. It also found an increasing prevalence of the gene during that time, according to Guo-Bao Tian, a microbiologist at Sun Yat-sen University in Guangzhou, at the ASM meeting. Tian and his colleagues discovered that 10% of the mcr-1 genes showed up in strains of the gut bacterium Escherichia coli that were also resistant to other antibiotics.

    Record Heat Brings First Serious Air Pollution Episode of 2017 to Northeast, Midwest - Dr. Jeff Masters ·  The first major heat wave of the summer for the Midwest and Northeast U.S. set numerous daily record highs on Monday, and also brought the worst ozone air pollution of the year to much of the region. Ground level ozone, which is created from chemical reactions between volatile organic carbon (VOC) compounds and nitrogen oxides, is created more readily at warmer temperatures. Monday’s record heat helped these chemical reactions occur faster, resulting in ozone pollution that topped out in the “Unhealthy” range along the coasts of Connecticut, New York and Maine. The heat was accompanied by light winds, which allowed pollution levels to build. These concentrations were as much as 50% higher than the federal standard for hazardous level of ozone, and were capable of causing increased risk of stroke, heart attack and breathing problems for sensitive groups. Even people not unusually sensitive to air pollution could see adverse health effects from pollution levels this high. The other main pollutant of concern, tiny particles known as PM2.5 (those that are less than 2.5 microns or 0.0001 inch in diameter)--which cause over 80,000 premature deaths each year in the U.S.—was not as big of a concern on Monday, since PM2.5 levels stayed below the federal standard. Hundreds of premature deaths likely from this week’s air pollution Death certificates never list air pollution as the cause of death. Nevertheless, air pollution is a huge and silent killer: between 91,000 and 100,000 air pollution deaths per year occur in the U.S., according to separate studies done in 2016 by the World Bank and the Health Effects Institute (a U.S. non-profit corporation funded by the EPA and the auto industry). Air pollution deaths are calculated using epidemiological studies, which correlate death rates with air pollution levels. Air pollution has been proven to increase the incidence of death due to stroke, heart attack and lung disease. Since these causes of death are also due to other factors—such as lifestyle and family history—we typically refer to air pollution deaths as premature deaths. A premature air pollution-related death typically occurs about twelve years earlier than it otherwise might have, according to Caiazzo et al., 2013. Approximately 12,000 of these premature U.S. air pollution deaths each year are from high ozone. Since this week’s high ozone levels are affecting a very large population of tens of millions of people, I expect that the death toll from ozone air pollution this week will be several hundred people. Tuesday, June 13 is going to be another day with poor air quality in the Northeast and Midwest United States, and air pollution action days have been declared for Chicago, Philadelphia, and New York City, as well as parts of New Jersey, Rhode Island, and Massachusetts.

    Forced to Endure Extreme Heat, Prisoners Are Casualties of Texas’ Climate Denial, Documents Show - On a spring day in May, temperatures in Dallas, Texas, were already in the 90s.  It was hot outside, but it's nothing compared to the temperatures inside the Hutchins Unit, one of 79 state-run prison units still lacking air-conditioning in its cellblocks in 2017. Even those temperatures, though, still pale further in comparison with the extreme summer heat wave that broiled the jail on July 28, 2011, pushing the heat index up to about 150 degrees in the cellblocks, according to the state's own records, and transforming the jail into an oven that slowly baked Hutchins prisoner Larry McCollum alive. McCollum, a 58-year-old cab driver from the Waco area, was found having convulsions in his top bunk. He was taken to Dallas' Parkland Hospital, where his body temperature was measured at 109.4 degrees. McCollum, who was incarcerated for writing a bad check, had recently begun serving his 11-month sentence, and was eager to get through his time and reunite with his wife and two children. "He was taken from us. He was supposed to go in for 11 months, and he wound up with a death sentence," McCollum's daughter, Stephanie Kingrey, said. McCollum is one of 22 heat-related deaths that TDCJ has been forced to acknowledge in its prison units after litigation -- 10 of those deaths occurring during that same 2011 summer heat wave. But these deaths are likely the first few indications of what may be a much larger heat problem. McCollum is one of 22 heat-related deaths that TDCJ has been forced to acknowledge in its prison units after litigation -- 10 of those deaths occurring during that same 2011 summer heat wave. But these deaths are likely the first few indications of what may be a much larger heat problem. According to the records, staffers within the Health Services Division tracked a total of 46 heat-related illnesses in TDCJ units in 2010, 48 such illnesses between the months of June and July of 2011 alone, and another 59 illnesses between August 1 and August 16 of 2011. Health Services Division staffers tracked a total of 110 illnesses in 2011 through August 16 of that year, across scores of units. The records indicate that in 2011, a majority of prisoners were located in their cellblocks at the onset of the heat-related illness, and that several of the illnesses involved prisoners taking antipsychotic and other medications that make them more vulnerable to heat conditions.

    Dust Bowl-ification of U.S. Southwest leads to 8-fold jump in Valley Fever cases - Joe Romm - The infection rate of Valley Fever in the Southwest United States has gone up a stunning 800 percent from 2000 to 2011, as dust storms have more than doubled.  New research directly links the rise in Valley Fever to the rise in dust storms, which in turn is driven by climate change. Valley Fever, which the Centers for Disease Control and Prevention calls “a fungal lung infection that can be devastating,” is caused by inhaling soil-dwelling fungus. When the soil dries out and turns to dust, the wind can make the fungus airborne. “Dust storms are found to better correlated with the disease than any other known controlling factor,“ a new study led by NOAA scientists concluded. Moreover, the scientists emphasize that “this study provides direct evidence that dust storms in the southwestern United States have become more frequent in the past decade.” Climate scientists have long predicted — and are now finally observing — the drying out of the Southwest from climate change. My 2011 literature review in Nature called this “Dust-Bowlification,” a term the new study picks up. In recent years, multiple studies studies have confirmed that warming-driven climate change is already drying the American Southwest and other parts of the globe, spurring dust storms. A 2016 study found that the semi-arid Southwest has begun to enter a “drier climate state,” which matches findings from a 2015 study documenting an expansion of the entire world’s dry and semi-arid climate regions in recent decades as a result of human-caused climate change.

    The Relentless March of Drought – That ‘Horseman of the Apocalypse - By 2025 –that’s in less than 8 years from today– 1.8 billion people will experience absolute water scarcity, and two thirds of the world will be living under water-stressed conditions. Now it is feared that advancing drought and deserts, growing water scarcity and decreasing food security may provoke a huge ‘tsunami” of climate refugees and migrants. No wonder then that a major United Nations Convention calls drought ‘one of the four horsemen of the apocalypse.’ See what the United Nations Convention to Combat Desertification (UNCCD) says in this regard.By 2050, the demand for water is expected to increase by 50 per cent. As populations increase, especially in dry-land areas, more and more people are becoming dependent on fresh water supplies in land that are becoming degraded, the Bonn-based Convention secretariat warns.“The world’s drought-prone and water scarce regions are often the main sources of refugees.” Monique Barbut.Water scarcity is one of the greatest challenges of the twenty-first century, it underlines, adding that drought and water scarcity are considered to be the most far-reaching of all natural disasters, causing short and long-term economic and ecological losses as well as significant secondary and tertiary impacts.To mitigate these impacts, drought preparedness that responds to human needs, while preserving environmental quality and ecosystems, requires involvement of all stakeholders including water users and water providers to achieve solutions for drought, explains UNCCD.“Drought, a complex and slowly encroaching natural hazard with significant and pervasive socio-economic and environmental impacts, is known to cause more deaths and displace more people than any other natural disaster.”

    Where climate change is most likely to induce food violence - While climate change is expected to lead to more violence related to food scarcity, new research suggests that the strength of a country's government plays a vital role in preventing uprisings. "A capable government is even more important to keeping the peace than good weather," said Bear Braumoeller, co-author of the study and associate professor of political science at The Ohio State University. While previous studies had examined the impact of climate change-induced weather patterns on violence and the increased danger of violence in weak or failing states, this is the first study to demonstrate that the combination of the two risk factors is even more dangerous than they would be separately.  Braumoeller conducted the study with his former doctoral students Benjamin Jones, now at the University of Mississippi, and Eleonora Mattiacci, now at Amherst College. Their results appear in the Journal of Peace Research. "We've already started to see climate change as an issue that won't just put the coasts under water, but as something that could cause food riots in some parts of the world," Braumoeller said. Extreme weather such as droughts and floods could hurt agricultural production in some countries, leading to violence there or elsewhere by people who are desperate for food. "Climate-induced food scarcity is going to become an increasingly big issue and we wanted to understand which countries are most threatened by it," he said.

     Study: India’s rising temperatures are already deadly - (AP) — India is now two and a half times more likely to experience a deadly heat wave than a half century ago, and all it took was an increase in the average temperature of just 0.5 degrees Celsius (less than 1 degree Fahrenheit), a new study shows. The findings are sobering considering that the world is on track for far more warming. For the last two weeks much of Asia has been gripped by a heat wave, with a record high of 53.5 degrees C (128.3 degrees F) set in the southwest Pakistani city of Turbat on May 28 — the world's hottest-ever temperature recorded for the month of May. Temperatures in the Indian capital of New Delhi have soared beyond 44 degrees C (111 degrees F)."It's getting hotter, and of course more heat waves are going to kill more people," "We knew there was going to be an impact, but we didn't expect it to be this big," he said. Their study, published Wednesday in the journal Science Advances, shows that, while India's average temperatures rose by more than 0.5 degrees C (0.9 degrees F) between 1960 and 2009, the probability of India experiencing a massive heat-related mortality event — defined by more than 100 deaths — shot up by 146 percent. The study also found that the number of heat wave days increased by 25 percent across most of India. Areas in the south and west experienced 50 percent more heat wave events, or periods of extreme heat lasting more than three or four days, in 1985-2009 compared with the previous 25-year period.

    Scientists may have just found an unexpected new threat to the ozone layer --  Severe storms over the central United States may be posing bigger problems beyond bad weather. New research suggests that frequent summertime storms in the Great Plains region could be depleting the protective ozone layer in the upper atmosphere, putting humans at increased risk of unhealthy exposure to ultraviolet radiation. And some scientists believe that climate change could make the situation worse. The study, published this week in the Proceedings of the National Academy of Sciences, builds on a groundbreaking 2012 paper that was among the first of its kind to tackle ozone loss over the United States. According to lead author James Anderson, an atmospheric chemist at Harvard University, most previous studies have focused on the poles, where the icy temperatures are well suited for the chemical reactions that lead to ozone depletion. In fact, the famous “ozone hole” — a massive deterioration of ozone in the atmosphere spurred by industrial pollution and discovered in the 1980s — largely occurred over the Antarctic. The Antarctic ozone hole finally appears to be recovering — mostly thanks to an international agreement called the Montreal Protocol, which prompted major global efforts to curb the emissions of chlorofluorocarbons, the chemicals that cause ozone to break down in the atmosphere. But ozone-destroying chemicals still linger in the atmosphere, and depletion still occurs on smaller scales. Recent studies have found a new “hole” in the Arctic being carved by leftover atmospheric pollutants. And now, scientists say this process is not necessarily limited to the poles. The new study suggests that the right conditions — including chilly upper-air temperatures previously thought to exist only in the Arctic and Antarctic — occur in the United States as well. 

    May Continues a Ridiculous Warm Streak for the Planet - Another month is in the global temperature record books. While May just missed setting a record, the data is another reminder that climate change is making the world hotter and pushing it into a new state. This May was the second-warmest May on record, according to NASA data released on Thursday. The planet was 1.6°F (0.88°C) warmer than normal last month, trailing 2016 by just a 10th of a degree. Widespread hot spots stretched from pole to pole, showing no corner of the globe is untouched by the impact of rising carbon dioxide levels in the atmosphere. Temperatures soared up to 13.8°F (7.1°C) above normal in parts of Antarctica while a wide swath of heat cooked northern Africa and western Europe.

    El Nino signal is weakening in the Pacific: Kemp (Reuters) - The probability of El Nino, a warming of ocean surface temperatures in the eastern and central Pacific, developing this year has been downgraded by U.S. government forecasters as sea surface temperatures and wind speeds in the area remain close to their long-term averages.The Pacific saw a relatively rapid swing in late October from La Nina conditions (characterised as unusually cold temperatures in the equatorial Pacific Ocean) to neutral or even slightly El Nino-leaning conditions by March. Since then, however, the oceanic and atmospheric signals pointing to a possible El Nino have all weakened.  The U.S. National Oceanic and Atmospheric Administration (NOAA) last week downgraded the probability of El Nino conditions being present in the fourth quarter of 2017 to just 36 percent, down from 53 percent at the time of its March forecast. (http://tmsnrt.rs/2snJmB0) The agency’s central prediction is now that conditions will be neutral in the fourth quarter, with a probability of 53 percent, with only an outlying chance of La Nina, at 11 percent.  El Nino has a major impact on temperatures and precipitation on countries bordering the Pacific and Indian oceans, and across Latin America, with a smaller impact in some areas of the United States. The phenomenon is typically strongest during the northern hemisphere autumn and winter and weakest during early spring.

     June 2017 ENSO update: pancake breakfast -  After months of suggesting an elevated chance for El Niño to develop, the CPC/IRI forecast has flattened out, and neutral conditions are expected (50-55% chance) to continue through the fall. In fact, the Nino3.4 region (a key ENSO monitoring area in the tropical central Pacific) is hovering around 0.5°C warmer than the long-term average. Yep, that’s the threshold for El Niño, but surely you remember that ENSO is a seasonal phenomenon, meaning those warmer sea surface temperatures need to stick around for several months—long enough to provoke an atmospheric response.  Despite the warmer sea surface temperatures, the atmosphere is not behaving like El Niño. During May, the indicators that we track looked very average, including both the upper-level and near-surface winds over the equatorial Pacific and the amount of rain and cloudiness in the central Pacific and Indonesia. The indexes that measure the difference in the atmospheric pressure between the central Pacific and the far western Pacific, the Southern Oscillation Index and the Equatorial Southern Oscillation Index, were both close to zero in May, indicating, again: neutral conditions. Most of the recent forecast models predict that the Niño3.4 region will move closer to average temperatures over the next few months. The average of all the dynamical model forecasts in the North American Multi-Model Ensemble flattens out at slightly above the long-term mean for the rest of this year. Averaging all model forecasts together usually produces the best forecast, because it reduces the noise and highlights the signal.

    West Coast on an Acidification Trip; Fishing Industry in Peril - Hot spots of ocean acidification have been found in the waters that wash onto the shores of the West Coast, a major concern for the region’s billion-dollar fishing industry as well as the region’s potentially fragile coastal ecosystems. A new study of a 600-mile span of coastline found some of the lowest pH levels ever measured on the ocean surface, showing that significant acidification can be found in waters right along the shore.“Ocean acidification has made landfall” across the entire area, coauthor Francis Chan, an Oregon State University marine ecologist, said.But the news from the study, detailed May 31 in the journal Scientific Reports, isn’t all bad: Some areas had more moderate pH levels, and both these and the hot spots persisted in the same areas from year to year. This could give researchers and officials looking to protect marine life a map of where to concentrate efforts to mitigate against rising ocean carbon dioxide levels.Ocean acidification is the often-overlooked partner to global warming and is driven by the same human-caused emission of carbon dioxide that is driving the rapid rise of global temperatures. The ocean absorbs much of that excess carbon dioxide, and as it does so, the pH of the ocean water declines, meaning it becomes more acidic (just as CO2-laden soda is more acidic than regular water).As the ocean acidifies, it becomes difficult for shelled organisms such as oysters and clams to build their shells, as well as for fish to breathe. Some of the species that could be most impacted, particularly phytoplankton, sit at the base of the ocean food chain, potentially taking away a key food source for many other species, including some that are most economically valuable, such as salmon and black cod. The waters off the West Coast of the U.S. are particularly vulnerable to acidification because they feature cold water upwelling from deeper in the ocean. Cold water is better at absorbing CO2 (which also makes acidification in the frigid waters of the Arctic a major concern for marine life there). The cold, upwelling waters also provide abundant nutrients and make the area a rich spot for marine life.

    This Summer's Gulf 'Dead Zone' Could Be Bigger Than Connecticut - Summer is almost here, and this is the time each year when a team of federal and university scientists predicts the size of the so-called dead zone that will develop in the Gulf of Mexico later in the summer. We're waiting for that official prediction, but based on federal nitrate flux data and Midwest weather patterns this spring, it seems likely that it will be bigger than usual.  That means a swath of marine habitat considerably larger than the state of Connecticut could be lifeless by summer's end—a haunting prospect for coastal ecosystems, fisheries, and the men and women who earn their livelihoods from them. And the Trump administration's budget proposal and general antagonism toward science and environmental protection are likely to make the problem worse in the future.  Marine and coastal dead zones are the result of a phenomenon called hypoxia —a state of low dissolved oxygen that occurs when excess pollutants, such as nitrogen and phosphorus, accumulate in bodies of water. These nutrients feed blooms of algae that, when they die and decompose, deplete the oxygen in the surrounding water. Hypoxia is a silent killer, suffocating organisms that can't escape the low-oxygen zone quickly enough, and causing others to flee.  As we wrote a year ago when the National Oceanographic and Atmospheric Administration (NOAA) predicted an "average" (roughly Connecticut-sized) Gulf dead zone, even average is not the same as normal . Nitrogen and phosphorus can come from many sources, but the largest are due to human activity, including sewage discharges and fertilizers from farm fields running off into rivers and streams.  The size of the dead zone in any given year is dependent not just on how much fertilizer was applied to fields in the drainage area, but also on the amount of rainfall available to carry it from the land into the rivers and on to the Gulf. This spring has been a wet one in the Midwest, and the drenching rains and widespread flooding that hit parts of the region in late April and continued into May have created ideal conditions for a large flush of nutrients downstream.  The two graphs below from the U.S. Geological Survey (USGS)—which monitors stream flow and nitrate levels in rivers and streams—show how the nitrate "flux" in the Mississippi River basin in May 2017 compares with previous years, and how the actual size of the dead zone tracks those fluxes each year. It's easy to see the contrast between a wet year like this one and, say, the devastating drought year of 2012 .  These are preliminary data that the scientific team led by NOAA will use in making its dead zone prediction this month.

    Black Sea's Stunning Plankton Bloom Can Be Seen From Space - The turquoise swirls of the Black Sea's phytoplankton bloom can be seen all the way from space in a new image released by the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA 's Aqua satellite. "The May ramp-up in reflectivity in the Black Sea, with peak brightness in June, seems consistent with results from other years," said NASA's Goddard Space Flight Center ocean scientist Norman Kuring. The May 29 image shown above is a mosaic comprised of multiple satellite passes over the region. Kuring, who does not study this area, noted that this year's bloom is one of the brightest since 2012.  According to NASA, the bright, milky swirls are caused by coccolithophores, a phytoplankton commonly found in the Black Sea. These microscopic plankton are plated with white calcium carbonate, and when aggregated in large numbers, these reflective plates are easily spotted from space. Phytoplankton are microscopic marine organisms and an important food source for a wide range of sea creatures such as whales, shrimp, snails and jellyfish.  Phytoplankton make their own food from sunlight and dissolved nutrients but if too many nutrients are available, they can grow out of control and form harmful algal blooms. These blooms can lead to eutrophication—or dead zones —where low oxygen is lethal to marine life.

    Trump Administration Denies Protection for Endangered Species Killed by Gillnets -- The new federal administration withdrew a proposed rule Monday that would have protected endangered species —including whales , dolphins and sea turtles —caught and killed in the drift gillnet fishery targeting swordfish off California. Monday's decision demonstrates the administration's blatant disregard for recommendations of its own fishery advisors and reverses course on commitments made by the previous administration. In September 2015, after a years-long process incorporating input from fishery stakeholders, the Pacific Fishery Management Council recommended that the National Marine Fisheries Service set hard caps on the incidental catch of nine endangered species most at risk from entanglement, injury and death in mile-long drift gillnets that target swordfish off California. The hard caps would have applied to endangered fin, humpback, and sperm whales, short-fin pilot whales and common bottlenose dolphins; as well as endangered leatherback, loggerhead, olive ridley and green sea turtles. The swordfish drift gillnet fishery is the only Category I fishery off the entire U.S. West Coast—a designation reserved for fisheries with high mortality to marine mammals.  "The Trump administration has determined not to issue regulations implementing a decision made by federal fishery managers more than a year ago to protect some of the ocean's most iconic and endangered marine animals," Geoff Shester, Oceana's California campaign director and senior scientist, said. "In doing so, the National Marine Fisheries Service ignores the will of its federal fishery advisors, the State of California, California State and Congressional members , and the more than 22,000 members of the public who weighed in to support these caps.

    Sea-Level Rise Poses a Rising Risk to U.S. Shores - Scientific American,- Norfolk, Va., is half a world away from Antarctica's melting ice sheets. Yet this low-lying city on the Chesapeake Bay is one of the places most vulnerable to tidal flooding from rising sea levels in the U.S. As the climate heats up, in the most extreme scenario Norfolk and other East Coast communities can expect waters to climb as much as 11.5 feet—about 3.5 feet more than the global average—by 2100. This year the National Oceanic and Atmospheric Administration released a report aiming to help local governments such as Norfolk's get ready. It is the first analysis to break down vulnerability into one-degree chunks of latitude and longitude—about 70 miles across—for the entire U.S. coastline, and it lays out possible scenarios for average global sea-level rise from “low” (a rise of 0.3 meter, or about one foot) to “extreme” (2.5 meters, or about eight feet). It also accounts for local factors such as subsidence, or sinking land. In nearly all the scenarios, rises in the Northeast and the western Gulf of Mexico exceed the worldwide average. “We wanted to say, 'Listen, here are the main factors, and here's how they could affect you,' so that everyone has the best available data and the same models to use in the same manner across the coastline,” says NOAA oceanographer William Sweet, the report's lead author.To understand why the East Coast is particularly vulnerable, one has to look southward. Antarctica's ice sheets are melting faster than initial models predicted, and ocean currents sweep that water northward. Gravity is also to blame: Antarctica's tremendous mass exerts a huge pull on the oceans, extending all the way to the Atlantic—but as the continent loses ice, its grip will weaken, allowing that closely held water to flow toward the opposite pole. Melting mountain glaciers add more water, and higher global temperatures make the oceans warm and swell in a process called thermal expansion.So-called sunshine flooding—inundation without storms—now occurs in Norfolk as often as nine days a year, up from two days a year in the mid-1980s, the report says. City officials are employing everything from earthen dikes to water-permeable pavement to tame the rising waters. 

    Trump Calls Mayor of Shrinking Island, Says Don't Worry About Sea Level Rise - President Trump told the mayor of a small island experiencing rapid coastline loss to "not worry" about sea level rise . According to local outlet Delmarva Now , Trump placed the call to Tangier Island Mayor James "Ooker" Eskridge after seeing a CNN report on the endangered island, which overwhelmingly voted for him. "[Trump] said, 'Your island has been there for hundreds of years, and I believe your island will be there for hundreds more,'" the mayor reported. Tangier Island is losing around 15 feet of coastline per year, and the New York Times reported last year that experts estimate residents may only have 50 years left on the island before having to relocate. Here's an excerpt from the Times report:  There will be dozens of Miamis and thousands of Tangiers. "The Outer Banks, the Delmarva Peninsula, Long Island, the Jersey Shore—they're in the same boat," David Schulte, a marine biologist with the United States Army Corps of Engineers, said. "It's going to just take a little longer for them to get to where Tangier is now." An excruciating question is how we will decide which coastal communities to rescue and which to relinquish to the sea. But a number of other difficulties attend those decisions. How do we re-engineer the land, roads and neighborhoods of the places deemed worthy of salvation? How do we relocate residents whose homes can't (or won't) be saved? Also, there's the money problem.  A recent study, commissioned by the Risky Business Project, an initiative led by Henry Paulson, Michael Bloomberg and the hedge-fund billionaire and philanthropist Tom Steyer, concluded that as much as a half-trillion dollars' worth of coastal property in the United States could be under water by the end of the century. And that figure doesn't include the cost of further encroachments by flooding.

    Maryland Island Denies Sea Level Rise, Yet Wants to Stop It -- Stands of tall pines stick out like pale arboreal skeletons throughout the marsh on this island lashed by the Chesapeake Bay. The trees are dying farther and farther inland as salt water poisons the soil, an ominous sign that the rising sea is reclaiming this land. Some on the island and the peninsula that connects it to eastern Maryland can trace their ancestry back 300 years or more. But rising sea levels, connected to climate change as well as land sinking since the last ice age, have steadily consumed Deal Island as their kin are born and buried. Old-timers speak of plucking buckets of arrowheads from beaches that now lie underneath the bay. Scientists are concerned that the ghost forests are a sign that within the next generation or so, parts of the island will become uninhabitable. Much more, they say, could be subjected to flooding so frequent it would make living here almost impossible. Deal Island is on the front lines of climate change. Even under the rosiest scenarios, in which sea levels rise only 2 feet by 2100, much of the island will be underwater in a few generations. Rising global temperatures are expected to wipe out businesses, marinas and homes. Still, climate change isn’t a popular phrase here. Many of those whose families have scraped out a living, largely through the bay’s bounty of crabs and oysters, attribute the retreating ground to erosion, or “land loss.” “We have climate change four times a year. I’m concerned about erosion.” In some sense, Deal Island, a three-hour drive from Washington, is a microcosm of America today. This is Trump country, and many of those who live here are deeply rooted in Methodist faith, are politically conservative and are wary of outsiders or government restrictions on their way of life. And yet one relatively modest effort may offer a glimmer of hope for a divided country. The residents here need a climate policy that prepares their most vulnerable people for the flooded future that scientists say is on the way. It could happen within the lifetimes of these islanders, or some of them. 

    Scientists say the rapid sinking of Louisiana’s coast already counts as a ‘worst case scenario’ -- It’s common knowledge that the coast of Louisiana is quietly sinking into the balmy Gulf waters. But new research suggests we may have been underestimating how quickly it’s happening. A new paper, published Wednesday in the Geological Society of America’s bulletin GSA Today, includes an updated map of the Louisiana coastline and the rate at which it’s sinking into the sea, a process scientists call “subsidence,” which occurs in addition to the climate change-caused process of sea-level rise. The new map suggests that, on average, the Louisiana coast is sinking at a rate of about 9 millimeters, or just over a third of an inch, per year — a faster rate than previous studies have suggested, according to the authors. “I think it’s a point worth making that we are finding here that what people recently have considered worst case scenarios are actually conditions that we already see right now,” said Torbjörn Törnqvist, a geologist at Tulane University and a co-author on the new paper. Scientists have long known that Louisiana is sinking. Subsidence is believed to be a natural process, which has likely been occurring in the region for thousands of years. But scientists believe the process has been enhanced by a variety of human activities in the Mississippi Delta over the past century, including oil and gas extraction, as well as the building of levees and other actions affecting the flow of the Mississippi River, which carries mud and sediment down toward the Gulf and helped build up the delta in the first place.  The combination of subsidence and sea-level rise along the Gulf shore has made coastal Louisiana increasingly vulnerable to erosion in recent years. And in the future, as sea levels continue to rise, the problem is only expected to worsen along the Louisiana shore.

    Dem aims to block Trump properties from receiving federally subsidized flood insurance | TheHill: Legislation introduced in the House on Monday would prevent President Trump from receiving federally subsidized flood insurance, amid warnings that the effects of climate change could cause parts of his Mar-a-Lago resort and other south Florida properties to be underwater in coming years. The bill from Rep. Earl Blumenauer (D-Ore.) — titled the Prohibiting Aid for Recipients Ignoring Science (PARIS) Act — would ensure properties owned by a president or a president's family members can’t have access to subsidized insurance from the National Flood Insurance Program. An analysis by Coastal Risk Consulting found that the Mar-a-Lago grounds in Palm Beach, Fla., could be under at least a foot of water for 210 days a year because of tidal flooding. And it’s not just Mar-a-Lago, where Trump spent many weekends this past winter after taking office in January, that might be affected by rising sea levels resulting from climate change. Trump’s oceanfront condos in Miami and his Doral golf course would also be threatened, according to projections by the National Oceanic and Atmospheric Administration and the South Florida Regional Climate Change Compact. Blumenauer wants to make Trump feel the potential effects of his withdrawal from the Paris climate accord, which made the U.S. one of only three countries in the world to abstain and drew anger from key longstanding allies. The Trump administration also refused to sign onto parts of a Group of Seven declaration regarding climate change in light of the decision to leave the Paris pact. “The American people should not be responsible for bailing out leaders who ignore science to gain political points, while subjecting the United States — and the rest of the world — to the catastrophic effects of climate change,” Blumenauer said in a statement. “Trump may choose to reject science, but he can’t ignore the impacts — especially as they happen in his own backyard.” 

    U.S. Quietly Removes 17 Sites From UN Biosphere Reserve Network --The U.S. has quietly withdrawn 17 sites from the UNESCO World Network of Biosphere Reserves program.  As first reported by National Geographic , the sites include a number of national forests, preserves and reserves from Alaska to the Virgin Islands (see list below). There were previously 47 biosphere reserves in the U.S.  The move was made during the International Coordinating Council of the Man and the Biosphere Programme meeting in Paris this week. Bulgaria also removed three sites.  "It's not currently clear why the U.S. and Bulgaria asked to remove those sites: requests for comment have not yet been returned. In the past, sites were removed after countries were no longer able to meet the requirements of the program for protecting them." According to the United Nations, biosphere reserves are nominated by national governments and remain under the sovereign jurisdiction of the states where they are located. As detailed by the conservation nonprofit George Wright Society , the biosphere program was launched in the 1970s to establish internationally designated protected areas, help minimize the loss of biological diversity, raise awareness on how cultural diversity and biological diversity are intertwined, and promote environmental sustainability. But over the years, the program has been criticized by certain individuals and groups as—per this Infowars post—a United Nations "land grab" of American landmarks. As the George Wright Society writes:  "A large, almost bewildering variety of charges have been alleged about biosphere reserves. Many of these charges revolve around a basic fear and distrust of the United Nations. This category of objections includes such claims as the United Nations is poised to invade the United States, confiscate American land, impose some kind of 'new world order' on citizens here, and so forth. There is no truth whatsoever to these charges."

    The three-minute story of 800,000 years of climate change with a sting in the tail -- There are those who say the climate has always changed, and that carbon dioxide levels have always fluctuated. That’s true. But it’s also true that since the industrial revolution, CO₂levels in the atmosphere have climbed to levels that are unprecedented over hundreds of millennia. So here’s a short video we made, to put recent climate change and carbon dioxide emissions into the context of the past 800,000 years.  Earth has a natural greenhouse effect, and it is really important. Without it, the average temperature on the surface of the planet would be about -18℃ and human life would not exist. Carbon dioxide (CO₂) is one of the gases in our atmosphere that traps heat and makes the planet habitable. We have known about the greenhouse effect for well over a century. About 150 years ago, a physicist called John Tyndall used laboratory experiments to demonstrate the greenhouse properties of CO₂gas. Then, in the late 1800s, the Swedish chemist Svante Arrhenius first calculated the greenhouse effect of CO₂in our atmosphere and linked it to past ice ages on our planet.  Modern scientists and engineers have explored these links in intricate detail in recent decades, by drilling into the ice sheets that cover Antarctica and Greenland. Thousands of years of snow have compressed into thick slabs of ice. The resulting ice cores can be more than 3km long and extend back a staggering 800,000 years. Scientists use the chemistry of the water molecules in the ice layers to see how the temperature has varied through the millennia. These ice layers also trap tiny bubbles from the ancient atmosphere, allowing us to measure prehistoric CO₂levels directly.The ice cores reveal an incredibly tight connection between temperature and greenhouse gas levels through the ice age cycles, thus proving the concepts put forward by Arrhenius more than a century ago. In previous warm periods, it was not a CO₂spike that kickstarted the warming, but small and predictable wobbles in Earth’s rotation and orbit around the Sun. CO₂ played a big role as a natural amplifier of the small climate shifts initiated by these wobbles. As the planet began to cool, more CO₂ dissolved into the oceans, reducing the greenhouse effect and causing more cooling. Similarly, CO₂was released from the oceans to the atmosphere when the planet warmed, driving further warming. But things are very different this time around. Humans are responsible for adding huge quantities of extra CO₂ to the atmosphere – and fast.The speed at which CO₂ is rising has no comparison in the recorded past. The fastest natural shifts out of ice ages saw CO₂levels increase by around 35 parts per million (ppm) in 1,000 years. It might be hard to believe, but humans have emitted the equivalent amount in just the last 17 years.

     Avoiding Two Degrees of Warming 'Is Now Totally Unrealistic' -- Michael Oppenheimer has been thinking about climate change about as long as most Americans have been alive. For almost four decades, he has worked on answering the phenomenon’s two most pressing questions: How dangerous will climate change get? And what can humanity do about it? So after President Donald Trump announced his decision to withdraw from the Paris Agreement on Thursday, Oppenheimer was one of the experts I most wanted to hear from. It helps that Oppenheimer, a Princeton professor since 2002, has worked on or in some of the most important environmental programs of the modern era. He is currently a coordinating lead author of the UN Intergovernmental Panel on Climate Change, and he edits the journal Climatic Change. From 1981 to 1996, he worked as the senior scientist at the Environmental Defense Fund, where he helped frame the 1990 amendments to the Clean Air Act that reduced acid rain. Along with other scientists, he lobbied the United States to start negotiating the UN Framework Convention on Climate Change, which President George H.W. Bush signed 25 years ago this week. Since then, he has attended the major UN climate negotiations, including Paris in 2015.I spoke to him on Friday about his outlook for climate treaties looking forward, Trump’s ability to roll back older climate policies, and whether the U.S. withdrawal from Paris could make global warming significantly worse. Our conversation has been edited for concision and clarity.

    Stunning Photos of the Arctic Circle As It Literally Melts Away  --Artist and photographer Diane Tuft, whose work is included in the permanent collection of the Whitney Museum, the International Center of Photography in New York City, and the Parrish Art Museum in Water Mill, New York, has focused her life’s work on traveling to remote areas to record environmental changes on the Earth’s landscape. Her first monograph, UNSEEN: Beyond the Visible Spectrum, was a collection of 10 years’ worth of photographs from the American West, Nepal, North Africa, and Iceland. She spent six weeks on the continent of Antarctica for her second book, Gondwana: Images of an Ancient Land. Her latest, The Arctic Melt: Images of a Disappearing Landscape (Assouline), brings her back to the Arctic Circle, where her unconventional landscape photography turns frozen tundra and ice from the North Pole, Norway, and Greenland into a staggering record of beauty and loss.

    Scientists stunned by Antarctic rainfall and a melt area bigger than Texas - Scientists have documented a recent, massive melt event on the surface of highly vulnerable West Antarctica that, they fear, could be a harbinger of future events as the planet continues to warm. In the Antarctic summer of 2016, the surface of the Ross Ice Shelf, the largest floating ice platform on Earth, developed a sheet of meltwater that lasted for as long as 15 days in some places. The total area affected by melt was 300,000 square miles, or larger than the state of Texas, the scientists report. That’s bad news because surface melting could work hand in hand with an already documented trend of ocean-driven melting to compromise West Antarctica, which contains over 10 feet of potential sea level rise. “It provides us with a possible glimpse of the future,” said David Bromwich, an Antarctic expert at Ohio State University and one of the study’s authors. The paper appeared in Nature Communications. “You probably have read these analyses of West Antarctica, many people think it’s slowly disintegrating right now, and it’s mostly thought to be from the warm water eating away at the bottom of critical ice shelves,” Bromwich continued. “Well, that’s today. In the future, we could see action at the surface of these ice shelves as well from surface melting. So that makes them potentially much more unstable.” 

    Animation shows huge crack growing in Antarctica’s Larsen C ice shelf – snap off in days to weeks - A block of ice about the size of Delaware could break off of Antarctica "within days," researchers suggest. And a new animation shows just how close the humongous iceberg is to calving. Antarctica's Larsen C ice shelf — one of the largest such shelves in the southern continent — began developing the crack in 2010. That rift lengthened and widened over the years, but has grown most rapidly since 2016. In early June, new satellite images showed the rift had split, turned north, and begun moving toward the Southern Ocean. Now Adrian Luckman of Swansea University in the UK, who is closely monitoring Larsen C with his colleagues, has released a new animation of the rift's rapid growth. "Waiting for the final [jump]!" Luckman said in a tweet about the video on June 16. The images reveal how the rift "jumps" as it slices through bands of weak ice, slows when it hits denser ice, and speeds up again when it encounters more weak ice. In the animation, the ocean is shown in emerald green (top right), the Larsen C ice shelf is the light blue patch, and the glacier behind it is white. It's impossible to say precisely when the rift will snap the ice off, but Dan McGrath, a scientist with the US Geological Survey, thinks it won't be long."I would expect it to occur quite rapidly, within days or weeks," McGrath, who researches Larsen C, told Reuters on June 1. The ice block makes up about 10% of Larsen C's total area.According to Luckman and his Swansea colleague Martin O'Leary, the crack lengthened 11 miles from May 25 to May 31. They also noted that the rift only has to extend through 8 more miles of ice for it to birth a colossal iceberg."The rift tip appears also to have turned significantly towards the ice front, indicating that the time of calving is probably very close,"

    Exxon fights ‘reckless and false’ climate charge by New York AG | TheHill: Exxon Mobil Corp. fought back against New York’s attorney general in court Friday, calling his allegations of “sham” climate change accounting “reckless and false.” A brief filed in a New York state court repeatedly accuses Attorney General Eric Schneiderman (D) of “pandering,” saying that his office gave reporters the briefing before filing it, showing the political motivation behind the ongoing case. “Filled with inflammatory, reckless, and false allegations of an ‘ongoing fraudulent scheme’ and ‘sham’ business practices, the attorney general’s brief was filed with this court minutes before detailed press accounts appeared describing his baseless claims,” Exxon attorneys wrote. “No further evidence is required to establish the political motivation of the attorney general’s fruitless year-and-a-half long investigation pursuing his ever-shifting and unraveling investigative theories,” they said. Schneiderman has been investigating since 2015 whether Exxon misled the public and investors about what it knew about climate change and its effects on the company’s bottom line. Exxon has been fighting to stop the investigation, saying that the attorney general has improper political motives and the company has done nothing wrong.

    Trump Administration Seeks 'Drastic Remedy' to Derail Kids Climate Lawsuit -- The Trump administration filed a writ of mandamus petition with the Ninth Circuit Court of Appeals Friday, seeking an extraordinarily rare review of a Nov. 10, 2016 decision by U.S. District Court Judge Ann Aiken to deny its motion to dismiss Juliana v. United States . Further, the Trump administration is seeking "a stay of proceedings in the district court" while the Ninth Circuit considers its petition. The Trump administration argues the Ninth Circuit should "exercise its supervisory mandamus powers to end this clearly improper attempt to have the judiciary decide important questions of energy and environmental policy to the exclusion of the elected branches of government." The U.S. Constitution provides for three separate but equal branches of government, with no exception for energy and environmental policy. Douglas A. Kysar , the Joseph M. Field '55 Professor of Law at Yale Law School who is not connected with the litigation, but recently co-authored Courting Disaster: Climate Change and the Adjudication of Catastrophe , said:  "Writs of mandamus are reserved for the most extraordinary and compelling situations in which ordinary rules of appellate procedure must be overridden to avoid a manifest injustice. For the Trump Justice Department to even seek a writ of mandamus in the current context is offensive to Judge Aiken, to the entire federal judiciary, and, indeed, to the rule of law itself. The writ should not be granted and we should all question why the Trump administration's lawyers are willing to try such a trick rather than forthrightly defend the case. "When the Framers divided power within the government, they did it so that the branches could not only check and balance each other, but also poke and prod when necessary. The Juliana litigation is a powerful poke and prod to the entire federal government on the question of climate responsibility. In that sense, Juliana might well be the most important lawsuit on the planet right now and the government knows it. That's why Trump's lawyers are so desperate to avoid an honest fight."

    Trump’s Climate-Change Sociopathy -- Jeffry D Sachs– President Donald Trump’s withdrawal of the United States from the Paris climate agreement is not just dangerous for the world; it is also sociopathic. Without remorse, Trump is willfully inflicting harm on others. The declaration by Nikki Haley, the US ambassador to the United Nations, that Trump believes in climate change makes matters worse, not better. Trump is knowingly and brazenly jeopardizing the planet.  Trump’s announcement was made with a bully’s bravado. A global agreement that is symmetric in all ways, across all countries of the world, is somehow a trick, he huffed, an anti-American plot. The rest of the world has been “laughing at us.”  These ravings are utterly delusional, deeply cynical, or profoundly ignorant. Probably all three. And they should be recognized as such.  Trump’s announcement was rooted in two profoundly destructive developments. The first is the corruption of the US political system. Trump’s announcement was not really his alone. It reflected the will of the Republican leadership in Congress, including the 22 Republican senators who sent Trump a letter the week before, calling on him to withdraw from the Paris accord.  These senators, and their counterparts in the House of Representatives, are on the take of the oil and gas industry, which spent $100 million on campaign contributions in 2016, of which 90% went to Republican candidates. (In fact, the total was almost certainly far above $100 million, but much is untraceable.) The second destructive development is the twisted mindset of Trump and his closest advisers. Their view, defended with “alternative facts” that have no basis in reality, is paranoid and malevolent, aimed at inflicting harm on others, or at best indifferent to harm befalling others.

    Trump wages battle against regulations, not climate change | PBS — While President Donald Trump’s beliefs about global warming remain something of a mystery, his actions make one thing clear: He doesn’t consider it a problem for the federal government to solve. Trump’s recent decision to pull out of the Paris climate deal was just his latest rapid-fire move to weaken or dismantle federal initiatives to reduce carbon emissions, which scientists say are heating the planet to levels that could have disastrous consequences. Trump is waging war against efforts to curb U.S. dependence on fossil fuels. He’s done that through executive orders targeting climate change programs and regulations, massive proposed spending cuts and key appointments such as Scott Pruitt as chief of the Environmental Protection Agency. To what degree Trump will succeed remains to be seen. Despite the fanfare of his Paris announcement, including a pledge that his administration will halt all work on it, formally removing the U.S. from the accord could take more than three years. Rescinding the Clean Power Plan, President Barack Obama’s signature measure to curb emissions from coal-fired power plants, likely would require three years. Trump’s budget, which would slash funding for climate research and assistance to cities preparing for weather-related calamities, needs approval from Congress, where resistance is strong. Still, the sharp change in course is being felt in ways large and small, down to the scrubbing of climate change information from federal agency websites.

    Macron Trolls Trump With 'Make Our Planet Great Again' Recruiting Site | HuffPost: French President Emmanuel Macron is zinging U.S. President Donald Trump again for pulling out of the Paris climate accord. Now he has launched a Make Our Planet Great Again website aimed at openly recruiting scientists and others to come to France to join the battle against climate change.The effort is, again, in English, and tailor-made for environmental scientists and engineers in the U.S. who are “faced with the climatic skepticism of the new American government.” The site seems to be Step 2 in Macron’s apparently serious offer June 1 inviting environmentalists and “responsible citizens” to move from America to work in France.The site begins with a message from Macron. “Our job: To help you come work with us on our common challenges. Our commitment is ancient: France has always been a leader in the advancement of human rights and has left its mark in our common history. Our new challenge? Climate change.” He adds: “France is becoming an innovative hub of science, technology and progress. You may know our research hubs, such as La Sorbonne or Paris-Saclay. These are the places you have to come work in to develop new initiatives for our planet.” The website is a “concrete tool to enable and facilitate the arrival of every committed citizen,” the message adds. Here “you can find all the answers to the questions you have about how to complete your project.”  pic.twitter.com/3g5LYO9Osj — Emmanuel Macron (@EmmanuelMacron) June 1, 2017 The French welcome to immigrant scientists is a very different approach from the Trump administration’s strategy. Travel restrictions and immigration crackdowns have become so severe in the U.S. that corporate leaders, particularly in Silicon Valley, have warned that the brightest brains on the planet will be fleeing to other nations to the detriment of the U.S. economy. 

    EPA Chief Ducks Out of G7 Climate Meeting More Than A Day Early --The U.S. Environmental Protection Agency chief Scott Pruitt ducked out of a meeting of Group of Seven environment ministers in Italy early on Sunday, leaving after only a few hours to return to Washington, DC.  The Trump administration's decision to pull out of Paris earlier this month created a significant rift between the U.S. and its allies in the G7, and other environment ministers and diplomats were strong in voicing disappointment of and resistance to the U.S. position.  The ministers are expected to issue a communique today, and German environment minister Barbara Hendricks emphasized it will "differentiate opinions" between the U.S. and the G6. World leaders, including German Chancellor Angela Merkel and Canadian Prime Minister Justin Trudeau, are grappling with how best to handle Trump's rejection of the Paris agreement ahead of the G20 summit next month.  As reported by Bloomberg, Erik Solheim, executive director of the United Nations Environment Program, commented in Bologna:  "We are all looking for American leadership. We need American leadership on climate, trade and peace. If the White House is not providing that leadership, we will find that leadership in other places. Europe is now more united than ever."

     U.S. left as 'footnote' in G7 climate talks  (Reuters) - Rifts between the United States and its leading industrial allies over climate change deepened on Monday when Washington refused to subscribe fully to a Group of Seven statement on the environment. The U.S. said it would not sign up to a pledge by Italy, Canada, Japan, France, Britain and Germany which called the 2015 Paris agreement on climate change "irreversible" and key for the "security and prosperity of our planet". As a consequence, Washington formally refused to back multilateral development banks -- bodies designed to finance poorer nations and help them reduce their pollution emissions. U.S. President Donald Trump pulled out of the Paris deal earlier this month and the U.S. position was laid out in a brief note at the bottom of a general communique following a meeting of G7 environment ministers in this northern Italian city. "The U.S. is now left as a footnote to climate action and that's very sad," said Canadian Environment Minister Catherine McKenna. "Everyone expressed their deep disappointment with the U.S. decision," she said. The head of the U.S. Environmental Protection Agency, Scott Pruitt, only attended the first day of the meeting on Sunday, held as an early summer heatwave settled over Italy, before flying back to Washington. In a statement on Monday, he defended the U.S. position. "We are resetting the dialogue to say Paris is not the only way forward to making progress," he wrote.

    Angela Merkel’s Anti-Trump Alliance Crumbling ahead of G-20 - Spiegel  -  The German chancellor had been hoping to isolate Donald Trump on climate issues at the upcoming G-20 summit in Hamburg. But Merkel's hoped-for alliance is crumbling, underscoring Germany's relative political weakness globally. Many countries are wary of angering the United States. German Chancellor Angela Merkel had actually thought that Canada's young, charismatic prime minister, Justin Trudeau, could be counted among her reliable partners. Particularly when it came to climate policy. Just two weeks ago, at the G-7 summit in Sicily, he had thrown his support behind Germany. When Merkel took a confrontational approach to U.S. President Donald Trump, Trudeau was at her side. But by Tuesday evening, things had changed. At 8 p.m., Merkel called Trudeau to talk about how to proceed following Trump's announced withdrawal from the Paris climate agreement. To her surprise, the Canadian prime minister was no longer on the attack. He had switched to appeasement instead.What would be wrong with simply striking all mentions of the Paris Agreement from the planned G-20 statement on climate, Trudeau asked. He suggested simply limiting the statement to energy issues, something that Trump would likely support as well. Trudeau had apparently changed his approach to Trump and seemed concerned about further provoking his powerful neighbor to the south. The telephone call made it clear to Merkel that her strategy for the G-20 summit in early July might fail. The chancellor had intended to clearly isolate the United States. at the Hamburg meeting, hoping that 19 G-20 countries would underline their commitment to the Paris Agreement and make Trump a bogeyman of world history.  Led by the Italian G-7 presidency, the plan had been for a joint reaction to Trump's withdrawal, an affirmation from the remaining six leading industrial nations: We remain loyal to Paris.  Suddenly, though, Britain and Japan no longer wanted to be part of it. British Prime Minister Theresa May didn't want to damage relations with Trump, since she would need him in the event of a hard Brexit, the Chancellery surmised last week. And given the tensions with North Korea, Japanese Prime Minister Shinzo Abe couldn't put his country's alliance with the U.S. at risk. In other words: Climate policy is great, but when it comes to national interests, it is secondary.

    Defying Trump, EU Parliament backs Paris climate goals | Reuters: The European Parliament backed curbs on EU states' emissions on Wednesday to share the burden of the bloc's Paris climate goals and forge ahead despite President Donald Trump's decision to pull the United States out of the 195-nation pact. It voted 534 to 88 in favor of binding national targets for slashing greenhouse gas emissions in sectors including transport, agriculture and waste management to achieve the bloc's overall goal of emissions at least 40 percent below 1990 levels by 2030. Taking the floor ahead of the vote, EU politicians reiterated disappointment over Trump's decision and rejected his call to renegotiate what he called the "draconian" economic costs of a deal they pledged to implement without Washington. "The refusal of the US to commit to the Paris agreement will push the rest of the world to be even more united against climate change," European Commission President Jean-Claude Juncker told the parliament. In months of tough talks, deputies sought a compromise between ambitious climate measures and concerns among the bloc's 28-member states over the economic strain of the requisite shift to low-carbon technology in big employment sectors. Environment campaigners hailed the draft law's call for a more ambitious baseline for calculating emission-reduction targets than that proposed by the European Commission, the EU executive. However, the parliament voted against a proposal to decrease the amount of credits from well-managed forests, which absorb carbon dioxide, that may be used to offset emissions. It also included measures to support lower-income EU member states.

    How Trump could slow climate change projects around the world  - Much of the fallout from President Trump's withdrawal from the Paris Agreement has centered on the symbolism of losing the world's largest economy and second largest emitter of greenhouse gas emissions as a leader in the fight against climate change. Now, scientists, advocates and officials around the world are becoming increasingly concerned about the tangible effects it will have on the rest of the globe. In addition to pulling out of Paris, which will not take effect until 2020, Trump has reneged on $2 billion in unpaid commitments to the Green Climate Fund (GCF), which was created in advance of the Paris Agreement to support projects to address climate change in the developing world. Climate finance experts fear it could be a sign of further cuts to other programs that depend on American resources."There’s a whole slew of things where the U.S. has become such an important supporter of other countries," says Rachel Kyte, CEO of United Nations-backed initiative Sustainable Energy for All and former World Bank climate envoy. "Certainly there will be cuts. Exactly where the cuts call will be is something we don’t know." Two billion dollars may sound small in the scheme of international development, but climate finance experts say such a commitment goes further than meets the eye. Much of the money would have been used to help build basic infrastructure necessary to develop clean energy sources. Other funding would have supported the development of markets to catalyze private investment. And, because many of the GCF investments pay returns, money given to the fund would help pay for more than one project. In total, developed countries committed to send $100 billion annually in financing to the developing world by 2020. The end of U.S. financial support—and the private investment it sparks—could threaten that goal.

    Naomi Klein: No Is Not Enough - Shocking. Abnormal. Unprecedented. And, in the end, horror. These are just some of the words used to describe the Trump presidency since he took office. And with each passing day in the Trump administration, each new statement, tweet or piece of legislation, many people feel that these Trump-ian antics are unlike anything seen before.  But author and award-winning journalist Naomi Klein disagrees: We have seen this before.  Speaking to a crowded hall on June 12 at the Cooper Union in New York City, Klein discussed the events contributing to Trump's rise, the future of the progressive movement and the "shocks" that are lying in the wake of Trump's policies. The event was also held to promote Klein's new book, No Is Not Enough: Resisting Trump's Shock Politics and Winning the World We Need .  Much of Klein's talk centered around the theory she presents in her 2008 book The Shock Doctrine , but she also differentiated Trump's policies as a different form of shock. And while most media coverage of the White House portrays his administration as a chaotic mess, Klein argued that the media ends up missing the more diabolical policy movements behind the curtain that are "shock-creation machines"—such as the removal of Dodd-Frank and the pulling out from the Paris climate agreement .  "This narrative has emerged that he's this bumbling idiot, that it's all chaos," she said. "And meanwhile, behind the scenes, getting very little media attention is a methodical, very organized redistribution of wealth from lower and middle incomes to the one percent of the one percent."

    Full Interview: Naomi Klein on "No Is Not Enough: Resisting Trump's Shock Politics" - Democracy Now! interview and transcript - Full interview with Naomi Klein about her book, "No Is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need."

    Pruitt Names Lawyer Who Defended Kochs Industries as a Top EPA Law Enforcer -- U.S. Environmental Protection Agency ( EPA ) Administrator Scott Pruitt may have skipped the G7 climate meeting more than a day early , but he has certainly kept busy staffing his agency. POLITICO reported that Pruitt has named energy industry attorney Patrick Traylor as a deputy in the Office of Enforcement and Compliance Assurance . The office, which the Trump administration reportedly tried to cut , enforces key anti-pollution laws such as the Clean Air Act and the Clean Water Act to protect the environment and vulnerable communities. Traylor, whose LinkedIn profile indicates he started the job in June, was a longtime partner of the international law firm Hogan Lovells and has represented companies owned by the Koch brothers and other energy industry giants. Per POLITICO, "clients include utility Southern California Edison; Venture Global LNG, a natural gas exporter; Flint Hills Resources, a Koch subsidiary refiner; Koch Nitrogen, maker of synthetic fertilizer; and several wind companies seeking Endangered Species Act permits." Traylor has also defended Dominion Energy and TransCanada , as New York Times reporter Eric Lipton tweeted . Dominion is behind the highly contested Atlantic Coast Pipeline and TransCanada's is responsible for the Keystone XL .

    Pruitt Moves to Politicize Superfund Cleanups  - The Trump-appointed head of the U.S. Environmental Protection Agency has moved to take personal control of all major toxic cleanup operations under the Superfund program, according to an agency memo posted today by Public Employees for Environmental Responsibility (PEER). This new arrangement allows him to bypass staff experts and confer one-side benefits on corporate polluters. The May 22, 2017 memo by EPA Administrator Scott Pruitt directs that all decisionmaking on Superfund cleanups “estimated to cost $50 million or more at sites shall be retained by the Administrator” – meaning that Pruitt is taking direct charge of all decisionmaking in these cases. In addition to new cases, Pruitt will oversee all existing major cases “throughout the process” in order to develop “alternatives” to current cleanups. In one of his first acts under this memo, Pruitt last week tabled a 2016 order that General Electric Co. spend $613 million to complete removal of toxic PCBs (polychlorinated biphenyl) the company discharged into the Housatonic River in Western Massachusetts. Pruitt is now inviting GE to negotiate a new compromise for handling the massive contamination caused by its Pittsfield transformer factory. “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, pointing out 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.”  While the next stage of the GE case is unclear, the Pruitt memo does make clear that he wants to reduce “the level of agency oversight” and spur “faster cleanups” by taking steps to, among other things –

    • “Streamline” how contaminated sediment (often an expensive aspect of remediation) is treated;
    • Employ “non-traditional approaches for financing site cleanup”; and
    • “Reduce the …costs and burdens borne by parties remediating contaminated sites.”

     Trump Wants to Cut EPA’s Scientific Research in Half –  President Donald Trump’s budget proposal would slash the Environmental Protection Agency’s scientific research programs by nearly half, according to a new report prepared by former EPA staffers. The newly formed Environmental Protection Network is a coalition made up of retired employees from Republican and Democratic administrations, many of whom have had decades of experience running the day-to-day work at the agency. And on Monday, this group of lawyers, scientists, and policy wonks released an analysis of the White House budget ahead of congressional testimony that EPA Administrator Scott Pruitt is set to deliver on Thursday. The hearing will be the first time that Pruitt will have to defend the dramatic cuts the administration has proposed for the agency. Science is supposed to be the basis for nearly everything the EPA does. For example, the Clean Air Act requires the agency to propose and enforce air, water, and climate regulations that adhere to the best available science. Under that law, the EPA found that climate change endangers human health and enacted the Obama administration’s signature regulations on carbon emissions—regulations that the Trump administration is working to undo. So what if science initiatives are severely underfunded? For the EPA, carrying out even its basic functions will become much more difficult.Trump’s budget slashes the EPA’s main science programs by 47 percent, according to the former staffers’ analysis. “This area would be the most severely cut, contrary to verbiage in the Budget document acknowledging the important role of science in carrying out EPA’s regulatory, permitting and enforcement responsibilities,” says the report. “The damage is not only to EPA but to scientists across the country.” 

    EPA head defends White House’s plan for massive cuts to his agency -- President Trump once vowed to get rid of the Environmental Protection Agency “in almost every form,” leaving behind only “tidbits.” On Thursday, the man he appointed to lead the EPA went to Capitol Hill to defend a budget proposal that would begin that promised dismantling. “I believe we can fulfill the mission of our agency with a trimmed budget, with proper leadership and management,” EPA Administrator Scott Pruitt told members of a House Appropriations subcommittee, adding in his prepared remarks that the Trump administration’s proposal “supports EPA’s highest priorities” while aiming “to reduce redundancies and inefficiencies.”The “trimmed” budget he referenced would amount to a cut of more than 31 percent, or $2.4 billion annually — a larger percentage than at any other federal agency. The administration wants to rid the EPA of thousands of employees and sharply reduce or eliminate a variety of national and regional programs.Pruitt encountered swift resistance Thursday from members of both parties, who described the EPA’s work in their districts as both vital to environmental protection and an economic engine in many areas. “I’ll get straight to it. The fiscal year 2018 budget request for EPA is a disaster,” said Rep. Nita M. Lowey (D-N.Y.), adding that it would “surely impact EPA’s ability to fulfill its critical mission of protecting the air we breathe and the water we drink.”The subcommittee’s chairman, Rep. Ken Calvert (Calif.), and several other Republicans also were quick to distance themselves from many of the administration’s proposals, saying Congress is unlikely to go along with such deep — and deeply unpopular — cuts to environmental programs around the country.

    Trump's environment rollbacks won't stick, Obama's EPA head says -  President Donald Trump’s moves to roll back Obama-era environmental and climate regulations won’t stick, according to his predecessor’s environmental chief. Neither the science nor the law is on Trump’s side as the administration moves to repeal rules governing water pollution, carbon-dioxide emissions from power plants and methane leaks from oil and gas wells, said Gina McCarthy, who led the Environmental Protection Agency for nearly four years under former President Barack Obama. "I don’t think this administration understands how to do a rule in a robust way," McCarthy said in a meeting with Bloomberg News reporters and editors in Washington. "Nothing that they do here is going to stand up to science scrutiny or legal scrutiny." Her successor, EPA Administrator Scott Pruitt, is moving to reorient the agency by getting rid of a series of rules without offering a replacements. That approach might not survive in the courts -- and could lead to a reversal under the next administration."I don’t think they’ve shown themselves to be particularly enamored with the laws that they are required to implement," McCarthy said. "This administration is going so far to one side that it will spring back."  McCarthy’s comments come as Trump and Pruitt prepare rules delaying or reversing a suite of regulations. On Tuesday, the EPA proposed a two-year delay in Obama-era mandates governing methane emissions from oil and gas wells. The agency also delayed enforcement of a rule forcing refiners and chemical plants to better manage risks to avoid explosions or terrorist attacks. And the White House Office of Management and Budget is reviewing an EPA plan to repeal Obama’s Clean Power Plan, his signature effort to pare greenhouse gas emissions from the electricity sector.

     U.S. Interior chief recommends shrinking Utah's Bears Ears monument | Reuters: U.S. Interior Secretary Ryan Zinke said on Monday he has recommended that President Donald Trump reduce the size of the Bears Ears National Monument in Utah - a move that drew quick fire from conservationists but was supported by mining and drilling interests. The 1.35 million acre (5,463 square kms) area, designated by former President Barack Obama during his final days in office and named for its iconic twin buttes, is the first of 27 national monuments to be reviewed by the Trump administration as part of a plan to increase development on federal lands. "My job is to make sure that I ... reflect the concerns of Utah, and reflect the concerns of the taxpayers and the public who own the lands, and I think we've done that," Zinke told reporters in a teleconference about his interim recommendation sent to Trump on Saturday. Zinke toured Utah for four days before making the recommendation. His report said that the Antiquities Act, used by past presidents to declare monuments, should cover the "smallest area compatible" with protecting important sites. "Therefore... the Secretary of the Interior recommends that the existing boundary of the (Bears Ears) be modified to be consistent with the intent of the act." Rather than designating a vast monument, as Obama did, "it would have been more appropriate to identify and separate the areas that have significant objects to be protected to meet the purposes of the Act," Zinke's report said. More study is necessary to determine how much smaller Bears Ears should be, Zinke said, and that decision will not be made until all of the 27 monuments are reviewed.

    Trump administration to delay another Obama-era methane rule - The Trump administration will postpone industry compliance with an Obama-era rule limiting methane emissions from oil and gas wells on federal lands. An effort by congressional Republicans to repeal the methane rule failed in the Senate by one vote on May 10. The methane rule, which was finalized in November by the Interior Department's Bureau of Land Management, was challenged in court by several states and oil and gas industry groups. In a notice to be published Thursday in the Federal Register, the BLM said certain portions of the rule will be postponed until the legal challenges are resolved. "While the BLM believes the [methane rule] was properly promulgated, the petitioners have raised serious questions concerning the validity of certain provisions of the rule," the agency said in its notice. "Given this legal uncertainty, operators should not be required to expend substantial time and resources to comply with regulatory requirements that may prove short-lived as a result of pending litigation or the administrative review that is already under way." The announcement was criticized by environmental groups and congressional Democrats. "Once again, Donald Trump and [Interior Secretary] Ryan Zinke are showing where their priorities lie: the profits of corporate polluters above all else, including the health of our communities," said Lena Moffitt, a senior director with the Sierra Club. "BLM's methane rule would protect our public lands and communities, and it has already withstood legal challenges and an attempted repeal in Congress."

    Donald Trump is handing the federal government over to fossil fuel interests - They didn’t give him much money during his campaign, presumably because, like most people, they were confident he wouldn’t win. But they made up for it quickly after the election. According to an analysis by the Center for Public Integrity, “oil, gas and coal companies and executives contributed more than $1 out of every $10 raised for Trump’s inauguration, for which he raised nearly $107 million overall” (a new record). The love affair between Trump and fossil fuel companies has blossomed ever since. Recently, Kathleen Sgamma, president of the oil and gas trade group Western Energy Alliance, gushed to the New York Times, “not in our wildest dreams, never did we expect to get everything.”“Everything,” in this case, denotes a long list of friendly appointments and regulatory rollbacks. For all its controversies, distractions, failures, and unfilled jobs, the Trump administration has been steady and true in its devotion to fossil fuel interests, giving them a greater presence inside executive agencies, stripping them of regulatory restraints, and proposing to defund their competitors.  There are some areas of policy where Trump faces friction from courts, Congress, or other elements of the conservative coalition. He has stumbled on health care, on his travel ban, and on foreign policy. But when it comes to environmental and energy policy, the coalition is aligned. All the party’s most powerful and influential factions support a pro-fossil, anti-regulatory agenda; there is an extensive infrastructure of big money, think tanks, and lobbyists built to support it.

    Energy Department aims to close international clean energy office | TheHill: The Energy Department (DOE) has shuttered its office that focuses on developing clean energy technology internationally. An agency spokesperson said DOE is “looking for ways to consolidate the many duplicative programs that currently exist within DOE,” and that the Office of International Climate and Technology would close. The New York Times first reported the closing on Thursday. The Times reports employees were told earlier this month that their positions were being eliminated. The office — consisting of 11 workers — opened in 2010 as a way for the U.S. to work with international allies on energy sector technology to reduce greenhouse gases. Employees in the office work with international partners on the Clean Energy Ministerial, an annual gathering of high-polluting nations that focuses on greening the energy sector. DOE spokeswoman Shaylyn Hynes said other offices within the department have international teams that could shoulder the work of the closed office. “The Office of Energy Efficiency and Renewable Energy (EERE) has an International Affairs team, while the International Affairs Office has a renewables team,” she said. “The Department is looking for ways to eliminate this kind of unnecessary duplication — just like any responsible American business would.” 

    Resist 45: NY And CA Attorneys General Sue Trump Admin Over Energy Efficiency Standards -- With the Trump-Russia collusion narrative suffering a setback from Comey's testimony last week, the 'Resist 45' movement is branching out, full steam, with a series of lawsuits from Attorneys General from all over the country this week. Yesterday we noted that the attorneys general of Maryland and the District of Columbia filed a lawsuit alleging that foreign payments to President Trump's hotelsfrom visiting world leaders violated the emoluments clause of the U.S. constitution (see "Maryland, D.C. Attorney Generals To File Lawsuit Against Trump").  Now, a coalition of 11 AGs' from around the country, led by the supremely impartial Eric Schneiderman of New York and Xavier Becerra of California, have filed yet another lawsuit alleging that the Trump administration violated the law by obstructing the implementation of energy efficiency standards that targeted consumer and commercial appliances.  New York AG Schneiderman posted the following message to his twitter account: Coalition Of 11 AGs Argue That Trump Administration Violated The Law By Obstructing Implementation Of Energy Efficiency Standards For Common Consumer And Commercial Appliances Over Time, Standards Would Save Consumers And Businesses Approximately $12 Billion, Provide Energy Savings Equivalent To The Annual Electricity Consumption Of Over 19 Million Households, Eliminate Millions Of Tons Of Air Pollution Last Month, Trump Reversed Course On Another Efficiency Standard After AGs Sued New York Attorney General Eric Schneiderman and California Attorney General Xavier Becerra, leading a coalition of 11 Attorneys General and the City of New York, today filed a lawsuit against the Trump administration's U.S. Department of Energy (DOE) over its failure to comply with federal law by delaying energy efficiency standards for several common consumer and commercial products. The Trump administration failed to publish in the Federal Register final energy efficiency standards for five products: portable air conditioners, uninterruptible power supplies, air compressors, walk-in coolers and freezers and commercial packaged boilers. .@POTUS is illegally obstructing #energyefficiency standards that would save consumers $11.6 BILLION & cut pollution. 11 AGs are suing.pic.twitter.com/QWbV2YOygv — Eric Schneiderman (@AGSchneiderman) June 13, 2017  Schneiderman followed up with the following: In April, we warned @POTUS's admin that we'd sue if the illegal delays continued for 60 days. They failed to listen. https://t.co/TPdGDz1Vvc 

    Wind, solar produce 10 percent of US electricity for first time | TheHill - Wind and solar produced 10 percent of the electricity generated in the United States for the first time in March, federal energy officials said Wednesday. The Energy Information Administration’s (EIA) monthly power report for March found that wind produced 8 percent of the electricity produced in the U.S. that month, with solar producing 2 percent. The two sources combined to have their best month ever in terms of percentage of overall electricity production, EIA said. The agency expects the two sources topped 10 percent again in April but forecasts that their generation will fall below that mark during the summer months. Due to the way geographic wind patterns affect the generation of electricity, the two sources typically combine for their best months in the spring and fall. Annually, wind and solar made up 7 percent of electric generation in 2016, EIA said.  EIA’s report comes the day after an annual energy report from BP found renewable energy to be the fastest-growing source of electricity in 2016, growing by 12 percent and producing 4 percent of the world's electricity. Renewable energy advocates have cheered the industry’s growth, calling it a clean, increasingly inexpensive source of electricity. Some conservatives, though, contend its prevalence is a threat to grid reliability, an issue the Trump administration’s Energy Department is currently investigating.

    Solar And Wind Revolution Happening Much Faster Than Expected - The clean energy revolution is unfolding even faster than previously thought, which will have massive ramifications not just for the solar and wind industry, but also for the fading fortunes of old King Coal.  Bloomberg New Energy Finance (BNEF) published its “New Energy Outlook” (NEO), with renewable energy forecasts through 2040. BNEF says that the costs of wind and solar are falling rapidly, and the transition to cleaner energy will be more significant than expected. “This year’s report suggests that the greening of the world’s electricity system is unstoppable, thanks to rapidly falling costs for solar and wind power, and a growing role for batteries, including those in electric vehicles, in balancing supply and demand,” said Seb Henbest, BNEF’s lead author of the NEO 2017. Solar is already cost-competitive with coal and natural gas in parts of Europe and the U.S., and solar will become cheaper than fossil fuels even in China, India, Brazil and Mexico by 2021. “These tipping points are all happening earlier and we just can’t deny that this technology is getting cheaper than we previously thought,said Henbest.  Between now and 2040, the world will invest $10.2 trillion in new electricity generation – and renewables will capture three-quarters of that total. As a result, by 2040, wind and solar will account for 48 percent of the total installed electricity capacity around the world, up from 12 percent now. Batteries become dramatically cheaper, making residential and utility-scale energy storage mainstream. Electric vehicles will also become widespread, helping to balance the grid from intermittent sources of generation from wind and solar. Costs for solar have fallen by 75 percent over the past decade, and will fall by another 66 percent over the next 25 years. These projections even take into account the assumption that current subsidies for renewables expire.

    Can Texas go 100% renewable? -- The Electric Reliability Council of Texas (ERCOT) grid is largely isolated from other grids in the USA and generates as much electricity as the UK. Here we take a look at whether ERCOT could eventually generate most or all of its electricity from intermittent renewables, specifically wind and solar. We find that the prospects for 100% renewables generation are effectively zero, and for the same old reason – the requirement for prohibitive amounts of energy storage. High percentages of renewables generation might be achievable with large amounts of dispatchable backup capacity, but the system would be highly inefficient and it is questionable whether this capacity could handle the high ramp rates that would be needed to balance the erratic wind and solar input.

     Environmentalists accused of “cherry picking” official data on wind and solar power -- Windfarm watchers in the north have accused environmentalists of spinning the facts about the “extraordinary” success of recent green energy production. They accused the charity WWF Scotland yesterday of “cherry-picking” official data on wind and solar power. The critics pointed out that on a specific day highlighted as exemplary for green energy – May 15 – electricity customers were actually being billed £750,000 to compensate windfarm companies. The so-called “constraint payments” are frequently awarded for switching off turbines to avoid overloading the national grid. Referencing the same official data, the anti windfarm campaigners also revealed how, on the same day, Scotland imported electricity from England – as it still often does. WWF Scotland had celebrated an “extraordinary month” for renewables in Scotland, with windfarms powering “the equivalent of 95% of Scottish households’ electricity needs.” The comments are based on analysis of renewables data for WWF. Supporters and opponents of windfarms tap into the same daily data provided by the national grid. WWF Scotland’s reading was that wind generated enough power “to supply 100% or more of Scottish homes on 11 of the 31 days in May.”

    'Industroyer' virus could bring down power networks, researchers warn -  Six months on from a hacking attack that caused a blackout in Kiev, Ukraine, security researchers have warned that the malware that was used in the attack would be “easy” to convert to cripple infrastructure in other nations.The discovery of the malware, dubbed “Industroyer” and “Crash Override”, highlights the vulnerability of critical infrastructure, just months after the WannaCry ransomware took out NHS computers across the UK.Industroyer, analysed by the researchers from Slovakia’s ESET and the US’s Dragos, is only the second known case of a virus built and released specifically to disrupt industrial control systems. The first was Stuxnet, a worm that sabotaged the Iranian nuclear programme, which was thought to have been built by the US and Israel.The virus attacks electricity substations and circuit breakers using industrial communication protocols which are standardised across a number of types of critical infrastructure – from power, water and gas supply to transportation control. Those control protocols date back decades, to long before security practices such as encryption and authentication were standardised. Their only real security feature involves sequestering them on networks that aren’t directly connected to the internet; but as the need for economic efficiency has pressed in, even that has been jettisoned. This common attack vector makes Industroyer so dangerous, according to ESET: “The problem is that these protocols were designed decades ago, and back then industrial systems were meant to be isolated from the outside world,” says Anton Cherepanov, a senior malware researcher at the firm. “Thus, their communication protocols were not designed with security in mind. That means that the attackers didn’t need to be looking for protocol vulnerabilities; all they needed was to teach the malware ‘to speak’ those protocols.”

    Automakers Prioritize Climate Despite Trump’s Decision - Automakers are disappointed with President Donald Trump’s decision to exit the Paris climate accord – and some will back the agreement without him.  Two of the U.S.’s vehicle manufacturing institutions issued statements opposing Trump’s decision, and electric carmaker Tesla’s chief exited the president’s economic advisory panel over it. “We believe climate change is real, and remain deeply committed to reducing greenhouse gas emissions in our vehicles and our facilities,” announced Ford Motor Co.Our commitment to sustainability is why we’re investing so heavily in electrification and adding 13 new electrified vehicles to our lineup.”General Motors issues a similar statement: “GM will not waver from our commitment to the environment and our position on climate change has not changed. International agreements aside, we remain committed to creating a better environment.”Tesla CEO Elon Musk had been attending economic advisory meetings with Trump and other executives. He decided to leave the panel after hearing about Trump’s decision.“I am departing presidential councils. Climate change is real. Leaving Paris is not good for America or the world,” he posted on Twitter.  It would seem that other automakers’ strategic plans on climate change and clean air would be in line with GM, Ford and Tesla, including Toyota, Honda, BMW, Volkswagen, Daimler, Nissan, Renault, Volvo Trucks, BYD, and others.

    Copper demand for electric cars to rise nine-fold by 2027: ICA | Reuters: The growing number of electric vehicles hitting roads is set to fuel a nine-fold increase in copper demand from the sector over the coming decade, according to an industry report on Tuesday. Electric or hybrid cars and buses are expected to reach 27 million by 2027, up from 3 million this year, according to a report by consultancy IDTechEx, commissioned by the International Copper Association (ICA). "Demand for electric vehicles is forecast to increase significantly over the next ten years as technology improves, the price gap with petrol cars is closed and more electric chargers are deployed," IDTechEx Senior Technology Analyst Franco Gonzalez said in the report. "Our research predicts this increase will raise copper demand for electric cars and buses from 185,000 tonnes in 2017 to 1.74 million tonnes in 2027," Gonzalez said. Electric vehicles use a substantial amount of copper in their batteries and in the windings and copper rotors used in electric motors. A single car can have up to six kilometers of copper wiring, according to the ICA. The global market for copper is around 23.9 million tonnes, according to the International Copper Study Group. That suggests electric vehicles could account for about 6 percent of global copper demand in ten years, according to analyst estimates, rising from less than 1 percent this year.

    Oslo airport imports biofuels from California, greens doubt benefit | Reuters: Oslo airport is importing renewable jet fuel made from waste cooking oil in California, stirring criticism that shipping and trucking it more than 16,000 kilometers (10,000 miles) undercuts environmental benefits. Oslo was the first international airport hub to offer biofuels as part of the fuel mix it sells in 2016, followed by Los Angeles and Stockholm, as part of efforts to limit surging greenhouse gas emissions in the airline industry. "This is a tiny little drop (in fossil jet fuel use). But it is the first drop," said Olav Mosvold Larsen of state-owned Avinor, which runs 45 airports in Norway. He said jet biofuels were twice the cost of conventional fuels. The jet fuel blend sold for planes in Oslo now has 0.2 percent biofuels in the test project, he told Reuters. So far, Avinor has bought 1.25 million liters (275,000 UK gallons) of biofuels. In recent months, Avinor has imported waste cooking oil, sold by AltAir in California from sources including fast food restaurants, he said, confirming a report in the Norwegian daily Aftenposten. Last year, Oslo's biofuels came from Spain. Some environmentalists say that shipping biofuels from California, via the Panama Canal, makes no sense. "This is madness," said Truls Gulowsen of Greenpeace, saying that European laws should do more to promote local production of biofuels, such as from Nordic forests. "Waste cooking oil should be used in California," he said.

    First New Coal Mine of Trump Era Opens in Pennsylvania - President Trump lauded the opening of the nation's first new coal mine in recent memory. Corsa Coal Company will operate the mine in Somerset County, Pa. - outside of Pittsburgh. Corsa CEO George Dethlefsen said the mine will be a boon to the struggling local economy. He praised Trump's easing of regulations and encouragement for fossil fuel exploration. Dethlefsen told Leland Vittert that for the 70 positions available in the mine, 400 people applied. "It's a hard day's work every day, but it's worth it," one miner said. Vittert said the news contrasts with Hillary Clinton's message that she would "put a lot of coal miners out of work." Pennsylvania Gov. Tom Wolf (D), who endorsed Clinton, joined the mine company in watching a video message from Trump commemorating the occasion. R.J. Harris, a longtime host on Harrisburg's 580-WHP, said the mine opening is a "shot in the arm" for the Keystone economy. Though, Harris said he is optimistic that Corsa's mine opening is evidence that Trump can help turn the region's economy around. The mine will reportedly be producing metallurgical or bituminous coal - which is used in steel-making - while anthracite is the type often used in energy production.

    Trump touts 'amazing results' in mining industry | TheHill: President Trump on Monday highlighted “pretty big stories” about the mining sector as proof that his energy policies are working, three days after urging the media to write more positive stories about the economy. “There are a couple of major stories today in the newspapers about the mines that are opening and the miners are going back to work,” Trump said at the beginning of his first-ever White House Cabinet meeting Monday. “Actually, they’re pretty big stories. People are surprised. It’s kicking in very fast.” Trump on Saturday accused the “fake news” media of refusing to report on positive economic issues, including the “drilling and energy sector” going “way up.”     The #FakeNews MSM doesn't report the great economic news since Election Day. #DOW up 16%. #NASDAQ up 19.5%. Drilling & energy sector.....way up. Regulations way down. 600,000+ new jobs added. Unemployment down to 4.3%. Business and economic enthusiasm way up- record levels!— Donald J. Trump (@realDonaldTrump) June 11, 2017     On Monday, the right-wing website CNS News published a story about the mining sector posting its first quarterly profit in three years. The report — based on Census Bureau data released early last week — looks at information from the mining, quarrying, oil and natural gas sectors. The sector turned a combined $1.9 billion profit in the first quarter of 2017 after losing money since late 2014. The Drudge Report linked to the article on Monday, as well as a story about a coal mine opening in Pennsylvania last week and a Friday article about new mining jobs in Wyoming. 

    World Coal Production Just Had Its Biggest Drop on Record - It’s the end of an era for coal. Production of the fossil fuel dropped by a record amount in 2016, according to BP Plc’s annual review of global energy trends. China, the world’s biggest energy consumer, burned the least coal in six years and use dropped in the U.S to a level last seen in the 1970s, the company’s data show. Coal, the most polluting fuel that was once the world’s fastest growing energy source, has been a target of countries and companies alike as the world begins to work toward the goals of the Paris climate agreement. Consumption is falling as the world’s biggest energy companies promote cleaner-burning natural gas, China’s economy evolves to focus more on services than heavy manufacturing and renewable energy like wind and solar becomes cheaper. “The fortunes of coal appear to have taken a decisive break from the past,” BP’s Chief Economist Spencer Dale said at a briefing in London on Tuesday. The most important outcome of this “is carbon emissions, which saw little or no growth for a third consecutive year.” The shift away from coal in most of the world’s major economies comes as U.S. President Donald Trump is seeking to revive the fuel, having promised during his election campaign to restore lost jobs in mining areas such as West Virginia. Coal’s decline has been driven largely by competition from cheap shale gas, prompting skepticism that the country’s withdrawal from the Paris climate agreement will do much to halt the slide. U.S. demand for coal fell by 33.4 million tons of oil equivalent last year to 358.4 million, the biggest decline in the world in absolute terms, BP data show. Global consumption dropped 1.7 percent last year compared with an average 1.9 percent yearly increase from 2005 to 2015, according to BP. China, which accounted for about half of the coal burned in the world, used 1.6 percent less of the fuel, compared with an average 3.7 percent annual expansion in the 11 preceding years. Consumption of coal fell in every continent except Africa, the BP data show. Germany, Europe’s biggest user, consumed 4.3 percent less coal. U.K. demand fell 52.5 percent, the biggest percentage decline among the world’s major economies, according to BP’s data. In Asia, China’s decline was partially offset by higher consumption in India and Indonesia, where the fuel is still so cheap and readily available that utilities prefer it over natural gas for electricity generation. ” 

    Coal is dead’ and oil faces ‘peak demand,’ says world’s largest investment group - “Coal is dead,” Jim Barry, the global head of BlackRock’s infrastructure investment group, explained in a recent interview. BlackRock, the world’s largest investment group, with $5 trillion in assets — more than the world’s largest banks — has begun to bet on clean energy. Why? “The thing that has changed fundamentally the whole picture is that renewables have gotten so cheap,” said Barry. No, the world’s coal plants are not going to all down shut tomorrow, Barry noted to The Australian Financial Review. “But anyone who’s looking to take beyond a 10-year view on coal is gambling very significantly.” Coal isn’t the only fossil fuel at risk. Because of the rapidly improving performance and cost of batteries, Barry is “bullish” on electric vehicles. And as a result, he is bearish on oil demand, noting that “there was always this historic view on oil about peak supply but it’s about peak demand being an equal dynamic.” BNEF and the credit rating agency Fitch have made similar warnings.

    Coal-fired power stations are not necessarily a barrier to the expansion of renewable energy --Electricity systems previously based largely on coal-fired power stations offer more potential for the expansion of renewable energy than is often claimed. Coal-fired power stations can adapt their electricity generation to the fluctuating output of wind and solar power stations far more flexibly than was generally assumed to date. Only minor modifications are required for this, even with old coal-fired power stations. This gives countries which have historically relied largely on coal a way to make their electricity generation more climate-friendly at a low cost, while preserving the security of electricity supply. However, in electricity systems in which there are also many gas-fired power stations on the grid, flexible coal-fired power stations can lead to more greenhouse gases – for example, relatively climate-friendly but more expensive gas-fired power stations are still being ousted by polluting coal-fired power stations, for example in Germany. This trend can only be broken by climate policy measures, for example a minimum price for CO2 that renders electricity generation from coal more expensive.

    Insurers: We're off the hook, Duke Energy knew coal ash risk - (AP) — Dozens of insurance companies say they're not obligated to help pay for Duke Energy Corp.'s multi-billion dollar coal ash cleanup because the nation's largest electric company long knew about but did nothing to reduce the threat of potentially toxic pollutants. The claim is in a filing by lawyers for nearly 30 international and domestic insurance companies that were sued by Duke Energy in March to force them to cover part of the utility's coal ash cleanup costs in the Carolinas. The 57 policies generally promise to help Duke pay what it's legally obligated to pay for property damage "caused by an occurrence," even if liability for an incident doesn't become known until decades later, the Charlotte-based company said in the same filing last week in the state court that hears complex business cases. Both sides filed the document in describing a litigation timeline that would lead to trial in mid-2019. The insurers counter they're not on the hook to pay. They say that because Duke Energy stored its coal ash in unlined pits as part of its normal practices, any property damage "was caused intentionally, by or at Duke's direction" and there weren't any distinct pollution events that triggered coverage. They note that Duke was well aware that burning coal to generate electricity leaves byproducts containing toxic substances that can contaminate groundwater. They say Duke's ash ponds were built without safeguards to prevent groundwater pollution, and some ash ponds placed the ash in direct contact with groundwater.

     Nearly 14,000 companies in China violate pollution rules -  Environmental inspectors in northern China have found that nearly 14,000 companies, or 70 percent of the businesses they examined, failed to meet environmental standards for controlling air pollution, according to a state news agency report. The inspectors working for the Ministry of Environmental Protection came up with those results after two months of work across 28 cities in northern China, said Xinhua, the state news agency. The companies and industries varied widely, including businesses such as wool processing and furniture production. More than 4,700 companies were in unauthorized locations, lacked the proper certificates and failed to meet emissions standards, said the report, which was published on Sunday. Even though Chinese leaders have vowed to crack down on polluters, the factories continue to contribute to severe levels of air, water and soil pollution. Chinese citizens cite the country’s widespread pollution as one of the issues of greatest concern to them. The announcement, which was dated June 10 and circulated online this week, also calls into question whether China can fill a global leadership vacuum on the issue of climate change. China, the world’s largest emitter of greenhouse gases, has urged countries to abide by the Paris climate accord, even though President Trump is withdrawing the United States, historically the largest emitter, from the accord.

    New cracks found in Tihange 2 nuclear power plant - Seventy new micro-cracks have been discovered in the high-pressure boiler at the aging Tihange 2 nuclear reactor in Belgium, since the last inspection in 2014. Experts using ultrasonic technology found the new cracks after positioning the camera in a different direction, according to a response from Belgian Interior Minister Jan Jambon to a parliamentary question from the Green party. The security of the Tihange nuclear power plant is not in doubt and it will continue to operate, Jambon said. Lying only 60 kilometers (37 miles) from the German border, the Tihange nuclear power station has long been a target of criticism by German politicians and anti-nuclear campaigners concerned over its safety.  Last year, the German state of North Rhine-Westphalia purchased iodine tablets in case of a nuclear disaster.

    Lithuania Declares Belarusian Nuclear Power Plant a National Security Threat -- The Lithuanian government declared the Belarusian nuclear power plant in Grodno region a national security threat due to breaches and incidents that keep happening during its construction, the governmental press service said Wednesday. "National security and interests of the Lithuanian people are the most important. Lithuania’s position concerning Belarusian nuclear power plant is clear and principled – the construction of the nuclear power plant in the city of Astravyets cannot continue… Nuclear security and environmental safety requirements are still not being followed," Prime Minister Saulius Skvernelis said as quoted in the statement.  The location where the plant is being built is 50 kilometers (30 miles) away from the Lithuanian capital city of Vilnius. "Belarus didn't provide evidence that when choosing the location for construction of the Belarusian nuclear plant… an assessment had been made of the number of residents living in Lithuania, their allocation and other actions that might be significant in case of an accident," the Cabinet statement read. Lithuania has strongly objected to the construction of the Belarusian nuclear power plant, calling it unsafe. It also encourages the European Union countries to refuse to buy electricity from the future plant.

    Policy change needed to raise nuclear capacity: IEA -- The International Energy Agency (IEA) says clear and consistent policy support is needed if nuclear power is to significantly expand its contribution to the global transition to clean energy sources. Policies are required to address uncertainties in investing in new nuclear power plants and to avoid the premature closure of existing reactors, the Paris-based agency says in its annual report, Energy Technology Perspectives 2017.The IEA's main scenario - the 2 Degree Scenario (2DS) - demonstrates the actions needed in the energy sector to limit the rise in global temperatures to no more than 2°C. The IEA says the report "highlights that decisive policy actions and market signals will be needed to drive technological development and benefit from higher electrification around the world. Investments in stronger and smarter infrastructure, including transmission capacity, storage capacity and demand side management technologies are necessary to build an efficient, low-carbon, integrated, flexible and robust energy system."  Current government policies are not enough to achieve long-term global climate goals, the IEA says. Of the 26 technologies it assessed, only three "remain 'on track' to meet climate objectives". Substantial progress has been made in technology areas that have received clear policy support.

    Natural Gas Industry Blasts Nuclear Power With Fake News – Forbes - Natural Gas, the darling energy source of the millennia, has decided it needs to take down its biggest competitor – nuclear power. The American Petroleum Institute has flooded the airwaves in Ohio and Pennsylvania with anti-nuke commercials and has even drawn AARP into the fray by pushing fear – fear of higher prices and fear of radiation. Just the opposite of what is true. This is ironic since the natural gas industry emits more radioactivity than all of nuclear in America combined. And more people die every year from natural gasthan any other electricity source except coal. The issue in these states is that warped wholesale electricity markets, renewable subsidies and cheap natural gas from hydraulic fracturing (fracing) have made low-cost nuclear power just not low enough for short-term profitability, putting some nuclear plants at risk of closing. Several have already closed and six more are scheduled to close in the next ten years. Most climate scientists, like Jim Hansen, and economists say that a small subsidy, much smaller than renewables get, is necessary to keep these plants open andpreserve both the low-carbon power and the generation diversity needed to weather changes in the market and in the climate. During the last Polar Vortex, nuclear was the only source unaffected by the extreme cold. And nuclear costs are stable and predictable for decades, unlike natural gas or renewables.  The trend has power regulators worried, with those in New York and Illinois recently approving subsidies to keep their nuclear fleets operating, saving thousands of high-paying jobs and most of the states’ clean energy. The regulators and utility operators know how important energy diversity and baseload power are to the stability of the electric grid. This is an esoteric concept that most people do not understand, yet it rules their daily energy lives.  A new article for Scientific American points to the overwhelming evidence that saving nuclear plants is the most environmentally significant and cost-effective thing that governors can do for their states. API does not want any help to go to nuclear, which it sees as a competitor, and a hurdle to their plan for natural gas rising to 80% of electricity generation in these markets. They want to capture this monopoly quickly before natural gas prices rise after America links to the global market in the next several years.

    Kashmir – The Trigger for Nuclear War -- The disputed of territory of Kashmir, lying in the north of the sub-continent between India and Pakistan, does not often feature in the world news media, but recently the little-known yet most sensitive region has received attention, not only because of boundary clashes between the armies of India and Pakistan but because there have been some dramatic incidents in the Indian-administered region. Tension is rising, as indicated by comments from politicians and media in both countries, which have been swinging from casual abuse to extremes of frenzied condemnation.The Vishva Hindu Parishad (VHP) in India is a right-wing, religiously-based ultra-nationalist political party with a large following which actively supports the ruling Bharatiya Janata Party, which bases its policies on the aspirations of a strongly nationalistic community. The leader of the VHP, Acharya Dharmendra, declared in a speech on June 2 that «India should drop a nuclear bomb on Pakistan for creating tension at the border. It is a rogue nation and India must teach that country a lesson. It is important for peace in the Indian subcontinent». So far as can be determined, no Pakistani politician has yet made such a statement, publicly, at least, but the feeling in Pakistan as regards the use of nuclear weapons is much the same as in India: very many citizens of both countries believe that nuclear weapons just make a bigger bang. This is worrying, to put it mildly, especially as these two well-armed nations are squaring up to each other over the Kashmir imbroglio.

    How the Nuclear Power Meltdown Will Help U.S. Natural Gas Producers --The U.S. nuclear power sector is facing its biggest crisis in years, with an increasing number of nuclear units being retired for economic reasons and the four new units now under construction in the Southeast facing possible cancellation. Bad news for the nuclear sector is good news for owners and developers of natural gas-fired power plants — and, of course, for natural gas producers — because gas plants are a primary alternative to nuclear in providing reliable, around-the-clock power. Gas plants also are a go-to choice for supporting intermittently available renewable sources like wind and solar. Today we review the woes facing the nuclear sector, efforts by some states to prop it up with subsidies, and the strong economic/environmental case for ramping up gas-fired generation. Natural gas consumption for U.S. power generation has increased by nearly 150% over the past 20 years — from 11.1 Bcf/d, on average, in 1997 to 27.3 Bcf/d in 2016, according to the Energy Information Administration (EIA) — and despite President Trump’s June 1 (2017) announcement that the U.S. will be exiting the Paris climate accord, many U.S. utilities and independent power producers (IPPs) have indicated they won’t waver from their plans to shut down more coal units, build new gas-fired plants and ramp up their use of wind and solar power. The power sector’s strategy is based primarily on economics and regulatory expectations. The sheer abundance of U.S. natural gas supply suggests that gas prices will remain relatively low and competitive with coal, even as exports of liquefied natural gas (LNG) pick up. And while the Trump administration has promised to dismantle the Clean Power Plan (the Obama administration effort to reduce the power sector’s carbon dioxide (CO2) emissions 32% from 2005 levels by 2030, mostly by switching to gas and renewables) — see More, More, More (U.S. Gas Demand) — many states, utilities and IPPs are (as we said) pushing ahead with their plans to shift away from coal, which produces roughly twice the CO2 per megawatt-hour (MWh) that gas does.

    Activists hold 'action camp' in Monroe County - Martins Ferry Times Leader — Two environmental advocacy groups joined forces this weekend in Monroe County to educate their members about hydraulic fracturing in the Wayne National Forest and train members on “direct action” techniques to resist the oil and gas industry. About 150 Appalachia Resist and Keep Wayne Wild members and their families were hosted by Michael and Ruth Partin, who own a family farm in the Wayne National Forest hills near Graysville. The groups arrived on Friday and camped out on the Partin farm until Monday. “We love the mountains and the remoteness of the place. We came out here for clean air, clean water and privacy after living in San Diego, where there (are) 3 million people in town, and the air is brown,” Partin said. Partin noted he appreciated the extra police presence provided by the Monroe County Sheriff’s Department, although he wasn’t expecting any conflicts at the event.“I didn’t expect any trouble. The folks came in for a weekend of camping from all over. There were people here from Vermont, Michigan, Carolina and all across Ohio. The police were very vigilant and I appreciated their presence,” Partin said.The event — the second-annual Appalachia Resist Action Camp — was held in the Wayne National Forest because of the recent leases that were auctioned by the Bureau of Land Management to companies expected to set up fracking operations there.“This year’s camp will again focus on working with activists in our region around the intersection of social and environmental justice. Emphasis will be on the proposed fracking of the Wayne and the history of resource extraction and social justice movements in our region,” Appalachia Resist states on its Facebook page.

    Y'town should be wary of latest anti-fracking tactic - Youngstown Vindicator - No amount of window dressing can hide the fact that the self-absorbed proponents of an anti-fracking charter amendment are still trying to pull a fast one on the people of Youngstown.Despite being rejected six times by the city’s voters, the advocates of the unenforceable scheme are trying to make another bid at the polls this November.The premise of the anti-fracking proposal is just as foolhardy today as it was when it was first placed on the ballot. The effort to ban hydraulic fracturing in the city of Youngstown is legally unenforceable under current Ohio statutes. Even if the charter amendment is approved in November because of the sweetener that has been included, the courts would strike it down. That’s because the Ohio Constitution gives the Ohio Department of Natural Resources exclusive authority to oversee the hydraulic fracturing process used to extract oil and gas from beneath the earth’s surface.In addition, as organized opposition from the business and labor communities has repeatedly pointed out, other aspects of the anti-fracking measure could threaten jobs tied to the drilling industry in the city, including hundreds at Vallourec Star. And practically speaking, the measure has no viable application. As Mayor John McNally has noted time and time again, no company has any serious plans to drill for oil or gas within city limits.

    Eclipse Resources' Outlaw C 11H Well sets record for lateral length at 19,500 feet -  Columbus Business First - A driller in Ohio has completed a well with 19,500 feet in lateral extension, likely one of the longest ever drilled.  State College, Pennsylvania-based Eclipse Resources Corp. announced Friday that its Outlaw C 11H Well into the Utica Shale in Guernsey County was completed with a depth of 27,750 feet and a lateral length of 19,500 feet. That lateral length surpasses a relatively new Eclipse well, the 19,300-foot Great Scott 3H, and i ts Purple Hayes well that had a lateral length of 18,544 feet that was discussed on Eclipse's first-quarter conference call. That's important because the longer the lateral length of the well, the more natural gas that can be taken out of a well over its life. It's a crucial efficiency for wells that run in the millions of dollars to drill, hydraulically fracture and complete.The Purple Hayes well was, at the time, what Eclipse believed was the longest horizontal onshore lateral in the country, according to WorldOil.com and Oil & Gas 360. That's well above the average lateral length of an oil and gas well. The average lateral length in the Marcellus and Utica is between 8,000 feet and 9,000 feet, according to data from BTU Analytics. The average lateral length has been steadily increasing as drillers' technical skill increases; it was just under 6,000 feet about six years ago. The Energy Information Administration reported in 2016 that lateral length in the Marcellus Shale, for instance, is between 2,500 feet and 7,000 feet depending on the well.  Drilling longer "super-lateral" wells is a major initiative from Eclipse, which is based in Pennsylvania but has operations in Belmont, Monroe, Noble and Guernsey counties in Ohio, southwest of Pittsburgh. The ones that have been drilled are scheduled to be completed over the course of the next several months.

    Leaving money on the table - Pittsburgh Post-Gazette -- One would be hard-pressed to find a better poster child for the hydraulic fracturing industry than Pennsylvania. Billboards promoting natural gas litter the state’s highways. A Matt Damon film dubbed the state the “Promised Land.” As natural gas production has soared, the Keystone State has become an increasingly prominent energy exporter.  But the poster child of fracking has a dirty secret. It lags behind other major oil and gas producing states in tax policy. While most producing states — as many as 38 — tax energy production, Pennsylvania does not. All others, from Alaska to North Carolina, levy severance taxes directly on extraction of their oil, gas or coal. Revenues from such taxes allow these states to either address current budget needs, keep other taxes low or invest in their futures once drilling declines. Even neighboring Ohio and West Virginia levy severance taxes and have done so for several decades. Ohio Republican Gov. John Kasich is no fan of tax increases but has long argued that the state’s severance tax rate is too low, as this reflects the permanent loss of a natural resource. No state with a severance tax has ever seriously considered eliminating it since the Ulysses S. Grant presidency. Pennsylvania’s failure to adopt this universally applied tax has meant significant foregone revenue. Some projections estimate that a Pennsylvanian severance tax would have generated around $350 million for the state in the current fiscal year, potentially altering the state’s troubled fiscal situation.

    A Look Back At The 4 Years Since The PA Dems Voted For A Fracking Moratorium - Four years ago today, the Pennsylvania Democratic Party’s state committee members voted 115-81 in favor of a resolution calling for a statewide moratorium on fracking. Within a week, Ed Rendell, the former governor who opened the state to fracking, publicly criticized the vote, calling it “ill-advised.” Some gubernatorial candidates were quick to fall in line.  Tom Wolf, who went on to win the race in 2014, didn’t address the vote specifically, but said, “We must be vigilant about public health and safety in the process of tapping our natural resources. If done right, this is an opportunity for us to have good-paying energy jobs; a safe and secure environment; and the ability to make critical investments in education, health care, and infrastructure through a tax on oil and natural gas extraction.”Was Wolf right? Let’s review the short list of what has happened since his party’s vote. Since June 15, 2013, 8,906 permits for unconventional wells have been approved by the Pennsylvania DEP. Of those, 3,688 have been drilled. Drillers have racked up 2,037 permit violations, 1,631 of them on matters related to environment and health. The DEP has issued 91 positive letters of determination confirming that fracking activities have contaminated private water supplies. The Federal Energy Regulatory Commission has approved 33 natural gas pipelines that run through the state. Seven pipeline incidents have occurred in the state, including the explosion on the Texas Eastern pipeline in Westmoreland County on April 29, 2016 that nearly killed 26-year old James Baker. Meanwhile, an 80-year old pipeline operated by Sunoco Logistics, now Energy Transfer Partners, was modified to carry ethane and other natural gas liquids. The first shipments of ethane transported in the line have been shipped from Marcus Hook to Scotland. The company followed up with its Mariner East II proposal for two more pipelines to follow roughly the same route. The Pennsylvania Public Utilities Commission (PUC) allowed the company to take land by eminent domain even though it is a private corporation that is not providing a public benefit with its projects and even though the project had not yet been approved when the company used it to clear trees. The DEP spent years working with Sunoco Logistics on its application for water permits. Even after the long back and forth, the company’s resubmitted application was so flawed that the DEP issued 17 letters of deficiency, collectively containing hundreds of outstanding problems, last September.

    Appalachian midstream gas play gains anchor shipper --A private midstream company, hoping to take advantage of the expected build-out of interstate pipeline capacity for moving Appalachian natural gas to markets, said Monday it has received a binding anchor shipper commitment for its gathering and transport system currently under construction. XcL Midstream received the commitment from THQ Appalachia I, an affiliate of Tug Hill Inc., for the XcL, which will include a 1-Bcf/d dry gas header system, a 200 MMcf/d wet gas system and a parallel fresh water pipeline, XcL said Monday. Both XcL, based in Canonsburg, Pennsylvania, and Fort Worth, Texas-based Tug Hill are backed by private equity company Quantum Energy Partners. "THQ Appalachia has dedicated its extensive upstream lease position in exchange for 600 MMcf/d of capacity on the Appalachia Connector Pipeline dry gas system and will also receive 200 MMcf/d of capacity on the wet gas pipeline," XcL said. The project developer hopes the XcL Appalachia Connector system will be online in time to access the more than 14 Bcf/d of new gas takeaway capacity expected to enter service in the southwestern Appalachian region -- comprising West Virginia, Ohio and southwestern Pennsylvania -- by the end of 2018, Tug Hill Chief Operating Officer Evan Radler said in an interview Monday. "The construction started on this project in May, so it's well under way," Radler said. "The in-service date is scheduled to be just ahead of these interstate pipelines. We'll be online in [the second quarter of] 2018, which is about a quarter ahead of when all these other big projects are coming online," the executive said. Several interstate pipeline projects, such as such as the Atlantic Coast Pipeline and the Mountain Valley pipeline, which are proposed to be built to source gas from the Marcellus and Utica shale plays of West Virginia, are anticipated to come online in the next 18 months.

    In a Northeast Minute...Everything Can Change - Appalachia Gas Supply Outlook vs. Takeaway Capacity --After years of oversupply conditions and pipeline constraints, the U.S. Northeast natural gas market is on the verge of reaching a point where it is unconstrained by transportation capacity and enjoys increased optionality for reaching growing demand markets downstream. There are no fewer than 20 pipeline projects in the works to facilitate that. If all – or even most of them get built, the region would develop the opposite problem — not enough gas to fill all that new pipe. Ultimately, the state of the Northeast market will come down to the timing of the expansions projects compared with the pace of production growth. Today, we conclude this series with a look at how supply will line up with pipeline expansion in-service dates over the next five years. The transformation of the Northeast from primarily a gas taker to net gas supplier to the U.S. is reaching a critical turning point. In recent years, producers have been growing supply as fast as midstream companies can build the capacity for them to send it out. In Part 1 of this series, we looked at the Northeast’s supply-demand balance and the resulting surge of gas leaving the area, which has happened even as production growth slowed in the past 18 months or so. Now, with 20 more expansion projects due to come online by 2020, the questions arise: what will production do, and how will the two factors align in terms of timing?

    Despite Ban, 600,000 Tons of Fracking Waste Entered NYS… – More than two years after Governor Andrew Cuomo banned high-volume hydraulic fracturing (fracking), new data reveals that landfills in New York have received more than 600,000 tons of fracking waste from Pennsylvania gas drillers. Though they were released for public comment more than a year ago, the Department of Environmental Conservation (DEC) has not finalized proposed changes to the state’s solid waste regulations, which would increase oversight – but not place an outright ban – on the disposal of fracking waste in landfills. Release of the DEC’s final regulations are expected any day. Today, state Senator Brad Hoylman and Assemblyman David Buchwald announced legislation S98A/A302A to ban all oil and gas waste from disposal at New York’s solid waste management facilities, wastewater treatment plants, and for use as a de-icing agent on roads. An analysis by Environmental Advocates of New York of Pennsylvania Department of Environmental Protection’s oil and gas waste data system found that between 2011 and March 2017, 608,646 tons of fracking waste has been dumped into New York State landfills – a 32% increase from the 460,000 tons first outlined in the organization’s 2015 report, License to Dump. Of that waste, over half has been disposed of in Chemung County Landfill, in Lowman, NY. “Even though New York banned high volume hydraulic fracturing nearly three years ago, our state continues to accept dangerous fracking waste from other states to dispose of in our landfills and to use as a chemical de-icing agent on our roads, posing significant environmental hazards. That’s why I’ve introduced S.98A, which would implement a comprehensive fracking waste ban in New York.  Liz Moran, water & natural resources associate at Environmental Advocates of New York said, “DOH Commissioner Dr. Zucker said fracking is a danger to public health. And so is fracking waste. Governor Cuomo boldly banned fracking, but when it comes to the drilling waste, the state has been slow to respond and too often relied on bureaucratic labels and processes to justify inaction. Banning fracking waste from our landfills, wastewater treatment plants, and roadways, is a common-sense approach to protecting New York’s water. Environmental Advocates thanks and applauds Senator Hoylman, Assemblyman Buchwald, and many other legislators who have worked tirelessly to keep fracking waste out of New York State.”

    Push to ban imports of fracking waste intensifies in Albany - The Buffalo News: The state Department of Environmental Conservation is finalizing its revised rules governing New York State's solid waste facilities. Some state legislators and environmental advocates see it as a chance for the DEC to make sure oil and gas wastes from hydraulic fracturing in neighboring states like Pennsylvania stay out of New York State's wastewater plants and landfills. So they're also pressing for statutory laws during the legislative session to ban the practice. "We think this poses significant environmental concerns," state Senate bill sponsor Sen. Brad Hoylman told reporters during a conference call last week.There's a similar bill in the Assembly.Waste from fracking sites can include material with high levels of natural radioactivity like radium and carcinogenic chemicals like benzene or formaldehyde that can taint the wastewater plants that process them or potentially contaminate land and water if they're land-filled or spread as brine to de-ice roadways, according to Elizabeth Moran, the water and natural resources associate for Environmental Advocates of New York.In all, more than 600,000 gallons of fracking waste from other states has been hauled to landfills in upstate New York, the organization said. "They put our water quality at risk of harming our public health and the environment," Moran said.

    NYMEX July gas jumps on smaller-than-expected storage build --NYMEX July natural gas futures spiked Thursday after weekly storage data came in lower than expected for the first time in five weeks. The July contract settled at $3.056/MMBtu, up 12.3 cents from Wednesday's close. The $3/MMBtu mark seems to be the current key pivot point for pricing, according to sources. Until Wednesday, the July contract had not strayed more than 5 cents either side of the mark since June 1. The US Energy Information Administration on Thursday reported a 78 Bcf storage build for the week that ended June 9, 12.36% lower than the 89 Bcf injection expected by a consensus of analysts surveyed by S&P Global Platts. Article continues below... Request a free trial of: Gas Daily Gas Daily Gas Daily Your source for actionable intelligence across the entire gas marketplace: Market commentary recaps prior day’s spot and futures trading activity Natural gas news, including FERC rulings and insights Price reporting at 94 geographic locations Platts Analytics market fundamentals supplement NYMEX Henry Hub 36-month forward contract prices REQUEST A FREE TRIAL MORE INFORMATION The injection is the first smaller-than-expected build in five weeks, with the previous four weeks seeing higher-than-expected climbs in storage. The bullish data comes after temperatures in the US Midcontinent and Northeast were warmer than normal last week. Gas stocks now sit at an estimated 2.709 Tcf, down 322 Bcf, or 10.6% from what was seen at this time last year, according to EIA data. Inventories are 9.2% above the five-year average of 2.481 Tcf, according to the EIA. The region with the largest build was the East, seeing a 34 Bcf week-on-week increase, according to the EIA data. 

    Fake Grassroots Group Launched by Natural Gas Industry to Counter Pipeline Protests - The American Gas Association, a major trade group representing some of the nation's largest natural gas companies and utilities, has launched a new front-group called Your Energy America aimed at promoting natural gas and pipeline infrastructure, all while casting fossil fuel opponents as " anti-energy extremists ." "As the name implies, Your Energy paints itself as a grassroots organization, something akin to the Sierra Club or the American Civil Liberties Union, but for folks who support natural gas," Huffington Post reporter Alexander C. Kaufman writes. But Kaufman notes, "The only indication that Your Energy is a public relations campaign paid for by a major industry association appears on the privacy policy page ." The organization's about section states: "Your Energy was created to speak out against a misguided movement that assaults our way of life. This movement is based on the simplistic belief that keeping our natural resources in the ground is the only solution to climate change. This isn't just false—it's dangerous to our quality of life, economy and energy security." Notably, the group's Virginia chapter quietly debuted last month ahead of the state's governor's race , which is considered by local publications as a " pipeline referendum " over the highly contested Atlantic Coast and Mountain Valley pipelines.  Environmental groups worry about the proposed paths of the two fracked -gas pipelines, which would cross through pristine areas of Virginia, taking private property by use of eminent domain, removing mountaintops and threatening valuable drinking water resources. The Atlantic Coast Pipeline, in particular, is owned by utility Dominion Energy, the state's largest energy company and the largest corporate donor to state candidates.

    Natural Gas Industry Brings A Fake Grassroots Group To Eastern Pipeline Fights | HuffPost: Amid intensifying fights over new natural gas pipelines in Virginia, New Jersey and New England, the gas industry is ramping up its defense with a new front group meant to appeal to East Coasters, who have mostly avoided the fights over oil and gas development that have rocked Western states.Your Energy launched quietly in Virginia last month, ahead of a November gubernatorial election that is shaping up to be a “referendum on pipelines,” as one local newspaper put it.The group, which is funded by the American Gas Association, debuted as a co-sponsor of a conference at the Virginia Chamber of Commerce on May 24. Jim Cheng, who served as secretary of commerce under then-Virginia Gov. Bob McDonnell (R) and is not on the group’s payroll, spoke on its behalf.“I am here today assisting a new organization, called Your Energy Virginia, that was created to raise the energy IQ of Virginians about the many benefits of natural gas,” said Cheng, according to audio obtained by HuffPost. “And to try to follow on these radical and uniformed elements within your communities that try to intimidate or shut down pro-energy supporters.”As the name implies, Your Energy paints itself as a grassroots organization, something akin to the Sierra Club or the American Civil Liberties Union, but for folks who support natural gas. Its Virginia chapter’s website features promotional materials about the economic and environmental benefits of natural gas and prompts visitors to join by submitting their names, email addresses and ZIP codes. The only indication that Your Energy is a public relations campaign paid for by a major industry association appears on the privacy policy page. 

    EPA Will Delay Obama-Era Fracking Rules By Two Years --The Environmental Protection Agency (EPA) proposed Tuesday a two-year delay to Obama administration rules limiting methane emissions from hydraulic fracturing operations.EPA said the delay is necessary so officials can review methane emissions regulations enacted by the Obama administration. The agency will take comments on the proposed delay for the next 30 days before it issues a final decision.“The agency is proposing a two-year stay of the fugitive emissions, pneumatic pump and professional engineer certification requirements in the rule while the agency reconsiders issues associated with these requirements,” reads an EPA press release. “Under the proposal, sources would not need to comply with these requirements while the stay is in effect. Since issuing the final rule, EPA has received several petitions to reconsider certain aspects of the rule.”EPA’s decision follows a new peer-reviewed study by National Oceanic and Atmospheric Administration (NOAA) researchers, which found the agency agency relied on inflated methane emissions estimates to justify its regulations.The study’s authors noted EPA’s justification to relied on research that detected “daily peak emissions rather than daily averages that are generally employed in emissions inventories,” the study found. The methane rule is part of President Barack Obama’s global warming agenda to cut greenhouse gas emissions. Methane is a short-lived, but potent, greenhouse gas. Scientists blame human greenhouse gas emissions for warming the Earth’s climate. Had the rule gone into force, new oil and gas operations would have been subject to strict emissions limits.

    FERC gives Sabal Trail go-ahead to start service on gas pipeline - The US Federal Energy Regulatory Commission has granted Sabal Trail Transmission permission to start service on part of the 515-mile, 1 Bcf/d natural gas pipeline, which would boost supplies to the Southeast. In an order Friday morning, FERC specifically authorized Sabal Trail to place into service about 482 miles of mainline between an interconnect in Tallapoosa County, Alabama, and the southern interconnect in Osceola County, Florida, as well as compressor stations in Alabama and Florida, and several meter and regulation stations. The project is meant to provide power-hungry Florida with more gas to feed generation. Its first phase is designed to provide an initial capacity of 830 MMcf/d, and the company's recent in-service request covered about half that volume. In approving the request to start service, FERC did not address requests from environmental groups that urged FERC to hold off on allowing the pipeline to enter service while they await a ruling from a federal appeals court on their challenge to FERC's certificate of convenience and necessity. Sabal Trail (CP15-17) is part of a trio of projects that include Transcontinental Gas Pipe Line's Hillabee Expansion and the Florida Southeast Connection, collectively known as the Southeast Market Pipelines Project and totaling 685.5 miles, designed to feed growing demand from gas-fired power generation in Florida. The Sabal line is being built by a joint venture of Enbridge, NextEra Energy and Duke Energy. It originates in Tallapoosa County, Alabama, and will transport gas to Georgia and Florida and terminate at the new hub south of Orlando. It is intended to supply gas to Florida Power & Light and to Duke Energy Florida.

    Texas Oil And Gas Exports Are Booming -- As soon as the export ban on oil - in force since 1973 - was lifted in America, producers started making global expansion plans. Oil was depressingly cheap, production was abundant, and emerging markets demand was growing. Now prices have improved, which has led to production ramp-ups, so there’s even more oil—and gas—for export.  The Gulf Coast is the natural focal point of this expansion. It has two of the ten busiest ports in the world by cargo volume: The Port of South Louisiana and the Port of Houston. Until relatively recently, the Port of Houston was where all the oil action in Texas took place. Now, things are changing, with energy companies expanding along the state’s coast, shunning the busy—and more expensive—big port. In an extensive analysis of the situation, the Houston Chronicle’s David Hunn notes that companies such as Phillips 66, Occidental Petroleum, and Cheniere Energy, all based in Houston, have opted for export capacity outside the city and its port. Occidental Petroleum, for example, built a terminal near Corpus Christi where last month it tested a Very Large Crude Carrier, or VLCC – a vessel capable of transporting between 1.9 and 2.2 million barrels of crude. The test was successful , and according to a senior marketing official from Occidental, VLCCs will in the future dock at the company’s terminal, load at 60 percent of capacity, and then be joined into deeper waters by smaller tankers to fill up to 100 percent. Occidental has a pretty wide footprint in the Permian, where production prices are low and the crude is internationally competitive. Phillips 66 chose Freeport, another Texas port, for its LNG export terminal, which was completed last year and the first cargo set off in December. LNG exports from the U.S. are on the rise and their reach is expanding globally, which has prompted a race to build export terminals. Recently, authorities approved the first floating LNG terminal, off the Louisiana coast: Delfin LNG, with an annual export capacity of 13 million metric tons. And that’s not all. The port of Brownsville is also gaining a lot of attention from the energy industry: three LNG plants have already been planned for construction there and the port’s management has requested approval from Congress to increase the depth of its ship channel to 52 feet from the current 42.

    Shale Production Will Hit An All Time High Next Month... And That's Just The Beginning - - While the June oil production data is still pending, it is safe to say that the June oil output from US shale producers - estimated today by the EIA at 5.348mb/d - will post the first double-digit production growth since July of 2015, when oil prices tumbled and a substantial portion of US production was briefly taken offline. Indicatively, while over the past year total U.S. production is up roughly 525kb/d, virtually all of it, or 98.5%, is the result of horizontal rig production in the Permian Basin, where output is up by 507kb/d.m The Permian basin has been leading the increase in horizontal oil rig count (+178%)  More important, however, is that according to the latest EIA Daily Productivity Report forecast released today, in July total shale basin output is expected to rise by 127kb/d in one month, hitting 5.475 mmb/d, and surpassing the previous record of 5.46 mmb/d reached in March 2015. Needless to say, this is bad news for OPEC, which continues to price itself out of the market by not only keeping prices high enough to make production profitable for US companies, but by allowing shale to capture an increasingly greater market share. Worse news is that shale is just getting started: both the Energy Information Administration, OPEC and the International Energy Agency have chronically underestimated the contribution of U.S. crude oil supplies in their forecasts. As Shale River notes, each has significantly increased their estimates for 2017 U.S. crude oil production during the year, with recent upward revisions larger than prior increases. In fact, the EIA recently conducted its 11th consecutive upward revision of its 2017 estimate.But the worst news - for OPEC yet again - is in the long-term, where if 5.5mmb/d is considered a record, just wait until shale hits more than double that amount, or over 12mmb/d, which Goldman expects will be achieved some time in the 2020s.

    Health Effects of Oil and Gas Emissions Investigated in Texas - Scientific American -- Once mainly fields and ranchland, Karnes County is now a top crude oil producer in Texas, due to its location on top of the Eagle Ford Shale play. But long-term residents like Jasso say they are concerned about whether the oil boom, which helped to fix up their highways and put money into their children's schools, was also responsible for their migraines, dizziness and shortness of breath. “A lot of them noticed there had been a lot of changes in the community. A lot of people, when they talk about their health issues, were saying, 'We weren't feeling this before all this,'” said Priscilla Villa, a community organizer with the environmental group Earthworks. Her outreach is part of the Washington-based nonprofit's newly expanding national effort to help people around the country living near oil and gas development hold polluters and governments accountable. Those efforts could take on added significance under the Trump administration, which has moved to halt implementation of methane regulations, a potent greenhouse gas that has 25 times the heat-trapping capability of carbon dioxide. Not only would these regulations have helped address climate change, they would also have helped stop emissions of other pollutants like volatile organic compounds (VOCs) that are linked to respiratory and cardiovascular problems. Examples of some known hazardous air pollutants include benzene, a carcinogen, which comes from burning oil. Chronic exposure to toluene, used to produce benzene, can lead to upper respiratory tract irritation, dizziness, sore throat and headaches. VOCs also have indirect health impacts when it forms chemical reactions with nitrogen oxides in sunlight and creates ground-level ozone, the main component of smog. Exposure to smog can lead to asthma, wheezing and cardiovascular effects, according to U.S. EPA data.

    Top Texas scientists to release fracking impact study --A respected state research cooperative will release on Monday a report on the effects of hydraulic fracturing on communities in Texas.The Academy of Medicine, Engineering and Science of Texas, a conglomerate of Texas research scientists across disciplines, has spent two years reviewing the impacts of shale oil and gas development on earthquakes, wildlife, air quality, water, transportation and area residents.The academy, known as TAMEST, touts the report, Environmental and Community Impacts of Shale Development in Texas, as the first comprehensive analysis of its kind. “The goal of the TAMEST Shale Task Force report is to provide a clear, science-based assessment of these impacts and the gaps in our current knowledge of them,” said task force chair Christine Ehlig-Economides, a petroleum engineer and professor at the University of Houston. TAMEST calls itself “Texas’ premier scientific organization,” which includes all of the state’s Nobel Laureates, plus Texas-based members of the National Academies of Sciences, Engineering, and Medicine. The Shale Task Force report is an analysis of existing peer-reviewed scientific literature, following the same processes used by the National Academies, TAMEST said.

    Shale Gas Giants Battle for Dominance as US Supplies Surge - (Bloomberg) -- The two biggest shale gas deposits in the U.S. are producing a record amount of the power-plant fuel, signaling that a fight for market share will intensify as supply outstrips demand. As natural gas prices rebound from last year’s historic lows, output from the Marcellus shale basin in the U.S. East and the Permian reservoir in Texas is driving a rebound in America’s production of the fuel. Low-cost supply from the Marcellus is surging as new pipelines are built to shuttle gas to markets across the U.S. and Canada. Meanwhile, Permian output is rising as a recovery in oil prices boosts the production of gas that’s extracted alongside crude. A deluge of new gas production from Texas and Pennsylvania threatens keep the U.S. awash in excess supply and lower prices nationwide, even as rising exports trim a glut of the fuel in storage. Though the reservoirs are thousands of miles apart, gas competition between the Marcellus and Permian is set to heat up as producers there go after the same customers in major markets like the Midwest. “Everyone can’t grow and everyone can’t win,” Justin Carlson, managing director of research at East Daley Capital Advisors Inc., an energy consulting company he co-founded in Centennial, Colorado. “Marcellus producers did not count on the Permian.” Marcellus gas output will rise 0.5 percent to 19.4 billion cubic feet a day in July from June, while Permian production will climb 1.9 percent to 8.5 billion, the U.S. Energy Information Administration’s monthly Drilling Productivity Report showed Monday. That’s an all-time high for both shale deposits. The Marcellus may end up ceding some ground to the Permian, Carlson said. Output from the Marcellus will probably climb by 11 billion cubic feet by the end of 2019 from last year, well below the guidance given by producers in the region showing a gain of 14.5 billion during the same period, he said. That means the new pipelines crisscrossing the region could take longer to fill.

    How Will Permian E&Ps Dispose of All That Produced Water? -- Exploration and production companies (E&Ps) in shale basins have a water problem — in fact, they have three water problems. Two are upfront well-completion costs: sourcing water for the frac job and disposal of the flowback water from the frac job.  These are nontrivial issues, but they pale in comparison to a much bigger problem – produced water – the water that always comes along with the oil and natural gas out of a well. It is a lot of water; on average in the U.S., somewhere around five to six barrels of water are produced for every barrel of oil that comes out of the ground, more from some basins than others. The Permian, for example, produces six to eight barrels of water per barrel of crude. That’s over 1,000 Olympic-size swimming pools full of water out of the Permian alone each day. And because this water is chock-full of minerals, petroleum residue and especially salt (which makes it brine), producers must dispose of the water in a safe, environmentally responsible manner.  Today most produced water moves off the lease in trucks, although producers are now increasing their investment in produced water-gathering and transportation systems to move the barrels to centralized facilities and disposal wells. But here’s the bottom line: it costs just about as much to move a barrel of water as it costs to move a barrel of oil.  And there is a lot more water than oil coming from a given well. The implication is that the largest single cost of operating a well — sometimes more than half of total operating cost — is produced-water disposal. That is a number that can impact producer economics and thus capex investment plans, drilling activity and production growth.   But what happens if Permian production doubles — a distinct possibility. Today we continue our surfing-themed series on the effect of sand and water costs on producer economics with a focus on produced water in the U.S.’s hottest shale play.

    Funds pull back from Permian as U.S. shale oil firms go into overdrive - Cash, people and equipment are pouring into the prolific Permian shale basin in Texas as business booms in the largest U.S. oilfield. But one group of investors is heading the other way - concerned that shale may become a victim of its own success. The speed of the recovery in the U.S. shale industry in the past year has surprised oil investors after a global supply glut led to a two-year crude price slump and bankrupted many shale firms. Eight prominent hedge funds have reduced the size of their positions in ten of the top shale firms by over $400 million, concerned producers are pumping oil so fast they will undo the nascent recovery in the industry after OPEC and some non-OPEC producers agreed to cut supply in November. The funds, with assets of $286 billion and substantial energy holdings, cut exposure to firms that are either pure-play Permian companies or that derive significant revenues from the region, according to an analysis of their investments based on Reuters data. The Permian, which stretches across West Texas and eastern New Mexico, produces about 2.5 million barrels of oil per day (bpd), accounting for more than a quarter of overall U.S. crude production. "We'll have to see if these U.S. producers have the discipline to not go crazy and keep prices where they keep making money," said Gary Bradshaw, portfolio manager at Dallas-based investment firm Hodges Capital Management. There is no sign that shale producers will restrain production. They redeployed rigs and personnel quickly since prices began strengthening in 2016 and made shale profitable again; rig counts have risen by 40 percent this year in the Permian, which accounts for about half of all U.S. onshore oil rigs. 

     Dakota Access Pipeline reprimanded by Iowa regulators for lack of liability insurance - The Iowa Utilities Board has reprimanded the Dakota Access Pipeline for failing to comply with a state order to show that at least $25 million in general liability insurance is in place to protect the public from possible oil leaks and spills. A Dakota Access spokeswoman said over the weekend the company has the required insurance in hand. But a pipeline opponent complained Monday that intervention by Iowa regulators should not have been needed to fix the problem. "What if the pipeline had broken. Who would have been liable?" said Ed Fallon of Des Moines, a former Iowa legislator who heads Bold Iowa, a political activist group. "I am glad they got the insurance issue fixed quickly, but it never should have lapsed. If you are a driver and your car is without insurance, you don't get to drive anymore." In approving the project in March 2016, Iowa utility regulators directed the Texas-based Dakota Access to maintain a minimum of $25 million in liability insurance for the life of the pipeline. Oil began flowing through 30-inch pipeline, which extends from North Dakota's Bakken oil patch to Patoka, Ill., on June 1. It has the capacity to transport about 520,000 barrels of oil daily. On Friday, the Iowa Utilities Board said that Dakota Access had made a filing on May 15 which said it had extended the terms of its insurance policies until June 1. The filing said the company had secured new policies to replace the existing policies, which “will be filed with the Board as soon as they are available.” As of last week, no insurance filing had been made, the Iowa Utilities Board said. The pipeline crosses diagonally for about 343 miles through 18 Iowa counties, primarily through farmland. "It is important that the Board have accurate, up-to-date information regarding the insurance for this pipeline," the Iowa Utilities Board said. " Accordingly, the Board will direct Dakota Access to file, on or before June 13, 2017, either (a) the new insurance policies or (b) a detailed report describing the status of the policies and stating when they will be filed."

    Trump Bows to Big Oil, Delays Methane Rule on Public Lands -  The U.S. Environmental Protection Agency (EPA) proposed a two-year delay on the implementation of Obama-era regulations requiring fossil fuel companies to curb methane emissions Tuesday evening.In its announcement of the stay, the EPA acknowledged that the move may have a "disproportionate impact" on children's health, but reasoned that the temporary nature of the stay would ensure "limited" harm to children.The Bureau of Land Management also announced in a separate notice published Thursday that oil and gas companies would not have to comply with its own rule restricting venting and flaring gas on public land while the rule is under judicial review. The BLM rule survived a Congressional Review Act attack in the Senate last month, as bipartisan backers pointed out that methane regulations save millions of taxpayer dollars and protect public health."The plans to delay these much-needed methane pollution standards demonstrates that the Environmental Protection Agency is no longer working for the people, it's working for polluters," said Lauren Pagel, Earthworks policy director. "Families living near oil and gas operations need EPA safeguards because they're breathing the industry's toxic air pollution right now. "A two year delay would allow more air pollution that will lead to higher levels of cancer, asthma attacks from ozone smog and worsen the climate crisis."The methane waste rule calls for leak detection and repair with affordable, off-the-shelf technologies, and restricts venting and flaring of methane by oil and gas companies on public lands. The original compliance date is January 18, 2018.  "Methane waste seriously and urgently threatens our climate, our pocketbook and public health," said Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center. "If there was any doubt who Sec. Zinke serves in his position, it's now abundantly clear it's not the American public."

     Pipeline to the classroom: how big oil promotes fossil fuels to America's children - Jennifer Merritt’s first graders at Jefferson elementary school in Pryor, Oklahoma, were in for a treat. Sitting cross-legged on the floor, the students gathered for story time with two special guests, Republican lawmakers Tom Gann and Marty Quinn. Dressed in suits, the two men read aloud from “Petro Pete’s Big Bad Dream,” a parable in which a Bob the Builder-lookalike awakens to find his toothbrush, hard hat and even the tires on his bike missing. Abandoned by the school bus, Pete walks to Petroville elementary in his pajamas. “It sounds like you’re missing all of your petroleum by-products today!” Pete’s teacher, Mrs Rigwell, exclaims, extolling oil’s benefits to Pete and fellow students like Sammy Shale. Before long, Pete decides that “having no petroleum is like a nightmare!” The tale is the latest in an illustrated series by the Oklahoma Energy Resources Board, a state agency funded by oil and gas producers. The board has spent upwards of $40m over the past two decades on providing education with a pro-industry bent, including hundreds of pages of curriculums, a speaker series and an after-school program – all at no cost to educators of children from kindergarten to high school.  A similar program in Ohio shows teachers how to “frack” Twinkies using straws to pump for cream to emulate shale drilling. A national program sponsored by companies including BP and Shell claims it’s too soon to tell if the earth is heating up, but “a little warming might be a good thing”. Decades of documents reviewed by the Center for Public Integrity reveal a tightly woven network of organizations that works in concert with the oil and gas industry to paint a rosy picture of fossil fuels in America’s classrooms. Led by advertising and public-relations strategists, the groups have long plied the tools of their trade on impressionable children and teachers desperate for resources.

    IE Questions: Where Does Fracking Water Go? - Inside Energy - Each day, 2.4 billion gallons of wastewater pour out of U.S. oil and gas wells according to 2009 estimatesfrom Argonne National Lab. This includes water pumped down for fracking and water that flows up to the surface from deep aquifers. Both contain dissolved minerals and chemicals including many that are harmful, and both can have impacts on drinking water resources if not handled with care, according to a 2015 report from the EPA. The water coming up from deep underground, called “produced water,” contains salt and other dissolved minerals, hydrocarbons, and sometimes radioactive elements. It acquires these components naturally, from its time holed up within rocks. In Colorado, produced water is nearly as salty as the ocean, but that varies by geography. The produced water coming out of wells in Pennsylvania and Ohio, for instance, can be ten times as salty as ocean water. The water used for fracking – a mixture of water, sand, and chemicals – is pumped underground at high pressure and wedges rocks apart. The sand stays put in the cracks, creating pathways for oil and gas to travel towards the well, and about 40% of the water and chemicals flow back to the surface. Some of the chemicals in fracking fluid are not harmful. Others are toxic. Most are present in very small quantities, but even in tiny amounts chemicals like benzene are dangerous. (Check out FracFocus.org to learn about chemicals used in fracking fluids. The database lists ingredients used on over 100,000 U.S. fracking jobs from states that require disclosure.) Joseph Ryan and Jessica Rogers, researchers at University of Colorado, recently identified that, of the hundreds of chemical compounds used in fracking fluid, fifteen often-used chemicals are of particular concern because they are both toxic and able to stick around in the environment for a long time. Fracking fluid and produced water gets mixed together. In the U.S., nearly all of this wastewater is injected into disposal wells. These deep wells are designed to prevent the water from escaping and contaminating drinking water aquifers, surface water, and ecosystems. In eastern Colorado, disposal wells are drilled to about 9000 feet deep. That’s 2000 feet below the rocks that contain oil and gas and it’s very unlikely that the wastewater will get into drinking water once pumped into the disposal well. However, in cases where disposal wells that are not well designed or drilled due to lax rules, that might not be the case. There is another concern about the safety of disposal wells. They are the cause of most of the earthquakes associated with oil and gas development. Also, quarantining water in disposal wells means that it is taken out of the water cycle. Less water is available to move from clouds to lakes, rivers, groundwater, and the ocean and then back to clouds. Using a resource in a way that can’t be replenished is not sustainable in the long term, so taking water out of circulation is not ideal.

    New technology could recover more oil from early Bakken wells -  bismarcktribune.com: Oil companies are applying new hydraulic fracturing techniques to early Bakken wells, a process industry leaders say has the potential to recover more oil without increasing the footprint on the land. Operators are targeting wells drilled between 2008 and 2010, the early years of Bakken development before fracking technology advanced to where it is today. Companies are refracturing the older wells using today’s technology and getting promising results, said Justin Kringstad, director of the North Dakota Pipeline Authority, who recently analyzed the wells.On average, they’re getting better performance from the wells,” Kringstad said. Fracking — or pumping a high-pressure mixture of water, sand and chemicals deep underground — and horizontal drilling techniques allowed operators to recover oil from the Bakken. But the industry believes it’s only recovering about 5 to 15 percent of the oil available, Kringstad said. More than 140 wells in the Bakken have been refractured, and most saw an increase in oil production from 200,000 to 250,000 barrels, according to Kringstad’s analysis. The newly fracked wells are injected with larger volumes of fluid and sand and the fracture treatments are applied to smaller segments of the well, he said. North Dakota legislators also are interested in the potential for refracturing existing oil wells and are planning a study during the interim focused on the fiscal impact to the state. Sen. Kelly Armstrong, R-Dickinson, said recovering more oil would mean more tax revenue and more jobs. “We are only getting a small, small amount of the total potential reserve down there,” Armstrong said. “Everybody would benefit if we could figure out a way to recover more.”

    Pipelines can now handle all of the current Bakken crude production | Prairie Public Broadcasting: A milestone for North Dakota Pipeline Authority director Justin Kringstad. For the first time since he began that job – in 2008 – there is enough pipeline capacity to take the current production of Bakken crude to market. A substantial amount of crude has been shipped by rail – but that percentage has been reduced as more pipeline capacity comes on line. The Dakota Access Pipeline is now operational – and is to carry 520,000 barrels of oil a day. But Kringstad said oil will still move by rail. "I don't believe anyone has the expectation that crude oil movement by rail will go away completely," Kringstad said in an interview. "We'll likely see some of that oil go by rail to the coastal markets." Kringstad said the market itself will drive those decisions of where the barrels of Bakken crude will be marketed. "But over the long term, we will see higher percentages of oil by pipeline," Kringstad said. Kringstad said this will also spur some competition – meaning there will likely be less of a premium to ship oil by rail.

    North Dakota oil output up 25,000 b/d in April, gas sets record -- North Dakota oil production averaged over 1.05 million b/d in April, up nearly 25,000 b/d from March, the state Department of Mineral Resources said Tuesday. Oil production in April was still nearly 177,000 b/d below the all-time monthly record set in December 2014, according to state data. April marked the third month in a row that production remained above the 1 million b/d threshold. Since crossing over the 1 million b/d mark in April 2014, statewide monthly oil production has fallen below 1 million b/d just four times. Statewide natural gas production averaged nearly 1.84 Bcf/d in April, up from 1.73 Bcf/d in March and an all-time record, according to preliminary data. The state reported 13,717 producing wells in April, up 24 from March and also an all-time high. Drilling permits fell from 93 in March to 58 in April but have since climbed to 100 in May, according to state data. "Operators are maintaining a permit inventory that will accommodate increased drilling price points within the next 12 months," Lynn Helms, the state's top oil and gas regulator, said in a statement. There were 830 wells waiting on completion at the end of April, up 141 wells from the previous month. North Dakota's rig count averaged 50 in April, up four from March, but well below the all-time high of 218 set in May 2012. The statewide rig count was 55 on Tuesday.

    Federal judge orders more environmental analysis of Dakota pipeline - A federal judge ordered the U.S. Army Corps of Engineers to reconsider its environmental review of the Dakota Access Pipeline on Wednesday, opening up the possibility that the line could be shut at a later date. U.S. District Judge James Boasberg in Washington said the Army Corps did not adequately consider the effects of a possible oil spill on the fishing and hunting rights of the Standing Rock Sioux tribe. Operations of Energy Transfer Partners LP's (ETP.N) pipeline have not been suspended but that could be considered at a later date, the order said. The $3.8 billion line began interstate crude oil delivery in May. The parties are expected to meet Boasberg next Wednesday to discuss future steps. The Standing Rock Sioux are expected to argue that pipeline operations should be halted. The judge said in a 91-page decision that, while the Army Corps substantially complied with the National Environmental Policy Act, federal permits issued for the pipeline violated the law in some respects, saying in a court order the Corps did not "adequately consider the impacts of an oil spill on fishing rights, hunting rights.It was unclear whether the judge would agree that the line should be shut. Independent research firm Clearview Energy Partners of Washington D.C. noted in a comment late on Wednesday that Judge Boasberg's order pointed to "omissions" in the Corps' analysis, which the Corps may be able to address quickly, rather than larger errors that might require more study. "We think that the Corps may be able to persuade the court to allow Dakota Access to continue operating while the omissions are addressed and the court reviews them for adequacy," they wrote. 

    Judge: Dakota Access Pipeline needs further environmental review | TheHill: A federal judge ruled Wednesday that the environmental review for the Dakota Access pipeline was, in part, inadequate and must be reconsidered, handing tribal opponents of the 1,170-mile pipeline project a key legal victory. But U.S. District Court Judge James Boasberg did not order pipeline operators to stop the oil that is already flowing through the project, saying he would need to consider that request in light of Wednesday's judgement. Boasberg ruled that the federal government “substantially complied” with the federal environmental permitting law that governs projects such as Dakota Access, a 1,170-mile $3.8 billion pipeline that can carry up to 570,000 barrels of oil per day. But, Boasberg wrote in a 91-page opinion, the Army Corps of Engineers “did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.” He ruled that the Army Corps, which permitted the project, would need to conduct a new review of Dakota Access that considers those factors. But Boasberg did not order Dakota Access to cease operations, which have been underway since June 1. He said that is a “separate question” that he will consider in the future. Two tribes, the Standing Rock Sioux and Cheyenne River Sioux, have tried for months to halt the Dakota Access project. They argue the pipeline, which crosses the Missouri River upstream from the Standing Rock Indian Reservation in North Dakota, threatens water quality there. Courts have rejected two previous arguments against the pipeline: that it violates the tribes’ religious liberty by flowing under sacred water in North Dakota and that its construction threatened cultural heritage sites on the Great Plains. The tribes have long argued the project needs to undergo a more thorough environmental review before it could transport crude from the Bakken oil fields to terminals in Illinois. The Army Corps said last summer that it would grant the permits necessary to build the project, but DAPL opponents said the pipeline needed to go through a more rigorous Environmental Impact Statement (EIS) review first. 

    Ruling on Dakota Access pipeline surprises oil industry — A judge’s ruling that might open the door for at least a temporary shutdown of the disputed Dakota Access pipeline surprised the industry that hailed the project as a “game changer” for North Dakota oil. But shippers said Thursday that they aren’t concerned that there will be any long-term disruption to service on the $3.8 billion pipeline that on June 1 began moving crude from the Bakken oil patch to a distribution point in Illinois, from which it’s shipped to the Gulf Coast and potentially high-paying markets abroad. “It’s business as usual today,” said Ron Ness, president of the North Dakota Petroleum Council, which represents nearly 500 energy companies including Texas-based Energy Transfer Partners, which built Dakota Access. U.S. District Judge James Boasberg ruled Wednesday that the Army Corps of Engineers “largely complied” with environmental law when approving the pipeline but didn’t adequately consider some matters important to the Standing Rock Sioux. The tribe draws its water from Lake Oahe and is opposed to the pipeline crossing beneath the Missouri River reservoir in North Dakota. “Obviously, we don’t know how all that plays out,” Ness said. “But clearly the pipeline is running. It’s a critical element of the nation’s energy infrastructure.” The pipeline — whose completion was pushed through earlier this year by the Trump administration — has the capacity to move half of North Dakota’s daily oil production. Ness just a few weeks ago called it a “game-changer that opens up everything.” But the Standing Rock Sioux and other tribes are fighting the project in federal court in Washington, D.C., and they’ve hailed Boasberg’s ruling as a victory. Boasberg said the Corps didn’t adequately consider how an oil spill under Lake Oahe might affect tribal fishing and hunting rights, or whether it might disproportionately affect the tribal community. He will rule later on whether the pipeline should be shut down while the Corps reconsiders those matters, though he acknowledged such a move “would carry serious consequences that a court should not lightly impose.” 

    TransCanada asks for pause on review of ND oil pipeline | North Dakota News | bismarcktribune.com: TransCanada Corp. has asked the U.S. State Department to pause its review of an oil pipeline that would originate in northwest North Dakota and carry oil to Canada. The same company behind the Keystone XL proposes to build the Upland Pipeline that would originate about 15 miles southwest of Williston and transport up to 300,000 barrels of oil per day. Because it crosses the U.S.-Canadian border, the project requires a presidential permit.TransCanada, which held open houses with North Dakota landowners more than a year ago to discuss the project, recently asked the State Department to put its application for a presidential permit on hold. The company wanted to pause the U.S. review of the project to better align the timing with TransCanada’s proposed Energy East Pipeline System, which is under review by regulators in Canada, said TransCanada spokesman Matthew John. The Upland Pipeline would transport Bakken crude to Canadian markets as well as refineries on the U.S. East Coast by connecting with the proposed Energy East. Because the two pipelines are related, TransCanada wants to align the timing of the regulatory reviews, John said. The proposed Upland route would travel about 126 miles in North Dakota, crossing the Canadian border near Flaxton. It also would require approval of the North Dakota Public Service Commission. 

      Goldman Sachs-backed Firm Invests Big in Shipping Tar Sands by Train Along Keystone XL Route – Steve Horn - USD Partners, a rail terminal operator owned in part by Wall Street giant Goldman Sachs, has signed a nearly three year deal to facilitate moving tar sands by train from where it is extracted in Alberta, Canada, to an offloading terminal in Stoud, Oklahoma, in a route mirroring that of the Keystone XL pipeline. From Stroud, the heavy oil can be sent via pipeline to the nearby oil storage hub in Cushing, Oklahoma. USD's announcement, which said the company could transport up to 70,000 barrels per day of tar sands in rail cars, came in a June 2 filing with the Securities and Exchange Commission (SEC). The deal, centering around the purchase of the Stroud terminal, also included the acquisition of 300,000 barrels of storage space in Cushing, a town known by oil and gas industry observers as the “pipeline crossroads of the world.”  “Our Hardisty to Stroud rail solution delivers immediate takeaway capacity, preserves the integrity of our customer’s heavy barrels and enables substantial end market optionality at Cushing with available pipeline capacity to the Gulf Coast.” Dan Borgen, CEO of USD Partners, said of the deal in a press release.   Ironically, as reported by DeSmog's Justin Mikulka, Goldman Sachs penned a 2013 report titled, “Getting oil out of Canada,” which said tar sands–by-rail was not economically viable. However, in the years following that report, USD, with the backing of Goldman, has entrenched itself more deeply in the tar sands–by-rail market. In Hardisty, Alberta, where the tar sands–by-rail journey begins, USD Partners owns a major oil-by-rail shipping facility. The Hardisty facility currently has the ability to handle two tar sands–by-rail shipments per day, equivalent to 120,000–140,000 barrels per day of crude. This latest deal will represent a quarter of the site's business.

    U.S. tops others in petroleum, natural gas production - Some people may find it hard to believe that the United States was the largest producer of petroleum and natural gas hydrocarbons last year. As a matter of fact, it was the fifth consecutive year that the U.S. beat Russia, Saudi Arabia, and all of the other OPEC producers. The U.S. beat everyone. For some 40 years, oil and natural gas production declined in the U.S., and there was little hope of reversing the downward trend. Along came marvelous technological developments in a little area just north of Fort Worth called the Barnett Shale. Wildcatters began drilling into shale vertically and then horizontally, and using multiple fractures in the formation. Originally, the process showed little promise in releasing natural gas from tight shale formations. But, they kept trying, and learning from each venture. By 2008, the U.S. was well on its way to being the top producer. “The United States has been the world's top producer of natural gas since 2009, when U.S. natural gas production surpassed that of Russia, and it has been the world's top producer of petroleum hydrocarbons since 2013, when its production exceeded Saudi Arabia’s,” according to the Energy Information Administration. For the United States and Russia, total petroleum and natural gas hydrocarbon production in energy content terms is almost evenly split between petroleum and natural gas, while Saudi Arabia's production heavily favors petroleum. EIA said total petroleum production is made up of several different types of liquid fuels, including crude oil and lease condensate, tight oil, extra-heavy oil, and bitumen. In addition, various processes produce natural gas plant liquids, biofuels, and refinery processing gain, among other liquid fuels. “In the United States, crude oil and lease condensate accounted for roughly 60 percent of total petroleum hydrocarbon production in 2016. In Saudi Arabia and Russia, this share is much greater, as those countries produce lesser amounts of natural gas plant liquids, and they also have much smaller volumes of refinery gain and biofuels production.”

    Falling Interest Rates Have Postponed "Peak Oil"  -- Gail Tverberg  -- Falling interest rates have huge power. My background is as an actuary, so I am very much aware of the great power of interest rates. But a lot of people are not aware of this power, including, I suspect, some of the people making today’s decisions to raise interest rates. Similar people want to sell securities now being held by the Federal Reserve and by other central banks. This would further ramp up interest rates. With high interest rates, practically nothing that is bought using credit is affordable. This is frightening. Another group of people who don’t understand the power of interest rates is the group of people who put together the Peak Oil story. In my opinion, the story of finite resources, including oil, is true. But the way the problem manifests itself is quite different from what Peak Oilers have imagined because the economy is far more complex than the Hubbert Model assumes. One big piece that has been left out of the Hubbert Model is the impact of changing interest rates. When interest rates fall, this tends to allow oil prices to rise, and thus allows increased production. This postpones the Peak Oil crisis, but makes the ultimate crisis worse. The new crisis can be expected to be “Peak Economy” instead of Peak Oil. Peak Economy is likely to have a far different shape than Peak Oil–a much sharper downturn. It is likely to affect many aspects of the economy at once. The financial system will be especially affected. We will have gluts of all energy products, because no energy product will be affordable to consumers at a price that is profitable to producers. Grid electricity is likely to fail at essentially the same time as other parts of the system. Interest rates are very important in determining when we hit “Peak Economy.” As I will explain in this article, falling interest rates between 1981 and 2014 are one of the things that allowed Peak Oil to be postponed for many years.

    U.S. shale firms more exposed to falling oil prices as hedges expire | Reuters: Cash-strapped U.S. shale firms scaled back their hedging programs in the first quarter, leaving them more vulnerable to tumbling spot market prices just after OPEC reached a landmark deal to curb global supply. The pullback in hedging was driven by rising service costs and expectations that prices would continue to rally after the Organization of the Petroleum Exporting Countries extended those cuts in May, analysts said. However, rising U.S. production has stymied OPEC's efforts to rebalance markets. Crude oil futures LCOc1 have lost 15 percent of their value since February, raising the risk that unhedged companies are more exposed to market weakness. The market peaked at $55 a barrel in January as cuts got under way, but has struggled since, and closed Monday at $48.29 a barrel [O/R], barely changed from the end of November, when OPEC agreed with nonmembers to cut 1.8 million barrels a day in supply. For oil traders, hedging data serves as a leading indicator of future supplies. With so little hedged, dealers say producers are now looking to hedge at the next chance possible, a move that will pressure prices in coming months. Producers hedge by buying a variety of financial options to secure a minimum price for crude and safeguard future production. According to a Reuters analysis of hedging disclosures by the 30 largest U.S. shale firms, most stayed on the sidelines in the first three months of 2017, a stark contrast from a year ago when firms rushed to lock in prices, even though oil was trading $15 a barrel lower.In total, 18 companies reduced outstanding oil options, swaps or other derivatives positions by a total of 49 million barrels from the fourth quarter to the first quarter, the data shows. Another 10 companies increased their hedging positions by 91 million barrels; two others did not hedge at all. Compared with a year ago, the group is more exposed to falling oil prices, with one-fifth fewer barrels hedged, or the equivalent of 28 million barrels, and three times more barrels rolling off, or the equivalent of 38 million barrels. 

    Shale Drillers May Be Digging Own Hole as Oil Flirts With $40 -- U.S. shale is coming perilously close to puncturing its own rally. Just months after predicting double-digit production increases, largely based on crude prices sitting between $55 and $60 a barrel, drillers are suddenly contemplating the possibility of retrenchment as a stubborn global supply glut is keeping prices near $46. It’s a reversal that could accomplish what OPEC and other global producers have failed to do this year: slow down America’s booming shale industry. Analysts and company officials say a drop to $40 a barrel could halt rig growth for smaller drillers in less active U.S. shale basins, and undercut efforts by fracking service providers such as Halliburton Co., FTS International and Patterson-UTI Energy Inc. to raise their fees. “The growth outlooks proposed by many oily E&Ps appear tenuous at best and not resilient to prolonged weak oil prices," Drillers at an RBC Capital Markets energy conference in New York last week insisted they were sticking with their spending plans, noting they’d emerged from last year’s oil-market slump with leaner costs and lower debt levels. But they acknowledged the shakier ground their budgets stand on. Noble Energy Inc. has the flexibility to “toggle activity" if prices decline further, Chief Financial Officer Ken Fisher said at the meeting, while EOG Resources Inc. Executive Vice-President Billy Helms said the company will “moderate" production if needed. The market got yet another bearish bump Tuesday as West Texas Intermediate oil, the U.S. benchmark, dipped below $46 a barrel on an industry report showing an unexpected boost for U.S. crude stockpiles. Inventories rose by 2.75 million barrels last week, according to an American Petroleum Institute report Tuesday, people familiar with the data said. A $45 barrel “slows most U.S. shale plays," UBS AG analysts wrote in a June 9 note. At $40, companies will “hit the brakes" on growth even in the Permian, the prolific oil play in West Texas and New Mexico, the analysts predicted. 

    Lower oil prices set to test U.S. shale drillers: Kemp Some U.S. shale producers claim they can produce oil profitably with prices well below $50 per barrel or even $45 per barrel; the oil market is likely to put those claims to the test. Shale firms have hired an extra 425 rigs to drill for oil since the end of May 2016, more than doubling the active rig count, oilfield services company Baker Hughes says. Producers have continued adding rigs even though benchmark oil prices have fallen almost $10 per barrel since the middle of February and are now almost $4 below year ago levels. Rigs have been added at rates comparable to the height of the shale boom between 2012 and 2014 ensuring output will continue growing significantly through the rest of 2017 and into 2018. The U.S. Energy Information Administration forecasts onshore production from the Lower 48 states will grow by 340,000 barrels per day (bpd) in 2017 and another 500,000 bpd in 2018. As a result, U.S. shale producers together with other non-OPEC suppliers are expected to capture all of the increase in global oil demand in 2018 and raise their share of the market significantly at the expense of OPEC. Shale producers and OPEC are now on a collision course, with OPEC curbing production to try to raise prices and shale drillers adding rigs to boost output. The contradiction will likely be resolved through a drop in oil prices to rein in shale growth. Oil prices have already declined significantly to curb the drilling boom and put output on a more sustainable trajectory. Past experience shows changes in the U.S. oil rig count typically lag 15-20 weeks behind changes in WTI oil prices (http://tmsnrt.rs/2svJfUd).The decline in WTI prices since February should cause the rig count to level out or even start to fall sometime between the middle of June and the end of July (http://tmsnrt.rs/2s4kBZ8).If the rig count starts to level off or fall in the next few weeks, it could offer some support to beleaguered oil prices. However, if the rig count continues rising relentlessly, fears about overproduction will grow, and prices are likely to come under even more pressure.

    Caelus Energy delays key test on Alaskan North Slope crude discovery - Dallas-based independent Caelus Energy will delay a key test well on a promising North Slope discovery due to the crude price outlook and continued uncertainty about state tax policies, a spokesman said Monday. Caelus announced the discovery of a possible multi-billion-barrel field at Smith Bay, in the Alaskan Beaufort Sea offshore the National Petroleum Reserve-Alaska, in October 2016, but needs further tests to confirm its production potential. More drilling and production tests had been planned for next winter -- exploration is mainly done in winter in Alaska -- but that has now been postponed, spokesman Casey Sullivan said in an interview. The price outlook is only part of the problem, Sullivan said, although it affects income from Caelus' producing Oooguruk field that would have helped finance the Smith Bay project. Another problem is the state of Alaska's inability to pay money owed explorers like Cealus for tax credits earned under an oil and natural gas exploration incentive program. "We've earned about $100 million in tax credits," which is unpaid, Sullivan said. "While this is important, it's only part of the picture. There is heated debate in the Legislature as to how to get to closure," on the state production tax and the unpaid tax credits, which now totals an aggregate $700 million for all explorers. Alaska is struggling with multi-billion-dollar state budget deficits due to low oil prices, and has been drawing down reserves to fund the state budget.

    Trump's FBI Nominee's Ties to Exxon -- Christopher Wray, President Trump's nominee for FBI director, advised corporate clients on how to avoid "being in the crosshairs" of law enforcement at a 2015 legal forum where investigations by state attorneys general into whether ExxonMobil misled investors and the public about climate change were a topline issue.   Wray's law firm later pitched clients on its ability to help corporations "vigorously contest" such investigations in response to the 2016 launch of a coalition of 17 state attorneys general aimed at pursuing similar legal efforts around climate change. The firm's clients have included ExxonMobil and other powerful fossil fuel interests.  First, some quick background on the issues at play, followed by some details on the involvement of Wray and his law firm.   Wray once led federal corporate fraud investigations, but then he switched sides.  . Wray's credentials include a 2003-2005 stint as assistant attorney general for the U.S. Department of Justice, where he oversaw corporate fraud investigations, helped to take down Enron and contributed to national security efforts after 9/11.  After Wray left the Department of Justice in 2005, he switched sides and joined the corporate law firm King & Spalding, which has consistently ranked as a "White Collar Group of the Year ." He's since defended big corporations against investigations by U.S. attorneys general offices around the country.  Wray's law firm has defended powerful fossil fuel interests in climate change litigation.  King & Spalding successfully defended Chevron in Native Village of Kalina v. ExxonMobil , a case where a community of Alaska Natives sought compensation for the cost of relocating their coastal village due to flooding and erosion caused by climate change. The community and others like it still remain stranded in the path of rising waters , without the financial resources necessary to relocate once again.  DesmogBlog has previously reported on some of the firm's broader other clients in the fossil fuel industry, which have included ConocoPhillips, Marathon Oil, Occidental Petroleum, Peabody Energy and Shell. Other clients have included ExxonMobil and the Russian oil companies Gazprom and Rosneft .

    Cuba Scrambles As Venezuela's Oil Industry Collapses - As Venezuela’s oil industry goes down it flames, it’s looking like it may just take Cuba down with it.Venezuela, once the crude powerhouse of South and Central America, is no longer able to produce enough oil to sustain its own economy, much less those of other countries. Cuba is frantically drilling in search for new reserves and reaching out for new suppliers, but there is no guarantee they’ll be able to stabilize their oil income any time soon.Cuba became dependent on Venezuelan oil in the 1990s, when they were sold cut-price crude in exchange for the services of skilled laborers in order to bail them out of economic collapse in the wake of the fall of the Soviet Union. Currently, Cuba relies on foreign oil for more than two thirds of its daily consumption, with over 100,000 barrels of crude flowing from Venezuela every day for years. Now, quite suddenly, their dependence on Venezuelan oil has been forced to come to a bitter end.In the midst of political unrest and economic devastation, Venezuela’s oil exports have plummeted by 40 percent in the last 3 years. During an export drought that lasted the better part of last year, the Cuban government has been combatting the stemmed fuel flow with regular energy rationing. In an attempt to avoid blackouts, the government has ordered cuts in electricity and fuel consumption to most state-run companies and entities (a huge pool in a communist country) by 50 percent, resulting in workers hours slashed and access to vehicles severely restricted. This April, they also began restricting sales of premium gas to government officials and diplomats.After this eight-month moratorium on exports to Cuba, Venezuela once again began to export light oil to Cuba and  Curacao in March, but at a great cost to their own refineries. As of this month, the 187,000-barrel-per-day Puerto la Cruz refinery is running at just 16 percent of its capacity thanks to a deficit in light oil and a lack of maintenance in ill-funded refineries. With this unsustainable model and no sign of improvement in the country’s economy, Cuba is looking for new sources of crude, and quickly.

    Statoil Aims To More Than Triple Brazil Output (Reuters) - Norwegian oil and gas company Statoil aims to more than triple its production in Brazil and wants to become the sole operator for the entire Carcara discovery, among the world's biggest in recent years, its local country manager said. Statoil has invested more than $10 billion in Brazil, making it the country's largest foreign offshore operator. The Peregrino heavy oilfield 85 km off the coast of Rio de Janeiro is the biggest it operates outside Norway. With Peregrino producing 80,000-90,000 barrels of oil equivalents per day, Statoil's 60 percent equity stake in the field currently leaves the company with 48,000-54,000 barrels in daily output from the South American country. "We expect (Statoil's) equity production to more than triple in Brazil going towards 2030," Anders Opedal, Statoil's head of Brazilian operations, told Reuters in an interview, referring to the company's share of production. Last year, Statoil bought a 66 percent stake and became the operator of the BM-S-8 licence in the Santos Basin, including parts of Carcara, from state-run Petroleo Brasileiro SA (Petrobras) for $2.5 billion. The Norwegian firm also took operating control of the BM-C-33 licence in the Campos basin from Repsol Sinopec, holding a 35 percent stake. Statoil has also approved the Peregrino phase 2 development, which is expected to add 250 million barrels of reserves at a break-even price of below $45 a barrel, down from an original estimate of $70 a barrel. 

    Hydraulic Fracturing Market Expected to Exhibit a Significant Growth Rate of 11% during 2016 to 2020 - The demand for Hydraulic Fracturing Market is expected to be driven by the rapid increase in the rate of production and it provides access to strategy of shifting energy through natural gas and energy security by domestic supply. The increase in demand of energy and the increase in inclination towards production and exploration of non-conventional sources of energy such as shale gas and tight oil among others is expected to further drive the growth of the market. Favorable government rules and regulations and the increased government expenditure for promoting the extraction of natural resources is further expected to drive the growth of the market.  Among all technologies, plug and perforation is most commonly used for the extraction of crude oil and natural gas. It is used in cased hole wells and is flexible in nature. Plug and perforation technique majorly helps in achieving high production rate. It is mainly used for shale oil and shale gas completions. It has the ability to be reworked in case of any problem or when production process pauses. The ease of accessibility provided by such technology for fracking in horizontal wells, make it a favorable technology than alternatives such as sliding sleeve and others.  North America Region is expected to dominate the hydraulic fracturing market with the highest CAGR. The region is expected to grow with the increase in extraction of minerals from the earth's crust. In the Europe region, rising investigation for the development of available hydrocarbon reserve is expected to drive the growth of the market.

     Big Oil's Pivot To Renewables Has Begun - The prospect of peak oil demand has emerged as an increasingly possible reality, acknowledged even by some oil industry executives themselves. If and when oil demand peaks – whether its 5, 10 or 20 years from now – the oil industry faces an existential crisis. Peak demand will mean falling prices, shrinking profits and terminal decline.That is, unless oil companies begin to diversify into cleaner sources of energy. A new report from Wood Mackenzie suggests that the largest oil companies should probably start getting into renewables if they want to pivot with the rapidly changing energy landscape. Renewables are becoming cheaper and cheaper, surpassing fossil fuels in many markets.“The momentum behind these [renewable] technologies is unstoppable now,” said Valentina Kretzschmar, director of research. “They [the oil companies] are recognising it is a megatrend; it’s not a fad, it’s not going away. There is definitely a risk to their core business.”Because they are late to the party, the oil majors will need to step up spending in order to gain a foothold. If the oil majors are to capture 12 percent of the global wind and solar industry – a similar market share to what they have now in terms of global oil supply – they would have to invest $350 billion between now and 2035. Because such a massive level of investment is probably not on the cards, the industry faces a great deal of financial risk in the coming decades.  Even though they are moving too slowly, the oil majors are starting to make initial forays into renewable energy. Norwegian oil company Statoil is still plying the Arctic for new sources of oil, but it is also slated to open up the world’s first floating offshore wind farm off the coast of Scotland in late 2017.

    Nicola Sturgeon hails ‘great success’ of oil and gas industry -- The oil and gas industry is still a “great success”, First Minister Nicola Sturgeon insisted as she highlighted new figures showing spending by the sector on innovation almost trebled last year. Investment of £15.9 million by Scottish Enterprise – the Scottish Government’s enterprise agency – helped 82 firms working in the sector in 2016-17, allowing them to come up with 111 innovative projects aimed at making their business more competitive. The projects had a combined value of £43 million – up from £14.5 million the previous year. The funding also means the Scottish Government exceeded a commitment to provide £10 million to support greater levels of innovation in the North Sea. Ms Sturgeon highlighted the figures in a speech to the Oil and Gas UK Conference in Aberdeen, telling industry leaders: “This investment by Scottish Enterprise highlights that Scotland is continuing to lead the way in making oil and gas one of this country’s great success stories.”

    Middle East fears prompt call for fracking - Lancashire Evening Post: A dispute in the Middle East which has seen two cargoes of Liquefied Natural Gas diverted from the UK in the last week could mean the area needs gas from fracking, an energy expert has claimed. But opponents of shale gas drilling say the claims are scaremongering to justify an environmentally damaging industry. Saudi Arabia, the United Arab Emirates and Egypt have all cut ties with the Gulf state of Qatar, a major supplier of LNG, over concerns that it is funding and supporting terrorism. The ongoing diplomatic row has forced wholesale gas up by 4.5 per cent. Nick Campbell, energy risk manager at Kirkham-based Inspired Energy, said it could get worse, especially if problems continue into the winter months. He said: “We saw the issue of reduced LNG last winter, when the Far East purchased global supplies as temperatures dropped. “If this was to continue into next winter, coupled with issues with Qatari deliveries into the UK, this would help to support winter gas prices at a time when demand is at its highest.” In 2015 Qatar supplied more than 20 per cent of Britain’s gas imports. The pro-fracking Lancashire For Shale group said ongoing price volatility could hit householders, businesses and hospitals. It said Blackpool Victoria hospital relied on gas for most of its energy requirements. A spokesman said: “According to one publicly available annual report, it used 80 GWh (gigawatt hours) of gas in 2012/2013 compared with under 20 GWh of electricity. “North West England is the UK’s biggest gas consuming region, using over 60,000 GWh in 2015.

    Fracking could be off the agenda after surprise election result - The Conservatives are the only main British party to support fracking for shale gas in the UK. Its manifesto claimed Britain had the potential to ‘replicate the shale boom that has transformed the US energy landscape’. Planning processes for shale developments would be streamlined and a higher share of tax revenues paid into a national ‘shale wealth fund’, for local communities in a bid to overcome opposition. However, the election result leaves that pledge, as with all of the party’s Manifesto promises, in the balance. Whilst it potential alliance partners the Democratic Unionist Party (DUP) are likely to support it, dissent in their own Tory ranks may stymie any bold policy moves with such a slim working majority. Ken Cronin, chief executive of UKOOG, the representative body for the UK’s onshore oil and gas industry, says the ‘fundamentals of why we need shale gas are as strong today as they were last week.’ He said: “84% of our homes use gas for heating and a significant number of UK industries, such as textiles, chemicals and beverages, relying on gas for feedstocks and energy.” He went on to say UKOOG is ‘looking forward to working with the new government to help ensure that we realise our ambition to see a mix of energy sources produced here in the UK, which will reduce our dependency on imported energy, improve our balance of payments and create jobs’.

    Australian Greens reject fracking pipeline: The Greens say the proposed Northern Territory North East Gas Pipeline stinks. The Australian Greens May National Conference was held during May in Alice Springs. Delegates attended the conference from all states and territories. Greens Parliamentarians presented on issues such as renewable energy and transitioning from fossil fuels, to housing affordability and the new economy. They all agreed that the proposed pipeline stinks. There was consensus between all Greens Member Bodies that the Australian Greens would throw their weight behind the NT Campaign to stop the pipeline development in the Northern Territory. The Pipeline is being built to transport fracked gas out of the NT to Mt Isa in Queensland or for export, in spite of NT Labor's current public policy of a moratorium on fracking. 'There is overwhelming evidence that processes surrounding unconventional gas extraction pose the risk of irreversible damage to water aquifers ,' said Marli Banks, the NT Greens spokesperson for fracking. 'Over 90% of the Northern Territory is reliant on our underground water sources. Why would the NT Government be risking our health and livelihoods?' There are over twenty six thousand proposed wells in the Northern Territory.

    Global offshore oil struggles to find its footing: Fuel for Thought - Global offshore oil production has been the most sluggish and recovery resistant sector in the oil industry during the last three years of slumped oil prices, but the arena is showing signs of adaptation and resiliency thanks to new cost-paring measures that in some cases allows offshore projects to compete with shale. The need to reduce costs is not only critical for private companies and national oil companies. The world needs oil from those projects to meet future demand. “The offshore sector, which accounts for almost a third of crude oil production and is a crucial component of future global supplies, has been particularly hard hit by the industry’s slowdown,” the International Energy Agency said in a recent report. “In 2016, only 13% of all conventional resources sanctioned were offshore, compared with more than 40% on average between 2000 and 2015,” IEA said. As the industry adjusts to what could be a lower-for-longer oil price and what investment bank Barclays has called a “new oil paradigm,” the offshore sector is becoming more compact, nimble and phased, Barclays analyst David Anderson told S&P Global Platts. Breakeven prices for offshore projects generally are around $50-$60/b, analysts say, higher than world oil prices which have hung in the mid-$40s/b to low-$50s/b in the last year. As a result, operators are being forced to adjust their thinking in a changing industry where speed, flexibility and economy are crucial. As the industry moves into a third year of lower oil prices and Brent prices linger at or below $50/b, a mere handful of offshore projects have been sanctioned recently. Many producers have shelved exploration in favor of quicker-return US shale onshore. Those still with an offshore presence are straining to whittle down the cost of commercializing pricey discoveries made years ago at $100/b oil and find new fields to bring online at current prices.

     Platts JKM LNG: Aug kicks off at $5.45/MMBtu; prompt demand supports July  -- The Platts JKM for LNG cargo delivery in August, the new front month, started at $5.45/MMBtu Friday. The July JKM ended its assessment period on Thursday at $5.525/MMBtu, up 10 cents/MMBtu from $5.425/MMBtu Friday of last week. Bids for July cargoes edged up toward the end of the week to $5.40-$5.45/MMBtu for H2 July, against offers mostly seen at around $5.60/MMBtu. On Friday, best bids for August cargoes were said to be $5.40/MMBtu and offers were heard $5.50-$5.60/MMBtu. Demand for prompt cargoes provided support, although a lower oil price and weak European gas prices limited upside potential. That resulted in the spread between JKM and UK NBP rising to more than $1/MMBtu on Thursday, the highest since January 26. Buying interest was shown from buyers in China and South Korea for July delivery. South Korea's Komipo concluded a transaction midweek at $5.60/MMBtu for a July 5-12 delivery cargo into Boryeong LNG terminal. Guanghui Energy in Cihna has a requirement for a late July or H1 August delivery of a 90,000-100,000 cu m cargo, while China Huadian may enter the market for an August-delivery cargo, sources said. In India, GSPC launched a tender for an H1 August cargo after failing to award its previous tender seeking ab H1 July cargo. The tender came as demand from India continued to remain subdued partly due to the Monsoon season during which India's Dabhol LNG receiving terminal is closed. Indian buyers were cautious about purchasing prompt-delivery spot shipments due to ongoing tank-top issues at Dahej LNG terminal.

    Pakistan to continue Qatar LNG imports despite diplomatic crisis: minister -- Energy-starved Pakistan expects no changes in its long-term LNG supply agreement with Qatar or its plans to build a natural gas pipeline with Iran, despite geopolitical uncertainties. Pakistan, which relies on gas for around 50% of its energy needs, has seen domestic natural gas production stagnate at around 4 Bcf/d against a demand of more than 6 Bcf/d. Consumption is growing at an annual rate of 5%, driven by a growing economy, rising demand from the power and industry sectors, and expansion of the country's gas supply and distribution network. "Pakistan has a 15-year commercial contract with Qatar for LNG supply, and the severing of diplomatic ties between Qatar and Saudi Arabia would have no impact on this deal," Pakistan's Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said at a media briefing in Islamabad earlier this week. Only if sanctions were imposed or a force majeure declared on Qatar's LNG exports would this agreement face a threat, Abbasi added. But severe trade flow disruption is unlikely as global energy security is at stake with several major economies heavily dependent on LNG exports from Qatar, the world's largest supplier of the fuel. Pakistan imported more than 2.5 million mt of LNG from Qatar in 2016, according to Platts Analytics. Qatar's three biggest customers -- Japan, India and South Korea -- imported more than 11 million mt each, accounting for almost half of Qatar's total exports of 78.8 million mt. 

    Russia’s Gazprom Says Proposed US Sanctions Aim To Boost US LNG Exports -New sanctions on Russian energy projects proposed by the U.S. Senate are aimed at boosting LNG exports from the U.S. to Europe, an official from Russian gas giant Gazprom was quoted as saying on June 15.  U.S. senators approved new sanctions against Russia on June 14 over alleged meddling in the 2016 U.S. election, targeting certain Russian energy projects. “As far as the implementation of the sanctions is concerned, they don’t conceal that this is aimed at ensuring American LNG to Europe,” Interfax quoted Gazprom Deputy CEO Alexander Medvedev as saying. The U.S. is eyeing new markets for its LNG exports, including Europe. Gazprom so far has dismissed the potential impact from the U.S. proposal on its business in Europe, where it accounts for a third of gas supplies, saying that high transportation costs make U.S. LNG too expensive. The U.S. Senate said it was the policy of the United States to continue to oppose Gazprom’s Nord Stream 2 pipeline project, saying it would have a detrimental impact on the European Union’s energy security, gas market development in Central and Eastern Europe and energy reforms in Ukraine.

    India is Opec's litmus test on oil demand growth - Rising US shale oil production has put short-term supply concerns centre stage as the oil market downturn enters its third year. But for Opec producers, worries about when demand for their crude will peak is only gathering pace and India is in focus.  The south Asian nation is tipped to be the world’s fastest-growing oil consumer over the next two decades. Its population of 1.3bn people holds the hopes of global oil producers as rising incomes and the rapid uptake of motorcycles and cars boost petrol and diesel, offsetting fading demand in the west. But India, which sources 86 per cent of its oil needs from Opec countries, wants to reduce its dependence on foreign crude. Already close to overtaking China as the country with the most deaths caused by air pollution, it also wants to prevent rapid motorisation from suffocating its cities.  “Oil will remain an important component of our energy usage but our capital expenditure is moving into alternatives — gas, renewables and technologies such as electric cars,”  “There is a paradigm shift happening in the Indian market.” India has become the litmus test for Opec nations and other producers. If India’s growing middle classes do not use as much oil as they hope, global demand for crude may peak and fall faster than expected.

    OPEC and U.S. shale drillers are on collision course: Kemp (Reuters) - The oil market is on an unsustainable course with output from U.S. shale and other non-OPEC sources increasing rapidly, while OPEC and its allies trim production to reduce inventories and prop up prices.  The International Energy Agency (IEA) projects non-OPEC output will increase by 1.5 million barrels per day (bpd) in 2018 (“Oil Market Report”, IEA, June 2017).  If that proves correct, non-OPEC suppliers will capture all the increase in demand next year, because the IEA predicts consumption will increase by only 1.4 million bpd.  In effect, OPEC will be restricting its own output only to see rival producers step in to meet growing demand from refiners. OPEC will face the familiar dilemma of whether to defend oil prices by continuing to restrict output or defend market share by growing production again. OPEC and its non-OPEC allies are unlikely to remain impassive as U.S. shale producers and other non-OPEC countries not bound by the production agreement capture all the growth in market demand in 2018. If U.S. shale production continues to grow rapidly, OPEC will probably return to defending its market share in 2018, even if it means accepting lower oil prices. Between mid-2014 and mid-2016, OPEC’s strategy switched to protecting its market share and allowing oil prices to sink.  In the second half of 2016, OPEC switched tack again, and abandoned its market share strategy in favour of a return to price defence. Prices have risen but OPEC’s share of production is set to decline once more in both 2017 and 2018, which could force another change of strategy. OPEC now predicts U.S. oil production will increase by 800,000 bpd in 2017, compared with a projected decline of 150,000 bpd at the time of its December forecast (“Monthly Oil Market Report”, OPEC, June 2017). U.S. oil producers have added more than 400 extra rigs since the end of May 2016 in response to higher oil prices. But the increase in U.S. production is now threatening to overwhelm the market, in a re-run of the situation in 2014 that led to the price collapse.Most forecasters are bullish about the outlook for oil demand growth in 2018. Even so, output from U.S. shale and other non-OPEC sources will essentially capture the entire gain.

    OPEC plays a song and dance for the oil market (podcast) In a meeting that unfolded -– at least to S&P Global Platts OPEC specialist Herman Wang's eyes -- just like the Eurovision pop song contest, OPEC and its non-OPEC partners decided on May 25 to extend their 1.8 million b/d in production cuts through the first quarter of 2018. Herman explains the Eurovision connection and also catches up with Yasser Elguindi, an analyst with Medley Global Advisors, to break down the meeting’s results and their impact on the global oil balances. The podcast also delves into the diplomatic row between Qatar and its fellow OPEC members Saudi Arabia and the UAE, along with Bahrain and Egypt, that is providing some disruption in the market and heartburn for physical traders. And in the podcast’s Get to Know an OPEC Member segment, this month's episode focuses on Iraq, with an interview with Ben Van Heuvelen, editor in chief of the Iraq Oil Report. Ben discusses with Herman Iraq’s discrepancies in oil production figures, negotiations with international oil companies over contract terms, the country’s fight against the Islamic State, the outlook for the Kurdistan region’s oil sector, and more.

    Russia Has Become A De Facto Member Of OPEC -- Russia and Saudi Arabia are becoming ever closer allies in a graphic example of realpolitik. The two would probably be implacable enemies if their contrarian positions in Syria were any gauge — Russia is closely aligned with Iran in their support of Bashar al Assad, yet Iran is Saudi Arabia’s public enemy No. 1 and only major rival in the Middle East.  But economics trumps almost all, and the two's interests are certainly aligned in trying to reverse the damage done by Saudi Arabia's failed bid to squeeze U.S. shale drillers out of the market, as well as the corresponding glut of supply forcing prices to painfully low levels -- painful at least for oil producers. As the Financial Times observed in quoting RBC Capital Markets as saying, "Saudi Arabia and Russia are essentially now co-pilots of this operation (of restricting output to boost prices) and they've made it clear there will be no going back to chasing market share. ... It's a huge change from two years ago when Russia would not co-operate with OPEC and even questioned its relevance in the age of shale."The two agreed last week to not only extend but deepen production cuts for a further nine months into 2018. But not all agree with the International Energy Agency's prediction that the cuts will be enough to balance supply and demand later this year.

    Saudi to limit July oil volumes to Asia, slash U.S. volumes –sources - Saudi Arabia, the world's top oil exporter, will limit volumes of crude to some Asian buyers in July and deepen cuts in allocations to the United States, industry sources with knowledge of the matter said on Monday. State-run oil firm Saudi Aramco would supply full contracted crude volumes to at least five Asian buyers mainly in North Asia and lower volumes for some customers in India, China and South Korea, the sources told Reuters on condition of anonymity. Cuts in crude allocations to Asia in July would total about 300,000 barrels per day (bpd), deeper than in June, the sources said. Aramco notified Asian refiners last month that it would reduce oil supplies to Asia by about 7 million barrels in June, its first cuts for that region since OPEC-led output reductions took effect in January. Elsewhere, crude allocations to the United States have been lowered significantly and Aramco continued to curtail supply to Europe, two sources said. One source said volumes to the United States would be cut by about 35 percent in July, while Europe supplies will be reduced by about 11 pct compared to June. One of Aramco's main buyers in China opted for lower nominations in July due to planned refinery maintenance and the more expensive Dubai benchmark, one of the sources said. Another North Asian customer said Aramco would supply full volumes of heavy crude for a third straight month.According to the July plans, Aramco would cut supplies to India by close to 200,000 bpd and China by about 110,000 bpd, while supplying full volumes to buyers in Japan and Taiwan, said one source with knowledge of the nominations. Supplies to one South Korean refiner were also reduced, two sources said. 

    Asian refiners receive full Saudi crude oil allocations for July -- Saudi Aramco's major buyers in Asia are receiving full allocations for Saudi crude oil loading in July, with some Japanese refiners even getting higher volumes, according to market sources. Traders at several key Asian end-users said their July nominations were met and they were not aware of cuts to any refiners in the region. At least two traders with two Japanese refiners said they had received incremental volumes, with one even getting "slightly more Arab Extra Light." A Singapore-based crude trader with a North Asian refiner said that there were some adjustments to the allocation but "overall, the volume was the same." Earlier this month, Aramco raised the July official selling price of its Asian-bound crudes by 35-95 cents/b. The adjustments were higher than market expectations with some traders saying that the increases were too high. The increases could indicate that Aramco was expecting strong summer seasonal demand from Asia, especially for the medium, heavy crudes, traders said. July OSPs were high and this was probably why Saudi Aramco was ready to allocate Asian buyers their nominated volumes, an East Asian crude trader said. The full allocations to Asia buyers comes despite OPEC and 10 non-OPEC producers extending oil 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.

    Hedge funds remain cautious on oil: Kemp  - (Reuters) - Hedge funds remain cautious on the outlook for oil prices despite confident statements from Saudi Arabia that global oil inventories will decline substantially in the next few months.Asset managers cut their combined net long position in the three main futures and options contracts linked to Brent and WTI by 39 million barrels in the week ending June 6 (http://tmsnrt.rs/2ske0ve).The net position had been increased by a total of 114 million barrels over the previous three weeks, analysis of data published by regulators and exchanges showed (http://tmsnrt.rs/2rRLXld). From a positioning perspective, the balance of risks is now on the upside, with few long positions left to be liquidated and a relatively large number of short positions that need to be covered. Saudi Arabia has offered some rhetorical support by reiterating its determination to bring global oil stocks down to the five-year average, though policymakers have so far resisted pressure to cut output again. But the continued rise in the number of rigs drilling for oil in the United States has made it hard for fund managers to become bullish again.The number of rigs targeting oil-bearing formations has more than doubled over the past 12 months, even though WTI prices are down by about 6 percent. The rig count has continued to climb even after WTI prices peaked in February and started to decline (http://tmsnrt.rs/2rmxAli).Since production lags the rig count by six months, the recent increase in drilling will ensure that U.S. output continues rising for the remainder of 2017 and into 2018.The U.S. Energy Information Administration now forecasts output will increase by 460,000 barrels per day (bpd) in 2017, up from the 110,000 bpd rise forecast in January.The agency expects production to rise by a further 680,000 bpd in 2018, against the 300,000 bpd forecast in January.With so much extra production projected to come from the United States, with output also increasing from Brazil, Norway, Libya and Nigeria, sentiment among hedge fund managers remains tepid.

    Hedge funds turn bearish on U.S. natural gas: Kemp (Reuters) - Hedge funds have turned much more bearish towards U.S. natural gas prices after stocks built much more than expected at the start of the summer cooling season.Hedge funds and other money managers cut their net long position in the two main futures and options contracts linked to Henry Hub prices by 765 billion cubic feet in the week to June 6.Fund managers cut their net long position by a total of 1,349 billion cubic feet over the two weeks since May 23, after boosting positions by 1,721 billion cubic feet over the previous 12 weeks (http://tmsnrt.rs/2rRAYZa).By May 23, hedge funds had accumulated a near-record net long position of 3,919 billion cubic feet, according to the U.S. Commodity Futures Trading Commission (http://tmsnrt.rs/2sTeDch).  Fund managers gambled that strong exports coupled with a new wave of combined-cycle power plants would tighten gas stocks this summer.But instead stocks have risen in line with the normal seasonal pattern as power producers have switched back to burning coal.With ample stocks, the bullish bias among the hedge fund managers was no longer sustainable and a correction became inevitable. Spot prices and calendar spreads peaked in the middle of May, and started to soften gradually, before tumbling after May 22. Gentle liquidation of long positions by former hedge fund bulls has been accelerated by a new wave of short selling from hedge fund bears anticipating a price correction. Nearly all the decline in prices has been concentrated in near-dated futures contracts to encourage maximum power burn this summer. The price of gas for delivery at Henry Hub in July 2017 has fallen by more than 40 cents per million British thermal units, around 12 percent, since May 22 (http://tmsnrt.rs/2rRvNIz). By contrast, there has been little change in forward prices, with the price of gas for delivered in July 2018 down by just 2 cents since May 22.  Gas prices are now much more competitive with coal, which should encourage power producers to run their combined-cycle units for more hours as baseload and limit further downside risks.

    Gas prices join oil prices as YoY negative -- Well, this isn't something I expected to happen at the beginning of this year. For the last 16 months, gas and oil prices have risen off their bottom and the question had been, how much of a YoY increase there would be.  That has all changed in the last month.  A few weeks ago, oil prices went negative YoY. As of this past weekend, according to GasBuddy, so did gas prices: Further, since oil prices remain down YoY:   and gas prices at the pump tend to follow oil prices with a slight lag, it looks like consumers will benefit from cheaper gas for a little while longer.  This will tend to be reflected in subdued inflation readings, and so higher real wage gains. All of which makes it perfectly obvious that the Fed isn't raising rates to fight inflation.

    OPEC production rises in May despite output cut deal renewal -- OPEC’s crude oil production increased by 270,000 bpd in May over April, to stand at 32.12mn bpd – the highest level since January this year, according to a survey by S&P Global Platts. The rise in crude production, despite the Organization of Petroleum Exporting Countries joining hands with a Russia-led group of 11 non-OPEC oil producers, to extend the production cut deal till March next year, is being attributed to a sharp recover of output in Libya and Nigeria – the two OPEC members that were exempted from complying with the pact, according to Platts. Despite the high compliance from the cartel’s biggest producer and de facto leader Saudi Arabia, as well as from Angola, output jumped from the two excepted OPEC members, and Iraq continued to under-comply significantly, increasing its production in May, the Platts survey showed.According to the survey, Nigerian output increased last month to 1.73mn bpd, up by 80,000 bpd from April, and the highest level since March 2016, due to the restart of Forcados crude exports. According to Platts shipping data, two Suezmax tankers fully laden with crude oil set sail from Nigeria’s Forcados terminal at the end of May. In Libya, crude output increased by 180,000 bpd to 730,000 bpd in May – the highest level since October 2014 – with the giant Sharara field resuming production, and exports from both key eastern and western ports rising steadily.

    OPEC oil output jumps 336,000 barrels a day in May: OPEC's oil production jumped in May, despite the exporter group agreeing last month to extend its six-month deal to cap output into 2018. Production across OPEC rose by about 336,100 barrels per day to 32.1 million bpd, according to secondary sources, led by increases from Libya and Nigeria, which are exempt from the deal, and Iraq. Output from Libya surged by more than 178,000 bpd to 730,000 bpd as the country's rival factions moved toward reconciliation, and supplies disrupted throughout years of conflict remained on line. In Nigeria, production was up more than 174,000 bpd to 1.68 million bpd as supplies sidelined by militant attacks on energy infrastructure last year came back into operation. With the gain, Nigeria reclaimed the title of largest African producer in OPEC from Angola, where output fell by 54,000 bpd, the biggest drop among the 13 members in May. Iraq, OPEC's second-largest producer, contributed the third-biggest increase with a more than 44,000 bpd jump. Baghdad has yet to cut deeply enough to hit its quota of 4.35 million bpd under the output cut deal. In May, it produced 4.42 million bpd.Only four countries were producing at or below the levels they agreed to in November: Saudi Arabia, Angola, Kuwait, and Qatar. Last month, OPEC and other exporters extended an agreement to remove 1.8 million barrels a day from the market in order to shrink brimming global stockpiles of crude oil. In May, inventories in the OECD, a group of mostly wealthy countries, remained 251 million barrels above the five-year average. Despite this, OPEC struck a fairly upbeat note on the global economy. "The gradual recovery of the world economy continues and stronger-than-anticipated growth in 1Q17 has lifted the world GDP growth forecast for 2017 to 3.4%, up from the 3.1% growth seen in 2016," OPEC said. "This positive momentum is expected to continue into the second half of the year." OPEC also revised down its forecast for non-OPEC oil supply growth this year by 110,000 bpd to 58.14 million bpd. 

    OPEC Oil Prodcution Rises Most In 6 Months, Hits Highest Since December --Well, so much for OPEC's production cut. In OPEC's latest Monthly Oil Market Report, the oil producing cartel reported that in May - the same month OPEC met to extend its production cuts - crude output climbed the most in six month, since November 2016, rising by 336.1kb/d to 31.139 mmb/d, the highest monthly production of 2017, as members exempt from the original Vienna deal restored lost supply. From the report:Preliminary data indicates that global oil supply increased by 0.13 mb/d in May to average 95.74 mb/d, m-o-m. It also showed an increase of 1.48 mb/d, y-o-y. A decrease in non-OPEC supply, including OPEC NGLs represents a contraction of 0.21 mb/d m-o-m but an increase of 0.34 mb/d in OPEC crude oil production, not only offset the decline of non-OPEC supply but also increased overall global oil output in May. The share of OPEC crude oil in total global production stood at 33.6% in May, an increase of 0.3% from the month before. Estimates are based on preliminary data for non-OPEC supply, direct  communication for OPEC NGLs and non-conventional liquids, and secondary sources for OPEC crude oil production Specifically, Libya pumped 730k b/d in May, up 178kb/d from 552kb/d in April; Nigeria output jumped to 1.68m b/d vs 1.506m b/d, a 174kb/d increase, while even the biggest producer Saudi Arabia, saw its output grow by 2.3kb/d to 9.94mb/d vs 9.938m b/d in April. Not surprisingly, in an attempt to preserve the "reduction" narrative, in its self-reported figures, Saudi Arabia told OPEC via direct communication that it produced 9.88mb/d in May, down 66.2kb/d from April's 9.946mb/d, although these figures are looking increasingly suspect. Perpetuating its existence of forced self-delusion, OPEC predicted that surplus oil inventories would continue to decline in 2H 2017 as their cuts (what cuts) take effect and demand picks up. “The re-balancing of the market is underway” OPEC wrote, conceding that it is taking place "at a slower pace" and adding that “the decline seen in the overhang” in developed-nation stockpiles “is expected to continue in the second half, supported by production adjustments by OPEC and participating non-OPEC producers." There was little discussion of the soaring US shale output, which as we wrote last night is expected to hit an all time high next month.

    Oil Rises On Signs Of US Inventory Declines, Lower Saudi Exports (Reuters) - Oil edged up on Monday on signs of inventory declines in the United States and news that Saudi Arabia will limit volumes of crude to some Asian buyers in July and deepen cuts to the United States. Saudi Arabia, the world's top oil exporter, will cut crude allocations to Asia in July to a total of about 300,000 barrels per day (bpd), deeper than in June, sources told Reuters. One source said volumes to the United States would be cut by about 35 percent in July. Data from market intelligence firm Genscape estimating a draw of more than 1.8 million barrels at the Cushing, Oklahoma delivery point for U.S. crude futures last week added to the bullish sentiment, said traders who saw the data. Brent crude futures ended the session up 14 cents, or 0.3 percent at $48.29 a barrel, having risen as much as 2 percent to a session high of $49.15. U.S. West Texas Intermediate (WTI) crude futures gained 25 cents, or 0.6 percent, to settle at $46.08, having peaked at $46.71. Prices plunged about 5 percent last week after data from the U.S. Department of Energy showed a surprise increase in stockpiles. "We think the market's negative reaction to a one-week counter-seasonal crude inventory build of 3.3 million barrels was excessive, at least relative to its lack of positive reaction to draws amounting to 10.9 million barrels in the previous two weeks of data," Standard Chartered analysts said in a note. "We do not expect a repeat of the inventory increase this week; rather we see a further large inventory draw." Some traders and analysts said the rise looked technical in nature, after WTI rallied and encouraged a similar move in the Brent market. But they said the move might prove fleeting. "When you start to approach $45 a barrel in WTI, you're in an area where you do find some price support and I think there has been some evidence last week of investment flows coming back into crude oil," Petromatrix strategist Olivier Jakob said.

    Saudi Arabia Cuts U.S. Oil Exports to Work Down Global Supply Glut --  Saudi Arabia is slashing its U.S. oil exports to a near three-decade low for this time of the year, intensifying its efforts to reduce a global supply glut that has been pummeling crude prices. State-owned Saudi Arabian Oil Co. expects sales to the U.S. will drop below one million barrels a day in June, then slide to about 850,000 barrels a day in July, according to people familiar with the matter. The July figure would be its lowest export total to the U.S. for that month since 1988, based on figures from the U.S. Energy Information Administration. Saudi Aramco expects its August exports to the U.S. to decline by another 100,000 barrels a day, these people said, which would be the lowest export amount for that month since 2009. The shift comes as crude markets test some of their lowest prices of the year. Oil traders have been questioning whether Saudi Arabia and other members in the Organization of the Petroleum Exporting Companies can change that. The group cut output this year in an effort to ease a longstanding glut, but U.S. companies have rushed to fill any void left by OPEC. U.S. crude prices tumbled more than 9% over the past three weeks and are down about 13.5% this year, back near where they were before OPEC's deal was first announced in November. Some say Saudi Arabia's decline in exports to the U.S. is a direct effort to ensure OPEC's cuts have the intended effect: reducing bloated inventories of oil around the world, and particularly in the U.S., that have kept prices down. Declining exports to the U.S. show that Saudi Arabia is "getting serious" about addressing the supply glut, said Jan Stuart, global energy strategist at Credit Suisse Group AG. Yet skeptics say Aramco cutting shipments to the U.S. doesn't necessarily mean the global glut is shrinking. Traders are increasingly focused on U.S. inventories, in part because data there are easier to come by than in other places. When the EIA reported an unexpected increase in U.S. oil supplies last week, prices fell by more than 5%. 

    OPEC sees oil market rebalancing at slower pace, says output rises -- OPEC said on Tuesday a long-awaited rebalancing of the oil market was under way at a "slower pace" and reported that its own output in May jumped due to gains in nations exempt from a pact to reduce supply. In a monthly report, the Organization of the Petroleum Exporting Countries said its output rose by 336,000 barrels per day (bpd) in May to 32.14 million bpd led by a rebound in Nigeria and Libya, which were exempted from supply cuts because unrest had curbed their output. The boost means OPEC is pumping more than its forecast of average global demand for its crude this year, hindering efforts to reduce a glut. But Libyan and Nigerian output remains volatile, meaning the gain may not last. OPEC said oil inventories in industrialized countries dropped in April and would fall further in the rest of the year, but a recovery in U.S. production was slowing efforts to get rid of excess supply. "The rebalancing of the market is under way, but at a slower pace, given the changes in fundamentals since December, especially the shift in U.S. supply from an expected contraction to positive growth," OPEC said in the report. Oil prices gave up gains on Tuesday after the release of the report to trade toward $48 a barrel, below the $60 level that top OPEC producer Saudi Arabia would like to see and less than half the level of mid-2014.In the report, OPEC pointed to continued high compliance by its members with the supply deal and said oil stocks in industrialized nations fell in April - although they are still 251 million barrels above the five-year average. 

    Oil Flat As OPEC Sees Market Balancing At “Slower Pace” -Oil prices rose on Monday on news that Saudi Arabia might cut oil shipments to Asia and the U.S., but more generally on the technical resistance that oil prices face in the mid-$40s. In early trading on Tuesday oil prices were flat. Russia’s energy minister Alexander Novak said that the oil market will come back into balance by the end of the compliance period for the OPEC/non-OPEC cuts. Both he and his Saudi counterpart, Khalid al-Falih, said that global crude inventories will converge back to the five-year average by the end of this year, and that the oil market will be balanced by the end of the first quarter of 2018.. At the same time, OPEC conceded that the oil market is balancing at a “slower pace” than it had previously expected after reporting higher-than-expected production from within the cartel and from the U.S.  Royal Dutch Shell lifted its force majeure on its Forcados stream in Nigeria last week, an important move that could bring back more than 200,000 bpd of oil supply to the market. At the same time, Shell also declared force majeure on its Bonny Light oil, affecting 200,000 bpd. The declaration came after the discovery of a hole drilled in its Trans Niger Pipeline. Nigeria appeared to have gained the upper hand over militants in the Niger Delta over the past year, but the attack raises concerns that militant activity has not gone away. In fact, the Niger Delta Avengers, which burst onto the scene last year with a series of successful attacks, issued a statement in early June saying that they will “resume attacks on oil facilities.” Oil prices sank last week in part because of fears that Nigeria could flood the market with rebounding supply. If the Niger Delta Avengers are as effective as they were in 2016, Nigeria’s production may not rise at all and could in fact decline.

    OPEC's simple problem. Despite Saudi cuts, it's shipping more oil: Russell | Reuters: OPEC has finally acknowledged what the oil market already knows, namely that rebalancing is taking longer than expected. Perhaps this is because OPEC is actually shipping more crude. The Organization of the Petroleum Exporting Countries prefers to talk about output when assessing the impact of the deal among members and 11 allied countries to reduce production by 1.8 million barrels per day (bpd). While output is no doubt important, for the immediate market impact it's probably better to focus on what the group is actually exporting. Vessel-tracking and port data in Thomson Reuters Eikon shows that for the first five months of 2017, OPEC exported 25.6 million bpd. This figure is only shipments by tanker and is filtered to show vessels that have already discharged, are discharging or are en route to their destination. The shipments for the first five months of this year are slightly higher than the 25.4 million bpd the producer group exported via tankers in the same period in 2016. In May, OPEC shipments were 25.6 million bpd, up from April's 25.02 million bpd, according to the vessel-tracking data. The increase in exports via tanker was also reflected in higher output by the group, which said in a report on Tuesday that it produced 32.14 million bpd in May, up 336,000 bpd from the prior month.

    Oil tallies third session gain ahead of weekly data on U.S. supplies --Oil prices tallied a gain for a third-straight session Tuesday, ahead of a weekly U.S. government data that are expected to reveal a decline in crude supplies.Daily gains have been modest, however, as investors remain skeptical that production cuts led by Middle Eastern producers and Russia are helping to alleviate a yearslong market glut. On the New York Mercantile Exchange, July West Texas Intermediate crude rose 38 cents, or 0.8%, to settle at $46.46 a barrel after tapping a low of $45.56. August Brent crude on London’s ICE Futures exchange added 43 cents, or 0.9%, to $48.72 a barrel.Following the late May decision led by the Organization of the Petroleum Exporting Countries to extend the output-cut agreement into the first quarter of 2018, the “focus now shifts to how U.S. crude and shale producers respond to higher prices,” said Mihir Kapadia, chief executive offer and founder of Sun Global Investments, in emailed commentary. U.S. production “has been one of the biggest headaches for OPEC as they [have] been flexible in increasing output in response to higher prices,” he said. “Thus OPEC’s desire for higher prices over the medium term have been continually thwarted.”The Energy Information Administration said Monday that domestic shale-oil output is expected to rise by 127,000 barrels a day in July, from a month earlier. Petroleum supply updates are due out from the American Petroleum Institute late Tuesday and EIA early Wednesday. The EIA last week reported a surprise rise in weekly crude stockpiles, the first in nine weeks.

    WTI/RBOB Slump After Another Shocking Crude & Gasoline Inventory Build --Following last week's surprising builds (which sent WTI/RBOB prices lower), API reported another big crude build (+2.75mm vs an expected draw of 2.45mm) and surprise gasoline build. Crude and Gasoline futures prices immediately gave up the day's gains.  API: 

    • Crude +2.75mm (-2.45mm exp)
    • Cushing -833k
    • Gasoline +1.794mm (-1.15mm exp)
    • Distillates -1.451mm

    Last week's surprise builds in crude, gasoline, and distillates upset the OPEC narrative of movement towards rebalancing and tonight's API data further weakens that case...

    Oil Prices Plunge After API Reports Surprise Build In Crude Inventories -- The American Petroleum Institute (API) reported a build of 2.75 million barrels in United States crude oil inventories, compared to analyst expectations that markets would see a draw of 2.7 million barrels for the week ending June 9—a 5.45-million-barrel discrepancy that is bound to unsettle already unsettled markets.It seems that oil inventories are particularly unpredictable as of late, with last week, the API and EIA reporting remarkably disparate figures in the amount of crude oil inventory movement—a 7.9-million-barrel discrepancy between the two that fanned the flames of an already shaky market.This week’s build, according to the API, ends three straight weeks of draws. The EIA reported a build last week, suggesting to some that the API and EIA are not necessarily in disagreement, only out of synch.Crude oil inventory concerns have lingered, despite OPEC’s curtailment on member and non-member production to the tune of 1.8 million barrels per day, and despite Saudi Arabia’s ratcheting down oil exports to the United States, and promise to ratchet down more, by 35 percent in July.While this would not affect global inventories, restricting the amount of oil coming into the US should theoretically bring down inventories in the much-watched market, if it weren’t for Iraq’s increased oil exports to the US. WTI was trading up 0.8% at $46.45 per barrel at 3:11pm EST—more than $1.50 per barrel lower than a week ago—with Brent trading at $48.74, compared to $50.05 per barrel last week.  The upward movement on gasoline inventories for another week was also a huge disappointment, climbing 1.794 million barrels this week, compared to an expected draw of 1.15 million barrels.

     Oil supply seen outpacing consumption in 2018, demand to top 100 million barrels per day | Reuters: Growth in oil supply next year is expected to outpace an anticipated pick-up in demand that will push global consumption above 100 million barrels per day (bpd) for the first time, the International Energy Agency said on Wednesday. The Paris-based IEA said production outside the Organization of the Petroleum Exporting Countries would grow twice as quickly in 2018 as it will do this year, when OPEC and 11 partner nations have restrained output. "For total non-OPEC production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply," the IEA said. "In 2018, we expect non-OPEC production to grow by 1.5 million bpd which is slightly more than the expected increase in global demand." Brent crude futures extended losses after the report, falling 64 cents on the day to $48.08 a barrel by 0804 GMT, from around $48.26 prior to the release. Oil inventories across the world's most industrial nations rose in April by 18.6 million barrels to 3.045 billion barrels, thanks to higher refinery output and imports. The IEA said stocks were 292 million barrels above the five-year average. The agency continued to forecast an implied shortfall in supply relative to demand for the second quarter of this year.But it said slowing demand growth in China and Europe in particular, as well as increasing supply, meant the deficit should narrow to 500,000 bpd from a prior estimate of 700,000. 

    WTI/RBOB Tumble After Unexpected Gasoline Inventory Build, Production Rise - After tumbling last night following API's surprise builds, WTI/RBOB levitated on a weak dollar into the DOE print but initialy kneejerked lower on the data which showed a smaller than expected crude draw and confirmed another significant gasoline build. After a small drop last week, crude production rose once again to cycle highs. DOE:

    • Crude -1.66mm (-2.45mm exp)
    • Cushing -1.156mm (-1.4mm exp)
    • Gasoline +2.096mm (-1.15mm exp)
    • Distillates +328k (+550k exp)

    Last night's surprise build in crude was not confirmed (but the DOE data showed a smaller than expected draw). Cushing stockpiles fall to the lowest level of the year, dropping more than a million barrels for a second week. The total is now 62.2 million barrels, plenty of room in the tanks there. However, Gasoline inventories rose once again... After a modest drop in production in the Lower 48 last week, US crude production rose once again this week to its cycle highs...

    US crude plunges to 5-week low, threatening technical breakdown: Oil prices threatened to fall through key technical levels on Wednesday after the government issued a bearish report on U.S. fuel stockpiles. U.S. West Texas Intermediate crude futures fell nearly 4 percent, plunging to a five-week low below $45 a barrel, following the report. WTI last traded at $44.76, just $1 above the recent low of $43.76 struck on May 5.Following a precipitous drop toward the May 5 low last week, analysts warned that WTI's next stop could be $42.20 a barrel, a level not seen since mid-November. The U.S. Energy Information Administration reported that gasoline stockpiles rose by 2.1 million barrels in the week through June 9, versus expectations for a 457,000 barrel drop.  The surprise increase was another sign of persistently weak gas demand even as the summer driving season revs up. The four-week average for gas consumption is 1.2 percent below the year-ago level.In addition, U.S. crude stockpiles fell by 1.7 million barrels, less than the expected decline of 2.7 million barrels.

    US gasoline demand concerns spark selloff across oil complex - NYMEX July RBOB led the oil complex lower Wednesday, plunging 6.68 cents to $1.4327/gal, after US Energy Information Administration data showed a second straight build in gasoline stocks amid low demand for the time of year. With summer just around the corner, traders are focusing on the gasoline market, which made EIA's weekly inventory a market mover as demand failed to rebound from a sharp decline the previous week. Over the last two weeks, implied gasoline demand has averaged 9.293 million b/d, compared with 9.763 million b/d during the two weeks prior to that, and 9.665 million b/d in the same period a year ago. "The real problem in the market a couple of weeks into June is this gasoline demand story," said John Kilduff, partner at Again Capital. The RBOB crack fell further Wednesday, although that alone might not be enough to persuade refiners to slow down, said Kilduff. "Refiners are going to still crank out supply because they're hoping that when schools close people are going to hit the road. That's wishful thinking, but it's what they're going to play for," he said. "There have been strong employment numbers and a low pump price, which is favorable for refiners, so any business plan would conclude that this should be a good summer, but so far we're not seeing that," he added. The front-month NYMEX RBOB crack spread against WTI was down $1.08 at $15.44/b Wednesday afternoon, compared with more than $19/b on June 1. US gasoline stocks increased 2.096 million barrels in the week that ended June 9 to 242.444 million barrels, EIA data showed Wednesday. Analysts surveyed Monday by S&P Global Platts were looking for a draw of 600,000 barrels. Distillate stocks increased 328,000 barrels last week to 151.416 million barrels, but analysts were looking for a build of 200,000 barrels. That surprise build pulled NYMEX July ULSD down 3.75 cents to $1.4102/gal. Inventories fell in 14 of 15 weeks through the week that ended May 19, but have since risen by a total of 5.1 million barrels. US crude stocks decreased 1.661 million barrels to 511.546 million barrels in the week that ended June 9. Analysts expected a draw of 2 million barrels. ICE July Brent settled $1.72 lower at $47/b. NYMEX July crude settled $1.73 lower at $44.73/b, off an intraday low of $44.54/b, a low for the front-month contract going back to November 15.

    Oil remains below $45 amid growing concern over U.S. supply glut - Oil prices edged lower in European trading on Thursday, as data showing U.S crude stockpiles shrank by less than anticipated, while gasoline inventories increased, underlined fears over a global supply glut. The U.S. West Texas Intermediate crude July contract was at $44.48 a barrel by 3:55AM ET (0755GMT), down 25 cents, or around 0.6%. The U.S. benchmark fell to its lowest since May 5 at $44.38 in overnight trade. Elsewhere, Brent oil for August delivery on the ICE Futures Exchange in London shed 25 cents to $46.75 a barrel after dropping to $46.70, a level not seen since May 5. Oil prices plunged nearly 4% on Wednesday after the U.S. Energy Information Administration said that crude oil inventories fell by 1.7 million barrels in the week ended June 9, disappointing expectations for a decline of around 2.8 million barrels. The report also showed that gasoline inventories increased by 2.1 million barrels, compared to forecasts for a drop of 457,000 barrels. For distillate inventories including diesel, the EIA reported a rise of 328,000 barrels. Oil prices have been under pressure in recent weeks as concern over rising U.S. shale output offset production cuts by OPEC and non-OPEC members.Elsewhere on Nymex, gasoline futures for July inched down 0.9 cents, or about 0.7%, to $1.426 a gallon, while July heating oil dipped 0.2 cents to $1.408 a gallon. Natural gas futures for July delivery tacked on 0.4 cents to $2.937 per million British thermal units, as traders looked ahead to weekly storage data due later in the global day. 

    Natural gas rallies while crude oil continues its slide - U.S. natural gas jumped 4.4% to $3.06/MMBtu, the highest settlement of the month, after EIA inventory data showed a smaller than forecast build of 78B cf, following a build of 106B cf in the prior week.Stockpiles fell week over week to 10.6% below last year’s level, but they remain 9.2% above the five-year average. Wells Fargo analysts say the bullish data marks a reversal of a four week trend in which the storage injection was higher than expected by 6B cf on average each week, and provides further confirmation that natural gas markets are at least 2B cf/day undersupplied. Based on current weather forecasts, Wells forecasts a 102B cf cumulative injection over the next two weeks, which would bring the storage surplus vs. the five-year average down to just 182 Bcf.  Meanwhile, U.S. crude oil settled another 0.6% lower at $44.46/bbl after plunging 3.7% yesterday.

    In latest sign of crude glut, aging supertankers used to store unsold oil | Reuters: Traders are increasingly storing oil in aging supertankers in Southeast Asia as they grapple with a supply overhang that has left the system clogged with unneeded fuel despite an OPEC-led drive to cut production to prop up prices. Around 10 very large crude carriers (VLCCs), all between 16 and 20 years old, have been chartered since the end of May to store crude for periods ranging from 30 days to around six months, brokers told Reuters. Each VLCC can carry 2 million barrels of oil. These vessels are in addition to around 30 supertankers used for long-term storage around Singapore and Linggi, off the West coast of peninsula Malaysia. One of the main drivers for storing oil in tankers is that crude prices for immediate delivery are cheaper than for future sale, a market condition known as contango. Brent crude futures, the international benchmark for oil prices, have fallen by 13 percent since late May, to around $47 per barrel. Brent for delivery at the end of 2017 is $1.5 per barrel more expensive <0#LCO:>. "Floating storage does seem ... viable assuming time charter rates of under $20,000 per day," said Rachel Yew, oil and tanker market analyst at Oceanfreightexchange. Current rates to charter a five-year-old 300,000 DWT for one year are $27,000 per day, according to shipping services firm Clarkson. Rates for VLCCs at least a decade-old are much cheaper. "It makes a lot of sense for a trader to pay $16,000-$19,000 per day to take an older VLCC for 30-90 days to store oil," said a Singapore-based supertanker broker, asking not to be identified. The festering supply glut comes even as the Organization of the Petroleum Exporting Countries (OPEC) pushes to withhold production until the end of the first quarter of 2018.

    The Lonely Drifting Oil Tanker That Signals OPEC's Struggle  - If a single ship can capture the current state of the global oil market, it’s the supertanker Saiq, floating idly about 850 kilometers (530 miles) south of the Canary Islands. Until a few days ago, the 330-meter-long tanker, chartered by Royal Dutch Shell Plc, was steaming at 13 knots toward the Chinese port of Tianjin after loading a 2-million-barrel cargo of North Sea oil at the Hound Point terminal near Edinburgh. Then, it suddenly stopped in the middle of the Atlantic Ocean, according to ship-tracking data compiled by Bloomberg. Its problem: China isn’t buying much crude right now, leaving the tanker searching for a customer. While the vessel was floating near Africa last week, Shell offered to sell the cargo in a ship-to-ship transfer all the way back in Scotland. There weren’t any takers. Across the world, the plight of the Saiq, now idling off the coast of Mauritania, reflects a broader trend in the physical oil market. After six months of oil-production cuts from the Organization of Petroleum Exporting Countries and 11 non-OPEC nations led by Russia, crude supply is surprisingly still plentiful, according to traders. "It’s a buyer’s market," said Olivier Jakob, managing director of Swiss-based consultant Petromatrix GmbH, echoing a widely held view in the physical market. On paper, global supply and demand balances from the likes of the International Energy Agency say the market should be reducing stockpiles. Oil prices, however, suggest that any inventory reduction remains minimal. The headline price for Brent crude, the global benchmark, is below $50 a barrel, indicating buyers are on the sidelines. Time spreads, the price difference between contracts for different months, have widened considerably in June, with key measures at levels last seen in November, when OPEC announced its output cuts. Signs have emerged that traders are resorting to turning tankers into floating storage due to a lack of buyers. 

    Global oil markets expected to tighten in third quarter 2017, then loosen through 2018 – EIA -- Forecast world production of crude oil and other liquids in 2017 and 2018 was revised slightly downward in the June edition of EIA’s Short-Term Energy Outlook (STEO), which was issued after the May 25 announcement by the Organization of the Petroleum Exporting Countries (OPEC) of an extension to production cuts that were originally set to end this month.  OPEC’s crude oil production target will remain at 32.5 million barrels per day (b/d) through the end of the first quarter of 2018. Given the extended production cuts, EIA now forecasts OPEC members’ crude oil production to average 32.3 million b/d in 2017 and 32.8 million b/d in 2018, down 0.2 million b/d and 0.4 million b/d, respectively, from the previous STEO. Total OPEC liquid fuels production is also expected to be lower than previously forecast. However, continuing production growth in many non-OPEC countries is expected to moderate the pace of global liquid fuels inventory draws in 2017. EIA expects a small inventory build in 2018. Inventory draws expected in the second and third quarters of 2017 suggest the possibility of some increases in crude oil prices over the coming months. However, because U.S. tight oil production is relatively responsive to changes in oil prices compared with offshore production, and even given an estimated six-month lag between a change in oil prices and realized production, higher crude oil prices in mid-2017 have the potential to raise U.S. supply in 2018.  The largest global inventory increase in the forecast occurs in the second quarter of 2018, when Brazilian and OPEC production are expected to increase by 570,000 b/d and 220,000 b/d, respectively. Supply growth in 2018 could contribute to downward pressure in oil prices as early as late 2017. EIA’s STEO forecast assumes OPEC cuts will be extended beyond March 2018 but that non-compliance will begin to grow late in 2017 and increase in the second half of 2018. Although this forecast reflects the assumption of increased non-compliance with a second production-cut extension in 2018, any extension provides some support for crude oil prices, even if only temporarily, which would partially offset downward price pressure from growing inventories.

    OilPrice Intelligence Report: Can Oil Come Back From Its Longest Losing Streak In Years?: Oil prices dropped to new lows this week, completely erasing all the gains made since OPEC originally cut production back in November 2016. The fear is that persistent oversupply will continue to weigh on crude oil markets. Both the IEA and OPEC came out with forecasts this week that admitted that the adjustment process is happening much slower than they expected. That pulled down WTI and Brent, but when the U.S. EIA reported an uptick in gasoline inventories on Wednesday, oil prices really tanked. Oil prices are closing out the fourth consecutive week of losses – the longest string of weekly losses in two years.Both the IEA and OPEC said this week that the oil market was adjusting slower than they expected. The IEA also said that non-OPEC production growth next year will reach 1.5 million barrels per day (mb/d), a volume that will exceed total global demand growth. That means that OPEC will be backing out production only to see non-OPEC producers fill the void. Everyone expects strong production growth from U.S. shale this year; the only discrepancy in predictions is over the magnitude of growth. But the sudden drop in oil prices has raised a few questions about the durability of the rebound. With drilling campaigns already underway, output growth is probably locked in for the next few months, and likely, for the remainder of the year. But the outlook for 2018 is still up in the air. Right now the shale industry has locked in its 2018 production with hedges at a much lower rate than it did at this point last year. The lower rate of hedging will increasingly expose shale drillers to low prices going forward. And without a rebound in prices, they won’t be able to get those hedges at $50 per barrel like they did last year. Without that certainty, they will be forced to try to drill in a lower price environment. In all likelihood, if prices stay in the mid-$40s or drop further, the shale boom could be curbed. 

     No Respite For Oil Prices As U.S. Rig Count Gains, Canada Adds 27 Rigs - The number of active oil and gas rigs in the United States rose again this week by 6—making 22 weeks of gains, continuing the longest growth streak in oil and gas rig increases since at least 1987, which is the earliest date that Baker Hughes Excel data is available.Last week, both the US and Canada saw significant increases in the number of active oil and gas rigs—11 in the US and 33 in Canada. This week, Canada saw another large growth spurt, adding 27 rigs.The number of oil rigs in operation increased by 6, while gas rigs increased by 1. Miscellaneous rigs decreased by 1 to 0. Combined, the total oil and gas rig count in the US now stands at 933 rigs, which is 509 rigs over a year ago today, when oil prices were significantly higher than they were today. Prices were up slightly on Friday morning after a rather horrific week, but prices still put major benchmarks squarely in the realm of the longest losing streak since 2015. WTI was trading up 0.85% at $44.84 at 9:11am EST, with Brent trading up 1.11% at $47.44—both benchmarks over a dollar lower than last week’s levels, and lower than prices were prior to the OPEC deal was solidified in November.   The hotspot Permian basin, which has seen more than a 30-percent increase in the number of active oil and gas rigs over the last 20-something weeks, saw no net increase in oil and gas rigs, while the Williston basin added 3 rigs. Still, the Permian basin boasts 222 rigs more than this time last year. The rush of drillers to the Permian basin is causing some concern beyond stealing some of OPEC’s clout—with eight hedge funds pulling more than $400 million in positions out of 10 oil and gas companies that are active in the Permian, likely concerned that the low-cost increased production from the Permian will lower low prices even further. At 8 minutes after the hour, WTI started was trading at $44.67, while Brent traded at $47.27.

    Shale  Efficiency Has Peaked For Now As Rig Count Surges For 22nd Straight Week --For the 22nd week in a row, the number of US oil rigs rose (up 6 to 747) to the highest since April 2015. Given the historical relationship between lagged prices and rig counts, we suspect the resurgence in rigs may begin to stall... Oil is headed for the longest run of weekly losses since August 2015 as OPEC member Libya restored production and the surplus in the U.S. shows little sign of abating. "Inventory levels remain stubbornly high," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. "The reality is, the things that have caused this trading range remain in place. Nothing’s changed." US Crude Production from the Lower 48 rebounded this week (after a modest fall the week before) to new cycle highs... The growth in rigs has been almost entirely in The Permian... But, as Reuters reports, while cash, people and equipment are pouring into the prolific Permian shale basin in Texas as business booms in the largest U.S. oilfield, one group of investors is heading the other way - concerned that shale may become a victim of its own success. Eight prominent hedge funds have reduced the size of their positions in ten of the top shale firms by over $400 million, concerned producers are pumping oil so fast they will undo the nascent recovery in the industry after OPEC and some non-OPEC producers agreed to cut supply in November. The funds, with assets of $286 billion and substantial energy holdings, cut exposure to firms that are either pure-play Permian companies or that derive significant revenues from the region, according to an analysis of their investments based on Reuters data. "Margins will continue to be squeezed by a 15 to 20 percent increase in service costs in the Permian basin," said Michael Roomberg, portfolio manager of the Miller/Howard Drill Bit to Burner Tip Fund. Which, despite the forecasts for increasing production, fits with OilPrice.com's OilPrice.com's Peter Tertzakian that shale efficiency has peaked... for now. Learning takes time and effort. But a good education pays off. North America’s oil industry has been in school for the past three years, studying how to become more productive in a fragile $50-a-barrel world. Many companies in the class of 2017 have graduated and are now competing hard for a greater share of global barrels.

    Did This Backroom Deal Just Bust OPEC's Control On Oil Prices? --Libya has been one of the biggest x-factors in the global crude markets the past year.With on-again, off-again production in this key nation alternately supporting and suppressing prices. But news this week suggests things are looking up for Libya’s crude output.And down for global oil markets.Reuters reported that Libya’s National Oil Company has struck a backroom deal with German energy developer Wintershall, which will see that firm restart a major chunk of oil production in the east of the country. The Wintershall assets covered by the deal have production potential of 160,000 b/d. But have been shut-in since earlier this year after a dispute broke out between the company and the Libyan government over an alleged $900 million in unpaid taxes. The two parties however, said Tuesday they have reached an “interim arrangement” to end the dispute. Opening the door for Wintershall’s significant swath of production to return to market. That would be a big happening for Libya’s overall oil output. The country is currently producing an estimated 830,000 b/d — meaning a return of the Wintershall fields would lift national production by nearly 20 percent overnight. Such a rise would continue an upward trend in Libya’s production the last few months. With production having been as low as 700,000 b/d as recently as March. Libyan officials said they are indeed targeting production of 1 million barrels per day by the end of July. Meaning the crude market might have a lot more supply coming over the next six weeks. All of which is critical for global crude prices. With Libya being exempted from OPEC production quotas — and thus one of the few nations on Earth free right now to ramp up output and exports. Stats this week in fact showed that Libya’s rise the last few months is having a notable effect on supply. With OPEC’s production for May coming in 336,000 barrels higher than the previous month — at 32.1 million barrels per day.

    America is no longer a force for stability in the Gulf - The Economist - AMERICA’S president got on so well last month with King Salman of Saudi Arabia that he has embraced the monarch’s foreign-policy goals. Sunni Saudi Arabia detests Shia Iran, its chief regional rival. So does Donald Trump. He also appears to share the Saudi view that the most egregious bankroller of terrorism in the Middle East is the tiny sheikhdom of Qatar. He applauded when, on June 5th, Saudi Arabia, Bahrain and the United Arab Emirates severed diplomatic ties with Qatar, as well as land, sea and air links. The Gulf states gave Qatari citizens 14 days to leave. Ludicrously, the UAE declared that anyone publishing expressions of support for Qatar can be jailed for up to 15 years. Mr Trump tweeted: “Perhaps this will be the beginning of the end to the horror of terrorism!”Though tiny, Qatar matters. It is the world’s largest producer of liquefied natural gas and an airline hub. It is also host to Al Jazeera, the nearest the Middle East has to an uncensored broadcaster (so long as it does not criticise the Qatari monarchy). It has good ties with Iran, with which it exploits a vast gasfield. It is supportive, too, of the (Sunni) Muslim Brotherhood, the most popular face of political Islam. All this makes Saudi Arabia hate it. The Saudi regime has tried in the past to bend Qatar to its will, but failed. Qatar hosts a large American airbase, which until now has made it feel safe. But with Mr Trump in the White House, nobody is now so sure. The spat has split the Gulf Co-operation Council, hitherto a force for stability in an unstable region. It may drive Qatar, as well as Kuwait and Oman, the other two members of the GCC, who pointedly declined to support the Saudi move, further into the arms of Iran. Tempers may eventually cool, but some observers worry that the price of Saudi Arabia backing down will be the muzzling of those pesky Al Jazeera journalists.

    US aims to dethrone Qatar with LNG war - The U.S. is expected to 'dethrone' Qatar, the biggest global LNG exporter, with its 30 planned LNG terminals and with six more under construction. According to official figures from the International Gas Union and the International Group of Liquefied Natural Gas Importers, Qatar exported 77 million tons of LNG in 2016. While sales to the Asian region accounted for more than 60 percent of Qatar's total LNG exports, the country's top export destinations were Japan, South Korea, India, the U.K. and China. Qatar exported 14.5 million tons of LNG to Japan, 12.3 million to South Korea, 8.8 million to India, 9.3 million to the U.K. and around 5 million tons to China. Qatar's total capacity of 77 million tons of LNG is distributed as follows: The Qatargas-1 terminal has a capacity of 9.5 million tons, Qatargas-2 has 15.6 million, Qatargas-3 has 7.8 million, Qatargas-4 totals 7.8 million tons, Rasgas-1 terminal's capacity amounts to 6.6 million tons, Rasgas-2 has 14.1 million tons and Rasgas-3 totals 15.6 million tons. The U.S. appears to be the strongest challenger to Qatar's LNG leadership in the near term, with annual LNG exports in 2015 totaling 330 thousand tons. The U.S. aims to take a more active role in Asia in the mid-term with plans to invest in LNG terminals, with anticipated completion dates between 2018 and 2024. The country currently has two active terminals set for LNG exports - the Kenai LNG terminal with a capacity of 1.5 million tons, which in 2016 did not export LNG. The second is the Sabine Pass LNG terminal, which is actively exporting LNG. Exports of around 2.9 million tons of LNG were made through the Sabine Pass in 2016. Further plans are afoot to have additional capacity of 13.5 million tons. Other LNG terminals under construction are Freeport (15.3 million tons), Cameron (12 million tons), Covepoint (5.25 million tons), Elba Island (2.5 million tons) and Corpus Christi (9 million tons). The total capacity of the U.S.' six under-construction projects is estimated at 57.55 million tons, and when all planned terminals are operational, the total LNG export capacity of the country is expected to exceed 300 million tons.

    Qatar Says It Can Defend Currency and Economy in Gulf Feud -- Qatar is still waiting for specific demands from the Saudi-led bloc that has severed ties with the tiny Gulf state, and therefore sees no basis yet for a diplomatic solution, Foreign Minister Mohammed Al Thani said. Kuwait, the mediator of the dispute, remains in contact with Qatar and the U.S., Al-Jazeera TV cited Al Thani as saying on Monday. Qatar is working on humanitarian issues stemming from the “illegal siege,” he said.Al Thani’s comments come as Qatar tries to play down the impact of a crisis now entering its second week. Finance Minister Ali Shareef Al Emadi said earlier that the country has enough financial firepower to defend its currency and economy and that the plunge in Qatari assets was a “normal” reaction to moves by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt to cut diplomatic and transport links. The Saudi-led alliance is demanding that Qatar distance itself from Iran and stop funding Islamist groups. Qatar denies sponsoring terrorism and accuses the Saudis of seeking to dominate smaller neighbors. The unprecedented measures have prompted investors and economists to ponder how long Qatar, the world’s biggest exporter of liquefied natural gas, can weather the pressure without having to devalue its currency or sell any of its global assets. Qatar’s sovereign wealth fund, one of the world’s largest, controls stakes in companies from Glencore Plc to Barclays Plc. Qatar’s most liquid bonds tumbled last week as its sovereign rating was cut and bets against its currency surged. “Our reserves and investment funds are more than 250 percent of gross domestic product,” Al Emadi, who sits on the board of the sovereign wealth fund, said. “I don’t think there is any reason that people need to be concerned about what’s happening or any speculation on the Qatari riyal.” The central bank broadcast a similar message of reassurance, saying it had sufficient reserves to meet all requirements and that banks were functioning normally without disruption, state-run Qatar News Agency reported.'

    Plan to airlift 4000 cows to isolated Qatar to maintain milk supplies -- A Qatari businessman is planning to airlift 4,000 Holstein dairy cows into the country as part of efforts to maintain milk supplies during the blockade by Qatar’s Gulf Arab neighbours. The proposal – described as the biggest airlift of cattle ever attempted – comes as Qatar moves rapidly to open an air and sea bridge via Iran, Turkey and port facilities in Oman. The plan to fly in the cows was disclosed by Moutaz Al Khayyat, chairman of Power International Holding, to the Bloomberg news agency. Khayyat said it would take as many as 60 flights to deliver the cattle, which were bought in Australia and the US. He had originally planned to import the cows by ship for a newly completed dairy facility near Doha. Saudi Arabia, Bahrain and the United Arab Emirates cut diplomatic, economic and transport ties with Qatar on 5 June, accusing Doha of supporting extremist groups.  Until then, Qatar had imported most of its dairy products from neighbouring countries – including Saudi Arabia. Riyadh closed the Qatari peninsula’s only land border, threatening the import of both fresh food and raw materials needed to complete a $200bn infrastructure project for the 2022 football World Cup.Turkey has replaced products that disappeared from supermarket shelves, including yoghurt and laban, while Morocco and Iran have pledged to supply the emirate with foodstuffs. Qatar has negotiated new cargo handling arrangements in the Omani ports of Sohar and Salalah, avoiding the need for goods to stop in the UAE. Shipments of containers through the UAE port of Jebel Ali were frozen last week.

    Qatar hires Bush attorney general John Ashcroft for 'crisis response' | TheHill: Qatar has hired John Ashcroft, the former attorney general under President George W. Bush who oversaw the War on Terror's legal proceedings. The decision to hire of Ashcroft, who also previously served as a Missouri senator, comes after the United Arab Emirates, Saudi Arabia and several other Mid-East states accused Qatar of supporting terrorist efforts in the region.  President Trump escalated the Qatari government’s diplomatic crisis by also accusing it of funding terrorist organizations that aimed to destabilize the region. Bloomberg first reported the big-name hire after Ashcroft's law firm filed a public form with the Justice Department. Lobbyists and attorneys in the United States are queried to disclose efforts conducted on behalf of foreign entities. “The Firm’s work will include crisis response and management, program and system analysis, media outreach, education and advocacy regarding the Client’s historical, current, and future efforts to combat global terror and its compliance goals and accomplishments,” according to file issued on Friday. Ashcroft will take the lead on the efforts, and the law firm will receive $2.5 million as a “flat fee” for the first 90 days of covering expenses, as well as to make the project a "top priority.”

    Qatar willing to listen to Gulf concerns, Kuwait says -- Qatar is ready to listen to the concerns of Gulf Arab states that have cut diplomatic and economic ties, Kuwait said on Sunday, as it tried to mediate a solution to the worst regional crisis in years. Saudi Arabia and allies Egypt, Bahrain and the United Arab Emirates (UAE) severed ties with Qatar last week, accusing it of supporting Islamist militants and arch-foe Iran - charges Doha denies. The rift has disrupted travel, separated families, severed commercial links and sown confusion among banks and businesses while deepening divisions between their respective allies fighting in wars and political struggles from Libya to Yemen. "(Kuwait) affirms the readiness of the brothers in Qatar to understand the reality of the qualms and concerns of their brothers and to heed the noble endeavors to enhance security and stability," Kuwait's state news agency KUNA quoted Foreign Minister Sheikh Sabah al-Khalid al-Sabah as saying. Kuwait, which has retained ties with Qatar and has often acted as a mediator in regional disputes, said it wanted to resolve the dispute "within the unified Gulf house". A previous mediation effort by Kuwait in which the Emir Sheikh Sabah al-Ahmad al-Jaber al-Sabah shuttled between Riyadh, Abu Dhabi and Doha, failed to achieve an immediate breakthrough. "Is this the beginning of wisdom and reasonable thinking? I hope so," UAE minister of state for foreign affairs Anwar Gargash wrote on Twitter in reaction to Kuwait saying Qatar was ready to listen to the grievances. Morocco, a close ally of the Gulf countries, said on Sunday it would remain neutral and offered to facilitate dialogue. 

    Iran sends planes stuffed with food to Qatar -  Five Iranian planes filled with food have landed at Doha airport as the blockade against Qatarby Saudi Arabia and other Gulf countries starts to bite. Iran said the planes were filled with vegetables and that it plans to send 100 tons of fresh fruit and legumes every day to the import-dependent nation, according to the semi-official Tasnim news agency. "So far five planes carrying ... vegetables have been sent to Qatar, each carrying around 90 tonnes of cargo, while another plane will be sent today," Iran Air spokesman Shahrokh Noushabadi told the Agence France-Presse news agency Sunday. "We will continue deliveries as long as there is demand."Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut links with Qatar last Monday, accusing Doha of supporting and financing terrorism in the Middle East and elsewhere -- a charge Qatar denies.Separately, Iran is preparing to send a flotilla of warships first to Oman and then later to international waters north of the Indian Ocean and the Gulf of Aden, Tasnim reported.The agency said the fleet was dispatched as part of Iran's commitments to fight international piracy, and did not mention tensions with Arab countries involved in the spat with Qatar. As well as cutting air, sea and land links with Doha, three of the countries involved -- Saudi Arabia, Bahrain and the UAE -- ordered Qatari citizens to leave within 14 days.On Sunday, Qatar said that the 11,000 citizens of those countries that have cut ties will be allowed to stay in the country.

    Qatar Is Running Out Of Dollars -- While the Saudi-led campaign to starve Qatar's citizens may end up short of the target, with both Turkey and Iran volunteering to provide needed staples to the isolated Gulf nation while local entrepreneurs have started a cow paradropping campaign to offset the decline in milk imports, a more pressing problem has emerged: Qatar's financial system is running out of dollars. As Bloomberg reports, several Qatari banks have boosted interest rates on dollar deposits to shore up liquidity as the Saudi-led campaign to isolate the gas-rich Arab state intensifies. To boost their hard currency reserves, Qatar banks are now offering a premium of as much as 100 basis points over LIBOR to attract dollars from regional banks, some 80 bps higher compared to the rate they offered prior to last week's crisis. A similar picture is visible on the 3-Month QIBOR, or Qatar Interbank Rate, which has surged to 2.3% as of Tuesday. According to the central bank, at the end of April, Qatar's banks held 21.4% of their customer deposits in foreign currency. Non-resident deposits made up 24% of the overall deposits of 781 billion riyals ($213 billion). A separate estimate from SICO Bahrain, Qatari banks have around 60 billion riyals ($16.5 billion) in funding in the form of customer and interbank deposits from other Gulf states. Most of this could eventually be withdrawn if the crisis continues. Adding to concerns of a monetary blockade, Bloomberg also reports that some banks in neighboring countries have been cutting their exposure to Qatar amid concerns of a widening of the blockade. The good news for Qatar - the world's wealthiest nation on a GDP/capita basis - is that it has enough financial firepower to withstand a prolonged financial siege, and defend its currency and economy, Finance Minister Ali Shareef Al Emadi told CNBC in an interview broadcast Monday. Al Emadi played down the impact of the crisis on the country, saying the plunge in Qatari assets last week was a “normal” reaction to the standoff.

    Egypt to put squeeze on Qatari LNG volumes -- Egypt was one of four countries to cut diplomatic ties with Qatar in June because of its alleged support for terrorist groups. Cairo currently relies heavily on Qatari LNG imports to make up its shortfall in domestic gas production. Related analysis: LNG trade disruption worries ease as Qatari flows to Suez, Egypt resume In 2016, Egypt imported 7.32 million mt of LNG, of which 4.42 million mt or 60% was sourced from Qatar. However, Egypt believes that rising domestic production will allow it to return to gas self-sufficiency in 2018/19, ending the need for LNG imports altogether. Given the diplomatic crisis with Doha, it looks as if Qatari volumes will be squeezed first, as both Cairo’s gas import requirements and political strategy prove complementary. Earlier this year, the government announced that state gas company EGAS had contracted with Russia’s Rosneft, France’s Engie and Oman’s OTI for 45 cargoes of LNG, implying a significant fall in Qatar’s share of the Egyptian LNG import market this year. At the same time, EGAS has begun talks with suppliers over deferring 40 out of 70 contracted LNG shipments next year, before imports are completely halted.

    Qatar imbroglio: a sea of troubles for energy and shipping markets (video & transcript) The diplomatic impasse between Qatar and its Arab neighbors made co-loading of cargoes at multiple ports in the Middle East difficult if not impossible. It also brought into focus, Fujairah's ability or lacunae thereof to rise above complicated geopolitics of energy and shipping markets and maintain its hallowed status as a global bunkering hub. For Qatar, it is going to be a tightrope diplomatic walk between Iran and its Arab neighbors before the spat ends and it is business as usual again.

    Multipolar World Order: The Big Picture in the Qatar-Saudi Fracture --Officially, everything started with statements made by Qatari emir Tamim bin Hamad Al Thani that appeared on the Qatar News Agency (QNA) on May 23, 2017. A few hours before the conference between the 50 Arab countries and the US President, Al Thani was reported to have said the same words that appeared on QNA. The speech was very indulgent towards Iran and described the idea of an «Arab NATO» as unnecessary. The exact words are not known because the event in which Al Thani had made such incendiary remarks concerned military matters and was thus not accessible to the general public. Especially to be noted is that QNA denies having published words in question and attributed them to a cyber-attack.The public dissemination of the Emir's words on QNA promptly provoked an unprecedented diplomatic crisis in the Gulf. Immediately, Saudi Arabia, the United Arab Emirates (UAE), Bahrain, Egypt and the Maldives took advantage of the confusion created by Al Thani’s alleged words by enacting a series of extreme measures while accusing Doha of supporting international terrorism (through Hamas, al Qaeda, Iran and Daesh). Qatar’s ambassadors in the countries mentioned were requested to return home within 48 hours, and Qatari citizens were given 14 days to leave Bahrain, Saudi Arabia and the UAE. At the same time, Riyadh proceeded to close its airspace as well as land and sea borders to Qatar, effectively isolating the peninsula from the rest of the world.Realistically, what interest would Qatar have had in promulgating the words of Al Thani in order to antagonize Riyadh and Abu Dhabi? Even if the Emir had made such remarks, Doha would certainly not have given them to QNA to publish on its website. If it was not a cyber-attack, it was certainly a miscalculation on Doha's part or, worse, possibly internal sabotage to damage the Al Thani family. To explain the dynamics that have officially created this unprecedented situation, it is necessary to sift through the facts in order to discern reality from fiction.

    Qatar-Iran ties: Sharing the world’s largest gas field -- As Qatar and a host of Arab nations are locked in a diplomatic dispute, analysts warn that a disruption to Qatar's gas supplies to the world could send energy prices soaring. Qatar is the world's largest exporter of liquefied natural gas (LNG) and produces up to 77 million tonnes of gas each year. Gas has helped transform the tiny emirate into one of the richest countries in the world, propelling its rise into a major regional player and helping Qatar fund huge infrastructure projects and host major events such as the 2022 football World Cup. Qatar has several gas fields within its territorial waters. In April 2017, Qatar announced it was boosting output in the world's largest gas field - the 'North Dome' - off the Gulf state's northern coast, which it shares with Iran. 'South Pars' is the name for Iran's share of the gas field.  Qatar Petroleum has insisted that the recent diplomatic rift between Qatar and some of its neighbours will not affect output.

    After Turkey’s decision to deploy troops in Qatar, Syrian Kurds express willingness to cooperate with Saudi Arabia -- The Syrian Kurds are ready to work with Saudi Arabia, a senior Kurdish official said in response to the tensions between Saudi Arabia and Qatar, which is backed by Turkey.“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,” said top Kurdish politician Ilham Ahmed, who is currently on a visit to Washington to discuss the ongoing Raqqa operation.The statement comes after Turkey threw its support behind Qatar, as other Arab states imposed an embargo on Qatar. The Turkish parliament approved a motion to deploy troops in Qatar and provide food and water supplies that have been cut off from Qatar by Saudi Arabia.Saudi Arabia, Egypt, the United Arab Emirates, and several other Arab countries have cut diplomatic ties and blocked transport routes with Qatar, after accusing Qatar of having ties with extremist groups.The Syrian Kurds have long accused both Qatar and Turkey of supporting extremist groups in Syria, but until recently Saudi Arabia has continued backing Turkey. On Thursday, a group of Saudi social media users on Twitter launched a campaign #saudiwithkurdistan, in response to the Turkish support for Qatar. “Saudi supports the establishment of the state of Kurdistan, a legitimate right to the Kurdish nation to live in peace,” Saudi social media user Norah  tweeted from Riyadh.

    Meet the Two Princes Reshaping the Middle East - The dramatic and sudden effort to isolate Qatar, like the fateful intervention before it in Yemen, sprang from the shared vision of two princes. Depending on your point of view, they may be the harbingers of a new and better Middle East—or reckless architects of disaster. Indeed, the region’s most important relationship may be the dynamic duo of Muhammad bin Salman, the 31-year-old deputy crown prince of Saudi Arabia, and Muhammad bin Zayed, the 56-year-old crown prince of Abu Dhabi, the lead sheikhdom of the United Arab Emirates. They share not only a desire to wage twin battles against Iran and Islamic radicalism, but also a deep appreciation for their conservative Gulf countries’ reliance on the United States. Together, they have shrewdly cultivated President Donald Trump, who is eager to show that he has a new strategy for defeating terrorism and confronting Tehran. Known to foreign diplomats and business executives as MBS and MBZ, they appear to have a mentee/mentor relationship, with the older MBZ viewing MBS as the future king of Saudi Arabia, who needs to be tutored by an older brother type figure. MBS, for whom the word hubris is a natural fit, seems to accept MBZ’s counselling but probably would be horrified of the perception that he may be the junior partner. Both men are arguably the powers behind their respective countries’ thrones. MBZ has been increasingly running Abu Dhabi, which has most of the UAE’s oil reserves, since his appointment as deputy crown prince in 2003 and his elevation to crown prince in 2004, when his father Sheikh Zayed, the founder of the UAE, died. Notionally, his elder half-brother Khalifa is the ruler of Abu Dhabi and president of the UAE as a whole, but his health has been ravaged by successive strokes and other ailments and he is no longer seen in public. MBS is tracking the same career path as his would-be mentor, having been appointed deputy crown prince three months after his father became king in early 2015. In two short years, he has amassed executive power equivalent to MBZ’s—so the two men can speak as equals in terms of deciding policy and enacting it. King Salman clearly dotes on MBS, and seems to validate almost any policy idea he puts forward. 

     Analysis: LNG trade disruption worries ease as Qatari flows to Suez, Egypt resume -- Concerns over the impact of diplomatic blockade on Qatar on LNG trade flows eased this week, following deliveries of Qatari LNG into Egypt and the transiting of several Qatari vessels through the Suez Canal, a key transport route for Middle East LNG shipments to the European markets.  This came as a relief to LNG traders, who were caught off guard last week when two Qatari cargoes destined for the UK via the Suez Canal turned around off the coast of Yemen and diverted towards South Africa's Cape of Good Hope, raising fears Egypt might have restricted access to the waterway. Market experts, however, argued the diversion was likely a move by the Qatari government to avoid transiting the Suez Canal and paying US dollar-denominated canal fees to Egypt, among those to have cut diplomatic ties with Qatar."It was likely Qatar's decision to turn away the two cargoes rather than Egypt's," said an Atlantic-based LNG trader. An Asia-Pacific-based LNG shipping analyst said: "As an international waterway, it is very hard to prohibit the transit of vessels, and the Egyptian government would not oppose the transit of Qatari vessels as the canal is a big contributor to the national income.""Instead the Qatari government may choose not the transit to avoid paying any US dollars to the Egyptians," the analyst said. LNG trade disruption concerns emerged amid rising diplomatic tensions in the Middle East, following a decision by Saudi Arabia, Bahrain, Egypt and the UAE on June 5 to cut diplomatic ties with Qatar, the world's largest LNG supplier, over claims it funds terrorism and extremism.

    Yemen War Threatens Crucial Oil Chokepoint -- The Bab al-Mandan strait, which facilitates the transfer of 4 million barrels of oil to Middle Eastern markets everyday, has become increasingly contentious over the past few weeks as an international navel coalition grows its presence in the area."Recent attacks against merchant shipping in the Gulf of Aden and Bab Al Mandeb have highlighted that there are still risks associated with transits through these waters,” the leadership of the Combined Maritime Forces, which boasts vessels from 31 nations, said on Monday. The U.S.-led group is based in Bahrain and guards the Gulf of Aden.In early June, unidentified forces attacked a Marshall Islands-flagged tanker from a vessel disguised as a fishing boat. Three grenades later, no member of the tanker’s crew suffered any injuries and it continued its voyage into the Red Sea.In January, Houthi rebels, backed by Iran, attacked a Saudi frigate in waters near Yemen. Two people died in what the KSA said was a suicide attack. Other waters near Yemen have seen attacks. Last night, Saudi Arabia’s state-run news agency reported that Houthis targeted an Emirati vessel as it departed from the Red Sea port of Mokha. The incident did not damage the ship, but one sailor suffered wounds. San’aa-based Al-Masdar news said the incident involved the Yemeni navy attacking a Saudi vessel carrying ammunition to its allied forces, but this claim appears erroneous. “Death to America, death to Israel!” can be heard in the background of a video of the attack posted by the same site, which editorially favors the Houthis. Vessels in the Gulf of Aden have also had a few close calls on pirate attacks, which were ultimately thwarted by CMF ships nearby. The total number of incidents is still far below figures from 2011, a period in which Somali pirates carried out 237 attacks and took hundreds of people hostage. The humanitarian crisis in Yemen worsens as the proxy war between Iran and Saudi Arabia rages on, and control over the Bab al-Mandab strait is the grand prize for the victor of the Yemeni civil war. The narrow waterway sees the passage of billions of dollars worth of crude supplies and other goods every year, including aid to Yemen, whose entire health system is on the “brink of collapse” in the wake of a cholera outbreak, according to the International Committee of the Red Cross.

    Video Emerges Of US Allowing ISIS Fighters To Escape Safely In Syria -- With numerous distractions unfolding on the newly released reality TV show that is “Keeping Up with the Trump Administration,” it may surprise readers to learn that the U.S. is using the terror group ISIS as a pawn in its depraved foreign policy. Video footage obtained by Al-Masdar appears to show convoys of ISIS fighters fleeing the Syrian city of Raqqa untouched by the U.S. military, which is currently bombing that exact location. As Al-Masdar notes, despite having Kurdish and American drones hovering around the city of Raqqa, U.S. bombs are nowhere to be seen as hundreds of fighters pass safely. The release of this footage comes on the heels of accusations from both Russia and Iran that the U.S. is colluding with ISIS to allow the group’s safe passage into areas controlled by the Syrian government. Iran claims to have direct proof but thus far has not released it. Even if Russia and Iran don’t have any secret documents that directly expose this collusion, the fact remains that we don’t necessarily need them.  After all, this is exactly how ISIS grew exponentially in Syria in the first instance – as a direct result of U.S. foreign policy strategy. In 2012, a classified Defense Intelligence Agency report predicted the rise of ISIS, something actively encouraged by the U.S. establishment. The report    stated:“If the situation unravels, there is the possibility of establishing a declared or undeclared Salafist principality in eastern Syria… and this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime.”  Further, leaked audio of former Secretary of State John Kerry shows he knew ISIS was gaining momentum in Syria, and that in turn, the U.S. hoped this would bring Syrian President Bashar al-Assad to the negotiating table.In recent times, the safe passage of ISIS fighters to areas under the control of the Syrian government has been an unspoken but official strategy and has been the reality on the ground in Iraq and Syria. Late last year, Anti-Media reported on an anonymous military-diplomatic official’s claims that the United States was allowing safe passage to Syria for ISIS fighters exiting Mosul, Iraq – even though the U.S. was supposedly waging an offensive to defeat ISIS in the area.

    The UN Just Accused The US Of Killing 300 Civilians Since Last Week In Raqqa -  According to a U.N. Commission of Inquiry tasked with investigating violations of international war crimes and crimes against humanity in Syria, the intensification of airstrikes by the U.S.-led coalition has led to a “staggering loss of civilian life,” the Guardian reports.   The U.N. war crimes investigators found that since the acceleration of airstrikes in the Syrian city of Raqqa commenced last week, 300 civilians have already died. This statistic arguably makes Bashar al-Assad pale in comparison; Assad’s regime reportedly kills approximately 20-50 people in any given week.“We note in particular that the intensification of air strikes, which have paved the ground for an SDF advance in Raqqa, has resulted not only in staggering loss of civilian life, but has also led to 160,000 civilians fleeing their homes and becoming internally displaced,” Paulo Pinheiro, the chairman of the U.N. Commission of Inquiry told the human rights council in Geneva.According to Karen Abuzayd, an American commissioner on the independent panel, the figure of 300 is based only on deaths caused by airstrikes. Therefore, the figure of civilian deaths caused by troops on the ground may ultimately higher. As the Guardian also notes, speculation that the coalition has been using white phosphorous has already drawn strong condemnation. Not surprisingly, this operation was conducted with full knowledge that there would be mass suffering for the civilian population. At the end of May of this year, Secretary of Defense James “Mad Dog” Mattis announced that the U.S. would be switching to so-called “annihilation tactics” against ISIS, stating: “Our intention is that the foreign fighters do not survive the fight to return home to North Africa, to Europe, to America, to Asia, to Africa, we are not going to allow them to do so

    U.S.-Led Forces Said to Have Used White Phosphorus in Syria - NYT - Images and reports from witnesses in the northern Syrian city of Raqqa suggest that the United States-led coalition battling the Islamic State there has used munitions loaded with white phosphorus, the use of which in populated areas is prohibited under international law. Photographs and video clips posted online showed blinding spots of light spreading outward on Thursday night over what residents said was eastern Raqqa. By day, the images showed low white puffs trailing tentacles of white smoke. Both are typical visual signatures of white phosphorus, which can be loaded into artillery shells.Residents reached by text message reported similar bombardments on Friday.The images were distributed by the Aamaq news agency of the Islamic State, as well as a monitoring group called Raqqa Is Being Slaughtered Silently. The Islamic State has made claims of use of white phosphorous by United States-led forces before as part of its efforts to discredit its enemies. White phosphorus, along with other incendiaries, has been used by Syrian government forces battling insurgents in Aleppo and elsewhere. It is not illegal under international law for militaries to possess and use white phosphorus, and the United States’ and other Western militaries say they use it mainly to create smoke screens to hide troop movements. But it can also be used as an incendiary weapon, setting very hot fires. And like thermite and napalm, it is proscribed in civilian areas by international law. A United States official acknowledged that American forces who are fighting the Islamic State, also known as ISIS, in Iraq and Syria have access to white phosphorus munitions, but he said it was not being used against personnel. The official spoke on the condition of anonymity because he was not authorized to discuss the use of the munition. The spokesman for the American-led task force said that as a matter of policy he could not discuss the use of specific munitions. It has not been determined whether the shells that appeared to contain white phosphorus landed in populated areas, but tens of thousands of civilians are believed to still be in Raqqa, even as many Islamic State leaders have fled south to Mayadeen in Deir al-Zour Province. Unicef, the United Nations Children’s Fund, warned that 40,000 children are believed to be trapped in the city.

    Russia's military says it may have killed IS leader; West, Iraq skeptical | Reuters: Moscow said on Friday its forces may have killed Islamic State leader Abu Bakr al-Baghdadi in an air strike in Syria last month, but Washington said it could not corroborate the death and Western and Iraqi officials were skeptical. The secretive Islamic State leader has frequently been reported killed or wounded since he declared a caliphate to rule over all Muslims from a mosque in Mosul in 2014, after leading his fighters on a sweep through northern Iraq. If the report does prove true, it would be one of the biggest blows yet to Islamic State, which is trying to defend its shrinking territory against an array of forces backed by regional and global powers in both Syria and Iraq. But in the absence of independent confirmation, some U.S. officials said U.S. agencies were skeptical of the report. Several Iraqi security officials said Iraq was doubtful as well. "His death has been reported so often that you have to be cautious till a formal Daesh statement comes," a European security official said, using an Arabic acronym for the group. U.S. Navy Captain Jeff Davis, a Pentagon spokesman, said: "We have no information to corroborate those reports." A senior Trump administration official noted “a number of infirmities” in the reports, which have given U.S. officials reason to question their accuracy. “Some of those infirmities suggested that this happened at the end of May and that there were upwards of 300 or more soldiers killed in that strike,” said the official, who asked not to be identified. “A strike of that size and that claim that would have happened that long ago without any knowledge is something that made me curious,” the official added.

    China has an alarming food problem — Today's Chinese citizens have grown hungry for fatty, high-protein foods, but the country's agriculture industry may have hit its limit. The Western diet could be to blame. Over the past two decades, China's prevailing diet has shifted away from grains like rice and wheat in favor of richer animal proteins and a wider variety of exotic vegetables. As Bloomberg reports, this change has left the country short of land on which to grow produce and raise livestock. While the Western diet typically demands about one acre per person, China has only 0.2 acres to devote to feeding each citizen. Meanwhile, the country consumes 50% of the world's total pork supply. "The rapid rate of industrialization in China is really chewing up crop land at an alarming rate," Lester Brown, founder and president of the Earth Institute, told Reuters. "China is now losing cropland." In an effort to meet the growing appetite for new foods, the country has turned its attention outward.  But the solution isn't as simple as importing more food from abroad — unless the world begins accommodating food production for 9 billion people. Instead, the Chinese government has started leasing farms in North and South America, Australia, and Africa. In some cases, it has bought the land outright.  But even that strategy has its limits.  Population experts predict that an additional 2 billion people will live on the planet by 2050. Many of the biggest spikes in population will be in areas outside of China — developing regions in South America and Africa, in particular — where the country has set up offshore factories for food production. In solving its own problem, China may inadvertently put much greater strains on the global food supply. Of course, China isn't the only country adopting a Western diet — it's merely the latest superpower to do so. The most straightforward way for people around the world to ease the global burden this diet creates is to consume less of the animal protein that requires so much land and water to produce. Even eating other livestock, such as poultry or pork, would ease the demand for feed.

    US, China strike deal on beef exports | TheHill: The Trump administration said Monday it has finalized an agreement with China allowing the U.S. to restart beef exports after a nearly 14-year ban. The Agriculture Department (USDA) outlined details that will allow cattle producers to begin shipping certain U.S. beef products to China after those exports were cut off in 2003 after mad cow disease affected some American herds. Commerce Secretary Wilbur Ross said in May that U.S. and Chinese officials were working on a framework to finally restart beef exports after Beijing had failed to fulfill repeated promises during the Obama administration to open up their market again. "As we clear away long-standing issues like this one, focusing on near-term, verifiable deliverables, we are building a sound foundation for further discussions," Ross said. Beef producers said the final deal will provide an economic boost to their industry, which has been working for years to reestablish sales of U.S. beef to China’s consumers. The North American Meat Institute called the terms of the deal “very favorable.” “The demand in China for high quality U.S. beef is high, so opening the market offers great potential for our businesses and the U.S. economy as a whole,” said Meat Institute President and CEO Barry Carpenter. The U.S.-China deal allows for qualified beef products produced after May 24 to be exported once a plant is approved by USDA that is eligible to send meat to China.

    White people wanted: a peek into China’s booming ‘rent a foreigner’ industry - When Katie moved to Beijing from New Jersey three years ago, she soon found that her full-time job didn’t pay well enough to cover her costs.That’s when an online job ad caught her eye: “Chinese-speaking foreigner wanted for part-time position.”  So Katie, a 25-year-old American who speaks fluent Putonghua, applied and got the job with the government-backed firm. Her business card says she is the assistant to the director of the firm. Her job involves accompanying the director to dinner with clients once a week.“I don’t know much about this company and we never talk about business at dinners,” said Katie, who didn’t want to give her real name.“There’s a lot of fun at the dinners and the pay – 1,000 yuan (US$145) each time – isn’t too bad for me.”  Katie said she had never asked why a foreigner was needed for the role, but she believed it had to do with creating an “international” image for the company, and her ability to add an “exotic” element to the dinner conversation.It’s not uncommon for Chinese companies to hire foreigners, especially white Westerners, to represent them in public relations-type roles. Many Chinese equate Caucasian faces with business success and a global outlook.For decades, products made in China but associated with foreign elements – such as a Western-sounding name or being endorsed by a Caucasian model – have been seen as superior.That perception has made China a lucrative place for foreigners to pick up work on the basis of their appearance, regardless of their skills.  Companies hire foreigners to step into the role of musicians, athletes, architects, lawyers and many other professionals for their marketing activities – a common ruse to win more Chinese customers.

    Deadly blast hits China kindergarten - At least seven people were killed and at least 59 people were injured in an explosion at the front gate of a kindergarten in eastern China, the Xuzhou city government in Jiangsu province told Reuters. Similar figures were reported by state broadcaster CCTV. The blast struck the Chuangxin Kindergarten in Fengxian as relatives were picking up their children at the end of the school day at about 4:50 pm, police and authorities said. The city government said they were investigating the blast and it wasn't clear if it was an accident or a deliberate attack. Multiple videos posted on Chinese social media and on official Chinese media showed bleeding children and adults lying on the ground outside the kindergarten, many motionless, with clothing strewn on the ground beside pools of blood. Images showed that the force of the blast tore people's clothes off and one dazed woman could be seen clutching her child, who is in tears. Kindergartens in China have previously been targeted by people bearing grudges against their neighbors and employers, or society in general. Early in May, a school bus packed with kindergarten pupils burst into flames in a tunnel in the eastern province of Shandong. Officials said the bus driver, angry at losing overtime wages, had set the fire. The rise in attacks prompted officials to tighten security around many schools, by posting guards armed with truncheons and installing gates and other barriers.

    Young Chinese in the red as easy credit drives up debt: Quick and easy access to credit has encouraged many young Chinese to go into the red to buy cars and apartments they could not otherwise afford. They are the faces of China’s growing addiction to debt, which along with government and corporate borrowing, has raised fears of a looming crisis and prompted Moody’s ratings agency to slash the country’s credit score last week for the first time in nearly three decades. “It is very easy — the car company encourages you to borrow the money and enjoy the car,” said Wu, 39, adding the couple is also paying off a 1mn yuan mortgage for a three-bedroom flat in Beijing. Since Chinese leaders turned on the credit taps in late 2008 to shield the country from the global recession, household borrowing has soared and pushed China’s overall debt liabilities above 260% of gross domestic product — compared with about 140% before the crisis hit. But slowing growth in the world’s second-largest economy has raised concerns that years of risky lending could lead to a disaster worse than the US sub-prime collapse. Household debt has become the major driver of China’s credit growth, expanding by an average of 19% a year since 2011, said Chen Long, an economist at Gavekal Dragonomics. If it continues to grow at this pace, household debt would reach roughly 66tn yuan by 2020 —more than double the current level— and potentially 70% of GDP versus 30% back in 2013. “Other countries have usually taken decades to complete such an increase,” said Chen. “For bank lending to households to rise very rapidly usually means lending standards are loosened so credit is extended to both more and less creditworthy consumers.” Mortgages make up the bulk of household debt. Chinese have long favoured putting their savings into bricks and mortar due to the low bank deposit rates on offer, volatility in the stock market and strict rules that make it difficult to invest money abroad. “It’s a safe choice,” said homeowner Charlie Liu, 26, who also rents out her flat on Airbnb to help cover the repayments on her 1.4mn yuan mortgage. But as apartment prices have soared —often doubling within a few years, particularly in major cities — fears of a real estate bubble have mounted.

    China Auto Sales Post First Consecutive Monthly Drop Since 2015 --The Chinese auto market is having it's own version of a "cash for clunkers" moment.  After artificially pulling sales forward for all of 2016 with a purchase tax that was cut in half from 10% to 5%, the Chinese auto market is now suffering the consequences of removing that stimulus.  As Reuters notes, Chinese auto sales have declined sharply so far in 2017 with April and May registering the first consecutive monthly declines since 2015.Chinese auto sales slipped in May from a year ago, registering two straight months of declines for the first time since 2015, with the automakers' association saying the weakness may drag on as the rollback of a tax incentive continues to hurt.The world's biggest auto market got a shot in the arm in 2016, growing at its fastest pace in three years, after Beijing halved the purchase tax on smaller-engined vehicles. But buyers have shied away since taxes climbed to 7.5 percent, from 5 percent, at the start of this year.  Auto sales in China fell 0.1 percent in May from a year ago to 2.1 million vehicles, China Association of Automobile Manufacturers (CAAM) said on Monday. In April, sales recorded their steepest fall in 20 months.

    China’s New Bridges: Rising High, but Buried in Debt - — Soaring over a lush valley in southern China, the Chishi Bridge is a 1.4-mile-long marvel of concrete and steel. Four piers, like graceful tuning forks as tall as skyscrapers, secure cables suspending a four-lane expressway 610 feet above fields of corn and rice. The Chishi Bridge is one of hundreds of dazzling bridges erected across the country in recent years. Chinese officials celebrate them as proof that they can roll out infrastructure bigger, better and higher than any other country can. China now boasts the world’s highest bridge, the longest bridge, the highest rail trestle and a host of other superlatives, often besting its own efforts. The eye-popping structures have slashed travel times in some areas, made business easier and generated a sizable slice of the country’s economy, laying a foundation, in theory at least, for decades of future growth.But as the bridges and the expressways they span keep rising, critics say construction has become an end unto itself. Fueled by government-backed loans and urged on by the big construction companies and officials who profit from them, many of the projects are piling up debt and breeding corruption while producing questionable transportation benefits. For all its splendor, the Chishi Bridge, in Hunan Province, exemplifies the seamy underside of China’s infrastructure boom. Its cost, $300 million, was more than 50 percent over the budget. The project struggled with delays and a serious construction accident and was tarnished by government corruption. Since it opened in October, the bridge and the expressway it serves have been underused and buried in debt.

    China’s plan to run the world - China wants to make the 21st century into the Chinese Century, and its "One Belt, One Road" initiative is the key. It's a staggeringly massive development project spanning dozens of countries — the most ambitious global engineering endeavor the world has seen since the Roman Empire. The overland "belt" part entails highways, railways, and all their supporting infrastructure, including power and the internet, across multiple land routes from western China through Central Asia to the Middle East and Europe. The maritime "road" part consists of new ports, ships, and sea routes from southern China across the Indian Ocean to Africa and through the Mediterranean Sea to Europe. If all these projects bear fruit, trade along these routes will exceed $2.5 trillion a year. Already, China has invested $1 trillion in the project, and 68 governments and international organizations have agreed to participate. China is "attempting to provide an ideological and moral alternative to the United States, the West, and liberalism," said Dan Garrett, a former Pentagon intelligence analyst. The goal is "to return China to its formal (imperial) glory as the center of the world."

    In Philippines battle, troops pinned down by sniper fire, Molotov cocktails | Reuters: When Philippines troops advanced on positions held by Islamist militants in a southern city last Friday they were caught in a kill zone. Thirteen soldiers died and about 40 were wounded during a 14-hour battle that showed recapturing Marawi City from an estimated 150-200 Islamic State militants was becoming harder by the day. The troops were hit by rocket propelled grenades and came under sniper fire as they crossed bridges over the Agus river toward the city's commercial center, an area held by the militants since May 23. "The snipers are good, they make sure that with every shot, someone is killed or wounded," said Pendaton Guro, a retired colonel who recognized the popping sound of the high caliber rifles while watching the battle daily from his rooftop overlooking the city. The offensive to retake the town, in the middle of the southern Philippines region of Mindanao, is now in its fourth week. And, the longer the militants hold out, the more President Rodrigo Duterte's image as a strong man could suffer. Two weeks ago the general leading the offensive was relieved of command, and Duterte assured Filippinos that Marawi would be cleared of militants in a matter of days. The protracted battle is reinforcing fears in nearby Indonesia and Malaysia, both of which have Muslim majorities, that Islamic State could seek to set up a regional caliphate as it holds onto territory in Southeast Asia for the first time.

    Unemployment is Up Because ‘Make in India’, Other Official Schemes Aren’t Working  -The Wire - Unemployment is a major hurdle in India’s growth path. One key election promise of the BJP government in 2014 was job creation. Criticising the UPA government for failing to provide employment, the BJP ganifesto (2014) stated that “The country has been dragged through 10 years of jobless growth by the Congress-led UPA government. Under the broader economic revival, BJP will accord high priority to job creation and opportunities for entrepreneurship.”Though reducing unemployment was a major goals of the BJP government, data shows that it has not been able to fulfill its promise of job creation. As per the Economic Survey (2015-16), the rate of unemployment has increased from 3.8% (2011-12) to 5% (2015-16). Additionally, in 2015 only 1.35 lakh jobs were added in eight labor intensive sectors, compared to 9.3 lakh jobs that were added in 2011-12.Table 1 below highlights the unemployment rate between 2013-14 and 2015-16, and also shows that unemployment rates are rising.From July 2014 to December 2016, in the eight major sectors – manufacturing, trade, construction, education, health, information technology, transport, and accommodation and restaurant – only 6,41,000 jobs were created. In comparison, these same sectors had added a total of 1.28 million jobs from July 2011 to December 2013. Specifically, the Prime Minister’s Employment Generation Programme (PMEGP), which generates employment in rural and urban areas by initiating new micro enterprises and small projects, has fallen by 24.4% from 428,000 in 2012-13 to 323,362 in 2015-16. Additionally, the Economic Survey (2016-17) also indicates a shift in the pattern of employment from permanent jobs to casual and contract employment. This temporary nature of work has adversely affected the wages, employment stability and social security of the workers.

     "Lynching Epidemic" Breaks Out In Venezuela --The public-safety infrastructure in Venezuela has been degraded to such a degree that citizens now take justice into their own hands. Agence France Presse reported that lynchings have risen sharply over the last year and a half as political and economic instability in the crumbling socialist republic has worsened. Witnesses who spoke to AFP said a 22-year-old man who was set on fire at an anti-government demonstration in May was actually lynched after being accused of stealing by the crowd - not because he was a government sympathizer, as President Nicolas Maduro had suggested at the time. As AFP alleges, "it is not just the country's economy and political system that are sick, but society itself, experts say. An epidemic of lynchings is one of the most gruesome symptoms." The OVCS says some 60 people were recorded as killed in lynchings in the first five months of this year alone. Last year there were 126 such killings -- a surge from the 20 reported in the previous year, coinciding with the worsening of political tensions and economic chaos."Their aim is to kill the person before the police arrive," says Marco Ponce, coordinator of the Venezuelan Social Conflict Observatory (OVCS)."In lynchings, citizens let out their anger in the face of a state that is not defending their right to justice," says Ponce."They think they are dispensing justice, and they do so with anger, so they go as far as killing the person."

    Peru calls for regional action to avoid Venezuela 'sea of blood' - (Reuters) - Latin America needs to take action to help Venezuela resolve its political crisis or risk the country turning into a "sea of blood," Peruvian President Pedro Pablo Kuczynski said on Monday, warning that a wave of refugees could hit neighboring Colombia. Kuczynski said during a conference in Madrid that Venezuelan President Nicolas Maduro should let humanitarian aid enter his oil-producing but economically ailing country. Dozens of people have been killed in protests against Maduro's socialist government since April. "If nothing is done, we are going to end up with a sea full of blood," said Kuczynski, a former banker who has taken the lead among Latin American leaders in criticizing Maduro. He warned of the threat of massive immigration to Colombia, and said desperate refugees might even try to get to the Caribbean island of Curacao, risking a replay of the deadly Mediterranean journeys of refugees from Syria and Iraq. "We have to avoid that. If Latin America has any solidarity among countries, we have to try to find a solution," Kuczynski said, according to a statement from his office in Lima.

    Global negative-yielding sovereign debt jumps to $9.5 trln - Fitch -- The value of negative-yielding government bonds globally increased by nearly $1 trillion to $9.5 trillion at the end of May from the beginning of March on worries about the French presidential election and a weaker dollar, Fitch Ratings said on Tuesday. On March 1, there were $8.6 trillion of negative-yielding sovereign debt. The value of negative-yielding European and Japanese government debt peaked at about $11.7 trillion last June, according to the rating agency. "Calming political fears related to the French election and a weaker dollar spurred the increase in the total," Fitch said in a statement. Those fears had stemmed from whether anti-European Union candidate Marine Le Pen would win the French presidency, pushing up the yields on French government bonds. But centrist Emmanuel Macron beat Le Pen in a run-off on May 7, reviving investor demand for French debt which sent some of their yields back into negative territory. On Sunday, his Republic on the Move (LREM) party scored well in a first-round parliamentary election, putting it on track to capture as many as three quarters of National Assembly seats on June 28, according to pollsters. The yield on five-year French government notes was -0.255 percent on Monday, down near 1 basis point from Friday. It reached 0.210 percent on March 24, which was the highest since October 2015, Reuters data showed. The amount of French negative-yielding sovereign debt outstanding climbed to $1.0 trillion from about $750 billion on March 1, Fitch said.

    Russia may seize U.S. property if its own compounds not returned: Kommersant | Reuters: Russia may seize U.S. diplomatic property in Moscow and complicate life for an Anglo-American school unless Washington hands back two diplomatic compounds in the United States before July, the daily Kommersant newspaper reported on Friday. In December, then U.S. president Barack Obama ordered the expulsion of 35 Russians over what he said was their involvement in hacking last year's U.S. presidential election, allegations Moscow flatly denies. The U.S. authorities seized two Russian diplomatic compounds, one in Maryland and another on Long Island, at the same time. Moscow did not retaliate, saying it would wait to see if relations improved under the incoming U.S. president, Donald Trump. Kommersant, citing unnamed diplomatic sources, said on Friday that Moscow wanted the compounds back before a possible meeting at the G20 in Germany in July between Russian President Vladimir Putin and Trump. If that did not happen, the newspaper cited the sources as saying Russia could retaliate by seizing a U.S. diplomatic dacha, or country house, in Serebryany Bor in north-west Moscow and a U.S. diplomatic warehouse in Moscow. It said that Russian authorities could also complicate life for Moscow's Anglo-American school by altering its legal status. Maria Zakharova, a spokeswoman for the Russian Foreign Ministry, said on Thursday that Moscow was still waiting for the return of its U.S. compounds and could retaliate in kind if that did not happen.

    ‘All this circus’: Putin takes heat from broke, angry Russians in live call-in show —  Facing a wave of popular unrest not seen in years, Russian President Vladi­mir Putin took to the nation’s airwaves Thursday to assure citizens that their lives will be getting better. Judging from the questions the Kremlin leader fielded over four long hours, Russians aren’t feeling it. Just three days after tens of thousands of people turned out in more than 180 cities across Russia to express their dissatisfaction with the government, Putin used his annual “Direct Line with the President” call-in show to say that the Russian economy is showing signs of growth after a long recession and that “in general things will start moving to where people feel a change for the better.” The questions that came in from viewers across the country reflected little of that. A Siberian teacher asked him how she is supposed to live on $280 a month. The residents of a Moscow suburb complained about a giant pile of garbage that they said is visible from space. A 24-year-old cancer patient from a far-northern mining town demanded to know why health care is in a shambles. “Please do not lose hope. I will see how to help, including you personally,” Putin told her. “We will work on your problem and on the hospital in your town. I promise!” Putin also touched on the political turmoil in the United States over Russian meddling in the 2016 elections. Commenting on the testimony of former FBI director James B. Comey, Putin said: “It sounds and looks very strange for the head of a special service to record a conversation with the commander in chief and then pass it to the media through his friend. And how is the FBI director different from Mr. Snowden then?”

    Europe turned upside down by political upheavals - Politico — What a difference a year makes. Europe’s political kaleidoscope has spun at a dizzying pace in the last 12 months, rearranging the balance of power on the Old Continent, perhaps durably.  After a period of stagnation, France is back in the ascendancy. Britain is isolated and on the skids, the result of a series of unforced political blunders. Germany is no longer alone in European leadership, meaning it could face pressure to make uncomfortable choices regarding the EU’s economic and defense policy after its September election. Spain, Portugal and even Greece are seeing light at the end of the tunnel after years of economic and political turmoil. Italy is teetering between revival and disaster, but it may stay on the edge almost indefinitely.The eurozone economy, which until recently seemed doomed to sluggishness despite the European Central Bank’s injections of hundreds of billions of euros, is suddenly expanding faster than either Britain or the United States.Some of these reversals of fortune are due to bold political gambles that went spectacularly wrong: former British Prime Minister David Cameron’s Brexit referendum, and his successor Theresa May’s decision to call a snap election to increase her mandate to negotiate Brexit, which resulted in her losing her majority. Others are the result of bets that went spectacularly right: most notably Emmanuel Macron’s decision to resign from the French government, form a completely new movement and run for the presidency as a pro-European independent against almost the entire political class.Part of the changed mood can be ascribed to the disruptive impact of Donald Trump. His nationalist, protectionist U.S. presidency has given the EU a new sense of purpose as a global leader in open trade and the fight against climate change — and new responsibility for its security and the stability of its neighborhood.And some of it can be attributed to natural swings of the political pendulum and the economic cycle. France’s economy was never as dead as it sometimes looked. Britain’s Euroskeptic campaigners always overestimated their country’s economic performance and its ability to prosper without guaranteed access to the EU single market for its goods and services.

    French parliamentary election: Macron's party on course for historic gains - Emmanuel Macron's centrist La Republique En Marche is projected to win a huge majority in the French Parliament, according to exit estimates compiled for CNN affiliate BFMTV by Elabe. Macron's fledgling party is expected to win between 415 and 445 seats in the lower house after taking a projected 32.3% of the vote.  Such a margin of victory in the 577-seat house would give Macron the majority he so badly craves to further his political revolution. The 39-year-old's La Republique En Marche (LREM) party is hoping to make huge gains and inflict a further blow on the country's traditional ruling parties.It would be a remarkable achievement for Macron, who won the French presidency last month without the support of a traditional mainstream party.Instead, his En Marche! movement helped carry him to a convincing election victory over far-right candidate Marine Le Pen.Macron's party contested 526 constituencies out of a possible 577. His party put forward 266 women candidates, while 219 come from outside politics. He has drawn candidates from a cross-section of society, including a former bullfighter, a Nobel Prize winner and an ex-fighter pilot. The move appears to have paid off as Macron's party, which has grown out of his grass-roots movement, is projected to record a stunning victory.

    The evidence does not support Macron’s claim that deregulating labor market will boost economy - Dean Baker - In her Washington Post column, Catherine Rampell repeats some ill-founded conventional wisdom in telling readers that French president Emmanuel Macron’s plans to weaken labor unions and reduce restrictions on laying off workers are the path to revitalizing France’s economy. In fact, this claim is not supported by the evidence. There is little evidence that strong unions or labor market protections are associated with high unemployment. The most obvious reason that France has had high unemployment is the turn to austerity in 2010 following the economic crisis. As a result of the cutbacks in government spending, there was no source of demand to replace the demand generated by asset bubbles prior to the crisis. For some reason, this fact is rarely mentioned in reporting on France’s economy. It is also worth noting that France’s “stagnant labor market” has a much higher employment rate for prime age (ages 25 to 54) workers than the U.S. labor market (79.7 percent in France compared to 78.2 percent in the United States). This fact would seem to undermine the case that regulations are seriously hampering France’s labor market.

    Greek economy minister says Wolfgang Schäuble ‘dishonest’ on debt relief -  Dimitri Papadimitriou, the Greek economy minister, accused Germany’s Finance Minister Wolfgang Schäuble of being “dishonest” because he acknowledged Athens had implemented significant reforms but still blocked debt relief. “Even Wolfgang Schäuble said that we met the requirements [to receive new loans], but then he changed his mind,” Papadimitriou told German newspaper Die Welt in an interview published Thursday. “I haven’t met Schäuble yet and I don’t want to be impolite, but his behavior seems dishonest to me.”“Greece is being made a sacrificial lamb,” Papadimitriou said, indicating the Greek debt crisis had been politicized in Germany because the country will hold an election in September.Papadimitriou said Schäuble “should tell his voters that Greece has to grow. And he can also tell them that Germany received debt relief after the Second World War.”The comments come ahead of Thursday’s Eurogroup meeting, where eurozone finance ministers aim to strike a deal to unblock new loans to Greece. A spokesman for Schäuble said Wednesday that he expected an agreement on a sustainable deal at today’s meeting, but added there was no guarantee Greece would get debt relief.

    Eurogroup approves $9.5bn bailout for Greece - Greece came away from Thursday's Eurogroup meeting with a $9.5bn (€8.5bn) loan installment and the beginnings of a commitment to longer-term debt relief - the Syriza government's key demand since it came to power in 2015. The six hour-long meeting of Eurozone finance ministers effectively brought the International Monetary Fund on board with Greece's third bailout loan, currently held only by European institutions, because the IMF insisted on debt relief as a precondition. "Nobody claims that this is the best solution," said IMF chief Christine Lagarde, who attended the Eurogroup session. "That would have been a final approval on debt relief so that there would be clarity. This is second best." Eurogroup Chairman Jeroen Dijsselbloem called the agreement "a major step forward" which prepared Greece for graduation from its programme in 2018. The Eurogroup praised Greece for legislating all 140 prior actions required to pass its second review under the programme – specifically in terms of tax reform, pension reform and labour market reform, all of which aim to make its economy more competitive. In terms of debt relief, the Eurozone made two concrete concessions. First, it promises to link Greece's rate of debt repayment to its rate of growth. The better the economy does in a given year, the more Greece will pay back. The corollary is that if Greece has little or no growth, it ought to receive a reprieve from creditors. This was a key demand of former finance minister Yanis Varoufakis in 2015, who claimed that a depressed economy could not reasonably be squeezed for debt repayment.

    Yanis Varoufakis: Latest Eurogroup Statement Keeps Greece on the Austerity Rack - naked capitalism - Yves here. Established readers may recall that we chronicled the 2015 Greek bailout in depth, focusing on the negotiating dynamics. We were early, indeed virtually alone, in identifying that the two sides did not have any bargaining overlap in their positions, which meant the talks would fail. And indeed, as the wrangling progressed, the dynamics worsened, with Greece apparently assuming it could play a game of chicken with the more powerful Troika.  Readers did not like hearing that Greece had only bad options. Particularly in America, action movies where the hero prevails against evil forces despite insurmountable odds acculturates people to believe there must be some way out of impossible-looking circumstances. And on a deeper level, we live in denial of the inevitability of death. The beating of Greece continues largely under the media radar. The IMF, largely due to an remarkable staff revolt against more counterproductive Greek bailouts, had threatened to sit out the next round of funding if the other lenders, which are primarily European countries, didn’t give real debt relief. With interest payments reduced and principal payments already deferred in some cases for decades, the only way to cut the borrowing levels is to reduce the principal amount. Note that this isn’t incurring a loss; there’s no way Greece can every pay off its obligations. It’s recognizing losses that already exist.But that’s too much for the northern creditors, like Germany and the Netherlands, who have demonized Greece for years and misled voters that Greece would repay. The IMF had found a way to defer making a decision until after the German elections this fall. The Bundestag has to approve bailouts and has taken the position that IMF participation is necessary, in part because the Europeans lack the staff to run a “program” as in monitor compliance. It also allows the Europeans to pretend that they aren’t the lead actors in turning Greece into a failed state. Among other things, Varoufakis’ update on this saga describes how the IMF capitulated earlier that it needed to. This is a disgrace. I wonder if the US (which has 1/6 of the votes on the board and a big informal say) decided to back the Eurogroup position as cheap way to show some solidarity with Europe. By Yanis Varoufakis. Originally published at his website:

    In "Personal Blow" Theresa May's Two Closest Advisors Quit After Election Debacle -- In the aftermath of the stunning loss by Theresa May's Conservative party in the UK General Elections, bookmakers quickly made Labour's Jeremy Corbin the odds-on favorite to become the UK's next Prime Minister, implying May would resign shortly. That contingency, however, got a last minute reprieve when May announced on Friday she would seek to form a minority government with the help of a small Northern Irish party, the far-right Democratic Unionist Party (DUP), extending her political career if only for the immediate future. However, the turmoil within the Conservative Party re-emerged on Saturday when Theresa May was forced to part ways with her two closest advisors, after the PM was warned she faced a leadership challenge unless she sacked Nick Timothy and Fiona Hill. While senior Tory party figures cautioned earlier against any immediate leadership challenge, saying it would only cause further disruption as Britain prepares to start Brexit negotiations as early as June 19, someone had to take the blame for the crushing electoral setback and according to both AFP and BBC they demanded the heads of May's joint chiefs of staff, Nick Timothy and Fiona Hill, as the price for allowing the 60-year-old to stay in office.May had relied on Timothy and Hill for advice and support since her previous job at the interior ministry, and their resignations will be a "personal blow."Announcing his resignation on the Conservative Home website, Timothy urged Tory MPs to "get behind" Mrs May but said nothing should be allowed to get in the way of the process of forming a government and beginning Brexit talks. He said the Conservatives' failure to win was not due to a lack of support for Theresa May and the Conservatives but due to an "unexpected surge" of support for Labour.

    Hung vote hangs over the economy -- What does the hung parliament mean for the economy? I think it useful to split this into the short term and the longer-term.In the short-term, the uncertainty generated by the election means weaker growth is likely to persist. Election uncertainty may have helped depress the housing market and house prices, according to Rics, the Royal Institution of Chartered Surveyors, though housing has been on a weakening trend. The election result has come at a time when the economy too has entered a weaker phase.Figures on Friday showing weak construction and industrial production figures for April, combined with evidence that May was a poor month for retailers, suggest the economy’s weak start to the year has continued. The National Institute of Economic and Social Research estimated growth of just 0.2% in the three months to May, the same as in the first quarter. The Organisation for Economic Co-operation and Development (OECD) attracted headlines a few days ago for a downbeat forecast for Britain’s economy, and for suggesting that the government should use the “fiscal space” afforded by low interest rates and the long average duration of government borrowing (the number of years on average that gilts have before they mature), to borrow a lot more for infrastructure investment.The OECD thinks the Brexit negotiations will weigh heavily on the economy, producing the unusual situation for Britain in which an acceleration in the global economy, from 3% growth last year to 3.5% this and 3.6% next, is accompanied by a slowdown in Britain’s economy, from 1.8% last year to 1.6% this and just 1% in 2018.  The OECD’s forecasts brought to mind a question I am often asked: where will the growth come from? The challenge here is easily stated. Britain’s economy has been, and continues to be, highly dependent on consumer spending. When consumers sneeze, as they did in the first quarter in slowing their growth in spending to a modest 0.3% (with retail sales actually falling), the economy catches a cold.

    The newly dreadful state of the Union -  Frances Coppola - Last Thursday's election was a shock. It was appalling for the Tories, extraordinarily encouraging for Labour and something of a "meh" for the Liberal Democrats and the Greens. And it was dreadful for nationalist parties. UKIP was completely wiped out, ending up with no seats at Westminster and a hugely reduced share of the poll. And both the SNP and Plaid Cymry lost seats. Nationalism, it seems, is dying down. Well, in the UK, anyway. Faced with a disastrous result, any half-decent party leader would step down. To his credit, Paul Nuttall, the UKIP leader, did exactly that. But not Theresa May. Dear me, no. In the last two days, we have discovered the lengths to which Mrs. May will go to retain her hold on power. Lacking an absolute majority, the Tories had no choice but to try to form some kind of alliance with another party. Their previous coalition partners, the Liberal Democrats - fingers still badly burned from last time - refused to play: "No pact, no deal, no coalition", they said as the results rolled in. The only other mainland parties with sufficient seats to be able to give the Tories the absolute majority they need to force through the Queen's Speech, and by extension the repeal of the 1972 Communities Act that is necessary to enact Brexit, are the Labour Party and the SNP, both of which have previously ruled out doing any deal with the Tories.  But there was a way out. Northern Ireland's Democratic Unionist Party (DUP) announced that it would be willing to discuss some kind of arrangement to keep the Conservative Party in power at Westminster. So the Tories hurriedly remembered their Unionist roots. On Friday morning, in her announcement that she would be forming a new Government, Theresa May used an unusual name for the Conservative party: Only the Conservative and Unionist party has the legitimacy and ability to provide that certainty by commanding a majority in the House of Commons. But the Northern Irish Unionist party on which Theresa May now depends for power is not the Tories’ former ally, the Ulster Unionists. No, Mrs. May seeks to ally herself with the hardline Democratic Unionist Party (DUP), a fundamentalist Protestant group with links to paramilitary organisations.  This is a marriage of convenience forged in hell. And it potentially puts at risk the security of the United Kingdom.

    May tells MPs: I got us into this mess and I will get us out - BBC - Theresa May has apologised to Tory MPs for the party's election performance, telling them "I got us into this mess I'll get us out of it." Addressing a meeting of backbenchers, the PM reportedly said she would serve as "long as you want me to do". One senior backbencher told the BBC that she had appeared "contrite and genuine but not on her knees". It comes amid confusion over whether the Queen's Speech will be delayed as talks continue to form a government. A senior minister has said he was "optimistic" that the Conservatives and Democratic Unionists will reach an agreement in the coming days to allow a proposed Tory minority government get its plans for the year ahead through the Commons, possibly as early as next Monday. But First Secretary of State Damian Green said he could not confirm the Queen's Speech will proceed as planned on 19 June. Labour said the government was "in chaos" and continued to be "in denial" about the message voters had sent about their opposition to an "extreme Brexit". Mrs May addressed a packed meeting of the 1922 Committee for 90 minutes after her failure to win the election outright prompted days of speculation about her future. According to reports of the meeting, she accepted personal responsibility for calling the snap election and for the result, which saw her party lose its overall majority and have to rely on the support of others.

    British PM May tells lawmakers she'll stay as long as they want her | Reuters: Britain's Theresa May told her party on Monday she would serve as prime minister as long as they wanted after a botched election gamble cost the party its majority in parliament and weakened London's hand days before formal Brexit negotiations. With British politics thrust into the deepest turmoil since last June's shock Brexit vote, EU leaders were left wondering how the divorce talks would open next week. Despite her party's expectations of a landslide victory, May lost her majority in parliament, pushing her into rushed talks on a support agreement with a small eurosceptic Northern Irish Protestant party with 10 parliamentary seats. May faced Conservative party lawmakers at a meeting of its 1922 Committee. Despite anger at the election, she was cheered briefly at the start of the meeting. "She said 'I'm the person who got us into this mess and I'm the one who is going to get us out of it,'" said one Conservative lawmaker who attended. "She said she will serve us as long as we want her." Lawmakers, who are by tradition not named at such meetings, told Reuters that there were no dissenting voices and that the party had no appetite for a leadership election. May appeared contrite, sought to apologize for her failed election gamble and gave an explanation of what went wrong. While some members of her party have said she will have to go eventually, May is expected to stay on as prime minister at least for now.

    Who are the Democratic Unionists and what do they want? - Northern Ireland’s Democratic Unionist Party rarely impinge on the British political consciousness. Yet on election night — as it became clear there was going to be a hung parliament — the DUP was the most Googled U.K. political party. By Friday, Theresa May was delivering a sombre statement in Downing Street, confirming her intention of cooperating with “our friends and allies” in the DUP. “Our two parties have enjoyed a strong relationship over many years, and this gives me the confidence to believe that we will be able to work together, in the interests of the whole United Kingdom,” she said. So who are the DUP? What price will they demand for propping up a minority Conservative government? And what impact will that have on Northern Ireland’s devolved government? The party has come along way since being established in 1971 by the firebrand Presbyterian preacher Iain Paisley, famous for his anti-Catholic rallying call of “No Rome Rule.” For the past decade, the DUP has been the largest unionist party in a power-sharing government with the Irish republicans Sinn Féin.  With the Tories now eight seats short of an overall majority, Theresa May will need to rely on the DUP’s 10 Westminster MPs. Rather than entering a formal coalition, the Unionists look set to enter into a “confidence and supply” deal with the Conservatives, giving the DUP an unprecedented role in the British government. Time has not completely mellowed the staunchly conservative DUP’s political outlook. The party cleaves to an evangelical political philosophy that would not look out of place on the fringes of the Republican Party in the United States. Senior DUP figures believe the Earth was created 6,000 years ago, that climate change is a myth and support a return of the death penalty. It opposes same-sex marriage and has fought to halt an extension of abortion rights.

    Theresa May’s plan to govern with DUP support thrown into confusion - Guardian -  Theresa May’s plan for a loose alliance with the Democratic Unionists to prop up her government was thrown into confusion on Saturday night after the Northern Ireland party contradicted a No 10 announcement that a deal had been reached. A Downing Street statement on Saturday said a “confidence and supply” agreement had been reached with the DUP and would be put to the cabinet on Monday. But the DUP last night put the brakes on that announcement, saying talks were continuing, not finalised. The DUP leader, Arlene Foster, said “discussions will continue next week to work on the details and to reach agreement on arrangements for the new parliament”.  Following talks between May and the DUP last night, a second statement from No 10 clarified that no final deal had been reached. A Downing Street spokeswoman said the prime minister had discussed “finalising a confidence and supply deal when parliament returns next week … As and when details are finalised, both parties will put them forward.” Earlier it emerged that angry Tory MPs had threatened to object to a formal coalition. The MPs had begun warning party whips they would oppose any formal deal, because of the DUP’s position on gay rights, abortion and climate change. The looser deal on offer would see the Northern Ireland party’s 10 MPs support the prime minister in key votes but not enter a closer pact with the Tories.The decision to rule out a formal pact, which could make it harder for May to govern, comes after her trusted joint chiefs of staff, Nick Timothy and Fiona Hill, resigned following her shock failure to secure a majority in Thursday’s general election. May had been under pressure from ministers to sack the pair or face an immediate leadership challenge. Gavin Barwell, who lost his Croydon Central seat, has taken up the role of chief of staff.

    UK coalition government driven by corporation tax cutters - The minority UK government elected last week is scrambling to agree a ‘confidence and supply’ agreement with a tiny party from Northern Ireland called the DUP (originally the Democratic Unionist Party).  The DUP has attracted considerable attention in the past 24 hours because of its Protestant fundamentalist religious values and general social conservatism.  TJN would like to point out the DUP’s commitment to tax havenry, and in particular its policy of competing with other countries within the United Kingdom in a race-to-the-bottom on the corporate income tax rate. For many years the DUP has persisted with demanding devolution of power to set a corporate income tax rate from Whitehall to Belfast, and is committed to lowering the corporate income tax rate to 12.5 percent, matching the rate in the Irish republic.  According to the DUP: “For years, business organisations campaigned for the need to devolve Corporation Tax and setting a lower rate by Government. It has been described as a potential game-changer for our economy. While other parties had second thoughts and gave up on achieving it, the DUP persisted and we have now secured the power, with a date set for lowering the tax in 2018 to a rate of 12.5%.” The DUP seems to assume that cutting corporate income tax rates is the route to economic development nirvana.  Perhaps they should pay attention to the Kansas experiment of race-to-the-bottom economics which went so disastrously wrong (see here and here).  Or maybe they should pay attention to the UK experience since 2007, where the sharp lowering of corporate income tax rates has attracted little investment outside real estate and mergers and aquisitions (in other words just buying up existing companies rather than making new or greenfield investment).  This has certainly lost the UK a vast sum of much-needed tax revenue, but without yielding the promised investment flows – see chart below.

    Queen’s speech may be delayed, No 10 suggests - The Queen’s speech may not go ahead as planned next Monday, No 10 has suggested, which would allow the Conservatives more time to reach a formal agreement with the Democratic Unionist party. The prime minister’s official spokesman declined to confirm that the Queen’s speech would be held on 19 June as previously announced. The leader of the Commons, Andrea Leadsom, would release a statement about the date soon, the spokesman said. But the first secretary of state, Damian Green, confirmed there could be a delay while agreement is sought with the DUP. “Obviously, until we have that we can’t agree the final details of the Queen’s speech,” he said. A government source said the Queen’s speech took a week to be prepared, hinting it could be delayed by a few days. For the speech to be given as scheduled, the contents would need to be decided by Tuesday morning. Also known as the gracious speech, it was historically written on vellum with ink that takes three days to dry. Although it is now written on thick goatskin parchment, this also needs several days to dry, meaning a speech cannot be amended at the last minute. “The lead time is a very long one,” a government source said on Monday. “There is still a political cabinet to come, talks with the DUP, who need to be happy with the contents to ensure they will vote for it, and a full cabinet tomorrow. There is currently no fixed date.”

    May inches towards deal to stay in power as battle rages over Brexit | Reuters: Prime Minister Theresa May edged closer to clinching a deal to stay in power with the support of Northern Irish kingmakers on Wednesday, but faced a battle over Brexit just days before divorce talks are due to begin. After days of political turmoil sparked by her botched gamble on a snap election, May's Conservative Party resumed talks with a small Northern Irish Protestant party on securing the support of its 10 members of parliament to pass legislation. May said late on Wednesday that the talks were continuing, but that a fire that devastated a 24-storey tower block in London, killing at least 12 people, had taken priority. Arlene Foster, the leader of the Democratic Unionist Party (DUP), met May for talks in Downing Street on Tuesday but Sky News reported she had returned to Belfast on Wednesday evening, leaving party colleagues to continue the negotiations. "We are continuing to have talks but today, as you will imagine, there has been a real focus on this terrible tragedy in London," May said. Even with a deal nearing to secure her government's survival, May is so weakened that her Brexit strategy has become the subject of public debate inside her own party, with two former prime ministers urging her to soften her approach. May has said the divorce talks, likely to be the most complex in Europe since World War Two, will begin as planned next week and her Brexit minister, David Davis, said Britain's negotiating position was unchanged. But with so much at stake for Britain and its $2.5 trillion economy, pressure was mounting on May from within and without her party to heed other voices. May now faces the task of satisfying both the pro-European and eurosceptic factions of her party, keeping Northern Ireland calm and negotiating a divorce with 27 other EU members whose combined economic might is more than five times that of Britain. 

    Brussels takes a step ahead in Brexit negotiations -- The Brexit negotiations will kick off only 10 days after the election, almost one year after the UK’s decision to leave the EU.Theresa May called the election to strengthen her hand in talks with Brussels, but the Brexit election has failed to clarify much on the UK’s negotiating position, while eating up the Government’s valuable preparation time.  Meanwhile in Brussels, the EU has been getting its house in order. After the EU’s heads of state and government agreed their negotiating guidelines in April, an arcane body of the EU’s 27 ministers – known as the General Affairs Council – has adopted detailed, legally binding instructions for Michel Barnier, the EU’s chief Brexit negotiator, on the divorce phase of the negotiations. Barnier later released two draft position papers setting out “essential principles” on citizens’ rights and money. All that while the European Council set out its transparency policy for negotiations. When David Davis, the Brexit Secretary of State, triumphantly announced that the Government has “over 100 pages of detail” on Brexit in store, it must have left his Brussels counterpart satisfied – not least because the EU has published more than 100 pages of its own Brexit priorities since the UK triggered the Article 50 in March. Brussels will kick off talks with a hard-line opening position on a technical but important matter: the timetable. The EU insists that talks must proceed in strictly defined sequences, requiring “sufficient progress” on settling the past before discussing the shape of future relations. Barnier says this structure is “a key point” for ensuring smooth negotiations. It is, however, directly at odds with Westminster’s view of negotiations. David Davis has warned that the EU’s timetable will be the “row of the summer”. In its new negotiating directives, the EU has taken a maximalist view of Britain’s financial obligations – covering not only outstanding budget commitments, pensions and contingent liabilities, but also other costs such as relocating UK-based EU agencies, EU farm payments until 2020 and funding British teachers seconded to European schools until 2021.

    Theresa May confirms Brexit negotiations to start this month – U.K. Prime Minister Theresa May said on Saturday that she would push ahead with the start of Britain’s Brexit negotiations with Brussels this month despite political turmoil in London following Thursday’s inconclusive general election. In a phone call with the German Chancellor Angela Merkel, May said the talks on Britain exiting the EU would begin “as planned” on June 19. The prime minister also confirmed that she wanted an early deal on citizens’ rights, as POLITICO reported on Thursday. May has ordered civil servants to draw up a “big, generous offer” on citizens’ rights to get the talks off to a good start, she said. In a statement released Saturday night about the call with Merkel, a Downing Street spokesperson said: “The prime minister confirmed her intention for Brexit talks to begin as planned in the next couple of weeks, and that we would be looking for a reciprocal agreement on the rights of EU citizens and British citizens abroad at an early stage.”

    70% Of UK Supports Pushing Ahead With Brexit Despite Election Upset --Despite Prime Minister Theresa May’s embarrassing performance earlier this month in a snap election that cost her Conservative party its parliamentary 'majority', more than 70% of Britons still believe the government should push ahead with Brexit – even after the election sparked exclamations from the left for a second referendum, according to the latest YouGov poll. The poll showed that the country is split down the middle over whether leaving the EU was the right or wrong decision, but even among voters who didn’t support the “leave” campaign, there’s an acknowledgement that the people have spoken, and now the government must obey their wishes. The poll also suggested that there’s still widespread support for May’s Brexit goals, which she outlined in January, when the prime minister emphasized a “free break” with the EU, suggesting that the UK wouldn’t swap control of immigration for continued unfettered access to the country’s single markets. However, the poll suggests the public is less confident in Theresa May’s ability to deliver on them.

    New economic woes put Theresa May under fresh pressure -- Theresa May has been hit by a series of economic blows, with consumers tightening their belts and businesses increasingly showing fears of a sharp slowdown as she attempts to cling on to power.The crucial services sector stands on the brink of a contraction, new data shows, and credit card spending has fallen for the first time in four years.High Street footfall has also gone sharply into reverse and manufacturing and construction companies in the English regions report a widespread slowdown in activity.Most of the gloomy figures published today were gathered prior to Mrs May’s disastrous snap election. It has further undermined confidence, according to the Institute of Directors (IoD).The hung parliament has triggered a massive swing towards negativity among the business leaders. Before the election, IoD members’ net confidence, which offsets economic pessimism and optimism, was almost balanced at minus three. In the aftermath of the election it has plunged to minus 37.Businesses were increasingly ready to openly criticise Mrs May over the weekend after her interventionist manifesto failed to inspire strong public support. Official figures later this week are expected to show a tightening squeeze on consumers. Economists estimate that wages grew by 2pc the year to April, down from 2.1pc a month earlier. Meanwhile inflation is expected to remain at 2.7pc, with rises to come. Shoppers are curbing their spending in response, according to data from Visa. The credit card company said household expenditure in May was gown 0.8pc on last year, the first decline since 2013. Consumers cut back on clothing and household goods especially. Visa UK managing director Kevin Jenkins said the data “clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze”.

    May Is Living the Weak, Unstable Brexit Nightmare She Warned Of -- It is barely a fortnight since Theresa May warned that Britain might head into Brexit negotiations with “a weak and unstable prime minister.” It’s happening. It’s her. May seemed to have bought herself time at the start of the week, after she apologized to Conservative lawmakers for the election disaster she’d led them into. But the government’s respon