week ending Jun 3

Brainard: Rate hike likely appropriate soon, but slowing inflation could prompt rethink on hikes: Federal Reserve Governor Lael Brainard said Tuesday that an interest rate hike is "likely appropriate soon," but slowing inflation could change that. Speaking at the New York Association for Business Economics luncheon on Tuesday, Brainard also said recent inflation numbers are lower than expected and there is little sign of wage inflation heating up. The Fed did not raise the bank's key interest rate in May, after raising rates in December and March. An interest rate hike is widely expected in June, a move that would push the target range up to 1 percent to 1.25 percent. Brainard, a member of the policymaking Federal Open Market Committee, said President Donald Trump's tax cuts could equal 2 percent of GDP in the first few years, and the cuts would boost demand at full employment. The Trump administration said its pro-business agenda would hit 3 percent GDP. Brainard's comment came after Dallas Fed President Robert Kaplan told CNBC earlier Tuesday he does not think the economy is about to take off. He sees growth of about 2 percent. "Two things drive GDP: growth in the labor force and growth in productivity," he said on "Squawk Box." "The problem is labor force growth is very sluggish. And my own judgment and our economists at the Dallas Fed think it's going to continue to be sluggish the next 10 years because the population is aging and labor force growth therefore is slowing."

 The Fed Shouldn’t Be Afraid of Growth - Narayana Kocherlakota -- The Federal Reserve has intimated that it intends to keep pulling back on economic stimulus in 2017, both by raising short-term interest rates and by shrinking its holdings of long-term assets. These steps have little to do with controlling inflation. Instead, they are part of a systematically anti-growth approach that the Fed adopted four years ago -- an approach that should be abandoned as soon as possible.  Four years ago this month, Ben Bernanke (then Federal Reserve chairman) announced in congressional testimony that, if the economy continued to improve, the Fed intended to reduce (or “taper”) asset purchases aimed at bringing down longer-term borrowing rates. Since Bernanke’s announcement, the Fed has been tightening monetary policy. It ended the asset-purchase program and initiated a sequence of short-term interest rate increases. Why has the Fed been tightening? Concern about inflation would be one plausible reason. But the shift in monetary policy occurred as inflation was falling. And, as the following chart shows, the tighter policy stance has served only to keep core inflation below the Fed’s 2 percent target: The low inflation has also affected expectations of future inflation. Judging from interest rates on Treasury securities, for example, market participants are expecting the Fed’s preferred inflation measure -- the Commerce Department’s price index for personal consumption expenditures -- to increase at an annualized rate of about 1.5 percent over the next decade. So for the past four years, the Fed has been tightening too quickly to achieve its inflation goal. Why? The answer, I think, is that it wants to keep the rate of economic activity from getting too high relative to what the central bank sees as the long-run sustainable level.   This may seem like a strange objective, given that Congress has charged the Fed with promoting “maximum employment,” which sounds like “try to make employment as high as you can.” But the Fed knows that if it pushes economic activity above its long-run level in pursuing that goal, it will eventually have to hit the brakes and bring growth below normal to cool the economy and keep inflation under control. The Fed doesn’t want to be in that position, so it gets just as worried when unemployment falls below its target as it does when unemployment is too high. 1 As a result, when the economy is close to what the Fed sees as full employment, the central bank takes a decidedly anti-growth policy stance to keep employment in check.

Fed Watch: Brainard, Powell, Employment Report Ahead -- Federal Reserve policymakers are turning a cautious eye to the inflation numbers, but for now believe special factors account for much of the weakness. Consequently, they remain more focused on the labor market in their policy deliberations. For now, that implies they will resist changing their expectations of further tightening this year as the US jobs market continues to hold strong. Tomorrow we should see more evidence of that strength. Inflation continues to come in below expectations. The latest PCE inflation report, for example, was better than March but still anemic: This weakness has not gone unnoticed on Constitution Ave, but Fed officials are not ready to call it quits on the expected path of monetary policy. Federal Reserve Governor Lael Brainard said earlier this week: Even so, I see some tension between signs that the economy is in the neighborhood of full employment and indications that the tentative progress we had seen on inflation may be slowing. If the tension between the progress on employment and the lack of progress on inflation persists, it may lead me to reassess the expected path of the federal funds rate in the future, although it is premature to make that call today. Her colleague Governor Jerome Powell appears less concerned: Core inflation was 1.5 percent for the 12 months through April. This measure has also risen since 2015, although its gradual increase appears to have paused because of weak inflation readings for March and April. Some of the recent weakness can be explained by transitory factors. And there are good reasons to expect that inflation will resume its gradual rise. On the other side of the country, San Francisco Federal Reserve President John Williams repeats the same:  Meanwhile, although inflation has been running somewhat below the Fed’s goal of 2 percent, with the economy doing well and some of the factors that have held inflation down waning, I expect we’ll reach that goal by next year. The tendency to dismiss weak inflation numbers will continue as long as unemployment plumbs fresh lows for this cycle. Central bankers believe they are in the range of full employment, and don't want to risk being too far below their estimates of the neutral interest rate when inflation finally does take hold a bit more aggressively.

Gary Cohn "Would Love To Be" Next Fed Chairman: Report -- One month ago we reported that according to Beacon Policy Advisors, a new name had emerged as potential replacement to Janet Yellen as head of the Federal Reserve: that of former Goldman COO and current Trump National Economic Council advisor Gary Cohn."The buzz among those who claim Cohn confides in them is that he would like to eventually replace" Yellen, assuming Trump decides to move in a different direction when the chair's term ends in early February, Beacon Policy Advisors said in a daily report for clients in late April. "On paper, Cohn likely meets Trump's expected top two requirements for a Fed chair candidate," the Beacon analysis said, specifically citing Cohn's advocacy for deregulation and his likelihood to keep interest rates low as Trump seeks to implement his pro-growth economic policies. Now, as Axios reports, this story is being validated by none other than Gary Cohn's inner circle. According to Mike Allen a shake-up of the White House staff has put Cohn in contention to replace Reince Priebus as chief of staff. While such a move had long been speculated, Allen added that a late surge in support among confidants of Trump could lead GOP lobbyist David Urban to get the job. However, as Axios notes, citing Cohn's Friends "after his current gig, Cohn would love to be named ... chair of the Federal Reserve."

Trump Said to Pick Nominees for 2 Positions on Fed Board -- The Trump administration has selected candidates for at least two of the three open positions on the Federal Reserve’s Board of Governors, according to people with direct knowledge of the decision. The expected nominees include Randal K. Quarles, a Treasury Department official in the George W. Bush administration, and Marvin Goodfriend, a former Fed official who is now a professor of economics at Carnegie Mellon University. In picking Mr. Quarles and Mr. Goodfriend, President Trump is seeking to install conservative counterweights to the Fed’s chairwoman, Janet L. Yellen. Both men have expressed reservations about the Fed’s aggressive efforts to revive economic growth since the 2008 crisis. Mr. Quarles would also become a leading figure in the administration’s efforts to roll back financial regulation. He would be nominated to serve as the Fed’s vice chairman for supervision, with responsibility for overseeing the Fed’s regulatory responsibilities. It is not clear when the administration intends to announce the nominations, according to the people, who requested anonymity to discuss confidential conversations. Until that happens, it remains possible that Mr. Trump could decide to reopen the search process. 

One of Trump’s potential Fed picks is a huge fan of negative interest rates - From the New York Times:The Trump administration has selected candidates for at least two of the three open positions on the Federal Reserve’s Board of Governors, according to people with direct knowledge of the decision. The expected nominees include Randal K. Quarles, a Treasury Department official in the George W. Bush administration, and Marvin Goodfriend, a former Fed official who is now a professor of economics at Carnegie Mellon University. Goodfriend is described in the piece as a sceptic of the Fed’s bond-buying, especially its purchases of mortgage-backed securities because these ostensibly favour the housing sector over other areas of the economy. He is also someone who has expressed sympathy for binding the Fed’s policy decisions with simple rules. Of course, deeply negative interest rates are difficult to impose when paper money exists as an alternative. Even after costs of storage, the effective lower bound probably isn’t much below -1 per cent. Goodfriend’s proposed solution to this challenge is truly radical: The zero bound encumbrance on interest rate policy could be eliminated completely and expeditiously by discontinuing the central bank defense of the par deposit price of paper currency. The central bank would still stand ready to exchange bank reserves and commercial bank deposits at par; and it could stand ready to convert different denominations of paper currency at par. However, the central bank would no longer let the outstanding stock of paper currency vary elastically to accommodate the deposit demand for paper currency at par. Instead the central bank could grow the aggregate stock of paper currency according to a rule designed to make the deposit price of paper currency fluctuate around par over time. The paper currency growth rule would utilize: i) historical evidence relating currency demand to GDP, ii) the estimated interest opportunity cost sensitivity of the demand for currency relative to GDP, and iii) the GDP growth rate.…The deposit price of paper currency would adjust flexibly much as floating exchange rates adjust to equilibrate the foreign exchange market when international interest rates differ from each other.In other words, the value of a paper dollar would no longer be guaranteed.

  Dear Fed, It’s Not “Really Hard to Spot Bubbles” - Wolf Richter - Minneapolis Fed President Neel Kashkari was the latest Fed official to claim in an essay – thus following in the time-honored footsteps of former Fed Chair Ben Bernanke – that “spotting bubbles is hard,” that the Fed cannot see them, and that if it could see them, it shouldn’t do anything to stop them because it had only “limited policy tools,” and because “the costs of making policy mistakes can be very high.” But it’s OK to use these “limited policy tools” to inflate the greatest bubbles the world has ever seen and then preside over the damage they cause to the real economy before they even implode. Neither Kashkari nor anyone else working at the Treasury Department in 2006 – when they were tasked by Secretary of the Treasury Hank Paulson to look for signs of trouble because they were “due for some form of crisis,” as he writes – could see any bubbles, not even the housing bubble although it was already beginning to deflate. “It is really hard to spot bubbles with any confidence before they burst,” Kashkari writes, specifically naming stock prices and house prices. “Everyone can recognize a bubble after it bursts, and then many people convince themselves that they saw it on the way up.” So here are some visual aids I put together for Kashkari and other Fed governors. It will help them “spot” the beautiful housing bubbles in the US – because bubbles really aren’t hard to recognize before they burst, if you want to recognize them.  What’s hard to predict accurately is when they’ll burst.

Is the United States Becoming Less of an Optimal Currency Area? -- It took the United States roughly 150 years to become an optimal currency area (OCA), according to economic historian Hugh Rockoff. This long journey meant that it was not until the late 1930s that a one-size-fits-all monetary policy made sense for the U.S. economy. Since then the U.S. economy has often been held up as the best example of a currency union that meets the OCA criteria. This especially was the case when comparisons have been made to the Eurozone, like in this classic Blanchard and Katz (1992) paper.  But all is not well in this land of the OCA.  Since the 1980s there has been a decline in labor mobility across the United States.  This can be see in the figure below: A number of explanations have been given for this decline, but in my view the best one is found in David Schleicher's paper titled "Stuck! The Law and Economics of Residential Stability". Schleicher makes the case that land-use regulations, occupational licensing, non-compete clauses, and other regulations are making it harder for individuals to pick-up and move to better jobs.  A spate of recent news stories reinforces how consequential the these labor market constraints are for many people. Schleicher notes that they are particularly onerous for those individuals that need to move the most, the folks from lower socioeconomic groups most affected by regional economic shocks.   The recent Autor et al. papers on the China shock vividly illustrate this point. On the surface these papers speak to how big and persistent the China shock was on certain local U.S. economies. But their deeper finding, in my view, is that they point to declining labor mobility in the United States. For they show the China shock had little effect on local population flows in the affected communities. That is, the unemployed in the affected regions did not readily move away to jobs elsewhere.

PCE Price Index: Headline & Core Down Again in April - The BEA's Personal Income and Outlays report for April was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index rose 0.19% month-over-month (MoM) and is up 1.71% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.15% MoM and 1.54% YoY. Core PCE remains below the Fed's 2% target rate.  The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.

Low Inflation at "Essentially Full Employment" - Carola Binder -- Yesterday, Brad Delong took issue with Charles Evans' recent claim that "Today, we have essentially returned to full employment in the U.S." Evans, President of the Federal Reserve Bank of Chicago and a member of the FOMC, was speaking before the Bank of Japan Institute for Monetary and Economic Studies in Tokyo on "lessons learned and challenges ahead" in monetary policy. Delong points out that the age 25-54 employment-to-population ratio in the United States of 78.5% is low by historical standards and given social and demographic trends.  Evans' claim that the U.S. has returned to full employment is followed by his comment that "Unfortunately, low inflation has been more stubborn, being slower to return to our objective. From 2009 to the present, core PCE inflation, which strips out the volatile food and energy components, has underrun 2% and often by substantial amounts." Delong asks, And why the puzzlement at the failure of core inflation to rise to 2%? That is a puzzle only if you assume that you know with certainty that the unemployment rate is the right variable to put on the right hand side of the Phillips Curve. If you say that the right variable is equal to some combination with weight λ on prime-age employment-to-population and weight 1-λ on the unemployment rate, then there is no puzzle—there is simply information about what the current value of λ is. It is not totally obvious why prime-age employment-to-population should drive inflation distinctly from unemployment--that is, why Delong's λ should not be zero, as in the standard Phillips Curve. Note that the employment-to-population ratio grows with the labor force participation rate (LFPR) and declines with the unemployment rate. Typically, labor force participation is mostly acyclical: its longer run trends dwarf any movements at the business cycle frequency (see graph below). So in a normal recession, the decline in the employment-to-population ratio is mostly attributable to the rise in the unemployment rate, not the fall in LFPR (so it shouldn't really matter if you simply impose λ=0).

Fed's Beige Book: Modest to Moderate expansion, Labor markets "Tighten" -- Fed's Beige Book "This report was prepared at the Federal Reserve Bank of Philadelphia based on information collected on or before May 22, 2017." Most of the twelve Federal Reserve Districts reported that their economies continued to expand at a modest or moderate pace from early April through late May. Boston and Chicago signaled that growth in their Districts had slowed somewhat to a modest pace since the prior Beige Book period, while New York indicated that activity had flattened out. Consumer spending softened with many Districts noting little or no change in nonauto retail sales, while auto sales have edged down from last year's record highs in several Districts; tourism activity has continued to keep pace with the general economy. Meanwhile, the majority of Districts continued to report moderate growth in manufacturing activity and in most nonfinancial service sectors. Construction of new homes and nonresidential structures also continued to grow at modest to moderate rates, as did sales of existing homes; nonresidential leasing picked up a bit. Lending volume trends tended to mirror (and support) the general activity of the economy. Agricultural conditions remained mixed with some regions negatively affected by unusually wet weather. Most energy sectors tended to modestly improve. A majority of Districts reported that firms expressed positive near-term outlooks; however, optimism waned somewhat in a few Districts. Labor markets continued to tighten, with most Districts citing shortages across a broadening range of occupations and regions. Despite supply constraints impeding the ability of firms to attract and retain qualified workers, most Districts reported that employment continued to grow at a modest to moderate pace. Similarly, most firms across the Districts noted little change to the recent trend of modest to moderate wage growth, although many firms reported offering higher wages to attract workers where shortages were most severe.

 Our obsession with GDP and economic growth has failed us, let’s end it -- The idea that the economic “pie” can grow indefinitely is alluring. It means everybody can have a share without limiting anybody’s greed. Rampant inequality thus becomes socially acceptable because we hope the growth of the economy will eventually make everybody better off. In my new book “Wellbeing Economy: Success in a World Without Growth” I point out that the “growth first” rule has dominated the world since the early 20th century. No other ideology has ever been so powerful: the obsession with growth even cut through both capitalist and socialist societies. But what exactly is growth? Strangely enough, the notion has never been reasonably developed. For common sense people, there is growth when—all things being equal—our overall wealth increases. Growth happens when we generate value that wasn’t there before: for instance, through the education of children, the improvement of our health or the preparation of food. A more educated, healthy and well-nourished person is certainly an example of growth. If any of these activities generate some costs, either for us individually or for society, we should deduct them from the value we have created. In this logical approach, growth equals all gains minus all costs. Paradoxically, our model of economic growth does exactly the opposite of what common sense suggests. Here are some examples. If I sell my kidney for some cash, then the economy grows. But if I educate my kids, prepare and cook food for my community, improve the health conditions of my people, growth doesn’t happen. If a country cuts and sells all its trees, it gets a boost in GDP. But nothing happens if it nurtures them. If a country preserves open spaces like parks and nature reserves for the benefit of everybody, it does not see this increase in human and ecological wellbeing reflected in its economic performance. But if it privatizes them, commercializing the resources therein and charging fees to users, then growth happens.

The Recession Predictions Keep Coming - If you’re worried about the next recession, you’re not alone. And you never will be. Recent history has dispensed a glut of warnings. The only missing element in the mix: an actual recession. Unusual? Not quite. The deep state of anticipating a new economic downturn is a hardy perennial. Last November, I highlighted some of the recession forecasts over the previous seven years – a period that’s been notable for the lack of an NBER-defined recession. Fast forward six months and, well, nothing’s changed. The recession warnings keep rolling in and the economy continues to expand.  Does that mean that recessions have been banished? Hardly. But forever seeing trouble around the next bend isn’t useful either. Ditto for issuing vague warnings with minimal, if any, supporting data or transparent methodologies that can be replicated. Fortunately, there’s a better way – The Capital Spectator’s monthly reviews of business-cycle risk, for example — here’s this month’s udpate. Aggregating analytics from a range of sources via the weekly updates of The US Business Cycle Risk Report is another. The cold, hard truth is that predicting recessions is impossible, at least from the perspective of developing a reliable methodology with a minimal run of false signals. The next best thing is analyzing a broad set of indicators to determine when a new downturn has started in recent history. The challenge is doing so with a short lag while maintaining a high degree of reliability. It’s tougher than it sounds. The good news: it’s not impossible. As for the constant stream of warnings that show up in the media, the track record isn’t encouraging. The warnings, however, never stop, as the recent examples below remind.One day another downturn will start, perhaps sooner than expected. How can you identify the genuine article? Ignoring the noise in the media is a good start.

Treasury Yield Curve Continues To Flatten - Bloomberg reports that a rate hike at the Federal Reserve’s June 13-14 policy meeting is a “virtual certainty”, based on Fed funds futures. That’s a clue for thinking that the recent flattening of the Treasury yield curve is on track to become even flatter. Consider the 10-year/3-month spread, a widely followed benchmark for monitoring the Treasury curve. On Wednesday (May 30), this spread dipped to 1.28 percentage points, an eight-month low, based on daily data via Treasury.gov. The 10-year/2-year spread has also decreased in recent months, sliding to 0.93 percentage points – the lowest since last October.  For another perspective, note the change in the full yield curve this year. The red line shows the current yields as of yesterday (May 30) vs. the yields at last year’s close (blue line). The main takeaway: a clear flattening trend has been unfolding so far in 2017. Another installment of tighter monetary policy implies that longer-dated Treasuries would be the target of selling, which equates with higher yields. But the crowd so far this year has ripped up the script. The benchmark 10-year yield dipped to 2.21% yesterday, close to the lowest level for the year to date. What’s the rationale for buying Treasuries at the longer end of the curve at a time of high expectations for another rate hike? Yesterday’s weaker-than-expected inflation news is a factor. The annual pace of the personal consumption expenditures (PCE) price index — a benchmark that’s considered to be the Fed’s preferred measure of inflation – fell to 1.7% in April from 1.9% in the previous month. Core PCE (excluding food and energy) also eased, dipping to a 1.5% year-over-year rate last month – a 16-month low. In other words, the central bank’s 2.0% inflation target looks a bit more elusive at the moment.

Falling tax receipts pose a debt-ceiling dilemma - The federal government’s tax collections haven’t been growing much recently. That could be a warning about the health of the American consumer and, by extension, corporate earnings. It also has some implications for the Treasury’s upcoming collision with the debt ceiling. Until recently, analysts were forecasting a hard deadline of October. But White House budget director Mick Mulvaney said last week that tax receipts have risen less than expected this year, and warned the ceiling would therefore be breached in August without any policy changes. The data appear to support Mulvaney’s point. Treasury Department reports show that federal tax receipts declined year-over-year in the second half of 2016. That’s the first time they’ve fallen over a six-month period since the recession.

Trump Adviser Cohn Open to Concessions on U.S. Debt Ceiling - President Donald Trump’s chief economic adviser said Friday that Congress has no choice but to vote to raise the government’s borrowing authority, and that the White House will consider spending cuts or other riders to avert an unprecedented default. Gary Cohn, the National Economic Council director, appeared to align himself with Trump’s budget director, Mick Mulvaney, and against Treasury Secretary Steve Mnuchin, who has said Congress should pass a "clean" bill to raise the debt limit. The internal administration dispute has become unusually public. "At the end of the day, Congress is going to raise the debt ceiling because they have no other choice,” Cohn said in an interview on CNBC, brushing aside objections by conservative lawmakers who question the need to increase the limit. “Treasury secretary would love to do a clean debt ceiling -- I get that. But if we need to get things attached to get it through, we’ll attach things,” Cohn continued. The U.S. is expected to reach its debt ceiling -- a legal limit on how much the government can borrow -- by as soon as August. If Congress doesn’t act to raise the ceiling, the government would default for the first time in its history. “The one thing you can say about the debt ceiling discussion, there’s absolutely no way that the U.S. will ever default on its debt,” Mulvaney said Friday in a Facebook Live interview with the New York Times. “We are not going to do that. You can take that off of the table.” The early signal from Cohn and Mulvaney that the White House will make concessions for votes in favor of a debt increase is likely to encourage House conservatives to dig in on their demands for steep reductions in spending, complicating the task of passing the measure through both chambers of Congress. The administration would have to win over more Democrats to counter any Republican defections. For their part, Democrats are more likely to insist on their own concessions, such as an assurance that the administration will continue making Obamacare subsidy payments to insurance companies..  

A Tax Cut Might Be Nice. But Remember the Deficit. - Greg Mankiw - In the debate about federal tax policy, one question looms large: Should we have a tax cut that increases the budget deficit? President Trump says he wants “a massive tax cut … maybe the biggest tax cut we’ve ever had.” But the Senate majority leader, Mitch McConnell, who is clearly worried about the growing national debt, says tax reform “will have to be revenue-neutral.” The stage is set for another Republican showdown.  Democrats, meanwhile, are likely to sit this one out. The Senate minority leader, Chuck Schumer, argues that passing a tax bill is going to be hard until the president releases his tax returns. Don’t hold your breath. Mr. Trump wants to cast himself in the role of a tax-cutting Republican president, along the lines of Ronald Reagan and George W. Bush. But the Reagan and Bush tax cuts combined the logic of supply-side economics and of Keynesian stimulus. Supply-siders argue that lower marginal tax rates give people more incentive to work and invest. Keynesians argue that leaving more money in people’s pockets, rather than in government coffers, increases spending and that greater demand for goods and services expands employment. When the government enacts deficit-financed tax cuts, the two channels can work simultaneously. Yet Mr. Trump faces a vastly different set of circumstances. The economy has not experienced a recent recession. The recovery from the financial crisis and Great Recession of 2008-2009 is now eight years old.Moreover, there is no sign we are heading into another recession. Over the past year, unemployment has fallen from 5.0 to 4.3 percent, and the stock market is up about 20 percent. Some firms are complaining about labor shortages. The Federal Reserve is responding to these events by raising interest rates. It believes, correctly in my judgment, that incipient inflation is a greater risk than recession. Keynesian pump-priming is not what the economy needs now.

America’s $1.1 Trillion National Security Budget - Project On Government Oversight (table) Total US National Security Spending, 2017-2018 (Sources: Table 25-1 from Analytical Perspectives and Table 26-1 Budget by Agency and Account in 2018 OMB Budget)

Defense hawks gird for budget brawl | TheHill: Defense hawks are hunkering down for a fight to get all $640 billion they say is necessary to rebuild the military after President Trump’s budget proposal fell short of their expectations. Budget experts predict a battle in the coming months between the administration, appropriators, party leadership and congressional committees that may fall short of delivering even the $603 billion Trump has proposed. Sen. John McCain (R-Ariz.) and Rep. Mac Thornberry (R-Texas), the chairmen of the Senate and House Armed Services committees, have the power to push a $640 billion defense policy bill regardless of how the budget shakes out.“It’s going to be a heavy lift to even get close to Trump’s proposal,” said Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies (CSIS). “With that said, the authorizers can go off and mark to something that’s completely different.” Trump’s $603 billion base defense budget leaves out much of what was on defense hawks’ wish lists, as well as items Trump himself promised throughout his 2016 White House campaign. The budget includes no additional ships from what was planned under former President Barack Obama, though officials have said the administration supports adding another littoral combat ship and has promised to issue a correction to the budget. The budget would also add no new soldiers and buy eight fewer aircraft than Obama had planned. The Pentagon has said this budget proposal is about fixing the readiness of the force it currently has and that Congress can expect the buildup to start in fiscal year 2019. But defense hawks say that’s an unnecessary and potentially harmful delay. Both Thornberry and McCain insisted this week they do not yet know whether their respective versions of the National Defense Authorization Act (NDAA) would eschew Trump’s budget and follow their $640 billion proposal, saying the budget process needed to progress further before making a decision. 

Military’s clout at White House could shift U.S. foreign policy -- When President Trump’s top foreign policy advisers gathered ­recently at the White House to discuss plans to revamp the administration’s Afghanistan strategy, the makeup of those in the room was indicative of a significant turn in U.S. foreign policy. Seated front and center at the Situation Room table were four current or retired generals who dominate just about every big national security decision Trump makes. The debate, however, was most notable for the voices that were absent. Secretary of State Rex Tillerson, the president’s top diplomat, was in New York. His acting deputy attended in his place. The generals at the table were Lt. Gen. H.R. McMaster, the national security adviser; Gen. Joseph F. Dunford Jr., the chairman of the Joint Chiefs of Staff; and two retired four-star generals, Defense Secretary Jim Mattis and Homeland Security Secretary John F. Kelly. Most of those in attendance emerged believing that the Afghanistan plan was ready to go to the president for final approval, U.S. officials who took part in the session said. Unbeknown to the White House, America’s top diplomat was not on board: Tillerson, who heads a department that some White House officials described as “AWOL” during the review process, didn’t think the plan did enough to address other countries in the region with a stake in Afghanistan, such as Pakistan, Iran and India, a person familiar with his thinking said. Tillerson also was concerned that the plan called for beefing up the State Department’s presence in dangerous locations outside Kabul. Even though the State Department remains understaffed at its top ranks, department officials said it had been an active participant in the review and insisted that a final decision on the emerging plan was probably weeks away. A State Department spokesman declined to comment on the ongoing discussions until “the group arrives at a decision point.” The disconnect over a major policy shift, with big implications for the Pentagon, the State Department and the federal budget, illustrates the sway military officers hold in the Trump administration. Current and retired military officers not only hold positions at the highest ranks of government but also fill senior staff jobs in the White House that have traditionally been the purview of civilians or experienced diplomats. 

Are We Fighting Terrorism, Or Creating More Terrorism? -- When we think about terrorism we most often think about the horrors of a Manchester-like attack, where a radicalized suicide bomber went into a concert hall and killed dozens of innocent civilians. It was an inexcusable act of savagery and it certainly did terrorize the population. What is less considered are attacks that leave far more civilians dead, happen nearly daily instead of rarely, and produce a constant feeling of terror and dread. These are the civilians on the receiving end of US and allied bombs in places like Syria, Yemen, Afghanistan, Somalia, and elsewhere. Last week alone, US and “coalition” attacks on Syria left more than 200 civilians dead and many hundreds more injured. In fact, even though US intervention in Syria was supposed to protect the population from government attacks, US-led air strikes have killed more civilians over the past month than air strikes of the Assad government. That is like a doctor killing his patient to save him. Do we really believe we are fighting terrorism by terrorizing innocent civilians overseas? How long until we accept that “collateral damage” is just another word for “murder”? The one so-called success of the recent G7 summit in Sicily was a general agreement to join together to “fight terrorism.” Have we not been in a “war on terrorism” for the past 16 years? What this really means is more surveillance of innocent civilians, a crackdown on free speech and the Internet, and many more bombs dropped overseas. Will doing more of what we have been doing do the trick? Hardly! After 16 years fighting terrorism, it is even worse than before we started. This can hardly be considered success.\

Pentagon chief: War with North Korea would be ‘catastrophic’ | TheHill: Defense Secretary James Mattis warned on Sunday that a war with North Korea would be "catastrophic," and would place United States allies in the region at extreme risk. "The North Korean regime has hundreds of artillery cannons and rocket launchers within range of one of the most densely populated cities on earth, which is the capital of South Korea," Mattis said on CBS's "Face the Nation." "This regime is a threat to the region, to Japan, to South Korea. And in the event of war, they would bring danger to China and to Russia as well," he added. "But the bottom line is it would be a catastrophic war if this turns into a combat if we're not able to resolve this situation through diplomatic means."Tensions rose between Washington and Pyongyang last month over the North's rapidly advancing nuclear and missile programs, prompting the U.S. to move a Navy strike group into the west Pacific near the Korean Peninsula. North Korea denounced that maneuver as an act of aggression and threatened a strike on the U.S. if provoked. The exchange put other countries in the region on high alert, particularly South Korea and Japan, where the U.S. has tens of thousands of troops stationed. President Trump told Reuters in an interview with Reuters last month that a "major, major conflict" between the U.S. and North Korea was possible, and that while he preferred a diplomatic solution, such a path would be "very difficult." 

These Powder Kegs Are About To Blow: "Trump Needs To Halt The Downward Spiral That Obama Orchestrated - Jeremiah Johnson --President Trump just took a trip to Saudi Arabia in an effort to obsequiously “shore up” the ties. Expected.  It is expected for any U.S. president to “recertify” the Petrodollar and the commitments to protect the House of Saud that were initiated by Kissinger and Nixon almost five decades ago.   In order to keep the MIC (Military Industrial Complex) happy, defense contracts have to be on the rise: A Republican administration is the foundation for this. The creation of a threat is ongoing.  The creation of a threat (whether viable or not) is essential to justify the defense contracts and the ongoing deployments of U.S. troops that were initiated under Obama and are continuing under President Trump.  The MIC is inexorably intertwined with the fragile (almost skeletal) domestic industrial base of the U.S. economy, as well as all of the foreign policy instituted at home and carried out abroad. Europe is redefining itself with Britain’s exit from the EU, and NATO is trying to maintain ties and commitments with Britain even as she dumps the Eurodollar and cuts the economic ties to the other nations.  The U.S. Congress and the MIC want to invade Syria, and then Iran.  They also want to “clear things up” in Korea.  These nations are in the way of the establishment of a U.S.-controlled hegemony in the areas and a face-off with Russia.   The Russians have pretty much taken over the Arctic in terms of exploration and mining. The Middle East is still in a shambles from the “Arab Spring” and all of the debacles in Egypt and Libya; the Eastern European question is not yet solved in relation to Ukraine and the tug-O’-war over it between the U.S. and Russia; Syria and Iran are “powder kegs” about to blow; and the potential for war with North Korea is far from exhausted. The President is going to need to take the initiative in order to halt the downward spiral that Obama orchestrated and began prior to his departure.  To avert at (the minimum) a new Cold War, he’ll have to sit down and do a face-to-face with Putin instead of dispatching Tillerson to play ping-pong periodically with Lavrov.  The time is now to head off these alliances between other nations that exclude the U.S. to a detriment.  Such economic alliances eventually always turn into military alliances…based on the need to preserve the flow of money between the nations involved.

Trump Submits to Neocon Orthodoxy - With astounding precision, Donald Trump zeroed in on the worst possible Middle East policy option in his recent trip to Saudi Arabia and made it his own. He rebuffed the efforts of Iran’s newly elected moderate government to open up communications with the West and instead deepened America’s alliances with decrepit autocratic regimes across the Persian Gulf. President Donald Trump is escorted by King Salman bin Abdulaziz Al Saud of Saudi Arabia during the arrival ceremonies, Saturday, May 20, 2017, at the Royal Court Palace in Riyadh, Saudi Arabia. (Official White House Photo Shealah Craighead) Turning up his nose at Iran — a rising young power — he embraced Saudi Arabia, which is plainly on its last legs. It was a remarkable display —  rather like visiting a butcher shop and passing up a fresh steak for one that’s rancid and smelly and buzzing with flies.  Saudi Arabia is not just any tired dictatorship with an abysmal human-rights record but one of the most spectacularly dysfunctional societies in history. It takes in half a billion dollars a day in oil revenue, yet is so profligate that it could run out of money in half a decade. It sits atop 18 percent of the world’s proven oil reserves, yet is so wasteful that, at current rates, it will become a net importer by the year 2030. Its king travels with a thousand-person retinue wherever he goes while his son, Deputy Crown Prince Muhammad bin Salman, plunked down $550 million not long ago when a 440-foot yacht caught his eye in the south of France. Yet this pair of royal kleptocrats dares preach austerity at a time when as much as 25 percent of the population lives on less than $17 a day in trash-strewn Third World slums.  Similarly, Saudi Arabia’s appetite for high-tech weaponry is such that in 2015 it became the largest arms importer in the world. Yet its military is so inept that it is unable to subdue ragtag Houthi rebels in neighboring Yemen or even stop them from raiding deep inside Saudi territory and launching regular missile attacks.

Trump’s Plan for Middle East Peace Could Actually Work -- During his visit to Israel this week, U.S. President Donald Trump made the strongest public link thus far between two important initiatives: reviving Israeli-Palestinian peace and creating an Israeli-Arab alliance to confront Iran. At his main event with Prime Minister Benjamin Netanyahu, Trump ad-libbed about Saudi King Salman’s potential role in brokering a peace agreement, saying the monarch “would love to see peace with Israel and the Palestinians.”At the heart of this agenda is the “outside-in” strategy for resuscitating Israeli-Palestinian negotiations. The talks would be linked to the development of a broader Middle Eastern coalition to oppose Iran’s ongoing expansion of influence in the Middle East and  prepare for the day of reckoning when the nuclear agreement expires.The Trump administration’s big idea is reportedly that Sunni-majority Arab countries could form a NATO-like alliance. This grouping could then have a less formal but still highly cooperative relationship with Turkey. And, most importantly, it could engage in meaningful coordination and cooperation with Israel to form a united regional bloc against additional Iranian mischief and pursuit of hegemony.A new strategic affiliation between the Arabs and Israel — one that offered the latter new regional legitimacy, recognition, and a key role in a united front against its mortal enemy, Iran — would be meant to provide Israel new incentive to come to terms with an independent Palestinian state. The Palestinians, in turn, would be provided by Israel and Arab nations with political cover, diplomatic support, and economic aid to help make the necessary compromises for a final peace deal. In theory, this is a great idea. It’s the only approach that anyone has posited in many years that might break the deadlock, potentially offering a win-win-win scenario for Israel, the Palestinians, and the Arab states. And there is evidence that Israel, some key Arab countries, and the Palestinians might be open to such a dynamic — if it can ever get off the ground.

Boeing’s Iran Deal Puts Trump in Tough Spot –  Boeing’s planned multibillion-dollar aircraft sales to Iran are facing a growing backlash from Republicans in Washington, but one key politician has stayed silent: Donald Trump. The proposed sales have put the U.S. president in a tough spot, pitting his hostility to Iran and the recent nuclear deal against his ambition to boost American factory jobs. “My No. 1 priority is to dismantle the disastrous deal with Iran,” Trump said during the 2016 presidential campaign. He’s also promised to boost American manufacturing and create 25 million new jobs.  If he blocks the plane sales, Trump could undercut that second goal. Boeing said its agreements to sell 110 aircraft for nearly $20 billion to two Iranian carriers would support nearly 120,000 jobs. Yet if he lets the sales proceed, Trump will anger Republicans in Congress and buttress a nuclear deal he detests by signaling to Western companies that America’s arch enemy is a good place to do business. “The decision wheel that he’s got in front of him is pretty complex,” Richard Nephew, who served as the lead U.S. sanctions negotiator on the nuclear deal, said. “It’s everything from the jobs issue to his inability to come up with something better that doesn’t restart the nuclear program and cause a great rift between us and the Europeans” who were party to the deal. The nuclear accord between Iran and six world powers lifted international sanctions in exchange for verifiable steps by Iran to abandon some of its nuclear activities. The United States also agreed to allow plane makers to sell aircraft to Iran. But the sales require export licenses, and the Treasury Department has broad leeway to cancel or deny them if there’s evidence Iran isn’t using the aircraft for civil aviation purposes.

Tillerson Present as Exxon Signed Major Deal with Saudi Arabia During Trump Visit -- During his recent trip to Saudi Arabia, President Donald Trump announced an array of economic agreements between the U.S. and the Middle Eastern kingdom, saying it would usher in “jobs, jobs, jobs” for both oil-producing powerhouses. While the $350 billion, 10-year arms deal garnered most headlines, a lesser-noticed agreement was also signed between ExxonMobil and the state-owned Saudi Basic Industries Corporation (SABIC) to study a proposed co-owned natural gas refinery in the Gulf of Mexico. Under the deal, signed at the Saudi-U.S. CEO Forum, the two companies would “conduct a detailed study of the proposed Gulf Coast Growth Ventures project in Texas and begin planning for front-end engineering and design work” for the 1,300-acre, $10 billion plant set to be located near Corpus Christi, Texas, according to an ExxonMobil press release. ExxonMobil's press release for the agreement mentions that Darren Woods, the company's CEO, was in the room for the signing of the pact alongside ExxonMobil Saudi Arabia CEO Philippe Ducom and SABIC executives. Missing from that release:  President Trump and recently retired ExxonMobil CEO and current U.S. Secretary of State, Rex Tillerson.  DeSmog discovered they were all present at the palace via the Saudi Press Agency's English-language press Twitter account, which released a series of photos of Woods and Tillerson shaking hands with SABIC CEO Yousef Al-Benyan and Saudi Defense Minister Prince Mohammad bin Salman, respectively. President Trump is seen seated in the background of the photos of both Woods and Tillerson, which were taken in the same room.As in the ExxonMobil press release, White House and State Department press releases failed to mention that Tillerson and Woods were both present when the deals were signed between the two countries at the Royal Court. Getty Images has also published the photo of Woods at the Al-Yamamah Palace, with Trump seated in the background.

Sec. John Kelly: Intelligence Leaks Are ‘Darn Close To Treason’ NBC -- Homeland Security Secretary John Kelly on Sunday condemned intelligence leaks after the Manchester attack as "darn close to treason."  The sharing of intelligence related to the case between British counterterrorism police and U.S. officials was briefly paused after pictures from the scene of Monday's deadly Ariana Grande concert bombing were published in the New York Times - and authenticated to NBC News by a senior U.S. law enforcement official. The name of the suspected attacker was also released to the press.  "I believe when you leak the kind of information that seems to be routinely leaked - high, high level of classification… I think it's darn close to treason," Kelly told NBC's "Meet The Press."  The New York Times did not reveal how it obtained the photos.  "I don't know where the leak came from," Kelly said. "But I will tell you this, as I always do in cases like this, I immediately called my counterpart in the UK. And after offering my condolences about the attack… She immediately brought this topic up. And, if it came from the United States, it's totally unacceptable. And I don't know why people do these kind of things, but it's borderline, if not over the line, of treason." British Prime Minister Theresa May warned that she would speak with President Trump about the importance of tightly held information between the two countries.  In a statement Thursday, President Trump called leaks after the attack "deeply troubling" and asked the Department of Justice to try to find out where they originated.

Three Leakers Of Classified White House Information Said To Be Identified, Expected To Be Fired --There have been rumors around Washington that press secretary Sean Spicer's job is in danger (and that Jared Kushner, the focus of much of the latest newsflow, may be forced to take a "step back") but the White House has denied these rumors. In an interview with Fox News' Jeanine Pirro earlier this month, Trump said Spicer has been "doing a good job but he gets beat up."But the biggest issue plaguing the White House at this moment is the seemingly relentless leakage of confidential information surrounding Trump's activities, with Trump administration officials saying last week the recent high-profile leaks of classified information are "coordinated and timed."And in a new development, CBS News has confirmed that three leakers of classified information at the White House have been identified and are expected to be fired. According to CBS, "officials within the Trump White House believe leaks of Mr. Trump's conversation with Russian Foreign Minister Sergey Lavrov are a "deliberate attempt" by officials who are holdovers from President Obama's administration and are trying to damage the Trump presidency."Last week, the Trump campaign released an email to supporters entitled "SABOTAGE," in which the campaign said, "There are people within our own unelected bureaucracy that want to sabotage President Trump and our entire America First movement."The White House has yet to announce any terminations or staff realignment. Instead, overnight Trump took another swipe at reports that his Twitter privileges may be removed, saying that "the Fake News Media works hard at disparaging & demeaning my use of social media because they don't want America to hear the real story!"

Trump asks world leaders to call him on his cell: report | TheHill: President Trump reportedly asked world leaders to contact him directly on his cellphone, raising questions about security, the Associated Press reported Tuesday.The request, which poses a risk of having the conversations of the U.S. president intercepted, breaks with diplomatic protocol. Trump urged Canadian and Mexican leaders to call his cellphone, former and current U.S. officials with direct knowledge of the practice told the the news wire, adding that only Canadian Prime Minister Justin Trudeau has utilized the direct communication line. The recently elected French President Emmanuel Macron and Trump exchanged phone numbers following the conclusion of the France’s election, a French official told the AP who would not say if Macron intended to take advantage of the offer. The White House and Trudeau’s office did not respond to the news wire’s requests for comment. AP Canadian Bureau Chief Rob Gillies said in response to the report that Trudeau is calling Trump on his cellphone. While it is a common practice for people to call one another on their cellphones, calls between world leaders are a carefully managed ordeal. Typical diplomatic protocol involves phone calls on highly secure phone lines. Trump’s decision to breach this protocol signals an ongoing distrust of official channels and modus operandi. 

Thanks to Trump, Germany says it can't rely on the United States. What does that mean?  -- German Chancellor Angela Merkel told a crowd Sunday in southern Germany that Europe can no longer rely on foreign partners.Merkel on Sunday declared a new chapter in U.S.-European relations after contentious meetings with President Trump last week, saying that Europe “really must take our fate into our own hands.” Offering a tough review in the wake of Trump’s trip to visit E.U., NATO and Group of Seven leaders last week, Merkel told a packed Bavarian beer hall rally that the days when Europe could rely on others was “over to a certain extent. This is what I have experienced in the last few days.” This is an enormous change in political rhetoric. While the public is more familiar with the “special relationship” between Britain and the United States, the German-U.S. relationship has arguably been more important. One of the key purposes of NATO was to embed Germany in an international framework that would prevent it from becoming a threat to European peace as it had been in World War I and World War II. In the words of NATO’s first secretary general, NATO was supposed “to keep the Russians out, the Americans in, and the Germans down.” Now, Merkel is suggesting that the Americans aren’t really in, and, by extension, Germany and Europe are likely to take on a much more substantial and independent role than they have in the past 70 years. Merkel’s comment about what she has experienced in the past few days is a clear reference to President Trump’s disastrous European tour. Her belief that the United States is no longer a reliable partner is a direct result of Trump’s words and actions. The keystone of NATO is Article 5, which has typically been read as a commitment that in the event that one member of the alliance is attacked, all other members will come to its aid. When Trump visited NATO, he dedicated a plaque to the one time that Article 5 has been invoked — when all members of NATO promised to come to the United States’ support after the attack on Sept. 11, 2001. However, Trump did not express his commitment to Article 5 in his speech to NATO, instead lambasting other NATO members for not spending enough money on their militaries. When Trump went on to the Group of Seven meeting in Italy, he declined to recommit to the Paris agreement on climate change, leaving the other six nations to issue a separate statement.

Trump rips Germany in early morning tweet | TheHill: President Trump criticized Germany in an tweet early Tuesday, saying the U.S. trade deficit with the European nation will change as will its spending on NATO and its military. “We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military,” Trump said. “Very bad for U.S. This will change”German Chancellor Angela Merkel said Sunday that her country can no longer "completely depend" on the U.S. Merkel, who met with Trump at a Group of Seven summit one day earlier, said that Europeans "must really take our destiny into our own hands.” "The times in which we could completely depend on others are on the way out," she said at a campaign rally in Munich. "I've experienced that in the last few days." Germany's foreign minister, meantime, called Trump’s policies “short-sighted,” saying they stand against the European Union’s interests. “Anyone who accelerates climate change by weakening environmental protection, who sells more weapons in conflict zones and who does not want to politically resolve religious conflicts is putting peace in Europe at risk,” Sigmar Gabriel said on Monday. “The West has become smaller, at least it has become weaker.” 

Oh, Lord, why won’t Donald Trump let me buy me a Mercedes Benz… even when it’s made in the USA? -  AEI -  Trump says it’s “horrible” that the Germans sell millions of cars to Americans. Forget the fact that millions of satisfied Americans willingly buy German cars from dealerships staffed by Americans because they greatly benefit from those voluntary purchases of quality vehicles. Every one of those transactions is win-win-win (buyer-German automaker-US auto dealership), and no American buyer of a German vehicle (nor the US dealership that sold the car) thinks anything “bad” or “horrible” has taken place.What’s even more important is the fact that while Trump looked at the millions of cars Germany sells to the US, he apparently forgot to look at the millions of cars the “bad, horrible” Germans are building…. well, right here in the United States of America. German automakers BMW, Mercedes and Volkswagen have collectively invested around $17 billion into the US economy to build state-of-the-art auto plants in South Carolina, Alabama and Tennessee. Together those three “horrible” German companies directly employ about 20,000 “great” American autoworkers at their plants and they jointly produce nearly one million cars here annually. Nearly 100,000 other “great” Americans are employed by auto parts suppliers that serve the German automakers’ operations in the US.States like Tennessee and South Carolina have become among the most highly globalized US states in large part due to the presence of the German automakers. For example, roughly one-third of the output of the economies of Tennessee and South Carolina’s economies (GDP) are tied to the value of those states’ exports and imports, and much of that trade is auto-related and connected to the activities of BMW and Volkswagen.And because mercantilist-in-chief Trump routinely expresses his love for US exports and hate for imports from “horrible” countries like Germany, he should be thrilled about the US-based German automakers, who serve as models for exporting cars from the US. For example, the $8 billion BMW factory in Spartanburg, South Carolina (pictured above) is BMW’s second-largest auto plant in the world and the German automaker has been the largest U.S. automotive exporter (by value) for many years (287,700 BMW X models during 2016 with an export value of more than $11 billion). That’s right — BMW is a bigger exporter than “American” automakers Ford or GM. Likewise, and both Mercedes and VW export hundreds of thousands of cars from the US to more than 100 countries around the world.

In Praise of a Transatlantic Divorce - The foreign-policy establishment is in a dither this week over Donald Trump’s recent truculent, bumbling, and boorish conduct in Europe. Their concerns hit a new high when German Chancellor Angela Merkel gave a speech back home declaring “the times in which we could rely fully on others” are “somewhat over” and suggesting Europe “really take our fate into our own hands.” The reaction back in the United States was swift and bordered on hysterical. The Atlantic’s David Frum declared Trump’s trip a “catastrophe,” and Joe Scarborough said it had done more damage than any presidential meeting since Nikita Khrushchev bullied John F. Kennedy at their meeting in Vienna in 1961. Richard Haass at the Council on Foreign Relations tweeted that Merkel’s reaction was a “watershed” that the United States had sought to avoid since World War II. Vali Nasr of Johns Hopkins University lamented that Trump had managed “in less than 3 months … to undo 7 decades of Transatlantic relations.” Needless to say, most of these commentators see this as a dramatic setback for the United States and a sign that the post-World War II order is headed for the dustbin of history. I’m no fan of Trump, whom I regard as having become the worst president in U.S. history after only four short but frantic months in office. He remains, in my view, a genuine long-term threat to America’s constitutional order. But the establishment’s somewhat apocalyptic reaction to the Trump trip strikes me as over the top and places too much blame on Trump himself. No matter how undiplomatic his behavior may have been, pinning it all on Trump ignores the larger factors at work. For starters, consider how it would have sounded had Merkel said the exact opposite in her speech. What if she had declared, “We learned at the recent meetings that we can have total confidence in the United States to protect us in any and all circumstances, and therefore we Europeans do not need to take responsibility for our own fate”? That would have been a ridiculous thing for a European leader to say, and it reminds us that Europe “taking its fate into its own hands” is not by itself a bad idea at all. It depends, of course, on how Europeans choose to do that. In fact, it would be highly desirable if Europe did take more responsibility for its own security.

Globalization Without Uncle Sam: America First May Mean America Out - President Trump’s bellicosity towards global integration is reducing America’s already waning prominence in a world increasingly defined by interlinkages of hyper-growth developing countries. It’s ironic that thanks to Trump, an oft-repeated mantra of Iran’s former President Mahmoud Ahmadinejad – “A world without America is not only desirable, it is achievable” – now seems less delusional. For the developing world, globalization was synonymous with Americanization. Since the end of World War II, the United States led in influencing global trade and security arrangements, shaping the future with investments in research and higher education. US President Donald Trump, expressing wariness about global integration, has adjusted policies and budget priorities – a retreat spurring a quest for connections among developing countries, explains Hassan Siddiq in this YaleGlobal article. China is now the world’s top trading partner, and its ambitious One Belt, One Road Initiative will set the agenda for foreign relations among the world’s fastest growing economies. Saudi Arabia is busy organizing the Islamic Military Alliance of 41 nations that will usher in new dependencies and flows of money and arms. Responding to worries among international students about xenophobia, American universities organize regional hubs and partnerships around the globe. Likewise, global audiences are less dependent on Hollywood, and the internet offers shows from around the globe, aided by automatic translators along with fan-based translation sites. Globalization encourages imagination, ambition and a sense of possibility. The country that instigated so many trends in modern globalization may soon find itself left behind. – YaleGlobal 

Report: Trump to reverse Obama’s Cuba policy | TheHill: President Donald Trump plans on reversing a set of policies softening relations with Cuba, according to a report from The Daily Caller.The U.S.-Cuba Trade and Economic Council, a non-partisan group, said the Trump administration is preparing to announce the changes to Obama-era policies in a June speech in Miami, according to the Daily Caller.The report cites two unnamed sources who said a bipartisan trio of senators -- Marco Rubio Marco Rubio (R-Fla.), Bob Menendez (D-N.J.), and Mario Diaz-Balart (R-Fla.) -- pushed for the reversal. Obama, who became the first U.S. president to visit Cuba in almost a century last year, put in motion a series of policies to thaw relations with the Communist island nation, which had been a strategic burden throughout the Cold War. While Obama was able to soften regulation on some kinds of trade, business and travel, Congress has refused to lift the 57-year-old embargo. The Trump administration had put the Cuba policy under review upon taking office. The Daily Caller report surfaced days after Trump met with Pope Francis, who facilitated the deal between Obama and Cuban President Raul Castro. 

Vietnam and the United States Make Nice for Now, but Disappointment Looms - This week’s visit of Vietnamese Prime Minister Nguyen Xuan Phuc to Washington resulted in the usual readout of supposed achievements and breakthroughs. The prime minister seems to have understood that this U.S. administration likes foreign officials to arrive in Washington with promises of new investments and other deals that the White House can quickly tout as a win.  And indeed, during the visit the U.S. president boasted that the two nations were signing deals that would result in “billions” in new trade, as well as, supposedly, creating many new jobs in the United States. At a speech at the Heritage Foundation, Vietnam’s prime minister promised roughly $15 billion in new deals. Reuters noted, however, that the Commerce Department’s figure for how much the deals would be worth was about one-half the Vietnamese prime minister announced in his speech.  Still, President Trump declared, “They (Vietnam) just made a very large order in the United States—and we appreciate that—for many billions of dollars, which means jobs for the United States and great, great equipment for Vietnam.” The two sides further discussed strategic issues, such as Vietnam’s desire to buy more cutters; Hanoi is hardly going to follow the lead of the Philippines and back down from its assertive defense of its exclusive economic zones in the South China Sea.  But this fanfare covers up some major problems in the relationship. The amount of deals announced is unlikely to fully please the U.S. administration, even though Hanoi likely sees the deals, in a way, as a concession to make to please the White House. And Vietnam will almost surely continue to run a major trade surplus with the United States. For an administration that looks at surpluses and deficits in a zero-sum way, trade relations are going to continue to be a primary irritant in the relationship.  Even on Tuesday, with the Vietnamese prime minister in attendance at an event, according to the Wall Street Journal, “U.S. Trade Representative Robert Lighthizer appeared to tag Vietnam as a country unfairly benefiting from trade by selling more to the U.S. than it buys. Mr. Lighthizer emphasized a $32 billion U.S. trade deficit with Vietnam while introducing Mr. Phuc at an event for businesses.”

Mattis says U.S. committed to Asia-Pacific as allies seek clear policy | Reuters: U.S. Defense Secretary Jim Mattis said on Friday the United States remains committed to its Asia-Pacific allies, as he arrived in Singapore for the region's premier security forum. Mattis, who is making his second visit to the region since he took charge of the Pentagon on Jan. 20, will be looking to articulate a clear U.S. policy for allies in the region and reassuring them at the annual Shangri-La dialogue in Singapore. Australian Prime Minister Malcolm Turnbull, who spoke at the opening of the forum on Friday evening, said there was concern in the region that the U.S. withdrawal from the Trans-Pacific Partnership and the Paris climate accord would lead to Washington retreating from global leadership. "While these decisions are disappointing, we should take care not to rush to interpret an intent to engage on different terms as one not to engage at all," Turnbull said. Authorities in Singapore stepped up security as Turnbull, Mattis and other leaders arrived for the meeting. They have said the terrorism threat to the city-state remains at the highest level in years, although there was no credible intelligence of an imminent attack. However, last week's dramatic attack in the Philippines by militant groups owing allegiance to Islamic State has created jitters in the region. Armed troops patrolled the area around the venue for the Singapore forum and nearby mailboxes were sealed.

Trump Dumps Pretense Of Altruism From U.S. Foreign Policy - For decades the U.S. foreign policy elite and its presidents played the farce of an altruistic United States that acts for the global good and in the interest of humanity.That was always a lie. Wherever one took a deeper look the U.S. acted solely in its (perceived) self interests. But the rhetoric helped to drag others along. Tributary governments could pretend they worked for the "universal good" when they in fact just followed orders from Washington DC. U.S. pressure was applied behind the curtain - through bribes, threats of revealing private secrets or -if necessary- via well managed "democratic" coups.Those times are over. Thanks to the honesty of the Trump administration the foremost positions of hard U.S interests and deadly threats are now openly declared fundamentals of U.S. foreign policy.The neo-conservative chaperone in the White House, National Security Advisor General McMaster, and the Goldman Sachs veto holder in the White House, economic advisor Gary Cohn, penned an op-ed in the Wall Street Journal that reveals the new true face of the U.S. empire: The president embarked on his first foreign trip with a clear-eyed outlook that the world is not a “global community” but an arena where nations, nongovernmental actors and businesses engage and compete for advantage. We bring to this forum unmatched military, political, economic, cultural and moral strength. Rather than deny this elemental nature of international affairs, we embrace it. At every stop in our journey, we delivered a clear message to our friends and partners: Where our interests align, we are open  to working together to solve problems and explore opportunities. We let adversaries know that we will not only take their measure, deter conflict through strength, and defend our interests and values, but also look for areas of common interest that allow us to work together. In short, those societies that share our interests will find no friend more steadfast than the United States. Those that choose to challenge our interests will encounter the firmest resolve. Translation: "Power is with the strong. We feel strong. Screw you!"

The Real Foreign Policy Scandal Is Its Sabotage By Trump Enemies - During the election campaign Donald Trump argued for better relations with Russia. He wanted to engage in a common fight against the Islamic State and other terrorists. After Trump had won the election, he advised his staff to set up a confidential track-2 communication channel with the Russian government. He rightfully did not trust the established official channels through the State Department and the CIA. His incoming National Security Advisor Flynn and his foreign policy advisor Kushner worked on his behalf when they soughed contacts with Russian officials. Such diplomacy is by nature not acted out in public. But now the U.S. people are told by their media that it is a scandal, A SCANDAL, that President Trump's advisors pursue the policies the candidate Trump had argued for. Today's headlines: NYT - Kushner Is Said to Have Discussed a Secret Channel to Talk to Russia; WaPo - Russian ambassador told Moscow that Kushner wanted secret communications channel with Kremlin; The Hill - Kushner wanted secure line with Kremlin before inauguration: report; The New Yorker - Jared Kushner’s Russia Problems; Reuters - Exclusive: Trump son-in-law had undisclosed contacts with Russian envoy - sources. The various formulations in those pieces are painting the discrete diplomatic contacts as something sinister and illegal: The WaPo author has at least the honesty to note: It is common for senior advisers of a newly elected president to be in contact with foreign leaders and officials. As an aside the Washington Post leakers reveal that U.S. intelligence can listen to Russian diplomatic communication between the embassy in Washington and Moscow. This is a criminal breach of a "sources and methods" secrets that should be punished.

In shakeup, Trump to set up 'war room' to repel attacks over Russia probe | Reuters: Once U.S. President Donald Trump returns from his overseas trip, the White House plans to launch its most aggressive effort yet to push back against allegations involving Russia and his presidential campaign, tackling head-on a scandal that has threatened to consume his young presidency. Trump's advisers are planning to establish a "war room" to combat mounting questions about communication between Russia and his presidential campaign before and after November's presidential election, while bringing new aides into the White House, administration officials and persons close to Trump told Reuters. The strategic shake-up comes as Republicans in Washington increasingly have fretted that the probe, continued chaos in the West Wing and Trump's steady slide in opinion polls will derail the president's drive to reform healthcare, cut taxes and rebuild the nation’s infrastructure. Upon Trump’s return, the administration will add experienced political professionals, including Trump's former campaign manager, and possibly more lawyers to handle the Russia probe, which has gained new urgency since the Justice Department appointed a special counsel to head the investigation, the sources said. Beyond pushing back at suggestions that Moscow is unduly influencing Trump’s administration, the messaging effort will also focus on advancing Trump’s stalled policy agenda and likely involve more trips out of Washington that will feature the kind of raucous rallies that were the hallmark of Trump’s campaign. A person in regular touch with the White House said it needed a different structure to focus on the “new reality” that there would be continued leaks to the media from the law enforcement and intelligence communities, leaks that have increased in frequency since Trump fired former Federal Bureau of Investigation Director James Comey on May 9. “Since the firing of Comey, that really exposed the fact that the White House in its current structure ... is not prepared for really a one-front war, let alone a two-front war,” the person said. “They need to have a structure in place that allows them to stay focused” while “also truly fighting back on these attacks and these leaks.”

Trump considers major changes amid escalating Russia crisis -  President Trump and his advisers, seeking to contain the escalating Russia crisis that threatens to consume his presidency, are considering a retooling of his senior staff and the creation of a “war room” within the White House, according to several aides and outside Trump allies. Following Trump’s return to Washington on Saturday night from a nine-day foreign trip that provided a respite from the controversy back home, the White House plans to far more aggressively combat the cascading revelations about contacts between Trump associates — including Jared Kushner, the president’s son-in-law and senior adviser — and Russia.White House officials also are trying to find ways to revive Trump’s stalled policy agenda in Congress and to more broadly overhaul the way the White House communicates with the public.That includes proposals for more travel and campaign-style rallies nationwide so that Trump can speak directly to his supporters, as well as changes in the pace and nature of news briefings, probably including a diminished role for embattled White House press secretary Sean Spicer.Although much remained fluid Saturday, the beefed-up operation could include the return of some of Trump’s more combative campaign aides, including Corey Lewandowski, who was fired as campaign manager nearly a year ago, and David N. Bossie, who was deputy campaign manager and made his name in politics by investigating Bill and Hillary Clinton for two decades. Both men have been part of ongoing discussions about how to build a war room that have been led in part by chief strategist Stephen K. Bannon. Other Trump players who have drifted from his orbit in recent months, such as Sam Nunberg, are also being courted to play more active roles, either officially joining the White House or in an outside capacity, working through confidants of the president.

Kushner under pressure to take hiatus from White House: report | TheHill: Administration officials close to President Trump are reportedly pushing White House adviser Jared Kushner to take a leave of absence amid recent reports that he is under FBI scrutiny. The FBI is reportedly interested in Kushner as part of its investigation into Russia’s meddling in the presidential election. A Sunday report on ABC News’s “This Week” said members of the Trump circle are wondering if Kushner will need to step aside. Reports last week said Kushner, who is also Trump’s son-in-law, had come under scrutiny in the FBI’s Russia probe over his contacts with the Russian ambassador and a Russian banking executive. Following those reports, Kushner faced renewed scrutiny after the The Washington Post on Friday said he sought to establish private communication with Russia.

The dueling scoops about Jared Kushner’s plan for secret communications with Russia, explained - Matt Yglesias -- On Friday night two versions of an incredible story emerged.  They both start like this: In early December, Jared Kushner and future former National Security Advisor Michael Flynn met with the Russian ambassador Sergey Kislyak in Trump Tower to see about setting up a secret communication channel between the transition team and Moscow. One version — from Ellen Nakashima, Adam Entous, and Greg Miller of the Washington Post — is full of ominous portent, suggesting Kushner was embarked on a kind of amateur hour cloak and dagger scheme whose purpose was to allow Trump to conceal communications with Russia from America’s own intelligence services. The Post version posted first, and immediately set Washington ablaze with former officials remarking on the staggering mix of stupidity and near-treasonous behavior implied by the Post’s reporting. Then a couple of hours later, Maggie Haberman, Mark Mazzetti, and Matt Apuzzo filed a report for the New York Times citing “three people with knowledge of the discussion” as explaining that the whole thing was perfectly innocent and simply reflected a desire “to discuss strategy in Syria and other policy issues.” Both the Times and the Post did, however, offhandedly mention a possible connection to a separate meeting Kushner later had with an executive of a sanctioned Russian bank. And while the investigation into Trump-Russia links necessarily focuses largely on actual or potential breaking of the law, the elephant in the room continues to be the policy aspects of Donald Trump’s curious affection for Vladimir Putin — on display this week as Trump took on occasion intended to mark his reaffirmation of America’s commitment to European defense and instead used it to undermine that commitment.   In the New York Times’ innocuous version of events “the idea was to have Mr. Flynn speak directly with a senior military official in Moscow to discuss Syria and other security issues.” For the president-elect’s incoming National Security Advisor to conduct direct talks about ongoing military operations with a foreign government outside the auspices of the American government would be highly unorthodox but not necessarily indicative of anything more nefarious than Flynn’s deep distrust for an Obama administration national security team that, after all, fired him.  This explanation is, however, somewhat difficult to square with the key claim of the Washington Post’s report which is that Kushner not only asked Kislyak to set up a line of communication with Moscow, but specifically suggested “using Russian diplomatic facilities in an apparent move to shield their pre-inauguration discussions from monitoring” by the American government.

Reuters Broke the Story of Russian Back Channel Plan Eight Days Before WaPo Named Kushner -- Pam Martens - As reporters in every major newsroom in the U.S. scramble to fill in the blanks in the bizarre tale of President Trump’s son-in-law, Jared Kushner, attempting to set up a secret back channel with Russia using Russian communication equipment almost two months before Trump had taken the reins as President, there’s another related story that has not been adequately fleshed out. Eight days before Washington Post reporters named Kushner as a key participant in this plan, reporters at Reuters had already reported on May 18 that “Michael Flynn and other advisers to Donald Trump’s campaign were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the 2016 presidential race…” The Reuters report then dropped the bombshell that Flynn and Sergei Kislyak, Russia’s ambassador to the United States, “discussed establishing a back channel for communication between Trump and Russian President Vladimir Putin that could bypass the U.S. national security bureaucracy, which both sides considered hostile to improved relations, four current U.S. officials said.” The Washington Post story naming Kushner ran on Friday, May 26, which triggered a full weekend of breathless reporting on CNN. It included a peculiar detail. The Washington Post article said it had obtained its information in the form of an anonymous letter in “mid December” but it didn’t publish its article until May 26, eight days after Reuters had confirmed that such a back channel had, indeed, been discussed for use between Trump and Putin. In the myriad incarnations of retelling by the media, the public has been left with the impression that it was Kushner that was going to be using this back channel, not Trump and Putin as Reuters clearly reported.

McMaster Responds To Kushner's "Russia Back-Channel" Report --Having admitted that their Memorial Day Weekend blockbuster sccop that President Trump's son-in-law "discussed the possibility of setting up a secure communications channel between the Trump transition team and the Kremlin with Russian Ambassador Sergei Kislyak,"  is really a non-story because, as they state themselves "It is common for senior advisers of a newly elected president to be in contact with foreign leaders and official," The Washington Post reports that President Trump's national security adviser, H.R. McMaster agrees this is a non-story, saying Saturday he "would not be concerned" about having a back-channel communications system with Russia. WaPo reports that McMaster and National Economic Council Director Gary Cohn, who together briefed reporters Saturday, were unwilling to discuss the Kushner matter, as was White House press secretary Sean Spicer. White House officials insisted the briefing be conducted off-camera, preventing photographers or television cameras from documenting it. McMaster said he could not talk about Kushner's talks with Russia because "it's not something that I've in any way been involved with or that I have any knowledge of." However, as WaPo reports, McMaster, a decorated three-star Army general, was asked whether he would be concerned if an official on his National Security Council staff or elsewhere in the Trump administration sought a back-channel communications system with the Russian embassy or the Kremlin in Moscow. His response is telling..."No," McMaster said. "We have back-channel communications with a number of countries. So, generally speaking, about back-channel communications, what that allows you to do is to communicate in a discreet manner." He continued, "No, I would not be concerned about it."

Homeland security chief defends Kushner’s alleged proposal for ‘back channel’ to the Russians as ‘a good thing’ WaPo -- Homeland Security Secretary John F. Kelly, the lone administration official to speak out publicly about reports that Jared Kushner sought a back channel to communicate with the Russian government, defended the move, saying it was a “good thing” for the U.S. government.“It’s both normal, in my opinion, and acceptable,” Kelly said of the reports that Kushner made the request for a secret communications channel to the Russian ambassador during the presidential transition. “ Any way that you can communicate with people, particularly organizations that are maybe not particularly friendly to us is a good thing.”Kelly made the comments on “This Week with George Stephanopoulos,” and he reiterated them in two other appearances on Sunday-morning news broadcasts.Kelly rejected the idea that such a back channel of communication with Russian officials would be damaging to U.S. security interests.“Any channel of communications, back or otherwise, is a good thing,” he said on “Fox News Sunday,” suggesting that he did not know the facts behind the reported December discussions between Kushner and Sergey Kislyak, the Russian ambassador to the United States. “It doesn't bother me.”Sergey Kislyak reported to his superiors in December that Jared Kushner, President Trump's son-in-law and adviser, asked him about setting up a communications channel between the transition team and the Kremlin using Russian facilities in the United States. (Alice Li,McKenna Ewen/The Washington Post)Kelly said that if such a line of communication was set up, the critical thing would have been for Kushner and other transition officials to understand that the information provided by the Russians might be intentionally false.“They may be working you,” he said. Kelly said he was not sure whether the reports that Kushner had proposed using Russian diplomatic facilities for such communications were true. But he said that as long as the information was shared with the U.S. government, it didn't represent a problem.

Exclusive: Wall Street Funds Hold Hundreds of Millions in Sanctioned Russian Bank Subject to Kushner Probe - Pam Martens  --The 2017 Memorial Day weekend will inevitably go down in history as the three-day span when remembrances of our military veterans took a media backseat to President Trump’s son-in-law, Jared Kushner, and everything Russian. One of the key areas under multiple probes is a meeting Kushner held in December with Sergey Gorkov, the Chairman of Vnesheconombank (VEB), a Russian state-owned bank which has been under U.S. sanctions since July 2014 for Russia’s annexation of Crimea and aggression in Ukraine. What this meeting was about has yet to be officially determined. Reuters reported on Saturday that “FBI investigators are examining whether Russians suggested to Kushner or other Trump aides that relaxing economic sanctions would allow Russian banks to offer financing to people with ties to Trump, said the current U.S. law enforcement official.” Financial dealings with a Russian bank that remains under U.S. sanctions can result in serious penalties – or not. Wall Street On Parade conducted research into filings made at the Securities and Exchange Commission for fixed income securities issued by Vnesheconombank and found that some of the biggest names in Wall Street banking and mutual funds in the U.S. hold, cumulatively, hundreds of millions of dollars in notes and bonds issued by the Russian bank. Fidelity Advisor’s Emerging Markets Income Fund shows it held more than $62 million in VEB fixed income securities as of December 31, 2016. Various Deutsche Bank mutual funds that operate in the U.S. own tens of millions of dollars of VEB debt securities. JPMorgan’s Emerging Markets Debt Fund shows that as of November 30, 2016, it held $20.5 million in VEB debt securities, although, curiously, it has the position assigned to its Ireland holdings. Other big mutual fund names showing VEB assets are PIMCO, Putnam, and Vanguard.

 Two Data Points on Jared Kushner – emptywheel - I wanted to pull out two data points in this profile of Jared Kushner, completed in the wake of the WaPo story that Kushner attempted to set up a back channel with Russia. First, as other stories have, this one blames Kushner for encouraging Trump to fire Jim Comey. But in recent weeks, the Trump-Kushner relationship, the most stable partnership in an often unstable West Wing, is showing unmistakable signs of strain. That relationship had already begun to fray a bit after Mr. Trump’s dismissal of the F.B.I. director, James B. Comey, which Mr. Kushner had strongly advocated, and because of his repeated attempts to oust Stephen K. Bannon, Mr. Trump’s chief strategist, as well as the president’s overburdened communications team, especially Sean Spicer, the press secretary.  I’ve pointed out before how the investigation into Mike Flynn might, with his cooperation, put Kushner at risk. But I’m interested in the new detail that Kushner assured his father that Democrats would love the firing of Comey because of Comey’s handling of the Hillary investigation. I can see how a dummie might believe that. But I’m at least as interested in how pitching that theory for Comey’s firing implicated Rod Rosenstein, insofar as he wrote a letter providing the fig leaf Hillary-based justification for the firing, and thereby led to the naming of Robert Mueller. Rosenstein is still the Acting Attorney General for the Russia investigation now looking more closely at Kushner, and Kushner has effectively already compromised him. Amid its larger narrative that Kushner and Trump actually haven’t been that close all that long, the NYT also reminds that Kushner got a lot of credit from his father-in-law for reviving the digital aspect of the campaign. Despite the perception that he is the one untouchable adviser in the president’s inner circle, Mr. Kushner was not especially close to his father-in-law before the 2016 campaign. The two bonded when Mr. Kushner helped to take over the campaign’s faltering digital operation and to sell a reluctant Rupert Murdoch, the chairman of Fox News’s parent company, on the viability of his father-in-law’s candidacy by showing him videos of Mr. Trump’s rally during a lunch at Fox headquarters in mid-2015. There lots of reasons to look askance at Trump’s data program, even before you consider that it was so central in a year where Trump’s opponent got hacked. So I find it notable (which is where I’ll leave it, for now) that Kushner’s role in the digital side of the campaign was so central to his perceived closeness to Trump.

Three lawmakers question Kushner Cos on concerns over White House tie | Reuters: Three Democratic lawmakers sent a letter to the president of Kushner Companies on Thursday seeking information related to concerns that the real estate firm has exploited Jared Kushner's role as a White House adviser to attract investment through a federal immigration program. Jared Kushner, the son-in-law of President Donald Trump and one of his top advisers, early this year stepped down as chief executive officer of his family's real estate company. Senator Patrick Leahy and Representatives John Conyers and Zoe Lofgren, in the nine-page letter dated Thursday and sent to Kushner Companies President Laurent Morali, asked for details about the company's controversial May road show in China, where the developer offered investors a chance to get U.S. visas under the EB-5 program if they put money in a project in New Jersey, One Journal Square. The letter, which was released publicly, also asked Kushner Companies what steps it has taken to ensure its affiliates do not exploit Jared Kushner's White House role when wooing investors in the future. The lawmakers cited a May 12 Reuters report that a Chinese immigration agency promoting the Kushner Companies project had touted Kushner's White House connections to assure potential investors that the One Journal Square project would succeed and investors would receive green cards. Such guarantees are prohibited by the rules of the EB-5 program, which grants foreigners a U.S. green card in exchange for investing $500,000 or more in development projects in low-employment areas of the United States.

There Remains No Evidence Of Trump-Russia Collusion -- Forbes --Where is the evidence of President Trump's collusion with Russia? The Wall Street Journal – no particular fan of Trump – characterizes the DOJcharge to Special Counsel, Robert Mueller, as fatally open-ended, vague, and flawed. His instruction lists no federal statutes and invites a fishing expedition into trivial matters. Journalists covering the story appear to disagree on what Mueller is supposed to do: Is he to “oversee the investigation into ties between President Trump’s campaign and Russian officials” or “investigate possible coordination between President Trump’s associates and Russian officials?” The political feeding frenzy has, to date, brought forth the following facts of Russiagate: Persons associated with the Trump campaign had contacts with Russians, some unsavory. Trump businesses, like other luxury property developers, had dealings with wealthy Russian buyers. Trump did not condemn Putin during the campaign and expressed a hope (shared by many across the political spectrum) of improved relations. These facts shed little light, if any, on collusion between the Trump campaign and the Russian state to throw the election to Trump, as is evidenced by the deafening silence of anti-Trumpists. As Jim Geraghty writes in National Review: The FBI counterintelligence guys presumably track Russian agents on our soil as much as possible. You figure the NSA can track just about any electronic communication between Russians and figures in the Trump campaign. If there was something sinister and illegal going on…the U.S. government as a whole had every incentive in the world to expose that as quickly as possible. Diverse figures and outlets agree that the nexus of “possible collusion between Russia and the Trump campaign” does not include any evidence of collusion. Maxine Waters (D-CA) concedes there is no proof of collusion as does Senator Dianne Feinstein (D-CA) joined by Trump nemesis Lindsey Graham (R-SC). Fox political analyst, Brit Hume, on Sunday’s #MediaBuzz stated that he has never seen a charge get so far out in front of the available evidence over the course of his long career. Matt Taibbi, a left-wing columnist for Rolling Stone who calls Trump the “crazy clown President," points out that “despite almost daily leaks by anonymous sources, we do not know whether it is about collusion between the Trump campaign and the Russian state.”

Trump's Personal Lawyer Subpoenaed By House Intel Committee -- Just minutes after an appearance on CNN explaining why he turned down House and Senate intelligence committees' "invitation to provide information and testimony" as nothing but a "fishing expedition," Trump personal lawyer Michael Cohen has been subpoenaed by the House committee. As a reminder, Axios notes, Cohen last found himself at the center of a media firestorm earlier this year when he played a substantial part in the still-unverified Steele dossier on Trump's Russia connections, which alleged that he took a trip to Prague to meet with Russian officials. CNN notes that Cohen is the second person in Trump's orbit to flatly deny a request from congressional investigators. Former national security adviser Michael Flynn refused to respond to a Senate subpoena and rebutted a House request last week through his lawyer. "I declined the invitation to participate, as the request was poorly phrased, overly broad and not capable of being answered," Cohen told CNN Tuesday, adding that he considered it a "total fishing expedition.""They have yet to produce one single piece of credible evidence that would corroborate the Russia narrative," Cohen said. He called the investigation a "rush to judgment." And so - unsurprisingly, AP reports that the House Intelligence Committee has subpoenaed Cohen.

Report: Nigel Farage a ‘Person of Interest’ in FBI Russia Probe –  Nigel Farage, the former pro-Brexit Ukip leader in the U.K., is now a “person of interest” in the U.S. counterintelligence investigation on possible collusion between the Trump campaign and the Kremlin, The Guardian reports. Farage reportedly raised the interest of FBI officials because of his relationships with both the Trump campaign and WikiLeaks founder Julian Assange. “One of the things the intelligence investigators have been looking at is points of contact and persons involved,” one source said. “If you triangulate Russia, WikiLeaks, Assange, and Trump associates, the person who comes up with the most hits is Nigel Farage.” He has not yet been accused of wrongdoing and is not an official suspect.

 Money laundering a concern at Trump property | McClatchy Washington Bureau: The net is closing around a duo of fugitive oligarchs and their kin accused of laundering Kazakh money in posh U.S. real estate — including Trump Organization properties. In a complicated case with potential implications for President Donald Trump’s business empire and associates of the real-estate-developer-turned-president, Switzerland has revealed it is considering an extradition request from Ukraine to hand over the son of a former Kazakh energy minister — and both men are facing money-laundering allegations in the United States and charges in Kazakhstan. It’s the latest development in a saga that is reaching into Bayrock Group, an international real estate and investment company that paid the Trump Organization a license fee for the use of its name and an 18 percent ownership stake in the New York hotel and condo project. The Khrapunov family is accused in U.S. lawsuits of “cleaning” illicit money through the purchase and quick resale of U.S. luxury properties, including daughter Elvira Kudryashova’s purchase of three Trump-branded condos in New York and a 9,000-square-foot Studio City mansion flipped in months to pop singer Bruno Mars for $6.5 million.

Comey To Testify Publicly That "Trump Did Push Him To End" Flynn's Russia Probe -- The showdown between Donald Trump and James Comey will be televised after all. According to CNN, the former FBI director plans to testify publicly in the Senate as early as next week to confirm bombshell accusations that President Donald Trump "did push Comey to end his investigation into a top Trump aide's ties to Russia." As a reminder, it was allegations that Trump was urging the former FBI director to end the FBI's ongoing probe into Michael Flynn (all allegedly written down in Comey's notebook, which so far few if anyone besides Comey has seen), that prompted the worst stock market selloff in mid-May, when some interpreted Trump's actions as an attempt to obstruct justice, with some speculating that Trump could even be impeached if Comey's allegations were confirmed.  As CNN adds, "final details are still being worked out and no official date for his testimony has been set. Comey is expected to appear before the Senate Intelligence Committee, which is investigating possible connections between the Trump campaign and Russia during last year's presidential election." Additionally, it emerged that Comey has spoken privately with Special Counsel Robert Mueller III to work out the parameters for his testimony to ensure there are no legal entanglements as a result of his public account, a source said. Comey will likely sit down with Mueller, a longtime colleague at the Justice Department, for a formal interview only after his public testimony. When he testifies, Comey is unlikely to be willing to discuss in any detail the FBI's investigation into the charges of possible collusion between Russia and the Trump campaign -- the centerpiece of the probe, this source said. But he appears eager to discuss his tense interactions with Trump before his firing, which have now spurred allegations that the president may have tried to obstruct the investigation. If it happens, Comey's public testimony promises to be a dramatic chapter in the months-long controversy, and it will likely bring even more intense scrutiny to an investigation that Trump has repeatedly denounced as a "witch hunt."  A week after he took office in January, Trump allegedly demanded Comey's "loyalty" if he kept him on as FBI director, and he urged Comey to drop his ongoing investigation into Michael Flynn, Trump's fired national security adviser, in a separate, one-on-one meeting.  "The bottom line is he's going to testify," the CNN source said. "He's happy to testify, and he's happy to cooperate."

Trump Is Reviewing Whether to Block Comey’s Testimony - The White House is reviewing whether to invoke executive privilege to prevent former FBI Director James Comey from testifying before a congressional panel next week. Comey is scheduled to testify Thursday before the Senate Intelligence Committee about his May 9 firing by President Donald Trump. The panel is investigating Russian meddling in the 2016 presidential election and whether the president or his associates were involved. Asked Friday if the White House might invoke executive privilege, Press Secretary Sean Spicer told reporters: "That committee hearing was just noticed, and I think obviously it’s got to be reviewed.”   He said he had not spoken to the White House counsel, Don McGahn, about the matter. A second White House official confirmed that the issue is under review. Senators will almost certainly ask Comey whether Trump asked him to drop an FBI investigation into former White House National Security Adviser Michael Flynn’s contacts with Russian government officials. Flynn was ousted Feb. 13. During a subsequent Oval Office meeting, Trump asked Comey to drop the Federal Bureau of Investigation probe into Flynn, said a person who was given a copy of a memo Comey wrote about the conversation. Trump has denied trying to quash the probe.A White House assertion of executive privilege over Comey’s testimony and his notes would open a sensitive legal and political debate. Independent analysts have said they don’t believe Comey, now a private citizen, can be stopped if he is intent on telling his story.“In the context of a criminal investigation, executive privilege has to give way," said Saikrishna Prakash, who lectures on constitutional law and presidential powers at the University of Virginia in Charlottesville. “How is the president going to stop Comey from testifying? He can’t put somebody in jail for violating executive privilege and he can’t fire him because he’s already been fired.” Conceivably, the administration could seek a court injunction against Comey testifying, in which case a violation would constitute contempt of court. But a court likely would be reluctant to issue an injunction against testimony before Congress.

 Trump Will Be a Nightmare Client for His Legal Dream Team - Donald Trump has lawyered up. He’s engaged New York über-litigator Marc Kasowitz, who routinely charges $1,500 per hour, to help him contend with the rapidly expanding federal probes into alleged Russian interference in the 2016 elections and possible Russian collusion with the Trump campaign.From a legal standpoint, the decision to retain Kasowitz is a no-brainer. With the appointment of Robert Mueller as special counsel to oversee the Justice Department’s criminal investigation of Russian meddling, Trump is potentially in deep trouble. He may even be accused of obstruction of justice related to his May 9 firing of former FBI Director James Comey and, depending on future political developments, may wind up facing serious calls for impeachment. Although White House Counsel Don McGahn can represent the interests of the presidency as an institution in the Justice Department’s investigation, as well as related and ongoing House and Senate hearings, he cannot represent Trump himself. Kasowitz is a logical choice to defend the president. The attorney-client relationship between the two men is wide-ranging and goes way back. Among other matters, he has represented Trump on bankruptcy and divorce issues, as well as the recently concluded Trump University fraud cases. In 2006, he filed a defamation action on Trump’s behalf against biographer Timothy O’Brien. Last October, he threatened to bring a libel complaint against The New York Times for publishing interviews with two women who said Trump had sexually harassed them.   But as talented and tough as Kasowitz and his colleagues may be, they’ll have their hands full representing the president. The legal mandate Mueller has been given is extremely broad. As explained by Deputy Attorney General Rod Rosenstein in a May 17 press release and an accompanying DOJ appointment order, Mueller will be empowered to explore “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and … any matters that arose or may arise directly from the investigation.” In other words, Mueller, who in addition to being a former federal prosecutor, ran the FBI from 2001-2013, will be able to look into just about everything, including possible obstruction by Trump.

Trump's “America First“ Infrastructure Plan: Let Saudi Arabia and Blackstone Take Care of It – Dave Dayen - Throughout the presidential campaign, Donald Trump blasted his rival for taking money from Saudi Arabia, which, he regularly charged, has a horrific human rights record and was behind the attack on September 11. Trump, of course, has never been married to anything he has said in the past. But even by Trumpian standards, a recent series of deals he struck with Saudi Arabia stand out. The two that made the news — a $110 billion arms deal and a $100 million gift to an Ivanka Trump-inspired endowment — are remarkable in their own right. But the third, which was rolled out much more quietly, is no less stunning: The Saudi kingdom joined forces with a top outside adviser to Trump to build a $40 billion war chest to privatize U.S. infrastructure. The vehicle would employ the same kind of public-private partnerships, known as P3s, the Trump administration has endorsed for its trillion dollar infrastructure plan. The deal hands over control of projects to rebuild American roads and bridges to the private sector and a foreign country. The Saudi Public Investment Fund announced its $20 billion investment with Blackstone, the private equity giant whose CEO, Stephen Schwarzman, chairs the Strategic and Policy Forum, a key group of private-sector advisers to President Trump. In recent months Schwarzman has become a key adviser to the president, speaking to him “several times a week,” according to Politico. Schwarzman, who has an estate near Mar-a-Lago and has known Trump for years, is a Republican megadonor, giving over $4 million to Super PACs that support conservative candidates in the last election cycle.

Trump Administration Conflicts Of Interest: How Gary Cohn Could Sell U.S. Infrastructure To Goldman Sachs -- President Donald Trump's administration this week touted an infrastructure plan that would sell off public assets to private financial firms. Left unsaid in the White House promotional materials was any mention that the Trump aide who is overseeing the initiative comes from a Wall Street firm that says it is seeking to buy up the very same kind of assets the Trump administration plans to sell off. Leading the White House privatization initiative is Gary Cohn, the former president of Goldman Sachs, who received a $285 million dollar payout upon leaving the bank and taking a job as the director of Trump’s National Economic Council. As Cohn has led the infrastructure privatization initiative from that perch, Goldman Sachs declared that it continues to look at “new business initiatives” that revolve around taking ownership of public assets, according to Securities and Exchange Commission documents reviewed by International Business Times. Cohn is spearheading the administration’s infrastructure policy despite a White House official telling Bloomberg News in February that he “will recuse himself from participating in any matter directly involving his former employer.” That pledge seemed at the time to show that Cohn was following ethics rules Trump enacted in January. Those rules require federal officials to sign an ethics pledge in which they agree to wait two years before they “participate in any particular matter involving specific parties that is directly and substantially related to my former employer.”Those rules, however, empower Trump to waive the restrictions whenever he wants. Whether or not Cohn has received such a waiver remains secret: the administration has not released a list of waivers, and has moved to block federal agencies from disclosing such waivers to federal ethics regulators.As a result, ethics experts say, there is no way to know if Cohn is wading into ethically murky waters. “Because of the White House’s refusal to provide basic information relating to its ethics program that every other White House of both parties have been willing to put forward, it’s very difficult to fully assess the ethics posture of its members, including Mr. Cohn,” Norm Eisen, a fellow at the Brookings Institute and the Obama administration's first ethics czar, told IBT. “I do think it is appropriate to view with extreme skepticism decision making that Mr. Cohn does that may benefit Goldman Sachs.”

The U.S. Has Forgotten How to Do Infrastructure - Noah Smith -- As Vox’s Matthew Yglesias points out, the problem with high infrastructure costs is that they force us to debate the wrong things. If costs were reasonable, even skeptics would probably agree to fix roads and build better trains. But when the price of maintaining high-quality infrastructure is ridiculously high, the issue gets divided into two camps -- a pro-building contingent that advocates biting the bullet and overspending to maintain transportation networks, and an anti-building group that throws up its hands at the price tag. When this is the debate, the country loses either way, because it ends up either spending too much money or living with potholed roads and trains that never arrive. The U.S. is in the grips of exactly this sort of dilemma. For some mysterious reason, the same mile of road or train track costs a lot more to build in the U.S. than in other rich countries like France or Japan. When it comes to trains, the disparity is particularly egregious. During the past few years, people who pay attention to this problem have catalogued a list of potential culprits. But none of these is really satisfying. One popular villain is union labor. The Davis-Bacon Act, passed in 1931, mandates that infrastructure workers get paid locally prevailing wages, which usually means the wages that union members would receive. Some studies have claimed that this law and other union-friendly policies drive up costs in the U.S. But unions probably don’t help explain the yawning gap between the U.S. and other rich countries. The reason is that places like France have some of the strongest unions in the world. Strikes by rail workers are commonplace. Yet France’s trains cost much less.

GOP leader tempers ObamaCare expectations | TheHill: Senate Majority Leader Mitch McConnell  (R-Ky.) is tempering expectations that the Senate will pass an overhaul of the nation’s healthcare system, promising his colleagues a vote but not success. McConnell in his public comments and private conversations about the ObamaCare repeal and replace bill is painting a more sober picture than Speaker Paul Ryan  (R-Wis.), who in March guaranteed passage through the House. McConnell is stopping well short of any grand pronouncement.He says he will bring a bill to the floor for a vote, but is not making any promises whether he will get at least 50 members of the 52-member Senate GOP conference to back it. “Mitch has been very clear in our conference, and that is there will be a bill and we will be voting on it,” said Sen. Dean Heller (R-Nev.). But that’s as far as the GOP leader has been willing to go. “He hasn’t gone beyond explaining that,” said Heller, who recently met with the special working group that is negotiating the healthcare bill. McConnell warned in an interview with Reuters that passing healthcare reform will be tougher than tax reform, another of President Trump’s top priorities. Expectations for repealing major parts of ObamaCare soared after the House passed its bill earlier this month but McConnell cautions the votes in the Senate aren’t there yet. What’s more, he’s not sure of the path to success. 

Trump's impatience with GOP grows | TheHill: An impatient President Trump is putting new pressure on Senate Majority Leader Mitch McConnell (R-Ky.) to get rid of the filibuster in order to speed progress on legislation repealing ObamaCare and reforming the tax code. In a message posted Tuesday on Twitter, Trump urged Republican senators to invoke the so-called nuclear option and “switch to 51 votes, immediately, and get Healthcare and TAX CUTS approved, fast and easy.” Trump also suggested his party wasn’t as cutthroat as Democrats when it comes to passing legislation, writing, “Dems would do it, no doubt!” It’s just Trump’s latest attempt to press McConnell to eliminate the power to filibuster legislation, something Republican lawmakers firmly rejected when the president floated the idea only a few weeks ago.That he used Twitter to do so was no surprise — but may have irritated McConnell, who has urged the president to rethink his use of social media. Tuesday’s tweet indicates the president’s patience on his legislative agenda is waning. McConnell has downplayed expectations, repeatedly refusing to put a timeline on the ObamaCare fight even as Trump and Speaker Paul Ryan (R-Wis.) have raised pressure. McConnell also has raised doubts over whether there is even a path to passing a bill, telling Reuters, “I don’t know how we get to 50 [votes] at the moment.” He did warn earlier this month that “we can’t take forever.” Other Senate Republicans have suggested an informal goal of holding a healthcare vote before the August recess, just days before Trump’s 200th day in office.

2 GOP senators just explained why a full Obamacare repeal isn’t going to happen - Lowering expectations, Iowa's two Republican senators say the long-promised repeal of "Obamacare" is unlikely, and any final agreement with the Republican-controlled House is uncertain. The comments Tuesday by Sens. Chuck Grassley and Joni Ernst come as the Republican-controlled Senate moves forward on its work to dismantle the 2010 healthcare bill, officially known as the Affordable Care Act, while facing conflicting demands within their own party and lockstep Democratic opposition. Both senators are active players in the healthcare debate. "You can't repeal it in its entirety," Ernst told reporters after a joint appearance with Grassley in suburban Des Moines. It was a frank admission from loyal conservatives representing a state Republican Donald Trump carried in November. The Senate's filibuster rule means that Republicans — who control the Senate with 52 seats — can't repeal the entire law. "You've got to have 60 votes, and we don't have 60 votes at this point," Grassley said. Grassley, in his seventh term, is a senior member of the Senate Finance Committee, which oversees the law's tax and Medicaid provisions. Ernst, elected in 2014, says she has been part of an informal GOP healthcare working group's discussions. "As much as I'd love to go back and scrap the whole darn thing, we're simply unable to do that," Ernst said. Other Senate rules permit the GOP majority to repeal portions of Obamacare without Democratic support but render other parts of the law off limits. "That just allows us to tinker around the edges," Ernst earlier told Eric Borseth, an Altoona, Iowa, businessman who implored her to "get rid of that monstrosity."  

White House preps broad exemptions from birth control mandate | TheHill: The Trump administration is poised to make changes to ObamaCare’s birth control coverage mandate by granting broad exemptions to employers that object on religious or moral grounds, a move that would impact thousands of women who currently get contraception from employer-provided insurance plans with no out-of-pocket costs. Any changes to the mandate, which requires that insurers cover birth control with no co-payment, would be a victory for religious groups and employers that have been engaged in legal battles since the requirement took effect in 2012. Reproductive rights groups are already threatening to sue the Trump administration if it takes any action to weaken or undo the mandate.According to a leaked May 23 draft of the rule obtained by Vox, any employer — including colleges, universities and health insurance companies — would be allowed to seek an exemption on moral or religious grounds. Currently, only houses of worship and some companies are exempt. “We think that’s unconstitutional, both in terms of separation of church and state and discrimination against women,” said Brigitte Amiri, a staff attorney with the American Civil Liberties Union’s Reproductive Freedom Project. If the rule goes into effect as drafted, “we will be bringing a lawsuit,” she added. Action from the Trump administration would likely build upon Burwell v. Hobby Lobby, in which the Supreme Court decided that “closely held” private businesses could be exempt from the mandate if it violated their religious beliefs. Churches and other houses of worship have also been exempt. The Office of Management and Budget is currently reviewing the rule, the final step before it goes into effect. It’s unclear when OMB will complete the review and if it will make any change to the current draft. 

 Total contributions to members of the 115th Congress from all Health Care Industries - Opensecrets.org

 Trump's health secretary pushed big pharma's agenda in Australia after loading up on drug company stocks –- In the spring before the 2016 presidential election, the Obama administration's 12-nation trade agreement known as the Trans-Pacific Partnership, or TPP, was still alive. Negotiators worked on details as Congress considered whether to ratify the pact.  The Australian government was getting in the way of one change demanded by U.S. pharmaceutical companies. Makers of cutting-edge biological drugs wanted to have data from their clinical trials protected from competitors for 12 years, as they are under U.S. law 2014 not the roughly five years permitted under the TPP. Australian officials insisted that an extension would deprive consumers of cheaper alternatives for too long.  On April 5, 2016, a bipartisan group of U.S. lawmakers arrived in Canberra, Australia's capital, for meetings with government officials on a broad range of subjects. Among those on the routine congressional trip was Rep. Tom Price, a Georgia Republican who would go on to become President Trump's secretary of health and human services. Three weeks before the trip, Price had purchased up to $90,000 worth of pharmaceutical stocks 2014 trades that would come under scrutiny after his nomination to Trump's cabinet.  In Canberra, Price and another Republican, Rep. John Kline of Minnesota, pressured senior Australian trade officials to modify their position on the 12-year extension, according to a congressional aide who was on the trip. The Australians explained that they had no intention of changing their laws or rules in ways that could increase drug prices. Price and Kline continued pushing, according to the aide, asking for a side letter or other written guidance that the period would be extended in Australia even if it weren't spelled out in the TPP itself.  Price's lobbying abroad, which has not previously been reported, is another example of how his work in Congress could have benefitted his investment portfolio. He traded hundreds of thousands of dollars' worth of shares in health-related companies while taking action on legislation and regulations affecting the industry. ProPublica previously reported that Price's stock trades are said to be under investigation by federal prosecutors.

 Washington’s Princes of Paperwork Are Crushing Physicians and Bankrupting, If Not Killing, Their Patients -- In the rancorous to and fro over the repeal of ObamaCare and its possible replacement with the American Health Care Act, an elephant in the room has remained unnoticed. It’s that giant bundle of burdensome regulations that is crushing physicians, their staffs, and sending the costs of healthcare soaring. A recent, detailed study published by the American Medical Association (AMA) sheds a common-sense light on what Washington chooses to ignore. For every hour physicians spent with patients, almost two additional hours are spent pushing papers. Even when face-to-face with patients, doctors spent 37% of their time filling out forms.  Burdened with the weight of regulatory paperwork, doctors are becoming increasingly unhappy – more paperwork, less time with patients. Indeed, in a typical day, during office hours, doctors spent only 27% of their time attending to patients face-to-face and 49.2% on electronic health records (EHR) and desk work. Even during after-hours work, doctors spent a whopping 59% of this time dealing with electronic health records.  The following table summarizes the AMA’s stunning findings. It tells the red-tape tale in horrifying detail. Just why do regulators promulgate so many regulations and produce so much red tape? For one thing, it creates jobs for the boys (read: the Princes of Paperwork).  But, there is another, perhaps more important, reason why regulatory bureaus produce endless miles of red tape to wrap around doctors, medical staffs, and the U.S. healthcare system. Bureaucrats are conservative. They like to avoid risks, and decision making is an inherently risky activity. After all, decisions can prove to be wrong, unpopular, or both. So, to avoid the risks and responsibilities that come with discretion and decision making, regulators produce rigid rules and red tape – the more, the merrier. The regulators’ check-the-box mentality allows them to slip out from under any responsibility if something under their regulatory purview “goes wrong.” The regulators are protected, and the onus is placed on the doctors and their staffs who must check all those boxes – boxes that cover everything under the sun.

“First thing we do, let’s kill all the beancounters” Part 2 -- Menzie Chinn --First, it was Newt Gingrich saying abolish the CBO. Now, Mick Mulvaney advocates ignoring the CBO.From The Washington Examiner:White House Office of Management Director Mick Mulvaney on Wednesday opened fire on the Congressional Budget Office, asserting in an interview with the Washington Examiner that the day of the institution as an authoritative non-partisan arbiter of legislation “has probably come and gone.”  Mulvaney, speaking in his office in the Old Executive Office Building, described the CBO’s scoring of the House Republican healthcare bill as “absurd,” arguing that it was a perfect example of why Congress should stop being so deferential to the group.“At some point, you’ve got to ask yourself, has the day of the CBO come and gone?”…This is pretty rich for an administration official who has double counted (a yet to be released plan for) tax reform in its growth and budget projections.Just to be clear, this is the same Mulvaney that asserted in a speech to the John Birch Society that the dollar had been debased by Obama policies at a time when it had just appreciated by 20% in real terms over the preceding two years. So the assault on technocratic policy institutions within the government continues.

Democrats copied the GOP’s politics of ‘personal responsibility,’ and it hurt America - President Trump’s proposed budget is a bait-and-switch. On the campaign trail, Trump styled himself as an advocate of working people who believed that the state has an obligation to help struggling Americans, irrespective of why they are in need. Whereas his main rivals for the Republican nomination insisted that Americans have a responsibility to procure their own health care, for example, Trump proclaimed that we “need health care for all people.” There was, he said in one interview, “a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”Since taking office, Trump has reverted to a more traditional Republican playbook: His economic policy offers huge handouts to the richest Americans, and it justifies this redistribution from bottom to top with the classic rhetoric of “personal responsibility” — a trope that has dominated American politics for the better part of three decades. As Trump says in his official statement on the budget, he “will champion the hardworking taxpayers who have been ignored for too long” while reforming the welfare state so that it no longer “discourage[s] able-bodied adults from working.”“Personal responsibility” is a peculiar phrase, at once anodyne and foreboding. It is both an expression of breezy common sense and a barely concealed threat to those unfortunate souls who might be so foolish as to act irresponsibly. With its popularity in campaign slogans, commencement speeches and self-help books, it would be tempting to dismiss personal responsibility as an empty incantation — a way to name-check virtues every decent citizen can rally around: love and lemonade, patriotism and pancakes, personal responsibility and apple pie. It’s such a routine part of American discourse that the literal meanings of the words barely register. Don’t be fooled. This language has had a profound impact on American politics. Weaponized by conservatives such as Ronald Reagan, then slowly adopted by liberals such as Bill Clinton, “responsibility” has shaped public policies from health care to housing. It is no coincidence, for example, that the greatest overhaul of the U.S. welfare state, which Clinton signed into law with bipartisan support in 1996, was called the Personal Responsibility and Work Opportunity Reconciliation Act.

Tesla's Elon Musk and Disney's Robert Iger quit Trump advisory councils, citing climate change: Tesla’s Elon Musk and Disney’s Robert Iger both said they were resigning from White House advisory councils after President Trump announced Thursday that he is withdrawing the United States from the Paris climate accord. Along with those two chief executives, other pillars of corporate America — including Google’s chief executive and Amazon.com — joined a growing chorus of disapproval over Trump’s decision. “Leaving Paris is not good for America or the world,” Musk tweeted. Musk, the CEO of both Tesla and SpaceX, had warned Wednesday that he would quit the two councils he was on if Trump pulled out of the climate agreement. Musk said he had “done all I can" — as a member of the advisory councils, through White House personnel and directly with the president — to push Trump to stick with the Obama-era plan. He later tweeted about China’s commitment under the climate accord; among that country’s goals is to get 20% of its energy from renewable sources by 2030. Musk has been an outspoken advocate of alternative energy. His electric car company Tesla also makes solar panels and high-capacity batteries. Musk was criticized when he agreed to serve on Trump’s panels on business and manufacturing, but he said he thought his presence could have a positive effect. “I believe at this time that engaging on critical issues will on balance serve the greater good,” he said at the time. Hours after Musk pulled out, Iger — who with Musk was on Trump’s business advisory panel — said he was leaving that council “as a matter of principle.”At Disney's shareholder meeting in March, Iger defended his decision to be involved with the council, saying he wanted to be "in the room where it happens."

Warren turns her fire on DeVos | TheHill: Sen. Elizabeth Warren (D-Mass.) is setting her sights on Betsy DeVos, the wealthy Republican donor who has become a lightning rod for the liberal grassroots as President Trump’s secretary of Education. Warren on Wednesday announced the launch of DeVos Watch, a coordinated effort to scrutinize the secretary’s handling of the $1 trillion federal student loan program and her oversight of student loan servicers, among other issues. “We all have an interest in a well-run, fiscally responsible, corruption-free student aid program that puts students first. That is Secretary DeVos' job — and it is Congress' job to make sure she does it,” Warren wrote in an op-ed published by CNN.Recently, Warren has raised concerns over potential ethics violations at the Department of Education, pushed DeVos to reinstate student loan protections and pressed the Trump administration to shield student loan borrowers from unnecessary fees. The salvos targeting DeVos are just the latest attempt by Warren to branch out from her expertise on financial matters — a pattern that has fueled speculation she is eyeing a presidential bid in 2020. After the 2016 election, Warren joined the Senate Armed Services Committee, giving her a chance to gain experience on the military matters that are crucial for the commander in chief. 

To kill net neutrality rules, FCC says broadband isn’t “telecommunications” - The Federal Communications Commission's plan to gut net neutrality rules and deregulate the Internet service market may hinge on the definition of the word "broadband."In February 2015, the FCC's then-Democratic leadership led by Chairman Tom Wheeler classified broadband as "telecommunications," superseding the previous treatment of broadband as a less heavily regulated "information service." This was crucial in the rulemaking process because telecommunications providers are regulated as common carriers under Title II of the Communications Act, the authority used by the FCC to impose bans on blocking, throttling, and paid prioritization. Thus, when the FCC's new Republican majority voted on May 18 to start the process of eliminating the current net neutrality rules, the commission’s Notice of Proposed Rulemaking (NPRM) also proposed redefining broadband as an information service once again. To make sure the net neutrality rollback survives court challenges, newly appointed FCC Chairman Ajit Pai must justify his decision to redefine broadband less than three years after the previous change. He argues that broadband isn't telecommunications because it isn't just a simple pipe to the Internet. Broadband is an information service because ISPs give customers the ability to visit social media websites, post blogs, read newspaper websites, and use search engines to find information, the FCC's new proposal states. Even if the ISPs don't host any of those websites themselves, broadband is still an information service under Pai's definition because Internet access allows consumers to reach those websites.

White House eyes Bannon ally for top broadcasting post -  The Trump administration’s leading candidate to head the Broadcasting Board of Governors, a position that with recent changes would give the appointee unilateral power over the United States’ government messaging abroad reaching millions, is a conservative documentarian with ties to White House chief strategist Steve Bannon, according to two people with direct knowledge of the situation. Michael Pack, the leading contender for the post, is president and CEO of the Claremont Institute and publisher of its Claremont Review of Books, a California-based conservative institute that has been called the “academic home of Trumpism” by the Chronicle of Higher Education. Pack, a former Corporation for Public Broadcasting executive, and Bannon are mutual admirers and have worked on two documentaries together. Pack has appeared on Bannon’s radio show and wrote an op-ed in March praising Bannon as a pioneer in conservative documentary filmmaking. Should he be appointed by President Donald Trump and confirmed by the Senate, Pack would be the first CEO of the BBG without a board as a firewall because of a little-noticed provision in last December's National Defense Authorization Act that disbanded the bipartisan board that controls the BBG. “The White House could theoretically use the BBG for any kind of messaging,” one senior government official with direct knowledge of the situation said. “People are generally worried about what might happen next because it would change the nature of BBG from having a CEO and a board and a track record for protecting independence to what might come next."

Intellectual Property Is Real Money - Dean Baker - In the last four decades, US policymakers have taken major steps to strengthen and lengthen patents, copyrights, and other forms of intellectual property (IP). The normal duration of patents and copyrights have been extended, and patents have been expanded to cover life forms, software, and business methods. This strengthened IP regime has been supported by both political parties and has gone largely unquestioned in public debate.That’s unfortunate, because there is an enormous amount of money at stake, and an enormous amount of money that is being redistributed from the bulk of the population to those in a position to benefit from owning intellectual property. While far from flashy, intellectual property rights have wide-ranging implications. They should be front and center on any progressive agenda.The case of prescription drugs provides the best measure of the amount of money at stake. This year, the United States will spend more than $440 billion on drugs that would likely cost less than $80 billion without IP protections. This gap — more than $360 billion — is equal to almost 2 percent of GDP. It is almost a third of after-tax corporate profits.And that’s just for prescription drugs. Add in the rents from patent and copyright protection in medical equipment, pesticides, fertilizers, seed crops, software, video games, and other areas and the figure could easily be twice as high. In other words, this is real money.   From the standpoint of the textbook, pushing up prices through patent and copyright protection is the same as imposing a tariff that creates a gap between the protected price and the free market price. The biggest difference is that the size of the distortion is several orders of magnitude larger in the case of patent and copyright protection.The idea of imposing a 20 percent tariff on imported shoes or steel would send any mainstream economist into a frenzy. They all know how tariffs distort the market, leading to waste and corruption. But when it comes to patents and copyrights, the difference we are talking about — between the protected price and the “free market price” — is ten or even a hundred times higher than it would be otherwise.

Fed official says U.S. immigration crackdown could hit economy | Reuters: The Trump administration's crackdown on illegal immigrants will likely weaken overall U.S. consumer spending and economic growth as those targeted for arrest increasingly choose to stay home and save more, a Federal Reserve policymaker said on Wednesday. Millions of immigrants "are not going out and shopping, they are staying home, they are afraid if they go out they are not coming home," Dallas Fed President Robert Kaplan said when asked about U.S. President Donald Trump's months old directive. "On the margin - and it's too soon for the data to pick it up, but you hear it anecdotally - I believe we are going to see it, I believe those people are more likely to save than to spend," he added at the Council on Foreign Relations. "And those two effects have some muting effect on consumer spending and therefore GDP growth."

State Dept. lifts limit on refugee admissions | TheHill: The State Department quietly lifted its restriction this week on how many refugees are allowed to enter the U.S. despite efforts by the Trump administration to scale back refugee resettlements, The New York Times reported Friday. Jennifer Smith, a department official, reportedly notified refugee groups of the decision Thursday in an email stating that they could begin bringing refugees to the U.S. “unconstrained by the weekly quotas that were in place.” Many of the organizations that received the email are private agencies that help guide individuals hoping to enter the country through the two-year U.S. application process.The number of refugees entering the U.S. could double as a result of the lifted restrictions, refugee advocates told the newspaper. The leap could go from 830 a week for the first three weeks of May to over 1,500 a week by next month. While the lifted restriction occurred on the same day that a Richmond, Va.-based federal appeals court handed down a ruling that blocked President Trump’s travel ban targeting six-majority Muslim countries, the decision is not related to the ruling, the Times said. Congress passed a spending bill last fall that tightly constrained the budget for the State Department’s refugee resettlement program. The spending bill passed earlier this month, however, does not impose any limits on refugee admissions. A State Department spokeswoman told the Times that State consulted with the Justice Department about its refugee quotes before making the decision to adjust them. 

Confusion over laptop flight ban as US denies EU reports that proposals have been scrapped - American plans to extend a ban on carrying laptops on to transatlantic aircraft were mired in confusion last night with Washington denying reports from Brussels that the plans had been scrapped.  An announcement of an extended ban had been considered imminent and was expected following a call between John Kelly, the Homeland Security Secretary, and European Home Affairs Commissioner Dimitris Avramopoulos and Transport Commissioner Violeta Bulc. The EU and aviation industry have long opposed proposals to extend the ban on laptops and other large items, including iPads and e-readers, which is already in force on flights to the US from 10 African and Middle Eastern airports.  With no ban being announced, EU officials said that the proposals were off the table, suggesting that Washington had backed down. “No ban,” a European Commission official said. “Both sides have agreed to intensify technical talks and try to find a common solution.” But within hours this was flatly contradicted in a statement issued on Mr Kelly’s behalf, insisting that the proposed ban was “still on the table”. The statement added: “Secretary Kelly affirmed he will implement any and all measures necessary to secure commercial aircraft flying to the United States – including prohibiting large electronic devices from the passenger cabin – if the intelligence and threat level warrant it.” Privately, senior DHS officials voiced annoyance at the reports coming out of Brussels.“I don’t know who was on the call, but this bore no relation to what was discussed,” one official said. “There has been an ongoing discussion about the threat, the nature of the threat and why we are considering this.”  Opposition to the proposed ban has been led by the main airline trade body, the International Air Transport Association (IATA).

Trump appeals travel ban case to Supreme Court | TheHill: The Trump administration late Thursday asked the Supreme Court to reconsider its travel ban that would block citizens from six Muslim-majority countries from entering the U.S. The administration filed two emergency applications with the Supreme Court justices seeking to block lower level court rulings that had previously halted Trump's March 6 executive order Reuters reported Thursday. The revised order banned citizens of Iran, Libya, Somalia, Sudan, Syria and Yemen from entering the country for 90 days while the government implemented a stricter visa screening process. In a statement, Justice Department spokeswoman Sarah Isgur Flores said it had "asked the Supreme Court to hear this important case and are confident that President Trump's executive order is well within his lawful authority to keep the nation safe and protect our communities from terrorism." "The president is not required to admit people from countries that sponsor or shelter terrorism, until he determines that they can be properly vetted and do not pose a security risk to the United States," the statement continued. The decision comes a week after a Richmond, Va.-based federal appeals court refused to reinstate the ban. The 4th Circuit Court of Appeals said in a 10-3 ruling that Trump’s executive order "speaks with vague words of national security, but in context drips with religious intolerance, animus and discrimination."After the ruling, Attorney General Jeff Sessions said in a statement that the administration “strongly disagrees” with a federal court’s decision to keep the order in place, calling the travel ban “a constitutional exercise of the President’s duty to protect our communities from terrorism.” Sessions said then that the department “will seek review of this case in the United States Supreme Court.” 

Erasing History: Trump Administration Returning CIA Torture Report To Be Destroyed - Over the last few months, a battle has played out over what will happen to the 6,700 page "CIA Torture Report" that the Senate Intelligence Committee spent many years and approximately $40 million producing. The report apparently reveals all sorts of terrible details about how the CIA tortured people for little benefit (and great harm in other ways) and lied to Congress about it. While a heavily redacted executive summary was released, there is apparently significantly more in the full report. And if we, as a country, are to actually come to terms with what our nation did, this report should be made public and there should be a public discussion on our past failings. Instead, it looks like the report is going to be returned and destroyed. Senator Richard Burr has been against the report from the beginning, and ever since he took over the Senate Intelligence Committee he's demanded that the administration return the report, arguing (totally against all evidence) that it was a work product of the Senate Intelligence Committee not meant for distribution to the executive branch. Of course, that's the exact opposite of what Senator Dianne Feinstein -- who spearheaded the effort to create the report -- has said. The intention was to understand what the CIA did and make sure the same mistakes were not repeated. And, in fact, Feinstein asked the executive branch agencies to put the document into their own records -- which would make the report subject to a FOIA request. The previous administration did not give the report back to Burr, but did block those in the executive branch from reading it or from putting it into their records -- which has so far stymied FOIA requests. And now, the Trump administration has started returning the report to Burr to destroy: The Trump administration’s move, described by multiple congressional officials, raises the possibility that copies of the 6,700-page report could be locked in Senate vaults for good — exempt from laws requiring that government records eventually become public.  This is problematic on many, many levels. Feinstein had even asked Obama to declassify the report, before leaving office -- something he refused to do. Feinstein is not at all happy about this turn of events.

Donald Trump’s War on Journalism Has Begun. But Journalists Are Not His Main Target. - Wars are rarely announced in advance, but President Trump provided an abundance of warning about his intention to wage an assault on journalism. During the election campaign, he called journalists an “enemy of the people” and described media organizations he didn’t like as “fake news.” You can pretty much draw a direct line between his words and the actions we’ve seen lately — which include journalists physically prevented from asking questions of officials, arrested when trying to do so, and in a now-famous example from Montana, body-slammed to the ground by a Republican candidate who didn’t want to discuss his party’s position on healthcare. This is most likely a prelude. From virtually the moment Trump took the oath of office, a deluge of irritating leaks has poured forth about, for instance, his private complaints against senior aides and his late night habits when he is upstairs at the White House without a tweet-blocking retinue of aides. Matters of crucial substance have also been leaked, such as his own disclosure of highly classified information to Russia’s foreign minister, and his obstruction-of-justice-worthy request to James Comey that the FBI restrain its investigation of Michael Flynn. Just a few days ago, there was another leak that wasn’t even Trump-centric, disclosing information about the British investigation into the suicide bombing in Manchester. “These leaks have been going on for a long time, and my administration will get to the bottom of this,” Trump warned in a statement on Thursday. “The leaks of sensitive information pose a grave threat to our national security. I am asking the Department of Justice and other relevant agencies to launch a complete review of this matter, and if appropriate, the culprit should be prosecuted to the fullest extent of the law.”

In an Unprecedented Court Escalation, Trump Protesters Could Be Facing Decades in Prison for Inauguration Demonstrations - Nearly six months after Donald Trump was sworn into office, more than 200 protesters who gathered in Washington, D.C. to protest his inauguration are facing felony charges that carry sentences of 70 to 80 years.According to Al Jazeera, the 212 protesters were arrested by the Metropolitan Police Department and initially charged with felony rioting, a crime that carries a 10-year prison sentence and a $25,000 fine. On April 27, the Superior Court of the District of Columbia added additional charges that include urging to riot, conspiracy to riot and destruction of property.  The possibility of long-term prison sentences for these protesters could have a chilling effect on participation in future rallies, particularly at a time of heightened levels of anti-Trump activism. While it's unclear whether police departments will respond to large-scale political protests in a similar fashion, a dangerous precedent has been set. These legal actions may also infringe on the demonstrators' First Amendment rights, as they directly target anti-Trump protest movements. As political protests and civil disobedience reach their highest levels since the 1960s, 18 states have responded by proposing over 30 bills aimed at suppressing demonstrations by increasing and expanding penalties for protesters. A new law in Missouri prohibits protesters from covering their faces with masks or other disguises. Florida, Tennessee, Georgia and Iowa have introduced bills that call for increased penalties for blocking traffic and demonstrating on private property.

While You Obsessed Over Trump’s Scandals, He’s Fundamentally Changed The Country - On the morning of May 12, Attorney General Jeff Sessions revealed that he had instructed federal prosecutors to begin pursuing lengthier prison sentences for drug offenders.  It was a draconian change in approach that flew in the face of a growing bipartisan agreement on sentencing reform. “He’s completely discarded what has been an emerging consensus about how best to keep the country safe,” said Matthew Miller, a former Department of Justice spokesman. “[O]ne of the most extreme voices in the country on criminal justice policy just happened to be put into the most important job for shaping its future.” The move was then largely buried under an avalanche of Donald Trump-related news. Just hours after Sessions’ policy was revealed, the president tweeted that he may have taped conversations with his recently-fired FBI director, James Comey. With less than 140 characters, Washington was abuzz again over Trump’s potential ties to Russia, which Comey had been investigating. This is a defining feature of the Trump administration: While scandal and squabble, palace intrigue and provocative tweets suck much of the oxygen out of the room ― and leave the impression of mass government disfunction ― a wide array of fundamentally Trump-minded reform is taking place. “All of this smoke is missing the steady progress that the modern Republican Party is achieving,” said Grover Norquist, the longtime anti-tax advocate. “The idea that Trump isn’t getting anywhere is wrong. Those free market guys are picking up maybe not all the marbles in the world, but a large quantity of them. And we haven’t thrown away any marbles.” One reason behind the perception that Trump’s agenda has largely foundered is that it’s made painfully little legislative progress. His efforts to push health care reform through Congress have advanced incrementally, but many hurdles remain. Tax reform appears unlikely to come before the summer, if at all. Trump’s budget won’t get a vote, and his relationship with Congress seems to fall somewhere between fractious and nonexistent. But legislative progress is only one vehicle that moves a president’s agenda. And there have been profound policy changes on a variety of administrative fronts, often obscured by scandals emerging from the White House.

The Problem with the Justice Department - Despite an obvious conflict of interest, the Department of Justice evaluates clemency petitions, runs federal prisons, decides what forensic evidence to introduce in federal cases, and advises the president on criminal justice reform. And make no mistake — prosecutors dominate the agency, with the 93 United States Attorneys playing the leading role in setting policies across a range of issues and career prosecutors running most of the divisions.This defining characteristic matters, because a building full of prosecutors will instinctively push back against reforms that could make criminal law fairer, less retributive, and more productive. That may be most obvious when a president is hostile to criminal justice reforms, but it is also true when a president is progressive.A look back at the Obama administration — eight years with a chief executive who was pro-reform — illustrates the way that the DOJ is institutionally constructed to maintain the status quo. While it seemed President Obama was sincerely committed to reforming federal criminal law, his results were disappointing. And though some of this failure can be blamed on a recalcitrant Congress, that excuse only goes so far. A close examination of Obama’s record shows that many of the administration’s reforms were subverted by the DOJ, not Congress. I was recently a part of a research effort to review the Department’s positions on a range of criminal justice issues during the Obama administration, and what we found should be instructive to anyone who desires reform in the federal system.

Trump’s Rogue America - Joseph E. Stiglitz – Donald Trump has thrown a hand grenade into the global economic architecture that was so painstakingly constructed in the years after World War II’s end. The attempted destruction of this rules-based system of global governance – now manifested in Trump’s withdrawal of the United States from the 2015 Paris climate agreement – is just the latest aspect of the US president’s assault on our basic system of values and institutions.  The world is only slowly coming fully to terms with the malevolence of the Trump administration’s agenda. He and his cronies have attacked the US press – a vital institution for preserving Americans’ freedoms, rights, and democracy – as an “enemy of the people.” They have attempted to undermine the foundations of our knowledge and beliefs – our epistemology – by labeling as “fake” anything that challenges their aims and arguments, even rejecting science itself. Trump’s sham justifications for spurning the Paris climate agreement is only the most recent evidence of this. For millennia before the middle of the eighteenth century, standards of living stagnated. It was the Enlightenment, with its embrace of reasoned discourse and scientific inquiry, that underpinned the enormous increases in standards of living in the subsequent two and a half centuries. With the Enlightenment also came a commitment to discover and address our prejudices. As the idea of human equality – and its corollary, basic individual rights for all – quickly spread, societies began struggling to eliminate discrimination on the basis of race, gender, and, eventually, other aspects of human identity, including disability and sexual orientation.  Trump seeks to reverse all of that. His rejection of science, in particular climate science, threatens technological progress. And his bigotry toward women, Hispanics, and Muslims (except those, like the rulers of Gulf oil sheikhdoms, from whom he and his family can profit), threatens the functioning of American society and its economy, by undermining people’s trust that the system is fair to all.  As a populist, Trump has exploited the justifiable economic discontent that has become so widespread in recent years, as many Americans have become downwardly mobile amid soaring inequality. But his true objective – to enrich himself and other gilded rent-seekers at the expense of those who supported him – is revealed by his tax and health-care plans.

Urgent Warning Issued By Human Rights Group Over New Police Bill In Congress  -- Last week, Human Rights Watch penned an open letter to the House and Senate Judiciary Committees voicing their strong opposition to a new bill that would make it nearly impossible to sue police for constitutional violations. Senator John Cornyn (R-Tex.) and Representative Ted Poe (R-Tex.) proposed the identical bills on May 16th “[t]o protect law enforcement officers, and for other purposes.” Co-Director of Human Rights Watch Alison Parker writes that H.R. 2437/S.B. 1134, or the“Back the Blue Act,” doesn’t protect police from danger, but rather “protects police departments from liability, and removes incentives for those departments to monitor themselves and improve the quality of their policing.”The proposed bill would make significant amendments to Sections 1983 and 1988 of the U.S. Code, shielding police officers from civil liability even in cases of grievous misconduct, making new federal crimes out of offenses already covered by state laws and imposing harsh mandatory minimum sentences.Qualified immunity already provides police with broad protection from liability by requiring proof that not only were an individual’s rights violated but whether or not a reasonable officer was aware that their misconduct violated the plaintiff’s rights. Qualified immunity has been described by experienced civil rights litigator and professor of law Alan K. Chen as “one of the most impenetrable barriers to liability for constitutional violations.” According to Professor Chen, “the Court has shaped the doctrine in ways that make it more closely resemble absolute immunity.”Under the Back the Blue Act, if police can prove that the violation and any injuries or damages inflicted“incurred in the course of, or as a result of, or . . . related to, conduct by the injured party that, more likely than not, constituted a felony or a crime of violence . . . (including any deprivation in the course of arrest or apprehension for, or the investigation, prosecution, or adjudication of, such an offense),” the offending officer would be responsible for out-of-pocket expenses only. The law would also preclude victims from recovering attorneys’ fees.

Fearing Trump's next move, liberals urge Supreme Court conservative Kennedy to stay | Reuters: Liberal activists are urging U.S. Supreme Court Justice Anthony Kennedy, a conservative with whom they often disagree, to put off any thought of retirement, fearing President Donald Trump would replace him with a jurist further to the right. The liberal Democrats' keep-Kennedy campaign, being pursued publicly and privately, reflects how powerless they have become against the Republican president when it comes to high court vacancies since the Senate in April reduced the vote tally needed to confirm a Supreme Court nomination to 51 from 60. It also shows how big the stakes are for both sides in any decision that Kennedy, who turns 81 in July, makes about his future on the court. If he were to retire, Trump would have a historic opportunity to recast the court in a more conservative posture, possibly for decades to come. Some former Kennedy clerks have said he is thinking about retirement. He has declined to comment on his plans, despite requests from many media outlets including Reuters. Right now, Kennedy "is the most important man in America. He is the vote that swings the court on the most important cases that reach it," said Elizabeth Wydra, president of the Constitutional Accountability Center, a left-leaning think tank. Nominated by Republican President Ronald Reagan in 1987 to a lifetime court seat, Kennedy has been a crucial swing vote on the nine-member court for more than a decade. On most issues, such as campaign finance and religious rights, he has voted with fellow conservatives. He also voted with the minority to strike down the 2010 Affordable Care Act, popularly known as Obamacare. But on gay rights and abortion, he has sided with the court's four liberals.If he stays in his post, the court's long-standing ideological balance will be preserved. If he quits, Trump could replace him with someone who tilts further right, giving conservatives a solid five-vote majority. 

White House details ethics waivers for ex-lobbyists and corporate lawyers (New York — President Trump has given at least 16 White House staff members dispensation to work on policy matters they handled while employed as lobbyists or to interact with their former colleagues in private-sector jobs, according to records released late Wednesday. The details on these so-called ethics waivers — more than five times the number granted in the first four months of the Obama administration — were made public after an intense dispute between the White House and the Office of Government Ethics, which had been pushing the Trump administration to stop granting such waivers in secret. The list of waivers includes high-profile names such as Reince Priebus, Mr. Trump’s chief of staff, and Kellyanne Conway, a senior White House adviser. They had to be granted waivers because of their prior work with organizations such as the Republican National Committee, which Mr. Priebus once ran, and because they continue to have contact with those organizations as part of their White House work. But the waivers granted by the White House are also going to former lobbyists, despite Mr. Trump’s campaign vow to try to reduce the influence of lobbyists in Washington. Andrew Olmem, who until recently was a Washington-based partner at the law firm Venable L.L.P., is a special assistant to the president for financial policy after he lobbied the federal government on behalf of a number of financial firms, including American Express, MetLife and S&P Global. Mr. Olmem’s waiver allows for him to participate in communications and meetings with former clients involving Puerto Rico’s financial issues, as well as amendments to the Flood Disaster Protection Act and reforming the Financial Stability Oversight Council’s treatment of insurers, the White House said. A second waiver was given to Michael Catanzaro, who until January was registered as a lobbyist for companies including Devon Energy, an oil and gas company, and Talen Energy, a coal-burning electric utility. Mr. Catanzaro moved from lobbying against Obama-era environmental rules to overseeing the White House office in charge of rolling back the same rules, an activity permitted by his waiver. Also receiving a waiver was Shahira Knight, who had been a lobbyist for Fidelity Investments and now serves as a special assistant to the president for tax and retirement policy — the same topic she had lobbied on while working for Fidelity, one of the largest retirement-investment companies in the United States.

Camille Paglia: Democrats Are Colluding With The Media To Create Chaos -- Camille Paglia is much more worried about the media than about the steady string of Trump-related scandals they claim to be uncovering. In a Tuesday interview with the Washington Examiner, Paglia excoriated the press for its coverage of Trump's decision to fire FBI Director James Comey and his alleged sharing of classified information with Russian officials. She accused journalists of colluding with the Democratic Party in an effort to damage the Trump administration."Democrats are doing this in collusion with the media obviously, because they just want to create chaos," she said when asked to comment on the aforementioned stories."They want to completely obliterate any sense that the Trump administration is making any progress on anything."  The popular author pointed to early struggles experienced by previous presidential administrations to illustrate the media's bias against Trump. "Obama's administration for the first six months was chaos," Paglia recalled. "Bill Clinton's was chaos for six months. Nobody holds that against a new person"  Paglia's assessment of media bias in the Trump era leaves little room for optimism."I am appalled at the behavior of the media," she declared. "It's the collapse of journalism."As the Examiner reported in April, Paglia, who cast her ballot for Jill Stein last November, ispredicting Trump will win re-election in 2020."I feel like the Democrats have overplayed their hand," she said at the time.Though the news cycle has moved through plenty of additional scandals in the past month, it appears as though Paglia's assessment of the president's prospects has not changed. "I'm looking forward to voting Democrat again," the acclaimed philosopher explained. "But the point is I feel that the media has so utterly lost its credibility that I think people are going to vote against the media again."

DNC Lawsuit Exposes Corruption, Data Breaches, Raises Questions About Death Of Shawn Lucas -- In June of last year, attorneys Jared Beck and Elizabeth Beck of law firm Beck and Lee filed a class action law suit against the DNC and former chairwomen Debbie Wasserman Schultz. The suit claims that the DNC acted against its charter when it showed demonstrable favoritism towards  Hillary Clinton in the Democratic primary, and failed to secure the data of DNC donors. The suit could have massive significance for the Democratic Party and could have an even wider impact if the origin of the DNC leaks are disclosed in the proceedings. Attorney Elizabeth Beck described the lawsuit to US Uncut:“We think that the DNC has been running absolutely out of control and completely disregarding their responsibilities, rights, and duties to the public.” The DNC lawsuit has so far received very little press coverage, despite revealing blatant corruption in the Democratic establishment. The death of Shawn Lucas, a process server who would have been a federal witness for the Becks, added further fuel to speculations of corruption surrounding the case. Jared Beck has also stated that Seth Rich would have been a potential witness in their case. The lawsuit has so far revealed an absolutely unabashed level of corruption in the Democratic Party establishment. Attorney Bruce Spiva stunningly argued in defense of the DNC during the latest April 25th hearing on the case: "There's no right to not have your candidate disadvantaged or have another candidate advantaged. There's no contractual obligation here,” Spiva further stated that the party had the right to select its candidate in any way it chooses and was "not bound by pledges of fairness."Spiva's defense has proved controversial, as it effectively admits the DNC primary process was rigged, but argues that this was not illegal. Jared Beck told US Uncut that he believed their suit would prove successful based on Article 5, Section 4 of the DNC charter which explicitly requires the chair of the DNC to remain impartial during the primary.

 Obama-Era Officials Subpoenaed By House Intel Committee In Trump "Unmasking" Probe --While it was not surprising that as part of the ongoing probe into alleged Russian interference in the 2016 elections, the House Intel Committee issued a total of seven subpoenas on Wednesday as the WSJ reported, what was surprisng is that in addition to four subpoenas focusing purely on the Russia investigation, the Republican-led committee also issued three subpoenas focusing on "unmasking" questions, involving how and why the names of associates of President Donald Trump were unredacted and distributed within classified reports by Obama administration officials during the transition between administrations. As part of the "unmasking" investigation, in addition to the NSA, the House committee also subpoeaned the FBI and the CIA for information on how and why Trump-linked names were exposed to the entire US intel community, and led to an avalanche of "unnamed sources" stories. Recall that typically information about Americans intercepted in foreign surveillance is redacted, even in classified reports distributed within the government, unless a compelling need exists to reveal them. Unmasking requests aren’t uncommon by top intelligence community officials but Republicans want to know whether any of the unmaskings of Trump campaign officials during the transition were politically motivated.

Changes coming to bank stress tests, Fed's Powell says: The Federal Reserve will be making some of its own changes to the way it regulates banks, ahead of a likely push from the Trump administration to loosen up post-financial crisis rules. Fed Governor Jerome "Jay" Powell told CNBC in an interview Thursday that upcoming stress test results will come with communication from central bank regulators on those changes. "We're committed to running as transparent as possible and effective as possible set of stress tests," Powell said. "They are very successful, very important post-crisis innovations and we want to continue to strengthen that." Though most U.S. banks have been passing the tests on a regular basis, they have criticized the process as cumbersome and lacking clear direction. "We do hear the complaints and we are working now as we have continuously to provide more information, more transparency," Powell said. For instance, he added that the Fed will be providing "much more granular information" about how banks should be reporting loss rates for certain corporate loans. In addition, he said regulators will be seeking public input about how to improve the process. It's all part of a process to review how things have been going since the financial crisis. Big Wall Street banks were the epicenter of crisis, with too much leverage and too little capital for protection once a wave of mortgage defaults set off a liquidity crisis. Congress in 2011 adopted the Dodd-Frank reforms that changed the way banking was done in the U.S. across a number of fronts. The new law increased capital requirements and limited risk-taking activities, such as banks trading for their own accounts. Now that much of that dust has cleared, Powell believes it's time to take a look at how all of the changes worked. 

Small banks get a vehicle for regulatory relief in the Senate — Small community banks have a vehicle in the Senate for regulatory relief that passed the House in the last Congress and has won some bipartisan support. The bill, introduced on Thursday by Senate Finance Committee Chairman Sen. Orrin Hatch, R-Utah, and co-sponsored by Sens. William Nelson, D-Fla., and Angus King, I-Maine, would raise the Federal Reserve Board asset threshold for exempting small bank holding companies from Dodd-Frank Act leverage and risk-based capital requirements to $5 billion from $1 billion.

 Two Questions for the Next SEC Director of Enforcement -- naked capitalism by Jerri-lynn Scofield - If recent reports in the New York Times, 2 Expected to Be Named to S.E.C. Enforcement Role, and the Wall Street Journal, SEC Chairman Plans to Hire Steven Peikin to Run Enforcement Division, are correct, partners at one white shoe law firm Sullivan & Cromwell (S &C), will soon be in place as the new top guns at the Securities and Exchange Commission (SEC), replacing partners from another white shoe firm, Debevoise & Plimpton, who held the same roles during the previous administration.   Jay Clayton, formerly an S & C partner, seeks to install his own enforcement team.    Clayton also intends to appoint Steven Peikin, who’s currently an S&C partner, alongside Stephanie Avakian, the agency’s acting enforcement director and a former white-collar defense lawyer, as co-directors of enforcement, in a move intended to dilute the S & C concentration at the highest SEC echelons, since potential client conflicts might otherwise hamstring SEC action. (SEC ethics rules bar Peikin for one year from supervising any cases that affect other S & C clients, and Clayton also is subject to similar conflicts constraints). […]  Neither the appointment of Peikin nor Avakian is subject to Senate confirmation.  Nonetheless, I would like  to know what positions each holds on the following two key issues.First, Mr. Peikin/Ms. Avakian, what is your position on so-called no admit/no deny settlements? As you’re well aware, these are settlements in which a defendant agrees to a significant cash payment to settle a legal action but neither affirms nor denies culpability. This is a complex issue that’s ripe for further discussion, with several key issues and concerns outlined in a paper due soon to be published in the Minnesota Law Review by Verity Winship & Jennifer K. Robbennolt, entitled Admissions of Guilt in Civil Enforcement. . Could you spell out further what such an enforcement policy would look like?  Do you agree with this approach? How would this approach accord with (or differ from) from the policy articulated in the memo authored by then-Deputy Attorney General Sally Quillian Yates  in September 2015 that was intended to increase accountability for corporate wrongdoing? While understanding that the SEC lacks authority to pursue criminal charges as  the Department of Justice can, it seems that the Yates policy has not had an appreciable impact on white collar crime (as discussed here, Law Enforcement Losing War on White Collar Crime). So, how and why would you expect results to differ if the SEC were to step up enforcement against individuals for civil matters within its purview?  Do you believe targeting individuals would have a significant deterrent effect compared to pursuing corporations?

Deutsche Bank fined $41 million for money-laundering lapses - Deutsche Bank AG has agreed to pay $41 million to settle Federal Reserve allegations that its U.S. operations failed to maintain adequate protections against money laundering. The Frankfurt-based bank’s U.S. operations fell short in complying with the Bank Secrecy Act, which requires lenders to help federal agencies prevent illegal transactions, the Fed said in a brief Tuesday statement. The regulator imposed a cease-and-desist order on Deutsche Bank that requires it to address “unsafe and unsound practices.” The bank also agreed to improve its controls and boost oversight of senior management.   Deutsche Bank’s insufficient monitoring involved billions of dollars in “potentially suspicious transactions” that were processed between 2011 and 2015, the Fed said. The transactions involved affiliates in Europe that failed to provide “accurate and complete information,” the regulator said.While the Fed didn’t disclose any specific transactions that were improper, Deutsche Bank has faced multiple investigations by various regulators into whether it allowed customers to engage in illicit trades. Deutsche Bank has recently reached settlements with the U.K. and the New York State Department of Financial Services over trades that allegedly helped wealthy Russians move some $10 billion out of the country.The settlements involved what are known as mirror trades, in which bankers purchased Russian stocks in rubles while selling the same amount of shares in London. The trades effectively converted rubles to dollars, and the cash flowed from the U.K. through Cyprus, Estonia and the U.S., investigators say. The deficiencies cited by the Fed include controls over transactions like mirror trades, said one person with knowledge of the matter. In its settlement with the Fed, Deutsche Bank agreed to enlist an outside monitor to review transactions with international banks in the second half of 2016 — a time frame that could expand depending on the monitor’s findings. The bank also agreed for the outside monitor to review its compliance with anti-money-laundering laws.

Hell Is Empty and All the Hedge Fund Managers are at The Bellagio - Blue blazers. Blue checked shirts. Collar open. No tie. Brown shoes. Black shoes. Or Nike shoes. New, new, all new. Soft leather satchels with bold brass zippers. Good cufflinks. Good watches. Better than you know. Hundred dollar haircuts. Straight razored shaves. Shaped cuticles. Manicured nails. Clean, soft, tailored. New. Talking boisterously in the check-in line at the Bellagio. “I have to be in Palm Beach. Everyone is in Palm Beach.” Pencil skirts. High heels. Rolling out of bed at five a.m. for spin class before the markets open, day after day after day. “I can get a lot of business done in Palm Beach. Where am I supposed to be—in exile?”  Rich people go to Vegas to spend money. Really rich people go to Vegas to learn how to make money. Each spring, as fat tourists sweat out on Las Vegas Boulevard, taking pictures of dancing fountains and wandering aimlessly into undifferentiated warehouses of slot machines and gaping at Chanel stores they cannot afford and being physically and financially sucked dry by this hot, abominable desert Babylon, the people who Know How Things Work gather in the other Vegas: the airy, cool, marble-floored conference rooms of The Bellagio, where silver coffee urns and platters of croissants sit on the patio next to the pool, and maroon-jacketed security guards keep out the general public. This is the SALT Conference, where the hedge fund industry gathers to talk about money and politics, all while voraciously sucking its own dick. If you have ever wondered whether there really is a cabal of elites plotting in private to rule the world, wonder no more. Here they are.

 The Trump Effect on C.E.O. Pay - Gretchen Morgenson - After the November election, the stock market experienced a Trump bump. The surge in share prices thrilled investors, but some corporate executives had even more reason to celebrate. That’s because rising prices can fuel higher pay even if other corporate results are so-so, which seems to be the case for some companies right now. Consider Equilar’s rankings of the top 200 highest-paid C.E.O.s, compiled for The New York Times. The company in the middle of the list awarded its C.E.O. $16.9 million, 9 percent more than it did in 2015, even though median revenues increased only 3 percent. Total shareholder returns were explosive — up 14 percent for the median company. A close look at the numbers suggests that the levitating 2016 stock market was a powerful driver of C.E.O. pay last year, and the bull market seems to have made shareholders less likely to complain about the pay increases executives received. Yet there are serious questions concerning the ties between executive pay and a company’s stock performance. Corporate compensation committees typically consider stock performance when determining pay. Another study by Equilar, a compensation analysis company in Redwood City, Calif., found that 57.4 percent of all Standard & Poor’s 500-stock index companies used total shareholder return, which includes dividends, as a performance measure for compensation purposes in 2015. But calibrating how much weight a stock price should have on C.E.O. pay is tricky: A company’s stock price can be influenced by share buybacks and other financial engineering that does little to produce long-term value. Why reward a C.E.O. for that?

 Robo-Advisors - The Future of the Investment Industry  --  A recent study by the CFA Institute (Chartered Financial Analysts) looks at the future of the investment profession.  The CFA Institute is a global, not-for-profit organization and is the world's largest association of investment professionals.  Currently, there are approximately 2 million workers in the investment industry, managing around $100 trillion in assets for clients.  The report looked at the findings from a survey of 1145 investment industry leaders , looking at the trends that will impact the investment business in the future.  Here are some of the more interesting findings, particularly those related to how the investment industry will have to adapt to changes in the marketplace.

 Are ATMs sitting ducks for WannaCry-style cyberattack? -- When WannaCry ransomware recently froze thousands of computers running on older versions of Windows, I wondered about ATMs.A few years ago, when Microsoft retired Windows XP, banks were slow to upgrade their ATMs to Windows 7 because of the costs and time involved in installing the new software. Upgrading operating systems on an ATM fleet is more complicated than changing them for a company's PCs, partly because ATMs are unattended and therefore have to be thoroughly tested.Today, most large banks and credit unions have migrated to Windows 7, according to David Tente, executive director of the ATM Industry Association.But the picture is less clear for smaller financial institutions, he said. “Many, if not most, of the 12,000 financial institutions with only one, two or three ATMs are still running Windows XP,” Tente said. ATM manufacturers are just now beginning to make Windows 10 available on their equipment two years after its release. So with Windows XP and Windows 7 the primary targets, are ATMs sitting ducks for WannaCry and its cousin WannaCrypt? And if so, could hackers succeed in crippling them?“Any device running a version of Windows that is vulnerable to the server message block exploit is vulnerable to ransomware like WannaCry — and worse, frankly,” said Avivah Litan, vice president of Gartner. “We have heard about other attacks that exploit this vulnerability that are far more lethal than ransomware.” David Pollino, deputy chief security officer at Bank of the West, also sees a risk.“If it could happen to the San Francisco Municipal Transport Agency on their payment machines, it conceivably could happen to an ATM network,” he said. The transport agency was hit in November with ransomware and a demand for 100 bitcoin. The ransom wasn’t paid and everybody got to ride public transportation for free that day.

One Bank's Stunning Forecast: "A Quarter Of All Malls Will Close Over The Next Five Years" –- One month ago, we first presented several striking charts and observations from Credit Suisse's retail analyst, Christian Buss, who showed the extent of the devastation sweeping through the US retail sector. To be sure, while the mass shuttering of retail stores - just today Michael Kors announced the company would close up to 125 full-price retail stores -  has been a recurrent topic on this website, most recently in the context of the next "big short", namely the ongoing collapse in the mall REITs and associated Commercial Mortgage-Backed Securities and CDS, one observation from Buss left us borderline speechless: "Barely a quarter into 2017, year-to-date retail store closings have already surpassed those of 2008." According to the Swiss bank's calculations, on a unit basis, approximately 2,880 store closings were announced as of the end of April, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimated that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

Commercial Banks Slash Auto Loans Outstanding For First Time In Six Years -- After the subprime mortgage bubble burst back in 2009, new regulations prevented banks from rushing right back into mortgages to re-inflate a market that nearly took down the global financial system.  Of course, Uncle Sam didn't restrict wall street from blowing massive bubbles in all asset classes, in fact the Fed seemingly condones it, just the mortgage market.And so, all that loan volume shifted to autos...and student loans. Alas, it seems as though commercials banks are finally starting to wonder whether they've inflated at least the auto loan bubble to the brink of bursting.  As the Financial Times points out today, the FDIC's commercial lending report for 1Q 2017 showed that commercial banks slashed their auto loan exposure sequentially for the first time in the past six years.But data released last week by the Federal Deposit Insurance Corporation showed the first sequential drop in car loans outstanding at commercial banks in at least six years. The total slipped $1.6bn to $440bn from the fourth quarter of last year to the first of this, suggesting that banks — wary of repeating the mistakes of the subprime mortgage crisis — have been spooked by rising delinquencies and the threat of litigation. Wells Fargo and JPMorgan Chase, the two biggest banks in the sector, saw first-quarter originations drop by double digits from the same period a year earlier. Even relatively aggressive specialists such as Capital One — which added a net $2bn to its $50bn car loan book over the first quarter — are toning down their outlook.

New Warning Signs Emerge For Subprime Auto Securitizations --Last month, we pointed out that one of wall street's largest underwriters of auto debt was suddenly slashing their own holdings of auto loans while simultaneously ramping up the issuance of auto securitization facilities thereby pawning off the risk to 'suckers' who have no idea they're jumping in front of yet another financial freight train.  Now, according to Bloomberg and Wells Fargo, new signs are emerging which suggest that auto ABS facilities, like their RMBS cousins of last decade, aren't quite as bullet proof as the 'suckers' thought they were.  While a subtle degradation, Wells Fargo points out that fewer auto borrowers are suddenly paying off their loan balances early.  And while that may not sound as dire as say a default, it suggests that auto borrowers may be finding it more difficult to find new financing when they go to trade in their 3-year old clunker for that brand new BMW.Fewer subprime borrowers are paying off their auto loans early, a possible sign that consumers with weaker credit scores are struggling more, according to a report by Wells Fargo & Co. researchers.Borrowers are making fewer extra payments on loans that were bundled into bonds in 2015 and 2016, compared with loans in 2013 and 2014 bonds, according to Wells Fargo analysts led by John McElravey. The data on prepayments may offer another sign that subprime consumers are having more trouble paying their bills, the analysts wrote in a note dated Tuesday. Borrowers are already defaulting on a growing amount of auto debt.Last decade, slower monthly payment rates on credit car ds were an early sign of the consumer credit cycle changing for the worse, the analysts wrote. For auto loans, slower prepayment may be more of a coincident indicator than a leading one, they wrote.

'The CFPB is simply not listening,' credit union group says  - Credit unions continue to press the Consumer Financial Protection Bureau for regulatory relief, arguing that the few exemptions given to such institutions have not done enough. In a letter sent Thursday to the CFPB, Jim Nussle, the president and CEO of the Credit Union National Association, asked for specific exemptions from four CFPB rules: the Home Mortgage Disclosure Act, remittances, the ability-to-repay/qualified mortgage rule and mortgage servicing rules.

Fed must stop rewarding banks for not lending – BankThink - Federal Reserve officials are beginning to call for shrinking the central bank’s bloated balance sheet. That’s good news. Doing so reduces taxpayer risk, and undoes the Fed’s massive allocation of credit to its preferred sectors, government and housing. This will close a chapter on one of the most controversial periods in the Fed’s history. The bad news: If the Fed doesn’t simultaneously stop paying banks to hoard money, the Fed will create the next recession.During the financial crisis, the Fed put its traditional tools of monetary control on ice, and switched to experimental ones. One of those new tools, paying interest on excess reserves, started in October 2008. It encouraged banks to park money at the Fed instead of lending to businesses and households. What drove Fed officials to discourage lending in the throes of a financial meltdown? It was an especially odd move given that the Fed was concurrently making so-called emergency loans to keep financial institutions afloat. But Fed officials feared that unless they got banks to hoard the fresh reserves created by their emergency lending, the flood of extra dollars would send the federal funds rate to zero — well below their 1.5% target. Influencing the federal funds rate was traditionally one of the Fed’s key methods for controlling the growth of credit and meeting its employment and inflation goals.  The experiment failed dramatically. The federal funds rate dropped toward zero anyway.The Fed did succeed, however, in getting banks to sit on those fresh reserves, curbing new loans banks would typically make when fresh deposits show up. It was thanks to interest on excess reserves that the Fed ended up stimulating so little in the economy, despite its efforts to ease so much. The new policy appeared intended to enhance the Fed’s traditional methods of monetary control. But in fact, it rendered those methods almost entirely impotent.

Just Released: Bank Loan Performance Under the Magnifying Glass » NY Fed  - The New York Fed’s recently released Quarterly Trends for Consolidated U.S. Banking Organizations (QT report) confirms that bank loan portfolios look a lot healthier than they did just a few years ago, reflecting the sustained economic recovery from the Great Recession. In this post, we sharpen the focus to look at bank loan performance in more detail, using more disaggregated charts added to the QT report this quarter.  The QT report tracks two key measures of bank loan performance. The “nonperforming loan ratio” measures the fraction of the loan portfolio which is past due at least ninety days or in nonaccrual status. The “net charge-off rate” measures the annualized dollars of final credit losses recognized by banks on their loans, divided by the size of the loan portfolio.  By both metrics, aggregate loan performance has improved markedly in recent years (see charts below). This reflects a combination of factors, including a sustained period of growth and declining unemployment, the eventual resolution of loans that went bad during the Great Recession, and tighter post-crisis underwriting standards for some types of loans such as residential mortgages.

May 2017: Unofficial Problem Bank list declines to 140 Institutions -- This is an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for May 2017. Update on the Unofficial Problem Bank List for May 2017.  During the month, the list dropped from 148 to 140 institutions after nine removals and one addition.  Aggregate assets fell by $1.9 billion to $34.2 billion.  A year ago, the list held 206 institutions with assets of $60.8 billion. Actions were terminated against Delaware Place Bank, Chicago, IL ($231 million); TransPecos Banks, Pecos, TX ($153 million); First Federal Savings and Loan Association of Greensburg, Greensburg, IN ($147 million); CenTrust Bank, National Association, Northbrook, IL ($91 million); Foothills Community Bank, Dawsonville, GA ($84 million); and Forrest City Bank, National Association, Forrest City, AR ($50 million).Guaranty Bank, Milwaukee, WI ($1.0 billion) departed the list on May, 05, 2017 as the fifth failure so far in 2017.  On March 29, 2017, the FDIC terminated the deposit insurance of Builders Bank, Chicago, IL ($41 million) causing their removal.  Pinnacle Bank, Rogers, AR ($78 million) found their way off the list through a voluntary merger. This past Wednesday, the FDIC published industry income results for the first quarter of 2017 and provided an update on the Official Problem Bank List.  The FDIC reported problem bank figures of 112 institutions with assets of $23.7 billion, which is the fewest number of problem banks since March 2008.

Could Trump go 'nuclear' on FDIC? | American Banker -- The end of the filibuster for presidential nominees could affect whether Democrats get a say in picking board members of the FDIC.  President Trump has shown he is willing to break long-established Washington practices — an attitude that could trickle down into the nomination process for federal regulators, including board members on the Federal Deposit Insurance Corp. By law, the five-member FDIC board cannot include more than three members of the same political party. As a result, administrations typically work out agreements with the Senate leaders of the opposing party, allowing them to make two picks in order to smooth the confirmation process.

 CFPB unfairly targeting Ocwen, analyst claims - Federal and state regulators have unfairly targeted Ocwen Financial Corp. with the goal of forcing it to sell its mortgage servicing portfolio to investors that would foreclose on troubled borrowers, claims a prominent mortgage finance analyst. The Consumer Financial Protection Bureau "has been overly harsh in its treatment of Ocwen, both measured by the amount of fines and penalties imposed and also because of the impressive record that the company has amassed in terms of helping consumers via loan modifications and permanent principal forgiveness," Christopher Whalen wrote in a paper published last week. The paper, titled "Abuse of Power: The CFPB and Ocwen Financial Corp.," is posted on the Social Science Research Network website.

FIS expensed strip clubs, padded timesheets during Ocwen audit, lawsuit claims - Auditors performing a review of Ocwen Financial Corp. padded timesheets and claimed excessive and improper expenses, including lengthy travel and meals at strip clubs and casinos, according to a lawsuit filed against Fidelity Information Services LLC. The California Department of Business Oversight selected FIS to review servicing practices of mortgages in the state in June 2015. Ocwen was to pay for the independent audit, which was budgeted to cost nearly $45 million and take two years to review 50,000 loans.

 Jared Kushner built luxury condos using real estate grants meant for poor communities: report -- Among the flurry of articles surrounding President Donald Trump’s adviser and son-in-law Jared Kushner, one of the less headline-grabbing stories centers on some of Kushner’s more unsavory business practices at the helm of his family’s real estate company.Those stories got a boost with a new Washington Post report that details how Kushner utilized a legal loophole that critics compare to gerrymandering to apply for a federal program that saved him $50 million on his company’s luxury condos in Jersey City, New Jersey, just across the Hudson River from Manhattan.The EB-5 visa program Kushner and his business partners used to build the luxury towers at 65 Bay Street on the Hudson River waterfront “made it appear that the luxury tower was in an area with extraordinarily high unemployment, allowing Kushner Companies and its partners to get $50 million in low-cost financing through the EB-5 visa program,” according to the Post‘s Shawn Boburg.“At the same time,” Boburg wrote, “they excluded some wealthy neighborhoods only blocks away.” The loophole, which developers have reportedly used before, is legal, but “prominent members of both parties say has been plagued by fraud and abuse.” The Trump administration is considering legislation that would make EB-5 gerrymandering harder, and Kushner has reportedly said he’d recuse himself from the decision once it reaches the president’s desk.The EB-5 program allows “wealthy foreigners” to get “a fast-track residence visa by investing at least $500,000 in a project in a ‘targeted employment area,'” the Post report said. “To qualify, the area must have an unemployment rate 1.5 times the national average. For developers, the terms of the investment are more favorable than a bank loan.” Kushner Companies (which the president’s son-in-law stopped working for once he joined the Trump administration) is reportedly trying to utilize the EB-5 program for yet another luxury property in Jersey City, this time to raise $150 million in the Journal Square neighborhood.

Fannie Mae: Mortgage Serious Delinquency rate declined in April, Lowest since January 2008 -- Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.07% in April, from 1.12% in March. The serious delinquency rate is down from 1.40% in April 2016. This is the lowest serious delinquency rate since January 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".    The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. Although the rate is declining, the "normal" serious delinquency rate is under 1%.   The Fannie Mae serious delinquency rate has fallen 0.33 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until this Summer.

MBA: Mortgage Applications Decrease in Latest Weekly Survey - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 3.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 26, 2017. ... The Refinance Index decreased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 7 percent higher than the same week one year ago. ...  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.17 percent, with points decreasing to 0.32 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The first graph shows the refinance index since 1990.Refinance activity will not increase significantly unless rates fall sharply. The second graph shows the MBA mortgage purchase index.  Even with the increase in mortgage rates late last year, purchase activity is still up 7% year-over-year.

Mortgage Rates Tumble To 6-Month Lows - After a week of dismal housing data, a silver lining perhaps. The spike in U.S. mortgage rates since the November presidential election has been cut in half. As Bloomberg notes, the average rate on a 30-year fixed mortgage dropped in the week ended Thursday to a six-month low of 3.95 percent, according to Freddie Mac data.In the seven weeks after the election, borrowing costs increased by 75 basis points to 4.32 percent at the end of December, the highest since April 2014.They’ve since managed to retreat 37 basis points - potentially good news for homebuyers and builders as the spring selling season continues to disappoint.As MishTalk's Mike Shedlock reminds us: Lawrence Yun, NAR chief economist, says “Demand is easily outstripping supply in most of the country.”How long can Yun’s silly argument go on?  There is not a supply shortage. Rather, there is a supply shortage of homes people can afford at which buyers are willing to sell. If homes were priced to sell, more homes would sell.Despite rising prices, buyers want higher prices than they can get. At some point, rising prices were bound to choke off sales.It’s too early to conclude a sustainable downtrend in housing has started, but if it has, it would be on top of an overall slowdown in consumer spending led by a slowdown in auto sales.  Here is my estimate of the economic and Fed consensus: Don’t worry, it’s just a temporary soft patch in March, April, and May. The second quarter half recovery is still on schedule.

Mortgage rates slide to fresh 2017 low as inflation slips through Fed's fingers - The benchmark rate for home loans remained in free fall in the most recent week in the wake of lackluster economic data that hinted the central bank may be slower to raise interest rates than it expects, mortgage provider Freddie Mac said Thursday. The 30-year fixed-rate mortgage averaged 3.94%, down one basis point during the week and marking a fresh 2017 low. The 15-year fixed-rate mortgage averaged 3.19%, unchanged for the week. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.11%, up four basis points. It was the third-straight weekly decline for the 30-year fixed, which represents the vast majority of the mortgage market. According to a report from the Urban Institute, the 30-year fixed made up 89.6% of purchase mortgages in February.  The 10-year Treasury yield, which mortgage rates loosely track, fell four basis points during the week after tepid inflation data suggested the Federal Reserve may have to scale back its interest rate-hike forecasts.

Black Knight: House Price Index up 1.3% in March, Up 5.8% year-over-year -- Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted. From Black Knight: Black Knight Home Price Index Report: U.S. Home Prices Hit Another New Peak, Rising 1.3 Percent for the Month, Up 5.8 Percent Year-Over-Year

• At $272K, the national-level HPI continued its upward trend, hitting another new peak in March 2017, marking a 2.3 percent gain in home prices since the start of the year
• Prices were up 1.3% for the month nationally and +5.8% Y/Y
• March marked 59 consecutive months of annual national home price appreciation
• Among the nation's 20 largest states, 8 hit new peaks. Of the nation’s 40 largest metros, 15 hit new peaks

The year-over-year increase in this index has been about the same for the last year. Note that house prices are above the bubble peak in nominal terms, but not in real terms (adjusted for inflation).

Case-Shiller: National House Price Index increased 5.8% year-over-year in March -- S&P/Case-Shiller released the monthly Home Price Indices for March ("March" is a 3 month average of January, February and March prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: Seattle, Portland, Dallas and Denver Lead Gains in S&P Corelogic Case-Shiller Home Price Indices The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8% annual gain in March, up from 5.7% last month and setting a 33-month high. The 10-City Composite and the 20-City Composite indices came in at 5.2% and 5.9% annual increases, respectively, unchanged from last month. Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In March, Seattle led the way with a 12.3% year-over-year price increase, followed by Portland with 9.2%, and Dallas with an 8.6% increase. Ten cities reported higher price increases in the year ending March 2017 than in the year ending February 2017...Before seasonal adjustment, the National Index posted a month-over-month gain of 0.8% in March. The 10-City Composite posted a 0.9% increase and the 20-City Composite reported a 1.0% increase. After seasonal adjustment, the National Index recorded a 0.3% month-over-month increase. Both the 10-City Composite and the 20-City Composite indices posted a 0.9% month-over-month increase after seasonal adjustment. Eighteen of the 20 cities reported increases in March before seasonal adjustment; after seasonal adjustment, 17 cities saw prices rise.

Home Prices Rose 5.7% Year-over-Year in March  -- With today's release of the March S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.9% month over month. The seasonally adjusted year-over-year change has hovered between 4.2% and 5.8% for the last twenty-five months. Today's S&P/Case-Shiller National Home Price Index (Nominal) reached another new high. The Real S&P/C-S HPI is at its post-recession high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.9% from the previous month. The nonseasonally adjusted index was up 5.9% year-over-year.Investing.com had forecast a 0.9% MoM seasonally adjusted increase and 5.7% YoY nonseasonally adjusted for the 20-city series. Here is an excerpt of the analysis from today's Standard & Poor's press release.“Home prices continue rising with the S&P Corelogic Case-Shiller National Index up 5.8% in the year ended March, the fastest pace in almost three years,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “While there is some regional variation, prices are rising across the U.S. Half of the 20 cities tracked by the S&P Corelogic Case-Shiller indices rose more than 6% from March 2016 to March 2017. The smallest gain of 4.1%, in New York, was roughly double the rate of inflation. [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.

Real House Prices and Price-to-Rent Ratio in March-- It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 2.4% above the previous bubble peak.However, in real terms, the National index (SA) is still about 13.8% below the bubble peak.
The year-over-year increase in prices is mostly moving sideways now just over 5%. In March, the index was up 5.8% YoY.  In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $278,000 today adjusted for inflation (39%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through March) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to October 2005 levels, and the CoreLogic index (NSA) is back to October 2005. Real House Prices Real House PricesThe second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to May 2004 levels, the Composite 20 index is back to March 2004, and the CoreLogic index back to March 2004. In real terms, house prices are back to early 2004 levels. This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to November 2003 levels, the Composite 20 index is back to September 2003 levels, and the CoreLogic index is back to August 2003.

NAR: Pending Home Sales Index decreased 1.3% in April, down 3.3% year-over-year  --From the NAR: Pending Home Sales Scale Back 1.3 Percent in AprilPending home sales in April slumped for the second consecutive month and were down year-over-year nationally and in all four major regions, according to the National Association of Realtors®. Only the West saw an increase in contract signings last month. The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 1.3 percent to 109.8 in April from a downwardly revised 111.3 in March. After last month's decline, the index is now 3.3 percent below a year ago, which is the first year-over-year decline since last December and the largest since June 2014 (7.1 percent). The PHSI in the Northeast decreased 1.7 percent to 97.2 in April, and is now 0.6 percent below a year ago. In the Midwest the index fell 4.7 percent to 104.4 in April, and is now 6.1 percent lower than April 2016. Pending home sales in the South declined 2.7 percent to an index of 125.9 in April and are now 2.3 percent below last April. The index in the West jumped 5.8 percent in April to 100.0, but is still 4.2 percent below a year ago.  This was below expectations of a 0.5% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in May and June.

Pending Home Sales Crash Most In 3 Years, Hit By "Double Whammy" Of Price, Inventory --Signed contracts in April tumbled 5.4% YoY (NSA). This is the biggest drop in pending home sales since August 2014 and comes on the back of last week's disappointing housing 'recovery' data as perhaps Fed- and Trump-driven mortgage-rate rises have finally hit the American 'pocketbook'. This is the second monthly drop in a row (-1.3% MoM) and comes with downward revisions for the last few months. As Bloomberg notes, the back-to-back declines in contract signings were the first since May and June of last year and underscore how limited choices of properties are impinging on the market’s progress by boosting prices and creating affordability issues.  Ironically, NAR's Larry Yun blames weak contract activity this spring on significantly weak supply levels spurring deteriorating affordability conditions."Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market," he said. "Realtors are indicating that foot traffic is higher than a year ago, but it's obviously not translating to more sales." "Prospective buyers are feeling the double whammy this spring of inventory that's down 9.0 percent from a year ago and price appreciation that's much faster than any rise they've likely seen in their income." US housing data is at its worst since May 2016...

U.S. Homes Are Finally Shrinking -- It's not quite a tiny-house movement, but homebuyers frustrated by the lack of listings that fit their budget will probably take it.  In the aftermath of the U.S. foreclosure crisis, homebuilders focused on the top end of the market, where it was easier to find attractive profit margins and credit-worthy borrowers. The median size of a new single-family home increased year after year, reaching a high of 2,467 square feet in 2015—49 percent bigger than in 1978 and 8 percent larger than the prerecession peak in 2007. Now that trend has begun to reverse. The median home size decreased slightly, to 2,422 square feet, in 2016, according to the U.S. Census Bureau’s annual report on the characteristics of new housing. The trend continued into the first three months of 2017, quarterly data show. The shift may be a natural extension of how new home construction tracks with economic cycles. At the onset of a recovery, builders target high-end home buyers, who are less likely to be constrained by poor credit, according to a theory advanced by Robert Dietz, chief economist at the National Association of Home Builders. As the recovery reaches down the income ladder—or perhaps, as luxury markets become saturated—builders get started on smaller homes. In 2016, that meant more new homes between 1,400 and 2,400 square feet. The share of homes larger than 3,000 square feet ticked down, as did the share of those of less than 1,400 square feet. Home sizes are still well above their prerecession peak, and the three-car garage is still more common than the one-bedroom apartment.  

Construction Spending decreased in April --- Earlier today, the Census Bureau reported that overall construction spending decreased in April: Construction spending during April 2017 was estimated at a seasonally adjusted annual rate of $1,218.5 billion, 1.4 percent below the revised March estimate of $1,235.5 billion.  Both private and public spending decreased in April:  Spending on private construction was at a seasonally adjusted annual rate of $943.3 billion, 0.7 percent below the revised March estimate of $949.7 billion. ... In April, the estimated seasonally adjusted annual rate of public construction spending was $275.3 billion, 3.7 percent below the revised March estimate of $285.9 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been generally increasing, and is still 24% below the bubble peak. Non-residential spending is now 3% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 15% below the peak in March 2009, and only 4% above the austerity low in February 2014. Year-over-year Construction SpendingThe second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 16%. Non-residential spending is up 4% year-over-year. Public spending is down 4% year-over-year. Looking forward, all categories of construction spending should increase in 2017 (maybe not public spending). This was below the consensus forecast of a 0.5% increase for April, however spending for March was revised up sharply.

Lumber Dispute Drives Up Construction Costs - An ongoing trade battle between Canada and the U.S. over softwood lumber has pushed up the cost of building a typical single-family home by several thousand dollars, according to the National Association of Home Builders, and prices could be going higher yet. As reported by Construction Dive, the Softwood Lumber Agreement between the two countries expired in October 2015 and a subsequent grace period ended a year later. Fears that the U.S. government would impose new tariffs to compensate for subsidies paid by the Canadian government to lumber producers pushed prices up by 7.2% in the first quarter. In late April, the U.S. Commerce Department announced countervailing duties for Canadian producers that averaged 20%, with additional anti-dumping duties expected to be announced on June 23. NAHB Chairman Granger MacDonald told Construction Dive that the tariffs will make houses less affordable for American buyers without doing anything to solve underlying trade issues. With a typical house using 15,000 board feet of lumber, according to MacDonald, the first quarter price hikes alone could add nearly $3,600 to the typical construction bill. NAHB said in an Eye on Housing report that April's 3% increase pushed the softwood lumber price index to its highest level in more than a decade. The price of softwood lumber climbed 10.4% in the first four months of the year. NAHB also said that gypsum, ready-mix concrete, and OSB all showed price increases.

Personal Income increased 0.4% in April, Spending increased 0.4% - The BEA released the Personal Income and Outlays report for April: Personal income increased $58.4 billion (0.4 percent) in April according to estimates released today by the Bureau of Economic Analysis. ... personal consumption expenditures (PCE) increased $53.2 billion (0.4 percent). ... Real PCE increased 0.2 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent. The April PCE price index increased 1.7 percent year-over-year and the April PCE price index, excluding food and energy, increased 1.5 percent year-over-year. The following graph shows real Personal Consumption Expenditures (PCE) through April 2017 (2009 dollars).  The dashed red lines are the quarterly levels for real PCE. The increase in personal income and PCE was at expectations.

Real Disposable Income Per Capita Gains in April -- With the release of today's report on April Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita.  At two decimal places, the nominal 0.34% month-over-month change in disposable income was trimmed to 0.15% when we adjust for inflation. The year-over-year metrics are 2.94% nominal and 1.21% real. The trend since 2013 has been one of steady growth. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013.  The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Nominal disposable income is up 73.6% since then. But the real purchasing power of those dollars is up only 27.1%.

Personal Spending Growth Tumbles To 7-Month Lows After Dramatic Revisions -- Having weakened to unchanged for the last two months, April saw personal spending rise 0.4% MoM (as expected) and personal income rise 0.4% MoM (as expected). However, year-over-year growth in spending (+4.3%, weakest since Sept 2016) and income (+3.6%, weakest since Jan 2017) both signaled a rolling over of the post-Trump exuberance (just in time for another rate-hike by the The Fed). Major (upward) revisions to spending data seems to have exaggerated April's demise... But, this is not what The Fed (nor Trump) was hoping for. Spending and Incomes are still rising though... And the revisions sent the savings rate soaring off crash lows... Before and After... Here's why - huge downward revisions to income and spending was re-engineered higher... And this is the economic data that The Fed et al. uses to judge whether rate-hikes are appropriate - more noise, less signal.

May Consumer Confidence Down, Remains Optimistic -- The latest Conference Board Consumer Confidence Index was released this morning based on data collected through May 18. The headline number of 117.9 was a decrease from the final reading of 119.4 for April, a downward revision from 120.4. Today's number was below the Investing.com consensus of 119.8. Here is an excerpt from the Conference Board press release. "Consumer confidence decreased slightly in May, following a moderate decline in April," said Lynn Franco, Director of Economic Indicators at The Conference Board. "However, consumers' assessment of present-day conditions held steady, suggesting little change in overall economic conditions. Looking ahead, consumers were somewhat less upbeat than in April, but overall remain optimistic that the economy will continue expanding into the summer months." The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

Hotels: Hotel Occupancy Rate Flat Year-over-Year --From HotelNewsNow.com: STR: US hotel results for week ending 20 May The U.S. hotel industry reported flat occupancy and slightly higher rates year over year during the week of 14-20 May 2017, according to data from STR.  In comparison with the week of 15-21 May 2016, the industry recorded the following in the three key performance metrics:
• Occupancy: Flat at 70.6%
• Average daily rate (ADR): +1.5% to US$127.91
• Revenue per available room (RevPAR): +1.5% to US$90.26
STR analysts note that occupancy for the week was pulled down due to comparison with a non-Mother’s Day Sunday in 2016. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

 Dollar General Accounts For 80% Of All New Store Openings In The US --  One week ago, when looking at the latest Fitch forecast of retailers most likely to file for bankruptcy next, we listed the hundreds of store closures already announced in 2017 between various bankrupt and still solvent retail chains. Declining consumer demand for traditional retail venues and deteriorating financial results aside, we showed the simple reason for the persistent pressure on traditional "brick and mortar" stores to restructure with the following chart which showed that North America has a glut of retail outlets, as well as far too many shopping malls, something which is becoming apparent as sales per capita decline. On a per capita basis, the US has roughly 24 square feet of retail space per capita, more than twice the space of Australia and 5 times that of the UK.But what about new store openings? After all, on a net basis the US retail industry has to still be growing. Here we have some good and bad news. First the good news: according to a recent analysts by Bank of America's REIT team, in which the bank analyzes both store openings and closings for the same sample of 33 retailers that its have analyzed since 2007, it finds that the projected net new store count for 2017 is 1,041, which is lower than last year’s actual 1,109. While the net number of 1,041 openings this year is lower than the 10-year average of 1,386, "nevertheless the numbers are still positive" is how BofA spins the silver lining. Now the bad news: as the following tabl shows, of the 1,041 stores expected set to open in 2017, 80%, or 810, belong to the one retail chain that focuses exclusively on America's poortest, i.e., Dollar General. Putting BofA's findings in context, US retail is still at least somewhat alive, but only thanks to America's poorest, seemingly a market of still largely untapped growth potential. In fact, of the nearly 7,800 net new stores opened since 2008 per BofA's sampled data, a whopping 76%, or 5,936, were Dollar General Stores. 

Trade Deficit increase to $47.6 Billion in April --From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $47.6 billion in April, up $2.3 billion from $45.3 billion in March, revised. April exports were $191.0 billion, $0.5 billion less than March exports. April imports were $238.6 billion, $1.9 billion more than March imports. Imports increased and exports decreased in April.
Exports are 15% above the pre-recession peak and up 5% compared to April 2016; imports are 3% above the pre-recession peak, and up 8% compared to April 2016. In general, trade has been picking up.The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.Oil imports averaged $45.40 in April, down from $46.26 in March, and up from $29.53 in April 2016.  The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012.  The trade deficit with China increased to $27.6 billion in April, from $24.3 billion in April 2016.

April Trade Deficit Up 5.2% from Revised March --The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $47.6 billion in April, up $2.3 billion from $45.3 billion in March, revised. April exports were $191.0 billion, $0.5 billion less than March exports. April imports were $238.6 billion, $1.9 billion more than March imports.The April increase in the goods and services deficit reflected an increase in the goods deficit of $2.3 billion to $68.4 billion and a decrease in the services surplus of less than $0.1 billion to $20.8 billion. Year-to-date, the goods and services deficit increased $22.1 billion, or 13.4 percent, from the same period in 2016. Exports increased $44.3 billion or 6.1 percent. Imports increased $66.4 billion or 7.5 percent. Today's headline number of -47.6B was worse than the Investing.com forecast of -46.1B. The previous month was revised upward by 1.6M. Revisions were made for January 2014 through March 2017. This series tends to be extremely volatile, so we include a six-month moving average.

GM Reports Record "Channel Stuffing": Auto Inventory Highest Since November 2007 -- As we await US auto makers to report May auto sales, we remind readers that when we discussed last month's disappointing monthly car sales report, which badly missing expectations showing the fourth consecutive month of declining auto sales - the first time this has happened since July 2009 -  we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.  Of note, we highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that April inventories increased to 100 days (935,758 vehicles) from 98 days at the end of March and just 71 days (681,402 vehicles) in April 2016. .Fast forward to today when GM reported its May results which again disappointed, and were down 1.3% vs estimates of a 4.3% increase, which in turn pressured GM stock. But that's not what caught our attention: a bigger problem is what GM revealed in its deliveries report which disclosed a whopping 963, 448 units in dealer inventory at the end of the month, up nearly 30k from the past month, and representing 101 days of supply, up from 100 in April. In short: GM "channel stuffing" just hit a new all time high, with the number of GM vehicles parked at dealer lots and patiently waiting for a buyer rising to the highest since the month before recession officially began, when GM was still pre-bankruptcy GM.

U.S. Light Vehicle Sales at 16.6 million annual rate in May --Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 16.60 million SAAR in May.  That is down 3% from May 2016, and up 1% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for May (red, light vehicle sales of 16.60 million SAAR mostly from WardsAuto).This was below the consensus forecast of 16.9 million for May.After two consecutive years of record sales, it looks like sales will be down in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Auto Bloodbath: Lowest Domestic Auto Sales In Three Years Despite Record Inventories And Incentives --After abysmal March and April auto sales and growing speculation on Wall Street that auto sales are looking less like a "plateau" (Ford's term) and more like a debt-fueled bubble on the verge of an "2007-like" collapse (Bloomberg's term), analysts were looking toward May auto sales for signs of hope. Unfortunately, the "hope" fizzled for the 5th straight month as overall auto sales declined again, with domestic light vehicles sales printing at an annualized 12.59 million, the lowest sales number going back more than three years, with GM missing badly even as its dealer inventory rose to a post-bankruptcy record "channel stuffing" high, while those carmakers who did beat expectations, did so by using record incentives and discounted sales to rental and other fleet customers (such as Ford). Here's the math: domestic car sales continued their decline on a year-over-year basis, although there was a silver lining within SUVs and pickup trucks, which rose for many manufacturers. May car sales came in at an annualized 4.50 million units (according to Stone McCarthy calculations), compared to April's pace of 4.80 million, and last May's 4.98 million. Light truck sales declined in May to 8.09 million compared to the 8.32 million selling pace reached in April, and below the 8.13 million units sold a year ago. In total, May domestic light vehicle sales fell to 12.59 million units, below expectations and far below April's 13.12 million selling pace. In fact, as shown in the chart below (blue column) this was the worst monthly print going back more than three years.

Car owners are holding their vehicles for longer, which is both good and bad: There are a lot of old "road warriors" traveling this Memorial Day weekend. That's because the average age of vehicles in the U.S. is a record 11.6 years, according to one recent study. That's not entirely a bad news story. The IHS Markit study showed that vehicles are being made with better quality nowadays, leading consumers to own them longer. According to IHS, the average length of ownership was a record 79.3 months, or nearly seven years. Still, "people are basically driving around in a rotary phone," joked Rebecca Lindland, executive analyst at Kelley Blue Book, in an interview with CNBC's "On The Money." Although the IHS report cited vehicle quality, Lindland insisted that one of her "biggest concerns about having such old vehicles on the road today is just the safety factor. There's a lot of vehicles that only have one air bag, if they have one at all." Some drivers might be using the holiday weekend as an opportunity to head to the nearest dealership, looking to replace their older models. They'll be greeted by a wide range of cars, trucks and SUVs with state-of-the art technology. Lindland highlighted auto upgrades including lane control, adaptive cruise control and even baby seat connectors. However, along with those new features comes higher sticker prices. Kelley Blue Book cites the average price of a vehicle as $34,342. While a compact SUV averages $28,395, a full-size pickup runs $45,252 and a full-size SUV is priced at $60,670 on average. Lindland said that in order to pay for those new vehicles, more buyers are taking out longer car loans. Some stretch out over six, seven or eight years, but Lindland suggested not signing for more than a five-year loan term.

ISM Manufacturing index increased to 54.9 in May -- The ISM manufacturing index indicated expansion in May. The PMI was at 54.9% in May, up from 54.8% in April. The employment index was at 53.5%, up from 52.0% last month, and the new orders index was at 59.5%, up from 57.5%. From the Institute for Supply Management: May 2017 Manufacturing ISM® Report On Business®: "The May PMI® registered 54.9 percent, an increase of 0.1 percentage point from the April reading of 54.8 percent. The New Orders Index registered 59.5 percent, an increase of 2 percentage points from the April reading of 57.5 percent. The Production Index registered 57.1 percent, a 1.5 percentage points decrease compared to the April reading of 58.6 percent. The Employment Index registered 53.5 percent, an increase of 1.5 percentage points from the April reading of 52 percent. The Inventories Index registered 51.5 percent, an increase of 0.5 percentage point from the April reading of 51 percent. The Prices Index registered 60.5 percent in May, a decrease of 8 percentage points from the April reading of 68.5 percent, indicating higher raw materials prices for the 15th consecutive month, but at a noticeably slower rate of increase in May compared with April. Comments from the panel generally reflect stable to growing business conditions, with new orders, employment and inventories of raw materials all growing in May compared to April. The slowing of pricing pressure, especially in basic commodities, should have a positive impact on margins and buying policies as this moderation moves up the value chain."  Here is a long term graph of the ISM manufacturing index.

Markit Manufacturing PMI: Down Fractionally in May -- The May US Manufacturing Purchasing Managers' Index conducted by Markit came in at 52.7, down fractionally from the 52.8 April figure. Today's headline number was above the Investing.com forecast of 52.5. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release: At 52.7 in May, down fractionally from 52.8 in April, the seasonally adjusted IHS Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) was above the 50.0 no-change value, but signalled the weakest improvement in business conditions since last September. The latest reading pointed to a further growth slowdown from the 22- month high recorded in January (55.0). [Press Release] Here is a snapshot of the series since mid-2012.

 Dallas Fed Manufacturing Outlook: Expansion Picks Up --This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for May. The latest general business activity index came in at 17.2, up slightly from 16.8 in April. Here is an excerpt from the latest report:Texas factory activity increased at a faster pace in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, moved up eight points to 23.3, reaching its highest level since April 2014.Other measures of current manufacturing activity also rose to levels not seen since mid-2014. The new orders index pushed up to 18.1, and the growth rate of orders index rose to 12.3, marking its fifth consecutive positive reading. The capacity utilization index moved up to 19.4, with roughly a third of firms noting increased utilization. The shipments index surged 15 points to 24.7, reaching a level not seen in nearly 10 years.Expectations regarding future business conditions continued to improve. The indexes of future general business activity and future company outlook came in at 31.6 and 30.9, respectively, up several points from last month’s readings. Other indexes for future manufacturing activity pushed further into positive territory. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator. Texas turns out a large share of the country’s production of petroleum and coal products, reflecting the significance of the region’s refining industry. Texas also produces over 10 percent of the nation’s computer and electronics products and nonmetallic mineral products, such as brick, glass and cement.

Regional Fed Manufacturing Overview: May Update – DShort - Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated."Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for May is 16.2, down from last month's 19.8. It has been in positive territory for seven consecutive months.

Chicago PMI Down in May -- The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest report for Chicago PMI came in at 55.2, a 3.1 point decrease from last month's 58.3. Investing.com forecast 57.0. Here is an excerpt from the press release: “May’s fall in the MNI Chicago Business Barometer needs to be viewed in the context of the strength seen in the past three months. With the three-month average, broadly stable, it provides a better guide this month to the underlying activity. Still, business activity over the past three months is running significantly above the levels seen during the same time last year,” said Shaily Mittal, senior economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.

Updated: Chicago PMI Increases in May -- Earlier, the Chicago PMI was reported at 55.2. That has now been corrected to 59.4. This was above the consensus forecast. Here is the updated report on the Chicago PMI: May Chicago Business Barometer at 59.4 vs 58.3 in AprilThe MNI Chicago Business Barometer increased to 59.4 in May from 58.3 in April, the highest level since November 2014. “May’s rise in the MNI Chicago Business Barometer provides a further boost to the business environment. Rising pressure on backlogs and delivery times accompanied with higher production levels suggests firms’ expectations of a busy summer,” said Shaily Mittal, senior economist at MNI Indicators.

Weekly Initial Unemployment Claims increase to 248,000 -- The DOL reported: In the week ending May 27, the advance figure for seasonally adjusted initial claims was 248,000, an increase of 13,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 238,000, an increase of 2,500 from the previous week's revised average. The previous week's average was revised up by 250 from 235,250 to 235,500.   The previous week was revised up by 1,000.   The following graph shows the 4-week moving average of weekly claims since 1971.

Job cuts jump in May: Challenger report - Cutbacks in retail and the auto industry sent job reductions soaring to over 50,000 in May, outplacement consultancy Challenger, Gray & Christmas reported Thursday. The total of 51,692 in May was 41 percent higher than the 36,602 job cuts announced in April and 71 percent higher than in May 2016, when U.S.-based employers said they would lay off 30,157 workers.Nearly 40 percent of the May cuts were announced by Ford Motor, Challenger said. "Ford's announcement of 20,000 global layoffs to streamline and cut costs is a typical strategy of large corporations who need to pivot to stay competitive," John A. Challenger, CEO of Challenger, said Thursday morning. "As consumers demand electric and self-driving options, traditional automakers will need to adapt."However, Ford told CNBC it never confirmed the 20,000 number with any media source and insisted the actual number of jobs eliminated was about 1,400. Blake Palder, a spokesman for the consultancy firm Challenger, cited media reports from the Washington Examiner and Forbes as its sources for the numbers. Officials from the media organizations didn't immediately respond to CNBC's request for comment.

ADP: Private Employment increased 253,000 in May -- From ADP: Private sector employment increased by 253,000 jobs from April to May according to the May ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “May proved to be a very strong month for job growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Professional and business services had the strongest monthly increase since 2014. This may be an indicator of broader strength in the workforce since these services are relied on by many industries.” Mark Zandi, chief economist of Moody’s Analytics said, “Job growth is rip-roaring. The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force. Increasingly, businesses’ number one challenge will be a shortage of labor.”  This was well above the consensus forecast for 170,000 private sector jobs added in the ADP report. 

 A Closer Look at This Morning's ADP Employment Report -- In this morning's ADP employment report we got the May estimate of 253K new nonfarm private employment jobs from ADP, an increase over April's 174K, which was a downward revision of 3K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail. Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend. As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011. ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016. For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high. There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above leveled off in late 2010 but began drifting higher in early 2015. For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing. 

May Employment Report: 138,000 Jobs, 4.3% Unemployment Rate --From the BLS: Total nonfarm payroll employment increased by 138,000 in May, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and mining.... The change in total nonfarm payroll employment for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported... In May, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.22. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent. The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 138 thousand in May (private payrolls increased 147 thousand). Payrolls for March and April were revised down by a combined 66 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In May, the year-over-year change was 2.23 million jobs. This is a decent year-over-year gain. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate was decreased in May to 62.7%. This is the percentage of the working age population in the labor force. The fourth graph shows the unemployment rate. The unemployment rate decreased in May to 4.3%. This is the lowest unemployment rate since 2001.

U.S. Unemployment Rate Hits 16-Year Low Despite Slower Job Growth — U.S. employers pulled back on hiring in May by adding only 138,000 jobs. Hiring was still enough to help keep pushing unemployment lower. The Labor Department said Friday that the unemployment rate fell to 4.3 percent from 4.4 percent. Hiring in the months of April and March were revised downward by a combined 66,000. Job gains have averaged 121,000 over the past three months, a deceleration from an average of 181,000 over the past 12 months. Average hourly earnings have risen a middling 2.5 percent over the past year. Restaurants and health care firms posted solid job gains. Food services added 30,300 workers, while health care contributed 24,300 jobs. Construction added 11,000 jobs. But manufacturers, retailers and governments shed workers last month. Despite the slowdown in job growth last month, the U.S. economy is running neither too hot nor too cold, with growth holding at a tepid but far from recessionary 2 percent annual rate. Few economists foresee another downturn looming, in part because the recovery from the recession has been steady but grinding, with little sign of the sort of overheated pressures that normally trigger a recession. The government's monthly jobs report produces a net gain by estimating how many jobs were created and comparing that figure with how many it estimates were lost. If hiring maintains its current pace, it would exceed population growth, and the unemployment rate should eventually fall even further below its current 4.3 percent, a level associated with a healthy economy. Still, the jobs report produces several different measures of unemployment. The broadest gauge includes not only the officially unemployed but also part-time workers who would prefer full-time jobs and people who want a job but aren't actively looking for one and so aren't counted as unemployed. Known as the "U-6" rate, this measure is one of the favorite metrics for Trump administration officials. The U-6 has declined since January, an encouraging sign that jobless people who had given up hope of working are now being hired. The falling U-6 points to a strengthening economy despite weak growth during the first three months of the year. But the influx of job seekers can also inflict a drag on pay growth. As more people start seeking jobs, employers begin to have less incentive to raise pay. It's only when employers face a shallow pool of job applicants that they tend to feel compelled to raise pay in hopes of hiring people who fit their needs. Annual growth in average hourly earnings has been so-so in recent months. And whatever meaningful pay raises that exist are going disproportionately to managers and supervisors. Many of the jobs that have been added over the past year are in the generally lower-paying leisure and hospitality industry — hotels, restaurants and amusement parks.

May Jobs Report – The Numbers - Slower but steady hiring pushed down the unemployment rate to the lowest level in 16 years in May, the Labor Department said Friday. Signs of a tightening labor market could keep the Federal Reserve on track to raise interest rates as early as this month. Here are five key numbers from the jobs report. The economy added a net 138,000 jobs in May, down from recent trends but steady enough to chip away at unemployment. Meanwhile, job growth was far weaker in March and April than previously thought. The economy has created an average of 121,000 jobs over the past three months, roughly two-thirds of last year’s average monthly job growth. The unemployment rate fell a tenth of a percentage point to 4.3%, the lowest level since May 2001. However, the drop reflecting troubling trends. The labor force contracted sharply. The drop could suggest that the labor market is at or above full employment. Fed officials project the jobless rate will average 4.7% to 5% over the long run.  The share of Americans holding jobs or actively looking for them fell two-tenths of a percentage point to 62.7%, just a tick above the level from a year ago and hovering near four-decade lows. In the most worrisome aspect of Friday’s report, the number of Americans in the labor force fell by 429,000. That suggests that many Americans in their prime working years remain on the sidelines, despite expectations they would rejoin the market as conditions improved. Private-sector workers saw their paychecks grow 2.5%, on average, in the year through May. That reflects consistent but hardly robust growth in Americans’ incomes. With inflation recently slowing, the growth in paychecks will give a real boost to the amount of money Americans have in their pockets to spend. A broader measure of unemployment fell to 8.4% in May from 8.6% in April. That rate—formally known as the “U-6″—counts not just unemployed workers in the labor force but also Americans too discouraged to enter the job search and part-time workers who would prefer to work full time. The rate has fallen more than a percentage point over the last year.

Job Growth Slows Sharply in May as Unemployment Hits New Low -- The unemployment rate fell to 4.3 percent in May, a new low for the recovery and the lowest level since 2001. However, this decline in the unemployment rate was the result of people leaving the labor market, as the number of people reported as employed in the household survey actually fell, with the overall employment-to-population ratio (EPOP) dropping from 60.2 percent in April to 60.0 percent in May. The establishment survey showed further evidence of a weakening labor market as the pace of job growth slowed in May to 138,000. There were also substantial downward revisions to the prior two months’ job growth numbers, which brought the average for the last three months to just 121,000. ... The situation in the household survey was mixed. The drop in employment was among prime-age workers, with the EPOP falling from 78.6 percent to 78.4 percent, with both men and women seeing small declines. On the plus side, the unemployment rate for African American men over 20 fell 0.8 percentage points to 6.5 percent, the lowest level since April of 2000. However this was entirely due to men dropping out of the labor force as employment actually fell. All the duration measures of unemployment rose modestly in May. The quit rate rose modestly to 11.7 percent, which is still below pre-recession peaks and well below the peaks hit in 2000. Involuntary part-time employment fell for the fourth consecutive month to a new low for the recovery. It is now only slightly larger relative to the size of the labor force than before the recession. Voluntary part-time rose by 320,000 but is still slightly below the peak hit in November. The summary data continue to show little evidence for the story that the labor market is increasingly benefiting the most educated workers. While the unemployment rate for college educated workers edged down by 0.1 percentage point, so did the EPOP. It now stands 0.4 percentage points below its year-ago level. In terms of EPOPs, those with high school degrees and less than high school were the biggest gainers in the last year.  There is certainly little evidence in this report that the labor market is overheating or is likely to do so any time in the foreseeable future.

Jobs report: Some softening in May. Should the Fed hold off on next rate hike? I say…[read on] -- Jared Bernstein - Employers added only 138,000 jobs last month, well below expectations for 175,000. Revisions to payrolls for the prior two months reduced employment gains by 66,000. The unemployment rate fell to 4.3 percent, its lowest level since 2001, but for the wrong reason: labor force participation fell by two-tenths of a percent. In other words, this is a considerably weaker-than-expected jobs report. Given the noise in the monthly data, the question is: does this report signal a real downshift in job growth or is it a blip? Also, if we’re really at full employment, we should expect some slowing in payroll gains as employers bump up against supply constraints. And what does this all mean for the Federal Reserve when they meet in a few weeks to consider another rate hike that is firmly priced into the markets?  A good place to start is by smoothing out the monthly noise with the official JB smoother, which takes monthly averages over the past 3, 6, and 12 months. It shows a marked deceleration in job growth, from about 190,000 over the 12-month period to 121,000 over the past three months. While this is suggestive of a softening of the job market, it is also consistent with supply constraints. However, if such constraints were operative, we should see wage growth accelerating. Yet the next two figures show that while year-over-year wage growth did accelerate as the job market tightened, it has since settled in to about a 2.5 percent pace, showing little acceleration in recent months. That’s more of a softening than a tightening story.The labor force participation rate is another important place to look in this regard, but it is a) a very noisy monthly indicator, and b) the overall rate is down in part due to retirement of aging boomers. A better indicator is thus the prime-age (25-54 year-old) employment rate. After falling 5.5 percentage points in the last recession, this rate has slowly been climbing back–score one for the tightening narrative. However, it ticked down a bit in May and, more importantly (this indicator is also noisy), is still about 2 percentage points below its pre-recession peak.The underemployment rate, which includes 5.2 million involuntary part-time workers who’d rather be full-timers, fell to a cyclical low of 8.4 percent, though this too reflects May’s labor force exits. On the other hand, involuntary part-time work is down a solid 1.2 million over the past year.Industry employment patterns reveal job losses in retail trade, down about 80,000 over the past four months, as brick and mortar stores lose demand to internet sales. Manufacturing remains soft, and state/local government shed 17,000 jobs in May. Health care continues to deliver, but gains in the sector have averaged 22,000 per month so far this year, compared to 32,000 per month last year. So, putting it all together, I think there’s enough evidence that the Fed’s tightening campaign has slowed the job market down for them to pause in their June meeting. I recognize that this will shock markets, but the Fed’s client is not the stock market. It’s the macroeconomy, and the dual mandate: full employment at stable prices. Given at least some evidence of softening in the job market in tandem with slower core price growth, a data-driven Fed should pause and take stock of where we are.

Unemployment rate fell in May for the wrong reasons: Slack still remains -- The latest data from the Bureau of Labor Statistics reveals a noticeable slowdown in job growth this year. Adding in May’s 138,000 net new jobs, monthly job growth averaged 162,000 so far in 2017, and just 121,000 over the last three months, down from an average monthly gain of 187,000 jobs in 2016. While employment growth would be expected to slow as the economy approaches genuine full employment, other indicators suggest we are not that close to full employment yet, so this explanation seems insufficient. Specifically, at this point in the recovery, we should be looking to not only add jobs, but also see stronger wage growth in those jobs. But this is not what we’ve seen. Unfortunately, wage growth has been flat over the last year. The latest data indicates that year-over-year nominal hourly wages grew 2.5 percent in May. In fact, as shown in the figure below, wage growth has averaged 2.5 percent over the last two years. If anything, we’ve seen a bit of a slowdown in wage growth this spring, and it is still below levels consistent with the Federal Reserve’s 2 percent inflation target combined with trend productivity growth of 1.5 percent. So, why has wage growth continued to be below target levels after recovery has gone on so long? The simple answer is that while the recovery has been long, it has also been weak. And this weakness combined with the extraordinary damage done during the Great Recession means that slack remains.

Full-Time Jobs Tumble By 367,000, Biggest Drop In Three Years -- While on the surface, the payrolls report, the wage growth and the unemployment rate (which dropped for all the wrong reasons) were disappointing, a quick look inside the underlying data reveals even more troubling trends, such as that in addition to the number of employed workers dropping by 233K according to the household survey, the composition of these jobs raised even more red flags because in May the US lost 367,000 full time jobs offset by the gain of 133,000 part time jobs. Putting this number in context, it was the biggest drop in full-time jobs going back to June 2014. And in this context, we are happy to announce that while manufacturing jobs once again declined by 1,000, the waiter and bartender recovery continues to hum along, with 30,000 workers added in "food services and drinking places."

Where The May Jobs Were: It Was All About Minimum Wage Again ---If May was supposed to be the "tiebreaker" month, after a disastrous March and a solid (if now downward revised) April, then the US economy is not doing well: with only 138K jobs added in the past month, while over 200K actual jobs were lost (per the Household Survey), it was no surprise that the biggest missing link of the so-called recovery, wage growth, was simply not there again.How is it that with the labor market supposedly near full employment, and the unemployment rate sliding to a post 2001 low of 4.3%, wages simply can not rise?The answer was once again to be found in the quality of jobs added because in addition to the previously noted plunge in full-time jobs, the biggest in three years, the granular detail from the BLS revealed that all the jobs growth was again in low or minimum-wage sectors such as education and health, which added 47,000, leisure and hospitality up 31,000 jobs of which food services and drinking places workers, aka waiters and bartenders, added another +30,300. Temp help services, by definition the lowest paying job category, added another 12,900 jobs. Combined, these three minimum-wage categories accounted for two-thirds of all April job gains.Looking at retail workers, which have suffered steep job losses recently as a result of the widespread shuttering of bricks-and-morter outlets, the BLS revised the reported rebound in the last two months, converting it into a job loss. As a result, retail workers have dropped for 4 consecutive months, and at 15.836 million, have dropped to 11 month lows.Another notable observation: after rising by 11,000 last month, manufacturing workers declined once again, down 1,000 jobs, the first drop in the sector since last October. Some further observations on the job breakdown, courtesy of Southbay Research:

• Healthcare (+32K): As expected, with ACA repeal dead, Healthcare hiring returns
• Leisure/Hospitality (+31K): As expected, restaurant demand kicks in
• Professional Services ex temp (+25K): As expected, relatively mild Temp worker demand
• Construction (+11K): Mild weather pulled in payrolls, leaving little for May
• Financial (+11K): Housing boom continues to drive financial payrolls
• Transportation (+4K): Supply chain pressure and manufacturing pause slowed demand for trucking
• Manufacturing (-1K): Factories hit the pause button (Trump rhetoric not yet translating into actual activity boost)
• Wholesale (-2K): Consistent with general macro trends (lack of inflation, retail supply chain pressure, inventory pressure)
• Retail (-6K): Grocery store and brick-and-mortar store pressure

The complete breakdown of changes in key job categories in April and May is shown below.

People Not In Labor Force Soar By 608,000 -- While the payrolls report (and wage gains) was an unmitigated disaster for anyone seeking "evidence" of an economic rebound (i.e., the Federal Reserve), there was some good news in the Unemployment rate which declined from 4.4% to 4.3%, the lowest going back to 2001. There is just one problem with the above "silver lining": the unemployment rate declined for all the wrong reasons, because contrary to expectations, the Household Survey reported that the number of employed Americans actually declined by 233K to 152.923 million, the lowest going back to February. So how could the unemployment rate decline as the number of employed Americans tumbled? Simple: the labor force plunged, with the BLS reporting that the total labor force declined by 429,000 Americans in the month of May. This was the result of a whopping 608,000 American exiting, as the number of people not in the labor force soared to 94.983 million, up from 94.375 million in April. As a result, the labor participation rate tumbled once again, sliding to 62.7%, the lowest print since 2016. In sum, between the huge payrolls miss and downward revisions, the disappointing wage growth, and the droves of people leaving the labor force, this may have been one of the ugliest jobs reports in recent years.

May jobs report: nothing more nor less than a decent late cycle report - HEADLINES:

• +138,000 jobs added
• U3 unemployment rate down -0.1% from 4.4% to 4.3%
• U6 underemployment rate down -0.2% from 8.6% to 8.4%
• Not in Labor Force, but Want a Job Now: down -146,000 from 5.707 million to 5.561 million   
• Part time for economic reasons: down -53,000 from 5.272 million to 5.219 million
• Employment/population ratio ages 25-54: down -0.2% from 78.6% to 78.4%
• Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.03 from $21.97 to $22.00,  up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

Trump specifically campaigned on bringing back manufacturing and mining jobs.  Is he keeping this promise?

• Manufacturing jobs fell by -1,000 for an average of +2500 vs. the last seven years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.   
• Coal mining jobs rose by +400 for an average of +300 vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month

March was revised downward by -29,000. April was also revised downward by -37,000, for a net change of -66,000.  

Comment: A Disappointing Employment Report --The headline jobs number was below expectations, and there were combined downward revisions to the previous two months.   Is this is slowdown in hiring a short term issue, part of the normal business cycle, or due to a Trump Slump®? My view is this slowdown in hiring is mostly part of the normal business cycle (my expectation was job growth would slow further this year).There was still some good news - especially with the unemployment rate falling to 4.3% (lowest since 2001), and U-6 falling to 8.4% (lowest since 2007).  But overall this was a disappointing report. In May, the year-over-year change was 2.26 million jobs. Still decent job growth. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.5% YoY in May. Wage growth has generally been trending up. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job. The number of persons working part time for economic reasons decreased in May. The number working part time for economic reasons suggests a little slack still in the labor market. This is the lowest level since March 2008. These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.4% in May. This is the lowest level for U-6 since November 2007. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.66 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 1.63 million in April. This is generally trending down, but still a little elevated. Although U-6, the number of persons employed part time for economic reasons, and the number of long term unemployed are still a little elevated, it appears the economy is nearing full employment. Overall this was a disappointing report.

 Link Between Low Wages and Low Productivity Growth: High Wages Make Low Productivity Jobs Disappear | Beat the Press | Blogs | Publications | The Center for Economic and Policy Research -- Dean Baker - Neil Irwin examined recent patterns in wage growth in a NYT Upshot piece. Irwin noted the extraordinarily low 0.6 percent pace of productivity growth in recent years (where are the robots?) and argued that wage growth has actually been relatively fast. He then examines why productivity growth might be so slow.One explanation he left out is that low wages makes it possible to hire workers at low productivity jobs. If an employer only has to pay a worker the $7.25 federal minimum wage, then it can be profitable to hire the worker at jobs that increase revenue for the employer by just over $7.25 an hour. This can mean hiring someone to work the midnight shift at a convenience store or to work as a greeter at Walmart.If the employer had to instead pay a worker $10 or $12 an hour, then many very low productivity jobs would no longer exist. This would raise the average level of productivity in the economy by eliminating the least productive jobs. In this way, it is possible that the weakness of the labor market has been a factor in reducing productivity growth as workers have had no choice but to take low paying, low productivity jobs. If this is true, as the labor market tightens and wages start to grow more rapidly, we should see productivity increase more rapidly.

The sad reason half of Americans don’t take all their paid vacation -- Millions of Americans are giving their vacation days back to their employer.The average U.S. employee who receives paid vacation has only taken about half (54%) of those days n the past 12 months, a new survey of over 2,200 workers by careers website Glassdoor found. This is relatively consistent with how much vacation time employees reported taking in 2014 (51%), when Glassdoor first conducted this survey. If an average worker who receives two weeks vacation leaves five days on the table, they’re effectively giving hundreds of dollars back to the company. This is similar to previous studies on the subject. Last year, more than half (54%) of Americans didn’t take all their vacation days, up from 42% in 2013, according to a separate study released by the U.S. Travel Association’s Project Time Off. These workers gave up 658 million unused vacation days and 222 million of those days cannot be rolled over or exchanged for money. (Over 5,600 full-time workers were surveyed, including 1,184 managers.)   Why don’t they take what’s due? “Fear,” says Scott Dobroski, career trends analyst at Glassdoor. “That’s the underscoring theme.” They fear getting behind on their work (34%), believe no one else at their company can do the work while they’re out (30%), they are completely dedicated to their company (22%), and they feel they can never be disconnected (21%). As workers shoulder a heavier work-load post-recession, he says others are afraid of not meeting goals. “We have almost no job security in the U.S., no legal requirement for severance pay and, with very few exceptions, can be laid off without notice,” John Schmitt, research director for the Washington Center for Equitable Growth, a left-leaning think tank in Washington, D.C. focusing on economic inequality and public policy.

Kafka In Vegas  - In legal circles, prosecutorial misconduct is viewed by many as a pervasive problem — an “epidemic,” as one prominent federal judge called it in 2013. Jurisdictions large and small are riddled with corrupt practices. Misconduct lies behind more than half of all cases nationwide in which convicted defendants are ultimately exonerated, according to the National Registry of Exonerations. Driven by a win-at-all-costs culture, such misbehavior is especially hard to root out because, many experts say, there’s little incentive to play by the rules. Appellate courts often sweep misconduct aside as harmless. Top prosecutors, burnishing their own careers, rarely punish underlings for it — and indeed they often flourish, going on to become judges reluctant to police their former peers. And the law gives prosecutors broad immunity from civil lawsuits, even when their bad behavior lands the wrong people in prison.   In October 2012, a judge declared that Steese, after 20 years in prison, was innocent. It was an extraordinary ruling — in fact, unprecedented in that court. But the Clark County district attorney was not willing to free Steese. Prosecutors vowed to put him through lengthy appeals. Even to re-try him. The process would take years. Or, if Steese just wanted to be released, the prosecutors had a tantalizing proposition: he could agree to an Alford plea. In a feat of logical gymnastics, this obscure plea allows defendants to maintain their innocence while at the same time pleading guilty and accepting the status of a convicted felon. And, perhaps most damaging to prisoners like Steese, after decades behind bars, the plea meant giving up the right to sue. It would also allow prosecutors to keep a “win” on the books, admit no wrongdoing, and avoid civil and criminal sanctions for their behavior. In exchange for all this, the prosecution in Las Vegas would let Steese go.

CPS will 'do whatever's necessary' to open come fall: Forrest Claypool-  Chicago Sun-Times: The Chicago Public Schools will open in the fall no matter what happens with budget talks in Springfield the next two days, schools chief Forrest Claypool said Tuesday. “We will open the schools in the fall, and we’ll do whatever’s necessary to do that,” Claypool told a sold-out crowd at the City Club of Chicago. But after a speech in which he reflected on his long career in government, Claypool ducked a question about whether he plans to still be heading the school system in September. Instead, flanked by CPS’ second-in-command Janice Jackson, who recently dropped her title of chief education officer from her Twitter account, Claypool shifted the subject back to state funding. “We have done every single thing possible to take costs out of the system beyond cutting the classroom, and we are at the point now where essentially it’s difficult, if not impossible, to keep cuts away from the classroom door,” he said. “And that’s why what happens in Springfield over the next few days, next few weeks is critical to protecting our kids.”CPS has been lobbying for changes in the state education-funding formula to benefit districts with a large number of children from low-income families. But those efforts have gone nowhere amid the larger state budget impasse between Democrat-led legislators and Republican Gov. Bruce Rauner. And in the face of the continuing budget stalemate in Springfield, where the legislative session is set to end at midnight Wednesday, the Chicago Board of Education agreed last week to borrow as much as $396 million in short-term, high-interest loans to make it to the end of the current school year. It also authorized CPS officials to borrow further by selling up to half a billion dollars in bonds so the cash-strapped school system can get by until tax revenue comes in.

8th graders from New Jersey refuse to be photographed with Paul Ryan | McClatchy Washington Bureau: For students across the country, the traditional eighth-grade trip to Washington is a chance to join the throngs on the Mall and perhaps spot some of the world's most powerful people on the grounds of the U.S. Capitol. But a group from South Orange Middle School in New Jersey will probably remember their trip to the nation's capital last week for another reason: It was the occasion for a pointed snub of House Speaker Paul D. Ryan, R-Wis. About half of the roughly 150 students on the trip refused to have their photo taken with Ryan when he briefly joined them outside the capitol Thursday. Instead, they stood across the street while Ryan posed with their peers. Matthew Malespina, 13, said in an interview Sunday that he chose not to be photographed with Ryan because he disagreed with the policies the speaker and his party are pushing on health care, among other things. "I don't want to be associated with a man who puts his party before his country," Matthew said. "I don't like to take a picture with somebody that I can't associate with. Let's say somebody is not nice to me at school, for example. I wouldn't take a picture with them, probably." Although little blowback has come their way in the liberal suburb of South Orange, New Jersey, Elissa Malespina said some of the online comments on news stories about the students' actions have been vitriolic, often focusing on the parents. "Our community has been supportive of what has happened," she said. "Outside our area, people have said that they should shoot the parents."

Later School Starts for High School? - Tim Taylor 00 Would high school students learn more if school start-times were moved back? For example, the American Association of Pediatrics recommends that adolescents should have schedules that allow them to sleep until 8AM. Jennifer Heissel and Samuel Norris offer some actual evidence on the point in “Rise and Shine: The Effect of School Start Times on Academic Performance from Childhood through Puberty,” David Figlio has a nice overview at "Start high school later for better academic outcomes," a report posted at the Brookings Institution website (May 25, 2017). Rather than provide an inferior copy of his discussion (with includes mentions of some other evidence and a more in-depth discussion), I'll just offer some excerpts of his discussion of the Heissel and Norris paper.  Figlio writes:  "The authors focus their attention on the relationship between sunlight and sleep, and take advantage of the fact that the state of Florida, where they conduct their research, is divided into two time zones. The sun comes up an hour later, on the clock, in the Eastern Time Zone than a few miles west in the Central Time Zone, […] "Heissel and Norris estimate that making scheduling switches would raise average math performance by six percent of a standard deviation and average reading performance by four percent of a standard deviation. While not earth-shattering performance changes, they are extremely impressive for a policy change that would cost school districts little to implement – and are approximately one-fourth the difference between an excellent-performing school and an average-performing school."

Elizabeth Warren Launches Ambitious New Project to Hold Betsy DeVos Accountable - Two weeks after Betsy DeVos completed her 100th day on the job, Elizabeth Warren penned a CNN op-ed announcing her new accountability effort aimed at the education secretary and her controversial agenda.  "DeVos Watch will seek information about the department's actions and inactions around federal student loans and grants and highlight the findings," Warren explained on Wednesday. "People can also participate directly by tracking the department's actions, submitting oversight suggestions or filing whistleblower tips." On her website, Warren also gives guidelines for useful tips. The Massachusetts senator will be looking closely at evidence-based reports on student loan borrowers and stakeholders. It's the same method she used to push Taylor Hansen, a for-profit college industry lobbyist and one of DeVos' first hires, to resign in March.  "Where Secretary DeVos and her agency refuse to answer, additional tools are available to get to the truth, including Freedom of Information Act requests, public interest litigation by student advocates and state law enforcement officials and investigations by the Department's nonpartisan Inspector General. Oversight will be a joint effort," Warren noted. Warren believes challenging DeVos is about putting country above party. "To the irritation of many in my own party, I regularly challenged the department when it was led by Democrats," Warren added in a video address. "Because no matter which party is running the place, we have to make sure that the Department of Education puts students, not private student loan companies, but students first."  Watch:

The Importance of Social and Emotional Learning - Life and work is more than reading and writing and arithmetic. Being able to function well with others in a wide range of situations is extraordinarily important--for many jobs, at least as important--as explicitly cognitive skills. The Future of Children has devoted is Spring 2017 issue to nine articles about "Social and Emotional Learning." After reading through the articles, my sense is that the subject is of potentially enormous importance, and that the state of current knowledge and practice is  fragmented and incomplete, with difficulties in deciding what traits to study, at what ages, and how to measure them.  Here are a few snippets.

The Campus Mob Came for Me—and You, Professor, Could Be Next - WSJ - Bret Weinstein op-ed - Whites were asked to leave for a ‘Day of Absence.’ I objected. Then 50 yelling students crashed my class.I was not expecting to hold my biology class in a public park last week. But then the chief of our college police department told me she could not protect me on campus. Protestors were searching cars for an unspecified individual—likely me—and her officers had been told to stand down, against her judgment, by the college president. Racially charged, anarchic protests have engulfed Evergreen State College, a small, public liberal-arts institution where I have taught since 2003. In a widely disseminated video of the first recent protest on May 23, an angry mob of about 50 students disrupted my class, called me a racist, and demanded that I resign. My “racist” offense? I had challenged coercive segregation by race. Specifically, I had objected to a planned “Day of Absence” in which white people were asked to leave campus on April 12. Day of Absence is a tradition at Evergreen. In previous years students and faculty of color organized a day on which they met off campus—a symbolic act based on the Douglas Turner Ward play in which all the black residents of a Southern town fail to show up one morning. This year, however, the formula was reversed. “White students, staff and faculty will be invited to leave the campus for the day’s activities,” the student newspaper reported, adding that the decision was reached after people of color “voiced concern over feeling as if they are unwelcome on campus, following the 2016 election.” In March I objected in an email to all staff and faculty. “There is a huge difference between a group or coalition deciding to voluntarily absent themselves from a shared space in order to highlight their vital and under-appreciated roles . . . and a group or coalition encouraging another group to go away,” I wrote. “On a college campus, one’s right to speak—or to be—must never be based on skin color.” My email was published by the student newspaper, and Day of Absence came and went almost without incident. The protest of my class emerged seemingly out of the blue more than a month later. Evergreen has slipped into madness. You don’t need the news to tell you that—the protesters’ own videos will do. But those clips reveal neither the path that led to this psychosis, nor the cautionary nature of the tale for other campuses.

Should the federal government be paying more or less overhead to universities? -  Tyler Cowen = That is the topic of my latest Bloomberg column, here is one excerpt: …it is possible to imagine an alternative vision where federal overhead allocations fall and the liberated money allows more scientists to get more (smaller) grants. Would that be a good idea? If we look to the private sector as a model, maybe so. Private philanthropy is typically more oriented toward specific projects than toward overhead. One view is that makes federal government funding of overhead all the more important to fill in the gaps; an alternative take is that the private sector realizes a lot of overhead funding ends up wasted, and the federal government ought to see the same. There is some truth to both of these stories, but not surprisingly the academic scientific community is stressing the former. Research funds spent on overhead strengthen the power and discretion of administrators (who capture and allocate the funds), senior scientists, the lab-based sciences and relatively expensive projects. They make universities more hierarchical and less egalitarian places, where the ability to bring in overhead funds yields status and influence. Spending less on overhead and more on individual projects would favor small-scale research, and would decentralize authority and influence. Lower overhead allocations would give the government more authority over project choice, and the university less discretion, for better or worse. Overall, projects would have to prove themselves more in the broader world of prizes, donors and news coverage, rather than lobbying within the university for support. A mixed bag of course — there is much more at the link.

 Michael Hudson: Are Students a Class? -- Students usually don’t think of themselves as a class. They seem “pre-class,” because they have not yet entered the labor force. They can only hope to become part of the middle class after they graduate. And that means becoming a wage earner – what impolitely is called the working class.  But as soon as they take out a student debt, they become part of the economy. They are in this sense a debtor class. But to be a debtor, one needs a means to pay – and the student’s means to pay is out of the wages and salaries they may earn after they graduate. And after all, the reason most students get an education is so that they can qualify for a middle-class job. The middle class in America consists of the widening sector of the working class that qualifies for bank loans – not merely usurious short-term payday loans, but a lifetime of debt. So the middle class today is a debtor class.  The financial class views the role industry and the economy at large as being to pay its employees enough so that they can take on an exponentially rising volume of debt. Interest and fees (late fees and penalties now yield credit card companies more than they receive in interest charges) are soaring, leaving the economy of goods and services languishing.  Banks don’t take risks. That’s what the governments are for. (Socializing the risk, privatizing the profits.) Anticipating that the U.S. economy may be unable to recover under the weight of the junk mortgages and other bad debts that the Obama administration left on the books in 2008, banks insisted that the government guarantee all student debt. They also insisted that the government guarantees the financial gold-mine buried in such indebtedness: the late fees that accumulate. So whether students actually succeed in becoming wage-earners or not, the banks will receive payments in today’s emerging fictitious “as if” economy. The government will pay the banks “as if” there is actually a recovery. And if there were to be a recovery, then it would mean that the banks were taking a risk – a big enough risk to justify the high interest rates charge on student loans. This is simply a replay of what banks have negotiated for real estate mortgage lending. Students who do succeed in getting a job hope to start a family, or at least joining the middle class. The most typical criterion of middle-class life in today’s world (apart from having a college education) is to own a home. But almost nobody can buy a home without getting a mortgage. And the price of such a mortgage is to pay up to 43 percent of one’s income for thirty years, that is, one’s prospective working life (in today’s as-if world that assumes full employment, not just a gig economy). Banks know how unlikely it is that workers actually will be able to earn enough to carry the costs of their education and real estate debt. So the banks insist that the government pretends that housing as well as education loans not involve any risk for bankers.

Texas Governor signs Dallas, Houston pension bills - Texas Governor Greg Abbott signed into law on Wednesday a bill aimed at addressing public pension problems in the state's two biggest cities, Dallas and Houston. The new law will increase retirement ages, hike worker and city contributions, limit cost-of-living (COLA) increases for retirees, and restructure governance. In a tweet on Wednesday, Abbott wrote that he was "proud of the Texas legislature leading on pension reform that ensures fiscal soundness." The Dallas police and fire pension system was projected to become insolvent within 10 years if the city or the state did not act. The new law cuts the Dallas system's nearly $3.7 billion unfunded liability to $2.18 billion and boosts the funded ratio to nearly 50 percent from the current 36.8 percent, according to a bill analysis. The Houston bill would help reduce the $8.1 billion unfunded liability in the city's municipal, police, and firefighter funds by reducing benefits. The law also lowers the fund's assumed rate of investment return from as high as 8.5 percent, one of the most ambitious rates in the country, to 7.25 percent, closer to nation's average. 

California’s Surprisingly Cheap Single Payer Plan - There is coverage today of a new report from the California Senate Appropriations committee estimating the budgetary implications of a proposed single payer health plan for the state (Sacramento Bee, LA Times, Vox). I’ve not yet been able to access the report directly, but the coverage of it is pretty encouraging.  After the implementation of single payer, the report says, health expenditures in the state of California would total $400 billion per year, or 15 percent of the state’s GDP. This is 3 percentage points lower than the share of GDP the US overall spends on health care. The reports indicate that, currently, government spending on health care in California is around $200 billion and employer spending on health care is between $100 billion and $150 billion. There is no indication of how much individuals currently spend on top of employers and governments on individual premiums and out-of-pocket expenses. Nonetheless, net of current government spending ($200 billion) and employer spending ($100-$150 billion), the single-payer plan requires an additional $50 to $100 billion of spending, or 1.9% to 3.8% of CA GDP. For that extra 1.9% to 3.8% of GDP: The state would pay for almost all of its residents’ medical expenses — inpatient, outpatient, emergency services, dental, vision, mental health, and nursing home care — under the plan, and Californians would not have any premiums, copays, or deductibles. Of course, there are challenges to implementing single payer on the state level. States have to deal with all sorts of federal laws like ERISA that could disrupt their plans. States have to hope the federal government will chip in the share they currently contribute to the state’s health care sector. States have to worry about rich people leaving to avoid tax to some degree. And states have to worry about what will happen during a recession when the state’s budget contracts in ways the federal government’s budget does not. But if the plan would work like this report says it does and at the cost this report says it does, it is a no-brainer.

California Senate passes universal health care bill - The California Senate approved a measure Thursday aimed at establishing a government-run universal health care system in the Golden State.The system, which would replace Obamacare – or what follows it under the Trump administration – would dramatically overhaul the health care market in California. Approved on a 23-14 vote, it now moves to the Assembly.“With President Trump’s promise to abandon the Affordable Care Act as we know it, it leaves millions without access to care and Californians are once again tasked to lead,” said Sen. Ricardo Lara, D-Bell Gardens. “Senate Bill 562 will finally enable California to cover all of its residents, creating a healthier and stronger state.”Lara introduced SB 562 with Sen. Toni Atkins, D-San Diego, earlier this year.Under the plan, government would negotiate prices with doctors, hospitals and other providers, acting as the “single payer” for everyone’s health care in the place of insurance companies. All Californians would receive coverage regardless of immigration status or ability to pay. The bill does not include detailed language about how the state would come up with hundreds of billions of dollars to pay for health care coverage for nearly 40 million residents.SB 562 would have to return to the Senate floor for another vote if it is amended in the Assembly with a funding plan. If that happens, the bill would require a two-thirds majority in each house to advance to the governor’s desk. In its current form, the bill only required a majority vote to pass.  Senators on both sides of the aisle spoke against the proposal and the lack of a clear way to pay for it.

Blue Cross Blue Shield Wants People in Georgia to Self-Diagnose Before Heading to the Emergency Room -- Blue Cross Blue Shield is quietly telling its individual market patients in Georgia that it will stop reimbursing some emergency room visits. The revelation comes from the Atlanta Journal-Constitution, which reports that Georgians are getting letters warning them that the insurer will no longer cover emergency room visits unless it determines them to have been necessary. This raises the worry from some public health advocates that patients will be afraid to go to the emergency room out of the fear that their treatment will not be reimbursed by their insurer. Laura Harker, a policy analyst who studies Georgia’s health care system at the Georgia Budget & Policy Institute, explained some of the possible outcomes to The Intercept. “Patients do not always know if they are having a true emergency or not. This policy could make some patients more likely to put off care that they need,” Harker said. “Many hospitals in rural Georgia are already struggling financially, and this policy could further hurt their bottom line. If BCBS decides that a visit does not count as an emergency, the hospital would most likely not get paid at all. Many patients wouldn’t be able to afford the full cost of an ER visit or they could end up with medical debt.”

The Messy Relationship Between Food Stamps and Health -- Among other programs President Trump proposed slashing in his budget blueprint Tuesday, the Supplemental Nutrition Assistance Program, previously known as the food stamps program, would lose 29 percent of its funding over 10 years.Conservative groups praised the budget proposal’s combination of boosted defense spending and cuts to “domestic programs that are redundant, improper, or otherwise wasteful,”. Liberal groups, meanwhile, said it would “harm America's most vulnerable people and make matters worse for those who can least afford it,”   The debate about food stamps largely centers on whether the program promotes dependency. In defending the proposal to The New York Times, White House budget director Mick Mulvaney said, “What we have done is not try to remove the social safety net for the folks who need it, but to try to figure out if there are folks who don’t need it and that need to be back in the work force.”   But there’s one thing about SNAP that even its liberal supporters would acknowledge is a weakness: There’s a lot of evidence that the program doesn’t help its recipients achieve or maintain a healthy weight. To name just one researcher who has uncovered this trend, Cindy Leung, a nutrition researcher at the University of California, San Francisco, found teen and adult food-stamp recipients had larger waists and higher levels of obesity than people who aren’t in the program, even when controlling for income. More than a quarter of children live in households that currently receive SNAP benefits, according to Leung’s work, and while she found that kids in the program are not more likely to be obese, she did find that children in the program consumed more sugar-sweetened drinks, processed meat, and high-fat dairy than kids who didn’t live in SNAP households.

Deaths from Alzheimer’s disease in the US have risen by 55%, says CDC - The rate of people dying from Alzheimer’s disease in the United States rose by 55% over a 15-year period, new data from the Centers for Disease Control and Prevention shows. The number of those patients dying at home from the neurodegenerative condition also rose, from 14% to 25% over the same time period studied, 2009-2014. The report also looked at Alzheimer’s caregivers — relatives and friends taking care of an Alzheimer’s patient in the home — and found that the caregivers would benefit from support such as education and help from case management services. “Millions of Americans and their family members are profoundly affected by Alzheimer’s disease,” CDC Acting Director Dr. Anne Schuchat said in a statement. “As the number of older Americans with Alzheimer’s disease rises, more family members are taking on the emotionally and physically challenging role of caregiver than ever before.” Alzheimer’s disease is the most common cause of dementia, causing symptoms including memory loss, impaired language, difficulties in concentrating and decision making, confusion, or disorientation. The disease mainly affects people over the age of 65 and is the sixth leading cause of death in the US, according to the Alzheimer’s Association. More than 5 million Americans are living with the disease. That number is predicted to rise to 16 million by 2050. 

America’s Toxic Prisons: The Environmental Injustices of Mass Incarceration --- Matthew Morgenstern is convinced his Hodgkin's lymphoma was caused by exposure to toxic coal ash from the massive dump right across the road from SCI Fayette, a maximum-security prison in LaBelle, Pennsylvania, where he is currently serving a 5- to 10-year sentence. "In 2010 and until I left in 2013, the water always had a brown tint to it. Not to mention the dust clouds that used to come off the dump trucks ... which we all breathed in.... Every single day I would wake up and there would be a layer of dust on everything," he writes from inside the prison. Likewise, in Navasota, Texas, Keith Milo Cole and John Wesley Ford, aging prisoners at the Wallace Pack Unit, worry about how their prolonged exposure to arsenic-laced water and extreme heat during summer months may have affected their health over the long term. Like Morgenstern, Cole says the water at his unit was brown until a federal judge ordered the Texas Department of Criminal Justice (TDCJ) to provide the prisoners safe drinking water. "It used to be where you could take a white wash rag and put it in the sink and water would run on it about 10 or 15 minutes, and it would actually turn brown," says Cole, who is serving a life sentence.The plight of these prisoners points to a nationwide problem that's inextricably linked to power imbalances within the US criminal legal system -- a system in which prisoners are often out of sight and thus out of the public mind. As a special investigation by Truthout and Earth Island Journal shows, the toxic impact of prisons extends far beyond any individual prison, or any specific region in the United States. Though some prisons provide particularly egregious examples, mass incarceration in the US impacts the health of prisoners, prison-adjacent communities and local ecosystems from coast to coast.

Climate change is keeping Americans awake at night. Literally - Scientists have observed poor rest in hot laboratory environments and sweltering houses. But as far as Obradovich could tell, he told The Washington Post, no one had tracked a large number of sleepers in their homes across the United States. Obradovich decided to investigate. As he and his colleagues noted in a Science Advances study published Friday, the researchers relied on a Centers for Disease Control and Prevention survey representing 765,000 Americans, contacted between 2002 to 2011, from across the United States. The CDC randomly dials Americans to inquire about where they live, their income, age, how much they drink, if they wear seat belts, if they were sunburned recently and other public health questions. Questioners also ask how many nights of insufficient sleep a person had in the past month. The study authors meshed these responses with weather station records to determine if respondents may have been exposed to unusual nighttime temperatures.  Equipped with this information, the researchers calculated that every nocturnal temperature increase of 1 degree Celsius produced an additional three nights of restless sleep per 100 people per month. Scaled across the United States, the authors wrote that this 1 degree bump translated to about "110 million extra nights of insufficient sleep” each year.  Physiologically speaking, this loss of sleep makes sense. Bodies cool down while we prepare to nod off. Our blood vessels expand, allowing heat to escape our bodies quicker. Body temperatures, which fluctuate by about 1 degree over the course of 24 hours, will bottom out in the wee hours of the morning. “Decreasing body temperature is one of the strongest signals to our brain to bring on sleep onset,” Sara C. Mednick, a sleep psychologist at the University of California at Riverside and co-author of the study, said in an email. “This decrease in temperature is regulated in part by the ambient temperature,” she said. “Thus, when the ambient temperature is too high, the body cannot cool itself and therefore can't fall asleep.”

To keep crops from rotting in the field, farmers say they need Trump to let in more temporary workers -- More than 11,000 foreign guest workers were approved last year to harvest the lettuce, fruit and vegetables for California’s $47-billion agricultural industry — a fivefold increase from 2011, according toLos Angeles Times analysis of U.S. Labor Department data. If this year’s hiring pace holds, that number will soar even higher. Consumer tastes for fresh strawberries and leaf lettuce — two of the state’s most stubbornly labor-intensive crops — have driven the boom along a coastal corridor from the Salinas Valley in Monterey County through the Oxnard Plain in Ventura County, according to the Times analysis. In the Santa Maria Valley alone, the number of agricultural guest workers catapulted from six sheepherders in 2012 to more than 2,000 laborers last year. If growers have their way, they will get even more under the visa program known as H-2A and face fewer barriers, delays and regulations.To do so, they will have to ask President Trump to put an asterisk on his “America first” economic agenda, which promises to crack down on immigration as a way of opening up jobs for Americans.“I think he has the same philosophy that we’ve had for years, and that is: If you let them in the front door, they won’t have to sneak around and go through the back door,” said Tom Nassif, president and chief executive of the Western Growers Assn. and a member of Trump’s agricultural advisory committee.Nassif believes that the president is ready to swing open the “big beautiful door” he promised in his border wall, even before he builds it, and even as he threatens to crack down on visas for high-tech jobs.“It’s the only option out there,” said Steve Scaroni, owner of Fresh Harvest Inc., the state’s biggest contractor of guest workers. “There is no other option.” That’s because non-immigrant Americans are not eager to pick crops, despite wages that are rising faster than the state average, according to a Times analysis.

Corn seed treatment insecticides pose risks to honey bees, yield benefits elusive – Nearly every foraging honey bee in the state of Indiana will encounter neonicotinoids during corn planting season, and the common seed treatments produced no improvement in crop yield, according to a Purdue University study. (Click http://purdue.ag/perilstopollinators for a video abstract). Neonicotinoids, including clothianidin and thiamethoxam, are a class of insecticide commonly applied as a coating to corn and soybean seeds to protect them from early-season pests. Since the coatings are sticky, a talc or graphite powder is added to vacuum systems in planters to keep the seeds from clumping. Powder exhausted from the planter contains neonicotinoids. The United States is losing about one-third of its honeybee hives each year, a significant problem since the bees pollinate many crops used to feed people and livestock. Neonicotinoids, which are highly toxic to honeybees, are being scrutinized as a possible contributor to the losses. Christian Krupke, a professor of entomology, showed in 2012 that exhausted insecticides collected on flowers that border agricultural fields and were present in hives near those fields. Bees in those hives showed physical signs of insecticide poisoning, and dead bees tested positive for the neonicotinoids used as seed treatments of corn and soybeans. Now, Krupke, along with collaborators, have measured the drift of those neonicotinoids from fields and found that the insecticides can settle on flowers up to 100 meters from the edge of the planted fields, the farthest distance examined in the study. Their findings are published in the Journal of Applied Ecology. Mapping Indiana’s corn acreage, as well as the areas that may receive drift, the authors say that 42 percent of the state is exposed to neonicotinoids during crop planting. Looking at public data on the location of apiaries and projecting the range that honey bees forage, they found that 94 percent of bees could fly through areas that contain lethal doses of the insecticides during the period when corn is planted.

Court Revokes EPA's Approval of Nanosilver Pesticide - The U.S. Court of Appeals for the Ninth Circuit concluded Tuesday that the U.S. Environmental Protection Agency (EPA) unlawfully allowed a novel antimicrobial pesticide product "NSPW-L30SS" (previously "Nanosilva"), made with silver nanoparticles, for use in an unknown number of textiles and plastics. The court voided EPA's approval, preventing the product from entering the marketplace and the environment. The opinion is the first of its kind to address EPA's responsibilities in issuing conditional registrations of new pesticides such as this one. "The court's decision recognizes the need for EPA to ensure that any pesticide approvals are in the public interest and in so doing protect our communities and environment," Sylvia Wu, staff attorney for Center for Food Safety (CFS) and counsel in the case hailed the decision, said. Nanotechnology is a powerful new platform technology for taking apart and reconstructing nature at the atomic and molecular level. Nanomaterials are rapidly entering the consumer marketplace, including the food industry. Particles at the nano scale—1/100,000th the width of a human hair—already can be found in items ranging from sandwich bags and cutting boards to paints and sunscreens. The same unique properties that make nanomaterials desirable to industry also raise unique health and environmental risks. The court's o pinion recognized this, noting that nanosilver may present significantly new risks to human health and the environment due to its smaller particle size. The opinion pointed out that EPA's own Scientific Advisory Panel had found that nanomaterials may enter "specific tissues, cell membranes or inside cells," and its size means it can also act as a "carrier for other toxic chemicals."

Melania Trump Bans Monsanto Products From The White House  -- First Lady Melania Trump has banned Monsanto products from the White House after learning of the health effects associated with consuming genetically modified (GM) corn, according to reports. While public debate rages about the safety of genetically modified food, Melania Trump says that as far as she is concerned, GM products are best avoided. “Barron’s health has improved out of sight since we started eating organic, non genetically modified food,” the First Lady said. After researching exactly where Monsanto’s genetically modified corn appeared in her family’s diet and becoming concerned about potential negative health effects, Melania Trump said she was “amazed at the place this company has in the food chain“. The First Lady, who proudly describes herself as a “full-time mom“, then realized that Monsanto produces other genetically modified crops such as soy, sugar beets, and cotton – and these products form the foundation of many American’s diets. In the interests of her son Barron’s health – as well as her own – Melania decided to eliminate processed foods containing GM crops from her family home. But as Melania explained, this wasn’t as easy as it sounds. 70 to 80 percent of American processed foods contain genetically engineered ingredients, according to the Grocery Manufacturers of America.  

Next Generation of GMOs Escapes Regulation -- Twenty years ago, proponents of genetic engineering promised that GMO foods would increase yields, reduce pesticides , produce nutritious foods and help feed the world. Today, those promises have fallen far short as the majority of GMO crops are engineered to withstand sprays of Roundup herbicide , which is increasingly documented as a risk to human health. Now, new genetic engineering technologies such as synthetic biology and gene editing are being hailed with the same promises of revolutionizing food production, medicine, fuels, textiles and other areas. But a closer look at this next generation or "GMOs 2.0" technologies reveals possibly even greater risks than existing GMO technology with possible human health risks and negative impacts on farming communities worldwide, among other unintended consequences. And while products developed using current genetic engineering methods are regulated by the U.S. government, GMOs 2.0 products are entering the market with few or no regulations.  While traditional genetic engineering involves inserting genes from one species into another, GMOs 2.0 technologies like synthetic biology aim to create life from scratch with computer-synthesized DNA.  “Genetic engineering has moved on from the first generation GMO crops," said Jim Thomas, program director at the ETC Group , a non-profit advocacy group that tracks the new GMO technologies. "There are different ways to genetically engineer an organism by creating synthetic DNA or editing DNA." The ETC Group describes synthetic biology or "extreme genetic engineering" as "the design and construction of new biological parts, devices and systems that do not exist in the natural world and also the redesigning of existing biological systems to perform specific tasks.""Synthetic biology is about synthesizing genetic sequences, designing them increasingly from scratch as if they were parts to put together in a particular way to get a predicted outcome," Thomas said.

'My worst nightmares are coming true': Europe's last primeval forest on 'brink of collapse' -- Scientists and environmental campaigners have accused the Polish government of bringing the ecosystem of the Białowieża forest in north-eastern Poland to the “brink of collapse”, one year after a revised forest management plan permitted the trebling of state logging activity and removed a ban on logging in old growth areas. Large parts of the forest, which spans Poland’s eastern border with Belarus and contains some of Europe’s last remaining primeval woodland, are subject to natural processes not disturbed by direct human intervention. A Unesco natural world heritage site – the only one in Poland – the forest is home to about 1,070 species of vascular plants, 4,000 species of fungi, more than 10,000 species of insect, 180 breeding bird species and 58 species of mammal, including many species dependent on natural processes and threatened with extinction. “At some point there will be a collapse, and if and when it happens, it’s gone forever – no amount of money in the universe can bring it back,” said Prof Tomasz Wesołowski, a forest biologist at the University of Wrocław who has been conducting fieldwork in Białowieża for each of the last 43 years. “With every tree cut, we are closer to this point of no return.” Logging is prohibited in the Białowieża national park nature reserve, which contains woodland untouched by humans for thousands of years, but the reserve only accounts for 17% of the forest on the Polish side, leaving approximately 40,000 hectares vulnerable to state-sanctioned logging.  “They are logging natural, diverse forest stands which were not planted by humans and replacing them with plantations of trees of a single age and species,”

Big tobacco leaves huge ecological footprint - WHO - Tobacco growing causes "massive harm" to the environment through extensive use of chemicals, energy and water, and pollution from manufacturing and distribution, the World Health Organization (WHO) said on Tuesday. The United Nations agency called for the tobacco industry to compensate for its products that contribute to greenhouse gases blamed for climate change, but gave no estimate of damage. The ecological footprint goes far beyond the effects of cigarette smoke, the WHO said in its first report on tobacco's impact on the environment. "From start to finish, the tobacco life cycle is an overwhelmingly polluting and damaging process." "We've not estimated the full economic impact of what's happening to the environment, that will require more studies," Vinayak Prasad, WHO tobacco control coordinator, told a news briefing. Tobacco use kills 7 million people a year, according to the WHO, which marks World No Tobacco Day on Wednesday.Tobacco plants require large quantities of insecticides, herbicides, fungicides and fumigants to control pest or disease outbreaks. "Many of these chemicals are so harmful to both the environment and farmers’ health that they are banned in some countries," the report said. Vast quantities of wood are burned to cure tobacco leaves, contributing to deforestation. Some big growers like China and Zimbabwe are also using coal, which emits carbon dioxide, the main greenhouse gas blamed for global warming, the WHO said. Millions of kilogrammes of non-biodegradable cigarette butts are discarded every year, it said. Tobacco waste contains over 7,000 toxic chemicals that poison the environment, including human carcinogens, it added. 

Scientists are accidentally helping poachers drive rare species to extinction -- If you open Google and start typing “Chinese cave gecko”, the text will auto-populate to “Chinese cave gecko for sale” – just US$150, with delivery. This extremely rare species is just one of an increasingly large number of animals being pushed to extinction in the wild by animal trafficking.What’s shocking is that the illegal trade in Chinese cave geckoes began so soon after they were first scientifically described in the early 2000s. It’s not an isolated case; poachers are trawling scientific papers for information on the location and habits of new, rare species. As we argue in an essay published today in Science, scientists may have to rethink how much information we publicly publish. Ironically, the principles of open access and transparency have led to the creation of detailed online databases that pose a very real threat to endangered species. We have personally experienced this, in our research on the endangered pink-tailed worm-lizard, a startling creature that resembles a snake. Biologists working in New South Wales are required to provide location data on all species they discover during scientific surveys to an online wildlife atlas.  But after we published our data, the landowners with whom we worked began to find trespassers on their properties. The interlopers had scoured online wildlife atlases. As well as putting animals at risk, this undermines vital long-term relationships between researchers and landowners.The illegal trade in wildlife has exploded online. Several recently described species have been devastated by poaching almost immediately after appearing in the scientific literature. Particularly at risk are animals with small geographic ranges and specialised habitats, which can be most easily pinpointed. Poaching isn’t the only problem that is exacerbated by unrestricted access to i nformation on rare and endangered species. Overzealous wildlife enthusiasts are increasingly scanning scientific papers, government and NGO reports, and wildlife atlases to track down unusual species to photograph or handle.

DEP demands more information on plans for Bucks County hazardous waste site --Pennsylvania on Tuesday again delayed a controversial project that would recycle hazardous waste in Bucks County, saying that a permit application was incomplete. The Department of Environmental Protection said part of the application by Elcon, a processor of waste from industries including petrochemicals, pharmaceuticals and semiconductors, had not submitted the required information in six categories, and so was “administratively incomplete.” Officials asked the company to resubmit the application – the second part of a multi-phase process that seeks state approval for the plant – but did not set a time by which a new application must be made. The plan for a 70,000 square-foot recycling facility on a 22-acre site in Falls Township, Bucks County has been opposed by environmentalists who say that the plant would be too close to the Delaware River which could be endangered by any spill of contaminants, whether caused by human error or by flooding that results from climate change.The company, based in Israel, made its first application to DEP in March 2014 when it sought approval for the location of its planned facility. That application was initially rejected on the grounds of insufficient information but was finally approved in November, 2015, allowing the company to move to the current phase, said Virginia Cain, a DEP spokeswoman. 

The world’s most toxic town: the terrible legacy of Zambia’s lead mines - Kabwe is the world’s most toxic town, according to pollution experts, where mass lead poisoning has almost certainly damaged the brains and other organs of generations of children – and where children continue to be poisoned every day.   Almost a century of lead mining and smelting has left a truly toxic legacy in the once-thriving town of 220,000 people in central Africa’s Copperbelt, 100km north of the capital Lusaka. But the real impact on Kabwe’s people is yet to be fully revealed and, while the first steps towards a clean-up have begun, new dangers are emerging as desperately poor people scavenge in the vast slag heap known as Black Mountain. “Having been to probably 20 toxic hotspots throughout the world, and seeing mercury, chromium and many contaminated lead sites, [I can say] the scale in Kabwe is unprecedented,” says Prof Jack Caravanos, an environmental health expert at New York University, on his fourth visit to the town. “There are thousands of people affected here, not hundreds as in other places.” The fumes from the giant state-owned smelter, which closed in 1994, has left the dusty soil in the surrounding area with extreme levels of lead. The metal, still used around the world in car batteries, is a potent neurotoxin and is particularly damaging to children. But it is youngsters who swallow the most, especially as infants when they start to play outside and frequently put their hands in their mouths.  Caravanos says lead poisoning stays with you for the rest of your life – it can’t be reversed. Having seen the extreme lead levels measured in children in several townships, he says severe and widespread health impacts are highly likely, including brain damage, palsy and ultimately fatalities. “I am concerned kids are dying here,” he says. The slow, insidious nature of lead poisoning means careful epidemiological work is needed to distinguish its effects from other causes and reveal the true extent of the crisis. But that work has barely begun. “It is shocking to think that we are here in 2017 and that problem we have known about for decades is still here,” says Caravanos.

 Above-Normal Atlantic Hurricane Season is Most Likely This Year: NOAA -- Residents living in Hurricane Alley need to prepare for what may be another busy Atlantic hurricane season. In its first outlook for 2017, issued Thursday, NOAA’s Climate Prediction Center predicted a 45% chance for an above-normal Atlantic hurricane season, a 35% chance for a near-normal season and a 20% chance for a below-normal season. NOAA gave a 70 percent likelihood of 11 - 17 named storms, 5 - 9 hurricanes,  2 - 4 major hurricanes (Category 3 or higher on the Saffir-Simpson Hurricane Wind Scale) and an Accumulated Cyclone Energy (ACE) 75%-155% of the median. These numbers include Tropical Storm Arlene, which developed in April over the northeast Atlantic. If we take the midpoint of these ranges, NOAA called for 14 named storms, 7 hurricanes and 3 major hurricanes. This is above the 1981-2010 seasonal averages of 12 named storms, 6 hurricanes and 3 major hurricanes.

Hurricane season starts with nobody in charge at FEMA or NOAA -- The 2017 hurricane season started Thursday without anyone in charge at the two federal agencies most involved in dealing with hurricanes, National Public Radio notes. Five months after Donald J. Trump was sworn in as president, no one has taken the reins at the Federal Emergency Management Agency, which is in charge of preparing for and then dealing with the aftermath of a hurricane. The last FEMA boss was a Florida man, W. Craig Fugate, who departed in January after seven years on the job. Fugate previously served as the head of the Florida Division of Emergency Management. Trump finally nominated someone at the end of April, but he has yet to be confirmed. Trump meanwhile has made no move to appoint a new boss at the National Oceanic and Atmospheric Administration, the agency in charge of the National Hurricane Center and the National Weather Service, which provide hurricane forecasts and hurricane warnings in advance of a storm. Incidentally, NOAA Is predicting an above-average hurricane season this year. Trump's proposed budget has targeted both agencies for cuts.

As hurricane season begins, NOAA told to slow its transition to better models -- It's a lousy time to be a US weather forecaster. Even as the Atlantic Ocean heats up, wind shear falls, and the potential for an active hurricane season looms, vacancies have been mounting at the National Hurricane Center in Miami and at National Weather Service offices around the country. According to a new US Government Accountability Office report, morale has sunk among forecasters, and increasing vacancies have led to an inability to provide timely severe weather information to state and local emergency managers. Instead of addressing this problem, the proposed budget released by the Trump administration late last month would exacerbate the tempest. Overall, the President's budget for the National Oceanic and Atmospheric Administration sought $1.06 billion for the National Weather Service, down six percent from 2017. But the devil is in the details, and some of these details are indeed devilish.   Perhaps most questionable is a "request" to limit the ability of forecasters to predict hurricanes and other severe weather with computer modeling. "NOAA requests a reduction of $5,000,000 to slow the transition of advanced modeling research into operations for improved warnings and forecasts," the budget blue book states. Incredibly, this request comes as the US Global Forecast System, the nation's premiere forecast model for everything from hurricane tracks to 10-day weather forecasts, continues to get distanced by the European forecast model, which assimilates real-time data far better than the American model and consistently produces significantly better forecasts.  Overall, NOAA's Office of Oceanic and Atmospheric Research, which researches weather and climate phenomena and seeks to improve computer modeling, would see a 22 percent budget decrease from $514 million to $400 million. “This budget would ensure that NOAA-NWS becomes a second- or third-tier weather forecasting enterprise, frozen in the early 2000s,” David Titley, who served as chief operating officer for NOAA from 2012 to 2013, told Capital Weather Gang.

How Rising Seas Drowned the Flood Insurance Program -- Long Beach Island is the largest and richest barrier island in New Jersey, an oasis of sprawling oceanfront retreats and second homes located midway down the state’s heavily developed coast, a two-hour drive from the metropolitan centers of New York City and Philadelphia.  In many places, the long, slender island is barely a few feet above sea level. And like most of New Jersey’s coast, it has been eroding for decades, leaving it vulnerable to flooding and rising seas.  Recently, the U.S. Army Corps of Engineers pumped more than ten million cubic yards of sand from offshore dredges to widen Long Beach Island’s beaches and dunes – part of a Sisyphean-like effort to protect the island’s $15 billion of high-calorie real estate. But there is a problem. The sand keeps washing away. A series of storms over the last two years gouged the neatly groomed beaches, costing tens of millions in additional repairs. When all is said and done, the project will cost more than half a billion dollars, most of the money paid by U.S. taxpayers.  Like other barrier islands up and down the Atlantic and Gulf coasts, Long Beach Island is drowning in slow motion. Over the last century, researchers estimate that the ocean and bays that flank the island have risen by about a foot. That doesn’t sound like much, but the added water has made a huge difference in life on the island. Barnegat Bay now routinely washes over the bulkheads and floods the streets.. Even more worrisome, the rising water makes it easier for storm surge and waves to do more damage in violent storms such as Hurricane Sandy, which wrecked Long Beach Island and the back-bay communities in Ocean County in October of 2012.  Sea level rise played an important role in Sandy, with historic flooding from Delaware to the Battery in lower Manhattan. Upward of 100,000 people experienced flooding who otherwise would have been dry, researchers estimate.  More than $2 billion went to property owners in Ocean County, including $200 million on Long Beach Island. That was nearly twentyfold what island property owners had collected in the prior 35 years of the program.  Today, the NFIP is effectively bankrupt. It owes the U.S. Treasury nearly $25 billion – money it borrowed from federal taxpayers to cover its obligations in Sandy, Katrina (2005), and Hurricane Ike (2008). No one expects that money to be repaid. Some coastal state lawmakers are even calling for Congress to write off the massive debt, contending it is the only way the troubled insurance program, which is up for reauthorization this year, can regain its financial footing.

Without serious water conservation efforts, India is failing the monsoon - Amidst the political storm created by the new cattle trade rules notified by the Centre last week, India received some welcome news on Tuesday. As the Indian Meteorological Department had predicted earlier this month, the south-west monsoon hit Kerala coast two days ahead of its regular date. The system has also advanced into North East India. The meteorological department expects the monsoon to be near-normal this year. If this forecast is borne out, it will come as a relief to the vast majority of the country, which is suffering from the severe water crisis created by three years of below-average monsoons.Eighty percent of all India’s agriculture depends on the south-west monsoon. These rains are a crucial factor in sustaining the economy, given that agriculture remains India’s primary occupation. The summer monsoon is also the single-most important source of drinking water, especially in South India, where non-perennial rivers depend on the system to recharge their flow.   Though the monsoon may not have been adequate over the last three years, it isn’t so much the monsoon that has failed India – it is India that has failed the monsoon. Even in years when there has been above-normal rainfall, the absence of efforts to conserve water have resulted in the precious resource running off into the sea. Take the case of Tamil Nadu, which is facing its worst drought in 140 years. In December 2015, unprecedented rains lashed its northern districts, leading to widespread flooding in Chennai and neighbouring areas. However, thanks to poor management of the catchment areas, an estimated 60% of the waterflow had to be released into the sea. In just over a year, Chennai began facing a severe drinking water crisis.

 Great Barrier Reef coral bleaching: Half the reef may have died in 2016 and 2017: AS MUCH as half the Great Barrier Reef may have died in the back-to-back bleachings over the past two years. But the head of the authority in charge of the reef says the actual extent of damage is tricky to calculate because some parts are growing well. The Great Barrier Reef Marine Park Authority believes about 30 per cent of coral, in the reef’s northern part, died last year in bleaching caused by warmer ocean waters, chairman Russell Reichelt told a Senate committee on Monday. Surveys after this year’s bleaching are still being done but initial observations suggest 20 per cent of coral — mainly in the central area of the 344,000 sq km reef — is dead. “Don’t think of these figures as the net amount of coral on the Barrier Reef because there are quite big movements upwards as well as downward,” Dr Reichelt told the senators at an estimates hearing in Canberra. The southern part of the reef had grown by about 40 per cent in recent years because it hadn’t been hit by cyclones or bleaching — but it was likely it would suffer from those in the future. Dr Reichelt said the bigger picture question was the coral’s resilience in the face of bleachings, tropical storms and other threats such as the crown of thorns invasions. “It depends on the frequency of these major impacts and the concern is the frequency could well be increasing and the recovery time will be insufficient,” he said. “If the recovery time is very short, there won’t be a lot of coral.”

Coral bleaching on Great Barrier Reef worse than expected, surveys show -  Coral bleaching on the Great Barrier Reef last year was even worse than expected, while the full impact of the most recent event is yet to be determined. Queensland government officials say aerial and in-water surveys taken throughout 2016 had confirmed an escalating impact from north to south. The Great Barrier Reef Marine Park Authority chairman, Russell Reichelt, said the reef had experienced significant and widespread damage over the past two years. “The amount of coral that died from bleaching in 2016 is up from our original estimates and ... it’s expected we’ll also see an overall further coral cover decline by the end of 2017,” he said in a statement on Monday. Surveys by the Marine Park Authority, Queensland Parks and Wildlife Service, Australian Institute of Marine Science and the ARC Centre of Excellence for Coral Reef Studies found the most severe bleaching north of Port Douglas. There, an estimated 70% of shallow water corals had died, with significant variability between and within reefs. It is now confirmed that about 29% of shallow water corals died from bleaching during 2016, up from the previous estimate of 22%, with most mortality occurring in the northern parts of the reef. Bleaching was also found in corals beyond depths divers typically survey, but mortality could not be systematically assessed. However, there was a strong recovery in the south in the absence of bleaching during the same period. Officials are predicting further coral loss this year, resulting from the second consecutive year of bleaching and the impacts of tropical Cyclone Debbie. 

Great Barrier Reef can no longer be saved, Australian experts concede - The Great Barrier Reef – a canary in the coal mine for global warming – can no longer be saved in its present form partly because of the “extraordinary rapidity” of climate change, experts have conceded. Instead, action should be taken to maintain the World Heritage Site's 'ecological function' as its ecological health declines, they reportedly recommended. Like coral across the world, the reef has been severely damaged by the warming of the oceans with up to 95 per cent of areas surveyed in 2016 found to have been bleached. Bleaching is not always fatal but a study last year found the “largest die-off of corals ever recorded” with about 67 per cent of shallow water coral found dead in a survey of a 700km stretch. Now experts on a committee set up by the Australian government to improve the health of the reef have revealed that they believe the lesser target of maintaining its “ecological function” is more realistic. In a recent communique, the expert panel said they were “united in their concern about the seriousness of the impacts facing the Reef and concluded that coral bleaching since early 2016 has changed the Reef fundamentally”. “There is great concern about the future of the Reef, and the communities and businesses that depend on it, but hope still remains for maintaining ecological function over the coming decades,” it said. “Members agreed that, in our lifetime and on our watch, substantial areas of the Great Barrier Reef and the surrounding ecosystems are experiencing major long-term damage which may be irreversible unless action is taken now.  “The planet has changed in a way that science informs us is unprecedented in human history. While that in itself may be cause for action, the extraordinary rapidity of the change we now observe makes action even more urgent.”

 Humans are ushering in the sixth mass extinction of life on Earth, scientists warn - Humans are bringing about the sixth mass extinction of life on Earth, according to scientists writing in a special edition of the leading journal Nature.Mammals, birds and amphibians are currently becoming extinct at rates comparable to the previous five mass extinctions when “cataclysmic forces” – such as massive meteorite strikes and supervolcano explosions – wiped out vast swathes of life, including the dinosaurs. The growing human population – which has increased by 130 per cent in the last 50 years and is set to rise to more than 10 billion by 2060 – and our increasing demand for resources as we become wealthier is ramping up the pressure on the natural world. Tens of thousands of species – including 25 per cent of all mammals and 13 per cent of birds – are now threatened with extinction because of over-hunting, poaching, pollution, loss of habitat, the arrival of invasive species, and other human-caused problems.But the researchers said it was not “inevitable” that this process would continue. There is still time for humans to turn the situation around by protecting habitats, changing our diets to less land-intensive food, and taking other forms of conservation. In one of a series of papers in Nature, a team of international scientists wrote: “The ever-increasing and unprecedented extent and impact of human activities on land and in the oceans over the past few centuries has dramatically reduced global biodiversity. “There is overwhelming evidence that habitat loss and fragmentation, over-exploitation of biological resources, pollution, species invasions and climate change have increased rates of global species extinctions to levels that are much higher than those observed in the fossil record.” And we are not immune from such problems. This loss of biodiversity could “substantially diminish the benefits that people derive from nature”, they warned.

The Ocean Is Filling Up With 'Plastic Smog' | HuffPost -- Every year, billions of pounds of plastic waste ― grocery bags, drinking straws, even cigarette butts ― pour into our oceans. Used by humanity for a few minutes at most, these single-use plastics likely will likely stick around for decades, or longer.Trillions of pieces of refuse get trapped by natural ocean currents, or gyres, at five locations, causing a dance of debris for hundreds of thousands of square miles. While these gyres, geographically removed from civilization, hold much higher concentrations of trash than other regions of the ocean, they’re evidence of a growing problem humans have mostly ignored since we embraced widespread plastic use 50 years ago. But now, researchers are ringing a warning bell: Our reliance on cheap, disposable stuff is smothering the seas, and it’s bound to get worse. Marcus Eriksen, a co-founder of the conservation group 5 Gyres, likens this growing horror to smog that covers cities like Los Angeles and Beijing. It’s an apt description. Over time, a plastic item in the ocean breaks down into many tiny particles, known as microplastics ― so many, in fact, that if you were to stand on the bottom of the ocean in the middle of a gyre and look up, the water overhead wouldn’t look clear, Eriksen said.“What you’d see are these massive clouds,” Eriksen said. “Clouds of micro- and nano-plastics stuck in the ocean’s gyres.” Perhaps the smoggiest of these gyres is the Great Pacific Garbage Patch, hovering a few hundred miles north of Hawaii. Reports describe it as a floating island of trash twice the size of Texas, so dense you could walk across it, and so vast you can see it from space. But such descriptions are misleading, scientists say. “The name ‘garbage patch’ is a misnomer,” wrote researchers at the National Oceanic and Atmospheric Administration’s Marine Debris Program in 2012. “There is no island of trash forming in the middle of the ocean, and it cannot be seen with satellite or aerial photographs.” Rather, it’s more like a swarm of microplastic bits. 

Urban 'heat islands' seen doubling city costs for climate change | Reuters: Heat trapped by dark-colored roads and buildings will more than double cities' costs for tackling global warming this century by driving up energy demand to keep citizens cool and by aggravating pollution, scientists said on Monday. The "urban heat island effect", under which cities are often several degrees warmer than nearby rural areas, adds to air and water pollution and can make sweltering workers less productive, it said. "The focus has been so long on global climate change that we forgot about the local effects," co-author Richard Tol, economics professor at the University of Sussex, England, said. "Ignoring the urban heat island effect leads to a fairly drastic under-estimate of the total impact of climate change," he said. About 54 percent of the world's population lives in cities, which cover just one percent of the Earth's surface. Overall, costs for cities to limit climate change including the local heat impacts could be 2.6 times higher than without the urban heat island effect, the survey in the Nature Climate Change journal said. For the worst-off city, accumulated losses could be up to 10.9 percent of a city's gross domestic product by 2100, they wrote of the survey of 1,962 cities including Tokyo, New York, Beijing, Lagos, Sao Paulo, London and Moscow. The study did not try to identify cities most at risk but lead author Francisco Estrada of the Universidad Nacional Autonoma de Mexico, told Reuters they were likely to be "close to the tropics and with the large populations".

Climate change could make cities 8C hotter – scientists -- Under a dual onslaught of global warming and localised urban heating, some of the world’s cities may be as much as 8C (14.4F) warmer by 2100, researchers have warned. Such a temperature spike would have dire consequences for the health of city-dwellers, rob companies and industries of able workers, and put pressure on already strained natural resources such as water. The projection is based on the worst-case scenario assumption that emissions of greenhouse gases continue to rise throughout the 21st century. The top quarter of most populated cities, in this scenario, could see temperatures rise 7C or more by century’s end, said a study in the journal Nature Climate Change. For some nearly 5C of the total would be attributed to average global warming. The rest would be due to the so-called “urban heat island” effect, which occurs when parks, dams and lakes, which have a cooling effect, are replaced by concrete and asphalt – making cities warmer than their surrounds, the researchers said. “The top 5% [of cities by population] could see increases in temperatures of about 8C and larger,”  The median city, right in the middle of the range, stands to lose between 1.4% and 1.7% of GDP per year by 2050 and between 2.3% and 5.6% by 2100, they conclude. “For the worst-off city, losses could reach up to 10.9% of GDP by 2100,” wrote the team. UHI “significantly” increased city temperatures and economic losses from global warming, they added. This meant that local actions to reduce UHI – such as planting more trees or cooling roofs and pavements – could make a big difference in limiting warming and minimising costs. Cities cover only about 1% of earth’s surface but produce about 80% of gross world product and account for around 78% of energy consumed worldwide, say the researchers. They produce more than 60% of global carbon dioxide emissions from burning coal, oil and gas for fuel.

Carbon Dioxide Set an All-Time Monthly High -  With May in the books, it’s official: carbon dioxide set an all-time monthly record. It’s a sobering annual reminder that humans are pushing the climate into a state unseen in millions of years.  Carbon dioxide peaked at 409.65 parts per million for the year, according to data from the National Oceanic and Atmospheric Administration. It’s not a surprise that it happened. Carbon dioxide levels at Mauna Loa Observatory in Hawaii peak in May every year. The reading from May is well above the 407.7 ppm reading from May 2016. And it’s far above the 317.5 ppm on record for May 1958, the first May measurement on record for Mauna Loa, the gold standard for carbon dioxide measurements. Prior to the Industrial Revolution, carbon dioxide stood at roughly 280 ppm. The new carbon dioxide high water mark follows a report released last week showing that last year, the world saw its second-biggest annual leap in carbon dioxide in the atmosphere. It’s second only to 2015, a year in which El Niño helped boost levels. Both years saw jumps that were roughly double the increase seen in 1979 when the National Oceanic and Atmospheric Administration started keeping the index. The rise in carbon dioxide is tipping the climate into a volatile state, one in which Arctic sea ice is scraping the bottom of the barrel, oceans are rising and causing flooding even on sunny days, and the earth has warmed 1.8°F above pre-industrial levels. As carbon dioxide levels continue to increase, those impacts will only become more pronounced.

Add nitrous oxide to the list of permafrost melt concerns -- Melting permafrost is among the biggest climate change issues. That’s because it contains billions of tons of carbon that, if it melts, will be released in the form of carbon dioxide and methane, an even more potent greenhouse gas. Less studied is what happens to the 67 billion tons of nitrogen stored in the currently frozen soil. New research shows that a permafrost meltdown could cause that nitrogen to be released as nitrous oxide, a greenhouse gas that’s nearly 300 times more powerful than carbon dioxide. That would crank up the planetary heat even further, and with it, the risks posed by sea level rise, increasingly extreme weather, and other climate change impacts. “Until recently, nitrous oxide emissions from Arctic soils were believed to be negligible,” Carolina Voigt, a PhD student looking at Arctic soil chemistry at University of Eastern Finland, said. But new research that Voigt and her colleagues published on Monday in the Proceedings of the National Academy of Sciences shows that understanding might be wrong.

Massive craters formed by methane blow-outs from the Arctic sea floor in Barents Sea – via Phys.org - A new study in Science shows that hundreds of massive, kilometer-wide craters on the ocean floor in the Arctic were formed by substantial methane expulsions. Even though the craters were formed some 12,000 years ago, methane is still leaking profusely from the craters. Methane is a potent greenhouse gas, and of major concern in our warming climate."The crater area was covered by a thick ice sheet during the last ice age, much as West Antarctica is today. As climate warmed, and the ice sheet collapsed, enormous amounts of methane were abruptly released. This created massive craters that are still actively seeping methane," says Karin Andreassen, first author of the study and professor at CAGE Centre for Arctic Gas Hydrate, Environment and Climate. Today more than 600 gas flares are identified in and around these craters, releasing the greenhouse gas steadily into the water column. "But that is nothing compared to the blow-outs of the greenhouse gas that followed the deglaciation. The amounts of methane that were released must have been quite impressive." A few of these craters were first observed in the 90s. But new technology shows that the craters cover a much larger area than previously thought and provides more detailed imaging for interpretation "We have focused on craters that are 300 meters to 1 kilometre wide, and have mapped approximately 100 craters of this size in the area. But there are also many hundred smaller ones, less than 300 meters wide that is," says Andreassen. In comparison, the huge blow-out craters on land on the Siberian peninsulas Yamal and Gydan are 50-90 meters wide, but similar processes may have been involved in their formation. The Arctic ocean floor hosts vast amounts of methane trapped as hydrates, which are ice-like, solid mixtures of gas and water. These hydrates are stable under high pressure and cold temperatures. The ice sheet provides perfect conditions for subglacial gas hydrate formation, in the past as well as today. “The principle is the same as in a pressure cooker: if you do not control the release of the pressure, it will continue to build up until there is a disaster in your kitchen. These mounds were over-pressured for thousands of years, and then the lid came off. They just collapsed, releasing methane into the water column,"

 As Arctic sea ice shows record decline, scientists prepare to go blind --In March 2017, when Arctic sea ice is typically at its maximum winter extent, circling U.S. satellites recorded an extent of just 5.57 million square miles — the lowest maximum in the record’s 38-year history, breaking the previous record set two years earlier and falling nearly half a million square miles below the 1981-2010 long-term average. That Arctic sea ice has been seriously declining since around 2005 is a well-known fact, thanks to a series of U.S. Department of Defense satellites that have continuously recorded the region with passive microwave instrumentation since 1979. These satellites have provided scientists, citizens and government with a thorough record of the changing Arctic — informing climate research and policymaking, mid-latitude weather predictions, and geopolitical analyses useful to international shipping and natural gas exploration companies as the Arctic melts and opens up for exploitation. But that’s about to change.  The U.S. satellites currently in orbit are already past their expiry date, with some already cutting out. When these satellites fail completely, Arctic researchers warn, the ongoing scientific recordkeeping will come to an abrupt end, with no funding and no time left to replace the aging infrastructure. “It is unfortunate and disturbing that right at the time we’re seeing sea ice cover in rapid transition, we’re in danger of losing some of our key capabilities to observe what’s happening and understand it,” says Mark Serreze, director of the National Snow and Ice Data Center.   For all intents and purposes, Arctic scientists — and the world — could very soon be blind to the tumultuous changes happening in the Arctic until 2022 or 2023, with no viable international systems coming on board in time to completely fill in the coverage gap.

The Larsen C iceberg is on the brink of breaking off - The saga of the Larsen C crack is about reach its stunning conclusion. Scientists have watched a rift grow along one of Antarctica’s ice shelves for years. Now it’s in the final days of cutting off a piece of ice that will be one of the largest icebergs ever recorded.  It’s the latest dreary news from the icy underbelly of the planet, which has seen warm air and water reshape the landscape in profound ways. The crack has spread 17 miles over the past six days, marking the biggest leap since January. It’s also turned toward where the ice shelf ends and is within eight miles of making a clean break. There’s not much standing in its way either. “The rift has now fully breached the zone of soft ‘suture’ ice originating at the Cole Peninsula and there appears to be very little to prevent the iceberg from breaking away completely,” scientists monitoring the ice with Project MIDAS wrote on their blog.

A huge crack across one of Antarctica’s largest ice shelves is nearing its breaking point -- A long-growing crack in the Larsen C ice shelf, one of Antarctica’s largest floating platforms of ice, appears to be nearing its endgame. Researchers with Project MIDAS, working out of Swansea University and Aberystwyth University in Wales and studying the shelf by satellites and through other techniques, have released an update showing that the crack grew a stunning 11 miles in the space of just one week between May 25 and May 31. It now has just 8 miles to go before an iceberg roughly the size of Delaware breaks free into the Southern Ocean. “There appears to be very little to prevent the iceberg from breaking away completely,” the researchers write. Elsewhere in their post, they note that the crack has curved toward the front of the ice shelf and the ocean, meaning that the time when a major break could occur “is probably very close.” Here’s an image from the researchers showing the progression of the crack, and how its growth has sped up since mid-2016 and especially since the beginning of this year. The researchers have estimated that the section of ice set to break off could be about 2,000 square miles in area. The U.S. state of Delaware isn’t much larger than that. “When it calves, the Larsen C Ice Shelf will lose more than 10% of its area to leave the ice front at its most retreated position ever recorded; this event will fundamentally change the landscape of the Antarctic Peninsula,” write the Project MIDAS team. “We have previously shown that the new configuration will be less stable than it was prior to the rift, and that Larsen C may eventually follow the example of its neighbour Larsen B, which disintegrated in 2002 following a similar rift-induced calving event.”

Antarctic ice rift close to calving, after growing 17km in 6 days - The rift in the Larsen C ice shelf in Antarctica has grown by 17km in the last few days and is now only 13km from the ice front, indicating that calving of an iceberg is probably very close, Swansea University researchers revealed after studying the latest satellite data. The rift in Larsen C is likely to lead to one of the largest icebergs ever recorded. It is being monitored by researchers from the UK's Project Midas, led by Swansea University. Professor Adrian Luckman of Swansea University College of Science, head of Project Midas, described the latest findings: "In the largest jump since January, the rift in the Larsen C Ice Shelf has grown an additional 17 km (11 miles) between May 25 and May 31 2017. This has moved the rift tip to within 13 km (8 miles) of breaking all the way through to the ice front, producing one of the largest ever recorded icebergs.  The rift tip appears also to have turned significantly towards the ice front, indicating that the time of calving is probably very close. The rift has now fully breached the zone of soft 'suture' ice originating at the Cole Peninsula and there appears to be very little to prevent the iceberg from breaking away completely." Researchers say the loss of a piece a quarter of the size of Wales will leave the whole shelf vulnerable to future break-up.

 $100 carbon tax by 2030 could save climate, say economists - Economists say countries should ramp up the price of carbon emissions to as much as $100 per metric ton by 2030 to stop catastrophic global warming. Experts including Nobel Laureate Joseph Stiglitz and former World Bank chief economist Nicholas Stern say carbon dioxide should be taxed at $40-$80 per ton by 2020.They say prices should rise to $50-$100 by 2030 to give businesses and governments an incentive to lower emissions even when fossil fuels are cheap.In a report published Monday, they suggest poor countries could aim for a lower tax since their economies are more vulnerable.The Trump administration has rejected calls to introduce a carbon tax in the United States, saying it would cost jobs. European Union carbon prices stand at just under $6 per ton.

Rex Tillerson signed a statement supporting Arctic science. Trump’s budget would cut it - The Trump administration’s latest budget proposal aims to significantly reduce funding for Arctic climate research, among other environmental programs — a move climate scientists say would be a big mistake. The budget, which was just released by the White House on Tuesday, includes substantial funding reductions for the National Oceanic and Atmospheric Administration. And among these is a $6 million cut to “eliminate Arctic research” at the agency’s Office of Oceanic and Atmospheric Research. As the budget itself bluntly states, this move “will terminate improvements to sea ice modeling and predictions that support the safety of fishermen, commercial shippers, cruise ships, and local community stakeholders.” The proposal comes just weeks after the United States participated in a meeting of the Arctic Council, an intergovernmental forum, which prioritized continued research and monitoring of the region and its response to climate change. The Arctic research program includes projects that monitor sea ice extent, track weather patterns and other atmospheric changes, map the seafloor and manage marine fisheries. Data from NOAA research efforts are used by scientists around the world and are considered a valuable resource for international climate monitoring efforts. And these efforts are vital to our scientific understanding of the changing climate and the Arctic ecosystem, as well as the safety and productivity of commercial interests in the region, scientists say. “These cuts would do great harm to NOAA’s crucial research to better predict the behavior of Arctic sea ice, and would in turn jeopardize the safety of fishermen, commercial shippers, and cruise ships, not to mention the effects of ice loss on the local ecosystem, acceleration of land-ice melt and northern hemisphere weather,” Jennifer Francis, an atmospheric scientist and Arctic expert at Rutgers University, said in an email to The Washington Post. 

 Trump Is Gutting Regulations That Corporate America Hates -- Few Americans care about beryllium. Most have probably never heard of it. But, it turns out, the metal -- symbol Be on the periodic table -- offers a case study on governing by President Donald Trump. With little fanfare earlier this year, the Department of Labor delayed and the White House began a review of limits on workplace exposure to the possibly toxic element used in cell phones and aircraft, handing industry a victory. Across Washington, myriad rules are similarly being softened, mostly to the delight of corporate America. With executive orders, bureaucratic actions and unprecedented use of an obscure statute, the Trump administration has killed or postponed dozens of regulations. The controversies swamping the White House haven’t gotten in the way of an often under-the-radar, piece-by-piece realization of Trump’s pro-business campaign promises. Some moves, such as relaxing Obama-era clean-water decrees, have made headlines. Many others, the beryllium deferment among them, have received scant attention outside a tight circle of agencies, businesses and often outraged public-interest groups.  They may seem minor, but they all add up. “He wants to free up as much of the economy from government regulations as possible and he’s found ways to do that outside the legislative process,” said Julian Zelizer, a professor and presidential historian at Princeton University. Chief executives may not see a clear path to the corporate tax cut they want, but they’re winning in a significant smattering of other ways. E-cigarette makers got a reprieve when Trump’s Food and Drug Administration pushed out the deadline for complying with tobacco laws. The Occupational Safety and Health Administration gave builders three extra months to slash laborers’ exposure to silica dust, which has been linked to cancer.

 State appeals court rules Exxon must give records to NY prosecutor - A New York state appeals court on Tuesday ruled that Exxon Mobil Corp should be compelled to turn over records in an investigation into how much the company knew about global warming as it continued to publicly downplay the effects it was expected to have on the fossil fuel industry. Exxon has been battling subpoenas from New York Attorney General Eric Schneiderman, who is probing the company for fraud in its public statements about climate change. The appeals court upheld a lower court's decision, rejecting Exxon's argument that the court did not properly consider which state's laws on turning over evidence in an investigation should apply in the case. The investigation is taking place in New York, but Exxon's headquarters are in Texas. "We respect, but disagree with the court's decision and are assessing our options and potential next steps," said Scott Silvestri, an Exxon spokesman. "The unanimous appeals court rightly affirmed the lower court's decision and rejected Exxon's frivolous claims, which were merely one of the many tactics the company has employed in its campaign of delay and distraction," said Schneiderman's spokeswoman Amy Spitalnick. Exxon is also fighting the investigation in Manhattan federal court, arguing Schneiderman and Massachusetts Attorney General Maura Healey, who is conducting a separate probe, are motivated by politics. On Friday, Schneiderman asked a judge to dismiss Exxon's case.

As It Seeks to Slash EPA Science Office, Trump Administration Insists It Isn't Anti-Science - When the city of Toledo temporarily lost access to clean drinking water several years ago after a bloom of toxic algae, the Environmental Protection Agency sent scientists from its Office of Research and Development to study health effects and formulate solutions. The same office was on the front lines of the Flint water crisis and was a critical presence in handling medical waste from the U.S. Ebola cases in 2014.Thomas Burke, who directed ORD during the last two years of the Obama administration and was the agency's science adviser, calls the office the nation's "scientific backstop in emergencies." President Trump's 2018 budget would slash ORD's funding in half as part of an overall goal to cut the EPA's budget by 31 percent. A statement from EPA Administrator Scott Pruitt did not directly address the cuts to ORD, but offered broad defense of the proposed agency budget, saying it "respects the American taxpayer" and "supports EPA's highest priorities with federal funding for priority work in infrastructure, air and water quality, and ensuring the safety of chemicals in the marketplace." ORD has no regulatory authority, but it conducts the bulk of the research that underlies EPA policies. ORD scientists are involved in "virtually every major environmental challenge the nation has," Burke said. Diminishing the role and input of the office, he said, risked leaving the country "uninformed about risks and public health." "In time, you're flying blind," he said. "Everything becomes a mystery."

 Inside Trump’s war on regulations - Politico --The chaos of Donald Trump’s first four months as president has overshadowed a series of actions that could reshape American life for decades — efforts to rewrite or wipe out regulations affecting everything fromstudent loans andrestaurant menus to internet privacy, workplace injuries and climate change. Trump and his agencies have already wielded executive actions and Republican control of Congress to postpone, weaken oroutright kill dozens of regulations created by Barack Obama’s administration, often using delays in the courtroom to buy time to make those changes. Their targets have includedprotections for streams from coal-mining pollution and a directive on the rights oftransgender students.  Other Obama-era regulations are in the crosshairs for possible elimination or downsizing, such as limits ongreenhouse gases from power plants and rules meant to preventconcentrated ownership of media companies. The administration’s efforts to unwind regulations span the U.S. economy. The president’s aides say the goal is "systemic" change. But Trump is going after even bigger targets, setting bureaucratic wheels in motion that could eventually ax or revise hundreds of regulations as agencies reorient themselves toward unwinding red tape and granting speedier approvals to projects. Just one of those efforts — an upcoming plan by Commerce Secretary Wilbur Ross forreducing burdens on manufacturers — yielded171 suggestions from business groups and others who submitted comments. Another executive order, requiring agencies to repeal two regulations for every new one they create, “will be the biggest such act that our country has ever seen,” Trumpsaid in January. If successful, these efforts could represent the most far-reaching rollback of federal regulations since Ronald Reagan’s presidency, especially if Trump’s proposed budget cuts make it hard for a future Democratic president to reaccelerate the rule-making apparatus. But Trump’s retrenchment faces multiple obstacles, including his slow pace in naming political appointees and his team’s overall inexperience in navigating the federal bureaucracy.

EPA chief puts new spotlight on cleanup program | TheHill: Environmental Protection Agency (EPA) head Scott Pruitt is looking to make a key federal program focused on cleaning contaminated sites an integral part of his agenda at the agency. With an eye toward expediting cleanups of contaminated sites and getting to work on languishing projects, Pruitt in recent weeks has formed a task force on the Superfund program and has issued a directive for the most expensive projects to go to him for approval. Pruitt has also used the program's recent history to criticize the Obama administration, pointing out that the more than 1,300 sites on the EPA’s priority list for cleanups is bigger now than it was when former President Barack Obama took office. Superfund – a key program under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 – has broad, bipartisan support in Congress and elsewhere, owing to its mission of cleaning up contaminated areas and making them usable for commercial development. Pruitt’s focus on the program, therefore, could pay dividends for his political future – and he’s unlikely to face strong opposition. But experts familiar with the program warn that his Superfund agenda could be ineffective or short-sighted, since it could lead to cleanups that are faster and cheaper but less thorough. The EPA chief's critics argue that the real problem with the Superfund is funding, owing in part to the expiration of a tax on the oil and chemical industries that has expired. The Trump administration could make the funding problem worse. President Trump’s budget proposal this week sought a $327 million cut – or 30 percent – to Superfund. For the most part, the EPA uses the program to supervise cleanups funded by the companies responsible for the contamination. But if those companies are bankrupt or cannot pay, the EPA occasionally pays for the process, using taxpayer money, since the tax has expired. To Pruitt, Superfund is a key example of a program where the EPA can make a real difference. 

 Trump Expected to Pull U.S. From Paris Climate Accord - President Trump is expected to withdraw the United States from the Paris climate agreement, three officials with knowledge of the decision said, making good on a campaign pledge but severely weakening the landmark 2015 climate change accord that committed nearly every nation to take action to curb the warming of the planet. A senior White House official cautioned that the specific language of the president’s expected announcement was still in flux Wednesday morning. The official said the withdrawal might be accompanied by legal caveats that will shape the impact of Mr. Trump’s decision.And Mr. Trump has proved himself willing to shift direction up until the moment of a public announcement. He is set to meet Wednesday afternoon with Secretary of State Rex Tillerson, who has advocated that the United States remain a part of the Paris accords and could continue to lobby the president to change his mind.Even as reports surfaced about his decision, Mr. Trump posted on Twitter that he would make his intentions known soon. Still, faced with advisers who pressed hard on both sides of the Paris question, Mr. Trump appears to have decided that a continued United States presence in the accord would harm the economy; hinder job creation in regions like Appalachia and the West, where his most ardent supporters live; and undermine his “America First” message.

Merkel Furious With Trump After "Unprecedented" G-7 Failure To Reach Consensus On Climate Change --In the end it was not mean to be. As discussed on Friday, during Trump's first G-7 summit, world leaders including German Chancellor Angela Merkel and new French President Emmanuel Macron, had hoped to persuade the the US president to endorse the Paris Agreement climate pledge to fight global warming. By the end of the summit - held at a luxury hotel in Taormina, Sicily that was once a Dominican monastery and base for the Nazi air force during World War Two - they realized they had failed, as Trump "underscored his determination to break the global mold" by refusing to follow the Group of Seven line not only on global warming but also by resisting measures on trade.Needless to say, Merkel who had hoped to leave the Saturday summit with the G-7 agenda endorsed by everyone, including Trump, was furious at the US president.“The whole discussion about climate has been difficult, or rather very unsatisfactory"  German Chancellor Angela Merkel told reporters Saturday. "Here we have the situation that six members, or even seven if you want to add the EU, stand against one. That means there are no signals until now whether the U.S. will remain in the Paris Agreement or not. We have therefore not talked around it but made clear that we the six member states and the EU remain committed to the goals of the agreement.”The unhappy German continued: "The fact that we have not been able to make progress here is of course a situation in which you have to say that there is no common support for an important international agreement. This Paris Agreement is not simply any old agreement, but it’s rather a core agreement.” She concluded by noting the unprecedented breach of agreement within the ranks, perhaps a first in G-7 history “There is right now no agreement. But we have made very clear that we are not moving away from our positions.” To be sure, its wasn't just Merkel who was displeased with Trump. According to Politico, while he avoided any major gaffes or serious diplomatic breaches, Trump’s lack of rapport with European leaders raises serious questions about his ability to effectively team up with critical U.S. allies.“Like when there’s a new strange kid in the class nobody likes,” said a senior EU official who was briefed on the closed NATO meetings in Brussels. “You behave civilly when teachers (media) watch but don’t spend time with him in private because he’s so different.”

Global Carbon Mitigation if President Trump Walks Out on the COP21 --Kahn - Suppose that all 7.5 billion people on the planet achieve the "American Dream" and buy a car that achieves 25 MP G and each drives 10,000 miles per year.  The arithmetic show that the carbon footprint caused by this privately enjoyable consumption would be proportional to burning 3 trillion gallons of gasoline a year.  Such large numbers immediately highlight the importance of collective action in mitigating this ugly Tragedy of the Commons.  So, this is why the news is filled with stories saying "Trump Will Free Ride and Not Honor President Obama's promises".   Let's step back for a moment.  First, the Paris COP 21 had no enforcement mechanisms.  Second, most of the LDCs set goals relative to vague business as usual scenarios.  Recall what a BAU is.  Suppose I weigh 200 pounds and I say that I will go on a diet such that at the end of the year I will weigh 10% less than my "business as usual scenario".    A naive reader would say;  "great, that means that you will weigh 180 by the end of the year".   That is false because I haven't told you what my BAU will be.  Suppose I say that my BAU is to gain 20% each year so ,  my 10% diet reduction really means that I will weigh 200*1.2*.9 at the end of the year = 216 pounds. If the USA walks out from "the deal", what happens next? Is the U.S the key to the galaxy in the year 2017?  Yes, there are multiple equilibria to this complex bargaining game, but here is my prediction.  Different nations will make different bets on the green economy. Elon Musk and Telsa will press ahead on its projects. A competition is taking place all over the world to build the green economy. Yes, a price on carbon would accelerate this progress but by how much?  I believe that the U.S action (which I do not support) will have a minor impact on global green innovation and thus the current headlines are over-played.  U.S journalists want to see the U.S as the key to the world's future.  We are entering a new period where we must be more modest about our role on this planet.  The U.S is a great nation but it is a small nation in a big world.

Animated map shows what the US would look like if all the Earth's ice melted --  President Donald Trump has reportedly decided to take the US out of the Paris climate accord, Jonathan Swan reports at Axios, citing two sources. Politico and CNN are also reporting Trump's intention to pull out of the agreement, citing White House officials. Whether Trump would stay in the deal — a cornerstone of Barack Obama's environmental policy — has been a looming question of his presidency so far. Recently, on his trip abroad, the president was pressured by European allies to stay a part of the accord. EPA Administrator Scott Pruitt, who repeatedly called for the US to exit the agreement, will be part of a small team figuring out the details of the withdrawal, according to Axios. Trump has previously called climate change a "hoax" and said while campaigning that he would "cancel" the December 2015 Paris deal if elected.The Paris agreement was a landmark moment in the environmental movement. It marked the first time that 195 countries came together and agreed to limit carbon emissions in order to keep the planet from warming another 2 degrees Celsius.  Climate experts warn any global temperature spike above 2 degrees Celsius could bring terrible consequences, from unavoidable sea level rise to unpredictable shifts in weather and drought.   If all the Earth's land ice melted, sea levels would rise over 200 feet. Here's what would that mean for the United States' coastlines.

U.N. chief takes veiled swipe at Trump on climate abdication: 'Our world is a mess' -- Facing the prospect that the United States will soon pull out of a landmark climate pact it helped negotiate, U.N. Secretary General Antonio Guterres on Tuesday delivered an urgent appeal to the world to stay the course and implement the Paris Agreement, under which countries pledge to voluntarily curtail their emissions of greenhouse gases. Addressing an audience of scientists, investors, and students at the New York University Stern School of Business, Guterres painted a disturbing portrait of world beset by climate-induced storms, heat waves, and rising sea levels that threaten island nations and coastal cities. Military strategists, he noted, increasingly recognize that climate change threatens global peace and security, fueling competition for scarcer natural resources and driving the mass movement of refugees. "Climate change is an unprecedented and growing threat," he warned, announcing that he would host a U.N. climate summit in 2019 to promote international support for the Paris Agreement. "The arguments for action are clear." Droughts from California to the Sahel are lasting longer than they have in the past, he said. The melting ice from the Greenland threatens to "alter the Gulf Stream and affect food production, water security and weather patterns from Canada to India," he noted. In the United States, he suggested, the Glacier National Park in Montana may have to change its name because the number of glaciers — 150 when the park opened in 1910 — is rapidly shrinking, with only 26 remaining. "Allow me to be blunt. Our world is a mess," Guterres said. "Soon the famous snows of Kilimanjaro will exist only in stories."

World risks four-year legal grey zone if Trump quits climate pact -  The United States could influence or even disrupt work by other nations to combat climate change until late 2020 even if President Donald Trump quits a global agreement, legal scholars said on Wednesday. Trump will honor a campaign pledge to pull out of the 195-nation Paris Agreement, a source briefed on the decision told Reuters on Tuesday. Trump tweeted he would announce his formal decision "over the next few days". U.N. rules for the 2015 pact, which seeks to shift the world economy from fossil fuels this century, say Washington would formally have to wait until November 2020 to withdraw. Trump could shorten the formalities to just one year by exiting Paris' 1992 parent treaty. Quitting the Paris Agreement would leave Trump in a legal grey zone until the next U.S. presidential election in 2020, retaining a vote as other nations work on detailed rules on issues such as how to monitor greenhouse gas emissions. In the worst case "the U.S. could make it more difficult to adopt the Paris rules", said Daniel Bodansky, a law professor at Arizona State University. "To the extent that (withdrawal from Paris) is already going to harm relations with our allies, staying in and being obstructionist would be even more harmful," he said. Trump has promised to promote the coal industry over renewables. Bodansky noted, however, that Washington did not try to obstruct other nations' work on the 1997 Kyoto Protocol, which obliged rich nations to cut emissions, after President George W. Bush angered U.S. allies by deciding in 2001 not to take part. Megan Bowman, a law lecturer at King's College, London, said the four-year waiting period was partly intended to insulate the agreement from a shift to a Republican presidency after Democratic President Barack Obama. "The downside ... is that if they (the United States) are recalcitrant they are sitting at the table, able to obstruct or stall the process,"

Ahead of Trump decision, China says it will stick to Paris climate deal | Reuters: China said on Thursday it will stick to the Paris climate deal as the world awaited an announcement by U.S. President Donald Trump on whether to keep the United States in the global pact to fight climate change. During his 2016 presidential campaign, Trump denounced the accord, and called global warming a hoax aimed at weakening U.S. industry. A source close to the matter said Trump was preparing to pull out of the agreement. A U.S. withdrawal could deepen a rift with its allies. The United States would join Syria and Nicaragua as the world's only non-participants in the landmark 195-nation accord agreed upon in Paris in 2015. Chinese Foreign Ministry spokeswoman Hua Chunying said the agreement had not been reached easily and it represented the broadest consensus of the international community. "Climate change is a global challenge. No county can place itself outside of this," she told a daily news briefing. No matter what changes other countries made in their positions, China would follow its green, sustainable development concept, strengthening measures to deal with climate change and would conscientiously follow the Paris agreement, Hua said. "At the same time, we will continue to resolutely be a protector and promoter of the global climate system process, proactively participating in the multilateral climate change process," Hua said. "We are willing to work with all sides to jointly protect the Paris agreement process, promote the actual rules and regulations of the agreement in follow-up talks and effectively enact them, and promote global green, low carbon, sustainable development."

India Would Stick to Climate Accord Even if U.S. Pulled Out - — Indian Prime Minister Narendra Modi told German Chancellor Angela Merkel in talks in Berlin on Tuesday that India would stay in the Paris climate accord even if the United States pulled out, a delegation source said. The official spoke on condition of anonymity. U.S. President Donald Trump refused to endorse the global climate change accord at a summit of the G7 group of wealthy nations on Saturday, saying he needed more time to decide. 

Trump Will Withdraw U.S. From Paris Climate Agreement — President Trump announced Thursday that he will withdraw the United States from participation in the Paris climate accord, weakening global efforts to combat climate change and siding with conservatives who argued that the landmark 2015 agreement was harming the economy. But he will stick to the withdrawal process laid out in the Paris agreement, which President Barack Obama joined and most of the world has already ratified. That could take nearly four years to complete, meaning a final decision would be up to the American voters in the next presidential election. Still, Mr. Trump’s decision is a remarkable rebuke to fellow heads-of-state, climate activists, corporate executives and members of the president’s own staff, all of whom failed this week to change Mr. Trump’s mind with an intense, last-minute lobbying blitz. It makes good on a campaign promise to “cancel” an agreement he repeatedly mocked and derided at rallies, saying it would kill American jobs. As president, he has moved rapidly to reverse Obama-era policies designed to allow the United States to meet its pollution-reduction targets as set under the agreement. “In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord but begin negotiations to re-enter either the Paris accord or an entirely new transaction on terms that are fair to the United States,” the president said. “We are getting out. But we will start to negotiate, and we will see if we can make a deal that’s fair. And if we can, that’s great.”

Obama, Musk, Other World and Industry Leaders Call Paris Climate Deal Withdrawal a Mistake -- Former President Barack Obama said on Thursday that the cities and businesses of the United States should step up to reduce greenhouse gases after President Donald Trump announced that America would withdraw from the Paris climate change accord.The mayor of Pittsburgh, pushing back on Trump's statement that he was elected to represent the citizens of that former steel-making giant rather than those of Paris, condemned the withdrawal.Tech entrepreneur Elon Musk immediately announced he will quit presidential advisory councils. General Electric Chairman and CEO Jeff Immelt said "Climate change is real. Industry must now lead and not depend on government." "The United States joins Syria, Nicaragua & Russia in deciding not to participate with world's Paris Agreement. It's now up to cities to lead," Pittsburgh Mayor Bill Peduto, a Democrat, said on Twitter.  Trump said at an announcement at the Rose Garden on Thursday that the United States would withdraw from the international agreement negotiated under Obama, citing a desire to protect American jobs and fuel what he has claimed would be three percent economic growth. Because Obama didn't ask the Senate for approval of the Paris accord, Trump can act unilaterally without the consent of Congress. Democrats, however, could slow down any action on the floor in retaliation of the decision and tie any pending nominations to the issue, actions that won't change the outcome but frustrate Republicans and the White House.Obama said in a statement that a withdrawal means an abdication of American leadership."The nations that remain in the Paris Agreement will be the nations that reap the benefits in jobs and industries created. I believe the United States of America should be at the front of the pack," Obama said in the statement. "But even in the absence of American leadership; even as this Administration joins a small handful of nations that reject the future; I'm confident that our states, cities, and businesses will step up and do even more to lead the way, and help protect for future generations the one planet we've got," Obama said.

Trump decided on the Paris climate agreement with virtually no science advisers on staff - By pulling out of the US out of the Paris climate agreement, President Donald Trump made a decision that could reverberate across generations into the future.  It appears that Steve Bannon, White House counsel Don McGahn, and EPA Administrator Scott Pruitt — advisers with nationalist ideology and fossil fuel industry allegiances — were the leading influences on his decision. But if Trump wanted to turn to a scientific mind on staff, he couldn’t. That’s because he has virtually no one in his White House advising him on scientific issues. The list of science vacancies in the Trump Administration is long. Trump has not appointed someone to run the White House Office of Science and Technology (a person who traditionally serves as the president’s chief science officer). OSTP is reportedly running on fumes. Foreign Policy recently reported that posts on the President’s Council of Advisers on Science and Technology — a group of civilian science and tech leaders who advise the president — have also gone unfilled, and are unlikely to be filled.  Both of these groups are meant to give the president an ear to leading scientific expertise. In the past, they’ve advised presidents on issues as diverse as biomedical research, cybersecurity, the emergence of infectious disease, nuclear policy, and, yes, climate science. (Not to mention, there are vacancies in many other science-related federal agencies: Trump has yet to appoint a new director of the CDC, for one. And you’ll recall he fired the surgeon general.) There’s no one inside the White House advising Trump on science. And outside voices failed to get through to him, too.  The impact of not having scientists close to the White House stretches further than the topic of climate change. On a recent press call, Rush Holt, CEO of the American Association for the Advancement of Science, said there “have been very limited conversations” with regards to Trump decision-making on the federal budget and the scientific community. That budget document slashed billions away from medical research that saves lives and invigorates the economy (among other potentially devastating cuts to scientific research across the government).

Trump's kooky climate change calculus: Opinion | Fox Business: President Donald Trump’s decision on Thursday to pull out of the Paris Agreement on climate change—an agreement supported by nearly every other nation in the world—is perhaps the kookiest policy calculation of his young presidency. Here’s why it matters. The agreement seeks to save the planet from global warming which the vast majority of scientist overwhelmingly believe is primarily caused by humans and our industrialized development. Left unabated, increasing greenhouse gases in the atmosphere continue raising temperatures which melt glaciers and ice caps, subsequently swelling sea levels and resulting in displacing tens of millions of people living on low-lying islands and/or shorelines. But there’s more…droughts will deplete global food supplies and lead to famine, more diseases and elimination of many plant and animal species. Not so Make America (or the world) Greatish.If not abated, global warming will also lead to the increased possibility of conflicts impacting our—an other nations’—national security. Increasingly scare water and land resources have been, and will continue to be, a leading cause of conflict in the world. That will be exacerbated by the booming planetary population growth which is projected to increase from 7.5 billion today to 8.5 billion by 2030. The President’s own Secretary of Defense James “Mad Dog” Mattis testified before Congress that he sees global warming as a national security issue.This pull out position places us in a group of only two of three nations which don’t support the Agreement. Nicaragua doesn’t support it, but only due to the weakness of the Agreement. They wanted it tougher. That leaves the only other nation to not support the Agreement: Syria. Rah rah really? That’s the other nation we want to align with on this critical matter? Its one thing to be isolationist as the President has moved toward, and evidenced through his stern talking to leaders of the North Atlantic Treaty Organization (NATO) at their recent Brussels meeting, but its quite another to be seen as an international paranoid pariah. That’s now the closed case assessment of many around the world. What a whacky and weird calculation for the President to make.

Trump’s argument for withdrawing from Paris agreement contains multi-trillion dollar math error -- President Donald Trump announced Thursday that the United States would abandon the Paris climate agreement, but his justification for withdrawing was rooted in a false economic claim.Trump claimed that U.S. commitments under the Paris accord would cost the country’s GDP $3 trillion, but the report he took that estimate from “does not take into account potential benefits from avoided emissions.”In other words: The study did not account for any benefits of participating in a global plan to avoid the worst effects of climate change. It is a report on climate mitigation that ignores climate change. The report also does not consider the economic benefits to renewable energy industries, nor does it consider the health costs that are associated with fossil fuel pollution. Frankly, this analysis in line with Trump’s previously articulated positions on climate change and the economy. He does not believe that climate change exists (he has famously called it a hoax perpetuated by China), and he believes that rolling back environmental regulations will help the economy. These positions fly in the face of established science and history. For starters, climate change is happening. It is happening right now. It is happening because of the rise in greenhouse gas emissions from human activity. In addition, history has shown time and time again that protecting the environment is good for the economy — and for people, who drink water and breathe and also live in houses by the ocean.The report Trump cited, released by NERA Consulting, is extreme. Even the conservative Heritage Foundation estimated less cost from the Paris agreement than the NERA report. Meanwhile, non-partisan reports offer dire warnings for not addressing climate change. Earlier this year, researchers at the University of California Berkeley found that “unmitigated, climate change could reduce global GDP by over 20 percent by 2100.”

OPINION: Kudos to Trump for rejecting the climate deal and putting America first - The Hill (blog) -- During the presidential campaign Donald Trump was crystal clear about his intentions regarding the Paris climate change accord.“We’re going to cancel the Paris climate agreement and stop all payments of U.S. tax dollars to U.N. global warming programs,” he promised.It was one of his most popular promises. I was there at many Trump campaign rallies when he would make this declaration, and it was always met with thunderous applause. These were voters in states like West Virginia, Pennsylvania, and Ohio whose jobs were in jeopardy from the Paris climate agreement. These same voters were contemptuous of a deal that would require their tax dollars — tens of billions of federal dollars — to be doled out to an international global warming bureaucracy. Many, many elites will get rich off this deal — and not many of them are in West Virginia.So kudos to Trump for keeping his word to the voters who elected him. The climate change agenda got trounced in the 2016 elections because American put jobs and growth ahead of the radical climate change agenda.My colleagues at The Heritage Foundation estimated that the requirement that the U.S. reduce its carbon emissions by almost 30 percent over the next decade would cost 400,000 manufacturing, construction, oil and gas and coal mining jobs and force the typical family of four to pay $30,000 more in electric utility bills over the next decade. So much for helping working class Americans. Paris is nothing more than a very regressive tax on the poor and middle class.Even that cost might be worth paying if there were any chance the treaty would work. But we already know China and India — the two largest polluters — are doubling down on coal. They are building scores of new coal plants as we close ours down. How is that good for the environment? Meanwhile, Europe too is turning away from the very green energy policies ‎they now want to foist upon America. And why would anyone believe the Europeans will honor any treaty. It was just last week that Trump had to call them out for not paying their NATO dues to the tune of more than $150 billion a year. Nor have they honored their EU pledges to cut their budget deficits to below 3 percent of GDP. They all signed the Kyoto Treaty and none of them honored that either.

Ken Ward, The Hill: In praise of Trump pulling out of the Paris climate pact -- The value of the Paris Agreement is in its aspirational goal of limiting temperature increase to 1.5 degrees Celsius, not in its implementation mechanisms, which are voluntary, insufficient, and impossible to monitor. But that modest goal will be breached shortly, which makes the agreement a kind of fig leaf, offering political cover to those who would soft-pedal the runaway climate crisis a while longer.The U.N. Conference of the Parties is certainly not the organization to constrain powerful, retrenched fossil fuel interests and other bad climate actors and rogue climate states. The Paris agreement affords oil, gas and coal companies a globally visible platform through which to peddle influence and appear engaged on climate change while lobbying for business as usual. That won’t save the climate.At what point do we give up wishful, incremental thinking — that reason will prevail, the free market will adjust, the president’s daughter and son-in-law will dissuade him from the worst climaticide, the Democratic Party will do something, or prior policies which tinker on the margins like the Clean Power Plan won’t be totally obliterated?  I’d argue we’ve reached that point. If Trump withdraws from the Paris Agreement, at least we will have clarity instead of false hope.Who wanted to keep the U.S. in the Paris agreement anyway? People around the world, a majority of Americans, environmentalists and other coastal elites — constituencies for which Trump has shown indifference and/or contempt. Staying in was also favored by Exxon Mobil, Chevron, BP, Peabody coal, eBay, HP, General Mills, Kellogg, Tesla and other multinationals the Trump administration would have preferred to keep happy. But let’s face it, they won’t be all that mad the U.S. is pulling out, and the political impact won’t be all that great.Neither will the environmental impact. In fact, since the agreement lacks teeth, breaking it won’t have any effect on the climate in the short term. But in the longer term, the shock and rethinking it will cause in some circles just might precipitate political and cultural changes we need to stave off climate cataclysm. Pulling out of Paris will also give the president a political boost. It gives Breitbart and Fox something to crow about and The New York Times, Washington Post and CNN something that’s not Russia-gate to fret over.

EPA Reportedly Helped Paris Agreement Opponents Place Op-Eds in Newspapers –-  President Donald Trump has decided to exit the Paris climate agreement , according to Axios. The news site also reported that the Scott Pruitt -led U.S. Environmental Protection Agency (EPA) has been "quietly working" with opponents of the agreement to help them place op-eds in newspapers. Media Matters identified a number of anti-Paris agreement op-eds that have been published in papers around the U.S. in recent weeks, spreading misinformation about the expected economic impacts of the agreement, the commitment of developing countries to cutting emissions and climate science in general.  Axios and The New York Times both reported on May 31 that President Donald Trump is expected to pull out of the Paris agreement, according to sources with knowledge of the decision. Trump subsequently tweeted on May 31 that he would announce his decision on the Paris accord this afternoon at the White House Rose Garden. The agreement, reached in December 2015, brought nearly 200 nations together in a pledge to fightclimate change and curb their greenhouse gas emissions.  As Axios reported, "Pruitt told aides he wanted them to pump the brakes on publicly lobbying for withdrawal from Paris. Instead, the EPA staff are quietly working with outside supporters to place op eds favoring withdrawal from Paris." Media Matters identified five anti-Paris agreement op-eds featuring misinformation about the agreement and climate change that were published in newspapers in recent weeks, including some that were syndicated and appeared in multiple outlets. Papers publishing the op-eds included The Washington Times , the Boston Herald , USA Today , The News Journal , The Jackson Sun and The Hill .

Fox News Host: Trump Called Me for Advice on Paris Agreement - Kimberly Guilfoyle (Co-Host): I don't think this is a deal that anybody should be crying about. Like we said, it's non-binding, and the United States is already a clean energy , oil and gas leader. So, we can keep doing what we're doing, we can keep reducing our emissions. Why would we in fact put ourselves at an economic disadvantage, giving and subsidizing an economic windfall to other countries, in sort of a climate redistribution of wealth scheme? It makes no sense to me.  I think he did the brave and courageous thing, and in fact, I told him that this morning at 8 a.m., when he called. And I spoke to him about it, and this was something very much so on his mind, but he seemed like ... Greg Gutfeld (Co-Host): Wait a second, who called you? Guilfoyle: The president. Gutfeld: Why?  Dana Perino (Co-Host): To ask about climate change ?  (video)

The Sound and Fury of Trump’s Paris Pull Out - Domestically, Trump just fulfilled a campaign promise and mollified many in his base who might have been concerned about his steadfast commitment to scuttling ‘globalist’ international treaties. He stuck it to the Left, and simultaneously dismantled the last important piece of Obama’s green legacy. (At this point, President Obama has precious few lasting environmental policy successes to point to from his time in office. That’s an inherent problem with governing by the executive action, as Obama chose to do. Of course, there’s a bright side to that fact for greens: Trump is also unlikely to make a large impact on environmental policy through Congress, so his legacy on that front should have a similarly short shelf life.)Internationally, Trump has flipped the bird to world. Developing countries will be gnashing their teeth at the thought of America backing out its financial commitments. Don’t be surprised to see a kind of domino effect, with leaders in the developing world jumping ship now that the cash flow promised them through the GCF could be drying up. As for the richer countries, they will see it as something akin to green treason. China may try to exploit the opening, and talk a big game about joining the EU in taking on a climate leadership role. If this comes to pass, understand that it will be nothing more than posturing. China is far and away the global leader in greenhouse gas emissions, and for all of the EU’s stern tone and finger wagging on climate change, the bloc’s latest data show that its emissions actually increased 0.5 percent in 2015. Contrast that with the United States, which saw emissions drop a whopping 3 percent last year as a result of the continuing (shale-enabled) transition from coal to natural gas. And that gets us to the heart of the issue. One’s opinion of the new climate course Trump just charted for America will ultimately depend on how much faith one puts in climate diplomacy as the holy grail for addressing climate change. The truth is, climate diplomacy has always been about preening, posturing, and moralizing—about optics above all else. What happened today was also all about optics (intentionally so) and that’s why greens committed to finding “diplomatic” solutions are pulling their hair out today.But let’s not forget that Paris was a next-to-worthless agreement, and U.S. climate policy is going to look very much the same without it as it would have if Trump had announced a decision to stick to the deal. America’s real climate impacts will be determined by how quickly we can transition to a more energy efficient information economy and, more importantly, by our ability to develop and adopt new technologies (the pairing of hydraulic fracturing and horizontal well drilling being the most important example of the past decade). Paris had nothing to do with any of that.

Trump misunderstood MIT climate research, university officials say | Reuters: Massachusetts Institute of Technology officials said U.S. President Donald Trump badly misunderstood their research when he cited it on Thursday to justify withdrawing the United States from the Paris Climate Agreement. Trump announced during a speech at the White House Rose Garden that he had decided to pull out of the landmark climate deal, in part because it would not reduce global temperatures fast enough to have a significant impact. "Even if the Paris Agreement were implemented in full, with total compliance from all nations, it is estimated it would only produce a two-tenths of one degree Celsius reduction in global temperature by the year 2100," Trump said. "Tiny, tiny amount.""We certainly do not support the withdrawal of the U.S. from the Paris agreement," said Erwan Monier, a lead researcher at the MIT Joint Program on the Science and Policy of Global Change, and one of the study's authors. "If we don't do anything, we might shoot over 5 degrees or more and that would be catastrophic," said John Reilly, the co-director of the program, adding that MIT's scientists had had no contact with the White House and were not offered a chance to explain their wo That claim was attributed to research conducted by MIT, according to White House documents seen by Reuters. The Cambridge, Massaschusetts-based research university published a study in April 2016 titled "How much of a difference will the Paris Agreement make?" showing that if countries abided by their pledges in the deal, global warming would slow by between 0.6 degree and 1.1 degrees Celsius by 2100.

Trump’s Confusion Regarding Chinese Coal – EconoSpeak - Jonathan Chait listens to President Trump so we don’t have to: China will be allowed to build hundreds of additional coal plants. So, we can’t build the plants, but they can, according to this agreement. India will be allowed to double its coal production by 2020. Think of it. India can double their coal production. Trump seems worried that China will be stealing our coal jobs by exporting their coal to us. There are several problems with these claims. Brad Plumer notes:  Over the weekend, the Chinese government ordered 13 provinces to cancel 104 coal-fired projects in development, amounting to a whopping 120 gigawatts of capacity in all. To put that in perspective, the United States has about 305 gigawatts of coal capacity total. The projects that China just ordered halted are equal in size to one-third of the US coal fleet.China produces a lot of coal because they consume a lot of coal. Their consumption of coal peaked in 2014 but has been falling since then:  Coal consumption fell by 4.7 percent year-on-year in 2016, and the share of coal in the country's energy mix slipped to 62.0 percent, down 2.0 percent year-on-year, the National Bureau of Statistics said in a report. Overall coal production also fell, dropping 9.0 percent to 3.41 billion tonnes in 2016. The data suggests that "coal consumption probably peaked around 2014," according to a statement from environmental group China Dialogue. China actually imports coal but even those imports may be declining. The U.S. is a net exporter of coal as reported by Census. While we import about $3 billion per year of coal, coal exports soared to over $7 billion in 2012. These exports fell to just over $4 billion in 2016 but this decline was not due to China but rather the competition from natural gas.

Trump Dumps the Paris Climate Agreement, But Big Companies Will Still Fight Climate Change - President Trump has followed through on his campaign promise to retreat from the Paris Agreement. Now, the United States has joined Nicaragua and Syria as one of only three countries in the world to stand apart from the historic global pact, signed just last year. Only China exceeds the United States in carbon emissions. Without the United States, the rest of the world will have a much tougher time meeting the Paris Agreement’s stated goal of preventing global temperatures from rising more than 2 degrees Celsius above pre-industrial levels. Back home, pulling out of the agreement removes incentives for the United States to crack down on emissions and, among other things, enforce tighter emissions standards in the automobile and coal industries. But while President Trump’s decision is alarming to climate advocates—and, you know, anyone who likes to breathe clean air and live above sea level—it would be hard to completely derail the country’s drive toward curbing emissions. The private sector is already deeply invested. From Facebook to Wal-Mart and now even Exxon (until recently helmed by Trump’s Secretary of State, Rex Tillerson), businesses increasingly view sustainability as critical to their bottom lines. “I don’t think this is going to diminish by one iota the commitment by the private sector in the US to do what makes sense from a business standpoint and from an environmental standpoint,” says John Holdren, President Obama’s former senior advisor on science and technology. The tech industry has naturally been out front on this issue. Facebook’s data centers, those energy-gulping engines of the knowledge economy, are now powered by 100 percent clean and renewable wind energy. The company aims to power all of its operations with at least 50 percent clean and renewable energy by next year. Facebook also negotiates renewable energy tariffs on behalf of itself and other businesses and has open sourced its data center designs for other tech companies to build atop. Meanwhile, Google expects to run its entire global operation, including data centers, on 100 percent renewable energy this year. The new Apple Park is already running on 100 percent renewable energy. Last year alone, Apple reduced its carbon emissions by nearly 585,000 metric tons. And while President Trump framed this decision as an effort to protect American workers, Jeff Immelt, chairman and CEO of General Electric, one of the top employers in the country, was among the loudest voices advocating to stay in.

An alliance of the nation's biggest states could short-circuit Trump's vow to leave the Paris Agreement --President Trump announced on June 1 that the US will exit the Paris Climate Agreement. Questions of how international treaties work aside, the actions of people on the ground in the US might circumvent the Trump announcement — causing the US to lower greenhouse gas emissions to the goals set by the Paris Agreement anyway, despite the actions of the president.  Governors of some of the largest states in the country are already taking action.  Governor Andrew Cuomo of New York, Governor Jerry Brown of California, and Governor Jay Inslee of Washington announced the formation of the United States Climate Alliance after the announcement, stating that they would convene states committed to upholding the Paris Agreement and reducing greenhouse gas emissions. "The White House's reckless decision to withdraw from the Paris Climate Agreement has devastating repercussions not only for the United States, but for our planet. This administration is abdicating its leadership and taking a backseat to other countries in the global fight against climate change," said Governor Cuomo in a statement emailed to Business Insider. "New York State is committed to meeting the standards set forth in the Paris Accord regardless of Washington's irresponsible actions. We will not ignore the science and reality of climate change which is why I am also signing an Executive Order confirming New York’s leadership role in protecting our citizens, our environment, and our planet."  Governor Jerry Brown was just as direct on a call with reporters organized by the World Resources Institute.  "This is an insane move by this president; the world depends on a sustainable future," said Brown. "It's tragic, but out of that tragedy I believe the rest of the world will mobilize, will galvanize our efforts."  As Christiana Figueres, the former executive secretary of the UN Framework Convention on Climate Change — who led the talks that created the Paris Climate Agreement in December 2015 — explained on that same call, it was always people in states, cities, and companies that would be working to cut emissions. Now, they might be doing the same — just without the mandate from the president.  As the World Resources Institute has pointed out, if the US states that support the Paris Agreement were counted as a country, they'd be the fifth largest economy and sixth largest greenhouse gas emitter in the world — meaning that action by those states is significant enough to have an impact.

Friday Beer Post: Defunding the Green Climate Fund is the equivalent of a restaurant beer a month for the average American household - From NPR's fact check of President Trump's Paris Climate Agreement withdrawal speech:  President Trump has repeatedly called the Paris accord a "bad deal" for the U.S. and said it will hurt the economy. One big outlay is the Green Climate Fund set up under the deal. President Barack Obama had committed the U.S. to contributing $3 billion to the fund, which aims to help developing countries adapt to climate change and develop low-emission energy technologies. Under Obama, the U.S. transferred $1 billion, but Trump's budget proposal does not include payments for the rest. But the White House could easily have stayed in the Paris accord even as it opted not to pay into the climate fund or impose emissions cuts. Read more here. $3 billion is about 0.0732% of the Trump's proposed $4.1 trillion budget. From the Census, the median household income for the United States was $55,775.  $3b in government expenditure is the household equivalent of $40.83.   This seems appropriate (warning--slightly NSFW depending on where you work and how loud you have the volume).

Second biggest jump in annual CO2 levels reported as Trump leaves Paris climate agreement- As President Donald Trump prepared to pull the United States out of the global Paris climate agreement this week, scientists at NOAA reported that 2016 had recorded the second-biggest jump in atmospheric carbon dioxide on record.Last year's increase in the atmospheric CO2 concentration was nearly double the average pace since detailed measurements started in 1979. Once CO2 is in the atmosphere, the heat-trapping gas persists there for decades as new emissions pile in, which means that even if global emissions level off—as they have started to do—the planet is on a path toward more warming, rising sea levels and increased heat waves and droughts in the decades ahead. Concentrations of other greenhouse gases, including methane and nitrous oxide, also increased last year, according to the National Oceanic and Atmospheric Administration's latest update to its greenhouse gas index. The heating effect of all combined greenhouses gases in the atmosphere increased by 2.5 percent in 2016, according to the index. "The warming effect of these chemicals we're tracking has increased by 40 percent since 1990," said Steve Montzka, a NOAA scientist who co-authored the update. "Even though emissions are leveling off, CO2 is so long-lived that the concentration is still increasing." Getting the atmospheric concentration to also level off would require reducing emissions by 80 percent, he said. That 80 percent cut is exactly what is targeted under the Paris climate agreement, but the goal is in doubt as the Trump administration rolls back climate and energy policies meant to lower emissions in the United States, historically the world's largest sources of greenhouse gas pollution."All the indicators are going in the wrong direction, and warning bells are ringing so loud as to be deafening," said Kevin Trenberth, a senior scientist in the climate analysis section at the National Center for Atmospheric Research. "Without the Paris agreement, the acceleration will likely continue and we will exceed 2 degrees Celsius above pre-industrial by the 2050s or earlier."

Rex Tillerson on Climate Change and the Implementation of a Carbon Tax -- With the American withdrawal from the December 2015 Paris Agreement, a climate agreement that has been ratified by 147 of the 197 Parties to the Convention (including the United States which ratified the Agreement on September 3, 2016), it is interesting to look back in time to October 1, 2009 when former ExxonMobil CEO and current Secretary of State, Rex Tillerson, gave a speech to the Economic Club of Washington D.C. about the implementation of a carbon tax.   Here is a five minute excerpt from his speech: (video) Here is a transcript of the pertinent section: "These costs and consequences inherent to cap and trade schemes have led many policy experts and economists to prefer another course of action to reduce greenhouse gas emissions.  That other option is a revenue neutral carbon tax.  I know that's hard for a politician to say so we've given them a new name; they can call it a "Refundable Greenhouse Gas Emissions Fee".  Now, as a businessman, I have to take a deep breath every time I talk about this subject because it is very difficult for me to speak favourably about any new tax.  So, I hope you take it as an indication of how serious we think the issue is.  A revenue neutral carbon tax, though, has the advantage of being well-focussed for achieving our society's shared goals of reducing emissions over the long-term."  

"Nobody knew border carbon adjustments could be so complicated" -- Holy cow, the Brookings Institution is trolling President Trump with the title on the webpage. The title of the report is a bit different. We live in interesting times:  In “The role of border carbon adjustments in a U.S. carbon tax,” Warwick McKibbin, Adele Morris, Peter Wilcoxen, and Weifeng Liu examine carbon tax design options in the United States using a model of the global economy. Through four policy scenarios the authors explore two overarching issues: (1) the effects of a carbon tax under alternative assumptions about the use of the resulting revenue, and (2) the effects of a system of import charges on carbon-intensive goods (“border carbon adjustments”). ... In sum, a carefully designed carbon tax in the United States can reduce emissions significantly with minimal effect on the economy. McKibbin et al. find no evidence of meaningful emissions leakage abroad, even when the U.S. policy is unilateral. Using carbon tax and [border carbon adjustment] revenue to reduce distortionary taxes produces better economic outcomes overall and for most individual sectors. To the extent that policymakers wish to protect the interests of energy-intensive trade-exposed industries with [border carbon adjustments] on imports, they should endeavor to tailor the adjustments to narrow, particularly vulnerable, subsectors so as not to inadvertently appreciate the U.S. dollar and do more harm than good overall.

  Forecast for EU carbon prices in next decade put Paris target in doubt -  (Reuters) - Participants in Europe's carbon market, including utilities, trading houses and banks expect EU carbon prices to be lower than predicted in the next decade, making it less attractive to invest in the technology needed to help hit emissions targets. Average carbon prices are likely to be almost 9 percent lower than forecast last year, a survey of 135 companies published by the International Emissions Trading Association (IETA) on Wednesday showed. "Once again IETA members have highlighted the yawning gap between current prices and what's needed to achieve the Paris objectives," Jonathan Grant, a director at PwC which carried out the survey, said in a statement. Europe has a target to reduce its greenhouse gas emissions by 40 percent by 2030 compared with 1990 levels as a part of its commitment to the 2015 global Paris Agreement. Higher carbon prices make it more expensive for firms covered by the EU Emissions Trading System (ETS) to emit greenhouse gases, meaning they are more likely to invest in low carbon technology, such as wind and solar power or energy efficiency measures, when prices are high.Around 45 percent of Europe's greenhouse gas emissions are regulated by the ETS, the bloc's policy to cut emissions by charging utilities, industry and airlines for the right to emit carbon dioxide (CO2). Respondents anticipate an average EU carbon price of 16.28 euros ($18.31) per tonne in the fourth phase of the ETS, which runs from 2021 to 2030, some 1.55 euros below expectations made for the phase last year. The expected average price is less than half the 40 euros per tonne that respondents said last year is needed to help incentivise investments to help the bloc meet goals set under the Paris Agreement. IETA did not ask its members in this year's survey what price would be needed to meet the Paris Agreement. 

Regional Greenhouse Gas Initiative auction prices are the lowest since 2014 -- The Regional Greenhouse Gas Initiative (RGGI) will hold its 36th auction for carbon dioxide (CO2) emission allowances on June 7. In the previous auction, held in March, more than 14 million allowances were sold at a clearing price of $3.00 per short ton of CO2, the lowest price in more than three years. CO2 allowance prices in March were down 16% from the clearing price of $3.55/ton in the previous auction in December 2016 and 60% lower than the peak of $7.50/ton at the December 2015 auction.  RGGI is the nation’s first mandatory cap-and-trade program for greenhouse gas emissions, covering the nine states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. The original objective of the RGGI was to reduce the carbon emissions of each state's electricity generation sector by 10% from their 2009 allowances by 2018. However, the combined effects of lower natural gas prices and state renewable portfolio standards have resulted in regional CO2 emissions falling below the original RGGI cap, and the cap was reduced in 2014 by about 45% from the 2009 level. Electric power sector CO2 emissions from the nine RGGI states accounted for approximately 7% of total U.S. electric power CO2 emissions in 2016. Total CO2 emissions from member states in 2016 were 79.2 million tons of CO2, lower than the revised cap of 86.5 million tons CO2. Even though RGGI reduced its emissions cap, actual emissions have remained well below the cap, resulting in a surplus of allowances. In some cases, surplus allowances can be banked for use in future years. However, the availability of too many banked allowances reduces the need to purchase new credits. Significant slack in the RGGI allowance market is not an entirely new phenomenon. In several auctions between 2010 and 2012, some allowances were left unsold. Following the release of the Clean Power Plan in August 2015, bids were submitted for more than three times the total number of RGGI allowances offered, creating demand that led to higher allowance prices. The downward trend in clearing prices since the start of 2016 reflects relatively low demand for RGGI allowances.

Exxon loses key climate change battle - ExxonMobil just lost a critical climate change battle even as the fate of the Paris accord remains in serious doubt. In a rare defeat for a major company, over 63% of Exxon shareholders voted in favor of a proposal on Wednesday calling on the world's biggest public oil company to do more to disclose the risk it faces from the global crackdown on carbon emissions. The proposal asks Exxon (XOM) to stress test its assets for climate risks each year. The test would include scenarios such as declining demand for oil as a result of emerging technologies like electric cars and regulations, stemming from the Paris climate accord. The vote occurred just hours after CNN and other news outlets reported that President Trump is expected to withdraw from the Paris climate agreement. It's very uncommon for these kinds of campaigns to get such a high percentage of votes, especially in the face of the kinds of intense lobbying efforts Exxon launched against this resolution. Last year, a similar proposal was backed by 38% of shareholders. "This is an unprecedented victory for investors in the fight to ensure a smooth transition to a low carbon economy," New York State Comptroller Thomas DiNapoli, who spearheaded the proposal, said in a statement. The Exxon proposal is nonbinding, meaning the company is not required to follow it. But given the strong support, it will be difficult for Exxon to ignore it will likely force the company to make significant changes.

Exxon Suffers Stinging Defeat On Shareholder Climate Resolution - naked capitalism - Jerri-Lynn here: Yesterday, Trump tweeted that he will announce his decision on continued US participation in the Paris Accord at 3 p.m. today in the White House Rose Garden. Absent some stunning last-minute reversal, he’s expected to announce a US withdrawal. Just a couple of things to bear in mind.First, whatever Trump announces,  withdrawal won’t happen immediately, as other national and EU political leaders are not just going to roll over and accept a unilateral US decision. As Politico reports in Juncker warns Trump to ‘stick to’ Paris climate deal, European Commission President Jean-Claude Juncker this week reminded the US leadership: Although Trump could get out of the non-binding deal’s commitments by simply rolling back U.S. climate policy, Juncker was adamant that it’s not as easy to leave the treaty as Trump might think: “The climate deal says: It takes three, four years after the treaty took effect last November to exit the agreement. That means the idea that you can simply disappear into thin air — that won’t happen.  “The law is the law, and everyone has to stick to it,” Juncker continued. “Not everything which is law, and not everything which is written in international treaties, is fake news. You got to stick to that.” I’m not going to speculate on what additional pressures other countries could bring to bear on the US that they haven’t already, unsuccessfully, attempted. Instead, the main point of this post is to report on the recent success of another tactic:  shareholder initiatives to prod oil companies to disclose and analyze their exposure to climate change regulation. Yesterday, despite an intensive push by Exxon to resist a shareholder resolution calling for the company to publish a detailed annual assessment of the risks to its business posed by climate change policies, the resolution passed comfortably, with 62% of shares voting in favor– including those held by BlackRock, according to The New York Times in Exxon Mobil Shareholders Demand Accounting of Climate Change Policy Risks, citing a person briefed on the decision. The significance of this development was not lost on The Financial Times, which noted in Exxon investors defy board on climate reporting:The vote at the world’s largest listed oil and gas group suggests there will still be significant pressure from investors to encourage US companies to address climate change, even if President Donald Trump withdraws the country from the Paris agreement. The following post outlines some further considerations.

More than half of small-scale photovoltaic generation comes from residential rooftops – EIA  - Generation from small-scale photovoltaic (PV) systems totaled about 37% of the annual generation from all U.S. solar PV electricity generators in 2016. EIA’s small-scale category includes PV systems that have less than one megawatt (MW) of generating capacity. Such systems are usually installed at or near residential, commercial, or industrial customer sites. In 2016, the residential sector’s share of total small-scale solar PV generation increased to 52%, based on EIA’s state-level estimates published in its Electric Power Monthly.Residential PV systems, averaging around 5 kilowatts (kW), are typically smaller than commercial PV systems, averaging closer to 200 kW, according to the National Renewable Energy Laboratory. Although EIA does not collect capacity data for individual PV systems, utilities report their customers’ aggregated small-scale PV capacity by sector. Because electric utilities do not necessarily know how much electricity is generated by rooftop PV on their distribution systems, generation from these systems must be estimated. To make comprehensive estimates of monthly generation for all small-scale solar PV at the state level, EIA developed methods that use the data it collects from electric utilities and third-party owners (TPOs) in conjunction with other information. TPOs are energy service providers that own rooftop PV systems located on customer premises and provide electricity directly to customers.Small-scale PV generation nearly doubled from 2014 to 2016, but its share of total solar PV generation has decreased as utility-scale solar PV generation increased even faster. As more utility-scale solar plants are added, the average size of a utility-scale solar PV plant entering service has also increased, from 10 MW for plants entering service in 2014 to more than 17 MW for plants entering service in 2016. California is by far the leading state for small-scale PV, with 43% of the nation’s total small-scale PV output in 2016. In recent years, New Jersey’s share of the nation’s total small-scale PV generation has dropped most significantly, from 12% in 2014 to 9% in 2016. Unlike other states, where the majority of small-scale PV is in the residential sector, the majority of New Jersey’s is on commercial-sector buildings or sites.

U.S. may put emergency tariffs on solar imports | Reuters: The United States has notified the other 163 members of the World Trade Organization that it is considering putting emergency "safeguard" tariffs on imported solar cells, according to a WTO filing published on Monday. The move raises the stakes in a global battle to dominate the solar power industry, which has grown explosively in the past five years. As production has increased, prices have tumbled, favoring producers who can take advantage of economies of scale. The United States, China and India are vying to be the market leader, and are looking out for any perceived breach of the international trade rules by their rivals. Last September, the WTO ruled that India was illegally discriminating against U.S. solar exports, while India launched its own WTO complaint about solar subsidies in eight U.S. states. The United States' ability to attract renewable energy investment has been tarnished by the shift in energy policy under U.S. President Donald Trump, putting China and India on top, a report by British accountancy firm Ernst & Young said earlier this month. The U.S. decision to consider safeguard tariffs follows a petition to the U.S. International Trade Commission (ITC) by Suniva, Inc, the filing said. Under WTO rules, such temporary tariffs may be used to shield an industry from a sudden, unforeseen and damaging surge in imports. They can be challenged by other WTO members. The ITC will decide by Sept. 22 whether the U.S. industry has suffered "serious injury", and if that is the case it will submit its report to Trump by Nov. 13, the filing said.

 Natural gas plants without the carbon dioxide emissions - How can we burn natural gas without releasing CO2 into the air? This feat is achieved using a special combustion method that TU Wien has been researching for years: chemical looping combustion (CLC). In this process, CO2 can be isolated during combustion without having to use any additional energy, which means it can then go on to be stored. This prevents it from being released into the atmosphere. The method had already been applied successfully in a test facility with 100 kW fuel power. An international research project has now managed to increase the scale of the technology significantly, thus creating all the necessary conditions to enable a fully functional demonstration facility to be built in the 10 MW range.

Meet the Man Who Said: Clean Energy Policies Are a Greater Threat Than Terrorism - Travis Fisher, a Trump political appointee in the Department of Energy, wrote a 2015 report for the Institute for Energy Research that called clean energy policies "the single greatest emerging threat" to the nation's electric power grid, and a greater threat to electric reliability than cyber attacks, terrorism or extreme weather.   Fisher is now leading up a controversial grid study ordered by Sec. of Energy Rick Perry under the pretense of ensuring the long-term reliability of the nation's electricity supply. If Fisher's past writings on the topic are any indication, the forthcoming DOE study is sure to be a thinly veiled attack on renewable energy aimed at propping up outdated coal and nuclear power plants that can't compete in today's electricity market. Rick Perry's grid study sounds strikingly similar to the one Travis Fisher wrote for fossil fuel interests in 2015. In his February 2015 report for the Institute for Energy Research (IER), Fisher attacked wind and solar power as "unreliable" sources of electricity. That same year, IER and its lobbying arm, the American Energy Alliance (AEA), together received millions of dollars from foundations affiliated with the Koch brothers , who have bankrolled an all out campaign to roll back state and federal clean energy policies. In a 2016 bankruptcy filing, coal producer Peabody Energy also disclosed that it contributed $50,000 to IER in 2015. Fisher wrote in his 2015 IER report: "The single greatest threat to reliable electricity in the U.S. does not come from natural disturbances or human attacks. Rather, the host of bad policies now coming from the federal government—and unfortunately from many state governments—is creating far greater and more predictable problems with grid reliability." He also offered this overview:  "New stresses on the electricity delivery system are coming primarily from two types of policies: 1) Regulations that directly shut down reliable sources of electricity, such as coal and nuclear power, and 2) Subsidies and mandates that force increased amounts of unreliable sources of electricity on the grid, such as wind and solar power, and undermine the normal operation of reliable power plants. Together, these two types of policies create a much less reliable grid and increase the chances of a major blackout."  A strikingly similar narrative appeared in the memorandum from Perry, who also serves on President Trump's National Security Council , which ordered a new DOE study on grid reliability be prepared in just 60 days:

Offshore Wind Turbines Blamed For Killing Family Of Whales - Marine environmental experts blame offshore wind turbines for the deaths of three minke whales that washed up on British beaches, The Times reported Monday. Wildlife experts claim that the noise generated by wind turbines affected the sonar that whales use to navigate, causing them to beach themselves. There are several commercial offshore wind farms close to where the whales beached themselves.  Marine environmental experts blame offshore wind turbines for the deaths of three minke whales that washed up on British beaches, The Times reported Monday. Wildlife experts claim that the noise generated by wind turbines affected the sonar that whales use to navigate, causing them to beach themselves. There are several commercial offshore wind farms close to where the whales beached themselves. “My personal opinion is that it could be a consequence of wind farms and the amount of sand in the water,” John Cresswell, chairman of the Felixstowe Volunteer Coast Patrol Rescue Service, told The Times. “If you stop the boat off the coast you can feel the vibrations and hear the noise.” The U.K. coastguard received reports of a minke whale calf that had become separated from its mother Friday evening. By the next afternoon, it had been found dead at the mouth of the River Ore, and its mother washed up near Felixstowe. On Sunday, another dead adult whale surfaced, indicating that an entire family could have been killed.“  Although proponents allege that offshore wind farms are good for the environment, wind farms can harm whales because they are loud and disruptive.  There are studies that show that the sounds created by the operational noise of the turbines create vibrations under that may in fact disorient marine mammals like whales,” Bonnie Brady, director of the Long Island Commercial Fishing Association who regularly discusses the impacts of noise on marine mammals, told The Daily Caller News Foundation. “In the case of what looks like this mother and calf, they go on the wrong path and end up disoriented then beaching themselves. The sound kills.”

judge rules coal mine polluted streams in West Virginia (AP) — A federal judge has ruled a coal mine in West Virginia has impaired aquatic life in two streams. The Charleston Gazette-Mail reports (http://bit.ly/2rsxZ9H ) U.S. District Judge Robert C. Chambers wrote in an opinion issued Friday that contaminated runoff discharged from one of Fola Coal's surface mines damaged Shanty Branch and Elick Hollow to the point of violating state and federal water quality protections. Chambers says both streams were once thriving ecosystems that supported important functions for West Virginians. He says downstream users rely on them for economic uses including clean drinking water, fishing, recreation and tourism. Chambers' decision is his latest in a series of rulings made in citizen lawsuits on coal-mining water pollution. He ruled the case brought by five environmental groups proved Fola violated its water pollution permits.

Intermountain Power Project will shutter coal-fired power plant -- Utah's largest coal-fired power plant — the Intermountain Power Project outside Delta — will cease operations by 2025 due to losing its Southern California customer base and a weak market for coal-fueled electricity. "We are saddened to announce this decision, but factors beyond our control make continued operation of the coal units unfeasible after their current power purchase agreements expire," said Ted Olson, chairman of the board of directors for the Intermountain Power Agency. The decision was anticipated, with its Southern California municipality customer base being prohibited from purchasing coal-fueled electricity when the contracts are up.While electricity will no longer flow from heating coal, IPP participants are moving ahead with plans to develop new natural gas-fueled electricity generation at the site. Already, 32 municipal power systems and rural electric cooperatives have agreed to participate in the gas project, and engineering work has started, according to company officials. The project will bring on 1,200 megawatts of new natural-gas fueled electricity, compared with the 1,800 megawatts of installed capacity from coal-fired generation. IPP, which generates enough electricity to power more than 1.5 million homes, began operating in 1986 and includes two transmission systems, a microwave communication system and a railcar service center. More than 440 people are employed at the site, generating an annual payroll that exceeds $46 million, according to a news release.

PSEG closing its 2 final New Jersey coal-fired power plants  (AP) — The largest energy provider in New Jersey is set to close its final coal-fired power plants. Public Service Enterprise Group will close the Mercer and Hudson generation stations on Thursday as inexpensive natural gas has made it no longer profitable to run the coal plants. Ralph Izzo, chief executive of PSEG Power, told the Philadelphia Inquirer that the company made a bad bet on high gas prices. The company took a $555 million loss on the plant closures last year and expects to write off up to $960 million this year. Environmentalist groups took credit for the coal plant closings. However, economic changes were the cause of the closings, according to PSEG's senior director of operations Bill Thompson. "The way the market works, the economics don't work," Thompson said. "They're not getting shut down for equipment conditions. It's just economics," he added.

 Coal Country’s Power Plants Are Turning Away From Coal - Coal is on the defensive in the nation’s power industry. Even in coal country. The pressure to shift more of the country’s electric supply to renewable sources is not just a rallying cry for environmentalists. Some of the power industry’s biggest customers, like General Motors and Microsoft, have made a commitment to clean energy. And to help them meet it — and keep them from taking their business elsewhere — utilities are changing their ways. West Virginia, where coal is king, is no exception. Appalachian Power, the leading utility there, is quickly shifting toward natural gas and renewable sources like wind and solar, even as President Trump calls for a coal renaissance. Appalachian Power still burns plenty of coal, but in recent years it has closed three coal-fired plants and converted two others to gas, reducing its dependence on coal to 61 percent last year, down from 74 percent in 2012. Chris Beam, the company’s president, made the industry’s shifting dynamics clear in an encounter with Gov. Jim Justice, a Democrat, at his inaugural ball in January. “‘Look, I’d like to see you guys build another coal plant,’” he recalled the governor saying. “And our answer was: We’re not going to build another coal plant.” (The governor confirmed the account, but added in an email, “I’ll continue to encourage power companies to burn more coal to put our miners back to work.”)  It’s the same story in Virginia, where Dominion, a leading utility based in Richmond — near where commercial coal mining got its start — designed a special rate to make it easier for Amazon Web Services and similar customers to buy renewable energy.

Coal Ash Is More Radioactive Than Nuclear Waste - The popular conception of nuclear power is straight out of The Simpsons:  Nuclear power, many people think, is inseparable from a volatile, invariably lime-green, mutant-making radioactivity.  Coal, meanwhile, is believed responsible for a host of more quotidian problems, such as mining accidents, acid rain and greenhouse gas emissions. But it isn't supposed to spawn three-eyed fish like Blinky.Over the past few decades, however, a series of studies has called these stereotypes into question. Among the surprising conclusions: the waste produced by coal plants is actually more radioactive than that generated by their nuclear counterparts. In fact, the fly ash emitted by a power plant—a by-product from burning coal for electricity—carries into the surrounding environment 100 times more radiation than a nuclear power plant producing the same amount of energy. * [See Editor's Note at end of page 2] At issue is coal's content of uranium and thorium, both radioactive elements. They occur in such trace amounts in natural, or "whole," coal that they aren't a problem. But when coal is burned into fly ash, uranium and thorium are concentrated at up to 10 times their original levels. Fly ash uranium sometimes leaches into the soil and water surrounding a coal plant, affecting cropland and, in turn, food. People living within a "stack shadow"—the area within a half- to one-mile (0.8- to 1.6-kilometer) radius of a coal plant's smokestacks—might then ingest small amounts of radiation. Fly ash is also disposed of in landfills and abandoned mines and quarries, posing a potential risk to people living around those areas.  To answer the question of just how harmful leaching could be, the scientists estimated radiation exposure around the coal plants and compared it with exposure levels around boiling-water reactor and pressurized-water nuclear power plants. The result: estimated radiation doses ingested by people living near the coal plants were equal to or higher than doses for people living around the nuclear facilities. At one extreme, the scientists estimated fly ash radiation in individuals' bones at around 18 millirems (thousandths of a rem, a unit for measuring doses of ionizing radiation) a year. Doses for the two nuclear plants, by contrast, ranged from between three and six millirems for the same period. And when all food was grown in the area, radiation doses were 50 to 200 percent higher around the coal plants.

 Britain on the brink of a small-scale nuclear reactor revolution - As coal-fired power plants wind down and with talk of blackouts in the air, nuclear is back on the table after the government gave the go-ahead last year for a third reactor at Hinkley Point in Somerset. Hinkley Point C is an £18bn, 35-year scheme that’ll be operated by EDF. It took financial backing from the Chinese government to land. However, a cheaper and smaller alternative is emerging – the small “modular” nuclear reactor, or SMR. An SMR is defined as producing 300MWe – just 10 per cent of what Hinkley Point C should provide.  SMRs are defined as reactor systems that are comparatively small, compact and entirely factory built. As a result, SMRs can be placed underground or underwater and moved for decommissioning. They employ "passive" safety systems that do not require human intervention – therefore fewer staff – and use a relatively small amount of nuclear material. There are a number of different SMR designs. The SMR has some notable advantages – at least on paper. Perhaps the biggest is that SMRs can be sited in energy consumption “hotspots” around the UK, such as cities, and tap into using existing electricity transmission cables. They’re also much cheaper than a Hinkley. No nuclear industry programme has yet produced a series of reactors along factory production lines, but a large order for SMRs could change all that.

Can France go to 50% nuclear? - Newly-elected president Emmanuel Macron has pledged to to cut the amount of nuclear electricity in France’s generation mix from 75% to 50% by 2025 while doubling wind and solar capacity and closing all of France’s coal-fired power stations by 2022. Will France still be able to generate enough electricity to fill demand if it does this? This post concludes that the answer is no, not even if France’s electricity demand decreases in accordance with the most optimistic projections. With 25% of its nuclear generation shut down France would likely face unmanageable power deficits.  The table below summarizes France’s installed capacity and electricity generation in 2015. The data are from the French grid operator Réseau de transport d’életricité (RTE), with wind capacity from the European Wind Energy Association and solar capacity from PV Tech (RTE’s totals do not include installations smaller than 1 MW and therefore underestimate wind and solar capacity). Hydro generation allows for pumped hydro losses and includes both run-of-river and reservoir hydro. Oil capacity is believed to consist largely of diesel peaking plants that are activated only during peak demand hours. A small amount of tidal, biomass and “other” capacity for which complete data are not available are included as “Other”: According to these numbers France obtained over 93% of its electricity from low-carbon sources (nuclear, hydro, wind, solar, biomass etc.) in 2015, which is about as good as it gets for a country with limited hydro resources. The question of why France should now want to change things is not discussed here. Figure 1 shows France’s average daily generation by source (data from Leo Smith’s Gridwatch France site) for the 20 months from November 21, 2014, when the Gridwatch data begin, through July 20, 2016. Later data are distorted by the progressive shutdown of nuclear plants for inspection during the French “nuclear crisis” and are therefore not used.

Why Are Global Warming Alarmists Afraid Of Nuclear Power? -- In the New York Times, David Leonhardt praises China and India for cutting carbon dioxide emissions, despite the fact that “Hundreds of millions of people in both China and India live in poverty, unable to afford basics—decent food, shelter, medical care, and education—that Westerners take for granted.”Pause here for a moment to reflect on the “progressives” of The New York Times, in their superior compassion and love of humanity, congratulating desperately poor foreigners on choosing to remain poor.    Leonhardt goes on to excoriate us Westerners, who live in comparative luxury, as “climate cowards” for refusing to sacrifice economic vitality to meet the requirements of the Paris Agreement. But notice one of the things he’s leaving out of this story, which is also missing from The New York Times editorial Leonhardt is praising. How is it exactly that China and India are managing to shift to “non-fossil fuel sources”?  Yes, they’re building wind farms and installing solar panels, although both have notorious problems with reliability of output. But the other big part of the story is that China and India are building nuclear power plants. A lot of nuclear power plants.  When The New York Times mentions China and India, it mentions solar and wind power, but not a word about nuclear. It’s almost as if they’re afraid to mention it, as if they are—what’s the phrase I’m looking for?—climate cowards. If we were actually to emulate the example of India and China, the federal government would encourage a massive campaign of building nuclear power plants. But it’s not, and The New York Times, I feel pretty safe in predicting, would be the first to oppose it. This is one of the reasons I’m deeply skeptical of claims about catastrophic human-caused global warming: because hardly anybody behaves as if they really believe it. If people really thought carbon dioxide emissions are the major threat to the planet, a crisis that threatens the very habitability of our planet, we would have gone all-in on nuclear energy 30 years ago. Even the safety concerns about nuclear power would be regarded as a reasonable risk to take to avoid flooding and baking the entire globe.

A fire broke out in the lab where the plutonium cores of the US's nuclear weapons are built : (AP) — A recent fire has put a national laboratory's ability to operate safely into question. The Defense Nuclear Facilities Safety Board announced Friday that it will hold a hearing next month to discuss the future of the Los Alamos National Laboratory, the Santa Fe New Mexican reported. The board is an independent panel that advises the U.S. Department of Energy and the president. A fire broke mid-April at the lab's PF-4 plutonium building where the plutonium cores of nuclear weapons are produced. Lab officials said that the fire was put out quickly and only caused minor injuries. According to the report, the board is unsure if the lab is fit to continue to operate and handle increasing quantities of plutonium in coming years after a series of problems with management in the maintenance and cleanup of the dangerous materials. The Department of Energy has announced plans to increase manufacturing of the plutonium pits at Los Alamos over the next decades. President Donald Trump's budget proposal will also increase funding for weapons work in the next fiscal year. The moves make local nuclear watchdog groups uneasy. "Fattening up our already bloated nuclear weapons stockpile is not going to improve our national security," said Jay Coghlan, the director of Nuclear Watch New Mexico, in a news release issued Friday. "New Mexicans desperately need better funded schools and health care, not expanded plutonium pit production that will cause more pollution and threaten our scarce water resources."The board will have the chance to get the opinion of a number of experts on the matter at its June 7 hearing. 

Three Mile Island nuclear plant to close | TheHill: The infamous Three Mile Island Nuclear Generating Station in Pennsylvania will close by September 2019, its owner announced Tuesday. The power plant is retiring 15 years before its federal license is due for renewal, falling victim to the same competitive electricity marketplace that has doomed numerous other nuclear plants in recent years, Exelon Corp. said, adding that some state policy changes could convince the company to keep the plant open. Three Mile Island is known internationally for seeing the worst nuclear power disaster in the United States, a partial core meltdown at one reactor in 1979 that empowered the anti-nuclear movement and led to significant new regulations on the industry.  Exelon used the shutdown plan to prod Pennsylvania lawmakers to pass legislation allowing nuclear plants to charge more for their electricity, as recognition of the emissions-free, relatively stable power they produce. “Like New York and Illinois before it, the Commonwealth has an opportunity to take a leadership role by implementing a policy solution to preserve its nuclear energy facilities and the clean, reliable energy and good-paying jobs they provide,”  Just last week, Three Mile Island was shut out of a key power auction by PJM Interconnection, significantly hampering its ability to sell electricity in 2020 and 2021, Lancaster Online reported.

 Three Mile Island Nuke Plant Closure Strengthens Call for Renewable Energy Future - Tuesday's announcement that the Three Mile Island Unit One nuclear plant will close unless it gets massive subsidies has vastly strengthened the case for a totally renewable energy future.  Three Mile Island joins a wave of commercially dead reactors whose owners are begging state legislatures for huge bailouts. Exelon, the nation's largest nuke owner, recently got nearly $2.5 billion from the Illinois legislature to keep three uncompetitive nukes there on line.  In Ohio, FirstEnergy is begging the legislature for $300 million per year for the money-losing Perry and Davis-Besse reactors, plagued with serious structural problems. That bailout faces an uphill battle in a surprisingly skeptical legislature. FirstEnergy is at the brink of bankruptcy, and says it will sell the reactors anyway.  To make matters worse, Ohio lawmakers have imposed unique spacing restrictions on the state's wind industry, blocking at least $1.6 billion in investments poised to build eight wind farms now waiting in the wings. Those turbine developments would go far in providing jobs to those who will inevitably lose them at FirstEnergy's uncompetitive nukes. In New York, Gov. Andrew Cuomo wants a staggering $7.6 billion for four uncompetitive upstate reactors. That bailout is being challenged in court by environmental groups and by industrial players angry about unfair competition and soaring rates. Their owners concede these old nukes can't compete with renewables or gas, and have wanted to shut most or all of them.  Now, Three Mile Island's owners say without millions more in handouts from Pennsylvania rate payers, the reactor will close in 2019. A battle over the handout will be upcoming in the Pennsylvania legislature. Ironically, the Quad Cities plant in Illinois, which is in line for huge subsidies, could not compete with gas or renewables at a recent power auction, and may have to shut despite the handouts.

Utility Refuses to Budge on Placing Nuke Waste Dump on Shore of Great Lake Despite Objections From 200 Communities -- Canadian energy company Ontario Power Generation (OPG) is not budging on its plans to dump nuclear waste less than a mile from Lake Huron , despite objections from hundreds of communities in the U.S. and Canada that fear water contamination. The utility issued a lengthy analysis on Friday reaffirming its favored option to bury low to intermediate radioactive waste at the Bruce Power nuclear complex near Kincardine, Ontario. OPG assures that the lake would not be threatened since the waste would be encased in rock. "The Bruce Site is the safest, most appropriate site for a Deep Geological Repository (DRG)," company spokesperson Kevin Powers told CBC News . The repository would contain 200,000 cubic meters of radioactive waste products buried 2,230-feet underground. Powers told Michigan Radio that other sites options would be too expensive (about $3 billion more than the current site), take between 15-30 years to develop and would provide no additional safety. Trucking the waste to another location could risk also radiological accidents and pollution, the analysis found. The Great Lakes provide drinking water for nearly 40 million people. Opposition group Stop The Great Lakes Nuclear Dump calculated that 217 communities on both sides of the border have passed resolutions expressing opposition to OPG's proposed nuclear waste dump.

Enviros Fight Fracking in Ohio National Forest - Courthouse News – Four environmental groups sued the U.S. Forest Service and Bureau of Land Management over their authorization of oil and gas leases that allow fracking of shale formations in Ohio’s only national forest.  The Center for Biological Diversity, Sierra Club, Ohio Environmental Council and regional environmental organization Heartwood filed a lawsuit Tuesday in Columbus federal court challenging the legality of the new leases.  The conservation groups say the Bureau of Land Management, or BLM, approved a plan to lease oil and gas companies 40,000 acres of federal land inside Wayne National Forest without taking a “hard look” at the consequences, environmental impacts and adverse effects of its actions. According to the lawsuit, BLM and Forest Service relied on an outdated, decade-old land and resource management plan – as well as a 2012 supplemental information report that was never subject to public notice and comment – when they authorized the new oil and gas leases in October.The conservation groups also claim BLM rushed the preparation of a 2015 environmental assessment and then determined that the plan would “not significantly affect the quality of the human environment” without properly analyzing threats to watersheds, public health, climate and endangered species like Indiana bats. The groups argue that hydraulic fracturing, or fracking, will industrialize Ohio’s only national forest with roads, well pads and gas lines. Such infrastructure, they say, would destroy animal habitats and pollute water supplies.“Both humans and wildlife species such as the endangered Indiana bat, river otter, bobcat, and Cerulean warbler, rely on the Wayne National Forest’s undeveloped woods, streams and rivers, and peace and quiet,” the lawsuit states. They’re also concerned about contamination from fracking chemicals and wastewater transported by trucks and pipelines. In their complaint, the groups highlight four times within the last three years that fracking activity near Wayne National Forest has contaminated streams and harmed wildlife.

Long Term Resistance Camp To Fight Fracking And Pipelines In Ohio | Global Justice Ecology Project: After a three-day long action training conference near the Wayne NationalForest in Ohio, organizers from multiple groups have launched a long-term resistance encampment to defend the Wayne National Forest from fracking and fracked gas pipelines. The action training conference was hosted by Southeast Ohio’s Appalachia Resist!, a direct action environmental justice group known for blockading the oil and gas infrastructure that threatens the rural communities where they live, as well as the recent action where a group member shut down an intersection in front of Chase Bank in Columbus to protest the Dakota Access Pipeline. The conference was attended by more than a hundred water protectors, land defenders, organizers and community members from around the state and region, who agreed on the goal to stop Energy Transfer Partner’s accident-ridden Rover Pipeline project, as well as Eclipse Resource’s plan to frack the Wayne National Forest. A wide variety of groups and organizers were represented, such as Keep Wayne Wild, the American Indian Movement of Ohio, Torch Can Do, Earth First!, Camp White Pine, Resist Enbridge Line 5, Radical Action for Mountains and People’s Survival, Tar Sands Blockade, the Buckeye Environmental Network, and the Athens County Fracking Action Network. “People from a lot of different backgrounds, walks of life, and organizing ideas are coming together,” said Crissa Cummings, 45, of New Marshfield. “We are sharing skills and building strategies. Companies like Energy Transfer Partners and Eclipse Resources can expect a wall of resistance.” Trainings included Strategic Direct Action, Environmental Justice and Environmental Racism, and Pipeline Resistance Strategy. Childcare and meals were provided.

Ohio EPA wants to raise fine against pipeline builder (AP) — Ohio’s environmental watchdog agency has increased the proposed penalty for the builder of a high-pressure natural gas pipeline after tests found diesel fuel in drilling mud spilled in a wetland.The Canton Repository reports the Ohio Environmental Protection Agency said Thursday it’s proposing to raise the penalty against Rover pipeline builder Energy Transfer from $430,000 to $914,000. The agency has ordered the company to monitor groundwater near the spill area and a quarry where mud was dumped.The newspaper reports the quarry is near a well that supplies drinking water to 40,000 Stark County customers.The Federal Energy Regulatory Commission said Thursday it wants records related to mud disposal preserved for the $4.2 billion project. An Energy Transfer spokeswoman says the company is cooperating with both agencies.

FERC Announces Investigation into Energy Transfer's Rover Pipeline - The Federal Energy Regulatory Commission (FERC) notified Energy Transfer Partners Thursday that it was conducting an investigation into the construction of the fracked gas Rover Pipeline .  The investigation comes as the Ohio Environmental Protection Agency discovered the presence of petroleum hydrocarbon constituents, which are commonly found in diesel fluid, among the fluid Energy Transfer Partners spilled near the Tuscarawas River during construction. "Energy Transfer has repeatedly proven itself not only incompetent, but an immediate threat to Ohioans and our wetlands and waterways," Jen Miller, Sierra Club Ohio director, said. "While we are encouraged by the announcement of this investigation, Energy Transfer Partners must be required to halt all operations on the pipeline until FERC can thoroughly examine the company's violations and inability to protect Ohioans."  Since news of the 15 violations broke on April 18, Energy Transfer Partners has racked up 16 additional violations , spilled 10,000 gallons of drilling fluid in Harrison County, and failed to pay its 2nd installment of its 401 permit fee. Energy Transfer Partners is currently operating without a Clean Water Act permit in Ohio. Last week, FERC halted the process at eight locations of the 32 where drilling is taking place under Ohio's wetlands and streams.  On Thursday, FreshWater Accountability Project , Michigan Residents Against the ET Rover Pipeline and the Sierra Club sent a letter urging the U.S. Army Corps of Engineers to immediately shut down all construction activity on Energy Transfer Partners' controversial Rover pipeline project.

Rover Pipeline faces more environmental scrutiny - The Ohio Environmental Protection Agency said Thursday it found diesel fuel in the drilling mud Rover Pipeline builders spilled in a local wetland in April.With the discovery, the state EPA raised the proposed penalty against Rover to $914,000 and ordered the pipeline company to monitor groundwater around the spill area and near a quarry where workers have been disposing drilling mud in pits. The quarry is near a well owned by Aqua Ohio, a company that supplies drinking water to some 40,000 customers in Stark County. “The water has been tested by Aqua Ohio and it was clean as of today,” Ohio EPA Director Craig Butler said Thursday. “We’ve also taken samples of private water wells and we will demand that Rover continues to do that to make sure, in the abundance of caution, that their water is safe.” Test results are pending on samples taken from 11 private water wells. Dallas,Texas-based Energy Transfer is building the $4.2 billion Rover Pipeline across Ohio, including parts of Stark, Tuscarawas and Carroll counties. The interstate pipeline will carry natural gas produced by wells in the Utica and Marcellus shales. Where Rover’s route crosses highways and rivers, construction teams drill a path beneath the obstacle.Workers drilling beneath the Tuscarawas River south of Navarre on April 13 inadvertently released 2 million gallons of drilling mud into 6.5 acres of wetland.The spill — one of several environmental violations — prompted FERC to suspend other Rover drilling projects and the commission ordered Rover to have an independent third-party contractor analyze all drilling activity at the Tuscarawas River site.On Thursday, FERC told Rover to preserve all records related to the composition, acquisition, preparation and disposal of the mud. In a joint statement, Acting FERC Chairman Cheryl A. LaFleur and Commissioner Colette D. Honorable said they were troubled by indications that diesel fuel was in the drilling mud, which went against commitments the company made to gain FERC’s approval for the project.

Pennsylvania pipeline fight could upend international oil flows - Refiners from the Midwest United States are fighting for access to a vital Pennsylvania pipeline – a move that could cripple their East Coast competitors and redraw the map for international flows of crude and fuel into coveted coastal markets. The regulatory dispute centers on a proposal by pipeline operator Buckeye Partners’ to that state's Public Utilities Commission. The plan would reverse the flow of fuels on a section of Buckeye’s 350-mile Laurel Pipeline, which currently flows from the East Coast to Pittsburgh. Because pipelines only flow in one direction, the change would effectively block five East Coast refineries from serving Pittsburgh – with Midwest refiners picking up their market share. The commission will decide on whether to allow Buckeye to reverse the flow from Pittsburgh, near the state’s western border, to Altoona, a small city about a hundred miles to the east. For a map detailing the proposal, see: tmsnrt.rs/2qk72Ep   Initially, such a reversal would cost East Coast refiners about $10 million annually, according to a study gasoline marketer Gulf Operating commissioned to include in its objections to the Buckeye proposal. Piping gasoline to Pittsburgh yields some of their highest per-barrel profits. But opponents, including East Coast refiners and some state lawmakers, are far more worried that such a decision would presage a reversal of the entire pipeline. That would take Midwest fuels all the way to Philadelphia on the state's eastern border, where it connects to distribution networks serving the entire eastern seaboard. For Buckeye, the move represents a bet that surging Midwest refiners will be better customers - keeping its pipeline full to capacity - than their struggling East Coast counterparts. The stakes are much higher for the refiners involved. Midwest refiners could gain a huge market opportunity to pipe fuels into the East Coast, the largest U.S. gasoline market.

Oil, gas future looks bright for county - The Steubenville Herald-Star — A panel of oil and gas officials predicted Wednesday that Jefferson County will see a growing interest in the energy industry in the coming months. The quarterly workshop series hosted by the Chamber of Commerce and the Jefferson County Port Authority at Holy Trinity Greek Orthodox Church’s Hellenic Hall saw several energy industry experts discuss the state of oil and gas drilling as well as pipeline projects and a brighter future for natural gas rigs in the county. “After today the mood in Jefferson County should be one of things are looking up. And with the PTT Global cracker plant planned for Belmont County, the downstream effect on this county will be definitely important,” said Mike Chadsey, director of public relations for the Ohio Oil and Gas Association. “There are currently 114 permits in Jefferson County. We haven’t been here a lot lately because of the general slowdown. Right now Carroll County is No. 1 in Eastern Ohio, and Belmont County is second. Jefferson County is eight out of the 10 top counties, but we are seeing signs of an uptick in the local area. Harrison County is also a county to watch,” explained Chadsey. “We are continually behind Pennsylvania, but the interest in the natural gas in Eastern Ohio never really stopped here. It slowed down, but it continued. If we burn the natural gas locally we can turn it into other projects and use it as feed stock for other products and goods. We can also sell it to gas-powered power plants,” continued Chadsey. “Our competition is Texas, Louisiana and the Gulf Coast. But there is a definite advantage for us in the market place,” noted Chadsey.

Gas industry organization hails Duke fracking, well water study - The suburban Pittsburgh-based Marcellus Shale Coalition is hailing results of a three-year Duke University study of drinking water wells in West Virginia. The report centered on more than 100 wells turned up little evidence of contaminated groundwater from hydraulic fracturing, or fracking, operations, although it found that accidental spills of fracking wastewater may pose a threat to surface water, including watersheds for the Ohio, Greenbrier and Monongahela rivers. “This report continues to demonstrate that hydraulic fracturing, a tightly regulated 60-year-old technology that’s helped enable America’s historic energy revolution, does not pose a threat to drinking water resources, which is widely supported by objective, straightforward data and science,” MSC said in a statement Thursday. The peer-reviewed study was funded by the National Science Foundation and Natural Resources Defense Council. It involved a research team from Duke's Nicholas School of the Environment, as well as counterparts from Ohio State, Penn State and Stanford universities and the French Geological Survey. “The bottom-line assessment is that groundwater is so far not being impacted, but surface water is more readily contaminated because of the frequency of spills,” said Avner Vengosh, professor of geochemistry and water quality at Duke's Nicholas School of the Environment. The results were published recently in the European journal Geochimica et Cosmochimica Acta."This is just one of numerous peer-reviewed studies to confirm fracking is not a significant threat (to) drinking water," blogger Seth Whitehead wrote on the energyindepth.org website maintained as part of a research, education and public outreach campaign by the Independent Petroleum Association of America.

Judge rules that environmental group can challenge Sunoco over pipeline eminent domain -- Sunoco Logistics’ use of eminent domain to take private land to build its Mariner East 2 pipeline came into question again on Thursday when a Philadelphia court ruled that an environmental group can argue that the practice is unconstitutional. Judge Linda Carpenter of the Philadelphia Court of Common Pleas denied the company’s request to summarily dismiss a complaint by the Clean Air Council, clearing the way for a trial, possibly at the end of this year. The Clean Air Council argues that Sunoco has no right to take land via eminent domain because the pipeline is carrying natural gas liquids across state lines and is therefore an interstate, not intrastate, pipeline. If Mariner East 2 is deemed an interstate pipeline, it is not entitled to a “certificate of public convenience” from the Pennsylvania Public Utility Commission, the environmental group argues.  That certificate is needed to assert eminent domain to take the land of uncooperative landowners.The ruling follows two other recent decisions from the Commonwealth Court, which ruled in favor of the company in its disputes with individual landowners.On Wednesday, the court rejected an appeal of a lower court ruling in Lebanon County.  That judge had sided against Homes for America, a property developer of low-income housing, in its argument against eminent domain.On May 15, the Commonwealth Court ruled against Stephen and Ellen Gerhart of Huntington County, who have been fighting Sunoco’s plans to build the natural gas liquids pipeline across their land, and argued that the company had no right to use eminent domain because the pipeline is not in the public interest. Once complete, the 350-mile Mariner East 2 pipeline will carry ethane, propane and butane from the Marcellus Shale of southwest Pennsylvania to a terminal at Marcus Hook in Delaware County, near Philadelphia.  Most of the fuel will be exported. Sunoco began construction in February after getting its final permits from the Department of Environmental Protection, but the project continues to be fought by some communities, especially in densely populated Philadelphia suburbs, where opponents argue it poses a risk to public safety.

 New York Attorney General: Feds Must Address Bakken Crude Oil Bomb Trains. Feds: Maybe Later? - New York Attorney General Eric T. Schneiderman has joined with attorneys general from California, Illinois, Maryland, Maine, and Washington in calling for limits on the volatility of crude oil transported by rail. The failure of federal regulators and Congress to address this known safety issue has led Schneiderman to continue to pressure regulators on it.“Because of a regulatory loophole, these trains can carry crude oil through some of our most densely populated areas without any limit on explosiveness or flammability — creating ticking time bombs that jeopardize the safety of countless New Yorkers and Americans,” said Attorney General Schneiderman. “It’s time for the federal government to put New Yorkers’ safety first and take immediate action to close this dangerous and nonsensical loophole.”A coalition of environmental groups led by the Natural Resources Defense Council has also submitted comments to regulators urging the creation of volatility limits for crude oil.This current effort to appeal to the Trump administration comes after years of the Obama administration failing to take action. As reported by Reuters, the directive to not regulate the volatility of Bakken oil came from the White House.Volatile crude oil from the Bakken shale region in Montana and North Dakota has been involved in multiple train derailments resulting in large oil spills and fires. The worst such accident happened in the small Canadian town of Lac-Mégantic, Quebec. It resulted in the deaths of 47 people and the entire downtown area being destroyed. That accident occurred almost four years ago, but downtown Lac-Mégantic r emains a large vacant lot.Despite the dire warning about the dangers of moving the same volatile oil in unsafe tank cars, this practice continues in communities across North America today.

Natural gas special report — US LNG: A benchmark for the future – Platts - We are currently witnessing a paradigm shift in the way LNG is priced and traded around the globe. From the first major shipment from Algeria to the UK in 1964, LNG has typically been sold under long-term contracts, usually between producers and utilities. These long-term contracts were almost always priced off of an oil-indexation linked to North Sea Brent crude or Japan Customs-cleared crude (JCC) because of the liquidity and transparency of these markets. While LNG supply growth increased significantly over the next four decades, the way LNG was traded and sold did not change much at all. By 2000, short-term LNG, defined as transactions under contracts of four years or fewer, only represented 2% of the market1. Since the new millennium, though, short-term LNG trading has increased to become nearly 30% of the market. Spot transactions, defined as trades whereby cargoes are delivered within 12 months of the transaction date, now account for half of these short-term transactions2. This momentum for shorter-term trading, supported by US LNG supplies and a growing number of LNG consumers and traders, is set to fundamentally alter the way LNG is priced and traded. This paper will examine the US LNG market, the distinct characteristics of US LNG, and how the global LNG market is fundamentally changing the way LNG is traded and priced. Destination-flexible US LNG, along with structural changes in global LNG market fundamentals — notably the foreseeable oversupply in the market in the coming years, a corresponding oversupply in the LNG carrier market, the growing importance of traders, and the number of new buyers entering the market that are seeking shorter-term contracts — are some of the key factors that will fuel the transformation of global LNG trading and pricing. 

Inside FERC June US national gas average up 11 cents to $3.01/MMBtu - The June bidweek national average natural gas price rose 11 cents to $3.01/MMBtu, with increased power demand expected as the market moves further into the summer season. The June bidweek price at the benchmark Henry Hub in Louisiana rose 10 cents to $3.42/MMBtu, a 3% increase from May but a more than 65% jump from June of last year. The uptick in Henry Hub prices came as the NYMEX June natural gas futures contract settled at $3.236/MMBtu, up 9.4 cents from the May contract's settlement price. But further upward movement may have been limited as total US production has approached the year-to-date high of 71.9 Bcf/d in recent days, according to data from Platts Analytics' Bentek Energy. Year to date, total US dry gas production has averaged 70.8 Bcf/d, down 1.6 Bcf from the same period a year ago. At the same time a string of weekly gas storage injections above market expectations have likely also lowered bullish expectations. But on the demand side, the latest one-month outlook for June from the US National Weather Service called for an elevated probability of above-average temperatures across much of the country, likely contributing to increased power burn.

Natural Gas Prices Fall As Below Normal Temperatures Set In --July contracts are taking a sizable hit today falling nearly 10 cents for the day and trading around $3.21/MMBtu.The hit on prices came after the weekend weather reports showed much cooler weather forecasts than the previous week for the next 15 days. In addition, CFTC position reporting showed another increase in overall net-long position last week.  Over the last 12 weeks, money managers have increased net long positioning by a total of 1,721 Bcf or a 78% increase. This level of strength in net-long position increasing scared many of the traders we talked to. Position liquidation, as we have warned repeatedly over the last month, can come at any time, and volatility begets volatility. How bearish was this weather update? Not significant to the longer term picture, but speculators don't care about fundamentals in the short-term, and they have very little regard for where the fundamental supported gas price is if they are looking for an exit.Until the dust settles (positioning reverts), it's unlikely we will see traders get excited to take long positions here.

Natural Gas Price Dips on Larger-Than-Expected Inventory Rise - 24/7 Wall St.: The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 81 billion cubic feet for the week ending May 26. Analysts were expecting a storage injection of 74 billion cubic feet. The five-year average for the week is an injection of 97 billion cubic feet, and last year’s storage injection for the week totaled 80 billion cubic feet. Natural gas inventories rose by 75 billion cubic feet in the week ending May 19. Natural gas futures for June delivery traded up about 1.3% in advance of the EIA’s report, at around $3.07 per million BTUs, and slipped to around $3.04 shortly thereafter. The highest close for the past five trading days was registered last Friday at $3.31. The 52-week range for natural gas is $2.81 to $3.64. One year ago the price for a million BTUs was around $2.95. Analysts at S&P Global Platts note that last week’s injection marked the fourth consecutive week of additions to storage that fell below the five-year average. This week’s injection kept that streak alive. Demand for the next week is expected to be moderate largely due to expected cooler temperatures into the weekend across the northern United States. Temperatures are expected to be warmer than normal in the central, southern, and western portions of the country. Stockpiles fell week over week to 12.8% below last year’s level, but remain 9.8% above the five-year average. The EIA reported that U.S. working stocks of natural gas totaled about 2.525 trillion cubic feet, around 225 billion cubic feet above the five-year average of 2.300 trillion cubic feet and 370 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.895 trillion cubic feet for the same period a year ago. 

 Wisconsin Supreme Court upholds rejection of fracking permit - (AP) - A divided Wisconsin Supreme Court has upheld a Trempealeau County decision denying a permit to open a new sand mine for use in hydraulic fracking. The Supreme Court on Wednesday ruled against Iowa-based AllEnergy Corporation. It had argued that a Trempealeau County environmental and land use committee in 2013 wrongly denied its permit to open the 550-acre sand mine and processing plant. A state appeals court and circuit court had affirmed the county committee's action. The Supreme Court agreed on Wednesday with four justices saying the permit was rightfully denied and three dissenting. County officials denied AllEnergy's application for a number of reasons, including concerns over the mine's environmental impact and health risks of nearby residents.

Where Refiners Are Allocating Their 2017 CapEx Dollars -- From an expenditure perspective, the refining side of the U.S. oil sector couldn’t be more different from the exploration and production side. Sure, both demand a lot of capital, but while E&P companies’ capex can ramp way up or way down year-to-year, reflecting shifts in hydrocarbon supply, demand and (mostly) pricing, refiners’ spending tends to be more consistent over time. Refiners focus primarily on maintaining existing assets and on making the incremental enhancements needed to refine new grades of crude, to expand refining capacity and to comply with ever-tightening environmental regulations. Today we review historical capital spending by a few of the largest refining companies in the U.S. and examine several of the larger projects where refiners’ dollars are being invested today. Refining is a costly business. It involves large, expensive equipment using specialized technology (and associated plumbing) to convert crude oil into saleable petroleum products like motor gasoline, diesel and jet fuel. These refining units must be meticulously maintained to make sure they operate around the clock in the safest, most efficient and most productive manner. Further, over the past 40-plus years, refiners have been called on again and again by federal (and California) regulators not only to reduce their own emissions, but to reconfigure their operations to enable the production of cleaner gasoline and diesel. As a result of all this, a large portion of a refiner’s budget is spent on simply staying in business — that is, keeping things running and staying in compliance with the latest environmental rules.

Taiwan set to import first cargo of US Gulf Coast Crude -- Platts Snapshot video -- Opportunities to export US crude to new destinations are now emerging as logistics constraints ease, making arbitrage economics more and more favorable. Higher exports come as OPEC and non-OPEC members have recently agreed to extend their production cuts by another nine months from June. In this video, Daniel Colover, associate editorial director, Asia & Middle East oil markets, talks about the latest purchase of US crude involving yet another Asian refiner as the region diversifies from traditional crude slates.

Gas Production From The Permian Basin Is Likely To Triple By 2020 - From The Wall Street Journal: The oil play that could flood the natural-gas market. Gas output from the Permian basin is likely to surge by 2020, rivaling production from Appalachian Marcellus.The oil-rich Permian Basin is emerging as a major source of new natural gas, a development that could deepen an existing glut and pressure gas prices for years. The West Texas region has become the most prolific spot for horizontal oil drilling and fracking. The new oil wells also produce natural gas, making it a nearly free byproduct that energy companies can then sell on top of the more-sought-after crude. Gas production in the Permian Basin is likely to triple by 2020 from its 2010 levels, analysts say. The region is poised to rival new gas output from the Appalachian Marcellus Shale, the U.S.’s biggest gas-producing region. The numbers: Gas production in the Permian is expected to increase by 5.5 billion cubic feet a day from the end of last year to reach 12.5 billion cubic feet by the end of 2020, according to energy investment bank Tudor Pickering Holt & Co. in Houston.  The Marcellus, which has long been the fastest-expanding gas field, is likely to add 6.1 billion cubic feet during the same period, not much more than the Permian, though its total production will be two times that of Permian by 2020.

 Crestwood boosting Permian gas infrastructure with processing plant, pipeline -- Eight months after forming a pact with Royal Dutch Shell to feed a new natural gas gathering system in the Permian Basin, midstream operator Crestwood Equity Partners is building a processing plant and pipeline that will attract flows from that system and a second one. The new infrastructure will provide producers in the region greater access to markets in the US West, along the Gulf Coast and Mexico. In search of higher returns and boundless growth opportunities, billions of dollars are being pumped into the shale play that stretches across West Texas and southeastern New Mexico. While some analysts have cautioned the basin is at risk of becoming saturated, which could drive up costs, the flurry of activity has continued, with investors securing acreage, bolstering drilling operations and adding new facilities. Crestwood, a master limited partnership based in Houston that is involved in the gathering, processing, storage, transportation and marketing of natural gas, NGLs and crude oil, said Wednesday that its 200 MMcf/d processing plant will be constructed near Orla, Texas, through a joint venture with private equity firm First Reserve. The project also includes a 33-mile, 20-inch pipeline connecting its existing Willow Lake gathering system in Eddy County, New Mexico, to the Orla plant, which will offer liquids handling and multiple residue and NGL interconnects. The expansion, with an initial capital budget of $170 million, is expected to be in service in the second half of 2018. Crestwood's goal is to "create a supersystem that spans over 2 million acres located in the heart of the most active development counties" in the Permian's Delaware Basin sub-territory, said Robert Phillips, CEO of the operator's general partner.

New Infrastructure to Help Corpus Keep Pace with Permian Growth - Crude oil exports out of Corpus Christi have increased sharply in the past few months, hitting a record 11.5 million barrels (MMbbl) in April 2017. And that may be just the beginning; the volume of crude put on ships in the Shining City by the Sea is likely to rise new Permian-to-Corpus pipeline capacity is completed and as new storage capacity, distribution pipes and marine docks being planned to accommodate a flood of Permian oil come online. Today we continue our series on the build-out of crude-related infrastructure in South Texas’s largest port and refining center with a look at rising crude exports and the new projects being planned. Hydrocarbon production growth in the Permian play in West Texas and southeastern New Mexico hasn’t missed a beat during the downturn in oil prices that started three years ago. Permian crude oil production now tops 2.3 million barrels/day (MMb/d) and is likely to rise by at least another 1.4 MMb/d by 2022, according to RBN’s latest Growth Scenario for the region, which we discussed in our recent Drill Down Report, With a Permian Well, They Cried More, More, More. Even faster growth is a distinct possibility — the multistack hydrocarbon resources and production economics in the Permian’s Midland and Delaware basins are that good, and exploration and production companies have placed big, expensive bets on the play’s success.

Has Permian Productivity Peaked? - The U.S. shale industry might have just received a huge windfall with the nine-month extension of the OPEC cuts. Shale output was already expected to come roaring back this year, but the extension of the cuts provides even more room in the market for shale drillers to step into. The sky is the limit, it seems. However, there are growing signs that the U.S. shale industry could be reaching the end of the low-hanging fruit. Or, more specifically, drilling costs are starting to rise and the enormous leaps in production that can be obtained by simply adding more rigs also appears to be running into some trouble. According to the EIA’s Drilling Productivity Report, productivity (as opposed to absolute production) is set to fall next month in the Permian Basin. In other words, the average rig will only be able to produce an estimated 630 barrels per day of initial production from a new well, down 10 b/d from the 640 b/d that such a rig might have produced in May. That is convoluted way of saying that the ever-increasing returns on throwing more rigs at the problem might be hitting a ceiling. This is a very notable development – it is the first time that the EIA predicts falling well productivity per rig since it began tracking the data several years ago. Still, because the rig count has increased so much, there will still be more production coming out of the Permian. It’s just that as drillers gobble up all the best spots to drill, it will become more and more difficult to find easy pickings. Moreover, simply drilling the wells is only one part of the equation. As Collin Eaton of Fuel Fix notes, companies are drilling wells at a faster pace than contractors can frac them. The shortage of completion crews means that the backlog of drilled but uncompleted wells (DUCs) has shot up over the past year, rising by more than 60 percent to 1,995 in April 2017 from a year earlier.

Scientists Link Fracking to Explosion That Severely Injured Texas Family - Scientists have determined that methane from a fracked well contaminated a Texas family's water supply and triggered an explosion that nearly killed four members of the family.  The family's ranch in Palo Pinto County is located only a few thousand feet away from a natural gas well. In August 2014, former oil field worker Cody Murray, his father, wife and young daughter were severely burned and hospitalized from a "fireball" that erupted from the family's pump house. A year later, the family filed a lawsuit against oil and gas operators EOG Resources and Fairway Resources, claiming the defendants' drilling and extraction activities caused the high-level methane contamination of the Murrays' water well. "At the flip of the switch, Cody heard a 'whooshing' sound, which he instantly recognized from his work in the oil and gas industry, and instinctively picked his father up and physically threw him back and away from the entryway to the pump house," the complaint states. "In that instant, a giant fireball erupted from the pump house, burning Cody and [his father], who were at the entrance to the pump house, as well as Ashley and A.M., who were approximately twenty feet away."As the Texas Tribune detailed, the studies found that methane and drilling mud chemicals had escaped from a poorly sealed Fairway gas well and traveled through underground fractures and eventually into the Murrays' water supply. The experts include Thomas Darrah, a geochemist at Ohio State University; Franklin Schwartz, an Ohio State University hydrologist; Zacariah Hildenbrand, chief scientific officer at Inform Environmental; and Anthony Ingraffea, a civil engineering professor at a Cornell University with expertise in fracking. "The timing is undeniable, the location is undeniable, the chemistry of the gas is undeniable," Chris Hamilton, the Murray's attorney, told news station WFAA. "This is not naturally occurring gas. This is gas that came from 4 to 6-thousand feet below the ground."

 Quake-Prone Kansas Hit By Dozens Of Temblors Since March (AP) — The U.S. Geological Survey says two earthquakes were recorded in Kansas during the Memorial Day weekend, bringing the total to nine earthquakes in May.The agency says an earthquake with a magnitude of 2.5 was recorded Monday about 10 miles west of Belle Plaine in Sumner County, and a 2.6 earthquake was reported Sunday 8 miles west of Belle Plaine.Another 2.6 magnitude earthquake was reported Thursday 10 miles west of Belle Plaine.Earthquakes also were reported in Jewell and Harper counties in May. Kansas recorded 13 earthquakes in April, and 11 in March. Scientists say an increase in earthquakes in Oklahoma, Kansas and Texas is linked to the injection of wastewater from hydraulic fracturing, or fracking, into the ground after oil and gas drilling.

 Buy Low, Sell High: Anadarko Execs Buy up Depressed Stock After Deadly Colorado Explosion -- Steve Horn - Buy low, sell high. It's a maxim taught to stock traders from day one and one which Anadarko Petroleum's upper-level management seems to have taken to heart in the aftermath of the April gas line explosion thatblew up a Colorado home , leaving two dead and one badly injured. Since the explosion, five members sitting on either Anadarko's board of directors or executive officer team have purchased a combined $2.6 million worth of company stock, totaling more than 46,700 shares,according to data on InsiderInsights.com and first reported by investor analyst site SeekingAlpha.com. Anadarko's stock price has fallen nearly $10 per share since the April 17 blast. However, the trouble may have just begun for the Texas-based company at the center of Colorado's frackingboom. On May 25, an Anadarko oil well exploded just a few miles from the mid-April gas line explosion site. That incident, also in Firestone, Colorado, left one dead and three others injured . "We felt like a shaking and the dishes shook. I asked my son and he said, 'Mommy I think it's thunder.' Then we walked out to our breezeway and saw smoke," Tiffany Kampmann, a Firestone resident, told Inside Energyof the incident. Earlier in May, Colorado's Democratic Gov. John Hickenlooper issued an order to have all oil and gas operations statewide reviewed for safety compliance following the Firestone home explosion. "Public safety is paramount. We are assessing whether these operations were conducted in compliance with state law and the Colorado Oil and Gas Conservation Commission's rules," said Hickenlooper. "Inspections of existing flowlines within 1,000 feet of occupied buildings must occur within 30 days and tested for integrity within 60 days. Lines that have been either abandoned or are not in use must be inspected within 30 days and abandoned under current rules within 60 days."

EPA halts Obama-era methane emissions rule for oil and gas industry - The Trump administration’s Environmental Protection Agency ordered a halt on Wednesday to an Obama-era rule created to reduce methane leaks from new and modified oil and natural gas drilling wells. The action places a 90-day stay on portions of the rule, set in 2016, that require oil and gas companies to detect and repair leaks of methane and other air pollution at new operations. Scientists have found that in the United States, methane leaks and venting have nullified any emissions benefit from transitioning the electricity sector from coal to natural gas-fired power plants. In fact, the EPA recently found that the problem of escaping methane is even worse than initially feared. The United States currently gets a third of its electricity from natural gas, up from 24 percent in 2010. With its latest action, however, the EPA wants to give the oil and gas industry a second chance to comment on the rule. The companies will not need to comply with certain requirements of the rule while the three-month stay is in effect, the agency said. Oil and gas producers opposed the rule, saying they were already subject to state rules on methane emissions and had a financial incentive to capture methane and put it onto the market. EPA Administrator Scott Pruitt’s decision to order the delay is in line with President Donald Trump’s so-called Energy Independence Executive Order, which directed the agency to review the oil and gas rules, the agency said. Pruitt wrote a letter to several oil and gas industry associations in April promising to postpone the June 3 deadline for the rule. In the letter, Pruitt indicated he intended to exercise the EPA’s authority under the Clean Air Act to issue the stay of the requirements to find and fix equipment leaks, promising that “sources will not need to comply with these requirements while the stay is in effect.”

 U.S. oil rig count to peak soon unless WTI prices rise: Kemp (Reuters) - U.S. exploration and production companies have hired an extra 400 rigs to target oil-bearing formations since the end of May 2016, according to oilfield services company Baker Hughes. The number of active oil-directed rigs has more than doubled over the last year, from 316 to 722, in one of the most remarkable recoveries on record, coming after one of the deepest slumps during the previous two years.But the recovery in oil prices has stalled since February and prices are now no higher than they were a year ago. Experience indicates the rig count will stop rising within a few months (http://tmsnrt.rs/2sd4syJ). The active rig count is likely to peak in June or July unless the price of benchmark West Texas Intermediate (WTI) crude starts rising again above $50 per barrel. Drilling activity and WTI prices each exhibit a pronounced cycle and are closely correlated (http://tmsnrt.rs/2qF8Ap6). Price changes typically lead changes in the number of rigs employed, with an average lag of between 16 and 22 weeks (http://tmsnrt.rs/2ravHeF).In 2014, oil prices turned lower in the middle of June and the rig count started to fall 16 weeks later, in mid-October. In 2016, prices turned higher from the middle of January and the rig count began to recover 19 weeks later, from the end of May (http://tmsnrt.rs/2qFlMKI). But prices stopped rising in late February 2017 and have since drifted sideways or slightly lower, which suggests the rig count is likely to peak between mid-June and the end of July. In recent weeks, exploration and production companies have added rigs at a slower pace than earlier in the year, which could be a sign that drilling is already starting to level off. Baker Hughes BHI.N reports that an average of six oil rigs were added each week in May, down from more than 13 per week in March (http://tmsnrt.rs/2sdCJhB).Prominent shale producers have told investors they can drill new oil wells profitably at prices well below the current level of almost $50 a barrel. But further increases in the rig count are likely to require a further increase in prices to make them sufficiently attractive.

Dakota Access pipeline expected to begin shipping oil Thursday - — The developer of the Dakota Access oil pipeline, which is expected to begin shipping oil on Thursday, will face scrutiny later this summer on whether it violated North Dakota rules during construction. The three-member North Dakota Public Service Commission is looking into whether Texas-based Energy Transfer Partners removed too many trees and shrubs along the pipeline route, and whether it improperly reported the discovery of Native American artifacts. No artifacts were disturbed. ETP maintains it didn't intentionally do anything wrong in either case. If the commission ultimately decides differently, the company could be subject to tens of thousands of dollars in fines, though it could fight them in state court. Regulators decided during a Wednesday meeting to hold hearings on back-to-back days in either July or August. A decision on fines would come sometime after that.

Leaked Documents Reveal Counterterrorism Tactics Used at Standing Rock to “Defeat Pipeline Insurgencies” -- A shadowy international mercenary and security firm known as TigerSwan targeted the movement opposed to the Dakota Access Pipeline with military-style counterterrorism measures, collaborating closely with police in at least five states, according to internal documents obtained by The Intercept. The documents provide the first detailed picture of how TigerSwan, which originated as a U.S. military and State Department contractor helping to execute the global war on terror, worked at the behest of its client Energy Transfer Partners, the company building the Dakota Access Pipeline, to respond to the indigenous-led movement that sought to stop the project.Internal TigerSwan communications describe the movement as “an ideologically driven insurgency with a strong religious component” and compare the anti-pipeline water protectors to jihadist fighters. One report, dated February 27, 2017, states that since the movement “generally followed the jihadist insurgency model while active, we can expect the individuals who fought for and supported it to follow a post-insurgency model after its collapse.” Drawing comparisons with post-Soviet Afghanistan, the report warns, “While we can expect to see the continued spread of the anti-DAPL diaspora … aggressive intelligence preparation of the battlefield and active coordination between intelligence and security elements are now a proven method of defeating pipeline insurgencies.” More than 100 internal documents leaked to The Intercept by a TigerSwan contractor, as well as a set of over 1,000 documents obtained via public records requests, reveal that TigerSwan spearheaded a multifaceted private security operation characterized by sweeping and invasive surveillance of protesters.

The Great U.S. Energy Debt Wall: It’s Going To Get Very Ugly - While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices, there’s another huge problem just waiting around the corner. Yes, it’s true… the worst is yet to come for an industry that was supposed to make the United States, energy independent. So, grab your popcorn and watch as the U.S. oil and gas industry gets ready to hit the GREAT ENERGY DEBT WALL. So, what is this “Debt Wall?” It’s the ever-increasing amount of debt that the U.S. oil and gas industry will need to pay back each year. Unfortunately, many misguided Americans thought these energy companies were making money hand over fist when the price of oil was above $100 from 2011 to the middle of 2014. They weren’t. Instead, they racked up a great deal of debt as they spent more money drilling for oil than the cash they received from operations. As they continued to borrow more money than they made, the oil and gas companies pushed back the day of reckoning as far as they could. However, that day is approaching… and fast. According to the data by Bloomberg, the amount of bonds below investment grade the U.S. energy companies need to pay back each year will surge to approximately $70 billion in 2017, up from $30 billion in 2016. That’s just the beginning…. it gets even worse each passing year:As we can see, the outstanding debt (in bonds) will jump to $110 billion in 2018, $155 billion in 2019, and then skyrocket to $230 billion in 2020. This is extremely bad news because it takes oil profits to pay down debt. Right now, very few oil and gas companies are making decent profits or free cash flow. Those that are, have been cutting their capital expenditures substantially in order to turn negative free cash flow into positive. Unfortunately, it still won’t be enough… not by a long-shot. If we use some simple math, we can plainly see the U.S. oil industry will never be able to pay back the majority of its debt: 

 Oil, natural gas industry projects spending uptick belies growing list of delayed FIDs: Rystad - More delayed major oil and gas upstream projects have been sanctioned so far this year than during the whole of 2016, but the list of delayed projects since the 2014 oil price slump continues to grow, Norwegian oil consultancy Rystad Energy said Friday. Noting Eni's final investment decision Thursday on its Coral LNG project in Mozambique, Rystad estimates that 17 delayed upstream projects have been launched since the second half of 2014, accounting for an estimated $78 billion of development spending. Notable project FIDs since 2014 include Tengizchevroil's Tengiz oil field expansion in Kazakhstan last year, and more recently, BP's Mad Dog 2 deepwater development in the Gulf of Mexico and Noble Energy's Leviathan gas project off Israel. But despite the positive momentum on project FIDs, Rystad said the total list of delayed projects has continued to grow, with 105 currently delayed FIDs compared with 39 in mid 2015 and 62 in early 2016. "The ongoing results of the oil price pain is clear to see. Still over 100 projects delayed, accounting for nearly 35 billion barrels of oil equivalent and $300 billion spend estimate delayed," Rystad research analyst Readul Islam said in a note. The list of delayed FIDs has grown across the board, Rystad estimates, bar Canadian oil sands projects which are "confined to one province in Canada." The highest number of delayed projects are currently in the deepwater and onshore sectors, it said. Rystad is among a number of oil analysts which have warned of a severe impact on future production volumes from the huge industry spending cuts in the wake of the oil price collapse.

 U.S. shale booms and depresses oil prices again: Kemp (Reuters) - U.S. oil production continues to rise relentlessly, frustrating efforts by OPEC and non-OPEC oil exporters to rebalance the global market and secure an increase in the price of crude.After a devastating slump in 2015 and 2016, the U.S. oil industry has returned to strong growth, with drilling and output rising rapidly (http://tmsnrt.rs/2qJXDCG).U.S. production is now forecast to grow by an average of 440,000 barrels per day (bpd) in 2017 and another 650,000 bpd in 2018, according to the U.S. Energy Information Administration (EIA).U.S. crude and condensates output rose by 62,000 bpd month-on-month to almost 9.1 million bpd in March (“Petroleum Supply Monthly”, EIA, May 2017).Production has increased by more than 530,000 bpd from its recent low of less than 8.6 million bpd in September, adding to an already well-supplied global market and delaying a drawdown in stocks.Weekly estimates prepared by the agency indicate output continued to increase in April and May and now stands at around 9.3 million bpd (“Weekly Petroleum Status Report”, EIA, May 19).While the weekly estimates are considered less reliable than the more comprehensive monthly numbers, they have generally provided a good guide to trends in the monthly data (http://tmsnrt.rs/2reYzCF).Most of the extra output between September and March came from oilfields in the Gulf of Mexico, where production increased by 257,000 bpd, and Alaska, where output was up by 74,000 bpd.But production from fields in the Lower 48 states excluding the Gulf of Mexico, most of which comes from onshore shale plays, also rose, by 200,000 bpd (http://tmsnrt.rs/2qJOnyN). In March alone, production in the Lower 48 states excluding the Gulf of Mexico rose by 35,000 bpd to its highest level in nearly a year (http://tmsnrt.rs/2qJT5fH). U.S. shale output will almost certainly rise substantially in the rest of 2017 and into 2018 given the typical six-month lag between spudding new wells and the beginning of their commercial production. Reported output for March mostly reflects wells started before the end of September 2016, when there were fewer than 425 rigs drilling for oil in the United States, according to oilfield services company Baker Hughes. The number of active oil rigs has now increased to 722, and thousands of extra wells have been drilled in the meantime, with many still waiting on completion services before starting to flow.

OPEC ponders how to co-exist with U.S. shale oil | Reuters: First, they ignored each other. Then, they went into a bruising fight. Finally, they are talking, albeit with opposing agendas. The history of the relationship between OPEC and the U.S. shale oil industry has evolved a great deal since the cartel discovered it had a surprise rival emerging in a core market for its oil around five years ago. U.S. shale bankers came to Vienna this week and OPEC is readying a trip for its top officials to Texas in a bid to understand whether the two industries can co-exist or are poised to embark on another major fight in the near future. "We have to coexist," said Khalid al-Falih, Saudi Arabia's energy minister, who pushed through OPEC production cuts in December, reversing Riyadh's previous strategy to pump as much as possible and try to kill off U.S. shale with low oil prices. OPEC and non-OPEC countries led by Russia agreed on Thursday to extend oil output curbs by nine months to March 2018, keeping roughly 2 percent of global production off the market in an attempt to boost prices. But OPEC now realises supply cuts and higher prices only make it easier for the shale industry to deliver higher profit after it found ways of slashing costs when Saudi Arabia turned up the taps three years ago. In the Permian Basin - the largest U.S. oilfield - Parsley Energy Inc, Diamondback Energy Inc and others are pumping at the fastest rate in years, taking advantage of new technology, low costs and steady oil prices to reap profits at OPEC's expense. OPEC's latest calculus acknowledges the global clout of shale but seeks to hinder its growth by keeping just enough supply on the market to hold prices below $60 per barrel.

Saudi Arabia's Falih dismisses US shale threat -- Saudi energy minister Khalid al-Falih played down the threat of rising US shale production in Moscow on Wednesday, especially in light of the deepening strategic relationship between Saudi Arabia and Russia and the extension of the OPEC and non-OPEC crude production cut deal agreed in Vienna last week. Falih, who was meeting with Russian energy minister Alexander Novak and OPEC Secretary General Mohammed Barkindo, outlined four drivers at play in the market: robust oil demand growth, the natural decline in legacy oil fields, investment cuts of $3 trillion over the last few years with a continued lack of sizable investments in long term projects, and the OPEC-led agreement to balance the market. "When these factors are taken together I can only conclude that the supplies coming from marginal barrels including shale production will not be sufficient to meet the future need for incremental capacity the mid-term," Falih said. "The market balance is already pointing in that direction," he added. "We have made tremendous progress in rebalancing the market and giving the market strong direction through our determined actions and high degree of conformity," Falih said of the agreement among producers to cut output by 1.8 million b/d in November 2016. This was followed up by high levels of compliance by most of the countries involved, with the OPEC/non-OPEC monitoring committee overseeing the deal pegging compliance among the deal's 24 members at 102% for April. 

Saudi Arabia To Trim Oil Exports To US To Force Inventories Lower -- Riyadh plans to purposely reduce exports to the United States to force a reduction in the latter’s sizeable inventories, which are preventing a greater rise in global oil prices, according to Saudi Oil Minister Khalid Al-Falih.Just one day after OPEC announced a nine-month extension to its November production cut deal, the top oil official told reporters on Friday that “exports to the U.S. will drop measurably.”Two sources close to the matter told Bloomberg that starting next month, Saudi crude supplies to American importers will be reduced to below one million barrels a day next month – a 15 percent decrease from the monthly average so far in 2017.The Organization of Petroleum Exporting Countries’ (OPEC) deal does not set limits on the amount any member country can export to its customers. This is why Saudi cargoes to the U.S. in recent months have totaled 1.21 million barrels a day – the highest rates since 2014, the year of the oil price crash. As the de facto leader and largest producer of OPEC, Saudi Arabia has cut its production the most of any member of the bloc. But stubbornly high fossil fuel inventories - which have been maintained worldwide, but are most readily measured in the U.S. due to open customs data – have prevented the measures from buttressing oil prices in a lasting way. Importer nations have opted to take advantage of low oil prices to stock up for the future.The Energy Information Administration reports that American crude inventories have been on a downward trajectory in recent weeks, so the lower shipments may have a magnified impact as they are doled out. Bloomberg also noted that Saudi Arabia generally has less oil to supply to the U.S. in summer months due to amplified domestic demand for cooling needs during the scorching desert summer.

Now There's Another Source of Oil That's Starting to Get Cheap - Reports of deep-sea drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie Ltd. That means oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates. The tumbling costs present another challenge for the Organization of Petroleum Exporting Countries, which is currently curbing output to shrink a glut. In 2014, when the U.S. shale boom sparked oil’s crash from above $100 a barrel, the group embarked on a different strategy of pumping at will to defend market share and throttle high-cost projects. Ali Al-Naimi, the former energy minister of OPEC member Saudi Arabia, said in February 2016 that such producers need to either “lower costs, borrow cash or liquidate.” “There is life in deep-water yet,” said Angus Rodger, director of upstream Asia-Pacific research at Wood Mackenzie in Singapore. “When oil prices fell, many projects were deferred, but the ones that were deferred first were deep-water because the overall break-evens were highest. Now in 2017, we’re seeing signs that the best ones are coming back.” The falling costs make it more likely that investors will approve pumping crude from such large deep-water projects, the process for which is more complex and risky than drilling traditional fields on land. That may compete with OPEC’s oil to meet future supply gaps that the group sees forming as demand increases and output from existing wells naturally declines. Saudi Arabia’s Al-Naimi left his post shortly after his speech targeting high-cost producers, and his successor Khalid Al-Falih organized production cuts by OPEC and some other nations that are set to run through March 2018. In a speech in Malaysia this month, Al-Falih bemoaned the lack of investment in higher-cost projects and said he fears the lack of them could cause demand to spike above supply in the future. Warnings from OPEC of a looming shortage are “overstated and misleading,” Citigroup Inc. said in a report earlier this month. The revolution in unconventional supplies like shale is “unstoppable” unless prices fall below $40 a barrel, and deep-water output could grow by more than 1 million barrels a day by 2022, according to the bank.

Worth Re-Posting -- Global Crude Oil Supplies Increased First Three Months Of 2017 -- June 2, 2017 --A gazillion stories on the oil sector will be reported this month (as every month). It's hard to sort out the most important story or data point among all those stories. It's hard to think there's a bigger or more important data point than this one from the IEA: global crude oil inventories actually increased during the first three months of 2017.The second most important data point, or possibly even more important: it is expected that  US shale will more than make up for an OPEC / non-OPEC cut through March, 2018. From that same link:The US could add up to 1.5m barrels per day to global oil production next year, nullifying the impacts from the deal, which was extended by nine months in May, according to Igor Sechin.  The story that could be bigger before the end of 2017: the OPEC / non-OPEC pact begins to show signs of cracking.

Canada proposes methane pollution standards for oil and gas drilling - Canadian regulators are formally proposing rules to reduce methane pollution from the oil and natural gas sector. The Thursday announcement from Environment and Climate Change Minister Catherine McKenna came despite the Trump administration’s actions in the United States to reverse course on methane regulations written by former President Barack Obama. In proposing the rules, McKenna specifically cited the examples of California, Colorado and North Dakota as jurisdictions that Canada wants to emulate on methane regulation. “By better detecting and patching leaks, companies will be able to save and sell that natural gas and do their part to fight climate change. And this will support more modern technology and good new jobs in the oil and gas sector,” McKenna said in a statement. The rules target methane leaks in the drilling process, leaks from equipment, venting unused gas at wells and at compressor stations, among other places.

Trudeau claims climate champion role while embracing Big Oil -- Canada’s Prime Minister Justin Trudeau has offered himself as a global leader on climate change, unveiling an ambitious new environmental plan that includes phasing out coal-fired power plants, a tax on carbon, and big investments in renewable energy. But at the same time, Trudeau has promised to help expand Canada’s role as an energy exporter. He’s backed controversial pipeline projects including Keystone XL that would cross into the United States and is pushing for big new investments in the tar sands oil fields of northern Alberta. Trudeau insists that he’s striving for a kind of third way, embracing big oil while also acknowledging the imminent threat of climate change and respecting aboriginal sovereignty. Critics say he’s making promises that contradict each other and risks alienating the progressive voters who elected him in 2015.

Shell to Divest Canadian Natural Stake Worth $3 Billion - According to a recent report on Reuters , integrated oil company Royal Dutch Shell plc intends to sell roughly $3 billion worth stakes of Canadian Natural Resources Ltd. in order to withdraw its focus from the oil sand business in Canada. The decision by the company complements its strategy to divert its attention towards renewable energy. Shell will use the proceeds from the transaction to reduce its debt burden, which was incurred during previous year’s acquisition of British oil and gas company, BG Group plc. The $54 billion buyout was a part of the company’s strategy to focus on cleaner fossil fuel. Shell sold assets worth $20 billion over the last two years for financing the transaction. Also, Shell is likely to dispose more properties valued almost $10 billion by next year.

Battle over pipeline to divide Canada's left, weigh on Trudeau | Reuters: Messy political infighting over a pipeline threatens to divide Canada's left just as it gears up to name a new leader to face Prime Minister Justin Trudeau, jeopardizing the New Democrats' chances of gaining power-broker status in the 2019 election. A New Democratic Party-led alliance set to take power in Canada's Pacific province of British Columbia vowed on Tuesday to block Kinder Morgan Inc's plans to expand an oil pipeline, setting up a fight with energy-rich Alberta and the federal government. [nL1N1IW0KU] The brewing battle between the only two provincial NDP governments in Canada is bad news for the party, which should have been basking in a surprise ascent to power in the country's third most populous province. Instead, it has exposed the party's gulf over energy and the environment, setting the stage for a potential pitched battle between two sides of a party that must unite if it hopes to unseat Trudeau's Liberals or become, at least, kingmakers. "This could be the key dividing line between passionate environmentalists and economic pragmatists in the party," said pollster Nik Nanos of Nanos Research. While both Trudeau and the Alberta NDP government support the project, the NDP divide runs up the party line to Ottawa, where six candidates vying for leadership of the third-place federal NDP have varied views on pipelines and the economy. The party will elect its new leader in October.The western battle over the pipeline expansion, designed to carry crude from Alberta's oil sands to the west coast, also poses potential risks to Trudeau, who had scored a rare political victory with a pipeline policy that balanced demands of energy-dependent Alberta and the environmentalists in his party. 

Kinder's Canadian woes deepen with pipeline foes on brink of power -- Kinder Morgan Inc.’s setbacks in Canada just got more complicated. British Columbia’s New Democratic and Green parties on Tuesday signed a power-sharing agreement that will allow them to oust Premier Christy Clark as early as next month. A top pledge: Block Kinder’s C$7.4 billion ($5.5 billion) Trans Mountain pipeline expansion in the Pacific Coast province. "The idea that somehow a pipeline for a market -- which doesn’t exist -- is going to create jobs in British Columbia is nothing more than a myth," Green Party leader Andrew Weaver, 55, said of sales of Canadian crude to Asia as nations seek to meet climate commitments. At a news conference with his NDP counterpart John Horgan, 57, Weaver also mocked projects like Petroliam Nasional Bhd’s proposed $27 billion gas export terminal as "unicorns in all our backyards"The Greens, with just three seats, hold the balance of power in the province -- both the birthplace of Greenpeace and the terminus of the Trans Mountain line from Alberta’s oil sands. In exchange for support to form a government, the NDP agreed to push ahead on about a dozen issues dear to the Greens, ranging from electoral reform to public transit. Just hours earlier, the Canadian unit of Houston-based Kinder Morgan had raised C$1.75 billion to help pay for the expansion in one of the nation’s largest initial public offerings. It fell 4.5 percent in its trading debut as the new political alliance vowed to "employ every tool available to the new government to stop the expansion of the Kinder Morgan pipeline."

U.S. is now a net exporter of energy to Mexico -- Mexico is now the U.S.’s primary oil and gas export destination, outpacing Canada, according to the EIA. The U.S. has exported a larger amount of crude and petroleum products to Mexico than Canada since August 2016, and averaged a total of 950 MMBOPD in February. Exports to Mexico have been rising gradually over the last few years, and the U.S. has been a net exporter of crude oil and petroleum products to the country since 2015. The country is in the process of deregulating its fuels market, most recently by phasing out mandated gasoline prices. Demand in Mexico is growing by 3% per year, outpacing growth in supply. Gasoline prices rose by 20% in the country in January as the government raised maximum rates. The Mexican supply imbalance has made it an attractive destination for refined products, a situation companies are looking to take advantage of.

Fracking could be ‘the new asbestos’ warns report into risks to workers -- ALLOWING fracking in Scotland could pose “serious risks” to the health of workers, according to a new analysis by campaigners.  Over 150 studies have linked fracking chemicals to health problems, they say. US experts warn that silica dust from the fracking industry can cause permanent lung damage.  More than 40,000 objections to introducing fracking are expected to be lodged with the Scottish Government before its public consultation comes to an end on May 31. Ministers say they will decide whether or not to ban the industry before the end of the year.  Fracking involves pumping fluids down boreholes to hydraulically fracture rocks deep underground to release tiny pockets of shale gas. The gas can be used to heat homes or to make plastics.  The petrochemical giant, Ineos, imports gas from US fracking fields to its complex at Grangemouth. The company is also bidding to frack large areas of central Scotland and the north of England and has recently being buying up major parts of the North Sea oil industry. The UK government backs fracking in England but the Scottish Government has had a moratorium on the industry since January 2015. The Scottish Parliament voted narrowly in favour of banning fracking in June 2016. New research from the digital campaign group 38 Degrees says that fracking workers can be exposed to toxic chemicals. One is benzene, which the American Cancer Society links to leukaemia.  If silica dust from the sand used in the fracking process is inhaled it can damage lungs and in the long term cause silicosis. The US National Institute for Occupational Safety and Health concluded there was “an inhalation health hazard” for fracking workers. Researchers from the University of Missouri examined more than 150 studies on the health effects of fracking chemicals. They concluded that there was “evidence to suggest there is cause for concern for human health.”

Leave oil rigs in the North Sea, say conservationists   - Conservationists want oil companies and regulators to consider leaving more old rigs in the North Sea rather than removing them, with the savings paid into a fund to protect sealife. After the Brent Spar debacle in 1995 when Shell provoked public outrage with plans to sink an old storage buoy, international regulations were imposed that work on the presumption that operators will remove rigs. Exemptions can be granted but are rare and on limited grounds. The Scottish Wildlife Trust says a rethink is needed of how the Ospar rules are applied, due to the multibillion-pound cost of decommissioning rigs – and because in some cases it would be better for the environment to leave platforms to become artificial reefs for marine life. Jonathan Hughes, the chief executive of the trust, said: “In the past, the natural reaction when you think of dumping a load of metal in the ocean is to throw your hands up in horror but when you look into it, it’s much more complicated. You could save money and have good environmental outcomes.” The trust said the savings for oil firms and the government – which has also been criticised over tax relief on decommissioning costs – could be ploughed back into a marine stewardship fund, as a form of compensation for leaving rigs in-situ. Hughes cited the example of MCP-01, a decommissioned North Sea rig owned by France’s Total that would have cost £387m for full removal or £11.7m to be made safe and left. The intervention by the trust, which has more than 40,000 members and manages a network of 120 wildlife reserves across Scotland, comes as Shell starts work on one of the region’s most high-profile decommissioning jobs. This month the world’s biggest ship removed one of the four platforms from Shell’s Brent field and delivered it to a Hartlepool scrapyard for recycling. The Anglo-Dutch oil firm recently awarded a contract to the oil services company Wood Group for the removal of a second Brent rig platform, Bravo. The Scottish Wildlife Trust said it did not want to be prescriptive about what the fund could pay for, but said examples could include enforcement of marine protected areas, cleaning up plastic rubbish in UK waters and supporting marine science research.

Dong Energy Divests Its Oil and Gas Business to Focus on Renewables --Denmark’s largest power producer, Dong Energy, agreed to sell its complete upstream oil and gas interests to global petrochemical manufacturer INEOS for $1.05 billion plus contingent payments, concluding an effort announced in October. This marks an existential reversal for Dong, whose very name abbreviates Danish Oil and Natural Gas. The Danish state created the company in 1972 to extract fuels from the North Sea. A few decades down the road, Dong moved into electricity production, and renewable generation in particular. Meanwhile, oil and gas drilling in the North Sea became relatively expensive due to the basin’s maturity. “The transaction completes the transformation of Dong Energy into a leading, pure play renewables company,” CEO Henrik Poulsen said in a statement this week. The sale still awaits regulatory approval, but is expected to close in Q3 of this year. It would include the transfer of 440 of Dong's 6,500 employees to Ineos.

 Indonesia looking to increase crude imports from Nigeria: NNPC -- Indonesia is looking to increase its crude purchases from Nigeria, state oil firm Nigerian National Petroleum Corp. said Wednesday. Harry Purwanto, Indonesia's ambassador to Nigeria, said during a meeting with NNPC group managing director Maikanti Baru in Abuja that the Asian country was seeking to increase crude imports to meet its surging energy needs, the NNPC said in a statement. "The Indonesia ambassador disclosed that his country looked forward to lifting crude oil directly from Nigeria, rather than through a third party as is currently the case," NNPC said. The southeast Asian country is a keen consumer of Nigerian crude, buying around 30,000 b/d every month, according to S&P Global Platts estimates.

 Iran eyes 5.3 Bcf/d of additional natural gas production from South Pars phases 17-21 = South Pars development phases 17-21 will add more than 150 million cubic meters/d (5.3 Bcf/d) of new gas production from the giant Iranian offshore field when they achieve full operating capacity, oil ministry news agency Shana reported Saturday quoting the CEO of National Iranian Oil Company, Ali Kardor. "We are now witnessing their completion and operation," Kardor said, referring to the five phases inaugurated in April, according to a transcript Shana published of an interview by Iran Petroleum. In a separate Shana report, Iran Petroleum put South Pars' current gas output at 540 million cu m/d, up from 280 million cu m/d in 2013, when Hassan Rouhani first became president. Development of the field started 15 years ago and has accelerated under Rouhani's administration, Iran Petroleum reported. To date, eight new South Pars phases have been brought on stream by the Rouhani administration. Rouhani was elected May 19 to his second term in office. Project phases 12, 15 and 16 were completed earlier. Iran's petroleum ministry has assigned top priority to the development of South Pars, which has gas reserves estimated at about 500 Tcf, not only because of the Persian Gulf field's huge size but also because it extends across Iran's maritime border with Qatar. Qatar calls its side of the gas deposit North Field and estimates the gas reserves at roughly 900 Tcf.

Analysis: Trump visit highlights continued US appetite for Saudi crude oil - During US President Donald Trump's first official overseas visit to Saudi Arabia earlier this month, oil was supposed to take a back seat -- or so analysts said ahead of the event. However, the fanfare in Riyadh over hundreds of billions of dollars of business deals signed between Saudi and US companies, including $55 billion of pledged investments by Saudi Aramco, revealed that oil could never have been far from anyone's mind. Of all the Middle East's oil producers, Saudi Arabia has enjoyed a special relationship with the US as a major crude supplier, which continues to this day. US oil imports have been shrinking for over a decade due to the shale boom, but figures from the Energy Information Administration show the US still imports significant amounts of Saudi crude, averaging over 1 million b/d, as has been the case in every year save one for more than the past quarter century. The 1.097 million b/d of Saudi crude the US imported in 2016 was nearly 36% off the all-time peak of 1.726 million b/d hit in 2003, but the Saudi share of US crude imports has slipped by only four percentage points over the same period to about 14%. Saudi Arabia remains the largest shipper of crude by sea to the US and its second largest crude supplier overall, after Canada. The general trend since 2009 of an eastward shift in trade flows of Persian Gulf crudes has been bucked by Saudi-US oil trade, and last year nearly 120,000 b/d more Saudi crude were delivered to the US than in 2009. The uptick has continued into this year, with EIA data showing US imports of Saudi crude averaged 1.338 million b/d in February.

Saudi Aramco signs deals to build gulf's biggest shipyard (Reuters) - Saudi Aramco plans to build the Gulf's largest shipyard through a joint venture with three companies that it announced on Wednesday, a $5.2 billion project aimed at helping reduce the economy's reliance on oil. Low oil prices have drastically slowed Saudi Arabia's economy so it is trying to create manufacturing jobs and produce goods and services which traditionally it has imported. Its strategy is to use large amounts of government money and the procurement budgets of big state-run enterprises, such as national oil firm Aramco, to attract foreign expertise to develop strategic industries. Aramco said it had signed a shareholder agreement with National Shipping Co of Saudi Arabia (Bahri), a state-controlled firm which ships oil for Aramco, London-listed United Arab Emirates engineering firm Lamprell Plc, and South Korea's Hyundai Heavy Industries Co. The 4.3 square kilometre (1.7 square mile) shipyard will be located at Ras Al Khair on Saudi Arabia's east coast. "The directors expect that the Maritime Yard will be the largest in the Arabian Gulf in terms of production capacity and scale," Lamprell said in a statement. Major production is expected to start in 2019 with the yard hitting full capacity by 2022. It will be able to work on four offshore rigs and over 40 vessels a year including three very large crude carriers (VLCCs), Aramco said. The government will cover about $3.5 billion of the total cost, with the remainder funded by the joint venture, said Lamprell, which will invest up to $140 million and own 20 percent of the venture. Aramco will own 50.1 percent, investing as much as $351 million.

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

Saudi Prince Mohammed Meets With Putin To Discuss Oil, Syria -- Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman is meeting Russian President Vladimir Putin today to discuss the extension of OPEC’s agreement with 11 other oil producers to extend the cuts approved last November, as well as the situation in Syria. Earlier in the day, Russia’s Energy Minister Alexander Novak met with his Saudi counterpart, Khalid al-Falih, to discuss, Reuters said, the situation on global oil markets. Despite the meeting, Russian-Saudi relations are not strained. The two support opposing sides in the Syrian civil war, and they are rivals in the Asian oil market. Yet, they have been thrown together by the 2014 oil price crisis, and more or less forced to collaborate on ways to prop up prices. While Russia, albeit with a budget deficit, has proved to be more resilient to the effect of what many observers saw as a price war waged by OPEC on U.S. shale, Riyadh has found it hard to withstand the blow and has become the most active advocate of the cuts in production. In the 2016 oil production cut agreement, Russia made a better bargain than Saudi Arabia: it boosted its production to more than 11 million bpd in November, which was taken as a basis month for the cuts, and only agreed to cut 300,000 bpd from its output.Saudi Arabia, on the other hand, undertook the biggest portion of the cut, and as of late May this year, according to Bloomberg, has cut production by 600,000 bpd, although its quota called for cuts of less than 500,000 bpd. As for Syria, bilateral relations have been strained. Back in 2015, Prince Mohammed said at a meeting with Putin that Riyadh was concerned with Moscow’s military involvement in support of President Bashar Assad and warned this involvement could have “dangerous consequences”.”. The outcome of today’s meeting, which should also include the signing of four cooperation agreements between Russia and Saudi Arabia, will be particularly interesting to see in the context of heightened tensions between Riyadh and Tehran as well as a flare-up of tension within the Gulf Cooperation Council. The latter was caused by friendly remarks from Qatar’s Sheikh about Iran on state media, which were later removed and attributed to “fake news”.

'Axis of love': Saudi-Russia detente heralds new oil order | Reuters: A meeting between the two men who run Russia and Saudi Arabia's oil empires spoke volumes about the new relationship between the energy superpowers. It was the first time that Rosneft boss Igor Sechin and Saudi Aramco chief Amin Nasser had held a formal, scheduled meeting - going beyond the numerous times they had simply encountered each other at oil events around the world. Their conversation also broke new ground, according to two sources familiar with the talks in the Saudi city of Dhahran last week who said the CEOs discussed possible ways of cooperating in Asia, such as Indonesia and India, as well as in other markets. The sources did not disclose further details, but any cooperation in Asia between Russia and Saudi Arabia - the world's two biggest oil exporters - would be unprecedented. State oil giant Aramco confirmed the meeting took place but declined to give details of the closed-door talks, which took place on the same day as OPEC kingpin Saudi Arabia and non-OPEC Russia led a global pact to extend a crude output cut to prop up prices. Kremlin oil major Rosneft declined to comment. The meeting - which also saw Nasser give Sechin a tour of Aramco's HQ, according to the sources - gives an insight into the newfound, unexpected and fast-deepening partnership between the two countries. It is one that will be closely watched by big oil consumers around the world which have long relied on the hot rivalry between their top suppliers to secure better deals. Such a detente between Moscow and Riyadh would have been almost unthinkable in the past. Up until a year ago, the two sides had virtually no dialogue at all, even in the face of a spike in U.S. shale oil production that had led to a collapse in global prices from mid-2014. Sechin was strongly opposed to Russia cutting output in tandem with OPEC.

Russian Energy Minister: Deeper Cuts Still On The Table -- Deeper cuts to OPEC’s oil production are not out of the question, but their implementation will depend on how things unfold with the current OPEC agreement, Russia’s Energy Minister Alexander Novak said in an interview with CNBC. “You know, we have the capability to react to any situation that might arise on the market. And to this end we have a technical committee working on this every month,” the minister said, adding that it was his opinion that in the next couple of months, stockpiles globally will continue to decline. In two months, the committee that was set up to monitor compliance and inventory developments during the agreement will meet in Moscow to discuss how the extension is going.Oil prices tumbled 5 percent after OPEC made its announcement yesterday, signaling the market expected more than just an extension of the current rate of cuts: it expected OPEC, combined with its non-OPEC collaborators, to deepen these to more than 1.8 million bpd.Yet, it seems that OPEC and Russia are for now comfortable with their quotas; or perhaps they are just not willing to risk losing further market share by cutting deeper. The latter is particularly likely for bigger OPEC producers such as Saudi Arabia and Iraq. The former has already lost some market share in Asia to the latter, to Iran, and to Russia. Iraq and Iran’s top oil men are also fine with the current arrangement, even though Iraq had as of the end of April still not sufficiently cut its output to meet its assigned quota. Energy Minister Jabar al-Luaibi, however, said at the OPEC meeting that Iraq is now compliant, producing 210,000 bpd less than in November. Iran’s Bijan Zanganeh said before the meeting that he considered both the six-month and nine-month extension scenarios “acceptable,” without elaborating. When asked if Iran would join the cuts if it is asked to, the oil minister refrained from a direct answer.

OPEC Can Still Do What It Takes to Prop Up Oil - “We’re going to do what it takes,” Khalid Al-Falih, Saudi Arabia’s energy minister, said in March. But by agreeing to an unexciting extension of cuts on May 25, the Organization of Petroleum Exporting Countries is merely tinkering. Unless the group acts decisively, it faces a slow process of attrition in rebalancing the market. But it can act decisively in two directions: much deeper cuts, or a longer-term commitment to higher output to scare off competitors. As Bloomberg’s Julian Lee notes, the current cut is minor compared to past episodes. Previous reductions of 4 million to 5 million barrels per day compare to a commitment of 1.7 million bpd this time. It is even less impressive when considering that this is the first time the cartel has had real (if partial) cooperation from significant non-OPEC producers. The last three major cuts occurred under different circumstances, though. All were in response to recession-led slumps in demand -- the 1998 Asian crisis, 2001 dot-com crash and 2008-2009 global financial meltdown. The current situation more closely resembles the mid-1980s, when rising output from new basins outside OPEC (the North Sea, Mexico and Alaska) meant that the group’s production cuts -- in practice, largely Saudi -- simply progressively ceded market share while failing to defend a price target. Proposals have been offered for a manipulation of the market, such as Goldman Sachs’ plan to try to flip it into backwardation. But these require impossible precision and coordination. Within OPEC, Libya and Nigeria cannot control their production levels or make any credible commitments, but rising Nigerian output has brought the country under pressure to consider a cap at some point. After the decisive re-election of President Hassan Rouhani, Iran is set to tender its giant new Azadegan field for international investors. Iranian output will not rise much for now, but it is certainly not willing to consider additional cuts. Iraq is chafing at its limits, with development resuming at some key fields. And the two leaders of the new (N)OPEC group, Saudi Arabia and Russia, have to herd the non-OPEC members who have joined, while there is still suspicion over Russia’s full compliance with the agreed limits. There is no prospect of bringing in any more significant producers -- Norway, Canada or Brazil. Other adherents to the agreement, such as Kazakhstan and Mexico, have new production in the works, sooner or later.

Russia's Economy Minister: "We Can Live Forever At $40 Oil" -- (video) The OPEC/non-OPEC deal is working, and the current underlying key assumption of Russia’s economic policies—oil prices at US$40—can allow it to live forever at that price or below, Russia’s Economy Minister Maxim Oreshkin told Bloomberg in an interview on the sidelines of the St. Petersburg International Economic Forum on Thursday.OPEC and Russia are already achieving what they intended to achieve with the deal—a decline in crude oil inventory levels around the globe, the minister said.Arguing that OPEC “has not failed at all” in its attempt to drive oil prices up, Oreshkin said that the price of oil is now much higher than it was this time last year, before the cartel and 11 non-OPEC producers led by Russia struck the initial output cut deal."We are targeting tighter short-term end of the curve,” the minister said, noting that hedge funds are currently taking risks with medium-term prices a year or two ahead.From a Russian economy perspective, the key assumption on which all Russian monetary and fiscal policies are based is oil at US$40, Oreshkin said. Russia is not as dependent on the price of oil as it was five or ten years ago, the minister noted, and said: “We are actually ready to live forever at oil prices $40 or below.” On Wednesday, Saudi Energy Minister Khalid al-Falih said—after meeting with his Russian counterpart Alexander Novak—that OPEC and non-OPEC producers are committed to do “whatever it takes” to draw the global crude oil inventories down to their five-year average. Last week, just a day after the output cut deal was extended as-is until March 2018, Novak said in an interview with CNBC that deeper cuts to OPEC’s oil production were not out of the question, but their implementation would depend on how things unfold with the current agreement.

Pre-OPEC short covering left oil price poised to fall: Kemp (Reuters) - Hedge fund managers had already closed out many of their bearish short positions in crude oil before OPEC and non-OPEC ministers met in Vienna on May 25, according to data from regulators and exchanges. The bout of short-covering explains why oil prices rose consistently in the run up to the meeting, then sold off sharply afterwards when ministers decided to leave output quotas unchanged.Hedge funds and other money managers raised their net long position in the three main Brent and WTI futures and options contracts by the equivalent of 89 million barrels in the week to May 23 (http://tmsnrt.rs/2qBEJ0J).The net long position increased for a second week running, after rising 6 million barrels the previous week, but only after it had fallen by 308 million barrels during the three weeks prior to that (http://tmsnrt.rs/2s9DrvZ).Nearly all the most recent increase came from a sharp reduction in the number of short positions, which fell by 87 million barrels, rather than an increase in long positions, which were up by just 2 million barrels.Hedge fund managers gradually accumulated short positions between mid-April and mid-May amid growing doubts about whether output cuts by OPEC and non-OPEC would be enough to rebalance the oil market.But as the OPEC meeting approached, many of those short positions were closed as a precaution in case ministers decided to surprise the market by announcing a second round of cuts (http://tmsnrt.rs/2s9jXaL). Past experience shows oil prices rise when OPEC cuts its production quotas but tend to decline if OPEC decides to leave them unchanged. So once the meeting finished with a decision to roll over existing cuts rather than deepen them, a fall in prices became highly likely and self-fulfilling. Hedge fund short positions in Brent and WTI more than doubled from 161 million barrels on April 18 to a peak of 356 million barrels on May 16. But by May 23, two days before the OPEC meeting, many fund managers had squared up or at least reduced their bearish positions and the number of shorts had been reduced to just 269 million barrels. With so many short positions eliminated in the run up to the OPEC meeting, mostly for tactical reasons, it was no surprise oil prices tumbled afterwards when ministers did not deliver a surprise cut (http://tmsnrt.rs/2qBv1vF).

Oil slips as more US drilling outweighs OPEC-led cuts: Oil prices slipped on Monday as further increases in U.S. drilling activity undercut an OPEC-led push to tighten supply. Trading was subdued due to public holidays in China, the United States and Britain, but concerns lingered over whether OPEC action would be enough to stem the tide of oversupply. Brent crude futures were trading down 19 cents at $51.96 per barrel at 0857 GMT. The contract ended the previous week down nearly 3 percent. U.S. West Texas Intermediate (WTI) crude futures were also down 19 cents at $49.61 per barrel.The Organization of the Petroleum Exporting Countries and some non-OPEC producers pledged last week to extend production cuts of around 1.8 million barrels per day (bpd) until March 2018. An initial agreement, in place since January, would have expired in June this year. Commerzbank analyst Carsten Fritsch called Monday's price moves little more than "intraday noise" but said hints of deeper cuts or a longer extension from OPEC left the market deflated after the final decision. "They increased expectations to such an extent that nine months was a disappointment," Fritsch said. High compliance with the cuts so far was unlikely to last, he said, adding to worries about whether the pledge would dent physical oil stockpiles that remain near record levels. "The pain for OPEC will increase to such a point that 100 percent compliance is unrealistic," Fritsch said. 

Oil Markets Worry OPEC Has No Exit Strategy -- Oil prices fell on Monday on another gain in the rig count, even though it was only a small increase. Analysts still wonder if the soft oil price is here to stay, or if it is short-term “noise.” Even though OPEC extended its production cuts last week, the market had already expected such a move, leading to a selloff in prices. Now, going forward, traders will want to see real and sizable declines in inventories as proof that the deal is working. The one worry is that the longer the oil price fails to rally, the less likely that OPEC will be able to keep all participants complying with their promised cuts.  Analysts are also concerned that OPEC has no exit strategy. The cuts work so long as they are in place, but what happens when inventories are back to their five-year average? Will OPEC go back to producing at maximum levels? That could quite possibly crash prices all over again. The lack of a strategy after the nine-month period offset what OPEC thought would have been bullish news when they extended the cuts last week.   Goldman has been one of the most consistently optimistic voices on oil prices, routinely arguing that the market is heading towards balance. But the investment bank capitulated to poor conditions by lowering its forecast to $52.39 per barrel this year, down from $54.80 previously.  Oil analysts expect that with the OPEC extension finalized, the drawdown in crude oil inventories will accelerate this year. The U.S. has already seen a drop off in storage, but the weekly declines could grow larger. Some traders, according to Reuters, predict that the drawdowns could jump as high as 10 million barrels per week, while those that are more cautious suggest declines on the order of 3 to 4 million barrels. “I think we'll easily get below 500 million barrels over the next six to eight weeks, or eight to 10 to be conservative,” Andrew Lebow, senior partner at Commodity Research Group, told Reuters. That would be down from the record high of 533 million barrels hit in March.

Ignore OPEC, It's China That Dictates Oil Prices -- The OPEC deal will lead to an ongoing tightening of the crude oil market, putting a floor beneath crude prices in the $50s per barrel in the second half of 2017, according to Helima Croft of RBC Capital Markets. She said that prices should ultimately “grind higher into the $60s” by the fourth quarter, with an average price for WTI expected at $61. Political and economic pressure surrounding Saudi Aramco’s IPO and Russian elections – both of which are slated for 2018 – will ensure that OPEC and non-OPEC does “whatever it takes” to keep oil prices stable and on the rise. But there are a lot of factors outside of OPEC’s control. High up on that list is the role of China, a country that has received little attention in the oil world as of late amid all the furor over the OPEC vs. U.S. shale debate. But China could make or break the oil market this year and next, depending on what happens with its economy. "If you wanted to know where the downside risk is, it is not in OPEC's decision or in U.S. driving demand or in global inventories rebalancing. I think China is the big source of concern," Prestige Economics President Jason Schenker told CNBC. Moody’s Investors Service downgraded China’s credit rating on May 24 to A1 from Aa3,explaining that the Chinese government might try to juice the economy with higher spending levels, which will lead to ballooning debt. The decision from Moody’s is ominous as it is the first credit downgrade for China in nearly three decades. Moody’s expects economic growth to continue to slow in China, putting a heavier burden on government stimulus when debt has already started to become a concern. "It's really the size of the leverage, the trends in leverage as well as the debt servicing capacities of the institutions that have that debt. When growth slows, then that points toward slower revenue growth, probably slower profitability and somewhat weaker debt servicing capacity," Marie Diron, senior vice president for Moody's sovereign rating group, said on CNBC's “Street Signs.” A softer Chinese economy has enormous implications for the oil market. China is the largest crude oil importer in the world and it is expected to account for one of the largest sources of demand growth this year – the IEA expects Chinese oil demand to expand by 400,000 barrels per day to 12.3 million barrels per day (mb/d). "Without China, the oil market cannot survive,"Fereidun Fesharaki, founder of FGE, told CNBC.

Despite OPEC/non-OPEC producers extending cuts, oil market fundamentals remain bearish -- Platts Snapshot video -- OPEC and its non-OPEC partners agreed May 25 to maintain crude oil production cuts, yet prices tumbled. James Bambino explains why doubts remain about the balance of global markets and examines whether the commitment to output cuts is enough to reverse the bearish state of the spot oil market. Refined product stocks, displaced barrels and healthy refining margins all play a part in the market, and it will be important to keep a close eye on fundamentals. For more on why the crude market rally has fizzled, read a detailed analysis from James Bambino on The Barrel blog.

Oil prices slide on worries Libya output will feed glut --Oil prices fell about 1 percent on Tuesday, on signs of resurgent crude output in Libya and concerns that extended production cuts by leading exporting countries may not be enough to drain a global glut that has depressed prices for almost three years. Brent crude LCOc1 ended the session 45 cents, or 0.9 percent, lower at $51.84 a barrel, while U.S. light crude CLc1 fell 14 cents, or 0.3 percent, to $49.66. "This is a rangebound market until you get something breaking out that tells you a longer term story," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. "For now the story is just one of an oversupplied market with the lower end of prices being defended by OPEC." Libya's oil production was at 784,000 barrels per day (bpd) because of a technical issue at the Sharara field, but was expected to start rising to 800,000 bpd on Tuesday, the chief of the state-run National Oil Corporation said. The Organization of the Petroleum Exporting Countries and other oil producers, including Russia, agreed last week to maintain output cuts of about 1.8 million barrels a day for nine months longer than originally planned. Still, prices tumbled after the OPEC deal was announced. The cutbacks have yet to drain crude inventories significantly.

Is This Saudi Arabia's Newest Strategy To Boost Oil Prices? -- OPEC’s new strategy to balance the oil market is to cut oil exports to the U.S., a move intended to drain near-record-high crude oil inventories. OPEC originally thought that six months of combined production cuts would be sufficient to balance the oil market, but the market still looks oversupplied. Not everyone agrees on this. The IEA has argued that we probably have already reached “balance,” which is to say, demand has caught up with supply. The energy agency says that the market is moving into a supply deficit situation in the second half of this year, if it hasn’t already. But the problem is that the one metric that OPEC officials themselves have held up as the key barometer to watch is the level of global crude oil inventories, rather than the immediate supply/demand balance. And on that front, they sort of shot themselves in the foot by ramping up exports just ahead of the implementation of the cuts late last year.Elevated exports in November and December meant that huge volumes of oil started reaching U.S. shores in January. It is no wonder that U.S. inventories surged in the first quarter. The flood of oil set back OPEC’s efforts right off the bat, and even close-to-100-percent compliance on the production cuts was not enough to drain inventories at the speed needed to declare victory by June.The huge increase in U.S. inventories means that OPEC needs six months just to get inventories back to where they started at the end of last year. “Producers unintentionally accelerated activities that would ultimately obstruct, and for a period reverse, the very rebalancing they were trying to accelerate,” Ed Morse, head of commodities research at Citigroup, said in April.

Oil Falls Amid Doubts OPEC Curbs Will Counter Shale Production - Oil fell amid doubts that prolonged cuts by OPEC and its allies will succeed in clearing a surplus while U.S. output remains so resilient. Futures pared losses after falling as much as 3.9 percent. While Saudi Arabia’s Energy Minister Khalid Al-Falih said the cuts are working and predicted global inventories will fall to the five-year average in early 2018, American drillers continue to add rigs to shale fields. American supplies fell 8.67 million barrels last week, the American Petroleum Institute was said to report. The market’s initial reaction to increased output from Libya was tempered as OPEC and Russia affirmed the goal of tackling the global glut, said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. “Competing commentary from the Saudis and Russia" on "keeping up the good work" offset the response, he said. “At some point, the verbal interventions do work." Even with U.S. crude stockpiles forecast to show declines for an eighth week, West Texas Intermediate for July delivery settled at $48.32 a barrel on the New York Mercantile Exchange, down $1.34. The contract lost 14 cents to $49.66 on Tuesday. WTI traded at $48.79 at 4:40 p.m. after the API report was released. Brent for July settlement, which expired Wednesday, dropped $1.53, or 2.6 percent, to $50.31 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.16 to WTI. The deal is coming across as ineffective to investors as more barrels enter the market from the U.S. and Libya

WTI Crude Tumbles To $47 Handle As OPEC-Compliance Drops --Crude oil prices have retraced 50% of their pre-OPEC-deal hope rally and dropped back below $48 as JBC Energy reports OPEC compliance dropping to 92% in May from 96% in April. Additionally, Bloomberg notes: *OPEC-14 OUTPUT ROSE 370K B/D TO 32.5M B/D IN MAY: JBC ENERGY“There continues to be considerable skepticism about the effectiveness of the production cuts,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report.“Oil prices are still trending towards weakness.”

4 Wildly Different Oil Price Scenarios For 2020 - One school of thought is that the severe cuts to upstream spending that have stretched into a third year are sowing the seeds of a supply shortage around 2020. The IEA is probably the most recognizable forecaster that falls into this camp. The agency has repeatedly pointed to the fact that new oil discoveries are at their lowest level in 70 years."There were no discoveries because there is no money for exploration. You find something if you look for it," the IEA’s executive director Fatih Birol said earlier this year. The IEA says the industry must step up spending if they are to avoid a supply crunch in a few years’ time. “[W]e are emphasising an important message: more investment is needed in oil production capacity to avoid the risk of a sharp increase in oil prices” by the early 2020s, the IEA wrote in a March report.But other analysts have an entirely different view, expecting oil prices to remain low for the foreseeable future, although for varying reasons.Some focus on peak demand, which mainly comes down to alternatives to oil. The most fervent believers in both electric vehicles and autonomous vehicles argue that oil demand is nearing a peak, so there is little chance of another major bull run. Even if more mainstream oil forecasters don’t see such a dramatic scenario on the horizon, they do see some supply-side forces that prevent an oil price spike. Namely, improving technology and falling breakeven prices for shale production could put a ceiling on the price of crude for the next few years. Goldman Sachs agreed with that sentiment a few weeks ago, stating that they are growing more confident that longer-term oil price range is “drifting lower.” Goldman says it sees lower prices over the next five years because of the “growing visibility on the sources of future supply.” And they also pointed to the resilience of U.S. shale as a principle reason for oil prices remaining low not just for the near-term but into the 2020s.

 OPEC oil output rises in May as cut-exempt Nigeria, Libya pump more | Reuters: OPEC oil output rose in May, the first monthly increase this year, a Reuters survey found on Wednesday, as higher supply from two OPEC states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others. A drop in output in Angola and Iraq and continued high compliance from Gulf producers Saudi Arabia and Kuwait helped lift OPEC's adherence with the supply cut deal to 95 percent from 90 percent in April, according to Reuters surveys. The Organization of the Petroleum Exporting Countries pledged to reduce output by about 1.2 million barrels per day (bpd) for six months from Jan. 1 as part of a deal with Russia and other non-members. Oil prices has gained some ground but an inventory glut and rising supply by outside producers has kept prices below the $60 a barrel that Saudi Arabia wants. A sustained output rise from Libya and Nigeria poses further challenges. To provide additional support for prices, the producers decided at a meeting last week to prolong the deal until March 2018. They discussed whether to include Nigeria in the output cap but decided against for now, OPEC delegates said. Nigeria and Libya were exempted because their output has been curbed by conflict. However, supplies from both nations staged a partial recovery in May, lifting overall OPEC output by 250,000 bpd to 32.22 million bpd. The biggest increase came from Nigeria, where the Forcados production stream began loading cargoes for export. The Forcados pipeline had been mostly shut since it was bombed by militants in February 2016.

WTI/RBOB Jump After Biggest Crude Draw Since September -- Libya production updates and weak economic data weighed on crude ahead of the API print tonight but as the data hit showing a bigger than expected crude draw (8th week in a row), both WTI and RBOB jumped higher. This was the biggest crude draw since Sept 2016.  API

• Crude -8.67mm (-3mm exp)
• Cushing -753k
• Gasoline -1.726mm (-1.5mm exp)
• Distillates +124k

If this holds for tomorrow's DOE data, this is the 8th weekly crude draw in a row (and this week's 8.67mm draw is the largest since Sept 2016)

Oil Falls Amid Doubts OPEC Curbs Will Counter Shale Production - Oil fell amid doubts that prolonged cuts by OPEC and its allies will succeed in clearing a surplus while U.S. output remains so resilient. Futures pared losses after falling as much as 3.9 percent. While Saudi Arabia’s Energy Minister Khalid Al-Falih said the cuts are working and predicted global inventories will fall to the five-year average in early 2018, American drillers continue to add rigs to shale fields. American supplies fell 8.67 million barrels last week, the American Petroleum Institute was said to report. The market’s initial reaction to increased output from Libya was tempered as OPEC and Russia affirmed the goal of tackling the global glut, said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. “Competing commentary from the Saudis and Russia" on "keeping up the good work" offset the response, he said. “At some point, the verbal interventions do work." Even with U.S. crude stockpiles forecast to show declines for an eighth week, West Texas Intermediate for July delivery settled at $48.32 a barrel on the New York Mercantile Exchange, down $1.34. The contract lost 14 cents to $49.66 on Tuesday. WTI traded at $48.79 at 4:40 p.m. after the API report was released. Brent for July settlement, which expired Wednesday, dropped $1.53, or 2.6 percent, to $50.31 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.16 to WTI. The deal is coming across as ineffective to investors as more barrels enter the market from the U.S. and Libya

WTI/RBOB Mixed After Biggest Crude Draw Since 2016, Production Hits 21-Month Highs --- Oil prices have roller-coastered since last night's API report of the biggest crude draw since September (hurricane-impacted), but kneejerked higher after DOE confirmed a big crude draw (though less than API), the largest since Dec 2016 and 8th weekly draw in a row. Distillates saw a surprise build and production rose again to its highest since Aug 2015. DOE:

• Crude -6.43mm (-3mm exp)
• Cushing -747k (-500k exp)
• Gasoline -2.86mm (-1.5mm exp)
• Distillates +394k (-700k exp)

8th weekly crude draw in a row and biggest since Dec 2016... surprise build in distillates

U.S. refiners process record volume of crude as demand climbs: Kemp  (Reuters) - U.S. oil refineries are processing record volumes of crude but stocks of refined fuels remain well contained thanks to strong exports and demand at home.U.S. refineries processed 17.5 million barrels per day (bpd) of crude in the week ending on May 26, according to the U.S. Energy Information Administration ("Weekly Petroleum Status Report", EIA, June 1).Throughput was more than 1.2 million bpd higher than at the same point in 2016 and 2.2 million bpd above the 10-year seasonal average.Record refinery runs have helped pull down U.S. crude stocks by 31 million barrels since the end of March, with inventories drawing down much faster and earlier in the year than normal.But despite fears that record processing would result in a build up of unsold products, stocks of gasoline and diesel have generally moved in line with normal seasonal patterns.Part of the explanation lies in the strength of exports, mostly to markets in Central America, South America and the Caribbean, where ageing and inefficient refineries have struggled to meet growing demand from consumers.U.S. refineries are increasingly geared towards meeting demand from the rest of the hemisphere rather than just the United States.U.S. refiners and traders exported 640,000 bpd of gasoline in the week ending on May 26, and a near-record 1.25 million bpd of distillate fuel oil.Fuel consumption at home is also now running at record or near-record levels, according to an analysis of EIA data.Gasoline supplied to domestic customers in the United States hit a record 9.8 million bpd last week, an increase of roughly 330,000 bpd compared with the same period in 2016. Distillate supplied averaged 4.1 million bpd, significantly higher than in 2016, though still below the record set in 2007.

Oil mixed; global crude glut drags despite big U.S. inventory draw - Oil prices were mixed on Thursday, with Brent crude down on concerns that key producers were still adding to the global crude glut but U.S. crude up slightly after a larger-than-expected domestic inventory drawdown.U.S. crude futures CLc1 settled up 4 cents at $48.36 a barrel, while Brent LCOc1 ended down 13 cents at $50.63. After settlement, both benchmarks fell, failing to sustain the lift from the morning news of declining U.S. crude and gasoline stocks.Eight straight weeks of declining crude and the market is barely up," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. “The market is telling us that unless we have significant inventory draws, the idea that we’re going to have stronger prices doesn’t look to be realistic.”Weekly data from the U.S. Energy Information Administration (EIA) showed crude inventories dropped 6.4 million barrels, exceeding the 4.4 million-barrel drop forecast. Gasoline inventories also dropped sharply ahead of the start of the summer driving season, the EIA said.On Wednesday, a Reuters survey found output from the Organization of the Petroleum Exporting Countries (OPEC) rose in May, the first monthly increase this year, as higher supply from two states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others.. U.S. production increased, and the expectation is that ongoing activity in U.S. shale will continue to boost output, offsetting OPEC efforts. OPEC and other producers, including Russia, have agreed to restrict output by 1.8 million bpd to drain stockpiles that are close to record highs in many parts of the world. U.S. production is closing in on levels from top producers Russia and Saudi Arabia. It hit 9.34 million bpd last week, highest since August 2015.  In Libya, output has recovered to 827,000 bpd after technical problems were resolved at the Sharara field.

Oil drops 2% as US climate withdrawal compounds glut concerns: Brent crude oil tumbled below $50 on Friday, heading for a second straight week of losses, on worries that U.S. President Donald Trump's decision to abandon a climate pact could spark more crude drilling in the United States, worsening a global glut. Benchmark Brent crude futures were trading at $49.52 a barrel at 8:48 a.m. ET (1248 GMT), down $1.11, or 2.2 percent. U.S. West Texas Intermediate crude futures fell $1.07, or 2.2 percent, to $47.29 per barrel. Both contracts were on track for weekly losses of more than 5 percent. The U.S. withdrawal from the landmark 2015 global agreement to fight climate change drew condemnation from Washington's allies - and sparked fears that U.S. oil production could expand even more rapidly.U.S. crude production last week was up by nearly 500,000 barrels per day (bpd) from year-earlier levels, straining OPEC's efforts to reduce global oversupply. "This could lead to a drilling free-for-all in the U.S. and also see other signatories waver in their commitments," said Jeffrey Halley, senior market analyst at futures brokerage OANDA. He added that the move could complicate the market outlook in a way that "would not be favorable to oil prices." "I think we will see a United States that is about to go crazy in terms of producing fossil fuels," said Matt Stanley, a fuel broker at Freight Services International in Dubai, adding other producers could do the same. "Why wouldn't they ramp up production when producers like the U.S. have an open invite to do as they please?"

 U.S. oil-rig count posts weekly climb, up 5 months in a row -- Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil climbed by 11 to 733 rigs this week. That marked a 20th weekly rise in a row, or roughly five months. The total active U.S. rig count, which includes oil and natural-gas rigs, climbed by 8 to 916, according to Baker Hughes. Oil prices appeared unfazed in the wake of the data. July West Texas Intermediate crude was down 51 cents, or 1.1%, to $47.85 a barrel on the New York Mercantile Exchange, little changed from its level before the data.

Oil Prices Fall As U.S. Rig Count Rises For 20th Straight Week - The number of active oil and gas rigs in the United States rose for the twentieth straight week, Baker Hughes reported on Friday—this time by 8, as drillers in the US make do with current barrel prices even below $50.The number of oil rigs in operation increased by 11, while gas rigs decreased by 3. Combined, the total oil and gas rig count in the US now stands at 916 rigs—more than double the number of rigs in operation a year ago, when WTI barrel prices were about $49.05—higher than today’s price per barrel for WTI. Say what they will about rebalancing the oil market—even if they say it again and again—OPEC and its non-OPEC counterparts have been unable to swing prices (and keep them) near $60 per barrel. Undeterred and even seemingly satisfied with the current pricing environment, shale players in the US are showing no signs of stopping, adding 256 oil rigs since December 2, shortly after OPEC announced its agreement. These weekly US rig count increases may soon taper off if oil prices continue to go nowhere—an event that may itself lift prices, triggering another round of investments in the shale patch. At 12:40pm EST on Friday, WTI was trading down .99% for the day at $47.88—almost $1.50 lower than last week’s pre-rig count price at $49.39. Brent Crude was trading down 0.91% at that time at $50.17, down $1.65 from last week’s $51.82 price. By basin, the Permian added 2 rigs, and now boasts 364 rigs in operation—222 rigs over a year ago. DJ-Niobrara, Utica, and Williston basins all added a rig, while Marcellus and Mississippian lost 2 and 1 respectively.

BHI: US rig count climbs for 20th straight week - Oil & Gas Journal -- The number of active drilling rigs spread across the US has increased in 20 straight weeks, according to data compiled by Baker Hughes Inc. The overall US count gained 8 units during the week ended June 2 to 916, up 512 since a low point in recent BHI data on May 20-27, 2016, and its highest point since Apr. 24, 2015. Over the past 20 weeks, the tally has surged up 257 units (OGJ Online, May 26, 2017). Oil-directed rigs jumped 11 units to 733, up 417 since their recent bottom on May 27, 2016. Gas-directed rigs, which led last week’s US gain, dropped 3 units to 182, still up 101 since Aug. 26. One rig considered unclassified remains drilling in the US. All 8 units to come online are land-based, bringing that count to 889. Rigs drilling horizontally increased 5 units to 771, up 457 since May 20-27, 2016. Rigs drilling directionally rose 3 units to 68. Offshore rigs and those drilling in inland waters remained at 23 and 4, respectively, this week. US Energy Information Administration data for the week ended May 26 shows US crude oil production increased 22,000 b/d to 9.34 million b/d. Of the increase, 20,000 b/d came from the Lower 48 and 2,000 b/d from Alaska. Analysts at Rystad Energy believe US oil production could reach 10 million b/d before Dec. 31, approaching the record high posted in November 1970. In the industry consulting firm’s monthly report on oil market trends, the analysts see US output rising 95,000 b/d each month this year propelled by shale drilling, with modest growth from Gulf of Mexico deepwater fields offsetting declines from other conventional fields.  More than half of all active US rigs reside in Texas, where the count collected 5 more units during the week to 463, an increase of 290 since May 20-27, 2016. The Permian did its usual part to supply the rebound with a 2-unit gain to 364, up 230 since May 13, 2016. Oklahoma rose 3 units to 126, up 72 since June 24, 2016. The Mississippian, however, declined a unit to 8. North Dakota, Colorado, and Ohio each increased a unit to 46, 35, and 25, respectively. Accordingly, the Williston, DJ-Niobrara, and Utica also each rose a unit to respective totals of 46, 28, and 26.  New Mexico and Pennsylvania each dropped 2 units to 55 and 33, respectively. Primarily pushing down the overall US gas-directed rig count, the Marcellus lost 2 units to 43, still up 22 since Aug. 12.

 Saudi Reserves Dip Below $500 Billion as BofA Sees Headwinds - Saudi Arabia’s net foreign assets dropped below $500 billion in April for the first time since 2011 even after the kingdom raised $9 billion from its first international sale of Islamic bonds. The Saudi Arabian Monetary Authority, as the central bank is known, said on Sunday its net foreign assets fell by $8.5 billion from the previous month to about $493 billion, the lowest level since 2011. That brings the decline this year to $36 billion. “Didn’t really see any major driver for such a huge drop, especially when accounting for the sukuk sale,” said Mohamed Abu Basha, a Cairo-based economist at EFG-Hermes, an investment bank. Even if the proceeds from the sale weren’t included, “the reserve decline remains huge,” he said. Saudi Arabia’s foreign reserves have dropped from a peak of more than $730 billion in 2014 after the plunge in oil prices, prompting the International Monetary Fund to warn that the kingdom may run out of financial assets needed to support spending within five years. Authorities have since embarked on an unprecedented plan to overhaul the economy and repair public finances. But the pace of the decline in reserves this year has puzzled economists who see little evidence of increased government spending, fueling speculation it’s triggered by capital flight and the costs of the kingdom’s war in Yemen. Finance Minister Mohammed Al-Jadaan said in April that the government didn’t withdraw from its central bank reserves during the first quarter. He said the decline could be attributed to local contractors paying overseas vendors after the government settled its arrears.

Economists Puzzled By Unexpected Plunge In Saudi Foreign Reserves -- The stabilization of oil prices in the $50-60/bbl range was meant to have one particular, material impact on Saudi finances: it was expected to stem the accelerating bleeding of Saudi Arabian reserves. However, according to the latest data from Saudi Arabia’s central bank, aka the Saudi Arabian Monetary Authority, that has not happened and net foreign assets inexplicably tumbled below $500 billion in April for the first time since 2011 even after accounting for the $9 billion raised from the Kingdom's first international sale of Islamic bonds. As the chart below shows, according to SAMA, Saudi net foreign assets fell by $8.5 billion from the previous month to $493 billion the lowest in six years, bringing the decline this year to $36 billion. Over the past three years, Saudi foreign reserves have dropped by a third from a peak of more than $730 billion in 2014 after the plunge in oil prices, prompting the IMF to warn that the kingdom may run out of financial assets needed to support spending within five years,according to Bloomberg. Analysts were puzzled by the ongoing sharp decline in Saudi reserves, especially since Saudi authorities recently embarked on a very public and "unprecedented" plan to overhaul the economy and repair public finances. Quoted by Bloomberg, Mohamed Abu Basha, a Cairo-based economist at EFG-Hermes said that he "didn’t really see any major driver for such a huge drop, especially when accounting for the sukuk sale." He added that even if the proceeds from the sale weren’t included, “the reserve decline remains huge."Adding to the confusion, the pace of the decline in reserves this year "has puzzled economists who see little evidence of increased government spending, fueling speculation it’s triggered by capital flight and the costs of the kingdom’s war in Yemen." Of course, the recent purchase of $110 billion in US weapons will be an even greater drain on Saudi finances, and begs the question whether the Saudis can even afford it.

Selective tax from June 10 | Saudi Gazette: — Saudi Arabia announced on Saturday that the selective tax will be implemented from June 10 and the value-added tax (VAT) from January 1. The announcement was made by the General Authority of Zakat and Tax based on a decision taken by the General Secretariat of Gulf Cooperation Council (GCC) on May 23. The selective taxes that will be implemented by all Gulf countries target several items, including tobacco products and power drink by 100 percent and fizzy drinks by 50 percent. The Zakat Authority is responsible for collecting VAT and ST, ensuring that all taxpayers comply with relevant laws and that no one evades taxes. It applies international standards for tax collection and uses state-of-the-art technology to ensure precision and accuracy. If registered people (traders, importers etc.) fail to present a tax declaration to the General Authority of Zakat and Tax, then they will be penalized by a fine ranging between 5% and 25% of the tax value. Those who withhold information or violate regulations or obstruct Zakat Authority’s employees from carrying out their duties will be fined up to SR50,000. Those who import or produce commodities liable to selective tax and don’t register the required information with the Authority will be considered as tax evaders.

Clash Between Qatar And The Saudis Could Threaten OPEC Deal - The cohesion of the Gulf Cooperation Council (GCC), which includes all Arab Gulf countries,seems to be cracking. UAE Minister of State for Foreign Affairs, Anwar Gargash, openly stated that the GCC was facing a major crisis, as Qatar seems to be opening up to Iran. Gargash made his comments on Twitter less than a week after Saudi Arabia and the UAE signaled frustration at Qatar. The simmering conflict between the UAE and Saudi Arabia on one side and Qatar on the other has again been heating up after the Qatar’s News Agency (QNA) was purportedly hacked, spreading remarks by Qatari Emir Tamim bin Hamad al-Thani which criticized Gulf rhetoric against Iran and suggested strains between the Emir and U.S. President Donald Trump. Qatar has vehemently denied these quotes, but the Saudi, Emirati and Egyptian governments have reacted by blocking Qatari news sites and TV stations, including Al Jazeera. The crisis between Qatar and its GCC neighbors, Saudi Arabia, UAE and Bahrain, emerged shortly after Tamim bin Hamad Al Thani, the Emir of Qatar, visited Saudi Arabia for the meeting between the heads of state of most Islamic countries and U.S. president Trump. During these meetings, as indicated by Arab sources, Sheikh Tamim has called Iran a force of stability. The latter is remarkable as most statements made to the press during the Riyadh Summit indicated that all attending countries agreed to keep Iran in political and economic quarantine. At the same time, the participants agreed to counter the Muslim Brotherhood, which is blacklisted by Saudi Arabia, UAE and Egypt. The Muslim Brotherhood however is well protected in Qatar. At present, the ideologue of the Brotherhood, Yusuf Al Qaradawi, is a celebrity in Doha, and has access to the Emir and the Emir’s father and predecessor, Hamad bin Khalifa al-Thani.

Millions of Yemenis face hunger during Ramadan - Al Jazeera -- While Muslims worldwide celebrate Ramadan with special meals and tasty treats, millions of Yemenis are suffering from an acute lack of food as the country's two-year war rages on.According to aid agencies, 17 million people do not have enough to eat, in what the UN calls the "largest humanitarian crisis in the world".Typically, people shop throughout Ramadan, but Yemeni storekeepers have nothing to celebrate."Sales are the lowest from years past. Every year is worse than before," Yahya Hubar, a shopkeeper in Hodeidah, a coastal city in western Yemen, told Al Jazeera.More than two million children are acutely malnourished in Yemen, where a child under five dies every 10 minutes of preventable diseases, according a report by UNICEF published in December. In addition, the country is facing a cholera outbreak, which so far has infected more than 29,000 people. As many are scrambling to get their hands on food necessities, no longer are people talking about the special foods prepared and enjoyed during the festive Ramadan month. "Our situation is very hard. We haven't been paid for several months. Essential needs are hard to get and the prices are high. We're looking at goods we can't buy," Nabil Ibrahim, another Hodeidah resident, told Al Jazeera.

'Nearly 600 cholera deaths' in Yemen over past month | Yemen News | Al Jazeera: An estimated 70,000 cases of cholera have been reported by UNICEF in Yemen, with nearly 600 people dying over the past month, as the disease continues to spread at an alarming rate.The UN agency, which provides humanitarian and developmental assistance to children and mothers in developing countries, said on Friday that the already dire situation for children in Yemen was quickly turning into a disaster."Cholera doesn't need a permit to cross a checkpoint or a border, nor does it differentiate between areas of political control," said Geert Cappelaere, UNICEF regional director, following his visit to the country, according to a statement on the agency's website. He gave warning that "the number of suspected cases is expected to reach 130,000 within the next two weeks" in the Arabian Peninsula country.UNICEF said at least 10,000 cholera cases were reported in the past 72 hours alone.Cappelaere described harrowing scenes of children who were barely alive - tiny babies weighing less than 2kg, fighting for their lives at one of the few functioning hospitals he visited."But they are the lucky ones. Countless children around Yemen die every day in silence from causes that can easily be prevented or treated like cholera, diarrhoea or malnutrition," he said.

Cholera, Famine and Girls Sold Into Marriage for Food: Yemen’s Dire Picture NYT - Cholera deaths in war-torn Yemen have surged into the hundreds, more than a quarter of Yemenis face famine, and parents are selling girls into marriage to buy food, the United Nations said on Tuesday. The description of Yemen by the top United Nations aid official, Stephen O’Brien, the under secretary general for humanitarian affairs and emergency-relief coordinator, was perhaps his most dire yet in a series of alarming updates on the crisis.“If there was no conflict in Yemen, there would be no descent into famine, misery, disease and death — a famine would certainly be avoidable and averted,” Mr. O’Brien told the United Nations Security Council.He depicted the crisis as man-made, implicitly placing part of the blame on the Saudi Arabia-led military coalition that has been bombing Yemen’s Houthi rebels and their allies for over two years. He also blamed the Houthis. “The people of Yemen are being subjected to deprivation, disease and death as the world watches,” he said. Mr. O’Brien also implored the Saudis to avoid an attack on Hodeidah, the only port in Yemen that can still handle shiploads of food and medicine. Virtually all of the basic needs in Yemen, the Arab world’s poorest country, must be imported. Saudi Arabia and its Arab allies have vowed to crush the Houthis, seeing them as proxies for Iran’s influence in the region. The Saudis have pledged to retake all territory seized by the Houthis, who are from the north of Yemen, and reinstate the Saudi-backed government that was forced to flee the capital, Sana, in 2015. Although widely criticized for indiscriminate bombings in Yemen, the Saudis have also suggested they are in no rush to end a war that has ravaged their neighbor, leaving roughly 10,000 Yemenis dead and millions destitute and at risk of disease.  Mohammed bin Salman, the deputy crown prince and defense minister of Saudi Arabia, said in a televised interview on May 2 that his side could just exhaust the Houthis and starve them of supplies.

Villagers Say Child Was Shot As He Tried to Flee U.S. Navy SEAL Raid -- Five civilians including a child were killed and another five were wounded in the latest U.S. Navy SEAL raid in Yemen, according to eyewitness accounts gathered by The Intercept. The raid by U.S. commandos in the hamlet of al Adhlan, in the Yemeni province of Mareb on May 23, also destroyed at least four homes. Navy SEALs, with air support from more than half a dozen attack helicopters and aircraft, were locked in a firefight with Yemeni tribesmen for over an hour, according to local residents. Details from five eyewitnesses in the village conflict with statements made by the Department of Defense and U.S. Central Command, which have not acknowledged that civilians were harmed. Official military reports claimed seven militants from the Yemen-based Al Qaeda branch, Al Qaeda in the Arabian Peninsula, were killed “through a combination of small arms fire and precision airstrikes.” Two commandos were also reportedly lightly wounded in the gunfight. Pentagon spokesman Jeff Davis told reporters on May 23 there were “no credible indications of civilian casualties.” Yet village residents gave a list of 10 names of civilians killed and wounded during the raid. Fifteen-year-old Abdullah Saeed Salem al Adhal was shot dead as he fled from his home with women and children. Another child, 12-year-old Othman Mohammed Saleh al Adhal, was injured but survived.

U.S. Starts Shipping Weapons To Syrian Kurds - Just three weeks after reports first emerged that the Trump administration was considering arming the Syrian Kurd militia caught in the crossfire between Turkish and Syrian army forces, NBC reported that the American military has started shipping weapons and equipment to the Kurdish fighters of the Syrian Democratic Forces, also known as YPG, a key US ally on the ground in Syria. Citing an unnamed official, NBC adds that the U.S. began providing the equipment in the last 24 hours. Details were scarce, with no specifics about what weapons and supplies the US is sending the Syrian Democratic Forces or how those items are being delivered however when the report first emerged, the U.S. military announced it would provide the YDF with ammunition, rifles, armor, radios, bulldozers, vehicles, and engineering equipment. Earlier this month US officials said that Trump had signed off on a plan “to equip Kurdish elements of the Syrian Democratic Forces” in the fight to retake the Syrian city of Raqqa from ISIS. "The SDF, partnered with enabling support from U.S. and coalition forces, are the only force on the ground that can successfully seize Raqqa in the near future,” Pentagon spokeswoman Dana White said in a statement. The announcement is guaranteed to send Turkey's president Erdogan into another fit of rage. Earlier this month Erdogan condemned Trump’s decision to arm Syrian Kurds whom Turkey considers to be terrorists and an extension of outlawed Kurdish insurgents within its borders. Three weeks ago Erdogan said: “I hope very much that this mistake will be reversed immediately,” adding that "we want to believe that our allies would prefer [to] be side by side with ourselves rather than with the terror groups.”

Stratfor looks at Afghanistan and sees a Conflict With No Time Limit -- Summary: Stratfor has been one of the few geopolitical research shops that has seen the madness of our war in Afghanistan. So their new report deserves attention. But it will be ignored. We prefer advice from “experts” who have been consistently been wrong. Phase two of the war begins soon. The body bags will arrive soon. Only our soldiers and their families will care. Forecast Highlights.

• The Pentagon’s move to deploy more troops to Afghanistan, should U.S. President Donald Trump approve it, would be aimed at empowering the Afghan National Security Forces to eventually inflict enough casualties on the Taliban to encourage them to negotiate.
• Until the factors that contribute to the conflict — including the Afghan forces’ weakness and Pakistan’s support for the Taliban — have been addressed, the prospects for ending the war will be dim.
• Lax border enforcement between Afghanistan and Pakistan will ensure that militants continue launching attacks into both countries from the border regions, further complicating efforts to end the war.

Analysis: The invasion routes into Afghanistan are well worn at this point in history. The pathways leading out of the country, on the other hand, are far less clear. This is the predicament U.S. President Donald Trump faces as he weighs the Pentagon’s proposal to send up to 5,000 troops to Afghanistan to support the struggling Afghan National Security Forces (ANSF) in their 15-year war against the Taliban. If Trump approves the measure, Washington will escalate its involvement in a conflict that has so far lasted through two presidencies. The move would entail granting U.S. troops greater authority on the battlefield, and may well invite a commensurate personnel contribution from Washington’s allies in the North Atlantic Treaty Organization.  But as much as the Afghan military could benefit from reinforcements — the Taliban are intensifying their attacks as part of the group’s annual spring offensive — Washington understands that more troops will only accomplish so much. The reasons for the war’s endurance are much deeper and more complicated than the number of boots on the ground. And until these underlying factors are addressed, peace will continue to elude Afghanistan.

Russia And Iran Sign Oil-For-Goods Barter Deal; Escape Petrodollar --Iran signed an agreement with Russia under which it has broken free from the petrodollar, and will "sell", or rather barter crude oil to Russia in exchange for products. The announcement was made by Iran’s Oil Minister Bijan Zanganeh, as reported by Russia’s RIA and TASS news agencies."The deal has been concluded. We are just waiting for the implementation from the Russian side. We have no difficulties; we signed the contract, everything is coordinated between the parties. We are waiting for Russian oil companies to send tankers,” he said, as quoted by Russian news agencies. While sanctions against Iran have been lifted, restrictions on trade in US dollars for the country's banks remain, making it difficult to sell oil on the open market.As reported here just over three years ago, the $20 billion agreement was initially signed in April 2014 when Iran was under Western sanctions over its nuclear program. Russian traders were to participate in the selling of Iranian oil. In exchange, Iran wanted essential goods and technology from Russia. This is what Reuters reported in April 2014 when the deal was first announced: The White House has said such a deal would raise "serious concerns" and would be inconsistent with the nuclear talks between world powers and Iran.   Russia and Iran discussed energy, electricity, nuclear energy, gas and oil, as well as cooperation in the field of railways, industry, and agriculture.  Novak had announced in February that Russia’s state trading enterprise Promsirieimport has been authorized by the government to carry out the purchase of Iran’s oil through the oil-for-goods program under study by both countries. Meanwhile, Zanganeh had been quoted by the media as saying that Iran would be paid in cash for half of the oil that would be sold to Russia.  The due payments for the remaining half would be made in goods and services, the Iranian minister had said.

Russia Expects China To Help Resolve Syrian Crisis, "Restore The Country" -- Last summer, when the Syrian conflict was near its peak under the Obama administration,China unexpectedly warned it was ready to enter the proxy war when in a stunning announcement, Xinhua reported that Beijing was prepared to side with Syria - and Russia - and against the US-led alliance, and that Xi and Assad had agreed that the Chinese military will have closer ties with Syria and provide humanitarian aid to the civil war torn nation.  A high-ranking People's Liberation Army officer also said that the training of Syrian personnel by Chinese instructors has also been discussed: the Director of the Office for International Military Cooperation of China's Central Military Commission, Guan Youfei, arrived in Damascus on Tuesday for talks with Syrian Defense Minister Fahad Jassim al-Freij, Xinhua added. Guan said China had consistently played a positive role in pushing for a political resolution in Syria. "China and Syria's militaries have a traditionally friendly relationship, and China's military is willing to keep strengthening exchanges and cooperation with Syria's military," Xinhua quoted Guan.

Early China Data Shows Slowdown Biting Amid Credit Tightening - The first hints of China’s economic performance this month suggest that a slowdown in growth is taking hold, as policy makers beef up efforts to clamp down on financial risks.The international-investor optimism that dominated in the earlier part of the year is now souring, as curbs on leverage push up the cost of domestic borrowing. Small and medium-sized companies are also reporting dented confidence, and sentiment among sales managers and in the steel market worsened.A surprise cut in China’s debt rating by Moody’s Investors Service last week may mark a turning point for the world’s second-largest economy, as momentum weakens following a better-than-expected expansion in the first quarter. Yet the gloom shouldn’t spread too far, with consumers still spending, factory-gate prices gaining and home prices defying predictions of a hard landing.   Standard Chartered Plc’s Small and Medium Enterprise Confidence Index headed for a second consecutive month of decline in May, falling slightly to 56.9 from 58 in April. "Both current performance and expectations fell," which put pressure on the labor market and on profitability, economists Yan Se and Ding Shuang at the bank wrote in a note. "Credit access for small- and medium-sized enterprises is tougher" and funding costs have worsened, the analysts said. The reading for expectations slumped to minus 0.1 in May, down from 17.7 last month -- the highest since at least late 2015. The assessment of the current economic situation has also dampened, falling to 12.2 in May from 17.6 in April.

China Manufacturing Contracts For The First Time In A Year: "The Economy Is Clearly On A Downward Trajectory" -- Following yesterday's official  (if less credible and focused mostly on SOEs) manufacturing and non-mfg PMI reports from China's National Bureau of Statistics, both of which came either in line or slightly better than expected, moments ago Caixin/Markit reported its own set of Chinese manufacturing data, and it was far more disappointing: at 49.6, not only did it miss expectations of 50.1, but by printing below 50, the operating conditions faced by Chinese goods producers deteriorated for the first time in nearly a year. As shown below, this was the first contractionary print sine last June when China's massive, anti-deflationary fiscal stimulus kicked in. The seasonally adjusted PMI posted below the neutral 50.0 value at 49.6 in May, the first contractionary print since the middle of 2016. Although only indicative of a marginal deterioration in operating conditions, Caixin conceded that the index fell from 50.3 to signal the first decline in the health of the sector for 11 months. The fall in the headline index coincided with slower increases in output and new orders, while staff numbers were cut at a quicker rate. Subdued demand conditions underpinned a renewed fall in purchasing activity, albeit only slight, and the first increase in inventories of finished items in 2017 so far. The latest data also signalled the first fall in input costs since last June,which in turn led manufacturers to lower their selling prices for the first time since February 2016.

China's debt downgrade signals alarm over its finances- Nikkei Asian Review: HONG KONG China's financial vulnerabilities are fueling the belief that China might have a "Minsky moment," in which debt levels hit the breaking point and asset values collapse. Among the dangers, local lenders being squeezed by tighter interbank credit, relentless growth of shadow assets and cross-holdings between banks and nonbank financial institutions. On May 24, U.S. ratings agency Moody's cut China's sovereign credit score one notch to "A1" on worries that the inexorable rise in leverage across the economy will result in higher contingent liabilities for the government. Four years ago peer Fitch Ratings lowered its rating to an equivalent level of "A+" on similar concerns. Moody's latest downgrade -- which puts China on a par with Japan and Israel, and one rank above emerging economies like Poland, Slovakia and Botswana -- did not come as a surprise to a lot of market watchers, even though the last time it happened was close to three decades ago. That was in November 1989, when China was wrestling with soaring inflation and economic sanctions imposed by the U.S. and its allies following the Tiananmen Square crackdown. "The downgrade is pretty much expected, given the negative outlook last March. It's just that the timing is earlier than people expected," said Arthur Lau, head of fixed income for Asia excluding Japan at PineBridge Investments, citing the lack of new developments in China's macroeconomic data. "Plus, the argument or reasons for the downgrade were not new and already known by the market," he said. Although Lau believes Chinese bond issues continue to offer more attractive yield spreads -- or returns -- versus comparable offerings with equivalent single-A ratings, he is cautious not to invest in small or midsize commercial banks that have increasingly relied for their income on wealth management and shadow banking products with wholesale funding. Within the financial sector, China's policy banks and top-tier commercial lenders are preferred, Lau explained, due to the interest-rate and foreign-exchange carry trades. 

Farming the World: China’s Epic Race to Avoid a Food Crisis -- China’s 1.4 billion people are building up an appetite that is changing the way the world grows and sells food. The Chinese diet is becoming more like that of the average American, forcing companies to scour the planet for everything from bacon to bananas. But China’s efforts to buy or lease agricultural land in developing nations show that building farms and ranches abroad won’t be enough. Ballooning populations in Asia, Africa and South America will add another 2 billion people within a generation and they too will need more food. That leaves China with a stark ultimatum: If it is to have enough affordable food for its population in the second half of this century, it will need to make sure the world grows food for 9 billion people.Its answer is technology. China’s agriculture industry, from the tiny rice plots tended by 70-year-old grandfathers to the giant companies that are beginning to challenge global players like Nestle SA and Danone SA, is undergoing a revolution that may be every bit as influential as the industrial transformation that rewrote global trade. The change started four decades ago when the country began to recast its systems of production and private enterprise. Those reforms precipitated an economic boom, driven by factories, investment and exports, but the changes down on the farm were just as dramatic. Land reforms lifted production of grains like rice and wheat, and millions joined a newly wealthy middle class that ate more vegetables and pork and wanted rare luxuries like beef and milk.

Sources: 3rd US Naval Strike Force Deployed to Deter North Korea - VOA - The United States is sending a third aircraft carrier strike force to the western Pacific region in an apparent warning to North Korea to deter its ballistic missile and nuclear programs, two sources have told VOA. The USS Nimitz, one of the world’s largest warships, will join two other supercarriers, the USS Carl Vinson and the USS Ronald Reagan, in the western Pacific, the sources told VOA's Steve Herman.  The U.S. military has rarely simultaneously deployed three aircraft carriers to the same region. But North Korea’s growing nuclear and missile threat is seen as a major security challenge for President Donald Trump, who has vowed to prevent the country from being able to strike the U.S. with a nuclear missile, a capability experts say Pyongyang could have some time after 2020.  Sitting alongside Japanese Prime Minister Shinzo Abe, Trump said Friday just before the start of Group of Seven (G-7) meetings in Sicily that G-7 leaders would have a “particular focus on the North Korea problem.” A White House statement issued Friday said the two leaders have agreed to “enhance sanctions on North Korea” in an attempt to prevent the further development of North Korea’s ballistic missile and nuclear programs.  The U.S. military, meanwhile, will test a system to shoot down an intercontinental ballistic missile (ICBM) for the first time next week.It is intended to simulate a North Korean ICBM aimed at the U.S. The Missile Defense Agency said it will test an existing missile defense system on Tuesday to try to intercept an ICBM. The Pentagon has used the Ground-Based Midcourse Defense (GMD) system to intercept other types of missiles, but never an ICBM.  The GMD has been inconsistent, succeeding in nine of 17 attempts against missiles without intercontinental range capability since 1999.

The Korean Peninsula: Ground Zero for Armageddon?  --Is the Korean Demilitarized Zone poised to become "ground zero for the end of the world"? Historian Bruce Cumings, the author of The Origins of the Korean War, raised this question in a recent article for the London Review of Books, and judging by a series of exchanges between the United States and North Korea in recent weeks, the possibility may not be as remote as it once seemed.In April, North Korea warned of the imminence of "a thermonuclear war," a prospect seemingly acknowledged by President Trump's declaration that, "We could end up having a major, major conflict with North Korea." On May 2, a US carrier strike group patrolled the waters off the Korean Peninsula in anticipation of North Korea's sixth nuclear test, which never happened. Nevertheless, on May 14, Pyongyang test-fired a new class of missile into the waters between the North and neighboring Japan, prompting the US to move a second heavily armed carrier strike group, equipped with Aegis missile defense systems, to the Korean Peninsula. These two strike groups, which jointly field a total of some 160-attack aircraft and are escorted by substantial support fleets, considerably raise the stakes in the region. According to Cumings, the latest high-stakes exchanges between the United States and North Korea are a continuation of six decades of US foreign policy which, "Since the very beginning ... has cycled through a menu of options to try and control the [Democratic People's Republic of Korea, or North Korea]." According to The New Yorker, in this asymmetric conflict, North Korea uses "belligerent propaganda -- not to mention nuclear-tipped ballistic missiles" to counter what it perceives as a persistent existential threat from the United States. Noam Chomsky has described the current situation as the logical outcome of the propensity of the United States to "play with fire" rather than making genuine efforts to achieve denuclearization: "Over and over again," he observes, "There are possibilities of diplomacy and negotiation ... which are abandoned, dismissed, literally without comment, in favor of increased force and violence."

China exerting ‘productive’ pressure on North Korea over missile launches, says US official - The US Ambassador to the UN, Nikki Haley, said on Tuesday the Trump administration believes China is using “backchannel networking” with North Korea to try to get Kim Jong-un to stop nuclear and ballistic missile testing.  “We believe they are being productive,” she told reporters. “We do think they’re trying to counter what is happening now.”Haley said China knew North Korea best “and so we’re going to keep the pressure on China, but we’re going to continue to work with them in any way that they think is best”. Haley said the United States and China were also discussing the timing of a new Security Council resolution that would toughen sanctions against North Korea in response to its latest ballistic missile launches. The latest on Monday was the third in three weeks.Beijing is North Korea’s traditional ally and accounts for up to 90 per cent of the isolated nation’s external trade, giving it considerable economic leverage, but there are limits to China’s influence and its willingness to use it. North Korea has advanced its nuclear weapons programme over Chinese objections. Notwithstanding US calls for China to turn the screw, Beijing remains reluctant to impose biting economic pressure as it fears a North Korean collapse that would lead to instability on China’s doorstep.China’s UN ambassador, Liu Jieyi, made clear last week that Beijing’s top priority was to restart talks with North Korea following its multiple tests to try to reduce tensions rather than impose new sanctions. He stressed that all progress with Pyongyang on eliminating nuclear weapons from the Korean peninsula has come through dialogue. Haley said Washington and Beijing were trying to decide the best way to approach North Korea.

South Korea's Moon sends aide to U.S. to quell fears over anti-missile system | Reuters: South Korean President Moon Jae-in's top security aide left for Washington on Thursday as the new leader tries to reassure his country's main ally he will not scrap a deal to host a missile defense system that has angered China. Moon ordered an investigation this week into why his office had not been informed about the deployment of four more launchers for the U.S. Terminal High Altitude Area Defense (THAAD) system, which are being deployed amid a growing threat of missile launches by North Korea. The liberal leader had pledged during his election campaign that he would review the decision to deploy THAAD, and said it was "very shocking" his office had not been told of the latest deployment while he is preparing for a summit with U.S. President Donald Trump in Washington this month. The decision to deploy the system in South Korea was made by Moon's conservative predecessor, Park Geun-hye, who was impeached and thrown out of office in a corruption scandal that engulfed South Korea's business and political elite. "My order for a probe on THAAD is purely a domestic measure and I want to be clear that it is not about trying to change the existing decision or sending a message to the United States,"

 Unlike ASEAN, G7 leaders send strong statement on South China Sea — Contrary to their Southeast Asian counterparts, the leaders of the Group of Seven advanced economies reaffirmed their commitment to maintaining a rules-based order in the East and South China Seas. The G7—composed of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States—urged all parties to pursue demilitarization of disputed features in the region.  "We reaffirm our commitment to maintaining a rules-based order in the maritime domain based on the principles of international law, including as reflected in the United Nations Convention on the Law of the Sea (UNCLOS), and to the peaceful settlement of maritime disputes through diplomatic and legal means, including arbitration," the G7 leaders said in a joint communique following their meeting in Taormina, Italy last Saturday.The leaders were also strongly opposed to any unilateral actions that could increase tensions in the region.This statement from the G7 leaders appears to be stronger than the Chairman's Statement of the Association of Southeast Asian Nations issued on April 29. Despite having four member states directly involved in the maritime dispute, the ASEAN under the leadership of President Rodrigo Duterte did not mention the militarization of the South China Sea in its final statement after a Leaders' Summit in Manila last month. "We took note of concerns expressed by some Leaders over recent developments in the area. We reaffirmed the importance of the need to enhance mutual trust and confidence, exercising self-restraint in the conduct of activities, and avoiding actions that may further complicate the situation, and pursuing the peaceful resolution of disputes, without resorting to the threat or use of force," the ASEAN chairman's statement read.

Islamic State jihad explodes in Southeast Asia | Asia Times: Islamic State-backed militants’ ongoing assault on Marawi City on the southern Philippine island of Mindanao heralds a bid by the radical extremist group to open a new Southeast Asian front in a spreading campaign of global jihad. The Marawi battle has established the clear presence of other Southeast Asian nationals fighting side-by-side with the IS-aligned Filipino Maute Group, with confirmed deaths of Malaysian and Indonesian nationals in the battle zone. On the battle’s seventh day, 61 militants, 20 government soldiers and 17 civilians were reportedly killed. Philippine Solicitor General Jose Calida publicly announced that “what is happening in Mindanao is no longer a rebellion of citizens, but it has transmogrified into an invasion of foreign terrorists who heeded the clarion call of ISIS.” Singapore’s Ministry of Home Affairs has claimed that Muhamad Ali Abdul Rahiman, a Singapore national, has been in Mindanao and was implicated in terror-related attacks across the region since the 1990s. Rahiman’s involvement in the current assault on Marawi is under investigation. The presence of foreign militants, of course, is not new to the Philippines. The Indonesian terror group Jemaah Islamiah, once affiliated with Al Qadea, is known to have set up a militant training center in the southern Philippines as early as 1994. Since then, the southern Philippines has been a known training ground for militant Indonesians, Malaysians, Singaporeans, Thais and some Arabs. Analysts and officials are now grappling with how IS has leveraged into these well-established networks, particularly between the Philippines and Malaysia. Some fear that IS may have a deeper network in the region than many previously realized. The Filipino Maute Group leading the siege of Marawi city has emerged suddenly at the center of Islamic militant ties. The extremist group was founded by Omar and Abdullah Maute, brothers who had previously worked in the Middle East and later returned to the Philippines imbued with hard-line Islamic ideologies.

India’s Economic Growth Slows Down in Fourth Quarter - India’s economy grew 6.1% in the three months through March from a year earlier – slowing from a provisional 7.0% in the previous quarter – government data showed on Wednesday. This is much lower than the forecasts for annual growth of 7.1% in the January-March quarter, reflected in a Reuters poll. While gross domestic product (GDP) growth was 6.1%, gross value added (GVA) growth – a metric that more economists now favour as it excludes indirect tax collection – slowed even more sharply in the fourth quarter to 5.6%, compared to 6.7% in the third quarter. Growth for FY 20160-17 came in at 7.1% – despite the fact that all data released today captures the impact of the revised WPI and IIP series, which was widely expected to boost the growth numbers. In a press conference on Wednesday, responding to a number of questions on whether the lower growth in the fourth quarter seen was because of demonetisation, chief statistician T.C.A Anant said that notebandi was only one of many policy factors that could have led to the slowdown in growth. “It would be difficult to state whether this [demonetisation-caused slowdown] is causal. All policy decisions by the government have some effect on growth rate. Demonetisation is one of them. It is not so straight forward to link third quarter and fourth quarter GDP numbers to demonetisation. Other dynamics should be kept in mind too,” Anant said. Two key aspects of economic health – gross fixed capital formation and private consumption (as a percentage of GDP) – also slowed down marginally to 28.5% and 57.3% respectively in the fourth quarter when compared to the third quarter. 

Government wants you to believe its cattle slaughter rules are about cruelty. They aren’t -- The Environment Ministry last week notified new rules under the Prevention of Cruelty to Animals Act, banning the sale of all kinds of cattle for slaughter at animal markets nationwide. In one fell swoop, the Centre has attempted to change the way the meat network in India operates. The new rules make it illegal for any animal passing through an open market to ever be sold for slaughter. Instead, it mandates that animals on the open market can only be sold for agricultural use, and requires the market authority to collect undertakings from the sellers and buyers of the animals asserting that they are not being traded for slaughter. The rules were immediately criticised. The chief minister of Kerala called them draconian and said the move intruded on federal rights. Representatives of livestock trade bodies condemned the rules. The West Bengal government said they would seriously jeopardise the jobs of millions of people in the state’s thriving leather industry. Many, particularly in South India and the North East, took to the streets to criticise the government for attempting to regulate what people can eat. That might be a natural reading of the government’s intentions with the rules, considering its willingness to push support for state-level anti-beef laws as well as its close association with numerous gau rakshak cow protection groups that have indulged in horrific violence.  But the Environment Ministry, in a press release issued on Saturday, insisted that the rules had nothing to do with what Indians eat. “The prime focus of the regulation is to protect the animals from cruelty and not to regulate the existing trade in cattle for slaughter houses,” the release said.

One Thing Modi Hasn’t Brought: Jobs  -- Three years ago, Narendra Modi was sworn in as prime minister of the Republic of India amid much hope and tremendous expectation. A good portion of the population remains optimistic that he’ll fulfill his promises to unshackle the Indian economy. But Modi’s tenure cannot yet be judged a success for one central reason: He’s signally failed to create jobs for the desperate young people who gave him his massive mandate. Modi’s landslide victory in 2014 was bigger than any seen in India for three decades. His Bharatiya Janata Party took home an unprecedented majority of seats in the lower house of India’s parliament, which meant that he was free to act without having to consult coalition partners. What’s more, he won the election more or less single-handedly. Voters, especially in India’s poor and under-employed north, thrilled to his personality and pledges of economic and political revival. Three years in, some important steps forward have been taken, including the passage of a landmark reform of indirect taxes. Foreign investors remain bullish on the country. Yet Modi’s jobs record is even poorer than that of the much-maligned Congress government that his replaced. India needs to create as many as a million new jobs every month just to keep up with the growing population. Under Modi, just over 10,000 jobs a month are being created instead, according to government figures from 2015. The scale of this failure is enormous -- especially since it will add to the angry army of already underemployed young Indians. The reforms needed to spur real job growth are simple to lay out. The government needs to reform itself -- starting with creating a less-intrusive regulatory state and a more accountable tax bureaucracy. In particular, factor markets like those for land and labor need to be swiftly made more flexible nationwide, so that business becomes more competitive. India’s troubled state-owned banks need to have their books cleaned up and, ideally, be privatized or forced to shrink. Government needs to free up capital by borrowing less, and foreign investment into infrastructure must be prioritized.

Venezuelan opposition condemns Goldman for $2.8 billion bond deal | Reuters: - Goldman Sachs Group Inc's statement that it never transacted directly with the government of Venezuelan President Nicolas Maduro when it bought $2.8 billion of bonds for pennies on the dollar was dismissed by the country's opposition on Tuesday as an effort to "put lipstick on this pig." Goldman, in a statement late Monday confirming the purchase, said its asset-management arm acquired the bonds "on the secondary market from a broker and did not interact with the Venezuelan government." (A look into Venezuela's economic crisis here) The New York-based investment bank came under fire from Venezuelan politicians and protesters in New York opposed to Maduro, who said the deal provided the cash-strapped government hundreds of millions of dollars in badly-needed hard currency. The deal, first reported by the Wall Street Journal, made Goldman complicit in alleged human rights abuses under the government, they said. "As hard as it may try, Goldman Sachs ... cannot put lipstick on this pig of a deal for Venezuelans," the head of the opposition-led congress Julio Borges said. Goldman Sachs did not respond to an email requesting comment on Borges' statement. In its original statement, Goldman had said: "We recognize that the situation is complex and evolving and that Venezuela is in crisis. We agree that life there has to get better, and we made the investment in part because we believe it will." The opposition-led National Assembly later on Tuesday voted to ask the U.S. Congress to investigate the deal, which they called immoral, opaque, and hypocritical given the socialist government's anti-Wall Street rhetoric.

Venezuela’s hunger crisis is for real -- Over a three-decade career, Raffalli worked with desperately hungry people everywhere from tsunami-hit Indonesia to Pakistan to the refugee camps of southern Algeria. A nutritionist by training and humanitarian by calling, she participated in the Oxfam experts groups that brought statistical rigor to such emotionally charged terms as “hunger crisis” and “famine.” Now she’s back in Caracas, her home town, applying a lifetime’s expertise in a context that never ought to have called for it. What she found was shocking. Caritas constructed a sample of more than two dozen at-risk areas in the poorest parishes of four Venezuelan states and started weighing children under 5 years old. This allows Caritas to measure “global acute malnutrition” — the key mechanism humanitarians use to assign numbers to the severity of hunger. In October, 8.9 percent of the children they measured faced either moderate or severe acute malnutrition. The number was high, and it has kept rising. By April, 11.4 percent of of children in vulnerable areas were experiencing acute malnutrition — well above the 10 percent threshold humanitarian agencies use to declare a food crisis. More and more, Raffalli is finding households pursuing the kind of emergency adaptation strategies usually associated with famines in war-torn  countries. Sixty-three percent report turning to “unusual foods,” 70 percent report that they’ve stopped consuming types of food they consider important, and 85 percent of families in at-risk areas report they are eating less. In 57 percent of households in at-risk areas, someone in the family has reduced essential food intake so others could eat. Forty-four percent report going one whole day without eating at all. Overall, 34 percent of families are now resorting to at least one emergency coping strategy — a sign of acute food insecurity– such as selling productive assets to buy food, reducing essential expenditures, eating from garbage bins, sending a child to beg for food, or sending a family member to live elsewhere to relieve pressure on food stocks.

Brazil meatpacker agrees to pay $3.2 billion to settle graft probe - The FCPA Blog - The FCPA Blog: The parent company of Brazil meatpacking giant JBS SA will pay a fine of about $3.2 billion spread over 25 years for bribing 1,900 local politicians. Brazil prosecutors announced the leniency agreement Wednesday with J&F Investimentos. "The payments will be made exclusively by the holding company and should start in December 2017," prosecutors said. J&F has 25 years to make the payments. Witnesses testifying for the prosecution said the company bribed about 1,900 politicians in recent years. An owner of J&F, Joesley Batista, resigned from the JBS board last week. He had been serving as chairman. His brother Wesley resigned as vice chairman but stayed on the board and is still serving as CEO. Prosecutors said J&F landed investments and loans from pension funds and state-run banks in return for bribes. JBS SA is traded on the Sao Paulo Stock Exchange, in the Novo Mercado segment, under the symbol JBSS3. JBS USA Holdings, Inc. owns 78.5 percent of Pilgrim’s Pride Corporation, one of the largest chicken-producing companies in the world. Pilgrim's Pride is listed on NASDAQ under the symbol PPC.

Mexico’s Economy Reels from a Blast from the Past - “Green gold.” That’s the new name Mexicans have given to avocado, one of the country’s staple foods and most important agricultural exports. Unlike real gold, the price of green gold is soaring, having more than doubled in the last year alone, to reach an average price of 71.4 pesos ($3.85) in Mexico City, according to data from Mexico’s National Institute of Statistics and Geography (Inegi). Avocado prices are soaring for a whole variety of reasons, including rising global demand. Mexico is the world’s biggest exporter of avocado, accounting for just under half of the global market. And that market is growing by the day, particularly in the U.S., Europe, and China. But there’s another reason why the price of green gold is rising in Mexico, and it’s much closer to home: inflation. After decades of trying to tame the tempest of rising prices, with a reasonable degree of success, Mexico’s inflation rate soared to 6.17% in May, as measured by the INPC, the CPI version used by Inegi. It was fueled largely by the rising cost of food and energy after the government hiked gasoline prices by almost one-fifth at the beginning of the year. It’s the highest inflation rate since April 2009 and over double the Bank of Mexico’s benchmark rate of 3%.

B.C. Election results: Greens to support NDP in four-year government deal - B.C. NDP Leader John Horgan could soon become British Columbia’s 36th premier, toppling the Liberal government and forcing the resignation of Premier Christy Clark under a historic power-sharing deal cut Monday between the NDP and Greens.A flurry of unprecedented backroom negotiations to cobble together the next B.C. government culminated on the weekend at a downtown Victoria hotel, when Green Leader Andrew Weaver broke off talks with the Liberal negotiating team at around 9:30 p.m. Sunday, realizing they were too far apart for a deal.The Liberals, led by a powerhouse bargaining team of Finance Minister Mike de Jong and B.C. Hydro chairman Brad Bennett expected to get another crack at convincing the Greens to support their party Monday morning. But Weaver blew off the meeting. Instead, Green chief of staff Liz Lilly phoned Bennett to break the bad news that morning: The Greens were going with the NDP.Clark tried to intervene personally at the last minute, calling Weaver directly an hour before his planned 2 p.m. news conference. However, the university climate scientist was busy arriving at his legislature office, where he had to change from his regular Hawaiian shirt into a suit and prep for his joint press conference with Horgan. The premier’s call went to his voicemail. “In the end we had to make a difficult decision,” Weaver told reporters at a news conference in front of the golden gates to the legislative chamber. “A decision we felt was in the best interest of British Columbia today and that decision was for the B.C. Greens to work with the B.C. NDP for a stable minority government over the four-year term of this next session.”

Ottawa announces $867M in financial assistance for softwood lumber industry - The Canadian government today announced it will make $867 million in loans available to the forestry industry, workers and communities impacted by softwood lumber tariffs recently imposed by the United States. The deal includes a series of loans and loan guarantees that will work in concert with provincial efforts to support the industry. "We believe that this group of measures across the sector in both the near term and long term is the appropriate response and one that we think will stand the test of scrutiny," said Natural Resources Minister Jim Carr at a news conference in Ottawa. Carr said Ottawa is working with the provinces to speak with one voice on the issue. He also said he is not worried about further criticism from the U.S. that Canada is subsidizing the industry with this financial support, because the loans are at market rates. The U.S. Lumber Coalition, however, was quick to respond with a view that differs sharply from Carr's."Today's announcement of a new government subsidy for Canadian softwood lumber producers only further tilts the trade scale in Canada's favour, threatening more than 350,000 jobs in communities across the Unites States," said coalition spokesperson Zoltan van Heyningen. "We need a level playing field and must limit the flow of unfairly subsidized softwood shipments from flooding the U.S. market, driving American lumber manufacturers out of business." 

Bubble, bubble, Canada's housing market poses trouble, IMF says - A correction in Canada’s frothy housing market could impair bank balance sheets, warns IMF.  Imbalances in Canada’s housing market have increased to a degree that could pose a “significant” risk to the outlook for the broader economy, the International Monetary Fund said Wednesday.“Households are highly indebted and housing affordability, particularly in Vancouver and Toronto, has become a social issue with many first-time buyers priced out of the markets,” the IMF’s report said.Home prices have soared in Toronto as an alternative destination since Vancouver authorities imposed a tax on foreign buyers of real estate to try to contain out-of-control pricing there. As of March, Toronto was seeing annual price appreciation of about 28%. That backdrop is having an impact on the financial system: Moody’s Investors Service downgraded the credit ratings of Canada’s six big banks earlier this month, noting high household leverage and elevated home prices. Household debt rose to 167.3% of disposable income in the last quarter of 2016. As Canadian consumers have become more leveraged, the IMF and other agencies are on watch.  Earlier this year, Canadian regulators alleged the Toronto-based mortgage lender Home Capital HCG, -0.77%   had mishandled loan applications and it’s struggled to retain deposits since then. While many analysts argue that Home Capital’s problems are limited, the company’s woes haven’t helped soothe nerves already frayed by the other challenges facing the housing market. These developments have sent the company’s stock tumbling.

Modi and Merkel Put India-EU Free Trade Agreement Back on the Agenda - Prime Minister Narendra Modi strongly endorsed German Chancellor Angela Merkel’s vision of the European Union and committed at the earliest to resume talks between India and EU to stitch up a free trade agreement encompassing goods, services as well as mutual investment protection. “A strong leadership like that of Merkel’s is needed for global stability”, Modi said. Modi seemed to subtly underscore the political significance of Germany pushing for a more liberal and open global order at a time when the United States under President Donald Trump is showing signs of protectionism and reneging on the Paris climate change agreement. Merkel had openly expressed her disappointment at the US’s somewhat insular approach last week. As if to boost Merkel’s morale, Modi reinforced India’s strong commitment to the goals undertaken at the Paris climate agreement and even promised to partner with Germany on a sustained basis to develop renewable energy. “We are made for each other”, Modi said in a gesture of solidarity. The prime minister’s promise to resume the stalled free trade agreement (FTA) talks with the EU also comes against the backdrop of India not attending the Belt Road Initiative meeting at Beijing, and Germany too expressing its apprehension that there isn’t enough transparency and openness in what China is attempting. The Germans seemed to be signalling to New Delhi that a more democratic and open global trade and investment regime can be pursued by India and the EU in a fast changing world order. Modi’s body language  clearly seemed to suggest he was ready to do everything to build this partnership. In this sense, the timing of the Modi-Merkel meeting has its own significance.

Turkey Refuses To Grant Germans Access To Incirlik Airbase -- While Angela Merkel is busy sowing the seeds of the next cold war between Germany and the Trump administration (and therefore the US, if only for the next three and a half years), a troubling flashpoint for Germany continues to grow in Turkey where on Tursday, Turkey's foreign minister said it is not possible to allow German lawmakers to visit troops stationed at Turkey's Incirlik air base now, although he said Ankara may reconsider if it sees "positive steps" from Berlin. It was not immediately clear just what Turkey's "demands" or expectations, monetary or otherwise, were from Merkel for it to change its view."We see that Germany supports everything that is against Turkey," Mevlut Cavusoglu told a news c  onference in Ankara. "Under these circumstances it is not possible for us to open Incirlik to German lawmakers right now ... If they take positive steps in the future we can reconsider." Turkey has prevented German lawmakers from visiting the roughly 250 troops stationed at Incirlik as part of the U.S.-led coalition against Islamic State, saying that Berlin needs to improve its attitude first.According to Reuters, Cavusoglu also said the issue would be discussed with German Foreign Minister Sigmar Gabriel, who is due to visit Turkey on Monday. Ties between the NATO allies deteriorated sharply in the run-up to Turkey's April 16 referendum that handed President Tayyip Erdogan stronger presidential powers.

A Hard Rain’s Gonna Fall -- Josh Rogin reports that Washington is about to involve itself in the Ukraine peace process in a big way. Like just about every political marker Trump has thrown down since he began his feckless turn as head of American decision-making, he has reversed himself as if his previous statements were never made.  As recently as this past July, when he was still just a candidate rather than the waking nightmare he is now, Trump said the Ukraine mess was “Europe’s problem”, and the USA should only step in if other countries ask for its help. Considering what a dog’s breakfast Washington has made of past nation-building efforts, and its slobbering devotion for Israel in endless ‘negotiations’ with the Palestinians in its own parody of a peace process, you would think that is about as likely to happen as a tiny angel appearing to sit on your shoulder and help you make good decisions. Well, Germany at least – not to mention Josh Rogin – affects to be delighted that Washington is considering inviting itself to form the Normandy Five, and inject its bouncy, effervescent presence into Ukrainian reconciliation. What could go wrong? It’s only putting the world’s two biggest nuclear powers into direct confrontation. European officials, for their part, are cheering. “We very much appreciate that the new administration will be more engaged in the Ukraine issue. In the beginning they seemed not to be so interested in this issue. That’s changed a lot,” German Foreign Minister Sigmar Gabriel told The Post after meeting with Tillerson on May 17. Let’s take another look at Ukraine’s negotiating position, just to refresh our memories. Russia must withdraw its legions of regular troops from Eastern Ukraine (this will be considered to have happened only when the Ukrainian Army is able to roll through Donbas unopposed), return control of the Russian/Ukrainian border to Ukrainian authorities…and hand back Crimea. Initially, Trump suggested he would look seriously at America recognizing Crimea officially as Russian territory. But in true attention-deficit style, his Secretary of State now expects Putin to return Crimea to Kiev’s control, and there will be no consideration of relaxing sanctions until that happens.

"We Have Told Each Other Everything" - Highlights From Macron's First Meeting With Putin -- Just a few days after the young French president made headlines for his white-knuckled, "not innocent" handshake with Donald Trump, Russian president Vladimir Putin was prepared for his first meeting with Emanuel Macron, with the result captured on the following clip. Macron - Putin handshake lasted 7 second pic.twitter.com/7M82845MHz What followed was talks in private between the two leaders in Versailles that lasted for almost three hours during which the two leaders discussed a number of topics ranging from bilateral relations to the situations in Syria, Ukraine, Libya and the Korean Peninsula, and culminated with a press conference in which Macron said the "Franco-Russian friendship" was at heart of his meeting with Putin and called for improved ties with Russia but warned he would hold tough positions on sanctions and the civil war in Syria.“I want us to win the fight against terrorists in Syria and build together lasting political stability. We have laid the ground for that work together today.” Macron said. “I believe we’ve had an extremely frank and direct exchange. We have told each other everything.”  Macron also admitted he has “some disagreements” with his Russian counterpart, but said that the two leaders discussed them openly. The French president concede that serious international problems cannot be resolved without Moscow, as he stressed the importance of the role Russia plays in the modern world. “No major problem in the world can be solved without Russia,” he said during the press conference, and added that France is interested in intensifying cooperation with Russia, particularly in resolving the Syrian crisis. The French leader went on to say that this issue demands “an inclusive political solution.”

Putin, Trump and ‘my guy’ Macron - The three-hour face-off between Vladimir Putin and Emmanuel Macron in Versailles offered some fascinating geopolitical shadow play. Macron went so far as to say that, “No major problem in the world can be solved without Russia.” On Syria’s war, which topped their agenda, he said it needs “an inclusive political solution.” While on terrorism, his guest offered: “It is impossible to fight a terrorist threat by dismantling the statehood of those countries that already suffer from some internal problems and conflicts.”  That’s hardly straight from the standard establishment playbook. More like a slight variation on 300 years of Franco-Russian diplomacy. Putin and Macron got together to inaugurate an exhibition at the Grand Trianon in Versailles, in partnership with the Hermitage in St Petersburg, celebrating the 300th anniversary of Peter the Great’s visit to France – which proved one of the founding stones of a complex cultural-political cross-fertilization.  Late last week, a Nato summit in Brussels and a G7 summit in Taormina busted open deep divisions in the Western front, essentially pitting the EU against Donald Trump. To say that the vast EU bureaucracy has been horrified is an understatement. In places like the Egmont – the Royal Institute for International Relations in Brussels – the consensus might best be summarized as: Europeans would only matter if they put in a US$100 billion order for US defense equipment (each, of course), and stopped whining about the climate. As this is not happening, the letter of the law is that every Nato member must spend 2% of GDP on defense, and “bad, bad” Germany should stop selling cars to the US. No wonder then that a common European viewpoint is begging to emerge after some serious discussions inside the EU, which is that the only way out is for Europe to get its act together – politically, economically and militarily. And it’s up to the Franco-German power couple to show the path to the region’s real strategic autonomy. That’s the gist of the extraordinary statement by Chancellor Angela Merkel: “The times in which we can entirely depend on others are gone. This, I have experienced in the last few days. We Europeans must take our destiny in our own hands.”

"It Wasn't Innocent": Macron Says Famous Trump Handshake "Was About Getting Respect" --Of all the sights during Trump's first trip abroad, his handshake with France's youngest ever president, Emanual Macron, was the most memorable as well as symbolic. At their first meeting ahead of a NATO summit in Brussels on Thursday, the two men locked hands for so long and hard, their knuckles turned white. When Trump tried to let go first, the French leader held the shake for a few seconds more. Both men’s jaws seemed to clench.With the handshake prompting a flurry of interpretative media reports, and on Sunday Macron told France's Le Journal du Dimanche, that his now famous white-knuckle handshake showdown with U.S. counterpart Donald Trump was "a moment of truth", designed to show that he's no pushover. Macron also said that "my handshake with him, it wasn't innocent"according to the AP. Macron said that he wanted to "show he would not make small concessions, not even symbolic ones, but also not overdo things".Macron also told the French newspaper that his approach to the encounter had been about getting respect."Donald Trump, the Turkish president or the Russian president see things in terms of power relationships, which doesn't bother me. I don't believe in diplomacy through public criticism but in my bilateral dialogues I don't let anything pass. That is how you get respect."Trump's hand contact with foreign leaders has been closely scrutinized since he took power. Memorable episodes include nearly tearing out Japan PM Shinzo Abe's arm during their first meeting in the White House which started with a bizarre 19 second handshake, refusing to shake Angela Merkel's hand in March, and a "clever neutralization" by Justin Trudeau during their first handshake encounter.

Poll Finds Germans Agree with Trump on NATO - Ever since Donald Trump took office as US president in January, there has been friction between Berlin and Washington over a variety of topics – and in particular over NATO. While the German government is staunchly in favor of furthering military cooperation within NATO, Mr. Trump has criticized the trans-Atlantic alliance on numerous occasions. Much to Berlin’s dismay, Mr. Trump has called it “obsolete” and berated European allies, including Germany, for owing “vast sums of money” for defense. He has also cast doubts on whether the US would stay committed to NATO’s principle of mutual defense. However, Mr. Trump is far from being the only one feeling ambivalent about NATO. When it comes to supporting the military alliance, it seems the German public agrees more with the American president than with its own government. According to the latest 2017 Global Attitudes survey conducted by the Pew Research Center, 53 percent of German respondents said Berlin should not take military action “if Russia got into a serious military conflict with one of its neighboring countries that is our NATO ally.” Yet Article 5 of the North Atlantic Treaty, which created NATO in 1949, commits member countries to come to the assistance of a fellow NATO member if that ally is attacked. Of the eight countries polled, Germany was the only one where more respondents rejected NATO solidarity than backed it. And support for Germany getting dragged into a military conflict with Russia dropped to just 29 percent of respondents from former East Germany, which was under Soviet occupation until 1990. By comparison, 45 percent of Brits said the UK should use military force to defend a NATO ally attacked by Russia, to 43 percent who opposed it. And 62 percent of the Americans surveyed by Pew supported the idea of honoring Article 5, which Mr. Trump declined to endorse at Thursday’s NATO summit in Brussels.

Merkel urges EU to control their own destiny, after Trump visit, climate change decision | Fox News: German Chancellor Angela Merkel said Sunday that “the past few days” have shown her that European Union nations must maintain friendships with the United States and Great Britain, but also put "our destiny into their own hands.” Merkel did not mention President Trump by name, but her comments have been widely interpreted as a response to the president declining to join six other countries in reaffirming their commitment to the 2015 Paris Climate Agreement at the G-7 summit in Sicily that ended Sunday. "The times in which we can fully count on others are somewhat over, as I have experienced in the past few days,” Merkel said Sunday at a campaign event in Bavaria. “And that is why I can only say: We Europeans must really take our destiny into our own hands.” Merkel and other foreign leaders tried to persuade Trump to join the pact that calls for reduced emissions of greenhouse gases and other pollutants that are thought to contribute to climate change. Trump, who has previously called climate change a “hoax,” said he would announce his decision on joining the accord sometime this week. The White House has argued that U.S. emissions standards are tougher than those set by China, India and others, and therefore have put American businesses at a disadvantage. His stance had led Merkel to describe the climate talks as "very difficult, if not to say, very unsatisfactory."

Merkel Signals New Era for Europe as Trump Smashes Consensus  -- German Chancellor Angela Merkel gave her strongest indication yet that Europe and the U.S. under President Donald Trump are drifting apart, saying reliable relationships forged since the end of World War II “are to some extent over.” Get the latest on global politics in your inbox, every day. Get our newsletter daily. Sign Up Merkel’s comments at a campaign rally signal that last week’s Group of Seven and NATO summits will reinforce her effort to unite the European Union behind a global agenda that clashes with Trump’s in key areas. She’s receiving Indian Prime Minister Narendra Modi on Monday, hosts his Chinese counterpart, Li Keqiang, on Thursday, and is looking for a fresh start in German-French ties with newly elected President Emmanuel Macron. The leader of Europe’s biggest economy offered a glimpse of her world view after Trump concluded a nine-day foreign trip during which he hectored NATO allies for allegedly not spending enough on defense, called Germany’s trade surplus “very bad” and brought the U.S. to the brink of exiting the global Paris climate accord. “The times when we could fully rely on others are to some extent over -- I experienced that in the last few days,” Merkel told supporters in Munich on Sunday, a day after the G-7 meeting ended. “We Europeans must really take our destiny into our own hands.” “Of course we need to have friendly relations with the U.S. and with the U.K. and with other neighbors, including Russia,” she said. Even so, “we have to fight for our own future ourselves.” Merkel was speaking as a “deeply committed trans-Atlanticist,” her chief spokesman Steffen Seibert told reporters in Berlin on Monday. “Honestly pointing out differences is the right thing to do, precisely because trans-Atlantic relations are so important.” 

What Was Merkel Thinking? - Der Spiegel -  A "potentially seismic shift" wrote the New York Times . A "new chapter in U.S.-European relations," proclaimed the Washington Post. German Chancellor Angela Merkel's comments made in a beer tent in Munich on Sunday have made headlines around the world. It was the kind of appearance the likes of which she will make hundreds of times ahead of Sept. 24 parliamentary elections in Germany. But in this speech, she clearly distanced herself from U.S. President Donald Trump. And she urged Europe to prepare for a future in which it has to be much more self-reliant."The times in which we could completely rely on others are over to a certain extent. That is what I experienced in the last few days," Merkel said. "That is why I can only say: We Europeans must really take our fate into our own hands."She went on to say: "Of course in friendship with the United States of America." She emphasized friendship with the U.S. on a few other occasions in her remarks as well. But then said: "We have to fight for our own future, as Europeans, for our destiny."Merkel's comments were unusual on several levels. It's not just what she had to say that was interesting, but also why and when: at a folk festival following a series of summits during which she spent  extensive amounts of time with Trump. The chancellor made direct reference to her strenuous week, during which the U.S. president managed to alienate his partners on several occasions.  Despite the directness of Merkel's Sunday speech, however, there are several open questions that need to be answered:

• 1. Why did her comments cause such a stir around the world?  On the eve of Trump's trip to Saudi Arabia, Israel and Europe, heads of state and government around the world were eager to put on a veneer of harmony. That effort, though, is over -- and Merkel is one significant reason why.
• 2. Why did Merkel choose the words she chose? Trump's credo is "America First." For Merkel, that consequentially means that Europe must take on a greater role. Trump's policies make it necessary to redefine European interests: That is something of which both Merkel and Foreign Minister Sigmar Gabriel, a senior member of the Social Democrats (SPD), are convinced. Much of the discussion has recently centered around increasing Germany's defense spending, which is a highly controversial issue in the country. Trump may have watered down his criticism of NATO in a recent tweet, but he is still demanding that most European countries spend more on defense.
• 3. To what degree were Merkel's comments part of the German campaign?  Merkel's appearance was the clearest indication yet that foreign policy and the future of the European Union will be vital issues in the campaign. The SPD had been hoping that it could score points against Merkel on the basis of her erstwhile even-handed approach to Trump. But now, Merkel has positioned herself more clearly than ever before as Europe's defender in the face of the Trump challenge -- a role that her SPD challenger Martin Schulz had been hoping to play. .
• 4. What are the consequences of Merkel's comments?  While there are no immediate consequences, the chancellor will have to substantiate her comments in the coming days and weeks. Otherwise, the SPD and other parties will be able accuse her of empty politicking.

German foreign minister: Trump has weakened the West | TheHill: Germany's foreign minister on Monday said that President Trump’s actions have weakened the West. “Anyone who accelerates climate change by weakening environmental protection, who sells more weapons in conflict zones and who does not want to politically resolve religious conflicts is putting peace in Europe at risk,” Sigmar Gabriel said, according to CNN. “The short-sighted policies of the American government stand against the interests of the European Union. The West has become smaller, at least it has become weaker.”Gabriel also called on Europe to stand up to the Trump administration, arguing that the continent’s refugee crisis could escalate. “If the Europeans are not resolutely opposing this right now, the migration flow to Europe will continue to grow,” he said at a discussion on migration and refugees in Berlin. “Those who do not oppose this U.S. policy are guilty.” German Chancellor Angela Merkel on Sunday said that Germany could no longer “completely depend” on the U.S. “The times in which we could completely depend on others are on the way out,” she said at a campaign rally in Munich. “I’ve experienced that in the last few days. [Europeans] must really take our destiny into our own hands.” 

 War of words between Trump and Merkel continues | Germany News | Al Jazeera: US President Donald Trump called Germany's trade and spending policies "very bad" - intensifying a row between the longtime allies and immediately earning himself the moniker "destroyer of Western values" from a leading German politician.As the war of words on Tuesday threatened to spin out of control, Merkel and other senior German politicians stressed the importance of Germany's Atlantic ties, with Foreign Minister Sigmar Gabriel suggesting the spat was just a rough patch.Trump took to Twitter early in the day in the United States to attack Germany, a day after Chancellor Angela Merkel ramped up her doubts about the reliability of Washington as an ally."We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change," Trump tweeted. Later in the day, Trump's spokesman and the US ambassador to the United Nations said there were no problems in relations with Merkel or NATO. The tit-for-tat dispute escalated rapidly after Trump, at back-to-back summits last week, criticised major NATO allies over their military spending and refused to endorse a global climate change accord.On Sunday, Merkel showed the gravity of her concern about Washington's dependability under Trump when she warned at an election campaign event in a packed Bavarian beer tent, that the times when Europe could fully rely on others were "over to a certain extent".

 Germany's Real Sin - Paul Krugman -- As many people have pointed out, Trump picked the worst possible example when he decided to describe Germany as “bad, very bad”. Yes, they sell a lot of cars in America; but (a) many of those cars are produced here and (b) Germany has a reputation for producing good cars. Why shouldn’t a country export goods in which it has a comparative advantage?  So this was the stupidest possible critique, and plays right into German self-righteousness. Yet Germany’s huge trade surpluses are a problem — which has nothing to do with trade policy. It’s the macroeconomics, stupid.  The basic story is illustrated by the following chart, of unit labor costs since the creation of the euro:  Here’s what happened: during the era of europhoria, when capital rushed into supposedly safe southern European economies, those economies experienced moderate inflation, allowing Germany to gain a big competitive advantage without actually having to deflate. Then confidence and capital flows collapsed, and what was needed was strong German reflation that would in effect return the favor — let southern Europe regain competitiveness without grinding deflation and the debt problems that go along with such a strategy.  But Germany hasn’t. It has practiced its own austerity, unforced — in the face of negative interest rates! — and harassed the ECB as it attempts to boost overall EZ inflation. The result is that the competitive gap that opened up after 1999 has barely closed, producing both huge German surpluses and a deadly drag on the rest of the euro area.  This has only minor spillovers to the United States — maybe Germany’s unhelpful role has contributed a bit to our trade deficit, but this is basically an intra-Europe issue. And it’s hard to think of a less helpful way for America to weigh in than what just happened.

As tensions with US mount, Germany reaffirms “strategic partnership” with China -- Under conditions of mounting tensions with the United States, Germany is expanding its already close political and economic ties with China. At a joint press conference in Berlin with Chinese Prime Minister Li Keqiang, German Chancellor Angela Merkel said on Thursday that in the period since China initiated diplomatic relations with Germany 45 years ago, the country has “become an increasingly important and now strategic partner.” This applies to “the entire spectrum” of relations, “of a political as well as economic nature … but also with regard to the cooperation on cultural and social issues.” Trading relations had been “an important subject” in the talks, Merkel continued. It had been “agreed that trading nations like Germany and China should cooperate and issue a clear recognition of free trade,” declared Merkel, in what was a barely concealed swipe at US President Donald Trump. At the G7 summit last week, Trump repeated his criticism of Germany’s trade surplus and threatened to adopt counter-measures.  “China was our most important trading partner in 2016, with a bilateral trade volume of €170 billion. These are already very impressive figures,” Merkel said. Merkel and Li had “discussed that we want to expand these developments, which have been positive for both sides.” The two countries signed 11 agreements and declarations of intent, according to the German government’s web site, including on cooperation in air travel technology, electronic mobility and recycling technology, and in the area of artificial intelligence. Partners on the German side included industrial giants like Airbus, Daimler, VW and Bosch, as well as mid-sized businesses and research institutes. Deutsche Bank signed a five-year cooperation agreement with the China Development Bank (CDB) on Tuesday. Both banks committed in the agreement to finance projects on the “New Silk Road,” up to a cost of $3 billion.

German Inflation Slows More Than Forecast as ECB Meeting Nears - German inflation slowed in May, underpinning recent comments from European Central Bank officials that the 19-nation bloc still needs extraordinary monetary stimulus.The rate dropped to 1.4 percent in May from 2 percent in April, sharper than the decline to 1.5 percent predicted in a Bloomberg survey. Inflation in the euro area, due Wednesday, is forecast to have cooled to 1.5 percent, though the German data means there’s now a risk of a weaker reading. While inflation rates have risen sharply across the continent since late last year, policy makers have cautioned that increases are driven largely by energy costs and not yet self-sustained. Still, with the economy growing solidly, speculation has mounted among investors about how the ECB’s stimulus efforts will eventually be unwound. Reuters reported on Tuesday that officials are ready to drop a reference to downside risks at their June 8 meeting and start using “largely balanced.”“Today’s German inflation data should take further pressure off the ECB to wind down its monetary stimulus,” said Carsten Brzeski, chief economist at ING Diba AG in Frankfurt. It “actually shows that the current cyclical upswing in the euro zone does not yet coincide with a pick-up in inflation.”Euro-area consumer-price growth probably decelerated to 1.5 percent this month from 1.9 percent in April, economists predicted in a separate survey before a report on Wednesday. Spain’s inflation rate fell more than forecast in May, dropping to 2 percent from 2.6 percent. At Barclays, economists have a below-consensus forecast of 1.4 percent for the euro area and said earlier on Tuesday they even see downside risks to that number. A reading below 1.5 percent would be the weakest so far of 2017.

Italy Ailing Banks May Lose $11 Billion in Bad Loan Sales -  Italy’s troubled banks may suffer an additional 10 billion euros ($11 billion) in losses from the sale of their bad loans at current market prices, said Ignazio Visco, Bank of Italy governor and ECB governing council member. “If they were sold at the very low prices offered by the few large specialist debt collection agencies active in the market today, which pursue very high returns, the amount of additional writedowns would be in the order of 10 billion euros,” Visco said on Wednesday at the central bank’s annual meeting in Rome. He pointed out that the country’s troubled banks have 20 billion euros in net bad loans. Italy is struggling to fix a crisis legacy of about 360 billion euros of soured loans in its banks’ balance sheets that is holding back credit and weighing on the country’s weak recovery. Italian authorities are trying to prop up Banca Monte dei Paschi di Siena SpA and two banks in the northern region of Veneto, using a provision in the EU’s bank-failure rules that allows governments to provide state aid. While talks for a state backed recapitalization of Monte Paschi, Banca Popolare di Vicenza SpA and Veneto Banca SpA are underway, Visco urged European authorities to coordinate better and faster on the banking crisis. “Effective coordination is lacking,” Visco said. He added that “crisis interventions are assigned to multiple, mutually independent authorities and institutions, both national and supranational, with decision-making processes relatively incompatible with rapid intervention. ” 

Italy's central bank warns against euro exit as election nears -- Italy's central bank warned on Wednesday that leaving the euro zone would not solve the country's economic problems, as two major parties campaign to drop the common currency before an election that may come as soon as this autumn. The right-wing Northern League wants to pull Italy out of the euro zone, and the anti-establishment 5-Star Movement, which some opinion polls say is now the country's most popular party, wants to hold a referendum on the issue. "It is an illusion to think that Italy's economic problems could be solved more readily outside Economic and Monetary Union," Bank of Italy Governor Ignazio Visco said in an annual speech to shareholders in Rome. The parties that favor giving up the euro blame Italy's chronically slow growth in part on the constraints of euro zone fiscal rules. Elections are due by May 2018, but officials from the main parties say they expect a vote this autumn. "A departure from the euro, which is often discussed with scant knowledge of the facts, would not serve to heal the structural defects of our economy; it certainly would not lower interest expenses and much less would it magically lower our debt level," Visco said. "On the contrary, it would generate serious risks of instability."

After Monte Paschi, Italy’s Other Troubled Banks Are in View - Italy may have no time to rest on its laurels after brokering a deal to keep Banca Monte dei Paschi di Siena SpA in business. While an “in principle” agreement between Finance Minister Pier Carlo Padoan and European Union Competition Commissioner Margrethe Vestager will help save the world’s oldest bank through paving the way for a precautionary recapitalization, the fate of two regional lenders in one of the country’s wealthiest regions and a third smaller bank has yet to be decided. The government -- seeking to save Banca Popolare di Vicenza SpA and Veneto Banca SpA -- plans to contact businessmen in the Veneto region where they’re based to help fund a rescue, appealing to local loyalties to avert winding them down. That came after the EU rejected the banks’ request to reduce the 1 billion euros ($1.1 billion) of private capital it’s requiring them to raise to get approval for a bailout, people with knowledge of the matter have said. “European rules must be respected and aid is only given to banks that can be profitable in the long-term and can carry out an in-depth restructuring,” said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University. “This is a good news for Paschi, less good for Veneto banks that are still far from being aligned to EU requests.” The two banks are fighting for survival after failing to raise money from private investors last year and are trying to win approval for a state-backed recapitalization of 6.4 billion euros - which can only be given if they raise additional money from private investors. Finance Undersecretary Pier Paolo Baretta said earlier this week that the government would look to “businessmen from the Veneto area who would benefit the most from the banks’ survival and conversely would be the most damaged by their failure.”In addition, the market value of a third lender -- Banca Carige SpA -- has been sinking after in recent days after the bank’s top investor criticized Chief Executive Officer Guido Bastianini and the lender’s chief financial officer for their management. The bank has already said it’s seeking to replenish capital through a 450 million-euro stock sale and reduce bad loans to stay afloat. 

Spanish banks, corporations create cross-industry blockchain platform  --Several leading banks and corporations in Spain are launching a cross-industry development platform called Red Lyra, leveraging blockchain technology to streamline the creation of services that use digital identities. The concept unites a consortium of providers in financial services, utilities and infrastructure that have agreed to support a shared secure digital identification process to validate basic services and develop applications in compliance with Spain’s legal and regulatory requirements, the nonprofit organization said in a Wednesday press release. Founding partners for the venture, which will go live this year, include Banco Santander, BBVA, Banco Sabadell, Caja Rural and the mobile payments provider Momopocket, along with Gas Natural Fenosa, the telecom provider MásMóvil and the domestic postal operator Correos, Red Lyra said. Blockchain distributed ledger technology was originally developed to support bitcoin transactions, and has more recently been adapted as a tool for other financial services. The Red Lyra network can certify and validate digital identities of individuals and companies, giving a diverse range of users access to relevant data to speed the enrollment of customers for banking and other services, Alex Puig, Red Lyra’s director, said in the release. Emphasizing neutrality and flexibility, Red Lyra envisions the network as a public resource that will eventually see broad industry participation across Spain, funded by contributions from partners and users, according to Puig. “All of the partners and users act in ‘coopetition,’ i.e. they cooperate with each other but they also compete, using the network with the assurance that they will never be able to control it without the approval of all participants,” Puig said. 

 A Problem Emerges With Europe's "Recovery": Companies Crippled By Soaring Payment Delays --With Mario Draghi praising the European economy in his quarterly speech at the European Parliament, albeit conceding that inflation is still too low for the ECB to remove its unprecedented monetary support, one would be left with the impression of a slow, steady European recovery, also explaining the recent record inflow into European stocks. Alas, as is often the case, the full story is just below the surface. And it is here that a big problem is emerging. According to the 2017 European Payment Report compiled annually by Swedish debt collector Intrum Justitia AB, a growing number of small and medium-sized businesses in Europe have complained they face excessive delays in being paid for their work, with large parts of the sector seeking tougher laws to address the problem. First discussed by Bloomberg, the Justitia report reveals that 61% of the 10,468 small and medium-sized companies surveyed say they’ve been asked by counterparties to accept longer payment delays than they feel comfortable with. This is a staggering increase of over 30% in just one year: in 2016, that figure was 46%.

In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt - Less than a decade after various complex, synthetic, squared, cubed and so on securitized debt structures nearly brought down the financial system, here come "Sovereign Bond-Backed Securities." Moments ago, the FT reported that in a watershed event for the European - and global - bond markets, Brussels is pressing for sovereign debt from across the eurozone to be "bundled into a new financial instrument and sold to investors as part of a proposal to strengthen the single currency area."  Call it securitized sovereign debt. In the latest attempt by Europe to create a common bond market, a European Commission paper on the future of the euro seen by the Financial Times, advocates the launching of a market of “sovereign bond-backed securities” — packaging different countries’ national debt into a new asset. The logic is simple: combine all the debt from strong and weak countries into one big pool, eliminating the outliers on both sides, then tranche it out, and sell it based on required yield returns. Officials hope that the plans would boost demand for debt issued by governments with relatively weaker economies, and encourage banks to manage their risks better by diversifying their portfolios, while avoiding old political battles over whether the currency bloc should issue common bonds. Why now? Because as has been Germany's intention all along, Berlin has been hoping to create a fiscally intergrated Europe (with a shadow government in Berlin of course), call it a (quasi) "fiscal union", and which is much more stable and resilient than the current iteration which is only as strong as its weakest link. Securitizing the sovereign debt resolves virtually all outstanding problems. The commission paper is the latest in a series of efforts to kick-start integration inside the eurozone. Such integration efforts have stalled since financial markets became convinced in 2013 that the European Central Bank would not allow the eurozone to break up. The last successful integration project was the creation of an EU banking union three years ago.

EU maps out road to deeper Monetary Union — EUbusiness.com - Following on from its White Paper on the Future of Europe earlier this year, the EU Commission set out Wednesday potential options for deepening Europe's Economic and Monetary Union. The EU executive says its reflection paper is intended to stimulate the debate on the Economic and Monetary Union as well as to help 'reach a shared vision of its future design'. With due deference to debates in the EU Member States and to the views of other EU institutions, the paper sets out concrete steps that could be taken by the time of the European elections in 2019, as well as a series of options for following years, when the architecture of the Economic and Monetary Union would be completed. "We need the political courage to work on strengthening and completing Europe's Economic and Monetary Union now," said EC vice-president Valdis Dombrovskis: "Today's reflection paper offers various ideas that should help building a shared vision for the euro as well as concrete steps to achieve it." The Commission says the euro is a success story, shared by 340 million Europeans and now the second most used currency around the world. It has brought stable prices and become a part of daily life for most Europeans, it adds. Moving ahead would involve taking steps in three key areas, says the Commission:

• 1) completing a genuine Financial Union
• 2) achieving a more integrated Economic and Fiscal Union
• 3) anchoring democratic accountability and strengthening euro area institutions

Brexit: UK firms can't get single market access by setting up 'letterbox' entities in EU, regulators warn | The Independent: City firms currently based in the UK can’t simply set up ‘letterbox’ entities within the EU to dodge the effects of Brexit, EU regulators said today. The European Securities and Markets Authority (ESMA) highlighted the potential risks of such companies popping up in the EU, where key operations are delegated to parents in London, and warned national regulators to "effectively supervise" any UK firms which relocate to the continent in the wake of Brexit. ESMA chairman Steven Maijoor said: "In the course of the UK withdrawing from the EU, UK-based market participants may seek to relocate entities, activities or functions to the EU27 in order to maintain access to EU financial markets."In the event that such Brexit-related relocations result in firms outsourcing part of their activities back to headquarters in the UK, this "should not result in those (EU-based) entities becoming letterbox entities nor in creating obstacles to effective and efficient supervision and enforcement," he continued. The comments are the latest in a string of warnings from European officials seeking to ensure UK firms do not circumvent EU rules on overseas access to financial markets after leaving the bloc. Mr Maijoor said it is also an attempt to prevent "supervisory arbitrage risks", whereby national regulators undercut each other as they bid to attract banks looking to move operations due to Brexit. Ireland, which has lost out on several high-profile relocations in the wake of Brexit, has already issued a complaint that rival centres are offering lax rules in order to lure business from London. Mr Maijoor warned any member states seeking to compete in this way risk undermining financial stability.

Why ‘Brexit’ Will Make Britain’s Mediocre Economy Worse -- An observer of Britain’s “Brexit” debate would be forgiven for thinking that the country’s economy is one of the European Union’s star performers. Brexit’s advocates rarely pass up an opportunity to claim that the European Union economy is the world’s weak link, and that Britain’s reformed, dynamic and flexible economy has little to risk, and much to gain, from leaving it. The reality is rather different. And Brexit threatens to make matters worse. Britain’s economic performance relative to the other big economies in Western Europe — including France, Germany, Italy and Spain — does not stand out as impressive, at least once the different prices of goods and services across these countries are factored in. As the chart below shows, British economic growth between 2000 and 2015 lagged behind Spain and Germany.And in 2015 Britain ranks only slightly ahead of France, a country that has become synonymous in Britain with economic weakness.Sustainable increases in living standards require economies to combine land, labor, capital and technology in more efficient ways; Britain has made a poor job of this, helping to explain why Britons’ wages have risen by much less than their French and German counterparts over the last 15 years. It also explains why Brits have to work longer hours than the French or the Germans to earn a comparable income, as the chart below shows.If the country’s overall performance looks mediocre, note that it is also highly skewed by London and the southeast of England. In one of the most politically centralized democracies in the world, regions as economically diverse as the northeast of England and London are essentially run as if they face the same challenges, and, Scotland aside, those regions have scant scope to tailor policies to their particular needs. This is part of the reason why, since 2000, poorer regions of Britain have not been catching up with the richer regions of the European Union. Instead, they’ve been falling further behind. A Britain outside of the European Union will inevitably be less open to trade with member states, which will curb competition and productivity growth. Tax revenues will fall, further squeezing infrastructure investment and education spending. That’s why, far from liberating Britain to conquer world markets as a buccaneering trading nation, Brexit threatens to make its mediocre economic performance even worse.

Guest Contribution: “Uncertainty and business investment in the UK after the Brexit” -- Trying to assess macroeconomic consequences of the Brexit seems to be too early as we only get at best 3 quarters of national account data since end of June 2016 (the referendum took place on June 23, 2016). However, looking at recent data is fruitful. The latest data on UK GDP have been published by the ONS on May 25, 2017, and relate to 2017q1. Although the second estimate for 2017q1 is quite low (0.2% quarter over quarter, downward revision of 0.1pp from the first release on 28 April 2017), we do not observe a marked slowdown since the onset of the Brexit (see the ONS website). The average growth since the Brexit (from 2016q3 to 2017q1) is 0.45% per quarter, to be compared with 0.63%, the average growth per quarter over the years 2013-2015 (all growth rates not annualized).  When looking at the composition of UK GDP growth, it turns out that growth is mainly supported by household consumption for few years. However, business investment, a key driver of GDP growth and potential growth, seems to have reached a peak in its cycle (see Figure 1 below). Since its peak in 2015 q3, business investment dropped by -2.7% in cumulative terms.  The literature on business investment tends to show that expected demand is the main driver, although many other short-term factors may be at play (see the IMF’s World Economic Outlook chapter on investment or this previous Econbrowser post). In a recent paper (Bussière, Ferrara and Milovich, 2015, WP Banque de France), we show that, using standard augmented accelerator models, expected demand explains more than three-fourth of the investment slump in a panel of OECD countries since the 2008-09 Great Recession. But we also show that uncertainty has an adverse impact on business investment, in line with the large existing literature on the topic (see e.g. Bloom, 2014).  One could argue that 2015q4 is well ahead of the Brexit referendum, but it is striking to observe that this date corresponds to the moment when the economic policy uncertainty (EPU) in the UK started to skyrocket (see Figure 2). This EPU index is based on the frequency of some specific words appearing in newspapers, reflecting thus a sentiment of uncertainty related to a large extent to the Brexit referendum.

Painstaking detail of Brexit process revealed in EU documents -- Just 10 days before the general election, the EU published two documents that will affect every person living in Britain for years to come. Despite being dropped into the maelstrom of an election caused by Brexit, there was hardly a murmur.The documents were the most detailed positions yet from the EU’s chief negotiator, Michel Barnier, on the upcoming divorce talks with the UK. In two policy papers, the bloc has elaborated its stance on the Brexit bill and citizens’ rights. Neither Theresa May nor Jeremy Corbyn referred to them directly during a 90-minute Sky/Channel 4 TV debate on Monday evening. Both party leaders declared they would secure a good deal, without going into specifics on issues that the EU has already taken a position on. The muted reaction can be explained partly by the fact that the texts were published with zero fanfare, when the country was still reeling from the terrorist atrocity in Manchester.   Furthermore, the EU documents contain no surprises. The equivalent of dotting the Is and crossing the Ts, they are a reminder the EU has had 11 months to get ready for Brexit. That is almost one year to assemble squadrons of specialists to pore over EU treaties and legal tomes to map the way ahead.The 10-page paper on the bill does not put a price on the divorce, but sets out in painstaking detail all EU bodies with a vested interest in the spoils – 40 agencies, eight joint projects on new technologies and a panoply of funds agreed by all countries, from aid for refugees in Turkey to supporting peace in Colombia. No detail is too small. Britain is even on the hook for funding teachers at the elite European schools that educate EU civil servants’ children.On citizens’ rights, the EU spells out in greater detail the protections it wants to secure for nearly 5 million people on the wrong side of Brexit – 3.5 million EU nationals in the UK and 1.2 million Britons on the continent.  In a red rag to hardline Brexiters, the document stresses the European court of justice (ECJ) must have full jurisdiction for ruling on disputes about citizens’ rights, while the European commission ought to have full powers for monitoring whether the UK is upholding the bargain.

 After Brexit: the UK will need to renegotiate at least 759 treaties - FT -- The treaty chest has swollen into a small archive of EU agreements, running to hundreds of thousands of pages and spanning 168 non-EU countries. Within them are covered almost every external function of a modern economy, from flying planes to America and trading sows with Iceland to fishing in far-flung seas.  On Brexit day, that will all fall away. By law Britain will overnight be excluded from those EU arrangements with “third countries”, entering the equivalent of a legal void in key parts of its external commercial relations. Some British officials are even peering into the pre-1973 chest again to see whether some seemingly obsolete treaties might gain a new lease of life from a disorderly Brexit.

Labour could introduce new post-Brexit visa scheme for unskilled workers, leaked paper reveals - Labour has reportedly drawn up a draft policy paper to allow unskilled migrants into the UK after Brexit. It proposes bringing back a special visa scheme for people seeking "low-skilled, unskilled and seasonal work" in the UK. The policy paper, seen by the Daily Telegraph and the Daily Mail, also proposes axeing rules which stop foreign spouses coming to the UK if their partner earns less than £18,600 per year. The new path for unskilled workers, known as Tier 3, was one of five original tiers of immigration visa drawn up by the previous Labour government in 2008 to attract foreign workers to do low-paid jobs British workers did not want, but it was never put into force because of an influx of workers from Eastern Europe.Tier 1 visas are for investors and entrepreneurs who are likely to create jobs in the UK while Tier 2 visas are for skilled workers below PhD level, such as tech workers or curry chefs, who make up for a skill shortage in the UK. Tier 4 is for student visas and Tier 5 offers temporary visas for young people aged 18-30.Labour did not include these plans in its manifesto and Jeremy Corbyn himself said at the weekend that he would introduce a "fair" immigration system but refused "to get into a numbers game".The party told the Daily Mail that the document was genuine but said it was one of several "discussion documents" there were not official policy.

Pharmaceutical Industry at Risk from Brexit - Pharmaceuticals are a hugely important industry for the EU and the UK. The sector creates thousands of jobs, billions of euros in exports, and is Europe’s most research-intense industry. But will Brexit mean for pharma? Border delays, disruption to R&D and regulatory divergence all pose hazards. Despite numerous debates about the impact of Brexit, the pharmaceutical industry seems to be less eye-catching than other sectors like the manufacturing supply chain and financial services. However, pharmaceuticals are one of the EU’s most important and fastest-growing industries, and they benefit greatly from EU integration. Pharmaceutical in the EU has increased from €125 billion to €225 billion over the past fifteen years. Employment in the sector also grew dramatically from 535000 to 725000. The pharmaceuticals sector has also become very advantageous for the EU. Exports of pharmacy products have more than tripled over the past fifteen years, with most of these gains obtained from extra-EU transactions. Pharmaceuticals are also the third largest industry in the UK, contributing 10 percent of the UK’s GDP, with an employment of 73000 people and a trade surplus of €3.3 billion.The rapid advance of the pharmaceuticals sector over the past decade can be closely associated with the integration of the EU trade chain. In 2016, around 67% of the EU’s exports of its products were intra-EU exports; 52% of the EU’s imports of its products were intra-EU imports. According to EFPIA figures, among the EU member states the UK is undoubtedly a key player, constituting 10% of the EU’s total production and employment. Moreover, the UK runs a trade deficit of €114 billion against the other EU27 countries, implying that it is a major destination for EU pharmaceutical products.

Deregulation poses global threat of regulatory arbitrage -- Last year brought a noticeable pivot away from globally harmonized financial regulation. Political campaigns hostile to globalization and regulation proved victorious in the U.S. presidential election and the U.K.’s Brexit referendum. The far-reaching effects of this pivot have not been fully considered. These mandates to prioritize national interests over international cooperation could cause a chain reaction of sorts. They risk igniting a vicious cycle of competitive deregulation and regulatory arbitrage in the financial services sector across multiple jurisdictions. Repeals of regulation in one country could attract banks from another, prompting other nations subsequently to enact their own competitive rollbacks, either to benefit from or not to lose institutions as a result of the corporate migration. When this finishes, we could be left with deregulation not just in countries that opposed globalization. In the end, many of the reforms designed to protect the global financial system and leading global economies from future crises could be erased. The brewing dispute between the U.K. and the European Union over how Brexit is implemented offers an illustration of how countries will move away from a regulatory footing and toward competing for international financial business. U.K. Prime Minister Theresa May appears committed to a strong break from the EU, but she has made a thinly veiled threatthat the U.K. may turn itself into a low-tax, low-regulation “Singapore-on-the-Thames” if the trade deal offered by the EU is not to her liking. Other members of the EU are set to gain from the U.K.’s decision, as analysts predict an exodus of financial institutions and other businesses out of London. Brexit is testing the resolve of Europe’s firmly harmonized regulatory regime. In March, the Irish financial services minister complained that rival EU members were engaging in regulatory arbitrage, as Dublin lost out to Luxembourg to be the base for AIG’s post-Brexit Europe operations. In the U.S., President Donald Trump and a Republican majority in Congress have wasted little time in trying to fulfill promises to slash regulations. The new administration has used executive actions to order a review the Dodd-Frank Act. Congressional Republicans have pushed the Financial Choice Act to roll back dozens of regulations and scale back supervisory oversight.  Trump’s “America First” slogan embodies the nationalist approach sweeping through countries that were once aligned on the need for global regulatory coordination. A movement away from international standards and best practices, especially voluntary ones, is the next logical casualty of regulatory arbitrage.

Corbyn Says The "War On Terror" Has Made Manchester-Style Attacks More Likely - Jeremy Corbyn will return to the general election campaign trail with a speech suggesting the "war on terror" – which included the Iraq war – is partly to blame for the Manchester terror attack. The Labour leader suspended his election efforts for most of the week but will restart campaigning with a speech praising the "solidarity, humanity, and compassion" seen in Manchester following the suicide bombing outside an Ariana Grande concert on Monday night. In the speech, Corbyn will explicitly link the terrorist attack to the UK's involvement in the war on terror under former Labour prime minister Tony Blair, which saw British military forces in Iraq and Afghanistan. He will say British foreign policy helped create an environment which encouraged domestic terror attacks. "Many experts, including professionals in our intelligence and security services, have pointed to the connections between wars our government has supported or fought in other countries and terrorism here at home," he is expected to say at a speech in central London."We must be brave enough to admit the ‘war on terror’ is simply not working. We need a smarter way to reduce the threat from countries that nurture terrorists and generate terrorism.”  The Labour leader was a prominent member of the Stop the War Coalition and repeatedly and consistently campaigned against the invasion of Iraq. A lifelong non-interventionist, Corbyn has repeatedly opposed Western countries invading other nations, and earlier this month said attempts at regime change in the likes of Yemen, Libya, and Syria "have failed in their own terms, and made the world a more dangerous place". Corbyn will also use his speech to say Labour would reverse proposed cuts to emergency services and provide additional funding for the intelligence agencies, while linking Conservative austerity measures to the Manchester attack.

Corbyn’s Manchester comments a risk but poll gap narrows: Jeremy Corbyn’s decision to return to the campaign trail with a speech linking the Manchester bombing to Britain’s foreign wars was risky in a number of ways. He has exposed himself to accusations of bad taste from both the Conservatives and Liberal Democrats, who claimed it was disrespectful to the victims. It has also drawn attention to one of the Labour leader’s vulnerabilities – the fact that most British voters lack confidence in him on issues of national security and defence. And it highlights one of the deepest faultlines within his party, between those who support military intervention abroad and those, like Corbyn, who oppose it. Corbyn stressed that sole responsibility for the Manchester bombing lay with the perpetrator, but he said that British-backed interventions like the war in Iraq and the overthrow of Muammar Gadafy have fuelled terrorism. “Many experts, including professionals in our intelligence and security services have pointed to the connections between wars our government has supported or fought in other countries, such as Libya, and terrorism here at home,” he said. “Protecting this country requires us to be both strong against terrorism and strong against the causes of terrorism. The blame is with the terrorists, but if we are to protect our people we must be honest about what threatens our security.” Corbyn was speaking after a number of polls conducted since the Manchester attack showed the gap between the Conservatives and Labour narrowing further. A YouGov poll for the Times puts Labour within five points of the Conservatives, compared to 24 points when May called the snap election. The numbers in the YouGov poll would still see the Conservatives win the election, but with a majority of just two seats.

U.K. Millennial Vote Sign-Ups Beat Brexit in Labour Boost - More U.K. millennials tried to register to vote ahead of the June general election than before last year’s Brexit referendum, a boost to Jeremy Corbyn’s opposition Labour Party. About 2 million people 34 or under attempted to sign up in the five weeks before the May 22 registration deadline, up 20 percent on the comparable period before the Brexit vote, according to U.K. government data. The surge stands to benefit Jeremy Corbyn’s opposition Labour Party, with the latest YouGov Plc survey showing about a 20 percentage-point lead for his party among this age group over Prime Minister Theresa May’s Conservatives. May’s party retains a lead of about 10 points nationally, boosted by their support among older voters who are more likely to turn out on June 8. Corbyn’s populist campaigning style -- focused on mass rallies and building a grassroots movement -- plus a desire among younger people to shape the path of Brexit are likely to be behind the surge, Matt Henn, professor of social research at Nottingham Trent University, said in a phone interview. “This is a last chance for young people to have some influence over their futures and their relationship with Europe,” Henn said. “Whether their voice will be heard is another matter.” 

Jeremy Corbyn’s Surprising Gains | HuffPost: Something strange appears to be happening on the way to British Prime Minister Theresa May’s anticipated victory after her clever strategy of calling a snap election.The ploy could backfire on her―just the way her predecessor, David Cameron, got caught when he thought he could shut up the ultra-nationalists by calling a referendum on British membership in the European Union. The result was Brexit, and Cameron’s own hasty exit.Until a few weeks ago, the general assumption in Britain was that the Labour Party was doomed to a sweeping defeat in the June 8 general election. In April, the Tories had an overwhelming lead in the polls.May, who had succeeded the hapless Cameron, was an opponent of Brexit who now vowed to make Brexit work. She was seeking a strong mandate, so that she could negotiate the best possible terms.May also moved to the center on domestic issues, promising more generous spending on public services, so as to pre-empt Labor’s domestic appeal. As politics, all this sounded positively brilliant.Labour, meanwhile, was stuck with a leftwing leader in Jeremy Corbyn, who was far behind May in the polls. Labour looked to lose dozens of seats and be consigned to political oblivion.Well, that was then.In recent weeks, Corbyn gained dramatically on May. Even the horrible bombing in Manchester, the kind of gruesome event that normally causes voters to rally behind the government, did not slow Labour’s momentum. According to the Guardian, more than a third of voters (37%) say their opinion of the prime minister is more negative than at the start of the campaign, against 25% who say it is more positive. The opposite is true for Corbyn, with 39% saying they have a more positive view of Corbyn compared with 14% who now have a more negative view. Corbyn also leads by 13 points among voters under 50, and is tied with May among women. 

Theresa May’s plan to slash net migration to tens of thousands would double unemployment, study warns -- Theresa May’s plan to cut net migration to under 100,000 a year would almost double unemployment in the UK to more than three million, according to a new study. It claims that British workers would be the main losers from lower economic growth caused by the country having fewer people to drive business expansion and, in turn, consumer demand and spending. The Migration Matters Trust, a cross-party group of politicians, business leaders and trade unionists which encourages an evidence-based debate on immigration, studied the relationship between the migration, unemployment and employment figures over the past 10 years. The trust is backing the Drop the Target campaign run by The Independent and the Open Britain group, which urges the Government to abandon its goal of cutting annual net migration to the “tens of thousands”. It concluded that unemployment would rise from 1.6 million today to 3.1 million if net migration fell below 100,000. It has not stood at that level since the mid-1980s during the Thatcher Government. According to the study, the employment rate for British citizens – the percentage wanting to work who have jobs – would drop from 75 per cent to 70 per cent, the lowest level for 20 years. The number of jobless people chasing each vacancy would rise from two today to seven. Barbara Roche, chair of Migration Matters and a former Labour Immigration Minister, said: “It’s not politically correct to say this, but some of the people hit hardest by cutting migration to below 100,000 would be British workers. " According to the Government’s own figures, in industries like hospitality, which have a higher proportion of migrant workers, seven out of 10 employees are Brits. These are the workers who will suffer if migration is cut.”

Growth will be lower if the Conservatives win - Simon Wren-Lewis - The Conservatives want Brexit to be the central issue in this election. Partly as a result, the relative macroeconomic outlook under the different parties has not been discussed as much as it should, or as much as it was in 2015. The other reason it has not been discussed very much is that the economic record of the last seven years has been dire, but prospects under either Labour or the LibDems would be distinctly better. [1] The last seven years have seen an extraordinary decline in real wages. To quote Rui Costa and Stephen Machin:“Since the global financial crisis of 2007/08, workers’ real wages and family living standards in the UK have suffered to an extent unprecedented in modern history. Real wages of the typical (median) worker have fallen by almost 5% since 2008, while real family incomes for families of working age have just about recovered to pre-crisis levels.”This stagnation in real wages is greater than any other advanced economy bar Greece. [2] In addition, as Laura Gardiner from the Resolution Foundation points out, current government policies imply the “biggest increase in inequality since Thatcher”. The less you earn, the more this government plans to take income away from you. The Conservative response is to point to record levels of employment, and to keep saying ‘strong economy’. But these two apparently diverse developments, high employment and falling real wages, may be related in a very simple way: workers may have been forced to price themselves into jobs by keeping real wages low, or workers who might otherwise have retired are continuing to work to earn enough for their old age. When high employment is a symptom of no growth in living standards, it is nothing to cheer about. They both reflect a weak rather than a strong economy.

No income tax rises for high earners under Tory government, minister reveals: High earners will not face any increase in income tax under a new Conservative government, one of Theresa May’s most senior ministers has promised. Sir Michael Fallon, the Defence Secretary, said voting Tory was “the only way” workers across the wage spectrum could be sure their tax would not go up, ending weeks of uncertainty for middle-class professionals. The pledge puts clear water between the Tories and Labour on personal tax, with Jeremy Corbyn promising to increase income tax on those earning more than £80,000 to help pay for a £50 billion giveaway. It comes amid concern among senior Tories about the party’s vanishing lead in the opinion polls, which was once as high as 24 percentage points over Labour but is now as low as three per cent.

Theresa May in Election Jitters Caught Lying About Tory Plans to Cut The NHS -  Yves Smith - This Real News Network segment describes how Theresa May has been caught out on her plan to privatize NHS assets. And on top of that, selling the real estate is the worst sort of financial gimmick. The British Government would get a one-time lump sum and then NHS costs would rise in future years as a result of the lease payments. You can see how that will play out: the financial-engineering-resulting budget increases would be used to claim NHS is becoming unaffordable. That would lay the groundwork for service cuts, requiring co-pays for some services, and/or privatization. (video & transcript)