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

Saturday, July 8, 2017

week ending Jul 8

Fed officials divided on when to begin balance-sheet unwind - - A divided Federal Reserve policy committee couldn’t reach agreement in June on the timing of when to begin shrinking its massive balance sheet, according to minutes of the meeting. “Several preferred to announce a start to the process within a couple of months,” the minutes of the June 13-14 meeting released on Wednesday in Washington showed. “Some others emphasized that deferring the decision until later in the year would permit additional time to assess the outlook for economic activity and inflation.” U.S. central bankers in June raised the benchmark lending rate for a second time this year to a range of 1% to 1.25%, while describing monetary policy as “accommodative” in their statement. Fed officials updated their balance-sheet policy in the gathering, laying out a path of gradual reductions with caps. The central bank wants to start winding down the $4.5 trillion bond portfolio without roiling longer-term interest rates, while gradually raising the policy rate. The minutes indicated that the committee wants to begin the balance-sheet process this year. The Fed said in June it would runoff maturing principal payments on Treasuries initially at $6 billion per month, increasing by $6 billion every three months over 12 months, until it reaches $30 billion. For agency and mortgage-backed securities debt, the cap starts at $4 billion, and rises by $4 billion every three months until it hits a $20 billion a month. The minutes showed Fed officials split on other key metrics for monetary policy. The minutes said “several participants endorsed a policy approach” where the labor market would undershoot their estimate of full employment “for a sustained period.” Meanwhile, several other participants “expressed concern that a substantial and sustained unemployment undershooting might make the economy more likely to experience financial instability or could lead to a sharp rise in inflation.” Financial conditions were also debated at the meeting, with some participants arguing that “increased risk tolerance” among investors could be lifting asset prices. A few others expressed concern that “subdued market volatility” could lead to financial stability risks. “A few participants also judged that the case for a policy rate increase at this meeting was strengthened by the easing, by some measures, in overall financial conditions,” according to the minutes.

Fed Officials Are Divided Over When to Reduce Its Debt Holdings – NYTimes - The Federal Reserve raised interest rates on schedule during the first half of 2017, but its plans for the second half of the year are less clear, according to minutes of the Fed’s most recent meeting in June. Officials debated how soon to start reducing the Fed’s securities portfolio, as the sluggishness of inflation and the exuberance of investors continued to concern them.At the June meeting, the Fed raised its benchmark interest rate for the third consecutive quarter, to a range between 1 percent and 1.25 percent. It also published a plan for paring its substantial holdings of $4 trillion in Treasuries and mortgage-backed securities, acquired after the financial crisis to further reduce borrowing costs for businesses and consumers.The Fed has said that it wants to begin the balance sheet plan this year. The minutes of the June meeting said several officials wanted to start “within a couple of months,” while others favored waiting, suggesting that officials are debating whether to begin in September or wait until December. The Fed published the meeting account Wednesday after a standard three-week delay.  Officials also disagreed about the likely impact of the plan. Some argued that balance sheet reductions were effectively the same as rate increases, while others predicted the plan would have only a modest economic effect. The differences are narrow because Fed officials remain confident in the strength of the economy. Janet L. Yellen, the chairwoman of the Fed, and other Fed officials have made clear that they are committed to reducing the Fed’s support for economic growth after years of hesitation. The Fed plans to raise its benchmark rate once more this year, which it says would push the rate to a neutral level that neither encourages nor discourages growth.But there are signs of emerging differences among Fed officials about the importance of two unexpected developments. Some Fed officials worry that investors are not responding to the recent rate increases. It has become cheaper and easier to borrow money in many cases, according to measures of financial conditions. That is the opposite of the effect the Fed intended. The minutes said some participants saw evidence that investors were taking larger risks, and a few were concerned about “a buildup of risks to financial stability.”

FOMC Minutes Show "Divided" Fed Fearful Of High Asset Prices, Low Inflation - Having hiked in June amid gravely disappointing macro-economic data, all eyes are now on the minutes for inflation (weakness blamed on "idiosyncratic factors"), labor market (concerns about "sustained employment undershoot"), balance sheet normalization (Fed "divided" over when to start), and market valuation concerns ("equity market high on standard metrics"). Rate hike odds for Sept (22%) and Dec (56%) were rising into the release.As Bloomberg Intelligence noted, financial stability concerns appear to be very high on policy makers’ radar and seem to be pushing the Fed’s hand to continue to gradually tighten policy.Some participants suggested that increased risk tolerance among investors might be contributing to elevated asset prices more broadly;a few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a buildup of risks to financial stability.As for the balance sheet, a September kickoff for the program is what traders widely expect. Any delay may affect calculations on the next rate hike (expected in December) and it may signal the Fed is worried about roiling markets, which ironically, may roil markets."A few of these participants also suggested that a near-term change to reinvestment policy could be misinterpreted as signifying that the Committee had shifted toward a less gradual approach to overall policy normalization." Since the Fed hiked rates in June, the Treasury curve is flatter, FANG Stocks are down, and gold has been hit hard...

FOMC Minutes: Inflation Discussions -- From the Fed: Minutes of the Federal Open Market Committee, June 13-14, 2017. Excerpts: With regard to the outlook for inflation, some participants emphasized downside risks, particularly in light of the recent low readings on inflation along with measures of inflation compensation and some survey measures of inflation expectations that were still low. However, a couple of participants expressed concern that a substantial undershooting of the longer-run normal rate of unemployment could pose an appreciable upside risk to inflation or give rise to macroeconomic or financial imbalances that eventually could lead to a significant economic downturn. Participants agreed that the Committee should continue to monitor inflation developments closely. Several participants endorsed a policy approach, such as that embedded in many participants' projections, in which the unemployment rate would undershoot their current estimates of the longer-term normal rate for a sustained period. They noted that the longer-run normal rate of unemployment is difficult to measure and that recent evidence suggested resource pressures generated only modest responses of nominal wage growth and inflation. . It was also suggested that the symmetry of the Committee's inflation goal might be underscored if inflation modestly exceeded 2 percent for a time, as such an outcome would follow a long period in which inflation had undershot the 2 percent longer-term objective. Several participants expressed concern that a substantial and sustained unemployment undershooting might make the economy more likely to experience financial instability or could lead to a sharp rise in inflation that would require a rapid policy tightening that, in turn, could raise the risk of an economic downturn. However, other participants noted that if a sharp rise in inflation or inflation expectations did occur, the Committee could readily respond using conventional monetary policy tools.

Inside the Fed’s June Meeting: The Annotated Minutes --In June, the Federal Reserve hiked rates for the third time in its past five meetings and maintained plans to deliver another increase by the end of 2017. With the release Wednesday of minutes from that meeting, we'll see how concerned Fed officials are about sluggish price growth and perhaps glean clues on the timing of balance sheet normalization.May's minutes showed that most participants viewed the slowdown in inflation as transitory. The balance of opinion may be shifting, however, in light of data released the same day as the Fed's June meeting which marked the third straight month of surprisingly soft price pressures. Dallas Federal Reserve President Robert Kaplan has said he wants to see more progress in moving towards the 2 percent inflation goal before lifting rates again.Along with the June hike, the Federal Reserve also provided an updated blueprint on how they plan to slim their massive asset holdings. These minutes offer information on how soon this process may begin, and whether officials plan to take a break from lifting interest rates to see how markets and the economy react to this form of policy normalization.In addition, any central bank commentary on financial conditions will be closely watched. Recently, a host of monetary policymakers have warned on equity valuations, with San Francisco Fed President John Williams going as far as saying the stock market"seems to be running very much on fumes."Odds of an additional rate hike by year-end are currently slightly above 50 percent.Follow along as we annotate their discussion.

SocGen: "Are We Just Prisoners Here, Of Our Own QE?" --In the aftermath of recent hawkish jawboning by central bankers around the globe, and especially FOMC members who now appear set to hike even if only to just spite momentum chasing market algos by "shocking" easy liquidity conditions in tightening as Goldman suggested in May, SocGen's Kit Juckes asks a more existential question: channeling the eagles he wonder if we "Are we just prisoners here, of our own QE?" and points out that as a result of the $15 trillion in CB liquidity injections, the US is "sort of" stuck in a 1990s-style Japanese "lost decade" and the impact on the global economy has been minimal yet "we've all seen the political consequences." As a result, he blasts any idea that the ECB will be able to exit its own "Hotel California" any time soon if ever:I meet a lot of people while I talk to clients who think the ECB simply won’t be able to escape its current policy setting because a stronger currency is too damaging. I think they’ll try, both to contain the currency, and to exit QE, because pressure within the ECN demands it, and practicality demands that they slow down.Luckily, thanks to Bullard's guidance from last week, we already know that when the exit attempt fails, and leads to a sever recession, the Fed and central banks will have no choice but to unleash even more QE, and so back to square one.Here is the key excerpt from his morning note: I was tidying up at home and ran into a copy of International Economy from the summer of 2009, which featured 31 interviews of economists answering the question ‘is America economically headed for a 1990s-style Japanese “lost decade” of stagnant growth?’ I thought the best observations were that the US entered the current cycle with a savings rate that was far too low (Bacon), and that a zero interest rate equilibrium isn’t conducive to innovation (Mann). The answer 8 years on though, is ‘sort of’. GDP growth has averaged 2%, ¾% per annum slower than in 2000-2007, and real wages have grown by 0.6% per annum, compared to 1.3% in the earlier period. We’ve all see the political consequences.

"What If": Citi Models A World Where The Fed Hikes All The Way To 3% ---It is becoming increasingly apparent that the Fed, now data-independent, has just one mandate: keep hiking interest rates until markets break.That is the conclusion of Citi's Jeremy Hale, who writes that the FOMC minutes pointed to a view that financial conditions had eased despite the previous Fed hikes because equities had rallied and corporate bond yields declined. Specifically, the minutes note that: "equity prices were high when judged against standard valuation measures." As a result, the Citi cross-asset strategist believes that "Central Banks are buying in to the BIS thesis that they need to control not just price, but asset price, inflation. In other words, markets may be inflated by easy money."In yet other words, those fringe financial blogs you've been reading for years were right all along. And, Citi adds, "it also means we might expect Central Banks to remain biased towards tightening until/ unless asset markets turn lower." Slowly markets are starting to get the message.What happens then?To answer that question, Citi has created a hypothetical scenario to assess how various assets may move if the Fed gets its way and takes FF all the way to 3%. According to Citi, this would take real yields to 200bp where they were when the FF rate last held this heady level. Additionally, he expects to see the beta on JPY and EUR real yields as ~20% and 40% respectively. In FX, real yield differentials would likely take $/JPY towards 140 and EUR/$ to 1.05 (and gold to <$800). EM asset markets, which have ignored rising US real yield for now, would not be able to ignore a move that large, and shorting EM $ credit remains the best hedge in Citi's view.

Banks Begin To Mutiny Against The Fed: "If We Are Right, Central Banks Will Be Wrong"  - After generations of largely uncontested and unquestioned monetary policy, where only the occasional "tinfoil" fringe blog dared to say that central banker emperors are not only naked and clueless but are also the cause of the world's biggest problems, more and more voices are emerging to challenge not only the prevailing monetary dogma but daring to tell the truth. One example was Bank of America's chief strategist, Michael Harnett, who on Friday confirmed what we had been saying for years, that  "central banks have exacerbated inequality via Wall St inflation & Main St deflation" and that the Fed failed in its mission to make the poor richer, instead its destructive policies have made the top 1% wealthier beyond its wildest dreams, and have been directly responsible for such political outcomes as "Brexit" and "Trump."  Then there was the WSJ, which on the front page, led with a headline that would have been anathema for "established" (i.e. sycophantic) financial journalism as recently as a few years ago: "Are Central Bankers Twisted Geniuses Or Bumbling Ex-Academics" the WSJ blasted on its front page, with James Mackintosh writing the following: Are central bankers twisted geniuses manipulating the markets in order to meet their inflation goals? Or are they bumbling ex-academics whose ramblings are overinterpreted by investors besotted with their brilliance? After last week's "communication" debacle, and as a result of the unprecedented ongoing collapse in the yield curve and plunge in inflation expectations at a time when central banks are coordinatively hawkish resulting in ever more deflationary market outcomes, increasingly more observers have become convinced that "bumbling academics" is the correct answer. Which brings us to the latest note by Deutsche Bank's Dominic Konstam, who dares to go so far as to stake his team's credibility in "fighting the Fed"saying that "If we are right, then [central banks] will be wrong" and adds that "we are biased towards a view that central bankers are not as powerful as they think they are in terms of delivering to their economic ‘targets”. Structural forces are more important."

Are we in a new inflation regime? – Jim Hamilton - Federal Reserve Bank of Chicago President Charles Evans got some attention recently with the following statement: In a world of global competition and new technology, I think competition is coming from new places. New partners are choosing to merge and sort of changing the marketplace and [bringing] more competitive pressures on price margins…If that’s the case, and I think that’s just speculative at this point, then it means that we need even more accommodation to get inflation up. Here are some of the data that might support such a statement. The existence of a Phillips Curve is one of the Fed’s core assumptions: as unemployment gets lower, the inflation rate should pick up. We’ve seen a huge drop in unemployment over the last six years. And in response, inflation did … pretty much nothing. It sure looks like other factors — maybe changes in competitive structure, maybe something else– are having a bigger influence on inflation than is the unemployment rate at the moment. But to that I’d add this– there’s really nothing new about the claim that other factors have a bigger influence on inflation than the unemployment rate. Here for example is a scatter plot going back to 1949 of the year-over-year change in inflation against the unemployment rate. I’ve drawn the regression line, as economists like to do, to help your imagination see the modest negative relation that holds in the data. But it is indeed modest, with an R2 of only 6%. Of course, economists have been teaching for a couple of generations that the Phillips Curve shifts over time due to changes in expected inflation. I’ve actually already incorporated a quick and dirty fix for this in the figure above by measuring the difference between this year’s and last year’s inflation on the vertical axis. If people expect this year’s inflation to be the same as last year, the result (as in Charles Jones’s macroeconomics textbook) is a Phillips Curve adjusted for expectations. I’m not saying the Phillips Curve has no basis in facts. I agree that the Phillips Curve is the correct framework for thinking about these questions. But I also agree with President Evans that other factors seem to be more important than the unemployment rate right now in determining inflation. Because they always have been.

 Someday Congress Won't Raise the Debt Ceiling - Narayana Kocherlakota - Treasury Secretary Steven Mnuchin has asked Congress to raise the federal debt limit above the ceiling imposed by legislators two years ago. According to a recent survey, only a small fraction of the American people -- both Democrats and Republicans -- support an increase. In contrast, a 2013 survey found that the vast majority of economists would like to scrap the debt ceiling. Who’s right? There is an important sense in which they both are -- and that means that the U.S. is likely to face some wrenching political conflicts in the next decade.   Here’s how I interpret what the economists were saying: Congress has the power to make tax and spending decisions. Those decisions typically result in a budget deficit, meaning that the government has to take on a growing amount of debt. But there’s no need to have a separate law to cap the size of the debt: If Congress doesn’t want to it to keep growing, it just needs to spend less, tax more or some combination of the two.  Here’s how I interpret what the non-economists are saying: We worry about the economic consequences of the federal debt getting too large relative to the size of the economy (and, hey, most economists seem to agree with us on that). So, it makes sense to us to have a law that imposes a cap on government debt. The problem is that Congress systematically breaks its own ceiling by making spending and tax commitments that will push the national debt above the statutory limit. Not raising the debt ceiling simply means that Congress will be forced to obey the law by rapidly unwinding those past spending commitments (or perhaps by rapidly increasing taxes to meet those commitments).  My own prediction is that Congress will yield to the administration’s demands and raise the debt ceiling sometime this summer. But the aging of our population means that the federal debt is only going to grow, and it would be surprising to me if voter concerns about the debt didn’t keep pace. If economists don’t like the debt ceiling, they’d better come up with some other mechanism that will allow voters to impose a credible cap on the size of the national debt. Otherwise, I expect that, sometime in the next decade, Congress is likely to yield to constituent pressures and not raise the debt ceiling, despite the attendant economic turmoil that is sure to ensue.

Only 4 House Republicans Say They Would Support "Clean" Debt-Ceiling Hike --With the CBO warning that the Treasury is on track to run out of cash in less than four months, Republicans are facing a difficult internecine struggle to raise the debt limits as both conservatives and moderates demand riders that stipulate how the money can be spent. And while the Trump administration has sought to play down this conflict, as the Hill reports,support for a “clean” debt-ceiling hike – that is, raising the debt ceiling with no strings attached – is dwindling as only a handful of the 16 remaining House Republicans who backed the last clean hike say they would back another. Yet, though Democratic support for a clean bill is far from assured, the Republicans’ much narrower majority in the Senate increases the likelihood of a clean hike. If the debt ceiling is raised with a clean hike — a distinct possibility given Democratic demands and the narrow, 52-seat majority for the GOP in the Senate, Republicans will need at least 24 members of their own conference to back a clean debt bill in the House..Even Paul Ryan voted against the last debt-ceiling bill in 2014 when he was Chairman of the House Ways and Means Committee. And in the Senate, every Republican opposed the bill the last time around. Given these odds, the chances of another round of downgrade-inducing gridlock are high – and the possibility of raising the US borrowing limit before Congress’s August recess, as Treasury Secretary Steven Mnuchin has repeatedly urged, are looking increasingly remote. The problem is compounded by the fact that this is the first time in 11 years that the GOP will be in charge of raising the debt ceiling while controlling both chambers of Congress AND the White House, meaning that the optics surrounding who “owns” the bill will complicate the voting process.

Steve Bannon Reportedly Pushing Trump To Raise Taxes On The Wealthy - The tensions between the Trump administration’s populist win and its more traditionally Republican establishment types have been well-documented in recent months. And now, more than two months after Treasury Secretary Steven Mnuchin and National Economic Council chief Gary Cohn unveiled an outline of the administration’s tax-reform ambitions, another battle between the two wings appears to be brewing. Trump’s chief strategist Steve Bannon is said to be pushing to raise the top tax rate on individuals, with Axios saying the former Breitbart CEO would like the top rate to have “a 4 in front of it” - currently, the highest income-tax bracket in the US is 39.6% for individuals earning more than $414,000 a year. Some officials – code for Mnuchin, Cohn and the other members of the more traditionally corporatist (or rather Goldmanist) wing of the Trump administration – believe Bannon’s ideas are crazy. But Bannon believes raising taxes on the wealthy could help the administration boost its populist bona fides, an angle which Trump appears to be actively pursuing once again having recently failed with his more traditional fiscal reform push. But as tax reform is shaping up to be a must-win for the Trump administration, it would hardly be a surprise to see Bannon’s plan shelved in favor of across-the-board cuts that would help rally the Republican Party’s conservatives to support whatever reform package Trump ultimately presents. Cohn and Mnuchin reportedly view tax reform as a top priority for the administration. However, as Axios notes, time to pass comprehensive reform is quickly running out.

  • Lobbyists who have met with Gary Cohn and Treasury Secretary Steven Mnuchin say they've been struck by how impatient the two appear:
  • Cohn has told associates that if tax reform doesn't get done this year, it's probably never going to happen.
  • Sources who know Cohn speculate that he'll leave the White House the instant he concludes tax reform is dead.
  • While Cohn and Mnuchin differ stylistically — Cohn is brash and physically imposing while Mnuchin is mild-mannered — sources who've been meeting with them say they share the same philosophy: Go big or go home.

Congressional Budget Office: Farm Subsidies Costing Taxpayers $7.5 Billion More Than Expected --  While many Americans were anxiously awaiting the Congressional Budget Office’s analysis of the Senate health care bill, this week the CBO released another important analysis: that the price tag on farm subsidies is expected to climb almost $7.5 billion more than originally thought.  According to new budget estimates released this week, the cost of commodity farm subsidies between 2016 and 2018 will be almost $7.5 billion higher than originally predicted. (Crop insurance spending is forecast to be below original estimates.) When the last farm bill was passed, commodity programs were supposed to cost $14.6 billion from 2016 to 2018, but now they’re expected to cost $22.1 billion.If a new farm bill isn’t passed in 2018, commodity subsidies will continue to be higher than expected. Commodity payments were previously forecast to normalize to lower levels after 2018, but the new estimates show that the subsidies in 2019 and 2020 will be $2.4 billion more than was originally planned – $10.8 billion instead of $8.4 billion. Will the budget office’s new analysis encourage Congress to consider common-sense reforms like decreasing subsidies to the wealthiest farmers in the next farm bill, or will farm subsidies continue to get more expensive? Stay tuned.

Seeing Through the Fog of Federal Budget Forecasting -- John Taylor -- Every summer since 2010 I’ve charted the latest Congressional Budget Office (CBO) long-term projection of the federal debt, noting the similarity with the Fourth of July fireworks. But during these years, the CBO has changed its procedures several times, fogging up comparisons over time and lessons from experience. Starting with my first post in 2010 on this topic, CBO reported projections of the debt as a percentage of GDP going out 75 years based on their “alternative fiscal scenario” which is more realistic than their “baseline scenario” that assumes no-change in current law. Here’s what CBO projections made in 2009 and 2010 looked like. You can see the explosions clearly as the debt to GDP ratio forecast reached 767% by 2083 in the 2009 estimate, and even higher in the 2010 estimate. I also sketched in an optimistic, but sensible, idea of what could happen the next year, 2011. Perhaps because the explosions looked so bad, CBO implemented procedural changes to make their projections look less like fireworks. First, starting with the 2011 projections, CBO stopped reporting the debt to GDP ratio once it exceeded 200 percent of GDP, which turned out to be in 2031, ending the exercise 50 years earlier than the previous projection.  So, in my blog post about the the 2011 projections I had to calculate my own debt projection.   It was based entirely on CBO assumptions and is shown in this next chart, which clarified that the explosion was still there, even though CBO stopped publishing it. (As you can see the 2011 projection was not what I hoped for.) The second CBO procedural change was to discontinue the use of the “alternative fiscal scenario” in the long-term projections which made it impossible to update my plots and make comparisons as before.  So, in the 2013 post, I simply superimposed CBO’s longer-term 2009 projection on their shorter-term 2013 projection, and thereby simulated a comparison as in the next chart.   As the chart shows quite clearly, the debt picture had not improved at all. The third change at CBO was to stop using the alternative fiscal scenario completely, and instead rely only on the “baseline scenario” which unrealistically assumes current law remains fixed.

 Trump administration sets one of the slowest paces for staffing and nominations in recent history -- The process of staffing the Trump administration and filling judicial vacancies has moved slowly on both ends of Pennsylvania Avenue, with only about one in five of President Trump’s civilian nominations receiving confirmation from the Senate, and committees waiting on paperwork for more than two dozen nominees.  New figures from the nonpartisan Congressional Research Service point to a marked slowdown in the pace of nominating and confirming personnel compared with prior administrations. Trump had submitted 242 civilian nominations to the Senate as of June 30, fewer than any of his four immediate predecessors. At the same time, only 50 have been confirmed, a smaller proportion than under previous administrations.   The research suggests that the significant number of vacancies in the Trump administration — and the concerns about policymaking that accompany them — are likely to persist unless both the White House and the Senate markedly accelerate their pace. And while Senate Democrats have worked to slow down the process, it appears some of the fault could lie with the Trump administration’s failure to turn around necessary documents.  Republicans and Democrats each blamed the other party for the slow pace.  The data “seems to show a pattern of Democrat obstruction which has only increased this year,” emailed Don Stewart, a spokesman for Senate Majority Leader Mitch McConnell (R-Ky.). “President Trump’s early nominees faced unprecedented obstruction.”   Senate Minority Leader Charles E. Schumer (D-N.Y.), who has noted Trump’s failure so far to enact significant legislation, said Republicans have accomplished little because they approach the process in a “totally partisan” way. “If they work with Democrats, they might be able to get something done,” he said in a statement.  The White House did not respond to requests for comment.

Why Has Washington Been At War For 16 Years? -- Paul Craig Roberts -- For sixteen years the US has been at war in the Middle East and North Africa, running up trillions of dollars in expenses, committing untold war crimes, and sending millions of war refugees to burden Europe, while simultaneously claiming that Washington cannot afford its Social Security and Medicare obligations or to fund a national health service like every civilized country has. Considering the enormous social needs that cannot be met because of the massive cost of these orchestrated wars, one would think that the American people would be asking questions about the purpose of these wars.  Perhaps if Americans and their “representatives” in Congress understood what the wars are about, they would rouse themselves to make objections. So, I will tell you what Washington’s war on Syria and Washington’s intended war on Iran are about. Ready? There are three reasons for Washington’s war, not America’s war as Washington is not America, on Syria.

  • The first reason has to do with the profits of the military/security complex. The military/security complex is a combination of powerful private and governmental interests that need a threat to justify an annual budget that exceeds the GDP of many countries. War gives this combination of private and governmental interests a justification for its massive budget, a budget whose burden falls on American taxpayers whose real median family income has not risen for a couple of decades while their debt burden to support their living standard has risen.
  • The second reason has to do with the Neoconservative ideology of American world hegemony. According to the Neoconservatives, who most certainly are not conservative of any description, the collapse of communism and socialism means that History has chosen “Democratic Capitalism,” which is neither democratic nor capitalist, as the World’s Socio-Economic-Political system.. Countries such as Russia, China, Syria, and Iran, who reject American hegemony must be destabilized and desroyed as they stand in the way of American unilateralism.
  • The Third reason has to do with Israel’s need for the water resources of Southern Lebanon. -- Israel is using America to eliminate the Syrian and Iranian governments that provide military and economic support to Hezbollah. If Hezbollah’s suppliers can be eliminated by the Americans, Israel’s army can steal Southern Lebanon, just as it has stolen Palestine and parts of Syria.

House committee unexpectedly backs Barbara Lee’s bill to end military authorization -- On September 14, 2001, Rep. Barbara Lee, who represents Oakland and Berkeley, stood up in the House of Representatives to cast the lone vote against the Authorization for Use of Military Force, a measure that paved the way for the war in Afghanistan.  Nearly 16 years later, a House of Representatives panel voted on Thursday for Lee’s amendment to repeal that authorization, which has been cited as justification for a vast array of American military actions in at least a dozen countries over three administrations. In a move that surprised many on Capitol Hill, the GOP-controlled House Appropriations Committee approved Lee’s amendment to the annual defense appropriations bill with a voice vote. If signed into law by President Trump, it would repeal the 2001 authorization eight months after Lee’s amendment passes. A new vote in Congress would be required to continue military action against the Islamic State or other terrorist groups. Thursday’s vote was a sign that there’s a bipartisan desire to revisit the sweeping powers given to the president to wage the war on terror. When the amendment passed, her fellow committee members broke into applause. Several of her colleagues then publicly congratulated Lee, who has proposed a form of the amendment every congressional session since 2001.  But it’s still just a first step, with a long legislative process ahead, Lee said. Procedural maneuvers could even remove the amendment from the spending bill when it goes for debate before the full House, the Associated Press reported. The 60-word Authorization for Use of Military Force, written as bodies were still being pulled from the rubble of Ground Zero, authorized the president to use force against nations, groups or people involved in the 9/11 attacks “in order to prevent any future acts of international terrorism against the United States.” It’s been used to justify at least 37 different military actions since 2001, a Congressional Research Service report found.

EXCLUSIVE: Documents expose how Hollywood promotes war on behalf of the Pentagon, CIA and NSA -- Tom Secker and Matthew Alford report on their astonishing findings from trawling through thousands of new US military and intelligence documents obtained under the Freedom of Information Act. The documents reveal for the first time the vast scale of US government control in Hollywood, including the ability to manipulate scripts or even prevent films too critical of the Pentagon from being made — not to mention influencing some of the most popular film franchises in recent years. This raises new questions not only about the way censorship works in the modern entertainment industry, but also about Hollywood’s little known role as a propaganda machine for the US national security apparatus.We have recently acquired 4,000 new pages of documents from the Pentagon and CIA through the Freedom of Information Act. For us, these documents were the final nail in the coffin.  These documents for the first time demonstrate that the US government has worked behind the scenes on over 800 major movies and more than 1,000 TV titles.

Army Unveils 700-Part Op-Order Process For Fighting New Wars Americans Won’t Care About — The Army has unveiled a new 700-part operations order in an effort to eliminate guilt small unit leaders may feel sending their soldiers to die in wars no one cares about, sources confirmed today.  According to Army spokesman Lt. Col. Ronald Dial, the “cornerstone of irrelevant and protracted land warfare” that makes up the 12 volume appendix to the “Army Planning and Orders Production” field manual would replace the long-standing five paragraph operations order, and become a mandated piece of equipment at the squad level.“This is by far the most comprehensive and thorough planning process ever conceived,” said Dial, who personally spent nearly 17 months reviewing the PowerPoint summary of the process, which came out to a 2-terabyte file size.“By following the 700-step planning process, leaders can be confident in their decision to risk their soldiers’ lives in any conflict with questionable strategic and operational goals.”According to Dial, the Army was looking at ways to remove all moral culpability of sending America’s sons and daughters to their deaths under dubious circumstances since the Vietnam War. But those efforts stalled after lop-sided victories of zero importance in Grenada, Panama, and Operation Desert Storm.“With the situation in the Middle East as hopeless as ever and only 30 percent of legislators still in Congress who decided to invade Afghanistan and Iraq, we knew it was only a matter of time before committing US forces to another historically volatile and culturally opposite area of the planet with no legitimate plan for success,” said Dial.“We felt it prudent to renew efforts to completely absolve leaders of risking their subordinates’ lives for reasons completely unknown to them.”

Iranians Hold ‘Trumpism’ Cartoon Contest to Mock U.S. Leader (AP) -- Iranians have organized a "Trumpism" cartoon contest in which hundreds of participants were invited to submit artwork mocking the U.S. leader.  The logo for the contest is based on the Nazi emblem, with a diagonal "T'' in a white circle against a red background. One cartoon shows President Donald Trump painting a Hitler-like mustache on the face of the Statue of Liberty. Hadi Asadi of Iran, who won first prize and a $1,500 award, said he wanted to highlight the "money-mindedness and war monger nature" of Trump. His cartoon shows Trump wearing a jacket made of dollar notes while drooling on books, a reference to cultural material."I wanted to show Trump while trampling symbols of culture," said Asadi, who produced the cartoon in two weeks using a stylus pen digital printing method.Contest organizer Masuod Shojai Tabatabaei said the aim of the contest and exhibition is to show wrong behaviors by Trump in the framework of satirical portraits. Trump and violence against women, media as well as building walls were among themes of the contest."The ism in Trumpism is a reference to racism and Nazism," said Tabatabaei. "Many believe his remarks are similar to Hitler. He has had a bad attitude toward media . refugees." The exhibition, which opened Monday and will last one week, includes the works of some 1,614 Iranian and foreign participants from 74 countries, including four works from American cartoonists, of which two were awarded citations.

Qatar: Rex Tillerson to travel to Kuwait in bid to resolve Arab dispute - - United States Secretary of State Rex Tillerson will travel to Kuwait next week to seek a resolution to the ongoing impasse over Qatar. Qatar is denying accusations that it sponsors terrorist organisations The row is problematic for the US because of the nation's close ties with Saudi Arabia US Defence Secretary concerned the dispute "could drag on for months" Arab nations involved in the boycott of the tiny Gulf state say its refusal of their demands is proof of its links to terrorist groups, and they are planning political, economic and legal steps. Qatar denies sponsoring terrorism and refused the list of demands from Saudi Arabia, Egypt, Bahrain and the United Arab Emirates, including shutting down its TV network Al Jazeera and curbing ties with Iran. Mr Tillerson will meet with Kuwaiti officials who have been trying to mediate between the disputing nations. The US is increasingly concerned the dispute is at an impasse and could drag on for a long time or intensify. Underscoring US concerns about a crisis involving key allies in the Middle East, Defence Secretary Jim Mattis discussed the importance of easing tensions in a phone call with Qatari Minister of State for Defence Affairs Khalid al-Attiyah. "We remain very concerned about that ongoing situation between Qatar and GCC (Gulf Cooperation Council) countries," State Department spokeswoman Heather Nauert told a briefing.

Tillerson Ready to Let Russia Decide Assad’s Fate | Foreign Policy: Secretary of State Rex Tillerson told the U.N. Secretary General Antonio Guterres during a private State Department meeting last week that the fate of Syrian leader Bashar Al-Assad now lies in the hands of Russia, and that the Trump administration’s priority is limited to defeating the Islamic State, according to three diplomatic sources familiar with the exchange. The remarks offer the latest stop on a bumpy U.S. policy ride that has left international observers with a case of diplomatic whiplash as they try to figure out whether the Trump administration will insist that Assad step down from power. Nearly three months ago, Tillerson had insisted that Assad would have to leave office because of his alleged use of chemical weapons. Tillerson’s assurances to Guterres signaled the Trump administration’s increasing willingness to let Russia take the driver’s seat in Syria, throwing geopolitics to the wayside to focus on defeating ISIS. He also signaled that U.S. military action against Assad’s forces in recent months is intended to achieve only limited tactical goals–deterring future chemical weapons attacks and protecting U.S. backed-forces fighting the Islamic State in Syria–not weakening the Assad government or strengthening the opposition’s negotiating leverage.Tillerson’s position reflects a recognition that Syria’s government, backed by Russia and Iran, is emerging as the likely political victor in the country’s six year long civil war. It also marks a further retreat from the 2012 U.N.-brokered Geneva Communique — signed by Russia, the United States, and other key powers — which called for the establishment of a transitional government with members of the regime and the opposition. The Geneva pact, according to the Obama administration and other Western allies, was to result in Assad’s departure from power. (Though the Obama administration softened its own demand that Assad step down during its final year in power). A State Department official declined to comment on Tillerson’s private discussion with Guterres, but insisted that the U.S. remains “committed to the Geneva process” and supports a “credible political process that can resolve the question of Syria’s future. Ultimately, this process, in our view, will lead to a resolution of Assad’s status.” “The Syrian people should determine their country’s political future through a political process,” the official added. 

 Have No Fear – Trump Is Lying Us Into War Just Like All The Presidents Before Him  -- Lee Camp: This week famed Pulitzer-Prize winning journalist Seymour Hersh revealed that the motivations (and facts) given by Trump for bombing Syria were about as truthful as an OJ Simpson testimony. To simplify the story, Hersh reported that the Syrian military did NOT use chemical weapons, that the US military knew exactly what Assad’s military was doing at the time, that the bombing was meant to hit “a high-level meeting of jihadist leaders” – and did just that. The resulting deaths caused by any form of chemicals were due to stores of chlorine, bleach, and fertilizer in the building that was struck – the literal fog of war. Here’s what Hersh’s source said: This was not a chemical weapons strike. That’s a fairy tale. If so, everyone involved in transferring, loading and arming the weapon – you’ve got to make it appear like a regular 500-pound conventional bomb – would be wearing Hazmat protective clothing in case of a leak. There would be very little chance of survival without such gear. [Military grade sarin] is odorless and invisible and death can come within a minute. No cloud. But instead there was a slow-moving cloud of chemicals: A Bomb Damage Assessment (BDA) by the U.S. military later determined that the heat and force of the 500-pound Syrian bomb triggered a series of secondary explosions that could have generated a huge toxic cloud that began to spread over the town, formed by the release of the fertilizers, disinfectants and other goods stored in the basement… Patients on the scene “smelled of bleach, suggesting that they had been exposed to chlorine.” (Remember Sarin gas has no smell.)Hersh states that although senior members of Trump’s national security team knew the truth and tried to impress it upon the president, Trump could not be talked out of viewing this as chemical warfare. Hersh said: In a series of interviews, I learned of the total disconnect between the president and many of his military advisers and intelligence officials, as well as officers on the ground in the region who had an entirely different understanding of the nature of Syria’s attack on Khan Sheikhoun. All this time I was under the impression Trump was just dumb and misinformed. What a relief to learn he is informed correctly but actively chooses to ignore the truth.

US ready to work with Russia on Syria ‘no-fly zones’: Tillerson (AFP) - The United States is willing to work with Russia on establishing "no-fly zones" in Syria as part of a joint effort to stabilize the war-ravaged country, the top US diplomat said Wednesday, ahead of President Donald Trump's first face-to-face with Vladimir Putin. In a wide-ranging statement, Secretary of State Rex Tillerson said Russia had a "special responsibility" to help create stability on the ground -- or risk hobbling the fight against the Islamic State group. Citing past cooperation in creating deconfliction zones in Syria, Tillerson made a strong case for both countries -- in spite of their "unresolved differences on a number of issues" -- to work together in Syria. "The United States is prepared to explore the possibility of establishing with Russia joint mechanisms for ensuring stability, including no-fly zones, on the ground ceasefire observers, and coordinated delivery of humanitarian assistance," he said. Tillerson issued his statement before joining Trump in Europe, where the US leader will meet Putin for the first time on Friday on the sidelines of a G20 summit in Hamburg, Germany. Syria will loom large in their discussions. It also came as US-backed fighters inched forwards in Raqa's Old City, in what Washington sees as a milestone in the campaign to defeat the Islamic State group in its de facto Syrian capital.

US-Russia Reportedly Ready For Cease-Fire In Syria --While the Trump-Putin meeting continues to stretch on way beyond its 30 minutes scheduled time, prompting media types to speculate endlessly, AP reports that sources are saying the United States and Russia are prepared to announce a cease-fire in Syria very soon...As AP reports, U.S. officials say the United States and Russia have reached an agreement for a cease-fire in southwest Syria.The cease-fire is set to take effect July 9 at noon Damascus time. Word of the cease-fire has emerged as President Donald Trump is meeting with Russian President Vladimir Putin.The officials weren’t authorized to discuss the cease-fire publicly and spoke on condition of anonymity.The deal marks a new level of involvement for the U.S. in trying to resolve Syria’s civil war.A separate deal to create “de-escalation zones” was brokered between Russia, Turkey and Iran, but not the U.S., but follow-up talks this week in Kazakhstan to finalize a cease-fire in those zones failed to reach a deal.The U.S. and Russia have been backing opposing sides in Syria’s war. This is a positive sign that there is some rapprochement between the two nations... but John McCain won't like it.

US Senate Strikes for Russian Equality – The Oligarchs Targeted in New Sanctions Bill - Not since the German government arranged for Vladimir Lenin to return to Russia, crossing German territory in a sealed train on April 16, 1917, has a foreign state at war with Russia done something as revolutionary as the US Senate did on June 15, 2017.  That is when, by a vote of 98 to 2, the senators  began the process of attacking the Russian oligarchs. They are the men who have dominated the Russian economy for more than twenty years, concentrating more national wealth in their  hands than can be found in any other major state in the world today.Unremarked by the senators themselves;  unreported by the American press;  and unnoticed, almost, in Russia, the new measure —  if adopted by the full Congress and signed into law by President Donald Trump —  will target the oligarchs’ lines of credit to international banks; the brokers,  repositories and clearinghouses of  their shares and bonds; their trade with the US and Europe; their US companies, bank accounts, boats on the high seas and homes abroad. If targeting the oligarchs is followed by formal sanctions, the aim will be to destroy their power at home and abroad. The Communist Party of the Russian Federation hasn’t contemplated this much. Senate Bill S. 722 started in March with Iran as its target. For short, it was called the ‘‘Countering Iran’s Destabilizing Activities Act of 2017’’.  Title I of the bill and 29 pages of its provisions deal with Iran. Then Title II was added. It runs for 94 pages and targets Russia. Read the text in full here.  The Anglo-American business media have reported the bill as an escalation in US economic sanctions against Russian targets, extending beyond the oil and gas sector. The Wall Street Journal interpreted  the legislation as an attempt to “wrest more control of Russia policy from the Trump administration”. The Financial Times reported  the bill would “tighten existing sanctions and threatens to broaden the restrictions from energy and banking to metals, mining, railways and shipping.” The newspaper failed to read the small print, noticing few of the novel details, except for one — the bill’s  threat to strike at European companies engaged in building and operating the new Russian gas pipeline to Germany, Nord Stream II.

Exxon, Chevron Join Trump in Opposing Russia Sanctions Bill -- ExxonMobil , Chevron and other oil bigwigs have spoken out against legislation that would establish tough, new sanctions against Russia for meddling in the 2016 election. The U.S. oil giants worry that the bill, which overwhelmingly passed the Senate 98-2 last month, could shut down oil and gas projects around the world that involve Russian partners, according to Market Watch . The companies have been contacting lawmakers about how the bill could "disadvantage U.S. companies compared to our non-U.S. counterparts," the Wall Street Journal reported. "This has far-reaching impacts to a variety of companies and industries," Jack Gerard, American Petroleum Institute CEO, commented to the Journal. "It has the potential to penalize U.S. interests and advantage Russia." The bill is currently stalled in the House but the Trump administration is reportedly lobbying House Republicans to weaken the bill as it also sets up a Congressional review process if President Trump wants to remove or ease the sanctions. "I think our main concern overall with sanctions is how will the Congress craft them, and any potential erosion of the executive branch's authority to implement them," press secretary Sean Spicer said last week.

Trump heads to G-20 summit on a collision course - President Trump and key global leaders are on a collision course ahead of the Group of 20 summit in Germany this week, with Trump's unapologetic “America First” mantra on trade and climate change running into emboldened, and increasingly united, opposition overseas. Trump reiterated his threats on Wednesday to pull the United States back from existing trade deals, arguing they were against the national interest. As Trump threatens to retreat from global trade, other world powers are exploring new economic ties. The European Union and Japan are expected on Thursday to announce plans for a major new free trade agreement. The E.U.-Japanese deal, which has only been negotiated in broad terms thus far, would lower barriers to exports of cars flowing in both directions, as well as reduce Japanese barriers to imports of trains and agricultural products, including cheese and chocolate, according to media reports. It would create a free trade area similar in size to North America, which is linked by the 1994 NAFTA agreement. If completed, the E.U.-Japan trade deal would be a sign of other top economies adjusting to a new world order in which they attempt to work around the United States instead of looking to it for direction on building global trade. Trump, with support from Congress, already ended an effort for the United States to reach a trade agreement with Japan and other Asian countries, and he has threatened to withdraw from the North American Free Trade Agreement and from a separate trade agreement with South Korea. Amid strengthening overseas opposition, Trump faces one of the most consequential economic decisions of his tenure so far, as he considers imposing new restrictions on steel imports to protect U.S. producers — a move vociferously opposed by Germany and other U.S. allies. The Commerce Department was close to recommending new restrictions, but other top Trump advisers warned it could lead to major economic fallout. Now the decision is hanging over both the administration and the summit of global leaders. 

Trump faces high stakes meeting with Putin - TheHill -- President Trump will be playing for high stakes when he meets Russian President Vladimir Putin during the Group of 20 summit in Hamburg, Germany, later this week. The encounter between the two men, the first since Trump became president, will be closely scrutinized in light of the allegations of Russian meddling in last year’s U.S. election — and because of the ongoing probes into whether there was any collusion between the Trump campaign and the Kremlin. But it is far from certain that Trump will even bring up the issue of Russian interference. At a White House briefing last week, national security adviser H.R. McMaster insisted “there’s no specific agenda” for the meeting. “It’s really going to be whatever the president wants to talk about.”McMaster also sought to play down the importance of the Putin meeting in general, saying that it “won't be different from our discussions with any other country, really.” Trump’s last high-profile meeting with Russians turned into a debacle. Meeting Russian foreign minister Sergey Lavrov and ambassador Sergey Kisylak in the Oval Office in May, Trump was reported to have revealed highly classified information. He also apparently celebrated his decision to fire FBI director James Comey, describing him to the Russians as “a real nut job.” At last week’s briefing, however, McMaster said that Trump’s overall policy on Russia has three priorities: to “confront Russia’s destabilizing behavior,” to deter the Kremlin from unwelcome actions and “to foster areas of cooperation.”

Playing Chicken with Nuclear Annihilation - Any truthful way to say it will sound worse than ghastly: We live in a world where one person could decide to begin a nuclear war — quickly killing several hundred million people and condemning vast numbers of others to slower painful deaths. Given the macabre insanity of this ongoing situation, most people don’t like to talk about it or even think about it. In that zone of denial, U.S. news media keep detouring around a crucial reality: No matter what you think of Donald Trump or Vladimir Putin, they hold the whole world in their hands with a nuclear button. If the presidents of the United States and Russia spiral into escalating conflicts between the two countries, the world is much more likely to blow up. Yet many American critics of Trump have gotten into baiting him as Putin’s flunky while goading him to prove otherwise. A new barrage of that baiting and goading is now about to begin — taking aim at any wisps of possible détente — in connection with the announced meeting between Trump and Putin at the G-20 summit in Germany at the end of this week. Big picture: This moment in human history is not about Trump. It’s not about Putin. It’s not about whether you despise either or neither or both. What’s at stake in the dynamics between them is life on this planet.

Instead of Trying to Sabotage the Trump-Putin Meeting, Democrats Should Support Vital Proposals -- Some leading Democrats in Congress are eager to turn the summit meeting between Donald Trump and Vladimir Putin away from avenues for improvements in U.S.-Russian relations, even if that means deflecting it toward World War III. On Wednesday, the New York Times reported that “the White House announced that the meeting with Mr. Putin would be a formal bilateral discussion, rather than a quick pull-aside at the economic summit meeting that some had expected.” Meanwhile, Senate Democratic leader Chuck Schumer criticized the lack of a “specific agenda” for the Trump-Putin discussion and tweeted “the first few things that come to my mind” — 10 items denouncing Russia and not a single step to help avert a nuclear war between that country and the United States. What a contrast with another Democrat, former Senator Sam Nunn, who signed a June 27 open letter that urged Putin and Trump to focus on “urgently pursuing practical steps now that can stop the downward spiral in relations and reduce real dangers.” The letter emphasized “reducing nuclear and other military risks.” But these days, apparently, the Democratic leadership in Congress has much bigger fish to fry than merely trying to avert a global nuclear holocaust.  The open letter offered four crucial proposals for the meeting between Trump and Putin:

  • *  “The starting point could be a new Presidential Joint Declaration by the United States and the Russian Federation declaring that a nuclear war cannot be won and must never be fought. This would make clear again that leaders recognize their responsibility to work together to prevent nuclear catastrophe, and would be positively received by global leaders and publics.”
  • *  “A second step could be to increase military-to-military communication through a new NATO-Russia Military Crisis Management Group. Restarting bilateral military-to-military dialogue between the United States and Russia, essential throughout the Cold War, should be an immediate and urgent priority. The focus of these initiatives should be on reducing risks of a catastrophic mistake or accident by restoring communication and increasing transparency and trust.”
  • *  “A third step could be to collaborate to prevent ISIS and other terrorist groups from acquiring nuclear and radiological materials through a joint initiative to prevent WMD terrorism. There is an urgent need to cooperate on securing vulnerable radioactive materials that could be used to produce a ‘dirty bomb.’ Such materials are widely available in more than 150 countries and are often found in facilities, such as hospitals and universities, that are poorly secured.”
  • *  “Fourth, discussions are imperative for reaching at least informal understandings on cyber dangers related to interference in strategic warning systems and nuclear command and control. This should be urgently addressed to prevent war by mistake. That there are no clear ‘rules of the road’ in the strategic nuclear cyber world is alarming.”

Lavrov gives Moscow's version of Trump-Putin talks | Fox News: While Secretary of State Rex Tillerson emerged from the sit-down between President Trump and Vladimir Putin claiming the U.S. president confronted the Russian leader on election meddling, it didn't take long for Tillerson's counterpart to provide Moscow's version of events. Russia’s Foreign Minister Sergey Lavrov told reporters on Friday that Trump had actually “accepted” Putin’s assurances that Moscow was not behind the meddling in the 2016 presidential election. Trump administration officials quickly pushed back, telling reporters at the G-20 summit in Germany that Lavrov's account was not accurate.Lavrov's account also would appear to deviate from what Tillerson told reporters in his off-camera press briefing.Lavrov had stressed that Trump “heard President Putin stating clearly” that the interference allegations are “not true” and the “Russian government did not meddle.” “President Trump, I’m sure, will either say [this] himself or Rex Tillerson [will], this campaign has acquired a rather strange character,” Lavrov said, according to a translation by Russia's Sputnik News. “Because in the course of the months that these allegations have been around, not a single fact has been presented ...” Tillerson, though, told reporters in Friday’s briefing that Trump opened the meeting by addressing concerns of Russia’s alleged meddling in the presidential campaign, leading to a “robust” discussion. “The president pressed Putin on multiple occasions—Putin denied involvement, as I believe he has done in the past,” Tillerson said. “They had a very robust and lengthy exchange on the subject.” Tillerson added that both presidents “agreed” the issue was a “substantial hindrance” to the ability to move the relationship between the U.S. and Russia forward. 

Trump and Putin find chemistry, draw criticism in first meeting | Reuters: In a meeting that ran longer than either side had planned, U.S. President Donald Trump and Russia's Vladimir Putin discussed alleged Russian meddling in the U.S. election on Friday but agreed to focus on better ties rather than litigating the past. Trump, a Republican who called it an "honor" to meet with the Russian president, drew swift criticism from Democrats at home, who accused him of dismissing U.S. intelligence and giving Putin's denial, reiterated on Friday, of Russian interference too much weight. Secretary of State Rex Tillerson told reporters at a summit of leaders of the Group of 20 major economies in Hamburg that Trump had "positive chemistry" with Putin during the meeting, which lasted some two hours and 15 minutes. He opened their discussion by pressing Putin about "the concerns of the American people regarding Russian interference in the 2016 election" and had a robust exchange, Tillerson said. The Russian president has denied any meddling in the U.S. democratic process last year and Moscow has asked for proof that it took place. Foreign Minister Sergei Lavrov said Trump accepted Putin's assertions that the allegations, backed by U.S. intelligence agencies, were false. Tillerson said they both sought to move on. "The presidents rightly focused on how do we move forward from what may be simply an intractable disagreement at this point," Tillerson said. That explanation did not sit well with Democrats. “Working to compromise the integrity of our election process cannot and should not be an area where ‘agree to disagree’ is an acceptable conclusion," said U.S. Senate Democratic leader Chuck Schumer in a statement.

First lady sent in to end Trump-Putin meeting | TheHill: First lady Melania Trump was sent in to try and end the meeting between President Trump and Russian President Vladimir Putin at the G-20 summit, which had run significantly long, Secretary of State Rex Tillerson said on Friday. U.S. officials sent in the first lady to end the scheduled 30-minute meeting when it had run for more than an hour. Melania was unsuccessful, and the meeting ended up running for 2 hours and 16 minutes. "Several times I had to remind the president, people were sticking their heads in the door," Tillerson said according to the Washington Examiner. "They even sent in the first lady at one point to see if she could get us out of there, and that didn't work either. ... We went another hour after she came in to see us, so clearly, she failed." Trump and Putin met in person for the first time on Friday at the conference of world leaders in Hamburg, Germany, amid violent protests in the city.

Trump Emerges From Putin Meeting With Cease-Fire and Little Else -- In Russia, some call Donald Trump a “marketolog” -- a master at the science of marketing. So Vladimir Putin may well have come into his first meeting with the U.S. president Friday in Hamburg looking to give Trump something to sell back home, something to talk up and tweet. What Putin gave him was a cease-fire in southwest Syria, a 140-character headline that Trump can use to show that his idea of working more closely with Putin’s government is starting to bear fruit. Never mind that the last cease-fire in Syria negotiated by Putin -- with the administration of Trump’s predecessor, Barack Obama -- collapsed almost immediately after it was signed. And never mind that Trump really got nothing else. In the more than two hours the men were together, Trump did not extract any price from Putin for the invasion of Ukraine, his coziness with Syria’s dictator Bashar al-Assad, his ineffectiveness at confronting Islamic State or his support for the Iranian regime. Not only that, but Trump also seemed eager to move on from the controversy over Russia’s meddling in the 2016 presidential election -- warning Putin that some U.S. politicians want to impose more sanctions but endorsing no specific penalties himself. 

Trump: Meeting with Putin ‘tremendous’ | TheHill: President Trump on Saturday did not clarify details regarding his meeting with Russian President Vladimir Putin the previous day, saying only that it was “tremendous.” Although the highly-anticipated meeting on Friday lasted more than two hours - which was nearly two hours longer than it was scheduled - details about what the two world leaders discussed have been scant. Accounts shared by Russian and U.S. officials significantly differ. Secretary of State Rex Tillerson said Trump repeatedly pressed Putin regarding possible Russian interference in the 2016 election, an issue currently under FBI and congressional investigation in the U.S. “The two leaders agreed that this is a substantial hindrance on the ability of us to move Russian-U.S. relationships forward and agreed to exchange further work regarding commitments of noninterference in the affairs of the United States and our democratic process as well as those of other countries,” Tillerson said. However, Russia’s Foreign Minister Sergey Lavrov implied the topic was brief and not contentious. "U.S. President Trump said that he heard firm assertions from Russian President Putin that it is not true and that Russian authorities have not meddled in the elections," Lavrov said. “[Trump] said that he accepts these assertions. That's it.” 

G20 Meeting Takes Awkward Turn as Trump Informs Mexico They’re “Absolutely” Still Paying for His Wall - In recent months, Donald Trump’s antagonism toward Mexico seems to have taken a backseat to his many other feuds—with Germany, Mika Brzezinski, and CNN, among others—not to mention the prospect of military conflict in North Korea. And yet, in the background, the original object of Trump’s hateful rhetoric still holds a place in his heart. The border wall charade is limping forward, even if Congress refuses to fund the effort. The threat of deportations and I.C.E. raids continue to terrorize immigrant communities. And Trump apparently still hasn’t given up on making Mexico pay for his proposed border wall, either. Mexican President Enrique Peña Nieto has repeatedly said that his country will not pay for the wall. Former president Vicente Fox has said so in even blunter terms. But on Friday, as he sat right next to Nieto on the sidelines of the G20 summit in Hamburg—a summit whose primary purpose is to bring world leaders together to build consensus—Trump seized the opportunity to affirm that he still thinks Mexico should pay for his personal vanity project. “Absolutely,” he told reporters, responding to a shouted question about whether Mexico would still pay for the wall. Nieto turned his head toward Trump, seemingly in disbelief. Seconds earlier, Trump had said, “It’s great to be with my friend, the president of Mexico. We’re negotiating NAFTA and some other things with Mexico. Let’s see how it all turns out. But I think we’ve made very good progress.”

North Korea missile test ‘new threat to world’, says US amid show of military force - The US has ramped up pressure on North Korea after Tuesday’s successful intercontinental ballistic missile (ICBM) test, making a show of force off the Korean peninsula and warning that any country harbouring North Korean workers was abetting Kim Jong-un’s regime.Officials in Seoul said the US-South Korean live-fire ballistic missile exercise early on Wednesday was intended as a warning to Pyongyang.  The South Korean president, Moon Jae-in, said it would demonstrate the allies’ determination to counter North Korean provocations with deeds and not just words of condemnation. “We need to clearly show our missile defence readiness to North Korea,” the presidential Blue House said in a statement. The US secretary of state, Rex Tillerson, called for global action to counter an “escalation of the threat” posed by the regime. He warned that any country that hosted North Korean workers, or provided economic or military aid to Pyongyang, or failed to implement United Nations sanctions was “aiding and abetting a dangerous regime”. He said in a statement: “Testing an ICBM represents a new escalation of the threat to the United States, our allies and partners, the region, and the world. All nations should publicly demonstrate to North Korea that there are consequences to their pursuit of nuclear weapons.”  Kim Jong-un delivered his own message on Wednesday, with the state Korean Central News Agency (KCNA) quoting him as saying: “American bastards would be not very happy with this gift sent on the July 4 anniversary.” The news agency claimed the North Korean missile was capable of carrying a “large, heavy nuclear warhead” that could survive re-entry into the Earth’s atmosphere.

UN to Meet on North Korea as U.S. Confirms Rocket Was ICBM - The United Nations Security Council will hold an emergency meeting later Wednesday after the U.S. confirmed North Korea’s rocket launch on July 4 was its first intercontinental ballistic missile.As North Korean leader Kim Jong Un bragged about sending more "gifts" to U.S. President Donald Trump, South Korea and the U.S. announced Wednesday they had conducted a joint ballistic-missile drill in waters off the eastern coast of the Korean peninsula.With Secretary of State Rex Tillerson calling North Korea’s actions a “new escalation of the threat” to the U.S. and its allies, the UN is set to issue a condemnation of the missile test, which comes in defiance of international sanctions. Still, with China and South Korea also calling for caution, and urging fresh efforts to entice North Korea to talks, the prospects for strong action appear limited.Kim’s progress toward acquiring missiles that can carry a nuclear warhead to the U.S. mainland also show how efforts to rein him in -- from international sanctions to U.S. and Chinese pressure -- have not worked. Even so, Tillerson called for “global action” to stop a "global threat.” “Any country that hosts North Korean guest workers, provides any economic or military benefits, or fails to fully implement UN Security Council resolutions is aiding and abetting a dangerous regime,” he said in a statement.

Alaska lobbies for defense boost after North Korea launch | TheHill: Calls for a more significant U.S. investment in missile defense are escalating after North Korea carried out its first successful test of an intercontinental ballistic missile this week, potentially putting Alaska in the nation’s range for the first time. Tuesday’s test — which leader Kim Jong Un called a “gift” to America for Fourth of July — elicited calls to spend more on missile defense at home and deploy more systems to Southeast Asia as time and options for reining in Pyongyang dwindle. “Alaskans awoke to disturbing news that North Korea tested a missile that some experts say may be able to reach Alaska in the near future,” Sen. Dan Sullivan (R-Alaska) wrote on Facebook Tuesday. “Now more than ever, it’s imperative for Alaskans and the rest of the nation that we be prepared. “That’s why I recently introduced a bill — the majority of which was included in the National Defense Authorization Act passed out of committee last week — that will significantly boost our missile defense capabilities and keep America safe.” Still, opponents of missile defense argue it’s a costly investment for something that cannot fully protect from North Korea and warn that sending more systems to South Korea and Japan could worsen regional tensions by angering China. 

 How To Deal With North Korea -- Thirty minutes. That’s about how long it would take a nuclear-tipped intercontinental ballistic missile (ICBM) launched from North Korea to reach Los Angeles. With the powers in Pyongyang working doggedly toward making this possible—building an ICBM and shrinking a nuke to fit on it—analysts now predict that Kim Jong Un will have the capability before Donald Trump completes one four-year term. About which the president has tweeted, simply, “It won’t happen!” Though given to reckless oaths, Trump is not in this case saying anything that departs significantly from the past half century of futile American policy toward North Korea. Preventing the Kim dynasty from having a nuclear device was an American priority long before Pyongyang exploded its first nuke, in 2006, during the administration of George W. Bush. The Kim regime detonated four more while Barack Obama was in the White House. In the more than four decades since Richard Nixon held office, the U.S. has tried to control North Korea by issuing threats, conducting military exercises, ratcheting up diplomatic sanctions, leaning on China, and most recently, it seems likely, committing cybersabotage. For his part, Trump has also tweeted that North Korea is “looking for trouble” and that he intends to “solve the problem.” His administration has leaked plans for a “decapitation strike” that would target Kim, which seems like the very last thing a country ought to announce in advance. None of which, we should all pray, will amount to much. Ignorant of the long history of the problem, Trump at least brings fresh eyes to it. But he is going to collide with the same harsh truth that has stymied all his recent predecessors: There are no good options for dealing with North Korea. Meanwhile, he is enthusiastically if unwittingly playing the role assigned to him by the comic-book-style foundation myth of the Democratic People’s Republic of Korea.

Why America Shouldn’t Buy North Korea’s Empty Threats - North Korea claimed to test an intercontinental ballistic missile this week, and Western alarmism over the rogue state kicked into overdrive once again. It is true that North Korea is marching toward an intercontinental ballistic missile. The North Koreans have hinted for years that they seek the capability to strike the U.S. homeland, and in his January new year’s address, North Korean leader Kim Jong-un openly said his country would pursue such a weapon. This is indeed frightening, but the hysteria of the last few months should be tempered by several basic insights.  Just because the North Koreans say they have an intercontinental ballistic missile hardly makes it so. Last year, North Korea claimed to detonate a hydrogen bomb. This was false. In trying to resolve the abductee problem with Japan, Pyongyang was nabbed returning incorrect human remains. The George W. Bush administration caught the North Koreans cheating on the Agreed Framework. Pyongyang’s lying on human rights in the North is of epic, Orwellian proportions. Throughout various talks and engagement since the early 1990s, the North Koreans continued nuclear development even as they professed denuclearization. Without independent verification, I see no reason why we should accept North Korean claims on almost anything of significance. California is 5,500 miles from North Korea. No one has actually seen a North Korean missile with that sort of range yet, and the South Korea military is now reporting that the Hwasong-12 missile is just a medium-range rocket after all. In other words, Pyongyang lied. Firing short- and medium-range rockets into the Sea of Japan is hardly evidence the North can strike the Western Hemisphere.

A North Korean EMP Attack: The Dark Possibility -- As the tension between North Korea and the US continues to grow, the possibility of war is rapidly evolving into a probability. Now some military experts worry that an attack via EMP (electromagnetic pulse) on the US mainland might be a feasible option for Pyongyang.  The signs are certainly there: Having recently completed the ninth missile test of 2017, Kim Jong-un promised to send the US an even bigger “gift package.” Most analysts believe North Korea is not yet capable of a direct missile strike on the US mainland, but Kim Jong-un’s dogged determination to make this a reality is quite disconcerting. Some experts believe that the more realistic threat at this point in time is an EMP attack. To make that happen, all North Korea has to do is launch a low-yield nuclear missile from a submarine, ship, or even by balloon and explode it at high altitude, above the atmosphere. The potential result: a blackout of the Eastern grid that supplies 75% of power to the United States. If an EMP attack did take place, it would be beyond anything we have seen before. The Commission to Assess the Threat to the United States from Electromagnetic Pulse Attack, which was established by Congress in 2001, estimates that within 12 months following a nationwide blackout, “up to 90% of the US population could perish from starvation, disease, and societal breakdown.”  In practical terms, a catastrophic blackout would be worst in cities, because it would instantly deprive the population of access to drinking water, refrigeration, heat, air conditioning, and telecommunication. Food stores would be looted within a matter of days, and gas stations would cease to function without electricity.

US warns Kim Jong-un it is prepared to use its 'considerable military forces' against North Korea: The United States warned on Wednesday that it was prepared to use its "considerable military forces" on North Korea "if we must". The warning came at an emergency meeting of the the UN Security Council following Tuesday's intercontinental ballistic missile (ICBM) test by the rogue state.. Nikki Haley, the US ambassador to the UN, said that North Korea's actions were "quickly closing off the possibility of a diplomatic solution"." One of our capabilities lies with our considerable military forces. We will use them if we must, but we prefer not to have to go in that direction," she said. The United States would propose new UN sanctions on North Korea "in the coming days", Ms Haley added, warning that Washington was prepared to cut off trade with countries trading with North Korea in violation of UN resolutions. She warned that if Russia and China did not support the move, then "we will go our own path". Russia criticised the test but said the option of considering military measures "should be excluded". China's UN ambassador, Liu Jieyi, told the Security Council meeting that the missile launch was a "flagrant violation" of UN resolutions and "unacceptable", but did not address new sanctions."We call on all the parties concerned to exercise restraint, avoid provocative actions and belligerent rhetoric, demonstrate the will for unconditional dialogue and work actively together to defuse the tension," he said. Donald Trump had earlier criticised China for not doing more to address the growing threat from North Korea.

General Warns U.S. Is Prepared For War In North Korea: "Self-Restraint Is A Choice" --Following North Korea's latest provocation, the launch of an ICBM that, for the first time, demonstrated North Korea's ability to strike the continental United States, General Vincent Brooks, Commander of Combined Forces Command and General Lee, Sun Jin, Chairman of the Republic of Korea Joint Chiefs of Staff, made a rather forceful combined statement directly warning North Korea they're prepared for war at any time."Self restraint, which is a choice, is all that separates armistice and war.As this Alliance missile live fire shows, we are able to change our choice when so ordered by our Alliance national leaders," said Gen. Brooks. "It would be a grave mistake for anyone to believe anything to the contrary."“Despite North Korea’s repeated provocation, the ROK-U.S. Alliance is maintaining patience and self-restraint,” said Gen. Lee. “As the combined live fire demonstrated, we may make resolute decisions any time, if the Alliance Commanders in Chief order. Whoever thinks differently is making a serious misjudgment.”The statement was issued after allied armies conducted a rare live-fire drill, launching tactical surface-to-surface  missiles off the east coast of Korea—an action they said was aimed directly at “countering North Korea’s destabilizing and unlawful actions on July 4.”  The drill and tough language appeared meant to reassure Seoul after North Korea’s successful ICBM test, a significant advance.

Can U.S. defend against North Korea missiles? Not everyone agrees | Reuters: Not everybody asserts as confidently as the Pentagon that the U.S. military can defend the United States from the growing threat posed by North Korea's intercontinental ballistic missile capability. Pyongyang's first test on Tuesday of an ICBM with a potential to strike the state of Alaska has raised the question: How capable is the U.S. military of knocking down an incoming missile or barrage of missiles? Briefing reporters on Wednesday, Pentagon spokesman Navy Captain Jeff Davis said: "We do have confidence in our ability to defend against the limited threat, the nascent threat that is there." Davis cited a successful test in May in which a U.S.-based missile interceptor knocked down a simulated incoming North Korean ICBM. But he acknowledged the test program's track program was not perfect. "It's something we have mixed results on. But we also have an ability to shoot more than one interceptor," Davis said. Despite hundreds of billions of dollars spent on a multi-layered missile defense system, the United States may not be able to seal itself off entirely from a North Korean intercontinental ballistic missile attack. Experts caution that U.S. missile defenses are now geared to shooting down one, or perhaps a small number of basic, incoming missiles. Were North Korea's technology and production to keep advancing, U.S. defenses could be overwhelmed unless they keep pace with the threat.

"So Much For China Working With Us": Trump Slams China On N.Korea Trade -- As the G-20 meeting in Hamburg between Trump and Xi draws nearer, the US president appears eager to continue antagonizing his Chinese peer.On his way to Warsaw this morning, where he will stay briefly ahead of the G20 summit in Hamburg which begins on Friday, Trump tweeted his displeasure at US trade deals which had been signed before his tenure: “The United States made some of the worst Trade Deals in world history. Why should we continue these deals with countries that do not help us?” Initially it was not exactly clear from that tweet alone which trade deals he has in mind, although Nafta has been at the forefront of many minds inside and outside the White House, while the precarious trade relationship between the US and China is well-known. The United States made some of the worst Trade Deals in world history.Why should we continue these deals with countries that do not help us?— Donald J. Trump (@realDonaldTrump) July 5, 2017Conveniently, in a subsequent tweet Trump did hint at the source of his displeasure in a following tweet, in which the President made it clear who he was referring to: "Trade between China and North Korea grew almost 40% in the first quarter. So much for China working with us - but we had to give it a try!"Trade between China and North Korea grew almost 40% in the first quarter. So much for China working with us - but we had to give it a try! — Donald J. Trump (@realDonaldTrump) July 5, 2017

Factbox: Trump talks tough on North Korea, but options limited | Reuters: U.S. President Donald Trump has employed tough rhetoric in response to North Korea's missile tests, but his options appear limited in dealing with a challenge that has vexed his Oval Office predecessors. U.S. Secretary of State Rex Tillerson called Pyongyang's test launch of an intercontinental ballistic missile on the eve of Tuesday's U.S. Independence Day a global threat, as experts cautioned that Alaska may now be within range. Most options for cracking down on Pyongyang fall into four categories: economic sanctions, covert action, diplomatic negotiations and military force. North Korea is already among the most heavily sanctioned nations, facing numerous strictures to limit its ability to conduct commerce, participate in international finance and trade in weapons and other contraband. Despite those measures, "most analysts agree that U.S. and multilateral sanctions have not prevented North Korea from advancing its fledgling nuclear weapons capability," said a report last year from the U.S. Congressional Research Service. Reuters has reported that Trump is focusing his North Korea strategy for now on tougher sanctions, possibly including an oil embargo, banning its airline, intercepting cargo ships and punishing Chinese banks doing business with Pyongyang. U.S. officials have expressed doubt about how much further China is willing to go to pressure its defiant North Korean ally - despite Beijing's increasing frustration with Pyongyang's missile launches and nuclear tests. Beijing has long feared that economic collapse in North Korea would flood China with refugees and leave it to deal with chaos on the Korean peninsula. 

North Korea’s Fast-Track Missile Development: How Far It’s Come and Why It Has the U.S. on Edge -- Since Donald Trump became president, North Korea has conducted a flurry of missile tests, triggering a wave of condemnation by U.S. media and political figures. The reaction contains more than an element of fear-mongering, and it is sometimes implied that armed with an intercontinental ballistic missile (ICBM), North Korea is liable to launch an unprovoked attack on the U.S. mainland. What tends to be lacking in such reports is any sense of sober reflection, and much confusion is sown concerning the actual state of North Korea’s program. This article takes a closer look at North Korea’s recent missile launches and argues that they pose a threat–not to the safety of the U.S. population, as the corporate media claim, but to the United States’ strategic calculus in the region.Abe, Trump and Moon agree to tighten pressure on North Korea- Nikkei Asian Review: -- Japanese Prime Minister Shinzo Abe, U.S. President Donald Trump and South Korean President Moon Jae-in agreed to put more pressure on North Korea when they met ahead of the Group of 20 leaders' summit which kicks off in Hamburg on Friday. The three leaders also agreed to urge China to play a greater role in efforts to denuclearize the Korean Peninsula. The last time the three met was in Washington last March -- the first encounter after Trump and Moon took office. Discussions lasted about 75 minutes over dinner at the U.S. Consulate General in Hamburg, mostly focusing on Pyongyang's nuclear and missile development. According to Japanese government officials, Abe said North Korea is the most pressing issue facing the international community. He also stressed the importance of the meeting, describing it as a historic opportunity for the three countries to share strategy on how to urge North Korea to renounce its nuclear weapons program. Abe said Tuesday's launch of what North Korean authorities claimed to be an intercontinental ballistic missile has shown that Pyongyang has no interest in serious dialogue. All three leaders shared the view that the technology at the country's disposal has made substantial progress. Abe said it is important to pressure North Korea to come to the negotiating table, stressing the need to tighten U.N. sanctions. Both Trump and Moon agreed.

South China Sea: China calls USS Stethem warship ‘a provocation’ - Beijing has called the presence of a US warship near a disputed island in the South China Sea "a serious political and military provocation". The USS Stethem sailed close to Triton Island, part of the Paracel Islands archipelago, claimed by China and others. China responded by sending military vessels and fighter jets to the area. It happened hours before US President Donald Trump and Chinese counterpart Xi Jinping spoke on the phone. During the call, Mr Xi told Mr Trump that "negative factors" were affecting US-China relations, according to a read-out of the call carried on Chinese state TV. A White House statement about their call did not say if they had discussed the incident. It said the leaders had instead "reaffirmed their commitment to a denuclearised Korean peninsula". The US has repeatedly warned China against its occupation and aggressive reclamation of islands in disputed waters, but Beijing says it is within its sovereign rights to do so. In a statement late on Sunday, China's foreign ministry confirmed reports that the USS Stethem had entered waters claimed by China. The warship had sailed within 12 nautical miles of Triton Island - which is also claimed by Taiwan and Vietnam - as part of its "freedom of navigation" operations, according to news agencies and Fox News citing US defence officials. UN rules dictate that any territory can claim the waters up to 12 nautical miles from its coast. The sailing of a US ship within those limits indicates the US does not recognise the territorial claim.Beijing said it would use "all necessary means to defend national sovereignty and security". It also accused the US of "deliberately stirring up troubles" in the region as China and Southeast Asian neighbours have "cooled down and improved the situation".  The US conducts a programme called "freedom of navigation" which the State Department says is to highlight the need to protect global maritime rights. The US, it says, will not acquiesce "in unilateral acts of other states designed to restrict the rights and freedoms of the international community in navigation and overflight and other related high seas uses".

Trump calls Xi as tensions escalate over Taiwan, North Korea | South China Morning Post: President Xi Jinping urged his US counterpart Donald Trump to abide by Washington’s decades-old “one-China” policy during a phone call on Monday morning as tensions between the two countries resurfaced over Taiwan, disputes in the South China Sea and how to handle North Korea’s nuclear weapons programme. Xi said US-China relations have been affected by negative factors since the two men met for the first time at the Mar-a-Lago summit in Florida in April, the state broadcaster China Central Television reported. “We attach great importance to the US government’s reaffirmation of the one-China policy and hope the US side will properly handle the Taiwan problem by adhering to the one-China principle and the three communiqués between the two sides,” Xi was quoted as saying. The call, just days ahead of a planned second meeting between the two leaders at the G20 summit in Hamburg, Germany later this week, came after the Trump administration agreed a US$1.4 billion arms sales package with Taiwan. China considers the island to be a breakaway Chinese province and tries to deter all countries from having formal ties with the island. US defence ties with Taiwan are a particularly sensitive issue. The phone call also came as the Trump administration has become increasingly frustrated with Beijing over its perceived lack of progress in putting pressure on North Korea to rein in its weapons programme.

US bomber planes fly over East and South China Seas - The US has flown two bombers over East Asian waters, as tensions continue to run high in the region. The B-1B Lancers took part in joint military drills with Japan in the East China Sea, the US Air Force said in a statement.They then flew over the highly contentious South China Sea.On Tuesday, North Korea test-fired a long-range missile some believe could reach Alaska, sparking concerns over its weapons capabilities.  A statement by the US Pacific Air Forces said the flights with Japan "demonstrate the solidarity between Japan and the US to defend against provocative and destabilising actions in the Pacific theatre".Tuesday's launch of an intercontinental ballistic missile (ICBM) by North Korea sparked a warning from the US that it would use military force "if we must".The US has been firing missiles into South Korean waters in joint ballistic missile drills in response to the missile test. Japan, which sent two F-15s for the joint drill, also has competing claims with China in the East China Sea.

US still has no path to peace in Afghanistan, bipartisan senators say - After more than 15 years in Afghanistan the US still does not have a strategy for winning peace and is making that goal even more unattainable by hampering diplomacy, a bipartisan group of US senators said in the Afghan capital on Tuesday. The criticism came as the Trump administration considers the deployment of thousands of additional soldiers, without publicly explaining what they are meant to achieve. In Kabul, the Republican senator John McCain excoriated 15 years of US efforts in Afghanistan, which, he said, pursued a goal amounting to “don’t lose”, rather than winning. McCain – accompanied by the Democratic senators Elizabeth Warren and Sheldon Whitehouse, and fellow Republicans Lindsey Graham and David Perdue – said the delegation shared concerns about the worsened security in Afghanistan since the drawdown of coalition troops in 2014. “Each of us may describe that concern in our own way but none of us would say that we’re on course to a success here in Afghanistan,” he said. Warren added that without a clear plan, political patience in the US could run out. “We need a strategy in the United States that defines our role in Afghanistan, defines our objective and explains how we’re going to get from here to there,” she said. Most experts believe the Afghan conflict cannot be won by military means alone. Yet, while planning to boost the 8,400 US troops in Afghanistan with about 4,000 more, Donald Trump is gutting civilian bodies tasked with diplomacy. Proposing budget cuts of 32% to the state department, Trump has also allowed for the closure of the office of the special representative to Afghanistan and Pakistan, tasked with coordinating across the US government to meet strategic goals in the region. 

Elizabeth Warren, back from first trip to Afghanistan, says, ‘I’m not there on a troop increase’ - WaPo - Back from her first overseas trip to visit U.S. military personnel, Sen. Elizabeth Warren (D-Mass.) warned that the Trump administration is creating a “diplomatic vacuum” in Afghanistan by leaving key State Department posts unfilled at a time when a “whole-of-government strategy” is needed to end the 16-year-old conflict.  The Trump administration has been working for several months on a new plan for Afghanistan and Pakistan, but internal debates among the White House, the Pentagon and the State Department have delayed this even as militants continue to mount attacks in both countries. U.S. military leaders have asked to deploy 3,000 to 4,000 more troops to Afghanistan, a request that probably will be fulfilled by President Trump. Warren traveled this week to Afghanistan, Pakistan and the United Arab Emirates as part of a bipartisan congressional delegation, making her overseas debut as a member of the Senate Armed Services Committee. Back in her Cambridge, Mass., living room on Thursday just 16 hours after returning home, Warren made clear: “I’m not there on a troop increase.”“No one on the ground believes there is a military-only solution in Afghanistan. No one,” she said. “From the heads of state to the young man who walked us from one building to another in the embassy compound. No one — people at the forward operating base to anyone we stopped.”“The Trump administration needs to define what winning in Afghanistan is and how we get to that,” the senator added. “They owe it to the deployed forces to provide the American people with a comprehensive, whole-of-government strategy that has not only a military angle, but also an economic and diplomatic plan.”  Trump has yet to nominate a U.S. ambassador to Afghanistan or neighboring Pakistan, two countries destabilized for years by terrorist groups that freely move across a porous border. Senior State Department positions entrusted with overseeing U.S. policy for Afghanistan and Pakistan remain vacant, and the acting director of the Office of the Special Representative for Afghanistan and Pakistan and her deputy stepped down last month as the administration is poised to close the stand-alone office.

 Shouldn't Anti-Globalization Activists [Heart] Trump? - For years, anti-globalization protesters have gone out to all sorts of notable economically-related gatherings worldwide, be they G-7, G-8 or G-20 summits; World Economic Forum gatherings; World Bank and IMF meetings; WTO ministerial conferences, and so on and so forth. The boilerplate accusation is that world leaders betray the interests of the common people in favor of a faceless global capitalist class. To this, the common people must stand up for what they believe in. So far, nothing is new here. What's interesting with the emergence of Donald Trump in world politics is that he espouses much of the same rhetoric: the [American] working class has been hurt by globalization, and therefore globalization should be rolled back to protect the common people from the ravages of world trade. As such, it's always struck me how vehemently opposed anti-globalization campaigners are to Trump when he's actually done much more to stop further economic integration than all of them combined. From single-handedly dooming the Trans-Pacific Partnership to oblivion to refusing to agree that trade protectionism is to be avoided during economic summits, he should be the man of anti-globalization writer Naomi Klein's dreams. But alas, he is not. This Canadian who likes meddling in Yanks' affairs just cannot stop blathering about how awful Trump is.  There are, of course, all sorts of wrinkles here. Coming from the left, the anti-globalization vision of eliminating world trade is complemented by replacing it with folks being self-sufficient in small, sustainable communities. Meanwhile, the Trumpian vision is instead a triumph of American industry making everything that those in the United States wish for and more--to the exclusion of considering everyone else's welfare. Another line of argument is that Trump is only masquerading as a champion of the working class and is actually globalizer in disguise.  Then you also have a panoply of leftist causes that are the exact opposite of what Trump champions. These include climate change, racial tolerance, and so on. But, if you really think about it, Trump may be the one who is *really* anti-globalization in outlook here if the criteria is sheer isolationism.

Putin jabs at Trump's trade policies ahead of G20 meet -  Russian President Vladimir Putin has taken a thinly-veiled stab at US President Donald Trump's policy agenda, slamming US sanctions and trade protectionism just a day before the leaders' highly-anticipated meeting in Germany.The two men are scheduled to officially meet for the first time on Friday in Hamburg on the sidelines of the G20 summit.German newspaper Handelsblatt published an article Thursday penned by Putin, who sang the G20's praises while criticizing the use of sanctions and protectionist trade policies, both measures associated with the US administration.  "Protectionism is becoming the norm, while unilateral, politically motivated restrictions on trade and investment, as well as technology transfer, are nothing but masked protectionism," Putin wrote. "We believe that these sanctions are not only doomed to fail, but also run counter to the G20 principles of cooperation in the interests of all countries."The US imposed sanctions on Russia after Moscow annexed the Crimea Peninsula from Ukraine in 2014. The Obama administration placed fresh sanctions on the country when American intelligence agencies said they believed Russia interfered in the 2016 US election.Trump has repeatedly threatened to pull the United States out of several multilateral trade agreements and in January pulled the US from talks on the Trans-Pacific Partnership agreement, which sought to tear down trade barriers among the 12-nation group.

Juncker gives Trump crash course in free trade at G20 summit - European Commission President Jean-Claude Juncker took advantage of today’s G20 summit to explain the advantages of free trade agreements to U.S. President Donald Trump.“Trade agreements are not only about selling and buying,” Juncker said during a closed-door meeting. “They’re about job creation,” he explained in remarks that were clearly intended for Trump, according to POLITICO’s sources. German Chancellor Angela Merkel, who is chairing the summit, opened the first working session, on growth and trade, by giving the floor over to the U.S. president. She then turned to Juncker, who seized his moment to trumpet the EU’s trade accords with Japan and Canada. “Yesterday, Shinzō and I came to an agreement in principle on the EU-Japan Economic Partnership Agreement,” he said, referring to Japanese Prime Minister Shinzō Abe. “We are convinced – and committed to demonstrate – that free and open trade, with clear and transparent rules is an important tool to promote prosperity in our societies,” he continued. “This is a win-win, both for Japan and the EU.” “Japanese companies already employ more than half a million people in Europe. We estimate that with this agreement our exports to Japan can grow by €20 billion. If each billion in exports supports 14,000 jobs, just do the maths.”Juncker then turned to Canada’s Prime Minister Justin Trudeau. “I know Justin shares this view too and that is why we concluded last year our bilateral EU-Canada agreement that will soon enter into force.”

Oh! What a Lovely Trade War, by Paul Krugman - According to the news site Axios, Trump, supported by his inner circle of America Firsters, is “hell-bent” on imposing punitive tariffs on imports of steel and possibly other products, despite opposition from most of his cabinet. After all, claims that other countries are taking advantage of America were a central theme of his campaign.And Axios reports that the White House believes that Trump’s base “likes the idea” of a trade war, and “will love the fight.” Yep, that’s a great way to make policy. O.K., so what’s complicated about trade policy? First, a lot of modern trade is in intermediate goods — stuff that is used to make other stuff. A tariff on steel helps steel producers, but it hurts downstream steel consumers like the auto industry. So even the direct impact of protectionism on jobs is unclear. Then there are the indirect effects, which mean that any job gains in an industry protected by tariffs must be compared with job losses elsewhere. Normally, in fact, trade and trade policy have little if any effect on total employment. They affect what kinds of jobs we have; but the total number, not so much. Suppose that Trump were to impose tariffs on a wide range of goods — say, the 10 percent across-the-board tariff that was floated before he took office.  Even if we ignore the damage to industries that use imported inputs, any direct job creation from new tariffs would be offset by indirect job destruction. The Federal Reserve, fearing inflationary pressure, would raise interest rates. This would squeeze sectors like housing; it would also strengthen the dollar, hurting U.S. exports. Then there’s the response of other countries. International trade is governed by rules — rules America helped put in place. If we start breaking those rules, others will too, both in retaliation and in simple emulation. That’s what people mean when they talk about a trade war. And it’s foolish to imagine that America would “win” such a war.

Some Non-Economic Implications of the National Security Rationale for Protection – Menzie Chinn - In several recent pieces [1] [2] [3], I have worried about the economic implications of trade protection, particularly those moving forward in the guise of “national security”. In this post, I want to make a couple of observations on some non-economic implications. From Politico: President Donald Trump’s protectionist rhetoric on trade has already set the United States apart from its global allies, but the White House’s pending moves — sweeping new trade policies to protect the steel industry — could be the first major steps to reverberate across global economies and incite other countries to retaliate…The pending Section 232 review, under which the administration is considering whether to limit imports of both steel and aluminum in the name of national security, would help Trump keep his campaign promise to crack down on unfair trade practices. …“   Those who doubt we are heading toward implementation of some substantial protectionist measures should read this account, which characterizes the President as being “hell bent” on moving forward. Chad Bown at Peterson IIE has outlined what countries would likely suffer the most – i.e., our traditional allies. That’s partly because imports of Chinese steel have already been reduced by conventionally used anti-dumping and countervailing duties. As for aluminum, see this NYT article. However, to the extent that China is now again in the firing line – partly because of a perceived failure to rein in North Korea, I expect that a large amount of the rhetoric justifying the use of Section 232 will be aimed at China. Not only is the use of Section 232 more likely to lead to retaliation by our trading partners. I think it might also be inflammatory with respect to certain minority groups within the United States. While the President has recently spoken of the evils of Germany, I do not realistically believe there will be a surge of attacks on Americans of German descent, but should diplomatic and economic relations with China or other nations deteriorate, other groups may be targeted. Count me worried.

Non-Credible Threats Are Only Non-Credible when Actors Are Sane --  Menzie Chinn --- Ordinarily, when I read a senior government official stating:“We have other methods of addressing those who threaten us, and of addressing those who supply the threats. We have great capabilities in the area of trade.”  [US Ambassador to UN Nikki] Haley said she spoke at length to President Donald Trump on Wednesday morning about “countries that are allowing, even encouraging trade with North Korea, in violation of U.N. Security Council resolutions.” “Such countries would also like to continue their trade arrangements with the United States,” she said. “That’s not going to happen. Our attitude on trade changes when countries do not take international security threats seriously.”   I discount such talk as constituting a non-credible threat. That’s because punishing China with effective trade sanctions would likely hurt America as much as the target (including through third channels as the global economy is hurt).  But the threat is truly non-credible if the agents are rational, as in the Rational Agent model of international relations (see alternatives, here). But using that model as a baseline is probably not correct for the Trump Administration. I think a better framework for analysis (if not a model) would be stumbling into conflict with a misapprehension of costs, benefits, and the workings of the world, as in this case. Of course, that does not mean that China would accede to US demands even if we imposed sanctions.

Mexican farmer's daughter: NAFTA destroyed us - If you ask President Donald Trump, Mexico won the lottery almost 25 years ago when it signed NAFTA, the free trade deal with the United States and Canada. "It has been a one-sided deal from the beginning of NAFTA with massive numbers of jobs and companies lost," Trump tweeted on Jan. 26. But if you ask Griselda Mendoza, the deal nearly destroyed her family and her community of corn farmers in the southern Mexican state of Oaxaca. "Before NAFTA, everybody here grew corn. People didn't make much money, but nobody went hungry," says Mendoza, 23, sharing common lore from her region. She was born just after NAFTA was signed. As cheap American corn came pouring in from the border, it had a devastating effect on her family. Her father, Benancio Mendoza, couldn't compete and make a living wage selling corn. He had to give up and move to the United States looking for a job. He took up a job as a cook in Tennessee, saving up money to send home so his kids could attend school. "He went north looking for a job and I didn't see him again for 18 years," says Mendoza, who now works as a secretary for the local government. While NAFTA did boost Mexico's manufacturing industry, it gutted many farming towns -- especially mom and pop corn farmers like Benancio's. Mexico lost over 900,000 farming jobs in the first decade of NAFTA, according to data from the United States Department of Agriculture. Mendoza says her small town of Santa Ana Zegache is now inhabited mostly by women and the elderly because working-age men went to the United States looking for jobs -- the vast majority crossing over illegally. NAFTA opened the Mexican market to U.S. corn producers who were subsidized by the U.S. government. 

Mike Pence will now oversee US space policy -- Today, President Trump signed an executive order to reinstate the National Space Council, an executive agency that will be tasked with guiding US space policy during the administration. The council, typically chaired by the vice president, is one that the US has seen before; it was first in operation during the ‘60s and ‘70s and then again under the George H.W. Bush administration, before being dissolved in 1993. Now, it’s back again, and this time with Vice President Mike Pence at the helm. Other notable members of the executive branch will serve on the council as well, according to a draft of the order obtained by The Verge. Those include the secretary of state and the secretary of defense, as well as NASA’s administrator — though that positioned has yet to be filled permanently. The executive order lays out the main functions of the council, too, which revolve around making recommendations of space policy for the president and how to implement that guidance. It also calls for the creation of an advisory group, comprised of non-government workers and those in the industry to provide advice. The council’s purview includes NASA, as well as the US Air Force and intelligence community, which rely heavily on satellites for national defense. “Basically this will be Pence’s eyes and ears into our government’s actions in space, whether it’s NASA or the Pentagon,” Phil Larson, a former space policy advisor for the Obama administration, tells The Verge.

Cabinet secretaries’ tough task: Lack of funding, support for agency missions - WaPo - As the Trump administration sets out to overhaul the federal government, a small group of Cabinet secretaries may have the most daunting task. They are running departments with missions they have sometimes disparaged, with employees who are secretly — and on occasion publicly — hostile.Across the agencies, these Cabinet members have made very public efforts to court their staff, yet frequently are crafting key initiatives in private. They are forming alliances where they can and skirmishing where they cannot. For the most part they have erected small, secluded citadels within each department, where they can advance policies that reflect the priorities of the ­president.At the Education Department, Secretary Betsy DeVos has been trying to build rapport with a leery staff, dining at times in the employee cafeteria and convening a group of LGBT employees to talk about hot-button issues relating to transgender students. But some employees complain they are being cut out of decision-making. The head of the financial aid division resigned in May, warning in a farewell email of severe constraints being placed on the ability of career officials to “make decisions and deliver on the organization’s mission.” Interior Secretary Ryan Zinke has invited staffers to his grand office overlooking the Mall to imbibe IPA beer from his home state of Montana and has trumpeted a new policy of allowing employees’ dogs to roam the department’s hallways on selected days. But as soon as government rules allowed, he reassigned dozens of Senior Executive Service career staff members without consultation or notice, relocating some to other parts of the country.

GOP senators warming to repeal then replace on ObamaCare | TheHill: Republican senators on Sunday mulled over the possibility of first repealing and then replacing ObamaCare, an idea that the GOP originally rejected but seems to be warming to reluctantly. President Trump last week floated the idea. He tweeted that Republicans should repeal and then replace ObamaCare at a later date if they are not able to come to a consensus on their bill. As the Senate majority leadership struggles to obtain enough support to pass healthcare legislation, some senators on Sunday argued it might streamline the process to split the bill into two.Sen. Rand Paul, who has been a vocal critic of the Senate GOP's healthcare bill — largely because he does not believe it's a full repeal of former President Obama's signature healthcare law — suggested Sunday the ObamaCare repeal and replace bills be separated. "Let's do clean repeal like we've promised," he said on "Fox News Sunday." "You can have a simultaneous bill or a concurrent bill that they can call replace," he continued. Paul said he wants repeal to work. "And the way you do it is you separate it into two bills and you do it concurrently," he said. Paul said right now, Senate leadership is not doing that. Ten Republican senators sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) on Friday calling for him to cancel, or at least curtail, the August congressional recess. But Paul said, "I'd rather get it done even before [August]." Paul also said he doesn't think the Senate is "getting anywhere with the bill we have." He called the bill a "kitchen sink" trying to do everything and said the bill is bloated "like a Christmas tree full of billion-dollar ornaments." 

What Would Happen If Republicans Repeal Obamacare But Don’t Replace It? -- After failing to bring the Senate to a vote to repeal and replace the Affordable Care Act (ACA) this week, Republicans, including President Donald Trump, have argued that the best path forward is to repeal Obamacare now and then delay replacing the legislation until a later date. However, this path would be risky on two fronts. From an economics standpoint, it would risk throwing the health care industry into bankruptcy. Politically, the repealers would then be blamed for the volatility and any downturn in the industry. A score from the Congressional Budget Office (CBO) predicted that 32 million people would lose healthcare insurance by 2026 if parts of Obamacare were repealed without a replacement put in place. By comparison, the CBO predicted that 22 million people would lose health care if the latest version of the Republican bill to replace Obamacare were passed by the Senate.  On "Fox and Friends" Friday, Republican Sen. Ben Sasse of Nebraska recommended for "maximum repeal" first and then wants to have a conversation about "real replacement." An avid watcher of "Fox and Friends," President Trump took to Twitter after the Sasse interview and advocated for a similar position. If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date! Donald J. Trump (@realDonaldTrump) June 30, 2017 Sen. Rand Paul of Kentucky, who was one of the Republican senators that rejected the Senate's latest proposed bill, sent a tweet supporting the President's strategy.I have spoken to @realDonaldTrump & Senate leadership about this and agree. Let's keep our word to repeal then work on replacing right away. — Senator Rand Paul (@RandPaul) June 30, 2017 In January, Paul seemed to warn about the exact dangers that he's now advocating, particularly the political dangers to repealing Obamacare without a follow-through plan to replace it.  "If Congress fails to vote on a replacement at the same time as repeal, the repealers risk assuming the blame for the continued unraveling of Obamacare. For mark my words, Obamacare will continue to unravel and wreak havoc for years to come," he wrote in an op-ed published by Rare.

Trump could be hurting the Obamacare repeal effort more than he’s helping --President Donald Trump got elected in no small part because of a signature pledge during the final months of the presidential campaign: to repeal and replace the Affordable Care Act. In campaign rallies, he attacked on President Barack Obama's signature healthcare law mercilessly. He whipped crowds into a frenzy with his vow to halt the increase in premiums and insurer exits from the marketplace. "Job-killing Obamacare is just one more way the system is rigged!" he said during an October campaign rally. Trump promised to repeal the law on "day one." Fives months into his presidency, healthcare overhaul is proving more complicated for Trump than the rhetoric. And a big part of the blame for the sluggish effort appears to lay squarely on Trump's shoulders. He has contradicted his own party's leadership, over-promised, and distracted from his own agenda. Analysts and frustrated members of his own party say he has helped increase the possibility that the law he railed against for so long stays in place.  On the campaign trail and after his election victory, Trump made grandiose promises about the end result of the Republican healthcare bill. In interviews before and after the election, Trump promised to cover "everyone" under his Obamacare replacement. He promised that costs for people would come down, that the government would pay less, that no one with a preexisting condition would be denied coverage. He also vowed robust competition in the insurance marketplace. That defined the debate in Obamacare's terms. Instead of talking about free-market principles, as Republicans had for years whe advocating for the ACA's repeal, the debate was framed around how many people would maintain coverage. Instead of talking about streamlining the market, Trump suggested it needed to become even bigger.  "It's going to be — what my plan is is that I want to take care of everybody," Trump said in an ABC interview right after he took office. "I'm not going to leave the lower 20% that can't afford insurance."

Why Republicans Might Be Forced To Oppose Tax Cuts - As Senate Republicans look for a way to save their struggling health care bill, some of them are floating a once-unthinkable possibility: keeping some of the taxes imposed by the Affordable Care Act. It may not happen, but that it’s even on the table helps illustrate why broader tax reform is going to be so tricky for the GOP. Democrats paid for their big expansion of the health care system via a series of new taxes on medical devices, health insurers and, especially, wealthy people. When Republicans came to power this year, they pledged to abolish most of those taxes as part of their plan to repeal and replace Obamacare. Both the bill that was passed by the House and the one that is now being considered by the Senate would cut taxes by billions of dollars. But getting rid of the Obamacare taxes poses two big problems for Republicans. The first is political: The cuts would go overwhelmingly to the richest Americans. The Tax Policy Center, a think tank that leans to the left but whose analyses are generally respected by both sides, estimates that nearly 45 percent of the Senate bill’s tax cuts would go to the top 1 percent of households by earnings. One tax that the GOP wants to repeal, the “net investment income tax,” is even more skewed: 90 percent of its revenue comes from the top 1 percent, and 62 percent from the top 0.1 percent. That has made it easy for Democrats (including former President Barack Obama himself) to tar the Republican plan as a tax cut for the rich. The tax cuts also create a math problem for Republicans: The more they give up in tax revenue, the more they have to cut spending on health care programs.1 That could make it harder to appease moderate Republicans who want more money to fight the opioid epidemic, smaller cuts to Medicaid and more generous subsidies for low-income Americans to buy insurance.

Five changes GOP might make to healthcare bill | TheHill: Senate Republican leaders are laboring to secure 50 votes for an ObamaCare repeal bill after being forced to delay the legislation before the July Fourth recess. Leaders likely sent some updated proposals to the Congressional Budget Office for analysis before leaving town, but Senate Republicans have yet to lock in a new agreement. Every tweak would have consequences, but here are five changes that could be made to the bill.

  • Keeping a tax on high earners. GOP senators are openly debating whether to keep a tax on high earners that was created to help pay for ObamaCare. The legislation that Republicans initially unveiled last week would have repealed a 3.8 percent tax on net investment income for individuals making more than $250,000 a year.   Democrats slammed the proposal as a tax cut for the wealthy, and since then, several GOP senators have expressed a willingness to keep the tax to help pay for more generous coverage subsidies.
  • Boosting subsidies. If the investment tax is kept, the savings will likely be used to provide larger subsidies to help low-income people afford health insurance.  Senate GOP leaders could double the amount of money in the bill’s long-term state innovation fund if the tax is not repealed. The legislation, as currently drafted, dedicates $62 billion over eight years to encourage low-income people with high healthcare costs to buy insurance. Adding money to the fund could address concerns from a variety of moderates that the bill’s tax credits are not generous enough to help low-income people buy insurance.
  • The Cruz amendment.  Sen. Ted Cruz is pitching an amendment that would allow insurers to sell plans that don’t comply with ObamaCare regulations, so long as they also sell plans that comply with those rules. Cruz says his “Consumer Freedom Amendment” would lower premiums by giving insurers a path around the regulations. Experts are concerned that the amendment would undermine the individual market by allowing insurers to sell plans that might not have all of ObamaCare’s protections for pre-existing conditions.  But the amendment has been endorsed by the White House and is supported by conservatives inside and outside of Congress.
  • More opioid money. McConnell last week gave moderate Republicans Rob Portman (R-Ohio) and Shelley Moore Capito (R-W.Va.) $45 billion in additional funding to combat the opioid crisis.  Ohio and West Virginia have been ravaged by the abuse of prescription opioids and heroin, and the initial version of the bill only provided $2 billion in state grants to address the crisis. McConnell hoped that the two moderate holdouts would be convinced to vote yes if the grants were more generous.
  • Medicaid changes. Centrist GOP senators have balked at the proposed Medicaid changes in the bill, and they’re backed up by their home-state governors, who accepted federal funding under the Affordable Care Act to extend Medicaid coverage to millions of additional people.

Actuaries identify “critical issues” in Senate health bill  - Axios - The American Academy of Actuaries looked at the Senate's health care bill, and found a decidedly mixed bag. Some policies would probably help stabilize insurance markets, the group said, while others could cause enrollment to fall or costs to rise. The actuaries laid out their findings in an analysis they shared with Senate leaders, members of Congress and governors.  Here's what they said:

  • The bill would pay the Affordable Care Act insurer subsidies, create a short-term stabilization fund and impose a waiting period for people to get insurance — all of which would help stabilize markets and lower premiums.
  • But repealing the individual mandate could increase premiums and reduce enrollment.
  • Younger adults might be more likely to enroll because of changes in how much they pay compared to older adults, which is good for the risk pool.
  • But tying premium subsidies to skimpier plans, and repealing the individual mandate, would be bad for the risk pool.
  • The long-term stabilization fund could help if used correctly.
  • Allowing waivers of certain ACA regulations, including essential health benefits, could reduce premiums but also increase out-of-pocket costs and "erode" the law's pre-existing conditions protections.
  • Expanding access to association health plans could make it harder for expensive patients to get coverage.
  • The bill's new structure of capped Medicaid payments "could be regarded as rewarding states with richer programs" while locking states with leaner programs into lower funding levels. It also could "penalize states with the most efficient programs," as states with inefficient Medicaid programs would be able to find the most opportunities for savings.
  • If those capped federal payments increase each year at the same rate as general inflation, they likely will not keep pace with rising health care costs — so "it will likely be difficult for states to sustain or improve their current programs." Limiting eligibility or rolling back benefits might reduce states' Medicaid spending, but would transfer more costs to insurers, employers, providers and enrollees.
  • Phasing out funding for the ACA's Medicaid expansion could result in states dropping the expansion.

Unintended Consequences of Healthcare Decentralization - Ed Dolan - All economic policies have unintended consequences. The decentralization of healthcare finance and policy proposed by congressional Republicans is no exception.The Better Care Reconciliation Act (BCRA) pending in the Senate would sharply shift responsibility for healthcare toward the states. Some of the biggest changes would come in Medicaid. would sharply cut federal spending, leaving states with the choice of responding by increasing their own contributions to maintain current enrollments, or by reducing coverage. Aside from Medicaid, they would gain the right to redefine the essential services insurance must cover, to experiment with high risk pools, and to change policies toward pre-existing conditions.A group of GOP senators skeptical of the BCRA have offered a different proposal that would permit even greater diversity in state healthcare policy. The Patient Freedom Act sponsored by Senators Susan Collins (R-ME), Bill Cassidy, MD (R-LA), Shelley Moore Capito (R-WV) and Johnny Isakson (R-GA) would give states three choices: Keep the existing framework of the ACA with most of its federal subsidies, sign up for a new market-oriented system centered on direct contributions to health savings accounts for each individual, or design a new system of their own, with federal approval.The decentralization is intended to bring an upsurge of innovation, leading to a more flexible, more customer-centered system that better meets the needs of the diverse populations of various regions of the country. As AEI Visiting Scholar Joel Zinberg puts it, the BCRA would “make it far more likely that Obamacare’s section 1332 “innovation waivers” can become effective tools for state-based experimentation and reforms to improve insurance coverage.” He notes that the BCRA would lift restrictions that have inhibited waiver applications, streamline the application process and create a $2 billion fund to motivate states to apply for innovation  waivers.For the sake of argument, let’s take the promised upside at face value. Even so, increased state-to-state diversity in healthcare policy and increased state responsibility for funding have their downsides, too. They would strain the resources of many states, undermine labor mobility, and weaken key macroeconomic stabilization mechanisms. These unintended consequences, too, need to be part of the healthcare debate.

Don’t Expect Health Coverage If You Survive a Gunshot Wound -- Among gunshot survivors, 51-year-old House Majority Whip Steve Scalise is an outlier. Such victims are more likely to be low-earning black men between the ages of 15 and 24. Scalise, who is white, does share one fundamental characteristic with these younger men: Being shot means he now has a preexisting condition in the eyes of health insurers. For most people, that status could mean more financial suffering under a Republican rollback of the Affordable Care Act. The ever-increasing ranks of American shooting victims could face higher insurance costs and less coverage if the ACA is replaced by a bill mirroring those pending in Congress. Survivors could run up against annual or lifetime dollar caps on coverage, which are prohibited under the ACA. That could mean death for some and financial ruin for others, since costs for lifetime care can run into the millions of dollars. Lower-income survivors, which are the majority of victims, benefited from expanded state Medicaid coverage in recent years. Some of them could lose their health-care coverage altogether. The consequences of such changes, according to a report published Thursday by the Brady Campaign and Center to Prevent Gun Violence, is that taxpayers and consumers with private insurance will wind up paying much of the cost for that care. The gun-control group’s logic? Emergency treatment centers will have to offset debt from uninsured patients by raising prices for those who can pay and will require “greater contributions from other taxpayer-funded programs at the local and state level, which will result in higher private insurance rates and higher taxes.” From 2001 to 2015, there were more than 1 million non-fatal firearm injuries, according to data from the Centers for Disease Control and Prevention. Close to 1,600 people are treated in American trauma centers each week, according to the Brady report. Just over the long July 4 holiday weekend, at least 102 shootings took place in Chicago, with 87 survivors, according to the Chicago Tribune. While 34,000 people die from gunshots each year, 81,000 people survive, the Brady report states, and their medical needs can be huge. 

Healthcare’s biggest losers: Which states are harmed the most under the Senate TrumpCare plan? -- In their campaigns, Republican candidates for Congress and the presidency were unanimous in denunciations of the Affordable Care Act (ACA) for increasing health insurance premiums and deductibles. Senate Republicans are struggling to pass a plan called the “Better Care Reconciliation Act” (BCRA) that would increase premiums and deductibles even higher than those currently paid under the ACA. The Kaiser Family Foundation has estimated the increases in premiums for plans matching the extent of coverage currently available under ‘silver’ plans for the year 2020. To focus on the impact on family budgets, they report premium amounts after the tax credits that subsidize purchases of health insurance are accounted for. Kaiser researchers found that marketplace enrollees would pay on average 74 percent more toward the premium for a benchmark silver plan in 2020 under the BCRA than under current law.

 Senate Republicans Lie Low on the Fourth, or Face Single-Minded Pressure - In normal times, the Fourth of July parade is a fat pitch down the middle for the grinning politician. For instance, here was Senator Joe Manchin III, a Democrat facing re-election next year in a state that President Trump won by 42 points, waving unheckled among the firefighters, beauty queens and county commissioners who streamed up Maple Avenue. Political disputes have never impinged on the festivities here, said Karen Lobban, 70, who has been involved with Alderson’s parade in one way or another for all of its 56 years. But, she added, “Things are different now.”  Mr. Manchin’s Republican colleague in West Virginia, Senator Shelley Moore Capito, was not here on Tuesday as she had been two years earlier. She released a YouTube message but had no public events for the day. The Republican senator next door in Ohio, Rob Portman, had none either. Nor did the two Republican senators in Iowa. The parades in Colorado proceeded without Senator Cory Gardner.  It is a tough summer for Senate Republicans, who are trying to combine a long-promised repeal of the Affordable Care Act with a replacement that has, in legislation drafted so far, been as popular as sunburn. Protesters have held sit-ins at Senate offices, phone lines have been jammed and editorial writers have blasted their states’ congressional delegations. Planes have even flown admonitory, if occasionally poorly conceived, banners over state capitals. Republican senators have had to decide whether public appearances would be fruitful or the crowds hostile. Many lawmakers seem to have given up on town hall-style meetings and parades. Others are still braving them, knowing they may get an earful on the health care bills. “Never before, in the 15 times that I’ve marched in this parade, have I had people so focused on a single issue,” Senator Susan Collins of Maine, who rejected the latest version of the bill, said in an interview shortly after walking the parade route in Eastport, Me. “I think it’s because health care is so personal.” On Tuesday, Ms. Collins and the few other Republican senators who ventured out — most of them opponents of the current bill, and most in rather remote locales — were largely rewarded with encouragement to keep fighting. This may be promising for other senators who are not planning to stay in all week. Ms. Capito has public events set for the coming days. The delay in voting on the Senate bill, which Ms. Capito strongly rebuffed, has taken some of the heat off, though activists in West Virginia said signs had been readied for Tuesday’s parades just in case. 

Senate Republicans face protests and sit-ins at home over health care bill  -- Although Senate Republicans have yet to resume work on their health care legislation, activists nationwide stormed their local district offices on Thursday, demanding to speak to senators about the controversial health care bill backed by the Senate GOP leadership.Hundreds of activists called on GOP senators to oppose the measure, called the Better Care Reconciliation Act, in a series of sit-ins at lawmakers’ offices in about 25 states. At least 43 people were arrested, according to an activist tally cited by the Daily Beast. The protests, tracked on social media with the hashtag #SitInSaveLives, were organized by a coalition of national and local groups, including the Working Families Party, Our Revolution, Democracy Spring and Ultraviolet Action.“The idea today was really to force senators to grapple with their conscience on it, to grapple with who they really represent, whether their constituents have the health care they need or if a handful of super-rich people do,” Working Families Party spokesman Joe Dinkin told Yahoo News. Some groups of protesters stayed in their senators’ offices overnight, Dinkin said, including the Cincinnati and Columbus offices of Sen. Rob Portman, R-Ohio. The GOP plan would dismantle much of the Affordable Care Act, also known as Obamacare. Notably, it would restructure the distribution of federal Medicaid funding, cutting the program by $772 billion through 2026. Senate Majority Leader Mitch McConnell, R-Ky., had promised the bill’s passage before the July 4 congressional recess but abruptly delayed the vote just days before the break. Politico reported that Senate Republicans tentatively expect a vote in two weeks.Although the Senate Republican leadership believed they could pass the bill before the recess, some GOP senators have begun expressing doubts about whether it will pass at all. So far, 10 have announced their opposition — for various reasons, from both the left and the right — to the current version of the Senate legislation. Those lawmakers are Sens. Susan Collins, R-Maine; Dean Heller, R-Nev.; John Hoeven, R-N.D.; Ted Cruz, R-Texas; Rand Paul, R-Ky.; Mike Lee, R-Utah; Shelley Moore Capito, R-W.Va.; Jerry Moran, R-Kan.; Ron Johnson, R-Wis.; and Portman.

McConnell: If we can't repeal Obamacare, we'll fix it - POLITICO: Senate Majority Leader Mitch McConnell said Thursday that if the chamber's fledgling Republican Obamacare repeal effort falls short, Congress will have to pass a more limited bill to shore up health insurance markets. "If my side is unable to agree on an adequate replacement, then some kind of action with regard to the private health insurance market must occur," McConnell said at a Rotary Club luncheon in Glasgow, Ky., the Associated Press reported. "No action is not an alternative. ... We've got the insurance markets imploding all over the country, including in this state." A bill to strengthen the insurance markets would presumably need Democratic support to get 60 votes to overcome a filibuster. McConnell in the past has warned fractious GOP lawmakers that if the Republican-only repeal effort failed, he would be forced to work with top Democrat Chuck Schumer on legislation that conservatives would likely oppose much more than the GOP repeal bill. He repeated that after a White House meeting with the president last week. The remarks could be aimed at Senate conservatives who argue the bill doesn't repeal enough of the health care law and contend that Republican leaders are turning their back on their eight-year-old campaign pledge to do away with the Affordable Care Act. Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah) have proposed an amendment to allow insurance companies that sell Obamacare plans to also sell non-Obamacare plans, an idea that health care experts say would tank the markets.

Conservative warns McConnell to not give up on ObamaCare repeal | TheHill: A leading House conservative is warning Senate Majority Leader Mitch McConnell (R-Ky.) he should not quit fighting to pass legislation to repeal and replace ObamaCare through the Senate. Rep. Mark Meadows (R-N.C.), the chairman of the conservative House Freedom Caucus, is not happy about talk that Senate Republicans might give up that effort and instead work with Democrats on legislation to shore up troubled insurance markets. “If we’re waving the white flag on something that we’ve campaigned against for many years, it is not a good sign for what comes down the pipe. How many white flags will we raise just when the going gets rough?” Meadows told The Hill in an interview. “It’s incumbent on us to work, to negotiate and find a happy medium that gets 51 votes in the Senate, 218 votes in the House and send it to the president,” he added.Meadows is reacting in part to comments McConnell made Thursday that suggested he might be getting closer to throwing in the towel on the healthcare effort. “If my side is unable to agree on an adequate replacement, then some kind of action with regard to private health insurance markets must occur,” McConnell said at a Rotary Club meeting in Kentucky. McConnell’s statement is one of several recent signals that the Senate bill, the Better Care Reconciliation Act, is in trouble. 

Conservatives revolt over talk of keeping ObamaCare tax | TheHill: Conservative groups are warning GOP senators against keeping an ObamaCare tax on investment income in their healthcare bill, an idea that has gained some traction among lawmakers. GOP lawmakers have floated keeping ObamaCare’s 3.8 percent net investment income tax to help pay for more generous healthcare subsidies for low-income people. Democrats criticized an earlier version of the Senate’s healthcare bill for eliminating the tax because it generally applies to high earners. But prominent conservatives argue Democrats will criticize the bill regardless of what happens with the tax. They say the tax is harmful to economic growth and should be repealed. “This tax, just like any tax increase, is an anathema to conservatives as it suppresses economic growth and opportunity throughout our nation,” Club for Growth President David McIntosh said in a statement Wednesday. “Under no circumstances should the NIIT be included in any forthcoming Republican ‘repeal’ bill.” ObamaCare’s net investment income tax applies to individuals making more than $200,000 and married couples making more than $250,000. The tax falls on forms of income that include capital gains, dividends and interest. It is one of a number of taxes that Democrats enacted to help pay for ObamaCare. Other revenue provisions include a Medicare surtax on high earners and taxes on the medical device, prescription drug and health-insurance industries, among other things.

GOP activists put Congress on notice: Repeal Obamacare or get voted out - Frustration is mounting among Republican activists over the GOP’s continued failure to repeal and replace Obamacare, with grassroots groups now warning of consequences for lawmakers in the 2018 elections if the Senate doesn’t reach a deal soon. “Activists, real grassroots people, are absolutely disappointed, and to some point I’d say devastated, over what we feel like is a broken promise,” said Donald Bryson, the state director of the North Carolina chapter of Americans for Prosperity, an influential conservative group backed by the Koch brothers. “A lot of these people are just really like, ‘Why wasn’t there a plan? Why don’t you all have a sense of urgency?’” he said, even as he noted that conservatives could still support the ultimate repeal bill. In a surprise move last week, Senate Majority Leader Mitch McConnell delayed a vote on the measure until after the July 4 recess in an effort to lock down more support for the bill. Lawmakers are now scrambling, again, to hammer out an agreement to repeal and replace the Affordable Care Act that won’t cause either the moderates or the conservatives to jump ship on a proposal that was at the very heart of the Republican message for years. After all, McConnell can only afford two “no” votes, and going into the recess this week, there remained considerable opposition to the bill drafted in secret. Conservative activists around the country are not in agreement over the details of the legislation. But they are vociferously making the case that Republican lawmakers need to figure out a way to repeal Obamacare — fast.

The GOP’s Health Care Dilemma -- There are di­lem­mas and then there are real di­lem­mas. On health care, Re­pub­lic­ans are in a real di­lemma. Con­gres­sion­al Re­pub­lic­ans prom­ised their base a mil­lion times that they would re­peal and re­place the much-des­pised (by the GOP base) Af­ford­able Care Act. No am­bi­gu­ity what­so­ever. In the House, they voted over 60 times to re­peal the ACA, though the re­place part was a little vague. Now that Re­pub­lic­ans oc­cupy the White House and hold ma­jor­it­ies in the House and Sen­ate, the Re­pub­lic­an base would be re­war­ded with re­peal of Obama­care, right? But here comes the di­lemma. While Amer­ic­ans are not ex­actly de­li­ri­ously happy with Demo­crats’ health blue­print, they like it a lot bet­ter than the Re­pub­lic­an House-passed Amer­ic­an Health Care Act. It’s un­likely that Sen­ate Re­pub­lic­ans will come up with something any­time soon that will be much more pop­u­lar than the ver­sion passed by their House col­leagues. So, do Hill Re­pub­lic­ans be­tray all of those prom­ises to their base to re­peal and re­place Obama­care, or do they pass something that people will hate even more? That’s what you call a di­lemma. 

Plan on Growing Old? Then the Medicaid Debate Affects You - These are the stories we tell ourselves: I will never be poor. I will never be disabled. My child will develop normally. They stand a decent chance of being true, even. There is one tall tale, however, that ought to inspire a great deal of skepticism: I will be able to pay for myself in my old age. In fact, a majority of people cannot and do not. One in three people who turn 65 end up in a nursing home at some point. Among the people living in one today, according to the Kaiser Family Foundation, 62 percent cannot pay the bill on their own. And when that happens, Medicaid pays. The very Medicaid program that stands to have hundreds of billions of dollars less to spend if anything like the health care bills on the table in Washington come to pass. All too many of the currently comfortable are utterly unconscious of this fact, for reasons that are perfectly understandable. We assume, incorrectly, that Medicaid is only for the younger poor or those with disabilities and that Medicare will pay for most nursing home care. Emotionally, we just cannot handle the prospect of our breaking down in old age. So we put our heads in the sand. Reality forces our hand, however, when the first nursing home bills arrive. The average annual cost is $82,128 for a semiprivate room, according to Genworth, which sells insurance that can help pay those bills. Most people can’t pay that amount and certainly not for long, especially after 10 or 20 years of retirement spending. If a spouse (a male spouse, more often than not in heterosexual couples) has already needed years of expensive care, the other partner is all the more vulnerable. Ask around. Someone you know has quietly faced these facts and probably turned to Medicaid. Chances are, you, a family member or a close friend will someday, too. So we tune out the health care policy debates at our own peril. The proposed cutbacks in the growth of Medicaid spending do not just affect the expansion that has taken place in recent years. They propose new per-capita caps on spending.  The Congressional Budget Office did suggest on Thursday that Medicaid’s budget could be 35 percent lower by 2036 if the Senate’s most recent proposal were to take effect, rather than if the status quo remained.

Medicaid Worsens Your Health? That’s a Classic Misinterpretation of Research -- As a program for low-income Americans, Medicaid requires the poor to pay almost nothing for their health care. Republicans in Congress have made clear that they want to change that equation for many, whether through the health bill that is struggling in the Senate or through future legislation. The current proposal, to scale back the Affordable Care Act’s Medicaid expansion and to cap spending each year, would give incentives to states to drop Medicaid coverage for millions of low-income Americans. It would offer tax credits toward premiums for private coverage, but those policies would come with thousands of dollars in new deductibles and other cost sharing. Despite the much higher out-of-pocket costs, some policy analysts and policy makers argue that low-income Americans would be better off. To take one highly placed example, Seema Verma, the leader of the agency that administers Medicaid, recently cited studies questioning the program’s effectiveness and wrote that the health bill “will help Medicaid produce better results for recipients.”What is the basis for the argument that poor Americans will be healthier if they are required to pay substantially more for health care? It appears that proponents like Ms. Verma have looked at research and concluded that having Medicaid is often no better than being uninsured — and thus that any private insurance, even with enormous deductibles, must be better. But our examination of research in this field suggests this kind of thinking is based on a classic misunderstanding: confusing correlation for causation.It’s relatively easy to conduct and publish research that shows that Medicaid enrollees have worse health care outcomes than those with private coverage or even with no coverage. One such study that received considerable attention was conducted at the University of Virginia Health System.

Medicaid Isn’t Worth Its Cost -- Medicaid isn’t worth its cost–that’s not my evaluation that’s what people who use the program think, at least as far as we can tell from their actions. Joshua D. Gottlieb and Mark Shepard review the evidence at Econofact, which aims to be a dispassionate and non-partisan review of the evidence on a variety of issues. We have also covered these issues before but seeing it all together is valuable. The cost is large: The Medicaid program cost about $532 billion in 2015 to cover 74 million people, or almost one in four Americans. The average full-benefit enrollee cost about $6,400 per year to cover in 2014. People with access to the program use a lot more healthcare than other similar people  The Oregon Experiment found that gaining Medicaid uniformly increased health care use: including hospitalizations (by 30 percent), emergency room use (by 40 percent), physician office visits (by 50 percent), and prescription drugs (by 15 percent). This evidence stands in contrast to the conventional wisdom that providing health insurance could reduce costs by eliminating ER visits. Of course, understanding whether this additional care is worth it requires a comparison of these real costs to the benefits provided. The health benefits appear to be real but modest: The Oregon Experiment did not find statistically significant evidence of improvements in physical health measures, such as blood pressure and blood sugar after two years of coverage. But it did find large improvements in mental health and self-reported health. Other studies examining the introduction of Medicaid or its expansion over time have found that Medicaid reduces mortality (of infants during the expansion of Medicaid eligibility for low-income children between 1984-1992; of adults during the expansion of Medicaid coverage for childless adults in Arizona, Maine and New York between 2000-2005; of teenagers who benefited from expansions of Medicaid to children during the early 1980s; and of infants and children in the 1960s and 1970s following the introduction of Medicaid) and improves health later in life.. . But these studies lack the gold-standard randomized design of the Oregon Experiment so should be interpreted with greater caution

Quelle Surprise! Study Confirms that ACA Narrow Networks Exclude Top Cancer Doctors -- Yves Smith - Lambert and once in a great while yours truly have written about one of the nasty-by-design ways insurers game Obamacare: via so-called narrow networks. Bear in mind that there is no precise definition, but a “narrow network” is one that restricts access to specialists. We’ve pointed out that this feature can allow insurers to engage in underwriting by stealth, effectively not covering certain not-common, costly-to-treat conditions by excluding doctors who know how to treat them from ACA networks.  Oddly, the mainstream media has chosen for the most part to ignore this issue. It may be because this trick appears to have been implemented most aggressively in where the insurers can pretend they have an excuse, as in areas that are thin on medical resources anyhow, such a rural or semi-rural areas, or mid-sized cities that don’t have university with a medical school, and hence won’t be well-endowed with specialists who are go-tos for exotic or difficult cases. But this week, McKinsey-UPenn study focused only on ACA plan areas that included hospitals with top-tier oncologists and showed how they are very much underrepresented in narrow networks. From Bloomberg: For the study, researchers from the University of Pennsylvania analyzed data on 23,442 oncologists in the U.S., evaluating how often doctors affiliated with National Cancer Institute-designated centers were covered by lower-cost insurance plans. The University of Pennsylvania is an NCI-designated cancer center.Oncologists working at the U.S.’s 69 NCI facilities in the U.S., which offer access to scientific research and are known for their handling of complex cases, were twice as likely to be excluded from plans with the narrowest networks, according to the study. “Most common cancers can be treated well anywhere,”  “But there are many patients with rare or uncommon tumors who need access to the most advanced clinical trials, and that access is often only at these NCI cancer centers.  …. The Penn researchers analyzed 248 insurance networks across the U.S. operating in areas with NCI-designated centers. They found that one in every three significantly limited the number of oncologists in their insurance plans. Of all the cancer doctors who were part of those narrow networks, 17 percent worked at NCI centers. Of all the doctors who were excluded from those plans, 35 percent participated at NCI centers.

You Say You Want a Single-Payer System: The Canada Health Act -- Senator Warren says that President Obama tried to move us forward with health-care coverage by using a conservative model that came from one of the conservative think tanks that had been advanced by a Republican governor in Massachusetts. Now it’s time for the next step. And the next step is single payer.Representative Conyers has introduced a Medicare for All bill into the House. Senator Sanders is drafting one for the Senate. For Canada Day/Fête du Canada, here’s a brief introduction to the key legislation underlying Canada’s health care system, the Canada Health Act. The first thing to know is that Canada does not have a single-payer system. There is a single-payer insurer in each province and territory. The Canadian federal government makes a block grant contribution to each province amounting to about 20% of the province’s health care spending. The Canada Health Act lays out requirements for those provincial single-payers to get that cash:The purpose of this Act is to establish criteria and conditions in respect of insured health services and extended health care services provided under provincial law that must be met before a full cash contribution may be made… the health care insurance plan of the province must, throughout the fiscal year, satisfy the criteria… respecting the following matters:

  • (a) public administration;
  • (b) comprehensiveness;
  • (c) universality;
  • (d) portability; and
  • (e) accessibility.

These five points are what single-payer is supposed to accomplish. These goals are what matters, single-payer is a means to these goals, not an end in itself. Here’s what they mean:

 Congress Moves to Stop I.R.S. From Enforcing Health Law Mandate — Congress is moving to prevent the Internal Revenue Service from enforcing one of the more unpopular provisions of the Affordable Care Act, which requires most Americans to have health insurance or pay a tax penalty. The plan is separate from Republican efforts to repeal the health care law, and appears more likely to be adopted because it would be written into the annual spending bill for the Treasury and the I.R.S.But it has a similar purpose: to weaken the health law that President Trump and Republicans in Congress want to dismantle.Congress has been working for months on a bill to repeal President Barack Obama’s health care law, including the coverage requirement. That provision, known as the individual mandate, is widely disliked, according to opinion polls.  In case that effort fails or bogs down, the House Committee on Appropriations has drafted a provision to stop the I.R.S. from enforcing the mandate. The restrictions, for the fiscal year that starts Oct. 1, are included in an appropriations bill that was approved on Thursday by the Subcommittee on Financial Services and General Government. “None of the funds made available by this act may be used by the Internal Revenue Service to implement or enforce section 5000A of the Internal Revenue Code,” which imposes the tax penalty on people who go without insurance, the bill says.The bill would also prohibit the I.R.S. from enforcing a requirement that employers and insurance companies inform the government of the name and Social Security number of anyone to whom they provide health insurance coverage. The government uses these reports to help administer the individual mandate and other requirements.

Laptop ban lifted for Abu Dhabi airline - Jul. 2, 2017: U.S. security officials are allowing passengers on flights from Abu Dhabi to the United States to carry their laptops and other electronics in airplane cabins. The Department of Homeland Security said Sunday that it is lifting the ban because additional security measures have been put in place. Etihad Airways is the only carrier that operates flights to the United States from Abu Dhabi International Airport. DHS spokesman David Lapan said that TSA officials verified the new measures with "visual confirmation." He said Etihad's efforts are a "model for both foreign and domestic airlines looking to adopt the new measures." Etihad said Sunday that it welcomed the decision. The airline operates 45 flights each week between Abu Dhabi -- the capital of the United Arab Emirates -- and the United States. "We would like to thank our guests for their understanding and loyalty while the ban was in place," Etihad said in a statement. Emirates airline, based in nearby Dubai, which is also in the U.A.E., is still subject to the laptop ban. The airline is the largest international carrier in the world. Abu Dhabi already has U.S.-based security and immigration officials at the airport. Travelers to the United States clear customs before departing Abu Dhabi, allowing them to skip immigration lines upon arriving in the United States.Electronic devices larger than a cellphone are still banned from the cabin on U.S.-bound flights from nine other airports in eight countries in the Middle East and Africa. Eight airlines operate flights to the United States from those airports.

US lifts laptop ban for flights from Dubai, Istanbul | TheHill: The Trump administration has lifted a ban on electronics larger than smartphones in the cabin for passengers traveling from Dubai and Istanbul to the U.S., CNN reported. "Emirates has been working hard in coordination with various aviation stakeholders and the local authorities to implement heightened security measures and protocols that meet the requirements of the U.S. Department of Homeland Security's new security guidelines for all U.S. bound flights," the Dubai-based airline said in a statement, according to the network. Turkish Airlines tweeted: "#WelcomeOnBoard to our U.S.-bound flight. Please fasten your seatbelts and enjoy your own electronic devices." Earlier this month, the administration lifted its ban on laptops in cabins on flights from Abu Dhabi to the U.S. The U.S. had banned laptops on flights coming from 10 different airports in Egypt, Morocco, Jordan, the United Arab Emirates, Kuwait, Saudi Arabia and Turkey in March. The U.S. does not have jurisdictions over foreign airports, but has authority over airlines that have direct U.S.-bound flights. The Department of Homeland Security announced last week that the U.S. would be unveiling new aviation security measures for all international flights entering the country, instead of implementing the laptop ban.

US lifts laptop ban on passengers flying with Etihad, Emirates and Turkish Airlines - The U.S. government has lifted the controversial laptop ban for flights to the U.S. for three major airlines.Effective immediately, Etihad Airways, Emirates Airline and Turkish Airlines have all been cleared to allow customers to bring electronic devices, including laptops, tablets and e-readers, on flights from the Middle East into the U.S.. That still leaves another six airlines, each of which remains subject to the ban.The department of Homeland Security initiated the ban in March. It came into effect covering all flights to U.S. destinations from 10 airports in the Middle East, including major travel hubs like Dubai, Abu Dhabi and Doha.The ban was unprecedented, particularly in today’s digital age, and it was purportedly introduced to increase national security. While administration officials didn’t comment on any new and specific threats, speaking at the time, the government said it made the decision based on evaluated intelligence that seemed to indicate that some terrorist organizations were looking into using consumer electronics to hide explosives and smuggle them onto passenger planes.According to these senior government officials, the February 2016 downing of Daallo flight 159 from Mogadishu to Djibouti was brought down by this kind of device, though it’s hard to explain today’s ban based on an incident that happened more than a year ago. There was talk of a similar ban coming into effect for flights from Europe to the U.S., but that never happened. Given the relaxing of the rules for this initial batch of airlines, such an extension seems unlikely. But given the realities of the U.S. government in 2017, anything is possible.

Appeals Court Refuses to Weigh In on Trump Travel Ban Rules (AP) -- A federal appeals court on Friday dismissed Hawaii’s attempt to challenge the rules created by the Trump administration for its travel ban on citizens from six majority-Muslim countries.The state asked the 9th U.S. Circuit Court of Appeals for an order saying the government could not omit grandparents, aunts and uncles, and other relatives of someone in the U.S. from the list of people who can still travel to the country. A three-judge panel said the 9th Circuit does not have jurisdiction to address the issue after the state appealed a federal judge’s decision to leave the government’s rules in place. U.S. District Judge Derrick Watson on Thursday denied Hawaii’s request to clarify who is exempt, saying the question would be better posed to the U.S. Supreme Court. Watson put President Donald Trump’s revised travel ban on hold in March, and the justices partially reinstated it last month. "Every day that passes is a day when our government is turning away human beings — from newborn children to elderly grandparents — whom the injunction requires to be admitted," attorneys for Hawaii said in their filing with the 9th Circuit. The 9th Circuit panel noted that Watson may not have authority to clarify the Supreme Court ruling. But he can interpret and enforce it. That appeared to give Hawaii an opportunity to reframe its request to Watson. 

California is closer to becoming a 'sanctuary state': — California is now one step closer to becoming a "sanctuary state." The Assembly Judiciary Committee approved Senate Bill 54 on Wednesday along party lines, with eight Democrats voting in favor and three Republicans opposed. Advertisement Deisy Camey came to the Capitol from San Francisco to show support for the California Values Act. “I know a lot of people that are undocumented,“ Camey said in Spanish. “And you know they are afraid." But there was no fear at the Capitol on Wednesday, where supporters of SB54 packed the hearing room -- with a long line weaving out the door “This bill, SB54 is crucial for our public safety,” Sacramento Area Congregations Together Associate Director Gabby Trejo said. “It allows undocumented immigrants to feel safe reporting crimes." “Women in particular have reported less domestic violence abuses,” Trejo said. “And we want to make sure that this bill gets passed and gets signed by the governor so that families feel safe to actually report crimes.”Immigration rights advocates packed the California Assembly hearing on Wednesday, July 5, 2017, for a bill that would make California a sanctuary state. Trejo said Sacramento is home to an estimated 65,000 undocumented immigrants. She said SB54 would let undocumented immigrants know, “that our local law enforcement will not be acting as ICE agents.” The bill has strong support from Democrats, but Republicans have had serious concerns about public safety. “Law enforcement leaders have overwhelmingly told us that this bill will make it harder for them to do their jobs,” Asm. Kevin Kiley, R - El Dorado Hills, said. “It will lead to the release of dangerous felons and will make our communities less safe." In March, Sacramento County Sheriff Scott Jones said he allows ICE agents into the county jail to protect the public. “The best way to keep widespread nets from being cast into our communities is to allow us to cooperate in our jails -- to protect the community from the worst of the worst,” he explained. Under the bill, ICE agents would be prohibited from entering county jails, unless they have a warrant. 

U.S. government seeks to intervene in Apple's EU tax appeal: source | Reuters: The U.S. government has sought to intervene in Apple's appeal against an EU order to pay back up to 13 billion euros ($14.8 billion) in Irish taxes, a source familiar with the matter said on Tuesday. iPhone maker Apple took its case to the Luxembourg-based General Court, Europe's second-highest, in December after the European Commission issued the record tax demand saying the U.S. company won sweetheart tax deals from the Irish government which amounted to illegal subsidies. The decision was criticized by the Obama administration which said the European Union was helping itself to cash that should have ended up in the United States. The Trump administration, which has tentatively proposed a tax break on $2.6 trillion in corporate profits being held offshore as part of its tax reform, has not said anything in public about the case. "I can confirm the United States filed an application with the European Union General Court to intervene in the case involving the retroactive application of state aid rules to Apple," said the source, who declined to be named because of the sensitivity of the matter. The General Court is expected to hear the case in late 2018, another source with knowledge of the matter said. Apple has said it was a convenient target for the EU and that the EU competition enforcer used an "absurd theory" to come up with a punitive figure.

"What Are They Trying To Hide" Trump Asks After 29 States Refuse To Give Data To Voter Fraud Panel --Together with lashing out at the anchors of Morning Joe, slamming "garbage" fake news CNN, and suggesting that Greta Van Susteren was fired because she "refused to go along with Trump hate", President Trump on Saturday blasted the 29 (and rising) states refusing to comply with his election fraud commission's request for voter data to a commission he created to investigate alleged voter fraud, asking "what are they trying to hide?"Numerous states are refusing to give information to the very distinguished VOTER FRAUD PANEL. What are they trying to hide?— Donald J. Trump (@realDonaldTrump) July 1, 2017  Last Wednesday, Trump's Presidential Advisory Commission on Election Integrity - which was formed to investigate his claim that millions of illegal votes cost him the popular vote in the 2016 presidential election - sent a letter to all 50 states asking them to turn over voter information including names, the last four digits of social security numbers, addresses, birth dates, political affiliation, felony convictions and voting histories.  The request was for information publicly available under each state's laws. And while some states are providing part of this information, many states immediately raised concerns and voiced their opposition to providing the information, and as of Saturday morning, more than half of all US states - 29 at last count - had refused to comply with the commission's requests, saying they are unnecessary and violated privacy, according to statements from election officials and media reports."This commission was formed to try to find basis for the lie that President Trump put forward that has no foundation," Kentucky Secretary of State Alison Lundergan Grimes told Reuters previously in an interview. Among the states refusing to comply with Trump's request are both Democratic and Republican states.

Privacy Rights Group Sues Trump’s Election Integrity Panel - A privacy advocacy group sued to block President Donald Trump’s Advisory Commission on Election Integrity from collecting voter information across the U.S.Kansas Secretary of State Kris Kobach -- the commission’s vice chairman and most public face -- has asked all 50 states to submit data on all their registered voters, including names, addresses, birth dates, political party affiliations if available, records of elections in which they’ve participated, plus the last four digits of their social security numbers.The Electronic Privacy Information Center, in a complaint filed Monday at a U.S. court in Washington, said the commission failed to first conduct a mandatory privacy impact assessment, without which its actions are unlawful and unconstitutional.The center accused the commission of “seeking to assemble an unnecessary and excessive federal database of sensitive voter data from state record systems.” That’s a violation of “the informational privacy rights of millions of Americans, including members of the EPIC advisory board,” according to the complaint.The Washington-based group wants the court to put a stop to the information gathering and order the blue ribbon commission to give back any data it’s already received until it meets the assessment requirement.The court ordered the government to respond to the group’s request for an immediate, temporary halt to the information gathering by 4 p.m. on July 5. More than two dozen states have already said they legally can’t or won’t comply -- either fully or partially -- with the panel’s request.

41 states have refused request for voter information - Forty-one states have defied the Trump administration's request for private voter information, according to a CNN inquiry to all 50 states.State leaders and voting boards across the country have responded to the letter with varying degrees of cooperation -- from altogether rejecting the request to expressing eagerness to supply information that is public.Kansas Secretary of State Kris Kobach, vice chairman of the Presidential Advisory Commission on Election Integrity, which President Donald Trump created by executive order in May, sent a letter to all 50 states last Wednesday requesting a bevy of voter data, which he notes will eventually be made available to the public.The order came months after Trump claimed without evidence that millions had voted illegally in the 2016 presidential election. When states began to express concerns about the legality of his administration's efforts to investigate voter fraud, Trump called them out on Twitter on Saturday, questioning whether they were hiding something. "Numerous states are refusing to give information to the very distinguished VOTER FRAUD PANEL. What are they trying to hide?" Trump tweeted. The information the commission is seeking includes registrants' full names, addresses, dates of birth, political parties, the last four digits of their social security numbers, a list of the elections they voted in since 2006, information on any felony convictions, information on whether they were registered to vote in other states, their military status, and whether they lived overseas.

Forty-five States Refuse to Give Voter Data to Trump Panel - Forty-five states and the District of Columbia are mounting a bipartisan rebellion against President Donald Trump’s commission on vote fraud by either declining to release any of the requested data or by providing only limited information to the panel. The Presidential Advisory Commission on Voter Integrity's request for extensive personal information about voters has ignited a firestorm in many states, including from both Republican and Democrat officials who oversee elections.  The panel is seeking "dates of birth, political party (if recorded in your state), last four digits of social security number if available, voter history (elections voted in) from 2006 onward, active/inactive status, cancelled status, information regarding any felony convictions, information regarding voter registration in another state, information regarding military status, and overseas citizen information." Nineteen states — both red and blue — and D.C. are flat-out refusing to comply with the request, citing privacy concerns and some claiming the 15-member vote fraud panel is politically-motivated.  Twenty-six states said they plan to only hand over only what is deemed public information by their respective state laws, while five states have yet to receive the commission's request or are still reviewing it, according to a count by NBC News. Many officials have expressed disbelief and outrage at the commission's call to hand over a staggering amount of voter data, some of which they say is confidential or sensitive. “I’m appalled that they even included that in their (letter),” Jim Condos, the Vermont Secretary of State, told NBC News. “They should know better.”

Arkansas is only state to submit voter data to Trump election panel -- Arkansas is the only state as of Friday to submit data to President Trump’s voter integrity commission, according to the Justice Department. Arkansas uploaded information at the request of the Presidential Advisory Commission on Election Integrity on Thursday, according to reports by Buzzfeed and The Washington Times. Arkansas' secretary of state did not immediately respond to a request for comment by The Hill. A district court on Friday heard an argument against the legality of the commission's request that all states share voter information, including voter names, birth dates, the last four digits of their Social Security numbers and party affiliation. The request, signed by commission vice chairman and Kansas Secretary of State Kris Kobach (R), was for information publicly available under each state's laws. Most states are refusing to provide some or all of the information. Arkansas' Gov. Asa Hutchinson said his state would provide some data that would not include "sensitive information." Some secretaries of state raised concerns about the commission's method of collection - a government website that states were asked to use to upload data. The Electronic Privacy Information Center (EPIC) is suing the Trump administration over the request, arguing the commission is breaking federal data and privacy laws.

Voter Data Request Is Illegal, not Just Controversial - Regulatory Review - Recently, the newly created Presidential Advisory Commission on Election Integrity sent a letter to all fifty states asking them to submit extensive information about registered voters. The letter has created an uproar among state officials, and many have announced their intention to refuse the request. President Donald Trump has tweeted his disapproval of these state refusals.  Overlooked in the controversy has been the rather obvious conclusion that, because the Commission on Election Integrity appears to have ignored the requirements of the Paperwork Reduction Act (PRA), its request is simply illegal.  The PRA was passed in 1980 with bipartisan support and signed by President Jimmy Carter. A central purpose of the law was to ensure that, before collecting information from the American public, federal agencies solicited public comment and received approval from the Office of Information and Regulatory Affairs (OIRA). In the 37 years since the passage of the PRA, tens of thousands of government information collections have gone through this process. Yet the Commission’s request letter did not include any indication that it had been submitted for review through the PRA process. The PRA requires not only that OIRA review requests for information, but also that agencies include on any such request an approval number and an estimate of the time it will take for a respondent to provide the information requested. The PRA and its implementing regulations do include exceptions to its public comment and OIRA approval requirements, but the request for voter data does not seem to meet any of those exceptions. To wit, the Commission is a federal agency under the definition in the PRA’s implementing regulations. It has clearly requested information, specifically: the full first and last names of all registrants, middle names or initials if available, addresses, dates of birth, political party (if recorded in your state), last four digits of social security number if available, voter history (elections voted in) from 2006 onward, active/inactive status, cancelled status, information regarding any felony convictions, information regarding voter registration in another state, information regarding military status, and overseas citizen information.

Trump voter commission to store data on White House computers under Pence staff direction – WaPo - The Trump administration announced plans to keep voter roll data it has requested from all 50 states and the District on White House computers under the direction of a member of Vice President Pence’s staff, it told a federal judge Thursday. The disclosure of the White House role came in a government filing required in a lawsuit by the Electronic Privacy Information Center, a watchdog organization that has asked a federal judge in Washington to block the requests for voter data until the impact on Americans’ privacy can be fully assessed. A decision on the request for a temporary restraining order by U.S. District Judge Colleen Kollar-Kotelly is expected as early as Friday afternoon. The commission’s request for voting information has caused a nationwide uproar. The states that won’t provide all of their voter data grew to a group of at least 44 by Wednesday, including some that said they would provide nothing. Others said that they will provide what information they can but that state laws control what can be made public. The vice president’s office said the commission’s letter asked only for publicly available data under state laws, stating that 20 states have agreed to share at least some data and 16 more are reviewing the request. President Trump has made claims widespread voter fraud cost him the popular vote in November, although critics say the claim is unsubstantiated and is a pretext for voter suppression.

A Court Is Considering A Request To Halt The Trump Election Commission’s Request For State Voter Lists -- A federal court on Friday heard arguments in a lawsuit alleging that the president's "election integrity" commission has violated federal privacy laws in its request for voter information from the states.US District Judge Colleen Kollar-Kotelly held more than an hour of arguments over the Electronic Privacy Information Center's request that the commission be halted from collecting the information while the lawsuit is heard. She did not rule from the bench, but told the parties that she would try to issue a written ruling as soon as possible.In the course of the arguments, a Justice Department lawyer acknowledged that one state, Arkansas, has transmitted voter information to the federal government thus far. The data was sent, the lawyer said, on Thursday. The commission began as follow up to Trump's unfounded and repeated claim that 3 million to 5 millions illegal votes were cast in the 2016 election. The origin of the commission, its membership, and its aims have been criticized by many people, including some Republicans, since it was announced.  Kobach, on behalf of the commission, sent the letter requesting the voter information on June 28. Over the course of the next week, elections officials in nearly every state said the request went too far and that their state — including Kobach's own Kansas — would not be turning over all the informatio n requested.On Monday, July 3, the Electronic Privacy Information Center sued, alleging the commission's request violates the E-Government Act of 2002, which requires a Privacy Impact Assessment be completed before government engages in certain actions.

This DOJ Letter May Be More Alarming Than Trump Commission’s Request For Voter Data -- Former Department of Justice officials and voting advocates are seriously alarmed over a DOJ letter sent to states last week that they say could signal a forthcoming effort to kick people off voter rolls. This comes as national attention focuses on several states blocking a request for voter information from President Donald Trump’s commission to investigate voting fraud, which does occur, but is not a widespread problem.The DOJ sent the letter to 44 states last Wednesday, the same day the Presidential Advisory Commission on Election Integrity sent a letter controversially requesting personal voter information. The DOJ letter requests that election officials respond by detailing their compliance with a section of the National Voter Registration Act of 1993 (NVRA), which covers 44 states and was enacted to help people register to vote, but also specifies when voters may be kicked off the rolls. Several experts said it’s difficult not to see the DOJ letter in connection with the commission’s letter as part of a multipronged effort to restrict voting rights. Former Justice Department officials say that while there’s nothing notable about seeking information about compliance with the NVRA, it is unusual for the department to send out such a broad inquiry to so many states seeking information. Such a wide probe could signal the department is broadly fishing for cases of non-compliance to bring suits aimed at purging the voter rolls.“These two letters, sent on the same day, are highly suspect, and seem to confirm that the Trump administration is laying the groundwork to suppress the right to vote,” said Vanita Gupta, the CEO of the Leadership Conference on Civil and Human Rights and former head of DOJ’s civil rights division under President Barack Obama. “It is not normal for the Department of Justice to ask for voting data from all states covered by the National Voter Registration Act. It’s likely that this is instead the beginning of an effort to force unwarranted voter purges.”

Here are the people investigating Russian meddling in the 2016 election -- Special Counsel Robert Mueller has hired 15 attorneys to join his team looking at Russian meddling in the 2016 election and whether there was any collusion between the Kremlin and the Trump campaign. President Trump and his allies have criticized the team for some members' political donations, which have gone almost exclusively to Democrats.  A spokesman for the special counsel would confirm the names of only 13 team members. Below is a look at who they are, and how much they have given to political campaigns over the years.

Russian mob-linked Trump associate could help blow lid off ‘dirty money’ in US real estate market -- Felix Sater, a Trump-linked Russian-born businessman who in 1998 pleaded guilty to taking part in a mafia-related stock fraud scheme, is now cooperating with an international investigation into an alleged money laundering network.Sources tell the Financial Times that Sater is “working with a team of lawyers and private investigators pursuing civil cases across three continents” against “a Kazakh family accused of pumping dirty money into US property.”Sater’s financial relationship with Trump dates back to at least 2003, when the Trump Organization rented out office space to Sater’s former company.Even though Trump initially tried to distance himself from Sater after news of his criminal past came to light in 2007, he subsequently tapped Sater in 2010 to scout out real estate. Additionally, Sater presented clients with business cards that claimed he was a senior adviser to Trump, and his office was on the same floor as Trump’s office in Trump Tower. Trump himself is not the target of this particular money laundering investigation, but the Financial Times notes that “the eight-year investigation has already offered a rare glimpse of the inner workings of a US real estate market that US Treasury Department officials warn is awash with dirty money” and “has raised questions about what steps Mr Trump has taken to check whether tainted funds are coursing through his properties.”

More Dems sign on to bill to impeach Trump | TheHill: Four more House Democrats have signed on to a bill to begin impeachment proceedings against President Trump after his Twitter rampage against MSNBC host Mika Brzezinski. Yahoo News reported Saturday that 25 House Democrats are now working on the bill, which has been in the works since April. The bill's primary sponsor is Rep. Jamie Raskin (D-Md.). The bill would create a congressional “oversight” commission that could declare the president incapacitated, leading to his removal from office under the 25th Amendment to the U.S. Constitution. After Trump's tweets on Thursday, Raskin sent out an email to colleagues urging support for his bill. “In case of emergency, break glass,” Raskin told Yahoo News. “If you look at the record of things that have happened since January, it is truly a bizarre litany of events and outbursts.” Raskin said that Trump's tweets show a pattern of instability that means he is unfit for office. “I assume every human being is allowed one or two errant and seemingly deranged tweets," Raskin said. "The question is whether you have a sustained pattern of behavior that indicates something is seriously wrong.” 

Justice Department Subpoenas The Intercept for Records on Barrett Brown - The US government just won't stop bullying Barrett Brown.The Intercept confirmed to Truthout over email that the publication's in-house counsel received a subpoena Thursday from the US Attorney's Office for the Northern District of Texas for all information including communications, contracts and payments between Brown and Deputy Editor Roger Hodge, whom Brown worked with on his National Magazine Award-winning column that he wrote while was in federal prison.While The Intercept declined to provide any further comment, Brown told Truthout that The Intercept's in-house counsel left a message with the US Attorney's Office stating that, while they would agree to turn over financial information, the publication will not, on principle, be providing any communications between Brown and The Intercept.In 2014, Brown pleaded guilty to two charges related to obstruction of justice and threatening an FBI agent. Truthout was in the courtroom when he was ultimately sentenced to five years and three months in prison -- having already spent two years in pretrial incarceration. He was released to a halfway house on November 29, and then subsequently released under house arrest in January, when he began writing for D Magazine. Since May 25, he has been on supervised release.His charges and arrest in 2012 stemmed from his reporting on hacked emails from private intelligence contracting firms. In 2011, he not only exposed that the private intelligence firm Stratfor had been snooping on activists on behalf of corporations, but also revealed plans by intelligence contractors to hack and smear activists.

Podesta: ‘It’s on the FBI’ That DNC Servers Weren’t Turned Over - John Podesta said he has no idea whether intelligence agencies asked Democratic National Committee officials for their Russian-hacked servers or whether they turned them over for investigation."That was a matter for the DNC," the former Clinton campaign chairman told host Maria Bartiromo.Podesta insisted he fulfilled his obligations by turning over Hillary Clinton's private servers, which were suspected to be vulnerable to hacks by Russia or others.A year ago the FBI concluded that while Clinton and her associates had been "extremely careless in their handling of very sensitive, highly classified information," they did not "intend to violate laws."The head of the failed campaign called the FBI's approach to the DNC Russia hack "fairly casual" and "lackadaisical." "If anything, it's on the FBI that didn't come forward and really inform the DNC about what was going on until long after," Podesta stated.

Conservative media outlets gain seats in White House briefing room | TheHill: Conservative media outlets have more official seats in a new White House briefing room seating chart released Friday. The updated seating chart sees conservative news organizations Newsmax and One America News (OAN), as well as British newspaper The Daily Mail, with designated seats. Newsmax and the Mail have their own spots, while OAN shares a seat. None of the organizations had a spot under the previous seating chart, adopted in 2015. The New York Post now shares a seat with the Christian Science Monitor, both organizations that previously held their own seats. The new chart also gives a seat to Westwood One radio, which it did not previously have.The updated seating arrangement comes as members of the White House press corps continue to deal with a decreased number of on-camera press briefings from press secretary Sean Spicer and deputy press secretary Sarah Huckabee Sanders. A number of reporters have criticized the White House press office for the lack of on-camera briefings. 

Media errors give Trump fresh ammunition | TheHill: A string of high-profile corrections and retractions by major news organizations on stories about President Trump or his allies have fueled more allegations of bias in the mainstream press. The relationship between Trump and the news media regularly hits new lows, with insults flying between the two camps and reporters warning that the president is inciting violence against journalists. But Trump’s allies on the right believe the president’s claims that the mainstream media is “fake news” have been bolstered by recent missteps. They point to recent admissions from top news outlets — including CNN, the New York Times and the Associated Press — that bombshell stories were either overcooked or included incorrect details. Adding insult to injury: Breitbart News, the pro-Trump media outlet that is scorned by many in the mainstream press, has been fact-checking their mainstream counterparts with some success. Breitbart’s Washington political editor Matthew Boyle was first to call into question a CNN story on alleged ties between a Trump associate and Russia that was later retracted. Boyle was also reporting on an error in an Associated Press report when the newswire corrected and later rewrote the story. Together, the corrections and retractions amount to only a few stories out of the thousands published every day. But the high-profile nature of the errors hurts the media's credibility at a time when the press is under more scrutiny than ever before, giving new political ammunition to critics of the mainstream press.

Trump Goes To Europe, Trashes U.S. Intelligence Agencies | HuffPost: A day before meeting Russian President Vladimir Putin, President Donald Trump on Thursday again refused to blame Russia for election meddling designed to put him in the White House – a conclusion that U.S. intelligence agencies made public in January.“I think it could very well have been Russia, but I think it could well have been other countries,” Trump said at a joint news conference in Warsaw with Polish President Andrzej Duda. He declined to name those other nations: “I won’t be specific.”Trump did, however, blame former President Barack Obama for failing to stop the interference as well as the intelligence agencies themselves ― extraordinary criticisms coming from a commander-in-chief while on foreign soil.The Office of National Intelligence released a report on Jan. 6 detailing the consensus view of the National Security Agency, the CIA and the FBI stating that Russia not only meddled in the presidential campaign, but also specifically wanted Trump to defeat Democratic nominee Hillary Clinton.“We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the U.S. presidential election. Russia’s goals were to undermine public faith in the U.S. democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian government developed a clear preference for President-elect Trump,” the report said. “We have high confidence in these judgments.” Trump, though, said it was impossible to know who did the meddling – a claim he made frequently during the campaign and transition. “Nobody really knows,” he said. “Nobody really knows for sure.” 

Trump 'pressed' Putin on election meddling but he denied it, Rex Tillerson says -- President Donald Trump was the first to raise the topic of Russian interference in the 2016 U.S. election at his face-to-face meeting with Russian President Vladimir Putin during the G-20 summit meeting on Friday -- which the Russian president denied, according to U.S. Secretary of State Rex Tillerson. "The president opened the meeting by raising the concerns of the American people regarding Russian interference in 2016 election. Putin denied such involvement, as he has done in the past," Tillerson said during an off-camera briefing today. "The two leaders agreed this is of substantial hindrance. They agreed to exchange further work regarding commitments of noninterference in the affairs of the U.S. and our democratic process as well as other countries.” Tillerson also added that both presidents acknowledged the “challenges of cyberthreats and interference in the democratic processes" in the United States and other countries and that they would work together to "create a framework" for dealing with such threats, including terrorism, efforts to hack into the “internal affairs of countries” and any actions against "infrastructure.” Russian Foreign Minister Sergey Lavrov confirmed during a televised news conference that Trump raised the issue of election interference, though adding that the president accepted Putin’s “clear statements” that “Russian leadership hadn’t interfered.” Lavrov pointed out that Trump noted the Russian interference had been “mentioned in several U.S. circles” but “the [U.S] can’t prove it.” “President Trump, I’m sure either he himself or Rex Tillerson, will talk about this, said that this campaign [accusing Russia of interfering] is already acquiring quite a strange character because for months when accusations have been voiced not a single fact has come out,” Lavrov said. But another senior White House official, when asked by ABC News whether Lavrov's description of Trump’s accepting the Putin denial of election interference is true, said, “No,” without providing further information. 

Now involving Reddit and neo-Nazis, the spiraling Trump-CNN feud is 2017 in a nutshell - LA Times: For any healthy American who hasn’t irradiated his brain by consuming political news on Twitter: Here’s a journalistic autopsy on how a wrestling video tweeted by President Trump last week spawned a national controversy involving Reddit, CNN, vengeful neo-Nazis — and a hashtag campaign that adds blackmail to the list of offenses of which the news media stands accused. It is a saga of politics and the media in 2017, when inane spats, egged on by the president and facilitated by social media, have the power to become consuming viral events, propelled by the right’s antipathy toward the mainstream media. It all started with the Reddit group /r/The_Donald. /r/The_Donald claims hundreds of thousands of subscribers, with lists of popular news stories from the day and other memes. Top posts receive thousands of approving upvotes. This online saloon is where, last week, an anonymous Reddit user named after Han Solo (plus an unprintable anatomical part) posted an old video clip of Trump pummeling another performer at a professional wrestling match. Except someone had doctored the GIF to replace the other wrestler’s head with the CNN logo, a nod to the president’s long-running feud with the cable news network. On its own, it wasn’t noteworthy, except for what happened next. On Sunday, Trump tweeted out what appears to be a spiffed-up version of the Reddit Han Solo’s GIF, with sound added, and the hashtag #FraudNewsCNN. It soon became Trump’s most-retweeted tweet ever.  The crudeness and brazenness of the tweet quickly became a big story. Many journalists were outraged, seeing the video as encouraging an atmosphere of violence against journalists. Trump’s supporters saw it as harmless mockery. “Wow!!” the Reddit Han Solo wrote in a post Sunday. “I never expected my meme to be retweeted by the God Emporer himself!!!”  Then came the plot twist.

Trump's disdain for CNN reportedly seen as 'wild card' amid pending $85 billion Time Warner-AT&T merger -- President Donald Trump's disdain for CNN could have consequences that reach far beyond negative internet memes and social-media rants from the Oval Office. Trump's enduring animus toward the news network is reportedly seen as a "wild card" within the White House amid a pending $85 billion merger between CNN's parent company, Time Warner, and AT&T, The New York Times reported Wednesday night, citing an unnamed senior administration official. The US Justice Department is deliberating over the merger. It is the only federal agency reviewing the deal, according to a June 27 report from the television-industry trade publication Broadcast & Cable, which also reported Republican Sen. Susan Collins of Maine had concerns about the deal that were not related to Trump or CNN specifically. Separately, Senate Democrats have taken issue with the merger. Sen. Al Franken of Minnesota was one of several lawmakers who signed a letter to the Justice Department asking it to squash the deal if it finds that the downsides outweigh the benefits to consumers. Sens. Elizabeth Warren, Richard Blumenthal, Maria Cantwell, and Cory Booker also signed the letter, as well as Bernie Sanders, the independent senator from Vermont. For his part, CNN president Jeff Zucker said the Time Warner-AT&T deal is not a factor in his daily journalistic and management decisions. "It's not something I think about,” he said.  It is unclear whether the Trump administration may seek to influence the Justice Department's deliberations on the merger, but The Times reported that White House advisers have discussed the deal as "a potential point of leverage."

Meanwhile, Spotted Together At A Southampton Party... -- While publicly polarizing average-joe America at every opportunity, it appears the 'elites' are having a blast 'together' behind the scenes... As Politico reports... Lally Weymouth held her annual summer party last night at her house in Southampton.There was a long gold carpet entrance from where the parking was to a big tent next to her house. She served champagne, rare filet, fried chicken, cornbread, a big chocolate cake, ice cream and cookies decorated as American flags. Brother Don Graham did a big tribute to toast Lally (whose birthday is tomorrow) and shouted out Steven Spielberg’s upcoming film about how Ben Bradlee and Katharine Graham challenged the government for the right to publish the Pentagon Papers in 1971 (Tom Hanks is playing Bradlee and Meryl Streep is playing Graham). Don made a big deal that Spielberg was there and jokingly conceived a Spielberg movie about Lally and described the cast (some actors and some in the room). SPOTTED: Jared and Ivanka chatting with Joel Klein and Alan Patricof, Kellyanne Conway on the dance floor, Boyden Gray, Chris Ruddy, Sen. Chuck Schumer (D-N.Y.) and wife Iris, Katharine Weymouth, Mary Jordan, Richard Cohen, Margaret Carlson, Gillian Tett, Steven Spielberg chatting with Steve Clemons and Robert Hormats, Carl Icahn, Tom Lee (famous for doing a leveraged buyout of Snapple and now lives in Princess Radziwill’s house), David Koch, John Paulson, Dina Powell, Richard Edelman, George Soros and his wife Tamiko Bolton, former Florida Gov. and Sen. Bob Graham (Lally’s uncle), her cousin Gwen Graham (who is running for Florida governor), Maria Bartiromo, Ray Kelly, Bill Bratton, Jeff Rosen, William Drozdiak, Rep. Lee Zeldin (R-N.Y.). As writes, David Koch was at a party with George Soros? Jared Kushner, Ivanka Trump, and Kellyanne Conway, too? This should surprise absolutely no one. It must be noted that attending the same gathering as someone with whom you disagree isn't wrong, nor is it a sign that you are colluding with them. That said, it shouldn't come as a shock that these people — Soros, Conway, Kushner, etc. — were all partying together. They are the Washington elites. The majority of those in the D.C. political world are homogeneous. They may play enemies on the great American stage, but behind the curtain, this acting troupe is thick as thieves.

Justice Department’s Corporate Crime Watchdog Resigns, Saying Trump Makes It Impossible To Do Job - One of the Justice Department’s top corporate crime watchdogs has resigned, declaring that she cannot enforce ethics laws against companies while, she asserts, her own bosses in the Trump administration have been engaging in conduct that she said she would never tolerate in corporations.Hui Chen -- a former Pfizer and Microsoft lawyer who also was a federal prosecutor -- had been the department’s compliance counsel. She left the department in June and broke her silence about her move in a recent LinkedIn post that sounded an alarm about the Trump administration’s behavior. “Trying to hold companies to standards that our current administration is not living up to was creating a cognitive dissonance that I could not overcome," Chen wrote. “To sit across the table from companies and question how committed they were to ethics and compliance felt not only hypocritical, but very much like shuffling the deck chair on the Titanic. Even as I engaged in those questioning and evaluations, on my mind were the numerous lawsuits pending against the President of the United States for everything from violations of the Constitution to conflict of interest, the ongoing investigations of potentially treasonous conducts, and the investigators and prosecutors fired for their pursuits of principles and facts. Those are conducts I would not tolerate seeing in a company, yet I worked under an administration that engaged in exactly those conduct. I wanted no more part in it.”

Federal Reserve Says Not to Worry About a Financial Crisis. That Means You Should — The supposed ‘expert officials’ at the Fed never seem to warn of a recession ahead of time, but instead, consistently encourage investors to buy in right before the bottom drops out. The Fed’s arrogance was on display yet again this week as chairman Janet Yellen made a bold statement about America’s economic future. While speaking Tuesday she confidently stated:“Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not [happen] in our lifetimes and I don’t believe it will.”When asked if regulations on the system put in place during the last crisis should be loosened, she continued:“We’re now about a decade after the last crisis hit and memories do tend to fade so I hope that won’t be the case and  I hope that those of us who lived through it will remind the public that it’s very important to have a safer sounder financial system and it is essential to sustainable growth.” The regulations she’s talking about include the protections on the too-big-to-fail banks and grant even more authority for the Federal Reserve to act unilaterally in times of crisis. If they can keep the general public ignorant about the consequences of injecting trillions of dollars into the markets — and until recently, keeping interest rates at zero — then the fear that arises during the next downturn will give them the green light to do even more damage to the economy.This kind of rhetoric is Wall Street’s wet dream and solidifies their belief that no matter what happens, Janet will ride in on a White Horse to save the day. After all, someone in that prestigious a position must be more intelligent and qualified than anyone else to make such a prediction, right?

Why Wall Street Should Be Viewed as a Major National Threat --  Pam Martens  - The New York Times finally decided to publish an editorial warning about Wall Street’s potential threat to the nation. Unfortunately, it did so with the kind of timidity we see regularly from cowed or compromised Wall Street banking regulators. The editorial writers noted that: “It’s entirely possible that the system is more fragile than the Fed’s stress tests indicate,” and they called for “heightened vigilance of derivatives in particular” without providing any detailed data. A more accurate assessment of the situation would have been this: There is only one industry in the United States that has twice in a period of less than 100 years brought about a devastating economic crisis in the country. Wild speculation coupled with poor regulation of mega Wall Street banks brought about the Great Depression in the 1930s, leading to massive job losses, bank failures, poverty and economic misery for tens of millions of innocent Americans. The precise same combination of wild speculation and crony regulators created the Wall Street crash of 2008, throwing millions of Americans into unemployment and foreclosure while creating obscene bailouts and bonuses for bankers, and leaving the U.S. with such a low economic growth rate to this day that many Americans feel they are still living in the Great Recession.  If a foreign country did this kind of damage to the U.S. economy with a military weapon, that country would have been reduced to bombed-out, smoldering ruins by now. But despite research coming directly from our own Federal government illustrating that Wall Street’s threat to the nation is more dangerous than ever, both the Obama and Trump administrations appointed Wall Street’s own former lawyers as regulators and allowed the derivatives bomb to re-arm itself and point directly at the heart of the nation’s economy.

Volcker Says Trump Changes to Volcker Rule Won’t Erode Principle -- Paul Volcker said he isn’t worried that the Trump administration will undermine the financial rule that bears his name. “If they can do it in a more efficient way, God bless them,” the former Federal Reserve chairman said in a phone interview about proposed revisions to the regulation. “The basic principle remains valid. I hope that won’t go away, and I expect that it won’t.” The Volcker Rule, part of the 2010 Dodd-Frank Act, restricts trading by banks to ensure they don’t make risky bets that lead to big losses. It took five regulatory agencies more than three years to hammer out the details of how firms can continue to help clients trade without engaging in so-called proprietary bets with their own money. A report released by Treasury Secretary Steven Mnuchin last month recommended that regulators simplify some of those directions and exempt community banks. “Everybody wants to see it more simple,” said Volcker, 89, who served as Fed chairman under presidents Jimmy Carter and Ronald Reagan. “The basic premise is hard to fight against. Yet the banks have powerful lobbyists who have been fighting it from day one.” The Treasury report defended the Volcker Rule, saying banks that have access to the government safety net shouldn’t be “engaged in speculative trading.” Yet it called for Congress and regulators to ease the compliance burden on firms that help clients buy and sell securities. 

Delaware Assembly Passes "Historic" Law Legalizing Blockchain-Based Stock Trades --The State of Delaware just took a historic step toward ensuring that US stock exchanges will soon be violently disrupted by blockchain technology - possibly to the extent of being rendered obsolete. CoinDesk reports that lawmakers in the state’s general assembly passed a law that makes explicit the right to trade stocks on a blockchain. Details of the bill are still emerging. One source indicated that the bill passed with near unanimity, with a single vote against. The vote was widely considered to be the final obstacle to state adoption, following the passage of the bill in the Senate earlier this month. The measure, which was added to another bill in the form of an amendment, is expected to be signed in to law by Delaware Gov. John Carney by the end of the month, with the ruling going into effect on Aug. 1.  Developed under the close guidance of blockchain lawyer Marco Santori of Cooley LLP and Caitlin Long of blockchain startup Symbiont, the bill is expected to pave the way for potentially large-scale issuance of stock on a blockchain. By trading stock on a blockchain or similar distributed ledgers, users can cut out middlemen like the exchanges and ATSs that profit by facilitating trades, resulting in significantly faster settlement times. The bill was introduced last year by the previous governor, Jack Markell, following requests made by multiple companies for the legislation – which was already lenient to blockchain stocks – to make explicit the legality of such issuances, according to CoinDesk's sources.

 Who owns what, really? In securities, Delaware may soon clear things up --In the summer of 2015, a Delaware official approached the cryptocurrency lawyer Marco Santori with a simple question. Andrea Tinianow, the state's director of corporate and international development, had learned that New York, where Santori practiced law, was cracking down on bitcoin startups. She wanted to know, "How do we drive them out of New York and bring them to Delaware?" Santori told her that some of his clients at the law firm of Pillsbury Winthrop Shaw Pittman were interested in issuing shares of stock on a blockchain. There was no law preventing it, but his clients wanted to see it expressly allowed. That conversation sparked an effort to amend Delaware state law so that companies incorporated there—among which are two-thirds of the Fortune 500—could rely on a distributed ledger to store and transfer securities records and to communicate with shareholders. The success of that effort is now all but assured. The Delaware state Senate passed a bill last Friday containing amendments to accomplish Santori and Tinianow's goal. Gov. John Carney Jr. has already expressed support for the bill, meaning that as of Aug. 1, Delaware corporations will have an all-new way to manage their equity. Dry though it sounds, the shift could be revolutionary. It would restore to companies and individuals direct ownership of their securities, while speeding up stock trades and increasing the transparency and security of the whole system. It would allow market participants and regulators to "understand with exact accuracy who owns what, and in real time," said Caitlin Long, the chairman and president of the smart-contracts startup Symbiont, Delaware's technology partner for the initiative. 

Ex-Goldman HFT Trader Makes Blockchain History Raising $200 Million In Tezos ICO In 4 Days -- Who needs IPOs when you have blockchain, and a lot of people willing to throw good money, or rather cryptocurrency, after bad something totally unknown.Presenting the Initial Coin Offering (ICO) for Tezos, a blockchain startup which has tapped a virtually unlimited source of funding, and has raised over $200 million in just four days. Tezos is already the biggest ICO in history and with the sale scheduled to continue for another 8 days, may end up raising over half a billion dollars. Recently, blockchain startup Block.One hit a record funding, raising around $185 million in the first five days of the crowdsale. Prior to that, another startup, called Bancor, netted nearly $150 million in contributions during the first three hours of its ICO. What makes Tezos different from a recent surge in similar such offerings, is that this ICO is not based on Ethereum and instead operates on an entirely new blockchain, a "self-amending cryptoledger" that rewards developers who upgrade the network's protocols and allows for "seamless," consensual upgrades of those protocols (read the white paper here for more detail). Which, as Mashable points out, makes it a competitor to Ethereum.Established by a husband and wife team, Tezos is an independent smart contract system built as an alternative to Ethereum. The platform has been under development over the last three years. Arthur Breitman and Kathleen Breitman used their extensive experience to develop the new blockchain solution.  And here is another striking fact: Arthur Breitman previously worked at the high frequency trading desk at Goldman Sachs and served as an options market maker at Morgan Stanley. Meanwhile, Kathleen Breitman is a former management associate at Bridgewater. The startup is focused on "transparency, security and governance by consensus as fundamental design goals."

Goldman to Review Commodities After Worst Start in a Decade -- Goldman Sachs Group Inc., the dominant commodities trader on Wall Street, is reviewing the direction of the business after a slump in the first half of the year, according to people with knowledge of the matter. By reconsidering the bank’s long-held view that the downturn in profitability is cyclical and will eventually reverse, Chief Executive Officer Lloyd Blankfein, who started his career in the commodities business, is drawing closer to the industry’s prevailing wisdom. Morgan Stanley, JPMorgan Chase & Co., Barclays Plc and Deutsche Bank AG have cut back or exited commodities trading in recent years amid falling revenue and tougher regulation. While the bank flagged the poor results for the first quarter -- without giving specific numbers -- the weakness has continued and the unit’s start to the year has been the worst in more than a decade, said one of the people, who asked for anonymity to discuss internal deliberations. The commodities division was one of the topics of discussion at a board meeting held in London late last month, the people said. No decision has been reached and the bank may not pursue large-scale changes, according to the people. It’s common for the bank to review struggling business units to see what can be improved, one of the people said. "Commodities has been and still is an important business for our clients and we will continue to invest in it to ensure we are best meeting their needs,” Michael DuVally, a bank spokesman, said in an emailed statement. 

How Goldman's Commodities Profit Engine Started to Sputter  The commodities supercycle was over, investors were losing interest and regulators were clamping down on risky trading. Most banks were retreating from commodities, but not Goldman Sachs Group Inc. “That is a core, strategic business for us,” Chief Executive Officer Lloyd Blankfein said in a 2013 interview with CNBC. Four years on, and Blankfein’s insistence that the commodities division -- where he cut his teeth -- would eventually return to previous levels of profitability is beginning to waver. Isabelle Ealet, a co-head of the bank’s securities division, is leading a review of Goldman’s commodity division after its worst start to the year in more than a decade, people familiar with the matter told Bloomberg. The decline in profitability is a blow for a unit that for decades has dominated global commodity markets -- becoming known, along with Morgan Stanley, as one of the “Wall Street refiners.” “The world changed a little bit: We have less volatility, less trending markets,” said Goran Trapp, founder of boutique advisory firm Energex Partners and former global head of oil trading at Morgan Stanley. “As banks have dismantled the merchant aspect of their business model, they have reduced the areas where they can generate income.” “Commodities has been and still is an important business for our clients and we will continue to invest in it to ensure we are best meeting their needs,” Michael DuVally, a Goldman spokesman, said in an emailed statement. 

Regulating the Credit Rating Agencies? Less Would be More — Money, Banking and Financial Markets: The major credit rating agencies (CRAs)—Moody’s, Standard & Poor’s (S&P), and Fitch—contributed significantly to the financial crisis of 2007-09. Their excessively high initial ratings of residential mortgage-backed securities (RMBS) helped fuel the bubble of mortgage finance that ultimately burst, with near catastrophic consequences for the U.S. financial sector. These disastrous failings motivated the post-crisis urge to tighten regulation of the CRAs. It’s not hard to share the (metaphorical) desire—reflected in the Dodd-Frank Act of 2010—to grab them by the lapels and shout “Do a better job!”There is, however, a better way, albeit one that is less intuitive and possibly less gratifying: namely, eliminate—or at least greatly reduce—the regulation of the CRAs. This would encourage entry into the credit rating business, stimulate innovation and, eventually, improve the efficiency of capital markets. Surprisingly, the Financial CHOICE Act, the bill to reform Dodd-Frank that was passed by the U.S. House of Representatives last month, did not seize the opportunity to roll back the largely ineffective regulation that Dodd-Frank applied to the CRAs. To understand the argument for less regulation of the CRAs, let’s start with what they do: CRAs provide opinions about the creditworthiness of bonds that have been issued by corporations, municipalities, sovereign governments, and the like. Such information provides the foundation for the operation of any credit market, where lenders naturally want to know about the creditworthiness of borrowers (but the lenders may be too small or lack the expertise to collect or analyze data themselves), and the more creditworthy borrowers want to have a credible means of conveying their creditworthiness. Put differently, the fixed costs of information gathering and analysis lead many investors to outsource this professional service.

War or Recession Might Be Needed to Break Low-Vol, Goldman Says -- It’ll take more than central bank tightening to shake volatility from its yearlong slumber, according to Goldman Sachs Group Inc. A large shock such as recession or war is usually required. That’s generally been the case for the 14 similar low volatility “regimes” since 1928, at least in equity markets, Goldman Sachs strategists Christian Mueller-Glissmann and Alessio Rizzi said. These periods on average lasted nearly two years, featured short-lived spikes and realized S&P 500 volatility was usually at or below 10. Swings picked up across assets in the past week and investors are positioning for a shift higher, in part because of fears of central bank tightening, the strategists wrote in a July 3 report. But a sustained breakout is unlikely without an escalation in uncertainty or recession risk, they said. “Volatility spikes have been hard to predict as they often occur after unpredictable major geopolitical events, such as wars and terror attacks, or adverse economic or financial shocks and so-called ‘unknown unknowns’ (e.g. Black Monday in 1987),”  “Recessions and a slowing business cycle have historically resulted in a high vol regime across assets.”Goldman Sachs puts the chances of a recession in the next two years at 25 percent.Low volatility isn’t unusual and tends to stem from a favorable macroeconomic backdrop with strong growth but anchored inflation and rates, similar to a “Goldilocks” scenario, Mueller-Glissmann and Rizzi said. Markets have reflected this since January, with equities reaching record highs, strong global growth and declining bond yields, they said.

Mandatory Arbitration Clauses: What’s Next? -- naked capitalism by Jerri-lynn Scofield - The Consumer Financial Protection Bureau (CFPB) has yet to take action against the widespread use of mandatory arbitration clauses in consumer contracts.  These clauses require consumers to submit to mandatory arbitration in the event of a dispute– and crucially, waive their right  to pursue class action litigation, an admittedly flawed mechanism that occasionally and erratically  forces corporations to pay some price for abuses they’ve committed against consumers. I discuss this issue at greater length in this post from last year,  I have no special insight into what, if anything, CFPB director Richard Cordray is going to do about issuing the long-delayed rule that was expected either to eliminate or circumscribe the  use of mandatory arbitration clauses, and I instead refer interested readers to this recent post In Ballard Spahr’s Consumer Finance Monitor, Will he or will he not issue the arbitration rule?, which lays out some key issues, If the CFPB were to issue a new rule at this time, Republicans in Congress would almost certainly invoke the Congressional Review Act (CRA) to scupper it– and when Trump would inevitably approve that action– future rule-making in this area would be precluded.  I’ve discussed how this mechanism works in various posts discussing the CRA, including Trump and Congress Use Congressional Review Act to Roll Back 14 ‘Midnight’ Rules; More to Follow?: The CRA was originally intended to prevent an outgoing administration from enacting a flurry of last-minute measures that would constrain a new administration and/or Congress, but there is no reason it cannot be used by Congress to overturn agency rule-making of which it does not approve.

 A Proposed Bankruptcy for Banks That Will Lead to Bailouts - At a time when news about Russia, health care, terrorist attacks and horrific fires dominates the headlines, it can be easy to forget that Congress continues to try to undo the regulatory reforms enacted in the wake of the 2008 financial crisis. And the Trump administration, despite getting into office on a wave of populism, seems quite willing to embrace Congress’s rather conventional deregulatory agenda. One core piece of the congressional drive to dismantle Dodd-Frank is the move to repeal orderly liquidation authority and with it the special powers of the Federal Deposit Insurance Corporation to deal with big bank insolvency. Instead, Congress would leave the failure of big financial institutions to the general bankruptcy system. If one desires to return to the Gilded Age, with a financial crisis at least once every decade, this is a splendid plan. A group of professors recently wrote Congress to alert it to the folly of repealing orderly liquidation authority and replacing it with bankruptcy. The professors largely take Dodd-Frank at face value: When a big bank fails, we should try to use the bankruptcy courts first and resort to orderly liquidation authority only in extreme circumstances. That is fine in the abstract, but it bears thinking a bit more deeply about this issue. Is it really plausible that any of the top half-dozen or so American financial institutions could resolve their financial distress in bankruptcy court? It could happen, just as I may travel to Mars some day. More realistically, we have to worry that the hurdles to such a case, and the potential knock-on effects, are so significant that such a bank failure would and should proceed immediately to orderly liquidation authority. That means that “bankruptcy for banks” should primarily focus on other creatures. For example, it might make sense to devise a bankruptcy court procedure for the next tier of banks and broker-dealers, should they fail. At present the failure of one of the larger “regional” bank groups might overwhelm both the F.D.I.C.’s traditional bank rescue tools and the bankruptcy code.

65% of major US banks have failed web security testing -- Websites run by some of the largest banks in the US have scored the poorest in a new security and privacy analysis audit.The non-profit Online Trust Alliance (OTA) Alliance anonymously audited more than 1,000 websites, ranking their security and privacy practices. None of the sites investigated knew about the test.In the firm’s Online Trust Audit & Honor Roll for 2017 many US banks were among the worst for security and privacy. The industry had both the most failing grades and the least “Honor Roll” recipients.For firms to receive the Honor Roll award, they must achieve an overall score of 80% or higher across three categories: consumer protection, security and privacy. A failure in any of the three squashes its chance entirely. 52% of the 1,000 sites tested qualified for the Honor Roll. It marks an overall 5% improvement from 2016. “The internet economy runs on data,” OTA founder Spiezle told NBC News. “If this data is not secure and users have negative experiences, this ultimately threatens the future growth and revenue potential of the internet.” Look away now if you’re a US banking customer, as only 27% of the 100 largest banks in the country made the grade. The figure represents a 28% drop from 2016. According to the OTA, the sector had been showing signs of improvement. Yet, due to “increased breaches, low privacy scores and low levels of email authentication,” things have slipped. The American Bankers Association (ABA) questions the results. Doug Johnson, senior vice president of payments and cybersecurity policy at the ABA, told NBC that banks “absolutely take privacy and security very seriously”.

New York Times Runs Editorial Today on the Mega Banks: You Need to Pay Attention - Pam Martens --We have frequently called out the New York Times for running sycophantic articles on the big, mean, untamed Wall Street banking behemoths which just happen to be one of its home town’s largest industries and source of the biggest paychecks, which, in turn, boost its real estate markets, restaurants and retail sales – not to mention its own ad revenues.  But today, the New York Times’ Editorial Board has joined Wall Street On Parade in expressing skepticism about the Federal Reserve giving a green light on the stress tests for 34 banks last week. After sounding the alarm about the Trump administration’s plans to roll back Obama-era reforms of Wall Street, the New York Times editorial raises the following concerns:“It’s entirely possible that the system is more fragile than the Fed’s stress tests indicate. By the Fed’s calculations, capital held by the nation’s eight largest banks was nearly 14 percent of assets, weighted by risk, at the end of 2016. “Alternative calculations of capital, including those that use international accounting rules rather than American accounting principles, put the capital cushion much lower, at 6.3 percent. The difference is largely attributable to regulators’ differing assessment of the risks posed by derivatives, the complex instruments that blew up in the financial crisis and that still are a major part of the holdings of big American banks.“The passing grades on the Fed’s stress tests pave the way for banks to pay their largest dividends in almost a decade. The hands-down winners will be shareholders and bank executives, who could see their stock-based compensation packages expand further. “But without continued bank regulation, and heightened vigilance of derivatives in particular, the good fortune of bank investors and bank executives is all too likely to come at the expense of most Americans, who do not share in bank profits but suffer severe and often irreversible setbacks when deregulation leads to a bust.”

Financial System of U.S. Rests on Health of Just Five Mega Banks - Pam Martens --According to the Federal Deposit Insurance Corporation (FDIC), as of March 31, 2017 there were a total of 5,856 banks in the U.S. operating under its Federal deposit insurance umbrella. But according to government financial researchers, five of those banks pose an ongoing material threat to the U.S. financial system. Not surprisingly, those five banks hold insured deposits for savers while simultaneously engaging in highly leveraged, high risk trading on Wall Street.On June 27, Janet Yellen, the Chair of the U.S. Federal Reserve (the nation’s central bank) spoke at an event at the British Academy in London. She stated the following about the U.S. financial system:“Would I say there will never, ever be another financial crisis? You know probably that would be going too far, but I do think we are much safer, and I hope that it will not be in our lifetimes and I don’t believe it will be.”We hate to be the bearer of bad tidings, but there is no substantive data to support Janet Yellen’s view. In fact, the very body that provides the intelligence to the Financial Stability Oversight Council (F-SOC), the U.S. Treasury’s Office of Financial Research (OFR), has been pumping out volumes of research that strongly suggest just the opposite. According to OFR’s research, those five Wall Street mega banks hold the fate of the U.S. financial system in their highly interconnected and highly dangerous hands. Tragically, that’s pretty much the same condition the U.S. was in heading into the crash of 2008.According to OFR research:“The larger the bank, the greater the potential spillover if it defaults; the higher its leverage, the more prone it is to default under stress; and the greater its connectivity index, the greater is the share of the default that cascades onto the banking system. The product of these three factors provides an overall measure of the contagion risk that the bank poses for the financial system. Five of the U.S. banks had particularly high contagion index values — Citigroup, JPMorgan, Morgan Stanley, Bank of America, and Goldman Sachs.”

Fed posts banks' 'living wills,' gives AIG, Prudential more time - U.S. bank regulators disclosed on Wednesday how eight of the nation’s largest banks would wind themselves down in the face of collapse and gave American International Group Inc (AIG) (AIG.N) and Prudential Financial Inc (PRU.N) an extra year to submit their doomsday plans. The Federal Reserve and Federal Deposit Insurance Corporation (FDIC) posted the public portions of “living wills” submitted by banks including Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Goldman Sachs Group Inc (GS.N). Introduced in the wake of the global financial crisis of 2007-2009, the plans outline how banks would go bankrupt without needing a taxpayer bailout. ( Regulators will scour the documents to make sure they are credible. Under the 2010 Dodd-Frank Act, the federal government has the power to carve up a bank if regulators do not believe its plan is workable and in recent years they have faulted more than a dozen banks for drafting overly optimistic or not credible plans. The Fed and the FDIC gave insurers AIG and Prudential Financial until the end of next year to submit their living wills from an original deadline of the end of 2017. The extension was given to enable the companies to incorporate any guidance regulators may provide on their plans. Regulators also posted plans from Bank of New York Mellon Corp (BK.N), Citigroup Inc (C.N), Morgan Stanley (MS.N), State Street Corp (STT.N) and Wells Fargo & Co (WFC.N). President Donald Trump wants to relax the "living will" process, reducing the frequency of having to submit a plan to once every two years and also give the banks more guidance on what to submit. He also wants to eliminate the role of the FDIC in reviewing the living wills.The living wills are separate from the Fed's stress tests, where banks demonstrate stability by showing how they would withstand economic shocks in hypothetical scenarios but failing either process is a black eye for bank bosses.

Warren Buffett is now the largest owner of 2 of the world's biggest banks -- Warren Buffett's Berkshire Hathaway is now the biggest owner of two of the world's largest banks: Bank of America and Wells Fargo. On Wednesday, the Federal Reserve cleared the way for Buffett to become Bank of America's largest shareholder. It passed all the big banks on their so-called stress tests, giving them permission to use their capital for things beyond buffering against disaster, including share buybacks and dividend payments.  Bank of America raised its dividend to $0.12 a common share. That made it compelling for Berkshire to convert its preferred shares into common stock, giving it shareholder ownership, and earning as much as $12 billion in profit. Berkshire announced on Friday that it would exercise its warrants to buy 700 million common shares of Bank of America, the third-largest US bank by market cap, instead of waiting until just before their expiry in 2021.  With $2.19 trillion in assets, Bank of America ranked ninth in the world, according to an S&P Global Market Intelligence ranking released in April.  Buffett's initial investment in the bank dating back to 2011 was a thumbs-up of sorts to CEO Brian Moynihan, who had recently taken the helm. He acquired $5 billion of Bank of America preferred stock with a 6% dividend, or $300 million annually, in August 2011, at a time when investors worried about the bank's capital needs, Reuters reported. The conglomerate said last July that it owned more than 10% of Wells Fargo, which on Friday amounted to nearly 537 million shares, according to Bloomberg. It's the second-largest bank in the US by market capitalization and was the 10th largest in the world by assets, according to S&P.   Berkshire Hathaway also owns smaller stakes in Goldman Sachs and JPMorgan.

US bank CEOs earn up to three times more than rivals - FT - US bank bosses have been paid an average of three times as much as peers around the world since 2004, according to a study by analysts at Bernstein that concludes that running an American bank “can’t be much more complicated”.Wall Street chief executives led by JPMorgan’s Jamie Dimon have regularly topped the league tables in the Financial Times’ annual bank CEO pay survey, with yearly remuneration around the $20m mark.  The Bernstein report, which examined chief executive pay across 25 banks in the US, Europe and Asia for the past 13 years, shows that US banks have persistently paid more than rivals in the rest of the world based on 2016 data.   The study also shows that global bank CEO pay “hasn’t changed at all” despite regulations and other burdens that mean banks now make far lower shareholder returns than they did in the heady period before the financial crisis began in 2007.

Why Apple's dreaded 'blue bar' will benefit banks – American Banker - Apple's plans to display a bright blue bar on iPhone screens when an application is monitoring the user's location may feel like a threat to location-based marketing. More likely, it is an overdue wake-up call for banks to improve their communication about the benefits of location data.  The premise behind Apple's location data change in iOS 11 is to help users differentiate legitimate businesses using location data to send valuable messages and offers from those with less noble intentions. Background activity such as location detection can also be a battery drain, so it benefits Apple to give users more control over how their iPhones consume power.  Banks and retailers increasingly use location data to send location-based offers or to alert customers when they're near a store that accepts mobile payments. Under Apple's plan, the implication is that consumers will want to turn off those apps to guard their privacy and make their phones more efficient. But that blue bar could turn out to be less of a warning signal and more of a call to action. "The banking industry needs to get its story straight on why and how location-based services are being used," Crone said. The last thing b anks need is for iPhone users frustrated with the blue bar on the screen turning off location settings, he added.

June 2016: Unofficial Problem Bank list declines to 137 Institutions, Q2 2017 Transition Matrix --Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.Here is the unofficial problem bank list for June 2017.Here are the monthly changes and a few comments from surferdude808:Update on the Unofficial Problem Bank List for June 2017.  During the month, the list declined slightly from 140 institutions to 137 after four removals and one addition.  Assets increased by $946 million to an aggregate $35.2 billion.  A year ago, the list held 203 institutions with assets of $60.6 billion. This month, actions have been terminated against Bank of the Orient, San Francisco, CA ($611 million); Cornerstone Bank, Moorestown,  NJ ($245 million  Ticker: CFIC); and Central Bank, Savannah, TN ($98 million).  Fayette County Bank, Saint Elmo, IL ($34 million) left the list through failure.  The addition this month was the $1.9 billion MidSouth Bank, National Association, Lafayette, LA (Ticker: MSL).  With it being the end of the second quarter, we bring an updated transition matrix to detail how banks are moving off the Unofficial Problem Bank List.  Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, a total of 1,720 institutions have appeared on a weekly or monthly list at some point.  Only 8.0 percent of the banks that have appeared on the list remain today.  In all, there have been 1,583 institutions that have transitioned through the list.  Departure methods include 910 action terminations, 405 failures, 251 mergers, and 17 voluntary liquidations.  Of the 389 institutions on the first published list, only 13 or 3.3 percent still remain nearly eight years later.  The 405 failures represent 23.5 percent of the 1,720 institutions that have made an appearance on the list.  This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.

Banks haven’t gone the way of Blockbuster — yet - BankThink - Traditional banks in most developed markets are not going to have a Blockbuster moment — having their business model become irrelevant within a period of just a few short years. Despite the advances of fintech, there is just too much customer and regulatory inertia for such a radical shift to occur so quickly.  However, many banks are clearly suffering from disruption, in which profits are squeezed by new competitors, new technologies and changing customer expectations. Rather than a disruptive big bang, the real danger is that these banks will just fade out of the picture over time. Research conducted by Accenture suggests that many consumers are ready to do without conventional banking relationships, preferring to assemble and manage their own portfolio of financial products and services, from mobile wallets to robo investment advice.But the shift is more apparent in emerging markets. In southeast Asia, where traditional bank models never took hold, almost two-thirds of customers are ready to build their own banking experience from component parts. In modern banking markets like Canada, Australia and Scandinavia — which weren’t disrupted by the global financial crisis — the go-it-alone group of customers is in the low-20% range, but growing. The willingness of consumers to look for banking alternatives reflects the fragmentation of what used to be a very vertically integrated business — banks controlled all aspects of the value chain, from the insured balance sheet all the way through to distribution and customer management. In Europe, that value chain is being broken up by new regulations like Revised Payments Service Directive (PSD2), which severs the link between underlying deposit accounts and payments.

Judge Allows Payday Lenders to Press Lawsuit Against Regulators -- A federal judge in Washington said a group of payday lenders may press ahead with a lawsuit that says federal bank regulators are trying to cut them off from the banking industry ( Advance Am. v. FDIC , D.D.C., 14-cv-00953, 7/5/17 ). The suit before Judge Gladys Kessler of the U.S. District Court for the District of Columbia, filed in 2014, claimed the Federal Deposit Insurance Corp., the Federal Reserve, and the Office of the Comptroller of the Currency joined Operation Choke Point, said to be a Justice Department effort to force banks to end business relationships with payday lenders. Although some plaintiffs and claims have since been dismissed, Kessler’s July 5 ruling keeps alive the suit by Spartanburg, S.C.-based Advance America and other short-term lenders, which says regulators deprived them of liberty without due process. Regulators moved for summary judgment against Advanced America, Check Into Cash, and NCP Finance, but Kessler denied the motion, saying she can’t “definitively conclude” that regulatory pressure won’t put them out of business. Although regulators said lenders’ haven’t backed up their due process claims, Kessler said that misses the point.  “The crux of Plaintiffs’ argument is that if Operation Chokepoint continues unabated, they will be effectively cut off from the banking system or broadly precluded from the payday lending industry in the future,” she said (emphasis in original).

NCUA chief to Cordray: Drop CFPB oversight for big CUs -- In one of his first official acts since being named permanent National Credit Union Administration chairman, J. Mark McWatters called on Consumer Financial Protection Bureau Director Richard Cordray to implement a conditional exemption from CFPB examination and enforcement authority for credit unions with assets above $10 billion. In a letter to Cordray, McWatters pointed to credit unions’ unique role within the financial services marketplace, given that they are not-for-profit cooperatives answering to member-owners, rather than for-profit banks. McWatters told Cordray that shifting compliance examination and enforcement authority to the NCUA would be an improvement over the current system, which, he said, places undue examination burden upon credit unions along with aggressive punitive fines. 

CFPB finalizes TRID update without a fix for compliance 'black hole' -- The Consumer Financial Protection Bureau's final rule to formalize guidance on a number of TILA-RESPA Integrated Disclosures compliance points omits an originally proposed fix for the so-called black hole that's created when a mortgage closing is delayed.  The TRID changes were first proposed last July and included guidance on the circumstances when a creditor can use the Closing Disclosure form, instead of the upfront Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance. But the provision did not make it into the final rule.

'If not now, when?' Fed's Powell on GSE reform — Federal Reserve Gov. Jerome Powell, who heads the agency's supervisory committee, called on lawmakers Thursday to move more quickly in crafting legislation to reform the government-sponsored enterprises, saying that "we're almost at a now-or-never moment here."  Speaking at the American Enterprise Institute, Powell offered a handful of principles as guideposts for resolving what he described as the biggest unfinished business of the crisis. While he stopped short of endorsing any single plan, Powell appeared to support legislative talks around a bipartisan overhaul rather than a plan — supported by small lenders — to let Fannie Mae and Freddie Mac be recapitalized and released from conservatorship.

Will housing finance reform hurt small banks? -- The battle over the future of housing finance may turn on whether whatever reforms or replaces Fannie Mae and Freddie Mac will bypass small banks, delivering more market share and power to the biggest banks. Small banks are clearly concerned, and are pushing back against the idea — conventional wisdom to many lawmakers of both parties on Capitol Hill — that significant changes are needed. The Independent Community Bankers of America and the Community Mortgage Lenders of America have signaled they support plans that favor minor reform over a massive restructuring of the system. 

HSBC in talks with U.S. to end crisis-era mortgage probe --HSBC Holdings is in talks to resolve a U.S. probe into its sale of toxic mortgage bonds a decade ago, according to people familiar with matter, a negotiation that could offer an early look at how the Trump Justice Department will deal with global banks. The London-based bank has had at least one meeting with the Justice Department and is scheduled to meet again, said three people who asked not to be named because the negotiations are confidential. The two sides remain far apart in discussions with Justice Department lawyers, while Trump administration appointees have yet to weigh in, one of the people said. A resolution, if one can be reached, is still weeks or even months away, the people said. It is unclear how much money is at stake for HSBC, which had set aside $2.4 billion for legal proceedings and regulatory matters generally as of the end of 2016.  If HSBC reaches an agreement with the government, it could give an early indication of how the new administration will levy financial penalties. Attorney General Jeff Sessions last month issued a departmentwide memo requiring settlement funds to be paid to the U.S. Treasury or to victims. The prior cases allowed billions of dollars in penalties to be paid through consumer relief measures — mortgage modifications, repayment plans and short sales, among other remedies. The Justice Department hasn’t said whether those so-called soft-dollar portions of the penalties will be allowed under the new policy.

RBS on brink of settling chunk of pre-crisis US mortgage probe - Royal Bank of Scotland (RBS) is on the brink of a multibillion-pound settlement with US regulators over the mis-selling of toxic mortgage bonds. Sky News has learnt that RBS could reach a deal with the Federal Housing Finance Agency (FHFA) as soon as this week, removing one of the biggest remaining obstacles to a resumption of the sale of the Government's stake in the bank. Sources said on Wednesday evening that a settlement - which analysts expect to cost RBS at least $4.5bn (£3.5bn) - was imminent, but could yet slip into next week as lawyers for both sides finalise the agreement. The precise size and timing of the fine have been moving around in recent weeks, and the FHFA penalty could ultimately be higher than $4.5bn, they added. The settlement with the FHFA relates to the mis-selling of mortgages to the US government-backed loan firms Fannie Mae and Freddie Mac prior to the 2008 financial crisis, when RBS was among the biggest players on Wall Street. RBS executives have been keen to agree a settlement as soon as possible as they continue their efforts to return the bank - which is more than 70%-owned by British taxpayers - to profit for the first time since 2007. However, they also have to engage in formal settlement talks with the US Department of Justice (DoJ) about another penalty related to residential mortgage-backed securities - a process which has been delayed by a clearout of senior officials at the agency under President Donald Trump's new administration. The DoJ fine will cost billions of pounds on top of the FHFA penalty. Nevertheless, a deal with the FHFA would be another important step along the road to helping RBS shed its remaining financial liabilities from the pre-crisis era.

Wells Fargo unsettles mortgage bond market by holding back funds - Wells Fargo & Co. surprised investors this week by withholding more than $90 million due to buyers of pre-crisis residential mortgage-backed securities. The bank said it invoked its right as trustee to hold back funds to cover legal costs. The 20 transactions had a principal balance of $540 million and are among more than 2,000 deals involved in a lawsuit brought by bondholders including BlackRock Inc. and Pacific Investment Management Co. in 2014 to recover losses from the financial crisis. It's only the second time that proceeds from bonds involved in that litigation have been withheld from investors. Wells Fargo's move caused losses for some bondholders and sent others scrambling to assess risks for similar deals in a market still recovering from the bursting of the housing bubble in 2008. "I expect the market to somewhat freeze until there is more clarity on the bonds with that clause or similar," said Guillermo Roditi, a portfolio manager at New River Investments in Los Angeles. "I expect there to be a bit of chaos." Wells Fargo withheld some funds after New Residential Investment Corp. exercised a so-called clean-up call on the debt. The deals were originally sold in 2004 and 2005 and include loans made or acquired by Bank of America Corp. to prime and non-prime U.S. borrowers. About $3,000 per loan was held back, according to analysts at JPMorgan Chase & Co. and Webbs Hill Advisors LLC. The amount withheld was determined by the "scope of the plaintiffs' claims," said Jen Hibbard, a Wells Fargo spokeswoman. "Wells Fargo, in its capacity as trustee, has been named as a defendant in lawsuits claiming the trustees breached certain duties to investors," she said. "Wells Fargo has incurred and will incur legal expenses, even though it continues to believe it is not responsible for any losses in the relevant trusts and that these lawsuits are without merit." Investors are suing six banks over their roles as mortgage-bond trustees, claiming they knew the loans underlying trillions of dollars of RMBS were misrepresented and failed to force the sellers to buy them back. Wells Fargo is trustee for 261 deals, according to JPMorgan.  

DOJ's False Claims Act focus shifts to reverse mortgage servicers -- The Trump administration's Justice Department was expected to be less aggressive in its pursuit of False Claims Act cases against the mortgage industry. Instead, its focus has shifted to Federal Housing Administration-insured reverse mortgages. The Justice Department obtained more than $1.6 billion in False Claims Act settlements and judgments during the 2016 fiscal year that ended on Sept. 30, primarily from cases of FHA lenders accused of origination defects in forward mortgages. Since 2009, the total has been over $7 billion.  It's a cash cow the federal government appears reluctant to give up, said Phillip Schulman, a partner at the Washington law firm Mayer Brown."There was a thought that there might be a kinder, gentler Department of Justice with a Republican administration, but the False Claims Act has been a cash register for the government for the last five years," Schulman said."Not only hasn't it gone away but the DOJ is now looking to the next set of companies for potential liability," he added.That may be why the DOJ has stepped up action against servicers of Home Equity Conversion Mortgages, the FHA's reverse mortgage program.  "HUD has very detailed servicing requirements on Home Equity Conversion Mortgages," said Krista Cooley, another partner at Mayer Brown. "And some of the servicing requirements that apply specifically to HECM loans have translated into False Claims Act risk for some servicers. So it is really important for servicers to get things right."

Silicon Valley is becoming a commercial real estate disaster - Wolf Richter -- There are parts of Silicon Valley where commercial real estate is still hanging on, and there are parts where it has let go.In Santa Clara, it has let go. Overall availability of office space in Santa Clara was nearly 19% in the first quarter, according to Savills Studley, up from 14% a year ago. Only two other areas in Silicon Valley – Milpitas and North San Jose – show greater availability at respectively 23% and a harrowing 30%.The availability problem becomes very real along the Great America Parkway, between Highway 237 and Highway 101. It’s near Levi’s Stadium. Nearby, Yahoo owned 49 acres of land that it acquired in 2006 and on which it had planned to build its new headquarters. It tore down the buildings on it and got the project approved for 3 million square feet of office space. It scuttled these plans in 2014 and turned the land into a parking lot for Levi’s Stadium. In April 2016, Yahoo sold the property for $250 million to LeEco, a Chinese company that had surged out of nowhere.LeEco was going to get into nearly everything, including electric cars in the US. It was going to build its global headquarters on it and hire 12,000 people. Then came reality. Earlier this year, LeEco in turn scuttled those plans and pulled back from the US, claiming that it had run into a cash crunch. It has since been trying to sell the property. There will be a buyer eventually, as always, but maybe not at $250 million. Turns out, that corridor along the Great America Parkway is drowning in office space that is for lease.

Fannie Mae making it easier to spend half your income on debt - Fannie Mae is making it easier for some borrowers to spend up to half of their monthly pretax income on mortgage and other debt payments. But just because they can doesn’t mean they should.“Generally, it’s a pretty poor idea,” said Holly Gillian Kindel, an adviser with Mosaic Financial Partners. “It flies in the face of common financial wisdom and best practices.”  Fannie is a government agency that can buy or insure mortgages that meet its underwriting criteria. Effective July 29, its automated underwriting software will approve loans with debt-to-income ratios as high as 50 percent without “additional compensating factors.” The current limit is 45 percent.  Fannie has been approving borrowers with ratios between 45 and 50 percent if they had compensating factors, such as a down payment of least 20 percent and at least 12 months worth of “reserves” in bank and investment accounts. Its updated software will not require those compensating factors. Fannie made the decision after analyzing many years of payment history on loans between 45 and 50 percent. It said the change will increase the percentage of loans it approves, but it would not say by how much.

Millennials Really Want A McMansion Of Their Own, There's Just One Problem... A new survey from of 24,000 millennials across the country, born between 1982 and 2004, revealed some 'great news' for the residential housing market...about 80% of the millennials surveyed said they're ready to move out of mom's basement and buy a home.  There's just one catch... Apparently those same millennials either have no idea how much a home costs in their respective cities and/or are really bad at math.  As evidence, the following table from Apartment List illustrates the hilarious gap between what millennials think a home down payment in their area should be and what it actually is. Not surprisingly, the largest gaps between millennial math and reality came from the most expensive cities like L.A. and San Francisco where down payment expectations were off by a modest 50-60%.Oddly enough, millennials in Las Vegas seemed to have bucked the bad math trend plaguing their generation...maybe all the gambling is actually good for something.

Wolf Richter: Apartment Rents Drop as Commercial Real Estate Sours -- After seven dizzying boom years, commercial real estate prices peaked in December 2016 and have since turned south. These values are collateral for nearly $4 trillion in loans, a good chunk from smaller banks. When the last bubble imploded after September 2007, prices plunged nearly 40%. The Fed has been pointing at the risks the new CRE price bubble poses for the banks. Among the sub-sectors, prices of apartment buildings, according to Green Street’s Property Price Index, were down 3% in May year-over-year. And transaction volume of apartment buildings has plunged. Real Capital Analytics put the “story for the apartment sector” this way:Activity in this sector, which was the largest and most liquid investment market for most of 2015 and 2016, declined in May and was lower than activity in the office sector. For the year to date, transaction volume for apartments is down 25% year-over-year. There is another side to this equation – the most important: rents. Because they pay for the whole construct, including the loans. According to Zumper’s National Rent Report for June, rents in multifamily apartment buildings (single-family houses for rent are not included) spiraled into a surprising counter-seasonal drop in June.“Summer is peak rental season, meaning it’s usually a difficult and expensive time to look for a new apartment,” said Zumper co-founder Taylor Glass-Moore. “However, renters this year are in luck, as median rents are dropping for both one and two bedrooms nationally.”The chart below shows the monthly percentage change in median asking rents since June 2016. Note the seasonal surge in early spring – and then the sudden drop in June. That’s when the median asking rent, instead of rising, dropped 1.7% for one-bedroom apartments (blue line, $1,149) and 1.8% for two-bedroom apartments (red line, $1,367) — both where they’d been in June 2016.

MBA: Mortgage Applications Increase in Latest Weekly Survey --From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey: Mortgage applications increased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 30, 2017.
... The Refinance Index decreased 0.4 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 6 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to its highest level since May 2017, 4.20 percent, from 4.13 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans

Americans Who Can’t Afford Their Homes Up 146 Percent   - Over 38 million American households can't afford their housing, an increase of 146 percent in the past 16 years, according to a recent Harvard housing report. Under federal guidelines, households that spend more than 30 percent of their income on housing costs are considered "cost burdened" and will have difficulty affording basic necessities like food, clothing, transportation and medical care.  But the number of Americans struggling with their housing costs has risen from almost 16 million in 2001 to 38 million in 2015, according to the Census data crunched in the report. That's more than double.  And despite the overall economic recovery, it's only a small improvement from 2014, going down by about 900,000 households. When people can't safely afford to pay their mortgages and rent, it isn't just a problem for those with a lower income or people who bit off more house than they can chew.  Housing unaffordability also drags down GDP, slowing down overall economic growth for everyone, said Dan McCue, senior research associate at the Joint Center for Housing Studies at Harvard University, which publishes the annual State of the Nation's Housing report. "It forces them to constrict spending on other items, which would reduce spending on other parts of the economy. They would buy less, save less, reduce savings," said McCue.

Construction Spending unchanged in May --Earlier today, the Census Bureau reported that overall construction spending was unchanged in May: Construction spending during May 2017 was estimated at a seasonally adjusted annual rate of $1,230.1 billion, nearly the same as the revised April estimate of $1,230.4 billion. The May figure is 4.5 percent above the May 2016 estimate of $1,177.0 billion.   Private spending decreased and public spending increased in May: Spending on private construction was at a seasonally adjusted annual rate of $943.2 billion, 0.6 percent below the revised April estimate of $949.3 billion. ... In May, the estimated seasonally adjusted annual rate of public construction spending was $286.9 billion, 2.1 percent above the revised April estimate of $281.0 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 increasing, and is still 25% below the bubble peak.Non-residential spending is now 5% above the previous peak in January 2008 (nominal dollars).Public construction spending is now 12% below the peak in March 2009, and 9% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 11%. Non-residential spending is up slightly year-over-year. Public spending is down slightly year-over-year. This was below the consensus forecast of a 0.5% increase for May, however spending for previous months were revised up.

Office Vacancy Rate and Office Investment --Last week Reis reported the office vacancy rate was unchanged at 16.0% in Q2, from 16.0% in Q1. A key question is whether office investment will increase further (as a percent of GDP). The following graph shows the office vacancy rate and office investment as a percent of GDP. Note: Office investment also includes improvements.  Here are some comments from Reis Economist Barbara Byrne Denham on Q2: Continuing its lackluster pace, the Office market recorded the lowest quarterly net absorption in three years as the vacancy rate remained flat at 16.0%. One year ago, the vacancy rate was 16.1%. In the last expansion, the U.S. vacancy rate had fallen from a high of 17.0% in 2003 to a low of 12.5% in 2007. In the current expansion that is now seven quarters longer than the previous expansion, the vacancy rate has fallen from a high of 17.6% to only 16.0% as tenants have leased far fewer square feet per added employee than in past cycles.  Overall office employment growth for U.S. metro areas in 2017 has grown at a slightly slower but still healthy rate of 2.0%. Thus, we expect occupancy growth to remain positive in 2017. We expect stronger construction in 2017 than in 2016 which means that the vacancy rate could continue to stay flat as occupancy grows at or near the same pace as new completions just as it has over the last two years. This has kept rent growth low and should continue to do so this year and next. This graph shows the office vacancy rate starting in 1980 (prior to 1999 the data is annual).  Office investment has been increasing, and is now above the levels of previous slow periods.  However the vacancy rate is still very high, suggesting office investment will not increase significantly going forward.

Hotels: Hotel Occupancy down Year-over-Year  - From STR: US hotel results for week ending 24 June The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 18-24 June 2017, according to data from STR.
In comparison with the week of 19-25 June 2016, the industry recorded the following:
• Occupancy: -1.2% to 75.8%
• Average daily rate (ADR): +1.1% to US$129.73
• Revenue per available room (RevPAR): -0.1% to US$98.31
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Consumer Delinquencies Up in First Quarter -- Delinquencies in both open- and closed-end loans rose in the first quarter of 2017, according to the ABA Consumer Credit Delinquency Bulletin released today. The rise in closed-end delinquencies was driven by an uptick in late payments on auto loans, the report noted. The composite ratio, which tracks delinquencies in the closed-end installment loan categories, rose 5 basis points to 1.56 percent of all accounts, but remained well below the 15-year average of 2.17 percent.Delinquencies in indirect auto loans rose 8 basis points to 1.83 percent of all accounts, while direct auto lending delinquencies increased by 9 points to 1.03 percent of all accounts. Both remained well beneath 15-year averages, however.In the home-related category lines tracked, home equity line of credit delinquencies and home equity loan delinquencies rose to 1.11 percent and 2.59 percent, respectively. Property improvement loan delinquencies held steady at 0.98 percent of all accounts. Meanwhile, bank card delinquencies rose 5 basis points to 2.74 percent of all accounts.“Eight years into the economic recovery, it was inevitable that we’d start to see delinquencies edge up from their extremely low levels,” said ABA chief economist James Chessen. “Even in a strong economy with good job growth, there are always people living paycheck to paycheck. Any small bump in the road can be enough to cause them to miss a payment or two on their loan. The good news is that most consumers have been careful to manage their debt levels to ensure they can withstand those small setbacks and meet their obligations.”

What's Going On With US Consumers: Store Traffic Plunges 8% Into July 4th Weekend ---First it was auto the auto parts suppliers getting hammered after O'Reilly Auto announced unexpectedly poor results (duly blamed on "mild weather" and weaker than expected Hispanic spending) and tumbling then most in 5 years, and then it was the retail REITs turn, after channel checks at Prodco Retail Traffic Analytics have revealed that the US consumer continued to hibernate into the July 4th weekend with North American store traffic 8.1% lower in the week leading up to the July 4 holiday weekend, a steeper drop than the year-to-date trend of down "only" 6.6%. In the week ending July 1, with footfall at luxury retailers down 9.7%, and 8.3% weaker at apparel stores, Bloomberg reported.  The justifications for the abysmal results were legion: retail 2Q sales results may be impaired by weak traffic, as consumers still prefer digital, and they swap shopping for travel, dining out, or outdoor recreation. Shopping less in-store continues to hurt retailers' ability to prompt unplanned purchases.The companies impacted the most included retailers such as Abercrombie & Fitch, Macy's, J.C. Penney, Tailored Brands and Nordstrom reported declines in traffic and same-store sales. And since they're among the tenants of REITs Kimco and General Growth, the the S&P 1500 retail REITs index fell as much as 2.8%, the most intraday in two months, with all 24 members declining:  Based on the above, it appears that 2Q retail sales will once again be hurt by overall weak spending even as Amazon continues to wreak havoc among the traditional retail sector. Abercrombie & Fitch, Macy’s, J.C. Penney, Tailored Brands and Nordstrom all reported declines in traffic and same-store sales. And while many would be first to blame the (near) monopolistic dominance of Amazon in the online retail space, reading between the lines confirms that US households are aggressively shrinking their overall spending basket, as store checks by Retail Metrics throughout the month found continued soft traffic, although the May retail deterioration appears to have stabilized at a low level. This, despite elevated promotional levels at both specialty apparel retailers, and department stores,

Malls Swap Retailers For Gyms And Restaurants In Last-Ditch Bid For Survival --With a record 8,640 retail stores expected to close in 2017, American malls are desperate to draw in customers as America’s retail apocalypse leaves them littered with empty store fronts. Now, some are experimenting with a model that worked for some movie theaters: Invest in restaurants and popular amenities like rock-climbing walls to sell customers a better shopping "experience." To wit, Bloomberg spoke with the owner of the Newgate Mall, which plans to pour $500,000 into overhauling the outdated food court in a bid to lure restaurateurs and hungry shoppers. Rent payments from eateries are never going to recoup the renovation costs, but for landlord Time Equities Inc., that’s not the point.“The food hall is part of an effort to breathe new life into the entire 718,000-square-foot (67,000-square-meter) center and increase foot traffic, according to Ami Ziff, director of national retail at New York-based Time Equities. The companies are turning to everything from restaurants and bars to mini-golf courses and rock-climbing gyms to draw in customers who appear more interested in being entertained during a trip to the mall than they are in buying clothes and electronics. The new tenants will pay higher rents than struggling chains such as Macy’s and Sears, and hopefully attract more traffic for retailers at the property, his hasn’t been done before on a broad scale.”  Malls expanded square-footage rapidly during the 2000s, creating a bubble of retail space. Thanks to Amazon and the rise of e-commerce, that bubble has now burt. And for many malls, time is quickly running out. One Credit Suisse analyst estimates that a quarter of American malls will close over the next five years.

Dead Mall Stalking: One Hedge Fund Manager's Tour Across Middle-America - Part 1 --For the past few years, most retailers have struggled. Of course, it’s easy to blame, but it is only one of many causes. At the same time, for us hedgies living in major cities with luxury malls, there is confusion about the problem itself - my mall is crowded and people are shopping. After having debated with friends endlessly on what the real root of the problem is, I decided it was time to actually go investigate. Every city has its own story and the local mall is the nexus of that story. In my mind, the only way to get real answers was a 4-day, 1,500 mile meandering road-trip through the lower mid-west, where we planned to hit as many malls and take as many meetings with facility managers and brokers as we could organize along the way. Besides, when an asset class like mall real estate is down 90% in a few years’ time, a different viewpoint can create huge upside. The overriding question was: is retail suffering because of cannibalizing store-fronts or are rising health care costs, with stagnant wage growth, what’s really cannibalizing disposable spending power in middle-America? Is shopping still America’s pastime or do we prefer food and “experiences” instead? Every industry evolves. Why hasn’t the mall changed in the past three decades - it’s still the same cinema, crappy food court and undifferentiated retailers that I knew when I was a teen—where’s the fun in that? Other countries are perfecting “shoppertainment,” why hasn’t America? In summary, what is the real issue with retail? When you scroll through there is a certain eeriness about a million square feet of empty space. However, the images don’t, in any way, prepare you for an almost-dead mall on its last gasps. As we wandered one facility with the head of leasing, we could look straight ahead at a thousand feet of almost vacant space, dimly lit from sky-lights as none of the lighting fixtures still worked—the air conditioner had long ago failed and it was 95 degrees inside this mall.

Dead Mall Stalking: One Hedge Fund Manager’s Tour Across Middle-America – Part 2 (Continued from Part 1...Malls are bearing the brunt of changes in retail, but they’re only the canary in the coal mine. Let’s start with a simple premise; commercial real estate (CRE) will change more in the next decade than it has in the past hundred years. Anyone who thinks they can fully foresee how it will evolve is lying to you. The only certainty is that highly leveraged real estate investors and lenders will be obliterated as current models evolve faster than anticipated. In the past, retail was retail, warehouse was warehouse and office was office—the same for all other CRE classes. There was some cross-over, but the main commercial real estate components stayed segmented for the most part. Now, with big box stores, the lowest hanging fruit for online shopping to knock off, going to dodo-land, there will be hundreds of millions of feet of well-located space suddenly becoming available. However, you cannot fill all of this space with the few big box retail concepts still expanding—especially as many stalwarts are themselves shrinking. As a result, a huge game of musical chairs is about to take place. Why pay $20/ft for mid-rise office space, if you can now move into an abandoned Sports Authority for $5/ft. Sure, it doesn’t come with windows, but employees like open plan space and there’s plenty of parking. Besides, with the rental savings, you can offer your staff an in-house fitness facility and cafeteria for free. Does your mega-church need a larger space? There’s probably a former Sears or Kmart that perfectly accommodates you at $3/ft. Have an assisted living facility with an expiring lease? Why not move it to an abandoned JC Penney—the geriatrics will feel right at home, as they’re the only ones still shopping there.   Go onto any real estate website and you will find out that huge plan space is nearly free. No one knows what the hell to do with it and the waves of bankruptcy in big box are just starting. As online evolves, these waves will engulf other segments of retail as well. Retail’s problems are about to become everyone’s problems in CRE. When the old Macy’s rents for $2/ft, what happens to everyone else’s rents? EXACTLY!!! What happens if a CRE owner is leveraged at 60% (currently considered conservative) and leasing at $15/ft when the old HHGregg across the street is offered for rent at $3/ft?

U.S. Light Vehicle Sales at 16.4 million annual rate in June -- Based on a preliminary estimate from WardsAuto (ex-Porsche and Volvo), light vehicle sales were at a 16.42 million SAAR in June. That is down 2% from June 2016, and down 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 16.42 million SAAR mostly from WardsAuto). This was below the consensus forecast of 16.6 million for May.  After two consecutive years of record sales, sales will be down in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967.

GM Reports Record "Channel Stuffing": Dealer Auto Inventory Highest Since June 2007-- We remind readers that when we discussed last month's disappointing monthly car sales report, which badly missed expectations showing the fifth 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 May inventories increased to 101 days (963,448 vehicles) from 100 days at the end of April and just 71 days (681,402 vehicles) in April 2016. ."  Fast forward to today when GM reported its June results which again disappointed, and were down 4.7%, more than the expected 3.4% decline (although one wouldn't know it by looking at the stock which was up as much as 3%). GM sales were dragged by most brands: Chevy -6.4%, GMC -3.6%, Buick +16.4%, Cadillac -11.8%. But that's not what caught our attention: a bigger problem is what GM revealed in its deliveries report which disclosed a whopping 980,454 units in dealer inventory at the end of June, up nearly 17k from the past month, and representing 105 days of supply, up from an already red-flag raising 101 in May. As Buntkley notes, "GM's inventory has officially hit a 10-year high. 980,454 units in stock (a 105-day supply) as of June 30, the most since June 2007."

We're On The Fast Track To 'Carmageddon - David Stockman - Back in the 1950s when GM had 50% of the auto market they always said that, “As General Motors goes, so goes the nation.”That was obviously a tribute to GM’s economic muscle and its role as the driver of growth and rising living standards in post-war America’s booming economy. Those days are long gone for both GM and the nation. GM’s drastically reduced 20% market share of U.S. light vehicle sales in June was still an economic harbinger, albeit of a different sort.GM offered a record $4,361 of cash incentives during June. That was up 7% from last year and represented 12% of its average selling price of $35,650 per vehicle, also a record. But what it had to show for this muscular marketing effort was a 5% decline in year-over-year sales and soaring inventories. The latter was up 46% from last June.My purpose is not to lament GM’s ragged estate, but to note that it — along with the entire auto industry — has become a ward of the Fed’s debt-fueled false prosperity. The June auto sales reports make that absolutely clear.In a word, consumers spent the month “renting” new rides on more favorable terms than ever before. But that couldn’t stop the slide of vehicle “sales” from its 2016 peak. In fact, June represented the 6th straight month of year-over-year decline. And the fall-off was nearly universal — with FiatChrysler down 7.4%, Ford and GM off about 5% and Hyundai down by 19.3%.The evident rollover of U.S. auto sales is a very big deal because the exuberant auto rebound from the Great Recession lows during the last six years has been a major contributor to the weak recovery of overall GDP.In fact, overall industrial production is actually no higher today than it was in the fall of 2007. That means there has been zero growth in the aggregate industrial economy for a full decade.

Houses, cars, and manufacturing Oh My!: We got contrasting data showing weakness and strength on Monday, that on balance nudges my outlook slightly darker. The two big consumer durables are houses and cars. In view of the last few months' slowdown in housing permits and starts, I have already - at least temporarily - downgraded my housing outlook to negative. June's motor vehicle sales (red in the graph below), at an annualized rate of 16.4 million, were the lowest in 2 1/2 years: Although it would take a number under 16.0 million for me to be concerned about any recession in the near future, it is enough for me to score vehicle sales as negative, along with housing permits (blue in the graph above). If the two big consumer purchases are now negatives, on the producer side of the ledger manufacturing continues to get a positive boost, via June's strong ISM manufacturing number. Here is the data, via, since the beginning of the Millennium: The new orders reading was particularly impressive. The ISM manufacturing data goes all the way back 70 years to the late 1940s. Here it is in roughly 30 year increments since then: With the sole exception of the Arab oil embargo of 1974, there has simply never been a recession without the ISM manufacturing reading falling below 50 (really below 48.5) first. Since 1982, typically ISM manufacturing has been under 50 for at least 6 months before the onset of a recession.

Qatar Airways set to start buying shares in American Airlines | Reuters: Qatar Airways is to press on with plans to build a stake of up to 4.75 percent in American Airlines in the near future, despite the "categorical" opposition of the U.S. company's management, Qatar Chief Executive Akbar al-Baker said on Thursday. The state-owned carrier notified American Airlines last month that it was interested in buying up to 10 percent of its shares but would not exceed 4.75 percent without the approval of American's board. "We will be able to start buying shares in the open market soon, depending of course on what is the share value," al Baker told reporters in Dublin, where he was launching a new Qatar Airways route. The share purchases will start as soon as Qatar receives regulatory approval, he said. However, American said in a regulatory filing dated June 22 that company rules prohibit anyone "from acquiring 4.75 percent or more" of the company's shares in issue without prior board approval. Shares in American were up 0.5 percent at $51.53 at 1342 GMT on Thursday, valuing the company at over $25 billion. The move by Qatar Airways would expand its investments to North America at a time when Qatar is embroiled in the region's worst diplomatic crisis in years and is locked in an airspace rights row with three other Gulf states.

Trade Deficit at $46.5 Billion in May -- From the Department of Commerce reportedThe 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 $46.5 billion in May, down $1.1 billion from $47.6 billion in April, revised. May exports were $192.0 billion, $0.9 billion more than April exports. May imports were $238.5 billion, $0.2 billion less than April imports. Imports decreased and exports increased in May. Exports are 16% above the pre-recession peak and up 5% compared to May 2016; imports are 3% above the pre-recession peak, and up 7% compared to May 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 $45.03 in May, down from $45.40 in April, and up from $34.19 in May 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 $31.6 billion in May, from $29.0 billion in May 2016.

U.S. Trade Balance Improves In May As Deficit With China, Europe Shrinks --Coming in largely as expected, the U.S. monthly international trade deficit decreased in May 2017 from an unrevised $47.6 billion in April (revised) to $46.5 billion in May, fractionaly worse than consensus expectations of $46.3 billion, as exports increased and imports decreased. According to the BEA, the goods deficit decreased $0.9 billion in May to $67.5 billion. The services surplus increased $0.2 billion in May to $21.0 billion. The most notably item about today's release is that the deficit with both the EU and China, the two largest trading partners, shrank by $2.6BN and $2.0BN respectively. Exports of goods and services increased $0.9 billion, or 0.4% percent, in May to $192.0 billion. Exports of goods increased $0.2 billion and exports of services increased $0.6 billion.

  • The increase in exports of goods mostly reflected increasesin consumer goods ($0.9 billion) and in automotive vehicles, parts, and engines($0.6 billion). A decrease in foods, feeds, and beverages($0.7 billion) partly offset the increases.
  • The increase in exports of services mostly reflectedincreases in travel (for all purposes including education) ($0.3 billion) and in financial services($0.2 billion).

Imports of goods and services decreased $0.2 billion, or 0.1%percent, in May to $238.5 billion. Imports of goods decreased $0.6 billion and imports of services increased $0.4 billion.

  • The decrease in imports of goods mostly reflected decreasesin consumer goods ($1.5 billion) and in automotive vehicles, parts, and engines($0.7 billion). An increase in capital goods ($1.3 billion) partly offset the decreases.
  • The increase in imports of services mostly reflected an increase in travel (for all purposes including education)($0.2 billion).

Broken down geographically, the May figures show surpluses, in billions of dollars, with South and Central America ($2.4), Hong Kong ($2.3), Singapore ($0.8), Brazil ($0.8), and United Kingdom ($0.7). Deficits were recorded with China ($30.1), European Union ($10.7), Mexico ($6.8), Japan ($6.4), Germany ($4.7), Italy ($2.4), Canada ($2.2), India ($2.0), Taiwan ($1.7), France ($1.7), OPEC ($1.1), South Korea ($0.8), and Saudi Arabia ($0.2).

US factory orders fall; core capital goods orders revised up - New orders for U.S.-made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8 percent, the Commerce Department said on Wednesday after a revised 0.3 percent decline in April. It was the second straight monthly decrease in orders. Economists had forecast factory orders falling 0.5 percent in May after a previously reported 0.2 percent drop in April. Factory orders were up 4.8 percent from a year ago. Manufacturing, which accounts for about 12 percent of the U.S. economy, is losing momentum after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil and gas drilling equipment. Activity is slowing against the backdrop of a moderation in oil prices and declining motor vehicle sales. Motor vehicle manufacturers reported on Monday that auto sales fell in June for a fourth straight month, leading to a further increase in inventories, which could weigh on vehicle production. Wednesday's report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft - seen as a measure of business spending plans - rising 0.2 percent instead of slipping 0.2 percent as reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, nudged up 0.1 percent instead of the previously reported 0.2 percent decrease. Moderate capital expenditure comes despite relatively strong business confidence. A survey this week showed a measure of factory activity rising to a near three-year high in June. In May, orders for machinery jumped 1.1 percent. Mining, oilfield and gas field machinery orders surged 8.5 percent. 

ISM Manufacturing index increased to 57.8 in June - The ISM manufacturing index indicated expansion in June. The PMI was at 57.8% in June, up from 54.9% in May. The employment index was at 57.2%, up from 53.5% last month, and the new orders index was at 63.5%, up from 59.5%. From the Institute for Supply Management: June 2017 Manufacturing ISM® Report On Business®  "The June PMI® registered 57.8 percent, an increase of 2.9 percentage points from the May reading of 54.9 percent. The New Orders Index registered 63.5 percent, an increase of 4 percentage points from the May reading of 59.5 percent. The Production Index registered 62.4 percent, a 5.3 percentage point increase compared to the May reading of 57.1 percent. The Employment Index registered 57.2 percent, an increase of 3.7 percentage points from the May reading of 53.5 percent. The Supplier Deliveries index registered 57 percent, a 3.9 percentage point increase from the May reading of 53.1 percent. The Inventories Index registered 49 percent, a decrease of 2.5 percentage points from the May reading of 51.5 percent. The Prices Index registered 55 percent in June, a decrease of 5.5 percentage points from the May reading of 60.5 percent, indicating higher raw materials’ prices for the 16th consecutive month, but at a slower rate of increase in June compared with May. Comments from the panel generally reflect expanding business conditions; with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace."  Here is a long term graph of the ISM manufacturing index.This was above expectations of 55.1%, and suggests manufacturing expanded at a faster pace in June than in May. A strong report.

Markit Manufacturing PMI: Growth Weakens in June -- The June US Manufacturing Purchasing Managers' Index conducted by Markit came in at 52.0, down from the 52.7 final May figure. Today's headline number was slightly below the forecast of 52.1. 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:June data pointed to a relatively subdued month for the U.S. manufacturing sector, with output, new order and employment growth all slowing since May. At the same time, survey respondents signalled resilient confidence towards the year ahead outlook, with optimism up to its strongest level since February. Meanwhile, cost pressures were the weakest recorded for 15 months, which resulted in the slowest pace of factory gate price inflation since late-2016.The seasonally adjusted IHS Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) registered 52.0 in June, down from 52.7 during May, to signal the least marked improvement in overall business conditions since September 2016. Slower rates of output and new business growth were the main factors weighing on the headline PMI in June, which more than offset a stronger contribution from the stocks of purchases component. [Press Release]  Here is a snapshot of the series since mid-2012.

US Manufacturing Schizophrenia Continues - Best ISM Since Aug 2014, Worst PMI Since Dec 2016 --- US Manufacturing stumbled to its lowest since Dec 2016 according to the latest 'soft' survey from Markit, as respondents reported a "disappointing end to the second quarter,with few signs of growth picking up any time soon."  However, if ISM's seasonal adjustments are listened to, US Manufacturing just surged to its highest since Aug 2014... you decide. Under the covers of the ISM data, everything is awesome...Which is an oddly divergent picture from the one painted by Markit respondents... Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“Manufacturers reported a disappointing end to the second quarter, with few signs of growth picking up any time soon.“The PMI has been sliding lower since the peak seen in January and the June reading points to a stagnation – at best – in the official manufacturing output data.“The survey’s employment index meanwhile suggests that factories will make little or no contribution to non-farm payroll growth in June.“Forward looking indicators – notably a further slowdown in inflows of new business to a nine-month low and a sharp drop in the new orders to inventory ratio – suggest that the risks are weighted to the downside for coming months.“Any good news was saved for inflation, with price pressures easing substantially in June on the back of waning global commodity prices.” It's probably transitory though...

ISM Non-Manufacturing Index increased to 57.4% in June --The June ISM Non-manufacturing index was at 57.4%, up from 56.9% in May. The employment index decreased in June to 55.8%, from 57.8%. Note: Above 50 indicates expansion, below 50 contraction.  From the Institute for Supply Management: June 2017 Non-Manufacturing ISM Report On Business® "The NMI® registered 57.4 percent, which is 0.5 percentage point higher than the May reading of 56.9 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index increased to 60.8 percent, 0.1 percentage point higher than the May reading of 60.7 percent, reflecting growth for the 95th consecutive month, at a slightly faster rate in June. The New Orders Index registered 60.5 percent, 2.8 percentage points higher than the reading of 57.7 percent in May. The Employment Index decreased 2 percentage points in June to 55.8 percent from the May reading of 57.8 percent. The Prices Index increased 2.9 percentage points from the May reading of 49.2 percent to 52.1 percent, indicating prices increased in June after decreasing in May. According to the NMI®, 16 non-manufacturing industries reported growth. The non-manufacturing sector continued to reflect strength for the month of June. The majority of respondents’ comments are positive about business conditions and the overall economy." This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. This suggests slightly faster expansion in June than in May.

Markit Services PMI: Strongest Business Activity Expansion Since January - The June US Services Purchasing Managers' Index conducted by Markit came in at 54.2 percent, up 0.6 percent from the May estimate. The consensus was for 53.0 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.Here is the opening from the latest press release:Business activity in the US service sector increased at the fastest pace since January in June, according to the latest survey data. Meanwhile, accelerations in new order and employment growth supported increased optimism in the sector. On the price front, input price inflation was the fastest since June 2015, while output charges rose at the strongest pace in the current 16-month sequence of inflation.The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.2 in June, up from 53.6 in May. This signalled a third month of accelerated growth in business activity among US service providers. Panellists linked growth to increased new orders and strong client demand. Overall, activity during the second quarter expanded at a solid pace that was only fractionally softer than that seen in the first quarter. [Press Release] Here is a snapshot of the series since mid-2012.

Services Economy Rebounds But Stagflation Looms As Inventories Spike --Following the shizophrenic picture of Manufacturing in 'Murica that we got earlier in the week, this morning's Services surveys show a modest and consistent rise for Markit's PMI (strongest since January with input prices soaring at the fastest pace in 2 years, and new orders at 5-month highs), and ISM's (employment down as new orders rise). A reminder of the divergence between ISM and Markit's view of Manufacturing... But both Markit and ISM saw modest gains in the Services sector... ISM Breakdown shows weakness in employment as new orders rise

  • Business activity rose to 60.8 vs 60.7 prior month
  • New orders rose to 60.5 vs 57.7
  • Employment fell to 55.8 vs 57.8
  • Supplier deliveries rose to 52.5 vs 51.5
  • Inventory change rose to 57.5 vs 54.0
  • Prices paid rose to 52.1 vs 49.2
  • Backlog of orders fell to 52.5 vs 57
  • New export orders rose to 55.0 vs 54.5
  • Imports rose to 51.0 vs 48.5
  • Inventory sentiment fell to 62.0 vs 63.0

Notably, while New Orders rose, we see that only 33% of respondents said new orders had improved (the lowest since January)...

Weekly Initial Unemployment Claims increase to 248,000 - The DOL reported: In the week ending July 1, the advance figure for seasonally adjusted initial claims was 248,000, an increase of 4,000 from the previous week's unrevised level of 244,000. The 4-week moving average was 243,000, an increase of 750 from the previous week's unrevised average of 242,250.  The previous week was unrevised.  The following graph shows the 4-week moving average of weekly claims since 1971.

Planned job cuts total 31,105 in June: Challenger report: The number of planned layoffs at U.S. firms fell in June to its lowest level of the year as employers opted to hold onto existing jobs in a tight labor market where skilled laborers are harder to find, a report released on Thursday showed. U.S. companies announced 31,105 planned job cuts in June, a 6.0 percent decline from 33,092 in May, according to outplacement consultancy firm Challenger, Gray & Christmas Inc. The previous month's figure was downwardly revised from 51,692 after Ford Motor Co reported it would cut 1,400 workers, not 20,000, as initially reported. Overall, June's job cuts were down 19.3 percent from a year earlier, when 38,536 layoffs were announced in June 2016. "Some companies are not making their layoffs this year, which they might have done if the labor pool wasn't so stretched, especially for skilled labor," John Challenger, chief executive officer of Challenger, Gray and Christmas, told Reuters. With the unemployment rate at 4.3 percent, its lowest since May 2001, employers are having a harder time finding the talent they need so they keep existing workers, Challenger said. The slowdown in layoff activity in June is reflected in the year-to-date totals as well, with the number of planned workforce reductions falling by 28 percent to 227,000 in the first six months of 2017 from more than 313,000 in the first half of 2016.

ADP: Private Employment increased 158,000 in June  --From ADP:Private sector employment increased by 158,000 jobs from May to June according to the June 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. “Despite a slight moderation in the month of June, the labor market remains strong,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “For the month of June, jobs were primarily created in the service-providing sector.”Mark Zandi, chief economist of Moody’s Analytics, said, “The job market continues to power forward. Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000. At this pace, which is double the rate of labor force growth, the tight labor market will continue getting tighter.”  This was below the consensus forecast for 178,000 private sector jobs added in the ADP report. 

A Closer Look at This Morning's ADP Employment Report – dshort - In this morning's ADP employment report we got the June estimate of 158K new nonfarm private employment jobs from ADP, a decrease over May's 230K, which was a downward revision of 23K. 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.

June Employment Report: 222,000 Jobs, 4.4% Unemployment Rate --From the BLS: Total nonfarm payroll employment increased by 222,000 in June, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, social assistance, financial activities, and mining.... The change in total nonfarm payroll employment for April was revised up from +174,000 to +207,000, and the change for May was revised up from +138,000 to +152,000. With these revisions, employment gains in April and May combined were 47,000 more than previously reported....In June, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.25. 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 222 thousand in June (private payrolls increased 187 thousand).  Payrolls for April and May were revised up by a combined 47 thousand. This graph shows the year-over-year change in total non-farm employment since 1968.In June the year-over-year change was 2.24 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 increased in June to 62.8%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.  The Employment-Population ratio increased to 60.1% (black line).The fourth graph shows the unemployment rate. The unemployment rate increased in June to 4.4%.   This was above expectations of 170,000 jobs, and the previous two months were revised up.  A solid report.

US Job Growth Rebounds In June, But 1-Year Trend Eases - US companies added 187,000 workers to payrolls in June, a moderate improvement over the upwardly revised 159,000 increase in the previous month, the Labor Department reports. That’s a healthy gain that suggests the economy overall remains on a positive track for the near term. But the year-over-year trend continues to point to softer growth generally for the labor market – a sign that economic activity may be vulnerable to deceleration in the second half of the year. Today’s numbers, on balance, however, offer a dose of encouragement. Most sectors of the labor market posted firmer gains last month, including the cyclically sensitive goods-producing slice of the economy. “We’re seeing pretty steady, solid hiring,” Michael Feroli, chief US economist at JPMorgan Chase, tells Bloomberg. “We’re just not seeing much acceleration in wages.” Another issue to monitor in the labor market is the ongoing deceleration in the annual growth trend. Private-sector employment increased 1.72% in the year through June, down from 1.79% in the previous month. The latest year-over-year pace marks the fourth-slowest gain in over two years, and well below the post-recession peak of 2.57% in February 2015. The good news is that the downshift in the employment growth trend remains gradual. At some point, if the slowdown continues, the slide will create a new headwind for the US economy. But using recent history as a guide implies that a relatively healthy rate of job growth will continue to hold for the next year or two, perhaps a bit longer, depending on how (or if?) the deceleration unfolds.  Nonetheless, today’s data suggests that there’s still a low probability that economic growth will soon accelerate in meaningful, sustained degree. Wall Street economists are projecting that second-quarter GDP growth will pick up to respectable 2.8% (seasonally adjusted annual rate) after Q1’s weak 1.4% gain, according to survey data from CNBC (as of July 6). Today’s employment report more or less aligns with that estimate. Overall, the case is still encouraging for expecting that moderate growth will continue for the foreseeable future. Recession risk is still low and the labor market’s forward momentum points to more of the same in the months ahead.

June Payrolls Rise 222K, Beat Expectations, But Hourly Earnings Disappoint -- While today's payrolls report will hardly have much of an impact on Fed policy as explained previously, moments ago the BLS reported that in June the US added 222K jobs (making a mockery of the ADP print again), beating expectations of 179K, with the May payrolls number revised from 138K to 152K and April revised from 174K to 207K, for a combined revision of the past two months of +47,000 more than previously reported.Meanwhile, the unemployment rate rose from 4.3% to 4.4%, and above the expectation of an unchanged print. However, the fly in the ointment is that despite the better than expected job growth, wage growth once again disappointed, with average hourly earnings rising only 0.2%, missing expectations of a 0.3% increase, while the May earnings number  was revised lower from 0.2% to 0.1%.

June Jobs Report – The Numbers -- Hiring accelerated in June and the unemployment rate rose as more Americans were drawn into the labor force, the Labor Department said Friday. Here are five key numbers from the jobs report.  The economy added a seasonally adjusted 222,000 jobs in June, the largest increase since February, and stronger than what economists expected. Meanwhile, revisions showed job growth was better in April and May than previously thought. The economy has created an average of 194,000 jobs over the past three months. That compares favorably to a monthly average of 166,000 during the first quarter, and a pace of 187,000 for all of last year. The unemployment rate rose last month by a tenth of a percentage point to 4.4%, edging up from the lowest level since May 2001. The higher unemployment rate reflects more Americans entering the labor force in June, but not all of them finding jobs. Federal Reserve officials project the jobless rate will average 4.5% to 4.8% over the long run. The current level of unemployment suggests the economy is at or very near to full employment, or the point at which nearly all job seekers have found work. The share of Americans holding jobs or actively looking for them rose one-tenth of a percentage point to 62.8% in June. The figure is little changed from 62.7% a year earlier. The labor-force participation rate is still hovering near four-decade lows. That largely reflects an aging population is retiring. But it could also suggest some 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 a familiar 2.5%, on average, from a year earlier. Wage growth has been stuck near that pace for about the past two years. Wage growth has been fairly consistent but hardly robust. A decade ago, before the recession began, average hourly earnings rose 3.6% from a year earlier. Many economists expect wage growth to accelerate with the unemployment rate at historically low levels. A broader measure of unemployment rose to 8.6% in June from 8.4% a month earlier. 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. During much of the expansion, the rate was relatively elevated compared with the unemployment rate, but it has settled back near historical norms. The rate averaged 8.3% the two years before the recession began.

June jobs report: great headline, but once again where are the wages?!? - HEADLINES:

  • +222,000 jobs added
  • U3 unemployment rate rose +0.1% from 4.3% to 4.4%
  • U6 underemployment rate rose +0.2% from 8.4% to 8.6%
  • Not in Labor Force, but Want a Job Now: down -130,000 from 5.561 million to 5.431 million   
  • Part time for economic reasons: up +107,000 from 5.219 million to 5.326 million
  • Employment/population ratio ages 25-54: up +0.1% from 78.4% to 78.5%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.99,  to $22.03, up +2.3% 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.)
  • Manufacturing jobs rose by +1,000 for an average of +2000 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 were unchanged for an average of +200 vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
April was revised upward by +33,000. May was also revised upward by +14,000, for a net change of +47,000.   The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly positive.
  • the average manufacturing workweek rose +9.1 hour from 40.7 hours to 40.8 hours.  This is one of the 10 components of the LEI. 
  • construction jobs increased by +16,000. YoY construction jobs are up +206,000. 
  • temporary jobs increased by +13,400.
  • the number of people unemployed for 5 weeks or less increased by +151,000 from 2,154,000 to 2,305,000.  The post-recession low was set 18 months ago at 2,095,000.
  • Overtime was unchanged at 3.3 hours.
  • Professional and business employment (generally higher- paying jobs) increased by +35,000 and is up +624,000 YoY.
  • the index of aggregate hours worked in the economy rose by 0.5 from 106.9 to 107.4 
  • the index of aggregate payrolls rose by +0.8 from 134.0 to 134.8.  
  • the alternate jobs number contained  in the more volatile household survey increased by   +190,000   jobs.  This represents an increase of 1,560,000  jobs YoY vs. 2,238,000 in the establishment survey.        
  • Government jobs rose by +35,000 .    
  • the overall employment to population ratio for all ages 16 and up rose +0.1% from  60.0% to  60.1 m/m  and is  up +0.5%  YoY.     
  • The  labor force participation rate rose +0.1%  m/m and is up +0.1% YoY from 62.7% to 62.8%.

Comment: A Solid Employment Report – McBride - The headline jobs number was above expectations, and there were combined upward revisions to the previous two months. And the unemployment increased slightly. In June, the year-over-year change was 2.24 million jobs. This is decent year-over-year job growth. Note that June has been the strongest month for job growth over the three previous years, followed by July and November. This is the 4th consecutive solid job gain in June: 304 thousand in June 2014, 206 in June 2015, 297 thousand in June 2016, and now 222 thousand in June 2017. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. 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 June. Wage growth has generally been trending up. Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle. The 25 to 54 participation rate was unchanged in June at 81.7%, and the 25 to 54 employment population ratio increase to 78.5%. The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 5.3 million, changed little in June. 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 increased in June. The number working part time for economic reasons suggests a little slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.6% in June. 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 essentially unchanged from May. 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 solid report.

Where The June Jobs Were: More Minimum Wage, Surge In Government Hiring, - Another month, another rise in minimum wage jobs such as healthcare and education, which is hardly a surprise but this time an unexpected source of hiring emerged: the government.First a quick recap of the key sectors that added jobs in June: healthcare added a total of 59,000. Of this, social assistance employment increased by 23,000 in June, and has added 115,000 jobs over the last 12 months. Employment in financial activities rose by 17,000 in June and has grown by 169,000 over the year. Securities, commodity contracts, and investments added 5,000 jobs over the month. Mining employment grew by 8,000, with most of the growth in support activities for mining (+7,000). Since a recent employment low in October 2016, mining has added 56,000 jobs. So how did June payrolls surprise so strongly to the upside? Courtesy of local government hiring, which added 35,000 jobs in June (more below). One sector that remains a bright light is professional and business services, where employment continued to trend up in June (+35,000) and has grown by 624,000 over the last 12 months. Offsetting this, however, employment in food services and drinking places also continued on an upward trend in June (+29,000). The industry has added 277,000 jobs over the year, and has been on a historic tear, with 88 consecutive months of job gains since March 2010. Below, courtesy of Southbay Research, are some of the highlights:

  • Half of Private Payroll hiring is Healthcare (+59K) and Restaurants (+29K)
  • House flipping more important than production: Real Estate Hiring (+10K) vs Manufacturing (+1K)

Local Government Hiring: +35K: June 30th is end of fiscal year for most States: Use-it-or-lose-it budgets bump up hiring.  Healthcare: At +59, this was Stronger than we modeled (+59K)

  • Healthcare surged higher as Obamacare repeal looks unlikely
  • Headline number masks generally soft payrolls
  • Supply Chain (Manufacturing + Transportation):  +3K
    • Manufacturing: +1K
    • Transportation: +2K
  • White Collar Hiring (Professional Technical + Information + Financial): +32K
    • Pro technical: 19K
    • Information: -4K
    • Financial: +17K
  • Consumer Spending (Retail + Leisure/Hospitality): +44K
    • Retail: +8K
    • Leisure/Hospitality: +36K
  • Business Expansion Still Mild
    • Temp hiring: +14K (average run-rate ttm 11K)

A visual summary of where all the jobs were in June.

 Why Some Men Don’t Work: Video Games Have Gotten Really Good - If innovations in housework helped free women to enter the labor force in the 1960s and 1970s, could innovations in leisure — like League of Legends — be taking men out of the labor force today? That’s the logic behind a new working paper released on Monday by the National Bureau of Economic Research. The paper — by the economists Erik Hurst, Mark Aguiar, Mark Bils and Kerwin Charles — argues that video games help explain why younger men are working fewer hours. That claim got a lot of attention last year when the University of Chicago published a graduation speech given by Mr. Hurst at its business school, where he discussed some of his preliminary findings. He says the paper is now ready to be read by the public. By 2015, American men 31 to 55 were working about 163 fewer hours a year than that same age group did in 2000. Men 21 to 30 were working 203 fewer hours a year. One puzzle is why the working hours for young men fell so much more than those of their older counterparts. The gap between the two groups grew by about 40 hours a year, or a full workweek on average.  Other experts have pointed to a host of reasons — globalization, technological change, the shift to service work — that employers may not be hiring young men.

Cleaning Toilets for Jesus - Trump’s “taxpayer first” budget proposal, released last month, not only guts social welfare spending, but expands work requirements for low-income recipients of aid. “If you are on food stamps and you are able bodied, we need you to go to work,” declared budget director Mick Mulvaney. Making low-income Americans work to qualify for aid has long been couched in the language of personal responsibility, dignity, and civic and moral duty. Mulvaney’s comments during the White House briefing were no exception: “There is a dignity to work,” he declared. “And there’s a necessity to work to help the country succeed.” While work requirements are widely regarded as darlings of the conservative agenda, few recognize the role that faith-based organizations have played in lending these policies ideological and practical support.  Arguably nowhere is this ideological fusion more prominent than in the faith-based — or, rather, faith-saturated — job-readiness program called Jobs for Life (JFL). Founded in 1996 in Raleigh, North Carolina, JFL is a global nonprofit organization premised on the belief that the local church, given its capacity to mobilize the cant of volunteers, is the untapped and ideal “solution” to the enduring social crises of poverty and unemployment. Through the development of “gospel-centered relationships” with the jobless poor, JFL aims to see “all people working and living for the glory of God.” An article in The Christian Science Monitor, entitled “Today’s hot new career handbook? The Bible,” lauds JFL as offering “a bit of Jeremiah for the jitters, some Noah for uplift, and Joseph for perspective.” JFL has long been regarded as a model for religious engagement and faith-based activism in the post-welfare era. In 1997, its cofounder was invited to the White House by President Clinton to help plan and promote “welfare-to-work” policies. And in 2000, it became the basis for a Texas lawsuit challenging the legality of using public funds for such an overtly sectarian organization. Judges later dismissed the lawsuit, thereby legitimizing Bush’s later faith-based initiatives.JFL has become a significant and firmly entrenched player in the landscape of job-readiness programs. By 2015, its courses were offered in over 347 cities across forty states and seven countries to nearly six thousand individuals each year, mostly in churches, community centers, homeless shelters, jails, and prisons.

"From Horrific To Catastrophic": Court Ruling Send Illinois Into Financial Abyss --First Maine, then Connecticut, and finally late on Friday, confirming the worst case outcome many had expected, Illinois entered its third straight fiscal year without a budget as Republican Governor Bruce Rauner and Democratic lawmakers failed to agree on how to compromise over the government’s chronic deficits, pushing it closer toward becoming the first junk-rated U.S. state. By the end of Friday - the last day of the fiscal year - Illinois legislators failed to enact a budget, and while negotiations continued amid some glimmers of hope and lawmakers planned to meet over the weekend, the failure marked a continuation of the historic impasse that’s left Illinois without a full-year budget since mid-2015, and which, recall, S&P warned one month ago will likely result in a downgrade of the 5th most populous US state to junk status, the first such downgrade in US history. Then came the begging according to Bloomberg, on Friday Illinois House Speaker Michael Madigan, a Democrat who controls much of the legislative agenda, pleaded with rating companies to "temporarily withhold judgment” as lawmakers negotiate. However, in a "shocking" development, just hours remaining before the midnight deadline to pass the Illinois budget, and Illinois' imminent loss of its investment grade rating, federal judge Joan Lefkow in Chicago ordered Illinois to come up with hundreds of millions of dollars it owes in Medicaid payments that state officials say the government doesn’t have, the Chicago Tribune reported. Judge Lefkow ordered the state to make $586 million in monthly payments (from the current $160 million) as well as another $2 billion toward a $3 billion backlog of payments - a $167 million increase in monthly outlays - the state owes to managed care organizations that process payments to providers. While it is no secret that as part of its collapse into the financial abyss, Illinois has accumulated $15 billion in unpaid bills, the state's Medicaid recipients had had enough, and went to court asking a judge to order the state to speed up its payments. On Friday, the court ruled in their favor. The problem, of course, is that Illinois can no more afford to pay the outstanding Medicaid bills, than it can to pay any of its $14,711,351,943.90 in overdue bills as of June 30.

Madigan’s House approves major income tax hike as Republicans break with Rauner - Chicago Tribune: he Illinois House on Sunday approved a major income tax increase as more than a dozen Republicans broke ranks with Gov. Bruce Rauner amid the intense pressure of a budget impasse that's entered its third year. The Republican governor immediately vowed to veto the measure, saying Democratic House Speaker Michael Madigan was "protecting the special interests and refusing to reform the status quo." The measure, which needed 71 votes to pass and got 72, is designed to start digging the state out of a morass left by the lengthy stalemate. Madigan, in a statement, praised the action as "a crucial step toward reaching a compromise that ends the budget crisis by passing a fully funded state budget in a bipartisan way." The tax hike now heads to the Senate, but whether there will be enough votes to send it to Rauner's desk is in question. When the Senate approved its own tax hike in late May, no Republicans voted for it and several Democrats voted against it. Senators return to the Capitol on Monday.The crucial vote in the House was the big story Sunday, though. Ultimately, pressure that had built up in districts across the state moved enough Republicans to defy the governor. With state government operating without a budget for two full years, public universities risk losing their accreditation, social service providers are closing their doors and layoffs of road construction workers are imminent. Adding to lawmakers' anxiety was a promised downgrade of the state's credit rating to junk status, which could spike the cost of borrowing at a time when the state has $15 billion in unpaid bills. Left out of the House budget package was a plan for dealing with the unpaid bills, though both sides generally agree that some amount of borrowing will be needed. 

Illinois House Approves Historic 32% Tax Increase, Governor Vows Veto --With Illinois, which on Saturday morning entered its third fiscal year without a budget, facing a catastrophic downgrade, late on Sunday evening the Illinois House approved the most controversial element of a budget package, a tax hike which will increase the income tax rate by 32% from 3.75% to 4.95%, and the corporate income tax rate from 5.25% to 7%, to try and end a historic budget impasse. The bill passed 72-45. The House also approved a $36 billion spending plan minutes later on a 81-34 vote. According to the Sun Times, it cleared an initial hurdle on Friday with 23 Republicans voting “yes.”“While no one could say this was an easy decision, it was the right decision,” House Speaker Mike Madigan said after the spending bill vote. “There is more work to be done.” Dems said they would work with Republicans on other resolution of other issues on table.The proposed tax increase will now head back to the Illinois Senate, which approved a revenue bill on May 23 with all Democratic votes as part of its “grand bargain” package. But Governor Bruce Rauner has said he’ll only support an income tax hike if it’s limited to four years and paired with a four-year property tax freeze. He’s also still seeking changes in workers’ compensation and pensions.Commenting on the just passed House bill, Rauner said he’ll veto the revenue bill. “I will veto Mike Madigan’s permanent 32% tax hike. Illinois families don’t deserve to have more of the hard-earned money taken from them when the legislature has done little to restore confidence in government or grow jobs,” Rauner said.

Illinois Tax Rate Soars 32% After Senate Overrides Governor Veto --Two days ago when we reported that the Illinois House had voted 72-45 to pass a 32% income tax hike (and a $36 billion spending plan), in an last ditch scramble to provide the state with its first budget in three years (or else suffer the first ever US downgrade to "Junk"), we said that "ultimately, the fate of Illinois' credit rating is now in the hands of Rauner, and whether and how fast his imminent veto is overriden." We got the answer on Independence Day afternoon, when just around noon, first the Senate voted to approve the House tax hike and spending bill, then shortly after, Gov. Rauner - just as he warned he would - vetoed both the income tax increase and the budget bill and budget implementation bill.... I just vetoed Speaker Madigan's 32% permanent income tax — Bruce Rauner (@GovRauner) July 4, 2017 .... only to be himself overridden moments later by the Senate, as it took the drastic measure to end a record budget impasse.The 36-18 vote in the Senate on the tax hike came after a very short debate, and two days after more than a dozen Republicans in the House broke ranks with Rauner to join Democrats to support the plan amid growing frustration.Needless to say, former PE titan, Bruce Rauner disagreed, and in his veto message to lawmakers said that "the package of legislation fails to address Illinois' fiscal and economic crisis —and in fact, makes it worse in the long run. It does not balance the budget. It does not make nearly sufficient spending reductions, does not pay down our debt and holds schools hostage to force a Chicago bailout." Rauner also noted he did not get the economic agenda items he had made a requirement to sign a tax hike into law."This budget package does not provide property tax relief to struggling families and employers. It does not provide regulatory relief to businesses to create jobs and grow the economy. It does not include real term limits on state elected officials to fix our broken political system" said Rauner, listing the issues from what he once dubbed his "turnaround agenda."

After tax hike and budget votes, Illinois avoids credit downgrade to junk for now - Chicago Tribune: llinois government's credit rating avoided a cut to junk status Monday when two key agencies said votes to raise income taxes and advance a spending plan count as progress toward ending the state's yearslong budget stalemate. They warned, though, that much was riding on a final resolution being reached in the coming days. The assessment came a day after more than a dozen Republicans broke ranks with Gov. Bruce Rauner to join House Speaker Michael Madigan's Democrats in approving a major income tax hike to help pay for local schools, universities, human services and other state programs. Despite a veto promise from the governor, Fitch Ratings said the House's action amounted to "concrete progress" toward breaking the impasse that's left Illinois awash in red ink. But the agency signaled a downgrade might not be far off if Democrats' budget push falls apart. Later Monday, Senate President John Cullerton announced that a vote on whether the plan should be sent to Rauner would have to wait another day. Attendance was lacking, as many senators had already dispersed from Springfield for the Fourth of July holiday. They could try again as early as Tuesday morning. Senate Democrats passed a tax hike proposal with 32 votes in May, but the political landscape is a little different this time around. Now, the measure would need 36 votes to advance, the same amount needed to override a Rauner veto. While there are 37 Democrats in the Senate, Cullerton said it would be "very difficult" for his party to do it on their own. The tax hike plan received Republican support in the House, but Senate GOP lawmakers haven't given a public indication they'd back it.

Chris Christie Announces New Jersey Government Shutdown, Orders State Of Emergency --Illinois, Maine, Connecticut: the end of the old fiscal year and the failure of numerous states to enter the new one with a budget, means that some of America's most populous states have seen their local governments grind to a halt overnight until some spending agreement is reached. Now we can also add New Jersey to this list.On Saturday morning, New Jersey Gov. Chris Christie declared a state of emergency in the state, and announced a partial state government shutdown as New Jersey become the latest state to enter the new fiscal year without an approved budget after the Republican governor and the Democrat-led Legislature failed to reach an agreement by the deadline at midnight Friday, CBS New York reports.WATCH: New Jersey Gov. Chris Christie announces state government shutdown amid budget impasse— CBS News (@CBSNews) July 1, 2017In a news conference Saturday morning, Christie blamed Democratic State Assembly Speaker Vincent Prieto for causing the shutdown. And, just like Illinois and Connecticut, Christie and the Democrat-led Legislature are returning to work in hopes of resolving the state's first government shutdown since 2006 and the first under Christie, before NJ is downgraded further by the rating agencies."If there's not a resolution to this today, everyone will be back tomorrow," Christie said, calling the shutdown "embarrassing and pointless." He also repeatedly referred to the government closure as "the speaker's shutdown."  Christie later announced that he would address the full legislature later at the statehouse on Saturday.

Maine and New Jersey state governments shut down by budget failures - Governors in New Jersey and Maine shut down state government after lawmakers in their states failed to reach budget deals before Friday’s midnight deadline. Republican New Jersey Gov. Chris Christie, who is in his final year of two terms running the state, called the Democratic-led legislature back to Trenton for a special session on Saturday. In Maine, Republican Gov. Paul LePage put in place a partial shutdown until Monday afternoon. “This is embarrassing and it’s pointless,” Christie said at a Saturday news conference in Trenton. “Our residents do not have access to a myriad of services that they deserve.” Under the New Jersey shutdown, only essential state employees such as state police, prison workers, and hospital employees will report to work, according to a statement from the governor’s office. The lottery, casinos and racetracks will remain open and road construction work will also continue.

How Low Can Taxes Go? Outside Washington, Republicans Find Limits - NYT - — Something strange has been happening to taxes in Republican-dominated states: They are going up.  Conservative lawmakers in Kansas, South Carolina and Tennessee have agreed to significant tax increases in recent weeks to meet demands for more revenue. They are challenging what has become an almost dogmatic belief for their party, and sharply diverging from President Trump as he pushes for what his administration has billed as the largest tax cut in at least a generation.And now some Republicans say that what has played out in these states should serve as a cautionary tale in Washington, where their party’s leaders are confronting a set of circumstances that looks strikingly similar.Republicans, with control of Congress and the White House and a base that is growing impatient for tax reform, are trying to solve a difficult math problem: paying for critical programs like infrastructure, health care and education while honoring their promise to deliver lower taxes without exploding the deficit.The debate promises to test the enduring relevance of one of the most fundamental principles of modern conservatism — supply side economics, the idea that if you cut taxes far enough, the economy will expand to the point that it generates new tax revenue.With the federal deficit growing and economic growth sputtering along in the low single digits, the Republican Party is facing questions from within over what many see as a blind faith in the theory that deep tax cuts are the shot of economic adrenaline a languid economy needs.  “Tax cuts — good. And that’s about as much thinking that goes into it,” said Chris Buskirk, a radio host and publisher of American Greatness, a conservative online journal. Now, he said, Republicans in Washington seem to be in an arms race to the lowest rates possible.“Everybody is trying to overbid each other,” Mr. Buskirk said. “How much more can we cut?” Outside Washington, Republicans are discovering there are limits.

Puerto Rico faces off with bondholders over statehood | TheHill: Puerto Rico's top elected leaders are doubling down on their pursuit of statehood, even as bondholders ask Congress and the White House to hold off until debt payments are made. Former New York Gov. George Pataki, who represents some of the island's bondholders, said he supports statehood, but only after Puerto Rico's financial woes are solved. "People may well push [statehood], but I don't think it will be credible," Pataki said. Puerto Rico’s Resident Commissioner Jenniffer González-Colón (R), who along with Gov. Ricardo Rosselló is leading the charge for statehood, said statehood and the debt issue are inseparable. "Puerto Rico's economic problem is the lack of an economic model," she said. "The territorial condition limits the island's growth opportunities." Supporters of statehood for Puerto Rico say its territorial status makes it nearly impossible for the island's economy to become self-sustaining. The territory has been losing economic ground — and borrowing beyond its means — since former President Bill Clinton Bill ClintonRepublicans ask Dems: Where's your healthcare plan? Puerto Rico faces off with bondholders over statehood Poll: Trump disapproval at 57 percent MORE signed a tax reform law in 1996. That law closed a loophole that gave tax incentives for U.S. corporations to set up subsidiaries in Puerto Rico. "By not receiving the same funds as the states, Puerto Rico has had to draw upon general obligation debt," González-Colón said. Still, Puerto Rico's officials say there's plenty of blame to go around for the territory's $72 billion in red ink. 

Is Terrorism Transforming America Into A Police State? -- For at least three decades, experts have noted the growing militarization of America’s police forces. The proliferation of Special Weapons and Tactics forces, or SWAT forces, is the most obvious example of that trend.  Small cities and even some modest-sized towns now have such heavily armed units utilizing military hardware and traveling in armored vehicles. They look—and act—far more like military combat units than anyone’s traditional conception of police. And the missions of SWAT forces have greatly expanded since their original formation. Increasingly, local authorities use them in routine matters that involve little or no danger of major violence from the targets of police action. A recent incident in Hutto, Texas, a sleepy, outlying suburb of Austin, illustrates just how dangerously promiscuous the utilization of SWAT teams has become. On June 26, local police conducted a raid to implement a search warrant on a house in a low-crime, middle-class neighborhood. The alleged crime? Police suspected that some residents of the target house were involved in gambling. Investigators were backed up by a SWAT unit with nearly a dozen officers in full combat regalia pouring out of an armored vehicle. Needless to say, the neighbors were both stunned and alarmed to see such an operation take place in their quiet community. One mother stated: “I went to my daughter’s room and looked outside their window to see if I could get a better view of what was going on, and there was a man in fatigues with a sniper rifle laying in my neighbor’s driveway.”  What was even more striking is that the police spokesman admitted to a reporter that the authorities “had no reason to believe” that the residence undergoing the search was involved in any violent activity. In other words, police were using paramilitary tactics and forces to execute a search warrant involving a nonviolent (indeed, victimless, crime) in a low-crime neighborhood. Such arrogant bullying should alarm anyone who cherishes domestic civil liberties.Unfortunately, such incidents have become all-too-common as local authorities seek new missions to justify the existence of SWAT teams and to keep the personnel alert and well trained. The expansion of SWAT units and missions is closely correlated to the existence of federal programs making surplus military hardware available at little or no cost to local police forces.

Recordings Reveal FBI Gave Man a Rifle, Urged Him to Carry Out Mass Shooting to ‘Defend Islam’ - It’s become a near-weekly occurrence. Somewhere in some state, the FBI will announce that they’ve foiled yet another terrorist plot and saved lives. However, as the data shows, the majority of these cases involve psychologically diminished patsies who’ve been entirely groomed, armed, and entrapped by FBI agents. Simply put, the FBI manufactures terror threats and then takes credit for stopping them.   A little over two years ago, Samy Mohamed Hamzeh, 25, found himself in the midst of an FBI sting.   Hamzeh was born in the U.S. but lived much of his childhood in Jordan before moving to Milwaukee when he was 19.   For four years, Hamzeh lived an entirely normal life, until one day he was contacted by people who wanted to radicalize him and give him weapons.  The group, entirely controlled by the FBI, was plotting to shoot up the Humphrey Scottish Rite Masonic Center during an event. In February of 2016, the FBI announced they had foiled a terror plot by a man who was planning to kill at least 30 people to “defend Islam.” Americans cheered, and everyone felt safer — the FBI had saved us from extremists once again.  However, that’s not how things actually happened.  For months, two corrupt FBI informants goaded Hamzeh into obtaining weapons. According to his attorneys, hundreds of hours of recorded conversations show the FBI pressed Hamzeh into getting these weapons and eventually began pushing him to carry out a mass shooting.   Despite the intense peer pressure from people pretending that they were mass murderers, Hamzeh resisted. He didn’t even want the guns. In spite of the FBI claiming Hamzeh was going to carry out a mass shooting — they were attempting to force him to do — the recordings, according to his attorneys, show he resisted and adamantly refused to ever participate in violence. As the Journal-Sentinel reports, a psychiatrist who evaluated Hamzeh in jail concluded he does not fit a profile of someone who would kill strangers and “has a strong moral code with a very prominent conscience and empathy.”  Hamzeh has now been in jail for a year and a half because the FBI tried to make him carry out a mass shooting that he didn’t want to do. And, he could be there much longer as each of the charges for the weapons — that he also did not want — carry 10 years a piece.

At least 101 shot, 15 killed during violent Fourth of July weekend in Chicago -- The city of Chicago flooded the streets with 1,000 extra police officers during the Independence Day weekend. But they could not stop an eruption of gun violence.The extra-long holiday weekend was the bloodiest in recent years. At least 101 people were shot, nearly half in the last 12 hours of July Fourth. To give you a sense of the enormity of that number, that's the amount of passengers that can fill most regional airplanes. At least 15 people were killed. To see the violence for ourselves, "CBS News: On Assignment" spent Tuesday night with Tim White, a former gang leader who now works to stop violence in the streets." We're on our way to a murder scene," White said. "We gotta turn those lights on."  We learned that just after midnight, two people were shot in one of the alleys. You could see a body on the sidewalk that police covered with a blanket. The body laid there for hours as police continued their investigation.   Just as we arrived at one crime scene over the weekend, we could hear on the police scanner there was another shooting a mile away. Because it was the Fourth of July holiday, it was hard to tell whether sounds across the city were fireworks or gunshots, but locals told us they can spot the difference because they are used to it. In one instance, we were at the scene where a man was dead from a gunshot to the head and covered by a blanket. We waited to see when the coroner's office would arrive to retrieve the body, but we had to leave -- and that was after being there for two hours possibly because of the high cases of shootings that night.

Poverty, Crime and Causality --Mike Kimel - I was bouncing around my twitter feed and landed on this tweet which in turn took me to a paper entitled Childhood family income, adolescent violent criminality and substance misuse: quasi-experimental total population study. The paper appeared in the British Journal of Psychiatry in 2014. Here’s the basic summary:

  • Background Low socioeconomic status in childhood is a well-known predictor of subsequent criminal and substance misuse behaviours but the causal mechanisms are questioned.
  • Aims: To investigate whether childhood family income predicts subsequent violent criminality and substance misuse and whether the associations are in turn explained by unobserved familial risk factors.
  • Method: Nationwide Swedish quasi-experimental, family-based study following cohorts born 1989–1993 (ntotal = 526 167, ncousins = 262 267, nsiblings = 216 424) between the ages of 15 and 21 years.
  • Results: Children of parents in the lowest income quintile experienced a seven-fold increased hazard rate (HR) of being convicted of violent criminality compared with peers in the highest quintile (HR = 6.78, 95% CI 6.23–7.38). This association was entirely accounted for by unobserved familial risk factors (HR = 0.95, 95% CI 0.44–2.03). Similar pattern of effects was found for substance misuse.
  • Conclusions:There were no associations between childhood family income and subsequent violent criminality and substance misuse once we had adjusted for unobserved familial risk factors.

K-12: ‘Tidal wave of expenses’ in looming California school budget crisis: Faced with significant salary hikes and ballooning health benefit and pensions, school districts across the state scrambled to balance their budgets at the end of the fiscal year. And the outlook for the coming years is even worse. Current and looming money problems beset school districts small and large, from tiny San Bruno Park — deemed by the state to be at risk of insolvency — to the 41-school San Jose Unified, which expects to cut 150 jobs before school reopens in August. “It’s like a tidal wave of expenses coming our way,” said San Jose Unified trustee Kimberly Meek. Across the state, districts struggled to adopt balanced budgets by June 30 for the next three years, as required by law. “Two-thirds of districts I look at have problems in the third year with deficit spending,” said Ron Bennett, CEO of School Services of California, which advises 850 of the state’s roughly 1,000 districts. About one-third see problems in the second year, and a handful are making big cuts in the first year, 2017-’18, he said. Among them is Cupertino Union, which faces a $5.6 million deficit next year — even after laying off staff and making $2.6 million in cuts this spring, CBO and co-interim Superintendent Chris Jew said.

14 Facts That Show America's Absolutely Pathetic System Of Public Education Deserves An 'F' Grade --One thing that almost everyone can agree upon is that our system of public education is broken.  We spend far more money on public education than anyone else in the world, and yet the results are depressing to say the least. Considering how much we are putting into education, we should be producing the best students on the entire planet, but it just isn’t happening.  Personally, I attended public schools from kindergarten all the way up through law school, and the quality of education that I received was extremely poor.  Even on the collegiate level, most of the courses were so “dumbed down” that even the family dog could have passed them.  And of course millions of other people all over the country would say the same sorts of things about their own educations.  Many refer to what is happening to our society as “the dumbing down of America”, and if we don’t get things fixed the United States is on course to become a second class nation.If you believe that I am exaggerating, I would like you to consider the following numbers.  The following are 14 facts that prove that America’s absolutely pathetic system of education deserves an “F” grade…

  • #1 Somewhere around 50 million students attend public schools in America today.
  • #2 Education is the most expensive item in 41 different state budgets.
  • #3 The latest PISA tests show that U.S. students are below average compared to the rest of the industrialized world…
  • #4 A report from the Educational Testing Service found that American Millennials are way behind Millennials in most other industrialized nations…
  • #5 According to one very disturbing study, fewer than half of all high school graduates“are able to proficiently read or complete math problems”.
  • #6 According to U.S. News & World Report, “inflation-adjusted spending per student in American public schools has increased by 663 percent.”
  • #7 In 2015, the percentage of students in our public schools coming from low income homescrossed the 50 percent mark.  That was the first time that had happened in at least 50 years.
  • #8 One study found that a whopping 76 percent of all high school graduates “were not adequately prepared academically for first-year college courses.”
  • #9 The following are five numbers which show how far the quality of college education has fallen in the United States…
    • -“After two years in college, 45% of students showed no significant gains in learning; after four years, 36% showed little change.”
    • -“Students also spent 50% less time studying compared with students a few decades ago.”
    • -“35% of students report spending five or fewer hours per week studying alone.”
    • -“50% said they never took a class in a typical semester where they wrote more than 20 pages.”
    • -“32% never took a course in a typical semester where they read more than 40 pages per week.”
  • #10 Just 36 percent of all full-time college students receive a bachelor’s degree within four years, and just 77 percent of all full-time college students have earned a bachelor’s degree by the end of six years.
  • #11 One survey found that nearly 10 percent of our college graduates believe that Judge Judy is on the Supreme Court…
  • #12 Another survey found that 29 percent of all U.S. adults cannot name the Vice-President.
  • #13 And yet another survey found that only 43 percent of all U.S. high school students knew that the Civil War was fought some time between the years of 1850 and 1900.
  • #14 Perhaps worst of all, 75 percent of our young adults cannot find Israel on a map of the Middle East.

New Florida law lets any resident challenge what’s taught in science classes - Any resident in Florida can now challenge what kids learn in public schools, thanks to a new law that science education advocates worry will make it harder to teach evolution and climate change. The legislation, which was signed by Gov. Rick Scott (R) last week and went into effect Saturday, requires school boards to hire an "unbiased hearing officer" who will handle complaints about instructional materials, such as movies, textbooks and novels, that are used in local schools. Any parent or county resident can file a complaint, regardless of whether they have a student in the school system. If the hearing officer deems the challenge justified, he or she can require schools to remove the material in question. Proponents of the new law say it makes the challenge process easier for parents and gives residents a greater say in their children's education. And state Rep. Byron Donalds, R-Naples, who sponsored the bill, told Nature in May that his intent wasn't to target any particular subject. But Glenn Branch, deputy director of the National Council for Science Education, said that affidavits filed by supporters of the bill suggest that science instruction will be a focus of challenges. One affidavit from a Collier County resident complained that evolution and global warming were taught as "reality." Another criticized her child's sixth-grade science curriculum, writing that "the two main theories on the origin of man are the theory of evolution and creationism," and that her daughter had only been taught about evolution. "It's just the candor with which the backers of the bill have been saying, 'Yeah, we're going to go after evolution, we're going to go after climate change,'" that has him worried, Branch said.

Louisiana is the first state to prohibit public universities from asking applicants about their criminal histories : —After nine years in prison, Syrita Steib-Martin was ready for college. With 30 transfer credits and a 3.8 GPA from taking classes while incarcerated, the Louisiana native filled out an application to attend the University of New Orleans. When she reached the box asking whether she had a criminal record, Ms. Steib-Martin – who at age 19 was arrested for stealing from a car dealership – answered that she did. Her admission to the school was denied. Two years later, she tried again, this time leaving the box unchecked. The result: She was accepted. Steib-Martin, now a licensed medical technologist, isn't sure what changed, but believes it was that unchecked box that made all the difference. "Had I not lied on my application," she says, "I would not be in the position I am in: saving lives, and a taxpaying member of society." Formerly incarcerated Louisianans such as Steib-Martin will no longer have to choose between lying and risking rejection. Last month, Louisiana became the first state to prohibit public colleges from asking applicants about their criminal history, with some exceptions. House Bill 688, drafted with help from Steib-Martin, passed 90-1 with bipartisan support and was signed into law by Gov. John Bel Edwards on June 16. The bill's near-unanimous passage, in the state with the highest incarceration rate, may be attributed in part to some Louisiana-specific factors. But, observers say, it's also indicative of a growing recognition across the United States that improving access to higher education for formerly incarcerated people can benefit not only ex-offenders, but society at large.

Colleges Are Preparing Kids For An Economy That No Longer Exists" As They Continue To Scam Parents And Students - Is there really anything that takes 4 to 8 years to learn or become an expert in?Seriously, what a waste of time. Even Ham, the first ape that went into space, only trained for 2 years.Colleges have convinced nearly everyone that you need a degree to be an effective employee or higher-income adult, but this is just not true.I can tell you as an employer that I’ve never asked a single person what their grades were and I’ve never asked to see a degree.The ugly truth is the ones with college degrees usually end up writing SEO articles for $15 an hour and the skilled workers who’ve been writing code as a hobby or editing videos for years on a MAC end up as managers making $75+ per hour.Young people today who sign up for college are committing to 3 things.

  • 1. Debt: It’s pure insanity that you’re required to pay for information that is freely available to all.  Think about it: a Google search, a 6-week or 6-month course, on the job training… All of these beat the price of college tuition. Why anyone would borrow money for a college degree makes no sense.
  • 2. Four unproductive years: Ouch! One of the biggest negative effects is that you’re detouring a life for 4 full years or more. By the time I was 22 years old, instead of having a degree, I had made $260,000 working at a job for the past four years, I owned two businesses that cash-flowed, and I had over 10 rental properties, not including about $400,000 I had made from flipping homes as a side gig.
  • 3. A workforce that isn’t there: Let’s be honest, colleges are preparing our young people for an economy that no longer exists!

Trump administration sued by 18 U.S. states over student loan relief | Reuters: More than one-third of U.S. states on Thursday sued the U.S. Education Department and Secretary Betsy DeVos over the recent suspension of rules that would have swiftly canceled the student-loan debt of people defrauded by Corinthian Colleges Inc and other for-profit schools. Last month DeVos pressed pause on the rules, due to take effect on July 1, saying they needed to be reset. Massachusetts, 17 other states and the District of Columbia said in a filing in U.S. District Court in Washington, D.C. the department broke federal law in announcing the delay with limited public notice and opportunity to comment. DeVos, a Republican, has said accelerating the debt cancellation process would put taxpayers on the hook for significant costs, and a delay is needed while current litigation in California over the rules works through the legal system. "With this ideologically driven suit, the state attorneys general are saying to regulate first, and ask the legal questions later," said Education Department Press Secretary Liz Hill in a statement, adding the rules were adopted "through a heavily politicized process." Consumer groups Public Citizen and Project on Predatory Student Lending sued on Thursday to lift the delay as well. The rules were finalized in the last days of the administration of President Barack Obama, a Democrat who overhauled federal student lending.After Corinthian, a for-profit chain, collapsed in 2015 amid government investigations into its post-graduation employment rates, the administration began drafting rules to help students caught with outstanding loans they had taken out for Corinthian tuition. Wanting to keep students from getting loans they could not repay, Obama specifically targeted for-profit, career colleges that promise students they will find jobs after graduating and can charge high tuition. The attorneys general for California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, all Democrats, also signed onto Thursday's lawsuit. 

18 States Sue Betsy DeVos for Killing Student Loan Protections - More than a dozen states and the District of Columbia are suing Secretary of Education Betsy DeVos for delaying Obama-era regulations aimed at protecting federal student loan borrowers, largely from for-profit colleges. "Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans," Massachusetts Attorney General Maura Healey said in a statement.  Healey, who has been a fierce critic of the for-profit school sector, led the coalition of 18 states and the District of Columbia in filing the lawsuit Thursday.DeVos announced plans last month to halt two regulations meant to hold for-profit colleges accountable and provide relief to students defrauded by them.The first regulation targeted by President Donald Trump's education secretary is known as Borrower Defense to Repayment. The rule outlines how student loan borrowers who have been defrauded can apply to have their loans forgiven. The rule, which was set to take effect July 1, was finalized by the Obama administration in November 2016 after nearly two years of negotiations. The department is currently processing 16,000 loan forgiveness claims.The second regulation, gainful employment – which is already in effect – aims to hold schools accountable for outcomes of students by requiring schools to prove that their graduates' incomes compared to their debts will allow them to pay back their student loans. Programs that don't meet that standard are barred from accessing federal funds.The announcement by DeVos sent student loan and consumer advocates, civil rights groups and others into a frenzy. They blasted the administration for a decision that they said would make it easier for for-profit schools to defraud students and evade accountability, make it harder for defrauded students to get their loans discharged, and amounts to a significant waste of tax payer dollars.

18 States Sue Betsy DeVos to Reinstate Rules Protecting Students from Predatory Private Colleges - Secretary of Education Betsy DeVos and the U.S. Department of Education were hit with multiple lawsuit filings Thursday for their recent actions making it harder for students to seek legal relief for student loan debt from predatory for-profit colleges.The highest profile lawsuit was filed by 18 state attorneys general in federal court in the District of Columbia. The suit challenges the department’s decision in June to suspend new rules created during the Obama administration for easing federal loan debt for borrowers who were cheated by for-profit colleges that helped secure their loans after making fraudulent promises about careers, job opportunities and potential future salaries.“The [suspended] Rule was designed to ensure ‘that students who are lied to and mistreated by their school get the relief they are owed, and that schools that harm students are held responsible for their behavior,’” the 18 states’ complaint said. “The Rule deters institutions from engaging in predatory behavior and restores the rights of students injured by a school’s misconduct to seek relief in court.”Also Thursday, two students sued the Education Department in the same federal court over the delayed rules. Both attended the New England Institute of Art, a for-profit school that ceased enrolling students in 2015. Its parent firm, Education Management Corporation, paid $95 million to settle a lawsuit over illegal payments to recruiters. The lawsuit by the 18 states described how DeVos abruptly reversed the Department’s protections for students. The pro-borrower policy was supposed to take effect on July 1, but two weeks ago the Department issued a notice postponing parts of it indefinitely. The DOE’s notice said it would issue a replacement policy “without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process,” the lawsuit claimed, adding that such secretive action violates the federal Administrative Procedures Act on multiple counts.The suspended rules were summarized by the lawsuit as having six main elements:

It Takes Most Students Twice As Long As They Hoped To Pay Off Their Student Loans --About 70% of college students – equal to about 44 million Americans - owe a collective $1.4 trillion in student debt. And while the standard repayment plan for federal loans suggests that they should take no more than 10 years to pay back, in reality, it regularly takes twice that long.“Research from Citizens Financial Group suggests that 60 percent of student debt borrowers expect to pay off their loans in their 40s. Data collected at the state level supports these findings. A study from the OneWisconsin Institute finds that it takes graduates of Wisconsin universities 19.7 years to pay off a bachelor's degree and 23 years to pay off a graduate degree.”Meanwhile, the Fed reports that there are 6.8 million student loan borrowers between the ages of 40 and 49 and that together, these graduates hold a collective $229.6 billion in debt. That means that Americans in their 40s with student loan debt each have an average balance of $33,765, according to CNBC.Many predict that the long-lasting effects of student debt threaten US housing prices as fewer millennials will be able to afford a home, while also delaying retirement.“The Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership, and a study from NerdWallet predicts that students who graduated from college in 2015 will have to delay retirement until the age of 75, in part because of the increasing burden of student debt.” CNBC points out that students should plan out how long it will take for them to pay off their loans, but this is easier said than done: Today's graduates face an uncertain job market, which is forcing more young Americans – members of the so-called millennial generation – to live with their parents for want of work.

 This is the age most Americans pay off their student loans -- Student debt is an unfortunate reality for most U.S. college graduates. Roughly 70 percent of grads leave college with student debt, and over 44 million Americans hold a total of $1.4 trillion in student loan debt.For federal student loans, the standard repayment plan expects borrowers to pay off their debt in less than 10 years. For many, however, it can take twice as long. Research from Citizens Financial Group suggests that 60 percent of student debt borrowers expect to pay off their loans in their 40s. Data collected at the state level supports these findings. A study from the OneWisconsin Institute finds that it takes graduates of Wisconsin universities 19.7 years to pay off a bachelor's degree and 23 years to pay off a graduate degree. The Federal Reserve reports that there are that there are 6.8 million student loan borrowers between the ages of 40 and 49 and that together, these graduates hold a collective $229.6 billion in debt. That means that Americans in their 40s with student loan debt each have an average balance of $33,765.  Many predict that the long-lasting effects of student debt will impact the housing industry, as well as how Americans finance retirement.  The Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership, and a study from NerdWallet predicts that students who graduated from college in 2015 will have to delay retirement until the age of 75, in part because of the increasing burden of student debt.

America’s Pension Bomb: Illinois Is Just the Start – Bloomberg graphic -- We’ve been hearing it for years: America’s public pensions are a ticking time bomb. Well, at long last, the state of Illinois is about to expose just how big this blowup could be. As of the 2015 fiscal year, Illinois had promised its employees $199 billion in retirement benefits. Right now, it’s $119.1 billion short. That gap lies at the center of a years-in-the-making fiscal mess that’s threatening to drop the state’s credit rating to junk-bond status. But Illinois is hardly alone. Connecticut and New Jersey—states that, to most of the world, seem like oases of prosperity—are under growing financial strain, too. We’ve ranked the states by the size of their funding gap. The lower the funding ratio, the more money the state has to come up with to meet its pension obligations

Kasich says legislature has left Medicaid $1.4 billion short -  Medicaid expansion enrollment in Ohio will not freeze, at least for now, but Gov. John Kasich is still sounding alarms that the two-year budget is $1.4 billion short of what is needed to fully fund the massive health insurance program.The Ohio House voted Thursday to override 11 Kasich budget vetoes, an unprecedented action taken by a Republican-dominated House against a Republican governor. Since 1975, there have been only five successful veto overrides in Ohio, and not since 1977 has there been an override of a budget veto, according to Legislative Service Commission research. Most of the overrides Thursday were aimed at giving lawmakers more control over a Medicaid program that insures 3 million Ohioans. To that, Kasich sent his fellow Republicans a message: "If you break it, you own it.” Overrides still need Senate support. That chamber canceled its session for next week but could return later this summer. The key question Thursday was whether the House would override Kasich's veto of a provision freezing Medicaid expansion enrollment starting in July 2018. Kasich estimated the move would cost 500,000 low-income Ohioans health coverage within 18 months. House Speaker Cliff Rosenberger, R-Clarksville, said he had the 60 votes to override the expansion freeze, but after talking to Kasich about working on other vetoed items, the House decided not to go forward.  Senate President Larry Obhof, R-Medina, said his members likely would support other overrides, should the House act on them later. In addition to Medicaid, the House overrode a veto that would help pave the way to fracking in state parks and other public lands by having lawmakers take control of a commission that approves permits. Over five years, Kasich has refused to make appointments to the panel, thus in effect enforcing a fracking moratorium. “This unconscionable attempt to override this veto puts the business interests of oil and gas companies ahead of the well-being of all Ohioans," said Aryeh Alex, director of the Ohio Environmental Council Action Fund.

Kasich's Warns Lawmakers' Veto Overrides Will Have Consequences – WOSU -- There may have been occasional disagreements between Ohio’s Republican-dominated House and Senate and Republican Gov. John Kasich, but he’d issued more than a hundred vetoes in his seven years in office without one being overturned. Thursday, that changed dramatically. For the first time in 40 years, state lawmakers voted to override a budget veto. And they did it 11 times, leaving only 36 of Kasich’s 47 vetoes, which was the most he’d ever issued on a spending plan. But Speaker Cliff Rosenberger (R-Clarksville) said it wasn’t personal, but stemmed from ideological disagreements. And singling out one action in particular, Rosenberger said no one should think that because the House didn’t vote this time to override Kasich’s veto of a freeze on Medicaid expansion enrollment next year that it didn’t have support.“We had a discussion about it. We have the votes to actually continue with that if we feel it’s necessary,” Rosenberger said. “But at this juncture we want to give the summer to let the federal government see if they are going to come to a conclusion in Congress before we take action on moving forward with the freeze waiver and the request.” The decision not to vote came a day after hundreds of activists, many from Democratic and progressive groups, rallied at the Statehouse to show support for Kasich’s veto. But House Finance Chair Ryan Smith (R-Bidwell) said the overrides were an appropriate show of force by state lawmakers, who are very concerned about spending, especially in Medicaid. Nine of the House’s 11 overrides related to Medicaid, including a proposal Kasich struck to require the state ask the feds for permission to charge some recipients premiums of up to $8 a month.

 Medicare Halts Release of Much-Anticipated Data - Pro Publica - In the past few years, many seniors and disabled people have eschewed traditional Medicare coverage to enroll in privately run health plans paid for by Medicare, which often come with lower out-of-pocket costs and some enhanced benefits.These so-called Medicare Advantage plans now enroll more than a third of the 58 million beneficiaries in the Medicare program, a share that grows by the month.But little is known about the care delivered to these people, from how many services they get to which doctors treat them to whether taxpayer money is being well-spent or misused.The government has collected data on patients’ diagnoses and the services they receive since 2012 and began using it last year to help calculate payments to private insurers, which run the Medicare Advantage plans. But it has never made that data public.Officials at the Centers for Medicare and Medicaid Services have been validating the accuracy of the data and, in recent months, were preparing to release it to researchers. Medicare already shares data on the 38 million patients in the traditional Medicare program, which the government runs. (ProPublica has created a tool called Treatment Tracker that enables people to compare how doctors and others use services in the traditional Medicare program.) The grand unveiling of the new data was scheduled to take place at the annual research meeting of AcademyHealth, a festival of health wonkery, which just concluded in New Orleans.  But at the last minute, the session was canceled. The change caught researchers — and even some former Medicare officials — off guard as the data’s release was a highly anticipated expansion of the government’s effort to share information. In a statement, CMS said there were enough questions about the data’s accuracy that it should not be released for research use. CMS said it will examine the data for 2015 “to determine if it is robust enough to support research use.”

Banks, bondholders driving the legal conflict over Flint’s water supply - In an extraordinary turn of events, the state of Michigan’s Department of Environmental Quality (MDEQ) has filed a federal lawsuit against the city of Flint for not signing off on a 30-year contract to buy water from the Great Lakes Water Authority (GLWA), the entity that took over Detroit’s public water system. The suit was filed on June 27, four days after Flint's City Council balked on the long-term deal, opting instead to sign a three-month renewal with the GLWA.   Flint signed onto the GLWA in October 2015, following the eruption of protests by the city’s largely working-class population over the lead poisoning of the city’s water supply. The poisoning of the city’s water resulted from the April 2014 decision by Republican Governor Rick Snyder’s emergency manager to sever Flint’s decades-long connection with the Detroit water system and instead draw the city’s water from the polluted Flint River.  The legal action filed last week would compel the city to sign the 30-year-deal, which is backed by Snyder, the city’s Democratic mayor, Karen Weaver, Genesee County and the Karegnondi Water Authority, the corporate entity contracted to supply Flint with water following the termination of the city’s agreement with Detroit.  The City Council’s failure to act will cause an “imminent and substantial endangerment to public health in Flint,” the Michigan Department of Environmental Quality’s complaint states.  The Snyder administration and the state’s environmental agency have as much credibility as a subprime mortgage lender. After three years of lies, virtually no one in Flint believes the professed concerns about the people’s well-being coming from the very officials, beginning with Snyder and the MDEQ, who organized the switch from the Detroit system to the Flint River in the first place and then covered up evidence that the switchover was killing and grievously harming people.The forces that are pulling the strings in the background and their various maneuvers are kept well hidden from public view by high-priced lawyers, bribed politicians and a corrupt and compliant media. But one thing is certain: neither side in this legal conflict is motivated by the interests of the workers and poor people of Flint. The City Council itself signed onto the original water switch and was fully complicit in the cover-up. What the known facts indicate is that the overriding aim of the 30-year deal with the GLWA and the lawsuit to enforce it is to ensure the repayment of the loans made to Flint and the Karegnondi Water Authority by the wealthy bondholders and Wall Street banks that control the debt.

Like the Shoes You Order From Amazon, Opioids Are Made in China and Arrive Directly at Your Doorstep   -- Grant Seaver and Ryan Ainsworth, both 13, were best friends growing up in Park City, Utah. When their parents found the boys dead last fall, they had little idea of what might have killed them. Upon searching their social media accounts, they found conversations with another local teenager and talk of “pink”—the alias for U-47700, an extremely powerful opioid, eight times stronger than morphine and responsible for tens of the thousands of deaths that have occurred in the national crisis. Parents and relatives were shocked, wondering where their boys could have contracted a drug so potent and dangerous.  Where do teenagers get anything these days?  On the internet.  U-47700 emerged last year as the latest drug in the growing epidemic. One user described it as "non-overbearing rushes of comfort, warmth, and laziness" that made him want to "lay in a cozy spot and watch a movie."   Over the last several years, as opioids, beginning with heroin, took root in areas of cultural and economic decline like the Rust Belt, Chinese manufacturers have capitalized on the cravings of addicts by mass-producing synthetic versions such as U-47700, fentanyl, carfentanil and other analogues.  Much focus on the opioid crisis has been on Mexican cartels and their complicated trafficking network."The single-biggest problem is heroin that pours across our southern borders, just pouring, and destroying," said Donald Trump in the third presidential debate last fall.While heroin via Mexican cartels is certainly a factor, the president continues to be as misinformed as ever. Synthetic opioids present a much greater threat; they are responsible for almost double the number of deaths compared to heroin.“Why wait for a field of poppies to grow and harvest if you can get your hands on the precursor chemicals and cook a batch of fentanyl in a lab?”

Drug-resistant ‘superbug gonorrhea’ is emerging, WHO warns –  - Untreatable cases of "superbug gonorrhoea" have occurred, the World Health Organization says, as it calls for new drugs to treat the bacterial infection.On Thursday, WHO and a global team of researchers published a study in the journal PLoS Medicine highlighting increases in drug-resistant gonorrhea, calling it a "serious situation."  The United Nations health agency now advises doctors to prescribe two antibiotics called ceftriaxone and azithromycin for the sexually transmitted disease."We are starting to see resistance emerging to these drugs and even, as we say, superbug gonorrhea,"  Dr. Manica Balasegaram, director of the Global Antibiotic Research and Development Partnership, told reporters from Geneva.Gonorrhea can infect the genitals, rectum and throat.  Each year, it's estimated 78 million people become infected. Most women with the infection have no symptoms and 40 per cent of men don't either.  Left untreated, men and women can become infertile and face an increased risk of HIV. In women, it can lead to abdominal pain, pelvic inflammatory disease and ectopic pregnancy. If a pregnant woman's infection goes untreated then the newborn could be infected, leading to blindness.In the U.S., the Centers for Disease Control and Prevention said 395,000 cases were reported in 2015, a 13 per cent increase from the year before. There was a similar rise of 15 per cent reported in Canada. Data from 2009 to 2014 suggests:

  • Widespread resistance to the antibiotic ciprofloxacin (97 per cent of countries that reported data in that period found drug-resistant strains).
  • The emergence of resistance to the current last-resort treatment, the oral antibiotic cefixime or injectable ceftriaxone (66 per cent of countries reporting).

Superbugs, or extensively resistant strains that could not be cured with the last line of defence, have been reported in France, Japan and Spain.

Oral sex spreading unstoppable bacteria - BBC News: Oral sex is producing dangerous gonorrhoea and a decline in condom use is helping it to spread, the World Health Organization has said. It warns that if someone contracts gonorrhoea, it is now much harder to treat, and in some cases impossible. The sexually transmitted infection is rapidly developing resistance to antibiotics. Experts said the situation was "fairly grim" with few new drugs on the horizon. About 78 million people pick up the STI each year and it can cause infertility. The World Health Organization analysed data from 77 countries which showed gonorrhoea's resistance to antibiotics was widespread. Dr Teodora Wi, from the WHO, said there had even been three cases - in Japan, France and Spain - where the infection was completely untreatable.  She said: "Gonorrhoea is a very smart bug, every time you introduce a new class of antibiotics to treat gonorrhoea, the bug becomes resistant." Worryingly, the vast majority of gonorrhoea infections are in poor countries where resistance is harder to detect. Gonorrhoea can infect the genitals, rectum and throat, but it is the last that is most concerning health officials. Dr Wi said antibiotics could lead to bacteria in the back of the throat, including relatives of gonorrhoea, developing resistance. She said: "When you use antibiotics to treat infections like a normal sore throat, this mixes with the Neisseria species in your throat and this results in resistance." Thrusting gonorrhoea bacteria into this environment through oral sex can lead to super-gonorrhoea. 

Tropical viruses: coming soon to Europe? Researchers in Bayreuth are investigating the impact of climate change - The mosquito-borne viral disease Chikungunya is usually found in tropical areas. Researchers at the University of Bayreuth and the European Centre for Disease Prevention and Control (ECDC) in Stockholm have now discovered how climate change is facilitating the spread of the Chikungunya virus. Even if climate change only progresses moderately – as scientists are currently observing – the risk of infection will continue to increase in many regions of the world through the end of the 21st century. If climate change continues unchecked, the virus could even spread to southern Europe and the United States. The researchers have published their findings in Scientific Reports.  It is the Asian tiger mosquito and yellow fever mosquito that infect humans with the Chikungunya virus. The climate affects the spread of a mosquito-borne virus in two main ways. First, it plays a crucial role in the geographical distribution of the mosquitos, which can only thrive in the long term if temperature and precipitation levels are high enough. Second, the virus replicates especially quickly in the body of the mosquito if the ambient temperature is high and remains relatively constant over the course of the day. For this reason, the risk of being infected with the Chikungunya virus has – until now – been mainly limited to tropical regions of Africa, Asia, and South America.

 The hidden inequality of mosquito bites - Living in a low-income neighborhood means dealing with all manner of injustices that richer people don't have to deal with — from low life expectancy to worse air quality to earsplitting noise to slower Internet speeds.  Now, a team of public health researchers studying neighborhoods in Baltimore has added one more indignity to that list: poorer neighborhoods also have to deal with more serious mosquito infestations. The researchers, led by Eliza Little of Columbia University, surveyed Asian tiger mosquito populations in five West Baltimore neighborhoods, spanning the gamut from the impoverished (Harlem Park) to the well-heeled (Bolton Hill). For three years, they surveyed a number of factors known to influence mosquito populations: abandoned buildings, accumulating trash, sources of standing water and surface vegetation among them. They tallied mosquito larvae and pupae where they found them, and put up periodic traps to catch and count adult female mosquitoes (the ones that do the biting).   Here's what they found when they counted the mosquito larva and pupa populations therein: In these charts, each dot represents a count done in a given neighborhood block at some point over the course of the three-year study. Counts are displayed as a “standardized container index,” which corrects for differences in the number of water-collecting containers in the different neighborhoods. In layman's terms, bigger numbers equal more mosquitoes.As the charts show, low-income areas tend to be home to more mosquito larvae and pupae. This means more bloodsucking pests when those larvae and pupae mature into adults.“Areas of endemic poverty and urban decay embedded within northeastern U.S. cities may provide footholds for pestiferous Ae. albopictus populations,” as the study's authors conclude. They warn that climate change, which will lead to hotter, wetter cities in the coming decades, will only amplify the problem.

Major New Study Shows Pesticide Risk to Honey Bees -- Scientists have found for the first time that neonicotinoid pesticides can harm honey bees in the real world.The major new study from the Centre for Ecology and Hydrology (CEH) found that pesticides called neonicotinoids can cause harm to bees, a development that is likely to increase calls for a ban of the chemicals across Europe.The UK—which has long lobbied against a ban—could make its own rules on pesticide use after Brexit. The finding is particularly significant because the study was funded in part by pesticides giants Bayer and Syngenta.The hotly anticipated research, published in the journal Science this evening, also discovered that exposure to the nicotine-based chemicals can reduce the reproductive success of three different bee species—honey bees, bumblebees and the red mason bee.With £3 million in funding from the chemical companies and additional money from Natural Environment Research Council, the researchers were able to conduct a large scale, field-realistic experiment across three different European countries—UK, Germany and Hungary.Previous experiments showing that neonicotinoids cause harm to bees have been criticised by industry because of their limited scope and test conditions not mimicking real life.The researchers exposed three bee species to winter oilseed rape crops treated with two types of neonicotinoids, manufactured by Bayer and Syngenta.The researchers found that neonics affected bees in different ways from country to country, with the impact of the chemicals more marked in Hungary and the UK than in Germany, where neonics were found to have no impact on honey bees. Overall, clothianidin, manufactured by Bayer, was found to have a more profound impact on bee health.

Study paints a confused picture of how insecticides are affecting bees -- A few years back, domestic honeybee nests started experiencing mass die-offs, and problems were found in wild bees as well.. Viruses, fungi, and pesticides have all been floated as possible causes, but definitive evidence has been hard to come by; a number of scientists have suggested that there might be multiple contributing factors. Nevertheless, suspicions focused on a specific class of insecticides called neonicotinoids. The EU has already placed restrictions on their use, and it's considering a near-total ban. If you read the headlines this week, it would appear that a new study completely justifies that decision. Funded in part by two insecticide manufacturers, a team of independent researchers purportedly tied neonicotinoids to bee colony health. But a quick look at the underlying data shows that the situation is far more complex. And a second paper, with more robust results, supports the idea that these insecticides are merely one of a number of factors contributing to bees' problems.  One of the two papers, by a group of European researchers, was meant to be definitive. They obtained a waiver from the EU to use neonicotinoids in fields in three countries: Germany, Hungary, and the UK. Different fields received either one of two different neonicotinoids or were untreated and acted as controls (untreated fields still received normal applications of other agricultural chemicals). Honeybee colonies were set up nearby, and the researchers found nearby nests of wild bees to track their health. If anything could make matters clear, this study seemed designed to do so. It didn't…. The more likely issue is that, despite the excellent experimental design, there were too many other factors influencing bee health. Fortunately, a second paper was released at the same time, and it has somewhat clearer results. In this case, the authors went into the field and measured the levels of neonicotinoids in hives near agricultural areas. They then created a series of their own hives, both treated with similar levels and left untreated as controls. All animals were given an RFID tag and put in a common hive to keep conditions as similar as possible. Here, there was a consistent pattern of results. The neonicotinoid treatment reduced the lifespan of the bees, caused them to leave the hive earlier, and reduced their grooming behavior. Colonies that were treated were also less likely to replace their queen if she left in a swarm.

EPA Chief Met With Dow Chemical CEO Before Deciding Not to Ban Toxic Pesticide  -- U.S. Environmental Protection Agency (EPA) administrator Scott Pruitt met with Dow Chemical CEO Andrew Liveris before deciding to reverse an earlier EPA decision to ban the company's toxic and widely used pesticide, chlorpyrifos.  According to records obtained by the Associated Press, the EPA boss met with Liveris for about 30 minutes at a Houston hotel on March 9. Later that month, Pruitt announced that he would no longer pursue a ban on chlorpyrifos from being used on food, ignoring his agency's own review that even small amounts of the pesticide could impact fetus and infant brain development.  But EPA spokeswoman Liz Bowman insisted to the AP that Pruitt and Liveris were only "briefly introduced" at the energy industry conference where both men were featured speakers.  "They did not discuss chlorpyrifos," the spokeswoman said. "During the same trip he also met with the Canadian minister of natural resources, and CEOs and executives from other companies attending the trade show."  According to the AP, Pruitt also attended a larger group meeting with two other Dow executives, but Bowman said they did not discuss the pesticide.

Peter Thiel Is Funding the Effort to Bring Woolly Mammoths Back to Life - MIT Technology Review --Somewhere between financing Hulk Hogan’s lawsuit against Gawker and backing Donald Trump’s campaign for president, iconoclast investor Peter Thiel found time to invest $100,000 in an effort to resurrect the woolly mammoth. That’s according to a new book by Ben Mezrich, Woolly: The True Story of the Quest to Revive one of History’s Most Iconic Extinct Creatures, which chronicles efforts by Harvard University genomics expert George Church to genetically modify elephant cells with DNA retrieved from frozen mammoths. Thiel’s donation, made sometime around 2015, is one of the previously unreported twists recounted by Mezrich, whose book tells how Church and his students became involved with a long-shot plan to re-create mammoths and release herds of them into the Siberian tundra as part of an elaborate effort to grapple with climate change. “Just remember. It’s only science fiction until we remove the fiction. Then it becomes real,” Mezrich has one scientist saying in the book.   The Harvard mammoth plan got in motion in 2012 during a gathering of “de-extinction” experts in Washington, D.C. Since then, it’s generated a huge amount of media buzz, but so far no scientific publications—and no mammoth, either.  Stewart Brand  is the entrepreneur and promoter largely behind recent interest in de-extinction technology. His organization, Revive & Restore, is trying to bring back the passenger pigeon and save the endangered black-footed ferret. The mammoth idea, he says, may be the least realistic of these plans, but it’s the one that gets people most excited. “People are having their imaginations grabbed and thrown over the horizon,” he says. But no one should imagine that de-extinction science—or any type of conservation—is particularly well funded. “The assumption is there must be some billionaire putting money into it,” he says. “The reality is that no big money is going into it. It’s our own money, except for Thiel.”

Shady slaughterhouses, 'cow laundering' drive spike in Amazon deforestation | Reuters: (Thomson Reuters) - At the FrigoAmazonas slaughter house inside the world's largest rainforest, the owner doesn't mince his words - much of the cattle processed here comes from illegally deforested land. "It's impossible to buy cows from land that isn't deforested," Felipe Oliveira told the Thomson Reuters Foundation in his tatty office at the abattoir in Brazil's Amazonas State. "Everyone here deforests... if they don't, it's impossible for a family to live," the slaughterhouse boss said, sitting beneath exposed electrical wires hanging from the ceiling. If the Amazon forest, described as the lungs of the planet for its role sucking climate-changing carbon dioxide out of the atmosphere, is to be saved, then addressing the impact of livestock is the most pressing priority, environmentalists say.The clearance of land for cattle pasture is responsible for 80 percent of the forest destruction in the Amazon, according to data from Yale University. The rate of deforestation in the Amazon increased by 29 percent last year, according to government figures. Larger ranchers, truckers and traders have set up elaborate schemes to "launder" cattle raised on illegally deforested land on the legitimate market, said analysts and officials. Brazilian authorities also link illegal deforestation to other crimes in the Amazon, such as forced labor on farms or "grilagem" - land grabs - by ranchers who fraudulently register properties occupied by small farmers to produce cattle. Powerful rural businessmen often bribe government officials or land registry agents known as "cartorios" to obtain property title deeds, according to Brazilian prosecutors. These illegally registered plots are often hotbeds of deforestation. As the world's largest exporter of beef and chicken, the importance of Brazil's struggle to contain illegal deforestation for livestock extends far beyond rural Amazonian settlements. 

Lightning-Caused Fires on the Rise in the World’s Largest Forest -- As fire season reaches for its annual summer turning point, the role lightning plays as the culprit in setting fires shows a worrisome trend. That’s not good news for the boreal forest, the world’s largest forest habitat, where virtually all wildfires are ignited by lightning. Since 1975, the number of fires ignited by lightning has increased between two and five percent, driven by an increase in volatile thunderstorm weather, according to a new NASA study published Monday in Nature Climate Change. In two of the last three years, immense fires in Alaska and Canada’s Northwest Territories provided a good case study, says Sander Veraverbeke, the study’s lead author and an Earth scientist at Vrije Universiteit Amsterdam.  Between 1975 and 2015, 82 percent of area that burned in the Northwest Territories originated from lightning. The figure is even higher—95 percent—for the burned area in Alaska. The four years with the largest fires, and the larged burned areas, have all occurred since 2003. The colossal fires in 2014 and 2015 involved a record number of lightning ignitions, with what scientists called “exceptionally high levels of burning near the northern treeline.” In the 2014 Northwest Territories fires, 98 percent of the area burned was ignited by lightning, and in the 2015 Alaska fires, 99 percent of the burned area was caused by lightning.   Large fires are creeping north and burning Arctic tundra. As peat is burned, carbon is released. “These fires are claiming an area that they haven’t burned historically, which also means they can change the carbon balance and shift an ecosystem into a different state,” Veraverbeke says.

1.5 Million Volunteers Plant 66 Million Trees in 12 Hours, Breaking Guinness World Record - The central Indian state of Madhya Pradesh set a new Guinness World Record on Sunday after 1.5 million volunteers planted more than 66 million tree saplings in just 12 hours along the Narmada river. The effort bested the state of Uttar Pradesh's previous record-breaking feat , when 800,000 participants planted 50 million trees in one day in July 2016. Shivraj Singh Chouhan, the chief minister of Madhya Pradesh, boasted the achievement: "I am extremely proud to happily share that people of Madhya Pradesh successfully planted 6.63 Crore saplings today." One crore is 10 million.  According to a press release for the occasion, the aim of the mass-planting event was to raise awareness for the nation's "make India green again" plan. At the Paris climate conference, India pledged to increase forest cover to 95 million hectares (235 million acres) by year 2030 and is putting $6.2 billion towards the effort.  "I am greatly indebted to all who are planting trees today," Chouhan also told . "We will be contributing significantly in saving nature. By participating in a plantation, people are contributing their bit to climate change initiatives and saving the environment."

As lakes run dry in Chennai, residents are desperate for a few buckets of water --On a hot June afternoon in Kaatukuppam, a fishing hamlet in the North Chennai neighbourhood of Ennore, residents waited impatiently for the Chennai MetroWater tanker to arrive with their weekly supply. It was supposed to have reached them at 7 am and they had been standing for over five hours, plastic buckets in hand.  The situation in Kaatukuppam is no different from that in any other part of Chennai, where a water crisis is worsening by the day. Regular supply of drinking water to the city has been slashed by 50% in the wake of Tamil Nadu’s worst drought in 140 years. For a city that requires around 830 million litres of water a day, only half the amount is being supplied, reported NDTV. According to the Times of India, the daily supply of 420 million litres to 470 million litres at present has, in fact, come down from 500 million litres a day just a few weeks ago.The failure of both the South West and North East Monsoons last year led to water levels in Tamil Nadu’s reservoirs plunging. As of April 20 this year, the state had 81% less water in its reservoirs than its 10-year average. The four main lakes that supply piped water to Chennai – Poondi, Red Hills, Cholavaram and Chembarambakkam – are nearly dry. When water levels in the four lakes fall, MetroWater usually taps into the Veeranam lake in Cuddalore district to make up for the shortfall. But this large lake has also run dry. This prompted MetroWater officials to extract water from the Wallajah lake, also in Cuddalore. But the use of these rural lakes to meet urban needs has infuriated farmers in the district, who say they are being deprived of their water resources.

Climate change may turn Africa's arid Sahel green: researchers | Reuters: - One of Africa's driest regions - the Sahel - could turn greener if the planet warms more than 2 degrees Celsius and triggers more frequent heavy rainfall, scientists said on Wednesday. The Sahel stretches coast to coast from Mauritania and Mali in the west to Sudan and Eritrea in the east, and skirts the southern edge of the Sahara desert. It is home to more than 100 million people. The region has seen worsening extreme weather - including more frequent droughts - in recent years. But if greenhouse gas emissions continue unabated, the resulting global warming - of more than 2 degrees Celsius above pre-industrial levels - could change major weather patterns in the Sahel, and in many different parts of the world, scientists say. Some weather models predict a small increase in rainfall for the Sahel, but there is a risk that the entire weather pattern will change by the end of the century, researchers at the Potsdam Institute for Climate Impact Research (PIK) said. "The sheer size of the possible change is mindboggling - this is one of the very few elements in the Earth system that we might witness tipping soon," said co-author Anders Levermann from PIK and the Lamont-Doherty Earth Observatory of New York's Columbia University. If the Sahel becomes much rainier, it will mean more water for agriculture, industry and domestic use. But in the first few years of the transition, people are likely to experience very erratic weather - extreme droughts followed by destructive floods, the researchers said. This level of unpredictability makes it very hard for people to plan for coming changes, they said.

Climate Change Drives Lakes Toward Ecological Tipping Points -When rising temperatures brewed up a perfect storm of excessive rainfall and extreme heat in the summer of 2014, the fallout hit home. The impacts were felt by at least half a million people in Ohio when a super-bloom of cyanobacteria, a toxic blue-green algae, shut down drinking water supplies for several days.The algae feasted on fertilizers washed in from farm fields, and the warming may have pushed the lake past an environmental tipping point. In warming waters, the cyanobacteria thrived and spread in a slimy green froth across hundreds of square miles. Schools, restaurants and other public facilities shut down after contamination was detected in Toledo's water intake system, and local stores quickly ran out of bottled water. In the summer of 2015, the algae spread again. Similar blooms in Lake Erie were common in the 1960s through the 1980s and then diminished, thanks to better pollution controls. But the outbreaks have increased once again in the past decade, according toNOAA. Scientists already know that the rapid warming of lakes will increase the number and intensity of such blooms, as well as other disturbances like oxygen-deprived dead zones. A new study published June 23 in the journal Scientific Reports helps identify which lakes are most likely to be affected, information that can help people and communities develop adaptation plans amid climate change.Illinois State University researcher Catherine O'Reilly said there's no doubt that climate change will shift lakes into new regimes."These tipping points or thresholds are likely created not just by climate change itself, but by interactions between climate change and other factors, such as climate oscillations like El Niño ... But now, each year is a new record-setting year, and because the climate itself does not return to normal, the lake is never able to recover completely," she said.

Coral Reefs Could Be Gone in 30 Years - National Geographic - The world’s coral reefs, from the Great Barrier Reef off Australia to the Seychelles off East Africa, are in grave danger of dying out completely by mid-century unless carbon emissions are reduced enough to slow ocean warming, a new UNESCO study says.And consequences could be severe for millions of people.The decline of coral reefs has been well documented, reef by reef. But the new study is the first global examination of the vulnerability of the entire planet’s reef systems, and it paints an especially grim picture. Of the 29 World Heritage reef areas, at least 25 of them will experience twice-per-decade severe bleaching events by 2040—a frequency that will “rapidly kill most corals present and prevent successful reproduction necessary for recovery of corals,” the United Nations Educational, Scientific and Cultural Organization concluded. In some areas, that’s happening already.“These are spectacular places, many of which I’ve visited. Seeing the damage being wrought has just been heartbreaking,” says Mark Eakin, a reef expert with the National Oceanic and Atmospheric Administration, and a lead author of the new report. “We’re to the point now where caction is essential. It’s urgent.” By 2100, most reef systems will die, unless carbon emissions are reduced. Many others will be gone even sooner. “Warming is projected to exceed the ability of reefs to survive within one to three decades for the majority of the World Heritage sites containing corals reefs,” the report says. 

UNESCO leaves Great Barrier Reef off in danger list | Reuters: The United Nations cultural body UNESCO has voted to leave the Great Barrier Reef off its "in danger" list despite recent widespread destruction of the World Heritage Site. The decision, which was taken at a UNESCO committee meeting in the Polish city of Krakow, allows Australia's conservative government to dodge political embarrassment and potential damage to the country's lucrative tourism industry, "We're taking every action possible to ensure this great wonder of the world stays viable and healthy for future generations to come," Australia's Energy Minister Josh Frydenberg told Australian Broadcasting Corporation Radio. Australia's management of the Great Barrier Reef has come under sustained criticism amid the biggest ever coral die-off as a result of the strongest El Nino in 20 years, a weather event that scientists believe is exacerbated by climate change. Eager to head-off charges that it was failing the World Heritage Site, which was recently pegged at being worth $56 billon to Australia, the Coalition government of Malcolm Turnbull lobbied all 21 UNESCO members. Australia's commitment to tackling climate change has been questioned by the government's lingering love affair with fossil fuels. Coal is the country's second-biggest export earner and the government is supporting a new $4 billion mine planned by Adani Enterprises which would ship millions of tonnes of coal through the waterways of the Great Barrier Reef. Adani's Abbot Point terminal, located adjacent to the reef, would also need to be expanded to accommodate all the extra traffic. This, environmentalists claim, would release plumes of soil and debris over the reef, causing damage to its ecosystem.

Sea level rise isn’t just happening, it’s getting faster - In at least the third such study published in the past year, scientists have confirmed seas are rising, and the rate of sea level rise is increasing as time passes — a sobering punchline for coastal communities that are only now beginning to prepare for a troubling future.  What was a 2.2 millimeter per year rise in 1993 was a 3.3 millimeter rise in 2014, based on estimates of the mass changes of a number of key components of sea level rise, such as the melting of the Greenland and Antarctic ice sheets, the study in Nature Climate Change found. That’s the difference between 0.86 and 1.29 inches per decade — and the researchers suggest further sea level acceleration could be in store.The chief cause of the acceleration was the melting of the Greenland ice sheet, which went from contributing under 5 percent of all sea level rise in 1993 to contributing over 25 percent in 2014, the study found.  The loss of ice in Antarctica and  smaller glaciers over the same time period also contributed to quicker sea level rise. The increase in the rate of sea level rise “highlights the importance and urgency of mitigating climate change and formulating coastal adaptation plans to mitigate the impacts of ongoing sea level rise,” “We understand why the sea level is accelerating and we’re understanding what the components are contributing,”

 "Supervolcano" Concerns Rise After Montana Hit By Strongest Earthquake In 20 Years --Following a swarm of over 1100 earthquakes recorded in the Yellowstone caldera over the past month, prompting scientists to voice concerns about the dormant Yellowstone "Supervolcano" slowly waking up, overnight these concerns escalated after a strong M5.8 earthquake hit western Montana early on Thursday morning - the strongest quake to hit the area in the past 20 years - the U.S. Geological Survey reported, with Reuters adding that the tremor was felt hundreds of miles away, from Missoula to Billings and some surrounding states. Subsequently the USGS recorded seven more tremors in the same area within an hour of the initial quake, which ranged in magnitude from 4.9 to 3.8. The quake which struck at 12:30 a.m. local time was strong enough to knock items off of walls and shelves in Helena and Missoula.  Some Twitter users posted feeling tremors as far as Spokane, Wash., Boise, Idaho and Calgary, Canada.Mike Stickney, seismologist at the Earthquake Studies Office, Montana Bureau of Mines and Geology on the Montana Tech campus in Butte, said the quake was probably the strongest in Montana since October 1964. The location, he said, is not surprising. “It’s right along the axis of the intermountain seismic belt.” He said the quake occurred on a strike/slip fault, a vertical fault where one side moves horizontally against the other, similar to the kind of movement experienced along the San Andreas Fault in California. That said, he said he "does not believe" the quake is seismically tied to the recent “swarm” of smaller earthquakes in the Yellowstone National Park area. “I don’t see any direct relationship between these two sequences,” he said. “This is a pretty sizeable earthquake. It would certainly have the potential to do structural damage near the epicenter, but we’ve had no reports indicating damage yet.” Others, however, disagree.

'Big bang' and 'pillar of fire' as latest of two new craters forms this week in the Arctic: -- Local reindeer herder witnessed the tundra explosion that led to birth of new hole in river. Scientists have located two fresh craters formed on Yamal peninsula this year, with the latest exploding on 28 June with the eruption picked up by new seismic sensors specifically designed to monitor such events, The Siberian Times can disclose. First pictures of the large craters - or funnels as experts call them - are shown here, and add to four other big holes found in recent years and examined by experts, plus dozens of tiny ones spotted by satellite. The formation of both craters involved an explosion followed by fire, evidently signs of the eruption of methane gas pockets under the Yamal surface. People in Seyakha village heard a 'loud explosion-like bang' then saw a fire and clouds of black smoke, according to reports. Deputy director of the Oil and Gas Research Institute, Moscow, Professor Vasily Bogoyavlensky said: 'We heard the news (about the new crater) from a friend who saw a flame of fire and then a rising pillar of smoke.' The head of Seyakha village, Igor Okotetto, confirmed he gad been told about the explosion. 

Global Warming Might Be Speeding Up – - It’s almost universally understood that the Earth will continue to get warmer for the foreseeable future. The rate at which the planet warms, however, won’t remain the same, report Cristian Proistosescu and Peter Huybers of Harvard University. They say it’s likely to speed up. Some parts of the planet heat up more slowly than others, they explain. But as more time passes, regions once less affected by global warming will get hotter. Thus the bulk of planetary warming this century may actually be back-loaded onto its final decades.The analysis, published Wednesday in Science Advances, addresses the gap between two long-battling camps struggling to understand how quickly the world will warm. One group looks at the historical record and projects into the future all the warming that has already been known to occur, mainly through direct observations. Those studies have found that, once there is twice as much carbon dioxide in the atmosphere as there was prior to the industrial revolution (a level expected to be reached later this century), the temperature may rise between 1.6 degrees and 3 degrees Celsius (2.9 degrees to 5.4 degrees Fahrenheit).Those estimates, while unnerving, are significantly lower than the projections generated by climate models held up by the other group. These are built from equations supplied by Earth physics and allow scientists to do something they can’t do in the real world—simulate how the planet behaves under various conditions over enormous periods of time. Computer models are the lab rats of climate science.  The contradictory evidence posited by the two camps was canonized in 2013, when the most authoritative climate-science group, the Intergovernmental Panel on Climate Change, broke with its own practice and declined to provide a single “best estimate” of warming. Instead it punted, providing only a range (from 1.5C to 4.5C) that extended the low end of the conflict below previous assessments.

 Mission 2020: A new global strategy to ‘rapidly’ reduce carbon emissions - In April, a new global initiative called Mission 2020 was launched by Christiana Figueres, the former UN climate chief who oversaw the signing of the Paris Agreement on climate change in late 2015.The aim of Mission 2020 is to bring “new urgency” to the “global climate conversation” with a call to begin “rapidly declining” global greenhouse gas emissions by 2020.Today, in a co-authored commentary published in the journal Nature, Figueres sets out further details about Mission 2020’s six central calls to action. The commentary is endorsed by 61 signatories, which include climate scientists as well as a range of NGO, religious, political and business leaders.Figueres and colleagues argue that, if global warming is to be limited to between 1.5C and 2C by 2100, global emissions must peak before 2020 and then begin to rapidly decline.Over the past three years, global CO2 emissions have leveled off, driven in part by large declines in coal use in China and the US. While it is likely too early to say for certain if CO2 emissions have peaked, there is a reason to be cautiously optimistic.However, peaking global emissions is in many ways the easy part. Scientists say that to stave off potentially dangerous levels of warming later in the century, global emissions need to decline quickly to near-zero.In the absence of geoengineering or large-scale deployment of negative emission technologies, peaking global emissions after 2020 would provide too little time to transform the global economy.

Carbon in Atmosphere Is Rising, Even as Emissions Stabilize -For more than two years, the monitoring station here, along with its counterparts across the world, has been flashing a warning: The excess carbon dioxide scorching the planet rose at the highest rate on record in 2015 and 2016. A slightly slower but still unusual rate of increase has continued into 2017. Scientists are concerned about the cause of the rapid rises because, in one of the most hopeful signs since the global climate crisis became widely understood in the 1980s, the amount of carbon dioxide that people are pumping into the air seems to have stabilized in recent years, at least judging from the data that countries compile on their own emissions. That raises a conundrum: If the amount of the gas that people are putting out has stopped rising, how can the amount that stays in the air be going up faster than ever? Does it mean the natural sponges that have been absorbing carbon dioxide are now changing? Scientists have spent decades measuring what was happening to all of the carbon dioxide that was produced when people burned coal, oil and natural gas. They established that less than half of the gas was remaining in the atmosphere and warming the planet. The rest was being absorbed by the ocean and the land surface, in roughly equal amounts.  In essence, these natural sponges were doing humanity a huge service by disposing of much of its gaseous waste. But as emissions have risen higher and higher, it has been unclear how much longer the natural sponges will be able to keep up.  Should they weaken, the result would be something akin to garbage workers going on strike, but on a grand scale: The amount of carbon dioxide in the atmosphere would rise faster, speeding global warming even beyond its present rate. It is already fast enough to destabilize the weather, cause the seas to rise and threaten the polar ice sheets.

If We Stopped Emitting Greenhouse Gases Right Now, Would We Stop Climate Change? -- Earth's climate is changing rapidly . We know this from billions of observations, documented in thousands of journal papers and texts and summarized every few years by the United Nations' Intergovernmental Panel on Climate Change. The primary cause of that change is the release of carbon dioxide from burning coal , oil and natural gas. One of the goals of the international Paris agreement is to limit the increase of the global surface average air temperature to two degrees Celsius, compared to preindustrial times. There is a further commitment to strive to limit the increase to 1.5℃. Earth has already, essentially, reached the 1℃ threshold . Despite the avoidance of millions of tons of carbon dioxide emissions through use of renewable energy , increased efficiency and conservation efforts, the rate of increase of carbon dioxide in the atmosphere remains high.   But setting aside the politics, how much warming are we already locked into? If we stop emitting greenhouse gases right now, why would the temperature continue to rise? What would happen to the climate if we were to stop emitting carbon dioxide today, right now? Would we return to the climate of our elders?   The simple answer is no. Once we release the carbon dioxide stored in the fossil fuels we burn, it accumulates in and moves among the atmosphere, the oceans, the land and the plants and animals of the biosphere. The released carbon dioxide will remain in the atmosphere for thousands of years. Only after many millennia will it return to rocks, for example, through the formation of calcium carbonate—limestone—as marine organisms' shells settle to the bottom of the ocean. But on time spans relevant to humans, once released the carbon dioxide is in our environment essentially forever .

G20 stage set for climate change showdown - The environment is expected to get unprecedented attention at the Group of 20 summit in Hamburg - as the resolve of 19 countries on climate change is put to the test following Trump's rejection of the Paris Agreement. Leaders of 20 of the world's most powerful nations will come together in Hamburg, Germany, July 7 and 8.  Among them, "Climate Chancellor" Angela Merkel - and US President Donald Trump, who has called climate change a hoax and dismayed the world by pulling out of the Paris Agreement to limit climate change to maximum 2 degrees Celsius (3.6 degrees Fahrenheit). With Germany wearing the mantle of the revolving G20 presidency, Merkel isn't shying away from what promises to be a controversial topic. The German government recently set out its agenda for the conference, confirming climate change as a focus of the talks. "The question is, what can the outcome be after the US stepped out of the Paris Agreement? How will the other 19 countries move forward? Will they continue to stick to the agreement, and ensure its goals are within reach?" On June 28, former Executive Secretary of the United Nations Framework Convention on Climate Change Christiana Figueres joined with international scientists and business leaders to author a wishlist for the G20 - in the form of an article in the journal "Nature."It outlines six goals for the G20 to set for themselves by 2020 - on green energy, low-emissions infrastructure, transport, land use, industry and finance. The year 2020 has weighty significance: It is not only the earliest date the US can legally exit the Paris Agreement, but also marks a "tipping point" by which scientists say if emissions do not fall, the Paris Agreement's temperature goals become virtually unattainable.

U.S., other G-20 nations near compromise on climate -  The United States and other major economies are nearing a compromise on climate change, one of the thorniest issues facing world leaders at the G-20 summit in Germany. After days of preliminary talks, G-20 negotiators are increasingly hopeful they can settle on a joint communique in which the United States underscores its intent to withdraw from the Paris climate agreement while the other nations emphasize their support for the pact, according to a senior diplomat involved in the discussions. Diplomats stressed that the text remains fluid and could be rewritten at the insistence of President Donald Trump and other world leaders, who will join the closed-door discussions in Hamburg over the next 48 hours.  But if it holds, the unity among the 19 other members of the G-20 would be a coup for German Chancellor Angela Merkel and other leaders who support strong action to tackle climate change. And it would further isolate the United States on the issue, underscoring that it is one of the few countries in the world that don't back the 2015 Paris deal. There has long been speculation that fossil fuel-dependent countries in the G-20 might hesitate to forcefully back the Paris agreement, and that nations like Turkey and Saudi Arabia might refuse to sign on to a separate action plan that details steps countries should take to reduce their emissions.Instead, diplomats said, both countries are expected to join other nations in endorsing the Paris deal and backing the action plan — unless the tone of the talks shifts dramatically in the coming days. The action plan, which was written by German officials and will be referenced in the communique, is the product of months of negotiation, and some news reports say it was watered down in an attempt to win broader support.

G20 not yet doing enough to prevent dangerous climate change - campaigners (Reuters) - Of the world's 20 leading economies, Italy, Brazil, France and Germany are closest to meeting international targets to keep global warming to less than 2 degrees Celsius, with Saudi Arabia and the United States trailing at the bottom, according to an index released ahead of this week's G20 summit. The G20 countries are responsible for 75 percent of planet-warming greenhouse gas emissions, but are not yet on track to cut those sufficiently to prevent temperatures reaching dangerously high levels, the index compilers said on Thursday. "It's time for the world's richest economies ... to step up their game on climate action," said Wael Hmaidan, executive director of the Climate Action Network (CAN), which published the index with Germanwatch and the NewClimate Institute. "If we are to realise the goals of the Paris Agreement we need countries to get down to the business of serious implementation," he said. Under the Paris Agreement, individual countries have drawn up targets to cut emissions to help reach the international goal to keep global warming to well below 2 degrees Celsius above pre-industrial levels. But some are making faster progress than others toward that goal. "Particularly promising are the developments in some of the major emerging economies such as Brazil or India," said Niklas Höhne, a founding partner of the Berlin-based NewClimate Institute and a professor at Wageningen University in the Netherlands. Brazil has achieved advances in reducing deforestation, which now need to be maintained, and India is favouring renewables over coal and electric vehicles over gasoline and diesel, Höhne said. "Both countries are moving in the right direction - yet climate policies and international climate finance need further support," he said.

Climate change could exacerbate economic inequalities in the U.S. -- Climate change may make the rich richer and the poor poorer in the United States.  Counties in the South face a higher risk of economic downturn due to climate change than their northern counterparts, a new computer simulation predicts. Because southern counties generally host poorer populations, the new findings, reported in the June 30 Science, suggest that climate change will worsen existing wealth disparities. New research simulated climate change in the United States through the end of the century, assuming greenhouse gas emissions continue to increase, and predicted economic impacts at the county level. These maps show how agricultural yields (top), annual death rates (middle) and energy expenditures (bottom) may change from their 2012 levels by 2080–2099.  Researchers created a computer program called SEAGLAS that combined several climate simulations to forecast U.S. climate until 2100, assuming greenhouse gas emissions keep ramping up. Then, using data from previous studies on how temperature and rainfall affect several economic factors — including crop yields, crime rates and energy expenditures — SEAGLAS predicted how the economy of each of the 3,143 counties in the United States would fare. By the end of the century, some counties may see their gross domestic product decline by more than 20 percent, while others may actually experience more than a 10 percent increase in GDP. This could make for the biggest transfer of wealth in U.S. history, says study coauthor Solomon Hsiang, an economist at the University of California, Berkeley.  In general, SEAGLAS predicts that counties in the lower Midwest, the South and the Southwest — already home to some of the country’s poorest communities — will bear the brunt of climate-caused economic damages, while counties in New England, the Great Lakes region and the Pacific Northwest will suffer less or see gains. For many of the examined economic factors, such as the number of deaths per year, “getting a little bit hotter is much worse if you’re already very hot,”

Poll: 39 percent think it's likely climate change will cause human extinction | TheHill: Nearly 4 in 10 Americans think there's a good chance climate change will cause human extinction, according to a new poll released Wednesday. The survey from the Yale Program on Climate Change Communication found that 39 percent think the odds of global warming ending the human race are at least 50 percent. Fifty-eight percent of respondents said climate change is human-caused — the highest number since the program began surveying on the topic in 2008. About a quarter of respondents said providing a better life for younger generations is the most important reason to reduce global warning, with 16 percent of respondents saying that preventing the destruction of most life on Earth is the most important reason. The survey was polled 1,266 adults between May 18 and June 6 and has a margin of error of 3 percentage points.

Court rejects Pruitt's delay of Obama-era methane rule | PBS  — A federal appeals court in Washington ruled Monday that the head of the Environmental Protection Agency overstepped his authority in trying to delay implementation of a new rule requiring oil and gas companies to monitor and reduce methane leaks. In a split decision, the three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit ordered the EPA to move forward with the Obama-era requirement that aims to reduce planet-warming emissions from oil and gas operations. EPA Administrator Scott Pruitt announced in April that he would delay by 90 days the deadline for oil and gas companies to follow the new rule, so that the agency could reconsider the measure. The American Petroleum Institute, the Texas Oil and Gas Association and other industry groups had petitioned Pruitt to scrap the requirement, which had been set to take effect in June.Last month, Pruitt announced he intended to extend the 90-day stay for two years. A coalition of six environmental groups opposed the delay in court, urging the appeals judges to block Pruitt’s decision. In a detailed 31-page ruling, the court disagreed with Pruitt’s contention that industry groups had not had sufficient opportunity to comment before the 2016 rule was enacted. The judges also said Pruitt lacked the legal authority to delay the rule from taking effect. “This ruling declares EPA’s action illegal — and slams the brakes on Trump Administration’s brazen efforts to put the interests of corporate polluters ahead of protecting the public and the environment,” said David Doniger, director of climate and clean air program for the Natural Resources Defense Council. EPA spokeswoman Amy Graham said the agency was reviewing the court’s opinion and examining its options. The EPA could seek to appeal the matter to the Supreme Court. 

The EPA's Climate-Focused Methane Rule Will Stay in Force -  Republicans hit another roadblock on Monday in their quest to repeal or weaken recent environmental rules restricting methane emissions. In a split ruling, the federal appeals court for Washington, D.C., told EPA Administrator Scott Pruitt that he cannot suspend enforcement of the agency’s “methane rule” while his staff considers whether to rewrite it. The ruling is a rare victory for climate advocates during the Trump administration—and their first win in court this year. Methane, the key ingredient in natural gas, is also a super-efficient greenhouse gas. Each molecule of methane traps dozens of times more heat than each molecule of carbon dioxide, making methane a big short-term influence on the intensity of global warming. The ruling suggests that some of the Obama administration’s environmental rules may prove more resilient than once seemed. In May, the Senate failed to repeal a slightly different “methane rule” from the Bureau of Land Management. That rule requires pre-existing oil and gas wells to limit their methane emissions—but it only applied to operations on federal or Native American land.The EPA’s methane rule—which was upheld in court on Monday—takes a broader approach. It mandates that all new oil and gas operations everywhere in the United States reduce their methane emissions. In late May, fossil-fuel companies begged the EPA to put the deadline for enforcement off. Pruitt granted their request twice over. First, he delayed the entire rule’s implementation by 90 days. Then, two weeks later, he announced that the rule would lose the force of law for two years. The EPA would fully reconsider the methane rule’s standing under the Clean Air Act, he said.  Thirteen states and six environmental groups immediately sued Pruitt, alleging that many of the fossil-fuel companies’ problems with the rule had already been addressed when the EPA was writing it. They alleged he had no right to put a 90-day stay on the rule’s implementation. It wasn’t that the rule had been illegally written, they alleged—it was just that Pruitt didn’t like it. A panel of federal judges agreed with them on Monday. Pruitt’s decision was “arbitrary, capricious, [and] in excess of statutory . . . authority,” they said. They struck down the 90-day stay, allowing the EPA methane rule to gain the force of law.

Science division of White House office left empty as last staffers depart - CBS News: -- The science division of the White House's Office of Science and Technology Policy (OSTP) was unstaffed as of Friday as the three remaining employees departed this week, sources tell CBS News. All three employees were holdovers from the Obama administration. The departures from the division -- one of four subdivisions within the OSTP -- highlight the different commitment to scientific research under Presidents Obama and Trump. Under Mr. Obama, the science division was staffed with nine employees who led the charge on policy issues such as STEM education, biotechnology and crisis response. It's possible that the White House will handle these issues through staff in other divisions within the OSTP. On Friday afternoon, Eleanor Celeste, the assistant director for biomedical and forensic sciences at the OSTP, tweeted, "Science division out. Mic drop" before leaving the office for the last time.Kumar Garg, a former OSTP staffer under Mr. Obama, also tweeted, "By COB today, number of staffers in White House OSTP's Science Division = 0." "All of the work that we have been doing is still being done," a White House official familiar with the matter told CBS News, adding that 35 staffers currently work across the OSTP. "Under the previous administration, OSTP had grown exponentially over what it had been before," the official said. "Before the Obama administration, it had usually held 50 to 60 or so policy experts, director-level people, for all of OSTP." The Obama administration staffed the OSTP with more than 100 employees. 

Science division of White House office no longer staffed: report | TheHill: The science division of the White House Office of Science and Technology Policy reportedly had no staff members as of Friday. Sources told CBS News that the last employees in the division, three holdovers from former President Obama's administration, all left the White House this week. Under Obama, the science division was staffed with nine employees who crafted policy on STEM education, crisis response and other key issues, according to the report. Eleanor Celeste, the former assistant director for biomedical and forensics sciences in the division, appeared to tweet about leaving the office this week.   science division out. mic drop.— Elle Celeste (@elleabella1112) June 30, 2017 While the science division had no staff members as of Friday, a White House official told CBS News that the science and technology office was still functioning with 35 staffers.  Still, that compares to the more than 100 employees who worked in the office under Obama. "All of the work that we have been doing is still being done," the official said. The news comes a week after President Trump’s Environmental Protection Agency notified dozens of scientists that their advisory positions with the agency would not be renewed.

The US’s top environmental official launched a program to formally challenge climate change science - --Scott Pruitt has been busy. The head of the US Environmental Protection Agency has moved to dismantle or delay 30 environmental rules in his first four months on the job, the fastest rollback of that scale the EPA has ever seen, according to the New York Times. Most of these rollbacks were announced with some fanfare. But more quietly, Pruitt has begun to put together a formal program to challenge the scientific consensus on climate change. First reported by E&E News, a news outlet focused on energy and the environment, the program will highlight uncertainty within climate science by providing a “back-and-forth critique” between experts appointed by the administration, according to a senior administration official who spoke with E&E News. The program will use a military tactic known as “red team/blue team,” used to scrutinize weaknesses in field operations. The red team will pose potential vulnerabilities, and the blue team would be charged with finding and defending the scientific reports that address that vulnerability. This approach goes outside the existing structure of peer review, in which a scientific paper must be evaluated and critiqued by other scientists at length before it can be published. The peer review process is designed to identify weaknesses in the science. Within peer-reviewed scientific literature, 97% of scientists agree that climate change is primarily due to human activity.

Scott Pruitt wants to hijack the peer-review process to push bad climate science -- EPA Administrator Scott Pruitt is undertaking a formal initiative to evaluate climate science, according to reporting from E&E News White House reporter Emily Holden. According to Holden, the program will feature a “red team, blue team” approach meant to provide “back-and-forth critique” of climate science.But actual climate scientists argue that “back-and-forth critique” already exists in climate science: It’s called the peer-review process.“The system they describe is precisely what scientific peer-review is,” Michael Mann, director of the Earth System Science Center at Pennsylvania State University, told ThinkProgress via email. “The reality is that the only thing these folks don’t like is the conclusion that the scientific community (that is, the world’s scientists, literally) has arrived at — that climate change is real, human-caused, and a threat.” It’s possible that the EPA might use the initiative to begin building a case for rescinding the agency’s endangerment finding, which found in 2009 that greenhouse gas emissions pose a threat to public health. That finding provides the basis for federal regulation of greenhouse gas emissions, and has long been a primary target for industry and conservative lawmakers. Bob Murray, CEO of Murray Energy Corporation and a significant financial donor to the Trump inauguration, told Holden that Pruitt promised him he would begin reviewing the endangerment finding “within months,” though Pruitt himself has publicly expressed hesitancy with the idea of rolling back the finding.

When the benefits of regulation are perceived to be zero -- Alan Krupnick: A striking feature of President Trump’s recent energy speech for me is that there is not a word to be found about the environment and health protections. The regulations President Trump wants to rollback are there for that reason. ...The guiding principle for the current administration seems to be to abandon benefit-cost analysis in favor of macroeconomics (i.e., monthly job reports from the BLS) and there is no short-term macroeconomic benefit from environmental regulations. In the long run, however, there are macroeconomic implications. Imagine that the production of goods and services, Q, in the U.S. is governed by an aggregate production function: Q = f(L,K,N) where L is labor, K is physical capital and N is natural capital (i.e., resources). Labor productivity, measured by Q/L, is one of the major indicators of long-term economic growth potential. Labor productivity rises with increases in the physical and natural capital stocks. The quantity of the labor resource depends on worker health, H, which depends on environmental quality. A decrease in environmental quality reduces L which reduces Q (e.g., air pollution makes people sick, sick people take sick days off from work, less work gets done). The health of the labor resource also depends on the access and use of health care. So, sick people could go to the doctor and get well quicker and starting working again. What?  The current administration also wants to cut health care? Well then, nevermind.

Even as renewables increase, fossil fuels continue to dominate U.S. energy mix – EIA - Fossil fuels have provided more than 80% of total U.S. energy consumption for more than 100 years. Since 1928, when consumption of natural gas surpassed that of biomass, the three fossil fuels—petroleum, natural gas, and coal—have been the most consumed fuels in the United States. In 2016, fossil fuels accounted for 81% of total U.S. energy consumption, the lowest fossil fuel share in the past century.  In 2016, the renewable share of energy consumption in the United States was 10.5%. This was the largest renewable share since the 1930s, when overall energy consumption was lower and the amount of biomass consumption (mainly wood) was relatively high. The greatest growth in renewables over the past decade has been in solar and wind electricity generation. Liquid biofuel consumption—more than half of which is ethanol blended into motor gasoline—has also increased in recent years, contributing to the growing renewable share of total energy consumption.  In addition to the increasing share of renewables, the decline in the fossil fuel share of consumption is attributable mainly to declines in coal consumption. U.S. coal consumption fell nearly 9% in 2016, following a 14% drop in 2015. Overall, U.S. coal consumption has declined almost 38% since 2005. In each of the past 20 years, the power sector has accounted for more than 90% of total U.S. coal consumption. Petroleum, which encompasses nearly all transportation fuels and several petroleum-based fuels used in homes, businesses, and industries, continues to be the largest source of energy consumption in the United States. Petroleum consumption has increased in each of the past four years.  Consumption of natural gas has risen in 9 of the past 10 years. As recently as 2006, the United States consumed more coal than natural gas (in energy-equivalent terms), but as natural gas consumption has increased—particularly in the electric power sector—natural gas use in 2016 was about twice that of coal.

G20 public finance for fossil fuels 'is four times more than renewables' -- The G20 nations provide four times more public financing to fossil fuels than to renewable energy, a report has revealed ahead of their summit in Hamburg, where Angela Merkel has said climate change will be at the heart of the agenda. The authors of the report accuse the G20 of “talking out of both sides of their mouths” and the summit faces the challenge of a sceptical US administration after Donald Trump pulled out of the global Paris agreement. The public finance comes in the form of soft loans and guarantees from governments, and, along with huge fossil fuel subsidies, makes coal, oil and gas plants cheaper and locks in carbon emissions for decades to come. But scientists calculate that to keep global warming below 2C, most fossil fuel reserves must be kept in the ground, requiring a major shift of investment to clean energy. The new report by a coalition of NGOs found that the G20 countries provided an average of $71.8bn of public finance for fossil-fuel projects per year between 2013-2015, compared with just $18.7bn for renewable energy. Japan provided the most at $16.5bn per year, which was six times more than it allotted for renewables. China, which is curbing its coal use and increasingly being seen as a climate leader, provided $13.5bn for fossil fuels but just $85m for green energy. Germany, also seen a climate leader, provided $3.5bn of public finance for fossil fuels, compared with $2.4bn for renewables. Britain provided $972m for fossil fuels, compared with $172m for renewable energy. “When the G20 countries committed to the Paris agreement, they made a pact with the world that they would take meaningful steps to reduce their carbon emissions in an effort to avert the worst effects of the climate crisis,” said Nicole Ghio of the Sierra Club, one of the groups that compiled the report. “But as we now know, these countries have been talking out of both sides of their mouths.” 

U.S. Sending $6 Billion to Subsidize Fossil Fuel Projects Abroad - The best available science shows an urgent need to keep global temperature increases below 1.5°C to avoid severe disruptions to people and ecosystems. Recent analysis shows that burning the reserves in already operating oil and gas fields alone, even if coal mining is completely phased out, would take the world beyond 1.5°C of warming. The potential carbon emissions from all fossil fuels in the world's already operating fields and mines would take us well beyond 2°C. Despite this reality, the same governments that have signed on to the Paris agreement on climate change —which agrees to hold global warming to well below 2°C and to strive to limit warming to 1.5°C—continue to provide sweetheart loans, guarantees and other forms of preferential financing to fossil fuel projects that could cause the world to blow past those climate targets.   This analysis shows that G20 governments are providing nearly four times more public finance to fossil fuels than to clean energy .  With the U.S. indicating that it intends to pull out of the Paris agreement, other governments must provide leadership in the clean energy transition: The remaining G20 governments will need to step up. Governments simply cannot be climate leaders while continuing to finance fossil fuels at current rates.  Governments must begin to shift trillions of dollars in investment from polluting infrastructure to low-emission, climate- resilient activities—a massive financial shift from "brown" to "green"—to stay within climate limits. They should start with their own public finance. Yet this analysis shows that recent trends are in the opposite direction. Public finance for fossil fuels far outstrips public finance for clean energy sources—a trend that will have to rapidly reverse in order to avoid the worst impacts of climate change.

House GOP tucks pro-gun measure inside energy appropriations bill   - Deep in an energy and water appropriations bill is a provision that would lift a prohibition of guns on federal property controlled by the U.S. Army Corps of Engineers. For years, the powerful gun lobby has been aggressively pushing to allow gun-carrying in buildings and areas owned or operated by local, state, and federal governments. At the federal level, gun advocates succeeded in getting the National Park Service and National Wildlife Refuges to allow loaded guns onto their lands. The laws opening both national parks and wildlife refuges to guns took effect in February 2010. Now, Army Corps lands are one of the few remaining pieces of federally controlled lands that have not been opened up to gun-carrying. The Army Corps, which controls 12 million acres of land around lakes and rivers, has banned carrying loaded guns on its lands since the 1970s. The proposed fiscal year 2018 energy and water appropriations bill — that a House Democrat says would do “real violence” to the federal government’s efficiency and renewable programs — states “the secretary of the Army shall not promulgate or enforce any regulation that prohibits an individual from possessing a firearm, including an assembled or functional firearm, at a water resources development project” overseen by the Army Corps. As part of its water resources mission, the Army Corps is responsible for 11.7 million acres of land and waters at 422 lake and river projects with recreation, 95,000 campsites, 6,500 miles of trails, and 3,522 boat launches. The agency’s water resources development projects include deep water ports and inland waterways, flood and storm damage reduction, hydroelectric generation, and water supply for irrigation and municipal and industrial purposes. In past years, the Army Corps stated it wanted to keep the ban in place because the areas the agency oversees, including hydroelectric dams, have security risks.

OE grid study has wind and solar lobbyists spooked — rightly -- When Energy Secretary Rick Perry requested a study of electric grid reliability, wind and solar energy lobbyists were predictably alarmed. Perry wanted to know how federal policies were shaping wholesale electricity markets and whether public policies were responsible for forcing the premature retirement of baseload power plants. The reason for the alarm? The request mentioned government mandates and subsidies, which have driven wind and solar energy’s growth, as possible drivers of reliability concerns. The industry lobbyists are right to be sensitive. Despite constantly touting the rapidly falling cost of wind and solar, industry growth over the next decade depends on mandates and subsidies. The lobbyists are not wrong about falling costs. The most recent Wind Technologies Market Report, a Department of Energy (DOE) study, highlights the up to 40 percent drop in wind turbine costs since 2008. Over the same period, solar PV costs have fallen by as much as 70 percent.  Are policies supporting wind and solar energy responsible for the premature retirement of baseload power? In some sense, the answer is obvious. Without wind and solar energy, sales to existing resources would have been higher and most of these resources are only on the grid because of government subsidies and mandates.

Construction costs for most power plant types have fallen in recent years --Based on EIA survey data for new, utility-scale electric generators (those with a capacity greater than one megawatt), capacity-weighted average construction costs for many generator types have fallen in recent years. Annual changes in construction costs include the effects of differences in the geographic distribution of installed capacity between years, differences in technology types, and other changes in capital and financing costs. EIA began collecting data on construction costs for new utility-scale generators installed in 2013. The data for each year reflect projects completed in that year. Because power plants are often constructed over several years, reported costs are not necessarily indicative of the cost of a project initiated in that year. Government grants, tax benefits, and other incentives are excluded from these costs. Construction costs alone do not determine the economic attractiveness of a generation technology. Other factors such as fuel costs (for generators that consume fuel), utilization rates, financial incentives, and state policies also affect project economics and, in turn, the kinds of power plants that are built.In 2015, wind, natural gas, and solar were the most commonly added capacity types, adding 8.1 gigawatts (GW), 6.5 GW, and 3.2 GW, respectively. In the case of wind and solar, almost all of these additions (98% and 91%, respectively) were at new plants, as opposed to new generators at existing plants.  For natural gas, about 60% of the capacity added in 2015 was new generators at new plants, and the remaining 40% were new generators at existing plants. For other fuels such as hydro and petroleum liquids, which had relatively little capacity added in 2015, almost all of those additions were located at existing plants. Construction costs for battery storage units are available for the first time in 2015.

Wind Share of Electricity Generation by State, 2016 - Big Picture Agriculture (map and graph) The share of electricity generation exceeded 10% in 14 states in 2016. Nebraska was less than 3 percent just 5 years ago and is now over 10%.  Wind provided 5.5% of U.S. electricity generation in 2016. The top five states by percentage of electricity generation are Iowa 36.6%, South Dakota 30.3%, Kansas 29.6%, Oklahoma 25.1%, North Dakota 21.5%. Each of them are producing more than 20% of their electricity generation by wind.

Booming solar energy demand raising ecological concerns in Canada - It is widely held by scientists that solar technology is key in building a clean, renewable energy infrastructure — but the environmental damage caused by mining the metals needed to produce solar panels creates an ecological conundrum.Now a new report from Simon Fraser University says Canada, and B.C. in particular, need to focus on environmentally responsible mining while acquiring the metals instrumental to the production of solar panels."Canada is home to 14 of the 19 metals and minerals that go into making a solar panel," said Dan Woynillowicz, the policy director at Clean Energy Canada and co-author of the SFU report.  "When we looked across the country at both existing and exploration projects for some of these metals ... B.C. is the most active player today," said Woynillowicz on The Early Edition.The demand for solar power is expected to grow drastically as solar photovoltaic systems become the planet's cheapest source of energy. And as that demand grows, so will Canada's mining industry and potentially B.C.'s economy, he said. "The question for Canadians is: can we actually put in place regulations, and the practices by mining companies, to capitalize on this as an opportunity to create growth?" said Woynillowicz. "I think that's the challenge for our policymakers and our mining companies."

South Australia’s power prices to be highest in world: South Australians will be slugged with the highest household electricity prices in the world from next month, energy market ­expert Bruce Mountain says, in another blow to a state with the slowest population growth on mainland Australia. The director of energy and utilities consultancy firm Carbon and Energy Markets said South Australia “unequivocally will have, both prior to sales taxes and after taxes, the highest household electricity prices in the world”. Mr Mountain told The Australian that before taxes and levies, household electricity prices in South Australia from July 1 would be about three times higher than they are in Denmark. “My calculation is that after July 1, the representative household electricity customer in South Australia will be paying slightly higher prices, after all taxes, than the representative household in Denmark, which currently has the world’s highest electricity ­prices. This comparison is at market exchange rates,” he said. He was yesterday “lost for words” after a family-owned specialist plastics recycling company in South Australia was forced to close, with the loss of 35 jobs, after its electricity bills soared from $80,000 a month to $180,000 a month during the past 18 months. Plastic Granulating Services managing director Stephen Scherer said power price hikes, driven by the closure of the state’s last coal-fired power station and a more than 40 per cent green ­energy mix, were the “final straw” for a company founded by his ­father 38 years ago. “I am absolutely devastated,” Mr Scherer said yesterday.

Turkish power ship proposed for Adelaide -- A large-scale temporary power solution is being considered, as South Australia struggles to ensure its energy security.A 250 MW ship-based power station is under consideration as a solution to the crisis for the Australian state, which has seen a lot of investment in renewable power over recent years, while old fossil stations were retired. The Turkish ship could be operational by the end of the year for less than the $360m budgeted for a new state-owned gas-fired power plant of the same capacity. The ship-based plant would plug into the high-voltage grid near the 479 MW Pelican Point power station, which returns to full capacity on July 1.  A second option would be for a 125 MW Powership at Outer Harbor and another of the same size anchored off Port Augusta, plugging into the grid near the site of the defunct Northern power station. The Powership fleet can operate on natural gas, liquid natural gas or heavy fuel oil and it is likely the ship would be leased until a permanent plant was built. The Istanbul-based firm, Karpowership, has installed the barge or ship-mounted power plants in Ghana, Iraq, Lebanon, Indonesia, Zambia, and Mozambique.

What Scotland’s Renewables Record Means for the Grid -Record-breaking renewable generation in Scotland was cheered by environmentalists last month. But grid planners remain cautious. “Market design and the existing network are not geared to the level of flexibility and adaptation that is required” in the country, said Aris Karcanias, co-lead of the clean energy practice at FTI Consulting. “We are challenged as we’re dealing with a system imbalance between generation source and demand pool, an aging grid, generation at the distributed level, a lack of transparency in data, and an uncertain regulatory framework often distorted by intervention,” said Karcanias. Karcanias said the need to upgrade the grid is becoming “a meaningful issue” in places such as Scotland where renewable energy penetration is climbing steeply. Andy Bradley, director at Edinburgh-based Delta Energy & Environment, said news of renewables’ record contribution to the Scottish grid is “fantastic” -- but cautioned that “it’s only one part of the puzzle."

World's Biggest Offshore Wind Developer Worries About Construction Delays in Germany - The world’s biggest offshore wind developer said construction delays on key electricity cables that will take North Sea wind power to Germany’s industrial heartland risk undermining the confidence of investors in new projects.  Dong Energy A/S sees delays as driving up costs of working in Germany, board member Samuel Leupold said in an interview in Berlin. Slow completion of a 916-MW grid hub stalled the operational start of Dong’s 582-MW Gode Wind I and II, which was completed last year, he said. Most if not all transmission projects in German waters were held up, and this is “shaking investor confidence, no doubt about that,” said Leupold, who is also Dong’s vice president for wind power. He spoke in the German capital after officially opening Dong’s Gode I and II wind facilities on Monday. While offshore developers in countries including the U.K., U.S. and Taiwan can plan their own grids, in Germany they’re bound to follow government transmission plans awarded to Tennet TSO GmbH. Federal, state and municipal planning restrictions and dithering have delayed completion of Germany’s 34 billion euro (US$38 billion) “super highway” of power lines, which will transfer clean power from northern coastal zones to the south, until 2025. For Dong, the delays mean potential cost overruns as the company presses ahead with plans to spend about 5 billion euros on German offshore by 2019. The company expects to open its biggest project to date, the 450-MW Borkum Riffgrund 2 field, in two years.

EU countries lack investment strategy in shift to low-carbon economy - Most European Union countries lack a clear strategy for redirecting public and private funds towards more sustainable investments as they shift to a low-carbon economy, the European Environment Agency (EEA) said Thursday. "Only a few European countries have turned their climate and energy objectives into concrete investment needs and plans to date," it said as it released a new study. It noted that only Belgium, the Czech Republic, Estonia, France, and to some extent, Germany have a national strategy in place to track spending related to climate mitigation and adaption. The EU estimates it should have investments of around 177 billion euros ($200 billion) per year from 2021-2030 to meet climate and energy targets, which will require a doubling of current investments in renewable energy and energy efficiency. "The study identifies a lack of country-level preparedness and information regarding estimated total investment needs, as well as their current and planned expenditure volumes for climate and energy purposes," the EEA said.

This Supermajor Is Leading The Charge On Renewables -- France-based Total S.A. is one of the elite seven “supermajor” oil companies in the world. When people talk about “Big Oil,” Total is exactly the kind of corporation they’re talking about. They have an aggressive vertical strategy, with businesses in every part of the fossil fuel world, from crude oil and natural gas exploration and production all the way down to the marketing of petroleum products. One would think that the company's primary goal would be to do everything they can to continue the reign of oil in perpetuity, and yet, on Total’s website, the casual visitor can find this statement:  “For Total, contributing to the development of renewable energies is as much a strategic choice as an industrial responsibility. We are doing our part to diversify the global energy mix by investing in renewables, with a strategic focus on solar energy and bioenergies.”  Total is leading what looks to be a wave of giant oil companies investing in the competition. Last year they spent nearly €1bn on buying a battery manufacturer, a move that Total chairman and chief executive Patrick Pouyanné said would “allow us to complement our portfolio with electricity storage solutions, a key component of the future growth of renewable energy”. While it’s not the only oil giant making a move toward alternative energies, some industry experts say Total is the only one taking renewables seriously. , Total’s gas and renewable power division, which includes solar, biofuels and batteries, has 13,000 employees and represented $4.7bn of capital expenditure in 2016.

Tesla wins giant battery contract in Australia, has 100 day deadline - Tesla has won an Australian contract to install the world's biggest grid-scale battery, in what experts say will be a litmus test for the reliability of large-scale renewable energy. Tesla's CEO Elon Musk, known for his bold approach to cars, clean energy and space exploration, trumped dozens of competing proposals to build the gigantic lithium-ion battery that will serve as emergency back-up power for South Australia - a state racked by outages. But under the agreement, Tesla must deliver the 100-MW battery within 100 days of the contract being signed or it will be free - a commitment Musk made in a Tweet in March. "There will be a lot of people that will look at this -'Did they get it done within 100 days? Did it work?'" Musk told reporters in South Australia's capital city of Adelaide. "We are going to make sure it does." The battery, designed to light up 30,000 homes if there is a blackout, will be built on a wind farm operated by France's Neoen - parts of which are still under construction. Musk said failing to deliver the project in time would cost his company "$50 million or more", without elaborating. It will be the largest lithium-ion battery storage project in the world, overtaking an 80 megawatt-hour facility in California, also built using Tesla batteries.

Companies have to open up about climate risks: Shell CEO | Reuters: Climate change poses one of the biggest long-term risks to the global economy and companies, including big oil and gas firms such as Shell, have to be open about how the risks will affect them, its chief executive said on Tuesday. Shell, one of the biggest oil and gas producing firms in the world, is under growing pressure from some shareholders to improve its carbon footprint and sustainability credentials. Shell said it assesses climate change risks internally but it has so far not disclosed in detail what financial impact climate-related risks could have. A think-tank estimated last month that energy companies could be wasting more than $2 trillion by 2025 on projects that will not be needed if governments' carbon-reduction targets are met. "It is right that it should be transparent which companies are truly on firm foundations over the long-term," Shell CEO Ben van Beurden wrote in a post on social media platform LinkedIn. Shell's press office confirmed its veracity. Last week, Shell signed up to a G20 task-force working on a framework to improve the ability to assess and price climate-related risks. Van Beurden said Shell will help the task-force determine a way to disclose commercially sensitive data.

Statoil to look at building world's first CO2 injection storage | Reuters: Statoil will look at building a carbon storage facility offshore Norway, in what the energy company said on Friday could be the world's first storage site to receive carbon dioxide from several industrial sources. "It will capture CO2 from three onshore industrial facilities in eastern Norway and ... have the potential to receive CO2 from both Norwegian and European emission sources," the company said. CO2 injection possibilities have been a long-researched target for global energy-hungry companies aiming to reduce emissions and achieve targets set by the Paris agreement on climate change. Such a project could also provide CO2 injection solutions for hydrogen producers that process natural gas, generating CO2 as a by-product, Statoil said. The proposal by Gassnova, the Norwegian state-owned carbon capture technology firm that gave the assignment to Statoil, consists of a plant that will receive CO2 from ships, which will be further injected into wells east of Norway's Troll gas field.

EPA proposes 2018 biofuel blending mandate at 19.24 billion gallons -- The US Environmental Protection Agency proposed Wednesday to require refiners and blenders to mix 19.24 billion gallons of renewable fuel into the US transportation fuel supply in 2018, down 40 million gallons from its required level for this year.The proposed 2018 Renewable Fuel Standard requires that 4.24 billion gallons of the total must be advanced biofuels, including 2.1 billion gallons of biodiesel and 238 million gallons of cellulosic biofuels. The biodiesel volume was set last year.The proposal, expected to be finalized by the end of November, includes an implied 15 billion gallons of conventional ethanol, the same as 2017 levels. The EPA on Wednesday also proposed setting 2019 biodiesel requirements at 2.1 billion gallons."We are proposing new volumes consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace," EPA Administrator Scott Pruitt said in a statement Wednesday. During a June 21 rally in Iowa, President Donald Trump said that his administration was "saving" the ethanol industry "just like I promised I would do in my campaign." During his speech, Trump said the US ethanol industry was "under siege."

Trucks drive through the energy-efficiency policy gap  -- The world’s leading energy body is calling for countries to do more to regulate heavy goods vehicles and trucks, which have lagged behind cars in improving fuel efficiency and reducing carbon dioxide emissions.In a report the International Energy Agency said there was a policy gap in legislation for so-called road freight transport — spanning lorries carrying industrial goods to supermarket trucks and vans delivering packages from online retailers. Only four countries have energy-efficiency standards for heavy duty transport, compared with about 40 countries that have similar rules for cars and smaller passenger vehicles, the IEA said. “The volumes of oil consumed and carbon emissions given out by these vehicles is huge, but policy attention has been very little,” said Fatih Birol, executive director of the Paris-based body.

Volvo, Betting On Electric, Moves To Phase Out Conventional Engines -- Volvo Cars on Wednesday became the first mainstream automaker to sound the death knell of the internal combustion engine, saying that all the models it introduces starting in 2019 will be either hybrids or powered solely by batteries. The decision is the boldest commitment by any major car company to technologies that currently represent a small share of the total vehicle market but are increasingly viewed as essential to combating climate change and urban pollution. While most major automakers offer hybrids and battery-powered options, none of them have been willing to forsake cars powered solely by gasoline or diesel fuel. On the contrary, United States automakers have continued to churn out S.U.V.s and pickup trucks, whose sales have surged because of relatively low fuel prices. Yet Volvo’s move may be the latest sign that the era of the gas guzzler is slowly coming to an end. Tesla, which makes only limited numbers of electric cars, surpassed Ford and General Motors this year in terms of stock market value, despite making significantly fewer cars than those automotive giants — a clear indication of where investors think the industry is headed.  Though based in Sweden, Volvo is owned by Geely Automobile Holdings of China, which already produces battery-powered cars for the Chinese market. The decision by Volvo to focus on electric vehicles could ultimately give it and Geely a head start if, as many analysts expect, sales of battery powered cars begin to take off. China is already the largest market for electric vehicles. Volvo’s battery-powered vehicles will be produced initially in China, but eventually also in Europe and at a new factory the company is building near Charleston, S.C.

France to end sale of diesel and gasoline vehicles by 2040 | Reuters: France aims to end the sale of gasoline and diesel vehicles by 2040 and become carbon neutral 10 years later, Ecology Minister Nicolas Hulot said on Thursday at a presentation of measures to keep up momentum on the Paris climate agreement. French President Emmanuel Macron wants to press ahead with implementing the pact to fight climate change after U.S President Donald Trump pulled out of the landmark deal reached in the French capital in 2015. Hulot presented an array of measures under six themes and 23 policy proposals, but most were short of specific details on how exactly the objectives would be achieved. "One of the symbolic acts of the plan is that France, which previously had made the promise to divide its greenhouse gas emissions by four by 2050, has decided to become carbon neutral by 2050 following the U.S. decision," Hulot said. "The carbon neutral objective will force us to make the necessary investments," he added. He said the proposals such as the decision to end the sale of fossil fuel powered vehicles was a tall order and would constitute something of a 'revolution', but solutions were available and French carmakers would be up to the task. Diesel and gasoline vehicles represented about 95.2 percent of French new car fleets in the first half of year, while electric vehicles hold 1.2 percent of the market. Hybrid cars make up about 3.5 percent.

France to Ban Sale of Cars Powered by Gasoline and Diesel - France plans to end the sale of vehicles powered by gasoline and diesel by 2040, environment minister Nicolas Hulot said. Hulot made the announcement Thursday in Paris as he launched the country's new Climate Plan to accelerate the transition to clean energy and to meet its targets under the Paris climate agreement . To ease the transition, Hulot said the French government will offer tax incentives to replace fossil-fuel burning cars with clean alternatives. "The government will offer each French person a bonus to replace their diesel car dating before 1997 or petrol from before 2001 by a new or second-hand vehicle," he said. "The target is a tough one," he noted, "but France wants to become the No. 1 green economy."   Hulot is a former TV host of nature documentaries and a popular environmental activist. His appointment as ecology minister was seen as a major "coup" by French President Emmanuel Macron 's new administration. In Alabama, for example, premiums would increase 164 percent from $156 a month to $411 under the BRCA. In Alaska, they would increase 142 percent from $334 a month to $802 a month. The reductions in premium subsidies, in concert with tax cuts for the wealthy, will cost Americans jobs as well. Because low- and moderate-income households tend to spend a much higher share of their disposable income, the overall effect of the BCRA would be less spending and lower aggregate demand across every state and congressional district.  This pain is highly unequal in its distribution, in more ways than one: There are differences in net premium increases among the states. These results actually understate the increases in out-of-pocket costs under BCRA since they do not reflect the higher deductibles that would be imposed.

Quarterly Coal Report - Energy Information Administration - The Quarterly Coal Report (QCR) provides detailed quarterly data on U.S. coal production, exports, imports, receipts, prices, consumption, quality, stocks, and refined coal. Data on U.S. coke production, consumption, stocks, imports, and exports are also provided. All data for 2015 and prior years are final. All data for 2016 and 2017 are preliminary. Highlights for first quarter 2017:

  • U.S. coal production during first quarter 2017 totaled 197.0 million short tons. This was 1.3% lower than the previous quarter and 13.9% higher than first quarter 2016. Production in the Western Region, which represented about 54.7% of total U.S. coal production in first quarter 2017, totaled about 107.8 million short tons (17.4% higher than first quarter 2016).
  • First quarter 2017 U.S. coal exports (22.3 million short tons) increased 15.3% from fourth quarter 2016 and increased 57.6% from first quarter 2016. The average price of U.S. coal exports during the first quarter 2017 was $110.44 per short ton.
  • The United States continued to import coal primarily from Colombia (86.1%), Canada (10.7%), and Indonesia (3.1%). No imports were recorded from Australia for first quarter 2017. U.S. coal imports in first quarter 2017 totaled 1.9 million short tons. The average price of U.S. coal imports during the first quarter 2017 was $74.81 per short ton.
  • Steam coal exports totaled 10.1 million short tons (31.6% higher than fourth quarter 2016); metallurgical coal exports totaled 12.2 million short tons (4.6% higher than fourth quarter 2016).

Southern's Clean Coal Experiment Ends With Mississippi Order -- A seven-year, $7.5 billion effort to build a first-of-its-kind “clean coal” power plant in Mississippi is officially over. Mississippi regulators ordered utility owner Southern Co. on Thursday to come up with a deal that’ll have the Kemper plant -- once hailed by the Obama administration as the future of coal -- running as a natural gas-fired generator instead. That ratified Southern’s June 28 proposal to pull the plug on using coal there. The ruling seals the fate of the Kemper plant, and memorializes the state utility commission’s call last month for the company to give up on “unproven” technologies at the plant. It also assures that customers won’t pay for the failure. Almost three years after the plant began generating power with gas, Southern has been unable to put crucial coal-gasifiers into service. The death of Kemper’s “clean coal” component represents a major setback for the very technologies that President Donald Trump has promoted as a way to help save mining jobs. It also marks the end of a high-profile project that was plagued by construction slowdowns, equipment failures and sliding gas prices. Kemper is already years behind schedule and more than $4 billion over budget. The Mississippi Public Service Commission told Southern it wants to finalize a settlement within 90 days guaranteeing that customers won’t pay for the coal portion of the plant. Southern last month warned investors that it may take a $3.4 billion second-quarter charge if the company isn’t authorized to recover the costs of the project from customers. "Today’s proceeding is in line with the framework the commission laid out two weeks ago,” Jack Bonnikson, a Mississippi Power spokesman, said by email Thursday. “We look forward to reviewing the order.” 

US coal’s future – not exactly bullish, but hardly bearish -- Over lunch at a recent energy conference, a fellow attendee asked where I worked and what I did, and I explained that I lead coverage of the US thermal coal market for S&P Global Platts. The gentleman, who worked for a group that finances renewable energy projects, had several questions about coal, and each answer seemed to only increase his incredulity. “So, let me understand,” said the gentleman finally. “You are bullish on coal?” No, I’m not. In the US, thermal coal is facing a long-term decline in demand, driven by cheap natural gas, an increase in renewable generation, and state and local authorities intent on reducing carbon emissions. But what gets lost in a blur of doom-filled headlines is the fact that a significant amount of electricity consumed in the US is still fueled by coal. In 2016, the US power sector consumed 677 million short tons of coal, generating 1,240 TWh of electricity, or 30.4% of the nation’s electricity, according to Energy Information Administration data. Power sector coal consumption was down 8.3% from the 738 million st burned in 2015, and down 20.5% from the 852 million st burned in 2014. But those drops were largely the result of historically low natural gas prices. In 2014, the NYMEX Henry Hub natural gas futures price averaged $4.27/MMBtu, but dropped to $2.63/MMBtu in 2015 and $2.55/MMBtu last year. So far this year, the gas contract is averaging $3.10/MMBtu, which helps make coal competitive. Partly due to higher natural gas prices, the EIA expects power sector coal consumption to total 677 million st in 2017, and 687 million st in 2018. But even if gas dropped to $1/MMBtu, utilities would continue to burn coal. There just isn’t enough natural gas to replace it. 

Coal on the rise in China, US, India after major 2016 drop — The world's biggest coal users — China, the United States and India — have boosted coal mining in 2017, in an abrupt departure from last year's record global decline for the heavily polluting fuel and a setback to efforts to rein in climate change emissions. Mining data reviewed by The Associated Press show that production through May is up by at least 121 million tons, or 6 percent, for the three countries compared to the same period last year. The change is most dramatic in the U.S., where coal mining rose 19 percent in the first five months of the year, according to U.S. Department of Energy data. Coal's fortunes had appeared to hit a new low less than two weeks ago, when British energy company BP reported that tonnage mined worldwide fell 6.5 percent in 2016, the largest drop on record. China and the U.S. accounted for almost all the decline, while India showed a slight increase. The reasons for this year's turnaround include policy shifts in China, changes in U.S. energy markets and India's continued push to provide electricity to more of its poor, industry experts said. President Donald Trump's role as coal's booster-in-chief in the U.S. has played at most a minor role, they said. The fuel's popularity waned over the past several years as renewable power and natural gas made gains and China moved to curb dangerous levels of urban smog from burning coal. Whether coal's comeback proves lasting has significant implications for long-term emission reduction targets, and for environmentalists' hopes that China and India could emerge as leaders in battling climate change. 

As Beijing Joins Climate Fight, Chinese Companies Build coal plants - When China halted plans for more than 100 new coal-fired power plants this year, even as President Trump vowed to “bring back coal” in America, the contrast seemed to confirm Beijing’s new role as a leader in the fight against climate change. But new data on the world’s biggest developers of coal-fired power plants paints a very different picture: China’s energy companies will make up nearly half of the new coal generation expected to go online in the next decade. These Chinese corporations are building or planning to build more than 700 new coal plants at home and around the world, some in countries that today burn little or no coal, according to tallies compiled by Urgewald, an environmental group based in Berlin. Many of the plants are in China, but by capacity, roughly a fifth of these new coal power stations are in other countries.  Over all, 1,600 coal plants are planned or under construction in 62 countries, according to Urgewald’s tally, which uses data from the Global Coal Plant Tracker portal. The new plants would expand the world’s coal-fired power capacity by 43 percent. The fleet of new coal plants would make it virtually impossible to meet the goals set in the Paris climate accord, which aims to keep the increase in global temperatures from preindustrial levels below 3.6 degrees Fahrenheit.  The United States may also be back in the game. On Thursday, Mr. Trump said he wanted to lift Obama-era restrictions on American financing for overseas coal projects as part of an energy policy focused on exports.  “We have nearly 100 years’ worth of natural gas and more than 250 years’ worth of clean, beautiful coal,” he said. “We will be dominant. We will export American energy all over the world, all around the globe.” The frenzied addition of coal plants underscores how the world is set to remain dependent on coal for decades, despite fast growth in renewable energy sources, like wind and solar power.

Exclusive: Indian utility bets $10 billion on coal power despite surplus, green concerns | Reuters: India's state-run power utility plans to invest $10 billion in new coal-fired power stations over the next five years despite the electricity regulator's assessment that thermal plants now under construction will be able to meet demand until 2027. In the first phase, India's biggest power producer, NTPC, plans to build three new plants with a combined capacity of more than 5 gigawatts (GW), nearly double the capacity of those currently being phased out, five senior company officials said. The company has not made the investment public because it has not yet received government approval. If approved, the plan could set back efforts by the world's third-largest greenhouse gas emitter to control carbon output and raise questions about Prime Minister Narendra Modi's vow to stand by commitments under the Paris climate accord. The proposal also comes as several coal-fired stations built in the last power boom a decade ago are standing idle due to softer-than-expected demand. State-controlled Coal India (COAL.NS) is struggling to sell its stockpile as a result. But other indicators indicate demand will pick up, a top NTPC executive said, asking not to be named because the plan had not yet been announced. "I don't think (the current) electricity surplus will be there for a long time," he told Reuters. "We should not fool ourselves."

Puerto Rico seeks to export coal ash, bans it from landfills   (AP) — Puerto Rico's governor on Tuesday signed a law that bans coal ash from being deposited in landfills across the U.S. territory, though critics complained the measure does not go far enough to protect people's health. Gov. Ricardo Rossello said coal ash can only be used for commercial purposes if it meets local and federal environmental laws. He also announced the creation of a $10 million company that would convert coal ash into construction material for exportation. The company is expected to start operating in a year. "The policy of this administration is to seek commercial alternatives to create jobs and to export the ash generated on the island," Rossello said. Applied Energy Systems, a company that uses mineral coal to generate power for Puerto Rico, had been depositing ash in the island's southern region. The practice sparked multiple protests, including an ongoing one that is barring trucks carrying coal ash from entering a landfill in the southern coastal town of Penuelas. A message left with a company official was not immediately returned. Critics say the law does not go far enough because it does not prohibit the use of coal ash for commercial purposes, nor the deposit of other types of ash in landfills. 

1,800 tons of radioactive waste has an ocean view and nowhere to go - The massive, 150-ton turbines have stopped spinning. The mile-long cooling pipes that extend into the Pacific will likely become undersea relics. High voltage that once energized the homes of more than a million Californians is down to zero.But the San Onofre nuclear power plant will loom for a long time as a landmark, its 1,800 tons of lethal radioactive waste stored on the edge of the Pacific and within sight of the busy 5 Freeway.Across the site, deep pools of water and massive concrete casks confine high-power gamma radiation and other forms of radioactivity emitted by 890,000 spent fuel rods that nobody wants there.And like the other 79,000 tons of spent fuel spread across the nation, San Onofre’s nuclear waste has nowhere to go.The nation’s inability to find a permanent home for the dangerous byproduct of its 50-year-adventure in nuclear energy represents one of the biggest and longest running policy failures in federal government history.Now, the Trump administration and Congress are proposing a fast track fix. The new plan aims, after decades of delays, to move the waste to one or more temporary central storage sites that would hold it until a geologic repository can be built in Nevada or somewhere else.  But the new strategy faces many of the same challenges that have dogged past efforts, leaving some experts doubtful that it can succeed.The shuttered San Onofre facility — not withstanding its overlook of prime surf breaks — is similar to about a dozen other former nuclear power plants nationwide that now have to babysit waste to prevent natural disasters, human errors or terrorist plots from causing an environmental or health catastrophe.

US Falls Behind the Rest of the World in Nuclear Power Production -- Nuclear power supplies 20 percent of electrical power in the U.S. and the majority of power needs in seven states. Along with solar, hydro and wind power, it emits no carbons into the atmosphere. Nuclear power is far more economical than solar or wind, and on a cost-per kilowatt hour, comparable to hydro-electric generation. Yet, nuclear power continues to suffer from misperceptions and misrepresentations, particularly about its safety. According to the Washington Post, it is the safest way to produce electricity.Europe has unequivocally embraced nuclear power. France gets 70 percent of its electricity from nuclear; Belgium 52 percent; Sweden 40 percent and Switzerland and Finland each 34 percent. And both Russia and China are attempting to become the major builder-operators of nuclear facilities around the world; combined, they have 30 new construction projects underway. America’s traditional leadership in this area is being sorely tested.America’s energy needs continue to rise, and unfortunately, neither wind nor solar are able to meet these needs economically. Natural gas-fired generating plants can—but at a cost to the environment. And whether power companies are ready to re-convert their facilities to coal is hypothetical at best. Which brings us back to nuclear.Importantly, this is not a hypothetical debate. There are four nuclear power plants under construction—two in Georgia and two in South Carolina—that are temporarily halted. The builder, Westinghouse, now owned by Japan’s Toshiba, has declared bankruptcy. Westinghouse, one of the most experienced nuclear builder-operators in the world, experienced massive cost over-runs in part because of bureaucratic red tape and delays that stopped construction for nearly a year.

Hackers targeting US nuclear power plants, report finds - For the past couple of months, hackers have breached the computer networks of companies that operate nuclear power facilities in the US, according to a new report from federal law enforcement officials.One of the companies targeted was the Wolf Creek Nuclear Operating Corporation, which operates a nuclear facility near Burlington, Kansas, according to a joint report issued last week by the FBI and Department of Homeland Security and described by The New York Times. The report carried an urgent amber warning, the second-highest rating for the severity of the threat, the Times reported.Organizations running the nation's energy, nuclear and other critical infrastructure have become frequent targets for cyberattacks in recent years. In a 2013 executive order, President Barack Obama called cyberattacks "one of the most serious national security challenges we must confront."President Donald Trump signed an executive order in May designed to bolster the United States' cybersecurity by protecting federal networks, critical infrastructure and the public online. One section of the order focuses on protecting utilities grids like electricity and water, as well as financial, health care and telecommunications systems. The government report didn't indicate whether the purpose of the cyberattacks was espionage or physical destruction, but researchers concluded that hackers appeared to be mapping computer systems for future attack. The origin of the attacks is also unclear, but sources told the Times that hackers' techniques resembled those used by a Russian hacking group known as Energetic Bear, which has been linked to attacks on the energy sector since 2012.

Russians Are Said to Be Suspects in Nuclear Site Hackings -- Hackers working for a foreign government recently breached at least a dozen U.S. power plants, including the Wolf Creek nuclear facility in Kansas, according to current and former U.S. officials, sparking concerns the attackers were searching for vulnerabilities in the electrical grid. The intruders could be positioning themselves to eventually disrupt the nation’s power supply, warned the officials, who noted that a general alert was distributed to utilities a week ago. Adding to those concerns, hackers recently infiltrated an unidentified company that makes control systems for equipment used in the power industry, an attack that officials believe may be related. The chief suspect is Russia, according to three people familiar with the continuing effort to eject the hackers from the computer networks. One of those networks belongs to an aging nuclear generating facility known as Wolf Creek -- owned by Westar Energy Inc., Great Plains Energy Inc. and Kansas Electric Power Cooperative Inc. -- on a lake shore near Burlington, Kansas. The possibility of a Russia connection is particularly worrisome, former and current officials say, because Russian hackers have previously taken down parts of the electrical grid in Ukraine and appear to be testing increasingly advanced tools to disrupt power supplies.  The U.S., which has several continuing investigations into Russia’s activities, is known to possess digital weapons capable of disrupting the electricity grids of rival nations. “We don’t pay attention to such anonymous fakes,” Kremlin spokesman Dmitry Peskov said, in response to a request to comment on alleged Russian involvement.

Former Tepco executives plead not guilty in first Fukushima case | Reuters: Three former executives of Tokyo Electric Power (Tepco) on Friday pleaded not guilty to professional negligence leading to the 2011 Fukushima nuclear disaster, though an analyst said there is little chance they will be convicted. Despite the not guilty pleas, former Tepco chairman Tsunehisa Katsumata, 77, and former executives Sakae Muto, 67, and Ichiro Takekuro, 71, apologized during the hearing at the Tokyo District Court for causing trouble to the victims and society, according to a pool report for foreign journalists. They are the first individuals to face criminal charges for the Fukushima Daiichi nuclear disaster but a high bar for proof may prevent a conviction. Prosecutors earlier declined to bring charges but a civilian judiciary panel twice voted to indict the executives, overruling the prosecutors the second time. "I apologize for the tremendous trouble to the residents in the area and around the country because of the serious accident that caused the release of radioactive materials," Katsumata said, adding he could not have anticipated the risk of high tsunami. Lawyers acting as prosecutors said the three executives had access to data and studies anticipating the risk of a tsunami exceeding 10 meters height in the area that could trigger power loss and cause a nuclear accident, according to the pool report. However, lawyers for the defendants said that such tsunami estimates were not well established, and even experts had divisive views.The defendants' lawyers were not immediately available to the media, a court official said. 

New Report Warns Nuclear War Is Inevitable Unless Cooler Heads Prevail -- As the Syrian and Russian governments accuse the United States of trying to invent reasons to launch an attack in the Middle East, an international group of former military and diplomatic leaders is warning of an “unacceptably high” risk of global nuclear war if cooler heads don’t prevail.In an 11-page report from the Nuclear Crisis Group (NCG) — a subcommittee of Global Zero, an organization that supports the total abolition of nuclear weapons — the former officials make recommendations to governments on ways to de-escalate tensions around the world.“The Nuclear Crisis Group assesses that the risk of nuclear weapons use, intended or otherwise, is unacceptably high and that all states must take constructive steps to reduce these risks,” NCG asserted. NCG is a committee made up of individuals from 10 different countries, including Russia, China, and the United States.  NCG continued in its overview before getting to the specific recommendations. The group echoed the stance of its mother organization, Global Zero:“The only way to eliminate fully the risks of nuclear weapons use is through their abolition. To achieve this, states with nuclear capabilities need, at a minimum, to reduce their reliance on nuclear weapons in their national defense plans, cease expansion of their nuclear arsenals, and reduce the number of weapons.” On the deteriorating situation with North Korea, which NCG considers a primary concern, the group said a true de-escalation of tensions will take some time but that sanctions have clearly failed and that genuine diplomacy is the only avenue:“To reduce immediate nuclear risks, the United States and North Korea should resume bilateral discussions immediately without preconditions.”To get both sides to the table, the group suggested an immediate first step is for the U.S. to knock off the military aggression in the region.

Lawsuit Over Fracking Plan for Ohio's Only National Forest Expanded - Center for Biological Diversity (press release) — Conservation groups today expanded a lawsuit challenging a U.S. Forest Service and Bureau of Land Management plan to permit fracking in Ohio’s only national forest. The groups are challenging a new 1,147-acre March 2017 lease sale in Wayne National Forest and adding claims that the federal fracking plans violate the Endangered Species Act, threatening animals in the forest and downstream.“Federal officials should not be putting corporate profits ahead of endangered species, safe drinking water and public health,” said Taylor McKinnon with the Center for Biological Diversity. “The government is violating its own laws to pave the way for this dangerous fracking plan, and we can’t let that happen.” In May four conservation groups sued the federal agencies in U.S. District Court in Columbus for their failure to analyze impacts to public health, water, endangered species and the climate before opening 40,000 acres of the Wayne National Forest to fracking in 2016, and prior to leasing 670 acres of those lands to the oil industry in December. The expanded lawsuit shows that fracking will threaten endangered mussels downstream from lease parcels, as well as endangered Indiana bats and threatened northern long-eared bats. The bats are already imperiled by forest fragmentation, white-nose syndrome and climate change. Habitat destruction, deadly wastewater pits and water contamination from fracking activities compound these threats. "The Wayne National Forest is home to many species who can't afford to have their habitat damaged by oil and gas development," Fracking will industrialize Ohio’s only national forest with roads, well pads and gas lines, the lawsuit asserts. In addition to destroying Indiana bat habitat, this infrastructure will pollute watersheds and water supplies that support millions of people, and endanger other federally protected species in the area.

Treasury Dept Asked To Investigate Reports That Russia Funneled Millions To US Environmental Groups - House lawmakers have added another twist to the ongoing congressional Russia investigation by asking the Treasury Department to look into allegations Russia secretly funneled money to environmental groups opposed to oil and gas drilling.Top Republicans want the Trump administration to investigate a Bermuda-based shell company that funneled money to a prominent environmental non-profit that’s given millions to anti-fracking activists. Media reports suggest the Bermuda shell company is tied to Russian oligarchs.Republicans on the House Committee on Science, Space and Technology sent a letter to Treasury Secretary Steve Mnuchin asking him to investigate “what appears to be a concerted effort by foreign entities to funnel millions of dollars through various non-profit entities to influence the U.S. energy market.”“If you connect the dots, it is clear that Russia is funding U.S. environmental groups in an effort to suppress our domestic oil and gas industry, specifically hydraulic fracking,” Republican Texas Rep. Lamar Smith said in a statement. Letter signatories Smith and Texas Rep. Randy Weber point to media reports of the U.S.-based environmental group, the Sea Change Foundation, taking $23 million from a Bermuda-based shell company with ties to Russian oligarchs in 2010 and 2011. That same year, Sea Change gave millions to U.S.-based environmentalists, including the Natural Resources Defense Council, the Sierra Club and the League of Conservation Voters. All of those groups oppose hydraulic fracturing, or fracking.

Sulfide-producing bacteria dominate hydraulically fractured oil and gas wells - Phys.Org --Researchers have found that the microbes inhabiting a hydraulically fractured shale formation produce toxic, corrosive sulfide through a poorly understood pathway. The team's findings, published this week in mSphere, an open-access journal of the American Society for Microbiology, reveal that the oil and gas industry may need new ways to monitor and mitigate sulfide-producing bacteria in fractured shales. "This is a pretty inhospitable environment of high pressure, salinity and temperature some 2,000 meters underground. You'd think that microbes introduced during the fracturing process would die, but some of them make a good life for themselves," says Mike Wilkins, an environmental microbiologist at The Ohio State University in Columbus and senior researcher on the study. "The industry spends a fair amount of money trying to keep microbes out of these systems."Hydraulic fracturing, also known as "fracking," involves the high-pressure injection of water, sand, and chemicals into shale formations to create fracture networks that release oil and gas, which are pumped back to the surface and recovered. Practiced for only the last decade, not much is known about the microbial ecosystems in the fracture networks.Sulfide-producing microbes cause multiple problems for drilling operations. Hydrogen sulfide can "sour" a well and must be separated from oil and gas in an expensive process. Sulfides can be toxic to the workers on the drilling pad and can also corrosively degrade metal pipelines. The microbes themselves can gum up the extraction process by filling in the tiny fractures with either biomass or excreted precipitates.

The Economist explains: How fracking leads to babies - A new study by Melissa Kearney and Riley Wilson, two economists at the University of Maryland, looks at the impact of the recent fracking boom in America, which boosted job opportunities for less-educated men. The economists wanted to see how this affected birth rates, both in and outside of marriage. They compared marriage and birth rates in areas where fracking had boosted the local economy with those where it had not had any effect. The researchers found no effect on marriage rates, though fertility rates did rise. On average, they find that $1,000 of extra fracking production per person was associated with an extra six births per 1,000 women.  The result confirms the hypothesis that better economic prospects lead to higher fertility. But it also sheds light on changing social mores in America: good times used to mean more wedding bells and babies, whereas now they just mean the latter. The policy prescriptions are not obvious. Whether or not people get married is their own business. But the finding does offer some comfort to those who worry that declining marriage rates are purely the product of worsening economic prospects for men. Clearly, some other factor is at play. 

Enbridge, lacking financing options, suspends New England gas pipeline project -- Lacking viable financing options, Enbridge has pulled its proposed Access Northeast natural gas pipeline in New England from Federal Energy Regulatory Commission review, saying it could be revived if the region develops policies that would support pipeline development to serve power plants. The $3.2 billion project called for bolstering the Algonquin Gas Transmission system in New York, Connecticut, Rhode Island and Massachusetts and included an expanded liquefied natural gas facility near Boston. Eversource Energy and National Grid backed the project, which was designed to deliver 925,000 Dt to power plants totaling about 5,000 MW. New England governors, ISO New England and others have been pressing for more gas pipeline capacity to supply the region, which is increasingly reliant on gas-fired power plants. There have been price spikes in the winter, when generators compete for gas with homes and businesses that use gas for heating. The proposal depended on New England states allowing electric distribution companies to contract for pipeline capacity and then releasing the capacity to gas-fired power plants who hesitate entering into firm contracts for pipeline capacity. The Massachusetts Supreme Judicial Court and state utility regulators rejected the framework, saying that it violated state rules deregulating the electric utility sector. ‘

State receives first fracking application -  Four years after former Gov. Pat Quinn signed legislation that cleared the way for fracking in Illinois, the state has received its first application for a drilling permit. Woolsey Companies Inc. is looking to drill a well near Enfield in southeastern White County. The company is based in Wichita, Kansas. Illinois Department of Natural Resources spokesman Tim Schweizer says the original paperwork was received on May 22, but the company is expected to submit an amended application to correct a few problems. That will extend the window for officials to consider the proposal. “It appears now we’ll have until August 31 to (decide),” Schweizer said. “The Illinois Oil and Gas staff here at the Illinois Department of Natural Resources will be reviewing the permit application and will ultimately make the decision on whether it is approved or denied.” In the meantime, the public is invited to weigh in with comments about the possible fracking site. “Comments can be submitted in writing and mailed to the Department of Natural Resources here in Springfield,” Schweizer said. “There’s also an opportunity to comment online or you can send in email comments.”

 Trump’s administration pursues radical expansion of offshore drilling - Despite spill risks, bipartisan opposition, Trump’s Department of Interior is moving forward with offshore drilling plans. New offshore oil drilling in Atlantic, Arctic, and Pacific waters may be the next phase in President Donald Trump’s new “energy dominance” strategy, based on an official federal notice published Monday. Following pledges last week by Trump and Secretary of the Interior Ryan Zinke to seek “energy dominance” through large increases in fossil fuel extraction, the Trump administration issued a formal notice that it has begun a process it hopes will dramatically expand offshore oil and gas drilling throughout United States waters.  By publishing the “request for information” from coastal and ocean stakeholders in the Federal Register, the Interior Department initiated what it says will be a two-to-three year long process to develop a new five-year plan for offshore drilling. The Interior Department is legally required to publish five-year plans that specify where and when sales of offshore drilling leases — and therefore future drilling activity — will occur. The expansive new planning effort largely duplicates work by the previous administration, which finalized a five-year plan for 2017 to 2022. That plan, which is currently active, took three years to develop and incorporated more than one million public comments submitted to the Interior Department. Under the plan, 10 lease sales in the Gulf of Mexico and one in the Cook Inlet in southwest Alaska were scheduled over the five-year period. David Hayes, a former Deputy Secretary and Chief Operating Officer of the Interior Department, noted the potential internal impact of the decision, within the context of the Trump administration’s proposed federal budget cuts. “At the same time that the [Interior] Department is proposing to cut 2,000 National Park Service jobs, it is committing money, time, and personnel to overturn an offshore plan that is not due to expire until 2022,” he said. The launch of the fossil fuel “dominance” oriented re-do of the five-year plan indicates the Trump administration officials are set to ignore existing analysis and large blocs of opposition, and instead attempt to follow through on earlier suggestions that their goal is new lease sales and new drilling throughout these highly controversial ocean areas.

Interior opens public review of offshore drilling plan | TheHill: The Interior Department on Monday began accepting public comments on a new five-year offshore drilling plan, an early step toward rewriting the blueprint for drilling in federal waters. Interior published a “request for information” in Monday’s Federal Register, seeking comment from the public and stakeholders on the potential for drilling in the 26 areas of the Outer Continental Shelf (OCS) leased for oil and natural gas production by the federal government. The 45-day comment period is the first step in the lengthy, years-long process of rewriting the program. The procedure involves assessing the economic and environmental impact of drilling, and the effects it would have on ocean features, wildlife and local communities.President Trump announced last Thursday that the public review process would begin this week as part of his agenda of opening up more American offshore areas for oil and gas development. “Under the previous administration, so much of our land was closed to development. We’re opening it up. The right areas, we’re opening it up,” Trump said. “America will be allowed to access the vast energy wealth located right off our shores.” Trump in April ordered Interior Secretary Ryan Zinke to reconsider the five-year offshore drilling plan instituted by President Obama last year. Interior said it will implement that plan, which limits lease sales to the Gulf of Mexico and waters off of south-central Alaska, while reviewing and eventually rewriting it. Interior has also proposed allowing seismic testing for oil and gas in the Atlantic Ocean, the first step toward potential drilling in the area. 

Trump called 'threat to every coastline' as he pushes ocean drilling plan --  Environmentalists have condemned Donald Trump as a “threat to every ocean and coastline in the country”, after the president pushed forward plans to expand oil and gas drilling in the Arctic and Atlantic oceans as part of what he called a new era of “American energy dominance”. The Trump administration has taken the first steps to rewrite a five-year plan, put in place under Barack Obama, that banned drilling along the Atlantic seaboard and in large swaths of the Arctic. The interior department is opening a 45-day public comment period for a new plan that it says will help grow the economy. Green groups have promised in response to mobilize the coastal communities that successfully implored the Obama administration not to open up new areas to drilling, due to fears over the effect of potential oil spills and noise pollution upon livelihoods and wildlife. “Trump’s appalling actions threaten every ocean and coastline in the country,” said Kristen Monsell, an attorney at the Center for Biological Diversity. “We’ll be fighting tooth and nail to make sure his disgraceful administration doesn’t endanger polar bears, whales, local economies and our climate with more dirty drilling.” US crude oil and natural gas production have soared in recent years and several analysts have voiced doubts that many companies will be interested in offshore extraction, given the low cost of a barrel of petroleum and the falling cost of drilling on land. However, in a speech on Thursday, Trump again promised to “unleash” American fossil fuels. The event was part of what has been touted by the administration as “energy week”, although the week was instead dominated by the healthcare debate and the president’s tweets about a TV host’s face. “America will be allowed to access the vast energy wealth located right off our shores,” Trump said. “And this is all just the beginning – believe me. The golden era of American energy is now under way. And I’ll go a step further. The golden era of America is now under way. Believe me.” . 

Existing and planned natural gas pipelines out of the Permian.- The pace of production growth in the Permian’s Midland and Delaware basins will be influenced by many factors, including the degree to which the market price for crude oil exceeds the play’s breakeven prices and the ability of midstream companies to add incremental pipeline takeaway capacity as that capacity is needed. While the pursuit of crude oil is driving drilling and production activity in the Permian, rapid growth in crude output is accompanied by large volumes of associated gas and NGLs that also must be dealt with. Fortunately, the Permian has been a major production area for decades — a lot of gas and NGL pipeline infrastructure is already in place. But it won’t be enough. Today we begin a blog series on the existing networks’ ability to move natural gas to market and the enhancements that will be needed to keep the Permian’s growth on track. It’s official: as of today, more Americans are talking about the Permian than the Kardashians and former FBI director James Comey ­­— combined! OK, maybe not, but sometimes it seems that way, doesn’t it? The U.S.’s hottest shale play, covering more than 70,000 square miles in West Texas and southeastern New Mexico, is widely viewed as an unstoppable force, a runaway train that by the early 2020s will account for one-third of total U.S. crude oil production as well as more than almost 12 billion cubic feet/day (Bcf/d) of natural gas for domestic consumption and export (to Mexico via pipelines and everywhere else as liquefied natural gas, or LNG).

New crude, condensate offtake deals signed for Permian producers by Trafigura, Enterprise -- Two midstream deals -- providing new pipeline takeaway capacities from the Gulf Coast -- were unveiled Wednesday, further reflecting a growing global appetite and competitiveness of light sweet crude and condensates from the Permian Basin in Texas.Commodity trader Trafigura said it signed a long-term deal with Plains All American Pipeline for the offtake of 100,000 b/d of crude oil and condensate from Midland in the Permian Basin to an export outlet at Corpus Christi on the Gulf Coast.Also, Enterprise Products said it had signed up additional shippers on its crude oil pipeline in the Permian Basin that is designed to provide 450,000 b/d of takeaway capacity to an export outlet in the Gulf Coast starting late 2017. The Trafigura deal, which comes into immediate effect, will enable the company to buy crude oil from producers in the rapidly-growing basin and also receive condensate for use in its splitter and export terminal at Corpus Christi, Trafigura said in a statement.

Shale’s super rigs getting bigger paychecks in the oil patch - U.S. oil companies are spending more money on so-called super-spec rigs, machines that churn out wells much faster than older models that led the first shale boom.   Xtreme Drilling Corp., a Canadian rig supplier, said this week it has locked in more than $24 million in revenue over the next year with three contracts for upgraded super-spec rigs, pushing the rig day rates toward $22,000 a day.  And Nabors Industries, a rig contractor in Houston, recently said it has contracted some super-spec drilling rigs at prices of up to $23,500 a day, almost 20 percent higher than spot rates in places like the Permian Basin and the Eagle Ford Shale in Texas."Operators are clearly growing concerned with the availability of super-spec equipment," said James West, an analyst at investment bank Evercore ISI. That's why some U.S. producers have been willing to boost rig contract prices by 10 percent to 20 percent, West said.These super-spec rigs – built with a bigger load capacity and faster drilling systems – can drill an oil well in less than 10 days, shaving more than a week from the average drilling time in 2010, and allowing companies to drill a greater number of wells each year. Matt Porter, president and CEO of Xtreme, said these higher rates show operators will pay a premium for more efficient drilling even though oil prices have slumped in recent weeks. West said it's possible if oil prices stay cheap next year, the U.S. rig count could drop by 20 percent from a 2017 exit rate of about 1,000. But the bigger rigs, he said, could still "enjoy robust utilization" in 2018.

Court rejects Trump administration move to delay methane regulation | Reuters: The U.S. Environmental Protection Agency cannot freeze implementing a rule requiring oil and gas companies to fix methane leaks in their equipment, a federal appeals court ruled on Monday in a setback for President Donald Trump's push to cut environmental regulations. The EPA on June 5 announced a stay in the rule, which would have required drillers and transporters to start reporting and fixing any methane leaks they found in wells and transfer stations, after EPA Administrator Scott Pruitt wrote in an April 18 letter the agency intended to reconsider imposing it. But the U.S. Court of Appeals for the District of Columbia Circuit said the agency did not have the authority to halt the rule during those deliberations. The EPA's stay "is essentially an order delaying the rule's effective date, and this court has held that such orders are tantamount to amending or revoking a rule," Judges David Tatel and Robert Wilkins wrote. The third member of the three-judge panel, Judge Janice Rogers Brown, dissented. "We are reviewing the opinion and examining our options," an EPA spokeswoman said in a statement to Reuters.The court's ruling came in response to a lawsuit filed June 5 by green groups that opposed the EPA's stay of the rule. The groups, including the Natural Resources Defense Council, Environmental Defense Fund, Sierra Club and other environmental organizations, argued the EPA did not follow procedures detailed in the 1970 law known as the Clean Air Act when it froze the rule.

EPA must enforce methane emissions rules immediately after court decision -  The Trump administration suffered a legal blow on Monday when the US Court of Appeals for the District of Columbia ruled (PDF) that the Environmental Protection Agency (EPA) must enforce methane emissions rules that were finalized by the Obama administration in mid-2016.The rules established performance standards for new drilling operations, and they required many oil and gas companies to conduct an initial survey of methane leaks by June 3, 2017. Changing finalized rules is often a lengthy and painstaking process, and Trump’s EPA Administrator Scott Pruitt announced his intention to start the reconsideration process for the rules in April. Pruitt, who sued the EPA as attorney general of Oklahoma over these rules, also announced a stay on the EPA’s enforcement of certain parts of the rules that could have lasted up to two years. Specifically, Pruitt said the EPA would not, for the time being, enforce four items specified in the rules, including regulation of low-production wells and the requirement that a professional engineer certify well vent system designs.  Environmental groups—including the Environmental Defense Fund, Natural Resources Defense Council, Environmental Integrity Project, Earthworks, the Clean Air Council, and the Sierra Club—challenged the EPA’s stay in court, however. The EPA argued that the stay was reasonable because the previous administration hadn’t given all stakeholders due opportunity to comment on certain parts of the rules’ final wording.  But two judges on the three-judge appeals court panel agreed with the environmental groups on Monday. “The administrative record thus makes clear that industry groups had ample opportunity to comment on all four issues on which EPA granted reconsideration, and indeed, that in several instances the agency incorporated those comments directly into the final rule,” the judges wrote. The judges noted that the EPA can start the reconsideration process for the methane emissions rules at any time, but the agency still has to enforce those rules until they’re overturned. “As we have explained, ‘an agency issuing a legislative rule is itself bound by the rule until that rule is amended or revoked’ and ‘may not alter [such a rule] without notice and comment.’” In a comment to Ars Technica, an EPA spokesperson noted, “We are reviewing the opinion and examining our options.”

Secretary Zinke met with industry officials shortly before delaying methane rule -- Interior Secretary Ryan Zinke held meetings with officials from fossil fuel companies and powerful industry trade groups less than a month before the Department of the Interior postponed compliance dates for a rule designed to limit methane waste from drilling sites on public lands. On May 22, for instance, Zinke met with officials from the American Petroleum Institute, an oil and gas trade group that opposed the Obama administration’s implementation of the methane waste rule, according to a redacted copy of his schedule obtained by Politico. Two days after that, Zinke participated in a video call with Newfield Exploration Co., the largest oil producer in Utah. A large portion of Newfield’s drilling operations in Utah are conducted on federally managed lands. The secretary also called into the May 25 board meeting of the U.S. Oil & Gas Association, an industry group whose members hold oil and gas leases on federal lands. Earlier in May, Zinke held video conference calls with two conservation-oriented organizations: the Land Trust Alliance, a national land conservation group based in Washington; and the Partnership of Rangeland Trust, a Colorado-based association of agriculture land conservation organizations. A few weeks after Zinke’s meetings with oil and gas industry officials, the Bureau of Land Management (BLM), a division of the Interior Department, entered a notice into the Federal Register stating it would delay compliance with the methane rule, finalized last November by the Obama administration. 

Native Americans Sue Frackers Over Manmade Earthquakes - National Geographic - Oklahoma has become one of the world’s most notorious earthquake hubs. In fact, in 2014 for the first time, the number of magnitude 3 or greater quakes in the state surpassed California’s total.  Though Oklahoma typically experienced zero to a couple magnitude 3 or greater quakes annually, the rate shot up to 20 in 2009. In 2013, the state had 109 such earthquakes followed by 579 in 2014, 903 in 2015, and 623 in 2016. In other words, the state went from some two sizable quakes a year to two or three a day.  Hydraulic fracturing, or fracking, has been a lightning rod for the blame, but it’s not so much the fracking itself as the cleanup afterwards that’s inducing these temblors. To dispose of this dangerous waste, companies pump it down a different opening deeper under the shale to rest permanently in a well of porous rock. The thing is, when these wastewater injection wells are continuously filled, pressure builds up on geologic faults—enough to cause earthquakes when the two sides of a fault slip past each other, the U.S. Geological Survey acknowledges. In 2009, companies in Oklahoma pumped 849 million barrels of wastewater into wells. By 2014, that number hit 1.5 billion.  That’s been a problem for Oklahoma’s Pawnee Nation and their advocate Erin Brockovich, the famed environmental activist lawyer, given that the tribe has endured some of the most devastating earthquakes in the state. On September 3, 2016, a magnitude 5.8 quake hit right near the town of Pawnee—Oklahoma had never experienced one more powerful—and was felt from Texas to South Dakota. Then on November 6, 2016, a 5.0 earthquake hit nearby Cushing. Exacerbating the danger, Cushing is the storage site of 60 million barrels of oil, the largest supply of crude in the world—a sticking point of concern for the Department of Homeland Security.

Trump administration looks to speed drilling permits | TheHill: The Trump administration wants to speed permits to drill for oil and natural gas on federal land and hold more auctions for drilling rights leases. Interior Secretary Ryan Zinke signed a secretarial order Thursday to advance those two priorities, formally ordering the Bureau of Land Management (BLM) to reduce permitting times and hold more frequent lease sales. Zinke said it’s part of the Trump administration’s “energy dominance” agenda, in which federal officials want to increase domestic production of fossil fuels and other energy sources and increase exports worldwide. The Thursday actions also fit with the administration’s rollbacks of numerous environmental standards, with a focus on rules affecting fossil fuel industries. “There’s a reason why our energy revolution from 2008 forward has been primarily on private lands and state lands, and not federal lands. We have been particularly, I think, punitive in some ways,” Zinke told reporters Thursday. His order asks the BLM to try to make permitting decisions for oil and gas drilling on federal land in 30 days. That’s the time frame required by law, but the actual time frame averaged 257 days last year, Zinke said, citing the agency’s data.

Another Big Gift to Oil & Gas: Zinke Fast Tracks Drilling on Public Lands -- In another gift to big polluters, Interior Sec. Ryan Zinke signed an order Thursday directing the Bureau of Land Management (BLM) to hold quarterly oil and gas lease sales and to issue new oil and gas drilling permits within only 30 days from application. The move is part of the Trump administration's efforts to allow dirty oil and gas polluters to dominate public lands that belong to the American people. The oil and gas industry doesn't need any more special favors or giveaways. The fossil fuel industry has received taxpayer handouts for decades. The BLM already makes the vast majority of federal lands available for oil and gas development. For example, BLM has classified more than 90 percent of lands it manages in 11 western states as available for oil and gas leasing. In contrast, conservation proposals have historically had to overcome greater institutional hurdles, and renewable energy projects on federal lands face much more stringent environmental standards than oil and gas development. Zinke's quest for faster permitting ignores the fact that delays are often the fault of industry and operators, not the BLM. From FY 2005 to FY 2015, it took operators an average of 133 days to resolve deficiencies in permit applications they filed with BLM, according to the Center for American Progress . Oil and gas drilling and fracking on public lands comes with a long list of threats to clean air, clean water, human health, wildlife and local communities. Federal oil and gas development with intensive industrial land disturbance and toxic chemicals has harmed human health, wildlife, sacred lands, drinking water sources and local economies focused on agriculture, tourism and outdoor recreation. It is the source of toxic air pollution that harms nearby communities where people live, work, and go to school . It destroys vital wildlife habitat. It generates massive amounts of toxic waste. And these impacts last for generations. We don't have time for 19th Century energy p olicies.

Erie may consider fracking as 'public health and safety’ concern  -  Erie officials in July will weigh an emergency ordinance amending the town's "public health and safety" code to consider complaints against oil and gas odors, officials announced earlier this week. The decision signals the latest in a string of calls for heightened local regulation by Erie officials, who amid gridlock at the state Capitol have begun to ask themselves, how — if even possible — should oil and gas be locally governed? It's a question that has spurred the town, split between county lines — it straddles Boulder and Weld counties — and a perpetually divided Board of Trustees to explore a variety of ordinances aimed at more local control over oil and gas activity in recent months. Under the new protocol's umbrella, if approved, resident complaints regarding odors from oil and gas activities would be investigated by local police. Such complaints could ultimately result in a summons or a ticket for companies in violation; a relatively unique approach to mitigate oil and gas effects on surrounding neighbors, officials said. If approved, the ordinance could force oil and gas companies to answer to a potential slew of violations in municipal court (every violation under Erie code within a 24-hour period is a separate charge), according to Shapiro, an approach typical of how the town addresses code violations.

Dakota Access pipeline developer to keep fighting Indian artifacts case - Houston Chronicle: A dispute over whether the Texas-based developer of the Dakota Access oil pipeline improperly reported the discovery of American Indian artifacts in North Dakota will linger into the fall, as the company continues to fight a relatively minor violation and small fine.Energy Transfer Partners has been battling since November when state regulators filed a complaint and proposed a $15,000 fine, which pales in comparison to the $3.8 billion cost of the pipeline that began moving oil last month. The complaint came after the Public Service Commission, which oversees pipelines, was notified by a third-party inspector that pipeline crews last October had diverted construction of the pipeline around Native American artifacts. The company had obtained the approval of the State Historic Preservation Office but not of the commission.The artifacts weren't disturbed, and ETP maintains it didn't intentionally do anything wrong. A public hearing on the issue was scheduled for Aug. 16, but the company requested that written arguments be made first. The PSC has agreed to a briefing schedule with a final deadline of Sept. 22. The hearing will be rescheduled after that, Commissioner Julie Fedorchak said.The commission also is looking into whether the company removed too many trees while laying pipe in the state. An Aug. 17 public hearing is still scheduled. There is not yet a formal complaint in that matter, and "briefs on that at this point would be premature," Fedorchak said. The company could face fines of up to $200,000 if found to have violated state rules in either case, though it could contest any fines in state district court. 

Dakota Access developer drops private security accused of working without license - The developer of the disputed Dakota Access oil pipeline said Wednesday that it no longer has private security personnel in North Dakota, including a firm that state regulators say operated illegally without a license. "We continue to have security measures in place in North Dakota, just no longer need boots on the ground," Energy Transfer Partners spokeswoman Vicki Granado said in an email to The Associated Press. North Dakota's Private Investigative and Security Board last week asked a state judge to block North Carolina-based TigerSwan's armed workers from continuing to monitor the pipeline system. The board said TigerSwan had no license during the height of the protests and continued operating after being denied one. Granado said in her email that TigerSwan stopped providing security services in the "last couple of weeks." TigerSwan said it ended work with Dallas-based ETP near the end of June. TigerSwan was founded by retired military special forces members. The regulatory board alleges in court documents that TigerSwan employees with semi-automatic rifles and handguns protected workers and equipment at construction sites, conducted intelligence on protesters including placing or trying to place undercover agents within the protest groups, and even monitored traffic on a state highway. The board also said TigerSwan continued to provide round-the-clock security along the pipeline in the state.

Minn. oil pipeline fight stokes threats, fears of Standing Rock -  Each day for decades, five pipelines have quietly pumped more than 2 million barrels of Canadian crude oil below northern Minnesota's forests, lakes and rivers to refineries around the Upper Midwest.   The lines were built in an era with no federal environmental law requiring studies or public hearings, keeping opposition to a minimum. Those days are gone, replaced by a massive multi-year permitting process that requires transparency and public input — and an environmental movement determined to make its voice heard. That was never clearer than last year when what began as a small protest over the route of an oil pipeline near North Dakota's Standing Rock Reservation mushroomed into a months long international incident. Protesters ultimately lost that fight after Donald Trump became president.  Many of those same activists, though, are focusing now on Minnesota where Enbridge Energy hopes to build a new pipeline to replace its aging Line 3. Activists are pressing Minnesota officials now to deny the permit and kill the project. State officials and company executives working to head off a confrontation say they're doing more than ever to listen to the concerns of those in the pipeline's potential path. That may not be enough to stop a confrontation."If that permit is issued, you can be sure you will have Standing Rock in Minnesota. I will tell you that," White Earth tribal member and Honor the Earth executive director Winona LaDuke said prior to one of 22 public meetings state regulators recently held across northern Minnesota."We've been very clear with the state representatives, and the governor of Minnesota, that if they approve this line, there will be tens of t housands of people in Minnesota."

Renewed slide in oil price will test U.S. shale profits: Kemp (Reuters) - U.S. independent oil and gas producers came close to breaking even during the first quarter of 2017 thanks to aggressive cost cutting and improvements in well productivity.Some shale producers claim they can drill wells profitably at prices well below $50 per barrel and in some cases below $40. But Harold Hamm, chief executive of Continental Resources, a major producer in North Dakota and Oklahoma, has said oil prices need to be above $50 to be sustainable.Prices below $40 would force producers to idle rigs again, he said in a recent interview (“Harold Hamm warns oil prices below $40 will idle U.S. drilling”, CNBC, June 28).The renewed drop in oil prices, unless quickly reversed, looks set to put these conflicting claims to the test. Fifteen independent producers with operations focused on the United States reported a combined net loss of $3.7 billion in the first three months of 2017 ( most of the losses were attributable to Marathon Oil, which reported a net loss of $4.9 billion, mostly as a result of an impairment charge linked to its Canadian oil sands businesses.The other fourteen companies in the sample reported total net income of almost $1.3 billion, up from a loss of $9.9 billion in the first quarter of 2016. Shale producers have benefited from a combination of cost reductions, improvements in drilling efficiency and well productivity, and a significant increase in oil and gas prices.The average price of WTI, the domestic benchmark, rose from $33 per barrel in the first quarter of 2016 to $52 in the first quarter of 2017.Unless there are further exceptional write-downs, the sample group may be able to increase their net income in the second quarter despite the fall in prices.Many, though not all, shale producers have hedged the price of their output for the remainder of 2017 which gives them some protection in the short-term against the downturn. But very little production has been hedged so far for 2018. The current calendar strip means hedging is only possible for 2018 at a WTI price of around $47 - and many shale producers will actually receive less.

Has U.S. Shale Wrecked Its Own Recovery? --Operational improvements in shale and non-shale oil drilling, on top of lower expenses for oilfield services and access to pipeline capacity, have driven down the costs of producing the fossil fuel since the 2014 market crash. But the increase in output has forced barrel prices into a deeper bearish market, causing further damage to corporate bottom lines.This trend is mapped clearly in the MSCI’s World Energy Index, which measures the progress of large and medium sized companies in 23 oil-producing countries on a quarterly basis. ExxonMobil, Chevron, Total, Royal Dutch Shell, and British Petroleum are the five biggest players on the index, which includes 85 other majors. Together, they have lost $115 billion in market value since the beginning of April, Bloomberg reports, according to World Oil.  Post-crash downsizing caused over 350,000 job losses, with oilfield services (OFS) companies taking the biggest hit, according to data from Houston’s Graves and Co. published last year. Since then, major energy markets, notably Texas, have begun rehiring workers at a snail’s pace. It seems the recovery will not be anything televise-able.As the number of rigs in the Permian basin climbs, so does the demand and cost of securing essential oilfield services. Oil majors took to scrapping major projects and liquidating assets after the 2014 and 2016 price crashes to balance the books, giving the producers the upper hand in negotiating services contracts for their remaining projects. Now, OFS companies are taking their revenge, and it’s beginning to show. S&P Global Platts predicts that OFS contracts will be 20 percent more expensive by the end of the year, partly because the best drilling spots have already been taken by the 900+ rigs already online across shale country. The slowdown in production showed on Friday, when Baker Hughes reported the first decline in active U.S. rigs in 24 weeks. The difference was only a single rig, but the end of the massive streak sent a clear message: prepare for a production plateau. In short, there isn’t any leeway left in the oil price to sustain additional capacity while guaranteeing a profit and avoiding a deep dive in barrel prices. U.S. shale output can only go down from here.

More LPG To Be Railed To The Pacific Northwest And Shipped To Asia --  Plans are afoot to double and maybe triple the liquefied petroleum gas (LPG) export capacity of the Pacific Northwest — British Columbia, Washington State and Oregon — giving the region an enhanced role in what has been a booming business. Volumes being shipped to Asia out of the Ferndale marine terminal in northwestern Washington State are at near-record levels, and AltaGas and Royal Vopak are building a 40-Mb/d (and expandable) export facility in northwestern BC that is planned to come online in early 2019. Further, Pembina may be only months away from committing to the construction of a 20-Mb/d LPG marine terminal, also in BC. Today we continue our series on the expanding role of Western Canada in LPG exports with a look at plans for new propane/butane marine-dock capacity in BC. In Part 1 of this series we discussed the fact that propane and butane — the two natural gas liquids (NGL) products generally referenced as LPG — are produced by the processing of natural gas to yield mixed NGLs and the fractionation of those NGLs into purity products. Refineries also produce LPG, but it is increased production of wet natural gas (with its high volumetric content of propane, butane and other NGLs) that has really been driving the market. As we said in Come on Down to My Boat, the U.S. five years ago flipped from its long-time status as a net LPG importer to a net exporter; by 2016 net exports averaged 785 Mb/d — several times where they stood in 2012.

“Explosive methane will create two million jobs!” - The American Petroleum Institute has trotted out a commissioned study claiming an increase of two million jobs in 2040 off a base of four million (in 2015). First, these are not people working with development or distribution of natural gas. 44% are “end user” workers, that is, someone someplace who works to “… convert natural gas and its associated liquids to electricity, petrochemical and other products and the industries that manufacture, sell, install and maintain gas-fired appliances and equipment used in the residential, commercial, vehicle and industrial sectors”. (API, “Key Observations and Findings”) The implication is that if natural gas went away, so would these 44% of jobs. That is not correct. The report further defines these as The largest NAICS codes associated with the end-use segment are Chemical Manufacturing, Gas-fired Electric Power Generation, Power Boiler and Heat Exchanger Manufacturing, Household Appliance Repair and Maintenance, and Industrial Process Furnace and Oven Manufacturing. The end-use segment also includes portions of the jobs related to Industrial Equipment and Machinery Repair and Maintenance, Industrial Construction, Freight Trucks, Turbine and Turbine Generator Set Manufacturing, Iron and Steel Pipe and Tube Manufacturing, and Freight Rail. While it is not clear what “largest” means here, nevertheless there is no notion of substitution or displacement. The natural gas industry is really responsible for jobs in “Household Appliance Repair and Maintenance” and “Chemical Manufacturing”? Second, 30% of the claimed jobs are in fact directly associated with natural gas mining, production and distribution. These are fully tied to natural gas. Third, 25% of the claimed jobs consist “…of oil and gas production companies and their suppliers of goods and services…”, or, to quote their NAICS descriptions, The largest NAICS Codes primarily associated with the production segment include Support Activities for Oil and Gas Operations, Crude Petroleum and Natural Gas Extraction, Drilling Oil and Gas Wells, and Oil and Gas Field Machinery Manufacturing. Natural gas can be credited with all of these jobs?

U.S. gas market rebalances as power producers return to coal: Kemp -  (Reuters) - The U.S. natural gas market has rebalanced with higher prices steadying production while reducing demand from electricity generators and making room for increased exports.  Higher prices have averted the stock crunch many analysts feared in 2017 as a result of rising exports and the start up of a large number of new gas-fired combined cycle power plants. During the first six months of 2017, prices for next-month delivery at Henry Hub were almost $1 per million British thermal units or 46 percent higher than in the first half of 2016. Gas prices paid by electricity producers were up $1 per million British thermal units or 39 percent in the first four months of the year, according to the U.S. Energy Information Administration. But gas-fired generation was down 15 percent compared with the same period in 2016 while the volume of gas consumed fell by 14 percent ( By contrast, total electricity generation from all sources was down by less than 2 percent compared with the prior year. Coal-fired power plants were the main beneficiaries from higher gas prices, increasing their electricity generation by almost 7 percent. Coal-fired plants operated at an average of 49 percent of their maximum output between January and April compared with 44 percent in the same period in 2016. By contrast, gas-fired combined-cycle units operated at 48 percent of their maximum output, down from 53 percent in 2016. Higher gas prices seem to have arrested the slide in gas production, with output down by 4 percent compared with the previous year but showing signs of stabilising. The ramp up in oil drilling since May 2016 in response to higher oil prices has also boosted associated gas output. Stabilising gas output and reduced consumption by electricity generators has freed up gas for export while leaving inventories at comfortable levels.U.S. gas exports increased nearly 50 percent to 1,045 billion cubic feet in the first four months, while gas imports were up just 6 percent to 1,063 billion cubic feet.As a result, net imports shrank from 303 billion cubic feet in January-April 2016 to just 18 billion cubic feet in January-April 2017.Working gas stocks in underground storage stood at 2,816 billion cubic feet on June 23, which was 313 billion below 2016 but 183 billion above the five-year seasonal average.Storage injections have been broadly tracking the normal seasonal trajectory, especially once adjusted for the slightly wa rmer-than-average start to the cooling season.

US BSEE approves plan to combine Beaufort Sea leases; could renew exploration -- A federal agency has approved a plan to unitize, or combine, former Shell leases in Alaska's Beaufort Sea that are now held by a subsidiary of an Alaska Native-owned corporation, the first step toward resumed exploration in the area, officials said Monday.The area is in the US Outer Continental Shelf, about 15 to 20 miles off the northern Alaska coast. Mark Fesmire, Alaska director of the US Bureau of Safety and Environmental Enforcement, said ASRC Exploration Inc., a subsidiary of Arctic Slope Regional Corp., now has an approved unit and has also applied for a Suspension of Operations on the former Shell leases. This is an action that temporarily halts the pending expiration of the lease terms, Fesmire said. If granted, the suspension would allow ASRC Exploration to conduct exploration, and if a discovery is made, the leases are automatically extended.ASRC purchased Shell's Beaufort Sea lease holdings in late 2016 after Shell withdrew from active Arctic exploration the previous year.  “The unit approval includes 20 Outer Continental Shelf leases that will now be grouped and administered as one unit. The advantage of unitization is that it allows an operator to do work on one lease and have that count as a development action in holding the entire group," Fesmire said.

Apache exits Canada in three deals worth $713 million - Apache Corp. will exit Canada in three separate transactions worth a combined $713 million, much of which it plans to plow into the Permian Basin and other fields, the company said late Thursday.The Houston driller's deals continue the oil industry's exodus from the Canadian oil sands business, after European and U.S. rivals Royal Dutch Shell, Statoil, ConocoPhillips and Marathon Oil Corp. announced similar asset sales earlier this year.Apache has inked a deal to sell its Canadian subsidiary, which owns property in Alberta and British Columbia, to Paramount Resources for $459.5 million. That deal is expected to close next month. Calgary-based Paramount has also agreed to merge with fellow Canadian producer Trilogy Energy Corp. Last month, Apache also sold off oil assets in Alberta to an undisclosed company and, in a separate deal, sold other holdings in Saskatchewan and Alberta to Cardinal Energy in Calgary.In 2016, about 11 percent of Apache's oil and gas output came from Canada, where it had about 13 percent of its proved reserves, according to regulatory filings.Apache said it would redirect a portion of the proceeds to its drilling programs in the Permian Basin and other areas in the United States, the U.K. North Sea and Egypt.  The rest of the funds will go toward paying down debt and other uses. The company had previously set aside $125 million to develop its assets in Canada, but now it plans to spend that capital elsewhere.

After $3 billion spent, Keystone XL can’t get oil companies to sign on --Keystone XL is facing a new challenge: The oil producers and refiners the pipeline was originally meant to serve aren't interested in it anymore. Delayed for nearly a decade by protests and regulatory roadblocks, Keystone XL got the green light from President Donald Trump in March. But the pipeline's operator, TransCanada Corp., is struggling to line up customers to ship crude from Canada to the U.S. Gulf Coast, say people familiar with the matter.TransCanada Chief Executive Russ Girling remains committed to completing Keystone XL and believes it will prove profitable in the long term, say two people familiar with his thinking. But it may be years before the company recoups its investment in the pipeline, these people say.TransCanada has spent $3 billion to date on Keystone XL, much of it on steel pipe, land rights and lobbying. Completed, the pipeline would travel 1,700 miles from Alberta to Steele City, Neb., where it would link up with existing pipelines that run to the Gulf Coast.The lack of interest has put the pipeline's fate in jeopardy. The company, based in Calgary, Alberta, has said it wants enough customers to fill 90% of Keystone's capacity before it proceeds. It started to aggressively court potential customers earlier this year as it seeks to meet that target, according to people familiar with the situation. TransCanada expects the pipeline, which would carry up to 830,000 barrels of oil a day, to cost $8 billion, compared with its initial estimate of $7 billion. The company took a $2 billion write-down related to the pipeline last year. The uncertain outlook for Keystone XL stands in contrast to Mr. Trump's upbeat rhetoric in March. The president invited Mr. Girling to the Oval Office and announced he was reversing an Obama administration move to block construction, declaring, "It's going to be an incredible pipeline, greatest technology known to man."

Has Keystone XL Become Obsolete? -- Keystone XL may have become obsolete before it was even built, at least according to some sources close to TransCanada, which has gone on a hunt for clients. A Wall Street Journal analysis quotes these sources as saying Canadian producers and U.S. refiners are just not interested in the pipeline that is supposed to carry 830,000 barrels daily of Alberta heavy crude to Gulf Coast and Midwest refineries. This lack of interest seems to be driven by TransCanada’s quest for long-term commitments, with producers and refiners seemingly unwilling to make such commitments in the current price environment. Also, according to the WSJ, Canadian crude comes at a higher cost than alternative heavy crude blends, which is contributing to the lack of enthusiasm for long-term commitments. That is likely to change over the long term, however, when declining imports from Mexico and Venezuela will benefit Canadian crude. The company behind the project itself seems upbeat. Already having spent US$3 billion on the project and planning to spend another US$5 billion before it is completed, TransCanada remains confident that it will find enough customers to fill Keystone XL at 90 percent of capacity over the next few months. For the time being, producers and refiners are moving the oil by rail – a much more expensive and riskier option than pipelines. Oilprice wrote last month about a looming pipeline capacity crisis in North America, which is likely to result in an increase in railway oil shipments. If Goldman Sachs is any indicator, railways have a bright future as an alternative to pipelines, although its long-term sustainability at current oil prices is questionable. What is unlikely to change, though, is U.S. Gulf Coast refineries’ need for a combination of light and heavy crudes to operate. Canadian crude may not be their only choice, but as producers north of the border focus on bringing down production costs just as much as their peers south of the border, it may become more competitive. Keystone XL still needs the green light from Nebraska before construction begins. The state’s Public Service Commission held a public hearing on the project last month, saying it would make its final decision by November 23 at the latest.

Canada Undermines Targets for Protecting Oceans by Increasing Oil Exploration -- naked capitalism -  Jerri-lynn Scofield - This Real News Network interview with Sabine Jessen, National Director of the Oceans Program for the Canadian Parks and Wilderness Society, discusses the Trudeau government’s plans to increase offshore oil exploration even though such a policy will undermine protection targets included in international agreements Canada has signed.

Fracking site entrance blocked in protest against drilling process - Protesters have blockaded the entrance to a fracking site as part of a month of action to resist the controversial drilling process. The group of 13 protesters, including three local councillors, arrived at the site on Preston New Road in Fylde, Lancashire, in the early hours of Monday morning and locked themselves to objects in an attempt to prevent vehicles entering the site. Lancashire county councillor Gina Dowding said: "It's abundantly clear that when it comes to fracking, local councils have been rendered weak and helpless. I feel I need to be here with the community to say that we won't roll over and accept this. "We are putting our bodies on the line because our voices haven't been heard." Kirkham town councillor Miranda Cox said: "When your community and family is threatened, you are often left with little choice but to take direct action. "As a councillor and member of this community, I have been left with no more alternatives. "I feel our way of life locally is under attack by an industry that, backed by a distant central government, is seeking to turn Fylde and Lancashire into the largest gas field in Europe. I cannot stand by and allow this mass industrialisation to happen." 

Fracking Companies Hoped They'd Get Away With It -- When Cuadrilla, Ineos and other fracking companies set their sights on turning the English countryside into major gas fields a few years ago, they were relying on the fact that this would stay mostly below the radar, and they could simply get on with getting the drills in and raking in profits. Several years on, this couldn't be further from the truth, as an unprecedented month-long Rolling Resistance kicks off in Lancashire this July. Organised by Reclaim the Power, hundreds of people from all across the country are making their way to a camp set up near Preston New Road. They are joining and amplifying the efforts of an incredibly strong and battle-hardy community which has dug in their heels in ever since the threat first appeared in Lancs. Rapidly formed groups like Frack Free Lancs and Preston New Road Action Group continue to cause fracking giant Cuadrilla costly delays and clear frustration. The resistance to fracking here doesn't just centre on the fact that fracking is a dirty, polluting and dangerous industry which threatens communities, our climate and health. On top of the environmental issues, the profound insult to democracy is that the people of Lancs already said no to fracking. In 2015, residents followed proper procedure to convince Lancashire county council to reject fracking. But then a year later, as local councillor Miranda Cox notes, the "ironically named Communities Secretary Sajid Javid" overruled this decision in Westminster, and decided to force fracking on a local area that is firmly opposed.

Ireland becomes third European country to ban onshore fracking - The Republic of Ireland has become the third EU member state to ban onshore fracking, after President Michael D. Higgins signed the bill into law yesterday. The Petroleum and Other Minerals Development (Prohibition of Onshore Hydraulic Fracturing) Bill 2016 was first introduced as a private members bill by Fine Gael party TD backbencher Tony McLoughlin last year, and received widespread support from across the political spectrum. The Taoiseach - Ireland's parliament - passed the bill in May before it was finally signed into law by the President yesterday in a historic move that has been praised by green campaigners and described by McLoughlin as "one of the proudest moments in my political career".Its done! Weve made history & become the 3rd state in the EU to ban #Fracking. One of proudest moments in my political career. Thanks to all — Tony McLoughlin TD (@TonyMcLTD) June 28, 2017McLoughlin added in a statement that if fracking had been allowed in Ireland it would "pose significant threats to the air, water and health and safety of individuals and communities here"."This law will mean communities in the West and North West of Ireland will be safeguarded from the negative effects of hydraulic fracking," he said. "Fracking must be seen as a serious public health and environmental concern for Ireland."Friends of the Earth Ireland also welcomed the news yesterday as "a day to celebrate".

Fracking in Colombia: What the frack? - The Bogotá Post - Hydraulic fracturing – or simply ‘fracking’ – is a method of extracting oil and gas which has made its way from the US across most of South America and fracking in Colombia is in its exploratory stages. Much lauded as the second most biodiverse country in the world, Colombia faces difficult questions as the government tries to balance both economic and environmental needs. The anti-fracking group, Alianza Colombia Libre de Fracking – an umbrella organisation of regional campaign groups – is demanding a complete ban on fracking in Colombia for a host of reasons, especially the environmental dangers that it poses to the country’s water sources. However, exploratory drilling is already taking place in 43 zones and the group fears these will pave the way for full fracking licences, which up until now have not been issued. The Alianza used International Water Day on March 22 to publish an open letter to President Santos outlining their concerns. Their spokesperson, Carlos Andrés Santiago, explained to us: “The US Environmental Protection Agency have rigorously documented the negative effects of fracking on drinking water sources.” Fracking is an ‘unconventional’ drilling method capable of extracting resources that ‘conventional’ or ‘traditional’ methods can’t. Much of the world’s oil and gas resources are trapped in reservoirs beneath the Earth’s surface, making it possible to simply drill down and tap them. ‘Unconventional’ resources are those which are not trapped in large pockets, but rather are found in millions of small ‘pores’ in the ground, requiring more complex extraction techniques. Fracking involves releasing these oil and gas deposits by forcing a mixture of sand, water and chemicals at high pressure into the deep rock where they are found. To fully understand the scope of the environmental dangers of fracking, we must look at the entire process, from transportation to extraction and waste disposal.

Brazil plans to test unconventional oil, natural gas production in 2018 - Brazil's government wants to start up a pilot project tapping unconventional oil and natural gas reservoirs next year, likely in the state of Bahia, as part of broader efforts to expand onshore output, a Mines and Energy Ministry official said. Latin America's biggest country is well behind the curve in development of unconventional resources such as shale and tight oil and gas formations when compared with the US and neighboring Argentina. But much of the damage has been self-inflicted, with the government and regulators slow to respond to criticisms and lawsuits against current development policies. "The idea is to bring everybody to the table to gain a broader understanding about the benefits and risks of non-conventionals," Joao Vicente de Carvalho Vieira, the ministry's director of oil and gas exploration, said on the sidelines of an industry event in Rio de Janeiro late Friday. "There are a lot of negative reactions to the technique of hydraulic fracturing, but nobody knows the potential of these resources." Brazil could hold as much as 250 Tcf of gas and 5.4 billion barrels of oil in unconventional deposits, according to a study by the Energy Economics Institute at the Federal University of Rio de Janeiro. Public resistance against unconventional exploration is strong in Brazil, despite the country's history of onshore and offshore oil production. Exploration of Brazil's onshore unconventional resources has been blocked by a series of lawsuits, including concessions granted during the country's 11th and 12th bid rounds. The government will host a workshop with ministries, federal and state government agencies, regulators, and officials from the National Petroleum Agency, or ANP, in August, Vieira said.

Unique coral reef at risk as oil companies plan to drill near Amazon river -- Oil companies planning to drill near a vast coral reef at the mouth of the Amazon river have calculated that the unique ecosystem has a 30% chance of being affected in the event of an oil spill. The unique reef system astonished marine biologists when its existence was widely revealed last year, and is believed it could be the home for dozens of previously unknown species. But activists warn that an oil spill could irreparably damage the 1,000 kilometre-long ecosystem before scientists have even had a chance to study it.“It’s unlike any other reef that we know about,” said Sara Ayech, an oil campaigner at the London offices of Greenpeace. “If the companies drill there’s a risk of an oil spill and if an oil spill hits the reef, then we could see parts of it destroyed before we even document them.”The Brazilian government has estimated that the Foz de Amazonas, or Amazon Mouth area, could hold 15.6bn barrels of oil. A consortium of oil companies led by French giant Total, and including BP and Brazil’s state-run oil company Petrobras, snapped up five exploration blocks in the area when they were auctioned off in 2013.   In January, Total said it had begun moving equipment to the Amazon area and planned to start drilling this year. The oil reservoirs it hopes to reach are situated in 1,900 metres of water, nearly 200 kilometres from the coast.Scientists from Greenpeace examined the publicly-available Environmental Impact Study Total submitted to the Brazilian authorities and found references to the possibility of an oil spill reaching the reef.  Reef structures in the area to be drilled “present possibilities of being impacted by oil”, the study said. In winter that possibility could be as high as 30.33%, while in summer, 20.93%, the study produced for Total by companies Proceano and AECOM said. In February BP told the Guardian it planned to start drilling a block it controls by August 2018. Brazilian company Queiroz Galvão also has a block it expects to start drilling from next year.

China may finance Russia’s natural gas pipeline to Europe - Gazprom’s Nord Stream 2 pipeline may get Chinese financing if European companies are forced out of the project by the latest round of US sanctions, business daily Vedomosti reports. Russian officials have already contacted Chinese banks, sources have told the media. “Nord Stream 2 has a good rate of return and low risks for creditors. Chinese banks may be interested,” explains Aleksey Grivach, deputy CEO at Russia's National Energy Security Fund.The extension will double the existing pipeline which delivers natural gas to Germany under the Baltic Sea and is estimated to cost €9.5 billion.  Initially, Engie, OMV, Royal Dutch Shell, Uniper, and Wintershall were to get a 50 percent stake minus one share in Nord Stream 2. However, red tape at the European Commission made Gazprom and its partners come up with another financing option. Under this plan, European companies will each provide an equal long-term loan to Gazprom, which will fully own the pipeline.  Financing of Nord Stream 2 may be affected by new US sanctions which target firms investing in Russian gas and oil projects. According to the new bill passed by the US Senate, and currently, before the House of Representatives, companies will be forbidden from making investments of over $1 million in the Russian energy sector.

Trump to promote U.S. natgas exports in Russia's backyard - President Donald Trump will use fast-growing supplies of U.S. natural gas as a political tool when he meets in Warsaw on Thursday with leaders of a dozen countries that are captive to Russia for their energy needs. In recent years, Moscow has cut off gas shipments during pricing disputes with neighboring countries in winter months. Exports from the United States would help reduce their dependence on Russia. Trump will tell the group that Washington wants to help allies by making it as easy as possible for U.S. companies to ship more liquefied natural gas (LNG) to central and eastern Europe, the White House said. Trump will attend the "Three Seas" summit - so named because several of its members surround the Adriatic, Baltic and Black Seas - before the Group of 20 leading economies meet in Germany, where he is slated to meet Russian President Vladimir Putin for the first time. Among the aims of the Three Seas project is to expand regional energy infrastructure, including LNG import terminals and gas pipelines. Members of the initiative include Poland, Austria, Hungary and Russia's neighbors Latvia and Estonia. Trump's presence will give the project a lift, said James Jones, a former NATO Supreme Allied Commander. Increased U.S. gas exports to the region would help weaken the impact of Russia using energy as a weapon or bargaining chip, said Jones. "I think the United States can show itself as a benevolent country by exporting energy and by helping countries that don’t have adequate supplies become more self-sufficient and less dependent and less threatened," he said. 

Trump Hopes To Quietly Steal Russia's Natgas Dominance Over Europe --One month ago, after the shocking collapse of the Gulf nation status quo with the announcement of the diplomatic, naval and financial blockade of Qatar by the Saudi alliance, we said that while it is unclear how this latest political fiasco plays out, one thing was certain: with Saudi Arabia and Qatar suddenly adversaries, any likelihood of a Qatari natural gas pipeline crossing Syria - the fundamental cause behind the Qatar proxy war in the first place - was gone.But one key question remained: why would Europe vacate all hopes of an alternative provider of cheap, copious LNG and concede the role of quasi-monopolist supplier of this critical for Europe resource to Gazprom, and thus Russia whose leverage over the continent would only grow as a result. We now have the answer: none other than Donald Trump has been hoping to "steal" Russia's European natgas relationships and clients, in hopes of making the US become the dominant supplier of LNG to Europe. According to Reuters, Trump "will use fast-growing supplies of U.S. natural gas as a political tool when he meets in Warsaw on Thursday with leaders of a dozen countries that are captive to Russia for their energy needs."

Trump Takes Advantage of Europe's Fossil Fuel Dependence  - After President Trump's speech last week promoting a dark and dystopian vision—U.S. fossil " energy dominance "— it is no surprise that his visit to Poland centers on promoting U.S. exports of fracked gas. Beyond such bluster, reality tells a different story. U.S. exports of liquefied natural gas (LNG) are expensive . For the economics to work, U.S. production costs have to be low while prices in importing countries stay high. In India, a major importer of U.S. LNG is now finding itself at the mercy of contracts that locked in high prices for U.S. LNG, relative to other sources of gas. This is how energy dominance will play out for those at the receiving end. Consumers in LNG exporting countries are also getting pinched. In Australia, for example, " extreme " levels of LNG exports have caused economic disruptions. While the Industrial Energy Consumers of America's call for a moratorium on LNG exports is prudent, Trump is not known for his prudence. The fracking industry dominates the Trump administration , and it wants more pipelines to support more exports. The U.S. government is allowing pipeline companies to forcibly take land away from property owners through eminent domain—not to benefit the general public, but to increase the amounts of U.S. oil and gas brought to the surface and burned, and increase industry profits. In short, we are witnessing the transformation of the U.S. into a petrostate. Former ExxonMobil CEO Rex Tillerson is running the State Department, and oil and gas cheerleaders Rick Perry and Scott Pruitt are at the Department of Energy and the U.S. Environmental Protection Agency.

Australia's east coast LNG exports second highest on record in June -- Australia's east coast LNG export hub Gladstone, shipped its second largest monthly volume in June, while China took the most it ever has from the port in a single month, data from Gladstone Ports Corporation showed Thursday.Total exports crept 1% higher month on month to 1.71 million mt in June, from 1.68 million mt in May, which made it the port's second biggest month for LNG exports, beaten only by the all-time record of 1.75 million mt set in December, the data showed.  Exports from six LNG trains are shipped out from Gladstone port. They are: the 9 million mt/year Australia Pacific LNG, the Santos-led 7.8 million mt/year Gladstone LNG, and the 8.5 million mt/year Queensland Curtis LNG, each with two trains. All six trains have been up and running since APLNG brought its second train online last October. And the June export figure is 14% stronger than June last year when 1.49 million mt of LNG was shipped.

Indian refiners tap spot crude market to feed increased capacity | Reuters: Indian companies have stepped up purchases of high-sulphur crude oil from the Middle East and Russia in the spot market to feed demand from expanded refining capacity, trade sources said. Four refiners in the world's third largest crude importer bought 9 million barrels of Middle East and Russian crude loading in July-August via spot tenders last month, drawing down excess supplies in the market after China's demand slowed. Refiners such as Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL) have opted to buy more spot crude as they gradually ramp up output, rather than increase long-term crude supplies, the sources said. IOC expects to run its new 300,000-bpd Paradip refinery at full capacity this year, while BPCL plans to ramp up output at its Kochi refinery to 310,000 bpd by September after an expansion, they said. "Refiners are buying heavier grades to increase middle distillate and fuel oil yields," Ehsan Ul Haq, director at London-based consultancy Resource Economics said, as refining profits for these products have strengthened. Indian refiners have also increased room for spot purchases during a period of abundant supplies, allowing them to react quickly to market changes and pick up cargoes when prices are competitive. IOC said in May it plans to buy 68 percent of its oil needs from term suppliers, down from 80 percent earlier.

Pakistan Fines Shell $2.6 Million For Oil Tanker Explosion That Killed 218 --Pakistan has ordered Shell Pakistan to pay at least $2.6 million in compensation after more than 200 people were killed when one of its tankers overturned and exploded in a devastating inferno last month.The tanker contracted by Royal Dutch Shell's local subsidiary crashed on a main highway in central Punjab Province while carrying some 50,000 liters of fuel from Karachi to Lahore on June 25. It exploded minutes later, sending a fireball through crowds from a nearby village who had gathered to scavenge the spilled fuel, despite warnings by the driver and police to stay away.The death toll from the debacle has risen steadily as dozens of people taken to hospitals with severe burns after the accident later died. It stood at 218 people on July 7, with 38 victims still in the hospital, some in critical condition.The fines ordered by Pakistan's oil and gas regulator include a 10 million-rupee ($95,000) penalty on Shell Pakistan, 1 million-rupee ($9,400) compensation for the families of each deceased, and 500,000 ($4,700) rupees for each person injured. That puts the total of fines at $2.48 million for the families of the dead so far. It was not immediately clear how many wounded would receive compensation.

Japan to raise crude storage capacity for Saudi Aramco -- Japan said on Friday that it was preparing to raise the crude oil storage capacity that it lends for free to Saudi Aramco by 30 percent from this summer. The extra storage will help Saudi Arabia, the world's biggest oil exporter, as it battles to keep customers in northern Asia amid a global glut and relatively low prices. In return for providing free storage, Japan gets a priority claim on the stockpiles in case of emergency. Japan is Saudi Arabia's biggest market for crude, but oil stored at the site on the southern islands of Okinawa has also been supplied to South Korea and China. Storage available to Saudi Arabia will be increased by 1.9 million barrels to 8.2 million barrels (1.3 million kl) as part of an agreement last October to extend the storage to 2019, a Japanese trade ministry official said. Work is underway to have additional tanks ready this summer at a storage facility in Uruma City in Okinawa, the official added. State-owned Saudi Aramco has stored crude in Okinawa since February 2011 at no cost. Japan has a similar deal with Abu Dhabi National Oil Co (ADNOC), under which ADNOC can store up to 6.29 million barrels (1 million kilolitres) at Kiire oil terminal in southern Japan's Kagoshima. As Japan gas a priority claim on the stockpiles, it treats the crude oil stored by Aramco and ADNOC as quasi-government oil reserves, counting half of the barrels as national crude reserves. Aramco and ADNOC need to fill at least half of the storage space at all times. Japan has extended the storage deals with Aramco and ADNOC to the end of December 2019.

Iran to sign new IPC gas deal with Total for South Pars on Monday - Iran plans to sign a new contract to develop its giant South Pars gas field with France's Total and China's CNPC on Monday, the first major Western energy investment since sanctions against Tehran were lifted, an Iranian oil ministry official told Reuters on Sunday. A spokesman for Total confirmed the company will sign the contract to produce gas for the Iranian market from 2021, adding that the 20-year deal with will be the first Iranian Petroleum Contract (IPC) signed in Iran. Total holds a 50.1 interest in the South Pars project with state-owned China National Petroleum Corporation owning 30 percent and Iran's Petropars 19.9 percent. The offshore field was first developed in the 1990s and Total was one of the biggest investors in Iran until the international sanctions were imposed in 2006 over suspicions that Tehran was trying to develop nuclear arms. Total has decided to return and develop Phase 11 of the South Pars project, which will cost up to $5 billion. "The international contract for development of Phase 11 of South Pars in the framework of IPC (Iranian Petroleum Contract) will be signed on Monday, July 3, at 14:30, at a ceremony in Tehran attended by Iranian oil minister Zanganeh and senior officials from France’s Total, China’s CNPCI and Iran's Petropars," the Iranian oil ministry official said. Total's Chief Executive Patrick Pouyanne told Reuters last month that the group would make an initial $1 billion investment after the United States extended sanctions relief under the 2015 agreement.

Qatari LNG development to extend LNG surplus into mid-2020s - The Barrel Blog - Qatar’s announcement Tuesday that it will double the size of its proposed new development on the giant North Field to 4 Bcf/d and use the gas for LNG exports will throw off course multiple new LNG projects elsewhere in the world. According to the International Gas Union, there were 879 million mt/year of proposed LNG projects waiting in the wings at the start of 2017. Qatar has said that the new project will raise its LNG capacity from 77 million mt/year to 100 million mt/year, an addition of 23 million mt/year, and that the project will take five to seven years to complete. 4 Bcf/d gas is the equivalent of 30 million mt/year of LNG, suggesting that some of the gas will be used either for domestic consumption or to support existing LNG capacity. However, the LNG market already expects a glut of new supply and is uncertain how it will be absorbed. Over the course of 2017, 42.45 million mt/year of new liquefaction capacity is expected to come on-stream, primarily in Australia and the US, but this year also witnesses the start-up of the first train at Yamal LNG in Russia, which will be Russia’s second LNG plant. The additions in 2017 come on top of 42.2 million mt/year in 2015 and 2016 combined and a further 32.6 million mt/year and 34.2 million mt/year respectively in 2018 and 2019. The project pipeline then starts to run dry, with 6.8 million mt/year added in 2020 and none in 2021. Overall global LNG capacity will have expanded from 304.4 million mt/year in 2015 to 459.15 million mt/year in 2020; a 50% increase in five years. This supply wave is expected to depress spot LNG prices. In turn, in markets which have both LNG and pipeline import options, cheap LNG is expected to create a ceiling price, depending on the level of infrastructural and contractual flexibility within markets to arbitrage between LNG and pipeline supplies.

OPEC's rising oil exports put output cuts to the sword -- OPEC's attempt to bolster crude oil prices by cutting output are now largely an exercise in self-deception, with recent production and export numbers laying bare the group's shortcomings. While the Organization of the Petroleum Exporting Countries may be able to claim relatively high compliance with its plan to lower output by 1.2 million barrels per day (bpd), this is ultimately just a smokescreen. Of far more importance is evidence that the group actually exported more crude in the first six months of this year than it did in the first half of 2016. OPEC exports jumped to 25.92 million bpd in June this year, up 450,000 bpd from May's 25.47 million bpd, according to vessel-tracking and port data compiled by Thomson Reuters Oil Research. Over the first six months of this year OPEC exports averaged 25.02 million bpd, up 290,000 bpd from the same period in 2016, according to the data. OPEC may be able to claim a small win insofar as the group's exports have dropped from the second half of 2016, when they averaged 25.14 million bpd. But this is a tiny reduction from what was a period of near record output for the group, and in some ways actually only underscores the lack of success OPEC has had so far this year in restricting exports. The rise in OPEC exports in the first half does look at odds with the cuts the group has made to production, with the 11 members that committed to lowering output achieving 92 percent compliance with their targets in June, according to a Reuters survey. But the vessel-tracking data show the crude market is getting as much oil from OPEC as it had been prior to the November deal.

OPEC: Deeper crude oil output cuts? - The Barrel Blog - OPEC and its associated non-OPEC producers’ decision in May to extend their production cuts for an additional nine months through to end-March 2018 has not been met with overwhelming enthusiasm by the oil market. In fact, quite the contrary; the price of Dated Brent sunk from above $53/barrel in May to just $44.46/b June 23, although it has rebounded slightly in recent days to $46.47/b June 28. If this slump is sustained, it may prove enough to stem the rise in the US oil rig count, although it is too soon to see any impact. Yet this is hardly the dynamic that OPEC wished to set in motion. If the rise in the US rig count does stall, it will merely reaffirm the responsiveness of US shale production to the oil price. If OPEC decides further cuts are necessary, and prices firm again, there is little to suggest that US rigs will do anything other than return to the field. The number of US drilling rigs targeting oil rose by another 11 in the week ending June 23 to 758, according to Baker Hughes data, the highest level since October 2015, when drilling activity was contracting sharply. As a result, the current outlook, according to the US Energy Information Administration, is for an increase in non-OPEC production this year of 700,000 b/d and then 1.4 million b/d in 2018. Moreover, there is more bad news from within, although it represents good news for the two countries concerned. Neither Nigeria nor Libya are subject to output restrictions because of their internal security situations. Both have seen a rebound in oil production and Libya’s looks particularly robust, at least in volume terms. 

OPEC Looks Totally Bewildered by the Oil Market - It may be too soon to write OPEC’s obituary, but the oil producer club appears in urgent need of late-life care. It shows little understanding of where it is, how it got there or where it’s going. While it still manages to collect new members here and there, its core group looks more fragile than at any point in nearly 30 years.  The historic output agreements, put together so painstakingly last year, are failing. Nearly 12 months of shuttle diplomacy culminated in two deals that would see 22 countries cut production by nearly 1.8 million barrels a day. Implementation has been better than for any previous output cut, with compliance put at 106 percent in May. A resounding success? Hardly. We're now in the final month of those deals and oil prices are lower than when they were agreed. Not only have producers sacrificed volume, but they earn less for each barrel they do produce. Having failed to use the good times to invest for a future of low oil prices, OPEC is facing a crisis of old age. It is falling apart internally, confounded by the world and increasingly irrelevant.The recent extension of the deals just leaves output restraint in place for another nine months, the best response OPEC could muster. Deeper cuts were barely mentioned. Assertions to do "whatever it takes" ring hollow. Indeed, there's no appetite for the big cuts that would demand real sacrifices in countries such as Russia, where normal seasonal factors helped it lower production in the first half of the year. Just sticking to current output levels could be difficult for the rest of 2017: early maintenance work has helped several OPEC members meet their targets but that can't continue. Then there's the problem of recovering output from Libya and Nigeria, both exempt from the cuts.

Two things are getting in the way of OPEC's scheme to boost oil prices: OPEC wants higher oil prices. But the same things keep getting in the way. Ever cheaper U.S. shale oil production and growing crude supplies are foiling the plans of the Organization of the Petroleum Exporting Countries to support prices with an export cut designed to remove 1.8 million barrels a day from the market through March 2018. U.S. shale producers keep making their costs cheaper while Nigeria and Libya — two OPEC countries exempted from the cuts — keep producing more, said Dan Yergin, vice chairman of market research firm IHS Markit. "It looked like the world was making progress toward rebalancing, but (these) two things have really pushed out rebalancing," added Yergin to CNBC's Squawk Box. Small, independent producers can churn out shale for $40 — or less — a barrel, he added."We are seeing that people can operate in the $45 range when people thought it was going to be in the $50s, because people keep figuring out how to push down the cost," said Yergin. This is as producers learn how to be more efficient in the growing industry. Data analytics and automation also help, he added. "Forget that world of $100 — that was not the new normal; that was an aberration," Yergin said of prices before 2014, when oil prices crashed. Although they have recovered from their lowest below $30 a barrel last year, prices are still below $50 barrel on Thursday. Oil futures were slightly higher on Thursday in Asia, with U.S. crude moving around $45.40 per barrel while European Brent was around $48 per barrel. 

Oil Production Vital Statistics June 2017 -- In June, the oil price succumbed to gravity and fell to $45 / bbl (Brent) but has since recovered to $50. OPEC 10 (excluding Libya, Nigeria and Gabon) produced 29.64 Mbpd in May, down 1.34 Mbpd on October 2016 and remains compliant with the agreed cuts. But adding in Nigeria and Libya, where production is rising, the cut is reduced to 1.04 Mbpd. Russia has cut 280,000 bpd and is largely compliant, but this merely undoes a sharp production ramp leading into the Ocober datum month. The real damage to the oil price comes from the USA where production is rising once again. Production in the USA is up 670,000 bpd on October 2016, undoing much of the OPEC constraint.OPEC have agreed to extend their cuts until March 2018. I have said all along that the magnitude of the cut is insufficient to support price when confronted with large over-supply and large inventories in storage. Large OECD projects continue to mature and come on line, for example the Kraken Field in the UK North Sea has just come on and will produce 50,000 bpd. The oil price will only begin to make a genuine and sustained recovery when non-OPEC supply begins to fall in response to low price. And that may not happen until late 2019.OPEC drilling remains close to a cyclical high (Figure 9) while US drilling continues to recover. Total US rigs stood at 940 on 30th June, up 32 for the month, though there are signs the rig count growth is slowing. Drilling remains stuck on a cyclical low everywhere else. Canadian production traditionally hits a seasonl low in June and this year is no exception with production down 700,000 bpd since February. Recovery from this seasonal low will will produce further head winds for the oil price for the remainder of this year. The following totals compare May 2016 with May 2017:

  • World Total Liquids 95.34/96.69 +1,350,000 bpd
  • OPEC 12: 31.82/31.88 +60,000 bpd
  • Russia + FSU 13.95/14.31 +60,000 bpd
  • Europe OECD  3.41/3.48 +70,000 bpd
  • Asia 7.50/7.41 -90,000
  • North America 18.60/19.62 +1,020,000 bpd

With global total liquids production up 1.35 Mbpd on a year ago despite OPEC+Russia cuts, it is little surprise that the oil price is significantly depressed. One reason for the large YOY increase was the Fort McMurray wild fire last year that shut down a large part of Canadian oil sands production. The following totals compare October 2016 with March 2017 and monitor compliance with the OPEC + others’ production cuts.

  • OPEC 10: 30.98/29.64 – 1,340,000 bpd
  • Russia + FSU 14.51/14.31/ -200,000 bpd
  • Oman 1.02/0.98 -40,000 bpd
  • Total -1.58 Mbpd – compliance has slipped a little

Hedge funds walk into bear trap in oil: Kemp (Reuters) - Hedge fund managers had amassed a record number of short positions in petroleum futures and options by the start of last week, which primed the oil market for a sharp short-covering rally at the end of the month.Hedge funds and other money managers held short positions in the five major contracts on crude, gasoline and heating oil amounting to 510 million barrels on June 27, according to regulatory and exchange data.Fund managers have added 200 million barrels of extra short positions since the end of May and 377 million barrels since crude prices peaked in the middle of February ( funds were even more pessimistic than in January 2016, with more short positions than when oil prices were touching their cyclical lows below $30 per barrel.Overall, fund managers were running net short positions of 20 million barrels in gasoline and 32 million barrels in heating oil on June 27 ( and still had a net long position of 357 million barrels in crude but it had been cut from 589 million barrels on May 30 and a record 951 million barrels on Feb. 21 ( doubts about the effectiveness of OPEC’s production cuts, coupled with increases in crude output from Libya, Nigeria, Canada and the United States have prompted a wave of short-selling.And concerns about the health of gasoline demand and high level inventories in the United States have added to the bearishness within the hedge fund community.Fund managers have ramped up short positions in NYMEX WTI by 86 million barrels over the last four weeks, in the most aggressive short-selling cycle since the start of 2015 ( the sheer number of short sales left the market looking imbalanced and vulnerable to a short-covering rally (“Hedge funds hold near-record short positions in petroleum”, Reuters, June 27). Crude prices have now risen for seven consecutive trading sessions as the pace of short sales slows and some hedge fund managers have been emboldened to start adding long positions in anticipation of a rally. Fund managers are likely to have closed out at least some of their short positions as prices have risen consistently over the last week.

US crude posts best winning streak since 2012 -  Oil prices rose for an eighth day on Monday, marking its longest stretch of daily gains in more than five years after data pointed to moderating U.S. output. U.S. West Texas Intermediate (WTI) crude futures ended Monday's session $1.03, or 2.2 percent, higher, at $47.07 per barrel. That marked a four-week closing high, adding to last week's 7 percent gain. Brent crude futures climbed 92 cents, or 1.9 percent, to $49.69 per barrel by 2:35 p.m. ET (1835 GMT), after jumping 5.2 percent last week, its first weekly gain in six weeks. Brent traded at its highest intraday level in more than three weeks on Monday. Crude posted its longest unbroken stretch of gains since February 2012."Its all about market sentiment," said Commerzbank senior oil analyst Carsten Fritsch. He cited a 100,000 barrel per day drop in U.S. production due to tropical storms and maintenance, as well as a decline in U.S. rig count. "These... (temporary) factors outweigh the sharp increase in OPEC oil production in June... and the continued increase in Libyan and Nigerian output at least at the moment," he said. Speculators in Brent crude futures and options raised their bets against a sustained price rise to the highest level on record in the latest week. Drilling activity for new oil production in the United States fell for the first time since January, dropping by two rigs, while U.S. government data showed crude output fell in April for the first time this year. 

Oil prices fall on U.S. holiday after eight days of gains - Oil prices fell on Tuesday, halting a run of eight straight days of gains on signs that a persistent rise in U.S. crude production is running out of steam. Brent crude futures fell by 22 cents to $49.46 per barrel by 0927 GMT.U.S. West Texas Intermediate (WTI) crude futures were trading down 20 cents at $46.87 a barrel. The falls came after both benchmarks recovered around 12 percent from their recent lows on June 21. Many traders closed positions ahead of the U.S. Independence Day holiday on July 4, while Brent also faced technical resistance as it approached $50 per barrel, traders said.Despite this, the market's outlook has shifted somewhat.Late May and most of June were overwhelmingly bearish as U.S. output rose and doubts grew over the ability of the Organization of the Petroleum Exporting Countries (OPEC) to hold back enough production to tighten the market.But sentiment began to shift toward the end of June, when U.S. data showed a dip in American oil output and a slight fall in drilling for new production."The fact that prices have not come under any noticeable pressure of late points to a shift in sentiment," Commerzbank said on Tuesday. "This may be related to the fact that most of the 'shaky hands' have withdrawn from the market by now," the bank added.'

Markets Overcome The Crash: Oil Rally Continues -Oil prices continued to rally, retracing a good chunk of the losses made over the past month. Brent is flirting with $50 oil while WTI has moved above $45. The gains have largely been attributed to a spate of short-covering, but the gains have damped down some of the panic that the market suffered from two weeks ago. . Even as oil entered bear market territory only recently, a growing number of analysts see the selloff as going too far. Now some argue that there is a better chance of more price gains than there is in another downturn. The logic is the same as it was earlier this year: despite short-term volatility, the market is still heading towards balance, even if that is occurring at a painfully slow pace. “We thought this market was actually a bit oversold. We think the fundamentals are better than where the price was earlier,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC. Other analysts agree. "Given that all these bearish headlines have been priced into the market, if you're going to have any sort of risk of a large outside move, I think it would be to the upside at this point," Stephen Schork, editor of The Schork Report, said to CNBC.. The rig count fell for the first time since January. Oil rigs were down by 2 for the week ending on June 23, and while it is only one week’s worth of data, the decline raises the prospect of the U.S. shale boom running out of steam as oil prices dropped into the low-$40s.

Crude Tumbles After Russia Opposes Deeper Production Cuts -  Crude oil fell sharply, ending the longest winning streak this year, as Russia was said to oppose any proposal to deepen OPEC-led production cuts. Futures dropped 4.1 percent in New York, the most in four weeks, after eight straight sessions of gains. Russia doesn’t want to change the current deal because any further supply curbs would send the wrong message to the market, according to government officials. The U.S. dollar strengthened, reducing the appeal of commodities denominated in the currency.Russia "pretty much threw cold water" on rumors of additional cuts,  The Bloomberg Intelligence index of independent exploration and production companies fell as much as 4.6 percent. Baker Hughes plunged as much as 37 percent on its first day of trading as a unit of General Electric Co.While crude prices surged last week, futures are down 16 percent for the year amid concerns that rising global supply will offset the output cuts from the Organization of Petroleum Exporting Countries and its partners. Libya and Nigeria, which are exempt from the agreement, accounted for half of the group’s production boost last month, according to data compiled by Bloomberg.  West Texas Intermediate for August delivery settled $1.94 lower at $45.13 a barrel on the New York Mercantile Exchange. Tuesday’s transactions will be booked Wednesday for settlement purposes because of the U.S. Independence Day holiday. Prices gained almost 11 percent in the eight days through Monday. Brent for September settlement closed at $47.79 a barrel on the London-based ICE Futures Europe exchange, down $1.82. The contract fell 0.1 percent to $49.61 on Tuesday, the first decline in nine sessions.

Oil brings 8-session rally to a screeching halt with biggest drop in a month - Oil prices suffer their largest drop in a month on Wednesday, snapping their longest run of gains since 2010 after news that Russia ruled out any proposals to deepen the global production cuts and reports of higher monthly exports from OPEC. August West Texas Intermediate oil lost $1.94, or 4.1%, to settle at $45.13 a barrel on the New York Mercantile Exchange, posting its first loss in nine sessions. That was the largest dollar and percentage loss since June 7. The contract only traded electronically and didn’t settle on Tuesday due to the Independence Day holiday in the U.S.  On Monday, WTI ended higher for an eighth straight trading day, scoring its longest streak of wins since January 2010, when the market rose for 10 straight sessions, according to data from WSJ Market Data Group. Over the period, it gained just over $4.50 a barrel, or roughly close to 11%. September Brent slumped $1.82, or 3.7%, to $47.79 a barrel Wednesday on ICE Futures Europe. Futures prices had traded in tight ranges earlier in Wednesday’s session, but were sent sharply lower after Bloomberg reported that Russia opposes any further restrictions on oil supply other than the ones already agreed. The Organization of the Petroleum Exporting Countries and a group of non-cartel members—including Russia—in May extended a deal to cut production into the first quarter of 2018. “Following a strong rally in just eight days, the market is taking stock with news apart from those stemming from the U.S. having been mostly price-negative during the past week,” That news includes “rising OPEC production due to Libya and Nigeria combined with Russia shooting down any hopes of further cuts.” “$50 on Brent proved one bridge too far to cross at this stage,”

Nigerian oil output recovery adds to surplus - traders | Reuters: Nigerian crude for August loading is proving slow to find buyers amid rising supply, oil trading sources said on Wednesday, a sign that an expected second-half rebalancing of the global market is getting off to a slow start. An increase in production in Nigeria and Libya, where conflict and unrest had curbed output earlier this year, is adding to the volume of light, sweet crude looking for buyers in the Atlantic Basin, despite an OPEC-led supply cut aimed at getting rid of a surplus. Oil traders say there are at least 40 unsold August-loading Nigerian cargoes looking for buyers, the equivalent of almost half of daily world demand and a higher volume than at similar points in earlier months. "It's starting to clear but there are still 40 plus left," said a trader, who said the excess supply for August loading was higher than earlier months as production has increased. "It's more because there is a much bigger programme in August. It's slow on Nigerian." Lingering cargoes of crude from Nigeria, Africa's biggest exporter, have been a feature of the market this year , weighing on prices since Nigeria's crude is sold in relation to Brent, the global benchmark.. Such signs of excess should start to be less visible in coming months if, as analysts like the International Energy Agency forecast, the global market tightens in the second half of the year helped by the OPEC cut. But Nigerian exports are set to exceed 2 million barrels per day (bpd) in August, a 17-month high, and on Tuesday the head of the IEA said further increases by key producers could hamper the rebalancing. ‘

WTI Bounces On Biggest Crude Draw Since 2016 --Having broken its win-streak with the biggest drop in 4 weeks today following Russia comments, crude prices hovered around $45 as API reported a massive 5.8mm barrel crude draw (most since 2016) and 5.7mm gasoline draw (most in 4 months). API:

  • Crude -5.764mm (-2.5mm exp)
  • Cushing -1.4mm
  • Gasoline -5.7mm
  • Distillates +375k

After last week's product draws (and small crude build), we suspect the effects of tropical depression Cindy may be impacting the data as the draws are very significantly away from expectations...

 The Global Oil Demand Driver That Is Being Ignored -- When looking at oil demand, oil market analysts focus overwhelmingly on passenger vehicles. One of the hottest debates today is over the prospect of peak oil demand: whether or not electric vehicles along with general trends towards more fuel efficiency will ultimately lead to a peak and decline of total oil demand worldwide. But the conversation often overlooks the role that heavy trucks and freight play in driving demand. The International Energy Agency just published a report arguing that the world needs to get a handle on fuel efficiency for freight, or else oil demand will continue to rise, regardless of how many Tesla’s are on the road. Freight transit is crucial for economic growth, and indeed, it tends to be correlated with GDP. The IEA says that only four countries – Canada, the U.S., China and Japan – have fuel efficiency standards for heavy trucks, one-tenth of the 40 countries that have rules for passenger vehicles. “For far too long there has been a lack of policy focus on truck fuel efficiency. Given they are now the dominant driver of global oil demand, the issue can no longer be ignored if we are to meet our energy and environmental objectives” Dr. Fatih Birol, the IEA’s Executive Director, said in a press release.Since 2000, heavy trucks have accounted for 40 percent of the total growth in oil demand, on par with the share for passenger vehicles. Trucks burn about 17 million barrels of oil per day (mb/d), or about one-fifth of total global demand. Crucially, demand is still growing…rapidly.

OPEC can’t save oil market alone—the U.S. has to step in, says Morgan Stanley - OPEC and other major oil producers have taken on an ambitious battle to rebalance the oversupplied oil market, but despite the best intentions their efforts aren’t enough, Morgan Stanley warns. In a Thursday research report, the Wall Street bank called on U.S. shale-oil producers to join in efforts to tackle the global supply glut that has pummeled prices since the summer of 2014. “If OPEC doesn’t balance the market, the oil price will have to force it somewhere else, most likely in U.S. shale. For a chance of a balanced market in 2018, the U.S. rig count can no longer grow and possibly needs to contract ~150 rigs. Given current break-evens, this requires WTI between $46-50,” the Morgan Stanley analysts said in the report. Cementing their downbeat assessment of the oil market, they significantly downgraded their 2017 forecasts for both West Texas Intermediate and Brent. They now see WTI trading at $48 a barrel at the end of the year, down from $55 expected previously. For Brent, they cut their forecast to $50.5 from $57.5. Crude oil for August delivery most recently traded at CLQ7, -2.83% $44.81 a barrel on Thursday, while Brent for September LCOU7, -2.95% was at $47.45 a barrel. Oil prices have been volatile in recent months, even as the Organization of the Petroleum Exporting Countries and other major producers—including Russia—have eased output. They initially agreed to a six-month pact running from January until the end of June, but as prices remained stubbornly low, they extended the accord into the first quarter of 2018. The OPEC and non-OPEC members have signed up to cut output by a collective 1.8 million barrels a day, hoping it will bring global oil inventories to a five-year average. The Saudi Arabian and Russian oil ministers have even pledged to do “whatever it takes” to balance the market. However, there may be a limit to “whatever it takes,” according to the Morgan Stanley analysts. “Although compliance has been healthy, OPEC’s production cuts have so far made little dent in inventory levels, which are still roughly as high as a year ago,” they said. “To support prices in the mid-$50s, OPEC-12 would probably need to lower production by another 200,000-300,000 barrels a day and extend the output agreement to end-2018. We find this unlikely,” they added. 

WTI/RBOB Jump After Major Inventory Draw Despite Biggest Production Surge In 6 Months --Oil bounced notably overnight after a surprisingly large crude build reported by API, but there was some selling in QTI/RBOB into today's DOE data, but that ended quickly as DOE reportedmajor inventory draws across the board sending WTI spiking above $46. However, after last week's drop, US crude production (in the Lower 48) soared by its most in 6 months. DOE:

  • Crude -6.299mm (-2mm exp)
  • Cushing -1.334mm (-700k exp)
  • Gasoline -3.669mm (-1.8mm exp)
  • Distillates -1.85mm (+500k exp)

Draws across the board... “Attention is likely to be focused not only on inventory trends, but also on gasoline demand in the run-up to the Fourth of July, as well as on U.S. oil production”: Commerzbank

 Oil settles slightly up; rally on U.S. inventory draw fades -- Oil futures settled up slightly on Thursday, well off session highs, after a sharp but short-lived boost from a much bigger-than-expected decline in U.S. inventories of crude oil and gasoline. Oil has not sustained gains for more than a couple of weeks as investors have grown more worried about the stubborn global crude glut. U.S. crude stocks fell 6.3 million barrels, the U.S. Energy Information Administration (EIA) said, citing stronger refining activity and reduced imports. That was much more than the draw of about 2.3 million barrels analysts had forecast, and it took total crude inventories to 502.9 million barrels, the lowest since January. Crude prices gave back gains in the early afternoon. After hitting a high of $46.53 a barrel, U.S. futures settled up 39 cents to $45.52 a barrel. Brent futures hit a high of $49.18 a barrel after the inventory figures were released, but settled up 32 cents to $48.11 a barrel. "There's a lot of bearishness out there now," said Phil Flynn, analyst at Price Futures Group in Chicago. "The market is still believing supplies are not going to be in balance globally." Investors believe the Organization of the Petroleum Exporting Countries will need to make further output cuts to offset thriving shale production in the United States. U.S. gasoline stocks dropped 3.7 million barrels in the most recent week, far exceeding the expected drop of 1.1 million barrels. Still, gasoline inventories remain about 6 percent above seasonal averages, so investors will watch for July data to see if demand is strong enough to whittle down stocks. The price of oil has tumbled from one-month highs just below $50 on increased production from OPEC, even as the group has pledged to cut output.

Brent Tumbles To $46 Handle After US Crude Production Surge --Yesterday's "bullish" slump in inventories (and record demand) was offset by a resurgence in US crude production and along with Russia's lack of enthusiasm for more production cuts, is weighing heavily on oil prices this morning Today's rig count data will be a key catalyst for signals that US shale production growth may be topping.“The market’s trying to pin it on the production increase but that seems overstated,”says Warren Patterson, commodity strategist at ING. “There was some strong [Brent] resistance at $50 and since the failure there it seems to have been one way” “The market did get a bit ahead of itself before the numbers so we are seeing some correction as a result of that”As Bloomberg Intelligence's Philipp Chladek notes, Russia and Kazakhstan's rejection of further oil production cuts that could be proposed by OPEC will hurt crude prices in 2H. Russia, with the lion's share, is leading a group of 11 non-OPEC nations committed to reduce output by 558,000 barrels per day. But Russian compliance has been weak thus far. That's also true of Kazakhstan, which started its multi-billion dollar 370,000 barrel Kashagan field. Non-OPEC cuts are voluntary and OPEC doesn't have a mechanism in place to prevent any breach.Additionally WSJ is now reporting that OPEC is mulling production caps for Libya and Nigeria, the market is unimpressed for now.

BHI: US rig count rises by 12 - Last week’s slight decline in the US rig count may have been more of fluke than a sign of an impending plateau in drilling. Baker Hughes Inc.’s tally of active rigs was back up double-digits during the week ended July 7, rising 12 units to 952, up 548 units since the bottom of the drilling downturn on May 20-27, 2016, and its highest point since Apr. 17, 2015.Last week’s single-unit drop ended 23 consecutive weeks of increases (OGJ Online, June 30, 2017). The count has fallen just six times since the drilling rebound began.  US oil-directed rigs, down 2 last week, gained 7 units this week to 763, up 447 units since May 27, 2016, and their highest point since Apr. 2, 2015. Gas-directed rigs rose 5 units to 189, up 108 units since Aug. 26, 2016, as part of their own resurgence.  All 12 units were onshore, bringing that tally to 927. Rigs engaged in horizontal drilling climbed 12 units to 804, up 490 units since May 20-27, 2016. Directional drilling rigs rose 3 units to 74. According to preliminary weekly estimates from the US Energy Information Administration, US crude oil production during the week ended June 30 jumped 88,000 b/d to 9.338 million b/d, nearly making up the losses from the previous week’s dive caused by preparations for Tropical Storm Cindy and maintenance in Alaska. Lower 48 output spiked 105,000 b/d while Alaska fell 17,000 b/d. However, EIA late last week reported that US production posted its first monthly decline of the year in April, shedding 24,000 b/d to 9.083 million b/d, a departure from its early weekly estimates for the month that showed higher output. Gulf of Mexico production dived 101,000 b/d primarily due to maintenance work, more than offsetting increases in major producing states Texas, New Mexico, Colorado, and North Dakota. In news this week impacting US operators, US Interior Sec. Ryan Zinke signed an order aimed at reducing drilling permit delays on federal onshore lands and holding lease sales at least quarterly (OGJ Online, July 6, 2017). The average time to process a drilling permit application in Fiscal 2016 was 257 days.  Oklahoma and its Woodford shale again bolstered the major oil- and gas-producing states and regions this week. The Sooner State gained 4 units to 136, up 82 units since its recent low on June 24, 2016, and its highest point since Mar. 20, 2015. The Cana Woodford also climbed 4 units and now totals 63, up 39 since June 24, 2016. The Arkoma Woodford rose 1 unit to 10. The Mississippian dropped 1 unit to 6. Alaska’s count doubled to 8. Texas, quiet as of late, gained 2 units to 463, up 290 units since May 20-27, 2016. Louisiana also rose 2 units and now counts 69. The Haynesville, which stretches from North Louisiana into East Texas, climbed 2 units to 43, up 30 units since Sept. 30, 2016. The Granite Wash, which stretches from western Oklahoma into the Texas Panhandle, increased 2 units to 14. New Mexico and Utah each lost 1 unit to 59 and 7, respectively. The Permian basin of West Texas and southeastern New Mexico recorded its first decline in 16 weeks, edging down 1 unit to 369.

US Oil Rig Count Rises But "Must Drop 150 For Oil Markets To Balance" -- After falling for the first time this year last week, Baker Hughes reports US oil rig count rose once again (as perhaps Cindy impacted drilling last week) for the 23rd week in the last 24. *U.S. TOTAL RIG COUNT UP 12 TO 952 , BAKER HUGHES SAYS.   This week saw a resurgence in US crude production (as Cindy's effects wear off)...This is the highest Lower 48 production since Aug 2015... And it is that production spike that poured coled water on the short-lived rally after DOE showed inventories dropping. However, as's Tsvetana Paraskova notes, the rig count needs to drop drastically further if any equilibrium in the global oil market is possible... Analysts and investors have been growing increasingly concerned that the OPEC-led production cuts would not be enough to bring the oil market back to balance, and now one investment bank, Morgan Stanley, is saying that if the market stands any chance of rebalancing next year, U.S. shale possibly needs to drop around 150 rigs.“If OPEC doesn’t balance the market, the oil price will have to force it somewhere else, most likely in U.S. shale. For a chance of a balanced market in 2018, the U.S. rig count can no longer grow and possibly needs to contract ~150 rigs. Given current break-evens, this requires WTI between $46-50,” Morgan Stanley analysts said in a research report on Thursday, as quoted by MarketWatch. According to Morgan Stanley, despite OPEC’s cuts, global inventory levels are currently around the same high as they were last year.

Oil prices drop 3 percent on rising global supplies | Reuters: Oil prices settled nearly 3 percent lower on Friday as rising U.S. production as OPEC exports hit a 2017 high cast doubt over efforts by producers to curb global oversupply. Brent crude LCOc1 settled down $1.40, or 2.9 percent, at $46.71 a barrel, after falling to $46.28, its lowest in more than a week. U.S. West Texas Intermediate (WTI) crude futures CLc1 finished $1.29, or 2.8 percent, lower at $44.23 a barrel, after trading as low as $43.78. Both benchmarks posted a sixth weekly decline in the past seven weeks with WTI down 3.9 percent on the week and Brent off 2.5 percent. "The stream of relentless supply continues," said Matt Smith, director of commodity research at Clipperdata. He said OPEC exports were 2 million barrels per day (bpd)higher in June than in 2016, despite of an extension of a 1.8 million bpd production cut deal led by the Organization of the Petroleum Exporting Countries. "We've seen exports last month from OPEC much stronger than they were in April and May, seemingly indifferent to the OPEC production cut deal," Smith said. Reuters oil data showed OPEC production is now at the highest level this year.

Oil prices drop to lowest finish in more than two weeks - Oil prices ended sharply lower Friday to tally a loss of nearly 4% for the week, as a rise in U.S. crude production and a weekly climb in oil rigs provoked concerns that OPEC-led efforts to bring balance the market are doomed. The number of active U.S. oil rigs climbed by 7 to 763 rigs this week, according to data from Baker Hughes released Friday. The data contradicted some expectations that the rig count would continue to fall, following the previous week’s retreat, which marked the first decline since January.  That combined with the weekly rise in total U.S. crude production reported by U.S. Energy Department Administration Thursday to pull benchmark U.S. oil prices toward their lowest finish in nearly two weeks. August West Texas Intermediate crude tumbled $1.29, or 2.8%, to settle at $44.23 a barrel on the New York Mercantile Exchange. That was the lowest finish since June 26, according to FactSet data.  For the week, prices were down roughly 3.9% to mark their sixth such loss in seven weeks.  September Brent on London’s ICE Futures exchange, dropped $1.40, or 2.9%, to $46.71 a barrel, with the contract about 4.2% lower on the week. “No surprise that more rigs were added this week, and it would take a prolonged period of $35 to $40 per barrel prices to really put the brakes on this,” Richard Hastings, macro strategist at Seaport Global Securities, told MarketWatch.  On Thursday, the EIA reported that crude levels in U.S. storage fell by 6.3 million barrels in the week ended June 30, but total domestic production also edged up by 88,000 barrels to 9.338 million barrels a day.Hastings said the rebound in U.S. crude production last week is a key reason why oil prices headed lower Friday. “Some observers maybe thought the big decline in production in the EIA data two weeks ago was all about low prices ruining the production party,” he said. “That might be the case in a few months from now, assuming we continue to see very low $40s.” But “continued news that auto makers are swapping into EVs and hybrids only, and the news from France regarding the gradual phasing out of internal combustion engines should not be underestimated,” said Hastings.

Analysis: Russian oil producers may abandon restraint if prices stay low -- Despite Russia being a leading member of the OPEC/non-OPEC production cut coalition, its producers face significant uncertainty as to whether participation will continue to be profitable and provide the impetus they need to keep their crude output restrained. Lower-than-expected oil prices and a stronger-than-expected ruble, coupled with seasonal factors and a hike in drilling rates in spring, are posing a significant likelihood of output increases toward the end of the year, which could lead to a lower compliance level by Russia overall with its obligations under the production cut deal that was extended in May to the end of March 2018. Russia achieved its target of reducing crude output by 300,000 b/d in late April, and maintained compliance at slightly above 100% in May and June, according to data from the energy ministry. So far, the production cut has had no major impact on oil producers' financial operations as they have mainly been reducing output from less profitable wells and increasing output from more profitable reservoirs. Due to seasonal factors, however, Russia usually produces less crude at the start of the year and gradually increases production toward the end of the year. Therefore, questions remain as to whether oil producers will be able to fulfill their cut obligations later in the year. Over the last 12 years, average daily output has typically risen by around 170,000 b/d from April to October, according to calculations by Sberbank CIB analysts. The task could be complicated further by a rise in drilling operations seen this spring, after a significant drop in February, which may result in an increase in output at the end of the year. In April, production drilling jumped by 9.8% year on year, contributing to a 6.1% increase for the first four months of the year, and drilling volumes in the next couple of months could be an indicator of the potential output dynamic later in 2017.

Ships Exporting Iranian Oil Go Dark, Raising Sanctions Red Flags -  Fox - Ships chartered by two oil traders responsible for a significant share of Iran's fuel exports last year failed to transmit their location and the origin of their cargo -- red flags for governments seeking evidence of evasion of sanctions on Tehran. Continue Reading Below The ships' radio-signal tracking systems were often not in use and occasionally indicated the ships had sailed from countries other than Iran, a Wall Street Journal investigation found. The U.S. government is analyzing movements of ships in the Persian Gulf for any attempts to circumvent bans on funding Iran's weapons programs or clearing payments for Iranian oil through the U.S. financial system, a U.S. official said. U.S. officials said they weren't familiar with the particular shipments identified by the Journal. This scrutiny come amid uncertainty in the U.S. about the future of the 2015 multinational agreement in which Iran pledged to scale back its nuclear program in return for the lifting of most international sanctions. President Donald Trump has cast doubt on whether his administration will continue to support his predecessor's commitment to the deal. U.S. officials said the White House is reviewing its Iran policy and considering stiffer measures. Shortly after Mr. Trump took office, the administration imposed new sanctions related to Iran's defense and ballistic-missile programs. While the nuclear agreement lifted many obstacles to doing business with Iran, the U.S. maintains sanctions that make it difficult to trade Iranian oil. A ban on clearing payments through the U.S. financial system hinders trade because oil is mostly bought and sold in dollars. The U.S. also prohibits doing business with blacklisted entities including the Islamic Revolutionary Guard Corps, a military division that is dominant in Iran's economy.

OPEC June crude oil output 32.49 mil b/d, up 220,000 b/d from May: Platts survey -- OPEC's crude oil production has risen 500,000 b/d in the last two months, as the continued recoveries of Nigeria and Libya pushed the bloc's output to 32.49 million b/d, according to the latest S&P Global Platts OPEC survey released July 6.The June output figure, an increase of 220,000 b/d from May, is a six-month high for the organization, complicating its efforts to hasten the oil market's rebalancing through production cuts that went into force January 1. The production rises in Libya and Nigeria, which were exempted from the agreement as they recovered from militancy, have sent the organization's collective output almost 600,000 b/d above its stated ceiling of around 31.9 million b/d when new member Equatorial Guinea is added in and suspended member Indonesia is subtracted. This comes even as compliance among OPEC's 12 countries with quotas under the agreement remains robust at 116%, according to an average of January through June production, as seven countries led by largest member Saudi Arabia have cut more than required. Saudi Arabia saw its output rise in the month to 9.97 million b/d, according to the survey, as the kingdom's crude exports rose significantly and the onset of summer drove domestic consumption of oil to power air conditioning. But that is still far below its quota under the deal of 10.06 million b/d. Second largest member Iraq grew production slightly to 4.45 million b/d, remaining the least compliant country in terms of output above its quota, which is 4.35 million b/d. Iran, OPEC's third largest producer, also saw a slight increase in output to 3.8 million b/d, right at its quota under the deal.

 Don’t Hold Your Breath For Deeper OPEC Cuts  - According to Reuters data, OPEC exports jumped again in June, the second consecutive month of rising exports. Everyone tends to pay attention to the production data, but the volume of exports is arguably much more important. Reuters says that OPEC’s oil exports rose to 25.92 million barrels per day (mb/d) in June, an increase of 450,000 bpd from May. More importantly, OPEC’s exports are actually 1.9 mb/d higher today than they were a year ago, despite the highly-touted compliance rate with the collective production cuts. Reuters columnist Clyde Russell calls OPEC’s efforts to balance the oil market “an exercise in self-deception.” It appears that OPEC is exporting just as much oil as it was before the November deal was announced, according to a Reuters analysis of oil tanker data. The UAE, for example, exported 2.8 mb/d in the first six months of 2017, higher than the 2.52 mb/d the country averaged in the same period a year earlier. Iran too is exporting more than last year. Then, of course, there are the countries exempted from the deal – Libya and Nigeria – where exports are rising quickly. Libya’s exports only averaged 243,000 bpd in the first half of 2016, a figure that doubled to 553,000 bpd this year. Libya’s production recently topped 1 mb/d, so its exports are surely set to rise further.Ultimately, this means that OPEC’s oil exports are not all that different from last year’s figures even though it has claimed success with the collective cuts. That raises the question about whether or not OPEC should make deeper cuts, an approach that a growing number of analysts say is needed to balance the market. And as Bloomberg recently noted, another cut would be consistent with OPEC’s own history. In the past, OPEC conducted multiple cuts over a short period of time, tweaking their output levels in order to achieve a targeted outcome. However, the one major reason why a follow-up cut would be more difficult is the presence of rapid-response U.S. shale. Shale drillers have already brought back a lot of production since last year, so deeper cuts could simply open up more room for them. While some analysts are pointing to the possibility of shale production starting to slow, that would support the notion that the industry responds very quickly to changing market dynamics. That responsiveness takes away some leverage from OPEC and undercuts the rationale for steeper cuts.

Saudi GDP falls for first time since financial crisis as oil output cut | Reuters: Saudi Arabia's gross domestic product shrank from a year earlier in the first quarter of 2017 for the first time since the global financial crisis, but the private sector strengthened gradually, official data showed on Friday. GDP, adjusted for inflation, shrank 0.5 percent year-on-year between January and March, its first fall since 2009. That was almost entirely because of a 2.3 percent contraction in the oil sector, as Saudi Arabia cut its crude output under a global deal among producing countries to prop up prices. The non-oil government sector of the economy shrank 0.1 percent, showing Riyadh continued to keep a tight rein on state spending as it tried to cut a big budget deficit caused by low oil prices. But the non-oil private sector grew 0.9 percent, accelerating from a revised 0.5 percent in the fourth quarter of last year. It was the fastest private sector expansion since the fourth quarter of 2015. Private businesses have been hit hard by government austerity measures, including higher domestic energy prices and delays in the government paying its debts to companies. Late last year, however, Riyadh began settling its debts more promptly, boosting the private sector. The outlook for growth in the rest of this year is murky. In recent weeks Riyadh has eased its austerity drive slightly, restoring financial allowances to public sector employees, and this should help consumption slightly.Also, the government plans to introduce a 5 percent value-added tax at the start of 2018, so there may be a consumption mini-boom in the preceding months as Saudis make big-ticket purchases to avoid the tax. But some austerity steps are going ahead this year, such as higher residence fees for expatriates, who make up about a third of the population. Also, the oil output deal extends through the end of 2017, so the oil sector will continue to drag on growth. 

Inside Saudi Arabia’s Big Bet on Plastics -  Under a tent in the Saudi desert, Ziad Al-Labban’s showing off his vision for the world’s largest oil supplier—and it looks like an Ikea store. Al-Labban has spent his career helping Saudi Aramco meet about 10 percent of global crude demand, but right now all he wants to talk about are all the petrochemicals used in the modern home he’s replicated at Sadara, the sprawling new $20 billion complex he runs in the industrial hub of Jubail. The mattress in the bedroom, the plates in the kitchen, even the Chevrolet Caprice in the driveway—he’s too excited reeling off the vast array of products enhanced by his chemicals to notice the scorching heat. At 46 degrees Celsius (115 Fahrenheit), it’s way hotter than most places have ever been. “Do you see that plasma TV?” “We will produce the chemical coating that goes into that screen.” Al-Labban has managed Aramco units before, including in the U.S., but this one is like no other. Sadara, a venture with Dow Chemical Co., emblazons its website with “Game Changer!” for a reason. The facility’s completion is key to the kingdom’s efforts to diversify the economy, develop new industries and create jobs for millions of youth. It’s the largest plant of its kind ever built in a single phase, taking more than 60,000 workers five years to assemble. Peak production is just weeks away, which is good news for Crown Prince Mohammed bin Salman. With the economy flatlining and the budget strained, he’s put next year’s initial public offering of shares in Saudi Arabian Oil Co., as Aramco’s formally known, at the center of his “Vision 2030” blueprint for life after oil. Some royals expect a $2 trillion valuation, which would let them raise $100 billion by selling just 5 percent, though many analysts expect half that. 

Muhammed Bin Nayef Bin Abdulaziz Al Sa’ud Confined To His Palace - In Jidda, according to the New York Times today.  So the story about the now deposed 57-year old former Crown Prince of Saudi Arabia and former Minister of the Interior, Muhammed bin Nayef (MbN), putting out a video supporting his own removal appears to be phony propaganda.  The Saudis instead have been broadcasting a video of the new Crown Prince, 31-year old Muhammed bin Salman (MbS) kissing the hand of (MbN).  Presumably he did that back in the day when MbN was the Crown Prince and MbS was his supposed loyal deputy. We have no video of MbN kissing the hand of MbS. As it is, the story also reports that when MbS’s elevation was announced, MbN returned to his palace to find his guards replaced by ones loyal to his successor.  He and his daughters have since been confined to the palace and also forbidden to leave the country, although the latter would seem to be impossible if they cannot leave the palace. MbN has been replaced as Minister of the Interior by his nephew, Muhammed bin Saud bin Nayef, whose father is governor of the Eastern Province.  Reportedly US intelligence officials are “outraged” at this, having worked long and well with MbN, who was reportedly the key figure behind squashing al Qaeda in Saudi Arabia,  He is viewed by these people as very competent, and his successor has apparently no experience at all in the area.  Wonderful.  But these people are constrained from speaking openly because of the clear support by President Trump and his son-in-law, Jared Kushner, of the elevation of MbS, as well as his aggressive warmongering in Yemen, against Qatar, and also against Iran Of course, we have also seen the spectacle of SecState Rex Tillerson repeatedly making it clear that he at least does not support the diplomatic and economic moves against Qatar.  SecDef Mattis has laid lower on the matter, but has also made it clear that the US intends to maintain its major CENTCOM air base in Qatar and is engaging in actions such as selling Qatar fresh fighter jets that go completely against the Saudi-led move that has been pushed by the warmongering and irresponsible new Crown Prince, Muhammed bin Salman, so stupidly supported by our lunatic president.

Qatar Ready for Consequences of Blockade Showdown, Minister Says  -- The Qatari government, under a Saudi-led blockade of its air, sea and land links, is unwilling to concede any demands that threaten its sovereignty or violate international law, said Foreign Minister Mohammed Al Thani. Qatari stocks fell. The small Gulf emirate is prepared to let pass the deadline for complying with 13 demands set down by the bloc, including shutting the Al Jazeera television network and cutting back ties with Iran, he said Saturday in Rome, where he met with his Italian counterpart.“There is no fear from our direction. We are ready to face the consequences,” Al Thani said. “There is an international law that should be respected and not violated.” Qatari stocks declined as the rift showed no sign of easing head of a crucial Monday deadline. The QE Index, which resumed trading after a one-week public holiday, lost 1.8 percent as of 9:48 a.m. in Doha, led by Industries Qatar QSC’s 2.6 percent loss.  Al Thani repeated that Qatar is willing to sit down and negotiate under the right circumstances. The ultimatum issued June 23 was made to be rejected, he said. Saudi Arabia, Bahrain, the United Arab Emirates and Egypt severed commercial links with Qatar almost a month ago, saying they were isolating the sheikdom over what they see as its tolerant attitude to Iran and support for Islamist groups. The group’s demands also include Qatar severing relations with the Muslim Brotherhood and ending Turkey’s military presence in the country. Qatar was given 10 days to respond.

One Day Before The Saudi Ultimatum Expires, A Defiant Qatar Is "Ready To Face The Consequences"  --Two days ago, when previewing the showdown in the Qatar "diplomatic quagmire", we reminded readers that "Qatar only has until July 3 to comply with the 10-day ultimatum of 13 demands imposed by the Saudi-led bloc", a list which the Saudis described as non-negotiable, with Riyadh's foreign minister Adel al-Jubeir saying Doha must “amend its behavior” or “remain isolated."Fast forward to just one day before the Saudi ultimatum expires, when Qatari Foreign Minister Mohammed Al Thani said his nation is unwilling to concede to any demands that threaten its sovereignty or violate international law. The small but wealthy Gulf emirate said it wasprepared "to let pass the deadline for complying with 13 demands set down by the bloc", including shutting down Al Jazeera and cutting back ties with Iran, Al Thani said in Rome quoted by Bloomberg, where he met the Italian foreign minister. “There is no fear from our direction. We are ready to face the consequences,” Al Thani said. “There is an international law that should be respected and not violated.”And while Al Thani repeated that Qatar is willing to sit down and negotiate under the right circumstances, he repeated that the ultimatum issued June 23 was made to be rejected.As a reminder, nearly a month ago, Saudi Arabia, Bahrain, the U.A.E and Egypt severed commercial, diplomatic and financial links with Qatar saying they were isolating the sheikdom over what they see as its tolerant attitude to Iran and support for Islamist groups, which is ironic since Saudi Arabia is widely acknowledged as the world's premier supporter of offshore terrorism. The group’s demands also include Qatar severing relations with the Muslim Brotherhood and ending Turkey’s military presence in the country. On June 23, Qatar was given 10 days to respond.Meanwhile, not mincing his words, Al Thani accused the blockading nations - it's clear who he was referring to here - of themselves having ties to groups and individuals accused of terrorism.“As for the countries that accuse Qatar of financing terrorism, they have the same problems as Qatar, more so, they are on top of the list in that area,” he said. “There are financial institutes in these countries involved in financing terrorist organization and financing terrorist operations in western countries.”

Saudi-Led Bloc Extends Qatar Deadline on Demands for 2 Days -- A Saudi-led coalition that has cut air, sea and land links with Qatar over accusations the country is supporting terrorism agreed to a two-day extension of its deadline for Qatar to meet its demands, the state-run Saudi Press Agency reported.The decision was made at the request of the emir of Kuwait, which has been acting as a mediator, Kuwait News Agency reported. Qatar would submit its official response to the demands to Kuwait on Monday, it said. The Saudi-led bloc will deliver a full response after a complete reading of the Qatari government’s answer, Saudi Press Agency reported later.Qatari Foreign Minister Mohammed bin Abdulrahman Al Thani on Saturday said his country wouldn’t concede any demands that threaten its sovereignty or violate international law, and was prepared to let pass Monday’s deadline for complying with the bloc’s 13 demands. Those include shutting the Al Jazeera television network and cutting back ties with Iran.“There is no fear from our direction. We are ready to face the consequences,” Al Thani said Saturday in Rome, where he met with his Italian counterpart. “There is an international law that should be respected and not violated.”Foreign ministers of Egypt, Saudi Arabia, Bahrain and United Arab Emirates are expected to meet on July 5 in Cairo to discuss the latest developments on relations with Qatar, the Egyptian foreign ministry said in an emailed statement. Al Thani repeated on Saturday that Qatar is willing to sit down and negotiate under the right circumstances. The ultimatum issued 10 days ago was made to be rejected, he said. Saudi Arabia, Bahrain, the United Arab Emirates and Egypt severed commercial links with Qatar almost a month ago, saying they were isolating the sheikhdom over what they see as its tolerant attitude toward Iran and support for terrorist groups. The group’s demands include Qatar severing relations with the Muslim Brotherhood and ending Turkey’s military presence in the country.

The Palace Intrigue at the Heart of the Qatar Crisis -- Who is the real leader of Qatar? On paper, it is Emir Tamim bin Hamad Al Thani, the 37-year-old son of Sheikh Hamad bin Khalifa Al Thani, who abdicated in Tamim’s favor in 2013. But the leaderships of Saudi Arabia and the United Arab Emirates, who have become involved in a messy diplomatic squabble with Qatar, think it is actually Sheikh Hamad, now known as the “father-emir,” who is still pulling the strings. The truth could dictate the outcome of the Gulf crisis, where the United States is trying to broker an early settlement while Iran watches mischievously from the sidelines.  There are a variety of judgments of who is really in control in Doha, none of which are particularly complimentary to the Al Thanis, the onetime desert tribe that number a mere few thousand but effectively own the world’s third-largest reserves of natural gas. “Hamad dislikes the Emiratis and the Bahrainis, but completely loathes the Saudis” was the opinion of a former diplomat who lived in Doha for several years, who insisted that the father is still the driver of Qatari diplomacy. The 65-year-old Hamad apparently takes a historical and “intensely personal” perspective. Hamad, in the judgment of a onetime insider, is “forceful” and “dangerous.” Those with a less intimate acquaintance with the Al Thani family take a more benign view. “Tamim is willful, but his father is a restraining force” is the judgment of one European official involved in Qatar’s 2022 hosting of the World Cup, which involved billions in infrastructure building on top of the alleged bribes paid to be chosen as a venue, estimated by a European intelligence agency at $180 million. Such an amount is almost pocket change for Doha. Qatar’s gas has given it the highest gross domestic product per capita in the world. During his reign, Hamad leveraged that wealth to set up Al Jazeera, the region’s first satellite television network, which dramatically increased Qatar’s influence — while upsetting its neighbors because it provided a platform to opposition voices and troublesome preachers like Islamist cleric Yusuf al-Qaradawi.

Behind the Scenes at the Saudi-Qatari Pissing Contest - Saudi Arabia, with the bellicose support of President Trump, has launched a diplomatic and partial economic offensive against the ridiculously small state of Qatar and is dragging its allies, the United Arab Emirates in particular, into a potential major headache. You see the de facto capital of the Emirates is Abu Dhabi which uses Qatari natural gas to generate half of its electricity via the Qatar-Abu Dhabi-Oman pipeline. So if Qatar really felt threatened it would pull the plug, and at least for a month or so, challenge the very survival of Abu Dhabi, for how many Emiratis let alone expats would be able to last +40c/105f temperatures without electricity? The Emirates capital city would have to import Liquified Natural Gas (LNG) which it doesn’t have the infrastructure prepared for as well as convert its electrical generators to LNG from natural gas, something that could take over a month to get up and running, no matter the $Billions the Emirates have to throw at the problem. So the Saudis picking a fight with their long time villains, the Qatari’s, could crash the Emirates economy and put a serious strain on the so called “coalition of the willing”, that is those still committed to the quagmire in Yemen and its assorted crimes, another source of strain between the two allies. The Emirates hate the Qatari’s, not without reason, and we know that the Emirates foreign legion has been concocting nasty plans against them in league with a pro-Israel PR Hit Squad in the USA. Still, the Emirates are dependent on Qatari gas so the shit could really hit the fan if the young newly crowned Saudi Prince and de facto commander in chief steps over the line and provokes a Qatari response.  Reality is the Emirates have much more serious trade relations with Iran than Qatar. Oman on the other hand, has even closer economic and political ties with its ancient fraternal brothers and sisters in the land of the Persians and the Saudi’s aren’t attacking the Omanis, so why the pissing match with Qatar?

Qatari minister cites 'aggression' as Gulf states consider sanctions --Qatar's Foreign Minister accused four Arab neighbors of "clear aggression" against his country as they met in Cairo to weigh further measures against a state they accuse of fostering terrorism in the region. Sheikh Mohammed bin Abdulrahman al-Thani said charges cited by Saudi Arabia, Bahrain, the United Arab Emirates and Egypt in cutting diplomatic and transport links a month ago "were clearly designed to create anti-Qatar sentiment in the west". "Qatar continues to call for dialogue despite the violation of international laws and regulations, despite the separation of 12,000 families, despite the siege that is a clear aggression and an insult to all international treaties, bodies and jurisdictions," he told a meeting at London's Chatham House think-tank. The rift between Qatar and its Gulf neighbors has aroused deep concern among Western allies who see the region's ruling dynasties as key partners in energy and defense. Qatar has invested heavily in infrastructure projects in Western states and maintains close diplomatic collaboration with the United States over the conflict in Syria. "Reading between the lines, the blockading countries were demanding that we have to surrender our sovereignty to end the siege, something which ... Qatar will never do," he said. As Sheikh Mohammed spoke, foreign ministers of the four states were meeting in Cairo to consider Qatar's response to 13 demands they have made in return for ending sanctions.The Arab countries have demanded Qatar curtail its support for the Muslim Brotherhood, shut down the pan-Arab al Jazeera TV channel, close down a Turkish military base and downgrade its ties with regional arch-rival Iran. 

Qatar shows mettle, offers compromise as Gulf states prepare meeting - Qatar announced plans for a steep rise in Liquified Natural Gas (LNG) production capacity on Tuesday that suggested it was ready for a protracted dispute with Gulf neighbors, but Doha said it was doing all it could to reach agreement. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain were due to meet on Wednesday to decide whether to continue sanctions they imposed on Qatar on accusations it was aiding terrorism and courting regional rival Iran. Doha denies the charges and has submitted to mediator Kuwait replies to 13 demands that the gathering will consider. "What Qatar has given in goodwill and good initiative for a constructive solution, based on dialogue, we believe should be sufficient (to show) we have carried out our duties from our side," Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani told a news conference in Doha. "There is a lot of progress that has been made on that front (countering terrorism financing)... but of course there is always room for improvement," he said, describing the sanctions as illegal steps under the pretext of fighting terrorism. The three Gulf states and Egypt have severed diplomatic and transport ties with Doha in a dispute that has raised concern across the Middle East and beyond. Western states fear a lengthy dispute, besides threatening political instability, could upset supply chains in a region vital for energy supplies. German Foreign Minister Sigmar Gabriel told the same Doha news conference he felt Qatar had shown restraint in the row which began on June 5 when the Gulf states severed diplomatic and transport ties. "We hope others will respond in a similar spirit."

Qatar Blockade To Continue After Arab States Slam "Negative" Response To Ultimatum -- Foreign ministers from Egypt, Saudi Arabia, the United Arab Emirates and Bahrain released statements following a meeting in Cairo on Wednesday, after the latest deadline they had set to Qatar expired on Tuesday night.  The four Arab nations, locked in a diplomatic crisis with Qatar, dismissed Doha’s response to their demands as “not serious” and pledged to continue to keep the Gulf state under political and economic sanctions until it changes its policies. They also “expressed regret with regards to the negative response from Qatar, which showed complacency and non-seriousness to deal with the root of the problem and reconsider their policies and practices.” Speaking to reporters, Egyptian Foreign Minister Sameh Shukri said that Qatar’s response to the four Arab states’ list of demands, which was passed on via intermediary Kuwait on Monday, was “generally negative” and failed to “lay the foundation for Qatar's reversal of the policies it pursues.”He added that Qatar’s reply "lacked content", and that it was no "longer possible to tolerate Qatari acts." Shukri also accused Qatar of failing “to realize the gravity of the situation,” according to AP.Separately, the Saudi Foreign Minister Adel bin Ahmed Al Jubeir says the alliance will weigh more measures against Qatar, and reserves the right to take action when appropriate.He also said that the Boycott will continue until Qatar changes policy, adding that it was no surprise that Iran is trying to get closer t o Qatar, while expressing hopes that Turkey will remain neutral.

Exclusive: Energy giants court Qatar for gas expansion role despite crisis | Reuters: The West's three biggest energy corporations are lobbying Qatar to take part in a huge expansion of its gas production, handing Doha an unintended but timely boost in its bitter dispute with Gulf Arab neighbors. The chief executives of ExxonMobil, Royal Dutch Shell and France's Total all met the emir, Sheikh Tamim bin Hamad al-Thani, in Qatar before it announced a plan on Tuesday to raise output of liquefied natural gas (LNG) by 30 percent. Company and industry sources told Reuters that the CEOs had expressed interest in helping Qatar with its ambition to produce 100 million tonnes of LNG annually - equivalent to a third of current global supplies - in the next five to seven years. The companies already have large investments in countries on both sides of the dispute, and are keen to remain neutral after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with Doha on June 5. Spokespeople from all three firms declined comment. However, a top executive from one energy major looking into expanding in Qatar said the huge business opportunity was worth the considerable political risk. "There is only one policy here – you have to behave like a commercial corporation," the executive told Reuters. "You have to make your choices purely economically and be Qatari in Qatar, Emirati in the Emirates." Energy sales have powered Qatar's rapid rise as a regional player since the late 1990s, and the oil majors' interest in the LNG expansion underline its longer-term economic muscle during the political row with its neighbors.

The Saudi-Qatar Spat – Qatar And Iran Are Winning – MbZ, MbS Lose Face -- The Saudi/UAE campaign against Qatar quickly turned into a mess. Qatar did not fold as had been expected. There was no plan B. The instigators of the plan have now to fear for their head.  Saudi Arabia, the United Arab Emirates, Bahrain and Qatar have all build up and pamper extremists groups fighting in other countries. They supply money, weapons and political and media support to various kinds of murderous Takfiris. Unlike the other three, Qatar not only supported arch-conservative Salafists but also groups aligned with the Muslim Brotherhood. The MB do not accept the primacy of the Arab absolute monarchs. They provide an alternative way of governing by adopting some democratic participation of the people. That makes them an imminent danger to the Saudis and other family dictatorships.  In the view of the Saudis and the other three Qatar had to be reigned in. While its media arm Al-Jazeerah Arabic promotes the sectarian and anti-Iran positions the Saudis support, it also promotes the Muslim Brotherhood. That needed to be stopped. On June 5 the four countries launched a boycott and blockade of Qatar. Three weeks later they issued a list of demands to Qatar which could be summed up as "surrender your sovereignty or else ...". The "offer" was designed to be refused. It practically demanded total capitulation while threatening more sanctions and even war. As MoA predicted on June 7, two days after the spat started, Qatar did not fold. It has hundreds of billions in monetary reserves, international support from its liquefied gas customers and allies, and it secured supplies and support from Turkey and Iran. It simply did not response to the "offer" in time for the ultimatum's end. The Saudis blinked first. On Sunday the ultimatum was prolonged for two days. Yesterday Qatar responded with its own demands which were, like the "offer", designed to be refused. It also announced that it would increase its liquefied gas exports by a third which threatens to take market share and income away from the Saudis. It reminded the UAE that 80% of its electricity supplies depend on natural gas delivered from Qatar.Today the Saudis, the UAE, Egypt and Bahrain met to discuss further consequences and new measures against Qatar. The Gulf media predicted more sanctions. But the gang of four decided to do ... nothing:

Qatar Cash Crisis Looms As Interbank Rates Hit Record Highs --We warned previously that Qatar was running out of cash, and it appears that is very much the case as the cost of interbank borrowing (liquidity provision) hits a record high.  To boost their hard currency reserves, Qatar banks are now offering a premium of as much as 100 basis points over LIBOR to attract dollars from regional banks, some 80 bps higher compared to the rate they offered prior to this crisis. And the soaring cost of interbanking liquidity provision suggests its not working... As Arqaam Capital analysts Jaap Meijer and Janany Vamadeva note in a recent report...A prolonged conflict between Qatar and its neighbors may leave the country’s banking sector "vulnerable” because of its reliance on foreign funding. They reiterate underweight rating on the sector.Arqaam doesn’t rule out renewed sanctions as Arab nations disappointed with Qatar’s response to list of 13 demands, and notes that the Qatari banking sector is "highly dependent on foreign funding (wholesale debt and deposits) with low operational relationships."The banking sector relies on foreign markets for 43% of its funding needs,with non-resident deposits making up 46%, interbank 43% and wholesale debt 11%.Qatar Islamic Bank has the highest share of funding coming from the Gulf Cooperation Council at 24%, Qatar National Bank the least at 5%, though has the highest dependency on foreign funding at 57%. As we noted previously, despite the spike in interbank rates, S&P is confident that Qatari banks are strong enough to survive the pullout of all Gulf money and then some. The ratings agency ran two hypothetical scenarios of capital flight, and concluded that Qatar’s lenders could survive the withdrawal of all Gulf deposits plus a quarter of the remaining foreign funds the banks keep. Still, that did not prevent S&P from lowering Qatar’s long-term rating by one level to AA- last week.

Qatar crisis: Saudi-led bloc vows new measures - BBC News: The four Arab states leading a boycott against Qatar have condemned its rejection of their demands and warned of unspecified new measures against it. Saudi Arabia, Bahrain, Egypt and the United Arab Emirates said Doha was intent on continuing a "policy aimed at destabilising security in the region". New measures would be enacted in an "appropriate and timely manner". They cut links with Qatar in June over its alleged support of terrorism and ties with Iran. It denies wrongdoing. The oil- and gas-rich nation was presented with a list of demands, including shutting down the Al Jazeera news network, closing a Turkish military base, cutting ties with the Muslim Brotherhood, and downgrading relations with Tehran. Qatar vigorously denied supporting terrorism, and insisted it would not agree to any measures that threatened its sovereignty or violated international law. The air, sea and land restrictions have caused turmoil in the country, which is dependent on imports to meet the basic needs of its population of 2.7 million. In a joint statement issued late on Thursday, the four countries expressed their "deep surprise over the unjustified refusal by the Qatari government to the legitimate list and logical demands" aimed at fighting terrorism, combating extremism and safeguarding Arab and international security.  They stressed that the list of demands was now "null and void" and vowed to take further "political, economic and legal measures" in a manner that "preserves their rights, security and stability towards a hostile Qatari government policy".

Saudis Are After the Muslim Brotherhood, and Turkey’s in the Way -- A crisis over the Gulf state of Qatar had U.S. allies at loggerheads. More than that, it showed that there aren’t just two power blocs in the region. There are at least three. An alliance led by Saudi Arabia apparently enjoys Trump’s full support. Iran heads a coalition of America’s enemies. But a third bloc, looser and harder to classify, is at the heart of the dispute in the world’s oil repository. It includes Qatar, which hosts a major U.S. military base; Turkey, a NATO member; and the stateless, beleaguered yet resilient group that both nations support: the Muslim Brotherhood. The 90-year-old Islamist movement has been in the crosshairs of the Saudis and other Gulf monarchies since the Arab revolts at the start of this decade, when it briefly held power after winning elections in Egypt, and seemed set to repeat the feat elsewhere. “They see the Brotherhood as the only organized, transnational movement that offers a different model of political activity and legitimacy,” said Shadi Hamid, a senior fellow at the Brookings Institution who worked at the think-tank’s Doha center. “They see that as a threat. That’s why the Muslim Brotherhood is so divisive. Because it captures this fundamental divide over the Arab Spring.” That agenda was apparent in the demands presented to Qatar. Placed under a partial blockade, the small, gas-rich nation was told to cut back ties with Iran and end its alleged support for al-Qaeda and Islamic State, the groups that top most Western terror lists. But it was also ordered to stop supporting the Brotherhood, which Western countries don’t classify as terrorist; to shut down the Brotherhood-friendly broadcaster Al Jazeera; and to kick Turkish troops out of their new base in Qatar. 

Turkey Warns It's Ready For Military Intervention In Syria, Accuses US Of Creating A "Terrorist Army"  --Speaking in an interview with France 24, in which Turkish president Recep Erdogan lashed out at Germany for not allowing him to address the Turkish community there and preventing him from bringing his bodyguards to the upcoming G20 meeting in Hamburg, Erdogan warned that Turkey is ready to intervene militarily in north Syria to repel Syrian Kurdish forces there, forces which recall are armed and supported by the US but are seen as a terrorist organisation by Turkey. He also said that to avoid military intervention, a de-escalation zone could soon be established by Turkish and Russian troops in the region.  Separately, Turkey's deputy Prime Minister Numan Kurtulmus told Reuters on Wednesday that Turkish military preparations in northwest Syria are "legitimate measures against a threat from Kurdish forces in the Afrin region, and Turkey will retaliate against any hostile move." He added in an interview that "This is not a declaration of war. We are making preparations against potential threats" adding that "It's ... a legitimate measure so that we can protect our independence. We cannot remain silent against those sending missiles from Afrin." Kurtulmus was responding to the head of the Syrian Kurdish YPG militia, who told Reuters that Turkish military deployments near Kurdish-held areas of northwestern Syria were a declaration of war which could trigger clashes within days.   Adding to the absurdity of the situation, last month the Turkish defence ministry said that the Pentagon had sought to give assurances that Washington would retrieve weapons provided to the YPG after Islamic State fighters were defeated. Clearly this was a ludicrous assertion and Turkey slammed it as such:  "There has never been an incident where a group in the Middle East has been armed, and they returned the weapons," Kurtulmus said. The United States "have formed more than a terrorist organization there, they formed a small-scale army." It will hardly be the first time the US has formed a terrorist organization.

Russia promises to respond should the US attack Syria - Fort Russ: Russia will respond adequately and in proportion if the US implement its threats against Damascus for allegedly preparing a chemical attack, as stated by Russian Foreign Minister Sergei Lavrov. "I very much hope that this time the United States will be guided by the need to really protect the non-proliferation of chemical weapons and not to speculate on the alleged intelligence, which comes from "secret sources". They cannot create pretexts for another blow to the forces of the Syrian army"- Lavrov said. The Minister confirmed that, during the recent telephone conversation between US Secretary of State Rex Tillerson, the US has information about the upcoming Damascus chemical attack. Earlier, Washington threatened Syrian President Bashar Assad, in the case of such an attack, that he will pay a high price.

Russia may deploy military in Syrian buffer zones within weeks | Reuters: Russia may deploy its military to police the borders of planned de-escalation zones in Syria within two to three weeks after finalizing an agreement with Turkey and Iran, Russian negotiator Alexander Lavrentyev said on Tuesday. Moscow hopes to sign the final documents with Ankara and Tehran on Wednesday, he told reporters after a series of meetings in the Kazakh capital, Astana. Russia and Iran, which back President Bashar Assad's government, and Turkey, which supports some of the rebels, agreed in principle to create four "de-escalation zones" in Syria in a previous round of talks in May, but put off a planned June meeting where they were supposed to work out the details. Since the May agreement was announced, the rebel-held stronghold of Idlib province in the northwest of Syria has been mostly calm. But fighting has continued on other frontlines in western Syria, including Eastern Ghouta of Damascus and the southwestern city of Deraa, where government forces and their allies are trying to crush remaining pockets of rebellion. Lavrentyev told reporters that Moscow and its partners were still discussing detailed maps and other conditions related to the Idlib and southern zones, while the borders of two other zones, in Homs province and near Damascus, had been agreed. "Overall, (the agreement) provides for the presence of Russian military police in the buffer zones, but once again this matter has not been agreed yet," he said. "Depending on when the documents on safe zones are signed, I think one should expect concrete measures on the deployment of forces within 2-3 weeks."

Tillerson: Russia Should Decide Assad's Fate - And so, three months after the US State Department famously flip-flopped, when first at the end of March Rex Tillerson said at a news conference that “the longer term status of President Assad will be decided by the Syrian people" adding that "our priority is no longer to sit and focus on getting Assad out" only to follow one week later with Tillerson's warning to Russia that "coalition steps are underway to remove Assad" which in turn segued into the first US attack on Syrian soil with the launch of no less than 59 cruise missiles, the US has done it again and according to Foreign Policy, Secretary of State Rex Tillerson has once again told the U.N. Secretary General Antonio Guterres that the fate of Syrian leader Bashar Al-Assad now lies in the hands of Russia, and that the Trump administration’s priority is limited to defeating the Islamic State. The striking reversal was announced during a private State Department meeting last week, according to three diplomatic sources cited by FP.And, as FP adds, "the remarks offer the latest stop on a bumpy U.S. policy ride that has left international observers with a case of diplomatic whiplash as they try to figure out whether the Trump administration will insist that Assad step down from power. Nearly three months ago, Tillerson had insisted that Assad would have to leave office because of his alleged use of chemical weapons." And a startling admission by the website owned by the Slate Group: Tillerson’s position reflects a recognition that Syria’s government, backed by Russia and Iran, is emerging as the likely political victor in the country’s six year long civil war. It also marks a further retreat from the 2012 U.N.-brokered Geneva Communique — signed by Russia, the United States, and other key powers — which called for the establishment of a transitional government with members of the regime and the opposition. The Geneva pact, according to the Obama administration and other Western allies, was to result in Assad’s departure from power.

Over 500,000 Syrian Refugees Return To Government-Controlled Areas Of Syria --Crucial to the Western narrative of the Syrian conflict is the assertion that Syrian President Bashar al-Assad is a brutal dictator who has taken to killing his own people over the course of Syria’s six-year-long conflict. This allegation has been the crux of the “humanitarian” justification for foreign military intervention in Syria that would seek to depose Assad’s government, a justification frequently used by the U.S. and its allies prior to an invasion or the toppling of an extant regime.While this narrative has been pervasive in media coverage of the Syrian conflict, it is now being debunked by the very Syrian refugees that the media purported were fleeing Assad in the first place. According to a recent statement from Andrej Mahecic, a spokesman for the UN High Commissioner for Refugees, an estimated 440,000 displaced Syrians who remained in the country have returned to their homes since the year began. In addition, 31,000 refugees in neighboring countries also returned to Syria in the first half of the year, with 260,000 having returned to Syria from other nations since 2015.UN Refugee Agency: Almost 500,000 Syrian refugees have returned home. Find out why: #UNHCR #standwithrefugees— UNA-USA San Diego (@UNASanDiego) July 1, 2017  Though Mahecic noted that these refugees represent only a “fraction” of the five million Syrian refugees living in neighboring countries, what is notable is that nearly all of those who have decided to come back are settling in areas of Syria controlled by the government or where the Syrian government has made major territorial gains against ISIS and US-backed militants like al-Nusra Front in recent months – namely Aleppo, Hama, Homs and Damascus.

Syrian Army Set To Recapture Oil Field Near Palmyra From ISIS - Syria’s army is advancing against ISIS militants in the central Homs province, and has encircled terrorists in the al-Hael oil field near the ancient city of Palmyra, Syrian state news agency SANA reported on Wednesday. Army units are currently less than a mile away from the al-Hael oil field, and are closing in on ISIS militants in the field from the west, south, and southeast, SANA quoted a military source as saying. Separately, Syrian Army forces have targeted ISIS hideouts west of the eastern city of Deir Ezzor, killing many terrorists. Last month, the army recaptured the Ark oil field, some 25 miles northeast of Palmyra, from the Islamic State terrorists. The Ark region is of strategic importance to Syria’s economy as it has many oil wells, according to a field commander who spoke to SANA then. On the larger front, the Syrian Democratic Forces (SDF), backed by a US-led coalition, are about to make ISIS give up its de facto ‘capital’ of Raqqa, in northern Syria. The terrorists claimed Raqqa as their ‘capital’ three years ago, but now the US-backed alliance of Kurdish and Arab forces is close to driving ISIS out of Raqqa as the Islamist militants are in retreat in both Syria and Iraq. Coalition forces supported the SDF advance into the most heavily fortified portion of Raqqa, by opening two small gaps in the Rafiqah Wall that surrounds the old city, the U.S. Department of Defense said on Tuesday, quoting Combined Joint Task Force Operation Inherent Resolve officials.

China Joins Russia In Calling For Official Probe Into Use Of Chemical Weapons In Syria -- If there was any confusion whether in addition to Moscow, Beijing was also behind Assad, today all doubts were laid to rest when both Russia and China called on all involved parties "to support the efforts of the OPCW and the United Nations in investigating the alleged use of chemical weapons in Syria," according to a joint statement by Russian and Chinese leaders on the current international situation posted on Kremlin website on Tuesday, following a meeting between Putin and China's president Xi Jinping. "The sides emphasize that in matters of chemical weapons in Syria, all parties, with respect to Syrian sovereignty, must support the efforts of the Organization for the Prohibition of Chemical Weapons [OPCW] and relevant UN structures to conduct an independent and comprehensive investigation in order to obtain irrefutable evidence, establish genuine circumstances and draw conclusions that are capable of withstanding the verification by facts and time." Additionally, in the document Russia and China both "strongly condemn any use of chemical weapons anywhere and by anyone. The statement came days after the White House claimed last week that a new attack involving chemical weapons was being prepared by the Syrian government, however, failed to and declined to present any evidence. Washington vowed to make Syrian authorities "pay a heavy price" in case of chemical weapons use. Commenting on the White House's statement, the Kremlin said that it considers US threats against Syrian legitimate leadership to be "unacceptable." Damascus also denied the information. Furthermore, after a bilateral meeting between Russian President Vladimir Putin and his Chinese counterpart Xi Jinping, the two sides called for respecting the sovereignty and territorial integrity of Syria, as well as for a political solution to the Arab country's crisis through an inclusive dialogue.

5 Maps That Explain The Modern Middle East -- If geopolitics studies how nations behave, then the nation is singularly important. Nation-states are the defining feature of the modern political era. They give people a collective identity and a pride of place… even when their borders are artificially drawn, as they were in the Middle East. Constantly in conflict with the notion of nationalism, especially in such a volatile region, are transnational issues. These are issues like religion and ethnicity that cannot be contained by a country’s borders. Arab nation-states are now failing in the Middle East, and though their failure is primarily due to their governments’ inability to create viable political economies, transnational issues—especially the competition between the Sunni and Shiite sects of Islam, as well as the struggle within the Sunni Arab realm—are expediting the process. (see maps)

The fall of Mosul is a defeat for Isis, but it remains a deadly force | The Independent: The battle for Mosul is a ferocious struggle that has now been going on for 256 days, or two months longer than the battle of Stalingrad. The fighting between Iraqi government forces and Isis is much smaller in scale than in Russia 75 years ago, but is comparable in its savagery and the importance with which both sides regard the outcome of the battle. Iraqi Prime Minister Haider al-Abadi is declaring “the end of the Isis state-let” as Iraqi forces capture the ruins of the al-Nuri mosque where Abu Bakr al-Baghdadi, who may himself be dead, declared the caliphate three years ago. Isis wanted to avoid the humiliation of seeing the Iraqi flag replacing their own colours on the top of the famous minaret. Wars in Iraq have seen many exaggerated declarations of victory since the US-led invasion in 2003, but this one has more substance than most, even if it is a little premature. Isis fighters still hold part of the Old City of Mosul where the ancient close-packed housing and narrow alleyways are ideal for their style of making war.Whatever the precise moment when the last Isis resistance is extinguished in the city, the Islamic State as a geographical unit in northern Iraq and western Syria is being smashed up. It still holds some big enclaves in the Tigris and Euphrates valleys, but it has lost almost its urban centres aside from Raqqa in Syria and Tal Afar west of Mosul. Isis is rooted in the five or six million strong Sunni Arab community in Iraq which has endured devastating losses since it lost power with the fall of Saddam Hussein in 2003. There is no doubt about the importance of the victory won by the Iraqi government forces. It could not have happened without the devastating US-led air strikes, but it was Iraqi ground troops which were decisive in defeating a fanatical but militarily skilful enemy which inflicted heavy losses on them. 

Dramatic Drone Footage Shows What Mosul Looks Like After 8 Months Of Fighting -- Despite being outnumbered 15-1, ISIS forces swiftly captured the Iraqi city of Mosul in 2014, before declaring their monstrous caliphate. It was the victory that put them on the map, and it left hundreds of thousands of refugees in its wake. But three years later, Iraqi forces have nearly finished retaking the city, and are in the process of mopping up the few remaining ISIS fighters who are clinging to several acres of territory along the Tigris river. It’s taken 8 months of near constant fighting, but the city of Mosul, which was once the largest city ruled by ISIS, has nearly fallen. So what does a city look like after being fought over for nearly a year? Recently released drone footage has revealed the extent of the damage, most notably the destruction of the Grand Al-Nuri Mosque, which used to look like this: But now looks like this after ISIS detonated the building just before it could be captured by Iraqi forces:As you can see however, the rest of the city looks pretty bleak as well. That’s because the population has declined from roughly 1,800,000 people to 664,000 people over the past three years. Take note. This is what a city really looks like when the SHTF.

Islamic State fights fiercely in shrinking Iraqi and Syrian strongholds | Reuters: Western-backed forces edged into the final redoubts of the two capitals of Islamic State's self-declared caliphate in Iraq and Syria on Tuesday, hampered by fierce resistance from the militants and the presence of human shields. Iraqi commanders have predicted final victory in Mosul this week after a grinding eight-month assault on the once two-million-strong city pushed Islamic State into a rectangle no more than 300 by 500 meters beside the Tigris river. In Raqqa, Islamic State's headquarters in northern Syria from where it plotted attacks around the world, U.S.-backed militia were fighting inside the historic Old City after coalition air strikes breached its walls in two places. Victory over the hardline militants in both cities would mark the effective end of the three-year-old caliphate, although a few towns and large rural areas of Iraq and Syria remain under their control. But their centers are a maze of narrow alleyways packed with civilians and planted with multiple explosive devices by the militants, who are also using drones and suicide bombings. "The presence of civilians has affected the troops' advance a lot," said a commander in Mosul from the Rapid Response Division, an elite Interior Ministry unit, estimating there were 10,000 civilians, including some brought in as human shields. Iraqi commanders called in air strikes on targets just 50 meters away from them and fighting got close enough at one point for the militants to throw a hand grenade at the troops. 

Facing defeat in Mosul, Islamic State mounts diversionary attack to the south | Reuters: Islamic State militants attacked a village south of Mosul, killing several people including two journalists, even as they were about to lose their last redoubt in the city to an Iraqi military onslaught, security sources said on Friday. The assault on Imam Gharbi village appeared to be the sort of diversionary, guerrilla-style strike Islamic State is expected to employ as U.S.-backed Iraqi forces regain control over cities IS captured in a shock 2014 offensive. Security sources said IS insurgents had infiltrated Imam Gharbi, some 70 km (44 miles) south of Mosul on the western bank of the Tigris river, on Wednesday evening from a pocket of territory still under their control on the eastern bank. Two Iraqi journalists were reported killed and two others wounded as they covered the security forces' counter-attack to take back the village on Friday. An unknown number of civilians and military were also killed or wounded. The fighting forced the U.N.-affiliated International Organization for Migration to suspend relief operations at two sites where it houses nearly 80,000 people near Qayyara, just north of Imam Gharbi, a U.N. statement said. With water trucks no longer able to reach the sites, the displaced people could run short of water at a time of midsummer temperatures well over 40 Celsius (104 Fahrenheit), it said.

At least 1,500 people killed by cholera in Yemen: WHO - Al Jazeera -- The World Health Organization (WHO) says that cholera outbreak in Yemen has claimed 1,500 lives and sickened about 246,000 people since April.The WHO representative in Yemen, Nevio Zagaria, said in a news conference on Saturday in the Yemeni capital Sanaa that the epidemic has hit 21 provinces out of Yemen's 22 provinces, stressing that the number of suspected cholera cases has multiplied tenfold in the last two months. UNICEF's acting representative Sherin Varkey, for his part, said a quarter of the fatalities from the outbreak were children.  The death toll rose from 1,300 announced two weeks ago by WHO, which put the number of suspected cases at over 200,000 at the time and said that number is growing by 5,000 a day. UN agencies have repeatedly warned that the three-year-long fighting in Yemen had destroyed the country's health sector, making it difficult to deal with the epidemic. Impoverished Yemen has remained in a state of civil war since 2014, when Houthi rebels overran much of the country, including Sanaa.

Migrants in Libya are being rounded up and sold into slavery, UN says - After leaving everything they know behind to risk their lives in search of a better life, hundreds of African migrants are being forced into a system of "modern slavery" in Libya, a United Nations spokesman says. "Facing all those risks and dangers in a foreign country, you can imagine that you are trying to do whatever you can just to survive yourself and send some money back home and support your family — and you end up with the hands of those smugglers, and you end up working for free," Othman Belbeisi, head of the UN International Organization for Migration's (IOM) Libya mission, told As It Happens host Carol Off. The IOM released a report on Tuesday detailing the system in which hundreds of people — many from Nigeria, Senegal and Gambia — are either rounded up in the streets by armed groups, or held captive by the very smugglers who brought them to the country in the first place.The IOM interviewed dozens of West Africans who recounted being sold in garages and car parks in the southern city of Sabha, one of Libya's main migrant smuggling hubs. The trade mostly targets men, Belbeisi said, but the IOM has also heard stories of women being sold into sexual slavery. The stories are all different, he said, but the common thread in all of them is violence and hunger. 

“Having America Care About You Is Not Necessarily a Good Thing” -- The May 31 bombing in Kabul targeting the city’s diplomatic sector is being reported as perhaps the most deadly bombing since the US occupation began in 2001. I don’t know if it’s the biggest mass-casualty incident, because there have certainly been many occasions when the Americans have killed more people in a single attack — up to 150 or 200 or more. However, it is one of the bigger bombs placed by the insurgents. The Taliban is probably behind this, though we don’t know.It’s interesting to contemplate why they would do this. People are dying all the time in very large numbers outside of Kabul and in the countryside, and nobody really pays attention. So if the insurgency puts a bomb in a place like Kabul, it signals to the West, to the Americans, that the country is not secure.The roots of the daily chaos that is Afghanistan today lie in the conflict between US-backed forces and an anti-state insurgency made up of the Taliban and allied groups. The various warlords, militias, and so forth backed by the United States probably amount to one hundred thousand to two hundred thousand armed men — and then you have perhaps fifty thousand Taliban and associated people on the other side.The people who are predominantly dying in this war are the people who are caught between those two sides. They’re dying because of roadside bombs, air strikes, American-backed militias abducting people — all of these things. Every year, the number of civilian deaths tends to be higher than the year before. Every year breaks a record, from 2001 onwards, and that trend is continuing.  The thing is that the elites — the ruling class in Afghanistan as well as the American elites — value lives in Kabul more than they value lives in the hinterlands, because of the symbolic value of Kabul. I think the Taliban recognizes that, so they try to kill people in Kabul.

“I Saw Pieces of Bodies”: Afghan Civilians Describe Terrorization by US Drones - "Bongak" and "Bnngina" are the terms used to describe military drones in different regions of Afghanistan: Dari/Pashto onomatopoeias because of the "bnng" sound they make as they hover above. Afghanistan is the world's most drone-bombed country, yet is commonly forgotten about in drone criticism and monitoring efforts. Drone surveillance and attacks began in Afghanistan in 2001, yet the civilian casualty toll has only been monitored since 2015. The Bureau of Investigative Journalism, the organization conducting this monitoring, reports that accurate figures are almost impossible to obtain because of the insecurity and inaccessibility of attack locations.  This means there are limitations to relying on civilian casualty figures when discussing the ethics of drone warfare in Afghanistan. More importantly, and this applies to all areas attacked and surveilled by drones, the effects of drones are much more profound and wide-ranging than a focus on casualty numbers invites the public to consider. Casualty figures can even work to dehumanize victims: Quantitative data is not the best tool to convey how it feels to hear drones, to think about being spied on in your home or to fear a possible attack. Despite the obvious challenges, it is important that researchers and journalists attempt to uncover and communicate the emotional and psycho-social harms of drone warfare. The recent documentary National Bird, which interviews Afghan drone victims, is one such example of the brave journalism needed.

US warship in South China Sea, 'military provocation,' says China | Asia Times: A US warship sailed near a disputed island in the South China Sea claimed by China, Taiwan and Vietnam on Sunday in an operation meant to challenge the competing claims of all three nations, a U.S. Defense Department official said. The USS Stethem, a guided-missile destroyer, sailed within 12 nautical miles of Triton Island, part of the Paracel Islands in the South China Sea, the official said.It was the second “freedom-of-navigation operation,” or “fonop,” conducted during the presidency of Donald Trump, following a drill in late May in which a U.S. warship sailed within 12 nautical miles of an artificial island built up by China in the South China Sea. China called the operation “serious political and military provocation,” according to the official Xinhua News Agency, citing a statement on Sunday by Foreign Ministry spokesman Lu Kang. China sent ships and fighter planes to warn off the Stethem, Lu said, according to the report. Twelve nautical miles marks the territorial limits recognised internationally. Sailing within those 12 miles is meant to show that the United States does not recognise territorial claims there. “Unlike in the Spratlys, where China has created new artificial territory in the last several years, it has effectively controlled the Paracels since 1974,” said Mira Rapp-Hooper, a South China Sea expert at the Center for a New American Security. “It claims illegal straight baselines around the Paracels, and the fonop may have been contesting these.” 

China Sends Warships, Fighter Jets To Intercept US Destroyer In South China Sea -- Just days before Trump's meeting with the Chinese president in Hamburg later this week for the G-20 summit, the Trump administration sent a guided-missile destroyer near Triton Island in the South China Sea, Bloomberg reported, a move "which may cause concern ahead of President Donald Trump’s meeting with his Chinese counterpart."According to an anonymous official cited by Bloomberg, the U.S. Navy sent the destroyer USS Stethem within 12 nautical miles (22 kilometers) of Triton Island on Sunday, passing through the contested waters on the basis of "innocent passage."  It was the second such operation conducted by the US during Donald Trump’s presidency. On May 24, the US Navy guided-missile destroyer, the USS Dewey, came within 12 miles of the Mischief Reef in the Spratly Islands, another disputed archipelago that lies in the southern part of the South China Sea. At that time, the Chinese Defense Ministry also sent two frigates to “warn off” the US vessel and said that it was “firmly opposed to the US behavior of showing force and boosting regional militarization.”The news of the US ship deployment to the contested area comes just days after reportssuggest China has completed construction of new missile shelters on Mischief and Fiery Cross reefs. And while in recent weeks China has shown restraint in not retaliating to US escalations, today Beijing reacted with outrage, with People's Daily reporting that China deployed military vessels and warplanes to “warn off” the USS Stethem, according to Chinese Foreign Ministry spokesperson Lu Kang.

North Korea fires missile towards Japanese waters, officials say -- North Korea has fired an intermediate range missile in the direction of Japan, US military officials said.The land-based missile was fired from near Panghyon airfield, and flew for 37 minutes before landing in the Sea of Japan, said the US Pacific Command.Japan has lodged a protest and PM Shinzo Abe said the launch "clearly shows that the threat has grown".Pyongyang has increased the frequency of its nuclear and missile tests in recent months, raising tensions.South Korea said Tuesday's projectile was launched at 09:40 local time (00:40 GMT) and flew about 930km (578 miles).The missile may have landed in waters claimed by Japan as its exclusive economic zone, according to Japanese officials. The US said it did not pose a threat to North America.

North Korea Claims Success in Long-Range Missile Test -- North Korea said on Tuesday that it had successfully conducted its first test of an intercontinental ballistic missile, claiming a milestone in its efforts to build nuclear weapons capable of hitting the mainland United States. The announcement came hours after a launch that the United States military said had sent the missile aloft for 37 minutes. That duration, analysts said, suggested a significant improvement in the range of the North’s missiles, and it might allow one to travel as far as 4,000 miles and hit Alaska. In an initial statement, the United States Pacific Command described the weapon as an intermediate-range missile rather than an intercontinental ballistic missile. But South Korean and Japanese officials said they were studying the data to determine if it was an ICBM. The missile departed the Banghyon airfield in the northwestern town of Kusong and flew 578 miles before landing in the sea between North Korea and Japan, the South Korean military said in a statement. The Japanese government said the missile landed in its so-called exclusive economic zone off its western coast. Under a series of United Nations Security Council resolutions, North Korea is prohibited from developing or testing ballistic missiles. 

China's Xi urges peaceful resolution to North Korea issue | Reuters: Chinese President Xi Jinping urged a peaceful resolution of tension over North Korean on Thursday, telling his South Korean counterpart that China is committed to denuclearization of the Korean Peninsula. The United States said on Wednesday it was ready to use force if need be to stop North Korea's nuclear missile program but said it preferred global diplomatic action against it for defying world powers by test launching a ballistic missile that could hit Alaska. Meeting in Germany ahead of a G20 summit, Xi told South Korean President Moon Jae-in that China upheld maintaining the peace and stability of the peninsula, and that all sides should strictly abide by U.N. Security Council resolutions, China's state news agency Xinhua reported. China supported the new South Korean government's efforts to restart dialogue and contacts with North Korea, Xi said, adding that the international community should work together to play a positive role to ease tension. Ties between China and South Korea have soured over the basing in South Korea of an advanced U.S. anti-missile system China sees as a threat to its own security, despite Washington and Seoul saying it is purely to defend against North Korea. Xi told Moon that China did not want to see the "difficulties" that have been present in relations of late, and that South Korea should "clear obstacles" to bilateral ties and pay attention to China's "legitimate concerns".

China-Russia diplomatic double act exposes Trump's crudeness -  The leaders of China and Russia have vowed to work together to peacefully defuse the deepening crisis over North Korea’s nuclear and missile programmes – a diplomatic double act that contrasts sharply with Donald Trump’s crude threats and pressure tactics.The joint declaration reflected a broader, ongoing strategic Sino-Russian alignment that has passed largely unremarked in the west. It has been encouraged by Trump’s often erratic, unfocused behaviour, and the resulting opportunities and dangers arising from weakened American global leadership. The China-Russia juggernaut is beginning to roll. And like a comic-strip fall-guy with his legs tied to the rails, Trump lies directly in its path.       Speaking during a two-day visit to Moscow on Tuesday, Xi Jinping, China’s president, and Vladimir Putin, Russia’s leader, agreed to “jointly push for a proper settlement … via dialogue and negotiation” with North Korea, Chinese news reports said.Russia’s foreign ministry later released a statement saying the two countries had agreed a joint position designed to defuse tensions around North Korea’s missile programme.Their collaboration extends far beyond the Korean peninsula. “The Chinese leader emphasised the need to boost cooperation and ‘steadfastly support each other in … defending respective sovereignty, national security and development interests’,” the official Xinhua news agency said.The summit marked the third time Xi and Putin conferred in person this year. Since taking power in 2012, Xi has met his Russian counterpart more than 20 times.

PBOC Hires Blockchain Engineers Who Will Oversee Creation Of The "Digital RMB" --For those who can’t quite reconcile the Chinese government’s tentative acceptance of bitcoin and other cryptocurrencies with the inherently anarchistic principles espoused by bitcoin's creator, here’s yet another clue to support the theory that the Chinese government has decided to tolerate and regulate digital currencies in hopes of learning how to apply the technology to its own digital currency.At its core, the hypothetical “digital RMB” will subvert bitcoin’s core mission – that is, to enable individuals to circumvent government control and monitoring. Instead, Chinese policy makers intend to use the currency to strengthen the Communist Party’s ability to monitor its citizens for evidence of money laundering and other financial crimes, as MarketWatch noted earlier this year. Of course, the PBOC’s official line is that it believes a blockchain-based digital currency would allow it to make more accurate monetary policy decisions by improving its ability to gather data on financial flows…but, as with all policies in China, maintaining social control and enforcing laws is the No. 1 priority here. People’s Bank of China Gov. Zhou Xiaochuan has said it will take China approximately 10 years to fully embrace the digital renminbi, though he said later that there is no official timeline.To that end, the Shanghai Daily reports that the PBOC has officially launched its own blockchain research institute, and is seeking to hire engineers who to oversee the creation of what could become the first blockchain-based fiat currency.

Growth projections for China? --  “…based on comparisons with its more developed neighbours, Mr Lueth argues it is “a myth that the growth of China’s Asian peers slowed when they were at China’s level of development, as measured by GDP [gross domestic product] per capita”. Taiwan managed to sustain growth rates of around 7 per cent a year for a decade after reaching China’s current level of GDP per head at purchasing power parity, around $11,000, in 1992. South Korea even managed 8 per growth for a period, having reached China’s current level in 1989. “Taiwan and Korea still had a lot of growth left [at China’s current] level of development,” Mr Lueth says. Singapore, however, soon trended down to growth of around 5 per cent (from 1979 onwards), while Japan plunged precipitously to 3 per cent (from 1969). This analysis, then, would seem to suggest that, while a continuation of robust Chinese growth is far from guaranteed, it is not inevitable that it has to slow from here. An alternative way of looking at the same data would be to analyse Asian growth with respect to what Mr Lueth calls the “technological frontier”. For instance, while China has reached the level of GDP per capita enjoyed by South Korea in 1989 (in PPP terms), it is further behind the US (the embodiment of the technological frontier) than Korea was in 1989 because the US economy has continued to expand in the past 28 years. On a PPP basis, China’s GDP per capita was only 21.2 per cent of that of the US in 2014, according to LGIM. Using this as the reference point, China could expect to see robust growth for the next 15-20 years if it followed the trail blazed by its neighbours…”  That is from Steve Johnson at the FT.

Japan 2016/17 corporate tax revenue down in blow to Abenomics  (Reuters) - Japan's corporate tax revenue fell to 10.3 trillion yen ($90 billion) for the last fiscal year, the lowest since fiscal 2012 when Prime Minister Shinzo Abe swept to power with a pledge to revive the moribund economy, the Ministry of Finance (MOF) said. While corporate tax revenue was down 0.5 trillion yen from the previous year, the other key revenue components - sales tax and income tax - also fell, resulting in the first decline in overall tax receipt in seven years, it said. Analysts say the declines in tax revenue meant that Abe's strategy to boost tax income to fund fiscal stimulus under his "Abenomics" reflationary policy has been stymied. Overall tax revenue came to about 55.5 trillion yen in the fiscal 2016 that ended in March, 0.8 trillion yen short of the previous year's receipt and undershooting the prior year's amount for the first time since 2009, the MOF said. Despite the decline in tax revenue, Japan's government bond issuance in the last fiscal year was 1 trillion yen less than the government had previously planned, as lower interest rates reduced debt-servicing costs. Unused cash reserves like those set aside for emergency have also left the government with a surplus to deliver extra stimulus spending. The fiscal 2016 year produced excess cash of 378.2 billion yen, the MOF said. That was higher than the 252.4 billion yen figure of a year earlier, but far below annual amounts of over 1 trillion yen in the first years after the premier swept to power in late 2012. Half of the excess cash must be spent to pay off debt under Japan's budget rules. The remainder would be available for allocation to an extra stimulus budget that may be compiled later this year.

Panicked BOJ Unleashes Bond Buying Bazooka: Offers To Buy Unlimited 10Y JGBs At 0.11% - During this morning's bond rout when a poor French auction sparked a high-volume selloff in German Bunds which also hit Japanese JGBs before slamming US TSYs, Goldman said that"with 10Y JGBs closing at 0.095 and getting hit at 10bp intraday, focus will be on how the BOJ will react tomorrow [i.e. now]. Opinions seem pretty split with some expecting an increase in purchase size in the 5-10 bucket, while others feel that the BOJ will let the 10Y run loose given the current sell off is more fundamental than event driven. With BOJ behind buying pace for 80tn reference anyway, personally I feel it doesn't hurt the BOJ to remind market of their presence." Goldman was right: the BOJ, panicking after the overnight bond rout, not only reminded markets of its presence, but did so in dramatic fashion when it first boosted the amount of JGBs bought in the 5-10 year bucket from JPY 450BN to JPY 500 BN, and then for good measure unleashed the QQEWYC bazooka, announcing it would purchase an unlimited amount of 10Y JGBs at 0.11%, just a fraction above the BOJ's 0.10% line in the sand. In immediate reaction, the benchmark Japanese TSY, which was trading north of 0.105% and flirting with 0.11%, promptly slid back to 0.095% now that it has become clear that all the hawkish posturing by central banks was just that.

Demographic Shock Ground Zero: Japan's Population Drops At Fastest Pace On Record -- Japan's demographic timebomb is hardly new, although over the past year it has encountered several notable milestones. Last December, we wrote that for the first time on record, Japan's births dropped below a million. This is what we said at the time:While the US is finally starting to feel the social, political and economic hit from an aging population, nowhere is the demographic impact more visible than in what is the epicenter of the developed world's demographic problems: Japan. It is here that according to the latest government data, the number of births in Japan is likely to fall below a million this year for the first time since data became available in 1899, reflecting a fast-ageing society and the high cost of child care. The number of births is estimated at 981,000 this year, down from slightly more than a million last year, data from the ministry showed. Births hit a record high of 2.696 million in 1949. It was also obvious that Japan would also post yet another natural population decline this year as deaths outpace births by a record margin, as seen by the light blue line in the chart above.Today, Japan's Ministry of Internal Affairs and Communications confirmed just that, when it reported that Japan's population has declined for an 8th straight year. More concerning than the ongoing decline, however, was the pace and as the Ministry added, Japan's population fell at the fastest pace on record going back to 1968 when record-keeping began. As of January 1, the number of Japanese people (excluding resident foreigners) dropped by a record 308,084 from a year earlier to 125,583,658, despite the country's ongoing efforts to tackle the rapid graying of the society.

The rebirth of the Trans-Pacific Partnership | The Japan Times: When Donald Trump, in one of his first acts as president, announced that the United States would not participate in the Trans-Pacific Partnership, many assumed that the mega-regional trade deal was dead. But such assumptions may have been premature. The TPP was originally envisioned as a rules-based economic area spanning the Pacific and comprising 12 member countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam — which collectively account for about 40 percent of the world economy. The negotiations, which lasted five years, were undertaken with great care and diligence. In Japan’s case, for example, the negotiators, headed by Akira Amari, then the minister of state for economic and fiscal policy, worked day and night to assuage opposition by various sectors of the domestic economy (say, rice growers) and to secure favorable outcomes. Trump’s announcement in January, which came just as the deal was set to be ratified, certainly shook the endeavor at its core. But many relevant players, eager to prevent the TPP from crumbling, soon began to discuss moving forward without the U.S. By May, Prime Minister Shinzo Abe was declaring that, though he still hoped for America’s return to the TPP, Japan was willing to take the lead in bringing the deal to fruition. Soon after, Japan and New Zealand announced that they would seek an agreement with other signatories by November to move the TPP forward. If they succeed, TPP signatories will benefit substantially — and the U.S. may well find that it has missed a massive opportunity.

The TPP May Not Be Completely Dead Yet - Will the work that went into negotiating the Trans-Pacific Partnership (TPP) go to waste?   There are two approaches the remaining members can take. Useful parts of the TPP can be uplifted and transplanted into other agreements. Or the trade agreement can be seen as a sleeping beauty — or better yet, a modern woman who needs no prince but who will wake up and get on with it.  The TPP cannot be revived as drafted. The agreement cannot come into force unless ratified within two years by economies that constitute 85 per cent of the total GDP of the 12 members. This makes ratification by the United States and Japan indispensable. While President Trump is not noted for consistency of purpose, the prospect that he will not only reverse his stance on the TPP but also secure Congressional approval within two years is surely nil. Revival of the TPP therefore depends on the 11 other members — that includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — agreeing to revise the ratification clause and approve an amended agreement. Japan and New Zealand, with some support from Australia, have advocated that approach.Economic modelling suggests that a TPP-11 would benefit participants, although the amount of welfare gained varies among countries. Reducing barriers to sharing resources usually produces gains and so the result is not surprising. Nor is it powerful. Each participant has to look at who in its community gains and who loses by implementing the trade agreement and ask whether the political battle for ratification is worthwhile. Governments that ‘sold’ the TPP on the basis of access to the US market, such as Vietnam and Malaysia, are especially challenged. Every participant is now likely to look at the agreement and say there are parts they accepted only because they were tolerable in return for access to the US market or other US concessions. The temptation to seek modification is high. But in doing so, the 11 members would nominate different clauses and face another lengthy set of negotiations. Is the cost of such renegotiation worthwhile? The group of 11 is not an obviously attractive unit and it is very likely that the negotiating resources would be better deployed elsewhere.

Sikkim border dispute: China resolute in protecting sovereignty in Doka La as Beijing media predicts 'chance of war': China will resolutely safeguard its sovereignty in the border conflicts with India even at the cost of war, Chinese experts warned on Monday, amid a standoff between the two nations in the Sikkim sector. As the standoff at the Doka La area continued for the third week, the longest between the two countries, the official media and the think-tanks in Beijing said that 'war is possible if the conflict between India and China is not handled properly'. Of the 3,488-kilometre-long India-China border from Jammu and Kashmir to Arunachal Pradesh, a 220-kilometre section falls in Sikkim. China will resolutely safeguard its border sovereignty in conflicts with Indian troops even at the cost of war, state-run Global Times quoted Chinese experts as saying. "China is also different from what it was in 1962," Wang Dehua, a professor at the Shanghai Municipal Centre for International Studies told the daily reacting to Defence Minister Arun Jaitley's comments that India of 2017 is different from what it was in 1962. "If they are trying to remind us, the situation in 1962 was different and the India of 2017 is different," Jaitley had said. "India has been treating China as its biggest competitor since 1962, as both countries share many similarities. For instance, they are both developing countries with huge populations," Wang said. "There could be a chance of war if the recent conflict between China and India is not handled properly, observers said, noting that China will resolutely defend its territory and safeguard the border," the Global Times report said.

China calls border row with India ‘the worst in 30 years’ as both sides dig in heels | South China Morning Post: China’s envoy to India has warned that a military stand-off along a contested part of the border in the Himalayas was the most serious confrontation between the two nations in more than 30 years. Ambassador Luo Zhaohui told media in New Delhi that the Chinese people were deeply angry over the “occupation” by Indian troops of its sovereign territory but said the showdown should be resolved through diplomatic means.Each side has about 3,000 soldiers facing off across a remote plateau in the pocket of land where Tibet meets Sikkim and Bhutan, Indian media reported citing army sources. Tensions along parts of the 3,500km frontier that China and India share have simmered ever since the two sides fought a brief but bloody war in 1962. The Donglang region has remained a hot spot, under the control of China but keenly watched by New Delhi given its proximity to the narrow strip of territory that connects India’s northeast with the rest of the country. Last month China began building a road on territory also claimed by Bhutan, a move seen as upsetting the status quo. Although China and Bhutan have spent decades negotiating the precise border without serious incident, the tiny Himalayan kingdom sought help this time from its long-time ally, India, which sent troops onto the plateau. 

Health Community Writes to US Lawmakers Lobbying to Get Modi to Relax Protection on Drug Patents - On the day before Prime Minister Modi met President Trump, four US lawmakers wrote a strongly worded letter to their president, asking him to push India to relax its barriers on trade and investments. Their letter made specific mentions of India’s regulations with regard to pharmaceutical patents and price control on medical devices.“We write to you ahead of the upcoming visit by Prime Minister Narendra Modi to urge you to prioritise the elimination of Indian trade and investment barriers that significantly harm American businesses and workers,” their letter said.  By the end of Modi’s three-country tour, which was played at high volume in the Indian media, several individuals and organisations globally, have now written a response-letter, saying they find the efforts by these four lawmakers to pressure India to change its stand on drug patents, to be “appalling.”  They wrote to Senator Ron Wyden, one of the signatories of the initial letter, saying, “The practical effect of the type of trade pressures you advocate is to enhance the monopoly power and raise the prices of new drugs for cancer and many other diseases. This is appalling.” They also cited India’s status as a developing country, with a per capita income that is nearly 35 times lesser than the US and explained, “A country with as much poverty as India should not enforce patents on drugs and vaccines the same way as high-income industrialised countries.”

Did Demonetisation Bring About a Digital Transaction Revolution? - Latest RBI data on reserve money shows that as on June 16, 2017,  currency in circulation (CIC) reached a figure of Rs 15.287 lakh crores. But this is still short (by 15%) of the CIC of Rs 17.977 lakh crores available on circulation as on November 4, 2016, the week prior to the announcement of demonetisation.  Although Prime Minister Narendra Moldi asked for 50 days to restore the normalcy, even after seven months of demonetisation, currency shortage still remains unresolved. On social media, people still complain about empty ATMs and cash crunch in several parts of the country, though most mainstream media publications are not paying any attention to this.Within a couple of weeks after the demonetisation, the narrative of the goals of the demonetisation dramatically shifted from the black money and fake currency to the virtues of digital economy. Consequent to this, India witnessed a publicity blitzkrieg that promoted digital transactions. Digi dhan melas and lucky dips were organised to encourage people to embrace the digital economy. We heard tall claims from the top ministers and bureaucrats that the digital transactions made a giant leap and that the present currency in circulation is more than enough to meet the demands of transactions needed by the nation. Niti Aayog CEO Amitabh Kant made a very ambitious announcement that ATMs, credit and debit cards and POS machines will be redundant by 2020. He claimed that “they will all become redundant in India, and India will make this jump because every Indian will be doing his transaction just by using his thumb in thirty seconds”. Prime Minister, in his mann ki baat  address on March 26, 2017, exhorted people to embrace digital transactions so that the full year target could be reached in half the time. In this context, a fact check is essential to ascertain the current status of digital transactions to understand how much our economy has shifted from cash transactions to digital transactions. RBI and NPCI data, all available in the public domain, are used here to separate wheat from the chaff.

There is No Other Way with Pakistan -- In the midst of Trump administration developing its policies on Afghanistan and Pakistan, the experts in Washington, are divided. The key question seems to be how to make Pakistan cease its support to the Haqqani Network and other militant groups that are destabilizing the region, especially Afghanistan. Moeed Yusuf and Stephen Hadley wrote an op-ed published by The New York Times offering some insights on the subject. In War on the Rocks, Christine Fair responded critically. Having myself been involved in Pakistan’s foreign and security policy both, as a state employee in a senior advisory role and a scholar, it seems to me the two articles misconceive not only Pakistan’s threat perceptions but also the ability of the United States to influence Pakistan’s behavior. Hence, the two articles offer the same old tried, tested, and failed approaches to handling Pakistan. First, both opinion pieces re-package an archaic understanding on Pakistan’s strategic anxieties. Yusuf and Hadley drum up the old narrative peddled by the Pakistani establishment of its fear of being squashed between Afghanistan and India as a reason to resort to militant support. They write, “To get Pakistan to alter its approach in Afghanistan, the United States must understand and address Pakistan’s strategic anxieties.” Christine Fair, on her part, provides an equally dated response that the United States needs to “signal to Pakistan that it does not consider its Indian fantasies to be credible.” These two approaches are part of longstanding debate between two camps in Washington that seek to, respectively, appease or punish Pakistan. This debate hinges on a core question: Is India really an existential threat to Pakistan? In making their cases, however, the two camps resort to extreme positions allowing no room for a middle ground — essentially applying a reductionist Indian-centric approach to Pakistan’s national security policy.

People 'burned to death in homes' by South Sudan's government -- The government of South Sudan and its militias are behaving with vicious brutality in the country, with reports of men being locked in huts and burned to death, and of machete attacks being carried out in remote villages.The atrocities are just one of the causes of the major refugee crisis in the region, with almost a million people fleeing to Uganda. Out of a population of some 12.5 million, more than 1.7 million are enduring severe hunger, classified as just one step below famine, and the number at risk of starvation is 6 million and growing. On top of that, a fast-spreading cholera outbreak threatens to kill thousands. The human rights group Amnesty International, which has been gathering together reports from the conflict, said forces – those loyal to the government and also some to the opposition – had also cut food supplies to parts of the country. Women and girls are increasingly being abducted and raped in the region of Equatoria, a new frontline in the conflict, which is now a region of “treacherous killing fields”, according to Amnesty.“The escalation of fighting in the Equatoria region has led to increased brutality against civilians. Men, women and children have been shot, hacked to death with machetes and burned alive in their homes. Women and girls have been gang-raped and abducted,” said Donatella Rovera, Amnesty International’s senior crisis response adviser. Joanne Mariner, another crisis response adviser for Amnesty, said: “It is a cruel tragedy of this war that South Sudan’s breadbasket – a region that a year ago could feed millions – has turned into treacherous killing fields that have forced close to a million to flee in search of safety.”

Rand Tumbles On Report South Africa Seeks To Nationalize Central Bank - The South African rand has tumbled following a report confirming recent speculation that South Africa’s ruling African National Congress will propose that the country's central bank, the Reserve Bank be nationalized and wholly owned by the state, according to three people familiar with the discussions quoted by Bloomberg. Bloomberg adds that the proposal which will surely have negative consequences on the country's financial stability was approved in plenary session of the party’s policy conference taking place in Johannesburg. However, the decision still to be ratified at the ANC electoral conference in December, so nothing is imminent. By way of background, Bloomberg reminds us that the central bank’s currently has about 600 private shareholders who have no say over the setting of monetary policy. Furthermore, Citi cautions that it would not chase the move as "these headlines are citing unnamed sources and have not been confirmed official. We will publish the details when released. Indeed such a proposal seems at odds with the last we heard from the ANC. The Treasurer General Mkhize spoke on Tuesday saying that most members of the ANC favor an independent central bank." For now, however, the news has impacted the ZAR, with the USDZAR spiking as much as 2.1% intraday.

Argentina 2017 inflation seen at 21.6 percent, above central bank target - Median inflation expectations for Argentina in 2017 held steady at 21.6 percent, unchanged from a month earlier and well above the central bank's target range of 12 percent to 17 percent, a poll of 54 economists published by the bank showed on Tuesday. Latin America's No. 3 economy is seen growing 2.7 percent this year, a tick above the 2.6 percent rate seen last month but below government expectations for growth of around 3 percent, according to the survey. Argentina's President Mauricio Macri is seeking to show signs that the economy is rebounding and that inflation - which totaled more than 40 percent last year - is under control ahead of mid-term elections in October that will help determine the fate of his open market reform agenda. Cuts in subsidies for utilities like gas and electricity, necessary to reduce a wide fiscal deficit, have resulted in higher consumer prices. A weakening peso currency and wage hikes above the central bank's target range also threaten to complicate the monetary authority's goal. On Tuesday, Buenos Aires province - Argentina's largest - reached a deal with public school teachers' unions to raise salaries by 24 percent in 2017, ending a months-long impasse. When negotiations began in February, the deal the union would ultimately reach was seen as a benchmark for the rest of the public sector, meaning a pay hike well above inflation goals could embolden other unions to demand a similar deal. But it has lost that bellwether status since many other sectors have already reached deals.

Finland could serve as China’s Arctic gateway for Obor -- It was a meeting that could easily pass unnoticed. Chinese Premier Li Keqiang met with Finnish Prime Minister Juha Sipila on June 27 in Dalian, China, during the annual World Economic Forum meeting known as Summer Davos.The upshot of their tete-a-tete was that China and Finland pledged to enhance bilateral cooperation in Arctic affairs and areas such as manufacturing and urbanization. Most important, Li told Sipila that China wanted to bolster communication with Finland in international and regional matters, specifically in the context of China-EU and China-Nordic cooperation.The growing collaboration between the world’s second-largest economy and a small Nordic nation of 5.5 million people highlights a little-known fact: China’s One Belt, One Road (Obor) project has an Arctic angle. and Finland could play a pivotal role.On the Finnish side, one of the most interesting proposals is for a €3 billion (US$3.4 billion) “Arctic Corridor” railway that would connect Northern Europe with China and Arctic Ocean deep-water ports. The idea is being pitched by a group of Finnish academics and business leaders. It would connect the city of Rovaniemi in northern Finland with the Norwegian port of Kirkenes on the Barents Sea. Ships could move goods from China as well as oil and gas from Arctic fields in Russia westward along the Northern Sea Route to Kirkenes. Cargos would be offloaded to the railway and sent southward through rail connections to Scandinavia, Helsinki, the Baltic states and the rest of Europe. “The Arctic Corridor project sees Obor as very important as it provides an alternative to connect Asia with the Arctic and Europe,” Timo Lohi, a spokesman for the Arctic Corridor project, told Asia Times.

Russia and the great land giveaway in the Far East | Asia Times: A little over a year ago, Russia started a program called “A Hectare in the Far East,” which offered citizens free land in the sparsely populated areas of the Far East to encourage migration. The project was met with much skepticism, but it has so far exceeded expectations, with more than 95,000 applications lodged and more than 21,600 plots of land registered to new users. While some critics remain, analysts estimate the free land program could act as a catalyst for the biggest migration trend to the Russian Far East since the time of the agrarian reform at the start of the 20th century.Still, there is much work to do on building infrastructure and a lot of space to fill. In total, more than 145 million hectares of land have been allotted for the distribution program. The nine regions of the Russian Far East account for 36% of the country’s land mass, yet only 6.2 million people live in those areas, or about 5% of the Russian population. By comparison, the Chinese northeast province of Heilongjiang that borders Russia has a population of 38 million, yet is about the same size as just two of Russia’s Far East provinces — Magadan and Primorsky Krai. While the land is given without payment, there is a condition attached: Within five years, the plot of land must be developed — through the construction of a house, a farmstead, or other means — for the tenant to gain outright ownership. 

Ahead of G20 summit, Putin calls sanctions 'covert form' of protectionism | Reuters: Russia is in favor of an open and rules-based trade order to boost global growth, and sanctions imposed against Moscow are a "covert form" of protectionism, President Vladimir Putin was quoted as saying on Thursday ahead of a G20 summit in Germany. "I'm convinced that only open trade relations based on uniform norms and standards can stimulate growth of the global economy and support a progressive development of intergovernmental relations," Putin wrote in a guest article published in German business daily Handelsblatt on Thursday. Putin said that protectionism was becoming widespread and a behavioral norm. "And unilaterally imposed and politically motivated sanctions on investment, trade and, in particular, technology transfer become its covert form," Putin said. "In our opinion, such sanctions not only have no perspective, but they also contradict the G20 principles for interacting in the interests of all countries of the world."

IMF urges G20 leaders to avoid 'myopic' trade policies | Reuters: The International Monetary Fund on Wednesday urged leaders of the Group of 20 major economies to avoid "myopic" nationalistic policies and to work together in agreed forums to resolve their trade and economic differences. In a pointed message before U.S. President Donald Trump's first G20 summit in Hamburg, Germany later this week, the IMF said in an economic briefing note to the leaders that a rules-based and open trading system was vital for world prosperity. "Myopic pursuit of zero-sum policies can only end by hurting all countries, as history shows," the IMF said. "Because national policies inevitably interact in a number of vital areas, creating strong spillovers across countries, the world economy works far better for all when policymakers engage in regular dialogue and work within agreed mechanisms to resolve disagreement." The IMF's pitch to maintain multilateral cooperation comes as the Trump administration is considering imposing broad new steel tariffs or quotas based on national security grounds, a move that has not occurred since the World Trade Organization was launched in 1995. The U.S. Commerce Department is expected to wait until after the G20 summit this Friday and Saturday to issue its review of the steel industry's national security implications, part of an effort to persuade China and other countries to cut excess capacity in the sector. It is working on a similar report on the U.S. aluminum industry, also invoking provisions of a 1962 U.S. trade law. The IMF also said that while the global economic recovery remains on track, with growth this year and next year in the 3.5 percent range, its forecasts do not include a major trade disruption.

Germany Bans Soldiers From Wearing Uniforms At G-20 Summit...For Their Own Protection --After Germany’s police discovered a trove of weapons while evicting protesters who had gathered in public parks in Hamburg in anticipation of this weekend’s G-20 summit, Der Spiegel reports that the country’s defense ministry has asked soldiers who are on duty this weekend not to wear their uniforms…for their own safety.“Soldiers in uniform who are moving around the city during the announced protests could be the target of spontaneous attacks by violent left-wing extremist protesters,” according to an internal memo from the defense ministry, according to the Der Spiegel report, which was cited in a report by Russia Today.To avoid attacks, soldiers have been ordered to appear in civilian dress in the host city from July 5 to 9 while the meetings are taking place. According to the ministry, protesters could attempt to disrupt the summit by occupying streets a nd logistics routes, as well as by targeting urban infrastructure and the city’s port.

Police injured in G20 protests as Merkel seeks policy consensus | Reuters: Protesters threw bottles and torched cars, injuring seven police officers, before a G20 summit in Hamburg on Thursday, tarnishing the start of a meeting Chancellor Angela Merkel hopes will cement her role as a stateswoman as she seeks re-election in September. Merkel, who is campaigning for a fourth term, can ill afford images of chaos and disharmony. The summit, which starts in earnest on Friday, is a chance for her to polish her diplomatic credentials but would be disastrous if marred by widespread violence. She met U.S. President Donald Trump for an hour on Thursday evening, but less than an hour later police clashed with anti-capitalist demonstrators near the summit venue and fired water cannon at black-clad protesters after they threw bottles. A Reuters eyewitness saw at least one protester with blood on his face being treated. "Welcome to Hell" was the protesters' greeting for Trump and other world leaders arriving for the two-day meeting. Police said at least seven officers were injured in clashes that continued after a late sunset in the northern city. Merkel has taken a high-risk gamble by choosing to hold the summit in the northern port city of Hamburg, partly to show the world that big protests are tolerated in a healthy democracy. Before meeting Trump, she struck a consensual tone, holding out hope for agreement on the divisive issue of climate policy and pledging to broker compromises. She pledged to represent German and European interests at the summit, but added: "On the other hand, as hosts we - and I - will do all we can to find compromises." 

German police used a water cannon to disperse around 500 anti-capitalist G-20 protesters : (Reuters) - German police used water cannon to disperse around 500 anti-capitalist protesters overnight in the port city of Hamburg where Chancellor Angela Merkel will host leaders of the G20 leading economies in a two-day summit starting on Friday. Tens of thousands of protesters are expected to march in the city this week against globalization and what they say is corporate greed and a failure to tackle climate change. German authorities believe around 8,000 demonstrators were prepared to use violence, the interior minister said on Tuesday. Some 20,000 police officers will be deployed. Hundreds of mainly young left-wing activists gathered and marched on a main street shortly before midnight on Tuesday in the first major protest ahead of the summit, which will be attended by U.S. President Donald Trump, Russian President Vladimir Putin and Turkish President Tayyip Erdogan. Der Spiegel magazine reported that the Germany army fears protesters will use unarmed drones and that it has deployed a radar to locate any possible aerial intrusions. A spokesman for the German military declined to confirm the report.

"Hamburg Is A Warzone": Militant G-20 Anarchists Riot, Clash With Police, Burn Cars, Smash Stores - Militant anarchists continued violent protests in Hamburg for the second day as the G20 summit kicked off in the city. According to local press, at least 45 people have been detained and 159 police officers have been wounded in clashes. For the second day, police had to resort to water cannon to disperse protesters while dozens of were set on fire in the suburb of Altona. As Reuters adds "for the 1,000 hard-left militants who wreaked havoc on the streets of Hamburg, German Chancellor Angela Merkel could not have chosen a better location to hold the G20 summit." That's because the dense, urban environment allows them to disperse and hide easily, and the city is full symbols of the wealth they detest - from the gleaming 800 million euro ($913 million) Elbphilharmonie concert hall to the shipyards that build luxury yachts. As the July 7-8 summit started on Friday, Black Bloc anarchists and other anti-capitalist protesters sat in groups on main intersections, blocking streets and bridges leading to the summit venue as well as a road used by trucks at Hamburg Port. On Thursday night, they hurled beer bottles, blocked roads using trash bins and set cars on fire. On Friday morning, G20 protesters staged a sit-in demonstration and blocked a road in Hamburg. Police said that they tried to urge the protesters to disperse peacefully, but then deployed water cannon to clear the road.

Rioting steals attention from politics on first day of G20 summit --Shocking scenes of rioting have emerged from Hamburg on Friday, where the G20 summit officially started. The Local was on the ground in the port city.  In short:

  • The G20 summit got underway in Hamburg on Friday with climate change, North Korea and free trade all on the agenda
  • World leaders including Donald Trump arrived in the harbour city on Thursday
  • A 12,000-person protest descended into violence on Thursday night, with police clashing with masked protesters across two Hamburg districts
  • On Friday, the first violence had already been recorded shortly after 9am
  • Videos have been posted online showing rioters smashing windows and burning cars on the harbour front
  • Hamburg police sent out an emergency request for backup from across the country on Friday morning
  • Clashes between police and masked rioters continued into the night, with almost 200 officers reported injured

 Macron’s outstretched hand to Trump is bid to keep US ‘in the circle’ - Emmanuel Macron's decision to invite Donald Trump to the annual Bastille Day celebrations in France on July 14th has been criticized at home but the French president appears determined to prevent his US counterpart from isolating himself. New French President Emmanuel Macron is trying to serve as a bridge between Europe and Donald Trump, seeking to influence and understand the US president amid widespread confusion in Paris about his intentions.Macron, a 39-year-old centrist elected in May, has invited Trump to be his guest of honour at the Bastille Day military parade in Paris on July 14, leading to criticism from some quarters in France.The two men have sharply different backgrounds, ages and views and have already tussled over Trump's decision to withdraw the United States from the global Paris agreement on combatting climate change. French government spokesman Christophe Castaner told the LCI channel on Thursday that the invitation to Trump was in honour of the United States, France's ally and liberator in the two world wars of the last century.’

EU and Japan reach free trade deal -- The European Union and Japan have formally agreed an outline free-trade deal. The agreement paves the way for trading in goods without tariff barriers between two of the world's biggest economic areas. However, few specific details are known and a full, workable agreement may take some time. Two of the most important sectors are Japanese cars and, for Europe, EU farming goods into Japan. The EU and Japan have done two deals for the price of one: a trade deal and a complementary "Strategic Partnership". One will create a major free-trading economic bloc, the second will see them co-operate in other areas like combating climate change. Both are "in principle" deals, some details to be agreed, so there could still be hurdles. But the signal this sends, bringing two of the world's biggest economic powers together, is unmistakeable. EU-Japan negotiations began in 2012 then stalled. It was Donald Trump's election, and the inward turn America is taking, that spurred the EU and Japan to overcome their differences. Both want to show domestic audiences they can deliver signature deals that promise new economic opportunities. They also want to send a clear message internationally that the EU and Japan, highly-developed democracies, remain committed to a liberal, free-trading, rules-based world, and they will seek to shape it even if the US won't. The outline plan was signed in Brussels after a meeting between the Japanese Prime Minister, Shinzo Abe, and the European Commission president, Jean-Claude Juncker, on the eve of a meeting of the G20 group of leading economies in Hamburg. It comes hard on the heels of the collapse of a long-awaited trade agreement between Japan, the US and other Pacific ring countries, the Trans-Pacific Partnership (TPP), which was scrapped in January by US President Donald Trump. The president of the European Council, Donald Tusk, said the agreement showed the EU's commitment to world trade: "We did it. We concluded EU-Japan political and trade talks. EU is more and more engaged globally." Mr Tusk also said the deal countered the argument put forward by some of those in favour of Brexit that the EU was unable to promote free trade: "Although some are saying that the time of isolationism and disintegration is coming again, we are demonstrating that this is not the case."

EU Takes Stand Against Crapification – Yves Smith - Reader Micael sent an article summarizing an EU Parliament effort to combat crapification by among other things, pushing for longer product lives and greater ease in product repair. While this appears to be only a first step, if this initiative gets traction, it could lead to EU manufacturers gaining advantage over their US competitors. Recall how US automakers fighting fuel economy standards worked to their long-term disadvantage, as foreign automakers got better at making vehicles that performed well from a driving and safety perspective while being more parsimonious in fuel usage. This plan goes well beyond what the US “right to repair” advocates are seeking. If the EU moves forward, this should help the US effort considerably.  From EUBusiness: Europe’s Parliament called on the Commission, Member States and producers Tuesday to take measures to ensure consumers can enjoy durable, high-quality products that can be repaired and upgraded.At their plenary session in Strasbourg, MEPs said tangible goods and software should be easier to repair and update, and made a plea to tackle built-in obsolescence and make spare parts affordable.77 per cent of EU consumers would rather repair their goods than buy new ones, according to a 2014 Eurobarometer survey, but they ultimately have to replace or discard them because they are discouraged by the cost of repairs and the level of service provided… Its recommendations include:

  • robust, easily repairable and good quality products: “minimum resistance criteria” to be established for each product category from the design stage,
  • if a repair takes longer than a month, the guarantee should be extended to match the repair time,
  • member states should give incentives to produce durable and repairable products, boosting repairs and second-hand sales – this could help to create jobs and reduce waste,
  • consumers should have the option of going to an independent repairer: technical, safety or software solutions which prevent repairs from being performed, other than by approved firms or bodies, should be discouraged,
  • essential components, such as batteries and LEDs, should not be fixed into products, unless for safety reasons,
  • spare parts which are indispensable for the proper and safe functioning of the goods should be made available “at a price commensurate with the nature and life-time of the product”,
  • an EU-wide definition of “planned obsolescence” and a system that could test and detect the “built-in obsolescence” should be introduced, as well as “appropriate dissuasive measures for producers”.

The Parliament is asking the Commission to consider a “voluntary European label” covering, in particular, the product’s durability, eco-design features, upgradeability in line with technical progress and reparability.

Emmanuel Macron and Justin Trudeau: when brutal neoliberalism tries to re-brand itself through fresh faces -- Neoliberalism has a human face with France's Emmanuel Macron and Canada's Justin Trudeau. The pair has been presented as young innovators, saviors from the evils of populism. But what about the substance which is their policies. Are their policies progressive or innovative? Trudeau talks about climate change, but has pushed for new pipelines carrying oil from Alberta's tar sands and supported Trump's approval for Keystone. The Canadian leader said Canada would welcome Muslims, but affected by Trump's travel ban and refused to raise country's refugee intake. Macron has just been elected president, yet as France's economy minister he pushed the pro-business labor reform that caused outrage among unions and workers in the country. The former Rothschild investment banker's campaign was funded by France's wealthiest, including those who moved to Belgium in order to pay less taxes. Both leaders have come under fire for their racist comments. While media heap praise Trudeau and Macron for their looks, what these leaders actually doing, is neither new, nor attractive. 

Emmanuel Macron wants to cut French parliament by third, streamline legislature | News | DW | 03.07.2017: French President Emmanuel Macron has said he will reduce the number of representatives in both of France's legislative chambers by a third. Macron said streamlining parliament would allow laws to be drafted more quickly.Speaking at the Palace of Versailles on Monday, Emmanuel Macron said France was ready to embark on a "radically new path," announcing sweeping changes to the country's voting system. Macron proposed cutting the number of delegates in both the upper and lower houses of parliament by a third, saying it would have "positive effects on the general quality of parliamentary work." "A parliament with fewer MPs and greater resources would be a parliament that is more fluid. I will propose to reduce by a third the members of the constitutional assembly," Macron said, while stressing he was "not giving in" to a sense of anti-parliamentarianism. "We need long-term perspective, but we must also act quickly and swiftly, therefore the shuffle between the two houses of parliament must be simplified," he said. "The pace of designing laws must meet the demands of society," he added, citing digital copyright and security as areas where rapid legislative responses were needed.

French Police Foil Plot To Assassinate Macron --Emmanuel Macron has been in office for barely two months, and already far-right extremists in France are out for his blood. As CNN reports, a man has been charged with plotting to assassinate French President Emmanuel Macron on Bastille Day during a visit by US President Donald Trump. Investigators said the man planned to attack Macron on July 14, during a parade on the Champs-Élysées in Paris, where Trump is set to be a guest of honor. News of the plot is surfacing a week after Macron invited Trump for the Bastille Day visit. That invitation was extended during a phone conversation between the two leaders about combating ISIS. The two leaders are also both expected to attend this weekend’s G-20 summit in Hamburg. According to CNN, the plotter, who is now in police custody, is a 23-year-old far-right nationalist who told police that he wanted to make a political statement by killing Macron. The plotter also told police that he wanted to kill blacks, Arabs, Jews and homosexuals. Security forces were alerted to the plot by users of a video game site, after the suspect posted about allegedly wanting to buy a Kalashnikov-type weapon to commit an attack. The suspect, who was left unnamed by both CNN and Reuters, was charged with terror-related activity last year, according to CNN, though it didn’t elaborate on the exact nature of these charges.

Italy-Austria tension over border troops at Brenner Pass - BBC News: Italy has summoned Austria's ambassador after the government in Vienna announced it was ready to deploy border troops to block any migrant influx. Austrian Defence Minister Hans Peter Doskozil told Kronen Zeitung daily that troops could go to the Brenner Pass. He said four Pandur armoured personnel carriers had been sent to the Tyrol region and 750 troops were on standby. Austria has border checks with Hungary and Slovenia. But elsewhere it adheres to the EU open borders system. Mr Doskozil said a military deployment at the busy Alpine pass, on the Italian border, would be "indispensable if the influx into Italy [across the Mediterranean] does not diminish". Later Italy's foreign ministry said it had summoned Austrian Ambassador Rene Pollitzer "following the Austrian government's statement about deploying troops to the Brenner (pass)". People-smuggling gangs have been exploiting the violence and chaos in Libya. The shortest crossing from Libya to Italy is only about 460km (290 miles). Nearly 85,000 migrants and refugees arrived in Italy in the first half of this year, across the Mediterranean. The UN refugee agency UNHCR says that is about 20% more than in the first half of 2016.

Bill Gates warns open door migration will overwhelm Europe --  Bill Gates has warned that European leaders risk deepening the migrant crisis by being too generous to those arriving on the continent.The Microsoft founder said countries such as Germany will not be able to handle the 'huge' numbers of migrants waiting to leave Africa and find a better life overseas.Instead, the 61-year-old suggested spending more on foreign aid to treat the root causes of migration, while making it more difficult for people to reach the continent.Speaking in an interview with the German Welt am Sonntag newspaper, with a translation published by Breitbart, he said: 'On the one hand you want to demonstrate generosity and take in refugees. 'But the more generous you are, the more word gets around about this — which in turn motivates more people to leave Africa. 'Germany cannot possibly take in the huge number of people who are wanting to make their way to Europe.'  Mr Gates praised Chancellor Merkel's commitment to spending 0.7 per cent of GDP on foreign aid as 'phenomenal', and asked other European leaders to follow suit.But he added: 'Europe must make it more difficult for Africans to reach the continent via the current transit routes.'

 Europeans Are Drinking Themselves to Death -- Europe’s drinking habits are putting its people at a higher risk of developing digestive cancers, a new report by the continent’s leading doctors found.The average European puts away between one and four drinks a day, enough to classify them as “moderate” drinkers and increase the risk of colorectal and esophageal cancers, according to a report issued Monday by United European Gastroenterology, a nonprofit coalition of specialists.“The majority of people aren’t aware that alcohol is a risk factor in these cancers,” said Professor Helena Cortez-Pinto, a gastroenterologist at Hospital Universitário de Santa Maria in Lisbon. “This epidemiological evidence is clear about the association.”The group analyzed data collated by the World Health Organization, which shows that Europeans drink more than people on any other continent, an average of 11.2 liters of alcohol per year—the equivalent of just under two drinks a day.Americans drink 20 percent less alcohol each year than Europeans, while the average African drinks half the amount. One in every five Europeans over the age of 15 drinks “heavily”—more than four alcoholic drinks—at least once a week. The American Cancer Society supported the report’s findings, pointing to comments on its website that note “limiting alcohol use to no more than two drinks a day for men and one drink a day for women could have many health benefits, including a lower risk of colorectal cancer.” Nearly one in every four deaths from gastrointestinal diseases can be attributed to alcohol intake, according to a World Health Organization report from 2014.

Poll finds that 60% of Britons want to keep their EU citizenship - Six out of 10 Britons want to keep their European Union citizenship after Brexit – including the rights to live, work, study and travel in the EU – and many would be prepared to pay large sums to do so, according to research led by the London School of Economics. Support for retaining the rights is particularly strong among 18- to 24-year-olds, 85% of whom want to retain their EU citizenship in addition to their British citizenship. Around 80% of people living in London also want to maintain the same rights.The findings come as pressure on Theresa May mounts from UK business groups, led by the CBI and Remain politicians in both houses of parliament, as well as cultural figures from across Europe, to pull back from her plans for a “hard Brexit” in favour of a deal that maintains the strongest possible trade and other links with the EU after the UK leaves in 2019. When asked how much they would be prepared to pay to retain EU citizenship, the average sum cited by more than 2,000 respondents to the LSE project (including those who were opposed to the idea and would not want to pay anything) was more than £400. Michael Bruter, professor of political science and European politics at the LSE, and his colleague Sarah Harrison at the LSE’s electoral psychology initiative (ECREP) worked on the research in conjunction with the polling firm Opinium. Bruter said the research showed that young people in particular were “very unhappy” at the prospect of losing rights they regarded as fundamental and crucial to their future prospects. “They would paradoxically be willing to pay far more than they currently do [compared with the current per capita contribution to the EU budget made by UK citizens] to retain those rights,” he said.The LSE/Opinium team found that 73% of voters would like either to protect or extend the rights that current citizens from other EU countries have to vote in the UK; 48% wanted to see the right to vote extended from local elections to general elections, while 25% wished to keep the status quo. Only 10% supported the government’s position of withdrawing EU citizens’ right to vote in local elections.

May’s Brexit plan could hit rights of Britons abroad, campaigners tell EU - Theresa May’s proposal to protect the rights of EU citizens after Brexit is so poor, it will badly damage the rights of Britons living in Europe, campaign groups have told the European commission. In an official response to the EU Brexit negotiating team, British in Europe and the3million have said that if May’s proposal is adopted it would represent a “severe reduction of the current rights” enjoyed by Britons in Europe. Last week they expressed fears that Britons would be the “sacrifical lambs” in the Conservatives’ mission to reduce immigration. The groups say May’s offer looks to curtail citizens’ rights to pensions and to move around the EU to work. They say that, if adopted, the UK proposal could also prevent them from returning to Britain for work or retirement with their EU spouses or to have an elderly parent move in with them in Europe. They attack May for ignoring the EU’s proposal, made two weeks ago, to guarantee all those rights and instead coming up with a new concept of replacing EU rights with rights “rooted” in UK immigration laws, including immigration family reunion laws, which they say are among the strictest in the world. British in Europe, which represents 11 grassroots campaign groups in France, Germany, Spain and elsewhere in the block, met Michel Barnier’s article 50 task force last Thursday to express its disappointment and anger over May’s proposal. It says last year’s referendum said nothing about removing the rights of EU citizens currently in the country or Britons settled in Europe, yet May’s proposal would do just that. “The choice made in the referendum was about our arrangements going forward, not about unravelling previous commitments,” says the 15-page joint response to the UK’s proposal. 

Commission’s UK financial services experts sidelined due to Brexit talks - Politico - The European Commission is set to reshuffle scores of seconded British experts working in its financial services directorate in the wake of Brexit negotiations. According to sources close to the discussions, the Commission’s task force dedicated to Article 50, headed by Michel Barnier, has requested that seconded employees working on sensitive Brexit-related issues in the Commission’s Financial Stability, Financial Services and Capital Markets Union department (DG FISMA) be reassigned to work on other files. If a seconded national expert from the U.K. civil service — even those who might not necessarily be a British national — is working on a particularly sensitive issue which is related to Brexit discussions, they may be asked to move to a different unit within DG FISMA, or even relocate to a different directorate. Those for whom a solution could not be found, have had their contracts terminated with a notice period of three months — sending them back to London — although only a handful of employees have been directly affected. A Commission source said arrangements were being found “on a case-by-case assessment … in order to avoid — in the interest of everyone involved — any possible conflict-of-interest situations.”

Severing ties with the EU starts in DAYS as transferring of laws to begin NEXT WEEK  - BREXIT secretary David Davis has said that legislation regarding the transfer of European Union (EU) laws into British ones should start next week.Mr Davis told a meeting of Theresa May’s top ministers that legislation for the so-called ‘Repeal Bill’ should be introduced to the House of Commons next week. A spokesman for the Prime Minister told reporters: “He [Mr Davis] said the legislation, which is the start of the legislative process for Brexit, is expected to be tabled next week.” A House of Commons spokesman told that as yet nothing had been timetabled so far. The Government says that the ’Repeal Bill’ is designed to achieve a smooth transition over the legal aspects as Britain moves out of the European Union, creating the necessity of transferring the legislation into British statute. Since Britain has been a member of the EU, or the EEC, for more than 40 years, the UK has created tens of thousands of laws related to the EU that will need unpicking and transferring. The bill is designed to transpose EU law as well as repealing the 1972 European Communities Act which formalised Britain’s membership of the bloc. 

EU chief mocks Brexit by comparing Britain's trade ambitions to a Monty Python sketch: Jean-Claude Juncker’s deputy has mocked Britain's ambitions to forge new global trading relationships after Brexit by comparing eurosceptic politicians to a character from Monty Python. Frans Timmermans is the powerful First Vice-President of the European Commission, which is leading the Brexit negotiations on behalf of the bloc’s 27 remaining member states. Speaking in the European Parliament in Strasbourg, Mr Timmermans likened UKIP MEP Raymond Finch to the Black Knight in the 1975 film Monty Python and the Holy Grail. In the film, King Arthur slices off the limbs of the belligerent Black Knight, who threatens to bleed on his adversary and bite his legs.

Theresa May could storm out of Brexit talks over the “divorce bill” - Downing Street has told business leaders that Theresa May could storm out of Brexit talks over the “divorce bill”, The Telegraph can reveal.A senior No 10 figure briefed industry and City bosses to prepare for the Prime Minister walking away from negotiations in September. The move would be designed for “domestic consumption” to show that Mrs May was p laying tough over the €100 billion (£87.7 billion) some European Union figures want the UK to pay before leaving. The briefing took place at a point after the general election was held last month and the figure has since left in the recent overhaul of Downing Street. Business leaders were told that while no final decision had been taken on walking out of talks, it was a distinct possibility.“I do think we are looking to be as hard-nosed, as hard-headed and as cold-eyed about this as it is possible to be,” said a source familiar with No 10’s thinking...

British officials drop ‘cake and eat it’ approach to Brexit negotiations -- British officials have quietly abandoned hope of securing the government’s promised “cake and eat it” Brexit deal, increasingly accepting the inevitability of a painful trade-off between market access and political control when the UK leaves the EU. Government insiders report a dramatic change of mood at the Department for Exiting the European Union (DExEU) since the general election, with growing Treasury influence helping force ministers to choose between prioritising economic interests or sovereignty. This is in stark contrast to the public position of both main political parties, first set out in the Theresa May’s Lancaster House speech in January, in which she echoed Boris Johnson’s boast that Britain can “have its cake and eat it” – enjoying full trade access without conceding over immigration, courts and payments. Labour’s Jeremy Corbyn sacked three shadow ministers on Thursday for departing from a similar position. Yet UK civil servants are now said to be presenting ministers with a more binary choice: accept political compromises similar to aspects of the European Economic Area (EEA), or settle for a much more limited trade deal such as the recent EU-Canada free trade agreement (Ceta). “We have a problem in that really there are only two viable options,” one official told the Guardian. “One is a high-access, low-control arrangement which looks a bit like the EEA. The other is a low-access, high-control arrangement where you eventually end up looking like Ceta – a more classic free trade agreement, if you are lucky. “Of course the policy position remains the Lancaster House speech which says what we want is a high-access, high-control situation, but the author of that speech [reported to be Downing Street adviser Nick Timothy] is no longer in an influential position.” 

 Brexit Starts to Go Pear Shaped from UK Side as Businesses Freak Out -  Yves Smith - The pace of Brexit activity has slowed but events continue to break almost entirely against the UK, as we predicted.  Nevertheless, more and more reality is beginning to sink in despite the ongoing cheerleading from Fleet Street’s press barons. As PlutoniumKun put it, “Looks like the British business class are finally waking up to the disaster that is a Brexit run by the Conservatives,” pointing to a new article in the Guardian, UK business leaders to call for indefinite delay in leaving single market. But even though the corporate elite finally has started to take stock of what Brexit might mean for them, their proposals are as unhinged as May’s negotiating position: Business leaders are to demand that ministers agree an indefinite delay in Britain’s departure from the European single market and customs union to give more time for talks on a long-term trade deal.In a dramatic escalation of the battle to soften the government’s Brexit strategy, groups representing thousands of UK employers aim to present a united front during a summit at Chevening country house hosted by the Brexit secretary, David Davis. Do none of these executives have staffers that are capable of reading the news and briefing them adequately? How did they miss that the Article 50 process runs a hard 24 months, the clock has been ticking for a while, and the UK will crash out if it can’t come to an agreement? The only way to stop the process or extend the deadline is if all EU members agree. EU leaders have said they’d be willing to let the UK reverse itself on Brexit and terminate the process, but even if that were to happen, you can bet the Europeans would require the UK to pay a price for having the EU bail them out of the mess they created, like cancelling the reduced EU contributions that Maggie Thatcher negotiated.  Similarly, from the very outset the EU has rejected negotiating a trade deal before the exit terms have been largely settled, and even then they’ve agreed only to discuss general parameters. The very tight timetable operates strongly to the EU’s advantage. Why should they give that up just because the UK has realized it’s going to do itself great economic harm?

Gulf between Theresa May and her chancellor widens as he demands close ties with EU while she uses G20 to woo US and China - Philip Hammond has said it would be “madness” not to seek “the closest possible arrangement” with the EU in comments that appear to widen the gulf between the Chancellor and Theresa May over Brexit. Mr Hammond, who flew to Hamburg with the Prime Minister for the G20 summit, suggested that leaving the EU was a “political argument” and stressed that the EU “will remain our largest trading partner”. His comments jarred with Downing Street’s outward-looking trade agenda, and come as Mrs May uses the G20 to talk trade with the leaders of the three biggest economies in the world: President Donald Trump, President Xi Jinping of China and President Shinzo Abe of Japan.Mrs May believes Britain will be better off as a result of leaving the EU, and talked today of a “golden era” of Anglo-Chinese co-operation after meeting President Xi. Tomorrow she will hold a one-on-one meeting with President Trump at which she will spend much of her time stressing the need for an open trade deal between the two countries. Mr Hammond, a former Remain campaigner who favours a softer Brexit than the Prime Minister, today appeared to prioritise the importance of maintaining strong trading links with the EU, without mentioning deals with other major nations. He said those who voted, like him, to remain in the EU “want to see a Brexit that looks sensible to them”, without referring to the fact that a clear majority voted Leave. He said they want: “A Brexit that is focused on protecting jobs, business, prosperity, trade, a Brexit that recovers sovereignty for the UK but also recognizes the reality that… the EU will remain our largest trading partner and our nearest neighbours, and that it would be madness not to seek to have the closest possible arrangement with them going forward. “To trade with them, to co-operate with them, but doing it as a sovereign country.” He went on: “The problem is this. There's an economic argument and a political argument. On the economic argument it's very clear that a very large proportion of our exports are going into the EU. “But there's also a political dimension. The EU is on a path towards deep political integration. That is not something that the British people are ever going to feel comfortable with. 

Jeremy Corbyn's Labour takes eight-point poll lead over Conservatives | London Evening Standard: Jeremy Corbyn’s Labour has taken an eight-point lead over the Conservatives, according to a new poll. A YouGov poll for The Times put Labour eight points ahead of the Conservatives in its first opinion poll since the General Election. It is the first time that Labour has been ahead since the height of Tory infighting during the EU referendum, The Times reported. The poll puts Labour on 46 per cent, the Tories on 38 per cent, the Liberal Democrats on six per cent and Ukip on four per cent. It came as one in five Labour MPs appeared on a deselection “hit list” apparently drawn up by left wing supporters of Mr Corbyn.

 Austerity Confusion, or why the Tories are trapped by austerity - Simon Wren-Lewis - What do we mean by an end to austerity? There seem to be two meanings being used currently. The first, used by Conservative politicians in particular, is equivalent to what economists call fiscal consolidation: cutting spending (or raising taxes) in order to reduce the deficit (as a share of GDP). However when Labour say they will end austerity, I think they mean something even simpler: to stop (and reverse) cuts to government spending as a share of GDP.  The confusion has been compounded by two factors. First, Conservative Chancellors have mainly used cuts to spending rather than tax increases as part of their austerity programme. Second, they have also justified cuts to spending that were needed to finance tax cuts (corporation tax, inheritance tax etc) as austerity, which is a clearly not fiscal consolidation and is simply a reduction in the size of the state.  How do I know Labour do not mainly mean ending fiscal consolidation when they talk about ending austerity. Just look at their GE2017 manifesto. That involved various increases in current spending financed entirely by higher taxes (including corporation and inheritance taxes). This manifesto, which helped gain them such rapid popularity in the GE2017 campaign, was a proposal to increase the size of the state.  I explore in a shortcut piece for the London Review of Books how this ambiguity is a serious problem for the Conservatives. Even if they ended austerity completely (made no further attempts to reduce the deficit), Labour would be able to offer a much more attractive fiscal package to the voters because Labour are prepared to undo the tax cuts the Conservatives have made over the last seven years.

Grenfell Tower survivors threaten to boycott inquiry unless scope broadened - Those affected by the Grenfell tower fire might boycott the inquiry into the disaster if the proposed scope is not widened, campaigners have said.Sir Martin Moore-Bick, who will lead the investigation, had previously said he was “doubtful” the investigation would be far-reaching enough to satisfy those who survived the blaze. The current proposals are for the inquiry to look at how the fire started and how it developed so rapidly, but calls have been made for the investigation to be broadened.Yvette Williams, one of the organisers of the Justice 4 Grenfell campaign group, said survivors and victims’ families were “very, very angry” and wanted the “systemic issues” related to the fire to be looked at as part of the inquiry.“They cannot just look at 14 June, when that building became an inferno. They can’t do that,” she told Sky News. “If we don’t get good terms of reference for the public inquiry and we don’t get a wide remit so that those people can take responsibility for what they’ve done, then we won’t participate in it.” It follows Labour leader Jeremy Corbyn writing to Prime Minister Theresa May, urging her to widen the scope of the public inquiry. He has asked for a two-part inquiry, the first looking at specific issues regarding the fire at the 24-storey building in Kensington, west London, and reporting back soon, with a second part “looking at the national issues”.

Almost eight in ten graduates will never pay back their full student loan, report finds – Telegraph -Almost eight in ten graduates will never pay back their full student loan under the new tuition fees system, a major report has found. The Institute of Fiscal Studies (IFS) has warned that there are “major issues” with the current system, as its research showed that most graduates will still be paying off student loans into their 50s. The number of graduates who fail to clear their debt before it is written off has almost doubled since 2011, when the Government axed the old maintenance grants in favour of a loan system. Under the new system, 77.4 per cent of graduates will never fully repay their debts, compared to 41.5 per cent of graduates under the previous system, according to the IFS.The IFS concluded that the cost a degree is now “considerably greater” for graduates, which it said carries a long-term risk putting off prospective students from applying for university in the first place. Shortly before the general election, the government agreed legislation to allow for elite universities that meet higher standards to raise their tuition fees above the £9,000 maximum to £9,250. The report found that the rise in tuition fees coupled with soaring interest rates - up to three per cent above inflation - means that higher earners could end up paying £40,000 in interest payments alone. “The average student accrues £5,800 of interest while studying, meaning that they borrow £45,000 but find on the day of graduation they have a debt of £50,800,” the report found. "There is a risk that better-off parents will pay fees up front, especially if they think their offspring will be high earners. This would increase the cost to government in the long run.” 

The difficult school-to-work transition for high-school dropouts – VoxEU  -- Despite the substantial costs associated with subsidised employment programmes targeting low-skilled youths, little is known about their effectiveness in easing school-to-work transitions. This column evaluates the effectiveness of such programmes for high-school dropouts in France with various types of labour market experience. Work experience, even in the market sector, is not always sufficient to increase the chance of very low-skilled youths being called for interview by an employer, suggesting that measures such as temporary jobs in the non-market sector or hiring subsidies in the market sector should be conditional on getting a certification of skills at the end of the employment period, at least for previously unskilled youths.

No comments: