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

Saturday, August 26, 2017

week ending Aug 26

Fed Confronts New Reality: Low Inflation and Low Unemployment - Federal Reserve officials are struggling to make sense of a new economic reality in which low inflation and low unemployment are persisting side by side. At the Fed’s most recent meeting, in late July, most officials said they expected the phenomenon to fade away by next year as low unemployment finally starts to drive up inflation. But a growing number of officials see the pattern as proof that the Fed needs to adjust its assumptions, according to an account of the meeting that the Fed published on Wednesday. At the July meeting, the Fed left its benchmark rate in a range of 1 percent to 1.25 percent. It also said it planned to start reducing its asset holdings “relatively soon.” The minutes said some Fed officials were ready to announce a starting date for the reductions, but most favored just a little more patience. Analysts expect an announcement after the Fed’s next meeting, Sept. 19 and 20. The timing of the Fed’s next rate move is considerably less certain. The Fed entered the year predicting three rate increases of a quarter-point each; so far it has delivered two, with a third seen possible in December. But the weakness of inflation, which the Fed now expects to remain below its target annual pace of 2 percent for the fifth-consecutive year, is prompting some Fed officials to hesitate. Most Fed officials subscribe to a view of inflation in which prices rise more quickly as unemployment declines. The basic idea is that companies must offer higher and higher wages to keep their workers. Now, the Fed is confronting “the coexistence of low inflation and low unemployment,” a phenomenon that inverts the “stagflation” experience of the 1970s, when both inflation and unemployment climbed. The meeting account said most officials continued to regard low unemployment as the most important factor. They said inflation was rising slowly because of temporary factors, like a decline in cellphone service prices. And they remain inclined to raise the Fed’s benchmark rate later this year.

The Low Misery Dilemma - Carola Binder  --The other day, Tim Duy tweeted: I expect the FOMC minutes to reveal that some participants were concerned about low inflation while others focused on low unemployment.— Tim Duy (@TimDuy) August 16, 2017It took me a moment--and I'd guess I'm not alone--to even recognize how remarkable this is. The New York Times ran an article with the headline "Fed Officials Confront New Reality: Low Inflation and Low Unemployment." Confront, not embrace, not celebrate. The misery index is the sum of unemployment and inflation. Arthur Okun proposed it in the 1960s as a crude gauge of the economy, based on the fact that high inflation and high unemployment are both miserable (so high values of the index are bad). The misery index was pretty low in the 60s, in the 6% to 8% range, similar to where it has been since around 2014. Now it is around 6%. Great, right? The NYT article notes that we are in an opposite situation to the stagflation of the 1970s and early 80s, when both high inflation and high unemployment were concerns. The misery index reached a high of 21% in 1980. (The unemployment data is only available since 1948). Very high inflation and high unemployment are each individually troubling for the social welfare costs they impose (which are more obvious for unemployment). But observed together, they also troubled economists for seeming to run contrary to the Phillips curve-based models of the time. The tradeoff between inflation and unemployment wasn't what economists and policymakers had believed, and their misunderstanding probably contributed to the misery.

Yellen: "Financial Stability a Decade after the Onset of the Crisis" -- From Fed Chair Janet Yellen: Financial Stability a Decade after the Onset of the Crisis. A few excerpts (here Dr. Yellen argues for keeping most of existing regulations put in place after the financial crisis):  Finally, many financial market participants have expressed concerns about the ability to transact in volume at low cost--that is, about market liquidity, particularly in certain fixed-income markets such as that for corporate bonds. Market liquidity for corporate bonds remains robust overall, and the healthy condition of the market is apparent in low bid-ask spreads and the large volume of corporate bond issuance in recent years. That said, liquidity conditions are clearly evolving. Large dealers appear to devote less of their balance sheets to holding inventories of securities to facilitate trades and instead increasingly facilitate trades by directly matching buyers and sellers. In addition, algorithmic traders and institutional investors are a larger presence in various markets than previously, and the willingness of these institutions to support liquidity in stressful conditions is uncertain. While no single factor appears to be the predominant cause of the evolution of market liquidity, some regulations may be affecting market liquidity somewhat. There may be benefits to simplifying aspects of the Volcker rule, which limits proprietary trading by banking firms, and to reviewing the interaction of the enhanced supplementary leverage ratio with risk-based capital requirements. At the same time, the new regulatory framework overall has made dealers more resilient to shocks, and, in the past, distress at dealers following adverse shocks has been an important factor driving market illiquidity. As a result, any adjustments to the regulatory framework should be modest and preserve the increase in resilience at large dealers and banks associated with the reforms put in place in recent years.

The Next Fed Chair Won’t Really Control the Fed -- Economists seem increasingly confident that Gary Cohn, the investment banker and White House adviser, will succeed Janet Yellen as head of the Federal Reserve when her term ends in February. Whether Cohn or someone else gets the nod, the horse race masks some of the broader dynamics at work the past decade that have fundamentally altered the Fed, mostly for the better, and continue to shape it in ways once thought inconceivable. The central bank, rightly, gets far more scrutiny from Congress, the media and the public than ever before. That scrutiny stems mainly from the searing 2008-2009 recession and the dramatic steps the Fed took to shore up the financial system and the broader economy. Some public reckoning was bound to result and, properly, seems here to stay. The new chair will also inherit a Federal Open Market Committee that’s become far more democratic and whose members, especially the presidents of the dozen district Fed banks, zealously guard their role in setting monetary policy. They aren’t beyond speaking publicly -- and getting attention -- on issues ranging from economic inequality to public education and drug testing in the workplace. While some of this freelancing annoys officials at headquarters in Washington, it does mean important arguments get aired sooner and more vocally. Kudos to Chicago Fed President Charles Evans for long questioning whether inflation is behaving as it should, while James Bullard of St. Louis months ago advocated pausing on rate increases. These voices all need to be heard, respected and managed. Sometimes they are right. Their distance from the chair and contacts in their local communities can give them perspective missing in D.C. Perhaps more voices should be involved in choosing the Fed leader. At the moment this position is filled by presidential nomination and Senate confirmation. In an ideal world, more voices would contribute to that choice, including from outside the U.S. After all, economic conditions in the rest of the world shape what decisions are made in the U.S. 

Chicago Fed "Index Points to Growth near Historical Trend in July" -- From the Chicago Fed: Index Points to Growth near Historical Trend in July The Chicago Fed National Activity Index (CFNAI) moved down to –0.01 in July from +0.16 in June. Three of the four broad categories of indicators that make up the index decreased from June, and three of the four categories made negative contributions to the index in July. The index’s three-month moving average, CFNAI-MA3, moved down to –0.05 in July from +0.09 in June. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. This suggests economic activity was close to the historical trend in July (using the three-month average).According to the Chicago Fed:The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.. A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

Chicago Fed: Economic Growth Inches Lower - "Index points to growth near historical trend in July." This is the headline for today's release of the Chicago Fed's National Activity Index, and here is the opening paragraph from the report:The Chicago Fed National Activity Index (CFNAI) moved down to –0.01 in July from +0.16 in June. Three of the four broad categories of indicators that make up the index decreased from June, and three of the four categories made negative contributions to the index in July. The index’s three-month moving average, CFNAI-MA3, moved down to –0.05 in July from +0.09 in June. [Link to News Release]The previous four out of five months were revised. The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth.The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity.

Wall Street Banks Warn Downturn Is Coming - HSBC Holdings Plc, Citigroup Inc. and Morgan Stanley see mounting evidence that global markets are in the last stage of their rallies before a downturn in the business cycle. Analysts at the Wall Street behemoths cite signals including the breakdown of long-standing relationships between stocks, bonds and commodities as well as investors ignoring valuation fundamentals and data. It all means stock and credit markets are at risk of a painful drop. “Equities have become less correlated with FX, FX has become less correlated with rates, and everything has become less sensitive to oil,” Andrew Sheets, Morgan Stanley’s chief cross-asset strategist, wrote in a note published Tuesday. His bank’s model shows assets across the world are the least correlated in almost a decade, even after U.S. stocks joined high-yield credit in a selloff triggered this month by President Donald Trump’s political standoff with North Korea and racial violence in Virginia. Just like they did in the run-up to the 2007 crisis, investors are pricing assets based on the risks specific to an individual security and industry, and shrugging off broader drivers, such as the latest release of manufacturing data, the model shows. As traders look for excuses to stay bullish, traditional relationships within and between asset classes tend to break down. “These low macro and micro correlations confirm the idea that we’re in a late-cycle environment, and it’s no accident that the last time we saw readings this low was 2005-07,” Sheets wrote. He recommends boosting allocations to U.S. stocks while reducing holdings of corporate debt, where consumer consumption and energy is more heavily represented. That dynamic is also helping to keep volatility in stocks, bonds and currencies at bay, feeding risk appetite globally, according to Morgan Stanley. Despite the turbulent past two weeks, the CBOE Volatility Index remains on track to post a third year of declines. 

GDP Forecasts: GDPNow 3.4%, Nowcast 1.9% -- The GDP forecasts by the Atlanta Fed GDPNow model and the New York Fed Nowcast are in the same ballpark this week.  The GDPNow estimate is 3.4%. The Nowcast estimate is 1.9%. GDPNow Forecast: 3.4 Percent — August 25, 2017 The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 3.4 percent on August 25, down from 3.8 percent on August 16. The forecast of third-quarter real GDP growth fell 0.3 percentage points to 3.5 percent after the Federal Reserve Board’s industrial production report on August 17 and the forecast of third-quarter real residential investment growth fell from 3.4 percent to –0.4 percent following the housing market data releases on August 23 and 24. The forecast of third-quarter real nonresidential equipment investment growth increased from 6.4 percent to 8.1 percent after this morning’s durable manufacturing report from the U.S. Census Bureau. Nowcast Forecast: 2.9 percent — August 25, 2017 It’s far too early for me to make an estimate.  We are looking at reports for July. Data and revisions will roll in for another three months.

13 Ways to Strengthen America's Economy - Noah Smith - The finer points of economic policy don’t get a lot of attention in the U.S. these days. With a president in the White House who seems far more interested in fighting personal battles than in making policy, and the country roiled by street violence and racial animus, there might seem little reason to think about how to improve Americans’ material standard of living. But someday the smoke will clear, and leaders will once again be thinking about economics. So I thought I’d make a list of policies that I would enact if I were in office. The overall goals of these policies would be to improve productivity, to ensure gainful employment for as many people as possible, to alleviate material deprivation and to provide for those who have trouble providing for themselves. Here’s my baker’s dozen:

CBO's Budget And Economic Outlook: 2017 To 2027: In fiscal year 2016, for the first time since 2009, the federal budget deficit increased in relation to the nation’s economic output. The Congressional Budget Office projects that over the next decade, if current laws remained generally unchanged, the deficit would decline in 2018 and then resume its upward trajectory - the result of strong growth in spending for retirement and health care programs targeted to older people and rising interest payments on the government’s debt, accompanied by only modest growth in revenue collections. Those accumulating deficits would drive debt held by the public from its already high level up to its highest percentage of gross domestic product (GDP) since shortly after World War II. CBO’s estimate of the deficit for 2017 has increased since January 2017, when the agency issued its previous estimates, because revenues are expected to be lower and mandatory spending is expected to be higher than earlier anticipated. Additionally, the current projection for the cumulative deficit for the 2018 - 2027 period is about $700 billion more than reported in January. CBO’s economic forecast - which underlies its budget projections - indicates that under current law, economic growth over the next two years would remain close to the modest rate observed since the end of the recession in 2009. Nevertheless, economic growth would continue to outpace growth in potential (maximum sustainable) GDP and thus continue to reduce the amount of underused resources, or slack, in the economy. The result would be increases in hiring, employment, and wages, along with upward pressure on inflation and interest rates. In the later part of the 10-year projection period, output growth would be constrained by a relatively slow increase in the nation’s supply of labor.

McConnell, Mnuchin Unequivocal About Avoiding Default on the Debt - Senate Majority Leader Mitch McConnell declared without hesitation Monday that Congress will raise the debt limit come September. “There is zero chance — no chance — we won’t raise the debt ceiling. No chance. America is not going to default, and we’ll get the job done in conjunction with the secretary of the Treasury,” the Kentucky Republican said, appearing alongside Treasury Secretary Steven Mnuchin. McConnell was in Louisville at a business event with Mnuchin. While the primary focus of the visit was the effort to rewrite the nation’s tax code, the two men made the debt limit a key issue. “We’re going to get the debt ceiling passed,” Mnuchin said. “I think that everybody understands this is not a Republican issue, this is not a Democrat issue. We need to be able to pay our debts. “This is about having a clean debt ceiling so that we can maintain the best credit, the reserve currency, and be focused on what we should be focusing on — so many other really important issues for the economy,” Mnuchin said. McConnell and Mnuchin were making clear that questions about the full faith and credit of the United States would hamper any other legislative efforts, including work on overhauling tax law. 

Trump Threatens Shutdown, Attacks GOP Senators During Angry Rally: An angry and defiant President Donald Trump used a Tuesday campaign rally to threaten a government shutdown, slam two Republican senators in their home state, and pour rhetorical gasoline on racial tensions he has twice stoked since the deadly Charlottesville, Virginia, white supremacist protests. Trump stuck to his staff’s script at the start of a rally in Phoenix, reading prepared remarks from a teleprompter just as he did during a stoic speech the night before to announce his Afghanistan policy. But it didn’t last, with the president appearing to put even more distance between himself and mainstream Republicans and even some members of his own Cabinet. A clearly agitated Trump used a large chunk of his remarks to lambaste the news media for what he dubbed “dishonest” coverage of his various statements about the Charlottesville violence that was spawned by events organized there by white supremacist groups. But he had plenty of vitriol left for lawmakers, including members of his own party. Trump threatened to force a federal government shutdown unless a spending bill that must be signed into law by the final minute of Sept. 30 includes monies for his desired U.S.-Mexico border wall. “Build that wall,” Trump told supporters in a convention center that reporters there tweeted was not full — despite the president’s repeated references to the “incredible” crowd size. “Now the obstructionist Democrats would like us not to do it,” he said of the proposed border barrier. “But, believe me, if we have to close down our government, we’re building that wall.”

Stocks Slide After Trump Threatens Government Shutdown Over Wall Funding, Killing NAFTA --Yesterday, when stocks surged at the market open following Politico's report that Trump is unexpectedly "making strides" on tax reform, we warned that "it can all be wiped away as soon as tonight, when Trump will deliver a speech to his "base", in which he may promptly burn any of the goodwill he created with capital markets following his far more conventional Afghanistan speech last night."Well, that's precisely what happened, because on Tuesday night, in another fiery campaign rally, Trump fiercely defended his response to violence in Charlottesville, made passing remarks from a teleprompter about the need for unity and inclusion before veering off-script to attack the news media, Democrats and even Republicans in the Senate whom he accused of distorting his response and blocking his agenda. But what spooked markets, and what has sent both US futures and European stocks lower, was Trump's threat to bring the U.S. government to the brink of a shutdown if needed to pressure Congress into funding the border wall that was a centerpiece of his 2016 campaign, stoking renewed fears that the debt ceiling debate will be far more contentious that the market expects. Delivering a warning to Democratic lawmakers who have objected to his plans to construct a wall along the U.S.-Mexico frontier, Trump called them “obstructionists” and said that it was time for the U.S. to crack down on illegal immigration. "If we have to close down our government, we’re building that wall,” Trump told thousands of supporters gathered in Phoenix for a campaign-style rally. “One way or the other, we’re going to get that wall.” As Trump spoke, S&P500 futures reversed gains to slip as much as 0.3% as Trump spoke.  As Bloomberg notes, Trump has asked for $1.6 billion to begin construction of the wall, with Congress under pressure to pass some kind of spending bill to keep the government open after Sept. 30. But Republicans in Congress haven’t shown much appetite for fighting to spend potentially billions more on a border barrier either. The funding would add to the deficit at the same time Republicans are trying to figure out how to pay for tax cuts.

Fellow Republicans rebuke Trump over government shutdown threat (Reuters) - President Donald Trump's fellow Republicans rebuked him on Wednesday after his threat to shut down the U.S. government over funding for a border wall rattled markets and cast a shadow over congressional efforts to raise the country's debt ceiling and pass spending bills. "I don't think anyone's interested in having a shutdown," the top Republican in Congress, House of Representatives Speaker Paul Ryan, told reporters on Wednesday in Hillsboro, Oregon, where he visited an Intel factory. Ryan said building a wall along the country's border with Mexico to deter illegal immigration was necessary, but added that the government did not have to choose between border security and shuttering operations. Trump in a speech on Tuesday evening threatened a shutdown if Congress does not agree to fund constructing the wall, a signature promise of his presidential campaign, which added a new complication to Republicans' months-long struggle to reach a budget deal. After Mexico rejected a chief part of Trump's promise - that it would pay for the wall - the president said the United States would fund it initially and be repaid by its southern neighbor. . Congress will have about 12 working days when it returns on Sept. 5 from its summer break to approve spending measures to keep the government open, while also facing a looming deadline to raise the cap on the amount the government may borrow. Both are must-approve measures.  Ryan suggested Congress would need to approve a short-term extension, or continuing resolution, of current funding levels so that the Senate could have more time to pass a full spending bill. That would push the budget battle to later in the year and could in turn delay attempts at tax reform, another signature Trump campaign issue.

Paul Ryan Dismisses Trump’s Shutdown Threat - Last night, President Trump reiterated his belief that sabotaging the functioning of the federal government is an effective strategy for persuading Democrats to vote for his border wall. Specifically, the president suggested that he might veto any spending bill that failed to include funds for his monument to American xenophobia, thereby allowing the government to shut down (and, almost certainly, his approval rating and that of his party to fall). Paul Ryan thinks this would be a bad idea. “I don’t think a government shutdown is necessary, and I don’t think most people want to see a government shutdown, ourselves included,” the House speaker told reporters in Oregon Wednesday. Ryan went on to note that the House has already passed $1.6 billion in border wall funding. That appropriation has languished in the Senate, where Mitch McConnell lacks the votes to overcome a Democratic filibuster (a problem that a government shutdown is highly unlikely to solve). “I don’t think anyone’s interested in having a shutdown,” Ryan continued. “I don’t think it’s in our interests to do so while we work on doing what we actually said we would do, what we’ve done already in the House and we need to do, which is to control our border. So I don’t think you have to choose between the two.” Congress must pass funding legislation and a debt-ceiling hike by the end of September in order to avert a shutdown and debt default, respectively. Lawmakers will only have 12 legislative days to do both those things. Ryan said that, in light of this time crunch, the GOP leadership would push for the passage of a short-term continuing resolution, as opposed to a full 2018 budget. Senate Republicans surely know that they can’t make their Democratic colleagues vote for Trump’s wall by threatening to shut down the government, given that the public tends to blame the party in power for political dysfunction.  But the president’s endorsement of legislative hostage-taking could stiffen the spines of the House GOP’s most intransigent ideologues — and, thus, make Ryan’s September even more difficult than it was already shaping up to be.

Debt Ceiling ‘Brinksmanship’ Could Test U.S. Top-Notch Credit Rating - Senate Majority Leader Mitch McConnell, R-Ky., predicted earlier in the week that there was "zero chance – no chance" that Congress fails to raise the debt ceiling when lawmakers return from their August recess. Those keeping an eye on America's credit rating will hope McConnell is right, as Fitch Ratings on Wednesday warned a downgrade could be in order if the debt limit isn't extended. In a statement issued shortly before noon, Fitch said lawmakers' upcoming government funding and debt limit deadlines "will demonstrate their capacity for coherent fiscal policymaking and cooperation." Should they fail to raise the debt ceiling "in a timely manner," however, Fitch warned it would consider stripping the world's largest economy of its highest rating – "AAA status." "Brinkmanship over the debt limit could ultimately have rating consequences, as failure to raise it would jeopardize the Treasury's ability to meet debt service and other obligations," Fitch said in its statement. The debt ceiling effectively caps the amount of debt the federal government can carry and was temporarily suspended back in November 2015. That suspension lifted in March, with the U.S. nearly $20 trillion in debt. As a consequence of hitting the debt ceiling, the Treasury has been operating under "extraordinary measures" since March to ensure the government pays its bills on time. Treasury Secretary Steven Mnuchin has said things should be just fine until September, when Congress will need to decide what to do about America's mounting debt problem. If the ceiling isn't raised, the U.S. may be forced to choose between paying government employees, meeting interest on existing debts or distributing Social Security benefits. 

U.S. credit rating at risk if debt limit is not raised in a ‘timely manner’, Fitch warns - LA Times: he nation’s credit rating is at risk if the $19.9-trillion debt limit is not raised “in a timely manner” before the Treasury runs out of cash in October, Fitch Ratings warned on Wednesday. “Brinkmanship over the debt limit could ultimately have rating consequences, as failure to raise it would jeopardize the Treasury's ability to meet debt service and other obligations,” Fitch, one of the three leading credit-rating companies, said after President Trump on Tuesday raised the possibility of a government shutdown over funding a Mexican border wall. Federal spending is only authorized through Sept. 30 as Congress works to pass a new budget and faces a potential showdown over funding for the wall, which Trump had vowed during his campaign would be paid for by Mexico. A government shutdown “would not have a direct impact” on the nation’s AAA rating, “but it would highlight how political divisions pose challenges to the budgetary process,” Fitch said. Failure to raise the debt limit, however, would threaten that top-level credit rating, even if the Treasury Department were to try to prioritize its debt payments, Fitch said. Some Republicans have suggested such a move would allow the Treasury to use incoming revenues to avoid defaulting on government bonds after it runs out of cash to pay all the nation’s bills. But experts have said that might not be legal or even technically possible given how the Treasury processes payments. “We have previously said that prioritizing debt service payments over other obligations if the limit is not raised — if legally and technically feasible — may not be compatible with ‘AAA’ status,” Fitch said.  The U.S. hit its debt limit in March, and the Treasury Department has been using accounting maneuvers ever since to free up cash to pay the government’s bills. The Congressional Budget Office estimates the Treasury will exhaust those measures and run out of cash in early to mid-October.

Trump Warns Of "Debt Ceiling Mess"; Blames McConnell, Ryan -- Conveniently coming just as warned that according to the T-Bill market, the odds of a government shutdown are now the highest they have been this cycle, moments ago Trump tweeted what appears to be a warning that the debt-ceiling process is setting up for failure, saying he had requested that Mitch McConnell and Paul Ryan tie the debt ceiling legislation into the V.A. Bill (which passed), adding that they did not do it, and as a result we "now have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. Could have been so easy-now a mess!"I requested that Mitch M & Paul R tie the Debt Ceiling legislation into the popular V.A. Bill (which just passed) for easy approval. They... ...didn't do it so now we have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. Could have been so easy-now a mess!— Donald J. Trump (@realDonaldTrump) August 24, 2017   The implication: the fingerpointing has begun over what even Trump now admits will be a debt-ceiling "mess" has begun, as has the scapegoating, and in Trump's view the blame will, or should, ultimately fall on Congressional Republican leadership in the face of McConnell and Ryan. While it is unlikely that Trump's latest escalation will accelerate a compromise, it virtually guarantees that the feud between the republican controlled Congress and the President will escalate further, effectively making either a debt-ceiling or government shutdown crisis increasingly likely.

In Early Concession, Trump Plans Meeting With GOP, Democrat Leaders --In what appears to be the first major concession to Congressional Republican leaders from the confrontational, "post-Phoenix rally" Trump, whose vow to "build that Wall" even if it means shutting down the government has spooked markets and sent Oct 12 T-Bill yields surging, Politico reports that the president is quietly organizing a meeting with McConnell and Ryan as well as Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi shortly after the August recess ends. The key topics of conversation will be avoiding a federal default and a government shutdown. On Wednesday, the White House said that Trump and McConnell will meet following the August recess to discuss the fall agenda, but it did not mention the Democratic leaders. While a White House spokesperson didn’t immediately respond to a question about a bipartisan meeting, secretary Sarah Huckabee Sanders said Trump intends to work closely with congressional leaders on shared policy goals. The meeting, which may still not happen, is sure to be heated: earlier today, in a pair of tweets Trump blamed McConnell and Ryan for creating a “mess” over the debt ceiling, claiming they rejected his call to attach an increase in the nation's borrowing limit to a bipartisan veterans bill. Trump's recent diplomatic "disintegration" with Mitch McConnell aside, passage of the debt bill would still prove problematic as The White House favors a "clean" debt ceiling hike while conservatives in the House and Senate are loath to back any measure that increases the nation's borrowing authority without corresponding spending cuts and reforms.

Evolution of the Trump Administration: An Op Ed -  Mike Kimel - Donald Trump seems to be missing some sort of a regulator that prevents him from simply saying what temporarily happens to be on his mind. That made it inevitable that he would treat his audience to a regular stream of faux pas. However, I think both the degree and severity of the mess may be diminished going forward. The reason has to do with how the Trump administration came into being.   He took the Republican nomination by beating the presumptive heir – Jeb Bush. Then he beat the back-ups who were viewed as acceptable to most establishment Republicans: Rubio and Cruz.  Now, when a new President takes office, he can usually stock his administration from think tanks and members of the political intelligentsia. Trump couldn’t. As the Republican nominee, he was never going to use left-leaning people. But he wasn’t about to bring in people from the Bush/Rubio/Cruz camps, nor were many of them willing to serve under him either. That pretty much ruled out the vast majority people with any experience in how Washington works.  So who was left? Well, there were disaffected members of the Republican establishment (those who had pissed off the neocons during the last Republican administration), some elements in the military, and people on the right who had been criticizing the Republican party for a long time. The latter group tend to be the most numerous. They also live on the fringes. And like most people on the fringes, they have no idea how the world works. Many are bombastic, like Trump himself. So that was the well from which Trump could draw. A clown show was inevitable. And since many of the clowns were actually advising Trump himself, it was also predictable that Trump would be repeating some of their nonsense, sprinkled in with some that was homegrown.  But it seems that Trump can learn, after all.  Somewhere along the way, it occurred to him to get rid of Priebus and replace him with Kelly. He quickly unloaded a couple of the more clown-ish actors, the Mooch and Steve Bannon, and perhaps his own predecessor…

Ship Rudderless After Trump Drops Its Pilot ---“The Trump presidency that we fought for, and won, is over,” Bannon said Friday, shortly after confirming his departure. “We still have a huge movement, and we will make something of this Trump presidency. But that presidency is over.”  Bannon was the "Make America Great Again" guy in the White House. The strategist who had the populist ideas that brought the votes for Trump. Jobs, jobs, jobs,  infrastructure investments, immigration limits, taxing globalists were his issue. Trump is no young German Emperor and Bannon is no chancellor Bismark. (Both would probably have liked those roles.) But with Bannon leaving, the Trump presidency is losing its chief strategist, the one person which set priorities and could set an alternative course for the ship of state under Trump's command. The racist Huffington Post headline implies that Bannon prioritized the wrong country. The reason is not that Bannon is anti-semite or a Nazi - he is neither. (It was the Obama administration, not Trump, which voted against the UN anti-Nazi resolution.) Bannon was anti-Islamist and anti-Iran which fitted the Zionist program. But he was also against the waste of U.S. assets and capabilities for the welfare of other countries. He was anti-empire and anti-war. Only yesterday a NYT portrait of him noted:General McMaster has become Mr. Bannon’s nemesis in the West Wing, the leader of what Mr. Bannon has described to colleagues as the “globalist empire project” — a bipartisan foreign policy consensus that emphasizes active American engagement around the world.  Mr. Bannon flatly rejects that philosophy. Mr. Bannon opposed the missile strike on Syria after President Bashar al-Assad used chemical weapons on his own people. He has expressed doubts about sending more troops to Syria or Iraq. He is skeptical of American military intervention in strife-torn Venezuela, a prospect raised last week by Mr. Trump, who surprised administration officials by speaking of a “military option” there.Bannon was also against the imperial projects in Afghanistan, North Korea and elsewhere. Then the empire stroke back at him.

Big business, military tighten their grip on Washington -- The corporate-controlled media has sought to portray the sequence of events that erupted within the ruling class over the Nazi rampage in Charlottesville entirely in racial terms, with Bannon and other advocates of “white nationalism” now purged, leaving political control of the White House and the Trump administration in steadier and more “moderate” political hands: a group of generals and ex-generals, headed by White House Chief of Staff John Kelly, together with Wall Street financiers such as Gary Cohn, Trump’s chief economic adviser, and Treasury Secretary Steven Mnuchin. The New York Times has led the way, with an editorial Sunday declaring that “Americans accustomed constitutionally and politically to civilian leadership now find themselves relying on three current and former generals—John Kelly, the new White House chief of staff; H. R. McMaster, the national security adviser; and Jim Mattis, the secretary of defense—to stop Mr. Trump from going completely off the rails. Experienced and educated, well-versed in the terrible costs of global confrontation and driven by an impulse toward public service that Mr. Trump doesn’t possess, these three, it is hoped, can counter his worst instincts.” In the same edition of the Times, a news analysis celebrates what its headline calls “The Moral Voice of Corporate America.” In this account, “a chorus of business leaders rose up this past week to condemn hate groups and espouse tolerance and inclusion.” Among those named as part of this “chorus” of “moral” leaders are such corporate criminals as Jamie Dimon of JPMorgan Chase, one of those responsible for the 2008 financial collapse; Mary Barra of General Motors, who oversaw the cover-up of an ignition-switch defect that killed hundreds of people; and WalMart CEO Doug McMillon, whose company is a synonym for low-wage exploitation.The ruling elite saw Trump’s incautious remarks defending the neo-Nazis who rioted in Charlottesville as a serious threat to the interests of American imperialism abroad as well as the maintenance of social and political stability at home. Powerful corporate interests feared the implications for Trump’s agenda of corporate tax cuts, the removal of business regulations, a profit windfall in the guise of infrastructure reform and the gutting of Medicaid and other social programs.

America's Goldman Sachs Regency - David Stockman - There’s not many tears being shed over Steve Bannon’s departure. His ethno-nationalist and protectionist worldview are opposite to true notions of liberty, free markets and a minimalist state.While Bannonism presented itself as a coherent alternative ideology to mainstream Big Government, it actually boiled down to an incoherent potpourri of cultural resentments and prejudices, economic shibboleths and amateur historical theorizing. His message appealed to the alt-Right because it proposed to replace oppressive statism with a more right wing version rooted in protectionism and nativism.  Notwithstanding the rotten essence of Bannonism, however, the firebrand self-promoter who was the Donald’s chief strategist got it right in his parting shots at his internal White House enemies. In so many words, he correctly asserted that the nation will now be ruled by a Goldman Sachs Regency and a team of generals. The move embodies the essence of Albert Einstein’s famous definition of insanity: Doing the same thing over and over and expecting a different result.The Trump presidency that we fought for, and won, is over,” Bannon told the conservative Weekly Standard on the Friday after his White House departure.“We will make something of this Trump presidency. But that presidency is over.” The Donald will now function, as Robert Wenzel aptly described it, as “something of a tweet master frontman” with the Vampire Squid riding higher than ever before.

Sebastian Gorka Resigns From White House Post - A week after the White House pushed out former chief strategist Steve Bannon, the Trump administration has lost another controversial staffer. The departee this week is Sebastian Gorka, a deputy assistant to the president and former Breitbart employee who was closely allied with the White House’s rapidly shrinking anti-globalist faction. News of Gorka’s resignation was first reported by the Federalist, and later confirmed by Axios and a host of other news outlets.As with Bannon’s ouster last week, the storyline of who said what when has gotten muddled: Gorka claimed he resigned, while the White House insinuated that he was pushed out. News of Gorka’s ouster broke shortly after Trump announced that he would be pardoning sheriff Joe Arpaio, a decision that was widely expected after Trump hinted that he “wouldn’t do it tonight” at a rally in Phoenix earlier this week. It also comes as Hurricane Harvey, which has been upgraded to a category four hurricane, is threatening to lay waste to the southwest. A copy of Gorka’s bluntly worded resignation was leaked to the Federalist, the former staffer “expressed dissatisfaction with the current state of the Trump administration.” “[G]iven recent events, it is clear to me that forces that do not support the MAGA promise are – for now – ascendant within the White House,” Gorka wrote. “As a result, the best and most effective way I can support you, Mr. President, is from outside the People’s House.” In the letter, Gorka blamed the president's failure to outline a plan for exiting Afghanistan after “16 years of disastrous policy decisions" for being the final straw. He also criticized the president and his military advisers for omitting any mention of Radical Islam from the president's statement on Afghanistan, delivered earlier this week.

"Is The President Emotionally Unstable?" New Democrat Bill Requires Trump To Undergo Mental Health Evaluation -- Back in February it was reported by Zero Hedge that Democrats would soon act to remove President Trump under the 25th Amendment, which states in part that a President can be replaced should he be unable to discharge his powers and duties.  Such an action would require a vote from the President’s cabinet, but could also be initiated by Congress.  As of today, Trump’s opponents are now actively pursuing this strategy. Asking whether the President has early stage dementia, or whether he is “mentally and emotionally stable,” Congressional Representative Zoe Lofgren (D-CA) introduced legislation that would force the President to submit to a psychological evaluation. Rep. Zoe Lofgren (D-Calif.) introduced the bill on Friday. Should the results of the said exam be unfavorable, the bill calls for Vice President Mike Pence and members of the Cabinet to remove Trump from office. The move would invoke the 25th Amendment, a rarely-used constitutional provision that allows the vice president and a majority of Cabinet members to jointly remove the president from office and replace him with the vice president.

Ron Reagan: There's "Good Reason" To Question Trump's Sanity --MSNBC political analyst Ronald Reagan Jr. stepped up his attacks on President Trump Thursday, telling MSNBC's resident blowhard Chris Matthews that Trump isn’t “behaving like a president” and that there’s “good reason” to question his mental state. Reagan, who claimed that Trump is “unfit for office” during an appearance on the show back in May, said that it’s “extraordinary” that the president’s mental health is a subject for public debate:“Think about how extraordinary it is that we're even having this conversation," Reagan said. "You and I have differences with various presidents, I've been very tough on George W. Bush on torture and things like that, but we're actually talking about the president's very sanity here, and doing it in a serious way."Last week, Tennessee Sen. Bob Corker questioned Trump’s mental state and called for “radical change” at the White House during a briefing with reporters, angering the president’s allies. White House Press Secretary Sarah Huckabee Sanders responded to the attacks by saying they "didn't dignify" a response.But Reagan echoed Corker’s remarks, and heaped on a few more criticisms of his own. "We're really, genuinely worried, and with good reason," Reagan said. "Very sober people are worried that this man is simply unfit for office, characterologically, emotionally, mentally. He does not have the stability, it seems."He also described the president’s behavior as “pathological.”"You can't control a president who is pathological in his behavior," Reagan said. "It's not that he's just not behaving like a normal president does, he's not behaving as a normal grown-up does."

 McConnell, in Private, Doubts if Trump Can Save Presidency - The relationship between President Trump and Senator Mitch McConnell, the majority leader, has disintegrated to the point that they have not spoken to each other in weeks, and Mr. McConnell has privately expressed uncertainty that Mr. Trump will be able to salvage his administration after a series of summer crises. What was once an uneasy governing alliance has curdled into a feud of mutual resentment and sometimes outright hostility, complicated by the position of Mr. McConnell’s wife, Elaine L. Chao, in Mr. Trump’s cabinet, according to more than a dozen people briefed on their imperiled partnership. Angry phone calls and private badmouthing have devolved into open conflict, with the president threatening to oppose Republican senators who cross him, and Mr. McConnell mobilizing to their defense. The rupture between Mr. Trump and Mr. McConnell comes at a highly perilous moment for Republicans, who face a number of urgent deadlines when they return to Washington next month. Congress must approve new spending measures and raise the statutory limit on government borrowing within weeks of reconvening, and Republicans are hoping to push through an elaborate rewrite of the federal tax code. There is scant room for legislative error on any front. A protracted government shutdown or a default on sovereign debt could be disastrous — for the economy and for the party that controls the White House and both chambers of Congress. 

McConnell Doubts "Trump Can Save Presidency" As Relationship "Disintegrates" ---  According to a new bombshell report from the NYT, the relationship between President Trump and Senate Majority Leader Mitch McConnell has "disintegrated" in recent week "to the point that they have not spoken to each other in weeks", prompting the Kentucky senator to express doubts if Trump can succeed in office and "salvage the presidency" after a summer of controversies and crises.The relationship between President Trump and Senator Mitch McConnell, the majority leader, has disintegrated to the point that they have not spoken to each other in weeks, and Mr. McConnell has privately expressed uncertainty that Mr. Trump will be able to salvage his administration after a series of summer crises.What was once an uneasy governing alliance has curdled into a feud of mutual resentment and sometimes outright hostility, complicated by the position of Mr. McConnell’s wife, Elaine L. Chao, in Mr. Trump’s cabinet, according to more than a dozen people briefed on their imperiled partnership. Angry phone calls and private badmouthing have devolved into open conflict, with the president threatening to oppose Republican senators who cross him, and Mr. McConnell mobilizing to their defense. In a phone call on Aug. 9, Trump blamed McConnell for the Senate's troubled efforts to repeal and replace the Affordable Care Act. The Times said the call descended into shouting and profanity.

Mitch McConnell: Republicans working with Trump on 'shared goals’ (Reuters) - Senate Majority Leader Mitch McConnell said on Wednesday that he and his team were in "regular contact" with President Donald Trump to discuss "shared goals" such as infrastructure and taxes.The statement came after media reports this week of tensions between the Republican president and McConnell, the top Republican in the U.S. Senate."The President and I, and our teams, have been and continue to be in regular contact about our shared goals," McConnell said in a statement that also cited support for the military and veterans and U.S. strategy against Islamic State. We have a lot of work ahead of us, and we are committed to advancing our shared agenda together and anyone who suggests otherwise is clearly not part of the conversation," McConnell said.

GOP taken aback by Trump’s verbal bombs | TheHill: President Trump’s public fights with Senate Majority Leader Mitch McConnell (Ky.) and other Republicans are just making it tougher to move his agenda, say GOP aides, strategists and former senators. Republicans say the hard feelings between the White House and Senate leader will only complicate the task of passing tax reform, keeping the government funded and raising the debt ceiling — three top items on the fall agenda. “It makes it much more difficult obviously. It’s much easier when you got everyone on the same page, in the same boat and pulling in the same direction,” said former Sen. Judd Gregg (R-N.H.), a columnist for The Hill who was a counselor to McConnell when he served in the Senate. A former Senate Republican leadership aide said Trump is only alienating allies by lashing out at them over Twitter. “Every time the president goes on a Twitter rant he either alienates people whose votes he needs, wastes time that should be spent building a public case for his policies or gives Democrats something to hammer,” said the source. Trump on Thursday blasted McConnell for failing to pass the Senate’s ObamaCare repeal bill and for not acting sooner on legislation to raise the debt ceiling. “The only problem I have with Mitch McConnell is that, after hearing Repeal & Replace for 7 years, he failed! That should NEVER have happened!” the president posted on Twitter. He also argued that McConnell and Speaker Paul Ryan (R-Wis.) missed an opportunity to attach legislation raising the debt limit to a popular bill reforming the Department of Veterans Affairs. 

John Kelly’s Latest Mission: Controlling the Information Flow to Trump -- For months, the White House under President Trump operated with few real rules, and those were barely enforced. People wandered into the Oval Office throughout the day. The president was given pieces of unvetted information, and found more on his own that he often tweeted out. Policy decisions were often based on whoever had last gotten Mr. Trump’s attention.Mr. Trump’s Twitter habit shows little sign of abating. On vacation earlier at his private club in Bedminster, N.J., and now, ensconced again in the White House, he has been watching television — unfettered by any aides — and responding as he always has.But inside the West Wing, the president’s new chief of staff, John F. Kelly, has been trying to control the things he can. After being sworn in on July 31, he spent three weeks assessing how to create a less jumbled, chaotic churn around Mr. Trump, and how to create a system that the president’s staff will respect. In two memos sent to the staff on Monday he began to detail his plan, starting with how he wants information to get to the president, and how Mr. Trump will respond. Codifying of paper flow and decision-making is not usually of note in a White House, and the practices laid out were fairly standard in previous administrations. But in Mr. Trump’s White House, where fiefs have been in constant combat and decision-making has often been ill defined, the memos, first reported by Politico, mark a new era.The pair of memos, signed by Robert Porter, the assistant to the president for policy coordination and staff secretary, as well as Mr. Kelly, codified rules and procedures that a White House typically sets at the outset of an administration. Mr. Kelly’s predecessor, Reince Priebus, sent some similar guidelines around early in the administration, according to two officials, but they were never taken seriously. Mr. Kelly, a retired Marine general, has been treated with a different level of deference inside the building, those aides said. Staff members discovered early on that they could defy Mr. Priebus, the officials said, but crossing a Marine is a different matter.

US pushes ahead with provocative war games in South Korea -In the midst of high tensions on the Korean Peninsula, the US is provocatively proceeding with joint military exercises with South Korea, involving tens of thousands of troops and aimed at training and preparing for war with North Korea.  Last year’s annual Ulchi-Freedom Guardian drills involved 25,000 American military personnel and 50,000 South Korean troops backed by warships and warplanes. The number of US personnel involved this year is 17,500, but US Defence Secretary James Mattis declared yesterday that the reduction had nothing to do with the tense situation the Korean Peninsula.The exercises are reportedly based on the joint US-South Korean Operations Plan (OPLAN) 5015, adopted in 2015, that involved pre-emptive strikes against North Korea and so-called “decapitation” raids aimed at eliminating the top leadership in Pyongyang. General Joe Dunford, chairman of the US Joint Chiefs of Staff, last week declined to say whether more “strategic assets” such as long-range B-1 bombers would be involved. The exercises will run until August 31.The US is proceeding with the war games despite repeated calls by China for them to be called off, in return for North Korea putting its missile testing on hold and both sides agreeing to talks to end the dangerous confrontation. The Trump administration has flatly refused to cancel joint military exercises with South Korea, claiming they are purely defensive in character.The Pyongyang regime warned yesterday in the official Rodong Sinmun that the joint exercises were “like pouring gasoline on a fire” and would worsen tensions on the Korean Peninsula. Such “reckless behavior [was] driving the situation into the uncontrollable phase of a nuclear war,” it stated. The comments follow a series of highly inflammatory remarks by US President Trump in response to two tests of long-range missiles by North Korea in July. Trump warned that further threats by Pyongyang against the United States would be met by “fire and fury like the world had never seen.” He then warned North Korea that military options were “locked and loaded.”

North Korea Threatens "Merciless Strike" As US-South Korea Wargames Begin -  Following North Korean leader Kim Jong Un's statement last week that he would "watch a little more the foolish and stupid conduct of the Yankees," as US-South Korean military exercises begin, CNN reports that Pyongyang also declared that its army can target the United States anytime, and neither Guam, Hawaii nor the US mainland can "dodge the merciless strike."The messages in Rodong Sinmun, the official government newspaper, come a day before the US starts the Ulchi Freedom Guardian military exercises with South Korea."The Trump group's declaration of the reckless nuclear war exercises against the DPRK ... is a reckless behavior driving the situation into the uncontrollable phase of a nuclear war," Rodong Sinmun said, using the acronym for Democratic People's Republic of Korea, the nation's official name.It described North Korea as the "strongest possessor" of intercontinental ballistic missiles capable of striking the US mainland from anywhere."The Korean People's Army is keeping a high alert, fully ready to contain the enemies. It will take resolute steps the moment even a slight sign of the preventive war is spotted," it said. China has urged both Washington and Pyongyang to tone down the rhetoric, warning via the government's mouthpiece Global Times...

In Latest North Korea Propaganda Clip, "Crazy" Trump Is Overlooking A Sprawling Cemetery -- (video) In the latest propaganda video warning from North Korea, released just as the US and South Korea begin their massive 10-day military drill, President Trump is shown overlooking a sprawling Guam graveyard cluttered with crosses in a crudely photoshopped image.  As Fox News reports, the North Korea regime followed the video with a statement posted through the state-owned KCNA news agency according to which Trump "spouted rubbish" and frequently tweeted about "weird articles of his ego-driven thoughts" while attacking South Korea's "puppy-like" Defense Minister Song Young-moo for "pinning hope on that crazy  man."

Trump Approves Plan to Create Independent Cyber Command (AP) — President Donald Trump has approved a long-delayed Pentagon plan to create an independent and more aggressive cyber command in order to beef up cyberwar operations against the Islamic State group and other foes.The White House announcement Friday means U.S. Cyber Command may eventually be split off from the intelligence-focused National Security Agency.For now, Trump has agreed to raise the stature of Cyber Command within the military and give it more autonomy. He did not say who would serve as commander of the organization."This new Unified Combatant Command will strengthen our cyberspace operations and create more opportunities to improve our nation's defense," Trump said in a written statement. "The elevation of United States Cyber Command demonstrates our increased resolve against cyberspace threats and will help reassure our allies and partners and deter our adversaries."Making cyber an independent military command will put the fight in digital space on the same footing as more traditional realms of battle on land, in the air, at sea and in space. The move reflects the escalating threat of cyberattacks and intrusions from other nation states, terrorist groups and hackers, and comes as the U.S. faces ever-widening fears about Russian hacking following Moscow's efforts to meddle in the 2016 American election. The goal is to give Cyber Command more autonomy, freeing it from any constraints that stem from working alongside the NSA, which is responsible for monitoring and collecting telephone, internet and other intelligence data from around the world — a responsibility that can sometimes clash with military operations against enemy forces.

Trump Offers Open-Ended U.S. Commitment to Shore Up Afghanistan - President Donald Trump announced an open-ended commitment to Afghanistan that will put as many as 4,000 more U.S. troops into the nation’s longest-lasting conflict and keep American forces there as long as it takes to deny terrorists a haven and bring about a political settlement with the Taliban. The decision marks a turnabout for Trump, who during the campaign only grudgingly acknowledged the need for the U.S. presence in Afghanistan and promised to eschew military entanglements and nation-building abroad to focus resources at home. “Our nation must seek an honorable and enduring outcome worthy of the tremendous sacrifices that have been made,” Trump said Monday in a nationally televised address from the Fort Myer Army base in Virginia. “The consequences of a rapid exit are both predictable and unacceptable.” Trump is now the third U.S. president to struggle with how to get out of Afghanistan, a country beset by ethnic, religious, cultural and tribal factions amplified by foreign powers including the U.S. as well as neighboring Pakistan and Russia. That mixture has stymied foreign armies for centuries. Trump declined to specify the number of troops the U.S. would have in Afghanistan or detail what criteria would be used to determine success. But his strategy gives the green light to a plan by Defense Secretary James Mattis to bolster training and support for the Afghan army with roughly 4,000 additional personnel -- a 50 percent increase in the current American military presence. Mattis said in a statement Monday night that several U.S. allies also have committed to increasing troop numbers.

Angry Trump Grilled His Generals About Troop Increase, Then Gave In — President Trump’s skepticism about America’s involvement in Afghanistan was no secret to his staff. But his top national security officials were still taken aback at a meeting in the Situation Room on July 19, when an angry Mr. Trump began ripping apart their latest proposal to send thousands of additional American troops to the country.  “We’re losing,” the president declared, according to a person who was in the room. The plan, he complained, was vague and open-ended, with no definition of victory. “What does success look like?” he asked. The day before that meeting, Mr. Trump had invited four soldiers who had served in Afghanistan to the White House for lunch. His exchanges with these enlisted men, an official said, left him sober about the prospects for turning around a war that has dragged on for nearly 16 years. He showed up the next day determined to ask hard questions.  On Monday night, Mr. Trump finally put forward a broader strategy for Afghanistan, one that would require thousands more American troops but place more conditions on the Afghan government. His decision, several officials said, was less a change of heart than a weary acceptance of the case, made during three months of intense White House debate by the military leaders who dominate his war cabinet.  In the end, these officials said, Mr. Trump accepted the logic that a “big military” approach was needed to prevent Afghanistan from again becoming a launching pad for terrorism against the United States. Persuaded there were no other options, Mr. Trump became the third American president to send young men and women into the longest war in American history.  His journey to that decision was starkly different than that of his predecessor, President Barack Obama. Unlike Mr. Obama, who ran for office promising to turn around the war in Afghanistan, Mr. Trump scarcely mentioned it on the campaign trail. But he had long opposed the war, in keeping with his general aversion to American military entanglements. As a private citizen, he repeatedly called on Mr. Obama to withdraw the troops.

Trump Surrenders To The Generals - American Conservative - Everybody who voted for Donald Trump hoping that he would reduce the US military’s involvement in foreign wars has been made a fool of. I’m sorry, but there it is. Last night’s announcement by the president that he’s going to send more troops to Afghanistan — he mentioned no numbers, but his staff has been telling lawmakers around 4,000 — is a betrayal.  Earlier this year, the president gave the Pentagon authority to send more troops into Iraq and Syria. He has deepened our involvement on the Saudi side of the Yemen war. And now we’re going back into Afghanistan. The New York Times has a story out today about how the generals talked Trump into doing the Afghanistan surge. Excerpts:President Trump’s skepticism about America’s involvement in Afghanistan was no secret to his staff. But his top national security officials were still taken aback at a meeting in the Situation Room on July 19, when an angry Mr. Trump began ripping apart their latest proposal to send thousands of additional American troops to the country.“We’re losing,” the president declared, according to a person who was in the room. The plan, he complained, was vague and open-ended, with no definition of victory. “What does success look like?” he asked.The day before that meeting, Mr. Trump had invited four soldiers who had served in Afghanistan to the White House for lunch. His exchanges with these enlisted men, an official said, left him sober about the prospects for turning around a war that has dragged on for nearly 16 years. He showed up the next day determined to ask hard questions. Then the generals — all of whom had Afghan experience — got to work on him.

The generals rolled him, as they rolled Obama … Before an audience of troops ordered into attendance, DJT gave us his decision on policy in Afghanistan:

  • 1.  "There will be no blank check."  Since the applicability of this statement was not made clear, I will take it to mean that there will be limits as to how many military resources will be "invested" in Afghanistan, how much US taxpayers' money is spent there for however long it (victory) takes.  Nevertheless, no numbers were provided for possible troop end strengths or expenditures.
  • 2.  "Decisions about future policy will be based on events on the ground, not on schedules decided in Washington."  This means that there will be no oversight over the commander in Afghanistan except by Mattis and McMaster, the apparent authors of this policy.  This is an abandonment of the American policy of civilian control of the military. 
  • 3.  We will fight until victory is achieved, victory being defined as a secure position for the elected government and an absence of terrorist plots against the US being "hatched" in Afghanistan.
  • 4.  We will not "nation build," but will maintain the aforesaid government in power.  This presumably will cost a lot more money.
  • 5.   "As the prime minister of Afghanistan has promised, we are going to participate in economic development to help defray the cost of this war to us."  Text of Speech.   As is well known I am not sympathetic to economic explanations of history but this has a name, "colonialism."
  • 6.  Pakistan is defined by Trump in this speech as a major haven and sponsor of terrorism in Afghanistan.  IMO this is correct.  DJT says that pressure will be applied to correct this.
  • 7.  India is summoned in the speech to help us achieve "victory" in Afghanistan and in helping us control Pakistan's adverse behavior.  India and Pakistan are enemies and both are nuclear armed.  Pakistan, as I have written elsewhere, can range the eastern Mediterranean with its mobile ballistic missiles when positioned in western Baluchistan.
  • 8. All restrictions will be removed from the actions of military commanders in the field.
  • 9.  It was repeatedly said in the speech that we must struggle on to victory to justify the losses we have suffered thus far.  This is sentimental nonsense.  Such reasoning completely ignores the principle of necessary acceptance of "sunk costs" that should be obvious to a businessman.

Bannon’s Breitbart tears into Trump after Afghanistan speech - Breitbart seems ready for one of Steve Bannon’s famed “wars.” Just minutes after President Donald Trump concluded his Afghanistan policy speech Monday night, the conservative site took an aggressive, critical approach to the address and Trump’s new policy. A banner headline blasted the president’s decision to extend the U.S. military commitment in Afghanistan as a “flip-flop” that “reverses course.” ..Articles likened him to his predecessor, President Barack Obama — a known sore spot for Trump. Monday’s address in front of service members in Fort Meyer, Virginia, was a first, big test of what Breitbart will do now that Bannon, the former White House chief strategist, has returned to run the site he left to join Trump’s White House bid. The new, re-Bannoned Breitbart didn’t seem to hold back at all. “Trump’s ‘America First’ Base Unhappy with Flip-Flop Afghanistan Speech,” blared one headline. The lead of the main story contained a series of subtle digs: “President Trump unveiled his plan for Afghanistan after seven months of deliberation Monday evening, announcing tweaks around the edges of the current strategy instead of a different approach,” read the lead sentence of Breitbart’s wrap on the speech. 

Trump’s Base Goes Ballistic Over His ‘Unlimited War’ - President Donald Trump acknowledged on Monday night that the new Afghanistan strategy he unveiled is a reversal of his long-held objection to the very idea of having a U.S. military presence in the country. But in announcing a ramp up of U.S. forces with no defined timeline for their departure, Trump tailored and mangled and obscured the policy to such a degree so as to make it both difficult to understand and—he hopes—palatable to his base. At one point, he asserted that his strategy was to have no publicly-stated strategy at all. “We will not talk about numbers of troops or our plans for further military activities,” Trump told a crowd of servicemen at Virginia’s Fort Myer on Monday. President’s have made abrupt foreign policy reversals before, often breaking with campaign pledges when presented with a new set of geopolitical realities. Trump’s reversal stands out not just for the outright vehemence with which he previously argued that America needed to put an end to its 16-year-long war—Trump has called for total US withdrawal from Afghanistan and for handing the country over to an army of mercenaries—but also because of what it says about his foreign policy at large. In the seven months since taking office, Trump has expanded military operations in Yemen, Syria, Iraq, Somalia, Libya and, now, Afghanistan. And that’s in addition to an escalated nuclear standoff with North Korea. It was “America First” rhetoric plastered atop a military-oriented interventionist policy. And it was done, ostensibly, to ensure that Trump’s base, disillusioned with decades of Republican-led foreign policy adventurism, heard someone who remained skeptical.Alas, many didn’t.  “Why did we even have an election?” wondered Mike Cernovich, a popular far-right internet media personality generally supportive of Trump. He mockingly tweeted a photo of a flak jacket-clad Jared Kushner, the president’s senior adviser and son-in-law, during a trip to Afghanistan this year, with the caption “General Jared.” In another tweet, he wrote, “Congratulations to President McMaster!” a derisive reference to White House National Security Adviser H.R. McMaster, who pressed the president to boost troop levels in Afghanistan.

How Trump swallowed a bitter Afghanistan pill - POLITICO: In his first national security address, President Donald Trump broke with his “America First” campaign rhetoric and his past skepticism about the war in Afghanistan, bowing to the stay-the-course advice of the generals who occupy top posts in his administration. Trump’s Monday night speech laid out a new American strategy for the war in Afghanistan that he cast as a bold new approach — “I’m a problem-solver… in the end, we will win,” he said — but which critics cast as an extension of a failed approach. The plan — which will maintain an unspecified U.S. troop presence without withdrawal timetables and intensify pressure on Pakistan to crack down on terrorist safe havens — was the product of a months-long strategy review in which the president’s national security team talked him out of ending the costly 16-year war. “It wasn’t a debate,” said a senior White House aide. “It was an attempt to convince the president.” It was also an unsatisfying outcome for a president who likes to act boldly and who has called America’s commitment to Afghanistan a waste of money. But the president conceded that the world looks different from behind the presidential desk. “My original instinct was to pull out,” Trump conceded, adding that “decisions are much different when you sit behind the desk in the Oval Office.” If there was a worldview behind the remarks, it was what Trump called a "principled realism" devoted to rooting out terrorists without building up the countries that host them — a balance between the president's isolationist tendencies and the neoconservative ideology that animated the last Republican administration. Like Obama before him, Trump was forced to confront a teetering situation from the day he assumed office. McMaster visited Afghanistan, Pakistan and India shortly after he took over from former national security adviser Michael Flynn in April. He launched a strategy review of American policy in South Asia shortly after his return. And like Obama, who later complained that his generals had boxed him into sending 30,000 more troops to the country in 2009, Trump chafed at the options presented to him by his military advisers. “Trump does recognize that just pulling out is not an option. If the Taliban takes over and then there’s a terrorist attack, that is a big political risk for him,”

U.S. puts more pressure on Pakistan to help with Afghan war  (Reuters) - The United States suggested on Tuesday it could cut U.S. aid to Pakistan or downgrade Islamabad's status as a major non-NATO ally to pressure the South Asian nation to do more to help it with the war in Afghanistan. A day after President Donald Trump committed to an open-ended conflict in Afghanistan and singled out Pakistan for harboring Afghan Taliban insurgents and other militants, U.S. Secretary of State Rex Tillerson said Washington's relationship with Pakistan would depend on its help against terrorism. "We are going to be conditioning our support for Pakistan and our relationship with them on them delivering results in this area," Tillerson told reporters. U.S. officials are frustrated by what they see as Pakistan's reluctance to act against groups such as the Afghan Taliban and the Haqqani network that they believe exploit safe haven on Pakistani soil to launch attacks on neighboring Afghanistan. Pakistan denies it harbors militants fighting U.S. and Afghan government forces in Afghanistan. Tillerson said the United States could consider withdrawing Pakistan's status as a major non-NATO ally, which provides limited benefits such as giving Pakistan faster access to surplus U.S. military hardware, if cooperation did not improve. "We have some leverage that's been discussed in terms of the amount of aid and military assistance we give them, their status as non-NATO alliance partner - all of that can be put on the table," he said. In a televised speech on Monday offering few specifics, Trump promised a stepped-up military campaign against Taliban insurgents who have gained ground against the U.S.-backed Afghan government and he singled out Pakistan for harboring militants. 

Trump's Afghanistan strategy includes new ultimatum on India - (AP) — Laying out his new Afghanistan war strategy, President Donald Trump reissued old demands on neighboring Pakistan to eliminate militant sanctuaries. Less expected: an entirely new warning to close U.S. partner India to provide more economic aid. Much of Trump's eagerly awaited address on turning around the nation's longest war sounded familiar, not least the need for Pakistan to crack down on Taliban fighters hiding across Afghanistan's borders. Washington has clamored for greater Pakistani action for years. More surprising was Trump's blunt challenge to India and how he linked Afghanistan's economic revitalization to totally separate U.S.-Indian trade matters. "We appreciate India's important contributions to stability in Afghanistan, but India makes billions of dollars in trade with the United States, and we want them to help us more with Afghanistan, especially in the area of economic assistance and development," Trump said. He didn't elaborate, but the threat was clear, especially given Trump's regular chafing over countries enjoying significant trade surpluses with the United States. Either India must pony up more money for what the Trump administration is calling its "regional approach" to Afghanistan, or it could face commercial repercussions.The U.S. deficit in goods and services with India last year was about $30 billion. Trump also is reviewing a work visa program heavily used by Indians. Trump's remarks on trade could irk India, which also has suffered attacks by Pakistan-based militants and sees itself as a natural counterterrorism ally of the United States. And they come less than two months after Prime Minister Narendra Modi was warmly welcomed at the White House as a key strategic partner, with the two leaders exchanging hugs and declaring their shared interest in bringing stability to Afghanistan. 

After 16 Years of War, Afghanistan Still World’s Heroin Supplier - On Monday, President Donald Trump revealed many substantive changes to U.S. strategy in Afghanistan, but the longest war in U.S. history cannot be won without confronting narco-terrorism. After 16 years and billions of U.S. dollars spent, Afghanistan now supplies more than 75 percent of the world’s heroin and the region hosts the highest concentration of terrorist groups. Not only that, Afghanistan serves as a primary hub where the world’s largest drug trafficking groups directly support Islamic terrorism. There will be none of Trump’s promise of victory without confronting these dark truths. Narco-terrorism describes the nexus between drug traffickers and terrorists. It manifests itself in four basic forms: 1) drug traffickers who engage in terrorist activity to further their drug trade; 2) terrorists who sell drugs to finance their operations; 3) organizations with equal interests in drug trafficking and terrorism; and 4) drug traffickers and terrorists who mutually support each other. Afghanistan’s Nangarhar province has become the epicenter of this black market. Here, there is a strong symbiotic relationship between heroin traffickers and terrorist groups like the Haqqani network and the Taliban. Drug traffickers give a percentage of their drug proceeds to the Taliban as a form of zakat, an obligatory donation required as one of the five pillars of Islam. Taliban commanders also ask heroin traffickers to purchase weapons and supplies for them, and allow their fighters to stage at drug labs before attacks. In exchange for this support, the Taliban agrees to protect heroin laboratories from the Afghan police and military. The Taliban intimidate or murder Afghan nationals who cooperate with authorities and wage active jihad against Afghanistan’s government, creating a lawless environment in which both drug trafficking and terrorism thrive.

US Taxpayers Spent $50 Million For Luxury Cars, Guns, & Booze To Mentor Afghan Intel Officers -- A foreign company hired by the U.S. government to mentor and train Afghan intelligence officers billed Uncle Sam for more than $50 million in luxury cars - including Porsches, an Aston Martin, and a Bentley - and the lucrative salaries of executives and their spouses (who didn’t do any work). The firm also spent $1,500 on alcohol and $42,000 on automatic weapons prohibited under the terms of the contract, according tofigures provided by a U.S. Senator from a federal audit that has not been released to the public. It marks the latest of many scandals involving the free-flow of American dollars to controversial causes in Afghanistan, where fraud and corruption are rampant in all sectors. In this latest case, the Department of Defense (DOD) hired a British firm called New Century Consulting (NCC) to operate a program called “Legacy East” that was supposed to provide counterinsurgency intelligence experts to mentor and train Afghan National Security Forces. Instead, NCC billed the Pentagon millions of dollars in questionable or unallowable expenses, including seven luxury cars and exorbitant $400,000 average salaries for the “significant others” of corporate officers to serve as “executive assistants.” Other prohibited expenses include severance payments, rent, unnecessary licensing fees, extensive austerity pay, and the cost of personal air travel. The outrageous figures became public when the top-ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee, Claire McCaskill, wrote a letter to Defense Secretary James Mattis demanding answers. As a federal lawmaker McCaskill had access to the information after viewing a report from the Defense Contract Audit Agency (DCAA), which provides financial oversight of government contracts for the Pentagon and operates under the Secretary of Defense. McCaskill discloses that the British firm continued receiving lucrative DOD contracts despite having “many previous problems,” involving billing and performance practices. The senator also questions why the Pentagon kept pouring money into a “troubled” program that a separate federal audit had determined was likely ineffective.

Trump plans to force Taliban to negotiating table by January 2025 — Saying that he has unleashed the United States military and “taken the gloves off,” President Donald Trump reiterated today that he would crush the Taliban insurgency and force them to the negotiating table by January 2025, sources confirmed. Though he stressed that he was implementing a new Afghan war strategy not impeded by artificial time tables for troop withdrawals, Trump insisted that victory would be at hand sometime in the next eight years or so. “We’re about to turn the corner in this fight,” Trump told reporters in a press conference after he outlined a new strategy on Monday. In what he called a “fresh start,” Trump said that the US military would stamp out rampant corruption in the Afghan government, subdue Pakistani support for the Taliban, and achieve a flourishing democracy in the region by continuing to train Afghan security forces that have been sitting through PowerPoint presentations given by US troops for the past 16 years. Trump’s bold new plan would also pare back overly-restrictive rules of engagement that have held back soldiers on the ground from effectively targeting Taliban forces by killing innocent civilians. In a break from his predecessors, the president also outlined measurable objectives for success in Afghanistan, such as “win,” and “kill lots of terrorists.”  “You will not win a battlefield victory,” Secretary of State Rex Tillerson said on Tuesday in a warning to the Taliban, the militant group currently winning in Afghanistan. “We may not win one but neither will you,” he added, mistakenly disclosing the Pentagon’s highly-classified Kick Can Down The Road operations plan. The Pentagon plans to use a system for Afghanistan similar to the Bush administration’s color-coded Homeland Security Advisory System, which would soon allow Americans to track the level of winning in Afghanistan on a monthly basis.

 Mattis: US 'actively reviewing' sending weapons to Ukraine | TheHill: Defense Secretary James Mattis said Thursday that the Trump administration is “actively reviewing” whether to provide weapons to Ukrainians who are fighting Russian-backed rebels. “On the defensive lethal weapons, we are actively reviewing it,” Mattis said during a press conference alongside Ukrainian President Petro Poroshenko. “I will go back, now, having seen the current situation, and be able to inform the secretary of State and the president in very specific terms what I recommend for the direction ahead.” Mattis spoke during a visit to Kiev. He is the first Defense secretary to visit Ukraine since 2007 and his trip was timed to coincide with Ukrainian Independence Day, including participating in a ceremony to mark the occasion. President Trump’s handling of the Ukrainian conflict has been highly scrutinized given his vocal desire to improve relations with Russia and the ongoing probes into alleged collusion between his presidential campaign and Moscow. Several news outlets previously reported that the departments of Defense and State had recommended Trump send defensive weapons to Ukraine, such as Javelin antitank missiles. Congress has given the president the authority to send Ukraine so-called lethal aid as it fights Russian-backed rebels in its east. Former President Obama opted not to use that authority for fear of provoking Russia and worsening the conflict, and instead sent only nonlethal aid. Mattis on Thursday dismissed the idea that sending defensive lethal aid would be controversial. “Defensive weapons are not provocative unless you're an aggressor, and clearly, Ukraine is not an aggressor, since it's their own territory where the fighting is happening,” he said. 

US Navy Halts Pacific Fleet Operations As Historical Path Of Collided Warship Emerges -- Following the second collision of US warships in two months, the US Navy's Chief of Naval Operations (CNO) has calling for a comprehensive review of recent incidents in the Pacific in the wake of the USS John McCain collision with an oil tanker early Monday morning. In a video, Chief of Naval Operations Adm. John Richardson called for an "operational pause" with commands and leaders across the fleet, and a deeper look into the training and certification of forces operating in  the Navy's 7th Fleet - those in and around Japan. #BREAKING: Statement from @CNORichardson on #USSJohnSMcCain collision. Operational pause and comprehensive reviewed directed.pic.twitter.com/OQFy0RGEAu — U.S. Navy (@USNavy) August 21, 2017"I have directed fleet commanders to immediately conduct an operational pause with commands and leaders across the fleet, to ensure we are taking all appropriate immediate measures to enhance the Navy's safe and effective operation around the world.... This is the second major collision in the last three months, and is the latest in a series of major incidents, particularly in the Pacific theater," said Richardson. "This trend demands more forceful action."That review "will examine the process by which we train and certify our forward deployed forces in Japan to be ready for operations and war," according to Richardson. "This will include, but not be limited to, trends in operational tempo, performance, maintenance, equipment and personnel. It will also focus on surface warfare training and career development, including tactical and navigational proficiency." According to CBS, the investigative team will be diverse, including people from across the Navy (both officer and enlisted), and experts from outside the Navy and the private sector.

Top Pentagon posts 74 percent vacant as Congress returns — A handful of Pentagon nominees will be waiting for Senate confirmation when the upper chamber returns in September from its summer recess, but the administration still has dozens of Defense Department positions to fill.  After clearing partisan deadlock on health care reform, the Senate confirmed 65 nominees by unanimous consent. Those included investment banker Richard Spencer to be Navy secretary and former Textron CEO Ellen Lord to be undersecretary for acquisition, technology and logistics, roughly doubling the total to 15 confirmed out of 57 positions. That’s about 74 percent of Defense Department positions that need Senate confirmation yet to be filled. Nominees for the high-level jobs of Army secretary, undersecretary of defense for personnel and readiness, and undersecretary of defense for policy have yet to be confirmed. On the Senate’s to-do list are four Pentagon picks who were excluded from the pre-recess confirmation vote, which strongly suggests there are individual senators with concerns that have not been made public. Any senator may request a hold from his or her party leader, who typically will not disclose its origin. The stalled nominees, who all advanced out of the Senate Armed Committee in late July, are David Joel Trachtenberg, for principal deputy undersecretary of defense for policy; Charles “Cully” Stimson, for Navy general counsel; Owen West, for assistant secretary of defense for special operations and low-intensity conflict; and John H. Gibson II, for the Defense Department’s deputy chief management officer.  President Donald Trump has widely been criticized for his slow pace of filling jobs across the federal government, and ahead of the batch that included Lord, several defense firm CEOs vented that the delays at the Department of Defense have fueled uncertainty and slowdowns for their businesses.

 Tracking how many key positions Trump has filled so far - WaPo - The Post and Partnership for Public Service, a nonprofit, nonpartisan organization, are tracking more than 500 key executive branch nominations through the confirmation process. These positions include Cabinet secretaries, deputy and assistant secretaries, chief financial officers, general counsel, heads of agencies, ambassadors and other critical leadership positions. These are a portion of the roughly 1,200 positions that require Senate confirmation. The Senate can only act on nominations that have been formally submitted by the Trump administration. Those marked “awaiting nomination” above have been announced but not yet submitted, while those marked “formally nominated” are awaiting action by the Senate.

U.S. hits Chinese and Russian companies, individuals with sanctions for doing business with North Korea - The Treasury Department on Tuesday placed sanctions on Chinese and Russian individuals and firms that it said had conducted business with North Korea in ways that advanced the country’s missile and nuclear weapons program, part of a broad effort by the Trump administration to further isolate the regime. The sanctions against 10 companies and six individuals are designed to disrupt the economic ties that have allowed Pyongyang to continue funding its missile and nuclear program despite strict United Nations sanctions prohibiting it. It was the fifth set of U.S. sanctions related to North Korea this year, and the largest. In a related move, two legal complaints were filed Tuesday by the Justice Department seeking the forfeiture of $11 million from two of the sanctioned companies believed to have been laundering money on behalf of North Korea. The complaints, filed in the U.S. District Court for the District of Columbia, would represent two of the largest seizures of North Korean funds. The Trump administration has been trying to strengthen the economic vise on North Korea in an effort to persuade it to negotiate an end to its nuclear weapons development. Last month, the administration pushed a new round of sanctions against North Korea at the U.N. Security Council. In response, North Korea vowed retaliation “a thousand times over,” and Foreign Minister Ri Yong Ho declared that North Korea would never relinquish its ballistic missile and nuclear programs. 

 Treasury Slaps Sanctions On China, Russia Entities And Individuals Over North Korea - In a move that is certain to infuriate China further and result in another deterioration in diplomatic relations between Washington and Beijing, moments ago the United States slapped both Chinese and Russian entities and individuals with new sanctions in the Trump administration's escalating attempts to pressure North Korea to relent and stop its nuclear program and occasional missile launches. The Treasury Department's Office of Foreign Assets Control said it would target 10 entities and six individuals who help already sanctioned people who aid North Korea's missile program or "deal in the North Korean energy trade." The U.S. also aims to sanction people and groups that allow North Korean entities to access the U.S. financial system or helps its exportation of workers, according to the Treasury:The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 10 entities and six individuals in response to North Korea’s ongoing development of weapons of mass destruction (WMD), violations of United Nations (UN) Security Council Resolutions, and attempted evasion of U.S. sanctions.  Today’s sanctions target third-country companies and individuals that (1) assist already-designated persons who support North Korea’s nuclear and ballistic missile programs, (2) deal in the North Korean energy trade, (3) facilitate its exportation of workers, and (4) enable sanctioned North Korean entities to access the U.S. and international financial systems. As a result of the latest action, "any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them."

A Furious China Responds To Latest Sanctions: Demands "U.S. Immediately Correct Its Mistake" Or Suffer Retaliation -- Less than 4 hours ago, the US Treasury announced that in the the latest set of actions targeting North Korea's "WMD program", among the companies sanctioned would be several Chinese and Russian companies and individuals. We said that "what this latest round of sanctions will achieve, is to further anger Beijing and the local population." Well, we didn't even have to wait all day for China to respond on the next morning as it traditionally does, and according to Reuters citing an embassy spokesman, Beijing was so furious with the US "provocation" it did not even comply with its own protocol of waiting, and instead "urged" the U.S. to "immediately correct its mistake"' of sanctioning Chinese firms over North Korea, to avoid impact on bilateral cooperation.Since the US will not "correct its mistake", either "immediately" or at any time, China will have no choice but to escalate, in the process making any credible diplomacy involving North Korea impossible, forcing" America's hand when it comes to North Korea, now that the diplomatic option is out of the picture.And virtually assuring that there is no hope for a diplomatic resolution of the North Korean crisis, earlier today a North Korean envoy to a UN disarmament forum refused to negotiate its nuclear program, accusing the US and South Korea of using joint military drills to carry out “an aggressive war scenario” and “a secret operation” against the North’s leadership.“The DPRK will never place its self-defense nuclear deterrence on the negotiating table or step back from the  p ath it took to bolster the national nuclear force,” a North Korean diplomat stated at the UN disarmament forum in Geneva, as cited by Reuters.

China Launches Official Investigation Into US Intellectual Property Practices -- Last week, China bypassed the World Trade Organisation agreements and using an old law officially launched a probe into Americas intellectual property practices. China's foreign affairs minister, talking of America, stated that: "We’ve come to the conclusion that they’re in an economic war and they’re crushing us.” Reiterating this stance, a Chinese Communist Party spokesman went on to say:“The economic war with America is everything and we have to be maniacally focused on that.”“If we continue to lose it, we’re five years away, I think, 10 years at the most, of hitting an inflection point from which we’ll never be able to recover.”  China's president Xi Jinping explained things further:“It’s my duty and responsibility to protect the Chinese workers’ technology and industry from unfair and abusive actions.”   “We will stand up to any country that unlawfully forces Chinese companies to transfer their valuable technology as a condition of market access. We will combat the counterfeiting and piracy that destroys Chinese jobs.”   Actually, none of that happened. At least not that way around. Think about it for a minute. Put the shoe on the other foot and it seems outrageous... because, well, it is.

South Korea, U.S. at odds over next steps on free trade deal revisions  (Reuters) - South Korean and U.S. officials failed to agree on Tuesday on how to move forward on discussions over their five-year-old free trade agreement that Washington is seeking to change to help cut its trade deficit with Asia's fourth-largest economy. A one-day video-conference between U.S. Trade Representative Robert Lighthizer, South Korean Trade Minister Kim Hyun-chong and the trade pact's joint steering committee ended without a decision on the next steps for possible revisions. "We have found the two sides have different views on the free trade agreement and have not reached any agreement," Kim told a news conference after the meeting. A USTR spokeswoman said proposals were exchanged and conversations on the topic will continue. U.S. President Donald Trump told Reuters in April that the agreement known as KORUS was a "horrible deal" and pledged to renegotiate or terminate the accord. In a statement issued in Washington, Lighthizer said that since KORUS went into effect in 2012, the U.S. trade deficit with South Korea has more than doubled to $27.6 billion last year, and that Seoul's non-tariff barriers to U.S. goods were a problem. "Unfortunately, too many American workers have not benefited from the agreement," Lighthizer said. "USTR has long pressed the Korean government to address burdensome regulations which often exclude U.S. firms or artificially set prices for American intellectual property. This negotiation offers us an opportunity to resolve these and other barriers."

Egypt Snubs Kushner, Cancels Meeting After US Yanks $300 Million In Aid -- Trump's son-in-law and the White House "global peace" adviser, Jared Kushner, arrived in Cairo on Wednesday only to learn that his top-level meeting with Egyptian officials had apparently been cancelled, as Egypt lashed out at the Trump administration's decision to slash aid to the country. One day after Reuters reports that the US canceled (or at least delayed) nearly $300 million in aid meant for Egypt on the grounds that its strongman ruler Abdel Fattah al-Sisi "hasn’t been respecting human rights and democratic norms" the Egyptian government responded by canceling a meeting between its foreign minister and Trump son-in-law Jared Kushner that was set for today. Kushner is famously responsible for the administration’s dealings in the Middle East. However, President Abdel Fattah al-Sisi’s office said the president would still meet the U.S. delegation, led by Kushner, later in the day as scheduled, according to Reuters.Top Egyptian officials believe the US’ decision to deny the aid package was "insensitive" to the valuable strategic relationship that the two countries have shared for decades. Or, simply stated, Egypt wants the periodic handouts established under the Obama administration to continue.In a statement released Wednesday, just prior to the confusion over Kushner's meetings with the foreign minister, the Ministry of Foreign Affairs hinted that the significant reduction in aid money from Washington could impact cooperation in many areas, and that withdrawing the aid money lacked “an accurate understanding of the importance of supporting Egypt’s stability. "Egypt considers this step as a misjudgment of the nature of the strategic relations that binds the two countries over decades," the ministry statement said. "It also underestimates the size and nature of the economic and security challenges facing the Egyptian people, and implies a mixing of cards that may have negative repercussions on achieving Egyptian-American common interests."

Senate Declares War On Assange --An angry Julian Assange slammed efforts to officially classify his whistleblowing organization as a "non-state hostile intelligence service", decrying it as an attempt to put the "Pompeo Doctrine" into law. In its annual "intelligence authorization", the Senate Intelligence Committee proposed to effectively declare WikiLeaks a terrorist media organization.“It is the sense of Congress that WikiLeaks and the senior leadership of WikiLeaks resemble a non-state hostile intelligence service often abetted by state actors and should be treated as such a service by the United States,” the bill states. Published on Friday, the Senate committee passed the bill late last month on a 14-1 vote, with only Democrat Ron Wyden of Oregon voting against the measure, citing “legal, constitutional and policy implications” that the WikiLeaks provision may entail.In response, Assange tweeted a statement slamming the “absurd” decision to brand a media organizations in such a way.“It is equivalent to suggesting that the CIA is a media organization. Publishers publish what they obtain. Intelligence agencies do not.”My statement responding to the U.S. Senate Intel Committee's attempt to place the "Pompeo doctrine" into law.More: https://t.co/ZmZenqzh7k pic.twitter.com/Kra0T7jSID — Julian Assange ???? (@JulianAssange) August 23, 2017

Mystery Deepens After US Confirms 16 Diplomats Suffered "Traumatic Brain Injury" In Cuban 'Sonic Attack' --One of the most bizarre stories this week took a more sinister turn yesterday as the USState Department officially confirmed 16 US Government employees were affected by health attacks in Cuba. State Department spokesperson Heather Nuarte calmly explained the details, which are quite frankly stunning....@statedeptspox: We can now confirm that at least 16 USG employees were affected by attacks in #Cuba pic.twitter.com/UEy1PJ7bXt — Department of State (@StateDept) August 24, 2017 And yet most of the mainstream media seems loathed to cover this!?  CBS News, however, did some digging, discovering from a review of medical records that the American and Canadian diplomats in Cuba have been diagnosed with mild traumatic brain injury - and central nervous damage - after an apparent attack with a sonic weapon targeted their homes.The diplomats complained about symptoms ranging from hearing loss and nausea to headaches and balance disorders after the State Department said"incidents" began affecting them beginning in late 2016.A number of diplomats have cut short their assignments in Cuba because of the attacks.The source says American diplomats have also been subjected other types of harassment including vehicle vandalization, constant surveillance, and home break-ins.As Axios reports, The State Department hasn't explicitly identified the source of the attack or what person or entity might have carried it out."We hold the Cuban authorities responsible for finding out who is carrying out these health attacks on not just our diplomats but, as you've seen now, there are other cases with other diplomats involved," Secretary of State Rex Tillerson told reporters earlier this month. The Cuban government has denied any involvement with the incident.

Rebranding Nafta -- As talks to revise the North American Free Trade Agreement start in Washington, it still isn't clear whether President Donald Trump wants to dismantle the pact -- "the worst trade deal maybe ever signed anywhere," he's called it -- or merely rebrand the same basic product under his own name. With any luck, it will be the latter. The administration's negotiating goals, published last month, don't rule this out. It's even possible that the agreement can be improved here and there, bringing it up to date with current trading conditions and strengthening its support for cross-border competition and efficiency. The main thing, though, is to avoid a breakdown that puts the existing arrangements in jeopardy. This risk arises because Trump has repeatedly said that trade deals only serve U.S. interests if they reduce the country's current-account deficit. This is simply wrong -- and if it becomes his litmus test for the new Nafta, the talks could easily do serious harm. Trade agreements don't drive trade imbalances. Their purpose is to foster competition -- hence greater efficiency, higher productivity and rising living standards. Make that the test of the new pact, and the talks present an opportunity to make a good agreement better. The U.S. says it wants stronger labor and environmental standards, and better protections for intellectual property. Those ideas -- built into the proposed Trans-Pacific Partnership, by the way, which the U.S. abandoned -- are worth pursuing. And seeking formal rules on currency manipulation shouldn't do much harm, because the issue hasn't arisen in North American trade; this too could set a useful precedent for future trade agreements.There are two main hazards. The U.S. says it wants to weaken Nafta's dispute-settlement system, which would make it easier to take unilateral action against trade practices the U.S. deems unfair. The U.S. also wants governments to have more latitude to prefer local over foreign suppliers when it comes to their own procurement. The first of these, especially, might be capable of wrecking the talks. Canada has objected strenuously to the idea, and rightfully so. Resolving disputes through arbitration rather than unilateral sanctions is a core tenet of liberal trade. 

NAFTA Negotiations Start in Secrecy, despite Fake Promises of Transparency. Lobbying Heats Up -  Wolf Richter - The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations “classified” and they’ll be cloaked in secrecy. But corporate lobbyists have access. And they’re all over it. The Electronic Frontier Foundation put it this way: Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018. But during his confirmation hearing in March, Lighthizer had promised to make the negotiations transparent and to listen to more stakeholders and the public. All of them were fake promises. The negotiations and the texts are classified and secret, and unless something is leaked, Americans (along with Canadians and Mexicans) will not know what is being negotiated at their expense. But lobbyists have access, and they’re being listened to. One big topic is the inclusion of an Investment State Dispute Settlement (ISDS) procedure.This is important for Big Oil, as represented by the American Petroleum Institute, which said in its brief that “NAFTA must include Investor-State Dispute Settlement.” It called ISDS “a neutral, international arbitration procedure” that “is necessary to ensure that, when US oil and natural gas companies invest abroad, they can seek protection for their investments if they do not have access to developed and independent court systems.” ISDS is an arbitration procedure outside of the national court system. Its rulings force legislatures to change laws in favor of foreign corporations, and the courts are helpless.

What Would a Better NAFTA Look Like? -- The North American Free Trade Agreement (NAFTA), which lays out rules for how companies in Mexico, Canada, and the United States cross borders to do business, has become something of a punching bag. As a candidate, Donald Trump called it a “disaster.” So did Bob King, the former president of the United Auto Workers. “For countless Americans, this agreement has failed,” Robert Lighthizer, the U.S. Trade Representative, said in a statement Wednesday morning, as he joined representatives from Canada and Mexico to renegotiate the trade deal. Among the complaints: NAFTA made it easier for companies to outsource jobs to Mexico, which led to lower wages for the American workers competing for the work that was left.Todd Tucker, a fellow at the left-leaning Roosevelt Institute, has proposed that countries agree to let labor take disputes to independent arbitrators, in a similar procedure to the ISDS mechanisms. “You have to have this as an explicit objective, at least of co-equal importance, to simply reducing the cost of doing business and investing across borders,” Rodrik told me. “Ultimately you want to give workers and other segments a much greater voice in the way their economy is managed.” It’s not just labor that should have more say in trade agreements, argues Tucker. Right now, for all their import, trade agreements are largely negotiated behind closed doors, and in the U.S., states and other local entities are not involved. Canada, by contrast, allows provincial governments to sign off on segments of trade deals that affect them specifically, Tucker said. When the European Union negotiates trade agreements, each national government gets veto power, and specific regions have veto power over their country’s sign-off. Many progressive groups say trade negotiations in the U.S. should be more transparent, because state and local groups would benefit from knowing exactly what is being negotiated. “In an ideal world, this process would move in tandem with a domestic conversation,” Rodrik told me. The AFL-CIO’s trade and globalization policy specialist, Celeste Drake, has suggested sharing individual provisions and text with the public and with Congress.

U.S. did not detail request for auto rules of origin at NAFTA talks: source (Reuters) - In the opening NAFTA session of talks, the United States did not give precise details of how much it wanted to boost North American content for autos, a source directly familiar with the negotiations said on Saturday. Robert Lighthizer, President Donald Trump's top trade adviser, this week said Washington wanted tougher rules of origin for autos, which determine how much of a vehicle must be built in the three NAFTA nations. He also said the United States was seeking new measures to ensure "substantial U.S. content" for autos. Companies wishing to take advantage of free trade in goods guaranteed by NAFTA must currently meet the 62.5 percent North American content requirement for autos and 60 percent for components. But during the opening four-hour round of talks on rules of origin on Friday, the U.S. delegation did not give details of how much it wanted the requirements to be lifted by. It also did not give a specific figure for what substantial U.S. content for autos could mean, said the source, who asked not to be identified because of the sensitivity of the matter.Agreement on a revised NAFTA agreement could pivot on the autos sector given its weight in trade. The United States had autos and auto parts trade deficits of $74 billion with Mexico and $5.6 billion with Canada last year, both major components of overall U.S. goods trade deficits with its North American neighbors. 

U.S. signals Trump’s Buy American agenda non-negotiable in NAFTA talks — The U.S. appears to be signaling that President Donald Trump's vow to aggressively promote a "buy American, hire American" agenda is not open to discussion during negotiations on a new North American Free Trade Agreement.The Trump administration has served notice that it's dealing with the issue outside NAFTA.While it's being pulled in one direction by Canada and Mexico, urging it to reduce Buy American rules for public-works contracts, and in the other direction by domestic U.S. politicians seeking an increase in Buy American, the administration has issued a reminder that it's working on a separate path.The U.S. government posted a notice seeking public comment on the costs and benefits of trade agreements on the operation of Buy American laws in government procurement, which appeared just as negotiators were huddled in Washington for the opening round of NAFTA talks.It flows from an executive order Trump signed earlier this year designed to make maximum use of Buy American rules. The order instructed government departments to perform studies within five months, with a report due to the president by Nov. 24. A notice is now inviting public comment for this report. The notice from the Department of Commerce and the U.S. trade czar has just appeared online and is to be officially posted on the U.S. federal register on Monday, seeking industry submissions by Sept. 18.

NAFTA Opening Round Fissures Over The Meaning Of "Substantial": What's The Best And Worst That Can Happen? – Mish - Trump is bound and determined to have his way in NAFTA negotiations whether or not anyone agrees with him. Ironically, not even the auto manufacturers do. The first round of negotiations, now underway, has hit a snag already. The meaning of “substantial” is in play. The Wall Street Journal reports U.S., Canada and Mexico Wrap Up Nafta First Round.Opening-round talks to remake the North American Free Trade Agreement revealed early fissures dividing the U.S. from Mexico and Canada, including a Trump administration proposal to require a “substantial” portion of autos and auto parts produced under the pact be made in the U.S.The renegotiation of the trade deal, which was one of President Donald Trump’s main campaign promises and a key pillar of his “America First” agenda aiming to revive U.S. manufacturing and reduce the country’s trade deficit, is likely to face many hurdles. Auto makers in all three nations generally oppose the stricter rules floated by the U.S. negotiator, and pro-business lawmakers in Congress don’t want to see the pact significantly altered.Early tensions over areas such as the so-called rules of origin—a major issue for the automotive industry—signaled the tough bargaining that lies ahead as the three nations try to wrap up a deal by early next year.The chief U.S. negotiator, Robert Lighthizer, came into the talks Wednesday saying the U.S. would insist on tightening the rules of origin, and adding a provision covering U.S. production, an idea quickly dismissed as unworkable by Mexican and Canadian officials.At this early stage of the talks, it is difficult to measure the depth of the disagreement. Opening rounds generally set the tone and schedule for negotiations. The U.S. has yet to release specifics on some of its most controversial positions, including measures to reduce the U.S. trade deficit, prevent currency manipulation, favor U.S. companies in government contracts, known colloquially as Buy America, and rework rules governing arbitration panels.The U.S. feels that its most significant leverage in the talks is Mr. Trump’s threat to withdraw from Nafta if the U.S. doesn’t get the changes it wants. North American trade is far more significant to the Canadian and Mexican economies than it is for the U.S.Mexican negotiators say they are prepared to scrap Nafta rather than accede to demands they consider harmful to their economy.  The best thing that can possibly happen is the trade talks collapse and Trump backs down on his promise to revoke the deal.  The worst is the trade talks collapse, Trump abandons NAFTA and starts a global trade war.

Red lines are drawn as NAFTA Round 1 closes - Canada, Mexico and the United States have their work cut out as they negotiate over the coming months a new North American Free Trade Agreement that all three countries can agree on. The five-day opening round, which wrapped up on Sunday, exposed deep differences among the three countries on areas including rules of origin, dispute settlement and trade deficits. It also cast doubt on all three countries’ shared goal of wrapping up talks later this year or early in 2018.  There was no indication from Canada or Mexico, however, that either was preparing to bolt from the table. Mexico sent a 150-person private-sector delegation to show support to its government. And all three countries said in a joint statement on Sunday afternoon that the scope and volume of proposals discussed throughout the first round “reflects a commitment from all three countries to an ambitious outcome.”“While a great deal of effort and negotiation will be required in the coming months, Canada, Mexico and the United States are committed to an accelerated and comprehensive negotiation process that will upgrade our agreement and establish 21st century standards to the benefit of our citizens,” the joint statement said. U.S. Trade Representative Robert Lighthizer did begin the negotiations “by putting the knife and the gun on the table,” in the words of one lobbyist. The U.S. also set out an aggressive schedule of negotiations covering 18 different issue or chapter areas. It also set out upward of 10 new proposals to modernize existing chapters or create new ones, according to sources with knowledge of the talks. Up next for negotiators, then, will be the tedious work of consolidating various country-specific positions into a single text. Read the full rundown from Pro Trade’s Doug Palmer and Adam Behsudi here.

Nafta Nations Say Quick Deal on Table as Inaugural Talks End -- The U.S., Mexico and Canada ended the first round of talks on a new North American Free Trade Agreement saying they’re committed to wrapping up the negotiations quickly with a far-reaching deal. “While a great deal of effort and negotiation will be required in the coming months, Canada, Mexico and the United States are committed to an accelerated and comprehensive negotiation process that will upgrade our agreement and establish 21st century standards to the benefit of our citizens,” the countries said in a statement Sunday, after five days of discussions in Washington. The next round of negotiations is scheduled for Sept. 1-5 in Mexico, with talks moving to Canada in late September and back to the U.S. in October. Additional rounds are being planned “for the remainder of the year,” the countries said. The joint statement reinforces the notion that the three nations are seeking a quick deal before politics overtakes the agenda next year. Mexico will hold a general election next July, while U.S. Congressional mid-terms are scheduled for November 2018. The opening round got off to a tense start last week, when U.S. Trade Representative Robert Lighthizer served notice the U.S. wouldn’t accept a modest “tweaking” of a trade deal that President Donald Trump believes has failed Americans. While U.S. trade with its Nafta partners has more than tripled since the agreement took effect in 1994, Trump blames the pact for gutting U.S. manufacturing and sending factory jobs to Mexico. Trade experts weren’t surprised by the cautious sense of optimism in the joint statement. “Despite good intentions, this Nafta renegotiation may be more akin to a lengthy process of couples therapy than a quick exercise in speed dating,”

Renegotiating NAFTA is putting lipstick on a pig -- EPI Blog -- The first round of the Trump administration’s NAFTA renegotiations began in Washington wrapped up on Saturday. The negotiators will meet again in September in Mexico City and then again in October in Canada. The United States has not yet proposed any specific measures on important issues such as labor rights, currency manipulation, or rules of origin. By all accounts, these negotiations are more likely to hurt than help most working Americans, who would be better served by efforts to target countries with large, global trade surpluses such as China, the European Union (EU) and Japan. Rather than tinkering around the edges of NAFTA, the United States should begin a campaign to realign the U.S. dollar and rebalance global trade. Over its first 20 years, growing trade deficits with Mexico and Canada from the North American Free Trade Agreement (NAFTA) eliminated 850,000 U.S. jobs, most of them in manufacturing. (American workers suffered far more after China entered the World Trade Organization in 2001, including 3.4 million jobs lost through 2015 alone, due to growing trade deficits with that country.) And trade deficits and job losses are just the tip of the iceberg of the devastation wreaked by bad trade deals, which have also driven down the wages of all 100 million American workers without a college degree, who have suffered losses of just under $2,000 per year for each median wage, full-time worker. Roughly $200 billion per year is being taken from the pockets of working people and middle class families, because the super-rich and huge corporations have been able to game the system at their expense. NAFTA has created the economic equivalent of a 14-lane freeway to Mexico, paving the way for the outsourcing of jobs and factories to Mexico. In the past twenty years, the U.S. has lost more than 87,000 factories (manufacturing establishments), wiping out nearly one-third of U.S. manufacturing production capacity. Tweaking NAFTA around the edges is not going to change those dynamics. As EPI founder Jeff Faux recently explained, NAFTA created “radical new rules for trade…that shifted the benefits of expanding trade to investors and the costs to workers.” The system that created this deal to benefit rich executives and multinational companies is still in place and if anything, tilts even further in their interest in an administration lead by former Goldman Sachs executives Gary Cohn (Trump’s chief economic advisor) and Treasury Secretary Steve Mnuchin.

 The great NAFTA tomato debate -- NAFTA talks have sparked a war in the produce industry as the Trump administration is expected to push forward with a proposal that exposes a deep regional fault line among growers. That proposal was supposed to hit the table during the first round of talks last week, but it was not formally offered during the first negotiating round, two sources with knowledge of the process told POLITICO. The last-minute changeup was due to congressional discomfort over not having enough time to review language that would have deep implications for U.S. trade remedy law, one source said. It is expected to be submitted during a future round of talks, which resume Sept. 1 in Mexico City. The Trump administration has already broadcast in its negotiating objectives its desire to see the proposal through. The idea aims to make it easier for American growers to bring a case against Mexico for selling produce at unfairly low prices when crops like blueberries or tomatoes are in season in a particular region. Growers would be able to bring anti-dumping and countervailing duty cases by domestic region and draw on seasonal data, a departure from current trade law that requires a majority of the industry nationwide to wield at least three years of annual data to prove injury. Critics argue such protections would fundamentally alter the nature of the free trade agreement for agricultural producers, potentially setting up a slippery slope where Mexico would have incentive to retaliate. “It’ll be hard to square this with the ‘do no harm’ mantra,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, referring to a slogan the U.S. agriculture industry and Agriculture Secretary Sonny Perdue has repeated often in reference to NAFTA 2.0. “There’ll clearly be American farmers as well as distributors who will complain bitterly about this.” Read the full story from Pro Agriculture’s Helena Bottemiller Evich and Catherine Boudreau.

Trump can't withdraw from NAFTA without a 'yes' from Congress | TheHill: The renegotiation of the 1993 North American Free Trade Agreement begins this week. President Trump has threatened that if he does not achieve his goals, he will terminate U.S. participation in NAFTA. But he does not understand, or admit, that he cannot do it on his own. Many in Congress fear that termination would cause economic upheaval, loss of jobs, and losses to firms, not to mention higher prices for U.S. consumers. NAFTA is a reciprocal agreement by which Mexico and Canada reduce barriers to our exports in exchange for the U.S. reducing barriers to their exports. This means that U.S. industries that export goods and services to Mexico or Canada — and the workers in those industries — would be hurt by any termination of NAFTA. Many members of Congress work under the fundamental misunderstanding that the president has the power, on his own, to terminate NAFTA. They are unaware that under the Commerce Clause of the Constitution, while the president is the negotiator and signer of trade agreements, he is not the “decider.” Power to approve, and to terminate U.S. participation in, trade agreements is assigned to Congress. While the president, under the Constitution, is the main spokesperson and negotiator for the U.S., the Constitution says, and the Supreme Court has affirmed, that this does not mean that the president dictates our foreign policy. The president has power in foreign relations that varies under the Constitution according to the context. Pursuant to the Commerce Clause, the president is at his weakest in the field of trade. The president and Congress have been misled by the conventional wisdom among some constitutional scholars, which holds that the president has authority to terminate U.S. treaties in all fields, despite lacking the power to make treaties by himself. This conventional wisdom is based on identification in practice of instances in recent history in which the president has terminated some treaties without congressional approval. 

Trump targets tax reform to reconnect with Republicans -- The Trump administration has decided to push hard for tax reform and dial down a controversial national security investigation into steel imports in a bid to swing Republican support behind the president after the turmoil of recent weeks, according to senior officials.   Past efforts to bring order to the Trump administration and its policymaking have struggled largely because of the president’s propensity to derail plans with a single riff on Twitter.   But senior people within the White House insisted that the exit last week of Steve Bannon, Mr Trump’s chief strategist and architect of his nationalist economic stance, cleared the way for a more streamlined policy process. These officials said they were determined to record quick wins in the weeks ahead, with tax reform seen as the best candidate to score what would be the president’s first major legislative gain and repair relations with the business community.

Trump’s team and lawmakers making strides on tax reform plan - POLITICO: President Donald Trump’s top aides and congressional leaders have made significant strides in shaping a tax overhaul, moving far beyond the six-paragraph framework pushed out in July that stoked fears about their ability to deliver on one of the GOP’s top priorities. There is broad consensus, according to five sources familiar with the behind-the-scenes talks, on some of the best ways to pay for cutting both the individual and corporate tax rates.  The options include capping the mortgage interest deduction for homeowners; scrapping people's ability to deduct state and local taxes; and eliminating businesses' ability to deduct interest, while also phasing in so-called full expensing for small businesses that allows them to immediately deduct investments like new equipment or facilities. Whether this early level of agreement can translate into an actual tax plan that can pass both the House and Senate remains an open question, especially as the administration finds itself distracted by the fall-out from Charlottesville; personnel shake-ups in the West Wing; and the ongoing investigations into Russian interference in the 2016 presidential campaign. The White House, Treasury Department and congressional leaders also have yet to resolve major philosophical questions, like whether a tax bill should add to the deficit and whether any tax cuts should be permanent, among other questions. Some stakeholders say the signs of progress are a relief, even if a deal is far from done.

GOP Eyes Budget Maneuver to Allow $450 Billion More in Tax Cuts -- A growing number of key congressional Republicans are considering a controversial maneuver that would allow for about $450 billion of tax cuts without offsets, according to four congressional aides familiar with the discussions. Under the proposal, the GOP would not account for things like expiring tax breaks when gauging the budgetary impact of tax legislation -- giving tax writers more room for cuts. Senate budget and tax panels are discussing the move to a “current policy” baseline -- instead of the standard “current law” baseline -- said the people who asked not to be identified because the discussions are private. The chief House tax writer, Kevin Brady, also signaled openness to the approach last month, saying it would lead to deeper tax cuts. The switch would risk a backlash from Democrats and deficit hawks. “This decision would represent a huge break in precedent, would weaken budget discipline to allow Congress to add over half a trillion dollars to the debt,” the nonpartisan Committee For a Responsible Federal Budget said in a letter earlier this month. 

House Speaker Paul Ryan gets innovative in spreading misleading international tax comparisons --During a town hall on Monday, House Speaker Paul Ryan trotted out a standard and misleading talking point, claiming that the international competitiveness of U.S. corporations is damaged by an allegedly too-high corporate income tax rate.“I was just meeting with a father/son business in—I was doing office hours in Janesville today. I met with a father/son business in—down in south central Wisconsin. I don’t want to tell their names because I don’t want to, you know, get them grief. But down in Genoa City, they have an electricity business. They make electrical parts for Snap-on and other companies.Their biggest competitor is Canada, a company in Canada. Their tax rate—they’re a corporation, small business, 35 percent. You know what the Canadian tax rate is? Fifteen percent. Eight out of 10 businesses in America file their taxes as people, as individuals. We call them, like, Subchapter S corporations, LLCs. Their top effective tax rate is 44.6 percent. Canadians are at 15 percent. The Irish at 12.5 percent. China, 25 percent.”As I noted a couple weeks ago, the most common version of this talking point just compares the statutory U.S. corporate tax rate to the statutory corporate rate in other countries. This is already awfully misleading because what corporations actually pay (their effective rate) is far less than the 35 percent s tatutory rate, thanks to a corporate tax code riddled with loopholes. It’s hard to come up with an exact number, but studies have found effective federal corporate tax rates ranging between 12.5 and 19.4 percent—a far cry from 35 percent.

US Futures Spike After Gary Cohn Promises Tax Reform By Year End -- Having hugged the flatline for much of the overnight session, S&P futures have spiked after the FT released an exclusive interview with Gary Cohn shortly after 5am ET this morning, in which Trump's chief economic advisor (and most likely future Fed chair) said that Trump's agenda and calendar "is going to revolve around tax reform" starting next week, assuring passage by year's end. Cohn explained that in the next three or four weeks, the tax bill will be written in the ways and means committee and Congress is "going to own" the writing of legislation. As a result, reform "can pass both of the tax committees and both chambers in 2017."  “Starting next week, the president’s agenda and calendar is going to revolve around tax reform,” Cohn said “He will start being on the road making major addresses justifying the reasoning for tax reform and why we need it in the US.” Cohn also laid out the coming calendar, with kick-off set for next Wednesday, August 30, in Missouri when Trump will deliver a speech which will be "the first in a series of addresses designed to convince the US public about the need to revamp a tax system that has remained largely unchanged for three decades." Confirming the recent Axios report which sent stocks surging earlier this week, Cohn said that the tentative framework has been already agreed upon with  "key Republicans on Capitol Hill — House Speaker Paul Ryan, Senate majority leader Mitch McConnell, and Kevin Brady and Orrin Hatch, the heads of the congressional tax-writing committees — had agreed a framework that would serve as the basis for a bill that will be hammered out over coming weeks."

Credit unions defend tax exemption in meeting with Mnuchin — Credit union executives defended the credit union tax exemption during a meeting Tuesday with Treasury Secretary Steven Mnuchin.  Mnuchin is leading the Trump administration’s tax reform efforts and credit union advocates are fearful policymakers could target their exemption from federal taxes. During the meeting, the National Association of Federally-Insured Credit Unions presented a January 2017 study that found "removing the credit union tax exemption would actually cost the federal government $38 billion in lost income tax revenue over the next 10 years.”The study also concluded that 900,000 jobs would be lost over the next 10 years without the exemption and that consumers save $16 billion annually because of their credit union membership.  The NAFCU delegation also discussed housing finance reform, regulatory relief and business lending restrictions with Treasury.NAFCU has called for the inclusion of an explicit government guarantee in any housing finance reform efforts as well as recapitalizing Fannie Mae and Freddie Mac. It has also favored loosening lending rules that would allow credit unions to make more business loans by doubling the business lending cap to 27.5%. Credit unions are also seeking an exemption from oversight by the Consumer Financial Protection Bureau.

Interior senior executives left in the dark amid reorg, reassignments - Some of the Interior Department’s longest-tenured and most experienced career executives say they’re feeling undervalued and overlooked as the agency begins a major effort to restructure and reorganize. Their criticisms come as Interior political leadership charges forward with a major reorganization effort that includes the reassignment of 30-to-50 senior executives back in June and another round of job transfers expected in the next few weeks. Multiple sources say the new reassignments are expected to focus on filling current position gaps in the department.One reason for the timing of the second round may be related to the arrival of David Bernhardt, who now is serving as Interior’s deputy secretary, several sources said. The Senate confirmed Bernhardt July 24. But for several members of Interior’s Senior Executive Service, the reassignments themselves sting less than how the department is going about its decisions. Several Interior sources told Federal News Radio that the most recent round of reassignments created a “chilling effect” in the department, and they fear how the reorganization effort will impact the workforce when the department’s executive cadre has had “absolutely no involvement whatsoever” in crafting the agency’s plans. “[Secretary Ryan Zinke’s career] executive team, his folks that are running his bureaus, have had no input, no review and no consultation,” said one executive on the West Coast who received and accepted a reassignment and requested anonymity because the executive didn’t get permission to speak to the press. There’s been “complete radio silence” from Interior leadership about its plans for the reorganization, said Joel Clement, who filed an official complaint to the Office of Special Counsel about his reassignment from the director of the Office of Policy Analysis to a senior adviser position at the Office of Natural Resources Revenue.

Wave of resignations hits Commerce Department’s board of ‘digital economy’ advisers - More business executives are departing en masse from Trump administration advisory positions, with a new set of resignations from a Commerce Department advisory board following an exodus from two business groups advising the White House, which then disbanded both of them. More than half of the members of the 15-person Digital Economy Board of Advisors, an expert board set up last year by the Obama administration to help the federal government navigate the digital economy, are known to have resigned this week in the wake of President Donald Trump's controversial comments about the violence last week in Charlottesville, Va., that left one person dead. Those no longer participating as of today include co-chairs ZoĆ« Baird, president and CEO of the Markle Foundation; Mitchell Baker, executive chairwoman of the tech organization Mozilla; David L. Cohen, senior vice president and chief diversity officer at Comcast; Brad Smith, Microsoft president and chief legal officer; Handy CEO Oisin Hanrahan; Karen Bartleson, president of the Institute of Electrical and Electronics Engineers; Marta Tellado, president and CEO of Consumer Reports; James Manyika, director of the McKinsey Global Institute; Sonia Katyal, chancellor’s professor of law at the University of California at Berkeley School of Law; and Corey Thomas, president and CEO of cybersecurity firm Rapid7. Their departures amplify the increasing rift between private sector advisers and the Trump White House. The departures differ from those from the White House advisory groups because they mark a case of outside experts distancing themselves not simply from the White House or Trump, but from a federal agency.

Members of Trump's arts commission spell R-E-S-I-S-T in memo announcing mass resignations - The President's Committee on Arts and Humanities announced that it was disbanding Friday following President Donald Trump's statements on violence during a white supremacist rally in Charlottesville Saturday. Writer Jhumpa Lahiri, "Jersey Boys" actor John Lloyd Young, lawyer Vicki Kennedy, and actor Kal Penn, among others, signed a letter calling out Trump's "hateful rhetoric" and "support of the hate groups and terrorists" that came out to protest in Charlottesville on August 12.  The letter, which was signed by all 16 of the committee's members, says that they will be resigning from their position in the White House and called on Trump to do the same.  To drive home the point, the members spelled out the word "resist" with the first letter of the six paragraphs that make up the memo.

Trump’s evangelical panel remains intact as others disband. Here are his religious cheerleaders --Donald Trump was forced to disband two business advisory councils and an infrastructure panel after some of America’s most prominent business leaders fled their posts, protesting against Trump’s statements appeasing white nationalist marchers at the weekend rally in Charlottesville, Virginia.   But the president’s religious evangelical advisory board, a mix of radical born-again preachers, televangelists and conservative political influencers, still stands almost intact. Not only have members avoided criticism of the president, while occasionally scolding the violence in general – some have been openly supportive of Trump’s statements assigning blame “on many sides” and slamming those who turned up to oppose the militant neo-Nazis.  Jerry Falwell Jr tweeted on Wednesday: “Finally, a leader in the White House. Jobs returning, North Korea backing down, bold truthful statement about Charlottesville tragedy. So proud of Donald Trump.”    Council member, preacher and Fox News commentator Robert Jeffress told a Christian TV channel: “Racism comes in all shapes, all sizes and, yes, all colors. If we’re going to denounce some racism, we ought to denounce all racism.”  Here are the members of the president’s panel of ultra-conservative religious cheerleaders.

Who Is Lobbying Mike Pence And Why? Health Insurers and Big Oil Seek To Influence Vice President -- Mike Pence has been among the Trump administration’s most prominent voices pressing to replace the Affordable Care Act, repeal post-crisis financial regulations, privatize American infrastructure and promote fossil fuels. Those positions would benefit the industries that have been directly lobbying Pence since he was elected vice president, according to federal documents reviewed by International Business Times.Amid speculation that Pence could mount his own presidential bid — or replace Trump if he leaves office early — the former Indiana governor and U.S. congressman has been directly lobbied by major health care and drug companies, Wall Street firms, oil and gas interests and industry groups interested in shaping a federal infrastructure privatization initiative. Pence’s office has also been lobbied by his former congressional chief of staff on behalf of insurance, defense contracting and telecommunications companies — and that lobbying revolved around health care policy, defense spending and net neutrality. Pence has enthusiastically backed the policies by the lobbying firms.While other vice presidents have been the target of lobbying in the past, Pence has been viewed as one of the most powerful vice presidents in recent history. He is a longtime politician serving a president with no experience in elected office, and during his vice-presidential selection process, Trump was reportedly offering potential running mates a vast policy portfolio to oversee. Pence also oversaw Trump’s White House transition, which shaped the administration’s personnel decisions and many of its policy proposals. Companies that have lobbied the vice president have spent tens of millions of dollars in total federal lobbying so far this year. Here is a deeper look at the major industries lobbying him — and what exactly they have been pushing for in their efforts to influence the vice president.

 Govs. Hickenlooper, Kasich Ready To Release Health Plan 'Within A Week' -- Staff for Colorado Gov. John Hickenlooper, a Democrat, and Ohio Gov. John Kasich, a Republican, are working on a joint plan to stabilize the country's health insurance markets, which they see as a key first step to broader health care reform. Kasich told Colorado Matters that they expect to release it ahead of September hearings in the U.S. Senate. They also intend to get other governors from both parties to sign onto the plan, to show support at the state level. "We're getting very close. I just talked to my guys today, men and women who are working on this with [Hickenlooper's] people, and we think we'll have some specifics here, I actually think we could have it within a week," Kasich said in a Monday joint interview with Hickenlooper. The plan will flesh out a set of principles the two men wrote about in an op-ed in The Washington Post, where they said another one-party health care plan is "doomed to fail," just like the Republican plans considered this year. "I'm not going to get into specifics with you until we have it all ironed out, but it's not going to be some pie-in-the-sky, way up there kind of stuff. There will be things that we will address that will have specific solutions. And one of the things we're finding out is the states do have some power to do some things unique to them, as long as these insurance markets are going to be stabilized," Kasich said.One specific they agree on and would discuss: Their desire to change the Affordable Care Act mandate that employers with 50 or more employees provide insurance coverage. The governors say that number is too low, which deters hiring at small companies. They also agree that the possibility of national single-payer coverage is not on the table in their discussions.

Bernie Sanders: Why Medicare-for-All Is Good for Business - Fortune -Despite major improvements made by the Affordable Care Act (ACA), our health care system remains in crisis. Today, we have the most expensive, inefficient, and bureaucratic health care system in the world. We spend almost $10,000 per capita each year on health care, while the Canadians spend $4,644, the Germans $5,551, the French $4,600, and the British $4,192. Meanwhile, our life expectancy is lower than most other industrialized countries and our infant mortality rates are much higher. Further, as of September 2016, 28 million Americans were uninsured and millions more underinsured with premiums, deductibles, and copayments that are too high. We also pay, by far, the highest prices in the world for prescription drugs. The ongoing failure of our health care system is directly attributable to the fact that it is largely designed not to provide quality care in a cost-effective way, but to make maximum profits for health insurance companies, the pharmaceutical industry, and medical equipment suppliers. That has got to change. We need to guarantee health care for all. We need to do it in a cost-effective way. We need a Medicare-for-all health care system in the U.S.  Let’s be clear. Not only is our dysfunctional health care system causing unnecessary suffering and financial stress for millions of low- and middle-income families, it is also having a very negative impact on our economy and the business community—especially small- and medium-sized companies. Private businesses spent $637 billion on private health insurance in 2015 and are projected to spend $1.059 trillion in 2025. But it’s not just the heavy financial cost of health care that the business community is forced to bear. It is time and energy. Instead of focusing on their core business goals, small- and medium-sized businesses are forced to spend an inordinate amount of time, energy, and resources trying to navigate an incredibly complex system in order to get the most cost-effective coverage possible for their employees. It is not uncommon for employers to spend weeks every year negotiating with private insurance companies, filling out reams of paperwork, and switching carriers to get the best deal they can.

 The IRS Is Still Enforcing The Individual Mandate, Despite What Many Taxpayers Believe - There has been considerable speculation since President Trump’s Inauguration Day Affordable Care Act Executive Order as to whether the Internal Revenue Service is in fact enforcing the individual and employer mandates. The IRS website has insisted that the mandates are still in force, despite the Executive Order and despite the fact that the IRS decided not to implement for 2016 tax filings a program rejecting “silent returns” that did not indicate compliance with individual mandate requirements. There is evidence, however, that many taxpayers do not believe it. An April report from the Treasury Inspector General for Taxpayer Services found that as of March 31, a third fewer taxpayers were paying the penalty than had been the case a year earlier. More importantly, insurers seem to believe that the IRS is not enforcing the mandate, or at least that taxpayers do not believe the IRS is enforcing the mandate, and are raising their rates for 2018 to account for the deteriorating of the risk pool that nonenforcement of the mandate will cause. It is of note, therefore, that Robert Sheen at the ACA Times has identified several letters from the IRS reaffirming that it is still in fact enforcing the individual, and employer, mandates. Taxpayers who do not have minimum essential coverage (through an employer, a government program, or individual insurance) or qualify for an exemption must pay an individual responsibility tax. The tax is calculated on a monthly basis and is the greater of either a fixed dollar amount or 2.5 percent of household income above the tax filing limit, up to the the national average premium for a bronze (60 percent actuarial value) health plan.  The IRS has announced that for the 2016 tax filing season the average bronze plan premium used for calculating the maximum penalty will be $232 for each member of a tax household up to $1,360 for five or more members.

Federal Judge Orders IRS To Release Names Of Specific Employees That Targeted Tea Party Groups --Remember Lois Lerner?  If not, she was basically the person that Obama put in charge of weaponizing the IRS so that it could be used by the Democratic party as a political weapon of mass destruction to suppress Tea Party groups back in 2012.  Ring any bells yet?Well, as a testament to the efficiency of our legal system, it turns out that the case is still ongoing some 5 years later.  Of course, this has to be a simple bureaucracy issue because there is no way that the Obama administration, you know, the only scandal-free White House in modern history, played any role in delaying the completely transparent transmission of information about this shocking threat to our Democracy...just ask CNN...we're sure they'll confirm the same.Be that as it may, after years of litigation over what conservatives have long called “chilling” behavior by one of the government’s “most feared” agencies, a federal judge has finally ordered the IRS to release the names of specific employees involved in targeting Tea Party groups in the lead up to the 2012 presidential election. Per Fox News: Judge Reggie B. Walton of the U.S. District Court for the District of Columbia also said the IRS must provide information about which groups were targeted and why, along with a strategy to make sure such targeting doesn't happen again.

A Deal Breaker for Trump’s Supporters? Nope. Not This Time, Either. Sixty-seven percent of Republicans said they approved of the president’s response to the violence in Charlottesville last weekend, compared with just 10 percent of Democrats, according to a CBS News survey conducted over the past week.  It’s an indication of what now seems an almost immutable law of the Trump presidency. There are signs that Mr. Trump’s support among Republican leaders and some Republican voters is weakening. But in an increasingly tribal America, with people on the left and the right getting information from different sources and seeing the same facts in different ways, it reflects the way Mr. Trump has become in many ways both symbol and chief agitator of a divided nation.  Moral outrage at Mr. Trump’s response to Charlottesville continues to glow white hot, but it has a largely partisan tinge.  From Ms. Hicks’s perspective, the president simply pointed out a fact: Leftists bore some responsibility for the violence, too. Of course, Nazis and white supremacists are bad, she said. But she does not believe Mr. Trump has any affinity for them. He said so himself. But she is exasperated that a significant part of the country seems to think otherwise. The week’s frenzied headlines read to her like bulletins from another planet.

Steve Bannon to target Ivanka Trump and Jared Kushner as he pledges to ‘go nuclear’ on ‘West Wing Democrats’ -- Steve Bannon, the ousted White House chief strategist, is reportedly considering starting a television network which would allow him to "go nuclear" as he settles vendettas with moderate advisers in the White House and pressures President Donald Trump to pursue a populist agenda of economic nationalism.  Allies of Mr Bannon compared him to a "tiger freed from his cage," suggesting things would get "ugly" as he targets the Republican establishment and what he calls "West Wing Democrats".  Mr Bannon's possible TV network would be intended as a rival to Fox News, the Rupert Murdoch-owned channel which has been supportive of Mr Trump, but which Mr Bannon now regards as too moderate,  Axios reported.  Immediately after his departure on Friday he re-assumed control of Breitbart, the influential right-wing news website he steered before joining Mr Trump's campaign last year. Mr Bannon said he was "going to war for Trump," which appeared to mean the original hard line policies pursued during the campaign. Mr Bannon's new venture would probably be funded by Bob Mercer, the hedge fund billionaire and conservative mega-donor, who has previously backed both Breitbart and Mr Trump. Mr Mercer and Mr Bannon met last week to discus plans for after his White House exit. The following evening Mr Mercer had dinner with the president.

How to Know When You're In a  Mass Hysteria Bubble - Scott Adams (Dilbert) - A mass hysteria happens when the public gets a wrong idea about something that has strong emotional content and it triggers cognitive dissonance that is often supported by confirmation bias. In other words, people spontaneously hallucinate a whole new (and usually crazy-sounding) reality and believe they see plenty of evidence for it. The Salem Witch Trials are the best-known example of mass hysteria. The McMartin Pre-School case and the Tulip Bulb hysteria are others. The dotcom bubble probably qualifies. We might soon learn that the Russian Collusion story was mass hysteria in hindsight. The curious lack of solid evidence for Russian collusion is a red flag. But we’ll see how that plays out.The most visible Mass Hysteria of the moment involves the idea that the United States intentionally elected a racist President. If that statement just triggered you, it might mean you are in the Mass Hysteria bubble. The cool part is that you can’t fact-check my claim you are hallucinating if you are actually hallucinating. But you can read my description of the signs of mass hysteria and see if you check off the boxes.If you’re in the mass hysteria, recognizing you have all the symptoms of hysteria won’t help you be aware you are in it. That’s not how hallucinations work. Instead, your hallucination will automatically rewrite itself to expel any new data that conflicts with its illusions.But if you are not experiencing mass hysteria, you might be totally confused by the actions of the people who are. They appear to be irrational, but in ways that are hard to define. You can’t tell if they are stupid, unscrupulous, ignorant, mentally ill, emotionally unstable or what. It just looks frickin’ crazy. The reason you can’t easily identify what-the-hell is going on in the country right now is that a powerful mass hysteria is in play. If you see the signs after I point them out, you’re probably not in the hysteria bubble. If you read this and do NOT see the signs, it probably means you’re trapped inside the mass hysteria bubble.

A GOP senator wrote a bill to protect Robert Mueller. Trump called him to try to kill it -- Since Special Counsel Robert Mueller was appointed to head the Justice Department’s Russia investigation back in May, Washington has speculated about whether President Donald Trump will end up firing him. And according to a new report from Politico’s Josh Dawsey and Elana Schor, the president still seems to badly want to keep that option open.  Dawsey and Schor write that shortly after Sen. Thom Tillis (R-NC) introduced a bill that would let Mueller appeal his firing in court, Trump called up Tillis, signaled he was “unhappy” with the bill and said he didn’t want it to pass.Tillis is a first-term senator who hasn’t been particularly known as a moderate or really for taking any high-profile stances at all. So it was a bit surprising when, earlier this month, he co-wrote a bill with Sen. Chris Coons (D-DE) to protect Mueller from Trump, and went on television to tout it.Justice Department regulations already state that the special counsel can only be fired for “good cause,” but Tillis and Coons’s bill — the Special Counsel Integrity Act — would make that regulation the law of the land. It would also state that the special counsel could only be fired by a Senate-confirmed official. Perhaps most importantly, the bill would also let a special counsel appeal his firing in court. If judges find that the firing was improper, the special counsel would be reinstated.On August 6, Tillis appeared on Fox News Sunday and said there was “no question” that the bill was designed to prevent Trump from improperly firing Mueller. He also appeared on ABC’s This Week and said he wasn’t sure that he agreed with Trump that the Russia investigation was a “witch hunt.” Trump called Tillis the next day to communicate that he didn’t want the bill passed.Indeed, like President Richard Nixon once did during the Saturday Night Massacre, Trump could repeatedly fire Justice Department officials until he has someone in place who would fire Mueller. The Tillis-Coons bill would solve this problem by allowing the courts to reappoint Mueller if they deem his firing to be improper. And, it seems, Trump really doesn’t want that bill to become law.

A House Divided Against Itself Cannot Stand - - Paul Craig Roberts - The liberal/progressive/left are enjoying their drunkfest of denunciation. I can’t say I have ever witnessed anything like it. These are the people who sat on their hands for 16 years while Washington destroyed in whole or part seven countries. Not being satisfied with this level of warmongering and crimes against humanity, Washington orchestrated a conflict situation with Russia. Americans elected a president who said he would defuse this dangerous conflict, and the liberal/progressive/left turned on him. In contrast, one person is killed after the hated Charlottesville protest event was over, and there is endless absurd outrage against the president of the US.  Three New York Times presstitutes yesterday blamed the crisis on Trump, declaring him “increasingly isolated in a racial crisis of his own making.” Apparently, Trump is responsible for the crisis because he blamed both protest groups for the violence. But isn’t that what happened? Wasn’t there violence on both sides? That was the impression I got from the news reporting. I’m not surprised that Trump got the same impression. Let’s assume that the impression Trump and many others got from the news is wrong. That would make Trump guilty of arriving at a mistaken conclusion. Yet, he is accused of instigating and supporting Nazi violence. How is it possible to transform a mistake into evil intent? The hypocrisy is stunning. For 16 years the armed services chiefs, the New York Times and the rest of the presstitute media, both political parties and the liberal/progressive/left have participated actively or passively in massive crimes against humanity. There are millions of dead, maimed, and displaced people. Yet one death in Charlottesville has produced a greater outpouring of protest.  I don’t believe it is sincere. I don’t believe that people who are insensitive to the deaths of millions at the hands of their government can be so upset over the death of one person. Assume that Trump is responsible for the death of the woman. How much blood is it compared to the blood on the hands of Bill Clinton, George W. Bush, and Obama? It seems clear enough that the outpouring of grief is an orchestration designed to deligitimize the president and the people who elected him. We are now experiencing at home what the Obama regime inflicted on Ukraine, with the support of course of the liberal/progressive/left just as John Wight said in CounterPunch. Just as the majority of the Maidan protesters had no idea they were being used, the same is the case for the majority of those protesting the false charge against Trump. For most of the liberal/progressive/left, the hatred of Trump and white nationalists that they are expressing is a reflexive result of the Identity Politics with which they are imbued.

'America First' protesters face off with opponents at California beach rally (Reuters) - Anti-immigration demonstrators faced off against a much bigger crowd of counter-protesters in the Southern California town of Laguna Beach on Sunday, as police kept the opposing sides apart. Around 2,500 people in total showed up for what became a raucous shouting match but did not descend into the kind of violence seen at this month's clashes at a white nationalist rally in Charlottesville, Virginia, where one person was killed. Police erected barricades along the oceanfront to deter car attacks like the one in Charlottesville which killed a woman when a suspected white nationalist drove into the crowd. Dozens of anti-immigration protesters rallying behind President Donald Trump's campaign slogan "America First" were escorted by police through opposing demonstrators who chanted: "Shame" and "No white supremacy". Trump's opponents blame him for boosting far-right sentiment, forcing the president to deny he tacitly supports racists. "We are not a white supremacism movement but an 'America First' movement," said Beverly Welch, 56, a health assistant protesting against illegal immigration. "We're trying to save our country." Police later declared the remaining protesters an unlawful assembly and forced them to disperse. They made three arrests.

Trump unshackled: President defends Charlottesville response at raucous rally (Reuters) - U.S. President Donald Trump revved up supporters on Tuesday with a defense of his response to a white supremacist-organized rally in Virginia and a promise to shut down the U.S. government if necessary to build a wall along the border with Mexico. Under fire for saying "both sides" were to blame for the violence between white supremacists and left-wing counter protesters in Virginia on Aug. 12, Trump accused television networks of ignoring his calls for unity in the aftermath. "I didn't say I love you because you're black, or I love you because you're white," Trump said. "I love all the people of our country." Police used pepper spray to disperse crowds after protesters threw rocks and bottles outside the convention center where Trump spoke, police said. Trump, who often uses news organizations as a foil, repeatedly singled out the media for criticism of how it covered the violence in the Virginia college town of Charlottesville and the resulting political fallout. "These are truly dishonest people. They're bad people. I really think they don't like our country," Trump said. "The only people giving a platform to these hate groups is the media." Adopting a glib tone, Trump said many reporters ignored his condemnation of white supremacists, including the Ku Klux Klan. "I hit 'em with neo-Nazi, I hit 'em with everything ... KKK? We have KKK. I got 'em all," he said. James Clapper, a former director of U.S. national intelligence, expressed concern at Trump's performance, calling it "downright scary and disturbing." "I question his fitness to be in office," Clapper told CNN. GOVERNMENT SHUTDOWN Funding for the border wall has flagged in the U.S. Congress as many lawmakers question whether Trump's main promise during the 2016 presidential el

Taibbi: Why Trump Can’t Quit the Alt-Right - He may have three and a half years left in office, but Donald Trump is finished. The Charlottesville tragedy was the final stake through the Grinch-heart of his presidency. If he didn't deserve it so enormously much, it would be sad.   The presidency of Donald Trump has already seen mass dismissals, felony accusations, a key adviser raided by the FBI, a press chief accusing a fellow official of auto-fellatio, a preschool version of a nuclear stare-down with North Korea, and countless other fiascoes and indignities. But a rampage of misjudgment and anti-leadership starting on August 12th, 2017, was a clear nadir. It began that Saturday morning. After torch-bearing neo-Nazis stormed a postcard-perfect Virginia university town, and the life of a young woman was snuffed out by a vehicular terrorist, Trump – the same man who couldn't shut up during the campaign, tweeting at all hours like a friendless coke addict, notably berating Barack Obama for failing to identify terrorism by name – suddenly lost the power of speech.  When he finally did make a statement, it was only to issue a preposterous parody of presidential evenhandedness, decrying bigotry and violence "on many sides." Those three words instantly set a new standard for Trump-iniquity. The president of the United States had announced he was so insecure, so politically alone, that he couldn't even disavow people making Hitler salutes in broad daylight. For a normal politician, the calculus is simple: Don't hug Nazis. It's on page one of Presidenting for Dummies. But Trump's narcissism is so malignant that it alters basic equations. The president seemed paralyzed by the fact that some of the Charlottesville protesters wore MAGA hats, an indemnifying variable in Trump-math: "They like me, therefore they are me. And me can't be all bad – even if me is a Nazi."

The Moral Voice of Corporate America  -- After Nazi-saluting white supremacists rioted in Charlottesville, Va., and President Trump dithered in his response, a chorus of business leaders rose up this past week to condemn hate groups and espouse tolerance and inclusion. And as lawmakers in Texas tried to restrict the rights of transgender people to use public bathrooms, corporate executives joined activists to kill the bill. These and other actions are part of a broad recasting of the voice of business in the nation’s political and social dialogue, a transformation that has gained momentum in recent years as the country has engaged in fraught debates over everything from climate change to health care.In recent days, after the Charlottesville bloodshed, the chief executive of General Motors, Mary T. Barra, called on people to “come together as a country and reinforce values and ideals that unite us — tolerance, inclusion and diversity.”Jamie Dimon of JPMorgan said, “The equal treatment of all people is one of our nation’s bedrock principles.”Walmart’s chief executive, Doug McMillon, criticized Mr. Trump by name for his handling of the violence in Charlottesville, and called for healing. And in a rebuke to the president, who suggested that both the racist groups and the counterprotesters marching in Charlottesville were to blame for the violence there, a wave of chief executives who had agreed to advise Mr. Trump quit his business advisory councils, leading to the dissolution of two groups. The forthright engagement of these and other executives with one of the most charged political issues in years — the swelling confidence of a torch-bearing, swastika-saluting, whites-first movement — is “a seminal moment in the history of business in America,” said Darren Walker, the president of the Ford Foundation and a board member at PepsiCo.

Trump confronts unprecedented public rebuke by Gary Cohn after Charlottesville - An unprecedented rebuke of President Trump by National Economic Council Director Gary Cohn reverberated through Washington on Friday, forcing the White House to respond to harsh, public criticism from one of the president’s top advisers. Cohn lashed Trump’s comments earlier this month blaming the violence in Charlottesville on “both sides,” saying in an interview with the Financial Times that “citizens standing up for equality and freedom can never be equated with white supremacists, neo-Nazis, and the KKK.” The adviser, who is Jewish and has long given to Jewish causes, said that the administration “must do better in consistently and unequivocally condemning these groups.” The criticism was the first serious public condemnation of Trump’s behavior by a member of his inner circle since the beginning of his presidency and raised the question of how a president who puts a heavy premium on loyalty would react.Privately, a White House official said, Trump was furious about Cohn’s public airing, though publicly, White House officials, while defending the president’s response to the events in Charlottesville, acknowledged that the White House can always do more.  “Gary has not held back how he feels about the situation. He’s been very open and honest, so I don’t think anyone was surprised by the comments,” White House press secretary Sarah Huckabee Sanders said.

Trump pardons Joe Arpaio, former sheriff convicted in racial profiling case - Donald Trump has pardoned former sheriff Joe Arpaio, the hardline Arizona lawman who was convicted of contempt of court in July for defying a judge’s order to stop racially profiling Latinos.  Trump had signaled his intention to grant the pardon at a rally in Phoenix on Tuesday evening, when he suggested Arpaio was “convicted for doing his job”.  Arpaio’s life and career “exemplify selfless public service”, White House press secretary Sarah Huckabee Saunders said in a statement Friday night, adding: “After more than fifty years of admirable service to our Nation, he is worthy candidate for a Presidential pardon.” “I am pleased to inform you that I have just granted a full Pardon to 85 year old American patriot Sheriff Joe Arpaio. He kept Arizona safe!” Trump later wrote on Twitter, as a major hurricane made landfall in Texas and after signing a controversial directive on transgender people in the military.  In an interview with the Arizona Republic moments after his pardon was publicly announced, Arpaio hinted at a return to politics. “I told my wife that I was through with politics,” he told the paper. “But now I’ve decided I’m not through with politics because of what’s happening. I’ve got a lot to offer.”  Over Arpaio’s 24-year tenure as sheriff of Maricopa county, he gained notoriety for detaining hundreds of undocumented immigrants in a Tent City jail and forcing them to wear pink underwear. The sheriff courted controversy and media attention – calling his own jail a “concentration camp”, serving inmates just two meals a day and selling replica pink underwear to the public – as he became a national figurehead for the virulent xenophobia that Trump embraced in his presidential campaign.  His criminal conviction stems from his 2011 refusal to comply with a judge’s order to halt the practice of engaging in traffic stops that targeted Latino drivers. Arpaio continued the traffic patrols for nearly a year and a half after the court order. Federal prosecutors charged him with misdemeanor contempt of court in 2016, arguing that his defiance of the order was politically motivated.

Secret Service says it will run out of money to protect Trump and his family Sept. 30 - The Secret Service said Monday that it has enough money to cover the cost of protecting President Trump and his family through the end of September, but after that the agency will hit a federally mandated cap on salaries and overtime unless Congress intervenes. If lawmakers don’t lift the cap, about a third of the agency’s agents would be working overtime without being paid, agency officials said. “The Secret Service estimates that roughly 1,100 employees will work overtime hours in excess of statutory pay caps during calendar year 2017,” Director Randolph “Tex” Alles said in a statement. “To remedy this ongoing and serious problem, the agency has worked closely with the Department of Homeland Security, the Administration, and the Congress over the past several months to find a legislative solution.” The spending limits are supposed to last through December, but the cost of protecting the president and members of the extended first family, who have traveled extensively for business and vacations, has strained the Secret Service, local governments and at least one other federal agency, the Coast Guard. Presidential travel for Trump and the first lady — who fly to their oceanfront Mar-a-Lago Club in Palm Beach, Fla., and to their golf club in Bedminster, N.J., on many weekends — has added costs for taxpayers and complications for the government. The Secret Service also must provide protection for Trump’s four adult children.  Alles cited overall increases to his agency’s staff levels, which grew by 800 this year, as a factor driving the extra costs, calling the issue “not one that can be attributed to the current Administration’s protection requirements alone.” 

The Rise of the Violent Left --For progressives, Donald Trump is not just another Republican president. Seventy-six percent of Democrats, according to a Suffolk poll from last September, consider him a racist. Last March, according to a YouGov survey, 71 percent of Democrats agreed that his campaign contained “fascist undertones.” All of which raises a question that is likely to bedevil progressives for years to come: If you believe the president of the United States is leading a racist, fascist movement that threatens the rights, if not the lives, of vulnerable minorities, how far are you willing to go to stop it?  mIn Washington, D.C., the response to that question centers on how members of Congress can oppose Trump’s agenda, on how Democrats can retake the House of Representatives, and on how and when to push for impeachment. But in the country at large, some militant leftists are offering a very different answer. On Inauguration Day, a masked activist punched the white-supremacist leader Richard Spencer. In February, protesters violently disrupted UC Berkeley’s plans to host a speech by Milo Yiannopoulos, a former Breitbart.com editor. In March, protesters pushed and shoved the controversial conservative political scientist Charles Murray when he spoke at Middlebury College, in Vermont. As far-flung as these incidents were, they have something crucial in common. Like the organizations that opposed the Multnomah County Republican Party’s participation in the 82nd Avenue of Roses Parade, these activists appear to be linked to a movement called “antifa,” which is short for antifascist or Anti-Fascist Action. The movement’s secrecy makes definitively cataloging its activities difficult, but this much is certain: Antifa’s power is growing. And how the rest of the activist left responds will help define its moral character in the Trump age.

Petition To Label Antifa A "Terrorist Organization" Reaches Critical Milestone -- A petition calling for the White House to officially brand the Antifa movement as a terrorist organization has reached the threshold of signatures necessary to compel the Trump administration to reply, according to the Washington Times. The petition received its 100,000th signature around 8 p.m. Eastern Time on Sunday. Though it had 30 days to reach that goal, the petition did so in less than a week.  The petition contends that Antifa deserves the terrorist designation because of its “violent actions” in cities like Berkeley, Calif, and Charlottesville, Va., as well as its “influence” in the killings of police officers. The full text of the petition is below:“Terrorism is defined as “the use of violence and intimidation in pursuit of political aims”. This definition is the same definition used to declare ISIS and other groups, as terrorist organizations.AntiFa has earned this title due to its violent actions in multiple cities and their influence in the killings of multiple police officers throughout the United States.It is time for the pentagon to be consistent in its actions – and just as they rightfully declared ISIS a terror group, they must declare AntiFa a terror group – on the grounds of principle, integrity, morality, and safety.”If the petition is successful, Antifa would differ from other terror groups in one unique respect: Antifa isn’t an organization, so much as a blanket term for far-left protesters known for their violent battles with right-wing groups, as the  Washington Times explains.“Antifa is short for anti-fascists, and the people involved are generally extreme leftists known for their face-offs with right-wing activists, including recently in Berkeley, Calif. Antifa counter-protesters made an appearance in Charlottesville, Va., last weekend and clashed with white supremacy and neo-Nazi groups protesting the removal of a Robert E. Lee statue.”

 Very Strange Indictment of Debbie Wasserman Schultz’s IT Scammers --  Well, here’s a peculiar thing about the Justice Department’s indictment of Imran Awan and Hina Alvi, the alleged fraudster couple who doubled as IT wizzes for Debbie Wasserman Schultz and many other congressional Democrats: There’s not a word in it about flight to Pakistan. The indictment undertakes to describe in detail four counts of bank-fraud conspiracy, false statements on credit applications, and unlawful monetary transactions, yet leaves out the most damning evidence of guilt. As I explained about three weeks ago, there is a very intriguing investigation of the Awan family. There are about six of them — brothers, spouses, and attached others — who were retained by various Democrats as computer-systems managers at compensation levels dwarfing that of the average congressional staffer. The Awans fell under suspicion in late 2016 and were canned at the beginning of February, on suspicion of mishandling the sensitive information to which they’d had access: scanning members’ e-mail, transferring files to remote servers under the Awans’ control, stealing computer equipment and hard drives, along with a sideline in procurement fraud. We should say that almost all of them were canned. Hina Alvi and her husband, Imran Awan, stayed on, even though they were no longer authorized to have access to the House computer system (i.e., to do the work they were hired to do). Alvi continued to be retained by Congressman Gregory Meeks, a New York Democrat, for another four weeks. Awan was kept on the payroll for about six more months by Wasserman Schultz, a Florida Democrat, former Democratic National Committee chairwoman, and Clinton insider. She finally fired him only after he was arrested at the airport right before a scheduled flight to Qatar, from whence he planned to join Alvi in Pakistan. There are grounds to suspect blackmail, given (a) the staggering sums of money paid to the Awans over the years, (b) the sensitive congressional communications to which they had access, (c) the alleged involvement of Imran Awan and one of his brothers in a blackmail-extortion scheme against their stepmother, and (d) Wasserman Schultz’s months of protecting Awan and potentially impeding the investigation.

 ‘Dishonest’ Media? Underreporting of the Democratic IT Staffer Scandal Validates Trump’s Attack - Mediaite - At Tuesday’s rally in Phoenix, President Trump slammed what he called the “dishonest media” for how they characterized his statements after the violence that took place in Charlottesville. Trump painted this picture to his audience that the media “ignored” his words. Putting over-the-top reactions aside, is Trump’s argument that the media is “dishonest” valid? Sure, but Trump simply used a poor example. Here’s a better one.A week ago today, the former IT staffer of  Congresswoman Debbie Wasserman Schultz (D-FL) was indicted on four felony counts including bank fraud and making false statements. This was after he was arrested as he was trying to flee the country to Pakistan and after months of numerous investigations surrounding him and his family who have been suspected of double-billing House Democrats for equipment and storing their data (which includes classified information) on non-government approved locations.If that was all news to you, that’s likely because your go-to news source (especially on TV) didn’t tell you.The arrest of Imran Awan received just an ounce of attention. According to the Media Research Center, the story was completely ignored by ABC and NBC while CBS only gave it 37 seconds of airtime. However, you can find articles only of his initial arrest on the websites of ABC News, CBS News, NBC News, CNN, The New York Times, The Washington Post, etc. That’s basically it.Outside of Fox News, none of them have even bothered to follow up with reporting on Awan’s indictment, even on their websites! If you type “Imran Awan” in the search bar for  most of these sites, you’ll find one article, maybe two. The only other reading material from this particular group of news outlets I came across is a NYT article that tries to dismiss the controversy altogether and a WaPo piece that attempts to just plainly look at the facts but also with the motive to dismiss the controversy. Between those and another WaPo article saying a watchdog group wants Congress to probe Wasserman Schultz, the coverage has been bone dry.

Angry Marine Who Discovered Awan's "Smashed Hard Drives" Breaks Silence, Unloads On Wasserman Schultz ---Andre Taggart, the U.S. Marine who alerted the FBI when he moved into a house he rented from Imran Awan only to find a garage full of "smashed hard drives", has decided to reveal his identity in a stinging, at least for Debbie Wasserman Schultz, new interview with the Daily Caller. Taggart, a black U.S. Marine who says he typically votes Democrat, is apparently fed up with Debbie Wasserman Schultz's Islamophobia smoke screen which he views as just a dishonest attempt to shield the Awans from their crimes.  In his epic rant to the Daily Caller, Taggart says the whole thing just "pisses me off" and that he's "absolutely disgusted with everything going on in the country right now."“It pisses me off,” said Taggart, a black Marine who says he votes Democrat. He believes Wasserman Schultz is crying wolf and devaluing the meaning of genuine discrimination, while also exposing herself and the nation to risks.“I just want to get these [guys] locked up and exposed and now,” Taggart told TheDCNF. “The people who facilitated them should also be locked up, as far as I’m concerned.”Taggart said he made the decision to no longer be anonymous because he is concerned that his fellow Democrats are making a grave mistake by ignoring a scandal with serious criminal and national security implications.“I’m absolutely disgusted with everything going on in the country right now, mostly because of right-wing conservatives, but with respect to this situation, political affiliation is irrelevant,” Taggart said.

 Newly Leaked Emails Just Revealed Trump Family Implicated In $350 Million Fraud Investigation -- It’s beginning to look like Special Counsel Mueller will catch President Trump and his three eldest children committing the first ever reality TV show assisted financial crime, all collaborating in a $350 million dollar bank fraud related to the Trump SoHo Condominium Hotel.The fraud-riddled Trump SoHo project ultimately failed and was foreclosed upon by lenders in 2014, but its legacy lives on in a byzantine web of lawsuits.We’ve obtained leaked copies of those emails related to a key lawsuit related to the  Trump SoHo – which are embedded below – that outline the Trump family’s complicity in a major financial crime.They show that Donald Trump and his three eldest children participated in a cover up in order to keep borrowing massive construction loans on the hotel they pitched on NBC’s Apprentice from failing during the financial downturn. The Trump Organization earned $3 million dollars from the fraud just last year alone, even as the hotel’s fortunes have sunk post-election.Three weeks ago, Bloomberg News reported that Mueller is focusing on the lower Manhattan Trump Soho Hotel deal and Vanity Fair reported recently that new emails reveal the Trump family’s participation in a criminal enterprise there.The Russian money trail leads right through the president’s troubled project in downtown Manhattan. A series of e-mails reveals new details. Now, the newly leaked email chain also confirms a major German public television report (ZDF) on the Trump SoHo hotel.   ZDF interviewed an American national financial fraud expert Professor William Black, who was told the sordid tale of the Trump SoHo frauds without being told the names of the participants. He concluded that based on their thorough reporting that the First Family participated in a business that was committing bank fraud in a pattern and a practice of illegal conduct which violated the federal racketeering laws known as the RICO Act.

Octogenarians Rule the Rich -- Six of the 25 richest Americans are over 80, according to the Bloomberg Billionaires Index. Carl Icahn and Charles Koch, for example, are 81. Earlier this month, Sheldon Adelson turned 84 and George Soros hit 87. Warren Buffett, the fourth-richest person in the world, with a net worth of $77 billion, celebrates his 87th birthday next week. New data from the Internal Revenue Service show just how old the top millionaires and billionaires in the U.S. are. While people over 80 make up only 3.7 percent of the population, the IRS estimates they control a larger share of the nation's top fortunes than people under 50.The wealthy have probably always been older than the general population. Despite the example of Mark Zuckerberg, the world's fifth-richest person, at 33,  it usually takes a long time to amass great wealth. Still, the imbalance is striking.  Every few years, the IRS analyzes the wealth of the richest Americans. Its Personal Wealth Study examines a rarefied group: people potentially subject to the estate tax, which is levied on individual fortunes of $5.5 million or more. The latest study, released this month and estimating personal wealth in 2013, finds 584,000 Americans, or about 0.2 percent of the U.S. population, with a combined net worth of $6.9 trillion. People in their 80s and 90s control $1.2 trillion of that wealth. Adults under 50, roughly 43 percent of the population , hold barely $1 trillion.

How Trump is doing at cutting regs | TheHill: President Trump is making headway on at least one campaign promise: cutting regulations. Shortly after the election, Trump boasted that 75 percent of federal regulations could be eliminated, arguing that too much regulation was preventing businesses from growing and hiring. “We're going to be cutting regulation massively,” the president promised business leaders in January. Trump has issued a series of executive orders both directing agencies to find their own rules to repeal and hand-picking which regulations must go, including former President Obama’s Clean Power Plan. Earlier this week, Trump signed an executive order to streamline and cut certain federal permitting regulations to speed up transportation, water and other infrastructure projects. Trump took advantage of the obscure Congressional Review Act to repeal 14 rules that had recently been finalized under former President Obama. The law allows Congress to roll back recent rules within a limited timeframe, and it prevents a filibuster in the Senate. This has been one of the successes of the Trump administration so far.   Trump and Republicans in Congress used the CRA to kill rules making it harder for people with mental illnesses to purchase guns, forcing federal contractors to fess up to labor law violations committed in the last three years and preventing states from withholding funds for abortion providers like Planned Parenthood.  Republicans are now using it to repeal the Consumer Financial Protection Bureau's attempt to prevent banks and credit card companies from stripping consumers of their right to join class action lawsuits.In March, Trump ordered the EPA to reconsider Obama’s Clean Power Plan, which limited carbon emissions for existing power plants and methane emissions for oil and natural gas drilling. Trump scored a victory a month later when the U.S. Court of Appeals for the District of Columbia Circuit agreed to put the case challenging the Clean Power Plan on hold to give the agency time to repeal the rule.

Wall Street Banks Sued Again for Conspiring to Control a Market – Pam Martens - The charges include conspiracy to restrain trade in violation of the Sherman Act and unjust enrichment in a $1.7 trillion market.  Since the Senate hearings of the early 1930s, which examined the Wall Street practices and conspiracies that led to the 1929-1932 stock market collapse and Great Depression, there have been rumblings that Wall Street’s system for lending stock for traders to short is a viper’s nest of ripoffs. Now two major law firms, Quinn Emanuel Urquhart & Sullivan and Cohen Milstein are suing six of the largest Wall Street banks, alleging that they illegally colluded in this market. The defendants are the usual suspects: JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Credit Suisse, UBS and their stock lending units. (The only surprise here is that Citigroup is not named.) You know there’s some high minded legal talent involved when the lawsuit quotes Tolstoy. The plaintiffs’ lawyers tell the Federal Court:“To paraphrase Tolstoy, all efficient markets resemble one another, but each inefficient market is inefficient in its own way. This case concerns a market variously called the ‘stock loan,’ ‘stock lending,’ or ‘securities lending’ market. It is one of the largest and most important financial markets that exists in the world today.  Unlike many other financial markets, the stock loan market has not evolved to reflect the ways in which modern technology can facilitate efficient and transparent electronic trading. Instead, the stock loan market remains an inefficient, antiquated, and opaque over-the-counter (‘OTC’) trading market dominated by large dealer banks, principally the Prime Broker Defendants. These banks have structured the market in such a way that they take a large cut of nearly every stock loan trade that is made. This arrangement is good for the Prime Broker Defendants. But it is bad for virtually everyone else, including the class members in this case.”The plaintiffs in the case thus far are the Iowa Public Employees’ Retirement System, the Orange County Employees Retirement System, and the Sonoma County Employees’ Retirement Association. The lawsuit is seeking class action status in order to represent others similarly harmed.

Leverage ratio harms banks’ role as safe haven in a crisis – Bank Think - Momentum is building to improve capital rules. Recently, Federal Reserve Chair Janet Yellen publicly acknowledged that aspects of the banking agencies’ supplementary leverage ratio “may be having unintended adverse consequences.” We share that view and believe these consequences could become much worse in a period of financial stress. The supplementary leverage ratio, or SLR, is just one of more than a dozen ways that the largest banking organizations are required to monitor their capital positions. Although the SLR is intended to serve as a backstop for risk-based capital standards, the banking agencies demanded higher and higher amounts of non-risk-based capital in the years following the crisis, to the point that the leverage ratio has become the binding capital requirement for many large banks. Meanwhile, the SLR in the U.S. is twice the international standard. This heightened requirement affects U.S. competitiveness and the ability of U.S. banks to provide financial services to their clients. More troubling is the fact that excessive amounts of capital needed to maintain the leverage ratio can actually increase — rather than reduce — risks to the financial system, impeding banks’ flexibility when responding to changes in economic conditions and assisting their customers in adjusting to changing economic winds. Keep in mind that the leverage ratio is a totally risk-blind measure of capital. Unlike risk-based capital requirements, a leverage ratio can compel a bank to load up on relatively risky assets. As the financial crisis showed, running blind to risk can be dangerous.

Regulators extend capital compliance deadlines | American Banker  — Bank regulators have agreed to indefinitely extend a deadline for all but the largest U.S. banks to comply with certain capital requirements, citing an expectation that the rules for those banks will soon be revisited. In a joint release Tuesday afternoon, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. said that the 2013 capital rules require banks to adopt a final set of capital deductions and risk weights by the beginning of 2018. But as part of last year’s Economic Growth and Regulatory Paperwork Reduction Act regulatory review process, the agencies had already determined that a simpler regulatory treatment of certain assets was warranted.“Under the current capital rules, the transitional treatment for those items is scheduled to be replaced with a different treatment on January 1, 2018,” the notice said. “This proposal would prevent the implementation of the fully phased-in requirements for these items by banking organizations that are not subject to the advanced approaches capital rules prior to the agencies’ consideration of simplification to the capital rules.” The proposal would not apply to banks with more than $250 billion in assets or more than $10 billion in overseas assets — so-called advanced approaches banks — and pertains to the capital treatments of certain assets: mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions and minority interests.

Fed’s Yellen: Some adjustments warranted for post-crisis reforms – Federal Reserve Chair Janet Yellen said that while the majority of the post-crisis regulatory reforms have made the banking and financial systems safer and more resilient, there have been some effects on markets and lending that warrant further examination. Speaking during her keynote speech at the Federal Reserve Bank of Kansas City’s annual monetary policy conference in Jackson Hole, Wyo., on Friday, Yellen defended the capital, liquidity and supervisory changes that the Fed and other regulators have enacted in the decade since the onset of the financial crisis. Banks and nonbank financial firms are better capitalized, less leveraged and more resilient than they were ten years ago, she said, and that stability has positioned the U.S. for stronger growth than other countries that did not make similar changes. But the lingering concerns about the effects of lending on credit availability and liquidity, while not applicable to the economy as a whole, perhaps are relevant to subprime borrowers and small businesses.  “While material adverse effects of capital regulation on broad measures of lending are not readily apparent, credit may be less available to some borrowers, especially homebuyers with less-than-perfect credit histories and, perhaps, small businesses,” Yellen said. “Smaller firms rely disproportionately on lending from smaller banks, and the Federal Reserve has been taking steps and examining additional steps to reduce unnecessary complexity in regulations affecting smaller banks.”   Industry groups and some members of Congress haveforwarded the argument in recent months that capital rules are stifling banks’ ability to extend credit to small businesses and individuals with less-than-perfect credit histories, which in turn is having a negative effect on small-business formation and other critical sources of growth. Yellen has defended the agency’s capital rules against this argument before, saying there is little evidence that small businesses that want credit cannot get it.

Yellen rejects Trump approach to Wall Street regulation, says post-crisis banking rules make economy safer - — Federal Reserve Chairwoman Janet L. Yellen offered a forceful defense of broad new banking regulations enacted after the 2008 financial crisis, saying the rules safeguard the economy against another crisis and rejecting assertions from President Trump and top aides that they should be rolled back. Yellen’s speech, delivered here to an annual gathering of central bankers, finance ministers and economists, comes as Trump considers whether to reappoint her to a four-year term as head of the U.S. central bank. Yellen, 71, made clear in her speech on Friday that she believes tighter regulations and standards have made the banking system safer and that while some improvements could be made, they should be modest, not structural. “The evidence shows that reforms since the crisis have made the financial system substantially safer,” Yellen said, according to prepared remarks. Trump has waffled on whether he would renominate Yellen to the post. She was first nominated by President Barack Obama for the four-year term, after having served as president of the Federal Reserve Bank of San Francisco. Trump has said he likes her cautious approach to raising interest rates, but declaring her opposition to rolling back new banking rules could put a wide chasm between her and the White House. There are numerous banking regulators that have input in how the financial system is overseen, but none are as powerful or as influential as the head of the Fed.

Yellen and Draghi Both Defend Post-Crisis Financial Regulation -- The world’s two most powerful central bankers on Friday delivered back-to-back warnings against dismantling tough post-crisis financial rules that the Trump administration blames for stifling U.S. growth.   European Central Bank President Mario Draghi, speaking at the Federal Reserve’s annual retreat in Jackson Hole, Wyoming, said it was a particularly dangerous time to loosen regulation given that central banks are still supporting their economies with accommodative monetary policies. That warning followed earlier remarks by Fed Chair Janet Yellen, who offered a broad defense of the steps taken since the 2008 financial-market meltdown and urged that any rollback of post-crisis rules be “ modest.”   The combined effect was “a subtle shot across the bow of those who seek deregulation,” said Michael Gapen, chief U.S. economist at Barclays Capital Inc. in New York.The complementary speeches come at what may be the tail end of Yellen’s tenure at the Fed’s helm. President Donald Trump is not expected to reappoint her when her leadership term expires in February, according to economists surveyed by Bloomberg.   Gapen said that by delivering overlapping messages, Yellen and Draghi could help amplify their points, but “in practice that’s not the agenda the Trump administration is likely to seek.”In a talk aimed broadly at defending the merits of globalization, Draghi said it’s crucial to make sure open policies on trade and global finance should be safeguarded with regulations designed to make globalization fair, safe and equitable.  “We have only recently witnessed the dangers of financial openness combined with insufficient regulation,” Draghi said, referring to the global financial crisis of 2008-09. Any reversal of the regulatory response to that crisis, he added, “would call into question whether the lessons of the crisis have indeed been learnt -- and thus whether financial integration can still be considered safe.”  That point was all the more important given that central banks are continuing to provide stimulus to their economies. “With monetary policy globally very expansionary, regulators should be wary of rekindling the incentives that led to the crisis,” Draghi said.

Big U.S. Banks Could See Profit Jump 20% With Deregulation -  The deregulation winds blowing through Washington could add $27 billion of gross profit at the six largest U.S. banks, lifting their annual pretax income by about 20 percent.  JPMorgan Chase & Co. and Morgan Stanley would benefit most from changes to post-crisis banking rules proposed by Donald Trump’s administration, with pretax profit jumping 22 percent, according to estimates by Bloomberg based on discussions with analysts and the banks’ own disclosures. Goldman Sachs Group Inc. would have the smallest percentage increase, about 16 percent.  Bloomberg’s calculations are based largely on adjustments banks could make to the mix of securities they hold and the interest they earn from such assets. The proposed changes would allow the largest lenders to take on more deposits, move a greater portion of their excess cash into higher-yielding Treasuries and municipal bonds, and issue a lower amount of debt that costs more than customer deposits. Of the changes proposed in June by Treasury Secretary Steven Mnuchin, the one that would probably have biggest impact on profit is allowing banks to buy U.S. government bonds entirely with borrowed money. Three others could also boost income: counting municipal bonds as liquid, or easy-to-sell, assets; requiring less debt that won’t have to be paid back if a bank fails; and making it easier to comply with post-crisis rules.

Volcker Rule rollback is not the kind of reg relief small banks need --I have long been advocating for regulatory relief for traditional banks that take deposits and make loans within their community. They should be able to make decisions and invest in assets to best serve their customers and community. In this regard, I am disappointed that the Volcker Rule continues to be characterized as a burden to community banks and allegedly is prohibiting them from taking part in fintech investment opportunities. This argument appears misleading and for the purpose of implementing broader rollbacks of the Volcker Rule. I regularly meet with hundreds of community bankers from around the country, and while they voice major concerns about regulatory burden, the Volcker Rule is not one they highlight.  The Volcker Rule neither favors nor disfavors community banks. It prohibits all FDIC-insured banks and their affiliates from investing in hedge funds. It was adopted because during the last financial crisis banks of all sizes experienced significant losses from investments in complex, unregistered on- and off-balance sheet funds. It is common knowledge that these losses seriously impacted the Deposit Insurance Fund. If the fund were used to protect deposits that underwrite such activities and their unique risk, it would require a significant increase in insurance premiums to account for such risk. Since all banks would share such a premium adjustment — thereby shouldering the risk of the few institutions making these types of institutions — this seems unwise. Importantly, whether it is fintech-based or otherwise, a fund can be structured to comply with the Volcker Rule, or to fall outside its scope, in a manner that would allow any bank to invest as long as it meets its board-approved investment policy. Indeed, many types of funds have been able to conform to the rule over the last several years without undermining their performance or limiting their market.  And contrary to recent criticism that the Volcker Rule allegedly hinders community bank investment in fintech, the fact is that any bank can lend or invest directly in such a company, similar to recently publicized actions taken by larger U.S. banks. While it is true that smaller banks, because of their size, might have fewer options to invest, the Volcker Rule is certainly not the cause of the competitive disparities between large and small banks.

Dallas Fed chief rejects looser curbs on big banks -- Robert Kaplan, the chief of the Federal Reserve Bank of Dallas, has warned against watering down the stress tests on America’s biggest banks, saying it would be hazardous to loosen regulation at a time of soaring asset prices.  The Fed president said he was concerned about risk-taking in certain corners of the financial markets, but he argued that one of the reasons there has not been a broader build-up of dangerous levels of debt was the strong regulatory regime put in place after the crisis.  “While market valuations may be full, I don’t see a build-up yet of excessive debt and one of the reasons is we have had very tough macroprudential policies, particularly on the big banks,” said Mr Kaplan. “Now is not the time to be easing back on, say, annual stress testing for big banks.”  His comments in an interview with the Financial Times ahead of the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming, echoed warnings by Stanley Fischer, the Federal Reserve Board’s vice-chair last week. Mr Fischer said attempts to slash regulatory burdens on big banks were dangerous and short-sighted.  Mr Kaplan said that one of the reasons he was comfortable with keeping monetary policy relatively loose was the countervailing discipline imposed by tough regulation: that balancing act would be harder to achieve if lawmakers and officials roll back standards. He added that market corrections in and of themselves do not create financial instability, suggesting that as things stand he was not overly concerned about the possibility of a reversal in asset price gains. 

Debt ceiling crisis would hit banks at their core - What will the fallout be for banks if the federal debt ceiling is breached late next month? It's safe to say that they would rather not find out. Worst-case-scenario predictions include higher funding costs, a decline in liquidity, weaker loan demand and decreased fee income. The market uncertainty would also almost certainly produce a steep decline in bank stock prices. Still, no one knows for certain what the specific results would be if Congress doesn’t raise the debt ceiling before Sept. 29, which is when Treasury Secretary Steven Mnuchin has said the government will run out of money to pay its bills. But most observers warn that the result could be an economic catastrophe, something the banking industry doesn’t want to see. “Hopefully we never get there,” said Michael Keim, president of the $4.5 billion-asset Univest Bank & Trust in Souderton, Pa.  Congress must agree to raise the limit, something it has done dozens of times over the years. Although Republican leaders in Congress do not yet have a plan to do so, Senate Majority Leader Mitch McConnell has said there is “zero chance — no chance” of Congress not raising the debt ceiling in time. It is possible lawmakers could combine a spending measure to delay a looming government shutdown with a debt ceiling plan. However, political squabbling could get in the way. President Trump has threatened to shut down the government if Congress does not provide funding to build a wall along the Mexican border. On Wednesday morning, Trump blasted the “mess” that McConnell and House Speaker Paul Ryan have created with the debt ceiling.

Washington quagmire spurs more banks to consider selling - An increasing number of bankers are growing tired of playing a waiting game with Washington.The banking industry was overcome with optimism when Donald Trump was elected president, fueled by a belief that the incoming administration would roll back regulation and introduce meaningful tax reform.Post-election euphoria tamped down M&A talk as bankers were hopeful that promised change, paired with rising interest rates, would justify remaining independent. The pace of consolidation though Aug. 8 is off nearly 7% from a year earlier, based on data from Keefe, Bruyette & Woods and S&P Global Market Intelligence.There are signs bankers are getting restless as regulatory relief and tax reform have taken a back seat — at least publicly — to a stalemate on health care and a host of foreign and domestic crises. Bankers are worried that “things probably aren’t going to change as drastically as everybody had hoped,” said Bob Wray, managing director of Capital Corporation, adding that his Prairie Village, Kan., firm has picked up multiple clients looking for buyers. Some clients, who tend to have less than $500 million in assets, have expressed frustration with a “lack of progress in Washington,” Wray said. “Everyone expected more on the policy side,” Plath said. “There’s a lot of disappointment in the industry … and that is leading some banks to seek a different path.”

How much should a bank board know? | American Banker — The Federal Reserve’s plan to change the rules regarding the responsibility of banks' board of directors has sparked a debate about what the boards' role should be in supervisory matters.  The central bank published a pair of proposals Aug. 3 that reversed 2013 guidance elevating certain matters to the board for approval and codifying a rating system for various aspects of board efficacy. The Fed said that the changes were the result of a yearslong review of its guidance, but some critics say the move gives the appearance of easing the Fed’s oversight at a time when boards are under increasing scrutiny. "It is potentially a pretty dramatic change in the way the Fed supervises bank boards and management,” said Dennis Kelleher, president of the public advocacy group Better Markets. “There is nothing more important to boards of directors than authoritative information on what is happening at the institution. [This is] valuable information that any board worth a whit should want.”  But the Fed and industry representatives say the changes effectively eliminate a load of busywork from boards’ agendas, allowing them to focus more on critical issues. Federal Reserve Gov. Jerome Powell, who heads the agency’s supervisory committee, said the changes do nothing to reduce a board’s supervisory responsibilities, but rather sharpen them and distinguish them from management's responsibilities.  “This is actually the first time we will be highlighting the performance of the board separate from senior management,” Powell said. “We’re increasing the focus on the board and clarifying our expectations of them in a way that we hadn’t before, and in a way that makes it easier to hold them accountable. We’re not downgrading it, we’re upgrading it.”

FDIC takes more flak from Noreika on de novos | American Banker  -– Acting Comptroller of the Currency Keith Noreika has intensified his complaints that the Federal Deposit Insurance Corp. is hindering the formation of banks, questioning the sincerity of recent FDIC overtures toward organizers of de novos.The FDIC is sending a welcoming message, Noreika said in a recent sit-down interview with American Banker, “but you're talking about people's livelihoods here.”Since the crisis, the agency has approved just a trickle of applications for deposit insurance, which new banks must obtain in addition to th eir charter. But recently, the FDIC has sought to encourage new applicants, starting with a reduction of the heightened-scrutiny period for new banks to three years from the traditional seven years.“From the FDIC's standpoint, we would like to do everything we can to encourage the formation of de novo institutions,” Martin Gruenberg said during a Q&A with reporters on Tuesday. “The FDIC has now approved six deposit insurance applications over the last 10months. We've seen a pickup in interest."But Noreika said the change could be a superficial one, suggesting the FDIC could be in effect extending the scrutiny period by delaying the moment when an application is formally approved.“We talk about shorter time frames, but there's often the small print," he said. “This isn't specific to the FDIC, but agencies play games about when they 'accept' the application. It could be years.”The heightened-scrutiny period for new i nstitutions begins when a bank opens its doors, according to FDIC rules.

 Rethinking split of banking and commerce: Noreika makes his case -- Though his term in office is quickly drawing to a close, with President Trump’s nominee Joseph Otting awaiting confirmation, Noreika has already found the time to publicly feud with his peers in other financial agencies on issues such as mandatory arbitration, the deposit insurance application process, and even a cornerstone of financial law — the separation of banking and commerce.  The principle was first codified in the 1956 Bank Holding Company Act, which restricted the nonbanking activities of multiple-bank holding companies. Ever since, it has been the subject of numerous legal and policy debates. Community banks have long felt that their survival depends on it.  "I'm not sure it really hurts the community banks," acting OCC chief Keith Noreika says in discussing traditional opposition to letting nonfinancial companies have a strong role in the banking system.  In an interview with American Banker, Noreika argued there should be no sacred cows in financial policy, including separation of banking and commerce. The following transcript has been edited for length and clarity. Why do you think we should reconsider the principle of separating banking and commerce? KEITH NOREIKA: What I don't like is everyone just assuming the separation of banking and commerce is holy writ, without having an intellectual understanding about why that's the case. That's why as a lawyer, I'm going to push holes in that argument so that people can justify it to me. If they can't, maybe there need to be some changes. It seems like we're just on autopilot. Certainly a little bit less now that I’m here — but certainly in the last administration, from Dodd-Frank on it's like, “Get rid of the ILCs, get rid of the trust companies.” When we're regulating a business that manages risks, part of risk management is diversification. We have a uniquely American system of bank regulation. But the notion of separation of banking and commerce is quite late to that debate. The Bank Holding Company Act was only enacted in 1956.

Choke Point is officially over, Justice Department says - — The Trump administration says it has put a stop to Operation Choke Point, a controversial program under the Justice Department that aimed to discourage financial institutions from servicing businesses viewed as high-risk. In a letter to House Judiciary Chairman Bob Goodlatte, R-Va., Assistant Attorney General Stephen Boyd called the policy a “misguided initiative,” and pledged to end it.“The Department will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities,” he said in the Aug. 16 letter.  “The Department will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities,” All bank investigations pursued under Choke Point had ended, and none would be “undertaken again,” Boyd said. Some subpoenas issued by the Federal Deposit Insurance Corp. under Operation Choke Point had “led to the discovery of other criminal activity involving certain individuals and non-bank entities,” Boyd said. The Justice Department plans to “pursue those ancillary investigations,” but only where unlawful conduct is at stake, he said.

 Can TRID be saved? - There have been many rules and regulations issued in the wake of the financial crisis last decade, but few have been as unpopular and controversial as TRID.The regulators who drafted the Consumer Financial Protection Bureau’s TILA/RESPA Integrated Disclosure Rule may have had good intentions, say credit union observers, but the end result was a regulation with many shortcomings. What’s even worse, they say, is that the CFPB continues to kick the can down the road when it comes to addressing specific concerns.In interviews with Credit Union Journal, compliance experts and credit union executives outlined the most crucial fixes TRID needs, starting with the ability of lenders to correct simple, inadvertent errors.Brandy Bruyere, VP of regulatory compliance for the National Association of Federally-Insured Credit Unions, said the CFPB allows lenders to fix non-numeric clerical errors, but not errors involving numbers. For the latter, the bureau refers lenders to the Truth In Lending Act or to the preamble of the TRID rule itself.“Even something as simple as a mistaken phone number, which does not affect the transaction, cannot be fixed,” she said. “Referring people to the Truth in Lending Act is not helpful because TILA does not have specific commentary — which means you have to consult with an attorney every time you have an error.” If a CU does have an error in a disclosure form, it can be stuck holding the bag on a fee, Bruyere continued. Prior to TRID, she said lenders had the ability make changes to settlement charges leading up to closing a loan. With TRID, there only are a few items that can change up to 10 percent — but for many items there is zero tolerance for changes.

Investors pour back into crisis-era credit product - Hedge funds are embracing an esoteric credit product widely blamed for exacerbating the financial crisis a decade ago, as low volatility and near record prices for corporate debt tempt them into riskier areas to seek higher returns. The market for “bespoke tranches” — bundles of credit default swaps that are tied to the risk of corporate defaults — has more than doubled in the first seven months of 2017. Traders in this opaque, over-the-counter market estimate there has been issuance of $20bn to $30bn this year, compared to $15bn in the whole of 2016 and $10bn in 2015. High-profile investors including Apollo, Brigade Capital and Blue Mountain are among those who having been buying tranches with a maturity of two to three years. The surge in activity reflects the effort by investors to generate a higher rate of return during a period of historically low volatility in credit markets, compounded by low fixed rate yields. Bespoke tranches remain largely the territory of credit hedge funds, since the products are not graded by the rating agencies and therefore have a limited investor base. But traders say pension funds in Canada and New Zealand are among the institutional investors who have entered the market. 

OCC seeks dismissal of New York fintech charter challenge - — The Office of the Comptroller of the Currency is seeking to dismiss a challenge to its fintech charter by New York’s bank regulator. In a legal filing on Friday, the agency argued that New York’s Department of Financial Services has no standing to oppose the fintech charter in court, since it has not yet formally issued one. “DFS lacks standing because OCC’s [fintech charter initiative] has resulted in no-injury-in-fact,” the document said. "OCC has not reached a final decision on whether it will offer the specific type of national bank charter that is being challenged.”The agency also opposed the state regulator’s argument that the OCC does not have the statutory authority to issue such charters, appealing to a legal doctrine that gives agencies the benefit of the doubt on their implementation of the law.“OCC’s authoritative interpretation of the ambiguous statutory term ‘the business of banking’ is therefore entitled to deference under the Chevron framework,” the agency said. The Comptroller's Office was sued in May by the New York regulator over its fintech charter initiative, which kicked off last year under former Comptroller of the Currency Thomas Curry. In July, the current acting head of the agency, Keith Noreika, said he backed the charter but was not prepared to formalize it yet."Suffice it to say, the agency is developing its litigation response and plans to defend this authority vigorously," Noreika said during a speech at an Exchequer Club luncheon. The agency was also sued in April by the Conference of State Bank Supervisors over claims that it does not have the authority to issue a fintech charter. The OCC filed a motion to dismiss that lawsuit late last month, on similar grounds.

Digital currency exchange readies expansion into hot US market - The already crowded American market for cryptocurrency exchanges is about to get a new entrant.Japanese exchange bitFlyer, the largest bitcoin startup in its home country, announced Friday that it plans to expand to the United States by opening a San Francisco-based exchange in the fall of 2017. San Francisco is where Kraken and Coinbase's GDAX, two leading U.S. digital asset exchanges, are located. Given the dramatic increase in the prices of bitcoin, ether and many other blockchain assets—the total market value has climbed to more than $142 billion, from a mere $18 billion on January 1—it makes sense that some exchanges are looking to expand into new markets. The company lined up a banking partner in the U.S. a year ago, a spokesman said, declining to identify the institution. Getting and keeping a bank account was once one of the biggest challenges for crypto exchanges; financial institutions saw too much reputational and regulatory risk in having anything to do with a leaderless, bordlerless internet currency.  Strict compliance with know-your-customer and other anti-money-laundering requirements is a must for any exchange to get and stay banked.

Identity Thieves Hijack Cellphone Accounts to Go After Virtual Currency - NYT - Hackers have discovered that one of the most central elements of online security — the mobile phone number — is also one of the easiest to steal. In a growing number of online attacks, hackers have been calling up Verizon, T-Mobile U.S., Sprint and AT&T and asking them to transfer control of a victim’s phone number to a device under the control of the hackers. Once they get control of the phone number, they can reset the passwords on every account that uses the phone number as a security backup — as services like Google, Twitter and Facebook suggest. “My iPad restarted, my phone restarted and my computer restarted, and that’s when I got the cold sweat and was like, ‘O.K., this is really serious,’” said Chris Burniske, a virtual currency investor who lost control of his phone number late last year. A wide array of people have complained about being successfully targeted by this sort of attack, including a Black Lives Matter activist and the chief technologist of the Federal Trade Commission. The commission’s own data shows that the number of so-called phone hijackings has been rising. In January 2013, there were 1,038 such incidents reported; by January 2016, that number had increased to 2,658.  But a particularly concentrated wave of attacks has hit those with the most obviously valuable online accounts: virtual currency fanatics like Mr. Burniske.    Within minutes of getting control of Mr. Burniske’s phone, his attackers had changed the password on his virtual currency wallet and drained the contents — some $150,000 at today’s values.Most victims of these attacks in the virtual currency community have not wanted to acknowledge it publicly for fear of provoking their adversaries. But in interviews, dozens of prominent people in the industry acknowledged that they had been victimized in recent months. “Everybody I know in the cryptocurrency space has gotten their phone number stolen,” said Joby Weeks, a Bitcoin entrepreneur. Mr. Weeks lost his phone number and about a million dollars’ worth of virtual currency late last year, despite having asked his mobile phone provider for additional security after his wife and parents lost control of their phone numbers.

Hackers Using Cell Phone Numbers to Reach Online Accounts - Hackers are targeting cell phone numbers to gain easy access to victims' online accounts — and virtual currency, the New York Times reported.According to the Times, hackers have increasingly been calling up Verizon, T-Mobile U.S., Sprint and AT&T and asking them to transfer control of a victim's phone number to a device under the hacker's control. The hacker then resets the passwords on every account that uses the phone number as a security backup."My iPad restarted, my phone restarted and my computer restarted, and that's when I got the cold sweat and was like, 'O.K., this is really serious,'" Chris Burniske, a virtual currency investor who lost control of his phone number, told the Times.According to the Times, within minutes of getting control of Burniske's phone, his attackers had changed the password on his virtual currency wallet and drained the contents of an estimated $150,000.The Federal Trade Commission reports there were 1,038 phone hijackings in January 2013 and 2,658 three years later, the Times reported. But a concentrated wave has hit those with the most valuable online accounts – virtual currency, the Times reported."Everybody I know in the cryptocurrency space has gotten their phone number stolen," Joby Weeks, a Bitcoin entrepreneur, told the Times.Coinbase, one of the most widely used Bitcoin wallets, has encouraged customers to disconnect their mobile phones from their Coinbase accounts. But some customers who've been hacked say the companies need to take more steps by doing things like delaying transfers from accounts on which the password was recently changed."Coinbase looks like a bank, stores millions of dollars like a bank, but you don't realize how weak its default protections are until you are robbed of thousands of dollars in minutes," Cody Brown, a virtual reality developer who was hacked in May, told the Times.

IRS Now Has a Tool to Unmask Bitcoin Tax Cheats: You can use bitcoin. But you can’t hide from the taxman. At least, that’s the hope of the Internal Revenue Service, which has purchased specialist software to track those using bitcoin, according to a contract obtained by The Daily Beast. The document highlights how law enforcement isn’t only concerned with criminals accumulating bitcoin from selling drugs or hacking targets, but also those who use the currency to hide wealth or avoid paying taxes. The IRS has claimed that only 802 people declared bitcoin losses or profits in 2015; clearly fewer than the actual number of people trading the cryptocurrency—especially as more investors dip into the world of cryptocurrencies, and the value of bitcoin punches past the $4,000 mark. Maybe lots of bitcoin traders didn't realize the government expects to collect tax on their digital earnings, or perhaps some thought they'd be able to get away with stockpiling bitcoin thanks to the perception that the cryptocurrency is largely anonymous. “The purpose of this acquisition is… to help us trace the movement of money through the bitcoin economy,” a section of the contract reads. The Daily Beast obtained the document through the Freedom of Information Act. The contractor in this case is Chainalysis, a startup offering its “Reactor” tool to visualize, track, and analyze bitcoin transactions. Chainalysis’ users include law enforcement agencies, banks, and regulatory entities. The software can follow bitcoin as it moves from one wallet to another, and eventually to an exchange where the bitcoin user will likely cash out into dollars or another currency. This is the point law enforcement could issue a subpoena to the exchange and figure out who is really behind the bitcoin. 

Bitcoin Bear Peter Schiff Doubles Down: Even at $4,000 It's Still a 'Bubble' - The price of bitcoin continues to surge, defying critics to set a new all-time high of $4,500 today.But even though bitcoin's price has soared in recent weeks, there will always be bears who see the market through a profoundly darker lens. One of the best-known among the bears, investor Peter Schiff, is now making his case in even stronger terms for why bitcoin has advanced ever farther into bubble territory.Schiff, who predicted the 2008 mortgage crisis, famously referred to bitcoin as digital fool's gold and compared the cryptocurrency to the infamous bubble in Beanie Babies.Moreover, the recent run-up in bitcoin hasn't softened Schiff's view: If anything, it's reinforced his sense of impending doom.Schiff told CoinDesk: "There's certainly a lot of bullishness about bitcoin and cryptocurrency, and that's the case with bubbles in general. The psychology of bubbles fuels it. You just become more convinced that it's going to work. And the higher the price goes, the more convinced you become that you're right. But it's not going up because it's going to work. It's going up because of speculation."In other words, bitcoin’s upward momentum ­– even the price more than doubling within 90 days ­– may be a kind of self-fulfilling pipe dream.Schiff does acknowledge that, under certain circumstances, bubbles can lead to trading opportunities for investors who aren’t wedded to the long-term viability of the asset."People who get i n and get out can make money," he said. Unfortunately, that's easier said than done. He added: "Most people never get out. Most people just don't sell, because of the psychology, and what happens to most people is they just keep buying more. So, when it crashes, they don’t just give back the paper profits – they give back real money."

Buffett Sees Market Crash Coming: His Cash Speaks Louder Than Words --   The Sage of Omaha’s adage is “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” But for Warren Buffett the current environment doesn’t appear to be offering up any wonderful companies at fair valuations. The situation is so bad that the cash stockpile of Berkshire Hathaway has more than doubled in the last four years, from under $40 billion to $100bn. The infamous investor is famed for his investment approach of pouncing on companies when they run in to problems and are seemingly undervalued. At the moment though, there aren’t many out there.The large stockpile is a likely indicator of not only how Buffett negatively views the current market environment but also how he sees the near future and what opportunities it will bring. Buffett has previously stated how much he hates cash, telling investors at the Berkshire AGM that it was a poor way to keep their money. During the Omaha-based meeting Buffett expressed his frustration with a cash pile that is approaching $100 billion, “We shouldn’t use your money that way for long periods…The question is, ‘Are we going to be able to deploy it?’”It may well be the case that Buffett is prepared to pay a dividend, stating that dividends could be paid "reasonably soon, even while I am around.” But this is unlikely. Buffett is known for his dislike of paying dividends. Since he took over Berkshire over half a century ago the company has paid a single $0.10 dividend in 1967. Instead, shareholders have been rewarded with value through investments that have increased the company’s earning power.

Fed’s Big Bond Unwind May Clobber U.S. Stocks, Corporate Debt - Stocks and corporate bonds may be the surprise big losers once the Federal Reserve starts reducing its $4.5 trillion balance sheet.  A committee of investors and banks highlighted that outside risk in a presentation to Treasury Department officials this month. A week after that, strategists at Morgan Stanley separately warned that investors are underestimating the trouble that the Fed’s plans could bring to corporate debt markets.  Money managers don’t seem alarmed so far. Stocks have gained 10 percent this year, including dividends, while corporate bonds are up 4.8 percent as of Friday’s close. Both Treasury debt and mortgage bonds, the securities most directly influenced by the Fed’s plans to reinvest less money, have lagged the broader U.S. bond market in 2017, although their returns tend to be more stable. The threat to the stock and corporate bond markets underscores the bind that the Fed is in as it tries to scale down the extraordinary stimulus it gave the economy during and after the financial crisis. Its quantitative easing program has more than quadrupled its debt holdings, and Fed policy makers plan to start slimming down those investments soon now that the economy is on more solid ground. But cutting back could hurt markets and perhaps the broader economy in ways that are hard to forecast.  As the Fed contracts its balance sheet, “all we can do is hypothesize what the paths are because this is unprecedented,”  Companies’ borrowing costs, for example, might rise by 1.35 percentage points relative to Treasuries, according to the committee’s presentation to the Treasury, and those higher funding expenses could weigh on stocks. The European Central Bank is considering further dialing down its quantitative easing, which could add to the pressure. After years of the central bank stimulus, signs of froth are everywhere. On the debt side, U.S. high-grade companies have already sold about $1 trillion of bonds this year, and are on track to break last year’s issuance record. Junk bond yields, at just 5.8 percent, are near all-time lows. In stocks, U.S. markets are close to record highs.

Corporate Debt Threatens U.S. Economic Prospects - Pam Martens - According to recent studies, U.S. corporations’ debt levels could pose some serious headwinds for the United States’ economy in the next major downturn. In April, the International Monetary Fund announced the following red flags:The U.S. corporate sector has added $7.8 trillion in debt and other liabilities since 2010;Among S&P 500 firms, median net debt “is close to a historic high of more than 1 ½ times earnings”; Looking at a “broader set of nearly 4,000 firms accounting for about half of the economy-wide corporate sector balance sheet, suggests a similar rise in leverage across almost all sectors to levels exceeding those prevailing just before the global financial crisis”;Debt is especially high “in the energy, real estate, and utilities sectors, ranging between four and six times earnings”;“The average interest coverage ratio — a measure of the ability for current earnings to cover interest expenses — has fallen sharply over the past two years. Earnings have dropped to less than six times interest expense, close to the weakest multiple since the onset of the global financial crisis.” In July 2016, S&P Global released a report which found that “global corporate credit quality has been weakening over recent years.” It said that in a sampling of about 14,400 nonfinancial corporations around the globe, “two out of five” are highly leveraged. In December of last year, the Financial Times obtained a study from a Wall Street trade group, the Securities Industry and Financial Markets Association (SIFMA), which found that if you added short-term company borrowings such as those found in money market funds to outstanding corporate debt, the total comes to a whopping $11.3 trillion. The article notes the following: “Much of the debt sold by companies in recent years has been used to buy back their own shares, pay out higher dividends or finance big mergers and acquisitions. While these buybacks funded by cheap borrowing have boosted earnings, a missing ingredient has been spending on investment to build their businesses.”

Why Davos tags tech giants as 'systemically important' --  To the layman, “systemically important” sounds like a compliment, but bankers know it’s a label with a lot of baggage. And it now describes large technology companies such as Google and Apple, according to a new report. “Financial institutions increasingly resemble, and are dependent on, large tech firms to acquire critical infrastructure and differentiating technologies,” says the report, published Tuesday by the World Economic Forum.  For example, Amazon Web Services is on its way to becoming “the backbone of the financial services ecosystem,” the report says, with everyone from JPMorgan Chase to Xignite, a company that makes market data application programming interfaces, using Amazon’s cloud service for data storage and processing. Meanwhile, JPMorgan itself is reportedly investing in a customer relationship management and analytics system for institutional clients that, like Amazon, would suggest trades based on past behavior. Despite using the provocative phrase “systemically important techs,” the report stops well short of calling for regulatory changes. “It is a play on words, intentionally so,” said Jesse McWaters, the WEF’s project lead for disruptive innovation in financial services. He stressed that the line in the nearly 200-page report is not a call for branding any tech companies systemically important financial institutions, which he said he did not think would be appropriate.  However, the increasing interconnectedness between financial institutions and tech companies creates new operational risks — consider the AWS outage in May — and “may require a consideration of things like know-your-vendor rules,” McWaters said.

Interest income boosts banks' 2Q profit to post-crisis record - — Bank earnings jumped 10.7% in the second quarter from a year earlier, to $48.3 billion, boosted by rising net interest income as banks kept expenses in check, the Federal Deposit Insurance Corp. said Tuesday.The agency’s Quarterly Banking Profile said net interest income rose 9.1% from a year earlier, or $10.3 billion, while the net interest margin rose to 3.22%, from 3.08%. Noninterest income rose 1%, to $66.8 billion. Meanwhile, noninterest expenses rose 3.3%, to $108.6 billion, compared with the second quarter of 2016. Though the report pointed to many positive signs for the industry, loan growth remained lackluster in the second quarter. The rate of annual loan growth slowed for a third consecutive quarter, with total loans and leases rising just 1.7%, or $161.2 billion, from the first quarter. Year over year, loans rose by 3.7%, compared with a 6.6% increase logged over 2015.  “Revenue and net income growth were both strong, profitability reached a post-crisis high, net interest margins improved, and the number of unprofitable banks and ‘problem banks’ continued to fall,” FDIC Chairman Martin Gruenberg said in prepared remarks. Overall, banks were profitable, with close to two-thirds of the industry reporting yearly growth in net income, compared with only 4% reporting a net loss. The industry’s average return on assets reached a post-crisis record, rising to 1.14%, up from 1.06% the year before.

That IBM blockchain? Northern Trust says it works | American Banker - After six months managing private equity deals with IBM’s blockchain platform, Northern Trust has an encouraging report about the technology’s viability for enterprises — though perhaps less so for its scalability.The platform has been working well, said Arijit Das, applications manager for enterprise tech at Northern Trust. “It is doing everything we hoped it would do,” he said. “We’ve got fund management on the blockchain.”  He noted that private equity transactions tend to be high-value but low-volume. “For that use case, it performs extremely well,” Das said. What remains to be seen is how well the technology spawned by bitcoin can perform with more frequent transactions — especially considering the bitcoin community’s recent struggles to scale the network.  IBM is announcing Tuesday the general availability of its blockchain platform, a toolkit of sorts for enterprises that want to create and operate distributed ledgers. If this sounds familiar, it’s because the vendor introduced the product about a year ago. Northern Trust revealed in February it was using the technology — not in pilot, but in production. A group of Canadian banks announced in March they were using it to upgrade their digital identity project. Big Blue’s blockchain is built on the Linux Foundation's open-source Hyperledger Fabric v1.0. It’s a permissioned blockchain designed for enterprises and intended to run on zLinux mainframes, either in IBM’s cloud or on premise. It’s meant to provide privacy, security, resilience and fault tolerance.  Other enterprise blockchains abound, including R3’s Corda, JPMorgan Chase’s Quorum, Digital Asset Holding’s Global Synchronization Log and other iterations of the Hyperledger protocol. (Microsoft also announced last week the Coco Framework, which provides security and governance controls for existing blockchain nodes.)

 “Swell”: Bernanke to Give Keynote Speech at October Cryptocurrency Event - Ben Bernanke will join Sir Tim Berners-Lee as keynote speakers at the “Swell” cryptocurrency conference October 16-18 in Toronto. Recently our customers requested that Ripple bring together leaders in banking and blockchain who are committed to changing the way the world moves money today. Challenge accepted. Today, we’re pleased to announce Swell: The Future Is Here, taking place in Toronto from October 16-18. Swell is attracting a roster of payments experts and industry luminaries to discuss trends, success stories of blockchain implementations and real-world blockchain use cases to meet changing customer demands for global payments.Dr. Ben Bernanke, Chairman, The Federal Reserve System (2006-2014) to be interviewed by Gene Sperling, National Economic Council Director and National Economic Advisor under Presidents Clinton and Obama (1996-2001, 2011-2014).Sir Tim Berners-Lee, Inventor of the World Wide Web who will present A Look Ahead Into the Future of Tech. Swell is an exclusive, invitation-only event.  Bloomberg reports Bernanke to Give Keynote Speech at October Cryptocurrency Event.Ben Bernanke, former chairman of the Federal Reserve, will be the keynote speaker at a blockchain and banking conference in October hosted by Ripple, the startup behind the fourth largest digital currency.The three-day event, called “Swell,” starts Oct. 16 in Toronto, Ripple said in a statement on its website. Bernanke, who has criticized cryptocurrencies in the past, will be interviewed by Gene Sperling, the former national economic adviser under Presidents Bill Clinton and Barack Obama. Bernanke wrote that virtual currencies could have “long-term promise” in a 2013 letter to Congress. However, in a 2015 interview with Quartz, he said bitcoin has “some serious problems,” including its anonymity and lack of stability. Bernanke was not immediately available to comment.

Keep CRA for fintech, but lose its geographic boundaries – BankThink - The interest of technology firms in the banking sector is fueling a continuing debate over the Community Reinvestment Act. The key question is: How is a law that assesses bank activities within a specific geographic footprint applied to companies with an undefined footprint?Contrary to the view of some observers, technology has not rendered the CRA obsolete or irrelevant. Similarly, policymakers should not give in to calls to create a “CRA-lite” for fintech firms and other nonbanks that desire a banking charter but lack physical branches. That would be just a way for them to avoid CRA requirements. We already have one large category of federally insured, CRA-exempt financial institutions (i.e., credit unions), and we do not need another.And yet, everyone seems to agree that CRA should be reformed. But how?   A crucial element of CRA enforcement is the Assessment Area, meaning the geographic boundaries in which a bank’s CRA performance is evaluated. Updating CRA policy for the digital age, in which boundaries are defined by an internet connection instead of a physical office, means redefining the appropriate Assessment Area, or AA.   Policymakers should also, finally, provide specific guidelines on minimum thresholds for CRA activities for different ratings within the AA, answering the 40-year-old question: How much is enough? I will come back to recommended guidelines for different CRA ratings at a later date; for now, I would just like to focus on the assessment areas.

 CRA investments' value hurt by talk of tax reform — While the fate of tax reform is far from certain in Congress, the Republican push to lower the corporate tax rate is already having an impact on banks and other investors in low-income housing tax credits.President Trump has been talking about a reduction to a 15% corporate rate, a big drop from the current 35% rate. Most industry observers are forecasting Congress will go with a 25% to 28% — and that level is already being priced into account, said Beth Mullen, a national director at CohnReznick, an accounting and tax advisory firm.  "At this stage, a 25% corporate rate is already being priced into deals that investors are closing right now," she said. "With the corporate rate going down, investors aren’t willing to pay what they used to.” Before the election, the average price of a low-income housing tax credit was $1.02. Pricing has fallen to between 91 to 92 cents per credit on average.Banks are major investors in low-income housing tax credits because it helps them meet their obligations under the Community Reinvestment Act. However, a significant reduction in the corporate rate could reduce demand for such credits.Last year, $16 billion in equity was raised from low-income house tax credit investors, 86.3% of it purchased by CRA-motivated investors, mostly banks, according to a CohnReznick survey. Originally, the Trump administration was hoping Congress would pass tax reform bill by the end of September. But that timetable has slipped, given the fact that Congress is facing a Sept. 29 deadline to deal with the debt ceiling and pass a new budget plan for the U.S. government. Most political observers believe it will be a struggle to pass tax reform by yearend.

Amex charged higher rates and fees in U.S. territories, CFPB says --American Express charged higher interest rates and annual fees for more than a decade to cardholders in Puerto Rico, the U.S. Virgin Islands and other U.S. territories, compared with customers in the U.S., the Consumer Financial Protection Bureau said Wednesday.According to a consent order signed between the bank and the agency, the CFPB alleged various "discriminatory policies" by American Express that harmed at least 200,000 consumers, most of them Spanish speakers.However, the CFPB said that American Express did not intentionally discriminate against its customers, but rather had different business units and practices overseeing its cards in the U.S. than in other U.S. territories, which include Guam, American Samoa and the Northern Mariana Islands. American Express rejected the CFPB's allegations of discrimination. The New York credit card giant said it agreed to the consent order to avoid the cost of protracted litigation."American Express does not tolerate discrimination in any form and is committed to ensuring that consumers are treated fairly," the company said in a statement. "Having long since taken actions that the CFPB subsequently ratified, the company decided to settle with them rather than go through years of litigation that would have provided no additional value to any of its customers."

Judge dismisses CFPB lawsuit against payment processors --A federal judge sanctioned the Consumer Financial Protection Bureau on Friday by dismissing a massive lawsuit against several payment processors and admonishing the agency for acting "in bad faith."U.S. District Judge Richard W. Story in Atlanta wrote in a 23-page opinion that the CFPB had failed to provide a knowledgeable witness in depositions in the case. The judge also said the bureau showed a "willful disregard" for, and "an unwillingness to comply" with, the court's instructions. The case in the U.S. District Court for the Northern District of Georgia was widely seen as an example of overreach by the CFPB, which filed a lawsuit in March 2015 alleging that payment processors "should have known" that debt collectors were trying to illegally collect on debts that consumers did not owe.  In the end, the judge punished the CFPB not based on the merits of the case but rather for its failure to comply with the rules of discovery, lawyers said."The CFPB has put up as much opposition as possible at every turn," Judge Story wrote. "The deposition transcripts show that the CFPB’s approach comes in two forms. The first is to bury the defendants in so much information that it cannot possibly identify, with any reasonable particularity, what supports the CFPB’s claims. The second is to assert privilege objections to questions that the court has repeatedly ordered to be answered. Neither form is proper, and together they demonstrate a willful disregard of the court’s instructions."Federal rules allow judges discretion to impose a range of sanctions such as striking claims or outright dismissal of a lawsuit if a party fails to comply with discovery orders. The judge did not impose any fines. The CFPB declined to comment.

CFPB gives small banks, CUs a break on HMDA reporting — The Consumer Financial Protection Bureau has decided to give small financial institutions a tiny bit of regulatory relief, by temporarily easing their reporting requirements under the Home Mortgage Disclosure Act. Lenders will not have to report data on open-ended home equity lines of credit in 2018 or 2019 if they originated fewer than 500 HELOCs in the preceding year, the bureau said Thursday. Originally the threshold was to be 100 loans per year, which would have ensnared many more small banks and credit unions. Institutions will still have to report closed-end home equity loans if they write 25 or more a year."Today's amendments show that the Consumer Bureau is committed to ensuring that financial institutions are able to comply," said CFPB Director Richard Cordray in a press release.  The change will buy time to resolve a simmering controversy. Credit unions, which are heavy originators of HELOCs, and community banks have criticized as excessively burdensome the 2015 rule that called for them to report these loans under HMDA. "This temporary increase in the threshold will provide time for the bureau to consider whether to initiate another rulemaking to address the appropriate level for the threshold for data collected beginning Jan. 1, 2020," the agency said.

OCC seeks to raise appraisal thresholds for commercial real estate loans — The Comptroller of the Currency is proposing to nearly double the appraisal threshold for commercial real estate transactions to $400,000.nCurrently, national banks have to obtain appraisals that meet Title XI requirements of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 for commercial real estate transactions estimated to be valued at $250,000 or above. "The proposed threshold of $400,000 reflects increases in CRE transaction values and general indices of inflation since adoption of the existing threshold in 1994," the OCC said in a press release. Banking groups have been urging federal regulators to raise the appraisal standards for commercial real estate.FotoliaBesides transactions that are normally considered commercial real estate, the proposal also encompasses one- to four-family construction loans that do not provide permanent financing for the homebuyers.However, the proposal excludes home construction loans that provide the buyers with permanent financing. "This approach would be consistent with other regulations and guidance that address construction loans to consumers in other contexts," according to the OCC.The comment period ends Sept. 29. The move was praised by banking groups, including the American Bankers Association, which had urged federal banking regulators last year to raise the threshold to $500,000.

‘Potential for mischief’ in Libor replacement for leveraged loans - How do banks, corporate borrowers, and investors in syndicated loans prepare for a benchmark rate that does not exist?This conundrum is creating tension between stakeholders in the $900 billion market for below-investment-grade corporate loans as the entire financial system contemplates the possibility that Libor, the longtime benchmark for all manner of instruments, may disappear.The Loan Syndications and Trading Association has suggested that new loan agreements be crafted to allow any loan to switch to a new benchmark without unanimous consent of the investors in that loan. Covenant Review, a research firm that advises corporate loan investors on their rights, objects, arguing that such a measure would open the door to manipulation by the largest banks — which, remember, is the kind of thing that necessitated rethinking Libor in the first place. This is something of a gray area for leveraged loans, which are underwritten by banks and broadly syndicated among institutional investors.The current market standard, according to both the LSTA and Covenant Review, requires consent from each affected lender for any amendments that would reduce the rate of interest on a loan. But it’s not clear that any replacement rate would necessarily be lower than the London Interbank Offered Rate. In fact, if Libor no longer exists, it would not be possible to determine if a new reference rate is lower. Representatives for both the LSTA and Covenant Review declined to comment for this article.

HUD in limbo: Top jobs unconfirmed, key decisions unmade - When Pam Patenaude was nominated by President Trump as the No. 2 at the Department of Housing and Urban Development, she was supposed to help make up for the inexperience of the leader of the agency, the retired neurosurgeon Ben Carson. But four months later, Patenaude’s nomination remains in limbo, as does that of Paul Compton, the pick to be the department’s general counsel. That has left HUD facing a leadership crisis, with other key roles like the head of the Federal Housing Administration and Ginnie Mae going unfilled by the Trump administration.While other agencies have also been hamstrung with senior jobs unfilled, the problem is particularly acute at HUD because Carson acknowledges he lacks prior experience. It has left key decisions, including whether to lower Federal Housing Administration premiums, unresolved for long stretches of time while Carson waits for his senior staff to arrive.It’s not clear why the Senate has not acted on Patenaude, a former HUD assistant secretary who is now president of the J. Ronald Terwilliger Foundation for Housing America’s Families. Her nomination was approved by the Senate Banking Committee in April. Democrats lack the ability to filibuster nominees, but by Senate tradition, a single lawmaker can sometimes place a hold on a nominee. Some industry observers pointed to Sens. Elizabeth Warren, D-Mass., and Robert Menendez, D-N.J., as likely holding Patenaude up. Democrats objected to her after she defended President Trump’s budget request to slash funding for HUD.

Ninth Anniversary of the GSEs' Conservatorships: Not a Time to Celebrate —  In the summer of 2008, Fannie Mae and Freddie Mac’s financial positions deteriorated sharply: the result of inadequate capital (equity financing) for the risks in the residential mortgages that they held and had securitized. On September 6, 2008, their regulator, the Federal Housing Finance Agency (FHFA), removed senior management and placed these government-sponsored enterprises (GSEs) into conservatorships. Since then, the FHFA and the U.S. Treasury (which extended almost $188 billion to keep them solvent through 2011) have run them. As a result of what was in effect their bankruptcy, many observers would have been willing to offer long odds on a bet that Fannie and Freddie would still be in conservatorships nine years later. They would have lost that bet. The Dodd-Frank Act of 2010 was silent on the subject, as is the House-passed Financial CHOICE Act. While both firms have stabilized and run cash-flow surpluses since 2012, there is no resolution in sight. Although it is not an occasion for a celebration, this ninth anniversary provides a good opportunity to review the U.S. housing finance system and Fannie and Freddie’s role. This review addresses U.S. housing policy more generally, offering thoughts about sensible ways forward.

Five simple ways GSE reform can narrow the homeownership gap -- With house prices reaching new highs each month, it is easy to come to the conclusion that U.S. residential housing has fully recovered since the depth of the financial crisis. However, the housing recovery is as unequal as the rest of U.S. income and wealth distribution.   Here are five ways that mortgage policy reforms could promote housing equality and encourage private capital to return to mortgage finance. Each action plan is meant to provide taxpayer-backed support for underserved markets and otherwise get the government out of the market’s way.

  • Income-targeted loan programs. The GSEs are now allowed to buy or back loans over $600,000 and approaching $1 million in certain high-cost areas. Loan limits are tighter in most of the country, but there too the maximum support allowed is not only well above median national existing house prices — about $256,000 — but often far beyond actual house prices in lower-income and/or hard-hit communities. In some states, the government-sanctioned limits in certain areas far exceed the statewide prices.
  • Affordability credit risk transfers.Fannie and Freddie have structured portions of their mortgage portfolios into tranches that share risk with reinsurers, hedge funds and other investors. Even so, the GSEs take a first-loss position and subsidize risk-share pricing. Why not encourage more private capital into equality-boosting mortgage finance by pushing the GSEs to structure credit risk transfers for the mortgages that most need their help?
  • Limits on equity extraction. Because a home is the most important source of wealth accumulation for LMI households, equity extraction — in which homeowners borrow against the value of their home — can lead to financial ruin. For good measure, it can also threaten financial stability if cash-out refinancing transactions or second liens convert first liens, in which a borrower owned a substantial amount of equity, into mortgages with sky-high loan-to-value ratios.
  • Sharing buyback risk.  Originators’ reluctance to make loans that they may have to buy back remains a formidable barrier for bank originations of the higher-risk loans most important to economic equality. Government agencies should identify products most likely to benefit younger and LMI borrowers, designing mortgages that ensure sustainable homeownership and sharing put-back risk with originators. This is a meaningful way for taxpayer-backed risk to enhance private capital instead of replacing it.
  • Better-designed mortgage products. A housing market that is 90% dependent on the government means that trillions of dollars of government support go to the types of mortgages that are the easiest to securitize in huge quantities. These are the least risky loans that support the greatest volume of mortgage origination, home-building and real estate transactions. But this commoditized underwriting and delivery system exacerbates the scarcity of mortgage products supporting sustainable homeownership for underserved housing markets (those with underwater mortgages and remaining stocks of vacant homes), young borrowers with student-debt loads, and borrowers such as the disabled or those in communities with unusual needs. Housing is indeed an important engine of U.S. prosperity, but taxpayer support should go first to ill-served borrowers and communities, not those who would do well even if forced to go it alone.

Black Knight: Foreclosure inventory below 400,000 for the first time since February 2007 - CR Note: The month-to-month increase in delinquencies is mostly seasonal (happens every July). From Black Knight: Black Knight Financial Services’ First Look at July 2017 Mortgage Data

• Foreclosure inventory fell by 12,000 in July, bringing the total below 400,000 for the first time since February 2007
• Active foreclosure inventory has declined by 28 percent (more than 150,000) over the past 12 months
• July’s 53,300 foreclosure starts mark the second lowest (next to April 2017) monthly volume since the start of 2005
• Early-stage mortgage delinquencies experienced a slight seasonal uptick in July
According to Black Knight's First Look report for July, the percent of loans delinquent increased 2.8% in July compared to June, and declined 13.5% year-over-year. The percent of loans in the foreclosure process declined 3.0% in July and were down 28.0% over the last year.   Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.90% in July, up from 3.80% in June. The percent of loans in the foreclosure process declined in July to 0.78%.  The number of delinquent properties, but not in foreclosure, is down 300,000 properties year-over-year, and the number of properties in the foreclosure process is down 152,000 properties year-over-year.

Which States Have The Most Mortgage Fraud?  -  In a recent blog post by CoreLogic, the real estate consultancy has determined the regions of the U.S. that have the highest correlation with the National Mortgage Fraud Risk index. The regions that are most highly correlated with fraud risk are areas that will be the best predictors of nationwide mortgage fraud.  In fact, one can look at a few highly correlated regions to predict fraud risk on a national scale.The heatmap (figure 3) shows the correlation of each region to the National Trend.  Mousing over a region shows the region name, the tracking score, and the percentage level of the lowest to highest possible tracking score (-1.0 to 1.0).  The heatmap has two layers (that can be toggled in the top-right menu of the map), one for state and one for CBSA.  The CBSAs are limited to the top 50 CBSAs based on population. California and Maryland have the highest correlation with the national trend for risk (see figure 2).  The two states have tracking scores of 0.49 and 0.47 respectfully.  To put this in perspective, the next highest correlated state is Massachusetts with a tracking score of 0.1.  All other states have a tracking score less than a 0.  When California and Maryland are combined by averaging, the tracking score climbs to 0.72.  The correlation typically increases the more regions that are added because the national score is a combination of all regions.  However, the combined correlation gets worse when combining more states in descending order of correlation. It requires combining more than 6 states before it becomes better than combining California and Maryland alone.Finding the states that are correlated is good but looking at smaller regions is better.  Smaller regions have a reduced number of contributing fraud factors to analyze.  Along with the states, CoreLogic also looked at the correlation for metropolitan areas, commonly referred to as core-based statistical areas (CBSA).  Utilizing the same process, the number of CBSAs that best fits the national trend can be reduced to three.  CBSAs are smaller than states and are less likely to be predictive of the national trend (see figure 1).

Freddie Mac: Mortgage Serious Delinquency rate unchanged in July -- Freddie Mac reported that the Single-Family serious delinquency rate in July was at 0.85%, unchanged from 0.85% in June.  Freddie's rate is down from 1.08% in July 2016.Freddie's serious delinquency rate peaked in February 2010 at 4.20%.  This ties last month as the lowest serious delinquency rate since April 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  Although the rate is still generally declining, the rate of decline has slowed. Maybe the rate will decline another 0.2 to 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.

  MBA: Mortgage Delinquency Rate in Q2 at Lowest Level Since 2000 -- From the MBA: Delinquencies and Foreclosures Continue to Decline in Q2 2017;The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.24 percent of all loans outstanding at the end of the second quarter of 2017.  The delinquency rate was down 47 basis points from the previous quarter, and was 42 basis points lower than one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.The percentage of loans on which foreclosure actions were started during the second quarter was 0.26 percent, a decrease of four basis points from the previous quarter, and six basis points lower than one year ago. The delinquency rate includes loans that are at least one payment p ast due but does not include loans in the process of foreclosure.  The percentage of loans in the foreclosure process at the end of the second quarter was 1.29 percent, down 10 basis points from the previous quarter and 35 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.49 percent in the second quarter, down 27 basis points from the previous quarter and 62 basis points lower than one year ago. Mortgage delinquencies decreased in the second quarter of 2017 across all loan types - conventional, FHA and VA - on a seasonally-adjusted basis.  The conventional delinquency rate dropped to 3.47 percent from 4.04 percent in the first quarter, reaching its lowest level since 2005.  The FHA delinquency rate decreased to 7.94 percent from 8.09 percent in the first quarter, reaching its lowest level since 1996.  The VA delinquency rate dropped to 3.72 percent from 3.90 percent in the first quarter, reaching its lowest level since 1979.

MBA: Mortgage Applications Decrease in Latest Weekly Survey - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey:Mortgage applications decreased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 18, 2017. ... The Refinance Index increased 0.3 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 9 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged from the week prior at 4.12 percent, with points increasing to 0.39 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

Freddie Mac: 30-year mortgage rate hits new low for 2017 -- Mortgage rates decreased for the fourth consecutive week and the 30-year mortgage hit a new low for 2017, according to Freddie Mac’s Primary Mortgage Market Survey. “The 30-year mortgage rate also declined for the fourth consecutive week, dropping three basis points to a new year-to- date low of 3.86%,” Freddie Mac Chief Economist Sean Becketti said. The 30-year fixed-rate mortgage dropped to 3.86% for the week ending August 24, 2017. This is down from last week’s 3.89% but up from 3.43% last year.The 15-year FRM held steady at 3.16%, an increase from last year’s 2.74%.The five-year Treasury-indexed hybrid adjustable-rate mortgage increased slightly, hitting 3.17%. This is up from 3.16% last week but down from 2.75% last year. “The 10-year Treasury yield fell six basis points this week amid concerns over lagging inflation,” Becketti said.

 Mortgage Rates Steady at 2017 Lows --Mortgage rates held steady to start the new week.  This keeps them in line with the best levels since November 2016.  There were no interesting developments in financial markets or in terms of economic data today.  Most news coverage was focused on the solar eclipse.  It's a good thing the eclipse happened, because it's not entirely clear what financial media outlets could have possibly discussed otherwise.But again, with rates at the lowest levels of the year, "boring" and "sideways" are only terms that inconvenience someone trying to write about market movements whereas they're a relative boon to consumers who are buying a new home or refinancing an existing mortgage.   3.875% remains the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios, although quite a few lenders remain at 4.00%. 

 FHFA House Price Index: Index Up 1.6% in Q2 - The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for June. Here is the opening of the report:  – U.S. house prices rose 1.6 percent in the second quarter of 2017 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 6.6 percent from the second quarter of 2016 to the second quarter of 2017. FHFA’s seasonally adjusted monthly index for June was up 0.1 percent from May.The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. FHFA has produced a video of highlights for this quarter.“U.S. house prices rose in nearly every state during the second quarter,” said FHFA Senior Economist William Doerner. “New home sales are climbing but, relative to the overall population, they still remain low from a historical perspective. The tight inventory is a major explanation for why house prices have been increasing every quarter over the last six years.” [Link to report] The chart below illustrates the monthly HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

NAR: "Existing-Home Sales Slide 1.3 Percent in July" --From the NAR: Existing-Home Sales Slide 1.3 Percent in July --Listings in July typically went under contract in under 30 days for the fourth consecutive month because of high buyer demand, but existing-home sales ultimately pulled back as large declines in the Northeast and Midwest outweighed sales increases in the South and West, according to the National Association of Realtors®.  Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 1.3 percent to a seasonally adjusted annual rate of 5.44 million in July from a downwardly revised 5.51 million in June. July’s sales pace is still 2.1 percent above a year ago, but is the lowest of 2017. .. Total housing inventory at the end of July declined 1.0 percent to 1.92 million existing homes available for sale, and is now 9.0 percent lower than a year ago (2.11 million) and has fallen year-over-year for 26 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.8 months a year ago.

Existing-Home Sales: July Sales Down Again - This morning's release of the July Existing-Home Sales decreased from the previous month to a seasonally adjusted annual rate of 5.44 million units and the June figure was revised downward by 10K. The Investing.com consensus was for 5.57 million. The latest number represents a 1.3% decrease from the previous month and a 2.1% increase year-over-year.Here is an excerpt from today's report from the National Association of Realtors.Lawrence Yun, NAR chief economist, says the second half of the year got off on a somewhat sour note as existing sales in July inched backward. “Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” he said. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.” [Full Report] For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2014. It can be found here.

Existing Home Sales Slump To 11-Month Lows; NAR Warns "Prices Are Rising Way Too Fast" --  For the first time since 2015, existing home sales fell in back to back months (-2.0% in June, -1.3% in July), dramatically missing expectations of a 0.5% bounce. Following the plunge in new home sales, existing home sales tumbled to their lowest SAAR since Aug 2016 as inventories dropped mdoestly (and home prices rose 6.2% YoY)NAR's Larry Yundetails:“July was the fourth consecutive month that the typical listing went under contract in under one month,”“This speaks to the significant pent-up demand for buying rather than any perceived loss of interest. The frustrating inability for new home construction to pick up means inadequate supply levels will keep markets competitive heading into the fall.”Yun concluded rather stunningly:“Home prices are still rising above incomes and way too fast in many markets."“Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.” Probably a good time to start hiking rates again and normalizing the long-end of the yield curve?

A Few Comments on July Existing Home Sales - First, as usual, housing economist Tom Lawler's estimate was much closer to the NAR report than the consensus.    So the decline in sales in July was no surprise for CR readers.Inventory is still very low and falling year-over-year (down 9.0% year-over-year in July). Inventory has declined year-over-year for 26 consecutive months.  I started the year expecting inventory would be increasing year-over-year by the end of 2017. That now seems unlikely. Inventory is a key metric to watch.  More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases. The following graph shows existing home sales Not Seasonally Adjusted (NSA). Sales NSA in July (red column) were the same as  July 2016. (NSA).Note that sales NSA are now in the seasonally strong period (March through September). And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.

July New Home Sales Down 9.4% from June - This morning's release of the July New Home Sales from the Census Bureau came in at 571K, down 9.4% month-over-month from a revised 630K in June. Seasonally adjusted estimates back to April were also revised. The Investing.com forecast was for 612K.Here is the opening from the report:Sales of new single-family houses in July 2017 were at a seasonally adjusted annual rate of 571,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.4 percent (±12.9 percent)* below the revised June rate of 630,000 and is 8.9 percent (±15.4 percent)* below the July 2016 estimate of 627,000.The median sales price of new houses sold in July 2017 was $313,700. The average sales price was $371,200. [Full Report]  For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

New Home Sales decrease to 571,000 Annual Rate in July -- The Census Bureau reports New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 571 thousand.
The previous three months were revised up solidly. "Sales of new single-family houses in July 2017 were at a seasonally adjusted annual rate of 571,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.4 percent below the revised June rate of 630,000 and is 8.9 percent below the July 2016 estimate of 627,000." The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply. The months of supply increased in July to 5.8 months from 5.2 month in June. nThe all time record was 12.1 months of supply in January 2009. This is in the normal range (less than 6 months supply is normal). "The seasonally-adjusted estimate of new houses for sale at the end of July was 276,000. This represents a supply of 5.8 months at the current sales rate."  Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973.

New Home Sales Plunge to Lowest Annualized Pace in Three Years - Mish -- New home sales plunged to a seasonally-adjusted annualized rate (SAAR) of 571,000.That was far lower than even the lowest Econoday economist’s estimate of 590,000.The Econoday consensus was 610,000 in a range of 590,000 to 622,000. Nonetheless, Econoday was happy about a number of things.Overstating weakness, July’s headline for new home sales fell to a far lower-than-expected annualized rate of 571,000. This is offset, however, by upward revisions totaling 33,000 in the two prior months which now stand at 630,000 and 618,000. This series, where sample sizes are low, is often volatile month-to-month with the 3-month average, still over 600,000 and just off expansion highs, telling the more reliable story.The best news in July’s report is an increase in supply, up 4,000 to 276,000 new homes on the market. Relative to sales, supply moves from 5.2 months to 5.8 months which is nearly at the 6 month mark which is widely considered to be balanced for new homes.Prices are showing increasing traction, up 0.7 percent in the month to a median $313,700. This is up 6.3 percent year-on-year which is roughly in line with prices of existing homes.The strength in pricing is good news for residential investment but not for first-time buyers who are being priced out of the new home market. The downdraft in July’s data aside, new homes are probably still a positive for the housing sector which has been trending higher in fits and starts all year. Watch tomorrow for existing home sales where strength is the expectation. Mortgage News Daily had a different take in its report, Worst Annual Pace in 3 Years For New Home Sales. New home sales in July were expected to remain steady after scoring a slight gain in June, instead they plunged to a rate even lower than those a year earlier. Three of the four geographic regions shared in the decline, Sales of newly constructed homes in July are estimated at a seasonally adjusted annual rate of 571,000 units. This is down 9.4 percent from June and 8.9 percent from the estimate for July 2016. The bad news was mitigated a bit as the U.S. Census Bureau and the Department of Housing and Urban Development revised their earlier June estimate to 630,000 units from their original estimate of 610,000.

A few Comments on July New Home Sales -- Bill Mcbride - New home sales for July were reported at 571,000 on a seasonally adjusted annual rate basis (SAAR). This was well below the consensus forecast, however the three previous months were revised up sharply.  Overall this was decent report. Sales were down 8.9% year-over-year in July.This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate).  Sales were down 8.9% year-over-year in July.Note that sales in July 2016 were strong, so this was a difficult year-over-year comparison.For the first seven months of 2017, new home sales are up 9.2% compared to the same period in 2016. This was a strong year-over-year increase through July.

The 2017 housing stall continues: Yesterday's new home sales report -- subject always, to sharp revisions -- for now confirms the slowdown in the housing market. Although the previous months were revised higher, sales of new single family homes have failed to make a new high for --- months (blue in the graph below), and confirm the stagnation shown by the much less volatile metric of permits for single family homes (red): Here's what the 3 month moving average of new home sales, that smooths out most of the volatility, looks like so far this year: The three month moving average has failed to make a new high since March. A look at median prices shows a very slow uptrend since the beginning of last year: The three month moving average of YoY prices also shows this deceleration -- although the overall trend is still positive: This morning's report on existing home sales tells the same story, falling to the lowest level in 10 months, at 5.44 million annualized (the below graph has not yet been updated with today's reading): Note that we had a similar stall, for a similar reason, in the first part of 2014. This was due to the interest rate "taper tantrum of mid-2013, as shown by the below graph of mortgage rates: We had a smaller increase in rates last November following the Presidential election. From late 2013 through much of 2016, there was a general declining trend in interest rates, one that so far is being repeated this year. I do not pretend to have any special insight into the direction of interest rates from here. What I can say is that *if* the pattern repeats, YoY interest rates will be lower beginning this November, and that will begin to help the housing market thereafter. Further, the demographic tailwind is still favorable for a continued increase in sales. But there are also two factors militating against a repeat of the growth of late 2014 and 2015. First, there isn't any big decrease in gas prices feeding into an increase in disposable income. Second, house prices increases have continued to outpace wage growth and are almost certainly keeping some potential buyers out of the market. 

"Winter Is Here" For Housing - Whalen Warns "The Crowd Of Buyers Is Thinning" --Following this morning's plunge in new home sales... After household formation collapsed in June...  It appears Institutional Risk Analyst's Chris Whalen is spot on with his mortgage finance update: "Winter Is Here"...After several weeks on the road talking to mortgage professionals and business owners, below is an update on the world of housing finance.  We hope to see all of the readers of The Institutional Risk Analyst in the mortgage business at the Americatalyst event in Austin, TX, next month.The big picture on housing reflected in the mainstream media is one of caution, as illustrated in The Wall Street Journal. Borodovsky & Ramkumar ask the obvious question: Are US homes overvalued? Short answer: Yes.  Send your cards and letters to Janet Yellen c/o the Federal Open Market Committee in Washington.  But the operating environment in the mortgage finance sector continues to be challenging to put it mildly.As we’ve discussed in several forums over the past few years, home valuations are one of the clearest indicators of inflation in the US economy.  While members of the tenured world of economics somehow rationalize understating or ignoring the fact of double digit increases in home prices along the country’s affluent periphery, sure looks like asset price inflation to us.In fact, since WWII home prices in the US have gone up four times the official inflation rate.  “Houses weren't always this expensive,” notes CNBC. “In 1940, the median home value in the U.S. was just $2,938. In 1980, it was $47,200, and by 2000, it had risen to $119,600. Even adjusted for inflation, the median home price in 1940 would only have been $30,600 in 2000 dollars, according to data from the U.S. Census.”Two key indicators that especially worry us in the world of credit is the falling cost of defaults and the widening gap between asset pricing and cash flow.  Credit metrics for bank-owned single-family and multifamily loans are showing very low default rates.  More, loss-given default (LGD) remains in negative territory for the latter, suggesting a steady supply of greater fools ready to buy busted multifamily property developments above par value.  We can’t wait for the FDIC quarterly data for Q2 2017 to be released later today as we expect these credit metrics to skew even further.

AIA: Architecture Billings Index "growth moderates" in July --Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: Architecture Billings Index growth moderatesFor the sixth consecutive month, architecture firms reported increasing demand for design services as reflected in the July Architecture Billings Index (ABI). As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI score was 51.9, down from a score of 54.2 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.5, up from a reading of 58.6 the previous month, while the new design contracts index increased from 53.7 to 56.4.“The July figures show the continuation of healthy trends in the construction sector of our economy,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “In addition to the balanced increases in design billings across all major regions and construction sectors, the strong gains in new project work coming into architecture firms points to future growth in design and construction activity over coming quarters.”
• Regional averages: South (53.8), Midwest (53.8), Northeast (53.6), West (50.9)
• Sector index breakdown: multi-family residential (55.8), commercial / industrial (55.4), institutional (52.0), mixed practice (48.4)

 Millennial Americans Are Moving to the 'Burbs, Buying Big SUVsMillennials are finally starting their own baby boom and heading for the suburbs in big sport utility vehicles, much like their parents did.Americans aged about 18 to 34 have become the largest group of homebuyers, and almost half live in the suburbs, according to Zillow Group data. As they shop for bigger homes to accommodate growing families, they’re upsizing their vehicles to match. U.S. industry sales of large SUVs have jumped 11 percent in the first half of the year, Ford Motor Co. estimates, compared with increases of 9 percent for midsize and 4 percent for small SUVs.“We do see that demographic group driving larger sport utility sales as they acquire homes, create families and gain some wealth,” said Michelle Krebs, an analyst at car-shopping website Autotrader. “They started with compact sport utilities and now, with families, they’re moving up.”The shift to suburbia may surprise those who’ve chided millennials for being more interested in pricey avocado toast than in saving for a home. Much of the generation delayed marriage, childbearing and home ownership after graduating with heaping student-loan debt and entering a weak job market. As more millennials overcome this, many want the life of their baby-boomer parents -- the kids, the house in the ’burbs and the beefy SUV. “As more people move out of their parents’ basement -- and there’s still quite a few living there -- we expect to see continued healthy demand for homes,” said Svenja Gudell, chief economist for Zillow, which found millennials made up 42 percent of homebuyers last year. “Millennials delayed home ownership, just like they delayed getting married and having kids, but now they’re making very similar decisions to their parents.”

Why Doesn't This Household Debt Worry Anyone?! --With all the attention going to political tensions between the USA and North Korea and the interest rate policies and monetary policies established by the various central banks around the world, we would almost forget to keep track of how the ‘real’ economy is doing. And then we aren’t talking about GDP results or theoretical consumer confidence levels, but about how the average households in the United States are doing with a special attention to the debt levels.Because consuming goods is one thing. Being able to afford them is another thing and if your consumption pattern and consumption economy is based on quicksand, then one simple economic shock might cause the entire consumption-based economy to collapse. The Federal Reserve Bank of New York has provided an updated net household debt situation, and the chart looks pretty alarming. After the Global Financial Crisis has hit the USA, the total debt decreased from 12.7 trillion dollar to 11.3 trillion dollar by 2013. Whilst this seems like a marginal move fueled by lower mortgage debt, it’s actually pretty impressive considering the 125 million households in the USA reduced their net debt by $11,200 per household.

The Imaginary Debt Crisis Is Here to Stay -- Barry Ritholtz -- Now that we have surpassed 2008 highs in household debt, I guess we are due for a panic attack. Four times a year, the Federal Reserve Bank of New York’s Center for Microeconomic Data releases its “Quarterly Report on Household Debt and Credit.” Soon after, we get the freak out over the record amount of debt. Sometimes it’s merely sensationalistic headlines; other times it strays into flawed analysis. It often unnerves investors and policy makers, who then do silly things against their own interests. That’s where we come in. A single number seen in isolation might score some clicks, but it doesn’t help the average person understand the data. This “denominator blindness,” as we have called it before, is the failure to put large numbers into the appropriate context. Yet the understanding that all numbers need to be qualified continues to elude many people. “Consumer debt is at a record high. Haven’t we learned?” screamed the Washington Post headline; a more restrained Reuters went with the less emotional but context-free “Americans’ debt level notches a new record high.” I give credit to the Wall Street Journal for being more nuanced 1 in noting that “While overall debt has increased, the figures aren’t adjusted for the growth of the population or the economy. Total debt was 67% of the nominal gross domestic product in the second quarter, down from as high as 87% in 2009.” (emphasis added) You can go through most of the first three dozen links in a Google News search of the term “household debt,” and article after article will omit the crucial question of Americans’ ability to service that debt -- or make payments that cover current interest and principal. The ability to service that debt is central to understanding how and when borrowing becomes risky.

 Data Scientist Cathy O’Neil: “Algorithms Are Opinions Embedded in Code” -  Yves Smith - Cathy O’Neil has a PhD in mathematics from Harvard and is the author of the best seller Weapons of Math Destruction. She is also involved in Occupy Wall Street.    In this TED talk, she describes how algorithms routinely institutionalize bias, bad practices, and personal opinion. Worse, the “gee whiz” factor of technology and the difficulty lay people have in forcing the algorithm creators to make their assumptions and processes transparent, and allow for audits of their algorithms, makes them an all-too-easy way to reinforce and legitimate skewed power dynamics. One part of her talk, on how hiring practices reinforce existing “success” models, which often have embedded biases, is consistent with our 2007 Conference Board Review article, Fit v. Fitness.  Algorithms are everywhere. They sort and separate the winners from the losers. The winners get the job or a good credit card offer. The losers don’t even get an interview or they pay more for insurance. We’re being scored with secret formulas that we don’t understand that often don’t have systems of appeal. That begs the question: What if the algorithms are wrong?  Algorithms are opinions embedded in code. It’s really different from what you think most people think of algorithms. They think algorithms are objective and true and scientific. That’s a marketing trick. It’s also a marketing trick to intimidate you with algorithms, to make you trust and fear algorithms because you trust and fear mathematics. A lot can go wrong when we put blind faith in big data.

U.S. retailers hit as immigration worries weigh on Hispanic spending (Reuters) - Many U.S. Hispanics are venturing out only to buy essential goods and are cutting back on discretionary spending, worried about possible harassment by immigration or law enforcement officials since the election of U.S. President Donald Trump, according to community groups, research firms and retailers. This change in consumer behavior by the country's second-fastest-growing ethnic group has recently been cited as a cause for worry by already-struggling consumer companies, from big-box retailers to auto parts makers. O'Reilly Automotive Chief Executive Gregory Henslee told analysts earlier this month that many of the company's stores with weak second-quarter sales were in Hispanic-dominant areas of the United States. "It's not just something that we've seen. It's something that most retailers have seen," Henslee said. In late July, Target Chief Executive Brian Cornell at a conference referenced a report by retail consultants NPD Group that cited a decline in discretionary spending by Hispanics. "They are staying home. They are going out less often, particularly around border towns in the United States," Cornell said at a conference in Aspen, Colo. Trump's surprise election win last November came partly on campaign promises to deport undocumented foreigners en masse and build a wall on the U.S.-Mexico border. These pledges - along with Trump's claim that Mexico was sending rapists and drug dealers into the United States - sparked outrage within the American Hispanic community. "For our own president to call us criminals, thieves and rapists - it's terrible ... we live in fear of doing those simple things like going for groceries," said a 19-year-old Chicago college student, Juan F., who did not want his full name used out of concern for family members who are undocumented. Juan, a U.S. citizen, said he has been shopping for his household since Trump's presidency began because family members are afraid to leave the house.

Here's How Many Americans Are Living Paycheck To Paycheck (Hint: It's A Lot) --Is your family forced to count down the days each month until the next paycheck arrives?  If so, you're part of a staggering, and growing, majority of households in America, the richest country on the planet, that is forced to do the same.  According to a new poll conducted by Harris Poll on behalf of CareerBuilder, over three-quarters of American households are forced to live paycheck to paycheck to make ends meet. More than three-quarters of workers (78 percent) are living paycheck-to-paycheck to make ends meet — up from 75 percent last year and a trait more common in women than men — 81 vs. 75 percent, according to new CareerBuilder research. Thirty-eight percent of employees said they sometimes live paycheck-to-paycheck, 17 percent said they usually do and 23 percent said they always do.Having a higher salary doesn't necessarily mean money woes are behind you, with nearly one in 10 workers making $100,000 or more (9 percent) saying they usually or always live paycheck-to-paycheck and 59 percent in that income bracket in debt. Twenty-eight percent of workers making $50,000-$99,999 usually or always live paycheck to paycheck, 70 percent are in debt; and 51 percent of those making less than $50,000 usually or always live paycheck to paycheck to make ends meet, 73 percent are in debt.Not surprisingly, the problem is even worse for minimum wage workers, 54% of whom say they have to work more than 1 job to cover their monthly expenditures. The majority of workers (81 percent) have worked a minimum wage job, and 71 percent of them were not able to make ends meet financially during that time —more than half (54 percent) had to work more than one job.

Millennials are financing everything from bed sheets to concert tickets -- Millennials want luxury sheets, Peloton exercise bikes and music festival tickets, but they don’t always have enough cash or a desire to put them on a credit card. So they are turning to an even more expensive method of payment: financing. In recent years, payment companies including PayPal PYPL, +0.25% Affirm and Bread have created installment plans for retailers that give consumers the option to finance the weirdest purchases over time. These payment methods have taken hold at a time when millennials have been more reluctant than their parents to use credit cards. Millennials had about two credit cards each on average last year, according to the credit reporting company Experian. That’s compared with about three for boomers and an average of 2.5 for members of Generation X. Now, they don’t have to wait to be able to afford that Vitamix blender.  What could go wrong? Quite a lot, consumer advocates say. The company Brooklinen sells pricey sheets: its “classic” sheet set for a queen-sized bed costs $129. But that can be steep for millennials, people born between 1982 and 1996, who are a core demographic for Brooklinen,  That’s why Brooklinen partnered with the payment company Affirm in June to offer a payment plan spread over three, six or 12 months. Financing doesn’t come cheap: Rates range from 0% to 30% APR, after Affirm checks the buyers’ credit and approves them. That compares to an average APR of almost 17% for credit cards — or zero if you’re paying with cash.   Vitamix blenders start at $450, an easier purchase for higher-income households, but “out of range” for some who are younger, said Holly Hacker, Vitamix’s director of direct sales and customer experience. Shoppers have also financed items including Cartier bracelets, worth $5,000 to $6,000 and Chanel wallets, worth about $1,700 to $1,900 from Linda’s Stuff, a luxury consignment website.

Sears Same-Store Sales Plunge 11.5%; To Close Another 28 Stores -- Near insolvent retailer Sears Holdings reported another quarterly loss, with same store sales plunging in Q2 more than expected as the company offered more margin-crushing discounts amid an industry that is, in the words of Dick's CEO, in "panic mode". The company blamed a "retail environment that remained challenging, with continued softness in store traffic and elevated price competition." For Q2, Eddie Lampert's company reported a net loss of $251 million, or $2.34 per share from $395 million or $3.70 per share, a year earlier. The adjusted loss was $1.16 a share, beating expectations loss of $2.48 per share, while revenue tumbled from $5.66 billion to $4.37 billion Y/Y primarily due to store closures, modestly beating expectations of $4.21 billion. As part of its restructuring effort and attempt to return to profitability, Sears has been trimming its real estate portfolio, cutting costs and seeking additional liquidity. The retailer announced that it will be closing an additional 28 Kmart stores this year, in addition to the 180 Sears and Kmart stores that have already been shuttered this year, and the 150 stores that are slated to be closed by the end of the third quarter.And while the company's cost-cutting is a welcome, if long overdue, change a bigger problem for Kmart is the collapse in store traffic, as same-store sales plunged 11.5%, worse than the expected 7.1 percent decline.

Vehicle Sales Forecast: Sixth consecutive month below 17 million SAAR -- The automakers will report July vehicle sales on Friday, September 1st. Note: There were 27 selling days in August 2017, there were 26 in August 2016. From WardsAuto: Forecast: U.S. Auto Market Continues Downward Trend in AugustA WardsAuto forecast calls for U.S. automakers to deliver 1.51 million light vehicles in August. ... The report puts the seasonally adjusted annual rate of sales for August at 16.5 million units, below the 17.1 million SAAR in same-month 2016 and 16.7 million in prior-month 2017.... Light-vehicle inventory stood at 3.86 million units at the end of July, up 9.4% from year-ago and about 15% higher than necessary with current sales rates. The streak of record-high stock is expected to continue with 3.8 million units at the end of August, 7.5% greater than same-month 2016. This will leave automakers with a 69 days’ supply, same as prior-month, but well above year-ago’s 62. Slowdowns in production and higher sales incentives through September are expected to narrow the gap between supply and demand.  Overall sales through July are down about 3% from the record level in 2016.

Deep Subprime Auto Loan Delinquencies Reach 2007 Levels: The Next Big Short? -- Subprime auto delinquencies have staked up so much that we are back at 2007 milestone levels. There’s a section of the auto-loan market — known in industry parlance as deep subprime — where delinquency rates have ticked up to levels last seen in 2007, according to data compiled by credit reporting bureau Equifax.“Performance of recent deep subprime vintages is awful,” Equifax said in a slide show on second-quarter credit trends.Analysts have been warning for years that subprime car loans pose a threat to lenders as delinquency rates have edged higher since reaching a post-recession low in 2012. But it wasn’t until last quarter that the least creditworthy borrowers started to show the kinds of late payment profiles that accompanied the start of the financial crisis.“We’re seeing an increase in delinquencies across all credit scores, but in the highest credit quality, it’s just a basis point or two,” Chief Economist Amy Crews Cutts said in an email Tuesday. “In deep subprime, the rise is more substantial. What stood out to me was the issuers. Those that have been doing this for a decade or more were showing the ‘better’ performance, while those that were relative newcomers were in the ‘worse’ category.”The reason for the increase, she posited, is that lenders have loosened underwriting requirements as more firms tap into a declining market for car loans, not that there are more customers with worsening credit profiles.“It isn’t a case of chasing a larger subprime share,” Cutts said in an email Tuesday. There’s been “almost no change in median credit scores. That means they are letting other underwriting characteristics slide,” she said, referring to the lenders that issue the bulk of subprime loans — so-called monolines that specialize in one area of the credit market and dealer-finance companies that work specifically with car sellers.

Headline Durable Goods Orders Plummet in July, Largest Drop in Two Years -The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:New orders for manufactured durable goods in July decreased $16.7 billion or 6.8 percent to $229.2 billion, the U.S. Census Bureau announced today. This decrease, down three of the last four months, followed a 6.4 percent June increase. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders decreased 7.8 percent. Transportation equipment, also down three of the last four months, drove the decrease, $17.4 billion or 19.0 percent to $74.3 billion. Download full PDFThe latest new orders number at -6.8% month-over-month (MoM) was below the Investing.com consensus of -6.0% and its largest drop in two years. The series is up 4.1% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.5% MoM, which was above the Investing.com consensus of 0.4%. The core measure is up 5.6% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 0.5% MoM and up 3.4% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is up 0.4% MoM and up 3.5% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

US Durable Goods Orders Post Biggest Drop Since August 2014 -  Orders for long-lasting manufactured goods sank 6.8 percent in July, the biggest fall in nearly three years, led by a drop in the volatile category of civilian aircraft. But a gauge of business investment rose last month. The Commerce Department said Friday that orders for durable goods — items meant to last at least three years — reversed a sharp gain in such orders in June. The numbers were warped by a 19 percent drop in orders for transportation equipment, a category that bounces wildly from month to month. Specifically, orders for civilian aircraft tumbled 70.7 percent in July — payback for a 129.3 percent surge in June. Excluding transportation, orders rose a solid 0.5 percent last month. Economists had expected orders to drop after the big gain in June. Overall, American industry continues to look mostly solid. Manufacturers have rebounded from a slump in late 2015 and early 2016 caused by cutbacks in the energy industry and a strong dollar that makes U.S. goods costlier overseas. Spending on durable goods accounts for a small part of American economic output. But changes in durable goods orders often signal where the economy is headed, so forecasters and investors watch the report closely. The category that's seen as a harbinger of future business investment— orders for capital goods excluding defense equipment and aircraft — expanded 0.4 percent in July.

Durable Goods Orders Decline 6.8% Led by Aircraft --Huge surges and declines in aircraft orders have made for extremely volatile durable goods orders lately. Last month aircraft orders surged 227 percent, this month aircraft orders plunged 82 percent.Last month aircraft orders surged 227 percent, this month aircraft orders plunged 82 percent.Amidst this volatility, the Econoday consensus estimate of -5.8% was reasonably close to the mark. Durable goods orders came in as billed with a steep aircraft-related decline for the headline, at minus 6.8 percent, contrasting with solid gains for ex-transportation at 0.5 percent and core capital goods (nondefense ex-aircraft) at 0.4 percent. A special plus in the report, and one that will lift GDP, is a sharp pickup in shipments of core capital goods, up 1.0 percent in July with June revised 2 tenths higher to 0.6 percent.Total shipments rose 0.4 percent with inventories keeping a balanced pace, up 0.3 percent. A negative in the report is a 0.3 percent decline in unfilled orders that follows, however, June’s 1.3 percent surge. For aircraft, which has picked up this year, orders fell 82 percent in July vs June’s enormous 227 percent jump. Orders for defense aircraft, up nearly 50 percent, are a positive in July’s data as is electrical equipment, up 2.6 percent in a good sign for construction. Computers and fabricated metals also show gains. Negatives include a 1.2 percent order decline for vehicles that follows a 0.7 percent decline in June and a 1.4 percent decline for machinery orders that belies the month’s strength for core capital goods.

 Chemical Activity Barometer Shows Modest Slowing in August -- Note: This appears to be a leading indicator for industrial production. From the American Chemistry Council: Chemical Activity Barometer Shows Modest Slowing The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), remained unchanged from July, continuing a modest deceleration of growth. The flat reading follows a 0.1 percent increase in July and a flat reading in June. Compared to a year earlier, the CAB is up 3.2 percent year-over-year, an easing from recent year-over-year gains. All data is measured on a three-month moving average (3MMA). On a year-over-year basis, the unadjusted CAB is up 3.0 percent, also an easing from the previous six months. This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production.  It does appear that CAB (red) generally leads Industrial Production (blue). CAB increased solidly in early 2017 suggesting an increase in Industrial Production, however, the year-over-year increase in the CAB has slowed recently.

Richmond Fed: "Manufacturing Activity in August Remained Little Changed from July" --   From the Richmond Fed: Reports on Fifth District Manufacturing Activity in August Remained Little Changed from JulyReports on Fifth District manufacturing activity were largely unchanged in August, according to the latest survey by the Federal Reserve Bank of Richmond. The composite index remained at 14 in August, with an increase in the employment index offsetting a decrease in the shipments index and a very slight decline in the new orders metric. Although the employment index rose from 10 to 17 in August, other measures of labor market activity — wages and average workweek — were largely unchanged.  This is suggests solid growth in August.

Kansas City Fed: Regional Manufacturing Activity "Expanded Moderately" in August -- From the Kansas City Fed: Tenth District Manufacturing Activity Expanded Moderately. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity expanded at a faster pace and expectations remained solid.“Factories reported acceleration in activity in August to the fastest pace since March,” said Wilkerson.  “Many firms also reported plans to raise finished goods prices in coming months.” The month-over-month composite index was 16 in [August], up from 10 in July and 11 in June.  The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Factory activity increased solidly at durable goods plants, particularly for electronics, metals, and aircraft products, while nondurable goods activity rose more modestly.  Most month-over-month indexes increased over the previous month.  The production index jumped from 4 to 22, and shipments, new orders, and order backlog indexes rebounded strongly after falling last month.  The employment index has remained basically unchanged for the past three months, while the new orders for exports index edged higher.  The finished goods inventory index fell from 7 to 2, while the raw materials inventory index was unchanged. The Kansas City region was hit hard by the sharp decline in oil prices, but activity started expanding last year when oil prices increased. Now growth is moderate with oil prices mostly moving sideways.

 US Services Economy Soars To Highest Since April 2015 As Manufacturing Slumps The US Manufacturing economy continues to languish near one-year lows (in line with the collapse in 'hard data' in recent months) but US Services are soaring to their highest level since April 2015.  Manufacturing was ugly across the board...Weaker increases in both output and new orders were key factors weighing on the headline manufacturing PMI in the latest survey period.Production volumes expanded at the slowest rate for 14 months in August, while new business growth weakened from July’s four-month high. Consequently, purchasing activity rose at a softer pace while firms also registered slower increases in inventory levels. Latest data signalled a further pick up in the rate of input price inflation at US goods producers.But everything is anecdotally awesome in Services-land...According to anecdotal evidence, strong economic conditions and an improvement in client demand had driven the latest upturn in activity.The latter was highlighted by a sharp and accelerated rise in new business received by services companies, with the rate of new order growth reaching a 25-month high in August. Greater intakes of new work and rising activity levels led firms to hire more staff in August. Judging by the collapse in 'real' economic data, we suspect manufacturing survey respondents are on to something...Commenting on the flash PMI data, Rob Dobson, Director at IHS Markit said:“The US economic growth story remained a tale of two sectors in August.The overall rate of expansion accelerated to a 27-month record, driven higher by strong and improved growth of business activity in the vast services economy. In contrast, the performance of manufacturing remained sluggish in comparison, with production volumes rising to the weakest extent in over a year.

Weekly Initial Unemployment Claims increase to 234,000 --The DOL reported:In the week ending August 19, the advance figure for seasonally adjusted initial claims was 234,000, an increase of 2,000 from the previous week's unrevised level of 232,000. The 4-week moving average was 237,750, a decrease of 2,750 from the previous week's unrevised average of 240,500.  The previous week was unrevised.  The following graph shows the 4-week moving average of weekly claims since 1971.

Joblessness Falls Quickly in Several Trump-Supporting States --Swing states that played a key role in electing Donald Trump president have posted some of the biggest declines in unemployment during the early phase of his administration. Six states voted for President Barack Obama, a Democrat, in 2012 and then Mr. Trump, a Republican, in 2016: Ohio, Michigan, Florida, Iowa, Pennsylvania and Wisconsin. The median unemployment rate of those switchover states has fallen far faster than the national median this year, according to an analysis of data released by the Labor Department on Friday. The median rate of those states stood at 3.9% as of July, down from just under 5% in December. By comparison, the national median fell to 4.1% in July from 4.7%. Among the switchover states, Wisconsin and Michigan have seen unemployment fall the quickest this year. Over the past three months, the average jobless rate in Michigan fell nearly 1.2 percentage points, to 3.9%, compared with the final quarter of 2016, just before Mr. Trump took office. Only three other states in the U.S. saw a deeper drop in joblessness. The rate fell 1 percentage point in Wisconsin to 3.1%. That drop ranked seventh in the U.S. Florida, where joblessness stood at 4.2% in July, ranked 12th with a 0.7 percentage point drop.  Most switchover states are in the Midwest, where the economy has diversified in recent years but still remains big in manufacturing.

Builders Complain Of Record Labor Shortages: Up To 75% Of Employers Can't Find Workers - Late last month we reported the remarkable anecdote of an Ohio factory owner who has numerous blue-collar jobs available at her company, but has one major problem: she is struggling to fill positions because so many candidates fail drug tests. Regina Mitchell, co-owner of Warren Fabricating & Machining in Hubbard, Ohio, told The New York Times this week that four out of 10 applicants otherwise qualified to be welders, machinists and crane operators will fail a routine drug test. .Whether it was due to pervasive drug abuse, or for some other reason, but fast forward two weeks when in response to a special question in the July NAHB/Wells Fargo Housing Market Index (HMI) survey, US homebuilders said that labor and subcontractor shortages have become even more widespread in July of 2017 than they were in June of 2016.This is a concern as the inventory of for-sale homes recently struck a 20-year low. And while economists and the public cry for more inventory, many builders are pressed to meet demand. A labor and subcontractor shortage in the building industry has worsened over the past year, according to the National Association of Home Builders/Wells Fargo Housing Market Index survey of single-family builders. The July 2017 HMI survey asked builders about shortages in 15 specific occupations that were either recommended by Home Builders Institute (NAHB’s workforce development arm) or that NAHB found to be particularly significant when tabulating Bureau of Labor Statistics data for a recent article on Young Adults & the Construction Trades.  Shortages (either serious or some) were at least fairly widespread for each of the 15 occupations, ranging from a low of 43 percent for building maintenance managers to a high of around 75 percent for the three categories of carpenters (rough, finished and framing). In addition to workers employed by single-family builders, the HMI survey asked about shortages of subcontractors, which have become even more widespread lately.  In the July 2017 survey, the incidence of shortages was higher for subcontractors than for labor directly employed by builders in each of the 15 occupations. At the top of the chart, for example, 85% of builders reported a shortage of framing subcontractors, compared to “only” 77% who reported a shortage of framers directly employed.

The construction industry has a productivity problem - Treehugger -- The Economist has some suggestions for fixing it. We have more. For years, everyone has been complaining that we still build our homes and buildings like they did a hundred years ago. Our construction industry is a shambles of poor energy efficiency and low quality. Now the Economist writes that the industry has a serious productivity problem that is getting worse. Productivity in construction has plunged by half since the late 1960s. This is no trifling matter. The building trade is worth $10trn each year, or 13% of world output. If its productivity growth had matched that of manufacturing in the past 20 years, the world would be $1.6trn better off each year. The Economist lists many reasons that we have been talking about since the crash of the housing industry in the Great Recession.

  • It’s fragmented. Most of the companies in it are small and local. Even the big builders subcontract out most of the actual construction. Because so much of real estate development is about politics and who you know, it tends to be local.
  • It’s cyclical. This makes any significant investment in factories or technology really risky. I noted this in an earlier post: “This is what has killed many prefabricated housing companies before; they have serious overhead and cannot compete with a guy in a pickup truck with a magnetic sign and a nail gun and a bunch of subcontractors getting paid by the square foot.”
  • It’s conservative. Everybody hates change and surprises, but as the Economist notes, A few building firms are experimenting with new techniques, from 3D printing and drones to laser-scanning and remote-controlled cranes. But the trade as a whole is reluctant to spend money on the sorts of technologies, from project-management software to mass production, that have revolutionised so many other industries.

The Economist has some very sensible suggestions for fixing the problems. The first is to recognize that the public sector is a huge portion of the industry, between 20 and 30 percent. So it can smooth out the cycles by investing in bad times instead of cutting back.  The Economist goes to recommend BIM (Building Information Modelling) but if the industry is going to get really productive, a lot more than that will have to change. It is much easier to control quality and hit high standards when building in the factory than it is building in the field. If the Building code standards are tough, then it will pay to invest in technologies like prefabrication because it becomes easier to hit the required targets. If a house fails a required blower test, it is expensive to go and find where it is leaking, but if it is built right in the first place under factory controlled conditions and close supervision, the odds are a lot better that it will pass. At that point, the industry will really have no choice but to invest in tech.

Industrial hack can turn powerful machines into killer robots - In a post titled “Exploiting Industrial Collaborative Robots,” security researchers at IOActive detail how popular models of consumer and industrial robots have already been compromised in such a way that could cause humans bodily harm. The study examines a class of collaborative robots designed to work together with their human counterparts, often in industrial settings.IOActive’s research focuses specifically on a set of unpatched vulnerabilities affecting the UR line of robots, made by Universal Robots, including “authentication issues in many of the control protocols, susceptibility to physical attacks, memory corruption vulnerabilities, and insecure communication transport.” The team disclosed the concerns to the company in January 2016, published a video on the exploits in July and has now detailed its method in depth in the blog post.  The hack, which targets a buffer overflow vulnerability, disables key safety measures put in place to ensure that the robots can work peaceably alongside their human counterparts. While the programming limits the physical parameters of what the industrial robots can and can’t do, hacks like the one demonstrated here allow these limits to be broken. The result could be dangerous, even catastrophic, for nearby human workers. As the study explains, “… Even the smaller UR5 model is powerful enough to seriously harm a person. While running at slow speeds, their force is more than sufficient to cause a skull fracture.”

Silicon Valley is using H-1B visas to crowd out American minorities - Silicon Valley's highly publicized campaign to hire minorities and women has failed. Black and Hispanic employees combined represent just 5 percent of the tech workforce, and women are outnumbered three to one, according to a new study from the software firm Atlassian. Yet when Atlassian surveyed over 1,400 tech workers, 94 percent deemed their industry inclusive. One reason for this glaring gap between perception and reality? The sector's prolific use of H-1B guest worker visas. Silicon Valley has grossly abused this visa program to take advantage of cheap foreign labor and paper over its diversity problem. Meanwhile, American workers -- especially those of color -- find themselves crowded out of the tech job market. Congress created the H-1B visa program in 1990 to allow companies to hire uniquely skilled foreigners in the relatively rare situations that they couldn't find American workers to fill specialized roles. In the program's first five years, firms never imported more than 52,000 workers annually. But as the dot-com boom commenced, Silicon Valley became increasingly addicted to the H-1B program, which provided firms with a ready supply of skilled workers who would accept far lower salaries than Americans. Eight in ten foreign workers hired through this program earn less than similarly skilled Americans. The tech sector has become the heaviest user of the H-1B program. In total, H-1B holders account for 13 percent of tech workers currently employed in the United States. Silicon Valley giants have aggressively lobbied for increases in the annual allotment of H-1B visas. Google's parent company, Alphabet, shelled out almost $17 million lobbying partly on immigration issues just last year. Microsoft spent nearly $9 million. They've gotten their way. Today, over 900,000 foreigners work in the United States on H-1B visas. Here's the problem: Tech companies don't need more foreign workers to fill skilled roles. There's an ample supply of qualified, willing Americans they could hire.  Tech companies' preference for cheaper foreign workers means many qualified Americans can't find a job in the industry. Nearly 11 percent more Americans would have held jobs as programmers if not for the H-1B program. Half of all college graduates who studied computer science end up working outside of the tech field. 

More Jobs Lost As The Government Decides To Have Military Uniforms Made By Convicts -- Small businesses are struggling to stay afloat because they have to compete with super cheap prison labor. Federal Prison Industries (FPI), a corporation owned by the federal government, employs more than 13,000 inmates at wages from 23 cents to $1.15 an hour, making everything from military apparel to call center and help desk support to solar panels and selling the products to the Pentagon and other federal agencies. FPI, also known as UNICOR, operates inside 83 federal prisons and made more than $900 million in revenue last year. In March Tennier Industries, which also makes military clothing, fired more than 100 employees after losing out to FPI on a new $45 million contract from the Defense Department. In May American Apparel put 175 people out of work when closed an Alabama plant for the same reason. Owner Kurt Wilson expressed his frustration that he pays workers $9 an hour with full benefits and yet "we're competing against a federal program that doesn't pay any of that," according to CNN. American Power Source  will  shed about 260 jobs when they close plants  in Alabama and Mississippi  on Nov. 1  because of competition from FPI, the AP reports."There's a federal program tanking our industry," Kurt Courtney, director of government relations at the American Apparel and Footwear Association, told CNN. "The only way for workers to get jobs back is to go to prison. There's got to be a better way." FPI's operations are patterned after a “mass-production, low-skilled labor economy of the 1930s,” according to  a report last year  from the Congressional Research Service. Dianne Cardwell of the New York Times called the company "inefficient by design" because it employs as many inmates as possible, "which diminishes the advantage of its low wages."

 Philly Fed: State Coincident Indexes increased in 33 states in July -- From the Philly FedThe Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for July 2017. Over the past three months, the indexes increased in 41 states and decreased in nine, for a three-month diffusion index of 64. In the past month, the indexes increased in 33 states, decreased in 15, and remained stable in two, for a one-month diffusion index of 36. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:  The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Barclays Installs Sensors To Monitor How Long Employees Spend At Their Desks -- As we reported last month, a Wisconsin company called Three Square Market has become the first company in the US to offer microchip implants to its employees. The firm, which designs software for breakroom markets, wants employees to use microchips to help facilitate vending-machine payments. The firm wanted to use its employees as test subjects for their product. And though the program was strictly voluntary, it marks an uncomfortable beginning of a trend that could someday result in all humans being involuntarily microchipped.Now, across the pond, companies are escalating efforts to monitor their employees.Barclays Plc has installed devices at its London headquarters that track how much time bankers spend at their desks. While a spokesperson for the bank says the devices aren’t meant to evaluate employees’ performance, their introduction has clearly spooked members of the rank-and-file, who leaked the story to Bloomberg.The devices are manufactured by OccupEye and use heat and motion sensors to record how long employees are spending at their posts. According to Bloomberg, employees inundated management with questions about the devices after they first appeared under their desks. The bank reportedly didn't neglected to inform some employees ahead of time. “Managers were peppered with queries when investment bank staff in London discovered black boxes stuck to the underside of their desks in recent months, according to several Barclays employees who asked not to be identified speaking about their workplace. They turned out to be tracking devices called OccupEye, which use heat and motion sensors to record how long employees are spending at their posts.

Workers May Have Just Killed Missouri’s Right to Work Law - In a badly needed victory for organized labor, a coalition of workers’ rights groups in Missouri is poised to halt a devastating new anti-union law from taking effect later this month. The deceptively named “right-to-work” (RTW) legislation—quickly passed and signed into law this February by Missouri’s new Republican governor, Eric Greitens—would prohibit unions in private sector workplaces from automatically collecting dues from the workers they are legally required to represent. Designed to decimate unions by cutting off their financial resources, RTW laws are currently in place in 27 other states. Though the law is set to take effect on August 28, the pro-union We Are Missouri coalition, led by the Missouri AFL-CIO, says it has collected enough signatures from voters to call for a state-wide referendum in November 2018 that could nullify the legislation. Implementation of the RTW law would be put on hold at least until next year’s referendum results are known. We Are Missouri spokesperson Laura Swinford tells In These Times that Republican legislators had been wanting to pass a RTW law for years, but were blocked by Democratic Gov. Jay Nixon. As soon as Greitens was elected last November, she says, “folks were prepared.” Missouri allows residents to call a referendum on new legislation by collecting signatures from at least 5 percent of voters from six of the state’s eight congressional districts. We Are Missouri estimated it would need to collect at least 100,000 signatures to call a referendum on the RTW law. Swinford says volunteer canvassers went to festivals, concerts, county fairs and other events in every county to gather signatures. “Our volunteers have gone out there day after day, weekend after weekend, going signature by signature, page by page.” So far, the coalition has tripled its initial estimation, collecting over 300,000 signatures. During a rally at the state capitol today, We Are Missouri turned in the petition along with 310,567 signatures.

Governments Are Turning to Banks for Easy Money - In the years since the Great Recession, state and local governments have increasingly borrowed money directly from banks instead of issuing public bonds. The loans, they say, come with lower costs and can be more convenient than going through the cumbersome public debt process. But observers worry that the terms around these loans aren't transparent enough, obscuring an important part of a government's financial health. Now, a new Stanford University study of these loans in California concludes that more than half of the municipalities there that have borrowed from banks have put themselves at "financial risk" thanks to stringent terms in the loan. Alarmingly for bondholders and ratings agencies, those terms often mean their investment takes a back seat to the bank's loan in the event of a default. What's more, the terms are so broad in some cases that the bank can recall the loan more easily. That, says Sylesh Volla, one of the paper's co-authors, makes direct loans riskier than bonds. In a review of 41 direct loans to California governments between 2010 and 2016, the terms all defined a missed debt payment and a bankruptcy filing as a default. That's standard, but some terms went further. More than 60 percent said a nonpayment on any of the issuer's debt would also count as a default and require immediate repayment of the loan. One-quarter said that any "material adverse change" in a government's operations or financial prospects -- as interpreted by the bank -- could trigger a default. And one-tenth said a credit rating downgrade would prompt a repayment. The findings of the study shed light on what is becoming a highly controversial area in state and local finances. California is the only state that requires governments to disclose the terms around all types of debt, thanks to a law that went into effect in 2015.

America’s benefits system is backwards -- If you tax something, you will get less of it. If you want to be efficient and fair, you should target government benefits to the people who need them most. These two principles sound simple and uncontroversial enough, but combining them into a coherent system has proven surprisingly difficult in the US and many other countries. The result is a system that punishes the poor when they make more money even as it transfers wealth from workers to well-off retirees. One fix: make benefits for potential workers universal, rather than targeted, and make benefits for the elderly targeted, rather than universal. This chart from Stanford’s John Cogan shows that while the system has become more generous to those in the middle over time, it’s nevertheless maintained its targeted character: The problem with targeting benefits this well is that anyone who gets a slightly better job — or simply puts in more hours in her existing work — loses out on valuable government aid. In many cases government benefits are withdrawn almost one-for-one as labour income rises. The chart below, from the Congressional Budget Office, shows how take-home pay (dark blue line) for a hypothetical single parent with one child in 2016 barely grows even when earnings (black line) rise dramatically.  As labour income grows from $10,000 per year to $37,000, take home pay only grows from $26,200 to $34,000. The effective tax rate on the extra $27,000 of earned income is more than 70 per cent! Another way to see this is to calculate how much the government takes away from workers as they earn more. The chart below, using the CBO’s figures, compares how much a single parent with one child is effectively taxed on every additional $7,000 she earns:

Speakers at CPS hearing assail budgeting practices - Chicago Tribune -- In a series of occasionally sharp exchanges on Wednesday, Chicago Public Schools officials defended the district's fiscal practices amid fresh rebukes from advocates and labor union members over a $5.7 billion budget plan that relies on money that has yet to materialize. Chicago Board of Education members are expected to approve the spending framework next week. Critics on Wednesday targeted the district's reliance on expensive borrowing and demanded that board members appointed by Mayor Rahm Emanuel support new taxes to help fund the system. Instead, CPS officials praised what the district now describes as a $544 million budget deficit. "We still have a little over a half-billion dollars that we're struggling with," school board President Frank Clark told the audience during one hearing over the district's developing budget plan. "But we've come a very, very long way." The district's latest projected deficit includes assumptions that legislators chip in $300 million of new state assistance. CPS also expects city government to provide an extra $269 million.School board members must also approve lines of short-term credit the district will use for cash to pay its bills this year, and the district has budgeted roughly $79 million just to pay the expected interest costs associated with that borrowing. 

Cashless kids: Is tap-and-go technology promoting financial illiteracy? -- It is a tap-and-go generation, where school tuckshops even accept plastic cards, fuelling financial illiteracy in kids, with some already clueless of the perils of credit card debt."It's buy now, pay later, it's interest-free terms," chief executive of not-for-profit Financial Basics Foundation Katrina Birch said."The fact that credit is so readily available to young people, there's a huge risk for the level of debt they could get into early on in their life."The organisation provides free programs and resources for teachers, to help make teenagers more money savvy.Ms Birch said a new survey of 1,100 students from high schools around the country, who have participated in their programs, suggested most were confused about credit cards.It found more than half the students believed it would take less than three years to pay off a $2,000 credit card debt at an 18 per cent interest rate, the minimum repayment. It would actually take more than 15 years. When asked about interest-free loans, just under one in five students thought there was no advantage in making any repayments until the end of the interest-free period, and one-third of students thought there was no interest charged on outstanding balances at the end of the interest-free period.  Even more concerning, 85 per cent of students thought they had a reasonable understanding of how credit worked. "There was a huge difference between their confidence around what they thought they knew and the reality of what they did know," Ms Birch said.

Another Way the Rich Preserve Their Advantage: Grade Inflation in Private Schools --  Yves Smith - One of the major reasons affluent parents send their children to private primary and secondary schools is to increase their odds of getting into elite colleges.   In New York City, the competition is insane, with parents putting their kids in pre-kindergarten programs to increase their odds of getting into kindergartens that will pretty much assure them a slot in a top private school. As if all of the extra-special education (the opportunity to get foreign language training early, as well as a raft of advanced classes) weren’t enough, students at prep schools have another advantage: grade inflation. As this article from The Hechinger Report describes, average GPAs at private high schools have increased even as SATs have declined: Here’s the latest, more profound way in which wealthier students have an advantage over lower-income ones: Those enrolled in private and suburban public high schools are being awarded higher grades — critical in the competition for college admission — than their urban public school counterparts with no less talent or potential, new research shows. It’s not that those students have been getting smarter. Even as their grades were rising, their scores on the SAT college-entrance exam went down, not up. Nor are those in some schools more intelligent than those in others…. The grade-point average of students at private high schools who took the SAT climbed between 1998 and 2016 from 3.25 to 3.51, or almost 8 percent, the College Board found in research to be published early next year.In suburban public high schools it went from 3.25 to 3.36. In city schools, it hardly budged, moving from 3.26 to 3.28. “If there were a uniform upward drift, then we would have one problem,” said Michael Hurwitz, senior director at the College Board, who led the research. “But this drift causes another problem: The variation does seem aligned with wealth in a very troubling way.”   Certainly for the top elite colleges, like the Ivy League plus MIT, Stanford and other highly-regarded schools, this can’t be news. The top private schools (prep schools like St. Pauls, Groton, Andover, Exeter, the New York City elite schools like Horace Mann, Dalton and Brearley) and the public schools that are close to if not on their level (Beverly Hills High, Bronx High School of Science) are very keenly observed by the top colleges. At least in my day, the view was that bases on their academic standards, Harvard could have admitted its entire class from private schools, particularly the top ones. Harvard admitted 35% of its class from private schools, which if anything is down from the level in my day. However, 16% were “legacy” which means their parents went to Harvard College, which seems higher than in my cohort.

Even With Affirmative Action, Blacks and Hispanics Are More Underrepresented at Top Colleges Than 35 Years Ago -- Even after decades of affirmative action, black and Hispanic students are more underrepresented at the nation’s top colleges and universities than they were 35 years ago, according to a New York Times analysis.  The share of black freshmen at elite schools is virtually unchanged since 1980. Black students are just 6 percent of freshmen but 15 percent of college-age Americans, as the chart below shows. More Hispanics are attending elite schools, but the increase has not kept up with the huge growth of young Hispanics in the United States, so the gap between students and the college-age population has widened.  The Times analysis includes 100 schools ranging from public flagship universities to the Ivy League. For both blacks and Hispanics, the trend extends back to at least 1980, the earliest year that fall enrollment data was available from the National Center for Education Statistics.  Blacks and Hispanics have gained ground at less selective colleges and universities but not at the highly selective institutions, said Terry Hartle, a senior vice president at the American Council on Education, which represents more than 1,700 colleges and universities.  The courts have ruled that colleges and universities can consider race or ethnicity “as one element in a holistic admissions policy, so it’s something that can be considered, but it’s not a magic bullet,” he said.  Affirmative action increases the numbers of black and Hispanic students at many colleges and universities, but experts say that persistent underrepresentation often stems from equity issues that begin earlier.  Elementary and secondary schools with large numbers of black and Hispanic students are less likely to have experienced teachers, advanced courses, high-quality instructional materials and adequate facilities, according to the United States Department of Education's Office for Civil Rights.

UVa Students Demand Racial Quotas, "Mandatory Education" On "Jefferson's White Supremacy" - Student groups at the University of Virginia have issued a list of demands that includesracial quotas and mandatory “education” about Thomas Jefferson’s connection to white supremacy. The Minority Rights Coalition (MRC) at UVA, a coalition of minority student groups, hosted the “March to Reclaim Our Grounds” on August 21 to “send a message to the university that we demand more from them [sic] in these times.”Taking that vow literally, the MRC members delivered a ten-point list of demands during the rally articulating the steps they believe UVA must take to “reclaim” the campus after it was overrun by white supremacists. The list begins with a demand that UVA “remove the Confederate plaques on the Rotunda,” referring to a building that stands at the center of Thomas Jefferson’s historic Academical Village. The plaques, which were erected “in memory of the students and alumni of the university who lost their lives in the military service of the Confederacy,” stand beside a series of other plaques honoring UVA alumni who perished in other armed conflicts. Another item on the list, conversely, asserts that the statue of Jefferson on UVA’s campus “serves as an emblem of white supremacy, and should be re-contextualized with a plaque to include that history” before going on to insist that “more buildings named after prominent white supremacists, eugenicists, or slaveholders should be renamed after people of marginalized groups.”

UC ripped again in latest audit that finds bungling of payroll upgrade -- A state audit released Thursday rips the University of California again — this time for bungling a plan to streamline its payroll systems.The payroll overhaul will cost UC nearly $1 billion — triple the expected cost — and will take five years longer than planned, says the audit that is the third deep dive into UC finances this year.The audit of the “UCPath” payroll system also faults the UC president’s office for failing to fully inform the governing Board of Regents about problems with the overhaul, which was supposed to save UC $753 million. Those savings — mainly from reduced staff — “will not materialize,” the audit says. Independent State Auditor Elaine Howle agreed that the university has no choice but to replace its 11 aged, problem-plagued systems for dealing with payroll and human resources. Those systems were blamed for UC’s botched overtime payments to nearly 14,000 employees over three years, a problem that forced UC in May to agree to pay $1.3 million in back wages and damages. The transformation to a new payroll system began in 2011 and was expected to be done in 2014. The announced price tag: $306 million. The audit determined it will take until mid-2019 and cost at least $942 million, although UC maintains it will be $504 million. In April, a state audit found that the office of UC President Janet Napolitano failed to disclose millions of dollars in reserve funds before asking regents to raise tuition, and that her office interfered with the auditor’s survey of campuses and rendered it useless. A second audit, released Tuesday, found that UC had not adequately justified its replacement of many employees with lower-paid contractors.

If Student Loans Were Honest --- (video) College is going to be one of the biggest investments of your life....which is why you should just trust what the student loan companies tell you without even thinking twice about how much you could be screwed after school has ended.

Dropping college enrollment shows Americans are no longer buying the college lie | TheHill: For decades, teachers and parents around the country have been repeating the same message to children: “To have a bright future, you need to go to college.” But now, in Hawaii at least, it’s starting to look like the younger generation isn’t buying it. Across the state, University of Hawaii college enrollment has plummeted by 15 percent in just six years, from a high of 60,300 students in 2012 to 51,300 as of 2017. Trying to explain this decline, university President David Lassner pointed to the fact that college enrollment has been declining around the country. Some have blamed demographics, citing the decline in birthrates. Others blame economic factors such as an improving economy, which may entice high school graduates into the workforce instead. In response, the state is attempting to bolster enrollment by (what else?) throwing money at the problem. There are proposals to increase education spending across the board, but in particular the state legislature during its past session approved the “Hawai’i Promise” scholarship program, an initiative approved by Gov. David Ige that will provide free community college tuition for qualifying residents, starting this fall. But there’s another consideration they might be missing: This might just be a matter of supply, demand and perceived value. As we all know, the cost of a college education has been increasing for years, so it was only a matter of time before potential students began weighing the costs and benefits of substantial debt and asking whether it’s really worth it. In an age of mobile-app startups and social media marketing, it might not be obvious to recent high school graduates that college can provide the employment skills they need at a price they can afford. 

Polarization for controversial scientific issues increases with more education - A commonly proposed solution to help diffuse the political and religious polarization surrounding controversial scientific issues like evolution or climate change is education. However, Carnegie Mellon University researchers found that the opposite is true: people's beliefs about scientific topics that are associated with their political or religious identities actually become increasingly polarized with education, as measured by years in school, science classes, and science literacy."A lot of science is generally accepted and trusted, but certain topics have become deeply polarizing. We wanted to find out what factors are related to this polarization, and it turns out the 'deficit model'—which says the divisions are due to a lack of education or understanding—does not tell the whole story," said Caitlin Drummond, the lead author who recently received her Ph.D. in behavioral decision research from CMU's Department of Social and Decision Sciences and will be a postdoctoral research fellow at the Erb Institute at the University of Michigan this fall.Published in the Proceedings of the National Academies of Sciences (PNAS), Drummond and CMU's Baruch Fischhoff used data from the nationally representative General Social Survey. They examined predictors of Americans' beliefs about six potentially controversial issues—stem cell research, the big bang, human evolution, genetically modified foods, nanotechnology and climate change. And they measured education by the highest degree earned, science classes taken in high school and college and aptitude on general science facts. They found that beliefs were correlated with both political and religious identity for stem cell research, the big bang and evolution and with political identity alone on climate change. On each of these issues, individuals with more education, science education and science literacy had more polarized beliefs.

Older Americans Have More Student Debt Than Ever, Face ‘Overly Complex’ Loan Servicing System -The Consumer Financial Protection Bureau has followed up on a report from last year regarding one of the biggest growing segments of student debt, 60+ year old Americans .  Yes, you read that right. Older Americans are borrowing at astounding rates, and becoming just as steeped in debt as younger student borrowers.   Announcing additional data to the study, the CFPB's Office for Older Americans and Student Loan Office compiled student loan data, rates, and ranges for all 50 states, Washington D.C. and Puerto Rico. This is what they found :

  • The number of older borrowers has quadrupled since 2005, from 2.7% to 6.4% in 2015:  That's 2.8MN total Americans.
  • Older borrowers owe more now than 10 years ago:  Doubling from $12,100 to $23,500 from 2005-2015 for a combined total of $66.7BN in total debt for the age segment. The CFPB notes that increasing tuition costs as well as the likelihood that older Americans owe other kinds of debt, (auto loan, mortgage) contribute to these rates.
  • 73% of older Americans take out loans for their children's education:  This number also includes older Americans who take out loans for their grandchildren or spouse to utilize. 57% of all student loan co-signers are 55+ years of age.
  • 37% of 65+ y/o loan borrowers are in default:  As the general population also struggles with loan payments, older borrowers are leading in missed payment rates, with only 29% of 55-65 year-olds and 17% under 50 in default. Inability to pay back loans can leave older Americans with garnished wages  and benefits, with 40,000 borrowers left without Social Security benefits due to default.

In short, older Americans face a lot of the same hardships younger borrowers must deal with when trying to finance their education, without the added benefit of time available to work to repay loans or sufficient disposable income.The CFPB also monitors user experiences when it comes to borrowing money, and noted that as of 2017 64% of the total complaints they received from 62+ Americans come from "dealing with a lender or servicer", and 36% were related to "continued attempts to collect debt not owed", two major problems many borrowers have day-to-day with the loan experience.   Education Secretary Betsy DeVos recently scrapped a plan to combine all the federal loan systems into one service, even though the CFPB and others all argue that the current system is wraught with poor customer service, overly complex processes, and aggressive collection tactics. The federal government outsources a large portion of the student loan work to outside contractors, which includes big names like Navient ( NAVI ) and Nelnet ( NNI ). These contracts expire in 2019.

  This is how long $1 million will last in retirement - For many soon-to-be retirees, a cool $1 million sounds like substantial savings goal, yet that largely depends on where you live. In some parts of the country, it will barely last a decade. "It's the benchmark everyone has in mind but it's important to be more specific, there's so much range across different states. Your personal situation plays a big role," said Mark Evitt, features editor at GOBankingRates.  The personal finance site compared average expenses for people age 65 and older, including groceries, housing, utilities, transportation and healthcare in every state to come up with how long a nest egg of $1 million would really last. It's no surprise that dollars stretched the furthest in states like Mississippi, Arkansas and Tennessee, where retirees could live a life of leisure for at least a quarter of a century."One of the benefits of living in the southeast is that the cost of living is significantly lower," Evitt said. However, in Hawaii, where residents pay roughly 30 percent more for household items across the board, that same amount will only get you just shy of a dozen years largely because of the cost of living and pricey real estate.

Health care will cost couples $275,000 in retirement - - A couple retiring this year will need an estimated $275,000 to cover health care costs in retirement, according to Fidelity. That's a 6% increase over last year.  Of course, it's a ballpark number. The true cost depends on a variety of factors like your health and how long you'll live. Plus, there's ongoing uncertainty about what the health care landscape will look like in the future. "No matter how you slice it, the number is brutal," said Adam Stavisky, senior vice president at Fidelity Benefits Consulting. Fidelity's estimate applies to those with traditional Medicare insurance coverage and considers premiums, co-payments, deductibles, and out-of-pocket drug costs. It excludes the cost of a nursing home or any long-term care you might need. The estimate assumes that both spouses are retiring at age 65 and that they'll live to between the ages of 86 and 88.  Costs are only expected to rise in the future. Younger workers who are further away from retirement should expect to spend a lot more.   The good news is, time is on their side. Stavisky suggests using a Health Savings Account, known as an HSA, to invest savings earmarked for health care costs.  Contributions aren't taxed when they go in, and they're allowed to grow tax-free. The money won't be taxed when you take it out either -- as long as the funds are used for health care expenses.  Any worker who has a high-deductible health care plan can open an HSA. You're currently allowed to save up to $3,400 annually, or $6,750 for family coverage in the account.

Fidelity Says Baby Boomers Haven't Even Saved Enough To Cover Their Healthcare In Retirement -- While statistics are somewhat sketchy on the topic, most research suggests that the average retirement-age household has managed to set aside roughly $200,000-$250,000 for their golden years.  Unfortunately, they'll need more than that just to cover their healthcare costs.  Per Bloomberg notes today, the average 65-year-old couple will need roughly $275,000 to cover their healthcare costs during retirement...and that's with Medicare. A 65-year-old couple retiring this year will need $275,000 to cover health-care costs throughout retirement, Fidelity Investments said in its annual cost estimate, out this morning. That stunning number is about 6 percent higher than it was last year. Costs would be about half that amount for a single person, though women would pay a bit more than men since they live longer.You might think that number looks high. At 65, you’re eligible for Medicare, after all. But monthly Medicare premiums for Part B (which covers doctor’s visits, surgeries, and more) and Part D (drug coverage) make up 35 percent of Fidelity’s estimate. The other 65 percent is the cost-sharing, in and out of Medicare, in co-payments and deductibles, as well as out-of-pocket payments for prescription drugs. And that doesn’t include dental care—or nursing-home and long-term care costs.

50,000 Blue Cross customers are about to get some bad news --- Thousands of North Carolina residents have been exempt from the Affordable Care Act and got to keep their old health insurance, paying significantly less for their coverage than those insured under the ACA. But that’s about to come to an end for 50,000 customers of Blue Cross and Blue Shield of North Carolina. In 2018, they will have to switch to ACA plans, in some cases paying twice as much or more for health insurance.“We know this will be tough news for our customers who love their grandfathered plans,” Blue Cross said in a post on the company’s blog this week. “Many customers transitioning off grandfathered plans will pay more for coverage in 2018. Many will pay quite a bit more.”Most of these Blue Cross customers are blissfully unaware of the looming change. Blue Cross will notify these customers in September that their current policies will expire and they will have to switch. The affected customers are on so-called grandfathered plans, which were allowed to remain in effect, per President Obama’s promise, even though these plans do not comply with ACA requirements for health insurance and would not be legal to sell today. Customers on grandfathered plans always had the option to switch to ACA plans, but most didn’t because their older plans, some purchased years before the ACA went into effect, were cheaper. The Durham insurer said some customers who switch to the ACA will benefit from federal subsidies to offset increased insurance costs but not all.  These customers are going to find that health care has changed quite a bit since they bought their plans. There are now high deductibles, fewer choices for doctors and hospitals in their coverage plans. Some will have to drop doctors they’ve been seeing for years and find new providers.

Anthem’s exit leaves thousands without health insurance choice in California  --For about 60,000 Covered California customers, choosing a health plan next year will be easier, and possibly more painful, than ever: There will be only one insurer left in their communities after Anthem Blue Cross of California pulls out of much of the state’s individual market.  That means they could lose doctors they trust, or pay higher premiums. Anthem’s departure is also a blow for the Covered California exchange, which often has boasted that healthy competition among its plans helped lower costs and improve its members’ access to care.Competition won’t be so healthy next year for Covered California enrollees in six counties: Monterey, San Benito, San Luis Obispo, Santa Barbara, Inyo and Mono. For them, it will be Blue Shield of California — or bust. Portions of seven other counties also will be served only by Blue Shield.  Californians in those areas who buy their plans outside the Covered California exchange also may be limited to one insurer. It’s not clear how many people that includes. “If one of [Covered California’s] goals … was to provide a competitive marketplace where people will have options and real choices, then there is a failure to meet that goal” The lack of competition means “There are definitely going to be people who will have to pay more for their health insurance,” Knauss said.Consumers who live in the one-plan areas and d on’t receive federal tax credits to lower the cost of their premiums will be the most affected, he added. They will have to shoulder the full amount of the increase if the Blue Shield premiums are higher than what they are paying now.

Every county in US set to have an ObamaCare option | TheHill: Every county in the U.S. will have at least one ObamaCare insurer on the exchanges next year after CareSource announced Thursday it would fill the last remaining “bare” county in Ohio. It’s an important political win for advocates of ObamaCare who argue the exchanges are functioning in spite of efforts by the Trump administration to let it implode. “Trump and Republicans in Congress have been rooting for healthcare to fail. With today's announcement, their talking points continued to evaporate,” Protect Our Care Campaign Director Leslie Dach said in a statement Thursday. “It's official. The biggest threat to your healthcare is still sabotage from the Trump administration and Republicans in Congress.” At one point or another over the past year, more than 80 counties have been at risk of having no ObamaCare insurer on the exchanges in 2018. Republicans have pointed to this as proof that ObamaCare is failing and needs to be repealed. But that number slowly trickled down over the last few months as other insurers stepped in to fill these spots, and then on Thursday, that number dropped to zero. The Trump administration downplayed the news, arguing that competition is lacking on the exchanges with many counties slated to have only one insurer next year.

Iowa’s ACA waiver plan would redistribute subsidies from the poor to wealthier people -- Does making health insurance premiums more affordable for healthier, wealthier people justify sharply increasing out-of-pocket costs for lower-income and sicker people? The state submitted the plan—called the Iowa Stopgap Measure—to HHS and the U.S. Treasury Department Tuesday under Section 1332 of the Affordable Care Act.  Modern Healthcare reported Friday that the state was planning to file the request this week. Under Iowa's state innovation waiver request, residents would receive premium subsidies based on broad age and income categories, without using the Affordable Care Act's calculation to cap premium costs at a certain percentage of a person's income. The state revenue department would determine a person's eligibility and level of subsidy, rather than having that determination made by the federal exchange.Another change is that people earning more than 400% of the federal poverty level would be eligible for premium subsidies. Meanwhile, people with incomes from 138% to 250% of poverty would no longer receive cost-sharing subsidies to reduce their deductible and coinsurance payments.   The state would use a portion of the federal subsidy money to set up a reinsurance program to protect insurers that sign up high-cost enrollees.  Iowa's Republican-appointed insurance commissioner, Doug Ommen, said the proposed redistribution of federal subsidy dollars is necessary to make premiums more affordable for Iowans of all income levels and dissuade them from dropping insurance. That, he argued, will stabilize the market and reduce premiums by keeping healthier people in the risk pool to offset the costs of sicker people. Otherwise, nearly 20,000 mostly healthy Iowans out of the 72,000 people currently in the ACA-regulated individual market are likely to drop coverage, which would drive premiums even higher, he warned.

The United States Can Reduce Socioeconomic Disparities By Focusing On Chronic Diseases - People of color face higher rates of diabetes, obesity, stroke, heart disease, and cancer than whites. In the case of diabetes, the risk of being diagnosed is 77 percent higher for African Americans and 66 percent higher among Hispanics, than for whites. Asian Americans, Native Hawaiians, and Pacific Islanders are at twice the risk of developing diabetes than the population overall.  In addition to higher rates of chronic illness, lower wages and insufficient insurance coverage among people of color greatly limits their access to treatment and often forces them to work while ill. Adjusting for inflation, incomes for all poor and middle-income Americans have declined over the past 15 years. As people of color are disproportionately represented within lower income levels, there is a growing wealth gap between racially and ethnically diverse households compared with white households, the size of which has not been seen since the early twentieth century. Furthermore, in 2015, for nonelderly adults, the percentage of African Americans, Hispanics, Asian Americans, and American Indian and Alaska Natives who were uninsured was one-and-a-half to two times as large as the percentage of white Americans who were uninsured. Research has shown that the onset of a chronic disease reduces wages by 18 percent. Chronic illness may restrict employment and increase medical expenses and costly caregiving responsibilities, which all contribute to widening the income and wealth gaps. On average, chronic diseases are projected to cost the United States $794 billion per year in lost productivity alone between 2016 and 2030. Relatedly, the Joint Center for Political and Economic Studies estimates that health inequities and premature death cost the US economy $309.3 billion a year. People with lower incomes have a greater likelihood of having one or more chronic illnesses, and greater morbidity means higher out-of-pocket costs. According to a RAND Health study, Americans with just one or two chronic illnesses in 2014 paid double the out-of-pocket costs compared to Americans without chronic conditions. Americans with three or more chronic illnesses paid four times as much or more. With median household income 140 percent to 171 percent less than their white peers, respectively, Hispanic and African American households have fewer resources to absorb those costs. Incomes among Hmong, Thai, Cambodian, Laotian, and Bangladeshi Americans are even lower.

"What Is Happening To Our Young People?" Teenage Drug Deaths Surge 20% -- There has been no shortage of depressing headlines tied to America's opioid epidemic, and to that list we can add one more: A new study has found that the number of teens who died from overdoses climbed by nearly 20% in 2015 after declining for seven straight years, according to the Guardian. But while men represent two-thirds of all drug-related deaths, the recent climb in teenage fatalities has been disproportionately driven by women, as the Guardian explains.The jump in fatalities was driven by heroin and synthetic opioid use and by an increasing number of deaths among teenage girls. Deaths among teenagers represent a tiny portion of drug overdose deaths nationally – less than 2%.”   The study's authors said they wanted to document the falling death rate among teenagers. However, it appears the data had other plans.We wanted to document that in this age group there had been a decline [in deaths],” said Sally Curtin, lead author of the study. “The trends were unique for this age group. But, once again, it did increase again between 2014 and 2015.”The rate of teenage drug-related deaths declined by 27% between 2007 and 2014 even as the rate for all Americans skyrocketed. But most of that decline was reversed by the jump in fatalities that occurred during 2015. Like the broader crisis, the surge in teenage deaths has been driven by powerful synthetic opioids like fentanyl and carfentanil which can be as much as 100 times more powerful than morphine. The report looked at the rate of overdose deaths for teens aged 15-19 between 1999 and 2015. Researchers found the rate of teens who died from a drug overdose dropped 26% between 2007 and 2014. Among boys, the death rate fell by one-third. But in 2015, the rate of overdoses among American teens increased by almost one-fifth. That year, 772 teens died of drug overdoses. The number of deaths in 2014 was 658, according to the Guardian.

Hunting a Killer: Sex, Drugs and the Return of Syphilis - Oklahoma City - For months, health officials in this socially conservative state capital have been staggered by a fast-spreading outbreak of a disease that, for nearly two decades, was considered all but extinguished.  Syphilis, the deadly sexually transmitted infection that can lead to blindness, paralysis and dementia, is returning here and around the country, another consequence of the heroin and methamphetamine epidemics, as users trade sex for drugs. To locate possible patients and draw their blood for testing, Oklahoma’s syphilis detectives have been knocking on doors in dilapidated apartment complexes and dingy motels, driving down lonely rural roads and interviewing prison inmates. Syphilis has led them to members of 17 gangs; to drug dealers; to prostitutes, pimps and johns; and to their spouses and lovers, all caught in the disease’s undertow.“Syphilis doesn’t sleep for anyone,” said Portia King, a veteran Oklahoma state health investigator. “We have 200 open cases of sex partners we’re looking for. And the spread is migrating out of the city.” It took months for investigators to realize Oklahoma City had a syphilis outbreak. Last fall, the juvenile detention center reported three cases — a boy and two girls, the youngest, 14. The center had never had a syphilis case in seven years of testing for it. Investigators were mystified: The teenagers did not know each other, live in the same neighborhood or attend the same school. Then, in February, a prison inmate tested positive. In interviews, he listed 24 sex partners — some his own, others the so-called pass-around girls for gangs, usually in exchange for heroin or methamphetamine. Contact information from the Entertainment Manager, as he called himself, pointed the way to a syphilis spread that, by March, led health officials to declare an outbreak, one of the largest in the country.

White supremacists are embracing genetic testing – but they aren’t always that keen on the results - The field of genomics and genetics have undergone almost exponential growth in recent years. Ventures like the Human Genome Project have enabled t humanity to get a closer look at our building blocks. This has led to an explosion in genetic ancestry testingand as of 6 April 2017 23AndMe, one of the most popular commercial DNA testing websites, has genotyped roughly 2 million customers.  It is perhaps unsurprising that one of the markets for genetic testing can be found among white suprmacists desperate to prove their racial purity. But it turns out that many they may not be getting the results they want.  Stormfront, the most prominent white nationalist website, has its own definition of those who are allowed to count themselves as white - “non-Jewish people of 100 per cent European ancestry.” But many supremacists who take genetic tests are finding out that rather than bearing "not a drop" of non-white blood, they are - like most of us a conglomerate of various kinds of DNA from all over the world including percentages from places such as sub Saharan Africa and Asia. Few are taking it well.  Of course, in another not totally surprising development, many of the Stormfront commentators also insisted that GAT is part of a Jewish conspiracy, “to confuse whites by sprinkling false diversity into test results".

 Ambrosia: the startup harvesting the blood of the young -- In Monterey, California, a new startup has emerged, offering transfusions of human plasma: 1.5 litres a time, pumped in across two days, harvested uniquely from young adults.  Ambrosia, the vampiric startup concerned, is run by a 32-year-old doctor called Jesse Karmazin, who bills $8,000 (£6,200) a pop for participation in what he has dubbed a “study”. So far, he has 600 clients, with a median age of 60.   It’s no coincidence his scheme is based near San Francisco. The idea has become faddish in tech circles. While anti-ageing products usually hold more appeal with women, two-thirds of the more than 65 participants who have signed up for this trial are men. Mike Judge’s Silicon Valley sitcom recently parodied the notion, with arch-tech guru Gavin Belson relying on a “blood boy” following him around to donate pints of sticky red at inopportune moments. That fictionalised account may well be based on the real-life adventures of Peter Thiel, the PayPal founder, who has expressed interest in having transfusions (Gawker even reported that he was spending $40,000 (£31,000) a quarter on regular transfusions from 18-year-olds).  The scientific community has rolled its eyes at the “trial” element of Ambrosia. There is no control group and, with participation costing so much, no one involved is very randomised. Despite these criticisms of the science, Dr Karmazin is still reporting positive results. His team has found that levels of carcino-embryonic antigens fell by around 20%, as did the level of amyloids – proteins involved in cancer and Alzheimer’s disease respectively.

L.A. jury hits Johnson & Johnson with $417-million verdict over cancer link to its talc - LA Times: Los Angeles jury issued a $417-million verdict Monday against Johnson & Johnson, finding the company liable for failing to warn a 63-year-old woman diagnosed with terminal ovarian cancer about the risks of using its talcum products. The verdict marks the largest award yet in a number of suits claiming that the company’s talc powder causes ovarian cancer. More than 300 lawsuits are pending in California and more than 4,500 claims in the rest of the country, alleging that the healthcare giant ignored studies linking its Johnson's Baby Powder and Shower to Shower products to cancer. The plaintiff, Eva Echeverria, was diagnosed with ovarian cancer in 2007. A surgeon removed a softball-sized tumor, but Echeverria is now near death and was unable to attend the trial, one of her attorneys said. In a video-recorded deposition played for the jury, she testified she used the Johnson’s Baby Powder from age 11 until 2016, when she saw a news story about a woman with ovarian cancer who had also used the product. Echeverria testified that if Johnson & Johnson, which earned a profit of $16.5 billion last year, had put a warning on the product, she would have stopped using it. 

World Famous Tourist Destination A Dumping Ground for Raw Sewage - (video) One of the most visited outdoor tourist attractions in the world, Niagara Falls, is known for its breathtaking views, but visitors are now having their breath taken away by something far less awe inspiring.Located just a few miles from Global Justice Ecology Project’s offices in Buffalo, the Niagara River that leads into Niagara Falls is frequently becoming the dumping outlet for the Niagara Falls sewer system, which has discharged more than a half-billion gallons of raw sewage mixed with storm water into the Lower Niagara River since May 2016, according to Investigative Post. The Niagara River runs north from Lake Erie to Lake Ontario. From the Investigative Post:The problem gained the attention of Governor Andrew Cuomo after a July 29 discharge turned the Lower Niagara into a black, smelly disruption for tourists on a busy Saturday at Niagara Falls State Park.  That incident was blamed on a worker error.Sewer overflows are well known to the state Department of Environmental Conservation and the Niagara Falls Water Board.Nonetheless, the DEC said it is investigating two separate discharges that the Niagara Falls Water Board reported Tuesday night. Those overflows totaled 3.5 million gallons.But from May 2016 to July 2017, the Niagara Falls Water Board reported at least 83 additional sewage discharges, an Investigative Post analysis of state data found.  The total estimated volume: 545 million gallons. That’s enough to fill 800 Olympic-sized pools.

in northeast Ohio, air pollution finds its way to the lungs (WOSU audio, 4:17)  State lawmakers are gearing up for another round in the fight over renewable energy mandates.  Opponents say they’re a financial burden; supporters say they help cut down on air pollution, which then improves respiratory health. There is one part of Ohio where the risk for experiencing breathing problems is one of the highest in the country. Several studies show people living in the 44301 zip code, along with other neighborhoods in Akron, Canton and Cleveland, are at an increased risk of respiratory problems because of the higher levels of air pollution.  Dr. Sumita Khatri specializes in respiratory illnesses at the Cleveland Clinic. She says there’s no question that people in this part of the state have a harder time breathing because of the higher volume of particulate matter.  There are more than 2 million people who live in Cuyahoga, Summit and Stark counties, and about 10 percent of those people -- kids and adults -- have asthma.  “We are a function of who we are, how we’re made up genetically and also the environment that we’re in," Khatri says. "And so although to some degree everyone is affected by air pollution from a health standpoint, there are also people who are especially sensitive and susceptible." Khatri is backed by studies from the New England Journal of Medicine and the American Lung Association which had the Cleveland, Akron, Canton region in the top 10 for people most at-risk to particle pollution, year-round. She attributes that to the large volume of vehicles, heavy traffic stagnation and manufacturing plants.

Trump's decision to allow plastic bottle sales in national parks slammed -  The Trump administration’s decision to reverse a ban on the sale of plastic water bottles in some of America’s most famous national parks, including the Grand Canyon, shows “the corporate agenda is king and people and the environment are left behind”, campaigners have said.  The comments come after the administration ended a policy that allowed parks to ban the sale of plastic bottled water in an effort to curb pollution. That policy “was a win-win for everyone except the bottled water industry, which is only interested in its bottom line”, said Lauren DeRusha Florez, a campaign director for Corporate Accountability International, a group that campaigns against corporate abuses.The change means national parks will no longer be allowed to ban plastic bottled water, after Trump administration officials ended a six-year-old policy put in place to curb pollution.  The National Park Service, responsible for America’s most celebrated wilderness areas, announced the change in a press release that closely echoed lobbyists’ arguments against the ban.   “It should be up to our visitors to decide how best to keep themselves and their families hydrated during a visit to a national park, particularly during hot summer visitation periods,” said the acting National Park Service director, Michael Reynolds. He said parks would continue to encourage people to use free bottle filling stations, “as appropriate”.

"Colossal Fraud": Lawsuit Accuses Poland Spring Of Selling Groundwater --  Ever wonder if that bottled mineral water you just spent several dollars on is really mineral water? According to a bombshell new lawsuit filed this  week, at least in the case of one company it isn't.A group of bottled water drinkers has brought a class action lawsuit against Nestle, the company which owns Poland Spring, alleging that the Maine business has long deceived consumers by mislabeling common groundwater. The lawsuit was filed on Tuesday in a Connecticut federal court and accuses Nestle Waters North America Inc. of a “colossal fraud perpetrated against American consumers” the Bangor Daily News reports.The plaintiffs claim that falsely labeling its "groundwater" product as pure spring water allowed Nestle to sell Poland Spring water at a premium; as a result the consumers who brought the legal action are seeking at least $5 million in monetary damages for a national class and several state subclasses. They requested a jury trial. The civil suit was brought by 11 people from the Northeast who collectively spent thousands of dollars on Poland Spring brand water in recent years. It seeks millions of dollars in damages for a nationwide class and hinges on whether the sources of Poland Spring water meet the Food and Drug Administration’s definition of a spring. The 325-page lawsuit, which was filed by lawyers from four firms, claims that none of the company’s Maine water sources meets the federal definition for spring water and that the company has “politically compromised” state regulators. Rather than spring water, Nestle Waters is actually purifying and bottling groundwater, some of which comes from sites near waste and garbage dumps, the suit claims.

The Pentagon is Poisoning Your Drinking Water --The nation’s biggest polluter isn’t a corporation. It’s the Pentagon. The Department of Defense, under a 1980 EPA exemption, is still allowed to burn weapons waste, detonate toxic explosives, and in certain cases even radioactive waste. Every year the DoD churns out more than 750,000 tons of hazardous waste — more than the top three chemical companies combined.The military is largely exempt from compliance with most federal and state environmental laws, and the EPA continues to work hard to keep it that way, especially in the case of perchlorate as the agency debates exactly how much of the noxious stuff is safe to consume.For the past five decades the federal government, defense contractors and the chemical industry have joined forces to block public health protections against perchlorate, a component of rocket fuel that has been shown to effect children’s growth and mental progress by disrupting the function of the thyroid gland which regulates brain development.Perchlorate has been leaking from literally hundreds of defense plants and military installations across the country. The EPA has reported that perchlorate is present in drinking and groundwater supplies in 35 states. Center for Disease Control and independent studies have also overwhelmingly shown that perchlorate is existent in our food supplies, cow’s milk, and human breast milk. As a result virtually every American has some level of perchlorate in their body. The higher the level the more dangerous it becomes, raising the risk of thyroid and other cancers. Currently only two states, California and Massachusetts, have set a maximum allowable contaminant level for perchlorate in drinking water. In California perchlorate has been found, not only in groundwater supplies, but in dairy cows.  In the Colorado River, which provides water for over 20 million people, perchlorate levels are high. The chemical is most prevalent in the Southwest and California as a result of the large number of military operations and defense contractors in the region. In 2001 the EPA estimated that the total liability for the cleanup of toxic military sites would exceed $350 billion, or five times the Superfund Act liability of private industry. But the federal government has been complacent and allowed perchlorate to run rampant throughout our water supplies.

  Off-target Movement of Dicamba in Missouri. Where Do We Go From Here?  - In 2017, there have been numerous instances of off-target movement of dicamba throughout the state of Missouri and beyond. While the majority of the injury on a per land unit area has definitely occurred in the boot heel of Missouri, there are many problems with off-target movement of dicamba in the rest of the state. The Missouri Department of Agriculture is currently investigating over 280 dicamba-related injury cases (Figure 1), and based on University of Missouri Extension field visits, we estimate 325,000 acres of soybean injured by dicamba across 54 counties in Missouri. On a national scale, there are now more than 2,200 dicamba-related injury investigations being conducted by various state Departments of Agriculture, and more than 3.1 million acres of soybean estimated with dicamba injury (see our recent update here). In my opinion, we have neverseen anything like this before; this is not like the introduction of Roundup Ready or any other new trait or technology in our agricultural history.  In my opinion, there are basically four routes by which dicamba can move away from its intended target, and we have experienced every one of these in 2017. The real debate seems to be about what percent of the total off-target movement should be placed into each one of these categories.  First, dicamba can move off-target by way of physical drift at the time of application. This can occur due to spraying when wind speeds are too high, use of improper nozzles that produce fine droplets, or to a host of other factors that we can just chalk up to "bad sprayer decisions or set-up at the time of application."  A second way that dicamba can move off-target is through tank contamination. This usually occurs due to improper spray tank cleanout. Unfortunately, many have learned the hard way that it takes very, very little dicamba in the tank to cause problems on non-Xtend soybean that are sprayed after a dicamba application. A third way that dicamba can move away from its intended target is through temperature inversions. Temperature inversions usually occur in the evening hours around sunset when the air nearest the earth's surface becomes cooler than the air above it. This cooler air forms a stable mass that can be moved horizontally along the earth's surface and then can deposit anything that may have been in it once it dissipates. The final way that dicamba can move away from its intended target is through volatility. Dicamba is an inherently volatile herbicide. We know that the older formulations of dicamba are more volatile and are illegal to apply. I do not believe that the scope and scale of this issue can be explained away by illegal applications of older dicamba formulations.

29 States Just Banned Laws About Seeds -- With little notice, more than two dozen state legislatures have passed “seed-preemption laws” designed to block counties and cities from adopting their own rules on the use of seeds, including bans on GMOs. Opponents say that there’s nothing more fundamental than a seed, and that now, in many parts of the country, decisions about what can be grown have been taken out of local control and put solely in the hands of the state.  “This bill should be viewed for what it is — a gag order on public debate,” says Kristina Hubbard, director of advocacy and communications at the Organic Seed Alliance, a national advocacy group, and a resident of Montana, which along with Texas passed a seed-preemption bill this year. “This thinly disguised attack on local democracy can be easily traced to out-of-state, corporate interests that want to quash local autonomy.” Seed-preemption laws are part of a spate of legislative initiatives by industrial agriculture, including ag-gag laws passed in several states that legally prohibit outsiders from photographing farms, and “right-to-farm” laws that make it easier to snuff out complaints about animal welfare. The seed laws, critics say, are a related thrust meant to protect the interests of agro-chemical companies. Nearly every seed-preemption law in the country borrows language from a 2013 model bill drafted by the American Legislative Exchange Council (ALEC). The council is “a pay-to-play operation where corporations buy a seat and a vote on ‘task forces’ to advance their legislative wish lists,” essentially “voting as equals” with state legislators on bills, according to The Center for Media and Democracy. ALEC’s corporate members include the Koch brothers as well as some of the largest seed-chemical companies — Monsanto, Bayer, and DuPont — which want to make sure GMO bans, like those enacted in Jackson County, Oregon, and Boulder County, Colorado, don’t become a trend.

For Crop Harvests, Every Degree of Warming Counts -- Each degree of global warming will cut into harvests of the world's staple crops, according to a new study that takes a broad view of the agricultural research field.  Wheat, corn, rice and soybeans make up two-thirds of humans' caloric intake. Each crop reacts differently to rising temperatures, and the effects vary from place to place. On average, though, the world can expect 3.1 to 7.4 percent less yield per degree Celsius of warming, according to the research. The findings draw from a meta-analysis of more than 70 studies of models, statistical regressions and experiments. Twenty-nine researchers published the paper this week in Proceedings of the National Academy of Sciences. It bolsters other predictions about degraded food supply by the Intergovernmental Panel on Climate Change. The United Nations predicts the world's population will grow to 9.8 billion by 2050 from 7.6 billion today. Warmer conditions could make it harder to grow enough food for so many mouths, and the crops that do grow could offer fewer nutrients (Climatewire, Aug. 2). The Paris climate agreement has committed the international community to less than 2 degrees Celsius of warming by the end of the century. The United States plans to quit the accord. But American agriculture could suffer disproportionately from warmer conditions, especially when it comes to corn, according to the study. Corn proved most sensitive to rising temperatures. Evidence suggests global corn harvests could decline 7.4 percent per degree Celsius of warming. The effect emerges consistently across the world's major corn producers, with the United States' harvests suffering most: 10.3 percent less corn per degree of warming.

Agriculture a culprit in global warming, says U.S. research | Reuters: - Agriculture has contributed nearly as much to climate change as deforestation by intensifying global warming, according to U.S. research that has quantified the amount of carbon taken from the soil by farming. Some 133 billion tons of carbon have been removed from the top two meters of the earth's soil over the last two centuries by agriculture at a rate that is increasing, said the study in PNAS, a journal published by the National Academy of Sciences. Global warming is largely due to the accumulation of carbon dioxide in the atmosphere from such activities as burning fossil fuels and cutting down trees that otherwise would absorb greenhouse gases such as carbon dioxide. But this research showed the significance of agriculture as a contributing factor as well, said Jonathan Sanderman, a soil scientist at the Woods Hole Research Center in Falmouth, Massachusetts and one of the authors of the research. While soil absorbs carbon in organic matter from plants and trees as they decompose, agriculture has helped deplete that carbon accumulation in the ground, he said. Widespread harvesting removes carbon from the soil as do tilling methods that can accelerate erosion and decomposition. "It's alarming how much carbon has been lost from the soil," he told the Thomson Reuters Foundation. "Small changes to the amount of carbon in the soil can have really big consequences for how much carbon is accumulating in the atmosphere."

Can anyone, even Walmart, stem the heat-trapping flood of nitrogen on farms? (NPR) Last year, Walmart unveiled Project Gigaton, a plan to reduce emissions of greenhouse gases by a billion tons of carbon between now and 2030. That's almost as much carbon as what's released from the country's entire fleet of passenger cars and trucks in a year.  The cuts will come from the company's suppliers: the vast galaxy of companies that make the products it sells. Even before unveiling that pledge, Walmart had been calculating the climate price tags of those products, estimating the greenhouse gases that are released in the process of making each one.  "Why are we seeing bread have high emissions?" Laura Phillips, Walmart's senior vice president for sustainability, wondered. Other food companies, including General Mills and Kellogg, have made their own commitments to reduce greenhouse emissions. To get a better grasp of the task, they joined forces and set up an organization called Field to Market to measure and reduce the environmental impact of their operations.  Down on the farm, the most important greenhouse source is something that doesn't normally get a lot of attention. It's the fertilizer — mainly nitrogen — that farmers spread on their fields to feed their crops.. Every year, American farmers spread millions of tons of it on corn fields alone.  Manufacturing nitrogen fertilizer is energy-intensive, burning lots of fossil fuels and releasing carbon dioxide. What's just as damaging, and perhaps even more so, is what happens when it's spread on a field. Bacteria feed on it and release a super-powerful greenhouse gas called nitrous oxide.  If you add it all up, fertilizer is the biggest part of the global warming price tag of a loaf of bread or a box of corn flakes. According to one study, carried out by the consulting group Deloitte, greenhouse emissions from fertilizer are the biggest single piece of the global warming price tag for almost half of the top-selling items on the shelves at Walmart.   Yet it's a climate driver that Walmart can't easily control.  In fact, even Walmart's suppliers, the companies that deliver meat and baked goods, don't control fertilizer use. Bakers just buy the grain that the farmers grow; meat packers buy the cattle that eat that grain. They're a step removed from the farmers who grow the grain and decide how much fertilizer to put on fields.

Pruitt Appears in Big Beef Video Urging Farmers to Kill Clean Water Rule - U.S. Environmental Protection Agency ( EPA ) administrator Scott Pruitt appears in a video sponsored by the beef industry calling on farmers and ranchers to file official comments on a proposal to withdraw and rewrite the Obama-era " Waters of the United States " rule (or WOTUS) before the Aug. 28 deadline. The National Cattlemen's Beef Association (NCBA) video was produced by the beef lobbying organization's policy division, Beltway Beef and was released last week. Notably, NCBA spent $117,375 in lobbying last year. "When comments are made a part of a record—as rule-making—we have an obligation to review them," Pruitt says. "It helps inform our decision-making process; it helps us make better decisions. And so we want farmers and ranchers across this country to provide comments." The video, filmed in Colorado during Pruitt's cross-country State Action Tour, directs viewers to a BeefUSA.org link to submit comments on the proposed repeal. The site includes sample text to submit to the Federal Register.  "We're trying to fix the challenges from the 2015 rule," Pruitt says in the NCBA clip, "where the Obama Administration re-imagined their authority under the Clean Water Act and defined a Water of the United States as being a puddle, a dry creek bed, and ephemeral drainage ditches across this country, which created great uncertainty ... and we are fixing that, and then we're hearing from stakeholders about how to get it right as we go forward."  But law experts told E&E News that Pruitt's interpretation of the 2015 rule—which extends Clean Water Act protections to streams, wetlands and any water body that shares a "significant nexus" with clearly navigable waters—as "misleading" and "inappropriate."  For one, WOTUS specifically states that puddles are not considered waters of the U.S. E&E News also pointed out that the rule also excludes dry creek beds that do not have a bed, bank and high-water mark and ephemeral ditches that "flow only after precipitation."  Incidentally, as Oklahoma's former attorney general, Pruitt had sued the EPA over WOTUS, alleging that it amounted to executive overreach and a regulatory burden.

Bill Gates and Richard Branson Back Startup That Grows ‘Clean Meat’ - Cargill Inc., one of the largest global agricultural companies, has joined Bill Gates and other business giants to invest in a nascent technology to make meat from self-producing animal cells amid rising consumer demand for protein that’s less reliant on feed, land and water. Memphis Meats, which produces beef, chicken and duck directly from animal cells without raising and slaughtering livestock or poultry, raised $17 million from investors including Cargill, Gates and billionaire Richard Branson, according to a statement Tuesday on the San Francisco-based startup’s website. The fundraising round was led by venture-capital firm DFJ, which has previously backed several social-minded retail startups. "I’m thrilled to have invested in Memphis Meats,” Branson said in an email in response to questions from Bloomberg News. “I believe that in 30 years or so we will no longer need to kill any animals and that all meat will either be clean or plant-based, taste the same and also be much healthier for everyone.” This is the latest move by an agricultural giant to respond to consumers, especially Millennials, who are rapidly leaving their mark on the U.S. food world. That’s happening through surging demand for organic products, increasing focus on food that’s considered sustainable and greater attention on animal treatment. Big poultry and livestock processors have started to take up alternatives to traditional meat. “The way conventional meat is produced today creates challenges for the environment, animal welfare and human health. These are problems that everyone wants to solve.” 

Thousands of Farmed Atlantic Salmon Escape Into Pacific Ocean - Thousands of Atlantic salmon escaped from a damaged net pen at a Cooke Aquaculture fish farm off Cypress Island in Washington's Puget Sound on Saturday, sparking fears from some that the farm-raised fish could threaten wild Pacific salmon. Washington Department of Fish and Wildlife (WDFW) said that 305,000 salmon were in the net pen at the time, but the company estimates that 4,000-5,000 fish escaped. Canada-based Cooke Aquaculture blamed the incident on high tides caused in the days leading up to and during Monday's solar eclipse . "Exceptionally high tides and currents coinciding with this week's solar eclipse caused damage to a salmon farm that has been in operation near Cypress Island for approximately 30 years," the company said. WDFW is monitoring the situation and crafting a fish spill-response plan with Cooke.  But why are Atlantic fish being farmed in the Pacific anyway? Well, as Inverse reported, Atlantic salmon net pens are banned in every West Coast state except for Washington.  "It's really a shame that this has happened," Jonathan White, the author of Tides: The Science and Spirit of the Ocean , commented to Inverse. "It underscores the risk and the dangers of farm fishing."  Farmed Atlantic salmon, a nonnative species to the Pacific coast, could also pose a risk to native species.  "Salmon farms are extremely harmful to wild fish because they break natural laws, releasing dangerous levels of viruses, bacteria and sea lice into the water," the Sea Shepherd Conservation Society warns on its Operation Virus Hunter campaign website. " Wild salmon are declining wherever there are salmon farms ." The Guardian reported in April that the sea louse, or salmon louse, is eating into farmed Atlantic salmon supplies in Scotland, Norway, Iceland and Canada, driving salmon prices higher and creating a "chemical arms race in the seas." Salmon companies around the world are spending an estimated $1.25 billion a year combined to tackle such outbreaks. Local anglers expressed fears that the Atlantic salmon will eat local salmon.  "It's a devastation," fisherwoman Ellie Kinley told the The Seattle Times . "We don't want those fish preying on our baby salmon. And we don't want them getting up in the rivers."

Farmed salmon ‘heading to every river in Puget Sound’ -- The Lummi Nation is marshaling a mop-up of thousands of fugitive Atlantic salmon in the tribe’s territorial waters, and the Swinomish chairman has called for a shutdown of the farmed-salmon industry in Puget Sound after last weekend’s spill.Swinomish fishermen caught farmed Atlantic salmon in the Skagit River on Wednesday night, as the fish continued to disperse through the Puget Sound, said Brian Cladoosby, chairman of the Swinomish Indian Tribal Community. He also received a report of an Atlantic salmon caught off Alki Point on Thursday afternoon. The fish were thick at Lopez Island Thursday, where fishermen out for smelt instead hauled in Atlantic salmon, and the fish were jumping in bays and coves all around the island. “These fish are headed to every river in Puget Sound,” Cladoosby said. “We have been saying all along it was not a question of if, but when, this would happen.“The wild salmon stocks are already endangered. It is time to shut these operations down. Period.”Meanwhile, the Lummi Nation has declared a state of emergency and is paying fish buyers to take the Atlantic salmon brought in by their fishermen, said Merle Jefferson, director of natural resources for the tribe. Jefferson declined to say how much the tribe is paying. “It is not going to be cheap, that is all I can say,” he said. “It’s just like an oil spill, we are trying to contain it as best we can.” He said the tribe would be testing some fish for disease, and freezing the rest. With wild salmon runs already depressed, the tribe does not want native fish subjected to competition for food from the Atlantic salmon or potentially exposed to disease, Jefferson said. The farmed Atlantic salmon also have made their way into the Nooksack River, where Lummi fishermen have had treaty-protected fisheries for generations. “We are concerned about impact on the spawning grounds,” said Timothy Ballew II, chairman of the Lummi Indian Business Council. “That could have lasting impacts on the future runs. This needs to be taken seriously. There are currently chinook in the river, and coho on the way. Our habitat is already in fragile state and adding this to the mix does not help.”

Are they safe to eat? Debate continues over escaped Atlantic salmon  - A Bellingham seafood company and other advocacy groups are warning people not to eat Atlantic salmon that escaped a fish farm Saturday after a net pen collapsed in the San Juan Islands.But the Washington Department of Fish & Wildlife has declared open season on the non-native salmon to prevent them from entering local rivers, saying the fish are safe to eat. A crew of anglers and videographers with Lummi Island Wild headed to Cypress Island Wednesday morning to document the damage to the Cooke Aquaculture net pens, which the company said held about 305,000 salmon before they collapsed Aug. 19. “We’re trying to defend our industry. ... We’re going out to document the truth,” said Riley Starks, spokesman for Lummi Island Wild, a cooperative that promotes sustainable fishing and uses reef nets to catch fish. “This is a real disaster.”The Lummi Indian Business Council, concerned about native Chinook salmon listed as threatened under the Endangered Species Act, said it has deployed tribal boats to track and remove Atlantic salmon from local waters. Meanwhile, Fish & Wildlife officials are encouraging local anglers to catch as many of the Atlantic salmon as they can. There is no size or catch limit, but anglers can only fish for Atlantic salmon in marine waters that are already open for Pacific salmon or freshwater areas open for trout fishing.“Our first concern, of course, is to protect native fish species,” said Ron Warren, head of WDFW’s Fish Program. “So we’d like to see as many of these escaped fish caught as possible.”Starks said that’s the wrong message to be sending to people. “The analogy we use is an oil spill, where you call residents to come out and bring their oil cans so they get free oil,” he said. “That’s not ok. ... It’s not safe to eat those fish.”

Zinke Recommends Shrinking a 'Handful' of the Nation's Most Cherished Public Lands - Interior Sec. Ryan Zinke will recommend unspecified boundary adjustments for a "handful" of the 27 national monuments under review by the Trump administration, according to an interview with the Associated Press .   Zinke commented that he will not ask President Trump to rescind any designations or revert sites to new ownership. Any areas removed from the protected lands would also remain under federal control and public access would remain or improve.  Under Trump's April executive order , the Zinke was given 120 days determine if previous presidential administrations exceeded their authority in monument designations from 1996 to present that are 100,000 acres or greater in size. Republican lawmakers have particularly accused President Obama, who designated more monuments than any other president, of abusing the Antiquities Act to protect land and water.  "No President should use the authority under the Antiquities Act to restrict public access, prevent hunting and fishing, burden private land, or eliminate traditional land uses, unless such action is needed to protect the object," Zinke said in a statement today about the draft report he submitted to Trump.  "The recommendations I sent to the president on national monuments will maintain federal ownership of all federal land and protect the land under federal environmental regulations, and also provide a much needed change for the local communities who border and rely on these lands for hunting and fishing, economic development, traditional uses, and recreation."  The former Montana congressman did not specify to the AP which sites could undergo changes. The White House has not yet issued a comment.

Interior secretary recommends Trump alter at least three national monuments, including Bears Ears - Interior Secretary Ryan Zinke recommended Thursday that President Trump alter at least three national monuments established by his immediate predecessors, including two in Utah, a move expected to reshape federal land and water protections and certain to trigger major legal fights. In a report Zinke submitted to the White House, the secretary recommended reducing the size of Utah’s Bears Ears and Grand Staircase-Escalante national monuments, as well as Oregon’s Cascade-Siskiyou National Monument, according to multiple individuals briefed on the decision. President Bill Clinton declared the 1.9 million-acre Grand Staircase-Escalante in 1996, while President Barack Obama designated the 1.35 million-acre Bears Ears last year. Cascade-Siskiyou, which now encompasses more than 113,000 acres, was established by Clinton shortly before leaving office and expanded by Obama in January. Trump had ordered Zinke to examine more than two dozen sites established by Clinton, Obama and George W. Bush under the 1906 Antiquities Act. The Interior Department did not give specifics on Zinke’s recommendations, instead releasing a report summary that described each of the 27 protected areas scrutinized as “unique.” Yet his proposal takes direct aim at a handful of the nation’s most controversial protected areas out west, according to several individuals who asked for anonymity because the report has yet to be made public. Zinke, who had called for revising Bears Ears’ boundaries in an interim report in June, is recommending a “significant” reduction in its size, an administration official said. The report also calls for changing the management rules for several sites, such as allowing fishing in marine monuments where it is currently prohibited, and would affect the boundaries of other monuments beyond the three officials identified Thursday.

Brazil abolishes huge Amazon reserve in 'biggest attack' in 50 years -- The Brazilian president Michel Temer has abolished an Amazonian reserve the size of Denmark, prompting concerns of an influx of mineral companies, road-builders and workers into the species-rich forest. The dissolution of the Renca reserve – which spans 46,000 sq km on the border of the Amapa and Para states – was described by one opposition senator Randolfe Rodrigues of the Sustainability Network party, as the “biggest attack on the Amazon of the last 50 years”. Conservationists said it will open the door for mining companies to enter Renca – the Portuguese acronym for the National Reserve of Copper and Associates – which was set up in 1984 and encompasses nine protected areas. More than 20 domestic and multinational firms have expressed an interest in the region which is thought to contain deposits of gold, copper, tantalum, iron ore, nickel and manganese. The government said the reserve is being abolished to attract foreign investment, improve exports and boost an economy that has been struggling to emerge from its deepest recession in decades. It claimed the change of status would not affect conservation areas and indigenous territories in the region, but Amazon activists warned commercial exploitation by big companies in the past has been followed by illegal land grabbers, artisanal miners and road builders. Christian Poirier of Amazon Watch said Temer’s decision had to be seen in the context of wider efforts by his government to erode protected areas, weaken environmental licensing, and diminish indigenous rights in the interests of wealthy supporters in the extractive industries. “The abolition of Renca will wreak havoc on the forest and indigenous communities in the interests of the small group of economically powerful groups who are keeping Temer in power,” he said. “This is the largest assault so far in a package of threats.” 

Where’s the kelp? Warm ocean takes toll on undersea forests (AP) The Gulf of Maine, stretching from Cape Cod to Nova Scotia, is the latest in a growing list of global hotspots losing their kelp, including hundreds of miles in the Mediterranean Sea, off southern Japan and Australia, and parts of the California coast. Among the world's most diverse marine ecosystems, kelp forests are found on all continental coastlines except for Antarctica and provide critical food and shelter to myriad fish and other creatures. Kelp also is critical to coastal economies, providing billions of dollars in tourism and fishing.  The likely culprit for the loss of kelp, according to several scientific studies, is warming oceans from climate change, coupled with the arrival of invasive species. In Maine, the invaders are other seaweeds. In Australia, the Mediterranean and Japan, tropical fish are feasting on the kelp. Most kelp are replaced by small, tightly packed, bushy seaweeds that collect sediment and prevent kelp from growing back, said the University of Western Australia's Thomas Wernberg. "Collectively these changes are part of a recent and increasing global trend of flattening of the world's kelp forests," said Wernberg, co-author of a 2016 study in the Proceedings of the National Academy of Sciences, which found that 38 percent of kelp forest declined over the past 50 years in regions that had data. Kelp losses on Australia's Great Southern Reef threaten tourism and fishing industries worth $10 billion. Die-offs contributed to a 60 percent drop in species richness in the Mediterranean and were blamed for the collapse of the abalone fishery in Japan. "You are losing habitat. You are losing food. You are losing shoreline protection,"

Hurricane Harvey's Real Story Begins: 40 Inches of Rain to Bring Catastrophic Flooding to Southeast Texas - Hurricane Harvey is now stalling over Texas, with the biggest threat of catastrophic flooding looming ahead, lasting well into next week. Harvey made landfall Friday night near Rockport, Texas, north of Corpus Christi, as the first Category 4 hurricane to landfall in the U.S. since Charley in August 2004. Harvey's center of circulation is currently located near Victoria, Texas, only roughly 50 miles from where it made landfall late Friday night. Hurricane and tropical storm-force winds are still occurring. A sustained wind of 57 mph and a gust of 83 mph reported Saturday morning near Victoria. . Rainfall amounts of more than 10 inches have already accumulated in southeast Texas, including 14.46 inches near Austwell.Heavy rain has pushed as far north as Austin, where there was a report of flooding of a poor-drainage area Saturday morning, trapping one vehicle, according to the Austin Fire Department.  Bands of heavy rain have triggered flash flood warnings around the Houston metro area, where rainrates of 1 to 3 inches per hour have been measured.  Harvey has pushed water 2 to 7 feet above average tide levels near Corpus Christi to Lavaca Bay, and water levels remain elevated as onshore flow continues to the east of Harvey's center.   With Harvey stalling several days, prolific rainfall, capable of catastrophic flash flooding, will result near the middle and upper Texas coast. Areas near the Texas and southwest Louisiana Gulf coasts are in the biggest threat area for torrential rainfall and major flash flooding, potentially including Houston and Corpus Christi.Local National Weather Service (NWS) offices have not minced words about the threat, warning of "some structures becoming uninhabitable or washed away" and "numerous road and bridge closures with some weakened or washed out," with record river flooding expected in some areas.Some at least areas of heavy rain may persist in parts of Texas or the adjacent Lower Mississippi Valley into Labor Day weekend. Here are the latest storm-total rainfall forecasts from the NHC and NOAA's Weather Prediction Center through next Wednesday. Keep in mind, locally higher amounts are possible where rainbands stall.

  • Middle/upper Texas coast: 15 to 30 inches, with isolated totals up to 40 inches
  • Deep South Texas and Texas Hill Country eastward to central and southwest Louisiana: 5 to 15 inches

Scott Cahill: Collapse Risk At The Oroville Dam Is Still Unacceptably High - The overflow from California's winter of heavy rain threatened to overpower our country's tallest dam. A cascading failure of the dam's main gates, its primarily spillway AND its emergency spillway had the world watching hour by hour to see if a catastrophic breach was going to occur.  Fortunately, the rains stopped long enough for the situation to be brought under control.The dam remains in place and repair crews have been working all spring and summer.But should we breathe easy at this point? Not at all, says dam safety expert Scott Cahill. Our readers will remember Scott from the excellent technical assessment he provided in the thick of the crisis earlier this year. In our earlier podcast with him, he explained how the real tragedy at Oroville was that for many years, small and affordable maintenance projects that easily could have prevented the crisis were diverted (in his estimation, the cost of making the needed repairs was quite small -- around $6 million. But for short-sighted reasons, the repairs were not funded; and now the bill to fix the resultant damage will likely be on the order of magnitude of over $200 million. Which does not factor in the environmental carnage caused by flooding downstream ecosystems with high-sediment water or the costs involved with evacuating the 200,000 residents living nearby the dam).And the pattern appears to be continuing. In this week's podcast, Scott details a number of concerning structural risks visible at Oroville that are again being de-prioritized, or ignored all-together. And as before, straightforward and inexpensive projects that have high potential to prevent a catastrophic failure of the dam are not being pursued: They've begun the repairs on the bottom half of the spillway, but the tragedy and loss from the bottom half of the spillway failing has already been realized. No one is worried about the bottom half of the spillway. On the other hand, they've done nothing yet with the upper half of the spillway -- which is what would cause a catastrophic failure of the dam. It's amazing how much money they've already spent, and yet their priorities are such that they haven't abated the liability at all.

Storms felled record number of trees in Poland: officials - It will take two years to clear the tens of thousands of trees smashed by the weekend storms that devastated Poland's forests, the country's forest service said Wednesday. "We're dealing with what is undoubtedly the worst disaster in the history of Polish -- and perhaps even European -- forestry," Poland's chief forester, Konrad Tomaszewski, told reporters.The storms that hit Poland overnight Friday to Saturday killed six people, including two Girl Guides crushed by a falling tree while camping in a forest.Aerial television footage in vast swathes of forest where trees had been snapped like matchsticks. According to Tomaszewski, the storms brought down an estimated 8.2 million cubic metres of lumber.It would take two years to clear the debris and begin replanting trees and decades to recover the lost natural habitats of birds and other wildlife, he added.  The storms also caused serious damage to thousands of households, ripping off roofs and downing power lines, mostly in northern and western regions of Poland. The disaster comes as Poland is under fire for ignoring a ban imposed by the EU's top court on logging in the Bialowieza forest, Europe's last primeval woodland.The European Court of Justice on July 27 ordered Poland to suspend logging in the forest pending a final judgement.The EU had taken Poland to court arguing that the operations were destroying a UNESCO-listed forest that boasts unique plant and animal life. According to Poland's forest service, loggers harvested some 111,993 cubic metres of wood in Bialowieza between January and August.

An Unusually Large Wildfire Has Burned for Weeks in Icy Greenland - There's something curious happening in icy Greenland: a wildfire that has been burning for weeks.The wildfire appears to be historic in both its size and its duration, but no one can say for sure — because Greenland doesn't have longstanding records of fires. Officials haven't had much of a need for them, seeing as nearly 80 percent of the Arctic island is covered in an ice sheet."There are wildfires, but it's not a typical wildfire environment, and it's a remote area," said Stef Lhermitte, a remote sensing scientist at Delft University of Technology in the Netherlands.At about two square miles, this wildfire is relatively small compared to others around the world. But it's the biggest in Greenland since satellite record-keeping began in 2000.“It's concerning. This is not usual.”This one was first spotted on satellite on July 31 in western Greenland, about 90 miles northeast of the city of Sisimiut — and it's still burning.Past wildfires in Greenland have only lasted one to three days, said Dr. Jessica McCarty, an assistant professor of geography at Miami University in Oxford, Ohio, and an expert in satellite data analysis. This one is about 40 miles west of the ice sheet.  "It's concerning," McCarty said. "This is not usual."News of the wildfire has intrigued scientists from around the globe, many of whom have been sharing statistics about Greenland on social media as researchers try to piece together Greenland's history to determine whether this is unprecedented. Lhermitte, the remote sensing scientist, found that this year has had the highest number of fire detections on record.

Greenland: how rapid climate change on world’s largest island will affect us all - The largest wildfire ever recorded in Greenland was recently spotted close to the west coast town of Sisimiut, not far from Disko Island where I research retreating glaciers. The fire has captured public and scientific interest not just because its size and location came as a surprise, but also because it is yet another signpost of deep environmental change in the Arctic. Greenland is an important cog in the global climate system. The ice sheet which covers 80% of the island reflects so much of the sun’s energy back into space that it moderates temperatures through what is known as the “albedo effect”. And since it occupies a strategic position in the North Atlantic, its meltwater tempers ocean circulation patterns.  But Greenland is especially vulnerable to climate change, as Arctic air temperatures are currently rising at twice the global average rate. Environmental conditions are frequently setting new records: “the warmest”, “the wettest”, “the driest”.Despite its size, the fire itself represents only a snapshot of Greenland’s fire history. It alone cannot tell us about wider Arctic climate change. But when we superimpose these extraordinary events onto longer-term environmental records, we can see important trends emerging.  Between 2002 and 2016 the ice sheet lost mass at a rate of around 269 gigatonnes per year. One gigatonne is one billion tonnes. One tonne is about the weight of a walrus.  Despite its icy image, the margins of Greenland are actually quite boggy, complete with swarms of mosquitoes. This is the “active layer”, made up of peaty soil and sediment up to two metres thick, which temporarily thaws during the summer. The underlying permafrost, which can reach depths of 100m, remains permanently frozen.  In Greenland, like much of the Arctic, rising temperatures are thawing the permafrost. This means the active layer is growing by up to 1.5cm per year. This trend is expected to continue, seeing as under current IPCC predictions, Arctic air temperatures will rise by between 2.0°C and 7.5°C this century. Arctic permafrost contains more than 1,500 billion tonnes of dead plants and animals (around 1,500 billion walrus equivalent) which we call “organic matter”. Right now, this stuff has been frozen for thousands of years. But when the permafrost thaws this organic matter will decay, releasing carbon and methane (another greenhouse gas) into the atmosphere. If thawing continues, it’s estimated that by 2100 permafrost will emit 850-1,400 billion tonnes of CO₂ equivalent (for comparison: total global emissions in 2012 was 54 billion tonnes of CO₂ equivalent). All that extra methane and carbon of course has the potential to enhance global warming even further.

Alaska's permafrost is thawing — The Arctic is warming about twice as fast as other parts of the planet, and even here in sub-Arctic Alaska the rate of warming is high. Sea ice and wildlife habitat are disappearing; higher sea levels threaten coastal native villages.But to the scientists from Woods Hole Research Center who have come here to study the effects of climate change, the most urgent is the fate of permafrost, the always-frozen ground that underlies much of the state.Starting just a few feet below the surface and extending tens or even hundreds of feet down, it contains vast amounts of carbon in organic matter — plants that took carbon dioxide from the atmosphere centuries ago, died and froze before they could decompose. Worldwide, permafrost is thought to contain about twice as much carbon as is currently in the atmosphere. Once this ancient organic material thaws, microbes convert some of it to carbon dioxide and methane, which can flow into the atmosphere and cause even more warming. Scientists have estimated that the process of permafrost thawing could contribute as much as 1.7 degrees Fahrenheit to global warming over the next several centuries, independent of what society does to reduce emissions from burning fossil fuels and other activities.In Alaska, nowhere is permafrost more vulnerable than here, 350 miles south of the Arctic Circle, in a vast, largely treeless landscape formed from sediment brought down by two of the state’s biggest rivers, the Yukon and the Kuskokwim. Temperatures three feet down into the frozen ground are less than half a degree below freezing. This area could lose much of its permafrost by midcentury.That, said Max Holmes, senior scientist and deputy director of the research center, “has all kinds of consequences both locally for this region, for the animals and the people who live here, as well as globally.”

Warming Arctic spurs battles for riches, shipping routes  — From a distance, the northern shores of Baffin Island in the Arctic appear barren — a craggy world of snow-capped peaks and glaciers surrounded by a sea of floating ice even in the midst of summer. Yet beneath the forbidding surface of the world’s fifth largest island lies an exceptionally pure strain of iron ore, and the Baffinland mine is believed to hold enough of it to feed smelters for decades. As climate change pushes the ice a little farther north each year, it is spurring talk of a gold rush in the remote Arctic for abundant natural resources, prized shipping routes and business opportunities in tourism and fishing. The Arctic, including the fabled Northwest Passage between the Atlantic and the Pacific, is among the last regions on earth to remain largely unexplored. In April, U.S. President Donald Trump signed an executive order to reverse Obama-era restrictions on oil drilling. However, experts say there remain many obstacles to reaping the riches once blocked by the ice.“As the world demand for raw materials is ever increasing, and (with) a realization that a large part of the unexplored deposits are in the Arctic, there is a natural shift to focus on that area,” said Mads Boye Peterson, head of Denmark’s Nordic Bulk Carriers Shipping. Peterson’s company sent a freighter through the Northwest Passage four years ago to show the route can be used to haul cargo in summer. However, he also noted that rising temperatures make operations harder because moving floes are less predictable than unbroken sheets of ice. “On the surface it might look like a slam dunk,” he said. “But it’s actually a lot more complicated than just something you decide to do overnight.” 

Climate change will likely wreck their livelihoods – but they still don't buy the science --In 50 years, the region near where I grew up, Cameron Parish in south-west Louisiana, will likely be no more. Or rather, it will exist, but it may be underwater, according to the newly published calculations of the Louisiana government. Coastal land loss is on the upswing, and with each hurricane that sweeps over the region, the timeline is picking up speed.As a result, Cameron, the principal town in this 6,800-person parish (as counties are called in Louisiana), could be the first town in the US to be fully submerged by rising sea levels and flooding. So it’s here one would expect to feel the greatest sense of alarm over climate change and its consequences. Instead, Cameron has earned a different kind of fame: it’s the county that, percentage-wise, voted more in favor of Trump than any other county in the US in last year’s election. Nearly 90% of the population did.Why would some of the people most vulnerable to climate change vote for a politician skeptical of climate change’s existence? Why would people in Cameron Parish support policies that could ruin them?To get to the root of this question, I slipped my tennis shoes into knee-high marsh waders, navigated the ropes on a rusty shrimp boat, and ate mountains of fried seafood. I spoke to people living different and yet parallel lives in Cameron Parish, where timelines are defined as pre-storm or post-storm, and where people kindly addressed me as Miss Shannon. In rocking chairs and over lunch specials, I asked them about their seemingly contradictory views. I asked them why they voted for Donald Trump. And I asked them how they felt about being the proud residents of what may be America’s first drowning town.

Refugees of a different kind are being displaced by rising seas — and governments aren't ready -- This week, University of Florida scientists discovered the sea level along the southeastern U.S. coast has risen far more quickly than the long-term rate globally, underscoring new concerns about the effects of climate change.Increasingly, the phenomenon of rising sea levels has amplified fears over climate refugees — individuals forced to leave their homes due to changing environmental conditions in their respective homelands. Climate watchers estimate that at least 26 million people around the world have already been displaced, and that figure could balloon to 150 million by 2050, according to the Worldwatch Institute.Relocating those populations costs vast sums of money, raising the question of who will cover those costs as sea levels continue their uptrend. The rise in global sea levels has accelerated since the 1990s amid rising temperatures, with a thaw of Greenland's ice sheet pouring ever more water into the oceans, a team of international scientists reported last month.In the U.S., the cost of climate change is expected to be steep. A Science study estimates that every one degree Celsius increase in global mean temperature will cost the U.S. 1.2 percent of its economic growth. Separately, a recent assessment by Lloyds estimated that flooding ranked high among the top five risks to global economic growth, and could cost upwards of $430 billion. Mark Witte, a professor of public finance at Northwestern University, said climate relocation demonstrates a classic economic problem when it comes to addressing slow moving, long-term challenges.  "We're going to wait too long, and it'll be a more expensive fix in the long term than if we just did something now."

New Orleans is now planning to evacuate the city if a heavy rainstorm comes - That’s worrisome, especially for communities still struggling to recover from the damage of Hurricane Katrina — which was 12 years ago this week.  Since Aug. 10, New Orleans has been operating under a state of emergency in the aftermath of a freak storm earlier this month. To make things worse, city officials lied about the state of the below-sea-level city’s pumping infrastructure, which the mayor said has “never been fully operational.” As of Monday, 15 of the city’s 120 pumps were offline for repairs, and fixing the system is expected to take weeks.  Now, the New Orleans Advocate reports that officials are developing a plan to evacuate the city if more than a foot of rain is expected within a 24-hour period before repairs can be completed.  The good news is that the last time that kind of rain fell was 1995, so it’s a pretty rare occurrence. The bad news: Evacuating on the forecast of a rainstorm would be unprecedented in city history. In fact, I can’t recall ever hearing of such an evacuation anywhere in the world.  Potentially related: There’s a tropical system brewing in the Gulf of Mexico with a “near 100 percent” chance of development in the next five days. It’s expected to head very slowly northward — a perfect recipe for intense rain.

Utilities Knew: Documenting Electric Utilities’ Early Knowledge and Ongoing Deception on Climate Change From 1968-2017 - Scientists had begun to warn electric utilities about climate change by 1968, and by 1988 the industry’s official research and development organization had acknowledged that, “There is growing consensus in the scientific community that the greenhouse effect is real.” Despite this early knowledge about climate change, electric utilities have continued to invest heavily in fossil fuel power generation over the past half a century, and since 1988 some have engaged in ongoing efforts to sow doubt about climate science and block legal limits on carbon dioxide emissions from power plants. The Energy and Policy Institute’s new report provides a first look into the electric utility industry’s nearly 50-year long relationship with climate science, based largely on original research that reviewed scores of industry documents: Download report: Utilities Knew: Documenting Electric Utilities’ Early Knowledge and Ongoing Deception on Climate Change From 1968-2017 Below are just a few of the key findings from the report.

California pollution permits sell at highest price ever  (AP) — California raised more than $640 million this month auctioning off permits for businesses to emit greenhouse gases as part of a program aimed at fighting climate change, according to state data released Tuesday. Last week's auction was the state's first since lawmakers voted to extend California's cap and trade program through 2030. It requires businesses, oil refineries and other polluters to obtain permits to be able to emit carbon, with the overall goal of drastically reducing emissions. Money raised through the auctions goes to projects such as high-speed rail, public transit and housing projects. Demand for the permits rebounded in this month's auction after more than a year of flagging interest as businesses waited to see if the program would continue. Permits for near-term emissions sold for $14.75, while future allowances went for $14.55 as companies snapped up permits before prices rise over the next 13 years. The sale price was nearly $1 higher than the price last quarter. The auction revenue pays for initiatives that reduce emissions or mitigate the impacts of climate change. Sixty percent of the money is earmarked for specific purposes, including the bullet train between Los Angeles and San Francisco, public transit and housing projects. Lawmakers are expected to decide this month on a spending plan for the remainder, including up to $840 million generated in previous auctions.

It’s time to start talking about “negative” carbon dioxide emissions - David Roberts - The world’s nations have agreed, almost unanimously, to try to limit the rise of global average temperature to 2 degrees Celsius or less over preindustrial levels. Is that still possible? Climate campaigners, scientists, and politicians frequently insist it is. All we need, they say, is political will.But that’s not all we need. There’s something else, something we talk about much less.You see, in order to have a reasonable chance of hitting the 2C target, modeling shows that humanity must go carbon negative in the mid- to late 21st century. Here are two scenarios developed by Oil Change International, one that offers a 66 percent chance of hitting 2 degrees, one that shows a 50 percent chance of hitting 1.5 degrees: As you can see, for a likely chance of hitting 2C, emissions have to go below zero in 2065. Going below zero means removing more carbon from the atmosphere than we are emitting, by capturing it and burying it beneath the earth’s surface.  If we do not allow negative emissions into the models, they show that to hit our target, emissions have to decline at an absolutely ludicrous rate:  Absent a meteor wiping out advanced civilization, that’s not going to happen. So, negative emissions it is! That means we must start burying and sequestering carbon (in some models as early as 2020) and rapidly scale up until we are burying more than we’re emitting. That is a truly daunting undertaking — some models show us burying 10 to 20 gigatons a year by 2100, which is 25 to 50 percent of today’s total emissions. Lots of natural processes sequester carbon (see Paul Hawken’s book Drawdown for more on how these processes could be enhanced), but to sequester the amounts needed in the time available, we have to accelerate things. That will require manually burying carbon in large underground reservoirs and aquifers.

Quantifying the causes of the recent decrease in US CO2 emissions -- Between 2007 and 2015 total annual US CO2 emissions decreased by 740 million tons (12%). An updated analysis shows that 35% of this decrease was caused by natural gas replacing coal in electricity generation, 30% by lower fuel consumption in the transportation sector, 28% by renewables replacing coal in electricity generation and 7% by other factors. The 515-million-ton (20%) decrease in electricity sector emissions between 2007 and 2015 was 50% attributable to natural gas replacing coal, 40% to renewables replacing coal and 10% to other factors. These estimates do not allow for the impacts of the 2008-9 global recession on emissions growth, which could have resulted in annual US CO2 emissions now being as much as a billion tons less than they otherwise would have been. This estimate is, however, speculative. In previous posts here and here Euan Mearns and I made approximate estimates of how much of the recent decrease in US emissions was caused by what. I came up with this:

  • Gas replacing coal in electricity generation: 40%
  • Decrease in gm/mile vehicle CO2 emissions: 30%
  • Growth in low-carbon renewables generation: 30%

And Euan, using a more detailed approach (and also including the impacts of the 2008-9 recession, which I ignored), came up with this:

  • Gas replacing coal 55 Mtoe – 20%
  • Fall in oil consumption owing to high price and recession 100 Mtoe – 36%
  • Fall in fuel oil consumption 25 Mtoe – 9%
  • Improved vehicle efficiency 26 Mtoe – 9.5%
  • Aviation, shipping and unallocated oil savings 29 Mtoe – 10.5%
  • [Biofuels 8.4 Mtoe]
  • Growth in wind and solar 40 Mtoe – 15%

California defies Trump claim that environmental regulation kills economic growth | Grist: The California economy is thriving, according to a new report released Monday — and that’s despite the state instituting relatively restrictive environmental rules.  According to the assessment, after the passage of California’s trademark — and controversial2006 cap-and-trade law, statewide per capita emissions fell by 12 percent. For every fossil fuel job in the state, California has 8.5 in solar and wind energy. (Compare that to the 2.5-to-1 ratio for the nation, overall.) Most notably, the report finds the state’s per-capita GDP grew by almost double the national average since cap-and-trade passed. In fact, the state is now the most energy-productive economy in the world — meaning it uses the least amount of energy to gain each dollar of GDP. “Being a leader environmentally is something the state has done for half a century, and the state continues to prosper,”   The research, published by the public policy nonprofit Next 10, suggests California is emerging as the sixth largest economy in the world while becoming cleaner and greener. That fact sits in direct opposition to the principle now undergirding policy in Washington: that unbridled industry is a key ingredient to U.S. prosperity. “California, in many ways, is out of control,” President Trump has said, attacking the state’s policies straight on.

The Trump administration just disbanded a federal advisory committee on climate change -- The Trump administration has decided to disband the federal advisory panel for the National Climate Assessment, a group aimed at helping policymakers and private-sector officials incorporate the government’s climate analysis into long-term planning.  The charter for the 15-person Advisory Committee for the Sustained National Climate Assessment — which includes academics as well as local officials and corporate representatives — expires Sunday. On Friday, the National Oceanic and Atmospheric Administration’s acting administrator, Ben Friedman, informed the committee’s chair that the agency would not renew the panel.  The National Climate Assessment is supposed to be issued every four years but has come out only three times since passage of the 1990 law calling for such analysis. The next one, due for release in 2018, already has become a contentious issue for the Trump administration. Administration officials are currently reviewing a scientific report that is key to the final document. Known as the Climate Science Special Report, it was produced by scientists from 13 different federal agencies and estimates that human activities were responsible for an increase in global temperatures of 1.1 to 1.3 degrees Fahrenheit from 1951 to 2010.  President Trump and many of his top aides have expressed skepticism about climate change, while others say human activity is to blame for global warming. So what's the administration's real position? (Peter Stevenson/The Washington Post) The committee was established to help translate findings from the National Climate Assessment into concrete guidance for both public and private-sector officials. Its members have been writing a report to inform federal officials on the data sets and approaches that would best be included, and chair Richard Moss said in an interview Saturday that ending the group’s work was shortsighted.

More GOP lawmakers bucking their party on climate change - While President Donald Trump continues to dismantle Obama-era climate policies, an unlikely surge of Republican lawmakers has begun taking steps to distance themselves from the GOP’s hard line on climate change. The House Climate Solutions Caucus, a bipartisan backwater when it formed early last year, has more than tripled in size since January, driven in part by Trump’s decision in June to withdraw the United States from the Paris climate accord. And last month, 46 Republicans joined Democrats to defeat an amendment to the annual defense authorization bill that would have deleted a requirement that the Defense Department prepare for the effects of climate change. The willingness of some Republicans to buck their party on climate change could help burnish their moderate credentials ahead of the 2018 elections. Of the 26 Republican caucus members, all but five represent districts targeted by the Democratic Congressional Campaign Committee next year. But it has also buoyed activists who view the House members’ positioning as a rare sign of GOP movement on climate change. “Strangely, President Trump helped us,” said Bob Inglis, a former Republican congressman whose views on climate change contributed to his defeat in a South Carolina primary in 2010. “His withdrawal from Paris dramatically increased the number of [internet] searches about climate change and increased interest … People are getting more and more uncomfortable with the nuttiness of these positions.” 

 Northeast states propose 30 percent greenhouse gas cut | TheHill: A coalition of nine northeastern states are proposing to cut their greenhouse gas emissions by 30 percent under an existing interstate cap-and-trade program. The proposal came Wednesday as part of the Regional Greenhouse Gas Initiative (RGGI), a cooperative agreement among the nine states that launched in 2009. The 30 percent cut to the cap would start from a 2020 baseline and would therefore be in addition to any greenhouse gas reductions before then.It came amid growing calls among states and localities to cut their greenhouse gas emissions just as President Trump works to undo major Obama administration policies that aimed to reduce emissions on a national level. Just last month, California voted to extend its cap-and-trade program. “With today’s announcement, the RGGI states are demonstrating our commitment to a strengthened RGGI program that will utilize innovative new mechanisms to secure significant carbon reductions at a reasonable price on into the next decade, working in concert with our competitive energy markets and reliability goals,” said Katie Dykes, chairwoman of the Connecticut Public Utilities Regulatory Authority and current chairwoman of RGGI. The group is also proposing a number of other changes to the program’s rules, such as adjusting the cap to remove some excess allowances, letting states hold off on selling some emissions allowances if they are too cheap and measures meant to mitigate excess allowances. The 2030 cap would be 65 percent below the 2009 cap that the program started with. The agreement has already cut power sector emissions in its states by nearly half. 

Why Climate Change Isn’t Our Biggest Environmental Problem, and Why Technology Won’t Save Us ---Our core ecological problem is not climate change. It is overshoot, of which global warming is a symptom. Overshoot is a systemic issue. Over the past century-and-a-half, enormous amounts of cheap energy from fossil fuels enabled the rapid growth of resource extraction, manufacturing, and consumption; and these in turn led to population increase, pollution, and loss of natural habitat and hence biodiversity. The human system expanded dramatically, overshooting Earth’s long-term carrying capacity for humans while upsetting the ecological systems we depend on for our survival. Until we understand and address this systemic imbalance, symptomatic treatment (doing what we can to reverse pollution dilemmas like climate change, trying to save threatened species, and hoping to feed a burgeoning population with genetically modified crops) will constitute an endlessly frustrating round of stopgap measures that are ultimately destined to fail. The ecology movement in the 1970s benefitted from a strong infusion of systems thinking, which was in vogue at the time (ecology—the study of the relationships between organisms and their environments—is an inherently systemic discipline, as opposed to studies like chemistry that focus on reducing complex phenomena to their components). As a result, many of the best environmental writers of the era framed the modern human predicament in terms that revealed the deep linkages between environmental symptoms and the way human society operates.   Any systems thinker who understands overshoot and prescribes powerdown as a treatment is effectively engaging in an intervention with an addictive behavior. Society is addicted to growth, and that’s having terrible consequences for the planet and, increasingly, for us as well. We have to change our collective and individual behavior and give up something we depend on—power over our environment. We must restrain ourselves, like an alcoholic foreswearing booze. That requires honesty and soul-searching.

Manchin rules out Trump energy secretary appointment - Sen. Joe Manchin (D-W.Va.) on Friday ruled himself out as the next energy secretary, quashing speculation President Donald Trump might nominate him to run the Energy Department and have the governor of West Virginia, a newly minted Republican, appoint a Republican senator.The plan, floated last week in a Bloomberg News report, could have given the GOP one more vote for its stalled bill to repeal and replace Obamacare. But Manchin took himself out of the running at a town hall in West Virginia, according to spokesman Jonathan Kott. The current energy secretary, Rick Perry, is considered a contender to succeed White House chief of staff John Kelly as head of the Department of Homeland Security.

Solar eclipse's effect on power demand proved a yawn for utilities (Reuters) - Monday's solar eclipse had no major impact on electricity demand in affected areas of the United States, according to grid operators and utilities, many of which had lined up alternative power supplies. Customers who left their homes and offices to enjoy the celestial display used less power and cooler temperatures in regions of the total eclipse helped lower demand for air conditioning, executives said. In the end, the eclipse led to fewer calls on power to replace renewables. PJM Interconnection, which coordinates power among 13 states from Michigan to North Carolina, said power demand declined rather than increased as expected across its territory during the eclipse. "PJM had expected a reduction in power from rooftop panels to result in an increase in electric demand on the grid," said spokesman Jason McGovern. Instead, PJM saw a net decrease in demand for electricity of about 5,000 megawatts throughout the eclipse, he said. FILE PHOTO: Solar panels are seen next to a Southern California Edison electricity station in Carson, California March 4, 2015.Lucy Nicholson/File PhotoAccording to several operators, pleasant temperatures and customers' enthusiasm to witness the eclipse as it made its way from one U.S. coast to the other, served to decrease the need for electricity. In North Carolina, the nation's second highest consumer of solar energy, reduced sunshine and cloudy skies did not deter people from going out and experiencing the eclipse, Randy Wheeless, a Duke Energy spokesman, said. The utility lost about 1,700 megawatts of solar capacity during the height of the eclipse, when they were expecting to receive 1,808 megawatts of solar.

Large-scale grid batteries will soon be a cheaper alternative to building natural gas plants - A new report on the future of energy in Minnesota should turn some heads (PDF). According to the University of Minnesota’s Energy Transition Lab, starting in 2019 and for the foreseeable future, the overall cost of building grid-scale storage there will be less than that of building natural-gas plants to meet future energy demand. That’s not bad, but current plans also call for bringing an additional 1,800 megawatts of gas-fired “peaker” plants online by 2028 to meet growing demand. Storing energy from renewables could solve that problem, but it’s traditionally been thought of as too expensive compared with other forms of energy. The new report suggests otherwise. According to the analysis, bringing lithium-ion batteries online for grid storage would be a good way to stockpile energy for when it’s needed, and it would prove less costly than building and operating new natural-gas plants.

Europeans Are Abandoning Their Utility Companies in Droves - A combination of new technology and a push toward low-carbon energy has caused customers at Europe’s largest and most-established utilities to flee. The average annual rate of leavers is nearly 12 percent, more than double the rate a decade ago, according to analysis by Bloomberg New Energy Finance published Tuesday. The largest six utilities in the U.K. alone lost more than 2 million customers since 2010.It’s not for lack of trying. Companies such as Centrica Plc and EON SE have offered everything from rooftop solar panels to connected home devices to satisfy their customers. But new companies are promising lower prices, better customer service and a resolute commitment to renewables. They may have started a movement away from traditional utilities that will be impossible to reverse. At the same time, the number of overall utility customers in the U.K. expanded by almost 1.5 million by last year from 2010.  The exodus is underpinned by the liberalization of Europe’s utility markets, which started in the 1990s and was cemented in 2007 with the European Union’s Third Energy Package. That freed customers to shop around for deals and switch utility providers. According to data from the U.K.’s Office of Gas and Electricity Markets, the regulator, half of British customers who abandoned a so-called “Big Six company” last year switched to a startup offering lower prices or new billing methods. For example, a company called Utility Warehouse Ltd. bundles power with broadband and mobile phone services, while London’s Octopus Energy Ltd. lets its customers pay the wholesale electricity price for the moment they are using the energy, plus a fixed monthly amount.  And about half of electricity customers at the largest six utilities are unhappy with the customer service provided, possibly leading to more switching, according to Ofgem.

Special Report: Refiner Valero's secret campaign against U.S. biofuels mandates  (Reuters) - U.S. biofuels regulations, which mandate mixing corn-based ethanol into gasoline, have lately drawn together a diverse cast of political opponents. They include an upstart gas station owners' trade group, a former Obama administration environmental adviser and billionaire activist investor Carl Icahn, who owns a refiner and served as U.S. President Donald Trump's special advisor on business regulation - until he resigned Friday amid allegations of a conflict of interest. Even the Renewable Fuels Association (RFA), a leading biofuels industry group, recently dropped its opposition to policy changes sought by this ad hoc coalition. These players would seem to have few shared interests, but they share one key connection – close ties to Valero Energy Corp. (VLO.N), America's largest oil refiner. As part of an extensive behind-the-scenes lobbying campaign, Valero played a key role in bringing these people and groups together around a policy proposal that could save the refiner hundreds of millions of dollars each year in regulatory costs, according to two former Valero executives with knowledge of the firms' lobbying strategy. Valero is a big loser under current regulations, which require refiners to either blend biofuels into their gasoline and diesel or buy government-issued credits from firms that do such mixing. After selling off much of its ethanol-blending operations in cash-raising deals in 2006 and 2013, Valero was forced to spend $750 million last year alone buying the credits, according to Valero's securities filings. The policy overhaul favored by Valero would free refiners from the obligation to blend biofuels or buy credits, shifting that burden to firms further down the supply chain toward retailers.

Supplying Lithium for the Electric Revolution Is Getting Harder --Hidden within the salt flats high in the Andes mountains of South America are vast deposits of the lithium that Elon Musk may need for his electric-car revolution. But extracting the mineral from brine ponds created by Orocobre Ltd. has proved more difficult than expected.  Bad weather and pump glitches meant production at the Olaroz facility in northern Argentina was 21 percent below Orocobre’s initial target in the year through June. While things are getting back on track, Chief Executive Officer Richard Seville says the company “either underestimated the complexity or overestimated our capability.”   Producers everywhere have struggled to keep up with demand as electric cars went from almost no sales a decade ago to more than half a million vehicles last year. The battery in a Model S from Musk’s Tesla Inc. uses about 45 kilograms (100 pounds) of lithium carbonate. More mines are planned, but difficulties at Olaroz -- the first new South American lithium mine in two decades -- are limiting funding for new ventures in Argentina, home to the world’s third-largest reserves.   “We need a new project entering the market every year to satisfy growing demand. If that doesn’t happen, the market will be tight.”   Australia is the biggest lithium producer, though Chile and Argentina account for 67 percent of global reserves, according to the U.S. Geological Survey.Extracting lithium from the salt flats that dot the arid northern regions of the South American countries is a lot easier and cheaper than digging underground for metals like copper. Producers just pump the brine solution into evaporation ponds, harvesting the mineral once the moisture is gone. Orocobre’s experience in Argentina shows the process isn’t without its challenges, especially for a newcomer.

Diesel still needed to meet climate goals, Merkel says | Reuters: - German Chancellor Angela Merkel warned on Sunday against a swift abandonment of diesel cars after a series of emissions scandals, saying the fuel is still needed if climate change targets are to be met. Speaking at a pre-election town hall event on RTL television on Sunday, Merkel called on German carmakers, all of which have been caught using workarounds to cheat nitrogen emissions tests, to work to re-establish public trust in diesel. "We need diesel if we are to achieve our climate protection goals," she said. Diesel cars emit less of the greenhouse gas carbon dioxide but emit more of the nitrogen dioxide that can cause breathing problems in high concentrations. She told one car owner that the more modest compensation received by German car owners compared with their U.S. counterparts was the result of very different legal systems in the two countries. Nonetheless, Germany's carmakers needed to compensate owners whose cars were less valuable as a result of the scandal as best as possible, she said, otherwise "the German car industry, which is admired the world over, could suffer substantial harm". The future of the auto sector, Germany's biggest exporter and provider of 800,000 jobs, has become a hot election issue as politicians blame executives and each other for the sector's battered reputation after Volkswagen's admission almost two years ago that it had cheated U.S. emissions tests.

DOE releases highly anticipated grid study, faults natural gas for baseload retirements --  The final grid study conclusion — that low natural gas prices are the biggest driving factor for most, if not all, baseload power plant retirements — probably won't surprise anyone in the power sector. Indeed, there appear to be very few surprises contained in the official draft of grid study, as many of its conclusions have already been widely documented and published by grid operators, national labs and other key stakeholders.In an April memo, Secretary Rick Perry Perry ordered the DOE to review the impact of federal and state policies on wholesale markets, including whether wholesale energy and capacity markets adequately compensate baseload resources for providing on-site fuel supply and strengthening grid resiliency. Perry praised baseload generators and appeared to single out intermittent resources for scrutiny — instantly raising concerns among some energy stakeholders that the study was being conducted with a clear-cut political aims in mind. The memo said the study would examine how so-called "regulatory burdens" have affected baseload power plant retirements. Perry later warned the White House could seek to overrule state energy policies, such as renewables mandates, on national security grounds if reliability was found to be threatened. The consensus among power sector experts is that persistently low natural gas prices and flat power demand are pushing coal and nuclear plants offline — not renewable energy. The study's findings echo those observations: The now-released DOE grid study found low natural gas prices, flat demand and a wide range of policymaking — such as federal and state environmental regulations and renewable energy incentives — have been responsible for plant retirements, especially since 2011.

Don’t forget about coal, new Energy Department report says - LA Times: Coal should remain an important source of electricity in the U.S. despite the growth of renewable energy, the federal government has recommended in a highly anticipated report commissioned by Energy Secretary Rick Perry.Clean energy advocates feared that the overdue report, which was produced by experts at the Energy Department and national laboratories and released Wednesday night, would be slanted to undercut the push to phase out fossil fuels in favor of solar, wind and other renewable energy sources.On that front, the report was a mixed bag.It notably undercut a central premise of President Trump’s energy agenda: that the coal industry be resuscitated by slashing regulations.The blame for coal's decline rests with the low price of natural gas, a cleaner alternative.“The biggest contributor to coal and nuclear plant retirements has been the advantaged economics of natural gas-fired generation,” the report says.But the report also recommends that more be done to increase the reliability of the U.S. electricity grid because the growing solar and wind industries produce power only when the sun shines or the wind blows. That conclusion upset some clean-energy advocates. "This report seriously overstates the challenges associated with new energy resources," said Graham Richard, CEO of Advanced Energy Economy, an association of clean energy companies.Because coal plants can generate power constantly, the report says they should be valued as a reliable contributor to the electricity grid. It also says the federal government should loosen regulations for power plants, including coal.

 DOE Grid Study Boosts Coal, Downplays Renewables - Natural gas and market forces are the largest influence on the retirement of coal -fired power plants, a long-awaited Department of Energy study concluded. The study, released late Wednesday night, proposes slashing certain regulations, including reducing permitting requirements at coal-fired power plants, to make it easier for nuclear and coal plants to keep operating. While the study does not issue an all-out attack on renewable energy , as many advocates feared following Secretary Rick Perry's aggressive April memo ordering the study , it downplays renewables' reliability benefits to the grid and suggests price changes to wind and solar . A draft of the study from DOE staff, leaked earlier this month, concluded that renewable energy is not a threat to grid reliability. In response, Janet Redman, U.S. policy director at Oil Change International , released the following statement: "The Department of Energy's grid study does little more than reveal the Trump administration's pro-fossil fuel bias and anti-regulation agenda. "Trump and his dirty DOE refuse to face the facts—thanks to growth in renewable energy and efficiency, America's demand for electricity is flatlining, and clean energy options like solar and wind power are outperforming dirty energy like coal. Yet, this study ignores those facts and calls for fast-tracking coal-fired power plants, fracked gas pipelines and other dirty projects that would lock in climate pollution for decades. The DOE needs to pull its head out of the sand. "Instead of embracing the clean energy future that Americans want, the Trump administration is looking backwards. Propping up a dirty energy system of the past at the expense of renewables makes the nation's energy grid more polluting and American families less secure."

U.S. Energy Department study says more coal, nuclear needed to secure grid (Reuters) - Cheap natural gas and the growth in renewable energy are speeding up the closure of coal and nuclear plants, putting the resilience of the U.S. electric grid at risk, according to an Energy Department report released on Wednesday. The long-anticipated study could rankle renewable energy advocates who fear the administration of President Donald Trump will undermine government support for the wind and solar industries as part of its broader drive to revive the ailing coal sector. Energy Secretary Rick Perry commissioned the study in April to evaluate whether "regulatory burdens" imposed by past administrations - including that of President Barack Obama - had forced the premature retirement of baseload power plants that provide nonstop power, like those fired by coal and nuclear fuel. Obama had introduced a raft of regulations intended to slash emissions of carbon dioxide blamed for climate change, a policy course that accelerated the retirement of older coal-fired power plants and bolstered the nascent solar and wind sectors, which depend heavily on weather conditions for their power output. "It is apparent that in today’s competitive markets certain regulations and subsidies are having a large impact on the functioning of markets, and thereby challenging our power generation mix," Perry said in a letter introducing the study. "It is important for policy makers to consider their intended and unintended effects." The report, conducted by DOE staff, said that continued closure of baseload plants puts areas of the country at greater risk of power outages. It offered a list of policy recommendations to reverse the trend, including providing power pricing advantages for baseload plants to continue operating, and speeding up and reducing costs for permitting for baseload power and transmission projects.Last week, the newly appointed chairman of the Federal Energy Regulatory Commission, Neil Chatterjee, said coal plants need to be “properly compensated to recognize the value they provide to the system.” 

Interior halts study on health risks of mountaintop coal mining - The Interior Department has ordered the National Academies of Sciences, Engineering, and Medicine to stop working on a study focused on the health risks of living near mountaintop coal mining sites in Central Appalachia. The National Academies made the announcement in a statement, and said it "believes this is an important study." The reasoning: The department began reviewing grants and cooperative partnerships that exceeded $100,000 in April. Heather Swift, the press secretary for the Interior, told Axios that "The Trump Administration is dedicated to responsibly using taxpayer dollars and that includes the billions of dollars in grants that are doled out every year by the Department of the Interior." The original request for the study came from the state of West Virginia in 2015.

Trump Kills Mountaintop Removal Health Impact Study - The National Academy of Sciences, Engineering and Medicine said in a statement the Interior Department has directed it to cease its study on the potential health risks for people living near surface coal mines in Central Appalachia. The Interior Department, which committed more than $1 million to the study last year, has begun an agency-wide review of grants over $100,000 because of the "Department's changing budget situation." President Trump's 2018 budget proposes cutting $1.6 billion from the Interior budget, including 4,000 staff positions. The academy said two public meetings scheduled this week in Kentucky will still be held, but does not know about the review's start date and completion.  “Trump has once again shown the people of Appalachia that we mean nothing to him," Bill Price, senior Appalachia organizer at the Sierra Club , said. "Everyone knows there are major health risks living near mountaintop removal coal mining sites, but communities living with daily health threats were counting on finally getting the full story from the professionals at the National Academies of Science. To take that away without warning or adequate reason is beyond heartless." As reported by the New York Times : "Mountaintop removal, which has occurred on at least 500 Appalachian mountains , has clogged streams and waterways with heavy metals such as selenium and manganese, which can be toxic in high concentrations. The dust kicked up by these explosions is also considered a hazard. One 2010 review published in Science found elevated mortality rates, as well as increased incidence of lung cancer and kidney disease, in counties near mountaintop mining. A 2011 study of central Appalachia found a higher rate of birth defects in the area."

Meaning of 'clean coal' mentioned by Trump unclear - President Donald Trump invoked "clean coal" at Tuesday night's rally in Phoenix, repeating a phrase that's used often by coal industry supporters to put a positive spin on the heavily polluting fuel — but one that remains ambiguous in its definition. The Republican president took credit for the opening of a coal mine in Pennsylvania, saying, "We've ended the war on beautiful, clean coal, and it's just been announced that a second, brand-new coal mine, where they're going to take out clean coal — meaning, they're taking out coal, they're going to clean it — is opening in the state of Pennsylvania, the second one." The most literal use of "clean coal" refers to coal that's washed as it leaves the mine to remove impurities such as dirt and rocks, a standard industry procedure. Clean coal also is used to refer to coal burned in modern power plants equipped with costly "scrubbers" to remove air pollutants such as nitrogen oxide or mercury. In recent years, clean coal has become most closely associated with coal-burning power plants that can capture and remove greenhouse gases such as carbon dioxide, which is considered a prime contributor to global warming. However, only a handful of coal plants worldwide have technology in place to capture and sequester carbon dioxide, including the Petra Nova plant in Texas that came online earlier this year. That plant was partially funded by a Department of Energy program for which Trump has proposed deep cuts.Some researchers say that even carbon capture won't make coal "clean." That's because the gas that's removed during coal-fired power generation can be pumped underground to increase the amount of crude oil extracted from aging reserves. Critics say the greenhouse gases resulting from increased oil production would offset any gains made at the coal plants. The Pennsylvania mine Trump spoke about Tuesday night will produce coal for making steel. 

Scott Pruitt requests delay in Texas haze rule to create pollution trading scheme -- The Environmental Protection Agency is seeking permission from a federal court to further delay the implementation of rules — already a decade overdue — that would reduce the level of haze-causing pollution from power plants in Texas. EPA Administrator Scott Pruitt asked the U.S. District Court for the District of Columbia on Friday to extend the deadline for the agency to decide on whether to accept a state regional haze plan or a federal plan for Texas. The agency’s Regional Haze Rule requires states to develop plans to clean up pollution and improve air quality at national parks and wilderness areas. The court set a September 9 deadline for the EPA to make a decision on whether to choose the federal or state plan. But the agency, in its filing, said it wants the court to extend the deadline for making a decision to December 31, 2018. “Circumstances have changed significantly over the past several months and weeks as EPA and Texas have engaged in a productive level of dialogue that has not occurred in many years,” Pruitt said in the filing. Last week, Texas Gov. Greg Abbott (R) and the chairman of the Texas Commission on Environmental Quality sent a letter to Pruitt committing to work with the federal agency to establish a state implementation plan by the end of 2018, the EPA said in its court filing. The letter stated that installing pollution control equipment, as required by the EPA’s federal implementation plan, would come at a “substantial cost.” 

 It's hard to lift all boats': talk of Appalachian subsidy stokes competition among coal-producing regions - Coal isn’t created equal.  Differences in chemistry and geology mean that coal from some parts of the country produces more pollution when burned, or is found in seams of varying thickness and accessibility, influencing the cost of mining it. Those regional distinctions, along with other factors, help shape the competitiveness of the fuel and the fortunes of mining communities. Appalachian coal, high in sulfur and costly to mine, has been losing market share to other American coal-producing regions for years. Looking to stem the tide, West Virginia Gov. Jim Justice last week proposed that the federal government subsidize coal-fired power plants that buy from Appalachian mines by $15 a ton, up to $4.5 billion per year.  Though they may simply be political bluster and opportunism, Justice’s comments — which he has hinted are of interest to President Donald Trump — have sparked infighting among coal-producing regions. The proposed subsidy has predictably come under fire from politicians and coal producers beyond Appalachia, including those in the Illinois Basin and St. Louis-based companies such as Peabody, which operates the country’s largest mine in Wyoming. “It wouldn’t be fair to incentivize one type of coal over another,” said Phil Gonet, president of the Illinois Coal Association. “This violates the principle that I thought the coal industry was following, that we want to do away with subsidies. We want a level playing field, where all kinds of energy can compete.” Gonet, whose trade organization represents member companies active in Appalachia as well as the Illinois Basin, said it’s fair to say that Illinois coal producers would lose out to their eastern counterparts if Justice’s proposal were implemented.  “It’s hard to lift all boats,” Gonet said. A clear example occurred in 1990, when passage of the Clean Air Act steered demand away from coal producers in Appalachia and Illinois in favor of lower-sulfur coal from Wyoming’s Powder River Basin.  What it really comes down to, he says, is economics. The economies of scale enjoyed in the Powder River Basin — where just 12 mines account for 40 percent of the nation’s coal production — give Wyoming another advantage that other coal regions can’t match.

Trump rejects use of emergency authority to help coal plants | TheHill: The Trump administration has denied a coal company’s request to invoke a little-used authority to stop coal-fired power plants from closing. Murray Energy Corp. CEO Bob Murray, an outspoken advocate for coal and a close ally to President Trump, had asked for a federal order to stop a major utility from closing any plants, even if it goes bankrupt. Such an order from the Energy Department would have, among other effects, exempted FirstEnergy Solutions Corp.’s plants from numerous environmental standards. The Associated Press first reported the Murray request and Trump administration denial Tuesday, citing a series of letters Murray sent to administration officials. The decision shows there are limits to Trump’s promises on the campaign trail and while in office to save the endangered coal industry, which has suffered for years due to competition from natural gas, environmental rules and other factors. “This administration is unified in our mission to undo the economic damage inflicted on millions of hard-working citizens during the 8-year-long war on coal,” Energy Department spokeswoman Shaylyn Hynes said in a statement. “We look at the facts of each issue and consider the authorities we have to address them but with respect to this particular case at this particular time, the White House and the Department of Energy are in agreement that the evidence does not warrant the use of this emergency authority.” 

In Montana’s Indian country, tribes take opposite sides on coal (Reuters) - U.S. Interior Secretary Ryan Zinke and Vice President Mike Pence took a horseback tour in May of a Montana coal mine belonging to the Crow Nation. They posed for photos with tribal leaders and declared an end to the U.S. government’s “war on coal.” The trip annoyed leaders of the neighboring Northern Cheyenne - a Native American tribe that chooses not to mine its coal reserves for environmental reasons. Zinke's department had ignored their requests for a meeting before its March decision to lift a coal-mining moratorium on federal lands, tribal leaders said. (Graphic: Coal war - tmsnrt.rs/2fMDqwx) The Crow and Northern Cheyenne live miles apart but stand on opposite sides of U.S. President Donald Trump’s pro-energy agenda. Their differences reflect a broader divide on drilling and mining among America’s 567 federally recognized tribes. While Native American lands cover 2 percent of the U.S. surface, they have been estimated to contain a fifth of the nation’s remaining petroleum, along with vast coal reserves - making them a key part of Trump’s effort to boost domestic production. For tribes such as the Crow, Trump's rise marks an opportunity to tap more of the vast energy reserves beneath their lands for a needed economic boost. "We have a window now that is short," said Kenneth Brien, who directs the tribe's energy development. For other tribes including the Northern Cheyenne, the administration poses a threat by too forcefully injecting its fossil-fuel agenda into tribal policy while ignoring environmental and social concerns. The tribe wants more stringent rules to ensure that nearby mines don't pollute its water supply with waste runoff and that a nearby coal-fired power plant has the proper air pollution controls. 

Japan stubbornly sticks to coal - Shaken by the Fukushima nuclear accident, Japan has launched plans to open 49 new coal-fired power plants in the next decade to replace nuclear, even as electricity demand drops and other developed countries shift to renewables.Japan is also looking to export their technology, which poses a serious threat to Asia’s environment as well as economy.According to a report released in March 2017 by CoalSwarm, the Sierra Club and Greenpeace, nearly 22,000 megawatts (MW) are in the pipeline in Japan, with construction already beginning on some plants. NGOs and trade unions are waging a campaign to try to halt that effort.The coal boom is strongly supported by Prime Minister Shinzo Abe. The reason is connected to the 2011 Tohoku earthquake, which heavily damaged the Fukushima Daiichi nuclear plant, leading to a national shutdown of nuclear power, a major source of electricity. While the dire predictions made in the aftermath of this disaster – massive rolling blackouts and power shortages – did not come true due to a national effort to conserve energy, the central government and the power industry decided that Japan needed another baseload alternative: coal.

Firm wants to burn methane leaking from Utah coal mine — creating credits to sell to carbon-emitting companies --Coal and trona mines are a big source of methane emissions, a potent greenhouse gas. Long after land that has been mined is restored, heat-trapping methane can still leak into the atmosphere. Now a Colorado business is developing a plan to make money by burning methane that would otherwise seep out of Utah’s recently retired West Ridge coal mine near East Carbon. Flaring the gas creates an environmental benefit — one that the state of California recognizes and considers a financial credit, called an offset. Companies in that state must keep thier carbon emissions under certain thresholds and may purchase these offsets to help account for those emissions, but they may not exceed their threshold. Global Carbon Strategies Corp. (GCS), based in Grand Junction, Colo., is aiming to tap the Utah mine’s ventilation system to flare up to 400,000 million British thermal units of methane a year, under a five-year contract with Utah trust lands officials. “Instead of just venting methane, we are spending money to generate offsets,” said GCS vice president Collon Kennedy. “It’s a pro-business thing. … Instead of a regulatory requirement, we are giving you an economic incentive.” Under federal safety laws, the mine operator has a legal right to vent the methane without penalty. And that, said Kennedy, qualifies the proposal to flare the seeping gas as a carbon offset under the system California adopted to limit emissions, called cap-and-trade. Carbon offsets are currently selling for $5.80 per ton of carbon dioxide equivalent. Kennedy’s firm is being underwritten by a major California business that he declined to identify.

Fossil fuel power plant owners appeal court decision upholding nuclear subsidies -- A coalition of non-nuclear generating companies today filed a notice they will appeal a federal court decision upholding the legality of New York’s subsidies for Upstate nuclear plants. The fossil fuel companies filed a notice today that they will appeal the July 25 decision to the U.S. Court of Appeals for the Second Circuit. The generators sued New York utility regulators last October over nuclear subsidies — called zero emission credits — that will be paid to three Upstate nuclear plants for 12 years. The non-nuclear companies claimed that the subsidies illegally interfere with the wholesale market, artificially lowering prices and harming power plants that do not get subsidies. U.S. District Judge Valerie Caproni dismissed their lawsuit last month, ruling that the nuclear subsidies are the legal product of state energy policy and do not harm market operations.

John Oliver Explains America's Terrifying Nuclear Waste Problem - "One out of three Americans lives within 50 miles of high-level nuclear waste, some of which, like Plutonium, is lethally dangerous and will be around for an incredible longtime," John Oliver explained last night on Last Week Tonight . According to the Nuclear Energy Institute , there is more than 71,000 tons of nuclear waste stranded at 104 reactors. "It was a problem we should have solved in the 1980s," Oliver said, "much like a Rubik's Cube." Despite years of using nuclear energy , the country still doesn't have a permanent facility for its storage , the comedian said. Oliver proposed what the U.S. really needs is some kind of "nuclear toilet."  Watch above.

The First Thorium Salt Reactors in Over 40 Years Were Just Switched on in Europe - A Dutch energy company has just embarked on a series of experiments testing the use of molten thorium salts in producing power from nuclear fission, the first of their kind since the early 1970s.It's still early days, but the use to thorium as an alternative to uranium could provide a cleaner, safer fuel source that would be harder to weaponise. With nuclear energy a booming industry in countries such as China and fear of nuclear threats on the rise, returning to this controversial topic could be well worthwhile.Netherlands-based nuclear power provider, NRG, are taking a gamble. They're conducting experiments that could see a shift from uranium-based nuclear power to thorium.In the historical battle between using uranium or thorium as a nuclear fuel, uranium provided both sides of the Cold War with a potential source of weapons-grade plutonium. But the world is changing, and with global warming, anxiety over nuclear accidents, and the promise of more countries going nuclear, thorium is back on the table as a viable energy resource."This is a technology with much perspective for large scale energy production. We want to have a head-start once the technology will break through," says NRG researcher Sander de Groot.

Saudi Arabia signs cooperation deals with China on nuclear energy (Reuters) - Saudi Arabia and China are to cooperate on nuclear energy projects following discussions between the two countries this week on ways to support the kingdom's nuclear energy programme, state news agency SPA reported. Saudi Arabia has been for years trying to diversify its energy mix so that it can export more of its oil, rather than burning it at power and water desalination plants. It launched a renewable energy programme this year with the announcement of the winning bid for its first utility-scale solar project due in November. In addition to that programme, Riyadh is in the early stages of feasibility and design studies for its first two commercial nuclear reactors, which will total 2.8 gigawatts. China's leading state nuclear project developer China National Nuclear Corp (CNNC) has now signed a memorandum of understanding with the Saudi Geological Survey (SGS) to promote further existing cooperation between the two sides to explore and assess uranium and thorium resources, SPA said. On Thursday, state-owned The Saudi Technology Development and Investment Co (Taqnia) signed a memorandum of understanding with China Nuclear Engineering Group Corp to develop water desalination projects using gas-cooled nuclear reactors. In a separate report, SPA said Hashim Yamani, the president of King Abdullah City for Atomic and Renewable Energy (KACARE), which is responsible for the country's nuclear plans, met officials in China on Aug. 23-24. Their discussions included cooperation in areas such as pre-feasibility study to build the first two nuclear reactors in the kingdom, and exploration for uranium and thorium.

 Yale Faculty Receive Two Million Dollar Grant to Study Health Effects of Fracking -- With a new two million dollar grant from the Environmental Protection Agency (EPA), researchers from the Yale School of Public Health (Yale), forestry & environmental studies (FES), and engineering & applied science (engineering) will investigate the health effects of unconventional oil and gas production.  Assistant professor Dr. Nicole Deziel (Yale) and professor Dr. James Saiers (FES) will direct an interdisciplinary team of scientists who will investigate the impact of hydraulic fracturing, more commonly known as 'fracking,' and related activities on drinking water quality and neonatal health outcomes within the Appalachian Basin.  Thousands of wells have been hydraulically fractured within the Appalachian Basin-an area stretching from Alabama to New York-during the past decade and the practice is expected to continue for years to come. 'This research brings together physical scientists, engineers and population scientists from across the Yale campus to evaluate the likelihood of drinking-water contamination and adverse birth outcomes resulting from these new industrial activities,' said Dr. Deziel. 'Research from these disciplines has generally been occurring separately, and integration of hydrogeology, chemistry and epidemiology will provide critical scientific evidence for policymakers, health officials and other researchers.'  The Appalachian Basin has contributed significantly to the nation's oil and gas boom. Advances in drilling and hydraulic fracturing have unlocked these reserves, which has increased domestic supplies and made oil and gas cheaper, but widespread deployment of these extraction technologies have been accompanied by concerns about environmental contamination, social stressors and health problems that may be felt acutely by lower-income communities. Through the grant, the EPA is seeking multidisciplinary research that illuminates the impacts of unconventional oil and gas production, with the ultimate goal of using this research to inform policy decisions and best practices for oil and gas drilling within the Appalachian Basin and elsewhere.

With FERC Back in Business, What Does It Mean for Gas Projects? -- On August 4, the U.S. Senate confirmed two new commissioners for the Federal Energy Regulatory Commission (FERC), restoring the three-member quorum legally required for FERC to vote. The Senate action ended a six-month dry spell during which FERC could not issue any orders, and thus could not approve any of the many pipeline projects pending there. What does it mean that FERC can act again to approve new projects? And does that mean the industry can move forward at the pace it needs? Today we explore these questions and assess what it will take to get some key gas infrastructure projects back on track.  This is the second part of our “You Never Can Tell” series on the challenges that midstream companies face when they run their projects through the regulatory gauntlet. In Part 1, we explored the implications of the loss of its quorum for FERC, which is chartered to have five members; discussed the “midnight orders” issued just before the commission lost its quorum to approve three major projects (Energy Transfer Partners’ Rover Pipeline, Williams’ Atlantic Sunrise Pipeline and National Fuel’s Northern Access Pipeline); and noted that other permitting issues can be just as troublesome as getting a certificate of public convenience and necessity from FERC. At the time of that post, we did not expect the inability of FERC to vote to last for six months. By taking so long to repopulate the five-member commission, the administration and the Senate have delayed project development for at least a half-year and probably longer. The “probably longer” refers to delays in authorization that can cause a project to miss key dates for tree clearing and other seasonally sensitive activities the developers can’t start without a certificate. This can force developers to wait for the target season to roll around again next year. So it’s very easy for a FERC delay of a couple of months to delay a project for a year or more.

Photos: Pennsylvania Residents in Path of Atlantic Sunrise Pipeline brace for fight over construction  -- If you know where to look, you can spot them along the roadsides as you drive through the hilly farmland of Lancaster County, Pennsylvania. Short wooden stakes stand exactly 50 feet apart, topped with orange tape. The markers seem benign, but for many Lancaster residents, the threat they represent is anything but: These poles mark the proposed path of the Atlantic Sunrise natural gas pipeline. The Atlantic Sunrise project is a $3 billion expansion of natural gas giant Williams’s Transco pipeline network. Building it will require burying a 42-inch pipe under miles of Amish country, below farms and rivers, in the face of opposition from many Lancaster residents. Many of the pipeline’s opponents are already in open rebellion. A group of nuns who own land on the proposed pipeline’s path refused to grant Williams an easement on their property. Williams threatened to use eminent domain, and now the nuns from the Adorers of the Blood of Christ have sued the Federal Energy Regulatory Commission in U.S. District Court. They argue the pipeline’s construction contradicts their deeply held religious beliefs and that using eminent domain to take their land is a violation of their First Amendment rights to freedom of religion. The Adorers, a small order of Catholic sisters with a commitment to social and environmental justice, first established themselves in the small farming community of Columbia, Pennsylvania, in 1925. There they founded St. Anne’s, a home for the elderly. More recently, they purchased a small forest preserve near their original ministry in Illinois. Beyond the immediate disruption to their land that the pipeline would inflict, the sisters argue that it also promotes fracking, which they consider harmful to the environment.

US appeals court deals setback to Constitution Pipeline project -- Efforts to serve New England with more US shale gas that would make supply costs cheaper on days of high demand for the home heating and power plant fuel suffered a blow Friday when a federal appeals court effectively stalled the 650 MMcf/d Constitution Pipeline at the New York border. Operator Williams and shippers Cabot Oil & Gas and Southwestern Energy have viewed Constitution as an important cog in the natural gas wheel that would alleviate bottlenecks in the pipeline-constrained Northeast, a region that needs new infrastructure to move output from the Marcellus and Utica shale plays. New England, in particular, heavily relies on pipeline imports from Canada and LNG imports from overseas to meet winter peak consumption, factors that can increase prices during shortages. Constitution's sponsors had repeatedly expressed optimism in recent months that the assistance the five-year-old project was seeking from the Trump administration and a successful challenge of the New York State Department of Environmental Conservation's denial last year of a key water permit would allow the pipeline to move forward and be completed. That goal has been put in limbo now that the US 2nd Circuit Court of Appeals has ruled to uphold the permit denial. "A state's consideration of a possible alternative route that would result in less substantial impact on its waterbodies is plainly within the state's authority," the court said. 

Cove Point LNG ready for commissioning (Argus) — Dominion today asked the US Federal Energy Regulatory Commission (FERC) for authorization to test its Cove Point LNG export terminal in Maryland by introducing gas into the pre-treatment and liquefaction areas. Cove Point is on track to become the second major operating LNG export terminal in the contiguous US. "These activities will support production of LNG in the fourth quarter of 2017," Dominion said. "This request is part of the commissioning process for the export project that is scheduled for completion in the fourth quarter of this year." Dominion previously said that Cove Point likely would achieve sustained production in the fourth quarter before starting long-term commercial operations late this year. Dominion has said that a third party has contracted to provide feed gas for the testing process and to export test cargoes, but it has declined to identify that entity. The $3.8bn Cove Point export project would have peak capacity of 5.75mn t/yr, equivalent to 770mn cf/d (21.8mn m³/d) of gas, from one liquefaction train. Cove Point has received an average of about 30mn cf/d of gas since 1 May to test other parts of the facility. Intake would increase significantly after FERC approves introducing gas into the liquefaction unit. When Cove Point comes on line, the contiguous US will have peak LNG export capacity of 25.75mn t/yr, as the fourth liquefaction train at Louisiana's Sabine Pass LNG export terminal started operating in late July. Six LNG export projects are being built or completed in the contiguous US with combined peak capacity of 75mn t/yr, which would almost equal Qatar's capacity of 77mn t/yr. Dominion has signed two 20-year take-or-pay liquefaction capacity deals totaling 4.6mn t/yr. Japanese trading house Sumitomo and Indian state-owned gas utility Gail each signed a deal for 2.3mn t/yr. Sumitomo has signed 20-year deals to sell most of its Cove Point offtake to Japanese utilities, with 1.4mn t/yr going to Tokyo Gas and 0.8mn t/yr to Kansai Electric. The customers at Cove Point are responsible for procuring their own gas and pipeline transportation. Most of the gas is expected to come from the relatively close Marcellus and Utica shale fields. 

New York state's final chance to stop fracking is slipping away | TheHill: New York banned fracking in 2014, Maryland recently followed suit, and local ordinances to limit it have been passed in 22 states. But a fracking expansion juggernaut is subverting state and local attempts to keep fracking’s negative impacts out. The federal fix is in, with the Trump administration ramming through project approvals and reversing Obama’s initiatives to regulate fracking’s air and water impacts and methane leakage. There has been some push-back from the courts, including important decisions over the last few days rejecting Federal Energy Regulatory Commission (FERC) approval of Florida's Southeast Market pipelines because it ignored their climate impacts, and upholding New York state's refusal to issue a water permit for the Constitution Pipeline. Still, some of the damage to state power to say “no” to fracking has been self-inflicted. Even in states like New York and California, which proclaim themselves sustainability leaders, fracked gas power plants and infrastructure are getting built over local objections, to serve as markets for fracked gas producer states like Pennsylvania and Wyoming. Increasingly, fracking’s environmental and health impacts are coming home to residents who fought to keep fracking out and believed they had prevailed. Sadly, they haven’t. New York is a cautionary case in point. Already the fourth-largest consumer of fracked gas in the U.S. despite its famous fracking ban, New York is surely on track to become the largest. It took a giant step down that path by allowing Competitive Power Ventures (CPV) to build an unneeded 680 MW fracked gas plant in the Hudson Valley’s Orange County. CPV opponents call it “the head of the snake,” because the plant necessitates a vast network of pipelines, compressor stations and fracking wells. Despite CPV’s spectacularly inappropriate siting, its efforts to preempt state laws and regulations, and an egregious corruption scandal, construction of the plant continues. If it becomes operational, it will signal a public health and climate catastrophe, and carte blanche for fracking expansion elsewhere. 

Governor opposition complicates Trump administration's Atlantic drilling plans -- The Trump administration is facing increasing pressure from governors of East Coast states to keep federal Atlantic waters out of the five-year oil and natural gas leasing plan it hopes to finalize late next year. Several East Coast governors, including Republicans and supporters of President Donald Trump, have ramped up pressure on the administration to keep the Atlantic out of the 2019-2024 federal offshore lease plan. This is significant since the administration is required by federal law to consider local and state opposition to offshore drilling before it approves a lease sale. Much of this opposition was made public this week as governors weighed in comments to the Interior Department's Bureau of Ocean Energy Management, which is developing the five-year plan. Comments were due Thursday and the agency received nearly 74,000 as of Friday afternoon. It's murky waters when considering expanded US offshore oil and gas drilling In an August 11 letter to BOEM, Virginia Governor Terry McAuliffe, a Democrat who previously supported offshore oil and gas development, wrote he could not support oil and gas drilling off his state's coast, largely because of a lack of a revenue sharing agreement between Atlantic coastal states and the federal government.   New Jersey Governor Chris Christie, a Republican and Trump supporter, is "strongly" opposed to any federal waters off his state's coast being considered for oil and gas drilling, according to Bob Martin, commissioner of the state's Department of Environmental Protection. In a letter sent to BOEM Thursday, North Carolina Governor Roy Cooper, a Democrat, wrote offshore drilling "threatens our coastal economy and environment, yet offers little economic benefit" to the state. 

Feature: Gasoline demand from Mexican deregulation may pressure Colonial Pipeline - A recent output disruption at Mexico's largest refinery may have contributed to Colonial Pipeline's June decision to cancel some shipping on its gasoline-only Line 1, USGC gasoline market sources have said. While this was an isolated event, growing Mexican import demand driven by deregulation could continue to put pressure on Colonial's Texas-to-North Carolina Line, sources said. Colonial in June decided not allocate the 37th cycle on its Line 1, the first such decision since the line's 42nd cycle in 2011. The disruption over June and July at Mexico's 330,000 b/d Salina Cruz may have also compounded the overall economic challenges of the USGC-USAC arbitrage over the summer, the sources said, as Latin America became a bigger draw for USGC product. "Why lose money shipping on Colonial when there's an entire other market for USGC gasoline? A lot of gasoline has been going out by ship this summer," a gasoline source said. Another USGC source agreed with that, saying that USGC gasoline has not been competitive with European sellers in the New York Harbor market in recent months and so has been bound for export.

Court Rules FERC Failed to Adequately Review Environmental Impacts of Sabal Trail Pipeline -  The U.S. District Court of Appeals ruled 2-1 Tuesday saying that the Federal Environmental Energy Regulatory Commission (FERC) failed to adequately review the environmental impacts of the greenhouse gas (GHG) emissions of the fracked gas Sabal Trail pipeline , which runs more than 500 miles through Alabama, Georgia and Florida. "Today, the D.C. Circuit rejected FERC's excuses for refusing to fully consider the effects of this dirty and dangerous pipeline," said Sierra Club staff attorney Elly Benson. "Even though this pipeline is intended to deliver fracked gas to Florida power plants, FERC maintained that it could ignore the greenhouse gas pollution from burning the gas. For too long, FERC has abandoned its responsibility to consider the public health and environmental impacts of its actions, including climate change . Today's decision requires FERC to fulfill its duties to the public, rather than merely serve as a rubber stamp for corporate polluters' attempts to construct dangerous and unnecessary fracked gas pipelines ."  The judges declared that the environmental impact statement for the Southeast Market Pipelines Project was required to either quantify the impact of GHG resulting from burning the fracked gas transported by the pipeline or explain why it failed to do so.  "That fear was manifested when this project began leaking into our communities the other week, and it's why a thorough review of this pipeline will show that it must be—and should have been—rejected."  Since FERC did neither, the commission must go back and conduct a new review of the project.

Court rejects pipeline project on climate concerns | TheHill: An appeals court on Tuesday rejected the federal government’s approval of a natural gas pipeline project in the southeastern U.S., citing concerns about its impact on climate change. In a 2-1 ruling, the Court of Appeals for the District of Columbia Circuit found that the Federal Energy Regulatory Commission (FERC) did not properly analyze the climate impact from burning the natural gas that the project would deliver to power plants. The ruling is significant because it adds to environmentalists’ arguments that analyses under the National Environmental Policy Act — the law governing all environmental reviews of federal decisions — must consider climate change and greenhouse gas emissions.The case concerns the Southeast Market Pipelines Project, which is meant to bring gas to Florida to fuel existing and planned power plants. The Sierra Club sued FERC following its 2016 approval of the project. The environmental group brought a series of objections to the project and its environmental review, but the court denied all of the objections except the one focused on greenhouse gas. The environmental impact statement for the project “should have either given a quantitative estimate of the downstream greenhouse emissions that will result from burning the natural gas that the pipelines will transport or explained more specifically why it could not have done so,” Judge Thomas Griffith, who was nominated to the court by President George W. Bush, wrote in the opinion. He was joined by Judge Judith Ann Wilson Rogers, one of President Bill Clinton's nominees. “As we have noted, greenhouse-gas emissions are an indirect effect of authorizing this project, which FERC could reasonably foresee, and which the agency has legal authority to mitigate,” Griffith said. “Quantification would permit the agency to compare the emissions from this project to emissions from other projects, to total emissions from the state or the region, or to regional or national emissions-control goals. Without such comparisons, it is difficult to see how FERC could engage in ‘informed decision making’ with respect to the greenhouse-gas effects of this project, or how ‘informed public comment’ could be possible,” the court wrote, quoting previous cases regarding environmental reviews. 

Contract volatility reins in US land rig day rate growth: Fuel for Thought -- “Tapping the brakes” is as good a description of what’s happening in US land drilling activity today as any, and it applies to drilling costs as well.Since the recovery in drilling activity began to really gather steam last December, the US active land rig count, as monitored by Platts RigData’s RADAR report, had added at least 40 rigs to each successive month’s average tally through May.Correspondingly, there was a comparable run-up in rig day rates (the daily cost to hire a rig with a full crew). The turnaround in day rates began somewhat modestly, if unexpectedly, in December. Even with this monthly improvement, however, it wasn’t enough to lift the average day rate for 4Q 2016 out of negative territory, where it had languished for two years.But Q1 of this year provided the jaw-dropper: a whopping 3.5% increase in the average day rate—the biggest quarter-to-quarter increase in this metric since 4Q 2010.The driver for much of this surge was a shift in operator-driller negotiations on rig day rates: As operators scrambled to lock in day rates on the spot market before they could escalate further, drillers shifted from offering discounts for longer-term contracts to asking for premiums for same—especially for the preferred Class D (1,500–1,999 hp) rigs that now account for 70% of all US onshore drilling activity.However, the rapidly accelerating rig count growth raised concerns that operators were adding more rigs than oil and gas prices warranted and that a correction of sorts was in order. And indeed there was a significant retrenchment, as the rate of additions to the active rig fleet was roughly halved in June and again in July.  Now, with the plateauing of rig demand over the past two months, there is a similar pattern of weakening for day rate gains.

The Latest Red Flag For U.S. Shale - The U.S. shale industry has had a rough few weeks, with a growing number of reports suggesting that the industry is facing much more financial trouble than many analysts had expected. Now, a new report adds further evidence to the notion that shale is losing its luster in a $50 per barrel market, with producers forgoing shale in favor of older wells.U.S. shale was thought to be the most competitive source of oil out there, and indeed the industry appears to be ramping up production at today’s prices. Shale had adapted to a $50 per barrel market, producers had streamlined operations to make them almost resemble an assembly line, and in a volatile and unpredictable market, the short-cycle nature of shale drilling made it one of the least risky options for drillers.But in just a few weeks’ time, investors are starting to ask major questions about the viability of shale drilling at such a large scale.A couple of notable things have occurred in the past month or so. Pioneer Natural Resources, a top Permian producer, raised concerns when it told investors that its Permian shale wells were coming up with a higher natural gas-to-oil ratio than expected, a potentially worrying sign. The company also reported that it had trouble with some of its wells, forcing it to delay some completions.Separately, Goldman Sachs reported that top investors are souring on U.S. shale E&Ps, with poor performances leading investors to search for ways to “reallocate capital” elsewhere in the energy space. That is big red flag for the shale industry, which is still struggling to consistently post profits despite the highly-touted cost reductions over the past few years. But the newest sign of trouble comes from the Wall Street Journal, which just reported that more oil producers are shunning shale drilling and using their scarce dollars to reinvest in older conventional wells. “As crude prices languish under $50 a barrel, and with increasing costs for land, labor and infrastructure, some shale fracking operations are starting to look expensive,” the WSJ reported.

Hurricane Harvey Set To Wreak Havoc On Texas Crude Production And Refining Capacity --According to the latest warning from the National Hurricane Service (NHS), Harvey looks to be the first hurricane to strike the Texas coast since 2008.  According to NHS models, the storm is expected to gain hurricane-force winds by tomorrow afternoon and make landfall in Texas at 1AM on Saturday.  Of course, heavy flooding and storm surge warnings have been issued for most of the Texas coast. Per Bloomberg, Harvey is expected to make landfall as a Category 1 or 2 hurricane. “It could intensify right up to landfall on Friday,” said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “I expect a Category 1 hurricane at landfall, but I cannot rule out a Category 2.Nearly the entire Texas coastline from Corpus Christi to Galveston are projected to be hit by hurricane force winds. Meanwhile the rainfall forecast is calling for up to 20 inches of rain for those cities at the center of the storm. In terms of economic impacts, nearly one-third of America's refining capacity currently sits in the path of the storm and large E&P companies have already started to evacuate staff from offshore rigs which will reduce oil imports to the Texas coast. The Gulf Coast from Corpus Christi, Texas, to Lake Charles, Louisiana, is home to nearly 30 refineries -- making up about 7 million barrels a day of refining capacity, or one-third of the U.S. total. It’s in the path of expected heavy rainfall. Flooding poses risks to operations and may cause power failures."Biggest impact of this storm will be a significant reduction of crude oil imports into the Texas Gulf Coast, resulting in refineries cutting crude rates,” Andy Lipow, president of Lipow Oil Associates in Houston, said by email.“There will also be a significant impact on petroleum product exports impacting supplies into Mexico.” Exxon Mobil Corp. had said it’s cutting output at its Hoover production platform in the Gulf of Mexico ahead of the storm. The company’s also working on plans to evacuate staff in stages from offshore facilities that will be in the path of the storm, Anadarko Petroleum Corp. said earlier this week it’s removing nonessential staff from some production platforms in the Gulf of Mexico in response to weather conditions. Meanwhile, cotton prices have also rallied on speculation the storm will threaten U.S. crops.

BHP Billiton Seeking Buyers For U.S. Shale Oil Assets - BHP Billiton is seeking buyers for its U.S. shale oil and gas operations after deciding that this business is non-core. The company will retain its offshore oil operations in the Gulf of Mexico, it said in the release of its FY 2016/2017 financial results, and will also look for ways to make the assets for sale more attractive to prospective buyers. The Australian miner reported a strong year, with underlying net profits coming in at US$6.7 billion, from US$1.2 billion a year earlier, thanks to higher iron ore and coal prices—its core business—on the back from improved demand from China.In its commodities outlook section, the miner said it expected U.S. supply and low production prices to continue undermining OPEC’s and its partners’ efforts to prop up international prices, but the long-term outlook, BHP said, remained positive, thanks to demand from emerging economies.BHP acquired its shale oil assets in 2011, as part of a US$20-billion shopping spree that led to criticism from some shareholders. One of these, Elliot Management Corp., argued that managerial missteps, including the shale asset acquisition, have cost the company US$40 billion in lost value, Bloomberg reports, noting that Elliott Management earlier this year initiated a public call for reforms at the miner. BHP’s chairman, Jac Nasser, admitted a couple of months later that “In terms of shale, if you had to turn the clock back, and if you knew what we knew today, you wouldn’t do it. The timing was way off.”

E&Ps maintain accelerated spending despite oil price decline - Despite a 12% decline in crude oil prices from their December 2016 highs, the 43 top U.S. exploration and production companies (E&Ps) we’ve been tracking are largely maintaining their aggressive 2017 drilling and completion capital spending plans, announcing a mere $1.0 billion — or 1.5% — decline in total investment since the plans were unveiled. The industry’s apparent confidence in the long-term profitability of its aggressive development of the major U.S. resource plays is in sharp contrast with eroding investor sentiment that has driven Standard & Poor’s (S&P) E&P Index 29% lower than its late-2016 peak. The companies that announced modest investment reductions — about one-third of our universe of 43 E&Ps — cited cost savings from increased drilling efficiency and divestments as well as the lower short-term price outlook as reasons for the cuts. Today we review the changes in the overall outlook for 2017 upstream capital spending and oil and natural gas production, and take a quick peek into our three peer groups: those that focus on oil, those that focus on gas, and diversified E&Ps. We analyzed in depth the ongoing transformation of the U.S. E&P sector in Piranha!, our market study of 43 top U.S.-based E&Ps that includes an examination of the strategies that E&Ps are adopting to thrive in a $50/bbl world. Of that universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. Also, in several blogs over the past few months we examined details for each of these groups of companies and tallied the increases in capex the firms had planned for 2017. Today, we update these capital spending plans and oil and gas production expectations.

New Pipeline Capacity to Keep Pace with Permian Production Growth - The widely held expectation that Permian NGL production will rise sharply through the early 2020s has set off fierce competition among midstream companies to develop new pipeline capacity out of the play — mostly to the NGL storage and fractionation hub in Mont Belvieu, TX, but also to Corpus Christi. Only some of the incremental pipeline takeaway capacity being planned is likely to be needed, though, raising the stakes among midstreamers to line up the long-term commitments they need to finance and build their projects. Today we continue our series on NGL-related infrastructure in the U.S.’s hottest shale play with a look at efforts to add new takeaway capacity as NGL production in the Permian ramps up. As we’ve seen time and again during the Shale Era, one of the biggest challenges posed by rapid production growth is developing the pipeline infrastructure needed to transport crude oil, natural gas and natural gas liquids (NGLs) to downstream markets. Exploration and production companies (E&Ps) in the Permian perhaps have been luckier than their counterparts in other shale plays because unlike, say, the Marcellus in northeastern Pennsylvania or the Bakken in western North Dakota, the Permian already had been a major production area for decades when shale production started ramping up in 2015-16 and therefore had substantial takeaway infrastructure already in place. But with Permian NGL production already at 800 Mb/d and expected to rise to 1.4 MMb/d by 2022 (under RBN’s Growth Scenario), the day is fast approaching when new pipeline capacity out of the play will be required.

Apache cribs activist tactic and protests wastewater well at Alpine High - Apache Corp., pulling a tactic from the playbook of environmental activists, is protesting another company’s application to inject oil and gas wastewater deep underground, hoping to prevent that company from contaminating aquifers or even causing earthquakes. Houston-based Apache has fastidiously managed its own use of water — and image — while developing its new West Texas play, Alpine High, over the past year. The company announced the field last September, estimating it held 15 billion barrels of oil and gas on about 350,000 acres in southern Reeves County. Apache has since worked to prove it is a responsible corporate citizen. It has promised not to drill within city or park boundaries. It is developing its own wastewater treatment and recycling program. And now it’s trying to prevent others from soiling the region’s aquifers — and Apache’s project. The issue: As oil flows up and out of the ground, it brings with it millions of gallons of salty, dirty water. When companies pump water underground for hydraulic fracturing operations, even more water comes up. And all of that water, usually laden with chemicals, has to go somewhere. The most common practice in Texas is to re-inject it deep underground, into formations that are not likely to produce oil.But environmentalists fear wastewater injection can pollute drinking water sources. And scientists have tied such injections to small earthquakes, becoming increasingly common in Texas.Several companies have filed applications over the year to inject wastewater near or in Alpine High. In response, Apache lawyers have filed a number of protest letters with the state, said spokesman Joe Brettell.One of the most recent, sent Aug. 15, protests an application submitted by Dallas oil and gas company Primexx Operating Corp. Apache says Primexx plans could threaten water resources.“Apache reserves the right to provide evidence and examples of more issues, violations and deficiencies with Primexx’s application at the hearing,” wrote Bill Hayenga, an Austin attorney working for Apache.

Texas oil industry boasts of near-infinite supply — but what if the world stops buying? -  With all the talk from Trump administration officials about achieving "energy dominance," Texas' own oil and gas industry has set out to prove that it's the most dominant of all. In a chest-puffing report issued Thursday, the Texas Oil and Gas Association detailed the billions of dollars of investment that are going into drilling, pipelines, and refining capacity in and around the bountiful Permian Basin. Texas accounts for 45 percent of onshore oil production and 25 percent of natural gas, and IHS expects investment in the Permian to quadruple by 2021, to $40 billion.  "What this report reflects is that Texas is the global energy leader, and we are very proud of that fact," said Todd Staples, TXOGA's president.  Impressive numbers, to be sure, especially when business investment in the rest of the American economy has been lagging. But even with a president in the White House and a governor in Austin willing to do seemingly whatever the extractive industries want, there may be another challenge stalking Texas' fossil fuel producers.That challenge is laid out in another report issued recently by BP, in the 66th edition of its annual statistical review and world energy outlook. It found that global energy demand increased by only one percent in 2016 for the third year in a row, a marked decrease from the longer-run average of nearly two percent.That decline was led by a dramatic slowdown in energy demand growth in China, which is shifting to less energy-intensive industries to power its economy, as well as appliances and cars that need less electricity and fuel.Even as fast-growing nations like India move towards a higher standard of living and all the power-using amenities that requires, they may be able to leapfrog the most polluting stages of that transition, if electric cars and solar power become cheap enough. That would depress energy demand growth even further.

Colorado: No online oil, gas pipeline map after fatal blast - AP — Colorado will not offer an online map of oil and gas pipelines in the wake of a fatal house explosion blamed on a gas leak, Gov. John Hickenlooper said Tuesday, citing concerns about security and theft.The state will instead require energy companies to provide location information to the existing Call 811 program, which marks the location of underground utilities at a property owner's request, Hickenlooper said.The expanded location program was among seven steps the governor announced in response to an April explosion in the town of Firestone that killed two people and injured a third. Investigators blamed the explosion on odorless, unrefined natural gas leaking from a pipeline that was thought to be out of service but was still connected to a well with a valve open.Hickenlooper said in May that the explosion showed the need for a comprehensive state map of "flow lines," which carry oil or gas from wells to tanks or other gathering equipment. But he said Tuesday "there are a lot of concerns about having a database like that available, of people stealing gas or, you know, tapping into these lines, that causes some level of security risk," he said. "I recognize that, and I think that's a valid argument."

Wyoming gets $1.6M to address leaking oil storage tanks  (AP) — The Wyoming Department of Environmental Quality has received a $1.6 million grant from the U.S. Environmental Protection Agency to help clean up contamination from leaking underground petroleum storage tanks. KTWO reports (http://bit.ly/2g4QFIM ) the funding will support staff that oversees cleanup projects around Wyoming. The money comes from a Trust Fund created by Congress in 1986 to address petroleum leaks from federally-regulated underground storage tanks. In 2005, the Energy Policy Act expanded eligible uses of the Trust Fund to include certain leak-prevention activities.Financing for the fund comes from a .1-cent tax on gasoline sold nationwide. The EPA says Wyoming reported last year six new confirmed discharges, 96 completed cleanups and 707 that are under investigation or active remediation.

Massive Fracking Plan Near Yellowstone National Park Threatens Wildlife, Air Quality, Climate - The Center for Biological Diversity and the Sierra Club lodged formal comments with the federal government Monday opposing a massive gas fracking project that spans 220 square miles of public land in Wyoming south of Yellowstone National Park.   The Normally Pressured Lance gas field would destroy wildlife habitat and worsen ozone pollution, a major cause of childhood asthma, in areas already suffering from extreme air pollution.  "This enormous project will be a disaster for wildlife, people and the planet," said Diana Dascalu-Joffe, a senior attorney with the Center for Biological Diversity. "It will decimate habitat for animals that are already struggling and further foul the air in communities already suffering with pollution from drilling and fracking . And it locks us into decades more fossil fuel dependence, which will only worsen the climate crisis."  In their comments to the federal Bureau of Land Management (BLM) Monday, the groups said the project would destroy key wildlife habitat for greater sage grouse, pronghorn and mule deer by allowing 3,500 new gas wells, roads and other infrastructure. If approved by BLM, drilling in the 140,000-acre gas field could begin next year.   Fracking in sagebrush habitats will reduce already dwindling mule deer populations in the region. Mule deer avoid gas wells and infrastructure, which fragments and shrinks their habitat. Research shows that development of the Pinedale fracking field decimated migration routes and winter habitat, reducing mule deer populations by more than a third.   Drilling would worsen ozone pollution in the upper Green River basin, where winter ozone levels already exceed federal health standards. The project would produce up to 440 million tons of equivalent carbon dioxide pollution. This would account for more than 1 percent of the entire remaining U.S. carbon budget needed to have a 50 percent chance of returning global average temperature rise to 1.5°C by 2100.

Fracking sites expose 17.6 million Americans to toxins - An estimated 17.6million Americans live within one mile of an active oil or gas well, a study has revealed. That means more than five percent of the US population is exposed to harmful toxins on a daily basis.Experts say the report should be a red flag to public health officials that protective regulations and policies need to be improved to help prevent exposure.The wells contaminate the quality of the air, water and soil and increase harmful toxins such as benzene and formaldehyde.People living within a mile of these toxic fumes have an increased risk for getting cancer, heart disease, dementia or a neurological problem.Birth defects such as pre-term birth, low weight and congenital heart defects have also increased around the areas with active oil and gas production. Researchers looked at the nationwide measurement for the number of people living near active oil and gas wells. 'Our study was specifically designed to determine how many Americans have increased health risks from potential exposure to pollutants emitted from oil and gas development,' said Eliza Czolowski, a research associate at PSE and lead author on the study. When people live within a mile of these operations, they have a higher risk of being hospitalized for numerous medical issues, including heart and neurological problems, cancers and asthma. Residential proximity to these operations has also increased adverse birth outcomes, including pre-term birth, lower birth weight, neural tube defects and congenital heart defects. So pregnant women living near these wells could be putting their fetuses at an increased risk to have one of these defects. 

Minneapolis Fed president: Fracking better than Twitter — Fracking has been better for the American economy than cellphones and social media, said the president of the Federal Reserve Bank of Minneapolis. While talking about what spurs economic growth, Neel Kashkari said advances in technology this century so far pale compared to the last one. “Compared to the integrated circuit, Twitter is not very impressive. Let’s just say that,” he told members of Rotary Club from Minneapolis and the west metro at the Edina Country Club on Thursday, Aug. 17. The comments came in response to a question about long-term stagnation predicted to affect the global economy. “So our productivity is growing at about half the rate as it had in prior decades, and we don’t have answer for why,” Kashkari said. He noted some basic economic rules, that two major features cause the economy to grow: 1. a skilled workforce that can do more with the same resources, which comes as a result of education and research into new technologies. 2. population growth, which is more people needing more services and goods. He said the advances of 50 to 100 years ago were transformative. Think of the airplane, the electrical grid and microchips. Social media, cellphones and all their applications, he said, have provided instant communication and speedy information, but they also waste time, cause needless interruptions and slow down worker productivity. “Are these things really moving the needle?” he asked. Fracking, on the other hand, was technology developed by roughnecks in North Dakota, Oklahoma and Texas, not techies in California, he said, and it has had a profound effect on the global economy.

 Impacts of Pipeline Toxins, Water Pollution Exposed During Bakken Oil ‘Toxic Tour’– This weekend, the Indigenous Environmental Network (IEN), Protectors of Water and Earth Rights (P.O.W.E.R.), grassroots activists and clergy from the Gulf Coast led a “toxic tour,” the Third Annual Healing Walk, and an educational seminar for community members in the heart of the Bakken Oil Formation. The two-day series of events aimed to increase awareness about the environmental impacts of pipeline toxins and pollution in local water resources. Participants say this information is critical for communities along the pipeline routes because the Bakken oil and gas field resources the Dakota Access and Bayou Bridge Pipelines and also leaks 275,000 tons of methane per year. “We have been dealing with oil and gas extraction around us for nearly 10 years,” said Lisa DeVille, President of POWER. “We cannot survive without healthy water so we gather annually to pray for the health of our water as our grandmothers and grandfathers used to. We know that with extraction, it’s only a matter of time before our only drinking source will be unsafe to drink.” “We can individually deal with the symptoms of the problems created by the oil and gas industry or we can work in solidarity and go straight to the source; for all of us that’s the extraction zone of the bakken shale oil fields,” says Kandi Mossett – Mandan, Hidatsa, Arikara from New Town, ND. The toxic tour and the healing walk also follows several pipeline developments this week with Dakota Access Pipeline (DAPL), the Bayou Bridge and the Keystone XL Pipeline. In Nebraska, hearings began to determine whether TransCanada should receive permits to build the pipeline across the state. In Louisiana, where the Bayou Bridge is the last leg of DAPL, votes were delayed on alternative community evacuation routes currently blocked by the Energy Transfer Partners, the company that built DAPL. Finally, the North Dakota Public Service Commission (NDPSC) announced that it will take legal action against DAPL for probable company violations during the pipeline’s construction.

Feds Urge Judge to Keep Oil Flowing in Dakota Access Pipeline During Environmental Review - Federal lawyers have urged a federal judge not to shut down the Dakota Access Pipeline while the Army Corps of Engineers conduct a fresh environmental review mandated by the court.  The lawyers said there was a "serious possibility" that the new review by Army Corps will also find there is little risk of oil from the pipeline spilling into North Dakota's Lake Oahe, that the local Native American tribes consider sacred and environmentally important.  In June, a federal judge ruled that the Army Corps had failed to adequately study the environmental impact of the pipeline. The Army Corps lawyers also argued shutdown of the pipeline could increase the risk of oil spill because the oil would instead have to be transported by rail, which they consider riskier.  The Indian tribes have asked for the pipeline be closed until the review is completed.

Dakota Access Pipeline owner sues Greenpeace, arguing it broke organized crime law -  The company behind the Dakota Access Pipeline, which drew international attention for potentially endangering the water supply of Native American tribes in the Dakotas, accused Greenpeace and other environmental activists who helped organize protests of eco-terrorism, racketeering and other crimes. By filing a lawsuit against the activists in U.S. District Court in North Dakota on Tuesday, the Dallas-based oil and gas company Energy Transfer Partners became the second firm to accuse Greenpeace of breaking a federal organized crime law used to try members of the mafia, the Racketeer Influenced and Corrupt Organizations Act, or RICO Act. Last year, a Canadian logging company, Resolute Forest Products, filed a RICO lawsuit against Greenpeace after the environmental group mounted a multimedia campaign against the company for harvesting trees in Canada’s sensitive boreal forests. As part of that campaign, Greenpeace branded Resolute a “forest destroyer.” In their respective lawsuits, Energy Transfer Partners and Resolute are being represented by Kasowitz, Benson & Torres LLP, a law firm founded by Marc Kasowitz, President Trump’s longtime attorney who was sidelined recently in the Russia investigations. Greenpeace defended its activism, accusing the firm’s lawyers of being “corporate mercenaries willing to abuse the legal system to silence legitimate advocacy work,” according Tom Wetterer, general counsel for Greenpeace USA. The protest of an oil pipeline that is being constructed close to the Standing Rock Indian reservation has become a rallying point for Native Americans across the United States. Here's what you need to know. (Daron Taylor/The Washington Post) 

Dakota Access Pipeline Company Sues Greenpeace, Claims the Group Engaged in 'Acts of Terrorism' - On Tuesday, Dallas-based oil company and Dakota Access Pipeline operators (or profiteers, depending on your understanding of what stolen land is), Energy Transfer Partners, filed a lawsuit against Greenpeace International, Earth First!, and other environment advocacy groups accusing them, ironically, of racketeering.ETP is the second company to accuse Greenpeace of violating the Racketeer Influenced and Corrupt Organizations Act (the RICO Act), typically used to try members of organized crime networks. Last May, preternaturally self-assured logging company Resolute Forest Products filed its own racketeering suit against Greenpeace over the environmental group’s anti-decimating-Canadian-forests campaign “Resolute: Forest Destroyer.” The oil and gas company is also charging these various groups, who helped organize peaceful protests against the construction of their beloved pipeline, of eco-terrorism and other crimes, the Washington Post reports. What was so specifically terrifying about these alleged acts, is that they caused damage to the company’s “critical business and financial relationships.” The lawsuit also accuses the environmental groups of “manufacturing a media spectacle,” that, again, impacted the company’s bottom line. Of course ETP is being represented by the law firm founded by Trump’s longtime (until recently, due the Russia inquiry) attorney, Marc Kasowitz. The same firm represented Resolute last year. Greenpeace’s lawyer, Tom Wetterer, commented on the connection in a statement, saying, “This is the second year Donald Trump’s go-to-attorneys at the Kasowitz law firm have filed a meritless lawsuit against Greenpeace….[The complaint] repackages spurious allegations and legal claims made against Greenpeace by the Kasowitz firm on behalf of Resolute.”  And let’s not forget either, beneath the pile of other reprehensible shit that Trump has done since taking office, that our fractious frack-zealot of a president brought back the Dakota Access Pipelines project from the dead, after Barack Obama in his final days as commander-in-chief had come to his senses and halted construction, and after many months of brave, dogged organizing against the pipeline by the Standing Rock Sioux Tribe and its allies.

Trump Attorney Sues Greenpeace Over Dakota Access in $300 Million Racketeering Case – Steve Horn - Energy Transfer Partners, owner of the Dakota Access pipeline, has filed a $300 million Racketeer Influenced and Corrupt Organizations (RICO) lawsuit against Greenpeace and other environmental groups for their activism against the long-contested North Dakota-to-Illinois project. In its 187-page complaint, Energy Transfer alleges that “putative not-for-profits and rogue eco-terrorist groups who employ patterns of criminal activity and campaigns of misinformation to target legitimate companies and industries with fabricated environmental claims and other purported misconduct” caused the company to lose “billions of dollars.”  In the case, Energy Transfer is represented by lawyers from the firm Kasowitz Benson Torres LLP, one of the namesakes of which is Marc Kasowitz. Kasowitz is a member of the legal team representing President Donald Trump in the ongoing congressional and special counsel investigation of his 2016 presidential campaign's alleged ties and potential collusion with Russian state actors. The press release announcing the filing of the lawsuit details that Kasowitz attorney Michael J. Bowe is leading what the firm describes as an ongoing probe into the environmental groups' “campaign and practices.” Bowe, according to multiple press accounts, is serving as Kasowitz's deputy in the ongoing Russia investigation. He also represents Resolute Forest Products and co-plaintiffs in its ongoing RICO lawsuit against Greenpeace, Stand.Earth, and other defendants involved in a corporate social responsibility campaign revolving around Resolute's forest-originated products. Bowe, furthermore, is an attorney-of-record in a $50 million defamation lawsuit filed against freelance journalist Yashar Ali by suspended Fox News anchor Eric Bolling. Ali published a freelance article commissioned by the HuffPost on August 4 in which multiple sources told Ali that Bolling had sent a litany of unsolicited lewd text messages to Fox News' female employees.  Another attorney of record for the latest Greenpeace lawsuit, Jennifer Recine, formerly represented Trump “against the owners of one of the last large scale real estate development sites in Manhattan” and helped him win “the largest ever attachment in New York City history,”

After fracking test launched on North Slope, company presses ahead to drill two new wells  - A unique effort to test the benefits of hydraulic fracturing on the North Slope is still underway, but the focus is shifting away from a well that's already been drilled to new sites 25 miles to the west.Accumulate Energy Alaska drilled a production test well this summer from an existing gravel pad along the Dalton Highway. Oil-flow tests are still underway at that well, known as Icewine No. 2.But early information helped determine "the size and extent of the oil bearing formations, and the best means for producing from them," says Accumulate, in a proposed update to its oil spill contingency plans filed with Alaska regulators July 31.  The proposed changes, announced by the Alaska Department of Environmental Conservation on Thursday, are under agency review. The oil company plans to drill the additional wells next spring, after contractors build about 25 miles of ice roads — frozen routes made with layers of water and ice chips to protect tundra — to reach drill sites from the highway. The two wells would explore oil deposits about 40 miles south of Slope oil fields. The company says it plans to hydraulically fracture the wells, testing the Seabee formation about 2 miles below the surface. The formation contributes oil to the Meltwater pool, part of ConocoPhillips' giant Kuparuk River unit.  Accumulate Energy is working with Burgundy Xploration of Houston. That company is headed by Paul Basinski, who helped discover the large Eagle Ford shale site in Texas. During the Alaska lease sale in December, the companies' more than doubled their lease holdings to about 700,000 acres. This summer, Accumulate has conducted hydraulic fracturing to stimulate the Icewine No. 2 well drilled off the Dalton, and to test the potential for oil to flow. That well is targeting the HRZ shale formation, a bit deeper than the Seabee formation.  Accumulate is targeting residual oil and gas that never migrated out of rocks in geologic history. That oil and gas is considered one of the sources for the crude oil at the giant Prudhoe Bay oil field.

A Second Wind for the North Slope?  - Rigzone -Following an executive order from U.S. Secretary of the Interior Ryan Zinke, the U.S. Geological Survey (USGS) is in the process of generating updated assessments of the oil and gas resources on Alaska’s North Slope in what could be the precursor to an exploration and development boom on federal lands that have mostly been off-limits to the industry.The May 31 executive order has renewed a sense of hope for opening currently off-limit areas of the National Petroleum Reserve – Alaska (NPRA), and opening the 1002 Area of the Arctic National Wildlife Refuge (ANWR), which has been tightly closed to the industry since the 1980s, to exploration.  As older oilfields such as Prudhoe Bay, the Kuparuk River and the Alpine have long since reached their production peaks, the state of Alaska has been anxiously watching the steady decline of oil through the Trans-Alaska Pipeline System (TAPS) over the last three decades – peaking in 1988 at 2.1 million barrels of oil per day to today’s roughly 500,000 barrels.While it has long been speculated that off-limit areas in NPRA and the 1002 Area in ANWR have the potential for major discoveries of hundreds of millions or billions of barrels of oil, decades of legislation and land management policies have kept them closed to the industry to varying degrees, said David Houseknecht, USGS senior research geologist who is overseeing the North Slope assessments, to Rigzone. Yet recent, headline-making discoveries on the North Slope by Armstrong Oil & Gas, Inc., ConocoPhillips Alaska and Caelus Energy Alaska have sparked excitement in the Last Frontier State. All lie within a major fairway stretching from the Colville River Delta to the western coast of Smith Bay. If areas that are currently off-limits to leasing near Teshekpuk Lake in NPRA open up, that could be the catalyst to the next energy boom in Alaska, Houseknecht said. With a Republican-controlled House and Senate and a president whose no-holds-barred approach to the industry has unleashed a wave of optimism among operators, many believe that Alaska can brightly shine on the industry’s maps once again.  “After the last administration spent eight years systematically closing off access to the Arctic, this executive order puts us back on track to explore and ultimately produce prolific resources in that region,” said U.S. Sen. Lisa Murkowski of Alaska in a press release.

 Can Oil Sands Pay Off at Just $50 a Barrel? - The future is arriving—a few tons at a time—at Suncor Energy Inc.’s North Steepbank oil sands mine in Alberta, Canada. Human-operated excavators scrape away the top layers of soil to get to the hydrocarbon-rich tar sand beneath in much the same way they always have. But now they’re dumping that dirt into driverless trucks that use GPS systems and lasers to find their way through the massive mine. The trucks, part of a multiyear test, are just one way that Suncor and other oil sands producers are trying to bring down the cost of what traditionally has been one of the most expensive ways to extract crude. Canada’s tar sands, which contain the planet’s third-largest oil reserves, were a prized possession for global energy companies when crude was trading above $100 a barrel. But since prices fell to $50 in 2015, where they have lingered, Royal Dutch Shell, ConocoPhillips, and Marathon Oil have unloaded their holdings amid concerns that these capital-intensive projects would struggle to turn a profit. The Canadian companies that have snapped up those assets are chipping away at those fears, using automation and other new technologies to drive down operating expenses. “They are making great progress and showing that they can be healthy and make money at $50 oil,” says Justin Bouchard, an analyst at Desjardins Securities in Calgary. In recent earnings announcements, Suncor and rival Cenovus Energy Inc. said they can now sustain production with oil at $40 a barrel without jeopardizing the dividend they pay shareholders. While that’s not yet near the economics of shale producers in Texas’ Permian Basin, where the break-even price can be as low as $25, additional advances on the horizon could make oil sands production even more efficient, Bouchard says. For instance, companies are experimenting with injecting solvents such as propane into reservoirs to recover more of the sticky crude. They’re also running tests that use radio waves, instead of steam, to heat the sand so oil can flow to the surface. 

Fracking: Shale rock professor says UK gas reserves 'hyped' - BBC News: The gas reserves in shale rocks in the UK have been "hyped", an academic said. Professor John Underhill from Heriot-Watt University said the UK's potential shale deposits were likely to have been disrupted by shifts in the earth 55 million years ago. He said the government would be wise to formulate a Plan B to fracking for future gas supplies. But the fracking firm Cuadrilla said it would determine how much gas was present from its test drilling. Hydraulic fracturing, or fracking, is a technique designed to recover gas and oil from shale, a sedimentary rock found worldwide. The amount of shale gas available in the UK is acknowledged to be a great unknown. Cuadrilla said estimates from the British Geological Survey (BGS) indicated a large potential gas reserve. But Prof Underhill said his research on the influence of tectonic plates on the UK suggested that the shale formations have been lifted, warped and cooled by tectonic action. These factors make shale gas production much less likely. "The complexity of the shale gas basins hasn't been fully appreciated so the opportunity has been hyped," he told the BBC. This is very different from the US, where big deposits of shale gas were created in the continental heart of America, far from the movement of tectonic plates. Prof Underhill's comments are based on an unpublished paper on tectonics. He said he deduced the impact on shale formations by chance. 

Norway Removes Greenpeace Ship From Statoil Arctic Drill Site -- Norway’s coast guard has removed Greenpeace protestors from a safety zone near Statoil drilling operations in the Korpfjell field of the Barents Sea, according to a new report in the Maritime Executive.  The protestors used kayaks to infiltrate a 500-meter exclusion zone around theSonga Enabler on Thursday in order to attach a large globe to the rig. On it was a statement from environmentalists calling on Norway to end its drilling in the Arctic. Statoil called the stunt “illegal and irresponsible” before summoning the authorities to remove the protestors’ vessel, Arctic Sunrise. On the other hand, Greenpeace Norway argues the coast guard’s actions were unlawful.“The Norwegian coast guard doesn’t have the right to board or remove our ship,” said Truls Gulowsen, head of the local branch of the environmental group.“Protest at sea is an internationally recognized lawful use of the sea, related to the freedom of navigation. We are taking action against Arctic drilling in an area where our rights to protest are protected under international law. The Norwegian government cannot unjustifiably interfere with that right.” So far, the government maintains that it acted within its rights when it removed the ship due to the clear establishment of the exclusion zone. To this claim, the group retorts: “While Greenpeace recognizes that Norway has the right to establish a safety zone around a fixed offshore installation, there should also be room to exercise the right to protest in a safe and peaceful manner.” Environmentalists continue to protest drilling in the Arctic and the potential opening of the Lofoten islands to exploration. Greenpeace is suing Norway in a trial set to begin in November, arguing that “granting licenses to open a new oil frontier breaches the Norwegian Constitutional right to a healthy and safe environment for current and future generations and contravenes the Paris Agreement.”

First tanker crosses northern sea route without ice breaker - BBC News: A commercial LNG tanker has sailed across the colder, northern route from Europe to Asia without the protection of an ice-breaker for the first time. The specially-built ship completed the crossing in just six-and-a-half days setting a new record, according to the tanker's Russian owners. The 300-metre-long Sovcomflot ship, the Christophe de Margerie, was carrying gas from Norway to South Korea. Rising Arctic temperatures are boosting commercial shipping across this route. The Christophe de Margerie is the world's first and, at present, only ice-breaking LNG carrier. The ship, which features a lightweight steel reinforced hull, is the largest commercial ship to receive Arc7 certification, which means it is capable of travelling through ice up to 2.1m thick. On this trip it was able to keep up an average speed of 14 knots despite sailing through ice that was over one metre thick in places. The Russian owners, Sovcomflot, will use this ice-breaking tanker to export gas from the Yamal peninsula to Asian markets later this year. It will be the first of a planned fleet of 15 that will transport gas from these ice bound fields all year round. "Previously there was only a window of navigation from our summer to autumn, but this ship will be able to sail westwards from Sabetta which is the Yamal energy port, all year round and eastwards from July to December," said Sovcomflot spokesman Bill Spears. "Before the northern sea route was only open for four months and you had to have ice-breakers - so it's a significant development." 

Lithuania challenges Russia with a shipment of U.S. natural gas - Lithuania, among the bravest of the former Soviet states surrounding prickly Russia, has poked a finger directly in the Kremlin's eye by buying a shipment of American liquefied natural gas, defying Moscow's energy stranglehold on the region. The shipment Monday could not have been economically advantageous, given that Russian gas supplies are right next door, but Lithuania calculated that the political dividends made it a shrewd deal. Why it matters: The move suggests that, three years after the Russian invasion of Ukraine, the Baltic states remain resolved to putting up a strong front against Moscow.

  • A geopolitical move: In an interview with Reuters, Lithuanian Foreign Minister Linas Linkevicius explicitly described the LNG shipment as part of his country's political calculus. "We want to cement our relationship with the United States in many aspects in addition to defense and security, [and the] energy trade is one of the strategic areas for cooperation," he said.
  • The shipment comes almost exactly a month after NATO military exercises were held just east of the capital of Vilnius, also intended to convey as a message of resolve against Russia.
  • Savoring the moment: On Monday night, a map on marinetraffic.com showed the LNG tanker Clean Ocean still moored at the Lithuanian LNG port, just southwest of Banginis, suggesting no rush to stop aggravating Moscow.

US LNG Exports to Lithuania A Chink in Russia's Eastern European Energy Dominance – - On Monday, a shipment of liquefied natural gas (LNG) arrived in the Lithuanian port of Klaipeda. That in and of itself was not overly remarkable, but where the shipment came from was. The shipment was the first purchase and importation of American natural gas by a former Soviet state. While the quantity of gas sold was minor, the shipment symbolized dramatic shifts in the worldwide energy market with the potential to influence geopolitics by reducing Russia’s ability to manipulate energy access to exert influence over its neighbors.Although the initial shipment was primarily of symbolic impact, officials in Lithuania were clear about the message they were trying to send.“We want to cement our relationship with the United States in many aspects in addition to defense and security– energy trade is one of the strategic areas for cooperation,” Lithuanian Minister of Foreign Affairs Linas Linkevicius told Reuters.Cheniere, the company behind the shipment, said it was looking forward to continuing the relationship with Lithuania.Lithuania has been working to reduce its dependence on Russian energy for several years. In 2014, it opened a terminal for LNG imports and began bringing in gas from Norway. However, the country would like to show Russia, and the state-backed energy company Gazprom, that multiple alternate energy suppliers exist. “That’s just smart business sense not to have all your eggs in one basket,” says Brigham McCown, an American infrastructure expert and a Program Council Member for the Warsaw Security Forum. “From my perspective, a lot of Eastern European countries would like to have U.S. natural gas in particular.” However, he stressed that the viability of American natural gas sales to central Europe depends on its price. Shipping LNG across the Atlantic requires a very low production price at home. To the extent that American producers are able to hit this mark, it is thanks to fracking. Fracking has paid off dramatically in terms of cheap energy in the U.S. Abundant natural gas has lowered electricity prices and helped spur the development of major chemical plants in places like Ohio and Louisiana. The next stage for the industry has been the export market, which so far has focused on Canada and Mexico. As the industry continues to expand, shipment companies are looking further afield, to Latin America and beyond.

Natural gas is key to German Energiewende -The head of one of Germany’s main natural gas associations told EURACTIV’s partner Der Tagesspiegel that the German government should back the fuel source as part of its energy transition, as well as advocating the use of power-to-gas technology.  The chief executive of the German Association of Energy and Water Industries wants “a clear commitment to gas” from the country’s lawmakers. Stefan Kapferer wants the energy source to play a more important role in the drive to meet the 2050 climate protection plan. Kapferer laid down four specific areas in which gas should be used. Firstly, in securing Germany’s heat supply, a factor in which gas still remains indispensable. Secondly, using the fuel source in natural gas-powered cars. Thirdly, gas power should be used as a back-up for renewable energies, which can be intermittent. Lastly, surplus electricity produced by Germany’s wind farms should be converted into gas fuel using power-to-gas technology. The latter option is still relatively unknown to Germany’s politicians, as well as other important opinion-forming groups. “We have work to do there,” Kapferer told reporters at the beginning of the month during a presentation of a BDEW survey on natural gas’s role in the German Energiewende.

Shell Plans To Double Gas Stations In Russia - Royal Dutch Shell plans to double the number of its retail gas stations in Russia from the current 227, Sergey Starodubtsev, the chief executive of Shell’s Russian unit, said on Wednesday.Shell views Russia as one of its priority regions, Russian media quoted Starodubtsev as saying at a press conference. The company does have plans to expand its retail network and plans to double the number of its gas stations in Russia in the near future, according to Starodubtsev.Apart from the downstream business, Shell is active in Russia with natural gas projects.The Anglo-Dutch oil and gas supermajor holds a 27.5-percent stake minus one share in the Sakhalin-2 liquefied natural (LNG) project, in which Russia’s gas giant Gazprom holds the majority stake of 50 percent plus one share.  Mitsui (12.5 percent) and Mitsubishi (10 percent) hold the remaining stakes.In June this year, Shell signed a joint venture deal with Gazprom to study the construction and development of another LNG project in Russia—Baltic LNG. The Baltic LNG project entails the construction of an LNG plant with an annual capacity of 10 million tons in the Baltic Sea port of Ust-Luga, which is some 110 kilometres (68 miles) west of St. Petersburg.Under the agreement, the Shell-Gazprom joint venture will secure the funding and carry out the design, construction, and operation of the LNG plant, Gazprom said in a June 3, 2017, press release. Last year, Shell and Gazprom expressed their intent to explore the Baltic LNG project possibilities by signing a Memorandum of Understanding (MoU) for potential cooperation in that project. This year Shell marks 125 years since it started doing business in Russia.

Russia claims to have invented an alternative to fracking - Russian scientists and local oil field services companies claim to have created a technology for thermochemical gas fracturing that could be an alternative to hydraulic fracturing and could increase oil production by between 1.7 and 6 times, Russia’s news agency RIA Novosti reports, citing the University of Tyumen’s press service. In hydraulic fracturing, rocks are fractured with high-pressure injection of fluids, while the new breakthrough technology, as claimed by Russian scientists and media, is creating chemical reactions in the strata that contain oil. The chemicals react and emit heat and gas, which makes extraction easier and lifts well productivity, according to the scientists and researchers. The other upside in the technology, the Russians claim, is that the main component in the chemical reactions is ammonium nitrate, which is often used as fertilizer. According to Professor Konstantin Fedorov, Director of the Institute of Physics and Technology at the University of Tyumen and the scientific consultant on the project, the improved well productivity effect lasts between 300 and 1,000 days. Production increases by between 1.7 times and 6 times compared to the initial output level, although the scientists have seen tests with production increases of 10 to 20 times. The success rate is close to 100 percent, Fedorov claims, as reported by Russian media. According to the University of Tyumen, the project —partially supported by government funding—had the goal to create an innovative and, more importantly, Russian method of oil and gas production. The project partners plan to begin the first tests at operational wells of one of Rosneft’s subsidiaries in September, according to the University of Tyumen. 

Turkey’s Unit International, Russia’s Zarubezhneft and Iran’s Ghadir sign drilling deal (Reuters) - Turkey's Unit International has signed a $7 billion agreement with Russia's state-owned Zarubezhneft and Iran's Ghadir Investment Holding to drill for oil and natural gas in Iran, the company said on Tuesday. In a statement, Unit said the three companies had invested a total of $7 billion for the drilling, which would take place at three oil fields and one large natural gas field in Iran. The total reserves at the three oil fields stand at 10 billion barrels, and the fields will produce 100,000 barrels per day, Unit said. It said the natural gas field had a production capacity of 75 billion cubic metres per year. The consortium will also be able to drill in other parts of Iran, the statement said. The natural gas extracted from the drilling will be equal to 1.5 times the 50 billion cubic metres of gas Turkey imports annually, Unit said, adding that the reserves in this field would help meet Turkey's gas demands for the next 150 years. Unit said all three companies had signed the agreement as equal partners, and added that this marked the first trilateral deal an Iranian company signed with foreign partners.

Oilex unveils favourable fracking analysis for Cambay -  Oilex unveiled positive results from the large gas resource at the company's Cambay project on Thursday. The analysis, completed by both tight gas experts at Schlumberger and Baker Hughes, confirmed that siltstones at Cambay could be effectively stimulated as part of the fracking process and that commercial gas flow rates were potentially achievable. Managing director Joe Salomon said that the findings had confirmed the importance of implementing a tailored approach. "We are very pleased that the review and analysis has confirmed the substantive potential of the EP-IV reservoir at Cambay, and that it has provided specific solutions to be employed in the execution of future drilling and well completion programmes. "These findings have confirmed the importance of implementing a tailored approach to unlocking the potential commercial success of the large gas resource at the company's Cambay project". With Schlumberger carrying out the testing, the report from Baker Hughes indicated various important details for the fracking process at Cambay, such as that the reservoir rocks had the essential characteristics for the development of suitable fractures required to increase exposure to the reservoir as well as to enhance gas flow rates under production. Also the report noted that proppant selection will be crucial to the maintenance of the necessary conductivity for sustained production.

Shell Loads Oil in Libya for the First Time in Five Years -- Royal Dutch Shell Plc, the world’s largest oil trader, is said to have loaded its first crude from Libya in five years over the weekend, adding to evidence of the OPEC nation’s comeback. The cargo on Saturday is for 600,000 barrels of crude from the Zueitina port, according to two people familiar with the matter who asked not to be identified because the information is private. A Shell spokesperson declined to comment on the shipment, but said the company’s Shell International Trading & Shipping “has a history marketing Libyan crudes. We welcome new business opportunities with Libya’s National Oil Corp.” Libya this year attracted Germany-based Wintershall AG and Russia’s Rosneft PJSC as investors amid signs of stability in the oil industry after years of civil war and political division. The nation is exempt from the supply cuts agreed to by the Organization of Petroleum Exporting Countries and allied producers. Crude output was 1.02 million barrels a day in July, a four-year high, according to data compiled by Bloomberg. Libya isn’t planning to join any agreement to curb output until it reaches its target of 1.25 million barrels a day by December and can maintain that level, two people familiar said in July. In 2005, Shell signed an exploration deal in Libya and five years later said gas found wasn’t in commercial quantities. Output and exports collapsed after the 2011 revolt against former leader Moammar Al Qaddafi. The country with Africa’s largest crude reserves pumped as much as 1.78 million barrels a day in 2008 and by 2011 it was down to as low as 45,000 barrels a day, Bloomberg data show.

 Hundreds of Protesters Occupy Shell Plant in Nigeria, 11 Days and Counting -- The decades-long struggle for social and environmental justice in the Niger Delta continues, largely unseen by the wider world.   On Aug. 11, hundreds of people from the Niger Delta stormed the Belema flow station gas plant owned by Shell in the Rivers State region of the Delta. The plant transports crude oil to the Bonny Light export terminal, from where it is shipped overseas.   Their list of demands could have been written by their parents and grandparents who fought the company before them. It is the same list of grievances for which the writer Ken Saro-Wiwa campaigned for—and ultimately died for—in the mid-nineties.  As Reuters reported earlier this month, "the protesters said they were not benefiting from the region's oil wealth and wanted an end to the oil pollution that has ruined much of the land."  Some 11 days on and the protests are continuing with hundreds still occupying the plant, with Shell still not able to access the site.  And now Shell is beginning to put pressure on the protesters to leave, saying their safety could be at risk.  In response, the local community have vowed to stay until Shell hands over the operation of the plant to a locally-controlled company.  However, Shell is unlikely to cede ownership of a key asset. So for the people of the Niger Delta, nothing changes. The vortex of pollution, injustice and poverty continues.  Hopefully, Shell will not resort to violence and colluding with the military to clear the site. Otherwise, once again it will have blood on its hands.

Inside the new economic science of capitalism’s slow-burn energy collapse -- A groundbreaking study in Elsevier’s Ecological Economics journal by two French economists, for the first time proves the world has passed a point-of-no-return in its capacity to extract fossil fuel energy: with massive implications for the long-term future of global economic growth.The study, ‘Long-Term Estimates of the Energy-Return-on-Investment (EROI) of Coal, Oil, and Gas Global Productions’, homes in on the concept of EROI, which measures the amount of energy supplied by an energy resource, compared to the quantity of energy consumed to gather that resource. In simple terms, if a single barrel of oil is used up to extract energy equivalent to 50 barrels of oil, that’s pretty good. But the less energy we’re able to extract using that single barrel, then the less efficient, and more expensive (in terms of energy and money), the whole process.Recent studies suggest that the EROI of fossil fuels has steadily declined since the early 20th century, meaning that as we’re depleting our higher quality resources, we’re using more and more energy just to get new energy out. This means that the costs of energy production are increasing while the quality of the energy we’re producing is declining.But unlike previous studies, the authors of the new paper — Victor Court, a macroeconomist at Paris Nanterre University, and Florian Fizaine of the University of Burgundy’s Dijon Laboratory of Economics (LEDi)—have removed any uncertainty that might have remained about the matter. Court and Fizaine find that the EROI values of global oil and gas production reached their maximum peaks in the 1930s and 40s. Global oil production hit peak EROI at 50:1; while global gas production hit peak EROI at 150:1. Since then, the EROI values of oil and gas — the overall energy we’re able to extract from these resources for every unit of energy we put in — is inexorably declining.

US Fracking Keeps Pushing Oil Price Forecasts Down -- A major financial company just lowered its five-year forecast for the oil price ceiling, as the U.S. continues to increases its oil production, Axios reported Friday. Citigroup is projecting that over the next five years, oil prices will not rise above $60 a barrel, down from the previous forecast of $65 a barrel. The Organization of Petroleum Exporting Countries (OPEC) is attempting to raise the price of oil by cutting back production from member countries and others who agreed to the restrictions. The organization has struggled with compliance, however. July marked the fourth straight month oil production from countries in the OPEC agreement has increased. July also marked the highest month of production from OPEC since December, the month before each country agreed to cut its production, CNBC reports.  Fracking has consistently grown in the major oil fields of the U.S. in 2017. Shale production is expected to hit over 6 million barrels a day throughout August and September, according to CNBC.

 Oil prices fall two percent after end-of-week rally (Reuters) - Oil prices fell nearly 2 percent ahead of monthly contract expiration on Monday, pulling back from last week's rally built on signs the global market is starting to rebalance from chronic oversupply. Brent crude futures settled down 2 percent, or $1.06 at $51.66 a barrel, while U.S. West Texas Intermediate crude futures ended down $1.14 a barrel, or 2.4 percent, at $47.37 a barrel ahead of the September contract's expiration on Tuesday. Both contracts had risen 3 percent on Friday, and traders said the day's action was marked by profit-taking. "Oil prices are experiencing some late summer chop with low trading volume and not much news. I think we are going to be stuck in a neutral for the next two weeks without big moves in either direction,"  U.S. hedge funds and money managers have reduced bets on rising prices in recent weeks, Commodity Futures Trading Commission data showed on Friday. U.S. oil prices have been on the upswing since bottoming out near $43 a barrel in mid-June, though the market has not been able to sustain a rally above $50. Despite the selloff, the market remains in its recent range, said Phil Flynn, analyst at Price Futures Group in Chicago. The world remains awash with oil despite a deal struck by some of the world's biggest producers to rein in output. Rising U.S. production has been a major factor keeping supply and demand from balancing. U.S. output may soon slow, as energy companies cut rigs drilling for oil for a second week in three, energy services firm Baker Hughes said on Friday. 

Strong Inventory Draws Suggest OPEC Deal Is Working -  Oil prices dove on Monday after a rally at the end of last week, a dip that analysts attributed to profit-taking. Investors have pulled back recently after building up large bullish bets on crude futures, a sign that the optimistic outlook has tempered. On Tuesday, oil was flat in early trading.. According to PetroLogistics, OPEC production is on track to decline by 419,000 bpd in August, compared to July. The sharp decline comes after a recent monitoring meeting where OPEC officials browbeat laggards within the group, imploring them to step up compliance with the deal. Compliance weakened in June and July, pushing the cartel’s collective output up to a year-to-date high. But fresh data suggests that they are improving the situation, with output dropping so far this month. . At the next official OPEC meeting in November, OPEC will reportedly discuss whether or not the group will extend the cuts beyond the March 2018 expiration date. "At our next meeting at the end of November...the most important items will concern the fate of the agreement to extend or terminate the production cut," Kuwait’s oil minister Essam al-Marzouq told Kuwait TV in an interview. Kuwait’s oil minister Essam al-Marzouq told CNBC on Monday that U.S. crude oil inventories are declining faster than expected, a sign that the OPEC deal is working as planned. “We are now seeing the impact of those cuts (in the first half of the year) as U.S. oil inventories fall by more than expected,” he said. “Week after week we are seeing a much bigger-than-expected fall in inventories.”  In what could be a watershed moment, the first U.S. LNG cargo landed in Lithuania, providing the Baltic States with an alternative source of natural gas. The Baltics have been wholly dependent on Russian natural gas, and the landing of a U.S. LNG cargo has already forced Gazprom to lower its prices. Meanwhile, Russia is trying to protect market share in its backyard, lowering prices, seeking an expansion of the Nord Stream pipeline system, and also developing its own LNG. The competition between U.S. LNG and Russian gas in Europe will play out in the years ahead – U.S. LNG supply is set to climb sharply next year and again towards the end of the decade.

NYMEX gas jumps 6.9 cents on eclipse impact, conflicting weather outlooks -- NYMEX September gas futures climbed 6.9 cents to $2.962/MMBtu as Monday's eclipse was projected to boost natural gas demand. The September contract settled at $2.962/MMBtu, up 6.9 cents from Friday's close. The price increase comes after a week where the NYMEX front-month contract dipped 9 cents over five trading sessions. Phil Flynn, senior market analyst at Price Futures Group, said the market could be seeing an "eclipse rally," as more gas was likely used for power generation as solar power was not available during the eclipse. According to US Energy Information Administration data, solar photovoltaic capacity was expected to be affected by an estimated 8.8 GW in California, along with North Carolina seeing nearly 3 GW affected, possibly giving support to prices as gas was used to account for some of that missing power generation. Any rise in gas demand could put increased pressure on national natural gas stocks, which currently sit 1.8% above the five-year-average, according to EIA data. Gene McGillian, manager of market research at Tradition Energy, said there are expectations that the storage build for the week ended August 18 will be below the five-year-average. The jump in price goes against the grain of the most recent six- to 10-day outlook from the National Weather Service calling for a likelihood of cooler-than-average weather for the Northeast and Midcontinent. Flynn said private meteorologist reports are conflicting, as some call for warmer-than-average weather heading into September, whereas others project possible frosts in some regions leading to "possible heating demand in September." 

 Oil heads higher on bets for an eighth-straight weekly fall in U.S. crude supplies -- Oil prices headed higher Tuesday, buoyed by expectations that data this week will show that U.S. supplies of crude oil fell for an eighth-consecutive week.  The September contract for West Texas Intermediate crude oil, which expires at Tuesday’s settlement, rose 17 cents, or 0.4%, to $47.54 a barrel on the New York Mercantile Exchange, after slumping 2.4% on Monday. The October contract advanced 24 cents, or 0.5%, to $47.77 a barrel. October Brent rose 29 cents, or 0.5%, to $51.95 a barrel on the ICE Futures Europe exchange, attempting to recoup part of its 2% slump on Monday. That weakness came amid a lack of major news from a meeting between members of the Organization of the Petroleum Exporting Countries and non-cartel producers about compliance with the output-cut agreement. Media reports said, however, that sources close to OPEC said compliance with the agreed production targets has fallen to 94% in July, compared with 98% in June. “OPEC punted at their technical meeting and put off a decision to extend [the output-cut agreement] until their November meeting,” said Phil Flynn, senior market analyst at Price Futures Group.Kuwait’s oil minister Essam al-Marzouq said on Kuwait TV Monday that OPEC will discuss whether to end or extend the production-cap deal at a meeting in November, according to media reports.“With the expiration of the September WTI futures contracts later Tuesday, prices climbed, but traded below the session’s highs as traders “look to the heart of the shoulder season when gasoline demand dips and refineries go into maintenance,” said Flynn.  But the weekly drop in the U.S. oil-rig count reported Friday, as well as news that BHP Billiton is getting out of the U.S. shale business is “raising questions about the level of U.S. oil production going forward,” he said. “The oil market most likely will have to prepare for another big drop in U.S. crude supply that will come after the September contract is history.”

 Oil prices climb as traders eye another U.S. crude drawdown | Reuters - Oil inched up on Tuesday, lifted by expectations of another crude stockpile drawdown in the United States but price gains were limited amid the reopening of Libya's largest oil field. Prices, however, pared gains in post settlement trade and Brent crude turned negative as the market was disappointed by industry data from the American Petroleum Institute showing a crude stockpile decline largely in line with expectations and a surprise build in gasoline inventories. [API/S] U.S. crude inventories were expected to have fallen 3.5 million barrels last week, the eighth straight weekly drawdown, and gasoline to have drawn down by over 600,000 barrels, a Reuters poll showed, ahead of weekly data. Official government inventory data for last week will be released on Wednesday at 10:30 a.m. EDT (1430 GMT). Brent crude settled 21 cents, or 0.4 percent, higher at $51.87 a barrel. Book-squaring ahead of the U.S. crude September contract's expiry on Tuesday added to price gains, traders and brokers said. U.S. crude futures for September delivery closed 27 cents, or 0.6 percent, higher at $47.64 while the more active October contract ended the session up 30 cents at $47.83. U.S. gasoline futures RBc1 also led the complex higher for most of the session and settled up 0.4 percent at $1.5908 a gallon as forecasts for heavy rain associated with the remnants of former tropical storm Harvey threatened to cause refinery flooding, traders said. A tropical depression is expected to form over the southwestern Gulf of Mexico on Wednesday or Thursday. "Traders of crude oil and gasoline will also have particular interest in the remnants of Tropical Storm Harvey expected to strengthen to Category 1 hurricane status as it crosses the Gulf of Mexico toward a possible Friday landfall on the Texas Coast," Tim Evans, Citi Futures' energy futures specialist, said in a note. "While not a major storm, this will at least serve as a drill for refiners along the coast, in our view." 

WTI Drops After 3rd Weekly Build In Gasoline Inventories -- Amid Libya headlines and contract rollover, WTI prices were wild heading into the inventory data tonight. Following two weeks of surprising builds in Gasoline inventories, API reports a surprise 3rd weekly build in gasoline inventories, and crude drawing only modestly (in line with expectations). The initial reaction was a kneejerk lower, breaking down the day's wedge. API:

  • Crude -3.595mm (-3.5mm exp)
  • Cushing -462k (+300k exp)
  • Gasoline +1.402mm (-1mm exp)
  • Distillates +2.048mm

Last week confirmed the concerns about building gasoline (even though crude saw a draw) and API shows a 3rd week of builds (and crude's draw was just in line) and Distillates also saw the biggest build since July. Price action was chaotic today heading into the API data and immediately kneejerked lower (breaking down from the wedge)... “If we are going to get into a new era of instability with Libyan oil production, if it becomes a wild card again, that’s definitely supportive for prices,” Phil Flynn, senior market analyst at Price Futures Group, told Bloomberg, adding, with reference to today's price action, there’s “a little bit of expiration madness. There’s a lot of positioning before the September expiration."

Oil tallies a gain as U.S. crude supplies drop for eighth week - An eighth consecutive weekly decline in U.S. crude supplies lifted oil prices Wednesday, but domestic production continued its climb to levels not seen since July 2015—setting a limit on crude’s price strength. October West Texas Intermediate crude CLV7, -2.00% tacked on 58 cents, or 1.2%, to settle at $48.41 a barrel on the New York Mercantile Exchange. October Brent crude LCOV7, -1.07%  rose 70 cents, or 1.4%, to $52.57 a barrel on the ICE Futures Europe exchange.The gains came after the U.S. Energy Information Administration Wednesday reported that domestic crude supplies fell by 3.3 million barrels for the week ended Aug. 18, following declines in each of the last seven weeks. That’s just below the forecast for a decline of 3.7 million barrels by analysts surveyed by S&P Global Platts.   The American Petroleum Institute had reported late Tuesday a fall of 3.6 million barrels, according to sources. “Although in line with consensus, oil inventories have fallen for an eighth consecutive week, now down 30 million barrels year on year, and down 70 million barrels from the peak in late March,” said Matt Smith, director of commodity research at ClipperData. “Refinery runs continue to be strong, up nearly 800,000 [barrels a day] year on year, while a larger draw would have been seen had it not been for strong waterborne imports.”  The report also showed that total domestic crude production edged up last week by 26,000 barrels a day to 9.528 million barrels a day, holding at levels not seen since the week ended July 17, 2015.

WTI Algos Uncertain After Gasoline Inventories Draw But Crude Production Surges --WTI crude prices managed to scramble back up to pre-API-tumble levels ahead of DOE's data dump this morning with all eyes on gasoline inventories, which did not disappoint showing a small draw (in line with expectations) along with crude's draw which was roughly in line with API and expectations. Production continues to rise to highest since July 2015. DOE:

  • Crude -3.33mm (-3.5mm exp)
  • Cushing -503k (+300k exp)
  • Gasoline -1.22mm (-1.25mm exp)
  • Distillates +28k

Builds in products (gasoline and distillates) according to API is weighing on markets (and a big shift from last week's massive crude draw), but DOE data showed a draw for gasoline (in line with expectations) and a draw for crude (in line with expectations)  Total Crude Oil Inventories dropped to the lowest since Jan 2016... But as is very clear, remains dramatically over-stocked relative to pre-2015 norms...

US EIA says Midwest ULSD stockpiles dip to lowest point of the year - US Midwest diesel stockpiles fell by 610,000 barrels week on week, hitting their lowest point of the year , Energy Information Administration data showed Wednesday. There were 30.183 million barrels of ULSD stockpiled in the US Midwest in the week that ended August 18, according to the latest EIA data. That is the lowest stockpiles have been since the week ending December 30, when they were 30.06 million. The low stocks have coincided with strong Midwest diesel prices. S&P Global Platts assessed Chicago ULSD at the NYMEX September ULSD futures contract plus 2.75 cents/gal Tuesday, its second-highest point since October 7. Group 3's X grade was assessed at plus 1.80 cents/gal, which did not deviate much from the following week but is well above an average differential of about plus 70 cents/gal in July.Nationally, stockpiles fell 534,000 barrels to 130.85 million barrels. The Midwest saw the biggest drain, the Gulf Coast fell by 365,000 barrels and the Atlantic Coast added 565,000 barrels. Additionally, US ULSD imports fell by 24,000 b/d to 37,000 b/d. That is the fewest ULSD imports the US has taken since 30,000 b/d for the week ending Oct 14.

Natural-gas prices hold on to earlier gains as rise in U.S. supply comes in a bit smaller than expected - Data from the U.S. Energy Information Administration on Thursday showed that domestic supplies of natural gas rose by 43 billion cubic feet for the week ended Aug. 18. On average, analysts were looking for a build of 46 billion cubic feet, according to a survey of analysts conducted by S&P Global Platts. Total stocks now stand at 3.125 trillion cubic feet, down 223 billion cubic feet from a year ago, but 45 billion cubic feet above the five-year average, the government said. Prices for natural gas also got a boost from forecasts that Tropical Storm Harvey in the Gulf of Mexico may become a hurricane by Friday, which could significantly disrupt energy operations in the region. September natural gas rose 4.3 cents, or 1.4%, from Wednesday's settlement to $2.971 per million British thermal units. It traded at $2.967 before the data.

Oil falls as Hurricane Harvey sparks fear that storm damage could sap demand --Oil prices ended sharply lower Thursday as pressure from the risk of weaker energy demand in the wake of a potential Category 3 hurricane in the Gulf of Mexico outweighed the typical price boost associated with the prospect of production disruptions in the region.Prices also declined as investors remained cautious as to whether the glut in oil supplies was finally disappearing, as U.S. production has continued its climb to more than two-year highs. Natural-gas prices, meanwhile, notched only a modest gain as Hurricane Harvey prompted the shut ins of some oil and natural-gas facilities in the Gulf of Mexico.  On the New York Mercantile Exchange, October West Texas Intermediate crude CLV7, +0.65% fell 98 cents, or 2%, to settle at $47.43 a barrel—the lowest finish in a week. October Brent crude lost 53 cents, or 1%, to $52.04 a barrel on London’s ICE Futures exchange, within the $4 range traded since late July.   “Refineries in the path of the storm will have to be shuttered, reducing crude demand, and reducing gasoline supply.” The risk of tighter inventories lifted gasoline futures prices to their highest finish of this month so far. September gasoline jumped 4.5 cents, or 2.8%, to $1.664 a gallon. September heating oil, however, settled at $1.621 a gallon, down less than half a cent. The hurricane has already hurt energy operations in the region. About 9.6% of Gulf of Mexico production, or 167.231 barrels of oil per day have been shut in, while less than half a percent, or 1.135 million cubic feet a day shut in, as of late Thursday morning central time, according to the Bureau of Safety and Environmental Enforcement.

 $20 Oil? Forget OPEC, China Controls Oil Prices -- U.S. shale has taken a lot of headline space recently as the biggest headwind for oil prices and the highest stumbling block for OPEC’s efforts to prop them up by cutting production. Yet, there may be another factor that could bring down oil prices as soon as next year...  China has been building a strategic crude oil reserve for the last decade, but the size of that reserve remains undisclosed, with analysts making estimates based on China-bound cargoes and satellite imaging.  Last year, a Silicone Valley tech company, Orbital Insight, suggested that China may have stored as much as 600 million barrels of crude by May. This was the highest reserve estimate at the time. Since then, the reserve has in all likelihood grown, possibly exceeding the U.S. SPR, which stood at 678.9 million barrels as of August 18th this year.  This year, Chinese crude imports have run at record-breaking rates, with the average daily on par with what the U.S. imports, at about 8 million barrels, the Financial Times notes in an analysis. A lot of these, however, are going into storage tanks, analysts believe, and they warn that soon the tanks may fill up, wreaking havoc on prices and--more notably--on OPEC.   What is most alarming is this: If the rate of imports slows down from the current 1-million-bpd, prices are bound to take a hit. The chance of the growth rate falling is quite big – last month imports slumped to the lowest since the start of the year, at 8.16 million bpd. Now let’s remember that OPEC and Russia have agreed to pump less until March 2018. Nobody knows what will happen after that, and while some experts are calling for the cartel and its partners to continue producing less for a longer period of time, it’s doubtful if everyone would be on board with this idea. In fact, we may well see taps being turned on again. It may be time to start considering the possibility of $20 oil again.

Oil industry evacuates, ceases production as Harvey approaches -- Oil companies continued to cease offshore operations and evacuate personnel on Thursday in preparation for Tropical Storm Harvey becoming a full-blown hurricane. The tropical storm is expected to intensify into an category 3 hurricane by Friday morning, as it heads directly for the Texas and Louisiana Gulf Coast. If it reaches hurricane strength, Harvey would be the first hurricane to hit Texas in nearly a decade.  Oil firms Exxon Mobil, Shell, and Anadarko had begun shutting down their offshore operations Wednesday evening. An Exxon spokeswoman told the Washington Examinerthat it continued to close its offshore and coastal operations through Thursday afternoon, while refineries on land continued normal operations. "Exxon Mobil is closely monitoring Tropical Storm Harvey, and continues preparation for severe weather at its offshore and coastal operations in the Gulf of Mexico," said spokeswoman Suann Guthrie."We are in the process of evacuating all personnel from our facilities expected to be in the path of the storm, which includes the Hoover platform and Galveston 209 platform," she explained.The Hoover platform was built to be the world's deepest offshore drilling platform at 4,800 feet and is named for the Hoover field that it extracts roughly 100,000 barrels a day of oil, along with equivalent amounts of natural gas.Both the Hoover and Galveston 209 platforms are "shut in" in anticipation of the storm, said Guthrie. "Our Hadrian South subsea production system in the Gulf of Mexico is also shut in. Refineries are currently operating as normal."Shell and Anadarko also shut in their offshore platform facilities. Anadarko said late Thursday afternoon that it has completed evacuation of all its facilities in the western Gulf, and stands ready to do the same in the eastern portion if the storm intensifies.

OilPrice Intelligence Report: Hurricane Harvey Causes Gasoline Price Spike - Energy prices are on their way up as a major hurricane is set to hit the U.S. within hours. Hurricane Harvey, at the time of this writing, is forecast to become a high Category 3 hurricane, the strongest hurricane to hit the U.S. since at least 2008, and perhaps since 2005. The storm is heading directly for the coast of Texas between Houston and Corpus Christi, where many oil refineries are located. “It is becoming pretty clear this morning that Harvey will be mentioned alongside Katrina and Sandy in the history books,” Todd Crawford, chief meteorologist at The Weather Company, told Bloomberg.. The Gulf Coast is home to 45 percent of the U.S.’ refining capacity, and nearly 20 percent of the nation’s oil production. Corpus Christi is also a major port for oil and refined products coming in and out of the country. Gasoline prices spiked more than 4 percent to their highest levels in weeks as roughly 1 million barrels of refining capacity was shut down over the past 24 hours. But crude oil prices did not receive the same attention – only a few offshore platforms were affected, and the expected outage of refineries actually means demand for crude will dip as downstream operations pause. Up to 35 inches of rain are expected, brining life threatening winds, floods and storm surge. Royal Dutch Shell, ExxonMobil and Anadarko Petroleum  evacuated their employees from the area. As of now, government data suggests that 10 percent of the Gulf’s oil production – about 167,000 bpd – along with 14 percent of its natural gas production will be curtailed.   According to Politico, the U.S. oil and gas industry is growing a little concerned that the Trump administration is giving them too much. The deregulatory push at the EPA and Department of Interior have handed the industry huge wins, but some are concerned that it could set the stage for some sort of accident – and oil spill or methane explosion – from an individual company that would result in serious damage to the entire industry. At worst, the regulatory apparatus could swing back in the other direction, especially under a new administration. Companies like ExxonMobil and BP , for example, see only minor costs to complying with methane emissions rules, which are targeted for rollbacks by the Trump administration. It’s a rare case of an industry cautioning the government not to grant them too many favors.

Baker Hughes data show U.S. oil-rig count down a second week in a row - Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil fell by 4 to 759 rigs this week. The total active U.S. rig count, which includes oil and natural-gas rigs, also declined by 6 to 940, according to Baker Hughes. Oil prices showed little reaction, with October West Texas Intermediate crude up 23 cents, or 0.5%, from Thursday at $47.65 a barrel on the New York Mercantile Exchange. It was nearly flat from levels seen before the data, when prices posted modest gains as traders weighed the potential supply and demand impact of Hurricane Harvey in the Gulf of Mexico.

Oil Prices Rise Amid Falling U.S. Rig Count - The number of active oil and gas rigs in the United States fell this week by 6 rigs. Combined, the total oil and gas rig count in the US now stands at 940 rigs, up 451 rigs from the year prior, with the number of oil rigs in the United States decreasing by 4 and the number of gas rigs decreasing by 2.Oil rigs in the United States now number 759—353 rigs above this time last year.Canada lost 6 oil rigs again this week, with the number of gas rigs increasing by 9—bringing Canada’s total to 217 oil and gas rigs—71 above the year ago levels.Prices rose on Friday as Hurricane Harvey draws nearer to the Gulf Coast, with futures hitting a four-month high. At 7:51am EDT Friday, WTI was trading up 0.74 percent at US$47.78 and Brent was trading up 0.81 percent at US$52.46.The rise in price was also thanks to the Energy Information Administration’s Wednesday report that the United States’ crude oil inventory had fallen by 3.3 million barrels. Gasoline inventories fell as well, by 1.2 million barrels, according to the EIA.Barrel prices for WTI were trading about 70 cents over last week’s levels, as prices just can’t seem to sustain any significant increase despite the weekly inventory draws reported by the EIA, reports of Saudi Arabia’s significantly restricted crude oil exports, or OPEC promises that compliance to the production cuts will improve or that further cuts are still on the table. The rise in the number of active rigs in the United States continues to slow, with the 5-week average gain for US oil rig count staying in negative territory for the second week in a row. Despite the falling average weekly gain in active US oil rigs, US crude oil production continues to increase, with average production averaging 9.528 million barrels per day for the week ending August 18, up from 9.502 million bpd the week prior.

Saudi plane for Qatari pilgrims waits on Doha for landing rights: airline (Reuters) - Saudi Arabia's state carrier said on Sunday it had been unable to send planes to transport Qatari pilgrims to the kingdom because it had been unable to get permission to land at Doha airport amid a diplomatic dispute between the two countries. Qatar and Saudi Arabia, along with three other Arab states, have been locked in a political row which severed transport ties to Doha in June, but Riyadh said last week it would facilitate the travel of Qataris for the annual haj pilgrimage. Between 2 million and 3 million Muslims travel to Mecca each year for the pilgrimage - which every able-bodied Muslim has a duty to undertake at least once in their lifetime. Along with reopening its land border with Qatar, Saudi Arabia said on Wednesday that King Salman had ordered the dispatch of a Saudi Arabia Airlines plane to fly Qatari pilgrims to Jeddah at his own expense so that they could go on to Mecca, Islam's holiest city. However, the first flight has not been able to take off from Saudi Arabia because it had not yet received landing permission in Doha, said Saleh al-Jasser, the general director of the airline, according to Saudi state news agency SPA. He said the airline had applied for landing permission several days ago. An official from Qatar's Civil Aviation Authority (CAA) denied claims made by media outlets in the blockading nations that Qatar had refused to allow Saudi Airlines to fly Qatari pilgrims. "The CAA received a request from Saudi Airlines in which they asked to carry Qatari pilgrims, and replied by explaining that they should coordinate with the Ministry of Islamic Affairs through the Qatari Hajj Delegation regarding this issue, in accordance with the procedures followed in the past, so that the CAA can take the necessary measures in this regard,"

Despite Sanctions, Qatar Outpaces Saudi Arabia In Economic Growth - Despite the torrent of reports attesting to the non-impact of the Saudi Arabia-led diplomatic boycott of Doha, new estimates by Bloomberg’s economic survey predict that 2017 will be Qatar’s slowest year of GDP growth since 1995.  A previous study in June forecasted 3.1 percent and 3.2 percent growth for this year and next, respectively. New figures reduce those numbers to 2.5 percent for 2017 and 3.2 percent for 2018. The deficit figures jump to 5.1 percent for the current period, compared to previous estimates at 4.6 percent.The current feud between Gulf monarchies began on June 5th, when Saudi Arabia expressed its indignation at an insubordinate Qatar.Energy interests, most notably Doha’s shared custody of the South Pars gas field – the largest of its kind – prevent Qatar from cutting relations with Shiite Iran, the Sunni Saudi government’s main rival in the Middle East.“Even before the diplomatic crisis with regional powers, it looked like Qatar’s non-energy economy would slow,” William Jackson, of Capital Economics told World Oil. “The early signs are that the sanctions dealt a damaging blow to Qatar’s economy in June. The impact appears to be temporary, but it will still result in weaker growth." To be clear, Qatari exports of natural gas have not been affected by the diplomatic row. The biggest casualty has been GCC-funded projects, namely food-processing and port facilities, that now face an uncertain future. “The illegal actions of our neighbors have been the catalyst for us to accelerate our economic plans and renew our commitment to diversification and sustained growth,” said Sheikh Tamim bih Hamid at Thani. “We fully expect to see a strong return of the Qatari economy this year and growth over the years to come.”

Qatar’s Plucky Plan to Outlast the Saudi Embargo -  Qatar’s 37-year-old emir, Sheikh Tamim Bin Hamad Al Thani, has survived his frenemies’ initial siege and is riding a surge in domestic nationalism as Qataris dig in for a long standoff. Panic buying in grocery stores, driven by whispered fears of a coup or invasion, made headlines early on. Neither materialized, giving Sheikh Tamim time to cement friendships in the West with big-ticket purchases of U.S. military jets, Italian naval ships, and the contract of Brazilian superstar Neymar, the world’s most expensive soccer player, which was acquired on Aug. 2 by the Qatari-owned club Paris Saint-Germain. Qatar even flirted with buying a stake inAmerican Airlines Inc. Top diplomats from Europe and the U.S. have paraded through Doha to reassure Sheikh Tamim, who controls the world’s third-largest reserves of natural gas. Turkey and Iran have stepped in to replenish Qatari warehouses with construction supplies and restock store shelves with parsley, milk, and other popular goods, foiling the embargo imposed by Saudi Arabia and its partners, Bahrain, Egypt, and the United Arab Emirates. In early July, Qatar signed a new counterterrorism pact with the U.S., belying the Saudi bloc’s accusations of extremism and undermining President Trump’s initial support for the blockaders.

In Historic Move, Qatar Restores Diplomatic Relations With Iran -- Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the tiny gas and oil rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. However, on Thursday it unveiled a stunning geopolitical realignment when it announced the restoration of diplomatic relations with Iran in a move that is arguably its greatest act of defiance yet. The Qatari foreign ministry announced early Thursday that "the state of Qatar expressed its aspiration to strengthen bilateral relations with the Islamic Republic of Iran in all fields" and reportedly informed Iran by phone of plans to return the Qatari ambassador to Tehran for the first time since it broke relations in 2016. The move is significant because the chief accusation leveled against Qatar by its former GCC allies, especially Saudi Arabia, is of growing too close to Iran while sponsoring and funding terrorism. For the Sunni gulf states "funding terrorism" is more often a euphemism meaning links to Iran and Shia movements in the gulf. Ironically, there is ample evidence demonstrating that both sides of the current gulf schism have in truth funded terror groups like al-Qaeda and ISIS, especially in Syria. But Qatar's announcement sends an audacious and daring message essentially signalling that the country remains unbowed by Saudi pressure, and that the severe economic sanctions designed to bring Qatar to its knees may result in a geopolitical backfiring and new regional order as Iran stands to benefit.

The Russian-Saudi rapprochement and Iran - A number of developments in recent months have signalled a possible rapprochement between Russia and Saudi Arabia. The two countries have made a joint effort to push for further cutting of oil production to help bring up prices. Since the beginning of this year, Russian Minister of Energy Alexander Novak and his Saudi counterpart Khalid al-Falih have been seeking to conclude an agreement on reducing output. In late May, then Deputy Crown Prince Mohammad bin Salman went to Russia to discuss with President Vladimir Putin the oil market and the situation in Syria. The visit came just three weeks before Crown Prince Mohammed bin Nayef was removed and bin Salman took his position. While in Moscow, the latter said that "relations between Saudi Arabia and Russia are going through one of their best moments ever". Two months later, Moscow and Riyadh signed a preliminary military cooperation agreement worth $3.5bn. The Saudis have requested transfer of technology to accompany the signing of the deal. In recent months, the two countries have also made significant progress on Syria. Under the patronage of Riyadh, Egypt provided a platform for negotiations between Moscow and the Syrian opposition. The importance of this step for the Kremlin is obvious. Russia is extremely interested in concluding an agreement on de-escalation zones, the implementation of which is not possible exclusively within the framework of the tripartite initiative of Russia, Iran and Turkey, without the involvement of other actors. From this perspective, the role Saudi Arabia played in the signing of the two Cairo agreements between Russia and the Syrian opposition on East Ghouta and Rastan is very important. 

Saudi-led airstrikes kill up to 14 civilians, including children – witnesses  -- Airstrikes, apparently conducted by the Saudi-led coalition in Yemen, have killed up to 14 civilians, including six children, witnesses on the ground report.  The attack targeted the Faj Attan area on the southern outskirts of Sanaa and also reduced two buildings to rubble, Reuters cites local sources as saying. The bodies of several children, who appear to be as young as 10, have been recovered by rescuers, the agency said. According to AP, eyewitnesses say that at least 14 civilians were killed in the early morning airstrikes, and the death toll is expected to rise as rescuers pull more victims from the rubble.  The news comes two days after a Saudi bombing killed dozens of people, most of them civilians, in a Sanaa hotel reportedly located next to a rebel checkpoint.The Wednesday attack was condemned by the Office of the UN High Commissioner for Human Rights, w hich said the Saudi-led coalition was responsible for protecting civilians in Yemen.“We remind all parties to the conflict, including the Coalition, of their duty to ensure full respect for international humanitarian law,” spokeswoman Liz Throssell said. “It is not clear at this point what investigations there have been and what they have led to.”  The UN reportedly plans to blacklist Saudi Arabia as a nation involved in violation of children’s rights for the high death toll its campaign takes on the minors in Yemen.

‘It’s a Slow Death’: The World’s Worst Humanitarian Crisis - After two and a half years of war, little is functioning in Yemen. Repeated bombings have crippled bridges, hospitals and factories. Many doctors and civil servants have gone unpaid for more than a year. Malnutrition and poor sanitation have made the Middle Eastern country vulnerable to diseases that most of the world has confined to the history books. In just three months, cholera has killed nearly 2,000 people and infected more than a half million, one of the world’s largest outbreaks in the past 50 years. “It’s a slow death,” said Yakoub al-Jayefi, a Yemeni soldier who has not collected a salary in eight months, and whose 6-year-old daughter, Shaima, was being treated for malnutrition at a clinic in the Yemeni capital, Sana. Since the family’s savings ran out, they had lived mostly off milk and yogurt from neighbors. But that was not enough to keep his daughter healthy, and her skin went pale as she grew thin.Like more than half of Yemenis, the family did not have immediate access to a working medical center, so Mr. Jayefi borrowed money from friends and relatives to take his daughter to the capital.“We’re just waiting for doom or for a breakthrough from heaven,” he said. How did a country in a region with such great wealth fall so far and so fast into crisis?

Lebanese Army Finds ISIS Anti-Aircraft Missile Cache: Could Passenger Jets Be Hit? --  The Islamic State has long been rumored as in possession of surface-to-air missiles, and now it appears a US ally is providing ground level confirmation of what might be a worst case nightmare scenario come true. The Lebanese Army has recently been engaged in a fierce campaign to root out ISIS terrorists from the Arsal border pocket - a northeast region of Lebanon bordering Syria which has seen fighting rage since 2014. As we previously reported, the operation is receiving some level of assistance from US special forces advisers as well as coordination from Hezbollah, while at the same time the Syrian Army is attacking from the Syrian side of the border in the Qalaman mountains.On Monday, Reuters issued the following report based on official statements of the Lebanese Army:Lebanon's army found anti-aircraft missiles among with a cache of weapons in an area abandoned by Islamic State militants, it said on Monday. The arms cache also included mortars, medium and heavy machine guns, assault rifles, grenades, anti-tank weapons, anti-personnel mines, improvised explosive devices and ammunition.Not only did Lebanon's army - which is working under the advisement of the Pentagon for the operation - confirm ISIS possession of anti-aircraft missiles, but last week it reported to have uncovered a similarly stocked Nusra (al-Qaeda in Syria) cache as well. According to the same Reuters report:A Hezbollah offensive last month forced militants from the Nusra Front group, formerly al Qaeda's official Syrian branch, to quit an adjacent enclave on the border for a rebel-held part of Syria. On Friday, the Lebanese army said it had discovered surface-to-air missiles in a weapons cache left by the Nusra militants in an area captured by Hezbollah and then taken over by the army.

US imposes new sanctions on North Korean oil, coal trade -- The Trump administration on Tuesday announced new sanctions in response to North Korean nuclear and ballistic missile tests, including penalties aimed at shutting down coal and oil flows into and out of North Korea. The Department of the Treasury's Office of Foreign Assets Control designated 16 companies and individuals accused of supporting North Korea's nuclear and missile programs and participating in North Korean energy trades. "Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system," Treasury Secretary Steven Mnuchin said in a statement. The sanctions come amid increasing global pressure to isolate North Korea, including a embargo on oil flows into the country. In Seoul Tuesday, a US congressional delegation, including Senators Ed Markey, Massachusetts-Democrat, and Chris Van Hollen, Maryland-Democrat, called for a ban on energy exports from China and Russia to North Korea, according to a report from NK News. "North Korea's trading partners must intensify and enact pressure to bring North Korea to the negotiating table: that starts with getting China to cut off the flow of oil to North Korea," Markey said, according to the report. China, North Korea's top oil supplier, does not report oil shipments to the country, but exports have declined dramatically since the end of the Cold War. North Korea's oil consumption averaged 76,000 b/d in 1991 and had fallen to 15,000 b/d in 2016, according to an Energy Information Administration report. 

 An Unexpected Problem Emerges: Chinese Banks Exhaust 80% Of Loan Quotas In First Half Of 2017 --When we discussed the latest monthly Chinese credit data reported by the PBOC, we pointed out something which to most pundits was broadly seen as success by the Politburo in its deleveraging efforts: for the first time in 9 months, debt within China's shadow banking system - defined as the sum of Trust Loans, Entrusted Loans and Undiscounted Bank Loans- contracted. These three key components combined, resulted in a 64BN yuan drain in credit from China's economy, the first negative print since October 2016, and rightfully seen by analysts as evidence that Beijing’s campaign to contain shadow banking and quash risks to the financial system, is starting to bear fruit. Offsetting this unexpected decline in shadow bank credit (if not Total Social Financing) was a greater than expected increase in traditional yuan bank loans. As we observed last Tuesday, both corporate loans and household loans increased greater than last year; new corporate loans advanced to CNY354bn from a decline of CNY3bn a year ago, with long-term corporate loans contributing CNY433bn (a year ago: CNY151bn) and short-term loans adding CNY63bn (a year ago: CNY-201bn). New household loans registered CNY562bn, compared with CNY458bn a year ago.

China’s Debt Swaps Surpass $100 Billion -- Almost a year after China rolled out steps to rein in soaring corporate leverage, concerns are rising that undeserving companies are benefiting while households are getting saddled with risks. China unveiled guidelines for debt-to-equity swaps in October, part of measures to trim the world’s biggest corporate debt loads. The idea was that healthy firms would use the program to cut interest-bearing borrowings, while bloated companies would be shunned. But it hasn’t always worked out that way, even as the total value of swaps reached 776 billion yuan ($116.3 billion) in the second quarter when volumes jumped to a record, according to Natixis SA. While China’s State Council said in October that zombie firms may not take part, 55 percent of the swaps last quarter were in the coal and steel industries, which are plagued by overcapacity, Natixis says. The stakes are high for lenders and even individual investors, some of whom buy wealth management products repackaged from the swaps. The absence of a clear definition of “zombie” is part of the problem, according to Fitch Ratings. Views vary on whether further guidelines on the program released this month by the banking regulator will help address these issues. The program is attracting bad companies because they see debt-to-equity swaps as a way to get a bailout, said Chi Lo, Greater China senior economist at BNP Paribas Asset Management. “You can imagine the zombie companies will be just like cancer cells that eat into the system.” 

Beyond the pale: China’s cheerful racists -- Setting off to spend a year teaching English in Zhejiang province in south-eastern China, I expected plenty of surprises. But what struck me most was something they tend not to tell you about in the guidebooks: the racism.  It started when I went around the classroom, asking pupils which city they were from. When I got to a slightly darker-skinned boy, his classmates thought it was hilarious to shout ‘Africa!’ It’s a theme. A girl with a similar complexion was taunted with monkey sounds; her peers refused to sit next to her, saying she smelt bad. I apparently erred when, teaching the word for wife, I showed my students a picture of Michelle Obama. The image of the then First Lady was greeted with exaggerated sounds of repulsion: ‘So ugly!’ they said. ‘So black!’  Such comments would have been treated harshly in a British classroom a quarter-century ago, let alone today. But my own protestations were met with confused faces — crestfallen that they’d disappointed their teacher, but clueless as to the nature of their mistake. And this stretches far beyond the classroom. To many Chinese, ideas about racial hierarchies are not outdated anathema but unquestioned belief. The Chinese don’t make a big deal about their racism: it’s so commonplace it can seem almost cheerful. An advert for a detergent shows a black man chatting up a Chinese woman, only for her to shove him in the washing machine until he emerges a fair-skinned Asian. The advert aired for months before it was picked up by an English-language website and caused uproar. The company, Qiaobi, apologised — to its non-customers. Its analogy of black skin and dirty laundry made perfect sense to the Chinese.

Navy Destroyer USS John S. McCain Collides With Merchant Ship -- A widespread search operation was underway Monday for 10 American sailors missing after their guided-missile destroyer collided with a larger oil tanker off Singapore. The USS John S. McCain is the second Navy ship in three months involved in a collision with a merchant ship from another country. It suffered "significant damage" to the hull after it was hit by the Alnic MC, a 30,000-ton chemical and oil tanker sailing under the Libyan flag, the Navy said in a statement.   Ten sailors were missing and five were injured following the collision, which happened at 5:24 a.m. Singapore time (5:24 p.m. ET Sunday), according to the Navy's latest update issued around nine-and-a-half hours later. A Navy spokesman told NBC News it was being treated as an accident. Singapore is leading search and rescue operations, providing four ships from its navy and coast guard as well as three tugboats from the Maritime and Port Authority of Singapore, its government said in a statement.  Also involved in the effort are helicopters and Ospreys from the amphibious assault ship USS America, the U.S. Navy added.

Asia shipping mishaps cause concern over sea safety; search expands -  Two shipping collisions near the Singapore Strait in less than a week have caused serious concerns and brought into renewed focus the need for seamless movement of cargo traffic worth billions of dollars annually in the region, market participants said on Wednesday. Separately, Southeast Asia is already grappling with piracy and terrorism in the Sulu Celebes Sea region, and when it showed some signs of ebbing, recent traffic accidents brought a different additional concern to the forefront -- safety at sea. "These are one-off accidents but they do point towards the need to be extra cautious," said a tankers broker in Singapore. Any oil spill or major collision can delay vessel traffic and result in additional demurrage costs for charterers or even in a force majeure, another broker said. In 2015, a large oil spill occurred in the Singaporean waters when the Libyan-registered Aframax oil tanker Alyarmouk collided with the Supramax dry bulk carrier Sinar Kapuas, resulting in the spillage of almost 33,000 barrels from a cargo belonging to Hong Kong-listed Strong Petrochemical Group. Singapore is located along one of the world's busiest waterways, with close to 1,000 ships anchored there at any given time. A ship calls at Singapore port every two or three minutes -- a total of around 130,000 ships a year -- making accident-free maritime passage in the region critical. On Monday, the US guided-missile destroyer USS John S McCain collided with the Liberian-flagged tanker Alnic MC in Singapore's territorial waters. But there was no oil spill from the collision and the maritime traffic was not affected. Last week, a product tanker, the Chemroad Mega, and a bulk carrier, the Sinica Graeca, collided around 3.2 nautical miles northeast of Tompok Utara near Pengerang in Johor, Malaysia, causing an oil spill the scale of which is being assessed even as a clean-up is on. The ships were detained and owners were asked to furnish a bond worth Malaysian ringgit 5 million, pending completion of the clean-up work.

Chief Of Naval Operations "Looking Into" Possibility Ships Were Hacked -- Tragedy struck the USS John S. McCain on Monday, when the destroyer collided with a merchant ship off the coast of Singapore, leaving 10 sailors missing and five injured. The US Navy is still struggling to find all of the remains of the missing sailors, and has ordered an operational pause for all naval fleets around the world as investigators try to figure out exactly why this terrible accident occurred. Among the possible causes that are being looked into, one has a raised a few eyebrows. Over the summer there have been two accidental collisions involving the 7th fleet, and a total of 4 similar incidents this year. This has led some Navy officials to suspectthat a cyber attack may have been responsible for the crash, as well as other recent Naval accidents.The Navy has not ruled out an intentional action behind the latest deadly collision between a Navy destroyer and a merchant ship, the chief of naval operations told reporters Monday.“That’s is certainly something we are giving full consideration to but we have no indication that that’s the case—yet,” Adm. John Richardson, the CNO, said at the Pentagon.“But we’re looking at every possibility, so we’re not leaving anything to chance,” he said.Asked if that includes the possibility the electronic defenses on the guided missile destroyer USS John S. McCain were hacked in a cyber attack, Richardson said investigators will look into all possible causes.“We’ll take a look at all of that, as we did with the Fitzgerald,” the four-star admiral said, referring to another Navy warship collision with a merchant ship in June near Japan.

Impact of Trump's Afghan Strategy on Pakistan -- What is US President Donald Trump's new Afghan strategy? What are its key elements? More troops? No deadlines? Partnership with India? More pressure on Pakistan? Is it really "new" or just a rehash of earlier Bush and Obama era strategies? How will Pakistan respond to pressure? Has similar or greater pressure worked in the past? Is it likely to work this time? Does Trump administration have more or less leverage with Pakistan than Bush and Obama administrations?  What are Pakistan's legitimate security interests in Afghanistan? Why does Pakistan believe India is using the Afghan soil to launch attacks in Pakistan? What is the way forward in Afghanistan? Can the US military defeat the Afghan Taliban?What about the emergence of ISIS in Afghanistan? Do Iran and Russia need to be involved in addition to India and Pakistan to stabilize Afghanistan? What will a regional solution look like?Viewpoint From Overseas host Misbah Azam discusses these questions with special guest United We Reach Chairperson Sabahat Rafiq and regular panelist Riaz Haq (www.riazhaq.com) https://www.youtube.com/watch?v=5PAU-88asQU&t=339s

The U.S. Spy Hub in the Heart of Australia -- A short drive south of Alice Springs, the second largest population center in Australia’s Northern Territory, there is a high-security compound, code-named “RAINFALL.” The remote base, in the heart of the country’s barren outback, is one of the most important covert surveillance sites in the eastern hemisphere. Hundreds of Australian and American employees come and go every day from Joint Defence Facility Pine Gap, as the base is formally known. The official “cover story,” as outlined in a secret U.S. intelligence document, is to “support the national security of both the U.S. and Australia. The [facility] contributes to verifying arms control and disarmament agreements and monitoring military developments.” But, at best, that is an economical version of the truth. Pine Gap has a far broader mission — and more powerful capabilities — than the Australian or American governments have ever publicly acknowledged. An investigation, published Saturday by the Australian Broadcasting Corporation in collaboration with The Intercept, punctures the wall of secrecy surrounding Pine Gap, revealing for the first time a wide range of details about its function. The base is an important ground station from which U.S. spy satellites are controlled and communications are monitored across several continents, according to classified documents obtained by The Intercept from the National Security Agency whistleblower Edward Snowden.Together with the NSA’s Menwith Hill base in England, Pine Gap has in recent years been used as a command post for two missions. The first, named M7600, involved at least two spy satellites and was said in a secret 2005 document to provide “continuous coverage of the majority of the Eurasian landmass and Africa.” This initiative was later upgraded as part of a second mission, named M8300, which involved “a four satellite constellation” and covered the former Soviet Union, China, South Asia, East Asia, the Middle East, Eastern Europe, and territories in the Atlantic Ocean.

Mugabe Says Zimbabwe "Will Not Prosecute Killers Of White Farmers" -- 93-year-old Zimbabwe President Robert Mugabe made it clear in an address this week thatpeople who murdered white farmers during a government-sanctioned purge in the 2000s will never be prosecuted. In 2000, Zimbabwe implemented a controversial land reform program that saw squatters invade and seize hundreds of white-owned farms around the country. As Newsweek details, the violent seizures resulted in the murder of several white farmers, with many more displaced, and close associates of Mugabe given large chunks of land. And now, speaking at a rally in Harare, Mugabe confirmed this massacre will go unpunished, according to Zimbabwean news site NewsDay. “Yes, we have those who were killed when they resisted. We will never prosecute those who killed them. I ask, why should we arrest them?” And just in case you thought - well that was 2000, it's 2017 now and everything's changed - it hasn't!!  The president has also spoken out against white residents of Zimbabwe owning land.“We say no to whites owning our land, and they should go,” Mugabe told supporters in 2014.  “They can own companies and apartments...but not the soil.”

Emerging economies await end to ECB largesse with record euro debt (Reuters) - Emerging economies' debt in euros has shot to record highs thanks to European Central Bank largesse, and yet an approaching end to this generosity won't necessarily inflict the kind of pain that markets once suffered at the hands of the U.S. Fed. The ECB's intention to start winding up its 60 billion-euro (55 billion pounds) a month stimulus programme for the euro zone economy has revived bad memories of when the Federal Reserve tried to signal something similar in 2013. That led to the 'taper tantrum' when investors took fright at the prospect that the ultra-cheap dollar funding they had grown used to would taper away. While the ECB will doubtless proceed cautiously with its own tapering process, the risk is that it could derail an emerging market (EM) rally. UBS strategist Manik Narain, however, argues that withdrawing quantitative easing (QE) in the euro zone won't hurt so much as the dollar process. "ECB tapering will have an impact but it's definitely the lesser of the two evils," he said. While governments, companies and consumers in emerging economies have binged on cheap euro borrowing for the past 2-1/2 years, the total remains modest compared with their dollar debts, Narain pointed out. No central bank is finding it easy to withdraw policies that helped to keep Western economies afloat after the global financial crisis. Investors are awaiting word from ECB President Mario Draghi, who will speak at a central bankers' meeting in the United States this week, on how he proposes to engineer a gradual end to the era of mass bond buying and negative interest rates. The important thing is to avoid a repeat of the taper tantrum of four years ago. This wiped half a trillion dollars off MSCI's emerging equity index .MSCIEF in three months, raised countries' borrowing costs by an average 1 percentage point .JPMEGDR and pushed some emerging currencies down by as much as 20 percent against the dollar.

Large-scale Russian military exercises in Belarus feared to be set-up for Putin’s next conquest - There are growing concerns large-scale war games planned next month by Russia with its neighbor Belarus could be a cover for something very sinister by Vladimir Putin — perhaps another Crimea. There is alarm in Europe that the Russian president could use the military exercises as a sort of Trojan horse or pretext for an annexation of Belarus, a former Soviet republic. Putin has had an increasingly acrimonious relationship with Belarusian President Alexander Lukashenko, particularly since Russia annexed the Ukrainian territory of Crimea. "Russia is billing it as modest exercises under 13,000 troops, but everything points to probably the largest military exercise in post-Soviet history," said Leon Aron, resident scholar and the director of Russian studies at the American Enterprise Institute, a Washington think tank. According to Aron, these types of exercises preceded Russia's invasion and later conflict with Georgia, a former Soviet republic that before the war was getting closer to Washington. Similarly, Russia used military exercises as a cover for its assault on the former Soviet republic of Ukraine. Russia insists its quadrennial Zapad (or Russian for west) joint military drills scheduled Sept. 14-20 will include 12,700 troops and are designed to "test military coordination." However, the New York Times reported last month the entire exercise could involve up to 100,000 people when also including "security personnel and civilian officials." "We urge Russia to share information regarding its exercises and operations in NATO's vicinity to clearly convey its intentions and minimize any misunderstandings," Pentagon spokesman Johnny Michael told CNBC.- 

Sweden is raising its military budget and reintroducing the draft amid Russia fears -  (Reuters) - Sweden's center-left minority government said on Wednesday it had agreed with two opposition parties to boost military spending in the 2018 budget as the country faces increased tension with Russia in the Baltics. Sweden's armed forces will get around 2 billion crowns ($250 million) extra in the 2018 budget and around 6 billion crowns during the 2018-2020 period in the deal between the Social Democrat and Green party coalition and the opposition Moderate and Centre parties, Swedish Radio reported. Sweden's military has said it needs the money to rebuild its strength after years of under investment and greater demands on its operational capabilities. The armed forces called for 9 billion crowns in extra spending during 2017-2020 period. The budget for 2018 - an election year - will be presented on Sept. 20. Sweden has reintroduced conscription and restored troops to the strategically key Baltic island of Gotland as it looks to bolster its defenses. It has also been drawing closer to NATO, although the government has ruled out becoming a member of the alliance.

Greece Hit By Sudden Surge In Refugees - Did Erdogan Break EU-Turkey Immigration Deal? -- As tensions soar between Ankara and Berlin, following Germany's angry response to Erdogan's call for those of Turkish descent to vote against Merkel, a coincidentally huge wave of refugees has suddenly started appearing on Greek coasts, making some wonder if Erdogan has broken his EU-Immigration deal. The last six days have seen over 1,200 refugees and migrants arrive Greece from Turkey. Source: Greek Migration MinistryIn addition, 84 new arrivals were recorded on the islands of Lesvos and Samos, on Wednesday. As KeepTalkingGreece.com reports,  two people assigned to operate the boat engines were arrested.A FRONTEX vessel rescued 48 refugees off the small island of Ro in the south-eastern Aegean.2,400 people arrived in Greece August 1-20, 2017. Half of them arrived within just the last days.Local authorities observe the incising number of arrivals with “keen concern” to see whether the phenomenon is temporary linked to the good weather conditions or if there is a more general trend. They already warn that the situation on the islands is slowly getting out of control. More than 14,000 people are trapped on the Greek islands that have hosting capacity for 5,576 people. Total numbers on the islands: 14,221

  • in hotspots: 8,179
  • in unofficial hotspots: 3,449

Reports from the island of Chios underline that a lot of refugees and migrants live outside the hotspots, spread across land plots without tents or any other facilities. Little kids are seen to walk around without shoes and sleep in carton boxes,”PolitisChios.gr reports from the area around unofficial hotspot of VI.AL.

Migrant crisis: Facebook publishes torture used to extort ransom --People smugglers and slave trading gangs are using Facebook to broadcast the abuse and torture of migrants to extort ransom money from their families.Footage that has remained on the social media site for months shows Libyan gangmasters threatening the lives of migrants who have fled their homelands, often in the hope of reaching Europe.The United Nations migration agency condemned the technology giant and publisher as irresponsible for allowing it to be used by smugglers “to advertise their services, entice vulnerable people on the move and then exploit them and their families”. The disclosure is part of a series of reports by The Times on the migrant crisis affecting hundreds of thousands of people on either side of the Mediterranean. Today the exploitation of migrants by mafia gangs in southern Italy, and dangerous efforts by an underfunded Libyan police force to take on heavily armed traffickers, are revealed.Harrowing footage shared on Facebook showed emaciated and injured migrants, mostly Somalis and Ethiopians, huddled in a concrete cellar describing the abuse they have suffered and pleading for their lives. The International Organisation for Migration (IOM) said that clips of the video had been sent to the captives’ relatives using the encrypted messaging service WhatsApp, along with demands that they pay between $8,000 and $10,000 or face their loved one being killed. The video showed a young Somali man lying face down on the floor with a heavy concrete block on his back. “I was asked for $8,000,” he said. “They broke my teeth. They broke my hand. I have been here for 11 months. They put this stone on me for the last three days. It’s agony.” “It is irresponsible for tech companies like Facebook to ignore this issue,” Mohammed Abdiker, IOM’s director of operations and emergencies, said. “It’s hard to believe that the tech giants cannot put some real effort into stopping these smugglers from using their platforms for racketeering.”

"The Perfect Storm Is Brewing": Goldman Warns Italy Has The Lowest Capacity To Absorb Migrants -- While Europe's economy and capital markets have been spared any major shocks in the past year, and in fact European GDP has been on a surprisingly resilient uptrend in recent quarters led higher by the relentless German export-growth dynamo (courtesy of the very, very low Deutsche Mark and a lot of broke Greeks), an old and recurring problem has re-emerged, one which threatens the stability and cohesion of the European Union itself: the latest surge of refugees which, arriving mostly from North Africa in recent months, has made Italy its primary landfall target resulting in a surge in migrant arrivals on Italian shores. However, with the rest of Europe largely shutting its borders to this refugee influx forcing Rome to deal with what many in Italy see as an unwelcome presence, a distinct sense of bad-will has been floating around Europe in recent months as Rome's pleas for more solidarity from its European peers have been stubbornly ignored. Meanwhile, Italy has accepted nearly 100,000 refugees in the first six months of the year and the number is rapidly rising.

 Italy’s economy could soar with a parallel currency -  It is hard to find any words to describe Italy’s experiment with merging its currency with Germany, France and the rest of the eurozone other than “dismal failure.” Since it adopted the euro, Italy’s average annual growth rate has been zero, according to calculations by the Bruegel Institute. You read that correctly. Absolutely nothing, over almost two decades. By comparison, Spain has managed 1.08%, France 0.84% and Germany 1.25%. Italy’s unemployment rate is a crippling 11%, the highest of Europe’s three biggest economies, and youth unemployment is a scary 35%. The national debt has climbed to a giddy 133% of gross domestic product, not because the government is especially extravagant, but because that’s what happens in a zero-growth economy. Its banking system is close to collapse, and poverty rates are soaring. It would be hard to find a more damning record. Sure, Italy’s economy is looking slightly better this year. Growth has ticked up towards 1% this year, and the stock market has jumped on the prospect. But a single percentage point after years of recession, and with the help of more than €2 trillion of printed money from the European Central Bank, is hardly anything to celebrate. The long term outlook remains grim. In the background, Italy is starting to have a fascinating debate, not about exiting the euro, but about introducing a parallel currency alongside it. Its main proponent is former Prime Minister Silvio Berlusconi, who, despite almost as many setbacks as Donald Trump, keeps bouncing back. In an interview with Libero Quotidiano, he argued for a parallel currency to run alongside the euro, which, in his view, would be entirely consistent with the existing EU and eurozone treaties. Companies and consumers, and of course the government, could then choose which currency they wanted to do business in. 

Norway Government Forces Sovereign Wealth Fund To Buy $100 Billion More In Stocks "To Safeguard The Country's Riches" --- As we reported late last year, the Norwegian government ordered its Sovereign Wealth Fund to increase its equity allocation to 70% to try and paper over what’s expected to be a 70 billion kroner ($11.1 billion) drawdown – the first in the fund’s history. That money was needed to plug a budget hole created by falling oil prices, and it seems the brilliant minds at the Norwegian Ministry of Finance and the Norges Bank figured they could easily recoup the fund's losses by upping its risk exposure. Indeed, they’ve already raised the fund’s expected average annual real return to 2.5 percent over 10 years and to 3.5 percent over 30 years, compared with 2.1 percent and 2.6 percent previously. Eight months later, the MoF is still planning to make the shift, which would result in it buying about $100 billion in global stocks, though prices have risen considerably in the interim. Despite the fund’s rush to raise its 10-year earnings forecast, fund officials said worries about a near-term market slump played “little part” in their investing plans," according to Bloomberg.“Norway’s $970 billion wealth fund has been ordered to raise its stock holdings to 70 percent from 60 percent in an effort to boost returns and safeguard the country’s oil riches for future generations. Any short-term view on growing risks will play little part, according to Trond Grande, the fund’s deputy chief executive.‘We don’t have any views on whether the market is priced high or low, whether bonds and stocks are expensive or cheap,’ he said in an interview after presenting second-quarter returns in Oslo on Tuesday. The decision to add stocks ‘was made at a strategic level, on a long-term expected excess return that we’re willing to take risk to achieve. And parliament has said that they wish to spend some time to phase in that increase.’”According to data cited by Bloomberg, the fund held 65.1 percent in stocks, 32.4 percent in bonds and 2.5 percent in properties during the second quarter. Its mandate is now to keep about 70 percent in stocks, 30 percent in bonds, with about 7 percent in real estate that’s now separate from the main portfolio.

 Quiet Epidemic of Suicide Claims France’s Farmers — Jean-Pierre Le Guelvout once kept 66 cows at a thriving estate in southern Brittany. But falling milk prices, accumulating debts, depression and worries about his health in middle age became too much to bear.  Just 46, Mr. Le Guelvout shot himself in the heart in a grove behind his house one cold December day last year. “It was a place that he loved, near the fields that he loved,” explained his sister Marie, who said she was “very close” to him but did not see his suicide coming.  The death of Ms. Le Guelvout’s brother was part of a quiet epidemic of suicide among French farmers with which stoical rural families, the authorities, public health officials and researchers are trying to grapple.Farmers are particularly at risk, they all say, because of the nature of their work, which can be isolating, financially precarious and physically demanding. For farmers who do not have children to help with the work and eventually take over, the burden is that much greater. Falling prices for milk and meat have also added to debts and stress in recent years.

France’s Macron, seeking to re-shape Europe, heads east  (Reuters) - While Britain toils over its messy divorce with the European Union, France's president Emmanuel Macron is embarking on a drive to deepen the economic integration of a bloc he says needs to be more protective of its citizens. The French leader will go this week on a three-day tour of central and eastern Europe, where he will seek backers for his push to tighten labor rules over 'posted' workers, a sensitive issue that has exacerbated an east-west rift. Days later, euro zone reforms, defense cooperation and immigration will be in focus when Macron hosts the leaders of Germany, Spain and Italy for talks, as he tries to enhance France's leadership in Europe. Paris has long complained that central and eastern Europe gains an unfair advantage from the "social dumping" of cheap labor, arguing the posting of low-paid workers hurts local jobs and erodes labor protections in higher-wage member states. Although posted workers make up less than 1 percent of the EU workforce, with many employed in the haulage and construction sectors, the issue has deepened a divide between the poor east and rich west. Macron will visit Romania, Bulgaria and Austria, where he will also meet the leaders of the Czech Republic and Slovakia, but is skipping Hungary and Poland, whose right-wing governments he has accused of spurning the bloc's values. An Elysee Palace source said Macron was visiting countries who were "the most attached to their European anchoring". A senior French diplomat said the president was deliberately snubbing Poland and Hungary "to send a message to Warsaw and Budapest". Macron's election win has re-energized the EU's Franco-German axis but in central and eastern Europe it has fanned fears of a "multi-speed" Europe that could mean reduced influence, financial support and economic competitiveness. 

Schaeuble nods on Macron’s calls for ESM reform - The German Finance Minister Wolfgang Schaeuble is drafting a plan that would allow states of the Eurozone’s southern periphery to tap into European Stability Mechanism (ESM) funds to invest in times of crisis, the Bild tabloid reports. The Greek press hailed the news as a signal of investment. But, the German government was nodding to Paris, not Athens. The notion of countercyclical investment during recessions is a policy turning point for Germany. More vehemently than anyone else, Schaeuble has opposed any form of fiscal transfers within the monetary union for the best part of the decade. However, Emmanuel Macron is moving towards the opposite trajectory, noting that the political consolidation of the Eurozone is a precondition for its continued existence. And Germany’s priority is, once again, the Franco-German axis.During the French electoral campaign in May, Macron’s chief economic advisor Jean Pisani-Ferry told the newspaper Die Zeit that Germany’s idea that “others” want its money has clouded its view on the need for Eurozone integration. The man who drafted Emmanuel Macron’s electoral platform said that “more Europe” means an independent budget and a finance minister for the Eurozone, public investment, a banking union, and new crisis management instruments. The first institutional tool he envisaged towards that end was the conversion of the European Stability Mechanism (ESM) into a monetary fund modeled after the IMF. Germany is the biggest contributor of ESM funds. But, taking this step to meet France half way may be the least politically costly step. The notion of a common budget and a banking union entail a degree of debt mutualisation, which Germany has fiercely resisted. In May, Pisani-Ferry said that the time for such changes would be “after the elections in Germany in September, at the latest.” 

Dutch government demands €13m in negative interest from Deutsche Bank - DutchNews.nl: The Dutch government has launched a claim against Deutsche Bank for €13 million that it says is owed as a result of negative interest rates. The German bank holds cash deposits with the Dutch state to underwrite derivative contracts. Usually the government pays interest on the deposits, but because the interest rate has dropped below zero finance minister Jeroen Dijsselbloem says the government is due a payment from the bank. ‘All other counterparties with the Dutch state are paying negative interest on the collateral that is held in cash,’ Dijsselbloem wrote in a letter to parliament. The case will have to be heard in the English courts because the contract with Deutsche Bank was drawn up under English law.

Last-minute regs may compound balance-sheet woes of European banks - Last-minute revisions to European securitization regulation are raising concerns about the ability of banks to unload over €1 trillion (about $1.17 trillion) of bad loans — considered a crucial step in boosting lending and jump-starting the region’s flagging economy.The latest draft, released in July, unexpectedly bans the securitization of mortgages where borrowers certify their own income, rather than providing documentation to the underwriter. These kinds of loans have been banned in the U.K. since 2010. But they are currently used as collateral in a number of securitizations, including some that have been making timely payments for a considerable amount of time. The rules would make such deals difficult to refinance. Self-certified mortgages are on the books of a “wide range” of EU institutions that either originated them or “have subsequently acquired these portfolios as part of the general trend of bank deleveraging that has occurred over the last few years,” the law firm Clifford Chance says.Adobe Stock They would also make it difficult for banks in other EU countries such as Italy, Ireland and the Netherlands to move forward with plans to unload portfolios of nonperforming loans. These portfolios are typically sold to private investors who depend on securitization for funding.

ECB chief Draghi: QE has made economies more resilient - BBC News: European Central Bank President Mario Draghi has said unconventional policies like quantitative easing (QE) have been a success both sides of the Atlantic. QE was introduced as an emergency measure during the financial crisis to pump money directly into the financial system and keep banks lending. A decade later, the stimulus policies are still in place, but he said they have "made the world more resilient". But he also said gaps in understanding these relatively new tools remain. As the economic recovery in the eurozone gathers pace, investors are watching closely for when the ECB will ease back further on its 60bn euro (£55bn) a month bond-buying programme. Central bankers, including Mr Draghi, are meeting in Jackson Hole, Wyoming, later this week, where they are expected to discuss how to wind back QE without hurting the economy. On Monday, a former UK Treasury official likened the stimulus to "heroin" because it has been so difficult to wean the UK, US and eurozone economies off it. In a speech in Lindau, Germany on Wednesday, Mr Draghi defended QE and the ECB's policy of forward guidance on interest rates."A large body of empirical research has substantiated the success of these policies in supporting the economy and inflation, both in the euro area and in the United States," he said.The ECB buying relatively safe assets such as government bonds means that banks can lend more and improve access to credit for riskier borrowers, Mr Draghi said. He added: "Policy actions undertaken in the last 10 years in monetary policy and in regulation and supervision have made the world more resilient. But we should continue preparing for new challenges."

Hong Kong Property Investors Go Trophy Hunting in London Despite Brexit - Chinese investment in London commercial property has more than trebled since before Britain voted to leave the European Union, most of it channeled through Hong Kong at a time of heightened political uncertainty in the former British colony. While others have pulled back from British property following last year's Brexit referendum, investors largely from Hong Kong are snapping up the British capital's best-known skyscrapers including the "Cheesegrater" and "Walkie Talkie". In the first six months of 2017 Chinese investors spent 3.96 billion pounds ($5.10 billion) on London commercial property according to data from the CBRE real estate group, the highest amount on record and outpacing the 2.69 billion pounds spent in the whole of 2016. Hong Kong accounted for 92 percent of the Chinese investment, according to the Knight Frank agency. Hong Kong food conglomerate Lee Kum Kee is set to pay 1.28 billion pounds later this month for 20 Fenchurch Street - the 34 story skyscraper known as the Walkie Talkie - a record for an office building in Britain. With Beijing cracking down on foreign deals by mainland companies, investors there are instead using Hong Kong as a conduit for overseas deals. China's state planner announced on Friday that the country will strengthen rules to defuse risks for domestic companies investing abroad and curb "irrational" overseas investment. However, Hong Kong-based investors are more significant players. 

Brexit Bulletin: Timetable Clash - Just a week to go before Brexit talks resume and already the U.K. and European Union are at odds again over how soon they can start crafting a trade deal. Adopting a provocative posture, Prime Minister Theresa May’s government is, in its own words, “stepping up pressure” on the EU to move on from discussing the terms of separation as soon as October. The use of fighting words in the past has not budged Brussels and will not go down well now given that EU officials blame the U.K. for slow progress and a lack of clarity. Before agreeing to talk trade, the EU wants “sufficient progress” to be made addressing citizens’ rights, the Irish border and the Brexit bill. Both sides had initially aimed for that milestone to be met in October. But Slovenian Prime Minister Miro Cerar told The Guardian that “the process will definitely take more time than we expected.” “There are so many difficult topics on the table, difficult issues there, that one cannot expect all those issues will be solved according to the schedule made in the first place,” Cerar said. “What is important now is that the three basic issues are solved in reasonable time.” Furthermore, Brexit Secretary David Davis revived a spat over whether the divorce and trade discussions should happen in parallel. The U.K. will try to speed up the process this week by publishing five position papers on topics ranging from data protection to resolving post-Brexit disputes. Investors may also be growing worried that the talks are proving sticky, increasing the risk that the U.K. leaves the EU in March 2019 without a deal. The pound was the worst performing Group of 10 currency last week. 

UK to release tranche of Brexit position papers (Reuters) - Britain will issue a cluster of new papers this week to outline its strategy positions in divorce talks with the European Union, ranging from regulation of goods to data protection, the UK's Brexit department said on Sunday. Prime Minister Theresa May's government wants to push discussions with the EU beyond a focus on settling divorce arrangements to its future relationship with the bloc to bring clarity to anxious businesses, citizens and investors. Last week, Britain issued proposals for a future customs agreement with the EU and a solution for Northern Ireland to avoid a return of border posts with the Republic of Ireland which might inflame tensions. Britain's Brexit department said on Sunday it would issue two formal position papers this week along with a batch of proposals for discussions on future relations ahead of the next round of negotiations scheduled for later this month. "In the coming days we will demonstrate our thinking even further, with five new papers - all part of our work to drive the talks forward, and make sure we can show beyond doubt that we have made sufficient progress on withdrawal issues by October so that we can move on to discuss our future relationship," Britain's Brexit minister David Davis said in a statement. 

 UK Trying to Renegotiate Shape of the Brexit Table, Which Will Effectively Shut Down Talks -- Yves Smith - UK readers may recall on the very first official Brexit talks session, the UK’s chief negotiator David Davis did not comport himself very well. More important, the British side effectively capitulated on virtually all points regarding the sequencing of issues. That isn’t surprising, since we and others had pointed out that the already impossibly tight timetable, made worse by Theresa May losing time with her snap election stunt, in combination with the fact that a disorderly Brexit would be catastrophic for the UK but merely painful for the EU gave the EU tremendous negotiating leverage. Moreover, the EU had been clear and consistent on its main issues, such as “The exit tab is one of the very first issues we need to settle” and “No trade talks until we’ve sorted out exit details.” The EU was actually generous by their standards by relenting a tad on the latter issue by now being willing to discuss future trade arrangement when the major departure issues have been largely resolved.The UK now appears to be trying to undermine the order of battle that was previously agreed. This is a disaster on multiple levels.First, it means the two sides will engage in arm-wrestling over what gets negotiated first. The term of art is “negotiating the shape of the table” which is a precursor to discussing substance. More fighting over that means even less time to resolve an already overwhelming list of very complex and contentious issues.Second, it reeks of bad faith negotiating. The British already are virtually f riendless on the Continent thanks to treating EU institutions with open contempt for decades and conveying the attitude that the English are racially superior to Europeans. Building an atmosphere of trust between negotiators as individuals, even if their principals are far apart, is critical for negotiations to succeed, and even more so if both sides need to be flexible and creative. At a minimum, that’s been acknowledged to be required for sorting out the Irish border issue, which in and of itself could be a dealbreaker.

EU ‘increasingly doubtful’ Brexit talks will move to phase 2 in October - Top EU officials are “increasingly doubtful” that Brexit talks will move on to their second phase of discussing trade in October, according to three senior diplomats briefed ahead of next week’s round of negotiations.  The skepticism from the EU side emerged at a key all-day meeting in Brussels Thursday. At the meeting, diplomats from the 27 remaining EU member countries were briefed on the bloc’s position by a senior member of chief negotiator Michel Barnier’s team. “It is clearly worrying that we have major differences on core issues such as direct effect [the application of EU law in the U.K.], the ECJ [the role of the European Court of Justice] and financial obligations [the so-called Brexit bill],” said a senior diplomat who attended the meeting. Asked about the content of the briefing, they said: “With very little time to land all this, even if U.K. moves [on key EU demands] ‘sufficient progress’ in October appears to be increasingly doubtful.” October is key because that’s when EU leaders will decide at a European Council summit whether “sufficient progress” has been made in the talks on three separation issues — the Brexit bill, the rights of EU citizens in Britain post-Brexit (and vice versa) and the Northern Irish border.On Monday, Barnier underlined the importance of moving forward on the three issues next week. “Essential to make progress on citizens rights, settling accounts and Ireland,” he tweeted. Andrew Duff, a former British MEP who has been following the talks closely, agreed that it “looks unlikely” there will be a breakthrough by October. “There could be a surprise from the British Treasury — that they will explain their methodology to calculate the [Brexit] bill — but I don’t see that happening.” “The British need to be shaken a bit and the only way to force reality in London is for the Commission and the Council to be strict and to apply the criteria that have been agreed,” he said. “It is clear that so far the British have failed to be sufficiently precise and sufficiently constructive on the three separation issues.”

Brexit: Money and other disputes dog EU-UK talks - BBC News: Before the Brexit talks and politicians' soundbites come the off-the-record briefings. So, after more work to map out the UK's exit from the EU, how will the third round of talks go? Not well, say both sides, cautioning against any big breakthroughs at the session starting on Monday. EU officials speak of a "big gap", unlikely to be closed any time soon. The UK predicts highly technical talks, with progress coming in later sessions. The British want to broaden the discussion to include a possible post-Brexit relationship, while the EU's chief negotiator Michel Barnier wants the focus to remain on his priority issues: citizens' rights, the UK's financial obligations and the Irish border. On the first, EU officials insist that the European Court of Justice is the only way to protect and enforce the rights of EU citizens living in the UK after Brexit. The British say no other country would accept a foreign court having such a role. There could be progress on less controversial elements, such as social security and the recognition of professional qualifications.The UK accuses Mr Barnier of "massively over-egging" his demands for money. That view is shared in private by at least one other member state. A British legal analysis of the so-called Brexit bill will be on the table at the talks, along with a discussion about the UK's share in the European Investment Bank. The EU has welcomed the UK's acceptance that it has financial obligations - but wants details of what the UK is, and is not, willing to pay for. 

Brexit remains an exercise in deception -   I talked last week about how the Leave campaign involved lies at its centre. Not the occasional exaggerations of the Remain campaign, but claiming things that were the opposite of the truth. Like there will be more money for the NHS, when in fact there will be less. That particular lie probably swung the result, according to the man who organised the Leave campaign.Labour people tell me that public opinion on Brexit will turn once these lies become apparent, and at that point Labour can safely take up the Remain cause. What this overlooks is that the managing of information characterised by the Brexit campaign continues. The Tory tabloids continue to distort the truth, and the Telegraph acts in a very similar fashion. The UK government appears more interested in saying stuff to please its UK audience than actually negotiating with the EU, and its studies of the impact of Brexit remain secret [1]. Meanwhile the opposition give no hint of the costs that Brexit will involve, and by design or conflicted confusion are just a tiny bit less pro-Brexit than the government. The broadcast media, and particularly the BBC, appear hopeless at questioning the facade that both main parties and supporting think tanks have erected. I have never heard a politician pulled up for saying we must retain access to the Single Market: all countries have access to that market! (This is the kind of journalism we should be seeing.) Individual MPs are intimidated into silence by the power of the Tory tabloids.

Tariffs, trade and money illusion - Frances Coppola - In the past few days, I have read three pieces from Economists for Brexit - now renamed "Economists for Free Trade" - extolling the virtues of "hard" (or "clean" Brexit) and calling for the UK to drop all external tariffs to zero unilaterally after Brexit. Two are written by professors of finance (Kent Matthews and Kevin Dowd). The third is from the veteran economist Patrick Minford.All three of these pieces wax lyrical about the benefits to GDP and welfare from unilaterally reducing external tariffs to zero. But bizarrely, not one gives adequate consideration to the currency effects of trade adjustment and the likely monetary policy response. Minford's brief discussion contains a schoolboy error (of which more shortly). The other two never mention it at all.In today's free-floating currency regime, trade shifts and currency movements are intimately linked. Indeed, for some countries, trade shifts are driven more by capital flows and associated currency valuation changes than they are by trade policy. So I am at a loss to understand how anyone can seriously discuss trade policy without considering currency effects and monetary policy. Especially professors of finance, who really should know better. First, let's consider how trade policy changes affect currency exchange rates. Recently, there was much discussion of a "border adjustment tax" by policymakers in the USA. The idea was that imposing a tax of, say, 20% on all imports to the USA would discourage businesses and consumers from buying imports, thus encouraging domestic US businesses at the expense of foreign exporters to the US. Additionally, US exporters would be exempt from import taxes, thus encouraging exports. The combination of the tax on imports with exemption from the tax from exports is the reason why this is called a "border adjustment tax". It is similar to a VAT, except that VAT is typically also imposed on domestic production.

The BBC should never have bigged up a ridiculous study saying a hard Brexit would be good for the UK economy -- This week, the BBC website “splashed” with the news that a group known as Economists for Free Trade had done some work suggesting that the UK economy could be £135bn larger if we forced through a hard Brexit. The next day the report’s author Patrick Minford was invited on to the BBC’s flagship morning radio programme, Today, to talk about his findings. The programme did invite another economist on to contradict Minford’s views. But the non-specialist listener would have been left with the false impression that the economics profession was split on the issue, that the impact of Brexit is merely a matter of opinion. Leaving the EU’s single market might be good for trade, or it might be bad: the experts just can’t agree. He may not have released his methodology, but we can reliably guess how Minford generated his latest figures because he has in the past used a grossly unreliable economic model to show startlingly large gains from what has been termed “unilateral free trade” for the UK. The principal and catastrophic flaw in this model is that it assumes that distance is no barrier to the international trade in goods – when all the empirical evidence of decades is that distance matters enormously, as countries do more trade with those who are geographically closer to them. Another fatal error is the assumption that price, rather than quality, is all that matters to consumers.Numerous other reasons by other, more competent, trade economists have been identified as reasons to disbelieve Minford’s figures, not least the fact that his definition of hard Brexit, bizarrely, seems to assume closer regulatory harmonisation between Britain and the EU than exists at the moment within the single market.  Yet in a sense all of this is beside the point. Trade is one of the simpler aspects of economics for the lay-person to get their head around. But that does not make it simple. With the best will in the world, the typical listener will struggle to keep up with a debate in which terms such as “non-tariff barriers” and “gravity model relationships” are thrown around. The BBC has accepted that it is unfair to its audience to juxtapose climate change sceptics and deniers against climate change scientists given the overwhelming weight of evidence on one side (although the BBC Today programme recently slipped back into its bad old ways when it invited Nigel Lawson on). But when it comes to the economics of trade, the BBC is guilty of precisely this false balance, which betrays its mission to inform.

UK Bank IT Train Wreck Demonstrates Why Algos Can Be a Terrible Idea -Given the walk-on-water abilities attributed to technology nowadays, for anyone outside of IT in general – and financial services’ IT especially – the reports that a big bank has lost an estimated £180m ($200m+) on a failed IT project might be surprising. That is the main take-away from the profit warning issued on Tuesday by, in this example, UK sub-prime lender Provident Financial.According to the company’s Trading Statement Provident will run a £120m loss as opposed to a previously-stated estimate of a £60m profit. While some of that reversal of fortune could be attributed to higher loan loss provision and defaults which plague highly pro-cyclical lenders like Provident – as well as tighter wholesale credit market conditions – most of the loss would appear to be because of an IT project catastrophe.Even for battle-hardened IT industry stalwarts such as I, this one is particularly gruesome.For those outside of the profession (which makes snake oil salesmen look respectable and reputable) perhaps the best way to give some context and illustrate the scale of what has befallen the bank, HBO’s Game of Thrones fans (who are reasonably up to date with the show) will perhaps recall the recent episode where Daenerys Targaryen’s dragon obliterates the Lannister army? In the aftermath, the bedraggled stragglers who survived are shown wandering shell-shocked amongst the devastation. Well, that’s how Provident’s IT department are feeling right now. Having been through more failed IT projects than I care to recall, that’s pretty much what it’s like. It almost seems an act of cruelty to lay before readers the full extent of the IT disaster which has engulfed Provident. But given this is a subprime lender and a particularly unpleasant one at that – their “business model” involves calling door-to-door in some of the UK’s most deprived areas selling high interest loans to people in desperate situations – I’m more than happy to twist the knife here.