A Closer Look at the Fed’s Balance Sheet Accounting – NY Fed - An earlier post on how the Fed changes the size of its balance sheet prompted several questions from readers about the Federal Reserve’s accounting of asset purchases and the payment of principal by the Treasury on Treasury securities owned by the Fed. In this post, we provide a more detailed explanation of the accounting rules that govern these transactions.
Should the Federal Reserve Be Doing the Nation’s Work with a Skeleton Crew? -- Pam Martens - The Federal Reserve Board of Governors is supposed to have a roster of seven Governors. It currently has four. Equally alarming, it lists just two members serving on each of its eight committees. One Fed Board Governor, Lael Brainard, is listed as one of the two members on six of the eight committees, or 75 percent of all committees. Governor Jerome Powell sits on five of the eight committees, or 63 percent of all committees. The Fed’s Committee on Supervision and Regulation consists of just Powell and Brainard. And yet, this is what the Fed’s 2015 Annual Report describes as the institutions the Fed supervises:
- 4,922 Bank Holding Companies
- 442 Domestic Financial Holding Companies
- 470 Savings and Loan Holding Companies
- 839 State Member Banks
- 154 Foreign Banks Operating in the U.S.
- Along with other entities per the graph above.
There has long been the suspicion that the Fed has farmed out much of its work of supervising the largest and serially malfeasant Wall Street banks to the Federal Reserve Bank of New York. There has also long been the suspicion that the New York Fed has grown too cozy with the banks it oversees to do the job properly. (See related articles below.) The Trump administration appears intent on levitating the stock market by promising Wall Street more deregulation. The public must never forget that the Federal Reserve wore blinders and Congress sat on its hands as Wall Street spun out of control in a frenzy of speculative excess and corruption, leading to the greatest financial collapse from 2008 to 2010 since the Great Depression. Two-member committees at the Fed are a brazen affront to what this nation has been put through at the hands of Wall Street and its misguided regulators.
Should We Worry About Excess Reserves? – Minneapolis Fed - Banks in the United States currently hold $2.4 trillion in excess reserves: deposits by banks at the Federal Reserve over and above what they are legally required to hold to back their checkable deposits (and a small amount of other types of bank accounts). Before the 2008 financial crisis, this amount was essentially zero. To put this number in perspective, the monetary base of the United States (the sum of all currency outside the Federal Reserve System plus both required and excess reserve deposits by banks at the Fed) is $4 trillion. So, 60 percent of the entire monetary base is now in the form of excess reserves compared to roughly 0 percent precrisis. Many of our monetary theories, from those developed by Benjamin Franklin and David Ricardo to those of Milton Friedman and more recent theorists, contend that the amount of liquidity held by economic actors determines prices, or at least helps to. Currently, there is about $12 trillion of such liquidity in the United States, in terms of currency and easily accessed bank deposits held by firms and households (M2). While the correlation between changes in M2 and prices is not tight in the short run, comparisons across longer time periods and across countries are clearer and more convincing: Greater liquidity is associated with higher prices. What potentially matters about high excess reserves is that they provide a means by which decisions made by banks—not those made by the monetary authority, the Federal Reserve System—could increase inflation-inducing liquidity dramatically and quickly. Banks in the United States have the potential to increase liquidity suddenly and significantly—from $12 trillion to $36 trillion in currency and easily accessed deposits—and could thereby cause sudden inflation. This is possible because the nation’s fractional banking system allows banks to convert excess reserves held at the Federal Reserve into bank loans at about a 10-to-1 ratio. Banks might engage in such conversion if they believe other banks are about to do so, in a manner similar to a bank run that generates a self-fulfilling prophecy. Policymakers could guard against this inflationary p ossibility by the Fed selling financial assets it acquired during quantitative easing or by Congress significantly raising reserve requirements.
Albert Edwards: The same problems that caused the financial crisis are back : The savings rates in the US and the UK are dropping, and economists are trying to figure out what that means. When the US government released its annual revisions to economic growth last week, it made sharp downward revisions to the personal saving rate. Savings as a share of disposable income was 4.9% last year, not 5.7% as earlier calculated, the Bureau of Economic Analysis said. The update showed that incomes were less than previously reported, while consumption was higher. Albert Edwards, a Societe Generale strategist and permabear, published the doomsday interpretation of this data in a note on Thursday. For Edwards, it's the eve of the financial crisis all over again. "Every day more evidence mounts that almost exactly the same debt excesses that caused The Global Financial Crisis (GFC) in 2008, are present today," he said. Slumping savings rates in the US and the UK were last seen in 2007, "just before the bursting debt bubble blew the global economy and financial system to smithereens." Edwards assigned the blame to the Federal Reserve. Quantitative easing, which stoked demand for bonds and other debt assets, "has not only inflated corporate debt to grotesque levels, but finally the US savings rate has responded to the surge in household paper wealth that QE has produced," Edwards said. He continued: "Typically the SR always declines (shown as a rise in the chart below) with rising wealth. Why do you need to bother saving if interest rates are close to zero and house and stock prices are rising?"
Let’s Face It: Monetary Policy Is Failing - naked capitalism - Yves here. This post does a fine job of explaining, in a layperson-friendly manner, why one of the key tenets of mainstream economics, the loanable funds theory, is bunk. It’s nevertheless incorporated in models widely used by central bankers and Serious Economists like Paul Krugman. The post shows how it has failed in practice. But what is more revealing is it was shown to be incorrect long ago yet orthodox economists refuse to give it up. From an earlier post, which explains the conventional argument first and then why it is wrong: From [the Wall Street Journal’s Fed reporter Greg] Ip: When central banks ease the supply of credit, they rely on banks to transmit the benefits to the broader economy by making loans, handling trades and moving money between people, companies and countries. Shrinking, unprofitable banks hobble that transmission channel. This is the debunked “loanable funds” theory: that when money is on sale, businesses will go out and invest more. That theory was partially debunked by Keynes and dispatched by Kaldor, but zombie-like, still haunts the halls of central banks.Businessmen see the cost of money as a possible constraint on growth, not a spur to it. They decide to invest in expansion if they see an opportunity in their market. The big exception? Businesses where the cost of funding is one of the biggest costs. What businesses are like that? Financial speculation.And we’ve seen the failure of this tidy tale in the wake of the crisis. Providing super cheap money has not induced businessmen to run out and ramp up their operations. Instead, one of the biggest outcomes has been corporate financial speculation: issuing debt to buy back their own shares.Further reading from our archives:
- Martin Wolf Defends Central Banks’ Negative Interest Rate Policies
- Philip Pilkington: Keynes and Loanable Funds
- Philip Pilkington: Krugman Still Wrong on Monetary Theory (Loanable Funds Edition)
PCE Price Index: June Headline & Core - The BEA's Personal Income and Outlays report for June was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.02% month-over-month (MoM) and is up 1.42% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.11% MoM and 1.50% YoY. Core PCE remains below the Fed's 2% target rate. Major revisions were made going back three years. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.
The U.S. Is the Sick Man of the Developed World - Justin Fox - What do the economists at the International Monetary Fund see when they look at the U.S.? An economy in the midst of a long expansion ("its third longest expansion since 1850"), with "persistently strong" job growth, "subdued" inflation and something close to "full employment." But also this:For some time now there has been a general sense that household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy. This sense is generally borne out by economic data and when comparing the U.S. with other advanced economies.The IMF then goes on to compare the U.S. with 23 other advanced economies in the Organization for Economic Cooperation and Development in this chart: The overall point is that the U.S. has been losing ground relative to other OECD members in most measures of living standards. 1 And in the areas where the U.S. hasn't lost ground (poverty rates, high school graduation rates), it was at or near the bottom of the heap to begin with. The clear message is that the U.S. -- the richest nation on Earth, as is frequently proclaimed, although it's actually not the richest per capita -- is increasingly becoming the developed world's poor relation as far as the actual living standards of most of its population go. This analysis is contained in the staff report of the IMF's annual "consultation" with the U.S., which was published last week. Another IMF report released last week, an update to its World Economic Outlook that downgraded short-term growth forecasts for the U.S. and U.K., got a lot more attention. But the consultation report is more interesting. It is interesting not because the IMF economists have turned up shocking new information or have especially amazing ideas for improving the relative position of the U.S. It's just that as outsiders looking in (yes, outsiders who work in Washington, but still ...), they at least offer a different perspective than one hears every day on Capitol Hill.
2017's Dollar Collapse Is The Worst Start Since 1985 -- The USD is off to its worst start since 1985, down about 9%. In the chart below (courtesy of Bianco Research), it appears the USD is tracing its performance in 1985 quite closely. Of course, 1985 was the worst year for the USD in almost 40 years, so if we stay on the current path, expect the USD to drop another 10% from here. The weak USD is setting up a possibly profitable rotation out of US equities into longer dated US Treasuries. In the next chart, I take the total return of our KLSU DM Americas Index (top 85% of North American market cap) relative to the JP Morgan Government Bond 15+ Years Index. I overlay the USD, and as can be seen from the chart, the relative performance of stocks vs. bonds tracks the USD fairly closely. If the stock/bond ratio follows the USD back to its May 2016 lows, bonds could outperform stocks by about 35%. The likely mechanism is a plunge in real rates, or TIPS. In this next chart, I overlay 10-year TIPS on the USD (inverted). The last time the USD was around this level, 10-year TIPS yields were zero. Same idea with 30-year TIPS. Here I use 30-year TIPS and overlay on the USD. The last time the USD was at these levels, 30-year TIPS yielded about 70bps. Even if breakeven inflation remained unchanged, there appears to be 30-50bps of downside to real rates based on the weaker USD. For a 30-year bond, with a 20-year duration, 30bps of downside would equate to about a 6% return. If the USD falls back into the 80s, shorter dated TIPS yields could easily fall back into negative territory. This could be what gold is sniffing out. Either gold should be at $1,150 or 10-year TIPS should already be around 20bps. If gold breaks above the June 7, 2017 high at $1,291, TIPS should follow.
U.S. Treasury expects to borrow $96 billion in third-quarter, $501 billion in fourth-quarter (Reuters) - The U.S. Treasury said on Monday it expects to borrow $2 billion less during the third quarter than it previously estimated but radically boost the amount it needs in the final three months of the year. The Treasury Department said in a statement it expects to issue $96 billion through credit markets during the July-September period, assuming an end-September cash balance of $60 billion. It also expects to issue $501 billion in net marketable debt in the fourth quarter. That estimate "is a massive projected borrowing figure, the likes of which have not been seen since Q4 2008," investment bank Jefferies said in a note to clients. "We think that it reflects a combination of replenishing cash balances and bill supply after the debt ceiling constraints are lifted," Jefferies said, adding that the large increase could in part be due to the anticipation that the Federal Reserve will start shrinking its bond portfolio in September. U.S. Treasury Secretary Steven Mnuchin urged Congress last week to raise the federal debt limit before lawmakers started their August recess, to avoid higher interest costs to taxpayers and market uncertainty about a potential default. Republican leaders in Congress have begun having bipartisan discussions on the matter in the House of Representatives. The U.S. government has a statutory limit on how much money it can borrow to cover the budget deficit that results from Washington spending more than it collects in taxes. Only Congress can raise that limit. During the second quarter, Treasury borrowed $35 billion and ended the period with a cash balance of $181 billion. The Treasury previously estimated borrowing of $26 billion for the April-June period. It said the increase was driven primarily by lower receipts.
Treasury To Issue Half A Trillion Dollars In Debt In Q4 --In the first warning sign that the US Treasury is burning through more cash than previously expected, at 3pm today the Treasury Department announced that in its latest forecast of end-of-September cash balance it anticipated only $60 billion of cash on hand, nearly half the $115 billion it forecast in its previous report in May, according to the Department’s marketable borrowing estimates. The treasury also expects to borrow $96 billion in net marketable debt in the current quarter, down from $98 billion forecast previously.This drawdown in cash, and jump in government outlays, was to be expected following the latest Monthly Statement from the Treasury which showed a surge in government outlays, which hit a record high $429 billion in June, for reasons discussed previously. However, the second, and more troubling warning sign was that in its initial forecast of calendar Q4 marketable borrowing needs, the Treasury now expects a near record $501 billion in net marketable debt to be issued from October through December. This amount will be nearly equal to the actual marketable debt borrowed in the last 4 quarters, which amounts to $527 billion. The full sources and uses can be found here.
"The US Is Staring Down A Technical Default" - Here Are The Five Debt Ceiling Scenarios -- In a note released on Monday commenting on the looming US debt ceiling showdown and the growing threat of a government shutdown and technical default by the US, Compass Point analyst Isaac Boltansky said he is becoming increasingly concerned that fall deadlines for federal government funding and the debt ceiling will prove tougher than the market currently expects, resulting in "markets roiled heading into 4Q and Fed’s policy normalization trajectory facing complications." He adds that the increasingly fragmented legislative landscape may be set to "transition from inaction to dysfunction", citing such factors as:
- Lawmakers return in Sept. with no clear strategy
- GOP leaders will likely be forced to rely on sizable contingents of Democrats
- Current spending caps for FY2018 are "despised" by both Democrats, Republicans, but for wholly different reasons
- White House’s position remains unclear as Treasury Sec. Steven Mnuchin has repeatedly called for a clean debt ceiling increase, but over the weekend President Donald Trump and OMB Director Mick Mulvaney suggested putting legislative activity on hold until health care is addressed
As a result, Boltansky sees odds of govt shutdown as materially higher than the likelihood of reaching debt ceiling as core components of spending fight (including border wall funding) are "meaningfully more politically complicated" than raising debt ceiling; his base case is for the federal government to face a brief shutdown in early October. While that may be a little extreme, the reality is that with Congress critically fragmented, and with increasingly more politicians chosing to ignore anything that comes out of the mouth of the president, a happy ending is by no means assured and, as Boltansky suggests, "market event" may be necessary to spur Congress into action, similar to the passage of the TARP bill.For a more nuanced look we go to SocGen's Stephen Gallagher which lays out the debt ceiling events over the next 2 motnh, as well as the 5 scenarios on how the debt ceiling drama, 2017 edition, will play out:
House heads into August recess with uncertain path on budget | TheHill: The House has no budget and no specific plan for preventing a government shutdown or debt ceiling breach as it heads into its August recess. “September is going to be a very difficult month," said Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus on Friday morning. "I mean obviously all of this is coming into play right away, all the fiscal issues and deadlines are going to make it extremely difficult to get everything done in a piece-by-piece basis.” When the Republican-controlled House returns in September, it will have four weeks to figure out a spending plan for 2018, and little more to address the debt ceiling. The chamber made middling progress on its agenda during the summer session; it passed a budget resolution out of committee and approved four of twelve spending bills. But both budget and spending are stalled due to Republican infighting. On the budget resolution, which includes reconciliation instructions that will pave the way for Republican’s tax reform plan, disagreements persist on the depth of cuts to mandatory spending in areas such as welfare and education. “They’re still working on making sure they have the votes to get it passed, and that’s the goal right now,”
Rand Paul Blocks NDAA Over Indefinite Detention --Sen. Rand Paul (R – KY) has blocked a motion by majority leader Mitch McConnell (R – KY) to advance the 2018 National Defense Authorization Act (NDAA), the massive military spending bill, saying that the bill should instead face debate and possible amendments. This sets the bill back for 6 weeks, at least. In particular, Sen. Paul is seeking two amendments, one which ends NDAA authorization for indefinite detention of suspects, and another related to the Authorization for the Use of Military Force (AUMF), something that was added to the House version but later quietly removed by the Speaker.Paul’s protest is expected to delay the NDAA vote through at least the August recess, meaning a vote is unlikely until September. While this gives plenty of time for amendments to be debated, it’s not clear the Senate leadership will allow that no matter how much time they’re given. Indeed, Senate Armed Services Committee chairman Sen. John McCain (R – AZ) was critical of any delay on any grounds, insisting the bill and its huge spending increase are a “solemn obligation” for the Senate to pass without delay. "It is unfortunate that one senator chose to block consideration of a bill our nation needs right now," McCain said in a statement.
Anthony Scaramucci resigns White House position, sources tell ABC News -- Anthony Scaramucci is out as White House communications director after just 11 days on the job - and just hours after President Donald Trump's new chief of staff, John Kelly, was sworn into office.Hoping to turn the page on a tumultuous opening chapter to his presidency, Trump had insisted earlier Monday that there was "no chaos" in his White House as he swore in the retired Marine general as second chief of staff. Not long after, Scaramucci, who shocked many with his profane outburst last week against then-chief of staff Reince Priebus, was gone.In the words of the White House announcement, he was leaving because he "felt it was best to give Chief of Staff John Kelly a clean slate and the ability to build his own team." The two-sentence release concluded, "We wish him all the best."Earlier, in an Oval Office ceremony, Trump predicted Kelly, who previously served as Homeland Security chief, would do a "spectacular job." And the president chose to highlight the rising stock market and positive jobs outlook rather than talk about how things might need to change in his White House under Kelly. Trump on Friday ousted Priebus as chief of staff and turned to Kelly, who he hopes will bring military discipline to an administration weighed down by a stalled legislative agenda, infighting among West Wing aides and a stack of investigations.
Why Is Anthony Scaramucci Out? Trump Reportedly Removed 'The Mooch,' Former White House Communications Director: Just ten days after "The Mooch" came, he went. The New York Times reported Monday that "President [Donald] Trump has decided to remove Anthony Scaramucci from his position as communications director." Soon after, ABC News reported that Scaramucci, often playfully called by his nickname "The Mooch," had resigned. Scaramucci, a New York financier, came onboard as communications director just ten days ago, which was what reportedly led former Press Secretary Sean Spicer to resign. The New York Times reported, citing multiple anonymous sources, that Scaramucci being forced out was the work of new Chief of Staff John Kelly, who took over the job this week after Reince Priebus resigned from the position last week. The Times reported it was not clear if Scaramucci would stay on in a different role in the White House or leave altogether.
The Party Establishment Wing Of Trumpworld Collapses --President Trump announced on Friday that he had dumped his chief of staff Reince Priebus — a move that everyone saw coming after Trump’s new communications director, Anthony Scaramucci, had spent much of the last week publicly blasting Priebus. In just a week, the president has executed a long-rumored shake-up of his staff, appointing Scaramucci, accepting the resignation of press secretary Sean Spicer, who had threatened to quit if Scaramucci was appointed, and now replacing Priebus with Homeland Security Secretary John Kelly. But remember, these are only the changes that have actually occurred. Published articles have suggested that both national security adviser H.R. McMaster and Secretary of State Rex Tillerson are frustrated in their roles and that Tillerson may consider resigning. Trump is mad at Attorney General Jeff Sessions and seems to be trying to get Sessions to quit. All this is coming only a few months after there was news of tension between the president and chief strategist Steve Bannon — even though both Bannon and Sessions were among Trump’s strongest backers during his campaign and are deeply connected to the nationalist part of Trump’s base. So what the hell is happening in the Trump administration? Earlier this year, I wrote that there were at least eight power centers in Trumpworld and that they would compete with one another for influence. But six months into the administration, some of his preferences have become clear: He seems to trust family members and his associates from New York more than people with long experience in policy or politics, even on matters of policy and politics. He does not share the deep wariness about Russia and Vladimir Putin that is held by both Democratic and Republican leaders in Washington. His favorite kinds of policies appear to be ones that reverse something former President Barack Obama did. And he seems to have no intention of courting traditional Beltway constituencies like the D.C. press corps, the foreign policy establishment or even GOP congressional leaders.
General Kelly Unveils His Plans To Restore Order To Trump's White House - "Stop Bickering, Get in Early, Make an Appointment." That's how the WSJ summarizes the new White House protocol implemented by Trump's new Chief of Staff, Gen. John Kelly, appointed just one week ago, and who has been tasked with what many believe is impossible: restoring order to the White House. It's already working. According to an anecdote relayed by the journal, earlier this week, a small group of senior officials talked with President Donald Trump in the Oval Office about plans to take on Beijing over intellectual-property theft. When a side debate broke out between two top aides, the new White House chief of staff ordered the pair out of the room. Return, John Kelly told them, once your differences are resolved, according to a person familiar with the exchange.The move kept the meeting on track. It also signaled to top staff that Mr. Kelly, a retired four-star general, planned to bring new order and discipline to a West Wing that has been riven for six months with division and disorganization, a move which has been cheered by many on Wall Street - notably Citi - who believe that Kelly's arrival could mark a new phase for the heretofore chaotic, disorganized presidency and which may even lead to Trump's successful passage of his proposed tax reform. The army veteran has, predictably, already imposed an army-like atmosphere: Running one of his first senior staff meetings, Mr. Kelly laid down clear lines of authority and ordered aides to stay in their lanes. Discussions with senators, U.S. House members or others on Capitol Hill must be reported to the White House’s legislative affairs director, Marc Short. Secretary of State Rex Tillerson, Mr. Kelly said, must know about meetings with foreign diplomats. Best of all, nobody will be spared Kelly's rules: they extend to Trump’s family, including son-in-law Jared Kushner and daughter Ivanka Trump, who serve as official advisers in the White House and have their own staffs; both now report to Kelly instead of directly to the president, as does Steve Bannon. Better yet, staffers no longer loiter outside an open Oval Office door, hoping to catch the president’s eye to be waved in for a chat or the chance to pitch a new idea. That door is now closed.
Tillerson Says He’s Comfortable in Job and With Trump (AP) -- Secretary of State Rex Tillerson hasn't always seen eye-to-eye with his boss. But President Donald Trump's top diplomat says he's comfortable in his job and in his relationship with the commander in chief. Speaking to reporters at a nearly hour-long news conference at the State Department on Tuesday, Tillerson sought to dispel speculation that he is frustrated and looking for a way out. He said he and Trump have had policy disagreements, notably over the Iran nuclear deal, which the president opposes. Still, Tillerson noted he has received Trump's confidence and said the president often calls at unusual times seeking input on various foreign policy matters. Tillerson said he wouldn't be doing his job if he didn't express his views, even when they conflict with those of the president."We have a good relationship," Tillerson said. "I talk to him just about every day, I see him several times a week, he calls me late at night, on the weekends when something comes into his head and he wants to talk. He may call me at any moment, at any time.""It is a very open relationship and it is one in which I feel quite comfortable telling him my views," Tillerson said. "We have differences, but I think if we're not having those differences I'm not sure that I am serving him. I would tell you the relationship between myself and the president is good. That's how I view it, anyway." Differences between Trump, top White House aides and Tillerson and the State Department bubbled to public attention even before a well-publicized spat last month over the Iran deal, which ended with Trump siding with Tillerson while making it clear he wants out of the accord. In June, Trump pulled the U.S. out of the Paris climate change accord against Tillerson's advice. Tillerson also has fumed over the slow pace of White House approvals for senior State Department positions.
Putin says U.S. must cut 755 diplomatic staff, more measures possible (Reuters) - President Vladimir Putin said the United States would have to cut its diplomatic staff in Russia by 755 people and that Moscow could consider additional measures against Washington as a response to new U.S. sanctions approved by Congress. Moscow ordered the United States on Friday to cut hundreds of diplomatic staff and said it would seize two U.S. diplomatic properties after the U.S. House of Representatives and the Senate overwhelmingly approved new sanctions on Russia. The White House said on Friday that U.S. President Donald Trump would sign the sanctions bill. Putin said in an interview with Vesti TV released on Sunday that the United States would have to cut its diplomatic and technical staff by 755 people by Sept. 1. "Because more than 1,000 workers - diplomats and support staff - were working and are still working in Russia, 755 must stop their activity in the Russian Federation," he said. The new U.S. sanctions were partly a response to conclusions by U.S. intelligence agencies that Russia meddled in the 2016 U.S. presidential election, and to punish Russia further for its annexation of Crimea from Ukraine in 2014. Russia's response suggested it had set aside initial hopes of better ties with Washington under Trump, something the Republican president, before he was elected, had said he wanted to achieve. A federal law enforcement investigation and multiple U.S. congressional probes looking into the possibility that Trump's campaign colluded with Russia have made it harder for Trump to open a new chapter with Putin. Russia denies it interfered in the election and Trump has said there was no collusion. Moscow said on Friday that the United States had until Sept. 1 to reduce its diplomatic staff in Russia to 455 people, matching the number of Russian diplomats left in the United States after Washington expelled 35 Russians in December.
The Kremlin is done betting on Trump and planning how to strike back against U.S. sanctions -- Your geopolitical nemesis is suffering a political meltdown and says you’re partly to blame. Angry legislators have slapped you with new sanctions, which their president says he will sign. What’s a resurgent autocracy to do? In Moscow, it’s time for some game theory. Regardless of whether the Kremlin believes its own denials of interfering in the 2016 elections, there is one undeniable truth: Russia is now Washington’s greatest political foe. Understanding that President Trump is “tied hand and foot,” as one foreign policy hawk here put it, Moscow is weighing options for retaliation. After a dalliance on the Trump train, Russia is once again channeling the ruthless realism that drives its political id, and embracing its role as antihero.“Okay, you think we’re bad guys, we’re going to be bad guys, and we’ll see whether you like it or not,” Russia’s decision on Friday to expel dozens, perhaps hundreds, of American diplomats and other embassy staff marks the first salvo in retaliation to American sanctions that promises to be unpredictable and fraught with emotion. It is built on the frustrations of a Russian leader who perhaps thought that a Trump presidency could change everything, and then watched those hopes dissolve in scandal and recriminations.The Russian establishment has been angry with the West before but rarely so filled with contempt. It is far worse than several years ago, when tensions rose to fever pitch over a pro-Western revolution in neighboring Ukraine, sold on Russian television as a nationalist uprising with echoes of fascism.
Berlin Calls For "Countermeasures" To US Sanctions Against Russia, Hints At Trade War -- While the Pentagon may be already contemplating its next steps in the escalating conflict with Russia, which as the WSJ reported will likely involve supplying Ukraine with antitank missiles and other weaponry - a red line for the Kremlin not even the Obama administration dared to cross - there is minor matter of what to do with a suddenly furious Europe, which as we discussed previously, has vowed it would retaliate promptly after Trump signed the anti-Russia legislation into law, due to allegations it was just a veiled attempt at favoritism for US-based energy companies. And, sure enough, on Monday, the Germany economy minister said that new penalties against Moscow proposed by US lawmakers violate international law and officials in Brussels should consider countermeasures. Speaking to Funke Mediengruppe newspaper, Brigitte Zypries said that "we consider this as being against international law, plain and simple." She added that "of course we don't want a trade war. But it is important the European Commission now looks into countermeasures." She also said that “the Americans can not punish German companies because they operate economically in another country." What makes the latest anti-Russia sanctions unique, is that the bill, which passed both the House and Senate but has yet to be signed by Trump, marked the first time Washington has made a move against Moscow without European consent. Furthermore, the reason for Europe's anger is that contrary to its stated intention of punishing Russia for "meddling in the presidential elections", the bill appears - according to Brussels - to target Russia’s Nord Stream-2 pipeline that will deliver natural gas from Russia to Germany. The proposed expansion would double the existing pipeline's capacity and make Germany EU's main energy hub, and even more reliant on Russia. In addition to targeting major sectors of Russia’s economy, including defense, railway, and banking industries the bill seeks to introduce individual sanctions for contributing in Russian energy projects, which will likely adversely impact numerous European companies
Trump signs what he calls ‘seriously flawed’ bill imposing new sanctions on Russia - President Trump on Wednesday signed a bill that imposes new sanctions on Russia, ending immediate hopes that he might be able to reset U.S. relations with the Kremlin as Congress overruled his opposition to the provisions' curb on his executive power. Trump's reluctant signing of the legislation came nearly a week after it was approved by an overwhelming, bipartisan majority in the Senate and after a similarly large majority in the House. The president issued two statements outlining his concerns with the bill, which he called “seriously flawed,” primarily because it limits his ability to negotiate sanctions without congressional approval. “By limiting the Executive’s flexibility, this bill makes it harder for the United States to strike good deals for the American people, and will drive China, Russia, and North Korea much closer together,” Trump said in a statement on Wednesday morning. “The Framers of our Constitution put foreign affairs in the hands of the President. “This bill will prove the wisdom of that choice,” he added. White House press secretary Sarah Huckabee Sanders spoke at the daily press briefing on Aug. 2. (Reuters) Lawmakers' solidarity in tying Trump's hands on this issue reflects a deepening concern about the administration's posture toward Russia, which critics have characterized as naive. The new Russia sanctions expand on measures taken by the Obama administration to punish the Kremlin for its alleged efforts to interfere in the 2016 election. But Trump has continued to doubt that Russia was responsible and he has called the investigations in Congress and by the special counsel into Russian meddling a “witch hunt.” The administration's lobbying of lawmakers in public and private to pull back the bill's requirement that Congress review any attempt by the president to amend sanctions against Moscow ultimately fell on deaf ears. The measure imposes a 30-day review period to give Congress a chance to vote down any of the president’s proposed changes to Russia sanctions before they can be implemented.
Trump Forced To Sign Sanctions Bill Against Russia; Reports Say President And Putin May Have Loopholes --President Donald Trump on Wednesday signed legislation passed overwhelmingly by Congress that slaps Russia with new sanctions and restricts the scandal-plagued president’s ability to weaken them.Under enormous pressure to sign the bill into law while a special prosecutor probes Trump’s own ties to the Kremlin, the sanctions are additional punishment for the Kremlin’s meddling in last year’s presidential election by digging up dirt on Democrat Hillary Clinton.The sanctions add to moves taken previously by President Barack Obama, who shuttered two Russian compounds in the United States that were used as dachas of sorts for Russian diplomats. They add to sanctions that Obama imposed on the country for its 2014 invasion of the Crimea region of the Ukraine. Anticipating that Trump — whose team is the target of several investigations into whether it colluded with the Kremlin to rig the election — might be pressured to sign the sanctions into law, Russian President Vladimir Putin ordered more than 755 American diplomatic personnel out of Russia.The sanctions represent a new low in relations between the two nuclear superpowers. Reports out of Washington indicated that Congress did not make the change that Trump wanted: removing the power of Congress to block Trump from easing or restricting the new rules. These reports come amid the signing statements accompanying the sanctions bill by the president, which read in part: "Since this bill was first introduced, I have expressed my concerns to Congress about the many ways it improperly encroaches on Executive power. ... My Administration has attempted to work with Congress to make this bill better. ... Still, the bill remains seriously flawed, particularly because it encroaches on the executive branchs [sic] authority to negotiate. ... I built a truly great company worth many billions of dollars. That is a big part of the reason I was elected. As President, I can make far better deals with foreign countries than Congress."
Russian PM Medvedev: "The U.S. Just Declared Full-Blown Trade War On Russia" -- Several hours after President Trump officially signed the new Russian sanctions into law - despite his reservations and his statement that while he favors "tough measures to punish and deter aggressive and destabilizing behavior by Iran, North Korea, and Russia, this legislation is significantly flawed" - Russia has responded, From Russian Prime Minister Dmitry Medvedev’s facebook page:The signing of new sanctions into law against Russia by the US president leads to several consequences. First, any hope of improving our relations with the new US administration is over. Second, the US just declared a full-fledged trade war on Russia. Third, the Trump administration demonstrated complete impotence, and in the most humiliating manner transferred executive powers to Congress. This shifts the alignment of forces in US political circles.What does this mean for the U.S.? The American establishment completely outplayed Trump. The president is not happy with the new sanctions, but he could not avoid signing the new law. The purpose of the new sanctions was to put Trump in his place. Their ultimately goal is to remove Trump from power.An incompetent player must be eliminated. At the same time, the interests of American businesses were almost ignored. Politics rose above the pragmatic approach. Anti-Russian hysteria has turned into a key part of not only foreign (as has been the case many times), but also domestic US policy (this is recent).The sanctions codified into law will now last for decades, unless some miracle occurs. Moreover, it will be tougher than the Jackson-Vanik law, because it is comprehensive and can not be postponed by special orders of the president without the consent of the Congress. Therefore, the future relationship between the Russian Federation and the United States will be extremely tense, regardless of the composition of the Congress or the personality of the president. Relations between the two countries will now be clarified in international bodies and courts of justice leading to further intensification of international tensions, and a refusal to resolve major international problems.
Sabotaging Russia-US Relations for Good -- The strategy that the American deep state intends to employ to sabotage once and for all the possibilities of a rapprochement between the United States and Russia has been revealed. After months of debate over the bad state of relations between the United States and Russia, the G20 offered the stage for the two leaders to meet and start discussing the various problems facing the two countries. In the days following the summit in Hamburg, the Kremlin and the White House revealed that Putin and Trump met three times in bilateral talks to discuss how to improve relations between the two nations. The ceasefire reached in southern Syria is therefore intended as the first step in a new direction set for Washington and Moscow. As was easy to foresee, the deep state did not like this prospect of cooperation, immediately unleashing the mainstream media on Trump, because repeated meetings with Putin at the G20 were apparently suggestive of some sort of collusion, as if the leaders of two nuclear powers cannot even speak with each other. Obviously uncomfortable with these meetings, the sabotaging of relations between Russia and the US has taken a new turn. The previous ceasefire in Syria, reached by Kerry and Lavrov during the previous administration a year ago, was sabotaged by the US Air Force’s bombing of Syrian troops at Deir ez-Zor, which killed and injured more than a hundred Syrian soldiers. This served to favor Daesh’s assault on government positions, hinting at some sort of cooperation between Washington and the terrorists. Moscow immediately interrupted any military-to-military communication with Washington, which included the ceasefire reached between Lavrov and Kerry. This time the strategy seems more refined and certainly does not lend itself to military action. Following the incident in Deir ez-Zor, the bombing of the Syrian base, and the downing of the Syrian Su-22, any further US military provocation would be met with a harsh response from the Russian side, risking an escalation that even the US military does not seem willing to to risk. For this reason, it seems that an approach that relies more on legislative means than military power has been chosen.
Russia Sanctions and The Coming Crackdown on Americans -- Last week I wrote an article and did an interview explaining that in my reading of the new Russia sanctions bill just signed by President Trump, there is a measure opening the door to a US government crackdown on some of the non-mainstream media. In particular, Section 221 of the "Countering America’s Adversaries Through Sanctions Act" would punish "persons" who are "engaging in transactions with the intelligence or defense sectors of the Government of the Russian Federation." At first one might think this is reading too much into the text, however as a twelve year Capitol Hill veteran bill-reader I can assure you that these bills are never written in a simple, expository manner. There is always a subtext, and in this case we must consider the numerous instances where the Director of Central Intelligence and other senior leadership in the US intelligence community have attempted to establish the idea that foreign news channels such as RT or Sputnik News are not First Amendment protected press, but rather tools of a foreign intelligence organization. I don't think the crackdown will stop at Russian government funded news organizations like RT and Sputnik, however. Once the initial strike is made at the lowest hanging fruit, the second wave will target Russia-focused organizations not funded by governments but that challenge the official US government line that Russia is our number one enemy and its government must be overthrown. Popular private alternative websites like The Duran and Russia Insider will likely be next on the list for prosecution. And after this second wave you can be sure there will be a push to move on other alternative media that has nothing to do with Russia but that opposes US interventionist foreign policy: ZeroHedge, Lew Rockwell, Ron Paul Institute, ConsortiumNews, etc.
U.S. sanctions Venezuelan President Maduro and labels him a ‘dictator’ - The Trump administration promised to punish Venezuelan President Nicolas Maduro — and now, it has. After what was widely seen as a fraudulent vote that usurped power from Venezuela’s democratically elected lawmakers, Washington froze Maduro’s assets, banned him from the United States and prohibited Americans from doing any personal business with him. “Maduro is not just a bad leader: He is now a dictator,” National Security Adviser H.R. McMaster said from the White House briefing room Monday, reading a statement from President Donald Trump. But the White House stopped short of its most serious potential punishment — banning Venezuelan oil imports, a move that could have accelerated the South American country’s economic collapse and deepened its humanitarian crisis. Other U.S. economic sanctions are still expected, part of a series of escalating measures after Sunday’s vote proceeded despite warnings from the international community. For now, Maduro becomes the fourth head of state directly sanctioned by the U.S. — after Bashar Assad of Syria, Kim Jong-un of North Korea and Robert Mugabe of Zimbabwe. “He joins a very exclusive club,” McMaster quipped. He declared the Venezuelan vote, which was marred by violence, a “sham election.”
The US empire ready to stage another coup against Venezuela - When you hear Washington's hawks making announcements about a 'dictator', you should start to worry. We've seen this scenario endless times. The target is, one more time, Venezuela and the socialist government of Nicolas Maduro. One must be extremely naive to believe that the US banking/corporate puppets care about anything else than Venezuela's rich oil resources.The US empire has lost so much credibility through endless wars based on big lies, orchestrated coups especially in Latin America countries, and all kinds of dirty interventions around the globe, that if there is anyone who seriously believes that these hypocrites really care about human rights, we should easily conclude that has been completely brainwashed by the Western media propaganda. The US real agenda concerning Venezuela is so obvious that there is no need for further investigation on the issue. But if you still want further proof that oil is the real game, here is another piece of evidence, provided by Miguel Tinker Salas, an expert on Latin America, who explained on RT why the US has held off on sanctioning crude oil: So far, the sanctions have been against refined Venezuelan oil products and against individuals in the Venezuelan government. They have not been for the importation of crude. And the fact that they are not including crude, speaks to that interdependence and the fact that US oil producers and exporters don't want to upend the market. And potentially, that 10% extraction of Venezuelan oil, could spike US gasoline prices as well.
Strange Fruit: Venezuela has an Opposition that Nobody Should Support -- No American, if that means a person from the United States, should support the Venezuelan opposition. Why? The question can be made this simple: Which side in the Venezuelan conflict produces “Strange fruit hanging from the poplar trees… a fruit for the crows to pluck”? I refer, of course, to the fact that in a number of well-documented instances Venezuelan opposition forces have burned black people alive. This horrible fact should be enough to decide the issue for those in the United States when they think about which of the two sides to support in the struggle.Yet it seems to be not so clear for some people. For them perhaps (paraphrasing the claim that Nicaraguan dictator Anastasio Somoza was “a son of a bitch, but our son of a bitch”) the Venezuelan opposition is made up of “our” racists, “our” lynchers, and “our” neo-Klansmen. For them perhaps, these racist-lynchers-neoKlansmen are just doing what needs to be done to bring democracy to Venezuela. I don’t see it that way, of course. Perhaps it is somewhat easier for me, since I live in Venezuela. Who would want to have such people running the show where you try to make a home?
Sanctionstein: What is the real cause of America’s latest sanctions regime? --On 25th July, a united Congress issued a new round of economic sanctions against Russian, Iranian, and North Korean industries, ignoring US President Donald Trump’s provisions, and after last month’s attempts stalled due to unintended economic consequences. House Rules Committee Chairman Pete Sessions [R-TX] feared that they would cause “huge problems to companies in Dallas, Texas, that I represent,” putting them at a disadvantage.Despite this, White House Press Secretary Sarah Huckabee Sanders rallied Congress. “We […] will continue to work with the House and Senate to put those tough sanctions in place on Russia until the situation in Ukraine is fully resolved,” she read carefully from her talking points.However, the actual legislation, “Countering Russian Influence in Europe and Eurasia Act of 2017” (S.1221) deems it necessary to “authorize the appropriation of $530 million […] to counter Russian influence in Europe and Eurasia and to promote energy security in Ukraine.” In reality, the bill, a mess of incoherent reasoning, attempts to ‘isolate’ Russia and promote post-coup Ukraine’s privatised (and failing) oil and gas industry, now controlled by American investors. For example, section 8 does not specify which companies to promote; however, Burmisa Holdings, the private Ukrainian oil conglomerate to which Hunter Biden, former US Vice President Joe Biden’s son, is a member of the board of directors, will eventually take precedence. Lickspittle Ben Cardin (D-MD) of the Senate Foreign Relations’ Committee lavished the sanctions, citing the ubiquitous ramblings of ‘Russian aggression’ to Politico.“I believe the proposed changes to the bill have helped to clarify the intent of members of Congress as well asexpress solidarity with our closest allies in countering Russian aggression and holding the Kremlin accountable for their destabilizing activities,” he droned.However, his ‘closest allies’—members of the European Union—were never consulted in the sanctions’ regime and did not share his sentiments. Several high-ranking German, French, and Austrian officials have openly condemned the unilateral moves, RTreports.
When is the World Going to Impose Sanctions on America? - The decision taken by the US Congress to "punish Russia" for alleged meddling in the US elections with the maintenance of existing sanctions has been followed by a bill to weaken the ability of President Trump to "weaken sanctions on Russia," thus presenting a direct challenge to the President's authority. The bill was passed in the House of Representatives by an overwhelming majority and at time of writing awaits a hearing in the Senate, which along with the House makes up the US Congress. The legislation also includes new sanctions against not only Russia but also Iran and North Korea, thus maintaining the pattern of waging economic war against states which refuse to accept that Washington's writ should run wherever it decides whenever it decides. Economic sanctions are not the benign instrument that some might assume. On the contrary, they are tantamount to an act of war, a means by which economic might is wielded as club to bludgeon 'recalcitrant' nations and states into submission. And though sanctions may not evoke the same sense of potency of cruise missiles, they kill just the same. The experience of the Iraqi people leaves no doubt of it. Between 1990 and 2003 sanctions on Iraq, imposed by the UN, are estimated to have been directly responsible for the deaths of 2 million people, half a million of them children according to Unicef. Multilateral sanctions were imposed on the country in response to Iraq's invasion of Kuwait in August 1990. Under UN Security Council Resolution 661 it was mandated that UN-member states should prevent all imports originating in Iraq and Iraqi-occupied Kuwait, business activity between nationals of member states and Iraq, and should undertake an embargo of funds or "economic resources" to Iraq or Iraqi-occupied Kuwait, except for medical or humanitarian purposes. The fact the sanctions were only lifted from Iraq after the devastating war unleashed on the country by the US and its UK ally in 2003 had killed countless more children tells its own story.
Trump 'disappointed' with China after North Korea missile test - BBC News: US President Donald Trump says he is "very disappointed" with China for not doing enough to stop North Korea's weapons programme. Writing on Twitter, he said he would not allow China to "do nothing" about the reclusive state. His comments came a day after Pyongyang test-fired its second intercontinental ballistic missile (ICBM) in a month. It later claimed the test proved that the entire US was within striking range of its weaponry. On Saturday, two US B-1 bombers conducted exercises over the Korean peninsula with South Korean and Japanese planes. The move was a "direct response" to the North's two ICBM launches, and "part of the continuing demonstration of ironclad US commitment to our allies", the US Pacific Command said. "North Korea remains the most urgent threat to regional stability," Gen Terrence J O'Shaughnessy, Pacific Air Forces commander, added in a statement. On Saturday, China condemned the test launch and urged restraint on all sides. But Mr Trump voiced frustration at Beijing's response, linking the US trade deficit with China with policy on North Korea. "I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk," he wrote in two consecutive tweets. "We will no longer allow this to continue. China could easily solve this problem!"
When in doubt, nuke China --The current collapse of the unipolar world, with the inexorable emergence of a multipolar framework, has enabled a terrifying subplot to run amok – the normalization of the idea of nuclear war. The latest exhibit comes in the form of a US admiral assuring everyone he’s ready to follow President Trump’s orders to launch a nuclear missile against China. Forget about the fact that a 21st century nuclear war involving great powers will be The Last War. Our admiral – admirably named Swift – is simply preoccupied by democratic minutiae, as in “every member of the US military has sworn an oath to defend the constitution of the United States against all enemies foreign and domestic and to obey the officers and the president of the United States as commander and chief appointed over us.” So it’s all about loyalty to the President, and civilian control over the military – irrespective of the risk of incinerating untold masses of said civilians, Americans included (as there would be an inevitable Chinese response). Swift, once again, to the rescue: “This is core to the American democracy and any time you have a military that is moving away from a focus and an allegiance to civilian control, then we really have a significant problem.” It doesn’t matter that the proverbial spokesman on behalf of the US Pacific Fleet – in this case, Charlie Brown (an apt name?) – swiftly engaged in damage control, deriding the premise of the (nuclear) question as “ridiculous.” Both the question and the answer are in fact quite revealing.
China hits back at Trump criticism over North Korea (Reuters) - China hit back on Monday after U.S. President Donald Trump tweeted he was "very disappointed" in China following Pyongyang's latest missile test, saying the problem did not arise in China and that all sides need to work for a solution. China has become increasingly frustrated with American and Japanese criticism that it should do more to rein in Pyongyang. China is North Korea's closest ally, but Beijing is angry with its continued nuclear and missile tests. North Korea said on Saturday it had conducted another successful test of an intercontinental ballistic missile that proved its ability to strike the U.S. mainland, drawing a sharp warning from Trump and a rebuke from China. Japanese Prime Minister Shinzo Abe spoke with Trump on Monday and agreed on the need for more action on North Korea just hours after the U.S. Ambassador to the United Nations said Washington is "done talking about North Korea". A White House statement after the phone call said the two leaders "agreed that North Korea poses a grave and growing direct threat to the United States, Japan, the Republic of Korea, and other countries near and far".
China Has Had Enough of Trump’s ‘Emotional Venting’ - Chinese state media warned President Trump on Monday against trying to solve problems with “emotional venting,” a clear reference to a series of tweets from late last week in which Trump expressed his disappointment in China’s inability to solve the problem of North Korea. I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet... ...they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!— Donald J. Trump (@realDonaldTrump) July 29, 2017“Trump is quite a personality, and he likes to tweet,” the government’s media arm, Xinhua, said in an editorial translated by the New York Times. “But emotional venting cannot become a guiding policy for solving the nuclear issue on the peninsula.”The editorial said the U.S. is “spurning responsibility” for the standoff with North Korea and suggested Trump should stop trying to “stab China in the back.” It added that the U.S. is risking “adding kindling or, even worse, pouring oil on the flames.” Meanwhile, the primary U.S. strategy for North Korea continues to lean hard on China to “put a heavy move,” whatever that means, on North Korea. Trump likely has no clue what he wants China to do, something that’s painfully obvious when considering the range of opinions he’s held on the issue.There’s the one stated in the tweets above: China could solve the problem if it would only try.Then there’s the opinion he expressed on June 20: China has in fact worked hard on the issue of North Korea, but hasn’t succeeded in solving it. And lastly, there’s the opinion he formed after a short discussion with Chinese president Xi Jinping: China doesn’t have much power over the situation at all. “After listening for ten minutes, I realized it’s not so easy,” Trump told the Wall Street Journal in April. “I felt pretty strongly that [China] had a tremendous power over North Korea. But it’s not what you would think.”
Urgent Warning: Time to Hit the Reset Button on U.S.-Korean Policy - Touching down in Washington D.C. Friday night after a peace delegation to South Korea, I saw the devastating news. No, it was not that Reince Priebus had been booted from the dysfunctional White House. It was that North Korea had conducted another intercontinental ballistic missile test, and that the United States and South Korea had responded by further ratcheting up this volatile conflict.The response was not just the usual tit-for-tat, which did happen. Just hours after the North Korean test, the U.S. and South Korean militaries launched their own ballistic missiles as a show of force. Even more incendiary, however, is that South Korean President Moon Jae-in also responded by reversing his decision to halt deployment of the U.S. weapon system known as THAAD (Terminal High Altitude Area Defense). President Moon gave his military the green light to add four more launchers to complete the system.South Korea’s new liberal president came into office May 10 on the wave of a remarkable “people power” uprising that had led to the impeachment and jailing of the corrupt President Park Geun-hye. Part of the legacy Moon inherited was an agreement with the U.S. to provide land and support for THAAD, a missile defense system designed to target and intercept short and medium-range missiles fired by North Korea. THAAD is controversial on many fronts: military experts say it doesn’t work; environmentalists say it emits dangerous radiation; national assembly members say it was never submitted for a vote; China says the radar is aimed at it and has responded with economic sanctions; and the local residents of Seongju, where the system is placed, are furious that their tranquil lives have been pierced by a billion-dollar Lockheed-Martin weapon system about which they were never consulted.
Trump admin planning trade measures against China: reports | TheHill: The Trump administration is reportedly preparing trade measures against China, including a crack down on intellectual property theft, signaling a shift by the Trump administration away from working with Beijing. Multiple outlets reported Tuesday that an announcement by the Trump administration could come at any time, and could include the office of the United States Trade Representative starting an investigation into China's trade practices. After an investigation, the U.S. could start placing tariffs on imports from China. Specific policies by the administration were not made clear in initial reports. The administration has been mulling trade action against China, the largest holder of U.S. debt, as tensions between the U.S. and North Korea rise. Trump appeared optimistic on Chinese relations with North Korea, which depends on China for much of its energy, after he hosted Chinese President Xi Jinping in April at his Mar-a-Lago resort in Palm Beach, Fla. Trump at that meeting encouraged Jinping to rein in North Korea. However, North Korea has continued its development of nuclear weapons and launched its second ballistic missile in less than a month last Friday, raising concerns about Pyongyang’s abilities to strike the U.S. mainland. Administration officials said earlier this week that the administration was considering economic sanctions, trade restrictions or other measures against China. Trump over the weekend went on Twitter to express his disappointment with China, which he says should be doing more to control North Korea.
An Angry Beijing Responds: "We Will Never Dance To Trump's Tune" - With just one day to go until the Trump administration launches the first salvo in what could develop into a full-scale trade war between the US and China, there is the issue of a diplomatic (hopefully) resolution of escalating situation in North Korea, one which Citi today said is "increasingly likely" to involve military action. On this issue, China is becoming increasingly displeased with Trump's relentless twitter badgering, and as AFP reports, "Trump-style outbursts are no way to get China to bend to the US's will." The animosity between D.C. and Beijing has been building up for months, as the two capitals have long traded blame over the failure to rein in the North, but last week's breakthrough in North Korean missile technology has raised the specter of a strike by Pyongyang on American cities, escalating the rhetoric. "I am very disappointed in China," President Donald Trump tweeted after the North boasted last week that the entire mainland US was within range of its intercontinental ballistic missiles. "Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk." While China - North Korea's main trade partner and ally - has repeatedly countered that it does not hold the key to the crisis and has rejected Trump's attempts to link the issue to the trade relationship, keeping official responses to Trump's 140-character outbursts restrained, state media has been less muted. "Trump is quite a personality," an opinion piece published Monday by the Xinhua state news agency said. "But emotional venting cannot become a guiding policy for solving the nuclear issue ... and even less should (the US) stab China in the back."
Winners And Losers When Trade War Breaks Out Between The US And China - The small of trade war between China and the US is becoming ever more rancid. In the latest development, this morning we reported that the Trump administration is planning a probe of what the U.S. sees as violations of intellectual property by China. Against a backdrop of Trump’s frustrations with domestic policy, sliding approval ratings and disagreement with China over North Korea, the chances of protectionist action are rising according to Bloomberg while CNBC adds that the official start date of the trade war will be this Friday.But who stands to lose - and win - if the U.S. takes aim at the unbalanced trade relationship? Bloomberg has done the math and found that with total trade of more than half a trillion dollars a year, the list of potential losers is very long. The most notable examples include:
- U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.
- U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.
- Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.
- Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.
- Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total -- below Vietnam.
And while conventional wisdom is that the US has a chronic trade deficit with China - it does - the U.S. also runs a nearly $17 billion trade surplus with China for agricultural products. China consumes about half of U.S. soybean exports, America’s second largest planted field crop. Soybean farms are mostly located in the the upper Midwest (Illinois, Iowa, Indiana, Minnesota and Nebraska). The volumes are so significant that a spike in soybean exports was a noticeable contributor to GDP growth in the second half of last year as readers may recall. China is also a major buyer of U.S. aircraft, perhaps the only areas of manufacturing where the U.S. retains a competitive edge (though not for much longer). The U.S. also has an $8 billion dollar trade surplus with China in the transportation equipment category.
Hacked Emails Show UAE Building Close Relationship With DC Think Tanks That Push Its Agenda - The United Arab Emirates has one of the most repressive governments in the world. The Gulf dictatorship brutally cracks down on internal dissent and enables abusive conditions for its massive migrant labor force. It also plays a key role in the bloody war in Yemen, running a network of torture prisons in the “liberated” parts of the country. That makes it all the more shocking that the UAE is so rarely criticized by leading U.S. think tanks, who not only ignore the Gulf dictatorship’s repression, but give a privileged platform to its ambassador, Yousef Al-Otaiba. Otaiba is a deeply influential voice in U.S. foreign policy circles, and is known in Washington for using his pocketbook to recruit allies. Last month, hackers began releasing screenshots of emails from a Hotmail account that Otaiba used for official business. The hackers have sent the screenshots to various news websites, including the The Intercept, the Daily Beast, Al Jazeera, and HuffPost. The latest batch of hacked emails passed to The Intercept and other outlets by “GlobalLeaks” provide insight into how Otaiba manages to find — or buy — so many friends in D.C. think tanks. The documents offer a glimpse into how a small, oil-rich monarchy can obtain such an outsized influence on U.S. foreign policy, showing the ambassador obtaining favors from Obama administration veterans — including Hillary Clinton’s presumptive Defense Secretary — and making large payments in return. One of the documents obtained by The Intercept was an invoice from the Center for New American Security, an influential national security think tank founded in 2007 by alumni from the Clinton administration. The invoice, dated July 12, 2016, billed the UAE embassy $250,000 for a paper on the legal regime governing the export of military-grade drones. It was signed by Michele Flournoy, a senior Pentagon official under President Barack Obama; Hillary Clinton was widely expected to name Flournoy as her secretary of defense. Flournoy co-founded CNAS and, in addition to outside work as a management consultant, currently serves as the think tank’s CEO.
Trump Saw A Disturbing Video, Then He Shut Down The CIA's Covert Syria Program --While we've carefully documented the dynamics in play behind Trump's decision to end the CIA's covert Syria program, as well as the corresponding fury this immediately unleashed among the usual hawkish DC policy wonks, new information on what specifically impacted the president's thinking has emerged. Thomas Joscelyn, a Middle East analyst for the Foundation for Defense of Democracies, explains in the August edition of The Weekly Standard:Earlier this year, President Donald Trump was shown a disturbing video of Syrian rebels beheading a child near the city of Aleppo. It had caused a minor stir in the press as the fighters belonged to the Nour al-Din al-Zenki Movement, a group that had been supported by the CIA as part of its rebel aid program. The footage is haunting. Five bearded men smirk as they surround a boy in the back of a pickup truck. One of them holds the boy’s head with a tight grip on his hair while another mockingly slaps his face. Then, one of them uses a knife to saw the child’s head off and holds it up in the air like a trophy. It is a scene reminiscent of the Islamic State’s snuff videos, except this wasn’t the work of Abu Bakr al-Baghdadi’s men. The murderers were supposed to be the good guys: our allies. Trump pressed his most senior intelligence advisers, asking the basic question of how the CIA could have a relationship with a group that beheads a child and then uploads the video to the internet. He wasn't satisfied with any of the responses: After learning more worrisome details about the CIA’s ghost war in Syria—including that U.S.-backed rebels had often fought alongside extremists, among them al Qaeda’s arm in the country—the president decided to end the program altogether.
Iran Worried U.S. Might Be Building 8,500th Nuclear Weapon - Amidst mounting geopolitical tensions, Iranian officials said Wednesday they were increasingly concerned about the United States of America's uranium-enrichment program, fearing the Western nation may soon be capable of producing its 8,500th nuclear weapon. "Our intelligence estimates indicate that, if it is allowed to progress with its aggressive nuclear program, the United States may soon possess its 8,500th atomic weapon capable of reaching Iran," said Iranian foreign minister Ali Akbar Salehi, adding that Americans have the fuel, the facilities, and "everything they need" to manufacture even more weapons-grade fissile material. "Obviously, the prospect of this happening is very distressing to Iran and all countries like Iran. After all, the United States is a volatile nation that's proven it needs little provocation to attack anyone anywhere in the world whom it perceives to be a threat." Iranian intelligence experts also warned of the very real, and very frightening, possibility of the U.S. providing weapons and resources to a rogue third-party state such as Israel.
Tillerson Mulls Closing War Crimes Office - Secretary of State Rex Tillerson is reportedly considering closing the Office of Global Criminal Justice, a tiny agency with a meager budget of $3 million a year, located within the State Department.According to its website, the office “advises the Secretary of State . . . on issues related to war crimes, crimes against humanity, and genocide.” It “also coordinates U.S. Government positions relating to the international and hybrid courts currently prosecuting persons responsible for genocide, war crimes, and crimes against humanity—not only for such crimes committed in the former Yugoslavia, Rwanda, Sierra Leone, and Cambodia—but also in Kenya, Libya, Côte d’Ivoire, Guatemala, and elsewhere in the world.” Furthermore, it deploys “a range of diplomatic, legal, economic, military, and intelligence tools to help expose the truth, judge those responsible, protect and assist victims, enable reconciliation, deter atrocities, and build the rule of law.”The New York Times reported that human rights advocates saw the proposal as an example of “the Trump administration’s indifference to human rights outside North Korea, Iran and Cuba.” Human rights activists also said that shutting the Office “would hamper efforts to publicize atrocities and bring war criminals to justice.” Newsweek reported, however, that the Obama administration also reportedly considered downgrading the office and merging it with another agency. According to the Newsweek article, the office offered rewards for information on “war criminals, and has inveighed against brutal dictators, including Sudanese President Omar al-Bashir and Syrian President Bashar al-Assad.” But the article also noted it “has not criticized Saudi Arabia or other American allies with dismal human rights records.”
Trump Says U.S.‘Losing’ Afghan War in Tense Meeting With Generals - NYT— President Donald Trump has become increasingly frustrated with his advisers tasked with crafting a new U.S. strategy in Afghanistan and recently suggested firing the war's top military commander during a tense meeting at the White House, according to senior administration officials. During the July 19 meeting, Trump repeatedly suggested that Defense Secretary James Mattis and Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford replace Gen. John Nicholson, the commander of U.S. forces in Afghanistan, because he is not winning the war, the officials said. Trump has not met Nicholson, and the Pentagon has been considering extending his time in Afghanistan. Over nearly two hours in the situation room, according to the officials, Trump complained about NATO allies, inquired about the United States getting a piece of Afghan’s mineral wealth and repeatedly said the top U.S. general there should be fired. He also startled the room with a story that seemed to compare their advice to that of a paid consultant who cost a tony New York restaurateur profits by offering bad advice. Trump is the third president to grapple with the war in Afghanistan. On Wednesday, two American troops were killed in Afghanistan when a convoy they were in came under attack. The Taliban claimed responsibility for the attack. Trump's national security team has been trying for months to come up with a new strategy he can approve. Those advisers are set to meet again to discuss the issue on Thursday at the White House. The president is not currently scheduled to attend the meeting, though one official said that could change. Former presidents Barack Obama and George W. Bush went through multiple strategies over the course of their presidencies to try to stabilize Afghanistan. What set Trump apart in the July meeting was his open questioning of the quality of the advice he was receiving.
McMaster And Mattis Have Twelve Months To Succeed In Afghanistan --Recently we learned that Erik Prince, founder of the security firm Blackwater Worldwide, and Steve Feinberg, financier, and owner of DynCorp International, a leading military logistics, and training contractor, approached the Secretary of Defense, Jim Mattis, with their plan to use contractors instead of American troops to stabilize Afghanistan. The meeting was arranged at the behest of President Trump’s advisors who want to ensure their boss is apprised of the full range of options in Afghanistan. The Secretary decided to stick with an in-house solution, that is to say, more of the same, for a war we are, in his words, “not winning.” Secretary Mattis is no enemy of contractors, but hopefully, he reflected on what Messrs. Prince and Feinberg said before he briefed President Trump last week on the way ahead in Afghanistan. I previously said we should let the Afghans and the neighbors – Iran, Pakistan, and China – try to sort it out, and minimize our work with Afghanistan to counternarcotics and intelligence sharing while we work with the Central Asian states to secure their borders. During the campaign, candidate Trump described the war in Afghanistan as “a complete waste” and has focused his efforts since inauguration on everything else, leaving the policy review to the national security advisor, Lieutenant General H.R. McMaster, which brings us to the problem… General McMaster spent several months trying to convince the President to commit more troops and agree to a four-year timeline in advance of May’s NATO summit meeting; he was blocked by the secretaries of Defense and State. McMaster then made a second try at last week’s National Security Council Principals Committee, only to get pushback from Trump. Seen in that light, the suggestion that the White House would consider the Prince-Feinberg plan was a billboard-sized hint that the President does not want a more-of-the-same solution.
Bannon and Blackwater Want to Outsource Afghanistan War - naked capitalism - Yves here. This Real News Network report is telling in so many ways…the lack of anything resembling investigative reporting into the war (at least in the MSM), the lack of any sensible strategy, the reliance on mercenaries, and the way profiteering dominates other considerations. (video & transcript)
A monster payday in Argentina shows a flaw in Trump’s NAFTA renegotiation - Dave Dayen - A company that specializes in bankrolling lawsuits has won a huge payday from the government of Argentina, in one of the biggest examples of financiers using the secret courts embedded in trade agreements as casinos. Burford Capital, the world’s largest firm for “litigation finance,” will earn $140 million on a $13 million investment in an investor-state dispute settlement (ISDS) case against Argentina over the nationalization of Aerolineas Argentinas, the nation’s flagship airline. The case was brought under Argentina’s bilateral investment treaty with Spain; the investors in the airline were Spanish. Under ISDS, part of over 3,000 trade agreements worldwide, corporations can sue governments for changes in law or regulation that violate trade agreements, and win awards equaling “expected future profits” they might have otherwise gained. The idea was to protect investors from seizure of assets, outside the court system of the offending government. But instead of helping companies resolve legitimate disputes over seized assets, ISDS has increasingly become a means for rich investors to speculate on lawsuits, winning huge awards and forcing local taxpayers to foot the bill. Donald Trump did not seek to eliminate ISDS in his negotiating objectives for reimagining NAFTA. He will only try to add some transparency mechanisms, such as making hearings and final rulings publicly available. The Burford Capital award reveals why that is wholly inadequate.
Koch Brothers Move to Back White House’s Tax-Cut Plan - After times of only tepid support for President Donald Trump’s agenda, the billionaire Koch brothers are putting their financial muscle behind the White House’s plan to overhaul U.S. taxes. Two gatherings in Washington this week mark the start of the push, and the network of conservative advocacy groups controlled by the Kochs has already lined up events in 36 states to make sure members of Congress hear the call for lower taxes when they’re home for their August recess. The move marks a pivot for the Kochs, who didn’t support Trump in 2016 and have come out against some of his policies. The network -- joined by many of the nation’s retailers -- scored a kill last week when Republican leaders abandoned the so-called border-adjusted tax on domestic sales and imports. The proposal had driven a wedge between the Koch-affiliated groups and some of their staunchest allies, including BAT advocate House Speaker Paul Ryan. “We’re committed to achieving legislation that can get to the president’s desk that he can sign,” Americans for Prosperity President Tim Phillips said in an interview. “We are strongly supportive of the blueprint for tax reform that was laid out by the Trump administration.” Thus far, the administration has released only a one-page plan that was shy of specifics on how to pay for cutting taxes for businesses and individuals. As details take shape, tensions could re-emerge. While the Kochs tend to favor a more purist view of limited government, Republican lawmakers face a political balancing act, which may become more fraught after having failed to unite behind a measure to repeal the Affordable Care Act.
Gingrich to GOP: Pass tax cuts or get ready for Speaker Pelosi - Former Speaker Newt Gingrich (R-Ga.) is urging Republicans to pass tax cuts, warning that failing to do so could result in voters coming together against Republican lawmakers. "The specter of House Speaker Nancy Pelosi is looming," Gingrich and Brad Anderson, former CEO of Best Buy and a member of the Job Creators Network, wrote in a piece published Wednesday in USA Today. "Following Republicans’ failure to fix the country’s health care system, polls show Americans are increasingly flirting with Democratic governance in Congress next year." As a result, Republicans need to change their game plan, the two wrote. "The next six months must not be the same as the last six months," the piece said. "To regain their legislative momentum and keep their majority, Republicans must clearly demonstrate they are fighting for the country’s hardworking taxpayers. This means passing a major tax cut by Thanksgiving — and making it retroactive to the start of this year." The two wrote that by 2018, the tax cuts will then have "spurred economic growth and wage increases." This will give Republicans momentum heading into the 2018 midterm elections, they said. But, the two warned, Republicans need to stay focused on the issue at hand. "A tax cut package directed at small businesses and the middle class is better policy than politics," they wrote. The first step to writing tax cut legislation involves rejecting the idea that it "needs to be revenue neutral," the op-ed said. "Instead, Republicans should argue that the tax cuts should be deficit neutral — meaning they wouldn’t add to the deficit because of the economic growth they'd produce," they said.
The Tax Reform America Needs (and Probably Won’t Get) - As multinational corporations have hopscotched around the globe to find the most profitable base from which to run their affairs, they have set off furious competition among governments hoping to lure investment by slashing tax rates to the bone. Smaller countries like Ireland or Hungary have been the most aggressive in this race. But big industrial powers have followed, too. Among the 35 members of the Organization for Economic Cooperation and Development, the policy think tank of the world’s industrialized countries, almost every one has reduced its corporate tax rate over the last 17 years. There are two exceptions: Chile and, alone among the world’s wealthy nations, the United States. In the United States, the federal tax rate on corporate profits is stuck at 35 percent— the same as 17 years ago, and more. This inability to adapt to economic reality is a signal of the impossibility, in the United States, of pragmatic, sensible tax reform. Once one of the lowest among economically advanced countries, the American tax rate on corporate profits is by now the highest. And still, corporate tax revenues amount to only 2.2 percent of the nation’s gross domestic product, half a percentage point less than the O.E.C.D. average. Even Ireland collects more as a share of its economy. While this is probably the most blatant shortcoming of the American tax code, it is hardly the only one. By the standards of most economists, the United States has one of the most counterproductive tax regimes among advanced nations — one that raises little money yet vastly distorts decisions on investing and saving, and encourages all sorts of trickery to avoid the Internal Revenue Service. That shortcoming is keeping the American state from raising the money it needs. According to a report by the O.E.C.D. on varieties of tax reform, “corporate taxes are the most harmful type of tax for economic growth, followed by personal income taxes and consumption taxes.” Indirect taxes, such as a sales or consumption tax, or — even better — taxes on immovable property, don’t reduce people’s incentive to save or invest, as direct taxes on personal or corporate income do. And yet when designing the tax code, Washington eschewed indirect taxes.
White House Floats Aggressive Tax Timetable in Fall - The White House is not wed to having congressional Republicans use the budget reconciliation process to advance a tax overhaul and is eyeing red state Democrats up for re-election as possible partners in the effort, legislative affairs director Marc Short said Monday. “We’ve learned how difficult it is to thread the needle with 52 [Republican] senators,” Short said at an event hosted by the conservative Americans for Prosperity at the Newseum. Short outlined an anticipated timetable for putting together a still unwritten tax bill that presumably would not be written including reconciliation instructions, given the description he offered. He said he expects text to be drafted over the August recess and the tax-writing committees to begin markups “right away” when Congress returns after Labor Day. The House Ways and Means Committee is expected to mark up a bill first, hopefully the first week back in September, Short said. The Senate Finance Committee will also be holding hearings and markups on the bill around the same time, he said. “Hopefully we’ll have completion by mid-November,” Short said of when a final bill could make it to President Donald Trump’s desk. Short said he is not expecting drastically different House and Senate bills, as the committees have been working with the administration to ensure all parties are on the same page.
Why Tax Cuts for the Rich Solve Nothing - naked capitalism Yves here. While this article by Joseph Stiglitz does a great high level job of debunking the supposed benefits of tax cuts, and also prominently flags that that Trump will be constrained by deficit hawks (both Democrat and Republican), this piece is out of step in some key ways in where the professional tax policy watchers think the tax “reform” fight will go.It is a given that pretty much everything the Republicans want to do is a sop to the rich, and they will flog every change they get through as a Big Deal. However, the reality is they are unlikely to do anywhere near as much damage as they’d like. The US already has cut the size of Federal tax income tax collection as a percent of GDP and has low taxes by advanced economy standards. There’s just not that much more budget cutting that can be done. And the bogus fixation on deficits means that any tax cuts have to be matched either by tax increases elsewhere or budget cuts. Finding the money to “pay for” tax cuts will not be easy. Corresponding to the focus of this article, the tax mavens don’t expect much in the way of changes in individual taxes. The big focus is corporate taxes, where the Republicans have been promising “simplification” for years. But like Obamacare, despite having a pet hobbyhorse, they don’t appear to have a coherent plan or consensus within the party. However, tax reform doesn’t have the danger of creating big losers as Obamacare reform did, plus Republican Congresscritters desperately need to have some accomplishments to report before the 2018 midterms. My tax watcher contacts don’t think we’re see going to territorial taxation as on the map, even though (per Ryan’s fondness for it) it may get more air time than it warrant. More likely is lowering the corporate tax rate. But the big impediment here is that would be done by getting rid of loopholes. All those loopholes have constituencies. And if the Republicans can’t get rid of enough of them, the overall reduction may fall too far short of the 15% level that’s been promised that whatever new level results will be seen as a disappointment, even a failure.
Bannon’s Proposed Tax Increase Isn’t on the Table, Another Trump Aide Says - A top income-tax rate of 44 percent for Americans earning more than $5 million per year isn’t under consideration, a White House official said Monday, knocking down a proposal said to be backed by top Trump adviser Steve Bannon. “I don’t think that that’s on the table right now, to be honest with you,” White House director of legislative affairs Marc Short said on Fox News. “We don’t believe that raising taxes is the way to encourage growth.” Bannon backs that increased rate, a person familiar with the White House chief strategist’s thinking said last week, as a way to pay for middle-class tax cuts. While one conservative lawmaker responded by saying some congressional Republicans might support a rate increase as part of a broader tax overhaul, Short is the third key player to dismiss the idea. Representative Kevin Brady of Texas, chairman of the House Ways and Means Committee, said Sunday that he did not “intend” to introduce the 44 percent rate to his panel’s work. “We’re going for growth, which means lower rates at every level,” he said on Fox News Channel’s “Sunday Morning Futures.” House Speaker Paul Ryan on Sunday declined to comment directly on the Bannon report but said he supports the outline released by the Trump administration in April, which caps the top rate at 35 percent. “We’re not in the business of raising tax rates,” Ryan said on “Sunday Morning Futures.” The White House is also getting support for its tax-cut plan from the political network of billionaire brothers Charles Koch and David Koch, who didn’t support President Donald Trump during his 2016 campaign. Short and Treasury Secretary Steven Mnuchin are set to appear on a tax panel hosted by two Koch-funded groups Monday in Washington.
Republicans Face Tough Choice: Repeal Obamacare or Cut Taxes - After the collapse of the Obamacare repeal, Republicans may have to choose between pursuing another health bill or pushing through a tax overhaul this year, because there’s almost certainly not enough time to do both. And that’s not even their biggest problem -- which is, they can’t agree on either. The Senate debate last week laid bare how sharply divided the party remains over health care. And Thursday, the group in charge of developing a tax plan made clear that it’s agreed on very little. Making matters worse, both the Senate and House face a pileup of urgent must-do items in September that require cooperation with Democrats: funding the government after Sept. 30 and lifting the debt ceiling, which the Treasury Department said on Friday must happen by Sept. 29. That raises the possibility of another drawn-out debate that would derail action on health care, taxes, or both -- or a government shutdown fight, an idea President Donald Trump seems open to. For Republicans, still in search of a major legislative accomplishment under Trump, time is running out for 2017. The House is already in its summer recess. The Senate is in session this week, but Senator John McCain has returned to Arizona for cancer treatment, leaving Republicans with a bare 51-48 majority and a debate over who’s to blame for the defeat of one of their party’s top priorities.
Ding dong. Repeal and replace is dead. (For now) - LA Times editorial -- Early Friday morning, the U.S. Senate came within one thin vote of dropping a megaton legislative bomb on the health insurance markets serving roughly 1 in 10 Americans. Republican senators were so eager to keep their promise to repeal the 2010 Affordable Care Act, yet so unwilling to compromise on a coherent approach to unwinding the law, that 49 of them backed an eight-page, lowest-common-denominator proposal that seemingly every major healthcare trade association and patient-advocacy group had warned would be disastrous for all concerned. The measure even attracted the support of three senators who’d dubbed it a fraud and pledged to vote “yes” only if they were assured the House wouldn’t pass the thing into law. Three other GOP senators bravely joined all 46 Democrats and two independents in voting against the so-called “skinny repeal” proposal, which Senate Majority Leader Mitch McConnell (R-Ky.) unveiled late Thursday night after days of closed-door negotiations within the GOP caucus. But the willingness of Susan Collins of Maine, Lisa Murkowski of Alaska and John McCain of Arizona to part company with their colleagues isn’t nearly as remarkable as the spectacle of 49 Republicans blithely voting in favor of a bill that would have quickly made health insurance unavailable or unaffordable to millions of their constituents — a measure that hadn't even been seen, let alone subjected to the ordinary legislative process of hearings and debate, until two hours before it was brought to a vote. It was easy for Republicans to vow to repeal Obamacare when they knew they couldn’t actually do it. Now that they have the numbers and the White House, they’ve learned that not all of them actually want to undo two of the fundamental changes wrought by the act: letting states extend Medicaid to more lower-income people largely at federal taxpayers’ expense, and barring insurers from favoring healthy customers over sick ones in the non-group market. The GOP was also divided over a push by conservatives to rein in spending on the traditional Medicaid population of very low income pregnant women, children, elderly and disabled Americans.
Trump Threatens To End Obamacare Payments, "Insurance Bailouts" Unless Repeal Passes --With the Senate having failed to repeal Obamacare, after a critical "Nay" vote by John McCain crushed Trump's biggest campaign promise shortly after midnight on Thursday, Trump is plans to kill Obamacare slowly, and this time he has vowed to take insurance companies and members of Congress down with it. The president on Saturday threatened to end key payments to Obamacare insurance companies if a repeal and replace bill is not passed. "After seven years of 'talking' Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!" Trump tweeted, followed by: "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!." This is not the first time Trump has made a similar threat: the president previously threatened to withhold Cost Sharing Reduction payments, or CSR, which lower the amount individuals have to pay for deductibles, co-payments and insurance. While the White House announced earlier this month that key ObamaCare subsidies to insurers would be paid this month, the administration did not make a commitment beyond July. Trump's threat may have a significantly adverse impact on the insurance sector when it opens on Monday. Incidentally, Trump is not wrong when he claims that insurance companies have received implicit taxpayer-funded bailout: as the chart below shows, insurance company stocks are up 700% since Obama became president, more than double the S&P's return.
Dems pivot to offering ObamaCare improvements | TheHill: House Democrats are poised to advance a flood of proposals designed to address the problems dogging President Obama's signature healthcare law — a move that puts pressure on Republican and Democratic leaders alike. The strategy marks a pivot for the Democrats, as party leaders have throughout the year discouraged members from offering improvements to the Affordable Care Act (ACA), fearing they would highlight problems with the law and divert attention from the Republicans’ months-long struggle to repeal and replace it. But rank-and-file Democrats are getting restless, with some saying they can no longer tell constituents they oppose the Republicans’ repeal bills without offering solutions of their own.“When I go back to the district, they want to know what you’re going to do,” said Rep. John Larson (D-Conn.). “Resisting is no longer just enough — they want to see what your plan is.” Following the early-morning failure of the Senate Republicans’ ObamaCare repeal bill on Friday, the Democrats — leaders and rank-and-file members alike — ramped up the pressure on GOP leaders to reach across the aisle and work on bipartisan ACA fixes. “We can go right to the committees and have a discussion on how we keep America healthy,” House Minority Leader Nancy Pelosi (D-Calif.) told reporters in the Capitol.
Trump threatens insurer payments — and health care enjoyed by Congress — President Trump on Saturday indicated he will make good on a months-old threat to destabilize the health insurance market if Senate Republicans cannot repeal and replace major elements of the Affordable Care Act. The first part of the ultimatum likely refers to cost-sharing reduction payments made by the federal government to insurers, which in turn offer plans with discounted deductibles and copays for many low- or middle-income Americans buying plans through ACA marketplaces.The second portion, while far narrower in scope, is significant in that it highlights an additional tool at the president’s disposal for acting unilaterally on health policy. Though ACA repeal has been in the spotlight throughout 2017, other rumblings regarding subsidies specific to Congress have been rare. In January, Rep. Ron DeSantis (R-Fl.) introduced a bill that would end an exemption enabling members of Congress and Capitol Hill staff to obtain employer contributions from the government to pay for plans on D.C.’s small-business exchange, which the federal Office of Personnel Management in 2013 issued guidance to allow. “By blowing the whistle on this special deal concocted by OPM, we will make members of Congress better understand the burdens of ObamaCare, thereby incentivizing members to get to work on a good repeal and replace plan,” DeSantis wrote then in a statement. Heather Higgins, CEO of the conservative-leaning advocacy group Independent Women’s Voice, wrote last week in a Wall Street Journal op-ed: “Congress is essentially unaffected by the high costs of the ObamaCare exchanges because of a special exemption crafted under the Obama administration.” Some subsidies obtained via D.C.’s small-business exchange, the op-ed claimed, were worth as much as $12,000 annually. While Trump’s meaning was not entirely clear, it is possible he could direct OPM to rescind the ruling enabling the exemption, as a coalition of right-wing groups encouraged him to do in a July 21 letter.
As Trump steams, Senate Republicans consider new repeal effort - Politico -- Senate Republicans’ party-line attempts to repeal Obamacare aren’t dead just yet — at least not if President Donald Trump has anything to say about it. Trump, increasingly impatient with the long-stalled repeal effort, met with three Senate Republicans about a new plan to roll back the health care law on Friday, signaling some lawmakers — as well as the president — are not ready to ditch their seven-year campaign promise. The group is trying to write legislation that could get 50 Republican votes, according to multiple administration and Capitol Hill sources. The proposal from Sen. Lindsey Graham (R-S.C.) would block grant federal health care funding to the states and keep much of Obamacare’s tax regime. White House officials also met with House Freedom Caucus chairman Mark Meadows (R-N.C.) to brainstorm how to make the idea palatable to conservatives, according to two sources familiar with the meeting. The White House-health care huddle came just hours before Trump savaged Senate Republicans in a series of Saturday tweets for failing to repeal Obamacare. If the Senate doesn't pass a bill soon, Trump warned, he may halt Obamacare payments subsidizing health plans for low-income individuals — an idea adamantly opposed by Republicans and Democrats alike. Trump also appeared to take a personal shot at lawmakers, seemingly warning that he could revoke their own health benefits on the exchanges. "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!" Trump tweeted Saturday afternoon. Trump seemed optimistic about moving forward on the bill on Friday after the shocking setback this week appeared to cripple his legislative agenda, according to a White House official. Yet several senior Republican Senate aides and allies of GOP leaders cautioned against any feelings of momentum coming from the White House on Saturday, particularly after Trump again instructed Majority Leader Mitch McConnell (R-Ky.) to change the Senate rules to a simple majority and gut the legislative filibuster.
Rand Paul: Trump Considering Executive Action On Healthcare -- After the Senate failed to repeal Obamacare on Thursday, when a critical "Nay" vote by John McCain crushed Trump's biggest campaign promise shortly after midnight, on Saturday the President threatened to end key payments to Obamacare insurance companies if a repeal and replace bill is not passed. "After seven years of 'talking' Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!" Trump tweeted, followed by: "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!." Now, in previewing what may be Trump's next potential step to keep the fight against Obamacare alive, Reuters reports that Senator Rand Paul told reporters that Trump is"considering taking some form of executive action" to address problems with the healthcare system.Paul said he spoke to President Donald Trump by phone about healthcare reform on Monday and told the president he thought Trump had the authority to create associations that would allow organizations to offer group health insurance plans.Allowing groups like AARP, which represents retirees, to form health associations could enable individuals and small businesses to form larger groups to negotiate with health insurance companies for lower rates. Such a move would also allow Trump to implement his threat of "ending bailouts for insurance companies."
Trump’s new weapon? His Cabinet | TheHill: President Trump this week unleashed a new group of advocates in his failed push to convince the Senate to repeal ObamaCare: his Cabinet. Energy Secretary Rick Perry and Interior Secretary Ryan Zinke were both used in the battle, highlighting the president’s willingness to exert pressure in new ways on lawmakers opposing his agenda. The push — from two Cabinet secretaries without healthcare oversight — drew backlash from lawmakers who already have strained relationships with the White House. Zinke’s threats in a phone call to Alaska Sens. Lisa Murkowski and Dan Sullivan, in particular, led to rancor. The Interior secretary told the two Republican senators that the Trump administration might not support economic development efforts in their state if Murkowski didn’t support the GOP’s ObamaCare repeal effort. Sullivan told the Alaska Dispatch News that the call was “troubling.” Murkowski downplayed the matter publicly, telling reporters on Thursday that what Zinke “shared with me was that the president was not pleased.” “I think it’s very clear based on my conversation with the secretary that he was just sharing the concern that the president had expressed to him to pass on to me,” she added. With her actions, Murkowski then appeared to illustrate the risks of Trump’s pressure campaign.She voted against the “skinny” ObamaCare repeal measure, which failed in a 49-51 vote. And she canceled a Thursday Energy and Natural Resources Committee hearing vote on six Interior and Energy nominees, an incident she called a “hiccup” unrelated to Zinke’s call. Murkowski chairs the panel, which writes Interior’s budget.
Senate Republicans Defy Trump, Will Work With Democrats On Stabilizing Obamacare -- In a troubling sign for the president, who over the past several days has threatened to end "bailouts" for insurers and, according to Rand Paul, is contemplating executive action to pursue his quest of repealing Obamacare, some Senate Republicans are now openly defying Trump's directives.As The Hill reports, Sen. Lamar Alexander (R-Tenn.), head of the Senate Health, Education, Labor and Pensions Committee, announced Tuesday that he will hold hearings and would work with his Democratic colleagues to “stabilize and strengthen” the individual insurance market under the Affordable Care Act, which the president has urged the Senate to keep trying to repeal. Alexander also urged the White House to keep up payments to insurers that help low-income consumers afford plans, which Trump has threatened to cut off. The hearings will give Democrats, particularly Sen. Patty Murray (Wash.), the committee’s ranking member, a seat at the negotiating table on healthcare for the first time, opening up a process that until now had been tightly controlled by Senate Majority Leader Mitch McConnell, who however suffered a major loss last week when he failed to pass repeal following the holdout vote of John McCain. Openly defying Trump, who suggested he’ll let ObamaCare implode, Alexander - in working with Democrats - is actively trying to prevent that from happening. “We need to put out the fire in these collapsing markets wherever these markets are,” Alexander said at the beginning of a Senate Health, Education, Labor and Pensions Committee hearing on nominations.
Exclusive: Majority of Americans want Congress to move on from healthcare reform - Reuters/Ipsos poll (Reuters) - A majority of Americans are ready to move on from healthcare reform at this point after the U.S. Senate's effort to dismantle Obamacare failed on Friday, according to an exclusive Reuters/Ipsos opinion poll released on Saturday. Nearly two-thirds of the country wants to either keep or modify the Affordable Care Act, popularly known as Obamacare, and a majority of Americans want Congress to turn its attention to other priorities, the survey found. Republicans have vowed to dismantle the Affordable Care Act since Democratic President Barack Obama signed it into law in 2010, and it appeared they finally had their chance when Republican President Donald Trump took office in January. But the law, which helped 20 million people obtain health insurance, has steadily grown more popular. The July 28-29 poll of more than 1,130 Americans, conducted after the Republican-led effort collapsed in the Senate, found that 64 percent said they wanted to keep Obamacare, either "entirely as is" or after fixing "problem areas." That is up from 54 percent in January. The survey found that support for the law still runs along party lines, with nine out of 10 Democrats and just three out of 10 Republicans saying they wanted to keep or modify Obamacare. Among Republicans, three-fourths said they would like their party's leaders to try to repeal and replace Obamacare at some point, though most listed other issues that they would give a higher priority right now. Disappointment among Republicans and happiness among Democrats about the repeal's failure were palpable. Two-thirds of Republicans felt "bad" that the Senate failed to pass a healthcare bill, while three-fourths of Democrats felt "good," according to the Reuters/Ipsos poll.
Republicans urge Trump to keep critical health subsidies for low-income people - Republicans lawmakers are urging Donald Trump to continue paying critical health insurance subsidies that help lower-income people afford it, amid growing concern that the president will follow through on his threat to cancel them. Frustrated by his party’s failure to repeal the Affordable Care Act, Trump has dangled the possibility that he would stop the payments – a move that experts say would send insurance markets into turmoil and cause premiums to rise dramatically. Democrats have called the threat an attempt to “sabotage” the Affordable Care Act, often referred to as Obamacare. Senator Lamar Alexander, the chairman of the Senate health, education, labor and pensions Committee, announced on Tuesday that his committee would begin holding hearings after Labor Day to discuss bipartisan legislation “to stabilize and strengthen the individual health insurance market” in 2018. “There are a number of issues with the American healthcare system, but if your house is on fire, you want to put out the fire,” Alexander said in introductory remarks at the start of a committee hearing on Tuesday afternoon. “And the fire in this case is the individual health insurance market. Republicans and Democrats agree on this.” Alexander publicly called on the president to continue the payments to insurance companies, knowns as cost-sharing reduction (CSR) subsidies. The payments help insurance companies offset low-income customers’ out-of-pocket medical expenses such as deductibles and co-payments. “Without payment of these cost-sharing reductions Americans will be hurt,” he said. He described the impact of cutting off the payments, which total an estimated $7bn in 2017 and cover roughly 7 million people. Without the funding, he said, the insurance markets would unravel and insurers would likely exit the marketplaces, leaving consumers with few, or possibly no, coverage options to buy insurance through the marketplace exchanges.
Lawsuits could force feds to pay Obamacare insurers - POLITICO: A pending court decision could force the Trump administration to pump billions of dollars into Obamacare insurers, even as the president threatens to let the health care law “implode.” Health insurers have filed nearly two dozen lawsuits claiming the government owes them payments from a program meant to blunt their losses in the Obamacare marketplaces. That raises the prospect that the Trump administration will have to bankroll a program the GOP has pilloried as an insurer bailout. Insurers are owed more than $8 billion in payments, and the tab is likely to grow. Insurers say spending restrictions Republicans forced on the “risk corridors” program during the Obama administration, aside from being illegal, are partly to blame for severe turbulence in some Obamacare marketplaces.“[The Obama administration] repeatedly assured us it was there and it would be a clear obligation of the government,” said Tom Policelli, CEO of Minuteman Health, which is among the insurers suing the government over the shortfall. “Even the federal government is subject to the rules.”The fiscal hit to the feds could be huge if the insurers win. And it would be one more embarrassing setback for Republicans, who likely saw their best shot at dismantling Obamacare slip away in the Senate’s failed repeal vote early Friday morning. President Donald Trump, meanwhile, has threatened to pull billions in funding from a separate Obamacare subsidy program he's labeled a "bailout" for insurers. The courts have so far split on whether the government must pay risk corridor funding since the first lawsuits were filed last year. In November, Land of Lincoln Health, a now-defunct nonprofit startup in Illinois, lost its case in the Court of Federal Claims seeking more than $70 million. But in April, Oregon-based Moda Health was awarded more than $200 million.
Sanders: I'm 'absolutely' introducing single-payer healthcare bill | TheHill: Sen. Bernie Sanders (I-Vt.) said Sunday that he will “absolutely” introduce legislation on single-payer healthcare now that the Senate GOP’s bill to repeal ObamaCare has failed. “Of course we are, we’re tweaking the final points of the bill and we’re figuring out how we can mount a national campaign to bring people together,” Sanders told Jake Tapper on CNN’s State of the Union.Sanders promised to introduce a “Medicare for All” proposal once the debate over repealing ObamaCare ended. He is one of several progressive lawmakers who back the healthcare model that has divided Democratic lawmakers. It’s unclear exactly when he will introduce the legislation. The Senate has two weeks remaining in sessions. Sen. Steve Daines (R-Mont.) attached an amendment to one version of the ObamaCare repeal bill Wednesday that would have created a single-payer healthcare system in the U.S. Daines does not support a single-payer system but used the model as a political maneuver. Sanders’s spokesman slammed the amendment as a “sham” at the time and said Sanders and other Democrats would refuse to vote on the measure. Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions.
Bernie Sanders To Propose New Rule Requiring Fair Prices For Taxpayer-Funded Drugs | HuffPost: Sen. Bernie Sanders (I-Vt.) plans to propose a new rule Monday that would require pharmaceutical companies to charge fair prices for drugs developed with taxpayer-backed research, he told HuffPost.The rule, introduced as an amendment to the 1938 Federal Food, Drug, and Cosmetic Act, would force federal agencies and federally funded nonprofits, such as research universities, to secure a reasonable pricing agreement from a manufacturer before granting it exclusive rights to make drugs, vaccines or other health care products.The bill is Sanders’ latest attempt to stop the Department of Defense from awarding drugmaker Sanofi Pasteur an exclusive license to produce a Zika vaccine developed over the past year by the U.S. Army. The mosquito-borne virus is sexually transmitted and causes devastating birth defects. The Centers for Disease Control and Prevention recorded 181 cases in U.S. states this year alone, with another 532 reported in U.S. territories, such as Puerto Rico and the U.S. Virgin Islands.“The days of allowing Sanofi and other drug makers to gouge American consumers after taking billions in taxpayer money must end,” Sanders told HuffPost. “That is why I am introducing legislation to demand fairer, lower prices for the Zika vaccine and for every drug developed with government resources. This is a fight that we cannot afford to lose.”The Army granted Sanofi $43 million to conduct a second phase of trials on the vaccine, and, if successful, promised another $130 million to conduct a third phase. Yet the French pharmaceutical giant has refused to agree to sell the drug back to taxpayers at a fair price, despite demanding a patent that would prevent other drugmakers from competing to manufacture the vaccine at a lower cost. (Sanofi denied rejecting the Army’s request in a series of letters to senators this month.)
Bernie Sanders’ Drug Price Bill Would Save Billions, Congressional Analysts Say - Allowing Americans to purchase lower-priced medicines from other countries would save the federal government alone more than $6 billion, according to a new analysis from the Congressional Budget Office. The report comes as the pharmaceutical industry has ramped up its lobbying — including against a legislative initiative that would let Americans purchase lower-priced medicines from countries such as Canada.Under existing law, drugmakers are permitted to produce pharmaceuticals abroad and then import them into the United States, where on average they charge Americans the highest prices for medicines in the world. However, while drugmakers themselves are allowed to import medicines, current law prohibits U.S. consumers and pharmaceutical wholesalers from doing so, even when the same medicines are sold at much lower prices abroad.Spending millions on campaign donations and lobbying, the pharmaceutical industry has for years successfully fought off legislation to end the prohibition. This year — nearly 17 years after President Bill Clinton’s administration killed Democrats’ drug importation legislation — the importation initiative has once again been renewed. Looking to take advantage of President Donald Trump’s promise to lower drug prices, Vermont Sen. Bernie Sanders, along with 21 Democratic lawmakers, introduced the Affordable and Safe Prescription Drug Importation Act on Feb. 28. The bill was referred to the Senate’s Committee on Health, Education, Labor, and Pensions. CBO estimates that the change would in total reduce federal government drug spending by more than $6.8 billion over ten years, including a reduction of $5.1 billion in direct spending and roughly $1.7 billion in increased revenue.
Centrist lawmakers plot bipartisan health care stabilization bill - POLITICO: A coalition of roughly 40 House Republicans and Democrats plan to unveil a slate of Obamacare fixes Monday they hope will gain traction after the Senate’s effort to repeal the law imploded. The Problem Solvers caucus, led by Tom Reed (R-N.Y.) and Josh Gottheimer (D-N.J.), is fronting the effort to stabilize the ACA markets, according to multiple sources. But other centrist members, including Rep. Kurt Schrader (D-Ore.), and several other lawmakers from the New Democrat Coalition and the GOP’s moderate Tuesday Group are also involved. Their plan focuses on immediately stabilizing the insurance market and then pushing for Obamacare changes that have received bipartisan backing in the past. The most significant proposal is funding for Obamacare’s cost-sharing subsidies. Insurers rely on these payments – estimated to be $7 billion this year — to reduce out-of-pocket costs for their poorest Obamacare customers. President Donald Trump has repeatedly threatened to cut off the payments, deriding them as a “bailout” for insurance companies. White House counselor Kelly Conway said on Sunday that Trump will decide “this week” whether to scrap the subsidies — which could make the markets implode.
Senator announces bipartisan health care hearing on Obamacare - (CNN) Several Republican and Democrat lawmakers agree that Congress needs to prevent a collapse of the health insurance market, which could hurt millions of consumers -- and that concern has opened up some bipartisan dialogue. Sen. Lamar Alexander, R-Tennessee, said the Senate health committee will hold bipartisan health care hearings on how to repair the individual market. In the House, a group of 40 lawmakers from both parties endorsed an outline of ideas aimed at making urgent fixes to Obamacare. The step toward bipartisanship on health care comes as some Republicans consider an approach that diverges from the president's stance. President Donald Trump has taken a hard line on Obamacare after legislative efforts failed last week in the Senate, saying that he wants to "let Obamacare implode." In tweets this weekend, he threatened to stop paying insurance companies cost-sharing subsidies that help lower out-of-pocket expenses for low-income policyholders, calling them "bailouts."On Tuesday, Alexander announced that the Senate's health committee would begin hearings in September on stabilizing the individual health insurance market."If your house is on fire, you want to put out the fire, and the fire in this case is the individual health insurance market," he said in a statement. "Both Republicans and Democrats agree on this." Alexander said in the statement that he was working with Sen. Patty Murray, D-Washington, to make the hearings bipartisan.Congress has to come up with a solution before September 27, when insurers sign contracts with the federal government over what insurance plans to sell on the exchange for 2018. About 18 million Americans who get their insurance in the individual market stand to be affected, he said. "Unless we act, many of them may not have policies available to buy in 2018 because insurance companies will pull out of collapsing markets," Alexander said.
What the US “Health Care Reform” Debate Did Not Address - Roy Poses, MD, President of FIRM – the Foundation for Integrity and Responsibility in Medicine.- It looks like the bizarre process in the US Senate ostensibly to “repeal and replace Obamacare” (aka the Affordable Care Act, or ACA) may be ending, at least for now. I can only hope that further discussion of health care reform will let sanity prevail, and start to address the major issues that have led to the massive dysfunction of US health care, but were not discussed during the latest kerfuffle (and not even discussed much in the real debate that preceded the introduction of the ACA.) On Health Care Renewal we have discussed some of the issues that have received much less attention than the Senate process and the push by the Trump administration to get rid of Obamacare. I submit the country needs to revisit these issues (and in some cases face them for the first time). Despite some protestations to the contrary (e.g., here), the US health care system has been plagued by dysfunction. According to a recent Commonwealth Fund study, the US was ranked 11 out of 11 in health care quality, but 1 out of 11 in costs. Traditionally, health care reform has targeted ongoing problems in the cost, accessibility and quality of health care. The ACA notably seems to have improved access, but hardly addressed cost or quality. Early on we noticed a number of factors that seemed enable increasing dysfunction, but were not much discussed. These factors notably distorted how medical and health care decisions were made, leading to overuse of excessively expensive tests and treatments that provided minimal or no benefits to outweight their harms.
Trump, GOP senators unveil measure to cut legal immigration | TheHill: President Trump on Wednesday teamed up with two conservative Republican senators to roll out new legislation aimed at dramatically curbing legal immigration to the United States, a key Trump campaign promise. Sens. Tom Cotton (R-Ark.) and David Perdue (R-Ga.) have been working with White House officials to revise and expand a bill released earlier this year that would halve the number of people who receive legal permanent residence over a decade. The senators joined Trump at a White House ceremony to announce the measure. The president told reporters in the Roosevelt Room that the measure “would represent the most significant reform to our immigration system in a half a century." They say the legislation would move the United States to a "merit-based" immigration system and away from the current model, which is largely based on family ties. The measure reflects Trump’s rhetoric during the 2016 campaign, when he argued that the spike in legal immigration over the past several decades has taken job opportunities away from American citizens and threatened national security.
Graham opposes measure to cut legal immigration | TheHill: Sen. Lindsey Graham(R-S.C.) is against a merit-based immigration bill unveiled earlier Wednesday by President Trump and Sens. Tom Cotton (R-Ark.) and David Perdue (R-Ga.). Graham, who last month proposed a renewed version of the DREAM Act alongside Sen. Dick Durbin (D-Ill.), warned Cotton and Perdue's bill could hurt the agriculture and tourism industries. “I've always supported merit-based immigration. I think we should always want to attract the best and brightest to the United States," Graham said in a statement. "Unfortunately, the other part of this proposal would reduce legal immigration by half, including many immigrants who work legally in our agriculture, tourism and service industries.” The Perdue-Cotton Reforming American Immigration for a Strong Economy (RAISE) Act, would halve the number of green cards given to foreigners and prioritize skilled immigration over family reunification. That would be a drastic change for the U.S. immigration system, which currently prioritizes immediate family members and adult children of permanent residents and citizens. Reducing the number of low-skilled immigrants allowed in the country would diminish the workforce available for industries that depend on those immigrants, Graham warned. “South Carolina’s number one industry is agriculture, and tourism is number two. If this proposal were to become law, it would be devastating to our state’s economy, which relies on this immigrant workforce," he added.
Immigration critics find their champion in Trump | TheHill: The White House's endorsement of legislation limiting legal immigration is a watershed moment for groups that have been pushing the idea for years. Organizations calling for a reduction to legal immigration had in the past been relegated to the political fringes, with leaders in both parties shying away from direct support for their cause. But the election of President Trump has fundamentally reshaped the politics of immigration, bringing their ideas into the mainstream debate. Trump on Wednesday appeared alongside Sens. Tom Cotton (R-Ala.) and David Perdue (R-Ga.) to promote the Reforming American Immigration for a Strong Economy (RAISE) Act, which would cut legal immigration to the U.S. in half. Some of the most prominent organizations and think tanks that advocate for reduced immigration, the Center for Immigration Studies (CIS), the Federation for American Immigration Reform (FAIR) and NumbersUSA, enthusiastically backed the bill. "President Trump, and bill sponsors Senators Tom Cotton and David Perdue, should be applauded for recognizing the current dysfunction of our outdated immigration policies that, unlike the rest of the nation, have been stuck in a time warp for the last 50 years," said Dan Stein, president of FAIR, in support of the RAISE Act. The bill would halve the number of new green cards each year and establish new conditions for permanent residency, including a requirement for potential immigrants to learn English before moving to the United States. Pro-immigrant groups slammed the measure, calling it a "nativist agenda."
Trump urged Mexican president to end his public defiance on border wall, transcript reveals --President Trump made building a wall along the southern U.S. border and forcing Mexico to pay for it core pledges of his campaign.But in his first White House call with Mexico’s president, Trump described his vow to charge Mexico as a growing political problem, pressuring the Mexican leader to stop saying publicly that his government would never pay. “You cannot say that to the press,” Trump said repeatedly, according to a transcript of the Jan. 27 call obtained by The Washington Post. Trump made clear that he realized the funding would have to come from other sources but threatened to cut off contact if Mexican President Enrique Peña Nieto continued to make defiant statements. The funding “will work out in the formula somehow,” Trump said, adding later that “it will come out in the wash, and that is okay.” But “if you are going to say that Mexico is not going to pay for the wall, then I do not want to meet with you guys anymore because I cannot live with that.” He described the wall as “the least important thing we are talking about, but politically this might be the most important.” The heated exchange came during back-to-back days of calls that Trump held with foreign leaders a week after taking office. The Post has obtained transcripts of Trump’s talks with Peña Nieto and Australian Prime Minister Malcolm Turnbull.Produced by White House staffers, the documents provide an unfiltered glimpse of Trump’s approach to the diplomatic aspect of his job, subjecting even a close neighbor and long-standing ally to streams of threats and invective as if aimed at U.S. adversaries.The Jan. 28 call with Turnbull became particularly acrimonious. “I have had it,” Trump erupted after the two argued about an agreement on refugees. “I have been making these calls all day, and this is the most unpleasant call all day.” Before ending the call, Trump noted that at least one of his conversations that day had gone far more smoothly. “Putin was a pleasant call,” Trump said, referring to Russian President Vladimir Putin. “This is ridiculous.”
Why Leaking Transcripts of Trump’s Calls Is So Dangerous -- Leaking the transcript of a presidential call to a foreign leader is unprecedented, shocking, and dangerous. It is vitally important that a president be able to speak confidentially—and perhaps even more important that foreign leaders understand that they can reply in confidence. Thursday’s leak to The Washington Post of President Trump’s calls with the president of Mexico and the prime minister of Australia will reverberate around the world. No leader will again speak candidly on the phone to Washington, D.C.—at least for the duration of this presidency, and perhaps for longer. If these calls can be leaked, any call can be leaked—and no leader dare say anything to the president of the United States that he or she would not wish to read in the news at home. In March, I warned about the risk of judicial overreach: In response to the danger posed by Trump, other American power holders will be tempted to jettison their historic role too, and use any tool at hand—no matter how doubtfully legitimate—to stop him. Those alternative power holders may even ultimately win. But in winning, they may discover themselves in the same tragic position as that Vietnam-era army officer who supposedly said: “We had to destroy the village in order to save it.” The risk of national-security establishment overreach looms even larger. The temptation is obvious: Senior national-security professionals regard Trump as something between (at best) a reckless incompetent doofus and (at worst) an outright Russian espionage asset. The fear that a Russian mole has burrowed into the Oval Office may justify, to some, the most extreme actions against that suspected mole.
Steve Bannon Wants Facebook and Google Regulated Like Utilities --Tech companies like Facebook and Google that have become essential elements of 21st-century life should be regulated as utilities, top White House adviser Steve Bannon has argued, according to three people who’ve spoken to him about the issue.Bannon’s push for treating essential tech platforms as utilities pre-dates the Democratic “Better Deal” that was released this week. “Better Deal,” the branding for Democrats’ political objectives, included planks aimed at breaking up monopolies in a variety of sectors, suggesting that anti-monopoly politics is on the rise on both the right and left.Bannon’s basic argument, as he has outlined it to people who’ve spoken with him, is that Facebook and Google have become effectively a necessity in contemporary life. Indeed, there may be something about an online social network or a search engine that lends itself to becoming a natural monopoly, much like a cable company, a water and sewer system, or a railroad. The sources recounted the conversations on the condition of anonymity because they were not authorized to give the accounts on record, and could face repercussions for doing so. (It’s not Bannon’s only counterintuitive proposal to float this week: he has also told people close to him he wants to raise the top marginal tax rate to 44 percent for people who earn more than $5 million per year.) Regulating a company as a utility does not mean that the government controls it, but rather that it is much more tightly regulated in what it is able to do and prices it is able to charge. And it doesn’t mean every element of the company would be regulated in that way. For Google — which now calls itself Alphabet and has already conveniently broken itself up into discrete elements — it may only be the search function that would be regulated like a utility.
Politicians’ social media pages can be 1st Amendment forums, judge says - We've been covering a recent First Amendment lawsuit targeting President Donald Trump—a novel legal argument in which Twitter users claim their constitutional rights were violated because the commander-in-chief blocked them from his personal @realDonaldTrump Twitter handle. Now there's some legal precedent on the matter. It comes from a federal judge in Virginia who said that a local politician had violated the First Amendment rights of a constituent because the politician briefly banned the constituent from the politician's personal Facebook account."The suppression of critical commentary regarding elected officials is the quintessential form of viewpoint discrimination against which the First Amendment guards," US District Judge James Cacheris wrote Tuesday in a suit brought by a constituent against Phyllis Randall, the chairwoman of the Loudoun County Board of Supervisors in Virginia.The judge didn't issue any punishment against Randall, as the Facebook ban for constituent Brian Davison only lasted about 12 hours. That said, the judge noted Randall committed "a cardinal sin under the First Amendment" by barring the constituent who posted about county corruption. What's more, the judge pointed out from the first sentence of the ruling that "this case raises important questions about the constitutional limitations applicable to social media accounts maintained by elected officials." Randall's Facebook page, the judge ruled, "operates as a forum for speech under the First Amendment to the US Constitution."
Hackers break into voting machines in 90 minutes | TheHill: — One of the nation’s largest cybersecurity conferences is inviting attendees to get hands-on experience hacking a slew of voting machines, demonstrating to researchers how easy the process can be. “It took me only a few minutes to see how to hack it,” said security consultant Thomas Richards, glancing at a Premier Election Solutions machine currently in use in Georgia. The DEF CON cybersecurity conference is held annually in Las Vegas. This year, for the first time, the conference is hosting a "Voting Machine Village" where attendees can try to hack a number of systems and help catch vulnerabilities. The conference acquired 30 machines for hackers to toy with. Though voting machines are technologically simple, they are difficult for researchers to obtain for independent research. The machine that Richards learned how to hack used beneath-the-surface software, known as firmware, designed in 2007. But a number of well-known vulnerabilities in that firmware have developed over the past decade. “I didn’t come in knowing what to expect, but I was surprised by what I found,” he said. He went on to list a group of actions he hoped states would take to help secure machines, including increasing testing opportunities for outside hackers and transparency in voting machine design. Speakers and organizers said they hoped the village would raise awareness about election machine security issues within the cybersecurity community.
Senators buck Sessions, move to protect state medical marijuana laws - The Senate Appropriations Committee on Thursday approved a budget amendment that would prevent the Department of Justice from cracking down on state-legal medical marijuana—likely to the consternation of Attorney General Jeff Sessions.The amendment prevents the Department of Justice from using any of its funds to prevent states from “implementing a law that authorizes the use, distribution, possession, or cultivation of medical marijuana.” It was added by a voice vote to the 2018 Commerce, Justice, and Science appropriations bill.The amendment is similar to the Rohrabacher-Farr amendment, which was present in an appropriations bill covering fiscal 2017 and has been around for years. Rep. Dana Rohrabacher (R-Calif.) is also moving a similar amendment through the House. The efforts fly in the face of Sessions, who personally wrote to Congressional leaders earlier this year asking them to ditch such provisions for legislation covering fiscal year 2018. He argued that the DOJ must have full power to assert federal law and combat “dangerous drug traffickers who threaten American lives.” In earlier statements on the issue, Sessions had proclaimed that "good people don’t smoke marijuana." But Senators clearly disagreed with his stance. “The federal government can't investigate everything and shouldn’t, and I don’t want them pursuing medical marijuana patients who are following state law,” Sen. Patrick Leahy (D-Vt.), who offered the amendment, told The Hill. “We have more important things for the Department of Justice to do than tracking down doctors or epileptics using medical marijuana legally in their state."
Trump’s attacks stun Republican senators | TheHill: President Trump’s management style isn’t making him many friends in Congress. Trump’s habit of bullying his allies has sown seeds of doubt about whether any political sacrifice by a GOP lawmaker will be rewarded — or even remembered — by the president.Trump’s pointed criticism of Attorney General Jeff Sessions, who was the only senator to endorse Trump for much of last year’s presidential campaign, has shocked many GOP lawmakers on Capitol Hill who have rallied to their former colleague’s defense. Sen. Lindsey Graham Lindsey (R-S.C.), who served for years with Sessions on the Judiciary Committee, said Trump “belittling and humiliating the attorney general” was “unseemly” and “inappropriate.” The public shots are “a sign of great weakness on the part of President Trump,” he said. What bothers lawmakers the most is that Trump seems to want to embarrass his targets. Some note that Sessions resigned from his safe Senate seat to join the executive branch and work for Trump. They say it is wrong that Sessions has become a target of the president’s ire for following Justice Department guidelines and recusing himself from oversight of the Russia investigation.
Kelly called Sessions to assure him job is safe: report | TheHill: White House chief of staff John Kelly reassured Attorney General Jeff Sessions that President Trump is not going to fire him despite his public criticism in recent weeks, according to a new report on Wednesday. Kelly told Sessions in a phone call on Saturday that he has the support of the White House, two sources familiar with the conversation told the Associated Press. Kelly has the authority of the president on many senior staffing decisions.During the call, which took place on the weekend before Kelly officially took over as chief of staff, Kelly stressed that while the president is still upset with Sessions, he does not plan on firing him or pushing him to resign. The president has said he is "disappointed" with Sessions and views his decision to recuse himself from the probe into Russian election interference as "unfair" to him. "We will see what happens," Trump said when asked last week about Sessions' future in the president's Cabinet. Kelly moved into his new position from his previous position as head of the Department of Homeland Security on Monday. He immediately set about reordering the White House staff, starting by firing Anthony Scaramucci, who held his position as communications director for just over a week.
Jeff Sessions Promises to Crack Down on Leaks, Threatening to Subpoena Reporters -- Attorney General Jeff Sessions announced a dramatic escalation in the U.S. government’s crackdown on leaks on Friday, threatening to subpoena news organizations for information about their sources even more frequently than the Obama administration. Sessions described the Trump administration’s plans at a press conference just a day after the Washington Post published embarrassing transcripts of phone calls between Donald Trump and two foreign leaders, Mexican President Enrique Peña Nieto and Australian Prime Minister Malcolm Turnbull.Sessions said that the Justice Department was reviewing Obama-era policies that set limits on its ability to subpoena journalists.“We respect the important role that the press plays, and will give them respect, but it is not unlimited,” said Sessions. “They cannot place lives at risk with impunity. We must balance the press’s role with protecting our national security, and the lives of those that serve in the intelligence community, the armed forces, and all law-abiding Americans.” “The Department of Justice is explicitly threatening to haul journalists before grand juries and force them to testify about their confidential sources or face jail time,” said Peter Sterne, a senior reporter at the Freedom of the Press Foundation. “Sessions’s comments seem intended to have a chilling effect on journalism, by making reporters and their sources think twice before publishing information that the government does not like.” “Our founders understood that democracy depends on an informed citizenry, and leaders can’t be trusted to disclose vital information that reflects poorly on themselves,” said Ben Wizner, a First Amendment lawyer with the ACLU, in a statement. “These first months of the Trump administration dramatically illustrate that point. Can anyone seriously argue that our country would be better off if the public received all of its information through official channels alone?”
Sessions Declares War On Leakers, Threatens Press With Subpoenas: "We Will Not Hesitate To Bring Criminal Action" - President Donald Trump’s strategy of publicly shaming Attorney General Jeff Sessions to force him to aggressively pursue the leakers who have been a persistent source of agitation for his administration appears to have worked. After announcing during a press conference last month that he wanted Sessions “to go full-bore” in his pursuit of leakers, the “beleaguered” attorney general appears to be doing exactly that. During a live press briefing on Friday that was tantamount to a declaration of war, Sessions said the Department of Justice will be cracking down on leaks of classified information, and is considering subpoenaing journalists to force them to reveal their sources in the Trump administration.Furthermore, the attorney general boasted that scrutiny of leakers is already a priority for the DOJ, claiming that the number of open leak investigations has tripled during the Trump administration. Under the new policy framework, the FBI will create a counterintelligence unit specifically to manage these cases, according to the Hill.“We are taking a stand,” Mr Sessions said. “This culture of leaking must stop," according to the Financial Times.“These leaks hurt our country,” said Mr Sessions. “Every agency — and Congress — must do better.”Sessions said the department will prioritize “unauthorized” disclosures – we assume this means leaks that aren’t a part of official communications department strategy which is…probably all of them – and that the DOJ “will not hesitate” to press criminal charges.
Four charged with leaks from Trump administration as attorney general vows crackdown - Four people have been charged with leaking information from the Trump administration, the US attorney general announced on Friday, as he took an aggressive stand against the deluge of leaks that have plagued the first six months of the presidency. Jeff Sessions, who was taunted by his boss, President Donald Trump, for being weak on leakers, said that he would leave no stone unturned in the hunt for the culprits. His remarks came after the highly-damaging, and highly unusual, leak of transcripts of Mr Trump’s telephone calls with the leaders of Mexico and Australia. "No one is entitled to surreptitiously fight their battles in the media by revealing sensitive government information,” said Mr Sessions. “No government can be effective when its leaders cannot discuss sensitive matters in confidence or to talk freely in confidence with foreign leaders." Mr Sessions did not provide details of the four, besides confirming said they had been charged with unlawfully disclosing classified information or concealing contacts with foreign intelligence officers. But, in his remarks at the justice department, he announced that his department has more than tripled the number of active leaks investigations compared to the number pending when President Barack Obama left office. He also said the department is reviewing guidelines related to subpoenas of journalists. "This nation must end the culture of leaks,” he said, in remarks guaranteed to please his boss. “We will investigate and seek to bring criminals to justice. We will not allow rogue anonymous sources with security clearances to sell out our country any longer.” Kellyanne Conway, a White House adviser, on Friday morning even raised the possibility of using lie detector tests to root out leakers. "It's easier to figure out who's leaking than the leakers may realise," she said.
Senate overwhelmingly approves Christopher Wray as new FBI director - The Senate easily confirmed Christopher Wray to lead the FBI on Tuesday, approving President Trump's nominee to succeed James B. Comey. The vote, 92 to 5, was a reflection of the Senate's confidence in Wray's credentials as a Yale-educated former Justice Department official and as a top cop who vowed to maintain the bureau's independence, resisting interference even from the president.Trump abruptly fired Comey in May, and his shifting reasons only deepened questions of possible cooperation between the president's campaign and Russian interference in the 2016 election. The president eventually admitted that he fired Comey because he was displeased with the FBI's Russia probe.Wray started his work in Washington during the George W. Bush administration after serving as a federal prosecutor in Georgia. He rose to become an assistant attorney general.Later, in private practice he represented New Jersey Gov. Chris Christie amid the "Bridgegate" scandal that led to charges against several of the governor's top aides. Wray told senators during his confirmation hearing that as FBI director he would not bow to pressure from anyone, even the president. He supports the investigation now underway by special counsel Robert S. Mueller III into Russia's election interference, he said. “I would consider an effort to tamper with Director Mueller’s investigation to be unacceptable and inappropriate,” he testified in July.
Senate blocks Trump from making recess appointments over break | TheHill: The Senate blocked President Trump from being able to make recess appointments on Thursday as lawmakers leave Washington for their August break. Sen. Lisa Murkowski (R-Alaska), doing wrap up for the entire Senate, locked in nine "pro-forma" sessions — brief meetings that normally last roughly a minute. The move, which requires the agreement of every senator, means the Senate will be in session every three business days throughout the August recess. The Senate left D.C. on Thursday evening with most lawmakers not expected to return to Washington until after Labor Day. Senators were scheduled to be in town through next week, but staffers and senators predicted they would wrap up a few remaining agenda items and leave Washington early.
WSJ Asks "Who Paid For The 'Trump Dossier'?" -- It has been 10 days since Democrats received the glorious news that Senate Judiciary Chairman Chuck Grassley would require Donald Trump Jr. and Paul Manafort to explain their meeting with Russian operators at Trump Tower last year. The left was salivating at the prospect of watching two Trump insiders being grilled about Russian “collusion” under the klieg lights.Yet Democrats now have meekly and noiselessly retreated, agreeing to let both men speak to the committee in private. Why would they so suddenly be willing to let go of this moment of political opportunity?Fusion GPS. That’s the oppo-research outfit behind the infamous and discredited “Trump dossier,” ginned up by a former British spook. Fusion co-founder Glenn Simpson also was supposed to testify at the Grassley hearing, where he might have been asked in public to reveal who hired him to put together the hit job on Mr. Trump, which was based largely on anonymous Russian sources. Turns out Democrats are willing to give up just about anything—including their Manafort moment—to protect Mr. Simpson from having to answer that question.What if, all this time, Washington and the media have had the Russia collusion story backward? What if it wasn’t the Trump campaign playing footsie with the Vladimir Putin regime, but Democrats? The more we learn about Fusion, the more this seems a possibility. We know Fusion is a for-hire political outfit, paid to dig up dirt on targets. This column first outed Fusion in 2012, detailing its efforts to tar a Mitt Romney donor. At the time Fusion insisted that the donor was “a legitimate subject of public records research.”
Trump dictated son’s misleading statement on meeting with Russian lawyer -WaPo -On the sidelines of the Group of 20 summit in Germany last month, President Trump’s advisers discussed how to respond to a new revelation that Trump’s oldest son had met with a Russian lawyer during the 2016 campaign — a disclosure the advisers knew carried political and potentially legal peril. The strategy, the advisers agreed, should be for Donald Trump Jr. to release a statement to get ahead of the story. They wanted to be truthful, so their account couldn’t be repudiated later if the full details emerged. But within hours, at the president’s direction, the plan changed. Flying home from Germany on July 8 aboard Air Force One, Trump personally dictated a statement in which Trump Jr. said that he and the Russian lawyer had “primarily discussed a program about the adoption of Russian children” when they met in June 2016, according to multiple people with knowledge of the deliberations. The statement, issued to the New York Times as it prepared an article, emphasized that the subject of the meeting was “not a campaign issue at the time.”The claims were later shown to be misleading.Over the next three days, multiple accounts of the meeting were provided to the news media as public pressure mounted, with Trump Jr. ultimately acknowledging that he had accepted the meeting after receiving an email promising damaging information about Hillary Clinton as part of a Russian government effort to help his father’s campaign.The extent of the president’s personal intervention in his son’s response, the details of which have not previously been reported, adds to a series of actions that Trump has taken that some advisers fear could place him and some members of his inner circle in legal jeopardy.As special counsel Robert S. Mueller III looks into potential obstruction of justice as part of his broader investigation of Russian interference in the 2016 election, these a dvisers worry that the president’s direct involvement leaves him needlessly vulnerable to allegations of a coverup.
New White House Leak to WaPo Over Trump Jr.-Russian Meeting is Backhanded Slap to the Face of Gen. Kelly -- Scaramucci is gone and the General is in, so you thought the leaks would end. WRONG. This might be one of the worst leaks yet. Or, you might want to simply call it 'fake news.' Either way, General Kelly will have his hands full at the Trump White House, which appears to be populated with the scummiest people on the face of the planet -- real self-fellatiors. According to the Washington Post, an unnamed source inside the White said Trump directed Trump Jr. media response, addressing his meeting with Russians. Flying home from Germany on July 8 aboard Air Force One, Trump personally dictated a statement in which Trump Jr. said that he and the Russian lawyer had “primarily discussed a program about the adoption of Russian children” when they met in June 2016, according to multiple people with knowledge of the deliberations. The statement, issued to the New York Times as it prepared an article, emphasized that the subject of the meeting was “not a campaign issue at the time.” The claims were later shown to be misleading. Over the next three days, multiple accounts of the meeting were provided to the news media as public pressure mounted, with Trump Jr. ultimately acknowledging that he had accepted the meeting after receiving an email promising damaging information about Hillary Clinton as part of a Russian government effort to help his father’s campaign. The extent of the president’s personal intervention in his son’s response, the details of which have not previously been reported, adds to a series of actions that Trump has taken that some advisers fear could place him and some members of his inner circle in legal jeopardy.
With one dictated statement, Trump may build the obstruction case against himself | TheHill: Yesterday the Washington Post reported that President Trump personally dictated a statement for his son Donald Trump Jr. to give regarding his meeting with a Russian lawyer, indicating that they "primarily discussed a program about the adoption of Russian children" that was "not a campaign issue at the time." The president's dictation of this statement to his son will create significant legal headaches for him and could be used by Robert Mueller, special counsel for the Justice Department's Russia investigation, as evidence of his corrupt intent as part of an existing obstruction of justice investigation. The statement reportedly dictated by the president proved to be misleading — at best — after Trump Jr. released an email string that showed the purpose of the meeting was actually to "provide some official documents and information that would incriminate Hillary and her dealings with Russia" as "part of Russia and its government’s support for Mr. Trump." If true, the president's decision to personally dictate the statement to Donald Trump Jr. raises a serious question: Why was the president motivated to craft this statement? His decision to do so would suggest that he was highly motivated to shape his son's account of the purpose of the meeting. Given that the statement was later shown to be deceptive, the president's authorship of the statement could suggest a strong desire to hide the truth about the meeting from the public or a desire to influence his son's account of what happened. Conversations between the president and his son about this public statement would not be privileged, and Mueller's team would likely have significant questions for both men about how the statement was written and the conversations they had regarding the statement. Did the president have prior independent knowledge of the meeting or its aftermath? What did Trump Jr. tell the president about what was discussed at the meeting? Did he object at all to the president's characterization of the meeting in the statement? The president has once again proven to be his own worst enemy in the growing obstruction of justice case being assembled by Mueller's team.
Video shows Trump's lawyer previously denied the president was involved with Trump Jr.'s misleading statement about meeting with a Russian lawyer - A Washington Post report published Monday contradicted comments made last month by one of the attorneys representing President Donald Trump in the Russia investigation. The attorney, Jay Sekulow, previously said Trump had nothing to do with a statement his son Donald Trump Jr. released to answer questions about a 2016 campaign-trail meeting he had with a Kremlin-linked Russian lawyer. The Post on Monday, however, reported that the president was actually behind the statement, which was quickly found to be misleading. Sekulow told news outlets in July that the president "didn't sign off on anything" and "wasn't involved" in drafting the first statement Trump Jr. used to defend his meeting with the Russian lawyer, Natalia Veselnitskaya. The initial statement said only that the meeting centered on Russian adoptions. It was revealed over several days, however, that Trump Jr. accepted the meeting on the premise that he would receive damaging information about Hillary Clinton that an email suggested was "part of Russia and its government's support for Mr. Trump." Watch footage of Sekulow denying Trump's involvement below:
Exclusive: Former Justice Department official joins Mueller team | Reuters: (Reuters) - A former U.S. Justice Department official has become the latest lawyer to join special counsel Robert Mueller's team investigating Russia's interference in the 2016 presidential election, a spokesman for the team confirmed. Greg Andres started on Tuesday, becoming the 16th lawyer on the team, said Josh Stueve, a spokesman for the special counsel. Most recently a white-collar criminal defense lawyer with New York law firm Davis Polk & Wardwell, Andres, 50, served at the Justice Department from 2010 to 2012. He was deputy assistant attorney general in the criminal division, where he oversaw the fraud unit and managed the program that targeted illegal foreign bribery. Mueller, who was appointed special counsel in May, is looking into possible collusion between the Trump campaign and Russia during the election, among other matters. Congressional committees are also investigating the matter. That Mueller continues to expand his team means the probe is not going to end anytime soon, said Robert Ray, who succeeded Kenneth Starr as independent counsel for the Whitewater investigation during the Clinton administration. "It's an indication that the investigation is going to extend well into 2018," said Ray. "Whether it extends beyond 2018 is an open question."
Special counsel Mueller impanels grand jury in Russia probe, WSJ reports - Robert Mueller, the special counsel overseeing the Russia investigation, has impaneled a grand jury in Washington, The Wall Street Journal reported Thursday.The move means the probe is intensifying and could stretch "for months," according to the newspaper. Impaneling a grand jury suggests Mueller "believes he will need to subpoena records and take testimony from witnesses," the Journal said. It does not necessarily mean he will bring charges against Trump allies. Former FBI Director Mueller is investigating Russian efforts to influence the 2016 election and whether the Trump campaign colluded with the Kremlin. The investigation has dogged and frustrated President Donald Trump during his first six months in office. The president has repeatedly called it a "witch hunt" and denied any collusion with Moscow. He and his allies have also been critical of Mueller. The Justice Department appointed Mueller after Trump fired former FBI chief James Comey. White House press secretary Sarah Huckabee Sanders issued a statement responding to the grand jury report:Ty Cobb, special counsel to the president, said he wasn't aware that Mr. Mueller had started using a new grand jury. "Grand jury matters are typically secret," Mr. Cobb said. "The White House favors anything that accelerates the conclusion of his work fairly....The White House is committed to fully cooperating with Mr. Mueller."Former FBI Director Jim Comey said three times the President is not under investigation and we have no reason to believe that has changed.Trump lawyer John Dowd told NBC News the president's legal t eam has been "cooperating with Bob Mueller and his staff since the first of June because we're trying to get this thing over and done with." Separately, CNN reported that Mueller's team has looked toward Trump and his associates' possible financial relationships with Russia. It "could offer a more concrete path toward potential prosecution" than the question of collusion with Moscow, according to the news network. Trump previously told The New York Times he considers Mueller looking at his finances a "red line" in the investigation.
Grand jury used in Trump-Russia investigation - BBC News: The special counsel investigating claims of Russian meddling in the US election has begun using a grand jury in Washington, reports say. The move suggests Robert Mueller may be taking a more aggressive approach to gathering data on possible collusion with Donald Trump's campaign team. Grand juries are used to issue subpoenas to compel people to testify. The president has again poured scorn on the inquiry, telling a rally in West Virginia it was a "total fabrication". In the US, grand juries are composed of members of the public who hear evidence in secret. Prosecutors use them to gather evidence, as they can compel people to testify or hand over documentation. They consider whether evidence is strong enough to issue indictments for a criminal trial. The juries do not decide the innocence or guilt of a potential defendant. Prosecutors have for months been using a grand jury in the Eastern District of Virginia, which had issued some subpoenas in the case, reports say.Mr Mueller has now opted for one of the several grand juries that sit in Washington, and reportedly began using it several weeks ago. Analysts say it shows Mr Mueller is taking full control of the investigation. He has already replaced most of the prosecutors originally on the case, in favour of his own legal minds. The switch from Virginia to Washington is also more practical. Mr Mueller's office will be closer and he knows the Washington federal courthouse better.
Trump-Russia probe expands to possible financial crimes: report | TheHill: The federal probe into alleged ties between the Trump campaign and Russia has expanded to focus on possible financial crimes, including those not necessarily related to the 2016 presidential campaign, CNN reported Thursday. CNN reported that some leads unrelated to Russia, but that involved individuals close to President Trump, are being passed along to special counsel Robert Mueller, who is leading the probe, to encourage cooperation. Acting Attorney General Rod Rosenstein noted in the letter appointing Mueller in May that the special counsel can probe any matters that "arose or may arise directly from the investigation." The president publicly warned Mueller to not investigate his business transactions during a New York Times interview last month, saying the special counsel would be crossing a line. But Bloomberg reported in July that Mueller was looking into Trump's past business transactions, including purchases from Russian buyers at Trump properties, the 2013 Miss Universe pageant in Moscow, a SoHo development involving Russian associates and Trump's 2008 sale of a Florida mansion to a Russian oligarch. CNN also reported Thursday that former Trump campaign adviser Carter Page had been the subject of a secret intelligence surveillance warrant since 2014, much earlier than previously thought. The Washington Post reported earlier this year that the FBI had obtained a warrant targeting Page in the summer of 2016.
Senators Unveil Two Bipartisan Bills To Block Trump Firing Mueller --Two separate bills - both with bipartisan backing from two Senate Judiciary Committee members - are being put forth to protect Special Counsel Robert Mueller's job. As NBC News reports, the new legislation aims to ensure the integrity of current and future independent investigations, and "ensuring that the special counsel cannot be removed improperly is critical to the integrity of his investigation." NBC News notes that Trump has been critical of Mueller since his appointment, and the president's legal team is looking into potential conflicts surrounding the team Mueller has hired, including the backgrounds of members and political contributions by some members of his team to Hillary Clinton. He has also publicly warned Mueller that he would be out of bounds if he dug into the Trump family's finances. However, Mueller has strong support on Capitol Hill. And now, as NBC reports, two bills are being unveiled - from within the Senate Juduciary Committee - blocking a president from firing any special counsel, without a federal judge's approval if the president or his Administration is the center of the investigation.
- Bill 1. Republican Sen. Thom Tillis of North Carolina and Democratic Sen. Chris Coonsof Delaware plan to introduce the legislation Thursday. The bill would allow any special counsel for the Department of Justice to challenge his or her removal in court, with a review by a three-judge panel within 14 days of the challenge.
- Bill 2. Republican Sen. Lindsey Graham of South Carolina, another member of the judiciary panel, said last week that he was working on a similar bill that would prevent the firing of a special counsel without judicial review. Graham said then that firing Mueller "would precipitate a firestorm that would be unprecedented in proportions."
Russian Lawyer Natalia Veselnitskaya Slams Congress: "They Don't Want The Truth" -- Congressional investigators have dragged Jared Kushner, Donald Trump Jr. and Paul Manafort to grill them about a now-infamous June 2016 meeting at Trump Tower that is at the center of the Democrats’ dubious narrative that the Trump campaign somehow colluded with the Russian government to tilt the election in Trump’s favor. But for whatever reasons, they have no interest in speaking with anyone from the Russian side, including Natalia Veselnitskaya, the Russian lawyer at the center of the meeting. Veselnitskaya revealed as much during a 10-minute interview with the Russian news program Vesti, saying she sought the meeting as part of her efforts to help Russian businessman Denis Katsyv, a client of hers who was targeted with sanctions through the Magnitsky Act. Neither Hillary Clinton, nor the Trump campaign were discussed during the meeting, she said. “I asked for help - help to get out a story I had come across in my professional capacity.” The meeting “had nothing to do with [then-candidate Donald Trump’s] rivals or the presidential election,” she added. “That never happened. That’s not true.”She expressed frustration that US investigators have not asked for her side of the story, telling her audience that the US Congress isn't interested in the truth.Mr. Veselnitskaya also complained that she had not been invited to testify at any of the hearings of the multiple House and Senate committees looking into the Trump-Russia collusion charges. “They don’t want the truth there at the moment. They need an enemy,” she said. “Some because they are looking to undermine Trump, some because they want to fuel the conflict with Russia.”
House Judiciary Republicans Call For Second Special Counsel To Investigate Clinton, Comey, Lynch -- Republicans on the House Judiciary Committee are asking the Justice Department to appoint a second special counsel, this one to investigate Hillary Clinton, former FBI Director James Comey and former Attorney General Loretta Lynch.In a letter to Attorney General Jeff Sessions and Deputy Attorney General Rod Rosenstein, the Judiciary Republicans say they want a second investigator to match Special Counsel Robert Mueller, who is conducting a sprawling investigation of the Trump campaign and various Trump associates.“The unbalanced, uncertain, and seemingly unlimited focus of the special counsel’s investigation has led many of our constituents to see a dual standard of justice that benefits only the powerful and politically well-connected,” the Republicans say.In their letter, the Republicans list 14 separate categories they say should be investigated by the additional special counsel. They are calling for a deeper investigation of Hillary Clinton and her potential mishandling of classified information. The Republicans are also questioning why the Justice Department did not impanel a grand jury to look into the mishandling of classified information. They also want to look into Comey’s recent claim that he was ordered by Lynch to publicly refer to the Clinton email probe as a “matter” instead of an investigation. Comey told the Senate Intelligence Committee last month that he was “confused and concerned” by Lynch’s request. Regarding Comey, the Republicans want the special counsel to look into “any and all potential leaks originated by Mr. Comey and provide to author Michael Schmidt dating back to 1993.”
Kushner to Interns: Trump Team Too Disorganized to Collude With Russia - Donald Trump’s election team could not have colluded with Russia because they were barely talking to each other, according to Jared Kushner, the president’s son-in-law and top White House advisor. “They thought we colluded, but we couldn’t even collude with our local offices,” Kushner told congressional interns during a private talk at the Capitol Visitor Center in Washington on Monday afternoon. Kushner’s meeting with the interns had been rescheduled from two weeks ago, shortly after which he had to appear before Congress to give testimony about the Russia investigation.A source provided a copy of written notes on Kushner’s talk and question-and-answer session to Foreign Policy. For investigators attempting to determine whether Trump’s associates knowingly worked with Russia to interfere with the 2016 U.S. presidential election, a defense claiming chaos and confusion might be the key difference between criminal behavior and incompetence.
Wasserman-Schultz And The Pakistani IT Scammers: "There's More Than Just Bank Fraud Going On Here" - The case of Imran Awan, Debbie Wasserman Schultz’s mysterious Pakistani IT guy, is not about bank fraud. Yet bank fraud was the stated charge on which Awan was arrested at Dulles Airport this week, just as he was trying to flee the United States for Pakistan, via Qatar. That is the same route taken by Awan’s wife, Hina Alvi, in March, when she suddenly fled the country, with three young daughters she yanked out of school, mega-luggage, and $12,400 in cash. By then, the proceeds of the fraudulent $165,000 loan they’d gotten from the Congressional Federal Credit Union had been sent ahead. It was part of a $283,000 transfer that Awan managed to wire from Capitol Hill. He pulled it off — hilariously, if infuriatingly — by pretending to be his wife in a phone call with the credit union. Told that his proffered reason for the transfer (“funeral arrangements”) wouldn’t fly, “Mrs.” Awan promptly repurposed: Now “she” was “buying property.” Asking no more questions, the credit union wired the money . . . to Pakistan.As you let all that sink in, consider this: Awan and his family cabal of fraudsters had access for years to the e-mails and other electronic files of members of the House’s Intelligence and Foreign Affairs Committees. It turns out they were accessing members’ computers without their knowledge, transferring files to remote servers, and stealing computer equipment — including hard drives that Awan & Co. smashed to bits of bytes before making tracks. The Awan family swindles are plentiful, but they are just window-dressing. This appears to be a real conspiracy, aimed at undermining American national security. A more pressing question is: Why were they given access to highly sensitive government information? Ordinarily, that requires a security clearance, awarded only after a background check that peruses ties to foreign countries, associations with unsavory characters, and vulnerability to blackmail.
Lawsuit Alleges Fox News And Trump Collaborated To Create Fake Story About Seth Rich Killing -- Malia Zimmerman, a Fox News reporter, was accused of fabricating two quotes for a story that connected now-deceased DNC staffer Seth Rich to Wikileaks in a lawsuit filed Tuesday by Washington police detective Rod Wheeler, the private investigator hired by Rich's family and himself a longtime Fox News commentator. The lawsuit, which accused Zimmerman and Trump supporter, Ed Butowsky, of inventing a story to "shift the blame" away from Russia's hacking of the 2016 election, also claims that President Trump collaborated with Fox News and was allowed to review a draft of the story before it was published. The plaintiff claims that the motive behind the report was "to shift the blame from Russia and help put to bed speculation that President Trump colluded with Russia in an attempt to influence the outcome of the Presidential election." Wheeler also said that the fabricated quotes attributed to him were meant to back up the network’s false thesis, and amount to defamation.Wheeler says he was forced to retract the fabricated statements after Zimmerman's (since retracted) article was published:
Shock Claim From Inside DNC: Seth Rich Leaked Emails To Moscow Lawyer One Month Before His Murder --With the 'Russian hacking' conspiracy theory hanging by a gossamer thread, a new narrative has emerged which still maintains the charge of Russian interference in the 2016 U.S. election: Seth Rich leaked the DNC emails to the same Moscow attorney who met with Trump Jr. in June 2016. According to Radar Online, an anonymous staffer currently employed by the DNC contacted attorney, GOP lobbyist, and Seth Rich investigator Jack Burkman, to reveal Rich met with Natalia Veselnitskaya one month before his murder - giving her a cache of DNC emails later released by WikiLeaks. “They claimed the Russian lawyer had met with Rich about a month before his death, four to six weeks, and Seth provided her with emails that were, apparently, leaked later on WikiLeaks." -Jack Burkman
Pulitzer-Prize Winning Reporter: FBI Report Shows It Was Seth Rich – Not Russians – Who Gave DNC Emails to Wikileaks - We’ve noted for many months that the DNC emails were leaked by an insider, not hacked by the Russians. Pulitzer-prize winning investigative reporter Seymour Hersh – who revealed in 1974 that the CIA was spying on Americans, who broke the story of the Mai Lai massacre in Vietnam and the Iraq prison torture scandal – said in a recent phone interview linked by WikiLeaks: [The DC police took Seth Rich’s computer, but couldn’t get past his password.] So they call the FBI cyber unit. The Feds get through [the password-protection on Rich’s computer], and this is what they find. This is accoring to the FBI report. What the report says is that – some time in late spring or early summer – he [Rich] makes contact with WikiLeaks. That’s in his computer. They [the FBI] found what he [Rich] had done was he had submitted a series of documents – of emails, of juicy emails – from the DNC.By the way, all this shit about the DNC, where the hack, it wasn’t hacked …He offered a sample, an extensive sample, I’m sure dozens of emails, and said I want money. [Remember, WikiLeaks often pays whistleblowers.]Later, WikiLeaks did get the password. He [Rich] had a dropbox, a protected dropbox, which isn’t hard to do. They got access to the dropbox. That’s in the FBI report. He [Rich] also let people know with whom he was dealing … the word was passed, according to the FBI report, “I also shared this box with a couple of friends, so if anything happens to me, it’s not going to solve your problem”.But WikiLeaks got access, before he was killed. I have a narrative of how that whole fucking thing began. It’s a [former CIA director John] Brennan operation. It was an American disinformation [campaign].
Trump's Bank Regulators: More Swamp Creatures - Alan White, Credit Slips - Following his appointment of Steven Mnuchin as Treasury Secretary, the President has nominated Joseph Otting, former CEO of OneWest Bank, to be the chief federal bank regulator as head of the Office of the Comptroller of the Currency. The OCC is the bank cop for the nation's largest banks. The OCC determines whether banks are taking too many risks with depositor and taxpayer money, and is charged with preventing failures of banks that are too big too fail, in other words, with preventing the next financial crisis. OneWest Bank was founded by Treasury Secretary Mnuchin in 2009 primarily to acquire, and foreclose, thousands of troubled mortgage loans made by the failed subprime lender IndyMac. Otting served as CEO of OneWest from 2010 until 2015. The President's two leading bank regulators made considerable fortunes by running this very unusual bank, relying on some big-time government funding. IndyMac had specialized in "nonprime" mortgages, including no-doc interest-only loans and other toxic products, that failed massively in the foreclosure crisis. IndyMac was the first large federally-regulated bank to fail and be bailed out by the FDIC in 2008. The California Reinvestment Coalition determined from several Freedom of Information Act requests that the FDIC will pay OneWest $2.4 billion for foreclosure losses on the IndyMac loans. Housing counselors in California identified OneWest as one of the most ruthless and difficult banks to deal with in trying to negotiate foreclosure alternatives on behalf of homeowners. In 2011 OneWest signed a consent decree with the federal banking agencies, neither admitting nor denying the agency's findings that OneWest had routinely falsified court documents in foreclosure cases, the practice known as robosigning. In his Senate confirmation hearing last week, Otting insisted that the regulators' findings of OneWest misconduct were a "false narrative." False or not, OneWest foreclosures do seem to have proven very profitable. Bloomberg estimates that Mnuchin made $200 million from the sale of OneWest in 2015, and Otting earned about $25 million in compensation and severance in his final year at OneWest.
Donald Trump's Pick For Key Bank Regulator Is A Foreclosure Kingpin, Of Course | HuffPost: ― President Donald Trump’s choice to lead a key bank regulation agency spent the first half of this decade running a bank that illegally foreclosed on hundreds of thousands of Americans, often using forged and fraudulent documents.In 2013, halfway through Joseph Otting’s time running OneWest Bank, Otting purchased a Las Vegas “resort lifestyle home” with a “heated pool,” “double doors forged of wrought iron and glass,” “professional-grade theater,” and “far-reaching views of both the golf course and the mountains” for more than $2 million. Today, as he awaits confirmation to lead the Office of the Comptroller of the Currency, the house stands as a monument to the money he made from pushing people out of their homes.During his tenure, Otting and OneWest Chairman Steve Mnuchin, who is now the Treasury secretary, signed a legal agreement in 2011 with a federal oversight body now under the control of the Office of the Comptroller of the Currency declaring that, under their leadership, OneWest used “robosigning” practices that led to inaccurate documents being used to push hundreds of thousands of American homeowners into foreclosure and out of their homes. As Otting and Mnuchin have both stated, they did not agree with or acknowledge the findings of that legal agreement when they signed it. In March, a subsidiary of OneWest agreed to an $89 million settlement with the Department of Justice for defrauding the government out of insurance payments from the Federal Housing Administration. The bank, which is now owned by CIT Group, is also accused of racial discrimination in a complaint to the Department of Housing and Urban Development and remains under investigation by the attorney general of New York. In the years after the 2009 financial crisis, nearly every major bank in the U.S. was found to have engaged in illegal practices as they foreclosed on millions of American families. But “OneWest stood out,” among all of the banks defrauding their customers, journalist David Dayen wrote in his 2016 book Chain of Title, which details the foreclosure fraud scandal.
US Senate acts on CFTC nominees, FERC nominations still pending - The US Senate voted Thursday to confirm three nominees to the Commodity Futures Trading Commission, but has yet to vote on nominations to the Federal Energy Regulatory Commission. Negotiation among party leaders was still underway Thursday afternoon and Senate leadership aides said more action on the nominees was still possible later in the day. The CFTC nominees confirmed were CFTC Acting Chairman J. Christopher Giancarlo; Democratic nomination Russ Behnam, senior counsel to the Senate Agriculture Committee's ranking member; and Republican nomination Brian Quintenz, a former capital management firm owner and congressional aide, who was also nominated by President Obama and unanimously confirmed by the committee in the last Congress.The Senate has yet to act on Republican CFTC nominee Dawn DeBerry Stump, a lobbyist and former congressional aide who represented the committee in crafting derivatives portions of the Dodd-Frank Act. Stump, along with Quintenz and Behnam, was approved by the Agriculture Committee late Wednesday. Giancarlo's nomination was previously approved by the panel. Stump's nomination is understood to have been held back so it could be paired with another Democrat expected to be named to the CFTC. That nominee would replace Sharon Bowen, a current commissioner who has announced she is stepping down. Giancarlo, who is expected to serve as chairman, has said he would wait until more commissioners are seated at the agency, which is down to two sitting members, before completing several key unfinished Dodd-Frank regulations such as a position limits rule.
SEC Punts on Unfinished Dodd-Frank Agenda, Thus Avoiding CRA - Jerri-lynn Scofield - The chair of the Securities And Exchange Commission (SEC), Jay Clayton, who assumed his position in May, has lost no time in signing onto a deregulatory agenda, as I discussed most recently in Doubling Down on Deregulation: SEC Extends JOBS Act Benefit in Elusive Quest to Goose IPO Market. As its website spells out, the SEC has a tripartite mission: “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,” according to this basic summary, What We Do, and Clayton pledged in his confirmation hearings to focus on the third, capital formation objective. Like other federal agencies, the SEC is required to submit its regulatory agenda to the Congressional Budget Office twice each year. The WSJ reported earlier this month in Regulators Drop Pursuit of Banker, CEO Pay Restrictions: Several regulators have dropped pursuit of a long-running plan to restrict bonuses on Wall Street, as part of a wider effort to stop working on unfinished rules put in place after the financial crisis. … The six agencies delivered a new proposal in April 2016, but that was too late to push through a final version of the rule before President Donald Trump took office in January. New regulatory agendas unveiled Thursday by the SEC and others show leaders excluded any mention of the restrictions, including longer deferment periods for bonuses and the amount of time payouts are subject to potential clawbacks. Now, this doesn’t exactly come as news to anyone who’s been paying attention, as I wrote last year in Mary Jo White Leaves Behind a Weakened SEC for Trump to Weaken Further. The ability to pursue a firm deregulatory agenda — including ignoring or punting on incomplete initiatives would be seriously complicated if the SEC under previous chairs Mary Shapiro and Mary Jo White had been more vigorous in pressing the agency to make rules. It’s far easier not to make rules than it would be to rescind those already in place. Instead, failure to complete regulation in a timely way has handed off an unfinished agenda fto a Clayton-headed SEC. And even before that, I should point out that according to the WSJ account:
OCC moves solo on Volcker Rule, soliciting feedback — The Office of the Comptroller of the Currency is soliciting public feedback on ways to reform the implementation of the Dodd-Frank Act’s Volcker Rule. In its notice to the Federal Register, announced Wednesday, the OCC asked financial industry stakeholders to weigh in on the rule.
US regulator moves to loosen Volcker rule -- A bank regulator appointed by President Donald Trump has taken a first step towards loosening the Volcker rule banning banks from placing market bets with their own capital, targeting a post-crisis prohibition that is reviled on Wall Street. The Office of the Comptroller of the Currency, which oversees national banks, initiated the process of amending the Volcker rule on Wednesday by formally seeking public comment from banks and others on how it is working.The Volcker rule, which bans banks from proprietary trading, is one of the least popular parts of the Dodd-Frank post-crisis reforms among big banks, which regularly complain of being strangled by regulations.Keith Noreika, a lawyer appointed by Mr Trump to lead the OCC in a caretaker role, said: “A bipartisan consensus has emerged that the Volcker rule needs clarification and recalibration to eliminate burden on banks that do not engage in covered activities and do not present systemic risks.” With Congress struggling to pass any major legislation, the banks are eagerly watching Trump-appointed regulators as lobbyists predict that they — and not lawmakers — will lead deregulation by revising their rules under existing law.
Why Volcker Rule reform won't happen quickly | American Banker -— The Office of the Comptroller of the Currency’s move this week to solicit feedback on rolling back the Volcker Rule was only the first step in a long process, yet observers say it shows how fractured the five agencies tasked with implementing the proprietary trading ban have become. In theory, the regulators tasked with handling the complex rulemaking have all signaled they believe it’s too complicated and needs to be revised. But acting Comptroller of the Currency Keith Noreika jumped out in front by issuing a proposal asking for ways to simplify it.
Big Three credit raters tighten their grip after ducking reform There's a revealing scene in the film version of Michael Lewis's "The Big Short." It's 2007; the subprime mortgage crisis has yet to unfold. Two hedge fund managers visit a Standard & Poor's executive in her office on Water Street in Manhattan. One asks the exec to name a time in the past year when the company didn't give a bank the AAA rating it was seeking. She demurs. "If we don't work with them," she says, "they will go to our competitors. It's not our fault. It's simply the way the world works."That was the way the world worked then — and, 10 years later, it's not entirely clear how much has changed. Before the crisis, Standard & Poor's Global Ratings (now S&P), Moody's Investors Service, and Fitch Ratings — the Big Three — showered investment banks with a bounty of AAA blessings, giving them the regulatory license to gobble up mortgage-backed securities. When the subprime market crashed, these complex debt instruments infected the balance sheets of banks worldwide, wiping out an estimated $11 trillion of household wealth in the U.S. alone. Of all the securities classed as investment-grade by Moody's (Baa3 or higher) in 2007, for example, 89 percent were subsequently downgraded to junk. "This crisis could not have happened without the rating agencies," the Financial Crisis Inquiry Commission concluded in 2011. You might have expected the credit rating companies, like the banks, to have taken a massive regulatory hit, savaging their business models and earnings prospects. They didn't. In fact, they managed what amounts to the great escape of the post-crisis era. Ten years later, the Big Three's grip on business is stronger than ever. "I, like everyone else, thought S&P, Moody's, and Fitch would fail to exist as companies, as they would blow up in a storm of litigation and no one in the markets would use them again," says Daniel Davies, research adviser at Frontline Analysts, a risk and credit analytics firm based in London. "Yet, they seem stronger than ever before." Towering over a cluster of much smaller rivals, the Big Three control about 96 percent of the global market. Their way of doing business — the issuer-pays model that's been around since the early 1970s — endures. Now that model could face its first serious test since the crisis as the Federal Reserve hikes interest rates from the low levels that have spurred record corporate-bond issuance.
SEC takes jab at startups while leaving the big banks alone -The Securities and Exchange Commission’s concern about “initial coin offerings” is understandable. There are significant problems in the ICO marketplace, but new markets always have issues. Unfortunately, the SEC’s recent restrictions defining the tokens sold through such offerings as “securities” completely miss the point and once again will constrain the ability of startups to raise much-needed capital without having to go to a bank or venture capitalist first.The SEC’s recent investigative report targeted specifically the offering linked to the DAO, but its effect will be felt by ICOs across the spectrum. In a press release, the SEC said the agency concluded that “tokens offered and sold by a ‘virtual’ organization known as ‘The DAO’ were securities and therefore subject to the federal securities laws.” The SEC is on a slippery slope going after cryptocurrency-powered offerings since the agency does not have direct authority over currencies. But more to the point, the agency’s dictum is yet another affront to the efforts by fledgling companies to raise funds. As we note in a recent report, ICOs are simply a new tool for doing what Title III of the JOBS Act should have done by providing capital to innovative startups in an efficient way. Title III allows all companies with less than $1 billion in sales to raise up to $1 million in equity or debt. It was designed, as the University of Georgia’s Usha Rodrigues described, to serve as an "IPO on-ramp," thereby easing "regular companies’ path to going public." However, by regulatory delay and overreach, the SEC made sure Title III did not work as well as it could have. Title III has, in aggregate, generated slightly over $50 million in committed capital since 2016. We note that so far in 2017, ICO issuers have raised over $1 billion
SEC hasn't quashed blockchain innovation. Let's keep it that way - In a recent report, the Securities and Exchange Commission stated unequivocally that blockchain-powered digital tokens can be securities. This ruling could have serious consequences for the future of blockchain technology.Digital tokens, built on the kind of open blockchain technology pioneered by bitcoin and ethereum, are sometimes used as naked instruments for sharing profits among investors in a common enterprise. Other tokens, however, are actual pieces of future network technology. Their creation and sale should be at least as free and clear from burdensome securities regulation as are crowdfunds on Kickstarter or web domain registrations. Over the past year, developers have raised well over $1 billion by building and selling tokens to hordes of enthusiastic online purchasers. Today's version of a dot-com-bubble maverick is a blockchain startup proudly announcing its upcoming “initial coin offering,” or ICO. The SEC report doesn’t abolish ICOs. Instead, it describes how a particular now-defunct token effort from last summer, known as “the DAO,” was a security (that therefore should have fallen under the guise of securities regulation). It does so by employing the facts and circumstances of SEC v. W.J. Howey Co., a seminal Supreme Court case that is often used to determine if and when federal securities laws apply. Tokens used as instruments for sharing profits among investors are securities by any other name. Based on the Howey test, they should be identified and regulated accordingly. But utility “tokens” that are pieces of future network technology are functional rather than profit-sharing. They represent real innovation, and the SEC should resist its urge to overregulate them.
SEC's "ICOs Are Securities" Ruling Proves Bitcoin Has Staying Power - The SEC shook the blockchain community last week when it issued a report ruling that the $50 million worth of tokens that were stolen last summer as part of a hack on the DAO were securities and should’ve been registered with the SEC. The DAO was a decentralized platform for investing in Ethereum-focused startups that was essentially an early version of the now popular Initial Coin Offerings. The report will likely slow the pace of new ICOs, as fledging company’s comprising a couple of ambitious engineers figure out how, exactly, to go about registering their projects.But CoinDesk analyst Noelle Acheson, in a report for the site’s premium subscribers, argued that the ruling’s benefits outweigh the short-term inconvenience that these startups will likely experience as they rush to recruit compliance specialists to vet their offerings and communicate with the SEC.By declaring that ICOs should be regulated like securities, the SEC is admitting that they are, indeed, securities. This is a landmark ruling. Since the CFTC first declared b itcoin to be a commodity in 2015, regulators have provided precious few updates to help move the digital currency further down the path of legitimacy. Earlier this summer, the Delaware legislature passed a law officially legalizing the use of blockchain technology in the trading of stocks. Later, the agency issued a registration order to startup called LedgerX, granting it status as an official CFTC Swap Execution Facility, legalizing bitcoin options trading the process.
Blockchain tokens may be the future of finance — if regulators allow it --Dozens of so-called ICOs have been completed already this year, and dozens more are on the horizon. The idea is that investors can partake of whatever protocol, platform or service is being built by buying the token associated with it. Unlike venture capital, which is typically locked up for years, tokens become liquid almost immediately, trading on web-based exchanges. Token offerings signal a sea change in the way that blockchain startups and software protocols are being financed. Beyond upsetting the balance of the investor ecosystem, though, this new funding model, and the projects taking advantage of it, may herald the dawn of something even more radical: a decentralized internet powered by applications that blur the line between owners and users.Inevitably, some observers are calling it an overheated market. Some are even comparing it to the dot-com bubble of the early 2000s. Most distressing to traditional investors, and even to early adopters of bitcoin, is the fact that some token projects have raised millions of dollars on the basis of little more than a white paper and a website. The Securities and Exchange Commission recently raised the barrier to entry for American entrepreneurs and investors, and risks putting the kibosh on such innovation altogether. But many observers and participants still believe that blockchain tokens — distinct from true cryptocurrencies in their method of issuance and other aspects — will be the future of finance. At bottom, the ICO model has caught fire because it has a number of advantages over old methods of raising capital. Until recently, companies looking to grow were limited to bootstrapping, borrowing money or selling equity to investors. All of those options are burdensome.
OCC files motion to dismiss fintech charter lawsuit — The Office of the Comptroller of the Currency has filed a motion to dismiss a lawsuit by state regulators challenging the agency's fintech charter. In April, the Conference of State Bank Supervisors sued the OCC, arguing that it did not have statutory authority to grant national bank charters to fintech companies that do not take deposits.
Bitcoin and bimetallism - Frances Coppola -- I wrote a piece on Forbes recently in which I described a bimetallic system of coinage and suggested how such a system might work - or rather, fail to work - for Bitcoin. These are the relevant paragraphs: In a bimetallic system, there are effectively two currencies which are linked by a fixed exchange rate set by fiat. At the end of the 19th century - the time of Bryan's speech - Britain's copper penny was worth 1/144 of one pound. Other denominations of coin were created by multiplying up the penny: so the silver sixpence was unsurprisingly worth six copper pennies, and the silver shilling was worth twelve pennies, or 1/20 of a pound. All these relationships were fixed by fiat. So, suppose that instead of using bitcoin as the medium of exchange, we use some other coin - let's call it "satoshi". We decide that this other coin is worth 1/100m of 1 bitcoin. Of course, in the Bitcoin system, there is no government "fiat": the nearest they have to this appears to be decisions made by developers, which are then validated by miners. It is democratic, sort of, though as the number of active miners is diminishing due to ever-rising costs, the claim to democracy is wearing distinctly thin. No matter. Developers can decide that the satoshi, not the bitcoin, shall be the medium of exchange, and set its value by fiat. Mankind shall not be crucified on a cross of Bitcoin. This sounds like a solution. But it is not. Ultimately, it spells the rise of the satoshi and the demise of bitcoin. This is because Gresham's Law applies: people will spend satoshis and keep bitcoins. As economic activity increases, demand for the satoshi will rise, putting the fixed exchange rate under pressure. The satoshi will inevitably be devalued, probably several times. Eventually, the fixed link to bitcoin will be broken, and the value of bitcoin in satoshi will float. Cue lots of Bitcoin experts popping up on Twitter to tell me I don't understand Bitcoin. This coin is different, apparently.
Steep fees call into question bitcoin’s promise for the unbanked -- Abra set out in 2014 to make mobile money movement cheap and fast worldwide, using the bitcoin network as rails. But lately the fees for transferring value on that network have risen, creating a predicament for the startup: charge more for sending funds with its mobile app, or eat the fees. For a time, Abra absorbed the additional cost. Given that the average transaction size for Abra is $200, and that bitcoin’s scaling problem is relatively new, “we can afford to wait for that technology to scale,” Bill Barhydt, the company’s founder and CEO, said in early July. (The company raised $14 million in Series A financing two years ago.)But late last week, Abra notified its users that starting Aug. 21, it would charge for withdrawing bitcoin to an external wallet. Barhydt said more people are using Abra’s bitcoin service than predicted, and network transaction fees are adding up. “The mining fee there make sense” to pass on to customers, he said, referring to the fee bitcoin senders pay so-called miners to ensure their transactions are included in the next block added to the public ledger. (Abra also allows users to keep their balances on its app in fiat currency. Sending money to another Abra user will remain free, as will paying a merchant with the app and adding funds via bitcoin or a bank account.) Bitcoin, once hailed as a fast and low-cost payment option, has become slower and more expensive to settle as the number of users increased, creating congestion in the network. The average transaction fee peaked at $5.50 in early June, making bitcoin untenable as a means of everyday payment. The fee has since fallen, but is still above $2 per transaction, according to bitinfocharts.com. While that’s negligible, in percentage terms, compared with the average transaction value of 17.97 bitcoin, or about $49,461, it’s a steep freight for smaller payments.
Bitcoin ATMs invade Philly, taking cryptocurrency to the masses - There’s no shortage of bitcoin in Philadelphia.In Northern Liberties, the red-hot digital currency can be bought at a shipping services storefront. In West Philadelphia, customers can fill their virtual wallets after topping off their tanks at a Citgo gas station. And in Cheltenham Township, a bitcoin ATM will convert your cash to cryptocurrency at a Dollar Plus variety store, conveniently sandwiched between an Aldi supermarket and a pawn shop.About two dozen machines or shops in the region will take regular cash and credit private bitcoin accounts, according to the website CoinATMRadar.com, which locates and maps bitcoin ATMs. Those accounts can then be used to pay for goods online without a credit card, remit payments quickly to family overseas, or cover bets placed on online gambling sites. They can also be used to buy illicit drugs over the Internet, according to federal agents with Homeland Security Investigations. And the number of those bitcoin outlets appears to be growing. That should come as no surprise because the value of bitcoin has skyrocketed. In January 2015, the value of a single “coin” was about $220. In mid-May it spiked to more than $3,000. On Monday evening, one bitcoin was trading comfortably at about $2,860. The world’s dominant digital currency (there are more than 700), bitcoin operates independently of any government or bank. Transactions are recorded and verified on the blockchain database that is instantly shared on a worldwide network of computers. Industry analysts say that the technology underlying those transactions makes bitcoin more secure than using a credit card. At Liberty Parcel, on the 800 block of North Second Street, a bitcoin ATM has been sitting inside the shop’s entrance for more than a year, where it simply occupies space. “It’s like a gumball machine in front of a pizza shop,” said a clerk who did not want to be identified by name. An average machine might exchange between $25,000 and $30,000 a month, said Neil Conner, a spokesman for Lamassu, a New Hampshire-based producer of bitcoin machines. Typically, stores where they are placed collect about $100 a month in rent.
Bitcoin Just Split Into Two Different Versions --Bitcoin, a digital currency worth $43 billion USD, is in uncharted and potentially risky territory after a split created two versions on Tuesday: the original bitcoin that's existed since 2008, and the new Bitcoin Cash, which aims to be a more populist alternative.The split in the network was triggered on Tuesday afternoon (all times EST) when an upstart group of bitcoiners pushed the button on a "hard fork"—an unprecedented event in bitcoin's history, and one that the majority of the community had tried to prevent for two years. In fact, just one week ago, it seemed like the possibility of a split had been safely avoided altogether. The fork was scheduled for Tuesday morning, and bitcoiners anxiously awaited the split. Due to some of bitcoin's quirks, the event actually happened six hours later. The hard fork was marked at 2:20 PM by the creation of an inaugural "block" of transaction data for Bitcoin Cash: nearly two megabytes in size. Bitcoin's blocks are capped at one megabyte, and Bitcoin Cash can support up to eight. Bigger block sizes is the major difference between the two virtual currencies and the impetus for the split. A second vanity block was quickly added to the chain and contained the phrase, "Hello world." Now two near-identical versions of bitcoin exist, each with their own set of rules and diehard supporters. Everybody who owns bitcoin automatically received the same amount in Bitcoin Cash, and this brand-new currency will have to fight to survive.
Bitcoin split is a flop — so far - Bitcoin’s underlying software code was split on Tuesday, generating a new clone called “Bitcoin Cash,” but the new virtual currency got off to a slow start due to lackluster support for its network.The initiative was headed by a small group of mostly China-based bitcoin miners — programmers who essentially operate the bitcoin network — who were not happy with scheduled improvements to the currency’s technology meant to increase its capacity to process transactions.These miners, who get paid in the currency for contributing computing power to the bitcoin network, initiated what is known as a “fork” on Tuesday, where the underlying blockchain splits into two potential paths, creating a new digital currency.The blockchain is a shared online ledger of all bitcoin transactions and has spawned a range of financial and business applications.Bitcoin’s split has created a new competitor to the original digital currency, which remains the oldest and most valuable in circulation. Yet only a small fraction of bitcoin miners have been contributing their computing power to the new blockchain, and it took nearly six hours for the first batch of Bitcoin Cash coins to be mined on Tuesday, according to Blockdozer Explorer, a firm providing data on digital currencies
Bank cybersecurity may need a new mindset | American Banker --Silos don’t just make a bank dysfunctional. They can also make it more vulnerable to cyberattacks. So say security experts who find the lack of standardized, centralized procedures for cybersecurity at many banks alarming. According to a study released last month by Cisco Systems, only 48% of financial services organizations polled even have a standardized information security policy. “One thing that would help is taking a different perspective and view on IT infrastructure as a whole,” said Demetris Booth, a cybersecurity evangelist at Cisco. “You still have a lot of organizations out there that look at protecting specific assets [in different ways] and viewing cybersecurity as one specific department,” instead of something embedded into the whole organization. This should also involve giving the chief information security officer a larger role within the organization, he said. "Our chief information security officer is ultimately responsible for the security of the bank's information and our customers' information, [but] he works in partnership with our IT staff, lines of business, vendors, and customers to make sure that we mitigate risks efficiently and effectively,” Selnick said. “It is essential to design security in from the start of every project, even before implementation starts — security needs to be a partner from the moment the business starts to define its needs for any new system or process.” It’s crucial that cybersecurity not be relegated in a corner to be dealt with by one department or one person, he said.
The 'hero' hacker who stopped WannaCry was accused of creating the 'Kronos' malware — here's what it is -- The security community was shocked on Thursday when the news broke that Marcus Hutchins, a researcher hailed as a hero for halting the spread of the devastating WannaCry cyberattack, has been arrested. Hutchins — better known as MalwareTech online — has been accused of being behind another piece of nasty malware: Kronos. In May this year, WannaCry spread around the world, crippling hospitals and seriously disrupting businesses. It infected organisations in 150 countries, encrypting data and demanding a bitcoin bounty to unlock it, and was only stopped when Hutchins inadvertently triggered a "kill switch" while investigating it. WannaCry had a massive effect on Britain's NHS (National Health Service), and as such the researcher attracted significant media attention and praise for his actions. He was even offered a $10,000 (£7,600) reward, which he pledged to donate to charity. As such, his indictment in America, after attending the hacker conference Defcon, has been met with shock and confusion. So what is Kronos? The indictment defines it like so: "Kronos" was the name given to a particular type of malware that recorded and exfiltrated user credentials and personally identifying information from protected computers." Kronos malware was commonly referred to as a "banking Trojan." In other words: It's malicious software that can steal victims' banking details, which can then be used to break into their accounts and commit fraud. Wired reports that it could also add extra forms to the banking webpages on infected users' computers — prompting them to enter further personal info like PIN codes. The indictment alleges that Hutchins created the malware, after which it was advertised for sale online in 2014. There is an unnamed co-defendant in the case, who is accused of advertising Kronos online (including on the now-shuttered dark web marketplace AlphaBay) and selling it. Kronos was advertised for sale for $3,000 (£2,282), the indictment says, but IBM researchers in 2014 found it for sale for as much $7,000 (£5,324) — far more than most other similar malware.
With LIBOR Dead, $400 Trillion In Assets Are Stuck In Limbo -- In an unexpected announcement, earlier this week the U.K.'s top regulator, the Financial Conduct Authority which is tasked with overseeing Libor, announced that the world's most important, and manipulated, benchmark rate will be phased out by 2021, catching countless FX, credit, derivative, and other traders by surprise because while much attention had been given to possible LIBOR alternatives across the globe (in a time when the credibility of the Libor was non-existent) this was the first time an end date had been suggested for the global benchmark, which as we explained on Thursday, had died from disuse over the past 5 years. Commenting on the decision, NatWest Markets' Blake Gwinn told Bloomberg that the decision was largely inevitable: “There had never been an answer as to how you get market participants to adopt a new benchmark. It was clear at some point authorities were going to force them. The FCA can compel people to participate in Libor. What can ICE do if they’ve lost the ability to get banks to submit Libor rates?” And while the rationale for replacing Libor is well understood (for those unfamiliar, read David Enrich's comprehensive account of Libor rigging "The Spider Network"), there are still no clear alternatives. Ultimately, as Bank of America calculates, "moving an existing $9.6 trillion retail mortgage market, $3.5 trillion commercial real estate market, $3.4 trillion loan market and a $350 trillion derivatives market is a herculean task." A partial breakdown of the roughly $400 trillion in global Libor-referencing assets is shown in the table below.
How “Shareholder Value” is Killing Innovation -- naked capitalism - Conventional wisdom holds that the primary function of the stock market is to raise cash that companies use to invest in productive capabilities. The conventional wisdom is wrong. Academic research on corporate finance shows that, compared with other sources of funds, stock markets in advanced countries have in fact been insignificant suppliers of capital to corporations. What, then, is their function? If we are to understand employment opportunity, income distribution, and productivity growth, we need an accurate analysis of the role of the stock market in the corporate economy. The insignificance of the stock market as a source of real investment capital exposes as fallacious the fundamental assumptions of the prevailing ideology that, for the sake of economic efficiency, a business corporation should be run to “maximize shareholder value” (MSV). As a rule, public shareholders do not invest in a corporation’s productive capabilities; they simply buy shares outstanding on the market, hoping to extract value that they have played no role in helping to create. And in practice, MSV advocates modes of corporate resource allocation that undermine innovative enterprise and result in unstable employment, inequitable incomes, and sagging productivity. The most obvious manifestations of the corporate misbehavior that MSV incentivizes are the lavish, stock-based incomes of top corporate executives and the massive distributions of corporate cash to shareholders in the form of stock buybacks, coming on top of already-ample dividends. Indeed, with stock-based pay incentivizing senior executives to do stock buybacks—i.e., having a company repurchase its own shares to give manipulative boosts to its stock price—over the past three decades the stock market has had a negative cash function. On the whole, U.S. business corporations fund the stock market, not vice versa. My INET paper, “The Functions of the Stock Market and the Fallacies of Shareholder Value,” provides an analysis of the evolving role of the stock market in the U.S. corporate economy over the past century. I ask how the changing functions of the stock market have influenced the processes of value creation (hence, the size of the economic pie), as well as the relation between value creation and value extraction (hence, the distribution of the economic pie). This essay is part of an ongoing project aimed at making “The Theory of Innovative Enterprise” central to an economic analysis that comprehends institutions’ and organizations’ roles in supporting or undermining stable and equitable economic growth.
Martin Shkreli Convicted Of Securities Fraud -- Moments ago, the Martin Shkreli jury announced its verdict, and while the ex-pharma exec was found not guilty on 5 of 8 counts, he was also found guilty on 3 of 8 counts, namely count 3: Securities Fraud, count 6: Securities Fraud, and count 8: Conspiracy to Commit Securities Fraud. As a result, as Bloomberg notes, Shkreli - once dubbed "the most hated man in America" - is now a convicted felon. Absent some miracle, Shkreli is now almost certain to go to prison, where he faces as much as 20 years behind bars, although he’s likely to serve much less. It remains to be seen whether the judge in federal court in Brooklyn, New York, allows him to return home, where he’s spent hours each day on social media, or ships him off to jail right away to await sentencing later this year.As Bloomberg adds, In the end, it was Shkreli’s lies to his investors that cost him his freedom, not his 2015 decision to jack up the price of an anti-parasitic drug. Prosecutors said Shkreli, 34, misled clients about the performance of his failing hedge funds, secretly used their money to start Retrophin, and then took $11 million from the drug-development company to repay them.
Top German Automakers Sued in U.S. Over Two-Decade ‘Cartel’ ---German’s major automakers were accused in a U.S. lawsuit of acting as a cartel, colluding for nearly two decades to limit the pace of technological advances in their vehicles and stifle competition -- allegations that widen the scope of the latest scandal to hit the nation’s auto industry. BMW AG, Daimler AG, Volkswagen AG and its Audi and Porsche brands shared competitive information about vehicle technologies with one another from 1996 through at least 2015 in violation of antitrust laws, according to a complaint filed Friday in San Francisco federal court. "These coordinated actions enabled the manufacturer defendants — the self-named ‘Fünfer-Kreise,’ or Circle of Five — to impose a German automobile premium on consumers premised on superior German engineering, while secretly stunting incentives to innovate," the suit alleges. The suit, which seeks class-action status on behalf of U.S. drivers, says the companies agreed to limit the development of vehicle systems, including emissions control. The arrangement allegedly led to the development of so-called "defeat devices" used by Volkswagen to cheat on pollution tests. Plaintiffs claim the operation of convertible roofs, body design, brakes and electronic systems were also part of the “technological innovations inhibited” by the pacts.
Bill Black: Subprime Auto Loan Defaults on the Rise - naked capitalism - Jerri-Lynn here: I’m posting this RNN interview with Bill Black as yet another example of how federal financial regulators have consistently failed to do their jobs: regulate! And their failure to do so thus allows banks to get away with further predatory behavior, in this case, concerning subprime auto loans. This is not a problem that originates with Trump. Although Black doesn’t regard the problem as a major one from a systemic perspective, he emphasizes this is a very severe problem for consumers who are going to lose not only their cars, but their credit ratings. Please persevere to about the middle of the interview, as the juicer material starts there. black demonstrates an appropriate degree of courage– which is sadly lacking in other more namby pamby discussions of regulatory breakdown.
Wells Fargo gets N.Y. state subpoenas over car insurance scandal - Wells Fargo & Co., the bank struggling with multiple consumer scandals, was sent subpoenas by two New York regulators over practices in its auto lending unit.Attorney General Eric Schneiderman has issued subpoenas relating to the unnecessary sales of collateral protection insurance, according to a person briefed on the matter, who asked not to be identified because the information wasn’t public. The New York State Department of Financial Services also sent subpoenas to a pair of Wells Fargo units, according to an email Wednesday from the agency.The San Francisco-based bank last week said it may have pushed thousands of car buyers into loan defaults and repossessions by charging them for unwanted insurance. The bank said an internal review of its auto lending found more than 500,000 clients may have unwittingly paid for protection against vehicle loss or damage while making monthly loan payments, even though many drivers already had their own policies. The firm said it may pay as much as $80 million to clients with policies placed between 2012 and 2017 — with extra money for as many as 20,000 who lost cars, “as an expression of our regret.” Customers have already started suing for damages. One suit filed in San Francisco federal court accuses the bank of bilking millions of dollars from “unsuspecting customers who were forced to pay for auto insurance they did not need or want.’’
Wells Fargo warns it may find 'significant increase' in unauthorized accounts -- Wells Fargo shares fell Friday after a filing with the U.S. Securities and Exchange Commission showed a new review of the bank's consumer sales scandal could reveal a "significant increase" in unauthorized accounts. "We expect that our review of the expanded time periods ... may lead to a significant increase in the identified number of potentially unauthorized accounts," the firm said in the filing. "However, we do not expect any incremental customer remediation costs as a result of these efforts to have a significant financial impact on the Company." Wells Fargo said in the filing it expects legal costs could exceed what it has already set aside by $3.3 billion. Shares closed 1 percent lower Friday.The bank, once considered the most upstanding of America's financial giants, has been plagued by scandal in the last year. Last fall, the bank paid $185 million in penalties after it was discovered workers had opened about 2 million consumer deposit and credit card accounts without customers' authorization since 2011. The workers were trying to meet aggressive sales goals, a practice the bank has since abandoned after clearing out top managers deemed responsible for the problems. Then in late July, news broke that hundreds of thousands of Wells Fargo customers were charged for auto insurance they did not need. The bank said on July 27 it plans to give about 570,000 customers a total $80 million for damages starting in August 2017. The Consumer Financial Protection Bureau (CFPB) has also begun an investigation into whether customers were affected by Wells Fargo's freezing and, in many cases, closing, of consumer deposit accounts, the filing said.
Wells Fargo Clients Want Credit Repair for Insurance Debacle - Wells Fargo & Co. customers suing the bank for forcing them to pay for unnecessary auto insurance that drove some of them into default on their car loans asked a court to order the bank to immediately take steps to repair their credit reports. The consumers said in a court filing Friday that as a result of negative and false reports Wells Fargo made to credit reporting agencies, their credit scores plummeted. They want the bank and National General Insurance Co., which they allege was also involved in the scheme, to investigate and correct any inaccurate information reported to Equifax, Experian, TransUnion and other credit bureaus. An internal review of the bank’s auto lending found more than 500,000 clients may have unwittingly paid for protection against vehicle loss or damage while making monthly loan payments, even though many drivers already had their own policies, Wells Fargo said last week. The firm said it may pay as much as $80 million to affected clients -- with extra money for as many as 20,000 who lost cars to repossessions, “as an expression of our regret.” The bank’s offer of refunds to customers who unwittingly bought collateral protection insurance isn’t enough, according to the consumers’ filing in Manhattan federal court.“Customers have been damaged by their unlawful scheme, which has ruined credit scores, depleted bank accounts, and resulted in cars being repossessed,” the consumers’ lawyers said in the filing. The bank said Friday it already promised, in a July 27 statement, to report all rating errors to the credit bureaus as part of a broader remediation effort with consumers. Adam Levitt, a lawyer for the plaintiffs, responded that he has “no faith they’re going to do anything without the force of an injunction, court order or jury verdict."
OCC's Noreika backs off on challenge to CFPB arbitration rule - Acting Comptroller of the Currency Keith Noreika said Monday that he would not interfere with the Consumer Financial Protection Bureau arbitration rule, backing off weeks of criticism that allowing consumers to sue financial institutions would threaten the safety and soundness of banks. The Office of the Comptroller of the Currency missed a deadline Saturday to petition the Financial Stability Oversight Council to try and delay the rule from taking effect. In a press release, Noreika blamed the CFPB for not providing the data that would have allowed the OCC to finish its analysis of the impact of the rule.
Dems use Wells scandals to call for hearings, defend CFPB arbitration rule — The 11 Democrats on the Senate Banking Committee and the top Democrat on the House Financial Services Committee are calling on Republicans to hold hearings with Wells Fargo's top executives over the bank's phony-accounts scandal and allegations that it improperly took out force-placed auto insurance on 570,000 borrowers. In a press release late Tuesday, Sherrod Brown, Elizabeth Warren, Mark Warner and the other eight Democrats on the panel said they would like an update on "significant developments" since regulators took action against Wells when employees opened up millions of fake accounts in order to meet sales quotas. Democrats cited reports that more customers were affected than previously disclosed, that the bank signed up customers for insurance products without authorization and that Wells retaliated against employees.
These 5 senators are key to the CFPB arbitration rule fight (Bloomberg slides) Four Republican senators are being eyed as possible defectors on a vote to repeal the CFPB's arbitration rule, while another senator may be absent, which will make the GOP's job harder.
House Republicans again threaten contempt charges against CFPB's Cordray - — The political fight between the Consumer Financial Protection Bureau and the Republicans on the House Financial Services Committee reached new heights on Friday. Staff for Chairman Jeb Hensarling, R-Tex., and Rep. Anne Wagner, R-Mo., who heads the subcommittee on oversight, released a report saying that CFPB Director Richard Cordray has ignored subpoenas for information about the CFPB’s efforts to craft a rule regulating arbitration agreements. The report concludes that Cordray should be held in contempt of Congress, which could have civil ramifications.
Payday Lending and CFPB: Another Cordray Fail --Jerri-lynn Scofield - I don’t mean to pick on AlterNet, but their coverage of the Consumer Financial Protection Bureau’s (CFPB) gaping self-inflicted wound is such a prime example of the problem of substituting partisan cheerleading for tough-minded analysis that I’m going to wade in and do a bit of debunking. Over to AlterNet, where the headline provides a good projection of what to expect in the article, Elizabeth Warren’s Pet Project Has Already Returned $12 Billion to Swindled Families—So Naturally Republicans Want It Dismantled:Less than a week after the Consumer Financial Protection Bureau celebrated its sixth anniversary, the Trump administration issued a decisive blow to the Bureau’s latest progress regarding a key arbitrations rule, which it now aims to nullify. For Republicans, the CFPB must be curtained like similar government agencies at the helm of President Trump’s deregulation agenda (sic). Yes, Virginia, the Republicans hate the CFPB. And the financial industry has long opposed the agency’s project of banning its mandatory arbitration clauses– which insulate it from those pesky class action lawsuits– as I first discussed in this August post, Business Groups Aim to Strong-Arm CFPB on Arbitration.Even though the agency had laid groundwork to ban the clauses in a comprehensive study it issued in December 2013, it somehow took til earlier this month to promulgate a final rule. The big problem with that timetable, as I wrote last week in this post, House Votes to Overturn CFPB Mandatory Arbitration Ban, is that Republicans predictably invoked the Congressional Review Act (CRA) process for repealing the agency’s rule. The House last week passed its resolution of disapproval of the rule, the Senate is expected to follow, and Trump has already promised to sign the result. The short-lived rule will thereby be repealed– and unfortunately, given the terms of CRA, the CFPB cannot now promulgate any similar rule until Congress provides new legislative authority.
CFPB fines JPM $4.6M for checking account denials -- The Consumer Financial Protection Bureau ordered JPMorgan Chase on Wednesday to pay a $4.6 million fine for failing to provide accurate information to consumers and reporting agencies when denying checking account applications. The agency said Chase did not have adequate policies in place when reporting information to specialty credit reporting agencies that collect negative information about consumer accounts, in violation of the Fair Credit Reporting Act.
CFPB eyes new disclosures for overdraft programs - The Consumer Financial Protection Bureau is laying the groundwork for increasing disclosure requirements on overdraft programs. In a study released Friday, the agency found that consumers who frequently overdraw their checking accounts pay nearly $450 more in overdraft penalty fees a year than those who opt out of coverage. Though just 9% of consumers frequently overdraw their accounts, these so-called frequent overdrafters paid a whopping 79% of all overdraft and insufficient funds fees, the study said. The CFPB released four sample disclosure forms for opting in to overdraft programs that it said would make it easier for consumers to evaluate the costs and risks of such coverage.
Apple Now Owns $51.5 Billion In Treasuries, More Than Mexico, Turkey Or Norway -- Every quarter, Apple manages to impress with its gargantuan cash hoard, which in Q2 rose to $262 billion (which however is $153 billion net of debt), a new all time high as shown in the chart below.While it is widely known that of this $262 billion, the vast majority, or $246 billion is held offshore, what is less appreciated is that Apple's actual cash is just $18.6 billion. The rest is held in various securities, both short- and long-term, something we first reported back in September when we introduced readers to Braeburn Capital, the firm that actually manages Apple's quarter trillion in asset holdings. In the five years that have passed since then, Apple's holdings have grown. Substantially. And, as the company reported in its latest 10Q, as of June 30, AAPL now owns enough assets to not only put even the world's largest hedge fund, Bridgewater to shame, but some of the world's largest holders of Treasurys. Of its total $243 billion in Short and Long-Term securities, Apple owned a whopping $51.5 billion in Treasurys, split between $20.1 billion in T-Bills and $31.3 billion in Treasury Bonds. While Apple's TSY holdings have fluctuated over the years, with a notable decline around September 2014, they have since grown to an all time high, up from $50.9 billion last quarter and $40.5 billion as of its last fiscal year end:
Google’s new program to track shoppers sparks a federal privacy complaint - WaPo --A prominent privacy rights watchdog is asking the Federal Trade Commission to investigate a new Google advertising program that ties consumers’ online behavior to their purchases in brick-and-mortar stores.The legal complaint from the Electronic Privacy Information Center, to be filed with the FTC on Monday, alleges that Google is newly gaining access to a trove of highly sensitive information -- the credit and debit card purchase records of the majority of U.S. consumers -- without revealing how they got the information or giving consumers meaningful ways to opt out. Moreover, the group claims that the search giant is relying on a secretive technical method to protect the data -- a method that should be audited by outsiders and is likely vulnerable to hacks or other data breaches. “Google is seeking to extend its dominance from the online world to the real, offline world, and the FTC really needs to look at that,” said Marc Rotenberg, the organization’s executive director. Google called its advertising approach "common" and said it had "invested in building a new, custom encryption technology that ensures users' data remains private, secure and anonymous."
Private Equity Firms Sued Over Retailer Bankruptcies --Yves Smith - Private equity firms are seldom sued for their practice of levering companies for fun and profit and not caring much if they leave smoldering wreckage in their wake. One big reason has been that it takes a lot of time and effort to prove fraudulent conveyance, which is layperson terms means continuing to bleed cash out of a company into your own pocket when you know it is a goner. And to discourage these suits, private equity general partners go into the legal version of scorched earth mode to deter other bankruptcy victims from getting bright ideas.Today, the Wall Street Journal reports on the outburst of litigation over bankruptcy restructuring plans for private-equity-damaged retailers like Payless Cashways. We’ve discussed how private equity set many retailers up for failure by selling off their real estate at rich, asin inflated prices, giving themselves a nice big payout, and saddling the operator with high lease payments. Mind you, the reason these chains had owned their own stores in the first place was that retail is a cyclical business. Owning a lot of the property you used was a way to reduce overheads and increase odds of survival. But in the cases the Journal highlighted, the private equity owners resorted to a strategy that had been discredited, that of the so-called dividend recap. The poster child was when Clayton & Dublier acquired Hertz in 2006, loaded it with debt, and made a big dividend payment with the proceeds. While Hertz didn’t fail, the company unquestionably suffered and the recap got a great deal of bad press. Deal watchers add to the list of firms hurt by older dividend recaps, such as Hexion Specialty Chemical, Burger King, KB Toys, Warner Music, and Burlington Coat, to the degree that law firms started against the practice. Yet in the post-crisis super low interest rate interest environment, lenders were desperate for yield and private equity firms revived this dodgy practice, as this chart shows:
Wolf Richter: How Banks Hurt the Real Economy – FDIC’s Hoenig to Senate - When tighter regulations were imposed on the banks after the Financial Crisis, the largest among them, the very ones that threatened to bring down the financial system, began squealing. Those voices are now being heard by Congress, which is considering deregulating the banks again. In particular, they claim that current capital requirements force banks to curtail their lending to businesses and consumers, and thus hurt the economy. Nonsense! That’s in essence what FDIC Vice Chairman Thomas Hoenig told Senate Banking Committee Chairman Mike Crapo and the committee’s senior Democrat, Sherrod Brown, in a letter dated Tuesday, according to Reuters. The senators are trying to find a compromise on bank deregulation. If banks wanted to increase lending, they could easily do so without lower capital requirements, Hoenig pointed out.Rather than blowing their income on share-buybacks or paying it out in form of dividends, banks could retain more of their income, thus adding it to regulatory capital. Capital absorbs the losses from bad loans. Higher capital levels make a bank more resilient during the next crisis. If there isn’t enough capital, the bank collapses and gets bailed out. But banks that increase their capital levels through retained earnings are stronger and can lend more. Alas, in the first quarter, the 10 largest bank holding companies in the US plowed over 100% of their earnings into share buybacks and dividends, he wrote. If they had retained more of their income, they could have boosted lending by $1 trillion.
FDIC defends right to charter new banks against OCC criticism -- After repeated attacks from acting Comptroller of the Currency Keith Noreika, the Federal Deposit Insurance Corp. defended its role in greenlighting prospective bank applicants. The Federal Deposit Insurance Corp. defended its authority to approve prospective new banks in response to suggestions by acting Comptroller of the Currency Keith Noreika that his agency should be able to approve applications on its own. “The FDIC’s role in reviewing and approving applications for deposit insurance — and closely monitoring the condition of new banks as they become established — has been an important safeguard of the safety and soundness of our banking system for more than 25 years,” FDIC spokeswoman Barbara Hagenbaugh said in a statement Friday.
Fifth Third lawyer is said to be a top candidate for FDIC - The Trump administration is considering nominating Fifth Third Bancorp's top lawyer to lead a key banking regulator, people familiar with the matter said. Jelena McWilliams has had several meetings in recent weeks with administration officials about running the Federal Deposit Insurance Corp., the people said. Though she hasn't been formally offered the position, she is a leading candidate, they added. The White House has been scrambling to fill the FDIC job since its original nominee, James Clinger, withdrew earlier this month. Clinger's decision was a setback for President Donald Trump, who needs his own regulators in place to make significant changes to the financial rules he blames for hurting the economy. The FDIC, which polices lenders and protects customer deposits, is one of the main overseers of the U.S. banking industry and will have an important role in dismantling regulations. McWilliams is a former chief counsel for Republicans on the Senate Banking Committee and also worked at the Federal Reserve. She was hired as Fifth Third's chief legal officer in January after her predecessor was let go because she had a romantic relationship with the head of Fannie Mae.
July 2016: Unofficial Problem Bank list declines to 134 Institutions -- Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for July 2017. Here are the monthly changes and a few comments from surferdude808: Update on the Unofficial Problem Bank List for July 2017. It was a quiet month for changes to the list as only three banks were removed that lowered the total count from 137 to 134 institutions. Aggregate assets fell by $2.4 billion to $32.8 billion. A year ago, the list held 196 institutions with assets of $58.9 billion. Actions were terminated against Gibraltar Private Bank & Trust Co., Coral Gables, FL ($1.6 billion); Dieterich Bank, N.A., Dieterich, IL ($617 million); and Washita State Bank, Burns Flat, OK ($114 million).
Is the Fed’s community banker seat worth the trouble? — As the Trump administration enters its sixth month in office, it has yet to name a nominee to the Federal Reserve Board who has experience with community banks — a legal requirement that experts say may be complicating the president’s ability to fill vacant seats on the central bank. “Vacancies at the Fed are a huge problem, and it’s been a problem that has been extending in [recent] decades,” said Peter Conti-Brown, assistant professor of legal studies and business ethics at the University of Pennsylvania’s Wharton School of Business. “If the reports are true that it is not for a want of trying that the Trump administration is not filling this vacancy, then you get a much better sense of what the source of the barrier is.”
Nonbanks seize on new source of funding for multifamily lending - Nonbanks looking to expand in multifamily lending have found a new source of funding in an esoteric (and somewhat tarnished) corner of the mortgage bond market. Many of these lenders originate large volumes of multifamily loans for the Federal Housing Administration, Freddie Mac and Fannie Mae. They also specialize in what is known as “transitional” lending, or short-term, floating-rate loans on commercial property buildings that are being repurposed or fixed up in order to eventually qualify for cheaper, longer-term financing. So-called transitional lending has traditionally been kept on balance sheet; but it’s become attractive to bundle the loans for transactions called (take a deep breath) commercial real estate collateralized loan obligations. Can investors stomach the features these deals sported before the crisis?
US CMBS Delinquency Rate Retreats Following Big June Jump - Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, released its July 2017 US CMBS Delinquency Report today. The full report can be found here: http://info.trepp.com/july-2017-us-cmbs-delinquency-report-press-release. After the Trepp CMBS Delinquency Rate climbed by its highest amount in more than five years last month, the reading rescinded by nearly the same figure in July. The delinquency rate for US commercial real estate loans in CMBS is now 5.49%, a decrease of 26 basis points from June. The July 2017 rate is now 73 basis points higher than the year-ago level. "We may see the delinquency rate dance around a bit over the next few months as we enter the final innings of the wall of maturities," said Manus Clancy, Senior Managing Director at Trepp. "There are enough large loans that can be resolved via modification, default, or refinancing that we may see the status of those assets change over the next few months. It's a fittingly uncertain ending for many loans that have been mired in uncertainty for almost a decade." About $1.4 billion in CMBS loans turned newly delinquent in July, which is around $1 billion less than the total that became delinquent in June. Nearly $1.2 billion in previously delinquent loans were cured last month, and roughly $1.7 billion worth of previously distressed debt was resolved with a loss or at par.
Understanding the Surge in Commercial Real Estate Lending - FRB Richmond -- U.S. banks have increased their commercial real estate (CRE) lending significantly in the past five years. Economists and regulators note that some positive factors are driving this trend, but they also see potential risks. Analysts at the Richmond Fed have found that some banks could be especially vulnerable if economic conditions deteriorate. These include institutions that are in certain major urban areas and have high concentrations of CRE loans, rapid CRE loan growth, and heavy reliance on "noncore" (or illiquid) funding. But the analysts also conclude that, overall, banks' CRE exposures do not appear to be as elevated as they were before the Great Recession. While many aspects of the U.S. economic recovery since 2009 have been modest, growth in commercial real estate (CRE) lending has surged in recent years. CRE lending is a broad term that refers to financing for almost any type of income-producing real property, whether it's office buildings, warehouses, retail boutiques, or apartment complexes. After declining in the wake of the Great Recession, the total volume of CRE loans outstanding has rebounded to greater than prerecession levels in recent years, boosted in part by low interest rates and strong foreign demand for U.S. real estate.1 Another driver is continued growth in multifamily housing, that is, apartment buildings with five or more units. Many economists see this surge in lending as boosting economic activity, but they also point out that this sector has historically been volatile and vulnerable to downturns. For these reasons, regulators have been watching CRE loan growth carefully.
Lower taxes would be boon for banks. Except in affordable housing -- The prospect of a lower corporate rate resulting from looming tax reform discussions may be a blessing for the industry, but it could be bittersweet for one particular group of bankers.The Trump administration is said to support a reduction in the corporate tax rate from 35% to 15%. On the one hand, lower taxes are appealing but, on the other, for commercial banks that invest in the affordable housing market, it is a downright scary prospect. These banks have traditionally relied on tax deductions to make their investments in affordable housing financially viable. The simple math is that deductions taken from a 35% tax rate are far more valuable than those taken from a 15% rate. The affordable housing market was created by the Tax Reform Act signed into law by President Ronald Reagan in 1986. The law established Low-Income Housing Tax Credits, or LIHTC, which provide investors with a one-for-one tax credit for every dollar they invest in affordable housing. Additionally, and key to the investment, the program also gave investors an avenue to take deductions against their corporate tax bills. Banking regulators have encouraged banks over the years to consider LIHTC as a potential investment. They offer a competitive rate of return and, as the Office of the Comptroller of the Currency noted in a 2014 report, LIHTC-financed projects can help banks gain credit on Community Reinvestment Act exams. Banks can get CRA consideration either through direct lending or by investing in a project or a specially focused investment fund. “National, regional, and community banks have made important investments in their communities using LIHTC,” the OCC report said. “By investing in or lending to LIHTC-financed projects, banks have met the needs of their customers and communities. In the process, banks have earned competitive rates of return and favorable CRA consideration.” With significant commercial bank participation, the LIHTC program has been a resounding success. It has led to the construction of more than 2.4 million low-income housing units, created hundreds of thousands of jobs and improved neighborhoods in literally every state in the nation. At the same time, the need for affordable housing has not abated. A record 21.3 million households were identified as “cost-burdened” in 2014 by Harvard University’s Joint Center for Housing Studies, which means they paid more than 30% of their income in rent. More than half of these households faced even more difficult circumstances, paying more than 50% of their income in rent.
How the very rich legally avoid paying taxes - It is not that difficult--if you have access to capital. Here are the steps: (1) Buy an apartment complex for $10,000,000 at a 4.5 percent cap rate with a 35 percent downpayment; finance $6,500,000 with an interest only loan at 3.5 percent that comes due in five years. (2) Let's say 35 percent of the value of the property is land and the remainder is improvements. Improvements on apartments are depreciated on a straight line basis over 27.5 years. So taxable income is 450,000-227,500 (interest) - 236,363 = -13,863 or a taxable loss. Meanwhile, cash flow is 222,500 per year. So one gets cash while taking a tax loss. (3) It gets better. Suppose when refinancing happens in five years, the property has gained 20 percent in value. Now one gets a 65 percent LTV loan on a $12,000,000 property--and gets to pull $1,300,000 out of the property. Suppose NOI has also gone up 20 percent. Sow now taxable income is 540,000-273,000-236,363 = 30,636. Assume that the owner's all in marginal tax rate is 50 percent. In exchange for a one time $1,300,000 in cash and cash flow of $267,000, the owner pays a little over $15,000 in taxes and 3.5 percent in interest on the extra money. No matter how one looks at it, this is a tax rate on cash of less than 10 percent. It keeps going for 27.5 years, at which point the owner can defer taxes via a like-kind exchange. All of this is perfectly legal. And it explains why salaried workers pay more in taxes than owners of capital.
A cautionary note for those intent on gutting GSEs --There is a body of opinion in Washington that the best way to move on from the conservatorships of Fannie Mae and Freddie Mac is to develop legislation to create a new housing finance system that retains a government backstop. However, there can realistically be only muted hope that today’s Congress, nine years after the conservatorships started, will agree on a feasible strategy to unwind Fannie and Freddie and replace them with a viable alternative. Washington is too divided; the chances of a bipartisan bill are still in question. Of course, Congress doesn’t need to act to end the conservatorships. The Housing and Economic Recovery Act of 2008 in fact empowered and delegated the Federal Housing Finance Agency with the legal authority and responsibility to bring Fannie and Freddie out of conservatorship — assuming they can be sufficiently capitalized — and reform their regulation. The law could not be any clearer about the FHFA’s authority to set the housing finance system on a proper footing without direction from Capitol HillRegardless of whether Congress could act, some supporters of proposals to recast or eliminate the two government-sponsored enterprises — and yet retain government support for mortgage assets — don’t seem to fully consider the complexities of transitioning to a future without Fannie and Freddie. Whenever elaborate financial policy reforms are implemented, a variety of economic, political, market and regulatory forces all necessarily intertwine over time to determine whether a policy will be successful, or an unintentional failure. Unfortunately, policymakers have all too often failed to rely on a clear fact-based analysis of the risks and bad incentives they may be cultivating over the longer term. History tells us that it often takes decades before the impact of such a financial stew ferments into intended or unintended consequences.’
FHFA’s Watt: No change in GSE credit scoring models until 2019 — Any change to the credit scoring models that Fannie Mae and Freddie Mac use will have to wait until 2019, Federal Housing Finance Agency Director Mel Watt said late Tuesday. “Any credit score model change would not go into effect before 2019 even if I announced a decision today,” Watt said in prepared remarks before the National Association of Real Estate Brokers' annual convention in New Orleans.
Fannie Mae: Mortgage Serious Delinquency rate declined in June, Lowest since December 2007 --Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.01% in June, from 1.04% in May. The serious delinquency rate is down from 1.32% in June 2016.This is the lowest serious delinquency rate since December 2007.
These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.Although the rate is declining, the "normal" serious delinquency rate is somewhat under 1%. The Fannie Mae serious delinquency rate has fallen 0.31 percentage points over the last year, and at that rate of improvement, the serious delinquency rate should be below 1% next month.
The big lie about California’s housing crisis -- The rent in California, not just San Francisco, is too damn high. California now has the highest poverty rate in the nation when the cost of housing is taken into account. Since 2005, more than 2.5 million Californians have been forced to leave the state in search of an affordable home. Unfortunately, the prevailing supply and demand — “just build” — mantra put forward by opinion leaders is diverting state government from the hard truth that the market has not responded to the demand of California families for affordable homes — not luxury and market-rate homes. We are told a big lie, that the solution to our housing crisis is to get government out of the way and leave it to the free market to let affordable housing magically “trickle down” to lower-income households. The truth, though, is developers build to make a profit, not to provide a social need. Luxury housing doesn’t trickle down, at least not at a scale to bring down rents in a meaningful way. Meanwhile, there are new players in the game, changing the parameters of the problem: the rise of Wall Street’s new rental empire. In recent years, real estate speculators have been taking rent-controlled homes in San Francisco off the market and harassing long-time tenants because Costa Hawkins lets them raise the rents when old tenants move out. The biggest owners in California are no longer mom-and-pop landlords, but mega corporations like Blackstone and Colony Starwood, and smaller speculators that follow their lead in raising rents. This time, instead of predatory mortgages, we’re seeing predatory rentals. State laws written by the Realtor lobby, like the Costa Hawkins Rental Housing Act, which severely restricts cities from passing rent control on many types of buildings and on vacant apartments, now serve as a means to line the pockets of landlords and give them the right to charge as much as they want, while more and more of us live with housing insecurity.
These Are The Cities Where Rent Hikes Leave The Most People Homeless -- The idea that rising rents beget increases in a city’s homeless population is nothing new. But in a recent study, Zillow, the online real-estate database company, used a mix of government and proprietary data to examine how much influence an increase in the first variable has on the second. The result was surprising. Using a mix of government data and its own proprietary databases, the company found that the magnitude of rising rents’ impact on local homeless population varies widely between cities, even when two of those cities both have worsening homelessness problems. For example, when the rent rises 5 percent in Atlanta, another 83 people become homeless. In New York, about 3,000 do, according to a Bloomberg analysis of the data. “That 5 percent rent hike in Atlanta can be expected to boost the homeless population by 1.5 percent—in New York, by 3.9 percent. Cities such as Pittsburgh, Minneapolis, and Detroit may have smaller homeless populations, but theirs are also sensitive to rising rents." The key variable here, as Skylar Olsen, a senior economist at Zillow, explains is the amount of slack, or rental vacancy rate, in a given market. “Rent hikes are likelier to force more people into homelessness in housing markets with less slack, said Skylar Olsen, a senior economist at Zillow. The U.S. is short more than 7 million housing units that extremely low-income households can afford, according to the National Low Income Housing Coalition, which defines such households as earning less than 30 percent of area median income. Such low-income renters may not be living in homes with the area’s median rent, but a median rent hike can boost prices for even the cheapest market-rate units. . ‘People move down the ladder, and it pushes everyone else down, and eventually the bottom rung falls off.’” Of course, rent isn’t the only factor affecting rates of homelessness; government-assistance programs funded by Housing and Urban Development keep hundreds of thousands of borderline Americans in their own homes.
MBA: Mortgage Applications Increase in Latest Weekly Survey - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 2.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 28, 2017. ... The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier to its lowest level since March 2017. The unadjusted Purchase Index decreased 2 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 at 4.17 percent, with points decreasing to 0.36 from 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
NAR: Pending Home Sales Index increased 1.5% in June, up 0.5% year-over-year -- From the NAR: Pending Home Sales Recover in June, Grow 1.5 Percent After declining for three straight months, pending home sales reversed course in June as all major regions, except for the Midwest, saw an increase in contract activity, according to the National Association of Realtors®.The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.5 percent to 110.2 in June from an upwardly revised 108.6 in May. At 0.5 percent, the index last month increased annually for the first time since March. ... The PHSI in the Northeast inched forward 0.7 percent to 98.0 in June, and is now 2.9 percent above a year ago. In the Midwest the index decreased 0.5 percent to 104.0 in June, and is now 3.4 percent lower than June 2016.Pending home sales in the South rose 2.1 percent to an index of 126.0 in June and are now 2.6 percent above last June. The index in the West grew 2.9 percent in June to 101.5, but is still 1.1 percent below a year ago. This was above expectations of a 0.9% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in July and August.
Construction Spending decreased in June - Earlier today, the Census Bureau reported that overall construction spending decreased in June: Construction spending during June 2017 was estimated at a seasonally adjusted annual rate of $1,205.8 billion, 1.3 percent below the revised May estimate of $1,221.6 billion. The June figure is 1.6 percent above the June 2016 estimate of $1,186.4 billion. Private and public spending both decreased in June: Spending on private construction was at a seasonally adjusted annual rate of $940.7 billion, 0.1 percent below the revised May estimate of $941.3 billion. ... In June, the estimated seasonally adjusted annual rate of public construction spending was $265.1 billion, 5.4 percent below the revised May estimate of $280.3 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been increasing, but is still 26% below the bubble peak. Non-residential spending is now 6% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 19% below the peak in March 2009, and only slightly above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 9%. Non-residential spending is up 1% year-over-year. Public spending is down 9% year-over-year. This was well below the consensus forecast of a 0.5% increase for June, and spending for previous months were revised down. A weak report.
US Construction Spending Just Collapsed -- Headline growth in US construction spending collapsed in July to just 1.6% YoY - the weakest since 2011. As Reuters reports, U.S. construction spending unexpectedly fell in June as investment in public projects recorded its biggest drop since March 2002. The Commerce Department said on Tuesday that construction spending tumbled 1.3 percent to $1.21 trillion - the lowest level since September 2016 - drastically missing economists' estimates of a 0.4% increase. This downside surprise suggests notable downside revisions to Q2 GDP (from its 2.6% annualized level). However, most ironic in the government's report was, amid The White House constant chatter of the need for infrastructure spending in America, Federal government construction spending crashed 9.5% - the largest drop since December 2010. Public construction spending has hovered in negative territory for the most part of the past year and requires a strong infrastructure spending for its revival. The latest data suggest state and local investment was weaker-than-previously estimated and imply a further modest downward revision to 2Q GDP.
Measuring up US infrastructure against other countries -- How does infrastructure in the U.S. compare to that of the rest of the world? It depends on who you ask. On the last two report cards from the American Society of Civil Engineers, U.S. infrastructure scored a D+. This year’s report urged the government and private sector to increase spending by US$2 trillion within the next 10 years, in order to improve not only the physical infrastructure, but the country’s economy overall.Meanwhile, the country’s international rank in overall infrastructure quality jumped from 25th to 12th place out of 138 countries, according to the World Economic Forum. The quality of infrastructure systems can be measured in different ways – including efficiency, safety and how much money is being invested. As a researcher in risk and resilience of infrastructure systems, I know that infrastructure assessment is far too complex to boil down into one metric. For instance, while the U.S. ranks second in road infrastructure spending, it falls in the 60th place for road safety, due to the high rate of deaths from road traffic. But by many measures, the U.S. falls short of the rest of the world. Two of these characteristics are key to our infrastructure’s future: resilience and sustainability. A new class of solutions is emerging that, with the right funding, can help address these deficiencies.
Personal Income decreased slightly in June, Spending increased less than 0.1% -- The BEA released the Personal Income and Outlays report for June: Personal income decreased $3.5 billion (less than -0.1 percent) in June according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $4.2 billion (less than -0.1 percent) and personal consumption expenditures (PCE) increased $8.1 billion (0.1 percent)...Real PCE increased less than 0.1 percent. The PCE price index increased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.The June PCE price index increased 1.4 percent year-over-year and the June PCE price index, excluding food and energy, increased 1.5 percent year-over-year.The following graph shows real Personal Consumption Expenditures (PCE) through June 2017 (2009 dollars). The dashed red lines are the quarterly levels for real PCE. The increase in personal income was below expectations, and the increase in PCE was close to expectations.
A Quarter Trillion Dollars In US Savings Was Just "Wiped Away" - As part of its historical revision to GDP, the BEA also had to adjust personal income and spending, with the full results released in today's July report. What it revealed was striking: over the revised period, disposable personal income for US household was slashed cumulatively by over $120 billion to just under $14.4 trillion, while spending was revised higher by $105 billion, to just above $13.8 trillion. There were two immediate consequences of this result. First, as the following table shows, while government pay has remained roughly flat over the past 3 years, growing in the mid-2% to mid 3% range, wages and salaries for private workers have been steadily declining as the blue line below shows, and after hitting a 4% Y/Y growth in February, wage growth has slumped to just 2.5% in June, the lowest since January 2014 when excluding the one-time sharp swoon observed at the end of 2016. mBut a more troubling aspect of today's revision is what the drop in income and burst in spending means for the average household's bank account: following the latest annual revision,what until last month was a 5.5% personal saving rate was revised sharply lower as a result of the ongoing downward historical adjustment to personal income and upward adjustment to spending, to only 3.8%. In dollar terms, this revision means that a quarter trillion dollars, or $226.3 billion, in savings was just "wiped away" from US households - if only in some computer deep in the bowels of the BEA buildings - who as a result have that much less purchasing power, and following the revision the total personal saving in the US as calculated by the BEA is now down to only $546 billion, down from $791 billion before the revision.
The Amazon Effect: Retail Bankruptcies Surge 110% In First Half Of The Year - As Amazon flirts with a $500 billion market cap, letting Jeff Bezos try on the title of world's richest man on for size if only for a few hours, for Amazon's competitors it's "everything must go" day everyday, as the bad news in the retail sector continue to pile up with the latest Fitch report that the default rate for distressed retailers spiked again in July. According to the rating agency, the trailing 12-month high-yield default rate among U.S. retailers rose to 2.9% in mid-July from 1.8% at the end of June, after J. Crew completed a $566 million distressed-debt exchange. Meanwhile, with the shale sector flooded with Wall Street's easy money, the overall high-yield default rate tumbled to 1.9% in the same period from 2.2% at the end of June as $4.7 billion of defaulted debt - mostly in the energy sector - rolled out of the default universe. In a note, Fitch levfin sr. director Eric Rosenthal, said that “even with energy prices languishing in the mid $40s, a likely iHeart bankruptcy and retail remaining the sector of concern, the broader default environment remains benign." He's right: after the energy sector dominated bankruptcies in the first half of 2016, accounting for 21% of Chapter 11 cases, in H1 2017 the worst two sectors for bankruptcies are financials and consumer discretionary. And if recent trends are an indication, the latter will only get worse as Fitch expects Claire’s, Sears Holdings and Nine West all to default by the end of the year, pushing the default rate to 9%. "The timing on Sears and Claire’s is more uncertain, and our retail forecast would end the year at 5% absent these filings," Rosenthal wrote. Putting the retail sector woes in context, Reorg First Day has calculated that retail bankruptcies soared 110% in the first half from the year-earlier period, accounting for $6 billion in debt.
Plans to Rethink America’s Malls Can’t Keep Up With Retail’s Collapse - Outside Detroit, plans have been in the works for two years to transform the outdated Lakeside Mall into an open-air center with green space and a waterway. With the property in foreclosure and its ownership in limbo, the blueprints will have to be flexible. The mall’s troubles have spiraled since landlord GGP Inc. stopped paying the mortgage last year and then failed to find a buyer for the property amid turmoil in the retail industry. The center’s value, already less than the $135 million loan, was slashed another $25 million in February. Officials for the city of Sterling Heights, Michigan, aren’t giving up on their project. They’re preparing to court new investors with opportunities that go well beyond retail, and anything from apartments to hotels and restaurants is possible. The forces bearing down on the project at Lakeside are playing out across the U.S., pushing property owners to redraw development plans to keep up with rapid changes in the industry. With store closures accelerating, landlords are having to change course and find ways to create malleable space that can accommodate a revolving roster of tenants. More than a dozen retailers have filed for bankruptcy this year and chains such as Macy’s Inc. are planning to shutter locations amid the rise of online shopping and changing consumer habits. As many as 13,000 stores are expected to close next year, compared with 4,000 in 2016, according to brokerage Cushman & Wakefield Inc. “The ground is moving beneath our feet,” “It’s moving at light speed.” Across the country, tenant turnover is speeding up. Retailers and restaurants are no longer as willing to commit to a space for as long as 10 or 15 years, especially at weaker properties, “There’s going to be more turnover, and quicker than we’ve ever experienced before,” Property owners are grappling with how to create spaces that can be used in different ways without dedicating too much cash to a particular idea, according to Maloney. One solution some landlords are experimenting with is using fabric partitions in place of walls, he said.
GM Auto Sales Crash, Dealer Inventory Near All Time High --It was expected to be a bad quarter for General Motors. It ended up being abysmal. GM reported that July auto sales crashed by a whopping 15%, nearly double Wall Street's already depressed expectations of a 8% drop, and with GM mothballing production across the country to catch up with lagging demand, it still sold only 226,107 vehicles as a result of double digits drops in Chevy, Build and Cadillac Sales of 15.3%, -30.5% and -21.7%, respectively. The only "good" performer was GMC, which dropped by "only" 7.3% Y/Y. The company also reported that while the average transaction price was $36,000, or roughly $1,000 higher than a year ago, the incentive spending as a percentage of average transaction prices was 11.5%, near an all time high.
U.S. Light Vehicle Sales at 16.76 million annual rate in July -- Based on an estimate from WardsAuto, light vehicle sales were at a 16.76 million SAAR in July. That is down 6% from July 2016, and up 1% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for July (red, light vehicle sales of 16.76 million SAAR mostly from WardsAuto). This was close to the consensus forecast of 16.8 million for July. After two consecutive years of record sales, vehicle sales will be down in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967. Note: dashed line is current estimated sales rate.
RV sales hitting all-time records -- Sometimes, bigger isn't always better. The recreational vehicle industry has figured that out and it has led to record-breaking growth.This year, RV shipments are expected to hit their highest level ever, according to the Recreation Vehicle Industry Association, marking the industry's eighth consecutive year of gains.Those shipments are accelerating, and should grow even more next year, the group said. Sales in the first quarter rose 11.7 percent from 2016.Much of the growth can be attributed to strong sales of trailers, smaller units that can be towed behind an SUV or minivan, which dominate the RV market. The industry also is drawing in new customers. As the economy has strengthened since the Great Recession, and consumer confidence improved, sales have picked up, said Kevin Broom, director of media relations for RVIA.Two of the major players in the industry, Thor Industries and Winnebago Industries, both manufacturers of RVs, reported huge growth in their most recent earnings report. Thor saw sales skyrocket 56.9 percent to $2.02 billion fromlast year. Winnebago's surged 75.1 percent last quarter to $476.4 million. Gerrick Johnson, an analyst at BMO Capital Markets, attributed much of that growth to acquisitions. Thor bought Jayco, then the No. 3 player in the industry, last June; Winnebago bought Grand Design in October.
June Trade Deficit at $43.6B, Better Than Forecast - The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.6 billion in June, down $2.7 billion from $46.4 billion in May, revised. June exports were $194.4 billion, $2.4 billion more than May exports. June imports were $238.0 billion, $0.4 billion less than May imports.The June decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.1 billion to $65.2 billion and an increase in the services surplus of $0.6 billion to $21.6 billion.Year-to-date, the goods and services deficit increased $26.7 billion, or 10.7 percent, from the same period in 2016. Exports increased $64.9 billion or 6.0 percent. Imports increased $91.7 billion or 6.9 percent. Today's headline number of -43.64B was better than the Investing.com forecast of -45.00B. The previous month was revised downward by 100M. This series tends to be extremely volatile, so we include a six-month moving average.
Trade Deficit at $43.6 Billion in June -- Earlier from the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.6 billion in June, down $2.7 billion from $46.4 billion in May, revised. June exports were $194.4 billion, $2.4 billion more than May exports. June imports were $238.0 billion, $0.4 billion less than May imports. Imports decreased and exports increased in June. Exports are 18% above the pre-recession peak and up 6% compared to June 2016; imports are 3% above the pre-recession peak, and up 5% compared to June 2016. In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $44.68 in June, down from $45.03 in May, and up from $39.38 in June 2016. The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. The trade deficit with China increased to $32.6 billion in June, from $29.7 billion in June 2016.
AAR: Rail Traffic decreased slightly in July - From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission. Total U.S. rail carloads were 0.6% lower in July 2017 than in July 2016. That’s not much, but it’s the first decline since October 2016. The end of easy comps for coal and grain gets much of the blame. For coal, carloads rose 4.0% in July, down from double-digit gains the previous six months. ... The biggest bright spots for rail traffic in July were carloads of crushed stone, gravel, and sand (up 15.0%, their sixth straight double-digit increase — thank frac sand) and intermodal (up 5.6%, keeping it on pace to set a new annual record this year). Carloads of petroleum products kept falling in July, as did carloads of motor vehicles and parts (consistent with declines in sales and production of cars and light trucks). Year-todate total carloads were up 5.4% through July; year-to-date intermodal was up 3.1%.This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA). Dark blue is 2017. Rail carloads have been weak over the last decade due to the decline in coal shipments.
U.S. factory orders rose in June as demand for aircraft soared - Chicago Tribune: rders at U.S. factories increased in June as demand surged for aircraft. The Commerce Departments reports that factory orders increased 3 percent in June, a solid rebound after declining in May and April. But the gains largely came from a massive 131 percent jump in orders for civilian aircraft, a category that can be volatile on a monthly basis. Excluding the transportation sector that includes aircraft, factory orders slipped 0.2 percent in June. Demand fell for computers and electronic products, while primary metals, machinery and motor vehicles eked out gains. U.S. manufacturing has been recovering from a slowdown in late 2015 caused by lower energy prices and a strong dollar that made American products more expensive overseas.
June factory orders -- New orders for U.S.-made goods rebounded in June, recording their biggest increase in eight months, but manufacturing is expected to continue to grow at a moderate pace as the boost from the energy sector fades. Factory goods orders jumped 3.0 percent, the Commerce Department said on Thursday. That was the largest gain since October 2016 and followed two straight monthly declines. May's data was revised to show orders falling 0.3 percent instead of the previously reported 0.8 percent drop. Economists had forecast that factory orders would surge 2.9 percent in June. Manufacturing, which makes up about 12 percent of the U.S. economy, has been buoyed by a surge in oil and gas drilling. But the energy stimulus is easing as ample supplies restrain crude oil prices. At the same time, motor vehicle production is declining as the industry struggles with falling sales, which have created an inventory glut. Motor vehicle production has decreased for three straight quarters. General Motors and Ford Motor have both announced they will cut production during the second half of this year. U.S. auto sales fell 6.1 percent in July from a year ago to a seasonally adjusted rate of 16.73 million units. Thursday's report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft — seen as a measure of business spending plans — were unchanged in June instead of slipping 0.1 percent as reported last month. Orders for these so-called core capital goods rose 0.8 percent in May. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, edged up 0.1 percent instead of the previously reported 0.2 percent gain. In June, orders for machinery increased 0.4 percent after advancing 2.6 percent in May. Mining, oilfield and gas field machinery orders increased 3.8 percent after accelerating 10.3 percent in May. Orders for transportation equipment jumped 19.0 percent, the biggest rise since July 2014, reflecting a 131.1 percent surge in civilian aircraft orders. Motor vehicle orders nudged up 0.1 percent after rising 0.3 percent in May.
Dallas Fed: "Texas Manufacturing Activity Strengthens" in July --From the Dallas Fed: Texas Manufacturing Activity Strengthens, Outlooks Improve Texas factory activity increased again in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose 11 points to 22.8, indicating output grew at a faster pace than in June. Other measures of current manufacturing activity also indicated a pickup in growth. The new orders and the growth rate of orders indexes rose several points each, coming in at 16.1 and 12.2, respectively. The capacity utilization index moved up to 18.1 and the shipments index increased three points to 11.6.Perceptions of broader business conditions improved again in July, with a sharp pickup in outlooks. The general business activity index edged up to 16.8, marking a 10th consecutive positive reading. The company outlook index jumped 15 points to 25.9, reaching its highest level since 2010. Labor market measures indicated slightly stronger employment gains and longer workweeks this month. The employment index has been positive all year and edged up to 11.2, its highest reading since the end of 2015. Twenty-one percent of firms noted net hiring, compared with 9 percent noting net layoffs. The hours worked index ticked up to 9.8. This was the last of the regional Fed surveys for July. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
July Chicago PMI Slides Back Down - The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.The latest report for Chicago PMI came in at 58.9, a 6.8 point decrease from last month's 65.7. Investing.com forecast 60.0.Here is an excerpt from the press release: “MNI’s July Chicago Business Barometer should be viewed in the context of the underlying, upward trend in business sentiment witnessed since early 2016. Key indicators, despite reversing their June reading, remain above their respective averages set over the last twelve months, and point towards robust confidence among U.S firms,” said Jamie Satchi, Economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.
Regional Fed Manufacturing Overview: July Update - -Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia.Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for July is 14.70, up from the previous month's 14.56. It has been in positive territory for ten consecutive months.
ISM Manufacturing index decreased to 56.3 in July - The ISM manufacturing index indicated expansion in July. The PMI was at 56.3% in July, down from 57.8% in June. The employment index was at 55.2%, down from 57.2% last month, and the new orders index was at 60.4%, down from 63.5%. From the Institute for Supply Management: July 2017 Manufacturing ISM® Report On Business® "The July PMI® registered 56.3 percent, a decrease of 1.5 percentage points from the June reading of 57.8 percent. The New Orders Index registered 60.4 percent, a decrease of 3.1 percentage points from the June reading of 63.5 percent. The Production Index registered 60.6 percent, a 1.8 percentage point decrease compared to the June reading of 62.4 percent. The Employment Index registered 55.2 percent, a decrease of 2 percentage points from the June reading of 57.2 percent. The Supplier Deliveries Index registered 55.4 percent, a 1.6 percentage point decrease from the June reading of 57 percent. The Inventories Index registered 50 percent, an increase of 1 percentage point from the June reading of 49 percent. The Prices Index registered 62 percent in July, an increase of 7 percentage points from the June reading of 55 percent, indicating higher raw materials prices for the 17th consecutive month, with a faster rate of increase in July compared with June. Comments from the panel generally reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in July compared to June, as well as supplier deliveries slowing (improving) and inventories unchanged during the period." Here is a long term graph of the ISM manufacturing index. This was slightly below expectations of 56.4%, and suggests manufacturing expanded at a slower pace in July than in June.
Markit Manufacturing PMI: Four Month High in July - The July US Manufacturing Purchasing Managers' Index conducted by Markit came in at 53.3, up from the 52.0 final June figure. Today's headline number was slightly above the Investing.com forecast of 53.2. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.Here is the opening from the latest press release:July survey data signalled a solid improvement in operating conditions in the US manufacturing sector. The upturn in business conditions was largely driven by marked and accelerated expansions in both output and new orders. Meanwhile, firms added to their payrolls and raised purchasing activity at the quickest rates since February. Business confidence reached a six-month high, as firms became more optimistic regarding future output. Inflationary pressures remained relatively muted, despite a pick up in the rate of input cost inflation.The seasonally adjusted IHS Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) registered 53.3 in July, up from 52.0 in June to signal a further improvement in the health of the sector. Notably, the latest improvement in operating conditions was solid and the strongest in four months. [Press Release] Here is a snapshot of the series since mid-2012.
Manufacturing Surveys Signal Economy "Still Stuck In Low Gear" Amid Collapse In 'Hard' Data --After hitting a 9-month low in June, Markit's US Manufacturing PMI bounced to 53.3 in July with new orders, output, and employment rebounding. In a China-esque moment, ISM disappointed, modestly dropping to 56.3 with prices paid surging and new orders tumbling. All of this uncertainty is happening as 'hard' data in the American economy is collapsing.After six straight months lower, PMI bounced in July (very slightly beating the 53.2 expectation) but ISM dipped and missed expectations.ISM breakdown shows most sub-indices declined but a surge in prices paid!! Despite the drop in new orders and the overall index, every ISM respondent was bullish...Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“The second half of the year got off to a good start for US manufacturers,with the health of the sector improving at the fastest rate for four months. Output, new orders, employment and buying activity all grew at increased rates. The only real blot on the copybook was a decline in exports for the first time since last September.“However, IHS Markit expects GDP growth to accelerate to a near 3% annualised rate in the third quarter, fueled by gains in consumer spending and business investment, which should benefit manufacturing.”However, before we get all carried away with this modest rebound, Williamson notes... ...although rising, the survey indices remain consistent with only very modest increases in comparable official data such as manufacturing output, durable goods orders and payroll numbers.
ISM Non-Manufacturing Index decreased to 53.9% in July -- The July ISM Non-manufacturing index was at 53.9%, down from 57.4% in June. The employment index decreased in July to 53.6%, from 55.8%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management: July 2017 Non-Manufacturing ISM Report On Business® "The NMI® registered 53.9 percent, which is 3.5 percentage points lower than the June reading of 57.4 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 55.9 percent, 4.9 percentage points lower than the June reading of 60.8 percent, reflecting growth for the 96th consecutive month, at a slower rate in July. The New Orders Index registered 55.1 percent, 5.4 percentage points lower than the reading of 60.5 percent in June. The Employment Index decreased 2.2 percentage points in July to 53.6 percent from the June reading of 55.8 percent. The Prices Index increased 3.6 percentage points from the June reading of 52.1 percent to 55.7 percent, indicating prices increased in July for the second consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector did not sustain the previous rate of growth and cooled-off in July. The majority of respondents’ comments were mostly positive about business conditions and the state of the economy."
Markit Services PMI: Business Activity Growth Accelerates in July - The July US Services Purchasing Managers' Index conducted by Markit came in at 54.7 percent, up 0.5 percent from the June estimate. The Investing.com consensus was for 54.2 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.Here is the opening from the latest press release:July survey data signalled a solid expansion in business activity among US service providers. New orders received by firms increased at the fastest pace for two years, which in turn contributed to a stronger rise in backlogs of work. As a result, firms increased their staff numbers at the quickest pace since last December. At the same time, inflationary pressures remained relatively strong, and business confidence suggestive of ongoing expansion in coming months.The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.7 in July, up from 54.2 in June. The latest reading signalled the largest expansion of business activity since January and the fourth consecutive month of accelerated growth. Despite being marginally below the longrun series average, the latest upturn in activity was solid overall. [Press Release] Here is a snapshot of the series since mid-2012.
US Services Economy Crashes To 11-Month Lows (Or Surges To 6-Month Highs) - You Decide -- Following mixed US manufacturing survey data earlier in the week (and disappointing French/German PMIs), US Services were even more mixed with PMI printing at 6-month highs (new business expanding at its fastest in two years), and ISM collapsing to 11-month lows. Despite the ongoing collapse in 'hard' economic data (against even weaker expectations), surveys of US Services employers by PMI are ebulient, but it seems the people that ISM are talking to are dysphoric... ISM Respondents do not seem to be as exuberant as PMI respondents. "A typical and expected midsummer slowdown in hiring activity by employers is causing a normal slowdown in business for this time of year.We expect a sharp ramp-up of business activity over the next three months." Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“The PMI surveys have now shown growth accelerating for four consecutive months, meaning the economy started the third quarter with the strongest momentum since January."This is also a broad-based improvement, with the upturn in service sector activity coming on the heels of news of faster manufacturing growth. As Williamson concludes, at current levels, the surveys are indicative of GDP rising at an annualised rate of approximately 2%, but if growth accelerates further in line with the upturn in new business, the third quarter could be even stronger. But the ISM data crushes that hope. with 7 of the components tumbling and the 53.9 print below the lowest economist estimate (of 54.9)...
Weekly Initial Unemployment Claims decrease to 240,000 --The DOL reported: In the week ending July 29, the advance figure for seasonally adjusted initial claims was 240,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 244,000 to 245,000. The 4-week moving average was 241,750, a decrease of 2,500 from the previous week's revised average. The previous week's average was revised up by 250 from 244,000 to 244,250. The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.
ADP: Private Employment increased 178,000 in July -- From ADP:Private sector employment increased by 178,000 jobs from June to July according to the July ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “Job gains continued to be strong in the month of July,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “However, as the labor market tightens employers may find it more difficult to recruit qualified workers.” Mark Zandi, chief economist of Moody’s Analytics, said, “The American job machine continues to operate in high gear. Job gains are broad-based across industries and company sizes, with only manufacturers reducing their payrolls. At this pace of job growth, unemployment will continue to quickly decline.” This was close to the consensus forecast for 175,000 private sector jobs added in the ADP report. The BLS report for July will be released Friday, and the consensus is for 180,000 non-farm payroll jobs added in July.
A Closer Look at This Morning's ADP Employment Report - In this morning's ADP employment report we got the July estimate of 178K new nonfarm private employment jobs from ADP, a decrease over June's 191K, which was an upward revision of 33K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail.Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend.As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011.ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016.For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high.There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above leveled off in late 2010 but began drifting higher in early 2015. For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing. Another view of the relative trends of the five select industries is an overlay of the year-over-year comparison.
July Employment Report: 209,000 Jobs, 4.3% Unemployment Rate - From the BLS: Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, professional and business services, and health care. .. The change in total nonfarm payroll employment for May was revised down from +152,000 to +145,000, and the change for June was revised up from +222,000 to +231,000. With these revisions, employment gains in May and June combined were 2,000 more than previously reported. .. In July, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.36. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).Total payrolls increased by 209 thousand in July (private payrolls increased 205 thousand).Payrolls for May and June were revised up by a combined 2 thousand.This graph shows the year-over-year change in total non-farm employment since 1968.In July the year-over-year change was 2.16 million jobs. This is a decent year-over-year gain.The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate increased in July to 62.9%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The fourth graph shows the unemployment rate. The unemployment rate decreased in July to 4.3%. This was above expectations of 180,000 jobs, and the previous two months were revised up slightly. A solid report.
July Jobs Report – The Numbers -- U.S. employers hired at a healthy rate in July and the unemployment rate fell back to a 16-year-low. Here are five key takeaways from the July jobs report. The economy created 209,000 jobs in July, well above this year’s average monthly gain of 184,000. It added 231,000 jobs in June. Job growth this year is just a touch below last year’s average monthly increase of 187,000. The takeaway: The labor market’s long expansion is showing no signs of exhaustion. There’s still room to run. The jobless rate fell by a tenth of percentage point to 4.3%, matching May as the lowest level of unemployment in 16 years. It declined despite an expansion in the labor force. That suggests the growing labor market is slowly drawing more Americans off the sidelines and into the job search, and that employers are hiring many of them. The drop could also nudge the Federal Reserve closer to raising interest rates. Unemployment is already below the Fed’s projection for long-run joblessness of between 4.5% and 4.8%. The average hourly wage for private-sector workers grew 2.5% in July. That’s a modest pace historically, but it looks better when considering inflation is so low. Real wages are growing at a solid pace. Over the month, average hourly wages grew 9 cents on average, or 0.34%. The share of Americans holding jobs or actively looking for work rose a tenth of a percentage point last month to 62.9%. That’s very slight progress. Labor-force participation is still depressed overall, and it’s only increased a tenth of percentage point over the past year despite the strong hiring. A measure underemployment—one that takes into account jobless workers, reluctant part-time workers and Americans too discouraged to look for work—remained at 8.6%. That’s two tenths of percentage point higher than May’s level, though it’s down more than a point from the prior year.
July jobs report: HEADLINES:
- +209,000 jobs added
- U3 unemployment rate down -0.1% from 4.4% to 4.3%
- U6 underemployment rate unchanged 8.6%
- Not in Labor Force, but Want a Job Now: down -11,000 from 5.431 million to 5.420 million
- Part time for economic reasons: down -44,000 from 5.326 million to 5.282 million
- Employment/population ratio ages 25-54: rose 0.2% from 78.5% to 78.7% (a new post-recession high)
- Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.06 from $22.04, to $22.10, up +2.--% YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
- Manufacturing jobs rose by 16,000 for an average of +5,500 vs. the last severn years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.
- Coal mining jobs fell by -200 for an average of +100 vs. the last severn years of Obama's presidency in which an average of -300 jobs were lost each month
- the average manufacturing workweek was unchanged at 40.9 hours. This is one of the 10 components of the LEI.
- construction jobs increased by 6,000. YoY construction jobs are up 191,000.
- temporary jobs increased by 14,700.
- the number of people unemployed for 5 weeks or less decreased by -172,000 from 2,305,000 to 2,133,000. The post-recession low was set 18 months ago at 2,095,000.
- Overtime was unchanged at 3.3 hours.
- Professional and business employment (generally higher- paying jobs) increased by 49,000 and is up +---,000 YoY.
- the index of aggregate hours worked in the economy rose by 0.2 from 107.4 to 107.6
- the index of aggregate payrolls rose by 0.7 from 134.9 to 135.6.
Payrolls Beat: 209K Jobs Added In July, Solid Wage Growth -- And now the dovish Fed has another problem: the BLS reports that in July the US added 209K jobs, beating consensus expectations of a 180K print, while June was revised higher to 231K from 222K, even as May was revised modestly lower from 152K to 138K. Nonfarm private payrolls rose 205k vs last month's 194k, and above the estimate of 180k, as the drop from durable manufacturing failed to materialize. Adding to the hawkish pressure, wages rebounded from last month's 0.2%, rising 0.3% M/M, and 2.5% on a Y/Y basis, above the 2.4% expected, and once again putting wage inflation back on the map. The unemployment rate dropped from 4.4% to 4.3% as expected, while the participation rate rose from 62.8% to 62.9%.
Jobs day! More solid jobs gains…but wage growth still not responding - The nation’s employment rolls went up 209,000 last month, and the unemployment rate ticked down slightly to 4.3%. The underlying pace of job gains, shown below, suggests a solid, healthy labor market characterized by strong employer demand for workers. That said, wage growth remains remarkably subdued. Taken together, these two facts imply that while we’re closing in on full employment, we’re not there yet. To get at the underlying trend just mentioned, our jobs-day smoother takes some of the noise out of the jumpy monthly data by averaging job gains over 3-, 6-, and 12-month periods. There’s been a slight acceleration of job growth over the past three months, but broadly speaking, net payrolls are rising at a rate of between 180-190 thousand over the past year. That’s strong enough job growth to continue placing downward pressure on the unemployment rate. Typically, downward pressure on unemployment means some degree of upward pressure on wage growth. But as the next two figures reveal (average hourly wage growth, yr/yr, for all and non-supervisory—blue collar and non-managerial—workers), while nominal wage growth initially caught a buzz, rising from about 2 to around 2.5%, it’s gotten stuck at 2.5 (a bit lower for the mid-level workers) and hasn’t accelerated further even as the job market has continued to tighten. One explanation for this lack of correlation is that the job market still has some slack, and that’s suppressing the extent of worker bargaining clout that we’d historically associate with the low unemployment rate and steady, sizable monthly gains we see in these data.In that spirit, this is a good time to evaluate a spate of slack measures. Here’s a list of “where they were at their trough and where they are today” for some key labor market indicators:
- –Monthly job losses/gains have swung from an average monthly loss of 773,000 in the first quarter of 2009 (i.e., your worst nightmare) to an average gain of 195,000 over the last three months.
- –Unemployment fell from a high of 10% in Oct of 2009 to 4.3% last month.
- –Underemployment fell from a high of 17.1% in April of 2010 to 8.6% last month.
- –Involuntary part-time work has fallen from 9.2 million in September of 2010 (6.6% of employment) to 5.3 million in July (3.4% of employment), slightly down from where it was in June.
- –The closely watched labor force participation rate is up from a low of 62.4% in September of 2015, but only moderately, ticking from 62.8% in June to 62.9% last month, which is back to where it was at the beginning of 2017. Some of this represents aging boomers leaving the labor force, but some represents ongoing slack.
- –That “slack” point re labor supply is underscored by looking at the prime-age (25-54, so few retirees in there) employment rate, which climbed from a low of 74.8% in November of 2010 to a post-recession high of 78.7% this month (up from 78.5% last month); it is now over 70% of the way back to its January 2007 level, 80.3%.
July Employment Stays Warm (with 8 graphs) The establishment survey from the BLS showed payroll employment up 209,000 in July. The revised increase, up 9,000, in payroll employment in June was 231,000. Private sector employment was almost solely responsible for the increase as government employment was up only 4,000. The labor market is continuing to add jobs at a healthy rate in spite of the length of the expansion.As in previous months most of the job growth is occurring in the service sector with some minor added employment in mining and construction. Average hours of work remained at 34.5 for the second month in a row. Average hourly earnings increased 0.3% (9 cents) to $26.36 and have increased 2.5% year over year while the CPI has increased 1.6% year over year, leading to an increase in real hourly earnings. This is a good sign, but no evidence that the labor market is going to be putting upward pressure on inflation anytime soon. The Beveridge Curve continues to show low unemployment and a high vacancy rate, sometimes the recipe for increased wage pressure. But, in this economy, the employment to population ratio and labor force participation are still notably below their recent peaks…meaning a lot of possible workers are on the sidelines. There are two accounts for why this is so. In one, people are staying on the sidelines because of the increased value of leisure. The other, that we have emphasized, is that there is a mismatch of skills slowing down the matching in the labor market. The employment to population ratio showed a modest up-tick as did labor force participation, although the labor force participation remains at a relatively low level. Moreover, trends in labor force participation are now very flat for many different types of workers and have been over the last several years. The most remarkable is that of teens, now at the lowest level since the data was recorded back in 1947.
US Payrolls Rise In July, But Annual Trend Continues To Weaken - US companies added workers at a faster rate in July, expanding payrolls by 205,000, up from an upwardly revised 194,000 in the previous month. That’s a healthy improvement, although the noisy monthly changes hide the fact that the year-over-year trend for payrolls continues to decelerate. Private payrolls increased 1.68% in July vs. the year-earlier month, fractionally lower than the 1.72% annual pace in June. A rounding error, perhaps, but the latest year-on-year increase leaes the trend close to the slowest advance in six years, marked by a 1.65% rise in March. A roughly 1.7% annual advance for private payrolls is still encouraging. Yet the persistence of the slowdown in jobs creation, which has been in force for more than two years, suggests that the eight-year-old economic expansion – the third-longest on record since the mid-1800s – may soon be facing new headwinds.That’s not obvious in the monthly comparisons. The crowd will likely focus on the fact that July’s private payrolls accelerated to the best pace in five months.“It was strong across the board. It puts (the Fed) still on track to start the program to wind down the book in September and it’s a long ways off in December for the next rate hike,” Justin Lederer, an interest rate strategist at Cantor Fitzgerald, tells Reuters.Tony Bedikian, head of global markets for Citizens Bank, agrees. “Kind of an all-around strong headline number,” he observes. “More people are coming into the labor force and finding jobs. It’s difficult to find anything really negative in the report.”The caveat is that month data is noisy, which is to say that focusing on the short-term data can be misleading at times.To be fair, the annual trend’s decline is gradual and so the slowdown could roll on for some time before it creates trouble for the labor market or the economy. In fact, it’s reasonable to wonder if the downshift has stabilized around the 1.7% rate. One reason for entertaining this idea: the annual pace has been in a tight range since March, averaging 1.7%, which implies that the economy has found a sweet spot for moderate, steady growth.
Where The Jobs Were: Waiters And Bartenders Topped The List -- We already showed that contrary to the strong headline payrolls print, the sole source of job gains in July was part-time jobs, which rose by 393K in the month, the biggest monthly increase since September 2016, as full-time jobs sunk by 54K. Which is why it should not surprise that of the 209K jobs added according to the Establishment survey, the sector that added the most jobs was the "food services and drinking places", i.e. "waiters and barenders" category, which added 53,000 jobs, the highest monthly increase since March 2014. There have now been 89 consecutive months without a decline for waiter and bartender jobs, the strongest sector for US employment. Needless to say, these jobs fall within leisure and hospitality, that sector pays the worst wages, an average of $13.35 an hour, and $331.08 a week. Next was professional and business services, which added 49,000 jobs. Within this category, administrative and waste services added 30,000 jobs, while temp workers rose by 14,700. The good news here is that hourly pay for this group averaged $26.07, and weekly pay $928.09, up 2.5% from a year ago. The bad news is that most of the jobs were in administrative and temp services, the lowest paying groupings. Health care added 39,000 jobs, with job gains occurring in ambulatory health care services (+30,000) and hospitals (+7,000). Health care has added 327,000 jobs over the past year. Employment in mining was essentially unchanged in July (+1,000). While no other sector made a significant contribution to the July report, it is worth pointing out that for the second consecutive month there wasn't a major job sector with a decline in jobs. Commenting on the job distribution, Andrew Zatlin of SouthBay Research said "manufacturing hiring is settling down: oil related capex hiring is pausing and autos are hitting the brakes. This offsets other gains. That leaves services to drive the hiring, and it's mostly positive. Healthcare hiring strengthened after the ACA repeal debacle. Temp hiring is also steady." In its observation of overall wge growth, which surprised to the upside rising 2.5% for all workers from a year ago, more than the 2.4% expected, that number can often be skewed by gains at the top. Furthermore, these are nominal numbers: assuming a 1.6% CPI as reported in June, that means "real" wage growth is roughly 1%. As the WSJ points out, "it's hard to push the economy very far when consumers are seeing only 1% wage growth."
Comment: A Solid Employment Report --The headline jobs number was above expectations, and there were slight combined upward revisions to the previous two months. And the unemployment decreased slightly. In July, the year-over-year change was 2.16 million jobs. This is decent year-over-year job growth. Note that July has been the second strongest month for job growth over the three previous years, exceeded only by June, and just ahead of November. This is the 4th consecutive solid job gain in July: 202 thousand in July 2014, 254 in July 2015, 291 thousand in July 2016, and now 209 thousand in July 2017. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.5% YoY in July. Wage growth has generally been trending up. From the BLS report: The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 5.3 million, was essentially unchanged in July. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job. The number of persons working part time for economic reasons decreased slightly in July. The number working part time for economic reasons suggests a little slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 8.6% in July.This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.79 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 1.66 million in June. This is generally trending down, but still a little elevated.
Only Employment Gains In The Past Year: Those With A High School Diploma Or Lower -- In its latest, July, snapshot of the US economy, the NY Fed observed something startling, and which hasn't received much discussion in the media: when looking at the June report, over the past year the only employment gains have gone to less educated Americans, or as the NY Fed puts it, "over the last year, the employment-to-population ratio has risen for the less educated." It added that "for those with less than a high school degree and for high school graduates, the employment-to-population ratio rose by 0.4 percentage point and 0.9 percentage point, respectively. Meanwhile, "the employment-to-population ratio for the more highly educated has been on a downward trend, with the ratio for those with a college degree 0.2% percentage point lower in June relative to a year ago." Now that we have the July data we can update the NY Fed data, and find... more of the same: as the chart below shows, while on both a 1-month and 1-year basis, the Employment-to-Population ratio for workers with "some college" or "a bachelor's degree and higher" declined or remained flat again, the biggest increase on both a 1-month and 1-year basis was for those with "less than a high school diploma" or "high school" graduates. In retrospect, this should not come as a surprise: in an economy where wage growth is "inexplicably" failing to materialize, in which waiters and bartenders were the hottest hiring sector last month and over the past 7 years, and where part-time workers soared in July, it makes sense that the best job prospects are for those who never went to college. As for the adverse structural consequences for the US economy as a result of lack of demand for those with a college education, that is self-explanatory and is a giant hint as to the unprecedented collapse in US economic productivity in recent years.
Meet The Tens Of Thousands Of Americans Desperate For A Warehouse Job At Amazon -- Today was Amazon Jobs Day, which the company said was "its biggest hiring event of the year" in which it would interview and hire 50,000 full-time and part-time employees in communities all around the country, mostly for vacant warehouse worker positions. The jobs fair is part of Amazon's pledge to hire 130,000 workers by 2018. Among the perks listed were the following: Full-time positions include medical benefits starting on day one and tuition pre-payment for high demand careers. Part-time positions include medical benefits that begin after 90 days and tuition pre-payment.The company said it offers "competitive pay" for full-time workers as well as part-time workers. Wages for the advertised positions range from $11.50 an hour in Tennessee to $13.75 an hour near Amazon's Seattle headquarters.Amazon provided the following handy dress code tips for today's interviews:
- Long hair must be pinned or tied up to a length that does not exceed the top of the shoulder. Beards may not exceed three inches from the face without being tied up or netted
- Extraneous articles hanging from clothing, such as chains or drawstrings, can cause a safety-risk and are prohibited
- We ask guests to wear flat, closed-toe and closed-heel shoes.
- Jewelry that dangles or protrudes from the body may come in contact with machinery and result in a safety hazard
In Robbinsville, New Jersey, Morgan Devries, 21, told NBC News she used to work in retail but is now applying for work at Amazon because the industry doesn't pay well enough. "I work at the airport and they are paying people $12 and under [per hour]," Clarence Williams told NBC News. "People cannot live on that type of wage! If you look at the long line, no one here is making good money."Some lucky candidates would be given job offers on the stop: they will pack or sort boxes. Considering Amazon's recent surge in employment, today's countrywide job fair was not surprising.
An Ohio Factory Owner Is Eager To Hire Workers, There Is Just One Problem... In April, the Fed's otherwise boring Beige Book revealed an striking anecdote about the current state of the US labor market: as the Boston Fed commented at the time, the qualified labor shortage had gotten so bad, that the hit rate on hiring after a simple math and drug test, has collapsed below 50%. To wit: One respondent said that during a recent six-month attempt to add to staff for a new product, two-thirds of applicants for assembly line jobs were screened out before hiring via math tests and drug tests; of 400 workers hired, only 180 worked out. Fast forward to today when we have a practical example of how severe this quandary has become for employers. According to WTVR, an Ohio factory owner said on Saturday that although she has numerous blue-collar jobs available at her company, she struggles 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. While not quite as bad as the adverse hit rate hinted at by the Beige Book, this is a stunning number, and one which indicates of major structural changes to the US labor force where addiction and drugs are keeping millions out of gainful (or any, for that matter) employment. “We have a 150-ton crane in our machine shop. And we’re moving 300,000 pounds of steel around in that building on a regular basis. So I cannot take the chance to have anyone impaired running that crane, or working 40 feet in the air.”
Wisconsin Buys Foxconn Facility for Kenosha -- I picked up this version 4 BS lies of Trump and Scott Walker’s Imaginary Foxconn Factory on Tom Bozzo’s facebook page where I stopped to see what he had to say as of late. While it is a great attention grabber, a link caught my eye in Wonkette’s article leading to this America and the Foxconn Dream . This morning Ken Thomas has his very thorough analysis Foxconn Cashes in for $3 Billion-Plus: Analysis up. The first being the wonkier, the 2nd is a Bloomberg discussion, and Ken’s is an analysis on a topic he pursues, government subsidizing business. And this one ??? I am not sure yet. Mr. Terry Gou the CEO of Foxconn said he would only come to the US if the chosen location met Foxconn’s demands, which of course Walker with the aid of Paul Ryan did do. The facility is located in Paul Ryan’s backyard. And the threat of having tariffs placed on Foxconn products has dissipated. Foxconn will invest $10 billion in a factory some say will be 20 million square feet and create 3000 jobs of roughly 6600 square feet for each US worker. Sounds more like a warehouse to me even if they stuck 160 foreign made robotic manufacturing cells (Tesla did such) in it. More than likely, this will be an assembly operation with components and assemblies coming from Foxconn and Foxconn suppliers. The value-add will be out of country.So what does all of this get Wisconsin for shelling out $519 per Wisconsin constituent and the US also?According to Bloomberg’s Tim Culpan; “Wisconsin is paying as much as $1 million per job, which will carry an average salary of $54,000. The state’s economic development corporation is selling the project to taxpayers with a claim that it will create 10,000 construction jobs for building the facility and another 6,000 indirect positions. It is expecting $3.3 million of investment per employee from the Taiwanese company”. Foxconn does not have a history of doing what it says and agrees to do. In Pennsylvania, Foxconn pledged $30 million to build a plant and hire 500 workers. It never happened. A pledge of $1 billion to build a plant in Indonesia dissipated also. Foxconn’s division Hon Hai has not spent 10 billion in any single year on infrastructure nor has it spent as much if one combines the last five years. Walker’s boondoggle may be mostly hype and a way to insure he is reelected in 2018.
Foxconn cashes in for $3 billion-plus: Analysis -- Foxconn hit the jackpot with Wisconsin on Wednesday, when CEO Terry Gou and Governor Scott Walker signed a memorandum of understanding for the company to invest $10 billion in southeastern Wisconsin in return for $3 billion in state subsidies and an undetermined amount of local incentives in the form of tax increment(al) financing (TIF).* The basic outline of the deal, sent to me by John Haynes of the Milwaukee Journal-Sentinel, is pretty simple: Foxconn is required to invest $10 billion and employ 13,000 workers within six years at an average pay rate of $53,875 a year plus benefits. In return, the state will give Foxconn $1.5 billion in tax credits for the 13,000 new jobs, $1.35 in tax credits for the $10 billion investment, and $150 million in sales tax breaks on construction materials for the plant. The tax credits are refundable, so Foxconn will receive a check if it doesn’t owe much or anything in state income tax in any given year. The state credits will total $200-$250 million a year for up to 15 years, or until Foxconn has received the entire $3 billion. All this must be approved by the state legislature by September 30. According to the state, if Foxconn does not create all the jobs or make the entire investment, it does not get the full subsidy. In addition, the legislature must also amend the state’s TIF law by lifting the 12% cap on the ratio of TIF’d property value to a municipality’s total property value, and extending the allowable life of TIF bonds. Together, these would make larger TIFs and greater municipal debt possible. It is unclear exactly how much more this will add to the subsidy package, since a final site hasn’t been chosen in the Kenosha-Racine area. But Kansas City has certainly managed to give hundreds of millions of TIF dollars to companies in the past, so a large local component to the incentives package is certainly possible. As I discussed last time, Foxconn wanted desperately to locate in the United States due to its fear of U.S. protectionism, so the country as a whole was actually in a very strong bargaining position. However, the possibility of a bidding war between different states negated this, even though the individual states (Wisconsin at 3.1%) had very low unemployment rates and thus greater bargaining power than otherwise. Without EU-style rules to restrict bidding wars, there was a high probability of Foxconn hitting the jackpot.
Tech companies outsourcing foreign workers via H-1B visas pay low wages - Hard numbers have been released by the US government agency that screens visas for high-skilled foreign workers, and they are not pretty. Data made available by the US Citizenship and Immigration Services (USCIS) for the first time show that the widely made complaint about the visa program is true: a small number of IT outsourcing companies get a disproportionately high number of H-1B visas and pay below-average wages to their workers. The H-1B program was put in the spotlight in April, when US President Donald J. Trump signed an executive order called “Buy American, Hire American” as part of his push to tighten immigration rules. Three months later, the USCIS formally disclosed the number of H1-B visas issued over the last two years by employer. Previously, the data was only available as estimates for companies petitioning for information, or by request under the Freedom of Information Act.Almost 4,000 companies submitted H-1B visa applications in fiscal year 2016. The top 20 sponsors took home 37% of all visas issued 1. IT outsourcing companies made up the top five.The new data also gives a more accurate picture of salaries of H-1B workers by employer. The top IT outsourcing companies on average paid much lower salaries to their workers.
Earnings Rise with Boost from Falling U.S. Dollar But Consumers Will Bear the Brunt of Rising Prices - Pam Martens - There seems to be an unlimited supply of methods in which the rich in America keep getting richer and the average Joe picks up the tab. Yesterday, Fortune Magazine ran this sobering headline: “The Wealth Gap in the U.S. Is Worse Than In Russia or Iran.” The article quotes Richard Florida, author of The New Urban Crisis, as follows: “Inequality in New York City is like Swaziland. Miami’s is like Zimbabwe. Los Angeles is equivalent to Sri Lanka. I actually look at the difference between the 95th percentile of income earners in big cities and the lower 20%. In the New York metro area, the 95th percentile makes $282,000 and the 20th percentile makes $23,000. These gaps between the rich and the poor in income and wealth are vast across the country and even worse in our cities.” Against that backdrop comes news from FactSet last Friday that with 57 percent of the companies in the Standard and Poor’s 500 Index reporting actual earnings results for the second quarter of 2017, “ten sectors are reporting year-over-year earnings growth, led by the Energy, Information Technology, and Financials sectors.” FactSet adds this: “The only sector reporting a year-over-year decline in earnings is the Consumer Discretionary sector.” That would be the sector in which the average Joe lives.Reuters has even more cheery news for the super rich who own the bulk of the shares of the S&P 500. The wire service reports that “The S&P 500 index is on track to post back-to-back, double-digit quarterly earnings growth for the first time in almost six years, and the trend could continue as a weak U.S. dollar and global growth help boost results.” Unfortunately for the little guy, a weakening U.S. dollar causes price increases on imported goods from countries whose currencies have risen against the falling U.S. dollar. Add this to stagnating wages for the middle class, spiraling health care costs, the next generation buried under $1.325 trillion of student debt (much of it loaded onto their shoulders by the same Wall Street predators who crashed the U.S. financial system in 2008) and one can see why America might feel like Sri Lanka to many of its citizens instead of the much vaunted meritocracy that Wall Street titans like to portray to the rest of the world.
How far does American Samoa have to go to get a bank? --Visiting American Samoa is like stepping back in time — both because of its unsullied natural beauty and its antiquated banking system. The economy runs on cash, but until recently the island had just seven ATMs, only three of which usually worked, to serve 60,000 residents. It's common for residents to wait in line for two or three hours — sometimes queuing in the early morning before the bank opens — to cash a check. Few islanders have credit cards, and most retailers don't accept them. American Samoa leaders have already tried to convince existing banks to open up branches there, and even attempted to form their own bank. But neither effort panned out. Now they have launched a bold effort to create a state-backed public bank, something that hasn't been done successfully in the U.S. in nearly a century. They hope it will help modernize the island's banking system — and American Samoa itself. "There is a great need for basic banking services in American Samoa, because they are not being served right now," said Phil Ware, a longtime Utah banker who is president of the newly created Territorial Bank of American Samoa. "I mean basic needs, like supplying cash, offering checking accounts and offering credit/debit cards. Our whole bank is a CRA [Community Reinvestment Act] project."
The NAACP issues its first-ever travel warning. -- CNN has the details: The organization is circulating a travel advisory after the state passed a law that Missouri's NAACP conference says allows for legal discrimination. The warning cites several discriminatory incidents in Missouri, included as examples of "looming danger" in the state. The NAACP says this is the first travel advisory ever issued by the organization, at the state or national level. The Missouri conference initially published the advisory in June, and it was recognized nationally at the NAACP's annual convention last week. "Individuals traveling in the state are advised to travel with extreme CAUTION," the advisory warns. "Race, gender and color based crimes have a long history in Missouri." To repeat, the NAACP is 108 years old and never has done this before. It did not do it to, say, Louisiana during the height of the lynching crises. It did not do it to Mississippi after Medgar Evers was murdered, or after the bodies were dug out of that dam in Neshoba County. It did not do it to Alabama after the church bombing, or to Tennessee after Dr. King was killed. It didn't do it to the Commonwealth (God save it!) during the eruptions over busing in the 1970s. It did it to Missouri, in 2017.
The Homicide Rate and Poverty -Mike Kimel - In my last post, I noted a positive correlation between the homicide rate in a state and killings by the police in the same state. In states where the risk of homicide is higher, police killings also tend to be higher. But there is a mitigating race component, and one which (not surprisingly for those who care about data) goes against conventional wisdom:for the same state homicide rate, people are less likely to be shot by cops in states where Black people make up 10% or more of the population than in states where people make less than 10% of the population.Looking at homicides, and accounting for race, it seems there are different dynamics at play among different population groups: I can’t find murder rates (whether victimization or offender) by race at the state level, but I do note that the data appears to show a clear relationship between the overall murder rate and the ethnic makeup of a given state:Relative to the rest of the population, there is an elevated homicide rate (both offense and victimization) in our Black population. Thus, if we want to reduce the homicide rate, perhaps the opportunity is greatest in understanding why the homicide rate is as high as it is in the Black community. Poverty is often mentioned as a factor driving crimes in general, and sometimes homicides in particular. To examine whether that is the case here, the next graph shows the percentage of a state’s population that is Black on one axis, and the homicide (victimization) rate on the other axis. States with fewer than 3 million than people are omitted. Additionally, states with a Black poverty rate in excess of 22% (which is approximately the median poverty rate for the Black population, measured by state) are colored orange:
Why Police Prefer Drug Raids Over Investigating Violent Crimes -- Last year, I reported on a case in which the Johnson County Sheriff's Office in Kansas had raided the home of a law-abiding, middle-class family in Kansas. The officers, arrayed in SWAT gear, terrorized the family and searched the house for hours, failing to find anything criminal. The raid was the result of a program used by the sheriff's office in which the police spend hours staking out gardening centers, identifying shoppers who buy hydroponic gardening equipment, and then proceeding to conduct SWAT raids on the homes of the alleged perpetrators — who are assumed to be growing marijuana in their homes. Viewing the antics of the Johnson County commissioners and the sheriff's office, one fairly quickly begins to wonder: "does law enforcement in Johnson County really have nothing better to do?" . In an analysis I conducted of crime and arrests in Johnson County, I found that — while Johnson County is generally pretty safe — an enormous amount of police activity conducted by the sheriff's office focused on drug enforcement while real crime like assault, rape, and car thefts produced very few arrests. Johnson County, however, is hardly unique in its oversized interest in drug busts at the expense of investigating real crime. In Oak Park, Michigan, police agencies and prosecutors are apparently more interested in throwing the book at people for growing vegetables in their front yard instead of going after criminals who engage in real violent or property crime. The case of Julie Bass in Oak Park made national headlines when the city attempted to jail her for more than 90 days because she grew peppers in her front yard. After the city government was humiliated in the national media, prosecutors eventually dropped the charges. At the same time, the Oak Park police spent time raiding medicinal marijuana dispensaries and seizing drugs and cash in an apparent attempt to pad the department's budget through civil asset forfeiture. Oak Park, it turns out, is a relatively high crime area. In 2011, the same year the city was harassing Bass, Oak Park reported some of the worst violent crime rates among Michigan municipalities. According to FBI crime data, Oak Park had the 38th-worst rate of violent crime out of a total of 338 towns and cities.
Have Smartphones Destroyed a Generation? - I’ve been researching generational differences for 25 years, starting when I was a 22-year-old doctoral student in psychology. Typically, the characteristics that come to define a generation appear gradually, and along a continuum. Beliefs and behaviors that were already rising simply continue to do so. Millennials, for instance, are a highly individualistic generation, but individualism had been increasing since the Baby Boomers turned on, tuned in, and dropped out. I had grown accustomed to line graphs of trends that looked like modest hills and valleys. Then I began studying Athena’s generation. Around 2012, I noticed abrupt shifts in teen behaviors and emotional states. The gentle slopes of the line graphs became steep mountains and sheer cliffs, and many of the distinctive characteristics of the Millennial generation began to disappear. In all my analyses of generational data—some reaching back to the 1930s—I had never seen anything like it. At first I presumed these might be blips, but the trends persisted, across several years and a series of national surveys. The changes weren’t just in degree, but in kind. The biggest difference between the Millennials and their predecessors was in how they viewed the world; teens today differ from the Millennials not just in their views but in how they spend their time. The experiences they have every day are radically different from those of the generation that came of age just a few years before them. The more I pored over yearly surveys of teen attitudes and behaviors, and the more I talked with young people like Athena, the clearer it became that theirs is a generation shaped by the smartphone and by the concomitant rise of social media. I call them iGen. Born between 1995 and 2012, members of this generation are growing up with smartphones, have an Instagram account before they start high school, and do not remember a time before the internet. The Millennials grew up with the web as well, but it wasn’t ever-present in their lives, at hand at all times, day and night. iGen’s oldest members were early adolescents when the iPhone was introduced, in 2007, and high-school students when the iPad entered the scene, in 2010. A 2017 survey of more than 5,000 American teens found that three out of four owned an iPhone.
Healthcare Triage: Hay Fever and Allergies Can Lower Student Test Scores -- Aaron Carroll (video) - Health issues can negatively affect people’s lives in an astoundingly wide array of ways. Recent studies indicate that students who suffer from allergies may perform worse on tests when testing occurs on high pollen count days. So how can we help all these students who are sneezing their way into remedial courses? Healthcare Triage has a few ideas about that.
Justice Dept. to Take On Affirmative Action in College Admissions — The Trump administration is preparing to redirect resources of the Justice Department’s civil rights division toward investigating and suing universities over affirmative action admissions policies deemed to discriminate against white applicants, according to a document obtained by The New York Times. The document, an internal announcement to the civil rights division, seeks current lawyers interested in working for a new project on “investigations and possible litigation related to intentional race-based discrimination in college and university admissions.” The announcement suggests that the project will be run out of the division’s front office, where the Trump administration’s political appointees work, rather than its Educational Opportunities Section, which is run by career civil servants and normally handles work involving schools and universities. The document does not explicitly identify whom the Justice Department considers at risk of discrimination because of affirmative action admissions policies. But the phrasing it uses, “intentional race-based discrimination,” cuts to the heart of programs designed to bring more minority students to university campuses. Supporters and critics of the project said it was clearly targeting admissions programs that can give members of generally disadvantaged groups, like black and Latino students, an edge over other applicants with comparable or higher test scores. The project is another sign that the civil rights division is taking on a conservative tilt under President Trump and Attorney General Jeff Sessions. It follows other changes in Justice Department policy on voting rights, gay rights and police reforms.
There’s a gulf between academics and university management – and it’s growing -- It may be hard to believe, but there was once a gentler era when universities were administered rather than managed. How times have changed. As part of my research into educational leadership which I presented at the British Educational Leadership, Management and Administration Society annual conference, I conducted a census of pro vice-chancellors. On the face it, they are much the same people they have always been: predominantly white, male professors. But dig a little deeper and key differences emerge in their motivations, aspirations and routes into the role compared to those of their predecessors. With one exception, the pro vice-chancellors I interviewed for my research are not the “reluctant” or “good citizen” managers of old, cajoled into the role by the vice-chancellor or a desire to give something back to the institution at the end of a successful academic career. Instead, they have made a conscious decision to take a management path: “I was embarking on an alternative career, one of academic management,” said one. Typically, they became pro vice-chancellors by climbing the academic management hierarchy from head of department to dean. Most don’t want to stop there, but aspire to become a vice-chancellor. They are motivated by a desire for a seat at the top table and to make a strategic contribution. “It’s my one chance to paint on a really big canvas… to really change things,” one explained. Some admit to being attracted by the high salary or the “being-in-charge angle”. As one individual put it: “many academics like power more than they are prepared to admit.” Most pro vice-chancellors I spoke to are happy to call themselves managers and to assert their right to manage other academics. What we are seeing is a shift of power from rank-and-file academics to this new professional elite, whose number and influence is growing. There was a 55% increase in numbers of pro vice-chancellors in pre-1992 English universities between 2005 and 2016, from 148 to 229. The role itself is becoming more managerial with executive variants, such as provosts or pro vice-chancellors/Deans, being created. And the range of pro vice-chancellor portfolios is expanding beyond traditional areas of teaching and learning and research to external relations, internationalisation, planning and strategic development. So career track managers have not only colonised the top jobs, but also extended their collective management remit.
Student loan debt skyrockets as borrowers struggle to pay | 98.1 KMBZ FM: Lower-income college graduates continue to struggle under growing mountains of student loan debt. According to figure compiled by Forbes, more than 44,000,000 Americans are working to pay off some kind of student loan, owing more than $1.3 trillion in student loan debt, which is $620 billion more than the total U.S. credit card debt. The average 2016 graduate has $37,172 in student loan debt. There are ways to reduce payments for graduates whose incomes are not keeping up, said Leland Cox, an attorney for Kansas Legal Services. "There is a process where the lender and work with them and perhaps work out a reduced payment plan that is something that is more realistic for them to afford," Cox said. Financial experts recommend rearranging monthly expenses and maintaining transparency with lenders. "If there are grounds there to seek a waiver of the repayment, then I absolutely encourage them to do that first," Cox said. "If the waiver application is denied, then at the very least, sit down and work through that process to see what sort of payment is feasible for them to make." People who fail to pay their student loans can have their wages garnished.
The College Debt Bubble (And Six Rules For 529 Plans) - Soaring tuitions are not your problem, parents of little ones. They are of zero consequence, given your timeline, so you can focus on other injustices like saving the whales, the honey bees, or the three-martini lunch (fast going out-of-style). Runaway tuitions will plummet 66% to $3,000 annually for public universities long before your preschoolers take their SATs. With them will crash the salaries of countless administrators and real estate values in those cool little college towns. How do I know this? It’s a classic credit bubble, and will end like they all do.In plain English, we threw a bunch of money at 18-year-old kids, told them they could only use it for college, and are surprised and confused that the price went up. Duh. This is ECON 101, folks. Supply and demand (with a ton of unintended consequences and distortions, the hallmarks of regulatory interventions in a market economy). Okay, pretend it’s “market day” at your child’s preschool, and Connor, Caleb, and your kid all get some chips (say five each) to trade and compete for cookies. A market price develops, cookies are exchanged for chips, and the game ends. Now start over, but give them all 100 chips each. What do you think happens to the price of cookies? In a slew of misguided efforts first to offer GI benefits, beat the Russians to the moon, and then make college “affordable”, well-intentioned, vote-seeking bureaucrats determined the government should use taxpayer funds to underwrite student loans to anyone with a pulse, and to guarantee them in case of default, even for private lenders. To limit potential losses, students, arguably our most vulnerable and naïve demographic, were precluded from basic bankruptcy protection, thereby also removing a necessary cog in capitalism that ensures prudent evaluation of risk by lenders. Predictably, the student loan sector boomed. Risk was socialized, if not eliminated. Teenagers, fueled by propaganda and drunk on cockeyed optimism, were pushed out like wind-up toys, directed to borrow tens of thousands of dollars without collateral or even a discernible plan to pay any of it back. Off to Party School USA they went… Worse, we convinced ourselves that the only ticket to a successful future is higher education, regardless of quality or cost. We failed to introduce children to the perils of debt and the marketability of skills.
Unpaid internships damage long-term graduate pay prospects --Almost every graduate taking an unpaid internship can expect to be worse off three years later than if they had gone straight into work. That is the shock finding of the first survey of its kind of the career trajectories of tens of thousands of students over a six-year period. The study, conducted by the Institute for Social and Economic Research at the University of Essex, reveals that, three-and-a-half years after graduating, former interns face a salary penalty of approximately £3,500, compared with those who went straight into paid work, and £1,500 compared with those who went into further study. Interns who were privately schooled or had parents in professional occupations also found themselves worse off, albeit by not as much. On average they were earning £2,000 less than their counterparts. Those from more disadvantaged backgrounds were more than £4,000 worse off than their counterparts who went straight into work. The study confirmed that graduates from advantaged backgrounds were more likely to find the sought-after internships. Meanwhile, those from disadvantaged backgrounds were often compelled to take unpaid work because of limited job offers. Dr Angus Holford, who carried out the study, said it showed that many graduates who took internships would end up disappointed if they thought it would put them on the path to success in a favoured career. “I expect some people will find an internship that enables them to do the job they really want to do and that will have the big labour-market return but, on average, an internship you take won’t lead directly to a job in the profession you really wanted or the profession you did the internship in.” The study also found that those who took internships were less likely to go on to professional or managerial roles or be satisfied with their career compared with those who had gone straight into work. Compared with those who went onto further study, an internship reduced the probability of a graduate working in a professional or managerial role, or being very satisfied with their career, by 15 and 8.8 percentage points respectively.
Texas lawmakers remain at odds over retired teacher health care costs -- A bill that would stabilize health care costs for tens of thousands of Texas' retired teachers for the next two years sailed through the House on final reading Wednesday, although its future is far from certain in the Senate as the political drama between the two chambers intensifies. Lawmakers in both Republican-led chambers have said the state should bear some of the rising costs for premium, deductible and out-of-pocket health expenses facing the state's retired teachers, who are expecting to see their health care expenses soar in 2018. However, the two sides are at odds about how to pay for it. "This is the most important bill I think we have this session," said Rep. Dan Huberty, a Republican from Humble who chairs the House Public Education Committee. Beginning in 2018, retired teachers under the age of 65 could see skyrocketing health care costs under a plan passed into law earlier this year attempting to shore up funding of the Texas Retirement System. After receiving a flood of calls about the spike in costs, lawmakers agreed to devise a plan to lessen the blow, such as by reducing the deductible for non-Medicare retirees from $3,000 to $1,500 and by reducing premiums for spouses by $100. In total, the legislation would change health care costs for more than 100,000, Rep. Trent Ashby, a sponsor of the House bill said. Since lawmakers returned to the capitol city for a 30-day special session, both the House and Senate have passed bills that would inject more than $212 million into the state's Teacher Retirement System to pay for those changes over the next biennium. While the two chambers agree on how much to spend, they are at odds about where to get the money. The House wants to pay for House Bill 20 out of the Economic Stabilization Fund, otherwise referred to as the state's rainy day fund which is normally reserved for one-time expenses, like construction projects and paying down debt. During the regular legislative session, lawmakers spent $75 million from the fund to rehab the Alamo. Although the House voted 135-13 in favor of the bill to lower health care costs, conservative lawmakers were hesitant to support a plan that would tap the state's piggy bank for recurring expenses.
Chicago Pension Bills Soar as City Pays Up to Keep Funds Solvent -- The city will pay $792 million to the police and fire pensions, $344 million to the municipal workers’ fund and $48 million to the laborers’ fund next year, according to its annual financial analysis released Monday. The metropolis forecasts a $114.2 million budget deficit in 2018, the smallest since at least 2007, the report shows. Mayor Rahm Emanuel has taken steps including raising property taxes and getting approval from the gridlocked state government to keep the retirement funds from running out of money. “All four pension funds are on the road to solvency with dedicated revenue supporting increasing pension contributions in 2018,” Emanuel said in a letter included in Monday’s report. Emanuel has enacted higher property taxes and utility levies to help cover these higher payments. The city also won Illinois’s approval to overhaul its municipal and laborer retirement funds, which had been on track to run out of money by 2025 and 2027, respectively. Changes, included in the state budget package this month, allow Chicago to contribute more money and make new employees pay more into their pensions. Despite the changes, the city’s pension debt is still rising. Chicago’s pensions are struggling with $35.8 billion of unfunded liabilities as of Dec. 31, up from $33.8 billion a year earlier. The shortfall comes after years of not paying enough into the funds. Chicago’s ballooning debt to its pension funds has weighed on the city’s finances and led Moody’s Investors Service two years ago to cut its bond rating to junk.
Health Care Costs for Prison Inmates Up 37% Since 2009 --Health care costs for prison inmates has increased roughly 37 percent from 2009 to 2016, according to an audit from the Government Accountability Office.In fiscal year 2009, the Bureau of Prisons obligated $978 million, which increased to $1.34 billion by fiscal year 2016.While general medical services increased by 37 percent in these eight years, drug abuse treatment program costs increased by 44 percent, psychology services costs increased by 39 percent, and sex offender management program costs increased by 20 percent.The report also evaluated whether or not an increase in inmate population was contributing to rising costs. They found that per inmate, the cost of health care was increasing. In 2009, the cost of health care per inmate was $6,334 and rose to $8,602 per inmate in 2016, even after adjusting for inflation.The report notes that health care costs are increasing for inmates because of four factors—inmates usually have poorer health and are an aging population, pharmaceutical prices are rising, and outside medical costs have risen. "For example, officials stated that inmates come into the system with more acute needs from limited access to health care or they have engaged in risky behaviors, such as substance abuse," the report says. "Inmates also tend to have higher rates of infectious diseases and chronic conditions that can persist throughout incarceration." The auditor says the agency does not have health care data needed to be able to understand or control its costs.
Insurers want to hike Obamacare rates in Illinois up to 43 percent --Insurers want to raise rates by up to 43 percent for Illinois customers who receive health care coverage under the Affordable Care Act. Among the companies seeking double-digit rate hikes on most of their plans starting next year are the three insurers that offered Obamacare coverage in Cook County this year, according to rate reviews released by the federal government on Tuesday. More than 351,000 Illinois residents are enrolled in Obamacare, with most of them — nearly 310,000 — covered by Blue Cross Blue Shield of Illinois. The company is anticipating rate increases averaging 38.2 percent on its BlueCare Direct plans; 14.5 percent on its Blue Precision plans; 9.3 percent on its Blue FocusCare plans, and 5.4 percent on its Blue Choice Preferred plans. Cigna HealthCare wants a 37.7 percent increase, which would affect nearly 27,000 Illinoisans, and Celtic Insurance, the third Cook County Obamacare insurer, plans to raise rates by about 15 percent for its more than 36,000 enrollees. Health Alliance Medical Plans, which offers Obamacare plans in central and downstate Illinois, has proposed a whopping 43.1 percent rate hike. In the rate reviews, most companies pointed to rising costs for medical services and prescription drugs as the cause of surging rates. Also apparently factoring into the rate hikes is the precarious state of the health care system under the Trump administration. Blue Cross Blue Shield cited “a loosening on the enforcement of the individual mandate,” while Cigna highlighted doubt as to whether the federal government will keep providing subsidies to insurers that lower copayments for low-income customers. Insurers can change their proposed increases before they go into effect on Jan. 1, 2018. State officials can recommend changes to the companies’ proposals, but they don’t have the power to alter or reject them. Consumers can comment on the proposals at ratereview.heathcare.gov.
California health premiums to rise an average 12.5 percent | Fox Business: Monthly premiums for California health insurance plans sold under former President Barack Obama’s health care overhaul will rise by an average of 12.5 percent next year, officials said Tuesday.A major insurance carrier will also stop offering the plans in most of the state, forcing about 10 percent of people insured through Covered California to buy a new plan. Anthem Blue Cross will continue offering plans only in Santa Clara County and parts of Northern California and the Central Valley. Covered California’s announcement on 2018 pricing comes at a time of extreme uncertainty about the future of the U.S. health care system. A Republican plan to unwind key pieces of the Affordable Care Act failed in the U.S. Senate last week, but President Donald Trump has repeatedly urged lawmakers to keep working on it. Trump has threatened to end payments that insurance companies receive to keep down out-of-pocket costs for lower-income consumers. Premiums for consumers on “silver tier” plans, the most popular, could spike even more if those subsidies are taken away, officials said. The average 12.5 percent increase is down just slightly from last year, when premiums rose by more than 13 percent. Consumers could lower their increase to about 3 percent if they switch to the lowest-priced plans, officials said. Insurance plans for next year will be available for purchase in California between Nov. 1 and Jan 31.
Insurers want to increase premiums by 30 percent or more | New York Post: Insurers are looking at increasing premiums by 30 percent or more next year as they try to sort out what the Trump administration and Congress will do with ObamaCare, according to a report. In Idaho, West Virginia, South Carolina, Iowa and Wyoming, big insurers are seeking to raise premiums by 30 percent or higher, the Wall Street Journal reported on Tuesday, citing rate requests from the Department of Health and Human Services. Companies in New Mexico, Tennessee, North Dakota and Hawaii are asking for average increases of at least 20 percent, the report said. The insurers face a deadline in mid-August for completing their rates and another in late-September to sign agreements with the government to offer health plans in 2018. The uncertainty surrounds whether the House and Senate will approve an overhauled health care plan that does away with the individual mandate that requires people to buy insurance or pay a penalty, the report said. Industry experts say that requirement helps keep rates low by making sure young, healthy people sign up.
NEBRASKA HEALTH CARE PREMIUMS MAY RISE BY 17 TO 50 PER CENT - KSCJ 1360: Nebraska’s only provider of individual health insurance plans under the Affordable Care Act wants to raise its monthly rates by an average of nearly 17 percent, and some rates could increase by more than 50 percent. Minneapolis-based Medica unveiled its proposed rates Tuesday. The company says a corresponding increase in federal subsidies would protect roughly 80 percent of consumers in the Nebraska market from having to pay more. The company outlined scenarios in which consumers in Omaha could see their rates increase by 57 percent, before accounting for subsidies. With subsidies, the increases would be much smaller for those who have to pay more. The Nebraska Department of Insurance says the rates are not final.
Idaho Health Plan Rates Set To Increase In 2018 - Health insurance premiums in Idaho will go up in 2018, between 6 and 81 percent depending on the plan you choose. That's according to proposed increases to the price of your health care plan. Each year, insurance companies operating in Idaho send their planned price hikes to the Department of Insurance. The proposed increases were released Monday for 2018. The proposed average overall statewide rate increase is 38 percent. The average price for Bronze, Silver, and Gold plans are all going up, with Silver plans averaging a 50 percent increase. Of the five insurance carriers proposing hikes, overall increases range from 25 percent, for Mountain Health CO-OP to 51 percent for Regence BlueShield of Idaho. Department Director Dean Cameron said he was disappointed and frustrated with the rate hike proposals. He said the increases make it difficult “for Idahoans to afford reasonable coverage,” especially if they don’t get a subsidy on the state’s health care exchange. Under state law, the Insurance Department can’t establish or deny rate hikes. But it can label a rate hike as “unreasonable” and try to negotiate a lower rate increase with an insurance carrier.
Health-care costs for typical Canadian family will eclipse $12,000 this year; up nearly 70% since 1997 —A typical Canadian family of four will pay $12,057 for health care in 2017—an increase of nearly 70 per cent over the last 20 years, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “Health care in Canada isn’t free—Canadians actually pay a substantial amount for health care through their taxes, even if they don’t pay directly for medical services,” said Bacchus Barua, senior economist with the Fraser Institute’s Centre for Health Policy Studies and co-author of The Price of Public Health Care Insurance, 2017. Most Canadians are unaware of the true cost of health care because they never see a bill for medical services and may only pay a small public health insurance “premium” tax (in provinces that impose them).And because general government revenue—not a dedicated tax—funds health care, it’s difficult for Canadians to decipher how many of their tax dollars pay for public health insurance.Using data from Statistics Canada and the Canadian Institute for Health Information, the study estimates that the average Canadian family with two parents and two children with a household income of $127,814 will pay $12,057 for public health-care insurance this year. After adjusting for inflation, that’s an increase of 68 per cent since 1997, the first year for which estimates could be calculated.
Double-Booked: When Surgeons Operate On Two Patients At Once -- Kaiser Health News --The controversial practice has been standard in many teaching hospitals for decades, its safety and ethics largely unquestioned and its existence unknown to those most affected: people undergoing surgery. But over the past two years, the issue of overlapping surgery — in which a doctor operates on two patients in different rooms during the same time period — has ignited an impassioned debate in the medical community, attracted scrutiny by the powerful Senate Finance Committee that oversees Medicare and Medicaid, and prompted some hospitals, including the University of Virginia’s, to circumscribe the practice. Known as “running two rooms” — or double-booked, simultaneous or concurrent surgery — the practice occurs in teaching hospitals where senior attending surgeons delegate trainees — usually residents or fellows — to perform parts of one surgery while the attending surgeon works on a second patient in another operating room. Sometimes senior surgeons aren’t even in the OR and are seeing patients elsewhere. Hospitals decide whether to allow the practice and are primarily responsible for policing it. Medicare billing rules permit it as long as the attending surgeon is present during the critical portion of each operation — and that portion is defined by the surgeon. And while it occurs in many specialties, double-booking is believed to be most common in orthopedics, cardiac surgery and neurosurgery.
The opioid epidemic, explained - Vox - If nothing is done, we can expect a lot of people to die: A forecast by STAT concluded that as many as 650,000 people will die over the next 10 years from opioid overdoses — more than the entire city of Baltimore. The US risks losing the equivalent of a whole American city in just one decade. That would be on top of all the death that America has already seen in the course of the ongoing opioid epidemic. In 2015, more than 52,000 people died of drug overdoses in America — about two-thirds of which were linked to opioids. The toll is on its way up, with an analysis of preliminary data from the New York Times finding that 59,000 to 65,000 likely died from drug overdoses in 2016.If you want to understand how we got here, there’s one simple explanation: It’s much easier in America to get high than it is to get help. Over the past couple of decades, the health care system, bolstered by pharmaceutical companies, flooded the US with painkillers. Then illicit drug traffickers followed suit, inundating the country with heroin and other illegally produced opioids that people could use once they ran out of painkillers or wanted something stronger. All of this made it very easy to obtain and misuse drugs. Meanwhile, there has been little attention to getting people into treatment. According to the surgeon general’s 2016 report on addiction, only 10 percent of people suffering from a drug use disorder get specialty treatment. The report attributed the low rate to shortages in the supply of care, with some areas of the country lacking affordable options for treatment — which can lead to waiting periods of weeks or even months just to get help. When you put these two issues together, you get the recipe for a disaster — one that has been only further accentuated by the socioeconomic and mental health issues that have plagued the US for years.
US Lags Far Behind in Banning Dental Health Hazard - the Use of Mercury - The United States is lagging far behind its Western allies – and perhaps most of the key developing countries – in refusing to act decisively to end a longstanding health and environmental hazard: the use of mercury in dentistry. The 28-member European Union (EU), with an estimated population of over 510 million people, recently announced its decision to ban amalgam use in children under age 15, pregnant women, and breastfeeding mothers. The ban comes into effect July 2018. “In sharp contrast, the U.S. government has done nothing to protect these vulnerable populations from exposure to amalgam’s mercury,” says a petition filed by Consumers for Dental Choice (CDC), which has been vigorously campaigning for mercury-free dentistry, since its founding back in 1996. In Norway and Sweden, dental amalgam is no longer in use, while it is being phased out in Japan, Finland and the Netherlands. In Mauritius and EU nations, it is banned from use on children. Denmark uses dental amalgam for only 5% of restorations and Germany for 10% of restorations. In Bangladesh, it is to be phased out in 2018, and in India, there is a dental school requirement of eliminating amalgam in favour of alternatives. In Nigeria, the government has printed and distributed consumer-information brochures while the government of Canada has recommended that all dentists stop its use in children and pregnant women — and those with kidney disorders.Dental amalgam has been described as a dental filling material used to fill cavities caused by tooth decay. And it is a mixture of metals, consisting of liquid (elemental) mercury and a powdered alloy composed of silver, tin, and copper.
Most Imported Cosmetics Are Never Tested by the FDA -- According to a New York Times story published Wednesday , contaminants such as mercury , lead and bacteria, and other banned ingredients, are showing up in an alarming number of imported personal care products . This follows recent news that asbestos was found in tests of imported makeup marketed to tweens. The Times story is based on a letter sent to Rep. Frank Pallone, D-N.J., from the U.S. Food and Drug Administration (FDA). In the letter, the FDA revealed that imports of personal care products have doubled in the last decade and that imports from China have increased 79 percent in the last five years. The FDA also disclosed that in 2016, 15 percent of imported personal care products inspected had adverse findings and 20 percent of products the FDA tested in its own labs had adverse findings. Usually, an adverse finding meant an illegal color additive was used, or there was microbial contamination in the product. The majority of contaminated products were from China. Some of the FDA's most troubling discoveries included:
- Skin whitening creams with high levels of mercury.
- Eyeliners containing a product called kohl, samples of which have been found to contain significant lead levels .
- Hairsprays containing methylene chloride, an ingredient banned in cosmetics and that has been linked to deaths from its use in paint strippers.
- Cosmetics kits with high levels of Citrobacter, Pseudomonas and Staphylococcus bacteria.
- Eye makeup containing color additives, banned for decades because they are hazardous to eyes.
- Temporary tattoo products with unapproved color additives.
Even scarier, the FDA's findings likely underrepresent the full scale of the problem. The vast majority of personal care product imports are never inspected. In fact, the FDA discovered the problems listed above by inspecting fewer than 1 percent of imports. Of the nearly 3 million imported shipments of personal care products, the FDA was only able to inspect fewer than 10,000. The FDA only tested an even smaller sample of imported cosmetics: 374.
Study: Only Wealthiest and Best Educated Benefit from Mediterranean Diet - Yves Smith - In a noteworthy first, a large-scale study in Italy has found that following the so-called Mediterranean diet reduced heart disease risk only for those in top of the educational and income cohorts. Even more disconcerting, the researchers pushed the data around and didn’t find strong explanations for what might have caused the disparity in results. We’ll discuss the study, High adherence to the Mediterranean diet is associated with cardiovascular protection in higher but not in lower socioeconomic groups: prospective findings from the Moli-sani study in more detail below. I encourage the medically and statistically minded to read the study in full and add their views.We pointed out in 2007 that socioeconomic status played a big role in health outcomes, and even more so in countries with high degrees of economic disparity. So one has to wonder to what degree the stress of being poor, and of increased precariousness for older low and middle income individuals (the people selected for this study were over 35 and were in less than perfect health) offset the benefits of a good diet, meaning even though the Mediterranean diet may not have led to better results, they would have been worse off had they not followed it. The study was large scale, starting out with over 24,000 participants and winding up with nearly 19,000 after various screens were applied, like missing data and implausible inputs. Subjects provided extensive information on health indicators, and in many ways, the diet reporting was detailed (for instance, it scored the variety of fruit and vegetable consumption as well as “healthier” versus less healthy veggie and protein cooking methods, as well as the level of organic food consumption). The findings were controlled for age, smoking level, body mass index, and amount of physical activity.
Too fat to stand and their flesh rots while they’re alive: The REAL reason America’s ‘Frankenchickens’ have to be washed with chlorine as US industrial farming practices are exposed ahead of possible post-Brexit trade deal -- The disturbing prospect of chlorine-washed chickens from the US going on sale in British shops in a post-Brexit trade deal last week sparked an explosive row at the heart of Government.But beyond the politics lies the story of why American poultry needs such drastic chemical treatment – and of the horrendous conditions at the farms where they are bred and reared. Now whistleblower farmers have revealed the full horror of the suffering to The Mail on Sunday, including how:
- Tens of thousands of super-sized 'Frankenstein' birds are crammed in vast warehouses.
- The chickens, which weigh up to 9lb, often buckle under their weight and must live without natural sunlight.
- Chickens frequently die before they reach maturity and many are left covered in their own faeces, turning warehouses into vile breeding grounds for disease.
Unlike in the UK and Europe, there are no minimum space requirements for breeding chickens in the US. America also does not have any rules governing lighting levels in the sheds and, crucially, its farms have no maximum allowed level of ammonia, which indicates how much urine and faecal matter is present. This means there is no limit on how much can fester inside the sheds.There is no legal requirement to wash US chickens in chlorine or other disinfectants, but 97 per cent of its birds are cleaned in this way after slaughter.
Cancer Alley' Residents Sue DuPont - Thirteen Louisiana residents who live in the shadow of one of the most toxic factories in the country recently filed a lawsuit against the facility's co-owners, DuPont and Denka, in an attempt to stop or reduce the production of an air pollutant linked to serious health problems, including cancer . The plaintiffs are currently seeking approval from a local judge to file a class action lawsuit that would allow anyone who has lived, worked or attended school within a defined boundary around the plant over the past five years to take legal action against the plant's owners. The plant, located along a stretch of land between New Orleans and Baton Rouge known as "Cancer Alley," has long been operated by DuPont, a notorious U.S.-based chemical company with a history of endangering public health and the environment . However, DuPont sold the majority of its stake in the facility to a subsidiary of the Japanese chemical giant Denka in 2015, though the company still owns part of the land. Though some state and local political leaders have touted the plant as a success story and "a win" for the local community, many residents have become increasingly concerned with the plant's release of chloroprene, a chemical used in the manufacture of synthetic rubber, into the air. In 2010, the Environmental Protection Agency ( EPA ) listed chloroprene as a carcinogen, stating that exposure levels greater than 0.2 micrograms per cubic meter of air lead to an increased risk of cancer. They also found that short-term exposure to high levels of the chemical can cause headaches, dizziness, respiratory irritation, chest pain, hair loss, gastrointestinal disorders, rashes, corneal damage and fatigue. "We are being killed by chemicals that the state is allowing Denka and DuPont to pollute our air with,"
Pittsburgh officials may have 'deflected' attention from lead-contaminated water - Residents in Pittsburgh, Pennsylvania, were given “misleading” statements by health officials who “deflected” attention from lead-contaminated water, according to the audit. The engineer who helped uncover the lead contamination crisis in Flint warned that the scandal there had undermined trust in drinking water and claimed the Pittsburgh report was a warning that similar mistakes could be repeated, including a failure of oversight by officials at the Environmental Protection Agency (EPA). “The road to Flint was paved with this nexus of complacency,” said Virginia Tech engineer Marc Edwards. “Water utilities were cheating, EPA was looking the other way, and health departments were all too happy to let that occur because they wanted to keep their focus on lead paint,” he said. “This is the one lead source that is government owned, government controlled, and directly affects a product intended for human consumption,” said Edwards. Five government officials were charged with involuntary manslaughter after an investigation accused them of not doing enough to warn the public of the spread of Legionella bacteria, part of the water chemistry struggle that resulted in Flint’s lead tainted water. In total, 17 officials in Flint face criminal charges. Pittsburgh discovered lead contamination in residents’ water almost a year ago, after the water utility switched chemicals it used to control metal corrosion. The circumstances mirror those in Flint, though the city’s water troubles have received significantly less national attention. However, elected officials have faced ongoing criticism after it was revealed that the water bought by residents from the Pittsburgh Water and Sewer Authority (PWSA) had high levels of lead. Like in Flint, plumbing in many homes in Pittsburgh is connected to water mains with old lead lines. Those lines can transfer lead to drinking water, especially when water chemistry is altered.
Foxconn Deal Lets Company Ignore Wisconsin Environmental Protection Laws - Apple supplier Foxconn has in recent years been accused of poisoning waterways near its facilities in China. Now Republican Gov. Scott Walker of Wisconsin is not only proposing to give the company a $3 billion taxpayer subsidy, his administration has also quietly slipped language into a bill that would exempt the Taiwanese conglomerate from state environmental protection laws. Walker, President Donald Trump and House Speaker Paul Ryan have in recent days touted Foxconn’s announcement that it will open a new manufacturing plant in Ryan’s Southwest Wisconsin congressional district. None of them, however, mentioned that the legislation providing the taxpayer subsidies included blanket waivers from Wisconsin’s environmental statutes. Under those laws, companies are prohibited from discharging materials or otherwise polluting wetlands without a specific permit to do so. Under the bill that Walker has put forward, companies within the new “economics and information technology manufacturing zone” will be allowed to discharge material into non-federal wetlands if it relates to the construction or operation of a manufacturing facility. Walker has called a special session that will discuss his bill tomorrow. Another section of the bill outlines how existing Wisconsin law requires companies to obtain a permit to disturb or transform nearby waterways. According to the official analysis of the bill by analysts in the Republican-controlled legislature, the new legislation will allow Walker’s administration to waive those permitting requirements “if they relate to the construction, access, or operation of a new manufacturing facility” in the zone where Foxconn is planning to build its facility. A separate section of the bill exempts new energy utilities built inside the Foxconn development zone from facing regulatory oversight by the state’s Public Service Commission. Those provisions also exempt regulation of the building and relocation of high-voltage transmission lines, according to state legislative analysts. The language buried in the Wisconsin legislation comes as prominent Republicans have pledged to roll back environmental laws in the name of economic development. Trump, for instance, has said that his pending infrastructure initiative will include proposals to waive environmental regulations. House lawmakers earlier this month passed legislation to reduce permitting barriers for fossil fuel pipeline development.
Homeland Security Will Waive Environmental Laws to Rush Border Wall Construction - The Department of Homeland Security (DHS) announced Tuesday it will exempt itself from having to comply with environmental and other laws to "ensure the expeditious construction of barriers and roads " near the U.S.-Mexico border south of San Diego, despite vehement objections from environmental groups that President Trump's proposed project could endanger critical habitats and ignores public input. DHS said it will publish the waiver in "the coming days" in the Federal Register. The waiver focuses on an approximately 15-mile segment of the border within the San Diego Sector and exempts the government from the National Environmental Protection Act —a critical mandate for any federal department or agency to properly consider the environment prior to undertaking any major federal action that significantly affects the environment. "The sector remains an area of high illegal entry for which there is an immediate need to improve current infrastructure and construct additional border barriers and roads," the agency said. "To begin to meet the need for additional border infrastructure in this area, DHS will implement various border infrastructure projects." Associated Press noted that this is the sixth time DHS has exercised this authority since 2005 and the first time since 2008. The Center for Biological Diversity —which sued the Trump administration in April for failing to perform any environmental impact studies or release any information about the project— stressed that the waiver would speed construction of replacement walls, 30-foot-high prototypes, roads, lighting and other infrastructure without any analysis of the environmental impacts.
Climate Refugees in Toxic Immigrant Jails Are Victims of Environmental Racism - - In April, the Northwest Detention Center in Tacoma, Washington, again made headlines after more than 100 immigrant detainees launched a hunger strike to protest the conditions inside the for-profit immigration jail: abuse from guards, maggoty food, inadequate access to medical care and exorbitant commissary prices, to name a few. Conditions at the immigration jail have drawn in local climate activists and other allies, who, in 2015, blockaded three exits where buses and vans usually carry out detainees for deportation. The activists' interest in the jail is not only grounded in concerns about basic human rights -- it's also about environmental justice. The 1,500-bed immigration jail, operated by the private prison giant GEO Group, sits adjacent to a federal Superfund cleanup site where a coal gasification plant leeched toxic sludge into the soil for over three decades. The Environmental Protection Agency (EPA) took over the site in the early 1990s as part of its Superfund cleanup of the tar pits, which included monitoring groundwater wells, and stockpiling and capping contaminated soils, according to the News Tribune, Tacoma's main newspaper. Today, the site is still dotted with drainage ditches, retention ponds and a capped waste pile.The site is just one of several distinct Superfund cleanup sites in the industrial district known as the "Tideflats," encompassing the city's port and multiple railroad facilities. Another cleanup site in the Tideflats is located around the former ASARCO copper smelter, which, according to the News Tribune, emitted lead and arsenic from its nearly 600-foot-tall smokestack for decades, contaminating the area's water, sediments and upland areas in the process. The area is so polluted that the city designated it unfit for residents -- except, that is, for Northwest's immigrant detainees. Eager to approve the jail, a Tacoma councilman, aided by a city attorney, found a useful loophole to keep it from being built on the city's "prime port property," by determining that it didn't meet the state's definition of an "essential public facility." This allowed developers to get around local zoning laws, according to the News Tribune.
The ugly truth: One mother’s fight to expose the hazards at Ground Zero - Jenna Orkin was living in Brooklyn on 9/11, when the Twin Towers of the World Trade Center collapsed into a smoldering pile of rubble and a cloud of toxic dust that enveloped Lower Manhattan. But her son was just a few blocks away from Ground Zero, as a student at Stuyvesant High School. Not long afterwards, with the Environmental Protection Agency and city officials denying that there was any health risk from the ubiquitous dust that permeated Downtown, the Department of Education decided to resume classes at the elite high school just a month later — while the rubble of Ground Zero still smoldered. Orkin didn’t believe the reassurances, but she struggled in the face of government denials and misinformation to convince her son that it was dangerous to be so close to Ground Zero.She was eventually proved right — with government statistics now confirming that exposure to the dust killed at least 322 Ground Zero recovery workers and sickened more than 17,439 others with respiratory issues or cancer — and even the DOE eventually acknowledged the dangers, having found lead dust levels that exceeded federal and local standards in three Stuyvesant classrooms five months after the city returned students to the school. But at the time, Orkin said, the EPA repeatedly lied about the dangers of being Downtown. And making matters worse, many media outlets credulously reported the EPA’s misinformation as fact, and “grossly misled” the public. Orkin and a small but growing cadre of allies battled relentlessly to make people see the ugly truth. Her activism took her through hours upon hours of congressional hearings, press conferences, and meetings where she and other environmental activists aiming to educate each other and the public with the evidence of the hazards. Orkin chronicles her fight in “Ground Zero Wars: The Fight to Reveal the Lies of the EPA in the Wake of 9/11 and Clean Up Lower Manhattan.” In her book, Orkin recounts the very personal story of how she and other local activists had to fight the government to uncover the actual dangers of living and working around Ground Zero in the aftermath of the 9/11 attacks.
McCain’s Brain Cancer Draws Renewed Attention to Possible Agent Orange Connection - ProPublica - When Amy Jones’ dad, Paul, was diagnosed with glioblastoma last month, she wondered whether it might be tied to his time in Vietnam.Then, last week, when Sen. John McCain, R-Ariz., also a Vietnam veteran, was diagnosed with the same aggressive brain cancer, Jones searched online for glioblastoma and Vietnam vets. She soon learned the disease is one of a growing list of ailments that some Vietnam veterans and their relatives believe is caused by exposure to Agent Orange, the toxic herbicide sprayed during the war. “Honestly, it’s not easy to even admit that this is happening, let alone to even talk about it,” said Jones, whose 68-year-old father has had surgery to remove a brain tumor and now is receiving radiation treatments. “It’s only been six weeks. It’s such a devastating diagnosis.” McCain’s diagnosis comes as the U.S. Department of Veterans Affairs is under increased pressure to broaden who’s eligible for Agent Orange-related compensation. During the war, the military sprayed millions of gallons of the herbicide in Vietnam to kill enemy-covering jungle brush, and in the process, may have exposed as many as 2.6 million U.S. service members — including McCain. News of his illness has prompted Amy Jones and others to call on the VA to study a possible connection between their loved ones’ Agent Orange exposure and glioblastoma. Under current policy, the agency makes disability payments to veterans who develop one of 14 health conditions, but only if they can prove they served on the ground in Vietnam, where the chemicals were sprayed. Veterans who served off the coast in the Navy and those with other diseases not on the list — such as brain cancer — are left to fight the agency for compensation on a case-by-case basis. Those with glioblastoma — or widows seeking survivor benefits — must prove the disease was “at least as likely as not” caused by Agent Orange, a cumbersome process that often takes years and more times than not results in denial.
Aldi pulls eggs from German stores over fipronil poison fear - BBC News: Supermarket giant Aldi has withdrawn all eggs from sale from its stores in Germany as they may have been contaminated by insecticide. Tests showed that the chemical fipronil, which can harm people's kidneys, liver and thyroid glands, was found in eggs from the Netherlands. Fipronil is used to treat lice and ticks in chickens. One German official said up to 10 million of the contaminated eggs may have been sold in Germany. Christian Meyer, the agriculture minister for Lower Saxony, told German television that there was a risk to children if they ate two of the eggs a day. About 180 poultry farms in the Netherlands have been temporarily shut in recent days while investigations are held. Marieke van der Molen, of the Dutch public prosecutor's office, said a criminal investigation was under way to find the source of the contamination. Meanwhile, European supermarkets have moved to halt the distribution of eggs from the affected batches. However, Aldi - which has close to 4,000 stores in Germany - is the first retailer to stop selling all eggs as a precaution. Reuters reports that investigators believe the chemical may have originated in contaminated detergent used to clean barns. Poultry World reported that fipronil may have been deliberately added to an existing insecticide to improve its effectiveness. The Netherlands is Europe's largest exporter of eggs and egg products, and one of the biggest in the world. It exports an estimated 65% of the 10 billion eggs it produces every year.
Glyphosate in Ben & Jerry's Ice Cream + 'Monsanto Papers' = Very Interesting Times -- Not long after the Organic Consumers Association (OCA) announced that Ben & Jerry's ice cream tested positive for glyphosate , the key ingredient in Monsanto's Roundup weedkiller, another story broke—one that validates the importance of finding glyphosate , even at low doses, in any food. According to internal Monsanto documents, Monsanto forced the retraction of a critical long-term study , first published in 2012, showing that very low doses of Monsanto's Roundup herbicide—lower than those detected in Ben & Jerry's ice cream—caused serious liver and kidney damage in rats. Shortly before the study was retracted, the editor of the journal began working for Monsanto, under a consulting contract. (The study, led by G.E. Séralini, was republished in 2014, by the Environmental Sciences Europe). Since the New York Times first reported on OCA's testing findings, the news about Ben & Jerry's has been picked by thousands of media outlets, including TV stations, in the U.S. and internationally, including in Germany, the U.K., France, Mexico, Portugal and Japan. No surprise, it didn't take long for critics to come out of the woodwork—mostly the usual suspects who defend Monsanto. Their criticisms focused largely on the amounts of glyphosate detected in the ice cream, and how they fall below the U.S. Food & Drug Administration's (FDA) "allowable safe levels"—levels that don't take into account the latest research. That latest research, in addition to the Séralini study, includes a peer-reviewed study published in January , in Scientific Reports. Led by Dr. Michael Antoniou at King's College London, the Antoniou study found that low doses (thousands of times below those declared "safe" by U.S. and international regulators) of Roundup weedkiller, administered to rats over a two-year period, caused non-alcoholic fatty liver disease. Non-alcoholic fatty liver disease, which is now reaching epidemic proportions, can lead to cirrhosis of the liver, a life-threatening condition. OCA's news, and the latest revelations about Monsanto's efforts to bury the truth about Roundup's true toxicity have Ben & Jerry's (and parent company Unilever) sweating. As for Monsanto, company officials weren't too pleased when their internal emails went public.
Just Released Docs Show Monsanto 'Executives Colluding With Corrupted EPA Officials to Manipulate Scientific Data' - Four months after the publication of a batch of internal Monsanto Co. documents stirred international controversy, a new trove of company records was released early Tuesday, providing fresh fuel for a heated global debate over whether or not the agricultural chemical giant suppressed information about the potential dangers of its Roundup herbicide and relied on U.S. regulators for help. More than 75 documents, including intriguing text messages and discussions about payments to scientists, were posted for public viewing early Tuesday morning by attorneys who are suing Monsanto on behalf of people alleging Roundup caused them or their family members to become ill with non-Hodgkin lymphoma, a type of blood cancer. The attorneys posted the documents, which total more than 700 pages, on the website for the law firm Baum, Hedlund, Aristei & Goldman , one of many firms representing thousands of plaintiffs who are pursuing claims against Monsanto. More than 100 of those lawsuits have been consolidated in multidistrict litigation in federal court in San Francisco, while other similar lawsuits are pending in state courts in Missouri, Delaware, Arizona and elsewhere. The documents, which were obtained through court-ordered discovery in the litigation, are also available as part of a long list of Roundup court case documents compiled by the consumer group I work for, U.S. Right to Know. It was important to release the documents now because they not only pertain to the ongoing litigation, but also to larger issues of public health and safety, while shedding light on corporate influence over regulatory bodies, according to Baum Hedlund attorneys Brent Wisner and Pedram Esfandiary.
Trump's pick for top science job called progressives 'race traitors' - Sam Clovis, who has been nominated by Donald Trump to be the Department of Agriculture’s (USDA) top scientist, previously ran a blog where he called progressives “race traders and race ‘traitors’” and likened Barack Obama to a “communist” and a “dictator”. Clovis, previously a college professor and radio talkshow host in Iowa, wrote the blog for his show Impact with Clovis. The website has been taken down but is archived. In a September 2011 post, Clovis said that Obama was “brought up by socialists to be a socialist. His associations were socialists or worse, criminal dissidents who were bent on overthrowing the government of the United States.” Warming to the theme, Clovis claimed in subsequent posts that Obama had a “communist father, socialist mother” and “has designs on being a dictator”. Obama’s followers, Clovis claimed are “progressive, Maoist, anti-colonist”. Clovis, who served in the Air Force for 25 years, turned his attention to race in August 2011, labeling progressives as “liars, race traders and race traitors”. He also accused progressives of keeping “minorities in this country enslaved to government” with a supposed desire to “essentially eliminate people of color from the American landscape”. In June 2011, Clovis said the civil rights leader WEB Du Bois was “the first race trader” for convincing black people to vote for Woodrow Wilson. According to CNN, a USDA spokesperson defended Clovis. “Dr Clovis is a proud conservative and a proud American,” the spokesperson said. “All of his reporting either on the air or in writing over the course of his career has been based on solid research and data. He is after all an academic.”
17 States Investigate Dicamba Damage Complaints Spanning 2.5 Million Acres - Complaints of crop damage from the powerful and volatile weedkiller dicamba have increased rapidly around the country. According to weed scientist and University of Missouri associate professor Kevin Bradley , 17 state governments are investigating more than 1,400 official complaints of dicamba-related injuries this year covering 2.5 million acres. "This is a substantial problem that needs to be addressed," Bradley wrote . Reports suggest that farmers applied the herbicide to Monsanto Co.'s new dicamba-tolerant soybean and cotton crops to beat back ever-resistant weeds , but the drift-prone chemical can be picked up by the wind and land on neighboring non-target fields, crops and native plants. Fruits and vegetables, as well as other crops that are not genetically engineered to withstand dicamba, are often left cupped and distorted when exposed to the chemical. The current rash of complaints echoes the similar devastation last summer , when 10 states reported hundreds of thousands of crop acres adversely impacted by the apparent misuse of the herbicide. Although dicamba has been around for decades, Monsanto, DuPont Co. and BASF SE sells new formulations of the herbicide that's said to be less drift-prone and volatile than older versions when used correctly. Monsanto execs defended its product, blaming growers for using older versions of dicamba or not following directions on the new product label. As reported by Bloomberg : The company attributes the drifting problem to farmers using illegal, off-label products that are more volatile—and thus more prone to drift—than the latest versions of dicamba. They may also be cleaning or using their spraying equipment incorrectly, or applying dicamba when it's windy.
Crops that kill pests by shutting off their genes -- Plants are among many eukaryotes that can "turn off" one or more of their genes by using a process called RNA interference to block protein translation. Researchers are now weaponizing this by engineering crops to produce specific RNA fragments that, upon ingestion by insects, initiate RNA interference to shut down a target gene essential for life or reproduction, killing or sterilizing the insects. The potential of this method is reviewed in Trends in Biotechnology's upcoming special issue on environmental biotechnology. As chemical pesticides raise concerns over insect resistance, collateral environmental damage, and human exposure risks, transgenic methods are becoming an attractive option for future pest control. For instance, certain strains of corn and cotton have been modified to produce protein toxins from the bacterium Bacillus thuringiensis (Bt) that poison certain worms, beetles, and moths. RNA interference adds another degree of subtlety, by instead shutting down essential genes in pests that consume crops."RNA interference-based pest control can provide protection at essentially no cost because once the variety is developed, the plant can just go on using it instead of needing additional applications of insecticide," says co-senior author Ralph Bock, a director at the Max Planck Institute of Molecular Plant Physiology in Germany. An RNA interference strategy could also address environmental and human toxicity questions around chemical pesticides. "When we target a key pest with RNA interference technology, what we are really hoping for is to see a big reduction in overall insecticide use," Besides application cost and environmental advantages, advocates of the method also point to the flexibility of finding a genetic target and its species specificity. While chemical pesticides such as organophosphates work by overloading an insect's nervous system, a suitable RNA interference target might control something as esoteric, yet indispensable, as cellular protein sorting.
Bees Are Bouncing Back From Colony Collapse Disorder - The number of U.S. honeybees, a critical component in the agriculture industry, rose in 2017 from a year earlier, and deaths of the insects attributed to a mysterious malady that’s affected hives in North America and Europe declined, according a U.S. Department of Agriculture honeybee health survey released Tuesday. The number of commercial U.S. honeybee colonies rose 3 percent to 2.89 million as of April 1, 2017 compared with a year earlier, the Agriculture Department reported. The number of hives lost to Colony Collapse Disorder, a phenomenon of disappearing bees that has raised concerns among farmers and scientists for a decade, was 84,430 in this year’s first quarter, down 27 percent from a year earlier. Year-over-year losses declined by the same percentage in April through June, the most recent data in the survey. Still, more than two-fifths of beekeepers said mites were harming their hives, and with pesticides and other factors still stressing bees, the overall increase is largely the result of constant replenishment of losses, the study showed. “You create new hives by breaking up your stronger hives, which just makes them weaker,” said Tim May, a beekeeper in Harvard, Illinois and the vice-president of the American Beekeeping Federation based in Atlanta. “We check for mites, we keep our bees well-fed, we communicate with farmers so they don’t spray pesticides when our hives are vulnerable. I don’t know what else we can do.”
Scientists Can See Zika Coming by Tracking the Climate - From the ashes of a devastating Zika virus outbreak last year, scientists are piecing together how it happened, and they’re using climate variables to get ahead of the next pandemic. The Zika virus rampaged through the Americas in 2015 and 2016, charging out of Brazil and into neighboring countries inside the Aedes aegypti and Aedes albopictus mosquitoes. Named for the Zika Forest in Uganda, where it was first isolated in 1947, the disease usually presents with mild symptoms, or none at all. But the outbreak last year caused a surge of microcephaly, a birth defect, and an increase in Guillain-Barré syndrome, which can lead to paralysis. Pictures of babies with shrunken heads and immobilized victims led to a coordinated effort in afflicted countries and across borders to track and fight the infection. As of July 19, the CDC reported 5,392 cases of Zika in U.S. states since 2015, including 224 infections acquired locally. The CDC also reported 36,986 Zika cases in U.S. territories like Puerto Rico. There is no vaccine, and there are only limited treatment options. So health officials are concentrating mosquito control measures to prevent new Zika infections. They’re also using travel advisories for pregnant women, blood testing and public information campaigns. Researchers are using the unprecedented outbreak to study the emerging disease in real time. And they’re uncovering lessons that could buy time for health officials to mobilize a response to mosquito-borne disease before another outbreak occurs.
Lyme Disease’s Worst Enemy? It Might Be Foxes -- A new study suggests that the rise in tick-borne disease may be tied to a dearth of traditional mouse predators, whose presence might otherwise send mice scurrying into their burrows. If mice were scarcer, larval ticks, which are always born uninfected, might feed on other mammals and bird species that do not carry germs harmful to humans. Or they could simply fail to find that first meal. Ticks need three meals to reproduce; humans are at risk of contracting diseases only from ticks that have previously fed on infected hosts. For the study, Tim R. Hofmeester, then a graduate student at Wageningen University in the Netherlands and the lead researcher of the study, placed cameras in 20 plots across the Dutch countryside to measure the activity of foxes and stone martens, key predators of mice. Some were in protected areas, others were in places where foxes are heavily hunted. Over two years, he also trapped hundreds of mice — and voles, another small mammal — in the same plots, counted how many ticks were on them, and tested the ticks for infection with Lyme and two other disease-causing bacteria. To capture additional ticks, he dragged a blanket across the ground. In the plots where predator activity was higher, he found only 10 to 20 percent as many newly hatched ticks on the mice. Thus, there would be fewer ticks to pass along pathogens to next generation of mice. In the study, the density of infected “nymphs,” as the adolescent ticks are called, was at 15 percent of levels in areas where foxes and stone martens were less active. “The predators appear to break the cycle of infection,’’ said Dr. Hofmeester, who earned his Ph.D. after the study. Despite stuffing his pant legs into his socks and using permethrin, a tick repellent, he said he removed more than 100 ticks from his own body.
Chemical Spill in Virginia Kills Tens of Thousands of Fish - About 165 gallons of an agricultural -use chemical leaked into a Roanoke-area creek over the weekend, resulting in fish kill estimated in the tens of thousands, Virginia officials announced Monday. The chemical was identified as Termix 5301, a type of surfactant (detergent-like substance) added to herbicide and pesticide products before application, according to the Virginia's Department of Environmental Quality (DEQ). The substance leaked from a punctured container on the property of Crop Production Services, a farm supply store in Cloverdale. The chemical was then washed into Tinker Creek by rainfall. Officials were notified of the spill on Saturday. Before the DEQ identified the chemical as Termix, multiple area residents reported seeing bubbles, suds and hundreds of dead fish in the water. DEQ said the fish that died includes all sizes and types of fish, including sunfish, rock bass and smallmouth bass, large suckers, and many smaller species such as minnows and darters. "We are continuing to count the fish because that does figure into whether there's a penalty against the company and we will be continuing to monitor the water quality," DEQ spokesman Bill Hayden said . Residents living up to 5 miles downstream from the spill have also reported seeing other types of dead wildlife. "There's no birds, there's no insects, and I hope that doesn't mean that something very, very serious has happened," local homeowner Stephen Rossi told WSLS 10 . Rossi also suspects that about two-thirds of the bees in his beehive have died from the water contamination.
Seattle-caught salmon found to contain cocaine, antidepressants and pain relievers - Salmon is purported to be one of the healthiest foods due to its high omega-3 content, protein, and essential fatty acids, but if the fish is obtained from the Puget Sound, it is anything but healthy. According to a recent study, up to 81 drugs and personal-care products were detected in the flesh of salmon caught in the Puget Sound. Some of the drugs include Prozac, Advil, Benadryl, Lipitor, and even cocaine. The Seattle Times reports that the levels are believed to be so high because either people in the area use more of the drugs detected, or because waste water plants are unable to fully remove the chemicals during treatment. Another theory is that leaky septic tanks are contributing to the problem, as high fecal coliform counts were detected. Said Jim Meador, an environmental toxicologist at NOAA’s Northwest Fisheries Science Center in Seattle:“The concentrations in effluent were higher than we expected. We analyzed samples for 150 compounds and we had 61 percent of them detected in effluent. So we know these are going into the estuaries.”Samples were gathered over two days for the study, and both migratory juvenile chinook salmon and resident staghorn sculpin were tested. Chemicals were found not only in the tissue of the fish but in the water. And, the researchers suggest, it is likely the study underreports the amount of drugs in the water close to outfall pipes, or in deeper water.Some of the drugs and contaminates found include Flonase, Aleve, Tylenol, Paxil, Valium, Zoloft, Tagamet, OxyContin, Darvon, Nicotine, caffeine, Fungicides, antiseptics, anticoagulants, as well as plenty of antibiotics.Intriguingly, the researchers are not concerned about the effect the cocktail of drugs will have on the humans who eat the fish, but they are concerned about how the chemicals are affecting wildlife. Reportedly, Meador’s other recent work has shown that juvenile chinook salmon migrate through contaminated estuaries in Puget Sound and die at twice the rate of fish elsewhere. That seems like cause for concern.Unfortunately, it not likely the contamination will let up. According to one study, 97,000 pounds of drugs and chemicals could be entering the Puget Sound each year.
Trump's Top Trade Nominees Have Strong Links to U.S. Beef and Growth Hormone Lobbies - Donald Trump's nominee to be the U.S. chief agricultural trade negotiator previously called for the U.S. to walk away from trade talks with the EU if it refused to drop its ban on beef reared with antibiotics and growth supplements, Energydesk can reveal. The news could have implications for the UK's attempts to strike a post-Brexit trade deal with the U.S., with reports suggesting the U.S. agricultural sector wants to weaken UK food standards—including the ban on growth hormones—to help boost its meat exports. Last week, International Trade Secretary Liam Fox refused to rule out reversing a ban on the import of chlorine-washed chicken during a visit to Washington to discuss a post-Brexit trade deal. This resulted in a cabinet split as Environment Secretary Michael Gove insisted that the UK would not compromise on its food standards by dropping restrictions on chlorinated chicken. Now, an Energydesk investigation has found that two of Trump's nominees for top agricultural trade positions have strong links to the U.S. beef and growth hormone lobbies. Gregg Doud, who was nominated for the top agricultural trade position by President Trump last month, authored a paper in 2013 arguing that the U.S. should "absolutely" walk away from trade talks with the EU if it refused to drop restrictions on U.S. meat imports. Doud previously spent eight years working for the National Cattlemen's Beef Association (NCBA)—a powerful lobby group that has identified Brexit as an opportunity to lift UK restrictions on the import of beef reared with substances that increase animal growth rate—such as hormones and beta agonists. Ted McKinney, the nominee to be the USDA's trade undersecretary, held the role of director of global corporate affairs at Elanco Animal Health—a major manufacturer of ractopamine—between 2009-2014.
Gulf of Mexico's Dead Zone Could be Largest Ever, Thanks to the Meat Industry - Scientists predict that so much pollution is pouring into the Gulf of Mexico this year that it is creating a larger-than-ever "dead zone" in which low to no oxygen can suffocate or kill fish and other marine life.The Guardian reported that the National Oceanic and Atmospheric Administration (NOAA) is expected to announce this week the largest recorded hypoxic zone in the gulf, an oxygen-depleted swath that's even larger than the New Jersey-sized, 8,185 square-mile dead zone originally predicted for July.And in a new analysis from environmental group Mighty, the meat industry as well as the country's appetite for meat is much to blame.When fertilizer and manure washes off soy and corn fields used to grow feed for livestock, it not only contaminates local drinking water supplies, it flows into larger water bodies and creates toxic algal blooms from the excessive nutrients, particularly phosphorus and nitrogen. When the algae dies and decomposes, it depletes the waters of oxygen and eventually leads to vast dead zones that is toxic to aquatic life."While fertilizer pollution starts in the Midwest, it flows down the Mississippi River until it finally dumps out into the Gulf of Mexico, which collapses into one of the world's largest Dead Zones each year as a direct result," the report states."Approximately 1.15 million metric tons of nitrogen pollution flowed into the Gulf of Mexico in 2016 alone, which is around 170 percent more pollution than was dumped into the Gulf by the BP oil spill Mighty is calling on Big Meat—particularly Tyson Foods, the largest meat company in the U.S.—to urge their grain producers such as Cargill and Archer Daniels Midland to take steps to reduce and prevent runoff pollution. "This problem is worsening and worsening and regulation isn't reducing the scope of this pollution," Lucia von Reusner, campaign director at Mighty, told the Guardian. "These companies' practices need to be far more sustainable. And a reduction in meat consumption is absolutely necessary to reduce the environmental burden."
Endangered frog habitat sparks California farm lawsuit - Tiny frogs and toads used to swarm over the Sierra Nevada. Now, the government says nearly 2 million acres of land needs to be preserved to prevent them from going extinct.California ranchers and logging groups say those protections are hurting their ability to make a living. So another conflict over the Endangered Species Act is going to court.The California Farm Bureau and two ranchers’ associations sued the U.S. Fish and Wildlife Service on Monday, challenging a year-old decision to designate more than 1.8 million acres of rural California as “critical habitat” for three species of frogs and toads that are protected by the Endangered Species Act.Loggers and ranchers who harvest timber or graze cattle on public lands worry the new restrictions on land use will eventually make it more difficult – if not impossible – to make a living in the Sierra, said Shaun Crook, a Tuolumne County cattle rancher whose family also owns a logging company.“It has the economic impact of putting you out of business is what that reality could be,” said Crook, president of the Tuolumne County Farm Bureau. Even though the designation was made a year ago, Crook said federal officials haven’t yet told him how the protections will affect his cattle, which graze on federal lands. But he said he and other ranchers worry that major tracts of land will be put off limits or they’ll be required to install fencing around protected areas.
Worsening drought conditions in parts of US stressing crops (AP) — Drought conditions worsened in several states over the past week from extreme heat and weeks with little rain, raising the prospect that grocery staples such as bread and beans could cost more as the region that produces those commodities is hardest hit. Drought conditions have begun to stress corn, soybeans, wheat and livestock in some areas, according to the weekly U.S. Drought Monitor released Thursday by the University of Nebraska-Lincoln. Nearly 11 percent of the continental United States is in moderate drought or worse, said Richard Heim, a meteorologist with the National Oceanic and Atmospheric Administration, in this week's drought summary. The report is compiled weekly using data from the U.S. Department of Agriculture and NOAA. "Much of Montana and parts of the Dakotas, Nebraska, and Kansas had no rain this week; some areas have been drier than normal for the last two to three months; and some drought indicators reflect dryness for the last 12 months," Heim wrote. About half of the nation's spring wheat, 13 percent of winter wheat, 15 percent of corn and 14 percent of the soybeans are in drought, the report said. Consumers could see the price of bread at the grocery counter rise, said Doug Goehring, agriculture commissioner for North Dakota, the nation's largest producer of spring wheat and second largest grower of wheat generally after Kansas. "There have been people in this business for five decades who have said they have never seen conditions like this,"
‘Flash drought’ could devastate half the High Plains wheat harvest - It’s hurricane season, but the nation’s worst weather disaster right now is raging on the High Plains. An intense drought has quickly gripped much of the Dakotas and parts of Montana this summer, catching farmers and ranchers off-guard. The multi-agency U.S. Drought Monitor recently upgraded the drought to “exceptional,” its highest severity level, matching the intensity of the California drought at its peak. The Associated Press says the dry conditions are “laying waste to crops and searing pasture and hay land” in America’s new wheat belt, with some longtime farmers and ranchers calling it the worst of their lifetimes. Unfortunately, this kind of came-out-of-nowhere drought could become a lot less rare in the future.“The damage and the destruction is just unimaginable,” Montana resident Sarah Swanson told Grist. “It’s unlike anything we’ve seen in decades.” Rainfall across the affected region has been less than half of normal since late April, when this year’s growing season began. In parts of Montana’s Missouri River basin, which is the drought’s epicenter, rainfall has been less than a quarter of normal — which equals the driest growing season in recorded history for some communities. “It’s devastating,” says Tanja Fransen, a meteorologist at the National Weather Service’s office in Glasgow, Montana. Just six years removed from 2011, one of the region’s wettest years on record, eastern Montana is now enduring one of its driest. “We’re at the bottom of the barrel,” Fransen says. “For many areas, it’s the worst we’ve seen in 100 years.”The drought already has far-reaching effects. In eastern Montana, America’s current-largest wildfire continues to smolder; the 422-square-mile Lodgepole complex fire is one-third the size of Rhode Island. It’s Montana’s largest fire since 1910. Across the state, 17 other large fires are also spreading. “We haven’t even hit our normal peak fire season yet,” Fransen says. Recently, as the climate has warmed and crop suitability has shifted, the Dakotas and Montana have surpassed Kansas as the most important wheat-growing region in the country. The High Plains is now a supplier of staple grain for the entire world. According to recent field surveys, more than half of this year’s harvest may already be lost.
Death Valley just experienced the hottest month ever recorded in the US - The average temperature in Death Valley last month was a stifling, suffocating 107.4 degrees. It was the hottest month ever recorded in the United States, and the second-hottest in the world — by just a fraction of a degree.The average monthly temperature is a combination of highs and lows. Daytime temperatures in Death Valley are known to be excruciatingly hot. In fact, it is currently the location of the hottest temperature ever recorded on Earth, 134 degrees. (Note: This record is currently being challenged.) But perhaps more alarming in this record is the month’s overnight temperatures — when things are supposed to cool down. The temperature didn’t fall below 89 degrees at any point in the month of July at Death Valley. On three nights, the “low” temperature was 102-103 degrees. According to Christopher C. Burt, a climatologist who contributes to Weather Underground, Death Valley’s previous warmest month was July 1917, although he believes that report is unreliable. Weather records at Death Valley extend back to 1911.“It should be noted that this is the hottest average monthly temperature ever measured in the U.S. or, for that matter, anywhere in the Western Hemisphere,” Burt said. The world record-holder for all-time hottest month is King Khalid Military City in Saudi Arabia. In August 2014, the city’s average temperature was 41.91 degrees Celsius, or 107.44 degrees Fahrenheit.
Fahrenheit 104 (40 degrees C). This is a number everyone should know - This graphic needs to be engrained in public awareness. Why? As I said in 2009, global warming could stop photosynthesis in plants we need to survive. That is not some academic projection of potential interest to people living in the second half of the 21st century. It is relevant now. I repeated that warning earlier this year because we were already starting to see the impact of this biological reality in other countries with increasing frequency. Well now comes the inevitable news .... According to the UK's Financial Times, Heatwave threatens US grain harvest. Since the US is the world’s top exporter of corn (about half the world's export), soya beans (about one third of the world's export) and wheat, damaging the harvest will have a global impact. This follows mere months since similar problems hit crops in Argentina, Paraguay, Uraguay and Brazil. As a result, the price of corn has risen 30% since mid-June and soy prices are the highest they have been in years. Here's why this magic temperature is a problem for plants. In simple terms, at 40 C you mess up the proteins (in the oxygen-evolving complex of PSII) responsible for splitting water into oxygen, hydrogen and a couple of free electrons. Those free electrons are critical for all the other steps of photosynthesis. Knocking out the machinery that makes this reaction possible is like removing the spark plugs from a car's engine. Different types of plants handle this problem differently. Plants like cacti (CAM plants) have adaptations for bright light, high heat, and low moisture. The plants we are talking about are not CAM plants.Plants like corn (C4 plants) are sensitive to temperature just like soy beans (C3 plants), but corn can deal with low moisture better. Here is an animation that shows the relevant portions of photosynthesis. The temperature-dependent piece of machinery we are focusing on here (responsible for the oxygen-evolving complex) is mentioned at several points in the animation; 1:54, 3:14 and in more detail at 3:54. Unlike the other components discussed, this animation doesn't show the proteins that make up the oxygen-evolving complex. They are stripped away so you can see how the water, oxygen, hydrogen and electrons move around.
It’s not just what U.S. farmland is foreign-held, it’s what’s the intentions are - AgDaily - A new online tool created by the Midwest Center for Investigative Reporting allows individuals to check up on just how much American land is currently owned by foreign entities, and the results might be surprising. Between 2004 and 2014, these databases show foreign investors doubled their American farmland holdings, growing from 13.7 million to 27.3 million acres, which is approximately the size of Tennessee. And while this represents only about 2 percent of total U.S. farmland, the value of the land in question leapt from $17.4 billion to $42.7 billion during the same period, according to U.S. Department of Agriculture data. Concerns about the growing amount of control foreign countries have on American farmland, and in turn American food prices, has prompted a bi-partisan bill introduced to the U.S. Senate by Sen. Debbie Stabenow (D-Michigan) and Sen. Chuck Grassley (R-Iowa) titled the Food Security is National Security Act of 2017, which “amends the Defense Production Act of 1950 to: (1) require the Committee on Foreign Investment in the United States to consider the potential effects of a proposed or pending transaction on the security of the U.S. food and agriculture systems, including the effects on the availability of, access to, or safety and quality of food; and (2) include the Secretary of Agriculture and the Secretary of Health and Human Services as members of the committee.” It’s not just a concern about who owns what, but rather what their intentions are. Many of the farm properties currently owned by foreigners are slated for wind farms rather than grain farming — concern about foreign control of grain supplies date back many years, and during the 1970s governors from numerous states facing the same issue drove Congress to pass the Agricultural Foreign Investment Disclosure Act (AFIDA) in 1978, which governs reporting requirements of foreign investors. Changes in food supply directly impact price, and those concerns came back to life though in 2013 when Chinese firm Shuanghui purchased U.S. pork producer Smithfield Foods and, along with it, more than 146,000 acres of farmland. Shuanghui paid $4.7 billion for the company, a price most in the U.S. felt represented a 30 percent premium. Why, if not for future pricing control over American food, they asked aloud.
Loss of Fertile Land Fuels ‘Looming Crisis’ Across Africa -- Kenya has a land problem. Africa itself has a land problem. The continent seems so vast and the land so open. The awesome sense of space is an inextricable part of the beauty here — the unadulterated vistas, the endless land. But in a way, that is an illusion. Population swells, climate change, soil degradation, erosion, poaching, global food prices and even the benefits of affluence are exerting incredible pressure on African land. They are fueling conflicts across the continent, from Nigeria in the west to Kenya in the east — including here in Laikipia, a wildlife haven and one of Kenya’s most beautiful areas. More than in any other region of the world, people in Africa live off the land. There are relatively few industrial or service jobs here. Seventy percent of Africa’s population makes a living through agriculture, higher than on any other continent, the World Bank says.But as the population rises, with more siblings competing for their share of the family farm, the slices are getting thinner. In many parts of Africa, average farm size is just an acre or two, and after repeated divisions of the same property, some people are left trying to subsist on a sliver of a farm that is not much bigger than a tennis court.A changing climate makes things even harder. Scientists say large stretches of Africa are drying up, and they predict more desertification, more drought and more hunger. In a bad year, maybe one country in Africa will be hit by famine. This year, famine is stalking three, pushing more than 10 million people in Somalia, Nigeria and South Sudan to the brink of starvation. But much of Africa’s farmland is in danger for another, perhaps simpler, reason: overuse. Fast-growing populations mean that many African families can’t afford to let land sit fallow and replenish. They have to take every inch of their land and farm or graze it constantly. This steadily lowers the levels of organic matter in the soil, making it difficult to grow crops.
North Canada offers free land for farming due to global warming - Land that was once frozen in the Yukon Territory in Northern Canada is becoming agriculture friendly due to global warming and is being offered for free to small farmers. The Yukon borders on Alaska and its government has already given away nearly 8,000 acres of farmland over the last 10 years, with a dozen applicants currently being considered.
Wildfire season is scorching the West - The West is ablaze as the summer wildfire season has gotten off to an intense start. More than 37,000 fires have burned more than 5.2 million acres nationally since the beginning of the year, with 47 large fires burning across nine states as of Friday. The relatively early activity is quickly becoming the norm, with rising temperatures making the fire season longer than it used to be. The warming fueled by greenhouse gases is also helping to create more and larger fires as it dries out more vegetation that acts as fuel for fires.This new fire situation means that western states need to be begin to rethink how they prepare for and combat fires, as well as how fire-prone land is developed. Five large fires (those of 1,000 acres or more) are currently raging across California, the largest of which is the Detwiler fire near Yosemite National Park, which has burned more than 80,000 acres since it ignited on July 16. That fire is now 75 percent contained, but it destroyed dozens of buildings, including 63 homes.
Carbon Dioxide May Rob Crops Of Nutrition, Leaving Millions At Risk - Rising carbon dioxide levels could have an unexpected side effect on food crops: a decrease in key nutrients. And this could put more people at risk of malnutrition. A 2014 study showed that higher levels of carbon dioxide in the atmosphere are likely to put a dent in the protein, iron and zinc content of rice, wheat, peas and other food crops. Samuel Myers, an environmental health researcher at Harvard's School of Public Health, was the lead author on that study. One study published in Environmental Health Perspectives estimates that the predicted decreases in the protein content of food crops may put about 150 million additional people at risk of protein deficiency by 2050. The other study, published online in GeoHealth, found that the available dietary iron supply could decrease in some high-risk regions. Wheat and rice are not high in protein, but nearly three-quarters of the world's population uses these two crops as "primary protein sources," the study says, based on data from the U.N. Food and Agriculture Organization.And so, any reduction in protein contained in these crops can lead to health problems, particularly for poorer people in low income countries, says Myers. Eighteen countries in Asia and Africa – including India, Bangladesh, Turkey, Egypt, Iran and Iraq — may lose more than 5 percent of their dietary protein, the authors find. For about 150 million people in these countries, that loss is enough to make them protein deficient. Protein deficiency is known to lead to low birth weight, stunting and other growth issues that influence overall health and well being.
Study: Indian monsoons have strengthened over past 15 years - An MIT study published today in Nature Climate Change finds that the Indian summer monsoons, which bring rainfall to the country each year between June and September, have strengthened in the last 15 years over north central India.This heightened monsoon activity has reversed a 50-year drying period during which the monsoon season brought relatively little rain to northern and central India. Since 2002, the researchers have found, this drying trend has given way to a much wetter pattern, with stronger monsoons supplying much-needed rain, along with powerful, damaging floods, to the populous north central region of India.A shift in India’s land and sea temperatures may partially explain this increase in monsoon rainfall. The researchers note that starting in 2002, nearly the entire Indian subcontinent has experienced very strong warming, reaching between 0.1 and 1 degree Celsius per year. Meanwhile, a rise in temperatures over the Indian Ocean has slowed significantly.Chien Wang, a senior research scientist in MIT’s Department of Earth, Atmospheric and Planetary Sciences, the Center for Global Change Science, and the Joint Program for the Science and Policy of Global Change, says this sharp gradient in temperatures — high over land, and low over surrounding waters — is a perfect recipe for whipping up stronger monsoons. “Climatologically, India went through a sudden, drastic warming, while the Indian Ocean, which used to be warm, all of a sudden slowed its warming,” Wang says. “This may have been from a combination of natural variability and anthropogenic influences, and we’re still trying to get to the bottom of the physical processes that caused this reversal.”
Farmer Suicides Rise in India as Climate Warms, Study Shows -- Farming has always been considered a high-risk profession, and a single damaged harvest can drive some to desperation. With agriculture supporting more than half of India's 1.3 billion people, farmers have long been seen as the heart and soul of the country. But they've also seen their economic clout diminish over the last three decades. Once accounting for a third of India's gross domestic product, they now contribute only 15 percent of India's $2.26 billion economy. There are many factors that can contribute to suicide, including poor crop yields, financial devastation or debt, access to easy methods of self-harm, or a lack of community support. In India, many farmers will drink toxic pesticides as a way out of backbreaking debt, with the government in some cases guaranteeing monetary aid to their surviving families. That provides a perverse incentive for suicide, "rewarding people who end their lives by paying family compensation, but only if they die," Patel said. "We may not be able to stop the world from warming, but that doesn't mean we can't do something to address suicide," including providing more financial stability and paying more attention to mental health, he said. The study released Monday should make those efforts even more urgent, experts said. "It provides evidence for a causal pathway — from unfavorable weather to poor crop yields to rural misery to increased suicide," said Dr. Howard Frumkin, a University of Washington environmental health professor who was not involved in the study. "With climate change bringing increasingly chaotic weather in many places, this causal pathway is likely to intensify." India's farms are already hit regularly by strong storms, extreme drought, heat waves and other extreme weather events. Some still rely on rainfall rather than irrigation to water their crops. Scientists have shown that extreme weather events are already increasing as the planet warms.
Suicides of nearly 60,000 Indian farmers linked to climate change, study says - An increase of 5C on any one day was associated with an additional 335 deaths, the study published in the journal PNAS on Monday found. In total, it estimates that 59,300 agricultural sector suicides over the past 30 years could be attributed to warming. Temperature increases outside the growing season showed no significant impact on suicide rates, suggesting stress on the agriculture industry was the source of the increase in suicides.Also supporting the theory was that rainfall increases of as little as 1cm each year were associated with an average 7% drop in the suicide rate. So beneficial was the strong rainfall that suicide rates were lower for the two years that followed, researcher Tamma Carleton found. Farm sector suicides in India decreased last year, but remain at epidemic levels in some states and are a source of immense pressure on legislators. One drought-hit state, Maharashtra, reported 852 farmer suicides in the first four months of this year, while in 2015, one of the worst years on record, about 12,602 farmers killed themselves across India. Overall, more than 300,000 farmers and farm workers have killed themselves in the country since 1995. Skulls and bones said to belong to farmers who killed themselves have been piled at Jantar Mantar, within walking distance of the Indian parliament.They were brought to Delhi by farmers from Tamil Nadu, a state suffering its worst drought in 140 years, which the protesters claim has triggered hundreds of suicides in the past months.
Air pollution deaths expected to rise because of climate change - New research predicts that air pollution worsened by climate change will cost tens of thousands of lives if changes are not made. The study, published in the journal Nature Climate Change, estimates that if current trends continue, climate change will be responsible for another 60,000 air pollution-related deaths globally in the year 2030. By 2100, that number could jump to 260,000. Previous research has found that some 5.5 million people worldwide already die prematurely due to air pollution. The authors say this is the most comprehensive study to date on how climate change will affect health as a result of exacerbating air pollution. The research incorporates results from several of the world's top climate change modeling groups in the United States, United Kingdom, France, Japan and New Zealand. Hotter temperatures "can speed up the reaction rate of air pollutants that form in the atmosphere," lead study author Jason West, an associate professor of environmental sciences and engineering in the University of North Carolina, Chapel Hill, told CBS News. "Places that by and large get drier from climate change would be expected to increase air pollution concentrations." The study estimates that climate change is expected to increase air pollution-related deaths globally and in all regions except for Africa. "Air pollution affects things like heart attacks, stroke, cardiopulmonary disease, and lung cancer," he said. "So because air pollution affects those causes it has a big effect on health."
Unchecked climate change could bring extremely dangerous heat to South Asia, scientists warn -- Extreme temperatures in South Asia could reach dangerous thresholds by the end of the century if we don’t curb our greenhouse gas emissions, according to an alarming new study. This means millions of people in the densely populated region could face serious heat danger if the planet reaches high-end warming levels by 2100. The research provides a grim reminder that the most vulnerable populations are often the least responsible for the progression of global warming, researchers said. Human beings, like any other animals, have their physical limits. Above certain temperature and humidity thresholds the body can no longer function properly and will eventually die. Greater levels of humidity in the air can make higher temperatures even more dangerous because the moisture in the air inhibits the body’s ability to cool itself by sweating. In the new study, which was published Wednesday in the journal Science Advances, the researchers focus on what is known as “wet bulb” temperatures, an index that accounts for both air temperature and humidity. It’s a similar concept to the idea of a heat index, which weather services often use to explain what the temperature actually feels like to the human body. Generally, a wet bulb temperature of 35 degrees Celsius, or 95 degrees Fahrenheit — approximately the temperature of the outside of the human skin, which tends to be a few degrees cooler than the body’s core temperature — is likely to be lethal after just a few hours. To be clear, this number is a special kind of index that takes humidity into account, and is not always equal to the regular air temperature. A lethal wet bulb of 35 degrees Celsius can be reached through a variety of different combinations of air temperature and humidity — for instance, an air temperature of about 115 degrees Fahrenheit with a relative humidity of 50 percent, or an air temperature of about 100 degrees Fahrenheit with a relative humidity of 85 percent. Lethal wet bulb temperatures don’t occur anywhere in the world, even on the hottest and most humid days, Eltahir said. That’s not to say that extreme heat doesn’t still kill people — there are all kinds of factors that can make certain people more vulnerable to high temperatures, such as age, health conditions, dehydration or physical exertion, and every year thousands of deaths around the world are attributed to heat waves. But the lethal wet bulb temperature refers to conditions that almost universally lead to death within about six hours unless people are able to get away from the heat, such as by going indoors into an air-conditioned space.
Climate change to cause humid heatwaves that will kill even healthy people -- Extreme heatwaves that kill even healthy people within hours will strike parts of the Indian subcontinent unless global carbon emissions are cut sharply and soon, according to new research.Even outside of these hotspots, three-quarters of the 1.7bn population – particularly those farming in the Ganges and Indus valleys – will be exposed to a level of humid heat classed as posing “extreme danger” towards the end of the century.The new analysis assesses the impact of climate change on the deadly combination of heat and humidity, measured as the “wet bulb” temperature (WBT). Once this reaches 35C, the human body cannot cool itself by sweating and even fit people sitting in the shade will die within six hours.The revelations show the most severe impacts of global warming may strike those nations, such as India, whose carbon emissions are still rising as they lift millions of people out of poverty.“It presents a dilemma for India between the need to grow economically at a fast pace, consuming fossil fuels, and the need to avoid such potentially lethal impacts,” said Prof Elfatih Eltahir, at Massachusetts Institute of Technology in the US who led the new study. “To India, global climate change is no longer abstract – it is about how to save potentially vulnerable populations.”Heatwaves are already a major risk in South Asia, with a severe episode in 2015 leading to 3,500 deaths, and India recorded its hottest ever day in 2016 when the temperature in the city of Phalodi, Rajasthan, hit 51C. Another new study this week linked the impact of climate change to the suicides of nearly 60,000 Indian farmers. Eltahir said poor farmers are most at risk from future humid heatwaves, but have contributed very little to the emissions that drive climate change. The eastern part of China, another populous region where emissions are rising, is also on track for extreme heatwaves and this risk is currently being examined by the scientists.
Earth likely to warm more than two degrees by 2100: experts | Reuters: - World temperatures are likely to rise by more than 2 degrees Celsius this century, surpassing a "tipping point" that a global climate deal aims to avert, scientists said on Monday. A study published in the journal Nature Climate Change shows a 90 percent chance that temperatures will increase this century by 2 to 4.9 degrees Celsius. Researchers at the University of Washington found only a 5 percent chance that warming could be at or below 2 degrees Celsius – one of the targets set by the 2015 Paris climate deal on limiting emissions of greenhouse gases that warm the planet. Missing that target would have dramatic consequences on people's livelihoods – such as prolonged periods of drought and rising sea levels – said Adrian Raftery, the lead author of the study and a professor at the University of Washington. The study uses statistical projections based on total world population, GDP per capita and the amount of carbon emitted for each dollar of economic activity, known as carbon intensity. "Our analysis shows that the goal of 2 degrees is very much a best-case scenario," said Raftery. "It is achievable, but only with major, sustained effort on all fronts over the next 80 years." According to the U.N. Environment Programme, world greenhouse gas emissions, mainly from burning fossil fuels, are now about 54 billion tonnes a year and should be cut to 42 billion by 2030 to get on track to stay below 2 Celsius.
We only have a 5 percent chance of avoiding ‘dangerous’ global warming, a study finds -- In recent years, it has become increasingly common to frame the climate change problem as a kind of countdown — each year we emit more carbon dioxide, narrowing the window for fixing the problem, but not quite closing it yet. After all, something could still change. Emissions could still start to plunge precipitously. Maybe next year. This outlook has allowed, at least for some, for the preservation of a form of climate optimism in which big changes, someday soon, will still make the difference. Yet a battery of recent studies call into question even that limited optimism. Last week, a group of climate researchers published research suggesting the climate has been warming for longer than we thought due to human influences — in essence, pushing the so-called “preindustrial” baseline for the planet’s warming backwards in time. The logic is clear: If the Earth has already warmed more than we thought due to human activities, then there’s even less remaining carbon dioxide that we can emit and still avoid 2 degrees of warming. Two new studies published Monday, meanwhile, go further towards advancing this pessimistic view which asserts that there’s little chance of the world will stay within prescribed climate limits. The first new study calculates the statistical likelihood of various amounts of warming by the year 2100 based on three trends that matter most for how much carbon we put in the air. Those are the global population, countries’ GDP (on a per capita basis), and carbon intensity, or the volume of emissions for a given level of economic activity.
There's a 95% chance the world will warm beyond a crucial tipping point — here's what that means -- By 2100, the world will be different. A newly published study estimates that there's a 95% chance global temperatures will rise more than 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels. That's the level that's frequently considered the tipping point beyond which the consequences of climate change become catastrophic. The goal of the Paris Agreement was to set emissions standards that could keep the world from hitting that point — ideally less than a 1.5-degree increase — though experts noted that global reductions would have to be even more aggressive to truly accomplish that aim. But according to the authors of the new study, it's extremely unlikely that we'll be able to stay below the 2-degree threshold. Even if we do take action on emissions, the authors suggest, we'll still probably see a median temperature rise of 3.2 degrees Celsius. That's based on their expectations for global population growth, rising GDP per capita, and the amount of carbon dioxide that can be expected to be emitted based on those GDP levels. That's significantly higher than the temperature rise that many experts said would lead to drastic consequences. "Huge swaths of the world will be living in places that by the end of the century will have heat waves so deep that people won't be able to deal with them, you have sea level rising dramatically, to the point that most of the world's cities are drowning, the ocean turning into a hot, sour, breathless soup as it acidifies and warms," environmentalist and author Bill McKibben recently told Business Insider. McKibben's predictions for what that warm world would look like weren't pretty. "If not hell, then a place with a similar temperature," he said. "We have in the Earth's geological record some sense of what happens when you run carbon levels up to the levels we’re running them now — it gets a lot hotter."
Iceland Could Be About To Experience A Major Volcanic Eruption -- Iceland’s largest volcano, Katla, was just moved to yellow status. But that isn’t all that’s concerning. There have also been over 500 earthquakes in Iceland in the last four days. Experts now believe that a volcanic eruption that could be quite large, may soon occur in Iceland. A series of 40 small earthquakes occurred just North East of Mount Fagradalsfjall two days ago, with the final one felt in Reykjavik, measuring at almost 4 on the Richter scale. Following tremors at Katla in South Iceland and a glacial river flood in Múlakvísl, the Icelandic Met Office has raised the status of the famous volcano on its “Aviation Colour Code Map for Icelandic Volcanic Systems” from green to yellow. People have even been warned to stay away from the Múlakvísl River because of the odor of sulfur.
Tropical Storm Emily Overwhelms Miami Beach's Anti-Flood System -- Miami Beach has the second most properties threatened by rising seas in the world, so the city recently sank $500 million into a Sisyphean project to install up to 80 anti-flood pumps across the city. Though the system has helped suck away sunny-day tidal flooding, independent engineers have warned that the pumps likely won't save the city during a major flood event: Last year, an engineer told New Times the pumps would probably fail during a hurricane because there are no backup generators if the city loses power. Yesterday Miami Beach saw firsthand how the new anti-flood system works during a major storm. The tail end of Tropical Depression Emily (not even a tropical storm at this point) grazed Miami, and the amount of rain exceeded the pumps' maximum capacity. Certain portions of the city ended up drowning under multiple feet of water. And according to city spokesperson Melissa Berthier, a brief power outage knocked two pump stations out in Sunset Harbour for 45 minutes. Multiple restaurants in the area, including Pubbelly and Sushi Garage, told New Times they were inundated. "The city has experienced an extreme amount of rainfall with a rate of over 7 inches per hour due to the remnants of Tropical Storm Emily," Berthier said via email. "This amount of rainfall is twice our design criteria for our storm-water infrastructure."
Despite Summer Snow, Greenland Is Still Melting | Climate Central: Recent summers on the vast, white expanse of the Greenland ice sheet have featured some spectacular ice melt, including an alarming period in 2012 when nearly the whole surface showed signs of melt. But this summer has instead seen several bouts of snow, staving off a big summer melt. So what gives? While it may seem contradictory, those snows are actually something Greenland may see more of with global warming, as the atmosphere becomes primed to dump more heavy precipitation. And while that snow may insulate the ice sheet against major melt this year, focusing on one summer risks missing the forest for the trees. Because make no mistake, Greenland is still melting, dumping water into the ocean and causing global sea levels to steadily rise.“We’re still pumping a lot of ice” out to sea, Marco Tedesco, who studies Greenland at Columbia University’s Lamont-Doherty Earth Observatory, said. As Arctic temperatures rise at about double the rate of the planet as a whole, Greenland’s surface has been melting at a steady clip, contributing about 30 percent of the foot of global sea level rise since 1900. And summer is prime melt season, when the sun’s rays beat down on the ice, causing meltwater to pool on the surface and drain down through the ice sheet and out to sea.
USGS Projects Large Loss of Alaska Permafrost by 2100 (and it won't stop there!) --Using statistically modeled maps drawn from satellite data and other sources, U.S. Geological Survey scientists have projected that the near-surface permafrost that presently underlies 38% of boreal and arctic Alaska would be reduced by 16-24% by the end of the 21st Century under widely accepted climate scenarios. from the USGS: Using statistically modeled maps drawn from satellite data and other sources, U.S. Geological Survey scientists have projected that the near-surface permafrost that presently underlies 38% of boreal and arctic Alaska would be reduced by 16-24% by the end of the 21st century under widely accepted climate scenarios. Permafrost declines are more likely in central Alaska than northern Alaska. Northern latitude tundra and boreal forests are experiencing an accelerated warming trend that is greater than in other parts of the world. This warming trend degrades permafrost, defined as ground that stays below freezing for at least two consecutive years. Some of the adverse impacts of melting permafrost are changing pathways of ground and surface water, interruptions of regional transportation, and the release to the atmosphere of previously stored carbon. “A warming climate is affecting the Arctic in the most complex ways,” said Virginia Burkett, USGS Associate Director for Climate and Land Use Change. “Understanding the current distribution of permafrost and estimating where it is likely to disappear are key factors in predicting the future responses of northern ecosystems to climate change.” In addition to developing maps of near-surface permafrost distributions, the researchers developed maps of maximum thaw depth, or active-layer depth, and provided uncertainty estimates. Future permafrost distribution probabilities, based on future climate scenarios produced by the Intergovernmental Panel on Climate Change (IPCC), were also estimated by the USGS scientists. Widely used IPCC climate scenarios anticipate varied levels of climate mitigation action by the global community. The research has been published in Remote Sensing of Environment. The current near-surface permafrost map is available via ScienceBase.
Mysterious craters blowing out of Russia could mean trouble for the whole planet -- In northern Siberia, rising temperatures are causing mysterious giant craters — and even more dire consequences could be in store, say climate scientists. The Russian province's long-frozen ground, called permafrost, is thawing, triggering massive changes to the region's landscape and ecology. It could even threaten human lives. "The last time we saw a permafrost melting was 130,000 years ago. It's a natural phenomenon because of changes in the earth's orbit," said professor of earth sciences at the University of Oxford, Dr. Gideon Henderson."But what is definitely unprecedented is the rate of warming. The warming that happened 130,000 years ago happened over thousands of years … What we see happening now is warming over decades or a century." We are therefore seeing a much more rapid collapse of the permafrost, Henderson said. It's clear that the thawing permafrost has an important effect on the climate, Henderson said. Under normal conditions, permafrosts regulate the amount of carbon in the environment by taking up and storing significant portions of carbon that humans release from burning fossil fuel. In the case of Siberia, this equation is being reversed. "When [permafrosts] release carbon, it will accelerate the rate of warming in the future," Henderson said. A self-reinforcing feedback loop is created whereby warming releases more carbon, which in turn produces greater warming.
World’s young people ‘could face $535tn climate bill’ - The financial burden for young people could total $535 trillion (£410tn) if action to significantly reduce greenhouse gas emissions is delayed. That’s according to a new study published in Earth System Dynamics, a journal of the European Geosciences Union, which suggests continued high fossil fuel emissions will lead to a “massive, expensive clean-up problem” for young people. It however states that just cutting emissions isn’t enough to limit global warming to a level that wouldn’t risk young people’s future but measures such as reforestation would be needed. The researchers estimate if the world starts cutting CO2 emissions in 2021 at a rate of 6% a year, around 150 gigatonnes of carbon must also be extracted from the atmosphere by 2100. Most of this – about 100 gigatonnes – could come from improved agricultural and forestry practices alone. However, if CO2 emissions grow at a rate of 2% a year, more than 1,000 gigatonnes of carbon would need to be extracted from the atmosphere by 2100 – this could only be achieved with a costly technological solution. The study estimates the total cost of using technologies like carbon capture and storage (CCS) could be around $535 trillion (£410tn), pointing out that extraction technologies have “large risks and uncertain feasibility”. It adds the target of limiting global warming to well below 2°C is “not sufficient” – the danger is that it could spur “slow” climate feedbacks, in particular, leading to partial melting of the ice sheets which would result in a significant increase in sea-level rise. The researchers argue atmospheric CO2 should be reduced to less than 350 parts per million (ppm) from its present level of around 400ppm.
Scientists dim sunlight, suck up carbon dioxide to cool planet (Reuters) - Scientists are sucking carbon dioxide from the air with giant fans and preparing to release chemicals from a balloon to dim the sun's rays as part of a climate engineering push to cool the planet. Backers say the risky, often expensive projects are urgently needed to find ways of meeting the goals of the Paris climate deal to curb global warming that researchers blame for causing more heatwaves, downpours and rising sea levels. The United Nations says the targets are way off track and will not be met simply by reducing emissions for example from factories or cars - particularly after U.S. President Donald Trump's decision to pull out of the 2015 pact. They are pushing for other ways to keep temperatures down. In the countryside near Zurich, Swiss company Climeworks began to suck greenhouse gases from thin air in May with giant fans and filters in a $23 million project that it calls the world's first "commercial carbon dioxide capture plant". Worldwide, "direct air capture" research by a handful of companies such as Climeworks has gained tens of millions of dollars in recent years from sources including governments, Microsoft founder Bill Gates and the European Space Agency. If buried underground, vast amounts of greenhouse gases extracted from the air would help reduce global temperatures, a radical step beyond cuts in emissions that are the main focus of the Paris Agreement. Climeworks reckons it now costs about $600 to extract a tonne of carbon dioxide from the air and the plant's full capacity due by the end of 2017 is only 900 tonnes a year. That's equivalent to the annual emissions of only 45 Americans. And Climeworks sells the gas, at a loss, to nearby greenhouses as a fertilizer to grow tomatoes and cucumbers and has a partnership with carmaker Audi, which hopes to use carbon in greener fuels.
On Climate Change - David Henderson and I wade in to perilous waters in the July 31 Wall Street Journal. We try to stake out a different and more productive conversation than the usual shouting match between alarmists and deniers.Climate change is often misunderstood as a package deal: If global warming is “real,” both sides of the debate seem to assume, the climate lobby’s policy agenda follows inexorably. It does not. Climate policy advocates need to do a much better job of quantitatively analyzing economic costs and the actual, rather than symbolic, benefits of their policies. Skeptics would also do well to focus more attention on economic and policy analysis. As economists, we both have a healthy skepticism of large computer based forecasting models. The famous 1972 club of Rome forecast that we would run out of resources, and the grand failure of large scale Keynesian models in the late 1970s are two humbling examples. The "climate" models also feature a lot of questionable economics. A crucial question -- how much carbon will the world's economies add on their own, without Paris-accord policies? That's economics, very questionable economics, and not meteorology. That said, however, the point of the oped is to try to shift the debate away from climate science and mixed climate-economic computer models. Stop arguing about climate, and let us instead investigate costs and benefits of policies. That strikes us as a much more fruitful place for discussion. If you are wary of the climate policy agenda, the costs and benefits of those policies are more fertile ground for discussion than the science of carbon emissions and atmospheric warming. If you only argue about the climate, then you implicitly admit that if the models are right about climate, the whole policy agenda follows. Do not admit that point. They may be right about climate and wrong about policy.
Poll Finds More Germans Fear Climate Change Than Terrorism --For a time back in 2015, there were widespread concerns that the spike in terrorist attacks in Germany in the aftermath of Angela Merkel's open door policy which admitted 1 million refugees in Germany from the middle east would lead to a popular wave of unrest, perhaps culminating with the unseating of Angela Merkel as Chancellor. It now appears that the Germans had more pressing concerns on their mind like... global warming. According to a new poll ahead of the German national election in September, Germans are more concerned about the future state of the environment than they are about more headline-grabbing topics like terrorism or the refugee crisis. The survey released on Tuesday conducted by research group Kantar Emnid Institute on behalf of publishing group Funke Mediengruppe found that 71% of respondents said they were personally more concerned about climate change. This worry ranked higher than the possibility of new wars, listed by 65% of survey participants, and also above terror attacks, listed by 63%.Crime was noted as a worry by 62% of the 1,000 participants surveyed, who were able to list more than one fear.But the most surprising finding is that less than half of those polled, or 45%, said they were anxious about the immigration of refugees into the country, while the lowest concern was unemployment 33% . Ironically, as the Local.de points out, while climate change was the biggest concern named by Germans, the topic doesn't seem to be winning any more support for the environment-conscious Green party, which is currently polling at around 8% .
German states turning their backs on the Paris climate change deal -- Officially, Germany is fully committed to the Paris accord. At the G20 summit in Hamburg earlier this month, Merkel said she “deplored” Trump’s decision to withdraw the United States from the treaty. Yet two important German states are undermining Merkel’s position. North Rhine-Westphalia (NRW) and Brandenburg are home to many mines which extract brown coal and power plants that burn the carbon-intensive fuel. Their governments have vowed to protect an industry that provides more than 70,000 jobs, many of them in economically deprived regions in the country’s east. That’s bad news for Germany’s promise to reduce overall emissions by at least 55 percent, relative to 1990, by 2030. A study commissioned by the World Wildlife Fund environmental group shows that NRW’s plans alone would bust Germany’s Paris targets. Unless Merkel can rein in the brown coal enthusiasts at home, she risks sending a devastating message to the world. If a country as rich and ecologically conscious as Germany prioritises coal mining jobs over the fight against global warming, others will also find it easier to turn their back on the treaty.
Prove Paris was more than paper promises – Nature - Beyond US President Donald Trump’s decision in June to withdraw the United States from the 2015 Paris climate agreement, a more profound challenge to the global climate pact is emerging. No major advanced industrialized country is on track to meet its pledges to control the greenhouse-gas emissions that cause climate change. Wishful thinking and bravado are eclipsing reality. Countries in the European Union are struggling to increase energy efficiency and renewable power to the levels that they claimed they would. Japan promised cuts in emissions to match those of its peers, but meeting the goals will cost more than the country is willing to pay. Even without Trump’s attempts to roll back federal climate policy, the United States is shifting its economy to clean energy too slowly. The idea is that as each country implements its own pledge, others can learn what is feasible, and that collaborative global climate protection will emerge. That logic, however, threatens to unravel because national governments are making promises that they are unable to honour. We call on governments that want the Paris agreement to work to revisit their pledges now — well ahead of when the formal review process begins around 2020 — and to be honest about what they can and really will do. They should open up their pledges for voluntary peer review by other nations and by scientists. Only with greater transparency, anchored in reality, can bottom-up climate diplomacy yield true cooperation. Ambition is no substitute for action.
Californians urged to save energy during solar eclipse - Californians have been asked to save energy during next month’s eagerly-anticipated solar eclipse to help reduce the strain on the state’s solar power resources. The California Public Utilities Commission (CPUC) has set up the CalEclipse.org website, where Californians are urged to “do your thing for the sun,” by reducing energy usage from 9 a.m. to 11 a.m. PT during the Aug. 21 solar eclipse. The Commission notes that as the solar eclipse passes over the Pacific Northwest, it will affect solar resources providing power to California’s grid. “We have plenty of wind, geothermal, hydro, and natural gas to make sure the grid runs smoothly during the solar eclipse, but we also have a lot of Californians who want to do their California thing and step in to help replace the sun when it takes a break,” explained CPUC President Michael Picker. “When we come together to do one small thing to reduce energy usage, we can have a major impact on our environment.”
Despite widespread belief in climate change, few are changing their lifestyle to combat it: Poll - Climate change is back in the news now that Al Gore has produced a new book and a new movie on the subject. Furious activists continue to sound the global warming alarm, and remain vexed at President Trump for recently abandoning the Paris Climate Agreement. But are critics practicing green-minded lifestyles? Maybe not, says a new poll. “New data suggests that while most Americans are coming to terms with climate change, many aren’t doing much, if anything, about it,” writes Gregory McCarriston, an analyst for the polling firm YouGov, which recently queried a thousand people on their habits. “We asked respondents about their consumption of fossil fuels and red meat, both of which have been noted for their impact on Earth’s ecosystems. Commercial beef production, for instance, accounts for more greenhouse gas each year than all the cars on the planet. 13 percent of climate change believers said they’ve greatly reduced their consumption of red meat, and 17 percent said they’ve reduced a little. 66 percent haven’t changed their habits at all,” Mr. McCarriston says. “Climate change believers were also asked about how their fossil fuel consumption has changed since hearing about climate change; 9 percent have cut back a lot, while 54 percent haven’t changed their consumption at all,” he notes.
'Inconvenient' - Al Gore's Home Devours 34 Times More Electricity Than Average U.S. Household Authored --On Friday, Al Gore’s sequel to “An Inconvenient Truth” – “An Inconvenient Sequel: Truth to Power” – arrives in movie theaters across the country. But there’s another inconvenient sequel worth noting and, like most sequels, this one is even worse than the original. Gore’s hypocritical home energy use and “do as I say not as I do” lifestyle has plunged to embarrassing new depths. In just this past year, Gore burned through enough energy to power the typical American household for more than 21 years, according to a new report by the National Center for Public Policy Research.The former vice president consumed 230,889 kilowatt hours (kWh) at his Nashville residence, which includes his home, pool and driveway entry gate electricity meters.A typical family uses an average of 10,812 kWh of electricity per year,according to the U.S. Energy Information Administration. Last September alone, Gore devoured 30,993 kWh of electricity. That’s enough to power 34 average American homes for a month. Over the last 12 months, Gore used more electricity just heating his outdoor swimming pool than six typical homes use in a year. The National Center for Public Policy Research obtained the environmentalist’s energy-usage information from individuals at the Nashville Electric Service, the utility that provides electricity to Gore’s home and much of Middle Tennessee.
Top EPA official resigns over direction of agency under Trump | TheHill: A top Environmental Protection Agency official resigned Tuesday in protest of the direction the EPA has taken under President Trump. Elizabeth "Betsy" Southerland ended her 30-year run at the agency with a scathing exit letter in which she claimed that “the environmental field is suffering from the temporary triumph of myth over truth.” She last worked as the director of science and technology in the Office of Water. “The truth is there is NO war on coal, there is NO economic crisis caused by environmental protection, and climate change IS caused by man’s activities,” Southerland wrote, directly rejecting many of Trump’s claims. Southerland said that since EPA Administrator Scott Pruitt took over the agency, dozens of regulations designed to protect the environment had been repealed, and Trump’s proposed budget cuts to the agency would devastate its ability to enforce existing protections and create new ones. She took aim in particular at Trump's demand that two federal regulations be struck from the books for every new one added. “Should EPA repeal two existing rules protecting infants from neurotoxins in order to promulgate a new rule protecting adults from a newly discovered liver toxin?” she wrote. “Faced with such painful choices, the best possible outcome for the American people would be regulatory paralysis where no new rules are released so that existing protections remain in place.”
States sue EPA over ozone rule delay | TheHill: Sixteen attorneys general are suing the Environmental Protection Agency (EPA) over its decision to delay implementation of an ozone pollution rule. “By illegally blocking these vital clean air protections, Administrator [Scott] Pruitt is endangering the health and safety of millions,” said New York Attorney General Eric Schneiderman (D). “But attorneys general have made clear: we won’t hesitate to fight back to protect our residents and our states.”EPA Administrator Pruitt announced in June that the agency would delay the start date for the agency’s 2015 ozone standards until October 2018.The agency was previously scheduled to finalize its list of areas that fall short of the standards by this October. But Pruitt told state governors in a June letter that the agency is instead “committed to working with states and local officials to effectively implement the ozone standard in a manner that is supportive of air quality improvement efforts without interfering with local decisions or impeding economic growth.”The EPA has said it is considering repealing the ozone pollution update released by the Obama administration in 2015. The rule lowers the allowable concentration of ozone, something public health groups say will help prevent issues like asthma, but a move industry groups say will cost jobs. The House last month voted to delay the rule and limit future ozone regulations.
EPA walks back delay of Obama air pollution rule | TheHill: The Trump administration is reversing course on its plan to delay by one year enforcement of the Obama administration’s ozone pollution regulation. The reversal, announced late Wednesday, came a day after 15 states and the District of Columbia sued the Environmental Protection Agency (EPA), saying the delay exceeded the agency’s authority under the Clean Air Act. Environmental groups filed a similar lawsuit last month. In a statement announcing the decision, the EPA emphasized that it will continue to work with states on implementing the ozone rule, which could include more targeted enforcement delays. “We believe in dialogue with, and being responsive to, our state partners,” EPA Administrator Scott Pruitt said in the statement. “Today’s action reinforces our commitment to working with the states through the complex designation process.” New York Attorney General Eric Schneiderman (D), who led the states’ lawsuit against the delay, said in a statement that he'll keep fighting, if needed, to implement the ozone regulation. “Our coalition of attorneys general will continue to take the legal action necessary to protect the people we serve — including making sure the EPA finalizes the designations by October 1, as required by the Clean Air Act,” he said.
EPA Reverses Decision to Delay Obama-Era Ozone Regulation After 15 States Sue -- U.S. Environmental Protection Agency ( EPA ) Administrator Scott Pruitt reversed course on plans to delay an Obama-era ozone pollution regulation, announcing Wednesday that EPA would comply with the rule's original Oct. 1 deadline. The move comes a day after 15 states and the District of Columbia filed suit against EPA for the delay, claiming that Pruitt's original plan to put a one-year stay on implementation would endanger "the health and safety of millions." In a statement announcing the decision, Pruitt claimed EPA "believe[s] in dialogue with, and being responsive to, our state partners." The Obama-era standards would lower the amount of allowable ground-level ozone from 75 parts per billion to 70; as Oklahoma's attorney general, Pruitt sued to fight the standards in 2015. As reported by The Hill : " Earthjustice , which sued the EPA last month over the delay, welcomed the action. The EPA's hasty retreat shows that public health and environmental organizations and 16 states across the country were right: the agency had no legal basis for delaying implementation of the 2015 smog standard,' said Seth Johnson, an attorney with the group. 'Implementing the safer 2015 smog standard will mean cleaner air and healthier people, particularly for those most vulnerable to ozone, like children, people with asthma and the elderly.'"
Trump officials hail coal export deal with Ukraine | TheHill: Trump administration officials are hailing a Pennsylvania coal company’s contract to export hundreds of thousands of tons of coal to Ukraine. Xcoal Energy & Resources inked the deal to ship 700,000 tons of thermal coal — used to produce electricity — to Ukraine by the end of the year for use by Centrenergo PJSC. The deal, which came about in part due to help from the Trump administration and the Ukrainian government, fits with President Trump’s goal of using energy exports as a geopolitical tool as well as Ukraine’s efforts to reduce Russia’s control over energy among its neighbors. “In recent years, Kiev and much of Eastern Europe have been reliant on and beholden to Russia to keep the heat on. That changes now,” Energy Secretary Rick Perry said in a statement. “The United States can offer Ukraine an alternative, and today we are pleased to announce that we will.” Commerce Secretary Wilbur Ross added that the agreement “will allow Ukraine to diversify its energy sources ahead of the coming winter, helping bolster a key strategic partner against regional pressures that seek to undermine U.S. interests.” Xcoal President Ernie Thrasher traveled to Ukraine for the announcement. “The U.S. coal will replace Russian origin coal at existing thermal power plants, i.e., energy security and diversification,” he said in a statement.
Advocates oppose EPA's delay of coal plant pollution limits - Environmental advocates urged the Trump administration on Monday to reverse course on its move to set aside an Obama-era measure limiting water pollution from coal-fired power plants. About 50 people spoke during a public hearing to voice their strong opposition to Environmental Protection Agency administrator Scott Pruitt's decision to delay implementation of a 2015 rule setting tighter guidelines for power plant wastewater piped into rivers and lakes that often serve as sources of public drinking water. The coal waste contains traces amounts of highly toxic heavy metals such as lead, arsenic, mercury and selenium. Pruitt was acting at the behest of electric utilities who petitioned him earlier this year to redraft the rule, which they claim is too costly and burdensome. The decision leaves EPA's guidelines from 1982 in effect, standards set when far less was known about the detrimental impacts of even tiny levels of heavy metals on human health and aquatic life. Many of those who traveled to EPA headquarters in Washington on Monday said they wanted to speak out, even as they expressed doubt it would do any good. Pruitt, the former attorney general of Oklahoma, has repeatedly moved to kill or delay rules curbing pollution from the fossil-fuel operations since his appointment to lead EPA. Robert F. Kennedy Jr., president of the Waterkeeper Alliance, told the three mid-level EPA officials running the hearing that Pruitt's actions violated federal law. He accused the EPA chief of engaging in a "sham process" to protect coal-industry profits at the expense of public health.
America's Carbon-Pusher In Chief - Who says President Trump doesn’t have a coherent foreign policy? Pundits and critics across the political spectrum have chided him for failing to articulate and implement a clear international agenda. Look closely at his overseas endeavors, though, and one all-too-consistent pattern emerges: Donald Trump will do whatever it takes to prolong the reign of fossil fuels by sabotaging efforts to curb carbon emissions and promoting the global consumption of U.S. oil, coal, and natural gas. Whenever he meets with foreign leaders, it seems, his first impulse is to ply them with American fossil fuels. His decision to withdraw from the Paris Climate Agreement, which obliged this country to reduce its coal consumption and take other steps to curb its carbon emissions, was widely covered by the American mainstream news media. On the other hand, the president’s efforts to promote greater fossil fuel consumption abroad ― just as significant in terms of potential harm to the planet ― have received remarkably little attention. Bear in mind that while Trump’s drive to sabotage international efforts to curb carbon emissions will undoubtedly slow progress in that area, it will hardly stop it. At the recent G-20 summit in Hamburg, Germany, 19 of the leaders of the world’s 20 largest economies reaffirmed their commitment to the Paris accord and pledged to “mitigate greenhouse gas emissions through, among other [initiatives], increased innovation on sustainable and clean energies.” This means that whatever Trump does, continuing innovation in the energy field will indeed help reduce global greenhouse gas emissions and so slow the advance of climate change. Unfortunately, Trump’s relentless drive to promote fossil-fuel consumption abroad could ensure that carbon emissions continue to rise anyway, neutralizing whatever progress might be made elsewhere and dooming humanity to a climate-ravaged future.
Senate confirms Bush 43 veteran to be deputy Energy secretary | TheHill: The Senate on Thursday confirmed Dan Brouillette, a former Energy Department official in the George W. Bush administration, to return to the agency as deputy secretary. Brouillette was confirmed on a 79-17 vote. He is one of a few fairly noncontroversial energy or environment nominees to come before the Senate so far during the Trump administration. Brouillette worked as the Energy Department’s assistant secretary for congressional and intergovernmental affairs from 2001 to 2003. He also served as a member of the Louisiana State Mineral and Energy Board from 2013 to 2016, and is a onetime chief of staff for the House Energy and Commerce Committee. His private-sector experience includes a stint as vice president at Ford Motor Co., heading its policy and government affairs efforts from 2004 to 2006. He is currently an executive at USAA, a banking and financial services firm.
Prospect of Trump tariff casts pall over U.S. solar industry - (Reuters) - U.S. solar companies are snapping up cheap imported solar panels ahead of a trade decision by the Trump administration that could drive up costs and cloud the fortunes of one of the economy's brightest stars. Domestic consumers and businesses have been embracing solar energy at a furious pace - thanks to a big assist from China. Low-cost photovoltaic cells and panels made in China and other Asian countries have helped drive down costs by around 70% since 2010, enabling more Americans to go solar. Installations in the United States last year hit a record. Jobs are mushrooming too. The domestic industry now employs more than 260,000 people, according to The Solar Foundation, most of them construction workers hammering panels on rooftops and erecting utility-scale solar plants in the nation's blistering deserts. But signs of a chill are already visible as the industry waits to see how President Donald Trump responds to a recent trade complaint lodged by a Georgia manufacturer named Suniva. The company has asked the administration effectively to double the price of imported solar panels so that U.S. factories can compete. About 95% of cells and panels sold in the U.S. last year were made abroad, with most coming from China, Malaysia and the Philippines, according to SPV Market Research. Trump has wide latitude to levy tariffs to protect domestic firms. His actions could determine whether sun-powered electricity can compete with fossil fuels to light the nation's homes and businesses.
Tilting at Windmills - Cleveland has been trying to develop offshore wind turbines on Lake Erie since 2004. After many false starts, construction on a pilot program will start in 2018, helped along by Project Icebreaker, which will allow year-round production in the partly frozen lake. Should this six-turbine wind farm on Lake Erie be successful, a new wind-powered energy grid could be developed along the southern shores of all the Great Lakes. The government’s National Renewable Energy Lab estimates that more than 100,000 megawatts of wind energy could be generated on the Great Lakes. That, in turn, offers the potential for thousands of good jobs in the manufacturing supply chain for turbines, their components, and maintenance. The American Wind Energy Association estimates that wind power has already stimulated 3,000 jobs and $900 million in wind investment in Ohio.By contrast, the United States government shuns national industrial policies, uses renewable energy subsidies intermittently, does not coordinate national energy policy with local and regional economic development efforts, and is reluctant to press China hard even when the Chinese violate basic trade norms. As a consequence, regional development policies such as the Lake Erie wind turbine effort are left to local and state governments and their industry partners, who often get steamrolled by the Chinese. Thus, the fantasy of combining a green energy transition with creation of new domestic industries and jobs has not been fully realized. Wages in former industrial powerhouse states like Ohio continue to languish, leaving their workforce as Trump-bait. This is a pity, economically as well as politically, because the potential is immense. But a closer look suggests how offshore wind epitomizes the unrealized promise of economic redevelopment policies for America’s heartland based on renewable energy. For starters, China has a serious industrial and targeted trade policy for capturing global markets and supply chains in wind (and solar), and the United States doesn’t. China subsidizes production of turbines, plays hardball with parts suppliers, and does whatever it takes to capture market share. European government policy is more consistent than ours in creating a market both for wind energy and for wind-turbine producers.
China’s ageing solar panels are going to be a big environmental problem | South China Morning Post: China will have the world’s worst problem with ageing solar panels in less than two decades, according to a recent industry estimate. Lu Fang, secretary general of the photovoltaics decision in the China Renewable Energy Society, wrote in an article circulating on mainland social media this month that the country’s cumulative capacity of retired panels would reach up to 70 gigawatts (GW) by 2034. That is three times the scale of the Three Gorges Dam, the world’s largest hydropower project, by power production. By 2050 these waste panels would add up to 20 million tonnes, or 2,000 times the weight of the Eiffel Tower, according to Lu. “In fair weather, prepare for foul,” she warned. Lu could not be immediately reached for comment. A staff member from the society, which was formerly known as the Chinese Solar Energy Society, confirmed that the figures were in a report presented by Lu at an industrial conference in Xian, Shaanxi in May. China currently hosts the world’s largest number of solar power plants with a total capacity of close to 80GW last year, according to the International Energy Agency. The installation in China is nearly twice the amount of the US. Nearly half of the nation’s total capacity was added last year. Industrial experts have also predicted that new solar farms completed this year will exceed 2016’s record, according to Bloomberg. This neck-breaking pace was driven by government’s drive to diversify the country’s energy supply structure, which at present relies heavily on fossil fuels such as coal and imported oil. But the solar plants are relatively short-lived, and the government does not have any retirement plan for them yet.
Tidal Energy — All Renewables Are Not Created Equal - Most everyone has heard of hydroelectric energy or hydropower, that uses a dam to store water in a reservoir. Water released from the reservoir flows through turbines, spinning them to generate electricity. But there are other types of hydropower that harness marine currents, tidal energy and wave energy, also referred to as marine current energy. Tidal stream turbines work much like submerged windmills, but are driven by flowing water rather than by air (see figure). According to Professor Jason Donev at the University of Calgary, tidal power is far more reliable than either wind or solar power as the sun doesn’t always shine and the wind doesn’t always blow. “We know how much electricity we’re going to generate at any given time, but tidal is still intermittent. Although it is very predictable, it’s still non-dispatchable – we can’t choose to turn it on or off like a dispatchable natural gas power plant,” says Donev. However, the inherent predictability of tidal power is highly attractive for grid management, removing much of the need for back-up plants powered by fossil fuels. The United Kingdom leads the world in marine current energy and has more companies involved in this area than any other. The ocean surrounding the U.K. has vast quantities of predictable, reliable and consistent marine current energy.
Electricity shake-up could save consumers ‘up to £40bn’ – BBC - Consumers in the UK could save billions of pounds thanks to major changes in the way electricity is made, used and stored, the government has said. New rules will make it easier for people to generate their own power with solar panels, store it in batteries and sell it to the National Grid. If they work, consumers will save £17bn to £40bn by 2050, according to the government and energy regulator Ofgem. The rules are due to come into effect over the next year. They will reduce costs for someone who allows their washing machine to be turned on by the internet to maximise use of cheap solar power on a sunny afternoon. And they will even support people who agree to have their freezers switched off for a few minutes to smooth demand at peak times. They’ll also benefit a business that allows its air-conditioning to be turned down briefly to help balance a spell of peak energy demand on the National Grid. Among the first to gain from the rule changes will be people with solar panels and battery storage. At the moment they are charged tariffs when they import electricity into their home or export it back to the grid. The government has realised that this rule must change because it deters people from using power more flexibly in a way that will benefit everyone. The tiny energy savings of millions of people and firms will be pulled together into packages by traders, who will offer substantial chunks of energy saving to the National Grid at the click of a computer.
Climate change poses threat to European electricity production - The vulnerability of the European electricity sector to changes in water resources is set to worsen by 2030 as a consequence of climate change. This conclusion is reached by researchers at Leiden University in an article published in Nature Energy this month. Thermoelectric power stations — including coal, gas, and nuclear plants — use significant amounts of fresh water for cooling purposes. A large gas power station can use an Olympic-sized swimming pool of water per minute. If water is not available, or if it is too warm, power stations have to reduce electricity production, or cease production completely. Led by Dr. Paul Behrens, a team of Leiden University researchers analysed over 1,300 power stations, drawing water from 818 different water catchments. Their research showed that the number of regions with a vulnerable electricity network due to water availability will increase significantly by 2030. If we want to reduce the use of cooling water throughout the EU, says Dr. Behrens, we will need to close old, inefficient power stations, and replace them with renewable sources, such as wind and solar energy. ‘This will help reduce the reliance of the electricity supply on water, and will also help us achieve our climate goals.’
Inside the Effort to Fight Climate Change Beyond the Power Sector - The transportation, manufacturing and agriculture industries have received a fraction of the attention of the power sector in the fight against climate change, but together they account for more than twice the harmful pollutants that are emitted during the production of electricity in the United States. And as sources of clean energy such as wind and solar comprise more of the nation's power, many experts believe it's time to focus attention on those other sectors. Targeting industries such as aviation, trucking and steel production will be critical to stopping global temperatures from rising to unsafe levels, according to a recent report from the Energy Transitions Commission (ETC), an international non-profit comprised of activists and business leaders devoted to reducing carbon emissions. "If we decarbonize the whole of power and electrify as much as possible that will generate about half of all the carbon emissions we’ll need," says ETC Chair Lord Adair Turner. "But we’ll still be left with sectors of the economy where we cannot electrify." To date, most efforts to address carbon emissions in these industries have come from individual companies. Shipping and trucking companies have invested in ways to reduce their fuel consumption, such as forming platoons by grouping trucks closely together, largely because it can lower their costs. Airlines have sought to replace old gas-guzzling airplanes with more efficient ones for the same reason and experimented with biofuels. In the industrial sector, many companies have tested technologies that capture and store carbon dioxide—though few of the projects have gained traction. The few efforts that have cut across entire industries are particularly tentative, according to experts. An international agreement to slow aviation emissions, for example, set a cap on emissions that takes effect five years after the negotiations and remains limited to international flights. Exempting all domestic markets is a major omission. In the U.S., for example, where hopping between cities requires hundreds or thousands of miles of travel, domestic travel is expected to grow by nearly 30% in the next two decades, according to FAA data.
Who, what, when, where and how? US biofuels industry grapples with RINs after waiver decision - Platts Commodities Spotlight podcast - A US appeals court rejected the Environmental Protection Agency's use of waiver authority to lower the federal biofuel mandate's blending volumes based on downstream constraints, but the decision leaves a lot of questions about how to find RINs to make up compliance shortfalls. Josh Pedrick and Wes Swift, who both cover Americas biofuels, walk through the questions that the market will have to grapple with, like which parties have to comply with what, where RINs come from, how obligations are calculated. "We can't all hop in our DeLorean, go back there and redo the numbers," Pedrick says, so what does the market do?
UK diesel and petrol car ban: Plan for 2040 unravels as 10 new power stations needed to cope with electric revolution - Plans to ban the sale of new diesel and petrol cars by 2040 in a bid to encourage people to buy electric vehicles are a “tall order” and will place unprecedented strain on the National Grid, motoring experts have warned. Michael Gove, the Environment Secretary, has warned that Britain “can’t carry on” with petrol and diesel cars because of the damage that they are doing to people’s health and the planet. “There is no alternative to embracing new technology,” he said. However the AA warned that the National Grid would be under pressure to “cope with a mass switch-on after the evening rush hour”, while Which Car? magazine warned that electric cars are currently more expensive and less practical. According to a National Grid report, peak demand for electricity could add around 30 gigawatts to the current peak of 61GW – an increase of 50 per cent.The extra electricity needed will be the equivalent of almost 10 times the total power output of the new Hinckley Point C nuclear power station being built in Somerset. National Grid predicts Britain will become increasingly reliant on imported electricity, which will rise from around 10 per cent of total electricity to around one third, raising questions about energy security. Just 4 per cent of new car sales are for electric vehicles, and concerns have also been raised about whether Britain will have enough charging points for the new generation of cars.
Everyone Is Revising Their Electric Vehicle Forecasts Upward—Except Automakers - Oil producers and research organizations around the world are revising their electric-vehicle forecasts upward as improving battery costs challenge previous assumptions about growth. A new study from Bloomberg New Energy Finance shows just how dramatically estimates are changing. The most radical swing comes from OPEC, which boosted its forecast of electric-vehicle sales by 500 percent compared to last year. The International Energy Agency has more than doubled its estimate about global electric-vehicle sales. Meanwhile, Exxon, BP and Statoil are all now expecting at least 100 million electric vehicles to hit the roads worldwide between 2030 and 2035. BNEF’s outlook is even more bullish. It projects that 530 million cumulative electric cars will be sold by 2040 — representing about one-third of the market for automobiles. (But) there’s one group of companies that is far less optimistic about electric cars: automakers. According to BNEF, the world’s biggest auto manufacturers are only planning to sell a combined 8 million electric cars per year by 2030.
Why electric cars are always green (and how they could get greener) The first $35,000 Tesla Model 3s are rolling off the line this month in the US. But Tesla’s not alone in racing to meet our fossil-free future. Other car makers are also working hard to expand their all-electric offerings.But wait—doesn’t an electric car actually emit more greenhouse gases than its conventional counterpart? After all, you still have to mine all the ingredients for its thousand-pound battery and then generate the electricity you’ll use to charge it up.It’s a question I’ve been asked time and again over the past few months, whenever I tell people that I write about battery packs and electric cars.It’s an understandable question. The main reason I think electric cars are worth writing about is that, once charged, they don’t emit a single gram of anything while you drive them. But that still leaves the following questions in need of answers:
- How much greenhouse gas is released in mining the car’s raw materials, often on the other side of the world, as a result of the (possibly fossil-sourced) energy used in the mining process?
- How much is released in refining those materials and in manufacturing and disposing of the car and its battery?
- And how much is released in generating the electricity the car uses?
What follows is an attempt to quantify those answers as accurately as possible. To get the best results, I focused on one place and time: my own country of the Netherlands for the year 2017. But my findings are relevant wherever you may live and drive.
The Two Capitalisms: Electric Batteries as a Case Study in US Magical Thinking vs. Chinese Vertical Integration - Capitalism with Chinese Characteristics, (CWCC) as the Chinese press officially refers to the use of capitalism by the Chinese Communist Party (CCP) to advance socialism in China, is winning the battle with the neoliberal, “free and efficient,” market that supposedly has led the USA, first and foremost, to “the end of history.” CWCC has transferred enough wealth from the west to the east to ignite self-sustaining growth in China’s GDP.Our world dominated by two capitalisms; the “free market” variety practiced in one form or another by almost all of the industrialized countries except Russia and a few others with a strong authoritarian bent; and “Capitalism with Chinese Characteristics (their official description) practiced of course by the Peoples’ Republic of China.Let’s look at how the two capitalisms have fared in creating a secure supply of the raw materials for manufacturing energy storage and production devices for the storage of and production of alternate (to fossil fuel produced) energy. Access to supplies is critical to prevent shortages and to help assure market position.Notwithstanding the illogical blather about globalization, its purpose outside of China in the last generation has been to enrich a small segment of western society without regard to the welfare of the general populations in those countries. Natural resource imperialism has been the driver of globalization for centuries. But the countries that were once victims of resource imperialism are in the process of turning the tables via total vertical integration of the production, use, and marketing of consumer goods critically enabled by those natural resources.Specifically, the overarching p urpose of Chinese business is to achieve Chinese independence of global markets for the basic needs of a widespread technological society second to none.
Lithium: Reserves, Use, Future Demand and Price -- A couple of weeks ago, French Environment Minister Nicolas Hulot announced that petrol and diesel car production would cease in France by 2040. Last week UK Environment Minister Michael Gove followed suit on behalf of the UK. Currently electric cars are dependent on Lithium Ion batteries for their on-board store of energy and this obviously raises questions about supplies of Lithium (Li), and as luck would have it a comprehensive report on this topic fell into my mail box last week. The report Raw material needs by the Li-ion battery industry by Dr P. Kauranen [1] is available online and in this post I want to provide a simple and partial summary of that report whilst adding information from other sources.
- In 2015 global Li production stood at 32,500 tonnes / annum and reserves were estimated to be 14 million tonnes giving a nominal reserves / production ratio (ROP) of ~431 years at current production and consumption rates.
- Global consumption of Li is projected to grow 4 fold by 2025 cutting the ROP to 108 years and consumption is expected to continue to grow beyond that. However, as demand and price rises so will the activity of mining companies and it is to be expected that reserves figures will rise too, perhaps broadly in line with demand.
- Li-ion batteries currently account for ~35% of global lithium demand and in 2015/16 electric vehicles accounted for 64% of Li-ion battery demand, the remainder being portable electronic devices – cell phones and computers. Hence EV’s currently account for 22% of global Li consumption.
- In 2015, China had 32.5% of the Li-ion battery manufacturing market, the USA had 7.3% and the EU 3.5%. By 2018 this will have changed to China 42%, USA 32% and the EU 1.4%.
- The massive jump in the USA performance is down to Tesla’s Gigafactory, which is designed to build 35 GWh of Li-ion batteries per year (see inset image up top) and scheduled to commence production in 2017. The Li-ion battery ambition of the EU is totally at odds with member states’ declared ambitions to go 100% EV by 2040.
- The main uses of Li-ion batteries in ~2016 are as follows:
- Cellphone 19.0%
- Tablet computer 7.3%
- Laptop computer 10.2%
- Battery electric vehicle 28.8%
- Plugin hybrid EV 5.3%
- eBuses China 29.3%
- Note the staggering figure for eBuses in China where it is reported that 94,000 vehicles were produced in 2015! Furthermore, stationary storage like the Tesla Powerwall has not yet got off the ground.
- Li prices have more than doubled since the end of 2015 but have been subdued this year. With global demand perhaps set to quadruple by 2025 we can expect a roller coaster ride as new supply and new demand play off each other.
Cobalt mining for lithium ion batteries has a high human cost - This remote landscape in southern Africa lies at the heart of the world’s mad scramble for cheap cobalt, a mineral essential to the rechargeable lithium-ion batteries that power smartphones, laptops and electric vehicles made by companies such as Apple, Samsung and major automakers. But Mayamba, 35, knew nothing about his role in this sprawling global supply chain. He grabbed his metal shovel and broken-headed hammer from a corner of the room he shares with his wife and child. He pulled on a dust-stained jacket. And he planned to mine by hand all day and through the night. He would nap in the underground tunnels. No industrial tools. Not even a hard hat. The risk of a cave-in is constant. “Do you have enough money to buy flour today?” he asked his wife. She did. But now a debt collector stood at the door. The family owed money for salt. Flour would have to wait. The world’s soaring demand for cobalt is at times met by workers, including children, who labor in harsh and dangerous conditions. An estimated 100,000 cobalt miners in Congo use hand tools to dig hundreds of feet underground with little oversight and few safety measures, according to workers, government officials and evidence found by The Washington Post during visits to remote mines. Deaths and injuries are common. And the mining activity exposes local communities to levels of toxic metals that appear to be linked to ailments that include breathing problems and birth defects, health officials say.The Post traced this cobalt pipeline and, for the first time, showed how cobalt mined in these harsh conditions ends up in popular consumer products. It moves from small-scale Congolese mines to a single Chinese company — Congo DongFang International Mining, part of one of the world’s biggest cobalt producers, Zhejiang Huayou Cobalt — that for years has supplied some of the world’s largest battery makers. They, in turn, have produced the batteries found inside products such as Apple’s iPhones — a finding that calls into question corporate assertions that they are capable of monitoring their supply chains for human rights abuses or child labor.
Electric vehicle realities - Izabella Kaminska - Electric vehicles (EVs) are all the rage. But they’re also fast becoming the sacred cows you can’t criticise for fear of being shredded by the EV, renewable, and tech lobbies. Questioning the cost structures of the industry in general is not allowed in public forums. My colleague Jonathan Ford discovered this recently when he dared to question the economic realities underpinning the renewable sector. In the spirit of non-consensus thinking, it’s time for FT Alphaville to ask just how green electric cars really are. Are policies to ban diesel and gasoline cars at some arbitrary point in the future likely to unleash a barrage of negative externalities that no one’s yet even thought about? Brian Piccioni and team at BCA Research offer a good starting point to our questions on Thursday, in a report entitled Electric Vehicles Part 1: Costs of Ownership. The bad news for EV fans is their work determines that the cost of ownership of an EV still far exceeds that of an internal Combustion Engine Vehicle (ICEV), even after subsidies are accounted for. Three points come up in particular.
- 1) Excluding subsidies, the net expense difference is about $16,000 in the US, $18,500 in Germany and $13,200 in France.
- 2) After subsidies, the difference is about $6,600 in New York State, $13,900 in Germany and $6,000 in France.
- 3) Even if electricity were free (which of course it isn’t), after subsidies, the difference in cost of ownership in NY would be $3,400, $3,200 in Germany and $600 in France.
German EU official against date to drop combustion engine (AP) — The German member of the European Union's executive body says it would be wrong to set a Europe-wide date to end the sale of cars with diesel and gasoline engines. Britain last week announced plans to ban the sale of new vehicles using such engines starting in 2040, following similar moves in France and Norway. But automaking powerhouse Germany is reluctant to follow suit. EU Budget Commissioner Guenther Oettinger told Monday's edition of the daily Rheinische Post that "a uniform EU date to give up the combustion engine would be significantly premature and wrong at this point." Oettinger argued that countries such as Poland still generate most electricity from coal. He said "if they switched to electromobility too soon, that wouldn't help the climate either because of rising CO2 emissions."
Renewables to replace gas as South Australia’s main electricity source within a decade -- Renewables and battery storage will replace gas as South Australia’s main source of electricity within eight years, according to industry analysts. The state’s energy transition could be a “leading case study on managing a power system in transition for other mature markets to follow”, says a report by Wood Mackenzie. The news comes as the South Australian government presses ahead with plans to build its own new gas generator and AGL pursues plans to build a new gas power station to replace part of its ageing Torrens Island gas generator. “Currently, South Australia’s peak loads are managed by open-cycle gas turbine (OCGT) plants,” said Wood Mackenzie’s Asia-Pacific power and renewables principal analyst, Bikal Pokharel. “But, by 2025, battery storage would be cheaper than OCGTs in managing peak loads … OCGTs would then be relegated as emergency back-ups.” According to the analysis by Wood Mackenzie and Greentech Media Research, battery costs will fall by 50% by 2025.
Big four banks slash lending to Australian coal miners -- Australia’s big banks have slammed the brakes on project finance lending to expand the coal industry since late 2015, but are still lending billions for other fossil fuel developments, environmental finance group Market Forces says. ANZ and Commonwealth Bank, previously named as the largest lenders to fossil fuels, both signalled they were actively reducing loans to some carbon-intensive sectors including the coal industry, with CBA linking this to the Paris climate change agreement in 2015. Westpac and National Australia Bank have also toughened their stance on lending to coal mining recently, as all four banks are targeted by environmental groups. Even so, critics of all four banks maintain much more action is needed in order to meet the climate change targets that banks say they support.
Coal to dominate in India through 2047 -- Coal-fired plants will continue to supply a significant share of India’s baseload power through 2047, a new report predicts. In a recent study titled Energizing India, the National Institution for Transforming India (NITI Aayog) and Japan’s Institute of Energy Economics said coal’s share in India’s energy mix would stay between 42 and 50 per cent for the next 30 years, providing baseload power along with nuclear. The nation’s ambitious renewable energy goals “have been taken into consideration” in the report, the authors noted. India is predicted to have 333 coal-fired power plants installed in 2047, up from 125 in 2012, under the business-as-usual scenario. Under an ambitious scenario, that number could rise to 459. However, in order to meet its climate goals under the Paris Agreement, half of India’s coal power capacity will need to use supercritical technology by 2047 according to the report. In 2015, supercritical plants accounted for 11.5 per cent of all coal-fired capacity.
Montana coal production up 1.5M tons - Coal mining in Montana is on a 1.5-million-ton upswing through the first half of the year as exports improve. The Montana Coal Council reports that after a rocky start, coal production began improving, with April, May and June outpacing the same the months in 2016 by 1.5 million tons. The total production through June was 14.95 million tons. Most of the growth came from mines shipping coal to Asian Pacific buyers. Lighthouse Resources’ Decker Mine and Cloud Peak Energy’s Spring Creek mines, both located in Southeast Montana, saw the biggest gains. Cloud Peak CEO Colin Marshall explained the gains Thursday in a second-quarter meeting with stakeholders. “Second-quarter shipments improved by 21 percent compared with the second quarter of 2016, as we exported 1.3 million tons and domestic customers took their contracted coal ratably,” Marshall said. Coal exports nationally have jumped 60 percent compared to the first six months of last year, according to a Reuters analysis of Energy Information Administration data. Export sales to European nations switching from nuclear power to coal was credited for much of the growth. Exports from Powder River Basin mines focused on Asian markets were not as strong as the national trend.
BLM weighing request to mine 4.1 million more tons of coal in northwest Colorado under Trump’s energy policies - The Bureau of Land Management is weighing whether to allow Peabody Energy to lease new federal land to mine up to 4.1 million more tons of coal in northwest Colorado. The agency says it is making the decision under the Trump administration’s energy policies, which include rescinding Obama-era rules that placed a moratorium on coal leases. Peabody has applied to lease 640 more acres of federal coal west of Steamboat Springs has part of its Foidel Creek Mine operations. The coal producer, coming out a bankruptcy filing that disrupted Routt County’s tax base, estimates it could recover 4.1 million tons of coal from the lease area, generating about $13 million in royalties, half of which would go to Colorado, according to the BLM. The lease would help the mine to continue at its current employment level of 365 people, the BLM says. “This would be a new federal lease within the area they are permitted to mine by the state,” said David Boyd, a BLM spokesman. “They have other federal leases in the area, but not immediately adjacent to the proposed area.
US coal floods Europe despite continent's fear about climate change - Coal exports to Europe and Asia are surging despite criticism from countries such as France and China over President Trump's decision to exit the Paris climate change agreement, according to new federal data. Coal exports for making steel and generating electricity rose 58 percent in the first three months of the year compared to the first quarter of 2016, the Energy Information Administration reported this month. The Energy Department's independent analysis arm said it is not sure how long the trend will last. The trend is continuing into the second quarter, with exports up 60 percent from a year ago, Reuters reported Friday. However, the levels are still much lower than the peak exporting days of five years ago. The first-quarter export numbers show coal supplies to Europe and Asia for electricity production rose by 6 million short tons while metallurgical coal rose by 2 million short tons. Nevertheless, the agency's most recent projections show the trend will eventually subside. One of the interesting points in the rise of U.S. coal exports comes from who is buying it — Europe. Many of the countries on the continent have criticized Trump's decision to withdraw from the United Nation climate deal that the Obama administration signed onto. Trump called the climate agreement a bad deal for the U.S. because it allowed some of the largest emitters of greenhouse gases, principally China and India, to continue their use of the fossil fuel over the next decade, while the U.S. would be required to begin phasing down its emissions from fossil fuels sooner..
Union, federal officials at odds on countering surge in coal mine deaths: — Deaths in U.S. coal mines this year have surged ahead of last year’s, and federal safety officials say workers who are new to a mine have been especially vulnerable to fatal accidents. But the nation’s coal miner’s union says the mine safety agency isn’t taking the right approach to fixing the problem. Ten coal miners have died on the job so far this year, compared to a record low of eight deaths last year. The U.S. Mine Safety and Health Administration is responding to the uptick in deaths with a summer initiative, sending officials to observe and train miners new to a particular mine on safer working habits. The push comes during a transition for the agency, amid signals from President Donald Trump that he intends to ease the industry’s regulatory burden. The miner’s union, the United Mine Workers of America, says the agency initiative falls short. It notes federal inspectors who conduct such training visits are barred from punishing the mine if they spot any safety violations. “To take away the inspector’s right to issue a violation takes away the one and only enforcement power the inspector and the agency has,” union president Cecil Roberts wrote in a recent letter to the federal agency. Patricia Silvey, a deputy assistant secretary at the Mine Safety and Health Administration, or MSHA, said eight of the coal miners who died this year had less than a year’s experience at the mine where they worked.
Energy poverty is a real problem. Coal is a bogus solution. - David Roberts -- Some 1.2 billion people around the world lack access to electricity. 2.8 billion burn charcoal, wood, or other biomass to cook and heat their homes. Lack of access to clean, reliable energy services, or "energy poverty," is a terrible problem for those who face it, leading to hours of drudgery gathering fuels and high mortality from indoor pollution (which kills around 4 million people a year).Energy poverty stands in the way of better health, better education, and better jobs. Development experts increasingly agree that there is no way to end extreme poverty without making energy access universal. That’s what the UN and the World Bank have set out to do by 2030 with the Sustainable Energy for All initiative.Meanwhile, the coal industry finds its fortunes on the decline in the developed world, losing out to natural gas and renewables. All its hopes for survival, much less growth, rest with the developing world.So it has glommed on to the surge of interest in energy poverty and is now selling itself as a solution.For instance, here’s Peabody Energy, calling "advanced coal" a solution to energy poverty:Here’s the World Coal Association doing the same. Here’s Arch Coal providing energy-poverty talking points to Jeb Bush when he attacked the pope over climate change. Here’s Murray Energy CEO Robert Murray delivering the same talking points on Fox News. Here’s the Daily Caller pushing them, direct from right-wing think tank the Energy & Environment Legal Institute. Here’s Fred Smith of the Competitive Enterprise Institute. And so on. Are they right? A recent paper from 12 international poverty and development organizations (led by the Overseas Development Institute) argues the negative. In fact, the opposite is true: Not only will more coal plants do nothing for energy access, they will impose unnecessary suffering on the poor.
S.C. utilities halt work on new nuclear reactors, dimming the prospects for a nuclear energy revival -- The long quest to revive the nation’s nuclear power industry suffered a crippling setback Monday when two South Carolina utilities halted construction on a pair of reactors that once were expected to showcase a modern design for a new age of nuclear power. The project has been plagued by billions of dollars in cost overruns, stagnant demand for electricity, competition from cheap natural gas plants and renewables, and the bankruptcy of Westinghouse Electric, the lead contractor and the designer of the AP1000 reactor that was supposed to be the foundation of a smarter, cheaper generation of nuclear power plants. Instead, the partly finished South Carolina reactors, along with two others under construction in Georgia, have demonstrated that the main obstacle to new nuclear power projects is an economic one. The plants would be more viable if the federal government imposed a tax on carbon as part of climate change policy, but that seems unlikely.“Today’s announcement is another powerful signal of just how bleak the outlook for nuclear in the United States is, a result of a hollowed-out nuclear industry, cheap gas, falling renewable costs and inadequate policies to account for the climate change costs of carbon emissions,” said Jason Bordoff, director of the Columbia University Center on Global Energy Policy. “Stronger climate policy as well as government support will be needed if we are to realize the much-heralded ‘nuclear renaissance,’ ” he added. Five U.S. nuclear plants have shut down recently, a result of age and of competition from renewable and natural gas plants.
South Carolina Utility Scraps $14 Billion Nuclear Project - South Carolina Electric & Gas Company (SCE&G) announced Monday that it will cease construction of the two new nuclear units at the V.C. Summer Nuclear Station. The decision to abandon the V.C. Summer project is of monumental proportion and is a full admission that pursuit of the project was a fool's mission right from the start. The damage that this bungled project has caused to ratepayers and the state's economy must be promptly addressed by SCE&G, Santee Cooper and regulators and all effort must be made to minimize that damage. SCE&G and Santee Cooper must now take on a large part of the project's cost. To reduce the on-going blow to SCE&G ratepayers already paying 18 percent of the bill just to pay for project financing, it's time for money to be refunded as it was collected from them under the false pretense that advance payment for the nuclear project was sound. In proceedings before the South Carolina Public Service Commission, we pledge to be a steward of the public interest and to determine who must be held accountable for this boondoggle and to fight for monetary reparations to customers. Warnings about potential problems with the project were raised in 2008 and repeatedly since then by Friends of the Earth and the Sierra Club but they were blindly ignored by both SCE&G and Santee Cooper as well as regulators. There was ample warning about the pitfalls that the project would face so it appears that regulators may have simply bowed to the will of SCE&G and rubber stamped decisions at every step of the way without proper review. Regulators have so far not attempted to make a case that they provided proper oversight and the pressure is now on them to explain their actions that have led to this debacle. Agencies charged with looking out for the public interest—the South Carolina Public Service Commission and the Office of Regulatory Staff—failed the citizens of the state by not performing due diligence of the unsubstantiated claims made by SCE&G about the project's cost, schedule and ease of construction. It was evident from the start that cost overrun, schedule delays and problems with an untested construction method were fraught with problems. Though the handwriting has been on the wall for years cost overruns and construction challenges never received proper review until the project was on the brink of failure.
Even at $25 Billion, Southern Sees Value in Finishing Nukes - Southern Co. still sees benefits in finishing two long-delayed, over-budget nuclear reactors in Georgia, even as new cost estimates show the overall price tag of the project has swelled to at least $25 billion. Southern Chief Executive Officer Tom Fanning stressed that, while the U.S. utility owner is still deciding the fate of the Vogtle nuclear project, dropping it altogether would leave the company with “nothing to show” for its investment. Southern, which owns a 46 percent stake in the reactors, would have to shoulder at least $11.5 billion in costs alone, including financing expenses, to finish the plant by February 2022, company estimates released Wednesday show. That excludes $1.7 billion that Southern’s slated to get after the project’s contractor, Westinghouse Electric, went bankrupt. “When you abandon, you have nothing to show for the amount of money you spent,” Fanning said in a call with investors Wednesday. “If we go forward, we have a nuclear plant that will serve us for decades to come.” The Vogtle project has come to represent the last hope in bringing about a long-hyped U.S. nuclear renaissance that has so far failed to materialize. The reactors became the only ones under construction in the country this week when Scana Corp. dropped a project in South Carolina -- a testament to how cheap natural gas and renewables are undermining the economics of nuclear. Southern said it would cost it about $6.3 billion to cancel the endeavor. Meanwhile, finishing the job, even at a higher price, would have a smaller impact on customer’s utility bills than previously expected because interest costs are lower, Fanning said. “They’ve got the conundrum of having spent billions of dollars,” . “That’s why abandonment in the middle of a project usually looks unattractive.”
Russia unrivaled in nuclear power plant exports -- Russia looks set to dominate the business of exporting nuclear power plants worldwide, as its share of the market has now reached 60 percent after concluding contracts with countries like India, Turkey, Egypt and Hungary for the construction of new plants and technical cooperation. This is attributed at least in part to disasters that struck two major competitors: Westinghouse Electric Co. of the United States, once a subsidiary of Toshiba, has gone bankrupt, while Areva SA of France is fighting an uphill battle to recover from stagnancy. Russia currently has contracts to build 34 reactors in 13 countries, with an estimated total value of $300 billion. When nuclear fuel supplies and technical cooperation are included, Russia’s state-run Rosatom State Atomic Energy Corporation is doing business in as many as 20 countries. A European diplomatic source stationed in Tokyo laments that Areva has not won a single contract for overseas construction of a nuclear power plant since 2007. Russia is now so far ahead that Areva simply cannot catch up, he adds.
Google enters race for nuclear fusion technology -- Google and a leading nuclear fusion company have developed a new computer algorithm which has significantly speeded up experiments on plasmas, the ultra-hot balls of gas at the heart of the energy technology. Tri Alpha Energy, which is backed by Microsoft co-founder Paul Allen, has raised over $500m (£383m) in investment. It has worked with Google Research to create what they call the Optometrist algorithm. This enables high-powered computation to be combined with human judgement to find new and better solutions to complex problems. Working with Google enabled experiment’s on Tri Alpha Energy’s C2-U machine to progress much faster, with operations that took a month speeded up to just a few hours. The algorithm revealed unexpected ways of operating the plasma, with the research published on Tuesday in the journal Scientific Reports. The team achieved a 50% reduction in energy losses from the system and a resulting increase in total plasma energy, which must reach a critical threshold for fusion to occur. “Results like this might take years to solve without the power of advanced computation,” said Michl Binderbauer, president and chief technology officer at Tri Alpha Energy. He said the company was aiming to produce electricity within a decade.
How to Clean Up Hundreds of Tons of Melted Nuclear Fuel -- More than six years after three nuclear reactors melted down in Japan, the country is homing in on the lost fuel inside one of them. Japan’s biggest utility and owner of the wrecked Fukushima Dai-Ichi plant, Tokyo Electric Power Co. Holdings Inc., last week released images that for the first time showed what’s likely melted fuel inside the No. 3 reactor. If confirmed, the nation will have to devise a way to remove the highly radioactive material, a mixture of melted nuclear fuel and reactor debris known as corium. The cleanup process that may last 40 years and cost 8 trillion yen ($72 billion) will require technology not yet invented. Here are a few ways the removal could be done, including the government’s preferred approach by taking it out the side: “Special tools and techniques will have to be developed to undertake such a task that has never been attempted before anywhere in the world,” said Dale Klein, an adviser to Tepco, as the utility is known, and a former chairman of the U.S. Nuclear Regulatory Commission. “Once Tepco has identified the characteristics of this material, then they can develop a plan to remove this material in a safe manner.” The search for the fuel has left a trail of dead experimental robots specifically designed to find and photograph the estimated combined 600 metric tons of fuel and debris in the three melted reactors. While the No. 3 reactor was the last unit to be probed, its the first to produce a strong indication of where the fuel came to rest. The removal process is slated to begin in 2021. Long-handled devices guided by a television monitor system were developed to remove fuel core debris at Three Mile Island in the U.S. after its 1979 meltdown. The so-called defueling process took from 1985 to 1990 and involved removing the partially melted fuel core from inside the pressure vessel of the No. 2 reactor, which remained intact. Fukushima offers a more complex challenge since three reactors suffered total meltdowns, with melted fuel rupturing pressure vessels and falling to the bottom of the units. No such effort is being made at Chernobyl, where a concrete sarcophagus was used to entomb the wrecked plant that melted down in 1986.
The disaster that could follow from a flash in the sky - A transformer-wrecking electromagnetic pulse (EMP) would be produced by a nuclear bomb, designed to maximise its yield of gamma rays, if detonated high up, be it tethered to a big cluster of weather balloons or carried on a satellite or missile. A midrange missile tested by North Korea on April 29th 2017 exploded 71 kilometres (44 miles) up, well above the 40km or so needed to generate an EMP. Imagine a nuclear blast occurring somewhere above eastern Nebraska. Radiating outwards, the EMP fries electronics in southern Canada and almost all of the United States save Alaska and Hawaii, both safe below the horizon. It permanently damages the grid’s multimillion-dollar high-voltage transformers. Many are old (their average age is about 40). Some burst into flame, further damaging substations. America runs on roughly 2,500 large transformers, most with unique designs. But only 500 or so can be built per year around the world. It typically takes a year or more to receive an ordered transformer, and that is when cranes work and lorries and locomotives can be fuelled up. Some transformers exceed 400 tonnes. After the surge, telecom switches and internet routers are dead. Air-traffic control is down. Within a day, some shoppers in supermarkets turn to looting (many, unable to use credit and debit cards, cannot pay even if they wanted to). After two days, market shelves are bare. On the third day, backup diesel generators begin to sputter out. Though fuel cannot be pumped, siphoning from vehicles, authorised by martial law, keeps most prisons, police stations and hospitals running for another week.
Anti-fracking group protests rejection of county charter - A group proposing a charter for Athens County has filed a protest with the Ohio Secretary of State against the local elections board’s rejection of the charter for the ballot, a move that a local judge upheld. On Wednesday morning, members of the Athens County Bill of Rights Committee officially filed their protest with the Athens County Board of Elections, addressed to Secretary of State Jon Husted."With the charter petition, the committee of petitioners followed the (state) constitution in exercising their right to propose to change the form of county government, but the Board of Elections and (Athens County Common Pleas) Judge (George) McCarthy have prevented that, we think illegally,” the group said in a statement.The group also filed an appeal of McCarthy’s decision with the Fourth District Court of Appeals on July 28.Last week, McCarthy reversed part of his decision regarding a proposed county charter initiative, ruling that the proposal did in fact have enough valid signatures. However, he upheld the rest of his decision rejecting the charter as invalid.In his decision, McCarthy sided with the county elections board in ruling that a proposed executive council (comprised of county elected officials who aren’t county commissioners) does not meet Ohio Revised Code requirements for a county executive under an alternative form of government.The county Board of Elections rejected the proposed county charter for the third year in a row on July 10, not due to a lack of valid signatures but because board members said it didn’t include a county executive position required under Ohio Revised Code statute for alternative forms of government.
$5.2 million fracking bid sets its sights on Wayne National Forest - New drilling wells may dot the landscape of Monroe County following a $5.2 million bid in March for the rights to explore and drill for oil and gas on 1,180 acres of land in the Wayne National Forest. The Wayne National Forest, which covers over a quarter million acres of Appalachia, has seen such bids before; the U.S. Bureau of Land Management previously leased more than 1,600 acres of the forest to private oil and gas companies in December 2016. Although the recent bids have been for access to subterranean mineral rights on federally-owned land, almost 60 percent of the subterranean mineral rights below the forest are privately owned. Nearly 65 percent of active wells are found on these areas. Wayne National Forest Supervisor Tony Scardina stressed the guidelines companies must follow when pursuing oil and natural gas leases.“All requirements are based on the best available science, extensive knowledge and experience of our staff and multiple layers of environmental study,” Scardina said. “At every stage of the oil and gas-leasing process, we apply these requirements, and once drilling is approved, we monitor ongoing operations to ensure requirements are properly implemented.”In 2015, more than 1,200 active vertical wells operated in Wayne National Forest. Currently, 780 of them are private. Proponents such as Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, believe this will be a boon for economic development.“The great thing about this is that property owners who leased their mineral rights finally be able to receive bonus and royalty payments for their lands,” Bennett said in an interview with the Cleveland Plain Dealer. The owners of subterranean mineral rights do not necessarily have to live in the area, however, because mineral rights are often bought and sold separately from surface land.
Protest Challenges Fracking Plan for Ohio's Only National Forest - — Conservation groups have filed an administrative protest challenging the U.S. Bureau of Land Management’s plan for a September auction of three parcels in Ohio’s only national forest for oil and gas leasing. The parcels are adjacent to the Rover Pipeline. The protest, filed Monday, targets the BLM’s failure to adequately analyze the impacts of fracking and pipelines on watersheds, forests and endangered species and its decision to open portions of the Wayne National Forest to fracking. Construction of the Rover Pipeline, which could transport fracked gas from the Wayne, has been halted because of spills and numerous safety and environmental violations.“We’re protesting this dangerous fracking plan because drinking water safety and public lands should come before corporate profits,” said Taylor McKinnon with the Center for Biological Diversity. “The Ohio and Little Muskingum rivers provide precious water to millions of people in Ohio and downstream states. Pollution from fracking and faulty pipelines would be disastrous for the people who depend on this water.” Fracking would industrialize Ohio’s only national forest with roads, well pads and gas lines. The infrastructure would threaten or destroy habitat for threatened and endangered species and damage watersheds and water supplies within and beyond the national forest. In 2014 a well pad caught fire in Monroe County, resulting in the contamination of a creek near the forest; wastewater and fracking chemicals spilled into Opossum Creek — an Ohio River tributary — killing 70,000 fish over a five-mile stretch. “The Wayne National Forest is a place for families to hike, hunt, fish, camp and enjoy nature. Toxic air pollution and pipeline corridors don't square with those values,” said Nathan Johnson, public lands director with the Ohio Environmental Council. “Oil and gas development is a threat to the public's enjoyment of this special place, and the Ohio Environmental Council is committed to ensuring the Wayne National Forest is available for future generations of Ohioans.” "The co-conspiring of federal, state and local agencies to do the bidding of fossil fuel and energy companies while abdicating themselves from following federal and state laws is disgusting,” says Tabitha Tripp, spokesperson for Heartwood. "Incomplete and flawed environmental assessments not only place public health and safety at colossal risks, but leave a legacy of morbid consequences to our children and the environment.”
Protest Challenges Fracking Plan for Wayne National Forest - Conservation groups have filed an administrative protest challenging the U.S. Bureau of Land Management’s plan for a September auction of three parcels in Ohio’s only national forest for oil and gas leasing. The parcels are adjacent to the Rover Pipeline.These groups include Center for Biological Diversity, Ohio Environmental Council, Sierra Club Ohio Chapter, and Heartwood. The protest, filed Monday, targets the BLM’s failure to adequately analyze the impacts of fracking and pipelines on watersheds, forests and endangered species and its decision to open portions of the Wayne National Forest to fracking. Construction of the Rover Pipeline, which could transport fracked gas from the Wayne, has been halted because of spills and numerous safety and environmental violations. Fracking would industrialize Ohio’s only national forest with roads, well pads and gas lines. These groups believe infrastructure would threaten or destroy habitat for threatened and endangered species and damage watersheds and water supplies within and beyond the national forest.
Ongoing Resistance to Wayne National Forest Fracking as September Land Auction Looms - Cleveland Scene - Starting last December, the federal Bureau of Land Management began auctioning land rights within Wayne National Forest, in southeast Ohio. The catch? The bidders could only be oil and natural gas drillers — private companies that will use the forest for non-renewable energy production. It wasn't a one-off thing. Auctions continued into 2017, with the next one slated for Sept. 21. The BLM will sell rights to 141 acres.
We traveled to Athens in January to get a sense of what this means for the region and for the state. For one thing, it meant more earthquakes. A 3.0-magnitude earthquake struck the forest in April, and the government ordered fracking operations halt immediately. (The state is still investigating the quake.) Elsewhere, the drilling process has destroyed wildlife habitat, and the bureaucratic process itself has eroded public trust. With the September auction looming, The Center for Biological Diversity, Heartwood, Ohio Environmental Council, Sierra Club, The Buckeye Environmental Network and Athens County Fracking Action Network have jointly filed a protest against the event. A major part of the protest deals with the supply-and-demand cycle that the state of Ohio is accelerating: with more drilling comes more infrastructure, and with more infrastructure comes more drilling. The groups point to the Rover pipeline, traversing Ohio into Michigan and Canada, as an example of how this acceleration can easily go wrong. Rover, which began construction only in March, has spilled millions of gallons of drilling fluid in northern Ohio wetlands.
Energy Transfer to sell stake in Rover pipeline entity to Blackstone (Reuters) - Energy Transfer Partners L.P. (ETP.N) said on Monday it would sell a 32.44 percent stake in a firm associated with the Rover pipeline project to Blackstone funds for about $1.57 billion. The 700-mile Rover pipeline, the biggest natural gas pipeline under construction in the United States, is designed to transport 3.25 billion cubic feet per day of domestically produced natural gas from the Marcellus and Utica Shale production areas to markets across the United States as well as Canada. Construction of the $4.2-billion Rover pipeline has hit several roadblocks in recent weeks. West Virginia's Department of Environmental Protection told the company last week to stop some work, citing environmental violations. The pipeline already faces sanctions for violations in Ohio and a federal ban on drilling activity that has delayed the anticipated startup of the project's first phase to the late summer from July. The Federal Energy Regulatory Commision on May 10 banned Energy Transfer from starting new horizontal directional drilling under waterways and roads following the release of about 2 million gallons of drilling fluid, a clay and water mix, into Tuscarawas River wetlands in Ohio. Blackstone Energy Partners and Blackstone Capital Partners will buy a 49.9 percent interest in ET Rover Pipeline LLC, or HoldCo, according to the agreement. The HoldCo owns a 65 percent interest in Rover Pipeline LLC. The two companies are constructing the Rover pipeline and will be the operator of the pipeline once in service, Energy Transfer said. Energy Transfer, which also operates the $3.8 billion Dakota Access Pipeline, said it planned to use the proceeds to pay down debt and help fund its current projects.
Billionaire behind the Dakota Access is ‘baffled’ by complaints about his new pipeline - Billionaire pipeline magnate Kelcy Warren, who just months ago defeated environmentalists to finish his controversial Dakota Access oil pipeline, has stepped into the limelight once again -- this time, to defend a natural gas line being built across the eastern U.S. In a letter to U.S. lawmakers Monday, Warren said he was “baffled” by federal energy regulators’ allegations that his company, Energy Transfer Partners LP, violated rules in building the $4.2 billion, 700-mile (1,127-kilometer) Rover gas pipeline and defended how the project has been constructed. That same day, his company reached a deal to sell a 32 percent stake in its Rover unit to Blackstone Group LP for about $1.57 billion in cash. The letter was a rare public statement for Warren, who has largely stayed out of the spotlight even as Energy Transfer’s pipeline projects became mired in controversy. Thousands of protesters had camped out at the site of the Dakota Access crude pipeline before Warren issued a memo in its defense. Regulators suspended work on portions of the Rover pipeline after Energy Transfer disclosed massive spills of drilling fluids and are investigating the company’s demolition of a historic house in Ohio. Warren was responding to a letter that U.S. Senator Maria Cantwell and Representative Frank Pallone, both Democrats, had written to the Federal Regulatory Energy Commission, calling for an investigation into what they described as “troubling incidents” involving the Rover pipeline. An investigation like that would be “both unprecedented and unnecessary,” Warren wrote in his letter to the lawmakers.Proposed Mountaineer XPress gas pipeline clears environmental hurdles --The second-largest natural gas expansion project proposed in the US Northeast reached a key milestone Friday, when the Federal Energy Regulatory Commission released a favorable final environmental impact statement. FERC staff concluded there would be some adverse and significant impacts from Columbia Gas Transmission's 170-mile, 2.7 Bcf/d Mountaineer XPress project running through West Virginia, but that, with various environmental plans, mitigation measures and further staff recommendations, those impacts would be "reduced to acceptable levels." While exact customer subscriptions are not publicly available, the Mountaineer XPress project is expected to substantially boost output capacity for the growing US Northeast region, and the associated 860-MMcf/d Gulf XPress project on Columbia Gulf Transmission is being proposed alongside Mountaineer to expand deliverability into the US Gulf Coast markets. FERC's EIS also covered the Gulf XPress project. Among the significant impacts cited in the EIS were permanent conversion of upland interior forest habitat and affects on large core forest areas, mitigated by collocation of about 22% of the route and additional measures in Columbia's environmental construction standards. Some 490 acres of core forest areas would be affected, and FERC asked the pipeline company to confer with West Virginia regulators to find further ways to reduce forest impacts. Staff also included 34 project specific mitigation measures. The Mountaineer XPress project is roughly 500 MMcf/d shy of Rover Pipeline's 3.25 Bcf/d capacity. While targeting somewhat different geography, Mountaineer is nonetheless in the same vein of producer-backed, supply-driven pipeline projects, which are expected to not only boost production in the Marcellus Shale but also increase deliveries from the US Northeast to neighboring regions, in particular the US Gulf Coast region. In another advance for the project, the West Virginia Department of Environmental Protection this week granted a Section 401 water quality certification for the pipeline. While it found permanent impact to West Virginia streams and wetlands and waters of the US, it mentioned plans for compensation through a credit purchase or fee program, and imposed a series of conditions. While the project entails 1,288 stream crossings, the water permit elicited no public comments in West Virginia, and the FERC docket has a tiny fraction of the comments flooding dockets for the eastbound pipes.
Landowners challenge pipeline developer, saying taking property is unconstitutional -- Virginia and West Virginia residents opposed to the Mountain Valley Pipeline asked a court in Roanoke, Virginia, to block federal regulators from allowing the pipeline’s developers to confiscate private property to build the 303-mile natural gas pipeline. In a lawsuit filed Thursday in the U.S. District Court for the Western District of Virginia, the residents challenge the authority of the Federal Energy Regulatory Commission to allow a private company like Mountain Valley Pipeline, LLC, to confiscate property through eminent domain to build such a project. The residents also are seeking a preliminary injunction so that — even if the FERC grants the company final permission to build the pipeline — the company would not be allowed to use eminent domain until this suit is decided. The plaintiffs contend that granting Mountain Valley Pipeline the authority to use eminent domain would violate the Fifth Amendment of the Constitution, which requires that private property may only be taken “for public use” and that “just compensation” must be paid. “The case before the court, in its simplest form, is a constitutional challenge to the eminent domain provisions of the Natural Gas Act … and the resulting unconstitutional acts of FERC and ultimately MVP,” the plaintiffs’ lawyers state in the lawsuit. The Natural Gas Act, passed in 1938, allows the federal government to regulate the interstate transportation and sale of natural gas. All of the the plaintiffs in this case are landowners within the path of Mountain Valley’s proposed 42-inch-diameter natural gas pipeline that will extend from Summers County, West Virginia to Franklin County, Virginia. The landowners want to “protect their constitutional rights to secure their private property from a government-sanctioned land grab for private pecuniary gain,” the lawsuit says.
CSX sees surge in shipments of gas byproducts in West Virginia - The Exponent Telegram — CSX has seen an uptick in business from the oil and gas industry that is helping to offset a decline in revenue from coal shipments in West Virginia, Pennsylvania, Ohio and New York.Scott Freshwater, president of the Independent Oil and Gas Association of West Virginia, said the industry he represents means more to the state than just money for landowners via royalties and governments via taxes. “It is part of the trickle-down effect. All of our production runs through processing plants, and from those plants, there are various heavier liquids that come out of the gas stream. Those liquids are shipped via rail and/or trucking to where it is processed into final products,” Freshwater said. “Some go to local fractionation plants, and the byproducts are then shipped again via rail.” Ethane, propane and butane are taken out of natural gas as liquids. The gas phase, or dry gas, goes back into the pipeline after it’s been treated. It then goes on to end users, Freshwater said. “CSX has seen a surge in shipments of products related to the natural gas sourced from the Marcellus and Utica Shale formations located in West Virginia, Pennsylvania, Ohio and New York. On the CSX network, shipments of frac sand and natural gas byproducts like LPG have both increased in 2017,” he said. The uptick is a sure sign the oil and gas industry is ramping back up in this region, officials say.
U.S. lower 48 gross natgas output rises in May - EIA - Times of India: (Reuters) - U.S. gross natural gas output in the lower 48 states increased by over 0.3 billion cubic feet per day (bcfd) to a nine-month high of 80.2 bcfd in May, the U.S. Energy Information Administration (EIA) said on Friday in its monthly 914 production report. Big gains in Texas, the largest gas-producing state, offset small declines in Pennsylvania and Oklahoma, the second and third biggest producers in the lower 48. Output in Texas increased by almost 0.4 bcfd in May to 21.5 bcfd, its biggest monthly gain since February. Production in Pennsylvania and Oklahoma, meanwhile, slipped by about 0.1 bcfd each to 14.8 bcfd and 6.7 bcfd, respectively. The biggest percentage increase was in West Virginia, which rose by almost 0.2 bcfd, or 4.6 percent, to a record high 4.3 bcfd. Gas production declined in 2016 for the first time since the start of the shale revolution a decade ago as low energy prices reduced drilling activity. Next-day gas prices at the Henry Hub benchmark in Louisiana averaged $2.49 per million British thermal units in 2016, the lowest annual average since 1999. That compared with $2.61 in 2015 and a five-year average (2012-2016) of $3.18.Before 2016, U.S. dry gas production last dropped in 2005 when Hurricanes Katrina and Rita slammed into the Gulf Coast, damaging energy infrastructure along the Gulf of Mexico, which had been supplying more than 20 percent of the nation's gas.
Inside FERC Henry Hub August index slides 9 cents to $2.97/MMBtu - The S&P Global Platts Inside FERC Gas Market Report August bidweek national average natural gas price fell 9 cents to $2.64/MMBtu as expectations for milder weather across much of the country weighed heavily on the market. The August bidweek price at benchmark Henry Hub fell 9 cents to $2.97/MMBtu, a nearly 3% decline from the July bidweek price. The slide in August prices came as the US National Weather Service's official August forecast called for average to below-average temperatures across key demand areas in the Midwest and Southeast. Year on year, the Henry Hub index fared better, rising 30 cents, or around 11%, from August 2016 as an overall tightening of supply-and-demand fundamentals have offered some support to the market. Toward markets in the Northeast, August bidweek prices at Transcontinental Gas Pipe Line Zone 6 New York shed 7 cents from July to average $2.30/MMBtu. In New England, Algonquin Gas Transmission city-gates fell even further, dropping 22 cents to $2.45/MMBtu. Upstream in the Northeast production regions, Dominion Appalachia prices fell 8 cents during August bidweek to reach $1.73/MMBtu. The fall in Northeast production area prices came as data from Platts Analytics' Bentek Energy showed regional production set several production records during July, including a new all-time high of 24.8 Bcf/d July 23.
White House sends key FERC nominations to Senate - The US Federal Energy Regulatory Commission may be on the verge of regaining its quorum. In a move that bolsters prospects for fast floor action on two nominees to FERC that have stalled in the Senate, the White House late Wednesday sent over the formal nomination of the pick favored by Democrats, Richard Glick, general counsel to the minority on the Senate Energy and Natural Resources Committee. Snapshot video: US coal prices could rally later this year if stockpiles continue declining President Trump had announced his intent to nominate Glick in late June, but a holdup on sending over his paperwork was complicating efforts to get agreement between the parties to clear for floor action the two nominees already advanced out of committee: Neil Chatterjee, a long-time energy staffer to Majority Leader Mitch McConnell, and Robert Powelson, a Pennsylvania utilities commissioner. Confirmation of Chatterjee and Powelson would bring the number of sitting commissioners to three, the minimum needed for FERC to conduct the bulk of its business. Timing of action on FERC nominees has been very closely watched because the commission has been without a quorum for six months, and the timelines of a number of key infrastructure projects are hinging on approvals from the agency in the coming weeks. Separately late Wednesday, the White House also formally nominated Kevin McIntyre, who heads the energy practice for Jones Day, for a seat on the commission. McIntyre, a Republican, is expected to be tapped as chairman. The formal nominations of Glick and McIntyre bolstered hopes Wednesday evening that Chatterjee and Powelson could be voted out before the Senate recesses for its August break.
Senate confirms two energy commission nominees, restoring quorum | TheHill: The Senate voted Thursday evening to confirm two of President Trump's nominees to the Federal Energy Regulatory Commission (FERC), paving the way for the commission to have its first quorum in six months. Neil Chatterjee and Robert Powelson were confirmed by unanimous consent and are slated to join the five-member board, which has seen its action paused since February following a pair of retirements. FERC is responsible for permitting decisions on energy projects like natural gas pipelines and export terminals. The lack of a quorum has left FERC unable to move such projects forward, inaction that has led to frustration in the energy, manufacturing and business communities. Neither Chatterjee nor Powelson was considered a controversial pick. Chatterjee is an energy aide to Senate Majority Leader Mitch McConnell (R-Ky.), and Powelson is a Pennsylvania utilities regulator. The Senate Energy and Natural Resources Committee advanced both nominations in June on 20-3 votes. Democrats, though, had been hesitant to bring their nominations to the floor for confirmation votes until they were assured a Democratic nominee would receive a vote as well. The White House filed paperwork for Democrat Richard Glick’s nomination on Wednesday. Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alaska) announced Thursday she would hold a September hearing for Glick’s nomination and that of Kevin McIntrye, whom Trump has picked to be chairman of the commission. Democrat Cheryl LaFleur is the only current member of FERC. Former Commissioner Colette Honorable and former Chairman Norman Bay left the commission earlier this year.
Trump now has the votes to feed US fracking frenzy with new gas pipelines - Miami Herald - Before leaving town, the U.S. Senate handed President Donald Trump and the oil industry two long-sought regulatory appointments that could expedite construction of natural gas pipelines nationwide. Since February, the Federal Energy Regulatory Commission has lacked a quorum to decide on new projects, frustrating the oil and gas industry, which lobbied Trump and the Senate to fill vacant seats. Just before its August recess, the Senate delivered, approving the nominations of Republicans Neil Chatterjee and Robert Powelson to serve on the commission, commonly known as FERC. Energy lobbyists were giddy following the vote, optimistic the commission will quickly act on a backlog of multi-billion-dollar gas pipelines proposed in states such as Ohio, Pennsylvania, the Virginias and North Carolina. “The long day’s journey into night for energy infrastructure is over,” said Scott Segal, director of the Electric Reliability Coordinating Council, a coalition of energy industries. With FERC’s quorum restored, “It will be time to get back to work!” he added. Property rights advocates and some environmental organizations were less gleeful, fearful that Chatterjee and Powelson will rubber-stamp new pipelines with little regard to safety or landowner concerns. Chatterjee has served an an energy aide to Senate Majority Leader Mitch McConnell of Kentucky, and Powerson is a member of the Pennsylvania Public Utilities Commission, a panel known to be friendly to the oil and gas industry.“Its unfortunate,” said Lynda Farrell, director of the Pipeline Safety Coalition, a group based in Pennsylvania, where a web of pipelines crisscross the state, with many more proposed. “There’s no representation on the commission that will approach pipeline approvals differently than they have in the past.” These are boom times for pipeline developers, partly because of the enormous volumes of natural gas being fracked from the Marcellus Shale formation of West Virginia, Ohio and Pennsylvania. Supporters say this fracking could boost production of gas-fired electricity, bringing down prices and allowing utilities to switch from coal to a cleaner-burning fuel.
FERC Confirmations Threaten to Continue Agency's Status Quo as Rubber-Stamp for Pipelines - The Senate voted to confirm Donald Trump's nominees on Thursday for the Federal Energy Regulatory Commission (FERC), Neil Chatterjee and Rob Powelson. Chatterjee has a long track record of advocating on behalf of the fossil fuel industry. In his time working for Sen. Mitch McConnell, he spearheaded the push for Senate approval of the controversial Keystone XL pipeline , sought to undermine U.S. leadership on the Paris climate accord , led McConnell's campaign to convince states to oppose the Clean Power Plan , and worked to lift the ban on crude oil exports. As a member of the Pennsylvania Public Utilities Commission, Rob Powelson has at times been supportive of clean energy policies. However, he has shown a deep allegiance to the gas industry throughout his tenure, and has recently compared anti-gas activists to terrorists . "It is disappointing to see the Senate confirm FERC Commissioners who have lengthy track records of prioritizing the interests of the fossil fuel industry over those of the American people," Lena Moffitt, senior director of the Sierra Club's Our Wild America Campaign, said. "As the gas industry is threatening a massive expansion of fracked gas projects , it is more important than ever that our FERC Commissioners put the health and safety of the public and our climate first, not rubber stamp any project the industry puts in front of them." "Based on their records, we remain concerned that Chatterjee and Powelson will continue FERC's status quo, approving unneeded fracked gas pipelines that take private land for corporate gain and lock Americans into higher electricity rates while increasing our dependency on fossil fuels for decades to come," Moffitt continued. "While they may have moved through the confirmation process with ease, these nominees will be met with firm resistance from communities across the country who have fought against the buildout of fracked gas."
Feds investigating freight train derailment, tank car fire in PA | TheHill: Federal investigators are being sent to probe a freight train derailment and tank car fire that occurred in a small Pennsylvania town early Wednesday morning. The National Transportation Safety Board (NTSB) said that three investigators will arrive on the scene in Hyndman, Pa., on Wednesday, with two more arriving Thursday and one arriving Friday. A CSX freight train carrying hazardous materials was en route to Chicago from Selkirk, New York, when it partially derailed about 100 miles outside of Pittsburgh. A total of 32 cars derailed from the tracks, including one containing liquefied petroleum gas and another containing molten sulfur, which leaked and caught on fire, according to the Associated Press. The derailed cars also struck a residential garage. No injuries have been reported, but emergency responders evacuated all the homes within a half-mile radius of the scene. Some of the train cars were still burning hours after the derailment, according to the AP. It’s unclear what caused the derailment, but federal investigators on the site will issue a report determining the cause and offering recommendations for the future.
Exclusive: Philadelphia oil refinery taps debt restructuring adviser - sources… (Reuters) - Philadelphia Energy Solutions LLC, the owner of the largest U.S. East Coast oil refining complex, has hired an investment bank to help tackle its debt burden, as it struggles with low profit margins, people familiar with the matter said on Tuesday. The move underscores the challenges facing some East Coast refineries, which used to enjoy a competitive advantage when oil prices were high because they were able to secure supplies cheaply by rail. The crash in oil prices has changed that. Philadelphia Energy Solutions' latest woes come five years after private equity firm Carlyle Group LP and Energy Transfer Partners LP's Sunoco Inc rescued the refinery owner from bankruptcy, in a deal supported by tax breaks and grants that saved thousands of jobs. The refinery complex is still one of the region's largest employers, and U.S. energy officials have warned that its closure could lead to price spikes at the pump and even threaten the national security interests. Philadelphia Energy Solutions has tapped investment bank PJT Partners Inc for advice on dealing with its near-term debt maturities, including a $550 million loan that comes due in 2018, said the sources, who spoke on condition of anonymity because the hiring has not been made public. The company also has a revolving credit line that comes due in 2019."Philadelphia Energy Solutions is currently assessing its capital structure with the goal of improving financial flexibility in light of current market and regulatory challenges that have affected the company's profitability," the company said in a statement to Reuters.
Now that oil and gas jobs are in demand again, will workers return? - Cautiously, things appear to be turning up again, leaving companies scrambling for workers and wondering if those they have let go will return. If those former employees don’t come back, will the industry known for bluster, swearing and endless hours away from home be able to recruit the hot-shot smarts it needs to move forward? At the end of each cycle, about 30 percent of the workers who lose their jobs don’t come back, said Tony Angelle, a vice president with Halliburton. His company is thinking about ways to attract talent now that activity is picking up again after a two-year slump. They “don’t want anything to do with the oil and gas business,” he said at the Developing Unconventional Gas East conference in Pittsburgh in June. Another fraction of the former workforce comes back reluctantly, still bitter about having been laid off, he said. There are people who fall in love with the business and never want to leave, said Jared Oehring, vice president of technology with U.S. Well Services. But if the business — cycles and all — is to be made worthwhile for more than just the die-hards, the tradition of oilfield culture needs an upgrade. “If times are tough and supervisors are yelling and cursing, like the old-school oil business,” it will repel many workers, Oehring said. As oil and gas companies are starting to negotiate what work-life balance means in the context of their business, even those that choose to remain are thinking differently about their work.
Dominion eyes first Cove Point LNG shipments amid commissioning -- Dominion Energy's Cove Point LNG export terminal in Maryland may be ready to ship its first commissioning cargo by end-September, with construction nearly complete and the company reaching a deal with a third-party shipper to take its initial production, CEO Thomas Farrell said Wednesday.After the power provider and gas pipeline operator released second-quarter financial results earlier Wednesday that showed a profit decline, Farrell suggested that another key project, the Atlantic Coast Pipeline, could face a construction delay depending on when a voting quorum is restored at the US Federal Energy Regulatory Commission.The developments come amid high anticipation for new takeaway capacity for increasing volumes of shale gas from the Northeast and for new outlets for that gas in the form of boosting LNG shipments to foreign markets where it is used to heat homes and produce electricity. Timing for the new infrastructure, especially Cove Point as Dominion looks to become the second US exporter of LNG produced from shale gas following Cheniere Energy, is being closely watched. "As we work toward commercial in-service later this year, we will bring the project to a status of ready for startup this quarter," Farrell said about Cove Point during a conference call with analysts. "We have received authorization from the Department of Energy to export LNG produced during commissioning. We have an agreement with a third party to provide the commissioning natural gas and export LNG from the facility."
This pipeline could jeopardize Washington's water supply, environmentalists say -— The pipeline that TransCanada wants to build is short, 3.5 miles, cutting through the narrowest part of Maryland. It would duck briefly under the Potomac River at this 1,500-person town, bringing what business leaders say is much-needed natural gas to the eastern panhandle of West Virginia. But environmentalists say that brief stretch could jeopardize the water supply for about 6 million people, including most of the Washington-metropolitan area. That’s why dozens of protesters have gathered each weekend this summer at various points along the upper Potomac, part of a growing national movement that opposes both oil and natural gas pipelines and wants businesses and governments to embrace green energy instead. Inspired by the Dakota Access oil pipeline protest at Standing Rock, N.D., and the broad wave of demonstrations that has energized the left since President Trump’s inauguration, the protesters hope to convince Maryland Gov. Larry Hogan (R) and his energy secretary to stop the pipeline, which got an enthusiastic green light from West Virginia. “It’s got me worried,” said Andy Billotti, 53, “If something were to happen, that fracked poison would come down the river . . . right into our wells.” The activists want Hogan, who earlier this year banned fracking in Maryland, to deny TransCanada a water quality permit to cross the Potomac. Environment Secretary Ben Grumbles said the state has sought additional information about the project from the company and will schedule a public hearing on the permit application in coming weeks.
Louisiana pipeline cutting through wetlands and 'cancer alley' faces growing protest - Bayou Bridge is operated by the same company as Dakota Access, threatens water supplies for indigenous communities, and poses a risk to the local environment. There’s another similarity, too: Opponents of the Louisiana pipeline, which include indigenous groups, environmentalists, and a local community in the path of the pipeline, aren’t backing down from a fight. “There’s a growing realization across the country that these pipelines have incredibly significant impacts on communities and our environment, and we can’t keep building more and more of this infrastructure,” said Cherri Foytlin, state director of Bold Louisiana, a group fighting to protect the state’s natural resources.“ The Dakota Access pipeline, which ships oil from the Bakken region from North Dakota to Illinois, ignited fervent opposition and a months-long protest camp at the Standing Rock Sioux Reservation. The camp has since been razed and, after President Trump gave his approval in January, now has oil running through it. The Bayou Bridge pipeline, meanwhile, is a 162-mile proposed project that would carry 280,000 to 480,000 barrels of oil per day from Lake Charles to St. James, located on opposite sides of the state. It would connect with the broader Dakota Access pipeline network through a pipeline starting in Nederland, Texas and traveling east. Bayou Bridge has received one permit from the state Department of Natural resources — a decision the agency is now being sued over — and is awaiting decisions from two more agencies required for construction: a permit from the Army Corps of Engineers and a water quality certificate from the state Department of Environmental Quality. While the project awaits these decisions, activists across the state are taking action.
Pipeline Payday: How builders win big, whether more gas is needed or not - The real fight over America's energy future isn't in coal, despite the Trump administration's public focus on a mining revival. Rather, dozens of pipeline projects, making up one of the largest expansions of natural gas infrastructure in U.S. history, are where the fossil fuel action is.At a cost of billions of dollars, these pipelines will tap the rich reservoir of fracked natural gas flowing out of the Marcellus-Utica shale basin that lies under much of Pennsylvania, Ohio and West Virginia.The Trump administration and its allies, energy-dominance manifestoes in hand, are eager to see these projects approved as soon as the president's nominees to the Federal Energy Regulatory Commission (FERC) are confirmed by the Senate.But are all these new gas pipelines really needed?Critics say that the financial interests of gas and electric companies—not market demand—are driving most of the new pipelines proposed for the region. Those profits are approved by FERC, an agency that is charged with ensuring public interests, but that nurtures "an exceptionally cozy relationship" with industry, as described in a comprehensive investigation published last month by the Center for Public Integrity and StateImpact Pennsylvania, with National Public Radio."At every turn, the agency's process favors pipeline companies," the review found after the groups interviewed more than 100 people, reviewed FERC records, and analyzed nearly 500 pipeline cases.It also noted another cozy relationship: the tight corporate links between the companies building the pipelines and those buying the natural gas, either to deliver it to homes and businesses or to use it to make electricity.One example of this is in Missouri, where Spire STL Pipeline LLC, an interstate pipeline company, and Laclede Gas Company, a local gas utility, have proposed to build a $220 million pipeline that would deliver Marcellus shale gas to St. Louis.Laclede and Spire are owned by the same parent company. Project opponents say this incestuous business arrangement between the customer, Laclede, and its supplier, Spire, puts the interest of shareholders above those of ratepayers. If the project is approved, shareholders of Spire, Inc., the parent company, will make a 14 percent annual return on the equity they invest in the project. Laclede's captive ratepayers would probably have to pay higher gas rates to finance the new pipeline.
Fracking-Related Water Problems Raise Issues in West Texas: A West Texas land baron and oilman is on the verge of pumping 5.4 million gallons of water a day from far under the desert mountains here and piping it 60 miles to the nation’s most bountiful oil field, the Permian Basin, where hydraulic fracturing has fueled a renaissance of U.S. oil and gas production. The Houston Chronicle reports with water in short supply and high demand, Dan Allen Hughes Jr., one of the largest landowners in the United States and president of his father’s eponymous oil company, plans to tap an aquifer under his 140,000-acre Apache Ranch.But Hughes has run into a wall of opposition from West Texas farmers, ranchers, residents and environmentalists, who worry he will steal water from their cattle, dry up their crops and deplete the spring that feeds the famous pool at Balmorhea State Park. “That’s a lot of water,” said Bill Addington, a rancher and conservationist from neighboring Sierra Blanca. “Believe me, there’s many people who have plans to sue if this goes forward. We will sue.” Hughes’ project may well just be the start of a much larger fight – over the ownership of West Texas water, the future of oil and gas production and fate of agricultural lands and ecologically sensitive habitats. It’s a feud that runs throughout the history of the West, between farmers and ranchers, conservationists and industry, neighboring cities, adjacent states. Whiskey is for drinking, they say. Water for fighting. “The Permian Basin is basically a desert, and that immediately presents challenges in finding adequate water,” “You can do without a lot of things. But you can’t do without water.” At least three other companies in the region are selling or planning projects to sell water to energy companies that use it by the billions of gallons to crack shale rock and release oil and gas. Water use in the Permian has risen six-fold since the start of the shale oil boom, from more than 5 billion gallons in 2011 to almost 30 billion last year. Energy research firm IHS Markit predicts demand will double by the end of this year, to 60 billion gallons, and more than triple by 2020, to almost 100 billion.
West Texas water pipeline to oilfield gets approval | The Herald: A 60-mile (96.56-million kilometer) pipeline intended to carry 5.4 million gallons (20.44 million liters) of water daily from a West Texas desert aquifer to the Permian Basin oilfield has won approval despite objections of ranchers, farmers and environmentalists. The Culberson County Groundwater Conservation District on Wednesday voted to allow the multimillion-dollar Agua Grande project proposed by Dan Allen Hughes, who owns the 140,000-acre (56657.22-million hectare) Apache Ranch near Van Horn and runs his father's San Antonio-based oil company, Dan A. Hughes Co. The water would be used in fracking operations in the oil- and gas-rich Permian Basin. The Houston Chronicle reports Hughes has said ranch and farm wells won't be depleted and the company will monitor aquifer water levels. Some opponents have said they'll file lawsuits to block the project.
EOG Resources touts data-driven U.S. oil exploration - EOG Resources has seven U.S. exploration teams using big data systems to generate new drilling prospects in lower-cost regions, CEO Bill Thomas said Wednesday. Oil and gas exploration, which Thomas told investors is a "key sustainable advantage" for the Houston oil producer, is a side of the oil business that has stayed far from the limelight in recent years as low crude prices pushed drillers to cut back on looking for new rocks to drill. Thomas said the company is using huge amounts of data streaming from the oil patch to learn how different types of dense oil-bearing rocks respond to hydraulic fracturing and horizontal drilling. It uses that information, he said, to capture new acreage in exploration plays to add to what the company calls its premium drilling locations. "Our multi-decade database and learning curves gives us a huge advantage in identifying the best rock to add new and better drilling potential to the company," Thomas said. On Tuesday, EOG said it would not cut its capital expenditures this year, despite lower oil prices and a flurry of rival independent drillers scaling back activity. Instead, it raised the projection of its annual oil production growth, from 18 percent to 20 percent. "We are committed to returns and living within our means,"
7 earthquakes struck Oklahoma in 28 hours for a disturbing reason - In less than 28 hours, Oklahoma has been pummeled by earthquakes. The wave started on Tuesday night, when five quakes struck the central part of the state, and extended into the early hours of Thursday as two more hit, according to the United States Geological Survey. All of the earthquakes were between magnitude two and five and no significant damage was reported. However, the shaking is part of a troubling recent phenomenon. The disposal of wastewater from hydraulic fracturing (also known as fracking), appears to have spiked the likelihood of earthquakes in Oklahoma, potentially raising the state to the same earthquake threat level as California, according to a recent USGS forecast.Until recently, earthquakes in Oklahoma were few and far between. In 2010, the state experienced just 41 tremors. By comparison, each year the southern California area alone has about 10,000 earthquakes. But "seismic activity has surged in [Oklahoma] in recent years," reporter Joe Wertz of StateImpact Oklahoma told NPR on Thursday. In the last few years, Oklahoma has weathered hundreds of significant quakes each year, along with parts of several other Midwestern states. "Scientists link the quake boom to the widespread oil industry practice of pumping waste fluid into underground disposal wells," Wertz told NPR. The rise in earthquakes, in other words, can be attributed to the injection of large quantities of wastewater into wells deep below the Earth's surface. According to USGS, the majority of the underground wastewater comes from oil and gas operations — it is created when clean water mixes with dirt, metals, and other toxins below the Earth's surface during extraction operations.
Oklahoma quake series hits on known fault; temblors less frequent this year (Reuters) - A series of earthquakes near a northern Oklahoma City suburb struck along a known fault line and damaged two power substations, resulting in about 5,000 residents temporarily losing electricity, officials said on Thursday. The quakes on Wednesday night near Edmond included one with a magnitude of 4.2, and came after the state imposed guidelines to reduce the risk of quakes caused by man-made activity related to hydraulic fracturing, or fracking, in its oil-rich shale formations. The number of quakes rattling Oklahoma has fallen after the state guidelines went into effect late last year. New fracking activity has also declined, officials said. The Edmond quake was the state's fourth this year with a magnitude of 4 and above, while last year, there were 15. "We are optimistic that the seismicity rate has gone down but we still believe that the seismic hazard is still significant in Oklahoma," said Jake Walter, state seismologist for the Oklahoma Geological Survey. He said the Edmond quakes took place on a mapped fault and included one of the strongest recorded quakes to hit the area. Seismologists and state officials have said an increase in the frequency of quakes over the past few years in Oklahoma has been tied to the disposal of wastewater from fracking. The Oklahoma Corporation Commission, a state regulatory agency for the energy industry, said it was investigating the Edmond quake series. It added that the quakes took place in an area where the commission has instituted volume reduction in disposal well operations. In 2016, there were nearly 2,200 earthquakes with a magnitude of 2.5 or above in Oklahoma, against slightly more than 600 as of the end of July this year, according to the Oklahoma Geological Survey.
Keystone XL Pipeline in Limbo: Developer May Not Build as Landowners Put Solar Array on Proposed Route -- Keystone XL owner TransCanada told investors Friday that the company was still assessing demand for the project with oil companies, increasing speculation that the controversial pipeline may not see the light of day. On an investor call, a TransCanada executive called for an "open season" on the Keystone project to attract investor bids, and said the company would assess interest and make a decision on the pipeline by November. As reported by Politico : "It was the strongest acknowledgment from TransCanada to date that the nearly decade-long Keystone saga may end in failure—despite President Donald Trump's overwhelming support for the project, which he green-lit as one of his first acts in office." TransCanada is also still awaiting approval from Nebraskan regulators to finalize the pipeline's proposed route through the state. A final Nebraska Public Service Commission hearing on Keystone last week showcased the depth of opposition to the pipeline in the state, while a local farmer has attracted attention for installing American-made solar panels on his land to protest the project. Jim Carlson said he rejected offers as high as $307,000 from TransCanada Corporation to lay pipe across his land. "They'll have to go under it, around it or tear it down to get their dirty oil from Canada to the Gulf of Mexico," Carlson told NBC Nebraska . Carlson is a pipeline fighter with Bold Nebraska , a grassroots organization opposing Keystone XL. Jane Kleeb, the group's founder, told NTV that they've raised more than $40,000 to install solar projects in the path of the proposed pipeline. "We're not just out in the streets protesting with signs, but we're actually building the type of energy we want to see," Kleeb said.
Keystone XL Foes Don’t Mention Climate in Red State Pipeline Battle - You won’t hear the C-word coming from Keystone XL foes as they argue against TransCanada Corp.’s push to get the final state approval needed to build the pipeline.C, as in climate. Instead, even as the company seeks to limit objections, they’re spotlighting TransCanada’s use of eminent domain, which Republicans traditionally oppose in support of landowner rights. Supporters, meanwhile, are pressing another issue close to Republican hearts: Jobs.As Keystone XL faces its final hurdle in Nebraska, the starkly different political landscape under President Donald Trump versus Barack Obama is bringing new shape to a debate that will be overseen by the state’s Republican-dominated Public Service Commission, set to hear a week of arguments starting Monday. With Trump in the White House, a positive nod from Nebraska could remove the final regulatory barrier.Property rights "might be the thing that stops this," said Art Tanderup, who owns farmland on the pipeline’s route that’s been in his wife’s family for 100 years. Even some pipeline supporters say the company shouldn’t be able to "take their land away," he said. Still, the jobs issue carries weight among Republicans as well, particularly in the age of Trump, who has focused on the energy industry’s ability to spark the U.S. economy. While the 2016 Republican platform says the Supreme Court’s 2005 ruling in support of eminent domain undermines the Constitution’s Fifth Amendment, Trump has in the past praised the decision.
Critical Keystone XL Testimony Denied in Last-Minute Decision -- The Nebraska Public Service Commission (NPSC)—the Republican-dominated state board deciding the fate of TransCanada's long-delayed Keystone XL pipeline—have barred experts and homeowners from testifying over potential spills or whether the tar sands pipeline is even necessary during final hearings next week. The Omaha World-Herald reports that former Lancaster County District Judge Karen Flowers, who was hired by NPSC to conduct the hearings, issued more than 30 rulings based on objections filed by TransCanada. She ruled that issues such as safety or if the U.S. even needs Canadian oil are out of the commission's scope of authority. "The (Nebraska Major Oil Pipeline) Siting Act specifically prohibits the commission from considering safety considerations, including the risk of spills and leaks," Flowers wrote in her ruling. Nebraska law requires the NPSC to approve a pipeline construction application if it is "in the public interest." The commission—made up of four Republicans and one Democrat—will mainly consider issues that impact the local economy such as jobs and revenues. Pipeline opponent Oil Change International spoke out against the hearing officer's ruling, as it bars the testimony of 15 outside experts and more than 25 landowners. For instance, the decision barred the planned testimony of Lorne Stockman , senior research analyst at Oil Change International. Stockman's testimony, which was submitted ahead of the hearings and thus part of the official record, would have stressed how changing market conditions and realities in the tar sands industry negates the need for Keystone XL pipeline. "There is simply no need for the Keystone XL pipeline based on the current market conditions, which even TransCanada has admitted ," he said, noting recent statements by TransCanada representatives who have cast doubt in finding sufficient shippers to fill the pipeline.
4 Proposed Tar Sands Oil Pipelines Pose a Threat to Water Resources - Greenpeace --A new analysis from Greenpeace USA finds that the three companies proposing to build tar sands pipelines have a legacy of pipeline spills, and that tar sands pipelines pose a threat to water resources. Summary Findings:
- Oil spills anywhere pose serious risks to human health and the environment, and oil spilled into bodies of water is difficult to fully clean up. Diluted bitumen transported from Canada’s tar sands fields represents a particular threat to water resources along the routes of proposed pipelines.
- Analysis of public data shows that the three companies proposing to build four tar sands pipelines — TransCanada, Kinder Morgan, Enbridge, and their subsidiaries — have seen 373 hazardous liquid spills from their U.S. pipeline networks from 2010 to present.
- These spills released a total of 63,221 barrels of hazardous liquids during that time period — including Enbridge’s 20,082 barrel diluted bitumen spill into the Kalamazoo River in 2010.
- The U.S. crude oil pipeline system as a whole has averaged one significant incident and a total of ~570 barrels released per year per 1000 miles of pipe, over the past 10 years.
- Assuming these rates, the Keystone XL pipeline could expect 59 significant spills over a 50-year lifetime. Similarly, the Line 3 Expansion could see 51 significant spills over a 50-year lifetime.
- Studies have found that a diluted bitumen spill into water is even more difficult to clean up than a conventional crude oil spill, due to the fact that bitumen sinks in water.
Progress On Increasing Access To Federal Lands - It’s a positive step – for U.S. energy, economic growth, consumer benefits and climate progress – for the Bureau of Land Management (BLM) to begin rescinding its 2015 hydraulic fracturing rule – one that we argue duplicates existing and effective state regulation and risks delaying energy development, potentially impacting consumers. The Interior Department’s Katharine S. McGregor explains:“Maintaining positive, productive working relationships with our state and tribal partners is a top priority of this Administration. We are committed to working collaboratively with them to ensure the safe and environmentally responsible development of our Nation’s energy resources. Our proposal to rescind the 2015 final rule responds to the President’s call to reduce regulatory burdens, foster job growth, and serve the energy needs of America’s families, small businesses, and manufacturers.”And this from Interior’s Vincent DeVito: “The Department of the Interior’s approach toward overseeing wells is to be better business partners and environmental stewards, which is in alignment with the Trump Administration’s across-the-board prioritization of domestic energy production.” Both statements make important, encouraging points about the future of U.S. energy development. First, the early actions of new leadership in Washington recognize the vast good that can result from safe and responsible development of America’s energy wealth. Also, we see Interior acknowledging that eliminating unnecessary regulation will help advance the country’s energy interests and expedite energy’s benefits to U.S. consumers, businesses and manufacturers.
Court tells Trump’s EPA to enforce methane rule for oil and gas drillers - A federal appeals court ruled late Monday that the Environmental Protection Agency must enforce Obama-era restrictions on greenhouse gas emissions from the oil and gas industry. The leak detection and repair provisions of the 2016 rule were set to take effect — and “begin delivering significant benefits”— on June 3. But on June 5, EPA Administrator Scott Pruitt “unlawfully stayed these and other requirements of the rule retroactively from June 2 until August 31, 2017,” the court said. Pruitt and his industry allies “have not offered any support for the proposition that compliance” with the 2016 rule “would cause significant hardship to regulated entities that had a year’s lead time to prepare,” the court argued. At the same time, the EPA’s stay of the rule “is causing substantial additional methane, ozone-forming [volatile organic compounds], and hazardous air pollutants such as benzene and formaldehyde to be released into the air of communities near these wells,” the court explained in its Monday order.
North Dakota still seeking to recoup pipeline protest costs (AP) -- North Dakota is continuing to seek federal funding to help pay state law enforcement bills related to months of protests over construction of the Dakota Access pipeline, despite being rejected on its first attempt. The state has applied for nearly $14 million in funding from a Justice Department program that helps pay costs related to law enforcement emergencies around the country. The state in late June applied to the Emergency Federal Law Enforcement Assistance Program, according to U.S. Sen. Heidi Heitkamp. The North Dakota Democrat sent a letter to Attorney General Jeff Sessions on Monday, urging his agency to "expeditiously review and approve" the state’s request. A decision is expected by the end of September. The $3.8 billion pipeline built by Texas-based Energy Transfer Partners began moving oil from North Dakota to a distribution point in Illinois in June. The project is still being contested in federal court by American Indian tribes who fear a leak could endanger their water supply, and protests from August to February resulted in a large-scale police response and 761 arrests. Gov. Doug Burgum in late April asked President Donald Trump for a disaster declaration to pave the way for federal aid to help recoup the $38 million spent by the state policing the protests and spare taxpayers the expense. The Federal Emergency Management Agency denied the request in May. Such declarations typically involve natural disasters, and the governor’;s office acknowledged last month that the request was a "longshot." The state did not appeal.
Natural gas production takes front seat in the oil-driven Bakken shale as rigs return. --For as long as producers have been drilling in the Bakken Shale — the oil-rich formation straddling North Dakota and Montana (plus Saskatchewan and Manitoba in Canada) — associated natural gas, an inherent byproduct, has taken a back seat to crude oil production from the play. In fact, at one point nearly 50% of Bakken’s produced natural gas was being flared, in large part due to limited midstream capacity to gather, process and move the gas to market. But that’s changed in the past couple of years. Substantial midstream capacity has been built. Flaring has eased considerably, and with the shift in drilling activity to the best, most productive acreage, the gas-to-oil output ratio has increased. Add to that rising rig counts and productivity gains in those sweet spots and that phenomenon becomes amplified. The result is that while oil production has largely stagnated this year below peak levels, associated gas volumes from the play climbed to a record high this past May. But will this trend be sustained, and, if so, what will it mean for gas flows, takeaway capacity and gas-on-gas competition at the Canadian border? Today, we begin a blog series looking at gas production trends in the Bakken and implications for gas pipeline flows as well as competing supplies.
Companies Fracking North Dakota Wells Recover More Oil (AP) — Oil industry leaders say companies' process of applying new fracking techniques to older wells in North Dakota's Bakken oil patch has the potential to recover more oil without increasing the footprint on the land. The Bismarck Tribune (http://bit.ly/2rS9WAV) reports that operators are targeting wells drilled between 2008 and 2010, the early years of Bakken development before fracking technology advanced. The energy industry uses the technique to extract oil and gas from rock by injecting high-pressure mixtures of water, sand or gravel and chemicals. Justin Kringstad is the director of the North Dakota Pipeline Authority, which recently analyzed the wells. He says most of the 140 wells in the Bakken that have been refractured saw an increase in oil production from 200,000 to 250,000 barrels.
California’s Aliso Canyon natural gas storage facility cleared to resume partial operation --Aliso Canyon, California’s largest underground natural gas storage facility, was cleared on July 19 by the California Public Utilities Commission (CPUC) and Division of Oil, Gas, and Geothermal Resources to increase injections above earlier imposed limits. The facility has been undergoing extensive testing since a leak was detected in October 2015 and stopped in February 2016. Owned and operated by the Southern California Gas Company (SoCalGas), Aliso Canyon has a total working storage capacity of 86 billion cubic feet (Bcf) of natural gas, or about 64% of the SoCalGas total. After the leak was detected, the storage level allowed by the CPUC was reduced to 15 Bcf, with any further withdrawals requiring regulatory approval. Once Aliso Canyon resumes limited operations, the facility’s maximum working gas storage level will be limited to a maximum of 23.6 Bcf, about 28% of the facility’s maximum capacity prior to the October 2015 leak. SoCalGas can withdraw natural gas when all three conditions are met: when natural gas is needed for reliability, after the other fields are at full usage, and after other steps have been taken to reduce or shift demand. As of July 23, those fields were collectively about 80% full, based on data provided by SoCalGas. Each of the 114 wells at the Aliso Canyon facility has been reviewed since the leak was contained. About 60% of the wells have been taken out of operation and isolated from the facility. The remaining wells are subject to several safety measures, including real-time pressure monitors, daily infrared leak detection, routine aerial monitoring for methane, and new steel tubing and seals inside the wellbore.
U.S. shale boom less potent than expected, new data shows - New data shows the surge in shale drilling hasn't lifted U.S. oil production as much as expected.In a monthly report on Monday, the Energy Department said the nation's daily output rose 0.6 percent to 9.17 million barrels in May, well below its original forecast of 9.32 million for that month.Texas outpaced the rest of the country, boosting output by 2.3 percent, or 78,000 barrels a day, as the oil fields in the Permian Basin surged. In New Mexico, parts of which share the Permian, production rose by 14,000 barrels a day. Colorado put out an extra 10,000 barrels a day.But other oil-rich states stalled out. In Alaska, Louisiana, Oklahoma, North Dakota and Wyoming, oil production collectively dropped nearly 45,000 barrels a day in May. It's another sign the oil industry's uneven recovery has left several U.S. oil fields behind as drillers focus on the prolific Permian. At the end of each month, the Energy Department releases a report on U.S. oil production that is based on a survey of producers. The agency's more frequent, weekly report – its first pass at calculating U.S. oil production – is widely considered less accurate than its monthly data because it is based on a formula rather than a survey. In this case, the monthly report showed U.S. oil production came in roughly 150,000 barrels a day lower than the weekly figures.
U.S. shale producers cutting budgets as oil prices lag (Reuters) - U.S. shale producers have started to trim their 2017 capital spending budgets, a tacit acknowledgement that such plans were too aggressive when crafted months ago before commodity prices weakened. This week alone, Anadarko Petroleum Corp, ConocoPhillips, Whiting Petroleum Corp and Hess Corp cut a combined $750 million from their capex plans, each citing weaker-than-expected oil prices. The quartet are just the first in a wave of oil industry earnings results expected over the next two weeks, with many analyst expecting peers including Noble Energy Inc and Marathon Oil Corp to cut their own spending in order to appease Wall Street's demands for fiscal restraint. "We sincerely believe the volatility of the current operating environment requires financial discipline," Anadarko Chief Executive Al Walker told investors on Tuesday. "Pursuing growth without adequate returns is something we will avoid." The cuts partly seem designed to appease Wall Street's fixation on cash flow, even though some companies have strong balance sheets. Shares of Conoco rose 1.6 percent on Thursday, with shares of Anadarko up 1.5 percent. Hess, for instance, cut $100 million from its 2017 spending plans despite having $2.5 billion in cash stored away. Anadarko cut $300 million, but has more than $6 billion in the bank. "In the current low price environment, we continue our efforts to reduce both capital and operating costs," Hess Chief Executive John Hess told investors on Wednesday.
Shale Drillers Aren’t As Safe As You May Think -- It’s been the main headwind for OPEC’s oil output cut deal. Rising shale oil production in the U.S. has been making headlines for almost a year now. While initially the trend was met with understandable enthusiasm by lenders exposed to the industry, now both banks and analysts are beginning to worry about a repeat of what happened in 2014 and 2015 to shale oil, when unsustainable debt levels sank a lot of companies in the field.CNBC’s Tom DiChristopher reports that the average debt level of 38 U.S. drillers has fallen from more than 8 times EBITDA in the second quarter of last year to about 3 times EBITDA in Q2 2017, which is no doubt great news - but it doesn’t appear to have convinced analysts that the danger of more bankruptcies is behind us.DiChristopher quotes Stifel analysts as cautioning in a note from last week that “U.S. onshore growth is unsustainable in the $40-$45/bbl price environment and that activity would need to be reduced to better balance corporate cash flows and" capital expenditures.” This doesn’t really fit the sub-US$30-per barrel production-cost picture that drillers have been painting in the last months after the OPEC agreement boosted prices for a while and everyone rushed to drill more.Another analyst, Timothy Rezvan from Mizuho, said that some shale drillers may prefer to continue playing chicken with OPEC, as they insist they need to spend more to boost future earnings. But that may not be the wisest game, as they would need a consistent price rally to justify this spending. There is no guarantee of such a rally in the medium term, which is what makes this game so very risky. These warnings are not new. In May this year, S&P Platts analyst Nicole Leonard warned that shale drillers with heavy debt loads won’t be able to survive another price crash. Leonard forecast that prices will rebound to US$60 a barrel as OPEC extends its cut agreement and driving season prompts hefty inventory draws. Both these things did happen, but prices have just now ticked above US$50 a barrel after OPEC announced yet another meeting to try to improve compliance rates, and after Washington indicated further sanctions against Venezuela are becoming increasingly certain.
Analysts Rake Over the Oil Patch, Chop Price Targets - When West Texas Intermediate (WTI) crude oil futures closed above $50 a barrel on Monday, after rising nearly 9% in the month of July, it seemed that the benchmark level might be able to hold. Those hopes were splintered when crude dipped below the $50 level on Tuesday and fell below $49 on Wednesday.Credit Suisse last week even cut its long-term price forecast for WTI from $62.50 to $57.00 a barrel in 2020. The bank doesn’t even think the market will return to supply-demand balance until 2019. Societe Generale analyst Irene Himona cut her forecast for Brent crude from $55 a barrel by the end of this year to $50, implying a WTI price about $2 to $3 below that level. These reduced forecasts for prices not only affect producers. The outlook for oilfield services firms and other oil patch players also has dimmed. A number of stocks saw lowered earnings estimates and price targets this morning from several analysts. Here’s a brief summary.
Macroeconomic risks for the oil industry: Kemp (Reuters) - The global oil industry now appears to be in the early stages of a cyclical expansion which is likely to see prices rise over the next few years, slowly at first but then accelerating later.Deep and long cycles in oil prices have been the defining characteristic of the industry since the 1860s ("Crude volatility: the history and the future of boom-bust oil prices", McNally, 2017).The boom-bust cycle which started in late 1998, with prices briefly below $10 per barrel, and was only briefly interrupted by the recession of 2008/09, ended in January 2016, with prices briefly below $28.In the 18 months since then, the industry has returned to an expansion phase, with a gradual increase in prices and drilling activity, much of it centered on the shale plays of North America.Most of the industry’s cyclical indicators (production, consumption, stocks, investment, employment, prices, costs) point to a sustained upswing in activity that is likely to continue in the short and medium term. Forecasting future movements in oil prices will always be subject to an enormous amount of uncertainty owing to the complex and non-linear dynamics of the oil market and all its sub-systems. “We’ve never been any good at predicting these cycles, neither when they occur nor their duration. We don’t spend a lot of time even trying,” Rex Tillerson observed in 2016, when he was still chief executive of Exxon. Price predictions have proved a regular graveyard for the reputations of even the most skilled oil analysts. But with the oil industry just emerging from the deepest slump in a generation, cyclical positioning strongly suggests that prices are more likely to move higher rather than lower in the next few years (http://tmsnrt.rs/2fbrwM9). The main uncertainty centres on how far and how fast oil prices and the industry’s costs will rise in the years ahead.
Vladimir Putin opposes US fracking because it threatens Russia's energy exports - Canada Free Press - Russian connections to anti-fracking activism in the United States underscore Russian President Vladimir Putin’s dedication to keeping Eastern Europe dependent on the oil and natural gas which flows from its state-owned energy giant, Gazprom. Russia has successfully stopped fracking efforts in Eastern Europe through phony environmentalist and media campaigns, and is now attempting to disrupt the surge in American natural gas production that is quickly bringing the U.S. into energy independence, and creating threatening unwanted competition for the Russian energy in Europe. Exports from the U.S. via the oil and natural gas extraction process known as hydraulic fracturing – or “fracking” – poses a clear danger not only to Gazprom, but to the Russian government. One quarter of the regime’s revenues come from taxes paid by the energy giant, in which the government is a majority stakeholder. It is not surprising, then, that Gazprom is the only major energy company in the world to oppose the development of shale gas. For years its executives have claimed that fracking poses severe environmental risks; Alexander Medvedev, Gazprom’s executive chairman and head of Gazprom Export, has vowed that the Russian state and Gazprom are ready “to wage [ ] war on shale.” While many former Soviet bloc countries in Eastern Europe have joined NATO and the European Union in an attempt to distance themselves from their Moscow, their overwhelming dependence on Russian energy imports has prevented them from achieving complete independence. Gazprom supplies 30 percent of the European Union’s natural gas, and during a 2009 dispute with Ukraine showed the world that it can make Europe shiver if it turns the spigots off.
TransCanada seeks additional commitments on Keystone pipeline system | Reuters: (Reuters) - TransCanada Corp launched an open season on Thursday for additional commitments for the transportation of crude oil on the Keystone pipeline system, according to a company statement. The open season will close on Sept. 28. The Keystone system, including the Keystone and Keystone XL pipelines, moves oil from Hardisty, Alberta, to markets in Cushing, Oklahoma, then onto the U.S. Gulf Coast. While the original Keystone is already operating, the controversial Keystone XL was delayed for years before being rejected by the administration of former U.S. President Barack Obama. In May, TransCanada's chief executive said lower oil prices and alternative export routes were complicating negotiations for shipper commitments on the XL pipeline project. He said the company did not have a firm deadline for concluding those talks. In March, President Donald Trump's administration approved Keystone XL. The expansion increases the capacity of the current Keystone system from Canada's oil-producing Alberta province to the Gulf of Mexico.
Too soon to say whether Keystone XL will be built, TransCanada exec says - POLITICO: The company behind the Keystone XL pipeline has not yet determined whether there is enough demand for the project to justify actually building it, a top executive said today. It was the strongest acknowledgment from TransCanada to date that the nearly decade-long Keystone saga may end in failure — despite President Donald Trump's overwhelming support for the project, which he green-lit as one of his first acts in office. The company says it remains confident in the project. But it has been struggling to find enough customers, and it still needs approval from Nebraska regulators for the pipeline's route, which landowners and activists in the state have been fighting since the project was first proposed.TransCanada on Thursday called for an “open season” on Keystone XL, a process in which potential customers are invited to bid for contracts to ship oil on the pipeline, which would connect oil sands in Alberta with refiners and export opportunities in the U.S. The open season will last until September, TransCanada Executive Vice President Paul Miller said during the company’s second-quarter earnings call today. A decision on whether to follow through with construction of the $7 billion pipeline will come later, he said. "In November, we’ll make an assessment of commercial support and [Nebraska] approval," Miller said. "In the event we do decide to proceed on the project, we’ll need six to nine months” before construction could start. It would be another two years once construction begins before the project comes online, Miller added.
Developer might not build Keystone XL pipeline | TheHill: The company that obtained a permit to build the controversial Keystone XL oil pipeline might decide not to build it. A TransCanada Corp. executive told investors Friday that it is still assessing interest in Keystone among the oil companies that would pay to use the Canada-to-Texas line, as well as seeking remaining regulatory approvals, and it will likely decide in November or December whether to build. The disclosure means that one of President Trump’s signature energy policy promises — to approve Keystone and get it built — may fall victim to commercial pressures and not get done. Trump approved Keystone’s permit to cross the border with Canada in March. It ended a significant chapter in the decadelong saga, ending years of delay under former President Barack Obama Barack ObamaObama team pushing Deval Patrick presidential run North Korea targeted emails of Clinton advisers: report Putin tests Trump with counterpunch on sanctions MORE — and a rejection of the permit in late 2015 — that the oil industry and Republicans frequently criticized. But Paul Miller, president of TransCanada’s liquid pipelines business, told investors in a quarterly earnings call that Keystone XL is far from certain. He said the Canadian company is launching an “open season” to actively seek out contracts for the $7 billion pipeline with a capacity of 830,000 barrels, through September. The company also needs approval from Nebraska for its route through that state. “Our assessment of these factors will really drive our investment decisions when we get into that November-December time frame,” he said.
TransCanada eyes late 2017 for final decision on Keystone XL: official - TransCanada will take an investment decision this "November or December" on its long-proposed Keystone XL pipeline, with two key processes being completed within that timeframe, the president of its liquids pipelines unit, Paul Miller, said Friday. The Nebraska Public Service Commission is reviewing the company's regulatory application on the final route and the next hearing is in August, Miller said on an earnings call. The commission is due to take a decision by November, he said, on the 1,179-mile, 36-inch-diameter pipeline that will ship 830,000 b/d of crude from Hardisty, Alberta to Steele City in Nebraska. Also by November, TransCanada will assess shipper commitments for a binding open season now under way for Keystone XL and the existing Keystone pipeline, he said. The 600,000 b/d Keystone pipeline -- often referred to as the southern leg of Keystone XL -- gives Western Canadian producers an option to ship their crude directly to the US Gulf Coast from Hardisty. The Keystone pipeline will take Canadian barrels from Nebraska to Cushing, Oklahoma, from where it can be shipped to Nederland, Texas."These are the last two items we are left with," Miller said. Based on talks with potential shippers, TransCanada is hopeful of taking a positive investment decision for Keystone XL later this year as "we see a growing demand" for Canadian heavy crude in the USGC, he said.
Keystone XL: low oil prices, tar sands pullout could kill pipeline plan - It will be close to three years, at least, before oil could possibly be moving through the controversial Keystone XL pipeline—if the pipeline is completed at all. Company officials now concede that after battling protests and regulatory hurdles for nearly a decade, market forces could scuttle the project. Canadian pipeline giant TransCanada first proposed the 1,700-mile project in 2008 to ship tar sands oil from Alberta to the Gulf Coast. During the prolonged dispute, the price of oil fell from more than $130 a barrel to roughly $45 a barrel today, undercutting the prospects for production growth in the Canadian tar sands, which were used to justify the Keystone XL project at its outset. Along with changing market conditions, the emergence of competing pipelines scattered TransCanada's customer base. Now it's uncertain whether the company can sign enough new commitments from Alberta's beleaguered oil patch to move forward.The company recently embarked on an "open season" for Keystone XL, inviting commitments from companies to ship tar sands crude (or, alternatively, lighter oil from the U.S. Bakken fields, in North Dakota and Montana). At the same time, regulators in Nebraska are weighing the concerns of landowners, environmental organizations and indigenous groupswho oppose the pipeline. The state's Public Service Commission will hold a week-long hearing starting Aug. 7 on whether or not to approve the pipeline's proposed route through Nebraska.
Environmentalists prepared to fight new oil and gas regulations in Quebec - Opponents of oil and gas development in Quebec say they’re prepared to ramp up their fight amid expectations that the provincial government could release new regulations on resource extraction in the coming weeks. In May, Natural Resources Minister Pierre Arcand said rules governing that activity would be released a month later and since then, both industry and opponents have been eagerly waiting for them. Carole Dupuis of the Regroupement vigilance hydrocarbures Quebec said her group will take their battle to communities in an effort to prevent an energy industry from taking off in the province. Patrick Bonin, a climate and energy campaigner for Greenpeace, said the push towards fossil fuel development runs counter to the province’s global commitment to combat greenhouse gas emissions.While the province may be better known for its wealth of hydroelectricity, it has plenty of natural gas. According to both the Quebec Oil and Gas Association and Canadian Association of Petroleum Producers, it’s believed to have enough natural gas to meet its needs for at least a century.
Rio - How CFE's Nueces Header Will Dance Gas To Mexico - The current phase of Mexico’s natural gas pipeline buildout, led by the country’s Comisión Federal de Electricidad (CFE), is nearing completion. With 22 new pipelines built or under construction, the effort has dramatically reshaped Mexico’s natural gas supply portfolio. The capacity of the pipeline network within Mexico has been tripled with the addition of 18 new pipelines, while four new pipelines on the U.S. side of the border will add almost 6 Bcf/d of export capacity by late 2018. As part of the building spree, CFE also initiated development of two new gas headers to be built in Texas: a 6-Bcf/d header at Waha in West Texas that was recently completed by a consortium of Carso Energy, MasTec, and Energy Transfer and the 5-Bcf/d Nueces Header, now under construction by Enbridge at Agua Dulce in South Texas. Today, we discuss CFE’s Nueces Header and its role in moving more gas south. We last looked at CFE’s pipeline buildout in Part 4 of our Waha blog series, “It Was Good Living With You, (W)aha.” In that blog, we reviewed the current status of the gas pipelines within Mexico and the header system CFE initiated in the Permian. Earlier this year, we posted a series of blogs focused on Agua Dulce in conjunction with our “I Saw Miles and Miles of Texas” Drill Down series. Today, we shift our focus back to South Texas and the 5-Bcf/d Nueces Header being built by Enbridge at CFE’s request.
Why US LNG won't face Australia's natural gas supply problem. The U.S. and Australia have been ramping up their LNG exports — Australia already is the world’s second-largest LNG exporter after Qatar and the U.S. will soon rank third. Two recent events highlight the difference between the two countries and their natural gas markets. First, in June the Australian prime minister acted to curtail LNG exports next year because of gas-supply shortages affecting domestic consumers. Second, on July 19, the Potential Gas Committee released its biennial analysis of recoverable gas resources in the U.S.; its findings support the view that U.S. LNG exports can continue growing without causing domestic supply constraints. Today we review the PGC report and the Australian LNG/supply situation, then compare the two markets. There are real similarities — and noteworthy differences — between the U.S. and Australia. They’re similar in size (Australia’s land mass is slightly smaller than the Lower 48). Big differences stand out, though. Australia’s population is only 24 million, an astounding 300 million fewer than the U.S. — heck, Texas alone has four million more people than The Land Down Under. And, as we will discuss today, there appears to be a big gap between the U.S. and Australia in the respective capacity of their natural gas sectors to accommodate a big ramp-up in LNG exports.
Seasonality of U.S. distillate consumption and stock levels is declining --Changes in demand trends, trade patterns, and fuel specifications have significantly reduced the role of traditional seasonal factors in driving U.S. distillate markets. Historically, distillate use in the United States was highly seasonal because of its use as a home heating fuel. In recent years, use of distillate as a heating fuel has decreased significantly, while its use as a transport fuel has remained relatively flat (Figure 1). Distillate stocks, which were traditionally drawn down during winter in recent years, have shown little change or even have built over the October-March winter heating season (Figure 2). However exports of distillate fuels, a growing portion of the overall disposition of U.S. distillate production, have actually become more seasonal in recent years, but because the net export peak occurs in the summer months, this change serves to offset the winter peak in domestic heating demand (Figure 3). Distillate fuel has a variety of uses (Figure 1), primarily on-highway transportation for both light- and heavy-duty vehicles. Distillate fuel is also used as a heating fuel in homes and businesses; as a fuel for certain industrial processes, agriculture, and farming; and, to a lesser extent, as a fuel for electricity generation. While use of distillate for home heating has decreased, the share of distillate used for transportation has increased. U.S. consumption of distillate went from 2.9 million barrels per day (b/d) in 1985 to 4.0 million b/d in 2015. In 1985, 504,000 b/d (18%) of U.S. distillate sales/deliveries were to residential customers, presumably for home heating use, and 1.1 million b/d (40%) of sales/deliveries were to on-highway transportation customers. In 2015, the residential customer sales/deliveries were down to 260,000 b/d (7%), while on-highway transportation sales/deliveries increased to 2.5 million b/d (64%).
Trump Signs Russia Sanctions Bill. Will It Impact Oil and Gas Development? -- On Wednesday, Trump was forced to sign a new sanctions bill. As Congress had voted for the bill in such large numbers, the president could not veto it. Therefore Trump grudgingly signed signed the bi-partisan bill "for the sake of national unity," while attacking it as "seriously flawed" and "unconstitutional." He said, "The bill remains seriously flawed—particularly because it encroaches on the executive branch's authority to negotiate. Congress could not even negotiate a healthcare bill after seven years of talking." The president added, "By limiting the Executive's flexibility, this bill makes it harder for the United States to strike good deals for the American people, and will drive China, Russia, and North Korea much closer together." In typical Trump fashion, he also bragged, "I built a truly great company worth many billions of dollars. That is a big part of the reason I was elected. As president, I can make far better deals with foreign countries than Congress." But Trump was not the only one who criticized the legislation, according to the Financial Times . The Russians also attacked Trump as demonstrating "complete impotence, in the most humiliating manner." The oil and gas industry was not happy, either. The paper noted, "International oil and gas companies have warned that the new sanctions, if signed into law, could cause unintended harm to billions of dollars worth of projects, due to the potentially broad interpretation of some clauses in the bill." The decision to expand sanctions to cover oil and gas export pipelines could now undermine some $4.75 billion worth of funding for projects, such as Gazprom's Nord Stream 2 gas pipeline from Russia to Germany, and Chevron's $37 billion expansion of the Tengiz project in Kazakhstan, whose oil flows through Russia to the Black Sea, according to the FT.
U.S. considering some sanctions on Venezuela oil sector - (Reuters) - The Trump administration is considering imposing U.S. sanctions on Venezuela's vital oil sector in response to Sunday's election of a constitutional super-body that Washington has already denounced as a "sham" vote, U.S. officials said. The measures, which could be announced as early as Monday, are not expected to include a ban on Venezuelan oil shipments to the United States -- one of the harshest options -- but could block sale of lighter U.S. crude that Venezuela mixes with its heavy crude and then exports, the officials told Reuters. While no final decisions have been made, the officials, who spoke on condition of anonymity, said the United States could also target further senior Venezuelan officials. But the timing of any new individual sanctions, such as those imposed on 13 Venezuelan figures last week, remained uncertain. Other options still under consideration, the officials said, include various measures to restrict access by the Venezuelan government and state oil company PDVSA to the U.S. banking system, the sources said. But it was not clear whether the U.S. administration was ready to take such action or would instead hold it in reserve if further escalation is deemed necessary following the Venezuelan ballot, which was widely boycotted and sparked deadly protests. Washington has backed the Venezuelan opposition's view that the vote is intended to cement dictatorship. The new round of sanctions is intended to make good on President Donald Trump's threat of "strong and swift economic actions" if Venezuelan President Nicolas Maduro went ahead with Sunday's election of a controversial new congress, the officials said. But the U.S. response, though expected to be the toughest yet against Maduro's leftist government since Trump took office, is also being calibrated to avoid causing further suffering to the Venezuelan people or seriously damaging U.S. economic interests, the officials said.
US Treasury preps Venezuelan oil export sanctions: source - The US Treasury Department is crafting sanctions which would prohibit the import of Venezuelan crude oil into the US, one of several sanctions options the White House is considering in response to an expected vote Sunday in Venezuela, an administration source said Tuesday. But the Trump administration, which has studied the impact of the potential crude oil import sanctions on the US refining sector, is not expected to impose Venezuelan oil sanctions, at least in the near term, the source said. "Treasury is preparing them, but that doesn't mean they'll implement them," the source said. The Trump administration has yet to decide on its expected sanctions response to the Sunday vote called by Venezuelan President Nicolas Maduro to elect a constituent assembly to redraft the country's constitution, sources, both in and outside the administration, said Tuesday. Several sources said they expect the initial response from the Trump administration would be to sanction individuals and some institutions within Venezuela. The administration may also move to restrict some US exports of petroleum products, including gasoline and distillate fuel oil, one source said.
U.S. Oil Sanctions Could Push Venezuela To The Brink -- On July 30, Venezuela’s government moved forward with an internationally-criticized special assembly that will rewrite the constitution, a move widely seen as an attempt to neuter the opposition and consolidate power. As many as 12 people died in street protests and clashes with police. The vote was called a “sham” and a “step toward dictatorship” by the U.S., and it has deepened an already acute political and economic crisis for the South American nation.The U.S. had threatened to levy penalties against the Venezuelan government in the lead up to the vote, and last week it slapped sanctions on 13 top Venezuelan officials, a move seen as a more mild option since it did not target Venezuela’s oil industry.But after proceeding with the vote, the U.S. has decided to step up the pressure. The Trump administration pushed off potentially catastrophic measures targeting Venezuela’s oil sector, but only for now. The U.S. imports about 800,000 barrels per day (bpd) of Venezuelan heavy crude; cutting that off could potentially lead to full-on collapse in Venezuela and would likely also deepen the already terrible humanitarian crisis.Venezuela produces a little under 2 mb/d, but aside from the exports to the U.S., the bulk of the remaining production is earmarked for a handful of countries for little cash or below-market prices. Venezuela has to send large volumes to China as repayment for past loans, and it also sells oil on the cheap to Cuba and other Caribbean countries as part of the increasingly irrelevant Petrocaribe program. In other words, selling oil to the U.S. is where the Venezuelan government makes most of its money. So, putting an embargo on Venezuelan oil into the U.S. could push the country into default. The U.S. Treasury Department has considered this option, but so far it has opted not to take this route
Venezuelan sanctions would tighten already tight USGC sweet/sour spreads -- US Gulf Coast refiners expect heavy crudes to become more valuable as slowing crude flows from some OPEC producers are felt, particularly if sanctions are enacted against Venezuela, company executives said Thursday.Imports of heavy crudes in the USGC from some key suppliers like Saudi Arabia have dropped as they rein in output to support higher crude prices. Venezuela, however, remains a key exporter of heavy crude into the USGC, and any cutback in supply would raise crude prices."Obviously the Venezuelan crude coming into the Gulf Coast is important. We participate in that, we certainly buy heavy spot cargoes from Venezuela during most months," said Mike Palmer, Marathon Petroleum's head of supply on the company's second-quarter results call Thursday."While we have had no difficulty replacing the crude that OPEC has cut, there is not as much sour crude into the Gulf as there had been before OPEC cuts," he said. "If that crude was no longer available because of sanctions then we would have to replace that crude from somewhere else." Marathon is the third-largest US refiner with 1.8 million b/d of refining capacity in seven refineries, including three on the USGC with a capacity of 1.1 million b/d. It also has moved Venezuelan crude up the Capline pipeline to its 273,000 b/d Catlettsburg, Kentucky, refinery on occasion. Marathon in Q2 processed 1.147 million b/d at its USGC plants, of which 74% was sour crude. Venezuela supplied in April 21.3 million barrels, or 710,000 b/d, to USGC refiners, out of a total of 65.8 million barrels of imported into the region during the month, Energy Information Administration data showed.
U.S. oil refiners pare exposure to Venezuelan crude imports --U.S. refiners are shifting away from processing heavy crude, lessening the potential impact on their businesses and motorists of any supply disruptions from Venezuela as the Trump administration considers new sanctions on the country. Deliveries of Venezuelan crude to Citgo Petroleum, the U.S. refining arm of state-run Petroleos de Venezuela slipped to about 70,000 barrels per day (bpd) last month from an average of some 200,000 bpd earlier this year. Phillips 66, the fourth-largest importer of Venezuelan crude this year, received about half its expected supply in June. U.S. imports of Venezuelan crude fell 32 percent in June to a 13-year low of 491,000 bpd, according to Reuters data. PDVSA’s exports have declined this year as production and shipping problems cut its ability to meet commitments. Valero, the largest importer of Venezuelan crude oil in June, plans to shift its U.S. refineries this quarter to run the maximum amount of light sweet crude possible, its officials said, as heavy oil becomes more expensive due to less availability of OPEC-supplied crudes. That has narrowed the discount versus lighter grades in recent months. Gulf Coast refiners, which can process up to 9.6 million bpd, traditionally preferred heavy, sour crudes. But OPEC output cuts, less supplies coming from Latin American producers and growing supplies of shale oil have improved the economics of running lighter crudes. Heavy oil producers Mexico and Colombia also have reduced shipments this year amid declining output. Venezuela, Mexico and Colombia combined trimmed production by almost 10 percent to 5.38 million bpd in the first five months of 2017 versus the same period of last year, according to official figures.
OPEC cuts hurt US refiners but help Canada’s oilsands - As supplies of lower priced heavier crude blends with higher sulphur content exported by OPEC have waned, the key price differential between benchmark light Western Texas Intermediate (WTI) crude and heavier crude blends entering the U.S. market has narrowed. The differential between WTI and Western Canadian Select, the benchmark for Canadian heavy crude, has shrunk to about $10/bbl from the $15/bbl range earlier this year as U.S. crude inventories contracted to 483 million barrels on July 26, down from 532 million barrels in April, according to the U.S. Energy Information Administration. As stronger heavy oil prices benefit Canadian oilsands and heavy oil producers, they also cut into the profit margins of U.S. Gulf Coast refiners. The narrow differential is a welcome development for Canadian heavy oil producers and could get even better in the near-term if the Trump administration blocks imports from Venezuela, which predominantly exports heavy crude to the U.S.
Canadian heavy oil plugs gap left by OPEC, Latam (Reuters) - Canada's struggling oil market has found something of a lifeline as traders scramble for heavy crude due to OPEC production cuts and sinking Latin American output. Output has fallen in Organization of the Petroleum Exporting Countries and non-OPEC Latin American countries such as Mexico and Colombia, leading refiners as far away as China to look to Alberta's oil sands to fill the gap. The interest has boosted the price for heavy Western Canada Select (WCS) oil, which is within range of its tightest discount to U.S. crude ever. Canadian heavy oil is an easy substitute for Middle Eastern and Latin American grades, and the rising demand represents a rare bright spot for the oil sands, which have been hit hard by falling prices and the high cost to produce and blend Alberta's heavy, tar-like bitumen. "We've been seeing a structural change (in the market) since OPEC cut medium sours, and Canadian heavy fits beautifully in there," one trader at an oil sands company said. OPEC is attempting to rebalance global markets by cutting sour crude output, keeping light sweet barrels flowing as U.S. shale producers are pumping at record levels. Output in Venezuela, an OPEC member, fell 11 percent in the first five months of the year to a 27-year-low due to underinvestment and infrastructure problems. And as political turmoil mounts there, the United States could impose sanctions that would hinder Venezuela's ability to sell crude. Mexico's production fell 8 percent in the first five months of 2017 from a year ago as a result of long-running natural production declines in aging oilfields. Colombia's dropped 11.5 percent as a consequence of rebel attacks on pipelines. Venezuela, Mexico and Colombia produce about 5.3 million barrels per day, while OPEC has cut about 1.8 million bpd in supply, most sour crude.
Taxpayers Give Billions in Fossil Fuel Subsidies, Lose Trillions to Related Health Costs - Health campaigners said the energy policies of the world's richest countries are inflicting a double burden on their citizens, not only using their taxes to pay fossil fuel subsidies, but also loading huge health costs on them. The work of the Health and Environment Alliance, HEAL , the report said that although fossil fuel combustion causes deadly air pollution and climate change , virtually all governments spend vast sums of public money—their citizens' taxes—on supporting the oil, gas and coal industry in fossil fuel energy production. A report by HEAL said the health costs associated with fossil fuels are more than six times higher than the subsidies the industry receives in the G20 group of the globe's leading industrialized countries. The G20 agreed in 2009 to phase out the subsidies , but HEAL said that on average, in countries belonging to the bloc, the health costs associated with fossil fuels are far greater than the subsidies: $2.76 trillion against $444 billion. HEAL cited a 2015 report by the UK-based think tank the Overseas Development Institute (ODI), which found that "G20 country governments' support to fossil fuel production marries bad economics with potentially disastrous consequences for climate change." HEAL's own report said the subsidies support an industry that causes premature deaths, ill-health and huge health costs worldwide, in stark contrast to the 2015 Paris agreement . It urged policymakers to end subsidies and use the public money saved to support healthy energy or health care investments instead.
Britain Announces Fresh Bidding Round For North Sea Oil & Gas Blocks - The British Oil and Gas Authority has announced a fresh bidding round for 813 oil and gas blocks in the North Sea. This is the 30th offshore licensing round for local hydrocarbon deposits and it will focus on mature fields, the authority said in a press release.The total area that will be tendered stands at 114,426 sq km or over 28 million acres, and includes prospects as well as discoveries that have remained undeveloped.Bids will be accepted until November 21 and the blocks will be awarded in the second quarter of 2018, OGA said, adding that the 30th round follows an auction organized earlier this month, in which 10 bidders won 12 exploration licenses in the British continental shelf.In March this year, in the 29th licensing round, the authority awarded 25 exploration licenses for 111 blocks and part blocks to 17 companies. That round focused on frontier, or untapped, areas in the British sector of the North Sea. As Reuters reported at the time, the 29th bidding round attracted meager interest from investors. In fact, bids were the fewest in the last 14 years due to the high production costs for oil and gas exploration in the North Sea. In that round, the greatest number of licenses went to Big Oil players with an established presence in the North Sea, such as Shell, Statoil, and BP.
Fracking giant Ineos gets protest injunction - The courts handed a big present to Ineos, the largest shale gas exploration company in Britain, on Monday. The High Court granted the giant firm an interim injunction against potential anti-fracking protesters. It covers eight named locations. They included two proposed shale gas sites in Derbyshire and Rotherham, as well as company offices and property belonging to site landowners. It also applies more widely than injunctions sought by previous oil and gas companies. It covers routes to the proposed exploration sites and to activities undertaken by Ineos employees and members of its supply chain. This includes any depot, equipment, people and operations. It even outlaws actions such as slow-walking. Ineos Shale also recently threatened the National Trust with legal action over access to land in Nottinghamshire. The company wants to carry out seismic testing there and said, “The National Trust is taking an overtly political position.” As the injunction was granted, direct action protests continued at Cuadrilla’s Preston New Road shale gas site near Blackpool. The coordinator, Reclaim the Power, said there had been disruptive action every working day in July. More than 70 people have been arrested. The second new study, meanwhile, takes a different approach, analyzing how much global warming the world has already committed to, since the warming due to some emissions has not yet arrived. Nonetheless, with the planet at a so-called energy imbalance, that warming is inevitably coming, and the study — conducted by Thorsten Mauritsen of the Max Planck Institute for Meteorology in Germany and Robert Pincus of the University of Colorado, Boulder — finds that it probably pushes us several slivers of a degree beyond where we are now. The upshot is that we may already have firmly committed to 1.5 degrees Celsius of warming even if emissions were to stop immediately and entirely (which is not going to happen).
Public support for fracking in the UK at record low, official survey reveals --Public support for fracking has reached a record low, according to the latest government research. A survey by the Business and Energy Department showed just 16% supported the controversial process of shale gas extraction, down from 21% last year and the lowest since the study was launched five years ago. Just 13% of the 2,000 people questioned said they knew a lot about fracking, with just under half knowing “a little.” Groups opposed to fracking said the findings showed that the industry was pulling energy policy in the wrong direction. Elisabeth Whitebread, energy campaigner at Greenpeace UK, said public opinion on fracking continued to “freefall”, adding: “Communities don’t want the unnecessary industrialisation of our countryside for shale gas we don’t need. “More than three-quarters of people support renewables, so the government should listen to their own opinion polls, stay true to their manifesto promise and support offshore wind and solar instead of a new fossil fuel industry. “Concern about climate change is at its highest since 2012, and to meet our climate targets, we must leave fossil fuels in the ground. The fracking industry is pulling UK energy policy in entirely the wrong direction and the public is right to be concerned.” Rose Dickinson, Friends of the Earth campaigner, said: “This makes bad reading for the industry because they know they are desperately fighting an unwinnable battle for support. “The extent to which this industry has failed to win over the public is undeniable. Opposition is increasing not only where fracking is proposed, but across the whole country.” A Business and Energy Department spokesman said: “There are a lot of myths about the alleged risks of fracking that are not backed up by evidence, and this survey shows that the vast majority of people asked said that they do not know a lot about it.
OPEC and the oil barons face a slow death by electrification - Opec, Russia and Big Oil thought they had half a century to prepare for the end of the internal combustion engine. At best they have a decade before the threat turns deadly serious.The twin announcement by France and Britain – within two weeks of each other – to ban sales of petrol and diesel cars by 2040 is an earthquake in the energy world.Others are moving in parallel. A non-binding resolution of the German Bundesrat [its upper house of parliament] has called for a prohibition by 2030. Norway already has such a target by 2025 and the catalytic effect is spectacular: sales of electric vehicles (EVs) reached 42 per cent of all cars in July.China’s new plan stipulates that zero-emission vehicles must make up 8 per cent of total sales next year, rising to 10 per cent in 2019, and 12 per cent in 2020. This is an even bigger earthquake. Those German and Japanese manufacturers that do not yet produce EVs – or not enough – face being shut out of the world’s largest car market.Once governments reset policy in this fashion, markets rush to take advantage. They accelerate the timetable. The inevitability factor turns against the status quo and shifts with pent-up force in a new direction. Morgan Stanley expects EVs to capture 70 per cent of the European market by mid-century. On the one hand it costs ever more to develop fossil-fuel cars that meet tightening rules on CO2 emissions and particulates (NOx). On the other, the cost of electric batteries keeps falling.
Analysis: First signs of stronger physical oil market in the Atlantic Basin start to emerge - The first signs of a sturdier physical oil market are beginning to emerge as evidenced by the healthier state of light sweet crudes in the Atlantic Basin, buoyed by robust demand from global refiners supported by healthy margins and refined product cracks. Traders told S&P Global Platts that the fundamentals in the oil market are strengthening as these light sweet crudes are suddenly selling swiftly, as a stronger middle distillate and gasoline complex are making such crude more appealing to refiners. The beleaguered light sweet barrels, especially those from Nigeria, which over the past few years have been selling sluggishly compared to their sour and heavier counterparts, are suddenly seeing a temporary lease of life. Traders have said the pace of trading for the September Nigeria loading program has been noticeably quicker than in previous months, as refiners from a number of regions scramble to take advantage of buoyant margins before the onset of autumn maintenance. "The Nigerian market is getting into shape," said a WAF trader. "The overhang has been reducing every month and the Indians, Americans and Brazilians have all been buying. The market has strengthened on lights and sweets across the Atlantic Basin." Differentials for light sweet crude in Nigeria have mirrored the strength in the Mediterranean and North Sea in the past few weeks, with grades such as Qua Iboe rising to the highest levels of the year this week. Qua Iboe was assessed at a $1/b premium to forward Dated Brent Thursday, its highest level since mid-December last year. This is also being reflected on the oil futures market along with the bullish factors that include the steady drawdown in US crude stocks and a recent pledge by Saudi Arabia to limit exports to 6.6 million b/d in August. There is a very narrow contango in the front two to three months of the ICE Brent curve but there is a brief backwardation in the back end amid ciphers of tightening fundamentals.
BP's Q2 2017 European natural gas price realization slips to $4.48/Mcf -- BP said Tuesday its average realized natural gas price in Europe slipped to $4.48/Mcf ($4.36/MMBtu) in the second quarter of 2017, a fall of 17% on the previous quarter and of 3% year on year, as European gas wholesale prices dipped compared with the first quarter. BP -- which is more exposed to gas prices in the US than in Europe -- also said its global realized gas price was down quarter on quarter, but up on Q2 last year at $3.19/Mcf as its US realized price rose year on year. European majors were seeing a steady improvement in realized gas prices in Q4 2016 and Q1 2017 as wholesale prices recovered from multi-year lows over the course of 2016. But gas prices in Europe slipped in Q2 compared with Q1 on milder temperatures and robust supply. According to Platts assessments, the average Dutch TTF day-ahead price in Q2 was $5.04/MMBtu and the equivalent UK NBP price was $4.84/MMBtu. That compares with $5.77/MMBtu on the TTF in Q1 and $6.00/MMBtu on the NBP. BP's realized European price had fallen to a multi-year low in Q3 2016 of just $3.94/Mcf. US GAS PRICE RECOVERY In the US, BP's Q2 realized gas price averaged $2.32/Mcf, a significant improvement from just $1.53/Mcf in the same period of 2016. It was, however, lower than than the $2.50/Mcf realized in Q1.
Stopping Nord Stream 2 -- Encouraging developments took place this week in Ukraine’s quest to get European nations to back out of a partnership with Russia to build the Nord Stream 2 pipeline. The $10 billion pipeline would transport up to 55 billion cubic meters of gas under the Baltic Sea, from Russia to Germany, and bypass Ukraine’s gas transportation network. Nord Stream 2 could be completed by the end of 2019. Morally, it’s wrong to be helping Russia’s economy while hurting Ukraine’s simultaneously. But Europe also needs economic reasons to ditch the project. This is where U.S. help in supplying liquified natural gas and encouragement of other, renewable energy sources will help. It was heartening to read the comments of Roderich Kiesewetter, the point person for German Chancellor Angela Merkel’s bloc in parliament’s foreign affairs committee on July 27. As reported by Bloomberg, Kiesewetter said Nord Stream 2 “mustn’t come at the expense of Ukraine or Eastern Europe” and welcomed the U.S. Congress adoption of sanctions on Russia to rein in U.S. President Donald J. Trump.
Ban lift on German OPAL line will let Russian gas flow - Auctions for new partially regulated transport capacities of the German OPAL gas pipeline restarted on August 1 as the German Federal Network Agency (Bundesnetzagentur) lifted its ban in line with Court of Justice of the European Union (CJEU) and Düsseldorf Higher Regional Court.This allows OPAL Gastransport, which operates the 470-kilometre pipeline running in a southerly direction from the Nord Stream landing point in Lubmin near Greifswald as far as the Czech Republic, to market the previously mostly unused OPAL capacities. Along the route, the natural gas pipeline with a transport capacity of 36 billion cubic metres of gas per year crosses the federal states of Mecklenburg-Vorpommern, Brandenburg and Saxony.“Lifting the suspension of auctioning of OPAL’s non-exempted capacity, means that the 2016 EC exemption decision will remain in force at least until 2019, when CJEU is expected to make a judgement,” Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies, told New Europe on August 1.She explained that restart of auctions, which were suspended for half a year as a result of provisional suspension by the courts of the 2016 European Commission exemption decision in response to Polish request, means that Russian gas giant Gazprom would be able to book at least 80% of OPAL capacity and potentially up to 100% should there be no interest from third parties thus allowing higher utilisation of capacity in Nord Stream-1. “Gazprom would be able to do so at least until when CJEU makes a judgement in 2019. Should the CJEU uphold the 2016 EC exemption decision – which I believe it will – Gazprom would be able to continue to do so afterwards,” Yafimava said, adding that higher utilisation of Nord Stream-1 would indicate that there is demand on part of Gazprom for additional export capacity, for example Nord Stream-2.
Exclusive: Sanctions gap lets Western firms tap Russian frontier oil | 4-Traders: A gap in U.S. sanctions allows Western companies to help Russia develop some of its most technically challenging oil reserves, and risks undermining the broad aim of the measures, a Reuters review of company results and media releases has found. When Washington imposed the sanctions on Moscow in 2014 over its annexation of Crimea and role in the Ukraine conflict, the U.S Treasury said it wanted to "impede Russia's ability to develop so-called frontier or unconventional oil resources". The restrictions were designed to prevent Russia countering declining output from conventional wells by tapping these hard-to-recover reserves which require newer extraction techniques like fracking, an area where it relies on Western technology. Three years on, however, Norway's Statoil is helping Kremlin oil giant Rosneft (>> NK Rosneft' PAO) develop unconventional resources, while British major BP (>> BP) is considering a similar project. Statoil is not breaching sanctions and nor would BP be doing so, but the cooperation highlights how sanctions have only been partially effective in curbing Western energy investment. The United States, having itself experienced a spike in oil output from tapping shale rock over the past decade, worded the measures to prohibit Western companies from helping Russia develop "shale reservoirs". It did not mention other lesser-known forms of unconventional deposits.
Global trade recovery lifts diesel demand: Kemp (Reuters) - World trade is growing again which will give a big boost to middle distillates such as diesel used in the high-power engines that move almost all freight. World trade volumes grew by 5 percent in the three months to May compared with the same period a year earlier, according to the Netherlands Bureau for Economic Policy Analysis (CPB).Trade growth came close to a standstill in the first quarter of 2016 but has been accelerating gradually since then especially from the fourth quarter onwards ("World Trade Monitor", CPB, May 2017).Volumes are now rising at the fastest rate for six years though growth is still comparatively slow in historical terms (http://tmsnrt.rs/2f7ArhW). Growth has accelerated in all regions, with the exception of Africa and the Middle East, where economic activity is still depressed owing to low oil prices. Slumping commodity prices between the middle of 2014 and early 2016 hit consumer spending and business investment in most developing countries hard.The result was a sharp slowdown in trade as household incomes fell and new oil, gas and mining projects were postponed or cancelled ("Commodity slump stalls global trade growth", Reuters, Oct 2016). But the stabilisation and increase in commodity prices, including oil, is now helping support faster trade growth in 2017. Mid distillates account for around 35 million barrels per day of global oil consumption, most of which is used to transport freight ("Statistical Review of World Energy", BP, 2017).Worldwide distillate consumption fell by 0.5 percent in 2016, the first annual decline since the global financial in 2009 and only the third since 1990 (http://tmsnrt.rs/2f875ja).Consumption was hit by a combination of the trade slowdown and back-to-back mild winters in much of the northern hemisphere in 2015/16 and 2016/17.Distillate demand grew more slowly than oil consumption as a whole, which was up 1.6 percent in 2016, and much slower than gasoline, up 2.4 percent.
Maritime chokepoints are critical to global energy security - The U.S. Energy Information Administration has released its 2017 World Oil Transit Chokepoints report. Chokepoints are narrow channels along widely used global sea routes for oil transport, with some so narrow that restrictions are placed on the size of the vessel that can navigate through them. The inability of oil tankers to transit a major chokepoint, even temporarily, can lead to substantial supply delays and higher shipping costs, resulting in higher world energy prices. While most chokepoints can be circumvented by using other routes that add significantly to transit time, no practical alternatives are available in some cases. Chokepoints may also expose oil tankers to theft from pirates, terrorist attacks, political unrest, and shipping accidents. By volume of oil transit, the Strait of Hormuz (leading out of the Persian Gulf) and the Strait of Malacca (linking the Indian and Pacific Oceans) are the world's most important strategic chokepoints. The Cape of Good Hope, near the southern tip of Africa, is a major oil trade route and potential alternate route to certain chokepoints. Ships carrying crude oil and petroleum products transiting certain chokepoints are in some cases limited by size restrictions. The global crude oil and refined product tanker fleet is typically classified using the Average Freight Rate Assessment (AFRA) system that was first established by Royal Dutch Shell many years ago and is now overseen by an independent group of shipping brokers. The AFRA system classifies tanker vessels according to deadweight tons—a measure of a ship's capacity to carry cargo. The approximate capacity of a ship in barrels is determined using an estimated 90% of a ship's deadweight tonnage, which is multiplied by a barrel-per-metric-ton conversion factor specific to each type of petroleum product and crude oil, because liquid fuel densities vary by type and grade.
Nigeria's NNPC in funding deals with foreign partners to develop oil fields -- Nigerian National Petroleum Corp said Thursday it had agreed new funding arrangements with four foreign partners to develop new oil fields in the Niger Delta that will substantially increase Nigerian reserves and daily production. The first of the deals, with US major Chevron Corp., is for development of two offshore oil blocks OMLs 91 and 91 and is expected to add 211 million barrels of oil and 1.9 Tcf of gas to Nigerian reserves, and potential output of 30,000 b/d of oil equivalent, the NNPC added. The second agreement was signed with the Shell, Total and Eni joint venture partnership for the development of several onshore and offshore oil fields that had long been delayed due to a lack of funds. "The deal (Project Santolina) is for an accelerated upstream production comprising of 156 development activities across 12 OMLs and 30 fields in the Niger Delta," NNPC said. Lack of funds has been a major stumbling block for NNPC, which manages the Nigerian government's average 57% interest in joint ventures business with foreign oil companies, in its efforts to bolster Nigeria's oil output. In June, NNPC singed a deal with indigenous company First Exploration and Production and oil service giant Schlumberger to provide $700 million to develop two shallow water fields that will add 50,000 b/d of crude to Nigeria's output. Also last December, Nigeria negotiated a deal with NNPC partners, Shell, ExxonMobil and Chevron, for the repayment of over $6 billion debt owed to the companies for funding oil and gas projects.
Government vows to halt oil production if cost remains high -- International Oil Companies (IOCs) and their indigenous counterparts may soon be forced to halt operation, as the cost of producing a barrel of crude oil remains high. The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, says there is no way the country can keep producing, while the prices of crude remain low. The minister said that the oil sector has suffered infrastructural deficit of over $15 billion (N4.59 trillion) as many investment has been put on hold due to the low oil prices. At an international conference and exhibition organised by the Society of Petroleum Engineers in Lagos, he said it is better for Nigeria to stop crude oil production than to produce at a high cost. The minister said that government is compelled to work towards drastic reduction of cost of production because “there is no way this country will produce oil at this sort of swelling prices that we see; there will be no margins left for this country.”He said unlike other countries that have managed to reduce their production cost over the years, the cost of producing crude oil in Nigeria has remained high.Kachikwu said only companies that could drive down costs would be given favourable consideration in the oil sector. Besides, the President of Dangote Group, Alhaji Aliko Dangote, has said that the country will be able to retain over $7.5 billion (N2.295 trillion) yearly through import substitution from the construction of the Dangote Refinery.
Global refiners brace themselves as China cements its oil market dominance (Reuters) - China is on pace to overtake the United States as the world's biggest oil importer this year, cementing its status as Asia's most pivotal oil market actor that will increasingly dominate the region's fuel trade. For the first time, China imported more crude oil in the first half of the year than the U.S., government statistics showed. China averaged 8.55 million barrels per day (bpd) versus 8.12 million bpd in the U.S., a trend that is expected to last. The shift highlights the change in the center of gravity in global oil markets from West to East. Chinese state-run oil trader Unipec is now the world's biggest physical oil trader. By drawing more of the world's oil to its shores, China, the second-biggest oil consumer after the U.S., will play a crucial role in setting the global price of the commodity, especially as the crude futures market in Shanghai develops. China's import surge is being driven by the expansion of its refinery capacity. But, as the domestic demand has not materialized to soak up the fuel supply, China's exports of gasoline and diesel have climbed to record highs. This flood of products has caused headaches for competitors across Asia and depressed diesel profit margins to multi-year lows in 2016. "China is putting a lot of pressure on the traditional export hubs of Taiwan, Korea and Singapore to capture the market share within Southeast Asia and Australia," said Joe Willis, senior research analyst, Asia refining, at energy consultancy Wood Mackenzie.
Saudi Arabia Growing Nervous Over OPEC Compliance - OPEC officials are hoping to limit the production of both Libya and Nigeria, as fears grow that the two exempted members are undermining cuts from the rest of the cartel. Saudi Arabia is also promising to lower its oil exports in order to take more supply off of the market. Saudi Arabia’s energy minister Khalid al-Falih reportedly cut short his vacation in order to attend the OPEC monitoring meeting in St. Petersburg on Monday, an unexpected move that put more weight on the details of the gathering. His attendance suggests OPEC is worried about the pace of rebalancing in the oil market, and also raises speculation about what OPEC might do next. OPEC’s Secretary-General Mohammad Barkindo said al-Falih decided to attend because of the meeting’s “strategic importance” and because of “the high expectations of the times,” the Wall Street Journal reported.The WSJ also said that al-Falih was “very nervous,” and he spent the weekend on the phone with various OPEC officials.There is a growing urgency from some members of the production cut deal to pressure Nigeria and Libya to agree to a cap on their oil production, as both countries have succeeded in ramping up lost output. “I think that as soon as these countries reach a stable production level, they must join other responsible producers and make their contribution to the measures aiming to rebalance the market,” Russia’s energy minister Alexander Novak said, according to TASS. Russia is not an OPEC member but joined in the pact to cut productionThe WSJ reported that one OPEC official said Nigeria would agree to cap output once it r eaches 1.8 million barrels per day (mb/d). However, the significance of that is undermined by the fact that Nigeria still has room to grow production up to the supposedly agreed upon 1.8 mb/d cap. Nigeria’s output stood at 1.6 mb/d in June and it will take some effort to grow production by another 200,000 bpd.
Saudi Oil Minister Met With Top Commodity Hedge Funds -- Khalid Al-Falih, Saudi Arabia’s energy minister, met in private with some of the world’s top commodity hedge funds in July, taking the unusual step of personally canvassing investor views on the state of the market. In the past, Saudi Arabian officials have disparaged hedge funds as unhelpful speculators that undermined OPEC’s quest for market stability. Last month’s meetings, described by people familiar with the encounters, signal the world’s largest exporter has reassessed the role of financial investors in the global oil market. Al-Falih met the oil investors and traders in London days before traveling to St. Petersburg where OPEC and non-OPEC ministers discussed the market, the same people said, asking not to be identified because the talks were private. Although Saudi officials have met in the past with hedge funds representatives, it’s the first time meetings involving the minister have been reported. Al-Falih met Pierre Andurand, the founder of an eponymous fund with more than $1 billion in assets, and Jonathan Goldberg, the former Goldman Sachs Group Inc. trader who founded BBL Commodities LP, the people said. He also met with traders including Alex Beard, the head of oil at Glencore Plc, the world’s largest commodities house.Al-Falih asked the oil traders why the Organization of Petroleum Exporting Countries had achieved only partial success reviving the market and what else the group could do to push prices higher. He also sought views on suggestions from some Wall Street banks that Saudi Arabia should target forward prices to end contango, the market structure where people pay less for oil delivered today than barrels supplied in the future. Contango has allowed some U.S. shale producers to hedge forward production and lock in profits, making it more difficult for OPEC to wrest back control of the oil market.
OPEC Has a Crippling Problem: Its Members Can’t Stop Pumping - OPEC, the once powerful oil cartel, is struggling to hold the line in a make-or-break fight to limit oil production, prop up crippling low prices and prove its relevance. Why? Its members are addicted to oil. Eight months after the Organization of the Petroleum Exporting Countries announced a plan for its 14 members and 10 allied... OPEC ministers met last week in St. Petersburg to discuss reining in output. Above, Russia’s Alexander Novak, left, and Saudi Arabia’s Khalid al-Falih.Photo: Kovalev Peter/Zuma Press OPEC, the once powerful oil cartel, is struggling to hold the line in a make-or-break fight to limit oil production, prop up crippling low prices and prove its relevance. Why? Its members are addicted to oil. Eight months after the Organization of the Petroleum Exporting Countries announced a plan for its 14 members and 10 allied countries to withhold almost 2% of the world’s oil every day to boost prices, seven of the 11 OPEC members that pledged to cut appear to be producing more oil than promised. Crude prices have actually fallen, by 7.6% to $52.52 a barrel, since the beginning of the year—half what the cartel called a fair price just three years ago and a level that some say is here for the long term. Previously, low production costs meant OPEC members profited even when oil prices fell. These days, members have ramped up government spending to keep populations happy and cover military expenses, and don’t have a cushion to let oil revenues slip. Their strained budgets can be covered only through increasingly high prices per barrel, and if prices are low they need to produce more. The inability to control output poses a potentially existential threat to OPEC’s influence. The longer prices remain low, “the harder it is to make the case to the most cash-strapped producers that they are ‘better together.’
OPEC’s Existential Sucker Punch - You wait decades for an existential crisis, then two come along at once. At least that's how it must feel for OPEC's beleaguered ministers. In the short term the market for their oil is being eroded by rising production outside their control. Looking further ahead, oil demand itself is under threat from the electrification of road transport. OPEC may not yet be dead, but its days are surely numbered.The most obvious short-term threat to the group comes from the rapid rise in U.S. shale oil, but the risks have expanded to include other areas like Brazil's prolific sub-salt discoveries and more recent finds further north along the east coast of South America. An increasing volume of U.S. crude is finding its way to markets in Asia that used to be the preserve of the group's Middle Eastern powerhouses. China was the biggest foreign buyer of U.S. crude in April -- the most recent month for which EIA data are available -- overtaking Canada for the second time this year. And Indian refiners are finding an appetite for heavier U.S. grades that compete directly with Middle Eastern crudes. This is a particular worry for OPEC producers whose initial output cuts were said to target buyers in Europe and the Americas while sales to key customers in Asia were to remain untouched. Add to this that there's been little letup in U.S. oil production. The American surge began late last year, just as OPEC ministers were edging toward a deal to cut output after a two-year production free-for-all that saw WTI crude fall to little more than $26 a barrel. This shows little sign of running out of steam -- output from the Lower 48 states, which includes offshore activity in the Gulf of Mexico, edged above 9 million barrels a day in the third week of July, its highest level for almost two years, according to weekly data from the Energy Information Administration. Outside the shale patch, big oil is learning to live with lower prices again. Royal Dutch Shell Plc "is getting fit for the $40s," Chief Executive Officer Ben van Beurden said on Thursday's second-quarter earnings call, Van Beurden also articulated the second existential threat, when he said in an interview with Bloomberg TV not only that his next car would be electric, but that he could see demand for liquid fuels peaking in the 2030s. A political trend towards growing electrification of transport poses a real, long-term problem. Nobody in their right mind is suggesting that oil is suddenly going to stop being the world's transport fuel of choice, but its market share will come under increasing pressure. Four countries in Europe have now proposed bans on the sale of gasoline and diesel-fueled cars by 2040 at the latest. Between them they account for around a third of all the passenger vehicles in use in Europe.
OPEC/non-OPEC coalition seeks to shore up oil output cut compliance at Abu Dhabi meeting - Faltering compliance with oil output cuts has moved the OPEC/non-OPEC producer coalition to call a meeting of technical experts next week in Abu Dhabi to discuss ways to firm up member commitments to uphold their quotas. The meeting, to be held August 7-8, follows pledges by the coalition's monitoring committee to demand better compliance from flagging members and another warning from OPEC's de facto leader Saudi Arabia that it would not tolerate any country to "free ride." "Although conformity with the production agreement remains strong at the aggregate level, some countries continue to lag, which is a concern we must address head on," Saudi energy minister Khalid al-Falih said at a meeting of the monitoring committee in St Petersburg last week. Iraq, for example, averaged 69,000 b/d above its quota from January through June, according to data from the S&P Global Platts OPEC survey, one of six secondary sources used by the coalition to monitor OPEC production. That is the largest amount by which any member of the bloc is exceeding its target. Iraqi minister Jabbar al-Luaibi will be meeting with Falih in the coming days, as well as with Iran oil minister Bijan Zanganeh, according to the Iraqi oil ministry. "Our friends had some viewpoints and gave some explanations," Zanganeh was quoted by Iran's Shana news service as saying. "They had justifications for their actions. We will continue talks with them." Luaibi has insisted for months that the deal concerns exports, not production, contrary to the text of the agreement on OPEC's website, and as the deal was being negotiated last fall, he complained that OPEC's secondary sources were not accurately reflecting Iraq's production levels. Other countries have likewise complained about secondary sources, but in almost every case, secondary source production estimates have been lower than what OPEC members have directly reported to the secretariat.
The Oil Trader Known as ‘God’ Is Closing Down His Main Hedge Fund - Andy Hall, the oil trader sometimes known in markets as “God,” is closing down his main hedge fund after big losses in the first half of the year. The capitulation of one of the best-known figures in the commodities industry comes after muted oil prices wrong-footed traders from Goldman Sachs Group Inc. to BP Plc’s in-house trading unit. Hall’s flagship Astenbeck Master Commodities Fund II lost almost 30 percent through June. Hall shot to fame during the global financial crisis when Citigroup Inc. revealed that, in a single year, he pocketed $100 million trading oil for the U.S. bank. His career stretches back to the 1970s and includes stints at BP and legendary trading house Phibro Energy Inc., where he was chief executive officer. “Andy Hall is one of the grandees of oil trading,” said Jorge Montepeque, a senior vice president of trading at Italian energy major Eni SpA. Hall is the latest high-profile commodity hedge-fund manager to succumb to the industry’s low volatility and lack of trending markets. At least 10 asset managers in natural resources have closed since 2012. Goldman Sachs reported its worst-ever result trading commodities in the second quarter. [One reader of the blog frequently suggested GS was often talking its own book, seemingly trying to move the market for its benefit, not necessarily the benefit of the customer.] Oil hedge funds such as Astenbeck wagered earlier this year that production cuts led by Saudi Arabia and Russia would send prices climbing. Yet, their bets backfired as U.S. shale producers boosted output and Libya and Nigeria recovered from outages caused by domestic disturbances and civil war. [And the fact that Saudi Arabia simply emptied some of its above-ground storage and never did cut exports -- until recently?]
Hedge fund short covering lifts oil prices: Kemp - (Reuters) - In recent weeks short covering, rather than long building, has driven oil prices higher, which suggests fund managers are becoming less bearish about prices rather than more bullish.Hedge funds and other money managers continued to reduce their short positions in crude and refined fuels in the week to July 25, pushing prices higher.Hedge funds reduced total short positions in the five major futures and options contracts linked to crude, gasoline and heating oil by 71 million barrels, according to data published by regulators and exchanges.Total short positions have been cut by 231 million barrels over the last four weeks to the lowest since the end of April (http://tmsnrt.rs/2f0JQYk).Hedge funds now have short positions in crude, gasoline and heating oil totalling 279 million barrels, down from a record 510 million barrels on June 27.By contrast, total long positions have increased by only 41 million barrels over the same four-week period.The prevalence of short covering rather than long building was apparent in four of the five major contracts in the week to July 25.Hedge funds cut short positions in Brent by 27 million barrels but left long positions unchanged.Funds cut short positions in NYMEX and ICE WTI by a total of 23 million barrels while long positions actually fell by 6 million barrels.Short positions in gasoline were cut by 11 million barrels while just 2 million barrels of new long positions were added.Only in heating oil was the reduction in short positions of 5 million barrels roughly matched by an increase in long positions of 6 million barrels.But with so many short positions now closed, the short-covering rally has now probably run its course. Short positions in crude and gasoline are well below the level at the start of June when the latest wave of selling began.
WTI Jumps Above $50 On Report US Prepping Sanctions Against Venezuela Oil Industry --After both Brent and WTI rose above their respective 50DMAs on Friday, capping 2017's best weekly rally for oil, the rising tide is accelerating as the latest CFTC COT data confirmed, when net specs boosted bullish Nymex WTI crude oil bets by 27K net-long positions to 423K, the highest in two months, as producers continued to cover short hedges, sending their net position to the most bullish since the summer of 2015. Meanwhile, oil started the Sunday session jumping out of the gate, with WTI rising above $50 for the first time since May in early Asian trading, following the usual non-material weekend chatter and "noise" out of OPEC (which to exactly nobody's surprise "can't stop pumping"), however what has attracted traders' attention, is a WSJ report that following last week's latest round of sanctions, and after today's vote to overhaul Venezuela's constitution further entrenching Maduro's unpopular regime, US government officials are considering announcing sanctions against Venezuela's oil industry as early as Monday, although as the WSJ notes, a full-blown "embargo against Venezuelan crude oil imports into the U.S. is off the table for now."
Oil surges higher, posts biggest monthly rise since April 2016 - Oil futures erased an early loss, surging into the closing bell as traders finished out July with the biggest monthly percentage gain since April 2016. On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in September CLU7, -3.01% rose 46 cents, or 0.9%, to $50.17 a barrel, its highest close since May 24. For the month, the U.S. benchmark advanced 9%. September Brent crude UK:LCOU7 rose 13 cents, or 0.3%, to settle at $52.65 a barrel and notched a monthly gain of 9.9%, its largest since December. Oil had drifted lower amid choppy trading conditions in earlier activity as investors weighed the potential for the U.S. to impose sanctions against Venezuela — a member of the Organization of the Petroleum Exporting Countries and a major exporter of oil to the U.S. — after a referendum over the weekend. “This could result in a shortage of heavy oil for U.S. refineries given that Saudi Arabia is already shipping less oil to the U.S. Ultimately, however, all these factors led to an increase in speculative positions on rising oil prices,” analysts at Commerzbank said in a Monday note. The U.S. Treasury on Monday afternoon announced sanctions against Venezuelan President Nicolás Maduro, freezing his assets in U.S. jurisdictions. The Trump administration hasn’t yet imposed new sanctions on Venezuela’s oil industry.
OPEC oil output jumps to 2017 high on further Libya recovery - (Reuters) - OPEC oil output has risen this month by 90,000 barrels per day (bpd) to a 2017 high, a Reuters survey found, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal. A dip in supply from Saudi Arabia and lower Angolan exports helped to boost OPEC's adherence to its supply curbs to 84 percent. While this is up from a revised 77 percent in June, compliance in both months has fallen from levels above 90 percent earlier in the year. The extra oil from Libya means supply by the 13 OPEC members originally part of the deal has risen far above their implied production target. Libya and Nigeria were exempt from the cuts because conflict had curbed their production. A gain in Libyan and Nigerian output has added to the challenge the OPEC-led effort is facing to get rid of excess supply on world markets. To address this, ministers at a July 24 meeting moved to cap Nigerian output and officials are holding talks next week on improving compliance. "There is a need to align all countries to achieve full compliance," a source close to OPEC said of the compliance talks, which will be held on Aug. 7-8 in Abu Dhabi. As part of a deal with Russia and other non-members, the Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million bpd from Jan. 1, 2017 until March next year.
Prompt NYMEX crude tops $50/b as US imposes sanctions on Maduro -- Crude futures climbed further Monday after US sanctions were imposed directly on Venezuelan President Nicholas Maduro, while a fire at Europe's largest refinery supported product futures. NYMEX September crude settled 46 cents higher at $50.17/b. ICE September Brent settled up 13 cents at $52.65/b on expiry. ICE October Brent rose 50 cents to settle at $52.72/b. Related Capitol Crude podcast episode:Making sense of sanctions: The US, Venezuela, Russia, energy and oil flows Market participants were eager to see if crude futures could build upon last week after prices rose by the most on a weekly basis this year. Early action suggested the rally was showing signs of exhaustion until news broke that the US Treasury Department had added Maduro to its Specially Designated Nationals list. That decision comes after Sunday's controversial election that gave Maduro the right to replace the country's National Assembly with a new legislative body tasked with rewriting the country's constitution. A weaker dollar also helped support crude prices Monday, with the dollar index sinking to 92.786, its lowest level since May 2016. Refined product futures were stronger than crude Monday after Shell took a number of units at the 404,000 b/d Pernis refinery offline because of a fire late Saturday, the company said Sunday.
Bulls Crushed As Oil Crashes Again - WTI hit $50 per barrel for the first time since May this Monday, but the benchmark then crashed on Tuesday morning as OPEC exports surged. Crude prices appeared to have firmed up this month and there was a greater sense of optimism in the oil market, but the Tuesday morning crash suggests volatility is still the defining feature of today’s markets. In the past, growth-at-all-costs was the name of the game. But with few expecting a strong rebound in prices, investors are increasingly pushing oil companies to focus on profitability, even if that means forgoing drilling. After Venezuela moved forward with its “constituent assembly,” a vote intended to defang the opposition to President Nicolas Maduro, the U.S. responded with another round of sanctions, this time targeting the President himself. Again, it was seen as the milder option on the table for the U.S., although news reports indicate that the U.S. Treasury Department has explored oil-related sanctions, either targeting oil imports from Venezuela, or barring PDVSA from doing financial business with U.S. dollars, or barring exports of U.S. refined products to Venezuela. OPEC is struggling to hold onto market share while also attempting to boost prices. Everyone seems to agree that if OPEC really wanted to drive U.S. shale out of business, it would have to pump full-tilt and let prices crash for an extended period of time. That might have worked in the past, but OPEC members are no longer strong enough financially to survive a lengthy downturn. That’s because public spending needs have skyrocketed since the Arab Spring. For example, according to the WSJ, the UAE can produce oil for $12 per barrel, but really needs oil prices at $67 per barrel to cover its budget. The story is similar for many Gulf Arab countries, as spending needs have spiked in response to an increasingly restless and restive population. The upshot is that OPEC is not willing or capable of enduring another price downturn.
Oil Prices Slip As OPEC Oil Exports Creep Higher - OPEC’s crude oil exports reached 26.68 million bpd last month, energy data provider Kpler said, on the back of higher shipments from Libya, Nigeria, and the UAE. The figure was up by almost 388,000 bpd from June. The UAE led the increase, shipping 326,000 bpd more in July than in June. Yet, Kpler notes, the June average was lower than usual, so the total for July, at 2.6 million bpd, was basically flat on May. Libya, which has ramped up its crude oil output to above 1 million barrels, exported an average daily of 907,000 bpd in July, up 182,000 bpd on a monthly basis. Nigeria’s exports rose by 130,000 bpd thanks to higher loadings through the Forcados terminal, to a total of 1.884 million bpd. Kuwait was the OPEC member whose exports shrunk the most last month, with shipments down by 241,000 bpd to 1.977 million bpd. Angola was next, exporting 98,000 bpd less in July than in June, at 1.66 million bpd. Saudi Arabia’s shipments of crude fell by 45,000 bpd last month to 7.155 million bpd. The Kingdom has pledged to cut its oil exports further, to 6.6 million bpd from this month.Meanwhile, Reuters reported that OPEC oil output rose by 90,000 bpd in July, thanks to higher production in Libya and Nigeria. The dip in Angolan exports and Saudi production, however, kept compliance with the production cut deal in the cartel at a respectable 84 percent, up from 77 percent in June.
Oil is tanking 3% on another report of rising output from Saudi-led oil cartel - Oil prices plunged back below $49 a barrel on Tuesday after another report that OPEC's output rose last month despite the cartel's deal to slash production. A survey of analysts conducted by Bloomberg News suggested OPEC's July output rose by 210,000 barrels a day to 32.87 million barrels a day. That was a bigger jump than the 90,000 barrels-a-day rise that a survey conducted by Reuters showed on Monday. U.S. West Texas Intermediate crude prices tumbled $1.58, or 3.2 percent to $48.59, by 11:58 a.m. ET (1558 GMT). The contract hit a nearly 10-week high at $50.43 earlier in the session, after breaking above the key $50 level for the first time in two months on Monday. Essam Al-Sudani | Reuters People work at the Halfaya oilfield in Amara, southeast of Baghdad, Iraq.Oil prices plunged back below $49 a barrel on Tuesday after another report that OPEC's output rose last month despite the cartel's deal to slash production. A survey of analysts conducted by Bloomberg News suggested OPEC's July output rose by 210,000 barrels a day to 32.87 million barrels a day. That was a bigger jump than the 90,000 barrels-a-day rise that a survey conducted by Reuters showed on Monday. U.S. West Texas Intermediate crude prices tumbled $1.58, or 3.2 percent to $48.59, by 11:58 a.m. ET (1558 GMT). The contract hit a nearly 10-week high at $50.43 earlier in the session, after breaking above the key $50 level for the first time in two months on Monday. International Benchmark Brent crude futures were trading down $1.61, or 3.1 percent, at $51.11 per barrel, after earlier slipping from a nearly 10-month high just below $53 a barrel. The rise in OPEC production was not unexpected following Monday's Reuters survey, he said, but the sharp drop on Tuesday indicates that investors perhaps bid up oil too much after Saudi Arabia vowed export cuts last week. "People keep taking them at their word and giving it to much credit, and then the rug gets pulled out,"
WTI Tumbles After Surprise Crude Inventory Build --Following the ugliest day in a month for WTI (on OPEC production increase survey), bulls hopes rest on tonight's API data confirming the recent trend of inventory draws but that was not to be. Against expectations of a 3.1mm draw, API reported crude inventories built by 1.78mm barrels last week. The kneejerk reaction was clear - down hard. API:
- Crude +1.78mm (-3.1mm exp)
- Cushing +2.562mm (-700k exp)
- Gasoline -4.827mm (-1mm exp)
- Distillates -1.225mm
The recent trend in draws (for crude, gasoline, and distillates) was stymied last week with the biggest crude draw in 2 months, and a huge build at Cushing... “This race to rebalance supply and demand--it’s a marathon and lot of people are entering it thinking it’s just a quick sprint,” Mark Watkins, a regional investment manager at U.S. Bank Wealth Management, which oversees $142 billion in assets, told Bloomberg. “But, this rebalancing is going to take a lot longer than a month, or six months or even a year.”
Oil: OPEC vs shale to cap prices at $50 or lower in third quarter - Growth in U.S. oil production is slowing, but will continue to blunt OPEC's efforts to cut supply and normalize global inventories, keeping benchmark prices capped at around $50 a barrel this quarter, according to a CNBC poll of energy strategists, traders and economists. De facto OPEC leader Saudi Arabia is leading calls to deepen production cuts as it battles perceptions of falling compliance. Doubts over OPEC's commitment to supply curbs tipped benchmark oil futures into a bear market in June. Elsewhere, OPEC is also squaring off against familiar rivals. Attempts to prop up the price of oil by the producer group have encouraged U.S. suppliers to put more oil onto an already over-supplied market. But bulls say that's changing as American production shows signs of leveling out and recent declines in U.S. inventories point to market re-balancing. "It's still sheikhs versus shale," said John Driscoll, director of JTD Energy Services in Singapore and a former oil trader whose career spans nearly 40 years. "I would put an average price for [the third quarter] at just under $50. In the past year it's like Brent was following the U.S. speed limit: 55 max." The "wild card" for oil markets, Driscoll said, remains output from tight oil formations such as the Permian Basin in the U.S. southwest. Brent crude will average $50 a barrel in the July to September period, according to the median response in CNBC's survey of 21 strategists, traders and economists. The lowest call was for $40 oil, while the highest was $56. Brent — the benchmark for two-thirds of the world's oil — averaged $50.79 in the second quarter.
"Lower-Forever" Oil Isn’t Forever-Ever - Ask the CEO of an oil company where they think the price of their main product is going, and the usual response is a deeply unsatisfying variation on "I dunno."That isn't the main reason why Royal Dutch Shell PLC's chief executive drew a collective gasp with his "lower forever" comment about the market last week. But it is worth remembering when it comes to interpreting what Ben Van Beurden meant.There's a good reason why oil chiefs tend to shy away from public prognostications on the subject: They can get it embarrassingly wrong.So it shouldn't be a surprise that when Van Beurden talked about oil being "lower forever", he didn't actually mean forever-ever:Lower forever; yeah, that's the mindset. Yeah, to be perfectly honest, I do think we will have quite a bit of movement in the oil price going forward, and there is a better than 50-50 chance that we will see oil prices trend up ... But that's not the mindset that we want to have in the organization. We do not want to have the mindset that higher oil prices are around the corner to help us out. Yeah, could go down, could go up, could stay about the same, right?Van Beurden wasn't trying to predict the oil price. He was trying to do something much harder: instill a culture of thrift inside a giant oil and gas company. This is about resilience, not clairvoyance.
WTI Slides After Disappointing Crude Draw & Production Surge - WTI prices dumped on last night's surprise crude build but have limped back above $49 heading into the DOE prints this morning (although Russia sanctions headlines dipped it). DOE did not help as the report was a disappointment for the bulls with production rising to a new cycle high, crude inventories drawing less than expected but total U.S. oil inventories (that's crude plus all products, including the often volatile "other oil" category) rose by 1.1 million barrels last week. DOE":
- Crude -1.53mm (-3.1mm exp)
- Cushing -39k (-700k exp)
- Gasoline -2.52mm (-1mm exp)
- Distillates -150k
API's surprise crude build was offset by DOE's draw - but it was a disappointingly small draw... and gasoline's draw was smaller than API's... Gaoline demand rose to a new record high 9.84mm b/d. Crude Production (in the Lower 48) topped 9mm last week for the first time since July 2015, and this week it rose once again to a new cycle high...WTI bounced back from the API surprise plunge but dropped into the DOE print on Russia sanctions headlines... and then extended its losses - back to API lows - on the production surge and total inventoiry build... Nitesh Shah, a commodities strategist at ETF Securities told Bloomberg: “The headlines from Saudi Arabia’s export cuts a few days ago pushed prices over $50 but when you scratch under the surface there’s still a lot of bearishness out there.”
Is The EIA Exaggerating U.S. Oil Production? - Oil is back at $50 per barrel, restoring some semblance of confidence in the market. But that is just about as much as we can expect in terms of a rally, according to most analysts, with momentum likely to dissipate from here.But not everyone agrees. Many are worried that oil prices will crash again next year as OPEC scrambles for an exit strategy, but there is actually a bullish case for oil that is not outlandish.First, crude oil inventories continue to fall. The EIA just released another week’s worth of data, showing another drawdown in inventories. It was a bit more modest last week – 1.5 million barrels – compared to previous four weeks, but the drawdowns continue. U.S. crude oil inventories are now down more than 50 million barrels from the peak hit in March, with stocks back within the five-year range.But a larger reason why oil prices could deviate from expectations and actually rise quite a bit is because the market is poetically assuming a lot more oil is set to come online than might actually be the case. As Andy Lipow, president of Lipow Oil Associates, notes in a CNBC column, the market has already factored in further production gains from Libya and Nigeria, a major reason why market pessimism really spread in the month of June. But because that assumption is baked into today’s price, if those two countries – beset with violence and instability – fail to come through, then a lot less oil will reach the market than is generally assumed. Moreover, the U.S. could also disappoint. As discussed in previous articles, the shale drilling boom is starting to slow. A bottleneck of services is held back the completion of some wells, while many shale companies have actually started to throttle back on their spending and drilling activity. In the past few weeks, a list of companies have announced cuts to spending plans for this year, including Anadarko Petroleum, ConocoPhillips, Whiting Petroleum, Hess Corp., and Pioneer Natural Resources. Those five companies alone have slashed a combined $850 million in spending. The cuts, coming in response to the recent dip of oil prices into the mid-$40s, will likely translate into much lower production next year. As a result, the projection from the EIA that shale will hit 10 million barrels per day (mb/d) in 2018, or even the more recent downward revision to just 9.9 mb/d, could be hard to reach.
Oil prices rise amid record U.S. gasoline demand (Reuters) - Oil prices edged higher on Wednesday, as surging U.S. fuel demand and strong refinery runs offset data from the Energy Department that showed crude inventories did not fall as much as expected last week. Crude inventories in the United States USOILC=ECI fell by 1.5 million barrels in the week to July 28, the Energy Information Administration said, about half the decline analysts had expected. However, the report also showed estimated weekly gasoline demand at a record high 9.842 million barrels. [EIA/S] Brent crude futures LCOc1 ended the session up 1.1 percent, or 58 cents, at $52.36 a barrel after hitting a session low of $51.18. U.S. West Texas Intermediate crude CLc1 rose 0.9 percent to settle at $49.59 a barrel, after falling to a low of $48.55 earlier in the session. Strong refinery runs continued to boost demand for crude. Refinery crude runs USOICR=ECI rose by 123,000 barrels per day last week, EIA data showed. "I would expect the bulls to re-assert control over the market after the initial knee-jerk lower," David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington. "Despite the week-to-week move lower in distillate demand, comparing the rolling four-week average of this year to last, distillate demand is running a whopping 14.5 percent over the same period last year."
Oil retreats on concerns about OPEC oversupply (Reuters) - Oil prices fell on Thursday, as cautious buying dried up after U.S. crude rose to near $50 a barrel, with concern about high crude supplies from producer club OPEC offsetting the previous day's data showing record U.S. gasoline demand. Benchmark Brent crude LCOc1 settled down 35 cents a barrel at $52.01 a barrel. U.S. light crude CLc1 was 56 cents lower at $49.03. U.S. crude traded at a session high of $49.96 a barrel. OPEC crude oil exports rose to a record high in July, driven largely by soaring exports from the group's African members, according to a report by Thomson Reuters Oil Research. U.S. light crude has remained below $50 a barrel, capped by robust domestic supplies. "The market needs continuing signs of improvement in the inventory picture to really drive the prices higher," said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. Strong demand in the United States has been supporting prices. The U.S. Energy Information Administration reported record gasoline demand of 9.84 million barrels per day (bpd) for last week and a fall in commercial crude inventories of 1.5 million barrels to 481.9 million barrels C-STK-T-EIA. That was below levels seen this time last year, an indication of a tightening U.S. market. But traders said high production by the Organization of the Petroleum Exporting Countries was limiting price gains. OPEC and other producers including Russia have promised to restrict output by 1.8 million bpd until the end of March 2018 to help support prices and draw down inventories.
Oil prices end lower as hedge-fund closure, OPEC unknowns add to bearish view - Oil futures gave up early gains to trade lower Thursday afternoon, as buying appetite faded and as investors awaited a highly anticipated OPEC meeting next week. News of the closure of an oil-linked hedge fund and doubts about sanctions against oil exporter Venezuela also contributed to the slump in crude. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September fell 56 cents, or 1.1%, at $49.03 a barrel, after trading as high as $49.96 during the session. October Brent crude on London’s ICE Futures exchange lost 35 cents, or 0.7%, to $52.01. Although there was no fundamental catalyst for the retreat, the downturn occurred as news surfaced that prominent oil trader Andy Hall was shuttering his energy-focused hedge fund after wrongway bets that oil prices would climb faster resulted in 30% losses in 2017, first reported by Bloomberg News. Oil has been stuck in a range for the past several months. Some investors speculated that the unwind of Hall’s Astenbeck Master Commodities Fund II may result in more oil contracts hitting the market, driving prices lower.
Oil prices fall as OPEC oil exports rise - Oil prices edged lower on Friday and were on track for weekly losses, weighed down by rising OPEC exports and strong output from the United States. Brent crude futures, the international benchmark, were trading at $51.76 a barrel at 1141 GMT, 25 cents below the last close and heading for a fall of close to 1.5 percent on the week. U.S. West Texas Intermediate (WTI) crude futures were 30 cents lower at $48.73 per barrel and were set to drop by around 2 percent for the week. Analysts said prices were pressured by rising output, although strong demand limited the losses. "Increasing OPEC production and increasing OPEC exports are the reason the market has been trading lower," said PVM Oil Associates analyst Tamas Varga. While the Organization of the Petroleum Exporting Countries is leading cuts of 1.8 million bpd along with some non-members such as Russia, its July exports rose to a record high, according to a report by Thomson Reuters Oil Research. July's exports of 26.11 million barrels per day (bpd) was a rise of 370,000 bpd, with most coming from Nigeria. A Reuters survey also showed OPEC oil output at 2017 highs in July, led by Libyan gains. Both Libya and Nigeria were exempt from OPEC's output cut deal. Output in Russia is also high. Russia's largest oil producer Rosneft (ROSN.MM) said its crude oil output grew by 11.1 percent year-on-year in the second quarter. In the United States, oil production has hit 9.43 million bpd, the highest since August 2015 and up 12 percent from its most recent low in June last year.
OilPrice Intelligence Report: Oil Price Rally Ends As Banks Slash Forecast - Oil prices stagnated this week, suggesting the rally over the past month might be losing momentum. An array of investment banks have slashed their expectations for oil prices yet again. A Wall Street Journal survey of 15 investment banks revealed the third consecutive month of declining expectations for oil prices. An average of those forecasts sees Brent averaging $53 per barrel this year, down $2 per barrel from the June survey. They also forecast Brent at $55 per barrel in 2018, also down $2 from June. “In the very near term, we are cautious about prices, especially in September and October, when the seasonality of crude and product demand turns bearish,” Michael Wittner, chief oil analyst at Société Générale, wrote in a report. WTI stalled out this week on several pieces of bearish data. U.S. oil production ticked up to 9.43 mb/d in the most recent EIA release, the highest production level in two years. Also, OPEC’s production rose again in July to its highest point in 2017. The Nigerian government has agreed to legalize small refineries in the Niger Delta, a key demand of community leaders. The Niger Delta is rife with illegal refining, but the government has agreed to grant small modular refineries in an effort to forge a stronger peace with militants in the region. The progress in peace talks bodes well for the country in its effort to bring more oil production back online. Nigeria is targeting 2 million barrels per day this month, up sharply from earlier this year. Andy Hall, a notable oil trader, has decided to shut down his hedge fund because of steep losses it has incurred on oil trades. Astenbeck Master Commodities Fund II lost 30 percent of its value through June. The hedge fund bet that oil prices would climb this year on the back of the OPEC cuts. But the rebound of production from U.S. shale, as well as the return of Libyan and Nigerian production, has prevented a rally from occurring. Bloomberg says at least 10 asset managers trading in the energy and natural resources space have shut down funds since 2012.
Oil Prices Rise As The U.S. Rig Count Falls -- The number of active oil rigs in the United States fell this week by 1 rig as drillers in the United States proceed more cautiously than earlier in the year. Combined, the total oil and gas rig count in the US now stands at 954 rigs, up 490 rigs from the year prior, with oil rigs in the United States decreasing by 1 and gas rigs decreasing by 3.Canada, which added 14 oil and gas rigs the week prior, lost 3 rigs this week, with the number of oil rigs falling by 5 and gas rigs increasing by 2.Prices lost a bit of ground on the week as signs point to the resilience of US oil producers who continue to take low oil prices on the chin. While down $0.13 week over week, WTI was trading up 0.84% on the day at $49.44 at 12:16pm. Brent crude trading up 0.73% on the day at $52.39.The rise in the number of active rigs in the US has slowed in recent weeks, but US crude oil production is not, with average production averaging 9.43 million barrels per day for the week ending July 28, according to the Energy Information Administration (EIA), who expects US production to reach an average of 9.9 million barrels per day in 2018. While flat this week, the Permian basin has proven most resilient in the low oil price environment boasting lower production costs and higher productivity, as well as a fair amount of hedging by Permian players at prices above $50.
Rig Count Drops For 3rd Time In 6 Weeks As US Shale Heavyweights Boost Production -The pace of US oil rig count growth has slowed dramatically in the last six weeks as the lagged response to oil prices indicated. While US oil production continues to trend higher, in lagged response to the rise in rigs, it is also nearing its apex. However, four U.S. shale companies recently reported second-quarter production that beat targets and increased their respective full-year output growth guidance.This is the 3rd weekly drop in the US oil rig count in the last six weeks...Crude Production (in the Lower 48) topped 9mm last week for the first time since July 2015, and this week it rose once again to a new cycle high...but judging by the slowdown in rig count growth, production may be set to slow.However, despite the slowdown in US oil rig count growth, OilPrice.com's Tsvetana Paraskova notes that US shale heavyweights are set to boost production this year.In a sign that the U.S. shale patch is boosting output that has been keeping a lid on oil prices,four U.S. shale companies reported second-quarter production that beat targets and increased their respective full-year output growth guidance. EOG Resources reported on Tuesday Q2 total crude oil volumes rising 25 percent to 334,700 barrels of oil per day, setting a company oil production record. The company raised its full-year 2017 U.S. crude oil growth target to 20 percent from 18 percent and total company production growth target to seven percent from five percent, keeping capital spending plans intact. Devon Energy beat its midpoint guidance with Q2 net production averaging 536,000 oil-equivalent barrels per day, and said that it was on track to achieve its full-year 2017 production targets. The company cut full-year capital outlook by US$100 million, citing “strong capital efficiencies” and saying it is keeping planned drilling activity for the year. Diamondback Energy reported Q2 2017 production 25 percent higher than in Q1 2017, and raised full-year production guidance by 5 percent. Newfield Exploration Company also beat its production targets and increased the mid-point of its full-year 2017 domestic production outlook. Newfield Exploration now estimates that its year-over-year domestic production growth, adjusted for prior-year asset sales, will be around 8 percent.
Baker Hughes: US rig count drops for third time in 6 weeks - The overall US rig count has recorded its largest decline since before the drilling rebound commenced in late May-early June of 2016. Baker Hughes’ tally of active rigs in the US dropped 4 units during the week ended Aug. 4 to 954. However, this week’s downward movement was primarily supplied by gas-directed rigs, which also lifted last week’s count (OGJ Online, July 28, 2017). The overall count is still up 550 units since the bottom of the drilling dive on the weeks ended May 20-27, 2016.US oil-directed rigs edged down a unit to 765, also their third drop of the past 6 weeks, during which time they’ve added just 7 units. They’re still up 449 units since May 27, 2016.Gas-directed rigs fell 3 units to 189, mostly stagnant since May but still up 108 units since last Aug. 26. Three units started work on land. However, the tally of rigs drilling horizontally declined for the just the second time in 38 weeks, shedding 3 units to 807, still up 493 units since May 20-27, 2016. The offshore count dived 7 units to 17. US crude oil production, meanwhile, continues to rise according to preliminary estimates from the US Energy Information Administration. Output during the week ended July 28 rose 20,000 b/d to 9.43 million b/d, up 970,000 b/d year-over-year. The Lower 48 contributed 25,000 b/d while Alaska dropped 5,000 b/d. Despite the overall US declines for the week, Texas recorded a 4-unit jump in its rig count and now totals 466, up 293 since May 20-27, 2016. Texas drilling growth has been mostly stagnant since May.The recently struggling Eagle Ford posted its first increase in 10 weeks, rising 2 units to 78, down 8 units since June 2 but up 47 units since last Oct. 14.Alaska gained a unit and now totals 6. Elsewhere, the DJ-Niobrara edged up a unit to 30.New Mexico and North Dakota each dropped a unit to 60 and 53, respectively. Accordingly, the Williston also was down a unit and counts 53.Oklahoma lost 2 units to 132, still up 78 units since June 24, 2016. The Cana Woodford relinquished 3 units to 60, still up 36 units since June 24, 2016. The Arkoma Woodford and Mississippian each rose a unit to 10 and 7, respectively.Reflecting the offshore dive, Louisiana led the major oil- and gas-producing states with a 5-unit drop
OPEC July oil output hits 2017 high of 32.82 mil b/d on Libya recovery: Platts survey - Libya's continued dramatic recovery from civil strife pushed OPEC's July output to yet another 2017 high, with the bloc producing 32.82 million b/d, according to the latest S&P Global Platts OPEC survey. Libya, exempted from OPEC production cuts that began January 1, averaged 990,000 b/d in July, up 180,000 b/d from June. Fellow exempt member Nigeria averaged 1.81 million b/d, a 30,000 b/d increase on the month, according to the survey. The two exempt countries, along with increased output from Saudi Arabia as the peak summer air conditioning season is now in full swing, have sent OPEC's collective output about 920,000 b/d above its nominal ceiling of around 31.9 million b/d, when new member Equatorial Guinea is added in and suspended member Indonesia is subtracted.Saudi Arabia produced 10.05 million b/d in July, according to the survey. Not including Libya and Nigeria, compliance among OPEC's 12 members with quotas under the production cut agreement remains robust at 114%, down slightly from 116% in June, based on an average of January through July output. That illustrates the challenge OPEC faces in rebalancing the market through its output deal, which also involves 10 non-OPEC producers, as the two exempt countries' recoveries, tenuous though they may be, threaten to undo a large portion of the group's collective cuts.The combined output of Libya and Nigeria in July was 590,000 b/d above October levels, the month on which OPEC based its production cuts and quotas. Most of Libya's key oil fields have now been brought back online, contributing to output growth in recent months, though some technical issues persist.In late-July, Libya's two main rival centers of power tentatively agreed a ceasefire, raising hopes that production could reach state-owned National Oil Company's 1.25 million b/d target by the end of 2017.Nigerian output has continued its upward trend despite the ongoing force majeure on exports of key crude grade Bonny Light due to pipeline issues.Output of another key Nigerian crude, Forcados, continued to ramp up last month, and tanker tracking data also showed a steady rise in exports month-on-month.Sabotage attacks on the key pipelines in Niger Delta in July, however, showed that the Nigeria's forward prospects continue to be riddled with uncertainty because of political tensions. OPEC officials have, at least publicly, dismissed the notion that Libya and Nigeria are undercutting their efforts, saying they are happy for the two countries.
Winter is coming, so is this summer OPEC's last and best chance to rebalance the oil market? – Platts OPEC Outlook Podcast - On this episode of the S&P Global Platts OPEC Outlook podcast, senior writer and Game of Thrones newbie Herman Wang takes a look at market fundamentals and what they might mean for the OPEC/non-OPEC production cut agreement going forward, as winter is coming. Herman also recaps the action from the recent St Petersburg meeting of the monitoring committee overseeing the deal, where OPEC's de facto leader Saudi Arabia acknowledged that exports, in addition to production, may need to be tracked, to convince a skeptical market that its efforts to rebalance the market are working.
As Saudi King's Health Wanes, War Architect Bin Salman Set To Become King -- While his health and even sanity have been in doubt for years, fresh rumors are spreading that King Salman of Saudi Arabia’s physical condition has further deteriorated.According to Saudi sources cited by Oil Price, Salman’s health will likely forced him to abdicate the throne in the next few months.Though it was long believed that Mohammed bin Nayef, the king’s nephew and the country’s Minister of the Interior, would assume the throne, bin Nayef’s sudden ouster as Saudi Crown Prince during Ramadan definitively changed that, with King Salman’s son and the current Crown Prince, Mohammed bin Salman, now positioned to take control. Bin Nayef’s ouster was initially reported by international media as having gone “smoothly.” However, it soon emerged that bin Salman had planned the entire affair and that the former Crown Prince, following his acquiescence of the title, was essentially under house arrest. Since then, rumblings have emerged that many in the Saudi royal family, which has long been guided by deference to elders and group consensus, are none too happy with the sudden turn of events in the normally stable kingdom. Now, with King Salman on vacation in Morocco for an entire month, the ambitious Crown Prince has been left in charge, promising a taste of things to come for the oil-rich kingdom. Already, speculators are stating that the kingdom’s balance of power is “on a knife-edge.” One such indication that there is trouble brewing within the royal family is the King’s recent string of drastic policy changes that stripped the Interior Ministry, formerly headed by bin Nayef, of many of its key mandates, including counter-terrorism. These functions have now been transferred to a new entity called the Presidency of State Security, which is under the direct command of the King, who also serves as Prime Minister.
Shocking Footage Of Saudi Siege Against Own Citizens --The Saudi regime is in the midst of an extreme and brutal crackdown against its own citizenry in the country's Eastern province - a situation now spiraling out of control with rising civilian deaths, entire neighborhoods turned to rubble, and new reports that water and electricity have been cut to the now completely besieged town of Al-Awamiya. Though local activists continue to upload shocking ground level videos to social media revealing that entire districts have been leveled, international and US media have remained largely silent. Tensions have been simmering in the heavily Shia populated Qatif governate throughout the past year, especially after the January execution of prominent Shia cleric and Al-Awamiya native Nimr al-Nimr. Additionally, 14 Shia citizens, among them young Mujtaba al-Sweikat - a student enrolled at Western Michigan University - currently await execution upon the signature of King Salman. The torture and mass trial of the group, charged with "protest-related" crimes has further inflamed tensions in the region. Large protests against the Saudi monarchy and security services have been frequent in Qatif going all the way back to the start of the so-called "Arab Spring" - though major international media outlets have tended to ignore such protests occurring under US/UK friendly regimes.
Qatar accuses Saudis of hampering Mecca pilgrims - (AFP) - The Qatari authorities have accused Saudi Arabia of jeopardising the annual hajj pilgrimage to Mecca by refusing to guarantee the safety of those taking part. Saudi Arabia and its allies have been boycotting Qatar since June 5, accusing it of backing extremist groups and of ties to Shiite Iran, in the region's worst diplomatic crisis in years. On July 20, Riyadh said that Qataris wanting to perform this year's hajj would be allowed to enter the kingdom for the pilgrimage, but imposed certain restrictions. The Saudi hajj ministry said Qatari pilgrims arriving by plane must use airlines in agreement with Riyadh. They would also need to get visas on arrival in Jeddah or Medina, their sole points of entry in the kingdom. The Qatari Islamic affairs ministry, in a statement published by the official QNA news agency on Sunday, said the Saudi side had "refused to communicate regarding securing the pilgrims safety and facilitating their Hajj". The ministry accused Riyadh of "intertwining politics with one of the pillars of Islam, which may result in depriving many Muslims from performing this holy obligation". According to the statement, 20,000 Qatari citizens have registered to take part in this year's hajj. The ministry said it denied Saudi claims that Doha had suspended those registrations. "The distortion of facts is meant to set obstacles for the pilgrims from Qatar to Mecca, following the crisis created by the siege countries," the Qatari ministry added, referring to Saudi Arabia and its allies.
Saudi Arabia says that calls for internationalization of holy sites 'a declaration of war' (Reuters) - Saudi Arabia's foreign minister called what he said was Qatar's demand for an internationalization of the Muslim hajj pilgrimage a declaration of war against the kingdom, Saudi-owned Al Arabiya television said on Sunday, but Qatar said it never made such a call. "Qatar's demands to internationalize the holy sites is aggressive and a declaration of war against the kingdom," Adel al-Jubeir was quoted saying on Al Arabiya's website. "We reserve the right to respond to anyone who is working on the internationalization of the holy sites," he said. Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said no official from his country had made such a call. "We are tired of responding to false information and stories invented from nothing," Sheikh Mohammed told Al Jazeera TV. Qatar did accuse the Saudis of politicizing hajj and addressed the United Nations Special Rapporteur on freedom of religion on Saturday, expressing concern about obstacles facing Qataris who want to attend hajj this year. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain previously issued a list of 13 demands for Qatar, which included curtailing its support for the Muslim Brotherhood, shutting down the Doha-based Al Jazeera channel, closing a Turkish military base and downgrading its relations with Gulf enemy Iran. On Sunday, foreign ministers of the four countries said they were ready for dialogue with Qatar if it showed willingness to tackle their demands.
The energy factor in the GCC crisis - As top diplomats from various countries flock to the Gulf in an attempt to solve the GCC rift, major energy companies continue to vie for competitive projects in the oil and gas fields in the region. The latest of these projects is the development of the South Pars/North Field, the world's largest natural gas field, which is owned by both Iran and Qatar. This field plays a central yet often underrated role in the development of foreign and national policies in both Qatar and Iran. In light of this, any attempt for isolation or pressure on either country to alter select policies is futile insofar as it disregards this fact.As several experts have previously noted, the tension arose briefly after the Riyadh Summit, when US President Donald Trump assured Saudi Arabia of his commitment to the region in the face of the "Iranian threat". The US' hope of forging an impenetrable GCC shield against Iran fails to appreciate the centrality of the energy question and exhibits a narrow sightedness based on the pursuit of self-interest. It is, therefore, predestined to fail. Similarly, the ensuing Saudi-led blockade against Qatar is destined to eventually subside and give way to normalised relations in spite of the current tension. As a sign, perhaps, that energy trumps political antagonism, it is noteworthy that shortly after the rift, Qatar announced it would not disrupt liquefied natural gas (LNG) exports to the United Arab Emirates (UAE), which runs through the Dolphin pipeline. The UAE receives about two billion cubic feet on a daily basis from Qatar. Egypt, similarly, will continue receiving Qatari LNG shipments which it secured till the end of 2017. Qatar's LNG ships continue to make their way unhindered to Asia through the Hormuz Strait and to Europe through the Suez Canal.
North Field gas keeps Qatar crisis stalemated -- The world’s largest gas field is at the nexus of a political stalemate between Qatar and three of its immediate Arab neighbors in the Persian Gulf region—Saudi Arabia, Bahrain and the UAE, along with Saudi ally Egypt. Qatar’s huge offshore gas and condensate field, known in that country as North Field, straddles its maritime border with Iran, which calls the field South Pars. Together, the two sides of the field contain as much as 1.4 Tcf of proven gas reserves, making it the world’s largest conventional non-associated gas field. Iran, Saudi Arabia’s regional arch-enemy, is very much a factor in the dispute between Qatar and the four Arab states that have recently started calling themselves the Anti-Terror Quartet. The so-called ATQ has accused both Qatar and Iran of funding terrorist groups and vociferously disapprove of Qatar’s friendly relations with Iran. But because of North Field’s shared status, Doha is obliged to engage with Tehran. Moreover, because of North Field’s importance to global energy supplies neither Riyadh nor Abu Dhabi can realistically tell major international partners to choose between doing business with them or Qatar, quashing all hope of squeezing Qatar financially and economically. On the basis of North Field reserves, tiny Qatar has grown its LNG exports from 1.9 million mt in 1997 to a record 78.7 million mt last year.
Blockaded Qatar Takes Saudi, UAE to WTO - Of course Qatar knows the WTO. The current [?] WTO negotiations were initiated in the capital of Doha. I am fascinated with the blockade on Qatar by fellow Gulf Cooperation Council (GCC) countries Saudi Arabia, the United Arab Emirates, and Bahrain, supposedly for supporting "terror." For the country where most 9/11 attackers came from and which has funded fundamentalist education throughout the world, Saudi Arabia is particularly noteworthy. My belief is closer in line with those who believe Qatar acts more as a neutral ground for those wary of Middle East authoritarianism--even if these folks may include Hamas and Hezbollah who have representative offices in Qatar. There is also the not-so-small issue of broadcast network al-Jazeera, which is widely viewed not just in the region but throughout the world. Its continuous criticism of other GCC countries rankles the others, and I must also point out that Qatar is not entirely faultless in its media coverage. After all, Qatar is just like the rest of them: As yet another absolute monarchy, Qatar is hardly a bastion of democracy. As al-Jazeera viewers would note, Qatar's leaders--who set up the network in the first place--are never criticized. Having failed so far diplomatically in resolving this dispute--the United States which has bases in Qatar but nonetheless was bashed by Trump as a state sponsor of terror has been of little use--Qatar now turns to international organizations to help its cause: Qatar has lodged a formal complaint with the World Trade Organisation against the “illegal siege” imposed by four Arab neighbours that have accused the Gulf state of sponsoring terrorism. The complaint, lodged with the WTO’s dispute-settlement body, described the embargo as “unprecedented”, accusing Saudi Arabia, the United Arab Emirates, Egypt and Bahrain of “violating the WTO’s core laws and conventions on trade of goods and services, and trade-related aspects of intellectual property,” the ministry of economy and commerce said in a statement on Monday.
The Hacking Wars Are Going to Get Much Worse - Reports this month that the United Arab Emirates orchestrated the hacking of a Qatari news agency, helping to incite a crisis in the Middle East, are as unsurprising as they are unwelcome. For years, countries — in particular Russia — have used cyberattacks and the dissemination of disinformation through social media and news outlets to provoke protests, sway elections and undermine trust in institutions. It was only a matter of time before smaller states tried their hand at these tactics. With few accepted rules of behavior in cyberspace, countries as big as China or as small as Bahrain can be expected to use these kinds of attacks. And they may eventually spill over into real-world military conflicts. The hacking attacks in the Gulf seem to follow a typical pattern of going after the media and the email accounts of prominent individuals. According to American intelligence officials, in late May, hackers supported by the United Arab Emirates infiltrated Qatari government news and social media sites. The attackers planted quotations falsely attributed to Sheikh Tamim bin Hamad al-Thani, Qatar’s leader, praising Iran, Hamas and Israel. t’s unclear if the Emirates undertook the hacking or hired freelancers to do the dirty work. (Emirati officials have denied playing any role.) But either way, the objective was achieved. The Emirati government, along with Saudi Arabia, Bahrain and Egypt, used the planted quotations as a pretext to ban Qatari news outlets and to break off diplomatic and trade relations with Qatar. The hacking and disinformation attack on Qatar is not unprecedented. In August 2012, for example, the Indian government accused Pakistani hackers of trying to provoke communal violence. One part of the cyberassault involved posting pictures on websites of corpses described as people killed by Muslims in India’s northeast. (In fact, they were manipulated photos of casualties from an earthquake in Tibet.) The hackers also sent text messages warning that an attack on students and workers from northeastern India living in Mumbai and Bangalore was imminent. Thousands of migrants began a panicked flight back to their homes.
Dubai's "Torch Tower", World's Fifth Tallest Residential Building, Is Engulfed In Flames -- A massive fire has engulfed the fifth tallest residential building in the United Arab Emirates, the 86-story Dubai Torch Tower - the same building which was also damaged in a major blaze in 2015 - where social media footage showed flames spreading up much of building and burning debris falling down. According to BBC, civil defence officials have "successfully evacuated" the building and are now working to bring the fire under control. Firefighting brigades from four stations have been sent to battle the flames at the Torch Tower, the fifth tallest residential building in the world.It was not immediately clear what caused the blaze in one of the world's tallest buildings. The fire is believed to have started on the ninth floor before ascending towards the top stories: “It's big fire started on 9th floor. Civil defence and police in the scene now to control the fire,” a Dubai police spokesperson told Gulf News. Dubai’s Civil Defence Director General and Police Commander are at the scene coordinating the rescue efforts. “No injuries have been reported so far in the Torch Tower fire incident,” Dubai's media office said in a latest tweet. The 79-story skyscraper opened in 2011, and it was the world's tallest residential building at its opening, but has since been surpassed by several others. The Torch Tower is said to be the 32nd tallest building in the world, according to the Skyscraper Centre. It has 676 apartments.
New Cease-Fire in Syria Holds, Observers Report -- A cease-fire held Thursday in parts of Syria's Homs province, observers said, giving civilians a chance to start putting their lives back together. The British-based Syrian Observatory for Human Rights reported no violations, while reporters on the ground said fruit and vegetable markets reopened and children were back on the streets in the city of Homs. The quiet will also give humanitarian workers the chance to bring in badly needed aid. "It's important that people can live again," an opposition activist told The Associated Press. Russian defense officials and representatives of the Syrian rebels worked out the details of the cease-fire in northern Homs last week in Cairo. Russian Defense Ministry spokesman Igor Konashenkov said the truce would affect an area that has a population of more than 147,000 people.
Summer Of "Mass Displacement" Continues: 1.3 Million Libyans In Need Of Emergency Assistance - Though Western media and much of the entire world have long forgotten about Libya, we never will. While the Nobel Peace Prize winning "humanitarian" minded architect of the 2011 US-NATO intervention (and author of Libya's current hell) continues to pen his presidential memoir in the midst of an epic retirement tour of yachts, golf courses, and hidden celebrity islands, Libya still burns out of control.As we've recently noted, the mass flow of migrants and asylum seeking refugees is not going away and remains a political flashpoint for European front line countries reeling from the immigrant wave. In an updated situation report on Libya issued earlier this summer, the United Nation's World Food Program (WFP) published some shocking numbers:Civilians in Libya continue to suffer as a result of conflict, insecurity, political instability and a collapsing economy. According to the 2017 Humanitarian Response Plan, 1.3 million people are in need of emergency humanitarian assistance. This means 20% of the entire Libyan population (estimated at 6.4 million according to the UN) is still in dire need of basic necessities of life such as food and housing. The WFP further notes on its main Libya page that Africa's fourth largest country enjoyed economic stability and independence until 2011 - the year Gaddafi was overthrown and murdered at the hands of NATO sponsored militants (bold emphasis is WFP's):At that time Libya, as one of the world’s most prolific oil-producing nations, maintained large trade surpluses. Although the country’s oil wealth did not percolate down to the wages of ordinary citizens, until 2011 the cost of food at household level was offset to some extent by a welfare state that offered free education and healthcare. Now, the country has a trade deficit and is gripped by a civil war opposing tribal groups, Islamist groups, various other militias and administration forces. Libya’s population is suffering a major humanitarian crisis. This involves poverty, insecurity, gender-based violence, mass displacement, shortages of food and cash in banks, and frequent power cuts.
Yemen: more than one million children at risk of cholera – charity More than one million malnourished children aged under five in Yemen are living in areas with high levels of cholera, the charity Save The Children warned on Wednesday as it began sending more health experts to the worst hit areas.The scaling up in response came after latest figures show that a deadly cholera epidemic that started in April 2015 has infected more than 425,000 people and killed almost 1,900. Save the Children said children under the age of 15 are now accounting for about 44 percent of new cases and 32 percent of fatalities in Yemen where a devastating civil war and economic collapse has left millions on the brink of starvation.“The tragedy is both malnutrition and cholera are easily treatable if you have access to basic healthcare,” said Tamer Kirolos, Save the Children’s Country Director for Yemen. “But hospitals and clinics have been destroyed, government health workers haven’t been paid for almost a year, and the delivery of vital aid is being obstructed.“ Cholera, which is spread by ingestion of food or water contaminated by the Vibrio cholerae bacterium, can kill within hours if untreated. The cholera outbreak prompted the United Nations last week to revise its humanitarian assessment and it now calculates 20.7 million Yemenis are in need of assistance, up from the previous figure of 18.8 million in a population of 28 million. Oxfam has projected the number of people infected with cholera could rise to more than 600,000 - “the largest ever recorded in any country in a single year since records began” - exceeding Haiti in 2011.
Culture of concealment: The UK government’s brazen duplicity in Yemen - Last month, on the last day of the current UK parliamentary session before its summer recess, a particularly obnoxious new British tradition called "take out the trash day" was enacted. The UK government is obliged to issue all its public reports before the end of the parliamentary year, but to avoid scrutiny from MPs, the government now regularly withholds any potentially embarrassing reports until the very last day of that session. It can then release them safe in the knowledge that there will be no time left for MPs to examine them, and no opportunity to question ministers over them. So having issued very little information over the preceding weeks, as MPs were heading back to their constituencies, the government took the opportunity to release dozens of reports and ministerial statements detailing everything from cuts to police, to the revolving door between cabinet ministers and private corporations, to the millions in legal fees the government spent attempting to prevent parliamentary scrutiny of Brexit. Buried deep among them was a Foreign Office report on the state of human rights in 30 countries deemed to be of "priority concern". What makes the report embarrassing to Britain, however, is that 20 of these countries are major customers of British arms exports, with Saudi Arabia, of course, topping the list.
China-Japan oil, gas field dispute flares up again: China has rejected Japanese protests to its oil and gas prospecting in the East China Sea, saying the operations occur in areas "indisputably" under its jurisdiction. Foreign Minister Fumio Kishida said Tuesday said Japan had lodged a protest with China over its apparent deployment of drilling rigs near the median line separating the two countries’ economic zones in the East China Sea. Japan also urged China to swiftly resume stalled negotiations to cooperate over oil and gas resources in the area. Those talks began in 2008 but broke down two years later amid rising tensions. Both countries claim the East China Sea islands which are controlled by Japan. Tokyo says China has built oil and gas extracting structures on its side of the median line, which may siphon off resources from beneath the Japanese side. A Japanese government official said Tuesday China’s mobile drilling ships had been spotted in the region, and were believed to have been boring for gas. It was "extremely regrettable that China is unilaterally continuing its development activity" near the median line, Japan's top government spokesperson Yoshihide Suga told reporters. China's Foreign Ministry on Wednesday dismissed the remarks, saying “the so-called issue of 'unilateral exploitation' does not exist."
The South China Sea’s untapped oil and natural gas are back in focus - The contested South China Sea has large deposits of oil and natural gas. Perhaps luckily for the environment, drilling for these resources has been discouraged by political tension among nations in the region. In particular, energy companies worry about China’s ongoing insistence that everything within its infamous nine-dash line—which marks off nearly the entire sea—is its own territory, despite an international tribunal invalidating the sweeping claim last year. The uncertainty has made it hard for energy companies to justify the hefty investments needed to extract carbon resources from below the sea floor. Recently, though the carbon resources have started to make headlines again, with Vietnam, Indonesia, and the Philippines—and, of course, China—all involved. Reed Bank is one of the major prizes in the South China Sea. Located near the Philippines coast, it is believed to hold large reserves of oil and natural gas. According to the nine-dash line, Reed Bank belongs to China. When the Philippines has tried to explore there, China has stopped it. Now, Reed Bank is back in focus. On July 12, a Philippine energy official said drilling at Reed Bank could resume before year’s end, with Manila getting ready to offer new blocks to investors via bidding in December. In May, Philippine president Rodrigo Duterte said his Chinese counterpart Xi Jinping had warned him there would be war if Manila tried to enforce last year’s tribunal ruling and drill for oil in disputed areas. Vietnam recently stopped a gas drilling operation located about 400 km (250 miles) off its southeast coast after receiving threats from China, according to a BBC report this week. While Vietnam had leased the area to one company, China had leased it to another. China threatened to attack Vietnamese bases in the Spratly islands unless the drilling stopped, according to the report.
The Week Donald Trump Lost the South China Sea - Hanoi has been looking to Washington for implicit backing to see off Beijing’s threats. At the same time, the Trump administration demonstrated that it either does not understand or sufficiently care about the interests of its friends and potential partners in Southeast Asia to protect them against China. Southeast Asian governments will conclude that the United States does not have their backs. In June, Vietnam made an assertive move. After two and a half years of delay, it finally granted Talisman Vietnam (a subsidiary of the Spanish energy firm Repsol) permission to drill for gas at the very edge of Hanoi’s exclusive economic zone (EEZ) in the South China Sea. Under mainstream interpretations of the U.N. Convention on the Law of the Sea (UNCLOS), Vietnam was well within its rights to do so. Under China’s idiosyncratic interpretation, it was not. On July 25, Chinese Foreign Ministry spokesman Lu Kang would only urge “the relevant party to cease the relevant unilateral infringing activities” — but without saying what they actually were. . China may be claiming “historic rights” to this part of the sea on the grounds that it has always been part of the Chinese domain (something obviously contested by all the other South China Sea claimants, as well as neutral historians. An international arbitration tribunal in The Hague, however, ruled these claims incompatible with UNCLOS a year ago. China has refused to recognize both the tribunal and its ruling. In mid-June, Talisman Vietnam set out to drill a deepwater “appraisal well” in Block 136-03 on what insiders believe is a billion-dollar gas field, only 50 miles from an existing Repsol operation. The Vietnamese government knew there was a risk that China might try to interfere and sent out coast guard ships and other apparently civilian vessels to protect the drillship. Reports from Hanoi (which have been confirmed by similar reports, from different sources, to the Australia-based analyst Carlyle Thayer) say that, shortly afterward, the Vietnamese ambassador in Beijing was summoned to the Chinese Foreign Ministry and told, bluntly, that unless the drilling stopped and Vietnam promised never to drill in that part of the sea ever again, China would take military action against Vietnamese bases in the South China Sea.
China Inc.'s Next Debt Headache Is $580 Billion of Put Options Coming Due - Chinese companies battling to cope with the government-induced tightening in funding markets are bracing themselves for the next shoe to fall: a wave of early bond redemptions. The nation’s businesses sold about 65 percent of all corporate bonds with put options worldwide, at 3.9 trillion yuan ($580 billion). Creditors holding some 2 trillion yuan of mainland notes will be able to exercise those options in the next two years, forcing issuers to either increase interest payments or redeem the debt early. Bonds sold by property companies are most affected, accounting for about a quarter of the 2 trillion yuan pile. Chinese authorities’ efforts to cut excessive and speculative borrowing have helped drive up costs across the corporate bond market, the world’s largest outside the U.S., with yields on top-rated notes rising 144 basis points in the past year. It’s also meant the overwhelming majority of puttable bonds are now ripe for exercising, adding to concerns expressed by ratings companies that the strain on cash flows will lead to more missed payments. “Right now liquidity conditions are relatively tight and financing costs have been high,” said Christopher Lee, managing director of corporate ratings at S&P Global Ratings, in an interview. “The financing environment is not very conducive for issuers and they may face refinancing pressure, even defaults.” Some 82 percent of Chinese bonds with these options are now “in the money,” after yields climbed since late 2016, according to a Fitch Ratings Inc. report from June 28. That means investors have an incentive to put the bonds back to the company or ask for higher coupons to match the changed interest-rate environment. The peak of put redemption will come in 2019, with 1.4 trillion of bonds with those options becoming exercisable, according to data compiled by Bloomberg.
Apple Removes Apps From China Store That Help Internet Users Evade Censorship — China appears to have received help on Saturday from an unlikely source in its fight against tools that help users evade its Great Firewall of internet censorship: Apple.Software made by foreign companies to help users skirt the country’s system of internet filters has vanished from Apple’s app store on the mainland. One company, ExpressVPN, posted a letter it had received from Apple saying that its app had been taken down “because it includes content that is illegal in China.”Another tweeted from its official account that its app had been removed. A search on Saturday showed that a number of the most popular foreign virtual-private networks, also known as VPNs, which give users access to the unfiltered internet in China, were no longer accessible on the company’s app store there.
Xi’s show of force declares China’s battle readiness to the world | South China Morning Post: China’s massive display of military might on Sunday sent a clear message to the army, the country and the world that the PLA under its commander, President Xi Jinping, is quickly modernising and improving its readiness for war. The event in Zhurihe in Inner Mongolia, to mark this Tuesday’s 90th anniversary of the founding of the People’s Liberation Army, had none of the ceremony usually associated with a military parade in China. It was done with the troops in battle dress to remind them that the world’s largest army must embrace changes and be ready for battle, analysts said. Xi, in a camouflage uniform, told the troops to “be ready to assemble at the first call and be capable of fighting and winning any battle”. The parade showcased what Xi has done to improve China’s military since he took power five years ago, and it underlined his vision of the army’s role in the country’s future as China aggressively tries to boost its regional and even global clout.
Vietnam’s role in North Korea: a ‘friendship’ endures? | Asia Times: In the wake of the most advanced weapons test in North Korean history at the beginning of this month, nations of the Asia-Pacific Region are responding to the rising tensions. In Hanoi, the capital of one of the few remaining states governed by a communist party, the incident was met with apprehension and anxiety. As the two communist states are committed to cordial formalities, some observers express optimism that Vietnam can mediate between North Korea and its foes. Nevertheless, Vietnam does not want to jeopardize flourishing trade and investment with South Korea and Japan, North Korea’s sworn enemies. In this context it is unlikely that Vietnam can persuade North Korea, or the Democratic People’s Republic of Korea (DPRK), to abandon its nuclear program, or would even attempt to. Rather, Vietnam maintains a multifaceted approach to North Korea, maintaining formal ‘friendship’ while consistently condemning its nuclear ambitions.The day following the July 4 launch of what was purported to be to be an intercontinental ballistic missile (ICBM), Vietnamese Foreign Ministry spokesperson Le Thi Thu Hang offered the following statement:“Vietnam is deeply concerned regarding the DPRK’s decision to proceed with the ICBM-Mars 14 test launch on 4 July 2017, [which represents] a grave violation of several UN Security Council resolutions and an elevation of tensions in the region.” Vietnam has consistently supported any and all efforts to promote dialogue and uphold peace and stability on the Korean Peninsula, urging each party to earnestly observe United Nations Security Council resolutions, actively strive for peace [and make] practical contributions to the maintenance of peace.
South Korea Is Preparing A "Surgical Strike" Against The North: Report --According to a report in South Korea's Munhwa Ilbo newspaper, which cites an unidentified government official, South Korea's military is preparing a "surgical strike" scenario that could wipe out North Korean command and missile and nuclear facilities following an order by S.Korea's President Moon Jae-in. Munhwa adds that the military is to report the scenario to presidential office after completing it as early as August 1.As the report details, South Korea's Special Forces are preparing a special strike op which would be launched in response to President Moon Jae-In's order to remove the North Korean leadership in case of emergency. This operation is taking place in addition to separate preparations currently conducted by the country's military forces.Targeted by the surgical strike would be North Korea's core facilities. As part of the operation, South Korea's forces would launch Taurus cruise missiles from F-15 fighters, which would be able to strike all key facilities in Pyongyang and can also strike the office of the Chairman of the Labor Party, Kim Jong Eun, at the Pyongyang Labor Party headquarters. The newspaper also adds that the South Korean military's own strike-hit scenarios include plans to create a special mission brigade of 1,000 to 2,000 at the end of this year with plans to eliminate war leadership figures such as Kim Jong Il and paralyze warfare command facilities in case of emergency. The military authorities have already commenced the CH-47D (Chinook) performance improvement project to transport these special mission brigades The full report, google translated is below:
China Threatens India Over Border: "Leave Chinese Land Or Face War" --While the world's eyes are focused on Syria, Russia, Ukraine, and North Korea; there is another - much more tense - fight between two nuclear powers that is getting far too little attention. The world's two most populous nations, China and India, have been engaged in a border dispute for decades but in recent months it has flared once again with a Chinese Ministry of Defense official now warning explicitly that Indian troops must leave the contested Doklam area if they do not want war. The latest standoff started more than a month ago after Chinese troops started building a road on a remote plateau, which is disputed by China and Bhutan. Indian troops countered by moving to the flashpoint zone to halt the work, with China accusing them of violating its territorial sovereignty and calling for their immediate withdrawal. China then added a large number of troops to the region:"The crossing of the mutually recognised national borders on the part of India... is a serious violation of China's territory and runs against the international law," Chinese defence ministry spokesman Wu Qian told a press conference quoted by AFP, adding that "the determination and the willingness and the resolve of China to defend its sovereignty is indomitable, and it will safeguard its sovereignty and security interests at whatever cost."He also said that "border troops have taken emergency response measures in the area and will further step up deployment and trainings in response to the situation," without giving any details about the deployment. And now, as RT reports, during a heated TV debate between a retired Indian Army major general and now defense commentator, Ashok Mehta, and the director of the Chinese Defense Ministry’s Center for International Security Cooperation, Senior Colonel Zhou Bo; tempers frayed. (video)
Hostile border dispute with India could damage China’s global trade plan, experts warn | South China Morning Post: The protracted border row between China and India has not only raised tensions between the two Asian giants but could also threaten Beijing’s ambitious trade and infrastructure outreach plan, the “Belt and Road Initiative”, experts have warned. Chinese and Indian troops have been locked in an eyeball-to-eyeball stand-off for over 40 days in a desolate region of the Himalayas that is also claimed by India’s ally Bhutan. Both sides blame each other for escalating the dispute by deploying troops in the area. Macau-based military expert Antony Wong Dong warned that Beijing’s hardball politics are pushing New Delhi further away and could end up making it an enemy. “China is playing psychological warfare ... but it should realise that even if it defeated India in a war on land, it would be impossible for the PLA navy to break India’s maritime containment,” he said, pointing to the importance of the Indian Ocean as a commercial lifeline. China is heavily reliant on imported fuel and, according to figures published by state media, more than 80 per cent of its oil imports travel via the Indian Ocean or Strait of Malacca. “Unlike Southeast Asian countries, India has never succumbed to China’s ‘carrot and stick’ strategies,” Wong said. “India is strategically located at the heart of China’s energy lifeline and the ‘Belt and Road Initiative’, and offending India will only push it into the rival camp, which [Beijing believes] is scheming to contain China by blocking the Malacca Strait and the Indian Ocean.”
Race to Renew India Submarine Force Amid Rising China Threat - After years of delay, India’s navy is preparing to take delivery of one of the world’s stealthiest and most deadly fighting tools: the INS Kalvari, an attack submarine named after a deep-sea tiger shark.The commissioning later this month of the Scorpene class submarine is a milestone in India’s effort to rebuild its badly depleted underwater fighting force, and the first of six on order. It comes as China’s military expands its fleet to nearly 60 submarines -- compared to India’s 15 -- and increases its forays into the Indian Ocean in what New Delhi strategists see as a national security challenge.A Chinese Yuan-class diesel-powered submarine entered the Indian ocean in May and is still lurking, according to an Indian naval officer who asked not to be identified, citing policy. It’s an unwelcome reminder of China’s rapidly expanding naval strength at a time when Indian and Chinese soldiers are engaged in a border dispute stand-off in Bhutan. China’s defense ministry didn’t respond to a faxed request for comment. The official opening in July of China’s first naval base at Djibouti at the western end of the Indian Ocean, recent submarine sales to Pakistan and Bangladesh and a visit last year of a Chinese nuclear-powered submarine to Karachi, have also exposed how unprepared India’s navy is to meet underwater challenges.
It Makes Little Sense to Blame Students for India’s Growing Loan Default Problem -- According to a recent report, the total non-performing assets (NPAs) in the education sector registered an increase from Rs 2,615 crores in March 2013 to Rs 6,336 crores in December 2016. That is, Indian banks saw a 142% increase in student loan defaults during a period of just over three years. In percentage terms, the share of NPAs increased from 5.40% to 8.76%. What are we to make of these numbers?To begin with, the larger issue of the increase in student loan defaults is worrisome. Until recently, student debt and growing loan defaults were considered to be an American problem, where 44 million borrowers owe $1.3 trillion in student loans. It has been reported that a record number (~8 million) have given up paying on more than $137 billion in education debts. This situation has come about due to the rising costs of education, high dropout rates and a labour market where many fresh graduates initially only find low-paying jobs for relatively long periods – sometimes for far too long – and thus cannot start repaying their loans.Over time, the problem spread to the UK, where the student debt now stands at £100.5 billion ($132 billion). According to one study, about 70% of students who left university in 2015 are not expected to finish repaying their loans. The problem of growing student debt and loan defaults may have already arrived in India. With high actual loan defaults and the likelihood of worse to happen becoming a feature of high income countries with robust higher education systems, the signs are ominous for India, where the higher education system is broken and degreed but unemployable young people are mass-produced by the hundreds of thousands. It therefore becomes essential to understand the drivers of the increase in student loan defaults in order to address the problem before it overwhelms us.
Duterte Approves Free State College Fees Opposed by Budget Chief - Philippine President Rodrigo Duterte signed a law Thursday providing free tuition in state universities and colleges over the objection of his economics advisers who said it could cost as much as 100 billion pesos ($2 billion) a year. The president said the long-term benefits of education outweighed the “very heavy budgetary implications”, Deputy Executive Secretary Menardo Guevarra said at a televised briefing in Manila. He said the projected cost appears to be on the high side. The additional spending comes as Duterte met with senators earlier this week to discuss a possible increase in the budget to fund the hiring of at least 20,000 soldiers and police after receiving reports of fresh Islamic State-linked terror threats in Mindanao. The Department of Finance estimated that the budget deficit for the month of July may have tripled to 147.7 billion pesos, the Manila Bulletin reported on August 1.Guevarra said the administration was looking at different ways to help fund the initiative, including borrowing through official development assistance as well as receiving donations. He said Duterte had left it to Congress to realign the budget to include free education.Earlier this week Budget Secretary Ben Diokno said free college education in state universities would not benefit the poor because only 12 percent of students come from poor families and the government already offered scholarships in 114 state-run tertiary schools.
Japan Buries Our Most-Cherished Economic Ideas -- Japan is the graveyard of economic theories. The country has had ultralow interest rates and run huge government deficits for decades, with no sign of the inflation that many economists assume would be the natural result. Now, after years of trying almost every trick in the book to reflate the economy, the Bank of Japan is finally bowing to the inevitable. The BOJ’s “dot plot” shows that almost none of the central bank’s nine board members believe that the country will reach its 2 percent inflation target: Accordingly, the bank has pushed back the date at which it expects to hit its 2 percent target. That’s a little comical, since by now it should be fairly obvious that the date will only get pushed back again and again. If some outside force intervenes to raise inflation to 2 percent, the BOJ will declare that it hit the target, but it’s pretty clear it has absolutely no idea how to engineer a deliberate rise in inflation. The bank will probably keep interest rates at zero indefinitely, but if decades of that policy haven’t produced any inflation, what reason is there to think that decades more will do the trick? Some economists think more fiscal deficits could help raise inflation. That’s consistent with a theory called the “fiscal theory of the price level,” or FTPL. But a quick look at Japan’s recent history should make us skeptical of that theory -- even as government debt has steadily climbed, inflation has stumbled along at close to 0 percent:
"They've Just Taken Leopoldo": Maduro Detains Opposition Leaders At Gunpoint - The crackdown by Venezuela President Nicolas Maduro - now officially branded a dictator by the U.S. - on political opposition intensified Tuesday when intelligence agents detained opposition leaders Leopoldo Lopez and Antonio Ledezma at gunpoint in their homes and took them into custody. The two politicians have been under house arrest for their involvement in anti-government protests and organizing, according to the BBC. Videos published online by family members of both men show them being led away in the middle of the night by agents from Sebin, the Venezuelan intelligence agency. Lopez’s wife Lilian Tintori said in a tweet: “They’ve just taken Leopoldo from the house. We don’t know where he is.” She published grainy footage from the home’s security cameras showing her handcuffed husband being placed in the back of a car.Momentos en que @leopoldolopez see llevado por funcionarios del SEBIN. ( Sigue sin conocerse su pradero) pic.twitter.com/BrIURSa7q0— #SOSVenezuela (@aura_rojas) August 1, 2017“If something happens to him, Maduro will be held responsible,” Tintori said, according toBloomberg.Vanessa Ledezma, the daughter of the former Caracas mayor, posted video of her father being taken away by the Sebin, the Venezuelan intelligence agency, in his pajamas. In the video, a woman can be heard shouting: "They're taking Ledezma, they're taking Ledezma, dictatorship!" Video apparently show arrest of Caracas, Venezuela Mayor Antonio Ledezma overnight @nbc6 https://t.co/AmFbB5YTsU
Protectionism Will Not Protect Jobs Anywhere - Kenneth Rogoff – As US and European political leaders fret about the future of quality jobs, they would do well to look at the far bigger problems faced by developing Asia – problems that threaten to place massive downward pressure on global wages. In India, where per capita income is roughly a tenth that of the United States, more than ten million people per year are leaving the countryside and pouring into urban areas, and they often cannot find work even as chaiwalas, much less as computer programmers. The same angst that Americans and Europeans have about the future of jobs is an order of magnitude higher in Asia. Should India aim to follow the traditional manufacturing export model that Japan pioneered and that so many others, including China, have followed? Where would that lead if, over the next couple of decades, automation is going to make most such jobs obsolete? There is, of course, the service sector, where 80% of the population in advanced economies works, and where India’s outsourcing sector still tops the world. Unfortunately, there, too, the path ahead is anything but smooth. Automated calling systems already have supplanted a substantial part of the global phone center business, and many routine programming jobs are also losing ground to computers. China’s economic progress may have been the big story of the last 30 years, but it struggles with similar challenges. While China is far more urbanized than India, it, too, is still trying to bring ten million people a year into its cities. Between jobs lost to automation and to lower-wage competitors such as Vietnam and Sri Lanka, integrating new workers is becoming increasingly difficult. Recently, the rise in global protectionism has made this difficult situation worse, as epitomized by the decision of Foxconn (a major supplier to Apple) to invest $10 billion in a new factory in Wisconsin. Admittedly, the 13,000 new jobs in the United States is a drop in the bucket compared to the 20 million (or more) that India and China must create each year, or even compared to the two million that the US needs.
European Commission President Juncker: New US sanctions on Russia only after consultation of allies --In the wake of Donald Trump signing off on stricter US sanctions against Russia, the Commission President Jean-Claude Juncker expressed his satisfaction, in principle, over the softening of the bill after the EU had expressed its concerns."I stated at the G7 summit in Taormina, Italy, and at the G20 summit in Hamburg, Germany, that if the Americans proceeded [with the adoption of new sanctions], we would be ready to react adequately in a matter of days. As a result, a significant proportion of the intended sanctions against Russia have been dropped. Moreover, the US Congress has now also committed to only apply sanctions after the country's allies are consulted. And I do believe we are still allies of the US", President Juncker said.European interests can thus be taken into account in the implementation of any sanctions. If not, the President of the European Commission reserves the right to take adequate measures. If the US sanctions specifically disadvantage EU companies trading with Russia in the energy sector the EU is prepared to take appropriate steps in response within days. "We are prepared", President Juncker said during a radio interview with the ARD's European studio in Brussels, broadcast today (Wednesday) at 20:30 on NDR Info. "We must defend our economic interests vis-à-vis the United States. And we will do that." The EU is maintaining its own sanctions against Russia. However, in order to fully implement the Minsk Agreements, the G7 must unanimously agree on the sanctions, with close cooperation between the allies. The US bill could have an unintended impact on EU interests relating to energy supply security. The sanctions would affect energy transport and the maintenance of pipeline systems in Russia which supply the Ukrainian gas transit system. The new US sanctions could also impact EU efforts to further diversify the energy sector, particularly in the Baltic.
An Angry, "Irritated" Italy Loses Patience With Macron Over Migrants, Libya -- One week after the latest Ifop poll showed that French president Macron's approval rating tumbled by 10 points in his third month, with only Jacques Chirac sliding more from his May 1995 election to July of that year according to Journal du Dimanche.... the young president's troubles are spilling outside France's borders, and as VoA reports, even as Merkel's political infatuation with Macron grows by the day, Italy is quickly falling out of love with Macron as irritation with France’s president is mounting in Rome. At the center of the rising tensions is Italy displeasure with how Europe is handling the country's refugee crisis: tensions have crept into diplomatic relations between France and the government of Paolo Gentiloni, prompted by Macron’s response to Italian pleas for more European assistance with the mainly sub-Saharan migrants crossing the Mediterranean in record numbers and his largely uncoordinated diplomatic intervention in the past week over the Libya crisis. On Tuesday, Macron oversaw a meeting in Paris of the leaders of two of war-torn Libya’s rival factions to discuss a political power-sharing deal to reunite the fractured north African country. Italy is furious that the meeting between the head of the U.N.-backed government of Prime Minister Fayez al-Sarraj - which has failed to assert authority even in the Libyan capital Tripoli - and General Khalifa Haftar - a warlord who largely controls the east of the lawless country - was not coordinated with the Italian government. As a result, Gentiloni’s ministers took the unusual step of openly criticizing the French president this week, voicing frustrations with Macron’s efforts, which they argue distract from a coordinated U.N. and European Union effort to engineer a political deal in Libya between three rival governments and dozens of militias.
EU accused of ‘wilfully letting refugees drown’ as NGOs face having rescues suspended in the Mediterranean - Aid workers have accused the EU of “wilfully letting people drown in the Mediterranean” as they face being forced to suspend rescue missions for refugees attempting the world’s deadliest sea crossing. Italy is attempting to impose a code of conduct on NGOs operating ships in the search and rescue zone off the coast of Libya, which is now the main launching point for migrants trying to reach Europe on smugglers’ boats.Humanitarian groups have argued the code will impede their work by banning the transfer of refugees to larger ships, which allows vessels to continue rescues, and forcing them to allow police officers on board. A revised code of conduct is expected to be presented by the Italian interior ministry on Monday, following meetings between officials and NGOs. The 11-point plan, which has been approved by the European Commission and border agency Frontex, could see any groups refusing to sign up denied access to Italian ports or forbidden from carrying out rescues. They are currently deployed by officials at Rome’s Maritime Rescue and Coordination Centre (MRCC) and charities fear any move to restrict their operations, leaving just Italian coastguard and naval ships, will dramatically reduce rescue capacity during peak season. German charity Sea-Watch announced the deployment of a second rescue vessel in response to the plans, which it called a “desperate reaction” by a country abandoned on the frontline of the refuge crisis by its European allies. “The EU is wilfully letting people drown in the Mediterranean by refusing to create a legal means of safe passage and failing to even provide adequate resources for maritime rescue,” said CEO Axel Grafmanns. “The NGOs are currently bearing the brunt of the humanitarian crisis and they are being left alone.”
Why offshore processing of refugees bound for Europe is such a bad idea - On the same day that a top UN official bravely called on Australia to end the harmful practice of processing asylum applications offshore in Papua New Guinea and Nauru, one of his colleagues announced his support for another proposed offshoring system – this time to prevent migrants reaching the EU. On July 24, Filippo Grandi, the UN high commissioner for refugees (UNHCR), said that Australia’s policy to deny access to asylum in Australia for refugees arriving by sea “has caused extensive, avoidable suffering for far too long”. Multiple reports have documented the abuses suffered in these offshore centres. Four years after the opening of these processing centres, at annual running costs of more than $1 billion per year since 2012 (£608m), Australia is now refusing to resettle vulnerable refugees who remain stranded in Papua New Guinea and Nauru. But the UNHCR’s approach to this kind of asylum policy is not joined up. On the same day as Grandi spoke, the agency’s special envoy for the central Mediterranean, Vincent Cochetel, announced the UN’s support for a proposal to set up screening systems for migrants attempting to reach the EU via Libya. Under this proposal, discussed by European and African ministers at a meeting in Tunis, transit countries such as Mali, Niger, Burkina Faso, Ethiopia, Chad and Sudan would be used to host offshore processing centres. The aim, according to Cochetel, is to “stop the dangerous journeys into Libya”. As part of this plan, 40,000 refugees identified as qualifying for international protection would be resettled to EU member states. Given the European Commission’s failure to persuade EU member states to resettle refugees under a similar scheme that began in 2015, it is difficult to imagine how the current proposal could work in practice. Many EU members, including the UK, have long opposed the idea of redistributing refugees through quotas.
Rome's Transport System Faces "Meltdown," On Brink Of Collapse -- New York City’s deteriorating subway has a rival for world’s most dysfunctional public transportation system. After only three months on the job, Bruno Rota, the head of Rome’s public-transit company has announced that he's leaving his post, saying that the Italian capital city’s decaying transportation system should declare bankruptcy, according to Reuters.Rota’s departure is an embarrassment for the anti-establishment five-star movement and one of its most high-profile politicians, Rome Mayor Virginia Raggi. Since taking office last year, Raggi’s administration has been paralyzed by internal tumult while the city’s infrastructure has continued to decay. The party’s failures in Rome suggest that it’s not prepared to govern, and may have contributed to Five-Star’s losses in a series of municipal elections last month.Meanwhile, the situation could hurt the party’s chances in next year’s general election.“Bruno Rota quit Atac on Friday, just three months after taking charge of the Italian capital's bus, metro and tram network, saying he was unable to salvage the firm and feared possible legal action tied to any eventual collapse."It is an appalling scandal," said Rota, who was called down to Rome after helping to turn around the transport system in the northern city of Milan. "The situation is worse than you can imagine," he told la Repubblica newspaper.Rota's dramatic departure has triggered yet another crisis for the city's 5-Star administration, which won power last year in what was seen as a litmus test of whether the anti-establishment group was ready to run Italy.” City officials are publicly criticizing Raggi, saying that Rome needs a “change in direction" after the city nearly adopted water rationing laws last week amid a worsening drought.
Swiss banks paid $1 bln in negative interest rates in H1 - (Reuters) - Swiss banks paid 970 million Swiss francs ($1 billion) in negative interest rate charges in the first six months of 2017, according to central bank data, up 40 percent year-on-year as clients continue to hoard cash. The Swiss National Bank (SNB) is charging a 0.75 percent fee on large deposits at the central bank, a cornerstone of its monetary policy since January 2015 which is aimed at weakening Switzerland's currency. It is a burden for banks, especially at a time when wealthy clients are still keeping more than a fifth of their holdings in cash despite buoyant financial markets, recent earnings at the biggest private banks show. The amount rich clients are opting to keep in cash has largely come down from the record-high level seen during the financial crisis but is falling very gradually. UBS , the world's biggest private bank, said last week the cash holdings at its flagship wealth management division came down in the second quarter to 21 percent of invested assets from 21.5 percent. UBS Wealth Management has 1.04 trillion francs in invested assets. Credit Suisse , the fourth-largest private bank in the world by assets, said cash holdings across its money managing units held steady in the three months to end-June at around 30 percent. Holdings in cash at Julius Baer , Switzerland's third-biggest private bank, came down to 22 percent from around 23 percent during the first six months of 2017. "It's interesting to compare right after the crisis in 2008, cash levels were at 34 percent, and the low we have experienced in 2007, pre-crisis. There the cash was around 16 percent," Julius Baer Chief Financial Officer Dieter Enkelmann said last week. "So there would be still room to go down if the markets would continue to do well."
"The Euro Crisis Is Not Over" Former ECB Chief Economist Urges "Greek Sabbatical From EU" - Otmar Issing, former Chief Economist and Member of the Board of the European Central Bank and the German Bundesbank, brings back the specter of Grexit scenarios, demanding a Euro-sabbatical for Greece. KeepTalkingGreece.com reports that, uin an interview with business news magazine Wirtschaftswoche, Issing warned of a new flare-up of the euro crisis. “The euro crisis is not over yet,” said the economist, one of the architects of the Euro.Issing called on a policy that would include EU treaties allowing the possibility of temporary withdrawal from the monetary union. “States like Greece would do well with a Sabbatical outside the monetary union. However, it should be accompanied by massive aid from other countries and a growth-oriented economic policy. And one would have to make re-entry into the euro zone dependent on fundamental reforms, ” Issing said. Issing no longer relies on the Stability and Growth Pact, a core element of the economic and monetary union. “I would not have considered the dimension of its dismantling by the governments”.Otmar Issing lashed out at the Greek government saying “the government is still in an anti-growth policy.” He also criticized Italy saying“It also did not seize the opportunity. The country has saved tens of billions of interest without using the leeway. ”
EU migrants make up over 20% of labour force in 18 British industries - A unique and detailed analysis has revealed which sectors of the economy would suffer most from a radical reduction in EU migration to Britain. According to a study by the Office for National Statistics, in at least 18 specialist industries EU workers constitute more than 20% of the labour force. And many others would be left almost as bereft if their number declined. The government insists EU workers living here will be able to stay post-Brexit. But there are fears that many will choose to leave when the drawbridge is raised in 2019 and that an eventual end of free movement will see future vacancies left unfilled. Last week it was announced that the independent Migration Advisory Committee will examine the economic and social contributions and costs of EU citizens in Britain. Concerns over the impact on the NHS and residential care have been highlighted in recent months. But the ONS study reveals a reliance on EU workers across a broad range of industries, extending far beyond the caring professions. It shows that nearly half – 47.6% – of employees in the fruit and vegetable “processing and preserving sector” are from EU countries. A similar proportion – 44.4% – are involved in meat processing. More than a third – 37.6% – of those processing fish, crustaceans and molluscs are EU migrants. In agriculture, just under 35% of workers employed in what the ONS describes as the “growing of nonperennial crops” are EU citizens, along with more than a quarter of workers involved in the manufacture of prepared animal feed. And just under a quarter involved in the “manufacture of bakery & farinaceous [starch] products” are EU workers. Many specialist sectors heavily reliant on people from other EU countries employ only a few thousand workers. Just over 1,000 EU nationals are employed in “the cutting, shaping and finishing stone industries”. But they constitute 22% of the workforce. Outside of manufacturing, entire industries rely on EU workers for a sizeable portion of their labour force. They make up almost 230,000 of the 1.7 million people working in the hotel and catering industry – 13.5% of the total.
British government divided on free movement after Brexit (Reuters) - Allowing free movement of people after Britain leaves the European Union would not "keep faith" with the Brexit vote, the international trade secretary said, underling divisions in the government over the issue. Liam Fox told the Sunday Times that senior government ministers had not reached a consensus on retaining free movement of people for a transitional period, a proposal outlined by Chancellor Philip Hammond on Friday. Hammond had said should be no immediate changes to immigration or trading rules when Britain leaves the EU in March 2019, and the status quo could endure until mid-2022. "If there have been discussions on that, I have not been party to them," Fox told the newspaper. "I have not been involved in any discussion on that, nor have I signified my agreement to anything like that." Divisions between ministers over Brexit strategy have become more open after Prime Minister Theresa May lost her majority in an early election she called in June. With May away on holiday, the debate has intensified. Hammond has led a push within the government to secure a business-friendly Brexit that avoids a sudden change in 2019 in the relationship between Britain and the EU, which buys nearly half the country's exports. Fox had previously said he backed a transition agreement to smooth Britain's exit from the trading bloc, but on Sunday he indicated that free movement should not continue. "We made it clear that control of our own borders was one of the elements we wanted in the referendum, and unregulated free movement would seem to me not to keep faith with that decision," he told the Sunday Times.
Border chaos will hit hard after Brexit, says report - Britain will be hit by huge border delays, require vast lorry parks in the south-east, and suffer more than £1bn a year in economic damage, according to a stark economic analysis of the likely impact of customs checks after Brexit.Additional costs associated with potential motorway queues, extra customs staff and jobs lost as a result of companies relocating mean even that assessment is “extremely conservative”, a study by a leading economic consultancy warns.The alarming assessment, by the Europe-wide Oxera consultancy, sets out what it describes as the most likely impact of the new border checks imposed after Brexit. The warning comes after Michel Barnier, the European Union’s chief Brexit negotiator, ruled that the government’s hopes of securing “frictionless” trade outside the EU was not possible. It also follows a week in which cabinet Brexiters signalled they were ready to adopt a comprehensive transitional deal for up to three years, as ministers attempt to buy time to tackle a series of unresolved policy challenges raised by Brexit.The complexities of creating a new customs regime as close as possible to the current arrangements is one of the major concerns for the Treasury, as it seeks to avoid serious disruption. Tory MPs are already sounding the alarm over potential gridlock at the border.The Oxera analysis paper, written by its head of transport Andrew Meaney and seen by the Observer, finds that the most likely outcome would be a scenario it describes as “slow trade: low regulation, high enforcement”.“Enforcement is either undertaken at the ports, or on a random checks basis,” it states. “However, the number of staff involved increases substantially, and many consignments are subject to lengthy checks.
Theresa May’s disastrous immigration targets pushed the UK into an uncertain Brexit – things are set to get much worse -– In much the same way as the assassination of Archduke Ferdinand was the trigger of the First World War, the adoption by the Conservatives of an unattainable immigration target triggered the demands for tighter control of EU immigration which is leading not merely to Brexit but to extreme forms of exit by leaving the single market. I don’t know whether the Conservative pledge in 2010 to cut immigration to the tens of thousands was dreamt up in the bath by David Cameron or, more likely, was inserted in their manifesto by some obscure adviser with nobody understanding its significance. Either way there have been serious consequences which were clearly not understood by those in search of a crunchy soundbite to fight an election. The figure seems to have been plucked out of the air with no evidence base and with no realistic prospect of meeting it. The most damaging consequence of choosing a target in this amateurish and arbitrary way, and then hopelessly missing it year after year, has been a deepening public cynicism feeding the narrative that immigration is “out of control”. Theresa May has built her political career on a dogged determination to cut immigration. Judged by her own standards, she has failed. As Home Secretary she sent out vans decked with posters telling immigrants to “go home”. And as Prime Minister she has refused to give an unqualified guarantee to remain for EU citizens already here, preferring to use them as bargaining chips in her bigger Brexit negotiation. But despite all this posturing, immigration has not gone down. Meanwhile, she has caused real anguish. These are real people, with real lives, who have also contributed much to Britain’s society and economy. That is why I am such a strong supporter of The Independent’s campaign, Drop the Target – a target which has no remaining credibility.
We won’t be a tax haven after Brexit, says Hammond - Britain will not slash taxes and regulations after Brexit to undercut European rivals, Philip Hammond has said. In a marked softening of tone, the chancellor said that Britain’s social, economic and cultural model would remain “recognisably European” after it left the EU. The comments to a French newspaper appear to rule out Britain reinventing itself as a Singapore-style corporate tax haven to attract global businesses. Such an idea was floated by Mr Hammond in January as a proposed response to other EU nations blocking access to the single market. Speaking to Le Monde in an interview published over the weekend, Mr Hammond said: “I often hear it said that the UK is considering participating in unfair competition in regulation and tax. That is neither our plan nor our vision for the future. “The amount of tax we raise as a percentage of our GDP puts us right in the middle of the pack. We don’t want that to change, even after we’ve left the EU. “I would expect us to remain a country with a social, economic and cultural model that is recognisably European.” The chancellor’s commitment to maintain present tax and social policies has irritated Tory MPs hoping that Brexit will mean a clean break from Brussels. It also potentially removes a powerful negotiating card if Europe does not offer a favourable trade deal.
No 10 contradicts Hammond over ‘off the shelf’ Brexit transition deal - Downing Street has said that the UK will not seek an “off-the-shelf” model for a post-Brexit transitional period, contradicting the position Philip Hammond is believed to have expressed to business leaders. The chancellor has been pressing for a simple transition arrangement to maintain trading conditions with Europe for at least two years after Brexit, mirroring arrangements the EU has with countries such as Norway and Switzerland that give them access to the single market. However, on Monday a No 10 spokesman said: “There were reports last week that we were looking for an off-the-shelf model. We are not looking for an off-the-shelf model. Precisely what the implementation model will look like is up for negotiation.” It is understood that Hammond believes the UK cannot negotiate a bespoke transitional deal in the time available – nor would it make sense to enter into prolonged negotiations about a temporary arrangement. The chancellor is reported to have told business leaders that the UK was seeking a “standstill” with full access to the single market and customs union, according to the Financial Times, as well as an “implementation phase” for new customs systems and immigration checks once a permanent deal is finalised with Europe. A senior cabinet source privately used the same phrase – “off the shelf” – when describing an implementation deal to the Guardian last week, suggesting that free movement between the UK and continental Europe would continue during that time. Hammond has irritated some cabinet colleagues, with one telling the Guardian: “He needs to put a sock in it, stop undermining the boss and get on with his day job.” They said he was guilty of “crazy behaviour”.
Hague backs transitional plan to avoid great Brexit ‘muddle’ - Philip Hammond’s plan for a stable transitional period is the best way to save Brexit from an approaching disaster, William Hague, the former Conservative cabinet minister, has said.Hague, a Tory peer who served as foreign secretary under David Cameron, said there was “clear potential for Brexit to become the occasion of the greatest economic, diplomatic and constitutional muddle in the modern history of the UK, with unknowable consequences for the country, the government and the Brexit project itself”.He said Hammond’s plan for a transitional period of up to three years after March 2019 along the lines of an existing “off-the-shelf” model, such as staying in the European Economic Area, was the best way of trying to rescue Brexit.No 10 on Monday ruled out the idea that Britain would have an “off-the-shelf” model for the transitional period, but this may be a matter of disputing the semantics. Hammond and others in the cabinet are understood to believe that there is not enough time to negotiate a fully bespoke deal with the EU from the moment the UK departs in March 2019 and therefore the best way of providing certainty for businesses would be to used an existing template. The most obvious model is for Britain to remain part of the EEA alongside non-EU members Norway, Iceland and Liechtenstein, which pay into the EU budget and abide by certain, but not all, EU rules.Writing in the Daily Telegraph, Hague said the “attractions of the chancellor’s plan, which sounds similar to joining the European Economic Area as a transition, are immense”. He said it would make negotiations with the EU much easier, because the task of agreeing a special transitional regime as well as an eventual free trade agreement could be skipped. Second, he said, the row about money would be partly solved as the UK would keep making EU budget payments in 2020 and 2021. Much of the discord is over those years because they fall in the period for which spending commitments have already been made.
U.K. Considers Alternatives to EU Court to Break Brexit Logjam - U.K. Prime Minister Theresa May’s government is studying a way to guarantee the post-Brexit rights of European Union citizens modelled on the court that oversees relations between the bloc and Norway. Having said it wants to end the jurisdiction of the EU Court of Justice, May’s team may be willing to accept a body akin to the court of the European Free Trade Association, according to a person familiar with the matter. Using such a template could find favor in the EU after its chief negotiator, Michel Barnier, recently noted EFTA’s court is able to interpret the bloc’s laws. An agreement could unstick the logjam surrounding the rights of EU citizens which is slowing the divorce talks and risks delaying the trade deal May wants. The idea of EU judges enjoying some say in Britain beyond March 2019 gained ground last week when U.K. Chancellor of the Exchequer Philip Hammond told the BBC that some countries have a relationship with the EU with “their own special tribunal to resolve any disputes.” Read more: Why EU Court of Justice is a Brexit Battleground: QuickTake Q&A Asked on Monday about the issue, May’s spokesman, James Slack, limited his response to what could happen in a transitional period after Brexit. While he said the U.K. is “not looking for an off-the-shelf model,” he added “the precise details of what an implementation period looks like are for negotiation."
Brexit: At-a-glance guide to the UK-EU negotiations - BBC News: The UK is negotiating its exit from the European Union after the country voted to leave in a referendum in June 2016. As it stands, the UK will depart the EU on 30 March 2019 but the terms of its withdrawal and the nature of its future relationship with the EU are yet to be decided. So what is being discussed and by whom?In the first phase of negotiations, British and EU officials are meeting each month for four days in Brussels, the home of the European Commission. So far, there have been two rounds of talks. The first one, in June, was largely a get-to-know you session in which both sides sized each other up, engaged in a few official pleasantries and discussed scheduling issues. July's session was much more serious and detailed, with full discussions taking place in four key areas: the rights of EU citizens in the UK and Britons on the continent, the future of the 300 mile land border between Northern Ireland and the Republic of Ireland, general separation issues, and the question of money. Matters are at an early stage and there has been no agreement in any of these areas yet. The two sides will next meet in the last week of August. The UK team is led by David Davis, the veteran Conservative MP who is Secretary of State for Exiting The European Union. His EU counterpart is Michel Barnier, a former French foreign minister and EU commissioner who was chosen by the other 27 EU member states to represent them. Both sides are deploying a Olympic-size squad of officials to work on the negotiations. Much of the spadework is being done by co-ordinators or "sherpas", senior officials whose job it is to pore over the nitty-gritty details and try and pave the way for a political agreement. The lead British sherpa is Oliver Robbins, the top civil servant in the Brexit department. Other key figures on the British side include Sir Tim Barrow, the UK's permanent representative in Brussels and Simon Case, David Cameron's former private secretary who is now director general of the UK-EU partnership, which is looking at post-Brexit co-operation.
Ministers blow £1m on headhunters for Brexit trade negotiators --The Government has spent more than £1m on recruitment consultants alone in a desperate attempt to find trade negotiators with the necessary skills to strike deals once Britain leaves the EU. The Department for International Trade spent £1.15m on recruitment agencies in the 12 months since July 2016, official figures show. It comes amid accusations that the Department is struggling to hire sufficient numbers of specialists needed to hammer out the trade deals, with ministers confirming just one appointment so far. Recruited a tiny number The details emerged through a series of parliamentary questions tabled by the Labour peer Lord Adonis, which showed the cash was paid to “organisations for services relating to the recruitment of staff”. The vast sum of money spent on solely on recruitment consultants is likely to be a major source of embarrassment for ministers who are now forced to train their own staff in negotiation techniques. “It is common knowledge around Whitehall that DIT have only managed to recruit a tiny number of experienced trade negotiators despite all this money on headhunters,” Lord Adonis told The Times. “There is a small pool of international trade negotiators and hardly any of them want to ruin their reputation by becoming trade negotiators for a British government that is unlikely to be able to achieve its objectives.”
Pound Plunges After BOE Votes 6-2 To Keep Rates Unchanged -- The whispers about a potential rate hike by the recently hawkish BOE ended up being wrong, when moments ago the Bank of England announced that in a 6-2 decision it kept rates unchanged at 0.25%, largely as expected. Saunders and McCafferty dissented in favor of an immediate interest-rate increase.In separate unanimous decisions, the central bank also kept its bond purchase programs unchanged at GBP10BN and GBP435BN for corporate and government bonds respectively.MPC holds #BankRate at 0.25%, maintains government bond purchases at £435bn and corporate bond purchases at £10bn. pic.twitter.com/ccUHh8b2IG— Bank of England (@bankofengland) August 3, 2017 The pound tumbled on the news... Not helping cable is that the BOE's cut of its 2017 GDP forecast to 1.7%, and the trim of 2018 from 1.7% to 1.6%. It also slashed wage expectations.As the cable plunged, the FTSE 100 index rose as much as 0.5%, testing its 50-DMA, on the back of the BOE's dovish U-turn.The BOE did caution again, however, that "if the economy follows a path broadly consistent with the August central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the path implied by the yield curve underlying the August projections." So far that's not happening.The monetary policy statement is below:
United Ireland referendum is inevitable after Brexit, says Irish parliamentary report author | The Independent: Brexit has sparked fears of a new hard border in Ireland - and protests PA Wire/PA Images A referendum on a united Ireland is inevitable following the Brexit vote, the author of a report by an Irish parliamentary committee says. The study urges both Dublin and London not to repeat the fallout from Britain’s EU referendum by failing to prepare for the possibility it will lead to Irish reunification. Mark Daly, the Fianna Fáil Senator, who compiled the report, said: “Last year, our former Taoiseach, Enda Kenny, said the EU needs to prepare for a united Ireland.“And it's clear from the 17 recommendations by the committee that a lot of work needs to be done in advance of a referendum.” Mr Daly added: “From talking to people in both communities in the North, it is clear that everybody believes that at some stage there will be a referendum. “But we must learn the lesson from Brexit and the lesson from Brexit is that you don't have a referendum and then tell people what the future will look like. “What you do is you lay out the future in great detail, you talk about the issues of great concern to all communities.” The report – entitled Brexit and the Future of Ireland: Uniting Ireland and its People in Peace and Prosperity – sets out detailed options for the island of Ireland in the wake of Brexit. It calls on the Republic, in the final Brexit agreement between the EU and the UK, to demand a “special status” for Northern Ireland and that there should be no new passport controls. Published by the Joint Oireachtas Committee on the Implementation of the Good Friday Agreement, the report also emphasises the need to protect EU structural funds in Northern Ireland, after Brexit. Last year, Northern Ireland broke with England by voting against Brexit, by 56 per cent to 44 per cent. Since then, the issue of the Irish border has emerged as crucial in the exit negotiations, with Brussels insisting progress is a red line before trade talks can begin. The Irish government declared it wants special status for Northern Ireland after Brexit, rejecting Britain’s suggestion that better technology can police trade between North and South after 2019.
More than half of young people in Ireland 'would join a mass uprising against the government' | The Independent: A mass uprising against the Irish government would be joined by more than half of young people in the country, a survey has indicated. Fifty four per cent of 18 - 34-year-olds said they would take part in a “large scale uprising against the generation in power if it happened in the next days or months”. The survey polled nearly 20,000 people in Ireland as part of the European Broadcasting Union’s Generation What? research.It showed that 36 per cent viewed politicians as corrupt, while 40 per cent said they were partly corrupt. Forty five per cent said they didn’t trust politics “at all”. However, 25 per cent said very few politicians were corrupt, a figure lower than most of those in the same generation who were surveyed in 14 other countries. The survey also found that the Church – traditionally a major institution in Ireland – appeared to have less influence over the country’s youth. Only two per cent of those questioned said they completely trusted the Church and 56 per cent they didn’t trust it at all.
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