A Decade of G7 Central Bank Collusion – and Counting.. - Nomi Prins - Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money. The scope and degree of this collusion are historically unprecedented and by admission of the perpetrators, unconventional in approach, and – depending on the speech – ineffective. Central bank efforts to provide liquidity to the private banking system have been delivered amidst a plethora of grandiose phrases like “unlimited” and “by all means necessary.” Central bankers have played a game with no defined goalposts, no clock rundown, no max scores, and no true end in sight. At the Fed’s instigation, central bankers built policy on the fly. Their science experiment morphed into something even Dr. Frankenstein couldn’t have imagined. Confidence in the Fed and the U.S. dollar (as well as in other major central banks globally) has dropped considerably, even as this exercise remains in motion, and even though central bankers have tacitly admitted that their money creation scheme was largely a bust, though not in any one official statement. On July 31, 2017, Stanley Fischer, vice chairman of the Fed, delivered a speech in Rio de Janeiro, Brazil. There, he addressed the phenomenon of low interest rates worldwide. Fischer admitted that “the effects of quantitative easing in the United States and abroad” are suppressing rates. He also said there was “a heightened demand for safe assets affecting yields on advanced-economy government securities.” (Actually, there’s been heighted demand for junky assets, as well, which has manifested in a bi-polarity of saver vs. speculator preference.) What Fischer meant was that investors are realizing that low rates since 2008 haven’t fueled real growth, just asset bubbles. The “Big Three” central banks — the Fed, the European Central Bank and the Bank of Japan — have collectively held rates at a zero percent on average since the global financial crisis began. For nearly a decade, central banks have been batting about tens of trillions of dollars to do so. They have fueled bubbles. They have amassed assets on their books worth nearly $14 trillion. That’s money not serving any productive, real-economy purpose – because it happens to be in lock-down. With a decade of failed policy experiments behind us, why should we have faith that the Fed — or any other central bank — has any clue about what to do next? The answer is simple. We shouldn’t.
PCE Price Index: July Headline & Core - The BEA's Personal Income and Outlays report for July was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.09% month-over-month (MoM) and is up 1.40% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.09% MoM and 1.41% YoY. Core PCE remains below the Fed's 2% target rate. Revisions were made going back to April.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 index data is shown to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But core PCE is such a key measure of inflation for the Federal Reserve that precision seems warranted. For a long-term perspective, here are the same two metrics spanning five decades.
Q2 GDP Revised up to 3.0% Annual Rate --From the BEA: Gross Domestic Product: Second Quarter 2017 (Second Estimate)Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2017, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent. The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated. These increases were partly offset by a larger decrease in state and local government spending ... Here is a Comparison of Second and Advance Estimates. PCE growth was revised up from 2.8% to 3.3%. (solid PCE). Residential investment was revised up slightly from -6.8% to -6.5%. This was above the consensus forecast.
Q2 GDP Second Estimate: Real GDP at 3.0% - The Second Estimate for Q2 GDP, to one decimal, came in at 3.0% (3.03% to two decimal places), an increase over 1.2% for the Q1 Third Estimate. Investing.com had a consensus of 2.7%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2017 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent.The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated. These increases were partly offset by a larger decrease in state and local government spending. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.42%. Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 14.7% below trend.
US Second Quarter GDP Revised Sharply Higher To 3.0%, Best In Two Years - In a surprise for traders - and the Fed - moments ago the BEA reported that after its first revision of Q2 GDP (a quarter which ended two months ago), the initial estimate of 2.6% was revised to 3.0%, beating expectations of a 2.7% print, and the highest annualized growth rate since Q1 2015. The annualized Q2 GDP was more than double the first quarter number which as a reminder printed at 1.2%While most components were revised higher in the latest release (with the notable exception of government which downshifted from 0.12% to -0.05%) the bigges contributor to the upward revision was Personal Spending, which surged 3.3% in Q2, after rising 1.9% in Q1, and contributing 2.28% of the bottom GDP line.As a result, the upward revision to the second estimate of GDP growth mainly reflected revisions to consumer spending on goods and to business investment. The full breakdown is shown below.Meanwhile, looking at the Fed's preferred inflation indicator, the core PCE, it showed that for one more quarter inflation supposedly remained dormant, as core PCE rose 0.9% in 2Q, in line with expectations, after rising by 1.8% in the prior quarter. Today's report also revealed that NIPA corporate profits increased 1.3% in Q2 after dropping 2.1% in the first quarter.Profits of domestic nonfinancial corporations increased 5.4% after increasing 0.3%. This however was offset by a sharp drop in profits of domestic financial corporations decreased 6.2% after decreasing 7.9%. Somewhat surprisingly, profits from the rest of the world decreased 2.0% after decreasing 2.1%, despite the steep drop in the USD. In total, the BEA reports that corporate profits increased 7.0 percent from the second quarter of 2016.
Q2 Real GDP Per Capita: 2.38% Versus the 3.03% Headline Real GDP - The Second Estimate for Q2 GDP came in at 3.0% (3.03% to two decimals), up from 1.2% in the Third Estimate of Q1 GDP. With a per-capita adjustment, the headline number is lower at 2.38% to two decimal points.Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale.The chart includes an exponential regression through the data using the E xcel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 9.6% below the pre-recession trend.
Opinion: No, hurricanes are not good for the economy - Once the immediate danger of a natural disaster subsides, and the loss of life, property damage, cost of rebuilding, and degree of insurance coverage can be assessed, attention generally turns to the economic effect. How will Hurricane Harvey affect the nation’s gross domestic product?You will no doubt hear assertions that the rebuilding effort will provide a b oost to contractors, manufacturers and GDP in general. But before these claims turn into predictable nonsense about all the good that comes from natural disasters, I thought it might be useful to provide some context for these sorts of events.The destruction wrought by a hurricane and flooding qualifies as a negative supply shock. Normal production and distribution channels are destroyed or disrupted. Producers have to find less-efficient (i.e. more expensive) ways to transport their goods. The net effect is lost output and income, and higher prices.Over the years, I’ve observed a tendency among economists and traders to view such events through a demand-side prism. They see lost income translating into reduced spending on goods and services, which might even warrant some largesse from the central bank. Of course, that is precisely the wrong medicine. Supply shocks reduce output and raise prices. The Federal Reserve’s interest-rate medicine affects demand. Lower interest rates will increase the demand for gasoline, among other goods and services, but they have no effect on supply. An easing of monetary policy under such circumstances would increase demand for already curtailed supply, raising prices even more.
It's Can-Kicking Time Again In The Imperial City by David Stockman - You have to hand it to the Donald. He speaks his mind. This week he dropped an unwelcome stink bomb on Capitol Hill during his Phoenix rant Tuesday night. If Mexico won’t pay for my wall, he seemed to say, than Congress will—-even if I have to shutdown the Imperial City to extract the first $1.6 billion of seed money:“We’re going to get our wall,” Mr. Trump said at a rally in Phoenix. “If we have to close down our government, we’re building that wall.” It didn’t take long for Washington’s permanent political class to say “no dice” to the shutdown idea. It seems Speaker Paul Ryan has been domiciled in the Imperial City since he was 21 years old and makes no bones about his priorities.“I don’t think anyone’s interested in having a shutdown,” House Speaker Paul Ryan said at a stop at an Intel Corp. facility in Oregon on Wednesday……. Mr.. Ryan said he expected lawmakers would need to pass a short-term spending bill in September to give them more time to work out a broader budget agreement later this year. What has the GOP Congress been doing the last nine months that it hasn’t enacted into law a single one of the 12 annual appropriations bills? The same bills that would provide upwards of $1.1 trillion to run the Pentagon and the domestic agencies. The answer is simple. They’ve been deliberately burning up the clock in order to force spending measures through as emergency continuing resolutions (CRs) or 11th hour compromises to keep the government open. This has been going on for years. It is the very reason Washington now stands on the edge of raising the national debt ceiling above $20 trillion. So we’ve officially entered the kick-the-can season. You can count on Paul Ryan to spin and misdirect in order to obfuscate what’s actually going on. The House Speaker is about to capitulate again to the nation’s fiscal doomsday machine. Expect clever maneuvers designed to hide the truth through yet another election cycle.
Fire, fury and the national debt limit - Cecchetti & Schoenholtz - During the 2016 campaign, then-candidate Donald Trump discussed his broad experience with debt. He would bring the skills and sensibilities of a real estate mogul to government debt management, and the result would be a better deal for the American public. He even broached the idea of renegotiating the obligations of the U.S. Treasury. Well, the day of reckoning has arrived. The Treasury has announced that by the end of September, it will face a shortfall. Without the authority to issue additional debt, the government will not be able to pay all of its bills—including the interest on the outstanding debt. In response, President Trump has threatened the Congress: either fund the wall along the Mexican border, or he will shut down the government. If the U.S. government fails to meet its obligations for any significant period, we will all be big losers. A government that cares about the people—both now and in the future—would never willingly inflict such a wound. Before proceeding, we need to distinguish two issues that tend to get conflated. These are: (1) the prospects for a government shutdown; and (2) the possibility of default on the U.S. Treasury’s outstanding debt. The first of these is bad, as it means suspending the pay of employees and not providing services for those relying on the government. But shutdowns have happened four times since 1990, most recently in 2013. They can be politically damaging, but the economic fallout has been both modest and temporary (see here.) Default is a completely different story. It would mean that the government does not make at least some promised payments on time. Lacking precedent, it is hard to anticipate the exact consequences. Would Social Security recipients fail to receive their monthly payments? What about government employees’ wages, including members of the military? How about government suppliers? Then there are the holders of Treasury bonds. Will they receive their interest payments? Their principal?
Need for Harvey recovery money could complicate Congress' hectic September | Fox News: The possible need to give hurricane relief funds to Texas could be an X-factor for Congress as it hustles to pass spending bills before October and avoid a government shutdown -- and the kind of political struggles that Republicans faced with 2012’s Superstorm Sandy. Congress is on recess until after Labor Day and will have less than four weeks upon its return to pass 12 spending bills to keep the government fully operational past Sept. 30. Their passage is already overdue. And negotiations could be complicated by the need to draft another, seperate bill to provide potentially billions in Hurricane Harvey relief money. Trump has already made the spending-bill situation more complicated, by again suggesting last week that he’d veto any spending resolution that doesn’t include money for his proposed U.S.-Mexico border wall. In addition, Congress must also agree to increase the federal debt ceiling or default on its financial obligation. The situation has pitted the administration against fiscal conservatives in Congress. Treasury Secretary Steven Mnuchin reiterated Friday that he wants Congress to raise the debt limit by the end of the month, as conservative lawmakers argue there’s no plan to offset a debt-ceiling increase with spending cuts. In January 2013, the GOP-led House approved a special spending bill to help rebuild the Eastern seaboard and New York City, lashed the previous October by hurricaine-like Superstorm Sandy. However, the bill passed with the support of just 49 Republicans. With Harvey, nobody knows for certain whether there will be federal need to cough up a supplemental spending bill to help Texas recover. However, the state’s congressional delegation wields a lot of clout. Texas GOP Sen. John Cornyn is the second-most-powerful member of the Senate. And three Texas Republicans lead House Appropriations subcommittees, which control the federal purse strings. They are Reps. John Carter, Kay Granger and John Culberson.
Harvey just gave Congress yet another political fight to wage in September Lawmakers now have another complicated task awaiting them when they return to Washington and an already packed September calendar: potentially approving billions of dollars for Hurricane Harvey recovery. Authorizing aid opens another window for Congress to potentially play politics and bicker over policy ahead of two key deadlines. President Donald Trump, who visited Texas on Tuesday, has promised swift help for the state after Harvey, which was the most powerful hurricane to hit Texas in more than 50 years when it came ashore Friday. A number of people have died and billions of dollars in damage have been caused in southeast Texas, where some areas could see as much as 50 inches of rain from the lingering storm. Rescue operations are ongoing in Houston and surrounding areas, where flooding has stranded residents. When Congress gets back from its August recess, it will have to respond to the storm as it already faces two politically contentious deadlines. Treasury Secretary Steven Mnuchin has warned that the U.S government will hit its borrowing limit on Sept. 29 and potentially risk defaulting on its obligations without raising the debt ceiling. Lawmakers also need to pass a funding bill before Sept. 30 to avoid a government shutdown. The hurricane adds another wrinkle to what could already become a messy set of negotiations."Congress can always find time, find a way to do the things it needs to do in an emergency," said Steven Billet, director of the legislative affairs program at the George Washington University Graduate School of Political Management. "The bigger question is who may or may not be tempted to play politics with [disaster relief.] ... The temptation will most assuredly be there for a lot of people." Both raising the debt limit and funding the government will likely come with complications. The White House has called for a "clean" debt ceiling increase without other provisions attached. Some conservative Republicans have previously called for spending cuts along with raising the borrowing limit and could seek concessions in the bill this time around. Trump has also threatened a government shutdown if Congress does not fund his proposed wall along the U.S.-Mexico border. Democrats have opposed approving money for the project.
Republicans Struggle to Pass Budget, Debt Ceiling, and Harvey Disaster Relief Funding -- Before we begin, let us all stipulate to two facts: 1) Senate Majority Leader Mitch McConnell is good at one thing and one thing only: obstructing a Democratic president; and 2) Speaker of the House Paul Ryan, the zombie-eyed granny starver from the state of Wisconsin, is a truly terrible politician on almost every level on which one can be a terrible politician, but especially as a legislative leader. God, John Boehner must laugh over his lawn mower every morning these days. It seems that there is a problem with the Congress. They're coming back with too…much…work…to…do. There's the budget, and the debt ceiling, and now there's a massive weather catastrophe to confront. What's a national legislature to do? Politico has the skinny. Job One: pass that buck! Officials won't have a grasp on losses for weeks to come, but President Donald Trump said Monday that he will soon request disaster relief from Capitol Hill. "I think you're going to see very rapid action from Congress, certainly from the president. You're going to get your funding," Trump said at a news conference. "I've already spoken to Congress, and everybody feels for you." For their part, GOP congressional leaders aren't yet giving concrete signs on how they might swoop in with assistance, but they could attach an emergency spending package to a continuing resolution needed to fund the government. "We will help those affected by this terrible disaster," said Ryan spokeswoman AshLee Strong, adding that the first step in that process is a formal request for resources from the administration. This is what you got elected to handle. Some of this stuff—the debt ceiling, the budget—are the everyday responsibilities of every Congress and, because we all live on planet Earth, where unanticipated weather events are fairly common among the natives, that's part of why you got elected, too. God, they're a mess, in the House especially. Half their caucus is made up of jumped-up county commissioners, gibbering Bible-banging fanatics, and jamokes gobbling Alex Jones brain pills with both hands. Ryan can't control them any more than Boehner could. It is unseemly for a Speaker to work with a whip and a chair. Unfortunately for Ryan, and for the rest of us, this cry of loons scares the half-sane portion of his caucus to death, so it wields an unusual amount of power for a collection of crazy people. Some conservative Republicans are likely to balk at any increased spending, as they have after previous natural disasters — which could further inflame the conflict between the likes of the hard-line House Freedom Caucus and GOP leadership. Still, divvying up some extra cash could actually ease leadership's legislative woes. "There's a huge amount of political pressure. You can't vote against this," says David Inserra, a policy analyst at the conservative Heritage Foundation. "So there's going to be pressure to put money out there, whether it's in a supplemental or a CR."
Harvey May Spur Congress to Avoid Shutdown, Debt-Ceiling Fights -- Congress is seen as likely to combine emergency aid for Harvey victims in September with stopgap government funding and a debt-limit increase. That could help Republican leaders persuade President Donald Trump and restive conservatives to put off major fiscal battles that could distract from the top GOP goal of a tax overhaul by the end of the year."If there is going to be a shutdown fight it would be December or January," House Freedom Caucus Chairman Mark Meadows of North Carolina told ABC News on Tuesday. "Not in September and certainly not along with the disaster we are having in Texas."Trump last week threatened an Oct. 1 government shutdown if Democrats don’t agree to his demand for $1.6 billion in funding for a wall on the border with Mexico. Now the president is asking lawmakers to quickly approve emergency funds for Harvey victims.Republicans were already tentatively planning to combine a debt-ceiling increase with a short-term spending bill to keep the government open. Adding the Harvey aid could make the bill politically impossible to veto, even if lawmakers omit money for a border wall. And delaying a fight over the wall to a future spending bill would lessen the possible impact of a fiscal showdown if a long-term debt-limit increase has already been enacted in September. The Congressional Budget Office estimates the government will reach its borrowing limit sometime in October.There still could be turbulence along the way. Conservatives, for example, are likely to bristle at what could be included in the financial bills. Representative Dave Brat of Virginia said in an interview Wednesday that the idea of combining the bills "has everything you want except Republican fiscal responsibility."
Trump Faces Showdown With Congress Over Harvey Emergency Funding Bill - The totality of the damage from Hurricane Harvey isn’t yet known, and as it continues to rain in Texas and Louisiana, it will likely be a few days before officials can start tallying up the damage but President Donald Trump has already promised Texans that he will swiftly pass an emergency funding bill to help offset what’s likely to be tens of billions of dollars in damages. But while Trump may hope that emergency funding is swiftly approved, Bloomberg points out that Congress has final say over the details of any relief bill. And lawmakers, who are not only facing a particularly hectic legislative calendar next month but don't have the - let's just say - best relationship with Trump these days, might not get the job done as quickly as the president would like. According to Bloomberg, conservative lawmakers could turn obstructionist unless the plan is offset by domestic spending cuts. “After previous storms, lawmakers have usually demanded detailed spending plans for emergency funds, while conservatives have argued that disaster funding should be offset by domestic spending cuts. With Harvey still expected to dump rain over Texas and Louisiana for several days, the full scope of the damage isn’t yet known.” While Trump said he’s already spoken with members of Congress, he has yet to submit a formal spending request for additional relief funds. “The real number, which will be many billions of dollars, will go through Congress,” Trump said Monday at a news conference ahead of a planned visit Tuesday to Texas to meet with local officials involved in the response. “It will happen very quickly.” Meanwhile, at least one Texas lawmaker has promised to add relief measures to a temporary spending bill that must be passed if Republicans want to avert a government shutdown after the current spending resolution expires on Sept. 30. However, Republicans haven’t said whether they will bring such a measure up for debate after Congress returns from its summer vacation.
About That Debt Ceiling Crisis... With just one month left until the "X Date", better known as the first day on which Treasury has exhausted its borrowing authority and no longer has sufficient funds to pay all of its bills in full and on time, and also known as the date the US is technically in default on its debt obligations and would be forced to prioritize debt payments according to that infamous 2011 Fed transcript...... traders were hoping if not for resolution, then at least a modest dose of optimism in the days ahead: after all with Houston reeling, the last thing the US needs is a full government shutdown in addition to the emergency crisis in Texas. Alas, that's precisely the opposite of what is taking place in the market, where the September/October Bill Spread has again blown out to record levels... ... making the October T-Bill "hump" the worst it has been yet. One potential catalyst for the spike in odds of an adverse outcome is that earlier today, the chairman of the conservative House Freedom Caucus said aid for victims of Hurricane Harvey should not be part of a vehicle to raise the debt ceiling.Quoted by The Hill, Rep. Mark Meadows (R-N.C.), a Trump ally who leads the conservative caucus, said disaster aid should pass on its own, apart from separate measures the government must pick up in September to raise the nation's borrowing limit and fund the government.“The Harvey relief would pass on its own, and to use that as a vehicle to get people to vote for a debt ceiling is not appropriate,” he said an interview with The Washington Post, signaling agreement with Trump on the approach. It would “send the wrong message” to add $15 to $20 billion of spending while increasing the debt ceiling, Meadows added.Ironically, it was precisely the Harvey disaster that prompted Goldman yesterday to lower its odds of a debt ceiling crisis from 50% to 33%, on the assumption that it would make conseratives more agreeable to a compromise, when in fact precisely the opposite appears to have happened, and the new dynamic is now playing out in the market where the odds of a government shutdown have never been greater.
Chris Christie: ‘Reprehensible Lies’ From ‘Disgraceful’ Cruz on Storm Aid - Texas Sen. Ted Cruz voted against Hurricane Sandy relief in 2013, and New Jersey Gov. Chris Christie is not letting him — or anyone else — forget it. As deadly storm Harvey continues to overwhelm cities along the Lone Star State's gulf coast and lawmakers push for federal funds, Christie said Wednesday that the junior Texas senator was "crap" for claiming to have supported aid for the Garden State despite his no vote."Dead wrong," Christie said of Cruz's claims in an appearance on MSNBC's "Morning Joe" Wednesday, before calling the senator "disgraceful." "I see Senator Cruz and it’s disgusting to me that he stands in a recovery center with victims standing behind him as a backdrop and he’s still repeating the same reprehensible lies about what happened in Sandy … and I’m not going to let him get away with it,” Christie added on CNN.
"There Will Be Blood": S&P Warns Failure To Raise Debt Ceiling Would Be "More Catastrophic Than Lehman" - With just one month left until the Treasury "X-date", or the moment when it would run out of cash without a debt-ceiling resolution... ... the time has come for dire, apocalyptic threats to spook Congress into action and specifically reaching a compromise on a debt ceiling resolution, and S&P - which infamously downgraded the US in 2011 during the last debt ceiling fiasco - is happy to be the source of bad news. In a report published on Wednesday titled "With A Shutdown, There Will Be Blood", U.S. chief economist at S&P, Beth Ann Bovino, writes that “failure to raise the debt limit would likely be more catastrophic to the economy than the 2008 failure of Lehman Brothers and would erase many of the gains of the subsequent recovery.” Not even bothering to focus too much on the implications of a debt-ceiling breach, which would result in a technical default of the US, and potentially imperil the reserve status of the US Dollar, Bovino instead analyses the other key event due in a month, the potential government shutdown and writes that If it began early in the quarter, a shutdown would shave at least $6.5 billion off of real 4Q GDP each week it continues. Her analysis is based in part on 1995-1996 government shutdown and 16-day shutdown in October 2013. However, agreeing with Goldman's analysis released earlier, the S&P analyst said that the likelihood of a federal shutdown in late September remains “slim” with the fallout from Harvey reducing the chances further. Still, S&P is unwilling to assume a happy ending, with Bovino adding that "betting on a rational US government can be risky." Judging by today's latest blow out in the spread between September/October Bill yields, the market agrees.
Trump Weighs Tying Debt Limit Increase to Harvey Aid -- President Donald Trump is considering attaching an increase in the U.S. debt limit to an initial $5.95 billion disaster aid funding request for Hurricane Harvey, two administration officials said, a move aimed at lowering the risk of an unprecedented default. The White House request, which could come as soon as Friday, would include $5.5 billion to the Federal Emergency Management Agency and the remainder to the Small Business Administration. The request is being prepared primarily to cover funding demands through the Sept. 30 end of the federal fiscal year, according to the officials, who described the matter on condition of anonymity. Administration officials already have begun talks with congressional leaders about the approach, which is intended to ease early passage of a debt limit increase and avoid a stand-off over the issue that could rattle financial markets, one of the officials said. A Senate spending panel has approved $500 million in FEMA reprogramming into a designated disaster-relief fund, according to a Senate Republican aide who spoke on condition of anonymity. As of Thursday at 9 a.m. New York time, the balance left in FEMA’s disaster relief fund was $2.1 billion, of which $641 million was then immediately available for response and recovery efforts related to Hurricane Harvey, said Mark Peterson, a spokesman for the agency. The congressional action, which came later Thursday, freed up an additional $500 million in the overall disaster relief fund for use on the Harvey response. Market angst is growing as Congress has only a limited number of working days remaining to raise the debt ceiling. The spread between one- and three-month Treasury bills has shrunk to around 8 basis points from as high as 24 basis points in May as investors have started demanding higher rates on one-month paper relative to three-month securities in order to compensate for default risk. The White House would like to extend the debt limit long enough to move back the threat of a U.S. default until after Congress can deal with funding for the full federal fiscal year and tax legislation the Trump administration backs, one of the officials said.
White House to request initial $12.7B for Harvey relief | TheHill: The White House is expected to ask Congress for an initial $12.7 billion in emergency relief funding in the aftermath of Hurricane Harvey, a senior GOP aide told The Hill on Friday. The White House has not made the formal request but is expected to soon as the administration seeks to respond to a Gulf region that has been devastated by historic flooding and rainfall. As an initial request, the White House will ask for $5.5 billion for a disaster relief fund and $450 million for a Small Business Administration program, which it hopes will be approved when lawmakers return to Washington next week from the August recess. The White House is also expected to ask that an additional $6.7 billion be added to a stopgap funding bill that Congress must pass by the end of the month to keep the government running, the aide said. Some lawmakers, including the chairman of the conservative House Freedom Caucus Mark Meadows (R-N.C.), a close ally of Trump’s, have said Harvey relief aid must be approved by Congress in a separate vote from a bill to raise the U.S. debt ceiling. Meadows has said a Harvey relief package will pass on its own and that it would “send the wrong message” to add billions in spending to the debate around the debt ceiling. Freedom Caucus members oppose a “clean” debt ceiling hike and generally want to see spending reform in any agreement. Meadows, however, has said he will not demand budgetary offsets for Harvey spending, a reversal for the conservative leader. Meadows and other conservative Republicans voted against relief aid for Superstorm Sandy in 2013 because the spending was not offset with cuts elsewhere. They also said that bill was stuffed with spending that was unrelated to the storm.Office of Management and Budget director Mick Mulvaney, a former founding member of the Freedom Caucus, has been “working around the clock” with lawmakers on the spending package, the White House said.
A Hot Mess - Kunstler - It wasn’t until more than a week after Hurricane Katrina slammed into New Orleans in 2005 that the full extent of the damage was recognized and so it will go with the hot mess where Houston used to be. Mostly, it is inconceivable that the business activity which made Houston the nation’s fourth largest city and, according to Chris Martenson, equal to the 10th largest economy in the world, will ever return to what it was before August 26, 2017. The major activity there has been the refining and distribution of oil products, and no activity is more central to the functioning of the US economy. So the public and our currently clueless leaders across the political spectrum, plus a legacy news media lost in the carnival of race and gender freak shows, is about to discover the dynamic relationship between energy and an industrial economy. The pivot in this relationship is banking, which enables the conversion of oil’s raw power into everything else that goes on in a so-called advanced economy. The popular assumption is that federal disaster relief can compensate for all losses. That assumption may go out the window with the Houston flood of 2017. And no amount of federal aid can compensate for the hours, days, and weeks that will tick by as businesses struggle to return to something like their former level of normal operation. Many businesses will never recover, especially the smaller ones that support the big one — the little tool and die shops, the construction outfits, the trucking and shipping concerns, the riggers and pipefitters, the cement companies, and so on. All of that activity existed in highly rationalized chains of on-time production and service and nothing will be on-time in Houston for a long time to come. The arguments over insurance coverage have not even begun, and then there is the question of how businesses in this perpetual flood zone will renew their insurance. Or how might they relocate to higher ground? And how do they pay for that? And where is higher ground in this vast, swampy lowland? The public has been conditioned by frequent natural disasters to think that nobody has to eat the losses, so that in effect loss doesn’t exist, just as the nation’s central bank has engineered the belief that risk no longer exists in the management of capital. Meanwhile congress is left to dither over two conjoined financial emergencies at once: authorizing emergency aid to Houston, and resolving the debt ceiling problem.
Deficit Spending Should Be Counter-Cyclical (Not Pro-Cyclical) - Barry Ritholtz -One of the weirdest things to come out of the financial crisis was the rise of the born-again fiscal hawks, as I called them in 2010. These are the folks who had never shown much interest in fiscal restraint before, but very suddenly became concerned about deficit reduction. Coincidentally, their awareness of the evils of deficits occurred sometime in late January 2009, once they were no longer in power in Washington. Both major political parties engage in deficit alarmism, although it would be a false equivalency to suggest they do so equally. Max Abelson at Bloomberg Businessweek pointed out that the most recent version of the shift on the importance of deficit reduction was dependent upon whose guy was in the White House:It was only about five years ago that powerful people in finance loved talking about the horrendous consequences for the U.S. if it didn’t get its finances under control. They warned that the federal debt—and the interest payments—could eventually get high enough to drag down the economy, burden future generations, and even threaten national security. Chief executive officers of five of the biggest U.S. banks joined a campaign called Fix the Debt, signing on with hedge fund billionaires, asset managers, and private equity executives, as well as former lawmakers and others.Then their guy won the White House in November, and reducing deficits suddenly became a nonissue.This sort of behavior is intellectually dishonest, hypocritical, economically counterproductive and, at times, even dangerous. It has been going on for too long.Consider a short anecdote about a president elected amid a major economic slowdown and a decade-long bear market for stocks . . . Continues at Bloomberg: Born-Again Fiscal Hawks Turn Into Doves
Pentagon Faces $65 Billion in Budget Cuts … U.S. national security funding may be slashed by about $65 billion in January as lawmakers forge ahead with a spending plan that collides with a budget ceiling under a six-year-old law. A $614 billion bill passed by the U.S. House in H.R. 3219 is caught in a political vise: President Donald Trump and most lawmakers want to see increases in Pentagon spending, yet that intention isn’t backed up by an agreement to undo the 2011 Budget Control Act. Without another budget agreement in place, the Defense Department faces automatic across-the-board cuts of 9 percent to 10 percent starting in mid-January, according to Chris Sherwood, a Pentagon spokesman. That’s about $65 billion, the Congressional Budget Office estimates. Enforcement of the act’s caps are returning for the coming fiscal year that begins Oct. 1 after they were adjusted in fiscal 2016 and 2017 for discretionary domestic and national security spending. That was the third time since the act passed that the limits were adjusted, in those cases for both defense and domestic discretionary spending. Trump wants to cut domestic spending while adding to defense, a proposal opposed by Democrats and many Republicans. If the mandatory cuts go ahead, they would be leveled across thousands of Pentagon programs. The White House would have the option of exempting military personnel funds from the automatic cuts, known as sequestration. Such cuts are likely because all of the pending congressional defense bills so far propose busting the cap of $549 billion in national security spending for fiscal year 2018, or $522 billion for the Pentagon alone. National security spending also includes programs such as the Energy Department’s maintenance of the nation’s nuclear warheads, environmental cleanup, and some activities of the FBI and Transportation Department. Still, because the automatic cuts wouldn’t take effect until mid-January, there would be time for an agreement even after the fiscal year starts on Oct. 1, Senate appropriators have yet to act on their defense bill, but Budget Committee guidance puts their number closer to the $549 billion national security cap than the House version.
"North Korea Is Waving A Red Flag In The Bull’s Face. What Will Donald Do?" -- The market reaction to the latest North Korean missile flight tells us everything we need to know: Risk Off. Equities wobble, gold up, bond yields down and gold higher. Markets understand the reality: the Trump Jump is now well and truly over – Treasury yields are right back down there, the dollar is down 10%, stock markets have gone short, yet the US populace. But if there was a snap election tomorrow….. Don’t even think about it.. Deliberately firing a missile on a trajectory over Northern Japan sends clear messages from the Kim Jong Un regime: 1) we are able to do it, and 2) but, we didn’t fire it in the direction of US Guam. Although the ballistics would have been well understood (ie it wasn’t going to hit Japan), it ratcheted up the fear by triggering alerts. It demands a US response – which will keep markets on tenterhooks. Firing the rocket from a site near downtown Pyongyang’s airport also sends the US a clear challenge about limits on what a “measured” response might mean. So much for the Northerners wanting to negotiate – as the Americans were telling us just last week. You’d almost think the N Koreans were trying to wind up Trump? Exactly. They are waving a red flag in the Bull’s face to force a reaction. The S Koreans have already sent a couple of bombers to aggressively practice bomb drops – calm and measured. What will Donald do? After last week’s “Fire and Fury” rant, the N Koreans are expecting him to fulminate, look stupid, make some further angry comments – in short more bluster.
Message from North Korean missile over Japan 'loud and clear’ (Reuters) - President Donald Trump warned on Tuesday that all options are on the table for the United States to respond to North Korea's firing of a ballistic missile over northern Japan's Hokkaido island into the sea in a new show of force. The missile test further increased tension in east Asia as U.S. and South Korean forces conducted annual military exercises on the Korean peninsula, angering Pyongyang which sees the war games as a preparation for invasion. North Korea has conducted dozens of ballistic missile tests under its leader, Kim Jong Un, in defiance of U.N. sanctions, but firing projectiles over mainland Japan is rare. Trump, who has vowed not to let North Korea develop nuclear missiles that can hit the mainland United States, said the world had received North Korea's latest message "loud and clear". "Threatening and destabilizing actions only increase the North Korean regime's isolation in the region and among all nations of the world. All options are on the table," Trump said in a statement. Trump and Japanese Prime Minister Shinzo Abe spoke and agreed that North Korea "poses a grave and growing direct threat" to the United States, Japan and South Korea, the White House said. Investors flocked to safe-haven assets after the missile firing. The dollar fell to its lowest in more than 2-1/2 years against a basket of major currencies .DXY but then rebounded, while benchmark 10-year U.S. Treasury note US10YT=RR yields fell and the price of gold XAU= hit more than a nine-month peak. U.S. stocks .SPX recovered from a sharply lower open. INTERMEDIATE RANGE Initial assessment indicates the North Korean missile was an intermediate-range ballistic missile (IRBM), the Pentagon said in a statement. Two U.S. officials said it appeared to be a KN-17, or Hwasong-12. North Korea's Kim guided a launch of its Hwasong-12 intermediate-range ballistic missile on Tuesday in a dr
Trump Responds To North Korea Launch: "All Options Are On The Table" -- After an uncharacteristically long, "Gen. Kelly-mediated" delay, Donald Trump finally issued an official response to last night's North Korean launch which flew over Japanese airspace. And, instead of tweeting, perhaps indicative of the gravity of the situation, moments ago the White House issued an official statement saying that "all options are on the table." Full statement below: The world has received North Korea's latest message loud and clear: this regime has signaled contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior. Threatening and destabilizing actions only increase the North Korean regime's isolation in the region and among all nations of the world. All options are on the table. While that may be, judging by North Korea's repeated provocations, at least Kim is convinced that Trump really has no options. Indeed, as Bill Blain commented earlier, "They will continue to goad him into doing something “angry”… at which point America gets the blame, and China can step in as peacemaker." In other words, North Korea - and China - appear to have set a trap for the US president. Will Trump avoid the temptation to walk straight in it, or - in an attempt to "boost ratings" - will Trump do what Gens Kelly and McMaster are telling him to do? One more launch by North Korea may be all it takes to find the answer.
Trump Says ‘Talking Is Not the Answer’ to North Korea Missiles - U.S. President Donald Trump on Wednesday dismissed the idea of negotiating with North Korea in response to Kim Jong Un’s latest provocation in test-firing a missile over Japan.“The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!” Trump said in a Twitter post.Kim on Tuesday said the missile test was a “meaningful prelude” to containing the American territory of Guam, adding he will continue to watch the response of the U.S. before deciding on further action.Trump said in a White House statement Tuesday that “all options are on the table” and that the test increased “the North Korean regime’s isolation in the region and among all nations of the world.” Kim guided the firing of the intermediate-range strategic ballistic rocket and urged his military to conduct more such launches into the Pacific Ocean in the future, according to a statement from the official Korean Central News Agency. The missile firing was part of "muscle-flexing" to protest annual military exercises being held between the U.S. and South Korea, KCNA said. North Korea had threatened earlier this month to launch missiles over Japan toward Guam, which prompted warnings of retaliation from American military officials.
Mattis Contradicts Trump: "We Are Never Out Of Diplomatic Solutions" On North Korea - In the latest public disagreement between President Trump and his top military advisor, Defense Secretary Jim Mattis on Wednesday said that when it comes to North Korea, diplomatic solutions remain on the table after he was asked to respond to a tweet by President Trump that said "talking is not the answer.""No, we are never out of diplomatic solutions," Mattis said in an exchange with pool reporters before meeting with his South Korean counterpart Song Young-moo in the Pentagon. "We continue to work together, and the minister and I share a responsibility to provide for the protection of our nations, our populations, and our interests, which is what we are here to discuss today."As discussed this morning, in his first tweet discussing the recent North Korean missile launch, Trump tweeted that "The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!" The market slumped briefly (the dip was quickly bought) after Trump appeared to be signaling that the administration was shifting tactics a day after a White House statement said "all options are on the table." Mattis and Secretary of State Rex Tillerson have repeatedly said the top priority should be a diplomatic solution with North Korea. On Tuesday, U.S. Ambassador to the U.N. Nikki Haley called the test "absolutely unacceptable and irresponsible," noting that North Korea has violated "every single security council resolutions have had" and suggesting a hard-line shift in US policy.As Reuters reports, Mattis made the comment during a media availability before the meeting, in which a reporter is allowed to ask a question on behalf of the press corps, which is then distributed to news outlets. Photographers and videographers are also allowed in.After initially saying "no" after being asked whether the U.S. was out of diplomatic solutions, the reporter pressed Mattis over what options can still be taken. "Now you're testing us here, you know," Mattis joked. "We bring you up here to take pictures."
With a drama-filled White House, Mattis has shown deft political touch - Away from the cameras and apart from the nonstop drama of the White House, Defense Secretary Jim Mattis has come to play a role unlike any other Cabinet member. The retired Marine general has become a force for calm, order and, in the eyes of the president’s critics, quiet resistance to some of President Trump’s most combative and divisive instincts. In perhaps his greatest political feat, Mattis has maintained this air of independence without directly provoking a president who demands absolute loyalty. The latest example came Wednesday morning when Trump vented his frustrations with North Korea after its latest missile launch. “Talking is not the answer!” Trump tweeted only a few hours before Mattis met at the Pentagon with Song Young-moo, South Korea’s defense minister, and delivered a very different message to reporters. “We’re never out of diplomatic solutions,” Mattis said. On Tuesday night, Mattis seemed again to be in mitigation mode when he announced that he would be pulling together a “panel of experts” to provide advice on how to implement Trump’s ordered ban on transgender troops. Trump announced the ban last month in a series of tweets that caught the military’s top brass largely by surprise. By contrast, Mattis’s statement promised an exhaustive study and also seemed to leave the door open to allowing some transgender troops who are serving to stay in uniform. Perhaps the most striking example of Mattis’s inclination to tamp down deep political divisions came in the wake of the recent violence in Charlottesville. Mattis was recorded in a video uploaded to Facebook speaking off the cuff to a small group of American troops in Jordan. “Our country, right now, it’s got problems that we don’t have in the military,” Mattis told them. “You just hold the line until our country gets back to understanding and respecting each other and showing it.”
Mattis’ transgender policy review is just ‘following orders’ -- Defense Secretary James Mattis is doing exactly what President Donald Trump asked of him in ordering a review of the transgender troop ban in the military, analysts say. Tuesday evening Mattis announced the military will “develop a study and implementation plan, which will contain the steps that will promote military readiness, lethality, and unit cohesion, with due regard for budgetary constraints and consistent with applicable law” with the transgender troop ban. The Defense and Homeland Security departments will establish a panel to provide advice and recommendations on the implementation of the president’s Aug. 25 directive. “The panel will assemble and thoroughly analyze all pertinent data, quantifiable and non-quantifiable. Further information on the panel will be forthcoming,” Mattis’ statement said. Trump’s Aug. 25 guidance banned transgender troops in the military on a case-by-case basis, prohibits future transgender people from joining the military and disallows the government from paying for transition services for transgender troops. But, the guidance also told DoD to further study how the guidance should be implemented, which is exactly what Mattis is doing. “What this statement says to me is Mattis is following orders. Trump has asked Mattis to take another look at the policy and come back to him with his recommendation and that sounds exactly like what Mattis is doing,”
Trump Forges Ahead on Costly Nuclear Overhaul -- During his speech last week about Afghanistan, President Trump slipped in a line that had little to do with fighting the Taliban: “Vast amounts” are being spent on “our nuclear arsenal and missile defense,” he said, as the administration builds up the military. The president is doing exactly that. Last week, the Air Force announced major new contracts for an overhaul of the American nuclear force: $1.8 billion for initial development of a highly stealthy nuclear cruise missile, and nearly $700 million to begin replacing the 40-year-old Minuteman missiles in silos across the United States. While both programs were developed during the Obama years, the Trump administration has seized on them, with only passing nods to the debate about whether either is necessary or wise. They are the first steps in a broader remaking of the nuclear arsenal — and the bombers, submarines and missiles that deliver the weapons — that the government estimated during Mr. Obama’s tenure would ultimately cost $1 trillion or more. Even as his administration nurtured the programs, Mr. Obama argued that by making nuclear weapons safer and more reliable, their numbers could be reduced, setting the world on a path to one day eliminating them. Some of Mr. Obama’s national security aides, believing that Hillary Clinton would win the presidential election, expected deep cutbacks in the $1 trillion plan. Mr. Trump has not spoken of any such reduction, in the number of weapons or the scope of the overhaul, and his warning to North Korea a few weeks ago that he would meet any challenge with “fire and fury” suggested that he may not subscribe to the view of most past presidents that the United States would never use such weapons in a first strike. “We’re at a dead end for arms control,” said
All The Countries America Has Invaded... In One Map - From Montezuma to the shores of Tripoli, the US has had a military presence across the world, from almost day one of its independence. For those who have ever wanted aclearer picture of the true reach of the United States military - both historically and currently - but shied away due to the sheer volume of research required to find an answer,The Anti Media points out that a crew at the Independent just made things a whole lot simpler. Using data compiled by a Geography and Native Studies professor from Evergreen State College in Olympia, Washington, the indy100 team created an interactive map of U.S. military incursions outside its own borders from Argentina in 1890 to Syria in 2014. To avoid confusion, indy100 laid out its prerequisites for what constitutes an invasion: “Deployment of the military to evacuate American citizens, covert military actions by US intelligence, providing military support to an internal opposition group, providing military support in one side of a conflict, use of the army in drug enforcement actions.” But indy100 didn’t stop there. To put all that history into context, using data from the Department of Defense (DOD), the team also put together a map to display all the countries in which nearly 200,000 active members of the U.S. military are now stationed. For more details, click on the country: The three countries with the biggest U.S. presence, according to DOD numbers, are Japan at 39,623, Germany at 34,399 and South Korea at 23,297. The publication of the maps comes just after President Donald Trump announced the military would not be pulling out of its 16-year engagement in Afghanistan - a reversal of his previous stance - and that the U.S. would seek stronger ties with India to combat terrorism in South and Central Asia.
U.S. has more troops in Afghanistan than previously disclosed, Pentagon reveals - LA Times: The Pentagon revealed Wednesday that roughly 11,000 U.S. troops are currently deployed in Afghanistan, 2,600 more than the U.S. military had previously disclosed to the public.Pentagon spokeswoman Dana W. White and Lt. Gen. Kenneth F. McKenzie Jr., director of the U.S. military’s Joint Staff, blamed the significant undercount on head-counting rules the Obama administration had devised.The Obama-era policies did not include troops deployed for less than six-months -- a stint the military considers a "temporary basis" -- as part of the military's total for Afghanistan. Because the Obama administration had set caps on the number of troops allowed to be deployed to active war zones in Afghanistan, Iraq and Syria, U.S. commanders found ways to supplement their forces by “temporarily” adding additional troops who would not be counted.Defense Secretary James N. Mattis expressed frustration with the approach and ordered a comprehensive review to give a more accurate picture of the U.S. military footprint, following last week's announcement by President Trump of a new military strategy in Afghanistan.“The secretary has been clear about his commitment to transparency in our public reporting procedures and increasing commanders' ability to adapt to battlefield conditions in countering emergent threats,” White told reporters at the Pentagon.The new policies "will balance informing the American people, maintaining operational security and denying the enemy any advantage," White said, adding that the Pentagon is also reviewing its practices for disclosing troop numbers in Iraq and Syria.
Why Russia Wants the US to Stay in Afghanistan - On August 15, 2017, Russian President Vladimir Putin’s special envoy to Afghanistan, Zamir Kabulov, urged the United States to withdraw its military presence from Afghanistan and end its 16-year campaign to stabilize the war-torn country. Kabulov’s fierce condemnations of the U.S. war in Afghanistan were praised by senior members of the Russian upper house, like Senator Alexey Pushkov, who claimed that the United States lost the war in Afghanistan due to Bush’s reckless use of force and Obama’s inability to end the war in a timely fashion.Even though Russian policymakers have scathingly criticized the U.S. war in Afghanistan, a closer examination of Moscow’s Afghanistan strategy reveals that Russia’s strategic interests are furthered by the retention of U.S. troops in Afghanistan. Despite his recent statements to the contrary, Kabulov accepted this geopolitical reality in a January 2017 interview with Interfax where he stated that “everything would collapse” in Afghanistan if the United States withdrew troops from the conflict zone.In light of Kabulov’s previous assessment, U.S. President Donald Trump’s August 21 decision to expand counterterrorism operations in Afghanistan aids Russia’s efforts to stabilize the country in two critical ways. First, Trump’s decision to maintain a U.S. military presence in Afghanistan allows Russia to influence the security situation in Afghanistan through diplomatic pressure on Washington, rather than through the deployment of its own military personnel. Second, Russian policymakers believe that an expanded U.S. military presence in Afghanistan will prevent the Taliban from further expanding its territory and steer the Taliban towards embracing Russia’s vision for a political resolution of the Afghanistan war.The Trump administration’s decision to send an unspecified number of additional troops to Afghanistan benefits Russian interests, as it ensures that counterterrorism operations can be effectively conducted in the country without the deployment of Russian troops. Even though Russia has confined its involvement in Afghanistan to multilateral diplomacy, and arms sales to disparate political factions, Kremlin policymakers have become increasingly willing to debate the efficacy of troop deployments to Afghanistan.
New Russian ambassador to U.S. calls for resumed military contacts | Reuters: (Reuters) - Moscow and Washington should re-establish direct contacts between their military and foreign policy chiefs, Russia's new ambassador to Washington, Anatoly Antonov, said on Wednesday. "The time has come to resume joint meetings of Russia's and the United States' foreign and defence ministers in a 'two plus two' format," Antonov said in an interview published on the Kommersant business daily's web site. Military contacts between Moscow and Washington were frozen in 2014 due to the Ukraine crisis. Antonov also called for meetings between the heads of Russia's Federal Security Service and Foreign Intelligence Service and the U.S. Federal Bureau of Investigation and Central Intelligence Agency. A "working cooperation" between Russia's Security Council and the U.S. National Security Council could also help fight terrorism, cyber threats and help strategic stability, he said. Antonov, a former deputy foreign minister, is subject to European sanctions over his role in the conflict in Ukraine.
U.S. retaliates against Russia, orders closure of consulate, annexes -(Reuters) - The United States has told Russia to close its consulate in San Francisco and buildings in Washington and New York that house trade missions, the State Department said on Thursday, in retaliation for Moscow cutting the U.S. diplomatic presence in Russia. The announcement was the latest in tit-for-tat measures between the two countries that have helped to drive relations to a new post-Cold War low, thwarting hopes on both sides that they might improve after U.S. President Donald Trump took office in January. Last month, Moscow ordered the United States to cut its diplomatic and technical staff in Russia by more than half, to 455 people to match the number of Russian diplomats in the United States, after Congress overwhelmingly approved new sanctions against Russia. The sanctions were imposed in response to Russian meddling in the 2016 presidential election and to punish Russia further for its 2014 annexation of Crimea from Ukraine. “We believe this action was unwarranted and detrimental to the overall relationship between our countries,” State Department spokeswoman Heather Nauert said in a statement on Thursday, adding that the United States had completed the reduction. “In the spirit of parity invoked by the Russians,” Nauert said, the United States has required the Russian government to close its San Francisco consulate and two annexes in Washington, D.C. and New York by Sept. 2. Secretary of State Rex Tillerson informed Russian Foreign Minister Sergei Lavrov of the closures in a phone call on Thursday, a senior Trump administration official said. The two men plan to meet on the sidelines of the U.N. General Assembly in September, the official said.
The president speaks for himself’: Rex Tillerson distances himself from Trump -- Appearing to suggest that Donald Trump did not represent “the American people’s values” after the recent violence in Charlottesville, Virginia, Rex Tillerson said on Sunday “the president speaks for himself”. Jim Mattis tells US troops America has 'problems', urges them to 'hold the line' Read more The US secretary of state was responding to questions about Trump’s assertion that “many sides” were to blame when white supremacists and anti-racism protesters clashed in Virginia on 12 August. One person died and many more were injured when a suspect who demonstrated with white nationalists at a so-called Unite the Right rally rammed his car into crowd of counter-protesters. Days after an official White House statement attributed to Trump blamed the violence “on many sides”, Trump went further in a testy exchange with reporters. “You had a group on one side that was bad and you had a group on the other side that was also very violent,” Trump said. Both sides included “very bad people”, the president added, saying those gathered for the far-right rally, ostensibly to protest the removal of a statue of Robert E Lee, included many “fine people”. Asked if such remarks made it harder for him to represent America abroad, Tillerson said: “I don’t believe anyone doubts the American people’s values or the commitment of the American government or the government’s agencies to advancing those values and defending those values.” “And the president’s values?” asked Chris Wallace, the Fox news anchor. Tillerson replied: “The president speaks for himself.” Asked if he was “separating” himself from the president, Tillerson said: “I’ve made my own comments as to our values as well in a speech I gave to the state department this past week.” Tillerson is the latest member of Trump’s cabinet to refuse to defend his shifting reactions to Charlottesville.
Republicans don’t know who to talk to at White House | TheHill: With Reince Priebus and Stephen Bannon both out, Republicans on Capitol Hill are asking who they can talk to at the White House ahead of a crucial, difficult stretch in the legislative calendar. The summer departures of Trump’s first chief of staff and chief strategist have created something of a communications vacuum along Pennsylvania Avenue, since Priebus and Bannon did the “bulk of the outreach” on Capitol Hill, GOP sources said. Priebus’s replacement, new chief of staff John Kelly, the former Homeland Security secretary and a retired Marine general, is respected on both sides of the aisle but doesn’t have long-standing relationships on the Hill. Several GOP lawmakers told The Hill they don’t personally know Kelly, and there are questions on the right about whether he’ll be a champion for conservative causes as he tries to restore stability to a White House mired in turmoil. “There is great respect for John Kelly but no real belief that anyone else can effectively carry out the Trump agenda until Kelly replaces Bannon with a conservative leader,” one House GOP lawmaker told The Hill. Another House Republican added: “Kelly is definitely a huge force, but I don’t know him.”Before stepping into the chief of staff job, Priebus had spent years cultivating relationships on the Hill as chairman of the Republican National Committee. And while Priebus, a close friend and ally of Speaker Paul Ryan (R-Wis.), seemed to embody the GOP establishment, he also made a concerted effort to connect with conservatives over the phone or through emails and text messages.
Fallout grows as Trump continues attacks on fellow GOP members - POLITICO: President Donald Trump has enjoyed breaking the conventional rules of politics. But his sustained criticisms of fellow Republicans are chafing members of his party, who say the strategy makes little sense and is further endangering his rocky legislative path while alienating his few allies. “If the goal is to accomplish absolutely nothing and fundamentally destroy the Republican Party from a national perspective, I wouldn’t change a thing,” said Josh Holmes, a former chief of staff and adviser to Senate Majority Leader Mitch McConnell. Trump’s attacks continued on Twitter Friday morning when he took on Sen. Bob Corker of Tennessee for making critical comments more than a week ago. He seemed to twist the knife by claiming that Corker had repeatedly asked Trump whether he should run for reelection, an assertion others said was dubious. “Tennessee not happy!” Trump tweeted, even though Corker won 65 percent of the vote in his last election. A Corker spokeswoman declined to comment. The strategy of attacking senior GOP figures — along with Corker, he has taken on McConnell and Sens. Jeff Flake of Arizona and Lisa Murkowski of Alaska — is one borne out of frustration and political calculation, senior White House aides and advisers say.Trump doesn’t understand why it takes so long for things to happen and why Republicans would vote against him or the party’s legislation. Several people who have spoken to him say he makes demands with little understanding of how long things take. “He just says get it done, get it done,” one adviser said.
Axelrod warns: Talk of removing Trump a 'very dangerous road' | TheHill: A former adviser to President Barack Obama on Wednesday cautioned against talk that President Trump is unfit for office, saying it opens the door to a potentially “dangerous road.” “The inference was that somehow there should be some effort to remove him, or at least that’s how some people would have heard it,” David Axelrod told CNN’s “The Situation Room.” “And I think we have to be very, very careful when we have these discussions because we have a system, a Constitutional system.” Axelrod specifically referenced comments made by former Director of National Intelligence James Clapper, who said he questions Trump’s fitness for the presidency following his remarks at a Tuesday night rally in Phoenix. "I really question ... his fitness to be in this office," Clapper said late Tuesday. "I also am beginning to wonder about his motivation for it, maybe he is looking for a way out." Axelrod said while he took Clapper’s remarks seriously, they made him “nervous.” “And if people get a sense that there’s some extraordinary measure that’s going to be taken to effect what they would view as a bloodless coup,” Axelrod explained. “Remember a third of the country supports this president, that’s a very dangerous road to go down. And if you ever did go down that road, you’re open a Pandora’s box that will never end.”
Roger Stone: Politicians voting for Trump's impeachment 'endangering their own lives' | TheHill: President Trump's former campaign adviser Roger Stone told TMZ that any politician who votes to impeach Trump “would be endangering their own life.” “Try to impeach him. Just try it,” Stone said. “You will have a spasm of violence, an insurrection in this country like you have never seen before. Both sides are heavily armed, my friend.” Stone said members of Congress who are advocating for Trump’s impeachment need to “get over it.”“The people who are calling for impeachment are the people who didn’t vote for him,” Stone said. “They lose. Their candidate had every advantage.” “Sorry, we whipped their ass,” he continued. “It’s over. You lost.” A small coalition of House Democrats has led the charge in pushing to impeach Trump. In July, Rep. Brad Sherman (D-Calif.) formally introduced articles of impeachment against Trump over his firing of former FBI Director James Comey, arguing the move amounted to obstruction of justice. Rep. Steve Cohen (D-Tenn.) announced last week that he would introduce articles of impeachment against Trump over his comments following the violence at a white supremacist rally in Virginia. Democratic leadership have pushed back on the impeachment efforts. House Minority leader Nancy Pelosi (D-Calif.) said in a statement that Congress should set up an independent commission to investigate Trump’s potential ties to Russia.
Trump Cybersecurity Advisors Resign, Citing His ‘Insufficient Attention’ to Threats -- A quarter of the members of the National Infrastructure Advisory Council, whose purview includes national cybersecurity, have resigned. In a group resignation letter, they cited both specific shortfalls in the administration’s approach to cybersecurity, and broader concerns that Trump and his administration have undermined the “moral infrastructure” of the U.S. The resignations came Monday and were acknowledged by the White House on Tuesday. Nextgov has recently published the resignation letter that the departing councilors submitted. According to Roll Call, seven members resigned from the 27-member Council. Several of those resigning were Obama-era appointees, including former U.S. Chief Data Scientist DJ Patil and former Office of Science and Technology Policy Chief of Staff Cristin Dorgelo. Not surprisingly, then, the issues outlined in the resignation letter were broad, faulting both Trump’s decision to withdraw from the Paris climate accords and his inflammatory statements after the Charlottesville attacks, some of which came during what was intended to be an infrastructure-focused event. “The moral infrastructure of our Nation is the foundation on which our physical infrastructure is built,” reads the letter in part. “The Administration’s actions undermine that foundation.”
Tillerson to ditch most special envoys, including on climate, Guantanamo -– Most of the United States’ special envoys will be abolished and their responsibilities reassigned as part of the State Department overhaul, Secretary of State Rex Tillerson told Congress on Monday, including envoys for climate change and the Iran deal. Special envoys for Afghanistan-Pakistan, disability rights and closing the Guantanamo Bay detention center will be eliminated under the plan. But President Donald Trump’s administration plans to keep envoys for religious freedom, fighting anti-Semitism and LGBT rights, despite speculation from critics that it would seek to downgrade those priorities. While State Department officials stressed that changes to the flow chart don’t necessarily signal a change in priorities, in some cases the policy implications are clear. Elimination of the Guantanamo closure envoy dovetails with Trump’s plans to keep the prison open. The president has pulled the U.S. out of the Paris global climate deal and threatened to do the same with the Iran nuclear deal.Of 66 current envoys or representatives, 30 will remain, a cut of 55 percent. Nine positions will be abolished outright. Twenty-one will be “integrated” into other offices, five merged with other positions, and one transferred to the U.S. Agency for International Development, the government’s foreign aid arm. In each case, the envoys’ staff and their budgets will be absorbed by the office taking over their functions. That shift will free up significant funds that Tillerson can draw upon as he restructures other parts of the agency, said a State Department official, who wasn’t authorized to comment by name and requested anonymity. For example, merging the cyber envoy into the broader Economic and Business Affairs bureau will boost the latter’s budget by $5.5 million.
Mexican Peso Tumbles As Trump Repeats Border Wall, NAFTA Threats -- While much of Trump's Sunday tweets have focused on the government response to the devastation resulting from the historic Texas and Houston flooding as Tropical Storm Harvey is expected to unleash as much as 40 inches of rain, the US president managed to sneak in a few threats to his North American neighbors, reiterating what he has periodically said, most recently last week, that the U.S. may cancel the North American Free Trade Agreement.We are in the NAFTA (worst trade deal ever made) renegotiation process with Mexico & Canada.Both being very difficult,may have to terminate?— Donald J. Trump (@realDonaldTrump) August 27, 2017Trump also said that "with Mexico being one of the highest crime Nations in the world, we must have THE WALL. Mexico will pay for it through reimbursement/other."With Mexico being one of the highest crime Nations in the world, we must have THE WALL. Mexico will pay for it through reimbursement/other.— Donald J. Trump (@realDonaldTrump) August 27, 2017 And while Mexico again repeated that it would in no way, shape or form pay of the wall... MEXICO FOREIGN MINISTRY SAYS MEXICO WILL NOT PAY FOR U.S. BORDER WALL 'IN ANY WAY OR UNDER ANY CIRCUMSTANCE' ... the market's initial reaction has not been kind to the Mexican currency, and in early Sunday trading USD/MXN spiked in reaction to Trump threatening Twitter comments, rising as much as 0.8% to 17.7504 before settling around 17.667 as once again the fate of NAFTA appears to be in jeopardy based on nothing more than one angry Trump tweet.
Why Trump’s threat to withdraw from NAFTA is an empty one - As the United States, Canada and Mexico head for a second round of talks this weekend to renegotiate the North American Free Trade Agreement, President Trump is ramping up his bluster about simply terminating the pact instead. But many former trade negotiators and experts agree that the president’s threat to cancel NAFTA is essentially an empty one, more likely intended as a bargaining ploy. For one thing, Trump lacks the legal authority to unilaterally end all U.S. obligations under the 23-year-old agreement with Canada and Mexico. Some of that power rests with Congress. And even if the president moved for a withdrawal, he would almost certainly face legal challenges and come under enormous pressure because of domestic economic and political considerations. His base in rural America, in particular, would be slammed by a U.S. pullout. “I don’t think it’s a credible threat,” said Warren Maruyama, a partner at the Washington law firm Hogan Lovells who worked on NAFTA and other trade issues in both Bush administrations. “Trump would do serious political damage and split the coalition that got him into the White House. While his win is often credited to anti-trade, blue-collar voters, he won just about every rural county, and Mexico is a huge market for American farm products.”Under NAFTA, Trump or the leaders of Canada and Mexico, for that matter, could withdraw from the trade agreement by simply giving six months’ written notice — which Trump has not yet done.But there is a separate U.S. act that put NAFTA into effect. This law states that only a few sections of the accord would cease to apply upon withdrawal, and even then it’s unclear what the practical effects would be. Many provisions could be left in limbo and presumably would have to be repealed by Congress. Much of the agreement — including key chapters on North American content requirements, access to government procurement, on investment and services trade — would not be invalidated merely by Trump’s action, according to legal scholars. “It leaves you in an odd situation in which a lot of the rest of the rules remain in effect,” said Jennifer Hillman, a Georgetown University law professor who specializes in international trade. Despite Trump’s repeated warnings recently about exiting the pact, the other two nations appear to understand these limitations.Canadian and Mexican officials were initially perturbed by Trump’s threats, but more recently seemed to be giving little credence to them.
NAFTA nations plan talks progress under barrage of Trump threats (Reuters) - Trade negotiators plan to take small steps forward in a second round of talks to rework the North American Free Trade Agreement (NAFTA) this weekend, trying to ignore daily threats from U.S. President Donald Trump to tear it up if he does not get his way. Trump has used Twitter, press conferences and speeches to attack NAFTA in recent days, a ploy Mexican and Canadian officials regard as a negotiating strategy to wring concessions, but which has heightened uncertainty over the accord. "Hopefully we can renegotiate it, but if we can't, we'll terminate it and we'll start all over again with a real deal," Trump told cheering workers at a factory in Missouri on Wednesday, as Mexico's foreign and trade ministers met their U.S. counterparts in Washington to keep relations on track. Away from the diplomatic noise, trade experts from the three NAFTA nations hope to advance the revamp during the five days of talks in Mexico that start on Friday by working through areas of greater consensus before turning to trickier issues. "We want to see positive signs of progress at the negotiating tables," said Moises Kalach, head of the international negotiating arm of Mexico's CCE business lobby, which is leading the private sector in the talks. "Hopefully we'll get it, even if it doesn't have to be stated publicly. Hopefully we'll start getting closure on some issues." Overall, the Mexican round, which follows talks two weeks ago in Washington, is expected to define more clearly the priorities of each nation rather than yield major breakthroughs. The emergence of detailed positions on the tougher points looks less likely in this round, officials said.
Trump’s Impatience Emerging as Biggest Threat to Nafta Deal -- President Donald Trump won’t be in the room when negotiations resume on Friday to revise the North American Free Trade Agreement, but his threats to blow up the talks could figure prominently.Since the first round of discussions wrapped up Aug. 20, Trump has threatened to withdraw from Nafta four times -- during speeches in Arizona and Missouri, in a Twitter post and at a news conference with the Finnish president. While Mexican officials have dismissed the comments as a scare tactic that could also be aimed at energizing Trump’s anti-trade supporters, the threats are a reminder of the significant leverage that a president holds to scuttle the $1.2 trillion trading area. A party can withdraw with six months’ notice. Trump’s tone contrasts with the generally polite and constructive atmosphere among negotiators in the early stages, according to two people taking part in the private discussions who asked not to be identified. Still, the mood could change quickly when officials start moving from exchanging proposals to bridging differences. On a personal level, many of the negotiators have known each other for years and brokered deals in the past, the two people said. “These are tough, hard, complex technical and political negotiations, and someone who is very impatient and who has in the past said that he doesn’t understand why this has to take so long could be tempted to press the nuclear button,” said Arturo Sarukhan, a former Mexican ambassador to the U.S. “That’s the danger that is out there.” Trump pulled the U.S. back from the brink of withdrawal in April. He changed his mind after seeing a map of Nafta-dependent U.S. states whose votes helped propel him to the White House. Trump may not want to start picking fights with lawmakers as he looks for a legislative win on raising the debt ceiling in September and a tax overhaul by year-end. With Trump’s threats of exiting Nafta “you don’t know if this a negotiating tactic or substantial,” said Fred Bergsten, a senior fellow at the Peterson Institute for International Economics. “If he proposes to terminate, the reaction in both Mexico and Canada would be awful. Agriculture in particular would go ballistic, the auto industry would go ballistic.”
Will Disappointing Tax Reform Puncture the Stock Market Bubble? – Yves Smith - Based on what top tax experts are saying now, the heavily hyped Trump tax reforms are likely to turn out to be a big dud. Given the overextended state of the stock market, could this wind up being the trigger for what many market commentators see as a long overdue price correction? More and more market mavens, such as John Mauldin and strategists like former central banker, now Citigroup’s chief economist Willem Buiter, have been raising red flags about valuations in the US stock market and in Buiter’s case, investment prices generally. Most commentators are looking nervously for a Big Event to take the air out of inflated asset values, such as a financial crisis in China that the government can’t contain, or central bankers tightening too quickly or bond prices sinking more than anticipated when the Fed starts shrinking its balance sheet. But could an underwhelming tax reform bill finish off the undue optimism about what a Trump presidency could do for the economy? Rest assured that the Republicans will pass a tax bill. First, Republicans love cutting taxes. Second, after the Obamacare reform disaster, Republican need to be able to point to an accomplishment, so getting tax reform done is a top priority. However, the Republicans have a big obstacle to achieving their objective. Most Republicans and many Democrats are deficit hawks. So that means any tax cuts need to be matched with either spending cuts or tax increases elsewhere. The problem is that the Federal spending as a percentage of GDP is already low by world standards, as you can see by the terrible state of a lot of our infrastructure, some of which is Federally funded, like Federal highway and bridge repairs. So we actually don’t have a lot of places left to cut, save the sacred cow of our bloated and overpriced military. 1
Gary Cohn: Only ‘Morons’ Pay the Estate Tax - President Trump’s chief economic adviser Gary Cohn recently took pains to separate himself from other administration officials when he revealed how “distressed” he was by President Trump’s response to the deadly white-nationalist rally in Charlottesville. (Not distressed enough to quit the administration and sacrifice his chances of becoming the next Federal Reserve chair, but distressed nonetheless.) But rest assured that on economic issues, Cohn is still more than comfortable playing the villain.The New York Times reports that, amid plans for a politically difficult tax-reform push, Cohn asserted that a tax affecting only the very rich can be repealed because any minimally competent wealthy person knows how to avoid it:In a meeting with a group of Senate Democrats this year, according to people who were present, Mr. Cohn jokingly dismissed concerns about the wisdom and cost of repealing the estate tax, remarking, “Only morons pay the estate tax.”A source close to Mr. Cohn denied that he had used the word, saying he had been referring to “rich people with really bad tax planning.” The comment echoed one famously attributed to “Queen of Mean” Leona Helmsley: “We don’t pay taxes; only the little people pay taxes.” As CNBC’s Robert Frank writes, there’s some evidence for the Helmsley-Cohn hypothesis. Since the tax applies only to parts of estates that are valued over $5.49 million for individuals or $10.98 million for couples, it only applies to about 1 in 500 taxpayers. And the threshold for triggering the penalty, which Republicans like to call the “death tax,” has risen dramatically in the last decade, leading to plunging revenues collected from it. But the less-noticed reason for the decline in estate tax payments is lawyers. Estate tax planning has become so effective that wealthy families can now easily pass large portions of their estates to their heirs without paying the tax. There’s nothing wrong or illegal about it: Shielding an estate from Uncle Sam often merely involves setting up an appropriate trust and filling it with assets. Other wealthy families can avoid the tax through gifts, since the amount that’s exempt from gift taxes has also gone up.If the estate tax is so trivial, revenue-wise — and it is — why would Cohn and his partners in tax-cutting crime even bother expending political capital on it? Because for the superrich, it remains an expensive hassle, one that requires often elaborate workarounds: setting up dubious foundations, moving money into exotic banks, hiring expensive lawyers, and so on.
Opinion: The deep, deep cynicism of ‘tax reform’ - In a speech in Missouri later today, President Trump will attempt to relaunch his administration’s tax-reform crusade. If you believe what he says, his plan will be the bestest, biggest, boldest tax reform ever devised in the whole history of man. It will be beautiful; it will be huge, that I can tell you. However, once you peer inside that nicely wrapped giftbox — when you peel off the gilt-edged rhetoric and the beautifully tied bow — what do you find inside? You find nothing. The box is empty. Despite months of promises that it would deliver its tax-reform package in two weeks, or next month, or by the Fourth of July or certainly by Labor Day, the Trump administration has now conceded that it is not capable of producing an actual plan or an actual bill. Instead, as with the health care debacle, it will punt the drafting of a bill to the sure hands of congressional leaders. We do, however, have some guidance as to how the White House will attempt to sell this nonexistent plan. It will be described in populist terms, as an effort to “derig” or “unrig” the economy on behalf of the little guy and gal, the American worker, and as an effort to punish the special interests that for too long have held sway in Washington. One of the administration’s two point men in that effort will be top economics adviser Gary Cohn, who left his job as president and COO of Goldman Sachs, along with a $285 million severance package, to join the Trump administration. The other will be Treasury Secretary Steve Mnuchin, also formerly of Goldman Sachs and currently husband of America’s own Marie Antoinette, the lovely Louise Linton. I’m sure that both Cohen and Mnuchin — populists through and through — will have the best interests of America’s working people foremost in their minds. We also have some idea of the basic premises behind this tax-reform effort, thanks to a “senior White House official” who may or may not have been Mnuchin or Cohn. “The president is going to lay out his vision to bring back Main Street by reducing the crushing tax burden on our companies and our workers and also to restore our competitive advantage by repairing and reforming our badly broken tax code,” this person told the press this week under the cover of anonymity. So let’s explore the two basic premises underlying that mission statement.
Trump Leaves the Tax-Reform Details to Congress - Four months ago, the Trump administration released the outlines of a tax-reform plan—a one-page list of ideas and principles that was notable mostly for how many questions it left unanswered. On Wednesday, President Trump traveled to Missouri to expand on the need for tax reform, to lay the groundwork for a major legislative push in Congress this fall. But more than anything else, what Trump’s speech revealed was that despite months of behind-the-scenes negotiations, Republicans aren’t much closer to enacting the most significant overhaul of the tax code in 30 years than they were back in April. Trump was pitching a plan that doesn’t exist and demanding votes for a bill that hasn’t been written. If anything, the address the president delivered was even less detailed than the skimpy blueprint the White House issued in the spring. The most specific item Trump mentioned—a 15 percent corporate tax rate, down from the current 35 percent—is something that Republican tax-writers on Capitol Hill believe is impossible to achieve under the parameters with which they must work. He talked in broad terms about simplifying the code so that it’s easier for people to file their taxes, removing unspecified special interest loopholes, and encouraging businesses to bring back profits they’ve parked overseas—all policies that have been central to GOP proposals for years and offer little indication of the particular direction the party plans to go. This was a bully pulpit speech. Having laid down his principles, Trump is once again leaving the dirty work to Congress, a strategy that even he seemed to acknowledge was as risky as it is politically necessary. “I don’t want to be disappointed by Congress, do you understand me? Do you understand?” he warned at one point, a none-too-subtle reference to his recent hectoring over the GOP’s failure to deliver on health care.
Trump touts tax reform, overlooks White House aide Cohn (Reuters) - U.S. President Donald Trump made his first major tax reform speech on Wednesday, but in a long list of thank yous he did not mention Gary Cohn, the White House point man on taxes who traveled with Trump to the event. At a manufacturing company in Springfield, Missouri, Trump reiterated his longstanding call for slashing the U.S. corporate tax rate to 15 percent from 35 percent at a time when lawmakers believe they could be lucky to bring it down to 25 percent. When asked about the omission of Cohn's name, White House spokeswoman Sarah Sanders told reporters on Air Force One, en route to Washington from Missouri, that it was customary for Trump to recognize Cabinet members, but not advisers, in speeches. Cohn traveled with Trump on Air Force One for the Missouri speech, in which Trump called on Democrats to join his tax overhaul effort. He said he would cut taxes and simplify the sprawling U.S. tax code for the middle class. But he offered few specifics, and tax reform will be an uphill task in Congress. "We must reduce the tax rate on American businesses so they keep jobs in America, create jobs in America and compete for workers right here in America," Trump said in his first presidential speech specifically on tax reform, one of his key 2016 campaign issues. Both congressional Democrats and Republicans say tax reform is needed but the Republican goal of enacting legislation this year faces a battle in Congress, which has already failed to deliver on healthcare reform sought by Trump.
Tax Cuts for the 1% Coming Out of Your 401K --. The GOP is making eyes on your 401k contributions with the intent of removing the upfront deduction which lowers your taxable income. The GOP would like to go to a Roth type of 401k. The problem I have with this idea is it is being presented as a way to help holders of a 401K today. It is not. The entire exercise here is provide enough offsetting revenue to provide a major tax cut for those making >$500,000 annually which number ~1.5 million households of the 154 million tax paying households. Why would the GOP want to do this? A tax cut would have to be passed through Reconciliation as Dems would filibuster to block it and that would require a super-majority vote (which was not the intent of the founders[that is a different story]). Reconciliation also requires no deficits be created at 10 years otherwise the act sunsets the same as the 2001/2003 tax breaks did in 2014(?). The rest of this article can be found here; The GOP is looking for ways to pay for tax cuts. Your 401(k) may bear the cost. "I would say an issue with 401ks is a lack of company contributions and a lack of company contributions without regard for employee contributions. It should also be a defined benefit plan and not a defined contribution plan with matching employer contribution. One other thing to consider if you have a stream of income to sustain yourself at 70-1/2 years of age. Consider rolling your 401K into a Roth to preserve the equity you gained from compounding; otherwise, you will lose much of it over the years in taxes.
The non-need for tax cuts: The corporate sector is doing fine; it’s the gov’t sector that’s hurting - Jared Bernstein --Matthew Gardner, from the excellent Institute on Taxation and Economic Policy, made a great point in this NYT article from yesterday (a smart account of the tenuous relationship between corporate tax cuts and investment). Mr. Gardner argued that a broader definition of American competitiveness is needed that includes not only the tax system, but also the business infrastructure that the tax system supports — bridges and roads, health care, education and research and development. “If all you think about is the tax rate, then it should be zero,” This resonates because it gets at the many contradictions raised by team Trump’s drive to slash the corporate rate by more than half (from 35 to 15 percent). As measured by profitability, share prices, and cash reserves, the corporate sector is booming. By these concrete metrics, they’re already “competitive.” But that word means something specific in this debate: it’s just saying that our statutory corporate rate is well above the rates that prevail elsewhere. To normal people, not steeped in this debate, the idea of closing that gap makes sense. But here’s the thing: because of deferral–the ability to avoid US taxation on foreign profits by booking them overseas–and many other tax avoidance techniques, the gap between our the statutory rate faced by our international companies and that of our competitors is not operational. But aren’t their foreign earnings locked up overseas, unavailable for US investment? First, I used the word “booked” for a reason. From the Times piece: “The earnings are not ‘trapped,’” “They’re not offshore. They’re not even earnings. They’re accounting gimmicks that allow earnings to be shifted abroad.” What’s more, companies already get something akin to tax-free repatriation by borrowing against those funds, with the added bonus of being able to deduct the interest paid on those loans from their tax bill.
Federal Judge Strikes Down Overtime Rule, Leaving Trump Labor Dept to Decide What Follows --Jerri-lynn Scofield - Federal District Court Judge Amos Mazzant yesterday quashed an overtime rule that would have raised the threshold for capping mandatory overtime pay from $23,660 to $47,476 a year. If that rule had taken effect, 4 million more workers would have been eligible for overtime pay, as reported by Bloomberg. The previous threshold was set in 2004. The new rule that raised it was promulgated by the Department of Labor in 2015, following an March 23, 2014, presidential memorandum that directed the Secretary of Labor to “modernize and streamline the existing overtime regulations for executive, administrative, and professional employees.” I point out in passing that this direction via presidential memorandum is not a new, exclusively Trumpian phenomenon. Under the Fair Labor Standards Act, employers are required to pay employees overtime when they work more than 40 hours a week. But this requirement is subject to a salary cap. Further, there is an exemption for white collar workers, who hold “bona fide executive, administrative, or professional” positions, according to Bloomberg. Twenty-one states, led by Nevada Attorney General Adam Laxalt, and a coalition of business groups had separately sued to block implementation of the rule, according to The New York Times. In November 2016, one week before the new rule was due to come into effect on 1 December– Mazzant– an Obama-appointee– had issued a decision and granted a preliminary injunction delaying the implementation of the rule, a signature achievement of the then-administration. Many employers had already adjusted work schedules in anticipation of the new rule taking effect, as reported by The Wall Street Journal, and many didn’t immediately reverse those decisions. The Department of Labor appealed that ruling before Trump was inaugurated. In June of 2017, the Trump Labor Department indicated it intended to revisit the rule and has subsequently solicited public comments. Labor Secretary Alexander Acosta has suggested that the agency may consider revising the salary threshold to somewhere near $32,000 a year. Make no mistake, this latest overtime decision helps doom millions of Americans to continue to labor in underpaid, crapified jobs (although I should point out it’s not the only factor). And thus far the Trump Labor Department has yet to propose any new overtime policy.
Trump administration introduces green card hurdle - Immigration authorities will require an in-person interview for certain applicants for green cards, a change likely to slow the process of obtaining one. The new requirement, which was confirmed Friday by a spokesman for the U.S. Citizenship and Immigration Services, will apply to anyone moving from an employment-based visa to lawful permanent residency. Visa holders who are family members of refugees or people who receive asylum will also be required to undergo an in-person interview when they apply for provisional status, a stage that precedes receiving a green card, according to USCIS. In fiscal year 2015, nearly 168,000 immigrants in these categories obtained lawful permanent residency, according to annual statistics from the Department of Homeland Security. Most (roughly 122,000) moved from an employment-based visa to a green card. The interview mandate is part of President Donald Trump’s plan to apply “extreme vetting” to immigrants and visitors to the U.S. The travel ban executive order signed by the president in January and revised in March called for federal departments to develop “uniform screening and vetting standards” to identify terrorists or people who “present a risk of causing harm.” The standards could include an in-person interview, the order stated. Carter Langston, a spokesperson for USCIS, told POLITICO that the categories of visas that require interviews will expand in the future, calling it “an incremental expansion.” The policy, Langston said, is "part of a comprehensive strategy to further improve the detection and prevention of fraud and security risks to the United States."
DHS Selects 4 Contractors To Build Prototypes For Trump's Border Wall - The Department of Homeland Security has finally reached a decision in the long-delayed process of selecting contractors who will build prototypes of President Donald Trump’s promised border wall. The department announced Thursday that it has selected four contractors to build wall prototypes, and that construction is slated to begin this winter, according to CNN.The announcement comes after the Government Accountability Office on Friday dismissed a complaint filed by contractors who claimed their bids had been passed over, allowing DHS to move forward after the complaints had threatened to delay the selection until November. Customs and Border Protection's acting Deputy Commissioner Ronald Vitiello announced that the designs will be constructed along the San Diego border. Four companies will be doing the building: Caddell Construction Co (DE), LLC, of Montgomery, Alabama; Fisher Sand & Gravel Co., DBA Fisher Industries, of Tempe, Arizona; Texas Sterling Construction Co., of Houston, Texas; W. G. Yates & Sons Construction Company, of Philadelphia, Mississippi.’
Judge Blocks Texas Sanctuary City Law; Finds Mandatory Enforcement Of Federal Law Is 'Unconstitutional' --Back in May Texas Republican Governor Greg Abbott signed into law a measure to punish so-called "sanctuary cities," despite pleas from some of the police departments of cities like Austin to halt the bill they said would hinder their ability to fight crime. Per Reuters, the Republican-dominated legislature passed the bill on a party-line vote. Among other things, the bill was designed to punish local authorities who refused to abide by requests to cooperate with federal immigration agents. Police officials found to be in violation of the law could face removal from office, fines and up to a year in prison if convicted.The measure also allowed police to ask people about their immigration status during a lawful detention, even for minor infractions like jaywalking.But, just two days before the bill was set to take effect, Federal Judge Orlando Garcia, a Bill Clinton appointee, has temporarily blocked Abbott's sanctuary city bill on the grounds that it's 'unconstitutional.' Per the Wall Street Journal:The League of United Latin American Citizens challenged the Texas law in May on behalf of the city of El Cenizo, a small and largely Hispanic border town. Several other jurisdictions, including the state’s four largest cities—San Antonio, Austin, Houston and Dallas—quickly joined the case.In his ruling, Judge Garcia, who was appointed by President Bill Clinton, said the state legislature has broad authority to enact laws regardless of what the majority of the public thinks, but “may not exercise its authority in a manner that violates the United States Constitution.”The ruling temporarily blocks provisions of the law that allow for disciplinary action against law-enforcement officials who don’t comply with federal requests to detain illegal immigrants. It also halts a provision that would prevent municipalities or police agencies from crafting policies that limit cooperation with federal immigration agents and endorsing such policies.
Immigration crackdown could slow rebuilding efforts (Reuters) - In the coming weeks, as Houston turns its attention to rebuilding areas devastated by Tropical Storm Harvey, people like Jay De Leon are likely to play an outsized role – if they stay around. De Leon, 47, owns a small construction business in Houston, and he and his 10 employees do exactly the kind of demolition and refurbishing the city will need. But like a large number of construction workers in Texas, De Leon and most of his workers live in the United States illegally, and that could make things complicated. The Pew Research Center estimated last year that 28 percent of Texas's construction workforce is undocumented, while other studies have put the number as high as 50 percent. Construction employed 23 percent of working undocumented adults in Texas at the end of 2014, higher than any other sector, according to the Migration Policy Institute. However, undocumented immigrants are growing increasingly nervous in Texas because of an immigration crackdown by the Trump administration that has cast a wide net. In addition, undocumented immigrants were worried about a new Texas law that had been scheduled to take effect on Friday, which would have barred cities in the state from embracing so-called sanctuary policies that offer safe harbor to illegal immigrants, and would have allowed local police to inquire about a person’s immigration status. That law was temporarily enjoined by a federal judge late Wednesday, but the state's governor has vowed to appeal. De Leon, who has lived in the country for 20 years and has two citizen children, says the changes have spooked the city’s migrant workforce. In recent weeks, he said, one of his employees left the state and another returned to Mexico. Both feared that if they stayed they risked arrest. Departing workers, he says, pose a problem for Houston in the wake of Harvey, which has killed at least 17 people and caused flood damage to commercial buildings, houses, roads and bridges expected to run into tens of billions of dollars.
Business warns Trump over ‘Dreamer’ deportations - Hundreds of business leaders have called on President Donald Trump to allow children of immigrants who entered the country illegally to remain and work in the US, as corporate America gears up for another fight with the White House. The letter from chief executives of Amazon, Apple, Facebook, GM, Google, Microsoft, Starbucks and Visa is the latest example of corporate America speaking out publicly to try to influence the Trump administration. The executives, entrepreneurs and venture capitalists signed the letter ahead of Mr Trump’s expected decision to end an Obama-era programme called Deferred Action for Childhood Arrivals, which protects nearly 800,000 young people who grew up in the US from deportation. The president, who pledged on the campaign trail that he would “immediately terminate” DACA if elected, told reporters on Friday that he would make his decision later on Friday or over the Labor Day weekend. “We love the Dreamers. We love everybody,” he said. White House spokeswoman Sarah Sanders later said the announcement would come on Tuesday. “The president’s been very clear: He loves people and he wants to make sure that this decision is done correctly,” she said. In the letter, the business leaders also called on Congress to pass the bipartisan Dream Act or other legislation to allow the so-called “Dreamers” to remain in the country.
ICE Plans to Start Destroying Records of Immigrant Abuse, Including Sexual Assault and Deaths in Custody – ACLU - Immigration and Customs Enforcement recently asked the National Archives and Record Administration (NARA), which instructs federal agencies on how to maintain records, to approve its timetable for retaining or destroying records related to its detention operations. This may seem like a run-of-the-mill government request for record-keeping efficiency. It isn’t. An entire paper trail for a system rife with human rights and constitutional abuses is at stake. ICE has asked for permission to begin routinely destroying 11 kinds of records, including those related to sexual assaults, solitary confinement and even deaths of people in its custody. Other records subject to destruction include alternatives to detention programs; regular detention monitoring reports, logs about the people detained in ICE facilities and communications from the public reporting detention abuses. ICE proposed various timelines for the destruction of these records ranging from 20 years for sexual assault and death records to three years for reports about solitary confinement. For years, advocates and communities across the country have denounced human rights abuses in the detention system. Many of the records that ICE proposes for destruction offer proof of the mistreatment endured by people in detention. Given the Trump administration’s plans to increase the size and scope of the system substantially, it is all the more disturbing that the agency wants to reduce transparency and accountability. NARA has provisionally approved ICE’s proposal and its explanations for doing so are troubling. In cases of sexual assault and death, for example, NARA states that these records “do not document significant actions of Federal officials.” It’s hard to believe that the actions of a federal official are not significant in the death or sexual assault of an individual who is in federal immigration custody. NARA also posited that in cases of sexual assault, that the “information is highly sensitive and does not warrant retention.”
Sheriff Joe Arpaio Pardon Widens Republican Rift As McCain And Flake Blast "Lawless" Trump -- It wasn't just millions of Democrats that were left 'triggered' by Trump's pardon of Sheriff Joe Arpaio over the weekend as several prominent Republicans, including John McCain, Jeff Flake and Paul Ryan, also decided to take a very public stand against the decision. Both McCain and Flake took to twitter to blast Trump's apparent lawlessness while Arpaio responded in weekend interviews saying "it's sad" the Republicans continue to "go after the President." Per the Wall Street Journal: “They’re trying to go after the president. He’s a great guy and I’m with him and will always be with him,” said Mr. Arpaio, a longtime sheriff in Maricopa County, Arizona, in an interview Sunday. “I’m sad what they’re doing to him. It’s sad.” Several prominent Republican lawmakers objected to the pardon over the weekend, saying it short-circuited the legal system and undermined the rule of law. Among the critics of Mr. Trump’s move were Arizona’s two GOP senators, John McCain and Jeff Flake, and House Speaker Paul Ryan of Wisconsin. Mr. Arpaio voiced disappointment in Mr. McCain’s position, saying, “It’s probably payback time” because Mr. Arpaio had campaigned for the senator’s Republican opponents in both of Mr. McCain’s presidential bids. As for Mr. Ryan, Mr. Arpaio said, “He ought to get on board and support our president.” Sen. McCain’s staff didn’t respond to a request for comment.
The Arpaio Pardon Encapsulates Trump’s Identity Politics - The trio of major announcements made by President Trump’s administration on Friday night — the departure of national security aide Sebastian Gorka, the pardon of former Maricopa County, Arizona, Sheriff Joe Arpaio, and the release of a formal memo from the president ordering the Pentagon not to accept transgender people as new recruits in the armed forces — illustrate two important things about the president’s governing style. First, one of the defining features of the Trump administration is that he embraces a kind of conservative identity politics, in which he promotes policies supported by groups that he favors and that may have felt marginalized during Barack Obama’s presidency. The second is that Trump’s support for those policies is not contingent on the presence of ousted aides like Gorka and Steve Bannon, who agree with him on these positions. The memo banning transgender recruits and barring the Pentagon from paying for future sex reassignment surgeries delighted conservative Christian activists, a core part of Trump’s base. Similarly, during his campaign, Trump had strong support from unions that represent police officers, border security agents and other law-enforcement personnel, a group that until recently included Arpaio.And Arpaio has long been a hero to groups strongly opposed to illegal immigration, which were vital to Trump winning the GOP nomination. Arpaio was convicted last month of criminal contempt of court for ignoring a 2011 federal court order that barred him and his department from considering race when making law-enforcement decisions. Arpaio argues that his tactics, which a court ruled illegally targeted Latinos, were simply an effort to enforce existing immigration law. “So proud of you, Mr President!” author and conservative activist Ann Coulter said on Friday.
Dispatches from Trumpland Part 2 — Mike Pence, the Silent Killer -- “Don’t work with any of those pro-Trump Super PACs,” a high level White Official told me, “as Pence controls them all.” Was this a legitimate scoop or D.C. intra-Trumpism rivalry? I went to find out. As an outsider, I don’t have any friends inside the Trump administration. Sources sure, lots of those, and what the media won’t tell you is that sources are people. Sources have the same petty beefs as the rest of us, and they’ll lie and play others to get what they want. Mike Anton, communications director at the NSC, made a lot of promises to the Heritage Foundation and other think tanks and media outlets during the Fire McMaster campaign launched by American nationalists and populists. “He was one the phone with everyone,” a person who received a call from Anton, told me. “In this town, it’s all about access, and that’s what Anton promised,” the source continued. In exchange for puff pieces Heritage and others would have access to McMaster. The ploy worked. Unprincipled propaganda pieces flowed like White House leaks from Dina Powell. “Anton is lost,” a person involved in the Trump Transition team told me, “He completely sold out to McMaster.” Anton was hired as part of a strategy to bring in people who understand Trump’s national security worldview. Colin Kahl and Ben Rhodes sought to oust Anton and others, labelling them the Axis of Ideologues, in contrast to the Axis of Adults.The NSC is staffed with several Rhodes loyalists, whom McMaster has gone to great lengths to protect. McMaster held a public town hall to say there is no such thing as an Obama holdover. Meanwhile McMaster purged anyone seen as having an “American first” foreign policy vision. Mike Anton’s job is safe, for now anyway, although it’s up to Anton to ask whether he is dying the thousand deaths of a coward by bending the knee to McMaster. “Mike Pence, like heart disease, is a silent killer,” a high level political operative answered in my response to the pro-Trump Super PAC question. She continued, “All those Super PACs are run by Pence.” Pence, people close to him confirm, lets others do the dirty work as he stays on the sidelines to keep his above-it-all brand. One high profile example of Pence’s style can be seen in how the Administration handled General Michael Flynn’s firing:After Flynn apologized to Pence, the vice president seemed open to allowing Flynn to remain in place, according to a senior administration official. But Reince Priebus, Trump’s chief of staff who had also come to Flynn’s defense in January, “didn’t want to let it go,” the official added. “People can finger Reince all they want,” someone close to Flynn told me, “But everyone knows it was Pence who wanted Flynn out.”
Trump just took a big step in undermining Obamacare : The Trump administration is taking a big step toward undermining the Obamacare exchanges for 2018. The budget for outreach to encourage people to sign up for 2018 insurance through the Obamacare exchanges will be sliced by a total of $116.5 million, according to the Department of Health and Human Services. Typically the Obama administration poured money into outreach during the open enrollment period — the few months out of the year that people could sign up for health insurance for the coming year — to help get as many people covered as possible. But the budget for advertisements encouraging enrollment will be reduced dramatically this year — to $10 million, down from $100 million in 2016, according to HHS. Additionally, the budget for the Navigator program, which trains people to assist others in signing up for coverage, will be cut to $36 million from $62.5 million last year. A release from the Centers for Medicare and Medicaid Services said that new funding levels were determined "based on previous evaluation of past Exchange outreach efforts." Increasing enrollment is a big step to ensure that younger, healthy people sign up for coverage. This not only provides them with insurance, but it helps balance out the risk pool, keeps costs down for all enrollees, and mitigates losses for insurers participating in the exchanges. If enrollment declines, it could lead to higher costs for Americans and an uptick in the uninsured rate according to Larry Levitt, a senior vice president at The Kaiser Family Foundation, a nonpartisan health policy think tank. "There's little question that cutting back on outreach and advertising will result in more people uninsured," said Levitt. "Those who fail to sign up will be healthier than average, which will cause the risk pool to deteriorate and premiums to rise. This is not a signal that the administration is trying to make the law succeed." The moves come after the Trump administration already slashed the length of open enrollment in half. It is now from November 1 to December 15. In past years, open enrollment ran from the start of November to the end of January.
Democrats Furious After Trump Announces 90% Cut To Obamacare Marketing Funds - It appears as though President Trump has just given the Democrats yet another reason to shift the blame for Obamacare's epic failure to his administration, as ridiculous as that may be. According to The Hill, the Department of Health and Human Services has just announced that they'll be slashing the Obamacare advertising budget by 90% for the 2018 plan year, from $100 million down to $10mm. Department of Health and Human Services officials said on a call with reporters that funding for advertising and other outreach for ObamaCare enrollment will be cut from $100 million last year to $10 million this year.An HHS official argued the administration is seeing "diminishing returns" from ObamaCare spending. The administration will still be spending some money on signing people up for the law, despite its opposition to ObamaCare.Officials also announced they are cutting funding for "navigators," which are outside organizations that help sign people up. Funding will be proportional to how navigators have fared in hitting their enrollment target the previous year. If a group signed up 70 percent of their target, they will get 70 percent of the funding.
Kamala Harris announces she will co-sponsor single-payer healthcare -- Sen. Kamala Harris (D-Calif.) announced during a town hall on Wednesday that she would support Sen. Bernie Sanders's (I-Vt.) "Medicare for All" bill, which would institute a single-payer health insurance system. "I intend to co-sponsor the 'Medicare for All' bill because it’s just the right thing to do," Harris announced Wednesday at a town hall in Oakland. "It's not just about what is morally and ethically right, it also makes sense just from a fiscal standpoint," she said. The decision to co-sponsor Sanders's bill is Harris's first instance of publicly supporting single-payer. In July, Harris said she supported single-payer "as a concept" but that lawmakers still needed to "work out the details." Sanders said earlier this week that he was building support for his “Medicare for All” bill. “You’re seeing more and more movement toward ‘Medicare for All,'" Sanders said. "When the people are saying we need healthcare for everyone, as more and more Americans come on board, it will become politically possible.” The former presidential candidate's backing for the policy has raised questions about whether he and his supporters might launch primary challenges against Democrats who do not back a single-payer plan. Sanders on Wednesday thanked Harris over Twitter for her announcement as well. "Thank you Kamala Harris for your support. Let's make health care a right, not a privilege," he tweeted.
Letter to Senator Sanders from Physicians for a National Health Program (PDF) Dear Senator Sanders: We are writing to express our concern about elements of your draft single payer legislation, especially the inclusion of copayments for medically-necessary care. While your staff has not shared with us the details of the current draft, we understand from colleagues in other single-payer advocacy groups that it mandates copayments for medical services for most Americans and proposes a four-year delay before the implementation of the single-payer reform. We also understand that during the four year phase-in period, the bill would make available a public option, and provide some upgrades to and expansion of Medicare coverage. Copayments Copayments undermine the goal of eliminating financial barriers to care, a goal that is at the heart of our single-payer advocacy. Copayments, even relatively modest ones, deter patients from seeking needed medical care. For instance, in the Rand Health Insurance Experiment, compared to persons with entirely free care, those with copayments (as low as 16% of costs) reduced their use of essential and low-value medical services to a similar degree. 1 Among non-poor adults, copayments reduced the use of “highly effective” care for acute conditions such as chest pain, urinary tract infections and fractures by 29% and “rarely effective” care (e.g. for a cold) by 22%. Highly-effective care for chronic conditions fell by 15%, and for acute-on-chronic conditions fell by 21%. For non-poor children, copayments reduced highly-effective care (e.g. for ear infections and strep throat) by 15%, and cut well-child visits by 21%. Cost sharing reduced prescriptions for several potentially life-saving medications such as insulin, asthma inhalers, and beta blockers by about 50% and oral contraceptive use by 25%. While the Rand Experiment was too small and too short to detect the expected deleterious outcomes of these shortfalls in care, it documented that copayments resulted in significantly worse control of blood pressure, a key cause of heart attacks, kidney failure and strokes.
Trump's firm sought Moscow real estate deal during presidential run - While Donald Trump was running for president in late 2015 and early 2016, his company was pursuing a plan to develop a massive Trump Tower in Moscow, according to several people familiar with the proposal and new records reviewed by Trump Organization lawyers. As part of the discussions, a Russian-born real estate developer urged Trump to come to Moscow to tout the proposal and suggested that he could get President Vladimir Putin to say “great things” about Trump, according to several people who have been briefed on his correspondence. The developer, Felix Sater, predicted in a November 2015 email that he and Trump Organization leaders would soon be celebrating — both one of the biggest residential projects in real estate history and Donald Trump’s election as president, according to two of the people with knowledge of the exchange. Sater wrote to Trump Organization Executive Vice President Michael Cohen “something to the effect of, ‘Can you believe two guys from Brooklyn are going to elect a president?’ ” said one person briefed on the email exchange. Sater emigrated from what was then the Soviet Union when he was 6 and grew up in Brooklyn. Trump never went to Moscow as Sater proposed. And although investors and Trump’s company signed a letter of intent, they lacked the land and permits to proceed and the project was abandoned at the end of January 2016, just before the presidential primaries began, several people familiar with the proposal said.
Pundits And Politicians Are Tacitly Admitting That They Lied About Russia --- It has been nearly three weeks since The Nation pushed an explosive memo from the Veteran Intelligence Professionals for Sanity into mainstream consciousness with an article detailing the evidence that the DNC leaks last year could not have been the result of a Russian hack. By continuing to ignore it, the US intelligence community and all the pundits and politicians who have advanced the Russian hacking narrative are tacitly admitting that they lied.The report is unequivocal. Not only could Russian hackers not have obtained the DNC emails in the way they are alleged to have obtained them, but metadata was in fact manipulated to implicate Russia in the leak. Since publication of the viral Nation article, even more evidence has come to light showing that a hack is far more improbable even than originally suspected. This means that there is currently more publicly-available evidence indicating that Russia did not hack the DNC than there is that it did.These earth-shattering revelations have gone all but ignored by the mainstream media, which had until the report surfaced been pummelling the American psyche with relentless fearmongering about the Great Russian Menace. The unquestioned narrative that Russia attacked American democracy in what many establishment politicians have horrifyingly labeled an “act of war” quickly transformed into ridiculous unsubstantiated claims about the Kremlin having taken over the highest levels of the US government and McCarthyite witch hunts against anyone who questioned these baseless assertions. This fact-free hysteria was used to manufacture support for new cold war escalations which remain in place to this day, threatening the existence of all life on earth. Far from addressing the massive, gaping plot holes that have suddenly emerged in its frenzied narrative, the mass media has all but ghosted from the scene. Russia gets an occasional mention now and again, but the fever-pitch shrieking panic has unquestionably been dialed down by several orders of magnitude. This is unacceptable. You don’t get to lie to the American people for nine months, terrify them with fact-free ghost stories that their nation has been taken over by a hostile foreign body, use their terror to manufacture support for a new cold war, and then change the subject to Nazis and Joe Arpaio as soon as evidence emerges that you’ve been reporting blatant falsehoods. That is not a thing. You need to either thoroughly refute every single argument against the narrative you’ve been spinning or admit publicly that you’ve been catastrophically wrong. You need to either (A) prove that you have not knowingly and/or unknowingly deceived the world, or (B) do everything you can to fix the damage that you have done.
Lurid Trump allegations made by Louise Mensch and co-writer came from hoaxer - Explosive allegations about Donald Trump made by online writers with large followings among Trump critics were based on bogus information from a hoaxer who falsely claimed to work in law enforcement. Claude Taylor tweeted fake details of criminal inquiries into Trump that were invented by a source whose claim to work for the New York attorney general was not checked, according to emails seen by the Guardian. The allegations were endorsed as authentic and retweeted by his co-writer Louise Mensch.The source’s false tips included an allegation, which has been aggressively circulated by Mensch and Taylor, that Trump’s inactive fashion model agency is under investigation by New York authorities for possible sex trafficking.The hoaxer, who fed the information to Taylor by email, said she acted out of frustration over the “dissemination of fake news” by Taylor and Mensch. Their false stories about Trump have included a claim that he was already being replaced as president by Senator Orrin Hatch in a process kept secret from the American public. “Taylor asked no questions to verify my identity, did no vetting whatsoever, sought no confirmation from a second source – but instead asked leading questions to support his various theories, asking me to verify them,” the source said in an email.
Come Melania's-Heels-Or-High-Water, 'Stupid News' Rules The Media -Tropical Storm Harvey has by now flooded the Houston area with over four feet of rain,causing the deaths of more than 30 people, forcing more than 30,000 residents to flee their homes, and destroying property worth many tens of billions of dollars. Given the biblical proportions of the delue, one would think that journalists would be hard-pressed to choose among an over-abundance of gripping and newsworthy stories. The New York Times and the Washington Post, two pillars of the journalistic establishment, have both identified one such story: the height of Melania Trump’s heels. I am not making this up; I couldn’t if I tried. Both newspapers recently featured stories focusing on the height of the heels the first lady was wearing when she boarded a helicopter to take her and the president to Air Force One, which would then fly them from Washington to Texas. When she exited the plane in Texas, Trump was wearing sneakers, but that fact apparently did not diminish the newsworthiness — at least in the minds of the reporters and editors of those two august newspapers — of the heels she had worn earlier that day. Just what is going on here?So-called mainstream news outlets are so determined to damage the image and reputation of the president and anyone associated with him that they will publish anything - literally anything - that, in the minds of their news and editorial leaders, might help to achieve that end.Even the pretense of fairness or objectivity has been abandoned; if a story might possibly damage President Trump, it will be published. “All the news that’s fit to print, including the stupid news.” Who exactly is the media serving with these stories? Whose interests are being served other than their own?
GOP senators: Comey drafted statement clearing Clinton before her interview - Former FBI Director James Comey began drafting a statement rejecting the idea of criminal charges against Democratic presidential candidate Hillary Clinton over her private email account about two months or more before Clinton was interviewed in the FBI probe, according to partial transcripts of interviews released Thursday by two Republican senators.Senate Judiciary Committee Chairman Chuck Grassley and Sen. Lindsey Graham said they obtained the transcripts from the Office of Special Counsel, a government watchdog agency that launched an investigation into whether Comey's actions violated a federal law against government employees engaging in political activity while on duty. In a letter sent Wednesday to Comey's successor, FBI Director Christopher Wray, Grassley and Graham said Comey's move to start preparing the statement sometime in April or early May reflected a premature conclusion that Clinton shouldn't be charged. "Conclusion first, fact-gathering second—that’s no way to run an investigation. The FBI should be held to a higher standard than that, especially in a matter of such great public interest and controversy," Grassley and Graham wrote as they demanded all FBI records of the drafts Comey prepared as well as other materials related to the OSC probe.
How do you say ‘whoops’ in Russian? Podesta Group retroactively files more DOJ disclosures for pro-Putin work -- The Podesta Group belatedly filed several new disclosures with the Justice Department on Aug. 17 related to work the firm completed between 2012 and 2014 on behalf of a pro-Russia Ukrainian think tank. Back in April, the powerful Washington lobbying firm run by Clinton ally Tony Podesta filed a document admitting its work for the pro-Russia European Centre for a Modern Ukraine may have principally benefited a foreign government. New disclosures revealed dozens of previously unreported interactions the firm made with influential government offices, including Hillary Clinton's State Department and the office of former Vice President Joe Biden, while lobbying on behalf of the center. Embattled ex-Trump campaign manager Paul Manafort failed to disclose his extensive lobbying efforts on behalf of the center at the time as well. Anyone lobbying or doing public relations on behalf of foreign governments is required to register as a foreign agent in compliance with the Foreign Agents Registration Act. The Aug. 17 filings include short-form registration statements for six Podesta Group employees and anamendment to the firm's registration statement that includes a list of political contributions made by relevant employees throughout 2013. A review of those donations shows both parties received cash from Podesta Group lobbyists.
Podesta Group Subpeonaed By Special Counsel Mueller In Russia Probe - As our readers are undoubtedly aware by now, The Podesta Group (PG) was co-founded by Hillary Clinton's former campaign chairman, John Podesta, and is still run by his brother, Tony Podesta. Now, according The Daily Caller, PG, one of six lobbying firms that worked on Manafort’s campaign to get Ukraine into the European Union between 2012 to 2014, finds itself directly in the crosshairs of Special Counsel Mueller's Russia probe.Special Counsel Robert Mueller issued subpoenas seeking testimony from executives who worked on a campaign organized by Paul Manafort – including the Podesta Group — an NBC exclusive report published Friday revealed.An executive, whose firm received a subpoena, said Mueller’s team is particularly interested in taking a close look at the lobbying campaign that included the Podesta Group.“We think they are trying to figure out, was this a legitimate project?” the executive told NBC News. “From our perspective it was — we did a lot of work. We took it seriously.”The unnamed executive told NBC News that six firms participated in the campaign that Manafort coordinated, which was paid for by the European Center for a Modern Ukraine, a non-profit based in Brussels.The report states that two groups, the Podesta Group and Mercury LLC, worked in Washington with Manafort’s partner Rick Gates, according to lobbying disclosure records.
CIA-Funded Washington Post Smears Indie Media For Covering DNC Fraud Lawsuit --The Washington Post, whose sole owner is both a CIA contractor and one of the wealthiest plutocrats of all time, has sent its Bezos-paid Ringwraiths after small independent reporters for having the temerity to talk about a lawsuit that had severe implications for the future of democracy in America. Back in May, comedian and Youtuber Jimmy Dore released a video titled “Washington Post Caught Blatantly Lying To Their Readers Yet Again” about one of the many, many deceptions that WaPo has been caught inflicting upon their unsuspecting audience. Dore pointed out that while corporate media reporters have long served as guard dogs for the establishment, in today’s environment where plutocratic CIA contractors can openly buy up media to advance blatant propaganda, those reporters have now become attack dogs for the establishment. As an example of this new breed of establishment attack dogs who go out of their way to smear and discredit all dissenting voices, Dore named amoral Bezos android Dave Weigel, who then spent months attacking both Dore and his writers. In a new article titled “In one corner of the Internet, the 2016 Democratic primary never ended”, big brave truth warrior Weigel used his massive platform to tear down writers and Youtubers who earn a fraction of his income because they reported on the DNC fraud lawsuit, which was dismissed last week. At no point in his insipid article does Weigel mention the Impartiality Clause of the DNC Charter, which was the central point of the fraud lawsuit and which the DNC was shown to have undeniably violated in such WikiLeaks releases as the conversations in the more egregious DNC emails, the Podesta emails showing that the DNC and the Clinton camp were colluding as early as 2014 to schedule debates and primaries in a way that favored her, and then-DNC Vice Chairwoman Donna Brazile acting as a mole against the Sanders campaign and passing Clinton questions in advance to prep her for debates with Sanders. DNC Chairwoman Debbie Wasserman Schultz was involved in all of these things, thus violating the promise the DNC made to the American people in its Impartiality Clause. Instead of addressing the lawsuit’s actual claims, Weigel opted to toss out a bunch of red herrings about voter roll purges and state elections officials to make the case that the DNC was not responsible for Sanders’ unfair treatment.
FBI, DHS Study Reveals Antifa As "Primary Instigators Of Violence At Public Rallies" Since April 2016 - President Trump was crucified by the mainstream media a few weeks back after hosting an improvised press conference and saying there was "blame on both sides" for the violence in Charlottesville that resulted in the death of a counter-protester. The comments resulted in most of Trump's advisory councils being disbanded, as CEO's around the country pounced on the opportunity to distance themselves from the administration, and heightened calls from CNN for impeachment proceedings.The problem is that while Trump's delivery probably could have been a bit more artful, the underlying message seems to be proving more accurate with each passing day and each new outbreak of Antifa violence.As Politico points out today, previously unreported FBI and Department of Homeland Security studies found that "anarchist extremist" group like Antifa have been the"primary instigators of violence at public rallies" going back to at least April 2016 when the reports were first published.Federal authorities have been warning state and local officials since early 2016 that leftist extremists known as “antifa” had become increasingly confrontational and dangerous, so much so that the Department of Homeland Security formally classified their activities as “domestic terrorist violence,”according to interviews and confidential law enforcement documents obtained by POLITICO.Since well before the Aug. 12 rally in Charlottesville, Virginia, turned deadly, DHS has been issuing warnings about the growing likelihood of lethal violence between the left-wing anarchists and right-wing white supremacist and nationalist groups.Previously unreported documents disclose that by April 2016, authorities believed that “anarchist extremists” were the primary instigators of violence at public rallies against a range of targets. They were blamed by authorities for attacks on the police, government and political institutions, along with symbols of “the capitalist system,” racism, social injustice and fascism, according to a confidential 2016 joint intelligence assessment by DHS and the FBI. Not surprisingly, law enforcement officials noted that the rise in Antifa violence overlapped perfectly with Trump's campaign as they made appearances at rally after rally to incite chaos...all the while making it seem as if violent, racist Trump supporters were to blame.
Reality Winner Was Not Told She Had the Right to Remain Silent -- At a court hearing on Wednesday, a federal judge agreed to delay accused leaker Reality Winner’s trial until March. The delay will allow Winner’s lawyers and expert witnesses to acquire the required security clearances needed to access classified information the government may use against her in court. A potentially critical pretrial battle, however, is brewing right now, according to court documents filed Tuesday. Winner — the 25-year-old Air Force veteran and ex-National Security Administration contractor indicted under the Espionage Act for allegedly leaking a top-secret document — has accused the FBI of violating her Miranda rights. Winner’s lawyers are arguing that any alleged confession should be barred from a jury trial.“Because Winner was not read her Miranda rights prior to law enforcement questioning,” Winner’s lawyers said in a memo supporting their motion, “any statements elicited by law enforcement from Winner during the encounter must be suppressed, as should any evidence obtained as a result of those statements.” Winner is accused of having leaked an NSA document that was the basis of a story published by The Intercept on June 5, though The Intercept has no knowledge of the source’s identity. (The Intercept’s parent company, First Look Media, has taken steps to provide independent support for Winner’s legal defense through the Press Freedom Defense Fund. First Look also contributed $50,000 in matching funds to the Stand With Reality campaign, which I co-founded.) Winner was denied bail shortly after her arrest and is currently in jail awaiting trial. Her case is the first leak prosecution the Trump administration has brought under the Espionage Act, as part of a wider crackdown on leaks. Winner’s case is widely seen as having enormous implications for both whistleblowers and the press. The Miranda rights argument made by her defense adds a potentially significant early wrinkle in what is almost sure to be a complex case.
YouTube "Economically Censors" Ron Paul, Labels Videos "Not Suitable" For All Advertisers -- Former US Congressman Ron Paul has joined a growing list of independent political journalists and commentators who’re being economically punished by YouTube despite producing videos that routinely receive hundreds of thousands of views. In a tweet published Saturday, Wikileaks founder Julian Assange tweeted a screenshot of Paul’s “Liberty Report” page showing that his videos had been labeled “not suitable” for all advertisers by YouTube's content arbiters.YouTube economically censors former presidential candidate @RonPaul for criticizing U.S. foreign policy on Afghanistan and WikiLeaks.pic.twitter.com/AnC88rZkhO— Julian Assange ???? (@JulianAssange) August 26, 2017Assange claims that Paul was being punished for speaking out about President Donald Trump’s decision to increase the number of US troops in Afghanistan, after Paul published a video on the subject earlier this week. The notion that YouTube would want to economically punish a former US Congressman for sharing his views on US foreign policy – a topic that he is unequivocally qualified to speak about – is absurd. Furthermore, the “review requested” marking on one of Paul's videos reveals that they were initially flagged by users before YouTube's moderators confirmed that the videos were unsuitable for a broad audience.
The Dumb Fact of Google Money - Washington, D.C., woke up to a humdinger of a story today, a flash portrait that shows the relationship between money, power, and ideas—and highlights the potential for intellectual corruption that has accompanied the flood of Big Tech money into the capital. The New York Times reported that the New America Foundation, the digital-savvy center-left think tank, might have pushed out Barry Lynn, a ferocious and influential critic of “platform monopolies” like, for example, Alphabet (née Google). After Google was hit with a 2.42 billion–euro fine by the European Commission in June, Lynn posted a congratulatory note to the regulators and a call for action by American anti-trust officials.New America, meanwhile, has received more than $20 million since its founding in 1999 from Alphabet companies and the foundation established by Eric Schmidt. Schmidt, currently executive chairman of Alphabet, also previously served as chairman of New America’s board.Before Lynn began his Open Markets program, New America had been closely, deeply associated with technology- and market-friendly Silicon Valley progressivism. Open Markets took a completely different tack, “researching and reporting on the political and economic dangers posed by monopolization,” largely by technology companies. And they were good at it. They were gaining adherents with influential essays by Lynn, Lina Khan, and Matt Stoller. They’d gotten the ears of Senators like Elizabeth Warren and even one of Silicon Valley’s own representatives, Ro Khanna. Some have given them credit for the anti-monopoly plank in the Democrats’ platform. (New America also has two Atlantic people on its board: the Atlantic Media chairman David Bradley and The Atlantic national correspondent Jim Fallows, neither of whom contributed to this story. Fallows was the chairman of the New America board from its founding until 2008, when Schmidt took over. New America’s CEO, Anne-Marie Slaughter, has written for this magazine. As have Lynn, Matt Stoller, and Phillip Longman of the Open Markets team. And we’ve cited Open Markets work repeatedly in our coverage.)
New America Foundation Head Anne-Marie Slaughter Botches Laundering Google’s Money, Fires Anti-Trust Team at Eric Schmidt’s Behest -- Yves Smith - While American news junkies are focusing on big stories like Hurricane Harvey’s devastation, Washington DC is agog with an unusually ham-fisted show of Google’s power. Today, the New York Times reported that Anne-Marie Slaughter, who runs the New America Foundation, fired all ten members of its Open Markets initiative headed by Barry Lynn. Our sometimes guest blogger, former Congressional staffer Matt Stoller, was part of this effort. Their sin? Not only praising the $2.7 billion EU fine against Google for anti-trust abuses related to shopping searches, a ruling whose logic threatens the rest of Google’s businesses, but also in a press release, calling for US anti-trust officials “to build upon this important precedent, both in respect to Google and to other dominant platform monopolists including Amazon.” The New York Times reported on the denouement Wednesday morning: This story is troubling. https://t.co/UmRVi2UnSI — Elizabeth Warren (@SenWarren) August 30, 2017 Think tanks play a critical role in shaping policy, but their credibility is jeopardized when decisions are based on funder preferences. — Elizabeth Warren (@SenWarren) August 30, 2017 And it isn’t just Warren that took notice of this New York Times story. The Washington Post, The Intercept, Vox, the National Review, The Week, Paste, and The Verge all quickly piled on, effectively on the side of Open Markets against Google. The reason this incident has gripped the attention of tout Washington is that the whole point of think tanks is to launder the money of corporations and powerful interests and lend a veneer of legitimacy to their PR and lobbying campaigns. That’s normally done by forming a group with an anodyne name, like Americans for Better Locker Rooms, to hide its real aims, which in this case might be to explain why pricey high tech IoT enabled lockers with spycams were absolutely essential for public schools. By contrast, Google and New America are joined at the hip. CEO Eric Schmidt was the chairman of New America until 2016. The Times reports that Google, Schmidt personally, and his family foundation together have given more than $21 million since 1999. The main conference room at New America is even called the “Eric Schmidt Ideas Lab”.
We Said Google Was Dangerously Powerful, Then Google Proved Us Right. - Matt Stoller - The reason American governance is dysfunctional is simple: We have turned much of our sovereignty over to private interests in the form of monopolies. So while our politicians can discuss important social questions, the structure of our political economy lies outside the realm of our democratic debate.This became obvious yet again today when the New York Times revealed that a team of anti-monopoly researchers had been fired from the New America Foundation, an influential Google-funded think tank in Washington, after the researchers pointed out that Google misused its power.Monopoly, it turns out, is the power of which we dare not speak.I am a member of the team that was let go, the Open Markets program. We research monopoly power not because business is bad, but because democracy is good. We try to understand our corporate and banking institutions not because we oppose commerce, but because we support commerce in open markets. Business is good, commerce is good, freedom, democracy is good. And monopolies are an enemy to all of these things. Much political deliberation these days goes into questions of inequality. Corruption is political inequality, and extremes of wealth are economic inequality. The institutional vehicle for both of these is monopoly power. Just look at the Bloomberg list of billionaires: The people on it tend to be rich white men who organize monopoly power and wield political influence. At Open Markets, we started with the same questions that most Americans have. What went wrong? Why did we allow a concentrated system of Too Big to Fail banks to crash our economy? Why can’t our industrial system reduce carbon emissions and help limit the impact of climate change? These kinds of questions about the power of finance and industry have been debated in America for decades, and bankers and industrialists have dedicated vast amounts of their money to influencing that debate. But in recent years, a new class of corporate power has begun to shape our world, prompting a new set of questions: Why have we allowed the internet's information monopolists to seize so much control of our digital lives? And why have they financially strangled our free press, and allowed propaganda and fake news to crawl out of the slime and influence elections?
Google Is Proof Positive That Big Money Is Poisoning Our Politics - Robert Reich: Since its founding in 1999, the New America Foundation – an important voice in policy debates on the American left – has received more than $21 million from Google, from its parent company’s executive chairman, Eric Schmidt, and from his family’s foundation. According to the New York Times, one of New America’s initiatives called Open Markets has been critical of the market power of tech giants like Google. Recently, the researcher who heads that initiative posted a statement on the New America Foundation website praising the European Union’s penalty against Google. Schmidt communicated his displeasure to the foundation’s president, who accused the researcher of “imperiling the institution as a whole” and shut down the Open Markets initiative. The New America Foundation isn’t alone. Over the last 3 years:
- – A non-profit group devoted to voting rights decided it wouldn’t launch a campaign against big money in politics for fear of alienating the wealthy donors it courts.
- – A liberal-leaning Washington think-tank released a study on inequality that failed to mention the role big corporations and Wall Street have played in weakening the nation’s labor and antitrust laws, presumably because the think tank didn’t want to antagonize its corporate and Wall Street donors.
- – A major university has shaped research and courses around economic topics of interest to its biggest donors, notably avoiding any mention of the increasing power of large corporations and Wall Street on the economy.
- – Comcast has been financing the International Center for Law and Economics, which supported Comcast’s proposed merger with Time Warner.
- – The Charles Koch Foundation pledged $1.5 million to Florida State University’s economics department, stipulating that a Koch-appointed advisory committee select professors and undertake annual evaluations. The Koch brothers now fund 350 programs at over 250 colleges and universities across America. You can bet that funding doesn’t underwrite research on inequality and environmental justice.
- – David Koch’s $23 million of donations to public television guaranteed that a documentary critical of the Kochs didn’t air.
Why Plutocrats Like Carl Icahn Are Almost Never Held Accountable – video - NEP’s Bill Black appears on the Real News Network and says Trump promised to “drain the swamp” but instead filled his administration with Washington insiders and elite billionaires like Carl Icahn. You can view with a transcript here.
It's Goldman vs JPMorgan As ISDA's Noble Indecision Roils CDS Market Several years ago, the International Swaps and Derivatives Association, or ISDA, lost much of its credibility when during the peak of the Eurozone debt crisis, it first refused to determine that CDS on Greece had been triggered, only to eventually concede - following substantial outside pressure - that Greece had, in fact, defaulted (if only on bonds not held by a certain central bank), but not before penning a "petulant" blog post in which it claimed amusingly that the "credit event/DC process is fair, transparent and well-tested". Fast forward to today when not only is ISDA in hot water again, but the entire corporate CDS market has been roiled by another indecision by ISDA, which said "it was unable to determine" if Singapore-listed Noble Group, formerly Asia's largest independent commodity trader was in default or not, creating a vacuum similar to what happened with Greece 5 years ago, and which, according to the FT, has resulted in mass confusion in the corporate bond and CDS market. What is more striking, however, is that this is "the first time ISDA has dismissed a question of default without making a ruling either way." Specifically, on August 9, ISDA ruled the following: The AEJ Determinations Committee (DC) has discussed over the course of a number of meetings the question as to whether a Restructuring Credit Event has occurred in respect of Noble Group Limited (Noble). The AEJ DC considers that it currently does not have sufficient information that is public or that can be made public to determine the Restructuring Credit Event DC Question one way or the other, in particular the AEJ DC has not been able to obtain the underlying documentation in respect of the Borrowing Base Facility (and amendments thereto) and Noble’s guarantee in respect thereof (the Relevant Documentation).
‘Madden fix’ bills are a recipe for predatory lending - Currently pending in both houses of Congress are versions of the Protecting Consumers Access to Credit Act of 2017 — bills that would “fix” the 2015 appellate court decision in Madden v. Midland Funding LLC. Unfortunately, these so-called legislative solutions are based on a faulty reading of case law. The Madden case held that National Bank Act preemption of state usury laws applies only to a national bank, and not to a debt collector assignee of the national bank. The decision has potentially broad implications for all secondary markets in consumer credit in which loan assignments by national banks occur: securitizations, sales of defaulted debt and rent-a-BIN lending. Unfortunately, the “Madden fix” bills are overly broad and unnecessary and will facilitate predatory lending. Specifically, the Madden fix bills claim to be restoring the so-called “valid-when-made” doctrine, which, according to proponents of the legislation, means that the usurious or nonusurious nature of a loan is fixed at the time when the loan is made. The problem is that this particular doctrine is wholly concocted. There is a “valid-when-made” doctrine in commercial law, but it means something entirely different than the Madden fix proponents claim. The actual “valid-when-made” doctrine provides that the maker of a note cannot invoke a usury defense based on an unconnected usurious transaction. The basic situation in all of the 19th-century cases establishing the doctrine involves X making a nonusurious note to Y, who then sells the note to Z for a discount. The discounted sale of the note can be seen as a separate and potentially usurious loan from Y to Z, rather than a sale. The valid-when-made doctrine provides that X cannot shelter in Y’s usury defense based on the discounting of the note. Even if the discounting is usurious, it does not affect the validity of X’s obligation on the note. In other words, the validity of the note is a free-standing obligation, not colored by extraneous transactions.
Reg reform crowded out by other priorities as clock winds down on Hill - When Congress returns to session on Tuesday, regulatory and housing finance reform will be on the back burner as lawmakers scramble to tackle a host of other pressing financial issues. Those include the need to raise the U.S. debt limit, pass a government budget, provide relief for victims of Hurricane Harvey, extend the national flood insurance program and begin the laborious process of tax reform.
New Worry in 'Repo': Just One Bank for $3.5 Trillion Market | Fox Business: When ED&F Man Capital Markets in June opened a settlement account for government bonds at Bank of New York Mellon Corp., it was a watershed moment in the world of "repos." London-based ED&F became the first bond broker to change clearing banks in this obscure but vital corner of the global financial system in nearly a decade. The move signaled that a market whose resistance to change has long vexed regulators is now shifting in a way that intensifies many traders' concerns about repo safety. Bank of New York's onetime sole rival in the business of clearing U.S. Treasurys and repos backed by them, J.P. Morgan Chase & Co., is exiting the business, prompting more than two dozen brokers to move to Bank of New York. Individual brokers' transitions have by all accounts been smooth. Yet many traders fret over the risks of having a single bank handle all clearing and settlement -- the process of completing trades and distributing funds according to contract -- in a short-term lending market estimated by the Treasury's Office of Financial Research at $3.5 trillion. Many worry that having all those transactions handled by just one clearing bank potentially exposes the world's safest bond market to threats ranging from mundane power outages to cyberattacks and terrorism. "This clearing function is only in one bank now and is so systemically important," The market has been targeted by the Federal Reserve for reform for nearly a decade. Those efforts picked up after shortcomings in repos were exposed in 2008, when lenders' retreat from Bear Stearns Cos. and Lehman Brothers Holdings Inc. played a role in accelerating the financial crisis.
U.S. insurers ask state regulators to push case for private flood insurance - U.S. insurers are making their case to state regulators to help ease federal policy restrictions to make it easier for companies to enter the flood insurance market. Their pitch involves a plan to coexist with the National Flood Insurance Program (NFIP) and help cover gaps in federal coverage, as they try to alleviate fears of a complete replacement of the federal program by private carriers. Though proponents of a private flood insurance market have advocated the removal of regulatory barriers from time to time, the debate has gained prominence as Congress faces a deadline to reauthorize the existing national program by Sept. 30. With its one-size-fits-all policy and mandatory coverage requirement for risky zones, the program collected over $4 billion in premiums in 2016 but has also racked up $25 billion in debt as a result of costly storms and hurricane claims in the last two decades. With the size of the damage caused by Hurricane Harvey and the resultant losses yet to be measured, it is unclear how much more pressure the program could face in the upcoming months. The National Association of Insurance Commissioners (NAIC), comprising U.S. state insurance regulators, has urged Congress to reauthorize the current federal program(here) for a period of 5 years and avoid short-term extensions to protect the stability of the insurance, housing, and lending markets. The NAIC has also repeatedly urged Congress to consider private entrants into the market to complement the federal program. At an NAIC meeting in Philadelphia earlier this month, private carriers urged state regulators to tell Congress it was important to expand consumer choices by increasing access to the private flood insurance market. Though private flood insurance options are already available in the market, it is rarely used due to policy barriers. For instance, some federal lenders are reluctant to provide mortgages to property owners with private flood risk coverage.
Harvey intensifies brewing flood-insurance storm --The impact of Hurricane Harvey intensifies an already brewing storm over U.S. federal flood insurance. The Texas disaster, which President Donald Trump is seeing firsthand on Tuesday, will put the government coverage program, already $25 billion in debt, further under water. Among other snags, the subsidized backstop insurance encourages building in high-risk areas. The National Flood Insurance Program, which is set to expire at the end of September, fell into debt after Hurricane Katrina in 2005 when it paid out $18 billion. Harvey could increase the red ink to $40 billion, according to U.S. lawmakers pushing for reform. That’s not surprising, given the huge subsidies. The average annual NFIP premium was $878 in a recent ValuePenguin study, with coverage for a residence and its contents capped at $350,000. Private insurance can be cheaper in lower-risk areas but can cost as much as $14,000 in areas prone to regular flooding, according to the research. The program also offers up to a 65 percent discount for about 20 percent of policyholders with older properties. The median value of an NFIP-insured home is twice that of a typical U.S. home, while vacation properties account for 25 percent of subsidized insurance policies, according to the Congressional Budget Office. More than 30,000 homes that have flooded multiple times have been rebuilt with the help of NFIP, according to the Natural Resources Defense Council – though they represent under 1 percent of the homes in the program. Congress phased out the lowest rates in 2012 but reinstated them two years later. Now lawmakers are facing another debate when they return to Washington next week, on legislation that would reauthorize the NFIP for five years. In exchange, it would limit or exclude coverage for high-risk properties and encourage more private insurers to participate in the market. Some politicians argue that now is not the time for reforms. They are particularly worried about higher costs for constituents. But the Texas inundation is the ideal catalyst. . Almost 2 million homes worth nearly $900 billion are at risk of being underwater by 2100, according to Zillow. Lawmakers need to do some urgent repairs.
Harvey could speed short-term flood insurance fix — The massive flooding in Texas from Hurricane Harvey is sure to put pressure on lawmakers to resolve differences over the National Flood Insurance Program, but observers say a short-term reauthorization of the program before a Sept. 30 deadline is still the most likely scenario. The House Financial Services Committee passed measures earlier this year to reauthorize the NFIP but that would aim to cut the program’s debt by shifting more policy holders to the private market. Panel Chairman Rep. Jeb Hensarling, R-Texas, has also made it known he would be open to winding down the program altogether.
Insurance Companies Could Face Staggering $500 Billion Loss During A Crisis-Like Downturn -- Here’s one more example of how central banks’ global coordinated monetary stimulus in the wake of the financial crisis has increased systemic risk in the US: According to an analysis conducted by BlackRock, insurers are more vulnerable to a market downturn now than they were ten years ago. The reason? Ultralow interest rates have forced insurers to venture into markets with higher yielding assets, forcing them to stomach more risk along the way.Whereas insurers once tended to adhere to only the safest types of fixed-income products – typically highly rated government and corporate debt – they’re increasingly buying exposure to risky high yield and EM products, along with illiquid private equity funds, to try and boost their earnings back to pre-crisis levels. These products carry a potentially higher reward for insurers, but heightened risks are also omnipresent. In a downturn similar to the 2008 crisis, BlackRock estimates that US insurers' holdings would drop by 11% - even more than they did during the crisis. Such a drop would be tantamount to $500 billion in losses.“The world’s largest money manager mined regulatory filings of more than 500 insurance companies and modeled their portfolios in a similar downturn. Their stockpiles - underpinning obligations to policyholders across the nation - would drop by 11 percent on average, according to its calculations. That’s significantly steeper, BlackRock estimates, than the group’s “mark-to-market” losses during the depths of the crisis. The reason is simple. Insurers needed to make up shortfalls after the crisis. But in a decade of low interest rates they had to venture beyond their traditional holdings of vanilla bonds. They now own vast amounts of stocks, high-yield debt and a variety of alternative assets - a bucket that can include hard-to-sell stakes in private equity investments, hedge funds and real estate.”
SBA's disaster program faces first real test in Harvey - It’s the disaster relief program few people, if any, are talking about. The Small Business Administration, in the wake of past criticism and a 2008 law that overhauled its disaster-loan regimen, created the Immediate Disaster Assistance Program, or IDAP, which guarantees 85% of bridge loans made to small businesses hit by a disaster.The SBA promises to provide guarantee decisions within 36 hours of receiving an application for loans that max out at $25,000.With Harvey’s devastation seemingly on par with Sandy and Katrina, quick and easy funding would be a welcome lifeline for scores of small businesses. But IDAP has never been tested, and there’s a concern bankers might be hesitant to participate because of qualms with some of its terms. An even bigger problem is awareness; few bankers, apparently, even know the program exists. “This program is not one I’ve heard much about from lenders,” said James Ballentine, the American Bankers Association’s executive vice president for congressional and public affairs. “I would hope something like this would be marketed in a way that business owners can take advantage of it.”
Regulators are still mostly ignoring millennials - On July 24, the Securities and Exchange Commission announced Bryan Wood as the new director of its Office of Legislative and Intergovernmental Affairs. While the hiring of the OLIA director is always noteworthy (because this office coordinates with Congress and other government entities on behalf of the SEC), Wood’s hiring marks a first, specifically the first time the SEC has hired a millennial to run an office at the agency. Millennials are leading a financial services revolution as changemakers, consumers and innovators. Meanwhile, millennials — who are the largest generation of Americans, numbering approximately 83.1 million, and are set to inherit over $59 trillion in assets over the coming decades — mostly remain a glaring blind spot at the federal financial regulators. Millennials, especially the oldest ones, have been front and center in the decadeslongstruggle to hold Wall Street accountable. Only in their 30s, the oldest ones have already witnessed multiple market meltdowns and scandals for the ages, including the Enron collapse, the dot-com bubble, the Great Recession and bank bailouts, Bernard Madoff’s guilty plea, and the ongoing Wells Fargo retail banking scandal. And these are the same Americans who graduated, often with significant student debt, exactly as the Great Recession began.
Wells Fargo takes center stage in arbitration fight -- Wells Fargo is trying to convince federal appeals judges that a large class-action lawsuit brought by customers who were charged hefty overdraft fees should be thrown out, since the aggrieved consumers agreed upfront to settle any disputes in arbitration. Meanwhile, many of the scandal-plagued bank’s adversaries have their eye on the court of public opinion, arguing that Wells Fargo’s various misdeeds demonstrate why mandatory arbitration clauses in consumer banking agreements ought to be barred.
Wells Fargo accused of scamming borrowers on rate lock fees - Wells Fargo forced borrowers to pay millions of dollars in fees to extend interest rate locks that expired due to the bank's delays in processing mortgage applications, a lawsuit claims. It's a common industry practice for lenders to charge fees to extend expired rate locks when late paperwork or other borrower issues delay processing. But Wells Fargo charged the fee even when rate locks expired because of the bank's own processing delays, claims the lawsuit, filed in the U.S. District Court in the Northern District of California. A Wells Fargo spokesperson declined to comment on the lawsuit's allegations, but defended the bank's rate-lock practices. Managers at Wells Fargo were engaged in a "systematic effort" to "wrongly offload the cost of … interest rate extensions onto borrowers," the lawsuit claims. "Wells Fargo managers pressure employees to blame customers for the delays so that the Bank can charge rate-lock extension fees. Wells Fargo also made it difficult to not assign borrowers the fee," the lawsuit adds. "For example, while Bank-paid rate-lock extension fees appear to have required the approval of a regional manager, determinations of borrower-caused delays did not. Moreover, if mortgage consultants accumulated too many borrower-charged extension fees in their files, they were reportedly subject to reprimand."
Wells opened far more fake accounts than originally estimated -- Wells Fargo said Thursday that employees opened 3.5 million potentially unauthorized consumer accounts over a nearly eight-year period, a 67% increase from its earlier estimate.The $1.9 trillion-asset bank had originally put the number of fake accounts at 2.1 million. But it agreed as a part of a consent order with regulators last year to expand its review by four years, which resulted in the significant increase in consumers estimated to be harmed.Wells said it will provide $2.8 million in refunds and credits to consumers who were harmed, on top of $3.3 million already refunded to consumers last year. The bank also found that employees opened 528,000 potentially unauthorized bill-payment enrollments, which had not previously been disclosed. Wells will refund $910,000 to bill-pay customers who were harmed.
Wells Admits It Created 1.4 Million More Bogus Client Accounts Than Previously Thought --Remember the outrage one year ago when it was revealed that in its push to pad its top, and bottom line, Warren Buffett's favorite bank had engaged in outright criminal account churning and "cross selling", opening some 2.1 million unauthorized client accounts without permission (subsequently this extended to unsolicited car insurance policies extended on Wells auto loans). Well it turns out there was not nearly outrage, because as the bank revealed this morning, the "real" number was higher. 67% higher.According to the outside review whose findings were released today, Wells Fargo saidemployees created two-thirds more bogus accounts than initially thought. According to the review, an additional 1.4 million "potentially unauthorized" deposit and credit-card accounts opened when the bank was encouraging employees to sell multiple products to retail customers, bringing the total to about 3.5 million, according to a statement Thursday from the San Francisco-based firm. The revised estimate covers January 2009 to September 2016, almost twice as long as the period examined in the initial review. Wells new CEO was, predictably, all apologies: […] However, as Bloomberg writes, the discovery is "a sign the bank is still struggling to move past a scandal that sparked record fines and congressional investigations." Furthermore, "the disclosure of even more fraudulent accounts threatens to catapult Wells Fargo back into the political crosshairs just as Congress returns Sept. 5 from its summer recess."
Wells Fargo’s Reputation Crisis Deepens, Fake Accounts And Sexual Harassment - According to The New York Times, thousands of Wells Fargo customers were enrolled in online bill payment services without consent, possibly as many as 528,000 cases. Wells Fargo reportedly said it will refund customers for unauthorized enrollment to the tune of $910,000, covering their extra account fees and charges. To make matters worse, an internal review found there were 67 percent more potentially fraudulent bank accounts than Wells Fargo previously estimated. The review found 3.5 million suspicious accounts. Wells Fargo is currently embroiled in ongoing investigations with the Justice Department and state attorney generals, since the company acknowledged earlier this summer that thousands of employees created unauthorized accounts with customers’ names. Sometimes, customers only discovered the misconduct after being charged unexpected fees. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said in a statement. “To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone.”Bloomberg reported the bank plans to pay $10.7 million in addition to previously established lawsuit settlements for customer compensation.Beyond retail banking, Wells Fargo has another scandal to deal with regarding its company culture. Former mortgage loan processor Jessica Nibert claims Wells Fargo took no action when she reported sexual harassment from her manager. The Charlotte Observer reported Nilbert’s lawsuit cites examples like the manager asking her to cook for him in the nude, calling her after hours and saying he likes to think of her in the shower, as well as asking her to wear skirts to work so he could “sneak her into a storage room.” Local Wells Fargo managers were allegedly aware of the issue, but told Nilbert to just ignore it. Nilbert said she was eventually fired in 2016, after a text message from her boss told her to start looking for work elsewhere.
Wells Fargo’s Testimony Left Some Feeling Shortchanged - Did Wells Fargo mislead the United States Congress during hearings last fall when it characterized its widespread opening of unauthorized bank accounts as a one-off problem in an otherwise clean operation? That question took on greater urgency Thursday after Wells issued disturbing new disclosures about its customer dealings. The bank concluded that it had opened as many as 3.5 million unwanted accounts for customers, 1.4 million more than previous estimates. What’s more, Wells admitted a new impropriety: enrolling more than half a million accounts into its online bill pay service without customers’ permission.The mounting infractions at Wells Fargo are getting hard to track without a scorecard. Unrequested auto insurance that affected 800,000 people — check. Unauthorized changes to mortgage repayment terms in bankruptcy — check. Improper withholding of refunds to some car loan customers — check. All of which raises questions about statements made last September by John G. Stumpf, Wells Fargo’s former chief executive, during and after the congressional hearings. When asked if any other fraudulent activities had been uncovered across the bank, he indicated that problems were limited to the unauthorized accounts opened by the Community Banking unit.In written questions after Mr. Stumpf’s testimony, Senate Democrats reiterated the question. “Have you discovered other types of misconduct involving other products aside from credit cards or basic banking (such as misconduct related to applications for mortgages or personal or other loans, or lines of credit, insurance or other investment areas)?” Wells’s response: “We believe that the activity at issue here was limited to certain team members within the Community Banking Division.” That certainly sounds like a no. But there’s a problem with that. We now know that last summer, before the hearings, Wells had become aware of its longtime practice of forcing auto insurance on some customers who did not need it. Yet there was no mention of that in the bank’s response to Senate Democrats.
Fed’s Powell: New plan won’t 'lighten load' for bank boards — The lead regulator at the Federal Reserve is defending a proposal issued earlier this month by the agency that would revise the types of information sent to banks’ boards of directors, saying the changes would not lessen supervisory standards. Federal Reserve Gov. Jerome Powell, who chairs the central bank’s supervisory committee, said Wednesday during a speech at the Federal Reserve Bank of Chicago that the proposed changes are intended to eliminate an impediment to bank boards’ effective execution of their core duties, not to make it easier for bad actions to go undetected. “We do not intend that these reforms will lower the bar for boards or lighten the loads of directors,” Powell said. “The intent is to enable directors to spend less board time on routine matters and more on core board responsibilities: overseeing management as they devise a clear and coherent direction for the firm, holding management accountable for the execution of that strategy, and ensuring the independence and stature of the risk management and internal audit functions.”The Fed issued a pair of proposals Aug. 3 aimed at improving the agency’s supervisory relationship with bank boards. The first revises 2013 guidance that had required that boards of directors be briefed on all Matters Requiring Attention and Matters Requiring Immediate Attention issued by bank supervisors. The second introduces a revised rating system that sets out assessments for each individual bank’s capital planning and positions, liquidity risk management and positions, and governance and controls. The proposals are open for public comment until Oct. 10 and Oct. 16, respectively. But critics have not waited until then to voice their concerns, namely that the Fed is loosening its controls over boards of directors — in whose hands the ultimate responsibility of a bank’s activities lie — at a time when significant concerns remain about whether banks are being operated safely and in accordance with the law.
Fed stress tests: One big public relations campaign - One of the summer highlights for Federal Reserve watchers is the annual ritual in which the Fed’s soothsayers peer into their crystal balls, aka the central bank’s stress tests, to reassure us that the U.S. banking system is robust and getting stronger all the time.This year, the news seemed particularly good. Whereas in previous years there were dunces that failed, the latest stress tests are the first in which all the banks passed. The results for the Fed’s stress tests were published in two stages. The results of the first stage — the Dodd-Frank Act Stress Tests (DFAST) — were published on June 22. These showed how the banks involved would fare under an “adverse scenario" and a “severely adverse scenario” projected over a two-year period ending in the first quarter of 2019. The 34 bank holding companies (BHCs) tested hold more than 75% of the assets of all domestic BHCs.The “severe adverse scenario” posits a GDP more severe than during the “global financial crisis” (GFC). It also has the unemployment rate almost doubling to 10%, equity prices falling by 50%, equity market volatility surging to 2008 levels, and house prices and commercial real estate prices experiencing large declines. Total projected losses across the 34 banks are $493 billion. The results for the second stage — the Comprehensive Capital Analysis and Review (CCAR) 2017 — were published on June 28. The CCAR provides a quantitative assessment of a firm’s capital adequacy and planned capital distributions (or “capital plan”), such as any dividend payments and stock buybacks. “This year's results show that, even during a severe recession, our large banks would remain well-capitalized,” said Federal Reserve Board Gov. Jerome Powell, the official in charge of the stress tests, on June 22. But I disagree and here’s why.
Fed finalizes rule targeting early termination clauses for megabanks— The Federal Reserve Board of Governors voted unanimously Friday to approve a final rule limiting the largest U.S. banks’ ability to enter into contracts with early termination clauses, a regulation intended to forestall a liquidity crunch if the bank is under stress.Federal Reserve Gov. Jerome Powell, who chairs the board’s supervisory committee, said the rule, which covers certain uncleared swaps, repurchase agreements and securities lending contracts, would better ensure that a distressed firm could be resolved more easily.“This final rule on QFCs that we are considering today is an important element of our strategy to make large banking firms more resolvable,” Powell said, referring to qualified financial contracts. “The final rule should help avoid the threat of a disorderly and mass unraveling of QFCs, as occurred in the case of Lehman Brothers, which intensified and prolonged the financial crisis.” The final rule is close to a 2016 proposal that would bar global systemically important banks, or G-SIBs, from entering into certain qualified financial contracts that include early termination provisions earlier than 48 hours from notice of bankruptcy. The plan would effectively place a stay on counterparties' ability to call certain derivatives, repurchase agreements, reverse repurchase agreements and certain securities transactions in order to give regulators time to stabilize the failed bank without liquidity draining from the institution.A memorandum accompanying the final rule said that the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency would be adopting "substantively identical final rules ... in the near future" that would apply to financial institutions under their purview.The proposal sprang from a 2011 plan by the Financial Stability Board, an international standards-setting organization affiliated with the Group of 20 industrialized nations, that suggested that limiting early termination clauses would facilitate post-bankruptcy resolution and reduce contagion risk.Many of the requirements in the rule simply codify changes that had already been happening in the derivatives market for some time — changes that were largely informed by regulators’ stated goal of restricting early termination rights as part of implementing Title II of the Dodd-Frank Act.
Key part of Dodd-Frank remains missing in action — In 2012, the Federal Reserve issued a proposal designed to force changes at banks and systemically important nonbanks that showed early signs of financial distress. Since then, the proposal — required by the Dodd-Frank Act and hailed by many as an important backstop to ensure regulators keep a close watch on bank holding companies — appears to have vanished. The Fed has made little to no mention of it, and it's not clear when or even if the central bank plans to finalize it.Its absence presents a problem, according to observers.“Their failure to finalize their guidance is just breathtaking,” said Dennis Kelleher, president of the public advocacy group Better Markets. “It’s just head-scratching the way the leading bank regulator hasn’t finalized one of its most important protections for taxpayers.” At issue is Section 166 of Dodd-Frank, a measure that was designed to force regulators to take actions early when it saw a bank holding company was getting into trouble. The Federal Deposit Insurance Corp. Improvement Act in 1991 included provisions requiring FDIC and other bank regulators to take “prompt corrective action” against flagging banks in order to reduce the potential of a more dramatic failure — and drain on the FDIC's resolution fund — later on. When Congress drafted Dodd-Frank, Section 166 was intended to apply that same principle to bank holding companies and nonbanks designated as systemically important financial institutions by the Financial Stability Oversight Council. There are important differences between the early remediation rules outlined in Section 166 and the prompt corrective action requirements in the FDIC Improvement Act. For one, the act's language is expansive and specific, while Section 166 is much more abstract, leaving more to the Fed to decide. Karen Shaw Petrou, managing partner at Federal Financial Analytics, said all of the macroprudential rules that the Fed enacted over the past seven years, including new capital and liquidity requirements under Section 165 of Dodd-Frank, rely on the assumption that the Fed would be dutifully watching for signs of distress and act accordingly. Without Section 166 rules, she said, those assumptions are misplaced. . “If you put in place all of the stuff in 165, and the agencies issued all the rules but did nothing about it, then what was the point? Section 166 was supposed to be the point.”
THE BLOCKCHAIN IN BANKING REPORT: The future of blockchain solutions and technologies – Business Insider - Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. In this report, BI Intelligence outlines why and in what ways banks are exploring blockchain technology, provides details on three major banks' blockchain efforts based on in-depth interviews, and highlights other notable blockchain-based experiments underway by global banks. It also discusses the likely trends that will emerge in the technology over the next several years, and the factors that will be critical to the success of banks implementing blockchain-based solutions. Here are some of the key takeaways from the report:
- Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with fintechs, and the ability to use the technology to create new business models.
- Banks are starting to narrow their focus, and are increasingly honing in on tangible use cases for blockchain technology that solve real problems faced by their businesses.
- Regulators are taking an increased interest in blockchain technology, and they're working alongside major banks to develop regulatory frameworks.
- Blockchain-based solutions will start to emerge in different areas of financial services. The most successful solutions will solve specific problems for banks and attract a large enough network to create widespread benefits.
Three fears for banks that share customer data with Facebook - As banks slowly, gingerly start to provide account and transaction data to their customers over Facebook Messenger and Amazon Alexa, they’re navigating a minefield of uncertainties when it comes to privacy and security. “Banks have a genuine and well-founded fear that the internet giants could take control of the customer, relegating the regulated financial institutions to low-margin utility pipes,” said David Birch, global ambassador at Consult Hyperion. TD Ameritrade went live with a Facebook Messenger bot last week. Wells Fargo, TD Bank, and Royal Bank of Scotland are among the banks that also have Messenger bots through which customers may speak or text questions and get quick responses. Capital One, American Express and TD Ameritrade are among those that have Alexa Skills — apps that let customers converse with Alexa through Amazon Echo and Echo Dot speakers to get account information and pay bills and such. Google did not respond to requests for an interview or information about bank tie-ins with Google Home, and bankers I have spoken with have expressed little interest in working with Google’s device. Here are three major questions financial firms have about how the tech giants manage bank and customer data … and some not completely comforting answers.
- Do Facebook and Amazon have access to the data the banks send through the channel? “Banks in general don’t want to have Facebook looking at their data in transit,” “Facebook, Google and Amazon know a lot about us, more than banks do,” “There’s some information banks have that those three do not have, and enabling transactions through them ensures the companies fill that subset of information they don’t have. Through any channel within Facebook Messenger, Google Voice and Amazon Echo, those that control the distribution pipe are going to get a lot of value out of that data.”
- Can Facebook and Amazon see or hear what customers speak or type to their financial institution over Messenger, Alexa and Echo? Facebook says it cannot. Amazon says voice recordings are securely stored in the Amazon cloud.
- Can data about bank transactions be read by the tech companies’ product-recommendation engines? Another worry for bankers is whether a product-recommendation engine or ad engine could monitor their conversations with customers, so a bank customer inquiring about a loan could be presented with an offer for a lower-rate product from a competitor, for instance.
B of A’s biggest shareholder is now Warren Buffett -- Warren Buffett’s Berkshire Hathaway exercised warrants to buy 700 million shares of Bank of America, locking in an $11.5 billion investment gain in a move that was telegraphed earlier this year. Buffett invested $5 billion in Bank of America in 2011 in exchange for preferred stock and the right to buy common shares. The cash infusion helped the bank put to rest doubts about whether it had enough capital, and its shares have more than tripled since then. Berkshire said in a statement in June that it would convert its preferred shares into common stock once the Charlotte, N.C., bank increased its dividend. The common shares that Berkshire received are worth about $16.5 billion. Berkshire now owns about 6.6% of B of A, according to the website Seeking Alpha.
August 2017: Unofficial Problem Bank list declines to 123 Institutions -- Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for August 2017. Here are the monthly changes and a few comments from surferdude808: The list shrank by a net 11 banks to 123 after twelve removals and one addition. Aggregate assets dropped by $4½ billion to $32.8 billion. A year ago, the list held 184 institutions with assets of $56½ billion. The addition this month was the Farmers and Merchants State Bank of Argonia, Argonia, KS ($34 million). In addition, the Federal Reserve issued a Prompt Corrective Action order against Heartland Bank, Little Rock, AR ($199 million), which has been on the list since December 2016. This week the FDIC released their official Problem Bank figures for the end of the second quarter of 2017, with their list holding 105 institutions with assets of $17.2 billion, which equates to an average asset size of about $164 million. Last quarter, the FDIC said the official list had 112 institutions with assets of $23.7 billion, which equated to an average asset size of $212 million. Thus, during the second quarter of 2017, the FDIC removed a net seven institutions and $6.5 billion of assets from the official list. The average asset size of the seven institutions the FDIC removed from the official list was about $929 million. Currently, the unofficial list only has five institutions larger than $950 million; therefore, it seems a bit of a stretch for the aggregate assets on the official list to decline by $6.5 billion during the second quarter. We know the FDIC does not like publishing the official figures, so it is unlikely they would provide us readers/analysts with an average or median asset figure to improve our understanding of the characteristics of the institutions on the official list.
Republicans Want to Sideline This Regulator. But It May Be Too Popular — With the election of President Trump, the nation’s consumer watchdog agency faced a quandary: how to shield the Obama-era institution from a Republican administration determined to loosen the federal government’s grip on business.In the weeks after the election, Richard Cordray, the Democrat who leads the agency, the Consumer Financial Protection Bureau, directed his staff to compile stories from ordinary Americans thanking it for resolving complaints.The anecdotes, which he solicited in an email to share with the Trump transition team, could provide a counterpoint to critics who had cast the agency as a regulatory scourge on the economy. And implicit in his request to employees was the belief that some accolades would come from parts of the country that helped elect Mr. Trump — evidence that the popularity of consumer safeguards transcends party divisions.“There must be hundreds of such stories,” Mr. Cordray wrote in the email in November, which was obtained in a public records request. He added, “I can think of no better vindication” of the agency’s consumer relief efforts. While many federal agencies have begun to loosen the reins on the companies they regulate, the Consumer Financial Protection Bureau, born out of the Dodd-Frank financial law in 2010, has taken the opposite course. Congress granted it unusually broad authority — and autonomy from the White House and Congress — to both enforce existing federal rules and write new ones, including issuing fines against financial companies. Under Mr. Trump it has openly embraced its mission, cracking down on debt collectors, pushing out a major new financial rule on arbitration and pursuing a flurry of enforcement actions against payday lenders and others. The approach, outlined in emails and other documents obtained through the public records request by The New York Times, comes as the Trump administration has taken an uncharacteristically low-key public stance toward the agency, a prominent blue holdout in a federal regulatory regime newly awash in red.
CFPB move to split payday rule may help it survive congressional challenge — — The Consumer Financial Protection Bureau’s likely decision to pare back its final rule on small-dollar lending may help guard it against a congressional rollback and pave the way for bankers to return to the space.The agency is expected to release a rule targeting payday loans of 45 days or less in the coming weeks, for now dropping plans to additionally rein in installment loans of longer maturity, according to sources familiar with the matter.The move allows CFPB to narrow the scope of its small-dollar rule, helping it to likely prevail against an expected challenge under the Congressional Review Act, observers said. The agency is already facing such a challenge for its rule banning mandatory arbitration clauses in financial contracts. “There is a lot more unified industry opposition to the arbitration rule than to the payday and small-dollar loan rule,” said Quyen Truong, a former assistant director and deputy general counsel at the CFPB. “If the final rule is narrower than the proposal, focusing on payday loans of 45 days or shorter duration, then that would further reduce the amount of industry opposition.” That’s not to say that Republicans won’t try to target the rule. In a recent interview, Rep. Steve Stivers, R-Ohio, said he expected a challenge. The CFPB first proposed a payday lending plan in June of last year. It would require lenders to underwrite the loans by doing an ability-to-repay test if the loan term was less than 45 days of its maturity date was longer and had an annual percentage rate of more than 36% and paid from a consumer's account.
States preparing to pick up slack if CFPB backs down — As Republicans policymakers pursue efforts to revamp the Consumer Financial Protection Bureau and replace its leadership, state agencies are already preparing to fill any vacuum that might ensue if the CFPB steps back. “We are seeing a significant uptick in activity by the states both legislatively and regulatorily,” said PJ Hoffman, the director of regulatory affairs at the Electronic Transactions Association, who was hired earlier this year specifically to lead the organization’s response to state-level measures.In recent years, states have become more aggressive in their oversight of the financial industry — a trend that could be traced back to the Dodd-Frank Act and a growing sense that consumers must be protected from the types of predatory actors that caused and exacerbated the financial crisis.The 2010 law contained a provision that expressly allowed state attorneys general to pursue companies for violations of certain federal laws, including the ban on unfair, deceptive or abusive conduct.“We've always done good work in this area, but" Pennsylvania Attorney General Josh Shapiro "wants to bring even more emphasis on it," said Nicholas Smyth, above, the head of Pennsylvania's new consumer protection unit. This cleared the way for state authorities to easily pursue companies that had also been investigated by federal regulators. Before that, "they had to argue over whether or not they had the authority to even make an inquiry,”
Hensarling accuses Cordray of rushing out rules ahead of political run - — House Financial Services Committee Chairman Jeb Hensarling is demanding that Consumer Financial Protection Bureau Director Richard Cordray publicly state by Wednesday whether he is running for political office.The Texas Republican accused Cordray of colluding with consumer groups and their lobbyists while rushing out a rule to restrict payday lending ahead of a widely expected gubernatorial bid in Ohio.“There is no valid legal basis for accelerating a federal rulemaking to satisfy an arbitrary deadline necessitated by election dates established under Ohio law,” Hensarling wrote in a letter to Cordray dated Monday. “If this is the case, it undoubtedly opens the Bureau’s rule up to legal challenge." The CFPB recently finalized a rule banning mandatory arbitration agreements in financial contracts and is said to be nearing the release of a rule targeting payday loans. In the letter, Hensarling asks Cordray to make a “categorical denial” that politics factored into the rule writing of the payday regulations and that he preserve all records relating to the rule.
Cordray denies politics influenced payday lending rule - — Consumer Financial Protection Bureau Richard Cordray said Wednesday that his possible political ambitions have not affected the development or timing of a final rule restricting payday lending, which is expected to be released soon. In a letter to House Financial Services Committee Chairman Jeb Hensarling, Cordray "categorically" denied that "political considerations have informed any aspect of my decisions, orders and communications relating" to the small-dollar lending rule, and pledged to keep any records related to the rulemaking. But Cordray also declined to spell out whether he was running for office. “At this time I have no further insights to provide on that subject,” he wrote. Hensarling has written three letters to Cordray this year asking whether he intends to resign from the bureau and run for governor of Ohio, as is widely expected. The Texas Republican's most recent letter, sent Monday, demanded that Cordray either provide a date at which he plans to resign or declare that will fulfill his full term, which expires next summer. The letter also suggested the CFPB was rushing the payday lending rule in order to accommodate Cordray's political ambitions. “You are asking me the same question a third time and my answer remains the same,” Cordray wrote.
CFPB forces exit of credit repair service company -- — The Consumer Financial Protection Bureau said Wednesday it had successfully forced a credit repair company to exit the industry.The CFPB filed a lawsuit last year against Prime Marketing Holdings, which operated under names including Park View Credit, National Credit Advisors and Credit Experts. The company marketed credit repair services, but the CFPB accused it of misleading consumers. On Wednesday the CFPB and Prime Marketing Holdings agreed to a proposed final judgment that would permanently ban the company from the credit repair industry and require that it pay a $150,000 civil money penalty. Because it is a federal case, a judge still needs to agree to the judgment, but experts said the agreement is a win for the bureau. “The defendant agreed to exit the industry entirely, which the CFPB no doubt views as a significant victory,” said Daniel Delnero, an associate at Ballard Spahr who specializes in consumer financial services litigation.
FDIC terminates consent order with Discover -- The Federal Deposit Insurance Corp. has terminated a 2014 consent order with Discover Financial Services’ banking subsidiary, the Riverwoods, Ill.-based company said Wednesday in a regulatory filing.The 3-year-old consent order was related to Discover Bank’s programs for combating money laundering. Under the agreement, Discover’s board of directors agreed to take a variety of steps to bolster its compliance efforts. The consent order, which was terminated without conditions, led to substantial expenses for Discover. The firm has said that it spent $30 million in 2016 on a project related to looking back at past efforts to comply with anti-money-laundering rules.While Wednesday'’s announcement was a step forward for Discover, the credit card issuer continues to operate under a second regulatory agreement related to its anti-laundering efforts. That 2015 agreement is with the Federal Reserve Bank of Chicago. Discover Bank, a $92.6 billion-asset depository based in Greenwood, Del., operates mostly on the Internet, offering checking and savings accounts, among other products. Earlier this year, Discover Chief Financial Officer Mark Graf said that direct-to-consumer deposits were funding nearly half of the company’s loans.
Trepp: CMBS loan exposure to Harvey near $30B - Commercial mortgage securitizations have approximately $30 billion in exposure to Houston-area and Gulf Coast Texas properties hit by Hurricane Harvey, Trepp reported Tuesday. Any signs of moving bond spreads or forced sell-offs from existing deals have yet to emerge, but the commercial mortgage research firm noted “that could be coming down the road once everyone has a better idea of exactly what areas were hit the hardest.”
Feds target luxury real estate wire transfers in money laundering investigation - The federal government is again expanding its investigation into whether foreign buyers are using shell companies to buy luxury U.S. real estate to launder money after its investigation found that potentially illicit activity is behind more than 30% of cash purchases from foreign buyers in select markets. Last year, the Treasury Department’s Financial Crimes Enforcement Network launched an investigation into unknown buyers using shell companies to buy high-end real estate in Manhattan and Miami-Dade County, because it was “concerned about illicit money” being used in the deals. The results of that initial investigation showed more than 25% of transactions covered in the initial inquiry involved a “beneficial owner” who is also the subject of a “suspicious activity report,” which is an indication of possible criminal activity. The initial investigation led FinCEN to expand the investigation to include all of New York City, Los Angeles, San Francisco and several other areas. Earlier this year, FinCEN said that it planned to continue the investigation past its initial end date because of the number of questionable transactions reported to the agency. Now, FinCEN is expanding its investigation again, and will now target what some are calling a “gaping loophole” in its initial investigation – wire transfers. The expanded investigation involves the issuance of “Geographic Targeting Orders,” which require title insurance companies in the designated areas to identify the actual person behind shell companies used to pay all cash for high-end residential real estate. Previously, title insurance companies were required to report a cash purchase above a certain dollar threshold if the deal involved the use of currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, or a money order in any form. Now, title insurance companies will be required to report certain cash purchases involving wire transfers, as well.
Trump Treasury Dept Renews Modest Real Estate Anti-Money Laundering Regs --Jerri-lynn Scofield - Last week, one day before the Financial Accountability and Corporate Transparency Coalition (FACT Coalition) published a major study discussing the failed status quo and efforts thwart money laundering, Treasury’s Financial Crimes Enforcement network (FinCEN) renewed and (slightly) extended modest measures targeting shell companies purchasing luxury properties in seven major metropolitan areas.The juxtaposition of the magnitude of the money laundering problem– discussed in the FACT report– and FinCEN’s limited, almost laughable measures– which target luxury real estate transactions undertaken by shell companies– caught my eye. Regular readers are of course well aware of the efforts made by Trump and his minions to thwart and roll back financial regulation– as I discussed in this previous post– Financial Regulatory Rollback Proceeds.But it’s worth repeating a point I’ve made many points before. FinCEN’s initial limited measures were drafted not on his watch, but on that of his predecessor– in January 2016– and have been renewed twice since then. So the inadequacy of this reporting framework cannot solely be laid at the feet of Trump’s administration– which in February, did renew the extant regulations. And this week, FinCEN yet again renewed and ever-so-slightly extended the measures. So this is an area where regulation has increased– albeit marginally– under Trump.The renewal came as a bit of a surprise to some, as it targets luxury real estate transactions– which, as everyone knows, is a sector Trump knows well (and was central to the development of his business reputation and portfolio). In the interests of keeping this post short and focused, I intend to focus on the FinCen measures. I encourage readers interested in the broader issue of money laundering to look at FACT’s study– which makes for sobering and depressing reading.
Replacing HARP creates wrinkle in Fannie, Freddie risk-sharing deals --The high loan-to-value refinance programs replacing the Home Affordable Refinance Program will require a change to the structure of Fannie Mae and Freddie Mac's credit-risk transfer deals.The new high LTV refinance programs will be available on loans originated on or after Oct. 1, 2017. If the original loan was included in the reference pool of a risk-sharing deal, the newly refinanced loan will take its place.
HUD revamps reverse mortgage program fees to stem losses - — The Department of Housing and Urban Development is revising its fees on federally insured reverse mortgages to reduce losses to its Home Equity Conversion Mortgage program. The agency will charge higher upfront premiums for most borrowers while lowering the annual premium. Under the new system, the upfront premium will be 2% for all loans, replacing the variable rate between 0.5% to 2.5%, with the annual premium lowered to 0.5% from 1.25%.This new fee structure will go into effect Oct 2."Given the losses we’re seeing in the HECM program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers," HUD Secretary Ben Carson said in a press release Tuesday. HUD said it needed to make a change due to the flagging financial condition of the agency’s reverse mortgage program. Currently, every loan in the program originated today is projected to lose money, said Adolfo Marzol, a HUD senior adviser for housing finance.
Federal Agency Issues Warning on Reverse Mortgages -- Pam Martens -- The Consumer Financial Protection Bureau (CFPB), the Federal agency created after the 2008 financial crash to protect consumers from predator banks, has issued a warning on what smells like the latest financial blood sport: bank employees selling reverse mortgages to seniors under the guise that it will allow them to reap a larger Social Security benefit down the road by delaying Social Security payments to a later age.Reading through the CFPB report that accompanied the warning, it reminded us of how the tobacco industry had secretly targeted young people as “replacement smokers” while intentionally hiding the deadly effects of smoking from the public.The CFPB report advises that “nearly five million homeowners will turn age 62 by 2020.” That’s the earliest age at which one can collect Social Security retirement benefits as well as the earliest age to apply for a reverse mortgage. That creates a big pool of potential new customers to whom banks can peddle reverse mortgages.The problems with this marketing strategy are multiple explains the report:“The CFPB examined different scenarios and found that, in general, the reverse mortgage loan costs exceed the cumulative increase in Social Security that homeowners would receive in their lifetime by delaying Social Security benefits. Furthermore, using this strategy will likely diminish the amount of home equity available to borrowers later in life. As a result of the diminished equity, borrowers that seek to sell their homes after using this strategy may have limited options for moving to a new location or handling a financial shock.” It’s understandable why financial predators would want to tap into the home equity in the homes of seniors. According to the CFPB report, it’s where the largest single pool of wealth resides for people 65 and older. As of 2015, according to the report, “80 percent of consumers 65 and older owned their homes– 30 percent of them with a mortgage and 70 percent without.”
Fannie Mae: Mortgage Serious Delinquency rate declined in July, Lowest since December 2007 --Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.00% in July, from 1.01% in June. The serious delinquency rate is down from 1.30% in July 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 0.30 percentage points over the last year, and at that rate of improvement, the serious delinquency rate should be below 1% next month. By vintage, for loans made in 2004 or earlier (4% of portfolio), 2.63% are seriously delinquent. For loans made in 2005 through 2008 (7% of portfolio), 5.71% are seriously delinquent, For recent loans, originated in 2009 through 2017 (89% of portfolio), only 0.32% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.
How the Fed's balance sheet wind-down affects the mortgage market -- In mid-June, the U.S. central bank raised rates and made clear its intentions to wind down a portfolio of bonds from a balance sheet that, as of June, totaled over $4.5 trillion — or more than 23% of U.S. GDP. How the Federal Reserve manages this behemoth bond portfolio has implications for general economic growth as well as for mortgage rates and housing.Mortgage-backed securities consist of pools of loans guaranteed by U.S. housing agencies Fannie Mae and Freddie Mac as well as Ginnie Mae — the Government National Mortgage Association, a corporation within the Department of Housing and Urban Development.MBS, together with debt issued by the agencies, currently account for approximately $1.8 trillion of the Fed’s portfolio. As they explained on June 14, the central bank’s policymakers said that they expect to begin the wind-down process this year, provided that the economy continues its path of steady, broad-based growth. Initially, they expect to hold off from reinvesting $4 billion in agency debt and MBS each month. This cap on the monthly reduction would then increase in steps of $4 billion at three-month intervals over a 12-month period until it reaches $20 billion a month.The Fed’s investment in MBS was a shift from its typical management of borrowing costs at the short end of the yield curve; rather, the Fed used its MBS portfolio to manage long-term rates. This aspect of quantitative easing via the mortgage market served several purposes. It offered homeowners the opportunity to lower monthly mortgage payments through refinancings. And with interest rates so low, investors deployed cash to finance the purchase of homes and convert them to rentals. Both results helped establish a bottom to home prices and the desired effect was the elimination of a negative wealth effect and the increase of net income available to encourage consumption by households.
Application defect risk remained flat in July - Loan application defects were unchanged for July compared with June, the first time in eight months there has not been an increase, according to First American Financial Corp. For all applications, the First American Loan Application defect risk index remained at 84, but that is still its highest level since July 2015.
MBA: Mortgage Applications Decrease in Latest Weekly Survey --From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey: Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 25, 2017. .. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 4 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.11 percent, from 4.12 percent, with points increasing to 0.43 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.The first graph shows the refinance index since 1990. Refinance activity will not pick up significantly unless mortgage rates fall well below 4%.
Mortgage rates fall to fresh 2017 low as Trump trade continues to reverse -- Mortgage rates fell to a fresh 2017 low, with borrowing rates continuing the reversal from post-election levels.The 30-year fixed-rate mortgage averaged 3.82% in the week ending Aug. 31, down from 3.86%, mortgage buyer Freddie Mac said Thursday.After surging in the wake of the election of President Donald Trump, rates have come back down as his agenda remains stalled in Congress. More recently, bonds have caught a bid due to worries around North Korea, as well as the devastation from Hurricane Harvey. The 30-year mortgage rate closely tracks the yield on the 10-year Treasury. The 15-year fixed-rate mortgage averaged 3.12%, down from 3.16%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.14%, down from 3.17%.
Black Knight: House Price Index up 0.9% in June, Up 6.2% year-over-year -- Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted. From Black Knight: Black Knight Home Price Index Report: U.S. Home Prices Hit Another New High with 0.9 Percent Gain in June, Up 6.2 Percent Year-Over-Year
• After 62 consecutive months of annual home price appreciation, U.S. home prices hit yet another new peak in JuneThe year-over-year increase in this index has been about the same for the last year (in the 5% and 6% range).
• Prices rose 0.9% from May, for a total of 5.5% growth since the start of the year
• The national level HPI now stands at $281K, and the rate of annual growth continues to accelerate (+6.2% Y/Y in June as compared to +6.1% in May)
• 12 of the 20 largest states and 21 of the 40 largest metros hit new home price peaks in June
Home Prices Rose 5.8% Year-over-Year in June - With today's release of the June S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.1% month over month. The seasonally adjusted national index year-over-year change has hovered between 4.2% and 5.8% for the last twenty-eight months. Today's S&P/Case-Shiller National Home Price Index (nominal) reached another new high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.1% from the previous month. The nonseasonally adjusted index was up 5.7% year-over-year. Here is an excerpt of the analysis from today's Standard & Poor's press release.“The trend of increasing home prices is continuing,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Price increases are supported by a tight housing market. Both the number of homes for sale and the number of days a house is on the market have declined for four to five years. Currently the months-supply of existing homes for sale is low, at 4.2 months. In addition, housing starts remain below their pre-financial crisis peak as new home sales have not recovered as fast as existing home sales.” [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.
Case-Shiller: National House Price Index increased 5.8% year-over-year in June - S&P/Case-Shiller released the monthly Home Price Indices for June ("June" is a 3 month average of April, May and June prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs. From S&P: The S&P Corelogic Case-Shiller National Home Price Rises Again to All Time HighThe S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8% annual gain in June, up from 5.7% the previous month. The 10-City Composite posted a 4.9% annual increase, down from 5.0% the previous month. The 20-City Composite reported a 5.7% year-over-year gain, the same as the previous month.
Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In June, Seattle led the way with a 13.4% year-over-year price increase, followed by Portland with 8.2%, and Dallas with a 7.7% increase. Nine cities reported greater price increases in the year ending June 2017 versus the year ending May 2017. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.9% in June. The 10-City and 20-City Composites both reported a 0.7% increase in June. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase. The 10-City Composite remained stagnant with no month-over-month increase. The 20-City Composite posted a 0.1% month-over-month increase. All 20 cities reported increases in June before seasonal adjustment; after seasonal adjustment, 14 cities saw prices rise. The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).The Composite 10 index is off 6.7% from the peak, and up slightly in June (SA).The Composite 20 index is off 3.9% from the peak, and up 0.1% (SA) in June. The National index is 3.2% above the bubble peak (SA), and up 0.4% (SA) in June. The National index is up 39.5% from the post-bubble low set in December 2011 (SA).
Real House Prices and Price-to-Rent Ratio in June - Mcbride - It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 3.2% above the previous bubble peak. However, in real terms, the National index (SA) is still about 13.3% below the bubble peak.The year-over-year increase in prices is mostly moving sideways now just over 5%. In June, the index was up 5.8% YoY.Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). Case-Shiller and others report nominal house prices. As an example, if a house price was $200,000 in January 2000, the price would be close to $278,000 today adjusted for inflation (39%). That is why the second graph below is important - this shows "real" prices (adjusted for inflation).The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through June) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to October 2005 levels. The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. n real terms, the National index is back to July 2004 levels, and the Composite 20 index is back to March 2004. In real terms, house prices are back to early-to-mid 2004 levels. On a price-to-rent basis, the Case-Shiller National index is back to November 2003 levels, and the Composite 20 index is back to August 2003 levels.
Zillow Forecast: "July Case-Shiller Forecast: Slowdown Coming in Home Prices" -- The Case-Shiller house price indexes for June were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close. From Svenja Gudell at Zillow: July Case-Shiller Forecast: Slowdown Coming in Home Prices Following months of record highs in the Case-Shiller U.S. National Index for home prices, July is expected to bring a slowdown — to 5.6 percent from June’s 5.8 percent year-over-year, non-seasonally adjusted gain. The monthly gain for July is forecast at 0.2 percent, which is half the 0.4 percent growth that index posted for June. The 10- and 20-month indices are expected to drop 0.1 percent from June to July, with the 10-city index gaining 4.8 percent in July over the previous year, down from June’s 4.9 percent annual growth, and the 20-city index climbing 5.4 percent annually, down from 5.7 percent in June. Zillow’s full forecast for July Case-Shiller data is shown below. These forecasts are based on today’s June Case-Shiller data release and the July 2017 Zillow Home Value Index. The July S&P CoreLogic Case-Shiller Indices will not be released officially until Tuesday, September 26. The year-over-year change for the Case-Shiller National index will probably be smaller in July than in June.
California’s housing crisis — it’s even worse than you think: Half the state’s households struggle to afford the roof over their heads. Homeownership—once a staple of the California dream — is at its lowest rate since World War II. Nearly 70 percent of poor Californians see the majority of their paychecks go immediately to escalating rents. This month, state lawmakers are debating a long-delayed housing package. Here’s what you need to know about the scope of one of California’s most vexing issues: While it’s always been more expensive to be a homeowner in California, the gap between us and the rest of the country has grown into a chasm. The median California home is now priced 2.5 times higher than the median national home. As of 2015, the typical California home costs $437,000, easily beating the likes of Massachusetts or New York (only Hawaii had more expensive houses). Despite relatively low mortgage rates, exploding housing prices have caused California’s homeownership rate to dip significantly. Just over half of California households own their homes—the third lowest rate in the country, and the lowest rate within the state since World War II. It’s not just housing prices that are affecting homeownership rates. Studies have found that student debt loads, rising income inequality and changing housing preferences among younger Californians are also at play. Rents didn’t dip during the recession, and now are soaring Rental costs across the state are some of the highest in the country. While listed housing prices dipped dramatically in the wake of the Great Recession, rents in California remained relatively stable before soaring in recent years in hot markets. Across the state, the median rental price for a two-bedroom apartment is about $2,400, the third highest in the country. But statewide figures water down how absurd the situation is getting in urban coastal markets, where the vast majority of Californians live. The median rent for a two-bedroom apartment in San Francisco reached more than $4,000 this year.
Housing Bubble 2.0: Home Equity Loans Soar To Highest Level Since 2008 - It seems as though the practice of using one's home as a personal ATM machine is making a 'yuge' comeback of late thanks, at least in part, to the same aggressive lending terms and attractive teaser rates that nearly sank the world economy just under a decade ago. According the Wall Street Journal and Equifax, home equity originations soared to $46 billion in 2Q 2017, the highest level since the market collapsed in 2008.“If customers feel like their home values are stable or increasing, and if they feel like their job prospects are good—that they will have the ability to pay back a loan they take—then they will start to take out more home-equity lines,” said Mike Kinane, head of U.S. consumer-lending products at TD Bank. “That is what we are starting to see.”Home-equity line originations rose 8% to nearly $46 billion in the second quarter, their highest level since 2008, according to credit-reporting firm Equifax . Borrowing via cash-out mortgage refinances hit $15 billion, up 6% from a year earlier, according to recent data from Freddie Mac. The main engine driving demand: rising home prices. The median sale price of an existing home rose to $263,800 in June, the highest on record, up 40% from $187,900 at the start of 2014, according to the National Association of Realtors.
Hurricane Harvey's damaged homes may be vastly uninsured - An inundated home is stressful enough, but many Houston residents may receive more bad news when they find out their homeowner's insurance doesn't cover flooding. Efforts to rebuild Houston after Hurricane Harvey may be complicated by what experts say is a high percentage of residential properties that lack flood insurance, which is sold by the U.S. government and isn't typically included in private homeowner's insurance. About 52 percent of the residential and commercial properties in Houston sits outside the Special Flood Hazard Area, compared with 44 percent of south Texas, according to real estate data firm CoreLogic. While flood insurance is mandatory for property owners whose buildings sit in flood zones, homeowners who sit outside those areas sometimes skip buying it because they believe flooding is unlikely to happen to them. "Sometimes people don't understand the risk or don't have good information on their risk," said Carolyn Kousky, director for policy research and engagement at the Wharton School of Business' Risk Management and Decision Processes Center, in an email. "But what we see in Houston is such an unprecedented amount of rain that lots of the people getting inundated never even thought it was possible that they could flood. This event is just unparalleled." Homeowners' policies don't protect against floods, which is mostly provided by the federal government's National Flood Insurance Program, though they do compensate policyholders from wind damage. Telling the difference, particularly in the event of a major natural disaster like Harvey, can be tricky, according to Cynthia DiVincenti, vice president with Aon National Flood Services.
Harvey costs seen at catastrophic levels with many uninsured - Hurricane Harvey’s second act across southern Texas is turning into an economic catastrophe — with damages likely to stretch into tens of billions of dollars and an unusually large share of victims lacking adequate insurance, according to early estimates. Harvey’s cost could mount to $30 billion when including the impact of relentless flooding on the labor force, power grid, transportation and other elements that support the region’s energy sector, Chuck Watson, a disaster modeler with Enki Research, said in an email Monday. That would place it among the top eight hurricanes to ever strike the U.S. David Havens, an insurance analyst at Imperial Capital, said the final tally might be as high as $100 billion. Less than a third of Harvey’s losses are likely to be insured, Watson said. Steve Moore, a 68-year-old who owns Houston’s Villa Serena Communities, about 5,000 apartment units that rent for about $500 a month each, expects more than $10 million of damage. Moore said the buildings aren’t fully insured. Many of the low-income residents who live on lower floors of his buildings near the Houston airport had some flooding, but nobody was hurt, he said. “I’m pretty depressed this morning,” said Moore, who tripped on a curb earlier Monday while surveying the damage and lost his phone and credit cards in three feet of water. “It’s just a mess.” “A historic event is currently unfolding in Texas,” Aon Plc wrote in an alert to clients. “It will take weeks until the full scope and magnitude of the damage is realized,” and already it’s clear that “an abnormally high portion of economic damage caused by flooding will not be covered,” the insurance broker said. Many forecasters were hesitant over the weekend to make preliminary estimates for how much insurers might pay. Researchers were shifting from examining Harvey’s landfall Friday as a roof-lifting Category 4 hurricane to the havoc it later created inland as a tropical storm. Typical insurance policies cover wind but not flooding, which often proves costlier. Blaming one or the other takes time.
How Much Harvey Damage Can Insurers Face Before They Crack? --Hurricane Harvey has unleashed unparalleled devastation on southwest Texas, flooding Houston, the fourth largest city in the US, and many towns along the Gulf coast from Galveston, to Port Lavaca and beyond. But even Harvey’s 130 mph winds aren’t strong enough to threaten the ironclad balance sheets of America’s largest insurers, which have amassed a “fatter-than-ever” capital cushion capable of absorbing any payouts related to what looks to be, by several measures, one of the worst hurricane in US history, according to the Wall Street Journal. Insurers have benefited from years of moderate damages from natural disasters in the US, which have kept payouts to a minimum. “The damage from the Category 4 storm, which hit the Texas coast on Friday, is far from being tallied. It is the first major hurricane to make landfall in the U.S. in more than a decade, and torrential rain will continue this week to cause widespread flooding.Harvey’s timing is good for insurers and insurance customers from one perspective: Personal and commercial insurers have record levels of capital, the money they have on hand that isn’t required to back obligations. With insurers’ overall strong capital position, Harvey is unlikely to cause extensive damage to the industry’s financial strength, though it could hurt quarterly earnings for those carriers with blocks of business in hard-hit areas.”Residential flooding typically isn’t covered by private-sector insurers; instead, it’s the responsibility of the US government’s National Flood Insurance Program. Because of this, Bloomberg estimates that insurers will llikely only pay out claims equal to about one-third of the storm's total cost. The NFIP also sells coverage to small businesses and people who are renters, according to WSJ. Early RMS estimates for wind losses, which would typically be covered by both personal and commercial policies, are in the low-single-digit billions.
Pence tells Texans housing biggest challenge in Harvey recovery -- Vice President Mike Pence warned that housing for storm victims is emerging as the top long-term challenge in the recovery from Hurricane Harvey as he arrived in Texas on Thursday to view the damage and meet with survivors. Pence said federal emergency management officials already have brought 2,000 manufactured homes to the region, with another 4,000 on order. While authorities currently focus on search and rescue efforts, attention is being turned to how to help the thousands of people who can no longer live in buildings damaged by flooding, Pence told reporters accompanying him during the flight to Texas. Dozens have died in the aftermath of the hurricane, and flooding caused by torrential rain continues to plague the state. Acting Secretary of Homeland Security Elaine Duke told reporters traveling with the vice president that about two million Texans have been evacuated and that crews are working to restore power to about 200,000 residents and businesses that are without power along with 11,000 more in Louisiana. There are about 32,000 people in shelters. She said that rivers in south Texas aren’t expected to crest before Saturday.Some cruise ships will be allowed to return to Texas ports, she said, but Colonial Pipeline Co. will shut down a gas pipeline in addition to a diesel and aviation fuel line that had already been deactivated. Many of the Cabinet secretaries joined Trump during his visit, when he met with federal and state officials organizing the recovery effort. Trump claimed on Twitter Thursday that he have witnessed "first hand the horror and devastation” inflicted the storm even though he didn’t go into any of the neighborhoods and stuck to a briefing at a firehouse in a city that suffered limited damaged and another in Austin.
70% of Harvey residential flood damage not covered by insurance - Residential flood damage from Hurricane Harvey could reach as high as $37 billion, with more than two-thirds of losses not covered by insurance, according to CoreLogic estimates. Insured flood loss for homes in the 70-county area affected by the storm, including inland, flash and storm surge flooding, is projected to be between $6.5 billion and $9.5 billion; insured damage from wind is estimated to be an additional $1 billion to $2 billion, CoreLogic said. But for the same area, uninsured residential flood loss is expected to be between $18 billion and $27 billion — or 70% of total residential flood losses.More than 98% of residential flood insurance in the U.S. is covered by the National Flood Insurance Program.Homeowners without insurance may still be able to receive federal disaster assistance through the Federal Emergency Management Agency. FEMA may be able to assist with loans and grants to cover losses and repairs, unemployment payments and rental payments for temporary housing, according to the Mortgage Bankers Association. From payment forbearances to financing to start the rebuilding process, here's a look at five ways homeowners affected by Hurricane Harvey can get mortgage help.In the past, the top five most expensive hurricanes to the NFIP were Katrina (2005), Sandy (2012), Ike (2008), Ivan (2004) and Irene (2011). The storms cost the program more than $30 billion in payouts. The Harvey recovery is expected to be among the most costly natural disaster rebuilding efforts in American history, with rainfall also setting a record for the continental U.S., according to the National Weather Service. Upon his arrival in Corpus Christi, Texas, on Thursday, Vice President Mike Pence warned that housing for storm victims is emerging as the biggest challenge in Harvey recovery.
Financial Relief Available to Texas Victims of Hurricane Harvey - Pam Martens - Hoping to relieve some of the panic by homeowners rescued from water-logged homes in Texas who have no idea when they may be able to return to their home or where the money will come from to restore the home to livability, the Federal Emergency Management Agency (FEMA) has released a fact sheet on what types of disaster assistance it can make directly to individuals along with specifics on how to apply. The fact sheet makes clear that not all individuals are being guaranteed each form of assistance. It notes that the assistance “can include as required” the following.
- Rental payments for temporary housing for those whose homes are unlivable. Initial assistance may be provided for up to three months for homeowners and at least one month for renters. Assistance may be extended if requested after the initial period based on a review of individual applicant requirements.
- Grants for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional.
- Grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by insurance or other federal, state and charitable aid programs. (FEMA funded at 75 percent of total eligible costs; 25 percent funded by the state.)
- Low-interest loans to cover residential losses not fully compensated by insurance. Loans available up to $200,000 for primary residence; $40,000 for personal property, including renter losses. Loans available up to $2 million for business property losses not fully compensated by insurance.
- Loans up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact. This loan in combination with a property loss loan cannot exceed a total of $2 million.
- Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence.
- Other relief programs: Crisis counseling for those traumatized by the disaster; income tax assistance for filing casualty losses; advisory assistance for legal, veterans’ benefits and social security matters.
Harvey could reshape how and where Americans build homes -- A homebuilder, Garcia said he built this place, like all the houses he builds, "above code" — stronger than the standards required by law, which in Texas tends to be less than in most states. But he doesn’t think those tougher standards should be imposed on every builder."You’ve got to find that medium, to build affordable housing," Garcia, 65, said sitting in his house as Harvey’s rains continued to pound the coast further north. Tougher mandatory codes mean higher costs, which means fewer homes. And if insurers had their way, he added, every home would be "a box with two doors and no windows."Hurricane Harvey has highlighted a climate debate that had mostly stayed out of public view — a debate that’s separate from the battle over greenhouse gas emissions, but more consequential to the lives of many Americans. At the core of that fight is whether the U.S. should respond to the growing threat of extreme weather by changing how and, even where, homes are built. That debate pits insurers, who favor tighter building codes and fewer homes in vulnerable locations, against homebuilders and developers, who want to keep homes as inexpensive as possible. As the costs of extreme weather increase, that fight has spilled over into politics: Federal budget hawks want local policies that will reduce the cost of disasters, while many state and local officials worry about the lost tax revenue that might accompany tighter restrictions on development.
NAR: Pending Home Sales Index decreased 0.8% in July, down 1.3% year-over-year --From the NAR: Pending Home Sales Lessen 0.8 Percent in July Pending homes sales stumbled in July for the fourth time in five months as only the West 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, decreased 0.8 percent to 109.1 in July from a downwardly revised 110.0 in June. After last month’s decline, the index is now 1.3 percent below a year ago and has fallen on an annual basis in three of the past four months. The PHSI in the Northeast inched backward 0.3 percent to 97.7 in July, but is still 2.4 percent above a year ago. In the Midwest the index decreased 0.7 percent to 103.3 in July, and is now 2.8 percent lower than July 2016. Pending home sales in the South declined 1.7 percent to an index of 123.1 in July and are now 0.2 percent below last July. The index in the West expanded 0.6 percent in July to 102.3, but is still 4.0 percent below a year ago. This was above expectations of a 0.8% 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 August and September.
Pending home sales unexpectedly fall on lean inventory -- An unexpected decline in July contract signings for the purchase of previously owned homes shows the continuing impact of limited supply on the real estate market, National Association of Realtors figures released Thursday showed. The index fell 0.8% (the estimate was a 0.3% gain) after a revised 1.3% advance. The gauge decreased 0.5% from July 2016 on an unadjusted basis. Three of four regions showed month-over-month declines. The decline in contract signings, the fourth in the last five months, highlights that a limited number of properties for sale remains the biggest hurdle for the housing market. That's particularly true for those wanting to buy for the first time as rising home prices are outpacing gains in wages. The Realtors group reduced its projection of sales this year to 5.49 million from last month's estimate of 5.56 million. Supply is failing to keep up with demand, and the outlook for sales is also less favorable because purchases in the Houston area will likely slow in the aftermath of Hurricane Harvey, the NAR projects."The housing market remains stuck in a holding pattern with little signs of breaking through," Lawrence Yun, NAR's chief economist, said in a statement. "The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace.""Buyer traffic continues to be higher than a year ago, the typical listing has gone under contract within a month since April, and inventory at the end of July was 9% lower than last July," Yun said. "The reality, therefore, is that sales in coming months will not break out unless supply miraculously improves. This seems unlikely given the inadequate pace of housing starts in recent months and the lack of interest from real estate investors looking to sell."Purchase contracts dropped 1.7% in the South, the nation's largest region, from a month earlier, and fell 0.7% in the Midwest. Yun forecasts the national median existing-home price to rise around 5%, similar to the 5.1% gain in 2016.
Construction Spending decreased in July -- Earlier today, the Census Bureau reported that overall construction spending decreased in July:Construction spending during July 2017 was estimated at a seasonally adjusted annual rate of $1,211.5 billion, 0.6 percent below the revised June estimate of $1,219.2 billion. The July figure is 1.8 percent above the July 2016 estimate of $1,189.8 billion. Private and public spending both decreased in July: Spending on private construction was at a seasonally adjusted annual rate of $945.5 billion, 0.4 percent below the revised June estimate of $949.4 billion. ... In July, the estimated seasonally adjusted annual rate of public construction spending was $266.0 billion, 1.4 percent below the revised June estimate of $269.8 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 24% below the bubble peak. Non-residential spending is now 3% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 18% 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 12%. Non-residential spending is down 4% year-over-year. Public spending is down 6% year-over-year. This was well below the consensus forecast of a 0.6% increase for July, however spending for previous months were revised up. Still a disappointing report.
Personal Income increased 0.4% in July, Spending increased 0.3% - The BEA released the Personal Income and Outlays report for July: Personal income increased $65.6 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.6 billion (0.3 percent) and personal consumption expenditures (PCE) increased $44.7 billion (0.3 percent). ... Real PCE increased 0.2 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent. The July PCE price index increased 1.4 percent year-over-year and the July PCE price index, excluding food and energy, also increased 1.4 percent year-over-year. The following graph shows real Personal Consumption Expenditures (PCE) through July 2017 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change. The dashed red lines are the quarterly levels for real PCE.The increase in personal income was at expectations, and the increase in PCE was slightly below expectations.
Real Disposable Income Per Capita Gains in July - With the release of yesterday's report on July Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita.At two decimal places, the nominal 0.21% month-over-month change in disposable income was trimmed to 0.12% when we adjust for inflation. The year-over-year metrics are 1.98% nominal and 0.57% real. The trend since 2013 has been one of steady growth. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013. The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Nominal disposable income is up 73.1% since then. But the real purchasing power of those dollars is up only 26.6%.
Real Personal Spending Disappoints In July, Savings Rate Tumbles To Lowest Since Dec 2016 --Following June's MoM decline in incomes, Americans saw a modest 0.4% bounce in July (better than expected). However, their spending grew less than expected (up 0.3% MoM vs 0.4% expectations). However, real personal spending rose just 0.2% MoM in July (below expectations). This sent the US personal savings rate down to just 3.5%, the lowest since December 2016. As Bloomberg notes, one bright spot was that wages and salaries rose 0.5 percent in July for a second month, the best back-to-back performance since the first two months of 2017.However, both private and government wage growth is the weakest since Dec 2016. While real disposable incomes gained, the saving rate dipped to the lowest this year.Faster pay growth would allow Americans to ramp up their spending while also socking away more cash for the future. The data on prices showed inflation remains stubbornly below the Federal Reserve's 2 percent goal. The central bank's preferred inflation gauge has matched or topped policy makers' target in just two months since 2012. While less convenient for the Fed, low price pressures help to boost consumer purchases.
Consumer Confidence Improved Again in August - The latest Conference Board Consumer Confidence Index was released this morning based on data collected through August 16. The headline number of 122.9 was an increase from the final reading of 120.0 for July, a downward revision from 121.1. Today's number was above the Investing.com consensus of 120.3.Here is an excerpt from the Conference Board press release.Consumer confidence increased in August following a moderate improvement in July,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence, with the Present Situation Index continuing to hover at a 16-year high (July 2001, 151.3). Consumers’ short-term expectations were relatively flat, though still optimistic, suggesting that they do not anticipate an acceleration in the pace of economic activity in the months ahead.” ,The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
Michigan Consumer Sentiment: August Final Up from July --The University of Michigan Final Consumer Sentiment for August came in at 96.8, up from the July Final reading of 93.4. Investing.com had forecast 97.4. Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer confidence has remained at a very favorable level, although slipping somewhat from mid-month. The Sentiment Index has been higher during the first eight months of 2017 than in any year since 2000, which was the peak year of the longest expansion in U.S. history. The renewed strength in 2017 was mainly due to consumers' favorable assessments of their own financial situations. Lows in unemployment, inflation, and interest rates, as well as renewed gains in the value of their homes and stock portfolios, pushed personal financial evaluations to near all-time peaks. When asked about news of recent developments, surprisingly few consumers made any reference to Charlottesville, North Korea, or Harvey-although too few interviews were conducted to fully assess the storm's ultimate impact. Harvey may diminish the 3rd quarter pace of economic growth, and higher gas prices will directly impact consumers. Prior to the storm, consumers anticipated no increase in gas prices in the year ahead (an expected change of just +0.4 cents). Given the current resilience of consumers, temporary increases in gas prices as well as a brief period of weakness in economic growth and employment are unlikely to derail confidence. Nonetheless, all of these events are more likely to increase precautionary motives and to slightly temper spending trends. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
Amazon Slashes Whole Foods Prices As Much As 43%, Channel Checks Reveal -- Following up on last week's story that sent grocer - and Wal-mart - stocks tumbling, when Amazon announced it would cut Whole Foods prices as soon as Monday, Bloomberg reports that according to channel checks, "Amazon spent its first day as the owner of a brick-and-mortar grocery chain cutting prices at Whole Foods Market" by as much as 43%. Some early examples observed at the Whole Foods store on 57th Street in Manhattan:
- organic fuji apples were marked down to $1.99 a pound from $3.49 a pound;
- organic avocados went to $1.99 each from $2.79;
- organic rotisserie chicken fell to $9.99 each from $13.99;
- banana prices were slashed to 49 cents per pound from 79 cents.
Following the news, European grocer stocks ticked lower again, while Kroger was down 2%, as apparently the size of the markdowns came as a surprise to the market and as Whole Foods peers will now struggle to catch down to its heavily subsidized competitor, watching their margins and profitability erode in the process.
Carmageddon Continues - Dealers "Wildly Overweight" SUVs As Sales Slow – Mish - The auto boom, one of the key components propping up consumer spending, has come to an end.Dealers are wildly overweight SUVs just as the market turned.As auto-industry growth stalls and family sedans go the way of the flip phone, one silver lining had been the trusty “crossover” SUV. Sales in the category boomed amid lower gasoline prices and higher demand for spacious wagons with all-wheel drive.But more clouds seem to be gathering as the summer car-selling season comes to an end. Incentives on SUVs are skyrocketing amid rising inventories, a trend that promises to dent the fat profits the segment has long returned.Auto makers report sales on Friday, and August volume is expected to rise 2% compared with the same month in 2016, but only because dealers have an extra selling day this year. On an adjusted basis, the rate of retail sales—stripping out deliveries to fleet buyers—will hit the lowest point of 2017, according to J.D. Power, despite hefty sales incentives and new model offerings.The U.S. auto market’s slowdown isn’t a new story, as analysts widely expected a seven-year growth streak to end and for sales to plateau at roughly 17 million a year for the foreseeable future. Red flags for the crossover market, however, represent a whole new set of headaches, particularly for companies like General Motors Co.“The industry is wildly overweight on crossovers,” John Murphy, an auto analyst for Bank of America Merrill Lynch, said in a recent presentation. The number of crossover models sold in U.S. dealerships is expected to rise to 110 nameplates by late 2020, up from 78 today, he estimated.Auto makers like GM—long dominant in the SUV market—have relied on bigger or heavier vehicles with higher price tags to drive profits, and offset the losses that result from sales of family sedans or compact cars. But in the first half of 2017, incentives for SUVs shot up 33%, according to research website Edmunds.com, with the average discount or rebate in the segment reaching $3,200. Ford Motor Co. is currently offering a $3,500 cash rebate on the Ford Escape, along with 0% financing for 72 months. A Ford spokesman said the SUV market is “increasingly competitive,” noting average transaction prices last month fell $400 compared to a year earlier.
Hurricane Harvey Likely To Destroy More Cars Than Katrina: "This Is Bad; Real Bad" -- Hurricane Harvey's historic flooding in Texas is set to wreak havoc on the auto industry and its insurers with analysts now predicting the storm could damage more vehicles than Hurricane Katrina. In August 2005, Katrina wiped out some 500,000-600,000 vehicles but William Armstrong of CL King warns that Houston has about 5x more people than New Orleans did at the time.Hurricane Harvey could damage more vehicles than Hurricane Katrina, driving business to the salvage auctions operated by Copart and KAR Auction Services, CL King analyst William Armstrong wrote in a note.Katrina damaged 500,000-600,000 vehicles in August 2005, and the greater Houston MSA is five times as populous as pre-Katrina New Orleans.The cost of dealing with catastrophes can be higher than normal given vehicle extraction, towing and temporary storage and auction locations, though both companies have grown their physical presence in Texas over the last year, which should lower the need for temporary locations.It may be 2-3 months or longer until damaged vehicles are sold at auction.Of course, storms of this magnitude bring not only millions in salvage-related charge offs for the auto industry but a loss of critical "selling days" for one of the biggest markets in the country. As CNBC points out this morning, Citi analyst Itay Michaeli figures Hurricane Harvey could knock about 500,000 units off the August auto SAAR to be reported later this week. Given the widespread flooding that will swamp dealerships and kill potential sales, analysts are bringing down estimates for the August new vehicle sales in the U.S. Citi analyst Itay Michaeli has cut his estimate for the rate of monthly auto sales in August, which are reported on Friday. He estimates Harvey will affect some 125 counties in Texas and about 60 percent of the state's auto sales.
Car Owners Inundate Insurers With Claims After Hurricane Harvey - Auto insurers were already bracing for another bad year when the downpour started in Texas, producing potentially hundreds of thousands of new claims.“We do know that approximately 100,000 claims have come in” as of Thursday, said Matt Stillwell, manager of governmental and regulatory communications at the Insurance Council of Texas, a trade association. He said the number was expected to climb as high as 500,000.“It is looking to be a huge impact on the auto insurance market,” he said. While homeowners’ insurance policies almost always exclude flood damage, comprehensive auto policies do cover flooding. The typical household in Houston has two cars, and Mayor Sylvester Turner urged residents to “hunker down” as Hurricane Harvey made landfall, hoping to avoid a replay of the tie-ups and crashes that killed about 100 people fleeing Hurricane Rita in 2005. That means few people moved their cars out of harm’s way before the flooding started. Texas drivers are not required to have comprehensive auto insurance — the type that covers flood and other types of damage. People holding only the legally required insurance — liability coverage for damage done to other people’s cars — will not have valid claims, Mr. Stillwell said.Those who have comprehensive insurance should get a payment based on replacement value minus depreciation, if their car is a total loss.For insurers, the losses will affect some more than others. The big, household-name auto insurers “have sufficient geographic and product diversification to absorb the losses,” Standard & Poor’s said in a report on the impact of the storm and flooding on various parts of the insurance industry. But “some of the regional and local players could face significant hits to their earnings, and possibly their capital,” the ratings firm added.
Ford To Abandon "Traditional Credit Scores" For Underwriting Decisions As Sales Stall -- So, what do you do when your sales are stalling because you've already financed new cars for every man, woman and child with a credit score north of 500? Well, you simply abandon credit scores in the underwriting process and instead explicitly mandate that your loan officers approve every potential car buyer that walks through the door with a pulse. Maybe we're exaggerating a little, but according to a new report from the Wall Street Journal, Ford Credit "has decided to change its approval process to look beyond credit scores in an effort to pump up sales." Which is a genius strategy if we understand it correctly.The company says it is looking at ways to increase loan and lease approvals for applicants with limited credit histories. These consumers are often denied credit because they lack a history of managing debt and as a result have low credit scores. Ford’s credit division plans to review new data to try to determine whether these customers, as well as those with more robust borrowing histories, are likely to repay their loans.The move by Ford Motor's financing unit is expected to unfold in coming years, even as concerns mount about rising auto-loan losses in the industry. Ford Motor Credit is expected to announce the plans as soon as Friday.Ford Credit is among the largest U.S. lenders to say that it is looking at using alter native methods of underwriting, beyond the traditional factors that are mostly centered around credit reports. “No financial services firm would take that decision lightly,” says Jim Moynes, vice president of risk management at Ford Credit.
Ford Touts 'Positive' Impacts Of Hurricane Harvey As August Auto Sales Slump - Earlier this week when we noted that Hurricane Harvey was likely to have destroyed more cars than Katrina (see post here), we concluded by predicting that auto OEMs would spin the utter devastation in Houston as a 'positive' for their inventory crisis. also tell you how Hurricane Harvey is great for long-term sales because of all the salvaged cars that have to be replaced."Now, fast forward just a couple of days and it's almost as if Ford prepped their August sales call notes from our previous post. Speaking to analysts this morning, Ford's CEO gleefully touted all of the upside potential for the auto industry in the wake of Hurricane Harvey noting that replacement demand will be "a little more positive" than even he expected.We think that the effect of the backfill of demand from Harvey, while we believe we can do that, but trend that a little more positive there as there's going to be replacement demand in the secondary used market.In terms of our overall impact in the month of August, from a new vehicle or fleet basis from Harvey and possible to say at this point we know it had some impact, which I think is further accretive. So we actually we had a pretty good August numbers, because there had to be some impact. We know as a percent of our internal targets of Houston used in the region which was far and away our weakest performance, if you would expect.Of course, it's somewhat difficult to understand exactly how an increase in salvage rates is supposed to solve your bloated inventory problem if you simply turn around and promise higher production...but maybe Ford is just better at math than we are.
U.S. Light Vehicle Sales at 16 million annual rate in August --Based on an estimate from WardsAuto, light vehicle sales were at a 16.03 million SAAR in August. That is down 6% from August 2016, and down 3.9% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for August (red, light vehicle sales of 16.03 million SAAR mostly from WardsAuto). This was well below the consensus forecast of 16.7 million for August (However Hurricane Harvey pushed down sales over the last week - and there will be some bounce back). 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.
Fuel shortages to hamper Labor Day travel (Reuters) - Travelers and fuel suppliers across the United States braced for higher prices and shortages ahead of the Labor Day holiday weekend as the country’s biggest fuel pipelines and refineries curb operations after Hurricane Harvey. Just six days after Harvey slammed into the heart of the U.S. energy industry in Texas, the effects are being felt not just in Houston, but also in Chicago and New York, and prices at the pump nationwide have hit a high for the year. (For a graphic on Harvey's impact on oil and gasoline markets, click tmsnrt.rs/2iK0YD9) Supply shortages have developed even though there are nearly a quarter of a billion barrels of gasoline stockpiled in the United States. But much of it is held in places where it cannot be accessed due to massive floods, or too far away from the places it is needed. Some of it is unfinished, meaning it needs to be blended before it can go to gas stations. Harvey has highlighted another weakness in the system: pipeline terminals typically only have a five-day supply in storage to load into the lines. Some of the biggest pipelines in the United States, supplying the northeast market and the Chicago area, have already shut down or reduced operations because they have no fuel to pump. “Gasoline is very much a ‘just-in-time’ fuel, for as many million barrels as they think we have,” said Patrick DeHaan, petroleum analyst at GasBuddy. “Sure, they are somewhere, but they still have to be mixed and blended together.” At least two East Coast refiners, including Philadelphia Energy Solutions and Irving Oil, have already run out of gasoline for immediate delivery as they have rushed to send supplies to the U.S. Southeast, Caribbean, Mexico and South America to offset the lack of exports since Harvey, sources said. Wholesale gasoline and jet fuel prices have soared as at least 4.4 million barrels per day of refining capacity, or nearly 24 percent of total U.S. capacity, has been closed due to the record rains. The United States is short of fuel. The country only has a 1-million barrel gasoline reserve, established in the Northeast after Superstorm Sandy in 2012. That is enough to supply the East Coast for about eight hours.
Harvey Causing "Unprecedented" Disruptions To Supplies Of "Essential" Chemicals - The unprecedented destruction wrought by Hurricane Harvey will impact the US economy in ways may not be immediately apparent. Until recently, coverage of the storm's impact has focused on property damage and the impact on the energy industry. But in a story published Friday, Bloomberg explains the devastating impact the storm has had on Texas’s chemicals industry, which is already causing supply-chain headaches for American manufacturers who're struggling to source the chemicals required to produce plastics and other components used in everything from milk jugs to car parts.Indeed, if Texas's chemicals plants are closed for an extended period, production at a potentially huge number of American manufacturers to grind to a halt.More than 60% of the US’s production capacity for ethylene – one of the most important chemical building blocks for American manufacturers – has been taken offline by the storm, a development that could ripple across the US manufacturing industry.“Texas alone produces nearly three quarters of the country’s supply of one of the most basic chemical building blocks. Ethylene is the foundation for making plastics essential to U.S. consumer and industrial goods, feeding into car parts used by Detroit and diapers sold by Wal-Mart Stores Inc.With Harvey’s floods shutting down almost all the state’s plants, 61 percent of U.S. ethylene capacity has been closed, according to PetroChemWire.” Ethylene, the gas given off by fruit as it ripens, occurs naturally, but it’s also a crucial product of the $3.5 trillion global chemical industry, with factories pumping out 146 million tons last year. Processing plants turn the chemical into polyethylene, the world’s most common plastic, which is used in garbage bags and food packaging. When transformed into ethylene glycol, it’s the antifreeze that keeps engines and airplane wings from freezing in winter. It’s used to make polyester for both textiles and water bottles. Ethylene is an ingredient in vinyl products such as PVC pipes, life-saving medical devices and sneaker soles. It helps combat global warming with polystyrene foam insulation and lighter, fuel-saving plastic auto parts. It’s used to make the synthetic rubber found in tires. It’s even an ingredient in house paints and chewing gum.
Dallas Fed: "Texas Manufacturing Activity Expands Again" in August --From the Dallas Fed: Texas Manufacturing Activity Expands Again Texas factory activity continued to increase in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down to 20.3, indicating output grew but at a slightly slower pace than in July. Other measures of current manufacturing activity also indicated continued growth. The new orders and the growth rate of orders indexes ticked down but stayed solidly positive, coming in at 14.3 and 11.7, respectively. The capacity utilization index fell six points to 12.2, while the shipments index increased seven points to 18.1.Perceptions of broader business conditions remained positive in August. The general business activity index was largely unchanged at a robust 17.0. The company outlook index posted its 12th consecutive positive reading but slipped 10 points to 16.3 after surging to a multiyear high last month. Labor market measures suggested continued employment gains and longer workweeks this month. The employment index came in at 9.9, slightly below the July reading, extending this year’s string of positive readings. Eighteen percent of firms noted net hiring, compared with eight percent noting net layoffs. The hours worked index rose five points to 14.5. This was the last of the regional Fed surveys for August. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
Dallas Fed Manufacturing Outlook: Continued Expansion in August - This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for August. The latest general business activity index came in at 17.0, up from 16.8 in July.Here is an excerpt from the latest report:Texas factory activity continued to increase in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down to 20.3, indicating output grew but at a slightly slower pace than in July.Perceptions of broader business conditions remained positive in August. The general business activity index was largely unchanged at a robust 17.0. The company outlook index posted its 12th consecutive positive reading but slipped 10 points to 16.3 after surging to a multiyear high last m onth.Expectations regarding future business conditions continued to improve. The indexes of future general business activity and future company outlook remained elevated at 29.2 and 34.5, respectively. Other indexes of future manufacturing activity showed mixed movements but remained solidly in positive territory. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator. The Dallas Fed on the TMOS importance: Texas turns out a large share of the country’s production of petroleum and coal products, reflecting the significance of the region’s refining industry. Texas also produces over 10 percent of the nation’s computer and electronics products and nonmetallic mineral products, such as brick, glass and cement.
Regional Fed Manufacturing Overview: August 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 August is 16.4, up from the previous month's 14.7. It has been in positive territory for eleven consecutive months.
August Chicago PMI Unchanged --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, unchanged from last month. Investing.com forecast 58.5. Here is an excerpt from the press release: “Following the sharp rise in the Barometer to a more than three-year high in June it isn’t too surprising to see activity subsequently ease somewhat. However, overall, the trend remains firm, consistent with the growth story of the US. The disappointment comes from the employment indicator which once again contracted, the sixth time in the last 12 months, with fewer firms expecting an increase in hiring,” said Shaily Mittal, Senior Economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.
ISM Manufacturing Index: Continued Expansion in August --Today the Institute for Supply Management published its monthly Manufacturing Report for August. The latest headline Purchasing Managers Index (PMI) was 58.8 percent, an increase of 2.5 percent from 56.3 the previous month. Today's headline number was above the Investing.com forecast of 56.5 percent. Here is the key analysis from the report:"The August PMI® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent. The New Orders Index registered 60.3 percent, a decrease of 0.1 percentage point from the July reading of 60.4 percent. The Production Index registered 61 percent, a 0.4 percentage point increase compared to the July reading of 60.6 percent. The Employment Index registered 59.9 percent, an increase of 4.7 percentage points from the July reading of 55.2 percent. The Supplier Deliveries Index registered 57.1 percent, a 1.7 percentage point increase from the July reading of 55.4 percent. The Inventories Index registered 55.5 percent, an increase of 5.5 percentage points from the July reading of 50 percent. The Prices Index registered 62 percent in August, the same reading as July, indicating higher raw materials’ prices for the 18th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in August, as well as supplier deliveries slowing (improving) and inventories increasing during the period. The Customers’ Inventories Index experienced a sharp decline in August compared to July."[source] Here is the table of PMI components.
Markit Manufacturing PMI: Slip in August --The August US Manufacturing Purchasing Managers' Index conducted by Markit came in at 52.8, down from the 53.3 final July figure. Today's headline number was above the Investing.com forecast of 52.5. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release:“Although still above the 50 ‘no change’ level, the decline in the PMI shows signs of a renewed stuttering of the manufacturing economy during August. The latest reading indicates one of the weakest improvements in the overall health of the sector seen over the past year, and translates into disappointing signals for comparable official data. “The drop in the output index indicates that manufacturing could act as a drag on the economy in the third quarter, with exports dampening order book growth.“The survey brings more encouraging signs of improved domestic demand, however, with orders for both consumer goods and investment goods such as plant and machinery on the rise, boding well for the wider economy to continue to expand as we move through the second half of 2017.” [Press Release] Here is a snapshot of the series since mid-2012.
"We're Back In The '60s Again" - Bomb-Shelter Sales Are Booming In The US And Japan --- US-based bomb-shelter manufacturers should maybe think about buying Kim Jong Un a fruit basket. According to McClatchy, sales have in both the US and Japan have risen dramatically this year as President Donald Trump and Kim have exchanged threats of nuclear annihilation. US and Japanese defense officials now believe the North is in possession of a nuclear warhead small enough to fit onto one of its ICBMS. The isolated country launched three short-range missiles into the East Sea Friday night – its first missile test in nearly a month – after US officials had praised Kim’s restraint earlier in the week. Ron Hubbard, president of Atlas Survival Shelters, a firm based in Montebello, California, said he expects to sell 1,000 shelters this year at a price of $25,000 apiece, according to McClatchy."Sales and inquiries have spiked, according to several of the U.S. companies that make money from doomsday fears.“The increase in demand is everywhere. We are getting hundreds of calls,” said Ron Hubbard, president of Atlas Survival Shelters, a firm based in Montebello, California. Inquiries have slowed down as tensions have eased over the last week, but Hubbard said he still expects to have a banner year, selling 1,000 shelters at an average price of $25,000 each.”Sales in Japan have increased to the point where one manufacturer is opening a sales office in Osaka. “Hubbard reports there is intensified demand in Japan, where he has opened a sales office in Osaka. He’s also opening a new 400,000-square-foot plant in Dallas, largely to serve the Japanese market.“We are back in the 1960s again,” said Hubbard, referring to the Cold War demand for bomb shelters. “We’ve got a crazy man on one side and Donald Trump on the other.”
Weekly Initial Unemployment Claims increase to 236,000 -- The DOL reported: In the week ending August 26, the advance figure for seasonally adjusted initial claims was 236,000, an increase of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 236,750, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised up by 250 from 237,750 to 238,000. The previous week was revised up.
ADP: Private Employment increased 237,000 in August --From ADP: Private sector employment increased by 237,000 jobs from July to August according to the August 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....“In August, the goods-producing sector saw the best performance in months with solid increases in both construction and manufacturing,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Additionally, the trade industry pulled ahead to lead job gains across all industries, adding the most jobs it has seen since the end of 2016. This could be an industry to watch as consumer spending and wage growth improves.”Mark Zandi, chief economist of Moody’s Analytics, said, “The job market continues to power forward. Job creation is strong across nearly all industries, company sizes. Mounting labor shortages are set to get much worse. The initial BLS employment estimate is often very weak in August due to measurement problems, and is subsequently revised higher. The ADP number is not impacted by those problems.” This was above the consensus forecast for 182,000 private sector jobs added in the ADP report.
A Closer Look at This Morning's ADP Employment Report - In this morning's ADP employment report we got the August estimate of 237K new nonfarm private employment jobs from ADP, an increase over July's 201K, which was an upward revision of 23K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail.Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend. As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011. ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016. For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high.There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above leveled off in late 2010 but began drifting higher in early 2015. For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing.
August Employment Report: 156,000 Jobs, 4.4% Unemployment Rate --From the BLS: Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining. The change in total nonfarm payroll employment for June was revised down from +231,000 to +210,000, and the change for July was revised down from +209,000 to +189,000. With these revisions, employment gains in June and July combined were 41,000 less than previously reported. In August, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $26.39, after rising by 9 cents in July. Over the past 12 months, average hourly earnings have increased 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 156 thousand in August (private payrolls increased 165 thousand). Payrolls for June and July were revised down by a combined 41 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In August the year-over-year change was 2.10 million jobs. This is a decent year-over-year gain. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate was unchanged in August at 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 Employment-Population ratio decreased to 60.1% (black line). I'll post the 25 to 54 age group employment-population ratio graph later. The fourth graph shows the unemployment rate. The unemployment rate increased in August to 4.4%. This was below expectations of 180,000 jobs, and the previous two months were revised down. A somewhat disappointing report.
Jobs report comes in slightly weaker than expect, but the real problem is slow wage growth - Jared Bernstein - The nation’s payrolls climbed 156,000 last month and the unemployment rate ticked up slightly to 4.4 percent, in a slightly weaker-than-expected jobs report. Wage growth is still stuck at an annual growth rate of 2.5%, the length of the average work week ticked down slightly, and payroll gains for June and July were revised down 41,000. (Note: Hurricane Harvey’s impact is NOT present in today’s jobs numbers, as the storm struck well after the survey date. See comments below.) Though the report on job growth in August comes in below expectations, the labor market continues to tighten at a good clip, generating job, wage, and income growth that will continue to support the expansion. However, there are soft spots, most notably the fact that wage growth has been uncharacteristically unresponsive to persistently low unemployment. Smoothing out the statistical noise from the monthly data is a useful way to get a clearer signal as to the trend of employment growth. JB’s monthly smoother shows that over the past three months, monthly gains averaged 185,000, a slight acceleration over the longer-term trends, and a number that’s thoroughly consistent with continued improvement and tightening in the job market. And yet, hourly wages can’t catch a buzz. As the figures below show, for all private-sector workers, nominal wage growth was stuck at 2% throughout much of the recovery, before taking off about two years ago, climbing to 2.5%, where it has been stuck, if not decelerating a bit (as per the smoother, a 6-month rolling average). For lower-paid workers (bottom figure: the 80% of the workforce that’s blue-collar production workers and non-managers in services), the pattern is similar, though the recent deceleration looks a bit clearer. Given that inflation is still on the low side—prices rose 1.7% in the most recent CPI report—these growth rates still imply rising real earnings, though less than 1%, year-over-year. In other words, most workers simply are not sharing in as much of the economy’s growth as would be expected given the apparent tightness of the labor market. Why that is the case remains among the most important economic questions of the moment. One cogent explanation is that while the job market is unquestionably tightening, it is not yet at full employment and there’s more “room-to-run” than the 4.4% unemployment rate implies. The most telling indicator for this argument (along with the wage results) is the employment rate for prime-age workers. It fell three-tenths of a percentage point last month, though it’s 3.6, 4.5, and 3.4 percentage points above its trough value for all, men, and women, respectively. Yet, it still remains 1.9, 3.1, and 0.7 points below its pre-recession peak.Other explanations include slow productivity growth, which restrains average wage gains, and, even at low unemployment, weak worker bargaining power.These indicators, in tandem with notably weak price pressures, should definitely lead the Federal Reserve to question the necessity of tapping the economic brakes by continuing their “normalization” of interest rates, i.e., their series of planned rate hikes.
Where The August Jobs Were: Who Is Hiring, And Who Isn't - As expected, last month's one-time, outlier surge in leisure & hospitality, and education & health jobs was not only revised lower, but is fully gone in the month of August. Furthermore, while according to the original July report not a single category had lost jobs, that is no longer the case as the chart below shows, with what the DOL now admits were losses in government, construction, retail and information jobs. So what happened in August? There were several notable observations: as SouthBay Research points out, the recent surge in Leisure and Hospitality jobs has hit a brick wall, barely growing in August, as consumer spending on recreational activities has peaked. Furthermore, low paid retail jobs continue to stagnate as the industry implodes, offset by a surprise rebound in mining and logging. Another surprise observations was the completely fabricated and patently untrue jump of 13,000 jobs in auto payrolls. This ridiculous number will be promptly revised lower next month as it comes at time when GM and all other OEMs are either furloughing or slashing payrolls, as several companies have announced extended factory shutdowns. With the Harvey hit, we expect this weakness to persist in coming months. Next, as Southbay also notes, Association & Membership Payrolls continue their surge: +13K in August. Curiously, this month saw greater enrollment in clubs than the entire year for almost every year since the recession ended, thus invalidating the credibility of the number. There was a silver lining: while the pace of job creation slowed notably, the jobs added were of the higher paying variety:
- Professional Services (+39.9K): Strong white collar hiring (technical services +22K) offset rather limp temp worker hiring.
- Manufacturing (+36K): Driven entirely by the above-noted surprise jump in Auto payrolls boosted this sector
- Construction (+28K) Not surprising given continued robust real estate demand
- Health care (+20K) To be expected as the US population ages ever faster; big job increases for physicians (+7.5K) and hospital (+6.4K) hiring.
Comment: A Solid Employment Report -- Bill Mcbride - The headline jobs number was below expectations, and there were downward revisions to the previous two months. And the unemployment increased slightly. Overall a disappointing report. In August, the year-over-year change was 2.097 million jobs. This is still decent year-over-year job growth, but this is the lowest year-over-year growth since early 2013. Note that August has been the second weakest month for job growth over the previous three years; only January has been weaker. This is the 3rd consecutive August report below 200 thousand jobs: 157 thousand in August 2015, 176 thousand in August 2016, and now 156 thousand in August 2017. This recent history was a key reason I took the under versus the consensus view. On the impact of Hurricane Harvey from the BLS: Hurricane Harvey had no discernable effect on the employment and unemployment data for August. Household survey data collection was completed before the storm. Establishment survey data collection for this news release was largely completed prior to the storm, and collection rates were within normal ranges natio nally and for the affected areas.So the impact from the hurricane on employment will be in the September, and probably October, reports. 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 August. Wage growth has generally been trending up. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.74 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.79 million in July.This is generally trending down, but still a little elevated. Overall this was a disappointing report.
Opinion: The jobs report shows a spike in auto jobs — and that doesn’t pass the smell test -- The August jobs report was a mild disappointment in most respects, with lower-than-average job growth, a tick up in the unemployment rate, and tepid wage growth. But there was one area that shone brightly in August: Manufacturing employment, specifically in the auto sector. The question is, why are auto makers hiring just when sales and production are slowing and while inventories are high? The increase doesn’t pass the smell test. First, the data: Manufacturing payrolls increased by 36,000 in August, three times as many as usual, and matching the highest monthly gain in four years. Better yet, the number of production workers (counting only those directly engaged in production and excluding back-office and support personnel) increased by 50,000, the highest in nearly 20 years. The average workweek for production workers increased by a tenth of an hour to 42.1 hours, while average overtime also increased by a tenth to 4.4 hours. Aggregate number of hours worked by production workers jumped by 0.7%, the most in three years. Hiring was particularly strong in the motor-vehicle sector, where employment rose by 13,700 on a seasonally adjusted basis, the most since February 2014. August is always the strongest month for hiring in autos, as the plants resume full-scale production after a summer lull for retooling. On a not-seasonally adjusted basis, hiring in autos was 30,000 in August, the best since 2013. Which leads to the obvious question: Why was August so strong? Manufacturing firms are certainly giddy. The Institute for Supply Management’s manufacturing index surged to a six-year high in August at 58.8%. The employment index also hit a six-year high. The hard data have also been good, but not quite as good as the ISM diffusion index. The rise in manufacturing jobs in August certainly fits in with this story of steady but gradual growth in the sector. But what doesn’t fit is the hiring spike in motor vehicles. Car and truck production has been trending lower, and inventories of unsold vehicles are high. Most of the auto makers have announced they will reduce production in the second half of the year in order to work down those inventories. Auto sales have fallen in 11 of the past 12 months, and have dropped seven months in a row. Sales in August, which are being reported on Friday, were expected to show a slight increase — at least that was the assumption before Hurricane Harvey knocked out sales for several days in the fourth largest market in America. If production and sales are trending lower, hiring more workers doesn’t make sense. And yet that is what the Bureau of Labor Statistics reported for August, based on its survey of businesses. Most likely, the data showing a spike in hiring is simply noise. It didn’t happen, and will probably be revised away.
Trump targets Obama rule on workers’ tips | TheHill: The Trump administration is planning to quash an Obama-era rule that prevents employers from pooling workers’ tips. The change could allow restaurants to share tips waiters receive, for example, with untipped employees such as kitchen cooks. The Department of Labor (DOL) announced its plan to change the Fair Labor Standards Act (FLSA) regulation in its semi-annual Unified Regulatory Agenda in July.The agency said the change would only apply to employers that pay tipped employees the full minimum wage directly. It would not apply to employees who make less than the minimum wage and earn tips to supplement their pay, also known as tip credit. The move to change the rule is welcome news for service industry employers, who have been fighting it in courts across the country for years. The National Restaurant Association claims the rule creates a pay disparity in restaurants between the front and back of the house. Angelo Amador, executive director at the Restaurant Law Center, said when cooks or dishwashers in the kitchen are only making $10 an hour but servers are making $30 an hour after tips it hurts employee harmony and the customer experience. “It is an issue of having better cohesiveness,” he said. “It’s why some restaurants are getting rid of tips.”
A Federal Judge Put Hundreds of Immigrants Behind Bars While Her Husband Invested in Private Prisons --Nearly 400 workers were arrested in the bust, which cost $5 million and was then the biggest workplace immigration raid in US history. They were driven to the National Cattle Congress, a fairground in Waterloo, where several federal judges would handle their cases over nine business days. Hearings were held in trailers and a dance hall. Cots were set up for the defendants in a nearby gymnasium. At the time, undocumented immigrants caught in raids like this were usually charged with civil violations and then deported. But most of these defendants, shackled and dragging chains behind them, were charged with criminal fraud for using falsified work documents or Social Security numbers. About 270 people were sentenced to five months in federal prison, in a process that one witness described as a “judicial assembly line.” Overseeing the process was Judge Linda R. Reade, the chief judge of the Northern District of Iowa. She defended the decision to turn a fairground into a courthouse, saying the proceedings were fair and unhurried. The incident sparked allegations of prosecutorial and judicial misconduct and led to congressional hearings. Erik Camayd-Freixas, an interpreter who had worked at the Waterloo proceedings, testified that most of the Spanish-speaking defendants had been pressured to plead guilty. Rep. Zoe Lofgren (D-Calif.) said the unconventional process seemed “like a cattle auction, not a criminal prosecution in the United States of America.” Yet amid the national attention, one fact didn’t make the news: Before and after the raid, Reade’s husband owned stock in two private prison companies, and he bought additional prison stock five days before the raid, according to Reade’s financial disclosure forms. Ethics experts say these investments were inappropriate and may have violated the Code of Conduct for United States Judges.
Trump To Lift Obama-Era Ban On Sale Of Military Weapons To Police -- More than two years after it was initiated by President Obama, the Trump administration is preparing to lift a ban on the sale of some military style weapons to police, according to the Hill. The reversal, which was widely expected, was confirmed by Attorney General Jeff Sessions on Monday during a scheduled address at the annual meeting of the Fraternal Order of Police, the nation's largest police union.“Those restrictions went too far,” Sessions said Monday. “We will not put superficial concerns above public safety. All you need to do is turn on a TV right now to see that for Houstonians this isn’t about appearances, it's about getting the job done and getting everyone to safety.”The FOP applauded the decision, blaming Obama - who said that the weapons made police seem like "an occupying force" in the community - for being "too concerned" about safety. USA Today had earlier reported that the administration was preparing to announce the end of the ban on Monday. Trump is expected to sign an executive order officially ending the ban later in the day. According to USA Today, the Obama administration executive order that blocked armored vehicles, large-caliber weapons, ammunition and other heavy equipment from being transferred from military ownership to local police departments.“The administration's action would restore "the full scope of a longstanding program for recycling surplus, lifesaving gear from the Department of Defense, along with restoring the full scope of grants used to purchase this type of equipment from other sources,'' according to an administration summary of the new program recently circulated to some law enforcement groups.
Trump rescinds Obama limits on transfer of military gear to police (Reuters) - U.S. President Donald Trump on Monday issued an executive order revoking limits imposed by predecessor Barack Obama on the transfer of surplus military equipment to local law enforcement agencies, the White House said. Obama had curtailed the equipment transfer program after law enforcement officers using military-style armored vehicles and guns confronted protesters in Ferguson, Missouri, in 2014 following the fatal police shooting of a black teenager. Trump's executive order said, "All executive departments and agencies are directed, as of the date of this order and consistent with Federal law, to cease implementing those recommendations and, if necessary, to take prompt action to rescind any rules, regulations, guidelines, or policies implementing them." The Republican president has reversed or cut back many of his Democratic predecessor's policies since taking office in January. The use of military equipment in Ferguson prompted a wider outcry over the use of war-fighting equipment by local law enforcement agencies in the United States. After a review, Obama barred the military from transferring certain types of equipment to police or sheriff's departments, including tracked armored vehicles, armed aircraft or vehicles of any kind, .50-caliber firearms and ammunition, grenade launchers, bayonets and camouflage uniforms. Obama also required law enforcement agencies to justify the need for items like helicopters and other aircraft, wheeled armored vehicles, unmanned drones, riot helmets and "flash-bang" grenades.
You Can’t Erase Urban Homeless By Making Them “Illegal” --They loiter, they sit, even sprawl on the sidewalk. Often we avert our eyes to their condition. Police see the homeless as a nuisance and they are soon scattered under the guise of “public safety.” Meanwhile, the non-homeless often loiter, and they congregate too, but are never turned away by the cops. They aren’t considered a threat. A struggling class of working poor living in urban areas with high housing prices, combined with an increasing lack of low-income rents and long-term solutions, ensure the poor have nowhere else to go. Those who can, move outside the urban limits. Those who can’t, stay behind, oftentimes on the streets, closer to shelters and other free services. But now officials in cities across the country want to make these people “illegal” in hopes they will move along, to wherever that may be. In a class action lawsuit filed in August, plaintiffs are claiming the city of Indianapolis is unconstitutionally targeting homeless people with their sidewalk ordinances. Homeless people and activists believe the law, which prohibits congregating or lying on certain public sidewalks, is being applied unequally, and by all accounts it is. On August 4, in what reports say was a joint effort with the Department of Homeland Security, notices were posted at several homeless encampments that they would be cleared within a few days, and that “an emergency” had been declared. According to the Indianapolis Star the city claimed: Congestion and cluttering of the area from personal belongings or people in the public right of way inhibits safe passage by pedestrians and emergency first responders, blocks evacuation routes and allows for concealment of threats targeting pedestrians and first responders. On August 8, city officials kept their word. According to Maurice Young, a homeless man mentioned in the lawsuit, police officers have made it clear to the homeless that they cannot sit, stop, loiter, or lie down in the cleared areas—but non-homeless people have not been treated the same way or even approached with such reminders.
Male, Female, Or 'Nonbinary': California Set To Be First State To Add "Gender X" Designation To Licenses --Up until now, state issued identification cards around the country have limited gender designations to 'male' and 'female' because, well, biological science has historically taught us that those were the only two options. But that hateful and narrowed-minded micro-aggression perpetrated by our genetic code will no longer be tolerated in the state of California, whether it's a scientifically proven fact or not. As the San Francisco Chronicle points out today, California's legislature is currently considering SB 179 that will add a new "nonbinary" gender designation to the state's identification cards.When Californians are designated by gender on a driver’s license, a birth certificate or any state identification, there are only two possible boxes to check: either “M” or “F.” But they may soon have a third option.A bill advancing in the Legislature would allow Californians to opt for a “nonbinary” gender marker on all forms of state identification. It’s not yet clear which alphabetical abbreviation will be used, though “X” appears to be a leading candidate.That would make California the first state in the nation to fully depart from the rigid either/or categorization of gender, embracing a more fluid understanding of the term — at least on paper.
Another Privatization Fail: 5 Things You Don’t Know About School Lunches (but Probably Should) - Here are five things you don’t know about school lunches—but probably should.
- 1. The Healthy, Hunger-Free Kids Act of 2010 has good intentions but is not well-executed—yet. Most everyone is aware that there is some set of standards that aim to standardize the nutritional quality of school lunches across the nation. Most notably, Congress passed the Healthy, Hunger-Free Kids Act of 2010, enabling the U.S. Department of Agriculture to overhaul school meals in order to meet currently accepted standards.In spite of its noble intentions, the act has been harshly criticized by claims that the food is unpalatable, participation in the school lunch program has dropped sharply as a result, and in turn, school districts are realizing less revenue. Worse, more students are skipping lunch altogether.
- 2. Standards require that certain foods be on a student’s trays when exiting the lunch line, but there’s no guarantee the kid will actually eat it. It also turns out there’s a lot of waste. The act requires that students participating in school lunch programs have certain items on their trays before exiting the lunch line—meaning many fruits and vegetables are dumped into the trash, untouched.
- 3. Your school district may be outsourcing its school lunch program. Huge food service companies are making bank by securing contracts with public school systems to provide school lunch foods. Privatization of school lunches has been around since the 1980s and 1990s, primarily due to dwindling federal support and funding. Sadly, nutritional standards often take a backseat to the need to control costs.
- 4. Major food companies make big money by marketing less-than-healthy food choices to schools. In 2009, privatization was viewed as a possible savior for the sad state of school lunches, promising ready-made, healthy, and tasty meals that meet USDA standards, but these programs largely targeted charter and private schools at the time, as the cost of the meals exceeded the federal reimbursement, and public school districts simply lacked the funding to make up the difference.
- 5. School districts may receive whole, nutritious food—and then process it into unhealthy options like chicken nuggets.
Many Poor Kids in Baltimore Are Testing Badly Because They Can’t See - Researchers from John Hopkins University in Baltimore, Maryland discovered three years ago that the reading disparity between poor kids and wealthy white kids can be tied to vision problems and a lack of eyeglasses. Now, a public-private coalition that includes the national nonprofit Vision to Learn is working to solve the problem and give poor children the glasses they need to succeed in school.A three-year program called Vision for Baltimore will be studying and screening 60,000 children for vision deficiencies. The program plans to distribute 8,000 glasses. Some researchers estimate that 20,000 children are in need of glasses in the region right now. "Teaching geometry at large high school in west Baltimore, I often had class sizes over 30 students and it was common for some of my students to tell me they wanted to sit closer to the board so they could see," former classroom teacher and TeacherProps founder and CEO Peter DeCandia said."Sometimes I noticed them squinting or realized the issue and did my best to change their assigned seat. To be honest, with so many things going on managing a class of 35 students in my first years of teaching, I wasn't always on top of it, and the issue was overlooked. Among the many injustices my students face and the ones I tried to tackle on a day to day basis, the issue of all my students being able to clearly see the board was a low priority amid other challenges." Experts believe that the mandatory vision screening periods for children are inadequate. Children who don't develop vision problems until partway through elementary school are going years without proper vision screening and treatment.
Chicago school board approves $5.75 billion budget, debt issuance (Reuters) - The Chicago Board of Education approved on Monday a $5.75 billion fiscal 2018 budget, which assumes nearly $570 million in uncertain funding, and also a plan to issue up to $1.9 billion of debt. The Chicago Public Schools' (CPS) budget for the fiscal year that began on July 1 counts on an additional $300 million from Illinois under a new statewide education funding formula that the House and Senate are scheduled to vote on this week. It also includes $269 million in new city dollars that have not been identified. "It's a difficult budget," Frank Clark, the board's president, said at the board meeting, adding that the cash-strapped district could receive as much as $450 million under the new formula. Escalating pension payments have led to drained reserves, debt dependency and junk credit ratings for CPS, the nation's third-largest public school system. Clark expressed optimism that a tentative funding formula deal announced by state legislative leaders last week will be approved. Illinois stopped the flow of $6.7 billion in state aid to its 852 school districts because a distribution mechanism is not in place. Payments to the CPS teachers' retirement system are expected to climb from $784 million in fiscal 2018 to $889 million in fiscal 2022, according to a CPS budget presentation. The board approved $1.55 billion of tax anticipation notes CPS needs to fund operations between biannual property tax collections. Borrowing costs for the fiscal 2018 notes are expected to rise to about $79 million versus $35 million for the same amounts of notes borrowed in the previous fiscal year, according to the district's budget documents. A refunding of up to $385 million of high-interest, variable-rate general obligation bonds issued in 2011, 2013 and 2015 was also approved by the board.
School funding bill could mean even bigger CPS property tax hike --The compromise school funding bill the Illinois House approved Monday contains a provision to let the Chicago Board of Education raise property taxes by what Democrats estimated was an additional $120 million.Cook County Clerk David Orr’s office, however, put that figure at closer to $148 million.Among many other things, the 550-page bill would allow Chicago's Board of Education to increase its maximum property tax rate for the Chicago Teachers’ Pension Fund by about 45 percent. That levy, first approved in late 2016, increased taxes by about $272 million this year.Orr’s office said CPS could have raised property taxes for pensions even higher but did not do so. If the district went for the maximum amount allowed under the state legislation that’s expected to pass, CPS could collect $147.9 million in additional taxes in 2018, Orr’s office concluded. That would bring the total CPS tax levy for pension contributions to $419.7 million — and even that figure that could go higher if assessed property values go up.That number could rise even more in future years because the pension levy is not subject to state property tax caps. It would remain steady or decrease only if property values stagnated or declined — or the district chose not to levy to the full available amount. A significant part of the school district’s financial woes stems from rapidly increasing required pension contributions, resulting in large part from the district’s past skipping or skimping on those payments. In this year’s budget, pension contributions are pegged at $773 million.
Fox & Friends Attacks Public Schools for Teaching Climate Change - Media Matters – (video & transcript)
The Asian American battle over college admissions - Asia Times --The US Justice Department said in early August that it’s investigating a complaint that accuses Harvard University of discriminating against Asian American students in its admissions practices.The move stems from a May 2015 suit filed against the Ivy League institution by more than 60 Asian American organizations nationwide. The complaint alleges that Harvard holds Asians to a higher admissions standard than African Americans, Hispanics and whites under a racial quota that unfairly limits the number of Asian American students admitted to the college annually.Harvard argues its admissions policy is fair and that it considers each applicant “as a whole person” — not just based on test scores and grades alone — consistent with standards set by the US Supreme Court.The high court, a year ago, upheld a University of Texas admissions plan that allows race and ethnicity to be considered as one of many factors in admission. If the Harvard suit also reaches the Supreme Court, any ruling in the case could alter the future of affirmative action at American universities.The question of whether elite US schools like Harvard discriminate against Asian Americans in the admissions process is a highly divisive one. Many members of the community – which includes individuals of Asian American and Pacific Islander heritage – hold conflicting views on the subject. Asia Times recently interviewed S.B. Woo and John C. Yang, two Asian American leaders on different sides of the issue. S.B. Woo is a retired physics professor and a former Lt. Governor of the State of Delaware. He was born in Shanghai, China, and came to the US at the age of 18. John C. Yang is the president and executive director of Asian Americans Advancing Justice (AAJC), a national organization active in civil rights and empowerment issues affecting the Asian American and Pacific Islander community. (interview transcripts)
The affirmative action ‘we don’t talk about’ — 30% of Harvard freshmen are legacies: survey - It’s almost fall, which means we are just weeks away from college application season and the start of our national obsession with the country’s elite colleges. A new data point making its way around the internet reminds us that those schools are just that: elite. Despite the cultural space they occupy, they educate only a small, rarefied group of today’s college students. About 30% of Harvard College’s class of 2021 has some sort of familial connection to the school, such as a parent, grandparent or other relative who attended the college, according to a survey of the class conducted by the school’s student newspaper, the Harvard Crimson. It’s hard to say whether the figure is accurate (the Crimson did correct an earlier, higher figure); more than 50% of the class responded to the survey, according to the newspaper, but it didn’t use official admissions data. So-called legacy can play a role in the Harvard admissions process, according to a frequently asked questions page the school’s website. “Among a group of similarly distinguished applicants, the daughters and sons of Harvard College alumni/ae may receive an additional look,” the site reads. Still, a Harvard spokeswoman wrote in an email that the school considers “a range of academic and personal factors as part of a whole-person admissions process.” Nonetheless, the Crimson survey adds to the growing body of evidence that the nation’s most prestigious colleges aren’t fulfilling what we think of as one of the most important roles a higher education institution can serve — as engines of economic and social mobility.
Trump admin reportedly hires a former for-profit college dean for fraud enforcement -- The man the Trump administration has reportedly hired to head a unit aimed at policing colleges and their use of federal financial aid dollars was once a dean at a for-profit college that’s been accused of misleading students. Julian Schmoke, who worked as a dean at DeVry University, according to his LinkedIn profile, will be the head of the Department of Education’s student aid enforcement unit, Politico reported Tuesday. The unit, which Obama administration officials created in the last year of their tenure, is charged with investigating colleges to identify potential misconduct that could put students and taxpayers at risk. Borrower advocates and even members of Congress expressed concern about Schmoke’s appointment, particularly given DeVry’s history. They also say it seems to be part of a broader pattern of the Department of Education appearing friendlier toward the for-profit college and student loan industries under Secretary of Education Betsy DeVos. Earlier this year, the Department announced delayed implementation of two rules fortified under the Obama administration aimed at cracking down on bad actors, particularly in the for-profit college space. “His association with DeVry and the fact that he’s being made the head of investigations at the Department of Education, does send a signal to students, to taxpayers and to the markets that the Department is not serious about investigating deceptive practices and other abuses by for-profit colleges,” said David Halperin, a lawyer and for-profit college critic.
Safe spaces and ‘ze’ badges: My bewildering year at a US university - Spectator - As a child in Glasgow, I learned that sticks and stones might break my bones but words didn’t really hurt. I’m now at New York University studying journalism, where a different mantra seems to apply. Words, it turns out, might cause life-ruining emotional trauma. During my ‘Welcome Week’, for example, I was presented with a choice of badges indicating my preferred gender pronouns: ‘he’, ‘she’, ‘they’ or ‘ze’? The student in front of me, an Australian, found this hilarious: ‘Last time I checked, I was a girl.’ Her joke was met with stony silence. Later I realised why: expressing bewilderment at the obsession with pronouns might count as a ‘micro-aggression’. Next stop, ‘transphobia’. It was soon obvious to my fellow students that I was not quite with the programme. In a class discussion early in my first semester, I made the mistake of mentioning that I believed in objective standards in art. Some art is great, some isn’t, I said; not all artists are equally talented. This was deemed an undemocratic opinion and I was given a nickname: the cultural fascist. I’ve tried to take it affectionately. After a year on campus, on a course entitled ‘Cultural Reporting and Criticism’, I still feel unable to speak freely, let alone critically. Although it doesn’t apply to my own course, friends have told me about ‘trigger warnings’ that caution they are about to be exposed to certain ideas; the threat of micro-aggressions (i.e. unintended insults) makes frank discourse impossible. Then there is the infamous ‘safe space’ — a massage-circle, Play-Doh-making haven — where students are protected from offence (and, therefore, intellectual challenge). During class discussions, I’ve learned to discreetly scan my classmates’ faces for signs that they might be fellow free-thinkers. A slight head tilt at the mention of Islamophobia, a gentle questioning of what exactly is meant by ‘toxic masculinity’. I was thrilled to see a scribbled note — ‘This is utter shit’ — on someone’s copy of one of the reading requirements, Maggie Nelson’s The Argonauts (an introduction to queer theory). In this way, I found the members of my secret non-conformist book club. It seemed to the members of my book club that academia is losing its way. It is riddled with paradox: safe spaces which are dangerously insular; the idea of ‘no absolutes’ (as an absolute); aggressive intolerance for anything perceived as intolerant; and censorship of ideas deemed too offensive for expression. It’s a form of totalitarianism and it’s beginning to infect British universities, too.
Ivy League Professors Issue Rallying Cry To Students: "Think For Yourself" - I want to commend and highlight a message published yesterday to college students signed by 15 professors from Harvard, Princeton and Yale. It’s short, to the point and powerful. I have republished it in full below: Some Thoughts and Advice for Our Students and All Students We are scholars and teachers at Princeton, Harvard, and Yale who have some thoughts to share and advice to offer students who are headed off to colleges around the country. Our advice can be distilled to three words:Think for yourself.Now, that might sound easy. But you will find - as you may have discovered already in high school - that thinking for yourself can be a challenge. It always demands self-discipline and these days can require courage.In today’s climate, it’s all-too-easy to allow your views and outlook to be shaped by dominant opinion on your campus or in the broader academic culture. The danger any student - or faculty member - faces today is falling into the vice of conformism, yielding to groupthink.At many colleges and universities what John Stuart Mill called “the tyranny of public opinion” does more than merely discourage students from dissenting from prevailing views on moral, political, and other types of questions. It leads them to suppose that dominant views are so obviously correct that only a bigot or a crank could question them.Since no one wants to be, or be thought of, as a bigot or a crank, the easy, lazy way to proceed is simply by falling into line with campus orthodoxies. Don’t do that. Think for yourself.
After decades of pushing bachelor’s degrees, U.S. needs more tradespeople - Fernando Esparza is taking a class in industrial computing taught by a community college at a local manufacturing plant in the hope it will bump up his wages. It’s a pretty safe bet. The skills being taught here are in high demand. That’s in part because so much effort has been put into encouraging high school graduates to go to college for academic degrees rather than for training in industrial and other trades that many fields like his face worker shortages. Now California is spending $6 million on a campaign to revive the reputation of vocational education, and $200 million to improve the delivery of it. “It’s a cultural rebuild,” said Randy Emery, a welding instructor at the College of the Sequoias in California’s Central Valley. Standing in a cavernous teaching lab full of industrial equipment on the college’s Tulare campus, Emery said the decades-long national push for high school graduates to get bachelor’s degrees left vocational programs with an image problem, and the nation’s factories with far fewer skilled workers than needed. “All throughout high school, they made it sound like going to college was our only option.” This has had the unintended consequence of helping flatten out or steadily erode the share of students taking vocational courses. In California’s community colleges, for instance, it’s dropped to 28 percent from 31 percent since 2000, contributing to a shortage of trained workers with more than a high school diploma but less than a bachelor’s degree. Research by the state’s 114-campus community college system showed that families and employers alike didn’t know of the existence or value of vocational programs and the certifications they confer, many of which can add tens of thousands of dollars per year to a graduate’s income. “We needed to do a better job getting the word out,” High schools and colleges have struggled for decades to attract students to job-oriented classes ranging from welding to nursing. They’ve tried cosmetic changes, such as rebranding “vocational” courses as “career and technical education,” but students and their families have yet to buy in,
Student loan balances jump nearly 150 percent in a decade -- For recent graduates, their student loan debt may very well shape the rest of their lives. Over the last decade, college-loan balances in the United States have jumped more than $833 billion to reach an all-time high of $1.4 trillion, according to a recent report by Experian. The average outstanding balance is now $34,144, up 62 percent over the last 10 years. In addition, the percentage of borrowers who owe $50,000 or more has tripled over the same time period, according to a separate report by the Consumer Financial Protection Bureau. A college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home.Currently, about 13 percent of the country's population carries at least one student loan, Experian said, although it's increasingly common to have more. The average number of loans is 3.7 per person, up from 2.4 per person 10 years ago."Student loan balances are on the rise, which is a result of the increasing cost of higher education," said Michele Raneri, Experian's vice president of analytics. "I expect that the price of getting a higher education will continue to increase, so I wouldn't be surprised if the loans increase also," she said. Still, delinquencies are down 3 percent since 2007, Raneri said, "which means that consumers are managing their student loan payments better than they have in the past," in part because they're better educated about credit in the aftermath of the Great Recession, she said.
Dean Baker: Social Security A Success Story: Can It Withstand Privatization Attacks? - naked capitalism (video and transcript) Jerri-Lynn here: I have one major quibble with the framing of this RNN interview. As I read it, Sharmini Peries strongly implies that Republicans are the sole proponents of privatizing Social Security. Those of us with longer memories will recall that but-for the Monica Lewinsky scandal breaking when it did, Bill Clinton might have added Social Security “reform” to his other list of– ahem– achievements (e.g., welfare “reform” and Wall Street “reform” in the form of the gutting Glass-Steagall via Gramm-Leach-Bliley and siding with Alan Greenspan and Robert Rubin rather than Brooksley Born on the Commodity Futures Modernization Act). Neo-liberals, too, would be only too willing to sacrifice the interests of the rest of us at the altar of the privatization god. I should note that Dean Baker points out that there’s strong support among some Republicans for Social Security– which he thinks might go as far as to include increasing benefits. Trump pledged during the presidential campaign to protect the program. We’ll have to wait and see whether he honors this pledge.
The Average Cost Of Care After A Dementia Diagnosis Is Over $300,000 (Reuters Health) - The average lifetime cost of care after a diagnosis of dementia in the U.S. is about $322,000, and families pay about 70 percent of that, new research suggests. The cost of care is $185,000 higher for someone with dementia than for someone without it, the study authors wrote in the Journal of the American Geriatrics Society. “Dementia represents one of the costliest diseases, and most of the responsibility of dementia care falls on families,” said lead study author Dr. Eric Jutkowitz of Brown University in Providence, Rhode Island. More than five million Americans live with dementia, according to the Alzheimer’s Association. That number could rise to 16 million by 2050. “For our long-term care system to be sustainable, we need to provide families with effective resources and tools,” Jutkowitz said by email. Jutkowitz and colleagues used data from the Centers for Medicare and Medicaid Services and the National Alzheimer’s Coordinating Center to estimate lifetime costs of care after a dementia diagnosis. Overall, lifetime costs came to $321,780. Medicaid, the government insurance for the poor, covered about 14 percent. Medicare, the federal insurance program for the elderly and disabled, covered about 16 percent. The 70 percent of costs after a dementia diagnosis born by families came to $225,000, on average. “We expected that dementia would cost a lot of money and that families would incur a large portion of the cost,” Jutkowitz said. “However, what was surprising was the magnitude of the total costs and the amount families incur.”
A 'party drug' just crossed a major hurdle on the path to being legally prescribed as medicine -- Known as ecstasy or "Molly," MDMA was created by pharmaceutical company Merck in 1912 and is currently considered an illegal substance with no medical benefit and a high potential for abuse. The drug is both a stimulant and a psychedelic, meaning it has both energy-raising and hallucinogenic properties, and it's been known to be dangerous when used without medical supervision because it raises body temperature and blood pressure. In the brain, MDMA amps up the activity of chemical messengers involved in mood regulation. Yet researchers who study it say that these same characteristics could make it an ideal treatment for some types of mental illness. One arm of Doblin's research involves studying MDMA in veterans with PTSD in a setting which combines the drug with traditional talk therapy. In three of the sessions, patients are given the drug or a placebo and talk therapy; in another 12 sessions, they are given talk therapy alone. Together, the two treatments could help produce faster and more measurable results, according to people involved in the research. "Psychotherapy is painful, it's slow, it's fits and starts, you start to get to something important and then the patient disappears for a month at a time; they're very defended about getting down to it," said New York-based psychiatrist Julie Holland at the London conference. Holland is also the medical monitor for the MAPS study of MDMA for PTSD in veterans. "MDMA-assisted psychotherapy allows the patient to be more sort of open to the process. It is a less painful process; MDMA can act as a catalyst to make the therapy go faster, be more efficient, be deeper, get to that malignant thing that needs to be taken out and examined in a more sort of peaceful environment with more acceptance," Holland said. Researchers are hopeful that the new FDA designation will help them in their quest to provide relief to people who haven't benefited from traditional approaches.
US Opioid Use Linked To Unemployment, Researchers Say -- The use of opioids is linked to the unemployment rate, a paper published in the National Bureau of Economic Research. Researchers, who are working on the paper Macroeconomic Conditions and Opioid Abuse, analyzed the connection between drug deaths and the economic climate for their study. The research comes as the number of opioid-related overdose deaths, which includes prescription opioids such as oxycodone, hydrocodone, and methadone, as well as heroin have quadrupled since 1999, according to the Centers for Disease Control and Prevention. “The fact that some of the recent rise in drug deaths coincides with the Great Recession and its aftermath highlights the importance of understanding the connection between economic conditions and drug deaths,” the researchers wrote.Although the unemployment rate is currently at a record low of 4.3 percent, the paper shows those who don’t have jobs aren't kept out of the spotlight as the country battles the opioid crisis.Researchers looked at the how deaths and emergency department visits caused by opioids and other drugs correlated with the local unemployment rate.When the unemployment rate in a county increases by one percentage point, the opioid-related death rate per 100,000 jumps by 0.19 (3.6 percent), while the opioid emergency department visit rate per 100,000 rose by 0.95 (7.0 percent), the paper said. The estimated impacts are larger when researchers use unemployment rates based by state, rather than counties. "Overall, we obtain strong evidence that opioid-related deaths and ED visits increase during times of economic weakness," the researchers said.
Warnings over shock dementia revelations from ancestry DNA tests - People who use genetic tests to trace their ancestry only to discover that they are at risk of succumbing to an incurable illness are being left to suffer serious psychological problems. Dementia researchers say the problem is particularly acute for those found to be at risk of Alzheimer’s disease, which has no cure or effective treatment. Yet these people are stumbling upon their status inadvertently after trying to find their Viking, Asian or ancient Greek roots.“These tests have the potential to cause great distress,” said Anna Middleton, head of society and ethics research at the Wellcome Genome Campus in Cambridge. “Companies should make counselling available, before and after people take tests.” The issue is raised in a paper by Middleton and others in the journal Future Medicine.A similar warning was sounded by Louise Walker, research officer at the Alzheimer’s Society. “Everyone has a right to know about their risk if they want to, but these companies have a moral responsibility to make sure people understand the meaning and consequences of this information. Anyone considering getting genetic test results should do so with their eyes open.”Alzheimer’s is linked to the build-up in the brain of clumps of a protein called amyloid. This triggers severe memory loss, confusion and disorientation. One gene, known as ApoE, affects this process and exists in three variants: E2, E3 and E4. Those possessing the last of these face an increased chance of getting the disease in late life. “About 3% of the population has two copies of the E4 variant – one inherited from each parent,” Professor John Hardy, of University College London, said. “They have about an 80% chance of getting Alzheimer’s by the age of 80. The average person has a 10% risk.”
FDA Recalls 465,000 Pacemakers on Hacking Fears -The Food and Drug Administration has recalled 465,000 pacemakers after discovering security vulnerabilities that could let hackers reprogram the devices, potentially putting patient lives at risk.Several devices from Abbott (formerly known as St. Jude Medical) are included in the recall, which the FDA says is intended as a "corrective action", including the Accent, Anthem, Accent MRI, Accent ST, Assurity, and Allure. The good news: If you're affected by the recall, you won't have to have the pacemaker removed and replaced. (In fact, the FDA recommends against that.) Officials say the vulnerability can be fixed with an upgrade to the device's firmware, something that takes just three minutes or so to complete. (While the system is updating, the device will work in backup mode, ensuring its essential features remain in operation.) The FDA says there have been no known reports of patients being harmed by the vulnerability to date. The recall does not apply to any implantable cardiac defibrillators (ICDs) or cardiac resynchronization ICDs.
FDA Approves Futuristic New Cancer Drug, To Cost $475,000, Sending Biotechs Surging -- The FDA on Wednesday opened a new era in cancer treatment, when it approved a landmark, futuristic new gene therapy-based approach to treat childhood leukemia, one which has produced unprecedented results in patients with the deadly cancer. The FDA called the approval "historic." "We're entering a new frontier in medical innovation with the ability to reprogram a patient's own cells to attack a deadly cancer," said FDA Commissioner Scott Gottlieb. The CAR-T cell treatment, developed by Novartis and the University of Pennsylvania, is the first type of gene therapy to hit the U.S. market, and one in a powerful but expensive wave of custom-made "living drugs" being tested against blood cancers and other tumors. The therapy is made by harvesting patients’ white blood cells and rewiring them to home in on tumors. Novartis’s product is the first CAR-T therapy to come before the FDA, leading a pack of novel treatments that promise to change the standard of care for certain aggressive blood cancers."This is a brand new way of treating cancer," said Dr. Stephan Grupp of Children's Hospital of Philadelphia quoted by the AP, who treated the first child with CAR-T cell therapy — a girl who'd been near death but now is cancer-free for five years and counting. "That's enormously exciting."This first use of CAR-T therapy is aimed at patients ill with a common pediatric cancer — acute lymphoblastic leukemia, or ALL — that strikes more than 3,000 children and young adults in the U.S. each year. While most survive, about 15 percent relapse despite today's best treatments, and their prognosis is bleak. The therapy will be marketed as Kymriah. The price tag: $475,000 for a course of treatment. While the amount sounds staggering to many patients, it was far less than many analysts had expected. Still, David Mitchell, president of advocacy group Patients For Affordable Drugs, met with Novartis yesterday to talk about "how to arrive at a fair price for its new CAR-T drug," but said the meeting was "disappointing."
Novartis to Charge $475,000 for Cancer Treatment US Taxpayers Paid $200 Million to Discover - A first of its kind revolutionary cancer treatment was approved by the FDA this week which boasts cure rates for childhood leukemia upwards of 70-80 percent. The innovative nature of the treatment lies in how it genetically re-engineers a patient’s own immune system to find and destroy tumors. While this is certainly noteworthy news, a major controversy is being overlooked by the mainstream media. As Novartis announced their $450,000 price tag, the media failed to report on who actually paid for the development of this breakthrough treatment. The answer, according to a patient advocacy group, is—you. As MIT’s Technology Review notes, the therapy, which will be marketed as Kymriah, is a customized treatment that uses a patient’s own T cells, a type of immune cell. A patient’s T cells are extracted and cryogenically frozen so that they can be transported to Novartis’s manufacturing center in New Jersey. There, the cells are genetically altered to have a new gene that codes for a protein—called a chimeric antigen receptor, or CAR. This protein directs the T cells to target and kill leukemia cells with a specific antigen on their surface. The genetically modified cells are then infused back into the patient. At six months, 89 percent of patients who received the therapy were still living, and at 12 months, 79 percent had survived, according to MIT. These results are nothing short of staggering. Given the fact that thousands of children and young adults are diagnosed every year in the US—making it the most common childhood cancer—the opportunity to save lives is overwhelming. However, Novartis announced the price this week of $475,000 per treatment. This was sold to the public as an ostensible win since the drug was predicted to be priced at $600,000 to $750,000 per treatment. If Novartis had solely financed and conducted their own research, of course, they could certainly charge whatever they wanted to charge. But this is not the case, according to the advocacy group Patients for Affordable Drugs. According to David Mitchell, the founder of the group, $475,000 per treatment is excessive because the federal government threw more than $200 million of your tax dollars into researching CAR-T therapy. According to Mitchell, Novartis simply purchased the rights to the treatment and failed to disclose what amount, if any, they invested in the research.
As Babies are Prescribed Pharmaceuticals, Have We Reached Dystopia? -- Would you let a five-year-old smoke a joint? I certainly hope not. Yet that would probably be less harmful than loading kids up on pharmaceuticals.Currently, over a million American children UNDER SIX YEARS OLD are taking psychiatric drugs. Babies are literally being doped up by the pharmaceutical industry. Over 274,000 babies UNDER ONE-YEAR-OLD are given drugs, mostly for anxiety. Anxiety drugs for babies. Have they tried motherly love? Or is that just an old fashioned, outdated concept? You know, I like to mention society’s similarity to Orwell’s 1984. And surely the growing police state, war on drugs, and endless military campaigns–where the enemy seems to change daily–are reminiscent of the fictional dictatorship of Big Brother. But it seems the powers that be are working tirelessly to blend together the dystopia of 1984, with that of Aldous Huxley’s Brave New World. In that dystopia, there is no police state or war. Society has been perfectly designed by scientists, inspired by Ford’s assembly line. Babies are grown in the lab, cloned to all look alike, depending on their class. Parents are an embarrassing relic of the past. How silly to think a child needs family when they have the state! The lower castes are deprived of oxygen as embryos to stunt their mental development. In America, they use fluoride in the drinking water instead. In Brave New World, children listen to 24-hour propaganda in their cribs. And how jealous the Department of Education must be of the incubators of Brave New World! They have to sometimes wait years to indoctrinate children. But at least the government gets to drug them up at a young age! And if the TV is left on, most of the programming is done for them.
Dubious stem cell clinic got hold of smallpox vaccine. FDA just took it away - The Food and Drug Administration just put dubious stem cell clinics on notice. The agency announced plans on Monday for new policies and enforcement efforts to stamp out what it called “unscrupulous actors” peddling unproven, potentially dangerous, and often expensive stem cell therapies—including a bizarre and troubling instance involving smallpox vaccine. As an initial demonstration of its harder stance, the agency today posted information on two enforcement efforts. One was a warning letter to a Florida stem cell clinic that had posed as legitimate clinical research and ended up blinding three patients after injecting stem cells directly into their eyeballs. The other was a concerning announcement that the agency had seized five vials of smallpox vaccine from stem cell clinics in California. The clinics, run by StemImmune Inc., were said to be mixing the dangerous vaccine with stem cells for an unproven, unapproved, and potentially harmful cancer treatment that was injected intravenously into patients or directly into their tumors. Though the injection of stem cells alone lacks safety and efficacy data, the vaccine is known to be dangerous. The vaccine contains a live poxvirus, similar but less harmful than smallpox. When it’s injected into patients with weakened immune systems—such as many cancer patients—the vaccine can cause life-threatening side effects, such as swelling of the heart. In today’s announcement, the agency noted that the vaccine, Vaccinia Virus Vaccine (Live), is not commercially available. It is reserved for people at high risk of being infected by the otherwise eradicated virus, such as researchers or military personnel. “The FDA has serious concerns about how StemImmune obtained the product for use as part of an unapproved and potentially dangerous treatment,” the agency said. The FDA added that it is actively investigating the vials’ origins.
Bucking FDA, Peter Thiel funds “patently unethical” herpes vaccine trial - Heavyweight tech investor and FDA-critic Peter Thiel is among conservative funders and American researchers backing an offshore herpes vaccine trial that blatantly flouts US safety regulations, according to a Monday report by Kaiser Health News.The vaccine—a live but weakened herpes virus—was first tested in a 17-person trial on the Caribbean Island of St. Kitts without federal oversight or the standard human safety requirement of an institutional review board (IRB) approval. Biomedical researchers and experts have sharply rebuked the lack of safety oversight and slammed the poor quality of the data collected, which has been rejected from scientific publication. However, investors and those running the trial say it is a direct challenge to what they see as innovation-stifling regulations by the Food and Drug Administration.“This is a test case,” Bartley Madden told KHN. Madden is another investor of the vaccine as well as a retired Credit Suisse banker and policy adviser to the conservative Heartland Institute. “The FDA is standing in the way, and Americans are going to hear about this and demand action.” Madden, Thiel, and other investors have invested $7 million into the vaccine’s development, according to Rational Vaccines, the company orchestrating the trial. Though Thiel could not be reached for comment, he has been openly critical of the FDA’s review process. At one point, he claimed that the agency’s processes were so overbearing that “you would not be able to invent the polio vaccine today.”
The super rich are injecting blood from teenagers to gain ‘immortality" -- Over 100 people have participated in a clinical trial at a San Francisco start-up offering blood transfusions for older patients. Each procedure costs $8,000 (£6,200) and sees the patient injected with two and a half litres of plasma – the liquid element of blood that remains after other cells have been removed - taken from young people. The procedure is being offered as an experimental attempt at rejuvenating the elderly. The median age of the patients is 60 years. Jesse Karmazin, 32, a Stanford-trained scientist who founded the US clinic, told The Sunday Times that the initial results from his patients had been encouraging.“It could help improve things such as appearance or diabetes or heart function or memory. These are all the aspects of ageing that have a common cause.“I’m not really in the camp of saying this will provide immortality but I think it comes pretty close, essentially. ‘ The new treatment comes on the back of several studies over the last 17 years in which Stanford researchers have shown the joining of circulatory systems (known as parabiosis) between old and young mice to be effective in rejuvenating organs, muscles and stem cells. Additionally, a study last year found that the plasma of young people itself had a rejuvenating effect when injected into older mice. However, despite the results of the mice-based studies, researchers have attacked the scientific validity of Karmazin’s experiment and raised a number of ethical concerns.
The first men to conquer death will create a new social order – a terrifying one -- In a 2011 New Yorker profile, Peter Thiel, tech-philanthropist and billionaire, surmised that “probably the most extreme form of inequality is between people who are alive and people who are dead”. While he may not be technically wrong, Thiel and other eccentric, wealthy tech-celebrities, such as Elon Musk and Mark Zuckerberg, have taken the next step to counteract that inequality – by embarking on a quest to live forever. Thiel and many like him have been investing in research on life extension, part of transhumanism. Drawing on fields as diverse as neurotechnology, artificial intelligence, biomedical engineering and philosophy, transhumanists believe that the limitations of the human body and mortality can be transcended by machines and technology. The ultimate aim is immortality. Some believe this is achievable by 2045.Of course, humans have long harnessed technology, from vaccinations to smartphones, to improve and extend our lives. But that doesn’t admit you into the transhumanist club. Wanting to live forever, and possessing vast sums of money and time to research, does. The hows and whens of transhumanism are matters of debate. Some advocate the "Singularity" – a form of artificial super-intelligence which will encompass all of humanity's knowledge, that our brains will then be uploaded to. Others believe in anti-ageing methods like cryonics, freezing your body after death until such a time when you can be revived. Transhumanism is no longer a fringe movement either. Darpa, the US government’s research arm into advanced weaponry, created a functional prototype of a super soldier exoskeleton in 2014, which will be fully functional in 2018, and is researching the possibility of an artificial human brain.
Chinese scientists say they’re close to trials transplanting pig organs into humans | South China Morning Post: Chinese scientists say they are waiting for the government to approve clinical trials using genetically modified pig organs for human transplants. The first such transplant surgery could be just two years away, according to one researcher from a national xenotransplantation project. Recent experiments conducted in China and elsewhere on animals including monkeys have shown they could live for an extended period of time – sometimes years – after receiving transplants of pig organs. China is meanwhile home to the world’s biggest pig-cloning farms that could supply animals bred specifically for transplants of livers, hearts and other organs to humans. There is also huge demand for transplant surgery in the country given its high rate of conditions such as cardiovascular disease, lung cancer and hepatitis that result in organ failure, according to Zhao Zijian, director of the Metabolic Disease Research Centre at Nanjing Medical University in Jiangsu.Zhao, who is also a senior scientist at a xenotransplantation laboratory in the province that is involved in the national project, said the ball was now in the government’s court. “We have patients dying from organ failure and their desperate relatives pleading for them to have the chance to live,” Zhao said. “But when we turn to the authorities in charge of approving the clinical trials, all we get is silence. We understand it must be very hard for the government to make a decision, but it’s time we got an answer,” he said. Beijing stopped the practice of obtaining organs from executed prisoners in 2015 – its major source for decades – leading to concerns over whether there would be enough donors to meet the transplant needs of the world’s most populous country.
FDA Warnings Meant to Protect Consumers Fall Under Trump - From the toothpaste you use to the lipstick you apply, the medicines you take to the food you eat, the Food and Drug Administration is supposed to stand between consumers and faulty products that could do them harm. It oversees $2.4 trillion of the U.S. economy—some 20 cents of every dollar Americans spend. But in the first months of Donald Trump’s presidency, the FDA has shown signs it may be retreating from its mission. From January to July, the agency sent 265 warning letters to companies, notifying them of what it alleged to be serious violations of federal rules. That’s the lowest tally for the first seven months of any year since 2008, according to a review of letters posted on the FDA’s website. On average, it’s a 30 percent drop from the number of letters sent during the same period of all eight years Barack Obama was president. In March, Trump nominated 45-year-old Scott Gottlieb to run the FDA. But Gottlieb, who also worked for the agency under President George W. Bush, has been critical of FDA practices in the past. In late 2011, when he was a resident fellow at the conservative American Enterprise Institute, he wrote an op-ed for the Wall Street Journal suggesting that the regulator’s enforcement approach contributed to generic drug shortages by driving up costs for pharmaceutical companies. While concerns with product safety are valid, he wrote, “the FDA and the manufacturers often don’t understand the drug-production processes well enough to detect the root cause of problems. Instead of calling for targeted fixes of troubled plants, the agency has often taken a very costly shotgun approach that requires upgrades virtually everywhere.” He echoed those remarks in Congressional testimony (PDF) later that month. The FDA, in response to questions about the drop in warning letters under Trump, says there’s been no order to slow down enforcement and that Gottlieb doesn’t plan to soften the regulator’s approach.
EPI comment regarding OSHA’s proposal to revoke the beryllium rule - Economic Policy Institute - To the Department of Labor: On January 9, 2017, OSHA published a Final Rule (FR) establishing a new Permissible Exposure Limit (PEL) for beryllium for general industry, construction and shipyards. . On June 27, 2017, OSHA published a notice of proposed rule-making (NPRM) proposing to revoke the ancillary provisions for the construction and shipyard sectors. We are writing to express our opposition to the Occupational Safety and Health Administration (OSHA) proposal to revoke the ancillary provisions limiting occupational exposure to beryllium in the construction and shipyard sectors. OSHA must adequately protect all workers exposed to beryllium, not only those in general industry. According to OSHA’s own analysis, nearly one in five workers (18.6 percent) who are exposed to beryllium work in the construction and shipyard sectors and “the best available evidence indicates that there is a significant risk of CBD [chronic beryllium disease] and lung cancer to workers in construction and shipyards based on the exposure levels observed” (82 Fed. Reg. 2568; 82 Fed. Reg. 29221). If enacted, the NPRM will fail to fully protect workers in the construction and shipyard sectors from beryllium exposure and will increase the incidence of beryllium-related death and illness. The cost of the resulting illness and death would outweigh any cost savings to businesses. Further, the proposed changes are based on assumptions that contradict those in the FR without providing new evidence to justify these claims. There changes are therefore arbitrary and capricious. We urge OSHA not to revoke the ancillary provisions protecting construction and shipyard workers from beryllium exposure. The proposal to revoke these provisions was made without considering new evidence and, if finalized, will cost lives.
Trump Administration Sued Over GMO Food Labeling -- Center for Food Safety (CFS) filed a federal lawsuit Sunday against the Trump administration for its failure to comply with the 2016 federal law on the labeling of genetically engineered (GE) food. Sec. of Agriculture Sonny Perdue and the U.S. Department of Agriculture (USDA) are charged with implementing the new labeling rules, and part of that process is a study on "electronic and digital disclosures" (like QR codes) for GE foods, as opposed to on-package text. That study was required to be finished by July 2017, with an opportunity for public participation, but USDA never completed the study or published it for public comment. "Because this is a controversial topic and crucial decision, Congress required this QR code study be completed by July and that the public's views be included. In court, statutory directives matter—not tweets. We won't let the Trump Administration get away with ignoring the law," said George Kimbrell, legal director for CFS. The federal GE food law requires USDA to establish federal standards for labeling by July 2018. The withheld study will inform the agency's ultimate decision, which is why it was required to be completed a year earlier. The new federal law allows USDA to consider several options: on-package text, a GE symbol on packages or "electronic or digital disclosures," which would require shoppers to use a smart phone to scan packages to access a website or call a 1-800 number for every single product to find out if it was produced with genetic engineering. "Americans deserve nothing less than clear on-package labeling, the way food has always been labeled," continued Kimbrell. "Allowing companies to hide genetically engineered ingredients behind a website or QR code is discriminatory and unworkable."
Arkansas Could Become First State to Ban Dicamba -- The herbicide dicamba , which has been linked to devastating crop damage around the U.S. , could be banned in Arkansas next year. The Arkansas Dicamba Task Force has recommended a cut-off date for the use of the highly drift-prone and volatile herbicide by next April 15 for the 2018 season. The state agriculture department has logged 950 misuse complaints in 26 counties as of August 23. Although dicamba has been around for decades, Monsanto , DuPont and BASF SE sells new formulations of the product that is supposedly less drift-prone and volatile than older versions when used correctly. The herbicide can be applied to crops genetically engineered by Monsanto to resist the herbicide. But off-target fruits, vegetables and other crops are often left cupped and distorted when exposed to the chemical. Weed specialists suspect that the thousands of crop damage reports arising across the country's farm belt are linked to dicamba exposure. Roughly 3.1 million acres have been impacted as of Aug. 10, according to Kevin Bradley, an associate professor in the University of Missouri's Division of Plant Sciences. A video from the Arkansas Farm Bureau describes how dicamba "has become the most difficult issue the Arkansas State Plant Board and University of Arkansas Division of Agriculture weed scientists have faced in years." Arkansas temporarily banned the use and sale of dicamba last month. Missouri and Tennessee took similar actions. The issues surrounding dicamba surfaced last year when Monsanto sold its Xtend cotton and soybean seeds several growing seasons before getting federal approval for the corresponding herbicide. Without having the proper herbicide, cotton and soybean growers were suspected of illegally spraying older versions of dicamba onto their crops and inadvertently damaging nearby non-target crops due to drift.
Once again, a jury rules in favor of Bundy supporters in their 2014 standoff with federal agents - LA Times: or the second time this year, the federal government tried and failed to convict four men who joined the high-profile Bundy family in its 2014 standoff with federal agents in a dispute over grazing fees for cattle. A Las Vegas jury acquitted two of the four men on trial, Ricky Lovelien and Steven Stewart, on all 10 charges against them.The jury found the other two defendants, Scott Drexler and Eric Parker, not guilty on most charges, but it could not reach verdicts on four charges against Parker and two charges against Drexler. The government has not said whether it plans to retry them. The verdicts were a remarkable setback for the government in its attempts to prosecute Cliven Bundy, his family and several of their supporters. The Bundys have become a powerful symbol of what some people on the right view as federal government overreach in controlling public lands. In October, a jury acquitted Ammon Bundy and his followers who were embroiled in a 41-day armed standoff at the Malheur National Wildlife Refuge in Oregon. The proceeding that ended Tuesday was retrial of a case that was originally tried in April but ended in a hung jury. Each of the four defendants faced multiple felony charges including conspiracy to commit an offense against the United States, weapon possession, assault and threatening federal officers stemming from the 2014 standoff near the Bundy ranch in Bunkerville, Nev. Guilty verdicts could have resulted in decades-long prison sentences. After 20 days of testimony, the jury deliberated for four days before reaching its verdicts.
Forest-Killing Beetles Are Swarming North Because of Climate Change - The southern pine beetle, with its three-millimeter frame and short spindly legs, doesn't cut an imposing figure. But en masse, these tree-slaying critters have been labeled "the most destructive insect pest of their forests" by the USDA Forest Service. By boring out serpentine trails under the bark of pine species, the pests sever nutrient flow within trees, killing their hosts within months. Native to Central America, Mexico, and the southeast United States, the beetles are now invasively expanding northward on a path paved by climate change. They were found for the first time infecting trees in New York in 2014 andConnecticut forests in 2015. Research published Monday in Nature Climate Change quantifies this worrisome trend in unprecedented detail, and predicts the potential fallout of a beetle invasion into vulnerable American and Canadian forests over the next 60 years. Given that this species cost the southeast US $100 million a year in timber losses from 1990 through 2004 and destroyed millions of acres of valuable forest ecosystems, its climate-enabled range expansion is likely to be disastrous for pines at higher latitudes.Using their new detailed parameters, Lesk and his colleagues projected that by 2020, the beetles will have made their way up Atlantic coast to Nova Scotia, Canada. By 2050, 78 percent of the pitch pine forests from southern Maine to eastern Ohio—around 48,000 square miles—could be warm enough to accommodate the beetles.
America Is on the Verge of Ratpocalypse -- Most cities know rat woes well. Washington, D.C., for instance, has burned through countless plans to stymie its longstanding “rat problem” or “rodent crisis,” in which disease-ridden critters are not only growing in number but ballooning to the size of human infants. What they don’t know is how this all will end. Houston, Texas, is seeing a rat spike this year, and so is New York City. In Chicago, rodent complaints for the early part of the summer have increased about 9 percent from last year, forcing city officials to start sprinkling the streets with rat birth control. Philadelphia and Boston were recently ranked the two cities with the most rat sightings in the country. And it’s not just this year; as USA Today reported last year, major cities saw spikes in rodent-related business from 2013 to 2015. Calls to Orkin, the pest control service, were reportedly “up 61 percent in Chicago; 67 percent in Boston; 174 percent in San Francisco; 129 percent in New York City; and 57 percent in Washington, D.C.” It’s no surprise that rats thrive in cities, where humans provide an abundance of food and shelter. But experts now agree that the weather is playing a role in these recent increases. Extreme summer heat and this past winter’s mild temperatures have created urban rat utopias.
Activists sue U.S. to restore protections for Yellowstone grizzlies (Reuters) - Environmental groups sued the U.S. government on Wednesday for stripping federal protections from grizzly bears in and around Yellowstone National Park, contending climate changes and poaching threaten the famed population of bears. WildEarth Guardians as well as a coalition including the Sierra Club and Northern Cheyenne Tribe separately sued Republican President Donald Trump's administration in U.S. District Court in Missoula, Montana to prevent removal of the bears from the U.S. list of endangered and threatened species. "Grizzlies have disappeared in nearly 98 percent of their range in the Lower 48; now is not the time to strip these bears of vital federal protections," WildEarth Guardians carnivore advocate Kelly Nokes said in a telephone interview. Grizzlies are a top attraction for the millions of visitors to Yellowstone each year, sometimes drawing vehicles packed with tourists in "bear jams." The lawsuits, which name U.S. Interior Secretary Ryan Zinke and the U.S. Fish and Wildlife Service as plaintiffs, claim that illegal killing and climate changes have caused declines in the grizzlies' food supplies and habitat loss. These factors threaten the survival of the large, hump-shouldered bears that roam Yellowstone and the three Northern Rocky Mountain states that border the park, according to the lawsuits. The groups are asking a federal judge to find that the U.S. government violated provisions of the Endangered Species Act in delisting the bears and to retain safeguards.
South Africa’s first online rhino horn auction did little to end poaching (and could even worsen it) - Private rhino horn owner John Hume recently held South Africa’s first online rhino horn auction, a major event in the ongoing fight by private rhino owners to be able to sell legal horn stocks. But in a statement released on Hume’s behalf it was admitted that there were very few bidders for the 264 horns.The auctions result is a setback to achieve a legal, commercial trade in horn to replace poached horn in supplying demand in the main markets. Hume’s official statement tried to put a brave face on it, saying he had triumphed and that a legal and sustainable supply has been established. He stills hopes to attract more buyers – horn will still be available for private sales as long as permits are available.The auction website had been translated into Vietnamese and Chinese in a bid to attract more bidders. Vietnam and China are the main markets for rhino horn – supplied currently by the huge level of poaching of rhinos in South and southern Africa.But with very few bidders taking part and one presumes little horn sold, it has done little to decisively advance the cause of establishing a legal, regulated market that both John Hume and Pelham Jones, chair of the Rhino Owners Association believe can replace poaching, and provide funds to promote the breeding, protection and ultimate survival of rhinos.There’s confusion over what comes next, made worse by the inconclusive result of the online auction, which has neither put a nail firmly in the coffin of legal trade nor shown a massive domestic demand that would put pressure on the government or provide economic incentives for more auctions or private sales. This is the worst of both worlds and will only encourage further poaching, as demand shows no sign of lessening.
381 New Species Discovered in the Amazon - A new WWF and Mamirauá Institute for Sustainable Development report, released Aug. 30, reveals that a new animal or plant species is discovered in the Amazon every two days, the fastest rate to be observed this century. The findings come as huge parts of the forest are increasingly under threat, sparking further concern over the irreversible—and potentially catastrophic—consequences unsustainable policy and decision-making could have. New Species of Vertebrates and Plants in the Amazon 2014-2015 details 381 new species that were discovered over 24 months, including 216 plants, 93 fish, 32 amphibians, 20 mammals (2 of which are fossils), 19 reptiles and 1 bird. The latest 2014-2015 survey indicates the highest rate of discovery yet, with a species identified every 1.9 days. The average number of new species found in the Amazon in WWF's 1999-2009 report was 111 a year, or one new species every three days, while the 2010-2013 report revealed that at least 441 were discovered, which works out at a rate of one new species every 3.3 days. Ricardo Mello, coordinator of WWF-Brazil Amazon Programme, said that life within this biome is still a great enigma: "We're in 2017, verifying the existence of new species and even though resources are scarce, we are seeing an immense variety and richness of biodiversity . This is a signal that we still have much to learn about the Amazon." Mello also stated that the new findings should compel decision-makers, both public and private, to think about the irreversible impacts caused by large-scale projects such as roads and hydroelectric dams in the Amazon. "This biodiversity needs to be known and protected. Studies indicate that the greatest economic potential of a region such as the Amazon is the inclusion of biodiversity in the technological solutions of a new development model, including development of cures for diseases, relying on new species for food purposes, such as superfoods."
Climate change threatens agricultural trade in Pacific Rim economies, UN agency warns - With global warming expected to significantly impact future yields in countries located closer to the equator, the United Nations agriculture agency is calling on Asia-Pacific economies to take a leading role in adaptation and mitigation. “Many APEC [Asia-Pacific Economic Cooperation] economies have already felt the full force of agricultural losses from natural disasters in recent years, with the vast majority of these being climate related,” said Kundhavi Kadiresan, Assistant Director-General and FAO Regional Representative for Asia and the Pacific. Geographically, the negative impact of climate change on agricultural output could result in lower yields of rice, wheat, corn and soybeans in countries with tropical climates, compared with the impacts experienced by those in higher latitudes. Fisheries could also be affected by changes to water temperature, warned the Food and Agriculture Organization (FAO) today. “The annual tally runs into the billions and billions of dollars in losses. So, the time to act is now. Policy makers need to prepare for changes in supply, shifting trade patterns and a need for greater investment in agriculture, fisheries, land and water management, that will benefit smallholder farmers and others that produce our food,” Mr. Kadiresan added. Many vital agricultural regions in Asia are at risk of crossing key climate thresholds that would cause plant and animal productivity to decline, according to a meeting in Viet Nam of Agriculture Ministers of APEC member economies. Based on the findings of the global research community, the International Panel on Climate Change (IPCC) anticipates that these trends are expected to worsen in the future with the projected impacts of anthropogenic climate change.
Sri Lanka bans plastic after garbage crisis -(AFP) - Sri Lanka banned plastic bags and other disposable products on Friday after the collapse of the island's biggest dump led to a rubbish disposal crisis. Rotting garbage piled up in many parts of the capital after the giant rubbish tip collapsed in April, crushing dozens of homes and killing 32 people. Many blamed the haphazard use of plastic, which was also cited in flash flooding in the capital after storm water drains became clogged. In response, President Maithripala Sirisena banned the sale of plastic bags, cups and plates, as well as the burning of refuse containing plastic. "Any person who fails to comply with the regulations... shall be liable to an offence and punishable under the National Environmental Act," the president said. Offenders could be fined 10,000 rupees ($66) and jailed for up to two years.
Kenya plastic bag ban officially goes into effect in effort to reduce pollution - A Kenyan ban [Kenya Gazette, PDF] on plastic bags officially went into effect [press release, PDF] Monday, six months after it was announced in February. The ban applies to Kenyans producing, selling or using plastic bags and carries a punishment of up to USD $40,000 or imprisonment of up to four years. Although the ban has a wide target audience, it will initially be enforced to target manufacturers. The plastic bags covered under the ban include carrier bags with handles and flat bags without handles. Kenya joins more than 40 other nations [Reuters report} that have enacted similar laws, but Kenya's is far more stringent than all of the others to date. Kenya hopes the ban will greatly reduce plastic pollution, but this goal is estimated to come at the expense of around 60,000 jobs lost. Reducing pollution has long been a goal of countries all over the world. In June a group of environmentalists sued [JURIST report] the UK government alleging that the country's proposed plan for reducing the UK's air pollution was inadequate. In March an Indian Court granted [JURIST report] the Ganges and Yumana rivers the same legal rights as people in an effort to protect them from being polluted. In February UN human rights experts called for [JURIST report] global leaders to take action by enacting strong anti-pollution legislation and strictly enforcing it. Earlier in February the European Commission gave final warnings [JURIST report] to Germany, France, Spain, Italy and the UK Wednesday for failing to address air pollution. Also in February New York's governor signed a bill [JURIST report] blocking fees for using plastic bags. In November a California plastic bag ban [bill, PDF] went into effect after it had been halted [JURIST report] by a referendum petition.
Scores treated after ′chemical mist′ hits British beach | DW | 28.08.2017: Residents and tourists in a southern English seaside town have been taken to hospital after inhaling a noxious 'haze.' Police said the chemical mist appeared to spread inland from the sea.Cliff tops and beaches near the town of Eastbourne in southern England were evacuated on Sunday after hundreds of people were affected by a mystery chemical mist. More than 100 people were treated in hospital after reporting breathing difficulties, stinging eyes and sickness from the haze, the BBC reported. The broadcaster cited East Sussex Healthcare NHS Trust as saying that 133 people were being "decontaminated" at one of its hospitals. Emergency services warned the public to stay away from beaches and to keep doors and windows closed due to the unknown noxious substance. In a statement, Sussex Police said the haze appeared to be coming in from the sea, adding that it had yet to establish the source. Local residents described how a packed beach at Birling Gap emptied in just a few minutes due to the sudden spreading of the haze.
Lead poisoning, gasoline lobbies and crime --Most of you have probably heard how the residents of Flint, Michigan were exposed to unhealthy levels of lead in their water (actually, any level is considered unhealthy) due to political and managerial incompetence.* Then I read this article on the “lead-poisoned generations of New Orleans,” which pointed out two things. First, there’s a very heavy correlation between lead poisoning and poverty, i.e., the poor are exposed to more lead in their air, water and earth than the rich due to where they live, the jobs they work, their lack of access to public health clinics, and their relative lack of political power. That article linked to another, fascinating one about Clair Patterson, an eccentric genius who fought a (mostly) lone war against the gasoline industry from after WWII until lead’s poisonous effects of people were pulled back by changes in US air quality regulations (e.g., removing lead from gasoline) that began in the 1970s but were prevented by industry lobbying from reaching their end point until 1995. (In the meanwhile, another generation of children inhaled lead at levels linked to permanent brain damage — and lower IQs.**) That long article is worth reading for its industry villains, the academic who took a big salary to work for industry, and the generation of environmental scientists spawned by Patterson’s work. There are two lessons from these stories. The first is that we’ve known about lead’s negative impacts for a long time, as this excerpt from the Patterson article demonstrates: The second is that industry will fight regulations to limit their use of lead, as alternative substances cost more (not a lot more, just more). That fighting is not just worrying from a public health and development perspective, but also from the perspective of those children who are permanently damaged by lead in their blood and soft tissue. This article goes through the lead-crime hypothesis, and explains why (1) crime has dropped radically in the US since the mid 1990s (programs to reduce lead began in the 1970s and it takes 23 years for kids with intelligence and behavior problems caused by lead to “hit the statistics”) and (2) why crime has not dropped by as much as it could: ongoing exposure to lead in polluted soil and water. Who’s most exposed? The poor people put in public housing, as also discussed in the first article above.
Why are New Zealand’s waters so polluted? - nI had lived in New Zealand for two years in the early 2000's. In 2015, I moved back here. I was astonished to see how much the country had changed in those 15 years. It has become wealthier on the back of an urban property boom, mass immigration and the explosive growth of intensive dairy farming which began back in the 1990s.I also discovered that the country is harbouring a disturbing secret, little known to the rest of the world: its freshwater is in severe crisis. Two-thirds of New Zealand's rivers are too polluted to swim in and half its lakes are irreversibly damaged. This pollution, say many independent environmentalists, scientists and economists, is primarily a by-product of the laissez faire growth of the country's dairy industry. The government, dairy industry, and irrigation lobby disagree. They say it's a legacy of over 100 years of farming.I set out to investigate why New Zealand, a country which markets itself as a clean, green paradise, has in fact got disturbing water pollution problems which only appear to be getting worse.While I was researching the story an event happened which I believe has been pivotal in awakening New Zealanders to the dire state of their freshwater. In August 2016, the tiny town of Havelock North, on the east coast of the country's North Island, was incapacitated by an outbreak of campylobacter in their drinking water. Over 5,000 of its 15,000 inhabitants were made ill by the bug and three deaths were later linked to the outbreak.
First-ever water tax proposed to tackle unsafe drinking water in California: >> For the first time Californians would pay a tax on drinking water, 95 cents per month, under legislation to fix hundreds of public water systems with unsafe tap water — a problem that’s most pervasive in rural areas with agricultural runoff. Senate Bill 623, backed by a strange-bedfellows coalition of the agricultural lobby and environmental groups but opposed by water districts, would generate $2 billion over the next 15 years to clean up contaminated groundwater and improve faulty water systems and wells. “My message is short and direct: We are not Flint, Michigan,” co-author Sen. Robert Hertzberg, D-Van Nuys, said at a Wednesday rally outside the Capitol, where demonstrators held signs reading “Clean water is not a luxury” and “Water is a human right.” Ironically, many Californians are more aware of the crisis in Flint — where state and local officials in 2015 told residents about lead contamination in the drinking water, after claiming it was safe to drink — than about the water problems in their home state, said the measure’s main author, Sen. Bill Monning, D-Monterey. He called this “a pivotal time in our state’s history to do the right thing.” SB 623 has been moving through the Legislature for months, but was amended Monday to include the tax on water for both homes and businesses. It also imposes taxes on farms and dairies, roughly $30 million annually, to address some of the contamination caused by fertilizers and other chemicals. Because it includes new taxes, the proposal will need a two-thirds vote in each house to pass, which supporters concede will be a battle.
Historic heat wave pushes California’s grid to the limit - From San Francisco to Los Angeles, California is bracing for a weekend of potentially historic heat, with temperatures forecasted to climb as high as 115°F in some areas of the state. That heat is helping to fuel wildfires, which have broken out in the Sacramento Valley and around Los Angeles. An air pollution specialist with the state’s Air Resources Board urged people especially susceptible to health problems from smoke — the asthmatic, the elderly, or people with weakened immune systems — to remain indoors throughout Friday and Saturday. But pushing its population indoors comes with its own set of risks for the state, which could see record-breaking levels of demand for power, as residents try to stay cool with the help of air conditioners. If too many homes and businesses demand power, it could overwhelm the grid, potentially causing a series of blackouts. In an effort to avoid that, the state has requested that Californians refrain from using major appliances between 1 p.m. and 10 p.m. on Friday. In Los Angeles, which has seen sweltering temperatures for nearly a week, residents have already set a new record for peak electricity demand — and temperatures are only expected to climb into the weekend. Overwhelming demand worked some equipment in the city to the point of failure, leaving more than 11,000 residents without power between Wednesday night and Thursday morning. This is hardly the first record-breaking heat wave to make headlines during the summer of 2017. Earlier this month, oppressive heat throughout Eastern Europe, France, Italy, and Spain was responsible for at least six deaths and the outbreak of several wildfires. The Pacific Northwest also had to contend with extremely high heat combined with smoke from wildfires in Canada earlier this month, creating a situation similar to what is being seen now in California where high temperatures combine with wildfire to create dangerous air quality, fueling concerns about public health. And in Arizona earlier this summer, it was so hot that planes literally could not take off: at least 38 flights out of Phoenix were grounded as temperatures climbed near 120 degrees Fahrenheit.
China Is Weaponizing Water - High in the Himalayan Mountains are what has been dubbed the “Water Towers of Asia.” Seven of the continent’s greatest rivers start life here including the Mekong, Ganges, Yangtze, Indus and Irrawaddy. What begins as dribble from snow melt in the Tibetan plateau builds into mighty rivers that flow across China’s borders before eventually reaching South Asia.To satisfy its insatiable demand for electricity and as part of its shift away from coal, China has gone on a dam building spree. In 1949, China had less than forty small hydroelectric dams, but now it has more dams than the United States, Brazil and Canada combined. On the upper Mekong alone, China has erected seven mega dams with plans to build an additional twenty-one. Just one of its latest dams is capable of producing more hydropower than all of Vietnam and Thailand’s dams on the Mekong.This dramatic increase in dam building activity has had an outsized environmental impact and stoked fears in downstream nations.“Beside having environmental issues those dams in Tibet can be disastrous for [India]. They can unleash their fury during earthquake, accidents or by intentional destruction can easily be used against India during war,” said Milap Chandra Sharma, a glaciologist at Jawaharlal Nehru University in New Delhi.China’s southern neighbors are not worried without reason. In the past, India has blamedsudden discharges from Chinese dams for several flash floods including one that caused an estimated $30 million in damage and left 50,000 homeless in northeast India.Each year, during China’s rainy season, downstream nations are on high alert as Chinese dams release water to ease pressure with little warning. “A discharge by a dam will have a domino effect on the whole system, which can cause huge damages,” explained Le Anh Tuan, deputy director of the Research Institute for Climate Change in Vietnam. In addition to floods, Chinese dams are also believed to be responsible for worsening droughts. Last year, Vietnam pleaded with China to release water from the Yunnan dam on the Mekong River to ease severe water shortages downstream. China agreed and waters flowed into Cambodia, Laos, Myanmar, Thailand and Vietnam. These two extremes not only highlight the environmental impact of Chinese dams, but also serve as a stark reminder of China’s influence over its southern neighbors. These rivers are foundational to life in South Asia, providing drinking water, irrigation for farming, habitats for fisheries and transportation for commerce.
Trump reversed regulations to protect infrastructure against flooding just days before Hurricane Harvey - Just 10 days before Hurricane Harvey descended upon Texas on Friday, wreaking havoc and widespread flooding, President Donald Trump signed an executive order revoking a set of regulations that would have made federally-funded infrastructure less vulnerable to flooding.The Obama-era rules, which had not yet gone into effect, would have required the federal government to take into account the risk of flooding and sea-level rise as a result of climate change when constructing new infrastructure and rebuilding after disasters.Experts are predicting Harvey — the most powerful storm to hit the US since 2004 — will cost Texas between $30 billion and $100 billion in damage. And in the coming days, Congress will be called upon to send billions of federal dollars to help with the state's recovery and rebuilding efforts.But because of Trump's rollback of Obama's Federal Flood Risk Management Standards, experts across the political spectrum say much of the federal money sent to Texas will likely be wasted on construction that will be insufficiently protected from the next storm. We will rebuild things that should not be rebuilt and ... in ways that are less safe and secure than they should be," Eli Lehrer, president of the DC free-market think tank R Street Institute, told Business Insider.
As Harvey's waters rise, so do panic levels, rescuer says - As Harvey continues dumping rain on East Texas and the waters there continue to rise, people are starting to panic, rushing rescue boats and even shooting at them if they don't stop, said one volunteer rescuer.Clyde Cain, of the Cajun Navy, a Louisiana-based rescue force that gained fame during Hurricane Katrina, said in one instance, a boat broke down, and while the crew sought shelter in a delivery truck, people tried to steal the inoperable boat."They're making it difficult for us to rescue them," he said. "You have people rushing the boat. Everyone wants to get in at the same time. They're panicking. Water is rising."Because of the hostile responses, the Cajun Navy has been forced to halt some rescue attempts, Cain said. "We have boats being shot at if we're not picking everybody up. We're having to pull out for a minute. We're dropping an air boat right now to go rescue a couple of our boats that broke, and they're kind of under attack," he said.
Harvey's 2-day rain in Houston is 3 times floodwater pumped from New Orleans after Katrina | NOLA.com: For the 48 hours ending at 11 a.m. Monday (Aug. 28), Harris County, Texas, which includes Houston, measured an average 23.7 inches of rain, which represents 732 billion gallons of water, said Jeff Lindner, a Harris County Flood Control District official. While sort of an apples to oranges comparison, that's almost three times as much floodwater as was pumped out of New Orleans in the aftermath of Hurricane Katrina in 2005 by the Army Corps of Engineers. Of course, that's only the rain total in Houston for the past two days. According to the National Weather Service, the city saw 35.48 inches of rain for the four-day Harvey drenching, as of 11 a.m. Monday.While Houston's four-day rainfall totals tower above other readings, the totals for other Texas locations include many that had seen more than 10 inches of rain. Lake Charles in Louisiana also measured 10.27 inches through 11 a.m. Monday, and was undergoing bouts of 2-inch per hour rainfall Monday afternoon.
'Texas has never seen an event like this': Harvey pummels state with 'catastrophic' flooding — here's the latest -- Hurricane Harvey made landfall on the Texas Gulf Coast on Friday night, with winds topping 130 mph.
- As of Wednesday morning, it was a tropical storm with winds up to 45 mph, and was poised to make a second landfall.
- A rain gauge near Highlands, Texas registered 51.88 inches of rainfall, breaking the record for the continental US.
- At least 18 deaths have been confirmed, and officials expect the toll to rise. Tens of thousands of people have had to take refuge in shelters as dangerous flooding continues.
- Houston Mayor Sylvester Turner announced curfew from 12 a.m. to 5 a.m. amid reports of looting, armed robberies and people impersonating police officers.
An additional six to 12 inches of rain was expected north and east of Houston and into southwestern Louisiana as of 1 a.m. CDT Wednesday morning, the National Hurricane Center reported. A rain gauge southeast of Houston measured 49.32 inches as of 9 am CDT on Tuesday, breaking Texas' tropical cyclone rainfall record. Another near Highlands, Texas (east of Houston) surpassed that record by Tuesday afternoon, registering 51.88 inches of rainfall — breaking the record for the continental US. At least 18 deaths have been reported. Tens of thousands have sought refuge in shelters, and hundreds of thousands could seek some sort of disaster assistance, officials said. "This is a landmark event for Texas," Brock Long, the Federal Emergency Management Agency administrator, said. "Texas has never seen an event like this." But Harvey isn't done yet — Houston is bracing for up to another foot of rain in the coming days, and the storm is turning its destructive eye on Louisiana next, poised to make a second landfall near the Texas-Louisiana border early Wednesday morning. As of 1 a.m. CDT, Harvey was situated about 45 miles south-southwest of Cameron, Louisiana.
Blame climate change for packing Harvey with rain, but not for its slow pace -- The long-term warming of Earth almost certainly created conditions that packed more moisture into Hurricane Harvey, scientists say. But the aspect of the storm most punishing to Houston — its languid pace, while dropping all that water — is less clearly tied to climate change. The deluge is equal to about 1 million gallons for every man, woman and child in Southeastern Texas, according to the Associated Press. Those massive reserves of water can be directly linked to the increased temperatures in the Gulf of Mexico, according to several scientists. Harvey has been fueled by waters that are nearly 1 degree Celsius (about 2 degrees Fahrenheit) warmer than in the past. Researchers put the increase in moisture in the storm added by that greater warmth at anywhere from 3 to 7 percent. “That large amount of moisture meant the potential for much greater rainfalls and greater flooding,” Michael Mann, a professor of atmospheric science at Penn State University, wrote on his Facebook page. The increased wetness packed by storms today is linked to the higher rates of evaporation that come along with higher temperatures in the atmosphere, said Mark Jacobson, director of Stanford University’s Atmosphere/Energy Program. “All hurricanes are more intense,” Jacobson said. “Whether a lot more intense or a little more intense, it’s hard to say, without re-simulating it.” Harvey has also devastated coastal communities because of an enhanced storm surge — another phenomenon that scientists widely agree is tied to climate change. In Galveston, Texas, near where Harvey made landfall, warming has contributed to a sea-level rise of more than a foot, in just the 50 years through 2012, according to the Union of Concerned Scientists, an environmental advocacy group. And higher sea levels create a cascading series of problems. In Galveston Bay, for example, Harvey’s storm surge of more than two feet came on top of the already higher sea level. Storm drains and waterways that normally empty into Galveston Bay had no place to empty. They backed up, causing even greater flooding.
Army Begins Releasing Water From 2 Houston Dams, Flooding Thousands Of Nearby Homes --The US Army Corps of Engineers began releasing water into the Buffalo Bayou - the main body of water running through Houston - from two flood-control dams whose water level has risen too rapidly, a move that will flood thousands of nearby homes. Emergency workers said they began to release water from the Addicks and Barker dams located 17 miles west of downtown Houston early Monday to prevent uncontrollable flooding of the Houston metropolitan area from torrential rains released by Tropical Storm Harvey, according to ABC News. Engineers were forced to start the process earlier than previously announced because water levels in the reservoirs had “increased dramatically in the last few hours,” officials said early Monday, adding that the release would likely cause additional street flooding that could spill into homes. This is the first time engineers have done this for flood control, officials said.“If we don’t begin releasing now, the volume of uncontrolled water around the dams will be higher and have a greater impact on the surrounding communities,” Col. Lars Zetterstrom, the Corps’ Galveston district commander, said in a statement Monday. “Both reservoirs are rising more than half a foot per hour,” Zetterstrom added. “Residents adjacent to the reservoirs need to be vigilant because the water in the reservoirs is rising rapidly." “It’s going to be better to release the water through the gates directly into Buffalo Bayou, as opposed to letting it go around the end and through additional neighborhoods and ultimately into the bayou,” the Army Corps commander said.
Trump surveys devastated Texas as Harvey rages on (Reuters) - President Donald Trump visited Texas on Tuesday to survey damage from the first major natural disaster to test his leadership in a crisis, as record rainfall from Tropical Storm Harvey lashed Houston and tens of thousands of people fled deluged homes. The storm turning slowly in the Gulf of Mexico has brought catastrophic flooding to Texas, killing at least 12 people and paralyzing Houston, America's fourth most populous city. Damage was expected to run well into the tens of billions of dollars, making it one of the costliest U.S. natural disasters. City officials were preparing to temporarily house some 19,000 people, with thousands more expected to flee the area as the flooding entered its fourth day and authorities found themselves running out of space in cramped shelters. The mayor of Houston announced an indefinite 12 a.m. to 5 a.m. curfew amid reports of looting, armed robberies and people impersonating police officers. Nearly a third of Harris County was under water, an area 15 times the size of Manhattan, according to the Houston Chronicle newspaper. Harvey has affected nearly a fifth of U.S. refining capacity, triggering worries about lack of gasoline and sending gasoline futures to a two-year high this week. Nearly 20 percent of refining capacity is offline in Texas and Louisiana, according to company reports and Reuters estimates. Although Houston residents saw patchy sunlight for the first time in days late on Tuesday afternoon, forecasters warned that 6 to 12 inches (15 to 30 cm) of rain was on its way and would continue through Thursday, badly straining the dams and drainage systems that protect the low-lying U.S. energy hub. Meanwhile water levels continued to rise. Harris County officials warned residents to evacuate as they released water from overflowing reservoirs to alleviate pressure on two dams, a move that would add to flooding along the Buffalo Bayou waterway that runs through the area.
As Catastrophic Flooding Hits Houston, Fears Grow of Pollution from Oil Refineries & Superfund Sites - Democracy Now - interview & transcript - A catastrophic storm has hit Houston, the nation’s fourth-largest city and home to the largest refining and petrochemical complex in the United States. The crisis began on Friday when Hurricane Harvey made landfall in Rockport, Texas. It was the most powerful hurricane to strike the state in more than 50 years. Much of the damage has been caused by the massive rainfall, with parts of Texas already receiving 30 inches of rain. That could top 50 inches in the coming days. Entire highways in Houston are now underwater. The storm has caused five reported deaths, but the death toll is expected to rise. Thousands of people are still stranded in their homes, waiting to be rescued. Meanwhile, the city of Dallas prepares to turn its convention center into a mega-shelter to host 5,000 evacuees. The National Weather Service released a statement on Sunday saying, "This event is unprecedented and all impacts are unknown and beyond anything experienced." We speak with Bryan Parras, an organizer for the "Beyond Dirty Fuels" campaign with the Sierra Club in Houston, Texas. He helped found the environmental justice group t.e.j.a.s.
Houston’s polluted Superfund sites threaten to contaminate floodwaters - As rain poured and floodwaters inched toward his house in south Houston, Wes Highfield set out on a risky mission in his Jeep Cherokee. He drove in several directions to reach a nearby creek to collect water samples, but each time he was turned back when water washed against his floorboard. “Yesterday as these large retention ponds filled up, eight feet deep in places, kids were swimming in them, and that’s not good,” said Highfield, a scientist at Texas A&M University’s Galveston campus. The Brio Refining toxic Superfund site, where ethylbenzene, chlorinated hydrocarbons and other chemical compounds were once pooled in pits before the Environmental Protection Agency removed them, sits “just up the road, and it drains into our watershed,” he said. Harris County, home to Houston, has at least a dozen federal Superfund sites, more than any county in Texas. On top of that, the state lists several other highly toxic sites managed by the Texas Commission on Environmental Quality. Up to 30 percent of the county is under water. Like other scientists in the area, Highfield is deeply worried about toxins leaking into the water during an unprecedented rainfall and flooding from Hurricane Harvey that caused dams to spill over for the first time in history. On Tuesday, ExxonMobil reported that two of its refineries east of Houston had been damaged in the flood and released pollutants. “I made a couple of phone calls to colleagues who said bottle up [samples], label them and we’ll run them all,” Highfield said. On Tuesday, EPA officials in Washington traveled to Houston to monitor environmental risks.
Is Harvey Also a Threat to the Air We Breathe? - Early Sunday morning Stephanie Thomas, of Public Citizen, one of the nonprofits that is part of the Healthy Port Communities Coalition, was walking down to Buffalo Bayou from her home in the Second Ward, just east of downtown Houston, when she caught a whiff of "something powerful." "It smelled like burnt rubber with a hint of something metallic thrown in," she says. She didn't linger near the bayou and soon she too was seeing reports on social media of an unknown industrial-like stench. However, it is still unclear where exactly the odor is coming from, but for people like Olmos, who has lived in Manchester for more than 15 years, the area refineries and petrochemical plants seem to be the likely culprits. All of this comes as some area refineries, facing the reality of Harvey and Houston's catastrophic flooding, have abruptly started shutting down operations, including ExxonMobil, Petrobras, Shell and Chevron Phillips, all announced they were shutting down operations on Sunday. While these shutdowns may be necessary, they can produce significant amounts of air pollution as the systems belch out all kinds of emissions during the shutdown process. “Harvey is also a threat to the air we breathe,” Bakeyah Nelson, executive director of Air Alliance Houston, stated in a release. “When petrochemical plants prepare for storms, they release thousands of pounds of pollutants into the air. This pollution will hurt public health in Houston. It is a stark reminder of the dangers of living near industry. We urge everyone to stay safe.” Chevron Phillips has already told the Texas Commission on Environmental Quality that it expects to exceed permitted limits for several hazardous pollutants, such as 1,3-butadiene, benzene and ethylene, during shutdown procedures.
'Unseen Dangers' of Harvey: Petrochemical Plants Release 1 Million Pounds of Harmful Air Pollution - As some of the nation's largest crude processors and refineries shut down their facilities amid " unprecedented " rainfall and flooding from Harvey , residents nearby are reporting noxious, gaseous smells clouding the air. "I've been smelling them all night and off and on this morning," Bryan Parras, from the environmental justice group TEJAS , told New Republic on Sunday. Some locals are also experiencing "headaches, sore throat, scratchy throat and itchy eyes," Parras added. Paris said that the chemical-like smells emanate from Houston's East End and are particularly strong in communities nearby the petrochemical plants. Problem is, the fence-line community cannot leave or evacuate as they are surrounded by devastating flooding, "so they are literally getting gassed by these chemicals," he said. The source of the smell is likely caused by the abrupt shutdown of ExxonMobil , Petrobras, Shell, Chevron Phillips and other petrochemical facilities in the wake of Harvey's historic flooding, reports suggest. A 2012 analysis from the Environmental Integrity Project found that "upsets or sudden shutdowns can release large plumes of sulfur dioxide or toxic chemicals in just a few hours, exposing downwind communities to peak levels of pollution that are much more likely to trigger asthma attacks and other respiratory systems." Initial reports from Texas regulators indicate that more than 1 million pounds of harmful air pollution have been released into the air due to the closures, the Environmental Defense Fund noted in a blog post .
Harvey marks the most extreme rain event in U.S. history -- The rain from Harvey is in a class of its own. The storm has unloaded over 50 inches of rain east of Houston, the greatest amount ever recorded in the Lower 48 states from a single storm. And it’s still raining. John Nielsen-Gammon, Texas state climatologist, said a rain gauge in Mont Belvieu, about 40 miles east of Houston, had registered 51.1 inches of rain through early Tuesday afternoon. This total exceeds the previous record of 48 inches set during tropical cyclone Amelia in Medina, Texas in 1978. Capital Weather Gang's Jason Samenow shares what's next for the battered Texas coast and tracks Harvey's path toward Southwestern Louisiana. (Claritza Jimenez,Jason Samenow/The Washington Post) All rainfalls totals from this storm are still preliminary and require review. But, if verified, this amount breaks not only the Texas state rainfall record but also the record for the remaining Lower 48 states. [What the flooding and rescues of Hurricane Harvey look like, in videos] Hawaii has logged isolated reports of greater amounts at high elevations from tropical systems, but the footprint from Harvey in Southeast Texas is much larger. It has produced at least three feet of rain over most of the Houston region, affecting more than 5 million people. “The 3-to-4 day rainfall totals of greater than 40 inches (possible 50 inches in locations surrounding Santa Fe and Dickinson) are simply mind-blowing that has lead to the largest flood in Houston-Galveston history,” the National Weather Service office serving Houston wrote. From the perspective of the amount of volume unloaded in the United States from a single storm, Harvey has no rival. Nielsen-Gammon found Harvey’s total rainfall concentrated over a 20,000-square-mile area represents nearly 19 times the daily discharge of the Mississippi River, by far the most of any tropical system ever recorded.
Houston Is About to Face a Public Health Nightmare - In the coming weeks and even months, residents of Houston and other parts of southern Texas hit hard by Hurricane Harvey will be faced with the public health disasters that can result from dirty floodwater and landslides. The natural disaster has ostensibly turned the city into a sprawling, pathogen-infested swamp. Up to 25 inches of rain have already accumulated in two days. Rains are expected to continue until Wednesday night, and by the end, Harvey will have dumped 40 to 50 inches on the metropolitan area. Heavy precipitation is turning entire neighborhoods into contaminated and potentially toxic rivers. For many of the city’s residents, contact with floodwater is unavoidable, putting them at risk for diarrhea-causing bacterial infections, Legionnaires’ disease and mosquito-borne viruses. Chris Van Deusen, a spokesperson for the Texas Department of State Health Services, says officials are already making efforts to address the emerging public health nightmare. State and local officials recommend that people avoid drinking tap water, as health officials always do after a hurricane. But in the case of Harvey, abstaining from the public utility is likely to be crucial. Officials on Monday drained two reservoirs that are responsible for at least part of the city’s water supply in order to prevent subsequent infrastructure problems. Doing so likely brought drinking water into contact with dirty floodwater. This leaves many, if not most, Houston residents without a potable water supply. All health officials are recommending that Houston residents boil water to kill off any bacteria, or use bottled water instead. Stagnant water is a breeding ground for all sorts of microscopic pathogens. Pritish Tosh, an infectious diseases physician and researcher at the Mayo Clinic, says hurricane floodwaters may be contaminated with pathogenic Escherichia coli (E. coli) bacteria that can cause serious gastrointestinal illness. Other bacterium found in floodwaters include Shigella, which can also cause gastrointestinal illness in the form of diarrhea, vomiting, fever, stomach pain and dehydration.
How Hurricane Harvey Could Cause Long-Term Devastation -- The most likely outcome, unless the storm takes an unexpected turn, appears to be tragedy. The region is already inundated. Houston’s already seen abnormally high amounts of rain this August, and parts of Louisiana are still flooded after rain storms earlier this month, a situation that left parts of New Orleans under several feet of water after some of the city’s water pumps failed. For now, the best case scenario is to hope that most people have evacuated, and that the storm and flood’s ravages will come against property and not human lives. After all, houses can be rebuilt. But this time, even that may not be true. Although Texas and Louisiana—owing to the constant threat of floods—are among some of the places in the United States where flood insurance is most prevalent, there are few places where even a quarter of all homes are covered. In Houston, just over 119,000 places are covered by flood insurance policies backed by the National Flood Insurance Program, which helps fund most flood insurance policies. There are just over 800,000 occupied housing units in the city, which means that somewhere under a sixth of all homes in the city have flood insurance. The situation is the same in Corpus Christi, where 19,183 buildings are insured of around 115,000 occupied housing units. The dearth of flood insurance policies makes the result obvious: Most people who lose homes or have them damaged in Harvey won’t have money to replace or repair them. There are a number of reasons why people might go without insurance. Flood protection is expensive, especially in at-risk areas—indeed, that’s how a flood insurance system should work. And although people in especially high-risk flood areas have to purchase flood insurance when they purchase homes as per NFIP guidelines, for people outside of those extreme-risk areas, lack of recent flooding can persuade many homeowners and renters from taking on the additional expense. But even for homeowners who do have flood insurance, the prospect of receiving full support for their future claims seems dicey. To say the NFIP has been beleaguered would be a euphemism—the program has been in debt since its inception 50 years ago, and now sits at least $24 billion in the hole. The premiums many homeowners pay are not enough to cover expenditures, the program has just started utilizing reinsurance for catastrophic costs, and the structure of the program is such that there’s never a disincentive to building homes in flood-prone areas, which means that 30 percent or so of the NFIP’s hemorrhaging of money goes to a handful of houses on floodplains that just get rebuilt every year.
Giant Chemical Plant In Crosby, Texas Warns It Is In "Real Danger" Of Exploding --A chemical plant in Crosby, Texas belonging to French industrial giant Arkema SA, has announced it is evacuating workers on Tuesday due to the risk of an explosion, after Tropical Storm Harvey knocked out power and flooding swamped its backup generators. The French company said the situation at the plant “has become serious” and said that it is working with the Department of Homeland Security and the State of Texas to set up a command post in a suitable location near our site. The plant, which produces explosive organic peroxides and ammonia, was hit by more than 40 inches of rain and has been heavily flooded, running without electricity since Sunday. The plant was closed since Friday but has had a skeleton staff of about a dozen in place. Following the flood surge, the plant's back-up generators also failed. According to the plant's website description, it "produces methyl mercaptan, ethyl mercaptan, dimethyl sulfide (DMS) and methylmercapto-proprionaldehyde (MMP)." Our products are key ingredients in the manufacture of biodegradable herbicides, pesticides and animal feed supplements. These products are also used in the production of pharmaceuticals, photographic chemicals and circuit boards. Ethyl mercaptan is primarily used as an odorizer for propane gas. The strong odor that ethyl mercaptan adds to propane makes gas leaks easier to detect, protecting homes and businesses. MMP is used in the production of methionine, an essential amino acid and a key component of poultry, swine and ruminant (cattle, sheep, etc.) feed.The threat emerged once the company could no longer maintain refrigeration for chemicals located on site, which have to be stored at low temperatures. The plant lost refrigeration when backup generators were flooded and then workers transferred products from the warehouses into diesel-powered refrigerated containers. In a statement released at 3:30pm, Arkema said "refrigeration on some of our back-up product storage containers has been compromised due to extremely high water, which is unprecedented in the Crosby area. We are monitoring the temperature of each refrigeration container remotely."
Hurricane Harvey: Explosion at flooded chemical plant in Texas - DW | 31.08.2017: Two explosions and billowing smoke have been reported at a flood-hit chemical plant near Houston. Residents nearby have been ordered to evacuate.Two explosions were heard at the flood-hit Arkema SA chemical plant in Crosby, Texas, on Thursday, after plant managers had warned of an impending accident. Authorities had earlier ordered an evacuation for all remaining workers and everyone within a 1.5-mile (2.4-kilometer) radius. Black smoke was seen rising from the damaged plant after the explosion. "At approximately 2 a.m. CDT (0700 UTC), we were notified by the Harris County Emergency Operations Center of two explosions and black smoke coming from the Arkema Inc plant in Crosby, Texas," the company statement said. It warned that further explosions were likely, but said the best course of action was to let the fire burn itself out. The Harris County sheriff's office said 10 people were in hospital after inhaling fumes from the plant. Nine of them drove themselves there as a precaution. The sheriff later told a press conference that three of the officers had being given the all-clear by the hospital and he expected the same result for the others. The plant produced organic peroxides used in the production of plastic resins, polystyrene, paints and other products. Villarreal, who once worked at the plant, said many in his his neighborhood did not evacuate because "there was really no clear direction" from authorities. Journalists reporting on the accident were ordered to move 5 miles (8 kilometers) away from the plant.
2 Explosions Reported at Houston-Area Chemical Plant Damaged by Harvey Floods -- Two explosions and black smoke were reported from an Arkema Inc. plant in Crosby, Texas—about 25 miles outside of Houston —on Thursday morning. The facility, which was swamped by 6 feet of water from Hurricane Harvey 's unprecedented flooding, manufacturers organic peroxides for the production of plastic resins, polystyrene, paints and other products. As the New York Times explains, these chemicals must be kept in cold storage, because when they warm up, they begin to decompose and create heat, which can lead to an explosion. Harris County officials had already ordered an evacuation zone in an area 1.5 miles from the damaged plant. Arkema said the flooding from Harvey "overwhelmed our primary power and two sources of emergency backup power. As a result, we lost critical refrigeration of the products on site. Some of our organic peroxides products burn if not stored at low temperature." Richard Rowe, the chief executive of Arkema's North American division, told Reuters that the company had expected the chemicals to catch fire and explode if they were not properly cooled. After the explosion, one Harris County deputy was taken to the hospital after inhaling fumes from the plant and nine others drove themselves to hospital as precaution, the Harris County Sheriff's Office tweeted . The office later tweeted that company officials believed that the smoke inhaled by the 10 deputies near the plant was "a nontoxic irritant." "We want local residents to be aware that the product is stored in multiple locations on the site, and a threat of additional explosion remains," Arkema warned. "Organic peroxides are extremely flammable and, as agreed with public officials, the best course of action is to let the fire burn itself out." Numerous chemical plants and refineries, including ones owned by companies like Exxon and Shell, have shut down or gone offline in the wake of Harvey, emitting more than one million pounds of air pollution . Houston now faces an additional risk of toxic petrochemical chemical spills into nearby communities.
Pruitt Delayed Emergency Rules for Chemical Plants Weeks Before Toxic Fires Erupted in Houston - In June, about 10 weeks before explosions and fires would begin erupting at a chemical plant damaged by Hurricane Harvey near Houston, Environmental Protection Agency (EPA) Administrator Scott Pruitt placed a 20-month delay on the implementation of rules designed to prevent and contain spills, fires and explosions at chemical plants.In a public comment filed with the EPA in May, an association of emergency response planning officials asked that at least one portion of the rules be spared the delay and implemented immediately: a section requiring hazardous chemical facilities to coordinate with local first responders and planners in case of an emergency."Save for the act of coordination and providing certain information, if it exists, this provision simply and directly requires people to talk to each other," wrote Timothy Gablehouse, president of the National Association of SARA Title III Program Officials, an association of state and local emergency response commissions. "It is fully appropriate for regulated facilities to understand what local responders can and cannot accomplish during an emergency response."Pruitt delayed implementation of the rules in response to complaints about the rulemaking process filed by chemical companies and industry groups, according to the EPA's filing in the federal register. States with large industrial chemical sectors, including Texas and Louisiana, also requested that compliance dates for the rules be delayed. The industry complained that the emergency response requirements in particular did not specify limits on the information that emergency planners and first responders could ask for, and the EPA agreed to delay those provisions to allow for additional public comment, despite warnings from Gablehouse and environmental groups.
Texas Republicans Helped Chemical Plant That Exploded Lobby Against Safety Rules - The French company that says its Houston-area chemical plant is spewing "noxious" smoke — and may explode — successfully pressed federal regulators to delay new regulations designed to improve safety procedures at chemical plants, according to federal records reviewed by International Business Times. The rules, which were set to go into effect this year, were halted by the Trump administration after a furious lobbying campaign by plant owner Arkema and its affiliated trade association, the American Chemistry Council, which represents a chemical industry that has poured tens of millions of dollars into federal elections. The effort to stop the chemical plant safety rules was backed by top Texas Republican lawmakers, who have received big campaign donations from chemical industry donors. Representatives from Arkema Americas and the American Chemistry Council did not immediately respond to requests for comment. Arkema has six production plants in Texas and has received more than $8.7 million worth of taxpayer subsidies from the state. Arkema’s Crosby plant — which OSHA fined more than $90,000 for ten “serious” violations earlier this year and has spewed smoke in Crosby — appears to be covered under the existing EPA rules because of the kinds of chemicals it uses. While Texas Republican Gov. Greg Abbott has given chemical companies legal cover to hide the locations of their EPA-regulated chemicals, the Associated Press reports that the imperiled Arkema facility houses large amounts of toxic sulfur dioxide and flammable methylpropen, which required Arkema to submit a risk management plan to the agency — and which would have subjected the company to the strengthened safety rules.
Interactive Map Shows Volatile Facilities Threatened by Hurricane Harvey - The Sierra Club released an interactive digital map Thursday detailing 449 plants, refineries and facilities that are posing heightened threats to the 25 counties most affected by Harvey . For decades, Houston has been home to an immense concentration of chemical and plastics plants, oil and gas refineries, Superfund sites, fossil fuel plants, and wastewater discharge treatment plants among others, threatening the surrounding communities. The overwhelming majority of these facilities were constructed in communities of color, only adding to the burden felt from this disaster. Now, in the wake of Hurricane Harvey, the threat posed by these facilities has been magnified. This site will be updated as we learn of actual reported and confirmed instances of releases, spills or accidents. "For as long as I can remember, my hometown of Houston has been littered with dangerous chemical plants, oil and gas refineries, and hazardous waste facilities," Bryan Parras, Sierra Club organizer, said. "These sites have caused devastation for my family, my friends, and my neighbors for years, polluting our air and water with deadly toxins. Hurricane Harvey didn't create the problem my community faces, but it has magnified it. "This map shows the world the threats we have lived with for years, and the environmental injustices we've been saddled with. The disastrous fire at Arkema this morning just goes to show the danger our community remains in for the days and weeks to come," Parras added. "As the clouds clear and the sun returns, and we begin to think about rebuilding, we must ensure that the recovery is just and equitable, and ensures communities are not displaced nor threatened by these toxic sites ever again, no matter the weather."
When the Butterfly Flaps Its Wings -- Kunstler -It remains to be seen what the impact will be from Mother Nature putting the nation’s fourth largest city out-of-business. And for how long? It’s possible that Houston will never entirely recover from Hurricane Harvey. The event may exceed the physical damage that Hurricane Katrina did to New Orleans. It may bankrupt large insurance companies and dramatically raise the risk of doing business anywhere along the Gulf and Atlantic coasts of the USA — or at least erase the perceived guarantee that losses are recoverable. It may even turn out to be the black swan that reveals the hyper-fragility of a US-driven financial system. Houston also happens to be the center of the US oil industry. Offices can be moved elsewhere, of course, but not so easily the nine major oil refineries that sprawl between Buffalo Bayou over to Beaumont, Port Arthur, and then Lake Charles, Louisiana. Harvey is inching back out to the Gulf where it will inhale more energy over the warm ocean waters and then return inland in the direction of those refineries. Much of the supply for the Colonial Pipeline system emanates from the region around Houston, running through Atlanta and clear up to Philadelphia and New York. There could be lines at the gas stations along the eastern seaboard in early September. The event is converging with the US government running out of money this fall without new authority to borrow more by congress voting to raise the US debt ceiling. Perhaps the emergency of Hurricane Harvey and its costly aftermath will bludgeon congress into quickly raising the debt ceiling. If that doesn’t happen, and the debt ceiling is not raised, the federal government might have to pretend that it can pay for emergency assistance to Texas and Louisiana. That pretense can only go so far before government contractors balk and maybe even walk.
Why they’re rescuing bats in Houston - On the grand scale of things, it may seem frivolous. While Houston is underwater and in the throngs of Herculean search and rescue efforts, wildlife experts are addressing the issue of imperiled bats. The underside of the Waugh Bridge is home to a colony of 250,000 Mexican free-tailed bats; as the Buffalo Bayou beneath it has risen, the bats have been trying to escape. Some have made it to surrounding buildings, others trying to flee have ended up in the water – struggling and drowning. Others, “too cold and wet to fly, simply remain in harm's way,” reports Popular Science. “Some of the bats did manage to get out. Others were found dead,” says Melissa Meierhofer, a wildlife researcher at the Texas A&M Natural Resources Institute. “Some were being saved. They looked pretty wet.” So why the sudden focus on bats? Sure, there are bat lovers for whom this might be of particular interest – compassion is compassion. But there are people and pets in dire need of attention. Yet here’s the thing: The Waugh Bridge colony eats around two and a half tons of insects every night. Without them, Houston’s mosquito population would look very different. Popular Science writes, "A dead bat is a bat that can no longer consume huge meals made of Houston's mosquitoes – mosquitoes that may lead to a proliferation of diseases after the flood." Imagining all the stagnant water that will remain for who knows how long, this seems like a very relevant concern. As The Atlantic explains:The devastating floodwaters from Hurricane Harvey will damage many human habitats, but after the flood recedes, the waterlogged city may become a more welcoming habitat for mosquitoes. And that means that residents already made vulnerable by the hurricane might also eventually be at increased risk for mosquito-borne diseases like West Nile virus and Zika.West Nile virus has been endemic in Texas since 2002. In 2016, the state had 370 cases; so far in 2017, there have been 36 confirmed cases. Harris County, where Houston is located, has seen cases of West Nile in humans this year, and detected the virus in local mosquitoes. Texas has also had 22 Zika cases in 2017.
Mexico's Red Cross delivers aid to storm-ravaged Houston - Aug. 30, 2017 Mexico’s Red Cross sent an envoy of volunteers to storm-devastated Houston on Wednesday, hours after Texas governor Greg Abbott said the state accepted an offer of aid from the Mexican government, including vehicles, boats, supplies and food. The support from Mexico’s Red Cross, a non-government agency, is separate from the official aid offer. The convoy of 33 English-speaking volunteers left from Mexico City for Texas, where they plan to work in Houston shelters for 20 days before being replaced by a fresh crop of volunteers. The Mexican government has not yet said when its aid will arrive, but has suggested they are willing to repeat an aid mission to Hurricane Katrina-ravaged New Orleans in 2005, when the Mexican army sent 200 troops with food, water and medicine. It was the first Mexican military operation on U.S. soil in 90 years.
Katrina Commander Slams Harvey Response: 'Stop Patting Yourselves on the Back'; This is 'Amateur Hour' --Lt. Gen. Honore was in charge of the Katrina response in New Orleans 12 years ago and warned CNN's Eric Burnett that 'night is coming' -- saying it was going to get a lot worse before it got better.Honore carefully crafted his words and slammed the response in Houston as being grossly inadequate, disgusted by the fact that they didn't even have 100 helicopters in the city to do search and rescues. He harkened back to the Katrina rescue plan where the 5th army (engineers) used a 'significant grid system' for search and rescue. Now, according to Honore, 'it looks like no one in Texas ever read the plan.'"You have to come in big and you've got to be there right at the edge of the storm so you can come in as soon as possible and go in and rescue people.Back during Katrina, Honore said they had 240 helicopters and 40,000 national guard within the first 4 days, orders of magnitude more than what's on the ground in Texas now."They just got 100 helicopters here. Something is significantly wrong with command and control and they need to stop patting each other on the back who are waiting to get rescued.""I know I'm sounding critical," Honore acknowledged as he called for an "Army response to local civil disasters."They've come upon a time when their mission is too big for the state National Guard — and they need to get the hell over it and bring them in when they have a big mission." Watch.
Houston Was Left to Drown - Flooding in the wake of Hurricane Harvey, which smashed into the Gulf Coast on August 25, has left scores dead, thousands in need of rescue on rooftops or in boats, hundreds of thousands more without power, and tens of thousands in need of shelter.Yet characterizations of the carnage by the National Weather Service as “historic,” “unprecedented” or “beyond anything experienced” should not be conflated with the spurious claim that the devastation wrought by Harvey is “unpreventable” or “unexpected.”The outcry by advocates, experts, and activists against the unplanned, for-profit development of cities like Houston has been consistently ignored by city officials, leaving millions — especially the poor and people of color — in the fourth-largest city in the US in a death trap.“Houston is the fourth-largest city, but it’s the only city that does not have zoning,” Dr Robert Bullard, a Houston resident and a professor who studies environmental racism, told Democracy Now! on August 29. “[As a result], communities of color and poor communities have been unofficially zoned as compatible with pollution … We call that environmental injustice and environmental racism. It is that plain, and it’s just that simple.”The image of elderly people in a nursing home sitting in waist-deep water, is a shocking illustration of how the most vulnerable segments of the population are struggling to deal with the effects of Harvey. Thankfully, all of those people have been rescued and brought to safety.But, as Dr Bullard points out, the nightmare for tens of thousands of the city’s poorest residents living in close proximity to Houston’s vast petrochemical industry is just beginning. They are literally being gassed by and steeped in the toxic materials unleashed by the floodwaters that have damaged the oil refineries and chemical manufacturers that surround their homes and neighborhoods. The choices facing people in these neighborhoods are gut-wrenching. Should you and your family stay as toxic floodwaters rise all around you? If you decide to go, where do you go?
Harvey Has Many Asking: How Hard Is It to Evacuate a Major City? --It’s the million-dollar question in disaster planning: Do you order a city to evacuate before a hurricane hits land, or do you tell residents to shelter in place?The question has been before big-city leaders several times in recent years, and it was the question Houston faced as Hurricane Harvey barreled toward the fourth largest city in America.Mayor Sylvester Turner decided not to order an evacuation, a decision that's come under scrutiny since the storm landed, flooding large swaths of the city and leaving thousands of people stranded on top of their water-filled homes. Texas Gov. Greg Abbott, on the other hand, urged people the day the storm made landfall in the Houston area to leave, adding to the political fallout from Turner’s decision. But even as rain continues to fall and levees break, prompting evacuations, the mayor defends his decision."You cannot evacuate 6.5 million people within two days. You cannot. That would be chaotic ... you would be putting people more in harm’s way," Turner said in a news conference on Tuesday.Houston's history has taught them as much.In 2005, Hurricane Rita struck Houston just weeks after Hurricane Katrina pummeled New Orleans and left 1,833 people dead. The mayor of Houston at the time, Bill White, called for an evacuation of the city. Highways were choked with traffic, fights between motorists broke out, people died from hyperthermia in the intense heat and 23 nursing home patients were killed as a bus evacuating them caught fire and exploded near Dallas. Turner vowed not to repeat that mistake. In his position, other city officials likely would have come to the same conclusion.
Flood Protection: The US Should Go Dutch to Avoid Building Another Houston -- While America’s fourth-largest city is a poster child for flood vulnerability, much of the United States is built on similar principles. When the Dutch, the experts in flood prevention, look at us, they try to be polite, but really there’s no way around the truth.“The United States is a little bit lagging behind in flood protection, to be honest,” says Jeroen Aerts, professor of water and climate risk at Vrije University in Amsterdam. Aerts says that good flood control rests on three pillars: first, fortification to keep water out; second, buildings that can withstand flooding; and third, resources for evacuation and reconstruction.The United States does fine on the third pillar, but fails on the first two. We build low-slung, widespread exurbs — partly because many American cities grew after the advent of the automobile. Thus, U.S. cities lack density, violating a key tenet advanced by the Dutch for making flood control possible and affordable. To avoid future Harvey-scale events, the U.S. could do well to take a page from Holland and get ahead of flooding, rather than scrambling to recover from it. It’s hard to keep a city dry if it’s huge. The reverse is also true, says Jeff Carney, director of the Coastal Sustainability Studio at Louisiana State University. When cities stack their housing up, rather than sprawling out, they are easier to defend and are more resilient.One example of a well-stacked American city is New York, New York — aka the island of Manhattan. It’s compact, with more than 1.5 million people in fewer than 34 square miles of land, so flood-prevention efforts are feasible. A couple of years ago, the New York City government allocated $100 million to build a flood barrier around the lower part of the borough, and the U.S. Department of Housing and Urban Development kicked in nearly twice that last year to ensure it becomes a reality.
Harvey again makes landfall, this time as a tropical storm, near Cameron, La -- The devastating storm once known as Hurricane Harvey, already the biggest rainstorm in the history of the continental United States, made landfall again Wednesday morning to bring another punishing wave of rain into Texas and Louisiana. Five days after roaring ashore near Houston — leaving behind disastrous flooding and a mounting death toll that had reached at least 22 people — Harvey made landfall before dawn near tiny Cameron, La., after drifting back out into the Gulf of Mexico as it churned up the coast. Now a tropical storm and expected to weaken over land, Harvey’s immediate impact is not expected to pack the same destructive power as when it slammed into Texas as a Category 4 hurricane last week and dropped foot after foot of rain. But forecasters said the danger was far from over. The National Weather Service warned Wednesday that “catastrophic and life-threatening flooding will continue in and around Houston eastward into southwest Louisiana for the rest of the week.” The service also warned that “expected heavy rains spreading northeastward from Louisiana into western Kentucky may also lead to flash flooding” across those areas, imperiling a new swath of the population. As Harvey approached, storm-battered Louisiana — where memories of Hurricane Katrina, which made landfall in the state 12 years ago this week, are still fresh — hunkered down, evacuating hundreds of people and deploying the Louisiana National Guard. Louisiana Gov. John Bel Edwards (D), in a news conference Tuesday, urged people to “prepare and pray.” Flash flood warnings were issued across eastern Texas and western Louisiana, areas facing mounting rainfall totals as Harvey continued its onslaught. Beaumont, Tex., about 80 miles east of Houston, had seen more than 32 inches of rain by Wednesday morning, according to reports released by the National Weather Service. Parts of Interstate 10 near Beaumont were left swallowed by floodwaters — with road signs poking above the wind-driven chop. About 60 miles to the east, Lake Charles, La., had seen more than a foot of rain, and forecasts say the downpours are expected to continue. A storm surge warning was posted across the coast of southern Louisiana, from Holly Beach to Morgan City.
Tropical Storm Harvey Makes Final Landfall; Major Flooding Swamps East Texas; Heavy Rain Threat From Louisiana to Arkansas - Tropical Storm Harvey made its final landfall, but its swath of torrential rain has triggered more massive flooding in east Texas, and will continue to produce torrential rain the next few days from Louisiana to parts of the Ohio Valley, while record-breaking, catastrophic river flooding continues in southeast Texas. Harvey made its third and final landfall around 3:30 a.m. CDT Wednesday morning near Cameron, Louisiana, with maximum sustained winds of 45 mph. While the heaviest rain had ended in flood-plagued Houston, Harvey's most torrential rain turned its sights on areas near Beaumont and Port Arthur, Texas. With rain rates as high as 3.87 inches per hour, inundating rain immediately to the west of Harvey's center of circulation crushed the southeast Texas counties near the Louisiana border Tuesday into early Wednesday. The heaviest rain over the past 48 hours is indicated by the purple and light pink contours. Jack Brooks Regional Airport near Port Arthur picked up a staggering 26.03 inches of rain Tuesday alone, more than doubling the previous calendar-day rainfall record in Beaumont-Port Arthur set over 94 years ago. Their four-day total from Saturday through Tuesday was an incredible 43.27 inches of rain,almost 25 inches greater than their previous record four-day rain record set in September 1980. The resultant flooding swamped a storm shelter in Port Arthur, prompting evacuees to be moved to another shelter.Torrential rain is still hammering areas near the Texas and Louisiana border. Orange, Texas has measured rainrates of 2 to 3 inches per hour for several hours early Wednesday. Heavy rain has also spread north into northern Louisiana, and bands of heavy rain have pushed well east to the northern Gulf Coast of Mississippi, southern Alabama and the Florida panhandle.
On Katrina's 12th anniversary, Harvey pours down on New Orleans -- The city shut down under a flash food watch on Tuesday as the storm’s outer bands drench the streets. A six-hour drive away in Houston, rescuers are swooping in on boats and helicopters to pull thousands of stranded people to safety. It’s all frighteningly evocative of the devastation wrought by Hurricane Katrina back in 2005. Katrina made landfall on Aug. 29 of that year, plunging 80 percent of the Crescent City underwater for weeks and leaving 1,500 people dead. Forecasts call for Harvey to douse New Orleans with 4-8 inches of rain over the next few days. Though that’s notably less than the 49 inches Harvey has already dropped on the hardest-hit areas in Texas — making it the most extreme rain event in U.S. history — any major rain is bad news for New Orleans. Most of the city is below sea level, and its drainage pumping system is still “broken.” In early August, a deluge hit the city and revealed that 17 of its 120 pumps weren’t working. Those pumps are spread across the city to suck water from storm drains and canals and deliver it into nearby bodies of water. The city has been working to fix problem, but the drainage system’s overall capacity remains “diminished.”
After disastrous rain around Beaumont and Port Arthur, Harvey surges inland -- Tropical Storm Harvey made its last landfall early Wednesday, just west of Cameron, La., near the border with Texas. Along the way, it has dispensed devastating rainfall in the Beaumont-Port Arthur area of southeast Texas, shattering more records. Additional heavy rains are predicted to swell into north central Louisiana on Wednesday and Tennessee and Kentucky on Thursday. Widespread flooding was reported throughout the Beaumont-Port Arthur area Wednesday morning. Floodwater even invaded a shelter, forcing evacuees to move. Bill Karins, meteorologist for MSNBC, tweeted that all roads in and out of Port Arthur were impassable, and that rescues required air support. He added many people were stranded in rising floodwaters and were pleading for help. Port Arthur’s city manager said almost the entire city was under water. Water has began to take over a shelter in Port Arthur, Texas. Now people are needing another place #MorningRushATL https://t.co/20Q1Bsd69R pic.twitter.com/JzamNjVGW5 On Tuesday alone, Beaumont-Port Arthur registered 26.03 inches of rain — including a foot of rain which poured down in just six hours. The 26-plus inches doubled its record for previous wettest day (12.76 inches from May 19, 1923) and even exceeded the most rain in any previous month on record. Rainfall totals since Friday in the Beaumont-Port Arthur area ballooned to 47.7 inches pushing its annual rainfall to nearly 87 inches – a new record, with one-third of the year still to go. Moderate to heavy rain continued in the area through midday Wednesday, but finally starting to decrease in the afternoon.
Guy who says God sends natural disasters to punish gays has his home destroyed in a natural disaster -- Tony Perkins, president of the anti-gay religious lobbying group the Family Research Council, had his home destroyed by the massive flooding ravaging Southern Louisiana this week.Although no one wants to celebrate a person losing their home, the destruction of Perkins’ house isn’t without irony, considering that he’s claimed in the past that natural disasters are God’s way of punishing an increasingly gay-friendly world. Calling into his own radio show, Perkins described the flood as being of “biblical proportions,” adding that he and his family will have to live in a camper for 6 months until the damage is repaired.But Perkins was careful to point out that this particular flood wasn’t because of the gays, but rather an “incredible, encouraging spiritual exercise to take you to the next level in your walk with an almighty and gracious God who does all things well.” The floods in Louisiana have so far killed 11 people and destroyed over 40,000 homes. Last year, Perkins had as a guest on his radio show Christian “prophet” Jonathan Cahn, who claimed that Hurricane Joaquin was a sign of God’s wrath for the legalization of gay marriage. Perkins agreed, saying that while “those on the left like to mock these things,” many throughout history know “God is trying to send us a message” through natural disasters.
Another Harvey Catastrophe: Extreme Flood Emergency in Port Arthur - After causing severe wind damage near its landfall point in Rockport, Texas on Saturday, followed by an almost unimaginable flood catastrophe Saturday through today in Houston, Harvey has notched yet another extreme rainfall catastrophe this morning, in the Golden Triangle area of Texas, encompassing the cites of Beaumont/Port Arthur/Orange (population 410,000). Harvey made its final landfall in Western Louisiana near the Texas border near 4 am CDT Wednesday, with top winds near 45 mph. Overnight, Harvey dumped a devastating deluge of rain over the region, where catastrophic rains in excess of five inches per hour fell early this morning.At the Beaumont-Port Arthur Airport, 26.03” of rain fell on Tuesday, which is more than double Beaumont's previous calendar-day record of 12.76" on May 19, 1923, in records going back to 1901. Between 10 pm last night and 1 am this morning, 11.86” fell. So far on Wednesday, 4.71” has been reported (as of 11 am CDT), bringing their 5-day storm total rainfall to a staggering 47.98”. The intense rains caused extreme flash flooding that inundated all of Port Arthur, according to Mayor Freeman, who showed a video this morning of the inside of his flooded house on his Facebook page. Port Arthur is the site of the nation’s largest oil refinery, which was forced to shut down due to the floods. The nation’s second-largest refinery, in Baytown, TX, was also forced to shut down yesterday, due to flooding-induced roof damage. In all, at least 12 refineries are currently offline due to Harvey. The extreme rains turned I-10 near Beaumont, Texas into a wild river with breaking waves this morning, as seen in this remarkable video of a rescue boat plowing through the waters. Several rescue boats capsized in the raging waters, and citizen rescue boats were told to stand down and let only the Coast Guard handle rescues early this morning. The latest Weather.com write-up on the situation in Port Arthur detailed a flooded shelter, house fires, overwhelmed 911 operators, and a plea for rescue boats. Multiple forecast models earlier this week had called for a final burst of 15” – 25” in rainfall around the Houston area from Tuesday into Wednesday. Instead, that burst took shape from just east of Houston to the TX/LA border, resulting in the catastrophic overnight flooding in the Golden Triangle.
‘We are in trouble.' Harvey flooding pushes Texas chemical plant to the brink, turns city into an island -— A week after Hurricane Harvey slammed into Texas as a Category 4 monster, millions of people across the Gulf Coast struggled Friday with the unfathomable misery left behind as scores were left without drinking water, forced from homes or trapped in cities transformed into islands. Federal officials kept up a tense watch at a storm-ravaged chemical plant east of Houston, waiting to see whether more of its volatile stores could ignite following fires a day earlier. First responders across Texas continued the grueling work of searching home after home, while state authorities warned that numerous rivers and basins, swollen after Harvey’s rainfall, continue to pose risks of “life-threatening” flooding. As of Friday morning, officials across Texas had recorded at least 42 deaths confirmed or suspected of being stormed related, a tally that may grow as recovery efforts continue. Most of the storm deaths occurred in Harris County, which includes Houston. By late Thursday, the medical examiners’ office had confirmed 25 storm-related deaths and another seven bodies awaiting autopsy to determine cause of death.In Port Arthur, a city of about 55,000 people about 100 miles east of Houston, there was no respite even as the sun came out and the immediate threat of rain was over. Much of the city where Sgt. Lam Nguyen serves as an officer remains underwater, as Harvey’s rainfall continues lapping at the massive oil refineries and natural gas facilities that ring Port Arthur. And water still covers many of the highways connecting this Gulf Coast community with the wider world. Nguyen estimated that 75 percent of residents here lost their homes — including him. He and nine members of his extended family had to be rescued as floodwaters rushed in late Tuesday and early Wednesday, and Nguyen worried about what was to come. “We’re running low on water and on food,” said Nguyen, who was wearing a red polo shirt instead of his usual police uniform, which was lost in the floods. “Our shelters are filling up. We are getting them food, for now, but we are running out of food. We’re doing all we can now.”
Harvey aftermath: More Houston homes at risk as Beaumont loses clean water (CNN) - A spate of unexpected disasters are gripping Texas cities nearly a week after Hurricane Harvey slammed into the coast. The entire city of Beaumont -- population 118,000 -- has no running water after both of its water pumps failed. And they won't be fixed until the floodwater has receded. In Crosby, plumes of black smoke filled the morning sky after two explosions at a flooded chemical plant. And in Houston, where authorities will go door-to-door to search for victims Thursday, residents near the Barker Reservoir must flee immediately as the massive pool of water is at imminent risk of overflowing and swallowing their homes.Across the state, families are searching tirelessly for missing relatives on the sixth day since the catastrophic storm made its first landfall as a Category 4 hurricane. Photos: Hurricane Harvey slams Texas At least 37 deaths related to Hurricane Harvey and its aftermath have been reported in Texas. Among the dead are a Houston man who was electrocuted while walking in floodwaters and a mother whose body was floating about a half mile from her car. Rescuers found her daughter clinging to her body. The child is in stable condition after suffering from hypothermia. "The worst is not yet over for southeast Texas," Gov. Greg Abbott said Wednesday. On Thursday, Federal Emergency Management Agency workers and firefighters will assess the extent of Harvey's destruction in the southwestern part of Houston, the nation's fourth largest city. About 100 miles east, Beaumont residents could find themselves without running water Thursday morning. Local officials said the city's water pump station has failed and they need to wait until floodwaters recede to make any repairs. In Port Arthur, desperate pleas of help piled up after residents woke up to rising waters when the storm made its final landfall Wednesday morning. A shelter in Port Arthur had to be evacuated after the water came inside, and residents remain trapped in their homes.
Military Will Help Beaumont Get Fresh Water; Outage Forces Hospital To Shut Down -Thousands of people are without water in Beaumont, Texas, adding to the misery of extreme flooding that has left large swaths of it and neighboring towns underwater. The lack of water is also forcing a large hospital to shut down — including its emergency services."Due to the failure of the city's water pump, it is in the best interest of our current patients to transfer to other acute care facilities," Baptist Hospitals of Southeast Texas said Thursday morning. "Due to the city-wide lack of services, we have no other alternative but to discontinue all services which will include emergency services. This is being done immediately."The crippling floodwaters were brought to Beaumont by Harvey — which hit the state as a hurricane Friday and has now become a tropical depression as it moves inland. In neighboring Port Arthur, the mayor said Wednesday, "Our whole city is underwater right now."From Beaumont, NPR's Debbie Elliott reports for our Newscast unit: "Thousands of people are displaced and living in shelters in Beaumont and Port Arthur, as crews try to rescue others still trapped by floodwater. Overnight, Beaumont lost both of its water sources. FEMA Director Brock Long says the military will help get water to the city's nearly 120,000 residents." " 'We're working with partners at DOD and state to open points of distribution to service citizens there in that dire situation,' Long said. "Residents have lined up at the few stores that are open to buy bottled water. City officials say they can't get to repairs until floodwaters recede." Some stores in Beaumont reportedly said they're waiting on water deliveries from Houston, roughly 100 miles away — but hours earlier, the Texas Department of Transportation said, "All major roadways into Beaumont from Houston are virtually impassable." Photos from the area show tracked military vehicles on roads and highways, trudging through high waters.
Incredible satellite photos show Texas before and after Harvey flooded the region - As eastern Texas saw its first clear skies and sunshine in days on Wednesday, satellites in space got to work photographing the damage left by Hurricane Harvey.Harris County and Greater Houston in Texas, which is home to roughly 5 million people, took the brunt of the storm's record-breaking rainfall. So far only drones and airplanes have been able to perform photo surveys from above the storm's devastation, which claimed dozens of lives. On Thursday, however, companies that operate satellites in orbit and sell the image data — like Deimos Imaging, UrtheCast, and DigitalGlobe — released a fresh batch of before-and-after photos of Texas. Here are some of the most revealing views of the devastation. To compare pre- and post-Harvey images, drag the slider to the left and right.
Harvey has unloaded 24.5 trillion gallons of water on Texas and Louisiana - The latest storm totals are in, and by our estimates, about 24.5 trillion gallons of water has fallen on Southeast Texas and southern Louisiana because of Harvey. Breaking it down, Texas has totaled 19 trillion gallons, and Louisiana has already seen 5.5 trillion gallons. More is on the way for Louisiana, but the rain is expected to taper off Thursday. So much rain has fallen in such a short amount of time, it will take weeks for it to fully drain. In low-lying areas and basements, it will take volunteers to physically pump the water out. Disease, unfortunately, will fester in this water as the sun comes out, and Texas summer heat returns. It’s probably impossible to truly comprehend how much water has fallen in Texas and Louisiana. But there are comparisons we can make that help paint a picture. First, there are 18 trillion gallons of water in the Chesapeake Bay. So that’s not even a good comparison. (Ava Marie) If you piled up 20 trillion gallons of water over the District of Columbia (approximately 68 square miles), the height of the water would be 1,410 feet — or almost the height of the Empire State Building. (Ryan Maue) The amount of rain that fell in Texas and Louisiana would have ended the historic California drought, twice over. (Paul Deanno) Over Harris County alone — which is home to Houston — 1 trillion gallons of water fell in the four days from Saturday through Tuesday. That’s as much water as flows over Niagara Falls in 15 days. (Jeff Lindner)It’s enough to cover the entire state of Arizona in more than a foot of water.
Hurricane Harvey is the worst rainfall disaster in US history — this interactive map shows how bad it was - On Friday, August 25, Hurricane Harvey hit Corpus Christi, Texas, and then continued on to batter cities and towns along the Gulf of Mexico. Since then, the tropical storm has killed at least 41 people, damaged or destroyed approximately 20,000 homes, and displaced tens of thousands. Winds have topped 130 mph and downpours reached up to four inches per hour. On August 30, a rain gauge near Cedar Bayou, Texas, measured 51.88 inches of rainfall, breaking the record for the continental United States set in 1978. Some climatologists are calling Harvey the worst rainfall event in the country's history. Business Insider produced an interactive map that shows where the storm struck hardest. Using data from the National Weather Service, the figures below represent the total rainfall from August 24 at 8 p.m. CDT (when it started raining) to August 31 at 4 p.m. CDT.Hover over a location, and it will show you the rainfall total. We will continue to update the map as more data become available. "The 3-to-4 day rainfall totals of greater than 40 inches (possible 50 inches in locations surrounding Santa Fe and Dickinson) are simply mind-blowing that has lead to the largest flood in Houston-Galveston history," Houston's National Weather Service office wrote.A spokesperson from The National Weather Service in Washington, DC told Business Insider that the data was collected by automated gauges as well as reports from volunteers. During the first 72 hours of the storm, Harvey covered over a 20,000-square-mile area, according to an analysis by Texas-based climatologist John Neilsen-Gammon. Floodwater has overwhelmed many areas in Houston, due partially to the city's flat geography, outdated (and in some areas, blocked) drainage systems, and a recent construction boom that has eliminated over 38,000 acres of wetlands. At least 33,000 people in Texas have fled to more than 230 shelters, with 11,000 people inside Houston's largest sports stadium. Hundreds of thousands could seek some kind of disaster assistance, officials said.
Texas residents face new evacuations and overflowing rivers caused by Harvey - As some Houston residents Friday faced the heartache of evacuating their homes again due to water expected from reservoir releases, parts of Texas south of the city were bracing for potentially deadly flooding from overflowing rivers. The coastal city of Lake Jackson, about an hour south of Houston, Friday issued emergency mandatory evacuation orders for two subdivisions threatened by the overflowing Brazos River. Voluntary evacuation orders were also extended to thousands of other residents along the Brazos and San Bernard rivers, said Brazoria County spokeswoman Sharon Trower. “The deal is that we’re at the end of the line, everybody else’s rainfall is pouring into our rivers, so we’re being affected now,” Trower said. Meanwhile, Houston Mayor Sylvester Turner asked people in 15,000 to 20,000 homes that had already been inundated in the western part of the city to evacuate again because reservoir releases were likely to send still more water pouring into their neighborhoods. The releases from the Addicks and Barker reservoirs, which are likely to continue for about two weeks, are part of the effort to control more widespread flooding that has plagued the nation’s fourth-largest city since Hurricane Harvey made landfall a week ago. The new evacuation requests came just as apprehensive residents across the region began making their way back to swamped dwellings, being warned only to return in daylight and to keep a wary eye out for wildlife, especially snakes. One Lake Houston resident came home to a 6-foot alligator in the living room. In a partially flooded neighborhood three blocks north of the Buffalo Bayou, in western Houston, residents were resigned to the news that their homes might remain flooded for the foreseeable future. In hip waders and boats, they moved in and out of the water to gather their belongings. Someone handwrote a sign and hung it from a street sign, "If you loot, we shoot," with a drawing of a gun.
So what now, America? - Zetland - First of all, let’s all agree that the flood damages to Houston were worse due to poor planning that paved wetlands and allowed the city to sprawl into flood plains. Second, subsidized flood insurance (or the lack of a requirement for insurance) means that many people fail to consider the risk of flooding when choosing where to live. (Me complaining about this 10 years ago, an update 5 years ago, and my student this year.)Third, climate change means that many models and assumptions are wrong. Houston has experienced three “500-year storms” in the past 40 years, and the number of storms is increasing, worldwide: Fourth, people and cities around the world are going to experience greater damages as climate change (emphasis on change) raises sea levels, redirects ocean currents and increases storm strength. Greater threats to weaker populations (Bangladesh just flooded) will result in economic loss, political instability, forced migration and many other impacts that will spill over to countries that are not immediately affected by climate. Fifth, there’s no need to spend €2-3,000 to get access to “expert opinions” at Stockholm’s World Water Week (it ends today). The right actions are obvious:
- Stop subsidies for living in risky places
- Restore the buffers that can protect cities from floods
- Build more absorption/storage capacity into systems to cope with flood — or drought!
- Plan for the next 50-100 years, not the next election cycle
These costs may bother people, but we’re talking about investing $ today to save $$$ in the near future. (NYC decided to not build flood defenses just before Sandy hit.)
Suspended belief - Houston and the last two decades - I've noticed an air of unreality hangs about the flooding of Houston. Those of you with memories of the 00s will remember how Gore was mocked for his animations of oceans flooding cities. Hey, the Gulf of Mexico, which is warmer and higher than it was in 2003, just flooded a six million person metro area. The press so far has - understandably - concentrated on happy rescues, people doing things for people. Underneath this news is a sort of failure to express the probable extent of the casualties and what this means economically. This isn't a matter of astonishing videos, it is a matter of the blotting out, for some unforeseeable time, of the 4h largest metro area in the U.S. I feel like our suspended belief in what is happening is cousin to our suspended belief in climate change itself. For two decades, we have mostly acknowledged that climate change is happening. We have attacked this global problem by the pinprick approach. Maybe if I change my consumer habits it will help? Not really. We gotta change our infrastructure. We gotta severely reshape our economy. Capitalism isn't built to solve this problem. That isn't even to say we abolish capitalism, it is simply a call for recognizing its limits and acting accordingly.
Now Comes the Uncomfortable Question: Who Gets to Rebuild After Harvey? -- In the decade-plus since Hurricane Katrina, Houston has been debating what it needs to protect itself from a catastrophic weather event. While that conversation has gone on, the city did what most cities do: carried on business as usual, constructing more than 7,000 residential buildings directly in Harris County’s Federal Emergency Management Agency-designated flood plain since 2010.That kind of construction spree, which was detailed in a prescient investigation by ProPublica and the Texas Tribune last year, is not just head-slapping in hindsight, it actually produces its own greater risks, as it means paving over the kinds of wetlands that can help buffer against extreme flooding events.But from a financial perspective, there was a logic behind those 7,000 buildings, as each is eligible for subsidized flood protection through the National Flood Insurance Program, that just so happens to be expiring at the end of September, meaning debate over its reauthorization will compete for time with everything else on a packed fall congressional calendar.“Harvey should be a wake-up call” for deep flood insurance reform, says Rob Moore, a senior policy analyst with the Natural Resource Defense Council’s water team. “One of the biggest shortcomings is that the program has always been intended first and foremost to be a rebuilding program.”While environmental groups, including the Environmental Defense Fund and the National Resources Defense Council, contend that the NFIP encourages irresponsible forms of coastal development, they have odd company in a coalition fighting for the program’s reform – insurance companies and free market groups that just want the government out. Hurricane Harvey is likely to focus attention on questions the federal government and the American public have in large part worked hard to avoid, because they don’t cut cleanly along ideological or partisan lines. And because they’re not much fun to think about. What does home ownership look like in an age of climate change? When is it OK to rebuild, and when is it time to retreat?
Harvey May Be "Costliest Natural Disaster In US History" With $190 Billion Price Tag -Tropical Storm Harvey made its second landfall near Cameron, La. on Wednesday after slamming Houston with a staggering 50 inches of rain, the largest rainfall ever recorded in the Continental US. Since the damages to HoustonGiven the unprecedented devastation, which will likely leave large swaths of Houston, America’s fourth-largest city, uninhabitable for weeks if not months, storm-watchers have scrambled to revise their initial forecasts for damages. Initially, the consensus projection was somewhere around $40 billion, with Moody’s forecast that property damage caused by the storm would total between $30 billion and $40 billion.If accurate, that would leave Harvey as the fourth-most expensive hurricane in US history, after Hurricane Andrew (1992), Superstorm Sandy (2012) and Hurricane Katrina (2005).However, after five days of torrential rains, one forecaster believes the $30-$40 billion figure would barely cover a quarter of the damage. Dr. Joel N. Myers, founder, president and chairman of AccuWeather, now believes Harvey could become the costliest natural disaster in US history, ultimately costing the US economy an eye-popping $190 billion in property damage and lost productivity once the "total destruction is completed." Such an astronomical price tag would be more than the combined costs of Hurricanes Katrina and Sandy, he said.Here’s USA Today:“Hurricane Harvey could be the costliest natural disaster in U.S. history with a potential price tag of $190 billion, according to a preliminary estimate from private weather firm AccuWeather.This is equal to the combined cost of Hurricanes Katrina and Sandy, and represents a 0.8% economic hit to the gross national product, AccuWeather said.‘Parts of Houston, the United States' fourth largest city, will be uninhabitable for weeks and possibly months due to water damage, mold, disease-ridden water and all that will follow this 1,000-year flood,’ said AccuWeather president Joel Myers.”While many analysts are focused on southwest Texas and western Louisiana, Myers warned that Harvey could continue to inflict severe damage even after being d owngraded to a tropical depression – which is expected Wednesday – the storm will continue to dump as much as 10 inches of rain on the Mississippi Valley.
"Rapidly Intensifying" Hurricane Irma Barreling Straight Toward The East Coast --The National Hurricane Center (NHC) has just updated its forecast for what it is now referring to as a "rapidly intensifying" Category 2 hurricane in the Eastern Atlantic ocean and the results look disastrous for a large swath of the Caribbean and Southeastern United States. Here is a brief summary of Hurricane Irma from the National Hurricane Centerreleased at 11AM EST: Satellite images indicate that Irma is rapidly intensifying. Very deep convection has formed in the central dense overcast, which is now displaying a small and clearing eye. Dvorak estimates were up to 77 kt at 1200 UTC, and since the cloud pattern continues to quickly become more organized, the initial wind speed is set to 85 kt.At 1100 AM AST (1500 UTC), the center of Hurricane Irma was located near latitude 16.9 North, longitude 33.8 West. Irma is moving toward the west-northwest near 10 mph (17 km/h). This general motion is forecast through early Friday, followed by a generally westward motion on Saturday.Maximum sustained winds have increased to near 100 mph (155 km/h) with higher gusts. Irma is forecast to become a major hurricane by tonight and is expected to be an extremely dangerous hurricane for the next several days. Hurricane-force winds extend outward up to 15 miles (30 km) from the center and tropical-storm-force winds extend outward up to 80 miles (130 km). Irma is expected to grow into a "major hurricane" within the next 24 hours with maximum sustained winds of 120 mph before growing even stronger throughout the weekend and eventually becoming a Category 4 storm.
Irma Turning Into Monster Hurricane: "Highest Windspeed Forecasts I've Ever Seen" --Hurricane Irma continues to strengthen much faster than pretty much any computer model predicted as of yesterday or even this morning. Per the National Hurricane Center's (NHC)latest update, Irma is currently a Cat-3 storm with sustained winds of 115 mph but isexpected to strengthen to a devastating Cat-5 with winds that could top out at 180 mph or more. Here is the latest from the NHC as of 5PM EST:Irma has become an impressive hurricane with intense eyewall convection surrounding a small eye. Satellite estimates continue to rapidly rise, and the Dvorak classifications from both TAFB & SAB support an initial wind speed of 100 kt. This is a remarkable 50-kt increase from yesterday at this time. Irma continues moving west-northwestward, now at about 10 kt. There has been no change to the forecast philosophy, with the hurricane likely to turn westward and west-southwestward over the next few days due to a building ridge over the central Atlantic. At long range, however, model guidance is not in good agreement on the strength of the ridge, resulting in some significant north-south differences in the global models. I am inclined to stay on the southwestern side of the model guidance, given the rather consistent forecasts of the ECMWF and its ensemble. In addition, the strongest members of the recent ensembles are on the southern side on the consensus, giving some confidence in that approach.
Attention is on Harvey, but flooding has killed thousands this month in other countries, too - Skies, streams and seas have unleashed tragedies around the world this month, forcing us to reckon once more with the deadly power of weather and water. While we watch and react to the devastation wrought by the remnants of Hurricane Harvey across Southeast Texas and Louisiana, we should also spare a thought for the floods that have each taken more than a thousand lives in Sierra Leone and South Asia.Local officials in Sierra Leone's capital, Freetown, said this week that the death toll from floods and mudslides triggered by intense overnight rainfall on Aug. 14 had passed 1,000. The combined death toll from floods amid ongoing and unusually severe monsoon rains in Nepal, India and Bangladesh has surpassed 1,200. The United Nations said that 41 million people in those three countries were affected in one way or another by the floods. (On the flip side, relentless drought in Somalia and neighboring Ethiopia has left hundreds of thousands dependent on food aid to avert a famine.)Hundreds of residents line up in Sierra Leone to identify the victims of a deadly mudslide, amid fears that if the bodies are not buried soon they could spark a public health emergency. (Reuters)These calamities elsewhere have been exacerbated by a lack of prevention infrastructure, like levees, as well as widespread deforestation, which promotes soil erosion. Many of the affected are also among their country's poorest and live in areas particularly susceptible to mudslides (on densely packed urban hillsides) and torrential rain (on the floodplains of rivers that seasonally overflow). As in Texas and Louisiana, extensive property damage, indefinite displacement and the spread of disease are all compounding the heavy toll. Below are some photos from Sierra Leone and South Asia that give a sense of the enormity of the catastrophes there.
More Than 1,000 Died in South Asia Floods This Summer - More than 1,000 people have died in floods across South Asia this summer, and as sheets of incessant rain pummeled the vast region on Tuesday, worries grew that the death toll would rise along with the floodwaters. According to the United Nations, at least 41 million people in Bangladesh, India and Nepal have been directly affected by flooding and landslides resulting from the monsoon rains, which usually begin in June and last until September. And while flooding in the Houston area has grabbed more attention, aid officials say a catastrophe is unfolding in South Asia. In Nepal, thousands of homes have been destroyed and dozens of people swept away. Elephants were pressed into service, wading through swirling waters to rescue people, and aid workers have built rafts from bamboo and banana leaves. But many people are still missing, and some families have held last rites without their loved ones’ bodies being found. “This is the severest flooding in a number of years,” Francis Markus, a spokesman for the International Federation of Red Cross and Red Crescent Societies, said by phone from Kathmandu, Nepal’s capital. Nepal’s flooded areas are the poorest parts of the country, where most families live in bare mud houses and rely on subsistence farming, he said. Those farms are now underwater, and thousands of people are stuck living under plastic tarps in camps for displaced people where disease is beginning to spread. India has also suffered immensely. Floods have swept across the states of Assam, Bihar, Odisha, West Bengal and other areas. This weekend, Prime Minister Narendra Modi flew over the devastation in Bihar, where more than 400 people are believed to have died in floods in recent weeks. He pledged millions of dollars in assistance and urged insurance companies to send in assessors as soon as possible to help farmers cope with their losses.
Monsoon rains bring Mumbai to a standstill - Al Jazeera: Floods have killed more than 1,000 people in India, Nepal and Bangladesh in recent weeks and forced millions from their homes in the region's worst monsoon disaster in recent years. India hit hardest by deadly regional floods With roads clogged, schools closed early along with some offices, and the evening rush hour saw people wading through knee-deep water on their way home or stuck in stranded vehicles for hours.The meteorological department has warned that the Mumbai rains would continue for the next 24 hours, prompting schools to remain closed until Wednesday.Citizens were asked by authorities to stay indoors, except for emergencies and fishermen advised to exercise caution.Narendra Modi, India's prime minister, urged residents to take all the necessary precautions in the wake of the chaos.The National Disaster Response Force launched a rescue mission with police to evacuate people from low-lying areas."The heavy rains, flooding, are delaying our rescue work. Even we are stranded," Amitesh Kumar, joint commissioner of police, told Reuters news agency.
There’s a disaster much worse than Texas. But no one talks about it -- A quick quiz: what is currently the world’s worst humanitarian disaster? If you nominated storm Harvey and the flooding of Houston, in Texas, then don’t be too hard on yourself. Media coverage of that disaster has been intense, and the pictures dramatic. You’d be forgiven for thinking that this supposedly once-in-a-thousand-years calamity – now happening with alarming frequency, thanks to climate change – was the most devastating event on the planet. As it happens, Harvey has killed an estimated 44 Texans and forced some 32,000 into shelters since it struck, a week ago. That is a catastrophe for every one of those individuals, of course. Still, those figures look small alongside the havoc wreaked by flooding across southern Asia during the very same period. In the past few days, more than 1,200 people have been killed, and the lives of some 40 million others turned upside down, by torrential rain in northern India, southern Nepal, northern Bangladesh and southern Pakistan. That there is a disparity in the global attention paid to these two natural disasters is hardly a novelty. It’s as old as the news itself, expressed in one, perhaps apocryphal Fleet Street maxim like a law of physics: “One dead in Putney equals 10 dead in Paris equals 100 dead in Turkey equals 1,000 dead in India equals 10,000 dead in China.” Most of this amounts to a pretty basic form of racism to which, lord knows, the media are far from immune; perhaps Eurocentrism would be more accurate. But whatever term you favour, it surely represents the most fundamental form of discrimination one can imagine: deeming the lives of one group of people to be worth less than those of another – worth less coverage, less attention, less sympathy, less sorrow.
Houston, South Asia Floods: Climate Change Is Creating A New Urban Crisis - naked capitalism Jerri-Lynn here. In this Real News Network interview, investigative journalist and economics professor Christian Parenti says we have the laws and technology to protect humanity from climate disaster, provided that we’re willing to rip away the veil of the ‘free market’. I’m not nearly so optimistic, but am posting this interview because it doesn’t fixate solely on the climate change problem but does mention some ways out of the crisis. Not that any of these look possible, given current political realities. But it’s important to at least to consider solutions– even if implementation is at best a distant possibility. (video & transcript)
Trump’s Council on Environmental Quality has no members at all - It would not be an overstatement to say that President Donald Trump has placed the environment at the bottom of priority list. While his administration aggressively pursues its rollback of environmental protections and climate action, other key aspects of federal environmental policy have been completely ignored. Seven months into his presidency, Trump has yet to appoint a single member to the White House Council on Environmental Quality (CEQ), despite the fact that he is required by law to appoint a council to create and recommend policies to improve of the quality of the environment.After noticing that its website showed no council members, ThinkProgress reached out to the council to ask for a list of current members. Told that this information was not available, ThinkProgress filed a Freedom of Information Act (FOIA) request for the current list of names. On Friday, the council’s FOIA public liaison responded to the request by noting that there were “no documents responsive to [the] request.” He explained that this is because there are currently no members of the council at all. The National Environmental Policy Act, passed by Congress in 1969 and signed into law by Republican President Richard Nixon, established the council as part of the executive office of the president. The law mandates “three members who shall be appointed by the president to serve at his pleasure, by and with the advice and consent of the Senate.” Additionally, the law dictates that the president of the United States “shall designate one of the members of the Council to serve as Chairman,” and that each be “exceptionally well qualified to analyze and interpret environmental trends and information of all kinds; to appraise programs and activities of the Federal Government in the light of the policy set forth in title I of this Act; to be conscious of and responsive to the scientific, economic, social, aesthetic, and cultural needs and interests of the Nation; and to formulate and recommend national policies to promote the improvement of the quality of the environment.”
EPA inspector general to investigate agency chief's travels to Oklahoma | Reuters: (Reuters) - The frequent travels of the head of the U.S. Environmental Protection Agency, Scott Pruitt, to Oklahoma will be investigated following congressional requests, the agency's Office of Inspector General said on Monday. Pruitt's many travels to his home state have fueled speculation that he intends to run for the U.S. Senate from Oklahoma. "Administrator Pruitt is traveling the country to hear directly from the people impacted by EPA's regulations outside of the Washington bubble," said Amy Graham, an EPA spokeswoman. "This is nothing more than a distraction from the Administrator's significant environmental accomplishments." The Office of Inspector General said it would look into the "frequency, cost and extent" of Pruitt's travels to Oklahoma through July 31, and whether travel policies and procedures were followed. It said the investigation will also aim to determine "whether EPA policies and procedures are sufficiently designed to prevent fraud, waste and abuse with the Administrator's travel that included trips to Oklahoma." Pruitt was in Oklahoma on at least 43 of the 92 days of March, April and May, according to copies of his travel records obtained by the Environmental Integrity Project watchdog group and reviewed by Reuters last month. The travel records show Pruitt's schedule this spring often took him to cities in the U.S. heartland where he held meetings, often with oil and gas industry representatives, made speeches and attended events before flying to Tulsa for extended weekends. The records showed Pruitt paid for some legs of the trips directly related to his visits home, although it was not clear he paid for all such legs.
Failure to Set Cost of Carbon Hampers Trump’s Effort to Expand Use of Fossil Fuels -- President Donald Trump’s efforts to boost fossil fuel extraction face a courtroom hurdle of his own making. His March 28 executive order “promoting energy independence and economic growth” rescinded the Obama administration’s calculation of the “social cost of carbon” — a metric that had been central to the process of crafting and justifying government rules addressing human-driven climate change. All government regulations are subject to cost/benefit analysis. The “social cost of carbon” was developed in large part to compare long-term costs from coastal flooding and other impacts of emissions of climate-warming carbon dioxide with upfront costs to the economy from curbing the burning of fossil fuels, the main source of such emissions. The value at the end of the Obama presidency was set at roughly $40 for each ton of carbon dioxide, the main greenhouse gas emitted by human activities, or equivalent amounts of other gases such as methane. The Trump order required a new calculation and ordered agencies to use procedures issued by the Office of Management and Budget in 2003 to craft relevant regulations. A protracted delay in the Trump administration coming up with its own carbon-cost estimate could empower environmentalists pursuing legal challenges to mining, drilling or pipeline projects, said Richard Revesz, director of the Institute for Policy Integrity at New York University School of Law. In an email on Tuesday, he pointed to two recent court decisions…
States say EPA’s climate rule guidance is 'legally incorrect' | TheHill: Democratic attorneys general want the Trump administration to rescind guidance that the Environmental Protection Agency (EPA) sent to states about complying with the Obama administration’s main climate change regulation. The coalition, representing 13 states and seven cities and counties, said in a Thursday letter that EPA Administrator Scott Pruitt incorrectly told states that if the Clean Power Plan takes effect, compliance deadlines will be extended. But the law and previous court cases on that question show that the deadlines are not automatically extended, argued the attorneys general, led by New York Attorney General Eric Schneiderman (D). The attorneys general accused Pruitt of using the March 30 guidance he sent to state governors as a way to delay or repeal the Clean Power Plan without going through the full regulatory or legal process to do so. “The facts are clear: the EPA has a legal obligation to limit carbon pollution from its largest source: fossil-fueled power plants. So if President Trump wants to repeal the Clean Power Plan, he must replace it,” Schneiderman said in a statement. “Scott Pruitt cannot simply wish away the facts by giving governors bad legal advice,” he said. “We’ll continue to fight to ensure that the federal government fulfills its legal responsibility to New Yorkers’ health and environment.” The Clean Power Plan has been on hold since February 2016, when the Supreme Court put a judicial stay on it. The EPA is working to repeal it fully. Pruitt, who was a leader in the litigation against the rule in his previous job as Oklahoma’s attorney general, sent the March 30 letter to assure states that they do not have to do anything to comply. “It is the policy of the EPA that states have no obligation to spend resources to comply with a rule that has been stayed by the Supreme Court of the United States,” Pruitt wrote at the time.
Investing power Vanguard votes against Exxon Mobil on climate change - It's official: index fund giant Vanguard Group voted against Exxon Mobil management for the first time to require the oil and gas giant to report on climate change, according to proxy voting records published by Vanguard on Thursday.The Exxon Mobil shareholder measure passed at the company's annual meeting earlier this year, a victory shareholder advocates said could not have happened without the vote of Vanguard, though the fund company had refused to reveal its specific company votes before Thursday's official disclosure.Vanguard also voted against management at Occidental Petroleum over a similar climate measure — also expected based on the results from the Occidental Petroleum shareholder meeting earlier this year. But Vanguard did vote with oil and gas management and against shareholder climate proposals in a majority of 2017 proxy measures.The two votes against Exxon and Occidental management contrast with Vanguard's votes against shareholders putting forward climate proposals at Noble Energy, Marathon Petroleum, Devon Energy, Chevon and Kinder Morgan.Vanguard also voted against requiring Warren Buffett's Berkshire Hathaway to report on climate and divest from fossil fuel holdings.A Vanguard spokeswoman said its decisions have more to do with how the shareholder proposals are worded and not the fund company's commitment to climate policy among its holdings. "While we believe the issue is real, we may not believe the proposal meets our threshold for support." Vanguard, the world's largest index mutual fund manager with $4 trillion under management, has not been known for its shareholder activism, but its influence as an investor is large and growing. The fund giant took in more than $300 billion in 2016, while the rest of the mutual fund industry combined had investor redemptions. "With Exxon and to a lesser extent Occidental, these votes can also be seen as bellwethers for the entire industry that major investors are expecting action on climate risk disclosure," said Jon Hale, the director of sustainability research at Morningstar.
EPA extends a waiver on motor fuel contents to apply nationwide, not just to Texas - Environmental Protection Agency Administrator Scott Pruitt on Wednesday expanded the scope of an emergency waiver of Clean Air Act restrictions on motor fuel requirements, saying the waiver would apply not only to Texas but also to 11 states and the District of Columbia through Sept. 15. The move, prompted by Hurricane Harvey, effectively declares an early end to summer regulations designed to prevent a buildup of ozone pollution, which contributes to lung disease and asthma. The regulations require oil companies to use low-volatility gasoline during the summer months, to prevent gasoline from turning to vapor. However, making summertime-grade gasoline can cost oil refiners several cents a gallon, according to the Energy Information Administration. Pruitt said in a letter to governors and District Mayor Muriel E. Bowser that companies can now use any blend stock or oxygenate in an effort to speed up gasoline and diesel deliveries to customers in Texas and beyond. Pruitt noted disruptions from refinery closures, pipeline limitations and problems with barge delivery of oil products. “These supply shortages can be reduced by waiving the requirements to sell low volatility summer” gasoline, his letter said. The letter eases regulations in Alabama, Georgia, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Louisiana, Florida and the District. The Renewable Fuels Association hailed the move, saying it would allow broader use of ethanol up to levels as high as 15 percent of motor fuel, the group said.
Volkswagen Engineer Gets Prison in Diesel Cheating Case - NYT — A Volkswagen engineer was sentenced on Friday to 40 months in prison for his role in the German automaker’s decade-long scheme to cheat on federal emissions tests for diesel-powered cars sold in the United States. The engineer, James Liang, is the first company employee sent to prison in the vast scandal that has tainted Volkswagen’s reputation and cost it more than $20 billion in fines and settlements with consumers.Mr. Liang, who helped develop the software that concealed high levels of pollutants generated by Volkswagen’s diesel engines, reached a plea deal with prosecutors last year after agreeing to assist in the government’s investigation of the company. But even after that pledge, Mr. Liang received a harsher sentence than the government recommended for pleading guilty to conspiracy to defraud the United States and violating the Clean Air Act. Federal prosecutors recommended a three-year sentence and a $20,000 fine, but Judge Sean F. Cox of the United States District Court for the Eastern District of Michigan gave Mr. Liang a longer sentence, as well as two years of supervised release and a $200,000 fine.
Should California spend $3 billion to help people buy electric cars? - Over seven years, the state of California has spent $449 million on consumer rebates to boost sales of zero-emission vehicles. So far, the subsidies haven’t moved the needle much. In 2016, of the just over 2 million cars sold in the state, only 75,000 were pure-electric and plug-in hybrid cars. To date, out of 26 million cars and light trucks registered in California, just 315,000 are electric or plug-in hybrids. The California Legislature is pushing forward a bill that would double down on the rebate program. Sextuple down, in fact. If $449 million can’t do it, the thinking goes, maybe $3 billion will. That’s the essence of the plan that could lift state rebates from $2,500 to $10,000 or more for a compact electric car, making, for example, a Chevrolet Bolt EV electric car cost the same as a gasoline-driven Honda Civic. Already approved by several Senate and Assembly committees, the bill will go to Gov. Jerry Brown for his approval or veto if the full Legislature approves it by the end of its current session on Sept. 15. California aims to reduce greenhouse gas emissions by 2030 to a level 40% below what they were in 1990. “If we want to hit our goals, we’re going to have to do something about transportation,” said Assemblyman Phil Ting (D-San Francisco), sponsor of Assembly Bill 1184. Without a dramatic boost in subsidies, Ting said, the state risks falling short of Gov. Brown’s goal of 1.5 million zero-emission vehicles on California highways by 2025, and the California Air Resources Board’s goal of 4 million such cars by 2030. The bill is opposed by Republicans averse to taxpayer subsidies and even the Legislature’s own analysts have called it “duplicative,” “unclear” and “problematic.” Some Democrats also are casting a wary eye on new state spending, given California’s frequent budget crises. Supporters say the money will come mainly from the state’s cap-and-trade auction revenue, although they are vague on details. Other legislators, including Senate leader Kevin de León (D-Los Angeles), are putting in their own bids for cap-and-trade revenue that overlap with Ting’s. “There are a lot of claims on that money,”
Researchers hack a self-driving car by putting stickers on street signs - Researchers at University of Washington, University of Michigan, Stony Brook University, and UC Berkeley have figured out how to hack self-driving cars by putting stickers on street signs. Starting by analyzing the algorithm the vision system uses to classify images, they used a number of different attacks to manipulate signs in order to trick machine learning models into misreading them. For instance, they printed up stickers to trick the vision system an autonomous car would use into reading a stop sign as a 45-mile-per-hour sign, the consequences of which would obviously be very bad in the real world. In the paper, "Robust Physical-World Attacks on Machine Learning Models," the authors demonstrated four different ways they were able to disrupt the way machines read and classify these signs using only a color printer and a camera. The most troubling part about these experiments is that they all appear very subtle to the human eye, camouflaged as graffiti, art, or incorporated into the sign's imagery. The first method involves printing up a full-size poster to cover the sign, which looks normal but maybe a little faded in places to a human. This caused the machine vision, from a number of angles and distances, to classify a stop sign as a speed limit sign 100 percent of the time in tests. Stickers placed on a stop sign to look like graffiti spelling the words "love" and "hate" caused the stop sign to read as a speed limit sign two-thirds of the time (and once as a yield sign). An "abstract art" attack – just a few small, strategically placed stickers – had the same effect as the poster cover-up. On a right turn sign, the researchers masked the arrow with grey stickers, and got it to read as a stop sign two-thirds of the time, and an added lane sign the rest of the time.
Thousands of rail workers rehired at Warren Buffett's BNSF as coal volumes rise - (Reuters) - BNSF Railway Co has called back roughly 4,000 of the 5,000 workers who were furloughed across its system last year, reflecting stronger volumes of coal, grain and intermodal containers and trailers, a spokesman said.Like other major U.S. railroads, the company owned by billionaire investor Warren Buffett's Berkshire Hathaway Inc has shed thousands of union and management jobs in recent years as it strives to improve efficiency and cut costs. BNSF, the top U.S. coal carrier, laid off roughly 5,000 employees from mid-2015 to early 2016. The Texas-based company and its peers faced cost pressures from plunging coal volumes as the strong U.S. dollar hurt exports of the fuel and utilities switched to burning cheaper natural gas. BNSF brought back roughly 4,000 of those workers as coal volumes rose this year, along with high levels of grain and upticks in intermodal containers and trailers, and sand used in hydraulic fracturing, spokesman Zak Andersen said. "We have seen an increase in coal due mainly to increased natural gas prices and higher electricity demand driven by seasonal trends," he said. "Although we anticipate the long-term trend to decline." The company had not previously disclosed the scale of the callbacks. Even after the rehirings, BNSF has downsized to around 42,000 employees from 48,000 in 2014 through layoffs, attrition and cutting two operating divisions, Andersen said. Union Pacific Corp said earlier this month it would cut roughly 500 management jobs and 250 railroad workers by mid-September, while CSX Corp has laid off hundreds of management and rail employees since the beginning of the year, as both companies pursue cost-cutting plans.
Duke Energy scraps SC nuke plant, seeks higher power rates (AP (AP) — Duke Energy asked regulators Friday to let its western North Carolina subsidiary raise household electricity bills by 16.7 percent and make consumers pay billions of dollars for a nuclear plant it won't open and the cleanup of coal ash deposited in unlined pits. The country's largest electric company asked the North Carolina Utilities Commission to let its Duke Energy Carolinas subsidiary raise rates by $647 million a year, adding $18.72 to the $104 monthly bill of the typical residential customer. The electricity provider for 2 million North Carolina customers also wants to collect nearly $1.7 billion over five years to close all its pits storing the toxic ash from burning coal. The Duke Energy Carolinas rate increase, its first in five years, would average 13.6 percent across all types of customers, including factories and retail stores. Meanwhile, Duke Energy Progress, the operating subsidiary for eastern North Carolina, asked regulators in June to allow it to raise power bills by an average 15 percent for 1.3 million customers, totaling an extra $477 million a year. That would mean $18 more per month for the typical household bill of $105.
Duke Energy nixes nuclear plant, will invest $6 billion in solar and batteries - This week, Duke Energy Florida announced that it will terminate all plans to build its Levy Nuclear Project. And as part of a deal with the Florida Public Service Commission, the company will instead invest $6 billion in solar energy, smart meters, and grid modernization as well as electric vehicle (EV) charging stations and a battery storage pilot program.Duke’s move reflects global trends that see surging growth for solar power as prices plummet, while increasingly uncompetitive nuclear power stagnates. Note that Duke’s investment in batteries and EV chargers are core strategies for increasing solar penetration. Indeed, as Energy Secretary Rick Perry’s recent grid study explained, a fleet of vehicles or chargers can be used to shift load “in response to price signals or operational needs,” and in particular “vehicle charging could be shifted to the middle of the day to absorb high levels of solar generation and shifted away from evening hours when solar generation disappears and system net load peaks.” Duke’s deal will add 700 megawatts (MW) of solar energy, which would, by itself, double total Florida solar capacity. Despite being called “the sunshine state,” Florida has historically lagged in solar investment.
The US backs off nuclear power, but Georgia wants to keep building reactors - Even as the rest of the United States backs away from nuclear power, utilities in Georgia are pressing ahead with plans to build two huge reactors in the next five years — the only nuclear units still under construction nationwide.On Thursday, Georgia Power asked state regulators to approve its proposal to complete the reactors at the Alvin W. Vogtle generating station near Augusta, home to two existing nuclear units built in the 1980s. The company, which has partnered with three other utilities on the project, said it expected the new reactors would cost roughly $19 billion and come online in 2021 and 2022. In July, South Carolina utilities abandoned efforts to build two similar reactors, advanced designs known as AP1000s, after delays and cost overruns associated with the project caused local utility bills to soar. That decision left Georgia as the American nuclear industry’s sole hope for an expansion in the near term. While China is building 20 nuclear reactors, including four AP1000s, the United States has largely abandoned the construction of costly new nuclear plants. Utilities have focused instead on building smaller, less financially risky plants fueled by natural gas, wind or solar power.Ernest J. Moniz, a secretary of energy under President Barack Obama, warned in July that the decline of the domestic nuclear industry could mean the loss of a valuable tool to tackle climate change, since nuclear plants do not generate carbon dioxide emissions. He also argued that ceding the global nuclear industry to China and Russia could weaken nonproliferation standards. “The U.S. position as a valued supplier is rapidly being eroded,” Mr. Moniz wrote. For now, Georgia’s utilities insist they can succeed where South Carolina failed. In March, Georgia Power took over control of the Vogtle expansion after Westinghouse, the lead contractor in both states, filed for bankruptcy amid endless construction woes.
Early signs of 'incompetence at every level' went unheeded as South Carolina rushed toward 'sexy' nuclear future | Business | postandcourier.com: -- The scaffolding wasn't there when welders arrived. So they stood around.Construction orders for dozens of ironworkers weren't handed out until mid-afternoon. So they pushed brooms.Workers couldn't tighten bolts to steel beams because of questionable engineering. So they spent hour after costly hour doing workarounds.Seasoned laborers who worked on two now-cancelled nuclear reactors in South Carolina described the $9 billion construction effort as one of the most dysfunctional jobs they have ever done.“Incompetency at every level,” said one construction worker, who like others asked not to be named for fear of being blacklisted in the industry.The soon-to-be-abandoned construction site at the southern tip of the Monticello Reservoir in Fairfield County, where roughly 5,000 employees once labored, was spared no expense.Workers erected a blue 560-foot-tall crane that looms over the two unfinished reactors. It was capable of lifting more than 2 million pounds. Workers built two new plants to continuously pour concrete for the reactors' bases. They constructed a giant assembly garage that could store 7-story-tall reactor components as they were prepped. Laborers with decades of experience building other power plants across the country told The Post and Courier the project was failing for years — in no small part, because the reactors were being built before the blueprints for construction were even finalized.
As Historic Flooding Grips Texas, Groups Demand Nuclear Plant Be Shut Down - As record-breaking rainfall and unprecedented flooding continue to batter the greater Houston area and along the Gulf coast on Tuesday, energy watchdogs groups are warning of "a credible threat of a severe accident" at two nuclear reactors still operating at full capacity in nearby Bay City, Texas.Three groups—Beyond Nuclear, South Texas Association for Responsible Energy, and the SEED Coalition—are calling for the immediate shutdown of the South Texas Project (STP) which sits behind an embankment they say could be overwhelmed by the raging flood waters and torrential rains caused by Hurricane Harvey. "Both the U.S. Nuclear Regulatory Commission and the STP operator have previously recognized a credible threat of a severe accident initiated by a breach of the embankment wall that surrounds the 7,000-acre reactor cooling water reservoir," said Paul Gunter, director of the Beyond Nuclear's Reactor Oversight Project, in a statement by the coalition on Tuesday. The groups warn that as Harvey—which on Tuesday was declared the most intense rain event in U.S. history—continues to dump water on the area, a breach of the embankment wall surrounding the twin reactors would create "an external flood potentially impacting the electrical supply from the switchyard to the reactor safety systems." In turn, the water has the potential to "cause high-energy electrical fires and other cascading events initiating a severe accident leading to core damage." Even worse, they added, "any significant loss of cooling water inventory in the Main Cooling Reservoir would reduce cooling capacity to the still operating reactors that could result in a meltdown." With the nearby Colorado River already cresting at extremely high levels and flowing at 70 times the normal rate, Karen Hadden, director of SEED Coalition, warned that the continue rainfall might create flooding that could reach the reactors.
Researchers Announce Nuclear Fusion Breakthrough --For years nuclear fusion was the stuff of sci-fi books and movies, but technology has brought it, like so many other things, closer to reality. So close, in fact, that there are plans to build the first nuclear fusion reactor by 2025 - a reactor that could yield a lot more energy than is fed into it and provide vast amounts of clean, sustainable energy. An international team of scientists is working on the biggest project in nuclear fusion in France, to build the largest magnetic fusion machine - a tokamak - and test the commercial-scale viability of this clean energy source. The ITER project is based on the pretty simple premise that the larger the vessel in which fusion reactions occur, the more of them occur, generating more energy.The ITER tokamak will be ten times larger than the largest existing such device, capable, as per plans, to produce 500 MW of fusion power. To compare, the record so far, set by European tokamak JET (the largest existing one), is 16 MW, from input of 24 MW. The goal of the ITER team is to produce these 500 MW from an input of just 50 MW. Recently, a team of researchers from the MIT published a paper that suggests this achievement is realistic.The MIT team tweaked the “recipe” for nuclear fusion in such a way that the output of power was ten times greater than with the original composition, which consists of 95 percent deuterium ions and 5 percent hydrogen ions, forming plasma heated to incredibly high temperatures in the tokamak from the movement of the ions.The tokamak produces magnetic fields that keep the superhot plasma inside and keep it moving - and hot - but controlling it for ever-longer periods of time and making it move faster to produce more energy has been a challenge. Now, the MIT scientists may have found the secret ingredient in an isotope of helium, helium-3.
US Conducts Successful Field Test Of New Nuclear Bomb -- In mid-April, we reported that "just as tensions over North Korea's nuclear program and potential US airstrikes run wild, the NNSA said that in conjunction with the US Air Force, it had completed the first qualification flight test of B61-12 gravity nuclear bomb on March 14 at the Tonopah Test Range in Nevada."Four months later, and just as concerns over North Korea's provocative launches have send shockwaves across global markets - again - the US National Nuclear Security Administration (NNSA) announced another successful flight test of B61-12 gravity nuclear bombs in Nevada. The second qualification flight test for the nuclear bomb was carried out by the NNSA and the US Air Force.According to the NNSA press release, two B61-12 gravity bombs (without a nuclear warhead) were dropped from F-15 fighter jets on August 8 at Tonopah Test Range in Nevada, and were designed to test the "non-nuclear functions and the aircraft’s capability to deliver the weapon." These tests are part of a series over the next three years to qualify the B61-12 for service. As we noted at the time, the first qualification flight test occurred in March. “The B61-12 life extension program is progressing on schedule to meet national security requirements,” said Phil Calbos, acting NNSA deputy administrator for Defense Programs. “These realistic flight qualification tests validate the design of the B61-12 when it comes to system performance.”
New York denies key permit for new gas-fired power plant (AP) — State environmental regulators have denied a key permit for a $900 million power plant being built in southeastern New York. The Department of Environmental Conservation filed a decision Thursday with the Federal Energy Regulatory Commission saying the environmental review of the 7.8-mile natural gas pipeline to the plant was deficient. The Millennium Pipeline Company project would supply gas for Competitive Power Venture's 650-megawatt Valley Energy Center in Wawayanda, 53 miles north of New York City. The plant is due to go online next year. Environmental activists targeted the pipeline as a way to stop the power plant. FERC's approval was contingent on the state approving permits. Competitive Power Ventures, based in Silver Spring, Maryland, called the state's action "without merit" and said it's confident the pipeline will ultimately be approved.
An update of demand factors affecting the gas market balance -- This is Part 2 of our update on the natural gas market balance in the injection season so far (from April 1 through August 15), using daily supply and demand data from our NATGAS Billboard report (RBN’s joint report with IAF Advisors). We began in Part 1 of this series with a fresh look at the relative strength of the gas market compared to last year, starting with the supply side. We’ll continue that analysis with a discussion of the demand side of the seasonal balance in a bit. Ahead of Hurricane Harvey, the CME/NYMEX Henry Hub September natural gas futures contract this past Friday settled at $2.892/MMBtu, down 5.7 cents on the day, as the market awaited the impact of the storm. Since then, preliminary gas pipeline flow data show major shifts in supply and demand (more on that in the blog). As of Sunday evening, the September contract was complacent, up little more than a penny in after-hours trading. We’ll know more about the effects of Harvey and the market’s reaction today and in the coming days and weeks. But prior to Harvey, the gas market has been sluggish in recent months. Last Friday’s settlement is down 34 cents from the summer peak expiration settlement in June of $3.236. The U.S. natural gas inventory deficit to last year has come down from more than 400 Bcf at the start of injection season in April to about 220 Bcf as of the latest storage data. What’s behind the higher injections and lower prices up to this point? Today, we continue our analysis of the gas market balance, including the latest on Harvey.
Americans Red and Blue Unite Against Trump's Plan to Drill the Atlantic - By almost any account, the partisan divide in this country today is wider than it's been in living memory, certainly wider than it was before he took office. But on one issue, at least, the president seems to have bridged that divide and fostered some much-needed unity. When it comes to endorsing Trump's plan to open up the Atlantic coast to oil and gas drilling , citizens in both red and blue states—as well as their elected officials—are speaking with one voice. They're saying, "Hell, no." When Trump issued an executive order unveiling his new America-First Offshore Energy Strategy back in April, his administration announced that the National Outer Continental Shelf Oil and Gas Leasing Program would be one of its key components. Under the aegis of this new program—which essentially reverses the Obama administration's 2016 ban on drilling in the Atlantic—the U.S. Department of the Interior would begin considering new leases for oil and gas rigs along the Eastern Seaboard for a five-year period beginning in 2019. Trump knew the move would enrage many of those who didn't vote for him and who already oppose his pro-extraction, anti-renewables energy policy. But by oh-so-cleverly placing the words America First in his plan's name, he probably thought he'd have no trouble picking up support in states where he had performed well in the election, or where the GOP controls the statehouse or the legislature (or both). Except that's not what happened. The response from South Carolina—where Trump beat Hillary Clinton by more than 14 points, and where the Trump-supporting Republican governor, Henry McMaster, routinely enjoys the cooperation of a state legislature dominated by members of his party—must have caught the president off guard. " I'm against it ," said the governor, flatly and unequivocally, back in June. His objection is shared by the mayors of Republican-heavy cities and towns up and down South Carolina's coast. It's also shared by the president of the state's Small Business Chamber of Commerce, who also leads the multistate Business Alliance for Protecting the Atlantic Coast, which represents more than 40,000 businesses that oppose the drilling leases.
Harvey throws a wrench into U.S. energy engine (Reuters) - A hurricane in the heart of the U.S. energy industry is set to curtail near-record U.S. oil production for several weeks, with the impact expected to reverberate throughout the country and across international energy markets. Harvey hit the Texas shore as a fierce Category 4 hurricane, causing massive flooding that has knocked out 11 percent of U.S. refining capacity, a quarter of oil production from the U.S. Gulf of Mexico, and closed ports all along the Texas coast. Gasoline futures jumped as much as 7 percent to their highest level in more than two years in early Monday trading in Asia as traders took stock of the storm's impact. The outages will limit the availability of U.S. crude, gasoline and other refined products for global consumers and further push up prices, analysts said. Damage assessments could take days to weeks to complete, and the storm continues to drop unprecedented levels of rain as it lingers west of Houston, home to oil, gas, pipeline and chemical plants. And restarts are dangerous periods, as fires and explosions can occur. So far, the federal government has not announced if it will release barrels of oil or refined products from the nation's Strategic Petroleum Reserve (SPR), which holds nearly 680 million barrels of oil. The SPR was established in the 1970s to prevent supply shocks in the wake of an embargo imposed by several members of the Organization of the Petroleum Exporting Countries (OPEC).
Refiners cut rates as Harvey pours on Houston - (Argus) — Roughly 13pc of US crude processing capacity cut rates or shut facilities as the remnants of a category 4 hurricane submerged the Texas coast in record flooding. Hurricane Harvey brought lashing winds and floodwaters to a region operating a quarter of US refining capacity and supplying markets far beyond state borders. At least 2.2mn b/d of crude processing cut or shut equipment while logistics infrastructure supplying crude and fuel across the eastern US and to markets overseas halted. ExxonMobil shut its 557,000 b/d Baytown refinery, the third-largest on the Texas coast, and a source familiar with operations said Marathon Petroleum reduced its 585,000 b/d Galveston Bay refinery in Texas City, the second-largest refiner in the state, to minimal rates. Shell shut its 247,000 b/d joint venture refinery with state-owned Mexican oil company Pemex in Deer Park, Phillips 66 its 247,000 b/d Sweeny refinery and Petrobras subsidiary Pasadena Refining shut its 100,000 b/d Pasadena refinery as floodwaters rose. LyondellBasell cut rates at its 268,000 b/d Houston refinery after port closures starved units of feedstocks, but said the facility had no damage. Other refiners continued to evaluate their operations and crude supplies. The reductions have strained fuel supplies into central Texas. Refiners and midstream operators must keep storage tanks full or risk their floating away. Companies use crude or products, rather than water, to keep the tanks filled and avoid quality problems. The US Environmental Protection Agency yesterday approved waivers relaxing emissions requirements for distillate and allowing winter-grade gasoline, which has an easier specification to meet. Phillips 66 shut its Pasadena refined products terminal tank farm today because of flooding that damaged at least one tank. Colonial Pipeline today said it continued to operate the earliest origin points on its 5,500-mile (8,851km) refined products pipeline system moving products through the US Gulf coast to the Atlantic coast. The company was meeting with its local staff to continue assessing conditions, a spokeswoman said.
Sabine Pass LNG output continues, minor Corpus Christi impact seen -- As the remnants of Tropical Storm Harvey continued to dump historic amounts of rain over Houston and much of the US Gulf Coast region's energy infrastructure on Monday, Cheniere Energy said its Sabine Pass LNG export terminal in Louisiana remained in operation and its Corpus Christi, Texas facility, which had been undergoing construction, so far sustained only minor damage. The Houston-based company said in a statement that initial assessments showed it has been lucky to pull through largely unscathed, even as the threat of future disruptions was real considering the track of the storm calls for punishing rain to hit southwest Louisiana in the coming days. At Sabine Pass in Cameron Parish, LNG production operations continued through the storm, Cheniere said. At Corpus Christi, only minor "cosmetic" impacts were found, the company said. "Now that the storm has passed through our Corpus Christi construction site, we are pleased to report that Corpus Christi saw no major impacts, and no interruption of LNG production at Sabine Passhas been experienced," CEO Jack Fusco said. Cheniere said it has opened an emergency office in Dallas, about 250 miles north of Houston, to support its gas supply and trading division and other essential functions to ensure it meets its production obligations at Sabine Pass. Cheniere said Friday that while Sabine Pass would continue operating during the storm, train 3 was undergoing maintenance unrelated to the storm. The full impact on production on train 3 during the work was not clear. The Sabine Pass terminal has four trains producing LNG.
Louisiana terminals, refineries tested as Texas deals with Harvey: In the LOOP - The Louisiana Offshore Oil Port and regional refining industry could be set to carry the load in the near future, collectively establishing itself as the most important chunk of US oil infrastructure while Texas remains hobbled by Hurricane Harvey. In three updates so far, LOOP has said its facilities are operating normally, although many facilities in neighboring Texas are shut. “At this time, there are no interruptions to vessel operations or deliveries from the Clovelly Hub due to Hurricane Harvey,” LOOP said Sunday. Roughly 2.4 million b/d of refining capacity has been shut along the Texas coast, while another major refinery is operating at reduced rates. Some offshore oil and gas operators evacuated platforms and rigs, although offshore production was picking up a bit Sunday, while onshore operators were shutting in what may amount to hundreds of wells in the Eagle Ford Shale in South Texas. The USGC crude market has ground to a halt. The four major ports in the Houston-Galveston area complex are closed to all inbound and outbound traffic: the Port of Houston, Port of Texas City, Port of Galveston and Port of Freeport. LOOP typically ranks No. 3 behind Houston and Port Arthur for US crude imports and accounts for 10% of US imports and 16% of Gulf Coast imports, according to Platts Analytics and US Customs data. But with Texas ports closed, LOOP could be set to reclaim the title of No. 1 port for US crude imports, which it has not held since May 2016. Latest crude flows at LOOP, regional ports At LOOP last week, Marathon imported about 500,000 barrels of 28.4 API Vasconia from Colombia on the tanker Krymsk on August 22 and another 491,000 barrels of 28.4 API DCO from Venezuela on the Karvounis on August 24, Platts Analytics and US Customs data showed. According to cFlow, Platts’ trade-flow software, the tankers Megacore Philomena and SKS Spey are currently in waters near LOOP’s offshore marine terminal and likely unloading crude. Megacore Philomena is laden with 365,000 barrels of crude from Mexico, according to Platts fixture reports, although it stopped at Freeport, Bahamas, before arriving at LOOP. SKS Spey picked up crude at the Bonga and Forcados oil terminal in Nigeria before sailing to Sint Eustatius in the Caribbean and ultimately LOOP. The Suezmax Sonangol Namibe is expected to arrive at LOOP on August 29, while the VLCC Leicester is expected to arrive September 15, both having sailed from Al Basrah, Iraq.
NYMEX oil product crack spreads soar to two-year highs on US hurricane [ Front-month NYMEX RBOB and heating oil crack spreads against NYMEX light sweet crude skyrocketed to two-year highs during mid-morning trade in Asia Monday, extending Friday's rise, amid concerns over Hurricane Harvey's impact on US Gulf Coast refining activity. Related video:Asian gasoline market assessing Hurricane Harvey's impact on supply NYMEX RBOB crack spread against NYMEX light sweet stood at $26.39/b as of 0334 GMT, while the NYMEX heating oil crack spread was at $21.87/b. Both were at highs not seen since August 2015. Crude oil futures though, were mixed. At 0334 GMT, ICE October Brent crude futures rose 21 cents/b (0.4%) from Friday's settle to $52.62/b, while the NYMEX October light sweet crude contract was down 16 cents/b (0.33%) at $47.71/b. After battering the coast and shutting some US refineries when it made landfall at Corpus Christi, Texas, late last week, Hurricane Harvey has now weakened to a tropical storm, the US National Hurricane Centre said Sunday. Roughly 2.2 million b/d of capacity were currently down or being brought down. Corpus Christi area refineries were already shut ahead of the storm, and Houston area refineries Sunday were being taken down because of flooding. "In terms of the global petroleum market, we see the impact as more of a passing ripple rather than a reason to revise the intermediate-term outlook for supply, demand, or prices," said Citi Futures energy futures specialist Tim Evans. The spread between front-month ICE Brent and NYMEX light sweet has continued to widen. As of 0334 GMT, front-month ICE Brent stood at a premium of $4.91/b over NYMEX light sweet, up 37 cents/b from Friday's settle.
Gas Station Shortages Expected In Texas As Gulf Coast Premiums Hit Record Highs According to retail fuel supplier Mansfield Oil, short-term fuel supplies for Houston and San Antonio are significantly impacted by Tropical Storm Harvey. Bloomberg reports that San Antonio and Houston supplies are at code red, while Corpus Christi was downgraded to code orange as terminals have come online already and limited spot supplies are available.For now, GasBuddy.com reports a number of stations are still open, though prices are rising... However, the Gulf Coast CBOB gasoline spread to NYMEX futures rose 9.50c to a 16.50c/gal. premium - the highest on record in data from 2012. The U.S. could see 30 percent of refining capacity shut on Harvey and if the storm moves up the Texas coast toward Louisiana, then additional shutdowns could occur in Port Arthur and Beaumont as well as in Lake Charles, Louisiana, Tudor Pickering Holt & Co. LLC analysts said. Port Arthur is home to the nation’s largest refinery operated by Motiva Enterprises LLC. “There’s a big drop-off suddenly in crude oil demand,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “We have a supply disruption event in gasoline production. Gasoline demand in the balance of the country is still elevated, so we could see a real impact on gasoline inventories if these refineries are unable to get restaffed quickly.”
Oil factbox: Refineries now facing brunt of Harvey-related flooding - Oil and gas companies on the Texas Gulf Coast were dealing Monday with the impact of Tropical Storm Harvey, which was unleashing torrential rains and flooding in the Houston area after making landfall Saturday near Corpus Christi.Roughly 2.2 million b/d of Texas refining capacity remained down, as were major ports in Corpus Christi and Houston. As of 2 pm CDT (1700 GMT), Harvey was about 40 miles east northeast of Port O'Connor Texas, with maximum sustained winds of 40 mph, according to the US National Hurricane Center. Harvey was expected to move offshore later Monday and slowly swing northeast, making landfall again Wednesday near Galveston Bay. Harvey is expected to produce additional rainfall accumulations of 15 to 25 inches through Friday over the upper Texas coast and into southwestern Louisiana," the NHC said. "Isolated storm totals may reach 50 inches over the upper Texas coast, including the Houston/Galveston metropolitan area." A state of emergency has been declared in Louisiana, although so far refiners in the area are operating normally. Roughly 2.2 million b/d of refining capacity has been shut. Houston-area refineries began shutting Sunday because of flooding. Refiners have not reported any damage so far. The following plants have been or are in the process of being shut: (Company: Location -- Capacity (b/d))
- ExxonMobil: Baytown, TX -- 560,500
- Valero: Corpus Christi, TX -- 293,000
- Citgo: Corpus Christi, TX -- 157,500
- Flint Hills: Corpus Christi, TX -- 296,470
- Magellan: Corpus Christi, TX -- 50,000
- Buckeye**: Corpus Christi, TX -- 50,000
- Shell: Deer Park, TX -- 340,000
- Petrobras: Pasadena, TX -- 112,229
- Phillips 66: Sweeny, TX -- 247,000
- Valero: Three Rivers, TX -- 89,000
Harvey disrupts 20pc of US refining capacity: Update (Argus) — Hurricane Harvey and its aftermath of historic flooding along the Texas coast disrupted 20pc of US refinery capacity and began cutting fuel supply to US midcontinent and southeast states. The outages cut rates on the 660,000 b/d Explorer Pipeline, which sends fuel from near Houston to Indiana, and the Colonial, moving 1.4mn b/d of gasoline and 1.1mn b/d of distillates from the Gulf coast to East coast markets. Explorer expected to run out of refined products from the Pasadena area tomorrow. Texas retailers meanwhile looked to source fuel from as far as Colorado and Georgia — a Colonial delivery point — to supply the state amid disaster work. "It is going to get that dire," said Paul Hardin, president of the Texas Food and Fuel Association. "We are definitely running out of options." Record rains in Texas shut or reduced 20pc of US refining capacity as companies today continued to manage rising waters and shrinking supplies. Flooding disrupted 3.7mn b/d of refining capacity on the Texas coast, including roughly 3mn b/d of capacity in Houston and the surrounding area. Three of the four largest US refineries, including Motiva's 600,000 b/d refinery in Port Arthur, the biggest in the nation, had reduced rates or shut outright as of today. Motiva, a subsidiary of Saudi Aramco, today confirmed that it has reduced rates by 40pc. Marathon Petroleum reduced rates at its 585,000 b/d Galveston Bay refinery, the US' third largest, according to a source familiar with operations. ExxonMobil shut its 557,000 b/d refinery in Baytown and individual units at its 348,000 b/d refinery in Beaumont, the company said. Beaumont continued to operate at a reduced capacity.
Hurricane Harvey Throws Global Oil Markets Into Chaos - The most powerful Hurricane to hit Texas in more than 50 years has devastated much of the coast, and the historic flooding is now causing havoc in the energy markets.The rain is not over, and will over the next few days, spilling a year’s worth of rain within a week. ExxonMobil shut down its Baytown refinery, the second largest in the United States with a capacity of 560,500 bpd. Royal Dutch Shell closed its 360,000 bpd Deer Park refinery, according to S&P Global Platts, and Phillips 66 shut down its 247,000 bpd Sweeny refinery. All port facilities in Houston and Corpus Christi were also shut down on Monday, not open to vessel traffic. That means that no refined products or crude oil will be either imported or exported for the time being.The implications of the refinery outages and the port closures could be dramatic, although how long it will last is uncertain. The first obvious effect is a disruption to the production of refined products, which could have substantial effects on the U.S. fuel supply. As of Monday morning, more than 2.3 million barrels of daily refining capacity was knocked offline, according to Reuters, or about 13 percent of the nation’s total. That has already forced gasoline futures up by 7 percent to their highest levels in two years.The effects will reverberate well outside of Texas. For example, the massive refineries on the Gulf Coast send gasoline through a major artery to the U.S. Mid-Atlantic and Northeast. The disruption will mean that much of the country could see higher gasoline prices soon. The Gulf Coast also exported 2.7 mb/d of refined products in May, much of which was sent to Latin America and Europe.In fact, as the world’s largest refined product exporter, disruptions in the U.S. will be felt around the world. “Any hiccup in U.S. refined product exports is highly disruptive to the supply chain given the dependency of nations like Mexico and other Latin American countries on the U.S.,” Michael Tran, director of global energy strategy at RBC Capital Markets, told Reuters. Worse, refined product output in Latin America has fallen recently, with Mexico and Venezuela most vulnerable to supply outages in Texas. “If there are a lot of shutdowns, whatever capacity is running will get consumed in the U.S., it will have to be, so Latin America will have to get its barrels from elsewhere. It creates a domino effect,”
Harvey’s rains shut in more U.S. refineries, sending fuel prices higher (Reuters) - U.S. fuel prices surged on Monday as two more Gulf Coast refiners cut output and a third considered reductions, leaving more than 13 percent of the country's refining capacity offline after Tropical Storm Harvey flooded plants and shut seaports. The storm swung back over the Gulf of Mexico on Monday and was expected to bring another 10 to 15 inches (25 to 38 cm) of rain to the Houston area and up to 8 inches as far east as New Orleans, the National Weather Service said. Marathon Petroleum Corp's Galveston Bay refinery in Texas City, Texas, cut production by half, sources familiar with plant operations said. Lyondell Basell Industries' Houston refinery early on Monday also cut output by half to conserve crude supply, other sources said. Meanwhile the nation's largest plant, Motiva Enterprises' 603,000-barrel-per-day (bpd) Port Arthur, Texas, refinery was considering shutting due to high water on the plant grounds and running with essential personnel only, two sources said. The profit that refiners make per barrel of gasoline jumped as high as 21 percent in the first trading day following Harvey's landfall near Corpus Christi, Texas, late on Friday, as fears of short supplies gripped the market. Gasoline for immediate delivery in the Gulf Coast hit five-year highs, traders said, while U.S. gasoline futures RBc1 jumped as much as 7 percent to $1.78 per gallon, the highest since late July 2015. In total, 2.45 million bpd of U.S. refining capacity was shut due to Harvey, which knocked out four refineries in South Texas before bringing flooding rains to plants near Houston.
Harvey triggers spike in hazardous chemical releases - Hobbled oil refineries and damaged fuel facilities along the Gulf Coast of Texas from Tropical storm Harvey have released more than two million pounds of dangerous chemicals into the air this week, adding new health threats to Houston’s already considerable woes. The big spike in releases, which include carcinogenic benzene and nitrogen oxide, will add an environmental and long-term health risk to the region that's struggling with the massive flooding that Harvey has brought to the country’s energy capital, according to environmental watchdogs. Story Continued Below The jump in emissions has been noticed on the ground in Houston, where residents have taken to Twitter to report a stronger-than-normal chemical smell in some areas. “It’s adding to the cancer risk to the community and well as respiratory problems,” said Luke Metzger, director of Environment Texas, which has been tracking the emissions recorded by the Texas Commission on Environmental Quality for years. That level of chemicals released this week from "unplanned events," which typically exclude normal day-to-day operations, was equal to the average amount measured over a three-month period last year, he said. The reports of the pollution emissions began in earnest on Aug. 27, about a day and a half after Harvey made landfall, according to a POLITICO review of the filings. Harvey slammed into the Houston refining belt as a Category 4 hurricane late Friday, bringing several feet of rain and strong winds. It has since crawled northeast along the Gulf Coast, damaging refinery infrastructure and forcing Exxon Mobil, Shell and other companies to halt operations, emitting hazardous gases as they shut down the vast plants that populate the Texas coast. The Gulf Coast is home to nearly a quarter of the U.S. fuel refining output and half the country's chemical manufacturing. The storm has cut power to nearly 300,000 people in Texas, forced 13 refineries to shut down and caused another five to ramp down operations, according to the latest information from the Department of Energy.
Harvey Releases 2 Million Pounds of Pollutants From Refineries - Damage from Hurricane Harvey may have released as much as 2 million pounds of potentially hazardous airborne pollutants from oil refineries and other facilities in the Houston area, according to regulatory filings submitted to the Texas Commission on Environmental Quality. In some cases, the estimated amounts released vastly exceed legal limits — but the state agency can't confirm how many contaminants have been released because air-quality monitoring stations throughout the area were shut down prior to Harvey's landfall. Oil refineries and other facilities are required to file emissions reports estimating the amount of contaminants released into the air as soon as an event occurs. Chevron Phillips Chemical reported that it may have released more than 745,000 pounds of contaminants into the air as it shut down its Cedar Bayou Plant in Baytown, Texas. "At this time, we can confirm that our company has safely shut down operations at our Cedar Bayou facility in Baytown" a spokesperson told NBC News. The roof of a tank at the massive Pasadena Terminal, which has 128 tanks holding petroleum products was partially submerged due to heavy rain on Sunday morning. Gasoline spilled out and more than 300,000 pounds of contaminants were released into the air, according to initial estimates by Kinder Morgan, which owns the facility. Kinder Morgan told NBC News that "the spill was contained onsite" and "appropriate regulatory agencies have been notified." ExxonMobil disclosed that hurricane damage at two of its Houston-area refineries may have released 12,000 pounds of contaminants into the air. The company told NBC News in a statement, "We have taken prompt action to respond to events and report any potential emissions as soon as we become aware." The precise quantity of pollutants released in the air is currently unknown — 24 state air quality monitoring stations across the Houston area were shut down last week in anticipation of the storm and remain offline until commission staff can safely access them.
Surrounded by Oil Refineries, Port Arthur, Texas, Faces New Environmental Crisis Following Harvey Floods - Democracy Now! | Video & transcript - Six days after Hurricane Harvey made landfall, the unprecedented storm is continuing to wreak havoc in Texas and parts of Louisiana. The death toll has risen to at least 38, but authorities expect it to grow as the historic floodwaters begin to recede. Early this morning, a pair of explosions rocked a chemical plant 30 miles northeast of Houston, sending thick black smoke into the air. The Harris County Sheriff's Office says one deputy was taken to the hospital after inhaling fumes, and nine others drove themselves to the hospital. Now a tropical depression, Harvey has moved inland, but many parts of Texas remain underwater or under flood watch. On Thursday, the city of Port Arthur, Texas, which is 100 miles east of Houston, was completely underwater. AccuWeather is now projecting the economic impact of Harvey might top $190 billion -- exceeding the economic impact of Katrina and Sandy combined. Up to 40,000 homes may been destroyed and 500,000 cars totaled in the storm. According to the Red Cross, more than 32,000 people are in shelters in Texas. We speak with Hilton Kelley, the founder of Community In-Power and Development Association in Port Arthur, Texas. He is a former Hollywood stuntman turned environmental activist. In 2011, he was awarded the Goldman Prize, the world's most prestigious environmental award, for his work battling for communities living near polluting industries in Port Arthur and the Texas Gulf Coast. Port Arthur is home to the largest oil refinery in the nation -- the Saudi-owned Motiva plant, which has been shut down due to flooding.
Harvey’s Toll on Energy Industry Shows a Texas Vulnerability - — For years, much of the nation’s refinery capacity and chemical production have been concentrated along the swamps and narrow inlets of the Gulf of Mexico, risking devastation in a monster storm.The pounding being endured by coastal Texas will probably be the biggest test of that risk so far, and energy experts say it raises questions about the area’s role as a hub for such crucial and environmentally sensitive industries.“The hurricane did what terrorists could only dream of and take a third of U.S. refinery capacity off line for days on end,” said Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin. “Over the long term, the energy sector will have to consider the costs of additional hardening of the infrastructure on the Gulf Coast versus moving to a different location like the Eastern Seaboard.” The Texas and Louisiana coasts took on their vital role because they link vast oil and gas resources, both inland and offshore, with Caribbean and Atlantic shipping channels. But the damage from Harvey, which arrived with hurricane force, has exposed a downside: vulnerability to storms that experts say are becoming more extreme because of climate change. The damage, detailed in state and federal regulatory filings, is wide ranging: escaping gasoline from a submerged roof at a Phillips 66 storage tank; a sinking tank roof at Exxon Mobil’s vast refinery in Baytown, which resulted in the release of hazardous gases including volatile organic compounds and benzene, above permitted levels; and a lightning strike that disrupted operations and led to toxic-gas releases at a Dow Chemical plant in Freeport. The full implications are potentially even larger. The environmental fallout could worsen, and if oil and natural gas prices spike because refineries and pipelines are crippled, renewable energy sources like wind and solar power, along with electric cars, could get a major lift. The United States could be forced to import more gasoline and other refined products. And a chemical industry that has been expanding rapidly because of cheap natural gas from shale fields could be slowed, or even stalled. Nearly every major Texas and Louisiana refinery has been partly or completely shut down because of damage or for safety reasons, suppressing the daily production of at least 2.6 million barrels of refined petroleum products. At least seven major refineries are out of commission, and Morningstar on Tuesday estimated that 11 more refineries, with a combined capacity to produce 1.3 million barrels per day, risked closing, including the Saudi Aramco-Motiva refinery in Port Arthur, Tex., the nation’s largest.
25 Oil Tankers Stuck In Gulf, Unable To Offload Due To Harvey Port Closures -- According to ship-tracking data compiled by Bloomberg, coupled with MarineTraffic real-time tracking, at least 25 tankers carrying almost 17 million barrels of imported crude oil are drifting near Texas and Louisiana ports, unable to offload because of closures from Tropical Storm Harvey. A Bloomberg further details, 20 Aframaxes, 3 VLCCs, 2 Suezmaxes are currently waiting off Texas ports of Corpus Christi, Freeport, Texas City, Houston and Galveston, as well as off Sabine Pass and Lake Charles, Louisiana. This is three more than the 22 ships that were "drifting" on August 28. Follows a description of the stuck tankers' cargo:
- 6m bbl Mexican crude, including Maya
- 4m bbl Saudi oil
- 3.3m bbl Venezuela crude
- 2m bbl from Iraq
- 500k bbl Castilla from Colombia
- 500k bbl Ostra from Brazil
- 500k bbl Bonga from Nigeria
Additionally, here is a current status update of the various ports:
- Corpus Christi: Port shut since Aug. 24, sees return to normal operations by Sept. 4
- Freeport: Port shut
- Houston: Port of Houston still shut, no timeline for reopening
- Sabine Pass: Sabine pilots say pass closed since 1pm local time Friday
- Lake Charles: Port shut since Aug. 28
Runoffs and silting are major hurdle for crude oil tankers at Galveston Bay: official -- Runoff and silting of rivers and waterways flowing into the Galveston Bay still remains a concern for opening up the Houston Ship Channel and its four ports to vessels that require more draft, like Aframax and Suezmax, an official at a marine agency said Thursday. Current weather is not a concern, Michael Cunningham, director of project management with the Greater Houston Port Bureau, said in an interview. "The hydrographic surveys being currently conducted are seeking to answer that question about shoaling [silting of the waterway] and whether the draft in the waterways and alongside facilities been reduced significantly," he said. "Theoretically, an Aframax or Suezmax tanker could come into Houston right now, so long as they are not drawing more than 37 feet of water," Cunningham said. But if there has been significant shoaling, the US Coast Guard will need to determine that with a higher degree of certainty and state what size of vessels can be brought in, he said. At current drafts of 33 feet to 37 feet, most tankers -- clean or dirty -- will not be able to transit the Houston Ship Channel until the restrictions are lifted. Barges will be able to get through, but they are susceptible to fast currents, so they probably will not be moving much. The bureau is a member agency that coordinates the movement of all vessels in the Houston-Galveston marine complex, which includes Port of Houston, Port of Texas City, Port of Galveston and Port of Freeport. The US Coast Guard has requested that surveys of the anchorages along the Houston Ship Channel be prioritized and work is underway to repair aids, lights, and ranges, the bureau said in its release Thursday.
Gas Prices Spike As Harvey Shuts Down Gulf Coast Refineries -- Gasoline prices hit two-year highs today in electronic trade after Hurricane Harvey, which reached the Texas coast last Friday, caused the shutdown of a number of refineries. Gasoline was trading at US$1.7595 a gallon, up 5.57 percent from Friday’s close, but west Texas Intermediate was down 0.55 percent to US$47.73 a barrel at 6:30 AM EDT.According to an S&P Platts report, around 2.2 million bpd in refining capacity was shut down or in the process of being shut down as of Monday morning. Refineries in the Corpus Christi area had shut down ahead of the storm, but those in the Houston area only began shutting down yesterday, prompted by the floods that Harvey brought.Among the plants being shut down was Exxon’s 560,500-bpd facility in Baytown – the second-largest oil refinery in the U.S. after Port Arthur. Shell also started shutting down its Deer Park facility, which has a capacity of 340,000 bpd, and Phillips 66 started the shutdown of a 247,000-bpd refinery in Sweeney. Texas houses some 4.944 million bpd in refining capacity. Hurricane Harvey has also disrupted imports and exports of oil and oil products, with both Corpus Christi and Houston ports closed. EIA data for May shows that Texas imported 1.9 million bpd of the total 3 million bpd that entered the U.S. via the Gulf Coast, as well as 418,000 bpd of refined petroleum products.As a result, Reuters reported earlier today, traders have approached refineries in Northern Asia seeking supplies of jet and diesel fuel. In addition, traders and refiners have provisionally reserved ships to carry gasoline and jet fuel from South Korea to the West Coast. In production, around 379,000 bpd of capacity has been idled, the U.S. Bureau of Safety and Environmental Enforcement said, which represents 21.64 percent of the 1.75 million bpd that field operators in the Gulf of Mexico pump.
Harvey knocked out 4.4 million barrels of daily oil refining capacity — sending gas prices soaring (Reuters) - Retail U.S. gasoline prices hit two-year highs and global shipping routes were scrambled as the nation's largest refiners remained shut on Friday, even as Harvey was losing strength.Major fuel pipelines feeding the U.S. Northeast and Midwest have been either closed or severely curtailed, prompting shortages in some areas and dramatic spikes in wholesale prices.The storm has roiled global fuel markets and tankers carrying millions of barrels of fuel have been rerouted to the Americas to avert shortages. European refining margins hit a two-year high on a surge in exports. The effect will continue for several weeks, if not months, after Harvey hammered the Gulf Coast for several days, causing floods that buried Houston and the surrounding area in several feet of water. It knocked out about 4.4 million barrels of daily refining capacity — slightly more than Japan uses daily — and the signs of restarts were tentative. The nation's largest refiner, Motiva's Port Arthur facility, which can handle 600,000 barrels of crude daily, will be shut for at least two weeks, according to sources familiar with plant operations. Other plants in the Beaumont/Port Arthur area are expected to face similar challenges restarting, as the waters were in fact still rising there, even as flooding receded in Houston, some 85 miles (137 km) west. In Corpus Christi, where Harvey first made landfall a week ago, refiners Citgo Petroleum Corp, Flint Hills Resources and Valero Energy Corp were moving to restart their plants, along with the nearby Valero Three Rivers refinery, according to sources. Benchmark U.S. gasoline prices have risen more than 15 percent since the storm began, but in trading Friday the contract for October delivery lost 1 percent, the first decline in five days. September's contract had risen by 25 percent, but stopped trading Thursday. The national average for a regular gallon of gasoline rose to $2.519 as of Friday morning, according to motorists advocacy group AAA, with even gaudier increases in the U.S. Southeast, which relies heavily on Gulf supplies. South Carolina, for instance, has seen prices rise nearly 30 cents, and prices were up nearly 20 cents in Texas, where fuel shortages were already evident.
Analyst: Harvey's Floods Could Delay 10% of US Fracking -- As much as 10 percent of U.S. fracking work could be delayed after Hurricane Harvey ripped through southeast Texas, home to one of the nation’s busiest oilfields, according to Raymond James & Associates.More than half of the rigs running in the Eagle Ford Shale are estimated to have suspended drilling because of the storm, Marshall Adkins, an analyst at Raymond James, wrote Thursday in a note to clients. The muddy conditions left in Harvey’s wake will add stress to the fracking services sector that has consistently lagged the faster drilling crews.Given its location in far southeastern Texas, the Eagle Ford was the only major American shale formation in the cross hairs of Harvey when it slammed ashore as a Category 4 hurricane last week. Major explorers including EOG Resources Inc. and Marathon Oil Corp. halted drilling and evacuated crews in anticipation of the storm, crimping as much as 57 percent of daily production, according to the Texas Railroad Commission.“Given that much of oil and gas activity occurs in areas only accessible via dirt roads, the heavy rainfall usually makes the movement of trucks and supplies much more difficult,” Adkins wrote. “The trucking and rail of sand, chemicals, and personnel to the well site will all take more time given the likely nasty condition of many Eagle Ford access roads.”The Eagle Ford was the only shale basin of the big four to drop activity last week, as some in the industry start to look at shale as a more expensive option compared to other places. The temporary drop in the rig count by as much as 45 rigs due to flooding could be a catalyst for higher oil prices, Adkins wrote.
US Gulf oil output rises as Harvey hits onshore: Update (Argus) — US offshore oil output continues to recover from now tropical storm Harvey as onshore producers gauge the impact on their operations. As much as 320,000 b/d of oil output, representing 18pc of the total from the US Gulf, and 615mn cf/d of natural gas, about 19pc of the total, were shut in as of 12:30pm ET today, according to the latest data from the Bureau of Safety and Environmental Enforcement (BSEE). In all, 102 platforms and five rigs have been evacuated. Yesterday, 331,400 b/d of oil output and 583mn cf/d of natural gas were shut in, with 98 platforms and five rigs evacuated. ExxonMobil said start-up operations at its Hadrian South subsea production facility in the Gulf are underway. But its Hoover and Galveston 209 platforms remain shut in. All four of BP's production platforms in the deepwater Gulf of Mexico continue to operate. Operations also continue normally at ConocoPhillips' Magnolia platform. Anadarko has resumed production at its Lucius facility. "Only Boomvang, Gunnison and Nansen in the western Gulf remain shut in until the weather permits the safe return of our personnel to these facilities," it said. In the onshore, ConocoPhillips has reopened its Eagle Ford office in Kenedy, Texas, but operations remain limited. Marathon Oil, which suspended operations in parts of the Eagle Ford basin as a precautionary measure ahead of the storm, is assessing all of its Eagle Ford locations and beginning to restart operations as access allows.
US offshore oil, gas output recovers: Update (Argus) — US Gulf of Mexico oil and gas output recovered some today as producers re-staffed platforms that they had shut ahead of Hurricane Harvey. As much as 331,400 b/d of oil output, representing 19pc of the total from the US Gulf, and 583mn cf/d of natural gas, about 18pc of the total, are shut in, the Bureau of Safety and Environmental Enforcement (BSEE) said, as 12:30pm ET today. In all, 98 platforms and five rigs have been evacuated. That compares with 378,000 b/d of oil output and 827mn cf/d of natural gas, with 105 platforms and five rigs evacuated, as of yesterday. The recovery in output may weigh on Nymex crude prices as record flooding has disrupted 17pc of US refining capacity along the Gulf coast. Nymex October crude futures fell by $1.30/bl to $46.57/bl today, while the Brent-WTI spread widened by 78¢/bl to $5.32/bl. Anadarko has returned crews to its Lucius platform in the Gulf and expects to restart production as pipelines permit. Production has resumed at its operated Constitution, Heidelberg, Holstein and Marco Polo facilities. But it will not return personnel to the Boomvang, Gunnison and Nansen spars in the western Gulf until Harvey has cleared the way for a safe return. Chevron assets in the region and the Gulf of Mexico continue to operate, it said. Apache, which has not halted any operations said, "we continue to monitor the situation and will advise on further closures as warranted." Many US oil and gas producers have shut their offices in Houston and across Texas because of the effects of Tropical Storm Harvey. BP, Chevron and Anadarko said their Houston offices will remain closed until conditions improve.
Harvey’s widespread destruction tests U.S. shale.- The tropical storm is the biggest to hit the sector since shale drilling took off a decade ago; production may be slow to bounce back. Before Harvey made landfall as a hurricane Friday, many big shale producers in the Eagle Ford shale fields near Corpus Christi, Texas, shut down their oil and gas wells, and initial estimates for lost production were between 400,000 and 500,000 barrels a day. As the hurricane’s widespread devastation has become clearer, several analysts say it is almost certain that much, if not most, of the region’s 1.4 million barrels a day of output is shut down. Restarting wells may not guarantee that they flow at the same rate as before the storm, said Tony Sanchez, chairman of Eagle Ford operator Sanchez Energy Corp. , in an interview before the storm. While Mr. Sanchez said he didn’t expect the outages to be too extensive or last too long, he said that on a technical level he fears that shale wells, once shut off, could lose pressure. “It’s not just a matter of flipping a switch,” he said. “There is significant risk in those wells not coming back to previous levels.”
Sand mine in West Texas supports fracking in Permian Basin | The Fresno Bee: Ten miles east of this community of 6,000 sandwiched between booming West Texas oil fields, heavy trucks have begun lining up at the region's first sand mine as it churns out ammo by the ton for U.S. frackers. The Houston Chronicle reports the $325 million mine, owned by Houston sand supplier Hi-Crush Partners, is the first working plant of its kind in West Texas, and over the next 18 months, rivals including U.S. Silica Co. and Fairmount Santrol plan to build more mines that will send millions of tons of sand into the Permian Basin, allowing oil producers to circumvent expensive rail lines that transport white sand from Wisconsin, one of the costliest obstacles in West Texas. "It's going to change the landscape for us," said Chris Gatjanis, who runs the Permian Basin operations for Halliburton, the world's largest hydraulic fracturing company. "If you can cut out a piece of the cost of getting the sand to location, it makes the economics out here work better."
Sempra and Boardwalk's proposed Permian-to-Katy gas pipeline - In the short term, Permian natural gas will be dealing with the aftermath of Harvey and what it might do to associated gas production from crude oil wells being curtailed due to refinery downtime and storage capacity issues. But that will soon be behind us, and at that point Permian natural gas production will resume its steep upward trajectory. Just a few months ago, the gas market was still sharpening pencils on potential gas takeaway constraints in West Texas, but congestion in the Waha gas market now appears as likely as another winning season for Alabama football. Where will this tide of natural gas end up? Until a few days ago, the Agua Dulce Hub in South Texas was Number 1 on the list, but a new project has thrown the Katy Hub into the mix as a potential destination. Today we analyze an interesting approach to relieving Permian natural gas market constraints. One thing we’ve yet to discuss here in the blogosphere is the potential impact of Permian natural gas arriving at the Agua Dulce Hub in 2020. Will these projects flip Agua Dulce from being short natural gas (as was our outlook in the “Miles of Texas” Drill Down series), to being long natural gas? If so, will excess gas need to flow northeast along the Texas Gulf Coast to the Katy and Houston Ship Channel (HSC) markets? Once that gas arrives in the Katy/HSC markets, will it find enough local demand? Or will it need to continue moving east into the Southeast Texas and Southwest Louisiana markets? Finally, what happens if Permian supply skips over Agua Dulce altogether and heads directly to Katy/HSC on a new greenfield pipeline? That last question is the subject for today as we look at the dynamics driving Sempra LNG & Midstream and Boardwalk Pipeline Partners’ Permian-to-Katy (P2K) pipeline open season. We will explore the other questions in a future bog series on the shifting Gulf Coast supply and demand dynamics. Sempra and Boardwalk announced a non-binding open season for the Permian-to-Katy (P2K) pipeline on August 14, 2017. The proposed 42-inch-diameter pipeline would originate at the Waha Hub in the Permian and terminate at the Katy Hub just west of Houston. Just before reaching Katy, one leg of the pipeline would head south and interconnect with various interstate pipelines before terminating at Gulf South Pipeline Co.’s Coastal Bend Header (which will supply gas to Freeport LNG) in Wharton and Brazoria counties.Why The Shale Oil "Miracle" Is Becoming A "Debacle" - by Chris Martenson - With high net-energy, society enjoys increasing complexity and technological advances. But without high net-energy fuel sources, our capabilities quickly regress to those of decades -- or even centuries -- past. Which is why understanding where we truly are in the 'net-energy story' is so incredibly important. Is the US on the cusp of being "energy independent" from here on out? Is the "shale miracle" ushering in a glorious new 'boom' era that will vault America to unprecedented prosperity? No. The central point of this report is that the US is deluding itself when it comes to energy abundance (generally) and oil (specifically). Yet that's not what we hear from the cheerleaders in the industry or in our media. From them, we hear a silver-tongued narrative of coming riches -- a narrative that contains some truth, some myth, and a lot of fantasy. The bottom line is this: The US shale industry resembles a fraudulent Ponzi scheme much more so than it does any kind of "miracle". How do I know that? Because, collectively, US shale companies have lost cash in every year of their existence. The burned through cash when oil was $100 -- and again when it was $90, $80, $70, $60, $50, $40, and $30 a barrel. They burned through cash in 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016. You don’t have to be a finance guru to appreciate or understand that any industry that persistently burns through cash is a bad deal. Especially one whose prime product – shale wells – principally deplete (-85%) in roughly three years. If you’ve been in business for 9 years drilling wells that mostly run out in 3 years, and you haven’t managed to produce positive cash flow at any point along the way, then it's time to admit that your business model simply doesn’t work. As even The Economist magazine recently noted: But the fact that the industry makes huge accounting losses has not changed. It has burned up cash whether the oil price was at $100, as in 2014, or at about $50, as it was during the past three months. The biggest 60 firms in aggregate have used up $9bn per quarter on average for the past five years. As a result the industry has barely improved its finances despite raising $70bn of equity since 2014. Much of the new money got swallowed up by losses, so total debt remains high, at just over $200bn. (Source) Let’s run that math. Five years is 20 quarters. That times $9 billion/quarter is $180 billion dollars in cumulative operating losses. This begins to give us a sense of the magnitude of losses investors will face when the music finally stops.
Energy trade groups get say on potential pipeline shutdown (AP) — A federal judge deciding whether to shut down the four-state Dakota Access oil pipeline while more environmental review is done is allowing national energy and manufacturing trade groups to have a say. U.S. District Judge James Boasberg, in Washington, D.C., granted the request Friday, just days before Monday’s final deadline for all parties involved in the legal dispute to weigh in with arguments. The Standing Rock Sioux and three other American Indian tribes in the Dakotas have been fighting the pipeline for more than a year, arguing that the $3.8 billion project built by Texas-based Energy Transfer Partners threatens cultural sites and tribal water supplies. The company disputes that and maintains the pipeline is safe. After months of delays, it began moving North Dakota oil through South Dakota and Iowa to a distribution point in Illinois on June 1. However, Boasberg later that month ordered the Army Corps of Engineers, which permitted the project, to further review the pipeline’s impact on the Standing Rock tribe. The judge is deciding whether to shut down the pipeline until the completion of the work, which is expected to take several more months. Groups including the American Petroleum Institute, American Fuel and Petrochemical Manufacturers, Association of Oil Pipe Lines, national Chamber of Commerce and National Association of Manufacturers asked to submit their stance on the matter. They maintained in court documents that ceasing pipeline operations “would have serious adverse economic impacts throughout the oil industry and local and regional economies.” Boasberg gave his approval in a one-sentence statement without providing details on his reasoning. Standing Rock attorney Jan Hasselman on Monday said the tribe doesn’t object because “everybody who wants to be heard should be heard.”
Tribes say Dakota Access pipeline overstates shutdown impact - ABC News: American Indian tribes hoping to persuade a federal judge to turn off the Dakota Access oil pipeline maintain in last-minute court filings that the project's developer has overstated the potential impacts of a shutdown. Standing Rock Sioux attorney Jan Hasselman and Cheyenne River Sioux attorney Nicole Ducheneaux also argue that Texas-based Energy Transfer Partners brought potential problems on itself by forging ahead with construction despite the uncertainty of final federal approval. ETP "made reckless choices, and it must accept the consequences," the attorneys wrote in documents filed Monday, the deadline for arguments imposed by U.S. District Judge James Boasberg in Washington, D.C. The $3.8 billion pipeline began moving North Dakota oil through South Dakota and Iowa to Illinois on June 1, after President Donald Trump pushed for its completion. The Army Corps of Engineers, which permitted the project, had decided to do more environmental study, but dropped that plan after Trump took office. The judge ruled in June that the Corps didn't adequately consider how an oil spill under Lake Oahe in the Dakotas might affect the Standing Rock Sioux, one of four tribes that have challenged the pipeline in court. He ordered the Corps to reconsider certain areas of its environmental analysis, and could decide to shut down the 1,200-mile pipeline while this work is done over the next several months.
Oil Firms That Cheered Regulatory Rollback Are Quaking Over Nafta - The Trump administration is easing environmental regulations and opening up territory for drilling as part of the president’s bid to unleash the "vast energy wealth" of the U.S. Yet Donald Trump’s push to rewrite the North American Free Trade Agreement could have the opposite effect.As Nafta negotiations resume Friday, oil industry leaders are desperate to preserve the 23-year-old trade deal that drove a North American oil and gas renaissance and paved the way for $34 billion worth of energy exports to Canada and Mexico last year."Any changes that disrupt energy trade across our North American borders, reduce investment protection or revert to high tariffs and trade barriers that preceded NAFTA could put at risk the tens of millions of jobs," said the top oil and gas trade groups from the U.S., Canada and Mexico in a joint position paper released last month.Energy companies that sat on the sidelines during other recent trade negotiations are getting more involved on Nafta -- securing formal roles on committees advising the process, unleashing lobbyists to influence it and outlining their priorities for the administration. Armed with a modest wish list, the industry is mostly in a defensive posture, terrified Trump will torpedo the current deal or weaken existing provisions that allow investors to sue countries over discrimination, seizures and other injustices.“We want to make clear in a thoughtful way that there’s really no reason to disrupt the energy component of Nafta,” American Petroleum Institute President Jack Gerard said in an interview. “Over time, this has really evolved to a very efficient marketplace in North America with Canada, Mexico and the United States. It’s a mature system that’s well in place, and they’re just no reason to disrupt it.”
Canadian oil pipeline protesters launch new battle from the water (Reuters) - On a sparsely populated island off the coast of the northwestern United States, more than a hundred environmental activists gathered last weekend to practice seaborne drills to disrupt construction on Kinder Morgan Canada Ltd's Westridge crude oil terminal. In kayaks and sailboats they practiced forming blockades, raising banners and rescue techniques. Sunday culminated in a mass role play in which kayakers blockaded a large vessel and unfurled banners emblazoned with "Stop Kinder Morgan" while pretend law enforcement boats circled around creating noise, waves and simulating arrests. The three-day camp on Lopez Island in Washington state's San Juan archipelago marks the opening of a new front in the campaign to stop Kinder Morgan's Trans Mountain pipeline expansion, a C$7.4 billion ($5.90 billion) project through British Columbia that gained Canadian government approval last year. The proposed project would triple capacity on an existing pipeline and transport 890,000 barrels per day of crude from northern Alberta's oil sands to Westridge docks in the Port of Vancouver for loading onto tankers bound for refineries as far afield as Asia. Activists aim to halt building work scheduled to start next month at Westridge terminal, located about 50 miles (80 km) north of Lopez Island, by launching a campaign from the water. Westridge is one of a handful sites along the pipeline owned by Kinder Morgan and protected by 10-foot-high (3m high) chain link fencing and security guards. The pipeline is fiercely opposed by groups concerned it will accelerate oil sands development, worsen climate change and increase the risk of an oil spill in the waterways around British Columbia and Washington known as the Salish Sea. Canada is home to the world's third-largest crude reserves but has limited pipeline capacity to transport its oil from landlocked Alberta to international markets. Delays to building new export pipelines, like TransCanada Corp's Keystone XL project, have contributed to a sharp pullback in international investment as companies fret about lack of market access weighing on Canadian crude prices.
Harvey sends gasoline prices climbing, deepens Venezuela's suffering -- Hurricane Harvey’s strike at the heart of the U.S. oil and gas industry caused backups throughout the petroleum system on Monday, from storage tanks in Cushing, Okla. to tankers waiting for gulf ports to reopen, and set U.S. gasoline prices soaring to the highest levels in two years. The shutdown of about 2.2 million barrels, or 12 percent, of U.S. refining capacity has driven gasoline prices up as much as 6.8 percent since Friday. Prices eased off later in the day, however, finishing up 4.4 percent and up about 8 percent in the past week. Analysts said that the coming end of the summer driving season and substantial inventories of gasoline and diesel would help dampen any price increase from Harvey. Huge disruptions remain. The massive rainfall has restricted ship traffic in ports all across the Texas Gulf Coast from Corpus Christi to the Sabine Pass, with further restrictions likely in Louisiana as the storm crawls to the east. The ports of Lake Charles, La. and neighboring Port Arthur, Texas were closed to inbound traffic Monday, according to the US Coast Guard. Bloomberg News reported that 14 tankers were in a logjam waiting to deliver crude oil. The Port of Freeport was losing some of its water depth as silt washed from the bay was building up, according to S&P Platts, an analysis firm. Robert McNally, president of the Rapidan Group, a consulting firm, said that the storms brought to a halt imports of crude oil from and exports of gasoline to Venezuela, putting more pressure on the country’s economy and fueling more disarray there. He noted that the Trump administration has been reluctant to impose oil sanctions on Venezuela. “That debate just got resolved,” McNally said, “and it will add pressure on Venezuela as long as this lasts.”
Trump exempts Citgo from Venezuela sanctions | TheHill: President Trump is exempting Citgo Petroleum Corp., owned by Venezuela’s government, from the financial sanctions imposed Friday on the country. The latest set of sanctions is meant to punish the government of President Nicolás Maduro as it moves to rewrite the country’s constitution and consolidate his power. To that end, the sanctions seek to exclude the Venezuelan government from the United States’ economy, including its markets and capital, and to make sure the U.S. does not assist the Maduro government. But Citgo, an oil refiner, retailer and transporter based in the United States and owned by the government’s Petróleos de Venezuela, will get to operate largely as normal. The White House statement announcing the sanctions framed the Citgo exemption as an attempt “to mitigate harm to the American and Venezuelan people.” Petroleum imports and exports are also exempt, a nod to the significant petroleum trade between the United States and Venezuela. “We are issuing general licenses permitting transactions that would otherwise be prohibited under the executive order,” Treasury Secretary Steven Mnuchin told reporters Friday. “These include a 30-day wind-down period, the financing for humanitarian goods to Venezuela and certain dealings in specific debt instruments that trade on secondary markets, and certain dealings with U.S. entities owned or controlled by the government of Venezuela. Also, the executive order carves out short-term financing for most commercial trade, including the export and import of petroleum.” Nonetheless, Citgo will not be allowed to send profits to its Venezuelan parent.
Total's Application to Drill Near Amazon Reef Rejected - Brazil's environmental agency (Ibama) rejected Tuesday the application for a license to drill in the mouth of the Amazon Basin by the French company Total (operating in a joint venture with BP). This is an important step towards defending the Amazon Reef ; a unique and largely unexplored ecosystem—Total's closest block is only 8km away from the reef. In a statement published Tuesday, Ibama's president, Suely Araujo, said that Total had not provided adequate information about the environmental impact of the project, making it impossible to grant the license. The company admits in their own Environmental Impact Assessment (EIA) that there is a 30 percent probability of oil reaching the reef in case of a spill. Among the many flaws on Total´s Environmental Impact Assessment, Ibama listed, the oil dispersion modeling and potential cross border risks to French Guiana, Suriname, Guyana, Venezuela and Caribbean archipelagos. The note also highlights the lack of information about possible impacts to the welfare of mammals, turtles and birds that live in the region. The company still has another chance to send additional documentation as requested by Ibama. "This will be the third and last time that the agency is willing to allow Total to provide adequate information about the environmental impact of the project. If Total does not adequately address the outstanding requests from the technical team, the licensing process will be finally archived ," said Suely Araujo, Ibama's president. "After two years and multiple unanswered questions, Total has failed to meet the demands of the regulator, Ibama," Helena Spiritus, Greenpeace Brazil energy campaigner, said. "They have shown they are incompetent and not fit to drill anywhere near the Amazon Reef. Ibama shouldn't give them another chance to threaten this precious ecosystem."
Campaigners seeking to overturn fracking decision face wait for court ruling (From The Argus): Campaigners fighting to overturn a Government decision to approve a fracking site in Lancashire face a wait to see if they have won the latest round of their legal battle. At the end of a two-day hearing in London, three Court of Appeal judges reserved their decision in challenges brought by the Preston New Road Action Group (PNRAG) and environmental campaigner Gayzer Frackman, from Blackpool. A ruling will be given in the case by Lord Justice Simon, Lord Justice Lindblom and Lord Justice Henderson on a date to be fixed. The appeal proceedings followed a defeat for protesters at the High Court in April when they failed to persuade a judge in Manchester that the decision to grant a planning application for the site in Fylde was not fair or lawful. UK energy company Cuadrilla’s planning application was refused by Lancashire County Council in 2015 but later granted following an appeal and a planning inquiry. The scheme was given the go-ahead in October by Communities Secretary Sajid Javid. During the latest hearing, David Wolfe QC, for the action group, submitted that “the Secretary of State, through his inspector, misunderstood key local and national planning policies”. The judges have been urged to “set aside” the ruling of Mr Justice Dove in the High Court and to “quash the Secretary of State’s decision”. Argument was made on behalf of both the Communities Secretary and Cuadrilla that the challenges by PNRAG and Mr Frackman should be dismissed.
Harvey hits flow of distillates from US Gulf to Europe -- The stream of distillate cargoes from the US Gulf Coast to Northwest Europe and the Mediterranean has all but halted in the last eight days as tropical storm Harvey forced the closure of terminals, ports and refineries in addition to disrupting market flows. Only one vessel was seen to leave the USGC to land across the Atlantic in the last eight days, according to data from S&P Global Platts trade flow software cFlow. The Medium range tanker Isola Blu is en route to Amsterdam. However, it may not end up there as cargoes are likely to be diverted to Latin America given the disruption. Cargoes frequently get bought and sold after loading and some are diverted in order to fill unexpected shorts. The Overseas Milos is now just outside of Curacao off the coast of Venezuela having previously been on course to Le Havre in France. Total arrivals from the USGC are now only at 320,000 mt, which has caused the ICE low sulfur gasoil futures spread to move definitively into a backwardation of around 75 cents/mt Tuesday after being mostly flat Friday, according to ICE data. The break in supply is likely to support the NWE and Mediterranean diesel markets. However, given the disruption, there was talk of a possible reverse arbitrage from Europe to the US emerging, according to sources, but so far there was scant evidence of this. The possibility of Europe supplying Latin America is perhaps the more likely outcome initially, but so far market participants were holding off for the further clarification on the situation in the US. "People are starting to sniff for Latam, but nothing has been really done. Everyone is waiting for the US to open it seems," a source said.
Sep Eagle Ford crude oil delivery to S Korea delayed 1-2 weeks on Hurricane Harvey - Various Northeast Asian end-users are bracing themselves for possible lengthy delays in the delivery of North and Central American crude oil supply amid recent onslaught of Hurricane Harvey, with three South Korean refiners expecting to receive cargoes from the US and Mexico behind their initial September schedule, market sources said Tuesday. At least two South Korean and one Chinese refiners had fixed a few Suezmax and VLCC cargoes to co-load their Mexican term barrels with Eagle Ford crude for delivery in the second half of September. But the companies are now expecting delays of around one to two weeks for the barrels to reach Asia, a North Asian crude trading manager with knowledge of the matter told S&P Global Platts. "South Korean companies have lots [of logistics matters] to sort out now ... for what we know as of now, the delays could be as short as one week to as long as a couple of weeks," the trade source said. Meanwhile, one South Korean refiner said it had not purchased any US crude barrels for loading in late August and September, though the firm is also expecting around one week of delay in the delivery of its September Mexican term supplies which include Isthmus and Maya crude. Overall, numerous tornado warnings and the prospect that massive flooding in virtually every corner of the nation's fourth-largest city could last at least several more days -- exacerbated by two swollen reservoirs that were being slowly released to avoid an even greater catastrophe -- complicated workers' efforts to assess damage to key energy infrastructure and determine when operations can return to normal.
China Becomes World’s Third-Largest Shale Gas Producer - China has become the world’s third-largest shale gas producer, after only the U.S. and Canada, Iran’s PressTV reports, adding that last year, China pumped almost 8 billion cubic meters of shale gas. The annual result was a 76.3-percent improvement on 2015, China’s Ministry of Land and Resources said – a record amount. Investments in shale gas exploration reached US$1.3 billion.Shale gas production in China has continued to grow this year, as it seeks to move away from crude oil and bets increasingly on gas as the cleaner fuel amid government efforts to reduce pollution levels.Earlier this month, the Ministry announced it will be opening two more production bases for shale gas in the south of China, and it will also schedule more oil and gas exploration tenders. The two bases will be in the Guizhou province and Hubei province. The tender for the US$193-million Guizhou development project took place on August 18 and the winner was a local company, Guizhou Industry Investment (Group) Co.China has significant shale gas reserves, but they are located in geologically challenging areas, there is no developed production and transportation infrastructure, and exploration rights are limited, as Bloomberg wrote last year. As of the end of 2015, recoverable shale gas reserves stood at 130 billion cu m, compared with 5.19 trillion cubic meters of conventional gas. One of the largest shale gas deposits in the country is the Fuling field, with proven reserves of 600.8 billion cubic meters. This year, however, Beijing announced plans to increase the proven reserves of shale gas in the country to more than 1.5 trillion cubic meters by 2020. This would involve some major investment in recovery technology as well as infrastructure. Production is also slated to expand to 30 billion cubic meters by 2020, according to the Ministry, and further to 80-100 billion cubic meters by 2030.
China-owned oil company cozies up to Washington | TheHill: -- The Washington office of a Chinese state-owned oil company has turned to K Street to help it connect with the U.S. government amid tough talk on trade from President Trump. The work to represent the “myriad of interests” of Sinopec Group actually began in May 2016 — before Election Day — but paperwork only recently appeared in a Justice Department disclosure database. The contract appears to have been extended another year, until May 2018. Sinopec is paying $32,000 per month. The effort includes Mark Cowan, a former CIA officer who held executive branch posts in three GOP presidential administrations, and Lynn Tian, the chairman of Sinowind Technologies who helped found the Asian Republican Coalition. Documents say they are handling the day-to-day management and coordinating the team’s overall efforts, respectively. Cowan formed Cowan Strategies in 2013 and Tian runs Global Strategies, Ltd. Both firms report working on the contract. Other lawyers and lobbyists — primarily from Patton Boggs, which has since merged to become Squire Patton Boggs — appear to round out Sinopec's team. The firm, and Cowan, have both represented the Chinese government and the China Chamber of Commerce, which is part of China’s Ministry of Commerce. Squire Patton Boggs still represents the Chinese government, in addition to public relations firms MSLGroup and BLJ Worldwide.
The World Eyes Yet Another Unconventional Source of Fossil Fuels - Yale E360: In May of this year, China claimed a breakthrough in tapping an obscure fossil fuel resource: Researchers there managed to suck a steady flow of methane gas out of frozen mud on the seafloor. That same month, Japan did the same. And in the United States, researchers pulled a core of muddy, methane-soaked ice from the bottom of the Gulf of Mexico. The idea of exploiting this quirky fuel source would have been considered madness a couple of decades ago — both wildly expensive and dangerous. Until recently, methane-soaked ice was considered explosively unstable. In the Gulf of Mexico, traditional oil rigs have been tiptoeing around these icy deposits for years, trying to avoid them. “These deposits have been a pain in the neck for oil exploration,” says Scott Dallimore with the Geological Survey of Canada. Accidentally melting deposits overlying traditional oil and gas fields could cause drilling infrastructure to collapse, or pipes to clog up with ice.Now the tide has started to turn, as studies of the frozen gas have quelled some of the bigger fears. “We always used to think of these as explosive and dangerous — they’re not,” says Dallimore, who is involved with Canada’s explorations of these deposits. These reassuring findings, combined with rising energy demands, have spurred some countries — especially fossil fuel-poor nations like India and Japan — to think seriously about commercial extraction. But there are still concerns about the wisdom of mining this unexplored corner of the fossil fuel landscape, including the possibility of triggering underwater landslides, unleashing tsunamis, disturbing ocean ecosystems, and — most important of all — more than doubling the planet’s natural gas supplies and the planet-warming emissions that go along with them. So is drilling for methane hydrates really a good idea?
Libya's oil disruptions widen as two more fields halt output - Two more oil fields in Libya are being closed after an armed group took over pipelines to both deposits, further disrupting the OPEC nation’s plan to boost crude production. El Feel, or Elephant, stopped production, Wessam Al-Messmari, an office manager for the Petroleum Facilities Guard that is protecting the field, said Sunday by phone. State-run National Oil Corp. declared force majeure at the deposit, according to a person familiar with the situation who asked not to be identified because the information isn’t public. The Hamada oil field will gradually stop pumping through Monday because of the pipeline closing, Arabian Gulf Oil Co. spokesman Omran al-Zwai said Sunday. Force majeure was also declared on Hamada, he said. Force majeure is a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. An armed group closed the pipelines to Hamada and El Feel, according to a person familiar with the situation. Libya revived its oil production and exports before the recent disruptions. In July, crude production was at a four-year high and exports were the most in three years, according to data compiled by Bloomberg. While the expansion has helped Libya’s oil-dependent economy, the Organization of Petroleum Exporting Countries is trying to cut global supplies. That effort has been undermined by recovering output at OPEC members Libya and Nigeria. Libya’s biggest field, Sharara, has been shut for about a week after an armed group closed the pipeline that linked the deposit to an export terminal, Al-Messmari said at the time. The field is still not pumping, a person familiar with the matter said Sunday. Libya, which holds Africa’s largest crude reserves, pumped 1.02 million barrels a day in July. It was producing 1.6 million barrels a day before a 2011 revolt set off years of fighting between rival governments and militias.
Fracking a potential 'game-changer' for South African economy - Hydraulic fracturing (fracking) could be a “game-changer” for South Africa’s economy, Academy of Science of South Africa (ASSAf) VP Professor Barney Pityana said on Thursday.Addressing delegates at a national shale gas conference, hosted by ASSAf in partnership with the Department of Science and Technology, in Port Elizabeth, he said fracking also had the potential to make a major contribution to South Africa reaching its commitments in terms of climate change, by limiting the country’s reliance on coal as an energy source. Limiting the country’s reliance on importing oil in an increasingly uncertain global climate, he added, was also crucial. “The development of diverse sources of energy is critical for any developing economy. South Africa is dependent on oil and gas imported from a variety of countries. Such dependence carries risks, including the uncertainties of the market and the political situations in an ever-changing world,” he noted. Pityana pointed out that South Africa had considerable shale gas reserves in the Western, Northern and Eastern Cape, adding that there were economically viable and advanced extractive technologies available for South Africa to develop a fracking industry.“Nonetheless, the extraction and development of the industry must be undertaken with caution,” he cautioned.Pityana noted that the concerns around fracking included the potential effect on underground water resources in an already water-scarce country and the negative effect on the environment, including human habitation and the habitats of plants and wildlife.
What's Next For Oil: Interview With Former DOE Chief Of Staff -- (interview & transcript) In this week's MacroVoices podcast, Erik Townsend and Joe McMonigle, former chief of staff at the US Department of Energy, discuss the state of the global energy market, and OPEC’s rapidly diminishing ability to control oil prices. McMonigle believes investors will be hearing more jawboning from the Saudis, OPEC's de-facto leader, over the next two weeks as they try to marshal support for extending the cartel's production-cut agreement past a March 2018 deadline. Of course, anyone who’s been paying attention knows the cuts have done little to alleviate supply imbalances that have weighed on oil prices for years. In a report published by the International Energy Agency earlier this month, the organization notes that non-compliance among OPEC members, and non-members who also agreed to the cuts those non-members who also agreed to cut oil production, increased again in July. According to the IEA data, non-compliance among the cartel’s members rose to 25 percent in July, the highest level since the agreement was signed in January. Meanwhile, noncompliance for non-members rose to 33%. Given that oil prices have fallen since OPEC members and non-members first agreed on the cuts last November, the Saudi's might have difficulty convincing their peers that the cuts are having an impact, other than allowing US shale producers to flourish. OPEC will meet Nov. 30 in Vienna.
Harvey may succeed where OPEC has struggled by boosting oil prices - (Reuters) - Hurricane Harvey may achieve in global crude oil markets in a few days what OPEC and its allies have struggled to achieve in months - a tightening of supplies and a rise in prices. Harvey, which has been downgraded to a tropical storm, hit the coast of Texas on Friday as the most powerful hurricane to hit the U.S. state in more than 50 years, causing widespread damage and flooding. The region where the storm struck is home to some 2.2 million barrels per day (bpd) of refining capacity as well as being a major shipment point for both imports and exports of crude oil and fuel products. The refining capacity that has been idled because of the storm is about 11.2 percent of the U.S. total, and the immediate impact is being felt in gasoline prices. Benchmark U.S. gasoline futures jumped as much as 6.8 percent in early trade on Monday in Asia to touch $1.7799 a gallon. Brent crude, the global oil benchmark, rose as much as 0.8 percent in early Asian trade, reaching as high as $52.84 a barrel. So far, this would imply the crude market is fairly relaxed about the impact of Harvey, but it's possible the effect of the storm will travel far beyond U.S. gasoline prices, given the United States' status as an emerging power in crude and refined product exports. It has been U.S. shale oil output that has largely frustrated efforts by the Organization of the Petroleum Exporting Countries (OPEC) and their allies to drive crude prices higher this year by restricting their own production. While much of the offshore crude production in the Gulf of Mexico was shut in ahead of Harvey's passage, the yet to be quantified damage from the storm may lie with the onshore, shale oil output that was in the storm's path. The Eagle Ford shale basin lies in the path of the storm and producers in the region have idled production.
Gasoline Spikes To 7-Month Highs After Harvey; Heating Oil, Crude Jump --The entire energy futures complex is notably higher at the open with RBOB Gasoline spiking over 4% to its highest since January amid the carnage of Hurricane Harvey. Bloomberg reports that Harvey, the strongest storm to hit the U.S. since 2004, made landfall as a Category 4 hurricane Friday, with torrential rain flooding cities from Corpus Christi to Houston and shutting plants able to process some 2.26 million barrels a day of oil. Major terminals and pipelines that move crude and fuel into and out of Houston-area refineries were also shut, potentially stranding some crude in West Texas and starving New York Harbor of gasoline.“Gasoline prices are going to continue to rise this week as we expect another three days of rain in the Houston area,” Andy Lipow, president of consultant Lipow Oil Associates LLC in Houston, said by telephone."With pipeline operators beginning to shut down their crude oil and refined product infrastructure, I expect to see further curtailment of refinery operations, resulting in less product being available. A spike in gasoline and diesel prices will drag up crude oil prices.”WTI is also higher as ~378.6k b/d of oil output from Gulf of Mexico is shut. Pushing RBOB Gasoline and WTI higher...
"Oil Markets Roiled": Goldman Calculates The Impact From Harvey's "Devastation" -- Oil markets were roiled, sending gasoline prices surging on Monday after Tropical Storm Harvey wreaked havoc along the Gulf Coast over the weekend, crippling Houston and its port, and knocking out numerous refineries as well as some crude production. As noted on Sunday, gasoline prices hit two-year highs as massive floods caused by the storm forced refineries in the area to close. Meanwhile crude futures fell as the refinery shutdowns could reduce demand for US crude production. As a reminder, Texas is home to 5.6 million barrels per day (bpd) of refining capacity, and Louisiana has 3.3 million bpd. Over 2 million bpd of refining capacity was estimated to be offline as a result of the storm. While the U.S. National Hurricane Center said Harvey was moving away from the coast, it was expected to linger close to the shore through Tuesday, and that floods would spread from Texas eastward to Louisiana. As Reuters reports, US traders were seeking oil product cargoes from North Asia with transatlantic exports of motor fuel out of Europe expected to surge. “Global refining margins are going to stay very strong,” said Olivier Jakob, managing director of Petromatrix. “If (U.S.) refineries shut down for more than a week, Asia will need to run at a higher level, because there’s no spare capacity in Europe.”
Oil markets hit by Storm Harvey; U.S. dollar slips (Reuters) - U.S. crude oil futures fell on Monday but gasoline prices surged to 2-year highs as Tropical Storm Harvey kept hammering the U.S. Gulf Coast, knocking out several refineries, which backed up crude supplies and disrupted fuel production. The U.S. dollar dropped to its lowest in roughly 16 months against a basket of major currencies and a more than 2-1/2-year low against the euro, following comments from central bankers on Friday and worries over the storm hurting the U.S. economy. Harvey made landfall in Texas late on Friday as the most powerful hurricane to hit the region in more than 50 years and caused large-scale flooding, forcing refineries in the area to close. U.S. crude futures fell as the refinery shutdowns could reduce demand for American crude. "The reduced inputs to those Gulf refineries will result in an increase in crude inventories," said Tony Headrick, energy market analyst at CHS Hedging. "That outweighs the outages in crude oil production from the storm." U.S. crude settled down $1.30, or 2.7 percent, at $46.57 a barrel. The refinery shutdowns sent U.S. gasoline prices soaring. Spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon, before easing to $1.7233. In the U.S. equity market, energy and bank shares weighed on the Dow and the S&P 500. "There tends to be initially a knee-jerk reaction and people react to the human side and the energy disruption but that eases soon," said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.
Oil Tumbles Amid Speculation Up To 30% Of US Refining Capacity Could Be Shut -- WTI tumbles below $47 as negative sentiment about excess crude supply in light of extended refiners shutdowns grows, and Wall Street piles on with more detailed estimates about Harvey's impact on US oil and refinery production. As oil slides, crack spreads have stabilized near the highs of the session, on concerns about gasoline availability, with Tudor Pickering saying that crack spreads could continue to rise in coming weeks in other U.S. regions served by the Gulf Coast refining center. As reported earlier, about 15% of U.S. refining capacity was offline Monday morning as the remnants of Hurricane Harvey continued to pound Texas and the Gulf Coast. Furthermore, the reason why oil is rapidly sinking is that according to Goldman (and others) estimates, Harvey's impact would be to significantly increase domestic crude availability by 1.4 million barrels every day, while removing 615-785 kb/d of gasoline and 700 kb/d of distillate supplies. And while some of the biggest refining companies in the world were affected, analysts expect shares of refiners to rise this week on wider crude differentials and stronger crack spreads. Mid-continent refiners like Delek US Holdings Inc. and Holly Frontier Corp. may be best positioned to outperform, and PBF Energy Inc. could also benefit given its exposure to the northeast. Here is Bloomberg's summary of why while it expects further pain for oil bulls, Wall Street is now bullish on refiners: Tudor Pickering:
- If Hurricane Harvey moves up the Texas coast toward Louisiana then additional shutdowns could occur in Port Arthur, Beaumont and Lake Charles, with up to 25-30% of U.S. domestic refining capacity could be shut near term
- Crack spreads could continue to rise in coming weeks in other U.S. regions served by the Gulf Coast refining center
- Estimated supply disruptions will be in 1-2 week range
- See 400k b/d Gulf of Mexico oil production impact, to last days not weeks; +300k b/d of Eagle Ford production impact will only last days
Early estimates of Harvey’s economic impact --Given that the rains have not yet ended, these first estimates of Harvey’s potential macroeconomic impact should be accepted cautiously. We’ll be paying attention throughout the week for meaningful updates. 1) From the RBC commodity strategy team, a look at the potential effect on the oil market: The impact of a storm of such magnitude and trajectory is fluid and has wide ranging implications for the oil market. While several regional refineries have reported no substantial damage from the storm, assessments of oil refineries and infrastructure are ongoing and the impact of the storm could be felt long after its passing in the event of extensive damage. At initial glance, the development is bearish for crude oil from a demand perspective given that some 2 mb/d of refining capacity remains shut. This has, tangentially, also spurred a knee jerk price spike higher for refined products. Prompt month gasoline cracks have surged 25% since last Wednesday’s close en route to multi-year highs. The Texan Gulf Coast comprises nearly 27% of total US refining capacity. Further details surrounding the status of localized refineries will dictate the extent and tenor to which refined product prices remain elevated. While pockets of the Eagle Ford and US offshore production has been curtailed or suspended for preventative measures, hurricanes are not as bullish from a supply disruption standpoint as in years past. A decade ago, prior to the US shale revolution, the Gulf of Mexico made up a larger percentage of total US oil production (closer to 30% vs current levels near 15%). Simply put, there are fewer barrels at risk from an aggregate percentage of US production. In fact, many US offshore Gulf of Mexico barrels have been exported to Asia this year. While it is premature to rule out damage to elements impacting production, a growing source of US crude imports have come from Canada rather than waterborne routes.
IEA says no need for oil release after Harvey - (Argus) — The IEA says it does not need to release oil from emergency reserves because markets remain "amply supplied" even after Hurricane Harvey disrupted energy operations in Texas and the US Gulf of Mexico.The IEA says it is closely monitoring the situation after the Category 4 hurricane struck the coast on 25 August. But it says crude and product stockpiles in the US and around the world are still "well above" the five-year average, reducing the need to organize a response from member countries."It is too soon to know how long oil production and refining operations will be disrupted, or the extent of the damage. However, for now, the IEA does not see a need to act as the market is amply supplied," IEA said.IEA says it is reviewing the situation and "stands ready to act as required." IEA member countries that are net oil importers are required to hold the equivalent of 90 days of imports, and the organization can order a coordinated release of those reserves in response to major supply disruptions.Offshore oil production in the US Gulf of Mexico is down by about one-fifth, or 379,000 b/d, as companies temporarily closed wells because of the storm, according to the US Bureau of Safety and Environmental Enforcement. US refiners in Texas have cut processing rates or closed facilities as the hurricane has strained operations.President Donald Trump's administration has yet to order any emergency crude release from the US Strategic Petroleum Reserve, which holds 678.9mn bl of sweet and sour crude at storage sites in Texas and Louisiana. The reserve has a maximum drawdown capacity of 4.4mn b/d, but test sales have revealed transportation bottlenecks near the storage sites
The Upcoming Oil Price Rebound - Oil prices sank on Monday as Hurricane Harvey devastated Houston and other parts of the Texas coast. The outage of key oil ports have disrupted shipments, leaving Texas shale drillers without a destination for their crude. The fear is that oil supplies will build up within Texas, which is why crude prices sank. The flip side is that the refinery outages have caused gasoline prices to skyrocket, opening up a wide crack between crude and products prices. An estimated 2.3 mb/d of refining capacity has been shut down temporarily, with major refineries such as ExxonMobil’s massive Baytown complex shuttered. Royal Dutch Shell, Phillips 66, Chevron and others also shut down refineries. Gasoline from Texas supplies much of the U.S. East Coast, but it also supplies Latin America and Europe, so the outages will be felt around the world. As for crude, the refiner closures mean demand will take a temporary hit, and plunging oil prices in the last few days reflect that. The rain is expected to continue through much of this week. An estimated 20 percent of the Gulf of Mexico’s offshore oil production was sidelined from the storm, or roughly 400,000 bpd. The outages offshore aren’t expected to last very long. An oil drilling ship sank in the port of Corpus Christi, blocking the ship channel. The drill ship, owned by Paragon Offshore, could delay reopening of the port. Corpus Christi has grown in importance recently because the volume of crude oil exports leaving the U.S has exited through the city’s port.. ExxonMobil may begin shutting down its Beaumont, TX refinery today, a facility with a capacity of 362,000 bpd, due to rising waters. It also plans on shutting down a 240,000-bpd crude distillation unit. Motiva Enterprises will make a decision on Tuesday on whether or not to shut down its refinery in Port Arthur, TX, the nation’s largest oil refinery. The facility has a capacity of 603,000 bpd, but Reuters reports that high water and problems obtaining crude oil are affecting operations. At the time of this writing, no word has come from Motiva. The outages of these two refineries would seriously exacerbate the growing gasoline shortage.
Oil product cracks hit fresh 2-year highs as Harvey knocks out US refiners - Oil product crack spreads soared to fresh 2-year highs during Asian trade Wednesday, as Tropical Storm Harvey, now on its path into Louisiana, continued to cripple US refinery output and port infrastructure. The NYMEX September RBOB crack spread against NYMEX October light sweet crude rose $2.50/b from Tuesday settle to $30.96/b as of 0457 GMT, having jumped by more than $8/b since the storm made landfall near Corpus Christi, Texas, on Friday night. The equivalent September NYMEX ULSD crack spread was up 97 cents/b at $24.48/b.This was the highest crack spread seen since July 2015 and May 2015 for NYMEX RBOB and ULSD respectively.The latest report from the US National Hurricane Centre showed southeastern Texas and southwestern Louisiana inundated with heavy rains as of 2200 CDT Tuesday (0300 GMT Wednesday).Estimates of US refining capacity that has been shut due to the storm have far outstripped the fall in crude oil production, prompting NYMEX RBOB and ULSD futures prices to surge even as upstream crude prices have fallen.Roughly 2.33 million b/d of Texas refining capacity remained shut, but the actual number is likely to be much higher, with a number of Texas refiners operating at reduced rates. Correspondingly, some crude production in the Eagle Ford Shale in Texas and the Gulf of Mexico were already returning by Tuesday. Marathon Oil and EOG Resources were inspecting and assessing their Eagle Ford Shale operations in South Texas on Tuesday and have begun to restart production where possible. Offshore in the Gulf of Mexico, the US Bureau of Safety and Environmental Enforcement showed 319,523 b/d of oil output shut-in on Tuesday, or 18.26% of total US Gulf output, down from 428,568 b/d Saturday.
European oil products spike on US storm Harvey -- European oil product prices continued to spike Wednesday, led by gasoline, as the supply implications of the impact of Tropical Storm Harvey on the US Gulf Coast's refining hubs reverberated through the region. With up to a fifth of total US refining capacity, or some 4 million b/d, still offline, markets are looking to Europe to provide clean product to markets the USGC normally supplies, such as Latin America, Brazil, Argentina and even the US West Coast. Shipping sources have already reported a flurry of trans-Atlantic fixtures and surging freight, with demand for gasoline shipments westwards the key driver. European gasoline prices have soared over two consecutive trading sessions on extra demand for cargoes required on the US Atlantic coast to substitute supply unable to leave the US Gulf Coast. The September Eurobob gasoline crack swap was assessed at $18.30/b Wednesday, up $2.80/b on the day, adding to the $1.35/b gained during the previous session, S&P Platts data showed. It was the highest level since August 13, 2015, when the crack swap was assessed at $18.85/b. Elsewhere in the paper market, the prompt strength caused the September/October Eurobob gasoline backwardation to widen to $57.75/mt, from $43.25/mt. Additional demand for gasoline shipments west from Europe also was the key driver behind a spike in Medium Range tanker freight rates west of Suez. The UK Continent-US Atlantic coast route, basis 37,000 mt, was assessed at Worldscale 215 Wednesday, up w55 from Tuesday. The rapid change in rates was reflected in fixtures reported, with a number of tankers heard on subjects to go the US Atlantic coast at freight rates up to double those seen last week."The question really is now which ships will fail and which will be fixed, at the moment it is really all over the place," a broker said. "We've seen all kinds of numbers rumored to be on subjects, and it all really depends on how long those US refineries will be out."
Hurricane Harvey Is A Disaster For OPEC -- The skies are clearing over Houston, but the damage from the remaining elements of Hurricane Harvey has spread east to Port Arthur and Lake Charles along the Texas-Louisiana border. That has knocked more refineries offline, including the largest refinery in the United States.In the aftermath of the storm, the most serious threat to the energy industry is the extended outage of refineries and pipelines, according to Goldman Sachs. The problem actually looks worse than it did earlier this week as the deluge has shifted towards Port Arthur, another refining hub. Motiva, which runs the U.S.’ largest refinery in Port Arthur, began to completely shut down its 600,000 bpd facility on Wednesday.Goldman says the refinery shut downs, as of August 30, have spiked to 3.9 million barrels per day (mb/d), although upstream oil production outages have dropped below 1 mb/d. More ports are now closed – in addition to Corpus Christi and Houston, the ports of Lake Charles, Beaumont, and Port Arthur have shut down.These outages, the investment bank says, will mean that the “ongoing recovery in production will only be partial.” The refinery and pipeline closures are “leaving the oil market long 1.9 mb/d of crude vs. last Thursday, short 1.1 mb/d for gasoline and 0.8 mb/d for distillate.” More worrying is that the recovery might not be quick. While most refineries had controlled shut downs, there are quite a few, especially in the Port Arthur region, that have been inundated with water, which means that the damage to them is still unknown. Based on the past major hurricanes of Rita and Katrina, Goldman speculates that about 10 percent of the 4 mb/d of refining capacity that has been disrupted will remain offline for several months. Other analysts agree that the damage could result in lengthier outages than many had hoped. “I'm actually quite concerned about Beaumont-Port Arthur because they just got a huge amount of rain in 24 hours, and we've already seen flooding within the refineries themselves, so we don't know exactly how bad it's going to be,” Andy Lipow, president of Lipow Oil Associates, told CNBC. “If it is bad, you're looking at six to eight weeks of outages over in Beaumont-Port Arthur.”
As oil prices weather storm, OPEC looks for long-term boost from Harvey (Reuters) - For veteran OPEC officials, Hurricane Harvey's impact on global oil markets is one of the strangest things they have seen. The storm has led to some of the biggest disruptions to U.S. energy infrastructure; yet it has failed to boost crude prices. In contrast with previous major hurricanes such as Katrina in 2005, Harvey has actually seen oil prices edge down as traders have focused more on the hit to demand from damaged U.S. refineries than the blow to supply from knocked-out production. That is deeply frustrating for OPEC countries currently restricting oil supplies in an attempt to push prices higher. "It seems no event will move the oil price up much," said one OPEC delegate, surprised by the lack of impact from Harvey. Another was also bemused after oil prices fell this week, defying too a steep drop in Libyan production due to unrest. "It is all really strange. The sentiment of the market has changed a lot in the last 10 years," he said. Whether the market continues to frustrate its would-be masters remains to be seen, however, with analysts divided whether demand from U.S. refineries will recover more quickly than U.S. production. In the past two years, OPEC has restrained production to prop up prices, because the pain of cheaper barrels was putting too much stress on most members' finances. The move has revived growth in the U.S. oil industry, with production and exports hitting new highs - until Harvey. Unlike hurricanes Katrina or Gustav, when strong winds mainly caused damage to oil production, Harvey has also severely disrupted the U.S. refining industry and products pipelines, causing a spike in products prices. Olivier Jacob from consultancy Petromatrix said U.S. gasoline prices were trading at levels normally equivalent to oil prices of around $84 per barrel, whereas Brent and WTI crude futures are actually at $51 and $46 per barrel respectively. "OPEC must be raging, they're not getting any of this (gain)," Jakob said.
Selected Data Points From The Weekly Petroleum Report -- August 30, 2017 -- Some data points (and my comments) from the weekly petroleum report for the week ending August 25, 2017:
- crude oil refinery inputs up slightly
- refineries operating at 96.6% of their capacity
- gasoline production increased; distillate fuel production decreased
- US crude oil inventories decreased by 5.4 million bbls -- now at 457.8 million bbls; this is the middle of the average range for this time of year
- total gasoline inventories unchanged; near the upper limit of the average range (which makes the spike in gasoline prices even before any effect from Hurricane Harvey highly suspect -- as usual)
- motor gasoline supplied average 9.7 million bbls/day, up by 0.2% from the same period last year (will this be seen on the weekly graph, yet to be posted?)
WTI/RBOB Algos Undecided After Gasoline Build, Production Dip RBOB gasoline is at a 25-month high (and WTI has a $45 handle) as all attention is focused on the duration and impact of the storm (i.e. how long refineries will be closed?). Inventory and Production data this week will be of limited help to traders as it occurred before Harvey struck but API confirmed the crude draw, gasoline build trend overnight, and DOE data shows the same pattern - crude draw, gasoline (and distillates) build and both WTI and RBOB dipped on the print.Before we get to the numbers, we note the following...“The next couple of weeks, I don’t know if you should try to read very much into it just because it’s subject to such impact because of Harvey,”Kyle Cooper, director of research with IAF Advisors, told Bloomberg.“It’s going to take a long time for the infrastructure to get back to order” API:
- Crude -5.78mm (-1.75mm exp)
- Cushing +582k (+200k exp)
- Gasoline +476k (unch exp)
- Distillates -486k
DOE:
- Crude -5.39mm (-1.75mm exp)
- Cushing +689k (+200k exp)
- Gasoline +35k (unch exp)
- Distillates +748k
The previous week's data calmed fears of gasoline builds, but API overnight showed a decent build (and at Cushing). DOE however shows this week with notable crude draw and product builds once again...
RBOB Gasoline Spikes To 25-Month Highs As Harvey Curbs Output --Front-month (Sept) RBOB Gasoline futures traded as high as $1.90 this morning - the highest since July 2015 - as more refiners (including America's largest) shutdown output due to Harvey's impact. As Bloomberg reports, America’s largest oil refinery is joining the spate of shut-downsin the face of Tropical Storm Harvey’s apocalyptic rains, potentially reducing U.S. fuel-making capacity to the lowest level since 2008. Motiva Enterprises LLC’s Port Arthur facility, the largest in the U.S., is shutting because of severe flooding issues, according to a person with knowledge of the plant’s operations who didn’t want to be identified because the information isn’t public. Motiva, owned by Saudi Arabia’s national oil company, said in a statement that the plant was operating at about 40 percent of its 605,000-barrel-a-day capacity.It joins more than a dozen other plants in Texas with combined capacity of more than 4 million barrels a day that have gone at least partially offline since Harvey approached the coast late last week. That amount of offline capacity could reduce U.S. fuel production to the lowest since Hurricane Ike shut several refineries after striking the Texas coast in 2008.
Oil factbox: USGC refinery outages, port closures continue to increase Aug 30 - While some Texas refiners were beginning to restart operations Wednesday as Tropical Storm Harvey moved into Louisiana, others were bringing plants down, causing a further reduction in available refining capacity.Motiva, Total and Valero shut their Port Arthur, Texas plants, although Valero was preparing to restart its Corpus Christi and Three Rivers refineries and Marathon was restarting its Texas City plant.The Port Arthur outages bring the storm-related outages to 3.04 million b/d, or 16% of total US capacity. Assuming refiners cutting runs or in the process of returning are at 50% of capacity, the total downed capacity rises to 4 million b/d (22% of the US total). Vessel traffic into and out of the US Gulf Coast has largely been closed, restricting oil and refined products imports and exports. Weather conditions in Houston and offshore have improved after Tropical Storm Harvey shifted toward Louisiana. Houston-Galveston port officials hope to restart limited ship movements soon, the Greater Houston Port Bureau said Wednesday, although higher currents from rivers and bayous will make navigation a challenge for some vessels, even after port facilities reopen. Corpus Christ officials hope to reopen ports by September 4.
Harvey shuts down major fuel pipeline supplying East Coast - American energy supplies have suffered another blow from Harvey, the monster storm that's been battering the Gulf Coast. The Colonial Pipeline, which carries huge amounts of gasoline and other fuel between Houston and the East Coast, is shutting down after Harvey forced the closure of refineries and some of the pipeline's own facilities. The pipeline has two main lines that together transport more than 100 million gallons of gasoline, heating oil and aviation fuel as far as the New York harbor each day. Its operator said the line that carries mainly diesel and aviation fuels will stop running Wednesday evening, and the line for gasoline, which is already operating at a reduced rate, will be suspended Thursday. Half of the 26 refineries that supply Colonial's 5,500 miles of pipeline are located between Houston and Lake Charles, Louisiana. "Once Colonial is able to ensure that its facilities are safe to operate and refiners in Lake Charles and points east have the ability to move product to Colonial, our system will resume operations," the operator said. Power outages during Hurricanes Katrina and Rita in 2005 forced the shutdown of parts of the Colonial Pipeline for several days. It also twice had to suspend services last year due to a leak and a fire. In the massive underground interstate system that is the nation's pipeline network, the Colonial Pipeline is I-95.Earlier Wednesday, the largest oil refinery in the country started shutting down as Harvey, which has now weakened to become a tropical depression, caused more catastrophic flooding along the Gulf Coast. Thirteen oil refineries have been shut down or are in the process of closing, while several others are operating at reduced rates. Altogether, the disruption has knocked out about a fifth of the nation's refining capacity, according to S&P Global Platts.
Front-Month RBOB Tops $2 After Colonial Pipeline Shutdown -- Gasoline prices have exploded higher once again this morning - topping the Maginot Line of $2.00 for the first time since July 2015 - following reports that the main conduit for fuel from the Gulf to the East Coast has been shut due to Hurricane Harvey. Motor fuel prices climbed as much as 6.6 percent in New York, advancing for an eighth session, while crude oil was little changed. Harvey has shuttered about 23 percent of U.S. refining capacity, potentially cutting fuel-making ability to the lowest level since 2008 and depriving the Colonial Pipeline of supplies.Its operator was forced to shut the main diesel line late Wednesday and planned to halt its gasoline line Thursday, meaning motorists from Maine to Florida may soon see higher prices at the pump.Colonial, which is the biggest single fuel transporter in the US, shipping more than 2.5m barrels a day on its line - or roughly one in every eight barrels of fuel consumed in the country - said in a statement late on Wednesday that its line carrying diesel and jet fuel would shut on Wednesday evening, followed by its gasoline pipe on Thursday. And that sent front-month RBOB above $2... Additionally, WTI prices are lower following news that the strategic petroleum reserve has authorized release of 500,000 barrels of crude to Phillips 66 Lake Charles refinery...
WTI/RBOB Tumble As Valero Says Refinery Startup Underway - RBOB is tumbling near $1.60 handle after headlines reported Valero saying that startup is underway at its Three Rivers refinery and its Corpus Christi refinery, both in Texas, according to a statement from co. spokeswoman Lillian Riojas. Bloomberg reports that the company is working to ensure availability of critical transportation and logistics infrastructure to resume all operations. Houston and Texas City, Texas, facilities continue to operate. Port Arthur, Texas, refinery shut because of flooding and potential power supply interruption.Additionally, Plains resumed service on its Cactus crude pipeline after shutting it down Friday in preparation for Harvey, according to person familiar with matter.And, Buckeye expects to restore its 50k b/d condensate splitter to normal operations to at Corpus Christi, Texas, later Wednesday. But it appears the machines took comfort in the headline...sending RBOB to the lows of the day...
Gas factbox: Production rises, demand remains down - Harvey isn't finished ravaging the US Gulf Coast Wednesday as the tropical storm enters Louisiana after dumping historic amounts of rain on the coastal region of Texas and delivering a 1,000-year flood to the nation's energy capital, Houston. At 10:00 am CDT Wednesday, the center of Tropical Storm Harvey was moving farther inland over southwestern Louisiana, according to the National Weather Service. "Harvey is moving toward the north-northeast near 8 mph (13 km/h) and this general motion is expected to continue through Thursday," the weather service said, adding "a turn toward the northeast is expected Thursday night and Friday." The forecast calls for Harvey to move through southwestern and central Louisiana Wednesday, then pass through northeastern Louisiana and northwestern Mississippi Thursday and Thursday night. Harvey had sustained winds near 45 mph Wednesday morning; weakening is expected over the next 48 hours. Offshore Gulf natural gas production was on the upswing Wednesday, rising to 2.7 Bcf/d from 2.6 Bcf/d Tuesday and a low of 2.4 Bcf/d Saturday. Offshore Gulf production remains down about 0.8 Bcf/d from the month-to-date average prior to the storm. Total US production is back up to 72.4 Bcf/d from a low of 71.95 Bcf/d Saturday, but remains about 0.6 Bcf/d below the month-to-date average prior to the storm, with most of that decline in the Southeast offshore portion of the Gulf.
Gas prices keep climbing as Harvey shutters oil refineries -- Tropical Storm Harvey is sending pump prices higher for motorists and causing temporary shifts in the flow of oil and gasoline around the world after taking down a huge chunk of U.S. refining capacity. Retail gas prices in the U.S. climbed 2 cents a gallon on Wednesday and have rise 7 cents in the past week, to a national average price of $2.42 per gallon, according to Gasbuddy. "In terms of product price increases, it might get worse before it gets better," said Rob Smith, an energy analyst with IHS Markit. It will be days or even weeks before the energy sector in the southeast Texas Gulf Coast is back to normal operations. The region accounts for about 3 percent of the U.S. economy and is a crucial export market for oil and chemicals. Wednesday brought news that the nation's biggest refinery, in Port Arthur, Texas, had begun a complete shutdown, the latest domino to fall among Gulf Coast refineries. The facility lies along the border with Louisiana, a hub for refineries that collectively account for more than 12 percent of the nation's refining capacity, according to IHS Markit. More than one-fifth of U.S. refining capacity has been shuttered since Harvey made landfall on August 25, according to S&P Global Platts.Mathew Peterson, chief wealth strategist for LPL Financial, noted that refiners' inability to produce and distribute gas is weighing on supplies, driving up prices at the pump. It could take two weeks or longer before big refineries in the Houston area can recover from a record-setting deluge and resume normal operations. That assumes they didn't suffer serious damage, which is still unknown. "Only when the water is gone will refineries be able to estimate how much damage they have -- presently, it's very difficult,"
US Releases 500,000 Barrels Of Oil From Strategic Reserve As Largest US Refinery May Be Shut For 2 Weeks --The U.S. Energy Department announced on Thursday that it would release 500,000 barrels of crude oil from the US Strategic Petroleum Reserve as a result of the disruption to the US petroleum industry following Hurricane Harvey amid fears of a surge in motor fuel prices, which have been compounded by the previously reported shuttering of the Colonial pipeline. According to the DOE statement, the oil will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana, a plant which has not been affected by the storm.According to Reuters, the release - the first emergency release from the reserve since 2012 - will include 200,000 barrels of sweet crude and 300,000 barrels of sour crude oil. It was an exchange agreement, meaning the government will loan crude to Phillips 66, which is required to replace the reserve’s oil at a later date.The Energy Department “will continue to provide assistance as deemed necessary, and will continue to review incoming requests for SPR crude oil,” spokeswoman Jess Szymanski said. The reserve, a legacy from the 1970s Arab oil embargo which caused panic over fuel supply, currently contains 679 million barrels of oil. It is a small release of crude for a country that uses nearly 20 million barrels of petroleum daily.Furthermore, it is unclear what if any benefit the SPR release will do to surging gasoline prices, as the bottleneck is not oil supply but rather refining capacity: as of this moment roughly 20% of US refining is offline as a result of Harvey. As we reported this morning, gasoline prices surged in morning trade after the Colonial Pipeline which operates the biggest U.S. fuel transport system, said it would shut its main lines to the Northeast amid outages at pumping points and lack of supply from refiners. Separately, and confirming that the gasoline price spike may last longer than initially expected, moments ago Reuters reported that Motiva Enterprises' Port Arthur, Texas refinery, the largest in the US, may be shut as long as two weeks for assessment of the plant and repair of any damage, sources familiar with plant operations said on Thursday. The 603,000 barrel per day (bpd) Port Arthur Refinery was shut on Wednesday due to flooding from Tropical Storm Harvey.
U.S. taps 1M barrels of oil from emergency stockpile to ease gas price -- The Energy Department is cracking open the nation's emergency stockpile of oil reserves for the first time in five years to help ease the impact of Hurricane Harvey on gasoline prices.Energy Secretary Rick Perry on Thursday ordered the release of 1 million barrels of oil from the Strategic Petroleum Reserve, a massive government underground storage system designed to provide an emergency backup in event of oil supply distruptions.The move comes amid rising gas prices following the temporary closure or planned shut downs at 16 refineries along the Texas Gulf Coast that have been overwhelmed by flood waters. About 25% of the nation's refining capacity is offline indefinitely due to the monster storm and flooding, according to Energy Department. For some refineries that remain open, obtaining oil to make gasoline is an issue. Closure of ports in Houston and Corpus Christi, reduced capacity of the critical Colonial Pipeline and the inaccessibility of certain roads has undermined access to oil. Thursday's ordered release will allow the Energy Department to deliver the crude oil to a Phillips 66 refinery. The national average of gas could peak at 25 cents higher than before Harvey, Oil Price Information Service analyst Tom Kloza said. Nationally, prices averaged $2.45 a gallon on Thursday, up 10 cents from a week ago and hitting a high for the year, according to AAA.
Panic Buying Has Begun In North Texas -- August 31, 2017 Starting last night, here in north Texas folks have been advised to keep their gasoline tanks full due to the impending shortage of gasoline in Texas, extending from the southeast coast up to Dallas-Ft Worth. This morning the message is being heard. Long lines are already forming at our neighborhood gasoline stations. If everyone fills their tank today and in tomorrow, I would assume many gas stations will run out of gasoline by mid-weekend, but at least all those folks that aren't traveling over the weekend will have a tank full of gasoline (or more, if they own multiple cars) sitting in their driveways. President Trump has already responded to Senator Markey's request and has released 500,000 bbls of crude oil from the SPR. That allotment will go to the Lake Charles Phillips 66 refinery. Some data points about that refinery:
- crude oil capacity: 250,000 bbls (so they will receive a two-day supply)
- total capacity: 285,000 bbls (I assume total capacity includes non-crude oil hydrocarbon products such as NGLs)
- gasoline production: 90,000 bbls/day (almost exactly 1% of US total daily demand)
Sep NYMEX RBOB futures jump 6% as Harvey knocks out Port Arthur refiners -- September NYMEX RBOB futures soared by more than 6% in Asian morning trade Thursday, as Harvey, which was downgraded to a tropical depression, still continued to impact US Gulf Coast refinery output.While some Texas refiners were beginning to restart operations Wednesday as Harvey moved into Louisiana, others were bringing plants down, causing a further reduction in available refining capacity.Motiva, Total and Valero shut their Port Arthur, Texas plants, although Valero was preparing to restart its Corpus Christi and Three Rivers refineries and Marathon was restarting its Texas City plant.At 11:50 am Singapore time (0350 GMT), NYMEX September RBOB was up 11.54 cents (6.12%) from Wednesday's settle at $2.0001/gal, while NYMEX September ULSD was up 1.17 cents (0.7%) to $1.6855/gal.The front-month NYMEX RBOB contract was now at highs not seen since July 2015, having climbed for the last seven sessions even as upstream crude prices have tanked. The latest report from the US National Hurricane Center said Eastern Texas and Western Louisiana remained paralyzed by flooding rains as of 2200 CDT Wednesday, as Harvey began to make its way across statelines. The Port Arthur shutdowns bring the storm-related outages to 3.20 million b/d, or 17.3% of total US capacity. Assuming refiners cutting runs or in the process of returning are at 50% of capacity, the total downed capacity rises to 4.08 million b/d (22% of the US total).
U.S. oil prices set for worst month in over a year as floods hit demand (Reuters) - U.S. crude oil prices are on track to post the steepest monthly losses in more than a year on Thursday as concerns spread over falling demand in the world's top oil-consuming country after storm Harvey knocked out almost a quarter of its refineries. But prices rallied in the oil products markets, with U.S. gasoline futures hitting a two-year high above $2 a gallon, buoyed by fears of a fuel shortage just days ahead of the Labor Day weekend that typically sees a surge in driving. Harvey, which brought record flooding to the U.S. oil heartland of Texas and killed at least 35 people, has paralysed at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates. Traders from Europe to Asia were scrambling to fix fuel cargoes to the United States. Goldman Sachs said it could take several months to restore all production. "While no two natural disasters are similar, the precedent of Rita-Katrina would suggest that 10 percent of the ... currently offline capacity could remain unavailable for several months," the investment bank said. For an interactive graphic on Harvey's energy impact click tmsnrt.rs/2xzsKWzCrude markets remained weak after sharp losses in the previous session. The closure of so many U.S. refineries has resulted in a slump in demand for the most important feedstock for the petroleum industry. U.S. West Texas Intermediate (WTI) crude futures CLc1 were set to close the month down 8 percent, their steepest monthly loss since July 2016. They traded at $46.12 a barrel at 0849 GMT, up 16 cents on the day, after falling more than 1 percent on Wednesday. International benchmark Brent crude LCOc1 was at $50.86, unchanged from the previous day, when the contract fell more than 2 percent. "The temporary closure of refineries is a major dent to United States crude demand and is weighing on both Brent and WTI prices," BMI Research said.
Natural Gas Factbox: Full market recovery seen weeks away -- US Gulf of Mexico offshore natural gas output rebounded Thursday, while exports to Mexico struggled to return to normal and some midstream operators continued to report disruptions almost a week after Harvey struck Houston, according to a Thursday afternoon report by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets. Domestic gas demand recovered slightly, but remained down about 2.5 Bcf/d from the month-to-date average prior to the storm and is still down 4.1 Bcf/d from August 2016 levels. Analysts expect it to take weeks for the market to fully recover, after the storm dumped upwards of 50 inches of rain on Houston over the past week. Meanwhile, Hurricane Irma is taking shape northeast of Venezuela, according to the US National Weather Service. * Offshore Gulf natural gas production remained on the upswing, rising to 3 Bcf/d from 2.7 Bcf/d Wednesday and a low of 2.4 Bcf/d on Saturday, according to Platts Analytics' data. Offshore Gulf production remains down about 0.4 Bcf/d from the month-to-date average prior to Harvey. Total US production is back up to 73 Bcf/d from the low of 71.95 Bcf/d on Saturday, and remains only slightly (34 MMcf/d) below from the month-to-date average prior to the storm. * US natural gas exports to Mexico remain down about 1 Bcf/d (22%) from the month-to-date average prior to the storm. Exports on Thursday averaged 3.4 Bcf/d compared to a month-to-date average of 4.3 Bcf/d and a maximum of 4.5 Bcf/d on August 2, according to Platts Analytics' data. Exports to Mexico hit a summer low of 2.9 Bcf/d on Saturday when Harvey disrupted supply availability and pipeline transportation in South Texas. * US gas demand recovered slightly, but remained down about 2.5 Bcf/d from the month-to-date average prior to the storm and is still down 4.1 Bcf/d from August 2016 levels. Gas demand from power generation is down about 3.3 Bcf/d from the month-to-date average prior to the storm to about 31.1 Bcf/d, compared to 31 Bcf/d on Wednesday and 27.9 Bcf/d on Saturday. * Power burn in Texas, however, remains very weak and is down 2.1 Bcf/d (37%) from the month-to-date average prior to Harvey.
Oil rises, gasoline jumps 10 percent as U.S. refineries reel (Reuters) - Gasoline futures surged 10 percent on Thursday as almost a quarter of U.S. refining capacity remained offline and traders scrambled to reroute millions of barrels of fuel, while oil prices rose nearly 3 percent. U.S. gasoline futures RBc1 have rallied roughly 26 percent from the previous week to a two-year high above $2 a gallon, buoyed by fears of a fuel shortage days ahead of the Labor Day weekend that typically brings a surge in driving. Gasoline was up 21.03 cents, or 11.2 percent, at $2.0950 at 1:53 p.m. (1753 GMT). Hurricane Harvey, which brought record flooding to the U.S. oil heartland of Texas and killed at least 35 people, has paralysed at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates. The shutdowns led the U.S. government to tap its strategic oil reserves for the first time in five years on Thursday, releasing 500,000 barrels of crude to a working refinery in Louisiana. Traders were also scrambling to redirect fuel to the United States. U.S. West Texas Intermediate (WTI) crude futures CLc1 recovered some early-week losses, trading $1.24 per barrel higher at $47.20 per barrel at 1309 EDT (1709 GMT). It was still on track to close the month down just under 6 percent, the steepest monthly loss since March.
Looming Gas Shortage: “Imports Can’t Make Up For This” - The East Coast will start feeling the effects of Hurricane Harvey as the gasoline supplied from the Gulf Coast starts to dry up. One of the most important pipelines that ships refined products to the Eastern Seaboard shut down on Thursday, which means that the U.S. Southeast, Mid-Atlantic, and Northeast could see supply disruptions and price increases. The Colonial Pipeline carries gasoline, diesel and jet fuel from several refineries in Houston, Port Arthur and Lake Charles, along the Texas and Louisiana Coast, up through the U.S. Southeast to Washington DC, Baltimore, and New Jersey. The pipeline had been operational through the worst of the Hurricane, easing fears about supply disruptions. But the outages at the nation’s top refineries along the Gulf Coast have forced the Colonial Pipeline company to announce on Wednesday that it was shutting down Line 2, which carries diesel and jet fuel due to “supply constraints.” And on Thursday, the company shuttered Line 1, the pipeline that carries gasoline. The pipeline company said that operations would only resume when it can “ensure that its facilities are safe to operate and refiners in Lake Charles and points east have the ability to move product to Colonial.” It is hard to overstate the critical role that the Colonial Pipeline plays. It carries 2.5 million barrels of refined products per day, or as the FT notes, “roughly one in every eight barrels of fuel consumed in the country.” More importantly, it is one of the only suppliers for major cities on the eastern seaboard, including New York, Washington DC and Atlanta. “With no refineries between the Gulf coast and Pennsylvania, the south-east is largely dependent on pipelines from the Gulf coast for their fuel, with Colonial being the largest,” “With Colonial shut and a quarter of Gulf coast refining capacity out, the south-east will need to get fuel from storage, other forms of transport from the Gulf like trucks and ships, and imports. Consumers will see the impacts of these disruptions and higher cost alternatives in higher prices paid at the pump.” It is unclear when the refineries will be able to come back online, but there are some signs of recovery. . According to IHS Markit, Corpus Christi is “faring the best” among the cities on the Texas coast that were badly hit, with its four major refineries set to resume operations this week. But that does little for the Colonial Pipeline, which depends on refineries further up the coast along the Texas-Louisiana border, an area that was dealing with catastrophic flooding mid-week.
OilPrice Intelligence Report: Fears Of A Gasoline Shortage Rise: Hurricane Harvey is still far and away the major story of the week in the energy world, with an huge number of refineries still offline. Oil prices continue to sag, while gasoline prices soared this week. Refinery outages persist. Some refineries in the Corpus Christi region are coming back online, but the larger ones in Houston and Port Arthur/Lake Charles are mostly offline. The Motiva facility in Port Arthur, the largest in the country, is still offline and could remain out of commission for two weeks, according to the latest reports. As of Friday, an estimated 3 mb/d of refining capacity is still offline, a slight improvement from earlier this week. Colonial Pipeline outage interrupts gasoline flows to east coast. The Colonial Pipeline carries more than 2 million barrels per day of refined products – diesel, jet fuel and gasoline – from Texas and Louisiana up through much of the U.S. Southeast and Mid-Atlantic. The pipeline was forced to shut down because of problems sourcing enough product. The outage has led to a spike in gasoline futures, pushing them up to their highest level in years. "Typical Colonial Pipeline volumes are equivalent to Europe's gasoline exports, so these volumes will be difficult to replace and will require supplies from distant regions if the outage is prolonged," Wood Mackenzie analyst Alan Gelder said in a note. As of now, the pipeline is slated to come back online in a few days as refineries along the Gulf Coast trickle back online. But it will likely operate at reduced rates through next week at least. "The major refined product pipelines out of Houston are mostly shut because there is no gasoline and diesel to pump," said Andy Lipow, of Lipow Oil Associates. . TransCanada announced the closure of the southern leg of its 600,000 bpd Keystone pipeline that runs from Cushing to refineries along the Texas Coast. The disruption could lead to a sharp increase in inventories at the Cushing storage facility. Discounts are deepening for Permian crude relative to WTI.
Oil Factbox: Gasoline prices soar on Harvey-related outages -- US gasoline prices continued to rise Thursday as downed refineries tightened supplies in the US Gulf Coast and the Atlantic Coast. NYMEX September RBOB settled at $2.1399/gal Thursday, up 25.52 cents/gal, and up more than 50 cents from August 22, before Texas coastal refineries began shutting down ahead of Harvey. Physical New York prices were higher as well. New York barge delivery RBOB was assessed by S&P Global Platts at a 44-cent/gal premium to the October RBOB contract, compared with a 30-cent/gal premium Wednesday. Colonial Pipeline, which is able to ship 1.37 million b/d of gasoline o//n its Line 1 from Houston to Linden, New Jersey, said deliveries will be "intermittent and dependent on refinery supply." Roughly 3.04 million b/d of refining capacity remains down in Texas, or 16% of US capacity. Assuming refiners cutting runs or in the process of returning are at 50% of capacity, the total downed capacity rises to 4 million b/d, which is 22% of the US total. Motiva is preparing to start up its 603,000 b/d Port Arthur, Texas, refinery -- the nation's largest -- once flooding from Harvey subsides, but was unable to provide a firm timeline for when that would be. With so much Texas refinery capacity offline, it is important to keep Louisiana refiners running to feed local demand and the Colonial Pipeline. The US Strategic Petroleum Reserve will release a total 1 million barrels of crude to Phillips 66 for its Lake Charles, Louisiana, refinery. The plant is running normally, and likely sought an SPR release to help bolster crude supplies constrained by weather-related port closures. * Jet fuel differentials in the Gulf and Atlantic coasts spiked Thursday as supply problems continued to plague markets, reaching levels not seen since Hurricane Ike ravaged the Gulf Coast in September 2008.
Harvey Hangover Hits Pump Prices, Jet Fuel Premium Highest Since 2008 - "It's only just beginning," warned one seasoned veteran energy trader as the hangover from Hurricane Harvey flows downstream to retail gas prices and jet fuel premiums. As Bloomberg notes, Harvey impact currently includes:
- Colonial says it’ll commingle Rbob and conventional gasoline
- Explorer Pipeline planning to start lines Saturday, Sunday
- Logjam grows to 29 oil tankers as 11 ports remain closed
- Total Port Arthur is said facing extended shutdown on power loss
- Texas storm bucks N.Y. traders with wild gasoline expiry swings
- NHC issues final advisory on Harvey; losing tropical character
Which has left retail gas prices at the pump are now at their highest in 2 years... And judging by their usual lagged response to RBOB, are set to go dramaticaly higher in the next few weeks... And while inventories are high, deliveries are slow and fears of shortages have created lines at many Texas gas stations... "This is going to be a substantial ouch for consumers," said Tom Kloza, global head of energy analysis for Oil Price Information Service. "Satan could not have drawn up a more horrible geographic scenario for knocking out Texas refining." But it is Jet Fuel premiums that are even more worrisome...New York jet fuel’s premium to Nymex futures rises 20.5c to 36c/gal., widest since 2008, data compiled by Bloomberg show.
US rig count increases by 3 this week to 943 — The number of rigs exploring for oil and natural gas in the U.S. increased by three this week to 943. A year ago, just 497 rigs were active. Houston oilfield services company Baker Hughes said Friday that 759 rigs sought oil and 183 explored for natural gas this week. One was listed as miscellaneous. Among major oil- and gas-producing states, New Mexico added three rigs. Alaska gained two and Pennsylvania one. Texas and Wyoming each lost a rig. Arkansas, California, Colorado, Louisiana, North Dakota, Ohio, Oklahoma, Utah and West Virginia were all unchanged. The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May of 2016 at 404.
Baker Hughes: US rig count gains 3 units to 943 - The overall US rig count has made a slight gain this week, marking the end of four straight weeks of declines. Baker Hughes’ calculation of active US rigs jumped 3 units during the week ended Sept. 1 to 943. Rigs drilling for oil were unchanged at 759 rigs compared with last week, while those rigs targeting natural gas gained 3 units to 183 rigs. Rigs unclassified were unchanged again this week at 1 unit.The US rig count is up 446 rigs from last year’s count of 497, with oil rigs up 352, gas rigs up 95, and unclassified rigs down 1 to no rigs drilling.The US offshore rig count decreased 1 rig from last week to 16. This count is up 6 year-over-year. On land, meanwhile, the count jumped up 3 units to 923 units this week.Among the major oil and gas-producing states, New Mexico gained 3 rigs this week to 65. Alaska gained 2 units to 6 rigs drilling. And Pennsylvania gained 1 rig to reach 32 units. Nine states were unchanged this week: Oklahoma, 130; Louisiana, 66; North Dakota, 52; Colorado, 37; Ohio, 29; California, 16; West Virginia, 14; Utah, 8; and Arkansas, 1. Two states—Texas and Wyoming—were down 1 rig each this week to respective counts of 455 and 25. In Canada, the overall rig count fell 16 units this week to reach 201. Rigs drilling for oil fell 13 units to 102 and those targeting gas fell 3 units to 99. The total count is up 64 units from this time a year ago when 137 rigs were working.
U.S. Oil Rig Count Flat Despite Hurricane Harvey -- The number of active oil and gas rigs in the United States rose this week by 3 rigs, largely dispelling earlier analyst notions that Hurricane Harvey would delay as much as 10 percent of upcoming fracking work, and suspend roughly half the rigs in Eagle Ford. The total oil and gas rig count in the United States, post Harvey, now stands at 943 rigs, up 446 rigs from the year prior, with the number of oil rigs in the United States flat this week and the number of gas rigs increasing by 3. Oil rigs in the United States now number 759—352 rigs above this time last year. While some were expecting a boost in oil prices due to an expectation that there would be a Harvey-related drop in the number of active US rigs, refinery shutdowns in the US—which had climbed to about a third of total crude oil refining in the United States and include the first and second largest refineries in the US—severely diminished the demand for crude oil as refineries have no need for the crude while in shutdown mode. While some refineries have since restarted production, 16 percent of total US refinery capacity—or 3.04 million barrels per day—remains offline in Texas. In 2005, it took refineries between one and two months to resume normal operations in the wake of Katrina. Prices continued to fall on Friday—and were off 6 percent on the month as a whole—despite decreased exports from OPEC for the month of August. At 12:15pm EDT Friday, WTI was trading down 0.42 percent at US$47.03, with Brent trading down 0.40 percent at US$52.65. Related: Failed Oil Price Recovery Slams Energy StocksIn line with a small rise in the number of oil rigs, US crude oil production continues to increase, with average production averaging 9.530 million barrels per day for the week ending August 25, up just slightly from 9.528 million bpd the week prior. While Hurricane Harvey, which was downgraded to a tropical storm before its conclusion, is safely in the oil industry’s review mirror, Hurricane Irma—upgraded Thursday to a Category 3 and expected to strengthen in the coming days—is currently headed for the Caribbean and has the potential to deal yet another blow to the US as early as late next week. At 6 minutes after the hour, WTI was trading at $47.04 with Brent crude trading at $52.49.
Shia Insurrection in Saudi Arabia; The Battle for Awamiya -- Since May, 2017 an ongoing insurgency has been raging in the Shia heartland town of Awamiya in eastern Saudi Arabia and it’s only thanks to the BBC being allowed to enter the area and film the destruction that the world can see how the House of Saud’s war against the Shia population of Yemen has now expanded to include the Shia population of eastern Saudi Arabia.The BBC World report shown on Wednesday, August 16, seemed to have come from Syria, with al-Zara, the ancient Shia capital of the Persian province of Bahrain and the rest of the town of Awamiya showing a level of devastation resembling that in Syria or to the Kurdish cities destroyed recently by Erdogan Ottoman’s Janissarris.Block by block destruction of the Old City with no visible signs of the Shia people who once lived here for millenia with almost 500 buildings destroyed and over 20,000 driven from their homes by Saudi airstrikes, artillery and mortar fire.The BBC crew was only allowed there in armored vehicles, filming through bullet proof windows while traveling as a part of an armored convoy. The one time they were allowed to stop and step outside the battlewagons they were riding, firing could by heard and they were quickly ordered to return to their vehicles so they could escape.This short view of an almost unknown urban war in the midst of the Saudi oilfields, with 2 million barrels a day being pumped via Awamiya alone (20% of total Saudi exports) with the House of Saud, after Russia, being the 2nd largest oil producer worldwide, should be sending shivers down the spines of those occupying the seats of power both east and west. How long the Shia rebellion in eastern Saudi Arabia, home to almost all Saudi oil reserves, will be able to maintain an armed resistance to the Saudi military assault is the 10 million barrel a day question.
Saudi-led coalition admits killing 14 civilians in 'mistake' airstrike as pictures emerge of young victims: The Saudi-led Arab military coalition on Saturday admitted responsibility for an air strike the previous day in the Yemeni capital that killed 14 civilians, describing it as a "technical mistake". The attack was the latest in a wave of deadly raids on residential areas of Yemen blamed on the coalition, drawing strong international condemnation. The coalition, in a statement carried by the official Saudi Press Agency, said a review of the strike investigators had found "that a technical mistake was behind the accident". Witnesses and medics in Sanaa said several children were among 14 people killed in Friday's air strike that toppled residential blocks in Sanaa. On Saturday, Coalition spokesman Colonel Turki al-Malki said that the coalition "regrets the collateral damage caused by this involuntary accident and offers its condolences to the families and relatives of the victims". Friday's raid targeted Faj Attan, a residential neighbourhood in the south of the capital that has been controlled since 2014 by Huthi rebels. The coalition on Saturday accused the rebels of "setting up a command and communications centre in the middle of this residential area to use civilians as human shields". The International Committee of the Red Cross on Friday condemned the raid as "outrageous". Rights group Amnesty International's Middle East research director, Lynn Maalouf, said the coalition "rained down bombs on civilians while they slept".
The Photos the U.S. and Saudi Arabia Don’t Want You to See - NYT - Let’s be blunt: With U.S. and U.K. complicity, the Saudi government is committing war crimes in Yemen. “The country is on the brink of famine, with over 60 percent of the population not knowing where their next meal will come from,” the leaders of the U.N. World Food Program, Unicef and the World Health Organization said in an unusual joint statement. Yemen, always an impoverished country, has been upended for two years by fighting between the Saudi-backed military coalition and Houthi rebels and their allies (with limited support from Iran). The Saudis regularly bomb civilians and, worse, they have closed the airspace and imposed a blockade to starve the rebel-held areas into submission. That means that ordinary Yemenis, including children, die in bombings or starve. This is Buthaina, a girl believed to be 4 or 5 who was the only survivor in her family of a bombing last week by the Saudi coalition that killed 14 people. Human Rights Watch has repeatedly concluded that many Saudi airstrikes were probable war crimes and that the U.S. shares responsibility because it provides the Saudis with air-to-air refueling and intelligence used for airstrikes, as well as with much of the weaponry. Yet victims like Buthaina aren’t on our television screens and rarely make the news pages, in part because Saudi Arabia is successfully blocking foreign journalists from the rebel-held areas. I know, because I’ve been trying for almost a year to get there and thought I had arranged a visit for this week — and then Saudi Arabia shut me down. With commercial flights banned, the way into rebel areas is on charter flights arranged by the United Nations and aid groups. But Saudi military jets control this airspace and ban any flight if there’s a journalist onboard. I don’t think the Saudis would actually shoot down a plane just because I was on it, but the U.N. isn’t taking chances. This is maddening: Saudi Arabia successfully blackmails the United Nations to bar journalists so as to prevent coverage of Saudi atrocities.
US Coalition Attacks ISIS Convoy, Accuses Syria And Russia Of "Terror Transfer" -- In a surprise move that few analysts expected, the US led anti-ISIS coalition operating in Iraq and Syria has bombed parts of the ISIS convoy previously given safe passage out of Lebanon as part of a controversial deal brokered early this week with the Lebanese Army and its allies. Coalition spokesman Col. Ryan Dillan had previously warned that, “We will take action where necessary; those would be absolutely lucrative targets.” And it now appears the US coalition followed through by attacking the vehicles as they traveled across Syria to the Islamic State stronghold of Deir Ezzor. The initial warning was issued in reaction to the controversial deal that followed ISIS' defeat in northeast Lebanon. Since July the Lebanese Army, Hezbollah, and the Syrian Army have attempted to root out ISIS from positions in the western Qalamun area of Syria and the Jurud Arsal border region of Lebanon. The fierce campaign has had some degree of assistance from US special forces, acting in an advisory capacity for Lebanon's military. The territory was fully liberated Monday (August 28), but only after Lebanon struck a deal with the about 300 remaining ISIS fighters and their families which would allow them to lay down their weapons and exit through Syria in a convoy of buses (though reportedly allowed to carry light weapons such as rifles). Though ISIS was clearly defeated, the deal allowed for the turnover of the bodies of 9 deceased Lebanese soldiers previously kidnapped in 2014.
Israel Threatens To Bomb Assad's Presidential Palace - More information has emerged from Israeli Prime Minister Netanyahu's meeting with President Putin last week. The two met in the Black Sea resort town of Sochi on August 23rd to discuss recent developments in Syria. According to new shocking reports in both Arab and Israeli media, a senior Israeli official accompanying Netanyahu on the trip threatened to assassinate Syrian President Assad by bombing his palace in Damascus, while further adding that Israel will seek to derail the US-Russia brokered de-escalation deal reached in Astana, Kazakhstan earlier this summer.According to the Jerusalem Post:A senior Israeli official warned the Russian government that if Iran continues to extend its reach in Syria, Israel will bomb Syrian President Bashar Assad's palace in Damascus, according to reports in Arab media.Israel also warned that if serious changes do not happen in the region, Israel will make sure the ceasefire deal, reached by the United States and Russia in Astana, Kazakhstan, will be nullified.A senior Israeli source told the Al-Jadida newspaper that no understanding was reached between the Israelis and the Russians. Prime Minister Benjamin Netanyahu did, however, make it clear to Putin that its concerns must be met or Israel will be forced to act.The warnings occurred in a meeting between Netanyahu and Russian President Vladimir Putin last week.As we noted at the time, Netanyahu's brazen words to Putin that 'preventative' escalation in Syria to destroy what Israeli defense officials commonly call the "Iranian land bridge" (or the so-called 'Shia crescent') reveals increased desperation as even the West is now seeming to ignore Netanyahu's repeatedly declared "red lines". While Netanyahu's public statements in Sochi were provocative enough - openly threatening direct military escalation in Syria should his demand for Iranian forces withdrawal not be met - the newly revealed threat of assassinating the sitting head of a sovereign U.N. member state takes the war of words to a whole new level.
North Korea Fires Missile Which Flies Over Japan -- Three days after North Korea launched three short-range ballsitic missiles, a move which as we discussed last night was met virtually without any response by the US administration and which we said would embolden North Korea to proceed with further provocations, Kim Jong Un has done just that and moments ago Yonhap reported that North Korea has fired another missile. Form Yonhap: According to Japan's NHK, the Japanese government warns that the North Korea missile is headed toward Northern Japan: JAPAN GOVT WARNS PEOPLE IN NORTHER JAPAN TO TAKE PRECAUTIONS AGAIN POSSIBLE NORTH KOREA MISSILE – NHK This is the government emergency warning that was blasted moments ago on all TV channels, urging the population to take "precautions": Government emergency warning through mobiles and on all TV channels, North Korea missile launched... pic.twitter.com/FVx1w7LHP3 — Rathertallbloke (@SteveinHokkaido) August 28, 2017 The USDJPY is tumbling on the news...
Implications of the Hokkaido missile miss | Asia Times: This week Japan found out just how vulnerable it was when a ballistic missile fired by North Korea broke up in airspace close to Hokkaido, Japan’s northernmost island. According to experts in Japan who spoke to me on background, Japan had no capable air defense assets in the north, leaving a significant part of its territory completely unprotected. In essence, the Japanese government has failed in its primary mission to protect its territory and people. There are many questions but the lack of proper missile defense is one that can be answered today. The others – why for example Kim Jong-un decided to shoot a missile intended to fly over Japan and why the United States stood by and did nothing – are questions that are not so simple to answer. Japan lacks adequate missile defense for three reasons. The first is that Japan has spent very little on defense, “preferring” to rely on the United States for its security. This is part of the legacy of the aftermath of World War II, but it is also a convenient excuse not to spend significant resources on defense systems, unless of course they can create jobs in Japan. The second reason is that Japan believes it can find ways to bargain with North Korea and avoid confrontations. This attitude is quite similar to the new South Korean government’s approach to North Korea’s missile and nuclear programs. While South Korea contemplates (sometime in the misty future) reunification, South Korea’s planners also understand that a more compliant government in North Korea could lead to other security arrangements, favorable to North and South Korea. This might even include nuclear weapons and missile sharing in future. The third reason is that current-day missile defense solutions available to Japan are far from foolproof. While the latest debacle near Hokkaido is an acute embarrassment to Japan’s leaders, at least Japan can claim that if it had missile defense it could have tried to shoot down the North Korean missile. I would not look for any strong effort by Japan to fix the missile defense problem.
South Korea Orders Show Of "Overwhelming Force", Conducts "Live Bombing" Drill As Kospi Tumbles -- South Korean President Moon Jae-in has already ordered his troops to demonstrate their capability for "strong retaliation" and put on a show of "overwhelming force", after his office convened a National Security Council session. According to Yonhap, President Moon ordered his country's military to display its capabilities that can "overwhelm" North Korea should the communist state decide to attack, the presidential office The show of overwhelming force involved the dropping of eight Mark 84 or MK84 multipurpose bombs by four F15K fighter jets at a shooting range near the inter-Korean border in Taebaek, Moon's chief press secretary, Yoon Young-chan, told reporters."The NSC standing committee denounced North Korea for violating the U.N. Security Council resolutions by again launching ballistic missiles despite stern warnings," Yoon told a press briefing.Yoon also said that in a telephone conversation that also took place shortly after the latest North Korean missile provocation, South Korean Foreign Minister Kang Kyung-wha and her U.S. counterpart Rex Tillerson agreed to push for additional sanctions by the U.N. Security Council. Futhermore, Gen. Jeong Kyeong-doo, chairman of South Korea's Joint Chiefs of Staff, and his American counterpart Gen. Joseph Dunford agreed to take related measures at the earliest possible date, which apparently include the temporary dispatch of U.S. strategic assets like long-range bombers to Korea. Chung Eui-yong, Moon's top security adviser, also held a telephone conversation with the White House's National Security Adviser H.R. McMaster to discuss the allies' joint measures against the North's latest missile provocation."McMaster said President Donald Trump fully supported President Moon's North Korea policy and the South Korean government's measures against North Korean provocations," Yoon said.
U.S. Deploys B-1Bs, F-35s To Korea In "Unprecedented" Show Of Force -- A day after President Donald Trump finally broke his silence on North Korea after the isolated nation twice provoked its geopolitical adversaries in the span of just four days,Yonhap is reporting that the US sent four F-35B stealth jets and two nuclear-capable B-1B strategic bombers to train with South Korea's F-15K fighter jets over the Korean Peninsula on Thursday in what it described as an "unprecedented" escalation of the allies' military response to N.Korea's provocations. Thursday’s air-to-ground precision-strike drills were conducted a mock bombing drill, which simulated a surgical strike of key enemy facilities, over the Pilsung Range in the eastern province of Gangwon. The "unprecedented" combined maneuver involved the F-35Bs from Japan and the long-range bombers based in Guam as well as a squadron of four F-15Ks, Yonhap said. They used MK-84, MK-82 and GBU-32 bombs, according to Yonhap. In a statement, US Pacific Command said the flyover was a "direct response to North Korea's intermediate range ballistic missile launch." "North Korea's actions are a threat to our allies, partners and homeland, and their destabilizing actions will be met accordingly," said Gen. Terrence O'Shaughnessy, commander of Pacific Air Forces.
Putin's Warning To The World: North Korea "On The Verge Of A Large-Scale Conflict" - As tensions between the US, its regional allies and North Korea continue ebb and flow, depending on what and where Kim lobs the next missile and whether Kelly can block Trump from tweeting for the next few hours, Russian President Vladimir Putin has decided to personally weigh in on the conflict for the first time since the UN passed new sanctions against the North earlier this month. In an article published on the Kremlin’s web site, the Russian president warned that the two sides are “balancing on the verge of a large-scale conflict," adding that any efforts to pressure the North to end its nuclear program would prove “futile,” and that the only tenable solution to the standoff would be a "dialogue with preconditions.""It is essential to resolve the region’s problems through direct dialogue involving all sides without advancing any preconditions (for such talks)," Putin wrote. "Provocations, pressure, and bellicose and offensive rhetoric is the road to nowhere." His remarks about a diplomatic solution alluded to a “road map” to peace formulated jointly between Russia and China.... without the U.S. According to the joint Russian-Chinese deescalation plan, North Korea would stop work on its missile program in exchange for the US and South Korea halting large-scale war games, allowing tensions to gradually subside.
All you need to know about China’s sanctions on North Korea | South China Morning Post: On January 1, Kim Jong-un announced to the world that North Korea was “getting close” to developing an intercontinental ballistic missile. Seven months later, he reportedly watched as his country launched exactly such a device into the Sea of Japan. Three weeks later, it fired another. Then on Saturday, Pyongyang sent up several short-range rockets for good measure, with one appearing to blow up immediately, according to the US military. In February, China announced it would ban coal imports from North Korea, in line with an earlier UN resolution.On August 15, nine days after the UN Security Council approved tough new sanctions against North Korea, China extended its ban on imports from its reclusive neighbour to include iron, iron ore and seafood.The idea behind the UN sanctions and China’s blockade on selected imports is that by starving North Korea of money, its leader will be unable to continue with his nuclear weapons programme. In 2016, Pyongyang generated US$190 million from sales of seafood to China. In the second quarter of this year, sales totaled US$68 million. China sanctions will cost North Korea US$1.5 billion, but won’t curb Kim’s nuclear ambitions The combined value of North Korea’s 2016 exports to China of coal, iron ore, lead ore and seafood – all of which are now banned by Beijing – was almost US$1.5 billion, or 60 per cent of its total exports. In the first half of this year, exports to China of those commodities totalled US$474.6 million. The thinking seems to be that while some Chinese businesses might suffer as a result of the sanctions, by starving Kim Jong-un of export revenue he will be unable to fund his missile programme.The US, China and most of the rest of the world have given their support for the UN sanctions, but whether they will work remains a moot point. The problem is that people like Kim Jong-un do not like being told what to do.
In China you now have to provide your real identity if you want to comment online -- The Chinese government under president Xi Jinping is continuing to make life on the internet difficult for its potential detractors. Yesterday (Aug. 25), the country’s highest internet regulator released new rules (link in Chinese) that govern who can post what online. The upshot: anonymity on the Chinese internet is just about dead. The new rules are the most recent instance of the Cyberspace Administration of China’s (CAC) efforts to enforce “real-name registration,” which aims to severely limit internet activity for users who do not provide identifying information. There are already rules in place that require using your real name to register for WeChat, mobile phone numbers, Weibo, and other services for a few years. But the latest rules target the relatively unruly world of online communities and discussion forums. “For users who have not given identifying information, platforms for and providers of online communities may not allow posting of any kind,” the announcement declares. It adds that, on these platforms, “no content may appear that is prohibited by national regulations.” (Those are my translations; I tried to keep intact the confusing language often used in these Chinese government announcements.) The CAC announcement also requires these platforms to “investigate thoroughly” any users they think may be using fake names and retain all user data for government inspection.
Green gold: how China quietly grew into a cannabis superpower - Every year in April, Jiang Xingquan sets aside part of his farm in northern China to grow cannabis. The size of the plot varies with market demand but over the last few years it has been about 600 hectares. Like every other hemp farmer in Hexin in Heilongjiang province near the Russian border, Jiang is growing the plant legally. The growers sell the stems of the crop to textile factories to make high-quality fabric, the leaves to pharmaceutical companies for drugs, and the seeds to food companies to make snacks, kitchen oil and drinks. For the farmers, the crop is green gold – hemp brings in more than 10,000 yuan (US$1,500) per hectare, compared to just a few thousand yuan for more common crops like corn. It also has few natural enemies so there’s little need for expensive pesticides. “That’s pure profit,” Jiang said. Jiang’s farm is in China’s frosty north and is one of the country’s major centres for the legal crop. Authorities in the province turned a blind eye to its production before legalising and regulating it last year. Another major growing area is in Yunnan province where the plant’s production has been regulated since 2003. Together, these areas account for about half of the world’s legal commercial cropland under hemp cannabis cultivation, according to the National Bureau of Statistics. Thanks to government support and a long tradition, China has quietly become a superpower in the plant’s production and research.
Doklam Stand-Off Ends: Indian Troops Withdraw, China Says Will “Exercise Sovereign Rights” - Announcing that the nine-week-long Himalayan stand-off was effectively over, India stated on Monday that New Delhi and Beijing have reached an understanding on a quick “disengagement” of border personnel at Doklam. China, however, claimed that while all Indian troops have be withdrawn, it will continue to “exercise its sovereign rights”. In a press statement, the MEA said an “expeditious disengagement of border personnel at the face-off site at Doklam has been agreed to and is on-going”. Chinese foreign ministry spokesperson Hua Chunying said that Indian troops have withdrawn to their side of the border, but made no mention of whether Chinese personnel had been removed and the road construction project ended. She asserted that Indian troops withdrew fully from the site by 2:30 pm on Monday (August 28). This was verified by the Chinese personnel.There was, however, no mention whether China will stop its road construction or withdrawn its troops. Instead, the spokesperson said: “China will continue to exercise its sovereign rights and maintain territorial sovereignty in accordance with the provisions of the historical conventions”.
Doklam: Who won? -- North Korea's latest missile outrage has stolen the global headlines from a potentially even more significant turn of events in world security. That is the seemingly sudden resolution of the border confrontation between Chinese and Indian troops in an area known as Doklam in disputed Himalayan territory. The Indian government has been careful to let China save face and has not declared victory since this risky, months-long deadlock came to an end. See India’s initial official statement, crafted with all the excruciating minimalism that Ministry of External Affairs officers spend years mastering (this was followed by a gentle clarification that both sides were withdrawing forces). The Chinese state media, meanwhile, has been quick to brag that the outcome involved the withdrawal of Indian forces, but conspicuously silent on the apparent cessation of the Chinese road-building activity that started the whole crisis. This was the sharpest confrontation between the armies of the world's two most populous nations since a bitter 1962 war and a nasty 1967 skirmish. At one stage, elsewhere on the disputed border, relations degenerated to a stone-pelting melee, caught here on video. These are two nuclear-armed mega-states, neither of which seeks or can afford war. So how they found themselves in the Doklam crisis, managed it and then de-escalated it holds important lessons for nothing less than peace and stability in their shared Indo-Pacific region, indeed globally. A central but most delicate question, of course, is who won. India was first to announce the withdrawal of its forces, and China did not take long to claim that its road-building was not necessarily over but could eventually resume when the weather is right. Such points reinforce the superficial reading, which some Western media were surprisingly quick to accept, that China had essentially forced India into a somewhat humiliating backdown. This is actually quite unconvincing, as a straightforward review of the evolution of the dispute would suggest. To recap, the face-off began in June when Chinese troops began to extend a road into the Doklam area. This is land disputed not by China and India but by China and Bhutan. The Chinese were presumably caught by surprise when their effort to change facts on the ground was interrupted by Indian troops (consistent with the longstanding arrangement for India to protect Bhutan's defence interests). India's stated intent all along was not to retain its forces in the area, or even to compel Chinese troops to leave, but to stop the provocative building of Chinese infrastructure on contested land.
India’s Demonetization: No Impact on Black Money Despite Huge Costs It Imposed - Jerri-lynn Scofield - The Reserve Bank of India (RBI) on Wednesday published its annual report, which assessed India’s demonetization policy, initiated last November. Regular readers will be familiar with some aspects of this story, covered extensively by Naked Capitalism here, here, here, here, here, here, and here. To recap, on the night of November 8, Prime Minister Narendra Modi delivered an unscheduled speech announcing the cancellation of Indian Rupees (Rs) 500 (about US$7.82) and Rs 1000 (US$15.65) notes– 86% of all cash then in circulation in what’s largely a cash-based economy– in order to ferret out black money.The government estimated that demonetization would flush up to 1/3 of currency then in circulation from the economy, with holders of black money choosing to trash or abandon their holdings rather than admit its shady provenance. Central bank liabilities were expected to decline, and the government to reap a windfall. Widespread and immediate chaos followed, as I observed firsthand as I was visiting India at that time (and wrote in some of the links included above). India’s population suffered, but largely acceded to the policy. The policy was widely criticized as misguided in that it wouldn’t achieve its stated objectives. Black money is not held in sacks or stacks of illicit cash secreted in basements, almirahs, safes, or lockable metal Godrej cabinets– it’s either invested domestically in real estate, art, gold, or other assets, or held offshore, either in the form of freely convertible currency or other assets. Now, it turns out the critics were right. The RBI reported that 98.96% of the demonetized INR 500 and INR 1000 in circulation when Modi made his announcement were returned to banks by the final deadline of June 30. The actual figures showed Rs15.28 trillion (US$239 billion) returned out of a total Rs 15.44 trillion outstanding (US$241 billion). As reported by the FT in India demonetisation fails to purge black money:The bank’s estimate follows media reports that complex money-laundering networks sprang up in the wake of the demonetisation to help wealthy Indians deposit huge volumes of previously undeclared currency without exposing themselves to tax authorities. Such people allegedly sold the old notes, at a discount, to brokers who then dispatched low-income Indians to deposit or exchange them at banks. Many wealthy Indians turned to friends and relatives to help them funnel previously undeclared cash into the banking system, while others “advance paid” salaries for large numbers of workers. (Jerri-Lynn here: See also this post for further details.)
And The Nation That 'Cannot Live Without The Internet' The Most Is... Have you ever thought about what life would be like without the internet?Given the volume of time people spend immersed in their smartphones, iPads and laptops, an unconnected life is pretty hard to imagine these days. For the majority of millennials, the time before the world wide web is now nothing more than a distant memory, a memory that's been eviscerated by the ubiquity and life-changing impact of connected technology.Interestingly, Statista's Niall McCarthy notes that it isn't just millennials who are losing touch with a world without smartphones, emails and social media. Research from Ipsos has found that society in general just can't live without the internet. 18,180 people were surveyed across 23 countries, with more than two thirds of them saying they cannot imagine a life that isn’t prefixed by www dot. While 73 percent of Americans said they cannot imagine an unnconnected life, the highest share was recorded in India at 82 percent.
Embracing A Multipolar World Order: How Rodrigo Duterte Is Revolutionizing The Philippines --In a new global environment, centered on a multipolar world order, the Philippines offers a unique perspective for understanding the changes occurring in international relations. With the victory of Rodrigo Duterte in May 2016, many anticipated a major change in Manila's relations with such countries as the United States and China. The Philippines has always enjoyed a privileged role in the containment strategy directed by Washington against the People's Republic of China. Since the very beginning of Duterte’s presidency, and especially during Obama's final months in office, Duterte displayed his disappointment with the United States’ use of the Philippines as a bulwark against Chinese expansion in the region. Such a role is something that a pragmatic leader like Duterte, with the interests of his nation at heart, would never accept to adopt.Duterte’s first diplomatic visits and statements confirmed this direction, with blunt words confirming his intentions to widen cooperation and alliances with the major countries of China and Russia, as demonstrated during Duterte's visit to Beijing and Moscow. In the months that followed, with Trump as the new occupant of the White House, Duterte greatly softened his rhetoric and moves against the United States, sensing some sort of natural affinity with Trump. Although Duterte has repeatedly shown an aversion to the imperialist policies of the American colonial masters, he seems to have a high regard for strongmen like Putin, Xi and, of course, Donald Trump, among whose company he includes himself.
German Documentary About a Trump Real Estate Project - NEP’s Bill Black is interviewed by German news firm ZDF for a documentary regarding a Trump real estate project. Bill appears around the 40 minute mark discussing potential violations of law including conspiracy. You can view here (site is in German).
Google to Comply With EU Search Demands to Avoid More Fines - Google will comply with Europe’s demands to change the way it runs its shopping search service, a rare instance of the internet giant bowing to regulatory pressure to avoid more fines.The Alphabet Inc. unit faced a Tuesday deadline to tell the European Union how it planned to follow an order to stop discriminating against rival shopping search services in the region. A Google spokeswoman said it is sharing that plan with regulators before the deadline expires, but declined to comment further.The EU fined Google a record 2.4 billion euros ($2.7 billion) in late June for breaking antitrust rules by skewing its general search results to unfairly favor its own shopping service over rival sites. The company had 60 days to propose how it would "stop its illegal content" and 90 days to make changes to how the company displays shopping results when users search for a product. Those changes need to be put in place by Sept. 28 to stave off a risk that the EU could fine the company 5 percent of daily revenue for each day it fails to comply."The obligation to comply is fully Google’s responsibility," the European Commission said in an emailed statement, without elaborating on what the company must do to comply.The onus is on Google to find a solution that satisfies regulators, who’ve learned from past battles with Microsoft Corp. and Intel. Corp. Microsoft’s failure to obey a 2004 antitrust order and charge reasonable fees for software licenses saw it fined 899 million euros four years later. Microsoft argued that its prices were fair and it shouldn’t be compelled to give away patented innovation.
Fears of new migrant 'Jungle' in the heart of Europe - (AFP) - Hundreds of migrants sleep in the shadow of high-rises in downtown Brussels, raising fears in the EU capital of a new "Jungle", similar to the dismantled camp in Calais. Each night, the young migrants -- mostly Sudanese and Eritreans -- take over Parc Maximilien, a sliver of green space adjacent to the gritty Gare du Nord station where trains depart for Belgium's North Sea coast. As in the French port of Calais, the dream of most here is getting to Britain. The young men, gathered just three kilometres (two miles) from European Union headquarters, have survived a long and dangerous journey -- through North Africa, across the Mediterranean and the gauntlet of police checks set up to catch them throughout southern Europe. But for now, only the efforts of activists and charities cushion the indignities of being an illegal migrant. Belgian authorities want no part in even a temporary solution for people they say are only interested in reaching Britain. For Theo Francken, deputy minister in charge of immigration, there is no reason to take on board "illegals ... who do not want asylum in Belgium". Also hanging over migrants is the EU's so-called Dublin rule, an obligation that asylum seekers lodge their cases in their first point of entry in Europe. In Adam's case, as for most in the park, this was Italy. In theory, he and his friends could be rounded up and sent back to Italy at any moment -- though Belgian authorities have yet to carry out any such operation.
19 European Countries Now Have Negative Interest Rates --- The Jackson Hole monetary conference had no sooner ended than one more European country was added to the scroll of countries with negative 2 year sovereign yields...(rates table) As Snake Hole Lounge details, the latest addition is the island of Cyprus whose Bank of Cyprus just posted a huge loss on bad debt provisions. (Bloomberg) — Bank of Cyprus reported loss for the second quarter of EU556 million. I guess ECB’s Mario Draghi will keep the pedal to the metal!
UK must pay Brexit bill, says Angela Merkel - German Chancellor Angela Merkel warned the U.K. on Saturday that it would have to pay a settlement to leave the EU, denying that the obligation amounted to a “fine.” “This is about obligations that Great Britain has entered into and that naturally must remain on the books,” Merkel said in her weekly podcast published Saturday ahead of the latest round of talks next week, Bloomberg reported. “It’s not about the cost of divorce — that makes it sound like fines. We’re still at the very start of these negotiations.” The divorce bill, or how much the U.K. should pay the EU upon leaving the bloc, is one of the most contentious issues in the Brexit talks. The EU has alreadyoutlined a full list of bodies and funds that it believes must be covered by the financial settlement. Estimates of the bill have ranged up to €100 billion. Brussels has told Britain to come forward with a proposal for how to calculate the bill or risk derailing next week’s Brexit talks — something it has so far declined to do, preferring to critique the EU proposal. Boris Johnson, the British foreign secretary, said he did not “recognize” the €100 billion figure but added that “we should pay not a penny more, not a penny less, of what we think our legal obligations amount to.”
Divorce bill remains sticking point as Brexit negotiations resume - Britain’s talks on leaving the European Union will resume on Monday amid a deepening standoff over the UK’s financial obligations. As the Brexit secretary, David Davis, calls for “flexibility and imagination” to break the deadlock, senior EU diplomats say their chief negotiator, Michel Barnier, will find it difficult to make progress until they have agreed how to calculate the amount Britain must pay to leave. Three and a half days of talks resume against the backdrop of a shift in policy from Labour and with both sides saying there is unlikely to be a major breakthrough.Brussels is infuriated at Davis’s refusal to spell out how the UK’s liabilities to the EU should be calculated, let alone put a figure on the final bill estimated at €75bn. Reports have suggested that ministers are ready to pay up to €40bn (£36bn) as the price of getting on with trade talks.The EU has said any attempt by the British to defer a deal on Brexit money could lead to the collapse of the talks. “If you leave big, sensitive political issues to the end of the negotiations – such as the financial settlement – you increase the risk of failure,” a senior official said.One EU diplomat told the Guardian that money was “the major sticking point and the biggest obstacle to making progress”. The diplomat said: “The UK government does not want to be too clear because they are afraid of the hard Brexiteers.”Despite the EU’s warning, Davis is expected to refuse to go into details before the EU places its own analysis of the expected bill upon the table. UK sources said Barnier’s team has produced a paper outlining the basis for a Brexit payment but has not yet said on what this is based. “We are waiting for them to produce a proper legal analysis that can be interrogated line by line,” a UK government source said.
Exclusive: EU could be open to Brexit climbdown over trade talks amid revolt led by France --France and other EU nations have signalled they are willing to begin Brexit trade talks as early as October in a move that opens the door to a climbdown by the EU, The Telegraph has learned. Senior French diplomats have made clear they want to see the deadlocked Brexit talks make progress in the first sign of splits emerging in the EU.Under the terms of a proposal set out by France the UK is being encouraged to request a three-year transitional deal if it continues to pay into the EU Budget and accepts EU law.This position puts Paris at odds with hardliners in Brussels and Michel Barnier, the EU’s chief negotiator, who are insisting there can be notrade talks until the issue of the Brexit divorce bill is settled. It represents a significant boost for David Davis, the Brexit Secretary, who on Monday travels to Brussels for face-to-face talks with Michel Barnier, the EU's chief negotiator.It came as the German Chambers of Industry and Commerce urged the European Union to push ahead with discussions on a future trading relationship amid concerns that Brexit will have a "major negative impact" on businesses.The French overture on a transition deal was confirmed by two separate senior UK sources and points to underlying cracks in EU unity.British ministers are adamant the UK will not write any cheques unless payments are linked to a future trade deal with the EU, while Mr Barnier insists there can be no trade talks until the money question is settled. “We’re basically stuck,” said a senior UK negotiator. Tensions between the two sides increased further last week after Brussels officials accusing Theresa May’s government of “magical thinking” over Brexit.
Brexit: Michel Barnier calls on UK to start 'negotiating seriously' - - ABC Radio (podcast) The European Union's chief Brexit negotiator has called on the UK to start acting seriously when it comes to striking a deal over leaving the EU. The British government is entering its third round of formal talks in Brussels. And its Brexit Secretary is calling for more "flexibility and imagination" in the talks.
UK Brexit charm offensive falls flat – Politico - It was meant to be a charm offensive directed at national capitals across Europe to help smooth the Brexit negotiations — but the British government’s decision to hold confidential briefing sessions for EU ambassadors in London appears to have fallen flat.In the last two weeks, the U.K. held two such events in a bid to explain London’s negotiating positions on key issues ahead of the latest round of Brexit talks, which are now underway in Brussels. If the effort was intended to win a sympathetic ear, it flopped.The meetings have not been officially announced, but according to six senior diplomats POLITICO spoke to who were either present at the meetings or briefed on them, the representatives of the EU27 were not impressed by what they say was a lack of detail from the U.K. And they were dismayed that a promise to provide a detailed position paper on how to calculate the U.K.’s financial obligations to the bloc once it leaves was subsequently withdrawn. The hour-long briefings — which took place on August 17 and 24 at the U.K. Foreign Office in Whitehall — were given by Alex Ellis, director general of the Brexit department and a senior member of David Davis’ negotiating team. On the invite list for the first meeting were representatives from all EU27 countries. At the second, the invite list was extended to include Iceland and Norway. The first briefing covered the U.K.’s papers on customs and Northern Ireland. The second session was on five papers that laid out the U.K. position on topics including data protection and European Court of Justice jurisdiction. Ellis also promised more position papers from the government in the coming weeks.“He told us that we had to treat the papers as simple ‘policy proposals aimed at starting a dialogue’ in response to EU papers and that their main purpose was to ‘to share ideas,'” a senior official who attended both briefings said. “Ellis basically told us that the purpose of the papers was to show to Brussels that London had done its homework this time.” The Brits were stung by what they saw as unfair criticism that they were unprepared, after the second round of talks in July.
After 3 rounds of Brexit talks, a gaping divide --EU chief negotiator Michel Barnier insists leaving the EU and the single market will have consequences for the UK. Brussels had long warned the U.K. that Brexit could not mean keeping the privileges of EU membership without the obligations.But after three rounds of formal negotiations, and a flurry of papers laying out where it stands on key issues, London’s approach looks less to EU leaders like the “cherry-picking” they warned against and more like a demand for a whole cherry pie — with a big scoop of ice cream on top to boot.On every major issue, from rejecting the EU’s approach to a financial settlement to trying to fast-forward the discussion of a new trade and customs deal, and refusing to accept the jurisdiction of the European Court of Justice, the U.K. has laid out a vision of a post-EU future in which things only get better for Britain — and at no cost.These disagreements are at the heart of an impasse that both sides fear no amount of negotiating will break: EU leaders and their negotiators insist that Britain must accept that there are negative consequences of leaving the EU while the U.K. government is intent on proving to its constituents that the country is better off single than attached. “I see in several [of the U.K.’s] proposals a certain nostalgia, through precise demands, which would amount to wanting to continue to benefit from the advantages of the EU’s single market without being part of it,” the EU’s chief negotiator, Michel Barnier, said at a joint news conference Thursday to wrap up the latest, abbreviated round of talks, which lasted just two days. “Brexit means Brexit,” Barnier continued, turning U.K. Prime Minister Theresa May’s famous phrase against her. “Leaving the single market means leaving the single market and, if that is the decision, it has consequences.”
A big business Brexit for a bargain basement Britain -- Big business claims that it is being ignored in the Brexit process. But research released today suggests that this is far from true. In fact, while small business, trade unions and public interest groups may be marginalised, large corporations are getting plenty of access to government ministers. They're determined to make sure that any type of Brexit becomes a big business Brexit. The research, based on a disclosed list of government meetings between October 2016 and March 2017, shows that one in six ministerial meetings in David Davis' Department for Exiting the EU over the last six months has been with business, the vast majority big corporations. In particular, the finance sector dominated those meetings, with 46 meetings being held with heavyweights including Goldman Sachs and HSBC. The information we've received from the Department for International Trade is even worse - with one in nine meetings being held with business, most of it very big. Again, finance has done well - eight meetings with big bank HSBC, six with Barclays, and six with KPMG, as well as seven meetings with oil giant BP and five with big pharmaceutical corporation GlaxoSmithKline. This gives us some idea who Britain will be batting for post-Brexit - big finance, big energy, big pharmaceuticals. Civil society only had five dedicated meetings with Liam Fox's Department for International Trade - out of 318 meetings altogether. Worse still, some of these organisations are actually pro-business groups advocating ultra-free market policies including the Adam Smith Institute and the Legatum Institute. Legatum is an influential think-tank, funded by a Dubai-based private investment group, which advocates the unilateral removal of agricultural tariffs and quotas, a move which would destroy small farmers in the UK.
Brexit: Big business and banks are dominating formation of Brexit warns report | The Independent: Brexit is being shaped by big business and banks while the interests of ordinary people are being drowned out, a damning new report has concluded. The analysis of lobbyist activity exposes how big corporations and the finance sector are dominating back-room discussions with negotiators in both London and Brussels. At the same time small business, labour groups and NGOs are being marginalised, leading campaigners to warn Brexit will be dictated according to a “corporate bias.”The report passed to The Independent highlights how a single investment bank had more meetings with officials from the UK’s Department for Exiting the European Union, than Britain’s two biggest trade unions put together, representing millions of workers between them. Groups that have poured money into Conservative party coffers - and even donated to Brexit Secretary David Davis himself - were also granted direct access to the UK’s team. In Brussels business interests also dominated, with officials at the EU’s Brexit taskforce three times more likely to meet corporate lobbyists than representatives of civil society. Details of the new report from the Corporate Observatory Europe and Global Justice come as Mr Davis heads back to Brussels on Monday for talks with the EU’s chief negotiator Michel Barnier.
Brexit: Keep single market for transition period – Labour - Labour would keep the UK in the EU single market and customs union for a transitional period after leaving the EU, the party has said. Shadow Brexit secretary Sir Keir Starmer set out Labour's new position in the Observer. The shift in policy would mean accepting the free movement of labour after leaving the EU in March 2019.Sir Keir said the transition would be "as short as possible but as long as necessary".Meanwhile, Brexit Secretary David Davis has urged the European Commission to have a flexible approach to talks.Labour's leadership has been criticised by opponents for a lack of clarity on what deal Britain should seek immediately after leaving the EU.Sir Keir said a transitional period was needed to avoid a "cliff edge" for the economy, so that goods and services could continue to flow between the EU and UK while negotiations on the permanent deal continued."Labour would seek a transitional deal that maintains the same basic terms that we currently enjoy with the EU," he wrote."That means we would seek to remain in a customs union with the EU and within the single market during this period."It means we would abide by the common rules of both."He compared this with the government's preference for "bespoke" transitional arrangements after leaving the EU, which, Sir Keir said, were highly unlikely to be negotiated before March 2019.He did not say how long the transitional period would be - only that it would be "as short as possible, but as long as is necessary".
Brexit warning: Forget the European Parliament at your peril --U.K. negotiators expressed mounting frustration this week over the seeming inflexibility of the leaders of the 27 remaining EU countries, who have insisted on settling Brexit divorce terms before discussing Britain’s future relationship with the bloc. But the EU’s chief negotiator Michel Barnier offered up a pointed warning at the news conference Thursday wrapping up the latest round of Brexit talks. “I suggest that nobody underestimates the role of the European Parliament,” Barnier said — a reminder that MEPs wield a veto over any final withdrawal agreement. While London may find the situation trying, dealing with the 27 leaders and Council President Donald Tusk could well turn out to be a picnic compared to the raucous 751-member Parliament. Some Parliament leaders, including its Brexit point-man, former Belgian Prime Minister Guy Verhofstadt, have taken a harder line on Brexit, and shown far less sympathy for the U.K.’s needs or wants. In the latest of a series of outbursts that have made him something of a villain in the British press, Verhofstadt berated the U.K. in an op-ed in the Daily Telegraph, saying it had long enjoyed too much privilege and special treatment in the EU, and as part of its exit was seeking even more unfair advantage.“U.K. ministers seem to want to devise a new customs union and seek to recreate all of the EU’s structures, in order to continue to benefit from the best elements of the EU, without it being called the EU,” he wrote “This is not serious, fair or even possible given the negotiating time remaining — now significantly limited by the U.K.’s own decision to call a general election after the triggering of Article 50 [the treaty mechanism that set Brexit in motion].” Gianni Pittella, the leader of the Socialists and Democrats group, slammed the U.K. for not negotiating in good faith. “Beyond the goodwill expressed on paper, the U.K. government is far from being open and keen to have a serious discussion on the crucial points linked to the British withdrawal from the EU, citizens’ rights, financial settlement and the Irish border,” Pittella said.
Brexit Makes Labour Exploitation More Likely in the UK --A report published today by Focus on Labour Exploitation (FLEX) and the Labour Exploitation Advisory Group (LEAG) reveals how growing uncertainty about the rights and status of EU nationals in the UK is increasing the risk of labour exploitation. It shows how rising levels of hate crime, and growing migrant worker uncertainty about their rights, have already had an impact on workers. More worrying for the future, it is now clear that Brexit poses a real threat to future rights and protections for all workers. By creating the conditions in which exploitation can thrive, Brexit is now a major obstacle to the prime minister’s commitment to tackle so-called ‘modern slavery’.Our new report shows that workers are facing an increase in bullying, discrimination, withheld wages, threats and physical abuse. The common reason for deteriorating treatment of workers is Brexit: people are being told by employers or colleagues that because they come from the EU they cannot or should not complain when their labour rights are challenged. Because these workers do not have any certainty about their future rights, many are too scared to speak out. Whilst the status of EU citizens in the UK has not yet changed, for many the damage is already done.The report shows that there are three main ways that the Brexit process has already increased the risk of labour exploitation among EU workers. First, the uncertainty about the immediate impact of the referendum result is leading to confusion amongst EU workers about their rights and this makes it easier for unscrupulous employers to take advantage. Second, the increase in hate crime and discrimination following the Brexit vote creates fear and makes migrant workers less able to speak up about abuse in the workplace. Third, the anticipated increase in restrictions on immigration after Brexit is leading some workers to accept unsafe jobs and abusive treatment as they understand they will need to prove they have been working in the UK in order to secure their right to remain. If the UK introduces tougher immigration restrictions without clear guidance for workers about what this means for them, and without clear routes to residence, then many EU workers will find themselves with undocumented status. Our report shows a 734% increase in EU workers seeking advice against the backdrop of Brexit, demonstrating the confusion and concern amongst EU nationals’ about their rights. When so many traffickers use threats related to migration status as a means of control, and with large numbers of migrants left unsure of their rights and status, exploitation will surely follow.
A million skilled workers plan to leave the UK after Brexit | The Independent: Almost one million EU citizens working in the UK, many of whom are highly qualified, are planning to either leave the country or have already decided to do so following Brexit, a new study has found. The international survey, which sampled 2,000 EU citizens working in the UK and 1,000 EU citizens from the ten countries most likely to supply EU labour, also found that 50 per cent of people felt less welcome since the referendum. The research also discovered that 55 per cent of those with PhDs and 49 per cent of those with postgraduate degrees had either decided to leave or were considering it.Karen Briggs, Head of Brexit at KPMG, who conducted the research, said: “Our survey highlights how important the actions of employers are going to be if the UK is to avoid a Brexit brain-drain. Although almost half of the EU citizens working in the UK plan to stay, what other EU citizens choose to do is definitely hanging in the balance. “Against this backdrop we expect to see increased competition for talent between employers over the coming years, and numerous firms seeking to supplement their workforce with AI, robotics and automation.” Punam Birly, Head of Employment & Immigration at KPMG, said the survey indicated too few employers were doing enough to support their EU employees, which was making the UK vulnerable.
Brexit: UK retirees rushing to settle in Europe, say financial advisers - British retirees are rushing to settle in European countries such as Spain, Portugal and France before the Brexit deadline, according to financial advisers, believing that such a move will become significantly more difficult in the future. One company that supports those moving to mainland Europe after they finish working revealed that the number of monthly inquiries to its website had doubled in a year, while actual business was up by 25%.It came as experts said it was extremely unlikely that any post-Brexit deals with European countries would allow Britons to continue to move overseas in their later years as easily they can do now. “The golden age of British retirees heading to the Costas is probably over,” said John Springford, a migration expert who is director of research at the Centre for European Reform.He pointed to research that found that while young immigrants provided an economic boost in most OECD countries, people turned into a net drain on national finances somewhere between the age of 40 and 45. “The thing about retirees they are expensive. There is no way Spain would allow lots of Brits to retire there and use their health system unless young Spanish people could come and work in the UK,” said Springfield. “If we don’t have free movement it is very unlikely we would have retirement rights.”
Now we know most international students go home after their courses – the vilification must end --Net migration to the UK has fallen to its lowest level in three years, according to figures from the Office for National Statistics (ONS). This fall is largely attributed to a significant increase in the number of EU nationals leaving the UK since June 2016, when the country voted for Brexit. Alongside these statistics came news that previous assumptions about international students overstaying their visas were incorrect. Whereas previous estimates put the figures on overstaying at around 100,000, now the ONS claims that a mere 4,617 did in 2016-17. This correction has been brought about by a new system of border checks on exit implemented in 2016. The figures indicated that 97% of international students from outside the European Economic Area are now thought to leave before their visa expires. There has been longstanding frustration from the UK higher education sector about the inclusion of students within net migration statistics. Universities have lobbied hard against portrayals of students as people intent on coming to the country through a back door to stay and work illegally. The new figures suggest the opposite: international students have been found to be honest, after all. The fact that this has come as a surprise to government leaves a very bad taste in the mouth indeed, and reflects an ongoing – possibly pernicious – stereotyping and misrepresenting of international students.
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