The Fed’s Unwinding - The Federal Open Market Committee (FOMC) held short-term interest rates steady on September 20th and announced that starting from October 2017 the Fed will gradually shrink its balance sheet, which grew considerably in response to the Great Recession. We review economists’ views on this move. Joseph Gagnon at PIIE thinks that the unexpected development was a further reduction in the median view of FOMC participants about where the short-term interest rate will settle in the long run. The Fed apparently endorses the view that the slowdowns in the growth rates of productivity and the working-age population have persistently lowered both the economy’s potential growth rate and the rate of return on investment. Shrinking the balance sheet will tighten financial conditions because it will increase the amount of long-term bonds in the market and thus push up their yields. Much of any increase is probably already priced into bond yields, given that this decision was telegraphed so clearly in advance. The 10-year Treasury yield rose only 2 basis points on September 20, but it has risen 58 basis points over the past 12 months, in part reflecting expectations of today’s decision. The FOMC continues to project another federal funds rate hike in December. Richard Clarida on Pimco Blog thinks there are intriguing clues from the dot plot, which shows the median FOMC participant is inclined to hike the fed funds rate by year-end 2017 and also has marked down her or his longer run dot to 2.75% (from 3% in the previous dot plot in June). Clarida argues that the FOMC dot plot now clearly indicates that many on this committee expect that the Fed may have to overshoot the longer run neutral rate. James Hamilton at Econbrowser thinks we may not have seen the end of balance sheet expansion. He created a mock-up of what the balance sheet would look like if the Fed reduced its holdings by the maximal amount at a smooth weekly rate and supposing that the Fed maintains the rate achieved by the end of 2018 through 2019 and the first three quarters of 2020. These projections assume the Fed will resume growing its balance sheet in 2020:Q4, and never let total assets fall below $3 trillion. The reason the Fed may go back to growing its balance sheet within three years comes from thinking about the liability side of its balance sheet. The big bulge in assets has mainly been financed by extra Federal Reserve deposits held by financial institutions, but several other liabilities are also significant– deposits held by the U.S. Treasury’s account with the Fed, deposits that get returned temporarily to the Fed through reverse repos, and currency held by the public.
Dudley sees Fed rate hikes; inflation weakness ‘fading’ (Reuters) - The Federal Reserve is on track to gradually raise interest rates given the recent inflation weakness is fading and the U.S. economy’s fundamentals are sound, an influential Fed policymaker said on Monday, reinforcing the central bank’s confident tone. New York Fed President William Dudley, among the first U.S. central bankers to speak publicly since a decision last week to hold rates steady for now, cited the soft dollar and strong overseas growth among the reasons he expects slightly above-average U.S. economic activity and a long-sought rise in wages. “With a firmer import price trend and the fading of effects from a number of temporary, idiosyncratic factors, I expect inflation will rise and stabilize around the (Fed‘s) 2 percent objective over the medium term,” he told students and professors at Onondaga Community College. “In response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually,” added Dudley, a close ally of Fed Chair Janet Yellen and a permanent voter on monetary policy. Dudley’s comments were similar to his speech earlier this month, and reinforced the growing expectation that the Fed is set to raise rates for a third time this year in December. That notion was driven home by Fed forecasts published last week, when the central bank held rates but announced the beginning of a long process of shedding bonds it accumulated to boost the economy. Still, others at the Fed are less anxious to tighten policy in the face of price readings that have sagged since February, despite strong jobs growth. Futures traders give a December rate hike about a 55-percent probability, according to Reuters data. Dudley nodded to the three devastating hurricanes that have struck parts of the U.S. south and the Caribbean, noting their effects will likely make it more difficult to interpret economic data in coming months. He said, though, that the effects would likely be short-lived and noted that such events tend to boost economic activity as rebuilding gets underway.
Fed’s Yellen says gradual hikes should continue, despite weak inflation (Reuters) - The Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank’s struggles to forecast one of its key policy objectives. It is possible, Yellen said, that the Fed may have “misspecified” its models for inflation, and “misjudged” key facts like the underlying strength of the labor market and whether inflation expectations are as stable as they seem, and central bankers need to remain open to that possibility as they decide on policy. Still, recent low inflation was likely a reflection of factors that would fade over time and despite uncertainties, it “would be imprudent to keep monetary policy on hold until inflation is back to 2 percent,” Yellen said in a 37-page address to the National Association for Business Economics “Without further modest increases in the federal funds rate over time, there is a risk that the labor market could eventually become overheated, potentially creating an inflationary problem down the road that might be difficult to overcome without triggering a recession,” she said. Yellen’s remarks attempt to resolve a debate that has split members of the central bank among those worried that inflation may be permanently anchored below the Fed’s 2 percent target because of structural changes in the global economy, and those who feel it is only a matter of time before tight labor markets lead wages and prices to rise. She did not provide a definite answer, noting that in current forecasts there was a 30 percent chance inflation could range anywhere from 1 percent to 3 percent, vastly different outcomes either of which could rewrite the Fed’s policy approach. But she did make clear the Fed still feels a gradual pace of rate hikes remains the base case.
Duy: "Has The Fed Abandoned Its Reaction Function?" --From economist Tim Duy at FedWatch: Has The Fed Abandoned Its Reaction Function? - The immediate policy outcomes of the FOMC meeting were largely as expected. Central bankers left interest rates unchanged while announcing that the reduction of the balance sheet will begin in October as earlier outlined in June. The real action was in the Summary of Economic Projections. Policymakers continue to anticipate one more rate hike this year and three next. This policy stance looks inconsistent with the downward revisions to projections of inflation and the neutral rate; under the Fed’s earlier reaction function, the combination of the two would drive down rate projections. Arguably, policy is thus no longer as data dependent as the Fed would like us to believe. That or the reaction function has changed...The economic forecasts were somewhat confounding. Policymakers edged up their growth forecasts, but still anticipate that unemployment will end the year at 4.3%. The unemployment forecast for the next two years edged down 0.1 percentage point, but this relative stability is somewhat confusing given that growth is expected to exceed potential growth until 2020 (remember, the Fed believes that labor force participation is more likely to fall than rise, so strong growth should induce downward pressure on unemployment).... Bottom line: the Fed is strongly committed to rate hikes. The[y] don’t appear to be following their earlier reaction function; policy feels path dependent at the moment. Indeed, given the Fed’s expectation of low inflation and volatile and possibly weak data due to the hurricanes, it is difficult to see what stops the Fed from hiking in December.
Trump meets with Warsh, Cohn and Powell as he steps up search for Fed chair - POLITICO: President Donald Trump has met with several candidates for the top job at the Federal Reserve in recent days, including former Fed governor Kevin Warsh, current Fed governor Jerome Powell and top economic adviser Gary Cohn, according to a senior administration official and two people close to the process. One person familiar with Thursday’s meeting with Warsh described it as “very positive” and said he presented himself to Trump as eager to bring reforms to the central bank, something people close to the matter say is very important to the president. The meetings come as the White House begins to focus more closely on the Fed chair position, with current Chair Janet Yellen’s term ending in February. Trump has said he is considering renominating Yellen, but Republicans on Capitol Hill believe the president will look to make a change. The president told reporters Friday that he has had four meetings with candidates for the Fed chairmanship. “I'll be making a decision over the next two or three weeks,” Trump added. Warsh, who served at the Fed during the financial crisis and is now a visiting fellow at Stanford’s Hoover Institution, remains at the top of the list of possible replacements for Yellen. One of the sources who confirmed the meeting with Warsh said that Powell is also now close to the top of the list and is a favorite of Treasury Secretary Steven Mnuchin, who is helping guide the Fed chair selection process.
Inflation, Uncertainty, and Monetary Policy. Janet Yellen - Today I will discuss uncertainty and monetary policy, particularly as it relates to recent inflation developments. Because changes in interest rates influence economic activity and inflation with a substantial lag, the Federal Open Market Committee (FOMC) sets monetary policy with an eye to its effects on the outlook for the economy. But the outlook is subject to considerable uncertainty from multiple sources, and dealing with these uncertainties is an important feature of policymaking. Key among current uncertainties are the forces driving inflation, which has remained low in recent years despite substantial improvement in labor market conditions. As I will discuss, this low inflation likely reflects factors whose influence should fade over time. But as I will also discuss, many uncertainties attend this assessment, and downward pressures on inflation could prove to be unexpectedly persistent. My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation. In interpreting incoming data, we will need to stay alert to these possibilities and, in light of incoming information, adjust our views about inflation, the overall economy, and the stance of monetary policy best suited to promoting maximum employment and price stability. [...]To conclude, standard empirical analyses support the FOMC's outlook that, with gradual adjustments in monetary policy, inflation will stabilize at around the FOMC's 2 percent objective over the next few years, accompanied by some further strengthening in labor market conditions. But the outlook is uncertain, reflecting, among other things, the inherent imprecision in our estimates of labor utilization, inflation expectations, and other factors. As a result, we will need to carefully monitor the incoming data and, as warranted, adjust our assessments of the outlook and the appropriate stance of monetary policy. But in making these adjustments, our longer-run objectives will remain unchanged--to promote maximum employment and 2 percent inflation.
emphasis added
Yellen: The Economy May Be Weaker than We Thought - Janet Yellen this week cast doubt on the Fed's announced plan to continue Fed rate hikes and reverse its years of "unconventional" monetary policy. “My colleagues and I may have misjudged the strength of the labor market,” Yellen announced on Tuesday, adding that they'd also misjudged "the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation."Yellen also "noted that the labor market, which historically has been closely linked to inflation, may not be as tight as the low unemployment rate suggests."In other words, Fed economists are concerned by the fact they've been unable to achieve their arbitrary 2% price-inflation objective, which they believe indicates a healthy level of economic activity. Moreover, they're concerned the low unemployment rate — which can be deceptive since it can show a "tight" market even in the presence of unemployed discouraged workers and involuntary part-timers — is not telling the whole story. The end result is that the Fed is not at all sure that it can continue with its promised path of raising the target interest rate as has been the "plan" for the past several years. As we've noted here at mises.org before, the Fed has a habit of announcing big plans to scale back quantitative easing, and increasing the target rate — only to later backtrack or downplay the extent to which it will "normalize" monetary policy. Looming over the latest admission of "miscalculating" the economy's success is the ongoing myth that the Fed and its economists are wisely and carefully steering the economic ship to a safe port. Actual experience — given that the target rate was kept near zero for eight years — more suggests panic and dismay, rather than the presence of a steady hand. If we look at the Federal government's own data on incomes through 2016, we find an unimpressive record indeed.
Wow! Yellin confirms 2% inflation is the Fed's ceiling -- You may have already seen this elsewhere, but in case you didn't, Janet Yellin all but officially confirmed the other day that 2% isn't in fact the Fed's target, it's their ceiling. Per the New York Times: Given that monetary policy affects economic activity and inflation with a substantial lag, it would be imprudent to keep monetary policy on hold until inflation is back to 2 percent,” Ms. Yellen told the National Association for Business Economics . Let me just remind you one more time that in the past 50 years, during recessions the inflation rate has typically fallen by more than 2%. That means that if the Fed is "successful," the next recession will tip over into outright deflation, including deflation in even nominal wages. Now imagine a wage-price deflationary spiral beginning with Donald Trump as president and the GOP in control of both houses of Congress.
PCE Price Index: August Headline & Core - The BEA's Personal Income and Outlays report for August was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.21% month-over-month (MoM) and is up 1.43% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.10% MoM and 1.29% 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.
Dollar Drops As Fed's Key Inflation Indicator Slumps To 2-Year Lows -- The dollar is extending its losses after Core PCE - among the Fed's most critical inflation indicators - slumped to just 1.29% YoY, the lowest since Oct 2015.Headline PCE disappointed (+1.4% vs +1.5% exp) and was unchanged from July's print but Core PCE was considerably worse.Despite Yellen's constant talk of 'transitory' shifts, this is the 6th monthly decline in this key measure and is the biggest miss against expectations in 2 years. And the reaction is evident in FX markets as rate-hike odds fade modestly...
Persistent Employment Disparities Matter for the Economy - Lael Brainard -- As directed by the Congress, the Federal Reserve's dual mandate is to promote maximum employment and stable prices. In fulfilling its dual mandate, the Federal Open Market Committee (FOMC) has set a target of 2 percent for inflation but does not have a similarly fixed numerical goal for maximum employment. That is because the level of maximum employment depends on "nonmonetary factors that affect the structure and dynamics of the labor market," which "may change over time and may not be directly measurable."2 Understanding how close the labor market is to our full-employment goal requires consulting a variety of evidence along with a healthy dose of judgment. The recognition that maximum employment evolves over time to reflect changes in the economic landscape serves us well by requiring FOMC participants to develop a nuanced understanding of labor market developments. This approach to maximum employment has allowed the FOMC to navigate the current expansion in a way that has likely brought more people back into productive employment than might have been the case with a fixed unemployment rate target based on pre-crisis standards. This is especially true at a time when the traditional Phillips curve relationship is flatter than in the past, which means that price inflation is likely to be less informative regarding labor market tightness than it was previously.3 It therefore seems particularly valuable to look beyond inflation and headline unemployment to assess the strength of the labor market. Even when aggregate economic statistics look strong, studying geographic areas and demographic groups that are not faring as well can point to ways of further improving the economy's performance. The Federal Reserve is also keenly interested in disparities in employment, labor force participation, income, and wealth because they may have implications for the growth capacity of the economy. When we consider appropriate monetary policy, we need to have a good sense of how fast the economy can grow without fueling excessive price inflation. At a time when the retirement of the baby-boom generation looks likely to be something of a drag on the growth of the labor force, it is especially important to consider whether relatively low levels of employment and labor force participation for some prime working-age groups represent slack that, if successfully tapped, could increase the labor force and boost economic activity.
Chicago Fed "Index points to slower economic growth in August" - From the Chicago Fed: Index points to slower economic growth in AugustLed by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to –0.31 in August from +0.03 in July. Two of the four broad categories of indicators that make up the index decreased from July, and two of the four categories made negative contributions to the index in August. The index’s three-month moving average, CFNAI-MA3, decreased to –0.04 in August from a neutral reading in July. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. This suggests economic activity was close to the historical trend in August (using the three-month average).According to the Chicago Fed:The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories. A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.
Q2 GDP Third Estimate: Real GDP at 3.1% - The Third Estimate for Q2 GDP, to one decimal, came in at 3.1% (3.06% to two decimal places), an increase over 1.2% for the Q1 Third Estimate. Investing.com had a consensus of 3.0%. 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 3.1 percent in the second quarter of 2017 (table 1), according to the "third" 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 "second" estimate issued last month. In the second estimate, the increase in real GDP was 3.0 percent. With this third estimate for the second quarter, private inventory investment increased more than previously estimated, but the general picture of economic growth remains the same. [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%.
Final Q2 GDP Comes In At 3.1%, Higher Than Expected - With just two days left until the end of the third quarter, what happened in Q2 will hardly provoke a market reaction, which is why when the BEA announced that the final Q2 GDP print was revised from 3.0% to 3.1%, (or specifically from 3.049% to 3.06%) it hardly inspired a move in risk assets, even though it did come in fractionally better than the 3.0% expected, and more than double the 1.2% Q1 GDP print. The revision to the third estimate of GDP growth mainly reflected an upward revision to private inventory investment, notably farm inventories. Personal consumption rose 3.3% in 2Q after rising 1.9% prior quarter, while its contribution to the change in GDP was 2.24% in 2Q, slightly below the 2.28% in the previous revision. Nonresidential fixed investment, or spending on equipment, structures and intellectual property rose 6.7% in 2Q after rising 7.2% prior quarter. For the inflation watchers, the GDP price index rose 1.0% in 2Q after rising 2.0% prior quarter, while Core PCE q/q rose 0.9% in 2Q after rising 1.8% prior quarter The BEA also reported that Corporate Profits Rose 0.7% Q/Q in Q2, after falling 2.1% in prior quarter. On an annual basis , corporate profits were up 6.4% in 2Q after rising 3.3% prior quarter. Notably Financial industry profits declined 7.1% in 2Q after falling 7.9% prior quarter. Federal Reserve bank profits down 10.6% in 2Q after rising 2.7% prior quarter. Finally, nonfinancial sector profits rose 4.9% in 2Q after rising 0.3% prior quarter.
Q2 GDP: 3.1% in 3rd estimate (5 graphs) The BEA released the 3rd estimate for Q2 real GDP and hiked it from 3% in the 2nd estimate to 3.1% in the third. Real GDP increased 1.2% in Q1, unchanged from the previous estimate. The 3.1% increase is the largest since Q1 of 2015. Non-residential fixed investment remained strong for the second quarter in a row, 7.2% in Q1 and 6.7% Q2. These back-to-back increases were the largest over the past three years. Residential investment, on the other hand, dropped 7.3%, the largest decline since 2011. Hurricane Harvey created a lot of uncertainty for the future. On the one hand it foretells a big short term hit to local GDP from lost economic activity and the hit to the oil and gas sector. Hurricanes Irma and Maria will not show up strongly in GDP except insofar as they affected Florida and the U.S. mainland. This is because the GDP from Puerto Rico and the U.S. Virgin Islands does not enter into calculations of U.S. Domestic GDP. Government expenditures on relief will show up.
U.S. economy accelerates in second quarter; hurricanes expected to slow growth (Reuters) - The U.S. economy expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years, but the momentum likely slowed in the third quarter due to the impact of Hurricanes Harvey and Irma. Gross domestic product increased at a 3.1 percent annual rate in the April-June period, the Commerce Department said in its third estimate on Thursday. The upward revision from the 3.0 percent rate of growth reported last month reflected a rise in inventory investment. “The destruction caused by Hurricanes Harvey and Irma and the resulting disruption ... are expected to be a drag on third-quarter growth,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. “Nonetheless, the economy remains on track.” Economic growth last quarter was the quickest since the first quarter of 2015 and followed a 1.2 percent pace in the January-March period. Economists estimate that Harvey and Irma, which struck Texas and Florida, could cut as much as six-tenths of a percentage point from GDP growth in the third quarter. Harvey was blamed for much of the decline in retail sales, industrial production, homebuilding and home sales in August. Further weakness is anticipated in September because of Irma. Rebuilding efforts are, however, expected to boost GDP growth in the fourth quarter and in early 2018. Signs of increasing inventory investment by businesses could soften the storms’ punch to the economy. In a separate report on Thursday, the Commerce Department said wholesale inventories jumped 1.0 percent in August after rising 0.6 percent in July. Inventories at retailers shot up 0.7 percent after being unchanged in July. The department also said the goods trade deficit fell 1.4 percent to $62.9 billion in August. That leaves an upside risk to growth estimates for the July-September quarter, which are below 2.5 percent. “The data available so far suggest that the firming in real inventory accumulation between second quarter and third quarter could be significant and could add over a full percentage point to growth in the third quarter,” said Daniel Silver, an economist at JPMorgan in New York.
Q2 Real GDP Per Capita: 2.41% Versus the 3.06% Headline Real GDP - The Third Estimate for Q2 GDP came in at 3.1% (3.06% 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 2.41% 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 Excel 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 9.5% below the pre-recession trend.
Softer GDP Growth Rate For US Is Expected In Q3 -- Forecasters continue to project a moderately slower increase in US economic activity for the third quarter vs. Q2, based on the average estimate for several models and economic surveys compiled by The Capital Spectator. The expected pace is strong enough to keep the economy humming, but the latest numbers suggest that next month’s preliminary Q3 data from the Bureau of Economic Analysis is on track to post a conspicuous slowdown. The average forecast calls for a 2.3% increase in output for Q3, which reflects data from the seven recent estimates (see chart below). The outlook marks a downshift from Q2’s healthy 3.0% increase (seasonally adjusted annual rate). The current set of Q3 predictions also reflect a modest downshift from the 2.8% average Q3 estimate published a month ago. One factor weighing on the latest projections is the expected blowback from two recent hurricanes – Harvey and Irma – that unleashed widespread damage across several southern states.Mark Zandi, chief economist for Moody’s Analytics, earlier this month estimated the combined price tag for both storms at $150 billion to $200 billion – an expected cost that reduced the firm’s Q3 GDP growth rate by half a point to 2.5%.Treasury Secretary Steven Mnuchin recently said that “there clearly is going to be an impact on GDP in the short run.” He added that “we will make it up in the long run,” in part due to the economic response to the hurricane damage. “As we rebuild, that will help GDP.”
Q3 GDP Forecasts: Close to 2% -From the Altanta Fed: GDPNow The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.3 percent on September 29, up from 2.1 percent on September 27. Since the previous GDPNow update on Wednesday, the forecasts of the contributions of net exports and inventory investment to third-quarter GDP growth increased from -0.16 percentage points and 0.90 percentage points, respectively, to -0.01 percentage points and 1.13 percentage points, respectively. The forecasts of real consumer spending growth and real nonresidential equipment investment growth declined from 2.0 percent and 5.7 percent, respectively, to 1.8 percent and 4.0 percent, respectively. From the NY Fed Nowcasting ReportThe New York Fed Staff Nowcast stands at 1.5% for 2017:Q3 and 2.0% for 2017:Q4. CR Note: Based on the August report, PCE looks sluggish in Q3 (mid-month method at 1.7%).
ECRI Weekly Leading Index: WLIg Negative, First Time Since March of 2016 - Today's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 14374, up slightly from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.72%, down from 2.83% last week and its twelfth consecutive week of declines. The WLI Growth indicator is now at -0.1, also down from the previous week, and it's first negative reading since March of 2016. ECRI's recent headline article digs into the causes of recent recessions after the 2008 financial crisis. Specifically, comparisons are made between US and Japanese economic growth, economic vulnerability, and exogenous shocks. ECRI concludes that while US GDP has been extremely low since the Great Recession, no recession has occurred due to a lack of exogenous events. Read more Below is a chart of ECRI's smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is above where it was at the start of the last recession.
GOP tax plan assures rising national debt forever - On Wednesday, President Donald Trump and the Republican congressional leadership plan to unveil their long-awaited tax-cut plans. Reports say the goal is to cut the corporate tax rate to 20% (the president wants 15%) from the current statutory federal rate of 35%; reduce the number of individual tax brackets to three from the current seven, and perhaps cut the top individual marginal rate to 35% from its current 39.6%. We’ll surely hear about how these tax cuts will boost economic growth and create thousands of well-paying jobs in the U.S. But we’re not likely to hear much about how Congress or the Trump administration expects to pay for them, because the simple fact is, they can’t, without taking on powerful special interests.So, sacred cows like charitable contributions and the mortgage-interest deduction are probably safe. But deductibility of state and local taxes may be capped or eliminated. That would really stick it to upper-middle-class taxpayers in blue states like New York, New Jersey, Connecticut and California, which voted heavily for Hillary Clinton in 2016. If that’s included — and the fight over it will be fierce — it might cover half of the tax cuts’ estimated $1.5 trillion in lost revenue over 10 years. But the cuts may wind up a lot bigger and the revenue gap a lot wider. And no, Larry Kudlow and Stephen Moore, they won’t “pay for themselves”; the U.S. government will have to borrow that money, just as it did after the 2001 and 2003 Bush tax cuts. That means the national debt will continue to grow, despite all the promises of Trump and the Republican Party leadership, who have been as adamant about the ballooning debt for the past six or seven years as they were about repealing and replacing Obamacare. In June, the Congressional Budget Office projected that the debt would rise by more than $10 trillion over the next 10 years. Since total federal debt now tops $20 trillion, it would likely exceed $30 trillion by the end of fiscal 2027, when the deficit alone would hit $1.4 trillion.
Do Republicans Really Care About the Deficit? - Jared Bernstein - Though America really doesn’t need a tax cut — demographic pressures alone suggest the need for more, not less, future revenues — President Trump and the Republican majority want one. But they don’t want to pay for it, which means the budget deficit is going to rise. Based on what we’ve seen so far, the increase in the deficit could be at least $1.5 trillion over 10 years.Perhaps this surprises you, as you’ve long heard Republicans cry about deficits and debt. But any such tears are of the crocodile variety. When it comes to increasing the budget deficit, the impact of this tax plan is no different from any of their others. Back in 2015, I testified at a hearing on these issues before the House Budget Committee. One after another, Republican members on the committee denounced rising debt levels. Why then, I asked, do you want to cut taxes? Their answer: It’s spending, not tax cuts, that increases the deficit.That, of course, is crazy. I don’t mean it’s bad economics, or lousy fiscal policy. I mean it’s disconnected from reality, or more precisely, from arithmetic. You can, and they do, make arguments about how growth effects will make up the difference, despite the complete lack of empirical evidence to support such claims. Indeed, rumor is that Mr. Trump has his economics team ginning up a “dynamic growth model” that will spit out phony growth effects offsetting much of the cost of their tax cut.Don’t believe it. Our fiscal history on this point is clear: Cutting taxes loses revenues, which, unless offset by higher taxes elsewhere or spending cuts, increases the budget deficit, which in turn raises the debt. (The debt is the sum of all past deficits minus past surpluses.)In fact, the Republican budget hawk is a rare bird. There are, instead, flocks of chicken hawks who use the deficit argument to block spending, promote fiscal austerity, and small government, conveniently tossing deficit concerns aside when it comes to tax cuts. But deficits don’t seem to hurt the economy. So, what’s the problem?
Jared Bernstein Shows the Costs of Not Understanding Sovereign Currencies - Bill Black - Most monetary theory taught in conventional economic classes is a fiction arising from carryovers from the era of the gold standard in which nations lacked a sovereign currency. Jared Bernstein has just published an op ed in the New York Times entitled “Do Republicans Really Care About the Deficit.” Republican elites, of course, have not really cared about federal budget deficits for decades. That is a good thing that Democrats should embrace in a bipartisan spirit. Bernstein, of course, is correct that the Republicans are hypocrites about federal budget deficits, pretending to care about them when the Democrats hold power and displaying their lack of any real care when Republicans hold power and the context is tax cuts for the wealthy. Democrats display a similar hypocrisy. Even Democrats like Bernstein who know that the Republicans proposed expansion of the federal budget deficit through tax cuts is not a real economic problem are primed to attack Republican hypocrisy by falsely asserting that the Republican deficits would harm the Nation. Democrats should embrace honesty as the best policy and stop embracing the politically attractive pose of claiming to be the Party that “really cares” about the federal budget deficit. That politically attractive pose is not simply dishonest and financially illiterate, it is also a trap. The Republican and New Democrat deficit strategy is to force Democrats to make an endless series of “Sophie’s choices.” Choose which excellent program to kill in order to save (temporarily) another from the chopping block because we supposedly cannot afford to provide both. Then repeat the process. The Republicans and New Democrats constantly, and falsely, claim that the federal government cannot afford to provide medical care availability that is routinely provided in most of Europe and Canada. It is a pure myth that the United States cannot afford to provide the safety net of Social Security, Medicare, and Medicaid.
Trump on NK nuclear threats: ‘They won’t be around much longer’ - President Trump late Saturday warned North Korea's foreign minister after his speech to the United Nations, saying if "he echoes thoughts" of Kim Jong Un, "they won't be around much longer.""Just heard Foreign Minister of North Korea speak at U.N. If he echoes thoughts of Little Rocket Man, they won't be around much longer!"Just heard Foreign Minister of North Korea speak at U.N. If he echoes thoughts of Little Rocket Man, they won't be around much longer!— Donald J. Trump (@realDonaldTrump) September 24, 2017In an address to the United Nations General Assembly, Ri Yong Ho said that the use of nuclear weapons is not Pyongyang's "first option." But cautioned that the U.S. and its allies should "think twice" before threatening North Korea.Ri said that Trump's insults against North Korea and its leader Kim Jong Un make it "inevitable" that the country's rockets will strike the U.S. mainland. The comments came moments after the U.S. flew B-1B bombers and F-15 fighter jets in international airspace east of North Korea – the farthest north of the Demilitarized Zone (DMZ) between North and South Korea that U.S. fighters or bombers have ever flown.Trump and North Korea have ratcheted up their rhetoric in recent days as the nation continues to expand its nuclear weapons program.
Trump Threatens "Little Rocket Man", Says Kim "Won't Be Around Much Longer" - The war of words between Trump and Kim escalated once again in the late hours on Saturday night, when President Trump sent another belligerent tweet directed at North Korea saying that if the country's foreign minister was speaking for North Korean leader Kim Jong Un in his threatening speech at the United Nations, "they won't be around much longer.""Just heard Foreign Minister of North Korea speak at U.N. If he echoes thoughts of Little Rocket Man, they won't be around much longer!"Just heard Foreign Minister of North Korea speak at U.N. If he echoes thoughts of Little Rocket Man, they won't be around much longer!— Donald J. Trump (@realDonaldTrump) September 24, 2017The president referred to a speech by North Korean Foreign Minister Ri Yong-ho earlier Saturday at the United Nations in which he called Trump “a mentally deranged person full of megalomania” who is holding “the nuclear button.” Ri said by repeatedly calling Kim "Rocket Man," Trump is making "our rocket’s visit to the entire U.S. mainland inevitable all the more." The foreign minister also said Trump is a "gambler who grew old using threats, frauds and all other schemes to acquire a patch of land." Ri jumped into the nickname game as well, saying Americans call Trump the "Commander in Grief," "Lyin' King," and "President Evil." Ri continued, saying Trump has turned the White House "into a noisy marketing place" and is making the U.N. "a gangsters’ nest where money is respected and bloodshed is the order of the day"
Sanctioning China to Go After North Korea is a Very Bad Idea - As North Korea’s nuclear program advances at an uncomfortably brisk pace, Americans are considering courses of action that range from launching a preemptive strike to ratcheting up already severe sanctions. But are sanctions really the way to go?Last week, at a hearing held by the House Foreign Affairs Committee with officials from the Treasury and State Departments, legislators suggested that placing unilateral sanctions on China might be the most potent means to compel them to urge North Korea—which relies on China for 92 percent of its trade—to curtail its nuclear program. While this seems like a tantalizingly straightforward course of action, it would almost certainly do more harm than good. Rep Brad Sherman (D-CA), a particularly vocal proponent of placing unilateral sanctions on China, contended at the hearing that “We are not doing enough to force them [China] to change their behavior, which is to punish North Korea a little bit for being a little bit too flamboyant.” And certainly, the U.S. does have ample economic leverage at its disposal to remind China of our infinite distaste for nuclear flamboyance. China is one of America’s principal trading partners. Americans spend $462.8 billion on Chinese goods and $16.1 billion on Chinese services annually. America is a good customer and withholding our business would possibly be a substantial enough threat to the Chinese economy to induce them to adopt a less lenient attitude toward North Korea. However, there’s reason to suppose that even if that were the case, unilateral sanctions would still fail. Sanctions work best when imposed by a consortium of countries on a small economically toothless country. They rarely work when imposed unilaterally on a large economically robust country—like China. Historically, most sanctions have been duds—some spectacularly, as with Napoleon’s continental blockade of the United Kingdom, and some embarrassingly, as with the U.S.’s enduring embargo on Cuba, which has, despite half a century of persistence, yet to yield any impressive policy reforms. Just as Cuba hasn’t yielded to economic pressure, North Korea probably won’t yield either, even if that pressure were immense.
The forbidden questions about the Korea crisis -- Now is the time for a gallant peace gesture from Washington or for Seoul to quit the war games – twice-yearly events, dating back to 1976, in which US and South Korean military forces deploy thousands of troops to simulate various scenarios for conflict with the North. This summer’s games involved 17,500 US troops and 50,000 South Koreans. To North Korea the games simulate invasion. War games with a specific offensive objective violate the UN Charter, that is, international law.The current mutual oppositional defiance between Pyongyang and Washington has evoked alarmist reactions and feverish talk from all parties except China, which has sensibly proposed a dual freeze: The US stops its perennial war games; North Korea stops testing missiles and nuclear weapons. In China this is a moderate position between those sympathetic to North Korea and those who want Beijing to take a hard line as Washington insists. Former US defense secretary William Perry, who once advocated pre-emptive strikes, agrees with a mutual freeze. In an August 1 editorial, The New York Times cited experts who endorse the freeze. So why not? US pressure on Beijing to pressure Pyongyang without regard to Beijing’s views does not work. The Chinese might do all they can to end North Korea’s tests and move toward denuclearization, but only if Washington gets out of their way and commits to accept whatever Beijing can accomplish. The question remains: Why does Washington insist on continuing the war games? Is it about strategy, military budgets, promoting weapon sales, face? Is the purpose to maximize tensions and so push South Korea away from China and toward Japan?
North Korea: Trump is 'a mentally deranged person' whose insults make the possibility of a nuclear strike on the US 'inevitable' - North Korea's foreign minister responded forcefully on Saturday to President Donald Trump's fiery comments before the United Nations General Assembly earlier this week. Ri Yong Ho, North Korea's foreign minister, said on Saturday that Trump's insults made "our rocket's visit to the entire US mainland inevitable all the more," according to The Associated Press. He retaliated against Trump's personal attack on the North Korean leader by calling the president "a mentally deranged person full of megalomania" who is holding "the nuclear button." Trump said at the UN that if North Korea didn't back down from its nuclear aggression, the US would "have no choice but to totally destroy North Korea." "No nation on earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles," Trump said. The president then went back to his latest nickname for the North Korean leader, saying, "Rocket man is on a suicide mission for himself and for his regime." North Korea has ramped up its nuclear aggression in recent weeks and fired a missile over Japan last week for the second time in two months. Earlier this month, North Korea also conducted its sixth and most powerful nuclear test, one the country said was a hydrogen bomb. In August, following reports from the Defense Intelligence Agency that North Korea could make nuclear warheads small enough to fit on missiles and could have as many as 60 nuclear devices, Trump issued a sharp warning to the country. North Korea "best not make any more threats to the United States" or it will "be met with fire and fury like the world has never seen," Trump said at the time, according to press pool reports.
McMaster Says US Has "Four or Five" North Korea Scenarios, "Some Are Uglier Than Others" ---As tensions between North Korea and the U.S. continue to escalate with every Trump tweet and subsequent response by Kim Jong-Un, National Security Adviser H.R. McMaster said that the U.S. has prepared "four or five different scenarios" for how the crisis with North Korea will be resolved, adding ominously that “some are uglier than others." McMaster declined to comment on the extent to which North Korea’s deeply-buried nuclear program was vulnerable to U.S. military strikes -- an assessment made of Iran before the 2015 framework agreement designed to stop its nuclear program.He acknowledged that every military option assumed a reaction from North Korea that endangered South Korean citizens, adding it’s “foremost in our minds.” That danger “is certainly taken into consideration in all our planning and war gaming, table-top exercise efforts,” McMaster said.Still, while McMaster said the threat from Pyongyang is “much further advanced” than anticipated and the Pentagon said the president has a “deep arsenal” to draw upon if needed, Bloomberg quoted U.S. officials who dismissed North Korean Foreign Minister Ri Yong Ho’s comment that President Donald Trump’s warnings to Pyongyang at the United Nations amounted to a declaration of war.That said, both governments have said “all options” are on the table in dealing with the tensions. Defense Secretary Jim Mattis, speaking in India on Tuesday, said the U.S. wants to keep engagement with North Korea in the diplomatic realm as long as possible. But on Monday Ri escalated tensions with his remark that North Korea would be within its rights to shoot down U.S. warplanes flying in international airspace. That startled markets, coming just days after the Pentagon sent planes near North Korea’s border.Additionally, as reported this morning, North Korea boosted defenses on its eastern coastline after the US flew B-1B Lancer bombers and F-15C Eagle fighter escorts from Okinawa, Japan, just off the coast of North Korea - the farthest north of the demilitarized zone any U.S. fighter or bomber aircraft have flown off North Korea’s coast this century, the Pentagon said. North Korea was surprised by the bombers, which weren’t caught by its radar,
Trump Says U.S. Prepared To Use "Devastating, Military Option" On North Korea -- On Tuesday, as President Trump imposed another round of meaningless new sanctions on North Korea's banks, Trump said that while he encouraged the world to work together to end the country’s nuclear program, the U.S. is “totally prepared” for a military option, which he said would be “totally devastating” for North Korea. Which at least provides some additional detail to what H.R. McMaster meant, when he said overnight that the U.S. has prepared "four or five different scenarios" for how the crisis with North Korea will be resolved, adding ominously that “some are uglier than others."“We are totally prepared for the second option -- not a preferred option -- but if we take that option it will be devastating I can tell you that,” Trump said during a joint news conference Tuesday at the White House with Spain’s Prime Minister Mariano Rajoy. “For North Korea that is called the military option. If we have to take it we will.”Trump says the US is "totally prepared" for a military option against North Korea, which would be "devastating" https://t.co/BUXAL142gPpic.twitter.com/wpIdlx7V5q— CNN International (@cnni) September 26, 2017The president added that North Korea’s nuclear weapons threaten “the entire world with unthinkable loss of life” and “all nations must act now to ensure the regime’s complete denuclearization."Trump said his tough words for Kim Jong Un were a reply to the North Korean leader’s own words. “He’s saying things that should never, ever be said,” Mr. Trump said. Trump also declared North Korea an “outlaw regime” and thanked Chinese President Xi Jinping for breaking banking ties with his Asian neighbor and for placing new restrictions on Pyongyang while enforcing new United Nations sanctions on Kim Jong Un’s regime.“I applaud China’s recent action to restrict its trade with North Korea,” Trump added. “In particular I applaud China for breaking all banking relationships with North Korea. I want to thank President Xi.”
Would North Korea Shoot Down a US B-1B Bomber? Yes. Could It? - On Monday, North Korean Foreign Minister Ri Yong-ho delivered a special statement after U.S. President Donald J. Trump warned that North Korea would not survive “much longer” if it continued on its current path. Ri, who is in New York City for the general debate of the United Nation General Assembly, where he spoke on Saturday, pushed back against Trump’s latest threat. Reiterating Kim Jong-un’s unprecedented statement in the first-person after Trump’s speech at the United Nations General Assembly last week, Ri emphasized that the U.S. president’s threats were a “declaration of war.” Ri added a threat of his own, underlining North Korea’s “right to shoot down the United States’ strategic bombers even when they’re not yet inside the airspace border of our country.” He concluded: “The question of who won’t be around much longer will be answered then.” There’s really two ways North Korea could shoot down a U.S. bomber. It could scramble the Korean People’s Air Force, which is primarily comprised of obsolete mostly Soviet-era and some Chinese aircraft, or it could use some of the ground-based surface-to-air missile (SAM) systems in its possession, including the S-200 and its own indigenous KN06 (Pongae-5) SAM, which was declared to be operational and ready for mass production just earlier this year. (Other systems like its S-75s and S-125s won’t be able to range targets that far out.)The first option seems unlikely, even though North Korea has made intercept attempts against U.S. surveillance aircraft in the past over the Sea of Japan and may even be increasing the readiness level of the KPAF over the past day. No aircraft in the KPAF’s inventory is suited for a dogfight with the fourth-generation fighters that would likely accompany a B-1B on a deterrence flight near North Korea’s MBZ. Indeed, even operations at nighttime — when the most recent B-1B mission took place, for instance — are an insurmountable challenge for the KPAF.That leaves the second and, in my view, the more likely option: North Korea would endeavor to use its air defense systems. The KN06 appears externally similar to the R ussian S-300 (SA-10 Grumble), the successor system to the S-200. With a claimed range of 150 kilometers for its interceptor, it would certainly be able to range targets outside, but near North Korea’s claimed MBZ.
North Korea Said To Seek Help From Republicans "To Figure Out Trump" -- In what may be the most bizarre development of the day, the WaPo reports that in their ongoing feud with President Trump, the North Korean government has quietly sought the help of an unlikely counterparty: Republicans. As the WaPo details, officials in Pyongyang have been quietly trying to arrange talks with Republican-linked analysts in Washington, "in an apparent attempt to make sense of President Trump and his confusing messages to Kim Jong Un’s regime." The outreach is said to have begun before the current eruption of threats between the two leaders, but will likely become only more urgent "as Trump and Kim have descended into name-calling that sharply increases the chances of potentially catastrophic misunderstandings." “Their No. 1 concern is Trump. They can’t figure him out,” a source with direct knowledge of North Korea’s approach to Asia experts with Republican connections told the WaPo. While the North Koreans do not appear to be interested in negotiations about their nuclear program, they want forums for insisting on being recognized as a nuclear state, something the Trump administration has made clear it is not interested in. At a multilateral meeting here in Switzerland earlier this month, North Korea’s representatives were adamant about being recognized as a nuclear weapons state and showed no willingness to even talk about denuclearization.
Trump's Iran decision could shake up North Korea stand-off | TheHill: President Trump’s upcoming decision on whether to toss out the landmark nuclear deal with Iran could have ripple effects half-a-world away. Experts on both sides of the political spectrum say that whatever happens with Iran will have effects on North Korea and vice versa. Opponents of the Iranian nuclear deal argue that Iran is watching North Korea’s belligerence to see what they might be able to get away with. Supporters of the deal, meanwhile, say scrapping it would send a signal to Pyongyang that the United States cannot be trusted in any potential future negotiations. “The Iran nuclear deal set an important precedent constraining a hostile proliferator's nuclear capabilities,” Robert Litwick, director of international security studies at the Wilson Center, said in an email. “Ironically, this ‘worst deal’ ever negotiated, according to President Trump, offers a useful model that could be applied to North Korea's much more mature nuclear program through a concerted diplomatic push, enlisting China, to constrain the North's capabilities.” Trump faces an Oct. 15 deadline to tell Congress whether Iran remains in compliance with the 2015 deal that provided Tehran with billions of dollars of sanctions relief in exchange for curbs to its nuclear program. If Trump chooses not the recertify Iran’s compliance, Congress will have 60 days to decide whether to reimpose sanctions.
Iran tests missile despite Trump pressure - BBC News: Iran says it has successfully tested a new-medium range missile, in defiance of US President Donald Trump. The launch of the Khoramshahr missile, which has a range of 2,000 km (1,242 miles), was shown on state TV. It is unclear when the test took place. On Friday, Iranian President Hassan Rouhani said Iran would increase its military power "as a deterrent". US President Donald Trump criticised the launch, saying the missile was capable of hitting its ally Israel. The Khoramshahr missile was first displayed at a military parade on Friday in Tehran. It is capable of carrying multiple warheads, Iranian media report.Iran's Defence Minister, Gen Amir Hatami, outlined the missile's "unique specifications". "The ability to evade the enemy's air defence line and to be guided from the moment of launch until the target is hit turns Khoramshahr into a tactical missile," he said. Iran would "not seek permission from any country for producing various kinds of missile", he added. The missile test is arguably a borderline case as far as the UN Security Council is concerned. A resolution calls on Iran not to undertake any activity related to ballistic missiles designed to be capable of delivering nuclear weapons.
US pulls staff from Cuba over 'specific attacks' - BBC News: The US is withdrawing more than half of its staff at its embassy in Cuba in response to mysterious attacks which left its diplomats unwell. Washington is also warning Americans not to visit the country because some attacks occurred in hotels. At least 21 staff reported health problems ranging from mild brain trauma and deafness to dizziness and nausea. Describing the US decision as "hasty", Cuba said it would affect bilateral ties but co-operation would continue. US Secretary of State Rex Tillerson said the two countries would continue to co-operate in investigating the attacks and said diplomatic ties would be maintained. Earlier reports suggested that sonic attacks were to blame. Cuba denies any involvement. At least two Canadians were also affected. The US is ordering all non-essential staff in the embassy in Havana to leave, along with all family members. Only "emergency personnel" will remain. The US has suspended visa processing in Cuba indefinitely. "Until the government of Cuba can ensure safety of our people, we will be reduced to emergency personnel," a US state department official said. "At least 21 employees have been targeted in specific attacks," the official said. Despite an investigation involving the FBI, the Royal Canadian Mounted Police and the Cuban authorities, there is still no full explanation as to the cause of the incidents since late 2016. "We don't know the means, the methods or how the attacks are being carried out," the official said on Friday.
NATO's Fakenews Russia Scare Increases Defense Waste --The military of the Russian Federation is organized in four districts - west, central, east and south. Each year one of the districts will stage a division size maneuver. 10,000 to 15,000 soldiers leave their quarters to move against imaginary adversaries. Their training is complemented by various military and civilian staffs exercises. The active part of the medium-size maneuver takes about a week and includes some live firing.This year, like in 2009 and 2013, the turn was on the western military district to run its quadrennial exercise. It included, as is usual in the western district, units from and within Russia's ally Belarus. The name of this regular training event is simply "West", Zapad in Russian. Zapad-2017 was publicly announced and foreign military observers were invited to watch it.NATO and its associated media used the occasion to launch a gigantic fear- and warmongering campaign against the Russian Federation. Over months hundreds of news pieces were weaved around dark murmurs from various NATO officials and "experts". Examples: [13 links] The Zapad 2017 maneuvers ended yesterday. They were exactly what Russia and Belarus had announced - a regular, medium-size training event with no special intent or effect. The Western "opinion formers" have, of course, reason to hype everything their selected boogeyman does. That reason is greed. This year nearly all NATO countries increased their military budgets. The U.S. Senate passed a record $700 billion trough for the Pentagon with 89 to 8 votes. The more than 10% budget increase was even higher that what President Trump had requested. It broke all earlier commitments:The $700 billion is $91 billion beyond the spending caps outlined in the 2011 Budget Control Act, which demanded a "sequestration" of military spending in order to rein in federal costs. There was no public outrage over this increase. Meanwhile Russia cut its 2018 defense budget by 25.5% down to a total of some $48 billion.
Economic Sanctions Against Russia Flop: The first comprehensive study of anti-Russia sanctions shows they hit EU much more than Russia - Did U.S. President Barack Obama create the anti-Russia sanctions in order to weaken the EU in its competition against America? If so, the policy has been a huge success — it has enormously damaged the EU’s economy. But, if Russia was the actual target — as Obama claimed — then it’s been a total flop: It has produced $100 billion loss to the EU, thus far — almost twice as much as the $55 billion total hit to Russia, and the hit to Russia might be even less than that, maybe even zero, because the harms to Russia included the harms from the plunging oil-prices, which weren’t at all due to the sanctions. Furthermore, the sanctions strongly helped Russia’s economy, in ways that don’t yet show up in the economic data but that constitute long-delayed reforms whose pay-offs will start only during the years to come. Washington’s economic sanctions against Russia could thus end up producing a net plus for Russia, on a long-term basis. These figures come from the first-ever comprehensive study of the effects of the sanctions, a study which also estimates the negative effects upon human rights (this Special Reporteur’s chief mandate), but the cost-figures cited here, are entirely economic, not about “rights” at all (which are separately dealt with in the same report). The study was issued, on September 13th, by the staff of Algeria’s, Idriss Jazairy, who is the U.N.’s Special Rapporteur on the Negative Impact of the Unilateral Coercive Measures. His mandate recognizes economic sanctions as being pre-invasion acts of war, and so as being threats to world peace, an up-ramp toward physical warfare. Mr. Jazairy has Masters degrees from both Oxford and Harvard, and is personally grounded in a democratic national legal tradition: Algeria’s Constitution explicitly is democratic: Its Article 6 is titled “Popular Sovereignty” and unambiguously states, in its Sovereignty Clause, which is the most important clause in any nation’s Constitution: “(1) The People are the source of any power. (2) The national sovereignty belongs exclusively to the People.”
U.S. Commerce Secretary says market access, protectionism top China issues (Reuters) - U.S. Commerce Secretary Wilbur Ross said on Wednesday the U.S. relationship with China was too lopsided and listed market access, protectionism and intellectual property as the biggest problems amid trade tensions between the two countries. Ross said both sides were frank and open, and articulated good points of view during his trip to Beijing, which was a good sign, although neither made concessions. “The most important thing to push for with China is better market access for companies operating there physically and for companies exporting there,” Ross said. “Ranking equal with that would be less protectionist behavior.” The U.S. Commerce Department said in a statement on Tuesday that Ross had pressed China on the “need to rebalance bilateral trade and investment relations” and urged it to take “meaningful action” on trade issues. China’s relationship with the United States has been strained by the Trump administration’s criticism of China’s trade practices and by demands that Beijing do more to pressure North Korea to halt its nuclear weapons and missile programs. Ross, speaking to reporters in Hong Kong two days after his visit to Beijing, also said overcapacity was still a big issue in some sectors and highlighted new industries such as robotics as potential threats.
Donald Trump Wants to Lead a 21st Century Scramble for Africa – But He Doesn’t Know How - Eight months into his term, president Donald Trump made his first Africa policy speech on the sidelines of the UN General Assembly meeting in New York. Over lunch at a posh hotel built by Leona Helmsley’s husband and once owned by the Sultan of Brunei, Trump signaled that his Africa policy would revolve around doing business and fighting terrorists on the continent. Meanwhile, Trump failed to mention the democracy, development, human rights, or corruption challenges facing the continent. Channeling the ghost of King Leopold–the Belgian king who saw Africa as ripe for exploitation–Trump ad-libbed that “Africa has tremendous business potential, I have so many friends going to your countries trying to get rich. I congratulate you, they’re spending a lot of money.” Across news and social media platforms, these tone-deaf sentences—along with Trump’s “Nambia” gaffe—eclipsed his other more benign comments. Trump’s overdue foray into Africa policy belies the degree to which his administration as neglected—and at times even undermined—US engagement with the continent. Trump’s 2018 budget proposal, for example, included several significant discretionary cuts to Africa-related programs. It eliminated funding for the African Development Foundation, US Institute for Peace, and U.S. Trade and Development Agency: three entities that focus extensively on Africa. And although Trump said yesterday that U.S. Ambassador to the United Nations Nikki Haley and Secretary for Health and Human Services Tom Price would travel to Africa “to promote our global health security agenda”, his budget proposal included a 17% cut to the president’s Emergency Program for AIDS Relief (PEPFAR)—an initiative long-championed by Republicans.
In Ottawa, waiting for the other shoe - NAFTA negotiators are making “good, solid progress” despite the lack of U.S. proposals on some of the hardest issues, Canada’s chief NAFTA negotiator Steve Verheul said Sunday afternoon during the second day of negotiations in Ottawa. “We’re looking at 28 different negotiating groups at the moment," Verheul told reporters during a break in the third round of talks. "The United States has made proposals in most of those. They're not maybe all as exciting as the ones you listed, but there’s a lot of work on the table and we’re working through it."The veteran trade official said he did not expect the United States to make proposals this round on four hot-button issues: dairy market access, auto rules of origin, investor-state dispute settlement and Chapter 19. Meanwhile, it’s possible negotiators could close out some relatively noncontroversial chapters by the time the third round finishes on Wednesday, Verheul said, without naming specifics. "I think we have a shot at that,” he said. "We’ll have to see." Read the full story here from Pro Trade’s Doug Palmer, who is in Ottawa this week following the talks.
Trade War Escalates After US Slaps Canada's Bombardier Jet With 220% Tariff --The fourth round of Nafta talks began in Ottawa over the weekend, and as US Trade Rep Robert Lighthizer and his Mexican and Canadian counterparts scramble to produce a deal by the end of the year – a self-imposed, “soft” deadline – Boeing inflamed trade tensions by winning a decision to slap a massive tariff on struggling Bombardier’s C-Series jet, potentially severing one of the last lifelines for the once-proud aircraft manufacturer. As Bloomberg reports, the Commerce Department slapped import duties of 220% on Bombardier’s C Series plane Tuesday, agreeing with Boeing’s complaint that “improper” government subsidies allowed Bombardier to illegally dump their jets on the US market. The preliminary determination threatens to upend Bombardier’s planned deliveries next year to Delta Air Lines Inc., which ordered at least 75 jets with a list value of more than $5 billion, an order which was critical for Bombardier after a rocky stretch of weak sales.
‘Complicated’ NAFTA round four looms in just two weeks - Forget the third NAFTA round — it’s already history — and shift your attention to the fourth one coming up in less than two weeks in Washington. It’s going to be “complicated,” Mexican Economy Minister Ildefonso Guajardo told reporters in Ottawa on Wednesday, because negotiators are getting down to brass tacks. All three NAFTA trade ministers — Guajardo, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland — touted progress made during five days of talks in Ottawa, especially in one of the most non-controversial areas — supporting small and medium-size enterprises — where negotiations are virtually complete. But they also all stressed the huge amount of work that remains to be done to finish the agreement by the end of the year. In that light, a reporter asked Lighthizer if he still thought reaching a deal by year’s end is realistic. “Oh man, that's a good question,” the U.S. trade chief said, parsing the query in a lawyer-like fashion. “The problem with your question is you say, 'Do I still believe?' By saying ‘I still believe,’ it implies I believed it originally. But that may be the case. I'm not going to comment on that.” Finishing by year’s end is “very very optimistic, very very difficult,” Lighthizer continued. “But there are reasons to do it. So when there are reasons to do it, we have a lot of motivation.” Those reasons include reducing business uncertainty caused by the renegotiation of the pact, he noted. Still, “I can't make that prediction,” Lighthizer admitted. For Doug Palmer’s recap of the Ottawa action, please click here.
Trump Tax Plan Leaked, Includes Tax Cuts For Wealthiest Americans; Morgan Stanley Skeptical - Ahead of the Trump administration's official disclosure of what its latest tax proposal would look like, overnight Axios leaked some of the more salient highlights, the first being that the tax rate for the wealthiest Americans would be cut to 35% and second, taxes on on big and small businesses would be reduced substantially, with plans to cut the top tax rate for “pass through" businesses from 39.6% to 25% - a move which would impact LLCs and sole-proprietorships. As Axios explains, this change would have a material impact on most small businesses in America, which do not pay the corporate tax and instead have their profits “passed through” to owners and taxed at the individual income rate. Bloomberg also adds that at the same time Republican negotiators are targeting a corporate tax rate of 20 percent, according to two people familiar with the matter. That would be higher than the 15% President Donald Trump wants, setting up a key decision for the president on a top legislative priority. The plan was conceived by the "Big Six" Republicans, a group which includes House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury secretary Steven Mnuchin, White House economic adviser Gary Cohn, and the chairmen of the two tax-writing committees — Senate Finance Committee chairman Orrin Hatch and House Ways and Means chairman Kevin Brady. Some further details, per Axios' sources:
- Top individual tax rate cut from 39.6 to 35. The current seven income tax brackets collapsed to three, as part of simplification. (Axios hasn't obtained the other two rates.)
- Axios can confirm that the Big Six agreed to cut the corporate tax rate from 35 percent to 20 percent. That key detail leaked last night to the Washington Post. (Trump has said he wants the corporate rate to be 15 percent.)
- The Big Six framework is also expected to include guardrails to prevent wealthy people from artificially lowering their income taxes by rearranging their affairs to get taxed at the small business rate.
- We can confirm, too, WashPo's reporting that under the Big Six framework there'll only be three individual income tax brackets rather than the current seven, and that Republicans plan to double the standard deduction — a boost for the middle class and a key component of simplification.
Trump Tax Plan to Cut Taxes for Corporations and Wealthy - President Donald Trump and Republican leaders inched closer to releasing their tax framework this week, as details leaked to lobbyists suggested it would dramatically cut taxes for corporations and the wealthy, provide a measure of middle-class tax relief and punish some households in Democratic-leaning states like New York and New Jersey. The White House said Trump will travel to Indiana Wednesday for a late-afternoon speech that will focus on the tax-overhaul effort. Early Monday morning, he tweeted that he has “important meetings taking place today. Big tax cuts & reform.” The only meetings listed on his schedule were a lunch with Vice President Mike Pence and dinner with “grassroots leaders” -- a group that will include several conservative organizations. Certain details of the tax framework have been finalized, according to White House press secretary Sarah Huckabee Sanders. She didn’t specify which ones, and said conversations with members of the president’s team, including Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, will continue. While some details of the framework may be in flux, a list of specifics that’s circulating among Washington lobbyists breaks from the president’s recent rhetoric against tax cuts for the rich. It sets the stage for a battle with Democrats and faces a litany of obstacles, including intra-party disputes about whether to pay for the tax breaks upfront or increase the deficit. The emerging framework includes a proposal to cut the corporate tax rate to 20 percent from 35 percent -- a costly move in revenue terms that Trump and Republicans say is necessary to create job growth. But its provisions for individual taxes may hit closer to home for many Americans. Three tax lobbyists familiar with those changes said they include cutting the top individual tax rate to 35 percent and creating a 25 percent rate for certain “pass-through” business owners -- both down from the current top rate of 39.6 percent. Such changes would cut taxes substantially for the top 1 percent of earners, said Kyle Pomerleau, an expert with the Tax Foundation, a right-leaning Washington policy group.
Trump's tax reform plan would dramatically lower rates for businesses, some individuals - Republicans will unveil sweeping changes to America's tax code Wednesday in a proposal that dramatically lowers taxes on businesses and many households but remains silent on thorny issues such as how to pay for it all.The framework—a joint product of the Trump administration and Republican leadership—calls for lowering the corporate rate from 35 to 20 percent. It would also bring down the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.The plan, described to CNBC by multiple sources, would collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent. It eliminates the deduction for state and local taxes, but nearly doubles the standard deduction. The child tax credit also would be substantially increased, though it was unclear by exactly how much.Those broad brushstrokes were hashed out during months of negotiations between Treasury Secretary Steven Mnuchin, National Economic Director Gary Cohn and top Republicans in the House and Senate, a group that has come to be known as the "Big Six." Tax reform has become the clarion call for the party amid rising frustration among conservatives over the failure of the repeal and replace of Obamacare."Tax reform is the most important thing we can do to restore confidence to this country, to get jobs and prosperity and that's why we are so singularly focused on getting this done this year," House Speaker Paul Ryan, a Big Six member, said on Tuesday.
Trump’s State-Tax Plan Could Cause Headaches for 52 Republican Lawmakers - President Donald Trump’s promised tax overhaul may force dozens of Republican congressmen in states including New York and New Jersey into a politically damaging vote to repeal a $1.3 trillion tax break their districts use heavily. But not if Representative Peter King of New York can help it. King, a Republican who represents Long Island, said he’ll oppose any attempt to repeal the state and local tax deduction, calling it “absolutely essential to my district.” King is one of 52 Republicans -- more than enough to scuttle any bill that lacks Democratic support -- who hail from districts that use the state tax deduction disproportionately. He thinks enough of those Republican colleagues will band together to keep its repeal out of any comprehensive tax legislation this fall, complicating GOP plans. “I can’t vote for a bill that would eliminate the state and local tax deduction,” King said in an interview. In New Jersey, where lawmakers say losing the break would increase taxes on the average taxpayer by $3,500 per year, Representative Leonard Lance says he’ll also work to save the so-called SALT deduction. But would Lance vote against a tax-overhaul bill that repeals it?“Let’s just say I would have the gravest of reservations,” said Lance, whose constituents reported paying $4.9 billion in state and local taxes in 2015, the highest amount of any Republican congressional district. If they and like-minded Republicans prevail, any tax-overhaul bill -- which Trump and Republican congressional leaders plan to preview on Wednesday -- may have to be sharply curtailed. The White House and lawmakers have avoided confirming details of their tax-bill framework, but lobbyists citing multiple leaks have said it will target a corporate tax rate of 20 percent or so, down from the current 35 percent. It would also provide middle-class tax relief and substantial rate cuts for many of the highest earners.
Poll: Majority wants tax system overhaul -- A majority of Americans agree that America's tax system needs a major overhaul, but are split on whether Republican efforts will help their families, according to a new poll.A CNN poll released Wednesday finds that 68 percent of Americans of agree that the tax code needs either a complete overhaul or major changes, a number which included 77 percent of Republicans, 70 percent of independents and 62 percent of Democrats. But Americans are less certain that it needs to happen right now.Just 12 percent of respondents told CNN they thought tax reform should be a top priority in Congress, citing other issues like hurricane relief and health care as larger concerns. When it comes to the Trump administration's efforts to work with Republican leaders on tax reform, the numbers are less optimistic. Four in ten Republicans believe their own taxes would drop under Trump-led tax reform, compared to just one in ten Democrats. Most Democrats, according to the poll, believe Trump's tax reform would primarily help the wealthy (61 percent) or big businesses (57 percent). The Americans surveyed were skeptical whether Trump's tax reform will help the middle class. About 40 percent say that taxes will likely rise for middle-class families under a GOP tax reform plan, while 34 percent say they think their own taxes will likely go up compared to just 21 percent who expect a tax break. Those divisions are strongest among party lines. Just 11 percent of Democrats expect their own tax rate to decrease, and only 9 percent expect Trump to cut taxes on the middle class. About 20 percent of those polled remain unsure about Trump's tax reform initiative, while 34 percent approve of the job he is doing on the issue.
The middle class doesn’t want a tax cut. It wants better government. - One of the great canards of American politics these days is that the “struggling” middle class needs and wants a tax cut. It doesn’t. What it needs and wants after years of tax and spending cuts is more and better government services for the taxes it already pays. According to the nonpartisan Tax Policy Center, the average rate of income tax paid by the American middle class — the 20 percent of households in the exact middle of the income ladder — has been going down for decades, and was at 2.6 percent of gross income in 2013, the last year for which statistics are available. For the 40 percent of household below them — what you might call the working class — the average household not only paid no tax, but because of refundable tax credits actually got money back from the government equal to 1.2 percent of income, helping to offset payroll taxes (Social Security and Medicare) that averaged around 8 percent. To whatever extent the middle class is struggling, it ain’t because of income taxes. Indeed, when Gallup asked Americans in April about the taxes they pay, a majority — 61 percent — said they felt the income tax they paid this year was fair. A Pew study found that only 26 percent of Americans felt they paid too much in taxes, in contrast to the 60 percent who felt corporations and the wealthy paid too little. A poll by Bloomberg found that taxes were well down on the list of Americans’ public policy priorities, with only 4 percent claiming it was their top concern. Obviously, there’s nobody who wouldn’t enjoy the extra spending or saving that a tax cut would bring, but as the researchers at Pew found in April, what Americans would like even better is for government to spend more to educate their children, rebuild infrastructure, and provide health care and an income safety net for the elderly, veterans and the deserving poor. Despite years of politicians railing against “big government,” Pew found that as many Americans today wanted government to be bigger as to be smaller. Like the campaign to repeal and replace Obamacare, the middle-class tax cut is a solution looking for a problem. It’s nothing more than a political totem, an expensive exercise in political pandering. Moreover, at a time when the U.S. economy is running pretty much at full capacity, a tax cut is more likely to lead to price and asset inflation than sustainable growth in incomes and employment.
Trump Calls 20% Corporate Tax Rate in Plan a ‘Perfect Number’ - President Donald Trump and Republican leaders launched an urgent effort to get a major legislative win this year, announcing a long-awaited tax plan that will immediately set off a fight over how much top earners should pay. The framework proposes cutting the top individual rate to 35 percent -- but leaves it up to Congress to decide whether to create a higher bracket for those at the top of the income scale, according to the document released Wednesday. The rate on corporations would be set at 20 percent, down from the current 35 percent. Trump told reporters Wednesday before departing for Indiana, where he’ll tout his tax plan, that he had previously called for a 15 percent rate so the plan would eventually settle on 20 percent. He called the 20 percent rate “a perfect number,” and “a red line” that was non-negotiable. Under the framework, businesses would be allowed to immediately write off their capital spending for at least five years. Pass-through businesses would have their tax rate capped at 25 percent. The plan sets out three tax brackets for individuals -- 12 percent, 25 percent and 35 percent, down from the existing seven rates, which top out at 39.6 percent. But that’s not firmly set, as congressional tax-writing committees will be given flexibility to add a fourth rate for the highest earners -- an effort to prevent the overhaul from providing too much of a benefit for the wealthy. There’s significant support among Republican members of the tax-writing House Ways and Means Committee to create a special top income-tax bracket for the highest earners, according to a GOP member of the panel who asked not to be named because discussions are private. Still, House Ways and Means Chairman Kevin Brady of Texas has said he’s committed to offering across-the-board tax relief. Trump has repeatedly said he’s focusing on middle-class individuals. At the same time, though, the tax plan calls for repealing the alternative minimum tax, the estate tax and the generation-skipping estate tax, all of which would be a boon for higher earners and the wealthy.
Trump Proposes the Most Sweeping Tax Overhaul in Decades - NYT — President Trump on Wednesday began an ambitious push to slash taxes and salvage what remains of his embattled legislative agenda in Congress this year, proposing a politically challenging array of tax cuts for individuals and businesses that would constitute the most sweeping changes to the federal tax code in decades. Mr. Trump, smarting from the latest defeat this week of his efforts to dismantle the Affordable Care Act, cast the tax plan as an economic imperative and the fulfillment of a promise to his working-class supporters to deliver benefits in the form of lower taxes, better jobs and higher wages. “This is a revolutionary change, and the biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor and as wages start going up at levels that you haven’t seen in many years,” Mr. Trump told hundreds of supporters in a speech at the Indiana State Fair Grounds. But the president offered no measure of the plan’s cost and scant detail about how working people would benefit from a proposal that has explicit and substantial rewards for wealthy people and corporations, including the elimination of taxes on large inheritances and deep reductions in the rates paid by businesses large and small. After months of secret talks among Republicans, the nine-page proposal produced by the so-called Big Six working group prompts as many questions as it provides answers. Without more details, it is difficult to show how middle-income families will see the most benefit from the tax overhaul — or if it will favor the richest Americans. On the individual side, the plan would collapse the tax brackets from seven to three, with tax rates of 12 percent, 25 percent and 35 percent, the president said. The current top rate is 39.6 percent and the lowest rate is 10 percent. The framework also gives Congress the option of creating a higher, fourth, rate above 35 percent in the tax plan to ensure that the wealthy are paying their fair share. The plan aims to simplify and cut taxes for the middle class by doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly. That would allow people to avoid a complicated process of itemizing their taxes to claim various credits and deductions. It would increase the child tax credit from $1,000 to an unspecified amount, and create a new $500 tax credit for non-child dependents, such as the elderly. Provisions such as the alternative minimum tax and the estate tax, a levy on inherited wealth that Mr. Trump has derided for years, would be gone under the Republican proposal.
Democrats talk tough against GOP tax plan – but are willing to deal - Senate Democratic Leader Charles Schumer Wednesday carefully avoided declaring the Republicans’ tax code overhaul plan as a non-starter or dead on arrival. What he didn’t say was as important to the future of the GOP tax plan as what he did. Schumer, along with other Democrats, signaled they’re willing to negotiate rates, deductions and almost anything else. And Republicans are likely to listen. But their public rhetoric was largely a litany of familiar Democratic talking points. "In the next few months, we are going to be talking about this every day, and the American people are not going to like this plan when they learn it," Schumer told reporters. Democrats since last month have been adamant about what they want, and reiterated their view Wednesday. They said they could work with Republicans on taxes only if the legislation avoided cutting taxes for the wealthiest 1 percent, didn’t increase the debt or deficit, and wasn’t passed by a fast-track procedure known as reconciliation. Forty-three of the Senate’s 46 Democrats and two independents signed a letter expressing that view. Schumer went to the Senate floor to make the case again Wednesday, denouncing the plan “Wealth-fare,” a boon to Wall Street and a betrayal to the middle class taxpayers who he says need tax relief the most.
US Republican tax plan to favor rich, cost $2.4 trillion: study - Plans unveiled this week for broad-based US tax cuts would mostly benefit the very rich while lowering government revenues by $2.4 trillion over a decade, according to an analysis released Friday. Furthermore, while most income groups would see lower taxes on average in 2018, in a decade some middle-class taxpayers would on average end up paying higher taxes, according to the non-partisan Tax Policy Center. Opposition Democrats continued to hammer at the plan on Friday, which they have described a giveaway to the rich. The White House said Thursday the plan would be a boon to the middle class and create prosperity for all, by increasing growth to pay for the tax cuts. But senior economic advisor Gary Cohn said he could not guarantee that every taxpayer would see a tax cut. "Despite the president's promises, it is implausible that this plan would permanently boost the economy," Howard Gleckman, a senior fellow at the center, wrote in presenting the findings. "Trillions of dollars in lost revenue would add to the federal debt, raise interest rates, and make it more costly for businesses to invest." President Donald Trump joined Republicans this week in rolling out the plan, which calls for doubling standard deductions income earners can use to reduce their tax burdens, lowering the top tax bracket and cutting corporate taxes from 35 percent to 20 percent. It would also reduce taxes on "pass-through" corporate entities, where a company's earnings are passed through to its owners, and eliminate the so-called Alternative Minimum Tax, which is designed to prevent tax avoidance by wealthy individuals who claim excessive deductions. Industrial lobbies hailed the plan this week, saying it would revive struggling businesses and promote hiring. US industry has persistently campaigned for lower corporate tax rates and for a simplified tax code, arguing that they restrain economic activity and prevent hiring.
Tax Reform Could Open Up a Huge Loophole for Wealthy Americans - In the emergency room, there’s a good chance your doctor isn’t an employee of the hospital. She might be an independent contractor and, for tax purposes, the owner of a small business whose sole purpose is to sell her services as a physician.That’s one example of a “pass-through business,” now a hot topic in the U.S. tax reform debate. Everything from a giant real estate business to a corner liquor store can be a pass-through, so called because it doesn’t pay taxes itself but instead passes profits on to the owner, who pays taxes based on his or her own individual rate. In fact, of the 26 million businesses in the U.S. in 2014, according to the Brookings Institution, 95 percent paid taxes on a pass-through basis. Unless a company is large or its ownership is complex, a pass-through is usually the simplest and lowest-tax option. Actors, architects, factories, and football teams can all structure themselves as pass-through entities. Now, everybody else might want to get in on the act, or at least think about it if they’re in a higher tax bracket. The tax reform framework released this week by President Donald Trump and congressional leaders offers a lucrative treat to pass-through business owners. A key provision would cap the federal rate for many pass-through businesses at 25 percent, a huge tax cut if owners are now taxed at the maximum individual rate of 39.6 percent.The logic behind the provision is to give pass-through businesses roughly the same sort of tax cut that U.S. corporations would get under the overhaul. Trump and Republicans are proposing a corporate rate of 20 percent. The problem with the provision is that it could create a huge and unpredictable drain on the U.S. Treasury and immense logistical hassles for the Internal Revenue Service. Millions of affluent people would have a new incentive to shift as much income as possible from ordinary sources through pass-through businesses.
Trump's "Give the Rich a Break" Tax Plan - Linda Beale - National GOP leaders on Wednesday released a 9-page document that they called a tax "framework" (available here on the Washington Post site) describing in vague terms how they intend to cut taxes for the nation's wealthiest people while doing very little that serves the government needs. Overall, the GOP framework would amount to about $2.2 TRILLION in less revenue to support federal programs (like protecting the environment from corporate pollutants, supporting higher education loans for students, funding basic university research) (assuming $5.8 trillion loss to lowering rates and shift to territorial system and maybe $3.6 trillion recouped by eliminating as yet unspecified deductions). See GOP proposes deep tax cuts, provides few details on how to pay for them, Washington Post (Sept. 27, 2017).
- They promise 3 rates (12%, 25% and 35%, without stating what the applicable income brackets for those rates should be). That lowering of rates is primarily beneficial to the wealthiest, since the people who just barely get by on their wages (especially with the new corporate regime of calling people in for short shifts, as needed, rather than paying them a regular full-time job) are hit hardest by the payroll taxes that won't be lowered at all under this plan.
- Although the lowest rate is higher than the poorest wage-earning taxpayers pay now, the planners claim that this is still a tax cut because of the "doubling" of the standard deduction for those taxpayers that do not itemize. However, the personal exemptions are eliminated, so that the combination of the standard deduction and the higher rate is likely to be at best a minimal cut for small families and an actual tax increase for larger families. See, e.g., this article.
- They promise to eliminate the "alternative minimum tax", a tax provision that was enacted as a safety provision to ensure that wealthy taxpayers who can afford tax planning and generally can most easily benefit from the various loopholes and tax subsidies written into the code would pay some modicum of taxes rather than get off scott-free from any tax burden.
- They plan to eliminate the estate tax--a tax that ONLY applies a low 35% rate to individuals who leave estates worth more than 5.5 million dollars or couples that leave estates more than 11 million dollars, and even then is often the only tax that the assets in those estates have ever been subject to, since these wealthy Americans are the ones most able to take advantages of various trusts and other loopholes and borrowing to ensure that they live as tax-free as possible off their assets during their lifetimes and pass them almost wholly intact to their heirs with stepped up basis to start the game all over again.
- They plan to give corporations an exceeding low statutory rate of 20%, even though the primary beneficiaries will be the owners and managers who already have enjoyed a hugely disproportionate share of corporate gains (compared to their workers) that has resulted in the cascading inequality of distribution of resources in this country, in part because the wealthy typically own most of the countries' financial assets and get a very low preferential capital gains rate on their income compared to the higher rate on wages paid by ordinary, non-wealthy wage-earners.
- Further, they plan to allow corporations to expense all investments, at least for the next 5 years, even though the economic reality is that expensing is an upfront subsidy since wear and tear is most significant at the back end of an investment, not the front end. Expensing (see page 7 of the framework) will cost huge amounts of tax revenues. It is just a way to reduce corporate taxable income (not economic income) even further, making the 20% rate on a lower amount of income produce even less tax revenues from corporations, which already pay a ridiculously low amount and are enjoying record high profits.
Column Don’t buy the spin: The new tax plan is a huge giveaway to the rich - Michael Hiltzik -The tax cutters in the Republican Congress and White House were very careful to dangle only a few details of their tax plan before the public, but fulsome in their claims that it would be a boon to the average American — putting “more money into the pockets of everyday hardworking people,” according to a quote from President Trump at the top of the “framework” released Wednesday. Don’t buy the spin. Judging from the scanty details in the framework, low- and middle-income Americans may or may not see a tax cut, and if they do, it will be modest. Wealthy Americans, however, will be granted immense benefits. Their most cherished tax breaks will be protected, other tax breaks will be added and they’ll even see a reduction in their top marginal tax rate. “By lowering the tax burden on the middle class, and creating a healthier economy, we can give American families greater confidence and help them get ahead,” the document says. “America’s tax code should be working for, not against, middle class families.” But let’s examine a few specifics.The capital gains tax preference is preserved. As we’ve noted before, wealthy taxpayers have been willing to give up a lot of breaks, as long as the capital-gains preference remains in place. The top tax rate on ordinary income is 39.6% (reduced to 35% in the tax proposal); the top rate on capital gains is just over half that — 23.8%. The preferential rate delivers an estimated $120 billion a year to taxpayers who are overwhelmingly members not merely of the 1%, but the 0.1% — they’re the recipients of almost 76% of the capital gains tax benefit. That’s because capital gains comprise much larger shares of the income of the wealthy than everyone else. Those with annual incomes of $1 million or more receive more than half their income from capital gains; working-class people earning $75,000 to $100,000 receive on average 75% of their income from wages. Repatriation of foreign corporate assets at a low rate. Big business has been pushing for this break for years, or since the last “one-time” repatriation amnesty in 2004. American multinationals hold an estimated $2.6 trillion of what Kleinbard calls “stateless income” offshore. They’ve resisted bringing the wealth back home because it would be taxed in the U.S. at standard corporate rates. Repeal of the estate tax. Dubbed by its wealthy critics the “death tax,” this levy supposedly burdens family farms and businesses. Yet the estate tax affects only a few thousand people at most, all of them multimillionaires with an average nest egg of more than $30 million. Among those who almost surely would benefit from repeal: Ivanka, Eric and Donald Trump Jr., the president’s children.
A leopard can’t change its spots: Newest Republican tax framework is what we knew it always would be—tax cuts for the rich. - The framework of the Republican tax plan was released today. In recent months, architects of the plan repeatedly promised that they had no “intention” to release a tax plan that disproportionately cut the taxes of the rich. Some too-credulous writers repeatedly chastised those of who thought that past Republican plans would provide a decent roadmap for the future and pre-emptively warned about all of the creative ways their new plan would likely try to cut the taxes of the rich. So, did Republicans unexpectedly veer and deliver a “middle-class tax cut”? Nope.They have once again rolled out a tax plan that is basically the same as all their previous tax plans. Not only does it deliver big tax cuts for the rich, it actually pretty creatively ensures that the crumbs that fall to the middle class will be as small as possible.The most obvious giveaways to the rich are a reduction in the top individual rate to 35 percent and a cut in the top corporate rate to 20 percent. As we’ve noted before, cuts to corporate rates are cuts to the rich, period.But these are just the most-obvious tax cuts for the rich.Contradicting their claims to simplify the tax code, Republicans are adding loopholes. Anybody who studies taxes knows that they are not complicated because of the rates—you look those up in a table after you’ve done the hard part of wrestling with deductions and exclusions. So making 7 rates into 3 does nothing to deal with the complexity of the tax code. But adding further loopholes for the rich and big corporations does exacerbate the code’s complexity and unfairness. One of their more egregious loopholes is hidden behind rhetoric about helping “small business.” The loophole caps the rate that individuals must pay on “pass-through” income at 25 percent. The first thing to note about this is that there is no small business tax code. Small business owners pay nothing at the business level, but then simply pay taxes on profits they take home on their individual income tax forms, just like you and I. So, the new tax rate does not cut taxes on small businesses. Instead, it cuts individual tax rates on small business owners who currently are in tax brackets above 25 percent. This is an extremely small share of all small business owners (less than 3 percent of all tax units are above the 25 percent tax bracket). So, this carve-out does not serve genuine small businesses, but instead serves only to ensure that rich households won’t have to actually pay the top individual tax rate on money they earn from “small businesses” like hedge funds and law firms, but can instead pay a lower 25 percent.
Trump's "1500-Word Airball" - David Stockman - The Donald’s strong point isn’t his grasp of policy detail. The nine page bare-bones outline released this week is nothing more than an aspirational air ball that lacks virtually every policy detail needed to assess its impact and to price out its cost. It promises to shrink the code to three rates (12%, 25%, 35%), for example. But it doesn’t say boo about where the brackets begin and end compared to current law. Needless to say, a taxpayer with $50,000 of taxable income who is on the 15% marginal bracket today might wish to know whether he is in the new 12% or the new 25% bracket proposed by the White House. After all, it could change his tax bill by several thousand dollars. Similarly, to help pay for upwards of $6 trillion of tax cuts over the next decade, it proposes to eliminate “most” itemized deductions. These “payfors” would in theory increase revenues by about $3 trillion.Then again, the plan explicitly excludes the two biggest deductions — the charitable deduction and mortgage deduction — which together account for $1.3 trillion of that total.And it doesn’t name a single item among the hundreds of deductions that account for another $1 trillion of current law revenue loss. They’re just mystery meat to be stealthily extracted during committee meetings after Congressman have run the gauntlet of lobbyists prowling the halls outside. Stated differently, after nine months of work these geniuses have come up with $6 trillion of easy to propose tax rate cuts and virtually no plan whatsoever to pay for them.In fact, this latest nine pages of puffery contains just 1,500 words — including obligatory quotes from the Donald and page titles.I hate to get picky, but the Donald’s team has been on the job for 250 days now. And all they came up with amounts to just three words each per day in office.Worse still, even as this “framework” opens the door to unrelenting demagoguery from the Dems about helping the rich, it does virtually nothing for Flyover America. And it surely leaves the rust belt workers who voted for Trump in western Pennsylvania, industrial Ohio, the Michigan auto belt and the manufacturing centers of Wisconsin and Iowa with absolutely nothing to show for their efforts.
The GOP Tax Plan Shows Signs Of Being Created By One Former Hedge Manager And One Future Hedge Fund Manager -- Taken as a whole, the sparse nine-page document proposes much of what we expected to see: streamlining seven brackets into three, elimination of state and local deductions, repeal of the estate tax, major reductions on corporate rates and very real inducement for American companies to bring money back from overseas. What really caught our eye however was the total absence of the phrase “carried interest” in the document. Trump leaned in very hard on the notion of punishing those paper-pushin’ “hedge fund guys” during the election, but this tax plan doesn’t specifically eliminate the carried interest loophole and in fact generally actually benefits anyone still running a hedge fund. In addition to the fact that this administration has the ideological follow-through of an armless man swinging a heavy bat, the reprieve for hedge funders in this plan likely exists because it was formulated by a hedge fund veteran (Mnuchin), and a man destined to open his own hedge fund in the very near future (Cohn). Steve Mnuchin is the very model of a modern Wall Street animal. The idea that he was ever going to propose a tax policy that did anything other than reward uber-wealthy financiers and then try to make up for that revenue loss elsewhere is fucking comical. Considering that the man is a human pass-through, everything in this plan benefits Stevie Mnooks. EVERYthing. And then there’s Gary Cohn. The former secondary face of Goldman Sachs will obviously benefit mightily from this plan, as will his former colleagues and his former firm. But if you really want to see what makes Gary’s bald pate glow with excitement, cast your eyes to his near future. Despite recent reports, it is hard to imagine that Cohn is really back in line to replace Janet Yellen at The Fed. He’s pissed Trump off once and survived, but it is beyond reason to imagine that he won’t somehow do it again before February 2018. Gary Cohn’s days inside The Beltway are numbered, meaning that we draw ever closer to watching Big Gary raise capital for his first bond fund at WhoLloyd Asset Management. Mnuchin and Cohn can as much do away with carried interest loophole as their boss can do away with bronzer and self-delusion. These are guys who live to create wealth. A tax plan that punishes them for that in any way is an unfair thing to expect from Steve and Gary. The fact that they both come from Goldman Sachs doesn’t make them instinctually more venal or nefarious, it just makes them better at getting what they want and more aware of their ability to get it.
Tax Sausage Making Begins, But Will Republicans Be Happy With the Result? - Yves Smith - The Trump administration announced the nine-page outline of a set of tax “reform” proposals yesterday. Bloomberg’s editorial board grumbled that the plan was far too sketchy, but that misses the point. Tax bills don’t just originate in the House of Representatives but its staff also drafts the language. Even though various Administrations devise and promote various changes in tax laws, this is very much Congress’ sandbox. For instance, the reason the border adjustment tax proposal failed wan’t just that a whole bunch of companies, starting with WalMart, screamed bloody murder about it. It was the Administration had presented a tightly-woven bill that needed to be implemented in full for it to work. That isn’t how things get done on tax bills. Thus the sketchiness of Trump’s tax plan isn’t in theory that big a deal. But in practice it will be. It is another reminder of how thinly staffed the Administration is and how it doesn’t seem to be sufficiently in tune with or concerned about how things are normally done in DC. This is a town run by lawyers, used to at least the appearance of being buttoned up, and not businessmen with short attention spans who’ve been fed a steady diet of PowerPoint. Making Congress fill out more details than usual, or having it push back on the Administration and demand more specifics, can have some perverse effects as far as Republicans are concerned. First, assuming Congress takes up at least some of the slack, is that filling in the blanks will put various factions at odds with each other even more so than usual. If one group took loses in an initial draft, it would be faced with the prospect of justifying its case and clawing ground back. The vagueness increases the odds of infighting. The failure of Obamacare reform has increased divisions in the party, so it’s not as if Republican Congresscritters have either a font of good feelings for each other or even recent success in finding compromises on supposedly critical initiatives. A second negative is that the Republicans are already behind their own timetable for getting a tax bill done. They wanted it in committees for mark-up in September. Treasury Secretary Mnuchin is trying to pretend that Congress can pass a bill by year end. Conventional wisdom is that it is hard to get anything important done in an election year, so the longer this goes into 2018, the more the odds increase that a tax bill will be tinkering as opposed to the grand “reform” that had been promised. And again, giving Congress less rather than more to start isn’t consistent with the perceived urgency. But don’t let the thinness of the plan lead you to think that they Republicans won’t get some sort of tax bill done. Republicans love tax cuts, plus they desperately need to be able to claim some sort of accomplishment before the 2018 midterms.
A $6.4 Billion Windfall Awaits Big U.S. Banks in Trump's Tax Cut - The six largest U.S. banks could see net income rise $6.4 billion, or 7 percent, if President Donald Trump and Republicans in Congress can push through their proposed corporate tax rate cut. Banks stand to benefit more than other industries because they typically have fewer deductions. The top six firms -- JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley -- paid an average of 26 percent in federal taxes last year, almost twice the average for nonfinancial companies, according to data compiled by Bloomberg. The Republican framework released Wednesday calls for lowering the corporate rate to 20 percent from 35 percent. The estimates for the tax savings are based on the firms paying a 20 percent effective U.S. federal rate, assuming current deductions are no longer allowed. While earlier versions of Republican tax proposals have talked about eliminating some deductions, the latest plan has scant information on such changes. If some deductions are kept, banks would end up with a lower effective tax rate and their savings would be even greater.
Cheat sheet: What tax reform would mean for lenders — The Republican’s tax reform blueprint released Wednesday was largely welcomed by the financial services industry, which would like to see a lower corporate tax rate, but battles lie ahead as Congress looks to hammer out the details.The plan would lower the corporate tax rate to 20% from 35%, allow businesses to expense new capital investments for at least the next five years and lower the rate on closely held small businesses and S corporations to 25%. “Today’s announcement is an encouraging step forward in our shared goal of a tax system that delivers higher economic growth, job creation and wages that our country desperately needs,” said Jamie Dimon, chairman and chief executive of JPMorgan Chase and chairman of the Business Roundtable. “Congress must act with urgency on this framework and move the legislative process forward.” But some expressed concern that the plan would double the standard deduction to $24,000 for married couples and $12,000 for individuals—a move that could dramatically lessen the impact of the mortgage interest deduction, which would be obsolete for many homeowners.“This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5% who would still itemize their deductions,” said William E. Brown, president of the National Association of Realtors.“When combined with the elimination of the state and local tax deduction, these efforts represent a tax increase on millions of middle-class homeowners,” Brown said. “That tax increase flies in the face of a reform effort ostensibly aimed at lowering the tax burden for Americans. At the same time, the lost incentive to purchase a home could cause home values to fall.” For many consumers, the mortgage interest deduction offers the biggest tax benefit because the size of their mortgage is large compared to their overall wealth. The blueprint technically keeps tax incentives for mortgage interest, but by doubling the standard deduction, many homeowners will see no tax benefit from owning a home. “Although the mortgage interest deduction remains untouched, its effectiveness could be diminished as more families elect to take a higher standard deduction,” said Granger MacDonald, chairman of the National Association of Home Builders. “As the process advances, NAHB looks forward to working with policymakers to mitigate any detrimental effects that this development could have on the housing market.” Some analysts said housing groups will push back harder as reform moves forward.
Treasury Removes Paper at Odds With Mnuchin’s Take on Corporate-Tax Cut’s Winners - Richard Rubin - The Treasury Department has taken down a 2012 economic analysis that contradicts Secretary Steven Mnuchin’s argument that workers would benefit the most from a corporate income tax cut. The 2012 paper from the Office of Tax Analysis found that workers pay 18% of the corporate tax while owners of capital pay 82%. That is a breakdown in line with many economists’ views and close to estimates from the nonpartisan Joint Committee on Taxation and Congressional Budget Office. The JCT, which will evaluate tax bills in Congress, estimates that capital bears 75% of the long-run corporate-tax burden, with labor paying the rest. But Mr. Mnuchin has been arguing the opposite, citing other papers that attribute more of the burden to labor. The point is central to Mr. Mnuchin’s argument that workers would benefit from the corporate tax cut the administration is proposing, and switching that assumption would significantly alter the estimates of who would benefit from the Republican tax policy framework released on Wednesday. The paper was available on the Treasury website during the summer, and it wasn’t clear when it was removed or whether Treasury intended to publish a new analysis. Other technical papers from 2008 through 2016 remain on its site, along with working papers dating back to 1974. “This yet another example of how the Trump administration is executing a middle-class con job with their tax scam,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, commenting on the removal of the paper. “History has shown most of the pockets lined by corporate tax cuts are found in wealthy shareholder suits. It is disturbing the Treasury Department is burying research proving that trickle-down economics harms American workers.”
Trump Plan Would Raise Taxes on Some Middle-Income People, Study Says - Republican lawmakers leveled harsh criticism at a Washington policy group study that said some middle-income taxpayers would ultimately see a tax increase under a framework for legislation that they and President Donald Trump proposed this week.That study found that over several years, changes proposed by the GOP would result in tax increases for almost 30 percent of individuals with incomes between $50,000 and $150,000. It also said that more than half the benefits provided by the plan’s tax cuts would go to the top 1 percent of taxpayers.The tax framework, which was released Wednesday, didn’t include several details about its proposals. So the study by the Urban-Brookings Tax Policy Center used some elements from a 2016 House Republican tax plan to fill in gaps. Senate Finance Chairman Orrin Hatch said the Tax Policy Center was trying to “invent numbers” and “reverse-engineer a completed tax plan from what’s in the framework.” The Utah Republican and others have described the plan that emerged this week as a broad set of goals, not a detailed plan.“This so-called study is misleading, unfounded and biased,” said House Ways and Means Chairman Kevin Brady of Texas.The report came one day after White House economic adviser Gary Cohn said he couldn’t guarantee that every middle-class family would get a tax cut under the plan. “You could find me someone in the country that their taxes may not go down,” Cohn told reporters Thursday at a White House press briefing. The tax center’s analysis suggests it eventually could be many people. That’s in part because of the framework’s call to end personal and dependent exemptions valued at $1.6 trillion over a decade, according to the report. The exemption would be replaced with an expanded child credit that isn’t inflation-indexed. That means the number of taxpayers with a tax increase would rise over time.
Gary Cohn says a typical American family earns $100,000 a year—here's how much they really make - Economic advisor Gary Cohn told reporters on Thursday that a typical four-person American family bringing in $100,000 a year would save $1,000 under the Republicans' proposed tax reform effort, which they could use to pay for a new car or a kitchen. In actuality, the average American family makes $74,000 a year before taxes, or about $30,000 less than that, according to the Bureau of Labor Statistics. The median American family income is roughly half of Cohn's estimate, or only about $55,000.Economic adv. Gary Cohn: Typical family with 2 children earning $100,000 "can expect a tax cut of $1000." #TaxReform pic.twitter.com/hIOoYigVhS— Steve Herman (@W7VOA) September 28, 2017And some critics are seizing on Cohn's assertion that, with $1,000, a family "could renovate their kitchen, they could buy a new car." Uh, Gary Cohn (who is worth several hundred million dollars) thinks it costs $1000 to buy a new car (or renovate your kitchen) pic.twitter.com/6IwRDgGSCN — Judd Legum (@JuddLegum) September 28, 2017"If a family gets to keep $1K in taxes, they can buy a new car!" -- Gary Cohn, who apparently last bought a car in 1905.— ((((Peter Sagal)))) (@petersagal) September 28, 2017Cohn is also under fire for acknowledging that he "can't guarantee" taxes wouldn't go up for some middle-class families. The GOP plan is expected to primarily benefit corporations as well as the wealthiest Americans, which includes various members of the White House and the Cabinet. The estate tax repeal alone would save Trump $564 million, Wilbur Ross $545 million, Betsy DeVos' father-in-law Richard $900 million, and Linda McMahon $250 million, reports Bloomberg. In fact, in several ways, the President himself stands to benefit tremendously.
Cohn: 'People don't buy homes because of the mortgage deduction' | TheHill: White House National Economic Council Director Gary Cohn on Thursday pushed back against criticism that Republicans' tax plan could hurt the real-estate market, saying, "People don't buy homes because of the mortgage deduction." "The No. 1 reason why people buy homes is they're excited and optimistic about the economy," Cohn said during a White House press briefing. "They have a job today, they feel confident they're going to have a job tomorrow, and their kids are going to get a job and their spouse has a job." The mortgage interest deduction is currently among the most popular preferences in the tax code. It allows homeowners to reduce their taxable income by the amount of interest they've paid on their mortgage.The GOP tax plan unveiled Wednesday would protect the mortgage interest deduction but would decrease the number of homeowners likely to claim it, as the plan would nearly double the standard deduction. Taxpayers can only claim the mortgage interest deduction if they itemize their deduction instead of taking the standard deduction. Cohn said that the majority of taxpayers already take the standard deduction. He also noted that the National Association of Home Builders (NAHB) came out in favor of the GOP's tax plan. The statement from NAHB Chairman Granger MacDonald said that the framework "represents a positive step in the right direction," citing the plan's provisions to lower the tax rate for "pass-through" businesses and preserving the low income housing tax credit. MacDonald also said the group looks forward to working with policymakers on solutions to "mitigate any detrimental effects" that the larger standard deduction could have on the housing market. Republicans have said that they want to overhaul the tax code in order to boost economic growth. "We have to get America back to a place where people feel excited and exuberant about the economy," Cohn said. "When they do that, they'll go out and spend money, they'll buy homes."
Trump's Refusal to Release His Own Tax Returns - Linda Beale - As most everyone is aware, Trump has refused to release his tax returns, breaking precedent with decades of presidential candidates and president's release of tax returns. Even Dick Cheney, grumpy corporatist veep, released his tax returns. Trump, however, used various excuses, none of them particularly strong, to say he "couldn't" release his returns. The main excuse was that his returns were under audit. Of course, that makes no difference whatsoever. Any taxpayer can release returns, whether or not they are under audit, and other presidential candidates (Nixon comes to mind) have done so during an audit period. Trump most likely didn't want to release his tax returns because he didn't want to provide fodder to critics who would look at the relatively measly amounts of taxes that he had to pay, or find information about trusts and other entities set up to keep money of shore or, who knows, find information about connections to various Russian oligarchs. Another reason that Trump likely hasn't wanted to release his returns--he wants to be able to pretend that he is not a beneficiary of all those many loopholes in the Code that particularly benefit the ultra-wealthy. That comes to the surface now, because of his claims, in an Indianapolis speech, that he would not receive any benefit from the so-called "reform" tax "framework" put out by Trump and the GOP leadership. We know from 2005 returns that he has, at least in that year, had to pay $31 million in Alternative Minimum Taxes (AMT) in a year when he would otherwise have paid very little in taxes. That is, in fact, the purpose of the AMT--to force wealthy taxpayers to pay some tax on their incomes when they otherwise have the ability to take advantage of so many loopholes that they would get off pretty much tax free. So we know that Trump lied when he said in Indianapolis that he would not get a benefit from his own tax proposal. His tax proposal would eliminate the AMT backstop for wealthy payment of at least some taxes. That would directly benefit Trump. He lied.
Meet The Six Senators Who Could Kill Trump's Tax-Reform Bill --The nine-page tax document unveiled by the Trump administration this week included may of the proposals we expected to hear: streamlining the tax code for individuals into three (or possibly four) brackets, eliminating state and local deductions, repealing of the estate tax, major reductions on corporate rates and incentives for American companies to repatriate billions of dollars in overseas profits. And while the details of the bill have yet to be worked out (Treasury Secretary Steven Mnuchin has said they will be negotiated in committee), after a handful of holdout senators killed the Republican effort to repeal and replace Obamacare (resulting in an embarrassing defeat on repealing an unpopular law that President Donald Trump has said "should've been a slam dunk"), the administration is likely already trying to figure out where senators stand. And, more importantly, where various senators stand in terms of their reservations. To help give readers a sense of where the legislation stands, Bloomberg has identified six senators who may (and in many cases will) cause problems for the Trump administration by opposing the bill. The list includes moderates, hard-core conservatives, and several senators who already have - or may soon announce - that they will not be seeking reelection, presumably allowing them more freedom to consider the legislation on its actual merits. The full list is presented below:
Taxcast: Hurricanes, Disaster Capitalism, Bitcoin and Over-Reliance on Unhelpful Economic Measures - (podcast) In edition 69 of our monthly podcast, the September 2017 Taxcast we look at our over-reliance on unhelpful economic measures like Gross Domestic Product and how it constrains us. Also:
- we discuss hurricanes, tax havens and disaster capitalism
- the bitcoin bubble – China may be closing its doors on it for the moment but tax havens like Switzerland are very interested…
Featuring: John Christensen of the Tax Justice Network and Professor of Political Arithmetic at University of Amsterdam, Daniel Mugge. Produced and presented by Naomi Fowler for the Tax Justice Network.“If you use GDP as it’s currently measured in order to strengthen your economy, you’ll make choices that if you look at it closer, actually don’t make sense.”“Because it’s been able to earn a lot of money the financial sector may show up as something that’s contributing positively to GDP and that seems like a serious mischaracterisation of how positive or otherwise the financial sector is for our individual countries.”Professor of Political Arithmetic at University of Amsterdam, Daniel Mugge“The last thing the world needs at the moment is an anti-government group of bitcoin suppliers and users who think it’s a good thing to operate beyond democratic or legal scrutiny.”
Trump Trounces "Hypocrite" McCain, Thinks Rand Paul "May Find A Way" To Save Obamacare Repeal Bill - In a surprising demonstration of wit, President Donald Trump told a crowd of rowdy Alabamians Friday night that it would be amusingly “ironic” if Kentucky Senator Rand Paul offered to vote for the Republicans’ floundering Graham-Cassidy health-care bill after John McCain blindsided the administration by withdrawing his support On Friday. The two senators, Trump explained, do not get along. And by swooping in to save the Republicans’ Obamacare repeal-and-replace effort at the last second, Paul would be coronated a hero.After saying earlier this year that he is determined to win Paul’s vote on health-care, the president appears to be making good on his word, launching what appears to be a personal charm offensive to try and win the support of one of the most intransigent Republican senators. That campaign continued Saturday morning, when the president tweeted that he “might have” a way to finally win the Kentucky senator’s vote. “I know Rand Paul and I think he may find a way to get there for the good of the Party!” — Donald J. Trump (@realDonaldTrump) September 23, 2017The tweet was part of a series about the Graham Cassidy bill, which was effectively killed on Friday when McCain withdrew his support. In the series, Trump took shots at McCain, and also Alaska Moderate Lisa Murkowski, who opposes the bill. The third Republican “no” vote belongs to Sen Susan Collins of Maine. Trump began by bashing McCain for opposing repeal and replace after campaigning on repealing Obamacare during his most recent Senatorial bid. The president also warned that McCain’s decision could elicit substantial political backlash in his state as premiums skyrocket…although, given his recent brush with brain cancer, we doubt McCain is still motivated by these types of political considerations…particularly after opposing a bill sponsored by his close friend, South Carolina Sen. Lindsey Graham.
Obamacare Repeal Officially Dead After Cruz Says No -- In a sudden change of heart that further imperils senate Republicans’ scramble to pass a bill to repeal and replace Obamacare before a rule allowing Republicans to circumvent a Democratic filibuster expires at the end of the month, Texas Sen. Ted Cruz is now saying he won’t support the Graham-Cassidy Obamacare repeal bill.. Cruz, who revealed his position during a panel discussion at a Texas Tribune conference in Austin, suggested that the proposal also lacks the vote of Sen. Mike Lee, according toPolitico. The Texas Republican said he and Lee offered amendments to the Graham-Cassidy proposal last week that would go further in bringing down Obamacare premiums but that the changes weren’t included in the latest draft of the bill. The latest blow to the seven-year-long Obamacare repeal effort comes as President Donald Trump escalates feuds with Both North Korea and US professional sports leagues. Cruz’s opposition means that, with both he and McCain saying know and at least two other moderates leaning toward a no, that even if Trump manages to flip Sen. Rand Paul, he wouldn’t be able to muster the 50 votes needed for Vice President Mike Pence to break a tie. “Right now, they don’t have my vote and I don't think they have Mike Lee’s vote either,” Cruz said during a panel discussion at the Texas Tribune festival in Austin that also included Sen. John Cornyn.
GOP changes Graham-Cassidy bill to win over wary senators | TheHill: Senate Republicans on Sunday night circulated a revised draft of their bill to repeal and replace ObamaCare, aiming to win over key holdout senators. According to estimates of the state-by-state impacts obtained by The Hill along with the revised bill, Maine and Arizona would see boosts in funding. Alaska would see a small drop in federal funding. The analysis from the backers of the bill argues that after taking into account money the state would save on its Medicaid program, Alaska would gain relative to current law. But Democrats argue that is misleading and say what matters is that Alaska would see a cut in federal funding.Those states are home to three holdouts on the bill, Sens. Susan Collins (R-Maine), John McCain (R-Ariz.) and Lisa Murkowski (R-Alaska). However, it is far from clear that the revisions would be enough to win their support. Collins has a long list of concerns, including an overhaul of the Medicaid program. McCain has denounced the process as rushed and lacking bipartisanship. The state-by-state analysis projects a 3 percent increase in funding for Alaska, a 43 percent increase for Maine and a 14 percent increase for Arizona. It is possible, though, that independent analyses of the impacts of the bill will be different than this analysis from backers of the bill.Some experts point out that the numbers do not appear to take into account a separate cap on Medicaid spending in the bill, which would lead to further cuts to federal funding to states. The overall bill is largely the same as the earlier version. It still converts ObamaCare's subsidies and Medicaid expansion dollars into a block grant for states.
Last Ditch Obamacare Repeal Bill Officially Dead After Collins Says No - Not only was the Republicans' third attempt to repeal Obamacare not lucky, but as of moments ago, said attempt has died a total of three times, the first when John McCain said he would vote no last Friday, then yesterday when Ted Cruz also said he would not support the Graham-Cassidy Obamacare repeal bill, and then the third and final time came late on Monday when Maine Senator Susan Collins confirmed she would oppose the latest GOP effort to repeal and replace ObamaCare, dooming the measure."Health care is a deeply personal, complex issue that affects every single one of us and one-sixth of the American economy. Sweeping reforms to our health care system and to Medicaid can’t be done well in a compressed time frame, especially when the actual bill is a moving target," she said in a statement. Her announcement is hardly a surprise: as we said last week, Collins was widely viewed as a "no" vote but talked with Pence over the weekend and said Sunday she wanted to see the preliminary analysis from the Congressional Budget Office. "It's very difficult for me to envision a scenario where I would end up voting for this bill," she told CNN's "State of the Union." Well, just prior to Collins' statement, the CBO projected that the last-ditch GOP ObamaCare repeal bill would result in "millions" of people losing coverage. The agency did not give a specific number given a lack of time to do the analysis before a vote, but said the "direction of the effect is clear." That was enough to seal Collins' "no" answer.
Republicans Throw In The Towel: Senate Will Not Vote On Obamacare Repeal Bill -- With the Republicans Obamacare repeal effort having died no less than three times over the few days, on Tuesday afternoon Republicans announced the Senate would not vote on Republicans' last-ditch bill to repeal Obamacare, putting an end to their seven-year push for now. According to Politico, the decision was reached at a party lunch Tuesday after it became clear the plan would fail. Three Senate Republicans had already said they would vote against the measure, and the GOP could only afford two defections."We don't have the votes so it's probably best we don't do the vote," said Republican Sen. Steve Daines of Montana. "We've lost this battle, but we're going to win the war.""Why have a vote if you know what the outcome is and it's not what you want. I don't know what you gain from that. But I do believe that the health care issue is not dead, and that's what counts," said GOP Sen. Richard Shelby of Alabama. "We've got some time this year to deal with it and I think we have to."Vice President Mike Pence told Republicans they should keep working on health care and not give up just because a key procedural deadline to pass the bill with a simple majority expires after Sept. 30."He does" want us to keep working," said Sen. Jim Inhofe (R-Okla.). "He's conveyed it outside of that meeting [too]. The votes aren't there so let's keep massaging." However, Republicans may not opt to pursue a health care overhaul and tax code rewrite simultaneously, as some GOP lawmakers desire. Sen. Pat Toomey said it's it's better to "focus on taxes right now."Earlier, Ted Cruz acknowledged his conference does not have the 50 Republican votes necessary to muscle the bill through the Senate. "There's more work to be done. I mean we don't yet have 50 votes. I think we're close and we need to continue working," he said.The hail mary legislation sponsored by Sens. Bill Cassidy and Lindsey Graham would dismantle ObamaCare’s insurance subsidy program and Medicaid expansion and convert their funding into block grants to states.
Will October 1 Bring Another Repeal Effort? - It could . . . With the Senate vote tomorrow canceled on the Graham – Cassidy ACA defunding bill, the effort to defund and repeal the ACA will cease for the rest of this budget year ending September 30, 2017. With the passage of a new budget and a new resolution the effort could go onward in an attempt to repeal the ACA. As I have said, there can only be one resolution per year. Let me clarify the one reconciliation per budget year statement. Unless the Senate passes more than one budget resolution, there can be only one Reconciliation per year for each of three subjects; spending, revenues, and debt limit in one or multiple bills. Since there was no budget passed last year, the Republicans had a unique opportunity to do two Reconciliations . . . one to defund the ACA and the 2nd one to do Tax Reform. The present Reconciliation affected Spending and Revenues thereby killing those two subjects for Reconciliation in 2017. If one bill covers spending and revenue, Reconciliation using a budget resolution is expended for those two subjects. Budgets end September 30 of each year. 2018 is a different year and again Congress could take up the repeal of the ACA. And why not when they can get 49 votes to pass it any time they wish to do so. Maybe one of the remaining three Republican Senators will side with them or a Dem may have a weak moment. Since Republicans want to do tax reform, they will use Reconciliation again as it only requires a majority vote and defund the ACA to provide the revenue for it. The opportunity to do two Reconciliations due to two budget resolutions will not be available for Republicans. It may end up being both ACA or Tax Reform in one Reconciliation of just one meaning the ACA or Tax Reform.
HHS hints at major changes to Medicare that could mean higher costs for patients -- The Trump administration is signaling it will pursue significant changes to Medicare that could put beneficiaries on the hook for higher costs. In an informal proposal on Wednesday, federal health officials hinted at several new pilot programs it may implement in the months ahead. One idea would give doctors more latitude to enter into so-called private contracts to charge Medicare beneficiaries more for certain services, if the patients were willing to pay. Elsewhere in the document, officials indicated they might offer more incentives to encourage beneficiaries to join private Medicare plans, known as Medicare Advantage plans. Democrats and other experts said the language suggested interest in the controversial “premium support” model long favored by Republican policymakers. For now, the proposals are only hints of what the Trump administration hopes to pursue in its Medicare and, potentially, its Medicaid policy making. There are no formal rules for the new ideas, nor is there any clear timeline for when they might be detailed. Until now, the Health and Human Services Department under Secretary Tom Price has mostly made changes to Medicare by unwinding Obama-era initiatives. It has canceled pilot programs that would have penalized some doctors and hospitals and made others voluntary, among other changes. Wednesday’s request includes, for the first time since Trump’s inauguration, clear signals about the conservative policies that the Republican officials want to achieve in the Medicare and Medicaid programs. Many of the changes reflect policies outlined by Speaker Paul Ryan and other Republicans in the “A Better Way” plan that, unlike efforts to repeal the Affordable Care Act, can be achieved without legislation. And Democrats caution that the proposals could have serious ramifications for patients.
Senate passes bipartisan Medicare reform bill | TheHill: The Senate on Tuesday night unanimously passed a bill aimed at making Medicare more efficient and saving it money. The passage of the under-the-radar bipartisan health-care reforms came on the same day that Senate Republicans abandoned a vote on a bill to repeal and replace ObamaCare. The bipartisan bill that passed Tuesday night, known as the CHRONIC Care Act, expands some programs created by the Affordable Care Act, but they are more obscure programs that are largely outside the realm of controversy. The bill includes a range of programs aimed at improving how Medicare pays for care with people with chronic conditions and lowers Medicare costs in the long run. “This legislation will improve disease management, lower Medicare costs and streamline care coordination services — all without adding to the deficit,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) said in a statement. He added the measure is “one of the few bipartisan healthcare bills to pass the Senate this Congress.” The bill’s provisions include expanding a program created by ObamaCare that provides care for seniors in their homes; giving new tools to groups of doctors that come together to coordinate care for a patient, known as Accountable Care Organizations; and expanding the use of telehealth, where doctors use technology to communicate with patients far away.
DHS planning to collect social media info on all immigrants | TheHill: The Department of Homeland Security has moved to collect social media information on all immigrants, including permanent residents and naturalized citizens. A new rule published in the Federal Register last week calls to include "social media handles and aliases, associated identifiable information and search results" in the department's immigrant files. BuzzFeed News first reported the new rule on Monday. It is set to go into effect on Oct. 18 after a public comment period.According to BuzzFeed, the new rule could also affect U.S. citizens who communicate with immigrants on social media by making their conversations the subject of government surveillance. Homeland Security's inspector general published a report earlier this year concluding that DHS pilot programs for using social media to screen immigration applicants "lack criteria for measuring performance to ensure they meet their objectives." "Although the pilots include some objectives, such as determining the effectiveness of an automated search tool and assessing data collection and dissemination procedures, it is not clear DHS is measuring and evaluating the pilots’ results to determine how well they are performing against set criteria," the report reads. In May, the Trump administration approved a new questionnaire for visa applicants that requests social media handles for the past five years, as well as biographical information going back 15 years.
Trump to scrap ‘Muslim ban’ and replace it with new targeted restrictions, says official -- Donald Trump’s ban on travellers from six Muslim-majority nations will reportedly be replaced with more targeted restrictions on visitors from certain countries. The new measures, aimed at stopping security threats from entering the US, are expected to be more specific and affect more countries than Mr Trump’s original travel ban. The new order could go into effect as early as this weekend, when the Trump administration completes its review of gaps in the government’s screening and vetting procedures for those seeking to enter the US. According to the Wall Street Journal, the Department of Homeland Security originally found that 17 countries were failing to comply with US standards, such as informing the US of known terrorists and issuing reliable passports. Facing the threat of being included in Mr Trump’s travel ban, about half of those 17 nations made changes to bring them into compliance. Those that did not are likely to be imposed with “tailored sanctions commensurate with their deficiencies” that take into account the threat posed by the country and any foreign policy implications of levying such restrictions, one person told the Journal. While the restrictions would differ for each country, people living in the targeted nations could be prevented from travelling to the US or could face increased scrutiny as they attempt to obtain a visa.Mr Trump still needs to approve the new plan, which appears to resemble what he had in mind earlier this month. “The travel ban into the United States should be far larger, tougher and more specific,” Mr Trump wrote after a bomb exploded on a London Underground train last Friday. Chaos erupted at airports in January following the administration’s rollout of its first travel ban, which blocked entry to the US for citizens from seven countries – Iran, Iraq, Somalia, Sudan, Yemen, Syria and Libya – for a period of 90 days. Iraq was later removed from the list as a result of criticism that the original order overlooked the country’s role in fighting terrorism.
Trumps Expands Travel Ban To Eight Countries, Adds North Korea, Venezuela -- On Sunday evening, President Trump announced he would replace his controversial travel ban with a targeted list of restrictions that will enhance vetting for nationals from eight countries, and restrict or prohibit entry of citizens from North Korea and Venezuela among others, to the United States as part of a sweeping new travel ban that also slaps restrictions on Iran, Chad, Libya, Syria, Yemen and Somalia - countries that hardly have a "thriving" tourism industry with the US.“As president, I must act to protect the security and interests of the United States and its people,” Trump said in the proclamation. Individuals who fall under the Supreme Court's "bona fide" exception can still apply for visas until Oct. 18. This would allow a foreign grandparent of a U.S. citizen to be granted the benefit of travel until this date.Speaking to reporters earlier, Bloomberg noted that Trump said “the tougher, the better,” on the restrictions. During his presidential campaign, Trump spoke often of “extreme vetting” of those wanting to enter the U.S., and on Sunday he tweeted, “We will not admit those into our country we cannot safely vet.”While Iran, Libya, Syria, Yemen and Somalia were part of the president's original travel ban, it has removed travel restrictions on Sudan, while adding Chad, Iraq, Venezuela and North Korea. The addition of latter two nations broadens the restrictions from the original, mostly Muslim-majority list. Though Iraq is not part of the list of targeted nations, the Department of Homeland Security said that Iraqi nationals should "be subject to additional scrutiny to determine if they pose risks to the national security or public safety of the United States." The officials say these states failed to comply with the U.S. information-sharing requirements that aim to make vetting processes stronger.
Trump Restricts or Bans Travel From Eight Countries - President Donald Trump restricted or suspended travel to the U.S. from eight countries, adding North Korea and Venezuela, while subtracting Sudan, from his earlier ban on travelers from six Muslim-majority nations.“I must act to protect the security and interests of the United States and its people,” Trump wrote in Sunday’s proclamation. The move came as the original order, which had been limited by court challenges, was set to expire.Speaking to reporters earlier, Trump said “the tougher, the better” about the restrictions, which will remain in place until the countries are found to have changed their behavior. During his presidential campaign, Trump spoke often of “extreme vetting” of those wanting to enter the U.S. On Sunday he tweeted: “We will not admit those into our country we cannot safely vet.”The new restrictions impact travel to varying degrees from Iran, Libya, Somalia, Syria and Yemen, all of which were on the original list. The U.S. will also now restrict or ban travel from Chad, North Korea and Venezuela. Each of the countries will be subject to its own set of restrictions, as set out in Sunday’s order. Sudan is no longer on the list. The Department of Homeland Security would have the authority to add or remove travel restrictions on countries as conditions change, a senior administration official said.New parts of the restrictions will take effect Oct. 18, a grace period that may prevent the kind of mass confusion seen at airports in the U.S. and abroad after the initial iteration of the travel ban took effect immediately. Other limitations took effect Sunday.
Experts say Trump's new travel ban could be harder to fight in court - — President Donald Trump's announcement on Sunday restricting travelers from an expanded list of countries has already been roundly criticized by immigrant and civil rights groups as no more lawful than his previous travel ban, but it could stand a better chance of holding up in court, legal experts said. The new presidential proclamation, which Trump said was needed to screen out terrorist or public-safety threats, indefinitely restricts travel from Iran, Libya, Syria, Yemen, Somalia, Chad, and North Korea. Certain government officials from Venezuela will also be barred. Trump's March 6 temporary travel ban, which replaced another ban from January and expired Sunday, targeted six majority-Muslim countries. It sparked international outrage and was quickly blocked by federal courts as unconstitutional discrimination or a violation of immigration law. In June, the US Supreme Court allowed a limited version of the ban to go ahead to give the justices time to examine its legality. The proclamation, set to take effect October 18, could be less vulnerable to legal attack, scholars and other experts said, because it is the result of a months-long analysis of foreign vetting procedures by US officials. It also might be less easily tied to Trump's campaign-trail statements some courts viewed as biased against Muslims. "The greater the sense that the policy reflects a considered, expert judgment, the less the temptation (by courts) to second-guess the executive," said Saikrishna Prakash, a professor at the University of Virginia School of Law, in an email. "It looks less like a matter of prejudice or a desire to fulfill a campaign promise." The government has said the president has broad authority in immigration and national security matters, but challengers to the March 6 ban had argued that it ran afoul of the US Constitution's bar on favoring one religion over another. They cited statements Trump made during his 2016 campaign for president, including his call for a "total and complete shutdown of Muslims entering the United States."
Trump to Cut Number of Refugees in U.S. by More Than Half - President Donald Trump has decided to allow the resettlement of no more than 45,000 refugees in the United States next year, according to a former and a current U.S. official, ending months of contentious debate inside the administration. That will bring the number of refugees allowed into the United States to the lowest level since establishment of the resettlement program in 1980.The long-awaited decision comes less than a week after Trump told the United Nations General Assembly that the United States prefers to prevent refugees from leaving their region and resettling in the United States. It comes at a time when the ranks of the world’s refugees have swelled to more than 22 million, placing an enormous burden on countries from Bangladesh to Turkey. “For the cost of resettling one refugee in the United States, we can assist more than 10 in their home region,” Trump told the gathering in remarks that were overshadowed by the president’s threat to destroy North Korea and his criticism of the Iran nuclear deal.The final outcome amounted to a compromise between White House hardliners who wanted to slash the resettlement program deeper and moderates who wanted to preserve the program, even if at a lower level than under former President Barack Obama.Stephen Miller, a White House advisor and key architect of the president’s immigration policies, had argued for a far smaller number, contending that the threat of terrorists and the costs necessitated such a move. But Miller has struggled to back his position up with evidence, according to officials. The Department of Homeland Security had argued behind closed doors for a ceiling of 40,000. But Deputy Secretary of State John Sullivan suggested that the U.S. could easily absorb 50,000 new refugees and that a more generous resettlement policy could provide other diplomatic benefits, including greater leverage in encouraging other countries to resettle refugees, and enhance the United States’ moral standing in the world.
US won't waive shipping restrictions for Puerto Rico relief | TheHill: The Trump administration on Tuesday denied a request from several members of Congress to waive shipping restrictions to help get gasoline and other supplies to Puerto Rico as the island recovers from Hurricane Maria. The Department of Homeland Security (DHS) declined the request to waive the Jones Act, which limits shipping between coasts to U.S.-flagged vessels, according to Reuters. DHS waived the act following hurricanes Harvey and Irma, which hit the mainland U.S. The agency has in the past waived the rule to allow cheaper and more readily-available foreign vessels to supply goods to devastated areas. But DHS said Tuesday that waiving the act for Puerto Rico would not help the U.S. island territory due to damaged ports preventing ships from docking. “The limitation is going to be port capacity to offload and transit, not vessel availability,” a spokesperson for Customs and Border Protection told Reuters. In a letter to the department on Tuesday, Sen. John McCain (R-Ariz.) urged DHS to rethink the decision, citing the agency's willingness to waive the Jones Act for relief efforts in the wake of hurricanes Harvey and Irma. “The Department of Homeland Security has been given the ability to waive the Jones Act to accommodate national security concerns, and has done so twice in the last month,” McCain wrote. “These emergency waivers have been valuable to speed up recovery efforts in the impacted regions. However, I am very concerned by the Department’s decision not to waive the Jones Act for current relief efforts in Puerto Rico, which is facing a worsening humanitarian crisis following Hurricane Maria." McCain called the department's decision "unacceptable" and warned that Puerto Rico faces a humanitarian crisis as the island's 3.4 million people struggle to survive without power or clean water.
State not requiring Puerto Rico evacuees to pay transportation costs - The State Department is not requiring anyone evacuated from hurricane-ravaged Puerto Rico to sign promissory notes reimbursing the government for travel costs. Marketwatch reported that the evacuees from Puerto Rico were being required to put up promissory notes under a longstanding policy. The Hill also posted a story based on the Marketwatch report. The State Department did evacuate 225 people from the Caribbean island of Dominica; most of those evacuees signed promissory notes agreeing to reimburse the State Department for travel costs, according to a source in the department.The costs are based on “the price of the last commercial one-way, full-fare (not discounted) economy ticket prior to the crisis,” according to the State Department's website. This policy applies to “anyone evacuated on U.S.-government coordinated transport, including charter and military flights.”But the State policy does not apply to the U.S. territory of Puerto Rico, a spokeswoman for the department said. The Defense Department would be in charge of any evacuated people from Puerto Rico. The Pentagon did not respond immediately to a request for comment.In the case of Dominica, some promissory notes were waived due to medical emergencies, the State Department spokesman said.
Trump: 'Big decision will have to be made' about rebuilding Puerto Rico | TheHill: President Trump on Friday touted his administration's response to the damage left by Hurricane Maria in Puerto Rico, but cautioned that a "big decision" would have to be made about the cost of rebuilding the island. "Puerto Rico Governor Ricardo Rossello just stated: 'The Administration and the President, every time we've spoken, they've delivered," Trump wrote on Twitter. "The fact is that Puerto Rico has been destroyed by two hurricanes. Big decisions will have to be made as to the cost of its rebuilding!" he added in a second tweet.It appears Trump was responding to a tweet by Rossello made earlier Friday morning. The Trump administration faced scrutiny this week for what critics called an inadequate response to Hurricane Maria in Puerto Rico, where necessities, like food, are running scarce and most people remain without power. The administration moved to ramp up its efforts on the island on Thursday, waiving shipping restrictions that Puerto Rican Gov. Ricardo Rossello said were hindering the delivery of aid to the U.S. territory.
Puerto Rico Rejects Loan Offers, Accusing Hedge Funds of Trying to Profit Off Hurricanes -- Puerto Rico has rejected a bondholder group’s offer to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico’s Fiscal Agency and Financial Advisory Authority said the offer was “not viable” and would harm the island’s ability to recover from the storm. The PREPA (Puerto Rico Electric Power Authority) Bondholder Group made the offer on Wednesday, which included $1 billion in new loans, and a swap of $1 billion in existing bonds for another $850 million bond. These new bonds would have jumped to the front of the line for repayment, and between that increased value and interest payments after the first two years, the bondholders would have likely come out ahead on the deal, despite a nominal $150 million in debt relief. Indeed, the offer was worse in terms of debt relief than one the bondholder group made in April, well before hurricanes destroyed much of the island’s critical infrastructure. Puerto Rico’s Fiscal Agency and Financial Advisory Authority suggested that profit motive rather than altruism was the bondholder group’s real goal. “Such offers only distract from the government’s stated focus and create the unfortunate appearance that such offers are being made for the purpose of favorably impacting the trading price of existing debt,” the agency said in a statement.
Wall Street Got a Bailout, Why Not Puerto Rico? - naked capitalism - Yves here. As this Real News Network interview underscores, Puerto Rico is well on its way to looking like a textbook case of Naomi Klein’s disaster capitalism. Almost half the island’s population has no drinking water. Drugstores and grocers are closing due to a lack of diesel fuel. This is a public health crisis in the making. From an article in the New York Post: The island of 3.4 million people is without electricity, and water, and looters have taken over as police and the National Guard enforce a strict 6 pm to 6 am curfew — leaving Americans in chaos, abandoned by their government. “It’s a war zone,” [former New Yorker Christina] Beckles said by email. “There is no power or water. We are under curfew from 6 pm to 6 am. Food is becoming scarce and people are getting desperate. Looting has already begun. The lines to get gas are seven to ten hours long — to receive $10 worth of gas.” And the Administration hasn’t been giving Puerto Rico the same emergency relief that it did to Houston and Florida. From Amy Goodman at Democracy Now!: One week after Hurricane Maria devastated Puerto Rico, President Donald Trump says he’ll visit the island next Tuesday, under withering criticism. Maria was the most powerful hurricane to strike the U.S. territory in nearly a century, coming just after Hurricane Irma, and destroyed the island’s entire electrical grid, caused severe flooding, widespread damage to homes and infrastructure. Most of the three-and-a-half million U.S. citizens who live in Puerto Rico remain in the dark, without access to power, clean water, food and fuel. It took President Trump five full days to respond to the plight of Puerto Rico. He did not tweet about it over that period. Over the weekend, he tweeted 17 times about athletes protesting police violence and refusing to visit the White House. Facing criticism, Trump held a news conference Tuesday in which he congratulated himself on his response to Puerto Rico’s disaster, repeating nearly a dozen times that he was doing a “great,” “amazing,” “tremendous” and “incredible” job. He denied he had neglected Puerto Rico… Puerto Rico was already facing the end-game of Latvia and Ireland when they were put on the rack of austerity: large-scale emigration, particularly by the young and educated. Now that so much housing, infrastructure, and personal possessions have been destroyed, people who have any way to leave (as in enough relatives and contacts on the mainland) probably will. And what does that mean for those who remain?
Trump scrambles to contain Puerto Rico crisis | TheHill: The Trump administration scrambled Friday to show it is on top of the crisis in Puerto Rico as it faced criticism from lawmakers in both parties that its response so far has been lacking. Puerto Rican officials are amplifying their warnings of an imminent humanitarian crisis, with San Juan Mayor Carmen Yulín Cruz making an emotional plea for someone — anyone — to take charge of emergency relief operations, heightening the sense of urgency on the hurricane-ravaged island. “I will do what I never thought I was going to do: I am begging, begging anyone that can hear us, to save us from dying,” Cruz said Friday afternoon. “If anybody out there is listening to us, we are dying and you are killing us with the inefficiency.”Acting Homeland Security Secretary Elaine Duke traveled to the U.S. territory on Friday to help coordinate the government’s response effort to Hurricane Maria’s widespread devastation, while President Trump is scheduled to make a trip on Tuesday. Vice President Pence will follow late next week. “We have a lot of big decisions. … I’ll be talking with the Democrats, and we’ll be talking to Congress, about what we’re going to do a little bit longer term,” Trump told reporters Friday afternoon. “In the meantime, we’ve saved a lot of lives, we’ve done a really good job, and now we’re bringing the people for distribution.” The three-star general recently put in charge of U.S. military relief operations in Puerto Rico said Friday that there are as many as 4,600 troops on the ground in Puerto Rico — including members of the National Guard and Reserves — and the Pentagon would be sending more troops and vehicles to the island, where residents could be without power for six months.
Trump defaulted on payments for his Puerto Rico golf course, leaving the territory with a $33 million tax debt - On Monday night, Donald Trump finally broke his near-deafening silence on the devastating situation in Puerto Rico with a series of tweets that tried to switch the narrative away from the fact that millions of people in the U.S. territory could be without power for up to six months and instead play up the island’s massive debt. But one thing the president failed to mention is the part he played in that mounting financial crisis.Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble.. — Donald J. Trump (@realDonaldTrump) September 26, 2017 Long before Hurricanes Irma or Maria decimated much of Puerto Rico’s physical structures, the island was already in trouble. Earlier this year, faced with $123 billion in debt (and growing), the U.S. territory took the unprecedented step of essentially declaring bankruptcy. But according to PolitiFact Florida, POTUS (before he was POTUS) only exacerbated the problem. In May, Trump made it clear that he had little interest in helping Puerto Rico’s debt situation: The Democrats want to shut government if we don’t bail out Puerto Rico and give billions to their insurance companies for OCare failure. NO! — Donald J. Trump (@realDonaldTrump) April 27, 2017 That tweet sparked the interest of the Florida Democratic Party, which issued a statement that very same: “Puerto Ricans are tax-paying, American citizens, though it isn’t surprising that Donald Trump clearly doesn’t know those non-alternative facts. Trump is simply lying: the negotiations being discussed are not a ‘bailout,’ but would help provide desperately needed access to healthcare for seniors and children on the island. Instead of using Puerto Rican families as scapegoats and bargaining chips for the disastrous Republican budget process that will likely lead to a government shutdown, he should pay back the nearly $33 million he owes Puerto Rican taxpayers after yet another one of his businesses defaulted on the island.” That failed business venture they were referring to was the Trump International Golf Club Puerto Rico, which, according to Fortune, borrowed $26.4 million in government-backed bonds in order to pay for improvements, but later defaulted on a $119,814 to bondholders. In 2015, the club filed for bankruptcy, which is when Trump (who licensed his name to the property) desperately tried to distance himself from the place bearing his unbearable name.
House passes flood insurance bill, Senate says no thanks — The House passed a bill Thursday to make it easier for homeowners to obtain private flood insurance policies not provided directly through the National Flood Insurance Program. But moments later, the Senate declined to move the bill.The House bill, which passed 264-155 with Republican and Democratic votes, aims to remove barriers that supporters of the legislation say make it harder for private insurance carriers to cover losses in flood-prone areas. It was introduced by Reps. Dennis Ross, R-Fla., and Kathy Castor, D-Fla.“The recent major flood events across the country have provided a much-needed sense of urgency to our efforts to provide consumers with private sector flood insurance options,” Ross said in a press release. “Currently, many homeowners in Florida and across the country face unaffordable flood insurance premiums and a lack of coverage options, largely due to federal regulatory barriers that give the National Flood Insurance Program a harmful monopoly over the marketplace.” The private flood insurance bill was attached to broader legislation that also would reauthorize expiring Federal Aviation Administration programs. Yet later in the day, the Senate passed an FAA reauthorization bill without the flood insurance provision included.The two Republican Louisiana senators, John Kennedy and Bill Cassidy, said they opposed adding the flood insurance fill to the FAA bill, rather than including it in a comprehensive flood insurance reform package. "This would be a disservice to millions of families across the U.S., especially those families still recovering from the recent hurricanes," the two senators said in a joint statement. "We need Congress to act on a long-term reauthorization of the NFIP that will provide these families with affordable insurance and peace of mind.”
Tom Price Resigns As HHS Secretary Amid Private Jet Scandal --As part of the growing private jet (ab)use scandal that has recently rocked the Trump administration, on Friday afternoon the White House announced that Secretary of Health and Human Services Tom Price offered his resignation and President Trump has accepted, according to the Press Sec. office. Full White House statement below:Secretary of Health and Human Services Thomas Price offered his resignation earlier today and the President accepted. The President intends to designate Don J. Wright of Virginia to serve as Acting Secretary, effective at 11:59 p.m. on September 29, 2017. Mr. Wright currently serves as the Deputy Assistant Secretary for Health and Director of the Office of Disease Prevention and Health Promotion. The resignation follows a Politico report according to which Tim Price took military jets to Europe, Asia for over $500K. In addition to all of the more than two dozen private and chartered jets Price has taken since May, the price tag had risen north of $1 million taxpayer dollars, according to calculations made by Politico. Trump had previously left open the question of Price's future employment. "I was looking into it and I will look into it," he told reporters earlier this week. "I will tell you personally, I'm not happy about it. I am not happy about it I'm going to look at it. I let him know it." Asked whether he will fire Price over the private jet use, Trump responded cryptically: "We'll see."Price, sensing he is in deep trouble, tried to stanch the bleeding on Thursday by pledging to write a check covering the cost of his seat on all of these private plane trips - including one from Washington to Philadelphia that cost $25,000. In the end it wasn't enough.Price if just one of several Trump officials who are in trouble over private jet use. As Axios summarizes, there are at least four others who are in hot water over the exact same thing:
- Scott Pruitt, Environmental Protection Agency administrator. The flights: A June 7 military flight to Ohio then New York ($36,068); a July 27 charter flight from Tulsa, Oklahoma, to Guymon, Oklahoma ($14,434); an August 4 charter flight from Denver, Colorado, to Durango, ColoradoA ($5,719); an August 9 flight on the North Dakota governor's plane ($2,144). Pruitt took "non-commercial" flights costing taxpayers more than $58,000, according to CBS News.
- Steve Mnuchin, Treasury Secretary. The flights: Mnuchin requested a government jet earlier this year for his honeymoon, according to ABC News. He and his wife also used a government jet when traveling to Louisville and Fort Knox, Kentucky, which coincided with the eclipse. An Air Force spokesman told ABC News that a government jet typically costs roughly $25,000 per hour to operate.
- Ryan Zinke, Secretary of the Interior. The flights: Zinke and his aides have reportedly taken several flights on private or military aircraft, including a $12,000 charter flight — which belongs to Nielson & Associates, a Wyoming-based oil-and-gas exploration firm — from Las Vegas to his hometown in Montana, and private flights between St. Croix and St. Thomas in U.S. Virgin Islands, per the Washington Post. Total cost: Unclear, as the total number of charter or military flights is unknown.
- David Shulkin, Secretary of Veterans Affairs. The flights/luxury purchases: Although Shulkin flew commercial to Europe for meetings with Danish and British officials about veterans' health issues in July, he did use government funds to fly his wife out, stating that she was traveling on "approved invitational orders," per the Washington Post. The government also provided a stipend for her meals. They also attended a Wimbledon championship tennis match, toured Westminster Abbey, and took a cruise on the Thames.
Trump appears to delete tweets backing Strange after primary loss | TheHill: President Trump on Tuesday apparently began deleting his tweets supporting Sen. Luther Strange (R-Ala.) in Alabama's Senate GOP primary runoff after Strange lost the race to former state Supreme Court Chief Justice Roy Moore. Trump had tweeted about Strange several times in the days leading up to the primary, including the day of, but those tweets had disappeared as of Tuesday night. The deleted tweets included those he sent the night before the election and the day of the race. A project from ProPublica documents the deleted tweets. “Big election tomorrow in the Great State of Alabama. Vote for Senator Luther Strange, tough on crime & border — will never let you down!” read one of the deleted tweets.
Roy Moore beliefs: Things the Republican has said - BBC News Alabama firebrand Roy Moore has dealt a huge blow to the Republican leadership by winning the party's nomination for the Senate. The controversial lawyer has made headlines for a series of incendiary remarks over the years, but beat his Washington-backed opponent with ease. Here's a round-up of some of his more extreme beliefs, with some analysis from the BBC's Anthony Zurcher on why it all matters.
- 1. Homosexuality should be illegal - He has likened it to bestiality, and called it "abhorrent, immoral, detestable, a crime against nature, and a violation of the laws of nature and of nature's God upon which this nation and our laws are predicated". His refusal to issue marriage certificates to gay couples cost him his place on the bench for a second time.
- 2. God's wrath is felt on Earth - Moore has suggested that the 11 September 2001 attacks against the World Trade Center and the Pentagon were a sign of God's divine anger. "Sounds a little bit like the Pentagon" he remarked after reading a Bible passage about "the great slaughter when the towers will fall". He has also said that violent crimes in the US such as murder and rape are "happening because we have forgotten God".
- 3. 'Red and yellows' don't get along --He appeared to use pejorative racial terms for Asians and Native Americans at a rally this month."We have blacks and whites fighting, reds and yellows fighting, Democrats and Republicans fighting, men and women fighting. What's going to unite us? What's going to bring us back together? A president? A Congress? No. It's going to be God."
- 4. Darwin was wrong"There's no such thing as evolution," he told the Washington Post less than a week before the election. "That we came from a snake? No I don't believe that."
- 5. Islam is a 'false religion' It is also a threat to US laws, Moore claims. Over the summer he falsely alleged that Sharia law was already being enforced in parts of the states of Illinois and Indiana, offering no evidence.
- 6. The law comes from God "God is the only source of our law, liberty and government," he said from the debate stage last week.
- 9. He writes poetry. And he has occasionally been known to give live renditions. One said: "Babies piled in dumpsters, Abortion on demand/ Oh Sweet land of liberty; your house is on the sand."
Trump allies see vindication in reports on Manafort wiretapping | TheHill: For some of President Trump’s staunchest allies, reports that former campaign chairman Paul Manafort was under U.S. surveillance are nothing short of vindication of the president’s widely-dismissed claims that former President Obama wiretapped Trump Tower. Although surveillance experts from both sides of the aisle say the claims mischaracterize reports about the order on Manafort, that hasn’t stopped Trump allies from saying the president was right all along. Longtime advisor Roger Stone has gleefully circulated a segment from Tucker Carlson’s show on Fox News in which the host says “all those patronizing assurances that nobody is spying on political campaigns were false” and “it looks like Trump's tweet may have been right.” When Trump made his claim in March, it was rejected by members of both parties. The Justice Department later stated that it had no evidence to back them up. While there have been some conflicts in the reports on surveillance of Manafort by both CNN and The Wall Street Journal, they have been consistent in stating that officials obtained a lawful order from a clandestine court to target Trump’s former campaign chief as part of the counterintelligence probe into Russian interference in the election. CNN reports that the order allowed officials to place a wiretap on Manafort, while the Journal reports that it covered only stored communications and did not allow officials to intercept his phone communications in live time.
Washington Post Misses Manafort’s Real Crimes - John Helmer - In April 2008 Paul Manafort (lead image, right) took $18,938,400 from Deripaska in return for which he promised to invest up to $100 million in Ukrainian cable television and telecommunications companies. Manafort trousered the cash, or so Deripaska has alleged in court, as he has been trying to get his money back. But Manafort’s hustle has been reported in US newspapers as an attempt to promote Kremlin influence in US elections, especially the one which put Donald Trump into the White House last November. The evidence for the subversion claim is now being gathered by the Special Counsel Robert Mueller, and reported publicly by leaks of what his investigation has placed in evidence before a grand jury. These include CIA, NSA and FBI surveillance and wire taps of Manafort during the presidential election campaign – yes, during the presidential campaign — and afterwards. On September 20, the Washington Post, a catalogue belonging by Amazon owner Jeff Bezos, published excerpts of Manafort emails which have been leaked by the FBI, whose agents broke into Manafort’s apartment at dawn on July 26, confiscating papers and computer records; by investigators with access to the files of Counsel Muller; and by other investigators, all of them pleading anonymity for themselves and authenticity for their leaks. (Source) The newspaper claims: “The emails are among tens of thousands of documents that have been turned over to congressional investigators and special counsel Robert S. Mueller III’s team as they probe whether Trump associates coordinated with Russia as part of Moscow’s efforts to interfere in the 2016 U.S. election.” The newspaper’s reporters deny having read the emails directly. Instead, they claim that “portions of which were read to The Washington Post along with other Manafort correspondence from that time.” The newspaper describes the readers on whom it relies for the veracity of the email quotes as “people familiar with the discussions” and “investigators”. A Manafort spokesman called Jason Maloni is cited by the newspaper saying the email exchanges reflected an “innocuous” effort to collect past debts. “It’s no secret Mr. Manafort was owed money by past clients,” Maloni said.” The reporters omitted to ask Maloni to comment on public court records indicating that at the time of the excerpted emails Manafort was in debt to Deripaska for more than $18 million. Elsewhere Maloni’s (pictured below left) repeated disclaimer that Manafort owes Deripaska money is carefully worded to allow the possibility that companies Manafort controls may indeed have owed, and still owe, companies controlled by Deripaska. For the names of the roster of front companies which both men have used to deal with each other, click to read.
Manafort’s Offer to Russian Oligarch Was Tied to Disputed Deal - When Donald Trump’s campaign chairman offered private briefings to a Russian oligarch close to President Vladimir Putin last year, he wasn’t only appealing to a superpower, he was pursuing a personal mission: the end to a costly dispute over a failed business deal. The campaign’s chairman, Paul Manafort, wanted a meeting in hopes of resolving a long-simmering dispute with the Russian, said two people familiar with the offer. The message, sent by email on July 7, 2016, through an intermediary, was never delivered to the intended recipient, Oleg Deripaska, and the briefings never occurred, the people added. But the correspondence compounds questions about the allegiances of Manafort, who famously offered to work for the campaign without payment. Though a presidential campaign is a 24/7 job, Manafort’s dispute with Deripaska apparently worried him enough to seek a meeting -- and even to trade on his powerful job to lure the billionaire. The two men were squabbling over a failed attempt by a private equity fund led by Manafort to buy a Ukrainian cable network. It’s not clear what became of the money that Deripaska provided for the venture. Years after the deal, Deripaska’s company sued, seeking an accounting of how the money was spent. The details are now even more clouded because lawyers for the men have since agreed to resolve the matter outside court -- and outside public view, according to one of the people. Their relationship is of keen interest to U.S. Special Counsel Robert Mueller, who is investigating Manafort’s business dealings as part of his probe into Russian interference with the U.S. presidential election and possible collusion between Trump campaign operatives and the Kremlin. As part of the probe, U.S. authorities have made a formal request to Cyprus for bank and company records linked to Manafort and Rick Gates. Several Manafort-related companies linked to the deal are registered in Cyprus. Gates was his partner in the private equity fund. Cyprus authorities haven’t responded. Gates, through his lawyer, declined to comment.
The “Russian Influence” Story Falls Apart – A New Fairy Tale Is Needed - The Obama White House and some Democratic officials pressed Facebook to find evidence for alleged "Russian interference" in the U.S. election. When Facebook found none, the pressure increased. Facebook went back, again found nothing and political pressure increase further. Congress threatened to investigate. Senator Warner flew to California and demanded the "right" results. Eventually Facebook gave in: By early August, Facebook had identified more than 3,000 ads addressing social and political issues that ran in the United States between 2015 and 2017 and that appear to have come from accounts associated with the Internet Research Agency. All hailed Facebook - finally there was something they could build their anti-Russian campaign on. It is of course idiotic to believe that 3,000 ads for which some $100,000 was spent over two years would somehow effect a U.S. election. In a U.S. presidential election more than $2 billion is spend on advertising. Facebook's ad revenue per year is some $27 billion. Moreover - as it now turns out these 3,000 advertisements which "appeared" to be "associated" with something "Russian" were not anti-Clinton or pro-Trump but were a mix of pro- and contra ads on various social issues: The batch of more than 3,000 Russian-bought ads that Facebook is preparing to turn over to Congress shows a deep understanding of social divides in American society, with some ads promoting African American rights groups, including Black Lives Matter, and others suggesting that these same groups pose a rising political threat, say people familiar with the covert influence campaign. The Russian campaign — taking advantage of Facebook’s ability to send contrary messages to different groups of users based on their political and demographic characteristics — also sought to sow discord among religious groups. Other ads highlighted support for Democrat Hillary Clinton among Muslim women.
Twitter suspends Russia-linked accounts, but U.S. senator says response inadequate (Reuters) - Twitter (TWTR.N) said on Thursday it had suspended about 200 Russian-linked accounts as it probes online efforts to meddle with the 2016 U.S. election, but an influential Democratic senator slammed its steps as insufficient. Senator Mark Warner, the top Democrat on the Senate Intelligence Committee, summoned Twitter officials to testify behind closed doors on Thursday as part of broad investigation of Russian influence in the 2016 presidential election. Facebook (FB.O) faced a similar grilling earlier this month. Lawmakers in both parties suspect social networks may have played a big role in Moscow’s attempts to spread propaganda, sow political discord in the United States and help elect President Donald Trump. Moscow denies any such activity, and Trump has denied any collusion. Twitter also briefed the House of Representatives Intelligence Committee on Thursday. Warner said Twitter officials had not answered many questions about Russian use of the platform and that it was still subject to foreign manipulation. The company’s presentation to the Intelligence Committee “showed an enormous lack of understanding from the Twitter team of how serious this issue is,” Warner said. He took particular umbrage at what he said was Twitter’s decision to largely confine its review to accounts linked to fake profiles already spotted by Facebook. Twitter said it had identified and removed 22 accounts directly linked to about 500 fake Facebook pages or profiles tied to Russia and that it unearthed an additional 179 accounts that were otherwise related.
Kushner used private email to conduct White House business -Presidential son-in-law and senior adviser Jared Kushner has corresponded with other administration officials about White House matters through a private email account set up during the transition last December, part of a larger pattern of Trump administration aides using personal email accounts for government business.Kushner uses his private account alongside his official White House email account, sometimes trading emails with senior White House officials, outside advisers and others about media coverage, event planning and other subjects, according to four people familiar with the correspondence. POLITICO has seen and verified about two dozen emails. Aides who have exchanged emails with Kushner on his private account since President Donald Trump took office in January include former chief of staff Reince Priebus, former chief strategist Steve Bannon, National Economic Council director Gary Cohn, and spokesman Josh Raffel, according to emails described to or shown to POLITICO. In some cases, those White House officials have emailed Kushner’s account first, said people familiar with the messages. At times, Bannon and Priebus have also used private email accounts to correspond with Kushner and others. The decision to set up new, private accounts as Kushner was preparing to enter the White House came in the wake of a bitter election campaign in which Trump routinely excoriated his Democratic rival Hillary Clinton for using a personal email account to handle government business when she was secretary of state. There is no indication that Kushner has shared any sensitive or classified material on his private account, or that he relies on his private email account more than his official White House account to conduct government business. Aides say he prefers to call or text over using email.
At Least 6 White House Advisors Used Private Email Accounts - NYT — At least six of President Trump’s closest advisers occasionally used private email addresses to discuss White House matters, current and former officials said on Monday. The disclosures came a day after news surfaced that Jared Kushner, the president’s son-in-law and adviser, used a private email account to send or receive about 100 work-related emails during the administration’s first seven months. But Mr. Kushner was not alone. Stephen K. Bannon, the former chief White House strategist, and Reince Priebus, the former chief of staff, also occasionally used private email addresses. Other advisers, including Gary D. Cohn and Stephen Miller, sent or received at least a few emails on personal accounts, officials said. Ivanka Trump, the president’s elder daughter, who is married to Mr. Kushner, used a private account when she acted as an unpaid adviser in the first months of the administration, Newsweek reported Monday. Administration officials acknowledged that she also occasionally did so when she formally became a White House adviser. The officials spoke on the condition of anonymity because they were not authorized to discuss the matter with reporters. Officials are supposed to use government emails for their official duties so their conversations are available to the public and those conducting oversight. But it is not illegal for White House officials to use private email accounts as long as they forward work-related messages to their work accounts so they can be preserved. During the 2016 presidential race, Mr. Trump repeatedly harped on Hillary Clinton’s use of a private account as secretary of state, making it a centerpiece of his campaign and using it to paint her as untrustworthy. “We must not let her take her criminal scheme into the Oval Office,” Mr. Trump said last year. His campaign rallies often boiled over with chants of “Lock her up!”
Kushner registered in New York as a female voter | TheHill: Presidential son-in-law and senior adviser Jared Kushner is registered as a female voter in New York, according to public records. Registration records show that when Kushner, who is married to first daughter Ivanka Trump, registered to vote in 2009, he apparently checked a box classifying his gender as a female. Democratic opposition research group American Bridge first spotted the error, which Wired then reported first."Kushner can't even fill out the most basic paperwork without screwing it up, so it's a mystery why anyone thinks he's somehow going to bring peace to the Middle East," Brad Bainum, a spokesperson for the group, told Wired about the mistake. "Would anyone but the president's son-in-law still have a West Wing job after repeated disclosure errors and a botched a security clearance form?" Kushner, who has a vast portfolio of issues at the White House, has had to amend his federal security clearance forms multiple times to include meetings with foreign contacts. He told congressional investigators that the mistakes have been due to a “miscommunication” with his assistant.
Ivanka Trump's China Business Ties Are More Secret Than Ever -- It is no secret that the bulk of Ivanka Trump's merchandise comes from China. But just which Chinese companies manufacture and export her handbags, shoes and clothes is more secret than ever, an Associated Press investigation has found.In the months since she took her White House role, public information about the companies importing Ivanka Trump goods to the U.S. has become harder to find. Information that once routinely appeared in private trade tracking data has vanished, leaving the identities of companies involved in 90 percent of shipments unknown. Even less is known about her manufacturers. Trump's brand, which is still owned by the first daughter and presidential adviser, declined to disclose the information.The deepening secrecy means it's unclear who Ivanka Trump's company is doing business with in China, even as she and her husband, Jared Kushner, have emerged as important conduits for top Chinese officials in Washington. The lack of disclosure makes it difficult to understand whether foreign governments could use business ties with her brand to try to influence the White House — and whether her company stands to profit from foreign government subsidies that can destroy American jobs. Such questions are especially pronounced in China, where state-owned and state-subsidized companies dominate large swaths of commercial activity. "There should be more transparency, but right now we do not have the legal mechanism to enforce transparency unless Congress requests information through a subpoena,"
The White House As Donald Trump's New Casino by Nomi Prins -- During the 2016 election campaign, Donald Trump repeatedly emphasized that our country was run terribly and needed a businessman at its helm. Upon winning the White House, he insisted that the problem had been solved, adding, “In theory, I could run my business perfectly and then run the country perfectly. There's never been a case like this.”Sure enough, while Hillary Clinton spent her time excoriating her opponent for not releasing his tax returns, Americans ultimately embraced the candidate who had proudly and openly dodged their exposure. And why not? It’s in the American ethos to disdain “the man” -- especially the taxman. In an election turned reality TV show, who could resist watching a larger-than-life conman who had taken money from the government? Now, give him credit. As president, The Donald has done just what he promised the American people he would do: run the country like he ran his businesses. At one point, he even displayed confusion about distinguishing between them when he said of the United States: “We’re a very powerful company -- country.” Of course, he ran many of them using excess debt, deception, and distraction, while a number of the ones he guided personally (as opposed to just licensing them the use of his name) -- including his five Atlantic City casinos, his airline, and a mortgage company -- he ran into the ground and then ditched. He escaped relatively unscathed financially, while his investors and countless workers and small businesses to whom he owed money were left holding the bag. We may never fully know what lurks deep within those tax returns of his, but we already know that they were “creative” in nature. As he likes to put it, not paying taxes “makes me smart.”
Here Are The Congressional Aides That Traded On Insider Information Over The Past Year -- Up until April 2012, members of Congress and their staff were the only people in the country actually allowed to trade stocks on insider information. That was supposed to change with the passage of the STOCK (Stop Trading on Congressional Knowledge) Act which was signed into law by Barack Obama on April 4, 2012. But, as we all know, laws are only meaningful to the extent our legislators and bureaucracies are willing to enforce them.Given that intro, it is with great 'shock' that we share with you the results of a Politico study which would seem to suggest that Congressional aides continue to trade on insider information on a fairly regular basis despite the existence of the STOCK Act. We guess the SEC didn't take seriously the STOCK Act's attempt to "criminalize behavior that is normal."The first such example of a "questionable" trade comes to us from Daniel Swanson, an aide to Senator Dick Durbin (D-IL) of the Judiciary Committee...why does it not surprise us that our first example comes from Illinois? As Politico notes, Swanson made some very "timely" trades in Mylan late last year as he managed to dump up to $60,000 worth of stock just two days before the DOJ levied a $465 million penalty on the company for their EpiPen billing practices. Ironically, Swanson's boss worked with the DOJ on the Mylan settlement...On Sept. 28, 2016, three members of the Senate Judiciary Committee sent a letter to the Justice Department suggesting that the drug company Mylan was violating Medicaid laws.Nine days later, the Justice Department reached a massive $465 million settlement with the firm.In between, another action happened almost invisibly: A Judiciary Committee aide to Sen. Dick Durbin (D-Ill.) dropped somewhere between $4,004 and $60,000 in Mylan stock from his and his child’s portfolios. If an aide had done the same thing in the executive branch, he or she could be investigated for violating federal conflict-of-interest law. But the Durbin aide’s ownership of shares of Mylan, and their timely sale, are reflective of Congress’ persistent refusal to crack down on stock trading by staffers, even in firms overseen by their committees.
Is Trump’s FSOC still a regulator? Maybe it never was — The Trump administration has implemented an apparent role reversal for the Financial Stability Oversight Council, leaving the true intended role of the post-crisis systemic risk body unclear. The interagency body’s primary concern since its creation has been designating nonbanks as systemically risky so that those firms could face higher regulations. But the new administration has shifted it in the opposite direction, as it reportedly nears dedesignating American International Group, a firm that was once the poster child for financial contagion.
The Feds Actually Expect Wall Street Bankers to Police Themselves - Nobody would look at how the government handled white-collar fraud cases after the financial crisis, when big bankers who sent the economy into chaosescaped criminal charges and often got promoted, and see some kind of model. Nobody, that is, except for James McDonald, the new enforcement chief at the Commodity Futures Trading Commission (CFTC), an obscure US agency that oversees the $483 trillion derivatives market.In a Monday night speech in New York City, McDonald announced a new initiative to provide significant benefits to financial institutions that "self-report" crimes and cooperate with investigators. In exchange, he said, companies might see civil penalties slashed, and in some instances, cases dropped altogether. Aformer federal prosecutor, McDonald noted the idea originated in gang prosecutions—he's done a lot of those—where it made sense to let individuals report on higher-level colleagues in exchange for leniency."We're committed to giving companies and individuals the right incentives to voluntarily comply with the law in the first place—and to look for misconduct and report it to us when they see it," McDonald said, according to an official transcript.In a vacuum, this initiative doesn't sound that bad. McDonald seems to be committing his agency to real police work: going up the chain to find the highest-level individual who can be prosecuted for wrongdoing. And only those companies disclosing all known facts and continuing to actively investigate—including rooting out those responsible—would be eligible for a reduced fine. Oh, and they would have to make sure the misconduct didn't happen again, either. Plus, McDonald pointed out, this is just how things work in America. "One goal in advancing our self-reporting and cooperation program is to bring ours in line with our law enforcement partners," including the Department of Justice, he said.
Technological Incompetence Appears to be Intentional at Wall Street’s Top Cop - Pam Martens - When we created the website for Wall Street On Parade, it took us about 30 minutes to add a free plug-in function so that our readers could search the text of every article we have ever written. (See Search box in upper right-hand corner of our menu at the top of this website.) But at Wall Street’s top cop, the Securities and Exchange Commission (SEC), if one wants to search corporate filings, one is limited to a four-year text search. This bizarre restriction inhibits investigative journalists from capably doing their job and connecting dots.This might sound like a small complaint were it not part of a larger pattern of technological failures by the SEC which have allowed Wall Street firms to run amok for decades.The biggest technological failure, of course, is the SEC’s inability to launch a Consolidated Audit Trail (CAT) over the 83 years of the SEC’s existence in order to spot manipulative or illegal trades by some of the most highly sophisticated trading houses in the world. While JPMorgan brags about having “more software developers than Google, and more technologists than Microsoft,” and Goldman Sachs is hiring the best Russian coders, Wall Street’s top cop is still driving a horse and buggy. The CAT, if it is ever implemented, would show every trade in U.S. stock and option markets, including when it occurred and at what firm it originated. But don’t hold your breath.
Senator Elizabeth Warren Expresses Skepticism about SEC Chair’s Real Agenda - Pam Martens - Donald Trump’s pick for Chairman of the Securities and Exchange Commission, Jay Clayton, seemed totally unprepared for Warren’s line of questioning yesterday, giving answers that raised further questions as to whose interests he was really representing. Warren reminded Clayton that in one of his first speeches as the SEC Chair, he had remarked that there had been “a 50 percent decline in the total number of U.S. listed public companies over the last two decades.” Warren said Clayton has used this rationale for reviewing and possibly reducing the disclosure burdens on public companies. Then Warren went in for the kill: “I want to understand your thinking on this. You compared the number of companies today with the number of companies in 1996 and 1997… which as you know was at the height of the dot.com boom. And, as you know, there was a sharp increase in the number of public companies leading up to the 1996 and 1997 years and then a lot of those companies failed over the next few years, leaving Mr. and Mrs. 401(k) losin’ a whole lot of money. So when you pick 1996 and 1997 as your target years for comparison, were you arguing that those were the ideal market conditions for ordinary investors?” Clayton responded that he would be happy to pick any five to seven year period over the last 20 years. Warren then explained that the evidence shows that the decline in publicly-traded companies is primarily the result of public companies merging and acquiring other public companies. Warren said she hoped Clayton would soon be giving a speech supporting stronger anti-trust enforcement. Warren then presented her hard data, stating:“But let’s just look at the IPOs, since that has been your focus. You said you want to get more investors involved in emerging companies, which is why you want to see more companies going public. Now in 1996, the peak of the dot.com bubble, there were 624 IPOs with a total of $36 billion in deal volume. From 2012 to 2016, there were about half that number of IPOs but the average annual deal volume was higher than it was in 1996. In 2014, IPOs raised $96 billion, nearly triple the total deal volume in 1996. So, in other words, in the last few years, people are investing more money in IPOs than they did even at the height of the dot.com boom.“So if your primary focus is on investors and not bankers and deal lawyers who make money on each of these IPOs, why do you care if there are fewer IPOs so long as IPOs overall are attracting more investor dollars?”
S.E.C. Rules to Protect Investors From Cyberthreats Fall Short- Gretchen Morgenson - At first glance, the hacking disclosed by the Securities and Exchange Commission on Wednesday didn’t seem too much of a concern to investors. The intrusion, after all, appeared to be limited to the S.E.C.’s database of corporate filings, like annual and quarterly financial reports and proxy statements. While the S.E.C. said it believed that the attack “did not result in unauthorized access to personally identifiable information, jeopardize the operations of the commission, or result in systemic risk,” the agency did acknowledge that the hackers could have profited by trading on the corporate data they gleaned. Still, said Jay Clayton, the S.E.C. chairman, the episode “highlighted the importance of cybersecurity to the agency and market participants.” I’ll say. The lapse at the S.E.C. and the breach before it at Equifax, the credit monitoring agency, should both be wake-up calls for investors who regularly trade stocks. In fact, these breakdowns raise questions about significant gaps in the S.E.C.’s computer security rules for stock exchanges and certain other significant trading platforms. As a result of these holes, investors’ trades on certain venues may be more vulnerable to hacking than on others. And because of the interconnectedness of the technologies supporting the nation’s stock trading systems, hackers gaining access to one venue could easily disrupt entire swaths of the market. The concerns center on an S.E.C. rule written in 2014 that was intended to strengthen the technological underpinnings of the United States securities markets, making them safer for investors. The rule, known as Regulation Systems Compliance and Integrity, or Reg SCI, came after a series of troubling market system failures. One was the $440 million glitch in 2012 at Knight Capital, a big stock trading firm. Other technical breakdowns occurred the next year on Nasdaq; on one occasion, all trading in that market was halted for three hours.
If Someone Hadn’t Traded On Hacked SEC Files, We’d Never Have Known The SEC Was Hacked - Last week the SEC took an unusually hands-on approach to investor education when it modeled precisely what not to do when your organization becomes the victim of a hack. The agency’s untimely disclosure, buried in the middle of a long-winded speech and lacking in basic chronological details, posed far more questions than it answered.Now, thanks to bits of leaked Senate testimony from SEC Chairman Jay Clayton, we have a slightly fuller answer to one of our central questions: Why did it take the SEC several months to realize that its previously discovered software glitch might have let crooks in the backdoor? The answer: The inquiry was coming from inside the agency: The Securities and Exchange Commission looked anew at a 2016 hack of its electronic corporate filing system as part of an enforcement investigation, its chairman said in testimony prepared for a Senate hearing on Tuesday…. Clayton’s testimony said the commission began reviewing the hack of the Edgar filing system in August due to “an ongoing enforcement investigation,” according to remarks prepared for the Senate Banking Committee. The SEC hadn’t previously disclosed that it looked into the 2016 hack because of an investigation into possible illegal trading.
Occupy the SEC Calls Out Regulator’s Absurd Push to Neuter Volcker Rule - It will come as no surprise to regular readers that the banksters are in the process of successfully pressuring the Trump administration to weaken the existing financial regulatory regime– including the tepid Dodd-Frank reforms (for further details, see this post, Financial Regulatory Rollback Proceeds). One new front that’s been opened in that war: rolling back the Volcker Rule’s limits on bank proprietary trading– an initiative that has caused the Office of the Comptroller of the Currency’s (OCC) to initiate a request for comments on the Volcker Rule. Occupy the SEC submitted a letter on 20 September in response to that request for comments. To recap a bit of the Volcker Rule’s history: the previous administration shamelessly exploited former chair of the SEC Paul Volcker as it sought to construct a regulatory regime in response to the great financial crisis. After much smoke and mirrors shenanigans, the ultimate result was the overly-complex, deeply compromised 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.One significant part of that reform was the highly-touted Volcker Rule ban on bank proprietary trading– a measure to prevent banks, e.g. the Too Big to Fail Bank behemoths bailed out at taxpayer expense– from gambling with other people’s money. Permit me to quote from Occupy the SEC’s press release briefly summarising the Volcker Rules’s history: […] Now, in the interest of keeping this post manageable in length– and of interest to readers with only a cursory background in finance– I’m only going to focus on one of the many excellent made in Occupy SEC’s letter. In addition to linking to this above, I’ve embedded the full letter below. This is on the distributional consequences of weakening or strengthening the Volcker Rule– and by that I mean, who will win, or who will lose, by such outcomes. It is clear that the OCC’s Notice has been issued as the result of the inordinate influence of the financial services lobby on regulatory initiatives at the agency. In the Notice, the OCC takes cognizance of numerous industry comments proclaiming that the Volcker Rule will harm the financial markets and suffocate market “liquidity.” These commentators suffer from what Keynes referred to as the “fetish of liquidity,” that most “anti-social maxim of orthodox finance.”Instead of considering the Volcker Rule’s impact on levels of employment, output or growth in all markets, such commentators primarily focus their analysis on the potential impacts of the Rule on short-term bank profitability. In doing so, they gloss over the numerous benefits to be reaped from vigorous implementation of the Volcker Rule (citations omitted).
Financial Times Columnist Skewers Wall Street Model in the New York Times - Rana Foroohar, an Associate Editor and Global Business Columnist for the Financial Times, penned an OpEd at the New York Times yesterday that was as audacious in its insults to the Times’ richest hometown industry, Wall Street, as it was brilliantly in touch with the abject dysfunction of the U.S. financial system. Foroohar’s thesis is this: “…there’s a core truth about our financial system that we have yet to comprehend fully: It isn’t serving us, we’re serving it.” Foroohar describes in specific detail what Wall Street On Parade has long described as Wall Street’s institutionalized wealth transfer system. (See our two particular articles of interest, here and here.) In her OpEd, Foroohar explains how the big banks have become unmoored from their core purpose. She writes:“In the 1970s, most of their financial flows, which of course come directly from our savings, would have been funneled into new business investment. Today, only about 15 percent of the money coming out of the largest financial institutions goes to that purpose. The rest exists in a closed loop of trading; institutions facilitate and engage in the buying and selling of stocks, bonds, real estate and other assets that mainly enriches the 20 percent of the population that owns 80 percent of that asset base. This doesn’t help growth, but it does fuel the wealth gap.” Foroohar makes these other astute observations as well: “The financial industry, dominated by the biggest banks, provides only 4 percent of all jobs in the country, yet takes about a quarter of the corporate profit pie… “Finance has become the tail that wags the dog. Until we start talking about how to create a financial system that really serves society, rather than just trying to stay ahead of the misdeeds of one that doesn’t, we’ll struggle in vain to bridge the gap between Wall Street and Main Street.” On the very day that Foroohar’s opinion piece appeared in the New York Times, the Office of the Comptroller of the Currency (OCC) released its latest quarterly report on the obscene trading revenues of the banks: “consolidated holding company trading revenue of $15.2 billion in the second quarter of 2017…“Credit exposure from derivatives increased in the second quarter of 2017 to $369.5 billion… “…four large commercial banks represented 89.6 percent of the total banking industry notional amounts [of derivatives]”
Citi Is Bringing Back One of the Most Infamous Bets of the Credit Crisis -- Jia Chen was in London again this summer -- just one of the many trips she’s recently made across the Atlantic -- to peddle a product left for dead in the ruins of the financial crisis.The 35-year-old Citigroup Inc. director has spent the past two years meeting clients, speaking at industry panels and becoming the face of a resurgent market for synthetic CDOs -- complex derivatives that let buyers make big, leveraged bets on the health of corporate America. Along the way, she’s helped establish Citigroup as its dominant player.It’s an astonishing comeback for the roughly $70 billion market for synthetic CDOs, which rose to infamy during the crisis and then faded into obscurity after nearly destroying the financial system. But perhaps the most surprising twist is Citigroup itself. Less than a decade ago, the bank was forced into a taxpayer bailout after suffering huge losses on similar types of securities tied to mortgages. Now, many in the industry say Citigroup is responsible for over half the deals that come to market, though precise numbers are hard to come by.This time, Citigroup says, it’s doing things differently. The deals are tailored in a way that insulates it from any losses, while giving yield-starved buyers a chance to reap returns of 20 percent or more. The market today is also just a fraction of its size before the crisis, and few see corporate defaults surging any time soon. But as years of rock-bottom interest rates have pushed investors toward riskier products, the revival of synthetic CDOs may be one of the clearest signs yet of froth in the credit markets. Other Wall Street banks, which shunned the market since the crisis or struggled to establish a foothold, are angling for a bigger slice of the action. BNP Paribas SA is also active in synthetic CDOs and others are keen to follow suit, according to people familiar with the matter, who asked not to be identified because they aren’t authorized to speak publicly. “There is a whole generation of people in finance who never knew or forgot what the problems were with synthetic CDOs,” said Janet Tavakoli, a 30-year veteran of the financial markets who runs a consulting firm and has written books on structured credit and CDOs. “Just as derivatives can lever up the upside, they can lever up the downside.”
AIG no longer 'too big to fail', FSOC says | American Banker - American International Group is no longer too big to fail.That was the ruling Friday from the Financial Stability Oversight Council, which said AIG, whose collapse in 2008 threatened to bring down the entire U.S. financial system, was no longer a systemically important financial institution.“This action demonstrates our commitment to act decisively to remove any designation if a company does not pose a threat to financial stability,” Treasury Secretary Steven Mnuchin, a member of the FSOC, said in the press release. The decision frees the New York-based insurer from the threat of more-stringent capital rules. The firm was at the center of the crisis, when its investing blunders led to a government bailout of $182.3 billion. AIG repaid the rescue, turning away from its infamous derivatives portfolio that contributed to the carnage. The ruling for AIG was a win for activist investor Carl Icahn, who has pushed for ending the designation since taking a stake in the insurer two years ago, and for Brian Duperreault, who took over as chief executive officer in May. Icahn announced his departure as a special regulatory adviser to President Donald Trump in August after questions were raised about potential conflicts of interest with his business dealings.
Wells Fargo fighting order to rehire whistleblower - Wells Fargo is extending a 6-year-old fight with a sham-accounts whistleblower, despite a government order to immediately reinstate the former employee. The San Francisco-based company’s move has drawn condemnation from investor and whistleblower protection advocates, who accuse the bank of flouting the law. "They really want to be unaccountable," said Amanda Werner, campaign manager of Americans for Financial Reform and Public Citizen, which has been pressing Congress to hold new hearings into the phony-accounts scandal after the bank raised its estimate for how many customers were affected. Wells Fargo's refusal to immediately follow an OSHA order to reinstate Claudia Ponce de Leon "shows that the [bank's] culture, which was dismissive to any type of laws, has not changed," said her lawyer. Wells counters that the government order is preliminary and it will present new evidence during appeal to prove it is in the right. The case matters because of what it says about Wells’ company culture, whether it has lived up to promises to protect its own whistleblowers and if it has, as it claims, taken stock of the mistakes it made and is working on fixing them. At issue is the case of Claudia Ponce de Leon, an employee at Wells who was fired in 2011 three months after she called the company’s ethics line to report that colleagues were opening fake accounts in order to meet sales goals. Wells maintains that Ponce de Leon was not fired because she blew the whistle on phony accounts, but because she engaged in inappropriate behavior. Ponce de Leon has denied the charges, and the Labor Department investigation that culminated in the order found no evidence to back up the bank’s allegations. Instead, the Labor Department said that Wells promoted Ponce de Leon 10 times over the span of a decade and on June 11, 2011, the same month she reported sham accounts. Three months later, the bank fired her.
Why are regulators so unwilling to remove Wells Fargo's leaders? – Bank Think - Wells Fargo’s chief executive will testify before Congress next week with the megabank’s reputation even more in tatters than when the bank’s phony-accounts scandal broke one year ago. The nation’s third-largest bank has faced a swirl of fines and lawsuits over allegations that it violated service member protections, overcharged for home appraisals, discriminated against its own employees and falsified mortgage records. One year later, Wells Fargo now admits to creating 1.4 million more unwanted bank accounts than previously reported and, by the way, forcing unneeded auto insurance on some 800,000 customers.As reprehensible as these exploitative business practices are, the most shocking aspect of Wells Fargo’s repeated scandals is that federal regulators have taken no meaningful action against its leadership. The $2 trillion-asset bank’s board of directors and senior managers are supposed to be held responsible for the institution’s ethical, moral and legal conduct. The record clearly shows they have failed. To hold them accountable, to send a message to systemically risky financial institutions that this conduct cannot be tolerated, and to advance justice for the bank’s millions of victims, federal regulators should replace the bank’s board and senior management. The penalties Wells Fargo has faced for its actions simply do not measure up to the harm the bank has caused for customers and the broader financial industry. The millions of dollars in fines are decimal dust on the $2 trillion bank’s balance sheet — a small cost of doing big business. The bank clawed back tens of millions of dollars in compensation from former CEO John Stumpf and former senior executive Carrie Tolstedt after their early retirement, but they still left the bank with a combined pay package worth more than $100 million. And the board of directors and other senior management haven’t even received a slap on the wrist from regulators, who are empowered to remove bankers for presiding over unsafe and unsound practices.
Equifax CEO Smith resigns, Barros named interim chief after hack - Equifax Inc. Chief Executive Officer Richard Smith resigned, joining other senior managers who left the credit-reporting company amid an uproar over the theft of private data on 143 million Americans. Smith will be replaced on an interim basis by Paulino do Rego Barros Jr., a seven-year company veteran who was most recently president of Asia Pacific, the Atlanta-based firm said Tuesday in a statement. Board member Mark Feidler, a former BellSouth Corp. president, was named nonexecutive chairman. The board will conduct a search for a permanent CEO and consider internal and external candidates. “The board remains deeply concerned about and totally focused on the cybersecurity incident,” Feidler said in the statement. “We are working intensely to support consumers and make the necessary changes to minimize the risk that something like this happens again.”Equifax has drawn outrage from lawmakers and scrutiny from regulators since Sept. 7, when it disclosed one of the biggest cyberattacks. Hackers stole sensitive data — including Social Security numbers, birth dates and other identifying information — for much of the adult U.S. population.Smith, who will remain as an unpaid adviser to the company, isn’t the first executive to go down in the wake of the disclosure. The firm’s chief information and chief security officers retired as of Sept. 15, the company said in a statement that didn’t identify the executives. David C. Webb, who joined the firm in January 2010, was previously chief information officer, according to an annual regulatory filing in February. Susan Mauldin had been chief security officer, according to her professional profile on LinkedIn and an Equifax press release from 2015. Mark Rohrwasser was named interim CIO and Russ Ayres was appointed interim CSO, reporting to Rohrwasser, according to the Sept. 15 statement. The shares have tumbled 26 percent since the breach was announced on Sept. 7.
Equifax CEO to collect $90 million: report | TheHill: Equifax CEO Richard Smith will collect roughly $90 million in the coming years after he resigned over the company’s massive privacy breach. Smith, who announced his retirement Tuesday, will collect about $72 million this year and $17.9 million in coming years, according to Fortune. This reportedly adds up to about 63 cents for each customer who was potentially exposed in the company’s data breach. Smith is one of three Equifax executives to leave the company after the data breach. Chief information officer David Webb and chief security officer Susan Mauldin both resigned last week. Equifax revealed earlier this month that it had suffered a massive data breach that affected up to 143 million U.S. customers. The impacted data is believed to include birth dates and credit card numbers.Company executives are under scrutiny following reports that they dumped stock before announcing the breach.The Justice Department announced last week that it was investigating the executives who sold the stock before announcing the breach. The Federal Trade Commission (FTC) is also investigating the breach.Lawmakers have similarly cracked down on the credit agency. Smith will testify before the House's Financial and Energy and Commerce committees over the breach.
Equifax follows Wells' crisis management playbook — with a twist -- In announcing Tuesday that Equifax CEO Richard Smith will take early retirement, the credit reporting bureau observed an increasingly well-worn ritual of scandal-ridden firms: apologize, promise to do better in the future, and sacrifice your top executive in the hopes it will ward off action by Congress and regulators. It's a playbook that Wells Fargo used just a year earlier, although Equifax made at least one crucial change. It jettisoned its CEO before he was due to appear before two congressional committees next week, a move that Wells made only after its top leader had been excoriated by lawmakers first. The House Energy and Commerce Committee scheduled a hearing with Smith for Oct. 3, while Senate Banking has a hearing on Oct. 4. It remains unclear, however, if Equifax's attempt to get ahead of lawmakers will help ease their criticism — or backfire. The committees may now ask for testimony from not only the company's former management, but also current, new management, in order to examine what actions are being taken going forward to ensure another data breach can't happen again. “This hearing wasn’t just about the breach — it’s about the company’s actions in response to the breach,” Several lawmakers were already demanding that Smith and his successors, interim CEO Rego Barros Jr. and nonexecutive chairman Mark Feidler, appear next week in front of the committees. "Mr. Smith, along with the new chairman and the new interim CEO, should all testify before the Senate Banking Committee," Sen. Elizabeth Warren, D-Mass., said in a press release. "The American public deserves answers about what went wrong at Equifax and what the company plans to do going forward."
The last thing Equifax needs is leadership continuity - Inevitably, Equifax’s CEO Richard Smith has left his post, joining the firm’s CIO and CSO in the ranks of the unemployed. In his place, Paulino do Rego Barros Jr., a seven-year Equifax veteran, will take over as interim CEO. For the credit bureau's sake, let's hope it has a long-term plan that's better than promoting from within. If Equifax is going to survive, the company needs to entirely rip out and replace systems, procedures, business models and management. For years, the credit bureaus have built a system around a very specific consumer demographic that excludes or alienates those who can't or don't want to build their credit files the traditional way. It's increasingly clear that those "alternative" credit models are perhaps the only path forward. Equifax is a 118-year-old company that came into being at the time of steamships and predating aviation. It's an analog company that simply hasn’t adapted to digital changes. Finding its calling in the age of credit risk assessment in the 1950s as one of the three legs of the FICO scoring stool, Equifax hasn’t needed to innovate — why should it, when it was in the incredibly lucrative business of both capturing and selling sensitive consumer data? Equifax was having its proverbial cake and eating it until a couple of weeks ago. However, as the digital economy has grown, Equifax's once-scarce commodity — sensitive personal and financial information — has spread far and wide across the digital corners of the globe. Even before the bureau's data breach, Social Security numbers and bank account credentials were stolen and shared en masse online, forcing financial institutions to adopt new ways to identify their customers through the use of tokenization, biometrics, device identification and other innovations. But what hadn't changed — at least, from within the system — was the use of static Social Security numbers as the keys to a consumer's credit. The legacy credit scoring system simply has not kept up with shifts in U.S. demographics. The FICO scoring system has been the backbone for lending in the U.S since its inception in 1958 and is primarily based on ratings from credit bureaus on historic lending activity. It assumes some degree of credit history on which the score can be calculated.
IRS bill could reduce need for Equifax, other credit bureaus — A senior House lawmaker plans to reintroduce legislation as early as Thursday requiring the IRS to fast-track the income verification process, which proponents say could help reduce the financial industry's dependence on credit bureaus.As heads continue to roll in the wake of the Equifax breach, Rep. Patrick McHenry, R-N.C., said his bill would be a step up from how lenders currently verify a potential borrower's financial data.“We need to get away from relying so heavily on the credit bureaus,” McHenry said in an interview. "We need to modernize the way lenders verify identity. And a huge component of that is income verification and making that process much more seamless than it currently is.” The bill is set to be co-sponsored by Rep. Earl Blumenauer, D-Ore., in the House, according to McHenry's office. It would require the IRS to automate the income verification process to speed it up for mortgage lenders, online lenders and a host of other financial institutions that screen borrowers. The legislation is also said to have support in the Senate from Mike Crapo, R-Idaho, and Cory Booker, D-N.J.Under the current process, a prospective borrower must first authorize a lender to verify tax return information through a 4506-T form. The lender will typically go through a third party that processes requests with the IRS in bulk, to verify the information submitted by applicants about important financial information contained in their tax returns, including annual income. But this can take anywhere from two to eight days because the IRS has to manually go into its system to verify the information. The new bill would require the agency to create an application programming interface to automate this verification process, once a borrower has signed off on it.
Fallout from Equifax breach will hit banks hardest | American Banker - The ramifications of the Equifax breach are going to reverberate for some time. The full extent of the harm — while not known for several months if not longer — will definitely touch consumers, nonfinancial companies and other areas of the economy. But make no mistake: Banks are going to pay the most of anyone. While consumers are understandably worried about fraud and identity theft, it is financial institutions that will ultimately be on the hook for any loans they make to identity thieves. True, fraud rates for consumer borrowing are near historic lows. However, identify thieves could use additional consumer information that they obtained from the Equifax breach (think Social Security numbers and addresses) to more accurately impersonate a consumer and, in turn, make a fake credit application look real. As a result of that risk, banks will have to institute stricter authentication procedures. While some lenders may choose to experiment with new ways to authenticate consumers, such as using biometric information, in most cases lenders will likely interpret “better authentication” as requiring more data from consumers to help ensure that the applicant is indeed who he says he is. For example, lenders may ask consumers to respond to more out-of-wallet questions during the application process that are more difficult for an identity thief to answer, like, “What is your mortgage payment?” or “Did you own a certain type of car?” This process will require consumers to provide more information to prove their identity. More disclosure of information from consumers will slow down the lending process because consumers may need to gather more information to complete the process and because it will also take them more time to fill in lender requirements. Requiring consumers to disclose more information could lead consumers to abandon credit applications that are otherwise supposed to be quick and painless, such as the process for obtaining instant retail credit. Meanwhile, more credit freezes will also mean more hassle for consumers and less advertising for lenders.
Equifax’s data flaws are more the rule than the exception -- I’m about to make an argument that could be viewed as mildly sympathetic to the current public enemy No. 1 — Equifax. Resist for a moment the urge to brush it off or fire away at me on social media. Our high-outrage, quick-to-react society could stand to benefit now and again from a little reflection, and shedding a broader light on the Atlanta credit bureau’s data-security disaster could be useful in fixing the problems that have ailed us for years. No organization is immune to data breaches, and a lot of potentially personal data was out there already thanks to all the screw-ups that preceded Equifax’s. And, by some measures, there have been bigger exposures of private information. Moreover, the gaffes keep coming. Just in the past two weeks, the Securities and Exchange Commission and Deloitte have announced large breaches affecting nonpublic corporate data and customers’ private emails. In the past few years, numerous breaches have affected millions of sets of personally identifiable information, credit card numbers, Social Security numbers and even fingerprints. But the hack that Equifax announced Sept. 7, in which the personal information of 143 million Americans was stolen, struck a nerve that, three weeks later, is still provoking angry reactions from Congress, consumer advocates and the public. In a Senate hearing Tuesday, Sen. Mark Warner suggested that Equifax may have forfeited the right to stay in business. The student loan marketplace provider LendEDU surveyed consumers this week and found that 54% think Equifax should lose its ability to act as a credit bureau.“Because this story is fresh and reactions have yet to be tempered, that percentage would most likely drop if you ran the same poll in six months,” said Mike Brown, research analyst at LendEDU. “But I would not expect the percentage to drop drastically because the Equifax breach has had a direct impact on the lives of many American consumers." And therein lies one of the reasons for the harsh condemnations of Equifax: The breach was something everyone could understand — and it tapped into existing fears about overall financial security. However, consumers have survived arguably worse hits in recent years. Let’s compare the Equifax breach to Yahoo’s and some other recent data break-ins.
Deloitte email platform and client data hit by cyberattack - Following record results that flagged the growth of its cybersecurity business, Deloitte LLP has revealed that it has been successfully targeted by a cyberattack that let hackers access data from an internal email platform. The auditing and consulting firm said Monday that it’s currently informing the clients affected and has notified governmental authorities after it became aware of the incident. Deloitte said "very few" clients were affected and has drafted outside help to review its security. The hack was first reported by The Guardian. The email platform was stored on Microsoft’s Azure cloud platform, according to The Guardian. A spokeswoman from Microsoft declined to comment. The U.K.-domiciled firm offers a range of consultancy services to blue-chip clients, and earlier this month posted record revenues of $38.8 billion for the fiscal year ended May 31. Deloitte flagged that its Risk Advisory business has seen increasing demand for cybersecurity advice, and the company had launched a number of Cyber Intelligence Centers that offer clients constant threat analytics and management. Although nowhere near the same scale, the hack follows the infiltration of Equifax, where attackers accessed personal data for as many as 143 million U.S. consumers. Regulators are facing their own challenges in their attempts to monitor hacks. The U.S. Securities and Exchange Commission this month disclosed that cybercriminals breached its online database of corporate filings, but they may have stolen corporate secrets that they profited from. #160;
Massive Hack At Deloitte: Entire Internal Email System Compromised, Client Emails Exposed --Another day, another major hacking.The Guardian reports that in the latest corporate cyber breach, one of the world’s “big four” accounting and consultancy firms, Deloitte, was been targeted by a sophisticated hack that "compromised the confidential emails and plans of some of its blue-chip clients." And just like Equifax, New York-headquartered Deloitte was similarly the victim of a cybersecurity attack that went unnoticed for months. The Guardian understands Deloitte discovered the hack in March this year, but it is believed the attackers may have had access to its systems since October or November 2016.Responding to questions from the Guardian, Deloitte confirmed it had been the victim of a hack but insisted only a small number of its clients had been “impacted”. It would not be drawn on how many of its clients had data made potentially vulnerable by the breach. Alas, the company has yet to provide a full disclosure of just who and which clients were violated: an estimated 5 million emails were in the hacked email cloud and could have been been accessed by the hackers. Deloitte said the number of emails that were at risk was a fraction of this number but declined to elaborate. While unlike Equifax Deloite is not a public public company and is not accountable to countless shareholders, with $37 billion in revenue last year and over 263,000 worldwide employees, Deloitte is a corporate behemoth which provides auditing, tax consultancy and - like Equifax - high-end cybersecurity advice to some of the world’s biggest banks, multinational companies, media enterprises, pharmaceutical firms and government agencies. Here the Guardian reports that Deloitte clients "across all of these sectors had material in the company email system that was breached. The companies include household names as well as US government departments."
Morgan Stanley CEO Rejects Dimon: "Bitcoin Is Certainly More Than A Fad" --Two weeks after JPMorgan CEO Jamie Dimon's now infamous "Bitcoin is a fraud" comments, Morgan Stanley CEO James Gorman told The Wall Street Journal today that Dimon is wrong and "Bitcoin is certainly more than a fad... the concept of an anonymous currency is an interesting concept."Gorman added that Bitcoin faces questions over regulation and entry barriers... "There is a government risk to it... I don't think it should be illegal." Full WSJ interview with Gorman below... (forward to 57:00 for bitcoin discussion)
The "Wolf Of Wall Street" Says Jamie Dimon Is Right About Bitcoin -- The guy who made tens of millions of dollars misleading American retirees into buying worthless pink sheet stocks says he agrees with J.P. Morgan Chase & Co. CEO Jamie Dimon’s comment that bitcoin is “a fraud.” Jordan Belfort, the inspiration for Leonardo DiCaprio’s character in the 2013 Martin Scorsese film “The Wolf of Wall Street,” told the Street that he believes Dimon is right, adding that bitcoin “isn’t a great model.” In what may eventually be revealed as an important distinction, Belfort’s take was somewhat more nuanced than Dimon’s. While the JPM CEO predicted that all digital currencies would eventually become worthless, Belfort said there might be room for one."I'm not saying cryptocurrencies, there won't be one – there will be one – but there has to be some backing by some central governments out there.If any digital currency demonstrates long-term viability, it will probably be one that’s backed by a central bank."
US Bank Regulator Opens Door to National License for Bitcoin Firms - The acting comptroller of the currency for the U.S. Treasury Department has said he is open to the idea that a new breed of banks might one day conduct business in bitcoin and other cryptocurrencies. Speaking at an event hosted by the Federal Reserve Bank of Philadelphia Thursday, Keith Noreika, the newly named director of the agency tasked with supervising all national banks, went so far as to state publicly that he foresees a future in which bitcoin companies might be granted "fintech charters" – proposed licenses designed to simplify the way startups do businesses across state borders.Currently, bitcoin companies and traditional money transmitters need to comply with a complicated network of regulatory regimes in all 50 U.S. states, a pain point that industry advocates have argued severely limits startup growth by increasing the cost of market entrance.But despite being open to crypto businesses applying for charters, Noreika went on to strike a cautious note on their chances of being approved.He told attendees: "I wouldn't be adverse to those people coming in and talking to the [Office of the Comptroller of the Currency] about how a charter could make sense for them. But that is a long process they'd have to go through, and just because you get in the door doesn't mean you're going to get out the door on the other side."
Chaos and hackers stalk investors on cryptocurrency exchanges - Cryptocurrencies were supposed to offer a secure, digital way to conduct financial transactions, but they have been dogged by doubts. Concerns have largely focused on their astronomical gains in value and the likelihood of painful price crashes. Equally perilous, though, are the exchanges where virtual currencies are bought, sold and stored. These exchanges, which match buyers and sellers and sometimes hold traders’ funds, have become magnets for fraud and mires of technological dysfunction, a Reuters examination shows, posing an underappreciated risk to anyone who trades digital coins.Huge sums are at stake. As the prices of bitcoin and other virtual currencies have soared this year – bitcoin has quadrupled - legions of investors and speculators have turned to online exchanges. Billions of dollars’ worth of bitcoins and other cryptocurrencies - which aren’t backed by any governments or central banks - are now traded on exchanges every day.“These are new assets. No one really knows what to make of them,” said David L. Yermack, chairman of the finance department at New York University’s Stern School of Business. “If you’re a consumer, there’s nothing to protect you.”Regulators and governments are still debating how to handle cryptocurrencies, and Yermack says the U.S. Congress will ultimately have to take action.Some of the freewheeling exchanges are plagued with poor security and lack investor protections common in more regulated financial markets, Reuters found. Some Chinese exchanges have falsely inflated their trading volume to lure new customers, according to former employees.There have been at least three dozen heists of cryptocurrency exchanges since 2011; many of the hacked exchanges later shut down. More than 980,000 bitcoins have been stolen, which today would be worth about $4 billion. Few have been recovered. Burned investors have been left at the mercy of exchanges as to whether they will receive any compensation.
SEC Files First-Ever Civil Fraud Charges Against ICO Companies - That didn't take long. After issuing a ruling in July that officially declared that the tokens sold during initial coin offerings must be registered as securities - a ruling that many hoped would lend a badly needed veneer of legitimacy to the shady ICO market - the SEC is following through with what we imagine will be the first of many civil actions against ICO and the individuals who launch them.The agency on Friday announced civil actions against two companies and their founder, businessman Maksim Zaslavskiy, for violating anti-fraud and registration provisions of federal securities laws after misleading investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds. It's important to remember that this is civil complaint - the SEC doesn't have the power to make arrests; to do that, it must work in tandem with the FBI. Zaslavskiy is a free man. However, his assets - and those belonging to his companies - have been frozen. Instead, the agency is seeking to permanently ban Zaslavskiy from participating in any future digital-currency offerings, along with what we imagine will be hefty fines.
'Fintechs tend to march to their own rules': former SEC chair Levitt -- Former Securities Exchange Commission Chairman Arthur Levitt and two fintech executives squared off Thursday over whether fintech companies need stricter regulation and corporate governance."Fintechs tend to march to their own rules," he said at the Economist's Finance Disrupted conference in New York. "It's a new industry with lots of failures and lots of spectacular successes. But regulation is often kind of background music, and the prevalence of scandal and mismanagement and aggressiveness is part of the backwash of innovation."Levitt did not single out any companies by name, but in the past two years marketplace lenders such as Social Finance (which he has advised) and Lending Club have come under fire for financial and other improprieties that lead to leadership changes. "Hardly a day goes by where there isn't a recording of some scandal or another," Levitt said. "I think that's generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures." His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals."I lived through 2007 through 2009, and the large established companies did not come out in any way looking remarkable," Friar said. "As we grow, it's important that we're doing it within the right regulatory environment but that regulation doesn't become a laggard that stops what we all want, which is a much stronger, healthier economy."
Technology underpinning bitcoin gets applied to contracts: -- As the questions filed by the conference’s app popped up on the screen at the Blockchain in Oil & Gas conference in Houston earlier this month, it was pretty clear there were two types of people in the audience. The first were those who had a solid understanding of distributed ledger technology (DLT). Then there was the other group, people who knew something, but maybe not a lot. The anonymity provided by the question tool allowed some of those just getting their blockchain “legs” to ask those basic queries without fearing they might engender eye rolls and head shakes. If you’re in the second group, here’s a very short primer: Blockchain is the technology used to power bitcoin. It is a type of distributed ledger technology, so it lacks a central data base. Key features of a smart contract, blockchainThe data held on it is considered “immutable.” What’s known as “truth”—that the seller of a piece of property, for example, does actually own it—is confirmed by “consensus,” the affirmation of ownership, financial status, etc. shared by the many on the ledger. And it’s decentralized, so that there is no one particular party in charge, nobody that can slam the brakes on a smart contract processing transactions, and it is the network, not a central authority, that approves the commerce and information on the ledger.
Why are Amazon, PayPal meeting with bank regulators? — Technology giants like Google, Amazon, Facebook and Apple are showing an increasing interest in engaging with federal banking regulators, a move that underscores Silicon Valley’s growing involvement in the financial services arena. In recent years, such firms have formed a lobbying group, Financial Innovation Now, that is staking out their view on various hot-button topics. But some firms are also meeting individually with government agencies. For example, Amazon lobbyists met with the Office of the Comptroller of the Currency starting in the second quarter of 2016, and again this year to discuss “issues related to mobile payments and payment processing, financial innovation, and technology," according to publicly available lobbying disclosures. PayPal, meanwhile, met with OCC officials in the second, third and fourth quarters of last year to discuss “mobile payment innovation” issues related to underserved customers and remittances and money transfers, according to its disclosures. Asked whether Amazon, which is run by CEO Jeff Bezos, should be allowed to own a bank, a former top regulator replied, "It's a tough decision that we are going to have to make one of these days."
The S&P Has Closed At New Record Highs 37 Times In 2017, The Most In 20 Years -- In a testament to the "buy the dip" mentality, or rather only remaining investing strategy in quasi-nationalized capital markets, BofA reports that the S&P 500 has closed at a new record high 37 times so far during 2017, the most in the Q1 to Q3 period since 1997, when the S&P closed at a new record 40 times before the start of Q4 (the most occurred in 1995 when there were 61 record closes). Additionally, 2017 still has the potential to top ’97 (40 records) as four trading days still remain in Q3, and judging by today's strong rebound we just may go for 38 by end of day. As BofA's Benjamin Bowler writes, "this high number of record closes further depicts how US stocks have continuously grinded higher as investors continue to buy every dip and keep volatility suppressed." It's not just the cash market however: another record was just observed in the VIX, which as we reported over the weekend, just saw the lowest September level on record. As BofA notes, despite NK, storms, and the Fed, the VIX has remained unusually low in Sep Shrugging off rising geopolitical tension with North Korea, several destructive storms, and the Fed’s plan to normalize its balance sheet, the VIX remained heavily subdued during September, defying seasonal trends. The average VIX close in September month-to-date is currently 10.60, which is the lowest average September on record.
Trump Now Live-Tweeting The Market: "Record High For S&P 500": Apparently, having nothing else to comment on this morning, moments ago the president tweeted that as of this moment, the S&P just hit its latest, 40th YTD, all time high in 2017."RECORD HIGH FOR S & P 500!" — Donald J. Trump (@realDonaldTrump) September 29, 2017Putting this declaration in context, in April 2016, Trump was feeling increasingly bearish about stocks. He told The Washington Post that they were overvalued and that the strong data that showed a healthy economy were essentially phony.“I think we’re sitting on an economic bubble. A financial bubble,” Mr. Trump said.By September, he was arguing that the Federal Reserve was propping up a “false economy” that is actually weak.“The only thing that is strong is the artificial stock market,” Mr. Trump told Reuters.Trump saved his most brutal assessment of the stock market, and the economy, for his first presidential debate with Hillary Clinton. In response to her criticism of his economic proposals, he said that the recovery was the worst since the Great Depression and that it would come crashing down the moment that interest rates rise.“The only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down,” Mr. Trump said. “We are in a big, fat, ugly bubble.Somehow we doubt there will be similar presidential enthusiasm on the way down.
Safety Becomes Stigma as Leveraged Loans Cut Out Covenants -- Protections have gotten so lax in the $1 trillion market for U.S. leveraged loans that if an offering comes with decent covenants, lenders take it as a sign that something’s wrong with the deal.“You do have to think twice when you see a loan with a covenant these days,” says Thomas Majewski, managing partner and founder of Eagle Point Credit Management.It’s not a crazy assumption in a market where 75 percent of new loans are now defined as “covenant-lite,” meaning a company could, for example, rack up as much debt as it wants regardless of its performance. In such a lenient atmosphere, the reasoning goes, a loan must be a stinker if a borrower has to resort to promising even standard protections. “It’s basically the worst it’s ever been in terms of loan covenant protections,” says Derek Gluckman, senior covenant officer at credit-rating firm Moody’s Investors Service. And that includes the heady pre-crisis year of 2007. A covenant-lite loan refers to debt where the issuer doesn’t have to meet periodic performance goals, known in the trade as maintenance covenants.It might make sense to cut some slack for bigger, more stable companies, but investors are raising the alarm on loans to middle-market borrowers with Ebitda under $50 million that have less room to bounce back from a mistake. Many small companies are unproven, first-time issuers, and the risks are even greater if their business is cyclical. At the same time, lenders are giving up compensation for the risk they’re taking by accepting skimpy yields and turning a blind eye to accounting maneuvers that downplay leverage
Online lending is 'natural evolution of banking': OCC's Noreika - — Acting Comptroller of the Currency Keith Noreika on Monday gave a ringing endorsement to online lenders seeking to expand into banking, suggesting they should consider taking deposits and seek out national bank charters as they mature.“Some pundits see the growth of the online lending industry as a response to the nation’s banking industry,” Noreika said in prepared remarks for a speech at the Online Policy Lending Summit, an annual industry conference. “And some say that if the industry had been sufficiently agile and fully met the need for lending, alternative lenders would not have grown so rapidly.”“I do not share that view,” Noreika said. “I see the growth of online lending and marketplace lenders as the natural evolution of banking itself.” Noreika argued that as it grows, the online lending industry has several reasons to consider directly entering the banking industry.“Some companies that set out to be ‘bank killers’ a few years ago are discovering the advantages of being part of the banking system,” he said, a nod to fintech firms like the online lender Social Finance and the payments processor Square, two companies that recently applied for industrial loan company charters in Utah. Noreika noted that as online lenders seek out new sources of funding, deposits are an attractive and cheap option.
JPMorgan Ordered To Pay Over $4 Billion To Widow And Family -- A Dallas jury ordered JPMorgan Chase to pay more than $4 billion in damages for mishandling the estate of a former American Airlines executive. Jo Hopper and two stepchildren won a probate court verdict over claims that JPMorgan mismanaged the administration of the estate of Max Hopper, who was described as an airline technology innovator by the family’s law firm. The bank, which was hired by the family in 2010 to independently administer the estate of Hopper, was found in breach of its fiduciary duties and contract. In total, JP Morgan Chase was ordered to pay at least $4 billion in punitive damages, approximately $4.7 million in actual damages, and $5 million in attorney fees.The six-person jury, which deliberated a little more than four hours starting Monday night and returned its verdict at approximately 12:15 a.m. Tuesday, found that the bank committed fraud, breached its fiduciary duty and broke a fee agreement, according to court papers. "The nation's largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they're too powerful to be held accountable," said Hopper in a statement. "The country's largest bank, people we are supposed to trust with our livelihood, abused my family and me out of sheer ineptitude and greed. I'm blessed that I have the resources to hold JP Morgan accountable so other widows who don't have the same resources will be better protected in the future."
US watchdog accused of going easy on Wells Fargo with $100M fine - The Consumer Financial Protection Bureau could have fined Wells Fargo in excess of $10 billion for its illegal sales practices but instead settled for $100 million, according to the agency’s internal documents released by congressional Republicans this week. The CFPB also had evidence that the bank’s sales problems went back to at least 2006 — far earlier than the 2011 to 2016 timetable that Wells Fargo originally admitted to, the documents show. “The bank knew since at least 2006 that its employees were gaming its incentive compensation program, yet failed to take actions sufficient to stop it,” CFPB employees wrote in a 2016 confidential memo. The documents were released as part of a politically charged report by the staff of House Financial Services Committee chairman, Rep. Jeb Hensarling. Hensarling (R-Texas) is a critic of the CFPB who along with other House Republicans has called for the firing of its director, Richard Cordray, an appointee of President Barack Obama, as well as for new laws to curtail the bureau’s authority over the financial services industry. It would take months for Wells Fargo to acknowledge publicly that its sales practices problems, in which employees trying to reach unrealistic sales goals opened accounts without customers’ permission, dated earlier than 2011. At first, then-Wells Fargo CEO John Stumpf agreed to expand its internal investigation to 2009. But when testifying in front of the Senate Banking Committee in late September 2016, he was reluctant to go back further than that. Eventually Wells Fargo would admit the sales practices problems as early as 2002 in a report issued by the bank’s board of directors earlier this year, roughly seven months after the CFPB’s fine. It is not clear why the CFPB chose 2011 as the original cut-off date for getting Wells Fargo to admit its sales practices problems. A Wells Fargo spokeswoman declined to comment on the date issue, but said the bank is reviewing the report.
Senate Republicans Plan to Sneakily Gut Major Consumer Protection Rule - Dave Dayen, Ryan Grim - In the middle of a consequential week for the future of American health care, Senate Republicans are hoping to sneak through a controversial nullification of a key rule from the Consumer Financial Protection Bureau. Republican leaders are whipping to secure the votes to overturn a rule CFPB finalized in July, which would protect financial companies from class-action lawsuits and deny consumers a day in court. The rule is among the most consequential actions the CFPB has taken since its founding. An added wrinkle here: Executives for both Wells Fargo and Equifax, both accused of ripping off millions of consumers, will testify in Senate committees next week. Both companies have used arbitration clauses in an attempt to deny consumers access to the courts. By getting the arbitration vote out of the way before the hearings, Republicans can avoid having to hand a gift to financial companies while Wells Fargo and Equifax sit squarely in the public spotlight. With Obamacare repeal sucking up all the oxygen, this week offers a perfect cover. Senate Majority Leader Mitch McConnell, R-Ky., recently told financial industry lobbyists at a dinner in Washington that he planned to bring the bill to the floor as soon as he had the votes, according to a Republican at the dinner. The CFPB’s rule bars consumer financial contracts from including clauses that force disputes into an arbitration proceeding, instead of allowing customers to join together with others in a class-action lawsuit. Critics say this gives financial institutions a license to rip people off, confident that only a maniac would go through years of costly arbitration to recover an erroneous $30 charge. “That is exactly what the banks are counting on. … They can get away with nickel and diming you forever,” said Sen. Elizabeth Warren, D-Mass., in a Senate floor speech Monday night. Rumors are bouncing among Democrats in the Senate and on K Street that McConnell could bring it to the floor for a vote as early as Tuesday. But with Alabama Sen. Luther Strange out campaigning, that makes a Tuesday vote highly unlikely. Don Stewart, a spokesperson for McConnell, noted that a vote is not yet on the schedule.
CFPB examiners moved through training program too fast, IG says -- The Consumer Financial Protection Bureau may have encouraged some examiners to move through its examiner commissioning program before they were ready, limiting their likelihood of success, the agency's Office of Inspector General said in a report released Monday. The CFPB has taken steps to enhance the examiner commissioning program, which the bureau has described as an important component of its supervisory program, since it was implemented in 2014, the agency's watchdog said.
CFPB penalizes title company over RESPA steering - The Consumer Financial Protection Bureau fined an Indiana title company $1.25 million on Wednesday for steering borrowers to an affiliated title insurer without disclosing that three executives are owners of the insurer.The CFPB found that Meridian Title in South Bend, Ind., failed to disclose its numerous executive relationships with Arsenal Insurance, a title insurer in Camden, Ind. The companies have offices in Indianapolis that are within five miles of each other.The bureau found that Meridian routinely selected Arsenal as the title insurance underwriter for its customers and was able to keep extra money beyond the commissions it normally would have been entitled to collect. “Meridian Title illegally steered consumers into purchasing a product from an affiliated company to add to its bottom line,” CFPB Director Richard Cordray said in a press release. “We’re ordering it to halt this practice and pay up to $1.25 million to consumers who were harmed.” Meridian's president and CEO, Mark Myers, did not return a phone call and email seeking comment. Arsenal also did not return a call seeking comment.
Democrats push CFPB's Cordray to move on overdraft rules -— House Democrats are pushing a bill to reform the way banks charge overdraft fees, but recognizing that Republicans are unlikely to take up the legislation, they are hoping Consumer Financial Protection Bureau Director Richard Cordray could address the issue without Congress. “Overdraft fees hit the consumers who can afford them the least — cash-strapped hardworking Americans who are struggling to pay their bills,” Rep. Carolyn Maloney, D-N.Y., said in a press release Wednesday. “This is why I am not only working to pass my Overdraft Protection Act but am also calling on CFPB Director Cordray to act on this before his term ends."
Finance Industry Plans Lawsuit to Overturn CFPB Rule - A coalition of corporate lobbying groups, led by the U.S. Chamber of Commerce, sued the Consumer Financial Protection Bureau to overturn a rule that makes it easier for aggrieved customers to file lawsuits against financial firms. The litigation, filed Friday in a federal court in Dallas, challenges the CFPB’s controversial effort to curb forced arbitration. The plaintiffs include the chamber, the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable, the American Financial Services Association and groups representing Texas businesses. The groups filed the lawsuit as the fight over the CFPB’s regulation comes to a head on Capitol Hill. While the agency argued that it gives consumers more power to hold firms accountable, some Republicans say the rule will mostly benefit trial lawyers and could result in Americans paying higher interest rates on credit cards and other financial products. GOP lawmakers are trying to overturn the regulation through legislation, though they have a limited time to do so and it’s not clear they have enough votes in the Senate. The CFPB rule, approved in July, targets arbitration clauses that are often buried in the fine print of contracts that consumers sign when they get new credit cards or open up checking accounts. The clauses prevent customers from banding together to file class-action lawsuits, instead requiring them to settle disputes through arbitration. The lawsuit filed by the chamber and other groups argues that CFPB actions aren’t valid because its structure, as created through the 2010 Dodd-Frank Act, is unconstitutional. They also challenged the research the CFPB used to write the arbitration rule, saying it’s flawed and that the regulator ignored evidence that shows its regulation will harm consumers.
The growing use of mandatory arbitration: Access to the courts is now barred for more than 60 million American workers - In a trend driven by a series of Supreme Court decisions dating back to 1991, American employers are increasingly requiring their workers to sign mandatory arbitration agreements. Under such agreements, workers whose rights are violated can’t pursue their claims in court but must submit to arbitration procedures that research shows overwhelmingly favor employers.In reviewing the existing literature on the extent of this practice, we found that the share of workers subject to mandatory arbitration had clearly increased in the decade following the initial 1991 court decision: by the early 2000s, the share of workers subject to mandatory arbitration had risen from just over 2 percent (in 1992) to almost a quarter of the workforce. However, more recent data were not available. In order to obtain current data for our study, we conducted a nationally representative survey of nonunion private-sector employers regarding their use of mandatory employment arbitration.This study finds that since the early 2000s, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent. This trend has weakened the position of workers whose rights are violated, barring access to the courts for all types of legal claims, including those based on Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act. In October 2017, the Supreme Court will hear a set of consolidated cases challenging the inclusion of class action waivers in arbitration agreements. Class action waivers bar employees from participating in class action lawsuits to address widespread violations of workers’ rights in a workplace. The Court will rule on whether class action waivers are a violation of the National Labor Relations Act; their decision could have wide-reaching implications for workers’ rights going forward.
CMBS lost more ground to other lenders in 2Q - Commercial mortgage bonds ceded more ground to other kinds of lenders in the second quarter, according to the Mortgage Bankers Association. The amount of commercial and multifamily mortgage debt outstanding ticked up from April through June, yet the balance of loans in commercial mortgage-backed securities continued its decline, with more loans being paid off than new loans being originated.Total commercial and multifamily mortgage debt outstanding rose to $3.06 trillion at the end of June, an increase of $48.7 billion, or 1.6%, over the end of March.Multifamily mortgage debt outstanding rose to $1.2 trillion in the second quarter, an increase of $21.7 billion, or 1.8%, over the first quarter.It was the fi rst time since 2015 that the dollar increase in multifamily mortgages was slower than the growth in debt backed by other property types, At the same time, CMBS balances declined by $10 billion during the second quarter. And that followed a decline of more than $20 billion in the first quarter.As a result, CMBS along with other kinds of securitizations, hold just $428 billion, or 14% of the total.
CMBS late pays fall in September for 3rd straight month -- Late payments on securitized commercial mortgages fell in September for the third consecutive month. The Trepp CMBS Delinquency Rate is now 5.4%, a decrease of four basis points from the August level. Delinquencies on office buildings, retail, hotels, apartment buildings and industrial property loans hit a post-crisis low of 4.15% in February 2016, then climbed consistently for more than a year as loans issued in 2006 and 2007 reached their maturity dates and did not pay off. Commercial mortgages generally have terms of 10 years and repay the bulk of principal in a final, balloon payment. So while the worst pre-crisis loans went bad early, a number of borrowers who obtained loans with very loose terms right before the financial crisis were able to keep making interest payments. It was only when they had to refinance that they ran into problems. In the 16 months between March 2016 and June 2017, the delinquency rate moved up 13 times. The September 2017 rate is 62 basis points higher than the year-ago level and 17 basis points higher year-to-date.
Nationstar preps reverse mortgage bonds with heavy exposure to judicial states - Investing in Nationstar’s next defaulted reverse mortgage securitization may require some patience. The collateral for Nationstar HECM Loan Trust Asset-Backed Notes, Series 2017-1 involves 1,360 loans and 200 properties totaling $422.3 million, according to Moody’s Investors Service. Reverse mortgages are loans issued to borrowers 62 or older to convert a portion their home equity into cash. Nationstar, which is controlled by Fortress Investment Group, acquired all of the loans from Ginnie Mae-sponsored securitizations. As with the servicer’s previous seven deals, payments to the notes will primarily come from the sale of repossessed properties and insurance claim payments from the Federal Housing Administration. However, the timing of the receipt of these funds depends on local real estate markets. And nearly half of the properties are in New York (30.3%), New Jersey (10.4%) or Florida (8.7%), states that require a court to sign off on a foreclosure, a lengthy process.
Reverse mortgage demand spikes ahead of HUD rule change - Reverse mortgage lenders are stretched thin to the point of having to turn borrowers away amid a surge in demand from seniors rushing to get loans before Department of Housing and Urban Development policy changes take effect Oct. 2.The new rules will revamp fees and lower loan limits on Home Equity Conversion Mortgages in an attempt to stabilize the program's financial footing. HECM loan applications have spiked notably since HUD announced the changes in late August, according to ReverseVision, developers of a loan origination system for reverse lenders."Applications have increased at least 12% from Aug. 25 to Sept. 25, echoing the flurries of activity we saw following the introduction of changes to the program in the past, such as HECM60 and Financial Assessment," said Wendy Peel, a vice president at the San Diego technology firm."Scrambling is the best way to put it," said Justin Knock, director of business development at San Diego-based lender Reverse Mortgage Lending. "For customers considering a reverse mortgage, it really pushed a lot of them off the fence. The changes to the principal limit factor rules are pretty drastic, and left a lot of borrowers with a now-or-never decision to make."
Ginnie chief vows tougher scrutiny of issuers after IG’s criticism - Ginnie Mae pledged to vet issuers more thoroughly after a government watchdog criticized its exposure to risks posed by nonbanks.A report by the Department of Housing and Urban Development's inspector general took Ginnie to task for inadequate management of the growing number of nonbanks among its issuers. But banks and nonbanks alike will be watched more closely, said Michael Bright, the acting president of Ginnie."We want more information from the issuers who are our counterparties," Bright said.Nonbanks, unlike banks, tend to operate monoline mortgage business and rely more on third-party financing because they lack balance sheets and deposits, and could in some cases "see liquidity dry up faster than a diversified bank," Bright said.But "banks can go under, too," he said."A balance sheet is not a panacea," he said, noting that diversified business lines are not necessarily a cure-all. The various financial services a bank offer could be, for example, concentrated in a region where there are economic concerns.
Corker’s retirement may change GSE reform calculus - — Sen. Bob Corker, R-Tenn., a key voice in the debate over housing finance reform and one of the Senate Banking Committee’s most influential members, announced Tuesday that he will not seek re-election in 2018.His departure puts a deadline of sorts on his ongoing efforts to unwind and replace Fannie Mae and Freddie Mac, an endeavor he started in earnest four years ago but which so far has failed to gain traction. Corker and Sen. Mark Warner, D-Va., have been the driving force behind a bill to eliminate the government-sponsored enterprises and replace them with private firms backed by a catastrophic government guarantee.It remains unclear whether Corker can help make that vision a reality in the remaining 15 months he has left in office. “It puts a deadline on everything he wants done,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, who called him one of the “most knowledgeable” policymakers on the issue...next year is also the last chance for House Financial Services Committee Chairman Jeb Hensarling to significantly shape GSE reform, because he faces a GOP term limit as the head of the panel.
Ginnie accelerates issuer buyouts in response to storms -- Ginnie Mae is giving expanded loan buyout authority to certain issuers in order to help them remove loans affected by Hurricanes Irma and Harvey from securitized mortgage pools. Ginnie will allow issuers with a certain percentage of collateral pool properties affected to request approval to buy out loans if borrowers are in distress or properties are damaged due to the storms. The buyout authority extends through March of next year. "The purpose of this action is to facilitate the ability of our issuers to provide relief to borrowers as provided for by the federal agencies that guarantee the loans in Ginnie Mae securities," said Ginnie Mae Acting President Michael Bright in a press release. "The purpose of this action is to facilitate the ability of our issuers to provide relief to borrowers as provided for by the federal agencies that guarantee the loans in Ginnie Mae securities," said Ginnie Mae Acting President Michael Bright. "In extraordinary situations such as this, accelerating buyout authority allows issuers to render assistance more quickly than under standard program guidelines." The expanded buyout authority is among the ways Ginnie is fulfilling an earlier offer to assist issuers that had more than 5% of collateral pool properties affected by Hurricane Harvey, and a subsequent extension of that relief after Hurricane Irma.
Ocwen settles servicing lawsuit with 10 states - Ocwen Financial has reached a settlement with 10 states under which it may not acquire servicing rights for eight months but will avoid financial penalties.The settlement does not end the lawsuits filed in April against the West Palm Beach, Fla., company by the Consumer Financial Protection Bureau and 19 other states. In response, Ocwen sued the CPFB, challenging its constitutionality.Allegations that Ocwen mishandled escrow accounts were at the heart of the actions brought by the 10 states that took part in the settlement, and are the subject of the pending suits.The CFPB and the Florida Office of Financial Regulation declined to comment about the settlement. The North Carolina Commissioner of Banks, the other lead state on the April lawsuits, said its cease-and-desist order is still in place.The settlement bars Ocwen from acquiring mortgage servicing rights until April 30, 2018, according to an 8-K filing Thursday with the Securities and Exchange Commission. The company agreed to find a new servicing platform and will not add any new loans to the RealServicing system it currently uses. The settlement also allows Ocwen to merge with or acquire an unaffiliated company or its assets to complete the shift from RealServicing to the new platform provided it gives state regulators a 30-day notice and the states do not object to the transaction.
Freddie Mac: Mortgage Serious Delinquency rate declined in August, Lowest since April 2008 -- Freddie Mac reported that the Single-Family serious delinquency rate in August was at 0.84%, down from 0.85% in July. Freddie's rate is down from 1.03% in August 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the lowest serious delinquency rate since April 2008.These are mortgage loans that are "three monthly payments or more past due or in foreclosure". Although the rate is still generally declining, the rate of decline has slowed. In the short term - over the next several months - the rate will probably increase slightly due to the hurricanes. After the hurricane bump, maybe the rate will decline another 0.2 to 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.
Fannie Mae: Mortgage Serious Delinquency rate declined in August, Lowest since December 2007 - Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 0.99% in August, from 1.00% in July. The serious delinquency rate is down from 1.24% in August 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%.
MBA: Mortgage Applications Decrease Slightly in Latest Weekly Survey - From the MBA: Mortgage Applications Slightly Decrease in Latest MBA Weekly SurveMortgage applications decreased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 22, 2017.... The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 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) increased to 4.04 percent from 4.03 percent, with points remaining unchanged at 0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Mortgage rates end the week flat - Mortgage rates remained unchanged from last week even though the 10-year Treasury yield first moved lower then spiked up during the period, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 3.83% for the week ending Sept. 28, the same as last week. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.42%. This week-to-week snapshot does not show the gyrations in the 10-year Treasury yield that took place during the week. The 10-year Treasury closed at 2.28% on Sept. 21. By Sept. 25, it slipped to 2.22% before increasing by 2 basis points on Sept. 26. But the yield spiked 7 basis points to 2.31% on Sept. 27. The 15-year fixed-rate mortgage averaged 3.13%, also the same as last week. A year ago at this time, the 15-year fixed-rate mortgage averaged 2.72%. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.2% this week, up from last week when it averaged 3.17%. A year ago at this time, the five-year adjustable-rate mortgage averaged 2.81%.
Black Knight: House Price Index up 0.5% in July, 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: Monthly Rate of Appreciation Slows as U.S. Home Prices Gain 0.5 Percent in July, Year-Over-Year Growth Steady at 6.2 Percent
• The rate of growth in year-over-year price appreciation stabilized in July after accelerating throughout every month of 2017The year-over-year increase in this index has been about the same for the last year (in the 5% and 6% range). Note that house prices are above the bubble peak in nominal terms, but not in real terms (adjusted for inflation).
• After hitting a high of 1.3 percent in March 2017, the rate of monthly appreciation has steadily slowed over subsequent months
• July marks 63 consecutive months of annual home price appreciation
• Of the 20 largest states, only Virginia saw home prices pull back, with a 0.2 percent month-over-month decline from June
Case-Shiller: National House Price Index increased 5.9% year-over-year in July -- S&P/Case-Shiller released the monthly Home Price Indices for July ("July" is a 3 month average of May, June and July prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: The S&P Corelogic Case-Shiller National Home Price Index Continues to Rise: The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.9% annual gain in July, up from 5.8% the previous month. The 10-City Composite annual increase came in at 5.2%, up from 4.9% the previous month. The 20-City Composite posted a 5.8% year-over-year gain, up from 5.6% the previous month. Seattle, Portland, and Las Vegas reported the highest year-over-year gains among the 20 cities. In July, Seattle led the way with a 13.5% year-over-year price increase, followed by Portland with a 7.6% increase, and Las Vegas with a 7.4% increase. Twelve cities reported greater price increases in the year ending July 2017 versus the year ending June 2017. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.7% in July. The 10-City and 20-City Composites reported increases of 0.8% and 0.7% respectively in July. After seasonal adjustment, the National Index recorded a 0.5% month-over-month increase. The 10-City Composite posted a 0.4% month-over-month increase. The 20-City Composite posted a 0.3% month-over-month increase. All 20 cities reported increases in July before seasonal adjustment; after seasonal adjustment, 17 cities saw prices rise. “Home prices over the past year rose at a 5.9% annual rate,”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 6.3% from the peak, and up 0.4% in July (SA).The Composite 20 index is off 3.5% from the peak, and up 0.35% (SA) in July. The National index is 3.8% above the bubble peak (SA), and up 0.5% (SA) in July. The National index is up 40.3% from the post-bubble low set in December 2011 (SA).The second graph shows the Year over year change in all three indices.The Composite 10 SA is up 5.2% compared to June 2016. The Composite 20 SA is up 5.8% year-over-year. The National index SA is up 5.9% year-over-year. Note: According to the data, prices increased in 17 of 20 cities month-over-month seasonally adjusted.
Case-Shiller Home Prices Rise At Fastest Pace In 3 Years, Hit New Record High -- Despite a slew of disappointing sales (new, existing, and pending), Case-Shiller reports national home prices rose 5.94% YoY - the fastest rise since June 2014 - hitting a new record high (now over 5% above 2006's peak). It has now been 36 straight months that the S&P CoreLogic Case-Shiller 20-City Compoosite home price index has risen at approximately 5 to 6% annually and it has been 62 months without any YoY price drops... Gains in New York and Los Angeles dominated the annual performance. As Bloomberg highlights, buyers are competing for a limited number of for-sale homes, allowing sellers to boost asking prices. Property values are consistently outpacing wage growth, helping explain why the share of first-time buyers of previously owned homes in August was at a one-year low. At the same time, owners’ equity as a share of total real-estate holdings climbed in the second quarter to the highest level in 11 years.Home prices may also get a boost in coming months after hurricanes Harvey and Irma reduced housing supply in parts of Texas and Florida. Affordability may remain challenging, as both sales and construction are interrupted by clean-up efforts. At the same time, a strong labor market and low-borrowing costs continue to encourage hopeful homebuyers.While home prices continued to advance strongly along the northwest part of the country, values were also picking up in Denver, Dallas and Las Vegas -- underscoring a broadening of appreciation throughout the U.S. Las Vegas, one of the hardest-hit cities during the housing collapse, registered the third-largest year-over-year advance in July.
Real House Prices and Price-to-Rent Ratio in July -- 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 3.8% 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 in the 5% to 6% range. In July, the index was up 5.9% 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 July) in nominal terms as reported. 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. In real terms, the National index is back to August 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.
Zillow Forecast: "August Case-Shiller Forecast: Annual Home-Price Gains Aiming Higher" -- The Case-Shiller house price indexes for July 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: August Case-Shiller Forecast: Annual Home-Price Gains Aiming HigherThe Case-Shiller U.S. National Index is expected to continue its upward climb in August, gaining 6.0 percent year-over-year following a 5.9 percent increase in July. The monthly gain is forecast at 0.4 percent, slightly below the 0.5 percent uptick in July.The 10- and 20-city indices are expected to post annual gains of 5.3 percent and 5.9 percent, respectively — both climbing a hair faster than they did year-over-year in July. And both are forecast to post monthly gains of 0.3 percent in August. Below is Zillow’s full forecast for August Case-Shiller data. These forecasts are based on today’s June Case-Shiller data release and the August 2017 Zillow Home Value Index. The August S&P CoreLogic Case-Shiller Indices will not be released officially until Tuesday, October 31. The year-over-year change for the Case-Shiller National index will probably be slightly larger in August than in July.
New Home Sales decrease to 560,000 Annual Rate in August -- The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 560 thousand. The previous three months combined were revised down."Sales of new single-family houses in August 2017 were at a seasonally adjusted annual rate of 560,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.4 percent below the revised July rate of 580,000 and is 1.2 percent below the August 2016 estimate of 567,000." The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. Even with the increase in sales over the last several years, new home sales are still somewhat low historically.The second graph shows New Home Months of Supply. The months of supply increased in August to 6.1 months from 5.7 month in July. The all time record was 12.1 months of supply in January 2009. This is at the top of the normal range (less than 6 months supply is normal). Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973.
New-home sales cool, supply jumps as storms strike South -- A second straight decline in purchases of new homes, combined with downward revisions for prior months, show a tepid market as results begin to be clouded by the fallout from Hurricanes Harvey and Irma, according to government data Tuesday.Single-family home sales fell 3.4% month-to-month to a 560,000 annualized pace (the estimate was 585,000) after a 580,000 rate (revised from 571,000). The supply of homes at the current sales rate rose to 6.1 months, the highest since July 2014; 284,000 new houses were on the market at end of August, the most since May 2009. Purchases fell in three of four U.S. regions, led by a 4.7% decrease in the South; unchanged in the Midwest. While data aren't available at the state or local level, areas in Texas and Florida affected by Harvey and Irma accounted for about 14% of single-family housing units authorized by permits in 2016, the Census Bureau said in a special notice. If no sales information is received by the government, the units' status is assumed to be unchanged. It may be hard to get a clear read on the market's underlying trends in the next few months as economic data become volatile thanks to three major hurricanes: Harvey in southeast Texas in late August, Irma in Florida in early September and Maria in Puerto Rico last week. Even without the impact of the storms, rising prices were crimping affordability, especially for younger, first-time buyers who also find it harder to get credit. At the same time, steady hiring and low borrowing costs are likely to keep underpinning demand in what’s been a gradual housing recovery.
Housing Horrors Continue: New Home Sales Tumble To Lowest Since 2016 --Extending July's weakness (in new, existing, and pending home sales), August is off to a rough start with existing sales and now new home sales has collapsed (down 3.4% vs expectations of a 2.5% gain). July's big plunge in sales was revised slightly higher but this left August with a 560k SAAR sales rate - the weakest since Dec 2016. This is the first back to back decline in new home sales since June 2016. Bloomberg does not that there may be caveats to this data (aren't there always?). While data aren’t available at the state or local level, areas in Texas and Florida affected by Harvey and Irma accounted for about 14 percent of single-family housing units authorized by permits in 2016, the Census Bureau said in a special notice. If no sales information is received by the government, the units’ status is assumed to be unchanged. It may be hard to get a clear read on the market’s underlying trends in the next few months as economic data become volatile thanks to three major hurricanes: Harvey in southeast Texas in late August, Irma in Florida in early September, and Maria in Puerto Rico last week. On the bright side, Median home prices tumbled...
Even leaving out the hurricane affected South, new home sales decline: Yesterday's new home sales report, on a nationwide basis anyway, can be thrown into the trash basket. As the Census Bureau made clear, about 30% fewer counties in Florida and Texas were unable to report. Further, those two states combined accounted for 14% of the total market in 2016. Note, by the way, that Irma didn't hit Florida until September, so probably only a decline in Texas is reflected in the August number. For the record, however, sales of new single family homes have failed to make a new high for 5 months (blue in the graph below), and do accord with the stagnation shown by the much less volatile metric of permits for single family homes (red): Here's what the 3 month nationwide moving average of new home sales, that smooths out most of the volatility, looks like so far this year: The three month moving average has failed to make a new high since March. Since the Census Bureau does collect this data on a regional basis, we can avoid the hurricane complications by showing only those sales for the Northeast, Midwest, and Western regions and omitting the South. Here's what that looks like: Like the national data, this data peaked in March both on a monthly basis as shown, but also on as a 3 month rolling average. Since this is *not* affected by the hurricanes, it absolutely does confirm a slowdown. Median prices were probably less affected by the hurricanes, but with that caveat, the very slow uptrend since the beginning of last year that was indicated last month may have been broken, as the median price of a new home in August 2017 was just slightly above what it was 12 months before:
More hurricane pain: Fewer homes, shortage of construction workers - The need to rebuild and repair houses following Hurricanes Harvey and Irma is likely to put a damper on new construction and aggravate the inventory shortage.The same crews that build new homes are also used to renovate existing ones, said Mark Fleming, chief economist at First American Financial Corp.After any storm, "there is a material slowdown in the pace of new construction because all of the construction workers are busy repairing the existing homes," Fleming said. "So the housing stock stops growing as much as it had been, but that's really the only longer-term implication."Even before the recent storms, there was a labor shortage in the home building industry."This will only serve to exacerbate the existing shortage-of-supply problem. It's hard to know at this junction if the magnitude of that exacerbation is significant or not," Fleming said.In August, the residential construction industry employed 786,400 people, the second most since the housing bust, according to preliminary data from the Bureau of Labor Statistics. There were 1.4 million people employed in residential building at its peak in August 2006. Employment bottomed out at 528,000 in February 2011. "Labor shortages have been the story of the construction underperformance for the last three years," said Redfin Chief Economist Nela Richardson. "A lot of those workers will be diverted to rebuilding and repair, not just the homes, but the infrastructure damaged during the storm. So it is a bleak picture from a new construction point of view."
A few Comments on August New Home Sales --Mcbride - New home sales for August were reported at 560,000 on a seasonally adjusted annual rate basis (SAAR). This was below the consensus forecast, and the three previous months combined were revised down. However there was probably some negative impact from hurricane Harvey (not clear the size of the impact). Sales were down 1.2% year-over-year in August. This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate). Sales were down 1.2% year-over-year in August. For the first eight months of 2017, new home sales are up 7.5% compared to the same period in 2016. This was a solid year-over-year increase through August. And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales. Now I'm looking for the gap to close over the next several years. The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through August 2017. This graph starts in 1994, but the relationship had been fairly steady back to the '60s. Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales. The gap has persisted even though distressed sales are down significantly, since new home builders focused on more expensive homes. I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales. However, this assumes that the builders will offer some smaller, less expensive homes. If not, then the gap will persist.
New Home Prices - Bill Mcbride - As part of the new home sales report released on Tuesday, the Census Bureau reported the number of homes sold by price and the average and median prices.From the Census Bureau: "The median sales price of new houses sold in August 2017 was $300,200. The average sales price was $368,100."The following graph shows the median and average new home prices. During the housing bust, the builders had to build smaller and less expensive homes to compete with all the distressed sales. When housing started to recovery - with limited finished lots in recovering areas - builders moved to higher price points to maximize profits. The average price in August 2017 was $368,100, and the median price was $300,200. Both are above the bubble high (this is due to both a change in mix and rising prices). The second graph shows the percent of new homes sold by price. About 4% of new homes sold were under $150K in August 2017. This is about the same as in August 2016, but down from 30% in 2002. In general, the under $150K bracket is going away. The $400K+ bracket has increased significantly. I'll break that bracket up in the future.A majority of new homes, in the U.S., are in the $200K to $400K range.
NAR: Pending Home Sales Index decreased 2.6% in August, down 2.6% year-over-year - From the NAR: Pending Home Sales Fall 2.6 Percent in August; 2017 Forecast Downgraded: Pending home sales sank in August for the fifth time in six months, and slower activity in the areas hit hard by Hurricanes Harvey and Irma will likely pull existing sales for the year below the pace set in 2016, according to the National Association of Realtors®.The Pending Home Sales Index, a forward-looking indicator based on contract signings, retreated 2.6 percent to 106.3 in August from 109.1 in July. The index is now at its lowest reading since January 2016 (106.1), is 2.6 percent below a year ago, and has fallen on an annual basis in four of the past five months. The PHSI in the Northeast fell 4.4 percent to 93.4 in August, and is now 4.1 percent below a year ago. In the Midwest the index decreased 1.5 percent to 101.8 in August, and is now 3.2 percent lower than August 2016. Pending home sales in the South retreated 3.5 percent to an index of 118.8 in August and are now 1.7 percent below last August. The index in the West declined 1.0 percent in August to 101.3, and is 2.4 percent below a year ago. This was below expectations of a 0.1% decrease for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in September and October.
Reis: Apartment Vacancy Rate increased in Q3 to 4.5% - Reis reported that the apartment vacancy rate was at 4.5% in Q3 2017, up from 4.4% in Q2, and up from 4.1% in Q3 2016. This is the highest vacancy rate since Q4 2012 (although the increase has been small). The vacancy rate peaked at 8.0% at the end of 2009. From Reis: The apartment market continued to withstand the pressure from added supply in the third quarter as the national vacancy rate increased only 10 basis points to 4.5% in the quarter. With so much construction underway, vacancy rates were thought to grow higher. More importantly, asking rents increased 1.0% in the third quarter, while effective rents grew 0.9%... Total inventory is still expected to increase significantly in 2017 and 2018; however, construction in the third quarter, 47,271 units, was again lower than expected. That said, this number should be revised once things get settled in Florida and Houston – two areas that have seen significant construction this year.At 4.5%, the national vacancy rate increased 10 basis points from 4.4% in the second quarter. One year ago, the vacancy rate was 4.1%. Occupancy growth, or net absorption, was 31,352 units, lower than new supply. This pushed the vacancy rate up in the quarter. This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999). Note: Reis is just for large cities. The vacancy rate had been mostly moving sideways for the last few years. However it appears the vacancy rate has bottomed and is starting to increase. With more supply coming on line later this year and next - and less favorable demographics - the vacancy rate will probably continue to increase slowly.
Renters find few options after Hurricane Irma - The plight of Orlando-area renters sheds light on a new set of post-Irma realities — rent payments on uninhabitable homes and apartments, challenges getting rent deposits refunded and few housing options in a tight rental market."It's kind of like being stuck in the mud right now," said Jay Myers, owner of Orlando Realty and Property Management. "You just have to work your way through it."Of the 600 Central Florida rental properties his group manages, only about 1.5% were vacant leading up to Irma. That supply has tightened further with damaged properties. Also, residents of Naples and other harder-hit areas have started looking for rentals in Orlando, Myers said. The advantage goes to tenants with pay stubs and tax returns in hand but, even then, the process has slowed, he added.Moll and Ryan Rose, 26, had to suddenly leave their home as Irma swept through the Orlando area early Sept. 11. An old pecan tree crushed the house Rose had rented for three years. Apopka firefighters responded within 10 minutes and told the couple to evacuate. The couple crammed a few belongings into bags, and grabbed their Chihuahua mix and two dogs owned by a roommate who was away. They left in their roommate's Tahoe SUV, dodging downed trees en route to a friend's house near Longwood. Their hopes of getting back all of the $1,500 deposit on their rental were dashed in part because Rose's lease exempted refunds for natural disasters. Orlando attorney Justin Clark said the "force majeure" lease clause about natural disasters isn't all that common but just another challenge renters may face when their house becomes inhabitable. He suggested tenants discuss options for discounted rent or a short break on rent.
Baltimore’s ‘Kushnerville’ Tenants File Class Action Against Landlord - Tenants of the Baltimore-area apartment complexes owned by Jared Kushner’s real-estate company have brought a class-action lawsuit against the firm’s property management arm over its aggressive pursuit of tenants for allegedly unpaid rent. The lawsuit, filed Wednesday in Circuit Court for Baltimore City, alleges that the management company and related corporate entities have been improperly inflating payments owed by tenants by charging them late fees that are often unfounded and court fees that are not actually approved by any court. This, the lawsuit charges, sets in motion a vicious cycle in which tenants’ rent payments are partly assessed toward the fees instead of the actual rent owed, thus deeming the tenant once again “late” on his or her rent payment, leading to yet more late fees and court fees. Making matters worse, the 5 percent late fees are frequently assessed on principal that includes allegedly unpaid fees, not just the rent itself. Tenants are pressured to pay the snowballing bills with immediate threat of eviction, the suit alleges. “The routine practice of charging tenants illegal fees combined with filing eviction proceedings against tenants who have paid their rent on time is predatory and destructive to hard-working Marylanders and their families. This is yet another example of corporations profiting from deceptive policies,” said Chelsea Ortega of Santoni, Vocci & Ortega, a Baltimore-area firm that has also brought class-action suits for similar “fee-churning” practices against two other large property management companies in the area. In this case, the firm is working with Brown Goldstein & Levy, a Baltimore firm specializing in civil rights cases, and the Public Justice Center, a civil legal aid office based in Baltimore that has also brought cases against area landlords over similar practices.
Hotel Occupancy Rate just Behind Record Year --From HotelNewsNow.com: STR: US hotel results for week ending 16 September The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 10-16 September 2017, according to data from STR.
In comparison with the week of 11-17 September 2016, the industry recorded the following:
• Occupancy: +0.5% to 72.2%
• Average daily rate (ADR): +1.4% to US$131.50
• Revenue per available room (RevPAR): +1.8% to US$94.97
Among the Top 25 Markets, Houston, Texas, reported the largest year-over-year increases in occupancy (+43.3% to 87.8%) and RevPAR (+58.6% to US$103.24). Amid recovery from Hurricane Harvey, Houston also posted an ADR increase of 10.7% to US$117.63.
Tampa/St. Petersburg, Florida, posted the second-highest lift in occupancy (+13.8% to 70.3%), that coupled with the highest increase in ADR (+14.1% to US$119.06), led the second-largest jump in RevPAR (+29.9% to US$83.75).
Reis: Office Vacancy Rate "flat" in Q3 at 16.1% - Reis released their Q3 2017 Office Vacancy survey this morning. Reis reported that the office vacancy rate was unchanged at 16.1% in Q3, from 16.1% in Q2. This is also unchanged from 16.1% in Q3 2016, and down from the cycle peak of 17.6%.From Reis Economist Barbara Denham: Continuing its steady but sluggish pace, the office market recorded no change in vacancy rate in the third quarter. Currently at 16.1% for the second quarter in a row, the national office vacancy rate has moderated between 16.0% and 16.1% for the last seven quarters. Construction fell to 6.5 million square feet from 10.4 million last quarter and 8.1 million in the third quarter of 2016. Net absorption, or occupancy growth, was in line with construction at 5.4 million. Last quarter’s net absorption was 4.8 million square feet, and third quarter 2016 net absorption was 3.7 million square feet.Although the office market seems to be stalling in this expansion with a persistently high vacancy rate relative to previous expansions — vacancy fell to 12.5% in 2007 from 17.0% in 2003 — one could argue that the market is in equilibrium as occupancy growth moves in line with inventory growth. Still, office employment growth in 2017 for the metro areas has averaged 2.0% (year-over-year through August), down from an average annual growth rate of 2.4% in 2016 and 2.8% in 2015. This means that office demand growth has been slightly weaker over the last eight months than in previous years. ... Asking and effective rents have both increased 1.5% since the third quarter of 2016. This is the lowest year-over-year rent growth rate since 2011 and the third quarter in a row that year-over-year effective rent growth was below 2%.
Personal Income increased 0.2% in August, Spending increased 0.1% -- The BEA released the Personal Income and Outlays report for August: Personal income increased $28.6 billion (0.2 percent) in August according to estimates released today by the Bureau of Economic Analysis ... personal consumption expenditures (PCE) increased $18.0 billion (0.1 percent)... Real PCE decreased 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent. The August PCE price index increased 1.4 percent year-over-year and the August PCE price index, excluding food and energy, increased 1.3 percent year-over-year. The following graph shows real Personal Consumption Expenditures (PCE) through August 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 below expectations, and the increase in PCE was at expectations. Using the two-month method to estimate Q3 PCE growth, PCE was increasing at a 1.7% annual rate in Q3 2017. (using the mid-month method, PCE was increasing 1.0%). This suggests sluggish PCE growth in Q3.
Real Personal Spending Drops Most Since Jan 2016 -- Growth in income and spending has been trending slower for the last six months and August showed continued weakness in spending (slowest annual growth since Aug 2016) but a slight uptick in incomes. This is not the 3.1% GDP exuberance you were looking for!Of course all of this comes with a big fat saveat from the government data-mashers:The August estimates of personal income and outlays reflect the effects of Hurricane Harvey that made landfall in southeastern Texas on August 25th. BEA cannot separately quantify the total impact of the storm on personal income and outlays because most of the source data used to estimate the components of personal income and outlays do not separately identify storm impacts.
Fed Stunner: Top 1% Of Americans Are 70% Wealthier Than The Bottom 90% - Today, the Federal Reserve released its triennial Survey of Consumer Finances (SCF) which collects information about family incomes, net worth, balance sheet components, credit use, and other financial outcomes. A superficial flip through the pages of the 2016 SCF reveals broad-based gains in income and net worth since the previous time the survey was conducted, in 2013. Unfortunately, reading between the lines reveals that while net worth and income did increase in the past three years, it was almost entirely for the "top 10%" of Americans. The "bottom 90%" got virtually nothing of this so-called recovery.First, here is the report's summary, taken verbatim and meant to demonstrate just what a great job at "wealth creation" the Fed is doing:
- Between 2013 and 2016, median family income grew 10 percent, and mean family income grew 14 percent
- Families throughout the income distribution experienced gains in average real incomes between 2013 and 2016, reversing the trend from 2010 to 2013, when real incomes fell or remained stagnant for all but the top of the income distribution.
- Families without a high school diploma and nonwhite and Hispanic families experienced larger proportional gains in incomes than other families between 2013 and 2016, although more-educated families and white non-Hispanic families continue to have higher incomes than other families.
- Families at the top of the income distribution saw larger gains in income between 2013 and 2016 than other families, consistent with widening income inequality.
The Rich Get Richer: America's Top 1% Now Control 38% of the Wealth - Real estate prices in many of the top zip codes in America have doubled over the past 5 years. In some hotter markets in California, gains are in excess of 200%. The tech heavy NASDAQ is +121% over the same time period, helping buoy the richest amongst us to new heights.According to Forbes' Cost of Living Extremely Well Index, a basket of 40 luxury items, they've risen -- uninterrupted -- since 1982. Recession proof.The inflation rate for the elite has been running hot since '82, averaging 5%. Although it's hard to get a hard reading on what the true inflation rate is for the wealthy, some argue it has been running in excess of 10% for the past decade. Statistics released by the Federal Reserve revealed the top 1% now control a record 38.6% of America's wealth. The bottom 90% of wage earners have been falling for 25 years -- touching down at a 22.8% share in 2016, down from 33.2% in 1989.Aside from wealth, the rich are increasing their earnings on an annual basis too, with reported incomes hitting a new high of 23.8% in 2016, up from 20.3% in 2013.Warren Buffett believes the Dow will hit 1 million within 100 years, conservatively. All of these lofty projections and data points leave out the specter of pullbacks, an arrogant position given the historical likelihood of this being an impossibility.One day, markets will dislocate, real estate prices careen lower, rich people flung from their windows directly into crematories, effectively leveling out these gross differences. Until then, however, let the good times roll.
Consumer Confidence Declines Slightly in September - The latest Conference Board Consumer Confidence Index was released this morning based on data collected through September 18. The headline number of 119.8 was a decrease from the final reading of 120.4 for August, a downward revision from 122.9. Today's number was above the Investing.com consensus of 120.0.Here is an excerpt from the Conference Board press release.“Consumer confidence decreased slightly in September after a marginal improvement in August,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Confidence in Texas and Florida, however, decreased considerably, as these two states were the most severely impacted by Hurricanes Harvey and Irma. Despite the slight downtick in confidence, consumers’ assessment of current conditions remains quite favorable and their expectations for the short-term suggest the economy will continue expanding at its current pace.” 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: September Final Down from August - The University of Michigan Final Consumer Sentiment for September came in at 95.1, down from the August Final reading of 96.8. Investing.com had forecast 95.3. Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer sentiment remained largely unchanged from the slightly lower level recorded at mid-month. The resilience of consumers has again been demonstrated as concerns about the impact of the hurricanes on the national economy have quickly faded. Given that the survey was able to reach most households in Florida and Texas in late September, it should be no surprise that small declines were recorded in the current financial situation of households. In the past year, there has been a long list of issues that could have derailed the overall level of consumer confidence, including the unprecedented partisan divide, North Korea, Charlottesville, and the hurricanes. Confidence has nonetheless remained very favorable, moving sideward in a very narrow positive range. In the first nine months of 2017, the Sentiment Index averaged 96.2, just ahead of averages of 91.9 and 92.9 recorded in the prior two years, making 2017 the highest recorded since 2000. To be sure, the recent Sentiment levels are still well below the average of 105.3 recorded from 1997 to 2000, which has also been reflected in slower overall growth rates in consumer spending. Needless to say, resilience is an ineffable quality whose appearance or disappearance is difficult to predict in advance. While consumer resilience has lowered precautionary saving motives and increased willingness to spend and incur debt, those changes will still be constrained by slower income growth and consumers who are still more risk averse. Overall, consumer expenditures are expected to increase by 2.6% in 2017 and in the 1st half of 2018. [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.To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is 11.0 percent above the average reading (arithmetic mean) and 12.3 percent above the geometric mean. The current index level is at the 78th percentile of the 477 monthly data points in this series.
Wholesale Inventories Surge As Plant-Shuttering-Automakers 'Stock Up' - Wholesale Inventories jumped 1.0% MoM in August, the fourth consecutive build in inventories in a row and the fastest monthly build since Nov 2016.This is the fastest annual growth rate for inventories since June 2015 as it appears producers embrace the idea that 'if they build it, they will come'. Perhaps most notably, motor vehicles saw the biggest rise (+1.2% MoM, +7.4% YoY) as sales collapse.This appears positive for Q3 GDP (restocking) but we wonder with Auto sales dumping (and automaker shuttering plants), what could go wrong?
Durables Goods Orders Bounce After July Collapse, Aircraft Orders To The Rescue Again -- Following July's collapse in Durable Goods Orders (post-Boeing hangover), hope was high for a rebound in August (despite Harvey and Irma's impact) and preliminary data showed a better than expected 1.7% MoM rise. July's plunge was the worst since Aug 2014's post-Boeing hangover... August preliminary data showed a 1.7% rise (against expectations of a 1.0% gain). Among the biggest drivers of this rebound was non-defense aircraft orders which jumped 44.8% MoM.
Headline Durable Goods Orders Up in August, Better Than Forecast The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders: New orders for manufactured durable goods in August increased $3.9 billion or 1.7 percent to $232.8 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 6.8 percent July decrease. Excluding transportation, new orders increased 0.2 percent. Excluding defense, new orders increased 2.2 percent. Transportation equipment, also up two of the last three months, led the increase, $3.6 billion or 4.9 percent to $77.4 billion. Download full PDFThe latest new orders number at 1.7% month-over-month (MoM) was better than the Investing.com consensus of 1.0%. The series is up 5.1% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.2% MoM, which was at the Investing.com consensus. The core measure is up 6.1% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is up 0.9% MoM and up 6.7% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is up 0.9% MoM and up 3.6% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.
Dallas Fed: "Growth in Texas Manufacturing Activity Holds Steady" in September -- From the Dallas Fed: Growth in Texas Manufacturing Activity Holds SteadyTexas factory activity continued to increase in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, edged down to 19.5 from 20.3 in August, indicating output grew at about the same pace as last month. Other measures of current manufacturing activity also indicated continued growth. The new orders index increased and the growth rate of orders index ticked down but stayed positive, coming in at 18.6 and 9.7, respectively. The capacity utilization index edged up four points to 15.8, while the shipments index jumped nine points to 27.4.Perceptions of broader business conditions improved in September. The general business activity index increased to 21.3, its highest reading in seven months. The company outlook index posted its 13th consecutive positive reading, jumping nine points to 25.6.Labor market measures suggested faster employment growth and longer workweeks this month. The employment index came in at 16.3, its highest level since April 2014. Twenty-eight percent of firms noted net hiring, compared with 11 percent noting net layoffs. The hours worked index rose four points to 18.4. The regional reports released so far for September have been solid.
Richmond Fed Manufacturing: Activity Improved in September - Today the Richmond Fed Manufacturing Composite Index was at 19 for the month of September from last month's 14. Investing.com had forecast 13. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 15.7, indicates expansion. Seasonal adjustment factors were recalculated to better reflect current economic trends and the entire series was revised. The complete data series behind today's Richmond Fed manufacturing report, which dates from November 1993, is available here. Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.
Kansas City Fed: Regional Manufacturing Activity "Continued to Expand Solidly" in September -- From the Kansas City Fed: Tenth District Manufacturing Activity Continued to Expand Solidly The Federal Reserve Bank of Kansas City released the September Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity continued to expand at a solid pace and that firms remained optimistic about the future. “Factories in the region reported another good month in September, with little impact overall from the Gulf Coast hurricanes,” said Wilkerson. The month-over-month composite index was 17 in September, up from 16 in August and 10 in July. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Factory activity increased solidly at both durable and non-durable goods plants, particularly for chemicals, plastics, and machinery products. Month-over-month indexes were somewhat mixed. The production index remained unchanged, while the shipments, employment, and new orders for exports indexes increased mildly. In contrast, the new orders index fell from 25 to 10, and the order backlog index also decreased. The finished goods inventory index fell from 2 to -6, while the raw materials inventory index was mostly unchanged. This was the last of the regional Fed surveys for September. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
Regional Fed Manufacturing Overview: September 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 September is 17.8, up from the previous month's 16.4. It has been in positive territory for twelve consecutive months.
September Chicago PMI Rose Sharply, Highest in 3 Months -- 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 65.2, up from 58.9 last month. Investing.com forecast 58.5. Here is an excerpt from the press release:“The strong outturn in September means that on a quarterly basis business activity was broadly unchanged from an already impressive Q2. Looking forward, firms are on record expecting a busy Q4 despite disruptions caused by the recent storms, with just a handful expecting delivery times to lengthen between October through December,” said Jamie Satchi, Economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.
Weekly Initial Unemployment Claims increase to 272,000 -- The DOL reported: In the week ending September 23, the advance figure for seasonally adjusted initial claims was 272,000, an increase of 12,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 259,000 to 260,000. The 4-week moving average was 277,750, an increase of 9,000 from the previous week's unrevised average of 268,750. This is the highest level for this average since February 6, 2016 when it was 277,750. Hurricanes Harvey and Irma impacted this week's claims. The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.
EPI comment regarding DOL Request for Information on the overtime rule -- RE: RIN 1235-AA20 Submitted via: https://www.regulations.gov - The Department of Labor’s 2016 Final Rule updated a critical labor standard for working families.2 The core provision of the 2016 rule was to increase the salary threshold under which most salaried workers are eligible for overtime pay when they work more than 40 hours per week from $455 per week ($23,660 for a full-year worker) to $913 per week ($47, 476 for a full-year worker), the latter being the 40th percentile of the earnings of full-time salaried workers in the lowest-wage Census Region, currently the South. Further, the rule provides that the threshold would be updated every three years to the 40th percentile of the earnings of full-time salaried workers in the lowest-wage Census Region, in order that the threshold does not continually erode over time as the wage distribution rises.The 2016 rule was critically needed because the threshold had been allowed to erode dramatically. In 1975, the threshold was at a level such that nearly half of all salaried workers earned less than the threshold (and were thus eligible for overtime), but by 2014, that share had eroded to less than 10 percent.3 The erosion in the threshold was due to two key factors: (1) the threshold was updated only once since 1975, generating, as wages rose throughout the economy, a growing share of exempt workers who should have been overtime eligible, and (2) the last update in 2004 was fatally flawed, due to (as described below) a mismatch between the salary threshold and the duties test, meaning that even in 2004 the 2004 rule resulted in a large share of exempt workers who should have been overtime eligible. The 2016 rule provided new or strengthened overtime protections to roughly 13 million workers, correcting to a large extent for these two sources of erosion in the threshold.4 The rule will also increase employment by spreading work. The 2016 Final Rule was the result of an exhaustive, more than two-year rulemaking process. During this process, the Department met with over 200 organizations, including “employees, employers, business associations, non-profit organizations, employee advocates, unions, state and local government representatives, tribal representatives, and small businesses.”5 The Department also received and reviewed over a quarter million public comments. In the Final Rule, the Department responded comprehensively to those comments and conducted a thorough economic impact analysis incorporating that input, along with a careful review of the academic literature.
Target to raise its minimum hourly wage to $15 by the end of 2020 - Target Corp. said Monday that it is raising the minimum wage for its workers to $11 an hour starting next month and then to $15 by the end of 2020. The company said the move will help it better recruit and retain top-quality staff and provide a better shopping experience for its customers. The initiative is part of the retailer’s overall strategy, announced this year, to reinvent its business, including remodeling stores, expanding its online services and opening up smaller urban locations. Target quietly raised entry-level hourly wages to $10 last year, from $9 the previous year, following initiatives by Wal-Mart and others to boost wages in a fiercely competitive marketplace. But Target's hike to $15 an hour far exceeds not only the federal minimum of $7.25 an hour but the hourly base pay at Wal-Mart, the nation's largest private employer, and plenty of its other retail peers whose minimum hourly pay now hovers around $10. As part of its $2.7-billion investment in workers, Wal-Mart Stores Inc. had raised its entry-level hourly pay for workers to $9 in 2015 and then to $10 in 2016. With Target's outsized influence in the retailing world, its increase could force rivals to match the pay in order to compete. "We see this not only as an investment in our team but an investment in an elevated experience for our guests and the communities we serve," Brian Cornell, Target’s chief executive, told reporters during a conference call Friday.
Target's move to $15 an hour 'blows up' this myth about raising minimum wage - With the holiday season approaching, this week Target became the first low-wage chain to announce it will raise pay to $15 an hour. Chief executive Brian Cornell said the decision to raise wages to $15 by 2020 will help Target attract and retain talent as the hyper-competitive retail sector enters its busiest quarter.It also shows the growing impact of the Fight for $15–and puts pressure on other major players like Amazon, Walmart and McDonalds to follow suit. Since striking fast-food workers launched the Fight for $15 in 2012, states and cities comprising more than 18 percent of the U.S. workforce—including Target's home city of Minneapolis—have approved $15 minimum wages. And scores of companies have raised pay to $15, including insurance giants Aetna and Allstate, major hospital chains across the country, and tech leader Facebook for its contracted bus drivers, janitors and security guards. But Target's role as an industry leader in retail—which together with restaurants employs the largest share of workers paid less than $15–illustrates what business strategists have long argued: historically low-paying sectors can make the shift to significantly higher pay. MIT business professor Zeynep Ton has shown how industry leaders like Costco and Trader Joe's provide a roadmap for how investing in retail workers with good wages and benefits goes hand-in-hand with strong growth and productivity. Target's move blows up the claims of corporate lobbyists who argue it's simply not possible for industries like retail and restaurants to pay a $15 minimum wage. In fact, growing numbers of business owners and economists confirm that a phased-in $15 minimum wage is realistic for employers and will help boost the consumer spending that ultimately drives job growth. But ultimately the imperative to pay a living wage is about our nation's values. As La Colombe CEO Todd Carmichael argued last week, "unless you pay your employees a nonpredatory living wage that keeps people and their families above the poverty line, you don't deserve to be in business."
New Economic Study Presents a Disturbing Map of the United States - Pam Martens - A new study backs up a theory that many Americans have long suspected: the U.S. is no longer the land of opportunity, despite what national statistics would have us believe. Rather, America is now narrowly constrained to zip codes of opportunity.The new research comes from the Economic Innovation Group (EIG), a bipartisan public policy organization funded by successful tech entrepreneurs. The study provides detailed data on the economically distressed communities that have fundamentally changed the economic landscape of America. The authors write:“A remarkably small proportion of places fuel national increases in jobs and businesses in today’s economy. High growth in these local economic powerhouses buoys national numbers while obscuring stagnant or declining economic activity in other parts of the country. EIG’s prior work shows that this trend represents a fundamental shift in the geography of economic growth in the United States. Geographic disparities have, of course, always existed in this country, but the prospects of different communities used to rise or fall together to a far greater extent than they do today. Now, national statistics are often far removed from the experience of the typical American community.” Some of the key findings from the groundbreaking study are the following:
- 53 million individuals (one in six Americans) live in economically distressed zip codes;
- Prosperous zip codes are home to 84.8 million people, more than any other of the five tiers of communities;
- More than half of the country’s population living in distressed zip codes resides in the South;
- A quarter of the distressed population is under 18 years of age, meaning roughly 13 million American children are growing up in communities likely to have deeply negative “neighborhood effects” on young people’s future earnings potential;
- In the average distressed zip code, more than a quarter of the population lives in poverty, and over 40 percent of prime-age adults are missing from the workforce;
- The prime years of the national economic recovery bypassed many of America’s most vulnerable places altogether. Far from achieving even anemic growth from 2011 to 2015, distressed communities instead experienced what amounts to a deep ongoing recession, with a 6.0 percent average decline in employment and a 6.3 percent average drop in business establishments;
- 58 percent of adults in distressed zip codes have no education beyond high school.
One of the most disturbing findings is that the so-called “economic recovery” has been a cruel illusion to a large swath of the U.S. The authors write: “Most distressed zip codes contain fewer jobs and places of business today than they did in 2000.”
The other wealth gap—the 1% vs the 0.01% - The top 1 percent isn't doing as well as you think. Although there's lots of noise about the growing wealth gap between the rich and poor, that isn't the fastest-growing money rift in America. It's between those who are merely rich and the super rich. I know, break out the violins. From an economic perspective, the most dramatic wealth gap is between middling millionaires, who have seen only modest gains, and the booming billionaires, who now seem to defy economic gravity. It's between the guy making $300,000, who still feels poor, and the man who made $37 million a day for a year. Both are lumped together by politicians, the media and even economists as "the rich" or "the 1 percent," who are gaining at the expense of everyone else. But a new study by a top economist gives us the clearest picture to date of the wealth gap among the wealthy. Emmanuel Saez, an economics professor at the University of California, Berkeley, who is a leading expert on top incomes, and Gabriel Zucman, assistant professor at the London School of Economics and a visiting scholar at UC Berkeley, found that the top 1 percent is really two groups. First, there are those at the bottom of the 1 percent. Those are folks who are worth single-digit millions, around $7 million or so as of the latest Fed survey. The people between the top 1 to 0.5 percent have seen their share of national wealth remain flat for the past 20 years. Their share of the wealth pie is the essentially the same as it was in 1995. Even those who are between the top 0.5 percent to the top 0.1 percent have barely seen any increase in their share of wealth. The big winners are those in the top 0.01 percent. These folks, who have a net worth of more than $100 million, have seen their share of wealth more than double since 1995, from around 5 percent to just under 12 percent. Over the past half century, they have nearly quadrupled their share of wealth. In other words, the 0.01 percent is leaving the 1 percent in the dust. The top 0.01 percent are stock-market winners—CEOs, bankers, entrepreneurs—who are riding financial markets to outsize gains. The rest of the top 1 percent are often mere wage earners.
Consumer Financial Protection Bureau's first national survey on financial well-being shows more than 40 percent of US adults struggle to make ends meet— Today, the Consumer Financial Protection Bureau (CFPB) released the results of a first-of-its-kind national survey on the financial well-being of U.S. consumers that showed that more than 40 percent of U.S. adults struggle to make ends meet. The survey provides measurements and insights on the financial well-being of specific groups of consumers as well as the population as a whole. In addition to the survey, the Bureau also released an interactive online tool allowing consumers to measure their level of financial well-being.The National Financial Well-Being Survey was conducted by the CFPB in 2016. Using the 10 question scale developed by the CFPB, the survey provides the first-ever national data directly measuring the financial well-being of U.S. consumers. Upon answering the 10 questions provided, consumers were given a score from 0-100. In the survey, the average consumer score was 54. The consumer sample used to conduct the survey was designed to be representative of U.S. households. In addition to responding to the questions which are included in the financial well-being scale, people participating in the survey answered questions about a host of other measures. These measures include individual, household, and family characteristics; income and employment; savings and safety nets; financial experiences; and money behaviors, skills, and attitudes. Major findings from the report include:
- More than 40 percent of adults report struggling to make ends meet: Of the nationally representative sample of consumers surveyed, 43 percent of consumers report struggling to pay bills. Additionally, over one third—34 percent—of all consumers surveyed reported experiencing material hardships in the past year. For the survey, examples of material hardships include running out of food, not being able to afford a place to live, or lacking the money to seek medical treatment.
- Certain financial and demographic characteristics are associated with financial well-being: Educational attainment, income, and employment status all appear to have a strong relationship with financial well-being. Additionally, the survey showed that financial well-being is higher for older adults, especially those aged 65 and older, whose average score was 61. On the other end of the spectrum, younger adults, those 34 and younger, tended to have the lowest financial well-being score with an average of 51.
ProPublica: The Bankruptcy System Fails Black Americans - It's been a busy day, but before I sign off for the evening, I would be remiss not to flag Paul Kiel's outstanding piece that came out this morning, How the Bankruptcy System is Failing Black Americans. ProPublica and The Atlantic co-published the article. An extensive data analysis also accompanies the article. Anyone who follows Credit Slips will want to read these pieces.Kiel finds chapter 13 filings are about three times higher in predominately black zip codes as compared to predominately white zip codes. Of course, these findings very much parallel our earlier work, which I blogged about here back in 2012. Like our work, the disparities Kiel finds remain even after statistically controlling for financial and other variables that should determine chapter choice. Because chapter 13 is generally a more expensive choice than a chapter 7, requiring a payment plan that many debtors don't complete (and hence don't receive a discharge), the racial differences are troubling. Where Kiel's article really shines are the interviews with the attorneys and bankruptcy debtors in Memphis, Tennessee. The interviews put faces and stories to the statistics that we can't do in academic studies. Check out Kiel's work.
When a Mental Health Emergency Lands You in Jail - Early last year, two suicidal patients showed up at a hospital emergency room in Pierre, S.D., seeking help. Although the incidents happened weeks apart, both patients ended up in an unexpected place: jail. Across the country, and especially in rural areas, people in the middle of a mental health crisis are locked in a cell when a hospital bed or transportation to a hospital isn’t immediately available. The patients are transported from the ER like inmates, handcuffed in the back of police vehicles. Laws in five states — New Mexico, North and South Dakota, Texas and Wyoming — explicitly say that correctional facilities may be used for what is called a “mental health hold.” Even in states without such laws, the practice happens regularly. “It is a terrible solution...for what is, at the end of the day, a medical crisis,” said John Snook, executive director of the Treatment Advocacy Center, a national group that advocates for the severely mentally ill. Research shows that the risk for suicide, self-harm and worsening symptoms increases the longer a person is behind bars. There are no national figures on how many people are held each year in jail just because they have nowhere else to go in a mental health crisis. Reports from the federal agency overseeing hospitals — the Centers for Medicare and Medicaid Services — offer a glimpse. Since 2011, at least 22 hospitals in 16 states have been cited by CMS for failing to stabilize patients in need of mental health help, instead handing them over to law enforcement to wait for a psychiatric evaluation or a bed. The hospitals span the country, from Alabama and South Dakota to New York and Ohio. The practice affects patients of all ages. At Avera St. Mary’s Hospital in Pierre, S. D., children from 12 to 16 were sent to spend the night in jail on at least seven occasions, CMS inspection reports show.
New York City is ramping up efforts to collect genetic data for crime analysis, but the process is unregulated - New York City is building a vast, unregulated DNA database that police are already using to connect suspects to evidence from crime scenes across the five boroughs. In the last five years, the number of DNA profiles in New York’s local database has grown dramatically, and by an ever-increasing rate, driven in part by a push to collect DNA in every gun case. As of July, the Office of Chief Medical Examiner was storing about 64,000 genetic profiles, The Trace and WNYC have learned. Details about the size of the database and its rapid growth have not been previously reported. The DNA in the database comes largely from crime scenes and suspects at a time when it is increasingly easy to obtain a profile from just a few cells left on a water bottle or doorknob. Lawyers say there are people in it who have never been convicted of a crime, and have no idea that their genetic profiles are routinely checked against evidence collected in criminal investigations. New York police say database hits generate thousands of solid investigative leads a year, and are a major way they nab dangerous criminals. “DNA is probably the most powerful scientific tool available to us,” said Emanuel Katranakis, commanding officer of the NYPD’s forensic investigations division. Forensic and legal experts agree that DNA evidence is a powerful crime-solving tool. But some have voiced alarm at the way New York City has built its database — with no oversight or scrutiny. State and federal DNA databases, by contrast, are subject to legislative oversight and strictly limit whose DNA can be stored, in most cases, to people who have been convicted of crimes.
Pa. will have trouble making payments beyond September As Pennsylvania lawmakers fight over the details of a long-overdue budget funding plan, the commonwealth is having trouble covering short-term costs. After temporarily delaying several payments, the Wolf administration has said it can meet expenses for the rest of this month. But after that, things may get tricky. Through Oct. 2, the state owes more than $700 million for various major obligations — including school costs, state employee salaries, and county assistance — plus at least tens of millions more for smaller ones. Revenue Department reports show that a billion dollars in Medicaid insurer payments and a half-billion in pension fund payments that the state deferred this month have already been paid off. But the administration isn't making detailed data available on expenses after Oct. 2. Spokesman JJ Abbott said around then, the general fund will hit another low point.
Reducing and averting achievement gaps: Key findings from the report ‘Education inequalities at the school starting gate’ and comprehensive strategies to mitigate early skills gaps – EPI - Persistently large achievement gaps between high-social-class and low-social-class children in America, and the disparities in opportunity that drive these achievement gaps, threaten the very notion of the American Dream. The lack of true equality of opportunity calls for much more comprehensive interventions to tackle those gaps. In this brief, we focus on interventions at the school and community levels, including support for parents. However, the need for those interventions would be substantially reduced and students’ odds of success greatly enhanced if we also addressed the broader structural forces that drive poverty and inequality and hold back a growing number of our children. This brief describes the type and size of early achievement gaps—and trends in them over time—and points to effective and comprehensive educational policies to avert and narrow them. It is based on key findings from Education Inequalities at the School Starting Gate: Gaps, Trends, and Strategies to Address Them, a study combining statistical analyses of performance gaps and qualitative analyses of school districts that are piloting promising strategies for closing these achievement gaps. The quantitative analyses (on the persistence of gaps over time and their sensitivity to individual and family characteristics and to educational experiences) are based on data from two representative national samples of children who started kindergarten in 1998 and in 2010. (Kindergarten classes separated by 12 years constitute an “academic generation” because the eldest cohort is in its graduation year when the youngest cohort is beginning kindergarten.) We compare children of low socioeconomic status (SES), as determined by parents’ educational attainment and job status as well as household income, with their higher-SES peers. In an effort to identify more effective policy solutions, we also look at how and why performance gaps and children’s circumstances have changed over time. Skills measured at kindergarten entry include both cognitive skills (reading and math) and noncognitive skills (self-control and approaches to learning).
Education inequalities at the school starting gate: Gaps, trends, and strategies to address them - Extensive research has conclusively demonstrated that children’s social class is one of the most significant predictors—if not the single most significant predictor—of their educational success. Moreover, it is increasingly apparent that performance gaps by social class take root in the earliest years of children’s lives and fail to narrow in the years that follow. That is, children who start behind stay behind—they are rarely able to make up the lost ground.Using data from two academic cohorts, the kindergarten classes of 1998 and 2010, this study examines the relationship between children’s socioeconomic status (SES) and their cognitive and noncognitive skills when starting school. We find that large performance gaps exist between children in the lowest and highest socioeconomic-status (SES) quintiles and that these gaps have persisted from the 1998 cohort to the 2010 cohort. The positive news is that the gaps have not grown, even as economic inequalities between these two groups of students have grown. The negative news is that the gaps have not narrowed, despite the fact that low-SES parents have substantially increased their engagement in their children’s early education.These performance gaps reflect extensive unmet needs and thus untapped talents among low-SES children. The development of strong cognitive and noncognitive skills is essential for success in school and beyond. Low educational achievement leads to lowered economic prospects later in life, perpetuating a lack of social mobility across generations. It is also a loss to society when children’s talents are allowed to go fallow for lack of sufficient supports. The undeniable relationship between economic inequalities and education inequalities represents a societal failure that betrays the ideal of the “American dream.” Greater investments in pre-K programs can narrow the gaps between students at the start of school. And to ensure that these early gains are maintained, districts can provide continued comprehensive academic, health, nutrition, and emotional support for children through their academic years, including meaningful engagement of parents and communities. Such strategies have been successfully implemented in districts around the country, as described in this report, and can serve to mitigate the impact of economic inequalities on children’s educational achievement and improve their future life and work prospects.
Fixing education inequalities will require fixing broader societal inequities --Every serious education research study concludes with a series of recommendations for further research and implications for education policy. Our recent paper comparing skills gaps among kindergartners an “academic generation” apart is no exception. What is perhaps different is how important we think major changes to policies outside the realm of education are to improving the education system itself.In Reducing and averting achievement gaps, we show that t here was a large gap in preparedness between high and low social class students who began school in the fall of 2010. Furthermore, this gap changed very little over the prior twelve years. And it’s not only a matter of math and reading skills—there are similar gaps in social and emotional skills, which interact with and inform those traditional academic abilities.We recommend that our counterparts in the field take up questions that arose in the course of conducting this work—like, to what degree do these gaps persist and change as children progress through elementary school and beyond, and what explains the lack of change over the past decade?The third part of our paper draws on studies of a dozen communities that have embraced a range of strategies to mitigate the impacts of poverty at the district level—including very early support for children and their families, efforts to engage parents as partners in their children’s education, pre-K and improved kindergarten transitions, enriching, whole-child curricula, and wraparound health and nutrition services through the K–12 years. Our case studies highlight how feasible, and successful, this kind of comprehensive enrichment and support can be.
America's Broken Education System: Grade-Rigging Scandal Strikes Baltimore And Spreads... Project Baltimore, an investigative reporting initiative, which was launched in March 2017, by Sinclair Broadcast Group Inc, the largest U.S. broadcaster, has uncovered more evidence of a massive grade manipulation scheme brewing in Baltimore City Schools. The report indicates, the problem is more widespread than thought. A high-level district administrator, who works in inside the school system says Project Baltimore now has “concrete evidence” of grade manipulation through 13 report cards obtained from Calverton Elementary/Middle School in west Baltimore. For each report card, Project Baltimore has two versions, one which teachers submitted, and a second version, where every single failing grade was changed to a passing mark. Per the report,Project Baltimore found the initial report cards showed 13 students failing a total of 18 classes.The timestamp tells us the first versions were printed on November 11,which is after the quarter ended and final grades were submitted.But nineteen days later, on the 30th, the report cards were printed again.This time, every single failing grade was changed to 60.In some cases, the course names weren’t even re-entered, and comments meant to alert parents of their child’s poor performance were deleted. Meanwhile, the grade rigging scandal in Baltimore, is now spreading across Maryland, where Gov. Larry Hogan will be investigating claims of widespread corruption in Prince George’s County Schools aimed at inflating graduation rates.The school system is conveniently boarding Washington, D.C., where school board members alleged in a May 30 letter to Hogan that “widespread systemic corruption” in the district since 2014 contributed to grade rigging. “Whistleblowers at almost every level in (Prince George’s County Public Schools) have clear and convincing evidence that PGCPS has graduated hundreds of students who did not meet the Maryland State Department of Education graduation requirements,” the board members wrote.
‘The real gender gap’: Young men falling behind women in everything but STEM subjects - It’s assumed that men generally do well in the fields of science, technology, engineering and mathematics, collectively known as STEM. In light of this, high-profile efforts are usually aimed at encouraging more girls and women to move into STEM. But there’s a big kicker to men’s success in STEM: Young males aren’t doing at all well in other fields. New Canadian research says high-school girls are, on average, doing as well as boys in STEM — plus they’re outperforming boys in almost every other sphere.A large study by David Card and Abigail Payne has found that girls and boys in Grade 12 end up roughly equally prepared to go into science, technology, engineering and mathematics programs.But girls also excel in the languages, humanities and other subjects, while boys do not. “The conventional wisdom is that the gender gap is about women and the forces — discrimination, sexism, parenting, aptitudes and choices — that make women less likely to study in STEM fields,” says Alex Tabarrok, a high-profile Canadian-American economist who has reviewed the study.But the real reason more males complete STEM degrees, says Tabarrok, of George Mason University, is that, to put it too bluntly, “the only men who are good enough to get into university are men who are good at STEM. Women are good enough to go into non-STEM and STEM fields.”
DeVos rescinds Obama-era school sexual assault policy | TheHill: Education Secretary Betsy DeVos released interim guidance Friday on how colleges should handle sexual assaults on college campuses, the latest step in the Trump administration's controversial rollback of Obama-era guidelines, in an effort to better protect both victims and students who are accused. The agency withdrew a 2011 "Dear Colleague" letter that required schools to adopt a minimal standard of proof — the preponderance-of-the-evidence standard — when disciplining students and replaced a 2014 question-and-answer document on how schools should investigate and adjudicate cases of sexual misconduct.The temporary guidance is meant to serve as a placeholder while the agency crafts news guidance with a new standard through a rulemaking process that involves public notice and comment. Senior department officials said it was inappropriate for the former administration to mandate schools use the preponderance-of-the-evidence standard without public input. “The department’s interim guidance emphasizes the important of fairness and impartiality in campus proceedings while relying heavily on prior guidance from [the Office for Civil Rights] dating back to 2001,” the official said. One senior department official said previous guidelines were “deeply flawed substantively and procedurally” and couldn’t be left in place while new guidelines are drafted. Critics were quick to slam the agency's action. "This decision shows the Trump Administration's utter disregard for survivors of sexual assault," Rep. Nita Lowey (D-N.Y.) said in a statement. "The effect of this policy reversal will be to delegitimize and suppress the voices of survivors, who are being told by this administration that they will be met with skepticism," she said. "Shame on the Trump Administration."
Michael R. Bloomberg: Jeff Sessions Has a Point About Free Speech - Sessions went to Georgetown University on Tuesday to deliver a robust defense of free speech on college campuses. However flawed the messenger, Sessions’s speech identified a real and growing problem: College students and administrators have been displaying a shocking disregard for First Amendment rights. Recent incidents involving violent protesters and overzealous administrators have made headlines, but they are not isolated cases. An unwillingness to hear opposing views is getting to be a defining feature of campus culture. A recent survey of students at four-year colleges and universities uncovered an alarming level of both legal ignorance and political intolerance: Almost half (44 percent) do not believe that the First Amendment protects hate speech. A majority thinks that it is acceptable to shout down an objectionable speaker to prevent the audience from listening. One in five thinks that, to accomplish that objective, violence is justifiable.Over the long run, these attitudes threaten a bedrock of American freedom. Respectful and reasoned dialogue is essential in a democratic society, and its survival depends on leaders -- inside and outside government -- who will vigorously and unflinchingly defend the rights of speakers with unpopular viewpoints.The rise of intolerance on campus has coincided with the increasing homogeneity of the academic faculty. In 1995, liberal faculty members outnumbered conservatives by roughly two to one. Today, it is closer to five to one -- and rather than man the barricades, many have joined students in protesting the presence of conservative speakers on campus. Administrators must shoulder some of the blame, too. By tolerating and sometimes nurturing a culture in which students feel entitled to protection, through safe spaces and trigger warnings, they are sheltering students from opinions they may find challenging or even disturbing. These are precisely the ideas that colleges should be exposing them to.
Education Isn’t the Key to a Good Income - One of the most commonly taught stories American schoolchildren learn is that no matter who you are, what your parents do, or where you grow up, with enough education and hard work, you too can rise the economic ladder. A body of research has since emerged to challenge this national story, casting the United States not as a meritocracy but as a country where castes are reinforced by factors like the race of one’s childhood neighbors and how unequally income is distributed throughout society. One such study was published in 2014, by a team of economists led by Stanford’s Raj Chetty. After analyzing federal income tax records for millions of Americans, and studying, for the first time, the direct relationship between a child’s earnings and that of their parents, they determined that the chances of a child growing up at the bottom of the national income distribution to ever one day reach the top actually varies greatly by geography. For example, they found that a poor child raised in San Jose, or Salt Lake City, has a much greater chance of reaching the top than a poor child raised in Baltimore, or Charlotte. They couldn’t say exactly why, but they concluded that five correlated factors—segregation, family structure, income inequality, local school quality, and social capital—were likely to make a difference. Their conclusion: America is land of opportunity for some. For others, much less so. A new working paper authored by the UC Berkeley economist Jesse Rothstein builds on that research, in part by zeroing in on one of those five factors: schools. The idea that school quality would be an important element for intergenerational mobility—essentially a child’s likelihood that they will one day outearn their parents—seems intuitive: Rothstein, however, found little evidence to support that premise. Instead, he found that differences in local labor markets—for example, how similar industries can vary across different communities—and marriage patterns, such as higher concentrations of single-parent households, seemed to make much more of a difference than school quality. He concludes that factors like higher minimum wages, the presence and strength of labor unions, and clear career pathways within local industries are likely to play more important roles in facilitating a poor child’s ability to rise up the economic ladder when they reach adulthood.*
Doing This In College Will Boost Your Income By 36% - But It Will Also Make You Dumber -- Years ago, we reported on the shockingly effective college-to-Wall Street pipeline established by Sigma Chi Epsilon, a fraternity whose members made it a goal to build a “little fraternity on Wall Street.” By offering insider tips, as well as offers to intervene on candidates’ behalf, members of the fraternity have helped populate banks like J.P. Morgan, BofA and Wells Fargo with fellow alumni – helping them beat odds three times steeper than the Princeton admissions rate. Now, a new study by researchers at Union College in Schenectady has confirmed what that story appeared to suggest. That despite the constant distraction from academics that fraternity membership represents, students who join reap the benefits of the associated professional network for years to come, MarketWatch reports. Of course, these benefits come with a tradeoff: The study showed that being a member of a fraternity also makes you dumber. “Being a member of a fraternity in college lowers a student's GPA by approximately 0.25 points on the traditional four-point scale, but raises future income by around 36%, according to a paper, “Social Animal House: The Economic and Academic Consequences of Fraternity Membership,” published by two economists from Union College in Schenectady, New York. “For this reason, joining a fraternity may be a rational decision that improves the long-term prospects of an individual student despite its damaging effects on a student’s grades,” the paper concluded.” These results suggest that fraternity membership causally produces large gains in social capital, which more than outweigh its negative effects on human capital for potential members,” they concluded. “These findings suggest that college administrators face significant trade-offs when crafting policies related to Greek life on campus.” They surveyed 3,762 alumni from a liberal Northeastern college who work full-time and also adjusted for the statistical impact of age, gender and ethnicity on a person’s income.”
Our Crazy-Making, Profiteering Education-Career Maze - Charles Hugh Smith --So let's say we want to set up a system to help students choose a career that fits their aptitudes and interests. What would we do? How about:
- 1. Give them zero (or superficial) aptitude and career-related tests.
- 2. Provide a few minutes with a counselor who knows nothing about them, their aptitudes or potential career-related interests.
- 3. Design the high school education system to provide near-zero knowledge of finance, debt, economics, how the economy functions and what the world of work demands of workers.
- 4. Denigrate (subtly or directly) non-college career options, channeling those who aren't sure into 4-year colleges, higher education paid with student loans designed to maximize profiteering.
- 5. Force them to choose a major or field of study at 17 or 18 years of age, despite their lack of real-world experience and objective knowledge of how the economy functions and their own aptitudes/character traits.
- 6. Disconnect this higher education from real-world work places so they exit higher education with little actual knowledge of the skills employers need.
- 7. When the student graduates after borrowing a fortune and discovers their diploma has low value in the marketplace or is in a field they've found they loathe, then suggest the "solution" is to borrow another fortune and invest more years in obtaining another credential.
This is the American education-career maze--ineffective, self-defeating, wasteful, irrational, and apparently designed to maximize student confusion, poor choices and profiteering by higher education and the student-loan racketeers. As if this wasn't bad enough, what do we decide to teach our students if careers might be significantly different in 10 or 20 years? Yes, math, the basics of science and communication skills will remain useful as a foundation, but these basics aren't enough to prepare students for a fast-changing emerging economy/4th Industrial Revolution. Clearly, it would be enormously beneficial to teach the skills needed to learn on one's own and adapt successfully to changing circumstances. The current system is a hierarchy of credentialing that enriches those dispensing and funding the credentialing.
Women earned majority of doctoral degrees in 2016 for 8th straight year and outnumber men in grad school 135 to 100 - The Council of Graduate Schools (CGS) released its annual report today on US graduate school enrollment and degrees for 2016 and here are some of the more interesting findings in this year’s report:
- For the eighth year in a row, women earned a majority of doctoral degrees awarded at US universities in 2016. Of the 78,744 doctoral degrees awarded in 2016 (Table B.25), women earned 40,407 of those degrees and 52.1% of the total, compared to 37,145 degrees awarded to men who earned 47.9% of the total (see top chart above). Women have now earned a majority of doctoral degrees in each academic year since 2009.
- By field of study, women earning doctoral degrees in 2016 outnumbered men in 7 of the 11 graduate fields tracked by the CGS (see top chart above): Arts and Humanities (54% female), Biology (51.7%, and one of the STEM fields that we hear so much about in terms of female under-representation), Education (69.4%), Health Sciences (69.9)%, Public Administration (77.4%), Social and Behavioral Studies (60.2%) and Other fields (50.7%). Men still earned a majority of 2016 doctoral degrees in the fields of Business (54.1% male), Engineering (77.2%), Math and Computer Science (74.2%), and Physical and Earth Sciences (66.4%).
- The middle chart above shows the gender breakdown for master’s degrees awarded in 2016 (from Table B.24) and the gender disparity in favor of females is significant – women earned 57.4% of all master’s degrees in 2016, which would also mean that women earned nearly 138 master’s degrees last year for every 100 degrees earned by men. Like for doctoral degrees, women outnumbered men in the same 7 out of the 11 fields of graduate study and in some of those fields the gender disparity was huge. For example, women earned more than 400 master’s degrees in health sciences for every 100 men and nearly 350 master’s degrees in both education and public administration for every 100 men.
- The bottom chart above displays total enrollment in 2016 by gender and field for all graduate school programs in the US (certificate, master’s and doctoral degrees from Table B.13), showing that there is a significant gender gap in favor of women for students attending US graduate schools. Women represent 57.5% of all graduate students in the US, meaning that there are now 135 women enrolled in graduate school for every 100 men. In certain fields like Education (75% female), Health Sciences (77.7% female) and Public Administration (77.1%), women outnumber men by a factor of almost three or more. By field of study, women enrolled in graduate school outnumber men in the same 7 out of the 11 graduate fields of study noted above, with females being a minority share of graduate students in only Business (45.1% female), Engineering (24.7% female), Math and Computer Science (31.5% female), and Physical and Earth Sciences (37% female).
Facing poverty, academics turn to sex work and sleeping in cars - There is nothing she would rather do than teach. But after supplementing her career with tutoring and proofreading, the university lecturer decided to go to remarkable lengths to make her career financially viable. She first opted for her side gig during a particularly rough patch, several years ago, when her course load was suddenly cut in half and her income plunged, putting her on the brink of eviction. “In my mind I was like, I’ve had one-night stands, how bad can it be?” Sex work is one of the more unusual ways that adjuncts have avoided living in poverty, and perhaps even homelessness. A quarter of part-time college academics (many of whom are adjuncts, though it’s not uncommon for adjuncts to work 40 hours a week or more) are said to be enrolled in public assistance programs such as Medicaid. They resort to food banks and Goodwill, and there is even an adjuncts’ cookbook that shows how to turn items like beef scraps, chicken bones and orange peel into meals. And then there are those who are either on the streets or teetering on the edge of losing stable housing. The Guardian has spoken to several such academics, including an adjunct living in a “shack” north of Miami, and another sleeping in her car in Silicon Valley. The adjunct who turned to sex work makes several thousand dollars per course, and teaches about six per semester. She estimates that she puts in 60 hours a week. But she struggles to make ends meet after paying $1,500 in monthly rent and with student loans that, including interest, amount to a few hundred thousand dollars. Her income from teaching comes to $40,000 a year. That’s significantly more than most adjuncts: a 2014 survey found that the median income for adjuncts is only $22,041 a year, whereas for full-time faculty it is $47,500. Adjuncting has grown as funding for public universities has fallen by more than a quarter between 1990 and 2009. Private institutions also recognize the allure of part-time professors: generally they are cheaper than full-time staff, don’t receive benefits or support for their personal research, and their hours can be carefully limited so they do not teach enough to qualify for health insurance.
More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why - More student debtors are falling behind on their federal student loans, after three years of declines in late payments—and with no clear explanation, experts aren’t sure whether to take it as a sign of distress or a temporary blip. The share of Americans at least 31 days late on loans from the U.S. Department of Education ticked up to 18.8 percent as of June 30, up from 18.6 percent the same time last year, new federal data show 1 . About 3.3 million Americans have gone more than a month without making a required payment on their Education Department loans—up about 320,000 borrowers. 2 The rise interrupts a period of 12 straight quarters of declines in delinquency rates, according to numbers dating to 2013, and comes despite the fact that the U.S. economy has improved, which normally would mean richer borrowers better able to afford their bills.The uptick may be small compared to the 17 million debtors repaying their loans 3 , but it surprised economists and government officials, who struggled to explain the reasons behind it. “There’s no fundamental reason for that to be happening,” said Yelena Shulyatyeva, senior U.S. economist for Bloomberg Intelligence. After all, she said, the U.S. economy has improved since June of last year, with lower unemployment, higher household incomes and increased wealth, federal data show. Consumers are more confident about the economy and their own personal finances, too, according to Bloomberg Consumer Comfort data.
California schools face $24 billion in retiree health costs - California schools are on the hook for $24 billion in future health care costs for their retirees, a mountain of debt that's forcing some districts to curb benefits or spend less on teacher salaries and classroom equipment, according to a new state report. Los Angeles Unified School District boasts a whopping 56 percent share — or $13.5 billion — of the unfunded liability, although it educates nine percent of California's public school population. It's historically provided some of the most generous retiree health benefits, including lifetime coverage for retirees and their spouses. Teachers' union representatives argued good health care is an essential tool for recruiting and retaining teachers. But the looming debt means newer teachers are offered skimpier benefits and less money is available to spend in classrooms. "Districts have to pay our bills and our basic bills are employee costs," said Teri Burns, a lobbyist for the California School Boards Association. "As that goes up, there's just that much less that's available for everything else — books and modernization, computers, professional development." Beyond retiree health benefits, California's teacher pension fund is facing nearly $100 billion in future payments it can't currently afford. "A hundred and 25 billion is like an anchor for families with kids in public schools," said David Crane, a Stanford University lecturer who writes on state pensions. "It drags down the performance of schools because the money doesn't even make it into the classroom. It's a really big problem."
L.A. pension officials deliver another financial blow to the city budget - LA Times: Los Angeles pension board voted Tuesday to scale back its long-range investment projections, creating yet another budget problem for the city’s elected officials. The City Employees’ Retirement System board, which oversees pension benefits for thousands of city workers, voted unanimously to cut its assumed rate of return — the yearly earnings expected from the agency’s investment portfolio — to 7.25%, down from 7.5%. The decision is expected to shift $38 million in retirement costs onto the general fund budget, consuming funds that would otherwise pay for basic services. And it comes at a time of increased concern over the city’s growing pension burden. Another pension agency, which oversees benefits for thousands of retired firefighters and police officers, recently reduced its own rate of return and recalculated the expected lifespan of its beneficiaries. Meanwhile, growth in the overall city payroll is also expected to push pension payments upward. Those issues, taken together, will add an additional $170 million in retirement costs in next year’s budget, city analysts say.
$858 Million: 'Outrageous' Management Fees Paid By Pennsylvania's Pension Fund in the Last 5 Years - Officials who oversee Pennsylvania's $26 billion pension fund for state workers have begun studying ways to reduce management costs, which Gov. Wolf and Treasurer Joe Torsella cited in April as the fourth-highest in the country.The governing board for the State Employees Retirement System (SERS) last week voted to begin working to reduce those management costs that go to financial firms, which Torsella described Tuesday as "outrageous."More than 220 fund managers split $162 million in management fees in 2016, according to the most recent audit of SERS. Since 2012, management fees have totaled $858 million.The size of the fund, meanwhile, is $1 billion less than it was three years ago. Its value was $26.3 billion at the end of 2016. Pension officials in Pennsylvania are grappling with similar problems facing other states and cities when it comes to public retirement plans. Increases in retirees collecting pensions have outpaced annual contributions to the fund, and annual investment growth has not lived up to expectations.
Price tag for Kentucky’s ailing pensions could hit $5.4 billion over next two years - Kentucky’s General Assembly will need to find an estimated $5.4 billion to fund the pension systems for state workers and school teachers in the next two-year state budget, officials told the Public Pension Oversight Board on Monday.That amount would be a hefty funding increase and a painful squeeze for a state General Fund that — at about $20 billion over two years — also is expected to pay for education, prisons, social services and other state programs.There are two reasons for the dramatic increase.First, Gov. Matt Bevin and the legislature committed two years ago to paying the state’s full annual recommended contribution, or ARC, to the long-underfunded Kentucky Retirement Systems, which provides pension benefits for state and local government retirees.Second, KRS recently adopted more realistic financial assumptions about its investment returns and the state’s payroll growth. Those new assumptions made KRS’ numbers look far worse literally overnight.The legislature will pass the next state budget during its 2018 law-making session this winter.“We realize this challenge is in front of us. That’s obviously part of the need for us to address pension reform,” said state Sen. Joe Bowen, R-Owensboro, co-chairman of the oversight board. “In the short-term, yeah, we’re obligated to find this money,” Bowen said. “And everybody is committed to do that. We have revealed this great challenge. We have embraced this great challenge, as opposed to previous members of the legislature, perhaps.”
The New Reality of Old Age in America: Working Until You Die -- People are living longer, more expensive lives, often without much of a safety net. As a result, record numbers of Americans older than 65 are working — now nearly 1 in 5. That proportion has risen steadily over the past decade, and at a far faster rate than any other age group. Today, 9 million senior citizens work, compared with 4 million in 2000. While some work by choice rather than need, millions of others are entering their golden years with alarmingly fragile finances. Fundamental changes in the U.S. retirement system have shifted responsibility for saving from the employer to the worker, exacerbating the nation’s rich-poor divide. Two recent recessions devastated personal savings. And at a time when 10,000 baby boomers are turning 65 every day, Social Security benefits have lost about a third of their purchasing power since 2000.Polls show that most older people are more worried about running out of money than dying. “There is no part of the country where the majority of middle-class older workers have adequate retirement savings to maintain their standard of living in their retirement,” said Teresa Ghilarducci, a labor economist who specializes in retirement security. “People are coming into retirement with a lot more anxiety and a lot less buying power.” As a result, many older workers are hitting the road as work campers — also called “workampers” — those who shed costly lifestyles, purchase RVs and travel the nation picking up seasonal jobs that typically offer hourly wages and few or no benefits. Amazon’s “CamperForce” program hires thousands of these silver-haired migrant workers to box online orders during the Christmas rush. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.) Walmart, whose giant parking lots are famous for welcoming RV travelers, has hired elderly people as store greeters and cashiers. Websites such as the Workamper News list jobs as varied as ushering at NASCAR tracks in Florida, picking sugar beets in Minnesota and working as security guards in the Texas oil fields.
Premiums expected to jump nearly 60 percent in Virginia's 2018 individual market - As many see their options for health plans dwindle down to one insurer, premiums are simultaneously set to rise by an average of 57.7 percent next year in Virginia’s individual marketplace. The increase is “unquestionably the highest we’ve ever seen,” David Shea, health actuary with Virginia’s Bureau of Insurance, told lawmakers Monday. The price hikes become even more astounding when compared with the average increases that the Affordable Care Act’s marketplace saw in the past three years, which hovered at around 11 percent before rising to 24.8 percent last year. Next year, the average monthly premiums for plans range from $502 to $1,031. “We’ve been fairly lucky in the state of Virginia,” Shea told the Health Insurance Reform Commission. “We’ve been virtually immune to any type of market instability.” But that was not the case this year, with national insurers leaving the market and others severely shrinking their footprints. “I think there would be unanimous agreement with anyone involved that this year’s filing season was the most challenging of any previous year,” Shea said. Wednesday is the final date on which insurers must submit their rates and agree to participate in the market next year. Del. Kathy J. Byron, R-Bedford, the commission’s chair, asked Jacqueline K. Cunningham, the state’s commissioner of insurance, if she has had any indication that any carriers plan to drop out before Wednesday. Cunningham said no. The rate increases can be attributed to an unstable market, with too few healthy people signing up to balance out the number of sick people who enroll, and the uncertainty of cost-sharing reduction payments, which are meant to go to insurers to cover the cost of offering lower prices to poor members, but which the federal government has refused to guarantee. Even if the federal government comes forward in the next few months and promises to pay insurers the cost-sharing reductions, the prices for 2018 will be locked and unable to be changed, Shea explained.
Anthem cites soaring drugs costs to justify 35% rate hike in California - Health insurance giant Anthem predicts Californians will pop a lot more pills next year. To make the case for a hefty premium hike in the state’s individual insurance market, Anthem Blue Cross has forecast a 30 percent jump in prescription drug costs for 2018. Such a sharp increase is nearly double the estimates of two other big insurers, and it runs counter to industry trends nationally. Prescription drug spending in the U.S. grew 6.1 percent over the 12 months ending in July, according to Altarum, a nonprofit think tank. That’s down from 12.9 percent in 2014, when expensive new hepatitis C drugs sharply lifted overall pharmaceutical spending. “I can’t understand why Anthem is predicting 30 percent,” said Charles Roehrig, a health economist and founding director of Altarum’s Center for Sustainable Health Spending. “There are examples of egregious price increases for particular drugs that have gotten a lot of well-deserved attention. But those haven’t characterized what’s happening as a whole,” he added. The advocacy group Consumers Union also questioned why Anthem’s cost projections are so much higher than its competitors, and it has asked state regulators to demand additional documentation from the nation’s second-largest health insurer. Overall, Anthem is proposing a 35 percent rate increase for about 135,000 consumers who buy their own insurance in and outside the Covered California exchange. It’s the largest increase statewide and assumes that federal subsidies for copays and deductibles will continue to be paid. The second highest, also assuming the U.S. government will continue paying those subsidies, is 28.6 percent by Molina Healthcare. Some of Anthem’s rivals aren’t as pessimistic on the outlook for drug costs. Two other large insurers, Blue Shield of California and Health Net, projected drug costs will rise by 16.4 and 15 percent, respectively. Anthem came in even lower than that in its rate filing for Colorado’s individual market, projecting an 11.4 percent increase in prescription drug costs.
2018 Obamacare Premiums Surge 45% In Key Swing State Of Florida --As Congress continues to debate whether or not Obamacare is "working," folks in the key swing state of Florida just found out that their insurance premiums for 2018 are going to surge by 45% in a single year. Per the Miami Herald:Health insurers selling Affordable Care Act plans in Florida will raise monthly premiums by nearly 45 percent on average next year, the state’s Office of Insurance Regulation said Tuesday.Florida regulators said most of the average rate hike — 31 percentage points — came from standard plans sold on the ACA exchange at healthcare.gov. Insurers raised rates for those plans due to the political uncertainty that has plagued the healthcare debate, specifically whether the Trump administration will stop paying subsidies that lower out-of-pocket costs for low-income Americans.Of the 1.43 million Floridians with an ACA plan in 2017, about three in four, or more than 1 million people, received a cost sharing reduction, according to federal estimates. Nine in 10 Floridians, or about 1.33 million received a separate subsidy that reduced their monthly rate, called the advance premium tax credit.Most Floridians with a standard ACA plan and a premium subsidy won’t see their monthly costs rise, and some may even pay less than they did the prior year.But the brunt of the 2018 rate hikes will fall squarely on the 7 percent of Floridians, about 66,000 people statewide, who earn too much to qualify for any financial aid to lower their costs of coverage.To put that surge into perspective, the average healthcare plan in Florida will now cost roughly $8,000 per year to cover a single person, a $2,500 increase YoY. Meanwhile, that implies that the average cost of covering a family of 4 is well over $1,500 per month ($18,000 per year), making it easily the second largest expense for most family budgets and in many cases the largest. Needless to say, most American families aren't prepared for their largest expenses to surge 45% in a single year.
Health Premiums To Rise An Average Of 24-Percent On Washington Exchange - If you buy individual health insurance through Washington’s Health Benefit Exchange get ready for sticker shock. Rates will go up by an average of 24 percent next year. “It’s difficult, we get it,” Michael Marchand, the state exchange’s marketing director, said when asked about the impact of higher rates on consumers. “You have to show empathy and you have to be able to say ‘hey look, there’s decisions you’re going to have to make this year that are going to be hard.’” On Monday, the exchange board certified the plans that will be offered for 2018. The exchange is Washington’s one-stop-shopping site for health insurance where about 200,000 people go to buy their individual coverage. It was created after the Affordable Care Act passed in 2010. Last year, Washington bucked the national trend and held premium increases to under 10 percent. But this year, Washington is not immune to instability in the individual market. Insurance companies and regulators point to rising healthcare and pharmaceutical costs, as well as uncertainty about the repeal of Obamacare, as factors contributing to the instability. “The rates are like the fire alarm,” Marchand said. “So if rates are escalating, that’s the alarm.” It’s not just premium rates that are going up. So are deductibles. For the most popular silver-rated plans on the exchange, consumers will pay an average of more than $300 a month next year, with a median deductible of over $4,500. Marchand said federal tax credits should take some of the sting out of the higher premiums for approximately 60 percent of exchange customers who qualify based on their income. Federal cost sharing payments can also help defray out-of-pocket expenses.
Poliovirus destroys cancer cells and stops tumor regrowth -- Researchers from Duke Cancer Institute have modified poliovirus to attack cancer tumors. The modified virus appears to unleash the body’s own capacity to fight malignancies by activating an inflammation process that counter’s the ability of cancer cells to evade the immune system.The researchers published their results in the journal Science Translational Medicine. Their research provides the first insight into the workings of a therapy that has shown promise in early clinical trials in patients with recurrent glioblastoma, a lethal form of brain cancer. The modified poliovirus received a breakthrough therapy designation from the Food and Drug Administration last year, expediting research. Using human melanoma and breast cancer cell lines, and then validating the findings in mouse models, the researchers found that the modified poliovirus therapy starts by attaching to malignant cells, which have an abundance of CD155 protein. The CD155 protein is otherwise known as the poliovirus receptor. The modified virus then begins to attack the tumor cells, directly killing many, but not all. This releases tumor antigens. The second phase of assault is more complicated. By killing the cancer cells, the modified poliovirus triggers an alarm within the immune system, alerting the body’s defenses to go on the attack.
Scientists edit embryos' genes to study early human development (Reuters) - British scientists have used a genome editing tool known as CRISPR/Cas9 to knock out a gene in embryos just a few days old, testing the technique's ability to decipher key gene functions in early human development. The researchers said their experiments, using a technology that is the subject of fierce international debate because of fears that it could be used to create babies to order, will deepen understanding of the biology of early human development. CRISPR/Cas9 can enable scientists to find and modify or replace genetic defects. Many describe it as game-changing. "One way to find out what a gene does in the developing embryo is to see what happens when it isn't working," said Kathy Niakan, a stem cell scientist who led the research at Britain's Francis Crick Institute. "Now we have demonstrated an efficient way of doing this, we hope that other scientists will use it to find out the roles of other genes." She said her hope was for scientists to decipher the roles of all the key genes embryos need to develop successfully. This could then improve IVF treatments for infertile couples and also help doctors understand why so many pregnancies fail.
I’m an environmental journalist, but I never write about overpopulation. Here’s why. – Dave Roberts - Anyone who’s ever given a talk on an environmental subject knows that the population question is a near-inevitability (second only to the nuclear question). I thought I would explain, once and for all, why I hardly ever talk about population, and why I’m unlikely to in the future. Math confirms that population is indeed a factor in environmental impact Human impact on the natural environment is summed up in a simple formula: Impact = Population x Affluence x Technology. All are rising. (Bill Gates has a slightly more complicated formula related to carbon dioxide, but P is a variable in his too.) The current global population has crossed 7.5 billion and is heading upward. The latest UN projections have it hitting 8.6 billion by 2030, 9.8 billion by 2050, and 11.2 billion by 2100. Average fertility rate will decrease, but that effect will be overwhelmed by the absolute numbers. The UN expects over half the growth out to 2100 to be concentrated in just nine countries, listed here in order of their expected contribution: India, Nigeria, the Democratic Republic of the Congo, Pakistan, Ethiopia, the United Republic of Tanzania, the United States of America, Uganda, and Indonesia. Most of those people will be fairly poor (by Western standards, though hopefully less so than their forbearers), which means their per-capita consumption of resources will be fairly low. Nonetheless, cumulatively, adding 2.3 billion people by 2050 amounts to enormous additional resource use and pollution (including greenhouse gases). However. That human numbers are, axiomatically, part of the story of human impact does not mean that human numbers have to take center stage. Talking about population growth is morally and politically fraught, but the best ways of tackling it (like, say, educating girls) don’t necessitate talking about it at all. When political movements or leaders adopt population control as a central concern ... let’s just say it never goes well. In practice, where you find concern over “population,” you very often find racism, xenophobia, or eugenics lurking in the wings. It’s almost always, ahem, particular populations that need reducing.
New STD cases hit record high in US, CDC says - In 2016, Americans were infected with more than 2 million new cases of gonorrhea, syphilis and chlamydia, the highest number of these sexually transmitted diseases ever reported, the Centers for Disease Control and Prevention said Tuesday. The agency's annual Sexually Transmitted Disease Surveillance Report shows that more than 1.6 million of the new cases were from chlamydia, 470,000 were from gonorrhea and nearly 28,000 cases were primary and secondary syphilis, the most infectious stages of the disease, according to the CDC. While all of these can be cured by antibiotics, many people go undiagnosed and untreated. “If not treated, gonorrhea, chlamydia and syphilis can have serious consequences, such as infertility, neurological issues, and an increased risk for HIV," said Harvey. However, the new data show that rates of this potentially deadly disease increased almost 18% between 2015 and 2016, with most of the cases in men who have sex with men. There was also a rise of the disease among women who pass it on to their newborns. There were 628 cases of congenital syphilis among newborns reported in 2016, with more than 40 deaths and severe health complications among the babies who survived. "For the first time in many years, we are now seeing more cases of babies born with congenital syphilis than babies born with HIV," said Harvey. "It means that women are not getting access to prenatal care, testing and treatment for syphilis. It's an unconscionable situation in America today."
Sexually transmitted diseases are at an all time high. But why? - It's a tale as old as fear-mongering World War II posters about the dreaded VD. Americans, on the whole, are really bad at talking about sex, and even worse at talking about sexually transmitted infections and diseases. As recently as 2013, one study found, half of patients visiting Sexually Transmitted Disease (STD) clinics were unwilling to use their health insurance to cover the cost of their visit—likely because of privacy concerns, the researchers concluded. In 2016, the United States budget for "Abstinence Only Until Marriage" sex education in schools—which has been shown time and time again to be ineffective in combating both teen pregnancy and sexually transmitted infections—was increased to $85 million per year. The average high school health course includes less than four hours spent talking about all Sexually Transmitted Infections (STIs) and pregnancy prevention combined, and 87 percent allow guardians to exclude their children from even this coursework. So on the one hand, it's not surprising to hear that rates of these infections are going up, on average, instead of down. And given the lack of education and discourse on these health issues, it would make sense for many Americans to interpret the findings of the Centers for Disease Control's annual Sexually Transmitted Disease Surveillance Report as the result of some sort of moral decline. But according to medical professionals, the problem isn't that people are having more sex—the problem is that sexual healthcare, and the policies that fund it, are in dire shape.
Woman dies of flesh-eating bacteria after Hurricane Harvey — A woman who lived in a Houston suburb that suffered severe flooding from Hurricane Harvey died earlier this month from flesh-eating bacteria that infected her through a tear in her skin, according to the Harris County medical examiner's office. Nancy Reed, 77, died Sept. 15 of necrotizing faciitis, more commonly known as flesh-eating bacteria, her autopsy results released Tuesday confirmed. . The infection spreads quickly through muscle tissue and can cause organ failure. The type of bacteria was not identified in the autopsy report, but streptococcus A, klebsiella, clositrium, E. coli, staphylococcus aureus and aeromonas hydrophila are among the types of bacteria that can cause necrotizing fasciitis and can be found in floodwaters, according to the federal Centers for Disease Control and Prevention. Vibrio vulnificus, another type of bacteria, live in brackish water. "This is one of the things we'd been worrying about once the flooding began, that something like this might occur." County emergency response officials have tallied at least 80 deaths in flood-affected areas since the storm hit Aug. 25. Contaminated storm water was the underlying cause of at least one other death during the hurricane and its aftermath. Clevelon Brown, 64, of Galveston County picked up a bacterial infection from standing in flood water and died of sepsis, an immune-system response to infection that causes widespread inflammation.Rescuer J.R. Atkins, a former firefighter and medic, was infected with necrotizing faciitis through an insect bite on his arm while helping neighbors in Missouri City, Texas, about 15 miles southwest of Houston, the Chronicle reported. He survived.
Mosquitoes carrying deadly diseases could invade 75% of America, warns US government -- Mosquitoes capable of spreading serious and potentially deadly diseases such as Zika, dengue and yellow fever could invade about three-quarters of mainland United States, the US Centres for Disease Control and Prevention have warned. The CDC, a US federal agency, has previously warned thatclimate change could affect human health in many ways including increasing the number of “disease carriers such as mosquitoes and ticks”.In a paper published in the Journal of Medical Entomology, it revealed maps showing areas where the habitat was suitable for two particular species of mosquito, Aedes aegypti or Aedes albopictus to survive. A study found 71 per cent of counties in the 48 contiguous states were suitable for aegypti and 75 per cent could support albopictus.The paper said the dengue, chikungunya and Zika viruses in particular represented a “growing public health threat in parts of the United States where they are established”.“We anticipate that Aedes aegypti and albopictus will be found more commonly in counties classified as suitable,” it said.“Counties predicted suitable with 90 per cent sensitivity should therefore be a top priority for expanded mosquito surveillance efforts while still keeping in mind that Aedes aegypti and albopictus may be introduced, via accidental transport of eggs or immatures, and potentially proliferate during the warmest part of the year.”
Alarm as 'super malaria' spreads in South East Asia - BBC News: The rapid spread of "super malaria" in South East Asia is an alarming global threat, scientists are warning. This dangerous form of the malaria parasite cannot be killed with the main anti-malaria drugs. It emerged in Cambodia but has since spread through parts of Thailand, Laos and has arrived in southern Vietnam. The team at the Mahidol-Oxford Tropical Medicine Research Unit in Bangkok said there was a real danger of malaria becoming untreatable. Prof Arjen Dondorp, the head of the malaria unit, told the BBC News website: "We think it is a serious threat. "It is alarming that this strain is spreading so quickly through the whole region and we fear it can spread further [and eventually] jump to Africa." In a letter, published in The Lancet Infectious Diseases, the researchers detail the "recent sinister development" that has seen resistance to the drug artemisinin emerge. About 212 million people are infected with malaria each year. It is caused by a parasite that is spread by blood-sucking mosquitoes and is a major killer of children.
Tyson Poultry Pleads Guilty to Clean Water Act Violations, Fish Deaths in Missouri - Tyson Foods, the nation's largest chicken producer, has taken "full responsibility" for accidentally releasing an acidic chemical used in chicken feed into the city of Monett, Missouri's wastewater treatment system that resulted in the deaths of more than 100,000 fish. The poultry giant unit pleaded guilty on Wednesday in federal court in Springfield, Missouri on two criminal charges of violating the Clean Water Act that stemmed from discharges at its slaughter and processing facility in Monett, Missouri, the U.S. Department of Justice (DOJ) said . The Arkansas-based company issued a statement taking responsibility of the 2014 incident. "We deeply regret the mistake that was made and have taken corrective action to make sure it doesn't happen again. We're committed to doing better in all areas of our business, especially when it comes to protecting the environment." According to the DOJ, one of the ingredients Tyson used in its chicken feed is a liquid food supplement called Alimet, which has a pH level of less than one. A tank that stored the chemical leaked and flowed into a containment area. The company then hired a contractor to remove the substance and take it to the Monett plant. However, the in-house treatment system was not designed to treat the substance. From there, the acidic chemical released into Monett's municipal waste water treatment plant, and killed bacteria used to reduce ammonia in discharges from the treatment plant into a nearby creek, resulting in the death of approximately 108,000 fish. Tyson will have to pay a $2 million criminal fine and serve two years of probation, the DOJ s aid. The company must also pay $500,000 to maintain and restore waters in the Monett area, with a focus on Clear Creek and the adjoining waterways.
Iowa farmers make record number of pesticide misuse claims - About three-fourths of Shane Susie's 80-acre soybean field was damaged after getting hit with dicamba that drifted over his crops from neighboring fields. The herbicide also savaged his family's trees, flowers and vegetable patch. "We're not eating anything out of it this year," said the 30-year-old who farms near Kingsley in northwest Iowa.He estimates his soybean damage losses at $15,000. With drought worries and low corn and soybean prices, "it will be a tough year." he said. "It makes a challenging year more challenging."Susie and other Midwest farmers have been drawn into a national debate swirling around whether new dicamba versions are safe for growers to use. Nationally, 2,242 farmers say dicamba has damaged an estimated 3.1 million acres, a University of Missouri report shows. Iowa ag leaders are investigating a record 258 crop damage reports from pesticide misuse this year. About 100 complaints on 150,000 acres are tied to dicamba.Monsanto and other ag giants like DuPont and BASF have developed seeds that are genetically modified so they can be sprayed with dicamba, killing weeds but leaving the crop unharmed. At issue is whether the new dicamba products stay where they're sprayed — or move to neighboring fields, where they can damage non-resistant crops, fruits and vegetables, trees and flowers.The U.S. Environmental Protection Agency is talking with academic researchers, state farm regulators, and Monsanto and other manufacturers to determine whether new restrictions should be placed on the chemical's use.
EPA to Allow Use of Dicamba, but with Tighter Restrictions -- The Environmental Protection Agency is aiming to allow farmers to spray the controversial weedkiller dicamba next year, but with additional rules for its use, an official with the agency said on Tuesday. Reuben Baris, acting chief of the herbicide branch of the EPA Office of Pesticide Programs, said the agency had not determined what steps it would take to mitigate problems associated with dicamba. The herbicide, which fights weeds resistant to another herbicide called glyphosate, was linked to widespread crop damage this summer. Use of dicamba, which is produced by BASF SE and Monsanto Co., spiked after U.S. regulators last year approved a new formulation that allowed farmers to apply it to soybean plants that were engineered to resist the chemical while it killed weeds. Previously it had been sprayed on fields prior to planting. Farmers say the chemical caused damage by drifting away from where it was sprayed to fields of soybeans and other plants that could not tolerate it, reports Reuters. Baris told a meeting of state regulatory officials in Washington, D.C., that the agency was "very concerned with what has occurred and transpired in 2017." The EPA is in negotiations with Monsanto and BASF, which sell dicamba herbicides under different brands, to make changes regarding how they are used, Baris said.
France to Vote Against Glyphosate Reauthorization in Europe - The French government intends to vote against and block the European Commission's proposal to reauthorize use of the controversial chemical in the European Union. "The European Commission has proposed renewing its approval for glyphosate for another 10 years. This is far too long, given the concerns that remain over this product, and France will vote against the proposal, as clearly laid out previously in July," Prime Minister Edouard Philippe announced Monday. According to Reuters , failure to renew the license by the end of the year would initiate an automatic ban starting Jan. 1, 2018. France has previously expressed concerns over the perceived health risks of glyphosate , the active ingredient in Monsanto's widely popular weedkiller Roundup . Two years ago, the country banned the sale of Roundup from garden centers over fears that the chemical could cause cancer . Ségolène Royal, France's former minister of ecology, sustainable development and energy, has urged for an outright ban on glyphosate herbicides across the EU. Philippe also said Monday that the government is asking its farm and environment ministries to propose by year's end "a plan to move away from glyphosate in light of the current research and available alternatives for farmers." France is Europe's biggest agricultural producer. The country's farming union, the FNSEA, spoke against a glyphosate ban over worries it could put them at a disadvantage against European competitors, AFP reported.
For Snubbing Glyphosate Hearing, EU Parliament Bans Monsanto Lobbyists --Monsanto lobbyists were officially barred by the European Parliament on Thursday after refusing requests to participate in hearings about the U.S. corporation's efforts to influence regulations of its controversial glyphosate within the 28-nation bloc. The ban was announced by the parliament's presidential council under rules designed to combat misbehavior by those lobbying the EU's lawmaking body. It is the first time, the Guardian notes, that "MEPs have used new rules to withdraw parliamentary access for firms that ignore a summons to attend parliamentary inquiries or hearings." The Greens/EFA Group in the parliament, which had requested Monsanto's removal after the biotech giant's refusal, welcomed the decision. "This is strong democracy. Those who escape democratic accountability must be excluded from access to lobbying," said MEP Sven Giegold, financial and economic policy spokesperson for the Greens/EFA and parliament's rapporteur for Transparency, Accountability and Integrity. "If Monsanto does business in Europe, it must also face up to its responsibilities before the European Parliament." The Guardian reports: The lobby ban will be a bitter blow to Monsanto’s advocacy campaign ahead of a decision later this year about the relicensing of glyphosate, which has been linked to cancer by one expert WHO panel. Another deemed it safe for public use, but Monsanto’s outreach to regulatory agencies in the US and Europe sparked controversy and prompted the parliamentary hearing.
Consumer group warns against common flame retardant -- The Consumer Product Safety Commission published guidance in the Federal Registry Thursday that serves as a warning for consumers not to buy products containing a commonly-used class of toxic flame retardants, called organohalogen chemicals. They have been linked to cancer, hormone disruption, infertility, and neurological [brain] deficits in children, according to the commission's guidance document. Some studies, cited in this commission report, substantiate these claims. The chemicals are especially hazardous to pregnant women and young children, studies find. The commission, a government agency charged with protecting the public from unreasonable risks of injury or death associated with the use of thousands of consumer products, also recommended manufacturers stop using these chemicals in products where they are currently found. These include upholstered furniture, mattresses, electronic cases, and children's toys. Commissioner Bob Adler said there's a "whole host of dangers" these organohalogen flame retardants carry. "These chemicals are added to products to keep them from catching fire in smolder or open flame situations," said Adler. He acknowledged, though, that the commission has not yet done careful and exhaustive studies of every single chemical within this class, but "every (chemical) that we've done careful and exhaustive study of has proven to be toxic -- and hazardously toxic -- to consumers."
House, Senate Committees Attack Environmental Laws Using Wildfires as Pretext - Two congressional committees will hold coordinated hearings Wednesday to push partisan legislation designed to weaken environmental laws on public lands . The House Natural Resources Committee will use the pretext of "catastrophic" wildfires to build support for legislation by Rep. Bruce Westerman (R-Ark.) that would curtail protections for endangered species and limit science-based review of environmental harms to expedite logging projects. The Senate Energy and Natural Resources Committee will consider three bills designed to limit environmental reviews on a variety of logging and forest-management projects on public lands. "Timber companies would be the only winners if these terrible bills pass," said Brett Hartl, government affairs director with the Center for Biological Diversity . "No matter what issue our public lands face, the knee-jerk response from congressional Republicans is an effort to gut our environmental laws. They're willing to sacrifice our wildlife, healthy streams and rivers, and vibrant public lands on the altar of private profit." The Senate committee will consider three bills:
- S. 605 by Sen. Steve Daines (R-Mont.) and Sen. Jon Tester (D-Mont.) would eliminate consultations required under the Endangered Species Act when a new species is added to the endangered species list or when critical habitat for a listed species is revised for Forest Service lands where a land management plan is already in place. Only when that plan is revised—usually every 15-20 years—would the Forest Service be required to review it at the landscape level.
- S. 1417 by Sen. Orrin Hatch (R-Utah) and Sen. Martin Heinrich (D-N.M.) would severely limit science-based review of potential harms under the National Environmental Policy Act for juniper-tree control projects on public lands if those projects are designed to benefit either mule deer or sage grouse populations. While Juniper control may be appropriate in some ecosystems, many juniper-removal projects use destructive chaining, plant non-native seeds and spray herbicides that could actually harm sage grouse and other species. That potential harm needs to be evaluated and disclosed.
- S. 1731 by Sen. John Thune (R-S.D.) would exempt many types of logging and forest-management activities up to 10,000 acres—approximately 15 square miles—from environmental review under the National Environmental Policy Act. The legislation includes provisions that would also limit judicial review of Forest Service logging activities and force citizens to use binding arbitration if they want to challenge a poorly conceived logging project.
In Canada, climate change could open new farmland to the plow | Reuters: As global warming intensifies droughts and floods, causing crop failures in many parts of the world, Canada may see something different: a farming expansion. Rising temperatures could open millions of once frigid acres to the plow, officials, farmers and scientists predict. “Canada is one of the few countries where climate change may create some opportunities for growing crops in northern latitudes,” said Rod Bonnett, president of the Canadian Federation of Agriculture, a lobby group representing 200,000 farmers. But determining just how much land in the world’s second largest country could become suitable for farming as a result of climate change is not easy, said Ian Jarvis, a senior official with Agriculture and Agri-Food Canada, a government department. In the country’s three prairie provinces alone - vast swaths of flat land in central Canada covering an area more than twice the size of France - the amount of arable land could rise between 26 and 40 percent by 2040, Jarvis said. “Most of the improvements are happening in fringe areas of agricultural regions,” he told the Thomson Reuters Foundation. “Canada is in a better situation than much of the rest of the world.” Canada is the world’s largest exporter of canola, flaxseed, and pulses, government figures show, and is one of the top wheat producers. Farmers hope the country of 35 million will be able to capitalize on the opportunities presented by warmer conditions - including by exporting more food to other regions hard-hit by increasing heat and crop failure. World agricultural production will need to rise about 50 percent by 2050 to keep pace with population growth, according to the United Nations’ Food and Agriculture Organization (FAO). As rising heat and more extreme weather cut harvests in some southern regions, hungry mouths across the developing world may turn to northern nations like Canada for help, experts predict. “We are seen as one of the few countries that can provide food for a growing global population,” said Bonnett of the Canadian Federation of Agriculture.
Wood-burning stoves face ban in pollution crackdown in London -- Wood burning is set to be banned in some urban areas to reduce air pollution under proposed restrictions that would be the strongest in Europe. Sadiq Khan, the mayor of London, is seeking powers to prohibit all burning of wood in parts of the capital with poor air quality. He also wants tighter curbs on wood-burning stoves, with only low- emission versions allowed to stay on sale.Wood-burning stoves are increasingly popular in middle-class homes and hotels, with 1.5 million across Britain and 200,000 sold annually. Old fireplaces have also been opened up in many houses and can cause greater pollution than stoves. Wood burning is most popular in the southeast, where it is done in 16 per cent of households compared with less than 5 per cent in northern England and Scotland.Between a quarter and a third of all fine particle pollution in London comes from domestic wood burning. During a period of very high air pollution in January, it contributed half the toxic emissions in some areas of the city, King’s College London found. Many people have switched to wood burning because they think it is greener than using gas boilers. A wood stove can emit billions of tiny toxic particles that pollute the surrounding area.
Battle to Protect 50 Million Forest Acres May Finally Be Won After 16 Years - A decades-long fight over a landmark rule protecting wild forests nationwide took another successful–and possibly final–turn last week after a U.S. district court threw out a last-ditch attack by the state of Alaska against the Roadless Rule. Adopted in the closing days of the Clinton administration, the Roadless Rule prohibits most logging and road construction in roadless areas of national forests. These lands, today equaling about 50 million acres or about the size of Nebraska, are some of the wildest places left in America. Upon its passage, the rule was overwhelmingly popular with the American people, including those who like to hike, camp, fish and recreate among the trees in wild, unmarred areas. The Forest Service also liked the rule, since, at the time, the agency had a multibillion-dollar backlog on maintenance for more than 400,000 miles of existing roads, and it wasn't eager to add even more to its workload. Yet, despite its popularity, state political leaders with ties to the logging and timber industries hated the new rule. Even before President Clinton left office, they began their attack. The Bush administration, which took office just eight days later, failed to come to the rule's defense. What followed was a 16-year legal battle involving a number of Earthjustice attorneys from the Denver, Bozeman, Seattle and Juneau offices, dozens of courtrooms and judges, and thousands of hours of legal wrangling. "When we first started this, it never crossed my mind we would still be litigating the rule 16 years later," Over the next two decades, three main legal battles emerged over the Roadless Rule. One challenge came from the state of Idaho, which has the most roadless public forest lands of any of the lower 48. The second attack came from the state of Wyoming. Lastly, the state of Alaska challenged the rule.
Degraded Tropical Forests Now Release More Carbon Than They Store, New Study Finds - Tropical forests may no longer be acting as carbon sinks and could be releasing more carbon than they store, according to troubling new research. A study published Thursday in the journal Science finds that forests across Asia, Latin America and Africa release 425 metric tons of carbon per year, which is equivalent to nearly one-tenth of the U.S.' annual carbon footprint. Researchers found nearly 70 percent of this loss is caused by small-scale degradation, the result of selective logging, drought and wildfire . All is not lost for forests, however. Researchers say that policies to curb deforestation , reduce degradation and restore land could turn forests back into carbon sinks. "These findings provide the world with a wakeup call on forests," the study's lead author, Alessandro Baccini, a scientist with the U.S.-based Woods Hole Research Center, said in a statement. "If we're to keep global temperatures from rising to dangerous levels, we need to drastically reduce emissions and greatly increase forests' ability to absorb and store carbon." For more: Washington Post , Reuters , The Guardian , PBS NewsHour
Tropical forests used to protect us from climate change. Now, they're making it. A surprising scientific study released Thursday presents troubling news about the enormous forests of the planet’s tropical midsection — suggesting that they are releasing hundreds of millions of tons of carbon to the atmosphere, rather than storing it in the trunks of trees and other vegetation.The results, published in the journal Science, contradict prior work in suggesting that these forests — including the Amazon rain forest but also huge tropical forests in Indonesia, Congo and elsewhere — have become another net addition to the climate change problem. However, the accounting also implies that if the current losses could be reversed, the forests could also rapidly transform into a powerful climate change solution. “The losses due to deforestation and degradation are actually emitting more CO2 to the atmosphere, compared with how much the existing forest is able to absorb,” The result, which spans the years from 2003 to 2014, differs from prior findings, which had suggested the forests of the tropics are a “sink” for carbon atoms. The forests were believed to be pulling carbon out of the air and embedding it in living plants — or, perhaps, only losing a little bit of carbon and thus amounting to a minor source.The study, however, focuses not only on the effects of deforestation but also forest degradation and disturbance. Degradation occurs, for instance, when there is selective logging of some of, but not all, the trees in an area; disturbance, meanwhile, would include the effects of wildfires and drought (which may also be influenced by climate change).Deforestation is considerably easier to measure, since it can be easily observed from space by satellite — you simply measure the area of places where trees have disappeared. But degradation is more subtle. The study managed to detect this kind of change using satellite, laser, and ground measurements to analyze forest areas specifically for the carbon content they contained, rather than simply for the area covered by trees. Hence the surprising result — deforestation may matter less than more subtle but cumulative changes to forests.
We’ve Grossly Underestimated How Much Cow Farts Are Contributing to Global Warming - A new NASA-sponsored study shows that global methane emissions produced by livestock are 11 percent higher than estimates made last decade. Because methane is a particularly nasty greenhouse gas, the new finding means it’s going to be even tougher to combat climate change than we realized. We’ve known for quite some time that greenhouse gases produced by cattle, sheep, and pigs are a significant contributor to global warming, but the newresearch, published in Carbon Balance and Management, shows it’s worse than we thought. Revised figures of methane produced by livestock in 2011 were 11 percent higher than estimates made in 2006 by the Intergovernmental Panel on Climate Change (IPCC)—a now out-of-date estimate. It’s hard to believe that belches, farts, and poop from livestock could have any kind of global atmospheric effect, but it’s an issue of scale, and the nature of methane itself. There are approximately 1.5 billion cows on the planet, each and every one of them expelling upwards of 30 to 50 gallons of methane each day. We typically think of farts as being the culprit, but belches are actually the primary source of cattle-produced methane, accounting for 95 percent of the problematic greenhouse gas. And problematic it is. Methane is about 30 times more efficient at trapping the Sun’s radiative heat than carbon dioxide over a timescale of about a century. There may be more CO2 in the atmosphere than methane, but by unit, it’s the more destructive greenhouse gas.
UN Calls for Crackdown on Illicit Wildlife Trafficking - Jerri-Lynn Scofield - The United Nations General Assembly earlier this month adopted a wide-ranging resolution calling for a crackdown on illicit wildlife trafficking.Wildlife trafficking operations have become increasingly sophisticated, often utilising organised crime networks. Rhinoceros poaching is only one of several sad examples I could cite– one that this recent Inter Press Service article, The Shifting Dynamics of Rhino Horn Trafficking brought to my attention.TRAFFIC, the wildlife trade monitoring network comprising 120 staff member working on five continents, released a report last week documenting how some criminal networks of Chinese origin operating in South Africa are now processing rhino horn locally into small items– beads, bracelets, bangles and powder– to evade detection and provide ready-made products to Asian consumers (mainly Vietnam and China). Previously, the trade occurred in whole rhino horns, which were more difficult to conceal.Nonetheless, more than 7,100 rhinos have been killed for their horns in Africa alone over the past decade, according to TRAFFIC. Most of the poaching– 91% of known losses in the continent– occurred in South Africa, home to 79% of Africa’s last remaining rhinos. According to the TRAFFIC report:The smuggling routes are complex and dynamic, exploiting weaknesses in border controls and law enforcement capacity constraints to provide a steady supply of rhino horn to Asian black markets. The routes span multiple airports, borders and legal jurisdictions, taking advantage of fragmented law enforcement responses that are hamstrung by bureaucracy, insufficient international co-operation and corruption. Smuggling methods are infinitely versatile, limited only by imagination and opportunity. As new smuggling methods are identified by law enforcement agencies, trafficking networks adapt and refine their tactics, finding new methods of concealment and new weaknesses to exploit.
Stray Dogs Started Turning Blue. Then the Street Mobilized — Mumbai turns out to be a pretty good place to be a dog. The poorest people living on the streets barely have enough food themselves, but they feed strays. And the rich, well, some go completely overboard. One Bollywood actress provides steaming vessels of chicken and rice every morning for dozens of neighborhood dogs. Another woman drives around in a specially outfitted Honda delivering meals to more than 100, sprinkling in special spices depending on the season. (Turmeric is good during the monsoons, she says, to help boost the dogs’ immunity.) India has some of the most pro-dog laws on the planet. It is illegal here to kill healthy strays, and the result is millions of them — perhaps as many as 30 million across the country. Packs of dogs trot through the parks, hang around restaurants for scraps (which they usually get), and sprawl on their bellies inside railway stations as rushing commuters leap over them. Some people won’t even call them strays, preferring the more respectful label of “community dogs.” And within India, Mumbai is considered something of a sanctuary city for them. But that reputation briefly hit a bump a few weeks ago, after some dogs took a dip in a Mumbai river and came out blue.Upon close investigation, it turned out that a dye company had released products into a drainage ditch that flowed into a Mumbai river where the dogs liked to play. Coloring for clothing had stained the dogs’ fur, and the monsoon rains soon blasted it off.What was interesting — and moving — was the community efforts to rally around the blue dogs and help them.“India is pretty unique,” said Ingrid Newkirk, the British-American co-founder of People for the Ethical Treatment of Animals, who grew up in India. “Maybe it’s a karmic sense, this idea that the dog could be you and if you don’t watch out in life it could be you again.After some factory workers spotted a pack of dogs that were bright blue, Taloja sprang into action. Workers called a neighborhood human rights activist who then called a neighborhood animal rights advocate who then called a nearby animal hospital. An ambulance was rushed to the scene. A few days later, in another incident near a factory, villagers waded into a ditch coursing with nitric acid and rescued a dog that was trapped.
North Atlantic Right Whales In Dangerous Decline, Study Confirms -- A new study published in the journal Ecology and Evolution confirms that the North Atlantic right whale—one of the world's most endangered whales—has reversed course and is no longer recovering, but rather, is in perilous decline. The authors estimate the probability that the population is declining at 99.99 percent and found a strong divergence between male and female survival rates, leaving the population with a troubling imbalance. There are substantially more males left than females. How can the authors (two of whom are from the government's own National Marine Fisheries Service) be 99.99 percent certain that they are correct? Because there are so few whales we can count them. North Atlantic right whales are individually identifiable by the unique, white, callosity patterns on their lower jaw. And, sadly, there aren't that many to count. The estimated population of North Atlantic right whales is fewer than 500. The females are dying off at an alarming 7 percent. In 1990, there were just about the same number of males as females. By 2015, there were 1.46 males per female. Humans nearly killed off these magnificent whales once before. Back in the day, harpooning whales was a way to get rich—and the best whale for that in the sea was the right whale. "Right" because it swims slowly, floats once dead, and just one could yield 1,386 gallons of oil.
Lawsuit Seeks Personhood Rights for Colorado River - A lawsuit filed Monday is seeking to establish personhood rights for the Colorado River--a unique move that could have larger implications for environmental law. The suit, brought by Denver lawyer Jason Flores-Williams against Colorado and Gov. John Hickenlooper, names the river itself as a plaintiff and environmental group Deep Green Resistance as an ally of the body of water to appear in court on its behalf. Flores-Williams says the suit is intended to force humans to take better care of natural resources by creating a legal consequence for inaction. The river, which supplies water for 36 million people in seven states, has been egregiously overused, and studies have shown climate change is already causing the river to shrink. As reported by the New York Times : "If a corporation has rights, the authors argue, so, too, should an ancient waterway that has sustained human life for as long as it has existed in the Western United States. The lawsuit claims the state violated the river's right to flourish by polluting and draining it and threatening endangered species. The claim cites several nations whose courts or governments have recognized some rights for natural entities."
Interior Secretary Ryan Zinke says Hurricane Harvey recovery at 20% - About 16,000 Texans are still displaced and living in hotels and other temporary housing because of Hurricane Harvey, federal officials said Saturday.In Austin to visit the Federal Emergency Management Agency’s Joint Information Center and receive a department update on relief efforts at a local U.S. Geological Survey office, U.S. Interior Secretary Ryan Zinke said Saturday that recovery will be a “marathon, not a sprint,” that lasts for years.“This is going to take a long time for recovery,” Zinke said. “I would say we’re probably at 20 percent.”Zinke commended first responders as well as federal and state government for the immediate response to Harvey.‘“It was a good first sprint, and I think it was a tribute to the great state of Texas and the governor and the president working all together,” Zinke said.Five of the U.S. Geological Survey’s stream gauges in Harris County indicate water levels still remain above normal, and three were at all-time daily highs on Saturday, according to the service’s real-time map.All three that were at all-time highs were on the Buffalo Bayou, which remains flooded after water was released into it by the Army Corps of Engineers to protect two upstream dams during Harvey’s rains. The five that were above normal were on the White Oak Bayou, Cypress Creek and Brays Bayou, among other streams.Jeff Adams, who managed the response to wildlife refuges in Texas for the U.S. Fish and Wildlife Service, said 13 employees statewide are still displaced, and the service is housing them temporarily in trailers, Adams said. Adams said the Aransas National Wildlife Refuge reopened Saturday, the last refuge to reopen after the storm. It took the longest to reopen because it suffered wind damage. About 75 percent of its buildings were significantly damaged, including seven that were demolished, he said.
Florida's Orange Growers May Never Recover From Hurricane Irma -- Hurricane Irma destroyed half of Florida’s citrus crop when it tore through the state earlier this month, as we reported earlier this month. The state’s orange growers at the time described the damage from the storm as the worst they’d seen in their lifetimes, as we reported at the time. Many of the affected groves of oranges and grapefruits were approaching harvest, too – and their destruction helped send the price of orange concentrate futures rocketing higher. Unfortunately for Florida’s citrus growers, the damage caused by Irma exacerbated declining output caused by an epidemic of “citrus greening” that’s in its twelfth year. The state’s increasingly exasperated farmers are now facing an unprecedented squeeze, the Wall Street Journal reports, as damage caused by the storm disrupted research into a genetically modified, greening-resistant orange tree. Farmers believe that modifying orange trees to make them resistant to greening is vital for the long-term survival of one of Florida’s most iconic industries (as WSJ points out, oranges appear on Florida license plates). Greening first emerged in the state back in 2015, and is believed to be caused by tiny disease carrying insects that were first introduced when farmers purchased orange trees from Asia back in 2004. Against this backdrop is intensifying competition from orange growers in Brazil, who are trying to horn in on the US orange-juice market (most of Florida’s oranges are processed into orange juice, while Oranges grown in California are eaten. “…Hurricane Irma this month hit a direct blow on Florida’s citrus groves, knocking 50% of developing oranges off trees across the state, according to the University of Florida Institute of Food and Agricultural Sciences.Trees with roots already weakened by greening were sitting in 4 feet of water in some of Florida’s southern areas earlier this month. During the storm, nurseries quarantined to keep out the disease lost roofs, and scientific laboratories working on anti-greening projects lost power, potentially compromising research years in the making.
Aid reaches Puerto Rico after Maria as threat from cracked dam recedes - Large amounts of federal aid began moving into Puerto Rico on Saturday, as the island tried to recover from a battering by hurricane Maria. Local officials praised the Trump administration’s response but also called for the emergency loosening of rules long blamed for condemning the US territory to second-class economic status.In the north-west of the island, people began returning to their homes after a spillway eased pressure on a dam that cracked after more than 1ft of rain fell in the wake of the hurricane. Though water continued to pour out of rain-swollen Lake Guajataca, the dam had not burst by Saturday night. Upstream of the towns of Quebradillas and Isabela, the state of the dam had prompted stern official warnings from Governor Ricardo Rossello and the US National Weather Service (NWS). Federal officials said Friday that 70,000 people would have to be evacuated, although Javier Jimenez, mayor of the nearby town of San Sebastian, said he believed the number was far smaller. Secretary of Public Affairs Ramon Rosario said about 300 families were in harm’s way. The NWS extended a flash flood watch for communities along the rain-swollen Guajataca River until 2pm local time on Sunday. If the dam failed, the NWS warned, the flooding would be life-threatening. “Stay away or be swept away,” it said. The governor said there was “significant damage” to the dam and authorities believed it could give way at any moment. “We don’t know how long it’s going to hold,” Rossello said. “The integrity of the structure has been compromised in a significant way.” The 345-yard dam, which was built around 1928, holds back a man-made lake covering about two square miles. More than 15in of rain from Maria fell on the surrounding mountains. The aid effort quickened with the opening of the island’s main port in the capital, San Juan, allowing 11 ships to bring in 1.6 million gallons of water, 23,000 cots, dozens of generators and food. Dozens more shipments are expected in upcoming days. The federal aid effort is racing to stem a growing crisis in towns left without water, fuel, electricity or phone service.
Aid begins to flow to Puerto Rico, facing a growing humanitarian crisis in Maria’s aftermath - Large amounts of federal aid began moving into Puerto Rico on Saturday, welcomed by local officials who praised the Trump administration's response but called for the emergency loosening of rules long blamed for condemning the U.S. territory to second-class status. In northwest Puerto Rico, people began returning to their homes after a spillway eased pressure on a dam that cracked after more than a foot of rain fell in the wake of the hurricane. The opening of the island's main port in the capital allowed 11 ships to bring in 1.6 million gallons of water, 23,000 cots, dozens of generators and food. Dozens more shipments are expected in upcoming days. The federal aid effort is racing to stem a growing humanitarian crisis in towns left without fresh water, fuel, electricity or phone service. Officials with the Federal Emergency Management Agency, which is in charge of the relief effort, said they would take satellite phones to all of Puerto Rico's towns and cities, more than half of which were cut off following Maria's devastating crossing of Puerto Rico on Wednesday. The island's infrastructure was in sorry shape long before Maria struck. A $73 billion debt crisis has left agencies like the state power company broke. As a result the power company abandoned most basic maintenance in recent years, leaving the island subject to regular blackouts. A federal control board overseeing Puerto Rico's finances authorized up to $1 billion in local funds to be used for hurricane response, but Gov. Ricardo Rossello said he would ask for more. "We're going to request waivers and other mechanisms so Puerto Rico can respond to this crisis," he said. "Puerto Rico will practically collect no taxes in the next month."
The entire island of Puerto Rico may be without electricity for months - It’s been less than a week since Hurricane Maria tore through Puerto Rico, bisecting the entire island, bringing 150 mph winds and torrential rains to some of its most populated areas. But the crisis in Puerto Rico, a US territory whose residents are citizens of the United States, is just beginning, and will likely last months or years. Puerto Rico’s entire power grid was knocked offline during the storm. The New York Times reports it could be four to six months before power is restored on the island. That’s half a year relying on generators, half a year without air conditioning in the tropical climate, half a year where even the most basic tasks of modern life are made difficult. And remember: 3.4 million people live there. Making life even harder: Cell service is out on almost the entire island, and communications are generally strained. Thousands of people living in the mainland United States with relatives in Puerto Rico have yet to make contact. At least six people died during the storm, but this number could rise due to the fact that news is moving slowly on the communications-choked island.Meanwhile, new crises keep forming in the wake of the storm. On Friday, the National Weather Service issued a dire warning about the Guajataca Dam in the Northwestern corner of Puerto Rico, which is reported to be near the point of breaking, threatening downstream areas with deadly floods. Seventy thousand people — enough to fill a small city — have been asked to evacuate areas that could be flooded by the nearly 11 billion gallons of water the dam holds back. Puerto Rican officials believe the dam’s failure is imminent. “It could be tonight, it could be tomorrow, it could be in the next few days, but it’s very likely [the dam will break] soon,” Christina Villalba, a spokesperson with Puerto Rico’s emergency management agency, told Reuters.
Puerto Rico Faces 'Apocalyptic' Conditions: Humanitarian Crisis Grows for 3.4 Million American Citizens - Puerto Rico's humanitarian crisis continued to grow over the weekend, as officials described "apocalyptic" conditions across the island in the wake of Hurricane Maria . Many of the 3.4 million American citizens living on the island are without power and disconnected from communications, and officials estimate some areas won't see power restored for months. Isolated towns and low-income communities are facing increasing shortages of supplies and fuel. Officials estimate the storm also destroyed around 80 percent of the island's crop value, while a dam compromised by heavy rain is causing worries about flooding and accessibility of drinking water . "The devastation in Puerto Rico has set us back nearly 20 to 30 years," Jenniffer Gonzalez, the island's nonvoting representative in Congress, told the AP. "I have four children and the youngest is 6 months old. We are preparing for six months, maybe even a year without power," Nina Rodriguez, a human resources manager in San Juan, told the New York Times . "All the infrastructure has collapsed. Everything we had before the hurricane is beyond reach," she added. Conditions: CNN , AP , Washington Post , Bloomberg , New York Times . Communications & power: NPR , Vox , NBC . Agriculture: New York Times . Dam: New York Times , Reuters , NBC , USA Today , CNN . Commentary: New York Times editorial
"People Are Going To Start Dying" - Puerto Rico's Battered Hospitals On Verge Of Failure A week after then-category 4 Hurricane Maria made landfall in densely populated eastern Puerto Rico, electricity remains offline across most of the island, while supplies of staples like gas, food and water are dwindling. Shelters on the island are reportedly running low on food, and the government managers of the emergency response effort are scrambling to evacuate 70,000 people from a river valley that’s in danger of being completely submerged after a nearby dam failed.And now, Reuters is reporting that hospitals across the island are struggling to continue providing medical services to patients after the storm left many of them flooded, strewn with rubble or relying on diesel-powered generators that will soon run out of fuel. For some, the only option is to evacuate to the United States for treatment. Among these patients is a baby with a heart defect who had the misfortune of being born just before Maria hit.“Among them is Cheira Ruiz and her baby girl Gabriellyz, who was born two weeks ago with a serious heart defect. The newborn was admitted to the Centro Cardiovascular de Puerto Rico in the capital shortly before Maria slammed into the island last Wednesday, but it was impossible for doctors to operate in such precarious conditions.”Gabriellyz was among the first infants cleared to take a medical flight out of Puerto Rico since the storm. Her parents, who live two hours south of the capital, found out the good news Friday when emergency officials knocked on their door in the town of Guanica and told them to pack for the trip to Miami. With phone service out, the doctors had called one of the island’s radio stations, which broadcast their plea for help in locating the couple. Hours before the flight was scheduled to depart, the parents learned there was only room for one of them. Mother and baby would fly alone to Miami.
A Storm's Never Destroyed a Grid Like Maria Ruined Puerto Rico - On Friday, the San Juan airport was abandoned. No electricity meant no air conditioning, and no air conditioning meant hot and muggy air wafting through the terminals. Ceilings were leaking. Floors were wet. Only the military, relying on its own sight and radar systems, was landing planes. The airport is one of the first places crews will restore power -- whenever they can get to it. Hundreds are still waiting for the all-clear to move in and start the arduous task of resurrecting Puerto Rico’s grid. The devastation that Maria exacted on Puerto Rico’s aging and grossly neglected electricity system when it slammed ashore as a Category 4 storm two days ago is unprecedented -- not just for the island but for all of the U.S. One hundred percent of the system run by the Puerto Rico Power Authority is offline, because Maria damaged every part of it. The territory is facing weeks, if not months, without service as utility workers repair power plants and lines that were already falling apart. “I have seen a lot damage in the 32 years that I have been in this business, and from this particular perspective, it’s about as large a scale damage as I have ever seen,” said Wendul G. Hagler II, a brigadier general in the National Guard, which is assisting in the response. No federal agency dared on Friday to estimate how long it’ll take to re-energize Puerto Rico. If it’s any indication of how far they’ve gotten, the island’s power authority known as Prepa is only now starting to assess the damage. “We are in the phase where we have people queued up and lining up resources.” What Buell does know is Puerto Rico’s power plants seem inexplicably clustered along the island’s south coast, a hard-to-reach region that was left completely exposed to all of Maria’s wrath. A chain of high-voltage lines thrown across the island’s mountainous middle connect those plants to the cities in the north.
Puerto Rico’s Agriculture and Farmers Decimated by Maria - José A. Rivera, a farmer on the southeast coast of Puerto Rico, stood in the middle of his flattened plantain farm on Sunday and tried to tally how much Hurricane Maria had cost him. For as far as he could see, every one of his 14,000 trees was down. Same for the yam and sweet pepper crops. His neighbor, Luis A. Pinto Cruz, known to everyone here as “Piña,” figures he is out about $300,000 worth of crops. The foreman down the street, Félix Ortiz Delgado, spent the afternoon scrounging up the scraps that were left of the farm he manages. He found about a dozen dried ears of corn that he could feed the chickens. The wind had claimed the rest.“There will be no food in Puerto Rico,” Mr. Rivera predicted. “There is no more agriculture in Puerto Rico. And there won’t be any for a year or longer.”Hurricane Maria made landfall here Wednesday as a Category 4 storm. Its force and fury stripped every tree of not just the leaves, but also the bark, leaving a rich agricultural region looking like the result of a postapocalyptic drought. Rows and rows of fields were denuded. Plants simply blew away.In a matter of hours, Hurricane Maria wiped out about 80 percent of the crop value in Puerto Rico — making it one of the costliest storms to hit the island’s agriculture industry, said Carlos Flores Ortega, Puerto Rico’s secretary of the Department of Agriculture. Across the island, Maria’s prolonged barrage took out entire plantations and destroyed dairy barns and industrial chicken coops. Plantain, banana and coffee crops were the hardest hit, Mr. Flores said. Landslides in the mountainous interior of the island took out many roads, a major part of the agriculture infrastructure there. The island suffered a loss of $780 million in agriculture yields, according to the department’s preliminary figures. Hurricane Georges in 1998 wiped out about 65 percent of crops and Hurricane Irma, which only grazed the island, took out about $45 million in agriculture production.
'Apocalyptic' devastation in Puerto Rico, and little help in sight -- Hurricane Maria whipped Puerto Rico with Irma-level winds, drenched the island with Harvey-level flooding, crippled communications, decimated buildings and damaged a dam that puts downstream residents at risk of catastrophe.But help has been slow to come to communities where the devastation is described as "apocalyptic," officials and residents argue.Gov. Ricardo Rosselló said the nation faces a humanitarian crisis. He urged Congress to approve a commensurate aid package as the US commonwealth, already hammered by a prolonged economic crisis, tries to get back on its feet.The governor joined others in emphasizing that Puerto Rico's residents are American citizens. "We need something tangible, a bill that actually answers to our need right now," he said. "Otherwise, there will be ... a massive exodus to the (mainland) United States." Hillary Clinton urged the Defense Department to send a Navy medical ship, while Democratic House Minority Leader Nancy Pelosi called for Republicans to join with Democrats to pass a robust relief package. "The Trump Administration must act immediately to make available additional Department of Defense resources for search-and-rescue operations, law enforcement and transportation needs," Pelosi said in a statement. "Our fellow Americans in Puerto Rico and the Virgin Islands deserve to know that their government will be there for them, without question or hesitation."
‘This Is Chaos’: Day 5 in Storm-Ravaged, Blacked-Out Puerto Rico - Hurricane Maria, which smashed into the island six days ago and devastated its power grid, couldn’t have come at a worse time. This is Puerto Rico’s hottest season of the year -- and virtually no one has air conditioning. Crews have arrived to begin the arduous task of resurrecting what was already an aging and long-neglected electricity system. But that’ll take weeks, if not months -- meaning more sleepless nights for those like Juan Bautista Gonzalez. “No one can sleep. I spend all night tossing and turning. This is chaos.” The destruction that Maria exacted upon Puerto Rico’s fragile grid when it slammed ashore as a Category 4 storm is unprecedented. More than half of the territory’s towers may be down, at least 90 percent of its distribution lines damaged or destroyed and almost all overhead transmission lines affected, according to the American Public Power Association and Energy Department. All told, Maria could result in $40 billion to $85 billion in insured losses across the Caribbean. In the 32 years that National Guard brigadier general Wendul G. Hagler II has served, he said, “It’s about as large a scale damage as I have ever seen.” Just before Maria hit, Hagler visited the U.S. Virgin Islands, where the majority of homes and businesses also remain without power and face a slow recovery. For an indication of how long it’ll take to rebuild the system, Governor Ricardo Rossello points to Hurricane Hugo, a powerful storm that ravaged the region in 1989. Some had electricity within two months. Others spent six months waiting. The whole endeavor may be slowed by the island’s weak finances. Puerto Rico filed for bankruptcy in May after years of economic decline while a series of defaults has effectively left it unable to raise money in the capital markets. The aging, government-owned Puerto Rico Electric Power Authority, operating under court protection from creditors, has more than $8 billion in debt but little to show for it. Even before the storm, outages were common, and the median plant age is 44 years, more than twice the industry average. President Donald Trump on Monday said Puerto Rico “is in deep trouble,” with a devastated electricity grid and billions of dollars owed to Wall Street banks.
"Hysteria is starting to spread": Puerto Rico is devastated in the wake of Hurricane Maria - Five days after Hurricane Maria tore through Puerto Rico, bisecting the entire island, the US territory is in the grips of a serious, life-threatening crisis, with humanitarian aid getting in far more slowly than is needed. The island is running short on food, fuel, and access to clean water and there’s limited communications, which means some communities have received no information about the rescue efforts underway. Among the greatest threats is the continuing lack of power throughout much of the island, after nearly the entire power grid was knocked offline during the storm (about 80 percent of the transmission infrastructure was destroyed). The New York Times reports it could be four to six months before power is restored on the island. That’s half a year with Puerto Rico’s 3.4 million residents relying on generators, half a year without air conditioning in the tropical climate, half a year where electric pumps can’t bring running water into homes, half a year where even the most basic tasks of modern life are made difficult. “The devastation is vast,” Puerto Rico Gov. Ricardo Rossello said in a statement Monday. “Make no mistake — this is a humanitarian disaster involving 3.4 million U.S. citizens.” The storm has claimed at least 10 lives in Puerto Rico so far, according to the Associated Press. But John Mutter, a Columbia University professor who specializes in natural disasters and studied the death toll from Hurricane Katrina, expects in the coming days it will reach into the hundreds. “Being without power is huge,” says Mutter. “Just how quickly they can get it back is still an unknown thing. But it’s extremely important they get it going to suppress the chances of illness following the storm.”
Military stretched thin by hurricane relief efforts | TheHill: The Pentagon is taking steps to prevent burnout among military personnel working rescue and recovery missions following a string of devastating hurricanes. Due to a "significantly higher storm season," it is common for military rescue and recovery personnel "to fly out of one hurricane and into the other," deputy to the chief of Air Force Reserve Maj. Gen. Derek Rydholm told reporters Friday. Rydholm, who spoke at the Pentagon alongside U.S. Army Corps of Engineers division commander Brig. Gen. Diana Holland, gave reporters an update on the rescue and recovery efforts following Hurricane Maria's battering of Puerto Rico. "We do have a lot going on, but we're always mindful that we have to balance the different tasks and make sure that we are ready to respond to the next one," Holland said. It's been a long month for the military's rescue personnel. Maria was the third major storm to hit the U.S. mainland or a territory in recent weeks, following Hurricanes Harvey and Irma. At least 10 people were reported killed in Puerto Rico because of Maria, which passed over the island early Wednesday. The U.S. territory — which has roughly 3.4 million residents — is now 95 to 100 percent without power. About 90 percent of the U.S. Virgin Islands are also without power. In response, the Federal Emergency Management Agency has opened an air bridge from the mainland, flying three to four military planes laden with water, food and generators to Puerto Rico daily. Holland said it will be "many days before we have a good picture on the whole scope" of the damage. Until then, it will be difficult to anticipate the additional military resources the island will need, she said.
What will it take to turn Puerto Rico's power back on? - In the wake of Hurricane Maria, Puerto Rico’s 3.4 million American citizens remain almost entirely without electrical power — but it’s not because their power plants are blown. The problem is that roughly 80 percent of transmission lines, which take power from the plants to distribution centers, are down. Nearly all the local power lines that run to residences and businesses have likely also been destroyed. The damage is so severe that simply repairing the electrical grid may not be an option. “We really should think in terms of rebuilding at this point,” says Ken Buell, director of Emergency Response and Recovery with the US Department of Energy. Paying for it will be a challenge, however: the Puerto Rico Electric Power Authority, or PREPA, is bankrupt, with at least $9 billion in debt, The New York Times reported in July. “They’re saying as far as economic impact, we're talking probably billions of dollars of impact,” Buell says. “So it's a big deal.” Right now, power in Puerto Rico is coming from generators, and it’s not clear how long the island will be relying on them. PREPA has conducted “a good portion of their damage assessment, which is the first step in power restoration,” Buell says. “One of the plants is on the top eastern edge of the island and actually took what appeared to be a direct hit from Maria,” he says. “So the fact that these plants are okay to start is a good thing.” The big problem is the catastrophic damage to most of the power lines that carry electricity from the power plants to the power distribution centers in major population centers. These run over mountains, and only two or three underground lines weathered the storm, Buell says. The local power authority hasn’t finished assessing the damage to power lines that run from the distribution centers to residences and businesses, “but they're assuming that it's near 100 percent,” Buell says.
Hurricane Maria Has Transformed Puerto Rico Into A "Cash Only" Economy --Electricity, internet access and cell phone service have been offline in parts of Puerto Rico for a whole week. And with the island still struggling to rescue people stranded in remote villages, those managing the emergency recovery effort have yet to focus their attentions on the monumental task that looms ahead: Rebuilding the island’s devastated infrastructure, from communications to sewers and water treatment plants that have been damaged by flash flooding and 155 mph winds that Hurricane Maria visited upon the island.The damage, as Bloomberg reports, has essentially knocked Puerto Rico’s economy back into the 1950s. For locals who’re struggling to begin the process of rebuilding their damaged homes, shops across the island are only accepting cash.The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U.S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules.The situation further frustrates one of the many challenges already facing a government that has sought a form of bankruptcy protection after its debts swelled past $70 billion: boosting revenue by collecting money that slips through the cracks.The cash-only economy could create problems for the island’s cash-strapped government, as business owners will no doubt be tempted to avoid declaring some of their revenues, depriving PR’s government of badly needed revenue. In fact, the power blackout only exacerbates a situation that has always been, to a degree, a fact of life in Puerto Rico. Outside the island’s tourist hubs, many small businesses simply never took credit cards, with some openly expressing contempt for tax collectors and others claiming it was just a question of not wanting to deal with the technology.But those were generally vendors of bootleg DVDs, fruit stands, barbers - not major supermarkets. Now, the better part of the economy is in the same boat.
No Jones Act waiver for Puerto Rico: Trump administration -- The Trump administration will not grant a Jones Act waiver for oil, refined products and other commodities being shipped into Puerto Rico as the island works to rebuild following Hurricane Maria, the Department of Homeland Security said Tuesday.In a statement, DHS said that it had consulted with other federal agencies and determined there was "sufficient capacity" of US-flagged vessels to move commodities to Puerto Rico and that a Jones Act waiver was unnecessary. "The limitation is going to be port capacity to offload and transit, not vessel availability," the agency said. "Most of the humanitarian shipments will be through barges, which make up a significant portion (along with tugs) of the US-flagged cargo fleet."On Monday, eight House Democrats, led by New York Representative Nydia Velazquez, sent a letter to DHS Secretary Elaine Duke, asking for a one-year Jones Act waiver for Puerto Rico, which is an unincorporated territory of the US. "The island is now facing an unprecedented uphill battle to rebuild its homes, businesses and communities," the House members wrote. "Temporarily loosening these [Jones Act] requirements -- for the express purpose of disaster recovery -- will allow Puerto Rico to have more access to the oil needed for its power plants, food, medicines, clothing, and building supplies." The Jones Act requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned. Critics of the century-old law argue that it increases shipping costs and hinders supply due to the limited capacity of the US fleet.
Puerto Rico crisis: What the Jones Act controversy is all about - The Jones Act is an obscure, century-old law that requires all goods ferried between U.S. ports to be carried on ships built, owned and operated by Americans.Now critics say it's making it difficult to get critical supplies into Puerto Rico.The Jones Act, when it was established in 1920, was meant to promote shipping by U.S.-owned and operated vessels. But it's also had the unintended consequence of making it twice as expensive to ship things from the U.S. mainland to Puerto Rico as it is to ship from any other foreign port in the world, according to Republican Senator John McCain's office.McCain and Democratic Representative Nydia M. Velázquez, as well as the governor of Puerto Rico and mayor of San Juan, have urged Trump to suspend the Jones Act to get supplies to Puerto Rico faster.President Trump has not waived the rule, though he said Wednesday that he is "thinking about" it. He noted the shipping industry opposes a waiver."We have a lot of shippers and a lot of people that work in the shipping industry that don't want the Jones Act lifted," he told reporters.Trump did suspend the law after Hurricanes Harvey and Irma, which struck Texas and Florida, to allow ships to move gas from the north while refineries and pipelines in the south were shut down. Seven lawmakers, led by Velázquez, sent a letter Monday to Acting Homeland Security Secretary Elaine Duke requesting a one year waiver of the Jones Act for Puerto Rico. A waiver, they said, would speed the delivery of fuel, food, medicines, clothing and building supplies. In response, the Department of Homeland Security said the Jones Act was waived after Hurricanes Harvey and Irma to make up for fuel pipelines that were shut. Puerto Rico is having no problems getting gasoline, diesel fuel and other supplies to the island, Homeland Security said. The problem is getting those supplies off the ships and distributing them on the island. Critics say the Jones Act costs American jobs by encouraging residents in Puerto Rico, the U.S. Virgin Islands and Hawaii to buy foreign-made goods that are shipped on foreign flagged vessels, rather than goods made in America. That's what happens when it comes to gasoline and other fuels, said Tom Kloza, chief oil analyst for Oil Price Information Service."Puerto Rico typically gets most of its gas from foreign sources -- Canada and Europe," he said. "Jones Act ships are so expensive that it doesn't make sense to buy gasoline from U.S. refineries." So, Kloza said, a waiver of the Jones act won't bring much more fuel to the island since Puerto Rico gets what it needs from other countries.
How Waiving the Jones Act Helps Puerto Rico - The Trump administration refused to waive the Jones Act for Puerto Rico: The Trump administration on Tuesday denied a request to waive shipping restrictions to help get fuel and supplies to storm-ravaged Puerto Rico, saying it would do nothing to address the island’s main impediment to shipping, damaged ports.The Jones Act limits shipping between coasts to U.S. flagged vessels. However, in the wake of brutal storms, the government has occasionally issued temporary waivers to allow the use of cheaper, tax free, or more readily available foreign flagged ships.The Department of Homeland Security, which waived the act after hurricanes Harvey and Irma, did not agree an exemption would help this time.Waiving the act may not do anything to repair the island’s ports, but that misses the point as badly as one can. The problem with the act is that it imposes significant economic costs on Puerto Rico, and especially in the wake of a storm as devastating as this one it is unreasonable and cruel to deny a waiver that would reduce those costs. Waiving the Jones Act isn’t just a question of delivering aid in the near term. It is a matter of helping a ruined Puerto Rican economy recover more quickly than it otherwise could. The administration doesn’t seem to understand this, and officials at Homeland Security reportedly aren’t taking that into consideration when they made their decision (via Drezner):Asked for comment on Puerto Rico having to pay twice as much for supplies at a time when it is economically and geographically devastated, [DHS spokesman David] Lapan said the department has not analyzed the potential cost savings of waiving the Jones Act “since that is not material to our decision-making.” Nelson Denis spells out the effects that the law has on the island:Under the law, any foreign registry vessel that enters Puerto Rico must pay punitive tariffs, fees and taxes, which are passed on to the Puerto Rican consumer.The foreign vessel has one other option: It can reroute to Jacksonville, Fla., where all the goods will be transferred to an American vessel, then shipped to Puerto Rico where — again — all the rerouti ng costs are passed through to the consumer.
Mayor Describes 'Near-Death Conditions' In Puerto Rico's San Juan | HuffPost: Tales of devastation continue to flow out of Puerto Rico, one of the islands tragically struck by Hurricane Maria. Millions are without cell service or power. Some are being discovered, days after the storm, in “near-death conditions,” according to San Juan’s mayor, Carmen Yulín Cruz.“Just yesterday, we have been canvassing one by one all of our elderly homes, finding our elderly ― and I’m not kidding ― we [had] to transfer 11 of them in near-death conditions, no food, no water, no electricity and really the sanitary conditions were deplorable,” the mayor told CNN’s “New Day” on Tuesday.Hospitals and care centers for the disabled are running out of diesel, Cruz added. Certain hospital patients, Reuters reported, have been evacuated to the U.S., but others await an uncertain fate as generators fail. “Another hospital wants to transfer two critical patients here because they don’t have electricity,” cardiovascular surgeon Gonzalez Cancel said. “We can’t take them. We have the same problem.” Cruz praised the Federal Emergency Management Agency’s response to the crisis, saying the aid trickling in allows people to no longer feel alone. “Maria has left behind her a trail of devastation and a humanitarian crisis,” she added. President Donald Trump directed a Twitter rant on Monday at Puerto Rico, saying the island is in “deep trouble,” especially in light of its “broken infrastructure & massive debt.” It still owes billions to Wall Street, he added.
Trump administration rushes military assets to Puerto Rico amid growing crisis — The Trump administration is rushing military hardware and personnel to Puerto Rico and the Virgin Islands as it becomes increasingly clear that the U.S. government response to Hurricane Maria so far has been inadequate and overmatched by the scale of the disaster. In the first six days after the hurricane made landfall here, the Navy had deployed just two ships, citing concerns that Puerto Rico’s ports were too damaged to accommodate numerous large vessels. But harrowing reports of isolated U.S. citizens struggling in the heat without electricity and running low on food and water have now spurred the Pentagon to throw resources into the relief effort even though they haven’t been specifically requested by territorial officials. The more robust approach includes the deployment of the USNS Comfort, a hospital ship that has responded to other natural disasters. The Pentagon also has assigned an Army general as point person for the humanitarian crisis: Brig. Gen. Richard C. Kim, the deputy commanding general of U.S. Army North. He will coordinate operations and assess what other resources are needed, defense officials said. “Obviously, what we asked for and what they sent was not enough for a storm that impacted every town in Puerto Rico from north to south and east to west,” Ramón Rosario, Gov. Ricardo Rosselló’s secretary of public affairs and public policy, said Wednesday in the San Juan convention center, the headquarters for the intergovernmental recovery effort. Rosario said the governor on Tuesday asked President Trump for more help for the devastated island, including more military personnel. “If they send 1,000, we’ll take it,” Rosario said. “If they send 10,000, we’ll take it.” Puerto Rican officials said that 10 military vessels are en route to the island and that half should arrive within 48 hours. A ship arrived Tuesday with 262,000 barrels of fuel for distribution to gas stations across the island.
FEMA chief: Feds 'working tirelessly around the clock' to aid in Maria recovery | TheHill: Federal Emergency Management Agency (FEMA) Administrator Brock Long said Tuesday that federal forces are "working tirelessly around the clock" to help with the disaster relief efforts in Puerto Rico and the U.S. Virgin Islands following Hurricane Maria. "The federal government is working tirelessly around the clock to unify the efforts to support [Puerto Rico] Gov. [Ricardo] Rosselló as well as [U.S. Virgin Islands] Gov. [Kenneth] Mapp with the initiatives," Long said during a news conference. Long said the agency is also working with the Department of Defense as part of a "robust sustainment force" of thousands to help distribute valuable resources. Hurricane Maria dealt significant damage to the U.S. territory's power grid, leaving much of the island without power in an outage that officials say could last up to six months. According to the Pentagon, 44 percent of Puerto Rico's 3.5 million residents are also without access to clean drinking water. "This is a logistically challenging and very unique event that the United States has not seen in a very, very long time, if ever," Long said. The FEMA administrator pointed out the logistical difficulties in sending aid to the storm-swept island, with only one working airport in the capital of San Juan. Teams are working to open up more airports so that emergency and commercial flights can bring in necessary resources and evacuate people from the island. "It's an island. We don't just drive trucks and resources onto an island,"
Puerto Rico's Power Grid 'Virtually Gone' After Hurricane Maria - Puerto Rico's power grid is "virtually gone," Acting Department of Homeland Secretary Elaine Duke told a Senate committee Wednesday, confirming that the massive humanitarian crisis on the island could endure for months. "Our focus is not necessarily restoring energy," Gov. Ricardo Rosselló told CNN on Wednesday. "The energy grid has been destroyed .... And we need to rebuild it. That does not get rebuilt in days." The future of the island's bankrupt and corrupt utility and its fossil-fuel-heavy colonial legacy are now top of mind as experts and officials begin to tackle the best way to restore power and rebuild the island's power grid. Most of the island is without power and 44 percent of the population lack drinking water over a week after Maria hit, and a haphazard distribution of emergency supplies and assistance is slowing recovery efforts and contributing to the devastation. As reported by USA Today : "Although the Senate hearing was called to assess the state of homeland security threats, much of the session focused on the dire conditions in Puerto Rico. At one point, Sen. Maggie Hassan, D-N.H., read aloud a dramatic appeal from former Puerto Rico Gov. Alejandro Garcia, who said that local hospitals 'are on the verge of collapse.' Some in need of medical care are 'dying in their homes because they can't fill prescriptions' or access out-patient care, including dialysis. 'This is happening in America,' Hassan said, reading from Garcia's plea." More on the Grid: USA Today , CNN , Wired , Bloomberg BNA , CityLab , Mother Jones . on Utility legacy: Huffington Post , Washington Post . Commentary: Slate, Eleanor Cummins analysis
Worse Than The Usual Hypocrisy: Trump, Puerto Rico, And The Jones Act - Barkley Rosser - The Jones Act was passed 97 years ago to protect US shipping within the US from foreign-made ships. I doubt I ever would have supported such an act, but at least back then there were plenty of US-made ships to fulfill the demand. Despite the Jones Act, the US shipping industry has collapsed in the last century so that the number of such ships is far below demand in normal circumstances, so that intra-US shipping costs are far higher than those outside the US. Puerto Rico was covered by he Jones Act and remains so. After Hurricanes Harvey and Irma the Jones Act was temporarily suspended for Texas, Louisiana, and Florida on orders of President Trump, going through the Department of Homeland Security. The Jones Act is not being suspended for Puerto Rico in the wake of Hurrican Maria, although damage to PR seems to be far greater than what happened on the mainland during Harvey and Irma (with those areas also accessible to supplies and aid by ground transportation, not relying nearly as much on ocean shipping). The supposed reason is that PR’s ports are damaged, which is certainly the case, but even if suspending the Jones Act will only slightly speed up deliveries, it will certainly reduce the costs of supplies, allowing cheaper natural gas from Pennsylvania in place of more expensive oil from Venezuela, for example. Which brings us to the worse then usual hypocrisy on the part of our president. While he has been all worked up over football players kneeling and moved to get aid to Texas and Florida as rapidly as possible while expressing lots of sympathetic sentiments for the victims in those states, his initial reaction to Hurricane Maria, after several days delay, was to talk about how bad their infrastructure was before the hurricane and how they have a massive debt situation. Of course, if he were really concerned about helping them, he could suspend their debt, but at a minimum, given that he is aware that they are poor and debt ridden, on top of having 80% of their crops destroyed and all their power out among other problems, he is insisting that they pay top dollar on supplies brought in by water, where almost all supplies will come. His refusal to suspend the Jones Act for Puerto Rico after having done so for mainland US territories is far worse than the usual hypocrisy from any president, even this far more hypocritical than pretty much all others one.
White House weeks away from formal funding request for Puerto Rico aid, sources say - The White House is likely weeks away from a formal funding request for Puerto Rico, as the storm-ravaged island enters its sixth day without power, according to Trump administration and congressional sources. Senate Minority Leader Chuck Schumer is demanding that lawmakers approve a disaster aid package by week’s end to help Puerto Rico and the U.S. Virgin Islands recover from Hurricane Maria. But aides familiar with the devastation on the Caribbean islands say the government is far more focused on delivering resources right now than getting more cash from Congress.“The thing is, funding doesn’t help them. Getting people and supplies there is what needs to happen,” one administration aide said Tuesday. “There’s no crunch in the short term for cash.” Still handling three simultaneous hurricane relief efforts, FEMA’s staff is stretched thin. But the agency’s disaster relief fund is still flush after Congress provided $15 billion in disaster aid, H.R. 601 (115), earlier this month, as well as another $6.7 billion that will kick in at the start of the fiscal year Oct. 1. Advocates argue that funding for FEMA doesn't mean Puerto Rico's government can pay its own bills, however, including its already depleted Medicaid program. While the federal government continues to calculate a damage estimate, responders deployed to the region are focused on logistics like getting food and water to millions of people who remain without power as temperatures hit 90 degrees and humidity hovers above 70 percent. The administration contends that much of Puerto Rico and the Virgin Islands is so damaged that officials can't even begin damage assessment, meaning the federal government may not know for weeks how many roads, buildings or power lines will need to be rebuilt.
Trump Waives Jones Act for Puerto Rico, Easing Hurricane Aid Shipments - The Trump administration said on Thursday that it would temporarily waive a century-old shipping law for Puerto Rico that officials there said was hindering disaster relief efforts after Hurricane Maria.The waiver of the law, known as the Jones Act, comes as federal and local officials report more supplies trickling onto the increasingly desperate island. But the Trump administration remains under pressure to step up the recovery effort.Sarah Huckabee Sanders, the White House press secretary, announced the decision on Twitter on Thursday morning, saying that President Trump had authorized it after a request from Gov. Ricardo A. Rosselló of Puerto Rico.At @ricardorossello request, @POTUS has authorized the Jones Act be waived for Puerto Rico. It will go into effect immediately. — Sarah Sanders (@PressSec) Sept. 28, 2017 “It is an act of justice. It will allow Puerto Ricans to rebuild and to have a cost of living that really frankly is affordable,” Carmen Yulín Cruz, the mayor of San Juan, said on CNN on Thursday. Several members of Congress had requested the waiver earlier in the week, saying it would facilitate delivery of food, medicine, clothing and other supplies to the island, which was devastated by Hurricane Maria. The decision was made by Elaine Duke, the acting head of Homeland Security, and comes after Defense Secretary Jim Mattis determined that doing so would be in the interest of national defense, according to a Homeland Security spokesman. The waiver will be in effect for 10 days.
Mountains of Aid Languish on Docks in Stricken San Juan - Thousands of cargo containers bearing millions of emergency meals and other relief supplies have been piling up on San Juan’s docks since Saturday. The mountains of materiel may not reach storm survivors for days. Distributors for big-box companies and smaller retailers are unloading 4,000 20-foot containers full of necessities like food, water and soap this week at a dock in Puerto Rico’s capital operated by Crowley Maritime Corp. In the past few days, Tote Maritime’s terminal has taken the equivalent of almost 3,000. Even with moves to ease shipping to the island, like the Trump administration’s waiver of the Jones Act on Thursday, the facilities have become choke points in the effort to aid survivors of Hurricane “There are plenty of ships and plenty of cargo to come into the island,” said Mark Miller, a spokesman for Crowley, based in Jacksonville, Florida. “From there, that’s where the supply chain breaks down -- getting the goods from the port to the people on the island who need them.” About 30 minutes before Wednesday’s 7 p.m. curfew, there were few signs of life at the Crowley port besides circling bats. The ground was muddy and the chain-link fence protecting the containers listed to the side. The race to move the boxes could mean life or death. The island of 3.4 million is in the throes of a burgeoning humanitarian crisis, without electricity, mobile-phone service or clean water. Puerto Rico’s power grid went dark during the hottest season of year and may stay down for weeks or months. Officials and residents warn of disease without access to clean water.
Puerto Rico's supply deliveries break down in the wake of Maria's devastation - It's been more than a week since Hurricane Maria slammed Puerto Rico, the most powerful such storm to hit the U.S. territory since 1932. It left much of the U.S. territory devastated, and, as fuel has been in short supply, delivery of much-needed supplies, such as food, medicine, water and construction materials, is essentially at a standstill at the Port of San Juan.The numbers are staggering: More than 10,000 containers filled with supplies are being stored between Crowley and Tote Marine, the two main shipping companies operating out of the port. President Donald Trump on Thursday approved a 10-day waiver of the Jones Act, allowing ships that aren't owned and operated out of the U.S. to deliver goods to Puerto Rico. Yet with many ports on the island already at or near capacity, it's unclear how this action will help alleviate the situation.At Crowley, which has served the Puerto Rican market since 1954 (longer than any other Jones Act carrier), the yard is already over the normal capacity of 3,200 containers, and more than 400 additional containers had been delivered by midmorning Thursday. Crowley has rearranged the containers to try and make additional room, but as of Thursday morning there was only capacity for about half a barge of containers. After that, the company will start to store containers on the pier. The Puerto Rico Ports Authority has also secured an emergency storage space for Crowley, which has the capacity for 200 containers.Still, it's unclear what the next storage plan will be if that lot becomes full, and containers are still not moving out of the port. Then there's the issue of sustaining operations at Crowley's port. Powering generators -- including for a large amount of refrigerated containers, which contain perishable food and medicine -- requires 2,500 gallons of diesel per day. There's also a lack of fuel for trucks to deliver these supplies to the 3.4 million Americans across the island. One of the biggest supermarket chains on the island, Supermercados Econo, has 104 containers in the Crowley yard and is only slowly moving them out. Major food distributor V Suarez has 114 containers. Wal-Mart has 70 containers stuck at the terminal for lack of trucks, drivers and fuel to move them out.
'People are starting to die': distribution chaos snarls effort to aid desperate Puerto Ricans - One of the key problems slowing recovery efforts for millions of desperate Puerto Ricans still without power and water: the challenge of distributing fuel and supplies already on the ground.In many parts of the island of 3.4 million people, the recovery in the first weeks after Hurricane Maria has largely been a make-it-up-as you-go-along affair, particularly for those still cut off by blocked roads and unable to communicate to the outside world. People collect water from wells and streams, clear roads and repair their own homes when they are not waiting in daylong lines for gasoline and diesel. For most, the only visible signs of authority are police officers directing traffic, a critical service because traffic lights are out across the island. “I have seen a lot of helicopters go by. I assume those are people from FEMA,” “People get pissed off because they see them going back and forth and not doing anything.San Juan Mayor Carmen Yulín Cruz, breaking down during one TV interview, says people on the island are in a “life and death” struggle." More than a million people lack drinking water and most of the island is without power.“I know that leaders aren’t supposed to cry and especially not on TV, but we are having a humanitarian crisis," Yulín Cruz told WUSA-TV. “It’s life or death, every moment we spend planning in a meeting or every moment we spend just not getting the help we’re supposed to get, people are starting to die.”But getting supplies from Point A to Point B remains a daunting task in a country still battling to open roads or even get out from under standing water. "We are well aware of the fuels needs on the ground," FEMA deputy administrator Daniel Kaniewski told CNN. He says there is "sufficient fuel" in depots, but "the challenge we have quite frankly is distributing it."
Puerto Rico Is Not A Good News Story, It's A People Are Dying Story, Says San Juan Mayor - Here's what's happening:
- At least 16 people have died in Puerto Rico, where Hurricane Maria made landfall as a category 4 hurricane with 155 mph winds. Dominica's police chief reported 27 fatalities.
- Puerto Rico is devastated. The island remains without power, electricity, or communications and it could take more than a decade to rebuild its infrastructure.
- Authorities have extended a nightly curfew in Puerto Rico "indefinitely."
- "We have not experienced an event of this magnitude in our modern history," Puerto Rico Gov. Ricardo Rosselló said, adding that they will need the full support of the US government.
- President Trump said he would visit Puerto Rico on Tuesday, as the White House defended his handling of the disaster after his tweets about sports figures.
- Other parts of the Caribbean, including the British Virgin Islands and the US Virgin Islands, are still reeling from the destructive force of Hurricane Irma.
San Juan Mayor Carmen Yulin Cruz blasted the acting director of Homeland Security Friday for calling the government response to the hurricane a "good news story" and saying she was "very satisfied" with the administration's "ability to reach people." "Well, maybe from where she's standing it's a good news story. When you are drinking from a creek, it's not a good news story. When you don't have food for a baby, it's not a good news story... This is a people are dying story. This is a life or death story. This is a there's a truckload of stuff that cannot be taken to people story. This is a story of a devastation that continues to worsen because people are not getting food and water," Cruz said on CNN. Cruz called the statement "irresponsible" and asked that Duke come visit the towns that had been devastated on the island and the residents who lacked medical care. "It's not a good news story when people are dying when they don't have dialysis, and when the generators aren't working, and the oxygen is not provided for them," she said. "Where is there good news here? The good news is we are getting heard."
Puerto Rico's new worry is a population flight to the US mainland that could slow its recovery - Financially troubled Puerto Rico's shrinking population has long been a cause for concern, but now the catastrophic damage and slow recovery from Hurricane Maria could force even more people to flee, making its economic outlook and recovery that much more shaky.A week after the category 4 storm, the recovery has been painfully slow and the devastation is worse than expected. The prospect of months without electricity across the island, the lack of potable water and thousands of homeless people make some amount of migration to the mainland from the U. S. territory all but guaranteed.Politicians in New York and Florida, two states likely to draw many Puerto Rican residents because of community and family ties, have been among the first to respond with aid and other support.The Miami-Dade school district, for instance, has said it is prepared to take in students from Puerto Rico and expects to see an influx once flights return to normal from the island."We have already over 2,000 Puerto Rican-born children, who are students in our school system. The family connections between Miami Dade and the island are very strong," said Alberto Carvalho, Superintendent of Schools for Miami Dade. "We are obviously expecting to receive a significant number, in the hundreds, to at least a couple thousand."Carvalho said a dozen students arrived from Puerto Rico even before commercial flights resumed. He expects more to trickle in, with the first most likely to be individuals with financial wherewithal, coming as families or sending their children to stay with relatives. The next wave he expects will be those that are less financially well off, and they could come in greater numbers as has happened in other crises where Florida was a destination for residents from Caribbean or Latin America nations. The fact that Puerto Ricans are Americans enables those leaving the island to easily enter and stay on the mainland.
It's not just Puerto Rico: 6 other Caribbean island nations are in crisis after the hurricanes - There’s a lot of media and political attention focused right now on the devastation Hurricane Maria brought Puerto Rico — and for good reason. The US territory is facing humanitarian and public health crises, with serious shortages of food and potable water, and homes and most hospitals still without power. But it seems many of us have lost sight of, or entirely forgotten, the fact that Hurricane Maria, and Hurricane Irma before it, walloped several other islands in the Caribbean. But they’re also difficult to reach and often poverty-stricken places, where even the wealthiest islanders (in the Bahamas) have a per capita GDP of only $27,000 per year. That’s what makes the islands particularly vulnerable to severe weather events — and what makes their recovery prospects after Irma and Maria worry-inducing.
- 1) Barbuda’s 1,600 inhabitants still can’t return home after Hurricane Irma forced them to abandon the island: It’s not an overstatement to say that Hurricane Irma annihilated Barbuda, the Caribbean island with 1,600 inhabitants that forms a country along with Antigua southeast of Puerto Rico. “The damage is complete,” Antigua and Barbuda’s Ambassador Ronald Sanders told Public Radio International. “For the first time in 300 years, there’s not a single living person on the island of Barbuda — a civilization that has existed on that island for over 300 years has now been extinguished.”
- 2) Hurricane Maria killed 27 people in Dominica — where even the prime minister was left homeless: An island to the east of Puerto Rico, Dominica was also shredded by Maria. Its prime minister, Roosevelt Skerrit, said there’s not a single street that wasn’t damaged by the storm, according to the BBC, and 27 of Dominica’s 73,000 inhabitants were declared dead as a result of the storm, with dozens more missing.
- 3) In the US Virgin Islands, 48,000 people are still without power: This group of islands — and another US territory — in the Caribbean have been devastated by the one-two punch of Hurricane Irma and Hurricane Maria. The islands’ governor, Kenneth Mapp, told Here and Now that three of his islands — St. John, St. Thomas, and Water Island — were decimated by Irma, and he had been using St. Croix as a base for their recovery. Then Maria came along and hammered St. Croix, too, wrecking 70 percent of the buildings there.
- 4) Irma left 10 Cubans dead and destroyed many of Havana’s fragile buildings: The US State Department is warning Americans to avoid travel to Cuba right now because the country is in major recovery mode following Irma. In Havana, roads were destroyed, buildings collapsed, and power and water services were down. Other parts of the country are still without power and running water, the State Department warned, while the official death toll from Irma stood at 10.
- 5) Irma and Maria collapsed the infrastructure, electricity, and communications lines of the British Virgin Islands: The British Virgin Islands were beaten by both Hurricanes Irma and Maria “These hurricanes are causing unimaginable destruction,” Richard Branson wrote on his website.
- 6) A third of Dutch St. Martin’s buildings were ruined: The Island of St. Martin, which is split into two sides overseen by French and Dutch control, was also walloped by Irma. A third of the buildings on the Dutch side of the island were destroyed, and 90 percent were damaged, according to Reuters. So far, more than a dozen people died as a result of the storm, with hundreds registered as missing.
In Shadow of Puerto Rico's Nightmare, Virgin Islands and Others Facing Intense Struggle -- While much media attention has rightly been focused on the devastation in Puerto Rico this week as calls have grown louder for President Donald Trump to deploy more resources to help the recovery from Hurricane Maria , the White House's inaction has caused attention to be pulled away from the U.S. Virgin Islands and other parts of the Caribbean that were also ravaged by the storm. Forty-eight thousand people in the U.S. Virgin Islands are without power following both Maria and Hurricane Irma , which made landfall two weeks earlier. More than 600 residents are still in shelters across St. John, St. Thomas, Water Island and St. Croix, which was spared much of the damage of Irma but overtaken by floodwaters after Maria. Gov. Kenneth Mapp has been asking the public for help via Twitter and in a radio interview on WBUR: "We need help," Mapp said just after Maria hit last week, as the islands were assessing the second wave of destruction. "With our FEMA partners and our cruise ship partners, we're bringing in a lot of food, water, tarpaulins, personal hygiene packs, cots and blankets. That's really the immediacy of the need. We're asking folks who can to go to USVI Recovery and they can donate there." The economy of the U.S. Virgin Islands "evaporated pretty much overnight," according to Clinton Gaskins, a restaurant owner interviewed by the New York Times. Tourism revenue makes up about a third of the island's gross national product, and the marine industry was also hit hard. As the Times reported, following Maria: Harbors are littered with ferries that capsized or were washed ashore, leaving fewer vessels to carry supplies back and forth. Masts from sunken sailboats jut out of the water. Charter boats, a big economic driver, lie on beaches, their hulls ripped open. The small island country of Barbuda was reported to be "nearly uninhabitable" in the wake of Irma. The 1,600 residents have still not been able to return home after the hurricane "almost completely destroyed" the island. Neighboring Antigua has been hosting many in shelters. Earlier this week, the Red Cross delivered bottled water, kitchen utensils, and toiletries to 300 Barbudan families who were most in-need; the aid came after a week-long assessment process, suggesting that relief efforts are moving slowly due to the immense destruction.
Hurricane ravaged Barbuda and Dominica must 'build back better' | Reuters: - Rebuilding the Caribbean islands of Dominica and Barbuda, ravaged by hurricanes Irma and Maria, is an opportunity to “build back better” and limit the impact of future disasters, U.N. Assistant Secretary-General Jessica Faieta said. As Hurricane Irma barreled toward the island, all of the 1,800 residents of Barbuda were evacuated to neighboring Antigua, but the storm destroyed most of its buildings and agriculture. In Dominica, Category 5 Hurricane Maria made landfall on September 18, claiming the lives of 15 people and affecting most of the small island’s population of 73,000 people. Recovery efforts are now focused on providing aid to people in shelters, restoring power and clearing the debris. But in the coming weeks as efforts turn to reconstruction, planning and investment must focus on building back better, including constructing homes, police stations and government buildings that can better withstand hurricanes. “Seeing the devastation, obviously investing in a reconstruction that becomes resilient, of building back better becomes extremely important for the Caribbean,” said Faieta, who also heads the United Nations Development Programme (UNDP) in Latin America and the Caribbean. “We are going to see more of these (disasters) ... such weather is going to become the norm rather than the exception,” Faieta told the Thomson Reuters Foundation. “We are seeing a complete new phenomenon and what has been done before is not enough.”
FEMA Director Urges Americans To Develop "A True Culture Of Preparedness" But No One Is Listening - FEMA’s new director, Brock Long, has repeatedly said that Americans do not have a “culture of preparedness,” something that is much-needed with the startling uptick in natural disasters. Long has only been the director of FEMA since June 20 of this year and already has had to deal with a historic number of disasters in this short period of time. It appears that Mr. Long has a mindset of self-reliance based on a couple of recent statements he has made to the media, but the MSM doesn’t seem too interested in his ideas about fostering a culture of preparedness, despite the practicality and essential nature of his suggestions. First, in an interview from Sept. 11 that I personally only heard about yesterday, FEMA’s new director, Brock Long, spoke with journalists to discuss the response to Hurricane Irma. In the interview, he said some things that vindicate all of us who have spent time and money working toward being prepared. “I really think that we have a long way to go to create a true culture of preparedness within our citizenry in America. No American, no citizen, no visitor to this country is immune to disaster. And we have a long way to go to get people to understand the hazards based on where they dwell, where they work, and how to be prepared financially, how to be prepared through insurance, how to have continuity of operations plans for their businesses, so that we can avoid the suffering, the strife, and the loss of life. It’s truly disappointing that people won’t heed the warnings. Of course, the reporter quickly shifted from the actual useful information to start asking about climate change, because for some reason she felt that was far more essential than the practical advice Mr. Long was offering. You can watch the interview below.
September is the strongest hurricane month ever recorded—probably - Harvey, Irma, Jose, Katia, and Maria. Over the past 30 days, some of the strongest hurricanes ever recorded in the Atlantic Ocean have prompted a diluvial flood, a mass migration, and an ongoing humanitarian crisis in Puerto Rico. It can feel like there’s little precedent for so many hurricanes in so short a time. In fact, there isn’t—at least within living memory. According to early estimates, September 2017 is already the most energetic month for hurricanes in the Atlantic Ocean ever recorded, even though the month is not yet over. The month’s accumulated cyclone-energy index of 155.4 breaks the previous record of 155.0, set in September 2004. “September 2017 has also set the monthly record for major hurricane days and looks to probably set the record for hurricane days (and possibly named storm days) as well,” says Phil Klotzbach, a meteorologist at Colorado State University who researches the history of Atlantic hurricanes. The month was so powerful that it has assured certain records for the 2017 Atlantic hurricane season as a whole, which is already among the 10 strongest seasons ever measured. Two Category 5 storms (with wind speeds exceeding 157 miles per hour) formed this year. Only a handful of years before this one have seen multiple Category 5 storms take shape: 1932, 1933, 1961, 2005, and 2007.
Flood Risk Increasing for Atlantic Coast Cities -- Cities on the Atlantic coast are likely to see more flooding . It won't just be catastrophic inundation, delivered by hurricane : it could also be routine, fine weather nuisance flooding . And that will happen not just because of sea level rise , driven by global warming , but by another factor: in Virginia, North Carolina and South Carolina , the coastal lands are sinking, declining by up to three millimeters (approximately .12 inches) a year, according to a new study in Scientific Reports . The conclusion is backed up by analysis of two decades of global positioning satellite data, gravitational measurements from space and studies of groundwater traffic. "During the last ice age around 20,000 years ago, large parts of Canada were covered by an ice sheet. This tremendous mass pressed down on the continent." The weight of the ice depressed the mantle beneath the planet's crust, and in consequence tracts of land not covered by ice were uplifted. "When the ice sheet then melted, this process was reversed," Karegar said. "The East Coast has thus been sinking back down for the last few thousand years." But what geophysicists call isostatic adjustment may not be the only force at work. When cities and farmers abstract groundwater, they also depress the soil around them. Water keeps the earth underfoot more buoyant. Take the water away, and the mass of the rocks and soil is more easily compressed.
Quake Relief Reaches Rich Mexicans, But the Poor Feel Abandoned - Relief supplies and volunteers are piling up at rescue sites in upscale districts of Mexico City following Tuesday’s deadly earthquake in a show of solidarity that has contrasted with the government’s struggle to get aid to people most in need.In the wealthy neighborhoods of Roma and Condesa in the centre of Mexico City, volunteers by the hundreds stand ready to help dig for survivors who may be trapped beneath the rubble. In recent days, however, they have largely remained idle. Others have brought food and water, eager to tend to rescue workers or the thousands of people made homeless by the quake. Yet they have struggled to find takers because so much sustenance is on offer.In the poor, far-flung neighborhoods in the outskirts of the capital, meanwhile, aid and comfort were less abundant. And in villages in some states surrounding the Mexico City, victims said they had yet to see government aid arrive. In the hard-hit Mexico City neighborhood of Del Valle, 48-year-old Marcela Sanchez came in search of aid after she lost her home in the large, working-class area of Nezahualcoyotl, in the remote northeast suburbs.“We haven’t received any aid,” Sanchez said. “Those of us who work in Mexico City return home with aid. God willing, they can help us.”The government’s response to Tuesday’s quake, which killed 319 people in Mexico City and surrounding states, is under scrutiny ahead of presidential elections next year. Earthquakes are politically sensitive after the ruling Institutional Revolutionary Party’s flawed response to the 1985 earthquake that killed thousands.
The Steep Price of Disaster in Mexico -- Don Quijones - Rescue efforts in Mexico are beginning to wind down after a trepidatory (vertical) earthquake unleashed destruction and bedlam in Mexico City and the two central states of Puebla and Morelos on Tuesday. The temblor took place 32 years to the day after a horrendous quake killed at least 10,000 people in Mexico City in 1985. Thankfully, the number of victims this time is many magnitudes lower, due largely to improved building standards and enhanced public awareness in the wake of the ’85 quake. Nonetheless, the death toll is close to 300 with thousands more injured. And for survivors the financial toll is just beginning. The total amount of money in Mexico’s disaster relief fund is just 9 billion pesos (just over $500 million). That’s a tiny fraction of the amount of money Mexico’s elected officials are alleged to have plundered from state coffers in recent years. According to the Mexican newspaper El Universal, Mexican state governors are estimated to have defrauded the country of 259 billion pesos ($14.6 billion), more than enough to fund the rebuilding effort not only in Mexico City, Puebla, and Morelos but also the south eastern states of Chiapas and Oaxaca, which were rocked by a 8.2 quake over two weeks ago. To further hamper the rebuilding effort, most of the apartment and office buildings affected in both quakes are not insured against natural disaster. This is one of the sharpest differences between disaster recovery efforts in advanced economies and emerging or developing ones. When people lose their homes or businesses in less advanced economies such as Mexico, they usually have to rebuild from scratch, with little or no financial support from the government or insurance firms. Even among its peers in Latin America (with the notable exception of Brazil), Mexico is desperately under-insured, despite its heightened exposure to seismic activity and other forms of natural disaster. According to the Financial Inclusion Report of the National Banking and Securities Commission, the total penetration of the insurance sector in Mexico in 2015 was 2.1% of GDP, compared to an average of 3.1% for Latin America as a whole.
50,000 Evacuated From Bali As Nation Faces Imminent Volcanic Eruption - Fears of an imminent eruption on the Indonesian tourist island of Bali have led to the evacuation of an estimated 50,000 people. The Mount Agung volcano is going to erupt, scientists say. Waskita Sutadewa, the spokesman for the disaster mitigation agency in Bali, said people have scattered to all corners of the island and some have crossed to the neighboring island of Lombok.Indonesian authorities raised the volcano’s alert status to the highest level on Fridayfollowing a dramatic increase in seismic activity. It last erupted in 1963, killing about 1,100 people.Evacuation post #SiagaGunungAgung is in 9 distric; Karangasem, Buleleng, Klungkung, Bangli, Tabanan, Denpasar, Gianyar, Badung &Jembranapic.twitter.com/Z49iOG0UCj — Indonesian Red Cross (@palangmerah) September 25, 2017 Villagers are staying in temporary camps, sports centers, village halls, or with friends and relatives. Some do return to the exclusion zone during the day to tend to their livestock or shift the animals to areas further from the volcano for their safety. Others say they are selling their cows because they don’t know when they’ll be able to return.
Sea creatures fled the Japanese tsunami on plastic rafts and travelled all the way to US shores - In March of 2011, an earthquake and tsunami off the Pacific coast of Japan near Tohoku severely disrupted life on land and at sea. Waves as high as 125 ft swept millions of objects off the coast and into the ocean, including docks, boats, and random plastic things—all of which have aided aquatic animal refugees. Marine biologists from the Smithsonian Environmental Research Center in Maryland and Oregon State University report in Science today (Sept. 28) that, after five years of study, these objects continue to arrive in US waters, with alien sea species aboard who miraculously survive the long, treacherous journey. Between 2012 and 2017, scientists counted 289 sea species from Japan washing up on western US coasts, like in Hawaii and Oregon. They arrive intact on makeshift rafts of fiberglass, plastic and other manmade materials. The marine biologists believe that these sea species can survive because their oceancraft, often made of human debris from the tsunami, don’t decompose like those made of natural materials, like wood, for example. The synthetic rafts are more durable and probably travel slowly, they posit, allowing the tiny sea creatures accustomed to the comforts of the coast to unexpectedly survive the harsh conditions on their transoceanic travels. “I didn’t think that most of these coastal organisms could survive at sea for long periods of time,” Smithsonian marine biologist Greg Ruiz, a study co-author, said in a statement. “But in many ways they just haven’t had much opportunity in the past. Now, plastic can combine with tsunami and storm events to create that opportunity on a large scale.” Most of the species washing up on these wandering rafts have never been seen on US shores. They include mollusks, hydroids, worms, colonies of crustaceans, and more.
Earth's oceans are warming 13% faster than thought, and accelerating -- New research has convincingly quantified how much the Earth has warmed over the past 56 years. That increase - of over 40%, with most since 1980 - traps heat in the Earth’s system, warming the entire planet. But how fast is the Earth warming and how much will it warm in the future? Those are the critical questions we need to answer if we are going to make smart decisions on how to handle this issue. At any time the direct effect of this blanket is small, but the accumulated effects are huge and have consequences for our weather and climate. Over 90% of the extra heat ends up in the ocean and hence perhaps the most important measurements of global warming are made in the oceans. But measuring the ocean temperature is not straightforward. Since about 2005 a new type of sensing device has been deployed (the Argo float system). These floats (approximately 3500 in total at any time) are spread out across oceans where they autonomously rise and fall in the ocean waters, collecting temperature data to depths of 2000 meters. When they rise to the ocean surface, they send their data wirelessly to satellites for later analysis. Hence we can now map the ocean heat content quite well. But what about the past? Fortunately, a paper just published today in Science Advances uses a new strategy to improve upon our understanding of ocean heating to estimate the total global warming from 1960 to 2015. I was fortunate to co-author the study, which uses several innovative steps to make improvements. First, we corrected past data for known biases in measurements. Second, we related the temperature measurements to results calculated from advanced climate computer models. Third, we applied temperature knowledge to larger areas so that a single measurement was representative of a large space around the measurement site. Finally, we used their knowledge of recent and well-observed temperatures to show that the method produced excellent results.
One of the most bizarre ideas about climate change just found more evidence in its favor -- More and more, we are learning that climate change can lead to some pretty strange and counterintuitive effects, especially when it comes to the wintertime. For instance, scientists have pointed out for a number of years that warmer seas, and a wetter atmosphere, can actually fuel more snowfall in massive nor’easters affecting the U.S. East Coast. More controversial still is an idea called “Warm Arctic, Cold Continents.” This is the notion that as the Arctic warms up faster than the middle latitudes, it may sometimes cause a displacement of the region’s still quite frigid air to places that aren’t so used to it. In other words, even as the planet warms, masses of cold air could also become more mobile and deliver quite a shock at times when outbreaks occur in more southerly latitudes. In both November and December of 2016, for instance, temperatures at the North Pole surged tens of degrees above normal while at the same time a huge mass of abnormally cold air descended over Siberia. Capital Weather Gang reported that in November, during one of the excursions, Siberian temperatures were “up to 60 degrees below normal.” Here’s what the configuration looked like last December:Now, a new study in the Bulletin of the American Meteorological Society makes the case that in January and February — later in the winter than those events — another, perhaps related change is occurring. This one involves the notorious “stratospheric polar vortex,” a loop of extremely cold and fast-flowing air, high in the atmosphere, that tightly encircles the Arctic in the freezing dark of polar winter. This vortex can sometimes develop outward bulges, allowing for a more southerly invasion of air.The study, led by Marlene Kretschmer of the Potsdam Institute for Climate Impact Research in Germany, sought to find patterns in the stratospheric polar vortex over the past 37 years, categorizing its behavior into seven states, ranging from a tight loop around the Arctic to “a weak distorted vortex.” And it determined that the stronger and more defined vortex has been occurring less frequently, while distorted states have been growing more common — a change linked to colder temperatures over Eurasia. “This study provides quite some evidence that the cooling trend over Eurasia was at least partly affected by the weakening of the stratospheric polar vortex,” said Kretschmer
Forget Countdowns – Climate Catastrophe Has Started in the High Mountains of Asia - Glaciers in the high mountains of Asia, including the Himalaya, are in danger of melting due to global warming. Climate scientists have already established this much. But exactly how much area of ice is likely to be lost has not yet been quantified – until now. New research estimates that 28-43% of the glacier mass will be lost by the end of the century, with conservative projections of limiting global warming to 1.5º C over pre-industrial levels. A team of scientists from Utrecht University and a research organisation named FutureWater, both in the Netherlands, and the International Centre for Integrated Mountain Development (ICIMOD), Nepal, have reported that a global temperature rise of 1.5º C over pre-industrial levels will lead to a warming of about 2º C in the high mountains of Asia (HMA).Their report, published in the journal Nature, says that “the 1.5° C goal is extremely ambitious and is projected by only a small number of climate models of the conservative IPCC’s RCP2.6 ensemble.”Projections for the other three RCPs also reveal “that much of the glacier ice is likely to disappear”, with projected mass losses ranging from 42% to 69% depending on the pathway. “These projections have potentially serious consequences for regional water management and mountain communities,” the report cautions. “Glaciers in the high mountains of Asia (HMA) make a substantial contribution to the water supply of millions of people, and they are retreating and losing mass as a result of anthropogenic climate change at similar rates to those seen elsewhere,” it adds.
'Watermelon snow' is making glaciers in Alaska melt faster - Microbes are pushing glacial snow into the red. An algae species that grows on glaciers gives the snow a crimson hue, which increases the amount of sunlight that the snow soaks up and makes it melt faster, new measurements confirm. On Alaska’s Harding Ice-field, these microbes are responsible for about a sixth of the snow-melt in algae-tinged areas, researchers report September 18 in Nature Geoscience. The finding suggests that future climate simulations, unlike current ones, should account for the effects of these algae when making predictions about glacial melt. The pink color, sometimes called watermelon snow, is caused by Chlamydomonas nivalis algae and related species. C. nivalis thrives in cold water, and “snowfields and glaciers are, in some sense, an aquatic environment,” says study coauthor Roman Dial, a biologist at Alaska Pacific University in Anchorage. Blooms pop up in the spring and summer, but the algae can come back year after year. Recent research has suggested that darkening of the snow by these algae or other microbes might make it melt faster. That melt might spur even more algae growth, starting a feedback loop of accelerated melting, scientists have proposed. But this is the first time algae’s effect on snowmelt has been directly tested.
How did that get there? Plastic chunks on Arctic ice show how far pollution has spread -- A British-led expedition has discovered sizeable chunks of polystyrene lying on remote frozen ice floes in the middle of the Arctic Ocean. The depressing find, only 1,000 miles from the north pole, is the first made in an area that was previously inaccessible to scientists because of sea ice. It is one of the most northerly sightings of such detritus in the world’s oceans, which are increasingly polluted by plastics.A team of scientists drawn from the UK, US, Norway and Hong Kong, headed by marine biologist Tim Gordon of Exeter University, said the discovery confirmed just how far plastic pollution has spread. It has prompted fears that plastic waste is flowing into the Arctic as the ice melts because of climate change. The thaw is simultaneously releasing plastic that has long been trapped in the ice. The scientists, who were on the explorer Pen Hadow’s Arctic Mission attempt to sail to the north pole, were surprised to discover the blocks of polystyrene many hundreds of miles from land in areas that were, until recently, covered by ice all year round. They found two large pieces on the edge of ice floes between 77° and 80° north, in the middle of the international waters of the central Arctic Ocean.“For the 25 years I have been exploring the Arctic I have never seen such large and very visible items of rubbish,” said Hadow, the only person to have trekked solo, without resupply, from Canada to the geographic north pole. “The blocks of polystyrene were just sitting on top of the ice.”
Arctic sea ice summer minimum in 2017 is eighth lowest on record -- Arctic sea ice has dwindled to its summer minimum for 2017, with its smallest extent for the year clocking in at 4.64m square kilometres (sq km) on 13 September. At 1.58m sq km below the 1981-2010 average, this puts 2017 as the eight lowest summer minimum in the satellite record, according to preliminary figures from the US National Snow and Ice Data Centre (NSIDC). The record low remains 3.39m sq km, which was set in 2012. Even though it wasn’t a record low, an NSIDC scientist tells Carbon Brief that the long-term downwards trend has continued with sea ice extent falling below 5m sq km again this year. This had never happened in the satellite record before 2007. Back in March, Arctic sea ice hit its lowest winter maximum on record for the third year in a row. Since then, Arctic sea ice has been on its annual decline through the melt season of spring and summer. At the time of the record low winter peak, Carbon Brief asked some polar scientists to put the much-reported findings in context. You can watch the video of their responses here.Scientists keep a close eye around the time the low is normally reached – usually early-to-mid september – then look for signs of ice accumulating again in order to pinpoint exactly when the summer minimum extent is reached.This year, that minimum point was on 13 September, when Arctic sea ice extent declined to 4.64m sq km.That means nine of the 10 lowest summer minima in the satellite record have occurred in the last 10 years, says Prof Julienne Stroeve, a professor of polar observation and modelling at University College London and senior research scientist at the NSIDC. She tells Carbon Brief:“Even though we didn’t reach a new record low, the extent fell below 5m sq km, something which never happened before 2007.” The chart below shows how the Arctic sea ice extent (sq km) has changed from May to September over the past five years. Years shown include 2017 (blue line), 2016 (green), 2015 (orange), 2014 (brown), 2013 (purple), and 2012 (dashed brown).
A key Antarctic glacier just lost a huge piece of ice — the latest sign of its worrying retreat An enormous Antarctic glacier has given up an iceberg over 100 square miles in size, the second time in two years it has lost such a large piece in a process that has scientists wondering whether its behavior is changing for the worse. The Pine Island Glacier is one of the largest in West Antarctica, a region that is currently Antarctica’s biggest ice loser. Pine Island, which loses an extraordinary 45 billion tons of ice to the ocean each year — equivalent to 1 millimeter of global sea level rise every eight years — is 25 miles wide where its floating front touches the sea, and rests on the seafloor in waters more than a half-mile deep. The single glacier alone contains 1.7 feet of potential global sea level rise and is thought to be in a process of unstable, ongoing retreat. That’s why scientists are watching it closely, and on Saturday, Stef Lhermitte, a satellite observation specialist at Delft University of Technology in the Netherlands, posted a satellite image showing that Pine Island had “calved,” or broken off a piece of ice about 103 square miles in area. (For comparison, Manhattan is 22.83 square miles in size.) The rectangular piece of ice then appears to have lost some of its shape immediately as smaller pieces splintered off. “It’s the fifth large calving event since 2000,” Lhermitte said. “This one and 2015, they were much further inland than the previous ones. So there has been a retreat of the calving front, specifically between 2011 and 2015.” It is the 5th large calving event since 2000, and today’s event is similar to 2015 when a 580km2 iceberg calved https://t.co/QXEzyX0X3q 3/n
Warm waters tripled the amount of ice lost in these Antarctic glaciers — and that's bad for sea level rise - Between 2008 and 2012, warmer than usual waters caused four glaciers in Western Antarctica to flow toward the sea faster than any other glacier on the continent. The glaciers also lost more than three times the amount of ice than usual, according to new research. All these changes are bad news for Antarctica — and us. As grounded glaciers melt, sea levels around the world rise. The four glaciers described in the study, published last week in the journal Earth and Planetary Science Letters, are located in Marguerite Bay, on the western side of the Antarctic Peninsula. This is the northernmost area of the continent, and the one most susceptible to rising temperatures. Researchers at NASA’s Jet Propulsion Laboratory (JPL) found that 1 to 2 degrees Fahrenheit warmer than usual waters in the area doubled the glaciers’ speed toward the sea, and more than tripled the amount of ice they lost — up to 33 feet a year, from 7 to 10 feet a year. Antarctica has been making headlines lately: one of the biggest icebergs ever recorded — roughly the size of Delaware — broke off the Antarctic Peninsula in July. Another glacier in Western Antarctica has been cracking from the inside out, producing another massive iceberg — four and a half times the size of Manhattan — this week. All these big chunks of ice, however, calved out from floating ice shelves. That means the ice loss doesn’t raise sea levels by itself. (The same goes for ice cubes in a glass of water: when the ice cubes melt, the water level in the glass doesn’t rise.) But the floating ice shelves do create a barrier that keeps the ice on land from flowing into the sea.
The Climate Change Land Rush: When Will People Start Leaving Coastal Cities? --- People love living near the coast. Only two of the world’s top 10 biggest cities—Mexico City and Sáo Paulo—are not coastal. The rest— Tokyo, Mumbai, New York, Shanghai, Lagos, Los Angeles, Calcutta and Buenos Aires—are. Around half of the world’s 7.5 billion people live within 60 miles of a coastline, with about 10 percent of the population living in coastal areas that are less than 10 meters (32 feet) above sea level. Coastal migration has been steadily trending upward. In the U.S. alone, coastal county populations increased by 39 percent between 1970 to 2010. As the population skyrockets—from 7.5 billion today to 9.8 billion by 2050, and 11.2 billion by 2100, according to a recent United Nations report—the question for sustainability and development experts is, will the world’s coasts bear the burden of all this humanity? But with the rise of both sea levels and extreme weather, perhaps a better question is, will all this humanity bear the burden of living along the world’s coasts? As the “500-year” hurricanes Harvey and Irma (and 2011’s Irene) powerfully and tragically demonstrated, living near a coastline is an increasingly dangerous proposition. But for some coastal regions, rising seas and hurricanes aren’t the only cause for alarm: the coastal lands in Virginia, North Carolina and South Carolina are sinking by up to 3mm a year, according to a new study led by researchers at the University of Florida. Could these multiple factors reverse humans’ seaward migration?
Good news! Global carbon emissions stayed flat in 2016. - This marks the third year in a row with no increase in CO2 emissions, according to a new report published from the Netherlands Environmental Assessment Agency. That’s largely due to a shift away from coal to natural gas, which tends to produce more electricity more efficiently, and renewable energy. Enough good news. Here’s the bad: When you add the potent greenhouse gas methane to the mix, global emissions were up .5 percent. Methane emissions primarily come from natural gas leaks (see Aliso Canyon) and cattle. Also, this report does not count the forests felled and peatlands burned which likely bumps the numbers up. Finally, halting the growth in emissions isn’t good enough — we’ve got to drive them down. Nonetheless, climate economist Nicholas Stern told the Guardian, “These results are a welcome indication that we are nearing the peak in global annual emissions of greenhouse gases.” The world has hit the brakes on what looked like unstoppable emissions growth. For the first time in the modern era, the economy is growing without increasing the amount of CO2 it spews into the air.
A 'geoengineering cocktail' is the latest last-ditch proposal to reverse climate change - Earth is warming, and much of the uptick on our planetary thermostat is caused by human activity. Ideally, the response to this clear threat to civilization would be to reduce greenhouse gas emissions from the consumption of fossil fuels, which is the major culprit behind human-driven climate change. That's why world leaders convened in Paris to hash out a gameplan for capping the rise in global mean temperature rise to 2°C above the preindustrial average. But President Donald Trump's recent decision to pull the United States out of the Paris Agreement, signed in 2016, underscores a growing demand for a "plan B" to confront climate change, in case nations fail to get their act together in time to prevent catastrophic temperature increases. One controversial solution is climate geoengineering, the notion that we could halt or reverse the warming of Earth with technological intervention. These concepts have historically fallen into two camps: solar radiation management and greenhouse gas removal. The solar approach aims to boost Earth's albedo, or reflectivity, by introducing reflective aerosols to the stratosphere (as one example). These compounds would bounce sunlight back into space, thereby cooling the planet, almost like an Earth-scale version of painting your roof white. Greenhouse gas removal, meanwhile, would focus on scrubbing warming gases, especially carbon dioxide, from the atmosphere using a range of techniques. The unknown side effects of humans tampering with complex planetary systems demands a cautious approach, lest our good intentions lead us to some kind of "Snowpiercer"-style dystopia. But if we do nothing to rein in our ongoing accidental geoengineering of the climate, we may well end up in a "Mad Max" dystopia, so it's worth considering all our options. This includes a cocktail combination of several approaches, an idea outlined by a Geophysical Research Letters study published in July.
Ignore Trump’s Words on Climate and the Paris Treaty — Look at What He’s Doing - This past week, the Trump administration seemed to signal that maybe the United States’ participation in the Paris climate accords was still up for negotiation. After weeks of wall-to-wall coverage of how climate change fuels the megastorms that have hammered Texas, Florida, and the Caribbean — and with several similar weather systems teed up in the oceans around us — a U.S. official sat in on a meeting of nations that did sign the climate treaty, and a European Union official left with the impression that the U.S. would not withdraw but instead “review the terms under which they could be engaged.” It’s no wonder the European official was confused. Since The Wall Street Journal’s report to that effect, we’ve had a flurry of White House officials insisting the president hasn’t altered his stance — and carefully adding that he is open to having his mind changed. White House Press Secretary Sarah Huckabee Sanders said the administration’s position remains the same, and the U.S. “is withdrawing unless we can reenter on terms that are more favorable to our country.” That sounds sensible — like the opening gambit of a negotiation — but it’s actually meaningless. First, each signatory to Paris set its own targets for reducing the greenhouse gases that cause climate change. Second, each country has complete latitude to decide how it reaches those targets. Third, the accords don’t even provide penalties against countries that promise to cut greenhouse gas emissions and then fail to do so. From an international perspective — or even an oil-and-coal-industry perspective — it’s hard to see what withdrawing from the treaty accomplished. A new U.S. president could have said, “I’m lowering our Paris target,” or “I’m changing the way we plan to meet the target” — and then dealt with the criticism at international gatherings. That approach would have kept the U.S. inside the treaty — and inside the process that sets the rules for follow-up over the next few years.
Rick Perry to Climate Activists: Fossil Fuels Save Lives - Protestors showed up to the National Petroleum Council's meeting in Washington, DC on Monday to call out Secs. Rick Perry and Ryan Zinke for their controversial stances on climate change . After an activist expressed, "climate change is killing people," the Secretary of Energy remarked in the conference room full of oil industry representatives and executives that fossil fuels save lives. "This industry is leading the world in affecting the climate and affecting the climate in a positive way," Perry said, according to Bloomberg . "I'm proud to be a part of this industry. You want to talk about saving lives, that's what we are doing." The former Texas governor praised Texas' efforts in reducing carbon dioxide and other pollution and that U.S. liquefied natural gas, which produces fewer greenhouse gas emissions compared to coal, is replacing dirty coal plants. He also insisted that energy access saves lives in Africa, an industry talking point, Bloomberg noted. "It upsets me when some guy stands up and says, 'What are you going to do, you're killing people,'" Perry said to applause. "No sir. You want to kill people, you take energy away from them and you see how those north African countries will be treated." Some of the fossil fuel industry's biggest names, including Exxon Mobil and Shell , were present at the annual meeting.
Civil servants charge Trump is sidelining workers with expertise on climate change, environment - LA Times: Interior Department manager Joel Clement figured his new bosses in the Trump administration might disapprove of his climate-change-focused work protecting Alaskan villages from rising seas. But the reassignment slip Clement received in June stunned him. He was not only removed from his post as director of policy analysis, he was deposited into a new job auditing fossil fuel company leases.Approximately 50 such slips went out to the department’s most experienced and highly paid managers. Other recipients interviewed were just as puzzled as Clement. It seemed to them that they were getting moved for the sake of getting moved — often to jobs unrelated to their skills. On Monday, Interior Secretary Ryan Zinke may have shed some light on his thinking when he told a petroleum industry group that he believes nearly a third of his workforce is disloyal to the Trump agenda. “I got 30% of the crew that's not loyal to the flag,” he said, in a remark first reported by the Associated Press. Article continues belowMost new administrations move quickly to reorient the federal workforce toward their agenda, but they usually rely on the deep expertise of top-level managers such as Clement to move the stubborn levers of bureaucracy. The Trump administration approach has been different. “I’ve talked to a lot of folks who have been around the federal government for decades and they say transitions can be tough, but what this group is doing is remarkable,” said Clement, who filed a whistler-blower complaint over the reassignment. “They have moved me into an area I know nothing about. It might as well be Chinese.”
Zinke plans overhaul because Interior Department employees 'not loyal' - Interior Secretary Ryan Zinke said Monday 30 percent of his agency's employees are "not loyal" to him or President Trump and he is developing a plan to overhaul the department. "I got 30 percent of the crew that's not loyal to the flag," Zinke said in remarks to the National Petroleum Council, a federal advisory panel. He compared his running of the agency to a pirate ship that seizes "a prized ship at sea and only the captain and the first mate row over" to complete the mission. He then went on to discuss a forthcoming "huge" plan to restructure the agency away from Washington and to the states to speed up oil and natural gas permitting. "I really can't change the culture without changing the structure," Zinke said. "The president wants it yesterday," he said, referring to the administration's desire to speed up the energy permitting process. "We have to do it by the law." He also said the Endangered Species Act has been "abused" by environmental groups and bureaucrats alike, which has stalled development. The designation of animal species granted protections under the law must be less arbitrary, Zinke said. "There is no off-ramp" for species to be taken off the endangered list, once it is determined that a species numbers are adequate and it has recovered, he said.
Trade panel puts solar tariff decision in Trump's hands - POLITICO: A federal trade panel declared Friday that surging imports of solar panels have hurt U.S. manufacturers — a decision that will allow President Donald Trump to penalize Chinese companies but could also choke off the fast-growing green energy industry in the U.S. The U.S. International Trade Commission voted to uphold a complaint brought by two domestic solar manufacturers that complained that the low-cost imports had damaged their businesses. The decision was opposed by the much larger U.S. solar installation industry, which has seen the influx of the cheap panels spark a boom in construction of giant solar farms and rooftop systems around the country. The issue will give Trump the opportunity to erect trade barriers he has hailed as key to his strategy to revive domestic manufacturing, and at the same time hit the Chinese companies that have largely evaded previous U.S. import penalties to become the leading suppliers of solar cells and panels. Administration officials say the trade case hasn't been a central one for the president, but they are increasingly confident Trump will favor tariffs when the commission sends the White House its recommendations in the next couple of months. In a statement, the White House said Trump would make a decision that "reflects the best interests of the United States," and it praised the solar-makers, saying the domestic "solar manufacturing sector contributes to our energy security and economic prosperity.”The case could also give Trump a platform to advance his “America First” agenda and tout his effort to revive the ailing coal sector. Coal companies have complained that the Obama administration waged a regulation-heavy “war on coal” while tilting federal tax incentives and loans to renewable energy sources in order to advance climate change policies.
Trump nominee to nation’s largest public utility has a massive conflict of interest - Earlier this month President Donald Trump announced that he would nominate retired coal executive Kenneth Allen to the board of the country’s largest public utility. Allen’s impending nomination to the federally-owned Tennessee Valley Authority typifies the Trump administration’s approach to political appointments: Find someone deeply embedded within the industry they will now oversee, and set off a slew of new conflict of interest concerns.The Tennessee Valley Authority (TVA), which was founded in 1933 by congressional charter and currently serves nine million consumers across seven states, provides electricity to consumers and local power distributors across the southeastern United States. Members of its nine-person board of directors help guide policy for the utility, including signing off on long-term planning and deciding what kinds of power sources to add or retire. That means that, if confirmed to the board, Allen could end up in a position to directly boost the relationship between the TVA and his former employer, Armstrong Coal.But more than giving Allen a chance to guide the TVA toward coal-friendly policies, serving on the utility’s board could offer Allen an opportunity for personal enrichment. TVA has been a longtime customer of Armstrong, and still currently purchases coal from the company. And, according to public filings, Allen is still receiving payments from his former employer on the basis of the amount of coal mined and sold from various Armstrong-owned properties. According to company filings with the U.S. Securities and Exchange Commission (SEC), Allen received $484,165 in compensation from Armstrong in 2016, his last full year of employment with the company. Allen’s compensation came from a combination of salary, bonuses, and money earned from an “overriding royalty agreement,” wherein Armstrong agreed to pay Allen $0.05 per ton of all coal mined, extracted, and sold from certain reserves held by the company.
Federal board moves toward penalties on solar panel imports | TheHill: The United States International Trade Commission (ITC) took a major step Friday toward slapping tariffs or other penalties on companies that import solar panel technology. The independent body unanimously accepted a petition from bankrupt solar manufacturers Suniva and SolarWorld that argued competition from imports, mainly from China, are hurting their businesses. The commissioners will soon recommend specific penalties, such as tariffs or price floors on crystalline silicon photovoltaic cells, the component of solar panels that generates electricity. President Trump has the sole authority to implement such penalties under a process spelled out in Section 201 of the Trade Act of 1974. He has prioritized trade policies that protect domestic manufacturing and often criticizes China’s role in international trade, giving Suniva and SolarWorld hope that he would implement protections.Under the 201 provision, the commission did not have to conclude that foreign companies or countries were doing anything unfair or illegal, only that the domestic industry has been injured. The ITC is due to issue recommendations in the case by Nov. 13, setting up a final decision on tariffs from Trump sometime after. In a statement following the commission’s vote, White House spokeswoman Natalie Strom said Trump “will examine the facts and make a determination that reflects the best interests of the United States.” She added that the domestic solar manufacturing industry “contributes to our energy security and economic prosperity.” Trump has taken an aggressive posture on trade, especially targeting imports of products from China. That raises the likelihood he will embrace tariffs on imported solar panels.
E.P.A. Threatens to Stop Funding Justice Dept. Environmental Work - — Scott Pruitt, the Environmental Protection Agency administrator who has aggressively pushed to dismantle regulations and downsize the organization, is threatening to reach outside his agency and undermine the Justice Department’s work enforcing antipollution laws, documents and interviews show.Under Mr. Pruitt, the E.P.A. has quietly said it may cut off a major funding source for the Justice Department’s Environment and Natural Resources Division. Its lawyers handle litigation on behalf of the E.P.A.’s Superfund program seeking to force polluters to pay for cleaning up sites they left contaminated with hazardous waste. The E.P.A. reimburses the Justice Department for that work, paying more than $20 million annually in recent years, or enough for 115 full-time employees, budget documents show.But Mr. Pruitt has signaled that he wants to end those payments, potentially carving a major hole in the division’s budget, in a little-noticed line in the E.P.A.’s budget proposal in the spring. No decision will be made until Congress passes an E.P.A. budget for the fiscal year that begins in October, officials at both agencies said, although the payments were created by the executive branch, not Congress, so Mr. Pruitt may be able to act on his own. Congress hopes to pass a spending plan before a stopgap measure expires in mid-December. Mr. Pruitt, a former attorney general of Oklahoma with strong ties to the fossil fuel industry who frequently sued the E.P.A. before President Trump placed him in charge of it, has made no secret of his ambition to unwind its regulations and shrink its work force to curtail what he sees as federal overreach in protecting the environment and public health.
How renewables are displacing natural gas from the west coast -- The rise of renewable energy has transformed power markets in the U.S. West Coast states, particularly California. The Golden State has added significant renewable power generation capacity in recent years. Additionally, record precipitation in the Pacific Northwest and California this year boosted hydroelectric generation in the region. These factors have reduced the natural gas market share of power generation in California and other Pacific Coast states, which has important implications for the U.S. gas market as a whole, especially considering that the Eastern U.S. is increasingly oversupplied and pushing its gas supply westward. Today, we look at the year-on-year changes in the West Coast power generation sector and their effect on the gas market this summer and longer term. As we noted in our latest gas supply-demand series, Summertime Blues, increasing generation from renewable sources has made a notable dent in the natural gas market share of power generation this summer. This isn’t a new trend, but one that’s been developing over the past several years. What’s different now is that as less natural gas is needed out West, particularly in California — the second largest natural gas consumer in the U.S. after Texas — it has the potential to exacerbate oversupply conditions in the Central U.S., which is already being targeted by growing gas production from the Marcellus and Utica shales that is pushing south and west.
California mulling ban on combustion-engine vehicles | TheHill: California regulators are exploring ways to eventually ban the sale of vehicles powered by internal-combustion engines, a top official told Bloomberg News.California Air Resources Board Chair Mary Nichols said the state, led by Democratic Gov. Jerry Brown, is interested in following the example set by China, which said earlier this month that it would move toward banning internal-combustion engines in the country. “I’ve gotten messages from the governor asking, ‘Why haven’t we done something already?’” Nichols said, adding that any potential ban would be a decade or more away. “The governor has certainly indicated an interest in why China can do this and not California.” Chinese officials said this month that they would try to end the sale of polluting vehicles by 2030. France and the United Kingdom are aiming to institute similar bans by 2040. A similar ban in California would likely garner opposition from automakers and even federal regulators. An automakers association told Bloomberg that the industry is working with California on “intelligent, market-based approaches to emissions reductions,” and the state would need to establish a mechanism for banning the sale of internal-combustion vehicles that fits within its authority to write pollution rules. “There are people who believe, including who work for me, that you could stop all sales of new internal-combustion cars by 2030. Some people say 2035, some people say 2040,” Nichols told Bloomberg. “It’s awfully hard to predict any of that with precision, but it doesn’t appear to be out of the question.”
California Mulls Combustion-Engine Car Ban: "You Could Stop All Sales By 2030" --California, the state which single-handedly turned Elon Musk into the billionaire that he is today by forcing taxpayers to subsidize his unprofitable electric vehicle scam via "Zero Emission Vehicle" credits, is now considering a full ban of combustion-engine cars by as early as 2030. The potential ban was discussed by Mary Nichols of the California Air Resources Board, the same folks who decided to regulate cow farts last year, who toldBloomberg that Governor Jerry Brown has expressed interest in a ban. Governor Jerry Brown has expressed an interest in barring the sale of vehicles powered by internal-combustion engines, Mary Nichols, chairman of the California Air Resources Board, said in an interview Friday at Bloomberg headquarters in New York. Brown, one of the most outspoken elected official in the U.S. about the need for policies to combat climate change, would be replicating similar moves by China, France and the U.K.“I’ve gotten messages from the governor asking, ‘Why haven’t we done something already?’” Nichols said, referring to China’s planned phase-out of fossil-fuel vehicle sales. “The governor has certainly indicated an interest in why China can do this and not California.”California has set a goal to cut carbon dioxide emissions by 80 percent from 1990 levels by 2050. Rising emissions from on-road transportation has undercut the state’s efforts to reduce pollution, a San Francisco-based non-profit said last month.“To reach the ambitious levels of reduction in greenhouse gas emissions, we have to pretty much replace all combustion with some form of renewable energy by 2040 or 2050," Nichols said. “We’re looking at that as a method of moving this discussion forward.”"There are people who believe, including who work for me, that you could stop all sales of new internal-combustion cars by 2030. Some people say 2035, some people say 2040,” she said. “It’s awfully hard to predict any of that with precision, but it doesn’t appear to be out of the question.”
BHP, world's largest miner, says 2017 is 'tipping point' for electric cars (Reuters) - This year looks set to be the “tipping point” for electric cars, Arnoud Balhuizen, chief commercial officer at global miner BHP said on Tuesday, with the impact for raw materials producers to be felt first in the metals market, and only later in oil. “In September 2016 we published a blog and we set the question - could 2017 be the year of the electric vehicle revolution?” said Balhuizen, a company veteran who runs BHP’s commercial strategy, procurement and marketing from Singapore. “The answer is yes...2017 is the revolution year we have been speaking about. And copper is the metal of the future.” Europe has begun a dramatic shift away from the internal combustion engine, although, globally, there are only roughly 1 million electric cars out of a global fleet of closer to 1.1 billion. BHP forecasts that could rise to 140 million vehicles by 2035, a forecast it says is on ‘the greener’ end. “The reality is a mid-sized electric vehicle still needs subsidies to compete... so a lot will depend on batteries, on policy, on infrastructure,” Balhuizen said. Electric cars are expected to soon cost the same as traditional vehicles - as early as next year by some estimates. But governments are also getting on board, with China’s subsidies leading the way and Britain becoming the latest country to announce its all-electric ambitions in July. Balhuizen said he expected the electric vehicle boom would be felt - for producers - first in copper, where supply will struggle to match increased demand. The world’s top mines are aging and there have been no major discoveries in two decades. The market, he said, may have underestimated the impact on the red metal: fully electric vehicles require four times as much copper as cars that run on combustion engines.
Visualizing The Massive Impact Of EVs On Commodities - What would happen if you flipped a switch, and suddenly every new car that came off assembly lines was electric?It’s obviously a thought experiment, since right now EVs have close to just 1% market share worldwide. We’re still years away from EVs even hitting double-digit demand on a global basis, and the entire supply chain is built around the internal combustion engine, anyways.At the same time, however, as Visual Capitalist's Jeff Desjardins notes, the scenario is interesting to consider. One recent projection, for example, put EVs at a 16% penetration by 2030 and then 51% by 2040. This could be conservative depending on the changing regulatory environment for manufacturers – after all, big markets like China, France, and the U.K. have recently announced that they plan on banning gas-powered vehicles in the near future. We discovered this “100% EV world” thought experiment in a UBS report that everyone should read. As a part of their UBS Evidence Lab initiative, they tore down a Chevy Bolt to see exactly what is inside, and then had 39 of the bank’s analysts weigh in on the results. After breaking down the metals and other materials used in the vehicle, they noticed a considerable amount of variance from what gets used in a standard gas-powered car. It wasn’t just the battery pack that made a difference – it was also the body and the permanent-magnet synchronous motor that had big implications. As a part of their analysis, they extrapolated the data for a potential scenario where 100% of the world’s auto demand came from Chevy Bolts, instead of the current auto mix. If global demand suddenly flipped in this fashion, here’s what would happen: (infographic, table)
European countries spend billions a year on fossil fuel subsidies, survey shows - Governments of 11 European nations are providing subsidies totalling more than £80bn a year to fossil fuel industries, green campaigners have claimed.Transport fuels account for the lion’s share of the support to fossil fuels. Many of the 11 countries surveyed encourage drivers to use diesel as it produces less carbon per mile than petrol, despite the fuel’s effects on air pollution which is particularly harmful to children. For many years, governments had incentives to prioritise the use of diesel, as it helped them meet internationally-set carbon reduction targets.A substantial amount of the claimed subsidies are for fuels such as gas, which is viewed by many as a transition away from more carbon-intensive fuels such as coal. Taxpayer support for electric vehicles, renewable electricity and other low-carbon efforts were not counted in the study by the Overseas Development Institute (ODI).In the UK, diesel fuel is taxed by volume at the same rate as petrol. This taxation can favour the dirtier fuel because diesel cars travel further than petrol vehicles on the same volume of fuel. Half of the support provided to fossil fuels was targeted at low-income households, the report acknowledged. Such measures by governments are intended to protect people on low incomes from fuel poverty. Nearly €5bn of the overall support was provided in this way by the UK government alone.Shelagh Whitley, head of climate and energy at the ODI, said: “The air pollution crisis in cities across Europe and the recent diesel emissions testing scandal have rightly led to increased pressure for governments to act [on air quality]. Yet our analysis shows European countries are providing enormous fossil fuel subsidies to the transport sector.”“This study shows how governments in Europe and the EU continue to subsidies and finance a reliance on oil, gas and coal, fuelling dangerous climate change and air pollution with taxpayers’ money.”
Sen. Manchin won’t vote for Trump’s mine safety nominee - Sen. Joe Manchin (D-W.Va.) on Wednesday said he plans to vote against confirming President Trump’s nominee to head the Mine Safety and Health Administration (MSHA). In his statement, Manchin recalled the numerous miner deaths in West Virginia, including 12 so far this year. Trump tapped David Zatezalo for the job earlier this month. Zatezalo is a retired former executive of Rhino Resources, which had frequent run-ins with MSHA for alleged safety violations during his tenure.“While I appreciate Mr. Zatezalo’s willingness to serve, I cannot support his confirmation to lead MSHA,” Manchin said in his statement. “After reviewing his qualifications and record of safety during his time in the coal industry, I am not convinced that Mr. Zatezalo is suited to oversee the federal agency that implements and enforces mine safety laws and standards.”
Maryland sues EPA over upwind air pollution | TheHill: Maryland Attorney General Brian Frosh (D) sued the Trump administration Wednesday to try to force it to take action against out-of-state power plants for their air pollution. Frosh contends in his lawsuit that the Clean Air Act obligates Environmental Protection Agency (EPA) head Scott Pruitt to require plants in five states to use air pollution controls. But the EPA hasn’t formally responded to Maryland’s November 2016 petition on the matter, nor its July threat to sue the EPA for missing the deadline to respond.“Emissions from power plants in surrounding states pollute Maryland’s air and violate the law,” Frosh said in a statement. “My office has filed suit because the EPA and Administrator Pruitt have failed to stop these violations, ignoring our request to require those power plants to comply with the Clean Air Act,” he said. “This federal law is supposed to protect everyone against the harm of breathing polluted air, so the federal government must ensure that power plants everywhere be held accountable.” Maryland’s Republican Gov. Larry Hogan directed Frosh to file the case. It also has the support of the state's secretary of the environment, Ben Grumbles, who worked in the EPA under former Republican President George W. Bush. The lawsuit, filed in federal court in Maryland, cites research and EPA data to argue that 36 power plants in Indiana, Kentucky, Ohio, Pennsylvania and West Virginia are violating the “good neighbor” provision of the Clean Air Act by not using pollution control technology that is already installed. Those pollutants blow into Maryland and reduce air quality in cities like Baltimore, despite the state’s own efforts to improve the air.
Lights Out? Now Australia's Got a Coal Shortage - Australia’s energy crisis keeps getting stranger. The world’s second-biggest seller of liquefied natural gas is already threatening producers with export curbs as it struggles to find enough supply for its own use. Now one of the largest thermal coal shippers is scrambling to replenish stockpiles at some power plants after they dwindled following a surge in demand and constrained supply.It’s the latest twist in the saga of how a global energy powerhouse is struggling to sustain reliable and affordable electricity for its own population. Power price spikes and gas shortages have already frustrated businesses and homes across the nation and put pressure on the government and generators to prioritize domestic customers over sometimes more lucrative export markets. Coal inventories at Australia’s three largest electricity providers -- AGL Energy Ltd., Origin Energy Ltd. and CLP Holdings Ltd.’s Energy Australia -- have shrunk over winter as they use more of the fuel to compensate for natural gas shortages. The closure of the Hazelwood coal-fired power plant in Victoria state also put further pressure on the nation’s remaining generators to produce more power, eating through their stockpiles at a faster pace.Against this backdrop, the power producers have struggled to get sufficient supplies as they compete with overseas buyers for lower-quality coal that was once considered too poor to export. Miners in Australia can command higher prices for coal known as high ash in China, South Korea and India.“The high ash market has developed in North Asia over a number of years and that has caused complications for some power stations,” said Robin Griffin, a research director at Wood Mackenzie Ltd. in Brisbane. “It means that miners can actually sell a much lower quality product into the export market.”
Chinese coal-fired electricity generation expected to flatten as mix shifts to renewables – EIA - Coal-fired electricity generation in China, the world’s largest coal consumer, is expected to remain flat through 2040, according to EIA’s International Energy Outlook 2017 (IEO2017). Other fuels, such as renewables, natural gas, and nuclear power, are expected to make up increasing shares of China’s electricity generation. Despite declines in coal’s generation share, IEO2017 projects that coal will remain an important component of China’s energy mix, peaking at nearly 4,400 billion kilowatthours (bkWh) by 2030. However, as China continues to replace older, less efficient generators with more efficient units, China’s power sector coal consumption is expected to peak as soon as 2018, at 4,800 million metric tons. As part of China’s 13th Five-Year Plan, a total of 150 gigawatts (GW) of new coal capacity has been canceled or postponed until at least 2020. Increasingly strict controls on total coal capacity and power plant emissions are expected to prompt the retirement of up to 20 GW of older plants and spur technological upgrades to China’s remaining 1,000 GW of coal power. Coal remains China’s largest source of electricity, accounting for more than 72% of the nation’s electricity generation in 2015. In the Reference case of EIA’s long-term international energy projections, China’s coal share of generation steadily decreases to nearly 50% by 2040, as generation shares from renewables and nuclear both increase. By 2040, fossil fuels (coal, natural gas, and petroleum) are still expected to make up most of China’s electricity generation mix.
Coal, natural gas to fight for power share over next few years - Coal and natural gas are likely to fight for every marginal megawatt-hour for the next few years like “cats in a sack,” said an S&P Global Market Intelligence analyst Wednesday. Speaking at the 40th annual Coal Marketing Days conference in Pittsburgh, Steve Piper said that as long as electricity demand remains low, competition between coal and gas will remain fierce. Piper said a fundamental reality of the current landscape is that coal and gas are stuck. If the price of one fuel increases, generators will switch to the other, which brings prices back to parity. And this dynamic is likely to persist for some time, he said. Based on his analysis, Piper said that every 10 cents movement in gas results in roughly 4.5 million st of loss/gain for Eastern bituminous coal and 8.6 million st of loss/gain for sub-bituminous coal. Pipes said gas demand continues to grow in the power sector, but is roughly flat in the industrial and commercial sectors. LNG exports are expected to add demand, but are not likely to be material until 2019 or later.
Trump proposes higher payments for coal, nuclear power -- The Trump administration wants to mandate that coal, nuclear and hydroelectric power plants get paid higher prices for electricity than they are currently receiving. Energy Secretary Rick Perry sent the proposed requirements Friday morning to the Federal Energy Regulatory Commission (FERC), asking for quick action from the commission to protect coal and nuclear plants that are on the verge of closing because of competition or other economic factors. Perry is seeking the new regulation in the name of electric grid resilience, which he said is threatened by coal and nuclear plant closures in recent years. It is the most concrete action yet by the Trump administration to try to save coal and nuclear plants, something Perry has named as a top concern. “A reliable and resilient electrical grid is critical not only to our national and economic security, but also to the everyday lives of American families,” Perry said in a statement. The Energy Department does not itself have the authority to create the rule. Instead, Perry is relying on a little-used authority he has under a 1977 law to formally call upon FERC to issue the regulation. While FERC commissioners are appointed by the president, the agency is otherwise independent and not obligated to follow through on Perry's request.
Perry puts thumb on the scale to save U.S. coal and nuclear: Kemp (Reuters) - The U.S. Department of Energy has thrown a lifeline to the struggling U.S. coal and nuclear industries by proposing a new rule that would explicitly compensate them for contributing to electric grid reliability and resiliency. Invoking his powers under the Department of Energy Organization Act, Energy Secretary Rick Perry has directed the Federal Energy Regulatory Commission (FERC) to consider a new grid resiliency rule.The proposed rule would require independent system operators (ISOs) and regional transmission organisation (RTOs) regulated by FERC to implement new electricity market rules compensating eligible power producers for their contributions to reliability and resiliency.“Specifically, the (proposed) rule allows for the recovery of costs of fuel-secure generation units that make our grid reliable and resilient,” Perry wrote in a letter to FERC dated Sept. 28.“Such resources provide reliable capacity, resilient generation, frequency and voltage support, (and) on-site fuel inventory,” he explained. “The rule allows the full recovery costs of certain eligible units.”“Eligible units must ... be able to provide essential energy and ancillary reliability services and have a 90-day fuel supply on-site in the event of supply disruptions caused by emergencies, extreme weather, or natural or man-made disasters.” The proposed rule would require ISOs and RTOs to establish “just and reasonable” tariffs for eligible units to recover their full costs and earn a fair rate of return. U.S. coal-fired and nuclear power producers have complained that the combination of cheap natural gas and growing output from wind and solar power has depressed power market prices. Power prices are now so low in some markets that many coal-fired and nuclear power plants are struggling to cover their long-term costs and are opting to close rather than pay for expensive maintenance and upgrades. Power markets already regulate and pay power producers for providing a mix of output (GW) and ancillary services.Ancillary services typically include frequency regulation, voltage control, reactive power, stand-by generation and black start capability, all of which contribute to the reliability and resilience of the grid.But for the most part markets compensate power producers for actual generation, with only relatively minor payments for ancillary services and resiliency. Perry wants FERC to order ISOs and RTOs to identify and compensate ancillary services contributing to reliability more explicitly and likely at a higher level.
DOE Proposes Outrageous, Massive Coal and Nuclear Bailout -- Department of Energy (DOE) Sec. Rick Perry just proposed a massive bailout for coal and nuclear power plants. The radical and unprecedented move is couched under a false premise that power plants with fuel located on site are needed to guarantee the reliability of the electricity system. The proposal relies on a mischaracterization of DOE's own recent study of electricity markets and reliability (discussed here ), which if anything demonstrated that this kind of proposed action is not justified. If adopted, the proposal would essentially ensure that coal and nuclear plants in regions encompassing most of the country continue to run even where they are too expensive to compete in the energy market. It would saddle utility customers with higher costs, while posing obstacles to the electricity system integration of cleaner and less risky energy sources such as solar and wind. The Natural Resources Defense Council (NRDC) is still carefully analyzing the proposal, but below is a very preliminary take: The proposal would bail out expensive and uncompetitive coal and nuclear plants The proposal asks the Federal Energy Regulatory Commission (FERC) to take action within 60 days that would financially prop up "fuel-secure resources," which must have "a 90-day fuel supply on site enabling [them] to operate during an emergency, extreme weather conditions, or a natural man-made disaster." This requirement is aimed squarely at coal and nuclear power plants, which would generally be able to satisfy these criteria. Many coal and nuclear units are very expensive and are having trouble competing in the wholesale electricity market (as discussed here ). So the proposal asks FERC to bail out these power plants by essentially guaranteeing them profits and insulating them from competitive market forces. The proposal amounts to a massive subsidy that would ensure the plants continue to operate, rather than being economically retired when they are more expensive than other units (including wind and solar) that sell electricity at lower cost. The proposal would radically reshape electricity regulation for most of the country The rule would have a massive scope, covering regional wholesale markets where electricity is bought and sold to serve most of the nation's customers. It would apply to areas where the electricity system is operated by regional entities known as Regional Transmission Operators (RTOs) or Independent System Operators (ISOs), which administer competitive markets for electricity. The RTOs tell the more expensive plants not to operate when there's cheaper electricity available from other plants. Secretary Perry's proposal would be a radical departure from the way FERC currently regulates electricity prices in these regions.The proposal would lead to higher energy bills and more pollution
DOE guarantees $3.7B in loans for Vogtle nuclear plant construction - After little concrete action for months, the Department of Energy on Friday took significant steps to support baseload power generation in the United States. First, DOE announced a new proposed rulemaking directing the Federal Energy Regulatory Commission to boost compensation for coal and nuclear generators that hold 90 days of fuel supply onsite. If enacted, the new rules could provide a lifeline for aging generators under pressure from cheap natural gas and renewable power in the nation's wholesale power markets. The same morning, DOE acted to shore up the prospects for new nuclear as well, approving new loan guarantees for the Vogtle plant. The agency has already guaranteed $8.3 billion in loans to the plant owners. “I believe the future of nuclear energy in the United States is bright and look forward to expanding American leadership in innovative nuclear technologies,” Secretary of Energy Rick Perry said in a statement. “Advanced nuclear energy projects like Vogtle are the kind of important energy infrastructure projects that support a reliable and resilient grid, promote economic growth, and strengthen our energy and national security."In late August, Southern Co. leadership recommended that construction of the Vogtle project continue after conducting an internal review of the project's finances. Originally slated to cost $14 billion, the company told the SEC it expects total costs could reach $27 billion by the project's completion. If regulators allow it to continue, Southern expects to finish Unit 3 of Vogtle between Feb. 2021 and March 2022. Unit 4 would be finished between Feb. 2022 and March 2023.
Weekly US coal production estimates continue to dip: EIA - Weekly US coal production totaled an estimated 14.68 million st in the week that ended Saturday, down 5.3% from the prior week and 4.8% below the same week a year ago, according to US Energy Information Administration data released Thursday. It marked the second time this year coal production has dipped below the year-ago total, the first time being during the week of Independence Day. Coal production has steadily declined in the past five weeks since peaking at a year-to-date high of 17 million st for the week that ended August 19. While stockpiles have drawn down, days of burn remain relatively elevated and natural gas prices have weakened, likely curtailing deliveries and stalling production. Platts Analytics' Bentek Energy estimates utility coal stockpiles as of last week stood at 128 million st, while the NYMEX Henry Hub natural gas futures contract has averaged $2.95/MMBtu since August 1. For the recently concluded week, coal production in Wyoming and Montana, which primarily comprises coal from the Powder River Basin, totaled an estimated 6.98 million st, down 6.2% compared with last week and 8.7% below the year-ago week. In Central Appalachia, weekly coal production totaled an estimated 1.45 million st, down 3.7% from last week but up 0.4% from last year. Annualized 2017 production would total 83.1 million st, up 8.8% from last year. In Northern Appalachia, weekly coal production totaled an estimated 2.1 million st, down 3.9% from last week and 2.6% below the year-ago week. Annualized production would total 114.6 million st, up 12.4% from last year.In the Illinois Basin, weekly coal production totaled an estimated 1.84 million st, down 3.9% from last week and 2.6% below a year ago. Annualized production would total 106.5 million st, up 8.2% from 2016.
US utilities appear unconcerned as coal stockpiles decline: analyst -Utility coal stockpiles are trending lower, but fuel buyers are not in rush to rebuild, as changing market dynamics continue to reshape what normal inventories are, said a noted coal analyst Monday. Mark Levin, with Seaport Global Securities, said in a research note that in discussions with industry sources, "we continue to get the sense that major US utilities are not particularly worried about getting the coal they need when they need it." Levin said that while natural gas prices have generally been supportive of increased coal burn, another mild winter and "uninspiring summer weather" have left stockpiles at "comfortable" levels. "Many of these utilities are relying less and less on coal, and more and more on natural gas and renewables," Levin said. "Their needs just aren't the same as they once were and likely won't be anytime soon. Hence, the definition of 'normal' inventories continues to evolve." The Energy Information Administration estimates utility coal stockpiles stood at 160.5 million st at the end of June, which is the most recent data available. July data is set to be released by the agency on Tuesday. The June total was down 12.4% from the year-ago period, down 5.8% from the five-year average for the month and down 17.2% from the five-year peak of 194 million st at the end of April 2016.
Washington State Rejects Coal Export Terminal - Washington state regulators denied a water quality permit for a major coal export terminal Tuesday, dealing a possibly lethal blow to the project. The Washington Department of Ecology denied the permit for the Millennium Bulk terminal project, finding that the proposed terminal would have caused "significant and unavoidable harm" to the nearby city of Longview. "There are simply too many unavoidable and negative environmental effects for the project to move forward," Ecology Director Maia Bellon said in a statement. As reported by the AP : "An environmental review released in April by Washington's ecology department and Cowlitz County analyzed potential harm to fish habitat, wetlands, water quality, local communities and more. Of 23 environmental areas, 19 would face harmful effects, and some could not be offset or reduced, officials said at the time." "This a major victory for activists who have been fighting for seven years to stop the coal export terminal in Longview," Jasmine Zimmer-Stucky, senior organizer with Columbia Riverkeeper , told ThinkProgress . "Today's victory came after 260,000 public comments were submitted in opposition to this permit, and it's a relief to know that agencies are responding to not only overwhelming opposition from the public but also their own facts and their own science." If built, the terminal would have been the largest export terminal in the country, expected to export up to 44 million tons of coal per year from Wyoming and Montana to China and potentially increasing U.S. coal exports by 40 percent.
Fighting the Toxic Nightmare Next Door - That fall the St. Louis Post-Dispatch reported that the odors were coming from a fire that had been burning 80 feet to 120 feet below ground at the landfill for almost two years and was likely to smolder for many more. The heat from the fire was accelerating the decomposition of trash, and the pumps and gas flares that normally remove toxic leachate and limit odors from dumps couldn’t keep up. Republic Services Inc., the company that owns the landfill, told the paper its staff was working to tame the “subsurface smoldering reaction”—an industry term of art for combustion that has no oxygen fueling it or flames rising from it. When Chapman’s family and neighbors began experiencing headaches, nosebleeds, and breathing problems that winter, she contacted the Missouri Department of Natural Resources, which regulates the state’s landfills. She learned that Bridgeton Landfill was only one part of a 200-acre dumping ground that had been classified as a Superfund site because another part of it, an old landfill known as West Lake, contained radioactive waste from the earliest days of the Atomic Age. One of the two radiation-riddled areas was contiguous with the Bridgeton section. No one knew how the fire had started in the Bridgeton Landfill or when it would end, but it was slowly moving north, toward the contaminated area. The Environmental Protection Agency, which called the whole sprawling dump the West Lake Landfill complex, had placed it on the National Priorities List in 1990 and announced a remedy in 2008. The plan was to cover the “radiological-impacted material” with several feet of topsoil, clay, and crushed rock and concrete. But the Missouri Coalition for the Environment argued to the agency that it was reckless to leave this particular element—thorium, a byproduct of uranium’s decay chain that becomes more radioactive over centuries—in an unlined landfill that sits in a developed area on a flood plain prone to tornadoes. An EPA review board also challenged the decision. Absent consensus, nothing was done. Officials were overseeing studies of other possible solutions when the landfill fire began.
The effects of a single terrorist nuclear bomb - Bulletin of the Atomic Scientists - The escalating threats between North Korea and the United States make it easy to forget the “nuclear nightmare,” as former US Secretary of Defense William J. Perry put it, that could result even from the use of just a single terrorist nuclear bomb in the heart of a major city. The idea of terrorists accomplishing such a thing is, unfortunately, not out of the question; it is far easier to make a crude, unsafe, unreliable nuclear explosive that might fit in the back of a truck than it is to make a safe, reliable weapon of known yield that can be delivered by missile or combat aircraft. Numerous government studies have concluded that it is plausible that a sophisticated terrorist group could make a crude bomb if they got the needed nuclear material. And in the last quarter century, there have been some 20 seizures of stolen, weapons-usable nuclear material, and at least two terrorist groups have made significant efforts to acquire nuclear bombs. Imagine a crude terrorist nuclear bomb—containing a chunk of highly enriched uranium just under the size of a regulation bowling ball, or a much smaller chunk of plutonium—suddenly detonating inside a delivery van parked in the heart of a major city. Such a terrorist bomb would release as much as 10 kilotons of explosive energy, or the equivalent of 10,000 tons of conventional explosives, a volume of explosives large enough to fill all the cars of a mile-long train. In a millionth of a second, all of that energy would be released inside that small ball of nuclear material, creating temperatures and pressures as high as those at the center of the sun. That furious energy would explode outward, releasing its energy in three main ways: a powerful blast wave; intense heat; and deadly radiation. The ball would expand almost instantly into a fireball the width of four football fields, incinerating essentially everything and everyone within. The heated fireball would rise, sucking in air from below and expanding above, creating the mushroom cloud that has become the symbol of the terror of the nuclear age. The ionized plasma in the fireball would create a localized electromagnetic pulse more powerful than lightning, shorting out communications and electronics nearby—though most would be destroyed by the bomb’s other effects in any case.
Ohio Communities Face 'Voter Suppression' in Push to Rein in Oil and Gas Development - DeSmog (blog) Three years in a row, communities in Ohio have attempted to vote on initiatives that would grant them greater say over oil and gas development in their jurisdictions, but over and over again, appointed officials, some with direct ties to the fossil fuel industry, have put up roadblocks preventing these initiatives from reaching the ballot. “We’re losing our ability to legislate and be a check and balance on the government,” Tish O’Dell of the Ohio Community Rights Network told DeSmog on September 15. O’Dell had just learned that yet another local ballot measure — this one in Bowling Green, Ohio — was facing a possible legal challenge. “The Bowling Green initiative is the only one that made it through all the administrative hurdles to get on [the ballot],” O’Dell said. It is the latest in a flurry of anti-fossil fuel ballot initiatives across Ohio which have gained the required number of signatures but likely won’t appear on ballots come election day. This year, initiatives in Youngstown, Medina County, and Athens County have all been taken off the ballot. These ballot initiatives are a response to the surge in activity related to hydraulic fracturing (fracking) and pipeline development in Ohio and would establish new county charters or amendments to city charters that elevate the communities’ governing authority over legal privileges enjoyed by the industry. The officials placing roadblocks in the way of the county charters often have close connections to the very industry threatened by the local initiatives. Husted, a lead 2018 candidate for governor, has been the beneficiary of large campaign contributions and fundraising events put on by the oil and gas industry. And some of the local boards of elections have even closer ties to Ohio’s powerful fossil fuel industry. For example, one member of the Meigs County Board of Elections that took a county initiative off the ballot last year is Ohio Gas Association President Jimmy Stewart.
High Court shoots down third local anti-fracking charter - For the third year in a row, the Ohio Supreme Court has rejected a proposed county charter that otherwise would have gone to Athens County voters for consideration. The Athens County Bill of Rights Committee (ACBORC) has been working to bring its anti-fracking charter to voters since 2015, with the case reaching the Ohio Supreme Court each year and being rejected by the high court each year. In July, the Athens County Board of Elections rejected the ACBORC charter as invalid by saying that a proposed executive council (comprising county elected officials who aren’t county commissioners) does not meet Ohio Revised Code requirements for a county executive under an alternative form of government. As with initiatives in the previous two years, this charter proposal doubles as an effort to keep oil and gas horizontal hydraulic fracturing (fracking) out of Athens County, through prohibiting the use of local water for fracking operations. It also would outlaw future fracking waste-injection wells, of which Athens County already has several in operation. In a split decision, the Ohio Supreme Court rejected the charter with two justices concurring, three more concurring in judgment only, and two dissenting. Like last year, the state high court rejected the charter saying it failed to provide for the exercise of all powers and duties of county government. “The Athens County charter petition is nearly indistinguishable from the language we rejected in (previous cases),” the decision said, taking issue with language that refers to duties of and compensation for county officials to be determined “in the manner provided by general law.” “The constitutional language is clear: a county charter must provide for the exercise of all powers, and the performance of all duties, imposed on counties and county officers by law,” the majority decision said. “For this reason, the boards did not abuse their discretion when they invalidated the petitions.” The majority decision was concurred upon by Chief Justice Maureen O’Conner and Justice Judith French. Justices Sharon Kennedy and Terrence O’Donnell concurred in judgment only but did not offer an opinion.
More than $200000 netted in latest eastern parcel lease to oil and gas companies - The Bureau of Land Management released another 142 acres of Wayne National Forest on Sept. 22 for private industries to lease with the intent of extracting oil and gas. The sale, combined with other parcels sold in Louisiana, netted the BLM more than $200,000, according to a press release.The BLM started selling parcels of the Wayne National Forest, Ohio’s only national forest, starting in September 2016. BLM spokesperson Davida Carnahan said in February that they intend to release parcels quarterly. The BLM also sold parcels in Louisiana. Some citizens worry the action could lead to hydraulic fracturing, a process in which chemicals are injected into the ground to fracture the earth and release natural gas. Since the BLM only leases the parcels to oil and gas companies, activists have the opportunity to submit proposals and protests through a formal process prior to the sale. 10 protests were made regarding the sales in the two states, but none of the six parcels were removed. Previous sales of the Wayne National Forest have yielded more than $7 million. The oil and gas companies that purchase the land are required to pay the federal government a royalty equal to 12.5 percent the value of production.Ohio receives 25 percent minimum of sales within the state.
Fracking Protesters: Our Concerns Are Being Ignored – WOUB -- Environmental activist groups say a federal agency is ignoring their concerns and protests over the leasing of land for oil and gas development in the Wayne National Forest.Bureau of Land Management (BLM) officials held a third lease auction of the Wayne National Forest on Thursday, leasing another 141 acres to develop “oil and gas reserves” in Monroe County.Two other auctions leasing out an over 1900 acres combined were held in December of 2016 and March, netting the BLM about $6.8 million in revenue total.Local activist groups such as “Keep Wayne Wild” and the Ohio chapter of the Sierra Club organization protested in front of the Wayne National Forest’s Marietta office on Sept. 9, but many of these protesters feel their efforts are brushed aside.“All of these auctions are going to happen until a judge or a court looks at the lawsuit,” said Roxanne Groff from the Athens County Fracking Action Network. “There’s no choice, really. As in other areas around the world, protests can go as far as interrupting the drilling process, but that can only do so much.”Environmental activists are particularly concerned about the third auction lease because of the parcels’ proximity to the planned route of the Rover Pipeline, a pipeline that will deliver processed natural gas from fracking Utica shale to delivery points in northern Ohio and Michigan.The Rover Pipeline had recent spills of “drilling mud” into Ohio wetlands in April, which activists are worried could happen in the Wayne National Forest.In a formal protest petition of the September auction filed by the Center for Biological Diversity and other groups in July, the petition asserts the BLM has not conducted an environmental impact analysis (EIA) for the cumulative impact of fracking in the Wayne National Forest and the potential effects of the nearby Rover Pipeline, as required by the National Environmental Policy Act. The Center for Biological Diversity also sued the BLM and U.S. Forest Service in May in an attempt to void the past two lease auctions under similar grounds, arguing past EIA’s have not sufficiently analyzed the negative effects of fracking to the area. “I think what we’re seeing is shoddy environmental analyses being put forward by an agency that’s being pushed by the Trump administration to increase fossil fuel production at any cost,”
Frack My Land or Lose the Rights, Ohio Woman Tells Driller - A company that is drilling for oil could be forced to extract natural gas, as well, on an Ohio property or lose those rights as part of a lawsuit that tests the requirements of a 37-year-old contract signed before fracking became commonplace. The lawsuit, considered by the Ohio Supreme Court Sept. 26, turns on a 1980 contract that Linda Alford signed with Collins-McGregor Operating Co., allowing it to drill for oil on 74 acres of her property near Ohio’s West Virginia border. The drilling company has continually extracted oil from the property as required by the contract, but Alford wants to force the company to dig deeper for natural gas—or allow her to sell those rights to another firm now that hydraulic fracturing is more practical and lucrative ( Alford v. Collins-McGregor Operating Co., Ohio, No. 2016-1281, oral argument 9/26/17 ). Forcing Collins-McGregor to explore deep fracking would be the first such requirement in the nation and would be prohibitive to smaller companies only interested in oil, Brent Barnes of Geiger Teeple Robinson & McElwee PLLC, the attorney representing the company, said at the court hearing. He estimated fracking Alford’s property would cost between $8 million and $10 million. Imposing the requirement retroactively also would force drilling companies to perform work they never intended when they entered into contracts with landowners, Barnes said. A majority of justices appeared reluctant to expand this new duty to oil and gas leases in Ohio. Justices R. Patrick DeWine, Terrence O’Donnell, Patrick Fischer, and Chief Justice Maureen O’Connor all asked questions that seemed to show they were concerned about implications for the industry. “So, because you have a right you must use it?” O’Donnell asked Alford’s attorney Sean Scullin of Scullin & Cunning LLC. “So the lease just says, ‘develop,’ and they’re in compliance because they’re developing their shallow rights.”Scullin argued that the deeper rights weren’t part of the contract at all back in 1980 because fracking wasn’t in the picture. For older contracts that still include these inherent duties, companies should be required to develop natural gas through fracking or allow landowners to re-sell those fracking rights so that the industry can take full advantage of the state’s natural resources, he said. Only Justice William O’Neill asked questions that could be seen as supporting extending this duty on drillers.
County, public remained in dark about big methane leak -- lancasteronline.com: One night in early September, a critical piece of natural gas infrastructure temporarily blew its stack. By the time a resident heard the racket, dialed 911 and workers responded, the Harmony compressor station in rural northeastern Pennsylvania had spewed more than twice as much natural gas into the air as a typical compressor station does in a year. Yet the Sept. 2 leak was not made public by any state agency or by the company itself. The Associated Press learned of it during a review of calls to the U.S. Coast Guard's National Response Center hotline for discharges of oil, chemicals and other substances. County emergency management officials found out the same way — about a week after the fact. They said the station's operator, Detroit-based DTE Energy, should have notified them at the time of the release so they could've taken steps to make sure residents were out of harm's way. "If it's something like this that's larger, we definitely need to know about it," said Robert Thatcher Jr., coordinator of the Susquehanna County Emergency Management Agency. "I don't know why they didn't contact us. That's a question that DTE needs to answer."State regulations require operators of compressor stations to "immediately" alert county emergency officials when there's an "imminent and substantial danger to the public health and safety." The company might not have seen the methane release as a serious situation that warranted public notice, as the nearest residence is more than a half-mile away. There was no explosion and no one was hurt.
2.9 Million Children Are Threatened by Toxic Air Pollution From Oil & Gas Development - A new analysis of state and federal data shows 2.9 million children enrolled in schools and daycares across the country are threatened by oil and gas air pollution . Released by the national environmental group Earthworks , this new analysis is part of a larger update to The Oil & Gas Threat Map , a map-based suite of tools designed to inform and mobilize Americans about the health risks from the oil and gas industry's toxic air pollution. The Obama-era U.S. Environmental Protection Agency (EPA) and Interior Department issued rules to limit this type of oil and gas pollution. The Trump administration is now trying to block and revoke these rules before they go into effect. "My two sons are among the millions of children who go to school near oil and gas operations that threatens their health and safety," said Patrice Tomcik, National Oil and Gas program coordinator with Moms Clean Air Force , from Southwest Pennsylvania. She continued, "Children are especially vulnerable to these threats, including cancer, respiratory illness, fetal defects, blood disorders and neurological problems. With so many children living, playing and learning in close proximity to oil and gas production, it is unconscionable that our federal government wants to stall and revoke safeguards that protect our children from this industrial pollution. Moms want to see these vital safeguards implemented, not ignored." The Oil & Gas Threat Map maps the nation's 1.3 million active oil and gas wells, compressors and processors. Using peer-reviewed research into the health impacts attributed to oil and gas air pollution, the map conservatively draws a 1/2 mile health threat radius around each facility. Within that total area are:
- 2,944,785 students attending 9,102 schools, colleges and day care facilities;
- 12.5 million people living in their homes including
- 3,035,508 children under 18
- 1,756,398 senior citizens 65 and over;
- 2,292 medical facilities; and
- all encompassed by the 187,413 square miles—an area larger than California—that lay within 1/2 mile of 1,292,669 oil and gas production facilities.
Pipeline opponents sue Sunoco, alleging constitutional violations - Four opponents of the Mariner East 2 pipeline sued Sunoco Pipeline and its parent, Energy Transfer Partners, in federal court on Monday, alleging the company violated several constitutional rights when police arrested the plaintiffs on a private property in Huntingdon County. The suit accuses Sunoco, plus a private security firm, a publicist, and 27 state and local police officers of violating constitutional protections over free speech, false arrest, malicious prosecution and equal protection when the plaintiffs were arrested on the property owned by the Gerhart family in March 2016. The claims stem from a confrontation between the Gerharts and their supporters, and Sunoco and law-enforcement officers on March 29, 2016 when a tree-cutting crew entered an easement that the company obtained through eminent domain on the Gerharts’ land to build the pipeline. The day before the incident, the Huntingdon County Court of Common Pleas ordered that no-one may interfere with Sunoco’s work on the easement, including the cutting of trees. A 36-page complaint filed in U.S. District Court for the Middle District of Pennsylvania says the company entered the property almost a year before the final state permits were issued for pipeline construction, and before it was allowed to do so under a “writ of possession” issued by a state judge in April this year. Officers arrested the co-owner of the 27-acre property, Ellen Gerhart, plus her daughter Elise Gerhart, and protesters Alex Lotorto and Elizabeth Glunt, the complaint says. Lotorto did not enter the easement and did not interfere with the work going on there but was handcuffed and detained for three days before being released without charge.
Cabot Oil & Gas settles fracking lawsuit with Pennsylvania families (Reuters) - Cabot Oil & Gas Co. has settled a lawsuit filed by two families in Dimock, Pennsylvania, who alleged their homes’ drinking water became contaminated with methane not long after the company began drilling for natural gas in 2007. The Ely and Hulbert families initially won $4.2 million in damages in a federal jury trial in Scranton last year, but Magistrate Judge Martin Carlson threw out the verdict as unjustified and ordered the parties to begin settlement talks. The terms of the settlement have not been made public. Leslie Lewis, the New York lawyer who represented the families, declined on Tuesday to comment on the terms. “After nine long years, the plaintiffs are happy and relieved to put the matter behind them,” Lewis told Reuters. Neither Cabot Oil & Gas spokesman George Stark nor the company’s lead lawyer, Stephen Dillard, could be reached for comment on Tuesday. Carlson approved the settlement on Sept. 21, court records show. Dimock, Pennsylvania was at the heart of the Marcellus Shale gas fracking boom that began in 2007. Residents complained that Cabot’s drilling caused methane gas to migrate to their wells, so much that they could light their tap water on fire. Flaming tap water in Dimock was a highlight of the 2010 Oscar-nominated documentary, “Gasland,” written and directed by Josh Fox. Residents also complained that their water had turned brown and corrosive.
New Pipelines Report Shows the ACP Is Part of a Widespread, Systemic Market Failure - Energy Collective - Anyone who examines the corporate deals that underlie the Atlantic Coast Pipeline comes away with a strong sense of looking at a broken regulatory system. The Federal Energy Regulatory Commission (FERC) is supposed to approve only those pipelines that can demonstrate they are actually needed. Pipeline companies demonstrate need by showing that customers have contracted for most or all of the pipeline’s capacity. In the case of the ACP, Dominion Energy and its partners manufactured the need by making their own affiliates the customers of the pipeline.What’s weird is that FERC seems to be okay with this. It recently approved another pipeline with a similar setup—the Nexus pipeline that will carry fracked gas from Ohio through Michigan to Canada. FERC ignored blatant self-dealing between the pipeline company and its regulated utility affiliate, including clear evidence the regulated utility affiliate increased its share of the pipeline’s capacity only to create a “need” for its parent company’s project.A new report from Oil Change International concludes the U.S. is currently building unneeded fracked-gas pipelines as a result of FERC’s regulatory failures, including its failure to police self-dealing. The result will be excess pipeline capacity, paid for by regulated utility customers. The primary cause of the overbuilding, and the reason companies like Dominion engage in self-dealing to create the impression of “need,” is that FERC sets an absurdly high rate of return on pipelines—14%, compared to a typical utility rate of return of 10%. FERC set the high rate back in 1997 when interest rates were double what they are now, so it was more expensive to build large infrastructure. FERC hasn’t changed the rate since then even though it is causing obvious market distortions—and creating an incentive for utilities to jump into the pipeline business.
LePage wants to develop a new gas pipeline from Quebec - Portland Press Herald: — Frustrated by failed attempts to greatly expand natural gas capacity in New England, Gov. Paul LePage said Thursday that he wants to develop a new pipeline from Quebec into Maine in an effort to lower energy prices for homes and businesses. “We cannot move forward as a state without more pipeline capacity,” LePage told a meeting of industry professionals and other business people at the fifth annual Natural Gas Conference held at The Woodlands Club in Falmouth.LePage told the group he plans to meet with officials in Quebec in the next month or so. In subsequent comments to the Portland Press Herald, LePage said the province is interested in a new gas line that could bring supply from western Canada through Maine.“The Canadians want to help,” he said.Attempts to reach the Canadian Consulate General in Boston were unsuccessful Thursday.LePage’s energy office is in contact with the consulate, which currently is led by David Alward, a former New Brunswick premier. LePage supported Alward’s attempts to bring a proposed crude oil pipeline from western Canada to New Brunswick.Maine officials have been trying for years to expand pipeline capacity in an effort to ease the hefty price differential that manufacturers pay for energy, compared to their competitors in the Southeast and Midwest. Those efforts have largely been stalled by public and political opposition to building new pipelines to the south, notably in Massachusetts. Maine is affected because the lines that bring lower-cost natural gas from Pennsylvania and New York must first pass through Massachusetts, supplying homes, businesses and power plants along the way. On the coldest days, there’s not enough gas to meet all the region’s demand, causing prices to spike. At the same time, environmental groups in Maine have been fighting pipeline expansions, favoring investments in efficiency, wind and solar.
West Virginia's regulatory environment markedly different than neighboring Pennsylvania - The Exponent Telegram — Industry leaders were told this week West Virginia, Pennsylvania and Ohio couldn't be more different when it comes to the regulatory environment governing oil and gas operations. Babst Calland's Blaine Lucas told attendees at Shale Insight 2017 in Pittsburgh this week that West Virginia case law governing local pre-emption — the line between local government authority and state controls — is relatively straightforward: First, a Monongalia County circuit judge nixed a ban on fracking within a mile of Morgantown's city limits in 2011. Then, just a few months ago the Fourth U.S. Circuit Court of Appeals upheld a federal judge's finding that Fayette County commissioners had overstepped their authority when they attempted to ban handling, storage and disposal of wastewaters associated with oil and gas operations within their county — essentially making any oil and gas operations a punishable offense. In the Fayette County decision, Appeals Judge Pamela Harris pointed out West Virginia law "simply does not permit a county to ban an activity — here, the permanent disposal of wastewater ... underground injection control wells — that is licensed and regulated by the state pursuant to a comprehensive and complex permit program.” "In West Virginia it's now fairly clear local regulation is preempted, and as a practical matter, very few counties in West Virginia have a zoning ordinance anyway," In Ohio, Lucas said recent decisions suggest local government control over the oil and gas has largely been preempted, "but that's not certain." The community of Munroe Falls, Ohio, tried at least twice to keep Beck Energy from drilling within city limits: In 2015 the Buckeye State's highest court dissolved an injunction the city had won in Summit County even though Beck Energy's drilling operation had been permitted. The city sued and lost again, though this time the Ohio Supreme Court ordered Munroe Falls to pay $45,000 in legal fees Beck Energy had racked up defending itself against what the court called a frivolous lawsuit. "In one case the Ohio Supreme Court bounced (it) off the ballot because it didn't deal with constitutional issues," Lucas said, noting the court has made it clear local government has very little jurisdiction. The regulatory environment in Pennsylvania is much different: A 2013 Supreme Court decision struck down sections of the state’s Oil and Gas Act that stripped local zoning regulations of their teeth. And earlier this year the same court decided any royalty payments the state received from the shale industry can only be used for environmental preservation.
Illinois has a choice to make about fracking—and Rauner is making the wrong one - Last month, the Illinois Department of Natural Resources granted its first high volume fracking permit to Woolsey Energy, a Kansas fracking company with a history of accidents. Woolsey applied for the permit in May but the application had so many deficiencies, it had to be resubmitted three times. Many of the people who worried about fracking in 2013 are even more worried now. Illinois People's Action and its coalition members, Fair Economy Illinois, are among them. We assert that the HFRA essentially provides an open-book test for completing an Illinois fracking application. Woolsey failed the test. Not once, but three times. The deficiencies weren't minor—missing data, inaccurate calculations, incomplete plans and, in the case of a Water Conservation Plan, no plan at all. Woolsey claimed that the Illinois law is more complicated than the Kansas law. This doesn't inspire confidence. In fact, there were 7,500 concerned comments submitted to the IDNR on Woolsey's application. But this time, the comments did not slow the process down. Quite the opposite. When the company submitted a shoddy application, IDNR walked Woolsey's execs through process. Instead of protecting the health and welfare of the people, IDNR enabled the corporation. The Illinois Constitution states "each person has the right to a healthful environment" (Article 11, Section 2). In Rauner's rush to embrace fracking, the permit was approved. With the governor's blessings, IDNR has become a captured agency of big energy. Woolsey will be fracking for oil as the well sits over the top of the Illinois Oil Basin. If gasoline prices continue to rise in the wake of Hurricane Harvey, fracking may be knocking on the door of many Illinois communities. We don't need the oil or gas that Illinois fracking would produce. And we certainly don't need the negative environmental and health effects. Illinois could be a national leader in clean, renewable energy. We can move forward or we can move backward. Most Illinoisans choose to move forward. Gov. Rauner, listen to your constituents.
Enbridge Line 3 pipeline debate shifts to public hearings | Fox Business: Minnesota kicks off public hearings this week on whether regulators should allow Enbridge Energy to replace its aging Line 3 crude oil pipeline across northern Minnesota. The replacement would have higher capacity than the existing pipeline and run along a new route in some areas — two characteristics that opponents say shows it's more like a new pipeline than a replacement. Environmental and tribal groups say they expect hundreds of people to protest and march against the project before Thursday's hearing in St. Paul. They've been buoyed by a recent review from the state Commerce Department, which surprised opponents and Enbridge alike by concluding the project isn't needed and won't benefit Minnesota. But Enbridge says Line 3 is a critical piece of infrastructure for petroleum shippers and refineries in the region. Oil pipelines have become an increasingly contentious national issue amid concerns about tar sands oil and climate change, the danger that spills pose to water supplies, and the rights of American Indians who live along the routes. The fight over the Dakota Access pipeline drew thousands of protesters to the Standing Rock Reservation in North Dakota, stalling work on that project for months. Here's a look at some of the issues with Line 3:
Zinke: Fracking is proof 'God's got a good sense of humor and he loves us' - Interior Secretary Ryan Zinke referred to the oil drilling method known as hydraulic fracturing, or fracking, as proof of divine love, as well as humor."Fracking is proof that God's got a good sense of humor and he loves us," Zinke told members of the National Petroleum Council, a federal advisory panel to the Interior and Energy departments. But the statement had no context and it was unclear what Zinke was trying to say exactly. He made the statement after saying that one-third of the 70,000 employees he oversees at the agency are "not loyal" to him or the president, and he is planning a major overhaul that is expected to speed up energy permit approvals on public lands.Energy Secretary Rick Perry, who sat next to Zinke during the petroleum council meeting, was heckled by activists when asking the federal advisers to develop recommendations to advance carbon capture technologies that will make fossil fuel plants cleaner. He said the technology remain challenged commercially and he wants the oil industry to help find a way forward."Integrating technology and deploying CCUS [carbon capture utilization and storage technology] at scale still remains a commercial challenge," Perry said. Exxon Mobil is developing a form of the technology for use with natural gas power plants, which experts have described as a promising technology. Exxon announced on Monday it was ramping up a program to cut methane emissions from its fracking and pipeline operations. Methane, like carbon dioxide, is a greenhouse gas, which many scientists blame for exacerbating the effects of global warming.
U.S. lawmakers ask Facebook, Twitter for information on anti-fracking ads - (Reuters) - A U.S. House committee investigating whether Russia has tried to influence U.S. public opinion on fossil fuels asked Facebook, Twitter and Alphabet (GOOGL.O) on Wednesday to turn over information about Russian entities that may have bought anti-fracking advertisements. House Science and Technology Committee Chairman Lamar Smith, a Texas Republican and climate change denier, asked the CEOs of the technology companies to turn over documents by Oct. 10 that detail the involvement of Russian-based or funded entities detected on their platforms, information on ads they purchased, and any communications concerning ads advocating for “so-called green initiatives.” Smith and the Republicans on the committee that oversees U.S. scientific agencies have targeted mainstream climate change scientists, questioning their integrity and calling for eliminating federal funding for climate research. They have also accused environmental groups of colluding with Russians to push for regulations to curb fossil fuel extraction. “The committee is concerned that divisive social media and political messages conveyed through social media have negatively affected certain energy sectors, which can depress research and development in the fossil fuel sector and expanding potential for natural gas,” Smith wrote in letters to the CEOs. The committee, which oversees U.S. scientific agencies, believes such anti-fracking ads reflect “the Russian government’s concern about the impact of fracking ... on the global energy market and potential challenges to profitability” of Russian energy companies, the letter said. The letter says Russia’s meddling in the U.S. energy market has been “well documented in the public domain” and seeks information similar to what Facebook is providing to the U.S. Senate about anti-immigration propaganda and advertising.
Harvey Proved How Fragile the Oil and Gas Industry Really Is – - During this year’s record-breaking hurricane season, oil rigs and refineries were just as exposed as any structure on the precarious Gulf Coast, and their owners were limited to the same options as everyone else: evacuate, prepare, and hope the storm was merciful. The devastation Harvey and other storms left behind illuminates just how defenseless oil and gas infrastructure is in the face of hurricanes that are growing in magnitude and frequency and challenging the permanence of the oil and gas industry’s presence in the Gulf.Harvey shut down 22 percent of the nation’s refining capacity, vitally disrupted the oil and gas transportation networks that deliver energy to much of the US, and caused damage to facilities that leaked more than a million pounds of dangerous air pollutants into communities around Texas. The road back to full operational capacity will take weeks, if not months.It’s no secret that oil and gas infrastructure along the Gulf Coast is increasingly at risk and that climate change could render it useless. The US Government Accountability Office, the Department of Energy, the Department of Natural Resources, countless environmental groups, and oil and gas industry representatives have all openly warned of the coming catastrophe.Extreme flooding, made worse by sea level rise and warming temperatures, threatens the functionality of refineries and processing plants. Hurricanes with 100 mile-per-hour winds hurtle into well platforms, rigs, and ports with increasing regularity and severity. In Louisiana, the disappearance of wetlands and the rapid pace of coastal erosion expose pipelines to corrosive salt water and ocean currents that they were never intended to withstand. Hundreds of billions of dollars of infrastructure investment could be wiped out. As weather events become more erratic and disruptive, the question becomes whether the Gulf’s oil and gas infrastructure can remain functional in the long term. Will oil and gas companies choose to keep repairing and reinforcing their facilities in the Gulf, or will they move on? If they cut and run, what will happen to the communities they leave behind?
Exxon aims to curb methane emissions from shale division - (Reuters) - Exxon Mobil Corp said on Monday it would launch a program to curb its methane emissions from its U.S. shale facilities by replacing aging equipment and updating dated technology, part of a plan by the company to reduce its environmental footprint. The program comes as Exxon, the world’s largest publicly traded oil producer, fights accusations by environmentalists and others that it misled investors and the public for years about the risks of climate change from fossil fuels. Exxon declined to outline the cost of the three-year program or the savings it projects by keeping methane from venting. Methane is a component of natural gas and can be sold. “We do believe this will have a meaningful impact on our methane-emissions reductions,” said Sara Ortwein, president of XTO Energy, Exxon’s shale-focused subsidiary. “We remain committed to minimizing our environmental impact from our operations.” As part of the three-year program, Exxon will replace outdated natural gas-powered pneumatic pumps, which chronically leak methane into the atmosphere, with compressed air-powered pumps. Such pumps can regulate pressure, temperature and other variables in oilfield equipment. The company will also boost employee training on methane emissions reduction and begin to study how satellites, drones and other equipment can better be used to detect leaks. Exxon said it has worked with the National Oceanic and Atmospheric Administration on using drones for methane detection flights. The program has received praise from some environmental groups, who said Exxon is taking a step to curbing greenhouse gas emissions. “It sounds like a very robust program,” said Matt Watson of the Environmental Defense Fund. “We’re eager to get more details.”
OXY To Complete Corpus Christi VLCC Loading Facility By End Of 2018 - Occidental Petroleum is aiming to complete by late 2018 a project to install multiple loading arms at its crude storage facility at Corpus Christi, Texas, allowing it to load VLCCs on a regular basis, Vice President for Midstream Terry Morrison said Friday. "With a current draft of 45 feet at the Corpus Christi Ship Channel, that project will allow us to load a VLCC with 1.2 million barrels to 1.4 million barrels at our Ingleside Energy Center facility," Morrison said on the sidelines of the Energy Exchange Conference in Midland. At a greater water depth of some 66 feet and more, Oxy will be able to fully load a VLCC with a capacity of 2 million barrels, he said.In late May, a VLCC was brought to Oxy's Ingleside crude terminal so that the company could assess any modifications that may be needed so that it can regularly load VLCCs at the Occidental Ingleside Energy Center in the future. The VLCC Anne was chartered by Oxy and it successfully sailed out, said Sean Strawbridge, chief operating officer of the Port of Corpus Christi Authority. "The super tanker could not be fully loaded due to the lack of draft at the ship channel," Strawbridge said, adding that under an expansion program unveiled recently, the loading of VLCCs on a regular basis would result in transportation cost savings of at least 75 cents/b. In late August, the PCCA and the US Army Corps of Engineers said they will jointly invest $327 million to deepen the port through an extensive dredging program to 54 feet from the current 45 feet and also expand the width of the channel entrance at Ingleside and Corpus Christi to 530 feet from 500 feet and 400 feet, respectively.
Permian ‘Super Basin’ Holds Up to $3.3 Trillion in Untapped Oil - The Permian Basin of Texas and New Mexico holds 60 billion to 70 billion barrels of yet-to-be pumped crude oil, according to a study by IHS Markit Ltd.The Permian region’s so-called recoverable resources would be enough to supply every refinery in the U.S. for 12 years and have a market value of about $3.3 trillion at current prices for West Texas Intermediate oil, the domestic benchmark.IHS spent three years studying output data from more than 440,000 wells to calculate the amount of crude remaining within the sprawling, mile-thick rock formation that pumps more oil than any other U.S. field, the London-based researcher said in a statement on Monday. The estimate may grow as IHS geologists and data scientists extend their analytical techniques to deeper geological zones.“The Permian Basin is America’s super basin in terms of its oil and gas production history and for operators it presents a significant variety of stacked targets that are profitable at today’s oil prices,” Prithiraj Chungkham, director of unconventional resources for IHS, said in the statement.The assessment may boost Pioneer Natural Resources Co. Chairman Scott Sheffield’s claim that the Permian is a 75 billion-barrel field that may rival Saudi Arabia’s massive Ghawar field. In November, the U.S. Geological Survey estimated just one layer of the Permian known as the Wolfcamp holds 20 billion barrels of crude.
In Oklahoma, Fracking May Have Damaged Hundreds Of Traditional Vertical Wells -- A new oil and gas study suggests that hundreds of traditional vertical oil wells in Oklahoma have been damaged by more recently drilled horizontal wells, dug for the purpose of hydraulic fracturing or “fracking.”As StateImpact reports, the study by the Oklahoma Energy Producers Alliance reveals that horizontal drilling and fracking may have damaged 450 older vertical wells in Kingfisher County alone. Since Spindletop, oil has traditionally been extracted from the earth using vertical drilling methods. But the newer technique of “fracking” drastically increases production by using directional bits that drill long wells that run horizontal to the earth’s surface. This can wreak havoc on the production of any vertical wells operating in the region above the horizontal well. The commission has created a new method for operators to report damage from nearby horizontal wells.
WPX Energy : team hits new company record for lateral drilling -- Members of the San Juan Basin team for WPX Energy are celebrating a new company record and possible world record for drilling nearly 8,400 feet on a lateral drill in 24 hours on an oil well near Nageezi. The announcement was made on a post on WPX Energy's Facebook page on Aug. 22, stating the company believed the team set a world record by drilling 8,370 feet on a lateral section of the 745H oil well within 24 hours between Aug. 14 and 15. Lateral drilling allows companies to drill into areas not located directly beneath a well to tap into oil and natural gas resources. The company describes the accomplishment as new company record and a possible world record, according to WPX spokesman Kelly Swan. There is no official system for tracking such records. The accomplishment took place at a well pad located about three miles southeast of the Nageezi Post Office along U.S. Highway 550, according to Andrew Brunk. He is the drilling superintendent operating out of the Aztec office. "I'm very proud of our team we have," Brunk said. "It's an amazing feat. We're definitely excited to reach that goal." A team from Cyclone Drilling, Inc. based in Gillette, Wyoming, was contracted by WPX Energy to conduct the drilling. They worked alongside contractors from Scientific Drilling International and Field Geo Services Inc., both based in Grand Junction, Colorado.
BLM fracking rule, appeal both tossed by appellate court - A federal appellate court on Thursday dismissed an appeal of a ruling finding the Bureau of Land Management’s regulation regulating hydraulic fracturing to be illegal, while also vacating the ruling itself. The 10th Circuit Court of Appeals based its decision not on the merits of the case, but on the fact that the BLM is moving to revoke the regulation. But the action means that the fracking rule takes effect for the time being, said Michael Freeman, an attorney with Earthjustice who is a litigator in the case. The appeals court determined the the BLM’s move under the Trump administration to revoke the rule makes the appeal moot. “It is clearly evident that the disputed matter that forms the basis for our jurisdiction has … become a moving target,” the court ruled, finding that to proceed with considering the appeal would be a waste of judicial resources. It said its decision to also dismiss the Wyoming district court decision was guided in part by its general practice of vacating district court judgments when an appeal becomes moot, to prevent them “from spawning any legal consequences.” The lower court had ruled in 2016 that the BLM lacked the authority to regulate hydraulic fracturing. The new BLM rule requires disclosure of chemicals used in fracking, and also has new well construction and testing requirements, and requires the use of tanks rather than pits when storing fluids flowing back from wells. Freeman said the rule was scheduled to take effect in 2015, but it was put on hold by a preliminary injunction issued by the Wyoming judge. But the appeals court’s action means the injunction is no longer in place and the rule takes effect, he said. “In terms of how long that will be in effect, that’s uncertain,” he said.
BLM fracking rule reinstated by Court of Appeals —The Tenth Circuit Court of Appeals in Denver today vacated a lower court ruling that found the U.S. Bureau of Land Management had exceeded its authority when it enacted regulations of hydraulic fracturing on public lands.Several citizen groups had appealed the U.S. District Court ruling, which invalidated the fracking regulation in June 2015.“We’re very pleased with the court’s decision,” said Michael Freeman, staff attorney for Earthjustice who represented the citizen groups in the appeal. “The Tenth Circuit vacated the lower court’s ruling, which means the rule will now take effect. These are long-overdue protections for our public lands, water and public health.”Earthjustice represented the Sierra Club, Earthworks, Western Resource Advocates, The Wilderness Society, Conservation Colorado Education Fund, and the Southern Utah Wilderness Alliance in the case. Read the Tenth Circuit opinion
Appeals court sidesteps decision on US fracking regulations - (AP) — A federal appeals court on Thursday sidestepped a decision on whether oil and gas regulations enacted by the Obama administration are legal, noting that the current administration plans to rescind them. The 10th U.S. Circuit Court of Appeals in Denver said it would be a waste of time to rule on the regulations, which govern hydraulic fracturing on federal lands, because the Trump administration has already begun the process of revoking them. The ruling left the status of the regulations unclear, and neither the federal Bureau of Land Management nor its parent agency, the Interior Department, immediately responded to phone calls and emails seeking comment. Both environmental and industry groups claimed victory. Mike Freeman, an attorney who represents environmentalists in the case, said the regulations are in force until the Trump administration formally revokes them, and that could take months and get tied up in court. "Remember, it took the agency nearly five years to develop the rules the first time," he said. Kathleen Sgamma, president of the Western Energy Alliance, an industry advocate, noted that the regulations have never been in force because a lower court blocked them before they took effect. She said the Trump administration won't enforce regulations it plans to undo. "I don't see a scenario where the government and the industry waste resources on a rule that is going to fundamentally change in the very near future," she said. The Bureau of Land Management enacted the regulations in 2015, requiring drilling companies to disclose what chemicals they used within 30 days of any hydraulic fracturing on land owned or managed by the federal government. -
Both sides claim win with fracking ruling - (UPI) -- Both sides in the debate over hydraulic fracturing claimed victory with a federal appeals court in Denver ruling on federal powers. The 10th U.S. Circuit Court of Appeals overturned a lower court's ruling on overreach challenges against the U.S. Bureau of Land Management, which wanted regulatory oversight from the states. Environmental groups said the ruling meant regulations developed under former President Barack Obama would now take effect "The 10th Circuit vacated the lower court's ruling, which means the rule will now take effect," Michael Freeman, an attorney for Earthjustice, said in a statement. "These are long-overdue protections for our public lands, water and public health."While appeals were pending, however, U.S. President Donald Trump took office and began the process of rescinding the rules altogether, which in part led the circuit court to vacate the lower court's opinion. Because of the changing circumstances, the appeals court said the matter was "prudentially unripe."For that reason, industry supports took the ruling as a victory. Kathleen Sgamma, the president of the industry's Western Energy Alliance, said it's time to put the matter aside."Just as the court recognizes that it is not worthwhile to expend judicial resources on a rule that is being overturned, it is clear that implementing the rule in the short term is likewise a waste of industry and government resources," she said in a statement.The long list of petitioners in a case pitting federal authority over state law included shale-rich states like Colorado and North Dakota. Colorado accounts for about 3 percent of total U.S. crude oil production in large part from its Niobrara and Denver-Julesberg shale basins. North Dakota is the No. 2 oil producer in the country, behind Texas, because of its Bakken shale reserve.
Highlands Natural Resources kicks off fracking programme in Colorado -- Highlands Natural Resources told investors it has kicked off a fracking programme, covering two wells - named Wildhorse and Powell - at the East Denver project in Colorado.The company highlighted that the start of the programme represents a further acceleration in its campaign at the East Denver project, ahead of the previously anticipated timeline.It is implementing what’s described as an efficient completions process, called 'zipper fracking', whereby two wells are completed in a coordinated parallel process. HNR expects the programme will last for several weeks, and thereafter it plans to begin flow-back and production processes. Robert Price, HNR chief executive said in a statement that he believes the company is now on the cusp of achieving “first oil, first gas, and first revenue”. "The commencement of fracking operations marks the beginning of the final major phase of sub-surface operations on the Wildhorse and Powell wells.”“We look forward to executing this advanced zipper fracking programme in concert with our third-party capital partners, who have collaborated with Highlands to optimise the operations plan over the past several months.
Colorado Landfills Contain Radioactive Substances From Oil Sector - Landfills in Colorado have begun to fill their space with low-level radioactive substances from oil and gas activities, state health officials have said, according to the local news site the Daily Camera. After a series of meetings with local officials, state authorities have concluded that unknown amounts of radioactive material have been stored at landfills throughout the state. Local authorities are currently trying to prohibit the practice altogether by strengthening their oversight mechanisms. "There is some of it that is just going to solid waste landfills…It is probably, mostly, staying in state," the state health agency’s director Gary Baughman said during the Wednesday meeting. So far, no “imminent” threats to public health have been detected, though landfill operators will continue to monitor water flowing out of the fills for radioactive qualities.Technologically advanced naturally occurring radioactive materials, or TENORM, have been a concern for health officials for a while now, especially in cases of improperly disposed materials from the fossil fuel industry. An accumulation of TENORM could cause cancer-causing exposure to the public and the environment. “It is in the industry's best interest to mitigate long-term risks. And it is in the public's best interest. This radiation lasts for a long time,” Jane Witheridge, a project manager for a special TENORM disposal plant in Pawnee, said. "If we don't treat it differently from municipal solid waste, we would not be serving either the industry or the environment as it should be in Colorado. This is being done in North Dakota. It is being done in Texas.” The 15 million-ton facility still will not be enough to dispose of all the TENORM produced by Colorado’s booming oil and gas sector. The Colorado Oil and Gas Association (COGA) denies that the TENORM has been destructive so far, though it continues to monitor the issue, an official statement read.
Colorado says 430 pipelines failed leak test after explosion (AP) - Colorado regulators say about 430 oil or gas pipelines near occupied buildings failed a leak-detection test that the state ordered after a fatal explosion blamed on a gas line. The results were posted on the Colorado Oil and Gas Conservation Commission website Wednesday. It wasn't immediately clear if a test failure means with certainty that the line is leaking or if might indicate some other problem. Officials didn't immediately respond to an email seeking clarification. Regulators said the status of another 13,000 pipelines remains unclear, and officials are working with energy companies to get more information. More than 107,000 pipelines either passed the test or were out of service and sealed. The state ordered tests on pipelines within 1,000 feet (300 meters) of occupied buildings after the fatal explosion in April.
Erase fracking regulations, industry tells Trump (UPI) -- With a court dismissing a challenge to federal rules on hydraulic fracturing, producers said it was time for President Trump to erase the law altogether. "The industry recognizes that every energy-producing area has different geologic, topographic, and hydrologic conditions, which is why the states are far more efficient and effective at regulating hydraulic fracturing than the federal government," Barry Russell, the president and CEO of the Independent Petroleum Association of America, said in a statement.The 10th U.S. Circuit Court of Appeals overturned a lower court's ruling on overreach challenges against the U.S. Bureau of Land Management, which wanted regulatory oversight from the states during President Barack Obama's tenure. While appeals were pending, however, U.S. President Donald Trump took office and began the process of rescinding the rules altogether, which in part led the circuit court to vacate the lower court's opinion. Because of the changing circumstances, the appeals court said the matter was "prudentially unripe." "The Obama-era rule is nothing more than duplicative federal overreach that would limit access to public lands and cost independent producers tens of thousands of dollars per well to implement without any measurable environmental or safety benefits," Russell added. Last week, however, environmental groups said the circuit court's ruling meant regulations developed under Obama would now take effect. Protections outlined in the measure, said Michael Freeman, an attorney for Earthjustice, "are long-overdue."
IPAA Independent Petroleum Association of America : Independent Oil, Gas Producers Urge Withdrawal of BLM Hydraulic Fracturing Rule to Increase American Energy Dominance and Jobs - The Independent Petroleum Association of America (IPAA) and Western Energy Alliance today submitted detailed comments to the Bureau of Land Management (BLM) on its proposed rule that would rescind the March 2015 nationwide rule governing the practice of hydraulic fracturing on federal and Indian lands. 'From the beginning, the Associations have been actively engaged in efforts to assist BLM's rulemaking efforts related to hydraulic fracturing,' wrote the groups in their comments. 'The Associations are grateful that BLM now realizes that the one-size-fits-all solution the agency issued in 2015 was not an appropriate mechanism to address unsubstantiated public concern about hydraulic fracturing.' The trade associations' technical comments underscore in detail why the March 2015 final rule is duplicative of state's efforts and was not justified by BLM. It is estimated that rescission of the 2015 regulation would result in over $220 million per year cost savings to the industry, according to the comments. 'Industry recognizes that every energy-producing area has different geologic, topographic, and hydrologic conditions, which is why the states are far more efficient and effective at regulating hydraulic fracturing than the federal government,' said Barry Russell, president and CEO of the Independent Petroleum Association of America. 'Our companies have already demonstrated that even without the implementation of the 2015 federal rule, we play a part in the solution to reducing carbon emissions. Under the strong environmental leadership of state regulators, clean-burning natural gas, unlocked by horizontal drilling and hydraulic fracturing, has helped the United States cut its carbon emissions to near 30-year lows. The Obama-era rule is nothing more than duplicative federal overreach that would limit access to public lands and cost independent producers tens of thousands of dollars per well to implement without any measurable environmental or safety benefits. Simply put, a federal hydraulic fracturing rule would hurt America's energy dominance, economic growth, and well-paying U.S. jobs.'
Enhanced Completions In The Bakken Could Cap Upside -- Filloon -- - Over at SeekingAlpha, summary:
- Bakken core wells show a lower level of oil production than other plays, but decreased well costs provide economic benefits
- lateral lengths in North Dakota mostly range between 8,000 and 12,000 feet
- current enhanced well results support production at $50/bbl (after differentials) but it is likely higher prices will be needed to support growth
- enhanced well results have improved economics significantly, and are the reason there is much dissension in current break evens
North Dakota's bill for oil pipeline protest costs now at $39 million -- North Dakota's bill for policing protests of the Dakota Access pipeline continues to rise. The North Dakota Emergency Commission is set to borrow an additional $5 million Monday to cover law enforcement costs. That will bring the total line of credit from the state-owned bank of North Dakota to $39 million. State Emergency Services spokeswoman Cecily Fong says 11 states provided law enforcement help to North Dakota, and some bills are only now arriving. Sponsor The $3.8 billion pipeline built by Texas-based Energy Transfer Partners began moving oil from North Dakota to a distribution point in Illinois in June, after months of protests. The Emergency Commission also is set to approve a $10 million federal grant to help pay state law enforcement bills related to the protests.
US exports of tar sands waste are fuelling Delhi’s air pollution crisis - Come winter and the Indian capital, New Delhi, is preparing to once again struggle beneath the noxious fumes that have become a perennial crisis. Eight Delhiites die each day from the city’s bad air. In response, the regional government has made efforts to tackle pollution from coal plants and tailpipe exhaust. But any benefits these policies might produce are threatened by skyrocketing imports of a fuel more polluting than coal or diesel.Petroleum coke – known as petcoke – is a high-carbon residue produced during the refinement of heavy oils. In its raw form, the high-carbon fuel can be used as a cheap substitute for coal.Delhi’s environmental authorities say petcoke, cut into coal power station feeds around the capital, is now one of the major sources of smog in the city.In many parts of the world, petcoke is restricted because of its toxicity. In India however, the fuel is unregulated and burned freely. In this regulatory void, demand has soared, rising 23% a year for the last five years. The country imported 20 times more petcoke in 2016 than it did in 2011. Delhi is in a race against time. The Supreme Court has ordered the use of petcoke to end but the government has failed to ban or regulate the fuel. Activists and public health officials are desperate to convince politicians to act before winter’s still, stagnant weather conditions begin to pool smog above the capital.When burned, petcoke emits 5-10% more climate change-causing CO2 than coal. But its true filthiness is revealed in the toxic smog it creates. The key air pollution-causing contaminant is sulphur, which creates oxide gases and particles, both of which are harmful to human health. In Delhi, a (relatively lax) regulation limits sulphur in coal to 4,000 parts per million. The National Capital Territory’s environmental agency (EPCA) says petcoke being burned around the capital contains sulphur up to 72,000ppm. Petcoke emissions also contain significant amounts of toxic heavy metals – particularly vanadium, nickel and iron.
The Energy 202: Oil industry afraid about what Trump might do on NAFTA - So far, President Trump has given the oil and natural gas industry quite a bit of what it wants. American Petroleum Institute said it wanted Trump to reconsider the stop on the Keystone XL and Dakota Access pipelines. Check. It said it wanted federal regulations to be reviewed “holistically.” Check. Although a bushelful, that may have been the low-hanging fruit. API has another ask of Trump that will be harder for the president to fulfill: preserving a key investment-dispute provision of the North American Free Trade Agreement, which from Trump’s perspective is a “job-killing” trade deal between Canada, Mexico and the United States. Here’s what API (along with many other business groups) is asking for: that Trump push to preserve a system of resolving international trade disputes called investor-state dispute settlement, or ISDS. Here’s how ISDS works: Say you’re a multinational corporation that decides to invest in a foreign nation. You put in your investment — it could be a gold mine in Indonesia or a luxury resort in Egypt — but suddenly, the foreign government issues a regulation that you think hampers your business. Under ISDS, you can sue that foreign government for the investment you think you lost. ISDS is meant to inspire confidence in corporations making investments in foreign countries. But the arbitration system draws ire from many corners. Most environmentalists don’t like how ISDS hamstrings governments that are attempting to curtail pollution. And some conservatives don’t like how ISDS undermines national sovereignty by having tribunals of corporate lawyers, not judges, hear cases.And there is where the strange bedfellows are made. ISDS is a feature of many free-trade agreements, including NAFTA. But the White House is putting together a proposal to allow the United States, Mexico and Canada to withdraw from the North American arbitration system at will, the Wall Street Journal reported in August.But big businesses, oil and gas included, don't want the boat rocked. With the third round of NAFTA renegotiations underway as of Saturday, U.S. industrial groups are lining up to preserve the arbitration system that, according to API’s Gerard, “provides what we need in the U.S. to secure that investment overseas.”Of particular concern to oil companies is Mexico. When NAFTA was first signed 23 years ago, Mexico had a nationalized energy sector. Since then, Mexico has begun selling off oil and gas fields. Foreign investors, including ExxonMobil, want ISDS protection if they are going to drill there.
Latest E&P Profits Shrink After Strong Q1, But Industry Remains Solidly Profitable --The 43 U.S. exploration and production companies (E&Ps) we’ve been tracking racked up $160 billion in losses in 2015-16, but they turned things around in the first quarter of 2017, posting profits of $9.1 billion, or $9.12 per barrel of oil equivalent (boe), during that three-month period. At first glance, the second quarter might seem like a return to tough times; profits by the group fell more than 80%, to only $1.7 billion, or $1.71/boe. However, when $6.3 billion in impairments by ConocoPhillips — most of them tied to $16 billion asset sales and a write-down of the Australia Pacific LNG project — are excluded, second-quarter profits by our universe of Oil-Weighted, Diversified and Gas-Weighted E&Ps totaled $8.0 billion, or $8.02/boe, a decline of only 11.6% from the first three months of 2017. Today, we begin a review of E&P performance and profitability with a big-picture look at key elements of their income statements. Monitoring the financial results of a large and diverse group of E&Ps over the long term is a good way to assess the health of the energy industry as a whole, particularly when you examine the details — the revenues, the costs and the impairments — that contribute to the bottom line. In Piranha!, our market study of 43 top U.S.-based E&Ps, we examined the strategies that E&Ps are adopting to thrive in a world of lower hydrocarbon prices. Of that universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. In four blogs over the past month (beginning with Rock Steady), we reviewed in detail the changes in forecasted capital spending and production reported by our universe in their mid-year results announcements. Today, we begin our analysis of the profitability data compared with their reported first quarter 2017 results.
US drillers won’t generate ‘meaningful’ returns unless oil stays above $50 a barrel -- Oil prices below $50 are simply not going to cut it in the U.S. shale oil patch, Moody's analysts say in a new research note. Exploration and production companies have managed to drive down their costs since oil prices crashed in late 2014. But Moody’s believes it will be difficult for drillers to cut much deeper, and any reductions will be offset by a rebound in the prices that oilfield services companies charge. For that reason, drillers won’t be able to make significant returns on the capital they plow into new production unless benchmark U.S. West Texas Intermediate crude oil and natural gas prices cooperate, Moody’s said. “Despite substantially improved cost structures, E&P companies will be able to generate meaningful capital efficiency only if the WTI oil price is above $50 per bbl and the Henry Hub natural gas price is at least $3.00 per” million British thermal units, Moody’s senior analyst Sreedhar Kona concludes in the report.
U.S. fuel exports recover after Harvey, offering buyers respite (Reuters) - Fuel exports from the U.S. Gulf Coast are rising rapidly as refineries recover from weeks of disruptions due to Hurricane Harvey, offering respite to buyers in Latin America and Europe. The gradual resumption of operations in the region that has become a major oil export hub has prompted a drop in benchmark gasoline and diesel refining margins on both sides of the Atlantic. Margins measure the profit from converting crude into fuels. Mexico’s state-run oil company Pemex bought gasoline cargoes from the U.S. Gulf Coast this week, according to shipping data, after sourcing dozens of cargoes from Europe, the Middle East and Asia through the month. Mexico, which relies on imports for half of its gasoline consumption, typically buys two cargoes of the road fuel per day, mostly from the U.S. Gulf Coast. U.S. outages came at a particularly difficult moment for Mexico as its largest refinery, the 330,000 barrels per day (bpd) Salina Cruz plant, was halted after an earthquake this month. It 190,000 bpd Ciudad Madero refinery was also undergoing maintenance. “The fuel supply is very complicated for Mexico right now. Two refineries are completely halted and several Texas ports are working with restrictions, so Pemex is looking for cargoes everywhere,” a trader exporting U.S. diesel to Mexico said. Similarly, diesel and gasoline exports from the Gulf Coast to Brazil were slowly recovering. About 10 tankers with cargoes of diesel have also been booked to sail to Europe this week, according to shipping data. That followed around three weeks of almost no activity on the transatlantic route which is a vital source of supply for Europe.
APPEC analysis: Asia seen as hot destination for US crudes --US crude producers will find a wide range of customers in the Far East as their ample supply could help accommodate Asia's fast-growing refining capacity, top industry executives said during opening addresses at the S&P Global Platts Asia Pacific Petroleum Conference in Singapore Monday. The rising popularity of US sweet and sour crudes in Asia emerged as one the key discussion topics in the preliminary stages of APPEC, with players from both the sell and buy sides highlighting positive aspects of US-Asia trade deals. US crude exports to Asia have been rising rapidly, reaching various destinations, with the trend expected to continue as over 4 million b/d of new Asian refining capacity will come online from 2016-2020, Unipec Deputy General Manager of Research and Strategy, Wang Peiat, said. "American producers are gaining market share in Asia...the US, with abundant non-conventional resources, has a great potential to become the next major crude suppliers [for Asia]," said Wang. Wang said Asia has already become the top destination of US grades in the first half of 2017, with various crude streams like WTI, Bakken, Mars, Eagle Ford and Southern Green Canyon finding a home in the Far East this year. "US crude exports to Asia, not only Europe, are up...even Australia has bought US crude as well. [Asia,] that is where the demand is," Chevron Vice President of Crude Supply and Trading, Ryan Krogmeier, said. The sharp rise in US production, especially from the Permian basin, coupled with ample output of condensate, could help drive future North America-Asia trade flows, Krogmeier said, adding the lack of US gulf coast refineries willing to handle mostly lighter-end grades produced in the US could mean more of the barrels may need to be pushed to the Asian outlets.
As Brent oil markets rebalance, U.S. lags behind (Reuters) - New York and London oil futures are sending very different signals to market players about the state of global supply balances, with U.S. contracts weak even as physical crude markets rally and London prices indicate tightening supply. The divergence in the two benchmarks is one that is puzzling some oil traders. The signals are key to determining whether the Organization of Petroleum Exporting Countries’ goal to rebalance markets by reining in supply is working. Global marker Brent’s strength reflects tighter supplies due to those cuts. Yet the opposite appears true in the U.S. market, which continues to signal large oversupply. Hurricane Harvey exacerbated the excess of domestic supply by forcing the closure of nearly 25 percent of U.S. refining capacity and half a dozen U.S. Gulf Coast ports and pipelines late last month. The weakness in the U.S. market may not last, say a growing number of traders and analysts. U.S. cash grades are trading at multi-year highs, led by strong exports and refining margins. With the wider premium for Brent over U.S. West Texas Intermediate arbitrage, U.S. crude has become increasingly competitive in foreign markets. The Middle East’s Murban, a light sweet crude, recently widened its premium to $6 a barrel over WTI into Midland, Texas, according to Reuters Eikon data. A month ago, it traded at $1 a barrel over Midland. “When you look at the Atlantic basin, supplies are getting tighter, especially with more West African (crude) moving to Asia and floating storage disappearing,”
Mexico to offer 35 shallow-water blocks in March 2018 bid round: CNH -- Mexico's National Hydrocarbon Commission will auction 35 shallow-water blocks in its first invitation to bids of the country's third hydrocarbon auction round, or Round 3.1, the commission, or CNH, said Thursday. These blocks have a range of prospective resources ranging from light to heavy crudes, as well wet and dry gas blocks, the CNH said at a webcast session. The auction will be held March 27, 2018. The total area of the blocks is 26,300 sq km. They are in the Burgos, Tampico-Misantla-Veracruz and Cuencas del Sureste basins. A new feature of Round 3.1 is the inclusion of four "exploration-extraction clusters," CNH said. These blocks include discovered fields that were not awarded in Round 2.1. Article continues below... Request a complimentary issue of: Platts Mexico Energy Monthly Platts Mexico Energy Monthly Platts Mexico Energy Monthly Stay on top of policies, pipelines and prices in a way that only Platts can cover them. Each report covers natural gas and LNG, crude oil and NGLs, and electric power and includes: News and market commentary Price reports Access to the Platts Mexico Facilities Databank Supply and demand analysis Short- and mid-term natural gas and LNG imports forecasts Request a complimentary issue. LEARN MORE These blocks will give access to areas with exploration potential as well discovered fields ready for development, CNH has said previously. CNH will auction 14 fields with a total area of 8,400 sq km in the Burgos region in the state of Tamaulipas' offshore. This is the first time Mexico would offer blocks in this region. These have an average area of 602 sq km, water depths up to 590 meters and prospective resources of 56% wet gas and 44% light oil. Expected resources for four blocks is wet gas and for 10 blocks is light oil.
Exxon Mobil bets on Brazil, buys 10 oil blocks in auction | Reuters: (Reuters) - Exxon Mobil Corp vastly expanded its presence in Brazil on Wednesday, winning 10 blocks in the country’s 14th round of bidding for oil exploration and production rights, helping the cash-strapped nation fetch a record 3.8 billion reais ($1.19 billion). Exxon Mobil took six blocks in consortia with state-controlled oil giant Petroleo Brasileiro in the promising offshore Campos basin, after bidding 2.24 billion reais for one block. That was Brazil’s highest-ever such bid. The U.S. company prior to the auction was among the few oil majors without a presence in the exploration of the recently discovered large offshore fields in Brazil. Exxon Mobil also bought two blocks that it will operate on its own in the Campos basin, which abuts Brazil’s pre-salt area where hydrocarbons are trapped under a layer of salt below the ocean floor. It won a further two blocks in the Sergipe-Alagoas basin that it will develop with Queiroz Galvão Exploração e Produção (QGEP) and Murphy Oil Corp. The results came as a surprise after Brazil’s oil regulator ANP managed to sell just one of 76 blocks on offer in the highly productive Santos basin by late morning. Analysts had said lackluster oil price performance and dwindling cash for investments might have dented appetite. But Exxon Mobil, which also made a record bid of 1.2 billion reais with Petrobras for a Campos block on Wednesday, helped Brazil achieve the record take. Exxon said in a statement that it was looking forward to working with the Brazilian government and other partners in operating the blocks they won.Asked after the auction why he spent so much on the bids, Petrobras CEO Pedro Parente said he had information suggesting the blocks were part of the pre-salt area, one of the world’s largest oil discoveries in recent decades.
Gas pipeline through central Europe to go ahead as planned - An EU-backed natural gas pipeline to connect Bulgaria, Romania, Hungary and Austria and ease reliance on Russian gas will proceed as planned, officials said on Thursday. The pipeline, BRUA, will be able to carry 1.75 billion cubic metres of gas from Bulgaria and Romania to Austria by 2019 and 4.4 billion once the second stage is completed in 2022. The project hit a setback in July when Hungary said it was not commercially viable to expand the pipeline into Austria, but European Commission officials and energy ministers from southeastern Europe agreed at a meeting on Thursday to get the project back on track. "It was agreed in a memorandum signed today that there will be reverse flow interconnections in all four states, including Hungary and Austria," Romanian Energy Minister Toma Petcu told reporters after the meeting in Bucharest. Petcu said Romania aimed to start work on its portion of the pipeline in the spring of 2018 and finish it by 2020 at the latest. Romania will receive around 180 million euros from the European Commission to help finance the first stage of its portion of the pipeline.
Gas export curbs loom as Australia's east faces gas shortfall (Reuters) - Royal Dutch Shell, ConocoPhillips and Santos face curbs on exporting gas from Australia’s east coast in 2018 if they fail to plug a projected local supply shortfall, Prime Minister Malcolm Turnbull warned on Monday. Eastern Australia faces a gas shortfall of up to 17 percent of market demand in 2018, the nation’s energy market operator and competition watchdog projected in reports submitted to the government on Monday that will be the basis for a decision by Nov. 1 on whether to limit exports. The shortfall of around 110 petajoules (PJ) seen in 2018 is far worse than the market operator flagged in March. “We are determined to ensure and we will ensure that that shortfall, which we’ve been advised of today - three times bigger than we thought it would be six months ago - is not going to occur,” Turnbull told reporters. Turnbull said he would press the east coast LNG exporters - Shell at Queensland Curtis LNG, ConocoPhillips and Origin Energy at Australia Pacific LNG, and Santos at Gladstone LNG - for plans to plug the 110 PJ supply gap. Gas has become a hot political issue as soaring prices are hurting households and threatening jobs at manufacturers like food, building materials and chemical producers, and at the same time driving up electricity prices, as gas-fired power is needed to back up wind and solar energy. To deal with the crisis the government passed a law earlier this year that would allow it to limit exports from any of the three LNG plants on the east coast to beef up local supply. “Gas supply remains tight in eastern and south-eastern Australia in 2018 and 2019, and there remains a risk of a supply shortfall,” Australian Energy Market Operator Chief Executive Audrey Zibelman said in a statement.
Australia government, east coast LNG producers in deal - avert export controls -- Australia's east coast LNG operators appear to have avoided restrictions put on the volumes of LNG they are allowed to export next year following an agreement with the federal government on Wednesday. To satisfy the federal government's concerns that the eastern seaboard of Australia could face gas shortages in the coming years, the Queensland-based LNG exporters -- which include Gladstone LNG, Australia Pacific LNG and Queensland Curtis LNG -- have agreed to plug the supply gap. "They have given us a guarantee that they will offer to the domestic market the gas that was identified as the expected shortfall by [the Australian Energy Market Operator] in 2018," Prime Minister Malcolm Turnbull, told reporters Wednesday. The prospect of the federal government triggering export limits for next year as part of its Australian Domestic Gas Security Mechanism, implemented in June, looked to have gathered steam after release of a report Monday by the AEMO which projected a shortfall risk for 2018 of 54-107 petajoules and 48-102 PJs in 2019. Turnbull said the LNG exporters indicated they would provide a similar guarantee for 2019 as they did for next year, with further details to be discussed when they meet again next week. "They've stated that they will offer first -- as a first priority -- domestic customers any uncontracted gas in future as a priority," Turnbull said.
Interview: Pakistan to lock another 3 mil mt of LNG in term contracts by year-end - Pakistan is currently in negotiations to secure an additional three million mt of LNG in long-term contracts by the end of the year to supply its new LNG floating terminal due to arrive by December, according to M. Adnan Gilani, chief operating officer with Pakistan LNG Ltd. The negotiations are taking place with over half a dozen potential suppliers on a bilateral government-to-government basis, Gilani said at an interview with S&P Global Platts Thursday on the sidelines of the 9th CWC LNG Asia Pacific Summit, held in Singapore September 19-22. "We hope to have two to three government-to-government agreements signed by the end of this year," Gilani said. "In the interim, we will secure around four spot cargoes a month [the equivalent of 3 million mt/year] until our contracts start." The new supply agreements will increase Pakistan's total LNG contractual commitment to more than 11 million mt/year, as the country aims to resolve a decade-long energy crisis, driven by mounting gas consumption and faltering domestic production. The new contractual volumes will be delivered to Pakistan's second floating, storage and regasification unit -- with a capacity of 4.5 million mt/year -- due to arrive at Port Qasim by the end of the year.
Pakistan Among Fastest Growing LNG Markets in the World - Pakistan joined the list of LNG importers last year and promptly became one of the world's fastest growing LNG markets, according to Shell 2017 LNG report. The South Asian nation has suffered a crippling energy shortage as demand has risen sharply to over 6 billion cubic feet per day, far outstripping the domestic production of about 4 billion cubic feet per day. Recent LNG imports are beginning to make a dent in Pakistan's ongoing energy crisis and helping to boost economic growth. Current global oversupply and low LNG prices are helping customers get better terms on contracts. Pakistan, Egypt and Jordan together imported 13.9 million tons of LNG, more than the combined increase of 11.9 million tons by the most populous nations of China and India. The biggest increase in LNG exports in 2016 came from Australia, where exports increased by 15 MT to a total of 44.3 MT. It was also a significant year for the USA, after 2.9 MT of LNG was delivered from the Sabine Pass terminal in Louisiana. Qatar remained the world’s largest LNG exporting country, accounting for around 30% of global trade of 258 MT by exporting 77.2 MT, according to International Gas Union report 2017.
BP starts production from giant Khazzan gas field in Oman ahead of schedule - Natural gas production has started at Oman’s tight Khazzan gas field operated by BP, in partnership with the Oman Oil Company Exploration and Production. The first phase of the Khazzan development is made up of 200 wells feeding into a two-train central processing facility, while the production is expected to plateau at 1 billion cubic feet of gas per day (bcf/d), said a press release. The project was completed ahead of schedule and below budget. Once the second phase of the Khazzan gas field is up and running, production is expected rise to 1.5 bcf/d. Approximately, 300 wells are expected to be drilled over the estimated lifetime of the Khazzan field. The first two phases together will develop an estimated 10.5 trillion cubic feet of recoverable gas resources. “I am delighted to see BP delivering Phase One of the Khazzan project within time and budget. This will result in realising more gas reserves and more production of gas that our country needs to support our energy planning and requirements,” said Dr. Mohammed Al Rumhy, minister of Oil and Gas. “The start of production from Khazzan, BP’s sixth and largest major project start-up so far this year, is an important milestone in our strategic partnership with Oman. With further development already planned, this giant field has the potential to produce gas for Oman for decades to come,” added Bob Dudley, group chief executive officer of BP. BP expects to start-up seven major upstream projects in 2017, making it one of the most important years for commissioning new projects in BP’s history. These seven projects are expected to make a significant contribution to the 800,000 barrels of oil equivalent per day of production from new projects that BP expects to add by 2020. “Khazzan further demonstrates BP’s ability to consistently deliver large, complex projects on schedule and within budget while applying the industry-leading skills and technology we have developed globally,” Dudley noted. “In this case, the tight gas techniques we perfected in the U.S. have been brought to Oman and we are very pleased with the results.”
BP brings shale techniques to Oman to start gas production -- British energy company BP said it brought lessons learned from hydraulic fracturing in the United States to start production at a natural gas field in Oman. BP and the Omani Ministry of Oil and Gas announced the start of production from the Khazzan natural gas field, BP's sixth and largest start-up for the year. "Khazzan further demonstrates BP's ability to consistently deliver large, complex projects on schedule and within budget while applying the industry-leading skills and technology we've developed globally," BP CEO Bob Dudley said in a statement. "In this case, tight gas techniques we perfected in the United States have been brought to Oman and we are very pleased with the results." Hydraulic fracturing has been used for decades, though improved techniques like horizontal drilling have led to considerable production gains for oil and natural gas in the United States. The first phase of operations from the Khazzan development in Oman will plateau at 1 billion cubic feet of natural gas per day. That's about half the September rate for gas production from the Bakken shale field in the United States, the least productive shale basin for natural gas in the country. Liam Yates, a research analyst at consultant group Wood Mackenzie, said in a statement emailed to UPI the Khazzan development is significant for Oman because it offsets declining production from elsewhere in the country. "BP's Khazzan project will be hugely important for Oman's gas supply, with Phase 1 alone supplying 25 percent of Oman's gas by 2019," he said. A second phase of operations will add another 500,000 million cubic feet per day. Capital expenses, meanwhile, are estimated at $12 billion, about 25 percent lower than initially planned.
Fracking fires up BP’s largest project of the year -- BP has started production at the Khazzan project in Oman, the largest of the new projects it has scheduled for this year, as the oil major attempts to export its US fracking experience around the world. The $16bn gas project uses the same controversial drilling technique that has unleashed an energy revolution in the US. Fracking has been used to prepare around 200 wells that will tap gas three miles below the earth’s surface in extremely hard, dense rock. The project is expected to produces one billion cubic feet of gas a day. BP believes the daily volumes could rise to 1.5 billion cubic feet in the project’s second phase, which will include an additional 100 wells. BP has used horizontal well-drilling and hydraulic fracturing, known as fracking, for years in the US. But the Khazzan project will be its biggest unconventional gas project outside of the US, and the largest of seven new projects the company was planning for this year. BP boss Bob Dudley credited the results of the Khazzan project to the techniques the company has perfected in the states. “Khazzan further demonstrates BP’s ability to consistently deliver large, complex projects on schedule and within budget while applying the industry-leading skills and technology we’ve developed globally,” Mr Dudley said. “The start of production from Khazzan, BP’s sixth and largest major project start-up so far this year, is an important milestone in our strategic partnership with Oman," he added. "With further development already planned, this giant field has the potential to produce gas for Oman for decades to come." Liam Yates, a research analyst with Wood Mackenzie, said the Khazzan project will boost Oman's gas production by 25pc and allow incremental increases in the amount of liquified natural gas it is able to export by ship. BP's global experience helped bring the project in within schedule and budget, he said.
Uganda plans to join OPEC after first oil fields flow in 2020: minister -- Uganda will seek to join OPEC once the East African nation starts pumping crude out from Lake Albert oil fields along the western border with the Democratic Republic of Congo at the end of the decade, Uganda's energy and minerals minister Irene Muloni said Wednesday. Article -- Feature: Ghana's output ramps up on Sankofa oil field The Ugandan government took the decision to join OPEC after consultations with other existing member states, including Equatorial Guinea, Muloni told an oil and gas conference in Kampala. "When we start producing our oil, we will join OPEC, to reap the benefits from being a member of the organization, these include stability of prices," she said. "We remain on course to deliver first oil in 2020." Uganda is hoping to start pumping as much as 200,000 b/d of crude in 2020 from its Lake Albert field, which could peak at 230,000 b/d in 2023, according to government estimates. The project is dependent on the construction of an export pipeline via Tanzania, however, and most market watcher believe the 2020 start-up target is optimistic. OPEC did not immediately respond to requests for comment.
Recent Developments In Russian Crude And Refined Product Exports -- Russia is a major producer — and exporter — of crude oil and natural gas, and a major exporter of refined products to boot. So it’s important to keep an eye on what’s going on in Russia, because as U.S. producers and refiners know all too well, what happens halfway around the world often has ripple effects in places like the Permian, the Houston Ship Channel and the Sabine Pass LNG terminal. Today, we discuss Russian crude production and refinery output, its compliance with the OPEC/NOPEC agreement to rein in crude production, and the country’s efforts to steer more of its crude and refined-products exports to Russian ports. This blog is based on the latest FSU Monthly report from our friends at FGE – Facts Global Energy. Russia is the world’s largest producer of crude oil, its total liquids output averaging about 11.2 million barrels/day (MMb/d) — nearly 10.9 MMb/d of crude and 370 Mb/d of natural gas liquids (NGLs). That puts Russian crude production about 900 Mb/d higher than Saudi Arabia and 1.4 MMb/d more than the good old U.S. of A. Most important to U.S. producers, Russia is among the 11 non-OPEC (NOPEC) oil-producing countries that last December (2016) agreed to reduce their production by a total of 600 Mb/d from November 2016 levels starting in January 2017 for six months as part of a larger, OPEC-led effort to reduce world oil supply and prop up oil prices. As RBN covered in Is This The Real Life? Is This Just Fantasy?, half of that 600-Mb/d production cut (or 300 Mb/d) is supposed to come from Russia alone, and OPEC’s side of the OPEC/NOPEC bargain calls for OPEC members (except for Nigeria and Libya, who’ve been given a pass) to reduce their output by a total of 1.2 MMb/d, again starting in January 2017. The OPEC/NOPEC agreement was later extended — it is now scheduled to run through March 2018, and it may be extended beyond that. Bottom line: Russia is a big part of the production-cut equation.
OPEC Loses Its Crown - Bloomberg Gadfly -Shale billionaire Harold Hamm told Bloomberg TV on Friday that forecasts of U.S. oil production growth are way too optimistic and are distorting global crude prices. That news was greeted with big smiles -- if not wild cheering -- by oil ministers meeting in Vienna to discuss the effectiveness of their output deal. But it is too early for them to start celebrating just yet.That wasn't the only boost ministers got ahead of their latest gathering. Analysts at Goldman Sachs Group Inc. said in a Sept. 21 note that the level of Brent backwardation -- the premium for crude for delivery next month over that for delivery a year in the future -- "is consistent with OECD inventories in days of demand cover falling to 5 percent above their five-year average level." In other words, OPEC is very close to reaching its target for stockpiles, at least in the developed nations. Add to that the latest figures from U.K.-based Oil Movements that show the volume of crude oil in transit on tankers falling to the lowest in records going back to April 2015, along with the growing sense that physical crude markets are tightening. And there you have it. The group's cuts are doing the job intended, shale isn't responding, and OPEC and friends may finally be reaping the rewards from nine months of impressive compliance with the output deals they agreed late last year.How did U.S. government forecasters get it so wrong? They failed to recognize that U.S. shale producers were finally starting to focus on return on investment, rather than growth at any cost, Hamm said. When oil prices fell with the recovery in Nigerian and Libyan production during the second quarter, shale operators cut capital expenditure and output started to fall. The result is that, while official Department of Energy forecasts as recently as last month showed U.S. crude production reaching 9.82 million barrels a day by December 2017, the Domestic Energy Producers Alliance -- a group representing domestic onshore oil and natural gas exploration and production, chaired by Hamm -- sees it at 9.35 million.
Solar to power Middle East oil, natural gas exports - A long-standing concern of the energy industry has been growing Middle Eastern demand for its own oil and gas, supported by generous subsidies, which make fuel exceptionally cheap in the region. Higher oil and gas consumption regionally would lead to rapidly diminishing export capacities, resulting in shortages on international markets. A key indicator of this growing demand has been the emergence in recent years of a number of Middle Eastern countries as LNG importers, despite vast regional gas reserves. Those concerns are receding. Low oil and gas prices have hit the oil producers hard and subsidies have, to some extent, been reined in for budgetary reasons. Higher domestic prices act as a drag on demand growth, just as low prices prompted a near unrestricted expansion of consumption. However, a second factor is beginning to make itself felt – solar power. Solar power in the Middle East is cheap because of the long hours of sunshine the region enjoys. It is a region that most stands to benefit from the technology’s increasing efficiencies and its substantial downward cost trajectory. Solar PV set record low tender prices in the UAE last year, well below the cost of fossil fuel generated power. Solar’s attractions are becoming irresistible and the number of projects in the region is proliferating. In September, Algeria announced construction of a 10 MW solar PV farm to power an oil field. It’s a minor project in terms of capacity, but one that neatly encapsulates the growing relationship between oil, gas and renewables because the alternative option would undoubtedly have been an oil or gas-fired generation set. Much larger projects are underway. Iran in September unveiled an agreement with UK-based renewable developer Quercus for a 600 MW solar PV farm, while Saudi Arabia’s ACWA Power announced that it had been awarded the 700 MW Concentrated Solar Power (CSP) fourth phase of Dubai’s Mohammed Bin Rashid Al Maktoum Solar Park development at a levelized tariff of $7.30/kWh, which, according to the company, is the first time CSP has reached cost parity with natural gas or oil-fired generation.
Hedge fund positions in oil look stretched: Kemp (Reuters) - Hedge funds have become strongly bullish on the outlook for all parts of the petroleum complex, amid signs global crude stocks are declining and fuels will be short supply after hurricane-related refinery outages.But with so many fund managers already betting heavily on a further rise prices, the market has become lopsided and the risk of a sharp reversal has increased significantly (http://tmsnrt.rs/2jUBXpk).Hedge funds and other money managers raised their combined net long position in futures and options linked to Brent and WTI by 83 million barrels in the week to Sept. 19.Fund managers have amassed a net long position amounting to 695 million barrels, the highest since mid-August and before that late April, in a clear sign of returning confidence.The net long position in Brent rose by 34 million barrels to 465 million, the highest for six months, according to records published by regulators and exchanges.Meanwhile, the net long position in WTI increased by 49 million barrels to 230 million, the largest one-week rise since December 2016.Portfolio managers also increased their already large net long position in U.S. gasoline by a further 3 million barrels to 71 million, the highest since April 2014.The net long position in U.S. heating oil rose by a further 5 million barrels to 51 million, the highest since February 2013.And the net position in European gasoil was boosted by 0.2 million tonnes to a new record of 17.2 million tonnes.Fund positioning in gasoline, heating oil and gasoil now looks very stretched, with the ratio of long to short positions near multi-year highs in each case.The large concentration of hedge fund long positions in gasoline, heating oil and gasoil could presage a sharp correction at some point if fund managers try to realise some of their profits.From a fundamental perspective, stocks of gasoline and especially middle distillates look somewhat tight as winter approaches in North America and Europe.
US crude surges 3% to settle at $52.22, best closing price in five months -- Brent crude oil hit a new 2017 high on Monday, continuing a rally fueled by improving demand and expectations that producers will extend output cuts. U.S. West Texas Intermediate crude surged more $1.56, or 3.1 percent, to end Monday's session at $52.22 a barrel, the highest closing level since April. WTI hit a session peak of $52.28, about $3 below its 2017 intraday high. International benchmark Brent rose $2.01, or 3.5 percent, to $58.87 by 2:09 p.m. ET, having touched the highest level since July, 2015. Trader positioning shows the market believes there's more room for U.S. crude prices to run up.Hedge funds raised their bullish bets on U.S. crude futures to the highest level in four weeks, the U.S. Commodity Futures Trading Commission reported on Friday. Wagers that oil prices will fall declined for a third straight week, according to the data covering trades through Sept. 19.The positioning suggests that the prevailing bear case in the market is unraveling, said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions. Traders were convinced that U.S. drillers would flood the market with oil whenever prices rose above $50 a barrel. But American producers signaled a greater focus on fiscal discipline during second quarter earnings reports.
Brent crude oil hits highest level since July 2015 -- Brent crude oil rose above $59 a barrel on Monday to its highest in more than two years, lifted by fast-growing demand and a threat to Iraqi Kurdistan’s crude exports as the autonomous region holds a referendum on independence. BP’s top oil trader in Asia said the crude market had turned a corner after a three-year slump, with consumption boosted by lower prices and excess inventories finally declining thanks to Opec’s efforts to cut production. “We are at a juncture where we are going to see continued inventory draws.” Brent, the international benchmark, rose 3.8 per cent to settle at $59.02 a barrel, its highest closing price since July 2015. It has gained more than 30 per cent since June as global stockpiles have tightened, with demand in industrialised countries expanding alongside emerging markets for the first time in almost a decade. West Texas Intermediate, the US benchmark, climbed 3.1 per cent to $52.22 a barrel, the highest level since April.
Goldman Turns Bullish On European Oil Majors --Goldman Sachs has raised its earnings per share (EPS) estimates for the European oil majors’ third-quarter results, and believes that the stocks will start reversing their underwhelming year-to-date performance when companies report higher Q3 cash flows from a year earlier, thanks to higher oil prices and increased production.The weak dollar against the euro and the reduction of the oil price estimates since the beginning of this year had prompted oil analysts to reduce their earnings estimates on Europe’s Big Oil by 24 percent.“Both these negative drivers [the dollar and oil prices] are coming to an end, with stable FX since the beginning of September and 2018 oil price expectations in line with the forward curve for the first time in over 12 months,” according to a Goldman Sachs note dated Thursday, as reported by The Street.“Our EPS estimates are currently 4% above... consensus expectations for 2018, having been 12% below in February,” Goldman Sachs analysts wrote in the note.According to the investment bank, European oil majors are expected to report 22-percent yearly growth in cash flows for Q3, on the back of higher production and higher oil prices. This should boost the companies’ stocks that have been underperforming the broader market by 12 percent year to date. The Q3 figures by Europe’s largest oil companies are also expected to show increased refining margins, due to Hurricane Harvey shutting down U.S. refining capacity. BP is likely to benefit from those higher margins, because it operates large refineries in the U.S. that have not been affected by the storm.
Oil prices fall from 26-month high on profit-taking (Reuters) - Brent oil prices fell on Tuesday after investors took profit following a rally to 26-month highs spurred largely by threats from Turkey to cut crude exports from Iraq’s Kurdistan region. Brent crude futures LCOc1 fell 85 cents to $58.17 a barrel by 1405 GMT, having hit $59.49, the highest since July 2015 and more than 34 percent above their 2017 low. U.S. crude futures CLc1 slid 54 cents to $51.68 a barrel, after hitting a five-month high of $52.43. Turkish President Tayyip Erdogan repeated a threat to cut off the pipeline that carries 500,000-600,000 barrels per day (bpd) of crude from northern Iraq to the Turkish port of Ceyhan, intensifying pressure on the Kurdish autonomous region over its independence referendum. This potential loss, combined with 1.8 million bpd of output reductions by the Organization of the Petroleum Exporting Countries and non-OPEC producers, raised concerns of tighter supply. The Iraqi government said it will not hold talks with the Kurdistan Regional Government about the results of the referendum, which is expected to show a comfortable majority in favor of independence after the results are announced later this week. “Although there was plenty of price-bullish news making headlines yesterday, undoubtedly the biggest factor was the referendum in the Kurdistan region of Iraq,” analysts at Vienna-based JBC Energy said in a note. But the rally over the past two days also led to profit-taking. “There’s some nervousness at that flat price level given the level of speculative length in the market,”
WTI Pops Back Above $52 On Unexpected Crude Draw -- WTI is hovering around $52 as all eyes are watching API's data to gain inisght into how fast refiners are coming back on line. The previous week saw the trend of crude builds and product draws continue but last week crude actually drew down (against expectations of a build), gasoline built (against expectations of a draw and Cushing stocks rose most in 6 months. API:
- Crude -761k (+3.1mm exp) - first draw since August
- Cushing +1.064mm - biggest build in 6 months
- Gasoline +1.47mm (-750k exp) - biggest build in 7 weeks
- Distillates -4.527mm
As US refinery outages continue to fall so it appears we are starting to normalize post-Harvey with Crude drawing and gasoline building...notably, biggest Cushing build in 6 months WTI was hovering just below $52 ahead of API and kneejerked above $52 on the print, RBOB faded lower...
Is The EIA Forecast Suppressing The Oil Price? -- Harold Hamm has complained about the EIA's forecast of a 1 mb/d increase in U.S. oil production next year, which he believes is not only overly optimistic but also responsible for the large discount that WTI suffers compared to Brent. "It's distorting. That's not putting America first, that's putting America last. And that's the result of this exaggerated amount the EIA has out there."Given that Hamm has been very successful in the oil business, he deserves to be listened to, but I have some concerns about his theory. For one thing, the explanations for price movements are legion. The U.S. independent oil producers are particularly inclined towards what academics call "agenticity," or a tendency to seek blame for an action. I've been on a number of radio call-in shows where the question was "Who raised prices?" not "Why did prices go up?" This saw its strongest expression in the late 1980s, after the 1986 oil price collapse, when many in the oil fields believed the theory that President Reagan asked the Saudis to crash the price of oil to hurt the Soviet Union. Because obviously, the thinking went, the price shouldn't go down therefore some outside force must have engineered it. For now, there are other reasons to doubt Hamm's theory. First and foremost, as the figure below shows, by February the EIA was forecasting an increase in U.S. oil production for next year at roughly 1 mb/d, but the differential between Brent and WTI did not begin increasing until early August. Possibly traders ignored the forecast until later in the year, as the reliability would in theory be increasing, but more likely something else was responsible. Traders tend to react when new monthly market forecasts are issued by the IEA, EIA and OPEC, but after the initial response, primarily to updated data or revisions to the projections, they have minimal impact on prices.
Global trade upturn aids oil market rebalancing: Kemp (Reuters) - Global trade is growing at the fastest rate for six years - which is both a symptom and a cause of the recovery in commodity markets. World trade volumes were up almost 5 percent year-on-year from May to July, according to estimates compiled by government economic planners in the Netherlands.Growth was four times faster than at the same point in 2016 (http://tmsnrt.rs/2y89NxC).Global trade and commodity markets are linked in a circular causal relationship, which is one of the most important in the macroeconomy and a key source of fluctuations in the business cycle.Commodities, from grains to minerals, metals and oil, are the largest item in global trade by tonnage, so the state of commodity markets has a major impact on world trade flows.But trade volume is in turn a major driver of demand for fuels used in the engines on ships, trucks and railroads.Most freight is moved by high-horsepower engines using residual fuel oil (ocean shipping) or distillate fuel oil (roads, railways, coastal and inland shipping).The broad-based boom in commodity markets between 2010 and 2014 spurred an enormous increase in demand for freight-linked fuels.Global trade volumes increased by an average of 3.7 percent per year between 2010 and 2014, according to the Netherlands Bureau for Economic Policy Analysis (“World Trade Monitor”, CPB, July 2017).Global consumption of distillate fuel oil increased by almost 3 million barrels per day (bpd) over the same period (“Statistical Review of World Energy”, BP, 2017).Consumption of freight-linked fuels grew much faster than demand for gasoline, which rose by just 1.7 million bpd. Consumption of low-sulphur distillate fuel oil in the United States is rising at the fastest rate in two years and record exports point to strong demand in Latin America as well as other markets. Freight fuel demand is in turn encouraging refineries to process record crude volumes and whittling away excess crude stocks.
WTI/RBOB Sink After Surprise Gasoline Build, Crude Production Rise - Amid record crude exports, DOE reported a surprise draw for crude inventories and surprise build for gasoline inventories which along with another rise in crude production sent both WTI and RBOB lower in the initial market reaction. DOE:
- Crude -1.85mm (+3.1mm exp)
- Cushing +1.18mm
- Gasoline +1.1mm
- Distillates -814k
ICE Brent/WTI spread closes as US crude exports hit record high - The ICE Brent/WTI spread fell sharply Wednesday after weekly US Energy Information Administration data showed US crude exports averaged nearly 1.5 million b/d, an all-time high, pulling inventories lower. Around the market close, the front-month ICE Brent/WTI spread was $5.74/b, compared with $6.56/b on Tuesday and $6.80/b Monday, which was the widest it had been since August 2015. A drop in US crude exports following Hurricane Harvey helped widen the spread, but that now looks like being a thing of the past after the EIA data showed exports rose 563,000 b/d week on week to 1.491 million b/d. "With a spread upwards of $6-$7/b, that's what you get," said Ryan McKay, commodity strategist at TD Securities. Higher exports, combined with Gulf Coast refinery utilization rising 11.9 percentage points to 84.9%, caused US crude stocks to decline 1.846 million barrels to 470.986 million barrels. Analysts surveyed Monday by S&P Global Platts were looking for crude stocks to have risen 1.3 million barrels. NYMEX November crude rose 26 cents to settle at $52.14/b. ICE November Brent settled 54 cents lower at $57.90/b. With Gulf Coast refining capacity and port operations close to normal, "crude oil differentials will indeed begin to narrow over the next several weeks," Barclays said in a note. After legal restrictions on US crude exports were lifted in late 2015, the Brent/WTI spread stayed in a stable range of roughly $3/b or less given the potential for arbitrage.
Crude oil markets show how to be bullish, but not really (Reuters) - Sentiment is often a somewhat flighty and nebulous concept, but it appears that crude oil markets are turning increasingly bullish about the prospect for higher prices. Certainly the mood at this week’s major industry conference in Singapore was a marked change from recent years, with several upbeat presentations, panel discussions and off-the-record chats giving the view that prices were more likely to rise than fall. The most bullish commentary at the Asia Pacific Petroleum Conference (APPEC) was from trading house Trafigura, whose co-head of group market risk, Ben Luckock, said the era of prices being lower for longer was coming to an end, and the market would be in a supply deficit of between 2 and 4 million barrels per day (bpd) by the end of 2019. Luckock was joined by several other market players at the S&P Global Platts event in being optimistic that a new cycle of rising prices was starting. But scratch beneath the bullish views and a different picture emerged. A snap electronic poll of the conference participants showed a majority of just under 70 percent believed oil prices would remain locked in a $50-$60 range for 2018, with only 10 percent seeing a breakout to the upside. That is basically where crude prices are currently, with Brent at $57.64 a barrel and U.S. benchmark West Texas Intermediate at $51.99 in early Asian trade on Thursday. Effectively, if you were to take away an impression of the APPEC conference, Asia’s most significant oil event, it would be that market participants felt a lot better about the state of crude markets, without having much faith that prices would mount a sustainable rally. That’s largely because the risks to a sustained price rally seem larger than the drivers currently.
Oil Prices At A Ceiling, Or Just Getting Started? - Oil moved back into bull market territory this week, with Brent prices jumping to a more than two-year high at $58 per barrel. A confluence of events has given a jolt of optimism to oil prices, with market sentiment at its most positive arguably in years. The proximate spark from earlier this week was the Kurdish referendum, which raised the specter of a sizable supply outage when Turkey threatened to cut off Kurdish oil exports through its territory, and Baghdad joined in by calling for an international boycott of Kurdish oil sales. So far, there are no signs of an actual supply disruption, but oil traded up at the start of the week on the heightened geopolitical risk. But Brent prices have only moved up into the upper-$50s because the underlying fundamentals have improved markedly in the last few months. Oil demand is robust and continues to grow even as global supplies have stagnated. The OPEC deal seems to finally be bearing fruit in the form of a sharp decline in global crude oil inventories.The oil market could finally be breaking out of a depressed pricing environment after three years of sluggishness, according to Trafigura Group, an oil trading company. “We are nearing the end of ‘lower for longer’ oil,” Ben Luckock, co-head of Group Market Risk at Trafigura said at the S&P Global Platts APPEC conference in Singapore on Tuesday. Luckock cites the fact that the oil market could lose some 9 million barrels per day (mb/d) by 2019 just from well depletion. That could leave the world short on supply, pushing up prices significantly. Citigroup said that the supply crunch could come as soon as next year, arguing that so many OPEC members are already producing at their maximum, despite nominally restraining output. Libya, Nigeria, Venezuela, Iran and Iraq might not be able to add new supply next year, Citi says. And in fact, the risk of a slide in production is probably a more likely outcome for some members. “Fear in the market has been that OPEC production will rise dramatically,” Citi’s Ed Morse said in Singapore. But, “there could be a supply gap emerging, which could point to a tighter market.” Much of OPEC is failing to invest in its upstream capacity, Citi argues, leaving little room for higher output. However, not everyone agrees that there is further room to run for oil prices, and just because oil has rallied in the past few weeks, does not mean that greater price increases are a foregone conclusion.
OilPrice Intelligence Report: Are Oil Markets Too Bullish For OPEC? Brent flirted with $60 per barrel this week, but it might have to wait a little longer. After hitting the highest price in two years mid-week, Brent declined on Thursday after looking a bit overstretched. The price gains have been a little too much in such a short period of time, raising the risk of a downslide. "We've made a really impressive run here and I do think we're due for a pullback," Robert Yawger, director of energy futures at Mizuho in New York, told Reuters on Thursday. There is quite a bit of disagreement about what happens next with oil prices. One notable call comes from Jodie Gunzberg, head of commodity and real asset indices at S&P Dow Jones Indices, who told CNBC that $80 is possible. She argued that Hurricane Harvey ignited a bit of bullishness from the outages, which could propel oil prices up in the coming months. "When we look at the index data, we can see the price could move even as high as $80 to $85 (a barrel). Not immediately, but with their structural backwardation and shortages in the market, you just can't replenish it overnight,” she said. "It is now in a bull market, Brent is up about 30 percent since June and we also had WTI up 23 percent." A top official from oil trading house Trafigura told an industry conference in Singapore this week that the “lower for longer” era was coming to an end. He argued that the oil market could see a supply deficit on the order of 2 to 4 million barrels per day (mb/d) by the end of 2019. While those were probably the most bullish comments at the event, other energy leaders at the event also struck an optimistic tone. . Although the oil market has experienced a bullish streak as of late, OPEC is not quite as confident that the price gains will continue. According to Reuters, OPEC officials are worried that demand will taper off and supply excesses will push down prices in the first quarter of 2018. Some top OPEC officials don’t see Brent holding near the $60-per-barrel level. “I don’t think it’s sustainable,” an official from a Gulf oil producer told Reuters. Another said that the current rally “might be short-lived.” He went on to add, “I think a range of $50-$55 a barrel is good, you don’t want to see prices rising to $60 or higher because then it will bring in more shale.”
NYMEX November gas dips 4.4 cents on 'lackluster' market after EIA data - NYMEX November natural gas futures settled at $3.017/MMBtu, down 4.4 cents, as a lackluster market put pressure on the contract despite a lower-than-expected storage build from the US Energy Information Administration. EIA figures showed a 58-Bcf build to gas storage stocks for the week that ended Friday to reach 3.466 Tcf. The build was below the consensus of an S&P Global Platts survey of analysts indicating a 66 Bcf injection. "Those numbers look like they are on the bullish end of things and the market initially popped in reaction," said Phil Flynn, senior market analyst for Price Futures Group, "but it's looking like October is not going to be the shoulder month we expected. "We're not seeing the demand and the market is not getting a boost from these numbers. The market is lackluster," he said. After the EIA report was released, the November contract initially ticked up about 1 cent to about $3.07/MMBtu before going into decline. On the whole, Flynn said the storage figures were not too promising. Storage stocks for the corresponding week a year ago totaled 3.593 Tcf, so 2017 is lagging 3.5% behind 2016. The five-year average for the same period stands at 3.425 Tcf, putting 2017 at 1.2% above that pace.
Baker Hughes: Oil-directed rigs, Utah lift US rig count by 5 - Baker Hughes’ overall US rig count increased this week by its largest margin in 2 months, driven by more oil-directed drilling and activity in Utah and the Gulf of Mexico.The tally of active rigs gained 5 units during the week ended Sept. 29 to 940, down 18 units since a peak of the drilling rebound on July 28. The count had fallen in 6 of the previous 8 weeks (OGJ Online, Sept. 29, 2017).Oil-directed rigs jumped 6 units to 750, down 18 since their recent high on Aug. 11. Gas-directed rigs edged down 1 unit to 189. One rig considered unclassified remains operating. Three rigs started work onshore, where those drilling horizontally gained 4 units to 794, down 16 since July 28. Rigs drilling directionally rose 5 units to 82, while rigs drilling vertically dropped 4 units to 64. Three rigs began drilling off Louisiana, bringing the overall US offshore tally to 22. Just 2 rigs are drilling in inland waters after 1 unit went offline this week.Utah’s rig count spiked 4 units this week to 12, leading the major oil- and gas-producing states in increases. Reflecting the movement offshore and in inland waters, Louisiana rose 2 units to 67. New Mexico and North Dakota—and its Williston—each edged up a unit to 69 and 50, respectively. Texas dropped 2 units to 451, down 15 units since Aug. 4. Edging down a unit to 385, the Permian posted a rare decline this week after jumping 6 units last week to its highest point since Feb. 6, 2015. Activity there remains elevated as firms continue to bet on the region despite still-volatile oil prices.. ExxonMobil currently is operating 19 rigs in the Permian. In the Midland basin, where the firm has added 200 wells since mid-2014, ExxonMobil has 14 rigs drilling horizontally. The firm also has 4 rigs drilling horizontally in the New Mexico Delaware basin, where it recently drilled its first 12,500-ft horizontal lateral.Oklahoma declined 3 units this week to 124, down 12 from its recent high on July 7. The Cana Woodford dropped 1 unit to 62, down 7 from Aug. 25. The Haynesville, DJ-Niobrara, and Granite Wash also each decreased a unit to respective totals of 44, 25, and 13. Canada’s rig count, meanwhile, fell 7 units to 213, still up 33 units since May 12. Oil-directed rigs declined 9 units to 113, while gas-directed rigs gained 1 units to 100.
US Oil Rig Count Rises Most In 3 Months -- With US crude production having rebounded back to near cycle highs in its lagged response to the oil rig count, this week's rebound in the oil rig count (+6 to 750) is notably the largest addition in almost 3 months. As Bloomberg details, explorers renewed their search for U.S. crude as oil entered a bull market and overseas demand for American supplies flourished. Working rigs targeting crude increased by six this week, bringing the total to 750, according to Baker Hughes data reported Friday. Drillers resumed adding rigs for the first time in more than a month, a period that included Hurricane Harvey’s sweep across the Eagle Ford Shale region and coastal shipping terminals. Meanwhile, exports of domestic crude jumped 61 percent last week to an all-time high. The rig count is seen as an indicator of near-term production growth. Production may have a little further to go... WTI has been volatile this week but remains higher on the week... having dropped below $52 yesterday
Oil Markets React Stoically To Rising Oil Rig Count -- The number of active oil and gas rigs in the United States rose this week by 5 rigs.The total oil and gas rig count in the United States now stands at 940 rigs, up 418 rigs from the year prior, with the number of oil rigs in the United States increasing by 6 this week and the number of natural gas rigs decreasing by 1. The oil rig count now stands 325 above the count one year ago.While there is typically a significant lag for correlation between oil prices and rig count movement, the recent rise in oil prices will no doubt encourage US shale drillers to turn on the taps at the more profitable pricing. It’s possible that the response to the prices may be quicker than normal, as the number of drilled-but-uncompleted wells (DUCs) have grown over the past couple of months, and stood at 7,048 as of the last count in August 2017. To compare, in December 2016, the number of DUCs stood at 5,379. A year ago August, the figure was 5,031. The increase in uncompleted wells has risen, year over year, more than 30%. WTI climbed $1.00 week on week, and almost $9 more than end-June prices. The spot price for WTI fell earlier on Friday as traders hung back before the data release, down 0.21% to $51.45 at 12:33pm EST—still almost $1 over last week’s price. Brent crude was trading down 0.68% on the day at $56.77— $.20 above last week. Oil rigs in the United States now number 750—325 rigs above this time last year. Although the number of oil rigs are still up significantly year on year, the increases slowed in the Q2 2017, and have reversed in Q3. The first quarter 2017 saw 137 oil rigs added in the United States, while the second quarter 2017 saw 97 rigs added. In stark contrast, the third quarter, that ended with today’s data, has seen the total number of rigs decrease by 6.Still, US crude oil production is again on the rise after a brief dip due to Harvey—now at 9.547 million barrels per day for the week ending September 22, 2017—a new high for 2017. At 10 minutes after the hour, WTI had rallied and was trading at $51.67. Brent crude traded at $56.86.
Mideast OPEC producers fret oil price rally may burn out (Reuters) - Middle East OPEC producers are concerned weak demand and excess supply in the first quarter of 2018 may undermine an oil price rally that has pushed Brent crude about 30 percent higher since June, OPEC and industry sources said. Supply cuts since Jan. 1 by the Organization of the Petroleum Exporting Countries, Russia and other producers helped lift prices, while Hurricane Harvey added to gains when it knocked out nearly a quarter of U.S. refining capacity. Benchmark Brent rose above $59 a barrel this week, its highest level in more than two years and nearing the $60 mark. Gulf oil sources have said OPEC’s largest producer Saudi Arabia would like to achieve that level this year. Brent is now trading around $58. “I don’t think it is sustainable,” said one senior Gulf oil industry source, citing possible excess supply from U.S. shale oil producers in the first few months of 2018 on the back of higher prices now. OPEC and others have cut production by about 1.8 million barrels per day (bpd), but U.S. shale producers have been filling the gap, with their output set to rise for a 10th month in a row in October. Climbing global demand for crude have also helped prop up prices, as have tensions OPEC member Iraq, where authorities in its semi-autonomous Kurdish region held an independence referendum despite opposition from Baghdad and Western powers. A second industry source from a main Middle East producer said the price rally “might be short lived.” “I think a range of $50-$55 a barrel is good, you don’t want to see prices rising to $60 or higher because then it will bring in more shale,” the source said.
Aramco listing reshapes Saudi Arabia's OPEC oil policy (Reuters) - Saudi Arabia’s plans to float state oil titan Aramco are prompting the country to think the unthinkable. Late last year, Saudi Arabia tried to get fellow oil producers around the world to agree to reduce production. Before an OPEC meeting in Vienna in November, Saudi officials were armed with an unprecedented bargaining chip: if there was no deal, the kingdom would quit the exporter group altogether. The strategy was approved at the highest level of the Saudi government, said sources familiar with the matter. It was not only aimed at ensuring the smooth workings of the world’s energy supply. It was also driven by a desire to push up oil prices to maximize the valuation of Saudi Aramco ahead of the listing, said the sources who declined to be named as the information is confidential. In the end, the world’s biggest oil exporter did not have to enact that option. OPEC members along with non-OPEC producers including Russia agreed a deal in December to cut output by about 1.8 million barrels per day. But the fact such a move was considered shows how Aramco’s initial public offering (IPO) - expected to be the biggest in history - is forcing the kingdom to rethink its OPEC policies.Riyadh’s stance represented a shift, OPEC sources said, from its decades-old role of advocating restraint and seeking to convince fellow members like Algeria, Venezuela and Iran that prices rising too fast benefited alternative energy providers. “Saudi Arabia is now the main price hawk,” said a high-level OPEC source. He added he was surprised how quickly the kingdom shifted from its policy of prioritizing market share, by pumping oil at full tilt, to supporting production cuts following its decision to list Aramco.
Moving Fast and Breaking Things, a Saudi Prince Tests His Public - The real weight of public opinion in Saudi Arabia lies among its young people, an Internet generation eager for social change. Or at least, so says one member of that cohort. And Mohammed Bin Salman, the 32-year-old who effectively runs the country in his father’s name, just placed a big bet on his millennial peers. By ending the world’s only ban on women driving cars, the crown prince has upset plenty of people in this Islamic kingdom, founded on a pact between clerics and the royal family. He may be calculating that an even larger number of Saudis are ready to go along for the ride. Will it work? It’s hard to gauge the mood of a country with little freedom of expression or opinion polling, though a 2014 survey found the public almost equally divided. Much depends on who wins the argument, because Prince Mohammed’s promise of a more “vibrant’’ society is just part of an all-embracing reform program. Further down the road lie economic changes that are likely to unsettle many Saudis accustomed to government largesse. Some measures have already met with resistance. Steffen Hertog, a professor at the London School of Economics and longtime Saudi-watcher, acknowledges that there’s guesswork involved. “My best guess is that there is a silent majority in favor” of letting women drive, he said. There’s also “a vocal minority that is very unhappy about the move.”
Iraqi government asks foreign countries to stop oil trade with Kurdistan (Reuters) - Iraq on Sunday urged foreign countries to stop importing crude directly from its autonomous Kurdistan region and to restrict oil trading to the central government. The call, published in statement from Prime Minister Haider al-Abadi’s office, came in retaliation for the Kurdistan Regional Government’s plan to hold a referendum on independence on Monday. The central government’s statement seems to be directed primarily at Turkey, the transit country for all the crude produced in Kurdistan. The crude is taken by pipeline to the Turkish Mediterranean coast for export. Baghdad “asks the neighboring countries and the countries of the world to deal exclusively with the federal government of Iraq in regards to entry posts and oil,” the statement said. The Iraqi government has always opposed independent sales of crude by the KRG, and tried on many occasions to block Kurdish oil shipments. Long-standing disputes over land and oil resources are among the main reasons cited by the KRG to ask for independence. Iraqi Kurdistan produces around 650,000 barrels per day of crude from its fields, including around 150,000 from the disputed areas of Kirkuk. The region’s production volumes represent 15 percent of total Iraqi output and around 0.7 percent of global oil production. The KRG aspires to raise production to over 1 million barrels per day by the end of this decade.
Iran Closes Airspace To Iraqi Kurdistan Ahead Of Historic Independence Vote - The diplomatic and economic noose is tightening around Iraqi Kurdistan one day ahead of its historic independence referendum. On Sunday, the Iranian government announced closure of its airspace to northern Iraq's Sulaimani and Erbil Airports, at the request of Iraqi authorities. The Baghdad government has repeatedly threatened military intervention in Iraq's autonomous Kurdish region should the vote proceed on Monday, which Baghdad warns could provoke invasion by neighboring states. The United States too has warned that the non-binding referendum will be “particularly provocative and destabilizing” - this as Turkey musters tanks along its border with Iraqi Kurdistan. On Sunday the Iranian Supreme Security Council announced through state media that, “At the request of the Iraqi central government, Iranian airspace has been closed on all flights that originate from Kurdistan Region.” The move comes after a month's worth of warnings that Iran could close its borders to Iraqi Kurdistan should the independence vote proceed. Iranian government officials had previously warned that, “The republic of Iran has opened its legitimate border gates on the premise of the consent of the federal government of the Iraqi state. If such an event [referendum] happens, these border gates from the perspective of the Islamic Republic of Iran would lose its legitimacy."
Turkey’s Erdogan threatens to cut off oil flow from Iraq’s Kurdish area over referendum (Reuters) - President Tayyip Erdogan warned on Monday that Turkey could cut off the pipeline that carries oil from northern Iraq to the outside world, intensifying pressure on the Kurdish autonomous region over its independence referendum. Erdogan spoke shortly after Prime Minister Binali Yildirim said Ankara could take punitive measures involving borders and air space against the Kurdistan Regional Government (KRG) over the referendum and would not recognize the outcome. Voting began on Monday despite strong opposition from Iraq’s central government and neighboring Turkey and Iran - both with significant Kurdish populations - as well as Western warnings the move could aggravate Middle East instability. Erdogan, grappling with a long-standing Kurdish insurgency in Turkey’s southeast, which borders on northern Iraq, said the “separatist” referendum was unacceptable and economic, trade and security counter-measures would be taken. He stopped short of saying Turkey had decided to close off the oil flow. Hundreds of thousands of barrels of oil a day come through the pipeline in Turkey from northern Iraq, but he made clear the option was on the table. “After this, let’s see through which channels the northern Iraqi regional government will send its oil, or where it will sell it,” he said in a speech. “We have the tap. The moment we close the tap, then it’s done.” Yildirim said Ankara would decide on punitive measures against the KRG after talks with Iraq’s central government. “Our energy, interior and customs ministries are working on (measures). We are evaluating steps regarding border gates and air space. We will take these steps quickly,” Yildirim told Turkish broadcasters.
Don’t underestimate Kurdistan’s resilience – Brookings - Iraq's Kurdistan region will hold a referendum on Kurdish independence this week, which has been met with varying degrees of resistance from both the region and the international community. The international resistance to Kurdish self-determination is not a novel one, and has in fact been a hallmark of the Kurdish national struggle ever since the Kurds were deprived of their own state by imperial powers, which established the nation-state system in the Middle East from the ruins of the Ottoman Empire. Prevailing state interests, international resistance to upsetting the balance of power in the region, and powerful, resource-rich armed forces at the disposal of the region’s (Western-aligned) autocrats made it implausible for the Kurds to redraw the map of the Middle East. That paved the way for a century’s worth of rebellions, countless atrocities, and genocide against the Kurds. Yet, the Kurdish national liberation project in Iraq survived. Its survival stems in large part from the persecution the Kurds have suffered, which has strengthened the unifying thread of Kurdish nationalism and the morally and intellectually resilient cause of Kurdish self-determination. Its survival is also due to geopolitics and a regional order that became beset with constant instability and conflict, opening up opportunities for external patronage and the development of personal and institutional ties with regional powers.The Kurds–who have been victims of dictatorship, human rights abuses, and systematic displacement, particularly under the Baath Party in Iraq, which killed scores of Kurds in the Halabja genocide and the wider al-Anfal operation–have championed their cause as one of the right to self-determination. This helped guarantee international recognition and legitimacy, and enabled a trajectory that has since moved them closer toward sovereignty.
Kurdistan’s Leaders Put Aside Differences, Vote Yes in Independence Referendum – Kurdistan Region’s officials and the political parties’ leaders cast their vote in the historic independence referendum, putting aside all political differences. The polling stations opened across the Kurdistan Region and the areas outside of the Kurdistan Regional Government (KRG) administration at 8:00 am (local time) on Monday. Despite political differences and some reservations over the date of holding the independence referendum among the political parties, the leaders unanimously participated in the referendum and voted yes. President of the Kurdistan Region Masoud Barzani cast his vote early Monday morning in Pirmam, near the capital of Erbil, in a bid to begin the process to separate from Iraq. Following the vote, Barzani in a post on Twitter said “Proud to cast my vote earlier this morning and partake in this historic day, the day of the Kurdistan Referendum.” Mala Bakhtiyar, Head of Executive Body of the Patriotic Union of Kurdistan, after casting his vote told reporters that holding the referendum is a legitimate right for the Kurds, stating that the country of Kurdistan is no threat to neighboring countries. Kosrat Rasool, the Vice President of the Kurdistan Region, who voted in one of the polling stations in Kirkuk, urged the Iraqi government to accept the results of the referendum if they believe in democracy. He commended the people of the Kurdistan Region for having a united stance and voicing their opinion about the independence. Omar Said Ali, the leader of the Gorran [Change] Movement, after casting his vote in Sulaimani revealed that he has voted yes, as the party in a statement on Sunday freed its supporters in how they deal with the referendum process. Ali Bapir, Amir of the Kurdistan Islamic Group, told reporters at a polling station that the people of the Kurdistan Region have the legitimate right like all other nations to live freely.
Iraq’s Kurds just voted to secede. Here’s why that could cause a new civil war -- With the eyes of the world focused on North Korea, the Kurds have just taken a large — and very dangerous — step in that direction by overwhelmingly approving a referendum on formally declaring independence from the Iraqi central government in Baghdad. Qubad Talabani, deputy prime minister of the Kurdistan Regional Government (KRG), called it a “historical day” for Kurds. The referendum isn’t binding, and there’s no sign that the US-backed government in Baghdad has any intention whatsoever of acting on it. In a televised speech on Sunday, just one day before the referendum vote, Iraqi Prime Minister Haider al-Abadi called the vote “unconstitutional” and declared that Baghdad “will not recognize its outcome.” Still, the mere act of holding the vote risks a new rupture between the Kurds and the Iraqi government — one with a real risk of actual fighting between the two sides. Kirkuk is the flashpoint largely because of its massive oil wealth. Nine billion barrels of oil reserves lie just outside the city — 6 percent of the world’s total and 40 percent of Iraq’s. Until recently, Baghdad produced and sold all of Kirkuk’s oil. But after ISIS sabotaged Baghdad’s pipeline and peshmerga forces streamed in, Baghdad lost control. Kurds now control three of the five oil fields. A deal reached in August 2016 ensured that both Kurdish and Iraqi governments get a share of the oil proceeds, but Baghdad wants its oil fields back. Yet Kurdistan needs oil revenue from Kirkuk to pay even a fraction of the costs of running a quasi-independent Kurdish state. Baghdad’s only way to regain control of Kirkuk is through negotiations or fighting.
Turkey raises oil threat after Iraqi Kurds’ referendum -- Turkey has threatened potentially crippling restrictions on oil trading with Iraqi Kurds after they backed independence from Baghdad in a referendum that has alarmed Ankara as it faces a separatist insurgency from its Kurdish minority. Most oil that flows through a pipeline from Iraq to Turkey comes from Kurdish sources, and stopping that would severely damage the Kurdish Regional Government (KRG), which relies on sales of crude for almost all its hard currency revenues. Iraq’s Kurds endorsed secession by nine to one in a vote on Monday that has angered Turkey, the central government in Baghdad, and other regional and world powers who fear the referendum could lead to renewed conflict in the region. So far the pipeline is operating normally despite Turkish threats to impose economic sanctions on the Kurdish autonomous region in Iraq. Turkish officials, however, have ramped up pressure on the Kurds. Turkish President Recep Tayyip Erdogan said after talks with Russian President Vladimir Putin the Kurdish government “made a big mistake by holding the referendum” and must be prevented from “bigger mistakes”.
Kurdistan referendum: Erdogan says Iraqi Kurds risk 'ethnic war' and threatens military response to vote -- Turkish President Recep Tayyip Erdogan has warned that the referendum on support for independence for Iraqi Kurdistan next door risks sparking an "ethnic war" in the region. In a speech at the presidential palace in Ankara on Tuesday, Mr Erdogan reiterated that options, including the military, are on the table to protect Turkey's security.He also repeated his Monday threat to cut off the pipeline which exports the autonomous Kurdish Regional Government (KRG) of Iraq's oil across the Turkish border. The KRG's 8.4 million strong population took to the polls on Monday to vote on whether to separate from Baghdad in a referendum not recognised by the central government. Turnout is believed to have been high, at around 72 per cent, and local television said 90 per cent of votes had been cast as 'yes' to independence. "Until the very last moment, we weren't expecting Barzani to make such a mistake as holding the referendum. Apparently we were wrong," Mr Erdogan said, referring to KRG President Masoud Barzani. Iraq's Kurds would starve, he added, if Turkey decided to close its long border with northern Iraq, warning that economic and military action were both options on the table for Ankara. The Kurdish people - who number roughly 30 million across several countries - were left stateless when the Ottoman Empire collapsed a century ago.
Iraq Deploys Troops To Kirkuk After Kurdistan "Yes" Vote; Turkey Threatens Blockade - Immediately on the heels of the Iraqi Kurdistan "yes" vote, the Iraqi parliament approved sending troops to the disputed Kirkuk region to prevent the Kurdistan Regional Government (KRG) from taking full control of the oil-rich area. Preliminary official results out Wednesday indicate a 92% vote in favor of Kurdish independence. A written statement produced by Baghdad said the decision aims to protect Iraqi citizens residing in the contested area between Baghdad and Erbil. But the decision is also no doubt motivated by protection of Kirkuk's multiple oil and gas fields, which Baghdad has now ordered the KRG to hand over, including all other oil facilities throughout northern Iraq.The KRG held its deeply controversial referendum on Kurdish independence Monday, which as expected resulted in a "yes" vote to declare the autonomous Iraqi region a new state. Kurdish leader Masoud Barzani announced the results of the referendum on live TV Tuesday, while attempting to ease tensions by urging "serious dialogue" with the Baghdad government instead of threats of sanctions and troop presence. Barzani further warned Iraqi Kurds of "facing hardships" while also pleading with world powers to “to respect the will of millions of people”.Currently, Israel is the only country which has voiced public support for Kurdish independence - something which has earned the condemnation of Turkey, Iran, and others in the region. Israel stands accused of using the Kurds of to Balkanize Iraq and the broader Arab region. Turkey for its part has come close to warning Israel that it could cut diplomatic ties should Israel continue in its public support of an independent Kurdistan. This week Turkish President Recep Tayyip Erdogan warned, “If they do not review, we cannot take a lot of steps that we were about to take with Israel” - to which Israeli lawmakers responded that such threats were "empty".
Kurdish Vote Won't Spark A Sustained Oil Price Rally - Turkey and Iraq have stepped up the pressure on Kurdistan after the semi-autonomous region of Iraq voted for independence. Turkey’s President Recep Tayyip Erdogan threatened to block Kurdish oil exports through Turkish territory, while Baghdad called for an international boycott of Kurdish oil sales. The Kurdish people appeared to have voted overwhelmingly for independence on Monday, pending final results. But the Kurdish Regional Government has said that the vote, which won’t be recognized internationally, will be a starting point for negotiations with Baghdad, and not the culmination of real independence.Turkey’s President called the referendum “illegal, null, and void,” and threatened to shut down exports through the pipeline that runs from Kurdistan to the Turkish Mediterranean port of Ceyhan. “Let’s see where they are going to drain off the petrol — we control the valve,” he said. “Once you turn off the valve, it will be over.”The referendum was also opposed by Iran, as well as the United States, which argued that it would destabilize the region.Iraqi Prime Minister Haider al-Abadi said on Sunday that all foreign countries should not purchase oil from Kurdistan, arguing that the sales are illegal if not conducted under the auspices of the Iraqi central government.Iraq “asks the neighboring countries and the countries of the world to deal exclusively with the federal government of Iraq in regards to entry posts and oil,” a statement from the Prime Minister’s office said.Kurdistan produces just over 600,000 bpd, or about 15 percent of Iraq’s total output. Most contentiously are the oil fields around disputed areas in Kirkuk, which the Kurds took control of in 2014 when ISIS burst onto the scene and rapidly seized swathes of territory from the Iraqi government.“The Iraqi government is not going to stand still and watch Kirkuk’s integration into Kurdistan, and the mobilization that we’re seeing is an Iraqi effort to reassert control over the contested territory,” Ayham Kamel, director of the Middle East and North Africa at Eurasia Group, said in a Bloomberg interview. Ethnic clashes “might become a pretext for much wider mobilization,” he added. Kurdistan is largely at the mercy of its much more powerful neighbors. The bulk of the region’s finances come from oil exports, much of which go through a pipeline across Turkey to the Mediterranean. If Turkey takes draconian action to shut down Kurdish oil exports, it would cripple the Kurdish economy.
Kurdistan region refuses to hand over border crossings to Iraqi government: Rudaw | Reuters: (Reuters) - The Kurdistan Regional Government in northern Iraq refused to relinquish control of its border crossings to the Iraqi government, Erbil-based TV Rudaw said on Friday, citing a KRG official. Relinquishing control over border crossings with Turkey, Iran and Syria was a demand made by Iraq, Iran and Turkey in retaliation for the Kurdish independence referendum held on Monday in northern Iraq. Backed by Ankara and Tehran, the Iraqi government has demanded that the Kurdish leadership cancel the result of the referendum or face sanctions, international isolation and possibly a military intervention. An embargo on direct international travel to Kurdistan is set to begin at 6:00 pm local time (1500 GMT), imposed by the Iraqi government to force the KRG to hand over the control of its airports to Baghdad. Iraqi Prime Minister Haider al-Abadi said in a statement on Friday the direct air travel ban is not “a punition against the citizens of the region, it is a constitutional measure decided by the government in the interest of the residents of Kurdistan.”
Last flight departs as Iraq imposes ban for Kurdish independence -(Reuters) - The last international flight left Erbil airport on Friday as the Baghdad government imposed an air ban on Iraqi Kurdistan in retaliation for an independence vote that has drawn widespread opposition from foreign powers. Iraq's Kurds overwhelmingly backed independence in Monday's referendum, defying neighboring countries, which fear the vote could lead to renewed conflict in the region. (GRAPHIC: Iraq's Kirkuk region - tmsnrt.rs/2gq0Gk4) Foreign airlines suspended flights to Erbil and Sulaimaniya in the autonomous region, obeying a notice from the government in Baghdad, which controls Iraqi air space. Erbil airport was busier than usual as passengers scrambled to catch the last flights out before the ban went into force at 6 p.m. (1500 GMT) on Friday. Domestic flights are still allowed, so travelers are expected to travel to Kurdistan mostly via Baghdad’s airport, which will come under strain from the extra traffic. Maintaining the travel curbs is likely to discourage visits by businessmen and Kurdish expatriates, and affect industries including hotels, financial services, transport and real estate. More than 400 Kurdish travel and tourism companies are directly affected by the flight ban and 7,000 jobs are at risk in the sector, Erbil-based Rudaw TV said. The Kurdistan Regional Government (KRG), meanwhile, refused to hand over control of its border crossings to the Iraqi government, as demanded by Iraq, Iran and Turkey in retaliation for the independence referendum.
Syria - U.S. CentCom Declares War On Russia --Yesterday three high ranking Russian officers were killed in an "ISIS attack" in eastern-Syrian. It is likely that they were killed by U.S. special forces or insurgents under U.S. special forces control. The incident will be understood as a declaration of war. The U.S. Central Command in the Middle East wants the oil fields in east-Syria under control of its proxy forces to set up and control a U.S. aligned Kurdish mini-state in the area. The Syrian government, allied with Russia, needs the revenues of the oil fields to rebuild the country. Last week the Russians issued sharply worded statements against U.S. coordination with al-Qaeda terrorists in Idleb province and warned of further escalation.Yesterday the Russian Ministry of Defense accused the U.S. military in east-Syria of direct collaboration with the Islamic State:US Army special units provide free passage for the Syrian Democratic Forces (SDF) through the battle formations of Islamic State (IS, formerly ISIS/ISIL) terrorists, the ministry said in a statement. “Facing no resistance of the ISIS militants, the SDF units are advancing along the left shore of the Euphrates towards Deir ez-Zor,” the statement reads.The newly released images “clearly show that US special ops are stationed at the outposts previously set up by ISIS militants.”“Despite that the US strongholds being located in the ISIS areas, no screening patrol has been organized at them,” the Russian Ministry of Defense said. This map marks the currently relevant conflict area - (U.S. proxies - yellow, SAA - red, ISIS - black):The accusations are plausible. Large parts of ISIS in Deir Ezzor consist of local tribal forces from eastern-Syria. U.S. special envoy Brett McGurk recently met tribal leaders who had earlier pledged allegiance to ISIS. Deals were made. As we wrote: The U.S. diplomat tasked with the job, Brett McGurk, recently met with local tribal dignitaries of the area. Pictures of the meeting were published. Several people pointed out that the very same dignitaries were earlier pictured swearing allegiance to the Islamic State.
Russia Releases Photos Showing US Special Ops At ISIS Positions In Syria -- The Russian Defense Ministry has released aerial images allegedly showing ISIS, the SDF, and US special forces working side-by-side on the battlefield against Syrian and Russian forces in Dier ez-Zor, Syria.The aerial photos of ISIS' territory north of #Deir_ez_Zor where #USA special operation troops are seen https://t.co/lH6u8H9bvZ pic.twitter.com/gjqlQubi9o— (@mod_russia) September 24, 2017As Adam Garrie reports, via The Duran,it has long been thought that the US proxy militia SDF is operating in collusion with ISIS in various parts of Syria. This has especially been the case in respect of Deir ez-Zor. In Deir ez-Zor, the Russian Defense Ministry has previously stated that the Syrian Arab Army and their allies are fired on most intensely from positions known to be held by the SDF.Furthermore, Russian Defense Ministry Spokesman Major General Igor Konashenkov recently stated,“SDF militants work to the same objectives as Daesh terrorists. Russian drones and intelligence have not recorded any confrontations between Daesh and the ‘third force’, SDF”.He added that Russia will not hesitate to target SDF forces that threaten the battle field progress and personal safety of Russia’s allies, namely the Syrian Arab Army.Other reports surfaced of US military helicopters airlifting known ISIS commanders to safety as the Syrian Arab Army made its advance on the former ISIS stronghold of Deir ez-Zor. All of this has happened as the US is moving its proxy Kurdish led SDF forces from Raqqa to Deir ez-Zor, in a move that appears to be an attempt to stop Syrian forces from liberating their own country’s legally recognised territory.Now, the Russian Defense Ministry has released a statement followed by 12 photos showing how SDF forces work alongside US special forces in ISIS controlled areas without facing any resistance from ISIS. Furthermore, none of the US or Kurdish led forces even take defensive positions which indicate that they are cooperating with ISIS rather than engaging in a perverse truce. In other words, the SDF, US special forces and ISIS move among each other in the same manner as allies do. The following is the statement from the Russian Defense Ministry on the matter:
Time for China to talk Korean war plans with US? - Anxiety across the globe is growing by the day as Pyongyang and Washington trade threats of military action. Yet there is insufficent discussion of specifically how the powers concerned would react should the unthinkable happen.With no agreed upon roadmap for what would transpire in the event of all-out war, leaders in Beijing, Washington and Seoul are placing all their hopes on maintaining a delicate status quo. But the dysfunctional relationship between all parties involved is not sustainable. It is also entirely dependent on avoiding what appears to be the increasing likelihood of an unfortunate misunderstanding. Since the Korean Armistice Agreement in 1953 there has existed a vague understanding that China would send troops across the Korean border should a full-blown conflict resume. Last April, Chinese state-run Global Times published an editorial suggesting Beijing should show restraint in the event that the US conduct a surgical strike on the North. If South Korean or US troops were to cross the 38th parallel, however, China would have no choice but to follow through with its long-standing commitment to send ground troops in to maintain the integrity of the border.In August, the same state media outlet further argued that China should stay neutral if North Korea instigated conflict with a missile attack, raising further questions about just how such a series of events would shake out. If war broke out due to a mistake or miscalculation, assigning blame for who started it would not be black and white. It cannot be ignored that the nature of China’s commitment to support North Korea has changed. Since Kim Jong-un has taken power, Beijing’s pivot towards closer relations with South Korea has deepened. Xi Jinping has had numerous high-profile meetings with South Korean leaders since taking office, but none with Kim Jong-un. A surprise meeting with North Korean envoy Ri Su-yong in 2016 was believed to be the first meeting between Xi Jinping and a senior North Korean official in three years, despite the two countries’ symbolic relationship as committed allies.
What if worst comes to worst with North Korea? China ‘must be ready’ for war on the peninsula | South China Morning Post: Beijing needs to come up with backup plans – either on its own or with Washington and Seoul – in case the crisis on the Korean peninsula escalates into conflict, a leading Chinese analyst has warned. But other observers said it was still too early to discuss a post-war Pyongyang with other countries, insisting there is no sign of the North Korean regime falling. In an article published in Australia-based online magazine East Asia Forum earlier this month, Peking University international relations professor Jia Qingguo called on China to work with the United States and South Korea on contingency plans. Analysts said it was rare for such a subject to be raised so publicly by a Chinese academic. In his article, Jia said four major areas needed to be addressed: North Korea’s nuclear arsenal, an influx of refugees, restoration of social order, and post-crisis political arrangements on the peninsula. “So far Beijing has resisted the idea for fear of upsetting and alienating Pyongyang. But, given recent developments, Beijing may have no better choice than to start talking with Washington and Seoul,” Jia wrote. “When war becomes a real possibility, China must be prepared.” He said that if the regime of North Korean leader Kim Jong-un fell, most likely as a result of a US military strike, either China or the United States should be ready to manage North Korea’s nuclear facilities to prevent the spread of the weapons. A safety zone should be set up in northeast China to shelter North Korean refugees, and Beijing should talk to Washington about whether to accept a unified Korea.
Beijing Orders All North Korean Businesses To Close - In the latest sign that China is moving to dramatically limit its exposure to its restive neighbor and long-time economic dependent, Chinese authorities on Thursday ordered all North Korean firms to stop doing business in the world's second-largest economy, fulfilling Beijing's obligations according to the latest round of UN Security Council sanctions, which were passed two weeks ago.The order comes just days after President Donald Trump revealed that the People’s Bank of China had asked the country’s banks to sever their business ties with North Korea. Specifically, they were ordered to stop providing financial services to North Korean customers and to wind down existing loans, severing one of North Korea’s most reliable connections to the global financial system. It was reported that the banks were warned that continuing to transact with North Korean business could result in embarrassment and economic losses, according to Russia Today.
'US offended by Moon's offer to North Korea for military talks' - Moon Chung-in, President Moon Jae-in’s special adviser for unification and national security affairs, said Tuesday that the U.S. had complained about Moon’s proposal for military talks with North Korea in July. “The U.S. was deeply disgruntled by Seoul’s offer for military talks,” he said during a ceremony marking the 10th anniversary of the second inter-Korean summit on Oct. 4, 2007. “U.S. Secretary of State Rex Tillerson lodged a complaint to Foreign Minister Kang Kyung-wha in harsh tones.” This is the latest indication that there may be a gap between the Moon and Donald Trump administrations on how to handle North Korea. At the ceremony later, President Moon renewed his call for inter-Korean military talks. “Military dialogue should be resumed urgently to ease tensions between the two countries,” he said, noting that it was one of the agreements reached during the historic summit. The largest conservative Liberty Korea Party (LKP) has accused the Moon administration of failing to coordinate with the U.S. over how to deal with North Korea, saying it reflects the chasm growing in the South Korea-U.S. alliance. “The government has dismissed our concerns on the alliance with the U.S. But now with Moon’s remarks, we have to wonder if mistrust between the two countries is taking the bilateral relations to a dead end,” LKP floor leader Chung Woo-taik said. The Moon Jae-in government proposed in July that the two Koreas resume military and Red Cross talks, as part of efforts to implement a peace overture delivered in a previous presidential speech in Berlin. Pyongyang, however, did not respond until the proposed date. At that time, the Ministry of Foreign Affairs said it had sufficiently explained the proposal to the U.S. and sought understanding in advance.
North Korea seen moving missiles from development center: South Korean broadcaster (Reuters) - Several North Korean missiles were recently spotted moved from a rocket facility in the capital Pyongyang, South Korea’s Korean Broadcasting System (KBS) reported late Friday amid speculation that the North was preparing to take more provocative actions. The report cited an unnamed intelligence source saying South Korean and U.S. intelligence officials detected missiles being transported away from North Korea’s Missile Research and Development Facility at Sanum-dong in the northern part of Pyongyang. The report did not say when or where they had been moved. The missiles could be either intermediate range Hwasong-12 or intercontinental ballistic Hwasong-14 missiles, according to the report, though the missile facility at Sanum-dong has been dedicated to the production of intercontinental ballistic missiles. A source from South Korea’s defense ministry said he could not confirm details of the report or whether there has been any unusual activities in the area mentioned. South Korean official have voiced concerns that North Korea could conduct more provocative acts near the anniversary of the founding of its communist party on Oct. 10, or possibly when China holds its Communist Party Congress on Oct. 18. Amid heightened tensions on the Korean Peninsula, South Korea and U.S. forces recently held their first joint short range air defense training exercise in South Korea, according to a statement released by the U.S. Pacific Command on Friday. The statement did not give the date of the exercise, but said the next exercise is scheduled to take place over the next few months as the two forces become more familiar with each other’s capabilities.
How China is using military ties to expand its reach in Southeast Asia | South China Morning Post: China has been stepping up its military engagement with Southeast Asian nations, a move seen as an attempt to counter balance the United States in the region. Last week’s visit to China by Singapore’s Prime Minister Lee Hsien Loong saw the two countries reaffirming their commitment to conduct more joint drills in the latest sign that Beijing is strengthening its defence ties to Southeast Asian countries. Analysts have highlighted how Chinese arms exports and the country’s regional military strength have helped improve its bilateral relationships and allowed Beijing to assert itself as an alternative to the United States, which has been closely involved in the region since the end of the Second World War. In the midst of a rapidly changing security landscape, how significant is China’s regional military involvement? The southeast Asian nation has seen its ties with China deepen in recent years after Kuala Lumpur’s cash-strapped government increasingly opted to do business with China’s state-linked weapons suppliers. Malaysia has bought low-cost aircraft, warships, and rockets from Beijing in its bid to modernise its ageing military and fleet. Last year, the two nations inked a 1.17 billion ringgit (US$278 million) deal – their first major defence contract – to jointly build four littoral mission ships, used for coastal patrols. In April, the two nations set up a defence cooperation committee. China has also invested some US$7.2 billion in developing a mega seaport near the Malacca Strait. Laos has had an enduring diplomatic relationship with China. The two countries reaffirmed their cooperative military relationship during a four-day visit by Chinese officials to the small, landlocked nation earlier this month. The two promised to deepen their high-level military exchanges, with China pledging to continue supporting the development of Laos’s communist army, Xinhua reported.
Economic Watch: Nationwide negative list to spur foreign investment - Xinhua | English.news.cn: (Xinhua) -- China will roll out a negative list for foreign investment, which has been tested in pilot free-trade zones. The negative list model, which states the sectors and businesses that are off limits to foreign investment, will be adopted nationwide as early as 2018. "Introduction of the negative list is a creative approach at home and abroad. It lays an important foundation for market to play a decisive role in resource allocation," said Xu Shanchang, with the National Development and Reform Commission. The approach had an initial test run in Shanghai, Tianjin, Guangdong and Fujian, before expanding to other places, including Zhejiang and Hubei, for further testing. "It is rather important to be prepared before making it a nationwide practice," Xu said. On Aug. 16, the State Council issued a document saying that China would make its foreign investment environment "more law-based, internationalized and convenient" to promote growth and raise the quality of foreign investment. "The country should continue to reduce market access restrictions for foreign capital," the document said.
China’s mortgage debt bubble raises spectre of 2007 US crisis | South China Morning Post: Young Chinese like Eli Mai, a sales manager in Guangzhou, and Wendy Wang, an executive in Shenzhen, are borrowing as much money as possible to buy boomtown flats even though they cannot afford the repayments. Behind the dream of property ownership they share with many like-minded friends lies an uninterrupted housing price rally in major Chinese cities that dates back to former premier Zhu Rongji’s privatisation of urban housing in the late 1990s. Rapid urbanisation, combined with unprecedented monetary easing in the past decade, has resulted in runaway property inflation in cities like Shenzhen, where home prices in many projects have doubled or even tripled in the past two years. City residents in their 20s and 30s view property as a one-way bet because they’ve never known prices to drop. At the same time, property inflation has seen the real purchasing power of their money rapidly diminish. “Almost all my friends born since the 1980s and 1990s are racing to buy homes, while those who already have one are planning to buy a second,” Mai, 33, said. The rush of millions young middle-class Chinese like Mai into the property market has created a hysteria that eerily resembles the housing crisis that struck the United States a decade ago. Thanks to the easy credit that has spurred the housing boom, many young Chinese have abandoned the frugal traditions of earlier generations and now lead a lifestyle beyond their financial means. The build-up of household and other debt in China has also sparked widespread concern about the health of the world’s second largest economy. The Chinese leadership headed by President Xi Jinping has taken a note of the problem and launched an unprecedented campaign in the second half of last year to curb home price rises in major cities by raising down payment requirements, disqualifying some buyers and squeezing the bank credit available for home buyers. The campaign is still deepening, with five more cities introducing rules last weekend that will freeze some property deals. Meanwhile, China’s financial regulators have launched an investigation of “consumer loans” in big cities because a torrent of consumer credit flowed into the property market after the government imposed restrictions on mortgage loans.
Japan's Abe Announces Plans for 2 Trillion Yen Spending Package - Japanese Prime Minister Shinzo Abe announced on Monday that he would seek to implement a 2 trillion yen ($18 billion) spending package to expand access to education and cut waiting times at child-care centers. He made the comments shortly before his coalition partner said an election would be held, likely on Oct. 22.Abe said he would make use of revenue from a planned consumption-tax hike set to take effect in October 2019. Revenue from increasing the sales levy had previously been marked mostly to replace deficit spending on the social safety net.He said that he wanted to settle on the details of the package before the end of the year. The plan would make pre-school education for children age 3 to 5 free, and provide free child care for those under age 2 for low-income families.Abe said it would be important to find a balance between spending on the policy package and improving Japan’s finances. The nation has one of the largest public debt burdens among developed countries, with a debt-to-GDP ratio of almost 240 percent, according to the International Monetary Fund. He said he also wants to consider measures to increase wages and encourage investment. Abe described the time from next fiscal year through fiscal 2020 as a three-year period of intensive investment to boost productivity and wages.
Abe Announces Japan Snap Election, Will Face New Challenger As if the just concluded German elections, and the upcoming referendums in Catalonia and Iraqi Kurdistan were not enough, here comes Japan.Shortly following Sunday night reports that Japanese Prime Minister Shinzo Abe plans to launch a new economic stimulus package of around 2 trillion yen ($17.8 billion) by the end of this year, which sent the Yen sliding to session lows and the USDJPY rising as high as 112.50 before fading the entire move, on Monday the Japanese premier confirmed recent rumors when he said he would dissolve parliament’s lower house on Thursday for a snap election, as he seeks a fresh mandate to overcome “a national crisis”. Abe, in power for five years with the success of his famous Abenomics always just beyond reach, said he needed a mandate to shift some revenues from a planned future tax hike to social spending such as education, besides seeking support for a tough stance toward North Korea’s repeated missile and nuclear tests.“I will dissolve the lower house on Sept. 28,” Abe told a nationally televised news conference on Monday according to Reuters. Earlier, the head of Abe’s junior coalition partner, Natsuo Yamaguchi, said he understood the election would be held on Oct. 22. The decision is aimed to take advantage of Abe’s recently surge in favorable ratings following a crash in support for Abe as early as two months ago as a result of ongoing corruption scandals in his party, as well as ongoing opposition disarray. The main opposition Democratic Party is struggling with single-digit ratings and much depends on whether it can cooperate with liberal opposition groups.
Modi’s Promise of a ‘New India’ Looks Shaky Amid Economic Chaos -- Suddenly, the BJP is feeling besieged by news of economic distress all around. After a badly botched up demonetisation exercise, we are seeing an equally botched up implementation of the GST which has sent small businesses into a tailspin, exacerbating the decline in output and employment seen during the months after demonetisation.Trading companies were de-stocking before the start of the GST regime on July 1, 2017, in the hope that they would buy up fresh stocks under the new tax system. But given the messy implementation, analysts say the re-stocking process is quite slow and firms would rather wait for the GST system to stabilise before going full swing again. And mind you, all this is happening just before the festive season. This is bound to impact GDP growth in the second half of 2017. As predicted by many, inflation too has marginally gone up post GST. The multi-decade high domestic petrol and diesel prices are not helping matters either. Ironically, record high oil taxes are the only source of stable revenues as they are out of GST. It is India’s oil tax and not GST which is coming to the Centre’s rescue.To add to finance minister Arun Jaitley’s woes, the sub optimal – perhaps an understatement – working of the GST network (GSTN) has created a major risk of revenue shortfall in 2017-18, putting the Centre’s fiscal arithmetic at risk. The finance ministry got its first shock when the GST refund applications (those seeking refunds after paying tax) totalled Rs 65,000 crore for July when total collections were Rs 95,000 crore.
In another sign of closer ties with India, US eyes dropping Pakistan as ally -- US officials familiar with a new “AfPak” strategy, involving renewed US commitment to Afghanistan and closer ties with India, say that the Trump administration is reconsidering its strategic alliance with Pakistan, the Financial Times reports.“No US president has come out on American national television and said such things about Pakistan,” Husain Haqqani, former Pakistan ambassador to the US, was quoted as saying in reference to recent comments from president Trump. “US policymakers are at the end of their tethers about what they see as Pakistan not helping them while promising to help them.”“Thinking of Pakistan as an ally will continue to create problems for the next administration as it did for the last one,” Lisa Curtis, who leads South Asia policy in the National Security Council, wrote in a joint report with Mr Haqqani earlier this year.In a rare public condemnation from the US, Trump accused Pakistan last month of “housing the very terrorists that we are fighting,” putting more strain on an already tense relationship. In addition to potentially revoking Pakistan’s status as a non-NATO ally, the US is weighing cutting civilian aid, conducting (more) unilateral drone strikes on Pakistani soil and imposing travel bans on officers of Pakistani intelligence agency ISI.
The Economist Claims: Sending 1.2 Billion Unskilled Africans To Europe Will Increase World GDP -- The Economist ran a couple of articles promoting migration as good for the global economy. Professor Bryan Caplan argued that labour is the world’s most valuable commodity and its value depends on location. If borders were open, a world of free movement would be $78 trillion richer. Mexican labourers can expect to earn 150% more in the West. Unskilled Nigerians make even 1,000% more in Germany than in Africa. The value of an unskilled worker is so much higher in Europe that a Nigerian can make 1000 times as much in Germany, adding 1000 times more to global GDP. Because Western societies are more structured and organised than the Mexican or Nigerian, the unskilled worker can be more productive in a factory in Germany or a farm in the USA than in Africa. A taxi ride in Berlin is much more expensive and thus valued much higher than a taxi ride in Lagos, while the amount of work, driving a car for a while, is the same.If The Economist expounds Professor Bryan Caplan’s view correctly, then the argument is plain idiotic. The Economist confuses countries with companies that are profit-oriented, and where people are disposable resources. Yet, countries are communities, and citizens do not usually expect their governments to merely maximize GDP. History teaches us that migration causes social unrest, disrupts social cohesion and ultimately the stability of the recipient nation. And even if we set aside these social or national considerations, the Economist’s reasoning is still false. The whole argument breaks down on social security and the massive world oversupply of unskilled labour. Social security determines the minimum price of labour .
Why Won’t American Media Tell the Truth About What’s Happening in Venezuela? -- Earlier this week, Donald Trump stood before the U.N. and called for the restoration of "political freedoms" to a South American nation in the thoes of an economic crisis. The country in question was Venezuela, but he could have just as easily been describing Argentina, whose right-wing government imprisoned indigenous politician Milagro Sala, has run inflation into the double digits and is in the process of re-imposing the sort of austerity policies that triggered a popular revolt and debt default in 2001. The description also fits Brazil, where President Michel Temer has been caught on tape discussing bribes, his former cabinet member's apartment recently raided to the tune of 51 million reais ($16 million). Temer, who assumed office only after leading the impeachment of his predecessor, Dilma Rousseff, has also run an aggressive program of austerity, dissolving the programs that lifted tens of millions of Brazilians out of poverty and into the middle class. In both countries, right-wing forces have taken power and undermined fragile democratic norms with the objective of reversing the modest redistribution of wealth achieved under left-wing administrations over the past 15 years. Backed by a United States government with a long history of subverting leftist movements in the region, and a mainstream media that's all too eager to carry its water, the right is now attempting the same feat in Venezuela. Unlike Brazil and Argentina, Venezuela has been victimized by a number of factors outside of its control, but especially a precipitous drop in the price of oil, the country's main source of revenue.
Suspected mass-spoofing of ships’ GPS in the Black Sea - Imagine alarms ringing out on more than 20 ships located near the Russian port of Novorossiysk in the Black Sea, as their GPS systems suddenly gave them false readings, placing some inland, some at airports, blinking back and forth between accurate positions and pure fiction.This type of GPS spoofing has been done before, but the incident in the Black Sea, which happened in June, appears to be the first well-documented account of mass-spoofing happening outside the confines of a university experiment.Four years ago, students using a blue box about the size of a briefcase showed us it was possible to fool the GPS navigation system of an $80 million super-yacht. Their spoofing device – cobbled together for about $1000 – sent counterfeit signals that slowly, subtly overpowered the authentic GPS signals until the ship ultimately came under their control.Under the direction of University of Texas/Cockrell School of Engineering Assistant Professor Todd Humphreys, the yacht takeover – along with the school’s hijacking of a drone a year earlier – were both designed to shed light on the perils of navigation attacks, serving as evidence that spoofing is a serious threat to marine vessels and other forms of transportation. Now, with what looks to be real-world spoofing of ships in the Black Sea, Humphreys’ warnings seem prescient.
Russia Props Up Ukraine Rebels With Coal Sales From War Zone - Russia is helping Ukrainian rebels sell coal on international markets to raise much-needed cash for pensions and social needs, evading a blockade imposed by the government in Kiev as efforts to implement a peace deal remain stalled. The separatists are sending nearly 1 million tons of coal per month to Russia across their shared border as of August, boosting income to support the 4 million inhabitants of the breakaway eastern Ukrainian regions, Russian Deputy Economy Minister Sergei Nazarov said. Russia re-exports the coal to third countries via its sea ports, he said in an interview, confirming Ukrainian accusations that it’s fostering trade links for the rebels. Russia and the separatists are deepening ties amid a trade blockade imposed by Ukraine and a lack of progress in enforcing a 2015 peace accord to end the three-year war that’s claimed 10,000 lives. The government in Kiev and its western allies accuse Russia of provoking the conflict after the ouster of Ukraine’s Moscow-friendly president in the 2014 revolution, a charge the Kremlin denies. While Russian President Vladimir Putin has no plans to recognize or annex rebel territories, he’s moving to ensure the incremental integration of the two border areas with Russia, three people close to the leadership said in April.
"Debt trap" may paralyse central banks with fear - BIS -- (Reuters) - Central banks are in danger of falling into a “debt trap” where they can’t take needed action for fear of triggering defaults and economic turmoil, a senior Bank for International Settlements (BIS) official said on Friday. In a speech in London, Claudio Borio, the head of the monetary and economic department at the central bank umbrella group, said it may be time for central banks to focus less on inflation and more on financial stability. Low interest rates are encouraging record amounts of borrowing -- as is the asset-buying stimulus employed by many central banks seeking to lift inflation. But such policy in turn makes central banks more nervous about raising interest rates in case it sends their borrowers to the wall and causes a slump in their economies -- known in economic textbooks as a debt trap. “At a minimum, this suggests lengthening the horizon over which it would be desirable to bring inflation back towards target,” for central banks, he said. “It would be desirable to use the additional room for manoeuvre to address the financial cycle more systematically.” “This could improve overall macroeconomic performance and reduce the risk of a ‘debt trap.. A trap could arise if policy ran out of ammunition, and it became harder to raise interest rates,” Borio said. He added that his remarks had been intentionally provocative.
Over 1.1 Million Refugees Remain In Limbo Across Europe --The majority - 52 percent - of asylum applications received by EU countries, Norway and Switzerland in 2015 and 2016 are still awaiting a decision. As Statista's Martin Armstrong notes, due to the historic influx of people over this period, that share accounts for roughly 1.1 million people, according to new analysis of Eurostat data by Pew Research Center. Aside from those still in limbo over their future, 880,000 have had their applications accepted - the majority of such applicants came from Syria (about 520,000).
As Cash Use Plummets, Swedish Government Begins Testing Cryptocurrencies -- Riksbank, Sweden’s central bank, is taking a serious look at Bitcoin. As cash use plummets and the amount of currency in circulation dwindles, central banks are looking to cryptocurrencies as government-backed money. In Sweden, the number of banknotes and coins in circulation has fallen to its lowest level in three decades. Riksbank estimates that cash transactions made up only 15 percent of all retail transactions last year. That number is down from 40 percent in 2010, thanks in large part to massively popular mobile payment services. That leaves the bank wondering if a technology similar to that of Bitcoin’s could be implemented in Sweden. Riksbank isn’t the only central bank taking a serious look at blockchain, the technology that makes Bitcoin and other cryptocurrencies run. These systems, also called distributed ledgers, rely on networks of computers, rather than a central authority like a bank, to verify and record transactions on a shared, virtually incorruptible database.Government bankers across the world believe this has the potential to replace cash and make other payment systems more efficient. – Technology ReviewRiksbank is investigating not only distributed-ledger technology (which it describes as unproven yet “progressing incredibly rapidly”) but also traditional, centralized accounting methods for its “e-krona” (pdf) project. Many central banks are looking into this type of currency, but Sweden appears to be at the forefront of the movement. According to Rod Garratt, an economics professor at the University of California, Santa Barbara, a cryptocurrency that’s available to all consumers “opens up a whole host of issues” and would pose new challenges for makers of monetary policy.
Italy’s Great Experiment - J.d. Alt - Italy is experimenting with giving tax-cuts to its citizens in exchange for public services―such as pulling weeds and cutting grass. Wow. What an amazing idea! The government issues a tax credit, and uses it to pay a citizen in exchange for the citizen’s services to the government. The government could even make this arrangement more formal by printing the tax credits on pieces of paper called “LIRIES” (or something like that) and paying for the weed-whacking services with this “cash.” That way the citizen who’s earned the “LIRIES” has the option of using them as payment to another citizen (who’d also like a tax-cut) for, say, a bag of potatoes. So, the first citizen pulls some weeds, gets paid in “cash” and then uses the “cash” to buy her dinner. If you thought about it, you could possibly run an entire economy in this fashion. The only thing you’d have to worry about, of course, is that the government might run out of the tax-credits it needs to pay the citizens to do the work! If that happened, where could the government possibly get more tax-credits? Could it collect tax-credits as “taxes”? Could it borrow them from all the street-sweepers and weed-whackers who’ve earned them? (In which case it would have to pay “tax-credit interest”―which just seems to exacerbate the problem!) Hmmm. I’m going to have to think about that one. But in the meantime, doesn’t this mean that any Eurozone country has the option to stay IN the Eurozone while at the same time operating its own local economy using its own local “sovereign” currency?
Employment in Europe and the US: Debunking the Story of EU Weakness and US Strength --The common narrative that the US labour market outperforms the EU is not as trustworthy as overall unemployment figures imply. There is a complex interaction between job creation, labour force participation and unemployment. Jobseekers leaving the labour market altogether was an important factor behind the reduction in US unemployment, while Europe’s job growth has been accompanied by increased labour force participation.The global financial crash had a lasting impact in Europe. Most EU countries faced long recessions and labour market weakness after 2008. In contrast, recovery in the US economy and job market started much earlier. Much has been said about the reasons for this discrepancy between the two regions, and in our view some of the pain of post-2008 Europe could have been avoided.However, beyond the doom and gloom, comparing the EU and US is a not as simple as it seems. And the balance is not monolithically favourable to the US. In fact, it is worth emphasising a few bits of good news regarding EU labour markets:
- Before the crisis, the rate of job creation was faster in the EU than in the United States;
- In recent years, the rate of job creation in the EU was the same as in the US;
- While labour force participation has been falling in the US, it has increased in Europe.
There is a wide assumption that the US economy is more effective than Europe at creating jobs, which should be reflected in a more rapid increase in total employment. However, as we see in Figure 1, the EU was actually creating jobs faster than the US in the years before the crisis. From 2000Q1 to 2008Q1, the number of jobs in the EU expanded by 10%, but only by 6% in the United States. Note that this chart compares each region to its own level of employment in 2008Q1; it does not display the percentage employment rate.
Crackdown in Catalonia - Jacobin - Since early September when the Catalan parliament approved a law to unilaterally hold an independence referendum, Spain has been gripped by a constitutional crisis. The conservative Spanish government is determined that the October 1 vote, which Spanish courts deemed illegal, will not go ahead. Their response has been severe, constituting an unprecedented attack on democratic rights and Catalan autonomy.The crackdown intensified this past Wednesday with the arrests of fourteen high-level Catalan officials, including the regional economy minister Josep Maria Jove who is now being investigated for sedition. This comes on the back of a series of police raids on newspapers, printers, delivery services, and regional government offices, with authorities confiscating 1.5 million posters and leaflets and 10 million ballot papers. Public prosecutors issued summons to the more than 700 mayors cooperating with the preparations for the referendum, while political events related to the vote have been banned in a number of cities across Spain.The arrests on Wednesday were described as a “democratic scandal” by Barcelona’s major Ada Colau and sparked mass protests across Catalonia. In Madrid pro-independence MPs walked out of the Spanish parliament while Podemos’s parliamentary group staged a protest on the steps of the Congress. Just before this protest, Podemos MP Manolo Monereo sat down with Jacobin contributor Eoghan Gilmartin to discuss the crisis and how the current standoff could benefit the Right in Spain. Since 2008 we have been living through a regime crisis in Spain, characterized by a breakdown in the basic constitutional principles of the post-Franco transition. This regime crisis is characterized by three key problems that are intimately related: the first is the question of corruption, a series of scandals which have completely discredited the political system; the second is the social question, which we see with increasing unemployment, inequality, and precariousness which primarily affects the younger generation; and the third is the national crisis.
Defiant Catalans Block Spain's Military Boats From Landing; Spain Seizes ".CAT" Domain – Mish - Spain’s plan to send boatloads of military police to Catalonia to prevent its independence referendum has backfired with dockers in two ports staging a boycott and a third refusing access. The Express writes Police boats Blocked by Catalan ports as unrest threatens to Rip Spain Apart More than 4,000 members of Spain’s Guardia Civil are being dispatched to the troubled region amid concerns over divided loyalties in the autonomous community’s own police force, the Mossos d’ Esquadra.Spanish authorities wanted to house the Guardia Civil officers on four cruise ships – two in Barcelona, one in Tarragona and another in Palamos.But as thousands took to the streets to protest against the detention of Catalan officials, local dock workers joined the backlash.The Assembly of Stevedores of the Port of Barcelona announced that workers would not provide any services to boats carrying security forces, a decision it said was taken “in defence of civil rights”.Colleagues in Tarragona quickly followed suit and the Catalan government then denied permission to dock in Palamos – which, unlike Barcelona and Tarragona, falls under regional rather than national control.More than 40,000 people have gathered in Barcelona to protest over the arrests and the intervention of the Spanish government in the Catalan independence vote.Many of the angry protesters have been waving Catalonia’s red and yellow flag while chanting “We will vote” and “Hello Democracy!”In a television address, Catalan’s President Carles Puigdemont said: “The Spanish state has by all rights intervened in Catalonia’s government and has established emergency rule.“We condemn and reject the anti-democratic and totalitarian actions of the Spanish state.”A spokesman for the Catalan National Assembly said: “They made a big mistake; we wanted to vote and they declared war.”Catalans are split on the issue of independence but support for a vote is high and few are happy with Spanish police arresting Catalan leaders.Tensions have been further fuelled by reports that some of those detained are likely to face charges of sedition, which carries a lengthy prison sentence.
Spain In Crisis: Catalan Police Rejects Madrid Takeover, Vows To "Resist" -- Spain found itself on the verge of a full-blown sovereign crisis on Saturday, after the "rebel region" of Catalonia rejected giving more control to the central government in defiance of authorities in Madrid who are trying to suppress an independence referendum on Oct. 1.As tensions rise ahead of the planned Catalan referendum on October 1, and as Madrid's crackdown on separatist passions took a turn for the bizarre overnight when as we reportedSpain’s plan to send boatloads of military police to Catalonia to halt the referendum backfired with dockers in two ports staging a boycott and refused access, on Saturday Spain's Public Prosecutor's Office told Catalan Police chief Josep Lluis Trapero that his officers must now obey orders from a senior state-appointed police coordinator,Spanish news agency EFE reported on Saturday.The Catalan Police, however, disagreed and as Bloomberg reports, the SAP union - the largest trade group for the 17,000-member Catalan Police, known as Mossos d'Esquadra -said it would resist hours after prosecutors Saturday ordered that it accept central-government coordination. The rejection echoed comments by Catalan separatist authorities.“We don’t accept this interference of the state, jumping over all existing coordination mechanisms,” the region’s Interior Department chief Joaquim Forn said in brief televised comments. “ In a joint press conference today with the Catalan home affairs minister Joaquim Forn and the Mossos chief Josep Lluís Trapero, Forn said that the move by Spain was "unacceptable". “We denounce the Spanish government’s will of seizing the Mossos, as they did with Catalonia's finances" Forn said adding that that "the Catalan government does not accept this interference, it bypasses all the institutions that the current legal framework already has in place to guarantee the security of Catalonia." Additionally, Trapero expressed his intention to not accept the measure, which he described as "interference by the state", and also warned that "it skips over all the bodies of the legal framework to coordinate the security of Catalonia".
Catalan campaigners hand out a million referendum ballots - Catalan independence campaigners have held rallies across the region, distributing 1m ballot papers a week before people are due to vote in a sovereignty referendum that the Spanish government has vowed to stop. Thousands of people congregated in town squares around Catalonia on Sunday to show their support for the vote as tensions between the pro-independence regional government and the Spanish state continued to rise.Speaking at a rally in Barcelona, the president of the independence group Òmnium Cultural, Jordi Cuixart, said: “Here are the packs of ballots that we ask you to hand out across Catalonia.” Carme Forcadell, the speaker of the regional parliament, told a Barcelona crowd: “I ask you to go out and vote! Vote for the future of Catalonia!”The distribution of voting slips comes days after Spanish Guardia Civil officers raided regional government buildings, arrested 14 senior Catalan officials and seized almost 10m ballot papers. The Spanish government has also drafted in thousands more police officers and tightened its control over the region’s funding, while the constitutional court has announced that 24 referendum organisers will be fined between €6,000 and €12,000 (£5,300-£10,600) a day until they abandon preparations for the vote.The raids and arrests brought 40,000 people on to the streets of Barcelona in protest on Wednesday night. Although the demonstrations were largely peaceful, there were scuffles and two Guardia Civil vehicles were attacked. A chief prosecutor later asked the national court to consider investigating the demonstrators for sedition.The Spanish prime minister, Mariano Rajoy, has repeatedly said that the 1 October referendum – which the central government insists is illegal and unconstitutional – will not take place, and the legislation underpinning the vote has already been suspended by Spain’s constitutional court. However, the Catalan regional president, Carles Puigdemont, has refused to back down and has said the Spanish government is acting “beyond the limits of a respectable democracy”.
Catalan separatists take to the streets ahead of referendum (Reuters) - Demonstrators calling for Catalan independence gathered in hundreds of towns across the region on Sunday following Madrid’s actions last week to try to block a referendum on self rule that it considers illegal. Spanish police have arrested Catalan officials who were involved in organizing the Oct. 1 vote and they also seized electoral material, including ballot papers and ballot boxes. This led to several days of protests in Barcelona. But Carles Puigdemont, the head of the Catalan regional government, has said the referendum will go ahead. Several thousand protesters gathered in central Barcelona on Sunday chanting “We will vote!” and handing out ballot papers. The crowds began whistling and booing a police helicopter during speeches by the protest organizers, showing growing anger among the referendum supporters about the increased police presence. Between 3,000 and 4,000 state police officers from other regions of Spain have arrived or are on their way to Catalonia. Carnations are left on a graffiti reading "We will vote independence October 1" during a gathering in support of the banned October 1st independence referendum in Barcelona, Spain, September 24, 2017. REUTERS/Susana Vera“We feel occupied by the Spanish police,” 56-year-old interior designer Nuria Gimenez said. “We’ve been protesting for 10 years, we’re not going to stop now with one week to go. We need to keep going until the end.” On Saturday, the state prosecutor in Catalonia told all local and national police forces they would be placed temporarily under a single chain of command and report directly to the interior ministry in Madrid
Catalonia referendum: Madrid moves to take over local policing - BBC News: The Spanish authorities have moved to place all policing in Catalonia under central control to stop the disputed independence referendum on 1 October. Col Diego Pérez de los Cobos has been put in charge of Catalan and central police forces in the autonomous region. Madrid said the order was aimed at achieving better co-ordination. But the Catalan authorities rejected it, saying it was an unacceptable interference. Thousands of extra police are being sent to the region to block the vote. The Constitutional Court says the vote is illegal but Catalan leaders are determined to hold it.The Spanish authorities have sought to stop the independence vote by seizing voting materials, imposing fines on top officials and arresting temporarily dozens of politicians. The public prosecutor's office justified the the appointment of Col Pérez de los Cobos on the basis of a law governing joint operations in an autonomous region. The order will remain in place until 1 October, Catalan newspaper La Vanguardia reports. Joaquim Forn, Catalonia's interior chief, said the local government did not "accept this interference" in the regional police, known officially as the Mossos d'Esquadra. "The Catalan government does not accept this intervention of the state because it does not take into account all the legal framework that we have in order to take care of the security in Catalonia," he said."The leader of the Catalan police will not hand over his functions," he said.
Catalan Police Ordered To Close And Occupy Polling Stations To Stop Vote Going Ahead - The Catalan Police (Mossos) have been ordered by the Public Prosecutor's Office to close and occupy all premises that will or might be used as polling stations in the region to prevent them from being used for Sunday's independence referendum vote, suspended by the Constitutional Court. The Public Prosecutor's Office confirmed to The Spain Report on Wednesday morning that the document and the orders it contains were genuine. Officers must close and cordon off the centres until 9 p.m. on Sunday evening and make it clear that the police cordon is not to be broken, warning people they are liable to criminal prosecution if they do so. They have been ordered to remove anyone already in the polling stations, and seize any items being used for the vote, "especially ballot boxes, computers, ballot papers and election documents and propaganda". They may repeat the removals and seizures if people try to break the police line during the day. The cordons and closures must be in place by Saturday, September 30. Mossos officers must report any infractions of the polling station orders, and may request local police, National Police and Civil Guard back up if they believe they need it. The Catalan Police must also prevent people designated as polling officers from being able to access the premises designated as polling stations, which is due to happen from 7:30 a.m. on Sunday. Finally, the Mossos have been told to prevent the vote taking place anywhere within 100 metres of the designated premises, "including on public streets". Catalan Police chiefs are worried about the public order and manpower requirements stemming from the order, Spanish media reported.
Catalonia Dreaming? - Just days away from the referendum promoted by secessionist forces, Spanish police arrested over a dozen senior officials from the Generalitat and carried out over forty raids in the Catalan government’s headquarters. Social and political tensions have reached a new height as the unified state’s repressive machinery has been set in motion. Protests are being stepped up and political rhetoric is ever more aggressive. If the irresponsible actions of the political class that led to this institutional breakdown continues, deep social conflict will follow. This extreme situation was unthinkable less than a decade ago. According to the Catalan public polling body, only 15% of Catalans wanted an independent state when the economic crisis broke out in September 2008. Six years later, that number was up to 48%. Given the entire population of Catalonia (7.5m), this would mean that close to 2.5 million Catalans switched in favor of independence in over just six years. Why? At least two major events have contributed to the tense relations between Catalonia and the rest of Spain. First, the Statute of Autonomy approved by Catalans in 2006 underwent several amendments by the Spanish constitutional court in 2010. While the real changes are often exaggerated by secessionists, the reckless attitude of the central government dynamited any possibilities for agreement. Second, the economic crisis triggered widespread political dissatisfaction with the functioning of Spanish democracy. The dire economic situation, unpopular austerity measures, and a series of large-scale corruption scandals affecting political elites, nourished the breeding ground for new movements and parties with a clear-cut enemy to blame. Some pointed to the banking and political elites. In Catalonia, the scapegoat became Spain itself.
Germany election: Merkel wins fourth term, nationalists rise - BBC News: German Chancellor Angela Merkel has been re-elected for a fourth term while nationalists have made a historic breakthrough in federal elections, exit polls suggest. Support for her conservative CDU/CSU alliance has dwindled but the bloc will remain the largest in the parliament. Its current coalition partner, the social democratic SPD, says it will go into opposition following big losses. The nationalist AfD is on track to become the third party. The performance, better than forecast in opinion polls, means the right-wing, anti-Islam party will have seats in the Bundestag for the first time. Dozens of protesters have gathered outside the party's headquarters in Berlin, some with placards saying "Refugees are welcome".While her alliance has remained the largest party, the numbers, if confirmed, are the worst result for the alliance between the Christian Democrat (CDU) and the Christian Social Union (CSU) under Mrs Merkel's leadership. Addressing supporters, Mrs Merkel, who has been in the job for 12 years, said she had hoped for a "better result". She added that she would listen to the "concerns, worries and anxieties" of voters of the Alternative for Germany (AfD) in order to win them back. Mrs Merkel also said her government would have to deal with economic and security issues as well as addressing the root causes of migration - one of the main reasons behind the AfD's result. "Today we can say that we now have a mandate to assume responsibility and we're going to assume this responsibility calmly, talking with our partners of course."
Far-right party wins MPs in German parliament for first time in half a century A far-right party has won seats in the German parliament for the first time in half a century, in an election that saw Angela Merkel returned as chancellor for the fourth contest straight. The German chancellor pledged to address the concerns of people who voted for the anti-Muslim and anti-immigration AfD after initial results showed it winning 13.5 per cent of the vote – at the higher end of what was expected. Meanwhile, the centre-left SPD – the current coalition partners of Ms Merkel’s CDU and a titan of German politics for 150 years – have hit a historic low of just 20 per cent, the social democratic party’s worst showing since the Second World War. Small parties in general did well in the election and were all up on their 2013 results, with the the liberal FDP re-entering the Bundestag with 10.5 per cent of the vote, the Greens on 9.5 per cent, and the left-wing Die Linke on 9 per cent. Turnout and voter participation also appears to have climbed since the previous election, which was held in 2013. SPD leader Martin Schulz immediately ruled out going back into coalition with Ms Merkel, leaving the Chancellor likely to go into coalition with the liberals and the Greens – the so called “Jamaica Coalition” because the colour of the parties matches the country’s flag yellow, black, and green flag. Such a coalition has not been formed at German national level before – though it does sometimes occur in Germany’s state parliaments, such as in the northern state of Schleswig-Holstein where it currently operates. Ms Merkel could alternatively try to form a minority government if she is unable to secure the formal backing of other parties – with coalition negotiations expected to take weeks or even months. The result is a huge blow for Mr Schulz, a former president of the European Parliament who became SPD leader earlier this year and once hoped to unseat Ms Merkel from the Bundeskanzleramt. His appointment as leader in March saw the SPD spike in the polls, but his honeymoon quickly faded.
Merkel Chastised as Far-Right Surge Taints Fourth-Term Win --Angela Merkel won a fourth term as German chancellor in a victory that was marred by the hollowing out of support for the two main parties and a surge for the populist AfD in a clear rebuke to her open-doors refugee policy. Merkel’s Christian Democrat-led bloc and her main challenger, Martin Schulz’s Social Democrats, plunged to historic lows as votes flowed to the anti-immigration Alternative for Germany, or AfD, in a sign of the growing polarization in Europe’s biggest economy. Six parties are poised to enter the lower house, the Bundestag, for the first time since 1953. Merkel and the other party leaders will hold press conferences on Monday to discuss the results. The principal loser was Schulz’s SPD, which recorded its worst result since the war. The party leadership immediately announced its intention to go into opposition and not renew the so-called grand coalition with Merkel’s party that has governed for the past four years.The AfD out-polled the pro-business Free Democrats, the Greens and the post-communist Left to become the first far-right party in the Bundestag since the immediate postwar period, after it channeled voter rage at Merkel for allowing some 1.3 million migrants to enter the country since 2015.“Clearly, we had hoped for a somewhat better result,” but “we achieved the strategic targets of our election campaign,” Merkel said at her party’s headquarters in Berlin. Apart from the challenge of the AfD, the task ahead is “first and foremost to ensure economic prosperity” and “to hold the European Union together and build a strong Europe,” she said. The result offers Merkel two possible routes to govern: The first is to add the Greens to a coalition with the Free Democrats, her party’s traditional allies with whom she governed from 2009 to 2013, in a so-called Jamaica coalition -- so named as the party colors match those of the country’s flag. While it’s a combination previously untested at national level, such a government was formed this year in the state of Schleswig-Holstein, and the chancellor has kept tabs on the region’s progress ever since.
Who are Germany’s far-right AfD? - The Alternative for Germany (AfD) party looks set to become the first far-right nationalist movement to enter the German parliament since World War II. The AfD is projected to win 13.1 percent of the votes in Sunday's election, making it the third biggest political force in Germany. The news prompted anti-AfD protests in Germany's capital, Berlin, with hundreds of demonstrators taking to the streets shouting slogans against the anti-immigrant party. The result marks the first time in more than 60 years that a far-right party will sit in the German parliament. Founded in April 2013 to contest that year's September federal election, the AfD began as an anti-euro party. The party, in response to the European debt crisis that marked the years preceding its launch, challenged German-backed bailouts of Europe's struggling southern economies such as Greece. Their manifesto, endorsed by a number of Eurosceptic academics, called for the dissolution of the euro currency and less centralisation of power in Brussels. Despite failing to win the required five percent of votes needed to gain representation in the German parliament, the party made a mark in the election, winning 4.7 percent of votes. The AfD had proved effective in occupying the space left behind by ChancellorAngela Merkel's gradual shifting of her conservative CDU party closer to the political centre ground. "Merkel has been changing the CDU since 2005, moving it more to the centre. In the years 2005-12, you had people inside the party that were dissatisfied with where she was leading it," Julian Gopffarth, a researcher at the London School of Economics' European Institute, tells Al Jazeera. The newly established AfD, to the right of Merkel's party, offered an outlet for former CDU members who felt her changes had taken the party too far from its conservative political roots.
Meet the Lesbian Goldman Sachs Economist Who Just Led Germany’s Far Right to Victory - Xenophobic populism has returned to German national politics with a bang, this time in the guise of a 38-year-old lesbian investment-banking economist. Alice Weidel is the unusual figure who has come to symbolize the far-right Alternative for Germany’s (AfD) goal-line run into the Bundestag. The AfD’s astounding 13.4 percent finish makes it the first openly chauvinistic, illiberal party to capture seats in Germany’s foremost democratic institution since the early postwar years. Should the Social Democrats (SPD) enter another “grand coalition” with Merkel’s Christian Democrats (CDU), the AfD, as the largest opposition force in the Bundestag with over 60 seats, would become Oppositionsführer, the de facto leader of the opposition. Until now, Germany had been one of the very few countries in all of Europe that didn’t harbor such a sample in its national legislature. Though their fine print varies, the far-right Europe-wide, like the AfD, flaunts pedigrees that are anti-immigration (and anti-immigrant), eurosceptic, authoritarian, and volkish, blood-and-soil nationalist – and together, in ever greater numbers, pose a very real threat to Europe’s postwar consensus. More immediately, they now pose a threat to the parliamentary order of Germany’s Bundestag. For the size of their triumph, Merkel herself must bear much of the blame as by refusing to address immigration in the campaign, she left the field wide open for the AfD. In part, the AfD owes its promotion into prime-time German politics to Weidel, its unlikely public face. A complete unknown in Germany until she, in tandem with Alexander Gauland, was tapped to lead the party’s national campaign. Gauland more or less fits the stereotype of the Willie Stark-style populist rabble-rouser, but its Weidel — a self-confident, dressed-for-success expatriate financial consultant who on the surface seems to be the sort of “globalist” that nationalist populists typically claim to despise — who has earned the higher public profile. It’s no accident, however, that she has remained in her party’s good graces.
Merkel’s poll win unlikely to make much difference to Brexit, analysts say -- Germany’s federal elections, whatever coalition Angela Merkel forms after the victory of her CDU party, are unlikely to make much difference to Brexit – but may well make euro reform more difficult. Analysts and commentators say Brexit campaigners’ hopes that with the vote behind her, Merkel – especially if, as seems likely, her government includes the pro-business Free Democratic party (FDP) – would back a favourable deal for the UK were always misplaced. The EU and single market are a “core national interest” for Germany, “essential to its stability, security and prosperity”, said Christian Odendahl of the Centre for European Reform. All major parties and most voters bar the 13% who cast their ballots for the anti-immigrant AfD want more EU cooperation, not less. The FDP may be more pro-business, but it will be a junior partner in the likely coalition and got badly burned the last time it governed with the CDU. It will use its few bargaining chips “very carefully, and almost certainly not on Brexit”, Odendahl said. Brexit campaigners are also wrong to argue that the value of its trade with the UK – particularly exports – means German industry will inevitably press politicians into demanding a softer Brexit, Odendahl argued. The idea that Germany would buy into something “because of the number of cars BMW sells is misleading”, he said. “Of course German industry wants to limit any economic damage – but not at a cost to the single market.” German businesses have “made the best possible use of the single market, with complex supply chains across the continent. Nothing is more important to them than the single market, its rules and institutions.”
AfD politician says Germany should stop atoning for Nazi crimes - A politician from the rightwing populist Alternative for Germany (AfD) party has broken with the country’s postwar political consensus by calling for a “180-degree turn” from the tradition of remembering and atoning for the Nazi era. In a speech in a beer hall in Dresden, Björn Höcke, who leads the party in the eastern state of Thuringia, railed against Germany’s decade-long tradition of acknowledging the crimes of the National Socialist era, describing the Holocaust memorial in Berlin as a “monument of shame”. “They wanted to cut off our roots and with the re-education that began in 1945, they nearly managed,” Höcke said. “Until now, our mental state continues to be that of a totally defeated people. We Germans are the only people in the world that have planted a monument of shame in the heart of their capital.”
"Forget Germany, Spain Is The Real Problem" --Following yesterday's German election, which despite Merkel's 4th victory was a rout for the establishment "grand coalition" parties of CDU/CSU and SPD which saw its worst election performance since the 1940s offset by a surge in the ascendant right-wing AfD, there have been numerous analyst reactions to the "sudden reemergence" of populism in Europe, but one we find perhaps the most insightful and useful, comes from Bloomberg macro commentator Mark Cudmore, who writes this morning that for all the concerns, it's not so much Germany as what is about to happen in European peer Spain, where Catalonia is set to hold an independence referendum on October 1, that should be on traders' radars.Below is his latest Macro View explaining why... The euro is once again set to suffer from an outsized political premium. Spain, rather than Germany, is the real problem. The AfD’s strong performance in the German election and the lack of a clear coalition are both concerns at the margin, but they wouldn’t provide a sustainable headwind for the euro in isolation.Much more worrying is Catalonia’s planned independence referendum on Oct. 1. Investors have been ignoring this story, but this week will see it take center stage.The heavy-handed response by the central government in Spain has significantly elevated the probability of civil unrest as well as potentially increasing support for independence for the region.People opposed to breaking away probably won’t vote, so any poll that proceeds will return an unrepresentative and overwhelming result for independence. If Mariano Rajoy is able to snuff out the illegal referendum, it’ll only intensify the demands for another, more official independence vote.Failing to stop it means there’ll be a symbolic declaration of independence.
Greece no longer in breach of EU budget deficit rules — EUbusiness.com - The European Union closed its excessive deficit procedure for Greece Monday, confirming that the country's deficit is now below 3 per cent of GDP, the EU's reference value for government deficits. "Greece's finances are in much better shape," said Estonian minister Toomas Toniste, for the EU presidency: "We are now in the last year of the financial support programme, and progress is being made to enable Greece to again raise money on the financial markets at sustainable rates." Greece's fiscal balance has been steadily improving arom a deficit of 15.1% of GDP reached in 2009, turning into a 0.7% of GDP surplus in 2016. Although a small deficit is still projected for 2017, the fiscal outlook is expected to improve again thereafter. Greece's debt-to-GDP ratio peaked at 179.0% in 2016 and is expected to decrease over the coming years. In the light of this, the EU Council has decreed that Greece now fulfils the conditions for closing the excessive deficit procedure. Greece will now be subject to the preventive arm of the EU's fiscal rulebook, the Stability and Growth Pact. The Council says that monitoring will continue until August 2018 under its macroeconomic adjustment programme, and post-programme monitoring will follow. For their part, the Greek authorities have committed to maintaining a primary surplus of 3.5% of GDP until 2022 and a fiscal trajectory after that that is consistent with EU fiscal requirements.
UK's Johnson opposes adopting any new EU rules during Brexit transition | Reuters: (Reuters) - British foreign minister Boris Johnson will oppose any move to adopt European Union regulations made after Britain leaves the bloc in March 2019, the Sunday Telegraph newspaper reported, risking reigniting divisions over Brexit. Johnson, who campaigned to leave the EU in last year’s referendum, is one of Britain’s highest-profile politicians and seen as a possible replacement for Prime Minister Theresa May. On Friday, he praised a speech by May in which she set out her plan for a roughly two-year transition period after Brexit. But the Telegraph reported that Johnson had set out a new set of demands, reviving talk of a split among May’s senior ministers which has the potential to destabilize her minority government.“Boris will be one of those Cabinet ministers pushing to make sure we don’t have any new EU rules and regulations during the transition,” a cabinet source was quoted as saying by the newspaper. Johnson had fueled talk of a leadership challenge ahead of May’s speech by publishing his own 4,000-word plan for Brexit which was seen as a criticism of May’s more cautious approach. May’s transition plan, set out in the Italian city of Florence in a speech that sought to break an impasse in negotiations with the EU, underlined the importance of regulation to the future economic relationship with the bloc. She highlighted the fact that Britain and the EU start with identical regulatory standards and said she wanted “a practical approach to regulation that enables us to continue to work together in bringing shared prosperity to our peoples”.
Jeremy Corbyn refuses to back EU single market membership-- Jeremy Corbyn has made increasing Labour members' power a defining theme of his leadership. But as I noted before the party conference began, there is one issue on which Corbyn is starkly at odds with activists: Brexit. A recent poll found that 66 per cent of Labour members believe the UK should "definitely" remain in the single market, with a further 20.7 per cent more favourable than not. When challenged on the subject on The Andrew Marr Show, Corbyn refused to give ground. Though he emphasised that he wanted "tariff-free trade access to the European market" and promised to "listen" to activists, he sounded a sceptical note over continued single market membership. "We need to look very carefully at the terms of any trade relationship because at the moment we're part of the single market, obviously, that has within it restrictions on state aid and state spending, that has pressures on it through the European Union to privatise rail, for example, and other services." Though Labour has backed continued single market membership for a Brexit "transition period", it has not endorsed a permanent deal. Corbyn's scepticism is unsurprising. He voted against the single market's creation in 1986 and has often criticised it as an obstacle to socialism. Some on the left backed Brexit on these grounds (the so-called "Lexiteers"). Others, however, such as Anthony Barnett in this week's NS, argue that the limitations imposed by the single market have been much exaggerated (French president Emmanuel Macron recently nationalised a shipyard and many European railway systems are publicly-owned).
Hopes and Frustrations As Brexit Talks Resume After May Speech (Reuters) - British and EU negotiators talked up hopes for progress on Brexit as a new round of talks began in Brussels on Monday, three days after Prime Minister Theresa May tried to revive the process and improve the mood. But neither side disguised continued frustrations: the European Union’s Michel Barnier dismissed talk of Britain diverging from EU rules during any post-Brexit transition 18 months from now; Brexit minister David Davis urged him to stop stalling talks on future trade relations if he wants London to settle its accounts. ”The UK will honor commitments we have made during the period of our membership,“ Davis told reporters as he met Barnier. ”But it is obvious that reaching a conclusion on this issue can only be done in the context of and in accordance with a new deep and special partnership with the European Union. “We are laying down concrete proposals and there are no excuses for standing in the way of progress,” he said, echoing May’s remark in Florence on Friday that other states would not lose out financially in the current EU budget cycle to 2020. Barnier said he wants to know this week what firm proposal Britain is making on settling its bills, one of the three main issues on which he is seeking “significant progress” before he will recommend that EU leaders launch talks on future relations. Barnier emphasized that a future deal and a transition to it were not foregone conclusions. And he rejected suggestions that some EU rules might no longer apply if Britain stays in the single market for a couple of years after Brexit.
EU officials 'dictated' Theresa May's £18bn Florence speech pledge - Express.co.uk: THE DIVORCE bill section of Theresa May’s Brexit speech in Florence was “dictated” by the European Commission, an EU official has claimed. The Prime Minister’s keynote speech, where she agreed to a €20billion (£17.5billion) transition period, was reportedly run past EU leaders before being announced. In the address, Mrs May sought to outline a plan for the UK’s relationship with the EU after Brexit to break negotiations deadlock. Specific wordings on the UK’s pledge to “honour commitments” was made after consultations with EU officials and leaders in other European powers. A senior EU official told The Telegraph: “The Commission pretty much dictated the section on the financial settlement. The wording was exactly as the Commission wanted in order to convince member states the UK was serious about breaking the deadlock.” The address, apparently written in part by the EU Commission, dedicated the UK to a two-year transition period with the UK continuing our current €10billion-a-year (£8.76billion) contribution to Brussels coffers. A second EU official insisted days before the speech that only a pledge to “honour commitments we have made during the period of our membership” would suffice.Exactly the same language was used three days later as Theresa May laid out the UK’s Brexit position.Brussels eurocrats were said to be congratulating themselves over headlines putting the divorce bill at €20billion (£17.5billion) with them hoping Britain’s electorate would not realise it could be closer to double.
Britain expected to pay rising EU pension costs as Eurocrats rake in retirement funds | UK | News | Express.co.uk: Newly discovered accounts show a huge 5.4 per cent rise in the amount the UK owes to the Bloc's pension pot. Now Eurocrats expect Britain to pay off part of the €67.2billion (£59billion) before cutting ties with the EU and liberating itself from excruciating bills. The incredible costs are expected to be one of the largest parts of the EU divorce bill inflicted on the UK by the failed European superstate. A diplomat with a close relationship to Brexit talks discussed the impact of the new bill on British citizens.Speaking to The Times, the official said: “Paying pensions for Eurocrats after Brexit is going to be one of the most resented divorce costs. "A lot of people are worried it will be too much for the British public to swallow.” The bloc have been accused of using stalling tactics to force the UK to pay up, with EU Brexit negotiator Michel Barnier deciding to halt transition talks until all budget commitments made before the referendum result are honoured in full. The EU's overall pension bill of €234.8billion (£206billion) will increase by a further €23billion (£20.2billion) thanks to legislation signed off by former Prime Minister David Cameron.
UK treatment of foreign nationals ‘could colour’ MEPs’ view on Brexit - The European parliament’s Brexit coordinator has warned the home secretary that Britain’s recent treatment of foreign nationals could “colour” MEPs’ attitudes to whether they approve a future Brexit deal. Guy Verhofstadt, a former Belgian prime minister, has written to Amber Rudd to express leading MEPs’ concerns about a series of incidents highlighted by the Guardian, including the threat to deport a Japanese woman who lives with her Polish husband in London. Haruko Tomioka, 48, had her child benefit stopped and driving licence revoked, in what critics claim was an example of the Home Office’s attempts to create a “hostile environment” for those it believes should not be in the country. Despite living in the UK for 13 years, and being married to an EU national, Tomioka was told in a formal letter she had seven days to leave the country before the Home Office accepted it had made a mistake. Verhofstadt, who met the Brexit secretary, David Davis, for a meeting on Monday in Brussels, at the British cabinet minister’s bidding, warned Rudd in his letter of the concerns shared by him and colleagues on the European parliament’s Brexit steering group. “An increasing number of these incidents have been reported in the media in the past months,” he wrote. “The most recent case concerned a Japanese spouse of an EU citizen who was threatened with deportation even though she was lawfully in the country under EU law for more than 13 years.“As you are aware, the interests of both the EU and UK citizens are of paramount concern to the European parliament and the institution will act to protect their interests throughout the process leading to the UK’s withdrawal from the EU.” Verhofstadt warned that the UK needed to continue to comply with the letter and the spirit of EU law as long it was still a member of the bloc.
EU says splits within May's Cabinet are impeding negotiations - Express.co.uk: Top EU figures have apparently been left exasperated by a lack of clarity from the UK side on its formal positions, which has left them scouring British newspapers on a daily basis for clues. They raised serious concerns about the lack of a unified message coming out of Downing Street during a series of high-level meetings in Brussels with the Lib Dem MP Tom Brake this week. Officials also expressed fears about a lack of progress on the Irish issue, and in particular on how to prevent the return of a hard border, something that could “derail” the talks.Mr Brake, who is the Lib Dem spokesman on Brexit, met with the parliament’s negotiator Guy Verhofstadt as well as officials from the EU Council, Ireland, car maker BMW and the British team in Brussels, UKREP. Afterwards, he told express.co.uk the European side of the talks had expressed concern about a substantive lack of detail on clear issues and raised fears Ministers are “making excuses” for a lack of progress. He said: “The Cabinet haven’t yet agreed the negotiating stance that they are adopting in relation to the withdrawal. That was made clear to us by officials, who said it feels like they are negotiating with jelly.”
Donald Tusk: There’s not ‘sufficient progress’ in Brexit talks to discuss future UK-EU trade - European Council President Donald Tusk has said there is not yet “sufficient progress” in Brexit talks to discuss future trading relations with the UK. After meeting Theresa May in Downing Street, he said there were signs the UK now had a more “realistic” position and that the Prime Minister appears to have abandoned a “having her cake and eating it” approach to Brexit. But he said he would tell member states there has still not been enough progress towards the EU’s objectives to allow negotiations to move to discussing the future trade deal the UK desires. It follows the Prime Minister’s speech in Florence, in which she proposed a Brexit transition period of two years during which the UK would pay into EU coffers and remain in the single market and customs union. British officials hoped the speech would help to break a deadlock in talks and mean discussion could move on to future relations. But at the start of the fourth round of Brexit talks on Monday, the EU’s chief negotiator Michel Barnier said the UK would have to give a stronger commitment on settling its financial obligations to the EU, before any transition was discussed. Leaving No 10, Mr Tusk backed Mr Barnier, saying: “If you ask me, and if today member states ask me, I would say there is no sufficient progress yet, but we will work on it.” EU officials had been annoyed by suggestions from Foreign Secretary Boris Johnson that the UK could “have its cake and eat it” on Brexit, or have the benefits of the EU without the obligations, but Mr Tusk said that approach appears now to have ended.
Moody’s downgrades Britain debt rating - Manila Times - Moody’s cut Britain’s long-term credit rating Friday, citing economic uncertainty sparked by complex Brexit negotiations and the likelihood of weaker public finances. The ratings agency cut the debt grade one notch to Aa2 from Aa1 with a stable outlook, which reflects expectations Britain’s debt will “continue to rise,” and worries that whatever trade agreement is reached with the European Union, even a “best-case scenario would not award the same access to the EU… that the UK currently enjoys.” Moody’s predicted “weaker public finances going forward” as the government boosts welfare spending after several years of cuts and Prime Minister Theresa May’s parliamentary coalition faces pressure to make good on promises to boost spending for Northern Ireland. The ratings agency also expects Brexit and the loss of access to the single market to weigh on growth, saying it is “no longer confident that the UK government will be able to secure a replacement free trade agreement with the EU which substantially mitigates the negative economic impact of Brexit.” The downgrade came hours after May, in a major address in Italy, vowed that Britain would largely maintain its current ties with Brussels ahead of a fourth round of negotiations with the European Commission next week. The pound fell on the speech, which critics said did too little to clarify matters.
Europe is seeing the rise of 'small-dollar terrorism' funded by 'legitimate' sources — Most jihadist terrorist attacks carried out in Europe since 2015 have been funded using "legitimate" sources such as savings accounts and loans, according to a leading academic in the field. Professor Peter Neumann, director of the International Centre for the Study of Radicalisation, told the Financial Times' Combating Illicit Trade conference on Wednesday that terrorist financing in Europe has changed in recent years because the types of attacks favoured are now relatively cheap to plan. Terrorist financing traditionally refers to money earned by groups such as Al-Qaeda through international drug trafficking or illicit donations from supporters. Home Secretary Amber Rudd earlier this year pledged to crack down on fake charities that are donating sometimes hundreds of thousands of pound to terrorist groups. These large revenues can be used to fund complex and costly attacks, such as sophisticated bomb plots, as well as subsidising propaganda. However, plots in Europe have become relatively simple and uncostly in recent years. Tactics such as ramming vehicles into pedestrians, as occurred in Nice and in London, require only the hiring of a van. The most expensive, the November 2015 attacks in Paris, cost a maximum of €20,000 according to the French government. Neumann said some attacks have cost no more than €500. "Almost all of these attacks were either funded from legitimate sources — from people's savings, income and small loans — or from petty criminality," he said. Europe is seeing is the rise of "small-dollar terrorism," he added, "terrorist attacks that basically cost nothing."
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