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

Saturday, October 28, 2017

week ending Oct 28

 Next Fed Chair Will Help Determine Pace Of Interest Rate Hikes -- President Trump says he is very close to making a decision about who will lead the Federal Reserve once Janet Yellen's term expires in February.The Fed chair is often called the second-most-powerful person in Washington, after the president. By steering interest rate policy, the Fed chair affects economic growth, the pace of job creation and inflation. The Fed also regulates banks and responds to financial crises — it played a massive role in dealing with the Great Recession by cutting interest rates to record lows and buying trillions of dollars in bonds. So it has a big effect on our economic well-being.There are still a handful of names floating around. In an interview on Sunday on Fox Business News, Trump mentioned three names: John Taylor, an economist currently at Stanford University's Hoover Institution; Jerome Powell, a current Fed governor; and Yellen, the current Fed chair.Taylor is probably the easiest candidate to contrast with Yellen. He is the author of something called the Taylor Rule, which is essentially an equation that takes the current growth rate and level of inflation and determines where the Fed should set interest rates. It could put the Fed's decisions on interest rates on autopilot. Some conservatives in Congress have advocated for it.  But critics, including Yellen, say it is not sensitive enough to what is happening in the real world. Taylor has said he would be more flexible than his academic work might suggest. But there's little doubt he would raise interest rates faster than Yellen. Taylor criticized the Fed for holding interest rates too low after the financial crisis, and he continues to believe that.

 Trump asks Fox Business host for advice on Fed chair pick - President Donald Trump solicited advice from Fox Business anchor Lou Dobbs on Wednesday on whom he should pick as the next chair of the Federal Reserve, agreeing with Dobbs’ assessment that incumbent chair Janet Yellen “might be worth keeping” on in the role. Trump, pressed on who plans to nominate for the upcoming vacancy during an interview on Fox Business, tossed the question over to Dobbs, asking what the host’s “preference” would be. Story Continued Below ..“I would love to hear you. I only want that from people I respect,” the president told Dobbs. “I personally believe that Janet Yellen might be worth keeping,” Dobbs replied. The president responded that Yellen “was very impressive” during their recent meeting in the Oval Office, adding, “I like her a lot.” “I mean, it’s somebody that I am thinking about. I would certainly think about it,” Trump said of potentially reinstating Yellen as Fed chair. The exchange was another striking instance of the president looking outside the West Wing for advice on his pending Fed chair nomination. The president asked lawmakers to partake in a show-of-hands poll on who they favored to head the Fed come February when Yellen’s current term expires – current Fed governor Jerome Powell or Stanford University professor John Taylor. Despite Yellen’s “impressive” performance during her meeting, officials said last week that Trump was leaning toward picking Powell to lead the Federal Reserve. Powell has been heavily favored by Treasury Secretary Steven Mnuchin, who has headed up the search.

Cohn Said "Likely To Leave The White House" After Tax Plan, Won't Be Fed Chair – While bookies' odds for Gary Cohn to be the next Fed Chair were already low to minimal,Bloomberg reports that, according to three people familiar with the mater, President DonaldTrump does not intend to appoint National Economic Council Director Gary Cohn to lead the Federal Reserve. , Trump said in at least one private meeting last week that Cohn has no chance of being Fed chair, according to a person present for the remarks. Trump has privately told advisers that Cohn is doing a great job in his current role and that he wants to keep him at the White House through congressional consideration of his proposed tax overhaul, according to a person familiar with the conversations. “No decision has been made and no candidate has been ruled out but Gary’s role is too crucial to getting tax reform done,” a senior administration official familiar with the president’s thinking said. It may be “too important for him to continue to be the lead, for him to announce a change at this time.” Leaving Powell the clear favorite..  But the bigger news from the 'people familiar with the matter' is, as Bloomberg reports,Cohn is likely to leave the White House soon after Congress disposes with the tax plan, two people said.

Warsh vs. Quarles said to be renewed by Trump Fed search - The race to be the next Federal Reserve chairman is rekindling an old feud between Kevin Warsh, one of the Trump administration's finalists, and the newest Republican appointee to the Fed board, according to several people familiar with the matter. Fed Governor Randal Quarles, who was sworn in this month as vice chairman of bank supervision, has told friends that he doesn't think Warsh is qualified to lead the world's most powerful central bank, according to two former associates familiar with his comments. Quarles, they added, is also concerned that Warsh would inject himself into regulatory policies that are meant to be the domain of the vice chairman. Treasury Secretary Steven Mnuchin, a key participant in the chairman search, is aware of Quarles's concerns, the people added. The pushback could be having an impact: Mnuchin has privately made clear that he doesn't support Warsh's candidacy, two people familiar with his thinking have said.President Donald Trump said this week that he is "very, very close" to announcing his selection. He has narrowed the list to Warsh, a former Fed governor, and four others: Fed Governor Jerome Powell; John Taylor, a Stanford University economist; National Economic Council chief Gary Cohn and the current Fed Chair, Janet Yellen.It's not unusual for ambitious, smart people to clash in Washington. But the animosity between Quarles and Warsh shows how long such conflicts can brew and their potential to influence the most critical White House decisions.   The battle dates to when both worked in the George W. Bush administration, and its intensity, especially on the part of Quarles, has surprised many of their former colleagues. Warsh has long been known as a political player who isn't afraid to throw elbows behind the scenes in pursuit of his goals, but Quarles is seen as a low-key, courtly lawyer who has garnered few adversaries in Washington.

It’s Going to Stay a Yellen Fed No Matter Who Gets the Job -- With every headline, financial markets get jolted as investors guess whether President Donald Trump will re-nominate Yellen to the helm of the U.S. central bank or opt for a more hawkish successor such as Stanford University economist John Taylor. Fed chairs matter. If credible, they influence dozens of policies, from regulation to research. But on monetary policy, Yellen’s strategy of gradual rate hikes, and ultra-slow balance sheet runoff, will be difficult for any newcomer to quickly change. The Fed is guided by the goals Congress set for it, what the data say about those goals, and its forecast of how fast it’s going to achieve them. And right now, it has missed its inflation goal for most of the past five years, with the data showing scant sign of a breakout to galloping growth. “I don’t think the fundamentals of the economy allow you to change the policy path that much,” said Seth Carpenter, chief U.S. economist for UBS Securities, and a former Fed economist. “The biggest opportunity for change is with respect to balance sheet policy, and even there I find it hard to see how much change” a newcomer can bring. Trump said this week he’s “very, very close" to announcing his pick for the new Fed chair, who will need Senate confirmation. In a Fox News interview broadcast Sunday, the president specifically mentioned Yellen, Taylor and Fed governor Jerome Powell, without precluding other choices. Yellen and Powell, who has never dissented since his arrival at the Board in May 2012, would be continuity choices. Taylor brings a different framework. If he gets the job, there is little doubt that his influence will be large over the longer run. In the near term, however, the biggest change under a Taylor Fed might be in the area of transparency, . “He would make monetary policy more clear, more transparent, and more accountable to Congress,” Levin added. 

Chicago Fed "Index Points to a Pickup in Economic Growth in September" -- From the Chicago Fed: Index Points to a Pickup in Economic Growth in September Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved up to +0.17 in September from –0.37 in August. All four broad categories of indicators that make up the index increased from August, and three of the four categories made positive contributions to the index in September. The index’s three-month moving average, CFNAI-MA3, was unchanged at –0.16 in September.  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 September (using the three-month average).

Q3 GDP Advance Estimate: Real GDP at 3.0% -  The Advance Estimate for Q3 GDP, to one decimal, came in at 3.0% (2.99% to two decimal places), a decrease over 3.1% for the Q2 Third Estimate. had a consensus of 2.5%.  Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the third quarter of 2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.1 percent. The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The "second" estimate for the third quarter, based on more complete data, will be released on November 29, 2017. [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 1.43%.

BEA: Real GDP increased at 3.0% Annualized Rate in Q3 - From the BEA: Gross Domestic Product: Third Quarter 2017 (Advance Estimate) Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the third quarter of 2017, according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.1 percent.  The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment, exports, and federal government spending. These increases were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.  The deceleration in real GDP growth in the third quarter primarily reflected decelerations in PCE, in nonresidential fixed investment, and in exports that were partly offset by an acceleration in private inventory investment and a downturn in imports.  The advance Q3 GDP report, with 3.0% annualized growth, was slightly above expectations. Personal consumption expenditures (PCE) increased at 2.4% annualized rate in Q3, down from 3.3% in Q2.   Residential investment (RI) decreased at a 6.0% pace. Equipment investment increased at a 8.6% annualized rate, and investment in non-residential structures decreased at a 5.2% pace.

Steady economic growth continues - The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 3.0% annual rate in the third quarter. That is close to the long-term historical average of 3.1%, and better than the 2.1% we’ve seen on average since the Great Recession ended in 2009. Real GDP growth at an annual rate, 1947:Q2-2017:Q3, with the 1947-2017 historical average (3.1%) in blue and post-Great-Recession average (2.1%) in red.Solid growth over the last two quarters has brought our Econbrowser Recession Indicator Index down to 3.3%. The U.S. remains clearly in the expansion phase of the business cycle.  GDP-based recession indicator index. The plotted value for each date is based solely on information as it would have been publicly available and reported as of one quarter after the indicated date, with 2017:Q2 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index, and which were sometimes not reported until two years after the date. About a fourth of the growth in GDP came from inventory accumulation, with real final sales only up 2.3% at an annual rate. Inventory estimates are subject to significant revision and gains there should not be expected to be repeated. Nonresidential fixed investment continues to help, with 3/4 of the 2017:Q3 growth in nonresidential fixed investment coming from purchases of new equipment. Housing still isn’t making a positive contribution.

US Q3 GDP Rises Faster Than Expected - US economic growth was surprisingly resilient in the third quarter, according to this morning’s preliminary estimate from the Bureau of Economic Analysis. Output increased 3.0%, well above the 2.5% consensus forecast via and only slightly below Q2’s solid 3.1% advance. For all the talk that blowback from recent hurricanes would weigh on economic activity in Q3, there was nary a sign of trouble in the headline number. Excluding the previous quarter, the 3.0% advance in Q3 marks the strongest GDP rise in three years. As usual, the main driver of growth in absolute terms is consumer spending, which dominates economic activity. Although the rate of increase in personal consumption expenditures decelerated in Q3 to 2.4% from 3.3% in Q2, the rise is strong enough to keep the economy moving forward for the near term. Within the consumer sector, durable goods spending picked up to 8.3% in Q2, the fastest pace this year. The firmer rate offset softer growth in nondurable goods and services.Private inventories delivered the biggest positive improvement for growth contribution in Q3 among the main GDP categories. This slice of the economy contributed 0.73 percent points in the August-through-September period, up from 0.12 percentage points previously. The biggest drag on GDP in Q3 in terms of contribution to the headline number: residential fixed investment, which subtracted 0.24 percentage points, the second round of quarterly red ink in this corner.Overall, today’s report strengthens the view that US economic momentum rolls on and is no immediate danger of stumbling to a stall-speed pace or worse. Recession risk, in short, remains virtually nil for the moment, as Tuesday’s economic risk report advised.“There are no real headwinds to growth for the first time since the expansion began,” notes Mark Zandi, the chief economist of Moody’s Analytics. “We are at full employment and we are in full swing, let the good times roll.”

US Economy Unexpectedly Grew At 3.0% In Q3 As BEA Ignores Impact Of Hurricanes Harvey, Irma -- In the immediate aftermath of Hurricanes Harvey and Irma, Wall Street quickly trimmed its Q3 GDP forecasts from 3.0% to the low/mid 1% range, expecting a substantial, if brief, adverse impact on US growth from the storm devastation. However, moments ago the BEA surprised everyone when it reported that in its first estimate of third quarter growth the US economy grew an unexpectedly hot 3.0%, putting all fears of a hurricane-induced slowdown in the rearview mirror, and suggesting that the economy may indeed be starting to overheat with a second consecutive 3.0% or higher GDP print, as if the hurricanes did not have any adverse impact on the economy at all (they did, but as we explain below, the BEA simply decided to ignore the impact of the hurricanes). The Q3 GDP was above the consensus estimate of 2.6% and just below the 3.1% in the second quarter. The back to back 3.0% or higher prints are the fastest pace of growth since the  4.6% and 5.2% revised GDP growth reported for Q2 and Q3 2014. Looking at the components, Personal Consumption rose 2.4%, above the 2.2% expected, and contributed 1.62% to the bottom line Q3 GDP, which while down from the 2.24% in Q2, was still stronger than expected. The increase in consumer spending reflected increases in spending on both goods and services. The increase in goods was mostly attributable to motor vehicles, and the increase in services primarily reflected increases in health care, in financial services and insurance, and in food services and accommodations. The big driver of GDP growth was the jump in private inventories, which contributed 0.73%, or nearly a quarter, of the net GDP number. The increase in inventory investment primarily reflected increases in wholesale and in manufacturing inventories. The increase in business investment reflected increases in equipment and in intellectual property products; these increases were partly offset by a decrease in structures investment. Additionally, for inflation watchers, the Fed's preferred inflation metric, Core PCE rose 1.3% q/q in 3Q, in line with expectations, after rising 0.9% prior quarter; while PCE Prices advanced 1.5%, above the 1.2% expected. Final sales to private domestic purchasers q/q rose 2.2% in 3Q after rising 3.3% prior quarter.

This GDP report is whispering some really important messages to us - Jared Bernstein - A bunch of notable points from this morning’s advanced GDP report for 2017Q3. The economy’s growing a good clip (though not at the 3% headline number), with no price pressures in sight. Consumer spending is solid, boosted by job and earnings growth as well as, I suspect, a wealth effect from the stock market (stock market gains are not in GDP, but if people feel wealthier, they spend a little bit more). The hurricanes didn’t faze the data flow (note: Puerto Rico is not counted in national GDP), and a few noisy factors, especially an inventory bump, helped boost the number (I smooth out the noise below). Yes, the White House is going to brag on this report, as pretty much any White House would. But what they should see here is yet another great reason to not screw around with the Fed chair. Leave Yellen where she is, Trump, and go tweet about your awesome golf skills, or something.Also, why, why, why—if the economy is percolating along at a solid, steady clip, do we need big-ass, wasteful tax cut? That’s a rhetorical question, but other than “because we won and that’s what our donors want!,” I’ve not heard anything like a decent answer to that question. First, readers know I’m all about discounting the annualized quarterly growth rates, which as you see below are choppy. So, while the White House will crow about the topline 3% number (the real, annualized growth from q2 to q3), I emphasize the 2.3% year-over-year growth rate. The figure shows both measures and the important bit is the way the yearly rate smooths out the bips/bops of the annualized quarterly one. Punchline: the underlying, trend growth rate of real GDP is around 2%, though slightly north of that, and the last six quarters do show a nice, steady acceleration of the yearly growth rate (I’ll get back to the price column of the table below): The Congressional Budget Office estimates potential GDP, i.e., what the level of the economy’s output should be at full utilization of our stock of labor and capital, given our productivity (the latter being how efficiently were transforming said inputs into outputs). As of 2017q3, nominal GDP is back to potential, so by this measure, we’re at full employment (see figure; this is the first quarter in the expansion that both real and nominal GDP beat CBO’s potential). You’d get the same result from looking at the 4.2% unemployment rate and various estimates of the lowest rate believed to be consistent with stable prices.

Leading indicators in GDP report negative for second straight quarter --Three months ago, when the preliminary read on second quarter GDP was released, I started out with, "While Q2 GDP increased at a smart rate, there was bad news in both of the long leading indicators that are contained in the release." Today's preliminary report on Q3 GDP makes it two quarters in a row.  There are two long leading indicators in the GDP report: real private residential investment and corporate profits. Since the latter is not released until the second or third revision, the less leading proxy of proprietors' income serves as a placeholder. Real private residential investment declined at a -6.0% annual rate, following a revised -7.8% annual rate for Q2.  That's even worse when you take into account that the best measure is housing investment as a share of GDP. Since housing investment declined and GDP rose, that's an even bigger hit. Secondly, proprietors' income rose slightly, only +0.2% overall and +0.6% on a nonfarm basis, before adjusting for inflation, which ran over 1% last quarter, meaning that on a real basis, both declined.  The below graph compares these with corporate profits adjusted for unit labor costs, which had increased very slightly in Q2: One quarter could just be noise. But two quarters in a row later in the expansion is at very least a yellow flag. In the last month I have downgraded my long leading forecast from positive to neutral. I'm NOT negative now, but any further significant spreading or deterioration will cause me to turn negative for the first time since late 2006. I'll update later with graphs once FRED posts the info.

Q3 GDP: Investment - The first graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.  In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue.  The dashed gray line is the contribution from the change in private inventories. Residential investment (RI) decreased at a 6.0% annual rate in Q3. Equipment investment increased at a 8.6% annual rate, and investment in non-residential structures decreased at a 5.2% annual rate. On a 3 quarter trailing average basis, RI (red) is slightly negative, equipment (green), and nonresidential structures (blue) are positive. The slight dip in RI isn't concerning - as long as it doesn't continue! The second graph shows residential investment as a percent of GDP. Residential Investment as a percent of GDP decreased in Q3, but has generally been increasing. RI as a percent of GDP is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next couple of years. I'll break down Residential Investment into components after the GDP details are released. Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

Q3 Real GDP Per Capita: 2.34% Versus the 2.99% Headline Real GDP - The Advance Estimate for Q3 GDP came in at 3.0% (2.99% to two decimals), down from 3.1% in the Third Estimate of Q2 GDP. With a per-capita adjustment, the headline number is lower at 2.34% 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 9.3% below the pre-recession trend.

2-Year Treasury Yield Rises To Nine-Year High - The Treasury market continues to price in firmer odds of another rate hike by the end of the year. Notably, the policy sensitive 2-year yield edged up to 1.60% yesterday (Oct. 24) for the first time since 2008, signaling that a hawkish bias continues to dominate fixed-income trading. The benchmark 10-year yield advanced too, although this rate’s upward bias remains well below its peak in recent years. The 10-year rate inched up to 2.42% on Tuesday, a five-month high, based on daily data via DoubleLine Capital Chief Investment Officer Jeffrey Gundlach, an influential voice in the bond market, tweeted on Tuesday that “The moment of truth has arrived for secular bond bull market!”Meanwhile, Fed funds futures are estimating a 97% probability that the Federal Reserve will lift its current 1.0%-to-1.25% target rate at the December FOMC meeting, based on CME data this morning.Growing speculation that President Trump is considering replacing Fed Chair Janet Yellen with Fed Governor Jerome Powell or Stanford economist John Taylor is also part of the mix for the bond market lately. Taylor’s considered a hawkish choice, based on his work for developing a set of rules for the central bank’s interest-rate decisions. According to CNBC, the so-called Taylor Rule indicates that Fed funds should be significantly higher at roughly 3%, more than double the current 1.0%-to-1.25% target range.Another factor lifting rates lately: strengthening expectations that Congress will pass tax-reform legislation, including the prospect for a cut in tax rates that’s considered a pro-growth measure by the administration. “It’s going to be all growth,” Trump recently asserted. “That growth can be staggering.” Many analysts are skeptical, but for now the bond market’s inclined to assume that a tax cut will be a positive for the economy.Despite the recent rise in yields, the Treasury market’s implied inflation forecast remains relatively subdued and steady. The yield spread for the nominal 5-year rate less its inflation-indexed counterpart, for instance, is currently 1.73% — roughly the average for the range so far in 2017 and moderately below the Fed’s 2.0% inflation target. The implication: there’s still a case to forgo more rate hikes in the near term.

Budget deficit projected to pass $1 trillion even sooner than expected - Expected tax cuts along with increased spending for hurricane victims and a higher debt ceiling could push the U.S. budget deficit even higher than expected. In fact, the deficit could break $1 trillion by 2020, two years sooner than current government projections, according to a Goldman Sachs analysis. "We have increased our budget deficit forecasts somewhat over the next few years to reflect the effect of disaster spending, expected tax cuts, and an increase in spending caps," Goldman Sachs chief economist Jan Hatzius said in a note. Under the new estimates, the deficit will hit $750 billion in 2018, $900 billion in 2019 and $1.025 trillion in 2020. The figures represent a $50 billion increase for next year and $75 billion for each of the following two years. If accurate, they could be quite a bit higher than what the Congressional Budget Office expects. Figures the Treasury Department released last week showed that fiscal year 2017 ended with a $666 billion shortfall, which actually was lower than the CBO projection of $693 billion. However, the office expects the deficit to fall to $563 billion in 2018 then hit $689 billion and $775 billion in the following two years. The 2017 debt represented 3.5 percent of GDP, an increase of 0.3 percentage points from the previous year. CBO does not see the deficit passing the $1 trillion mark until 2022, when it is estimated at $1.03 trillion, then expects it keep rising to $1.46 trillion by 2027. 

Time for Politicians to Stop Deficit Fearmongering - Real News Network, interview and transcript. The common misconception is that the government is doing something wrong when it runs a deficit, but what most people don't understand is that there's a matching surplus in another part of the economy, says economist Stephanie Kelton.  Stephanie Kelton is a Professor of Public Policy and Economics at Stony Brook University. She is also the former Chief Economist on the US Senate Budget Committee and Economic Advisor to the Bernie 2016 presidential campaign.

Fear, Not Debt, Limits Our Spending on Education and Infrastructure – Dean Baker - In his Washington Post column (10/26/17), Fareed Zakaria pushes the pet myth of the arithmetic-challenged elite (yes, that is probably redundant) that the federal debt is limiting spending for many important ends: [The United States] is politically paralyzed, unable to make major decisions. Amidst a ballooning debt, its investments in education, infrastructure, and science and technology are seriously lacking.  Arithmetic fans would evaluate this assertion by looking for evidence that the debt is causing problems such as high interest rates and inflation, and creating a large debt-service burden.  The opposite is the case, with long-term interest rates still under 2.5 percent, compared to more than 5.0 percent in the surplus years of the late 1990s. Inflation remains under the Fed’s 2.0 percent target, and has actually been trending downward this year. And debt service is less than 1.0 percent of GDP (net of interest rebated by the Fed), compared to over 3.0 percent in the 1990s. In short, there is no evidence that debt is limiting our ability to spend more in these and other areas. There is a strong case that fears over the debt, raised by folks like Zakaria, are limiting our ability to invest for the future.

So Much For Fiscal Probity - Menzie Chinn - House adopts Senate budgetThe budget will allow Republicans to pass a tax overhaul that adds up to $1.5 trillion to the deficit through a process known as reconciliation, which only requires 51 votes to pass in the Senate.  Here’s the implications for debt:   In other words, the legendary “true” Republican deficit hawk is a rare creature indeed.  If the legislation passes, my back of the envelope calculations (based on these estimates) suggest a 0.5 ppt of GDP increase in the current account relative to what would have otherwise occurred.

Trump To Recall Up To 1,000 Retired Air Force Pilots In Revised 9/11 Executive Order -- In an unexpected development, President Donald Trump has signed an executive order allowing the Air Force to recall up to 1,000 retired pilots to address what the Pentagon has decribed as "an acute shortage of pilots," Fox News reported. The order, which Trump signed Friday, amends an emergency declaration signed by George W. Bush in the days after the Sept. 11, 2001 terror attacks. The Air Force is only allowed to recall up to 25 pilots under current law. The order signed by Trump temporarily removes that cap for all branches of the military. A Pentagon spokesman, Navy Cmdr. Gary Ross, said in a statement that the Air Force is currently "short approximately 1,500 pilots of its requirements." That number includes approximately 1,200 fighter pilots. "We anticipate that the Secretary of Defense will delegate the authority to the Secretary of the Air Force to recall up to 1,000 retired pilots for up to 3 years," Ross said.  "The pilot supply shortage is a national level challenge that could have adverse effects on all aspects of both the government and commercial aviation sectors for years to come."Read the full text of the order below:

 US To Put Nuclear Bombers On 24 Hour Alert: First Time In 26 Years - The unexpected decision by President Trump to amend an emergency Sept 11 order signed by George W Bush, allowing the Air Force to recall up to 1,000 retired air force pilots to address what the Pentagon has decribed as "an acute shortage of pilots" caught us by surprise. After all, this was the first time we have heard of this particular labor shortage - perhaps there was more to this executive order than meets the eye. Indeed, a just released report may help explain the reasoning behind this presidential decision.According to Defense One, the US Air Force is preparing to put nuclear-armed bombers back on 24-hour ready alert, a status not seen since the Cold War ended in 1991.   “This is yet one more step in ensuring that we’re prepared,” Gen. David Goldfein, Air Force chief of staff, told the publication in an interview during his six-day tour of Barksdale and other U.S. Air Force bases that support the nuclear mission. “I look at it more as not planning for any specific event, but more for the reality of the global situation we find ourselves in and how we ensure we’re prepared going forward.”Quoted by Defense One, Goldfein and other senior defense officials stressed that the alert order had not been given, but that preparations were under way in anticipation that it might come. That decision would be made by Gen. John Hyten, the commander of U.S. Strategic Command, or Gen. Lori Robinson, the head of U.S. Northern Command. STRATCOM is in charge of the military’s nuclear forces and NORTHCOM is in charge of defending North America. Putting the B-52s back on alert is just one of many decisions facing the Air Force as the U.S. military responds to a changing geopolitical environment that includes North Korea’s rapidly advancing nuclear arsenal, President Trump’s confrontational approach to Pyongyang, and Russia’s increasingly potent and active armed forces.

With 3 aircraft carriers nearby, Mattis lays down the law for North Korea -  Defense Secretary Jim Mattis visited the demilitarized zone between North and South Korea on Friday and made clear the US's mission in dealing with Pyongyang: to denuclearize the Korean Peninsula.  "North Korean provocations continue to threaten regional and global security despite unanimous condemnation by the United Nations Security Council," Mattis said near North Korea's border, according to Reuters.  "As Secretary of State Tillerson has made clear, our goal is not war, but rather the complete, verifiable, and irreversible denuclearization of the Korean peninsula," Mattis continued. But North Korea has repeatedly made it clear that it would not denuclearize and would even go to war to prevent outside forces from disarming them.  The stalemate between North Korea and the US is well known, but Mattis' statement took on new weight in North Korea's border with three US aircraft carriers in or heading to the Pacific. While Mattis said clearly that war is not the US's intention, military strength has taken an increasingly prominent role in the struggle. South Korean President Moon Jae-in praised the "aggressive deployment" of US strategic assets like aircraft carriers to the country, saying it helped deter North Korea. A separate statement from the US military's top military officer, Chairman of the Joint Chiefs of Staff Marine Gen. Joseph Dunford, said that "any attack" from North Korea would be met with an "overwhelming and effective" response, "using the full range of US military capabilities."

The Unthinkable Becomes Discussable With North Korea - On an unseasonably warm October day recently, Donald Trump’s CIA director and national-security adviser soberly assessed the world’s greatest threats below the gentle light of chandeliers in a hotel ballroom.  All was normal in Washington—except that two of the president’s top aides were signaling, with deadly seriousness, that conflict could soon erupt between two nuclear-weapons powers. Talk of nuclear war—of the “general and universal physical fear” of being “blown up” at any moment, as William Faulkner once put it—subsided with the end of the Cold War. Americans instead cited “fear of the greenhouse effect, the ozone layer, and Chernobyl as dangers to the future,” a psychoanalyst told The New York Times in 1992, when George Bush and Boris Yeltsin officially concluded the rivalry between the nuclear superpowers. Just a few years ago, former U.S. Secretary of State John Kerry was observing that while it was good that “our children don’t know what the threat of nuclear war really feels like,” this generational divide made it more challenging to convey the urgency of ridding the world of its deadliest weapons. But as North Korea’s nuclear program has rapidly advanced, and as the Trump administration has sounded the alarms about that progress, such talk is creeping back into public discourse in Washington and beyond. The president and his advisers have avoided explicit discussion of nuclear war. Yet they’ve spoken increasingly openly—and with remarkable stoicism—about the potentially catastrophic toll of a U.S.-North Korean conflict, not only because both countries possess nuclear weapons but because North Korea has formidable non-nuclear arms and shares a heavily militarized peninsula with South Korea.

On North Korea, ‘We’re Fools If We Don’t Start Taking the President at His Word’ - On Friday, Donald Trump’s defense secretary traveled to the tensest point of the world’s tensest conflict to deliver a message. “Our goal is not war,” James Mattis declared at the the border between South Korea and North Korea, but rather to persuade Kim Jong Un to give up his rapidly expanding nuclear-weapons arsenal through hard-nosed diplomacy. Back in Washington, D.C., however, a counter-message is percolating: The president’s repeated threats of war with North Korea, and his advisers’ increasingly urgent warnings that the administration could be forced to take military action if diplomacy fails, aren’t being taken seriously enough. The alarms may be ringing loudest in Congress, where a broader debate is building about who has the power to wage war. Bob Corker, the Republican chairman of the Senate Foreign Relations Committee, will on Monday hold a hearing about the president’s authority to use military force. Corker has expressed concern that Trump, with his fiery rhetoric and disdain for diplomacy, is leading the country toward another “world war,” this time on the Korean peninsula.   And on Wednesday, amid a similar legislative push in the House, Chris Murphy announced that he and two other Democratic senators, Brian Schatz and Cory Booker, will be introducing legislation next week to prohibit the president from taking military action against North Korea—whether nuclear or non-nuclear—without congressional authorization. Murphy argues that the bill is merely a “restatement of existing law”—specifically the War Powers Act of 1973—applied to the pressing case of North Korea, though he allowed that the president likely has a different interpretation of his authorities under Article II of the Constitution.  “By making it clear what Congress’s interpretation is of the president’s war-making ability in North Korea, I think we begin to bind his hands,” he told me. “I think we’re fools if we don’t start taking the president at his word,” said Murphy, who sits on the Senate Foreign Relations Committee and has been a leading Democratic voice on foreign policy since Trump’s election. “He has shown an enthusiasm for military force against North Korea in his Twitter account that is extraordinary.”

The Contradiction at the Core of Trump’s North Korea Strategy -- In a joint appearance at a security conference on Thursday, CIA Director Mike Pompeo and National-Security Adviser H.R. McMaster exposed a central tension in the Trump administration’s efforts to counter the North Korean nuclear-weapons program. Both officials stressed that North Korea was rapidly approaching a milestone that might prompt the U.S. military to go to war with Kim Jong Un. But they claimed that their current approach consists of peacefully exerting economic and diplomatic pressure on Kim until he agrees to begin dismantling his nuclear arsenal—the kind of campaign that typically takes years to succeed, if it succeeds at all. The timing, in other words, doesn’t add up. “We’re not out of time, but we are running out of time” to deal with North Korea’s nuclear program, McMaster said. Previous administrations had kicked the North Korea can down the road, he argued, and now we’re all out of road.  Pompeo explained why. Kim Jong Un and his scientists are fine-tuning their nuclear-weapons capabilities with each successive missile and nuclear test, he noted, including the capacity to credibly threaten the United States with nuclear weapons by fitting a nuclear warhead on a long-range missile. “They are close enough now in their capabilities that from a U.S. policy perspective, we ought to behave as if we are on the cusp of them achieving that objective,” Pompeo said.  Yet the “global effort” that Pompeo and McMaster proceeded to describe involves persuading China to crack down on North Korea in ways it has resisted for decades, and compelling North Korea to do something it insists it won’t and that only one other country has done before: give up the nuclear-weapons arsenal that it painstakingly built. It took many years for international economic sanctions and diplomatic isolation to force Iran to agree to restrictions on its nuclear program. And Iran never possessed nuclear weapons or a superpower patron like China. The time mismatch suggests that one of two things may soon have to give: either the Trump administration’s economic and diplomatic “pressure” campaign against North Korea, or the red line it has drawn on North Korea acquiring the ability to reliably strike the United States with nuclear weapons.

Think positive: How to get North Korea to roll back its nuclear weapons activity - Bulletin of the Atomic Scientists - If the definition of insanity is doing the same thing over and over while expecting different results, insanity is an apt description of US sanctions policy against North Korea. Though North Korea has been under sanctions for more than a decade, both bilaterally from the United States and multilaterally from the United Nations, North Korean leader Kim Jong-un's fervor for strengthening his nuclear weapons program has only increased. He responded to new sanctions imposed by the United Nations in September by conducting further nuclear tests. This prompted the United States to propose even harsher sanctions, and for US President Donald Trump to respond to Kim with fiery rhetoric of his own.This is a dangerous cycle, leaving room for nothing but further escalation. Rather than proposing harsher sanctions or threatening military action, the United States would be better served by offering North Korea positive inducements to roll back its nuclear activity.  Inducements, broadly defined, are instruments used to persuade a state or other actor—in this case, North Korea—to change its behavior. When used as tools of counterproliferation, they can be either positive or negative in nature. There are two types of positive inducements that can bring about nuclear reversal, the decision by a state to give up its nuclear weapons or its technical capabilities to produce a nuclear weapon: economic incentives, such as the transfer of technology, money, or knowledge in exchange for abandoning nuclear weapons; or security incentives, such as offering assurances to remove a perceived threat, placing a state under the nuclear umbrella of a nuclear power, building confidence by creating or strengthening alliances, or offering diplomatic recognition. Most studies have focused almost exclusively on the efficacy of economic sanctions to prevent or reverse nuclear proliferation. Very few have analyzed the utility of positive inducements (for exceptions see this, this, and this), and even fewer have looked at the net effects of comprehensive packages that include both positive and negative inducements—although proliferation diplomacy often embraces such packages as a way of dealing with states of concern.

Trump Blames Russia for ‘Hurting’ U.S. Efforts on North Korea’s Nuclear Weapons — President Donald Trump said on Wednesday that Russia was having a negative impact on U.S. efforts to rid North Korea of nuclear weapons while China had been helpful.  In an interview with Fox Business Network, Trump said it would be easier to resolve the North Korea nuclear issue if the United States had a better relationship with Russia. "China is helping us and maybe Russia's going through the other way and hurting what we're getting," Trump said of the North Korea situation. A series of weapons tests by North Korea and a string of increasingly bellicose exchanges between Trump and North Korean leader Kim Jong Un have ratcheted up tensions. Trump has pressed China to help rein in North Korea's nuclear program.  As North Korea's sole major ally, China accounts for more than 90 percent of trade with the isolated country.  Trump said in a tweet that he spoke with Chinese President Xi Jinping on Thursday and the conversation included North Korea.  U.S.-Russia relations have been strained over allegations Russia meddled in the 2016 presidential election, Moscow's annexation of Crimea from Ukraine and its backing of the Syrian government.  "I think we could have a good relationship" with Russia, Trump said. "I think that North Korean situation would be easier settled."  Trump said during last year's campaign that he hoped to improve relations with Moscow.

Trump’s Iran Strategy Looks Ominously Familiar - The similarities with the 2003 Iraq War are striking, starting with the president’s manipulation of facts and intelligence to suit his political purposes. In his speech last Friday, for example, Trump stretched the evidence to portray Iran as a partner of Al Qaeda and North Korea, speciously suggested Iran was on the verge of collapse when international sanctions were suspended in 2015, overstated the “financial boost” Iran got as a result of the nuclear deal, falsely asserted Iran was intimidating weapons inspectors, and incorrectly claimed that the deal’s key restrictions disappear “in just a few years.” Trump also alleged that “the Iranian regime has committed multiple violations of the agreement,” an odd assertion given the repeated conclusions of the International Atomic Energy Agency, and Trump’s own intelligence services, that it has not. In fact, Trump’s main evidence for this last claim—Iran’s temporary and quickly corrected slight excess in its stockpile of heavy water—was an excellent example of the effective functioning of the deal, which in any case had already required Iran to dismantle its only heavy water reactor, whose core is now filled with concrete.   Listening to Trump’s misleading statements, it was hard not to recall President George W. Bush’s famous 2003 State of the Union claim that Saddam Hussein had “recently sought significant quantities of uranium from Africa,” Vice President Dick Cheney repeatedly and categorically asserting that “Saddam has resumed his efforts to acquire nuclear weapons,” and Secretary of State Colin Powell’s speech to the United Nations asserting that Iraq had an active biological weapons program and close links to Al Qaeda.  Today, similarly, it is hard to avoid the conclusion that Trump’s claims emerged not from an assessment of the facts—after all, Trump had already twice certified to Congress based on intelligence assessments and the advice of his top national security advisers that Iran was complying with a deal that is in the U.S. interest—but rather from his reported tasking of White House officials last July to come up with a rationale for decertification.

Tillerson Demands Iran "Militias" Leave Iraq As Fighting Against ISIS "Comes To A Close" - One week after we reported that the head of Iran's elite Revolutionary Guard (which two weeks ago was designated by the US as a terrorist organization), Qassem Soleimani, was observed in Erbil last Sunday where he met with Kurdistan regional president Barzani to discuss the growing crisis - the latest indication of Iran's surging influence in the region - and just days before Iraq sent in troops assisted by Iranian militia into Iraq's Kurdish region, which promptly regained control over the oil-rich Kirkuk region, on Sunday Secretary of State Rex Tillerson said that Iranian "militias" need to leave Iraq as the fight against Islamic State militants was coming to an end. “Certainly Iranian militias that are in Iraq, now that the fighting against (the Islamic State group) is coming to a close, those militias need to go home,” Tillerson said during a press conference in Riyadh, where the U.S. diplomat is holding talks with top Gulf officials. "All foreign fighters need to go home,” he added hopefully, quoted by NRT. Tillerson's Gulf visit came as part of concerted efforts to curb Iran's rapidly expanding influence in the region, including boosting the clout of Sunni-ruled Saudi Arabia in Shiite-majority Iraq, where Iran backs Shia militias fighting in the north - part of a wider regional battle for influence that extends from Syria to Yemen - even as there was scant hope of a breakthrough in attempts to reconcile Saudi Arabia and Qatar.

Rex Tillerson Makes "Secret" Visit To Afghanistan  -- One day after Rex Tillerson's visit to Saudi Arabia, which came as part of the US Secretary of State's concerted efforts to curb Iran's rapidly expanding influence in the region, including boosting the clout of Sunni-ruled Saudi Arabia in Shiite-majority Iraq, and urging Iranian militias to leave Iraq as the "fighting against ISIS comes to an end", Tillerson made an unannounced visit to Afghanistan's capital Kabul, where he is in discussions with President Ashraf Ghani about the United States’ policy towards South Asia. "Cloaked in secrecy and under heavy security, Tillerson slipped out of the Qatari capital of Doha in the pre-dawn hours" and flew to Bagram Air Base, AP writes. The secret visit was the third stop on his Middle East and South Asia trip, which started in Saudi Arabia and Qatar, and will finish in Pakistan and India.“The Secretary stated that the new U.S. strategy for South Asia makes clear the United States’ commitment to working with the government of Afghanistan and with partners across the region to achieve peace in Afghanistan and deny safe havens to terrorists who threaten that goal,” the U.S. Embassy in Kabul said in a statement. “President Ghani reiterated his support for the new U.S. strategy and emphasized his government’s commitment to reforms aimed at ensuring the safety, security, and well-being of all Afghans.”“The U.S. has made it clear in terms of our support for Afghanistan, support a sovereign unified Afghanistan, a democratic Afghanistan, of charting a path to peace, prosperity and self-reliance,” Tillerson told the small group of reporters allowed to accompany him to Kabul. “It is imperative in the end that we are denying safe haven to any terrorist organizations or any extremists to any part of this world.”“We also want to work with regional partners to ensure that there are no threats in the region,” he said. “This is very much a regional effort as you saw. It was rolled out in the strategy itself, demanding that others deny safe haven to terrorists anywhere in the region. We are working closely with Pakistan as well.”

Senators Stunned to Discover We Have 1,000 Troops in Niger -- The death of four U.S. Special Operations Forces troops in Niger has generated a raucous conversation about how presidents should comfort bereft Gold Star families.  But, quietly, it’s fueling a more difficult debate than whether a phone call or a letter suffices in the aftermath of tragedy; mainly, why were U.S. troops in the country in the first place, and does Congress need to exert more authority when it comes such deployments? Many lawmakers assiduously duck these questions. But on the Sunday shows, several were forced to address them in the aftermath of four soldiers dying under still-mysterious circumstances near the small town of Tongo Tongo. In the process, two powerful Senators tacitly admitted that they hadn’t even known the extent of U.S. involvement in Niger in the first place.  Sen. Lindsey Graham (R-S.C.), one of the chamber’s most hawkish members, told host Chuck Todd on Meet the Press that he didn’t know until recently that a thousand U.S. troops are stationed in Niger.  Graham is on the powerful Senate Armed Services Committee, tasked with overseeing the Pentagon. And he made the admission when Todd pressed him on whether Congress needs to vote on an Authorization of Use of Military Force (AUMF) for that mission. “The military determines who the threats are, they come up with the engagement policy and if we don’t like what the military does, we can defund the operation,” Graham said. “But I didn’t know there was a thousand troops in Niger.” Graham added that as long as American military activity involves countering “radical Islamist fundamentalism and the spread of it,” Congress doesn’t need to give the Pentagon any special permission since, in his view, the AUMFs that passed in 2001 was sufficient. That AUMF, which sailed through Congress after the attacks on 9/11 has been used as legal justification for numerous campaigns beyond counteracting the Taliban in Afghanistan; most prominently in Syria to target ISIS and, now, as far-flung as Niger.  Sen. Chuck Schumer (D-N.Y.), the chamber’s most powerful Democrat, admitted later on the same show that he was just as ignorant as Graham about the number of U.S. troops in Niger. When Todd asked him if he knew previously about the thousand troops there, he said he didn’t.

The Pentagon Can’t Say What Happened In Niger. Local Officials Say Troops Were Set Up – Facing mounting questions about the attack in Niger that left four US soldiers dead, the US military's top general on Monday pledged to be transparent about what the Pentagon knows.But that turned out to be precious little as Joint Chiefs Chairman Marine Gen. Joseph Dunford offered a new timeline, but few details, even as news reports emerged from the region suggesting that the US soldiers and their Nigerien partners were set up for the attack by residents of a village they were visiting."The attackers, the bandits, the terrorists have never lacked accomplices among local populations," Almou Hassane, the mayor of Tongo Tongo, told the French-to-Africa service of the US government's Voice of America.A village chief in Tongo Tongo was arrested after the attack, VOA quoted Hassane as saying. The US news service reported that the arrest of Mounkaila Alassane was later confirmed by a Nigerien legislator.The editor of a newspaper in Niamey, Niger's capital, also gave a similar account, according to VOA. The editor, Moussa Askar, cited the country's defense minister as the source of his information."It turns out that this village was a little contaminated by hostile forces," the VOA quoted Askar as saying. "The unit stayed a little longer than expected because, apparently, people were aware that something was going on."According to the VOA report, a fake terror attack was staged nearby. The US and Nigerien soldiers rushed to the scene, where they were attacked by about 50 or more assailants in vehicles and on motorcycles. Four Nigerien soldiers and three Americans were killed on the spot, VOA said. The fourth American, Army Sgt. La David Johnson, was killed later, according to the VOA report.

 It’s Not Just Niger — U.S. Military Activity Is a “Recruiting Tool” for Terror Groups Across West Africa -  Neither the White House chief of staff, the chair of the Joint Chiefs of Staff, nor the president ever addressed it in a press briefing. But from mid-January to late March 2013, Green Berets from the 10th Special Forces Group deployed to the impoverished West African nation of Niger. Working alongside local forces, they trained in desert mobility, the use of heavy weapons, and methods of deliberate attack.  Until recently, such missions were conducted without notice or media scrutiny. Americans were involved in firefights, but the operations were kept quiet. When special operators died in Africa, it was due to an accident or after a night of partying. Americans were rarely killed in combat.  U.S. forces are already deployed all across Africa by the thousands. Around 6,000 troops are on the continent, conducting 3,500 exercises, programs, and engagements each year – almost 10 missions each day — from Cameroon to Somalia, Djibouti to Libya. More than 800 of these forces, Pentagon spokesperson Maj. Audricia Harris told The Intercept, are deployed to Niger. This is up from approximately 100 troops sent in 2013 to carry out drone reconnaissance missions, making the hardscrabble country, wedged between seven nations, including Mali, Libya, Nigeria, and Chad, the largest concentration of U.S. military forces in West Africa. “The rapid, largely unrecognized increase in U.S. troops in Niger is part of the large expansion of the U.S. military footprint in Africa,” says William Hartung, director of the Arms and Security Project at the Center for International Policy. “This expansion is long overdue for congressional scrutiny and public discussion.” U.S. efforts, primarily focused on training allies and proxies, are flawed, often ineffective, and can have destabilizing effects on countries that military operations are meant to strengthen, according to experts. Cast as benign training operations, they can lead to unforeseen consequences and dangerous blowback. “While the Pentagon likes to downplay the military aspects of these missions, in a number of instances, they have involved acts of war that risk getting the U.S. involved in broader conflicts, even as they have had little impact on the spread of terrorism,” Hartung notes.

America’s Forever Wars - NYT Editorial - The United States has been at war continuously since the attacks of 9/11 and now has just over 240,000 active-duty and reserve troops in at least 172 countries and territories. While the number of men and women deployed overseas has shrunk considerably over the past 60 years, the military’s reach has not. American forces are actively engaged not only in the conflicts in Afghanistan, Iraq, Syria and Yemen that have dominated the news, but also in Niger and Somalia, both recently the scene of deadly attacks, as well as Jordan, Thailand and elsewhere. An additional 37,813 troops serve on presumably secret assignment in places listed simply as “unknown.” The Pentagon provided no further explanation. There are traditional deployments in Japan (39,980 troops) and South Korea (23,591) to defend against North Korea and China, if needed, along with 36,034 troops in Germany, 8,286 in Britain and 1,364 in Turkey — all NATO allies. There are 6,524 troops in Bahrain and 3,055 in Qatar, where the United States has naval bases.  America’s operations in conflict zones like Africa are expanding: 400 American Special Forces personnel in Somalia train local troops fighting the Shabab Islamist group, providing intelligence and sometimes going into battle with them. One member of the Navy SEALs was killed there in a mission in May. On Oct. 14, a massive attack widely attributed to the Shabab on a Mogadishu street killed more than 270 people, which would show the group’s increased reach. About 800 troops are based in Niger, where four Green Berets died on Oct. 4. Many of these forces are engaged in counterterrorism operations — against the Taliban in Afghanistan, for instance; against the Islamic State in Iraq and Syria; against an affiliate of Al Qaeda in Yemen. So far, Americans seem to accept that these missions and the deployments they require will continue indefinitely. Still, it’s a very real question whether, in addition to endorsing these commitments, which have cost trillions of dollars and many lives over 16 years, they will embrace new entanglements of the sort President Trump has seemed to portend with his rash threats and questionable decisions on North Korea and Iran. For that reason alone, it’s time to take stock of how broadly American forces are already committed to far-flung regions and to begin thinking hard about how much of that investment is necessary, how long it should continue and whether there is a strategy beyond just killing terrorists.

NYT Laments ‘Forever Wars’ Its Editorials Helped Create - Corporate media have a long history of lamenting wars they themselves helped sell the American public, but it’s rare so many wars and so much hypocrisy are distilled into one editorial. On Monday, the New York Times (10/22/17) lamented the expansion of America’s “forever wars” overseas, without once noting that every war mentioned is one the editorial board has itself endorsed, while failing to oppose any of the “engagements” touched on in the editorial.The Times began by noting the  sheer scope of US military reach: The United States has been at war continuously since the attacks of 9/11 and now has just over 240,000 active-duty and reserve troops in at least 172 countries and territories…. American forces are actively engaged not only in the conflicts in Afghanistan, Iraq, Syria and Yemen that have dominated the news, but also in Niger and Somalia, both recently the scene of deadly attacks, as well as Jordan, Thailand and elsewhere. An additional 37,813 troops serve on presumably secret assignment in places listed simply as “unknown.” The Pentagon provided no further explanation. The editorial stops short of actually opposing anything specific, instead insisting, “It’s time to take stock of how broadly American forces are already committed to far-flung regions and to begin thinking hard about how much of that investment is necessary.” They are vaguely concerned; here we have this massive global empire, fighting an ever-changing nebulous enemy of “terrorism,” with no end in sight. What can be done? It’s unclear—but let’s “take stock.”

Dying for the Empire is Not Heroic - Predictably, the news media spent most of the week examining words Donald Trump may or may not have spoken to the widow of an American Ranger killed in Niger, in northwest Africa, in early October. Not only was this coverage tedious, it was largely pointless. We know Trump is a clumsy boor, and we also know that lots of people are ready to pounce on him for any sort of gaffe, real or imagined. Who cares? It’s not news. But it was useful to those who wish to distract Americans from what really needs attention: the U.S. government’s perpetual war. The media’s efforts should have been devoted to exploring — really exploring — why Rangers (and drones) are in Niger at all. (This is typical of the establishment media’s explanation.)That subject is apparently of little interest to media companies that see themselves merely as cheerleaders for the American Empire. For them, it’s all so simple: a U.S president (even one they despise) has put or left military forces in a foreign country — no justification required; therefore, those forces are serving their country; and that in turn means that if they die, they die as heroes who were protecting our way of life. End of story. Thus the establishment media see no need to present a dissenting view, say, from an analyst who would question the dogma that inserting American warriors into faraway conflicts whenever a warlord proclaims his allegiance to ISIS is in the “national interest.” Patriotic media companies have no wish to expose their audiences to the idea that jihadists would be no threat to Americans who were left to mind their own business.

Lira Tumbles After US Reportedly Refuses Visa For Turkish Minister Delegation -- The Lira is down over 1% following Bloomberg reports from CNN TURK that Washington has declined to issue a visa to a delegation from Turkey's Justice Ministry. There was a last-minute development in visa tensions between Turkey and the United States. The US did not give a visa to the officials of the Justice Ministry who would be in contact with Washington. The group included the following names:

  • Aytekin Sakarya (General Director of Criminal Affairs of the Ministry of Justice)
  • Mehmet Çkmen (General Director of Laws)
  • Orhan Cuni (General Director of Criminal Affairs General Directorate of Alternative Solutions Department)
  • Merve Ozcan (Tetkik Hakimi)
  • Prof.Dr. Mustafa Serdar Özbek (Ba?kent University Faculty of Law)

The US has announced that the visas have not been approved by the Ministry of Foreign Affairs due to visa restrictions.The reaction was immediate... This is the latest escalation in the US/Turkey Visa battle that started 3 weeks ago.

Indonesia’s military chief barred from entering US | TheHill: The head of Indonesia's military was denied entry into the U.S. on Saturday by U.S. Customs and Border Protection as he and his wife were preparing to leave for Washington, D.C. General Gatot Nurmantyo was invited to attend a conference on combatting violent extremism on Monday and Tuesday by the Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford. The general and his wife were preparing to board a flight heading to the U.S. capital when they were informed of the U.S. government's decision, CNN reported. The U.S. Embassy in Indonesia released a statement on Sunday saying they were in contact with Nurmantyo. "We remain committed to our Strategic Partnership with Indonesia as a way to deliver security and prosperity to both our nations and peoples," the Embassy said in a statement. Indonesia's Foreign Ministry spokesman, Arrmanatha Nasir, said the government was looking to clarify the situation with Washington, according to CNN. The Hill has reached out to the Department of Homeland Security for comment.

 Steve Bannon’s already murky Middle East ties deepen - Shortly after Donald Trump’s chief strategist Steve Bannon left the White House, a company with close ties to him was hired by the United Arab Emirates to launch a social media campaign against its Arab neighbor, Qatar. It was part of a multimillion-dollar effort by several Middle Eastern nations to isolate Qatar that received a boost when Trump criticized the country that for years had been a critical regional ally. The UAE is paying $330,000 to a firm with the same parent company as Cambridge Analytica, the business Trump employed to reach voters with hyper-targeted online messaging during the campaign, to blast Qatar on Facebook and Twitter, among other sites, according to federal records. Bannon, who remains one of Trump’s closest advisers, has long had an interest in the region. He has huddled with UAE officials behind closed doors, visited the country as recently as last month and pushed for a group of Middle Eastern nations, including the UAE, in their bitter dispute with Qatar. On Monday, Bannon is scheduled to speak at a day-long conference in Washington organized by the Hudson Institute, a conservative think tank and paid for by multiple donors, entitled “Countering Violent Extremism: Qatar, Iran, and the Muslim Brotherhood.” The speech follows Bannon’s September meeting in the UAE with its crown prince, Sheikh Mohammed bin Zayed al-Nahyan. The two weren’t strangers: Bannon, Trump’s son-in-law Jared Kushner and ousted National Security Adviser Michael Flynn met with the crown prince at Trump Tower during the presidential transition in December. That meeting triggered controversy, as the UAE hadn’t notified the outgoing Obama administration about the visit as is customary.

Trump to skip key Asia summit in Philippines to go home earlier - WaPo - Leaders of more than a dozen countries will meet for a major summit in the Philippines in mid-November, but President Trump won’t be there. He is planning to skip it and leave the Philippines the day before. It’s a bad signal to send to the region, and it could undermine the overall goal of his Asia tour by calling American regional leadership into question. At the White House Monday, Trump said he will “probably” be visiting the Philippines as part of his 12-day trip to Asia early next month. A National Security Council spokesman told me Trump will be in Manila Nov. 12 and 13 and will meet with Philippine President Rodrigo Duterte and others. But Trump will not travel the additional 52 miles to the Philippine city of Angeles on Nov. 14 for the East Asia Summit, an annual conference of Asian and world leaders that focuses on the strategic future of the region. “The President’s trip to Asia is extremely lengthy and will be his longest to date – his return to the U.S. on the evening of Nov. 13 is entirely schedule-driven,” the spokesman said. “You should not read anything into his being absent on the 14th.” The East Asia Summit opens in Angeles on Nov. 13, but the major events with world leaders occur on Nov. 14. But the region is sure to read a lot into Trump’s absence, according to experts and former officials. By not attending the East Asia Summit his first year in office, even though he will already be nearby, Trump is signaling a lack of interest in the organization and the project it represents. 

Even a Nafta Collapse Won’t Keep Companies From Moving to Mexico   - It wasn’t supposed to be like this, but the folks who help U.S. companies set up production in Mexico say they’re having a solid year.Tecma Group has more business than ever in its three decades doing relocation. In just the last few weeks, it aided a maker of cleaning equipment and a packaging company make the move south. Chicago-based Mexico Consulting Associates has three new prospects interested in Mexico. Keith Patridge, who runs McAllen Economic Development Corp., expects at least 12 companies to set up shop in Reynosa alone this year. And another firm, Tacna Services Inc., has assisted two businesses locate in the Baja California area.President Donald Trump’s vow to scrap or revamp the North American Free Trade Agreement was expected to put a scare into companies considering these kinds of moves. But many are sticking to plans to set up shop in Mexico even if the pact isn’t renewed, according to the experts who help firms relocate and find new plants.Lots of factors go into the decisions but these companies have made a simple calculation: Cheap labor in Mexico -- as much as a $20,000 saving per worker compared with the U.S. -- is enough to offset the higher costs of any tariff imposed by Nafta’s demise. That math shows how Trump’s America First effort to revive manufacturing faces hurdles. “If they just wiped out Nafta and went back to normal trade tariffs, I think that’s manageable,” said Ross Baldwin, chief executive officer of Tacna. “Life would continue on because the labor rate is so dramatically different.”

Wall Street furious over proposal to slash 401(k) limits - Wall Street pushed back hard on Friday against a report that congressional Republicans are weighing a plan to severely limit the amount of money Americans can contribute to their 401(k)s. The Capitol Hill lawmakers, searching for ways to pay for President Trump’s broad proposed tax cuts, are eyeing a $2,400 cap on pre-tax contributions to 401(k) plans, used by millions of US workers to save for retirement. Currently, the pre-tax limit for such contributions is $18,000 a year. Contributions to 401(k)s are tax-deferred, which means that the government won’t be able to get its cut until retirees start withdrawing money from those accounts — which they must do by age 70¹/₂. As the number of US workers covered by pension plans shrinks, 401(k) plans are becoming more widely used — and necessary. There is roughly $4.7 trillion in 401(k) plans in the US. The world’s largest money managers, which handle more than $20 trillion in assets, bristled that Congress wanted to cap contributions, according to The Wall Street Journal report. The Vanguard Group, the world’s second-largest asset manager, founded by investing legend Jack Bogle, is “greatly concerned over legislation that would negatively impact investors’ ability or incentive to save for retirement,” spokeswoman Laura Edling told The Post. ”Proposals that mandate contributions be made after tax should be carefully reviewed to take into account their impact on incentives to save,” Edling, whose company managed $4.5 trillion, added. The Investment Company Institute, a trade group of mutual fund companies, also opposed the talk of caps. “We believe the best way to maintain or raise retirement plan participation and the resources available for retirement is to preserve the current system of tax deferral, which has encouraged millions of Americans to save for retirement,” Mike McNamee, the group’s spokesman, told The Post. “That’s a pretty low limit,” Andrea Coombes, a retirement specialist at NerdWallet, told The Post of the proposed $2,400 cap. “Ultimately, the goal is save what you can.” 

This Big Tax Cut for ‘High Fliers’ Shows Why an Overhaul Is So Hard -  President Donald Trump and Republicans love the idea of cutting taxes. But the hard part comes now as they wrangle over who will see the biggest breaks. Trump has vowed that the middle class would be the main beneficiaries under his tax plan, but the framework’s limited details have led to estimates that top earners would reap the biggest gains. While GOP leaders say those analyses aren’t fair -- because they filled in the plan’s gaps with details from a previous Republican blueprint -- the debate has left them vulnerable to pushback from their own members, and attacks from Democrats. The lack of specifics continues to frustrate members of the House Freedom Caucus, who are negotiating support of the budget resolution in exchange for assurances on the timing of a tax bill’s release. The House is scheduled to vote Thursday on the Senate budget resolution, according to a House leadership aide -- a crucial step to passing a tax bill with only Republican votes. The House Ways and Means Committee plans to release a tax bill the week of Oct. 30, before marking it up the week of Nov. 6 and sending it to the House floor for a vote the week of Nov. 13, according to two tax lobbyists who spoke with House GOP aides. The lobbyists asked not to be named. Trump and Vice President Mike Pence joined a House Republican conference call Sunday afternoon to build momentum for the tax legislation, according to a person familiar with the matter. During the call, Trump urged House members to adopt the Senate budget this week and follow through on the tax overhaul, said the person, who asked not to be named. On Monday morning, Trump offered one fresh detail -- tweeting that he wants no changes to tax-deferred retirement savings in tax legislation. Republicans had been considering reducing the annual cap on contributions from the current $18,000 a year -- or $24,000 for workers over 50 -- according to a New York Times report on Friday. Other details remain unclear, however.

House Republicans Propose Leaving Income Tax Rate Unchanged For Million-Dollar Earners - Now that the Senate has passed the $4 trillion federal budget, unlocking the reconciliation process and clearing the way for tax reform, Republicans on the House Ways and Means Committee are hashing out the finer points of tax reform. And in keeping with the spirit of Treasury Secretary Steven Mnuchin’s promise that the lopsided nature of the proposal’s cuts (which allocated 80% of the benefits to the top 1% of earners) would be corrected in committee, a group of House Republicans are considering a radical proposal that brings them into direct conflict with Mnuchin and Gary Cohn, who the group derisively refer to as “the Democrats.” Axios reports that House Republicans are exploring not cutting the income tax rate for people who earn $1 million or more per year. Right now, the marginal tax rate for anyone who makes $418,000 or more per year is 39.6%. The Republicans' expected opening offer, which Axios says has been secretly negotiated for months and has received the blessing of the president, would have cut the highest tax rate to 35%.

 Feud Erupts Between Trump And Corker Just Hours Before Critical Senate Meeting - At 1pm EST President Trump is heading to Capitol Hill to huddle with Senate Republicans in hopes that he can somehow mend fences with certain members of his own party and save his tax plan from meeting the same fate as his Obamacare repeal efforts. That said, he seems to be off to a bad start on the whole "fence mending thing" so far this morning after trashing Senator Corker in an early-morning tweet storm: "Bob Corker, who helped President O give us the bad Iran Deal & couldn't get elected dog catcher in Tennessee, is now fighting Tax Cuts.  Corker dropped out of the race in Tennesse when I refused to endorse him, and now is only negative on anything Trump. Look at his record!" Of course, the tweet storm followed an appearance by Senator Corker on "Good Morning America" this morning in which he attacked the President on his handling of foreign policy initiatives and stood by his previous comments that the White House has turned into an "adult day care center."Republican Sen. Bob Corker today stood by his remarks criticizing the White House as an "adult day care center" and arguing that President Trump is putting the United States on a path toward "World War III." "I don’t make comments I haven’t thought about," the Tennessee senator said in an interview with "Good Morning America."

Key Republican Opens Door to 401(k) Change Despite Trump Tweet — President Donald Trump tweeted that there would be "NO change" to Americans' 401 (k) benefits in tax reform, but a top House negotiator on taxes said Wednesday that tweaks to retirement savings may still be on the table.  Speaking at a Christian Science Monitor breakfast with reporters, House Ways and Means Chairman Kevin Brady, R-Texas, declined to rule out changes when asked whether Trump's position had killed the idea.  "We think in tax reform we can create incentives for Americans to save more and save sooner, which can help," Brady said. "We are exploring a number of ideas in those areas."  While he did not offer details, Brady said there were "continuing discussions with the president" on the topic. Trump ruled out changes to 401(k) benefits on Monday in response to reports that Republicans were considering lowering the amount of tax-privileged savings Americans can contribute to their plans in order to raise revenue for cuts elsewhere. On Wednesday, the president took credit for "very quickly" squashing prior talk of limiting 401(k) contributions, but he also seemed to confirm Brady's suggestion that retirement benefits are under discussion. "Maybe it is and maybe we’ll use it as negotiating," Trump told reporters at the White House. "But trust me, that’s one of the great things, you know, there are certain elements of deals you don’t want to negotiate with — 401 (k)s — and Kevin knows it, and I think Kevin Brady is fantastic, but he knows how important 401 (k)s are." While Brady said a decision had yet to be made on retirement benefits and several other key issues, he emphasized that a final bill was coming soon. If the House passes a budget this week, he plans to release legislation on taxes next week. Brady predicted there would soon be an agreement among House Republicans on one of the most contested elements of tax reform so far: the state and local deduction.

Republicans are starting to notice another big problem with their tax plan - I've written before about problems with the provision of the Republican tax framework that President Donald Trump touts as good for small businesses.  This tax break would ensure that people who own so-called pass-through businesses would be taxed at no more than 25% on income from those businesses, unlike wages, which may currently be taxed at rates up to 39.6%.   A major problem with this proposal is that most small businesses wouldn't benefit. More than 80% of tax filers with small-business income are already taxed at rates of 25% or less, so only the wealthiest business owners, who currently face high tax brackets, would get a tax cut.  And many of the businesses getting the tax advantage wouldn't be small. The president, who would surely contest the idea that his own businesses are small, would get a big tax break from this provision.  But now another problem with the proposal is starting to get attention in Congress — a problem that will make this provision a huge mess even if you like the idea of a big tax cut for business owners.   If you're going to give a tax break for business income, you have to clearly define what's a business and what's just work. That's surprisingly hard. And while tax reform is supposed to make taxes simpler, this tax break is sure to make a lot of people's taxes very complicated.   If this proposal became law, I could form Josh Barro LLC. Instead of drawing a salary, I would charge Business Insider fees for writing services. I would do the same with KCRW and any other employers. And then I would tell the IRS that all my income was business income, subject to a maximum rate of 25%.   Unfortunately for me, but fortunately for the government's finances, the drafters of the Republican tax legislation would like to avoid that.   They intend the tax break to go only to bona fide businesses involving capital investment and job creation, not to independent professionals like lawyers or doctors (or me, in this scenario). So they need to write a rule that puts "guardrails" between real business income and labor income that a taxpayer might claim was business income. As Scott Greenberg of the conservative Tax Foundation describes in a useful Twitter thread, there are three main ideas out there about how you might build those guardrails.  Unfortunately, none of the ideas are very good.

House Leaders Face State-and-Local Storm to Begin Tax Debate - House leaders announced plans to press on with a budget vote Thursday that represents an attempt to stick to their ambitious goal of delivering tax-overhaul legislation by year’s end. In setting the vote, House Speaker Paul Ryan and his leadership team turned aside an attempt to delay it by a group of Republican lawmakers who fear their constituents would be hurt by repealing the state and local tax deduction. The budget vote may still be close, but the decision to move ahead suggests that House leaders are confident of adoption. GOP lawmakers from high-tax states, including New York and New Jersey, are seeking to preserve the state and local tax break, at least partially. On Wednesday, two of them said they thought they had enough votes to put the budget resolution in jeopardy if they didn’t get their way. Despite the last-minute drama, House Majority Whip Steve Scalise projected confidence to reporters Wednesday evening. “It’s looking good,” said Scalise of Louisiana. “We’re going to get this done.” But convincing disaffected moderates to go along with the budget vote Thursday is just one step. They are likely to draw a harder line on a final tax bill if their concerns are not addressed. “This proposal will devastate my district forever,” said Representative Peter King, who represents the southern shore of Long Island. “How anybody from New York and New Jersey can vote for this budget without knowing what is in the tax bill is beyond me.” He and Representative Tom MacArthur of New Jersey said they thought the objectors had enough votes to threaten passage if they weren’t satisfied. 

NY Rep Peter King: "We Have Enough 'No' Votes To Block Budget" -- In a pronouncement that confirms the worst fears of Paul Ryan and the rest of the Republican Congressional leadership, New York Republican Peter King told a group of reporters that he has enough 'no' votes to block ratification of the senate version of the federal budget - a crucial step in the process toward tax reform that could potentially sink the White House's plan before the bill has even been written.King's declaration follows a Politico report from earlier that Gary Cohn told a bipartisan group of legislators that the final bill would scrap a deduction for state and local taxes - known as the SALT deduction. Scrapping the deduction would lead to a dramatic increase in the federal tax bill for taxpayers in blue states, which tend to have higher taxe rates. Treasury Secretary Steven Mnuchin, who is managing the bill on behalf of the White House along with Cohn, has characterized the deduction as an unfair subsidy from the federal government, and has said the final bill would make it up to taxpayers in other ways. “How anybody from New York and New Jersey can vote for this budget without knowing what is in the tax bill is beyond me," King said. He later reaffirmed his opposition by exorting Republicans from New Jersey and New York to vote against the Senate budget.OMB Dir. Mulvaney wrong about ending SALT deductions. NY & NJ subsidize rest of USA. Show some fairness Mick!— Rep. Pete King (@RepPeteKing) October 22, 2017GOP failure to preserve #SALT will devastate NY and LI. Must vote NO on budget to stop this! — Rep. Pete King (@RepPeteKing) October 24, 2017   King alleged that he and fellow GOP Rep. Dan Donovan, also of NY, weren’t invited to several meetings with Republican leaders on the tax issue - suggesting that little has been done to hammer out a compromise. “They are trying to pick us off one by one," King said.  In a rare feat of political honesty, King admitted that sitting back and letting the deduction be scrapped without a fight would be political suicide, because eliminating the deduction would be financially devastating for his constituents. “The rest of the country is getting a tax cut and the best they are offering my folks is you will break even? I can’t go back to my district and say re-elect me, it could have been worse," he said. “This proposal will devastate my district forever.

Washington’s Biggest Mystery: What’s in the Republican Tax Plan? - Republicans are barreling into a lobbying frenzy next week, when House Ways and Means Chairman Kevin Brady plans to unveil a sweeping tax bill to remake the U.S. economy that’s being crafted with rigorous secrecy. The stage was set with the House’s adoption Thursday of a budget resolution designed to speed the course of tax legislation and kick off a three-week sprint toward a House bill. Now, lobbyists representing every corner of the economy are poised to first devour, then attack what may be hundreds of pages of legislation that Brady says he’ll release Nov. 1. Special interests from realtors to dairy farmers will be trying to save their industry-specific tax breaks, said Tim Phillips, president of Americans for Prosperity. His group, which is backed by billionaire industrialists Charles and David Koch, supports ending such breaks. “It’s pretty fierce,” Phillips said. “We met with Brady on Tuesday and he was saying their offices are swamped with all the special interest groups swarming in asking to be protected.” President Donald Trump has promised that middle-class Americans will be the biggest beneficiaries of the tax overhaul. But it remains to be seen which groups will lose their advantages -- a necessary step to help pay for cutting tax rates. Even Republican members of Brady’s committee say they don’t know whether any decisions have been made. “The problem is that Ways and Means has somewhat been kept out of the loop with details,” Representative Jim Renacci of Ohio, a member of the House tax-writing panel, said in an interview. “There are still a lot of hurdles to get it done.” The bill is supposed to be released in just five days. Leaving such details under wraps has become “almost a double-edged sword,” said lobbyist Will Hollier, whose clients include Microsoft Corp. and Visa Inc. The secrecy has allowed for some efficiency, but it’s also prevented GOP leaders from winning broad support for the legislation in their own conference so far, he said. 

What The GOP Budget Taught Us About The Party’s Tax Reform Plans -- After a month of wrangling, Republicans in the House narrowly passed a budget resolution on Thursday that has no direct policy effects. Like all other budget resolutions of this kind, it doesn’t even go to the president for a signature. But Thursday’s budget resolution, which was also approved by the Senate last week, really matters. Most importantly, to use the so-called reconciliation rules — by which lawmakers can pass a bill with a simple majority vote in the Senate instead of needing 60 votes to end a filibuster — Congress has to approve a budget resolution first. So now, Republicans can move forward with their proposal to reform America’s tax system and potentially pass a bill without any Democratic votes. (All Democrats voted against the budget resolution in both the House and the Senate). But beyond legislative tactics, Republicans also made three telling decisions during this process, each with a potentially big impact:

  • 1. They chucked aside concerns about the deficit The original House version of the budget bill called for a tax reform plan that would be deficit-neutral, meaning that any tax cuts would have to be made up for with tax increases.  At President Trump’s urging, House leaders simply took up the Senate bill and adopted that version. The resulting budget does not guarantee that the GOP’s eventual tax bill will raise the deficit by $1.5 trillion, but it’s a clear signal that Republicans are not committed to a deficit-neutral tax plan despite constantly complaining about rising deficits when Barack Obama was president.
  • 2. They left open the possibility of getting rid of or limiting state and local tax deductions Earlier this week, Rep. Peter King of New York, a Republican, demanded that party leaders commit to leaving in place the local and state income tax deduction, which allows Americans to deduct those taxes on their federal tax filings. Party leaders refused King’s request and held the vote anyway. That led 11 of the 14 GOP House members from New York and New Jersey, including King, to vote against the budget resolution. If King’s bloc is not placated on this issue, Speaker Paul Ryan will have a very narrow margin on which to pass the tax bill through the House.
  • 3. They left Obamacare out of the bill - The last budget resolution passed by Republicans, in January, explicitly laid out a path for health care legislation to be passed using reconciliation. That’s how they were going to repeal Obamacare. This budget does not lay out such a path. That does not mean Obamacare is safe by any means. The budget adopted by both chambers calls for reductions in Medicaid spending, a big part of Obamacare. And, of course, Republicans can weaken Obamacare in other ways..

This all sets up a dicey path on moving forward with tax reform. Republicans are saying they will roll out the formal tax bill as soon as next week. That will set up three big intra-party debates as members of Congress, lobbying groups and the public examine this legislation and potentially push for changes.

One last time on who benefits from corporate tax cuts - Larry Summers -  I recently asserted that Kevin Hassett deserved a failing grade for his “analysis” projecting that the Trump administration proposal to reduce the corporate tax rate from 35 to 20 percent would raise the wages of an average American family between $4,000 to $9,000. I chose harsh language because Hassett had, for what seemed like political reasons, impugned the integrity of people like Len Burman and Gene Steuerle who have devoted their lives to honest rigorous evaluation of tax measures by calling their work “scientifically indefensible” and “fiction.” Since there have been a variety of comments on the economics of corporate tax reduction, some further discussion seems warranted. The analysis from Hassett, chief of the White House Council of Economic Advisers (CEA), relies heavily on correlations between corporate tax rates and wages in other countries to argue that a cut in the corporate tax rate would boost returns to labor very substantially. Perhaps unintentionally, the CEA ignores our own historical experience in their analysis. As Frank Lysy noted, the corporate tax cuts of the late 1980s did not result in increased real wages. Actually, real wages fell. The same is true in the United Kingdom, as highlighted by Kimberly Clausing and Edward Kleinbard. These examples feel far more relevant to the corporate tax issue analysis than comparisons to small economies and tax havens like Ireland and Switzerland upon which the CEA relies. Casey Mulligan and Greg Mankiw also do not defend CEA’s numbers, but do make use of simple academic abstract models that do not capture the complexities of a policy situation to argue that wage increases could be larger than the tax cut.  Mankiw’s blog is a fine bit of economic pedagogy. It asks students to gauge the impact of a corporate rate reduction on wages in a so called “Ramsey” model or equivalently in a small fully open economy, with perfect capital mobility. Even with these assumptions, he does not get answers in the range of the CEA’s estimates.

What I do support in a new tax plan - Larry Summers - I have been very sharply critical of what I regard as unprofessional exaggeration by advocates of the Trump tax proposal. Reasonably enough, people have asked what I am for. I strongly support tax reform in general and especially corporate tax reform on the model of the highly successful bipartisan 1986 tax reform, which achieved very large rate reductions, spurred economic growth and improved the efficiency of the economy while being revenue and distribution neutral. I would suggest the following five elements in the spirit of 1986:

  • 1. Reduce rates but not revenue. A core principle in 1986 was that rates cuts had to be financed by base broadening such as mortgage and health deductions and scaling back unwarranted business write-offs. This ensured that the beneficial effects of rate cuts were not offset by the risks of larger deficits. I have been a major proponent of deficits and fiscal expansion to spur recovery but now, when unemployment may fall below 4 percent and the Fed is tightening, is not the time to expand the long-run deficit.
  • 2. Broaden the corporate base by limiting international sheltering. Revenue is foregone and the economy is hurt when companies are permitted to avoid taxes on profits earned abroad by relocating them in Ireland, the Cayman Islands and other jurisdictions and building up cash. A U.S. company that benefits from U.S. commercial advocacy, U.S. negotiations on its behalf, U.S. research and development and so on should pay a minimum tax on its foreign income of 15 to 20 percent.
  • 3. Work to increase neutrality across investments and means of financing. The tax system as now structured encourages leverage because interest payments on debt are deductible and dividend payments are not. There are also biases between investments with different depreciation lives. Moving toward limits on interest deductibility in situations like many private equity deals where debt has equity-like risk premiums would raise revenue and increase financial stability.
  • 4. Attack tax shelters. The most powerful driver of change in 1986 was stories about corporations reporting huge profits to shareholders on their 10k and then paying no taxes. At a minimum, public companies should be required by the IRS to publicly reconcile their publicly reported income and their tax reported income. Consideration should be given to a minimum tax of 10 percent of income as reported to shareholders. Other tax shelters such as carried interest, tax free like kind exchanges of real estate, and special treatment of option based executive compensation should scaled back or closed.
  • 5. Eliminate special benefits for non-corporate business — instead of adding to them. Currently pass-throughs are taxed at a lower rate than corporations after accounting for dividend and capital gains taxes that are also paid on (some) corporate income. The administration plan regarding so-called pass-through entities has not been spelled out. Breaks for such entities run the risk of creating a major unjustified subsidy to law partners, merger advisers, management consultants and economic advisers. The right approach is the opposite. .

Top White House economic advisor Gary Cohn reportedly revives idea of hiking gas tax -- Top White House economic advisor Gary Cohn reportedly raised the prospect of hiking the federal gasoline tax on Wednesday, reviving the idea after President Donald Trump raised the issue earlier this year.Cohn, the director of the National Economic Council, told a group of moderate Democrats and Republicans they would have the opportunity to vote to increase the gas tax when Congress considers an infrastructure package early next year, Politico reported. Cohn made the remark while discussing elements of the administration's $1.5 trillion tax cut with the Problem Solvers Caucus, according to Politico.The White House did not immediately respond to a request for comment on the report.The U.S. government currently applies a charge of 18.4 cents per gallon on retail gasoline. Revenue from the levy goes to the Highway Trust Fund, which pays for road construction and mass transportation. The tax has not changed since 1993.In May, Trump said he was open to raising the gas tax in order to underwrite improvements to the nation's infrastructure.Then White House Press Secretary Sean Spicer later clarified that Trump was not endorsing a hike but was considering it. He said an undisclosed group of truckers had asked Trump to consider raising the tax and use the funds to patch up roads.Shortly after Trump's remarks, White House infrastructure advisor and LeFrak Organization CEO Richard LeFrak told CNBC the president deserved credit for broaching what has historically been "the third rail of politics." He noted that several states have recently raised their own gas taxes.  The average national gas price stands at $2.45 a gallon. The cost at the pump has remained relatively low since an oil price downturn in 2014.

I.R.S. Says It Will Reject Tax Returns that Lack Health Insurance Disclosure - NYT --Despite President Trump’s pronouncements, not only is Obamacare not dead, there are signs that his administration is keeping it alive.In the latest signal that the Affordable Care Act is still law, the Internal Revenue Service said this week that it is taking steps to enforce the most controversial provision: the tax penalty people face if they refuse to obtain health insurance.Next year, for the first time, the I.R.S. will reject your tax return when filed electronically if you do not complete the information required about whether you have coverage, including whether you are exempt from the so-called individual mandate or will pay the penalty. If you file your tax return on paper, the agency said it could suspend processing of the return and delay any refund you might be owed. The agency’s new guidance for tax professionals seems to contradict Mr. Trump’s first executive order, on Inauguration Day, which broadly instructed various agencies to scale back the regulatory reach of the federal health care law. Legal experts say the I.R.S. has been clear that the law was in effect, despite repeated efforts by Mr. Trump and Republican lawmakers to repeal it. Congress would have to specifically repeal the mandate, they say, even if the administration has significant leeway over how aggressively it enforces it.

White House pushing for new concessions in bipartisan health bill, including retroactive mandate relief - WaPo - The White House signaled to Senate Republican negotiators Friday that it wants a bipartisan health-care bill to include retroactive relief this year for individuals and employers subject to the Affordable Care Act’s insurance mandate, according to individuals briefed on the matter, a request that is sure to anger Democrats. Key White House officials are seeking a rightward shift in the proposal crafted by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), which would restore subsidies to help offset out-of-pocket costs for low-income Americans buying ACA plans in exchange for further flexibility in how states regulate health coverage. The individuals briefed on what the White House privately signaled to Senate Republicans were granted anonymity to describe closed-door talks that had not been announced publicly. They said that nothing was final and that the negotiations were ongoing and could change rapidly. While the moves were part of what could become a more extended negotiation, the White House requests — which also include providing states with broader leeway — could derail the carefully crafted bipartisan package unveiled this week. Senate Majority Leader Mitch McConnell (R-Ky.) said Sunday he is ready to move a bipartisan health-care bill but first needs clarity from President Trump on what he is willing to sign. There's a new bipartisan health-care deal in the Senate, and President Trump has been signaling wishy-washy support for the agreement.  What I’m waiting is to hear from President Trump what kind of health-care bill he might sign,” McConnell said. “I think he hasn’t made a final decision. When he does, and I know that we’re not just debating it, but actually passing something to be signed, I would be happy to bring it up.” 

Schumer Says Bill to Prop Up Obamacare Has Votes to Pass Senate - Senate Democratic leader Chuck Schumer said a bipartisan bill to temporarily stabilize Obamacare’s insurance markets has enough support to pass the Senate, but Majority Leader Mitch McConnell said he’s waiting for assurances from President Donald Trump before he allows a vote. The bill introduced by Tennessee Republican Lamar Alexander and Washington Democrat Patty Murray has all 48 Senate Democrats backing it along with 12 Republicans, Schumer said on NBC’s “Meet the Press” on Sunday. “I would urge Senator McConnell to put it on the floor immediately, this week,” Schumer said. “It will pass, and it will pass by a large number of votes.” McConnell said that he would be “happy” to bring the measure to the floor if he knew Trump would sign it. “I’m not certain yet what the president is looking for here,” McConnell said. Trump has made conflicting statements about the Senate effort to halt an exit of insurers from individual markets and what Alexander described as “chaos.” The president had personally encouraged Alexander and Murray, who lead the Senate’s Health, Education, Labor and Pensions Committee before seeming to pull back support. “I want them to be careful with respect to the insurance companies, insurance companies are extremely good at making money,” Trump said Oct. 19. “I want to take care of our people. I don’t want to take care of our insurance companies.” Days earlier, Trump had expressed the same concern when he ended subsidies for Obamacare insurers that were designed to keep premiums low. “We need something that goes a little further to get on board,” White House Press Secretary Sarah Sanders told reporters Oct. 18 when asked about the Senate proposal. She called the deal a “good step in the right direction.” Alexander has said the bill contains language to make clear there won’t be what Trump has cast as a bailout of health insurers. 

Here's How Much Your Obamacare Rates Are Going Up In 2018 (Hint: It's A Lot And It's All Trump's Fault) -- A new study conducted by Avalere and released earlier today found that Obamacare rates will surge an average of 34% across the country in 2018.  Of course, this is in addition to the113% average premium increase from 2013 and 2017, which brings the total 5-year increase to a staggering 185%.Meanwhile, and to our complete shock no less, Avalere would like for you to know that the rate increases are almost entirely due to the Trump administration's "failure to pay for cost-sharing reductions"...which is a completely reasonable guess if you're willing to ignore the fact that 2018 premium increases are roughly in-line with the 29% constantly annualized growth rates experienced over the past 4 years before Trump ever moved into the White House...but that's just math so who cares?New analysis from Avalere finds that the 2018 exchange market will see silver premiums rise by an average of 34%. According to Avalere’s analysis of filings from states, exchange premiums for the most popular type of exchange plan (silver) will be 34% higher, on average, compared to last year.“Plans are raising premiums in 2018 to account for market uncertainty and the federal government’s failure to pay for cost-sharing reductions,”said Caroline Pearson, senior vice president at Avalere. “These premium increases may allow insurers to remain in the market and enrollees in all regions to have access to coverage.” Avalere experts attribute premium increases to a number of factors, including elimination of cost-sharing reduction (CSR) payments, lower than anticipated enrollment in the marketplace, limited insurer participation, insufficient action by the government to reimburse plans that cover higher cost enrollees (e.g., via risk corridors), and general volatility around the policies governing the exchanges. The vast majority of exchange enrollees are subsidized and can avoid premium increases, if they select the lowest or second lowest cost silver plan in their region. However, some unsubsidized consumers who pay the full premium cost may choose not to enroll for 2018 due to premium increases.

ACA enrollment schedule may lock millions into unwanted health plans - WaPo - Millions of Americans with insurance through the Affordable Care Act could find themselves locked into health plans they do not want for the coming year because of the Trump administration’s schedule for the enrollment season that starts in less than two weeks. The complication arises when people who already have health plans under the law are automatically re-enrolled in the same plan. In the past, a few million consumers each year have been auto- enrolled and then were sent government notices encouraging them to check whether they could find better or more affordable coverage. This time, according to a federal document obtained by The Washington Post, the automatic enrollment will take place after it is too late to make any changes. Auto-enrollment will occur immediately after the last day of the ACA sign-up season, which the Trump administration has shortened, leaving the vast majority of such consumers stranded without any way to switch to a plan they might prefer. That inability is particularly problematic at the moment, health policy specialists say, because political turmoil surrounding the sprawling health-care law has contributed to spikes in 2018 insurance rates that might catch customers by surprise, as well as widespread public confusion about this fifth year’s enrollment season. The administration’s unannounced decision about the nuances of auto-enrollment is part of a pattern in which President Trump’s antipathy for the ACA — he erroneously terms its insurance exchanges “dead” — has filtered into a series of actions and inactions that could suppress the number of Americans who receive coverage through the marketplaces for 2018.   The sign-up period is to run from Nov. 1 to Dec. 15 — half the duration of the past three years. Last month, federal health officials announced that they were slashing by 90 percent the money devoted to outreach and advertising aimed at uninsured Americans eligible for ACA coverage and people already covered who need to sign up again. At the same time, funding for enrollment helpers, known as navigators, has been curtailed by about 40 percent.

Thousands of US companies face healthcare penalties -- Tens of thousands of US companies will soon face penalties for failing to comply with an obligation to provide health insurance for staff, after the Treasury told the White House there was no way to delay enforcement of a measure in Obamacare. The Internal Revenue Service will soon start informing companies that have not complied with the Affordable Care Act (ACA) how much they must pay, according to the IRS and two US officials. One White House official said that more than 100,000 companies could be affected by the penalties, which are likely to start hitting them within weeks, blindsiding bosses at a politically sensitive moment. The Trump administration has been urging big companies to swing behind its tax reform plans, as it prepares for a rocky passage through Congress and a frenzy of lobbying by competing corporate interests. The official said the Treasury raised the issue with the White House after its lawyers concluded there was no way to delay enforcement. The White House declined to comment. 

 Judge won't force Trump to keep making ObamaCare payments | TheHill: © Getty Images A federal court in California has struck down an emergency motion that would have forced the Trump administration to continue making ObamaCare subsidy payments to insurers. U.S. District Judge Vince Chhabria denied the motion for an injunction, saying that he was skeptical that cutting off the payments known as cost-sharing reductions (CSR) would cause an immediate injury to residents of the state. He noted many states, including California, saw “the writing on the wall” and took actions to mitigate any potential harm if the payments were ended. “To be sure, the absence of money for CSR payments does not seem to be causing health care reform to come crumbling down,” Chhabria wrote in his ruling. California allowed insurers to add a surcharge to the mid-level silver plans, which increases the amount of tax credit subsidies available. So even though premiums would spike for silver plans, consumers would have other, cheaper options. Eighteen states and Washington, D.C., signed onto the motion for a temporary restraining order that would have forced the administration to keep making the payments while a lawsuit worked its way through the courts. Trump cut off the payments earlier this month, which are required under the law and help low-income people afford co-pays and deductibles. The payments were the subject of a lawsuit by House Republicans during the Obama administration. A federal court ruled the payments were being made illegally, but the Obama administration appealed. Congress could still decide to appropriate the payments, and there is some bipartisan agreement that they should be made. 

Trump’s Would-Be Drug Czar Helped the Drug Profiteers -  Rep. Tom Marino has withdrawn his nomination as President Trump’s new drug czar after revelations he pushed through a measure that worsened the U.S. opioid epidemic. NEP’s Bill Black says Marino and other lawmakers have been bought off by pharmaceutical companies he says have acted as “illicit, criminal, drug dealers” on The Real News Network. You can view with transcript here.

What the Washington Post/CBS DEA investigation tells you about Congress: It’s really bad -- Recently, the Washington Post and CBS teamed up on an investigation that has now cost Congressman Tom Marino (R-PA) his nomination as the next Drug Czar. It is an incredible report, deeply sourced, with amazing details on how industry worked with Congress to gut DEA’s ability to prosecute drug trafficking abuses and deepened a horrific opioid epidemic in the U.S. Many watchers have already latched on to the financial ties between industry and government. However, as troubling as they may be, it appears no laws were broken. No bribes were reported. Campaign contributions appear to conform to the letter of the law. Yet something feels clearly corrupt in this story. Which brings us to why the report is devastating on another front: it is a stunning display of institutional incompetence.  The bill at the heart of the investigation is not a major bill. It is short and obscure. If you read it, you would likely have no clue what it does. And it’s a perfect example of where lobbying has the greatest influence. Congress as an institution, in a bipartisan fashion, both professionally and politically, failed. And its failure illustrates by far the most common form of influence in today’s Congress. This was not a case where 535 members of Congress were corrupted by a few thousand dollars of campaign contributions. This was a case where 535 members and their staffs didn’t know any better. This investigation did not uncover a crime; it exposed an institution in decline. Congress, in this instance, was unable to prevent the worsening of a national crisis because it didn’t know what it was doing.

 Impossible to Compete with Unintentional Self-Parody: Trump and Opioids -- Bill Black --This is the first in a series of columns I will write that are prompted by the joint 60 Minutes and Washington Post investigations of the role of Congress and the White House in making it far harder to sanction effectively companies selling massive numbers of opioids that they know will go largely to those addicted to opioids.  I will use the case study to illustrate many important points that criminologists know about elite white-collar crime and how to limit it and sanction perpetrators. In this column, I introduce one of the most important concepts in white-collar crime – “seeming legitimacy.”  The most elite predators use the seemingly legitimate entities in the business, government, and non-profit sectors that they run as “weapons” of predation and “shields” against sanctions.  The criminology term for this is “control fraud.”  The same logic applies to non-criminal predation.  I will show in later columns in this series that Representative Marino (R, PA), the worst of the political shills for the opioid Predator Class, repeatedly spread the falsehood that the worst of the opioid predators could not be predators because they structured their firm as if it were “legitimate.”  As a former state and local prosecutor, Marino knows that CEOs running the largest frauds pose as seemingly legitimate firms because it optimizes control fraud. Some of these columns will focus on the startling parallels to actions taken by Congress and the White House to aid the Predator Class’ epidemics of “control fraud” during the savings and loan (S&L) debacle and the opioid epidemic.  Congress and the White House gave aid and comfort to the elite criminals leading epidemics of criminal conduct and predation that they knew would cause catastrophic harm in both crises.

Trump’s answer to the opioid crisis is $57,000 and “Just say no” - After nearly two and a half months of failing to follow through on his pledge to declare a national state of emergency in response to the opioid crisis, President Donald Trump is finally taking action. Sort of. Trump ordered the Department of Health and Human Services on Thursday to formally declare a public health emergency in response to an epidemic that caused at least 53,000 overdose deaths in 2016. “As Americans, we cannot allow this to continue,” Trump said in a speech at the White House. “It’s time to liberate our communities from this scourge of drug addiction. Never been this way. We can be the generation that ends the opioid epidemic. We can do it.” Experts who spoke with VICE News ahead of Trump’s speech expressed cautious optimism that the emergency declaration could lead to helpful policy changes at the federal level, but they also warned that the immediate impact would be negligible. To start, Trump’s declaration unlocks just $57,000 in funding. Despite a recommendation from his opioid commission to tap into FEMA’s $4.28 billion Disaster Relief Fund, Thursday’s declaration only allows access to the Department of Health and Human Services’ (HHS) Public Health Emergency Fund, which is nearly depleted. Congress could replenish the Public Health Emergency Fund beyond the current balance of $57,000, but that hasn’t happened since 1990, when the fund’s value peaked at $45 million. One estimate from a Harvard economist put the public health cost of the opioid crisis at $14 billion per year.

Still waiting for FEMA in Texas and Florida after hurricanes — Outside Rachel Roberts’s house, a skeleton sits on a chair next to the driveway, a skeleton child on its lap, an empty cup in its hand and a sign at its feet that reads “Waiting on FEMA.”  Outside the White House this month, President Trump boasted about the federal relief efforts. “In Texas and in Florida, we get an A-plus,” he said. FEMA officials say that they are successfully dealing with enormous challenges posed by an onslaught of closely spaced disasters, unlike anything the agency has seen in years. But on the ground, flooded residents and local officials have a far more critical view. According to interviews with dozens of storm victims, one of the busiest hurricane seasons in years has overwhelmed federal disaster officials. As a result, the government’s response in the two biggest affected states — Texas and Florida — has been scattershot: effective in dealing with immediate needs, but unreliable and at times inadequate in handling the aftermath, as thousands of people face unusually long delays in getting basic disaster assistance.  FEMA has taken weeks to inspect damaged homes and apartments, delaying flood victims’ attempts to rebuild their lives and properties. People who call the agency’s help line at 1-800-621-FEMA have waited on hold for two, three or four hours before they even speak to a FEMA representative. Nearly two months after Hurricane Harvey made landfall in Texas on Aug. 25, and six weeks after Hurricane Irma hit Florida on Sept. 10, residents are still waiting for FEMA payments, still fuming after the agency denied their applications for assistance and still trying to resolve glitches and disputes that have slowed and complicated their ability to receive federal aid.

Disaster relief bill clears major hurdle in Senate - A House-passed bill aimed at helping communities impacted by a string of recent natural disasters cleared a key hurdle in the Senate on Monday evening.  Senators voted 79-16 to advance on the bill, setting up a final vote as soon as Tuesday.  All of the 16 "no" votes came from GOP senators, including Sens. Mike Lee (R-Utah) and Rand Paul (R-Ky.). The House bill would provide $36.5 billion to fund hurricane relief, a flood insurance program and wildfire recovery efforts in the West. That includes $18.7 billion for the Federal Emergency Management Agency's disaster relief fund, $16 billion to address national flood insurance program debt and $576.5 million for wildfire recovery efforts. It also provided $1.27 billion for disaster food assistance for Puerto Rico.Monday evening's vote comes after Sen. Bill Nelson (D-Fla.) tried to add more money to the legislation to help with the recovery efforts for hurricanes Irma, Harvey and Maria. His request was blocked, as expected, by Senate Majority Leader Mitch McConnell (R-Ky.). 

Senate sends $36.5 billion disaster relief bill to Trump's desk | TheHill: The Senate easily cleared a disaster relief bill on Tuesday, sending the legislation to President Trump's desk. Senators voted 82-17 on the House-passed measure, which includes help for the response to a string of wildfires and trio of hurricanes. Senators rejected an uphill bid from Sen. Rand Paul (R-Ky.) to include an offset that would pay for the more than $36 billion in funding. “You'll find often that it's easy to be compassionate with someone else's money. But it’s not only that. It’s not only compassion with someone else’s money. It’s compassion with money that doesn't even exist, money that's borrowed,” Paul said during a speech from the Senate floor. The bill, which passed the House earlier this month, would provide $36.5 billion to fund hurricane relief, a flood insurance program and wildfire recovery efforts in the West. That includes $18.7 billion for the Federal Emergency Management Agency's disaster relief fund, $16 billion to address national flood insurance program debt and $576.5 million for wildfire recovery efforts. It also provided $1.27 billion for disaster food assistance for Puerto Rico. 

‘Days were lost’: Why Puerto Rico is still suffering a month after Hurricane Maria - Before Hurricane Maria tore through the rest of this island, it came to Mayor Jorge Márquez’s home. The storm ripped through improvised plastic shutters, shook the windows and sent his panicked family, including his grandchildren, scurrying to a bathroom to hide.  At the end, when the winds finally died down, he stepped outside to glimpse at the damage to the town he’s run for nearly two decades. Tattered roofs littered the ground. Snapped trees mangled power lines. The local hospital was lost. The town’s funeral home was gone.  Márquez wept.   The easy part of the storm was over. The real agony had yet to begin.   “Everything we’ve built over 16 years, destroyed in a single day,” he said Tuesday, pausing to fight back fresh tears. A month has passed since Maria ravaged Puerto Rico, and the island continues to operate in emergency mode, struggling to do even the basics: save lives, protect property, provide drinking water, turn on the lights. Time ticks away in a hazy state of permanent disaster, a catastrophe born from the worst storm to cross Puerto Rico in 85 years — and of a slow recovery by the federal, state and local governments. The blame for the unsatisfactory response, the Miami Herald and Puerto Rico’s Center for Investigative Journalism found, lies with bureaucracies that were unprepared for a collapsed communications system and overwhelmed by the logistical challenges of aiding an island left with no corner unharmed. Even the White House appeared indifferent to the needs of 3.4 million American citizens 1,000 miles from its shores.Above all, strapped finances that plunged the island into an economic tailspin long before any winds arrived left the state government so thinly stretched it could not maintain its power grid or afford extensive preparations for a monster storm –– much less pay for the sort of recovery that would be demanded in the mainland U.S. 

Democrats call for investigation into Puerto Rico utility deal | TheHill: House Democrats are pushing for an investigation into a contract signed by a small Montana-based energy company to help restore Puerto Rico’s electrical grid. Rep. Raúl Grijalva (D-Ariz.), the ranking member on the House Natural Resources Committee, said Democrats have “pushed for a full investigation of some sort” into Whitefish Energy’s agreement to repair Puerto Rico’s hurricane-damaged energy infrastructure. “I think there’s more digging to be done,” Grijalva said Tuesday. “We’re looking at it; we pushed for a full investigation of some sort.” The Washington Post reported Monday on the $300 million contract with the Puerto Rico Electric Power Authority, which Whitefish Energy signed last week to help the island recover from Hurricane Maria. Whitefish is a two-year-old company that had only two employees when Maria struck Puerto Rico last month. As of Monday, it said it had 280 employees in Puerto Rico, mostly contractors. The company is based in the small Montana hometown of Interior Secretary Ryan Zinke. Zinke’s office told the Post he knows the company’s CEO and that one of his sons worked at the firm as a summer job. But the agency and company executives said Zinke had no role in the company’s Puerto Rico contract. House Natural Resources Committee Chairman Rob Bishop (R-Utah) said Tuesday that he had not yet read reports about the contract. A GOP spokesman told the Post that the deal “raises numerous questions” and that the committee would examine it. The Natural Resources Committee has jurisdiction over Puerto Rico.

Nurses returning from Puerto Rico accuse the federal government of leaving people to die - The nation's largest nurses union condemned the federal government's emergency response in Puerto Rico on Thursday for "delaying necessary humanitarian aide to its own citizens and leaving them to die."The stinging criticism came from members of the nonprofit National Nurses United, speaking on Capitol Hill with Democratic members of Congress after a two-week humanitarian mission to Puerto Rico. About 50 volunteer nurses visited two dozen towns in urban and rural areas, and described the desperation of Puerto Ricans — even five weeks after Hurricane Maria hit the island — as worse than anything they had witnessed on other humanitarian missions, including the aftermath of Katrina in New Orleans and the earthquake in Haiti.The official death toll from the storm so far is 51, though Vox's own reporting suggests the actual number of deaths could be in the hundreds.   The nurses described doctors performing surgery in hospitals with light from their cellphones, children screaming from hunger, elderly residents suffering from severe dehydration, and black mold spreading throughout entire communities.  "We cannot be silent while millions of people continue to endure these conditions," said Bonnie Castillo, associate executive director of National Nurses United. She said some nurses arrived in towns that never got food or water supplies, or any other help from the Federal Emergency Management Agency.  Here is what most concerned them from their experience on the ground:

  • People standing in line for hours in the sun for food and water, with federal workers giving them paperwork instead of distributing supplies
  • Residents living in soaked homes without roofs, where dangerous black mold is spreading and leading to respiratory problems
  • Rural towns that have never gotten food and water supplies, and yet have no running water and no electricity
  • An outbreak of leptospirosis, a dangerous bacterial disease that has already claimed lives; as of Thursday, four deaths have been attributed to this outbreak
  • Multiple communities without clean water that are at risk of the outbreak of water-borne illness epidemics

FEMA Had a Plan for Responding to a Hurricane in Puerto — But It Doesn’t Want You to See It -- The Federal Emergency Management Agency, citing unspecified “potentially sensitive information,” is declining to release a document it drafted several years ago that details how it would respond to a major hurricane in Puerto Rico.The plan, known as a hurricane annex, runs more than 100 pages and explains exactly what FEMA and other agencies would do in the event that a large storm struck the island. The document could help experts assess both how well the federal government had prepared for a storm the size of Hurricane Maria and whether FEMA’s response matches what was planned. The agency began drafting such advance plans after it was excoriated for poor performance and lack of preparation in the wake of Hurricane Katrina in 2005.ProPublica requested a copy of the Puerto Rico hurricane annex as part of its reporting on the federal response to Maria, the scale and speed of which has been the subject of scrutiny and criticism. More than a month after the storm made landfall, 73 percent of the island still lacks electricity. Early last week, a FEMA spokesman said he would provide a copy of the plan that afternoon. It never came. After a week of follow-ups, FEMA sent a statement reversing its position. “Due to the potentially sensitive information contained within the Hurricane Annex of the Region II All Hazards Plan, there are legal questions surrounding what, if any, portions of the annex can be released,” the statement said. “As such, the documents that you seek must be reviewed and analyzed under the Freedom of Information Act (FOIA) by FEMA.” The statement did not explain what legal questions apply. As ProPublica has previously reported, FEMA’s Freedom of Information process is plagued by dysfunction and yearslong backlogs. For example, FEMA hasn’t responded to a request for documents related to Superstorm Sandy that we filed more than three and a half years ago.

Climate change already costing U.S. billions in losses, congressional auditor says in report – A nonpartisan federal watchdog says climate change is already costing U.S. taxpayers billions of dollars each year, with those costs expected to rise as devastating storms, floods, wildfires and droughts become more frequent in the coming decades. A Government Accountability Office report released Monday said the federal government has spent more than $350 billion over the last decade on disaster assistance programs and losses from flood and crop insurance. That tally does not include the massive toll from this year’s three major hurricanes and wildfires, expected to be among the most costly in the nation’s history. The report predicts these costs will only grow in the future, potentially reaching a budget busting $35 billion a year by 2050. The report says the federal government doesn’t effectively plan for these recurring costs, classifying the financial exposure from climate-related costs as “high risk.” “The federal government has not undertaken strategic government-wide planning to manage climate risks by using information on the potential economic effects of climate change to identify significant risks and craft appropriate federal responses,” the study said. “By using such information, the federal government could take the initial step in establishing government-wide priorities to manage such risks.” GAO undertook the study following a request from Republican Sen. Susan Collins and Sen. Maria Cantwell, the ranking Democrat on the Senate Committee on Energy and Natural Resources. 

US refugees: Stricter screening as 120-day ban expires - BBC News: US President Donald Trump is to allow refugees to begin entering to the US again, with stricter rules for applicants from 11 "high risk" nations. The decision came as a 120-day ban on refugees expired on Tuesday - a part of Mr Trump's executive orders that came to be known as the "travel ban". Applicants from the 11 nations will be restricted for a 90-day review period. Last month the president announced the lowest cap on refugee resettlements ever set by a US president. The State Department said on Tuesday that vetting for the US Refugee Admissions Program (USRAP) was "generally adequate" but "additional in-depth review is needed with respect to refugees of 11 nationalities". The 11 countries have not been named. It further announced that additional vetting would be put in place for refugees of all nationalities seeking to join family members already in the US via the "following-to-join" programme.Elements of the additional vetting were reported by US media. The Department of Homeland Security will collect more biographical data such as the names of family members and places of employment, the reports said. Officials also plan to do more to mine social media posts, but it is not clear what measures the White House will put in place. According to Reuters news agency, applicants will now be required to provide proof of their whereabouts going back a decade - twice as long as before. The temporary ban on all refugees worldwide, as well as a permanent ban on Syrian nationals, was announced by Mr Trump in January during his first week at the White House. It also included a 90-day ban on citizens from seven Muslims-majority nations. After it was challenged in court, the White House replaced the order with one that excised the Syria ban, and a judge ruled in June that the travel restrictions could go into effect. 

How US Foreign Policy Helped Create the Immigration Crisis  - As his price for not deporting roughly 800,000 “Dreamers” who came to this country as children, Donald Trump demands an escalated war against immigrants, topped by his nightmarish 2,000-mile wall along the Mexican border. Democrats have said no. Whether or not some sort of deal is eventually struck, the country will remain deeply divided over undocumented immigrants from the south. Ad Policy Unfortunately, though, that debate is entirely focused on domestic policy—how to treat the undocumented after they have arrived. Democrats, thinking Latinos will vote for them, want the newcomers to stay. Republicans, fearing Democrats are right, want them sent back. Employers want their cheap labor. Workers fear their wage competition. The clash of these agendas further inflames simmering social tensions over racism, police tactics, and cultural identity, which in turn feed Trump’s reactionary base. Lost in these US-centric arguments is the role of our foreign policy in creating the conditions that push people in Central America and Mexico to make the long, arduous, and frequently fatal trek north. In the 1980s, Washington and its neoliberal collaborators began imposing policies that favored multinational corporations and hurt the working poor. For at least 150 years, the United States has intervened with arms, political pressure, and foreign aid in order to protect the business and military elites of these countries who have prospered by impoverishing their people.   Meanwhile, many of the oligarchs became partners in the growing narco-trafficking business. Protected by government officials, criminal gangs have spread throughout the region, adding threats of kidnapping, extortion, rape, and murder to the daily life of people struggling to make a living. A young Guatemalan recently told me: “Unless you are connected to one of the families that run this country, there is no future here. Either you work for the narcos or go north.”

Expelling Immigrant Workers May Also Send Away the Work They Do – NYTimes - Few American industries are as invested in the decades-long political battle over immigration as agriculture. Paying low wages for backbreaking work, growers large and small have historically relied on immigrants from south of the Rio Grande. These days, over one-quarter of the farmhands in the United States are immigrants working here illegally.This is how the growers will respond to President Trump’s threatened crackdown on immigration: They will lobby, asking Congress to provide some legal option to hang on to their foreign work force. They will switch to crops like tree nuts, which are less labor-intensive to produce than perishable fruits and vegetables. They will look for technology to mechanize the harvest of strawberries and other crops. And they will rent land in Mexico.There is one thing they won’t do. Even if the Trump administration were to deploy the 10,000 immigration agents it plans to hire across the nation’s fields to detain and deport farmhands working illegally, farmers are very unlikely to raise wages and improve working conditions to attract American workers instead. “Foreign workers will always be harvesting our crops,” Tom Nassif, who heads the Western Growers Association, told me. The only question for policymakers in Washington is whether “they want them to be harvesting in our economy or in another country.” If they choose the latter, he warned, they might consider that each farmworker sustains two to three jobs outside the fields.

All eight of Trump’s border wall prototypes stand in San Diego (photo gallery) Eight prototypes for the border wall between the United States and Mexico now stand tall in San Diego, across the border from Tijuana, Mexico. The walls, which are being paid for by sanctioned federal funds, will then be reviewed for their effectiveness in the final wall plan. One of the Trump's main promises during his campaign was a border wall, though funding for the final product remains up in the air.

 Proposal to change the H-2A program via appropriations would allow agribusiness to fill hundreds of thousands of permanent, year-round jobs with temporary guestworkers - It’s become a time-honored tradition. Every year for almost a decade, members of Congress—spurred by corporate lobbyists who can’t gather enough support from their fellow colleagues for an immigration policy that will lower wages and degrade working conditions for migrant and American workers—use the appropriations process to get what they want. Few people pay close attention to the deliberations about how to fund the government, so members of Congress can quietly tack their bad idea as a “rider” onto an appropriations bill that is folded into an “omnibus” appropriations bill to keep the government running. If the president vetoes the omnibus budget, the government may shut down. This makes a veto unlikely, which allows riders to become law without facing a debate and vote on the merits of it in the House and Senate. Appropriations riders have become common in U.S. labor migration policy. President Obama’s attempts to improve wages and working conditions for American and migrant workers in the H-2B guestworker program—for jobs in landscaping, forestry, construction and seafood processing, for example—were thwarted again and again through appropriations riders that lowered minimum wage rates for workers and prohibited the Labor Department from enforcing key rules. There is no annual limit on the number of H-2A workers that can be hired, and H-2A is the fastest-growing U.S. guestworker program, more than doubling over the past decade, with over 200,000 farm jobs certified in in 2017. The vast majority of H-2A workers are employed on crop farms, picking fruits and vegetables. The House appropriations committee in charge of funding the Department of Homeland Security (DHS) has now added a rider that would allow H-2A guestworkers to be employed in year-round jobs, thus drastically expanding the scope of this program. By allowing year-round employment, employers could seek to bring in guestworkers for jobs on dairy, livestock, and poultry and egg farms, as well as in nurseries and greenhouses and other non-seasonal agricultural occupations.

Will Democrats Lose Their Last Tool to Block Trump’s Worst Judicial Nominees? - President Trump and his allies have excoriated Mitch McConnell, the Republican leader in the Senate, for his failure to pass important legislation. McConnell is responding, in part, by stepping up his efforts to transform the federal judiciary. If he succeeds, Democrats will lose their only tool to block even the most reactionary judges from winning lifetime appointments.Of course, McConnell already has a singular success to boast about to conservatives who are frustrated with his rule. After blocking President Obama’s appointment of Merrick Garland to replace Antonin Scalia on the Supreme Court, McConnell shepherded Trump’s choice of Neil Gorsuch to confirmation, earlier this year. But this victory didn’t quiet McConnell’s critics on the right, so the Majority Leader is offering them a free hand for choosing the rest of the federal judiciary as well. Because of McConnell’s stonewalling of not only Garland but also Obama’s lower-court nominees, Trump has dozens of judicial vacancies to fill.McConnell’s vehicle for further marginalizing Senate Democrats involves an obscure tradition known as the blue slip. The President nominates all federal judges, but for decades the home-state senators for all nominees have been asked for their approval of the choices. If the senators agree, they submit a form (on blue paper) that ratifies the choice. If they do not approve of the nominee, they do not return the so-called blue slip—and the Judiciary Committee does not move the nominee forward to a hearing and a vote. The blue-slip rule does not have the force of law; it’s simply a custom that has been honored over time. Notably, when Patrick Leahy, the Vermont Democrat, was the chairman of the Judiciary Committee, during the Obama Administration, he followed the blue-slip rule in states where there were Republican senators. If these senators did not return their blue slips—and many did not, especially in Texas and other Southern states—Leahy buried the President’s nominees. In truth, the blue slip is a rather dubious tradition, one that has historically given senators a little-deserved veto power over a President’s choice. But, because Senate Republicans exercised this power over Obama’s nominees, it’s only fair—indeed, it’s obligatory—that Senate Democrats have equal say when it comes to Trump’s.

Conflict Mounts Inside Voting Fraud Commission in the Wake of Child Porn Arrest - Pro Publica - The arrest, on child pornography charges, of a researcher for the controversial Presidential Advisory Commission on Election Integrity is intensifying conflict inside the group, with two Democratic members asserting again that a small band of conservatives holds disproportionate power. The researcher, Ronald Williams II, who was arrested late last week, previously worked as an intern at the Department of Justice on a case with J. Christian Adams, who is now a Republican member of the commission.Democratic commissioner Matt Dunlap contends Williams’ involvement with the commission is the latest in a series of discoveries suggesting a few conservative members wield outsize clout; Dunlap claims that Democratic members have been largely excluded from planning. Today he wrote a letter to the commission demanding information.“I am seeking information because I lack it,” stated the letter, a copy of which was given to ProPublica. “I am in a position where I feel compelled to inquire after the work of the Commission upon which I am sworn to serve, and am yet completely uninformed as to its activities.” The letter demanded copies of “any and all communication between members of the commission” beginning in May.Dunlap called the arrest of Williams the last straw in what he characterized as a series of actions by several commissioners to manipulate the commission. In September, an email was released showing that Republican Commissioner Hans von Spakovsky lobbied against the inclusion of Democrats on the commission. And earlier this month, filings in a lawsuit showed that, before they joined the commission, von Spakovsky and Adams played a role in the commission’s most consequential action to date: a letter sent to states requesting sweeping quantities of voter data. Both Dunlap and Alan King — a Democratic commissioner and probate court judge in Jefferson County, Alabama — said the commissioners were never told about any staff members apart from Andrew Kossack, the person running the commission. They said they did not know of Williams until they read about him in a Washington Post article describing his arrest in Maryland on 11 counts of possessing and distributing child pornography.

Hundreds Face Conspiracy Charges For Actions Of A Few During Inauguration Day Protests - When Texas photojournalist Alexei Wood goes to court in Washington, D.C., on November 15, he’ll be one of the first people to face charges stemming from protests around the inauguration of President Donald Trump. Wood and five others are being charged for their alleged involvement in what prosecutors are describing as a riot on the morning of January 20, hours before Trump was sworn in at on the Capitol steps. All nine defendants face up to 70 years in prison. The case’s outcome could set a precedent that would affect all of the over 200 remaining defendants awaiting trial for the “J20″ protests who face the same strict maximum sentence.“The government doesn’t like this kind of activity in its city,” said Wood’s lawyer, Brett Cohen.The U.S. Attorney’s Office for the District of Columbia did not respond to requests for comment, but information gleaned from the April 27 indictment indicates the sort of tactics the government will use against the defendants, who will be tried in staggered groups of around eight beginning November 15. By charging everyone together with conspiracy counts, the government seems intent on making an example of the J20 protesters. “They’re prosecuting us as a group,” Wood said.  The conflation of the protesters as a whole with the alleged violent acts of a few in the crowd is worrying to Menefee-Libby. It would be a “radical departure” from a basic understanding of the law, Menefee-Libby said, if the government prosecutes people solely for their proximity to criminality. “Individuals can only be held responsible for their own behavior,” said Menefee-Libby, describing a fundamental tenet of the U.S. justice system. That the government’s case does not differentiate between actors and bystanders could be an indication of future clampdowns on protest. “Even if we take the government at their word, that members of the protest had unlawful goals,” said attorney Shana Knizhnik, of the American Civil Liberties Union’s D.C. chapter, “it’s undeniable they also had lawful goals.”

House Launches Probe Into Comey's Handling Of Clinton Email Investigation - After months of inexplicable delays, the chairman of the House Judiciary and Oversight committees,  Bob Goodlatte (R-Va.) and Trey Gowdy (R-S.C.), announced moments ago a joint investigation into how the Justice Department handled last year's investigation into Hillary Clinton's private email server.  Among other things, Goodlatte and Gowdy said that the FBI must answer for why it chose to provide public updates in the Clinton investigation but not in the Trump investigation and why the FBI decided to "appropriate full decision making in respect to charging or not charging Secretary Clinton," a power typically left to the DOJ. "Our justice system is represented by a blind-folded woman holding a set of scales. Those scales do not tip to the right or the left; they do not recognize wealth, power, or social status. The impartiality of our justice system is the bedrock of our republic and our fellow citizens must have confidence in its objectivity, independence, and evenhandedness. The law is the most equalizing force in this country. No entity or individual is exempt from oversight. "Decisions made by the Department of Justice in 2016 have led to a host of outstanding questions that must be answered. These include, but are not limited to:

  • FBI's decision to publicly announce the investigation into Secretary Clinton's handling of classified information but not to publicly announce the investigation into campaign associates of then-candidate Donald Trump;
  • FBI's decision to notify Congress by formal letter of the status of the investigation both in October and November of 2016;
  • FBI's decision to appropriate full decision making in respect to charging or not charging Secretary Clinton to the FBI rather than the DOJ;

Julian Assange confirms Cambridge Analytica sought Wikileaks help - A data-mining firm that worked for Donald Trump’s election campaign made an approach to WikiLeaks, founder Julian Assange said on Wednesday.The statement followed a report in the Daily Beast that Cambridge Analytica chief executive Alexander Nix made contact with Assange about the possible release of 33,000 of former secretary of state Hillary Clinton’s missing emails.“I can confirm an approach by Cambridge Analytica [prior to November last year] and can confirm that it was rejected by WikiLeaks,” Assange tweeted. He did not elaborate on the content of the request.The Daily Beast report said: “Nix, who heads Cambridge Analytica, told a third party that he reached out to Assange about his firm somehow helping the WikiLeaks founder release Clinton’s missing emails, according to two sources familiar with a Congressional investigation into interactions between Trump associates and the Kremlin.“Those sources also relayed that, according to Nix’s email, Assange told the Cambridge Analytica CEO that he didn’t want his help, and preferred to do the work on his own. If the claims Nix made in that email are true, this would be the closest known connection between Trump’s campaign and Assange.”Another report by CNN, citing two unnamed sources, said Nix wrote to several people including Trump mega-donor Rebekah Mercer, explaining that he had emailed Assange seeking access to the Clinton emails to turn them into a searchable database for the campaign or a pro-Trump political action committee. Mercer and her father Robert, a hedge fund billionaire, are major investors in Cambridge Analytica. Steve Bannon was a vice-president of the company – he reportedly had holdings valued at between $1m and $5m – before joining the Trump campaign and becoming the White House chief strategist, a post he left in August. Cambridge Analytica’s website claims it holds up to 5,000 data points on more than 230 million American voters. It promises to help clients “gain the advantage over your opponents by adding our blend of big data analytics and behavioral psychology to your campaign arsenal.” The company was hired as part of the Trump campaign’s data operation, led by Brad Parscale and overseen by Trump’s son-in-law, Jared Kushner. Between 29 July and 12 December the Trump campaign paid Cambridge Analytica $5.9m, according to the Federal Election Commission.

Clinton campaign, DNC paid for research that led to Russia dossier - The Hillary Clinton campaign and the Democratic National Committee helped fund research that resulted in a now-famous dossier containing allegations about President Trump’s connections to Russia and possible coordination between his campaign and the Kremlin, people familiar with the matter said. Marc E. Elias, a lawyer representing the Clinton campaign and the DNC, retained Fusion GPS, a Washington firm, to conduct the research. After that, Fusion GPS hired dossier author Christopher Steele, a former British intelligence officer with ties to the FBI and the U.S. intelligence community, according to those people, who spoke on the condition of anonymity. Elias and his law firm, Perkins Coie, retained the company in April 2016 on behalf of the Clinton campaign and the DNC. Before that agreement, Fusion GPS’s research into Trump was funded by an unknown Republican client during the GOP primary. The Clinton campaign and the DNC, through the law firm, continued to fund Fusion GPS’s research through the end of October 2016, days before Election Day. Fusion GPS gave Steele’s reports and other research documents to Elias, the people familiar with the matter said. It is unclear how or how much of that information was shared with the campaign and the DNC and who in those organizations was aware of the roles of Fusion GPS and Steele. One person close to the matter said the campaign and the DNC were not informed by the law firm of Fusion GPS’s role. The dossier has become a lightning rod amid the intensifying investigations into the Trump campaign’s possible connections to Russia. Some congressional Republican leaders have spent months trying to discredit Fusion GPS and Steele and tried to determine the identity of the Democrat or organization that paid for the dossier. 

Hillary Clinton Lied, Paid For "Trump Dossier" --- What was previously widely suspected has now been confirmed. In its latest bombshell report that - for once - doesn’t include some nefarious allegations of wrongdoing or incompetence involving President Donald Trump or members of his administration, theWashington Post reported Tuesday that the Democratic National Committee and the Clinton campaign jointly financed the creation of the infamous “Trump dossier,"which helped inspire the launch of the floundering investigations into whether the Trump campaign colluded with the Russians.Though neither the DNC nor the Clinton campaign worked directly with former British spy Christopher Steele as he compiled the document, the fact that Democrats funded the dossier – which includes information primarily gleaned from sources in Russia – ironically suggests the Democrats indirectly leveraged Russian sources to try and spread information of dubious veracity about a political opponent to try and sway an election. Even though the scandalous accusations contained within the dossier weren’t made public until after the vote, presumably waiting to see what foot the shoe would end up on, this would’ve provided serious grist for the collusion narrative, which we imagine would’ve been stretched to include the entire Republican establishment as accomplices. While it’s impossible to determine exactly how much money was spent on the dossier, the Clinton campaign paid Perkins Coie – the law firm of Clinton superattorney Marc Elias - $5.6 million in legal fees from June 2015 to December 2016, according to campaign finance records, and the DNC paid the firm $3.6 million in “legal and compliance consulting’’ since Nov. 2015. Some of that money was presumably used to pay for the dossier.

"The Hoax Turned Around": Trump Responds To News Hillary Funded "Fake Dossier" --Responding to Tuesday's WaPo report that Hillary Clinton was the mystery financial source behind the "Russia Dossier", Trump blasted Hillary Clinton, calling the project a “disgrace” and claiming the tables have turned on Democrats over the “Russia hoax.”"I understand they paid a tremendous amount of money and Hillary Clinton always denied it, the Democrats always denied it, and now only because it's going to come out in a court case they said "yes, they did it" and  they’re embarrassed by it, but I think it’s a disgrace,” Trump told reporters, before heading to Texas for a briefing on Hurricane Harvey recovery efforts and a Republican fundraiser. “It’s a very sad commentary on politics in this country.”Trump: Clinton involvement with Russia dossier is a “disgrace”   Trump repeatedly said Wednesday that this information only came out because the court case would have revealed it. Amid a series of Russia-related controversies that have Democrats – at least for now – on defense, Trump suggested the allegations of Russia collusion with his campaign were a "hoax" and have boomeranged and are hurting Democrats.“The whole Russia thing … this was the Democrats coming up with an excuse for losing the election,” Trump told reporters. “They lost it and they lost it very badly. And they didn’t know what to say, so they made up the whole Russia hoax.”Trump added: “Now it’s turning out that the hoax is turned around, and you look at what’s happened with Russia and the uranium deal and the fake dossier, and it’s all turned around.” Trump was referring not only to the dossier but the Obama administration’s 2010 approval of a Canadian mining company’s sale to a Russian firm that gave them partial control of U.S. uranium reserves.  “I think the uranium sale to Russia and the way it was done so underhanded with tremendous amounts of money being passed, I think that's Watergate modern age,” Trump said.

Paul Ryan Says FBI Will Turn Over Long-Sought 'Trump Dossier' Documents - Shortly after House Speaker Paul Ryan finished extolling his triumph over a group of 20 intransigent blue-state Republicans who opposed a budget bill passed by the House on Thursday, the Republican leader dropped a surprising revelation about the House Intelligence Committee’s push to subpoena the FBI for records pertaining to the infamous “Trump dossier.” As the public’s perception of the dossier’s credibility has deteriorated further following this week's revelation that it was financed by the Clinton campaign and Democratic National Committee, the FBI is finally acquiescing to the House Intel committee's monthslong campaign to obtain the records. The agency said it will provide the documents to Nunes & Co. by next week, Ryan said. After Ryan accused the agency of “stonewalling” and “foot-dragging” during an interview published on Wednesday, the FBI contacted his office and promised the requested materials would be readily provided, Politico noted.  “The FBI got in touch with us yesterday afternoon and they have informed us that they will comply with our document requests, and that they will provide the documents that Congress has been asking for by next week,” Ryan said.

John Podesta and Debbie Wasserman Schultz under scrutiny after making possible false statements to Congress - This week’s report that Hillary Clinton’s 2016 campaign and the DNC privately paid for opposition research against President Trump may have landed former DNC chairwoman Debbie Wasserman-Schultz and former Clinton campaign manager John Podesta in legal trouble. It is illegal to lie to Congress, yet before these financial ties were discovered, Schultz and Podesta were privately interviewed by congress, and claimed that they were not aware of any financial contracts between the Clinton campaign and DNC with intelligence firm Fusion GPS. When Podesta made that claim, the attorney sitting right next to him had worked at the law firm who set up the contract with Fusion GPS for the Clinton campaign and the DNC. A Republican enemy of Trump had initially funded the research, which ultimately resulted in a dossier with many unverified attempts to link Trump’s campaign with Russian government officials. When it became increasingly clear that Trump would become the Republican presidential nominee, the Clinton campaign and the DNC funded the rest of it. “This provides us the ability to connect some dots that we couldn’t do before this,” said Senate Intelligence Chairman Richard Burr. “And any investigation when you have a revelation this big, it begins to clarify some pictures that you were already trying to understand. This has done instantaneously for us, which will require us to dig a lot deeper in some areas that maybe a week ago we weren’t planning to.” Wasserman-Schultz continues to deny that she was ever aware her organization was funding this research.

Why doesn’t Hillary’s ‘dossier’ trick count as treason? - What’s the difference between the infamous Russian dossier on Donald Trump and that random fake-news story you saw on Facebook last year? The latter was never used by America’s intelligence community to bolster its case for spying on American citizens nor was it the foundation for a year’s worth of media coverage.  Then again, you get what you pay for. We now know Hillary Clinton and the Democratic National Committee paid as much as $9 million for the discredited dossier on TrumpAccording to the Washington Post, a lawyer named Marc Elias, who represented both the 2016 Clinton campaign and the Democratic National Committee, had hired Fusion GPS, a DC firm working on behalf of the Russian government to soften sanctions at the time, to provide opposition research for them. The firm then hired a former British spy named Christopher Steele who reportedly purchased salacious rumors about Trump from the Russians. Now, you might expect that the scandalous revelation of a political campaign using opposition research that was partially obtained from a hostile foreign power during a national election would ignite shrieks of “collusion” from all patriotic citizens. After all, only last summer, when it was reported that Donald Trump Jr. met with a Kremlin-linked Russian lawyer who claimed to be in possession of damaging information about Clinton, there was widespread condemnation.  Finally, we were told, a smoking gun tied the Trump campaign to Vladimir Putin. Former Democratic vice presidential candidate Tim Kaine went as far as to suggest that the independent counsel begin investigating treason. Treason! Trump Jr. didn’t even pay for or accept research.  The Clinton crew, on the other hand, did. They didn’t openly push the contents of the dossier — probably because they knew it was mostly fiction. Instead, Fusion GPS leaked it to their friends in the media.

Republican Group That Helped Finance 'Trump Dossier' Revealed -- In what will probably be remembered as a footnote in the Congressional inquiries into the credibility of the infamous "Trump dossier", the mysterious Republican anti-Trump group that retained opposition research firm Fusion GPS during the Republican primary has finally been revealed. And surprisingly, it wasn't John McCain, the RNC or the Cruz campaign. It was...the Washington Free Beacon? The conservative website reportedly told a Congressional panel that it paid Fusion GPS to conduct opposition research on Trump during the primary, but asked it to stop in May 2016 when it became apparent that Trump would be the nominee. The DNC and Clinton campaigns, through lawyer Marc Elias, contracted Fusion to dig into Trump's background in April 2016, which is when the real work that led to the dossier's creation began. The Free Beacon famously is funded in large part by New York hedge fund billionaire Paul Singer of Elliott Management Corp. Singer strongly opposed Trump during the primary. The conservative-leaning news website confirmed its relationship with Fusion in a post published Friday night. In the post, the Free Beacon explained that it had withdrawn its financial support before former British spy Christopher Steele was brought on to begin the research that led to the dossier. The Free Beacon also paid to fund opposition research into other candidates besides Trump. Lawyers for the conservative publication Washington Free Beacon informed the House Intelligence Committee Friday that the organization was the original funder for the anti-Trump opposition research project with Fusion GPS.

House Republicans to investigate Russia uranium deal tied to Canadian company -   CBC News: Republican leaders of two committees in the U.S. House of Representatives launched an investigation on Tuesday into the purchase by a Russian firm several years ago of a Canadian-based company that owned some 20 per cent of U.S. uranium supplies. Republican lawmakers say they want to know whether the 2010 transaction involving Rosatom and Uranium One, which has headquarters in Toronto, was fully investigated by the FBI and other agencies before it was approved by a panel that oversees foreign investment in U.S. strategic assets. "We're not going to jump to any conclusions at this time,"said Devin Nunes, a Republican from California. "But one of the things that you know that we're concerned about is whether or not there was an FBI investigation. Was there a [Department of Justice] investigation? And if so, why was Congress not informed of this matter?" Some Republicans have claimed that Hillary Clinton's State Department approved the deal after her husband's charitable foundation received a $145-million US donation, but the State Department controls only one seat on the panel that approved the transaction and the New York Times reported two years ago that she did not participate in the decision.

House Committees Announce Investigation Into Hillary's Approval Of Russia's Uranium One Deal - Today is shaping up to be a fairly bad day for Hillary Clinton.  Just moments after the House Judiciary and Oversight committees announced an investigation into Comey's handling of the Hillary email investigation, the House Intelligence and Oversight committees have also announced an investigation in the Uranium One deal which handed Russia 20% of America's uranium reserves and landed the Clinton Foundation some $145 million in donations and a $500,000 speaking gig for former President Bill Clinton.As we've pointed out over the past couple of days, the Uranium One deal has recently resurfaced in public discussion after a former FBI informant came forward suggesting that he personally witnessed Russian operatives in a massive bribery, extortion and money laundering scheme discussing efforts to curry favor with the Clintons. The informant has requested an audience with certain Congressional committees but has so far been silenced by an NDA he signed with the FBI. Here are a couple of our recent posts on the topic as a recap:

As the The Hill points out, the Uranium One investigation will initially look into whether or not the FBI bothered to investigate the circumstances surrounding the approval of the deal which occurred during an ongoing investigation. The two panels, the House Intelligence and Oversight Committees, will first probe whether there was an FBI investigation into the deal, approved when former Democratic presidential candidate Hillary Clinton was Secretary of State. Rep. Pete King (R-N.Y.) on Monday cited “very, very real concerns about why we would allow a Russian-owned company to get access to 20 percent of America’s uranium supply.”“It’s important we find out why that deal went through.”

FBI watched, then acted as Russian spy moved closer to Hillary Clinton | TheHill: As Hillary Clinton was beginning her job as President Obama’s chief diplomat, federal agents observed as multiple arms of Vladimir Putin’s machine unleashed an influence campaign designed to win access to the new secretary of State, her husband Bill and members of their inner circle, according to interviews and once-sealed FBI records. Some of the activities FBI agents gathered evidence about in 2009 and 2010 were covert and illegal.A female Russian spy posing as an American accountant, for instance, used a false identity to burrow her way into the employ of a major Democratic donor in hopes of gaining intelligence on Hillary Clinton’s department, records show. The spy was arrested and deported as she moved closer to getting inside State, agents said. Other activities were perfectly legal and sitting in plain view, such as when a subsidiary of Russia’s state-controlled nuclear energy company hired a Washington firm to lobby the Obama administration. At the time it was hired, the firm was providing hundreds of thousands of dollars a year in pro bono support to Bill Clinton’s global charitable initiative, and it legally helped the Russian company secure federal decisions that led to billions in new U.S. commercial nuclear business, records show. Agents were surprised by the timing and size of a $500,000 check that a Kremlin-linked bank provided Bill Clinton with for a single speech in the summer of 2010. The payday came just weeks after Hillary Clinton helped arrange for American executives to travel to Moscow to support Putin’s efforts to build his own country’s version of Silicon Valley, agents said. 

Senate Intel Chairman Calls For Special Prosecutor To Investigate 'Uranium One' Deal - Hillary Clinton is back in the crosshairs of Congressional investigators after two House committees launched investigations into the circumstances surrounding the Obama-era Uranium One deal more than a year after suspicions of a quid-pro-quo were first raised by Peter Schweizer in his infamous “Clinton Cash” expose.The Hill breathed new life into those allegations last week when it reported on an FBI investigation into attempts by Russian nuclear industry officials at the US-based subsidiary of Rosatom (the Russian nuclear agency)  to bribe and extort their way into control of Canada-based Uranium One - and by extension, the 20% of US uranium assets it controls. And now that the Uranium One story has found its way back into mainstream consciousness, Chuck Grassley, the widely respected head of the Senate Judiciary Committee, is calling for the DOJ to appoint a special prosecutor to investigate the deal. The thinking is, presumably, if Deputy AG Rod Rosenstein felt comfortable appointing a prosecutor to dig into possible collusion between Russia and the Trump campaign, he should be equally comfortable appointing a prosecutor to investigate these serious allegations from the Obama era. "Whoever in DOJ is capable" of launching an investigation into Uranium One should go ahead and do so, Grassley tweeted.  Whoever in DOJ is capable w authority to appoint a special counsel shld do so to investigate Uranium One "whoever" means if u aren't recused— ChuckGrassley (@ChuckGrassley) October 25, 2017

Gorka Says Hillary Clinton Is Guilty of Treason, Could ‘Get the Chair’ - Sebastian Gorka, the controversial former deputy assistant to President Trump, charged in a Thursday night interview on Fox News that recent allegations against Hillary Clinton are comparable to espionage committed by Julius and Ethel Rosenberg, who “got the chair.” Gorka told Sean Hannity, “If this had happened in the 1950s, there would be people up on treason charges right now. The Rosenbergs, OK? This is equivalent to what the Rosenbergs did and those people got the chair.” He added, “Think about it. Giving away nuclear capability to our enemies, that’s what we’re talking about.” Gorka was referencing the probe House Republicans recently announced into the circumstances surrounding the sale of Canadian mining corporation Uranium One, which was approved in 2010 by the Obama administration. At the time, a committee involving Hillary Clinton approved the sale to Rosatom, Russia’s Atomic Energy Agency.

Hopes Dim for Congressional Russia Inquiries as Parties Clash — In a secured room in the basement of the Capitol in July, Jared Kushner, President Trump’s son-in-law and senior adviser, fielded question after question from members of the House Intelligence Committee. Though the allotted time for the grilling had expired, he offered to stick around as long as they wanted.But Representative Trey Gowdy, who spent nearly three years investigating Hillary Clinton’s culpability in the deadly 2012 attack in Benghazi, Libya, was growing frustrated after two hours. You are in an unwinnable situation, Mr. Gowdy, a South Carolina Republican, counseled Mr. Kushner. If you leave now, Democrats will say you did not answer all the questions. If you stay, they will keep you here all week.The exchange, described by three people with knowledge of it, typified the political morass that is crippling the House Intelligence Committee’s investigation into Russian meddling in the 2016 election — and whether the Trump campaign colluded in any way. But the problems extend beyond that panel. All three committees looking into Russian interference — one in the House, two in the Senate — have run into problems, from insufficient staffing to fights over when the committees should wrap up their investigations. The Senate Judiciary Committee’s inquiry has barely started, delayed in part by negotiations over the scope of the investigation. Leaders of the Senate Intelligence Committee, while maintaining bipartisan comity, have sought to tamp down expectations about what they might find. Nine months into the Trump administration, any notion that Capitol Hill would provide a comprehensive, authoritative and bipartisan accounting of the extraordinary efforts of a hostile power to disrupt American democracy appears to be dwindling.  “Congressional investigations unfortunately are usually overtly political investigations, where it is to one side’s advantage to drag things out,” said Mr. Gowdy, who made his name in Congress as a fearsome investigator of Democrats. He added, “The notion that one side is playing the part of defense attorney and that the other side is just these white hat defenders of the truth is laughable.”

Mueller now investigating Democratic lobbyist Tony Podesta — Tony Podesta and the Podesta Group are now the subjects of a federal investigation being led by Special Counsel Robert Mueller, three sources with knowledge of the matter told NBC News. The probe of Podesta and his Democratic-leaning lobbying firm grew out of Mueller's inquiry into the finances of former Trump campaign chairman Paul Manafort, according to the sources. As special counsel, Mueller has been tasked with investigating possible collusion between the Trump campaign and Russia.  Manafort had organized a public relations campaign for a non-profit called the European Centre for a Modern Ukraine (ECMU). Podesta's company was one of many firms that worked on the campaign, which promoted Ukraine's image in the West.  The sources said the investigation into Podesta and his company began as more of a fact-finding mission about the ECMU and Manafort's role in the campaign, but has now morphed into a criminal inquiry into whether the firm violated the Foreign Agents Registration Act, known as FARA.   Under FARA, people who lobby on behalf of foreign governments, leaders or political parties must file detailed disclosures about their spending and activities with the Justice Department. Willful failure to file the forms is a felony and can result in up to five years in prison, though such prosecutions are rare.

 Ex-Trump campaign chairman Paul Manafort investigated for possible money laundering: report - Paul Manafort, President Trump's ex-campaign chairman, is being investigated for possible money laundering, according to The Wall Street Journal, which cited three people familiar with the matter.The newspaper writes that the Manhattan U.S. attorney's office is launching the probe which now joins other state and federal probes connected to Manafort.WSJ adds that the investigation is led by the U.S. Attorney for the Southern District of New York in conjunction with a probe special counsel Robert Mueller is carrying out related to possible money laundering by Manafort.Tuesday's report comes in the wake of Mr. Trump's reported interviewing of at least two people for U.S. attorney positions in New York -- which includes the office which oversees the fresh Manafort probe.New York State Attorney General Eric Schneiderman has been investigating Manafort's real estate holdings in New York. Mueller, who is using a federal grand jury in Washington, D.C. to help with his investigation, is said to be particularly focused on Manafort's lobbying efforts between 2012 and 2014 for a pro-Russian Ukrainaian political party, and his offshore banking and financial dealings.

Republicans spoil for a fight over Russia probe budget - Republicans trying to hobble Robert Mueller’s sprawling probe into President Donald Trump and Russia matters are about to get a new weapon: the special counsel’s budget. Lawmakers haven’t yet seen the Russia investigator’s first spending report, which must go through a Justice Department review before being made public. But they’re already setting up a fight over how much the probe is costing taxpayers — and the fact that there’s no end in sight. “For them to say to us, ‘Vote for an open-ended appropriation into a Mueller witch hunt,’ I think you’ll see significant objection there,” Rep. Steve King (R-Iowa) told POLITICO. Mueller’s public budget is expected to contain only top-line figures covering broad categories like staff salaries, travel, outside contracts, supplies and equipment. But money will become a recurring fight as the investigation drags on, because Mueller is required to produce public expense reports every six months — giving opponents repeated opportunities to paint him in a negative light. 

Robert Mueller Russia inquiry: first charges have been filed – reports - A federal grand jury on Friday approved the first charges in the investigation into alleged Russian meddling in the 2016 US presidential election, according to multiple reports. The indictment was sealed by a federal judge so it is not clear what the charges are or to whom they relate, a source briefed on the matter told Reuters, adding that the indictment could be unsealed on Monday. The filing of charges by the grand jury in Washington was first reported earlier on Friday by CNN, which quoted multiple sources and said the target or targets could be taken into custody as soon as Monday. The Wall Street Journal later confirmed the report. Trump 'will help pay' legal bills of White House staff and aides in Russia inquiries Read more US intelligence agencies concluded in January that Russia interfered in the election to try to help Donald Trump defeat Democratic candidate Hillary Clinton through a campaign of hacking and releasing embarrassing emails, and disseminating propaganda via social media to discredit her campaign. Special counsel Robert Mueller, a former director of the FBI, is investigating whether Trump campaign officials colluded with those Russian efforts. “If the special counsel finds it necessary and appropriate, the special counsel is authorized to prosecute federal crimes arising from the investigation of these matters,” Deputy attorney general Rod Rosenstein said in a 17 May letter appointing Mueller. Sources familiar with Mueller’s investigation say he has used that broad authority to investigate links between Trump aides and foreign governments as well as possible money laundering, tax evasion and other financial crimes. Peter Carr, a spokesman for Mueller, declined to comment to Reuters or CNN on Friday. Trump has denied allegations his campaign colluded with Russians and condemned investigations into the matter as a witch hunt. The Kremlin has denied the allegations. The special counsel’s investigation also includes an effort to determine whether the president or any of his aides tried to obstruct justice. 

 Kaspersky says it obtained suspected NSA hacking code from U.S. computer (Reuters) - Moscow-based antivirus software maker Kaspersky Lab said on Wednesday that its security software had taken source code for a secret American hacking tool from a personal computer in the United States. In September, U.S. officials ordered Kaspersky’s products removed from government computers, saying the firm was vulnerable to Kremlin influence and that using the software could jeopardize national security. After that announcement, the Wall Street Journal reported on Oct. 5 that hackers working for the Russian government appeared to have targeted a National Security Agency (NSA) worker by using Kaspersky software to identify classified files in 2015. The New York Times reported on Oct. 10 that Israeli officials reported the operation to the United States after they hacked into Kaspersky's network. The Russian government has denied any involvement. Kaspersky began an internal inquiry in a bid to restore trust. On Wednesday, it said it had stumbled on the code in 2014 when the consumer version of its popular software flagged a zip file as malicious on a U.S. computer. While reviewing the file’s contents, a Kaspersky analyst discovered it contained the source code for a hacking tool later attributed to what Kaspersky calls the Equation Group. The software removed the file and the analyst reported the matter to Chief Executive Eugene Kaspersky, who ordered that the copy of the code be destroyed, the company said. Kaspersky said it assumed the 2014 source code episode was connected to the NSA’s loss of files described in media reports. “We deleted the archive because we don’t need the source code to improve our protection technologies and because of concerns regarding the handling of classified materials,” said Kaspersky spokeswoman Sarah Kitsos.

Sinclair’s Washington Winning Streak Has Democrats Crying Foul -- Sinclair Broadcast Group Inc. has prospered in Washington since President Donald Trump took office, as policy changes open a path for the conservative-leaning broadcaster to expand nationwide.  Sinclair’s regulatory winning streak continued this week with proposals at the Federal Communications Commission to ease ownership restrictions and approve a new broadcast standard, leaving Democrats to cry foul.  “It has reached a point where all of our media policy decisions seem to be custom-built for this one company," Jessica Rosenworcel, a Democratic FCC member, said Wednesday at a congressional hearing. "It’s something that merits investigation.” On Tuesday, the FCC eliminated a requirement for broadcasters to keep a local studio. A day later, Pai called for easing ownership restrictions, potentially taking pressure off Sinclair’s $3.9 billion deal for Tribune Media Co.’s TV stations. Earlier, he had restored an obsolete rule, making the deal possible. On Thursday, the agency moved toward blessing a new broadcasting standard that may enrich Sinclair as it offers viewers sharper pictures. Republicans and other broadcasters welcomed what they called overdue steps to eliminate outmoded regulations. The recent record at the FCC under Republican Chairman Ajit Pai is deregulatory, a switch from steps to tighten rules under his Democratic predecessors.

Treasury says CFPB arbitration rule hurts consumers — The Treasury Department released an 18-page report Monday saying that the Consumer Financial Protection Bureau rule restricting arbitration agreements is not in the public’s best interest. The report said the rule, which was released in July, would “impose extraordinary costs” including $500 million in legal fees mostly for lawyers that bring forward class-action lawsuits.

Senate votes to kill new rule allowing class-action lawsuits against banks after Pence casts deciding vote - LA Times: The Senate voted Tuesday night to kill a controversial rule that would have allowed Americans to file class-action suits against banks instead of being forced in many cases into private arbitration. The move by the Senate followed a similar action by the House in July to rescind the rule. President Trump is expected to sign the repeal legislation, providing a major victory for the financial industry. Vice President Mike Pence cast the deciding vote after the Senate tied 50-50. All but two Republicans — John Kennedy of Louisiana and Lindsey Graham of South Carolina — voted to repeal the rule. No Democrats or independents supported the move.The White House said Trump “applauds” Congress for voting to repeal the rule, which would have given consumers “fewer options for quickly and efficiently resolving financial disputes.”The rule was unveiled in July by the Consumer Financial Protection Bureau and praised by Democrats and consumer advocates as giving average people more power to fight industry abuses, such as Wells Fargo & Co.’s creation of millions of unauthorized accounts.But banking lobbyists argued that the rule would unleash a flood of class-action lawsuits, and that the cost of fighting those suits would be passed on to consumers. Republicans quickly moved to repeal the regulation. “The entire purpose of this rule is to promote class-action litigation and stop arbitration resolution when there is a dispute,” said Sen. Mike Crapo (R-Idaho).  The U.S. Chamber of Commerce praised the repeal vote, saying the rule “would have benefited the class-action trial bar at the expense of American consumers and businesses alike.”

Congress just killed a rule that would have made it easier for consumers to sue banks — here's why people are so upset -- On Tuesday, Congress passed a bill preventing an Obama-era regulation from taking effect that would have made it easier for consumers to file class-action lawsuits against financial firms, particularly banks. The bill rescinded a rule from the Consumer Financial Protection Bureau that would strip language from certain financial agreements forcing consumers to settle grievances in arbitration instead of with a lawsuit. Vice President Mike Pence needed to cast the tiebreaking vote passing the bill since Republican Sens. Lindsey Graham and John Kennedy voted against it. The bill was the culmination of a long fight between Democrats and Republicans, with each side arguing that it was fighting in the interest of consumers. The rule, released in July by the CFPB, prevented financial institutions from including clauses in contracts for financial products that forced consumers into arbitration in the event of dissatisfaction with the product. Arbitration cases are resolved privately by an arbiter. While the rule did not do away with arbitration, it would have guaranteed consumers the option to settle disputes with lawsuits. Forced-arbitration clauses are common in contracts for things like credit cards and car loans, and banks argue that it is a quick way to settle consumers' disputes without going through drawn-out legal cases.  The CFPB's rules, however, are subject to the Congressional Review Act, which allows Congress to void any rule with a majority vote. So nearly as soon as the regulation on arbitration was released, the wheels to remove it began to turn.  Democrats' argument in favor of the CFPB rule was pretty simple: They said it allowed consumers to hold banks and financial institutions accountable. The CFPB said class-action lawsuits brought more money back to consumers who had been wronged and arbitration clauses let banks off the hook.

After Day of Feuding, Jeff Flake and Bob Corker Join Trump to Upend a Major Consumer Protection – Dave Dayen - WITH NATIONAL ATTENTION focused Tuesday morning on a mushrooming feud between President Donald Trump and Sen. Bob Corker, R-Tenn., followed by a feud in the afternoon between Trump and Sen. Jeff Flake, R-Ariz., the Senate gift-wrapped the biggest present Congress has so far bestowed upon Wall Street in the Trump era. With a razor-thin margin, the Senate passed a resolution to nullify a signature regulation from the Consumer Financial Protection Bureau, which banned forced arbitration provisions. Such clauses, tucked into the fine print of contracts that nobody reads, deny consumers the ability to contest claims through a class-action lawsuit and can allow banks and other financial institutions to rip off their customers with virtual impunity.  Only GOP Sens. Lindsey Graham of South Carolina and John Kennedy of Louisiana bucked their party — but a no vote when the measure passes is not much of a bucking. In a sign of how far the Democratic Party has come in recent years, all 48 members of the Senate caucus voted to keep the arbitration rule. The vote was split 50-50, which required Vice President Mike Pence to break the tie.To secure his victory, Trump enlisted an ex-Wells Fargo attorney, Acting Comptroller of the Currency Keith Noreika, and a former bank CEO, Treasury Secretary Steve Mnuchin, to do the dirty work. The Senate vote came a day after the Treasury entered the fray with guns blazing. The House passed its version of the resolution within just a couple weeks of the CFPB finalizing the rule in July. But continuing reports of petty consumer fraud at Wells Fargo and a data breach of over 140 million customer accounts at the credit reporting bureau Equifax made it difficult for the Senate to proceed. Both Wells Fargo and Equifax have attempted to use arbitration clauses in their financial contracts to force victims out of class-action litigation.  The scandals put a human face on the practice of companies forcing customer disputes through a secret, non-judicial process. Days before the vote, Americans for Financial Reform addressed this directly in a video featuring a woman with disabilities and a veteran, who were ripped off by Wells Fargo and then prevented from a day in court because of an arbitration clause.

CFPB Arbitration Rule Overturned - Credit Slips - By a 51-50 vote, with Vice President Pence breaking the tie, the Senate has voted to overturn the Consumer Financial Protection Bureau's rule forbidding the use of contract terms (in covered consumer loan products) barring consumers to bring or participate in class actions. The affirmative vote was supported by the usual narratives: Class actions make credit more expensive, arbitration is a better and more efficient means for resolving consumer disputes, class action lawyers are greedy parasites, etc. The truth of these narratives is irrelevant, it seems. For instance, though it is possible arbitration might be used to efficiently and effectively vindicate consumer rights, there isn't much evidence that it does so in practice, and there is evidence to the contrary. As a mechanism for collecting consumer debts, the history of arbitration is uglier still. And even if the availability of class actions increases the cost of credit--emphasis on if--it's not obvious this would be bad. If class actions deter lender misconduct--not that there's any history of bank misconduct!--, and if this increases some lenders' costs and ultimately the cost of their financial products, then... I don't know. Who cares, I guess? Why should consumers victimized by fraudulent lender conduct subsidize cheaper credit for others? The contrary narrative--that class actions are just so darn expensive to defend that banks settle even the bogus ones for large sums of money--is so implausible that it should not be taken seriously without credible supporting evidence. 

Mike Pence Secures the No Law Zone Around Wall Street – Pam Martens - Millions of Americans have quietly been pondering for months what a President Mike Pence would be like should Donald Trump be impeached or resign. Yesterday they found out and it’s not a pretty picture. After the U.S. Senate tied 50-50 on a vote yesterday, Vice President Mike Pence cast the deciding vote to keep the nation’s courthouse doors closed to the customers of the Too-Big-to-Fail banks on Wall Street – effectively strengthening the no law zone that already exists for these banks. The vote came about as a result of the Consumer Financial Protection Bureau (CFPB) issuing its final rule in July which would allow consumers who have been defrauded in financial transactions involving credit cards and bank accounts to have access to file a group action (known legally as a “class action”) using the nation’s courts.   Wall Street is the only industry in America that contractually bans both its customers and its employees from accessing the nation’s courts as a condition of opening an account or getting a job there. (That’s likely because it’s also the only industry that has the brazenness to let the top lawyers of the largest Wall Street banks meet in secret each year to plan their strategies for keeping their no law zone in force.) Instead of being able to go to court with a claim of fraud (if you’re a customer), or a claim for labor law violations, like failure to pay overtime or sexual harassment (if you’re an employee), Wall Street makes its customers and employees sign an agreement to take all such claims into an industry-run or privately-run arbitration system. These private justice systems are not cheaper and fairer as Wall Street’s shills (like the U.S. Chamber of Commerce) insist. Fees can run into tens of thousands of dollars as opposed to a few hundred dollars to file in court; and study after study has found that arbitrators most often rule in favor of the corporate interest over the consumer. Unlike a public courtroom, the press and the public are not allowed to attend the hearings. There are no publicly available transcripts of the hearings as there would be in court. Arbitrators are instructed that they do not have to follow legal precedent or case law but can rule from their gut; they are not required to write reasoned and detailed decisions so that an appeal of their findings can be made. In fact, it is next to impossible to bring a court appeal of an arbitration ruling because Wall Street’s biggest law firms have spent decades convincing the courts that these decisions must be permanently binding.

Republicans Just Caved to the Big Banks and Exposed Trump’s Sham Populism - Steve Bannon, who’s back at Breitbart News after being bounced out of the White House, is busy talking up the “populist” revolution that is supposedly sweeping the Republican Party. “President Trump and his whole candidacy from the very beginning . . . was a repudiation of the élites, the repudiation of the foreign-policy establishment, a repudiation of the ‘Party of Davos,’ ’’ Bannon told a conference in Washington, D.C., on Monday. I’ve been to Davos, the annual gathering of business bigwigs, economists, and journalists in the Swiss Alps. It was in 2007, and I was following around Paul Wolfowitz, who was then the president of the World Bank, for a magazine piece. From what I recall, the place was thick with bankers and other financial types. If Donald Trump had actually repudiated the “Party of Davos,” we would be celebrating the fact that the banks and their lobbyists were no longer acting as puppet masters in Washington, D.C. The financial tricksters and bagmen would have been sent fleeing across the Potomac, like the routed forces of Brigadier General William H. Winder after the Battle of Bladensburg, in the War of 1812.  Except, of course, no such repudiation has happened. Here are the first two paragraphs from a news story that the Wall Street Journal published late Tuesday night: Congress overturned a rule by an Obama-appointed financial regulator that would have made it easier for consumers to sue banks in groups, with Vice President Mike Pence casting a tiebreaking vote in the Senate.The 51-50 vote handed the financial industry its most significant legislative victory since President Donald Trump took office and was a rebuke of Consumer Financial Protection Bureau Director Richard Cordray, who pressed ahead with his agenda in defiance of Republicans. You may assume that the right to sue a company or person you think has cheated you is a basic American right. Not when it comes to the financial industry. For years, banks and credit-card companies have forced their customers to sign account agreements that bar them from banding together to file class-action lawsuits. These clauses, often buried in the fine print of the customer agreements, stipulate that all group claims must be settled in an industry-run arbitration system, where a third party—often a retired judge—issues a binding ruling. If people want to pursue an individual claim, they have to do it themselves in small-claims courts, which is costly and time-consuming.

Inside Cordray’s ill-fated gamble on CFPB arbitration rule - The stunning defeat of the Consumer Financial Protection Bureau’s arbitration rule didn’t have to happen.  That was the message from critics and former agency officials who say the bureau erred in how it designed the final rule, putting too much emphasis on class action litigation as a panacea for consumers. Had the agency tempered the rule instead of banning all mandatory arbitration clauses in financial contracts, it could have avoided having it repealed by Congress.  The CFPB’s loss has big consequences for the agency—under the Congressional Review Act, they are prevented from adopting a future rule that is "substantially similar."  Critics of the arbitration rule have long argued that the CFPB failed to take into account its own study, and other evidence that found class action lawsuits do not provide consumers with many benefits. The findings of the CFPB’s study furthered the impression that it was intent on doing something despite its own deeper look at the issue. “We knew how the book was going to end,” said Richard Hunt, president of the Consumer Bankers Association. “We knew the CFPB was going to conduct a bad study to write a bad rule to pay off the trial lawyers…. [but] certainly the study helped our cause when it clearly states the consumer receives more money via arbitration than class action lawsuits.” The industry repeatedly cited the CFPB's own study as a reason why the rule should be repealed because it found that consumers received just $32 on average from class action lawsuits, but $5,400 on average from a handful of disputes in arbitration. After the findings of the study, some said CFPB Director Richard Cordray should have narrowed the scope of the rule or at the very least delayed it until a Democratic administration for fear the Senate would scrap it.

Is arbitration win a turning point for banks? - The Senate's razor slim vote to repeal the Consumer Financial Protection Bureau's arbitration rule was arguably the industry's biggest policymaking victory since passage of the Dodd-Frank Act. But does it mean the regulatory tide has turned in banks' favor? Many are skeptical."It's a very big win for banks, and a huge victory that [the Senate] finally did it, but I don't think the implications of it are all that broad," said Alan Kaplinsky, the co-practice leader at Ballard Spahr's consumer financial services group. "This was an unusual situation where there was almost universal support for an override, and look how difficult it was; they eked by." The 51-to-50 vote, which required Vice President Mike Pence to break a tie, overturned a rule abhorred by banks that would have have prohibited arbitration clauses that preclude consumers from bringing class actions. The repeal was authorized by the Congressional Review Act, which allows lawmakers to reverse agency rules with a simple majority.

Deutsche Bank will pay $220 million to resolve U.S. Libor probe - Deutsche Bank AG agreed to pay 45 U.S. states a combined $220 million to resolve a probe into interest-rate manipulation, more than twice the amount of Barclays Plc’s settlement last year. The states’ investigation found that the German bank’s false rate submissions inflated borrowing costs linked to the London and U.S. dollar interbank offered rates, which are used to value trillions of dollars of securities and loans, New York Attorney General Eric Schneiderman said Wednesday in a statement. The accord is the latest development in probes by governments across the globe into banks’ manipulation of benchmark interest rates, one of the key scandals that led to a cultural overhaul of the industry over the past decade. An illuminated sign for Deutsche Bank outside a bank branch in Frankfurt, Germany. Bloomberg News Global fines have topped $9 billion. Deutsche Bank paid $2.5 billion in penalties and disgorgements to resolve U.S. and U.K. investigations, and a unit pleaded guilty to wire fraud in connection with its role in the scandal. In July, the bank agreed to pay $77 million to resolve investor lawsuits in the U.S. "Deutsche Bank employees and management knew or had strong reason to believe that Deutsche Bank’s and other panel banks’ Libor submissions did not reflect their true borrowing rates," according to the statement. The bank admitted to allegations about how traders and managers engaged in the manipulation on an almost-daily basis from 2005 to 2009, according to the settlement. “We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets,” Schneiderman said in a statement. Deutsche Bank’s traders also attempted to influence other banks’ Libor submissions to benefit trading positions, Schneiderman said. The practice defrauded government entities and nonprofits as well as the bank’s counterparties, according to the statement. 

Federal Prosecutors Are Investigating Wells Fargo's FX Business -- Last week, WSJ stoked fears that the Feds might be ramping up another probe into abuse and manipulation in the foreign exchange market when it reported that Wells Fargo had abruptly terminated four bankers from its FX business and transferred another. Now, Wall Street’s paper of record is reporting that Federal prosecutors are investigating Wells for abuses in its FX shop - but the scope of the investigated is limited to one disputed trade. According to WSJ, prosecutors have subpoenaed information from Wells and from the recently fired bankers as they investigate a trade and ensuing dispute between Wells and one of its clients, Restaurant Brands International Inc. RBI owns several fast-food franchises, including Burger King, Tim Hortons and Popeyes Louisiana Kitchen. In an amusing twist, both companies count Warren Buffett’s Berkshire Hathaway as one of their largest shareholders.The foreign-exchange issue revolves around a trade made within the past three years that included positions running into the billions of dollars, the people said. The trade resulted in a loss to Restaurant Brands, the people added, which led to a dispute between it and the bank. WSJ pointed out that the investigation into Wells Fargo’s foreign-exchange business, which is housed within its investment bank, are separate from sales-practices issues that rocked the bank more than a year ago. Wells Fargo is planning to refund Restaurant Brands hundreds of thousands of dollars related to the trading loss, WSJ's sources said.  The Federal Reserve is also looking into the issue. Specifically, Federal prosecutors are looking into the sequencing of the trade in question and whether it could have involved so-called front-running, some of the people familiar with the matter said. That should send a chill down the spine of the fired bankers, as earlier this week a US jury found a former HSBC currency trader guilty of fraud related to front-running a large trade that netted the bank some $8 million in profits. The US is also in the process of extraditing another UK-based FX trader to face front-running related charges in the US.

Two of the Biggest Bailed Out Derivative Banks, Citi and Merrill, Get Fined for Breaking Derivatives Rules - Pam Martens -  Over the past month, with little media attention, both Citigroup and Merrill Lynch have received fines from regulatory bodies for failure to properly report their trading in derivatives – an opaque trading arena that played a significant role in bringing down both firms during the financial crisis. As reported by the Government Accountability Office (GAO) in 2011, Citigroup received $2.5 trillion in cumulative, secret low cost loans from the Federal Reserve during the 2007-2010 financial crisis while Merrill received $1.9 trillion.  Significant portions of the money loaned to Citigroup and Merrill Lynch were authorized by the Federal Reserve to be funneled to the broker-dealer subsidiaries of the firms in London – where it found its way into pursuits that remain undisclosed to this day. Because of the central role that derivatives played in the Wall Street crisis, which led to the worst U.S. economic downturn since the Great Depression, the Dodd-Frank financial reform legislation that was passed in 2010 was supposed to prevent insured depository banks from holding dangerous levels of derivatives. Known as the “push out rule,” where derivatives would be pushed out of the insured banks, before that rule ever had a chance to take effect, Citigroup engineered its repeal.On September 25, the Commodity Futures Trading Commission (CFTC) fined Citigroup $550,000 for failing to properly report derivative trades. One of the violations was defined as follows: “…Citi violated its reporting obligations by reporting ‘Name Withheld’ as the counterparty identifier for tens of thousands of swaps with counterparties in certain foreign jurisdictions.” Today, for the second time in two years, the Financial Conduct Authority in the U.K. has fined Merrill Lynch (which was taken over by Bank of America during the financial crisis in 2008) for failure to properly report its derivative trades. Today’s action resulted in a fine of £34,524,000 over Merrill’s failure “to report 68.5 million exchange traded derivative transactions between 12 February 2014 and 6 February 2016.”

CLOs – "Safe" CDOs – Are Booming Again -- Last week we explained how junk bond managers were buying increasing amounts of equities to “juice” their portfolios and propel their funds higher in the performance rankings. While this struck us as a relatively recent development, the tried-and-trusted method of trading more risk for more yield is going gangbusters in the CLO (Collateralized Loan Obligations) market in 2017...In “Hunt for Yield Fuels Another Boom in Another Complex, Risky Security”, the WSJ notes:“The CLO boom is the latest sign of the ferocious hunt for yield permeating markets. Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds. CLOs carve up a portfolio of bank loans to highly indebted companies into slices of securities with different levels of risk. The securities at the bottom of the CLO stack offer the highest potential source of returns, but they are also the first to absorb losses if there are defaults in the underlying loan portfolio. The more senior slices offer lower returns but are more insulated from losses. CLOs are often lumped together with other alphabet-soup acronyms of the financial crisis, such as more toxic CDOs, or collateralized debt obligations. But CLOs actually weathered the financial crisis well: Investors who bought at the top of the market in 2007 suffered paper losses, but there were no defaults at all for the highest-rated securities.”The “boom” terminology applied by the WSJ for 2017 is apt:“...investors seeking yield are overcoming their skepticism and buying into securities that rely on financial engineering to juice returns. Volumes of CLOs, or collateralized loan obligations, hit a record $247 billion in the first nine months of the year, according to data from J.P. Morgan Chase Co. Fueled by a wave of refinancings and nearly $100 billion in new deals, that far outpaces their recent full-year high of $151 billion in 2014 and the pre-crisis peak of $136 billion in 2006.”

  Bitcoin's Bewildering Race to $100 Billion - There is no official measurement of a market bubble, but one could be the speed and force of the rise, a technique borrowed from the physical realm. Dot-com stocks rose 680 percent from the beginning of 1996 to the end of March 2000. Bitcoin has risen nearly 825 percent in the past year alone, to about $5,700. In that run, it has added roughly $90 billion in value, crossing above $100 billion for the first time on Friday before dropping back a bit. It's only a matter of time before it becomes a permanent member of the $100 billion club. Bitcoin is now worth more than a number of financial firms that would be its rivals, like American Express Co. ($81 billion)  and PayPal Holdings Inc. ($84 billion). Still, compared with other asset classes, like real estate or stocks, bitcoin is a pimple, which is why some people have convinced themselves that bitcoin can't be in a bubble. New York City real estate alone is worth more than $1 trillion. There is $8 trillion worth of gold in the world, nearly $15 trillion in Treasury bonds and more than $25 trillion in the U.S. stock market. Bitcoin's mere $100 billion, by comparison, is small.  But that's only part of the equation. New York City real estate is worth 10 times bitcoin, but it didn't pass the $100 billion mark, adjusted for inflation, until the late 1970s, or roughly 310 years after the territory was renamed after the Duke of York. U.S. auto sales didn't reach $100 billion for 60 years. Apple did it in a sprightly 31 years, but that was still four times slower than bitcoin, which clocked in at about seven years. But Apple, unlike bitcoin, produces significant earnings and holds $260 billion in actual cash. Recently, the bitcoin bubble guessing game has moved to transactions, which now equal $1 billion a day compared with about $150 million in daily transactions in the cryptocurrency a year ago. That gives bitcoin a network value to transaction ratio, or NVT, of roughly 100, which some say is not that unusual if you were to think of it as a price-to-earnings ratio of high-growth tech stock. Netflix Inc. and have both been there. But the NVT ratio is more like a price-to-sales ratio. Bitcoin users pay an average fee of 0.1 percent to complete a transaction, which doesn't go to bitcoin itself but to the trading platforms. Bitcoin's fees are on track to hit $365 million a year, which would give it a P/E ratio of nearly 275.

 Bitcoin pioneer's cryptocurrency alternative allows for multiple networks - Jeff Garzik, a bitcoin pioneer known for his contributions to the digital currency's underlying code, has created a rival to the asset whose value he helped push into the stratosphere. Bitcoin is being held back not only by its own limitations, as he sees it, but by the infighting that has become a permanent feature of the contentious community surrounding the digital currency. Fed up with the politics and brinkmanship that ultimately, this past July, saw bitcoin split into two separate versions, Garzik decided to create a brand-new cryptocurrency, which he calls Metronome. Now, six months later, he is bringing it into the public spotlight. "We've really been beating this up on the economic-model side, the engineering side, the legal and tax side," said Garzik, who serves as CEO of Bloq, a blockchain startup that focuses on enterprise applications. "When it's launched, it's launched; Bloq doesn't have any control over it at that point. So we've got to front-load all this work." A case in point: Bloq spent more than $1 million on legal and tax review for Metronome, says Garzik. The company hired not one but three auditors to assess its software. What could be worth so much trouble and expense? Potentially a better cryptocurrency. As new coins and blockchain technologies proliferate, the need for them to be able to interact with each other has become a pressing issue. But Garzik thinks he has a better solution: Rather than merely making various blockchains interoperable, he wants to give them a common asset. Metronome's MTN token doesn't have its own blockchain, as the two most valuable cryptocurrencies, bitcoin and Ethereum, do. The new cryptocurrency can jump from one blockchain to another. Instead of switching assets — selling bitcoin and buying Ethereum's ether currency, for instance — in order to escape the drama or risks associated with a particular network, people can simply move their assets to a new network. 

"We've Built A Thousand-Year Cryptocurrency" – And It Works On Multiple Blockchains -- Jeff Garzik’s start-up, Bloq, is launching a new cryptocurrency which can switch between blockchains. As Coindesk reports Garzik's company is today announcing what it believes will be a solution to the infighting he perceives as keeping money out of the established cryptocurrency market.  Revealed at Money2020 in Las Vegas, Bloq is unveiling metronome, a cryptocurrency that seeks to claim a series of firsts in crypto-economics, including offering users the ability to switch the same token back and forth between blockchains as desired.  "It's sort of a best-of-all-worlds cryptocurrency," Garzik said, describing it as a ‘boxcar’ that could ride on top of any compatible blockchain. Bloomberg explains He’s calling it Metronome and says it will be the first that can jump between different blockchains. For example, coins that are used for applications on the Ethereum blockchain will be able to move to Ethereum Classic before jumping onto Qtum or Rootstock, which connects with the bitcoin blockchain, said Garzik. The mobility means that if one blockchain dies out as the result of infighting among developers or slackened use, metronome owners can move their holdings elsewhere. That should help the coins retain value, and ensure their longevity. Roszak believes this sophisticated automation will encourage large investors who have yet to put money into public cryptocurrencies for fear of the seemingly erratic decision-making by developer groups to do so. ‘They're cryptographically secure but these components create surprise and risk.’ In contrast, Roszak framed the Metronome token as ‘fixed and locked in stone,’ attributes he suggested should counter these concerns.

Large banks make terrible partners, fintechs say - It may be the dark underbelly of big banks’ “open” innovation projects.While large banks and fintechs are ostensibly working more closely together than ever, in private conversations and even publicly at a few conferences, fintech leaders have expressed increased frustration about working with bank partners.  Though they won’t name names, they claim tier-one U.S. banks string them along, fail to communicate, don’t pay anything and, worst of all, out-and-out steal intellectual property. Following is a guide to what fintechs are complaining about:

  • Long lead times: For small fintechs with limited amounts of capital, foot-dragging on the part of a large bank partner can be deadly.  “There seems to be a correlation: the larger the institution, the longer the lead time will be,” sa . “For a startup, even if you have a very interesting product, it’s a huge obstacle to overcome within large institutions to get a seat at the table to even have a conversation. So that takes a lot of time, which takes a lot of money and quite a few companies disappear or fold because they focus on these larger institutions and didn’t have enough funding to make it through the time to get to something.”
  • Failure to pay: More seriously, fintechs claim large banks are bad at paying for new technology and services. “A lot of people will tell you, forget about the big banks, don’t even talk to them because they’re going to talk you to death and not pay for it anyway,” DeMunck said. “It’s totally useless and a waste of your time. High-profile VC investors would much rather see you go after some other sectors where you know there might be some chance to get more rapid traction for what you’re doing. You also might get paid.”
  • Questions around intellectual property: Then there is what is arguably the most serious charge: that large banks have “borrowed” ideas given to them by fintechs.  “It didn’t appear communications were working at all between the different groups, which is not unusual in these huge companies,” said Mark Montgomery, founder and CEO of Kyield, in an interview.. “I told both groups I was talking to the other. And then we hit a wall and it went no further. This is not abnormal in our experience, but working across an organization, including senior-most executives and the board of directors, is often necessary.” Eighteen months later, Montgomery claims he saw a press release announcement about a new innovation program that was almost word for word the same as a paragraph he had sent them earlier. He has no plans to sue, partly because a lawsuit could cost millions in legal fees and ruin his company.

Treasury Dept: Stop saying “shadow bank” - The U.S. Treasury Department wants international financial regulators to stop using the term "shadow banking" when referring to non-bank lenders, according to a report released Thursday. Instead, it wants such activities to be referred to as "market based finance."  Per the report: "Applying the term 'shadow banking' to registered investment companies is particularly inappropriate as the word 'shadow' could be interpreted as implying insufficient regulatory oversight, or disclosure. Registered investment companies, as described in this report, are regulated by the SEC and provide extensive public and regulatory transparency of fund portfolio holdings on a quarterly, monthly and, in some cases, daily basis." The term "shadow banking" was coined by former bond fund manager Paul McCulley in 2007, and soon became ubiquitous as such lending helped spark the following year's financial crisis. Today the term is used fairly broadly, particularly as the securitization mania of 2007 has given way to new lending booms like private credit funds.  While "shadow banking" may be a pejorative term — which seems to be Treasury's gripe — it hasn't stopped the industry's rapid growth. Nor has that growth sparked increased oversight, as non-bank lenders continue to operate under much less oversight than can their banking peers.

Banks need to fear Amazon's finance ambitions: McKinsey report - Banks around the world have spent the past few years preparing for competition from small, nimble technology startups. It turns out the real threat may be Jeff Bezos. Financial institutions have parried the threat from fintech firms by incorporating some of their innovations through partnerships and in-house coding teams, according to McKinsey & Co. In its annual banking report, McKinsey said that the industry needs to continue its digital makeover to protect the up to 40 percent of revenues at risk by 2025 and prepare for competition from so-called platform companies like Bezos's Inc."We thought that fintechs would provide the chief digital threat," authors of the report said. Instead, it's become clear that e-commerce companies such as Amazon and Alibaba Group Holding Ltd. "are reshaping one industry after another, blurring sector boundaries as they seek to be all things to all people." Bezos, the founder and chief executive officer of Amazon, built the company into the world's biggest online retailer. As he extends Amazon's reach, the Seattle-based company has had discussions with banking regulators about financial innovation, according to lobbying disclosures reviewed by American Banker. And it already has a small-business lending arm that has doled out more than $3 billion to more than 20,000 of the merchants on its e-commerce platform. American technology giants including Alphabet Inc.'s Google and Facebook Inc. have already begun to encroach on traditional finance activities like payments, McKinsey said. In Asia, firms like Alibaba have made the most headway. Digital upstarts in China have grabbed huge chunks of market share from banks, including 25 percent of unsecured consumer lending and 12 percent of mutual fund sales.

Stress tests for midsize banks are more trouble than they’re worth - While stress testing can provide valuable insight into the strength and resilience of our financial system, regulators are increasingly acknowledging shortcomings in the post-crisis regime — and the critical need to review and reform these programs to make them more realistic, more transparent and more tailored. In March 2017, bank regulators issued a report detailing ways to reduce unnecessary regulatory burden while maintaining safety and soundness, something the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) requires them to do at least every 10 years. The banking agencies’ recent proposal to simplify regulatory capital standards is an important step toward fulfilling promises made in March — a welcome recognition that some bank regulation provides more burden than benefit. A range of defects in the stress-testing structure hurt America’s midsize, regional and large banks, and are in need of repair. Unfortunately, some rules that even regulators acknowledge are improperly calibrated cannot be remedied without congressional action. As an initial matter, the Dodd-Frank Act’s arbitrary asset thresholds of $10 billion, $50 billion and $250 billion — with an array of corresponding stress test mandates — crudely divide the industry in a manner that is unrelated to actual risk, and needlessly tie the hands of agencies seeking to strike an appropriate regulatory balance. Dodd-Frank mandates stress tests on all banks with $10 billion or more in consolidated assets. That midsize bank requirement, meant for institutions with a limited reach, was still clearly patterned after banks whose failure might pose a risk to the stability of the financial system. Midsize banks are extremely unlikely to present systemic risk to a U.S. banking system that safeguards over $13 trillion in insured deposits and extends more than $9 trillion in loans. By their nature, midsize banks have modest financial and geographic footprints. Yet their stress testing regime relies on national macroeconomic scenarios that are not relevant to them. This is a misallocation of resources that the regulators recognize, but they have little discretion because the statute holds midsize banks to much the same stress test scenarios and disclosure requirements as it does the nation’s most complex institutions.  

Auto lenders brace for losses from Harvey, Irma and Maria - U.S. auto lenders are starting to tally the financial damage from late-summer hurricanes that destroyed an estimated 500,000 to one million vehicles. So far, the impact on lenders has been relatively small, since many of them are offering forbearance to car owners who are struggling to rebuild their lives. Moreover, the biggest U.S. auto lenders have less than 10% market share, so hurricane-related losses will be spread widely across the sector, hitting credit unions and the financing arms of automakers in addition to banks.Still, the industry’s eventual losses seem likely to run into the hundreds of millions of dollars across Texas, Florida and Puerto Rico. During the quarter, major auto lenders such as Ally Financial, Wells Fargo and Capital One significantly boosted their loan-loss reserves in anticipation of higher default rates.Loans with longer terms, as well as loans to borrowers who have little equity in their vehicles, are more vulnerable when borrowers default, since insurance proceeds are less likely to cover lenders’ losses in those situations, according to Fitch. The costs to specific banks hinge largely on their geographic footprint. Wells Fargo has significant exposure in Puerto Rico, where damage estimates are emerging more slowly than they did in Texas and Florida. A Wells Fargo subsidiary, Reliable Auto, is the largest vehicle financing companies on the storm-ravaged island.

Treasury calls for looser federal oversight of insurance companies | TheHill: The Treasury Department on Thursday called for fundamental changes to the way federal agencies regulate insurance companies under the Dodd-Frank Act financial rules. In a report released Thursday night, the department said regulators should move away from regulating insurance companies based on size, and instead focus on risky activities conducted by such firms. The move could require Congress to amend Dodd-Frank, which created strict rules meant to limit dangerous activity in banks and financial firms.“Treasury’s position is that entity-based systemic risk evaluations of insurance companies are generally not the best approach for mitigating risks arising from insurance,” the report reads, calling for more federal collaboration with state regulators. “Instead, insurance regulators should focus on potential risks arising from insurance products and activities, and on implementing regulations that strengthen the insurance industry as a whole.” Dodd-Frank subjects banks and certain financial firms with more than $50 billion in assets to tighter rules and closer federal scrutiny. Federal regulators analyze those firms, called “systemically important financial institutions,” (SIFI) to ensure their stability. Several insurance companies faced tight federal scrutiny after some of their sprawling investment divisions contributed to the 2008 financial crisis. The Financial Stability Oversight Committee, an interagency group of regulators, recently released AIG from the enhanced rules after the firm scaled back their non-insurance activities. A federal court struck down Metlife’s SIFI designation last year, and Prudential is currently fighting theirs. 

Atlantic hurricanes wipe out reinsurers’ profits in Europe — The financial damage from the hurricanes that struck Texas, Florida and the Caribbean in recent months crossed the Atlantic on Thursday when Munich Re, a German insurer, warned that virtually all of its profit this year would be wiped out by the horrendous cost of the disasters. The hurricanes have already caused hundreds of deaths and left residents of Puerto Rico and other islands living in primitive conditions. Now, Munich Re and several other large reinsurers — companies that effectively insure other insurers — have reported big losses resulting from the natural disasters. That has consequences for regular consumers: The financial battering that insurers have suffered portends higher premiums for homeowners in disaster-prone areas. Virtually all insurance companies that sell to consumers and businesses unload some of their risk to reinsurers like Munich Re, Swiss Re or SCOR SE, a French company that also reported losses from the hurricanes on Thursday. The cost of buying reinsurance is almost certain to rise, and will eventually be passed on to customers. Insurance has already become expensive and hard to get in states like Florida, which are frequently at risk of being hit by hurricanes. Munich Re, which has warned about the effects of climate change since the 1970s, has predicted the severity of storms is likely to increase in years to come. That would further raise the financial damage, and consequently the cost of insurance.   Munich Re, by some measures the world’s largest reinsurer, said that its losses from hurricanes Harvey, Irma and Maria would be 2.7 billion euros, or $3.2 billion, though it warned that the estimate was “fraught with considerable uncertainty.” The losses will come to €3.2 billion including damage from other natural catastrophes such as earthquakes in Mexico, Munich Re said.

CFPB got it right with data-sharing guidance -- There is no longer any doubt: Consumers own their financial data. This week, the Consumer Financial Protection Bureau released a long-awaited statement on whether banks should let customers share their financial data with third-party companies, and if so, how. The CFPB’s verdict made clear: Consumers should have access to financial data that is timely, accurate and secure on whatever trusted third-party tool they choose to use. Equally important is how the CFPB chose to make its views known. The bureau laid out its vision for a “robust, safe, and workable data aggregation market that gives consumers protection, usefulness, and value” through a set of consumer protection principles and called on all stakeholders to keep consumer interests at the center of any new data-sharing agreements, systems or standards that are developed. In issuing its recommendations as principles, the bureau got it exactly right. Under the Dodd-Frank Act, the CFPB has authority to write rules that govern how consumer financial data should be shared between financial institutions and third parties. But prescriptive rules would have risked becoming quickly outdated, given how fast the data aggregation market is changing. By issuing principles, the CFPB creates space for the industry to lead the development of solutions, while providing needed clarification about regulators’ expectations. Now it is up to the industry to seize the opportunity the CFPB has created. With several bilateral agreements already inked between banks and third-party companies, and multiple stakeholder groups working to develop common application programming interface standards, there is growing momentum in the data-sharing space. But these industry-led efforts will miss the mark if they don’t also address the need for appropriate mechanisms for liability and accountability that incentivize all parties — banks, data aggregators and fintech companies — to keep the data up-to-date, accurate and secure.

A CFPB policy everybody seems to like (really) - The Consumer Financial Protection Bureau’s entrance into the battle between banks and fintechs over customer information appears to have done something remarkable by largely pleasing both sides. Banks have welcomed the statement of principles because they are non-binding, while fintechs are encouraged by the CFPB’s recognition of key issues in the debate.“They were carefully conceived, and not at all constructed from an industry vs. industry fight,” said Steve Boms, vice president of government affairs at Envestnet Yodlee, a company that provides technology to financial advisors and does data aggregation. “Our view is these were formulated using the perspective of the consumer, with informed consent and full transparency.”  Rob Morgan, vice president of emerging technology at the American Bankers Association, said it is “pleased that the CFPB’s new principles for consumer-authorized data sharing acknowledge key recommendations ABA outlined earlier this year, particularly with regard to security, transparency and control.”Yet the principles could also lay the groundwork for future regulation if banks and fintechs cannot work out some outstanding issues on their own. “You could imagine someone saying, ‘We put out principles, we hoped the industry on its own would move in this general direction, but we’ve gotten all these complaints about lack of informed consent,’” “’So clearly rulemaking is now necessary so we can provide an enforceable standard in the industry.’”   It’s clear that the CFPB isn’t there yet. The agency appeared to be walking a fine line between weighing in on the debate while not upending it.  At issue is a fight between data aggregators and fintechs on the one hand who argue banks don’t share enough of their customers’ account data with third parties, which fintechs need to provide personal financial management and robo-advisory apps. On the other side, banks say they are happy to share the data, but want to be careful with whom it’s shared. Both parties claim to have the consumer’s best interests at heart.

'Regulation by enforcement' makes compliance unpredictable, new MBA chair says - The Consumer Financial Protection Bureau's practice of "regulation by enforcement" forces mortgage companies to develop compliance standards based on the mistakes of their peers, rather than clear guidance from the enforcement agency, according to David Motley, the new chairman of the Mortgage Bankers Association. "The CFPB continues to enforce regulation through enforcement action rather than through clear rules of the road that the industry can follow," Motley said in an interview with NMN, explaining that regulation by enforcement leads companies to question themselves based on other companies' errors and develop policies and procedures in response.

Barclays, U.S. are said to renew talks over toxic mortgages - Barclays and the Justice Department, engaged in a legal battle over the suspected fraudulent sale of mortgage securities a decade ago, have revived discussions about reaching an out-of-court settlement, according to people with knowledge of the situation. The Justice Department has responded in recent weeks to requests from the London-based bank to reopen negotiations, said the people, who asked not to be identified speaking about a confidential process. If successful, the lender would avoid a protracted trial and remove a major misconduct issue weighing on its share price.  The Justice Department sued Barclays for fraud in December, in the waning days of the Obama administration, after the bank refused to pay the amount the government sought in negotiations. At the time, people familiar with situation said Barclays was willing to pay no more than $2 billion to settle the civil matter, while the Justice Department was seeking a far higher penalty. The lawsuit was the government's first against a bank over the sale of toxic mortgage bonds that helped spur the financial crisis. Other lenders negotiated settlements worth tens of billions of dollars in penalties overall rather than risk drawn-out litigation and possible trials. Deutsche Bank AG accepted a $7.2 billion agreement to resolve its RMBS investigation in December, the same month talks with Barclays collapsed. By prompting the Justice Department to sue, Barclays may have been betting it would fare better with enforcement officials appointed by President Trump, analysts and legal experts have said, an approach that could be vindicated if Barclays re-enters negotiations.

 Ban origination fees on VA refis to curb veteran mortgage churn - Recently, Ginnie Mae and the Department of Veterans Affairs formed a task force to curb the practice of churning VA Interest Rate Reduction Refinance Loan products. I applaud this long overdue effort to protect our veterans from one of our industry's more insidious lending practices. But as the former president of the Ginnie Mae, chairman of a national VA lender and a retired veteran, I feel it's time we go further and ban origination fees for IRRRL products altogether. As our veterans transition to civilian life and become first-time home owners, many find themselves frequent targets for churning, or the reselling of IRRRL products every time there is a small drop in rates. Churning is a particular problem in our industry because of the way the VA refinance program is structured. Because lenders are allowed to charge fees for IRRRL products, lenders have an incentive to repeatedly push them onto unsuspecting veterans. In fact, there are companies that go into county courthouses and hunt down recently recorded VA loans, specifically targeting lenders that serve military borrowers. Lenders then buy this information and aggressively target veterans by mail and phone, telling them they could save thousands by refinancing their mortgages. Every veteran I know who owns a home is constantly harassed with mailers and phone calls. What veterans don't always realize is that the lender will charge thousands of dollars in fees to reduce their monthly mortgage payment by $100. It will take years for the refinance to pay off. Eliminating IRRRL origination fees alone would eliminate churning as we know it. But as a second step, the VA and Ginnie Mae could ensure that nobody can put a new VA loan into a Ginnie Mae pool if they are less than 12 months old. It's always in the best interest of the lender that originated a VA loan to put it in its own portfolio. Lastly, our industry needs to do a better job educating military veterans so they understand how IRRRL products work and what their rights are under the program.

Warren fights uphill battle against Montgomery’s FHA nomination -– Brian Montgomery appears headed for easy confirmation for another stint as commissioner of the Federal Housing Administration, despite objections by Sen. Elizabeth Warren, D-Mass., that he is too close to the financial services industry. During a nomination hearing on Thursday, Montgomery appeared to enjoy widespread support by members of the panel. But Warren raised concerns about Montgomery’s consulting business after he left the FHA in 2009, noting that he helped negotiate agreements with FHA lenders on False Claims Act cases brought by the Justice Department.  "This is the revolving door at its worst," Warren said. "I hope we will reject this nomination.”

Freddie Mac: Mortgage Serious Delinquency rate increased in September --Freddie Mac reported that the Single-Family serious delinquency rate in September was at 0.86%, up from 0.84% in August.  Freddie's rate is down from 1.02% in September 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the highest serious delinquency rate since May of this year.  These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  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.

Freddie Mac Updates Student Loan Debt Requirements -In a recently released bulletin by Freddie Mac, the enterprise reports that it has updated requirements for qualifying borrowers with student loan debt.All of the changes noted in the bulletin are effective for mortgages with settlement dates on and after January 18, 2018—or immediately at the seller’s discretion.According to the GSE, the purpose of these updates are in an effort to provide flexibility to exclude student loan debt from the monthly debt-to-income (DTI) ratio “when it is likely that student loan payments will no longer be required in the near future, or are not required currently and will not be required in the future.”Currently, the requirement for student loans in repayment is that when a monthly payment is not reported on the credit report, the seller must obtain documentation verifying the monthly payment amount included in the monthly DTI ratio.However, the revised requirement will calculate monthly DTI ratio, using the greater of the monthly payment amount reported on the credit report, or 0.5 percent of the original loan balance or outstanding balance as reported on the credit report—whichever is greater.“Our current requirements were developed based on traditional student loan repayment plans that provide for fully amortizing monthly payments typically reported on credit reports,” the bulletin reported. However, the revised requirements continue to permit the use of the reported payments for student loans with fully repaying monthly payments. while also providing a solution for evaluating student loans in income-driven repayment plans.  The report notes that income-driven repayment plans are becoming more prevalent in the market, therefore by requiring the use of a minimum payment of 0.5 percent of the original loan balance or outstanding balance, whichever is greater, the “risk of the potential payment shock from the monthly payment increasing after the annual recertification is reduced.”

Person-to-person is more credible for mortgage info than online -- Originators and real estate agents are considered more trustworthy and credible by home purchasers than online sources about mortgage information, a Fannie Mae study found. Home buyers in 2016 used an average of 3.4 different sources to get mortgage advice. Real estate agents were the most cited source, by 77% of respondents, followed by 75% for mortgage lenders, 69% for various online sources and 63% for family and friends. However, when asked which was the most influential resource for mortgage information, a lender was cited by 32%, followed by 30% for real estate agents, 16% for family and friends and 13% for online sources. When it came to millennials, which made up 38% of the survey respondents, 29% said a real estate agent was the most influential source of information, with 27% citing a mortgage lender, 23% naming family and friends, and 14% stating it was the online source. Asked why a particular source was considered to be an influential place to get information, 46% of those that picked online said convenience, but just 8% said trustworthiness and 3% said credibility. 

Why the mortgage industry remains closed to legal cannabis workers - There is an emerging industry that employs as many as 230,000 workers and is expected to create over 283,000 new jobs in the next three years. Its businesses have a net worth of $7.2 billion, with a projected compound annual growth rate of 17%. Those kinds of numbers would usually prompt financial institutions to go out of their way to establish a market foothold, both to extend credit to companies and establish consumer relationships with employees — particularly when the Bureau of Labor Statistics expects traditional sectors like utilities, agriculture, manufacturing and even the federal government to shed jobs through 2024.

Thousands displaced by wildfires now face housing shortages -  Shelly Lanning, her husband and two children are staying with her mother in Ukiah, Calif., an hour from where her home burned down the morning of Oct. 9. She's not sure where she's going to live next. Lanning, 46, ran a day-care center and her husband a catering company out of their home in Santa Rosa's Coffey Park neighborhood. Fire destroyed the entire community, including the apartment building down the street from Lanning's home, where her 23-year-old son lived. Lanning is one of thousands of residents who have lost their homes in a region that has faced some of the worst effects of the state's housing affordability crisis. A limited housing supply fueled by the San Francisco Bay Area's booming job growth and decades of slow construction has forced home values and rents to near record highs. Now, with Coffey Park and other neighborhoods devastated across the region — estimates of damage to residential properties have topped $3 billion, and Santa Rosa lost 5% of its homes — the number of new families flooding the market is giving rise to fears of widespread displacement and even higher costs. The fires threatened many of Burbank Housing's properties, which are generally reserved for families of four making less than $71,000 a year, or equivalent salaries for smaller or larger families. Even before the fire, 15,000 people were on wait lists for Burbank Housing homes.

Canyon 2 wildfire bottles up home loans across Orange County - The Canyon 2 fire has been contained for more than a week. The last embers have been extinguished. But aftereffects from the 9,200-acre conflagration still are rippling throughout Orange County. Because President Trump declared Orange County a disaster area, mortgages for properties all over Orange County — from La Habra to Dana Point — need a damage inspection before lenders can fund loans. That's holding up escrows, refinances and reverse mortgages for a host of borrowers otherwise unaffected by the Canyon 2 disaster. The bureaucratic designation — "presidentially declared major disaster area" — triggers an automatic response by the Federal Housing Administration requiring that all homes in that geographic area be re-inspected before loans get funded. Other lenders acting on their own, and some insurance companies, also require some form of inspection or certification that a home is damage-free before issuing a new loan or insurance policy. The U.S. Department of Veterans Affairs didn't respond to questions about how VA loans are affected, but some agents said the agency has a similar policy. The same thing is happening to borrowers in seven fire-ravaged counties north of San Francisco, as well as borrowers in disaster areas in Texas, Florida and Puerto Rico. No one knows the total number of borrowers affected, although FHA estimates it insures about 500 loans a month in Orange County. Some agents suspect millions of dollars in loans have been affected in the county. 

Mortgage rates end the week at highest point since July - Mortgage rates reached their highest level since July and are closing in on 4%, according to Freddie Mac. The 30-year fixed-rate mortgage fixed-rate mortgage averaged 3.94% for the week ending Oct. 26, 2017, up from last week when it averaged 3.88%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.47%. "The 10-year Treasury yield surged this week, jumping 12 basis points. The 30-year mortgage rate followed suit, increasing 6 basis points. Today's survey rate is the highest rate in three months," Sean Becketti, Freddie Mac's chief economist, said in a press release.

America's Housing Affordability Issue -- A recent speech by James Bullard, President and CEO of the Federal Reserve Bank of St. Louis provides us with an interesting viewpoint regarding the current state of the U.S. housing market.  In his speech given at the Bi-State Development 2017 Annual Meeting, Mr. Bullard looks at living standards across American metropolitan statistical areas (MSAs) which are defined as an area containing a large population centre and the counties adjacent to that centre, particularly those areas that have a high degree of integration with that population centre as measured by commuting patterns.  In his speech, he focuses on housing and housing affordability, a key part of living standards and a measure that may give us some sense of where the housing market is headed.     Here is a map which shows the MSAs in the United States:In 2015, about 86 percent of Americans lived within one of 381 U.S. MSAs and about 56 percent of Americans lived within one of 53 large MSAs which have a population of more than 1 million people.Mr. Bullard notes that the cost of living across the 381 MSAs varies widely, driven primarily by the cost of housing.  One way to measure the cost of housing is to look at the median price per square foot as shown on this map:  Zillow data shows that in 2015, the median home value in San Francisco was $479 per square foot compared to only $105 per square foot in St. Louis. While raw per square foot data is interesting, an even more important measure is affordability.  Here is a map showing the share of households that can afford payments on a median-priced single-family home in their MSA:

  FHFA House Price Index: Index Up 0.7% in August -- The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for August. Here is the opening of the report: – U.S. house prices rose in August, up 0.7 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The previously reported 0.2 percent increase in July was revised upward to 0.4 percent.The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From August 2016 to August 2017, house prices were up 6.6 percent.For the nine census divisions, seasonally adjusted monthly price changes from July 2017 to August 2017 ranged from -0.1 percent in the New England division to +1.4 percent in the Pacific division. The 12-month changes were all positive, ranging from +5.0 percent in the Middle Atlantic division to +9.3 percent in the Pacific division. [Link to report]The chart below illustrates the monthly HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

MBA: Mortgage Applications Decrease in Latest Weekly Survey - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 4.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 20, 2017. The previous week’s results included an adjustment for the Columbus Day holiday... The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 10 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.14 percent from 4.16 percent, with points remaining unchanged at 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990.  Refinance activity will not pick up significantly unless mortgage rates fall well below 4%. The second graph shows the MBA mortgage purchase index. According to the MBA, purchase activity is up 10% year-over-year.

September New Home Sales Jumps Almost 20% -- This morning's release of the September New Home Sales from the Census Bureau came in at 667K, up 18.9% month-over-month from a revised 561K in August. Seasonally adjusted estimates back to June were also revised. The forecast was for 555K. Here is the opening from the report:Sales of new single-family houses in September 2017 were at a seasonally adjusted annual rate of 667,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 18.9 percent (±19.0 percent)* above the revised August rate of 561,000 and is 17.0 percent (±22.4 percent)* above the September 2016 estimate of 570,000.The median sales price of new houses sold in September 2017 was $319,700. The average sales price was $385,200. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

New Home Sales increase to 667,000 Annual Rate in September - The Census Bureau reports New Home Sales in September were at a seasonally adjusted annual rate (SAAR) of 667 thousand. The previous three months combined were revised up slightly. "Sales of new single-family houses in September 2017 were at a seasonally adjusted annual rate of 667,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 18.9 percent above the revised August rate of 561,000 and is 17.0 percent above the September 2016 estimate of 570,000."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. New Home Sales, Months of SupplyThe months of supply decreased in September to 5.0 months from 6.0 month in August. The all time record was 12.1 months of supply in January 2009. This is in the normal range (less than 6 months supply is normal). 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. The inventory of completed homes for sale is still low, and the combined total of completed and under construction is also low. New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate). In September 2017 (red column), 52 thousand new homes were sold (NSA). Last year, 44 thousand homes were sold in September.

New Home Sales Explode In Storm-Soaked September - Biggest Jump In Over 25 Years -- Following existing home sales modest bounce, new home sales in September exploded by 18.9% MoM - the biggest jump since January 1992. Against expectations of a 1.1% decline, new home sales soared 18.9% MoM in September -9 standard deviations above expectations... To the highest SAAR since 2007... Highlights of New Home Sales (September)

  • Single-family home sales rose 18.9% m/m to 667k annualized pace (est. 554k), the strongest since October 2007
  • Purchases in U.S. South surged 25.8% m/m to 405k rate, fastest since July 2007; sales in other regions also advanced
  • Median sales price increased 1.6% y/y to $319,700
  • Supply of homes at current sales rate dropped to 5 months from 6 months; 279,000 new houses were on market at end of September

Bloomberg's key takeaways: The biggest monthly gain in home sales since January 1992 reflected an increase in the number of properties in which construction hadn't yet started. That level of 236,000 was the most since January 2007 and signals residential building will strengthen in coming months as firms get busy filling orders. While the report showed particular strength in the U.S. South, possibly a reflection of increased demand following the storms, sales were firm in other parts of the country.

A few Comments on September New Home Sales - New home sales for September were reported at 667,000 on a seasonally adjusted annual rate basis (SAAR). This was well above the consensus forecast, and the highest sales rate since October 2007. The three previous months were revised up slightly. There was clearly some rebound following hurricane Harvey. Sales in the South were up sharply from August, and at the highest level since July 2007. Some contracts in the South, that would have been signed in August, were probably delayed until September.  Also some people who lost homes might have signed contracts for new homes in September (New home sales are counted when contracts are signed).  Sales were up 17.0% year-over-year in September.This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate). For the first nine months of 2017, new home sales are up 8.6% compared to the same period in 2016.This was a solid year-over-year increase through September.And here is another  update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.

NAR: Pending Home Sales Index unchanged in September, Down 3.5% Year-over-year - From the NAR: Pending Home Sales Flatten in September Pending home sales were unchanged in September, but activity declined on an annual basis both nationally and in all major regions, according to the National Association of Realtors®.  The Pending Home Sales Index, a forward-looking indicator based on contract signings, was at 106.0 in September (unchanged from a downwardly revised August figure). The index is now at its lowest reading since January 2015 (104.7), is 3.5 percent below a year ago, and has fallen on an annual basis in five of the past six months.  The PHSI in the Northeast rose 1.2 percent to 94.5 in September, but is still 2.4 percent below a year ago. In the Midwest the index climbed 1.4 percent to 102.9 in September, but remains 2.5 percent lower than September 2016. Pending home sales in the South decreased 2.3 percent to an index of 115.9 in September and are now 5.0 percent below last September. The index in the West grew 1.9 percent in September to 102.7, but is 2.9 percent below a year ago.  This was below expectations of a 0.5% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in October and November.

 Vacant Property Rates Soar In Over Half Of U.S. Local Housing Markets -- According to a new report from ATTOM Data Solutions published earlier today, vacant property rates are once again increasing in many markets across the country but perhaps not for the reasons you might think.  While so-called pre-foreclosure "zombie" properties have declined some 22% YoY, overall vacant property rates in 54% of the 149 metropolitan statistical areas analyzed by ATTOM actually increased due to, among other things, increasing ownership rates by investors as opposed to actual homeowners. ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, today released its 2017 U.S. Residential Vacant Property and Zombie Foreclosure Report, which shows nearly 1.4 million (1,367,793) U.S. residential properties (1 to 4 units) were vacant as of the end of the third quarter of 2017 — representing 1.58 percent of all U.S. residential properties.The 1.58 percent vacant property rate nationwide decreased slightly from 1.63 percent a year ago, but vacant property rates increased from a year ago in 81 of the 149 metropolitan statistical areas analyzed in the report (54 percent), including Chicago, New York, St. Louis, Baltimore and Phoenix.The report also shows that the number of vacant “zombie” pre-foreclosure properties — which have started the foreclosure process but have not yet been repossessed by the foreclosing lender — decreased 22 percent from a year ago to 14,312 as of the end of Q3 2017, 67 percent below the peak of 44,030 in Q3 2013. The number of vacant bank-owned properties decreased 48 percent from a year ago to 24,026 as of the end of Q3 2017.“Zombie foreclosures have dwindled dramatically over the last four years as a supply-starved housing has soaked up even some of the most highly distressed properties,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “There are still pockets of the country with high zombie foreclosure rates, and high vacant property rates in general, primarily in the Rust Belt and parts of the Northeast and Southeast — driven in large part by a high share of non-owner occupied vacant properties in those areas. “There is evidence that the ultra-tight inventory environment in some red-hot markets is beginning to ease just a bit, with vacant property rates nudging higher in markets such as San Jose, San Francisco, Los Angeles, Boston and Denver,” Blomquist added.

Nearly 1.4 million residential properties vacant in 3Q  -- Nearly 1.4 million residential properties were vacant as of the end of the third quarter, according to the Attom Data Solutions Residential Vacant Property and Zombie Foreclosure Report. The vacant property rate increased in 54% of local housing markets despite the 1.58% vacant property rate being down from 1.63% a year ago. The number of zombie foreclosure properties, which have started the process but have yet to be repossessed by the foreclosing lender, decreased year-over-year by 22% to 14,312 properties at the end of the third quarter. "Zombie foreclosures have dwindled dramatically over the last four years as a supply-starved housing has soaked up even some of the most highly distressed properties," said Daren Blomquist, senior vice president at Attom Data Solutions, in a press release. 

NMHC: Apartment Market Tightness Index remained negative for Eighth Consecutive Quarter - From the National Multifamily Housing Council (NMHC): Apartment Markets Decline Slightly in the October NMHC Quarterly Survey Market conditions for the apartment industry remained soft in the National Multifamily Housing Council’s (NMHC) October Quarterly Survey of Apartment Market Conditions. While the Market Tightness (37), Sales Volume (45) and Equity Finance (46) Indexes remained below the breakeven level of 50 – with the Debt Financing Index (51) edging just above 50 – there was little change compared with three months earlier.“The apartment market is headed into a seasonally slow leasing period with new deliveries easing upward pressure on rents and occupancy rates in many markets around the country,” said NMHC Chief Economist Mark Obrinsky. “The big increase in multifamily starts in 2015 and 2016 is finally filtering through to the marketplace on a broad basis.”“Leasing activity appears to have picked up in Texas and Florida in the aftermath of Hurricanes Harvey and Irma. Some respondents also noted that fires on the West Coast may be pushing occupancy rates up,” said Obrinsky. “Elsewhere, new deliveries are leading to concessions becoming more commonplace.”The Market Tightness Index decreased from 42 to 37, marking the eighth consecutive quarter of overall declining conditions. Forty percent of respondents reported looser conditions than three months prior, compared to just 14 percent who reported tighter conditions. This graph shows the quarterly Apartment Tightness Index. Any reading below 50 indicates looser conditions from the previous quarter. This indicates market conditions were looser over the last quarter.

Rental Insecurity: Survey Finds 1 In 5 American Renters Missed A Payment In Past 3 Months - A new survey conducted by recently found that Americans, despite historically low unemployment levels and surging stock indices which would both seem to suggest that 'everything is awesome', are having a very difficult time making ends meet.  Per the survey, some 20% of renters admit they were unable to make their monthly payments on time at least once over the preceding three months with the results being even worse among minorities and those lacking a college degree.

    • Analyzing data from Apartment List users, we find that nearly one in five renters were unable to pay their rent in full for at least one of the past three months. We estimate that 3.7 million American renters have experienced an eviction.
    • Evictions disproportionately impact the most vulnerable members of our society. Renters without a college education are more than twice as likely to face eviction as those with a four-year degree.
    • Additionally, we find that black households face the highest rates of eviction, even when controlling for education and income. Perhaps most troublingly, households with children are twice as likely to face an eviction threat, regardless of marital status.
    • The impacts of eviction are severe and long-lasting. Evictions are a leading cause of homelessness, and research has tied eviction to poor health outcomes in both adults and children. These effects are persistent, and experiencing an eviction makes it difficult to get back on one’s feet.
    • Performing a metro-level analysis, we find that evictions are most common in metros hit hard by the foreclosure crisis and in those experiencing high rates of poverty. Perhaps counterintuitively, expensive coastal metros have comparatively low rates of eviction, in part because strong job markets with high median wages offset expensive rents in those areas.
Hotel Occupancy Rate increases YoY, Just behind Record Year -- From STR: US hotel results for week ending 14 October  The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 8-14 October 2017, according to data from STR.  I n comparison with the week of 9-15 October 2016, the industry recorded the following:
• Occupancy: +2.4% to 72.3%
• Average daily rate (ADR): +5.3% to US$130.83
• Revenue per available room (RevPAR): +7.8% to US$94.58
STR analysts note that U.S. performance growth was lifted due to a comparison with a Jewish holiday time period last year.  Among the Top 25 Markets, Houston, Texas, reported the largest year-over-year increases in occupancy (+37.3% to 85.2%) and RevPAR (+57.0% to US$99.76).  The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Michigan Consumer Sentiment: October Final Remains Favorable --The University of Michigan Final Consumer Sentiment for October came in at 100.7, up 5.9 from the September Final reading of 95.1. had forecast 100.9.Surveys of Consumers chief economist, Richard Curtin, makes the following comments: Consumer sentiment slipped ever so slightly in late October, despite remaining at its highest monthly level since the start of 2004. This is only the second time the Sentiment Index has been above 100.0 since the end of the record 1990's expansion, and its average during the first ten months of 2017 (96.7) has been the highest since 2000 (108.5). The October gain was reflected in more favorable consumers' assessments of current economic conditions (+4.8) as well as expected economic prospects (+6.1). Personal finances were judged near all-time record favorable levels due to gains in household incomes as well as decade highs in home and stock values. Lingering doubts about the near term strength of the national economy were dispelled as more than half of all respondents expected good times during the year ahead and anticipated the expansion to continue uninterrupted over the next five years. To be sure, consumers do not anticipate accelerating growth rates but rather a continuation of the slower pace of growth that has characterized this recovery. Low unemployment and low inflation rates have made lower income growth rates more acceptable. Moreover, the Great Recession has caused a fundamental change in assessments of economic risks, with consumers now giving greater preference to economic stability relative to economic growth. This is the essential reason why consumers have voiced such positive economic assessments of such a modest pace of economic growth. Overall, the data indicate a 2.6% growth rate in real consumption in 2017 and in the first 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.

PG&E pushing to pass North Bay fire liabilities to ratepayers: Fearing billions of dollars in future liability, PG&E has been aggressively urging state regulators to make it easier for the company to charge ratepayers — rather than its shareholders — when its power lines and other electrical equipment cause wildfires. Top PG&E executives met as recently as last week to lobby officials at the state Public Utilities Commission in San Francisco over the issue, which could arise powerfully in coming months if the utility is found to be responsible for the Wine Country fires, a serious possibility that state regulators are now investigating. In a 30-minute meeting on Oct. 17, Meredith Allen, PG&E’s senior director of regulatory relations, told Travis Foss, an adviser to PUC Commissioner Clifford Rechtschaffen, that PG&E and other California utilities are in “an untenable situation,” according to a record of the meeting that PG&E sent to the PUC as required under state lobbying rules. PG&E should not have to pay “a disproportionate” share of the costs of wildfires because of the growing fire risk and a tough insurance market, Allen argued. But consumer groups say the push by PG&E and the state’s other two large utilities — Southern California Edison and San Diego Gas & Electric — is out of line. If the PUC allows utilities to pass along most of their uninsured wildfire costs to ratepayers in the form of higher monthly bills, critics say, they will have less incentive to properly maintain wires, trim back trees and take other sometimes costly measures needed to reduce wildfire risk. “PG&E and the other utilities are very vigorously lobbying to see that the costs of disasters be covered by ratepayers, even when they are found negligent,” said Mark Toney, executive director of The Utility Reform Network, a San Francisco consumer group.

The Jones Act and the Cost of Shipping to U.S. Ports - The Merchant Marine Act of 1920, often referred to as the Jones Act, requires shipping between U.S. ports to occur on ships that carry the U.S. flag, are built in the United States, and are owned by U.S. citizens. The act also requires crew on these ships to be comprised of at least 75 percent U.S. citizens or permanent residents. The original rationale for this act was to support the continuing viability of an American merchant marine fleet, an issue that was of concern after the significant losses to the U.S. Merchant Marine fleet in World War I. The Jones Act’s main purpose subsequently shifted towards supporting employment and work conditions for American shipbuilders and seamen. The U.S. is not unusual in restrictions on cabotage (the shipment of goods, person or mail between ports within the same country); most countries surveyed by the U.S. Department of Transportation restrict operation of international vessels between domestic ports to at least some degree. Since Puerto Rico is part of the United States, the Jones Act covers shipments to and from that island, just as it covers shipments to the 48 contiguous states, Alaska, Hawaii, and Guam.  The Jones Act does not cover some United States territories, such as the U.S. Virgin Islands.  The Jones Act raises the cost of transporting goods between American ports. For example, the cost of shipping crude oil from Texas to refineries in the East Coast is significantly more expensive per barrel than shipping crude to much more distant locations according to a 2014 study by the Congressional Research Service (see chart). Similarly, a 1988 study by the Government Accounting Office (GAO) on the effects of the Jones Act on Alaska, which depends much more on shipping than the contiguous 48 states, estimated extra shipping costs of $163 million per year for goods shipped between Alaska and the mainland United States. In 2012, the Federal Reserve Bank of New York found that shipping cost for a twenty-foot container from the mainland United States to Puerto Rico was $3,063, but only $1,503 for the same container from the mainland United States to the Dominican Republic. According to one estimate, the Jones Act raises the price of gasoline by as much as 15 cents per gallon because of the high costs of transporting fuel by U.S.-flagged ships relative to foreign-flagged ships. The ban on the transportation of liquefied natural gas by foreign-flagged ships raises the price paid by the Puerto Rico Electric Power Authority by as much as 30 percent. Overall, the World Economic Forum estimates that preventing foreign ships from transporting cargo between United States ports costs the United States economy $200 million per year in extra shipping costs.

Chemical Activity Barometer "Bounces Back" in October -- Note: This appears to be a leading indicator for industrial production. From the American Chemistry Council: Chemical Activity Barometer Bounces Back, Following Historic September StormsThe Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), notched an increase over September’s reading both on a three-month moving average (3MMA) basis and an unadjusted basis. The CAB was up 0.2 percent and 0.7 percent, respectively. The increases reflected a bounce back from the effects of Hurricanes Harvey and Irma. Compared to a year earlier, the CAB is up 3.0 percent on a 3MMA basis, a slower pace than the previous nine months, but one that continues to suggest further gains in U.S. business activity into 2018... Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

Rental Nation: Unique 'Solution' Emerges To Address Flood Of Off-Lease Vehicles...Lease Them Again -- We've written frequently of late about the coming wave of off-lease vehicles that threatens to flood the used car market with excess supply, crush used car prices and simultaneously wreak havoc on the new car market as well. As we recently noted (see: "Flood Of Off-Lease Vehicles" Set To Wreak Havoc On New Car Sales), the percentage of new car 'sales' moving off dealer lots via leases has nearly tripled since late 2009 when they hit a low of just over 10%.  Over the past 6 years, new leases, as a percent of overall car sales, has soared courtesy of, among other things, low interest rates, stable/rising used car prices and a nation of rental-crazed citizens for whom monthly payment is the only metric used to evaluate a "good deal"...even though leasing a new vehicle is pretty much the worst 'deal' you can possibly find for a rapidly depreciating brand new asset like a car...but we digress.  Of course, what goes up must eventually come down.  And all those leases signed on millions of brand new cars over the past several years are about to come off lease and flood the market with cheap, low-mileage used inventory.  By the end of 2019, an estimated 12 million low-mileage vehicles are coming off leases inked during a 2014-2016 spurt in new auto sales, according to estimates by Atlanta-based auto auction firm Manheim and Reuters.

Vehicle Forecast: Sales Expected to Exceed 17 million SAAR in October -- The automakers will report October vehicle sales on Wednesday, Nov 1st.  Note: There are 25 selling days in October 2017, there were 26 selling days in October 2016.  From WardsAuto: U.S. Forecast: October Auto Sales Rate Flat with Prior-Year.  A WardsAuto forecast calls for U.S. automakers to deliver 1.31 million light vehicles in October. A daily sales rate of 52,579 units over 25 days is nearly equivalent to like-2016’s 52,584 units for 26 days. ...  The report puts the seasonally adjusted annual rate of sales for October at 17.55 million units, behind year-ago’s 17.80 million and prior-month’s 18.48 million mark.  Sales had been below 17 million SAAR for six consecutive months, until September, when sales spiked due to buying following Hurricane Harvey. Sales in October were probably also elevated due to the hurricanes.

Inventory Levels Of These GM Plants Still In "Danger Zone" Even After 2 Hurricanes And 6,000 Job Cuts --Over the past two months, General Motors' stock has rallied nearly 30% on the notion that hurricanes in Texas and Florida solved the company's nagging inventory problem.  But, even after two of the most devastating hurricanes in U.S. history wiped out hundreds of thousands of vehicles and GM's preemptive elimination of some 6,000 jobs, Automotive News says the company still has a ways to go at certain plants if they want to bring system-wide inventories down to healthy levels. Even after cutting more than 6,000 jobs this year, General Motors might need to further shrink its manufacturing operations to address bloated inventories of some vehicles amid plateauing U.S. sales and pressure from Wall Street to avoid overproduction.The majority of GM's U.S. assembly plants, including some where a shift already has been eliminated, produce vehicles that on average have at least an 80-day supply, 33 percent more than what the industry generally considers healthy, according to estimates from the Automotive News Data Center."The danger zone is definitely consistently staying in that 80 to 100 days," said Joe Langley, a senior analyst at economic forecasting and data company IHS Markit. "The ultimate red flag is when volume is at that 120 days or more consistently and incentives aren't moving the needle."GM has at least seven U.S. assembly plants that on average produced vehicles with greater than an 80-day supply entering October, including four that have more than 100 days, according to the estimates. That does not include GM's two U.S. plants for the Chevrolet Silverado and GMC Sierra, because pickups commonly have higher inventories to meet demand for a variety of trim and feature configurations.

 Headline Durable Goods Orders Up in September, Last Three of Four Months - 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 September increased $5.1 billion or 2.2 percent to $238.7 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 2.0 percent August increase. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders increased 2.0 percent. Transportation equipment, also up three of the last four months, led the increase, $4.0 billion or 5.1 percent to $81.2 billion. Download full PDFThe latest new orders number at 2.2% month-over-month (MoM) was better than the consensus of 1.0%. The series is up 8.3% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.7% MoM, which was better than the consensus of 0.5%. The core measure is up 7.5% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is up 0.4% MoM and up 7.3% 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 1.3% MoM and up 7.8% 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.

Richmond Fed: "Manufacturing Activity Remained Positive in October" - From the Richmond Fed: Reports on Fifth District Manufacturing Activity Remained Positive in October Reports on Fifth District manufacturing activity remained positive in October, according to the latest survey by the Federal Reserve Bank of Richmond. The composite index dropped, affected by a notable decline in the shipments index, which fell from 22 to 9, but it remained positive across all components, indicating continued growth. While most manufacturing indexes fell in October, the wage index increased from 17 to 24, which is the highest it has been since May of 2000. Manufacturing firms remained optimistic about growth in the next six months. Most expectations indexes rose, with the exception of employment and average workweek, which both remained positive and were well above current values. This suggests decent growth in October.

Kansas City Fed: Regional Manufacturing Activity "Posts Strong Growth" in October -- From the Kansas City Fed: Tenth District Manufacturing Activity Posts Strong GrowthThe Federal Reserve Bank of Kansas City released the October 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 posted strong growth and expectations about future activity improved further.“Factory activity accelerated further in our region this month, posting its highest composite reading since 2011,” said Wilkerson.   The month-over-month composite index was 23 in October, the highest since March 2011, up from 17 in September and 16 in August.  The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Factory activity increased strongly at both durable and non-durable goods plants, particularly for food, plastics, computer and electronic products.  Month-over-month indexes were mostly higher.  The new orders index increased moderately, and the order backlog index increased to its highest reading since March 2011.  The employment and new orders for exports indexes increased slightly.  However, the shipments index was unchanged, and the production index eased somewhat but remained high.  The finished goods inventory index jumped back into positive territory, and the raw materials inventory index also increased moderately. 
emphasis added  All of the regional Fed surveys have been strong in October. 

 Philly Fed: State Coincident Indexes increased in 38 states in September From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for September 2017. Over the past three months, the indexes increased in 37 states and decreased in 13, for a three-month diffusion index of 48. In the past month, the indexes increased in 38 states, decreased in 10, and remained stable in two, for a one-month diffusion index of 56. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:  The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Weekly Initial Unemployment Claims increase to 233,000 -- The DOL reported:In the week ending October 21, the advance figure for seasonally adjusted initial claims was 233,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 222,000 to 223,000. The 4-week moving average was 239,500, a decrease of 9,000 from the previous week's revised average. The previous week's average was revised up by 250 from 248,250 to 248,500. Claims taking procedures continue to be severely disrupted in Puerto Rico and the Virgin Islands as a result of power outages and infrastructure damage caused by Hurricanes Irma and Maria. The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

The founder of the world’s largest hedge fund just shared brutal analysis of the US economy - There's no other word for Ray Dalio's latest note on the US economy, and the situation it describes. The founder of Bridgewater, the world's largest hedge fund with about $160 billion in management, posted the note on LinkedIn on Monday, and sets about splitting the US economy in two: the top 40% and the bottom 60%.  The point of this exercise is to show that while the headline numbers show a growing, healthy economy, there's a lot more going on under the surface that needs to be paid attention to.  The stats he cites for the bottom 60% are downright depressing. Here's a selection taken straight from the note (emphasis Dalio's):

  • Real incomes have been flat to down slightly for the average household in the bottom 60%  since 1980 (while they have been up for the top 40%).
  • Those in the top 40% now have on average 10 times as much wealth as those in the bottom 60%. That is up from six times as much in 1980.
  • Only about a third of the bottom 60% saves any of its income (in cash or financial assets).
  • Only about a third of families in the bottom 60% have retirement savings accounts—e.g., pensions, 401(k)s—which average less than $20,000.
  • For those in the bottom 60%, premature deaths are up by about 20% since 2000. The biggest contributors to that change are an increase in deaths by drugs/poisoning (up two times since 2000) and an increase in suicides (up over 50% since 2000).
  • The top 40% spend four times more on education than the bottom 60%. 
  • The average household income for main income earners without a college degree is half that of the average college graduate.
  • Since 1980, divorce rates have more than doubled among middle-aged whites without college degrees, from 11% to 23%.
  • The number of prime-age white men without college degrees not in the labor force has increased from 7% to 15% since 1980.

In other words, the economy isn't as healthy as might appear at first look. And note includes a warning: the "stress between the two economies" will "intensify over the next 5 to 1o years" because of demographic and technological change.

Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance - Walmart's low-wage workers cost U.S. taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing, according to a report published to coincide with Tax Day, April 15.Americans for Tax Fairness, a coalition of 400 national and state-level progressive groups, made this estimate using data from a 2013 study by Democratic Staff of the U.S. Committee on Education and the Workforce."The study estimated the cost to Wisconsin’s taxpayers of Walmart’s low wages and benefits, which often force workers to rely on various public assistance programs," reads the report, available in full here."It found that a single Walmart Supercenter cost taxpayers between $904,542 and $1.75 million per year, or between $3,015 and $5,815 on average for each of 300 workers." Americans for Tax Fairness then took the mid-point of that range ($4,415) and multiplied it by Walmart’s approximately 1.4 million workers to come up with an estimate of the overall taxpayers' bill for the Bentonville, Ark.-based big box giant's staffers.

Invisible women: Domestic workers underpaid and abused - There are at least two million domestic workers in the United States, and most of them are black Americans or immigrant women. They are considered so unworthy of legal protections that basic workers' rights do not extend to them. Now, a political climate and leadership tells them that they are not only unwelcome, but they also should not expect safety because of their skin colour and ethnicity. Many face slave-like working conditions. They are one of the only classes of workers excluded from basic working protections, as set forth in the 1935 still-unamended National Labor Relations Act. Many are poor immigrant women of colour, which puts them in the crosshairs of President Donald Trump's administration. Beginning with New York in 2010, eight states have passed their own Domestic Worker's Bill of Rights - legislation to protect workers from racial discrimination and sexual harassment, their right to one day off a week, overtime and paid leave - but the rest of the nation is slow to catch up. Hawaii, Illinois, Massachusetts, Connecticut, Nevada, Oregon and California joined New York. Thanks to the efforts of advocacy groups, Massachusetts passed its Domestic Worker's Bill of Rights in 2014. Regardless of their documentation status, the still-young legislation gives all domestic workers in the state of Massachusetts some rights. But this does not mean they are now automatically safe. All of the women profiled here have suffered abuse. And while three of them are in better places, one is not. These are their stories.

Majority Of White Americans Say They Face Discrimination -- A new NPR poll finds that a majority of white Americans believe they face discrimination in America today...  "If you apply for a job, they seem to give the blacks the first crack at it,"said 68-year-old Tim Hershman of Akron, Ohio, "and, basically, you know, if you want any help from the government, if you're white, you don't get it. If you're black, you get it." As NPR reports, more than half of whites - 55 percent - surveyed say that, generally speaking, they believe there is discrimination against white people in America today.  Hershman's view is similar to what was heard on the campaign trail at Trump rally after Trump rally. Donald Trump catered to white grievance during the 2016 presidential campaign and has done so as president as well.  50-year-old heavy equipment operator Tim Musick, who lives in Maryland, just outside Washington, D.C. says anti-white discrimination is real, but he doesn't think he has ever really felt it personally.  "I think that you pretty much, because you're white, you're automatically thrown into that group as being a bigot and a racist and that somehow you perceive yourself as being more superior to everybody else, which is ridiculous," Musick said, speaking during his lunch break at a construction site. "I'm just a man that happens to have been born white," Musick continued.Notably, people from every racial or ethnic group surveyed said they believe theirs faces discrimination - from African-Americans and Latinos to Native Americans and Asian-Americans, as well as whites.

On Safari in Trump's America - A farmer in the group told Third Way’s eager listeners he knew exactly what was wrong with America: his fellow Americans. “You’ve got all these parasites making a living off the bureaucracy,” the farmer declared, “like leeches pulling you down, bleeding you dry.” We had been in the state for just a few hours, and already the researchers’ quest for mutual understanding seemed to be hitting a snag. Others in the group, a bunch of proudly curmudgeonly older white men, identified other culprits. There were plenty of jobs, a local elected official and business owner said. But today’s young people were too lazy or drug-addled to do them. As we proceeded to meetings with diverse groups of community representatives, this sort of blame-casting was a common refrain. Disdain for the young, in particular, was a constant, across demographic, socio-economic, and generational lines: Even young people complained about young people. “They don’t want to do the work, and they always feel like they’re being picked on,” a recent graduate of a technical school in Chippewa Falls said of his fellow Millennials. Some of the people we met expressed the conservative-leaning view that changes in society and the family were to blame. One, a technical-skills instructor at the Chippewa Falls school, questioned whether women belonged in the workplace at all. “That idea of both family members working, it’s a social experiment that I don’t know if it quite works,” he said. “If everyone’s working, who is making sure the children are raised right?”

10-Year-Old Mexican Girl With Cerebral Palsy Detained by Border Patrol After Surgery in Texas - A 10-year-old girl with cerebral palsy who entered the United States from Mexico without permission a decade ago is potentially facing deportation after having to go through a Border Patrol checkpoint in South Texas for emergency gallbladder surgery, a family lawyer said Thursday. Immigration advocates are protesting Rosa Maria Hernandez's case and say Border Patrol should show more discretion in the cases of sick children who are in the U.S. illegally but need medical treatment. Leticia Gonzalez, an attorney for the Hernandez family, said Thursday that Rosa Maria was taken with a cousin from the Texas border city of Laredo to a children's hospital in Corpus Christi, about 150 miles away. They had to pass through one of several Border Patrol checkpoints set up in South Texas, north of the U.S.-Mexico border. Gonzalez said Border Patrol agents allowed the girl and her cousin to pass, but followed the hospital vehicle taking them. At the hospital, agents stood by and refused to let Rosa Maria's relative close the door to their room so they could keep watch over the girl, Gonzalez said. And after the surgery was complete, agents stood ready to escort Rosa Maria to a federal facility for unaccompanied minors in the U.S. illegally, located another 140 miles away in San Antonio. Rosa Maria is now being held at the facility indefinitely, the attorney said. Even if she is eventually released to a sponsor approved by the U.S. Department of Health and Human Services, the girl will undergo processing and could be deported. Gonzalez said it could be several weeks before she is released. "They just refused to allow the child to go home,"   In a statement, U.S. Customs and Border Protection confirmed its agents had escorted Rosa Maria from a checkpoint to the hospital. It said Border Patrol agents were "committed to enforcing the immigration laws of this nation."

Rehab work camps were about to be regulated. Then a friend stepped in - Reveal News. For years, Christian Alcoholics & Addicts in Recovery proudly operated outside of state oversight in Oklahoma. The founders ran their Christian recovery program their way – with church, hard manual labor and little government interference.In 2013, it looked like that was about to change. After a handful of patients died in another unregulated rehab, state lawmakers introduced a bill to crack down on a wide swath of uncertified programs.Then Republican lawmaker Doug Cox stepped in.“He said, ‘Look, I have a couple of them in my area. Would you mind exempting them?’ ” recalled former Republican Rep. David Derby, who sponsored the bill.Cox successfully introduced an amendment to the bill that maderegulation optional for recovery centers such as CAAIR. But Cox withheld one important detail from Derby: He sat on CAAIR’s board of directors.“I wasn’t aware that he was on the board,” Derby said, chuckling. “I wouldn’t have done it.”Republican Rep. Jason Murphey, another of the bill’s co-sponsors, said he had no idea either. “Are you serious? That’s crazy.”The Oklahoma Constitution, along with the legislative rules of the House of Representatives, require any lawmaker who has a “personal or private interest” in a bill to disclose that fact to other lawmakers and refrain from voting on it.Cox did not mention his position on CAAIR’s board during the committee hearing for the amendment or recorded discussions on the House floor, according to a review of hearing archives by Reveal from The Center for Investigative Reporting. He also voted on his own amendment, though he refrained from voting on the final bill. He didn’t bring it up when he wrote an editorial for a local newspaper, promoting his amendment. He said the initial bill would have put CAAIR out of business

With business booming under Trump, private prison giant gathers at president’s resort - WaPo— In recent years, the private prison company GEO Group has held its annual leadership conference at venues near its Boca Raton headquarters. But this year, the company moved its gathering to a Miami-area golf resort owned by President Trump. The event last week, during which executives and wardens gathered for four days of meetings, dinner receptions and golf outings at the luxurious 800-acre Trump National Doral, followed an intense effort by GEO Group to align itself with the president and his administration. During last year’s election, a company subsidiary gave $225,000 to a pro-Trump super PAC. GEO gave an additional $250,000 to the president’s inaugural committee. It also hired as outside lobbyists a major Trump fundraiser and two former aides to Attorney General Jeff Sessions, one of the president’s most prominent campaign backers. GEO Group, meanwhile, has had newfound success in Trump’s Washington. The company secured the administration’s first contract for an immigration detention center, a deal worth tens of millions a year. And its stock price has tripled since hitting a low last year when the Obama administration sought to phase out the use of private prisons — a decision that Sessions reversed. 

FBI Reports 61% Surge In "Felonious" Cop Killings Year Over Year -- Coinciding with an unprecedented surge in violence in cities like Chicago and Baltimore last year, the 2016 Law Enforcement Officers Killed And Assaulted (LEOKA) report released by the FBI earlier today has revealed a staggering increase in criminal attacks against police officers.  Per the report, a total of 118 law enforcement officers were killed in the line of duty in 2016, of which 66 were felonious, a 61% increase versus 2015 and 144% increase compared to 2013.A total of 118 law enforcement officers were killed in the line of duty in 2016, according to the FBI’s annual Law Enforcement Officers Killed and Assaulted (LEOKA) report released today. Of those deaths, 52 were accidental and 66 were felonious.Additionally, 57,180 officers were assaulted in the line of duty, with nearly 30 percent of those officers being injured in the incidents. All of these numbers increased from figures reported in 2015, when 45 officers died accidentally and 41 were feloniously killed in the line of duty. There were 50,212 assaults against law enforcement listed in the 2015 LEOKA report.

L.A. County now has 58,000 homeless people. So why are there thousands fewer shelter beds than in 2009? - “Live from skid row, it’s Tuesday night!” Pastor Dan shouted, beginning two hours of Christian music and prayer for worshipers arrayed on metal chairs in the spacious, white-walled chapel at the Union Rescue Mission. Once the playful service ended, worshipers folded and stacked their chairs and began to unfurl cots. There weren’t enough for everyone. “Blankets and sheets on the floor,” the resident concierge at the chapel doors told latecomers who had waited outside for admission. “Blankets and sheets on the floor.”By lights out, 1,300 people were bedded in the five-story building in the heart of skid row, women overflowing into the chapel and men on mattresses on the floor of the day room. The crush of bodies at the Union Rescue Mission is a snapshot of the deficiencies in L.A.’s shelter network. The county has one of the nation’s largest homeless populations, but its ratio of shelter beds to homeless people is among the nation’s lowest. There is no overarching shelter policy and no budgeting process to fund more shelters when homelessness increases. With rare exceptions, public agencies in Los Angeles do not build and operate shelters. Instead, contractors operate facilities that range from a few cots in a church storage room to hundreds of bunks lined end to end in converted industrial buildings. They compete for a pot of local and federal money that has been shrinking in recent years. “We do not have a standard for temporary subsistence housing,” “I don't think we have ever admitted that shelters are a permanent part of our society even though they've been here for as long as history has recorded.” 

Some Puerto Rico Schools Reopen, Making Do Without Power - Students returned to classes on Tuesday at the Dr. Francisco Hernández y Gaetan school in San Juan, even though it still lacked electricity. The school is among the first to reopen in Puerto Rico after Hurricane Maria.  “We are ready,” Kenia Caraballo Rivera, the principal said with a smile as students stopped to say hello or embrace her. “And this,” she added, pointing to a beige folding table and chair in the main hallway near the entrance, “is my office.” With no electricity in the school and no windows in her office, Ms. Caraballo works in the hall, where daylight streams in through the front door.The resumption of classes at the school on Tuesday was a joyous, achingly needed milestone on the plodding path back to normality in Puerto Rico’s newest era: After Maria. But the island’s education system is hardly picking up where it left off before the storm. Only 98 of the island’s public schools reopened on Tuesday, 9 percent of the total, and the ones that did were in San Juan and Mayagüez, two major cities. Another 112 schools in those areas will open as soon as their final paperwork is turned in. Few, if any of the reopened schools have generators, or internet access, or air-conditioning. School days have been slashed in half, at least for now. And the students — the ones who have not moved to the mainland — must bring their own water bottles and douse themselves in repellent to fend off the island’s mosquito invasion.   Each school building had to be inspected by the Army Corps of Engineers and had to have working water before it could reopen. They had to be repaired, disinfected, and scrubbed of mud, mold and rat droppings; much of that work was done by determined teachers. The schools had to be able to feed the students, and there was paperwork to file. As a test run, the schools first opened as community centers to work out the kinks.

Chicago school board approves revised budget, $1.1 billion bonds - (Reuters) - The Chicago Board of Education on Wednesday signed off on a revised fiscal 2018 budget and up to $1.1 billion of bonds the junk-rated school district tentatively plans to sell next month. The board revised the $5.75 billion spending plan it approved in August to incorporate a $450 million funding boost. That money resulted from the enactment in August of a new Illinois education funding formula that gives the Chicago Public Schools (CPS) higher aid payments and pension contributions from the state and allowed it to hike local property taxes. Escalating pension payments have led to drained reserves and debt dependency for CPS, the nation’s third-largest public school system. The district plans to refinance about $630 million of outstanding debt, including $440 million of floating-rate notes that carry interest rates as high as 9 percent, during the week of Nov. 13 subject to market conditions. Also scheduled for sale are $225 million of new general obligation bonds and $65 million of capital improvement tax bonds that have a separate investment grade rating based on a provision that insulates pledged property tax revenue from the risk of a potential bankruptcy by the school system. The infusion of more state funding will reduce the district’s cash-flow borrowing to $1.3 billion versus $1.55 billion in fiscal 2017, according to school board documents. The district reported it received a 3.60 percent interest rate for recent tax anticipation note deals totaling $550 million. 

"It's Very Common": Baltimore Teacher Admits To Passing Students That Never Showed For A Single Day Of Class - Teaching can be a thankless job.  Talk to almost any educator in the public school system and you're bound to get a earful about grueling hours, disrespectful kids, infuriating bureaucracy and minimal pay.  As such, it looks increasingly like the teachers in Baltimore's public schools have decided to just stop teaching altogether and pass every student that walks through their doors.  In the latest installment of a growing scandal revealed by "Project Baltimore", an investigative reporting initiative launched by Sinclair Broadcast group in March 2017 to examine Baltimore's public school system, a teacher at Calverton Elementary/Middle in west Baltimore has come forward with proof that grade changing is not only common in his school district but explicitly encouraged by senior administrators.  According to Fox45, below is the end of year text message that Calverton teachers received their principal, Martia Cooper, instructing them to "please double check end of the year averages and make sure they are 60 and above."  The message went on to say that any "averages below 60" should be "corrected" so that failing students could be pushed through the system.

Trump’s Heated Political Rhetoric Spills Over into Classroom, Increasing Stress and Undermining Learning – UCLA - This report examines whether the substance and tone of national political discourse during the first four months of the Trump administration affected U.S. public high school students.  We consider the following questions: 1) Have national political debates on topics such as immigration enforcement increased students’ stress and heightened students’ concerns about their well-being or the well-being of their families?  2) Have combative political dynamics at the national level contributed to incivility between students in schools and classrooms?   3) In what ways is student learning affected by heightened stress or incivility?  4) Do the impacts of the national political environment on student experiences differ depending on the demographics of the high schools they attend?  To answer these questions, UCLA’s Institute for Democracy, Education, and Access conducted a survey in May 2017 on changes in school climate, and therefore on teaching and learning, during the first months of the Trump administration.  The 1535 teachers who responded to the survey teach in schools that are representative of public high schools in the United States in terms of student demographics and geographic location.  In addition to responding to multiple choice questions, 848 teachers provided additional written responses.  In July and August 2017, we conducted 35 follow-up interviews with social studies and English teachers from geographically and demographically diverse schools.  Key findings from the study include:

  • Stress and concerns with welfare have increased, particularly in schools enrolling few White students.
  • Polarization, incivility, and reliance on unsubstantiated sources have risen, particularly in predominantly White schools.  
  • A growing number of schools, particularly predominantly White schools, became hostile environments for racial and religious minorities and other vulnerable groups.  
  • While some school leaders avoided issues related to the political environment, others moved proactively to create a tolerant and respectful school culture.  When leaders did not act, student behavior grew dramatically worse.    
  • As the national political environment has become more threatening, bellicose, and uncivil, more young people are subject to adverse socio-emotional and academic consequences.  These changes also undercut the democratic purposes of public education.  
  • Educators can mitigate some of these challenges, but they need more support.  Ultimately, political leaders need to address the underlying causes of campus incivility and stress.

Liberals Love Trump's Tax Plan (When Told It's Bernie's) -- (videos)  President Donald Trump's proposal for comprehensive tax reform was almost immediately dismissed as heartless and impractical by his political opponents. But Campus Reform wondered what would some of those opponents think if they were told the same plan was being proposed by someone they adore - Senator Bernie Sanders? To find out, we headed to George Washington University to ask students their opinions on Trump’s new tax plan. WIthout much explanation, the students immediately made clear their distaste for the plan. “It’s not the most efficient, nor beneficial to the general populus,” said one student when asked her opinion of Trump’s plan. “It’s better for the upper class than anyone else,” added another. After watching student after student express their disapproval of the plan, we then asked those same students what they thought of Senator Bernie Sanders’ new tax plan. Immediately, they expressed excitement and support after hearing the details of the plan. The only problem for them? There was no tax plan for Senator Sanders. The plan they loved was actually President Trump’s. How did they react? Enjoy... Additionally as MishTalk's Mike Shedlock writes, unsurprisingly, Students Despise Obama Policies...When Credited to Trump. In anticipation of the 100-day mark of Donald Trump's presidency, Campus Reform asked students at George Mason University to evaluate some of the president's accomplishments. The students predictably blasted things like the "Apology Tour" and stimulus package, even comparing them to Nazi policies, at least until learning that they were actually accomplished during President Obama's first 100 days.

Puerto Rican college students attend FIU for free after Hurricane Maria - The moment Ricardo Neco stepped outside his home and saw what Hurricane Maria did to his neighborhood, he started planning how to get out of Puerto Rico. The 19-year-old booked a $140 flight to Orlando with plans to stay with a friend. While waiting for his flight, he drove past the University of Puerto Rico’s Río Piedras campus in the capital, San Juan, where he studied finance. Officials have pegged the damage to the school at more than $100 million, with severe infrastructure damage to all 11 campuses. Then Neco found out about a program in Florida — instituted by Gov. Rick Scott — that made Puerto Rican students applicable for in-state tuition. He heard Florida International University had money to help students like him — more than $450,000 worth. The grant pays for his tuition, his food and a dorm room. He changed his flight to Miami and made arrangements to sleep on the couch of a friend’s South Beach studio apartment. He was sold. So was his childhood friend, 20-year-old Omar Jimenez. He stuck it out on the island a little longer to help his parents with their nursing home in the mountains, which has been without power or water since Hurricane Irma. Getting food, water, medicine and staff to the remote home has been “a day-to-day challenge,” he said. Still, his parents pushed him to go somewhere and continue studying for his biology degree. “I wish I could be there helping, but they want me to focus on my studies,” Jimenez said.

Professor quits over denied Dakota Access pipeline seminars   — A University of North Dakota journalism professor said Thursday he's quitting because the school would not let him conduct seminars on the Dakota Access oil pipeline protest. Mark Trahant said he was put in charge of a journalism lecture series and proposed two pipeline protest topics that were rejected. Last year he wanted to hear from reporters who covered the protests, and this year he suggested talking about how the protest played out on social media. Trahant didn't say specifically who turned down his requests, other than to say "it went up to both the provost's and president's office." He said he was "disappointed and disgusted" because he doesn't believe the Grand Forks college is an institutional leader in the state. "I have lived in other conservative states and universities tend to be kind of an institutional check and balance," Trahant said. "And you don't get that sense in North Dakota." Trahant said he was told that "senior administration" feared the state Legislature would retaliate against the university if he went through with his plans for the lecture series.

Professor Claims Math, Algebra, And Geometry Promote "White Privilege" - A University of Illinois math professor believes that algebra and geometry perpetuate “white privilege” because Greek terms give Caucasians unearned credit for the subject.  But that isn’t the professor’s only complaint. She also believes that evaluations for math proficiency perpetuates discrimination against minority students, if they do worse than their white counterparts. Rochelle Gutierrez argues in a newly published math education book for teachers that they must be aware of the identity politics surrounding the subject of mathematics.“On many levels, mathematics itself operates as Whiteness,” she argues with complete sincerity, according to Campus Reform. “Who gets credit for doing and developing mathematics, who is capable in mathematics, and who is seen as part of the mathematical community is generally viewed as White.” Gutierrez argues that subjects like algebra and geometry, which relate to arithmetic, also perpetuate racism and white privilege. She worries that “curricula emphasizing terms like Pythagorean theorem and pi perpetuate a perception that mathematics was largely developed by Greeks and other Europeans.” Gutierrez claims that the importance of math skills in the real world also places what she calls an “unearned privilege” for those who are good at it. Because most math teachers in the United States are white, white people stand to benefit from their grasp of the subject disproportionate to members of other races. Are we really that smart just because we do mathematics?” she asks, raising the question as to why math professors get more grants than “social studies or English” professors.

There is no 1st Amendment right to speak on a college campus - “Freedom of thought and speech on the American campus are under attack,” Sessions said at Georgetown last month, in a speech that referred to several incidents that have become touchstones for free speech advocates — including the the controversy that erupted at Berkeley when right-wing columnist Ben Shapiro spoke, and the shouting down of The Bell Curve author Charles Murray at Middlebury College last spring. Especially deplorable was the fact one of Murray’s hosts, a professor, was injured in a post-speech scuffle. Seen in its best light, the controversy about free speech in American universities bespeaks fear that the next generation of Americans will not have been educated to engage in public debate, which necessarily entails encounter with alien and frequently outrageous perspectives. That is a problem well worth addressing, especially as our politics grows more diverse and more polarized. Universities do have a great responsibility to educate students for citizenship in a country violently split along lines of ideology and identity.  The language and structure of First Amendment rights, however, is a misguided way to conceptualize the complex and subtle processes that make such education possible. First Amendment rights were developed and defined in order to protect the political life of the nation. But life within universities is not a mirror of that life.  By guaranteeing that all can participate in the formation “of that public opinion which is the final source of government in a democratic state,” the First Amendment lies at the foundation of our self-governance.  But here we are talking about public discourse: the free flow of ideas in newspapers, in public squares, on debate stages, on theatrical stages, in art galleries and concert halls. Outside of the sphere of public discourse, equality is not so obviously desirable.

The Finger-Pointing at the Finance Firm TIAA - Gretchen Morgenson, NYT - In the treacherous world of finance, where investors confront biased advice, hidden costs and onerous fees, one investment giant seems to stand apart — the Teachers Insurance and Annuity Association, also known as TIAA. Calling itself a “mission-based organization” with a “nonprofit heritage,” TIAA has enjoyed a reputation as a selfless steward of its clients’ assets for almost a century. TIAA’s clients — educators, researchers and public service workers, many inexperienced with finance — consider the company a trusted partner without whom they could not hope to retire comfortably. That many customers revere it is not an overstatement. Now, TIAA’s image as a benevolent provider of investment advice is in question. Several legal filings — including a lawsuit by TIAA employees with money under the company’s management, and a whistle-blower complaint by a group of former workers — say it pushes customers into products that do not add value and may not be suitable but that generate higher fees. Such practices would violate the legal standard that applies to retirement accounts and securities laws governing investment advisers. And while TIAA contends that its operations are untainted by conflicts because its 855 financial advisers and consultants do not receive sales commissions, former employees, in interviews and in lawsuits, disagree. They say the company rewards its sales personnel with bonuses when they steer customers into more expensive in-house products and services. The accusations are notable not only because TIAA tells clients that it puts them first, but also because it is one of the world’s larger money managers, with almost $1 trillion in assets under management. Today, five million people — most of them college professors, nurses, administrators, researchers and government employees — entrust their money to TIAA.

Kentucky pension reform: Bevin proposal would move workers to 401(k)-like plans – After months of planning and closed-door negotiations, Gov. Matt Bevin and GOP legislative leaders on Wednesday released a plan that they say begins to tackle Kentucky’s multibillion-dollar pension debt while honoring promises to retirees and public employees.As expected, the plan calls for transitioning most public employees from traditional pension plans to 401(k)-like plans – but it does so in a much more gradual way than recommended by the Bevin administration’s pension consultant.The plan protects the benefits of current retirees, Bevin said, and fulfills "promises that have been made to our public employees."But it cuts benefits of current employees and teachers in some ways. And many leaders of employee and retiree groups raised the prospect that if the changes become law they would be challenged in court — particularly over a plan that would move current teachers and most public employees into 401(k)-type plans after 27 years of service."The bottom line is this plan will cost taxpayers significantly more money each year and we'll have reduced benefits for teachers, so why would any Kentuckian want the legislature to approve that?" said Brent McKim, president of the Jefferson County Teachers Association.But at a news conference where he unveiled the plan with House Speaker Jeff Hoover and Senate President Robert Stivers at his side, Bevin said the plan protects all employee contractural rights.Moreover, the governor said the plan addresses the financial crisis in a way that stabilizes the pension system and assures retirement benefits can be paid into the future."If you are a retiree, if you are working to be a retiree at some point, you should be rejoicing,” Bevin said. “... It guarantees by law that your pension is going to be funded. There will be no more kicking of the can down the road.”

Americans Are Retiring Later, Dying Sooner and Sicker In-Between  - The U.S. retirement age is rising, as the government pushes it higher and workers stay in careers longer.  But lifespans aren’t necessarily extending to offer equal time on the beach. Data released last week suggest Americans’ health is declining and millions of middle-age workers face the prospect of shorter, and less active, retirements than their parents enjoyed.  Here are the stats: The U.S. age-adjusted mortality rate—a measure of the number of deaths per year—rose 1.2 percent from 2014 to 2015, according to the Society of Actuaries. That’s the first year-over-year increase since 2005, and only the second rise greater than 1 percent since 1980.  At the same time that Americans’ life expectancy is stalling, public policy and career tracks mean millions of U.S. workers are waiting longer to call it quits. The age at which people can claim their full Social Security benefits is gradually moving up, from 65 for those retiring in 2002 to 67 in 2027.  Almost one in three Americans age 65 to 69 is still working, along with almost one in five in their early 70s. Postponing retirement can make financial sense, because extended careers can make it possible to afford retirements that last past age 90 or even 100. But a study out this month adds some caution to that calculation. Americans in their late 50s already have more serious health problems than people at the same ages did 10 to 15 years ago, according to the journal Health Affairs.The study showed the number of middle-age Americans with ADL limitations has jumped: 12.5 percent of Americans at the current retirement age of 66 had an ADL limitation in their late 50s, up from 8.8 percent for people with a retirement age of 65. At the current retirement age of 66, a quarter of Americans age 58 to 60 rated themselves in “poor” or “fair” health. That’s up 2.6 points from the group who could retire with full benefits at 65, the Michigan researchers found. Cognitive skills have also declined over time. For those with a retirement age of 66, 11 percent already had some kind of dementia or other cognitive decline at age 58 to 60, according to the study. That’s up from 9.5 percent of Americans just a few years older, with a retirement age between 65 and 66.

Second red state withdraws ObamaCare waiver aimed at shoring up market | TheHill: Iowa withdrew a waiver request to the federal government Monday that was aimed at helping the state's insurance market, the second Republican-governed state to do so. Gov. Kim Reynolds (R) said in a joint statement with Centers for Medicare & Medicaid Services Administrator Seema Verma that ObamaCare's rules are too restrictive for the request to work. The proposal would have expanded ObamaCare subsidies to higher-income earners and helped insurers who cover patients with high medical costs.“Iowa pursued state flexibility through the Stopgap Measure, but ultimately, Obamacare is an inflexible law that Congress must repeal and replace," Reynolds and Verma said. Iowa officials said the plan would have stabilized the state's individual insurance market, where only one insurer is set to sell plans next year. That insurer, Medica, plans to increase premiums by an average of more than 57 percent. The Washington Post reported last month that President Trump told a top official within his administration to reject the proposal. The Trump administration also sent a letter to Iowa officials last week indicating that the state would need to come up with substantial funding if the waiver were to be approved. Oklahoma also recently withdrew a waiver request to the federal government that would have stabilized its health insurance markets. The Oklahoma health commissioner said that approving the waiver would have helped more than 130,000 Oklahoma residents and reduced premiums by 30 percent. 

What is the Matter With the Iowa ACA? -- The story as it is told is “Iowa’s Healthcare Market has imploded. Companies have gone out of business, lost money, premiums increased, policies canceled, etc. “ With Obamacare’s fifth open-enrollment season kicking off on Nov. 1, the consequences are playing out across one of America’s most politically influential states as residents struggle to maintain coverage.” It has been difficult to implement the ACA with the issues with the healthcare exchanges, Republicans badmouthing the ACA, and its first attempt at a US healthcare policy. Just one insurer is willing to sell policies in 2018. Why did it end up this way and what caused it?Gov. Kim Reynolds: “Obamacare is unaffordable, unsustainable and unworkable and Obamacare has driven out consumer choice and competition.”Trump: “Obamacare is finished. It’s dead. It’s gone. There is no such thing as Obamacare anymore.”Vanessa Beauregard a resident of Iowa: “I cannot believe our politicians and government have put us in this situation. It’s just not right when you’re not a deadbeat.”Dave Anderson, a health insurance expert at Duke University. “It’s hard to build inexpensive networks when the only hospital within 30 miles has you over a barrel.”  Aaron Todd, chief strategy officer for the Iowa Primary Care Association.: “There wasn’t a political will to make hard decisions or move people. They basically saw [keeping the noncompliant plans] as a relief valve.”Nick Gerhart, who authorized the noncompliant plans to remain in the market as the state’s insurance commissioner. : “Why would I stand in the way of people keeping their insurance? It was a viable option. What does it look like if they’re in? The [premium] increases still would have been significant.” Disagreeing with these being a destabilizing factor.  Here is the story as I know it, a half commitment to the ACA with a lot of resistance from Republicans.

U.S. Uninsured Rate Rises to 12.3% in Third Quarter - Gallup -- The percentage of U.S. adults lacking health insurance rose in the third quarter of 2017 to 12.3%, up 0.6 percentage points from the previous quarter and 1.4 points since the end of 2016. The uninsured rate is now the highest recorded since the last quarter of 2014 when it was 12.9%.  The uninsured rate, measured by Gallup and Sharecare since 2008, had fallen to a record low of 10.9% in the third and fourth quarters of 2016. However, the 1.4-point increase in the percentage of adults without health insurance since the end of last year represents nearly 3.5 million Americans who have entered the ranks of the uninsured.Still, the uninsured rate remains well below its peak of 18.0% measured in the third quarter of 2013, prior to the implementation of the Affordable Care Act's (ACA) mandated healthcare exchanges and the associated requirement that all adults have health insurance or be subject to a fine.Several marketplace factors could be contributing to the growth of the uninsured rate since 2016. Some insurance companies have stopped offering insurance through the exchanges, and the lack of competition could be driving up the cost of plans for consumers. As a result, the rising insurance premiums could be compelling some Americans to forgo insurance, especially those who fail to qualify for federal subsidies.Uncertainty about the healthcare law also may be driving the increase. Congressional Republicans' attempts to replace the healthcare law may be causing consumers to question whether the government will enforce the penalty for not having insurance. The results for the third quarter of 2017 are based on more than 45,000 interviews with U.S. adults aged 18 and older from July 1 to Sept. 30, conducted as part of the Gallup-Sharecare Well-Being Index. Gallup and Sharecare have asked a random sample of at least 500 U.S. adults each day since January 2008 whether they have health insurance.

Most popular Obamacare plans cost average of 34 percent more for 2018 - The average price of the most popular types of Obamacare health plans sold on the federal insurance marketplace will be at least 34 percent higher in 2018, according to an analysis released Wednesday. The Avalere Health analysis also found lower — but still double-digit — average price hikes for the other types of Obamacare plans, which go on sale Nov. 1. Continued uncertainty in Obamacare markets, and the Trump administration's threats and eventual decision to cut off key payments to insurers are fueling the higher prices, Avalere said. Many Obamacare customers will be insulated from those sharply higher rates because their premiums are subsidized by the federal government. The subsidies can significantly reduce what a customer directly pays in premiums, with many subsidized customers being able to find a plan for $100 per month or less. More than 80 percent of Obamacare customers who buy plans on government marketplaces get such subsidies, in the form of tax credits, because they have low or moderate incomes. But customers who do not qualify for subsidies will get hit with the full impact of the price hikes. In many states, nonsubsidized customers will have to shell out more than $100 per month more than what they currently pay for their plans. About 18 million people who do not get health coverage through a job, Medicare or Medicaid are covered by the types of individual health plans whose prices Avalere analyzed. And about 11 million of those people buy coverage through a government-run exchange. The health consultancy's report highlighted price changes for so-called silver plans, which are purchased by more than 70 percent of customers who buy coverage on government-run health exchanges. Silver plans pay for 70 percent of their customers' health costs: such as surgeries, hospital stays, medical tests and prescription drugs. Customers are responsible for paying for the remaining share of charges.

Soaring Premiums Mean Soaring Risks for Obamacare -- Buying insurance on the Obamacare exchanges? Prepare to see your bill rise by about a third. A new report from the consulting firm Avalere predicts large rate hikes for the mid-priced “Silver” plans that form the backbone of the exchanges, with somewhat smaller increases in the cost of “Bronze” and “Gold” plans. That’s a national average of course, and only for the most popular policies. In reality, the premium hikes will vary by state and by type of coverage. If you live in Alaska, you’ll actually see your premiums fall by around 25 percent (though thanks to the unique challenges posed by Alaska’s geography, they’ll still be relatively expensive). In Iowa, on the other hand, a Silver plan will cost you 70 percent more than it did last year. Avalere cites a number of factors that are driving up premiums. Many are the same problems we’ve been seeing for years, the product of bad program design: lower-than-anticipated enrollment in the marketplace and limited insurer participation. Some are a result of policy uncertainty: not knowing exactly what the government is going to do about Obamacare, insurers want to hedge their bets, so they don’t lose a fortune if the Trump administration suddenly decides to take off in a new direction. And then, of course, there are the CSR payments. . By law, insurers have to sell lower-income consumers (people whose incomes are under 250 percent of the poverty line) special policies with lower out-of-pocket expenses. Alas, in their haste to push the law through Congress, Democrats neglected to provide a funding stream to pay insurers for this special subsidy, and when Republicans took over Congress, they refused to appropriate money for that purpose. The Obama administration kept making payments to insurers to cover the added cost of those policies, but the legal basis for doing so was pretty dubious. Trump has been threatening to cut off the slush fund for quite some time, and a couple weeks ago, he finally made good on that threat. That has put insurers in something of a bind: If they operate on the exchanges, they have to sell poorer consumers those policies with lower out-of-pocket expenses. But they can’t charge any more for them than any other Silver plan. One obvious solution is to raise the price of all Silver policies, and our nation’s insurers have embraced the obvious.

US hospitals wrestle with shortages of drug supplies made in Puerto Rico   - One of the workhorses of Clarke County Hospital, a 25-bed facility in rural Osceola, Iowa, is an unassuming product known as a Mini-Bag. It is a small, fluid-filled bag used by nurses to dilute drugs, like antibiotics, so that they can be dripped slowly into patients’ veins. The bag’s ease of use has made it popular in small facilities like Clarke County, where the pharmacy is closed on nights and weekends, as well as at nationally known hospitals like the Cleveland Clinic, which uses 34,000 of the bags every month. “It’s a safe, sterile, stable way to get medications to patients,” said Michele Evink, the pharmacy manager at Clarke County Hospital. Now, hospital pharmacists across the country are racing to find alternatives — which themselves are becoming scarce — after Hurricane Maria halted production at the factory in Puerto Rico where Baxter, the manufacturer, makes the product.The bag shortage is the most significant to be directly linked to the effects of the hurricane but others are likely to follow. In addition to creating a humanitarian crisis on the island, the storm knocked out production at the Puerto Rican factories that make vital drugs, medical devices and medical supplies that are used around the world. Some device and supply companies have already begun limiting shipments of certain items from the island, ranging from mesh for repairing hernias to surgical scalpels and tools used in orthopedic surgery. On Monday, Dr. Scott Gottlieb, the commissioner of the Food and Drug Administration, questioned companies’ statements that their plants were back in operation: “We understand that manufacturing is running at minimal levels, and certainly far from full production,” Dr. Gottlieb said in prepared remarks published Monday by the House Energy and Commerce Committee.

Statement by FDA Commissioner Scott Gottlieb, M.D. on medical device manufacturing recovery in Puerto Rico - During the weeks since Hurricanes Irma and Maria devastated the infrastructure of Puerto Rico, the U.S. Food and Drug Administration has addressed is the potential for shortages of critical medical products. The FDA has been monitoring more than 40 drug products and working closely with dozens of pharmaceutical and medical device companies to help these important facilities get back online; enabling employees to return to work and manufacturers to ramp up production of medical products used by all Americans. I’ve spoken recently about the importance of the medical product manufacturing presence in Puerto Rico, both to the economic well-being of the island, and to the health of all Americans. The FDA has provided information on the scope of drug manufacturing in Puerto Rico and our concerns around the potential for critical drug shortages resulting from impacts to these facilities. Unfortunately, the devastation caused by the hurricanes to Puerto Rico’s medical product manufacturing sector goes beyond the effects on pharmaceutical companies. The FDA has been working equally hard to minimize shortages of medical devices manufactured in facilities on the island. There are currently more than 50 medical device manufacturing plants in Puerto Rico, employing about 18,000 people. Collectively, they manufacture more than 1,000 different kinds of medical devices. These include simple but essential products like surgical instruments and dental products as well as highly complex devices such as cardiac pacemakers and insulin pumps. To date, we’re monitoring about 50 types of medical devices manufactured in Puerto Rico that are critically important to patient care — because they may be life-sustaining or life-supporting and/or because there may be the single manufacturer of that device type. The FDA is working closely with about 10 manufacturers – some of which are the sole manufacturer of a certain device type – to prevent medical device product shortages across the U.S. We are particularly focused on blood-related medical devices.

The Secretive Family Making Billions From the Opioid Crisis -- The descendants of Mortimer and Raymond Sackler, a pair of psychiatrist brothers from Brooklyn, are members of a billionaire clan with homes scattered across Connecticut, London, Utah, Gstaad, the Hamptons, and, especially, New York City. It was not until 2015 that they were noticed by Forbes, which added them to the list of America’s richest families. The magazine pegged their wealth, shared among twenty heirs, at a conservative $14 billion. (Descendants of Arthur Sackler, Mortimer and Raymond’s older brother, split off decades ago and are mere multi-millionaires.) To a remarkable degree, those who share in the billions appear to have abided by an oath of omertà: Never comment publicly on the source of the family’s wealth. That may be because the greatest part of that $14 billion fortune tallied by Forbes came from OxyContin, the narcotic painkiller regarded by many public-health experts as among the most dangerous products ever sold on a mass scale. Since 1996, when the drug was brought to market by Purdue Pharma, the American branch of the Sacklers’ pharmaceutical empire, more than two hundred thousand people in the United States have died from overdoses of OxyContin and other prescription painkillers. Thousands more have died after starting on a prescription opioid and then switching to a drug with a cheaper street price, such as heroin. Not all of these deaths are related to OxyContin—dozens of other painkillers, including generics, have flooded the market in the past thirty years. Nevertheless, Purdue Pharma was the first to achieve a dominant share of the market for long-acting opioids, accounting for more than half of prescriptions by 2001.

Pharmaceutical Founder Arrested In Alleged Nationwide Opioid Scheme – NPR - On the same day President Trump declared the opioid epidemic a public health emergency, the co-founder of a prominent opioid medication manufacturer has been arrested on fraud and racketeering charges. John Kapoor, former CEO of Insys Therapeutics, has been charged with conspiring to push the company's signature drug for unacceptable uses through a series of bribes and kickbacks.Subsys, as the drug is known, transmits the extremely powerful narcotic fentanyl in spray form, allowing it to be placed beneath the tongue for fast, potent pain relief. It is meant only for treating cancer patients suffering from severe pain. But according to prosecutors, Kapoor and several other former high-ranking executives at the company conspired to bribe doctors to write "large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer." They also allegedly "conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients."

Scientists Can Read a Bird’s Brain and Predict Its Next Song.  Next up, predicting human speech with a brain-computer interface. Entrepreneurs in Silicon Valley this year set themselves an audacious new goal: creating a brain-reading device that would allow people to effortlessly send texts with their thoughts.In April, Elon Musk announced a secretive new brain-interface company called Neuralink. Days later, Facebook CEO Mark Zuckerberg declared that “direct brain interfaces [are] going to, eventually, let you communicate only with your mind.” The company says it has 60 engineers working on the problem.It’s an ambitious quest—and there are reasons to think it won’t happen anytime soon. But for at least one small, orange-beaked bird, the zebra finch, the dream just became a lot closer to reality.That’s thanks to some nifty work by Timothy Gentner and his students at the University of California, San Diego, who built a brain-to-tweet interface that figures out the song a finch is going to sing a fraction of a second before it does so. “We decode realistic synthetic birdsong directly from neural activity,” the scientists announced in a new report published on the websitebioRxiv. The team, which includes Argentinian birdsong expert Ezequiel Arneodo, calls the system the first prototype of “a decoder of complex, natural communication signals from neural activity.” A similar approach could fuel advances towards a human thought-to-text interface, the researchers say.

These baby foods and formulas tested positive for arsenic, lead and BPA in new study -- An alarming study released Wednesday found many baby food products test positive for arsenic, including 80% of infant formulas. And, that's not the only dangerous contaminate found. The Clean Label Project, a nonprofit advocating for transparent labeling, tested baby food, infant formulas, toddler drinks and snacks purchased within the past 5 months. The group, which did not publish findings in a peer-reviewed journal, looked at top-selling formulas and baby food using Nielsen data, and also included emerging national brands. After about 530 baby food products were tested, researchers found 65% of products tested positive for arsenic, 36% for lead, 58% for cadmium and 10% for acrylamide. All of these chemicals pose potential dangers to developing infants.  Jennifer Lowry, pediatrician and toxicologist at Children’s Mercy Hospital in Kansas City, Mo., who is not affiliated with the research, said these chemicals can affect fine motor skills and cognition.  Mainstream brands including Gerber, Enfamil, Plum Organics and Sprout were among the worst offenders — scoring two out of five in the Clean Label Project's report card for toxic metals. Plus, 60% of products claiming to be "BPA free" tested positive for the industrial chemical bisphenol A. The quantities of contaminates range, but some products tested positive for up to 600 parts of arsenic per billion. That's far more than just trace amounts.  Arsenic was the most common contaminate spotted in the Clean Label Project study. Nearly 80% of infant formula samples tested positive for arsenic. The toxin is associated with developmental defects, cardiovascular disease, neurotoxicity, diabetes and even cancer, according to the World Health Organization.

In the U.S. market for human bodies, anyone can dissect and sell the dead - The company, Southern Nevada Donor Services, offered grieving families a way to eliminate expensive funeral costs: free cremation in exchange for donating a loved one’s body to “advance medical studies.” Outside Southern Nevada’s suburban warehouse, the circumstances were far from comforting. In the fall of 2015, neighboring tenants began complaining about a mysterious stench and bloody boxes in a Dumpster. That December, local health records show, someone contacted authorities to report odd activity in the courtyard. Health inspectors found a man in medical scrubs holding a garden hose. He was thawing a frozen human torso in the midday sun.  As the man sprayed the remains, “bits of tissue and blood were washed into the gutters,” a state health report said. The stream weaved past storefronts and pooled across the street near a technical school.   Southern Nevada, the inspectors learned, was a so-called body broker, a company that acquires dead bodies, dissects them and sells the parts for profit to medical researchers, training organizations and other buyers. The torso on the gurney was being prepared for just such a sale. Each year, thousands of Americans donate their bodies in the belief they are contributing to science. In fact, many are also unwittingly contributing to commerce, their bodies traded as raw material in a largely unregulated national market.

Madagascar Hospitals On High Alert: "No One Is Safe" From The Black Plague -- Travelers are being warned to keep their distance from areas of Madagascar affected by the bubonic plague. As the outbreak worsens, some doctors are even warning that “no one is safe” from the disease.  The outbreak of the black plague in Madagascar has so far killed 97 people, and doctors are warning that it will be continuing to spread and worsen, meaning no one is safe. Health officials say the disease, which contributed to the deaths of more than 50 million people in Europe during the Middle Ages, has spread from rural areas to the more urban areas not usually affected. Hundreds of cases are reported on the tropical island every year, but experts are warning the epidemic is “much more dangerous” than in previous years. Officials have reported infections in 17 of the island nation’s 22 regions since the outbreak started in August. And the number of cases is growing by the day, said Elhadj As Sy, the secretary general of the International Federation of Red Cross and Red Crescent Societies (IFRC) as the nation put all hospitals on high alert. The hospitals have also begun implementing preventative measures with attempts to stall the spread of the bacterial infection. Last week, less than 60 people had died and around 600 had been infected. Now, there are 911 confirmed cases in addition to the almost 100 deaths. While cases of bubonic plague occur in Madagascar nearly every year, the much more dangerous and deadly pneumonic plague has never been so prevalent. It arrived earlier than expected this year, and has become much more contagious with it being transmitted from person to person through the air. Pneumonic plague is the most life-threatening form of the infection caused by the manifestation of a Yersinia pestis bacterial infection. Although the black plague can be treated effectively with antibiotics, the incubation time of this bacteria is incredibly short. Death often occurs within 12-24 hours of becoming infected. The bubonic strain of the disease is spread through the bites of infected fleas, whereas the more contagious and deadly pneumonic type is spread through the coughing or sneezing of an infected person.

Human Exposure to Glyphosate Has Skyrocketed 500% Since Introduction of GMO Crops - Glyphosate —the most widely applied herbicide worldwide and the controversial main ingredient in Monsanto 's star product Roundup —is not just found on corn and soy fields. This pervasive chemical can be detected in everyday foods such as cookies, crackers, ice cream and even our own urine . In fact, researchers from the University of California San Diego School of Medicine found that human exposure to glyphosate has increased approximately 500 percent since 1994, when Monsanto introduced its genetically modified ( GMO ) Roundup Ready crops in the United States.  "Our exposure to these chemicals has increased significantly over the years but most people are unaware that they are consuming them through their diet," For the study , published Tuesday in JAMA , the research team analyzed the urine excretion levels of glyphosate and aminomethylphosphonic acid (AMPA) in 100 people from a Southern California community over five clinic visits between 1993 to 1996 and 2014 to 2016. AMPA is one of the primary degradation products of glyphosate. "The data compares excretion levels of glyphosate and its metabolite aminomethylphosphonic acid in the human body over a 23-year time span, starting in 1993, just before the introduction of genetically modified crops into the United States," Mills explained. "What we saw was that prior to the introduction of genetically modified foods, very few people had detectable levels of glyphosate. As of 2016, 70 percent of the study cohort had detectable levels."  Of study participants with detectable levels of these chemicals, the mean level of glyphosate increased from 0.203 micrograms per liter in 1993-1996 to 0.449 micrograms per liter in 2014-2016. For AMPA, the mean level increased from 0.168 micrograms per liter in 1993-1996 to 0.401 micrograms per liter in 2014 to 2016.

US study finds rise in human glyphosate levels - Levels of glyphosate, a controversial chemical found in herbicides, markedly increased in the bodies of a sample population over two decades, a study published Tuesday in a US medical journal said.  The increase dated from the introduction of genetically-modified glyphosate-tolerant crops in the United States in 1994. The findings published in the Journal of the American Medical Association (JAMA) came as the European Commission proposed on Tuesday to renew the license for glyphosate for a shorter than usual five to seven years. That decision by the EU's executive arm followed a growing uproar over the alleged danger of its use. Researchers compared the levels of glyphosate in the urine of 100 people living in California. It covered a 23-year period starting from 1993, the year before the introduction of genetically-modified crops tolerant to Roundup. Glyphosate-containing Roundup, produced by US agro giant Monsanto, is one of the world's most widely-used weedkillers. "Prior to the introduction of genetically modified foods, very few people had detectable levels of glyphosate," said Paul Mills, of the University of California at San Diego School of Medicine, the study's principal author. Among the study group, detectable amounts increased from an average of 0.20 micrograms per liter in 1993-1996 to an average of 0.44 micrograms in 2014-2016. "Our exposure to these chemicals has increased significantly over the years but most people are unaware that they are consuming them through their diet," Mills said. Roundup was initially used on genetically modified soy and corn, but it is also sprayed on a substantial portion of wheat and oats grown in the US, he said. In July, California listed glyphosate as carcinogenic, and the World Health Organization International Agency for Research on Cancer called it "probably carcinogenic" in 2015. Glyphosate critics, led by environmental activist group Greenpeace, are calling for an outright ban in Europe. On Monday activists handed the EU a petition signed by more than 1.3 million people backing such a move.

EU on brink of historic decision on pervasive glyphosate weedkiller -- A pivotal EU vote this week could revoke the licence for the most widely used herbicide in human history, with fateful consequences for global agriculture and its regulation.Glyphosate is a weedkiller so pervasive that its residues were recently found in 45% of Europe’s topsoil – and in the urine of three quarters of Germans tested, at five times the legal limit for drinking water.Since 1974, almost enough of the enzyme-blocking herbicide has been sprayed to cover every cultivable acre of the planet. Its residues have been found in biscuits, crackers, crisps, breakfast cereals and in 60% of breads sold in the UK.But environmentalists claim that glyphosate is so non-selective that it can even kill large trees and is destructive to wild and semi-natural habitats, and to biodiversity. The CEO of the Sustainable Food Trust, Patrick Holden, has said that a ban “could be the beginning of the end of herbicide use in agriculture as we know it, leading to a new chapter of innovation and diversity”. But industry officials warn of farmers in open revolt, environmental degradation and crops rotting in the fields if glyphosate is banned.

Misplaced monarchs: Clusters of butterflies stuck up north -  Monarch butterflies, those delicate symbols of spring and summer, should mostly be in Texas by now, winging their way to Mexico for the winter. But Darlene Burgess keeps seeing colorful clusters of them — and she lives in Canada."As nice as this is to see, I really wish I wouldn't see it because they're running out of time," said Burgess, who does evening monarch counts at Point Pelee National Park in Canada. "It's really not good for them." It's not just Canada. Swarms have been seen elsewhere, including near Cape May , New Jersey, at levels more normal for late September and early October. Scientists say tens of thousands of the butterflies are likely to be stranded far north of where they'd normally be this time of year because of the unusually warm weather and strong winds that have kept them from migrating south, said biologist Elizabeth Howard, director of the monarch tracking non-profit Journey North . Monarchs typically arrive in Mexico around Nov. 1. This many "stragglers" in Ontario and elsewhere is "definitely new territory for us," said University of Kansas biology professor Chip Taylor, director of Monarch Watch.Some monarchs were born late, some didn't move south because temperatures were warm, and some couldn't move south because winds were coming from the south for weeks and they couldn't fly through them. Now they may be stuck because temperatures are starting to fall. Howard said their muscles don't work when temperatures dip into the 50s. And if they don't freeze, they are likely to starve to death because much of the plants they need to feed their long voyage south are already gone for the season, biologists said.

Insectageddon:  Farming Is More Destructive than Climate Breakdown --  George Monbiot -- Which of these would you name as the world’s most pressing environmental issue? Climate breakdown, air pollution, water loss, plastic waste or urban expansion? My answer is none of the above. Almost incredibly, I believe that climate breakdown takes third place, behind two issues that receive only a fraction of the attention.  One is industrial fishing, which, all over the blue planet, is now causing systemic ecological collapse. The other is the erasure of non-human life from the land by farming.  And perhaps not only non-human life. According to the UN Food and Agriculture Organisation, at current rates of soil loss, driven largely by poor farming practice, we have just 60 years of harvests left. The impact on wildlife of changes in farming practice (and the expansion of the farmed area) is so rapid and severe that it is hard to get your head round the scale of what is happening. A study published this week in the journal Plos One reveals that flying insects surveyed on nature reserves in Germany have declined by 76% in 27 years. The most likely cause of this Insectageddon is that the land surrounding those reserves has become hostile to them: the volume of pesticides and the destruction of habitat have turned farmland into a wildlife desert.  But anyone of my generation (ie in the second bloom of youth) can see and feel the change. . This year I tried to find some caterpillars for my children to raise. I spent the whole summer looking and, aside from the cabbage whites on our broccoli plants, found nothing in the wild but one garden tiger larva. Yes, one caterpillar in one year. Insects, of course, are critical to the survival of the rest of the living world. Knowing what we now know, there is nothing surprising about the calamitous decline of insect-eating birds. Those flying insects – not just bees and hoverflies but species of many different families – are the pollinators without which a vast tract of the plant kingdom, both wild and cultivated, cannot survive. The wonders of the living planet are vanishing before our eyes.

The Primal Mammalian Movement - One of the mainstream media’s primary tasks is to convince each individual media consumer that he’s all alone with any critical or dissenting thought he might have, so it’s best to suppress those thoughts. It’s part of the “softer” neoliberal alternative to fascism: Rather than de jure censorship and violent repression of dissent, get the mass of atomized individuals each to censor himself, use crimestop, never listen to thoughtcrime or entertain any cognitive dissonance. Hierarchical, professionalized science, including its hyperspecialization, is inherently authoritarian and pro-status quo. This is especially true of the technocracy paradigm under which science is assumed by almost all practitioners and fans to be equivalent to the development of technology. Under this paradigm, science = engineering. Most of all it’s true under the corporate science paradigm where this tech development mission automatically is assumed to be in the service of profit-seeking corporations. Putting that together, we have the modern scientific paradigm where what Kuhn called “normal science” quite simply is what otherwise would be called “corruption”. I propose to overthrow this scientific paradigm and replace it with a paradigm of science rededicated to seeking knowledge for its own sake and for the well-being of humanity and the Earth. In the same way that every branch of politics must be socialist if it’s to have any legitimacy at all, so all branches of science must become the ecological versions of their respective disciplines. Therefore the ecological sciences, inflected by chaos theory, must become paramount. In the same way, technological design must adhere to the ecology rather than strive for domination and control. In particular, only agroecology offers a way for humanity to restore the soil, avert the worst of climate chaos and all other environmental crises, eat sufficiently and well, and organize society in a way combining the best of reason, humaneness, and ecological holism. This is the vision of food sovereignty.

Food ruined by drought could feed more than 80m a day, says World Bank - The food produce destroyed by droughts would be enough to feed a country with a population the size of Germany’s every day for a year, the World Bank has reported.In a new study, it said, the “shockingly large and often hidden” consequences of prolonged periods without rain threatened to stunt the growth of children and condemn them to a lifetime of poverty.The report said the lost food production related to drought would feed more than 80 million people every day for a year, adding that while floods and storm surges had an immediate impact, droughts were “misery in slow motion”. The World Bank said women that were born in droughts bore the marks for their entire lives, growing up mentally and physically stunted, undernourished and unwell.New data shows that women born during droughts had less access to education, had more children and were more likely to suffer from domestic violence. Problems caused by droughts were passed on to the next generation, leading to a vicious cycle of poverty.Droughts reduce crop yields, forcing farmers to expand into nearby forests, the Bank said, adding: “Since forests act as a climate stabiliser and help regulate water supplies, deforestation decreases water supply and exacerbates climate change.” For firms, the economic cost of a drought was four times as big as a flood, it said.Guangzhe Chen, senior director of the World Bank’s water global practice, said: “These impacts demonstrate why it is increasingly important that we treat water like the valuable, exhaustible, and degradable resource that it is. We need to better understand the impacts of water scarcity, which will become more severe due to growing populations and a changing climate.” The World Bank said that many of the countries affected by drought overlapped with areas already facing large food deficits and that were classified as fragile, heightening the need to tackle the problem.

Little Has Changed For Flint Residents Forced To Pay For Poisoned Water - Nearly 1,250 days ago, a major water crisis hit Flint, Michigan. Complaints by residents, matched with studies showing more evidence of serious health issues, continue to emerge. Yet, even as problems persist, authorities and officials involved in fomenting the crisis have yet to be held accountable. Lead poisoning in the water brought about the rise of childhood development issues and long-term brain damage in Flint, but according to a paper from David Slusky of Kansas University and Daniel Grossman of West Virginia University, fetal deaths are on the rise. The authors conclude that between 198 and 276 more children would have been born—an estimated 58% increase in fetal death rates—had Flint officials not switched the city’s water source from Detroit River to the Flint River. Their findings suggest that a “more lax regulatory environment in the context of drinking water may have substantial unforeseen effects on maternal and infant health, including large reductions in the number of births.” Grossman and Slusky’s research is part of a growing number of studies on the devastating effects of Flint’s water crisis. Melissa Mays, a community organizer and founder of the clean water advocacy group Water You Fighting For, was directly impacted by water contamination. Flint residents are still being forced to pay for water bills, Mays said. “We had a 65 percent credit for a short time, but the state took that away. So we still pay the highest rates in the United States for poisoned water. Now the state is threatening to take people’s homes by turning their unpaid water bills into a lien on their properties.” “I was one of 8,002 residents who received this threat. So the poisoned community faces tax foreclosures because we refuse to pay for poison or simply cannot afford it. We still live off of bottled water because unfiltered water is too dangerous and the filters don’t remove everything.”

Shocking photo shows Caribbean Sea being ‘choked to death by human waste’ - A photographer has captured the damage being done to the planet's oceans with a shocking “sea of plastic and styrofoam” image taken near a tranquil Caribbean island.  Caroline Power, who specialises in underwater photography, has dedicated her career to highlighting the damage plastic waste is doing to our oceans. She said witnessing the plastic blanket of forks, bottles and rubbish between the islands Roatan and Cayos Cochinos, off the coast of Honduras, was “devastating”.“To see something that I care so deeply for being killed, slowly choked to death by human waste was devastating,” she told The Telegraph.“Once the trash is in the ocean, it is incredibly difficult and costly to remove. The key is to stop the trash before it enters the ocean.  “In order for that to happen, we need to improve waste management, environmental education and recycling facilities on a global scale. This is a developed nation (first world) problem as well.”The worst of the rubbish the dive team found was about 15 miles off the coast of Roatan heading towards the Cayos Cochinos Marine Reserve“We were on a dive trip to a set of islands that don't quite break the ocean surface. They are one of the most pristine dive sites in this part of the Caribbean,” Ms Power recalled.“The photo of the diver in the water was actually over one of these seamounts. To see an area that is supposed to be pristine covered in garbage and trash was disheartening.”She said they passed through floating garbage for “nearly five miles”, adding: “Everywhere we looked, plastic bags of all shapes and sizes: chip bags, ziplocks, grocery, trash, snack bags, other packaging. Some were whole and the rest were just pieces. Sadly, many turtles, fish, whales, and seabirds will mistake those bits of plastic for food.   “We then reached an area about two miles wide that had multiple trash lines that stretched from horizon to horizon “There was also a seemingly infinite number of plastic forks, spoons, drink bottles, and plates. There were broken soccer balls, toothbrushes, a tv, and so many shoes and flip flops.”

Rivers carry plastic debris into the sea -- Minute plastic particles can be found in the water in virtually every sea and river. This constitutes a serious and growing global environmental problem. There are enormous quantities of input each year and plastic weathers only very slowly. Marine life can be harmed by the tiny plastic particles floating in the water. One example of how this happens is when fish, seabirds or marine mammals mistake the particles for food and consume them. "It is still impossible to foresee the ecological consequences of this. One thing is certain, however: this situation cannot continue," says Dr. Christian Schmidt, a hydrogeologist at the UFZ. "But as it is impossible to clean up the plastic debris that is already in the oceans, we must take precautions and reduce the input of plastic quickly and efficiently."   In this context, large rivers obviously play a particularly large role - not only because they also carry a comparatively large volume of waste on account of their larger discharge. Schmidt says, "the concentrations of plastic, i.e. the quantity of plastic per cubic metre of water are significantly higher in large rivers than small ones. The plastic loads consequently increase at a disproportionately higher rate than the size of the river." The researchers have also calculated that the ten river systems with the highest plastic loads (eight of them are in Asia and two in Africa) - areas in which hundreds of millions of people live, in some cases - are responsible for around 90 percent of the global input of plastic into the sea. "Halving the plastic input from the catchment areas of these rivers would already be a major success", says Schmidt. "To achieve this, it will be necessary to improve the waste management and raise public awareness for the issue."

Prozac in ocean water a possible threat to sea life, PSU study finds - Oregon shore crabs exhibit risky behavior when they're exposed to the antidepressant Prozac, making it easier for predators to catch them, according to a new study from Portland State University (PSU). The study, published in the journal Ecology and Evolution, illustrates how concentrations of pharmaceuticals found in the environment could pose a risk to animal survival. For years, tests of seawater near areas of human habitation have shown trace levels of everything from caffeine to prescription medicines. The chemicals are flushed from homes or medical facilities, go into the sewage system, and eventually make their way to the ocean. In a laboratory, the PSU team exposed Oregon shore crabs to traces of fluoxetine, the active ingredient in Prozac. They found that the crabs increased their foraging behavior, showing less concern for predators than they normally would. They even did so during the day, when they would normally be in hiding. They also fought more with members of their own species, often either killing their foe or getting killed in the process. "The changes we observed in their behaviors may mean that crabs living in harbors and estuaries contaminated with fluoxetine are at greater risk of predation and mortality," said researcher Elise Granek, a professor in PSU's department of Environmental Sciences and Management.

A huge salmon die-off is happening — and our cars might be responsible - Silvery coho salmon are as much a part of Washington state as its flag.. So watching the species die in agony is distressing: Adult coho have been seen thrashing in shallow fresh waters, males appear disoriented as they swim, and females are often rolled on their backs, their insides still plump with tiny red eggs that will never hatch. “Coho have not done well where a lot of human activity impacts their habitat,” said Nat Scholz, a research zoologist for the National Oceanic and Atmospheric Administration. That’s to say the least. A recent study traced a major coho salmon die-off to contaminants from roads and automobiles — brake dust, oil, fuel, chemical fluids — that hitch a ride on storm water and flow into watersheds. The contaminants are so deadly, they kill the salmon within 24 hours. “Our findings are . . . that contaminants in stormwater runoff from the regional transportation grid likely caused these mortality events. Further, it will be difficult, if not impossible, to reverse historical coho declines without addressing the toxic pollution dimension of freshwater habitats,” said the study, published Wednesday in the journal Ecological Applications.    The finding could be a breakthrough in a mystery that has vexed scientists for years. But it fell short of explaining another mystery: Why are coho the only one of five salmon species to be affected? Chinook, sockeye, pink and chum don’t remotely experience the same mortality.

Car Pollution Is Killing Coho Salmon - The grisly video above shows a coho salmon struggling to survive in polluted stormwater runoff on the Duwamish River in Washington. This contaminated water— filled with oil from cars, pesticides, dirt and debris—can kill this particular species of Pacific salmon in hours , according to Puget Soundkeeper Alliance , which posted the clip on Oct. 21.  Sadly, it appears that this fish is one of many coho salmon in the Puget Sound Basin that have died, and will continue to die, from this man-made tragedy.  A new study , published in the Ecological Society of America 's journal Ecological Applications, has found "that contaminants in stormwater runoff from the regional transportation grid likely caused these mortality events."  "Further, it will be difficult, if not impossible, to reverse historical coho declines without addressing the toxic pollution dimension of freshwater habitats," the authors note.  Stormwater runoff comes from rain that falls on streets, parking areas and other developed land and flows directly into waterways. As it flows, the water can collect a potentially toxic cocktail of oil, grease, animal waste, litter, pesticides, fertilizers and other potential pollutants.

Digging in the mud to see what toxic substances were spread by Hurricane Harvey -  The floodwaters from Hurricane Harvey had to go somewhere.  The storm dumped 50 inches of rain on parts of the Houston area in late August. Much of the water made its way through streets and bayous and eventually drained into the Houston Ship Channel, the busy commercial waterway that allows ships to travel between the Gulf of Mexico and industrial facilities around Houston.   "The Port of Houston is saying they had up to 10 feet of storm layer deposited in the ship channel," explains Tim Dellapenna of Texas A&M University, Galveston, who is studying the so-called storm layer of sediment that Harvey left in the bottom of the channel.Sediment can tell scientists a lot about a flood — contaminants get trapped in the mud, and the very amount of mud and sand can reveal things about how the storm played out. "We're actually going to try to do a full screening for dioxins, heavy metals, polyaromatic hydrocarbons," Dellapenna explains. Mercury is a heavy metal. Polyaromatic hydrocarbons are often released by petrochemical operations, like the ones that line the ship channel. Dioxins, in this case, could come from a Superfund toxic waste site nearby. The San Jacinto Waste Pits upstream flooded during the storm, and the Environmental Protection Agency says dioxins may have washed into the channel. Last week, the EPA announced a plan to remove nearly 212,000 cubic yards of contaminated material from the pits to prevent future contamination from floods.

Post-hurricane cleanup could kill more workers than storms themselves -  --  The mainland US death toll for the two hurricanes, which battered Texas and Florida in August and September, now stands at approximately 200 people. But according to Jessica Martinez, executive director of National Council of Occupational Safety and Health (Cosh), a nationwide network of workplace health and safety groups, a greater number of people will die cleaning up in their wake “if more resources aren’t put into health and safety training from post-cleanup”.  And local work safety groups said federal officials have been conspicuously absent from meetings about worker safety. Part of the problem stems from cuts the Trump administration is seeking to make to federal funding given by the Obama administration to labor groups to train undocumented workers in their rights to a healthy and safe workplace. Local groups claimed the Trump administration was also refusing to coordinate with worker groups doing health and safety training for hurricane cleanup workers.  Disaster cleanup work is extremely hazardous. For example, during the hurricanes chemicals got into Houston’s water, including flesh-eating bacteria that already took the life of one woman trying to clean up her home.As well as chemicals released during the storm, hurricane damage knocked loose asbestos, creating a toxic brew of chemicals and mold, which could cause debilitating and deadly long-term problems for those doing the work.Reports of the deaths of cleanup workers have already begun to surface. More than 1,000 workers died from the cleanup work following the 9/11 terror attacks. However, unlike 9/11, where the work was done mainly by firefighters and skilled unionized demolition workers, the cleanup work following Harvey is being done mainly by undocumented day laborers, paid on average $80 a day.Undocumented workers may also be afraid to speak out about work dangers due to fear of deportations, creating a recipe for disaster, according to safety experts. “Workers are going to be facing an enormous amount of pressure to move quickly. People want to move quickly and get back into their houses,” said Garza.

California launching fire clean-up ‘for the record books’  — Government officials outlined plans Monday for what they say will be the largest fire clean-up in California history, aimed at removing hazardous substances and ash from 8,400 homes and other structures burned in Northern California wildfires. With hundreds of anxious homeowners listening, state emergency services official Eric Lamoureux set a target of early 2018 for completing the clean-up and allowing owners to start rebuilding.California has declared a public health emergency in the fire area, in part because of concern for hazardous substances ranging from freon in air-conditioners to asbestos in older homes. The fires that began Oct. 8 have killed at least 42 people, making them the deadliest series of wildfires in state history.“The size and scope of this debris removal process will be one for the record books,” Sen. Mike McGuire, a Democrat from the wine-country town of Healdsburg, told fire survivors at a Santa Rosa community forum. The meeting gave residents some of the first briefings on the clean-up to come.Authorities have warned residents returning to the ruins of their homes to beware of possible hazardous residues in the ashes, and required them to sign forms acknowledging the danger.  Many survivors — at Monday’s forum, and in fire zones where people are returning — say they are confused about what authorities will allow them to do at their blackened properties before the massive waste removal.  “I’d like to know what’s hazardous. What are we looking for?” 

Why has the EPA shifted on toxic chemicals? An industry insider helps call the shots — For years, the Environmental Protection Agency has struggled to prevent an ingredient once used in stain-resistant carpets and nonstick pans from contaminating drinking water. The chemical, perfluorooctanoic acid, or PFOA, has been linked to kidney cancer, birth defects, immune system disorders and other serious health problems. So scientists and administrators in the E.P.A.’s Office of Water were alarmed in late May when a top Trump administration appointee insisted upon the rewriting of a rule to make it harder to track the health consequences of the chemical, and therefore regulate it. The revision was among more than a dozen demanded by the appointee, Nancy B. Beck, after she joined the E.P.A.’s toxic chemical unit in May as a top deputy. For the previous five years, she had been an executive at the American Chemistry Council, the chemical industry’s main trade association. The changes directed by Dr. Beck may result in an “underestimation of the potential risks to human health and the environment” caused by PFOA and other so-called legacy chemicals no longer sold on the market, the Office of Water’s top official warned in a confidential internal memo obtained by The New York Times. The E.P.A.’s abrupt new direction on legacy chemicals is part of a broad initiative by the Trump administration to change the way the federal government evaluates health and environmental risks associated with hazardous chemicals, making it more aligned with the industry’s wishes.It is a cause with far-reaching consequences for consumers and chemical companies, as the E.P.A. regulates some 80,000 different chemicals, many of them highly toxic and used in workplaces, homes and everyday products.

EPA plans to streamline air pollution permitting | TheHill: The Environmental Protection Agency (EPA) on Wednesday said it would reassess the way it issues Clean Air Act pollution permits for new facilities, as a way to reduce regulatory burdens for businesses. As part of a review President Trump mandated earlier this year, the EPA said it would undertake four new initiatives to re-evaluate how it regulates pollution. The most notable of those is the creation of a new task force to reconsider the permitting process for new sources of air pollution under the Clean Air Act, called the New Source Review (NSR).“The potential costs, complexity and delays that may arise from the NSR permitting process can slow the construction of domestic energy exploration, production, or transmission facilities that must undergo review,” the EPA wrote in a 15-page report on its regulations. “In some circumstances, the NSR process discourages the construction of new facilities or modifications of existing ones that could result in greater environmental improvements. Such reactions to the NSR process slows the growth of domestic energy resources and raise energy.” The EPA issues three types of permits for newly built or modified facilities such as power plants, which set site-specific pollution requirements. But commenters told the EPA the review process is lengthy, complex and costly, and suggested a handful of ways to improve the process. 

China Just Shut Down Thousands of Factories to Fight Pollution --In an unprecedented crackdown on pollution, the Chinese government has temporarily shut down tens of thousands of factories in an effort to improve air quality throughout industrial regions in the country.  Thousands of regulators with China 's Ministry of Environment have spread across the country to inspect factories for compliance with strict new laws detailing emission standards. Electricity and gas lines to factories will be suspended until officials can determine whether or not each facility is following the law. Many migrant workers were forced to abandon these factories and look for other work, though the Chinese Premier promised in April that while the closures would mean setbacks, the government would work to transfer these employees instead of laying them off. In 2013, China established a bold plan to measurably improve air conditions by the end of 2017, a deadline whose looming approach has led to drastic measures geared towards hitting those targets at all costs.  These factory closures are occurring alongside large-scale moratoriums on coal use and steel production , which are two of the biggest contributors to air pollution in China's industrial regions. In August, the northern Hebei province announced that these shutdowns would remain in place from October of this year through next March . Air pollution typically spikes during this time, typically referred to as "heating season."

'We Are Not OK': A First-Hand Account of Hurricane Maria - I live in western Puerto Rico . In this post I want to tell you a little about my family's experience with Maria , and how you can help Puerto Rico.   On Thursday Sept. 21, when the sun came up, I looked out our front door at a wintery landscape. There was not one leaf on one tree in all the tropical forest that surrounds our property. Instead, the walls of my house were plastered with one-inch-by-one-inch pieces of leaves. It was as if they had been stripped off the trees, chopped in a food processor, and coated onto our house with a pressure washer.  I could see houses that I've never seen before, exposed by the now leafless landscape. Whole neighborhoods were laid bare. Two of our neighbors had lost their roofs. .Maria has laid bare an old and enduring chasm between the San Juan metro area and everyone else. They call us "la isla," as if we don't also live on the same island as they do. So when San Juan quickly recovered, as all provisions and supplies were funneled to its ports—while the governor called meetings of all the town mayors, making the only leaders helping western Puerto Rico waste the day traveling for hours to San Juan—the image sent by the Puerto Rican central government to everyone else is that since San Juan is OK, all of Puerto Rico is OK.  But we are not OK. There are still over 150 people from rural towns unaccounted for. Almost everyone is without power, even if the water plants are slowly coming online (powered by diesel generators). As we are able to be more mobile, we hear more stories. One of my dearest friends spent 18 hours of the storm floating on an air mattress inside of her living room in five feet of water, before being rescued by good Samaritans on kayaks ( read her story here ). My husband's secretary lost everything as the river and ocean united to flood her home. She found fish in her house. My building's janitor described how the flood waters converted his home into a blender, moving furniture from one room to another. "But I'm not throwing anything away, I'm just drying it out," he says. "Because I don't know what FEMA is going to give us."

Puerto Rico’s electricity service is slow to return after Hurricane Maria – EIA - More than one month after Hurricane Maria made landfall, electricity service has not been restored to most residents of the U.S. territory of Puerto Rico. As of Monday morning, the Puerto Rico Electric Power Authority (PREPA) had partially restored service to 18% of customers in 35 of 78 municipalities.  On September 6, two weeks before Hurricane Maria made landfall on Puerto Rico, Hurricane Irma passed just north of the island. In the days following Hurricane Irma, nearly 900,000 customers in Puerto Rico were without power, based on data compiled in the Department of Energy's Situation Reports. By September 19, just prior to the arrival of Hurricane Maria, PREPA had restored power to 96%, or all but about 63,000, of Puerto Rico’s electricity customers.Hurricane Maria, a Category 4 hurricane, made landfall in Puerto Rico on September 20, bringing powerful winds, storm surge, and major flooding. PREPA reported all 1,570,000 of its electricity customers were without power after the storm. Hurricane Maria destroyed much of the territory’s transmission infrastructure, and as a result, outages linger even as power plants are being prepared to resume operation.  Puerto Rico’s electricity generation is mostly fueled by petroleum and natural gas. In 2016, these fuels made up 47% and 34%, respectively, of the territory’s net generation. In 2016, coal made up about 17% of Puerto Rico’s electricity generation, and renewables provided the remaining 2%.  Almost two-thirds of Puerto Rico’s electricity generation capacity is located in the southern portion of the island, and most of the population is concentrated in the north. Some of the electricity generated in the south of the island must be transmitted on long-distance transmission lines to the north, but many of those transmission lines were damaged by Hurricane Maria. Several smaller power plants are located along the coastal areas in the eastern and western portions of the island and supply electricity to local population centers.

Small Montana firm lands Puerto Rico’s biggest contract to get the power back on - For the sprawling effort to restore Puerto Rico’s crippled electrical grid, the territory’s state-owned utility has turned to a two-year-old company from Montana that had just two full-time employees on the day Hurricane Maria made landfall.The company, Whitefish Energy, said last week that it had signed a $300 million contract with the Puerto Rico Electric Power Authority to repair and reconstruct large portions of the island’s electrical infrastructure. The contract is the biggest yet issued in the troubled relief effort.Whitefish said Monday that it has 280 workers in the territory, using linemen from across the country, most of them as subcontractors, and that the number grows on average from 10 to 20 people a day. It said it was close to completing infrastructure work that will energize some of the key industrial facilities that are critical to restarting the local economy. The power authority, also known as PREPA, opted to hire Whitefish rather than activate the “mutual aid” arrangements it has with other utilities. For many years, such agreements have helped U.S. utilities — including those in Florida and Texas recently — to recover quickly after natural disasters.  The unusual decision to instead hire a tiny for-profit company is drawing scrutiny from Congress and comes amid concerns about bankrupt Puerto Rico’s spending as it seeks to provide relief to its 3.4 million residents, the great majority of whom remain without power a month after the storm. “The fact that there are so many utilities with experience in this and a huge track record of helping each other out, it is at least odd why [the utility] would go to Whitefish,” PREPA’s executive director, Ricardo Ramos, and a spokesman did not respond to emails asking why the utility didn’t activate the mutual-aid network.  Ramos told reporters that Whitefish was the first company “available to arrive and they were the ones that first accepted terms and conditions for PREPA.”

$300M Puerto Rico Recovery Contract Linked to Trump Donor -- Puerto Rico has agreed to pay a reported $300 million for the restoration of its power grid to a tiny utility company that is primarily financed by a private-equity firm founded and run by a man who contributed large sums of money to President Trump, an investigation conducted by The Daily Beast has found.Whitefish Energy Holdings, which had a reported staff of only two full-time employees when Hurricane Maria touched down, appears ill-equipped to handle the daunting task of restoring electricity to Puerto Rico’s more than 3 million residents.Much larger utilities are more commonly used following natural disasters on the scale of Hurricane Maria, which devastated the island last month.The private-equity firm that finances Whitefish, HBC Investments, was founded by Joe Colonnetta, who serves as its general partner. Federal Elections Commission data compiled by The Daily Beast shows Colonnetta contributed $20,000 to the Trump Victory PAC during the general election, $2,700 to Trump’s primary election campaign (then the maximum amount permitted), $2,700 to Trump’s general election campaign (also the maximum), and a total of $30,700 to the Republican National Committee in 2016 alone.Colonnetta’s wife, Kimberly, is no stranger to Republican politics either; shortly after Trump’s victory, she gave $33,400 to the Republican National Committee, the maximum contribution permitted for party committees in 2016. Joe Colonnetta is not the only Republican connection to the controversial Whitefish contract. On Monday, The Washington Post reported that Whitefish Chief Executive Officer Andy Techmanski is friends with Trump administration Interior Secretary Ryan Zinke. Moreover, Whitefish is located in Zinke’s hometown of Whitefish, Monatana.  Zinke isn’t the only member of the Trump administration with a connection to the Whitefish contract. In addition to the Colonnettas’ contributions to Trump’s presidential campaign, Kimberly Colonnetta’s Facebook page contains a photo of her with Ben Carson, Trump’s secretary of housing and urban development. Another photo appears to show Kimberly Colonnetta with Trump Secretary of State Rex Tillerson. Both photos were posted the week of Trump’s inauguration.

Puerto Rico, Whitefish defend controversial power contract (Reuters) - Puerto Rico and Whitefish Energy Holdings on Tuesday defended their $300 million contract for the small Montana company to repair the U.S. territory’s hurricane-ravaged power grid after the deal was criticized by U.S. lawmakers. The back-and-forth comes as Puerto Rico struggles to restore power to more than 80 percent of the island a month after Hurricane Maria made landfall. Whitefish last month signed a deal with Puerto Rico’s quasi-public power utility, PREPA, to help fix a grid that was nearly destroyed by Maria, the strongest storm to hit Puerto Rico in 90 years. Whitefish was awarded the deal without a competitive bidding process, and despite the facts that it had just two full-time employees and was established only two years ago. That drew criticism from legislators who suggested cheaper options might have been available. In a statement on Tuesday, Governor Ricardo Rossello said his administration would review PREPA’s contracting practices and forward findings to the island’s comptroller. Rossello defended the deal, saying it was necessary to ensure Puerto Rico would have workers in place quickly. “Of those (contractors) who met the requirements and aggressive schedules to bring brigades, one was asking for a substantial amount of money - which PREPA had no liquidity for - and another did not require it,” Rossello said. “That other one is Whitefish.” 

Puerto Rico’s electric utility likely to get emergency manager amid criticism over contract to small Montana firm - Puerto Rico’s financial oversight board is moving to install an emergency manager at the island’s state-owned utility amid criticism of a $300 million contract it awarded to a small Montana energy firm for work on the territory’s crippled electrical grid. The board said Wednesday that it intends to appoint Noel Zamot, a retired Air Force colonel and member of the oversight panel, to oversee daily operations of the Puerto Rico Electric Power Authority. The decision comes as House and Senate Democrats called for an investigation into the utility’s agreement with Whitefish Energy. Sen. Lisa Murkowski (R-Alaska) pledged to examine the grid-rebuilding efforts at an upcoming hearing of the Committee on Energy and Natural Resources, which she chairs. San Juan Mayor Carmen Yulín Cruz on Tuesday told Yahoo News that the contract should be “voided right away.” The Washington Post reported on Monday that Whitefish had only two full-time employees on the day Hurricane Maria hit the island and had never taken on repairs on the scale of the destruction suffered in Puerto Rico. Whitefish has said that its expertise working in mountainous terrain qualifies it for the job and that its business model calls for rapidly expanding using subcontractors. 

Puerto Rico Continues to Suffer Worst Electricity Failure in U.S. History -- Hurricane Maria caused the largest blackout in U.S. history, according to a new report . An analysis released this week from the Rhodium Group finds that the hurricane caused a net loss of 1.25 billion hours of electricity since hitting Puerto Rico on Sept. 20—the largest in recorded history.   Nine of the 10 most severe power outages in the U.S. were the result of hurricanes , according to the report. Weeks after Hurricanes Maria and Irma passed over the region, 75 percent of Puerto Rico's 3.4 million inhabitants remain without power.   The U.S. Virgin Islands were hit especially hard, as 98 percent of St. Croix and all of St. John remain powerless. Whitefish Energy, an obscure firm given the $300 million contract to repair Puerto Rico's power grid, is now under several government reviews after lawmakers expressed concerns with the bidding process and the firm feuded publicly with San Juan mayor Carmen Yulín Cruz on Twitter this week.   "Nothing destroys electrical grids like hurricanes do," Trevor Houser, who leads Rhodium's energy and natural resources work, told BuzzFeed News .

Tesla and Puerto Rico lay out plans for long-term energy solution –  Puerto Rico is looking to rebuild its electric grid long-term and is considering Tesla’s suggestion about scaling its microgrid technology using batteries and solar power, thereby transforming the island’s energy infrastructure. After a series of talks with Tesla, Puerto Rico’s Department of Economic Development and Commerce Secretary Manuel Laboy told Bloomberg that they are considering “a series of micro-grids and regional grids that use solar and battery technology, along with other renewable sources.” There is a lot to be said for decentralizing Puerto Rico’s power generation infrastructure. The island’s aging and poorly maintained power plants and transmission lines did sustain significant damage when the Category 4 storm came ashore, and even today, a month later, less than 20 percent of the island is with power. And with the prospect of future weather events of the same intensity entirely possible, owing to climate change, the whole of the Caribbean region would be better prepared to make it through intense storms with decentralized power generation and energy generation with local solar farms combined with energy storage. Not only is solar power cleaner than fossil fuel-powered electrical generation, but if will be much cheaper for the consumer. And while even solar panels may not be immune to powerful hurricanes, the mounting systems have improved substantially and have proven to reduce the damages caused by extreme wind.

Forget the Grid of the Future, Puerto Ricans Just Want Power Back -- A month after Hurricane Maria devastated the island, power lines still lie slack along roads, utility poles are snapped clean in half, and most Puerto Ricans remain in the dark. So you could understand why Cruz Maria Ramos Resto, a 50-year-old school cafeteria worker, rolled her eyes when asked if she supports the solar-driven “grid of the future”—the one that environmentalists, renewable energy developers and Puerto Rico’s government have been touting since Maria laid waste to the island’s power system.“But of course!" said Resto, who lives next to an oil-burning power plant in Palo Seco. “When are you bringing it over? Let’s have it, already! Let’s see it!"There’s plenty of hype about rebuilding Puerto Rico’s grid using solar panels, wind farms and batteries, with Tesla Inc.’s Elon Musk and Virgin Group founder Richard Branson backing the idea. Then there’s the crushing reality: The U.S. territory is broke, and millions of disillusioned Puerto Ricans expect little to change in how they get their energy anytime soon.  “Everyone wants to see Puerto Rico re-establish its energy sector, and everyone wants it to be reliable and efficient and green,” said Richard Donner, a credit analyst covering Puerto Rico’s government-run utility for Moody’s Investors Service. “But the question is how do you get from here to there? It’s a matter of money.” And time, both of which Puerto Rico’s leaders have in short supply.

In Puerto Rico, Surgery by Flashlight Is Just the Beginning - On Friday, former Puerto Rican Gov. Alejandro García Padilla tweeted a photo from inside a hospital, in which scrubbed-up doctors leaned over an operating table performing surgery lit only by a flashlight. “This is what POTUS calls a 10!” García Padilla wrote in the English version of his post. “Surgery performed with cellphones as flashlights in Puerto Rico today.”  Closely cropped and the dictionary definition of “bleak,” it illuminates just a small sliver of the public health crisis Puerto Rico is currently facing. Some 33 days after Hurricane Maria made landfall on Puerto Rico, only 23 percent of residents have electricity, according to, which provides daily updates on basic services on the island. While there are other, somewhat unrelated problems at play—gas stations have been slow to reopen, and roads are badly damaged—the power grid’s utter annihilation in the category 4 winds is not just a temporary inconvenience. A month later, the ways that lack of electricity can set off a cascade of other crises is becoming increasingly clear. First, there’s the issue of clean water. Many wastewater disposal and clean water delivery systems are dependent on electricity. Without energy to power the systems, pumps don’t work, allowing sewage to build up on site instead of draining away to treatment plants. On the other end, drinking water cannot be delivered to residents without electricity either because those pumps and filters are also offline. Obviously, a lack of access to freshwater is a big problem— people are at risk of dehydration or, if they turn to lower-quality water sources, infection. In countries without modern plumbing and wastewater management, water-borne diseases such as leptospirosis thrive. But when a strong enough hurricane hits, even wealthy nations are at risk, as evidenced by the rivers of toxic waters stirred by Hurricane Harvey in Texas and Hurricane Irma in Florida. Electricity is also crucial for communication. And clear communication is essential for relief and recovery efforts. Delivering supplies is irrelevant when people don’t know where or how to get them. On Friday, the Wall Street Journal wrote: Gov. Ricardo Rosselló said that some of Puerto Rico’s 78 municipalities weren’t aware that food and water provided by FEMA were available at distribution centers—but that local officials needed to retrieve the supplies. Only when island and federal authorities were able to personally visit the towns could they relay vital information. A giant government-owned hospital ship, the USNS Comfort, arrived in Puerto Rico weeks ago to help out, but no one has figured out how to use it. The ship has extensive space and equipment for trauma care and a large staff, but CNN reported that as of Tuesday, only 33 of 250 beds were full. Many people don’t know about the ship (remember, without electricity, most cellphone towers are down). Even if they do, they can’t get to the port, as many of the island’s roads are impassable, doubly so without oil to power a car.

 The mental health toll of Puerto Rico's prolonged power outages - More than a month has passed since Hurricane Maria's initial landfall in Puerto Rico, but around 80 percent of the island still remains without power.  As residents grapple with the immediate damage, it's worth asking what the health effects will be over the long term. How do we identify those most vulnerable, and, with limited resources, tailor public health interventions? I have studied various disasters' effects on health, from the Sept. 11 terrorist attack to Hurricane Sandy. Based on my studies of hurricanes and power outages, we can expect to see a number of lasting effects on Puerto Rico in the months ahead, including mental health issues. After Hurricane Sandy, the power was out for about 12 to 14 days, with variations across the eight affected counties in New York City. We found that Hurricane Sandy had immediate effects on certain types of mental health problems.  According to the data we've collected and are still analyzing, the negative effects from Hurricane Sandy on certain mental health illnesses – such as mood disorder and substance abuse – lasted anywhere from three months to as long as one year after the disaster, depending on the county. Why did the stress endure for so long? Hurricanes and loss of power also lead to a loss of essential services for communities – such as access to food, clean water, transportation and communication. Lasting home damage can induce anxiety and depression among the residents in the affected areas, especially for those with preexisting mental health problems. Puerto Rico is missing these basic services, making daily life more stressful and thus more likely to cause mental suffering over the weeks and months ahead.

Foraging for food, water and hope: Puerto Ricans cope with lingering devastation of Hurricane Maria -  Joel Cotto and Jesús González picked up their fishing nets after a full day at a lake in Cidra, Puerto Rico, feeling good about their bucket full of shrimp and fish known as chopas. The friends said they had become fishermen after Hurricane Maria devastated the island Sept. 20 because food had become so scarce for their families. Cotto, 50, said the hurricane ripped the roof off his home in Aguas Buenas, a municipality in the island’s central region, and damaged virtually everything, including the refrigerator. “The roof, the house, everything is stripped away,” Cotto said. “We have to fish for what we are going to eat today.” Like Cotto and González, 57, many Puerto Ricans are making substantial adjustments to their lives based on hurricane-related devastation to the island, a U.S. territory. Despite some aid reaching residents during the past four weeks, many people have had to find new ways to at least temporarily feed their families, filter water and care for the young, elderly and sick. Food, water, medicine, electricity and shelter all remain desperately scarce on the island. The hurricane wiped out thousands of homes, decimated agriculture and cut power and phone lines, making it difficult for most of Puerto Rico’s 3.4 million residents to communicate with family or aid services. Some roads in mountainous regions contort and contract with mudslides that expose precipices on each side. In some cases, people have been left isolated by collapsed bridges in communities that already were off the beaten path. The number of deaths associated with the hurricane rose to at least 49, Puerto Rico Gov. Ricardo Rossello said Friday, and that number was expected to go up again. Officials said dozens of people are still missing. 

‘Like going back in time’: Puerto Ricans put survival skills to use - A grandmother turned a school bathroom sink into a bath. Neighbors are piling into a garage for communal meals prepared on an old gas stove. A 79-year-old man made a bonfire out of fallen tree branches to cook.More than a month after Hurricane Maria tore through Puerto Rico on a path of destruction that spared no region, race or class, residents of the island have found their creativity stretched to the limit as they try to function without many amenities of the modern world.It is not just water and electricity that are in scarce supply. Cellphone service ranges from spotty to nonexistent. Cars are damaged and roads blocked. For many, work and school still have not resumed, so they wander the streets, play board games and sit around telling stories by candlelight. “It’s like going back in time,” said Kevin Jose Sanchez Gonzalez, 25, who has been living in darkness since Sept. 5, the day before a previous storm, Hurricane Irma, began to chip away at Puerto Rico’s electrical grid.

Puerto Rican Climate Activist: Aid Being Unfairly Distributed & Superfund Sites Continue to Overflow - Democracy Now! video and transcript - President Donald Trump said his administration deserves a “10 out of 10” for its response to the ongoing humanitarian crisis in Puerto Rico. But over 1 million people on the island still lack clean drinking water, and residents say they are suffering from eye infections and gastrointestinal diseases as a result of exposure to contaminated water. We speak with Puerto Rican environmental activist Elizabeth Yeampierre, who co-wrote a piece with Naomi Klein headlined “Imagine a Puerto Rico Recovery Designed by Puerto Ricans.”

The US could have avoided Puerto Rico’s water crisis -  The numbers associated with the current situation in Puerto Rico, one month after Hurricane Maria struck the U.S. territory, are baffling. More than 2.5 million residents are still without power. The Federal Emergency Management Agency is able to offer 200,000 meals to Puerto Ricans daily — but it needs to feed 2 million people. Perhaps most baffling, or at least exasperating, President Donald Trump gives himself a perfect 10 for his response to the storm’s aftermath.  One of the most pressing issues on the island is access to clean water. Officials estimate that more than 1 in 3 residents in Puerto Rico doesn’t have it. Aid agencies on the ground say the number is closer to 1 in 2. Families are drinking water contaminated with sewage and dead animals. Others are drawing from toxic Superfund sites. There have been at least 10 cases of leptospirosis from drinking contaminated water — and officials are investigating four deaths which may have been caused by waterborne bacteria.  Simply put, this is an ongoing public health crisis. Puerto Rico was in a tough spot before Maria tore through the Caribbean island.  But aid agencies and relief experts believe the current predicament could have been avoided. There are international standards and a clear blueprint for how to get safe water to people after a disaster. But so far, the federal response has failed in providing both immediate help and longer-term solutions — and part of the reason for that could boil down to discrimination. “We’re a very capable nation, yet we don’t seem to have deployed our capabilities in this instance,” says John Mutter, a Columbia University professor and international disaster relief expert. “This isn’t rocket science. We know what we’re supposed to do. The fact that we’re not doing it needs explanation.”

The Situation in Puerto Rico: The Roads - Lambert Strether - Puerto Rico’s road system, devastated by Hurricane Maria, despite being not as newsworthy as its power situation, or providing as many heart-tugging photos[1] — here is a fine write-up from Vox — may in the end prove more intractable.To begin with, Puerto Rico is almost completely dependent on the automobile for transport. Bloomberg: Puerto Rico has one of the highest rates of car ownership in the world, thanks to urban sprawl and the government’s failure to build public transportation that commuters might actually use…. Puerto Ricans are isolated without cars… About 931,000 Puerto Ricans drive or carpool to work out of 3.4 million total residents, according to U.S. Census data. … [T]he island has the fifth-highest number of vehicles per capita in the world. So, a working road system isn’t simply required to get the containers off the docks in San Juan[2], it’s required for every phase of life in Puerto Rico as an economic and social entity (getting to work; taking care of your grandmother).  I’ll start with one set of figures, then move through maps, then photos, and finally to positive measures that I found being taken (which seem rather small, and ill-coordinated, when set beside the requirements). Here is the most basic figure of all, from Axios, which I quoted on October 13: Only 392 miles of Puerto Rico’s 5,073 miles of roads are open (The Axios post was “updated 19 hours ago”  and the figure has not changed.) Axios says that its figures come from FEMA and the PR government site, so I went to both places to look. The PR “dashboard” has no figures for roads, so I assume the figure comes from FEMA, and after I clicked the “Expand All Sections” link, there it was, with a key disclaimer not mentioned by Axios or any of the other venues that quoted the figure[3]. As of October 18: 392 miles of Puerto Rico’s 5,073 miles of roads are open, allowing for passage through the outer ring of the island. Here is a map from FEMA showing the status of that passable 392 miles of outer ring road:

Climate Exodus, the Caribbean Residents' Dilemma -- The recent hurricanes which leveled vast swathes of the Caribbean islands, Irma and Maria, have raised concerns among residents about how viable it remains to live there. Certainly, others like their big neighbor to the North aren't helping matters. Climate deniers like Trump likely make their future bleaker. Saying global warming is a hoax means denying sea levels are rising and denying warmer temperatures means more water vapor is being stored--both of which make storms even more damaging. So, not only have many of these countries and territories suffered tremendous damage, but worse is still to common thanks in no small part to global inaction on climate change. What to do? With limited economic prospects at home, Caribbean residents are thinking of the inevitable in leaving for good. What's the point in rebuilding when nearly everything is wiped out almost every other year?Investors, governments, visitors and the people who have called these islands home for generations now wonder: Has something elemental changed? Might paradise turn uninhabitable? Is it time to go? Devastation is part of the natural cycle of life in the islands. During the past four decades, the region has been hit by more than 200 major storms, which killed more than 12,000 people and caused nearly $20 billion in damage, according to an International Monetary Fund study. About 1 percent of the Caribbean’s gross domestic product is wiped out every year. “Storms shape the history of these places,” said Joshua Jelly-Schapiro, a geographer and author of “Island People: The Caribbean and the World.” “And people have been leaving these islands for decades,” heading for New York, London, Paris and other more stable places in countries that once colonized the Caribbean.  But in recent years, hurricane season has delivered more intense storms. “A person in the Caribbean generally would experience one Category 5 hurricane in a generation,” said Tahseen Sayed, the World Bank’s Caribbean country director. “In two weeks, we’ve had two Category 5 hurricanes.” The result is not only physical damage and economic strain. “There’s a new, strong consensus that storms are getting worse and climate change is to blame,” Jelly-Schapiro said. “You didn’t hear that even a few years ago. For the first time, people are saying, 'I love this place, but maybe it’s not a place where we can live.' ”

2017 lining up to be among the three warmest years on record -- The global climate summary for September was released by NOAA's National Centers for Environmental Information this morning, documenting our planet's climate vital signs, including monthly temperature, precipitation, polar ice extent, and extreme events.  According to the report...  The September temperature across global land and ocean surfaces was 1.40°F above the 20th century average of 59.0°F, the fourth highest value for September in the 138-year period of record, behind 2015 (highest), 2016 (second highest), and 2014 (third highest). The 10 warmest Septembers have occurred during the 21st century, specifically since 2003. September 2017 also marks the 41st consecutive September and the 393rd consecutive month with temperatures at least nominally above the 20th century average. For the year to date, no locations anywhere were record cold or even much colder than average. Three small, isolated patches of cooler than average conditions dot the North Pacific, the North Atlantic, and the Southern Ocean off the Antarctic Peninsula. The rest of Earth's surface was dominated by much warmer than average or record hottest temperatures.  In the report's supplemental information, NCEI scientists wrote:  The average global land and ocean surface temperature for January–September 2017 was 0.87°C (1.57°F) above the 20th century average of 14.1°C (57.5°F)—the second highest global land and ocean temperature for January–September in the 1880–2017 record, behind the record year 2016 by 0.13°C (0.23°F). However, the January–September 2017 value surpasses 2015 by only 0.01°C (0.02°F) and 1998 (the only year from the 20th century among the top 10 warmest years on record) by 0.19°C (0.34°F).... 2017 is gearing up to end up among the top three warmest years on record and the warmest year with ENSO-neutral conditions.

La Niña WATCH activated - The El Niño Southern Oscillation (ENSO) is currently neutral. However, models suggest the tropical Pacific Ocean will continue to cool, making the chance of a La Niña forming in late 2017 at least 50%; around double the normal likelihood. While this means the Bureau's ENSO Outlook has shifted to La Niña WATCH, rainfall outlooks remain neutral due to competing climate drivers. Following a brief period of warming, tropical Pacific surface waters cooled significantly in the past fortnight, and hence the central to eastern tropical Pacific Ocean is now generally cooler-than-average. Atmospheric indicators of ENSO, including the Southern Oscillation Index (SOI), trade winds and cloudiness near the Date Line, are also approaching La Niña levels. Seven of the eight international climate models surveyed by the Bureau suggest that sea surface temperatures will reach or exceed La Niña thresholds by November 2017. However, indicators need to remain at La Niña levels for at least three months to be considered an event. This is forecast by six of the eight models. If a La Niña does occur this year it is likely to be short and weak, as sea surface temperatures are forecast to warm again in early 2018, as the austral autumn is the time when La Niña events normally decay. The Indian Ocean Dipole (IOD) is currently neutral. All six international climate models indicate neutral conditions will continue through 2017. Indian Ocean Dipole events are typically unable to form between December and April due to the influence of the monsoon trough over the tropical Indian Ocean.

How Trump Is Crippling Storm Forecasting Just When It’s Getting Good - As Hurricane Harvey roared toward the Texas coast in late August, weather models showed something that forecasters had never seen before: predictions of four feet of rainfall in the Houston area over five days – a year's worth of rain in less than a week. "I've been doing this stuff for almost 50 years," says Bill Read, a former director of the National Hurricane Center who lives in Houston. "The rainfall amounts … I didn't believe 'em. 50-inch-plus rains – I've never seen a model forecast like that anywhere close to accurate. Lo and behold, we had it."That unbelievable-but-accurate rain forecast is just one example of the great leap forward in storm forecasting made possible by major improvements in instruments, satellite data, and computer models. These advancements are happening exactly when we need them to – as a warmer, wetter atmosphere produces more supercharged storms, intense droughts, massive wildfires, and widespread flooding, threatening lives and property. And yet the Trump administration's climate denial and proposed cuts threaten these advances, spreading turmoil in the very agencies that can predict disasters better than ever. The president's budget proposal would slash the National Oceanic and Atmospheric Administration's budget by 16 percent, including 6 percent from the National Weather Service. Besides hampering climate research, the cuts would jeopardize satellite programs and other forecasting tools – as well as threaten the jobs of forecasters themselves. And they may undermine bipartisan legislation Trump himself signed earlier this year that mandates key steps to improve the nation's ability to predict disasters before they happen.

Record-Melting Fall Heat Wave Bakes Southern California - It's not every Oct. 23 or 24 that millions of Americans are swathed in temperatures above 100°F. This week has done just that, bringing some of the toastiest weather ever observed in the U.S. during late October, and more pre-Halloween heat is on the way.  By far the most scorching weather has been in Southern California, although it's also been exceptionally mild this month in settings as far-flung as Michigan, Florida and New England.  A multi-day summer-like heat wave kicked into high gear on Monday and continued Tuesday along and well inland from the California coast, from Santa Barbara through Los Angeles to San Diego. Dozens of locations recorded highs for the date and all-time highs for this late in the year, and Santa Ana winds kept the temperatures amazingly warm throughout Monday night. In Orange County, the city of Fullerton soared to 107°F on Monday. According to WU weather historian Christopher Burt, this is likely the hottest single temperature recorded anywhere in the U.S. so late in the year. Even Death Valley has never recorded a temperature this high after Oct. 16 in any year! For comparison, the national U.S. record high for November is 105°F, most recently at Tustin Irvine Ranch, California, in 1997. Another impressive mark: downtown Los Angeles (the University of Southern California campus) hit 102°F. Prior to Monday, the downtown station had never topped 100°F after Oct. 17, in records going all the way back to 1877. Incredibly, the USC downtown station got even hotter on Tuesday, reaching 103°F at 1 pm.  Here are some of the many records set on Monday, with the old daily record and year and the year that observations began. Asterisks denote that the high was an all-time record for so late in the year.

Southern California Braces for Wildfire Threat Amid Triple-Digit Heat - Triple-digit temperatures and hot, gusty winds created "critical fire weather conditions" in Southern California on Monday, bringing a threat of rapidly spreading wildfires to the area, forecasters warned. The National Weather Service issued red flag warnings and fire weather watches across Southern California, stretching from San Diego to Los Angeles, Ventura, and Santa Barbara counties through Wednesday evening. The service said temperatures hovering around 100 degrees on Monday and Tuesday could break records for some areas. "We're going into an exceptionally hot stretch of weather coming up over the next several days," said Frank Giannasca, a senior meteorologist for The Weather Channel.   A red flag warming signals that "critical fire weather conditions" are occurring or are about to occur. Strong winds, low humidity and high temperatures can combine to trigger "extreme fire behavior," the National Weather Service said. Temperatures were forecast to reach into the high 90s and the low 100s along the coastline from Santa Barbara and down through San Diego, Giannasca said. "Even people at the beaches are going to feel the intense heat and high temperatures as you move inland," he said.  Just north of San Jacinto, about 25 miles northwest of Palm Springs, a wind-driven brush fire quickly burned through 50 acres Monday morning, closing State Route 79, a major traffic corridor, the Riverside County Fire Department said.  More than 200 firefighters, supported by three helicopters and four air tankers, raced to keep the fire from spreading in 100-degree conditions with 45-mph winds, Cal Fire said. By midafternoon, it was 75 percent contained.

Southern California Is Breaking Heat Records By Alarming Margins --- Southern California is getting scorched by an unseasonable heat wave, with temperatures in some areas breaking records by double-digit margins.  According to the National Weather Service office in Los Angeles, heat records for Oct. 25 were shattered in a number of places Wednesday. The most notable record was set at the Camarillo Airport in Ventura County, where a high of 103 degrees broke the previous record, 88 set in 1983, by a jaw-dropping 15 degrees.  Heat waves typically break temperature records by only as much as a few degrees. A June 2016 heat wave that struck Southern California, for example, broke several records by single digits. The one double-digit margin was set in El Cajon, where temperatures for that calendar day toppled the previous record by 10 degrees. Even during a 2015 heat wave in the region with back-to-back days of temperatures surpassing 100 degrees, the heat broke records by small margins. Other heat records set Wednesday include Oxnard, where 102-degree temperatures beat out the old record by 8 degrees, and Los Angeles International Airport, where 99-degree heat toppled the 1983 record of 92. The ongoing heat sparked several brush fires on Tuesday, requiring closures on three freeways. Later Tuesday, hot wind gusts complicated firefighters’ efforts to contain a growing wildfire in the hills about 60 miles northwest of Los Angeles. Scientists have long warned that these types of heat waves will become the new normal. “If we continue with business-as-usual burning of fossil fuels, and warm the planet by [3 degrees Celsius] by the end of this century, then what we today call ‘extreme heat’ we will instead call ‘midsummer,’” Michael Mann, a leading climate scientist and professor of meteorology at Penn State University, told HuffPost during a heat wave plaguing the Midwest and Northeast last summer.

Southern California stews in the most extreme heat the nation has seen so late in the year -- A mere week before the calendar flips to November, temperatures in cities and towns across Southern California surged to unthinkable levels — on the verge of 110 degrees. Not one but two locations hit 108 on Tuesday — matching the hottest weather observed on record in the United States so late in the calendar year. According to the National Weather Service, both Marine Corps Air Station Miramar (formerly known as Miramar Naval Air Station, about 15 miles northeast of San Diego) and San Luis Obispo topped out at 108 degrees. Brian Brettschneider, a climatologist based in Alaska, tweeted that the 108-degree reading tied the previous hottest temperature set so late — at Indio Fire Station, Calif., on the same date in 1959. This weather record was overshadowed by searing heat in Los Angeles, where the hottest postseason game in Major League Baseball history was played Tuesday evening. The first-pitch temperature for Game 1 of the World Series at Dodger Stadium was a blistering 103 degrees. 

Forest fires stoke record loss in world tree cover: monitor | Reuters: Forest fires in Brazil and Indonesia contributed to a record loss in global tree cover in 2016, equivalent to the size of New Zealand, that could accelerate deforestation blamed for climate change, an independent forest monitoring network said on Monday. Man-made global warming increased the risks of wildfires by adding to extreme heat and droughts in some regions, according to Global Forest Watch (GFW). This year, California and Portugal have been among places suffering deadly blazes. The combination of forest fires with land use change and climate change could speed destruction in areas like the Amazon and contribute to emissions of carbon dioxide, one of the gases that contribute to global warming, the report said. Worldwide, global tree cover losses rose 51 percent in 2016 from the previous year to 297,000 square kilometers (114,672 square miles), according to data from the University of Maryland compiled by Global Forest Watch (GFW). That was a record high for GFW records stretching back to 2000, and contrasted with some other satellite measurements that indicated a slowdown in the pace of forest clearances to make way for farms, cities and roads. “We saw quite a dramatic spike in 2016,” said Mikaela Weisse, research analyst at the U.S. think-tank World Resources Institute which oversees GFW. “That seems to be related to forest fires in countries including Brazil, Indonesia and Portugal.” GFW measures loss of tree cover and does not estimate net changes in forests to take account of re-growth and new plantings. 

The Next Climate Domino - Tropical Forests -- audio - NASA scientist Annmarie Eldering: Orbiting Carbon Observatory reports tropical forests now releasing carbon to the atmosphere. Confirmed by Alessandro Baccini at Woods Hole Research Center. From Post Carbon Institute, Daniel Lerch - "The Community Resilience Reader - Essential Resources for an Era of Upheaval". Radio Ecoshock 171018

El Niño’s Warning: Satellite Shows How Forest CO2 Emissions Can Skyrocket -- During the last El Niño, global average temperatures spiked to more than 1 degree Celsius above pre-industrial levels for the first time on record, and carbon dioxide levels increased at a record pace.Now, scientists working with data from a carbon-tracking satellite have figured out where most of that CO2 surge came from. The source was three massive tropical forest regions, in different parts of the world, that each responded to the rising temperatures in a very different way:

  • "In the Amazon, El Niño clobbered photosynthesis," said Colorado State University climate researcher Scott Denning. During the drought caused by El Niño, the rainforest stopped inhaling CO2, meaning more was going into the atmosphere.
  • In the tropical jungles and forests of Africa, record warmth and rain combined to speed the decomposition of plant debris. "Stuff just rotted faster," increasing climate-warming emissions, he said.
  • And in Indonesia, hot and dry conditions helped spur intense fires that burned deep into carbon-rich peat soils, releasing even more CO2 and methane.

If those forest regions respond to global warming being caused by human activities in the same way they did during the 2015 El Niño temperature spike, they will become net sources of CO2 instead of carbon sinks, Denning said.

CO₂benefits of regrowing forests nothing to shake a stick at - Currently, land ecosystems (and human activities affecting them) are responsible for emitting the equivalent of about 1.5 billion tons of CO2 each year. (For comparison, total human-caused emissions are around 48 billion tons each year.) This is the balance of about 11 billion tons of emissions (caused by things like deforestation and agricultural practices) and the 9.5 billion tons of our CO­2 emissions that land ecosystems helpfully soak up. It’s possible to change both of those numbers so that land ecosystems remove more CO2 from the atmosphere than they add. Changing those numbers, however, could run into a number of logistical issues if doing so interferes with competing land uses. For example, reforestation efforts can’t reclaim so much agricultural land that we can’t feed the world’s still-growing human population. And high costs for particular conservation strategies could obviously be prohibitive. To handle the economics, the researchers from The Nature Conservancy produce two estimates—one for a world where a weak price of $10 per ton has been placed on CO2 emissions, and one with a stronger price of $100. That sets the definition of “cost-effective” for conservation efforts. Ignoring costs for a moment, they found a whopping theoretical maximum of almost 24 billion tons of CO2 per year through 2030 that could either be prevented from reaching the atmosphere or actively removed from it. At a carbon emissions price of $100 per ton, a little more than 11 billion tons of that maximum is cheap enough to save you money by avoiding some of the tax on net emissions. That’s fully 37 percent of the reductions needed to limit warming to no more than 2°C—an international goal. (Though after 2030, the contribution would start to drop off as the number of conservation opportunities remaining declines.) Half of this 11 billion tons per year of CO2 could be achieved by reducing emissions. That includes things like changes to agricultural practices and slowing the continued losses of forest and wetland area. The other half would be CO2 soaked up by actual expansion of forests or building up carbon in farmland soils, for example. About 40 percent of reforestation would depend on converting land currently used for raising livestock.  Such a shift would not be massive—only about four percent of grazing land would be converted to forest—but it would mark a change from current trends.

New Zealand Government to Plant 100 Million Trees Yearly - New Zealand's next prime minister Jacinda Ardern has set ambitious environmental policies to confront a warming planet. "I do anticipate that we will be a government, as I said during the campaign, that will be absolutely focused on the challenge of climate change ," said Ardern, whose Labour party has signed a coalition agreement with the New Zealand First party. "That will include a zero carbon act. That will include an independent climate commission. That will include making sure that we have an all gases, all sectors emissions trading scheme," she added.  Other green initiatives include transitioning the country's power grid to 100 percent renewable energy , a significant investment in regional rail, and a goal to plant 100 million trees a year through the "Billion Trees Planting Programme." According to the Associated Press , Arden said the goal of doubling the amount of trees the country plants each year is "absolutely achievable" by using land that was marginal for farming animals. The Green Party will support the incoming government with a confidence and supply agreement, which includes a major goal of net zero carbon emissions by 2050.  "All three parties share an absolute commitment to addressing climate change," Ardern said.

'Impossible To Save': Scientists Are Watching China's Glaciers Disappear --  NPR: The Tianshan No. 1 glacier is melting fast, receding by at least 30 feet each year. Scientists warn that the glacier — the source of the Urumqi River, which more than 4 million people depend on — may disappear in the next 50 years. Li, who heads the Tianshan Mountains Glaciological Station of the Chinese Academy of Sciences, points to a valley beyond a valley of boulders below to another glacier in the distance. "Twenty years ago, when I was a young scientist, these two glaciers were connected," he says. "But now, look: They're completely separate. Things are changing very, very quickly."In the past 50 years, says Li, the average global temperature has risen by 1 degree Celsius (1.8 degrees Fahrenheit). As a result, these glaciers — split from the original Tianshan No. 1 glacier into No. 1 East and No. 1 West — are retreating by around 30 feet each year. Scientists are the only people allowed here. The government has banned tourism on the glacier and shut down factories in the town below, laying off 7,000 workers to try to lessen the impact of pollution. But local sources of pollution account for just 30 percent of the damage to glaciers, says Li. The other 70 percent is caused by global carbon emissions that have warmed the entire planet.

Mountain glaciers shrinking across the West -- Until recently, glaciers in the United States have been measured in two ways: placing stakes in the snow, as federal scientists have done each year since 1957 at South Cascade Glacier in Washington state; or tracking glacier area using photographs from airplanes and satellites.  We now have a third, much more powerful tool. While he was a doctoral student in University of Washington's Department of Earth and Space Sciences, David Shean devised new ways to use high-resolution satellite images to track elevation changes for massive ice sheets in Antarctica and Greenland. In 2012, he first asked for satellite time to turn digital eyes on glaciers in the continental U.S., and he has since collected enough data to analyze mass loss for Mount Rainier and almost all the glaciers in the lower 48 states. He will present results from these efforts Oct. 22 at the Geological Society of America's annual meeting in Seattle.  The maps provide a twice-yearly tally of roughly 1,200 mountain glaciers in the lower 48 states, down to a resolution of about 1 foot. Most of those glaciers are in Washington state, with others clustered in the Rocky Mountains of Montana, Wyoming and Colorado, and in California's Sierra Nevada. Shean's technique uses automated software that matches millions of small features, such as rocks or crevasses, in the two images. It then uses the difference in perspective to create a 3-D model of the surface.  The results confirm stake measurements at South Cascade Glacier, showing significant loss over the past 60 years. Results at Mount Rainier also reflect the broader shrinking trends, with the lower-elevation glaciers being particularly hard hit. Shean estimates cumulative ice loss of about 0.7 cubic kilometers (900 million cubic yards) at Mount Rainier since 1970. Distributed evenly across all of Mount Rainier's glaciers, that's equivalent to removing a layer of ice about 25 feet (7 to 8 meters) thick.

Climate change might be worse than thought after scientists find major mistake in water temperature readings - Global warming might be far worse than we thought, according to a new study. The research challenges the ways that researchers have worked out sea temperatures until now, meaning that they may be increasing quicker than previously suggested. The methodology widely used to understand sea temperatures in the scientific community may be based on a mistake, the new study suggests, and so our understanding of climate change might be fundamentally flawed. The new research suggests that the oceans hundreds of millions of years ago were much cooler than we thought. If true, that means that the global warming we are currently undergoing is unparallelled within the last 100 million years, and far worse than we had previously calculated. Until now, scientists believed that the temperature of the ocean depths and the surface of the polar ocean 100 million years ago were about 15 degrees warmer than they are today. But they might in fact have stayed relatively stable – making the warming we're currently undergoing far more alarming. Reducing emissions won't stop global warming, claims study "If we are right, our study challenges decades of paleoclimate research," said Anders Meibom, the head of EPFL's Laboratory for Biological Geochemistry and a professor at the University of Lausanne. "Oceans cover 70% of our planet. They play a key role in the earth's climate. Knowing the extent to which their temperatures have varied over geological time is crucial if we are to gain a fuller understanding of how they behave and to predict the consequences of current climate change more accurately." 

In Antarctica, Two Key Glaciers Accelerate Toward the Sea - Two of the frozen continent’s fastest-moving glaciers are shedding an increasing amount of ice into the Amundsen Sea each year. The Pine Island and Thwaites glaciers are among the most critical in the world. They are currently holding back ice that, if melted, would raise the world’s oceans by nearly four feet over centuries, an amount that would put many coastal cities underwater. Glaciers are essentially long rivers of ice. Just as a river collects water that drains from a specific area, Antarctica’s glaciers collect ice from parts of the great ice sheets that cover the continent. The amount of ice that could flow into the Pine Island glacier and then into the sea would eventually raise the world’s sea level by over a foot and a half.The animation above shows Pine Island glacier flowing into the Amundsen Sea from 2014 to 2017. Twice in that period, the glacier released an iceberg larger than 100 square miles.The Pine Island’s flow is accelerating rapidly. Its ice shelf, an expanse of ice that floats on water where the glacier meets the sea, has increased its speed by 75 percent from 1973 to 2010.“This is a result of the warmer waters in front of them,” said Eric Rignot, a climate scientist at the University of California, Irvine, who has done extensive research on polar ice.“In some relatively colder years, we know the melt rate slowed down and the glaciers slowed down. On warm ocean years, the glacier moves really fast.” In the 1980s, Pine Island gained about as much ice as it lost every year. Now, the glacier is out of balance.

Scripps Study: There’s A Chance Climate Change Can Wipe Out Humans By 2050 - Climate scientists have worked for years to calculate how a warmer atmosphere might impact human life on Earth. Now scientists at Scripps Institution of Oceanography at UC San Diego have published new calculations that find a small potential for global warming of such significance, it could wipe out life on Earth. The paper, published Thursday says, there is a one in 20 chance of catastrophic change by 2050, which would mean most people would have problems adapting to the change in climate. There is a smaller chance of an existential change, meaning it would wipe out humanity. “When we say 5 percent-probability high-impact event, people may dismiss it as small but it is equivalent to a one-in-20 chance the plane you are about to board will crash,” Veerabhadran Ramanathan, lead study author and a distinguished professor of climate and atmospheric sciences at Scripps said in a press release. “We would never get on that plane with a one-in-20 chance of it coming down but we are willing to send our children and grandchildren on that plane.” The publication coincides with the start of Climate Week NYC which begins Monday in New York. Ramanathan and colleagues will outline the “three-lever” mitigation strategy of emissions control and carbon sequestration on Monday at the United Nations.

Americans want a tax on carbon pollution, but how to get one? -- According to a new study published by Yale scientists in Environmental Research Letters, Americans are willing to pay a carbon tax that would increase their household energy bills by $15 per month, or about 15%, on average. This result is consistent with a survey from last year that also found Americans are willing to pay an average of $15 to $20 per month to combat climate change. Another recent Yale survey found that overall, 78% of registered American voters support taxing and/or regulating carbon pollution, including 67% of Republicans and 60% of conservative Republicans.  This raises the question – with such broad support across the political spectrum, why doesn’t America have a carbon tax in place by now? Study co-author Anthony Leiserowitz noted the similarity to public support for many gun control policies: Policy elites sometimes have ideological stances quite different than their constituents, even of their own party (e.g., background checks on gun purchases in the US which is overwhelmingly favored by Democrats and Republicans).Public support often doesn’t translate into policy. On the issue of gun control, Republican lawmakers are afraid that if they vote for even the most benign policies like requiring background checks for all gun purchases, the NRA will mobilize its supporters against them. In primary races with relatively low turnout, with partisans more likely to vote, Republican lawmakers fear that mobilizing even a relatively small minority of opposition voters could cost them their jobs. On the issue of climate change and carbon taxes, they have the same fear of the Koch network. In short, the wealthy and powerful have more influence over American policy than average voters.

EPA cancels climate-change talk to be delivered by agency scientists | TheHill: The Environmental Protection Agency (EPA) has canceled a scheduled speaking appearance at a Rhode Island conference on Monday in which three agency scientists had been lined up to talk about climate change. EPA spokesman John Konkus, who formerly served as a Trump campaign operative in Florida, confirmed that the scientists wouldn't be speaking at the State of the Narragansett Bay and Watershed event in Providence, R.I.. “EPA scientists are attending, they simply are not presenting, it is not an EPA conference," he told The Hill in a statement. The New York Times was the first to report on the decision. Many were taken aback by the agency's decision, according to the Times article, as the EPA helps fund the organization hosting the event: the Narragansett Bay Estuary Program.  The scientists who were set to speak at the conference planned to talk about their research findings that climate change is having a negative effect on the estuary, including changing the air and water temperatures, the sea level, as well as the marine life in and near the estuary, the Times reported, citing colleagues with knowledge of their planned remarks. A 400-page report, which the three scientists largely contributed to, is set to be released on Monday — the day they were scheduled to speak at the conference. Konkus did not provide the Times with further explanation about the sudden cancellation. The move has raised concern that the agency is trying to block climate change research and efforts to speak out about its impact under the leadership of Administrator Scott Pruitt, according to the Times.

EPA Pulls Scientists From Talk on Climate Change, Highlighting Fears Agency Is 'Muzzling' Staff - Ever since Scott Pruitt took the helm of the U.S. Environmental Protection Agency ( EPA ), he has worked to undo decades of hard-fought climate protections, denied that carbon dioxide is a "primary contributor" to climate change , and even removed mentions of the term "climate change" from agency websites. Now, the agency has canceled the speaking appearances of three of its scientists to discuss the topic at a conference in Rhode Island on Monday, highlighting "widespread concern that the EPA will silence scientists from speaking publicly on climate change," the New York Times reported Sunday. EPA research ecologist Autumn Oczkowski, EPA postdoctoral fellow Rose Martin and EPA consultant Emily Shumchenia were scheduled to speak at the State of the Narragansett Bay and Watershed —a conference timed with the release of a 400-page report on the state of the watershed and estuary. Oczkowski was due to give the keynote speech. Martin and Shumchenia were due to speak on a panel about the biological implications of climate change. The scientists also contributed substantial material to the report, which features findings on how climate change affects the area's air and water temperatures, precipitation, sea level and fish. Tom Borden, program director for the Narragansett Bay Estuary Program, confirmed that the EPA canceled the appearances and said that no other agency staff or affiliates will speak at the event. "It's definitely a blatant example of the scientific censorship we all suspected was going to start being enforced at EPA," said John King, who also works on the program. "They don't believe in climate change, so I think what they're trying to do is stifle discussions of the impacts of climate change."

Pruitt: Scientists receiving federal grants will be cut from EPA advising roles - Environmental Protection Agency Administrator Scott Pruitt says scientists who sit on EPA advisory boards and committees who have also received federal grants for studies could be cut from their roles as soon as next week, citing a lack of objectivity in their research.  Speaking at a Heritage Foundation event on Tuesday, Pruitt said that scientists who serve on those advisory boards who have also received funding from the EPA may not be "objective." "There are dozens and dozens of these folks. Over the years these individuals, as they've served in those capacities, guess what's also happened? They've received monies through grants, and often substantial monies through grants," he said.  Pruitt said having individuals on EPA advisory boards who have received grants from the agency raises red flags."That to me causes question on the independence and the veracity and the transparency of those recommendations that are coming our way," he said.Pruitt said he would act next week to "fix that." "I'm going to issue a directive that addresses that -- that is much like sue and settle -- to insure the independence and transparency and objectivity in regard to the scientific advice we are getting at the agency," he said. Jennifer Sass, the Natural Resources Defense Council's health program senior scientist, said Pruitt's goal was to "get rid of scientists who tell us the facts about threats to our environment and health."

Report: EPA Hires 12 More Bodyguards for Pruitt, Costing $2M Annually for Full Security Team - The U.S. Environmental Protection Agency ( EPA ) Administrator Scott Pruitt has been noted for taking unusual steps to operate with extreme caution at the job—including the installation of a $25,000 soundproof communications booth and contravening a bi-partisan EPA transparency practice of keeping his schedule secret.  Now, CNN reports, the EPA is expanding Pruitt's security detail with an additional 12 agents, meaning his total security fleet stands at 30 bodyguards. This will cost the department $2 million a year in salaries alone and does not include training, equipment or travel.   Meanwhile, President Trump 's budget blueprint would cut the EPA's funds by more than 30 percent.    No other administrator has needed 24/7 security but Pruitt has reportedly received more death threats than any other EPA chief. The inspector general said the office has launched investigations into more than 70 such threats.  "We have at least four times—four to five times the number of threats against Mr. Pruitt than we had against Ms. McCarthy," said assistant inspector general Patrick Sullivan , referring to President Obama's EPA administrator, Gina McCarthy.  "The EPA is a lightning rod. We get threats from both sides of the spectrum," Sullivan told CNN. "Some people believe the EPA is not doing enough to enforce environmental laws, and they're upset about that. Other people think the EPA is doing too much, vis-à-vis enforcing environmental laws and they're upset about that."  However, eyebrows are raising over Pruitt's questionable use of taxpayer money. In August, the inspector general launched a "preliminary investigation" into Pruitt's frequent trips back to his home state of Oklahoma "at taxpayer expense" following congressional requests . Airfare for these trips reportedly cost more than $12,000.  Pruitt already had an unprecedented number of security officers before CNN learned of the new hires.

Dems: EPA nominee may be circumventing confirmation | TheHill: Senate Democrats said Tuesday that a controversial Environmental Protection Agency (EPA) nominee could be circumventing the requirement that he be confirmed by the Senate. The accusation was made in a letter that all 10 Democrats on the Environment and Public Works Committee sent to Michael Dourson, the nominee to be the EPA’s top chemical safety regulator, outlining “several concerns” with his status at the agency. Dourson has not gotten a vote either in the Environment Committee or in the full Senate. But last week he started working at the EPA as an adviser to EPA chief Scott Pruitt. A 1998 law prohibits any person from doing the duties of a Senate-confirmed official without having such confirmation. “According, it would be unlawful for you to assume any of the delegated authorities of the [position] before the Senate confirms your nomination while serving as an ‘adviser to the administrator,’” wrote the senators, led by Sen. Sheldon Whitehouse (D-R.I.). “Your appointment creates the appearance, and perhaps the effect, of circumventing the Senate’s constitutional advice and consent responsibility for the position to which you have been nominated,” they continued. “Your improper involvement in EPA decisions could provide grounds for subjects of EPA regulations and oversight to challenge the legal validity of those decisions in court.” 

U.S. Senate panel approves controversial EPA nominees (Reuters) - The Senate Environment and Public Works Committee on Wednesday approved four nominees to key posts at the Environmental Protection Agency, including one appointee with ties to the chemical industry who will head the agency’s office of chemical safety.Senator Tom Carper, the top Democrat on the committee, said two of the nominees were of “grave concern”: Bill Wehrum, nominated for assistant administrator for the Office of Air and Radiation, and Michael Dourson to head up the Office of Chemical Safety and Pollution Prevention. Carper called Dourson “one of the most troubling nominees I have ever considered during my time on this committee.” Senator James Inhofe of oil-producing Oklahoma, the panel’s senior Republican, praised the passage of the nominees and urged the full Senate to quickly confirm them so they can “improve public health within the scope of the EPA’s authority.” Republicans say the EPA under former President Barack Obama overstepped its authority to regulate. Scott Pruitt, President Donald Trump’s EPA administrator, has said the agency had an “activist agenda” under former President Barack Obama. Pruitt has worked to do away with regulations pushed through by the Obama administration, and has proposed scrapping the landmark Clean Power Plan that sought to curb emissions linked to climate change. Pruitt sued the agency more than a dozen times when he was Oklahoma’s attorney general. Jeff Holmstead, a former head of the EPA air and radiation office under former President George W. Bush, said Wehrum is the “ideal person to shepherd Administrator Pruitt’s reforms through the regulatory process.” 

Nicaragua Joins Paris Agreement, Leaving Only U.S. & Syria Behind - Nicaragua will officially join the Paris agreement and has presented the necessary paperwork to the UN, Vice President and first lady Rosario Murillo said on local radio Monday. Murillo called the accord "the only instrument we have in the world that allows the unity of intentions and efforts to face up to climate change and natural disasters." Nicaragua was the only country to outright reject the agreement in 2015, arguing in favor of more drastic action to mitigate climate impacts. The move means that the U.S., which announced it would pull out of the agreement in June, heads into the COP23 talks in Bonn next month alone with Syria as the only two countries in the world not participating in the global accord. "Scientists from more developed countries, scientists working at NASA, European scientists, everyone agrees that we must stop the process that is leading to the destruction of the planet," said Nicaraguan President Daniel Ortega. As reported by the BBC : "Nicaragua has no oil and vigorously pursues green energy policies—more than 50% of its electricity is produced by geothermic, wind, solar, biomass and wave power. It is a country that is believed to be especially at risk from climate change.  The World Bank described the central American country as "a renewable energy paradise" in 2013."

Congressional Auditor Urges Action to Address Climate Climate Change -— Fires, floods and hurricanes are already costing the federal government tens of billions of dollars a year and climate change will drive those costs ever higher in coming years, a new federal study warns.The report by the Government Accountability Office, Congress’s auditing arm, urges the Trump administration to take climate change risks seriously and begin formulating a response. The study, scheduled to be released Tuesday, says that different sectors of the economy and different parts of the country will be harmed in ways that are difficult to predict. But one estimate projects that rising temperatures could cause losses in labor productivity of as much as $150 billion by 2099, while changes in some crop yields could cost as much as $53 billion. The Southwest will suffer more costly wildfires, the Southeast will see more heat-related deaths and the Northwest must prepare for diminished shellfish harvests. The report acknowledges that it is difficult to pinpoint the costs of disasters that can be directly attributed to climate change. And the projected fiscal burden remains less than 1 percent of the current $3.8 trillion federal budget.But Senators Maria Cantwell, Democrat of Washington, and Susan Collins, Republican of Maine, who jointly requested the report, said between the lines of a conservative government audit was an urgent economic message that Washington should heed. “The Government Accountability Office — if you will, the chief bean counter — is basically telling us that this is costing us a lot of money,” Ms. Cantwell said. “We need to understand that as stewards of the taxpayer that climate is a fiscal issue, and the fact that it’s having this big a fiscal impact on our federal budget needs to be dealt with.” The report, two years in the making, comes as the Senate prepares to vote this week on a $36.5 billion disaster-relief package to fund hurricane relief, a flood insurance program and wildfire recovery efforts in the West.

Democrats Are Letting the Climate Crisis Go To Waste - What should be a sparkling opportunity to push forward an ambitious agenda on climate — to condemn Republicans for not just ignoring but fueling a crisis with increasingly human and economic consequences — is going quite literally up in smoke. Even the most dogged climate champions in Congress are doing something Republicans would never dream of: letting a crisis go to waste. It’s not often that planetary devastation is so omnipresent. The United States has been hit by a string of catastrophic hurricanes this season, all of which were strengthened by unusually warm Atlantic waters. Their storm surges hit coasts harder and higher thanks to sea level rise, and knocked out infrastructure largely unprepared for rising tides and fierce winds. Wildfires — fueled by unusually hot, dry weather — have ripped through the Western half of North America, turning the air in some of California’s biggest cities into a public health hazard.  Each of the 10 hottest years on record have happened since 1998, and Republicans are doing everything in their power to rip up the regulations and policies that could help mitigate the United States’ contribution to our ongoing climate crisis, most recently in taking their first official step to dismantle the Clean Power Plan.  There’s been no unified policy response from congressional Democrats to Republicans’ attack on the Clean Power Plan or recent extreme weather events. Instead, the country’s most progressive Democrats have taken the GOP’s advice of not politicizing the events of the last few months. “We have a lot of time to make that point,”   The trouble is that we don’t —  Without radical developments in so-called negative emissions technology, keeping warming below 2 degrees celsius will mean a prohibition on new fossil fuel infrastructure in the short term and a total decarbonization of most Global North economies by mid-century at the latest. To get to a 1.5 degree Celsius warming cap — the more ambitious target inscribed in the Paris Climate Agreement — “you would have to shut down every coal and gas plant in the U.S. in the next 10 years,” climate researcher Glen Peters told me last year. “You couldn’t have a single petrol car in the U.S., and the same for India, for China, and for every country in the world. While you remove those, you have to build up new infrastructure, wind turbines, solar panels … a completely new car fleet, and so on.”

The Senate’s top climate advocate explains why Congress is doing nothing about global warming -- Sen. Sheldon Whitehouse (D-RI), widely seen as the Senate’s most active advocate on climate change, says he is in routine communication with “six to 10” Senate Republicans who, he says, privately support his carbon tax bill but are unwilling to publicly back it. Only one Senate Republican, South Carolina’s Lindsey Graham, is willing to publicly support that idea.  In an interview with Vox, Whitehouse talked excitedly about the former Republican officeholders and George W. Bush officials who have formally voiced their support as well.   “If you want to have a valid Republican Party 10 years from now, you can’t have a generation of people that grows up seeing the Republican Party as climate deniers,” Whitehouse said in an interview, explaining his confidence that Republicans will move to address an issue their party’s president has called a “Chinese hoax.”  The issue is getting new attention as several severe hurricanes have made landfall in the US, causing expensive and lasting damage in Texas, Florida, and Puerto Rico. After the hurricane in Florida, one Republican mayor said: “If this isn't climate change, I don't know what is.”To be sure, Republicans still hold power over which bills even come to the floor with their bare majority, and Senate Majority Leader Mitch McConnell certainly doesn’t seem interested in bringing Whitehouse’s bill to a vote anytime soon. (“I don’t think CO2 is a pollutant,” Texas Rep. Joe Barton told me when I asked about the possibility of climate legislation. “You’re creating CO2 asking me these questions.”)  So many on the left are also skeptical that Senate Republicans are genuinely interested in addressing climate change beyond assuring their Democratic counterparts behind closed doors that their hearts are really in the right place. Former Vox reporter Brad Plumer argued, at length, that a conservative carbon tax is a “dream” that “refuses to die,” and said that the media should be skeptical that the GOP would act on climate change until their elected officials openly embrace it.

US ambassador to Canada believes 'both sides' of climate science | TheHill:  The new U.S. ambassador to Canada said Monday that she believes “both sides” of climate change science.In an interview with Canada’s CBC News, Kelly Knight Craft said that she believes there is “accurate” science on “both sides” but did not specify what sides she was referring to.“I believe there are sciences on both sides that are accurate,” Craft said. “Both sides have their own results from their studies, and I appreciate and respect both sides of the science.” President Trump appointed Craft, a prominent GOP fundraiser, to the ambassadorship earlier this year. Craft told CBC that even though Trump has pledged to pull the United States out of the Paris climate agreement, she thinks the U.S. can “absolutely” fight climate climate change. “We all have the same goal, and that is to better our environment and to maintain the environment,” she said. “I feel like our administration has been on top of this regardless of whether or not they’d be pulling out.”

The Cost Of Cool - THE blackouts that left hundreds of millions of Indians sweltering in the dark last month underscored the status of air-conditioning as one of the world’s most vexing environmental quandaries. Nearly all of the world’s booming cities are in the tropics and will be home to an estimated one billion new consumers by 2025. As temperatures rise, they — and we — will use more air-conditioning. Air-conditioners draw copious electricity, and deliver a double whammy in terms of climate change, since both the electricity they use and the coolants they contain result in planet-warming emissions. Scientific studies increasingly show that health and productivity rise significantly if indoor temperature is cooled in hot weather. So cooling is not just about comfort. Sum up these facts and it’s hard to escape: Today’s humans probably need air-conditioning if they want to thrive and prosper. Yet if all those new city dwellers use air-conditioning the way Americans do, life could be one stuttering series of massive blackouts, accompanied by disastrous planet-warming emissions. We can’t live with air-conditioning, but we can’t live without it.  Projections of air-conditioning use are daunting. In 2007, only 11 percent of households in Brazil and 2 percent in India had air-conditioning, compared with 87 percent in the United States.   “Current energy demand does not yet reflect what will happen when these countries have more money and more people can afford air-conditioning.” He has estimated that, based on its climate and the size of the population, the cooling needs of Mumbai alone could be about a quarter of those of the entire United States, which he calls “one scary statistic.” 

German Utilities Pay Customers to Use Electricity Thanks to Renewables Surplus - This past May , Germany's renewable energy mix generated so much power that prices actually went negative for several hours, meaning grid operators were forced to pay customers to use electricity. This coming Sunday, however, wind generation alone is forecast to hit a new record, according to data crunched by Bloomberg . This means average prices will be negative for Germany electricity customers for a whole day, not just for a few hours. When prices go negative, power producers either close power stations to reduce the electricity supply or pay consumers to take it off the grid, Bloomberg noted. In May, Germany's mix of solar , wind , hydropower and biomass generated 88 percent of Germany's total electricity demand. While that was an already impressive feat then, on Sunday at 7 a.m, wind generation will peak at 39,190 megawatts—or enough to meet more than half of the country's total demand. That's just from wind power! Germany's previous wind generation record was 38,370 megawatts on March 18. The world's fourth largest economy is in the midst of a clean energy revolution known as Energiewende. Fortune reported that German consumers pay a surcharge of around €20 ($23.61) on their energy bills to pay for the initiative. Power prices are higher in Germany than in any other European country except for Denmark , where it costs €0.308 ($0.36) per kilowatt hour versus Germany's €0.298 ($0.34). To compare, residential prices for electricity averages $0.13 cents per kilowatt hour in the U.S.  However, it appears that the overwhelming majority of Germans do not mind paying this extra amount to go green. An survey by the Agency for Renewable Energies (AEE) revealed that 95 percent of Germans rate the expansion of renewables as important to extremely important for energy security and to fight climate change.

Europe’s climate strategy of burning wood for energy isn’t working  - Every day resistance is growing to the use of wood as a renewable energy. Environmental NGOs have long opposed the use of ‘forest biomass’ because it  harms the climate and biodiversity. Now opposition is going mainstream, with increasing numbers of EU citizens expressing their concerns about the pressure the policy  is putting on forests. Growing demands have led to the use of whole trees for energy. Businesses too, are complaining that bioenergy subsidies are distorting biomass and energy markets. In the name of promoting ‘green’ energy and encouraging the use of renewable sources of electricity and heating, since 2009 the European Union has allowed Member States to subsidise the use of wood for renewable energy production. These subsidies have increased the use of biomass in coal-fired power installations by 85% in some member states, according to a recent study by think tank Sandbag. The study shows that 40% of biomass use for electricity production happens in coal power plants.This is disturbing on many levels, and not least that because it means that billions of public funds are being used as a hidden subsidy for coal and coal infrastructure.But the use of wood in large scale inefficient coal-fired power stations is highly problematic in itself, and attracting fierce opposition.Installations such as Gardanne in the South of France and Drax in the United Kingdom require huge volumes of wood. Local activists in France and the UK are protesting against biomass burning in these places because of the negative effect on forests and air quality.Forest-based industries are also concerned. They understand – as ample evidence shows –that wood is a limited resource and burning it, specifically in large inefficient installations, is a huge waste. Increasing demands have also led to the use of whole trees for energy.But perhaps even more concerning are the negative impacts on the climate. Burning wood emits more CO2 than burning coal per unit of energy produced, while compensation for these emissions by future growth of trees is unlikely in the time scales relevant for climate change. This was highlighted recently in a letter by almost 200 scientists that said ‘bioenergy is not carbon neutral and can have serious negative climate impacts’, and which urged policy makers to implement strict rules on bioenergy in future EU renewables policy.

 EPA plans to repeal emission standards for truck components -  The Environmental Protection Agency is seeking to repeal tighter emissions standards for truck components, a rule adopted in the final months of the Obama administration aimed at controlling traditional air pollutants as well as greenhouse-gas emissions linked to climate change.  EPA Administrator Scott Pruitt, who privately met in May with the manufacturer that stands to benefit most from the rule’s repeal, suggested in August that he would reexamine the rule “in light of the significant issues raised” and see whether it is consistent with the agency’s authority under the Clean Air Act. The Office of Management and Budget has posted a notice saying that on Saturday it received the proposal to rescind the rule. Unlike some Obama-era regulations, the rule, which is scheduled to take effect Jan. 1, has been widely embraced by the trucking industry. The rule applies the standards now used for heavy-duty trucks to new truck components called gliders and trailers. A glider, or body, is the front of a truck, including the cab, which fits over the engine. Trailers are the storage components that make up most of the length of a truck. Trucking companies can install an outdated engine into a new truck body and avoid regulations that would apply to an entirely new truck. Engine manufacturers and public health advocates are in favor of closing that loophole and applying pollution controls uniformly. Heavy-duty trucks have faced tighter emissions standards since 2004, though they have become more stringent over time, thereby widening the gap between new ones and truck bodies that contain older engines.

Electric cars emit 50% less greenhouse gas than diesel, study finds -  Electric cars emit significantly less greenhouse gases over their lifetimes than diesel engines even when they are powered by the most carbon intensive energy, a new report has found.In Poland, which uses high volumes of coal, electric vehicles produced a quarter less emissions than diesels when put through a full lifecycle modelling study by Belgium’s VUB University.CO2 reductions on Europe’s cleanest grid in Sweden were a remarkable 85%, falling to around one half for countries such as the UK.“On average, electric vehicles will emit half the CO2 emissions of a diesel car by 2030, including the manufacturing emissions,” said Yoann Le Petit, a spokesman for the T&E think tank, which commissioned the study.“We’ve been facing a lot of fake news in the past year about electrification put out by the fuel industry but in this study you can see that even in Poland today it is more beneficial to the climate to drive an electric vehicle than a diesel.”The new study uses an EU estimate of Poland’s emissions – at 650gCO2/kWh – which is significantly lower than calculations by the European commission’s Joint Research Centre science wing last year.But its findings will likely be welcomed in Brussels, where a new emissions standard for 2030 is set to be unveiled in November, along with some potentially more radical proposals. Speaking in the European parliament this month, the EU’s climate commissioner, Miguel Canete, said: “One option we’re looking at is a mandate to ensure a minimum share of low – for manufacturers it could be zero – emitting vehicles.” Today, just 1.7% of new vehicles sold in Europe are electric, and some EU officials question whether Europe has access to enough lithium to create a 5-10% market share for electric cars anytime soon. Its capacity to scale up construction of battery plants may also be in doubt.

Tesla reportedly strikes deal with China to build ‘wholly-owned’ gigafactory in Shanghai -- There have been several false alarms over the past few years about Tesla building a factory in China. Earlier this year, Tesla finally confirmed working with the Shanghai government to establish a manufacturing facility in the region and promised an announcement by the end of the year.Now the Wall Street Journal reports that they have come to an agreement with the local authorities on a “wholly owned” factory in the region. As previously reported, the biggest roadblock for foreign automakers to establish manufacturing capacity in China is that they have to create joint ventures with domestic companies and split their profits and technologies with them.The government has been talking about potentially relaxing those laws especially for the production of electric vehicles, but the company apparently went another way instead.According to the WSJ report, Tesla will establish the factory in Shanghai’s free-trade zone: “The deal with Shanghai’s government will allow the Silicon Valley auto maker to build a wholly owned factory in the city’s free-trade zone, these people said. This arrangement, the first of its kind for a foreign auto maker, could enable Tesla to slash production costs, but it would still likely incur China’s 25% import tariff.” Tesla didn’t comment on the report and reiterated that an official announcement should be coming later this year. China is already the biggest market for electric vehicles, or any vehicles for that matter, and Tesla profited from the demand by tripling its sales to over $1 billion in the country in 2016. Tesla continues to have strong sales in the country this year, where it leads foreign electric car sales with no close second.

 Where will we charge all those electric cars we’ll soon be buying? - The auto industry is getting ready to plug into battery power in a big way. In recent months, virtually every major automaker has announced some form of “electrification” and, by the middle of the coming decade, conventional hybrids, plug-in hybrids, and pure battery-electric vehicles could account for nearly one-third of all new vehicle sales — even more if California regulators ban the internal combustion engine entirely, as they’re now considering.  But this dramatic shift raises plenty of questions, including one of the most basic: Where will American motorists plug in? And where will all the energy come from to charge up millions of new plug-based vehicles?  While proponents see the shift to battery power as a way to clean up air pollution and reduce our dependence on foreign oil, skeptics fear it could put a massive strain on the nation’s electrical grid requiring billions of dollars in new infrastructure including the addition of many new generating plants. Potentially worse, that could actually increase pollution problems, they warn, especially if those plants were to rely on coal.  When you add them all up, hybrids, plug-ins, and pure battery-electric vehicles, or BEVs, accounted for less than 3 percent of all the vehicles sold in the U.S. in 2016. The numbers have been rising this year, and is expect to surge with the arrival of more long-range models such as those coming from Audi, Ford, Nissan, and Volkswagen. Tesla alone is forecasting 2018 will see sales of 500,000 BEVs, primarily its new Model 3, or about six times its previous annual record.

Trump caves on ethanol - The bipartisan pull of corporate welfare—also known as the swamp—is powerful. Last week it swallowed up no less than Donald Trump and his fearless Environmental Protection Agency administrator, Scott Pruitt. They caved under pressure from the ethanol lobby and political extortion from Republican Senators Joni Ernst, Deb Fischer and Chuck Grassley. Mr. Pruitt announced Thursday that EPA won’t reduce its proposed 19.24 billion gallon biofuels quota for 2018, and may even increase it. The EPA will further consider giving biofuels a pass to pollute that no other industry enjoys, via what’s known as a Reid Vapor Pressure waiver for high-ethanol blends. As bad, the EPA announced it will keep intact a compliance credit scheme that benefits global and integrated oil companies and ethanol producers at the expense of smaller independent refiners and manufacturers. “Renewable identification numbers,” or RINs, are a credit created each time a gallon of ethanol is mixed with fuel. The EPA requires refiners to use RINs as proof of compliance with biofuel standards, and credits can be bought or sold. Because only major global refiners have the capabilities to blend their own fuel, most small and midsize merchant refiners have no way of producing RINs in-house. Big Oil, the ethanol lobby and speculators have cornered the market for the credits, and RIN prices are soaring. In 2012 Philadelphia Energy Solutions paid $10 million for RINs. This year, it will spend $300 million, twice the price of payroll. Only crude oil—the refinery’s main input—costs more annually. Because of that skyrocketing expense, Moody’s has dropped the refinery’s credit rating from a B+ to a CCC- in four years. Mr. Pruitt’s announcement means it will get no RIN relief.

More than half of EU biodiesel made from imported crops - Some 53% of EU biodiesel is made with imported feedstock, according to a recent analysis of European Commission data by NGO Transport and Environment, and almost half of imported palm oil is burned in car engines. “EU car and truck drivers are the biggest consumers of palm oil in Europe and they don’t know it,” Transport and Environment’s (T&E) Clean Fuels Manager Laura Buffet said on Tuesday (17 October). The raw materials for around half of the crop-based biodiesel produced in the EU are imported, she said, stressing that this does not fit with the image of a sustainable EU sector that the biofuels industry likes to present. Biofuels currently make up 4.9% of EU transport fuel, with biodiesel accounting for 81% of this figure. According to T&E’s analysis, some 33% of this biodiesel is made from imported palm oil. “There are differences in the greenhouse gas impacts of vegetable oils but on average, all crop-based biodiesels are worse for the climate than fossil diesel,” the T&E study stated. “Palm has the highest overall GHG emissions – over three times the fossil emissions.” 

U.S. warns public about attacks on energy, industrial firms (Reuters) - The U.S government issued a rare public warning that sophisticated hackers are targeting energy and industrial firms, the latest sign that cyber attacks present an increasing threat to the power industry and other public infrastructure. The Department of Homeland Security and Federal Bureau of Investigation warned in a report distributed by email late on Friday that the nuclear, energy, aviation, water and critical manufacturing industries have been targeted along with government entities in attacks dating back to at least May. The agencies warned that hackers had succeeded in compromising some targeted networks, but did not identify specific victims or describe any cases of sabotage. The objective of the attackers is to compromise organizational networks with malicious emails and tainted websites to obtain credentials for accessing computer networks of their targets, the report said. U.S. authorities have been monitoring the activity for months, which they initially detailed in a confidential June report first reported by Reuters. That document, which was privately distributed to firms at risk of attacks, described a narrower set of activity focusing on the nuclear, energy and critical manufacturing sectors. Department of Homeland Security spokesman Scott McConnell declined to elaborate on the information in the report or say what prompted the government to go public with the information at this time. The FBI declined to comment on the report, which security researchers said described an escalation in targeting of infrastructure in Europe and the United States that had been described in recent reports from private firms, including Symantec Corp. 

Will This Trump Move Trigger A Coal And Nuclear Buying Spree?  - You probably haven’t heard about it. But one of the most critical energy developments in years is now gearing up for a major battle in America. That’s a slate of new regulations around power pricing across the U.S. which have been proposed by the Trump-era Department of Energy (DOE), in order to give coal and nuclear power generation a boost — opened for public comment this week. Here’s the crux: the new DOE rules aim to ensure “reliability and resiliency” of power generation in America. By rewarding electricity producers who are able to generate continuous and steady power supply.There are a couple of key pieces to the exact wording here. One being that electricity grid operators will be required to provide “full cost recovery” to some power-producing facilities. Specifically, those power plants that “maintain 90-day on-site fuel supplies”.That basically means nuclear and coal-fired plants. With these solid-fuel driven facilities being the only ones that keep large fuel inventories on-site — unlike alternative generation methods like natural gas, hydro and renewables.The cost recovery specification is critical here. As it would mean that grids would be required to ensure pricing that pays back coal and nuclear plant builders for all of their costs in putting up new facilities — likely meaning such operations would enjoy premium pricing.   If implemented, these rules would thus encourage the building of new nuclear and coal plants. Which proponents of the law say are necessary in order to provide stable baseload power to the grid.

Plan to support coal, nuclear divides U.S. energy industry (Reuters) - U.S. industries that rarely agree - gas drillers and renewable energy producers - urged a federal agency on Monday to dump a government directive to prop up ageing nuclear and coal plants, saying the electricity grid was already reliable. The split in the energy industry showed that a Trump administration push to make the country energy “dominant” by boosting output from every part of the sector may face hurdles. A group of 20 organizations including the Independent Petroleum Association of America and the Solar Energy Industries Association submitted comments to the Federal Energy Regulatory Commission as it considered a regulation proposed late last month by U.S. Secretary of Energy Rick Perry. Perry’s directive would reward certain nuclear and coal fired power plants that store 90 days of fuel on site for contributing to the reliability of the power grid. He wants the FERC to pass the rule before the winter season starts. The groups said Perry’s request “fails to provide substantial evidence” for its claim that competitive markets do not already value fuel security. The proposed rule would “prop up uneconomic generation that is unable to compete … and that is not otherwise needed for reliability,” the groups said. The FERC rejected a request to extend the comment period on the directive that ended on Monday. But its three commissioners have hinted that they may not pass the rule, or that it could be changed, because they do not want to damage competitive markets. The FERC panel is supposed to be five members strong, but the U.S. Senate has not yet voted on two other FERC nominees. Coal and nuclear interests insisted that many plants need the support in order to survive. Coal producer Murray Energy said in comments to FERC that it and other coal producers and related industries are “threatened with bankruptcy and significant economic harm” if plants and other operations are forced to shut by “unreasonable and unsupportable market pricing mechanisms.” 

Winter reliability strong, RTOs tell FERC, undermining DOE NOPR justification  - Federal energy regulators turned their attention toward the coming winter on Thursday, hearing presentations from staff and each RTO and ISO about expectations for the colder months.  "At this time," staff said, "we do not see major risk factors that would likely lead to significant market disruptions during this winter."   FERC staff winter '17 report. The six organized market operators under FERC jurisdiction reinforced that claim, saying even in markets like New England, where gas pipeline capacity has raised power supply concerns, they are prepared even if temperatures drop below expectations. “The generation assets and transmission assets perform well and are accustomed to cold weather,” ISO-NE Vice President for System Operations Peter Brandien said. “We may have some delayed starts for units that haven't been on and we're bringing them on in a cold morning but we don't see forced outages due to cold weather.”Those comments, echoed by other RTOs, run counter to the Department of Energy’s justification for its proposal to provide cost recovery for coal and nuclear plants with 90 days of fuel onsite. Secretary of Energy Rick Perry has repeatedly said the rule is necessary to protect the grid from events like the Polar Vortex, an extended cold snap that forced some generators offline in 2013-2014. Brandien said long periods of extreme cold could still pose problems in ISO-NE, when plants “are using oil and LNG pretty hard and we don’t have time to get shipment or replenishment of those fuels.” The ISO’s winter reliability program is meant to combat such issues by requiring generators to keep stockpiles of oil or LNG onsite. This is the last year for the program, which Brandien said was always meant as a “stopgap,” after which the ISO will implement a new “pay for performance” tariff in the capacity market.

 Gas industry pushes back against US DOE proposal on grid resilience - The US natural gas industry laid out its case against the Department of Energy's notice of proposed rulemaking on grid resilience, arguing the proposal distorted the record of gas sector reliability and floated a discriminatory framework that would benefit coal and nuclear generation over similarly-situated resources. As comments flooded in to the US Federal Energy Regulatory Commission this week on the proposal (RM18-1), the Interstate Natural Gas Association of America said it backed DOE efforts to enhance grid reliability and resilience. But INGAA faulted the NOPR for trying to justify a "deeply problematic policy" by misstating the performance of natural gas during extreme weather events, such as the 2014 Polar Vortex and Gulf Coast hurricanes. During the Polar Vortex, INGAA argued gas performed "approximate to or better than" what DOE termed "fuel-secure" generation sources -- those that have 90 days of fuel stored onsite and for which the DOE plan would guarantee full cost recovery. Any gas-related issues during the Polar Vortex were largely unrelated to reliability of pipelines, and had more to do with market prices and scheduling, INGAA said. In PJM Interconnection, it said "combined cycle (i.e., baseload) natural gas-fired generators averaged lower forced outage rates (4.29%) than baseload coal plants (7.71%) and were close to the forced outage rates for nuclear plants (3.51%)." Moreover, in response to the Gulf Coast hurricanes and Hurricane Sandy, the trade group said the pipeline system performed well, even according to DOE studies, while "so-called 'fuel-secure generation' including coal and nuclear power has faced challenges during extreme weather events." It highlighted coal piles freezing during the Polar Vortex and nuclear reactors shutting during Sandy.

Powelson rejects Polar Vortex arguments underpinning DOE recovery plan - Secretary of Energy Rick Perry often mentions the threat of power sector emergencies like the Polar Vortex as justification for his department's proposal to provide cost recovery to power plants with 90 days of fuel supply onsite. Last week, Perry repeatedly referenced the Vortex at a House committee meeting on the DOE proposal, telling lawmakers the cost of his plan should be "secondary" to keeping the lights on in emergencies. "We’re probably going to have another one," Perry said of the Vortex. "And if we are, shouldn’t it be our responsibility to make sure that when your constituents turn the lights on that they’re not having to make the decision between staying warm and having light?"Perry's line of reasoning rests on the assumption that generators with fuel onsite would perform better in extreme weather conditions than natural gas plants, which must draw fuel through pipelines. But multiple House members questioned that reasoning at the hearing, pointing out that onsite coal supplies froze in the Vortex and were recently inundated by flood waters after Hurricane Harvey. Powelson added his voice to that chorus on Monday, telling an audience at the Association for Blacks in Energy policy summit that gas issues did not drive disruptions. "There’s a dirty little secret going around that the gas guys didn't perform during the Jan. 6 and 7 timeline," he said. "I am here to tell you unequivocally that is not the case, and I can’t stand here and represent what we call a mistruth that the gas industry caused the interruptions of the Polar Vortex.”  Powelson also reportedly addressed reforms enacted by grid operator PJM since the extreme weather, saying that they had helped to "weed out some of these bad actors in the marketplace" and noting a new capacity performance construct put in place to ensure generators perform in peak demand periods.

Power grid operator protests Trump plan to aid coal, nuclear (AP) — The nation's biggest electric grid operator said a Trump administration plan to change the way electricity is priced to reward coal and nuclear power is both unworkable and potentially against the law.PJM Interconnection, which operates the grid covering 65 million people from Illinois to Washington, D.C., submitted formal comments on the plan late Monday to the Federal Energy Regulatory Commission.In a conference call with reporters and industry analysts, PJM's president and CEO, Andy Ott, said the plan by Energy Secretary Rick Perry is not "workable.""In fact, we do believe it's contrary to law and, again, will not really solve any problems," Ott said.Guaranteeing higher payments to coal, nuclear and other qualifying power plants would probably increase consumers' electric bills, unless FERC found another source of money, Ott said.Coal-fired and nuclear generators comprise just over half of all generation capacity in PJM's region. However, the amount of U.S. electricity generated by coal has fallen to about one-third in the last decade, mostly as hydraulic fracturing has made natural gas cheaper and more plentiful.The natural gas boom also has hit nuclear power plants, sending their owners in search of a financial rescue in states including Pennsylvania and Ohio where competitive electricity markets have compounded the effect. In its 76-page filing with FERC, Pennsylvania-based PJM urged the commission to reject the plan drawn up by President Donald Trump's administration.

Subsidizing coal and nuclear power plants would not be legal, PJM says -- The independent company that manages competitive wholesale power markets in Ohio and 12 other states believes a federal proposal to subsidize the owners of old nuclear and coal plants is unworkable and would not even be legal. The U.S. Department of Energy proposal "is simply unworkable," said Andrew Ott, CEO of PJM Interconnection, in a press conference today. "We believe it is contrary to law." PJM intends to file formal comments later today with the Federal Energy Regulatory Commission regarding the proposal from the DOE. The DOE in September, following intense lobbying from the coal industry and from FirstEnergy and other traditional utilities, proposed that FERC require PJM and other grid managers to credit the owners of the big coal and nuclear plants for providing "resiliency" to the grid because they store fuel on-site and run 24 hours a day. They also generate power at higher prices than new gas turbine plants. In other words, the DOE wants PJM's fiercely competitive markets to accept higher priced power from old coal and nuclear plants at whatever it cost to generate -- plus a profit -- the way the old plants did business before de-regulation. The DOE reasoned that coal plants traditionally have a 45-to-60 day fuel supply on hand, while nuclear plants run continuously for 18-to-24 months before having to replace a third of their fuel rods, a process that takes 30 to 60 days. The plan would require coal plants to have a 90-day supply of fuel on-site. The proposal was aimed at helping the old plants compete with new ultra-efficient gas turbine power plants -- which are about twice as efficient -- but which rely on pipeline gas rather than fuel on site.

 2 groups oppose sale of West Virginia coal-fired plant (AP) — Environmental advocates are urging West Virginia's Public Service Commission to reject two power companies' proposal to pay $195 million for a 37-year-old coal-fired power plant, saying it will saddle 530,000 ratepayers with the expenses and market risks. Monongahela Power Co. and Potomac Edison Co. this year proposed purchasing the 1,300-megawatt-capacity plant along the Ohio River near Belmont from Allegheny Energy Supply. They called it "the least-cost source to meet a steadily increasing capacity shortfall" in the utilities' service areas that would initially cut average ratepayer bills by about $12 annually. In a brief to the commission, West Virginia Citizen Action Group and West Virginia Solar United Neighborhoods say the sale among FirstEnergy Corp. entities mainly shifts risks and costs from the corporation to customers whose rates would rise later.

Coal-export terminal backer sues Washington over permit denial  (AP) — A company proposing to build a terminal in Washington state to export U.S. coal to Asia sued the state Tuesday, arguing regulators unfairly denied the project a key permit. Millennium Bulk Terminals-Longview's lawsuit claims the state Department of Ecology violated federal and state laws when it denied the project a water quality certification last month. The lawsuit filed in Cowlitz County Superior Court alleges the denial was based on "biased and prejudiced decision-making." The company also appealed the decision to a state shoreline hearings board. Millennium, owned by Utah-based Lighthouse Resources, has sought to build a facility along the Columbia River to handle up to 44 million tons of coal a year. Trains would carry the coal from Montana, Wyoming and other states, which would be loaded onto ships headed to Asia. It would be one of the largest in North America. "Today's filings demonstrate Ecology invented special rules in a unique and unprecedented process in the evaluation of Millennium's project," Company officials described a protracted permitting process that has been unprecedented in scope. The company said it has invested about $15 million in the permitting process. 

World's Biggest Coal Company's Bankruptcy Protects It From Climate Lawsuit, Judge Rules -- Peabody Energy is not responsible for climate impacts incurred before its 2016 bankruptcy filing, a judge ruled this week. The world's largest private coal company is one of 37 fossil fuel companies being sued by three municipalities in California for damages due to climate change caused by burning fossil fuels and for conducting a "coordinated, multi-front effort" to discredit climate science.  St. Louis Judge Barry Schermer, who presided over the bankruptcy, ruled that the counties missed the deadline to file claims during Peabody's Chapter 11 filing last year and that language around environmental exceptions in Peabody's bankruptcy plan do not apply to the California suit. The coal giant, which lost $2 billion in 2015, posted a quarterly profit of $200 million this week, six months after emerging from bankruptcy.   As reported by Bloomberg :   "St. Louis-based Peabody was sued in July together with global energy companies such as Exxon Mobil Corp. and Royal Dutch Shell Plc. The suit says the companies have known since at least 1965 that their activities were changing the climate, and that there was only a narrow window of time to reverse from a catastrophic course.  "We are reviewing the court's decision and considering our options," said Vic Sher, a Sher Edling LLP lawyer representing the California communities, Marketwatch reported. "But it would be a shame if Peabody, the biggest private coal company in the world, can use the bankruptcy laws to avoid defending these cases that call into question their role in damaging our climate, causing sea levels to rise, misleading the public and policy makers about those impacts, and shifting billions of dollars in costs onto coastal communities."

 Electricity from shale gas vs. coal: Lifetime toxic releases from coal much higher - Despite widespread concern about potential human health impacts from hydraulic fracturing, the lifetime toxic chemical releases associated with coal-generated electricity are 10 to 100 times greater than those from electricity generated with natural gas obtained via fracking, according to a new University of Michigan study. The study is a comparative analysis of the harmful health effects of electricity produced from shale gas and coal. It looks at the amount of toxic chemicals released into the air, soil and water during both the resource extraction and electricity generation phases of both technologies and concludes that the potential human health impacts of electricity from coal are much higher.The findings suggest that as the U.S. energy market continues to shift from coal to natural gas, the overall "toxicity burden" of the electricity sector will decrease, said study corresponding author Shelie Miller, an environmental engineer and an associate professor at the U-M School for Environment and Sustainability's Center for Sustainable Systems."This analysis does not imply that concerns associated with shale gas production are unfounded, only that the overall toxic load of coal is definitely greater," Miller said. "And while the study doesn't address this directly, we should be pursuing renewables more aggressively if we really want to decrease the human toxicity burden of our energy system." The study was published online Oct. 10 in the journal Environmental Science & Technology. The other authors are Brian Ellis of the U-M Department of Civil and Environmental Engineering and Lu Chen, a recent graduate of the U-M School for Environment and Sustainability.

India bans use of dirtier coal alternative in New Delhi area  (Reuters) - India’s top court on Tuesday banned the use of petroleum coke, a dirtier alternative to coal, in and around New Delhi in a bid to clean the air in one of the world’s most polluted cities. The court, which recently banned the sale of firecrackers in the New Delhi area, also ordered a ban on the sale and use of furnace oil - another dirty refinery by-product - in and around the capital and ordered implementation of strict emission norms by the end of December. “It is a big win for clean air,” Sunita Narain, an environmental activist and a member of a committee set up by the government which recommended the ban of such fuels around the Indian capital, told Reuters. The order comes after the Environment Protection Authority (EPCA), a government-appointed body, in April recommended to the court that it ban the fuels due to high sulfur levels. India is the world’s biggest consumer of petroleum coke, a dark solid composed mainly of carbon, which emits 11 percent more greenhouse gases than coal, according to the Carnegie–Tsinghua Center for Global Policy. Burning it also emits several times more sulfur dioxide, which causes lung diseases and acid rain. Annual demand for the fuel, which is more energy efficient than coal, has nearly doubled over the past four years to more than 27 million tonnes.

In bizarre twist, coal may become a scarce commodity - Livemint: The idea of coal as a scarce commodity seems somewhat preposterous given it remains one of the most abundant mineral resources on the planet, but the coming years may see a deficit in seaborne markets for the polluting fuel. The current debate surrounding coal is generally one of how long it will continue to play a role in the world’s energy mix before it is replaced by cleaner alternatives, mainly renewables such as wind and solar. While various analysts will disagree on how quickly this process will occur, the reality is that coal, particularly in Asia, will remain a bedrock of energy supply for at least the next decade. With the exception of India, most major coal importers in Asia have increased purchases this year, with top buyer China boosting imports by 13.7% in the first nine months of the year, compared to the same period in 2016. This demand has boosted the Asian benchmark thermal coal price, the Newcastle index back to levels close to $100 a tonne, with the marker ending at $98.25 in the week ended 20 October, up 36% from the low so far this year of $72.42 in May.There will be a supply shortfall of 22.7 million tonnes in 2017 in the global seaborne market, Rodrigo Echeverri, head of energy coal analysis at Noble Resources, told the World Coal Leaders conference this week in Barcelona. While rising exports from the United States can meet some of the shortfall, Echeverri expects the supply deficit to persist in 2018, meaning that Newcastle prices have to remain above $80 a tonne in order to incentivise US shipments. The issue for global coal markets is that despite the rhetoric of countries trying to lower coal consumption, in reality this has been increasing. 

Fracking Chemicals May Impact Brain Development in Young Children --As the fracking industry expands in the U.S., Europe and the UK, so too does the list of concerns about the industry’s human health and environmental impacts. This month, a new raft of independent studies raises fresh concerns, including potential effects on infant health.  Researchers from the Center for Environmental Health examined how unconventional oil and gas  — UOG — techniques may contribute to health concerns across sites in the United States, publishing their findings in the journal “Reviews on Environmental Health.”  In fracking and other so-called UOG processes, a concoction of water, sand and a host of chemicals is channeled at high pressure directly into shale beds to prompt the release of petroleum. Environmental health advocates have long criticized U.S. regulations for being too lax, as endocrine disruptors and other toxic chemicals compose part of that cocktail. This review looked at the presence of five major pollutants that are routinely found at fracking sites: heavy metals, particulate matter, polycyclic aromatic hydrobcarbons, BTEX and endocrine disrupting compounds. Individually, all of these substances are classed as potentially hazardous to human health. This review aimed to highlight the potential hazards of these substances and to explore what long-term exposure might mean for infants. The researchers note in the paper’s introduction: There is ample evidence that environmental toxicants can cause neurodevelopmental problems. Developmental neurotoxicity has been called a “global silent pandemic” – “silent” because the “brain draining” impacts of early life exposure to neurotoxicants are often subtle and subclinical, which can make them hard to detect (71), (72), (73). Another aspect of this “silent pandemic” is the lack of safety standards set by regulatory authorities on virtually any of the 85,000+ chemicals that we are exposed to daily, as well as the limited attention clinicians and academic researchers have paid to the “brain drain” caused by neurotoxicity in early life (74).

Study: Fracking Chemicals Harm Kids' Brains - A new study from the Center for Environmental Health adds to the growing body of evidence that unconventional oil and gas (UOG), which includes fracking , is harmful to human health and especially hazardous to vulnerable populations, including newborns and children. During the fracking process, a mixture of water, sand and chemicals is directed at high pressures into shale beds to release petroleum resources. This slurry involves the use of nearly 700 chemicals , the U.S.Environmental Protection Agency found. The new research, published Wednesday in Reviews on Environmental Health, examined five particular air and water pollutants that are widely used in or byproducts of UOG development and operations—heavy metals, particulate matter, polycyclic aromatic hydrobcarbons, BTEX (benzene, toluene, ethylbenzene, xylenes), and endocrine disrupting compounds."Every stage of the UOG lifecycle, from well construction to extraction, operations, transportation and distribution can lead to air and water contamination," the paper notes. Dauntingly, the researchers found that early life exposure to these substances has been linked to potentially permanent learning and neuropsychological deficits, neurodevelopmental disorders and neurological birth defects. "Given the profound sensitivity of the developing brain and central nervous system, it is reasonable to conclude that young children who experience frequent exposure to these pollutants are at particularly high risk for chronic neurological diseases."   The authors warn that people living near such operations can suffer from increased exposure to elevated concentrations of air and water pollutants. About 17.6 million Americans live within one mile of an active oil or gas well, a separate study found.

Wooster man dead in Stark County gas line incident  -  Canton Repository -  A pipeline worker died following an incident Monday morning that caused a massive natural gas leak and prompted authorities to evacuate a neighborhood. Wesley J. Johnson, 60, of Wooster, died at the scene, according to the Stark County Sheriff’s Office. Officials believe a cap on the end of a pipeline gave way, killing him. A second worker was evaluated at the scene but refused medical treatment, Erie Valley Fire & Rescue Assistant Chief Tom Bragg said. The worker was able to guide firefighters to turn off the valves to the pipeline. Reports of an explosion in the 8400 block of Beth Avenue SW came in around 10:15 a.m., and the odor of natural gas soon drifted over Navarre more than 4 miles away. The incident happened during maintenance work at a metering station on part of the Columbia Gas Transmission System, but the cause is unknown, according to the owner, TransCanada. “Tragically, we can confirm that one employee was fatally injured,” TransCanada spokesman David Dodson wrote in an email. “We are working with local responders to ensure family members are properly notified.” The Public Utilities Commission of Ohio will investigate the incident and forward findings to the U.S. Department of Transportation, which will decide what action to take. 

Is the US gas market headed for more oversupply, pipeline constraints?  - Midstreamers in recent years have been in overdrive to de-bottleneck the Marcellus/Utica natural gas supply region as well as other growing gas supply basins and connect producers to where the demand is increasing. Significant transportation capacity has been added in recent years and much more is on the way. Constraints are starting to ease and producers are finding relief. But with production growing again, there are signs of potential new bottlenecks on the horizon. The RBN Growth Scenario estimates that Lower-48 gas production could increase to 92 Bcf/d by 2022. Demand is expected to grow too — primarily from exports — but no more (and potentially less) than supply in the same timeframe, leaving the market in a precarious equilibrium over the next five years. Thus, it will be all the more critical that incremental supply can access what new demand there will be. At the same time, demand growth will be concentrated in one geographic region — in the Gulf Coast states. In today’s blog, we explore the potential risks of overproduction as producers crank up drilling activity. As we covered in Part 1, after slumping in 2016, both U.S. crude oil and Lower-48 natural gas production are climbing again. At the current price level near $50/bbl — our Cutback Scenario — the RBN Production Economics and Production Forecasting Models indicate that crude production would grow to 10 MMb/d by 2022. If prices climb to $57/bbl — RBN’s Growth Scenario — production would increase to 11.2 MMb/d by 2022. But if prices increase to $65/bbl — as in our Advance Scenario — crude production could rise to 12.5 MMb/d in five years’ time. Invariably, the incremental crude production will bring with it associated natural gas production.

Appalachian gas production cannot continue to ramp up rapidly: exec - Despite improved drilling and completion techniques such as the drilling of longer horizontal laterals, natural gas production from the Appalachian Basin cannot continue on its current rapid upward trajectory indefinitely, a speaker at the Platts Appalachian Oil and Gas Conference in Pittsburgh said Monday. Appalachian producers will eventually experience "sweet spot exhaustion," Alan Farquharson, senior vice president of Range Resources, said on the sidelines of the conference. "As you drill longer and longer laterals, it minimizes the number of wells it takes to develop that core position," Farquharson said. "As a result, the core of the acreage gets drilled up, you have to step out to tier one, tier two and tier three wells, which means you get lower productivity per well." Forecasts from Platts Analytics' Bentek Energy unit call for production from the US Northeast to grow from an average 24.9 Bcf/d in September to a winter-ending average of 27.3 Bcf/d in March 2018. In recent months, producers in Appalachia and other producing basins have been experimenting with the drilling of extended lateral wells, which have recorded higher per-well production. However, that per-well production growth comes at a cost when it is measure against an operator's production across the company's entire acreage, Farquharson said. "The best thing that people need to look at is not individual well productivity, but productivity on a normalized basis," The Appalachian Basin is similar to other producing basins, in that there are core areas where well productivity is the highest, as well as non-core area, where output tends to be less prolific. In the case of the Appalachian Basin, there are two distinct core regions, the dry gas Marcellus region in northeastern Pennsylvania and the wet gas region around southwestern Pennsylvania, West Virginia and Ohio, which is highly prospective for both the Marcellus and Utica shale plays. 

GOP Senators, Fueled by Industry Cash, Propose Bill to Expedite Small Scale LNG Exports --  Steve Horn  - U.S. Senator Marco Rubio (R-FL) and U.S. Senator Bill Cassidy (R-LA) have introduced a bill to fast-track the regulatory process for the export of small-scale liquefied natural gas (LNG). The bill, titled " Small Scale LNG Access Act ," was introduced on Oct. 18 and calls for amending the "Natural Gas Act to expedite approval of exports of small volumes of natural gas." The proposed legislation follows in the footsteps of the U.S. Department of Energy's (DOE) proposed rule which would assume that all U.S. small-scale exports of LNG, with the gas mostly obtained via hydraulic fracturing ("fracking") , is in the "public interest" as defined by the Natural Gas Act. The public commenting period for the DOE's proposed small-scale LNG rule ended on Oct. 16, with 81 comments posted on DOE, alongside the U.S. Federal Energy Regulatory Commission (FERC), oversees the regulatory process for LNG exports and the industry has long complained that the process is too onerous.  On Oct. 5, Cassidy, U.S. Sen. Lisa Murkowski (R-AK), and U.S. Sen. John Barrasso (R-WY) also wrote a letter to U.S. Energy Sec. Rick Perry in support of the proposed rule.  "We write in support of the Department of Energy's (DOE) proposed rule to expedite the approval of small-scale exports of natural gas," they wrote. "We appreciate this proposal and the series of steps the Department has taken to decrease burdensome regulations and increase the United States' energy security. The current permitting process for LNG export facilities is expensive, and small-scale projects often are not cost effective under current conditions." The Rubio-Cassidy bill also calls for small-scale LNG exports to be considered by default in the "public interest," as defined in Section 3(c) of the Natural Gas Act.   Small-scale LNG does not refer necessarily to the actual amount of LNG which will be exported from the site, but rather the size of the tankers carrying the natural gas.  "It's just making the refrigerator component itself a little bit more modular, repeatable and standardized. But we're still using the largest [General Electric] turbines, the largest storage tanks ever built."

Catholic priest, 5 others arrested at gas pipeline construction site - A half dozen people, including a Catholic priest, were arrested at today's protests against the Atlantic Sunrise natural gas pipeline in Lancaster County, say protestors.Ann Neumann, spokeswoman with Lancaster Against Pipelines, said the arrests occurred around 3 p.m. during a non-violent gathering of about 60 protestors on land owned by the Adorers of the Blood of Christ, a religious community, at the site of the Atlantic Sunrise Pipeline construction in West Hempfield Township.Brett Hambright, spokesman for the Lancaster district attorney's office, said the six protestors - four men and two women - were first warned to vacate an easement area. After a few minutes, the six remained and were arrested. They were placed in zip ties and taken to the state police barracks for processing. None were among the 23 people arrested at the site Oct. 16.They were released by about 6:30 pm., and will be mailed summons for their next court appearance, he said.The interaction with police was peaceful and the individuals were cooperative, Hambright said. Names will of those charged were not going to be released today, he said.The protestors arrested were blocking access by pipeline workers to the road to the Catholic sisters' field, which is the same site where 23 people were arrested Monday, Neumann said."Our objective was to stop construction to bring awareness that this pipeline is completely unnecessary and the sisters have a lawsuit against the Federal Energy Regulatory Commission that says this pipeline violates their religious freedom, their deeply held religious beliefs," Neumann said. After the arrests, construction workers began working, she said.

Natural gas pipeline groups call on US Army Corps to break permitting logjam - Faced with repeated rejections of interstate natural gas pipelines in New York, a key industry trade group is hoping the US Army Corps of Engineers may be able to assist, as well as exploring whether to pursue Clean Water Act changes. "Unfortunately, we now are seeing the natural gas equivalent of a single state erecting a roadblock on the interstate highway system," said Jeffrey Bruner, Iroquois Pipeline Operating Company president and the incoming chairman of the board of the Interstate Natural Gas Association of America. "We've seen a single state threaten to turn the process for approving interstate natural gas pipelines on its head by that state's manipulation of delegated authority," he said, in a briefing for reporters a day before the INGAA board was schedule to vote him in as chair. The comments come as Williams' Constitution Pipeline and National Fuel Gas Supply's and Empire Pipeline's Northern Access Project have been blocked through water permit denials by New York state regulators, as was a Millennium Pipeline project before recently getting relief from the US Federal Energy Regulatory Commission. Industry hopes of further relief in court were dimmed earlier this month when the 2nd US Circuit Court of Appeals declined to rehear a decision upholding New York's denial of Constitution. Northern Access' pending 2nd Circuit appeal is slated for oral arguments November 16. Adding to the industry's challenges, environmental groups objecting to projects are increasingly turning to state water reviews as an avenue for litigation. On Wednesday, Appalachian Mountain Advocates and others wrote to Virginia's State Water Control Board to say it cannot approve the Atlantic Coast Pipeline and Mountain Valley Pipeline projects at this time because it lacks adequate information from project sponsors and the Department of Environmental Quality about erosion and sediment controls and stormwater management.

 Rover Pipeline 'willing to address any contamination' in groundwater - Rover Pipeline has responded to the Michigan Department of Environmental Quality regarding concerns about water containing gasoline spilling from the pipeline construction area into wetlands near Pinckney.The DEQ issued a violation notice to Rover Pipeline on Friday, Oct. 13, which noted the presence of gasoline in water that was spilling from the pipeline project's dewatering system into wetlands near the northern crossing of Dexter-Townhall Road by Pinckney. Energy Transfer is involved in building the 713-mile, natural gas Rover Pipeline that ends in Livingston County.Rover Pipeline had until Wednesday, Oct. 18, to respond to the violation notice. The DEQ suggested Rover Pipeline cease unauthorized water discharges, submit an application for a special permit related to treating the water contamination and register the water withdrawal system the DEQ thought was pumping more than 100,000 gallons of water a day through the dewatering system. "At the outset, we want to reiterate Rover is committed to protecting Michigan's environment and to working with the MDEQ to resolve this matter amicably," states a letter dated Oct. 18 from Jennifer Street, on behalf of Rover Pipeline, to the DEQ's Jackson District Office."To that end, Rover voluntarily ceased dewatering activities on October 13th upon receiving reports of MDEQ's conclusion that hydrocarbons were potentially flowing through the groundwater in the area," Rover's response continues. "Rover also has remained in frequent communication with the MDEQ on this issue since the anonymous complaint and initial inspection by MDEQ staff on October 11, 2017." Area residents initially noticed water spilling from Rover's dewatering system into the wetlands and the smell of gasoline coming from the water, and they reported it to the DEQ.

U.S. Midwest oil refiners boost output, cut region's dependence on Gulf Coast (Reuters) - U.S. refineries from Ohio to Minnesota are capitalizing on access to cheap crude from Western Canada and North Dakota oilfields, helping their region break a historic dependence on fuel from the Gulf Coast while redrawing oil trade maps.   Since the early 2000s, crude and fuel flows from the Gulf Coast into the U.S. heartland have been cut in half, as crude coming from Canada and North Dakota has pushed U.S. Midwest refining activity to record levels. In 2016, Midwest refining capacity rose to 3.9 million barrels per day (bpd) of crude, the highest annual volume on record. Midwest refiners such as Marathon Petroleum Corp, Phillips 66, BP PLC and Husky Energy have invested billions of dollars on new units capable of turning sludgy crude from Canada into gasoline and diesel. Investments in the Dakota Access Pipeline and other avenues have helped bring in shale oil from North Dakota. “Ten years ago, we were 1 million barrels per day short on products, with the Gulf Coast supplying the product. Today, the midcontinent is flush with products,” Marathon Petroleum Chief Executive Gary Heminger said in a recent Reuters interview at the company’s Findlay, Ohio, headquarters. Yet analysts warned that weakening U.S. gasoline demand will make it challenging for Midwest refiners to sell their growing output. The Midwest is land-locked, making it hard to get products to new markets, especially as rival refiners defend their turf. Philadelphia area refiners are currently fighting efforts to reverse a pipeline so Midwest companies can move fuel to western Pennsylvania. 

Gulf Coast refinery runs are approaching levels seen prior to Hurricane Harvey -- For the week ending October 20, 2017, gross inputs to petroleum refineries in the U.S. Gulf Coast averaged 8.8 million barrels per day (b/d), or about 324,000 b/d higher than the previous five-year range for mid-October, based on data in EIA’s Weekly Petroleum Status Report (WPSR). Gross inputs, also referred to as refinery runs, in the Gulf Coast had been higher than the five-year range for much of 2017 until Hurricane Harvey made landfall in the Houston, Texas, area on August 25. A little more than half of all U.S. refinery capacity is located in the U.S. Gulf Coast region (defined as Petroleum Administration for Defense District 3). Texas, where Harvey made landfall, represents 31% of all U.S. refinery capacity according to data from January 2017. Gulf Coast refineries supply petroleum products to domestic markets in the Gulf Coast, East Coast, and Midwest, as well as to international markets. Hurricane Harvey’s most significant effect on petroleum markets was the curtailment of some refinery operations in Texas. Refinery operations rely on a supply of crude oil and feedstocks, electricity, workforce availability and safe working conditions, and outlets for production. As a result of Hurricane Harvey, many refineries in the region either reduced runs or temporarily shut down. For the week ending September 1, 2017, the first WPSR data point after Harvey’s landfall, gross inputs to refineries in the Gulf Coast fell 3.2 million b/d, or 34%, from the previous week. For the week ending September 8, Gulf Coast gross inputs to refineries fell by another 263,000 b/d to 5.9 million b/d, the lowest weekly value since Hurricanes Gustav and Ike disrupted refinery operations in September 2008.  After several weeks of increasing refinery runs following Hurricane Harvey in late September and early October 2017, Gulf Coast refinery runs fell again during the week ending October 13 because of additional disruptions caused by Hurricane Nate. Overall, the magnitude and duration of Hurricane Harvey’s impact on Gulf Coast refinery runs has been similar to what happened following Hurricanes Katrina in 2005 and Gustav and Ike in 2008.

Trump to auction off a vast swath of the Gulf of Mexico to oil companies - The Trump administration made history Tuesday in proposing that nearly 77 million acres in the Gulf of Mexico be made available for companies wanting to purchase federal oil and gas leases — the largest offering ever in the United States.In announcing the sale, the Interior Department compared the targeted waters to “about the size of New Mexico” and said the first lease sales off Texas, Louisiana, Mississippi, Alabama and Florida are scheduled for March next year. The event will include “all available un-leased areas on the Gulf’s Outer Continental Shelf,” a statement said. Interior Secretary Ryan Zinke first broached such a sale shortly after he took office in March, proposing to offer 73 million acres for leases. This part of the Gulf was the scene of arguably the worst environmental disaster in U.S. history, the 2010 Deepwater Horizon explosion and subsequent spill of 215 million gallons of crude that fouled beaches from Louisiana to Florida. Today @SecretaryZinke announced @BOEM_DOI is proposing the largest oil & gas lease in US history — US Dept of Interior (@Interior) October 24, 2017Years later, the spill’s effects are still being felt, according to a report by the nonprofit group Oceana.Scientists have detected hydrocarbons from the well in 90 percent of pelican eggs more than 1,000 miles away in Minnesota, where the birds spend summer after wintering along the gulf. Dolphins living in Barataria, La., have experienced mortality rates 8 percent higher than dolphin populations elsewhere, and their reproduction success dropped 63 percent.  The Bureau of Ocean Energy Management, the Interior Department division that oversees offshore leases, offered assurances that the environment would be protected as additional leases are sold in the gulf. But the agency largely focused on the resources that could be recovered there as part of what President Trump calls America’s energy dominance.

Interior to offer largest oil and gas lease sale in US history -  The Interior Department said Tuesday it will propose the largest oil and gas lease sale ever held in the United States — nearly 77 million acres in the Gulf of Mexico off the coasts of Texas, Louisiana, Mississippi, Alabama and Florida. The sale, scheduled for next March, includes all available unleased areas on the Gulf’s Outer Continental Shelf, a reflection of the Trump administration’s strategy to maximize oil and gas drilling on federal lands and waters. Even so, only a small fraction of the tracts available are expected to receive bids. A similar lease sale in August drew bids on just 90 offshore tracts totaling about a half-million acres — less than 1 percent of the 76 million acres available. Interior Secretary Ryan Zinke touted the upcoming sale as part of the administration’s bid to achieve what President Donald Trump calls “energy dominance” in the global market. “In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible (will) spur local and regional economic dynamism and job creation,” Zinke said. Rep. Raul Grijalva of Arizona, the top Democrat on the House Natural Resources Committee, said Zinke and congressional Republicans were taking credit for an Obama-era policy to offer oil and gas leases from all available tracts in the Gulf, rather than separating the western and eastern Gulf areas from the more productive central Gulf region off Louisiana, Mississippi and Alabama. “Republicans spent eight years alleging the Obama administration was killing oil and gas when they knew it wasn’t true,” Grijalva said. “Now they’re taking credit for lease sales made under the Obama leasing plan. Tomorrow they may as well claim credit for capturing Osama Bin Laden.”

Offshore Oil Drilling May Be Coming to a Coastline Near You - It's nearly impossible to convince certain people, most notably leaders of our federal administration, that bold action is needed on climate change , but recent events have certainly made a compelling case. Three major hurricanes have battered U.S. coasts in recent months, impacting the lives of millions of people and causing billions of dollars in damage. Although no single storm event can be blamed directly on climate change, scientific experts agree that the warming climate and ocean waters contribute to the frequency and scale of hurricanes—putting the residents, natural resources and economic security of coastal communities at elevated risk. This makes the Trump administration's proposal to expand offshore oil drilling off U.S. coasts all the more dubious. As Texas, Florida and Puerto Rico struggle to recover from hurricane damage, our federal government is seeking new ways to increase carbon emissions and put our nation at even greater risk. Following an executive order earlier this year, Interior Sec. Ryan Zinke announced plans to revise the nation's Five-Year Offshore Drilling Plan, threatening the Atlantic, Pacific, Gulf of Mexico and Arctic Ocean with the prospect of new offshore oil rigs. Congress leaders are also discussing the proposed Accessing Strategic Resources Offshore (ASTRO) Act , which would fast-track offshore drilling by removing critical safety and environmental protections.  The drilling, rigs and transportation tankers required for offshore drilling release a brew of toxic chemicals and leaked oil. High concentrations of metals have been found around drilling platforms in the Gulf of Mexico, and have been shown to accumulate in fish, mussels and other seafood. Offshore drilling also regularly leads to oil spills. Since 1969, at least 44 major oil spills (of more than 10,000 barrels or 420,000 gallons of oil per spill ), have been recorded in U.S. waters. This includes the Deepwater Horizon disaster of 2010, which poured about 200 million gallons of oil into the Gulf of Mexico over the course of 87 days. The spill devastated beaches and coastal wetlands from Louisiana to Florida. It killed birds, fish and marine mammals, and delivered a serious blow to the recreation and fishing-based economies of the Gulf States, which have yet to fully recover.

U.S. Deepwater Offshore Oil Industry Trainwreck Approaching -- The U.S. Deepwater Offshore Oil Industry is a trainwreck in the making.  The low oil price continues to sack an industry which was booming just a few short years ago.  The days of spending billions of dollars to find and produce some of the most technically challenging deep-water oil deposits may be coming to an end sooner then the market realizes.Drilling activity in the Gulf of Mexico hit a peak in 2013 when the price of oil was over $100 a barrel.  However, the current number of rigs drilling in the Gulf of Mexico has fallen to only 37% of what it was in 2013.  This is undoubtedly bad news for an industry that fetches upward of $600,000 a day for leasing these massive ultra-deepwater rigs.One of the largest offshore drilling rig companies in the world is Transocean, headquartered in Switzerland.  They lease ultra-deepwater rigs all over the globe.  When the industry was still strong in 2014, nearly half of Transocean's fleet of 27 ultra-deepwater rigs were leased in the Gulf of Mexico.  Even though Transocean was quite busy that year, its ultra-deepwater rig utilization was 89% during the first half of 2014, down from an impressive 95% in 1H 2013.The term utilization represents the total number of working rigs in the fleet.  So, in 2013, Transocean had 95% of its rigs busy drilling oil wells.  But if we look at the following chart, we can see the disaster that has taken place at Transocean since the oil price fell by more than 50%: Currently, Transocean's ultra-deepwater rig count has dropped to a low of 12 versus 27 in 2014.  And it's even worse than that.  Since 2014, Transocean added three more new rigs for a total number of 30.  Thus, Transocean's ultra-deepwater rig utilization is down to a stunning 37% compared to 95% just four years ago.  So, when a rig isn't working, it's not making revenue.

 Crude imports fall amid wider Dubai, Brent premiums over WTI: In the LOOP - The Louisiana Offshore Oil Port has seen a month-on-month decline in crude imports, impacted by persistently wide Brent/WTI and Dubai/WTI spreads that have pushed up the price of foreign grades. For the first half of October, LOOP imported 4.585 million barrels of crude, according to Platts Analytics’ Bentek Energy and the US Customs Service. This represents a month-on-month decrease of 1.643 million barrels versus imported volumes in the first half of September. Of the crude imported in October, Iraqi Basrah Light accounts for about 2 million barrels. LOOP also brought in about 547,000 barrels of Mexican Maya, 960,000 barrels of Brazilian Jubarte, 540,000 barrels of Venezuelan Morichal, and 538,000 barrels of Venezuelan Zuata. A widening Brent/WTI spread has discouraged imports of pricier Brent-based barrels into the US Gulf Coast, according to Platts data. For the first half of October, Brent averaged a $5.84/b premium to WTI, up 24 cents/b from the first half September value of $5.60/b. In addition, a wider Dubai/Brent spread has discouraged imports of Dubai-based Middle Eastern barrels into the USGC. For the first half of October, Dubai averaged a $4.13/b premium to WTI, up 46 cents/b from the first half of September value of $3.67/b. Continued OPEC production cuts, coupled with lost domestic sour crude production due to Hurricanes Harvey and Nate have tightened supply of domestic sour grades leading to higher regional prices. For the first half of October, regional sour benchmark Mars had an average differential to WTI cash of plus $2.20/b. This represents an increase of 44 cents/b from the grade’s average assessed value in September. As Mars and similar domestic grades have increased in price, regional refiners have not only been importing fewer barrels of crude, they also have been switching their slates to run proportionately more domestic sweet grades, according to an industry source. Doing so allows refiners to capitalize on higher distillate yields of sweet grades even as the regional sweet/sour spread holds steady.

 While Trump Opens National Parks to Fossil Fuel Drilling, Fee Hikes Would Lock Out Vacationing Families -  The national parks , heralded by one former director as containing "the highest potentialities of national pride, national contentment, and national health," may soon be off-limits to many working American families due to price hikes that were proposed on Wednesday by Interior Sec. Ryan Zinke .  Citing the need to address maintenance and infrastructure concerns, the National Park Service said it wants to raise rates for vehicle passes from $25-30 to $70 during the busiest months of the year at some of the country's most popular parks, including the Grand Canyon, Yosemite and Yellowstone.  The changes are likely to impact many vacationing families as they would be imposed between May and September. Seventeen of the nation's parks would be affected by the rate hikes.  Ben Schreiber, senior political strategist for Friends of the Earth , denounced the proposal, saying it exemplified the administration's antagonistic attitude towards working families and its commitment to serving corporate interests.  "The Trump administration is turning our National Parks into an exclusive playground for the rich," Schreiber said. "Secretary Zinke has given our public lands to oil companies, slashed budgets, and attacked the regulations that ensure taxpayers receive a fair price for their natural resource."  As Schreiber added, the news that the National Park Service's infrastructure projects apparently depend on increased fees for citizens comes as the Republican Party pushes a tax plan that would leave the federal budget with a $5 trillion hole over the next decade, largely via tax cuts for the wealthy.  "While Republican leadership looks to slash taxes for billionaires, price hikes at our National Parks will hurt working Americans," Schreiber said. "This is just the first of the inevitable new fees that will be pushed onto working Americans. We should help give breaks to families who want to go on vacation, not companies who want to drill."

Erie neighbors fed up with nearby fracking site -Vista Ridge neighbors have been vocal about the around-the-clock noises and smells coming from a nearby fracking site. On Saturday, dozens met at a small park at Crestview Lane and Primrose Lane for a picture -- the Pratt location in the distance.Families present at the event told Denver7 reporter Amanda del Castillo they were fed up.“My husband mentioned it last night. He said, 'What do you want to do? You want to just move?' I said no, I have a 14-year-old who just started high school,” Kate D’arcy said.She and her family have lived in the area for several years. D’arcy’s family is just one of hundreds living less than1,000 feet from Crestone Peak Resources’ Pratt and Waste Connections locations.“For me, it feels like it’s a constant attack on my overall senses,” she said.The problem has gone on for months now.“We’ve noticed both the smells, the vibrations, the constant noise,” D’arcy added.“The problem is that it’s perfectly legal,” Christiaan van Woudenberg said. He can see the Pratt location from his backyard.Legality hasn't stopped Vista Ridge neighbors.“There have been over 900 complaints filed for the COGCC,” van Woudenberg announced to Saturday’s crowd.

How Russians attempted to use Instagram to influence Native Americans -  The protests against the Dakota Access Pipeline in Cannon Ball, North Dakota, were sacred for the Standing Rock Sioux Tribe. But for Russian trolls, the protests were another opportunity to sow discord in America — one of a series of social movements, from Black Lives Matter activism to pro-Trump populism, on which trolls appear to have seized. An Instagram account called @Native_Americans_United_ shared images related to Native American social and political issues — including the construction of the Dakota Access Pipeline, the flashpoint for activists from all over the country, but especially Native Americans. RBC, a Russian outlet, identified that account as one of 180 connected to a Russian troll farm intent on exploiting existing divisions and social movements in the United States, based on a major investigation into the operations of Russia’s Internet Research Agency. So far, the accounts uncovered by RBC center around highly visible tension points in American politics: protests against police violence, protests against pipelines that have become a flashpoint between conservatives and progressives, and memes popular with the pro-Trump right. Those accounts are believed to include a fake Tennessee GOP Twitter account and payments to black activists to organize protests or hold self-defense classes. This, meanwhile, would be the first instance of Russians targeting Native Americans. RBC reported that at least 33,000 people followed the @Native_Americans_United_ account. A post from that account reads “IF AN OIL COMPANY DESTROYED THESE ‘SACRED’ BURIAL GROUNDS AMERICANS WOULD LOSE THEIR MINDS,” plastered over an image of a US military cemetery. “BUT WHEN AN OIL COMPANY DESTROYS NATIVE AMERICAN SACRED BURIAL GROUNDS NO ONE SAYS A WORD.” 

U.S. lawmakers ask DOJ if terrorism law covers pipeline activists (Reuters) - U.S. representatives from both parties asked the Department of Justice on Monday whether the domestic terrorism law would cover actions by protesters that shut oil pipelines last year, a move that could potentially increase political rhetoric against climate change activists. Ken Buck, a Republican representative from Colorado, said in a letter to Attorney General Jeff Sessions, that damaging pipeline infrastructure poses risks to humans and the environment. The letter, a copy of which was seen by Reuters, said “operation of pipeline facilities by unqualified personnel could result in a rupture - the consequences of which would be devastating.” It was signed by 84 representatives, including at least two Democrats, Gene Green and Henry Cuellar, both of Texas. The move by the lawmakers is a sign of increasing tensions between activists protesting projects including Energy Transfer Partners LP’s Dakota Access Pipeline and the administration of President Donald Trump, which is seeking to make the country “energy dominant” by boosting domestic oil, gas, and coal output. Last year activists in several states used bolt cutters to break fences and twisted shut valves on several cross border pipelines that sent about 2.8 million barrels per day of crude to the United States from Canada, equal to roughly 15 percent of daily U.S. consumption. The letter asks Sessions whether existing federal laws arm the Justice Department to prosecute criminal activity against energy infrastructure. It also asks whether attacks on energy infrastructure that pose a threat to human life fall within the department’s understanding of domestic terrorism law. 

Lawmakers Urge DOJ To Consider Prosecuting Pipeline Activists As Terrorists - Several members of Congress signed on to a letter recommending Attorney General Jeff Sessions look into whether the Justice Department has the laws it needs to prosecute environmental activists challenging pipelines as if they are terrorists.The letter asks Sessions if the USA PATRIOT Act and Pipeline Safety Act contain enough provisions to criminalize actions against “energy infrastructure at the federal level.” It also asks if the Justice Department plans to prosecute any of the individuals involved in the alleged “attempted sabotage of four major crude oil pipelines in multiple states” on October 11, 2016.“Do the attacks against the nation’s energy infrastructure, which pose a threat to human life, and appear to be intended to intimidate and coerce policy changes, fall within the DOJ’s understanding of [domestic terrorism]?” representatives add. It appears to be an effort to convince the Justice Department to take a far greater role in helping energy interests and affiliated trade groups in their efforts to stamp out dissent against oil and gas operations.Ken Buck, a representative from Colorado and one of the authors of the letter, has received over $400,000 from oil and gas industry interests in his political career. While most of the representatives who signed on to the letter were Republicans, two were Democrats—Gene Green and Henry Cuellar, who are both from Texas. Cuellar has received nearly $600,000 from oil and gas interests in his political career.

Oil pipeline opponent uses ‘necessity defense’ --what is it?   (AP) — An American Indian activist and former U.S. congressional candidate in North Dakota accused of inciting a riot during protests against the Dakota Access oil pipeline says he'll seek to present a "necessity defense" — justifying a crime by arguing it prevented a greater harm. Chase Iron Eyes has pleaded not guilty to inciting a riot and criminal trespassing. He could face more than five years in prison if convicted at trial in February. The pipeline has since begun carrying oil from North Dakota through South Dakota and Iowa to Illinois. Pipeline protesters who try the necessity defense typically argue that the greater harm is climate change. Iron Eyes, a member of the Standing Rock Sioux tribe, says he hopes to show that civil disobedience was his only option to resist a pipeline's incursion on his ancestral lands. The prosecutor in the case didn't respond to a request for comment. A judge will hear arguments Nov. 3.  People who use the necessity defense are trying to show the harm they caused is justified because a greater harm was avoided as a result. The U.S. Supreme Court has said it's an "open question" whether federal courts have the authority to recognize a necessity defense not provided by law, according to North Dakota District Court Judge Laurie Fontaine.Whether the defense is permitted by law in state courts varies, according to University of Mississippi law professor Michael Hoffheimer. The main argument against the defense is that it gives people who don't like a particular law the chance to break it and then argue it was excusable.

Could the worst gas leak in US history be causing health problems? --  Two years after the largest methane blowout in U.S. history, residents in the Porter Ranch neighborhood of Los Angeles are still in the dark about its long-term effects on their health. When well SS-25 at the Aliso Canyon gas storage facility sprung a leak on Oct. 23, 2015, it released almost 100,000 metric tons over the course of four months — the equivalence of 7.8 million metric tons of C02, or emissions from almost 2 million cars. Along with methane, many other toxins —including benzene — were released and have since been found in homes in Porter Ranch. State and local agencies say that the levels of toxins residents were exposed to “are not expected to cause a significant increase in overall risk of health effects from either short-term or long-term exposure.” But few agencies are willing to state conclusively that there are no long-term health risks. According to scientists like UCLA professor Michael Jarrett, this is because there is not enough scientific evidence to prove anything. He says it’s important to conduct a comprehensive study to determine if residents are still getting sick from the blowout. And while SoCalGas, the company responsible for the blowout, agreed to fund $1 million for a health study, the sum fell short of the $13 to 46 million that experts, politicians, and county health officials think a proper study would cost.

The ‘sweet spots’ fueling the US shale oil boom ‘will not last forever,’ Saudi Aramco CEO says -- Saudi Aramco's Amin Nasser, CEO of the world's largest oil company, says he does not spend much time worrying about booming production from U.S. shale fields. One reason, says Nasser, is that shale drillers will eventually deplete the low-cost, high-quality "sweet spots" they've focused on throughout much of the three-year oil price downturn. American energy companies have driven down the cost of producing a barrel of crude, staved off bankruptcy and prevented output declines by tapping their best oil fields first. "The concentration that we are seeing today is on the sweet spot of shale, and this will not last forever," Nasser said in an exclusive interview on CNBC's "Squawk Box." "You can concentrate for some time on the sweet spots and produce more oil. But ultimately you need to venture downward, and that's where you have less quality and you require more cost to produce these barrels," Nasser said Sunday from the command center at Saudi Aramco headquarters in Dhahran. A surge in U.S. shale production is one of several factors that has frustrated the Saudi-led effort to drain the world's stockpiles of excess crude. OPEC and several other exporting nations, including Russia, have agreed to keep 1.8 million barrels a day off the market in a bid to boost oil prices. 

US shale outlook seen at risk from more intensive fracking - US shale oil production is unlikely to peak before the middle of next decade, but current fracking techniques may be risking the prospect of faster decline rates from tight oil than many are forecasting, a top oil industry event was told this week. As the US shale industry continues to chase lower breakevens and boost productivity in the wake of the 2014 price downturn, shale players have turned to pumping much larger volumes of sand and water into horizontal wells. In addition to "bigger fracks", drillers have also increased the density of their fracking stages in a bid to boost the volumes of tight oil drained from each well. Although the techniques have raised initial flows rates by up to 30% in some wells, the intensive fracking is depleting the source rocks faster risking a sharp rise in future decline rates, according to Bernand Duroc-Danner, the former CEO of Weatherford International. "If you're going to be fracking closer zones like crazy, lots of sand, lots of water, lots of pressure, you drain the hell out of those zones which is why production goes up," Duroc-Danner told the Oil & Money conference in London. "But then those zones don't get replenished...after two years, there'll be a build up in decline rates...I am not so sure if the battle won't be, in two years, to sustain the base as opposed to keep on growing," he added. With higher intensity fracking, US shale decline rates are already creeping up in some shale plays, but the impact is overwhelmed by increased drilling activity, Duroc-Danner said. Energy research group Wood Mackenzie recently flagged similar concerns over the production outlook for the Permian Basin, the world's top shale play. Citing risks related to tighter well spacing and well-on-well "interference", Wood Mac last month estimated that the Permian could see peak production by 2021, putting more than 1.5 million b/d of future production in doubt.

Halliburton CEO defends fracking business as margins disappoint - Fracking isn’t looking so great for the world’s biggest fracker, but the CEO of Halliburton Co. says he can pull some levers to improve profits.After lackluster margins for the company’s main business sent shares tumbling, casting a cloud over third-quarter earnings that otherwise beat estimates, Chief Executive Officer Jeff Miller said there are three things he plans to do to improve fracking profits: raise prices, maximize the use of machinery and cut costs.“Increasing pricing is important, but it’s just one component we can leverage to reach our goal,” Miller told analysts and investors Monday on a conference call. “Ultimately we will utilize a combination of all three levers to return to normalized margins.”In his first full quarter as CEO, Miller has sought to reassure investors that Halliburton is well-positioned to rebound from the worst oil-market collapse in a generation. A plunge in oil exploration exacted $5.76 billion in losses last year, the Houston-based company’s darkest year since at least 1987.Halliburton shares tumbled as much as 2.2 percent, and were 1 percent lower at $42.90 as of 11:37 a.m. in New York. The stock had climbed as high as $45 before the opening of regular U.S. trading. Investors are “curious” about the margins with demand seemingly on the rise, Kurt Hallead, an analyst at RBC Capital Markets, said in a note to clients.  Sales in North America, the world’s busiest drilling region, nearly doubled during the third quarter to $3.2 billion, bucking the pessimistic outlook of rival fracking companies who last week predicted slower growth from the U.S. and Canada. Excluding one-time items, Halliburton’s worldwide third-quarter profit of 42 cents a share exceeded every one of the 34 estimates from analysts in a Bloomberg survey. The company earned $365 million during the period, compared with $6 million a year earlier, according to the statement. Total revenue of $5.4 billion was $101 million higher than the average estimate from analysts.Halliburton is the largest provider of fracking, the well-completion technique that blasts water, sand and chemicals underground to release trapped hydrocarbons. When combined with other services such as drilling and cementing wells, the company is the world’s No. 3 oilfield contractor.

Big oil urges OPEC to extend output cuts beyond March 2018 - Major oil CEOs called on OPEC to extend output cuts beyond March next year on Friday, arguing “huge volatility” in the energy market meant it would be imperative for the cartel to try to put a floor under prices.  OPEC members are reportedly forming a consensus around extending their production cutting deal with other crude exporters by nine months. That would prolong the agreement among OPEC, Russia and other oil-producing nations to keep 1.8 million barrels a day off the market through the whole of next year. The exporters reached the deal last December and have already extended the agreement once through March of 2018. When asked whether it would be necessary for OPEC to prolong the agreement beyond March next year, Total Chief Executive Patrick Pouyanne told CNBC, “Of course they need it”. BP CEO Bob Dudley echoed the arguments put forward by his Total counterpart and said it looked “probable” OPEC would extend its agreement next year. OPEC members are reportedly forming a consensus around extending their production cutting deal with other crude exporters by nine months. That would prolong the agreement among OPEC, Russia and other oil-producing nations to keep 1.8 million barrels a day off the market through the whole of next year.

IEA eyes 40%-50% methane emissions cut from oil, gas sector at no net cost - About 40% to 50% of current methane emissions from the oil and gas sector worldwide could be avoided at no net cost, a new analysis by the International Energy Agency concludes. A commentary released Monday previews the group's World Energy Outlook 2017, to be released November 14, by offering a glimpse at cost curves IEA developed to examine potential methane emissions reductions and the costs and revenues associated with mitigation globally. "The role that natural gas can play in the future of global energy is inextricably linked to its ability to help address environmental problems," said Tim Gould, head of the WEO energy supply outlook division, and Chistophe McGlade, WEO senior analyst, in the commentary released Monday. They find gas has a clear edge over other fossil fuels when it comes to air pollutants and CO2 emissions from combustion. On average, they find that "gas generates far fewer greenhouse gas emissions than coal when generating heat or electricity, regardless of the time frame considered."

US Shale Investors Tire Of 'Growth At Any Cost' Model -- Since the shale oil revolution began in the late 2000s, management teams have mostly focused on growth at any cost, and investors have mostly been prepared to back them.This year, however, investor sentiment has shifted. Shareholders are less dazzled by the excitement of the shale boom, and more interested in orthodox measures of success including returns on capital and cash generation.For Encana, which produces gas and oil in the US and Canada, the shift has prompted an effort to change the company’s culture.“The same conversation we have with our investors, about creating value by delivering quality corporate returns, is the conversation we’re constantly having within the company,” Mr Suttles said. The whole shale industry is being pushed in the same direction. If companies fail to improve shareholder return, says Stephen Trauber, global head of energy at Citi, “investors will start to question what management is doing”.

Many E&Ps Defy Soft Prices And Expect 2017 Capex To Exceed Cash Flow -- Despite some hints that U.S. exploration and production companies are slowing some of their drilling in high profile shale basins — including last week’s decline of 15 operating rigs in the Baker Hughes count, our analysis of 43 representative E&Ps suggests that more than half expect their upstream capital spending in 2017 to exceed cash flow — a definite sign of optimism — and one fifth of the E&Ps will outspend cash flow by more than 50%. Is this a case of rose-colored glasses? Blind faith? Or have E&Ps’ post-price-crash efforts to high-grade their portfolios and improve their operational efficiency given them well-deserved confidence that if they don’t “back down” on capex things will turn out well?  Today, we analyze the cash flow versus the capex of 43 U.S. E&Ps and discuss what it all means. After weathering the oil price decline in 2014-16, U.S. E&Ps have been repositioning themselves to survive and even thrive in a $50/bbl world by (among other things) focusing on the sweetest of production sweet spots and wringing more oil, gas and natural gas liquids out of each well by drilling longer laterals, using more frac sand and fine-tuning their completion techniques. In late 2016, the 43 E&Ps we’ve been tracking in our recent Piranha report and related blogs announced a 42% increase in 2017 capital spending, and despite oil prices dipping below $50/bbl in the second quarter of 2017, our universe of producers remained committed to their accelerated investment plans (see Rock Steady). But as noted above, there have been indications that E&Ps have started to pull back somewhat, with a 5% decline in the rig count since the end of July cited as evidence.

Arrest after protesters scale 60ft fracking rig in Kirby Misperton - BBC News: A man has been arrested after three protestors scaled a 60ft high fracking rig in North Yorkshire. Two men and a woman climbed to the top of the site at Kirby Misperton, between Malton and Pickering, at about 03:00 BST, police said. A 29-year old man is in custody on suspicion of aggravated trespass and criminal damage after he climbed down at about 15:45. The other two remain at the site and were issued with safety harnesses. Third Energy was given planning permission to operate on the site in May 2016. It has not received final consent to begin fracking but expects to start before the end of the year.

Scotland to toughen ban on fracking after Holyrood vote - Scotland’s ban on fracking has been significantly toughened, after MSPs at Holyrood pressured the SNP into making any relaxation of the policy subject to a parliamentary vote.The Scottish Parliament voted overwhelmingly in favour of an indefinite ban on the controversial gas extraction technique, announced by ministers earlier this month. The motion was carried by 91 votes to 28, with the SNP also accepting Labour and Green amendments which make it harder for the ban to be reversed in future.MSPs had expressed concerns that the ban could be overturned at “the whim of a minister”, but it will now be included in the Scottish Government’s next National Planning Framework.As any changes to this require a vote in Holyrood, it means that if ministers change their minds on fracking they will have to gain the approval of MSPs rather than acting unilaterally.Earlier this month Energy Minister Paul Wheelhouse said fracking “cannot and will not” go ahead due to concerns over its impact on the environment and local communities.The decision followed a public consultation on the issue which received more than 60,000 responses, of which 99 per cent were opposed to fracking in Scotland. Mr Wheelhouse said last night’s vote was a “clear endorsement” of the Scottish Government’s position, claiming the scientific research did not prove fracking would be safe.

Norway Unfazed By Peak Oil Concerns - When crude oil demand will peak is anyone’s guess. Forecasts vary widely. Wood Mackenzie says that peak demand is “very real,” and sees a decline of 4 million bpd between 2020 and 2035. Other majors including BP and Total SA see peak demand as coming between 2025 and 2040, as a result of clean energy government initiatives, slower economic growth, and wider use of electric vehicles.Not everyone is that concerned with peak oil demand, however. Recently, Norway’s Energy Minister said the biggest problem for Europe’s largest oil and gas producer is satisfying near-term demand, which is growing faster than Norwegian continental shelf operators are making discoveries.It might sound a bit weird that Europe’s greenest country is still so big on oil and gas, but in reality, there’s nothing weird: Oil and gas exports account for a substantial portion of Norway’s export revenues, with their value for 2016 standing at $43.84 billion (350 billion crowns), accounting for 47 percent of the country’s total export value. Norway’s biggest customer is the European Union. Together with Saudi Aramco, Norway’s state major Statoil accounted for a fifth of the EU oil market last year. Yet demand in the EU is supposed to be falling, with rigorous policies designed to encourage acceleration of the shift to renewable energy. Indeed, according to European Union statistics, demand is on a stable downward curve thanks to greater energy use efficiency, “structural changes in the economy”, and lower demand for fuels. Still, Eurostat notes, crude oil and its derivatives account for the biggest share of energy consumption in the 28-strong union.  That’s good news for Norway, and there’s more good news from Wood Mackenzie. The energy consultancy has forecast that although in places like Europe, Japan, the United States, and even China, crude oil consumption will plateau by 2035, the demand for petrochemicals will jump considerably. Wood Mac expects that petrochemicals will turn into the top driver for demand growth in crude oil in the long run as fuels lose their top spot. This will continue until about 2035, the consultancy estimates.

BHP finds 5 Tcf of gas off Trinidad: minister - UK-Australian BHP has discovered 4 trillion to 5 trillion cf of natural gas in the deepwater LeClerc well off the east coast of Trinidad, energy minister Franklyn Khan said today. The discovery is the first in the country's deepwater program. Khan did not elaborate on his statement or provide any details on the LeClerc find. BHP did not respond to a request for comment, but the firm said in January that LeClerc is a "large potential resource" that could start production in the early to mid-2020s. The new gas deposit could alleviate the Caribbean state's gas shortage that has suppressed output of LNG, ammonia and methanol. BHP operates nine deepwater blocks in Trinidad. The blocks hold an estimated 10 trillion-40 trillion cf of gas and 2bn-8bn bl of crude, the energy ministry has said. "This is an important development for the country and will ease the shortages of natural gas that have been having a damaging effect on the economy," an energy ministry official told Argus today. The ministry is awaiting more details about the discovery, including production volumes, the official said. BHP will drill two extension wells on LeClerc "sometime in 2018," the official added. Trinidad's gas production has been falling since 2013, when it averaged 4.1 Bcf/d. The country's gas production averaged 3.292 Bcf/d in January-August, down 1.8pc on the 2016 period. The country needs another 1bn cf/d to meet current demand, according to the ministry. BHP started the oil-focused deepwater exploration campaign in May 2016 at the LeClerc prospect on block 5, 217km off the eastern coast of Trinidad. LeClerc-1 was drilled to 5,771m and LeClerc ST1 to 6,973m. BHP has a 65pc stake in block 5. Shell holds 35pc. LeClerc is the second major gas discovery in Trinidad this year.

Oil Quality Issues Could Bankrupt Venezuela - The next few weeks for Venezuela will be crucial, as it could struggle to meet a huge stack of debt payments. Reports that the nation’s oil production is experiencing deteriorating quality raises a new cause for concern for the crumbling South American nation. Venezuela’s state-owned oil company PDVSA is reportedly shipping crude oil with growing quality issues. Reuters reported that its oil shipments are “soiled with high levels of water, salt or metals that can cause problems for refineries”. It’s a troubling situation for an oil company already suffering from a steep drop in output.The quality problem is very much related to the country’s economic crisis. Without cash, PDVSA is struggling to obtain the proper chemicals to treat its oil, or pay for equipment and upkeep to maintain quality. As a result, PDVSA has had to shut down operations, or throttle back on production. “We’re refitting chemical injection points, recouping pumps and storage tanks,” one PDVSA worker told Reuters. “But without chemicals, we can’t do anything.”The oil company has been shipping crude that is apparently causing problems for refiners around the world. According to Reuters, that has led to complaints and even cancellations of purchases. Phillips 66, a U.S. refiner, cancelled at least eight cargoes in the first half of the year due to inferior quality. It also demanded discounts for other shipments. Refiners in India and China have also lodged complaints. The sales cancellation poses a serious financial threat to a company and country already wallowing in a horrific economic crisis.

Argentina Plans $21.5-Billion Oil Investment - The state oil and gas company of Argentina, YPF, plans to spend US$21.5 billion on new oil and gas production over the next five years, eyeing a 26-percent increase in crude oil production, company executives told Reuters. The company will sell some assets to gather the funds necessary for the ambitious production-raising plan, and it will also enlist the help of other companies, which will contribute an estimated US$8.5 billion to its five-year investment program. No names were given, but the YPF executives hinted that there’s a new partnership to be announced for the company’s power-generation business.YPF’s executives also suggested that the company should buy some power-generation assets from Brazil’s Petrobras, which is conducting a large-scale asset-sale program to slim down its huge debt load.YPF is eager to stage a repeat of the U.S. shale oil and gas boom, the FT reported yesterday, aiming for a 150-percent increase in shale oil and gas production. Conventional oil and gas will not be neglected, however, with plans for a 5-percent annual rise in production by 2022, to 700,000 barrels of oil equivalent daily.Argentina is in the throes of a serious energy deficit thanks to insufficient exploration up until just recently. The country is home to the second-largest shale reserves in the world, concentrated in the Vaca Muerta shale formation, which has become a major hotspot for Big Oil. Exxon, BP, Total, and Chevron are among the companies that have already pledged substantial funds for oil and gas exploration and production in Vaca Muerta, which holds reserves estimated at 22.8 billion barrels of oil equivalent. Argentina also has 2.4 billion barrels of conventional oil reserves, and is also hoping to score major discoveries offshore, to which end it will schedule a bidding round next year. Hopes are that the pre-salt basin along the Brazilian coast could extend into the Argentine continental shelf.

Australian domestic natural gas prices increase as LNG exports rise - Australia became the world’s second-largest exporter of liquefied natural gas (LNG) in 2015 and is likely to overtake Qatar as the world’s largest LNG exporter by 2019. As Australia’s LNG exports have increased, primarily from LNG projects in eastern Australia, the country has had natural gas supply shortages in eastern and southeastern Australia and an increase in domestic natural gas prices.  The western and eastern parts of Australia have separate natural gas and electricity markets and are not interconnected. Five states in eastern Australia—South Australia, Queensland, New South Wales, Victoria, and Tasmania—account for 86% of Australia’s population, and in 2016, LNG exports from eastern Australia accounted for 43% of the country’s total LNG exports.  Three new projects in eastern Australia—Australia Pacific, Queensland Curtis, and Gladstone—all are located on Curtis Island in the state of Queensland and are associated with upstream production fields that provide natural gas produced from coalbed methane.  Since the start of LNG projects in Queensland, domestic natural gas prices at several hubs in eastern and southeastern Australia have more than doubled. Briefly in mid-2016 and again in early 2017, Australia’s domestic natural gas prices exceeded Australian LNG export prices to Japan, Australia’s largest destination for LNG exports, when domestic natural gas shortages caused price spikes in natural gas markets. LNG export prices, on the other hand, reflected lower prices in long-term contracts, which were linked to the price of crude oil. With the decline in crude oil prices, export contract prices for LNG also declined.  In 2016, natural gas consumption by LNG export projects in Queensland was almost twice as high as the total domestic consumption in eastern and southeastern states. Australia’s Energy Market Operator (AEMO) projected that LNG exports from these states will continue to grow through 2019 as these LNG projects ramp up to full capacity.

LNG: The gas market goes global – Platts video - From 1964 to the present day, LNG has transformed the energy industry and is now leading to the development of a truly global gas market.Supply and demand are set to rise significantly over the coming years, as LNG is traded under shorter and more flexible terms, with S&P Global Platts JKMbenchmark at the forefront. Download our special report: Dawn of a global commodity: LNG trading transformed.

Perry brings US diplomacy to Africa, promises to export 'energy arsenal' - The Africa Oil Week conference in Cape Town got a taste of Texas or even a little slice of Hollywood this month, as the presence of US Secretary of Energy Rick Perry as guest of honor, perplexed yet impressed the conference delegates. “Why is he here? It can’t be that straightforward?” “Why will he come to an African oil event? There must be some other reason he is here.” “He is such a busy man, why would he come here?” These were some of the reactions I got when I asked some delegates what they thought of Perry’s presence at an event that was focused primarily on the African upstream industry. His first speech on Monday was delivered during a social event at the Two Oceans Aquarium, and he made sure to use the “swimming with the [oil] sharks” quote. Incidentally, he was near an actual shark tank when he said this. The next day, in his speech America’s New Energy Bounty: Freedom and Security, Perry did answer why he was here, by proclaiming that the US’ “energy arsenal” was here to empower Africa through “energy transformation.” Perry was accompanied by a sizable contingent from the Department of Energy to, as he said, “advance mutually beneficial safe and sustainable energy development” with allies in South Africa and across the continent. President Donald Trump’s administration has not been actively involved with African affairs. Which is what makes this sudden focus by Perry somewhat surprising. But energy diplomacy is not new after all. The African continent, especially the oil and gas producers, can definitely learn and be inspired by the dramatic rise in the US energy sector, which has transformed itself and is now a significant producer and exporter of crude oil, gas, condensates, natural gas, refined petroleum products, LNG and petrochemicals. Perry said that Africa could learn from the US, which used to be dependent on other countries for its energy needs, but has now “become an energy-abundant country” and plans to export to “our friends”. The department of energy held a half-day workshop on LNG and natural gas, and published a blueprint for African countries to follow to become leading exporters of natural gas and LNG.

As US exports make inroads to Asia, Middle East suppliers adopt strategies to secure buyers -- With so much attention on rising US oil exports and their impact on crude flows within Asia, the region’s more traditional suppliers from the Middle East are examining their own strategic approaches to maintain customers and secure outlets for their barrels. US cargoes are showing up more regularly in Asia, where major importers are eager to diversify their supply sources—a hot topic during the recent S&P Global Platts Asia Pacific Petroleum Conference in Singapore. Due to stability of supply and competitiveness against other grades, Middle East crudes have been East Asia’s largest supply source and many refineries in the region have been specifically configured to process Middle East sour crudes. But the increase in spot US barrels into Asia are prompting refiners to seek lower term crude imports from the Middle East. Supplies from Latin America may also be boosted into the region, as many North Asian crude importers tend to co-load their US cargoes with central and South American grades. US crude exports to China, South Korea, Japan South Korea, for example, may trim its dependency on Middle East crude supplies to “70% or below” from 84.9% in the first half of 2017, supported by favorable global benchmark price trends, coupled with plentiful options for supply diversification, according to Chang Jihak, senior executive vice president at Hyundai Oilbank. Japan’s largest refiner JXTG Nippon Oil & Energy is also looking to boost flexibility in its crude oil procurements by reducing its term commitments, Executive Vice President Takashi Hirose told Platts. JXTG will continue to emphasize its flexibility until market conditions change, Hirose said, adding that the company’s current term crude procurement ratio stands “at around 60%” of its total imports, with the balance comprising spot and framework supplies.

 Tide of diesel from the East imperils Europe's rally  (Reuters) - A recent rally in European diesel prices could be jeopardised by rising inventories in November as a raft of tankers sets sail from the East, reversing two months of stock declines following Hurricane Harvey. Up to 450,000 barrels per day (bpd) of diesel, or some 1.8 million tonnes, are set to reach Europe and the Mediterranean in November from Asia and the Middle East, according to Reuters shipping data and traders. That would mark a 50 percent increase from recent months. Those include the very large crude carrier Coshonour Lake, which was heading from Singapore to Europe on its maiden voyage with a cargo of 2 million barrels of diesel. The cargo, expected to reach Gibraltar on Nov. 26, was initially bought by China’s Unipec and later sold to Vitol, traders said. With around half of Europe’s cars fuelled by diesel and its refineries unable to meet domestic demand, the region regularly imports around 850,000 bpd of diesel primarily from the U.S. Gulf Coast and Russia but increasingly also from the East. “Everywhere you look, exports are going to grow,” a trader said. When Harvey struck the U.S. Gulf Coast in late August, traditional trading routes were retraced as more than a quarter of the United States’ refining capacity was crippled for weeks. Europe became a key supplier for Latin America and even the U.S. East Coast, draining stocks to below their five-year average for the first time in years and prompting a rally in benchmark diesel prices to a 27-month high in late September, supporting a rise in global crude prices. That, in turn, opened arbitrage opportunities from the East. With refineries in China, India, the Middle East as well as Russia and the United States ramping up exports after completing maintenance, things could change.Diesel imports into Europe are likely to surpass 1 million bpd in November versus an average of 800,000 bpd in the previous two months, which will lead to an increase in stocks, traders said. 

Analysis: Asian crude buyers alter trade strategies as backwardation persists - The sustained backwardation in Dubai crude price structure has prompted various Asian crude buyers to adjust their trading strategies, with Chinese trading firms actively trimming their long physical positions, while various regional refiners shifted their focus to short-haul Russian supplies, market participants said Wednesday. The spread between first and second-line Dubai crude swaps was assessed at 5 cents/b on August 10 in Singapore, marking the first time the paper market structure has flipped to backwardation since posting 4 cents/b on March 13, S&P Global Platts data showed. The Dubai swaps spread remained backwardated since then, averaging 18 cents/b in September and 24 cents/b so far this month. The physical Dubai crude market structure also strengthened to a multi-year high recently, with the spread between front-month cash Dubai and same-month Dubai swap at 71 cents/b on October 17 in Singapore, the highest since July 31, 2015, when it was assessed at 85 cents/b. Regional sweet and sour crude traders said the backwardation in the Dubai price structure could have encouraged Chinese trading firms to unwind some of the spot cargoes they are holding in recent months, potentially putting the brakes on their growing storage positions. China's crude oil stocks rose 20.16 million barrels in September from end of August, representing 11th consecutive month of gains, Platts calculations based on latest official data showed. However, regional traders and analysts said the country's inventory levels could slide in the fourth quarter, citing state-run Chinese trading companies' strong interest in selling cash Dubai crude partials, as well as full cargoes of various Middle Eastern and West African grades during the Platts Market on Close assessment process over the past few months. A backwardation in the crude market structure represents lower prices for forward month contracts than the current spot price. In essence, backwardation occurs when market participants are expecting future prices to be weaker than prompt prices, hence providing little incentive for trading firms and refiners to store oil for later use. "Storage incur costs over time but when future prices can't compensate this, it's best to offload and lock in stronger prices now," 

Southeast Asia's growing energy deficit to boost trade flows by 2040: IEA - Southeast Asia's growing deficit of fossil fuels including oil, natural gas and coal up to 2040 will dictate energy trends for the whole region, including trade flows, investments and policy making, according to the International Energy Agency's latest outlook. The deficit of primary energy sources will be triggered by a combination of declining production and reserves in the region, ballooning demand due to rising population and regulations that curb exploitation of natural resources. While each country faces different challenges, in total the region will be short of oil, gas and coal by 2040, the IEA said in its 2017 Southeast Asia Energy Outlook. "Flattening gas production and rising demand in recent years calls into question the position of Southeast Asia as a net gas exporter," the IEA's director of energy markets and security Keisuke Sadamori said. He said rising oil demand and declining production have already increased the region's dependency on oil imports to around 60%, and strong economic and demographic changes will ensure this dependency becomes further entrenched. Southeast Asia's energy demand has risen 60% since 2000, but per capita primary energy demand is still only half of the global average, Sadamori said, adding that about 65 million people in the region still lack access to electricity and 250 million people rely on biomass for cooking. This demand will have to be met by imports, often with hefty bills. The energy deficit already cost the region $20 billion in 2016, and dramatic changes in energy trade balances will see deficits balloon to $300 billion by 2040, equal to 4% of the region's GDP, with major implications for Southeast Asia's energy security.

 Global Oil Supply Disruptions Lowest Since 2012 - Unplanned disruptions in global oil supply dropped to 1.6 million barrels per day (bpd) in September 2017, which was the lowest level of crude offline due to unforeseen events since January 2012, the Energy Information Administration (EIA) said on Monday.The main reasons for the lowest unplanned crude supply disruptions in more than five years were reduced outages in Libya, Nigeria, and Iraq, the EIA said.  To compare, in May last year, for example, unplanned global oil supply disruptions averaged more than 3.6 million bpd, the highest monthly level recorded since EIA started tracking global disruptions in January 2011. In May 2016, sudden outages in Canada, Nigeria, Iraq, and Libya more than offset reduced disruptions in Kuwait, Brazil, and Ghana. As of September 2017, civil strife in Libya and militant activity in Nigeria saw an abatement in recent months, and global unplanned oil supply disruptions have dropped by more than 1 million bpd over the past six months, according to the EIA. In North America, outages in Canada earlier this year from the fire at Syncrude’s Mildred Lake facility, combined with outages at Long Lake and Surmont facilities, resulted in a 425,000 bpd disruption in April, the EIA said. Canada’s production has now returned to normal and as of September, there were no unplanned outages in Canada. In the U.S., production was shut-in as a result of Hurricane Harvey, which led to a 186,000-bpd disruption in August, and an average of 53,000 bpd disruption in September. Outages in Nigeria dropped from an average of 370,000 bpd in April to 200,000 bpd in September, thanks to the Trans Forcados crude oil export pipeline resuming exports, the EIA said.  Disruptions in Iraq dropped to 50,000 bpd in September, but “the outlook for Iraq’s oil supply from the Kirkuk oil fields remains uncertain following an offensive by Iraqi security forces that started on October 15 in response to the autonomous Kurdistan Regional Government’s (KRG) independence referendum held in September.”

What Trump’s Iran action means for Japan's energy interests | Asia Times: No country went out on a limb more – in economic terms – in bringing Iran to agree to curb its nuclear weapons ambitions than Japan. Though technically not a party to the Joint Comprehensive Plan of Action (JCPA), Japan’s role as a major importer of Iranian crude helped bring Tehran to the negotiating table. Japan may have been key but it did not come easily. It required repeated pressure from Washington, which became a sore point in US-Japan relations. Tokyo eventually cut imports drastically and relinquished its interests in several up-stream projects, such as the huge Azadegan oil field. With the deal signed and sanctions lifted, Tokyo naturally wants to get back in the game. Cue Donald Trump throwing a wrench into plans by announcing that the US would not certify that Iran is complying with the terms of the agreement. While it does not immediately follow that Congress, or any other party, will re-impose sanctions – thereby blowing up the deal – at the very least, Trump’s move introduces what consultants call a “country risk” to any deals. The country imposing the risk is the United States. Much depends on what happens in the next few months, including whether Congress re-imposes sanctions or declares the agreement invalid. “What matters is how much the US government, the White House in particular, wants to force foreign firms out of Iran,” says Helima Croft of RBC Capital markets.Tokyo was always a reluctant participant in the sanctions scheme. Having no petroleum resources of its own, Japan is almost entirely dependent on imports from the Middle East, and it was not inclined to put its economy in jeopardy by curtailing imports from Iran.  '

Saudi Arabia's oil minister visits Iraq to shore up OPEC cooperation -- Saudi oil minister Khalid al-Falih visited Baghdad on Saturday, calling for increased cooperation between OPEC's two largest oil producers as the group prepares to debate on extending its production cut deal next month. "The best example of the importance of cooperation between our two countries is the improvement and stability trend seen in the oil market," Falih told delegates at the Baghdad International Exhibition, according to media reports. Falih's comment came despite Iraqi compliance with its quota -- under the production cut deal -- being among the weakest of the OPEC members, with production averaging 4.50 million b/d in September, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed earlier this month. That is 149,000 b/d above its output quota. Compliance among OPEC and major non-OPEC producers reached 120% in September, its highest level since the output constraint deal was launched in January, the Joint Ministerial Monitoring Committee said Saturday. The JMMC, however, noted that while some of the participating producer countries have consistently performed beyond their voluntary cuts, others have yet to achieve 100% conformity. It did not provide any details identifying the underperformers. Falih was the first Saudi official to speak publicly in the country since Iraq's invasion of neighboring Kuwait in 1990, when diplomatic relations were severed and borders closed. Riyadh also viewed Baghdad with suspicion in the years that followed, both under the regime of Saddam Hussain, and the Shia-dominated post-war governments after 2003. It only reappointed an ambassador to Iraq in 2015, and even then relations have been frustrated.

Higher crude oil prices could work against Mideast producers: IEA - Major Middle Eastern crude producers may not keep their exports to Asia too tight in 2018 as any substantial uptick in international oil prices would reignite strong investment in global oil projects and prompt new competition to emerge, director for energy markets and security at the International Energy Agency Keisuke Sadamori said Monday. Any rise in global crude prices as a result of maintaining tight supplies to Asia could work against Middle Eastern producers as lower prices have been one of the main drivers of strong demand so far this year, while putting the brakes on a slew of new drilling projects around the world, Sadamori said during a group interview session on the first day of Singapore International Energy Week. "They [big OPEC and Middle Eastern producers] cannot be too ambitious [on their oil price targets]...there's not much [upside] room for them to hope for," Sadamori said. "Once the oil price goes to certain levels, this will stimulate new drilling and investments in North America," he added. Middle Eastern crude exports to Asia have fallen sharply over the past several months, with major Persian Gulf producers, including Abu Dhabi National Oil Co, recently slashing its allocations for November-loading crude oil by up to 15% to most of its customers. Before that, various Asian end-users had their crude oil term allocations from Saudi Arabia slashed for September, with at least two South Korean refining companies receiving around 10% cuts in monthly contract volumes for light and medium sour grades. More recently, Saudi Aramco fielded demand for 7.711 million b/d in November loadings but would only allocate 7.150 million b/d, the Saudi energy ministry said earlier this month, as the kingdom aims to keep the OPEC/non-OPEC production cut agreement on track in its efforts to rebalance the market. The cuts signal Saudi Arabia and the UAE's strong commitment to OPEC's November 30, 2016, deal to reduce production by 486,000 b/d and 139,000 b/d, respectively, from October levels last year.

Oil prices creep upward as traders test higher range: Kemp (Reuters) - Hedge fund managers continue to hold large bullish positions in crude and fuels, anticipating strong demand growth and output restraint will lift oil prices into a new, higher, trading range. Hedge funds and other money managers held a net long position equivalent to 883 million barrels in the five biggest futures and options contracts linked to petroleum on Oct. 17.The net position had been reduced by 6 million barrels compared with the previous week and 45 million barrels from the recent peak on Sept. 26 ( it was 578 million barrels higher than at the end of June and still near this year's peaks, according to records published by regulators and exchanges.Fund managers made comparatively minor adjustments to their positions in Brent, U.S. gasoline and U.S. heating oil in the week to Oct. 17, with few signs of profit-taking. Significant short-selling emerged, however, in U.S. crude, where portfolio managers added 23 million barrels of fresh short positions.Funds have embarked on a new cycle of short selling, the tenth since the start of 2015, with short positions up by 40 million barrels since Sept. 26.But the current cycle is unusual in that prices have risen over the last two weeks, even as funds added 35 million barrels of new short positions.The combination of rising prices with a new wave of short selling indicates U.S. crude prices may be moving into a new, higher trading range.From a pure positioning perspective, the concentration of long positions among hedge funds continues to pose a downside risk to oil prices if fund managers attempt to realise some of their profits before the year-end. But a move into a higher range would be consistent with the emerging fundamental picture, with U.S. oil drilling slowing, crude stocks falling, and consumption of refined fuels at home and in export markets increasing strongly.

Oil Nears $52 With Record OPEC Deal Compliance - WTI prices closed in on $52 a barrel on Monday as OPEC reported record compliance to its 10-month old output reduction agreement. A slowdown in North American drilling coincided with the industry cartel’s announcement, which propped up hopes of a shrinking oil supply glut.A Saturday statement by the Organization of Petroleum Exporting Countries (OPEC) showed that member countries, along with its NOPEC partners (Russia and the like) had been keeping up with their commitments from last November. The countries reached a 120 percent compliance rate in September, the bloc said.“The lower U.S. rig count number, the OPEC compliance number and the geopolitical headlines from northern Iraq and Iran on sanctions have helped futures higher,” Ole Hansen, head of commodity strategy at Saxo Bank told World Oil. “But there are signs the market could be weakening with the seasonal refinery demand slowdown.” Glencore Plc, Gunvore Group Ltd. and Trafigura Group Pte are all bullish on the future of oil prices, Bloomberg notes, estimating that prices will exceed $60 by late in 2018. Trafigura is particularly optimistic, noting that OPEC cuts and surging demand will allow market rebalancing in 2018, while a lack of new production due to cuts in capital expenditure will bring a shortage to the market by 2019, lifting prices further. But the Vitol Group remains bearish. CEO Ian Taylor sees Brent falling to $45 in 2018. Production in the U.S. has increased from 8.9 million bpd in January 2017 to 9.48 million in October, according to the Energy Information Administration, which expects it to rise still further in early 2018, possibly exceeding 10 million bpd.

Oil prices inch up, drop in southern Iraq exports supports | Reuters: Oil exports from southern Iraq have fallen by 110,000 barrels per day this month, according to shipping data and an industry source, adding to the drop in flows caused by a shortfall from the northern Kirkuk fields when Iraqi forces retook control from Kurdish fighters who had been there since 2014. The drop in northern Iraqi shipments has supported global oil prices in recent days. But southern exports, the outlet for most of the country’s crude, have been stable in recent months, making the decline unexpected. London Brent crude for December delivery LCOc1 was up 6 cents at $57.43 a barrel by 0055 GMT after settling down 38 cents on Monday. U.S. crude for December delivery CLc1 was up 3 cents at $51.93, having settled up 6 cents. Crude oil exports through the Iraqi Kurdistan controlled-pipeline to the Turkish port of Ceyhan rose 13 percent to 288,000 barrels per day (bpd) on Monday afternoon, less than half the normal levels, a shipping source told Reuters. U.S. crude inventories likely fell by 2.5 million barrels last week, while gasoline and distillate stockpiles also probably fell by at least 1.5 million barrels, a preliminary Reuters poll showed on Monday ahead of data by the Industry group the American Petroleum Institute later in the day.

Oil Prices Rise Ahead Of Inventory Data - Oil was flat Monday and up a bit in early trading on Tuesday. Reports of outages in northern Iraq were offset by assurances from the Iraqi government that production would ramp up in the south to compensate for the outages. Analysts are cautioning investors not to expect a huge price spike as a result. “The oil market still remains deaf in one ear and is responding primarily to price-supportive news,” Commerzbank wrote in a recent note. “The prices of both oil types, and especially of Brent, are overheated and [we] expect them to correct in the short term.”  A highly anticipated wave of earnings reports are approaching, and analysts expect the oil majors to report a significant increase in profits for the third quarter. According to FactSet, and reported on by the WSJ, the five largest western oil companies are expected to report nearly $13 billion in profits for the third quarter, a jump by about a third from the same quarter in 2016. The improved financials are a reflection of the ongoing cost improvements from the oil industry, even as WTI oil remains stuck at $50 per barrel. However, analysts will closely watch production figures to assess whether or not drilling is slowing down.  In its strongest indicator yet, OPEC suggested that Russian President Vladimir Putin’s comment about extending the production through the end of next year would be the basis for upcoming negotiations ahead of the highly-anticipated meeting in Vienna on November 30. An extension is not a done deal yet, but the comments from OPEC officials are the strongest yet.  Cheap oil from Canada and North Dakota have provided enough supply for Midwest refiners, allowing them to break their historical dependence on fuel from the Gulf Coast. According to Reuters, crude flows from the Gulf Coast to the Midwest has been cut in half since the early 2000s, largely due to a surge in supply from the Bakken and Alberta. This new arrangement has worked to the benefit of companies with refining assets in the Midwest, such as Marathon, Phillips 66, BP and Husky Energy. According to Reuters, oil prices have gained even as hedge funds and other money managers have stepped up short bets, a sign that the oil market has improved and can withstand a wave of shorts. That could be a harbinger of oil moving up into a higher trading range.

WTI/RBOB Extend Gains After Major Gasoline, Distillate Draws -- WTI advanced to the highest level since April today amid OPEC considering an extension of output caps, and extended gains after API data despite a surprise build in crude. RBOB gained on a much bigger than expected gasoline draw (-5.7mm vs +1.7mm exp). API:

  • Crude +519k (-3mm exp)
  • Cushing -55k
  • Gasoline  -5.753mm (+1.7mm exp)
  • Distillates -4.949mm

Last week's DOE data confirmed the trend of gasoline builds and crude draws, but if API is correct that normalization trend just ended...  WTI and RBOB both rallied notably today ahead of API and extended gains after...  “People are bullish because they think that U.S. inventories are starting to rebalance and that crude exports will help bring them down,” says Michael Lynch, president of Strategic Energy & Economic Research.

U.S. oil benchmark settles at a 6-month high - Oil climbed Tuesday, as Saudi Arabia reiterated a pledge to help balance the global crude market and geopolitical turmoil threatened global inventories, lifting U.S. prices to their highest finish since mid-April. December West Texas Intermediate crude rose 57 cents, or 1.1%, to settle at $52.47 a barrel on the New York Mercantile Exchange—the highest finish since April 17, according to FactSet data. Brent oil for December delivery, the global benchmark traded on ICE Futures Europe, rose 96 cents, or 1.7%, to $58.33 a barrel. That was the highest settlement since Sept. 26.At a conference Tuesday, Saudi oil minister Khalid al-Falih said Saudi Arabia is willing to “do whatever it takes” to bring global crude inventories back to their five-year average, according to Reuters. “This time the market, unlike the last time, believes them as OPEC and their compliance has earned some market cred,”   “Oil prices which were floundering lower overnight reversed course and surged higher” after al-Falih’s comments, he said. Al-Falih also suggested that more needs to be done, which is “signaling that it is very likely” that the Organization of the Petroleum Exporting Countries and other producers that are part of the agreement to curb crude output will agree to extend the current production cuts, said Flynn. The output-cut agreement is set to expire at the end of the first quarter of 2018. Al-Falih also noted the shale-oil slowdown pointing out that shale-oil production has risen only slightly, Flynn said. “This is a strong statement as many feared was that shale-oil production would offset OPEC and non-OPEC cuts. The reality of shale economics and falling production per well has proven that at least right now, the shale-oil producers were not up to the task, he said. Crude prices have risen over the past couple of weeks following an independence referendum in Iraq’s northern, semiautonomous Kurdish region. The move has led to clashes with Iraqi forces retaking the oil-rich Kirkuk area, throwing into question Kurdistan’s ability to export oil through Turkey and raising doubts about investments from big oil companies.

This Oil Rally May Be Short-Lived - It’s been another week of upbeat OPEC reports—from secretary general Mohammed Barkindo’s belief that global oil demand will jump to over 100 million bpd by 2020 to the proud announcement that compliance with the oil production cut deal had hit 120 percent in September—but is the most recent rally sustainable?These announcements do have an impact on prices, but their effects are often short-lived, especially when facts of life prove them wrong.For starters, any supply or demand announcement from an organization such as OPEC needs to be taken with not one but two grains of salt. The cartel knows very well that an upbeat message could—and often does—send prices higher. Barkindo, for instance, gave no foundation for his forecast of oil demand growth.Neither did OPEC’s monitoring committee go into detail about the 120 percent compliance rate. In truth, this record-high compliance rate covered all partners in the deal—OPEC and non-OPEC. However, it doesn’t really mean much if you look at OPEC’s own production numbers for September.These show that several members were pumping above their November 2016 quotas, notably the UAE, Iran, and Iraq. Saudi Arabia produced about 83,000 fewer barrels per day than what they agreed to, as did a few other OPEC members, though by a lot less. The biggest non-OPEC partner in the deal, Russia, has made no recent announcements about producing less than its 300,000-bpd cut quota. What’s more, a few days before OPEC patted itself on the back for the super-compliance, IEA’s Fatih Birol estimated the cartel’s member compliance at 86 percent, saying it was a good rate, even though it’s significantly worse than earlier months. Yet traders continue to rush to buy crude whenever OPEC says, “We’re doing great!”  Now some experts are beginning to warn that the rally won’t last, regardless of upbeat messages from sources whose wellbeing depends on high oil prices. And it’s not just the start of refinery maintenance season in the U.S. that will push down prices.

The 5 Countries That Could Push Oil Prices Up - Oil prices appear to be stuck in the $50s per barrel, but that doesn’t mean there aren’t serious supply risks to the market. An unexpected disruption could occur at any moment, as has happened in the past, leading to a sudden and sharp jump in prices. Geopolitical tension has been largely irrelevant since the collapse of oil prices in 2014, but it’s making a return now that cracks have emerged in some key oil-producing nations. The threat of an outage will carry more weight as the oil market tightens.  "The 'Fragile Five' petrostates - Iran, Iraq, Libya, Nigeria and Venezuela - continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the United States has decertified the 2015 Iran nuclear deal," U.S. bank Citi said.  The most near-term supply risk comes from Iraq. The surprise seizure of Kirkuk’s oil fields by the Iraqi government has already disrupted some oil shipments. The Bai Hassan and Avana oil fields near Kirkuk remained shut as of October 19, keeping at least 275,000 bpd offline.  The danger to Iran is a return of U.S. sanctions, which are by no means a given. Even then, it’s unclear if the U.S. has the ability to curtail Iranian oil exports. Libya was exempted from the OPEC deal, and for much of the past year has represented a downside risk to oil prices, not an upside one. That is because it has nearly tripled its output from about 300,000 bpd in August 2016 up to about 850,000 bpd currently, down a bit from a recent peak at over 1 mb/d. But damage to some export terminals likely means that near-term production has a ceiling at about 1.25 mb/d, meaning Libya won’t be able to bring output back to pre-war levels of 1.6 mb/d. Nigeria was also exempted from the cuts because violence and instability previously knocked a sizable portion of output offline. But Libya’s restoration of output coincided with a similar reduction in violence in the Niger Delta. Meanwhile, peace in the Niger Delta remains fragile, and reports that militants have grown frustrated with the pace of talks with the government raises concerns about a return to violence. The rebound in Nigerian production is not assured.  The unfolding implosion of Venezuela almost ensures that more of the country’s oil production will erode, perhaps at a quickening pace. As of September, Venezuela only produced 1.89 mb/d, down from 3.2 mb/d in the late 1990s, but also down from nearly 2.4 mb/d as recently as 2015. Without cash, state-owned PDVSA can’t invest in new production and can’t even invest in maintenance to keep existing production from falling.

Backwardation beckons for WTI as crude stocks fall – Kemp (Reuters) - U.S. crude prices appear set to follow the international Brent benchmark from contango into backwardation in the next few months as oil inventories in the United States dwindle. U.S. commercial crude stocks have fallen by 23 million barrels since the start of the year, compared with an increase of 19 million barrels at the same point in 2016, and an average seasonal rise of 24 million barrels in the last decade.  U.S. light sweet crude (WTI) futures for the contract nearest to delivery closed at a discount of just 28 cents per barrel to the seventh-listed contract on Monday. The front-month discount was the smallest since November 2014, when the oil market was only just entering its two-year slump ( Discounts for near-to-maturity futures contracts, known as contango, are a symptom of an oversupplied market with high inventories. By contrast, premiums for nearby contracts, known as backwardation, are associated with an undersupplied market and low stocks. Both Brent and WTI have been moving away from contango towards backwardation for more than two years as part of the market rebalancing process. WTI fell to a steep discount against Brent and remained stuck in contango, which deepened when Hurricane Harvey stopped many U.S. refineries processing crude and left the country with a build up in crude stocks.However, U.S. crude exports have been running at record rates since the middle of September, according to data from the U.S. Energy Information Administration (EIA).With crude imports remaining sluggish, net crude imports have fallen to less than 6 million barrels per day from almost 8 million barrels per day in August.At the same time, U.S. refineries have been processing record seasonal volumes of crude to rebuild stocks of gasoline and especially diesel depleted by the hurricane and strong consumption at home and in export markets. As a result, crude stocks along the East, West and Gulf Coasts have all fallen since the summer, are well below last year’s levels and appear tight. In contrast to the coasts, however, the Midwest has reported a continued build up in crude stocks, especially around Cushing, Oklahoma, the delivery point for the WTI futures contract. Plentiful crude at Cushing has ensured WTI prices for maturing futures contracts have continued to trade at a discount.

WTI Jumps Despite Surprise Inventory Build, Production Rebound -- Following last night's (API-reported) big product draws (and crude build), WTI slid lower (RBOB higher) into this morning's DOE data, but both WTI/RBOB prices jumped after the report showed major product draws (and a Cushing destocking). WTI rallied despite a big surprise build (+856k vs -3mm exp) and a major rebound in production after Hurricane Nate. DOE:

  • Crude +856k (-3mm exp)
  • Cushing -237k
  • Gasoline  -5.47mm (+1.7mm exp)
  • Distillates -5.246mm

"Seasonally, you’d expect crude inventories to grow,” Michael Hiley, head of over-the-counter energy trading at LPS Partners, told Bloomberg, and it did  - well above expectations. However the big product draws were more notable. Gasoline exports soared, Distillates exports jumped, and total crude/product exports hit a new record high... Following last week's collapse in production due to Hurricane Nate, production surged back... WTI prices had slid after an initial bounce following API overnight (and RBOB held gains) into the DOE print, and both rallied initialy after the print... Prices have been “trading elevated because of the OPEC comments that they will do whatever it takes to bring the market into balance.”

   Brent oil hits 27-month high on Saudi talk of extending supply cuts - (Reuters) - Brent crude closed at a 27-month high on Thursday as the market focused more on comments from Saudi Arabia about ending a global supply glut instead of an unexpected increase in U.S. crude inventories and high U.S. production and exports. Brent futures  gained 86 cents, or 1.5 percent, to settle at $59.30 a barrel, its highest close since July 3, 2015. U.S. West Texas Intermediate crude, meanwhile, rose 46 cents, or 0.9 percent, to settle at a six-month high of $52.64, its highest close since April 17. With Thursday’s gains, Brent futures were up for three days in a row following comments earlier in the week from Saudi Arabia that the Kingdom was determined to end a global supply glut that has weighed on prices for more than three years. “We are committed to work with all producers, OPEC and non-OPEC countries ... We will support anything to stabilise the oil demand and supply,” Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters on Thursday when asked whether the kingdom would support extending an agreement to cut supplies until the end of 2018. The Organization of the Petroleum Exporting Countries (OPEC), plus Russia and nine other producers, have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to March 2018, but they are considering extending it. “When you couple what Mohammed Bin Salman said along with (Russian President Vladimir) Putin, you have to realize we have two of the largest oil producers basically putting a blessing on an extension of production cuts through the end of 2018,” .

Saudi Rhetoric Sends Oil Prices To Two-Year High -Comments made by Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS), sent Brent crude to its highest in more than two years (highest since July 2015), above $60 a barrel, Reuters reports. West Texas Intermediate was more impervious to the comments, but it also gained a few cents, to the highest in six months.“The Saudis keep pressing for an extension of the output-cut deal through next year, so the market is feeding off that and we are seeing signs of tightening out there as a result of the program,” John Kilduff, a partner at Again Capital, told Bloomberg.At the same time “the Iraq-Kurd situation is also getting the attention of the market. The volumes are down out of Ceyhan” As's Irina Slav notes, the comments themselves are of the Saudi garden variety, and include:

  • a) a stale reassurance that the Aramco initial public offering is still on track for its scheduled takeoff in the second half of 2018;
  • b) a vague pledge to do whatever it takes to support oil prices;
  • and c) a vow to quit its oil dependency and move beyond fossil fuels at some point.

No matter that the assurances have all been made before - the comments add to the already growing optimism about OPEC’s production cut deal, which will almost certainly be extended until the end of next year, after Russia’s Vladimir Putin and now MBS have backed an extension.

OilPrice Intelligence Report: Oil Prices Finally Break $60 - Oil prices rose strongly on Thursday before breaking two-year-highs and the $60 mark on Friday. The price gains came after robust data from the EIA this week, plus rising confidence in an OPEC extension. But in recent times, oil prices have started to fall apart as they approach $60 per barrel, something that traders will be watching for again today. “It can’t really go above $60” a barrel, Giovanni Staunovo, a commodity analyst at UBS Wealth Management, told the WSJ. “If it goes too high, it’s an indication to U.S. shale producers to produce more oil.”  The WSJ reported that Saudi Arabia and Russia are leaning towards agreeing to extend their production limits through the end of 2018, a move that could be finalized at the upcoming meeting in Vienna on November 30. With those two countries on board, it would be likely that the rest would fall in line. Russian energy minister Alexander Novak warned earlier this week that Russia would boost output by 100,000 bpd next year if the agreement lapsed, while top Russian and Saudi officials also reassured the market about their intentions. “We don’t want to do anything that will shock the market…. and we won’t stop our efforts halfway,” Saudi energy minister Khalid al-Falih told reporters. Separately, al-Falih assured an orderly exit from the deal. “When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don’t have a return to higher inventories,” he told reporters. An extension through the end of next year is rapidly becoming the baseline assumption for the November meeting. Refinery runs along the Gulf Coast averaged 8.8 million barrels per day for the week ending on October 20, or about 324,000 bpd higher than the five-year average, according to the EIA. Refinery runs had been down by 3.2 mb/d, or 34 percent, in the immediate aftermath of Hurricane Harvey. Two months on from the devastating storm, things are nearly back to normal.

Oil up 2 percent, Brent hits $60 per barrel on support for extending curbs (Reuters) - Oil prices jumped about 2 percent on Friday, with global benchmark Brent crude rising above $60 per barrel, on support among the world’s top producers for extending a deal to rein in output and as the dollar retreated from three-month peaks. Saudi Arabia and Russia declared their support for extending an OPEC-led deal to cut supplies for another nine months, the Organization of the Petroleum Exporting Countries’ secretary general said ahead of the group’s next policy meeting on Nov. 30. The pact currently runs to March 2018. Brent futures LCOc1 rose $1.14, or 1.9 percent, to settle at $60.44 a barrel after hitting a session peak of $60.53, the highest since July 2015 and more than 35 percent above 2017 lows touched in June. U.S. West Texas Intermediate crude oil (WTI) CLc1 ended the session up $1.26, or 2.4 percent, at $53.90 after reaching a session peak of $53.98 a barrel, the highest since early March. For the week, Brent was 4.6 percent higher, notching its third straight weekly gain. U.S. crude rose 4.7 percent for the week. U.S. crude’s gains have lagged the global benchmark amid rising domestic output. Oil prices have been hovering near their highest levels for this year amid signs of a tightening market, renewed support this week of an extension of production cuts and tensions in Iraq. However, the announcement on Friday of a ceasefire between Iraqi forces and the Peshmerga from the country’s autonomous northern Kurdish region eased some concerns. 

 NYMEX November gas dips to $2.89/MMBtu despite bullish storage build - The NYMEX November natural gas futures contract fell Thursday despite the US Energy Information Administration announcing a lower-than-expected storage injection. The November contract settled at $2.89/MMBtu, down 2.9 cents from Wednesday's close, the third straight day of losses. The EIA announced an estimated 64-Bcf storage build for the week ended October 20, lower than the 66 Bcf expected by a consensus of analysts surveyed by S&P Global Platts, and 11 Bcf below the 75-Bcf injection average over the past five years during that time. Total estimated stocks now sit at 3.71 Tcf, a 1.2% deficit to the five-year average. The below-average build continues a recent trend, with four of the past five storage injections coming in below the five-year average, according to EIA data. The bearish tone in the market could be due to the recent increase in dry gas production. Data from Platts Analytics' Bentek Energy projected that US dry production will average 75.1 Bcf/d over the next 14 days, above the 73.7 Bcf/d month-to-date average. Also countering the bullish build could be forecasts for a warm winter, with the National Weather Service's most recent three-month outlook calling for above-average temperatures for much of the US through January. Above-average temperatures would take some demand pressure off of the market, as other factors, such as Mexican exports and LNG feedgas, have increased year on year. According to Platts Analytics, LNG feedgas has averaged 2.8 Bcf/d month to date, well above the 100 MMcf/d seen at this time in October 2016. Mexican exports have averaged 4 Bcf/d year to date, up from 3.6 Bcf/d at this time last year, according to Platts Analytics data. Looking down the curve, the January and February natural gas contracts sit at $3.175/MMBtu and $3.178/MMBtu, respectively.

 U.S. oil rig count rises this week but falls for a third month: Baker Hughes (Reuters) - The U.S. rig count fell for a third month in a row even as drillers added a rig this week for the first time in October, extending the drilling decline that started after crude prices fell below $50 a barrel this summer. Drillers added one oil rig in the week to Oct. 27, bringing the total count up to 737, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. For the month, the rig count fell by 13, the biggest decline since May 2016. It was also the first time since May 2016 that the number of rigs dropped for a third month in a row. The rig count, an early indicator of future output, is still much higher than a year ago when only 441 rigs were active after energy companies boosted spending plans in the second half of 2016 as crude recovered from a two-year price crash. The recovery in drilling lasted 14 months before stalling in August, September and October after some producers started trimming spending plans when prices turned softer over the summer.   Despite plans to cut spending by some exploration and production (E&P) companies, U.S. financial services firm Cowen & Co’s capital expenditure tracking increased this week. The 64 E&Ps it tracks planned to increase drilling and completion spending by an average of 50 percent in 2017 from 2016. That was up from 49 percent in the prior report. That expected 2017 spending increase followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said.  U.S. crude futures have averaged almost $50 a barrel so far in 2017, easily topping last year’s $43.47 average. Looking ahead, futures were trading above $53 for the balance of the year and calendar 2018.

 Saudi determined to end oil glut, sees smooth exit for OPEC pact (Reuters) - The world’s top oil exporter Saudi Arabia is determined to reduce inventories further through an OPEC-led deal to cut crude output and raised the prospect of prolonged restraint once the pact ends to prevent a build up in excess supplies.Saudi Energy Minister Khalid al-Falih, speaking during an investment conference in Riyadh, said on Tuesday the focus remained on reducing the level of oil stocks in OECD industrialized countries to their five-year average. The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers, have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to March 2018, but they are considering extending it. “We are very flexible, we are keeping our options open. We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the five-year average,” Falih told Reuters. The market has been concerned that, once the supply cut deal comes to an end, producers will ramp up supplies again, causing prices to fall. But Falih raised the prospect of continued output restraint to prevent this. “When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don’t have a return to higher inventories.” The oil pricehas recovered from below $30 a barrel at the start of 2016 to trade above $57 on Tuesday, and rose after Falih’s comments. Oil remains, however, at half its price in mid-2014. 

 OPEC must think about exit strategy: Kemp (Reuters) - Smoothly exiting from the current output pact, and perhaps replacing it with another agreement, has become the most important policy question for the Organization of the Petroleum Exporting Countries and its allies. Under the current “declaration of cooperation”, issued in December 2016, OPEC with Russia and some non-OPEC countries have pledged to limit their output. Production limits were originally intended to apply for six months between January and June 2017 but have since been extended for a further nine months until the end of March 2018. The original declaration was vague about its objectives but senior officials have since indicated the primary goal is to reduce oil inventories in OECD industrialised countries down to the five-year average. OPEC and its allies are now roughly half-way towards that goal, with stocks about 160 million-170 million barrels above the five-year average, compared with 280 million at the start of 2017 ("Monthly Oil Market Report", OPEC, March and Oct. 2017).OPEC officials have stressed their resolve to finish what they have started and reduce stocks even further next year.“We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the five-year average,” Saudi Energy Minister Khalid al-Falih said during a conference in Riyadh on Tuesday.“The intent is to keep our hands on the wheel between now and until we get to a balanced market and beyond,” he said (“Saudi determined to end oil glut, sees smooth exit for OPEC pact”, Reuters, Oct. 24). Since inventories are unlikely to be reduced to the target by the end of March, OPEC officials are discussing an extension of the production cuts for up to another nine months. But the more complicated and important task is deciding when and how to exit from the current agreement and whether to try to replace it with another production accord. Knowing when to declare that an objective has been achieved and making a course correction is often a major challenge for policymakers. If a policy has been successful, there is a tendency to continue pursuing it, even when the environment has changed and demands a different response. OPEC and its allies must decide when to switch the focus from limiting output and cutting stocks to growing production again to meet rising demand. If they wait too long, stocks will fall too far, prices will rise strongly, shale production will ramp up, and the oil market’s adjustment will overshoot.

OPEC's options for extending production pact: Kemp (Reuters) - Senior officials from the Organization of the Petroleum Exporting Countries and its allies are already discussing an extension of their production accord beyond its scheduled expiry at the end of March 2018.  Current production limits have already been extended once, from the end of June 2017 to give more time for the oil market to rebalance.Ministers and officials are now discussing lengthening the agreement again, possibly until the end of 2018 ("OPEC seeking consensus on oil supply cut extension before meeting", Reuters, Oct. 19). The simplest strategy would be to extend the agreement for three months until the end of June 2018, which would allow it to be reviewed again at the next regular ministerial conference. The upside of a three-month extension is that it would maximise OPEC's flexibility as the oil market gets close to balance, and align production limits with OPEC's regular meeting cycle. But it would risk disappointing traders and hedge funds who expect OPEC to do "whatever it takes" and are hoping for a bolder and longer commitment to production restraint. A second strategy is to extend the pact for a full nine months, until the end of December 2018, which would also align the accord with the regular meeting cycle. A nine-month extension would be bold, underscoring OPEC's commitment to cutting stocks, but it would limit the organisation's flexibility significantly. In effect, OPEC would be committing to hold production unchanged for 12 months (the three unexpired months of the existing agreement and then nine months of extension). With oil inventories declining steadily, the oil market moving from contango to backwardation, and spot prices on a rising trend, OPEC would risk losing control of the rebalancing process. Given the current rate of drawdown in crude oil stocks, a 12-month extension would pose a significant risk of inventories and prices overshooting. So OPEC could try an intermediate strategy: a firm extension for three months to June 2018 with an option to extend the production cuts for a further six months, conditional on market conditions in the middle of 2018. 

Saudi Wealth Fund Aims To Double AUM To $400 Billion By 2020 - Discovers Leverage Boosts Returns -- Saudi Arabia’s sovereign wealth fund, a key engine of the kingdom’s plan to diversify the economy, on Wednesday laid out new targets for growth, saying it aims to nearly double the value of assets it manages to around $400 billion by 2020. That sum includes the expected proceeds from the planned initial public offering of up to 5% of state-owned oil giant Saudi Aramco. The listing, slated for next year, could raise as much as $100 billion, Saudi officials have said. The Saudi fund, called the Public Investment Fund or PIF, held assets worth roughly $224 billion as of September, it said in a document released on Wednesday. It had previously struggled to calculate the value of its holdings, estimating them to be between $200 billion and $300 billion. The PIF has made a series of high-profile investments and announcements since Saudi Arabia unveiled its long-term plan for economic overhaul last year. It has invested $3.5 billion in Uber Technologies Inc., and committed $45 billion to a technology fund led by SoftBank Group Corp. The PIF’s announcement highlighted its aim of raising the fund’s annual returns. “The Program also encompasses efforts to maximize value in PIF’s existing assets, which make up the majority of the Fund’s holdings, and a new target to increase PIF’s Total Shareholder Returns (TSR) up from 3 percent to between 4 to 5 percent.” While our calculation suggests that they’ll need at least 5% to reach $400bn by 2020, Reuters reports that the PIF is even more optimistic about the “long-term”, aiming for 6.5-9.0% - all-time highs in equities and all-time lows in bond yields notwithstanding.

Saudi Aramco IPO scaremongering looks overdone - It has been a tough couple of weeks for Saudi Aramco. Recent anonymously sourced reports of the company’s planned initial public offering have painted a chaotic picture of delay and indecision behind the scenes. But a closer analysis of the facts show the plan to raise $100 billion from the sale of a 5% stake in the world’s largest oil company by the end of 2018 remains firmly on track for now. And why wouldn’t it be? With existing upstream capacity to produce over 12 million b/d of crude, Aramco is bigger than Exxon, BP and Shell combined. Downstream, it dominates fuel marketing and refining in the Gulf’s largest economy and owns a network of refineries from Asia to North America. It has the right to tap a claimed 260 billion barrels of proven reserves — just under a sixth of the world’s reachable oil. Its earnings potential is vast and few international resource fund managers can afford to ignore the chance to buy its shares. Beyond Aramco’s vast production of cheap crude there is political momentum behind the IPO. Crown Prince Muhammad bin Salman — also known as MBS — is the architect of the sale, which forms the cornerstone of his Vision 2030 plan to modernize the economy. From leapfrogging his elder cousin to become his father’s heir, to reining in the power of Saudi’s strict religious police and challenging Iran’s growing influence in the region, there is nothing in the thirty-something royal’s recent record that suggests he is likely to change his mind, or back down. That doesn’t mean significant challenges don’t exist. The crown prince’s initial insistence on Aramco commanding a valuation of around $2 trillion has become a focus for criticism. Meeting disclosure rules on international exchanges such as New York and London — which both covet such a large prestigious offering — are also problematic. But rules can be changed.  

Bombshell NSA Memo: Saudi Arabia Ordered Attack On Damascus International Airport With US Knowledge --  The Intercept has just released a new top-secret NSA document unearthed from leaked intelligence files provided by Edward Snowden which reveals in stunning clarity that the armed opposition in Syria was under the direct command of foreign governments from the early years of the war which has now claimed half a million lives. The US intelligence memo - marked "Top Secret" - is arguably the most damning piece of evidence to date which gives internal US government confirmation of the direct role that both the Saudi and US governments played in fueling an armed insurgency which launched massive and well-coordinated attacks on civilians, civilian infrastructure, as well as military targets in pursuit of regime change. The NSA report is sourced to the intelligence agency's controversial PRISM program - which gives the NSA the ability to sweep up all communications and data exchanged through major US internet service providers like Google. The memo focuses on events that unfolded outside Damascus in March of 2013. Damascus International Airport: a major civilian transport hub targeted by the Saudi government with knowledge of US intelligence. Image source: AFP/Getty One of the videos that Saudi-backed FSA fighters uploaded to YouTube identified by The Intercept as showing rockets launched on civilian areas of Damascus on March 18, 2013. US intelligence knew of the secret operation three days in advance yet did not stop it.   According to the document, the Free Syrian Army (FSA) was ordered to "light up Damascus" and "flatten" the Syrian capital's international airport by Prince Salman bin Sultan - a prominent member of the Saudi royal family tasked with overseeing operations in Syria as a top Saudi intelligence officer. The document further reveals that the "Saudis sent 120 tons of explosives/weapons to opposition forces" - presumably in the lead up to the operation. The report not only confirms that the assault happened, but that the Saudi government was "very pleased" with the outcome: "Attacks against airport, Presidential palace and other locations occurred on 18 March," the memo reads. Also significant is that the memo confirms US intelligence foreknowledge of the attack on a major civilian airport: "Reports gave U.S. three days warning about 18 March 2013 attacks (2 year anniversary of revolution)."

I will return Saudi Arabia to moderate Islam, says crown prince -- Saudi Arabia’s crown prince, Mohammed bin Salman, has vowed to return the country to “moderate Islam” and asked for global support to transform the hardline kingdom into an open society that empowers citizens and lures investors. nIn an interview with the Guardian, the powerful heir to the Saudi throne said the ultra-conservative state had been “not normal” for the past 30 years, blaming rigid doctrines that have governed society in a reaction to the Iranian revolution, which successive leaders “didn’t know how to deal with”.Expanding on comments he made at an investment conference at which he announced the launch of an ambitious $500bn (£381bn) independent economic zone straddling Saudi Arabia, Jordan and Egypt, Prince Mohammed said: “We are a G20 country. One of the biggest world economies. We’re in the middle of three continents. Changing Saudi Arabia for the better means helping the region and changing the world. So this is what we are trying to do here. And we hope we get support from everyone. “What happened in the last 30 years is not Saudi Arabia. What happened in the region in the last 30 years is not the Middle East. After the Iranian revolution in 1979, people wanted to copy this model in different countries, one of them is Saudi Arabia. We didn’t know how to deal with it. And the problem spread all over the world. Now is the time to get rid of it.” Earlier Prince Mohammed had said: “We are simply reverting to what we followed – a moderate Islam open to the world and all religions. 70% of the Saudis are younger than 30, honestly we won’t waste 30 years of our life combating extremist thoughts, we will destroy them now and immediately.” The crown prince’s comments are the most emphatic he has made during a six-month reform programme that has tabled cultural reforms and economic incentives unimaginable during recent decades, during which the kingdom has been accused of promoting a brand of Islam that underwrote extremism.

EU under mounting pressure to ban arms sales to Saudi Arabia --The European Union is under mounting pressure from MEPs to ban arms sales to Saudi Arabia in response to the Gulf state’s bombing campaign in Yemen.  The leaders of four political groups in the European parliament have urged the EU foreign policy chief, Federica Mogherini, to propose an EU arms embargo on Saudi Arabia, because of the devastating war in Yemen that has left nearly 20 million people in need of humanitarian aid. In a letter to Mogherini, seen by the Guardian, the MEP leaders accuse the EU of flouting its own rules, by selling weapons to Saudi Arabia in defiance of a 2008 common code on military exports. Mogherini has the right to propose an arms embargo, but would need to win the backing of EU member states, including the UK, one of the biggest arms exporters to the Gulf kingdom. The latest call for a ban would run into immediate opposition from the British defence secretary, Michael Fallon, who urged MPs on Wednesday not to criticise Saudi Arabia in the interests of a fighter jet deal. The EU code on arms exports lists eight grounds for turning down an arms export licence, including respect for the obligations of international organisations, such as the UN. In particular EU member states must show “special caution and vigilance” when issuing licences to countries where serious violations of human rights have been established by the UN or other bodies. The UN has described Yemen as the world’s largest humanitarian crisis: in September it agreed to send war crimes investigators to the devastated country to examine alleged human-rights violations committed by both sides during the two-and-a-half year civil war. After Saudi Arabia launched a bombing campaign against the Houthi rebels in March 2015, at least 10,000 people were killed in the first 22 months of the conflict, the UN humanitarian office said, almost double other estimates. At least 2,100 people have died from cholera, while thousands more are being infected with the disease every week following the collapse of water supplies and sanitation.

The Qatar Blockade Could Cause A Regional Recession -- Five months into the Gulf’s blockade against Qatar, and neither side looks ready to budge. But the repercussions of the ongoing spat—and Kuwait’s failure to end the dispute—could deliver a huge blow to the Gulf economy. Doha has stood its ground: It refuses to shut down its renowned news station Al Jazeera or abide by the sectarian politics orchestrated by Riyadh. Saudi Arabia and its allies (the United Arab Emirates, Bahrain, Egypt and others) maintain that Qatar’s relationship with Iran and other Shi’ite regimes contributes to disharmony in the Middle East. A series of ultimatums, diplomatic talks, and regional sanctions have yielded no results. Kuwait volunteered to mediate between the sparring parties a couple of months ago, but despite international encouragement for its leadership, the country has made no progress in resolving the impasse, which could lead to a regional economic recession if not remedied soon.  In 1982, the collapse of Kuwait’s Souk al-Manakh, the nation’s stock exchange established after the discovery and production of oil in the small emirate, demonstrated how the collapse of one Gulf state can quickly affect its neighbors. Kuwait is now preparing to launch its “grown-up” stock market sometime next year, just as Saudi Arabia prepares for its state-run oil company to undergo an initial public offering. The Gulf’s financial sector is undergoing major changes, and Crown Prince Mohammed bin Salman’s tough anti-Iran stance is adding fuel to a centuries-old, fiery clash of civilizations between Persia and Arabia. For Qatar and Iran, the relationship is one of necessity. The two nations share a stake in the South Pars gas field, which is the largest reservoir of its kind in the world. Doha’s resilience in producing and delivering liquefied natural gas to its customers via an Omani port demonstrates the country’s independence and resolve to keep its politics non-partisan. But the continued excision of Qataris and their wealth from the rest of the Gulf nations will begin affecting regional development in due course.

In A Dramatic Pivot, Shia Militia Leader Tells US: "Get Ready To Leave Iraq"  -- A prominent Iraqi militia leader with close ties to Iran has told the United States to go home while also accusing US forces of not actually being interested in fighting ISIS: Your forces should get ready to get out of our country once the excuse of Daesh’s presence is over," said Sheikh Qais al-Khazali, the commander of the Shiite PMU group Asaib (Popular Mobilization Unit), through the group's TV channel on Monday. The threatening statement was issued the same day Iraqi Prime Minister Haider al-Abadi publicly rejected Secretary of State Rex Tillerson's earlier suggestion that Iraqi paramilitary units who have for years fought Islamic State terrorists are actually "Iranian" and not Iraqi nationals.  On Sunday Tillerson controversially asserted that Iranian "militias" need to leave Iraq as the fight against Islamic State militants was coming to an end while in Riyadh where he engaged in rare high level talks with Abadi and Saudi Arabia’s King Salman. “Certainly Iranian militias that are in Iraq, now that the fighting against (the Islamic State group) is coming to a close, those militias need to go home,” Tillerson said during a press conference in Riyadh, just before boarding a plane for Baghdad. "All foreign fighters need to go home,” he added. But Iraqi PM Abadi pushed back against the Secretary of State in a face to face meeting in Baghdad on Monday. Abadi's words to Tillerson were publicized through a statement on the prime minister's official Facebook page posted late Monday, which has been translated by Zero Hedge (emphasis ours): Prime Minister Dr. Haider al-Abadi during his meeting with the American Secretary of State Rex Tillerson assured him that the fighters of al-Hash'd al Shaabi [PMU militias] are Iraqi fighters who fought terrorism and protected their country, they sacrificed in order to win against Daesh [ISIS], and that Hash'd al Shaabi is an official institution under the state. The Iraqi Constitution doesn’t allow for foreign armed groups under state institutions, and further said that we should encourage these fighters because they are the hope of our country and for the region.

The unlikely – and ironic – effects of Islamic State’s fall in Iraq -- Islamic State has been routed in Iraq. On October 5, the militant group lost the northern town of Hawija – its last urban stronghold after Iraqi forces recaptured Mosul and Tal Afar earlier this year. The brutal battles for these cities have been well documented. Less noticed, however, has been how the near-total defeat of IS is reshaping political and sectarian alliances in the region. The rise and fall of IS has had a sobering and unifying effect on relationships between Sunnis and Shi’ites. In Iraq, where thousands died in the vicious sectarian war that followed the fall of Saddam Hussein, residents of the mainly-Sunni cities of Mosul and Hawija nonetheless jubilantly welcomed the mostly-Shi’ite Iraqi forces who freed the cities from the Sunni extremists of IS. “They helped liberate us,” one Hawija Sunni leader told the New York Times of the fighters. Nor does a Shi’ite backlash against Sunnis seem imminent given Shi’ite recognition of Sunni suffering in the IS-occupied cities. The IS experience has affected Iranian politics too. Supreme Leader Ayatollah Ali Khamenei seemed to show a softer attitude toward Sunnis in a rare pronouncement – seen as carrying the weight of a fatwa – publicly prohibiting any discrimination against minorities. Sunnis have fewer rights than Shi’ites in Iran, and Khamenei’s August comment was made in response to an inquiry by Molavi Abdul Hamid, a prominent Sunni cleric from Iran's impoverished Sunni-dominated Sistan-Baluchistan province on the Pakistan border. In Syria too, IS's faster-than-expected battlefield defeats suggest that the group does not enjoy much local support among the Sunni tribes and populations it has been ruling for the past couple of years. The biggest changes can be seen in Iraq, where Shi’ite leaders’ attempts to develop a post-IS foreign policy are driven in part by fear of Iran’s growing influence and in part by the IS-inflicted suffering in Iraq. Many observers believe that the pursuit of sectarian policies at the expense of Iraqi Sunnis – as systematically practiced under the former Prime Minister Nuri al-Maliki – expedited the rise of IS. The result of the new dynamic is that Iraq’s main Shi’ite leaders are distancing themselves from Iran as they make once-unthinkable overtures to the region’s Sunni Arab bloc. In one of the latest signs of that shift, Iraqi Prime Minister Haidar Al-Abadi declined Tehran’s official invitation to take part in President Hassan Rouhani’s second-term inauguration ceremony on August 5. Such a refusal would have been unimaginable a few years ago. 

US Now Admits Syrian "Rebels" Have Used Chemical Weapons -- From the first moment chemical weapons were used on the Syrian battlefield, the American public was led to believe that only one side could possibly be responsible. The constant refrain in the echo chamber of US government officials and the mainstream media was that only the Assad government possessed chemical stockpiles and the technological capability of deploying such heinous weapons, therefore blame for each and every chemical attack from Ghouta to Khan Sheikhoun was laid at the feet of Assad and the Syrian military.And yet last Wednesday, for the first time, the US State Department casually dropped an important admission into its official Syria travel warning for American citizens: that the core rebel group currently operating in northwest Syria not only possesses but has used chemical weapons - to the point that the State Department considers it a major enough threat to publicly warn citizens about. The armed opposition group, Hayat Tahrir al-Sham (HTS), is referenced early in the document: "Terrorist and other violent extremist groups including ISIS and Al-Qaeda linked Hayat Tahrir Al-Sham [dominated by Al-Qaeda affiliate Jabhat Al-Nusra, a designated Foreign Terrorist Organization], operate in Syria.” HTS is the group now holding Idlib province, which it captured in 2015 as part of a coalition of armed groups given direct support from a US-led operations room in southern Turkey - this according to prominent pro-opposition analyst Charles Lister.

Syrian Kurds Cut Secret Gas Deal With Russian Forces - In a move that surprised many observers of the ongoing war for Deir Ezzor province, the U.S.-backed Syrian Democratic Forces (SDF) handed over one of Syria's largest gas fields to Russian forces on Thursday, possibly as the result of unprecedented direct talks between high ranking Russian officials and Kurdish leaders in Qamishli in northeastern Syria. Conoco gas plant (also locally called Al-Tabiya, which is the plant's main feeder field) lies on the eastern side of the Euphrates outside of Deir Ezzor city - which was recently liberated from ISIS as the Syrian Army and Russian forces approached from the west of the Euphrates. The Conoco field had been held by ISIS since 2014, and was taken by the SDF on September 23rd as the mainly Kurdish force advanced from the east. The now fast crumbling Islamic State relied on much of its financing through its prior consolidation over many oil and gas sites in the resource rich Deir Ezzor province.The gas field, which had the largest capacity of any in Syria prior to the conflict, is capable of producing 450 million cubic feet (13 million cubic meters) of natural gas per day. It is named for the American company which first discovered gas reserves and built a processing plant at the location, however, ConocoPhillips turned the facility over to the state-run Syrian Gas Company in 2005 and has no current association with it. Beirut-based al-Masdar News broke the story based on Syrian military sources: “The information, disseminated by Syrian military reports, claims that an agreement has been brokered between Russia and the U.S.-backed Syrian Democratic Forces whereby the Syrian government will be allowed to assume control over the gas field.” If true, then the scope of any backdoor agreements reached between Moscow and Washington regarding the transfer of energy assets held by Kurdish-led militias back to the rightful ownership of the Damascus government may yet encompass wider dimensions (i.e. future transfers) – although there is absolutely no evidence to suggest this is in fact the case. Nonetheless, the unexpected transfer of the Conoco Gas Field by the SDF to the Syrian government does now raise questions as to whether or not the hitherto competition between the Syrian Arab Army and Kurdish-led militias to seize control of the much larger Al-Omar Oil Field from ISIS further south is still on.

Kurds offer to suspend independence drive, seek talks with Baghdad (Reuters) - Kurdish authorities in Iraq offered on Wednesday to put an independence drive on hold, stepping up efforts to resolve a crisis in relations with Baghdad via dialogue. But an Iraqi military spokesman suggested an offensive - launched to wrest back territory after Kurds voted overwhelmingly for independence in a referendum in September - would continue regardless. The Iraqi government has transformed the balance of power in the north of the country since launching its campaign last week against the Kurds, who govern an autonomous region of three northern provinces and had held a swathe of other territory. “The fighting between the two sides will not produce a victory for any, it will take the country to total destruction,” the Kurdistan Regional Government (KRG) said in a statement. The KRG proposed an immediate ceasefire, a suspension of the referendum result and “starting an open dialogue with the federal government based on the Iraqi Constitution”. Baghdad has always considered the Kurdish secession referendum illegal. It responded last week by seizing back the city of Kirkuk, the oil-producing areas around it and other territory that the Kurds had captured from militant group Islamic State. In a brief social media comment hinting that the campaign would continue, an Iraqi military spokesman said: “Military operations are not connected to politics.” Prime Minister Haider al-Abadi has said the KRG should cancel the vote’s outcome as a pre-condition for talks. Several Shi‘ite members of parliament on Wednesday asked him to stick to his position and not to accept just a freeze of the referendum.

Kurdish Government Proposes End to Independence Push - With oil the source of regional disputes, the semiautonomous Kurdish government in northern Iraq said it was backing off its ambitions for independence. The Kurdistan Regional Government said in statements published Wednesday that greater Iraq and the self-governed Kurdish provinces were faced with “grave and dangerous” circumstances that followed a contentious referendum for Kurdish independence. The referendum coincided more or less with the liberation of Mosul and other key areas of northern Iraq from the terrorist group calling itself the Islamic State, known variably as ISIS, ISIL or Daesh. Liberation prompted a reconstruction effort by the Iraqi government. After tensions escalated in the wake of the referendum, Iraqi forces in early October wrestled control over oil fields in the disputed region of Kirkuk, taking over an economic lifeline for Kurdish independence. Kurdish military forces backed out of the northern city of Sinjar after a confrontation with paramilitary forces loyal to the federal government in Baghdad. The city is included in territories of dispute between the semiautonomous Kurdish government and the federal government in Baghdad. Disputed territories run north from a line stretching from Khanaqin along the eastern border with Iran to Sinjar, near the border with Syria.  The Kurdish government said Wednesday that, in order to prevent the conflict from spiraling out of control, it was proposing a bilateral cease-fire agreement, open dialogue with the federal government in Baghdad and a freeze to “the results of referendum conducted in the Iraqi Kurdistan.”

Iraq Resumes Kirkuk Crude Oil Exports Via Kurdish-Run Pipeline - Iraq resumed pumping oil from a field in the disputed Kirkuk province, the first sign that output is recovering from last week’s fighting between government troops and Kurdish forces that hobbled pipeline exports from OPEC’s second-biggest producer.Iraq’s central government, which rejected a Kurdish independence referendum last month, began exporting from the Avana field in Kirkuk through a pipeline operated by the Kurdistan Regional Government, according to an official at Iraq’s North Oil Co. and a port agent. Crude began flowing on Wednesday at a rate of about 90,000 barrels a day, they said.State-run North Oil, which operates at Avana, was working as well to begin pumping at the nearby Bai Hassan field, which also halted production and exports, the official said, asking not to be identified because the matter isn’t public. Increasing production from Iraq may put pressure on OPEC and other major producers seeking to rein in a global supply glut and firm up prices. The resumption in output at Avana also suggests the central government and the Kurdish authorities may have reached a deal to keep the oil flowing despite armed clashes sparked by the KRG’s Sept. 25 referendum for independence from Iraq that also included Kirkuk.

Gold-Backed Petro-Yuan Silliness: Reserve Currency Curse? -- A massive amount of hype is spreading regarding China's alleged ambitions to dethrone the dollar. The story this time involves China's plan is to price oil in yuan using a gold-backed futures contract. Even if that were true, the impact would be zero. Nonetheless, CNBC is now in on the hype.CNBC reports China has grand ambitions to dethrone the dollar. It may make a powerful move this year.Yuan pricing and clearing of crude oil futures is the "beginning" of a broader strategic push "to support yuan pricing and clearing in commodities futures trading," Pan Gongsheng, director of the State Administration of Foreign Exchange, said last month. To support the new benchmark, China has opened more than 6,000 trading accounts for the crude futures contract, Reuters reported in July. Yawn.Jeff Brown, president at FGE, an international energy consultant has a more accurate assessment. "Most counterparties will not want anything to do with this contract as it adds in a layer of cost and risk. They also don't like contracts with only a few dominant buyers or sellers and a government role." Repeat after me: It's meaningless what currency oil is quoted in. Once you understand the inherent truth in that statement, you immediately laugh at headlines like that presented on CNBC.

Ports, Pipelines, and Geopolitics: China’s New Silk Road Is a Challenge for Washington -- Founded four years ago, Khorgos is poised to become the world’s busiest inland port, a vital link in China’s multi-billion dollar plan to re-create the Silk Road. Some $8 billion of trade passes through each year, say Chinese officials. There’s a free-trade zone that welcomes 30,000 traders daily, and an industrial complex of factories where manufacturers enjoy perks such as two years of free rent courtesy of the Chinese government. “Today, the ground of Khorgos is mud,” says Guo Jianbin, deputy director of the Khorgos Economic Development Zone administration committee, accenting his words with a booted stamp. “But soon it will be paved with gold.” Khorgos is a linchpin in Chinese President Xi Jinping’s signature Belt and Road Initiative. Formerly known as One Belt One Road, it’s a rekindling of the ancient Silk Road through a staggeringly ambitious plan to build a network of highways, railways and pipelines linking Asia via the Middle East to Europe and south through Africa. The economic land “belt” takes cargo, in large part via Khorgos, through Eurasia. A maritime “road” links coastal Chinese cities via a series of ports to Africa and the Mediterranean. A total of 900 separate projects have been earmarked at a cost of $900 billion, according to the China Development Bank. There’s the $480 million Lamu deep-sea port in Kenya, which will eventually be connected via road, railway and pipeline to landlocked South Sudan and Ethiopia and right across Africa to Cameroon’s port of Douala. A new $7.3 billion pipeline from Turkmenistan will bring China an extra 15 billion cubic meters of gas annually. Not since the hordes of Genghis Khan galloped west in the 13th century have such sweeping transnational ambitions emanated from China, though instead of ashes and sun-bleached bones, this time the invaders plan to leave harbors, pipelines and high-speed rail in its wake.

Xi's Roadmap To The Chinese Dream -- Pepe Escobar - Now that President Xi Jinping has been duly elevated to the Chinese Communist Party pantheon in the rarified company of Mao Zedong Thought and Deng Xiaoping Theory, the world will have plenty of time to digest the meaning of “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.” Xi himself, in his 3½-hour speech at the start of the 19th Party Congress, pointed to a rather simplified “socialist democracy” – extolling its virtues as the only counter-model to Western liberal democracy. Economically, the debate remains open on whether this walks and talks more like “neoliberalism with Chinese characteristics”. All the milestones for China in the immediate future have been set.

  • “Moderately prosperous society” by 2020.
  • Basically modernized nation by 2035.
  • Rich and powerful socialist nation by 2050.

Xi himself, since 2013, has encapsulated the process in one mantra; the “Chinese dream”. The dream must become reality in a little over three decades. The inexorable modernization drive unleashed by Deng’s reforms has lasted a little less than four decades. Recent history tell us there’s no reason to believe phase 2 of this seismic Sino-Renaissance won’t be fulfilled. Xi emphasized, “the dreams of the Chinese people and those of other peoples around the world are closely linked. The realization of the Chinese dream will not be possible without a peaceful international environment and a stable international order.” He mentioned only briefly the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) as having “created a favorable environment for the country’s overall development”. He didn’t dwell on BRI’s ambition and extraordinary scope, as he does in every major international summit as well as in Davos earlier this year.But still it was implicit that to arrive at what Xi defines as a “community of common destiny for mankind”, BRI is China’s ultimate tool. BRI, a geopolitical/geoeconomic game-changer, is in fact Xi’s – and China’s – organizing foreign policy concept and driver up to 2050.

China’s new leadership team unveiled: Zhao Leji named as anti-graft chief while Xi elevates trusted deputy to top military role - China’s new leadership lineup has been revealed. The members of the Politburo Standing Committee are, in order of seniority, President Xi Jinping, Premier Li Keqiang, Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji and Han Zheng. The unveiling of the new lineup marks the climax of the twice-a-decade leadership reshuffle after months-long intense horse trading and power struggles in the lead-up to the 19th party congress.The new lineup has essentially confirmed previous exclusive reports by the South China Morning Post. Li Zhanshu, 67, Xi’s chief of staff, looks set to take over the head of China’s National People’s Congress while vice-premier Wang Yang, 62, is expected to become chairman of the top political advisory body, the Chinese People’s Political Consultative Conference. Wang Huning, 62, the top party theorist and director of the Central Policy Research Office, will be in charge of ideology, propaganda and party organisation. Zhao Leji, 60, head of the organisation department and the party’s personnel chief, will replace Wang Qishan to become the new anti-graft tsar, while Han Zheng, 63, the Shanghai party chief, will become the executive vice-premier. The leadership of the powerful Central Military Commission, the body that oversees the military, was also unveiled on Wednesday. General Zhang Youxia, a former director of the commission’s equipment development department and a trusted ally of Xi, was named as the new second vice-chairman.The current second vice-chairman Xu Qiliang was elevated to replace Fan Changlong as the first chairman. The 70-year-old Fan will retire.

Xi Jinping Unveils China’s New Leaders but No Clear Successor  --The ceremony in Beijing’s Great Hall of the People on Wednesday was meant to introduce the world to China’s new leaders, members of an elite committee that for decades has tried to govern by consensus and sometimes has been compared to a corporate board of directors. Instead, the nationally televised event was more a display of the political power that Xi Jinping has amassed in just five years as president. None of the other members of the new Politburo Standing Committee could be considered equals or potential rivals. The six men stood stiffly in dark suits on the stage, each bowing as Mr. Xi introduced them. After reciting their names, Mr. Xi added almost offhandedly: “More information about them can be found through media outlets.” The debut of the new Standing Committee, the pinnacle of power in China, capped a weeklong Communist Party congress that became a celebration of Mr. Xi’s one-man style of rule and his promise to lead a resurgent China to a place at the center of the world stage. “Over the past five years, we’ve done a lot. Some work has been finished, some we must continue with,” Mr. Xi said as his new colleagues, all men in their 60s, lined up before cameras. “A new era needs a new look, and even more needs new accomplishments.” For the first time in a generation, the new Standing Committee did not include a younger leader who would be groomed as heir apparent. The decision to delay anointing a successor broke with the unwritten conventions that have ensured relatively stable leadership changes since the era of Deng Xiaoping, which was beset by schisms and purges. 

As Trump turns his back on the world, the stage is set for President Xi -- It was a symbolic moment. High in the Swiss Alps, before an audience of the super-rich gathered for their annual shindig in Davos, China’s Xi Jinping delivered a powerful defence of globalisation. Protectionism, he said, was like locking yourself in a dark room. “While wind and rain may be kept outside, that dark room will also block light and air.” The Davos elite lapped it up, putting to one side any misgivings they might have had about Xi’s increasingly authoritarian rule, the purges of his opponents and the tightening of censorship. Xi might be the leader of an illiberal one-party state, but he talked the language of open markets and free trade. Unlike Trump, with his walls and punitive tariffs, this was a man with whom they could do business.  Both sides of Xi have been in evidence in the months since. This week he tightened his grip on power in Beijing, becoming the most powerful Chinese leader since Mao Zedong. But his tough line on anything that smacks of dissent at home has been matched by a much softer approach overseas. Where Trump has said the US will pull out of the Paris climate change deal, Xi has said China will stick by its commitments. While Trump has cut the US aid budget, Xi is delivering big infrastructure projects to poor countries with no questions asked. Trump has rejected the World Bank’s plea for more money, but Xi’s shiny new Asian Infrastructure Investment Bank (of which the UK was a founder member) has deeper pockets and is only too willing to lend. Trump wants to kill the North American Free Trade Agreement between the US, Canada and Mexico; Xi says the global economy is a big ocean from which no country can escape.

China Is Quietly Reshaping the World - China is quickly growing into the world’s most extensive commercial empire. By way of comparison, after World War II, the Marshall Plan provided the equivalent of $800 billion in reconstruction funds to Europe (if calculated as a percentage of today’s GDP). In the decades after the war the United States was also the world’s largest trading nation, and its largest bilateral lender to others.Now it’s China’s turn. The scale and scope of the Belt and Road initiative is staggering. Estimates vary, but over $300 billion have already been spent, and China plans to spend $1 trillion more in the next decade or so. According to the CIA, 92 countries counted China as their largest exports or imports partner in 2015, far more than the United States at 57. What’s most astounding is the speed with which China achieved this. While the country was the world’s largest recipient of World Bank and Asian Development Bank loans in the 1980s and 90s, in recent years, China alone loaned more to developing countries than did the World Bank.Unlike the United States and Europe, China uses aid, trade, and foreign direct investment strategically to build goodwill, expand its political sway, and secure the natural resources it needs to grow. Belt and Road is the most impressive example of this. It is an umbrella initiative of current and future infrastructure projects. In the next decades, China plans to build a thick web of infrastructure around Asia and, through similar initiatives, around the world. Most of its funding will come in the form of loans, not grants, and Chinese state-owned enterprises will also be encouraged to invest. This means, for example, that if Pakistan can’t pay back its loans, China could own many of its coal mines, oil pipelines, and power plants, and thus have enormous leverage over the Pakistani government. In the meantime, China has the rights to operate the Gwadar port for 40 years.

North Korea: The myth behind the rogue nation’s relationship with China: AT FIRST glance, it seems the perfect solution to the world’s most dangerous standoff: Find a way to get China to use its enormous influence to force North Korea to abandon its nuclear bombs. The countries, after all, share a long, porous border, several millennia of history and deep ideological roots. Tens, and possibly hundreds, of thousands of Chinese soldiers, including Mao Zedong’s son, died to save North Korea from obliteration during the Korean War, and China is essentially Pyongyang’s economic lifeline, responsible for most of its trade and oil. The notion of Chinese power over the North - that the countries are as “close as lips and teeth,” according to a cliche recorded in the 3rd century - is so tantalising that Donald Trump has spent a good part of his young presidency playing it up. The reality, however, is that the complicated, often exasperating, relationship is less about friendship or political bonds than a deep and mutually uneasy dependency. Nominally allies, the neighbours operate in a near constant state of tension, a mix of ancient distrust and dislike and the grating knowledge that they are inextricably tangled up with each other, however much they might chafe against it.

North Korea Is A Major Opium Producer, Making It A Prime Target For The CIA - When the U.S. overthrew the Taliban in the wake of 9/11 as part of its newly launched “war on terror,” it set the stage for the explosive growth of Afghanistan’s dying opium industry. A few short months before the invasion took place, the Taliban made headlines for having “dramatically ended the country’s massive opium trade” after the leader of the fundamentalist group had declared the substance to be un-Islamic. At the time, Afghanistan’s opium was used to produce 75 percent of the world’s heroin.  But despite being squashed by the Taliban, the opium market made a dramatic comeback immediately following the U.S. invasion in October 2001. Not only was the opium trade restored, it surged drastically – rising from a production level of 185 tons under the Taliban (before the production ban) to 3,400 tons in 2002.  Over a decade later, the amount of opium harvested annually continues to rise. Afghanistan’s opium is now used to produce 90 percent of the world’s heroin. This increase has been directly overseen by U.S. forces, who openly guard Afghanistan’s poppy fields.  While government-sanctioned opium production took a hit after Kim Jong-un assumed power in 2011, things have changed drastically in recent months, largely due to Chinese sanctions that were announced in mid-February. The sanctions, created in response to a North Korean ballistic missile test, led China to refuse imports of North Korean coal. Coal represents 40 percent of North Korea’s exports to China. That drastic hit to the North Korean economy has apparently forced Kim Jong-un’s hand, as opium production has once again picked up. Kang Cheol-hwan, a North Korean defector and president of the North Korea Strategy Center, told the Yonhap News Agency that “the North is cultivating poppy fields again for drug smuggling as a way to secure funds to manage its regime.”While North Korea’s opium production is small compared to that of post-invasion Afghanistan, it is still significant. North Korea, according to the Chosun Ilbo, produces around 40 tons of opium annually — comparable to Pakistan’s opium industry. Most of its opium is smuggled into and sold in China and cannot be targeted by sanctions, since it is hard to trace on the black market.  Some have speculated that North Korea’s return to opium production has caught the attention of the CIA, as the intelligence agency has a history of involving itself in opium trade and drug-running in general, as evidenced by its well-documented habit of managing drug supplies from Latin America to Asia.

Has North Korea copied Soviet ICBMs with help from Ukraine? -- Pyongyang’s rogue missile-firing has evoked a commotion among its neighbours. But the anger has turned into threats after Kim Jong-un’s regime astounded the world on July 4 – Independence Day in the United States – with its first intercontinental ballistic missile, which flew almost 1,000 kilometers after being launched. The Hwasong-14, which means ‘fire star’ in Korean, reached an altitude of 2,802 km and traveled 933 kilometers east into the Sea of Japan after a 39-minute flight. The ICBM’s actual range, on an optimum trajectory, is reportedly 6,700km – possibly over 10,000km (not accounting for the Earth’s rotation). That potentially puts targets in Alaska and Hawaii within its range. The international community had previously been told that it could take more than 10 years before Pyongyang could come up with an ICBM prototype that might pose a substantial threat – until Hwasong-14 skirted across the airspace of northern Japan. Copycat versions of Soviet missile? The Russian Defence Ministry initially believed the missile was merely one of the many makeshift “toys” that the Kim regime liked to parade, but the Pentagon confirmed shortly after that it was the real deal. Russian missile experts who examined photos of Hwasong-14 were quoted as saying the North Korean ICBMs may be copycat versions of long-range missiles made by the Soviet Union, such as the SS-18 Satan, capable of carrying multiple warheads with independently targetable reentry vehicles, Kanwa Defense Review has said. The Hwasong missiles bear all the hallmarks of the SS-18, and one telling indicator is its strikingly similar fairings. An initial analysis of the known trajectory and payload of the Hwasong family has lent fresh evidence to conjecture that Pyongyang may have obtained key ICBM technology from the Ukraine-based Yuzhnoye Design Office, which was once a Soviet Union bastion for rockets and advanced weaponry research and development, but is now allegedly laden with debt. 

Bank Of Japan Is Buying Bonds From Scandal-Hit Kobe Steel - Last week, the simmering scandal involving Japan's third largest steel producer exploded, when following reports that Kobe Steel had falsified data about the quality of its steel, aluminum, copper, iron powder and other products it sold to customers across virtually every single industry, Japan's Nikkei also reported that some Kobe Steel plants in Japan had been falsifying product quality data for decades, well beyond the roughly 10-year time frame given by the lying steelmaker. Worse, not only did the company, having already been caught, lie to shareholders and rule-abiding employees how long this illegal behavior had been going on, but - in a glaring example of corporate idiocy - had effectively enshrined and codified its fraudulent ways, as the cheating procedures eventually became institutionalized in what was a fraud manual, allowing the practice to continue as managers came and went. As all this was taking place, not only did the stock price of Kobe Steel plunge, but its bonds tumbled sending its default probability sharply higher. It now turns out that the rout would have been far worse, had it not been a direct intervention by the BOJ itself, which appears to have stepped in and bought Kobe bonds to arrest the plunge.

Abe's coalition retains two-thirds majority in Japan election -- Japanese Prime Minister Shinzo Abe's ruling coalition held on to a two-thirds majority of the seats in Japan's lower house after Sunday's general election, putting the prime minister in a position to move toward revising the country's pacifist constitution. Abe's Liberal Democratic Party and coalition partner Komeito easily saw off a challenge from a divided opposition, gaining 313 seats of the contested 465 seats. The LDP alone won 284 seats, giving it an "absolute majority," which allows it to control every standing committee in the lower house. The opposing parties had clinched 130 seats between them. The new leftist Constitutional Democratic Party won 55 seats, and Tokyo Gov. Yuriko Koike's Party of Hope 50 seats. . Abe's victory gives the prime minister a fresh mandate to pursue his cherished goal of reforming Japan's postwar constitution and to continue his economic-stimulus measures. If he wins a fresh three-year term as LDP leader at a party congress next year, he could govern until 2021, making him Japan's longest serving prime minister since World War II. 

Abe’s election win clears the way for more Abenomics -- So it is five big wins in a row for Japanese Prime Minister Shinzo Abe. His impressive victory in Sunday's Lower House election follows two earlier lower house successes and two in votes to the parliamentary Upper House. All this puts 63-year-old Abe in a strong position to secure another term as head of the ruling Liberal Democratic Party next autumn. If he continues in the job until 2021, as now seems probable, he will become Japan's longest serving prime minister since the dawn of the parliamentary system in the 1880s. Crucially for investors, this means an extended lease of life for the "Abenomics" reflationary policy regime under which the Nikkei Stock Average has soared from an extraordinarily depressed level to a 22-year high. It is not yet known whether Bank of Japan Gov. Haruhiko Kuroda, who has overseen an easy money program, is willing to serve another five year term himself. If not, it is highly probable that his successor will be a reflationist in the Kuroda mold. The nightmare scenario of a premature tightening of monetary and fiscal policy, bringing with it a resurgent yen and a return to deflation, is now far less likely than if Abe's decision to call an early election had backfired. Next on the Abe agenda is the necessary but politically contentious reform of the pacifist constitution the U.S.-imposed on Japan after World War Two, which has been treated as holy writ for seven decades.With the ruling coalition having retained its two thirds majority in the Lower House, the prime minister has the necessary parliamentary strength to push through a bill for constitutional reform. But winning a simple majority in a national referendum -- as is also required -- is a trickier proposition for a leader with limited personal charisma. To maximize his chances, he will need the kind of public support that comes with a powerful "feel good" factor at street level. 

After election win, Abe prioritizes North Korea, aging Japan  (AP) — Fresh off a decisive election victory, Japan's leader pledged Monday to tackle what he called Japan's two national crises: the military threat from North Korea and an aging and shrinking population. Prime Minister Shinzo Abe said at a news conference that he is committed to protect the Japanese people's prosperity and peace from any contingency. He also referred to Japanese people who were abducted years ago and are believed to still be held by North Korea. "I will pursue decisive and strong diplomacy to tackle North Korea's missile, nuclear and abduction issues and put further pressure to get it to change its policy," he said. His ruling coalition got voters' endorsement to stay in power in elections for Japan's more powerful lower house Sunday. Abe said Japan's decreasing population and aging is "the biggest challenge" for his Abenomics policy aimed at Japan's economic recovery from deflation. "The problem is progressing by the minute, and we cannot afford waiting around." He promised a comprehensive package by the end of the year to deal with Japan's demographic challenges, including investments in education, productivity improvements and pension system reform.  

Japan: North Korea Nuclear Threat 'Critical' -  The nuclear threat from North Korea is critical and requires a joint response from the United States, Japan, and South Korea, Japan's defense minister said Monday."[The] threat posed by North Korea has grown to the unprecedented, critical and imminent level. Therefore, we have to take calibrated and different responses to meet with that level of threat," Japanese Defense Minister Itsunori Onodera told his U.S. and South Korean counterparts, speaking through a translator, at the start of talks in the Philippines.U.S. Defense Secretary James Mattis was more reserved in his remarks, but did slam North Korea for defying U.N. Security Council resolutions against its nuclear and ballistic missile programs."North Korea's provocations threaten regional and global security despite unanimous condemnation by the United Nations Security Council," he said.North Korea has said many times its nuclear weapons program is not subject to negotiation, and has rejected U.S. calls for its denuclearization. Tensions between the North and the United States have been escalating following Pyongyang’s latest nuclear test last month, it’s sixth overall. North Korea has also conducted repeated tests of what intelligence officials have assessed to be both intermediate and long range ballistic missiles.

Japan Sounds Alarm On "Unprecedented, Critical And Imminent” Threat From North Korea -- Following the landslide victory by Prime Minister Abe in Japan's Sunday elections, which left his ruling coalition with a supermajority allowing him to change Japan's constitution, the prime minister wasted no time in signalling a push towards his long-held goal of revising Japan's post-war, pacifist constitution, however as Reuters reported earlier, Abe would "need to convince a divided public to succeed." Parties in favor of amending the U.S.-drafted charter won nearly 80% of the seats in Sunday’s lower house election, leaving the small, new Constitutional Democratic Party of Japan (CDPJ) as the biggest group opposed to Abe’s proposed changes. Still, Abe said he wanted to get other parties on board, including Tokyo Governor Yuriko Koike’s new conservative Party of Hope, and was not insisting on a target of changing the constitution by 2020 that he floated this year.Yet, despite Abe's soothing words, just one day after the election Japan was already setting the groundwork for creating the scapegoat that would be needed to get public support largely behind Abe's militant venture.And as a result, Japan’s defense minister said on Monday that North Korea’s nuclear and ballistic missile capabilities have grown to an “unprecedented, critical and imminent”level, requiring “different responses” to the threat.The minister, Itsunori Odonera, was  quoted by AP as saying that this rising threat compels his country to endorse the U.S. view that “all options” must be considered, which President Donald Trump says includes possible military action. And since this pivot would require a revised constitution, the next step is already in play.

US woos India into 100-year alliance against China | Asia Times: Even as the countdown begins for US President Donald Trump’s highly anticipated state visit to China, US Secretary of State Rex Tillerson is heading to India next week in a delicate geopolitical balancing act. A landmark speech Tillerson gave at the Center for Strategic and International Studies in Washington on Wednesday, titled ‘Defining Our Relationship with India for the Next Century’, served as preamble to his visit. His remarks gave powerful optics projecting India as a ‘pivotal state’ in the US’ future regional strategies. The US evidently hopes to pile pressure on Pakistan, which Tillerson will also visit, to cooperate in forging a negotiated settlement with the insurgent Taliban in Afghanistan and remote Pakistan territories. Tillerson’s speech also became a repartee to the triumphalist narrative of Chinese President Xi Jinping’s report at the 19th Communist Party Congress, which began in Beijing just a few hours earlier on October 18. The Trump administration has also encouraged India to step up in Afghanistan. Tillerson outlined an intensification of cooperation with India in counterterrorism and maritime security, and held out a profound US pledge that “the world’s two greatest democracies should have the world’s two greatest militaries.” Tillerson also signaled that the US will be leaning on India to offset China’s influence and proposed a new regional security architecture with the US, Japan, India and Australia as its main pillars. The US claims that it intends to use defense ties with India to challenge China’s rising military profile and regional influence, while also boosting its arms exports.

As US Presses Against Price Cap on Medical Devices, India Needs to Hold Health Above Trade - As expected, the US medical device industry knocked the doors of the United States Trade Representative (USTR) to pressurise the Indian government against the price ceiling on medical devices like cardiovascular stents and knee implants. On October 17, the Advanced Medical Technology Association (AdvaMed) filed a petition to the USTR to “suspend or withdraw, in whole or in part, India’s benefits under the Generalised System of Preferences (GSP)”. Under the GSP, Indian exports to the US enjoy less tariffs (import duty) compared to the tariffs imposed on other non-GSP exporters excluding the free trade agreement partners. Prior to the petition, USTR ambassador Robert E. Lighthizer wrote a letter addressing both the commerce minister and the principal secretary to the prime minister expressing concerns on the price ceiling. The letter states: The US government is committed to working with you to identify a policy solution that will address a policy solution Indian government priorities related to patient costs, but will also promote trade, innovation and access to advanced technologies. Until such a policy is developed, I urge you not to expand price controls to additional medical devices.In short, the USTR asked the government of India not to impose price controls on other medical devices. The US medical device industry’s allegation on the denial of equitable market access is a smokescreen to protect an inequitable market, at the cost of people’s lives. 

India’s coastal law is being altered in public interest – by bypassing the public - In the first week of October, the Ministry of Environment, Forests and Climate Change issued an amendment to the Coastal Regulation Zone Notification, 2011, which regulates development on India’s coastline. The change in the rules allows the mining of atomic minerals (such as uranium and thorium, which are mostly used to generate nuclear energy) in Coastal Regulation Zone areas notwithstanding their availability in other areas. While environmentalists have expressed concern over this amendment and its implications on fragile coastal areas, the change is worrisome for another reason. This is the eighth time in the last three years that the ministry has dispensed with the requirement of a public notice and instead of first issuing a draft has straight away come out with a final amendment to the notification. The Coastal Regulation Zone Notification was first issued in 1991. It saw close to 20 amendments and eight reviews in the following 20 years before it was replaced by a new notification in 2011. While the 2011 notification was to piece together all these amendments in one document, it also presented an opportunity for public engagement in designing a law. Numerous consultations, dialogue and negotiations between key actors including fishing groups, civil society, environmentalists, urban planners and policy-makers preceded the new law. But three years later, the notification was subjected to a review by an expert committee and a series of amendments – the number of which has now reached 12. Of these 12 amendments, eight were issued without first publishing a draft that would have enabled feedback from concerned citizens and those likely to be affected by the changes. And of the eight amendments, four dealt with extending the validity of the existing Coastal Zone Management Plan that was approved under the 1991 notification.

Analysis: Autos, manufacturing aid stellar rebound in India's oil demand -- India posted the highest growth in demand for oil products in 13 months in September at 9.9% as the effects of some key economic reforms started to fade, while an uptick in manufacturing and robust auto sales boosted consumption of industrial and transport fuels. The year-on-year oil demand growth was the highest since August 2016. Oil demand growth has been moderate after November 2016 when New Delhi demonetized 80% of its currency to curb illegal cash transactions. But analysts said that the after-effects of another key policy reform -- the Goods and Services Tax -- are still being seen. "Demonetization was an event but GST is a process. I think the after-effects of demonetization for most sectors are over. But as far as GST is concerned, the administrative and compliance challenges are not yet over," said Dharmakirti Joshi, chief economist at CRISIL, a unit of S&P Global. "The government is trying to address that." India's demand for oil products in September rose to 16.26 million mt, or 4.25 million b/d, driven by gasoline and gasoil, latest data from the Petroleum Planning and Analysis Cell showed. In September, demand for diesel rose 16.6% year on year to 6.08 million mt, while gasoline demand rose 17.9% to 2.14 million mt. "Car sales are rising, economic sentiment is improving, and key reforms are likely to benefit India in the long run, as Indians become accustomed to less cash. Things might change only slowly in small villages but big cities -- the main driver of demand -- have already adjusted to new realities," said Ehsan Ul-Haq, director at Resource Economist. Over January-September, while gasoline demand grew 5% year on year to 18.83 million mt, diesel demand rose 1.5% from a year earlier to 58.32 million mt. "With the monsoon season now behind us, and with signs emerging that the economy is picking up, India's oil demand should strengthen over the next few months," 

Russian Ships Deliver Military Equipment To The Philippines - In the latest confirmation that President Rodrigo Duterte's threat to diversify the country's military ties away from the United States and toward China and Russia was not hollow, AP reports that three Russian navy ships arrived in the Philippines on Friday and two others are coming, to deliver donated military equipment in the country's third naval visit under Duterte, who as discussed previously, has launched a historic pivot in the country's geopolitical posture away from the US and toward regional Superpowers. Three Russian antisubmarine ships docked in Manila on October 20 in time for Russian Defense Minister Sergei Shoigu's upcoming visit to the country, said Rear Admiral E. Mikhailov, the task force commander. Two other vessels arrived on October 21 at the port of Subic Bay, northwest of Manila to unload donated military equipment, the Philippine Navy said in a statement.Next week, Shoigu will be attending a meeting of 10 Southeast Asian defense ministers with counterparts from other countries, including the United States and China."I am assuring you that we will do our best to make this port call a significant contribution to the strengthening of friendly ties and cooperation between our two nations in the interest of security and stability in the region," Mikhailov said. Russian news agency TASS reported that the Russian Navy will allow local residents of Manila to take tours of the large antisubmarine vessel Admiral Panteleyev during its stay in Manila.

U.S. Military Is Building a $100 Million Drone Base in Africa - From high above, Agadez almost blends into the cocoa-colored wasteland that surrounds it. Only when you descend farther can you make out a city that curves around an airfield before fading into the desert. Once a nexus for camel caravans hauling tea and salt across the Sahara, Agadez is now a West African paradise for people smugglers and a way station for refugees and migrants intent on reaching Europe’s shores by any means necessary. Africans fleeing unrest and poverty are not, however, the only foreigners making their way to this town in the center of Niger. U.S. military documents reveal new information about an American drone base under construction on the outskirts of the city. The long-planned project — considered the most important U.S. military construction effort in Africa, according to formerly secret files obtained by The Intercept through the Freedom of Information Act — is slated to cost $100 million, and is just one of a number of recent American military initiatives in the impoverished nation.  The base is the latest sign, experts say, of an ever-increasing emphasis on counterterror operations in the north and west of the continent. As the only country in the region willing to allow a U.S. base for MQ-9 Reapers — a newer, larger, and potentially more lethal model than the venerable Predator drone — Niger has positioned itself to be the key regional hub for U.S. military operations, with Agadez serving as the premier outpost for launching intelligence, surveillance, and reconnaissance missions against a plethora of terror groups.

Venezuela's unpaid debt just grew to nearly $600 million, days before a make-or-break bill - Venezuela blew past another two bond payments this past weekend, adding hundreds of millions of dollars to a growing pile of unpaid bills just days before the first of two can't-miss debt deadlines.The beleaguered petrostate has now missed $586 million in payments tied to the debt of the government; state oil giant Petroleos de Venezuela, SA; and the utility Electricidad de Caracas, three investment firms focused on developing and frontier markets confirmed."I don't see how any person who's involved in Venezuelan debt can be anything except concerned, except for those who have credit default swaps," said Russ Dallen, managing partner at Caracas Capital Markets. Holders of the swaps benefit in the event of a debt default. As of last Friday, Venezuela had racked up $349 million in unpaid bond interest. This weekend, it failed to make payments totaling $237 million due on another two sovereign bonds. There is some consensus forming around the idea that Venezuela is squirreling away its pennies to make sure it is able to pay the $841 million in principal, plus interest, due on Friday on a bond issued by PDVSA, the state oil company. The collateral against the bond is Citgo, PDVSA's Houston-based refining and retail subsidiary.

Indigenous Community Judge Shot Dead As Colonial Violence Terrorizes Nicaragua   One day after she received an ominous warning, Indigenous Community Judge Celedonia Zalazar Point and her husband, Tito José González Bendles, were shot to death by Colonos in the northern Caribbean region of Nicaragua, a region that has been plagued by an escalating land conflict with illegal settlers since at least 2015. The unthinkable double homicide  took place in the Tungla, Prinzu Awala Indigenous territory—Judge Celedonia Zalazar Point’s jurisdiction in the municipality of Prinzapolka. La Prensa journalist, José Garth Medina, reported a statement from The Center for Justice and Human Rights of the Atlantic Coast (Cejudhcan) on Sept. 8, the date of the killings, concluding that the settlers entered the family home and killed both husband and wife with firearms. Despite claims issued by local authorities regarding pending investigations into this most recent incident, Medina reminded readers that the November 2016 massacre (which IC also reported on) of a Mayanga family by Colono invaders, has yet to generate any arrests.Colonos are armed, Mestizo imperialist settlers who are terrorizing Nicaragua’s Indigenous communities. Their endgame varies from one faction to the next; however most of them are interested in expanding the agricultural frontier with cattle farms or illegal mining interests—an effort that runs parallel to what has been happening across the Amazon for decades. Many Colonos are also in possession of illegal land permits that grant them ownership to traditional Miskito lands.

CPB World Trade Monitor | --Developments in global international trade and industrial production August 2017:

  • World trade volume increased 1.2% month‐on‐month (growth was ‐0.1% in July, initial estimate ‐0.4%).
  • World trade momentum was 1.0% (non‐annualised; 1.3% in July, initial estimate 1.1%).
  • World industrial production increased 0.6% month‐on‐month (0.1% decrease in July, unchanged from the initial estimate).
  • World industrial production momentum was 0.9% (non‐annualised; 1.0% in July, initial estimate 1.1%).

Worldwide debt more than triple economic output as central bank shift looms - (Reuters) - Worldwide debt has risen to a record $226 trillion - more than three times global annual economic output - and firms in more countries are struggling to service loans, a study shows, just as key central banks prepare to end super-cheap credit policies. World markets are expected to get confirmation over the next week that normalizing global interest rates from the extraordinarily low levels introduced to offset the fallout of the 2009 credit crash is no longer just a U.S. phenomena. The European Central Bank will lay out cuts to its 2-1/2 year-old stimulus program on Thursday, the Bank of England looks set to raise British interest rates for the first time in a decade, while the Fed is moving towards its third hike of the year. Years of cheap central bank cash has pushed world stock markets to successive record highs. But another side effect has been explosive credit growth as households, companies and governments took advantage of rock-bottom borrowing costs. Global debt now amounts to 324 percent of the world’s annual economic output, the Institute of International Finance (IIF) said in a report on Wednesday. One of the most authoritative trackers of global capital flows, the IIF report also highlighted “rollover” risks, especially in emerging markets that have borrowed in hard currencies such as euros and dollars. It calculated around $1.7 trillion needs to be refinanced or paid back before the end of 2018 across developing economies. Such debts will become costlier to service if Western interest rates rise and currencies strengthen. While U.S. interest rates have already been raised four times, the prospect of more alongside Europe’s shift toward tighter monetary policy, have pushed two-year U.S. borrowing costs to a nine-year highs. 

Lira Tanks As Germany Pressures Banks To Cut Turkey Funding - Following yesterday's US decision to decline a visa for a Justice ministry delegation, it was Germany's turn today to put the screws to Turkey. As Bloomberg reports, Germany is actively working to cut funding to Turkey from the country’s state-owned KfW bank, the European Investment Bank and the European Bank for Reconstruction and Development, people familiar with the matter say. Germany’s government “is closely following the political and legal developments in Turkey,” the Finance Ministry says in a statement to Bloomberg; ministries coordinate positions “and possible conclusions for the investment policy of international development banks,” while loans for private-sector projects are subject to appraisal on a case-by-case basis.While none of the institutions or banks have imposed a formal freeze on funding, they’ve all imposed tighter restrictions, the people said, asking not to be named, as the matter is sensitive.Increased scrutiny affects financing for companies and banks seen as being tied to or influenced by the Turkish government.Some German commercial banks are also reviewing their exposure to Turkey, amid deteriorating ties between the governments of Berlin and Ankara, the officials said.Commerzbank is altering its relations with some Turkish banks to mitigate reputational risk that could occur through those links, according to one person. EIB “is exercising utmost care in conducting due diligence appraisal of new projects in Turkey,” a spokeswoman for EU’s bank says, adding that financing volume in 2017 will turn out to be lower than in previous years; “EIB views current political developments in Turkey with concern” And that has sent Lira back to new lows...

 Brutal Killing of Journalist Exposes ‘Something Darker’ in Malta — The blast from the bomb planted in the rented Peugeot of Malta’s best-known investigative journalist was so powerful it took police investigators four days to collect body parts and wreckage scattered across sun-baked fields next to the road.  Tracking down potential suspects with deep grudges against the victim, Daphne Caruana Galizia, however, will take far longer. “It is a very long list,” Malta’s prime minister, Joseph Muscat, one of the journalist’s many targets, said in an interview. “She was a very harsh critic of mine.”  The list of people whom Ms. Caruana Galizia offended and infuriated as a prolific journalist in this tiny Mediterranean island nation includes many members of Mr. Muscat’s ruling Labour Party as well as the leader of the center-right opposition. Also on the list: the president of Azerbaijan and his family, executives of a Chinese electrical equipment manufacturer, foreign drug barons, an Iranian-born banker and people active in offshore tax havens like Panama and the British Virgin Islands. All of them were the targets at one time or another of Ms. Caruana Galizia’s relentless probing of the underbelly of the European Union’s smallest country, a nation that boasts Europe’s fastest growing economy but has been hit by six car bombings in the past two years, all of them unsolved. How a country that has in many ways been so successful could be the scene of such a macabre and brutal murder on a picturesque road only a half-hour’s drive from the capital, Valletta, has left many asking what went wrong.

Malta offers 1 million euro reward for leads on journalist′s murder -  DW | 21.10.2017: The Maltese government says it will give the reward for information leading to the identification of those behind the killing of Daphne Caruana Galizia on Monday. Her family has rejected its request to support the offer. Malta's government has offered an "unprecedented" 1 million euros ($1.18 million) reward, and safety guarantees, for anyone who can provide information about who murdered a high-profile journalist and blogger earlier in the week. Daphne Caruana Galizia, 53, an investigative journalist whose corruption stories took aim at Prime Minister Joseph Muscat and other top government officials, was killed by a car bomb a short distance from her home on Monday.  The reward offer included a government statement calling her murder a "case of extraordinary importance." It called the reward offer an "unprecedented measure," and said it was offering the sum to "whoever comes forward with information leading to the identification of those responsible" for her slaying."The government is fully committed to solving the murder ... and bringing those responsible to justice," the statement said.Several years ago the government offered a reward for information about a bank robbery, but this is believed to be the first time it has offered a reward in a murder case. There have been 15 mafia-style bombings or comparable attacks in Malta over the past decade, but many of the cases remain unresolved.

"It Could Open A Pandora's Box": Italy's 2 Richest Regions Are Voting In Historic Autonomy Referendums -- Voters in Italy's two wealthiest northern Italian regions of Lombardy and Veneto are voting on Sunday in referendums for greater autonomy from Rome, in which a positive outcome could fan regional tensions in Europe at a time when neighboring Spain is cracking down to prevent Catalonia from breaking away. Lombardy, which includes Milan, and Veneto, which houses the tourist powerhouse Venice, are home to around a quarter of Italy's population and account for 30% of Italy's economy, the Eurozone's third largest. Unlike Catalonia, the consultative votes are only the beginning of a process which could over time lead to powers being devolved from Rome. Also unlike Catalonia, which held an independence referendum on Oct. 1 despite it being ruled unconstitutional, the Italian referendums are within the law. Like Catalonia, however, Lombardy and Veneto complain they pay far more in taxes than they receive. At its core, today's vote is about whether taxes collected in the two wealthy regions should be used for the benefit of the two regions, or diluted among Italy's other, poorer regions, especially in the south. Lombardy sends €54 billion more in taxes to Rome than it gets back in public spending. Veneto's net contribution is 15.5 billion. The two regions would like to roughly halve those contributions - a concession the cash-strapped state, labouring under a mountain of debt, can ill afford.The two regions are both run by the once openly secessionist Lega Nord, or Northern League party, which hopes that the result will give it a mandate to negotiate better financial deals from Rome. The Northern League was established in the 1990s to campaign for an independent state of “Padania”, stretching across Italy’s north, from around Lombardy in the west to Venice in the east

 Rome ‘ready to negotiate’ with Italian regions after autonomy referendums - The Italian government said it will respect the outcome of two non-binding referendums held Sunday in northern Italy’s Veneto and Lombardy, in which a large majority of voters backed greater financial autonomy for the regions.  Gianclaudio Bressa, Italy’s junior minister for regional affairs, said the government was “ready to open a negotiation to define the conditions and forms of greater autonomy,” Corriere della Sera reported Monday.Local media reported more than 90 percent of voters were in favor of securing a better financial deal with Rome, according to preliminary results. Turnout in Lombardy was around 40 percent, while in Veneto it was 57 percent.Veneto Governor Luca Zaia said he wanted 90 percent of taxes to remain in the region. Lombardy’s President Roberto Maroni will submit a proposal to Rome seeking more autonomy within two weeks, he said, according to Reuters.Veneto and Lombardy account for a quarter of Italy’s population and some 30 percent of its economic output. According to AFP, Lombardy sends €54 billion more in taxes to Rome than it gets back in public spending, while Veneto’s net contribution is €15.5 billion.

Why Italy faces worst shock in Europe as ECB prepares to taper bond buys - MarketWatch: The entire eurozone will face a crucial test when the European Central Bank begins to wind down its asset-buying program, but one country stands to lose the most as the monetary punch bowl is taken away: Italy. Saddled with mountains of debt and a looming election, the southern European nation will likely struggle to find buyers for its government bonds when the European Central Bank stops snapping up Italian debt over the coming years, according to Christian Schulz, European economist at Citigroup. That means yields are set to rise, potentially strangling the country’s nascent recovery. “It comes at a difficult time. At the moment political uncertainty is rising and the ECB pulling out of the market just makes [the end of quantitative easing] so much harder on Italy than other countries,” Schulz said. “They have a huge pile of debt, which makes the country much more sensitive to interest rate changes than countries with smaller piles of debt,” he said. Italy has particularly benefited from the ECB’s quantitative easing program that began in 2015, as it’s been one of the biggest bond issuers in the currency union. The central bank has purchased 300 billion euros ($352.9 billion) of Italian bonds under the program, which is more than three times the net bond issuance for the country during that period, according to Schulz. That means the ECB has not only bought pretty much all new bonds issued in Italy since 2015, but also existing bonds from other investors.

Czech Election Won by Anti-Establishment Party Led by Billionaire - An anti-establishment party founded by a billionaire oligarch overpowered the Czech Republic’s longstanding mainstream parties on Saturday, making the blunt-talking, enigmatic tycoon almost certain to become prime minister in a coalition government. Ano, the party formed by Andrej Babis, 63, had nearly 30 percent of the vote with 99 percent of ballots counted. The Social Democrats, who have been at the center of Czech politics for a quarter-century and had finished first in the previous election, came in a distant sixth with just 7 percent. The Communists were fifth. And the Christian Democrats, another party that traces its roots to the country’s founding, got less than 6 percent, perilously close to the cutoff to qualify for seats in Parliament. Ano was not the only anti-establishment party to do well. The extreme right-wing Freedom & Direct Democracy, with 10.7 percent, doubled its proportion from the previous election. That was just a fraction of a percentage point behind the youth-oriented Czech Pirate Party, an anti-establishment movement from the opposite end of the political spectrum. In the previous parliamentary election, in 2013, Mr. Babis stunned the political establishment by drawing the second-highest number of votes, just one year after founding his party. That was enough to make Ano part of the ruling coalition with the Social Democrats and the smaller Christian Democrats, with Mr. Babis its finance minister. He was able to maintain his anti-establishment credentials by focusing on corruption and economic reforms. In recent months, as polls showed his rise to prime minister becoming likely, Mr. Babis became the target of an investigation into possible tax crimes and was fired as finance minister. This month, he was indicted on what he called politically motivated charges of misusing European Union subsidies. Opponents called on him to step down as his party’s candidate for prime minister. He refused. Often compared to President Trump, Mr. Babis has mixed such nationalist themes as opposition to immigration with a promise to use his business skills to streamline government, reduce red tape and fight corruption. With mainstream parties in decline, as they have been in recent elections across Europe, his promise to upend the political establishment found a receptive audience.

"Czech Donald Trump" Wins Landslide Victory --

  • The election outcome, the result of popular discontent with established parties, is the latest in a recent wave of successes for European populists, including in Austria and Germany. The populist ascendancy highlights a shifting political landscape in Europe where runaway multiculturalism and political correctness, combined with a massive influx of unassimilable migrants from Africa, Asia and the Middle East, have given rise to a surge in support for anti-establishment protest parties.
  • "It is unthinkable that the indigenous European population should adapt themselves to the refugees. We must do away with such nonsensical political correctness. The refugees should behave like guests, that is, they should be polite, and they certainly do not have the right to choose what they want to eat.... There is a deep chasm between what people think and what the media tell them." — Andrej Babis, in the Czech daily Pravo, January 16, 2016.
  • As prime minister, Babis would share government with Czech President Milos Zeman, who has described political correctness as "a euphemism for political cowardice."

Populist tycoon Andrej Babis and his Eurosceptic political party have won the Czech Republic's parliamentary election - by a landslide - making the "politically incorrect" billionaire businessman the main contender to become prime minister after coalition negotiations.With all of the votes counted, Babis's anti-establishment party ANO (which stands for "Action of Dissatisfied Citizens" and is also the Czech word for "yes") won nearly 30% — almost three times its closest rival — in elections held on October 20. The Eurosceptic Civic Democratic Party (ODS), the anti-establishment Czech Pirates Party and the anti-EU Freedom and Direct Democracy party (SPD) came second, third and fourth, with around 11% each.The Communists came in fifth with 7.8%. The Social Democrats, the center-left establishment party that finished first in the previous election, came in sixth with just 7.2%. The Christian Democrats, the center-right establishment party, won 5.8%, just enough to qualify for seats in parliament. In all, nine parties competed in the election.The election outcome, the result of popular discontent with established parties, is the latest in a recent wave of successes for European populists, including in Austria and Germany. The populist ascendancy highlights a shifting political landscape in Europe where runaway multiculturalism and political correctness, combined with a massive influx of unassimilable migrants from Africa, Asia and the Middle East, have given rise to a surge in support for anti-establishment protest parties.

Austria’s likely next chancellor hopes to form govt. in 60 days: paper (Reuters) - Austria’s likely next chancellor, Sebastian Kurz, wants talks over a new government to last no more than two months, he said in a newspaper interview published in Sunday.Austria’s president on Friday gave the green light to conservative leader Kurz, whose People’s Party (OVP) secured 31.5 percent of the vote in last week’s parliamentary election, to form a government. “The Austrians expect that there is quickly a strong and stable government which takes up work,” Kurz was quoted as saying by Austria’s Kronen Zeitung. “That means that negotiations should be concluded in less than 60 days.” Kurz campaigned on a platform that combined a hard line on immigration similar to that of the far-right Freedom Party (FPO) with traditional conservative principles like slimming down the state and cutting taxes. To form his coalition, only two of Austria’s parliamentary parties, the Social Democrats (SPO) and FPO, have enough seats to give Kurz a majority if they go into coalition with the OVP. Kurz is currently holding an initial round of discussions with the leaders of all parties in parliament, the last of which is his meeting with outgoing Chancellor Christian Kern, the head of the Social Democrats, later on Sunday. In a separate interview with tabloid Oesterreich, Kurz said his party has common ground with the FPO and that he had already held constructive talks with FPO leader Heinz-Christian Strache. “In the conversation with Heinz-Christian Strache, I also had the impression that he has a strong willingness to effect change and creative drive,” Kurz was quoted as saying by OE24. “But now I will conclude these talks on Sunday, and then take up coalition negotiations with a partner.”

 Schauble has reduced Europe to rubble’: Cabinet colleague takes parting shot at outgoing German finance minister - Germany’s foreign minister launched an extraordinary attack on the country’s outgoing finance minister on Tuesday, exposing deep divisions within Angela Merkel’s government of the last four years.On the day Wolfgang Schäuble was elected speaker of the German parliament, Sigmar Gabriel accused him of “reducing Europe to a pile of rubble which has to put back together by others”.In an interview with several German newspapers, Mr Gabriel said the former finance minister had “succeeded in turning almost all EU member states against Germany” with his hardline stance against Eurozone bailouts.  What made the outburst more remarkable was that Mr Gabriel served alongside Mr Schäuble as economy minister and vice-chancellor for much of the period he was describing. Mr Schäuble has long been a divisive figure in European politics. As Mrs Merkel’s long-serving finance minister, he is feted in Germany for presiding over a period of economic strength.But he is hated in countries like Greece for his deep-seated aversion to bailing out the poorer performing economies of southern Europe. The foreign minister’s outburst is the first sign that Mr Schäuble’s policies were disliked much closer to home — within Mrs Merkel’s government.Mr Gabriel led his Social Democrats (SPD) into coalition with Mrs Merkel’s Christian Democrats (CDU) in 2013 — only for his party to suffer its worst ever defeat in last month’s election.Although the SPD has announced it is going into opposition, Mr Gabriel and other ministers are staying on in a caretaker government while Mrs Merkel holds talks on putting together a new coalition with the pro-business Free Democrats (FDP) and the Greens. The 75-year-old Mr Schäuble agreed to become speaker to free up the finance ministry, which the FDP is widely expected to demand as the price for its support. He was elected unopposed in Tuesday's first sitting of the newly elected parliament.

"We Can't Welcome All The World's Poor" - Macron Unveils Crackdown On Criminal Illegal Aliens -- Two years after the European Commission carried out the bidding of German Chancellor Angela Merkel by approving a plan to distribute migrants entering the Schengen area through Greece and Italy evenly across the European Union, the people of Europe have made their displeasure with Merkel’s “open door” policy abundantly clear. Last month, Merkel’s Christian Democratic Union suffered its most embarrassing showing in a federal election in decades, allowing a far-right, anti-immigrant party into parliament for the first time since World War II. The Alternative for Germany party’s unexpectedly strong showing fractured the ruling coalition spearheaded by Merkel’s conservatives as her partners, the Social Democrats opted to rebuild in opposition, complicating Merkel’s attempts to form a ruling coalition. In what was widely celebrated by the right as an important public capitulation, Merkel announced that her government would consider implementing a refugee cap of 200,000 (far larger than the cap adopted by the Trump administration). While it’s unclear whether the cap will ultimately become law, the fact that Merkel has publicly acknowledged the failure of open doors was interpreted as a sea change in Europe’s response to the worsening migrant crisis.

 What happened to the €8 billion Europe took from Greece? - In 2012 with Greece on the verge of bankruptcy, fellow Eurozone states rallied round to rescue one of their own. Part of the bailout package they agreed was to use almost 27 billion euros to buy up Greek debt to prevent a vicious circle that would see the country facing more and more expensive borrowing costs. At the time, the countries agreed that they should not profit from this action and that the interest paid to them by Athens linked to the bonds they had bought should be returned. To this day, that interest amounts to almost €8 billion. Some of this money has been sent back to Greece but much of it remains in the hands of other European countries. And they seem determined not to reveal how much. “For legal reasons, it’s not possible for member states to declare the amounts paid by their central banks to Greece,” said a source at the European Commission, citing the principle that central banks should not disclose details about their investments to avoid unduly influencing the behaviour of markets. For once, it seems, that Europe is united on the issue – Ireland, Italy, Spain and even Greece all refused to disclose how much had been returned and how much they were still holding. In Luxembourg, the press revealed that the government had handed back to Greece €28.3 million and was committed to returning the entire €40.2 million of interest it had accrued.  According to Euronews’ calculations, the Bundesbank, due to its position as the largest of Europe’s central banks earned €2 billion of interest since 2012 on the debt they purchased from Greece. France took €1.58 billion and Italy €1.37 billion. . Under the Securities Market Programme, Eurozone central banks bought up Greek government bonds, pushing up the prices for that debt and thereby lowering the interest rates Athens needed to pay to borrow. . As a result of this programme, the countries participating received interest from Greece on the bonds they had purchased.  When Alexis Tsipras swept to power in 2015 and rejected a proposed deal to extend the bailout, Eurozone finance ministers agreed to freeze these payments, having returned €4.3 billion relating to the debt buyup and a separate programme known as ANFA. Finance ministries contacted by Euronews, including those in France and Germany, refused to comment on what interest has been returned, although German media claimed that none of the interest has been paid back to Athens since 2015 .

Rajoy Goes Nuclear on Catalonia’s Separatists, Seeks Suspension of Autonomy, National Takeover of Local Police and Public Broadcasting; Political and Economic Risk High -- Yves Smith - Spanish Prime Minister Mariano Rajoy had signaled he intended to deal forcefully with Catalonia’s independence movement.  Even though many expected he would hit the red button of using Article 155, almost no commentator expected Rajoy to move as aggressively he indicated he would on Saturday. Even if you take a dim view of the ham-handed moves of the separatists, this is a Franco-style crackdown. Stirring those memories is going to make this Constitutional crisis even more charged than it would have been. As the Financial Times summed it up: The Spanish prime minister will sack the entire Catalan government and call new regional elections within six months in an extreme move set to crush the regional independence movement. From the Guardian: Citing the Catalan government’s “conscious and systematic rebellion and disobedience”, Rajoy said Carles Puigdemont’s government would be stripped of its powers and its functions would be assumed by the relevant ministries in Madrid.   He did not go into details of how article 155 would be applied but a government statement said: “A series of measures will be introduced regarding sensitive issues such as security and public order, financial management, taxation, the budget and telecommunications.” Not that the government in Catalonia has a forum in which it could get a fair hearing, but earlier commentators reading of the scope of Article 155 argued that some of the measures Rajoy intends to take go beyond what Article 155 allows. The article allows central government to employ “necessary methods” to force a regional government to comply with the Constitution and protect the interests of Spain. The only route mentioned explicitly is that the national government can direct “all authorities” of the rebellious region. From Aljazeera: “The Spanish government really didn’t have a plan to proceed with 155, so there’s a lot of uncertainty as to what can be done and what can’t.”  Costa claims he has seen many proposals, such as the creation of an interim government to run Catalonia, that are “clearly not possible” under 155. “There’s no doubt [Article 155] has limits … including the Catalan statute of autonomy, which cannot be repealed,” Costa said.

How the Spanish PM plans to apply emergency rule in Catalonia - Spanish Prime Minister Mariano Rajoy has given concrete details of how his government plans to apply Article 155 of the Spanish Constitution in Catalonia, a provision which allows for Madrid to temporarily take control of internal affairs in the northeastern region. Speaking in the early afternoon after an emergency Cabinet meeting called to address the escalating crisis in Catalonia, Rajoy said the government’s application of the article had four main aims: a return to legality in Catalonia; recovering normality and social harmony; a continuation of economic recovery; and the holding of elections. The measures must now be passed by the Senate where the ruling Popular Party of Rajoy enjoys an absolute majority The key points of the government action plan are:

  • 1. The power to dissolve the Catalan regional parliament will pass to the Spanish prime minister. Regional elections are to take place within six months, although Rajoy specified that he wanted to “do this as soon as institutional normality is restored.”
  • 2. The central government has asked the Senate to authorize the dismissal of Catalan regional premier Carles Puigdemont, deputy premier Oriol Junqueras and all ministers of the Catalan government. Their functions would be taken over by the corresponding ministries in Madrid until the current state of exception is over.
  • 3. The Generalitat, as the Catalan executive is known, will continue to function and to be charged with administration in the region, with oversight from ministries in Madrid.
  • 4. The Catalan parliament will not dissolved, and will continue to carry out its representative function. However, the speaker of the house will not be able to propose a new candidate for the regional premiership or propose investiture sessions. The speaker will also be barred from implementing initiatives that contravene the Spanish Constitution or the Catalan statue. In the event such initiatives are proposed, the central government will have 30 days in which to veto them.

The measures proposed by the government must now be approved by the Spanish Senate where Rajoy’s ruling Popular Party enjoys an absolute majority. If the Senate does approve the plan, it will be the first time Madrid has enacted emergency powers limiting home rule in one of Spain’s autonomous regions since the Constitution of 1978 came into force.

Catalan leader accuses Spain of ‘worst attack’ since Franco  - Catalonia's leader accused Madrid on Saturday of waging the "worst attack" on his region since dictator Francisco Franco after the central government took drastic measures to stop it from breaking away. In a televised announcement, Carles Puigdemont said Madrid was failing to respect the rule of law after Prime Minister Mariano Rajoy announced he would move to dismiss Catalonia's separatist executive, take control of regional ministries and call elections. The premier said he had no other choice faced with the threat to national unity. Puigdemont said the measures were "incompatible with a democratic attitude and do not respect the rule of law," calling on the regional parliament to meet over the crisis. He accused the Spanish government, which still has to get approval from the Senate to implement the measures, of waging "the worst attack on institutions and Catalan people since the decrees of military dictator Francisco Franco abolishing the Catalan government". Franco ruled Spain with an iron fist from 1939 to his death in 1975, and among other repressive measures took Catalonia's powers away and officially banned the Catalan language. Cautious, though, Puigdemont did not once say the word "independence" as Spain and the rest of the EU waits to see if he declares a unilateral break from Spain after the region held a banned independence referendum on October 1st. 

450,000 Take To Barcelona's Streets, Led By Catalan Separatist President, Chanting "Time To Declare Independence" -- With Spain officially pulling the trigger on Article 155, and activating the Spanish Constitutional "nuclear option" this morning, when PM Rajoy said he would seize control of the Catalan government, fire everyone and force new elections in six months, attention has shifted to the Catalan response. And as we waited for the official statement by Catalan separatist president Carles Puigdemont, expected at 9pm local time, we found him taking to the streets, where he led hundreds of thousands of independence supporters in protest around Barcelona on Saturday, shouting "freedom" and "independence" following the stunning news from Madrid earlier on Saturday. The protest in the center of the Catalan capital had initially been called to push for the release of the leaders of two hugely influential grassroots independence organisations, accused of sedition and jailed pending further investigation. But it took on an even angrier tone after Prime Minister Mariano Rajoy announced his government would move to dismiss the region's separatist government, take control of its ministries and call fresh elections in Catalonia. According to municipal police, over 450,000 people rallied on Barcelona's expansive Paseo de Gracia boulevard, spilling over on to nearby streets, many holding Catalonia's yellow, red and blue Estelada separatist flag.

Spain Won't Arrest Catalan Leaders, Blames "Fake News" For Catalan Crisis -- Following Catalan President Puigdemont's address yesterday accusing Madrid of "the worst attack since Franco," the Spanish government has urged Catalonians to accept direct control from Madrid and ignore seditious instructions from the pro-independence leaders. Spanish Foreign Minister Alfonso Dastis responded on Sunday with the call to obey Madrid. “We are going to establish the authorities who are going to rule the day-to-day affairs of Catalonia according to the Catalan laws and norms ... I hope everyone will disregard whatever instructions they will be planning to give because they will not have the legal authority to do that.”  However, Dastis sought to calm nerves in the region, saying Madrid would not conduct arrests among the pro-independence leadership, though two prominent secessionists were detained on court order this month on allegations of sedition. “All the government is trying to do, and reluctantly, is to reinstate the legal order, to restore the constitution but also the Catalan rules and proceed from there,” Dastis told BBC TV. "We are not going to arrest anyone." Of course, Dastis could not help himself but fall back on the establishment's 'excuse du jour' for anything that does not fit with the maintenance of the status quo... "There has been a lot of alternative facts and fake news"

Catalan parties to announce response to Madrid moves - Catalan parties are due to meet on Monday to discuss their next steps at the start of a week that will see Spain dismiss the region's government to stave off its threat to break away from the country. "What happens now, with everyone in agreement and unity, is that we will announce what we will do and how," Catalan government spokesman Jordi Turull said after denouncing what he called "a fully-fledged coup against Catalan institutions". Spanish Prime Minister Mariano Rajoy Saturday announced he would remove Catalan leader Carles Puigdemont and his executive, with Madrid taking control of ministries under unprecedented measures to stop the region breaking away. The Catalan parties will meet Monday to set a date and agenda for a gathering of the regional parliament to debate their next steps -- a session that could potentially give the ruling separatists another opportunity to declare unilateral independence, which they have been threatening to do since a banned referendum on the issue on October 1. Though Catalans are deeply divided on whether to break away from Spain, autonomy remains a sensitive issue in the northeastern region of 7.5 million people. Catalonia fiercely defends its language and culture and has previously enjoyed control over its policing, education and healthcare. As nearly half a million angry separatists took to the streets of the regional capital Barcelona on Saturday, Puigdemont declared Rajoy guilty of "the worst attack on institutions and Catalan people" since the dictatorship of Francisco Franco. Among other repressive measures, Franco -- who ruled from 1939 until 1975 -- took Catalonia's powers away and banned official use of the Catalan language. 

Barcelona Mayor Calls for a Third Way to Solve Catalonia Crisis - Since dramatic police violence broke out at the start of October over a referendum to Catalonian independence, both Spain’s national and Catalonia’s autonomous regional governments have been teetering on the edge of radical action.Spain has threatened to temporarily strip the Catalonian government of its powers under a never-before-used provision of the country’s constitution, Article 155. Catalonia has stood on the edge of declaring independence, after an overwhelming vote in favor that was deemed illegal by the terms of Spain’s constitution. A police crackdown at polling stations escalated the crisis only further.The region’s largest city, Barcelona, has occupied a precarious position in the middle of it all. And on Sunday in Paris, its Mayor Ada Colau urged that threats from all sides be taken off the table. Speaking to Spanish media at the CityLab 2017 conference, Colau said drastic action on either side would warp the potential for the democratic process to work again in any elections that followed a removal of Catalan autonomy by central government:“Of course sooner or later we need to have elections, to change the cycle, but to get there we need to have them along with a return to institutional normality. That means not being under the threat of an intervention using Article 155 –  but also being without a unilateral declaration of independence.” As a self-proclaimed “municipalist,” Colau believes city-states rather than nation states are the future of government. She has recently opposed Catalan independence, after previous ambivalent views, and she is trying to steer a third course for Barcelona, a city where both pro- and anti-independence voters are large in number.

Catalan Separatists Plan Human Shield, "Civil Disobedience" To Block Spanish Takeover -- If Spain hoped that Catalonia would willingly and cheerfully hand over control over the separatist region to Madrid after Rajoy announced on Saturday that the Spanish government will fire Catalan leaders and force new elections in 6 months, he may be disappointed. According to Bloomberg, Catalan separatists are "mobilizing a human shield" to block efforts by Spanish authorities to take control of the breakaway region as both sides prepare to escalate the political conflict beyond what may soon be a point of no return.The dramatic Catalan action is in response to Rajoy's shocing announcement on Saturday, when he disclosed plans to clear out the entire separatist administration in Barcelona and take control of key institutions including public media and the regional police force, the Mossos d’Esquadra. Spain’s chief prosecutor said that if Puigdemont declares independence he would face as much as 30 years in jail and signaled that he could be arrested immediately."We are calling for a peaceful and democratic defense of the institutions," Lluis Corominas, the leader of the main separatist group in the Catalan Parliament, said at a press conference in Barcelona.According to two sources quoted by Bloomberg, groups of Catalan separatists will concentrate their activists around the regional government’s headquarters in Barcelona’s Gothic quarter and the nearby parliament building. "They expect Spanish police to use force to try to shut down the administration and will put their bodies on the line" the sources added.

Junqueras Tells AP Only Option Is To Proclaim Republic -- Catalan Deputy First Minister Oriol Junqueras (Esquerra, ERC) told the Associated Press on Wednesday evening that the Spanish government had left Catalonia “no other option” but to proclaim a new republic.Mr. Junqueras told the AP he was commenting as leader of his party, Republican Catalan Left, not as a member of the regional government. First Minister Carles Puigdemont has called a meeting of his regional executive and governing party MPs for 7 p.m., after it was reported that party, Junts Pel Sí ("Together For Yes") had agreed earlier in the evening to ask Mr. Puigdemont to declare independence from Spain.

Almost 1,400 Companies Have Left Catalonia Since October 2 -- A total of 1,394 companies moved their headquarters from Catalonia to other regions of Spain between 2 and 23 October, according to data from the Association of Commercial Registrars of Spain. On Monday, a total of 92 companies emerged, after recording highs at the end of last week. As El Economista reports, the vast majority (1,255) of the companies that left Catalonia had their headquarters in the province of Barcelona, ??while 25 left Gerona, 57 moved from Lleida and 57 did so from Tarragona.In the period between 2 and 9 October, the number of companies leaving Catalonia was 219 entities, while this figure rose to 551 companies until day 11, to 700 companies until October 16, to 805 until day 17, 917 until Wednesday 18, 1,185 until Thursday 19 and 1,302 until Friday 20. With the departures of Monday 23, there are already 1,394 companies.The days with the greatest number of transfers of headquarters of Catalonia were 19 of October, with 268; on October 9, with 212 outgoing entities, and on October 10, with 177 companies. After the rebound experienced from day 16 (68 transfers), when the trend was that each day increased the number of exits, to the maximum of 19 (268 transfers), on Friday decreased the number of companies that changed their registered office outside of the community (117), a decline that continued this week (92 on Monday). Without taking into account weekends or holidays, every 15 minutes and a half leaves a company from Catalonia. For its part, a total of 55 companies from outside Catalonia moved their headquarters to the region between 2 and 23 October, 48 of them to the province of Barcelona.

Catalan Government Said To Back Off Independence Push, Will Seek Elections; Spanish Stocks Soar, Yields Tumble --Yesterday Catalonia’s government was preparing to declare independence, as we discussed. Just hours after Puigdemont snubbed Madrid, canceling his visit to The Senate to discuss their imposition of Article 155, Catalan Deputy First Minister Oriol Junqueras told AP that the Spanish government had left Catalonia “no other option” but to proclaim a new republic. Mr. Junqueras told the AP he was commenting as leader of his party, Republican Catalan Left, not as a member of the regional government. Additionally, Puigdemont posted a defiant Instagram message: "We will not lose time with those who have already decided to crush Catalan self-government. Onwards!"However, just a few hours later, the Catalonia leadership seems to have backed down, and instead is opting for elections, reportedly just before Christmas.According to Bloomberg, Catalan President Carlos Puigdemont may call regional elections this week, rather than declaring independence from Spain, as authorities in Madrid finalize plans to oust his rebel administration, according to two people familiar with his thinking.After defying the Spanish courts for weeks, Puigdemont decision could either ease tensions or deepen the biggest constitutional crisis in western Europe’s fifth-largest country since an attempted coup in 1981. Spain’s chief prosecutor has warned he faces up to 30 years in jail if he goes ahead with the declaration."The scenario of independence is one that we cannot allow and which will not happen,” Economy Minister Luis de Guindos told Spanish radio on Thursday. He said there was already a "significant slowdown" in economic activity in the region. "They’re caught in a mousetrap. It seems their own decisions are producing vertigo.” Bloomberg’s also reports that this could take place on 20 December 2017.

Chaos in Catalonia as Separatist Leader Runs Into a Dead End -  Catalan separatists rebelled against their leader’s plan to draw back from declaring independence as Spanish authorities finalize plans to oust his insurgent administration. After a day of confusion in Barcelona, President Carles Puigdemont said in a televised address that he had considered calling regional elections, but he didn’t get the concessions he sought from officials in Madrid. He said it’s now up to the Catalan parliament to decide what to do next.  Regional lawmakers began a plenary session at around 6 p.m. to debate their response as Spanish senators push ahead with legislation to hand Prime Minister Mariano Rajoy wide-ranging powers to remove the Catalan leadership under Article 155 of the constitution. As Puigdemont held out for a conciliatory gesture from Madrid that never came, two lawmakers quit his party in frustration that he was climbing down and demonstrators gathered outside his office shouting "traitor." "I tried to get the guarantees to carry out these elections, but didn’t get a responsible answer,” Puigdemont said. “It’s up to the parliament to move ahead with what the majority decides in relation to the consequences of the application of Article 155 against Catalonia.”Barcelona is on a knife edge during a critical 48 hours for the biggest constitutional crisis the country has seen since an attempted coup in 1981. An election would have marked a capitulation by the separatist leadership after weeks brinkmanship that left Puigdemont facing a make-or-break decision that could either ease tensions or see him unilaterally declare Catalonia a sovereign republic. "Events have slipped from his control," said Angel Talavera, an analyst at Oxford Economics in London. "Today has been farcical."

In Dramatic Reversal, Catalan Leader Rejects Elections, Sets Stage For Showdown With Madrid In the latest plot reversal in what become a nail-biting Spanish drama, in which the narrative changes by the hour, moments ago Catalonia president Puigdemont made a televised statement refuted earlier reports he had capitulated to Spanish demands, and said he rejects calls for snap elections. Saying there are "not sufficient guarantees" for elections to take place, Puigdemont said he needs to exhaust all options for solution, and said that hewas ready to call election."My duty was to try", he said in a statement to reporters shortly after 5 p.m. on Thursday. "My responsibility was to explore all of the options in my hand to the very end.""No one will be able to say that I have not been ready to make sacrifices to guarantee dialogue.""It is now the Catalan Parliament that will have to decide on the response to the application of Article 155", he added, in reference to the article of the Spanish Constitution that the central government will use—for the first time in the modern democratic period—to suspend home rule in a Spanish region.Outside Catalan government headquarters in Barcelona, separatist supporters filled the square with chants of "independence" after Mr. Pugidemont made his announcement.A session of the Catalan Parliament it due to begin at 6 p.m.Puigdemont's latest decision - which may yet be reversed in this ongoing political whirlwind - is sure to infuriate Madrid, which earlier in the day said it was happy with the Catalan decision to call elections. It would also mean that Spain will shortly announce it is seizing control from the Catalan government, and could potentially arrest Puigdemont in prison, even though the local leaders has not formally declared independence. Meanwhile, in Madrid, a session of the Spanish Senate commission responsible for the Article 155 process has begun. The Deputy Prime Minister, Soraya Sáenz de Santamaría, has formally asked the commission to approve the measures the government has asked for.

Catalan crisis: Spain PM Rajoy demands direct rule - BBC News: Spanish Prime Minister Mariano Rajoy has called on senators to approve direct rule over Catalonia, amid an escalating crisis over the region's push for independence. He said he wanted to dismiss Catalan leader Carles Puigdemont, his vice-president and all regional ministers. Meanwhile the Catalan regional parliament is holding a vote on unilaterally declaring independence. Earlier this month Catalonia held a disputed referendum on the issue. Mr Rajoy said he was calling for exceptional measures because there was no other choice and said "law, democracy and stability" needed to be returned to Catalonia. He accused the Catalan government of dividing families and fracturing society. Many people had already suffered too much, he said, and the uncertainty was driving businesses out of the region. "The thing that Catalans need protecting from is not what they're calling Spanish imperialism, but a minority who, in an intolerant way, declare themselves the owners of Catalonia and consider as exclusive a history, culture and feelings that are the heritage of the community," he said. The speech was met with applause in the Spanish Senate, where Mr Rajoy's Partido Popular has a majority. Article 155 of the Spanish constitution empowers the government to take "all measures necessary to compel" a region in case of a crisis. It would enable Madrid to take control of Catalonia's finances, police and public media.

Catalan Leader Runs Out of Options as Streets Demand Secession -- Catalonia’s tumultuous push for independence is on a knife edge after separatists turned on their leader with Spanish authorities just hours away from getting the political power to crush their movement. Senators in Madrid are expected to pass legislation on Friday allowing Prime Minister Mariano Rajoy to seize control of everything from the insurgent region’s budget to its police force and state-run media. Backed into a corner by his own hardliners and Rajoy’s refusal to give him a dignified way out, Catalan President Carles Puigdemont will address the regional parliament in Barcelona as demonstrators clamor for a declaration of independence. After a day of high drama that saw Puigdemont caught between the might of the Spanish state and the anger of the street, western Europe’s worst constitutional crisis for decades may be coming to a head with the separatist leader running out of options. "This was a now or never moment for Puigdemont,” . “Even if there’s a declaration of independence, it won’t have the epic factor. It comes with serious internal divisions within his coalition and a renewed sense of unity in Spain.” Catalan lawmakers will debate motions put forward by political groups from noon with the separatists holding the majority in the chamber. Those motions could include some form of secession -- though that would have no legal basis outside Catalonia and wouldn’t be recognized by any other nations.  In Madrid, the Senate is due to reconvene earlier and vote around the time Catalan lawmakers meet. On Thursday, it passed an amendment to the government’s plan to use powers in Article 155 of the constitution that allow Madrid to take control of any rebellious region. The change says it should "take into account how events evolve." Protesters meanwhile are scheduled to gather in Barcelona. Earlier this week, groups had called for a human shield around government buildings to thwart Spanish efforts to take control. Yesterday, they focused their ire on Puigdemont, calling him a “traitor” after reports he was planning to back down from independence and call an election. “Anyone who has doubts, should go out into the streets and look into the eyes of the people,” 

"Nuclear Option" Activated: Spanish Senate Gives Rajoy Power To Oust Catalan Government Just minutes after the Catalan government voted for Independence from Spain, with a former Decision of Independence likely to follow momentarily, over in Madrid wasted no time in responding, and moments ago, with 214 for and 47 against, voted to approve Article 155 of Spain's 1978 Constitution, aka the Nuclear Option which has never been used before, suspending home rule in Catalonia, and giving Prime Minister Rajoy the power to oust the Catalan government. What happens next?Spain will promptly move to remove the Catalan president, suspend his ministers and assume authority over the region's public media, police and finances, the only question is how, and what this process will look like.Indeed, as Bloomberg reported earlier, Spanish politician Garcia Albiol tweeted that Spanish Prime-Minister Mariano Rajoy will restore democracy in Catalonia, adding that courts will reprimand the “plotters.” Furthermore, Spain's El Pais reported that rebellion charges will likely be leveled soon at Catalans for Secession.In terms of immediate next steps, there will be a Spanish Cabinet Meeting, which has been moved ahead to 5pm local time. After that, things may get delicate, especially if Spain sends in the proverbial cavalry.

Catalonia’s parliament declares independence; Spain imposes direct rule - Economist -- IT WAS political theatre—epic for some, farce for others and tragic for many more. By 70 votes out of 135, and with the opposition having walked out, the Catalan parliament in Barcelona voted today, October 27th, to declare independence and constitute Catalonia as a republic. Minutes later in Madrid, the Senate overwhelmingly approved the government’s request to exercise its constitutional power to intervene in Catalonia. Mariano Rajoy, Spain's prime minister, announced the immediate dismissal of the Catalan government and parliament, and called a fresh regional election for December 21st. Until almost the last minute it appeared that this head-on clash could be avoided. On October 26th officials in Madrid and Barcelona had discussed a deal whereby, if Carles Puigdemont, the Catalan president, himself called a fresh election, the government would suspend its plans for direct rule. Amid much confusion, the deal was aborted because of the mistrust between the two administrations and because Mr Puigdemont apparently feared being denounced as a traitor by the independence movement that he leads.  But it is purely symbolic: it will be declared void by Spain’s Constitutional Tribunal and no European government will recognise Catalonia as an independent state.  The narrow secessionist majority in the Catalan parliament opted to cast secret ballots, because they fear the legal consequences of breaching the constitution.The Senate duly approved Mr Rajoy’s request, backed by the opposition Socialists, to apply Article 155 of the constitution in Catalonia. Never used before, this grants the government wide powers to compel a region to obey the constitution. Mr Rajoy justified this “exceptional decision” by referring to the Catalan administration’s “continued process of anti-democratic decisions, against the law and Spanish and European values”. Apart from the dismissal of Mr Puigdemont's executive, Mr Rajoy announced the shutting down of the Catalan government's offices abroad. The government is also likely to replace the commanders of the Catalan police force, and take over the Catalan government's finances and IT centre. At the urging of the opposition Socialists, the government has dropped the idea of taking the public broadcasters in Catalonia. The dissolution of the Catalan parliament and the swift calling of a new election came as a surprise (Mr Rajoy had earlier talked of an election "within six months"). It suggests that he does not want direct rule to become the subject of a lengthy conflict.

Catalonia and Spain Enter Dangerous Uncharted Territory - Yves Smith -  A few observations:

  • What happens with the police force is key. Madrid has dismissed Catalonia’s chief of police and its director general. The chief of police was already being investigated for possible sedition charges. The rank and file stood aside during the referendum, which led Spain to send in the Guardia Civil, which used what was widely decried as excessive force to try to shut down voting. If substantial proportions of the police force refuse to obey orders, Madrid will have an optical and practical problem on its hands.
  • No one knows how much support there is now for independence in Catalonia. Prior to the election and for years before that, independence never polled as a majority position. I have yet to see any polls post referendum. The high level of injuries during the election probably moved some fence sitters into the separatist camp, but how many? Moreover, even among the separatist parties, some would have been satisfied with more devolved powers, most important, Basque levels of spending autonomy, as opposed to a full divorce. But with support pre-referendum for independence at only a bit over 40%, if there were to be civil war (which per below, I see as unlikely unless Rajoy makes a bone-headed move, like sending in troops), it would seem to be at least likely to occur within Catalonia as between Catalonia and Spain.
  • If Madrid encounters widespread disobedience, its real nuclear weapon is the banking system. Restricting access to or shutting down the payments system in Catalonia would produce very different fault lines that the use of force to assert control. First, it doesn’t generate dramatic video clips of thuggish behavior. Second, it hits people in their wallets, often quickly. Small businesses and non-salaried workers will feel the pinch quickly.
  • The relatively rapid timetable for new elections appears to be intended to minimize the amount of time Spain directly rules Catalonia. Rajoy likely sees that as an effort to reassure Catalonia; it’s doubtful many of the locals will be mollified much.

What comes next in Catalonia could make or break Rajoy – and Spain - Waving their declaration of independence like a red rag to a bull, the Catalan parliament has dared Mariano Rajoy to do his worst. But Spain’s prime minister, freshly armed with legal authority to impose direct rule, must nevertheless tread carefully or risk disaster.What comes next could make or break Rajoy and his government. But it could also make or break Spain.  Hardliners in Madrid, including members of Rajoy’s ruling People’s party, are champing at the bit. They will now demand a quick end to the protracted Catalan crisis, which has transfixed the entire country since the region’s disputed independence referendum earlier this month.  Ultra-unionists who have long sought to clip the wings of Catalonia’s autonomy will see a chance, and a justification, to bring secessionist leaders crashing down to earth. Their main targets are Carles Puigdemont, the Catalan president, Oriol Junqueras, his deputy, and Carme Forcadell, speaker of the Catalan assembly.  The penalties for rebellion under the Spanish constitution are harsh. Rajoy’s government has already shown itself willing to wield this weapon, locking up two leading Catalan independence advocates and appearing to throw away the key.  Jordi Sanchez, head of the Catalan National Assembly pressure group, and Jordi Cuixart of Omnium Cultural, were remanded in custody without the possibility of bail last week for alleged sedition. They face up up to 15 years in prison. More arrests could now follow among the 70 Catalan assembly members who voted in favour of Friday’s independence declaration. The anonymity surrounding the vote will provide scant protection. The identities of members of Puigdemont’s multi-party alliance, and their partners in the hard-left CUP party, are well-known. Will they go quietly? Its seems unlikely at this point, with passions on both sides running hot and high. And will Rajoy, having turned them out of office, try to detain them, too? He has the lawful power to do so, but politically such an order would mark a definitive point of no return.

Which other regions want to secede from Spain? - Spain's plans to use Article 155 of its constitution to dissolve Catalonia's parliament and directly administer the northeastern region could have a rippling effect on the country's independence movements, analysts and historians say.The region most similar to Catalonia, in terms of secessionist feelings and economic performance, is the Basque Country. The centre-right Basque Nationalist Party (PNV) oversees the ruling coalition of the region."The PNV government is looking with great interest at what's going on in Catalonia," Sebastian Balfour, Emeritus Professor of Contemporary Spanish Studies at the London School of Economics, told Al Jazeera.PNV holds five of 350 seats in the Spanish Congress and six of 266 seats in the Senate, but each seat counts. Spanish Prime Minister Mariano Rajoy's People's Party (PP) is leading a minority government in parliament and periodically needs support from the PNV.Catalonia is only a part, albeit the largest part, of Els Paisos Catalans, or the Catalan countries.The language and culture of Catalonia come from a long history within the Crown of Aragon, a kingdom which existed from the 12th to 18th centuries and controlled parts of Spain, Andorra, Italy, France and Greece.Spain's present-day Catalan countries include Valencia, Catalonia's southern neighbour and the Balearic Islands in the Mediterranean Sea.Galicia is another region with a unique identity, language and separatist strain is found on Spain's northwestern Atlantic coast.The Kingdom of Galicia existed from the fifth century, at times encompassing much of northwest present-day Spain and northern Portugal, until the 15thcentury, when it joined Spain. Galician and Portuguese are in the same language grouping and were mutually ineligible until that time.

ECB to halve bond buying as it plans to scale back quantitative easing - The European Central Bank (ECB) is to begin weaning the eurozone countries off billions of euros of monetary stimulus, edging back to normality following the recovery from the depths of the sovereign debt crisis nearly a decade ago. The central bank announced on Thursday it would halve its bond-buying programme – used to temper surging debt costs and stimulate lending to households and businesses – from €60bn to €30bn a month starting from January. The ECB pledged a gradual withdrawal of so-called “quantitative easing” to smooth the return to normality without rattling financial markets. The euro marginally lost some ground against other major currencies following the announcement, expected by City traders due to previous hints from the ECB over the course of its actions. The beginning of the process to unwind five years of unconventional monetary policy comes as eurozone growth gathers pace after years in the doldrums. The 19 countries out of the 28 European Union member states who use the single currency collectively grew at twice the rate of Britain in the three months to June. Mario Draghi, the ECB president, said growth in the eurozone was solid and broad based. “The latest data and survey results point to unabated growth momentum in the second half of this year,” he said. However, Draghi cautioned that loose monetary police – from quantitative easing and low interest rates – would be required for some time, despite the recovery, as the expansion in the eurozone remained conditional on significant support. This will mean the reduction in bond-buying will take place gradually. The ECB left interest rates unchanged at 0% and its deposit rate, which it pays for banks to park money with it overnight, at -0.4%. When the rate is negative, banks pay the ECB to deposit money, encouraging them to lend rather than store it with the central bank.

Why Brexit Risks a Gangsters’ Paradise as No Deal Looms -- Noel McLaughlin sells fuel in Donegal in the Republic of Ireland about 10 miles (16 kilometers) from Derry in Northern Ireland, and he reckons locals smuggling home heating oil across the border push down his sales by about 25 percent. “We would like to see a hard border, so we could have full-time customs, excise and revenue officers cutting out smuggling,” McLaughlin, 50, said. “We want people to be stopped and asked what they have with them.” Smuggling along the Irish border may be a microcosm of the challenges facing Britain and the European Union following Brexit. Theresa May’s government has made clear it won’t introduce strict border controls when the U.K. leaves the bloc. That will inevitably create a “gangsters’ paradise,” according to Simon Sneddon, a senior lecturer in law at Northampton University.“If I was an organized crime gang, I would be buying light aircraft, booze, a million Marlboro and praying for a quick hard Brexit,” said Sneddon, who opposes the U.K. leaving the EU. “Brexit will tighten the grip on what can be imported legally, whilst doing nothing additional to reduce demand.” Nowhere is this danger clearer than the 310-mile border running from near Derry in the north to Dundalk in the south, which will form the EU’s only land border with the U.K. after Brexit. An estimated 30,000 people a day cross the border, sometimes unaware that they are moving over one of the 300 crossings. Britain is resisting new controls on the frontier, with May saying “no physical infrastructure” will be placed on the border, because it could jeopardize the region’s peace process and trade between the north and south of Ireland.“I don’t care if a few hundredweight of beef is smuggled across the Irish border,”  Ireland wants the U.K. to stay in the customs union to avoid the need for a border. Different tariffs could lead to “criminality and smuggling,” Michael D’Arcy, junior finance minister, said in an interview with Bloomberg Television in New York on Monday. “We are not going back there.”

Brexit: UK will struggle to change UK borders in time, says watchdog - BBC News: The government will struggle to deliver the "huge changes" required to the UK's borders in time for Brexit, Meg Hillier, chairwoman of the Commons public accounts committee. The Labour MP was responding to a report by the National Audit Office, the UK's spending watchdog. The report warned of a significant increase in workload for border forces following Brexit. The government said it would ensure border forces had adequate resources. The border workforce has reduced by 4% over the past four years. The NAO report warns that the land border between the UK and Ireland may require "special arrangements" and any changes would need "significant lead times" to be successfully implemented. The report estimated if existing checks for non-EEA nationals - people who don't live in the EU, Iceland, Liechtenstein or Norway - were extended to EEA arrivals, UK Visas and Immigration would need to make 230% more decisions a year. The UK's tax authorities have estimated that if customs declarations are required for trade between the UK and the EU, they could increase by around 360%. The government said its new Customs Declaration Service would be able to handle significant increases in volume following Brexit and was on track to be delivered by January 2019. There will also be an additional 300 frontline Border Force officers to deliver training to the existing workforce ahead of Brexit. The precise details of the arrangements for UK borders post-Brexit are not yet known but as the government has committed to leaving the single market and the customs union the NAO report predicted Brexit would result in significant changes to border controls.

Theresa May privately agrees to pay €40 billion Brexit divorce bill - — Theresa May has privately agreed to double Britain's Brexit divorce bill in an attempt to progress talks that have stalled over Britain's financial contribution to the European Union. May has already agreed to pay Britain's full contributions to the latest budget round, amounting to some €20 billion, or $24 billion. That figure, however, was dismissed this week by the president of the European Parliament, Antonio Tajani, as "peanuts," with Germany and other countries refusing to allow talks on a future trade deal to start until Britain signalled it would agree to pay at least double the amount. Though the UK has made no official commitment to pay the extra money, the prime minister has reportedly privately assured EU leaders that Britain will ultimately agree to pay up once talks progress onto trade. According to The Times, May told a select group of EU leaders that she was prepared to pay an additional sum of about €20 billion to cover commitments which will stretch into future budget rounds.EU leaders have been frustrated that May has so far refused to officially table this offer. As a result, the European Council is expected to announce later Friday that it is not willing to move on to the next phase of Brexit talks, on trade and Britain's future relationship with the EU. The prime minister has reportedly urged her EU partners to understand the political difficulty she would face in publicly accepting a larger figure before talks on trade have even begun. May is under pressure from Conservative MPs to threaten to walk out of talks and leave the EU without any deal at all. 

UK business chiefs unite to demand urgent Brexit transition deal - UK business leaders have united to urge David Davis to quickly establish a Brexit transition deal that mirrors existing arrangements or risk losing British jobs and investment. In a letter to the Brexit secretary seen by the Guardian, five of the UK’s biggest business lobby groups said time was running out for the government to strike a transition deal before firms start to rein in spending plans as they finalise budgets for 2018 and prepare to implement contingency plans for Britain’s departure from the EU. The EU27’s negotiating guidelines for the two-year Brexit talks stipulate that they must take place in two phases: separation and “orderly withdrawal”, followed by future relationship. Only when the EU27 decide “sufficient progress” has been made on phase one can phase two begin.Broadly, phase one is about providing “clarity and certainty” to people and businesses on Brexit’s consequences and agreeing a sum covering the commitments the UK made as an EU member: avoiding a legal vacuum, protecting citizens’ rights, solving the Irish border, and reaching a financial settlement.Phase two of the talks will then focus on agreeing the “framework” of the future trading relationship between the UK and the EU. A transition period can also be agreed as part of this second stage, but the detail of the future relationship can only be worked out once the UK has left.Britain wants to move to stage two fast, but in order to keep as much leverage as possible in talks on the future relationship aims to delay agreeing the financial settlement as long as possible. The EU27 are adamant that all phase one issues must be addressed to their satisfaction before any talk of the future relationship.

Barnier plays down hope of ‘special’ UK deal -- The EU's future trade relations with the UK are likely to be no deeper than those with Canada, the European Commission has warned. Its Brexit negotiator, Michel Barnier, also said any UK transitional deal must maintain the jurisdiction of the EU court in Luxembourg over the UK. His comments, voiced in an interview with European newspapers on Monday (23 October), go against British prime minister Theresa May's vision of a "new, deep, and special partnership" and against the abhorrence of the EU court among hardliners in her Conservative Party. But Barnier said the cost of a no-deal Brexit would be greater for the UK than the EU. He also said that protecting the "integrity" of the EU single market was more important to him than safeguarding British cooperation. "As soon as the United Kingdom tells us that it wants to get out of the single market and the customs union, we will have to work on a model that will be closer to the agreement signed with Canada," Barnier said. "We cannot imagine a system that would include the advantages enjoyed by Norway with the limited constraints of Canada," he added. The EU and Canada recently concluded a wide-reaching free-trade pact. But the deal falls far short of the full single market perks enjoyed by Norway, a member of the so called European Economic Area, which entails its full conformity with EU laws. 

Executives spooked as hopes for early Brexit transition deal fade  (Reuters) - Executives at some of Britain’s largest companies have reacted with alarm to Prime Minister Theresa May’s statement that the details of any transitional arrangements with the European Union may not be known until a broader trade deal has been agreed. Already rattled by the slow progress of Brexit talks, businesses operating in the world’s fifth largest economy have been pressing for months for details about what any transitional EU trade deal will actually look like. May had promised to retain full access to the EU’s single market for two years after Brexit and told executives from leading British companies two weeks ago they should consider a transition period as assured. But the prime minister surprised many on Monday when she told parliament that any transition deal would be part of a wider trade agreement - meaning companies may not have specific details about interim trade arrangements for some time. Britain is due to leave the EU in March 2019 and many companies say they need to know the terms of any transition deal at least a year beforehand to reap any benefits while some banks have already triggered contingency plans. “The difficulty is timing,” Barclays Plc Chairman John McFarlane told Reuters. “We can avoid material dislocation if we know by the end of the first quarter next year, although real money is likely to be spent if uncertainty persists.” McFarlane said he believed Brussels was open to a transition deal that gave businesses and the British government time to adjust to the post-Brexit world, but an agreement needed to be reached as soon as possible.

Brexit: Sadiq Khan warns that city firms are 'not bluffing' about leaving UK - Business Insider: — Sadiq Khan has warned that city firms such as Goldman Sachs are "not bluffing" about leaving London if a favourable Brexit deal is not reached with the European Union. Speaking on BBC Radio 4's "Today" programme on Monday, the Mayor of London said that the "prime minister and our government need to announce plans for a transition period" or major banks will plan to leave the UK. Referencing Goldman Sachs CEO Lloyd Blankfein's tweet saying that he'll be "spending a lot more time" in Frankfurt because of Brexit, Khan claimed he was not bluffing. He said: "He is articulating publicly what many CEOs, investors and people who love working in London have been saying privately... they have to make a plan [for a no-deal scenario]." The Mayor of London said: "My fear is that other business will be thinking about leaving London and will realise those plans," adding that the government needs to "provide businesses with the certainty they need." Khan made it clear that he thought the transition period upon the UK's withdrawal from the EU should be "a minimum of two years" and it should "be announced as soon as possible."  Negotiations about a transition period and the future relationship between the UK and EU have been delayed at least until the end of December after the European Council voted to say "sufficient progress" had not been made for talks to advance. This has raised fears that the UK and EU will fail to reach a Brexit deal during the two-year Article 50 period despite Theresa May announcing plans for a two-year transition period on current terms during her Florence speech.

Brexit: UK likely to end up with Canadian-style deal, warns Barnier - The EU’s chief negotiator, Michel Barnier, has warned that Britain can expect a trade deal little better than the one the EU struck with Canada – and even that would take years to negotiate, despite Theresa May’s claims to the contrary over Britain’s future after Brexit. Barnier said he could envision a short transition period being agreed between the EU and the UK before March 2019 to ease the UK’s exit from the bloc, but it would require the British government accepting the continuation of EU law and the jurisdiction of the European court of justice. A future trade deal, however, would have to be negotiated over “several years” and “will be very different” from the status quo, Barnier told a group of European newspapers. “If we reach an agreement on the orderly withdrawal of the United Kingdom, such a [transition] period, both short and framed, is possible,” he said. “To my mind, it makes sense that it covers the financial period, so until 2020. It would leave us more time to prepare for the future relationship.“But I insist on one point: such a period would be possible only if it is framed by the maintenance of all of the regulatory architecture and European supervision, including jurisdictional. It would maintain the economic status quo and all obligations of the UK.”“From the moment the UK told us that it wants out of the single market and the customs union, we will have to work on a model that is closer to the agreement signed with Canada. “The single market is a set of rules and standards and is a shared jurisdiction. Its integrity is non-negotiable, as is the autonomy of decisions of the 27. Either you’re in or you’re out.”

Work on Brexit treaty has begun, says Michel Barnier, as he reveals plan to quit as EU negotiator - Michel Barnier, the European Union’s chief negotiator, has revealed work has begun on the Brexit treaty and that he will quit before trade negotiations between the EU and UK are finished. Mr Barnier said he would step down in the Spring after the 29 March 2019 Brexit deadline but before the end of a proposed transition deal to allow further EU-UK trade talks. He conceded that the future UK-EU trading relationship was the “most important” thing in the negotiations but added that talks over it could take years. Theresa May today issued a fresh threat to leave the EU without a dealbut Mr Barnier warned that no withdrawal agreement would have disastrous consequences including British planes being unable to gain authorisation to take off and land at European airports.   "We do not wish it at all, we do not work on it, but we do not exclude any option," Mr Barnier said,

UK ‘screwed’ in Brexit negotiations, says ex-ambassador — The U.K. has been “screwed” in Brexit negotiations because it triggered Article 50 too soon, the country’s former EU ambassador said.Ivan Rogers, who resigned as the U.K.’s permanent representative to the EU in January, also warned that a “bloody” no-deal scenario could be set in motion as early as December, and could end up with the two sides in a “trade war” and wanting to “knock chunks out of each other.”Giving evidence to MPs on the House of Commons treasury committee on Wednesday, Rogers said he advised Prime Minister Theresa May last fall not to invoke Article 50 “unless you know how Article 50 is going to work” but was opposed by “various people in London.”In an excoriating critique of May’s Brexit strategy, he said: “My advice as European negotiator was that this was the moment of key leverage and that if you wanted to avoid being screwed in negotiations in terms of the sequencing, if I can put it brutally, you had to negotiate with the key European leaders and the key people at the top of the institutions and say ‘I will invoke Article 50 but only under circumstances where I know exactly how it’s going to operate and it’s got to operate like this otherwise this is not going work for me.’”However, May’s decision to invoke Article 50 at the end of March gave the EU the opportunity to “set up the rules of the game in the way that most suits them,” Rogers said. EU negotiators were aware the U.K. wanted the talks to progress to trade at the earliest opportunity and used this as leverage to demand more money as part of the divorce settlement, he said. He said the more pressing the need to talk about trade and transitional arrangements becomes for the U.K. and for the British private sector, “the more likely they are to be more generous with their money.” “Anybody could have told you that that’s exactly what the 27 would do,” he added. Rogers, who warned of “muddled thinking” in government in his resignation email to staff at the U.K. Representation to the EU (known as UKRep), said he has not changed his view that getting a trade deal with the EU could take until the early to mid-2020s.

UK Leaders Starting to Crack as Brexit Realities Finally Sink In - Yves Smith - An unseemly leak out of a six-person dinner that included UK prime minister Theresa May and European Commission president Jean-Claude Juncker has shaken more insider accounts loose. They give a chilling picture of a dispirited Government, trudging reluctantly towards a future the ministers (save the deluded opportunists like Boris Johnson) know they will regret. The reality that the UK lacks the time and the operational capacity to manage a Brexit, even if that had been a good idea in the first place, has finally sunk in. The dinner leak, a nasty bit of work given that May had been promised secrecy, wound up, as a similarly detailed account of the last May-Juncker et al dinner had, in the Frankfurter Allgemeine Zeitung. This report, written from Jean-Claude Juncker’s perspective and widely assumed to be the handiwork of his chief of staff, Martin Selymer, was seen as so potentially damaging to May that Angela Merkel was outraged. It wasn’t just that May was depicted as desperate, effectively begging her EU counterparts to get her out of her political fix. It was also that the story presented as emotionally and physically exhausted, “despondent and discouraged.” A short but important piece by Rachel Sylvester at The Times provides more vignettes of the rising desperation and paralysis among officials involved with Brexit. I can’t recall reading anything remotely like this: Those who have seen Mrs May privately in recent weeks describe her as stricken and stunned. On one occasion she sat in silence for almost ten minutes while the visitor she had invited to see her waited for her to lead the conversation. He left the meeting deciding she no longer wanted to be prime minister. Sylvester’s overview: ministers are holding their red boxes with one hand, and their noses with the other, as they see the biggest change of their lifetime unfolding on their watch, even though this is a revolution they do not believe in. No wonder the government seems so anxious and uncomfortable. “We are trapped in a box,” admits one minister. “Parliament feels frozen by the referendum but people voted for a fantasy we can’t deliver. They can only have Brexit if they’re prepared to suffer the pain.” It is an extraordinary situation. In the past, ministers have resigned from the government in principle over much less. This is not so much a constitutional mess as an ethical one, with ambiguity on all sides. David Davis apparently lacks the intelligence to recognize the absurdities that he espouses, and so is not yet as ground down as May is. He was savaged this week for telling Parliament that it would not be able to vote on a Brexit deal (charitably assuming there is one) and forced to retreat. From the Telegraph:

EU Borders: Walking Backwards from Northern Ireland to Cyprus - naked capitalism Yves here. This post is a bit wonky, but even its wonkiness serves to make a point: that with international treaties, and in particular trade pacts, the devil really does lie in the detail.I had been surprised to read claims about the October round of Brexit negotiations that progress had been made on the Ireland border issue. I didn’t see how that was possible, since what the UK wants cannot be achieved. It cannot leave the single market (which is where it is going to be; even an EEA-type deal, which is in fact not going to happen, wouldn’t solve the border problem) and not have a hard border border between Northern Ireland and the Republic of Ireland. I haven’t seen any sign that the UK has abandoned its position. Sir Ivan Rogers, the UK’s former permanent representative to the EU,  confirmed the lack of realism in the UK position, from Parliamentary testimony this past WednesdayIt is extremely difficult, in all honesty, because we are leaving the customs union. Let us be clear: we are leaving the customs union because we want an autonomous sovereign trade policy. You want an autonomous sovereign trade policy because you intend to have a different trade policy. If you have a different trade policy, you are going to apply different tariff rates to various goods. You are also open to applying different standards, for example veterinary standards and phytosanitary standards.Say, for example, we did a UK-US free trade agreement. The Government is pushing that hard and wants that agreement. Like everybody else, I read the FT the other day on that. From my rather lengthy experience of dealing with the Americans on free trade agreements, I can tell you they will not do a free trade agreement with the British or anybody else without a major agricultural component in it. Congress cares more about agriculture and agricultural market access than any other issue. You may think that is very sad, but it is true.They will then make a set of demands in that free trade negotiation that will entail not necessarily a weakening of standards, but a divergence of standards from European standards, as their price in that deal. One, they will want market access for various of their key agricultural products, which they think they cannot get in the European Union at the moment, and they are right. They think the EU blocks out various of their agricultural products. The EU thinks the US blocks out various of theirs. The moment that happens, then the hard border becomes a big issue for the EU27.

 Soaring numbers flying abroad for medical care as NHS lists lengthen - The number of patients leaving Britain and flying overseas for medical treatment has trebled as NHS waiting times reach a record high, a Telegraph investigation has revealed.Government data shows the number of people going abroad for healthcare has increased from 48,000 in 2014 to almost 144,000 last year as the health service struggles to cope with demand.Experts said lengthening waiting times for surgery - particularly hip, knee and cataract operations - and cutbacks to fertility treatment - were fuelling the rise.NHS waiting times are now the longest they have been for almost a decade, with more than 409,000 people waiting more than 18 weeks for treatment - a rise from 34,000 in 2014.Patient groups said the figures reflected badly on the NHS.Joyce Robins, from Patient Concern, said: “It is a desperately sad state of affairs that people who have paid into the NHS all their lives are finding it is not there for them when they need it.“These are essential operations, but thousands of people are being left in pain and misery - for every person who goes abroad there will be many more left suffering,” she said.It comes amid a crackdown on “health tourism” within the UK. From Monday, hospital staff will be told to routinely ask patients for utility bills and bank statements in a bid to identify those from overseas who should be paying for NHS treatment.The new figures from the Office for National Statistics show a 198 per cent per cent rise in trips abroad from the UK for medical reasons between 2014 and 2016.Such treatments include dentistry and cosmetic surgery, which are offered more cheaply in many Eastern European countries. But health experts said the sharp rise reflected growing numbers of British patients going abroad for medical operations, amid lengthening waits and creeping rationing.One medical travel website, Medigo, reported a 200 per cent rise in queries about orthopaedic treatment in one year, with rising numbers going to countries such as France and Switzerland for hip and knee operations. Ugur Samut, it’s chief executive officer, said: “What we are finding is increasing numbers of patients from the UK wanting to avoid the waiting times on the NHS. We are especially finding that in orthopaedics, that is one of the biggest areas.”