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

Saturday, October 7, 2017

week ending Oct 7

Fed has no reliable theory of inflation, says Tarullo -- Central bankers are steering the economy without the benefit of a reliable theory of what drives inflation, a former top Federal Reserve policymaker said, as he called for policymakers to pay less attention to theoretical models and more to actual data. Daniel Tarullo, who left the US central bank’s board of governors earlier this year, said economists displayed a paradoxical faith in the usefulness of unobservable concepts such as the natural rate of unemployment or neutral real rate of interest, even as they expressed doubts about how robust those concepts were. He was particularly doubtful about the weight inflation expectations play in rate-setting policy, given the “range and depth of unanswered questions” about how they are formed and measured.  “The substantive point is that we do not, at present, have a theory of inflation dynamics that works sufficiently well to be of use for the business of real-time monetary policymaking,” said Mr Tarullo in a speech at the Brookings think-tank in Washington.

Trump, Mnuchin said to meet with Warsh to discuss Fed chair -- President Donald Trump and Treasury Secretary Steven Mnuchin met Thursday with former Federal Reserve governor Kevin Warsh as a potential nominee to be next Fed chairman, an administration official said, as the process of reviewing candidates to lead the U.S. central bank picked up pace. As part of the search Trump has already met with other contenders, said another administration official, who declined to name the candidates who have sat down with the president. Financial stocks rose and and bonds fell on the report of Warsh's meeting.  Warsh currently is a fellow at the Hoover Institution. Others Trump is said to be considering for Fed chair include the current chairwoman, Janet Yellen, Stanford economist John Taylor, former BB&T Corp. CEO John Allison and Columbia University economist Glenn Hubbard. Trump has said he's also considering White House National Economic Council Director Gary Cohn. The contest for the position remains an open race as the president isn't close to a decision, one of the administration officials said. Cohn and Yellen, whose term as chair ends in February, remain potential candidates and the president's advisers are trying to assure that he has a range of options, the official said. The selection is one of the most important before Trump, with the central bank responsible for safeguarding the U.S. economy and looked for as a source of global financial stability.Bond yields and the dollar rose on the news of the meeting with Warsh as investors reacted to a potential Fed pick who they'd view as more hawkish than the current chair. Bank stocks led equities to all-time highs."In terms of policy, I think it is fair to say that Warsh is less dovish than Yellen," said Stephen Stanley, chief economist at Amherst Pierpont Securities in New York. "He would be less in favor of fine tuning and more sympathetic to the Fed's role simply being to operate quietly in the background and let the private sector drive things forward."

Favorite to be next Fed chair believes central bank is a 'slave' to the stock market - Kevin Warsh, the favorite to be the next chairman of the U.S. Federal Reserve, apparently believes the central bank has become a servant to the stock market after years of loose monetary policy. Uber-bear Albert Edwards, an economist at Societe Generale's strategy team, said Monday that after listening to Warsh speak at a banking conference last week, he would be his choice to lead the Fed. He also revealed Warsh felt the Fed had been captured by the "secular stagnation" ideas of former U.S. Treasury Secretary Larry Summers and had become persuaded by the idea that more monetary stimulus is needed."Rather than admitting they are wrong, this group, who failed to predict the current economic malaise, have constructed this theory to explain why ever more stimulus is required. In particular Warsh warned that the Fed had become the slave of the S&P," Edwards noted."He (Warsh) got a rousing reception from the BCA (Research) audience as he talked a lot of sense – in particular on how the Yellen Fed has lost its way and current policy is deeply flawed," he added.Warsh, a former Fed governor, met with both President Donald Trump and Treasury Secretary Steven Mnuchin on Thursday. He is viewed as more hawkish than Janet Yellen, whose current tenure ends in February.Warsh's possible appointment has caused both U.S. bond yields and the dollar to move higher. Warsh was not immediately available for comment when contacted by CNBC. While Warsh may fulfil Trump's desire to reduce regulation, he may also want to raise interest rates at a more aggressive pace. This could be seen as a stumbling block to the president's stated preference for a low dollar.

One ex-banker's built-in advantage in the Fed chair race: Family ties to Trump - With Gary Cohn’s chances of becoming chairman of the Federal Reserve diminished, another former banker is waiting in the wings for the coveted post: Kevin Warsh.A veteran of both the central bank and Wall Street, Warsh is already high on the White House’s list of possible successors to Fed Chair Janet Yellen. But he has an enviable reference: his billionaire father-in-law, who met Donald Trump in college and is a confidant to this day. Warsh is married to the granddaughter of cosmetics magnate Estée Lauder, putting businessman Ronald Lauder in his corner. Though the president has provided few clear signals on whom he will pick for the world’s most important economic job, that family tie is a durable association with Trump that no other contender can claim.“Anytime someone has a connection to someone who’s powerful or famous, it matters immensely to Donald Trump,” Trump biographer Tim O’Brien said.If Warsh is nominated, “I can’t imagine that would come to pass without Trump having some sort of a conversation with Lauder,” O'Brien said. Warsh’s odds of taking over the Fed seemed to brighten after Cohn, the director of the National Economic Council, publicly criticized Trump’s response to violence in Charlottesville, Virginia. That angered the president, though Cohn, a former Goldman Sachs president, could re-emerge as time passes.It is also possible that Yellen, a Democrat appointed by President Barack Obama, will be renominated. But her views on regulating banks diverge considerably from those of Trump, who once vowed to do “a big number” on post-financial crisis rules. And Senate Republicans have no love for her.

Trump Aides Deliver Shortlist of Fed Candidates - President Donald Trump’s advisers have given him a final list of people they’re recommending as candidates to lead the Federal Reserve and have ended the search, according to seven people familiar with the matter. Two of the people said Fed Chair Janet Yellen remains under consideration -- even though few, if any, of Trump’s inner circle are advocating for her re-appointment. Trump could bring in a wild-card candidate, but several of the people said that’s unlikely.National Economic Council Director Gary Cohn recused himself from helping to manage the selection process after Trump said publicly in the summer that he might appoint him to the position, several people said. All of the people requested anonymity to discuss internal deliberations. Only a small handful of the president’s closest advisers have seen the final list of names, several of the people said. Two senior administration officials who have been involved in the discussions say that in addition to Yellen, Trump is considering Cohn, former Fed board governor Kevin Warsh and current governor Jerome Powell.There’s no frontrunner at the moment, several people said. Two people said the president has no plans to interview economist Glenn Hubbard and U.S. Bancorp Chairman Richard Davis, both of whom have been floated as possible candidates. A fifth person, Stanford economist John Taylor, a favorite of fiscal conservatives, is also believed to be under consideration, two of the people said. It’s unknown whether Taylor has been interviewed or is scheduled for a meeting.Trump is known to have spoken to Yellen, Cohn, Warsh and Powell about the Fed post, several people told Bloomberg News last week. Hubbard wasn’t immediately available for comment. Dana Ripley, a spokesman for U.S. Bancorp, declined to comment.

Why is MMT so popular? - Although MMT has been around for some time, it recently held its first international conference and has in the last few years attracted a devoted band of followers online. There are short and simple explainers around (e.g. here), but what these and MMT followers are typically not so good at is in explaining exactly why and how they differ from mainstream macroeconomics. To understand this, we need to go back to the 1960s and 70s. Then there was a debate between two groups in macro over whether it was better to use monetary policy or fiscal policy as an instrument for stabilising the economy.  To cut a long story short the monetarist won that argument, although not quite in the way they intended. Instead of central banks controlling the economy in a hands off way using the money supply, they instead actively used interest rate changes to control output and inflation. Fiscal policy was increasingly seen as about controlling the level of government debt. I have called this the Consensus Assignment, because it became a consensus and because I don’t think there is another name for it. The one or two decades before the financial crisis were the golden years for the Consensus Assignment, in the sense that monetary policy did seem to be relatively successful at controlling inflation and dampening the business cycle. However many governments were less successful at controlling government debt, and this failure was termed ‘deficit bias’. MMT is essentially different because it rejects the Consensus Assignment. It regards monetary policy as an unreliable instrument for controlling the economy, and MMT prefers to use fiscal policy instead. They are, to use my previous terminology, fiscalists. If you are always using government spending or taxes to control the economy, you are right not to worry about the budget deficit: it is whatever it needs to be to get inflation to target. Whether you finance those deficits by creating money or selling bonds is also a secondary concern - it just influences what the interest rate is, which has an uncertain impact on activity. For this reason you do not need to worry about who will buy your debt, because you can create money instead. The GFC exposed the Achilles Heel in the Consensus Assignment, because interest rates hit their lower bound and could no longer be moved to stimulate demand. Alternative measures like QE really were as unreliable as MMT thinks all monetary policy is.

Debt Keeps Rising and Nothing Bad Happens - Noah Smith - As the Republicans prepare for their big tax reform push, the issue of deficits and debt is once more coming to the fore. Many economists realize that tax cuts, especially income tax cuts, tend to increase deficits, which over time lead to increases in the national debt. The GOP plan, if adopted, probably would pump up both deficits and debt. This isn’t the first time that’s happened, of course -- Presidents Ronald Reagan and George W. Bush also cut taxes and deficits swelled:So the question is: Is more debt good, bad or does it even matter? But if it’s bad, how serious a problem is it? The answer is that no one really knows. Like so many things in macroeconomics, there is no reliable, well-confirmed theory that tells us the effect of government deficits or debt. In the short term, the big question is whether deficits raise aggregate demand. Aggregate demand isn't a particularly well-defined concept, but it essentially means how much people want to spend money on all the goods and services in the economy. Government spending puts money in people’s pockets, while taxes take money out, so if people spend some of the net amount that government puts in their pockets, deficits should give consumption -- and therefore the economy -- a boost. This is the basic Keynesian theory that gets taught in most introductory economics courses. Many have dryly noted that Reagan’s tax cuts in the 1980s looked an awful lot like Keynesian stimulus. On the other hand, if people save most of what they get from the government, aggregate demand won’t rise much at all. If people think that a deficit today has to be paid back tomorrow, they will expect their taxes to go up in the future, and this will make them spend less -- a theoretical possibility known as Ricardian Equivalence. So how much do deficits prompt people to actually go out and spend? It might depend on the type of deficit. There’s evidence that the tax rebates in the 2009 American Recovery and Reinvestment Act -- the stimulus package under President Barack Obama -- didn’t boost spending a lot (direct spending on things like roads had a bigger effect, but was a small part of the stimulus overall). Perhaps that’s because people anticipated that Obama’s deficits were temporary, and that taxes were going to go back up:

Democrats are the new deficit hawks in the age of Trump - The warnings about the nation's $20 trillion debt have been dire: Washington is on track to "explode" the debt. The proposed budget is "radical" and "extreme." Politicians should be "ashamed" of empty promises to reduce the deficit. But those warnings aren't coming from the tea party conservatives who rode a wave of fiscal frustration to Capitol Hill seven years ago and upended the Republican establishment. Instead, they are coming from Democrats who are embracing their inner deficit hawks to attack the tax plan forged by GOP leaders and President Donald Trump's administration. On Wednesday, Sen. Ron Wyden, D-Oregon, even quoted Republican Majority Leader Mitch McConnell. "The longer we wait to address the debt in a serious manner, the more the safety net frays, and the harder this crisis will be to address," Wyden said, recalling comments he said McConnell made in 2010. "At some point, a choice has to be made, and that point is now." Democrats are ringing the alarm bells as the Senate on Wednesday begins committee debate on its fiscal 2018 budget. The proposal includes significant spending cuts to popular programs such as Medicare and Medicaid, although they are not binding in the long run. Yet it also includes instructions for lawmakers to craft a tax bill that can cost as much as $1.5 trillion over a decade.  Democrats' hawkish rhetoric is a far cry from the years following the 2008 financial crisis, when they fought for ramping up government spending to resuscitate the ailing economy. The 2009 stimulus package, which clocked in at $787 billion, was billed as a way to create jobs and put money in the pockets of ordinary Americans. Economists Alan Blinder of Princeton University and Moody's Mark Zandi estimated that 17 million more jobs would've been lost during the recession without it. Now, the shoe is on the other foot.  Republicans are the ones proposing budget-busting legislation, which they are touting as a way to create jobs and put money in the pockets of ordinary Americans. The White House argues that passing tax reform would boost economic growth to an annual rate of 3 percent, a milestone that has proven elusive since the Great Recession. Democrats, however, are opposing any rewrite of the tax code that adds to the deficit. This week, they unveiled their own budget that keeps the country's debt-to-GDP ratio steady over the decade.

How We Think About the Deficit Is Mostly Wrong - Stephanie Kelton - With their nine-page “framework,” President Trump and congressional Republicans have turned to tax cuts in a bid to get a victory on their policy agenda. Mr. Trump has promised to deliver “the biggest tax cut in the history of our country.” It achieved a rare feat of bipartisan agreement in Washington — worry from the left and the right about the plan’s potential to increase the deficit. Senator Charles Schumer, Democrat of New York, warned that the plan would deepen the deficit by $5 trillion to $7 trillion. Senator Bob Corker, Republican of Tennessee, said, “If I think it adds one penny to the deficit, I’m not going to vote for it.” Are the proposed tax cuts a huge giveaway to the rich? Most definitely. Will they, as advertised, create a booming economy with benefits that trickle down to everyone else? I don’t think so. Mr. Trump’s plan will widen the country’s already dangerous wealth and income gaps, and because the gains go mostly to those at the very top, the tax cuts won’t do much to promote broad-based consumer spending or overall job growth. That’s enough to reject the plan. But it would be unwise to oppose tax cuts, or any other federal legislation, simply because they add to the deficit.   Why? Because bigger deficits wouldn’t wreck the nation’s finances. Think of it this way. Government spending adds new money to the economy, and taxes take some of that money out again. It’s a constant churning of pluses and minuses, and their minuses become our pluses. When the government spends more than it gets in taxes, a “deficit” is recorded on the government’s books. But that’s only half the story. A little double-entry bookkeeping paints the rest of the picture. Suppose the government spends $100 into the economy but collects just $90 in taxes, leaving behind an extra $10 for someone to hold. That extra $10 gets recorded as a surplus on someone else’s books. That means that the government’s -$10 is always matched by +$10 in some other part of the economy. There is no mismatch and no problem with things adding up. Balance sheets must balance, after all. The government’s deficit is always mirrored by an equivalent surplus in another part of the economy.

'Draining The Swamp' – Trump Admin Blows $11 Billion In The Last Week Of Fiscal Year --If you need further evidence regarding how wasteful and irresponsible Washington D.C. is when it comes to our tax dollars, look no further than the behavior of agencies under Donald “drain the swamp” Trump. This year’s spending binge amounted to $11 billion in the last fiscal year week of 2017, and many of the excesses were detailed by Open the Books Founder and CEO, Adam Andrzejewski, in a recent Forbes article.Here are some of the highlights from the piece, Use It Or Lose It — Trump’s Agencies Spent $11 Billion Last Week In Year-End Spending Spree: Every September, the end of the fiscal year sparks a “use it or lose it” spending frenzy as federal agencies race to use up what’s left in their annual budgets. It’s a phenomenon that should drive taxpayers crazy. Agencies are afraid that if they spend less than their budget allows, Congress might send them less money in the next year. Agencies often try to spend everything that’s left instead of admitting they can operate on less. Here are the top ten ways the government wasted taxpayer money in the last week of FY2017:

  • 1. In the last week of FY2017, President Donald Trump’s office alone spent $21.8 million, which is more than three times the $6 million former President Barack Obama’s office spent to close out FY2016. Trump’s spending included $6.2 million in electrical hardware and supplies; $490,000 on tents and tarps; $489,517 on furniture; $10,612 on floor coverings; and $197,438 on newspapers and periodicals
  • 2. Booze-Based Diplomacy – The State Department spent nearly $79,000 on booze for ten American embassies including Nigeria ($4,288), Peru ($4,453), Denmark ($4,736), Belgium ($6,760), Zambia ($6,429), and Sri Lanka ($9,613).
  • 3. Armored Vehicles for HHS – In then-Secretary Tom Price’s final week in office, the Department of Health and Human Services led the charge, spending more than $2 billion. This spending included a $1.5 million deal with Square One Armoring Services Company for a fleet of armored vehicles.
  • 4. Guns, Ammo, and Military-Style Equipment – Non-military agencies embarked on a one-week arms race, spending $7.3 million on guns, ammunition, and weapons. The Department of Homeland Security ($4.4 million) and the Department of Justice ($1.6 million) bought the most weaponry. However, The Department of Agriculture, for example, spent $306,617 on guns from Glock, Inc., plus an array of ammunition. In addition to guns and ammo, agencies loaded up on night vision equipment ($1.5 million); personal armor ($3.5 million); and combat, assault, and tactical vehicles ($284,457).
  • 5. Insect and Rodent Control at the VA – The federal government did some end-of-the-year cleaning, paying $152.5 million in “housekeeping” bills. While agencies paid $114 million to guards and facilities operations support, they also signed for custodial janitorial ($24.3 million); laundry and dry cleaning ($2.9 million); surveillance ($2.7 million); trash and garbage collection ($1 million); carpet cleaning ($630,943); interior plantscaping ($154,458); and snow removal/salt ($127,373). “Housekeeping” contracts included insect and rodent control, which cost $111,000 at the Department of Veterans Affairs.
  • 6. Redecorating Allowance – For the new fiscal year, many federal agencies decided to redecorate. In one week, the government spent $83.4 million on furniture plus another $23 million on office supplies and equipment.The Department of Veterans Affairs spent $15.6 million on new office furniture including $4.7 million to a veteran-owned company, American Veteran Office Furniture, LLC. The largest furniture contractor across all agencies, however, was Knoll, Inc. ($6.2 million) – a luxury furniture company that has 40 pieces permanently displayed in the American Museum of Modern Art in New York City.
  • 7. Self-Promotion (PR) Machine – The government spent tens of millions of dollars on last-minute self-promotion. Agencies spent $18.6 million on public relations, $11.7 million on market research and public opinion, and $5.5 million on communications. Further, $28.8 million went to advertising efforts – the Department of Homeland Security spent $15 million on advertising, including a $6.7 million deal with Lempugh, Inc., and a $4 million contract with the Ogilvy Group. Further, the Department of Veterans Affairs spent $3.2 million on signs and advertising displays with S2 Ventures, LLC.

You really can’t make this stuff up.

 The Death Spiral Appears Unstoppable - Chris Hedges - The American empire is coming to an end. The U.S. economy is being drained by wars in the Middle East and vast military expansion around the globe. It is burdened by growing deficits, along with the devastating effects of deindustrialization and global trade agreements. Our democracy has been captured and destroyed by corporations that steadily demand more tax cuts, more deregulation and impunity from prosecution for massive acts of financial fraud, all the while looting trillions from the U.S. treasury in the form of bailouts. The nation has lost the power and respect needed to induce allies in Europe, Latin America, Asia and Africa to do its bidding. Add to this the mounting destruction caused by climate change and you have a recipe for an emerging dystopia.Overseeing this descent at the highest levels of the federal and state governments is a motley collection of imbeciles, con artists, thieves, opportunists and warmongering generals. And to be clear, I am speaking about Democrats, too. The empire will limp along, steadily losing influence until the dollar is dropped as the world’s reserve currency, plunging the United States into a crippling depression and instantly forcing a massive contraction of its military machine. Short of a sudden and widespread popular revolt, which does not seem likely, the death spiral appears unstoppable, meaning the United States as we know it will no longer exist within a decade or, at most, two. The global vacuum we leave behind will be filled by China, already establishing itself as an economic and military juggernaut, or perhaps there will be a multipolar world carved up among Russia, China, India, Brazil, Turkey, South Africa and a few other states. Or maybe the void will be filled, as the historian Alfred W. McCoy writes in his book “In the Shadows of the American Century: The Rise and Decline of US Global Power,” by “a coalition of transnational corporations, multilateral military forces like NATO, and an international financial leadership self-selected at Davos and Bilderberg” that will “forge a supranational nexus to supersede any nation or empire.”

U.S. in Direct Communication With North Korea, Says Tillerson — The Trump administration acknowledged on Saturday for the first time that it was in direct communication with the government of North Korea over its missile and nuclear tests, seeking a possible way forward beyond the escalating threats of a military confrontation from both sides. “We are probing, so stay tuned,” Secretary of State Rex W. Tillerson said, when pressed about how he might begin a conversation with Kim Jong-un, the North Korean leader, that could avert what many government officials fear is a significant chance of open conflict between the two countries. “We ask, ‘Would you like to talk?’ We have lines of communications to Pyongyang — we’re not in a dark situation, a blackout,” he added. “We have a couple, three channels open to Pyongyang,” a reference to North Korea’s capital. The two countries have been trading public threats over North Korea’s nuclear program, with the North declaring that its missiles have the capacity to strike the United States and President Trump vowing to “totally destroy” North Korea. So far, the North Koreans have shown no interest in a serious negotiation. For his part, Mr. Tillerson gave no indication of what the administration might be willing to give up if talks began, and Mr. Trump has made clear he would make no concessions. But many inside and outside government have noted there were no major military exercises between the United States and South Korea scheduled until the spring, so the promise of scaling them back could be dangled. But Mr. Kim would be unlikely to see that as much of a victory and he has rejected any talks that would ultimately require him to disarm. 

Trump Tells Tillerson To Stop Negotiating With "Little Rocket Man": "We'll Do What Has To Be Done" - One day after Rex Tillerson revealed for the first time that the US has been in direct - if secret - contact with the government of North Korea over its missile and nuclear tests, a stunning revelation considering that administration officials have until this point insisted that there has been only limited, indirect contact between the White House and the Kim regime,  Trump, in his latest Sunday morning tirade, tweeted his Secretary of State to effectively stop negotiating with "Little Rocket Man" and to save his energy as Save your energy as Trump will "do what has to be done." "I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man... Save your energy Rex, we'll do what has to be done!" According to a handful of kneejerk reactions by conflict analysts, Trump's statement is effectively an admission that war appears inevitable as diplomatic negotiations, largely for optical purposes, are doomed to failure. Of course, this could be just Trump's latest attempt at posturing, coupled with a resumption in bilateral escalations with North Korea. It is also a very troubling, and cavalier way to gamble with millions of people's lives. As reported yesterday, during a press conference on Saturday in China, Tillerson said “we are probing, so stay tuned,” when asked about how he might begin a conversation with Kim Jong-un. Following Tillerson's surprising admission of high level contact with Pyongyang, the NYT compared the secret backchanneling to a strategy used by the Obama administration to help forge what became the Iran deal – a comparison that Tillerson swiftly pushed back against. “We are not going to put a deal together with North Korea that’s as flimsy as the one in Iran,” he said. He added that the situation is different and that the North already has nuclear weapons, while Iran was still years away from obtaining them.

Tillerson Called Trump A "Moron", Was Close To Resigning -- In recent days, foreign policy pundits have been scratching their heads over the apparent lack of directly lines of communication between the White House and the State Department, which led Trump to chide Sec State Rex Tillerson over the weekend, tweeting that there is no need to negotiate with North Korea, as Trump would "handle this" even as it emerged for the first time that the US had engaged in direct contact with Pyongyang. This was merely the latest example of the White House seemingly taking a position opposite to that pushed by Tillerson, prompting many to ask if there is a fallout between the former Exxon CEO and Donald Trump.Today, NBC gives one possible explanation for the bizarre relationship between the two men, with a report that Rex Tillerson was on the verge of resigning this past summer amid mounting policy disputes and clashes with the White House. The tensions reportedly came to a head around the time President Donald Trump delivered a politicized speech in late July to the Boy Scouts of America, an organization Tillerson once led, NBC reported citing officials familiar.Tillerson, who was in Texas for his son’s wedding in late July when Trump addressed the Boy Scouts, had threatened not to return to Washington, according to three people with direct knowledge of the threats. His discussions with retired Gen. John Kelly, who would soon be named Trump’s second chief of staff, and Defense Secretary James Mattis, helped initially to reassure him, four people with direct knowledge of the exchanges said.At that time, however, State Department spokesperson Heather Nauert responded to speculation that Tillerson was thinking about resigning by saying he was “committed to staying” and was “just taking a little time off” in Texas.Just days earlier, Tillerson had openly disparaged the president, referring to him as a "moron" after a July 20 meeting at the Pentagon w ith members of Trump’s national security team and Cabinet officials. NBC notes that while it's unclear if he was aware of the incident, VP Mike Pence "counseled Tillerson", who is fourth in line to the presidency, on ways to ease tensions with Trump, and other top administration officials urged him to remain in the job at least until the end of the year.

Rex Tillerson Will Neither Quit Nor Deny He Called Trump a ‘Moron’ - Secretary of State Rex Tillerson on Wednesday reaffirmed his support for President Trump in a public statement from the Treaty Room of the U.S. Department of State. “My commitment to the success of our president and our country is as strong as it was the day I accepted his offer to serve as secretary of state,” he said. “President Trump’s ‘America First’ agenda has given voice to millions who felt completely abandoned by the political status quo and who felt their interests came second to those of other countries.” Tillerson reportedly nearly quit his post last summer after the real-estate magnate’s polarizing speech to the Boy Scouts of America in July, calling the president a “moron”; Vice President Mike Pence allegedly intervened. “While I’m new to Washington, I have learned that there are some who try to sew dissension to advance their own agenda by tearing others apart, in an effort to undermine President Trump's own agenda,” Tillerson said of the reports. And regarding the claim that he called the president a “moron,” Tillerson said: “I’m not going to deal with petty stuff like that.” Following the presser, MSNBC reporter Stephanie Ruhle clarified: “My source didn’t just say he called him a moron. He said he called him an f-ing moron.”

Tillerson Summoned To White House As Furious Trump Raged Over "Moron" Comment -- Barely a week after HHS Secretary Tom Price resigned following reports that he’d spent more than $1 million in taxpayer funds traveling in private jets, speculation that Secretary of State Rex Tillerson’s head is next on the chopping block has reached a fever pitch. After reporting earlier in the week that Tillerson had privately criticized Trump, allegedly calling him a “fucking moron”, NBC reported late Thursday that the secretary had been summoned to the White House by Chief of Staff John Kelly for an impromptu meeting to discuss “a path forward.” Kelly summoned Tillerson, and their ally Defense Secretary James Mattis, to the White House, where the three of them huddled to discuss a path forward, according to three administration officials. The White House downplayed Kelly's decision to stay in Washington, saying he did so to manage day-to-day operations. Needless to say the president was not happy, and as NBC adds, "Trump was furious when he saw the NBC News report, which was published shortly before 6 a.m. Wednesday. For the next two hours the president fumed inside the White House, venting to Kelly, officials said. He left for Las Vegas shortly after 8 a.m., 20 minutes behind schedule." Tillerson scrambled to pull together a statement, while his spokesman publicly apologized for his comments about Pence and Haley, saying he “spoke out of line about conversations I wasn’t privy to.” Tillerson delivered a statement praising Trump and insisting he never considered resigning, but it’s what he didn’t say that further enraged Trump, officials said. Meanwhile Vice President Mike Pence was likewise "fuming" in Phoenix, where he was traveling: he and Tillerson spoke on the phone before the secretary’s public appearance on Wednesday morning. Pence was incensed upon learning from the NBC report that Tillerson’s top spokesman had said he once privately questioned the value of Nikki Haley, the U.S. ambassador to the United Nations. Officials said the spokesman, R.C. Hammond, fabricated an anecdote that Pence had asked Tillerson in a meeting whether Haley, who is seen as a possible successor if Tillerson, is helpful or harmful to the administration. Tillerson’s initial reluctance to deny that he’d made the “moron” comment during an impromptu press conference on Wednesday infuriated Trump – though the spokeswoman from the state department later denied that Tillerson had made the comment.

How Tillerson Is Trying to Save the Iran Deal From His Boss - Rex Tillerson is unlikely to go down in history as one of our better secretaries of State. In the past few months, he has been the subject of not one but two Politico Magazine headlines accusing him of ruining the State Department by driving out its best diplomatic talent, whether through his corporate-style restructuring of the department or through the daily indignity of working as career public servants and nonpartisan experts in an administration that disdains both. Yet if Tillerson quits or is fired before the end of the Trump administration, it will not be on account of those complaints from Obama-era diplomats. Rather, it will be because, as Rich Lowry puts it, “In a nationalist administration, he is a man without a country” — or more simply, because he doesn’t agree with the president about foreign policy and refuses to follow bad orders. There are only so many times a person can be undercut by their boss, whom they openly consider a moron, while trying to do their job, before they walk away. As Donald Trump attempts to kill the Iran nuclear deal without getting any blood on his suit, the tensions between Tillerson and Trump have made themselves felt again. Earlier this week, CNN reported that Tillerson was working with some lawmakers to try to head off Trump’s plan to decertify the deal by amending its implementing legislation and removing the requirement that the president recertify it every three months. At the moment, it looks like that effort either has already failed or will do so imminently, but the way a senior administration official described Tillerson’s take on the problem says a lot about the circumstances under which the former Exxon CEO is trying to work. “Tillerson has said the problem with the JCPOA is not the JCPOA,” the official told CNN, using the acronym for the deal’s official title, Joint Comprehensive Plan of Action. “It’s the legislation. Every 90 days the president must certify and it creates a political crisis.” In other words, the problem with the JCPOA is not the JCPOA: It’s Donald Trump.

Interview: US sanctions against Iran would see grudging international compliance - If the US reimposes sanctions on Iran's oil sector without the support of Europe, China and Russia, it will see grudging and uneven compliance by international energy companies and will not be able to stop crude flows that returned to the market in 2015, according to sanctions expert Elizabeth Rosenberg."Grudging compliance does not look like robust, immediate information sharing to support the enforcement of sanctions," said Rosenberg, the director of the energy economics and security program at the Center for New American Security and a former Treasury Department adviser on sanctions."In that world, sanctions are leaky, they're not so strong and they will be revealed to Iran and the world to be not an effective tool of statecraft and there will be myriad opportunities for opportunistic business people -- and confused business people -- to find ways of continuing the business that they have in place," Rosenberg said in an interview for S&P Global Platts' Capitol Crude podcast that came out Oct. 2. The possibility of the US going it alone on reimposing Iran sanctions has increased since President Donald Trump is widely expected to not certify Iran's compliance in the 2015 nuclear deal before Congress' October 15 deadline.Rosenberg said Trump is understood to have certified Iranian compliance twice before "under duress" and has made clear to staff that he would not do so again. She said the administration likely thinks it can pressure Europe, China and Russia to agree to rework the deal and present the new version to Iran as a take-it-or-leave it offer.If a new deal never materializes, the Trump administration or Congress could reimpose Iranian sanctions immediately. Rosenberg said the move would damage US economic leverage at a time when it needs major Iranian crude buyers on board for other diplomatic priorities like leaning on China to help counter the North Korean nuclear threat.

Mattis breaks with Trump on Iran deal - Defense Secretary Jim Mattis on Tuesday broke with the position President Donald Trump has taken against the 2015 Iran nuclear deal during testimony before the Senate Armed Services Committee. Asked by Independent Maine Sen. Angus King whether the deal, officially called the Joint Comprehensive Plan of Action, was beneficial to the US, Mattis answered affirmatively. "Do you believe it's in our national security interests at the present time to remain in the JCPOA?" King asked, adding after a brief pause, "That's a yes-or-no question." Mattis himself paused several seconds before answering, "Yes, senator, I do." The defense secretary later elaborated, saying he supported a "rigorous review." "If we can confirm that Iran is living by the agreement, if we can determine that this is in our best interest, then clearly we should stay with it," Mattis said. "I believe at this point in time, absent indications to the contrary, it is something the president should consider staying with." Trump's hostility toward the deal — signed in 2015 by Iran, the US, Russia, France, Germany, China, and the UK — is longstanding. During his presidential campaign, Trump tarred the agreement as a "bad deal" for the US and vowed to rip it up upon taking office. Trump has twice recertified the deal since taking office, as he is required to do every 90 days to keep Congress from reimposing sanctions. But his administration has agreed to other sanctions on Tehran, and Trump's rhetoric has signaled he's getting closer to scrapping the deal outright. 

Mattis: NATO Might Drop Ally Pakistan For "Connections With Terrorist Groups" --Defense Secretary James Mattis told a Senate Armed Services Committee hearing on Tuesday that Pakistan might be dropped by the United States as a NATO ally due to its support for the Taliban and other terrorist organizations. Currently, Pakistan is formally designated as a major non-NATO ally (MNNA) - a defense relationship which confers military and financial benefits but does not automatically imply a mutual defense pact.During the hearing which covered a wide range of national security issues, Mattis was asked if the US would consider revoking Pakistan's status, and responded, "I'm sure it will be."  The firm but not completely unexpected response which is sure to add tensions to the already shaky US-Pakistan alliance came after Mattis stated in his opening remarks that, "we will firmly address Pakistan's role. NATO's demands need to be heard and embraced in Islamabad." Mattis along with Marine Corps General Joseph Dunford, chairman of the Joint Chiefs of Staff, testified that they view Pakistan's main spy agency, Inter-Services Intelligence (ISI) as an enabler of terrorism in Central Asia. General Dunford said, “It is clear to me that the ISI has connections with terrorist groups.”  President Trump himself recently singled out longtime US ally Pakistan as a "safe haven to agents of chaos, violence and terror" when he announced a new plan for ramping up US anti-terror actions in Afghanistan back in August. Trump specifically blamed Pakistan for harboring Taliban leaders and other radical Islamic allies like the Haqqani network, which has long been leading insurgences against US and NATO forces in Afghanistan.

In meeting with military, Trump talks of ‘calm before the storm’(Reuters) - After discussing Iran and North Korea with U.S. military leaders on Thursday, President Donald Trump posed for a photo with them before dinner and declared the moment “the calm before the storm.” “You guys know what this represents?” Trump said after journalists gathered in the White House state dining room to photograph him and first lady Melania Trump with the uniformed military leaders and their spouses. “Maybe it’s the calm before the storm,” he said. What storm? “You’ll find out,” Trump told questioning reporters. Related Coverage Factbox: Trump on Twitter (Oct 5) - Ralph Northam, Stock Market, Rex Tillerson Classical music played in the background and tables were set in the nearby Blue Room for a fancy meal. The White House did not immediately reply to a request to clarify Trump’s remark. Earlier in the evening, while seated with the top defense officials in the cabinet room, Trump talked about the threat from North Korea and preventing Iran from getting a nuclear weapon. U.S. President Donald Trump participates in a briefing with senior military leaders at the White House in Washington, U.S., October 5, 2017. REUTERS/Yuri Gripas“In North Korea, our goal is denuclearization,” he said. “We cannot allow this dictatorship to threaten our nation or our allies with unimaginable loss of life. We will do what we must do to prevent that from happening. And it will be done, if necessary, believe me.” During his speech to the United Nations General Assembly last month, Trump said the United States would “totally destroy” North Korea if needed to defend itself or U.S. allies.

Here’s How Much of Your Taxes Have Gone To Pay For Wars Since 9/11  --Previously unreported Pentagon data shows how much the average U.S. taxpayer has paid for combat operations in Afghanistan, Iraq, and now Syria. According to the two page report summary, the cumulative estimated cost of the 16 year war in the Middle East has cost each taxpayer $7,500. According to Defense One, Americans paid the most for the wars in 2010, an average of $767 per taxpayer. Since the peak, the annual amount has declined to $289 this fiscal year and $281 projected for 2018. By October of 2018, the Pentagon’s share of the wars in Afghanistan, Iraq and now Syria will have collectively cost taxpayers more than $1.5 trillion, according to the Department of Defense.On the other hand, the Watson Institute at Brown U. tells a different story of the actual cost of war coming in at a staggering $4.8 trillion on a post 9/11 basis, and since this spending has been funded through new debt issuance, interest on the borrowed funds could climb to $7.9 trillion by 2053. According a paper by Columbia University economist and former chief economist of the World Bank Joseph Stiglitz and Harvard University’s Linda Blimes, former US President George W. Bush’s economic adviser Larry Lindsey touted that war costs would be capped near $200 billion when pitching the Iraq War, which he thought would be “good for the economy.”The economists wrote that "it now appears that Lindsey was indeed wrong – by grossly underestimating the costs." They determined that $750 billion to $1.2 trillion had been spent on the Iraq invasion alone, three years after the conflict started (2006). Now, 11 years after their paper, the Pentagon actually says that the Iraq, Afghan, and Syrian conflicts combined have summed just $1.5 trillion”.

Mysterious Cuban 'Sonic Attacks' Targeted US Spies -- Just days after the Associated Press reported that the State Department planned to withdraw most of its personnel from the Cuban embassy in Havana, the wire service is returning with another revelatory scoop about the mysterious “sonic attacks” that have caused injuries ranging from minor to life-threatening in 21 embassy personnel: Many of the diplomats targeted were US spies, partly explaining the State Department's reluctance to discuss the attacks.Frightening attacks on U.S. personnel in Havana struck the heart of America’s spy network in Cuba, with intelligence operatives among the first and most severely affected victims, The Associated Press has learned.It wasn’t until U.S. spies, posted to the embassy under diplomatic cover, reported hearing bizarre sounds and experiencing even stranger physical effects that the United States realized something was wrong, individuals familiar with the situation said.However, the AP’s government sources refused to confirm a timeline for the attacks, or provide other basic details, underscoring the sensitivity of the ongoing investigation. While the attacks started within days of President Donald Trump’s surprise election in November, the precise timeline remains unclear, including whether intelligence officers were the first victims hit or merely the first victims to report it. The U.S. has called the situation “ongoing.”

US Plans To Expel 60% Of Cuba's Washington Embassy Staff -- Stop us if you’ve heard this one before. In the interest of maintaining diplomatic “parity” between the US and Cuba, the Trump administration is reportedly planning to ask the Cuban government to reduce the staff at its embassy in Washington by 60% following last week’s announcement that the US planned to recall two-thirds of its diplomatic personnel in Havana, according to the Associated Press. While the government didn’t cite a justification for its decision beyond the 'parity' line – notably the same excuse used by the Trump administration when it ordered Russia to close its consulate in San Francisco and reduce the head count at its embassy in Washington – it’s clear that the move was meant as retaliation for a series of mysterious sonic attacks that have left 21 diplomatic personnel in Havana with injuries ranging from minor pain and nausea to permanent brain damage. The attacks, which began shortly after the election last fall, are considered to be ongoing, yet US intelligence hasn’t been able to confirm any specifics about the weapon used to carry out the attacks – to say nothing about the identity of the attacker or attackers.

Scoop: Trump urges staff to portray him as “crazy guy” - In an Oval Office meeting earlier this month, President Trump gave his top trade negotiator, Robert Lighthizer, an Art of the Deal-style coaching session on how to negotiate with the South Koreans.  A number of senior officials and cabinet secretaries were present for the conversation, including Defense Secretary Mattis, Agriculture Secretary Perdue, and Secretary of State Tillerson. At issue was whether the U.S. would withdraw from the Korean trade deal — an action Trump threatened but still hasn't done."You've got 30 days, and if you don't get concessions then I'm pulling out," Trump told Lighthizer."Ok, well I'll tell the Koreans they've got 30 days," Lighthizer replied."No, no, no," Trump interjected. "That's not how you negotiate. You don't tell them they've got 30 days. You tell them, 'This guy's so crazy he could pull out any minute.'" "That's what you tell them: Any minute," Trump continued. "And by the way, I might. You guys all need to know I might. You don't tell them 30 days. If they take 30 days they'll stretch this out." Plenty of world leaders think the president is crazy — and he seems to view that madman reputation as an asset. The downsides are obvious: the rhetoric can unnerve allies and has the potential to provoke enemies into needless, unintended war. But Trump keeps using the tactic, with varying degrees of success: Just today, the president undercut his secretary of state by suggesting diplomacy with "Little Rocket Man" in North Korea was a waste of time — implying that only military action would resolve the conflict. "Save your energy Rex," Trump tweeted, "we'll do what has to be done!"  We've never seen anything like this before. Trump's tweet, undercutting Tillerson's diplomatic efforts, comes a day after Tillerson acknowledged for the first time that the administration was in direct communication with North Korea.  Trump's comments today belong to a pattern that fits the "madman" or "he might just be crazy enough to do that" theory of international relations:

South Korea begins singing Trump's tune on KORUS - After a second bilateral meeting on KORUS on Wednesday, the United States and South Korea appear to finally be on the same page when it comes to their five-year-old trade deal: It’s time to amend it. A South Korean government statement released Wednesday evening said the two sides reached a common understanding on the need to reopen the deal to increase the benefits for both countries.To that end, Seoul said it will begin consultations with its legislature and stakeholders — a process expected to include an economic assessment and public hearings, among other elements — in an attempt to fully engage in potentially amending the agreement. U.S. Trade Representative Robert Lighthizer said there will be "intensified engagement" with South Korea to amend the pact that President Donald Trump has blamed for increasing America's overall trade deficit.South Korea had been resistant to Lighthizer’s attempts to sit down and negotiate, telling reporters after the first strategic meeting in August that Seoul would “not agree to the unilateral proposal” to amend the deal until they first examined the cause of the trade imbalance. The change in tune comes after Trump first threatened to withdraw from the agreement and later said the U.S. would “try and straighten out” the deal and “make it fair for everybody.”  A USTR spokesperson said the two sides anticipate further discussions and/or meetings to be scheduled in the coming weeks.

 Fearing trade war, US Inc. pleads with both Trump and China | Asia Times: Amid ongoing investigations into Chinese trade practices, American business groups have been speaking out with two loud and clear messages. Beijing’s domestic policies are unfair to foreign businesses, but Washington must step carefully. Industry groups this week echoed the Trump administration’s assertion that the World Trade Organization was not equipped to address Chinese practices seen as unfair. China’s regulatory regime “puts a thumb on the competitive scale in a way that significantly and profoundly affects US-based and foreign companies,” said Josh Kallmer of the Information Technology Industry Council at hearing on Wednesday. A representative from the US Chamber of Commerce stressed at the hearing, held by the office of the US Trade Representative (USTR), that even with full WTO compliance, not all of these policies could be changed. While pushing for changes to China’s policies, the American Chamber of Commerce in Shanghai also made clear in earlier remarks to the USTR that “A tit-for-tat trade war would be damaging for all parties.”The comments, submitted ahead of next week’s USTR hearing on the section 301 investigation into China’s trade practices, emphasized that because of “the scale of US investment in China, and the significant size of China business for many US corporations, it is important that US actions not put those interests at risk.” Any action, the Chamber urged “should be carefully constructed and well-grounded in objectivity.” Other groups echoed this sentiment. The US National Foreign Trade Council said in their statement to USTR that Washington needs to “work through these and other trade-related problems with China in ways that are consistent with the open, rules-based trading system that the United States has built.” 

U.S. Votes Against U.N. Ban On Death Penalty For Homosexuality -  A United Nations resolution banning the death penalty for homosexuality was opposed by a total of 13 countries in the U.N. Human Rights Council. While several were in Africa and the Middle East, the U.S. surprisingly voted against the measure, as well. Fortunately the resolution passed on Friday anyway, with 27 countries voting for the measure.  It was brought forward by eight nations—Belgium, Benin, Costa Rica, France, Mexico, Moldova, Mongolia, and Switzerland—who have made global LGBT rights a priority.  “This is a monumental moment where the international community has publicly highlighted that these horrific laws simply must end,” said Renato Sabbadini, director of The International Lesbian, Gay, Bisexual, Trans and Intersex Association (ILGA). “It is unconscionable to think that there are hundreds of millions of people living in states where somebody may be executed simply because of whom they love.” Previous efforts by Egypt, Saudi Arabia, and Russia to block or water down the resolution failed.

Mnuchin Insists "The Rich Won't Benefit" From Trump's Tax-Reform Plan -- Two days after the nonpartisan Tax Policy Center announced that the White House’s tax reform plan would raise taxes on about 12% of taxpayers, Treasury Secretary Steven Mnuchin took to the Sunday talk shows to defend the Trump tax plan, which was unveiled Wednesday in a nine-page document.And in characteristic Trump Administration fashion, In an appearance on “This Week” with George Stephanopoulos, Mnuchin repeatedly countered questions about the plan's impact on Trump's tax rate, or if it would raise taxes on middle-class Americans to fund large cuts for the rich, by noting that the details of the legislation had not yet been worked out, before prommising that all of Stephanopoulos's complaints would be rectified when the bill is written in committee.During the interview, Stephanopoulos pressed Mnuchin about research showing that 80% of the financial benefits from the plan would accrue to the top 1%, and other details of the TPC’s analysis – including claims that Trump and his family would benefit financially from the repeal of the estate tax, the repeal of the AMT, and cuts to the pass-through rate, among other provisions.Earlier in the week, NEC Chief Gary Cohn raised hackles among Trump critics by saying hecouldn't guarantee that the bill wouldn't raise taxes on some members of the middle class.

Republicans’ tax plan gives the top 1 percent of households a $207,000 tax cut; Bottom 20 percent get $50 – EPI - Last week, Republicans unveiled a framework for their plan to cut taxes. And despite repeatedly claiming they would provide a “middle-class tax cut,” it was clear from the meager details provided that this plan offered nothing of the sort. Instead, as we long suspected would be the case, an analysis by the Tax Policy Center (TPC) confirms that the Republican tax plan amounts to nothing but an enormous tax cut for rich people—just like every single Republican plan before it. TPC found that by 2027, the Republican tax cut would deliver 80 percent of its benefits to the top 1 percent, households that currently have incomes of roughly $730,000 or more. The top 1 percent of tax filers would receive a $207,060 average tax cut. In comparison, the bottom 20 percent of earners will receive only a $50 average tax cut. And hidden behind the crumbs thrown toward the middle-class is significant variation.  If you’re middle-class, maybe you’ll get a small tax cut—the middle 20 percent of tax filers will receive a $420 average tax cut. Or maybe you’re part of the 30 percent of taxpayers making between about $50,000 and $150,000 that TPC found would see your taxes increase.  Any claim that Republicans were ever genuinely planning a “middle-class tax cut” should be thoroughly dismissed. Far from it, Republicans appear dead-set on cutting taxes for the ultra-rich.

 The Poorest Tax Payers to Pay the Most Under Trump Plan - NEP’s Bill Black appears on The Real News Network and says that both Republicans and Democrats are financially illiterate when they speak about the deficit, and Trump’s economic experts are ‘completely disconnected from the real world.’ You can view here with a transcript.

Silicon Valley all in on tax reform - Silicon Valley is racing to support and shape President Donald Trump’s multitrillion-dollar tax proposal, despite months of distancing itself from his policies on everything from immigration to climate change. The Republican proposal to slash corporate tax rates and ease taxation of companies’ overseas earnings has vast implications for the tech industry, which counts the wealthiest companies on earth among its ranks. The companies have responded by marshaling an army of lobbyists, some with connections to a Trump administration that many of their customers and liberal employees loathe. Tech companies tapped 546 tax lobbyists in the first half of 2017, more than during any of the previous six years, according to data from the Center for Responsive Politics. No other policy issue facing tech companies in Washington — and there are many of late — stands to have as great an impact on their businesses as an overhaul of the tax code. Tech giants want Congress not only to chop the corporate tax rate but to allow them to pay less tax if they bring back home the cash they hold abroad. Apple, Microsoft, Cisco, Google’s parent Alphabet and Oracle top the list of U.S. companies with the biggest overseas cash piles, according to Bloomberg data compiled in June. Apple alone has a staggering $246 billion in cash outside the U.S. Those numbers help explain why the tech sector — despite its frequent fractures with Trump — has resisted calls to fully disengage from the administration: It needs to keep a foot in the door as Republicans draft and usher through their plans for a major tax overhaul. 

One Sentence in the GOP Tax Plan Has Multibillion-Dollar Implications - On the last page of a nine-page tax plan that calls for slashing business rates, President Donald Trump and congressional Republicans proposed a little-noticed, brand-new tax that may hit companies like Apple Inc. and Pfizer Inc. It’s contained in one sentence: “To prevent companies from shifting profits to tax havens, the framework includes rules to protect the U.S. tax base by taxing at a reduced rate and on a global basis the foreign profits of U.S. multinational corporations.” The rate and formula aren’t specified, but that lone sentence carries multibillion-dollar implications for multinationals. Their lobbyists are noticing. Proposing a new tax on U.S. companies’ foreign profits “is appalling,” said Ken Kies of Federal Policy Group, whose clients include General Electric Co. and Microsoft Corp. “The whole point of this tax reform was to make U.S. corporations more competitive. It’s going to do the opposite.” Trump and congressional leaders buoyed U.S. stocks and seized national attention last week as they released a broad tax plan that would cut the corporate rate to 20 percent from 35 percent while also cutting rates for pass-through businesses and individuals. Details of those proposals remain sketchy -- but there’s even less clarity around the plan for revamping international corporate taxes. As specifics begin to emerge, including at a Senate Finance Committee hearing Tuesday, opposition may increase. It’s not all bad news for multinationals. On the positive side, the framework would allow them to bring back to the U.S., or repatriate, years’ worth of foreign earnings after paying a low tax rate -- perhaps 10 percent --on them. And even the new minimum foreign tax might not be as bad as it could have been. Four tax experts told Bloomberg News the framework’s wording suggests that despite the tax’s goal, multinationals will be able to keep using sophisticated tax-winnowing techniques and tax havens. While they may still face billions of dollars in new tax payments, it won’t be as bad as it could have been for them thanks to one word in the framework’s language: “global.”

Return of the Tooth Fairies - Menzie Chinn - As I watched Secretary Mnuchin on Meet the Press (before discussing his taxpayer funded trip to view the recent eclipse) state : …the president is not going to sign something that he believes is going to increase the deficit. I was struck by an overwhelming sense of déjà vu. Of course, the caveat “he believes” is important. Mnuchin mentions “dynamic scoring”, but most economists agree that it is not plausible that the tax cuts as currently sketched out would lead to a revenue neutral outcome.  This sheer implausibility is laid out by Bruce Bartlett in his illuminating retrospective, informed from his vantage point at the inception of supply side economics:Extravagant claims are made for any proposed tax cut. Wednesday, President Trump argued that “our country and our economy cannot take off” without the kind of tax reform he proposes. Last week, Republican economist Arthur Laffer said, “If you cut that [corporate] tax rate to 15 percent, it will pay for itself many times over. … This will bring in probably $1.5 trillion net by itself.”That’s wishful thinking. So is most Republican rhetoric around tax cutting. In reality, there’s no evidence that a tax cut now would spur growth.The Reagan tax cut did have a positive effect on the economy, but the prosperity of the ’80s is overrated in the Republican mind. In fact, aggregate real gross domestic product growth was higher in the ’70s — 37.2 percent vs. 35.9 percent.Moreover, GOP tax mythology usually leaves out other factors that also contributed to growth in the 1980s: First was the sharp reduction in interest rates by the Federal Reserve. The fed funds rate fell by more than half, from about 19 percent in July 1981 to about 9 percent in November 1982. Second, Reagan’s defense buildup and highway construction programs greatly increased the federal government’s purchases of goods and services. This is textbook Keynesian economics. Here is a summary of assessments by two organizations (CFRB, TPC) and Deutsche Bank:

"Tax Reform Is A Pipe-Dream" - Stockman Warns Market Is Heading For Massive Crash -- Having raged against President Trump's '1500-word-airball' of a tax reform plan, the Reagan administration's director of the Office of Management and Budget, David Stockman told CNBC this week that Wall Street is "delusional" for believing it will even be passed. "This is a fiscal disaster that when they [Wall Street] begin to look at it, they'll see it's not even remotely paid for. This bill will go down for the count," said Stockman. He said White House economic advisor Gary Cohn and Treasury Secretary Steve Mnuchin "totally failed to provide any detail, any leadership, any plan. Both of them ought to be fired because they let down the president in a major, major way." Stockman pulled no punches about President Donald Trump... "You get a black swan in the old days, or maybe you get an orange swan now, the one in the Oval Office who can't seem to stop tweeting and distracting the whole process from accomplishing anything." Reaffirming his thesis that the stock market rally is in serious trouble... "There is a correction every seven to eight years, and they tend to be anywhere from 40 to 70 percent," Stockman said recently on CNBC's "Futures Now." "If you have to work for a living, get out of the casino because it's a dangerous place." "This market at 24 times GAAP earnings, 21 times operating earnings, 100 months into a business expansion with the kind of troubles you have in Washington, central banks [are] going to the sidelines," he said. "There's very little reward, and there's a heck of a lot of risk."

The GOP Tax Plan Is Already Hitting Speed Bumps - The White House is showing "softness" on ending a $1.3 trillion federal tax deduction filers get for their state and local taxes, Senator Bob Corker said Monday, warning that it raises questions about the GOP’s "intestinal fortitude" and could imperil a tax overhaul. The framework that President Donald Trump and Republican leaders released Wednesday calls for deep rate cuts and would abolish existing tax breaks to help pay for them. Without such “pay-fors,” Congress might have to settle for only temporary tax cuts. Corker, who insists he won’t vote for a tax bill that adds a penny to the deficit, said in an interview that he’s concerned about the early signals from the White House. On Friday -- two days after the tax framework was rolled out -- National Economic Council Director Gary Cohn said that ending the state and local tax break was negotiable. “That’s the easiest one,” said Corker, a Tennessee Republican. “Some of the others are actually more offensive and produce lesser amounts of money.” The budget rules that Senate leaders plan to use to pass the legislation require that any changes that boost the federal deficit would have to expire in time. But the nine-page framework released Wednesday provided few details on revenue raisers. It calls for eliminating deductions, but doesn’t specify them. By showing its willingness to negotiate on one such deduction, the White House appears to be charting a rocky path. “As a general matter in tax reform you have to acknowledge that you cannot negotiate with everybody’s single pay-for,” said Doug Holtz-Eakin, who runs the American Action Forum, a conservative group that’s working with GOP leaders on taxes. “If you do that for everything, you don’t get tax reform.” 

"Credit Negative For U.S. Government": Moody's Threatens Downgrade If Trump Tax Plan Is Passed -- As various institutions continue to publish very detailed estimates of how Trump's tax plan will impact the federal budget, which is somewhat amazing since income brackets haven't even been assigned yet, Moody's published a note today threatening to finally strip the U.S. of its AAA credit rating if the tax plan is ultimately passed as currently contemplated.President Donald Trump’s tax proposal would probably weigh on the U.S. government’s credit outlook, on concerns that it would cause the federal deficit to swell, according to Moody’s Investors Service.“The Trump tax framework is likely credit negative for the U.S. government,” Moody’s said in a statement. “Tax cuts would not be offset by equivalent cuts to spending, which would put upward pressure on the federal budget deficit and debt,” while “the tax reform’s effect on economic growth and, in turn, federal government revenue would also affect U.S. credit strength.”By contrast, banks, insurers and asset managers would benefit from a lower tax rate, Moody’s said.As we pointed out last Friday, the Tax Policy Center found that Trump's plan would cost $2.4 trillion over the first decade, assuming no spending cuts, and result in federal deficits soaring by several hundred billion dollars each year.

  • The proposal would reduce federal revenues by $2.4 trillion over the first ten years and $3.2 in the second decade. This means that absent a matched deduction in spending, US deficit and debt will increase by a similar amount. This is a problem as a Senate GOP budget resolution unveiled on Friday only allows for adding $1.5 trillion to the debt, implying a revenue shortfall of just under $1 trillion.
    • The business income tax provisions—including those affecting corporations and pass-through businesses—would reduce revenues by $2.6 trillion over the first ten years. Elimination of estate and gift taxes would lose another $240 billion. The individual income tax provisions (excluding those related to business income) would increase revenues by about $470 billion over the same period.

Tax Cuts, Sold as Fuel for Growth, Widen Gap Between Rich and Poor - It is a little unsettling that the intellectual underpinning of tax policy in the United States today was jotted down on a napkin at the Two Continents Restaurant in Washington in December 1974.  That was when, legend has it, Arthur Laffer, a young economist at the University of Chicago, deployed the sketch over dinner to convince Dick Cheney and Donald H. Rumsfeld, aides to President Gerald R. Ford, that raising tax rates would reduce tax revenue by hampering growth.It was another economy. The top marginal income tax rate was 70 percent then. For three decades, just over 10 percent of the nation’s income had gone to the 1 percent earning the most. Economists believed Simon Kuznets’ proposition that though market forces would widen inequality at early stages of growth, further economic development would ultimately lead it to narrow. The paramount policy challenge of the day was how to raise productivity.  To many economists, Mr. Laffer’s basic argument that high taxes would at some point discourage effort and reduce growth made sense: Why work or invest more if the government will keep almost all the fruits of your troubles? Even Arthur M. Okun, who had been President Lyndon B. Johnson’s chief economic adviser, was writing about leaky buckets to illustrate a trade-off between efficiency and equity: Taxing the rich to pay for programs for the poor could slow growth down, in part by reducing the incentive of the rich to earn more. It is unclear whether reality ever followed Mr. Laffer’s prescription. “In 1986 we dropped the top income tax rate from 50 to 28 percent and the corporate tax rate from 46 to 34 percent,” said Bruce Bartlett, a policy adviser in the administration of President Ronald Reagan. “It’s hard to imagine a bigger increase in incentives than that, and I can’t remember any big boost to growth.”  Nonetheless, tax policy today is still being driven by his decades-old argument, devised in an economy that looks nothing like today’s. Today, 1 percent of the population is taking in more than 20 percent of the nation’s income, twice as much as when the fateful dinner took place. Today’s top marginal tax rate, 39.6 percent, is a little over half what it was then.

Bernie Sanders, Wealth, and the Washington Post Fact Checker – Dean Baker - Earlier this week the Washington Post Fact Checker gave three Pinocchios to Bernie Sanders for saying that the world's six richest people had more wealth than the bottom half. Several people contacted me to complain about the piece. First, I'll make a few quick points on wealth as a measure on inequality. Wealth can fluctuate enormously and often for reasons that really don't tell us much about inequality. When the stock market fell by 50 percent between the bubble peak in 2000 and the trough in 2002 did we become a much more equal society?Asset prices, and therefore wealth, fluctuate inversely with interest rates. In fact, with bond prices the inverse relationship is definitional. If the interest on 10-year treasury bonds doubles from 2.2 percent to 4.4 percent (roughly its pre-recession level), will the implied plunge in bond prices mean we are more equal?Also, as the piece points out, the world's poorest people by this measure are not those who are starving and homeless in the developing world, but rather recent graduates of Harvard med school and business school who took out large amounts of debt to pay for their education. I'm afraid I can't shed many tears for these folks. Finally, what counts as wealth is hugely arbitrary. In the good old days, many workers had defined benefit pensions that helped support them in retirement. At least in the private sector these have been mostly replaced with 401(k) plans and other defined contribution retirement plans. A defined benefit pension would not show up in most measures of wealth whereas a defined contribution pension would. This means we would count someone with $50,000 in a 401(k) plan as having more wealth than someone who would get $30,000 a year in retirement until they die from their pension. That makes no sense.

Right Wing Propaganda Tank IPI Likes the Trump Tax-Cuts-for-the-Rich "framework" -  Linda Beale - There's no surprise here.  The Institute for Policy Innovation (IPI) is a right-wing "think" (i.e., propaganda) tank that has consistently argued for tax policies that favor multinational corporations and the wealthy.  So IPI has a posting on Sept 29 that is supportive of the so-called "tax reform framework" put out by the Trump administration. As an earlier post on A Taxing Matter noted, the Trump framework is a wish list for the wealthy, providing one tax cut for the ultra rich after another:

  • elimination of the estate tax (that only affects the heirs of estates worth more than $11 million);
  • territoriality (that advantages multinational corporations that actually operate from the U.S. but claim headquarters in low-tax jurisdictions);
  • a flat 25% rate on "pass-through income" that gives almost a 15% rate cut to wealthy owners of partnerships in the real estate, joint venture, oil and gas and other businesses (and affects very few true small business owners whose effective tax rate is already no more than 25%, if that much);
  • elimination of the top rates on the progressive individual rate structure (reducing the top rate from 39.6% to 35% (or less));
  • reducing the statutory rate for corporations to a low 20%, when corporations already pay much much less in taxes than they have generally paid under the income tax system while making record profits and paying their key managerial personnel the kind of salaries and percs that have exacerbated the increasing income inequality gap in the U.S.;
  • elimination of the Alternative Minimum Tax (AMT), a provision that was enacted to ensure that wealthy taxpayers are not able to use so many loopholes and special provisions that they escape taxation altogether on their income (the elimination of the AMT being a pro-wealthy tax cut that ordinary folk in the lower two-thirds of the income distribution will benefit not one whit from); and
  • permitting immediate expensing for five years of equipment and similar expenditures by businesses (another provision that will allow mega corporations to make even more profits that can be shared--through bonuses, higher salaries, and share buybacks with the wealthy managers and shareholders of the enterprise and a provision that runs explicitly counter to the actual economics of the business, in which new equipment stays at close to original value in the early years with wear and tear actually economically backloaded onto the last years of the useful life).

As a result of these provisions, the wealthy who own the vast majority of financial assets (including stock in corporations and partnership interests in real estate and other partnerships) will enjoy hundreds of thousands of dollars of tax cuts.  In fact, the major portion of the tax cuts will go to the very wealthy who need them least.Meanwhile, the rate of taxation on the lowest income group in the country, the bottom percentile, would be increased by 20% (from a 10% rate to a 12% rate)--a truly significant and revealing increase for people who are struggling to make ends meet in an "as needed" worker environment where steady full-time jobs for a regular paycheck are vanishing as corporations call workers in when they want them and send them home sometimes after only a few hours.

 Home Builders soften stance on mortgage interest deduction— The National Association of Home Builders is backing off long-held support for the mortgage interest deduction in hopes that the Trump administration can deliver on its promise of lower taxes. “This is an internal shift for us,” Jerry Howard, the group's CEO, said in an interview. “We will explore alternatives to the mortgage interest deduction. We are willing to look at tax incentives for homeownership that are not necessarily the mortgage interest deduction.” In a separate statement, said Granger MacDonald, the group's chairman and a builder and developer from Kerrville, Tex. “This is the first time in NAHB’s 75-year history that we have been open to the idea of broader options regarding housing tax incentives.” Housing groups have long defended the mortgage interest deduction because it makes homeownership a more appealing investment. But Republicans want to simplify the tax code in addition to lowering tax rates. The proposal released last week by the Trump administration and GOP lawmakers would double the standard deduction to $12,000 for individuals and $24,000 for married couples, reducing the appeal of the mortgage interest deduction. While the GOP blueprint retained the mortgage interest deduction, the overarching goal is to eliminate loopholes and specific deductions in order to get an overall lower rate. “When you double the standard deduction, you basically dilute the impact of the mortgage interest deduction as an incentive for first-time home buyers,” Howard said. However, he said the homebuilder group is looking at the plan holistically, and in the aggregate it is something that the group could potentially support.

Republicans Are Reconsidering Full Repeal of State and Local Tax Deduction - NYT— Republican leaders are backing away from a proposal to fully repeal an expensive tax break used by more than 40 million tax filers to deduct state and local taxes amid pushback from fellow lawmakers whose residents rely on the popular provision. The state and local tax deduction is estimated to cost $1.3 trillion over the next decade and its repeal is central to paying for a sweeping tax rewrite unveiled last week by Republican lawmakers and administration officials. But elimination of the provision has emerged as a flash point in the nascent debate over the plan, with Republicans in high-tax states worried about backlash from residents who could see their tax bills rise. The White House and Republican lawmakers are considering alternatives to an outright repeal, including allowing taxpayers to choose between deducting their mortgage interest or state and local taxes, a limit on the deduction or a special tax break for middle-class families that live in areas with high property taxes. Representative Chris Collins, Republican of New York, said in an interview on Tuesday that party leaders had assured him “there’s not going to be full repeal” of the state and local tax deduction. Mr. Collins, who represents a district in upstate New York, is among the more than 30 Republicans whose residents make heavy use of the deduction and would be more likely to see their tax bills rise if the provision is eliminated. 

Congress Takes The First Step To Pass Tax Reform: Here's What Comes Next - Today The House passed the 2018 budget resolution in a 219-207 mostly party-line vote (18 republicans voted against the resolution along with all Democrats), representing the first step toward the Republican goal of sending tax-reform legislation to President Trump. Republican lawmakers hailed the vote as meaningful because the due to the budget reconciliation rules, the incorporate tax measures would allow Republicans in the Senate to pass tax reform without any Democratic votes, though Senate Majority Leader Mitch McConnell can only afford two defections (this proved to be a terminal hurdle in repealing Obamacare). “We haven’t reformed this tax system since 1986. We need to pass this budget so we can help bring more jobs, fairer taxes and bigger paychecks for people across this country,” Speaker Paul Ryan said during House floor debate. To be sure, for the past month, all trader eyes have been focused on the prospect of US tax legislation which has fast become the only catalyst for equity valuations, and especially following last week's  release of the proposed Republican tax plan, as well as the failure (again) of the party’s efforts on healthcare. Additionally, the tragedy of three major hurricanes hitting Texas, Florida, and Puerto Rico has superimposed a new agenda onto Congress given the urgency of relief needs (which could also open the door to longer-term infrastructure improvements). As a result, how recovery and reconstruction may reshape the fiscal agenda —and the potential of getting it all done — is the main question Goldman asks in its latest "top of mind" periodical publication. The question is critical because while today's budget resolution passage suggests a beneficial tailwind far tax reform, there are many who warn that the real work, and major hurdles - not to mention bickering within the Republican party - is only just starting. So to get a sense of the complexities that lie ahead, here is Goldman's Washington economist Alec Phillips, laying out the next steps and assessing the prospects for the passage of both tax reform and fiscal policy, one which now faces substantial obstacles.

Conservative Democrats Embrace Parts of GOP Tax Plan - A group of conservative House Democrats is embracing some elements of a GOP plan to cut taxes, potentially creating an opening for Republicans to win bipartisan support.The Blue Dog coalition, which has 18 members in the House, said it’s open to lowering business taxes, the first significant sign of a crack in Democratic opposition to the GOP approach. Their position was included in a plan released Wednesday outlining the group’s stance on taxes.The Blue Dog proposal comes as Republicans are trying to build support for their nine-page tax framework, released last week, which faces opposition from many Democrats and objections raised by a handful of GOP lawmakers. Tax-writing committees in the House and Senate must now settle some of the most divisive issues, including where to set the top individual income tax rate and whether cuts should be paid for.It remains to be seen whether lawmakers from the Blue Dog group can resolve their policy differences with the GOP plan and support a measure Democratic leaders oppose. Republicans would benefit from attracting Democratic votes and being able to market the legislation as bipartisan. In their plan, the Blue Dog group indicated a willingness to lower the tax rate for corporations and pass-through businesses, which include partnerships and limited liability companies. Democrats have largely opposed those changes, arguing the Republican plan is too generous to businesses and the wealthy, and not helpful enough for the middle class.

Blue Dogs Urge Ryan To Ignore Pelosi-- Negotiate With Them Instead -- Jim Costa (Blue Dog-CA), Henry Cuellar (Blue Dog-TX) and Dan Lipinski (Blue Dog-IL) are three of the most right-wing Democrats in Congress. They are the co-chairs of the 18-member Blue Dog Coalition the House and each has a lifetime "F" rating from Progressive Punch. On crucial roll calls in the current session Lipinski-- who just voted with the Republicans this week to ban Choice at 20 weeks-- has voted with progressives 51.79% of the time. Cuellar is far worse, having voted with progressives just 44.64% of the time. And then there's Costa-- 37.25% with progressives. Are they in red districts where they have to vote like a Republican to be reelected? Not at all. Hillary beat Trump in all 3 of their districts very blue districts. If the three lost primary battles to actual Democrats there would be no chance the Republicans would win their seats. But only Lipinski has a primary challenger.  Yesterday the 3 of them penned an OpEd for USA Today urging Ryan and Trump to bypass Pelosi and normal House Democrats and work with the Blue Dogs on a tax plan. The Blue Dogs, a caucus almost entirely funded by corporate interests, are as eager as ever to deliver on the wish-list of the special interests that finance the careers of the corrupt, GOP-lite members."Since its founding in 1995," wrote the 3 fake Democrats, "the Blue Dog Coalition has served as a bridge from Democrats to Republicans on important legislation. In a time when the American people worry about extreme partisanship and whether Congress can get things done on their behalf, the Blue Dogs stand ready to help move our country forward... We call on Congressional Republicans to stop catering to the extremes of their party and to give the Blue Dog Coalition a real seat at the negotiating table on tax reform. The American people want to see Democrats and Republicans stop the partisan bickering and do our job-- to govern."

Déjà Voodoo - Joseph E. Stiglitz -- A Trump administration staffed by plutocrats – most of whom gained their wealth from rent-seeking activities, rather than from productive entrepreneurship – could be expected to reward themselves. But the Republicans’ proposed tax reform is a bigger gift to corporations and the ultra-rich than most had anticipated.  Eight months after assuming office, the administration has been able to offer only an outline of what it has in mind. But what we know is enough to feel a deep sense of alarm.Tax policy should reflect a country’s values and address its problems. And today, the United States – and much of the world – confronts four central problems: widening income inequality, growing job insecurity, climate change, and anemic productivity growth. America faces, in addition, the need to rebuild its decaying infrastructure and strengthen its underperforming primary and secondary education system.But what Trump and the Republicans are offering in response to these challenges is a tax plan that provides the overwhelming share of benefits not to the middle class – a large proportion of which may actually pay more taxes – but to America’s millionaires and billionaires. If inequality was a problem before, enacting the Republicans’ proposed tax reform will make it much worse.Corporations and businesses will be among the big beneficiaries, a bias justified on the grounds that this will stimulate the economy. But Republicans, of all people, should understand that incentives matter: it would be far better to reduce taxes for those companies that invest in America and create jobs, and increase taxes for those that don’t.After all, it is not as if America’s large corporations were starved for cash; they are sitting on a couple of trillion dollars. And the lack of investment is not because profits, either before or after tax, are too low; after-tax corporate profits as a share of GDP have almost tripled in the last 30 years. Indeed, with incremental investment largely financed by debt, and interest payments being tax-deductible, the corporate tax lowers the cost of capital and the returns to investment commensurately. Thus, neither theory nor evidence suggests that the Republicans’ proposed corporate tax giveaway will increase investment or employment.

A Defense of the All-American Estate Tax - Justin Fox - In 1889, steel magnate Andrew Carnegie offered up a rousing and still-famous defense of the estate tax:Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life.It's still possible to find very rich people espousing similar views. Third-richest-person-in-the-world Warren Buffett was espousing them on television just Tuesday morning. But with yet another Republican administration proposing yet another repeal of the tax (the last repeal was enacted in 2001, took full effect in 2010 and expired in 2011), and public sentiment seemingly in favor of such a move, it's worth considering just what has happened to change people's minds since 1889.When Carnegie made his argument, he had the political wind at his back. Over the next 15 years, 24 states (out of 45) enacted broad inheritance taxes, and the Republican-dominated federal government temporarily used a 15 percent estate levy (it was enacted in 1898 and repealed in 1902) to finance the Spanish-American War and other military adventures. 1  At least part of the political support for the estate tax in those days may have stemmed from a desire to stave off a federal income tax, University of California at Santa Barbara historian W. Elliot Brownlee writes in his "Federal Taxation in America: A Short History." 2  But it's striking to see the words that a Republican president, Theodore Roosevelt, wielded in support of both estate and income taxes in 1906: The man of great wealth owes a peculiar obligation to the State, because he derives special advantages from the mere existence of government. The estate tax finally came to stay in 1916, after the Democratic Woodrow Wilson administration had already succeeded (in 1913) in getting a federal income tax approved. With American intervention in World War I looming, Wilson wanted money for big-time increases in military spending, and adding an estate tax was actually less controversial than expanding the income tax. And so it remained for many, many decades.

Part of Patriotism is Paying Taxes - Linda Beale - As Americans, we pay taxes to allow our government to support important activities that we as individuals or individual businesses either can't do at all or can't do as successfully.  Both individuals and businesses benefit from government, so that paying taxes is a wonderful exercise in patriotism. For individuals, the idea of paying taxes as patriotism may be obvious to many of us, because we think that taxes are an obligation of citizens to support and pay for the many things that the government does that we cannot do ourselves, from running a military defense system to supporting basic research into diseases, helping people and cities and states hit by natural disasters (like Texas and Florida and Puerto Rico), supporting education and research that leads to innovation and economic growth, helping to fund changeovers from dying industries like coal to new and growing industries like solar and wind, preserving areas of public lands for the public rather than allowing them to be decimated by private industry and fossil fuel extraction, preventing huge multinational companies from gouging consumers or polluting our water, land, and air, and the many other things that the government does for the benefit of all Americans. But the far right in this country has been preaching the opposite for years.

Here’s How The Trump Administration Is Hurting Enrollment In Obamacare - At its heart, the Affordable Care Act — Obamacare — is about figuring out how to pay to provide more people with insurance coverage. Before the policy was enacted, insurers balked at covering those with preexisting conditions for the simple reason that such customers are expensive. Cover a lot of expensive people and you either need to enroll more healthy people (who will pay premiums but use fewer resources) or raise premiums.  In other words, enrolling those healthy people is central to making Obamacare work. And in light of that, it’s probably not surprising to discover that the administration of President Trump is taking a number of steps that, intentionally or not, will undercut the number of healthy people who enroll. Here are a number of ways that’s happening.

  • Slashed funding for enrollment groups. Earlier this month, The Post reported that navigator groups — organizations that work to enroll participants in Obamacare in states that don’t operate their own insurance exchanges — would see sharp cuts to the funding they receive from the federal government. Some groups saw reductions of as much as 92 percent of what they’d received in the past, part of the administration’s decision to cut funding overall by 41 percent. The biggest cuts, we learned, were to groups in the South and the Midwest. Nebraska will lose 81 percent of its funding; Indiana, 82 percent; Louisiana, 80 percent. Among the populations targeted by navigator groups are young people, a population that tends to be much healthier on average, for perhaps obvious reasons. Thirty-five organizations in 21 states targeted young people specifically.
  • Cut funding for enrollment advertising. The administration announced plans to cut its advertising budget for enrollment from $100 million to $10 million at the end of August — a 90 percent decrease. As Vox subsequently reported, a sharp decrease in advertising in Kentucky after that state elected a Republican governor led to a big drop-off in visits to the enrollment website in the state.
  • Shutting down the enrollment website for hours a week. The open enrollment period for 2018 runs from Nov. 1 to Dec. 15, the critical period during which enrollment is encouraged. Last week it was revealed that for 12-hour blocks on several Sundays during that period, would be down for maintenance. The only Sunday on which the site isn’t scheduled to be down from midnight to noon is on Dec. 10, the last Sunday of enrollment.
  • Halted participation in enrollment events. Talking Points Memo noted in August that a Latino group that had worked with the Department of Health and Human Services in past years to enroll people in Obamacare suddenly found itself shut out. While the administration of President Barack Obama had provided Spanish-language materials and sent surrogates to events to encourage enrollment, that stopped in 2017.

Ex-Medicare head says Trump ‘purposely’ raising insurance premiums | TheHill: The former head of the Centers for Medicare and Medicaid Services (CMS) under President Obama blamed President Trump on Friday for rising health-care premiums around the country. Andy Slavitt, who was acting CMS administrator from 2015 to 2017, accused Trump on Twitter of "purposely raising" health-care premiums as part of his plan to let ObamaCare "implode." "I ran this government agency under President Obama," Slavitt wrote. "Make no mistake. Trump is purposely raising people's premiums."Slavitt was reacting to news reports that Oklahoma's health commissioner was blaming the Trump administration for missing a deadline to approve a waiver for the state, which Oklahoma officials say will mean higher premiums for thousands of residents. "Three days later, beyond health plan commitment and rate filing deadlines, Oklahoma is forced to withdraw our waiver request due to the failure of departments to provide timely waiver approval," Oklahoma Health Commissioner Terry Cline wrote to administration officials earlier Friday. "The lack of timely waiver approval will prevent thousands of Oklahomans from realizing the benefits of significantly lower insurance premiums in 2018," the letter added, saying approving the waiver would have helped more than 130,000 Oklahomans and reduced premiums by 30 percent. Trump has frequently threatened to end ObamaCare subsidy payments to insurers and let the program "implode" amid GOP efforts this year to repeal the health-care law. 

Trump told HHS to deny request to fix Iowa ObamaCare market: report | TheHill: President Trump told the head of the Centers for Medicare and Medicaid Seema Verma to deny a request from the Republican-controlled state of Iowa to fix their health-care marketplace, according to The Washington Post. According to the Post, Iowa officials sought for months to get federal permission to fix health insurance markets in their state, but they were shut down by Trump administration officials. Critics of the president say Trump's unusual move is a part of the administration's effort to undermine ObamaCare. The Department of Health and Human Services has reduced the health insurance enrollment time frame by half, cut the advertising budget and has cut funding that helps people receive coverage under ObamaCare. Democrats have called on the White House to stop undermining the health-care law. Sen. Maggie Hassan (D-N.H.) said on Friday the administration should halt its "attempts to sabotage health care markets and raise health care costs for millions," according to the Post. 

Democrats accuse Trump of ‘sabotage’ on Obamacare sign-ups - POLITICO: Obamacare's first open enrollment season under the Trump administration is expected to be a flop — and even the law's most ardent supporters are worried there's little they can do to change that. With less than a month before sign-up begins, the federal government has gutted outreach and marketing, slashed funding to outside enrollment groups and left state officials in the dark on key details.The enrollment window is only half as long as in previous years. — the main sign-up site for more than half the country — will be shut down for 12 hours nearly every Sunday. Regional health officials have been told not to participate in sign-up events sponsored by outside groups. And in the White House and Congress, Republican leaders continue to insist the entire market is on the brink of collapse. While the Trump administration failed to repeal Obamacare, it's doing everything it can to whack it administratively — pulling resources, while pursuing strategies that are likely to depress sign-ups for the law's fifth open enrollment. As a result, even supporters acknowledge that Obamacare enrollment will likely drop for a second straight year as more young and healthy people jump ship, putting even more stress on fragile markets and driving a fresh round of partisan bickering over who's to blame. "They're trying to sabotage the markets," said Sen. Claire McCaskill (D-Mo.), warning that Republicans are fully responsible for the law's fate. "It's now all them. It is all them. One hundred percent."

Time’s up: As CHIP expires unrenewed, Congress blows a chance to save healthcare for 9 million children - Advocates for children’s health started worrying months ago that congressional incompetence would jeopardize the nation’s one indisputable healthcare success — the Children’s Health Insurance Program, which has reduced the uninsured rate among kids to 5% from 14% over the two decades of its existence. Their fears turned out to be true. Funding for CHIP runs out on Saturday, and no vote on reestablishing the program’s $15-billion appropriation is expected for at least a week, probably longer. That’s the case even though CHIP is one of the few federal programs that has enjoyed unalloyed bipartisan support since its inception in 1997. The consequences will be dire in many states, which will have to curtail or even shut down their children’s health programs until funding is restored. Hanging in the balance is care for 9 million children and pregnant women in low-income households.  What happened? The simple answer is that congressional Republicans’ last harebrained attempt to repeal the Affordable Care Act got in the way. A funding bill for CHIP seemed to be well on its way to enactment until a week or so ago. That’s when the effort to pass the egregious Cassidy-Graham repeal bill sucked all the air out of the legislative room. Agreement on a bill had been reached in mid-September by Sens. Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.). “Momentum was building,” says Bruce Lesley, president of First Focus, a children’s advocacy group in Washington. Then came Cassidy-Graham, and “we couldn’t even get a meeting,” Lesley says. “No one was even taking our calls.”

Trump rolls back access to free birth control - BBC News: Donald Trump's government has issued a ruling that allows employers to opt out of providing free birth control to millions of Americans. The rule allows employers and insurers to decline to provide birth control if doing so violates their "religious beliefs" or "moral convictions". Fifty-five million women benefited from the Obama-era rule, which made companies provide free birth control. Before taking office, Mr Trump had pledged to eliminate that requirement. The mandate requiring birth control coverage had been a key feature of so-called Obamacare - President Obama's efforts to overhaul the US healthcare system. But the requirement included a provision that permitted religious institutions to forgo birth control coverage for their employees. The Department of Health and Human Services (HHS) said on Friday it was important to expand which organisations can opt out and deny free contraceptive coverage.

California Sues To Stop Trump Administration Rollback Of Insurance Birth Control Requirement - Within hours of the Trump Administration announcing two new rules that would allow businesses to opt out of offering their employees insurance that covers birth control, the attorney general for the state of California has filed a lawsuit to block the regulations from going into effect.Under current law, most employer-sponsored insurance must include coverage for contraception. There is an exception in the law for certain businesses run by religious organizations that oppose birth control. The new rules introduced today by the Department of Health and Human Services would expand that exemption to any business that opposes contraception on religious or moral grounds.“Donald Trump wants businesses and corporations to control family planning decisions rather than a woman in consultation with her doctor,” said California Attorney General Xavier Becerra in a statement this afternoon. “These anti-women’s health regulations prove once again that the Trump Administration is willing to trample on people’s rights.” Though the rules won’t be published in the Federal Register until Oct. 13 — and won’t become official until after a 30-day public comment period — Becerra’s office filed a lawsuit [PDF] in federal court, seeking an injunction to prevent the regulations from taking effect.   The complaint argues that, unlike the existing exemption specifically crafted for religious organizations, the new rules would allow any employer to sidestep its legal obligation to provide this coverage by simply claiming it objects to birth control. There is, according to Becerra, “not even a requirement that the employer notify the federal government of a decision to stop providing contraceptive coverage.”

Trump administration weighing executive order on welfare - POLITICO: Trump administration officials are mulling an executive order that would instruct federal agencies to review low-income assistance programs, part of a coming effort to make sweeping changes to the country’s welfare system. The White House began circulating a draft order to federal agencies for comment last week, according to two administration officials, who were granted anonymity to discuss the internal deliberations. Story Continued Below One of the officials said the draft order calls on agencies to review existing regulations and propose new rules that conform to a set of broad welfare principles, including tighter work requirements that encourage recipients to shift back into the labor force. The order also calls for streamlining or eliminating duplicative services and establishing metrics for holding agencies accountable for program performance. It also encourages greater cooperation with state and local governments. The initiative comes as President Donald Trump shifts attention to his ambitious tax reform initiative in the wake of his failed effort to repeal Obamacare. Administration backers of the welfare executive order hope he signs it before Thanksgiving, one of the officials said.

GOP lawmakers say Trump wants tough measures in Dreamers deal - POLITICO: Democrats left a dinner last month with President Donald Trump enthusiastically touting a deal for “Dreamers.” Republicans who dined at the White House on Monday say Democrats may want to check the fine print. Influential GOP lawmakers say Trump laid out a much more expansive and rigid set of demands Trump wants from Congress in any agreement to turn the expiring Deferred Action for Childhood Arrivals program into law. House Majority Leader Kevin McCarthy (R-Calif.) said he made the case to Trump that funding for a border wall should be part of any legislative package on DACA. Asked if Trump agreed, McCarthy said yes — which would go counter to an agreement that Democratic leaders thought they had struck last month. One other new requirement, according to one Republican senator who attended: Congress needs to pass a bill that addresses solely the current population of DACA recipients, rather than a broader circle of young undocumented immigrants. “The president was very clear. Any effort to codify DACA needs to, one, be limited to DACA so the first criteria under the law should be you have a DACA permit today,” Sen. Tom Cotton (R-Ark.) said in an interview Tuesday. “Second, any deal has to end chain migration. And then third, it ought to include some kind of enhanced measures, whether it’s on the border or interior enforcement or what have you.” Trump’s latest wish list is a far cry from the basic border-security-for-Dream-Act exchange that he laid out to House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) during their own dinner last month. And it could spell trouble for the prospects of reaching an immigration deal with Democrats, whose votes will be needed to pass any Dreamer bills but will be reluctant to swallow any dramatic enforcement measures or other restrictive provisions.

Thousands of Dreamers could lose protection as DACA deadline arrives - Some 48,000 eligible unauthorized immigrants have yet to renew their immigration status as a part of the Deferred Action for Childhood Arrivals (DACA) program, despite this week's Oct. 5 deadline to renew.Of the 154,200 individuals whose DACA status is set to expire between Sept. 5, 2017, and March 5, 2018, just over 106,000 either have renewal requests currently pending with the federal immigration agency or have already had their renewal requests adjudicated, according to the Department of Homeland Security (DHS), which manages the program.The deadline is part of what DHS is calling an "orderly wind down" of the program, which the Trump administration announced at the beginning of September that it was rescinding. The program will phase out over the next six months, leaving the fate of Dreamers in the hands of Congress.No new applications were accepted after the announcement on Sept. 5 and renewals will only be accepted until Thursday for certain categories of recipients. If legislative action is not taken, DACA recipients could begin to lose benefits on March 6, 2018. Eligible DACA recipients have until this Thursday, Oct. 5th to "properly file their renewal request and associated application for employment authorization to U.S. Citizenship and Immigration Services (USCIS)," DHS said in a press release Tuesday."For individuals who are still eligible to request renewal of their deferred action under DACA, but have not yet done so, I urge you to make this a priority," said Acting DHS Secretary Elaine Duke in a statement earlier this week.

Trump’s ICE snitch-line is full of people secretly trying to deport their in-laws - Since April, Trump's Immigration and Customs Enforcement has been running a snitchline called "Victims of Immigration Crime Engagement (VOICE)" whose mission is to "provide proactive, timely, adequate, and professional services to victims of crimes committed by removable aliens."It's an 800 number you call to get your neighbors deported.Reporters from Splinter News used the Freedom of Information Act to get logs of these calls (alarmingly, ICE doxed a bunch of the callers and their victims by posting a spreadsheet with Social Security Numbers, home addresses, and phone numbers). What they found is a ghastly assortment of people secretly trying to get rid of their husbands' mistresses, their wives' children from earlier marriages, and their in-laws, as well as lots of petty grievances and score-settling. Then there was the charming gentleman who was trying to get his wife deported because she'd brought charges against her for beating her up.

  • Caller requested to report her mother-in law and sister-in law. Caller stated these individuals came to the U.S. as tourists and stayed in the U.S. in order to get legal status.
  • Caller stated the undocumented individual is destroying her family and is committing adultery.
  • Caller requested to report his ex wife that is undocumented as an overstayed on her visa.
  • Caller requested to report the illegal alien because the illegal alien will not let her see [her] granddaughter.
  • Caller requested to report an undocumented alien who is accusing him of domestic violence in order to obtain legal status. Caller claims subject is his legal wife.

Could Puerto Rico be Expelled for its "Tremendous" Debt? - Credit Slips - We would not exactly call ourselves avid readers of the US Navy blogs. But there is an interesting post on the U.S. Naval Institute Blog today on Puerto Rico and debt by Commander George Capen (retired). The context that inspired his blog post was the behavior of our president toward the current crisis in Puerto Rico. To quote:  “Ultimately, the government of Puerto Rico will have to work with us to determine how this massive rebuilding effort—will end up being one of the biggest ever—will be funded and organized, and what we will do with the tremendous amount of existing debt already on the island.” – President Donald J. Trump, 29 September  Commander Capen, whose post is worth reading in its entirety, writes: Puerto Rico didn’t ask to become a U.S. territory in 1898; nor do they get to vote in U.S. elections; nor do they have voting representation in Congress. But they are Americans. And they also voted to become a state (over 97 percent) earlier this year. As an unincorporated commonwealth, our Congress holds the fate of Puerto Rico in their hands. Following their vote for statehood, our Congress can make Puerto Rico a state. Congress could also vote to cast Puerto Rico aside as an independent nation.That final statement raises a question that we have been fascinated by (and have struggled with). Could Congress really “cast Puerto Rico aside as an independent nation,” even stripping Puerto Ricans of their US citizenship, because they have a “tremendous debt”?If one thinks that the constitution gives Congress complete authority to do whatever it wants with the territories and their people, then the answer is yes. And that was almost certainly the view in the early 1900s when the infamous Insular Cases were decided.  But today? The Insular Cases have never been overruled, and so are technically still good law, but they reflect a mindset–and racist attitudes – that would surely give any judge pause. Most constitutional decisions of that ilk have been overturned, and efforts have been made to inter the Insular Cases as well.

'Civil Society Is Pretty Much Gone' in Puerto Rico as White House Scrambles to Defend Slow Response -- President Trump spent the weekend playing golf and attacking Puerto Rican leadership on Twitter while the island remains in a state of severe crisis and recovery moves at a "glacial pace." While FEMA aid has begun reaching remote parts of the island, severe shortages of food, water and diesel are grinding on residents from rich and poor regions as 95 percent remain without electricity nearly two weeks after Hurricane Maria hit. Critics in the U.S. and Puerto Rico said that the administration's robust defense of its disaster response—including numerous tweets from the president—only serves to highlight inadequacies and inaccuracies in its reaction, while ignoring the extremely complex nature of the problem. "We have to think of this as societal collapse: no power, no water, no food, no nothing," a disaster response official told Politico Friday. "We came in thinking this would be a traditional model of disaster response … It is up to us to keep everything moving. Civil society is pretty much gone, and we didn't realize that until like 36 or 48 hours ago. And who knows when it's going to end."  In a memo to colleagues leaked this weekend by Axios , Homeland Security adviser Tom Bossert instructed the White House how to "pivot" White House messaging on Puerto Rico this week, emphasizing that "the storm caused these problems, not our response to it."

Who Is Carmen Yulín Cruz, the Puerto Rican Mayor Criticized by Trump? - When Carmen Yulín Cruz was a long-shot candidate for mayor here in 2012, she cast herself as a “pitirre,” a small bird known for fearlessly attacking larger ones. Now in her second term as mayor of San Juan, the capital of this storm-ravaged island, Ms. Cruz, 54, finds herself in a high-profile altercation, having publicly criticized the Trump administration for its response to the damage wrought by Hurricane Maria and getting plenty of reproach from Mr. Trump on Saturday in return. In Puerto Rico, her outspokenness has come as little surprise. Before the hurricane Ms. Cruz was known for a left-leaning populist streak and a tendency to speak in blunt and emotional terms. “We are dying here,” she said in a news conference Friday, her eyes filling with tears, as she issued a verbal distress signal. “Mayday.” Ms. Cruz even went to evacuate residents of an assisted living facility after a fire broke out there. Asked why she did so herself, when it could come across as showboating, she was quick with her response. “That is my job,” she said Saturday in an hourlong interview at her command center, after answering, in strong language, that she did not care how her efforts were perceived. “My job is to make life better for people, and you cannot make life better if you are in a helicopter. You can’t make life better for them if you can’t touch them.” Ms. Cruz said she had no time for petty politics when there were lives to save. “Sometimes you have to shake the tree in order to make things happen,” she said. “And if that has a political cost, I will take it, as long as it saves lives.” Her post-hurricane style has been at stark odds with that of Gov. Ricardo A. Rosselló, who praised the Trump administration’s response this week. “Whenever we have an ask for this effort, they have delivered,” said Mr. Rosselló, a member of the New Progressive Party, which favors Puerto Rican statehood. 

Trump’s Disgraceful Puerto Rico Attack -  American Conservative - Trump’s attack on San Juan’s Mayor Yulin Cruz this morning included a broader insult to people in Puerto Rico: At 7:09 a.m., Trump wrote: “The Mayor of San Juan, who was very complimentary only a few days ago, has now been told by the Democrats that you must be nasty to Trump.” Seven minutes later, he wrote: “…Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help. They….” “…want everything to be done for them when it should be a community effort [bold mine-DL]. 10,000 Federal workers now on Island doing a fantastic job.” Attacking a local official who is pleading for help in the middle of a major disaster would be a cruel and politically inept thing to do in any case, but Trump manages to make it worse by casting blame on the overall local response in the wake of what is generally acknowledged to be the worst disaster in Puerto Rico’s history. He accuses leaders in Puerto Rico and the population more generally of wanting “everything to be done for them” because one of their politicians criticized the federal government for an inadequate response to the disaster. That’s a contemptible response to legitimate criticism, and a disgraceful way to treat Americans who are going through one of the biggest disasters on record. Trump cannot excuse the lacking federal response by pointing to the scale of the disaster and then fault local officials for not doing enough, and it is obnoxious to suggest that the “community effort” has been insufficient when this is a disaster that he very publicly neglected for most of the last week.

At Least Nero Fiddled -- Menzie Chinn  Source: The Hill. From the Twitter feed of realDonaldTrump, commenting on the crisis in Puerto Rico this morning:  Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help. They want everything to be done for them when it should be a community effort. 10,000 Federal workers now on Island doing a fantastic job. Mr. Trump has suggested the difficulty in delivering assistance to the 3.4 million American citizens in Puerto Rico is due to geography.“We’ve gotten A-pluses on Texas and in Florida, and we will also on Puerto Rico,” Trump said at the White House. “But the difference is this is an island sitting in the middle of an ocean. It’s a big ocean, it’s a very big ocean. And we’re doing a really good job.” Here is a relevant comparison, from WaPo:After an earthquake shattered Haiti’s capital on Jan. 12, 2010, the U.S. military mobilized as if it were going to war.Before dawn the next morning, an Army unit was airborne, on its way to seize control of the main airport in Port-au-Prince. Within two days, the Pentagon had 8,000 American troops en route. Within two weeks, 33 U.S. military ships and 22,000 troops had arrived. More than 300 military helicopters buzzed overhead, delivering millions of pounds of food and water.No two disasters are alike. Each delivers customized violence that cannot be fully anticipated. But as criticism of the federal government’s initial response to the crisis in Puerto Rico continued to mount Thursday, the mission to Haiti — an island nation several hundred miles from the U.S. mainland — stands as an example of how quickly relief efforts can be mobilized.By contrast, eight days after Hurricane Maria ripped across neighboring Puerto Rico, just 4,400 service members were par ticipating in federal operations to assist the devastated island, an Army general told reporters Thursday. In addition, about 1,000 Coast Guard members were aiding the efforts. About 40 U.S. military helicopters were helping to deliver food and water to the 3.4 million residents of the U.S. territory, along with 10 Coast Guard helicopters.

The Military Was Ready in Texas and Florida. What Went Wrong in Puerto Rico? - Nearly two weeks after Hurricane Maria’s landfall, the Trump administration’s military aid to Puerto Rico may not be too late if it can save lives and ease the suffering of millions. But it is undisputedly arriving in amounts too little and too slowly, in sharp contrast to recent responses around the world and, most recently, elsewhere in the United States during this hurricane season.Over the past few years, the military has conducted textbook operations in Pakistan, Japan, Thailand and Haiti—pumping in massive amounts of aid after devastating earthquakes and hurricanes in those countries, no matter how rough or isolated the conditions. Just weeks ago, the military response to Hurricane Harvey in Texas was rapid and powerful. In preparation for Hurricane Irma, the Trump administration again ordered up an extensive military relief operation. But when Hurricane Maria struck at full strength several days later—precisely as advertised, and similar in scale to Harvey—the U.S. military simply called off the huge resources it had mustered for Hurricane Irma. An inadequately small military contingent was left on its own for nearly two weeks to help with the damage. If there was a plan for disaster relief it was not publicly apparent. And on-scene commander—crucial in crises this large—was not appointed until nearly 10 days after landfall.  No less an authority than the three-star general who reversed the disastrous initial federal response to Hurricane Katrina back in 2005, retired Army Lt. Gen. Russell Honoré, said as much. “We’re replaying a scene from Katrina,” he said on National Public Radio about Maria on Thursday. “We started moving about four days too late.” That seems overly generous. In Washington, the president has given himself and his administration “A-pluses” for their response to Maria, claiming his administration is “doing a very good job.” At the same, time, the military leadership has come off as brutally slow and suspiciously defensive. For example, testifying on Capitol Hill last Tuesday, Gen. Joseph Dunford, chairman of the Joint Chiefs, reportedly squawked that the ports and airports weren’t readily accessible.  Yet there are 15 airports or airfields in Puerto Rico, including on the smaller and remote islands of Culebra and Vieques. On Wednesday, by the Pentagon’s own count, nine airports in Puerto Rico were open. Only Thursday did the Northern Command announce that it was “adjusting” from a small seaborne operation to a larger airlift, emphasizing big cargo planes. Three harbors in Puerto Rico and eight in the Virgin Islands were serviceable to one degree or another, according to the military.

"This Is Textbook" - Military Officials Defend Trump Administration's Puerto Rico Response --A steady drumbeat of criticism accusing the White House of not doing enough to hasten the federal government’s relief effort in Puerto Rico has metastasized into yet another political dogfight, as President Trump and the White House respond to an outpouring of outrage from celebrities, politicians and local officials over the administration’s purported inaction over the response.The backlash to what we imagine the media will soon tag as “Trump’s Katrina” began earlier this week when Hillary Clinton and Marco Rubio urged the president to leverage the full might of the US military to aid the disaster response.But an emotional plea from San Juan Mayor Carmen Yulin Cruz during a press conference late Friday helped elevate the issue to the forefront of the public’s consciousness, eliciting an avalanche of condemnation from celebrities, Democratic politicians, and basically every group that opposed Trump during the election. Army Lt. Gen. Jeff Buchanan said Friday morning that the Pentagon has 10,000 people helping with the response to Hurricanes Maria and Irma – an unprecedented number. But even that number isn’t enough, he said.   As the Hill points out, the Pentagon initially sent 4,000 troops to help in rescue and restoration efforts to Puerto Rico and the Virgin Islands, but it wasn’t until Thursday, eight days after Maria slammed the Caribbean, that US Northern Command (Northcom) sent Buchanan. However, at least one administration official quickly pointed out that the early phases of the relief effort had been coordinated by the Navy, and that Buchanan's appointment coincided with FEMA taking the reins of the recovery effort.   Tom Bossert, Trump’s homeland security adviser, defended the lag between when the storm hit and when Buchanan was appointed.“It didn’t require a three-star general eight days ago,” Bossert said of the government response.When asked whether it was a mistake to not have Buchanan on the ground in Puerto Rico earlier, Bossert replied, “No, not at all.”“In fact, that doesn’t affect the way that we stage equipment and the way we area command and field operational command. This is textbook and it’s been done well,” Bossert told reporters Thursday at the daily White House press briefing.

Factbox: Relief efforts in Puerto Rico after Hurricane Maria (Reuters) - Puerto Rico, a U.S. territory of 3.4 million people, struggled through a 10th day with virtually no electricity, patchy communications and shortages of fuel, clean water and other essentials in the wake of Hurricane Maria, the most powerful storm to hit the island in nearly 90 years.  The storm struck on Sept. 20 with lethal, roof-ripping force and torrential rains that caused widespread flooding and heavily damaged homes, roads and other infrastructure.  These are the resources deployed by the United States to Puerto Rico as of Saturday:

  • - There are about 4,500 U.S. troops on the ground in Puerto Rico, including active duty and national guard. An additional 1,400 National Guard members are expected to arrive in Puerto Rico in four days.
  • - Forty-three officials from the Federal Emergency Management Agency, teams of U.S. Army Corps of Engineers and more than 1,600 National Guard members had sheltered in place during the storm.
  • - The U.S. military has the USS Kearsarge and Oak Hill, amphibious assault ships, assisting in relief efforts. The USS Wasp, which has completed relief efforts off the coast of Dominica, will soon be joining them.
  • - The USNS Comfort, a hospital ship, is en route to Puerto Rico and expected to arrive on Oct. 4. The Comfort is equipped to carry up to 1,000 hospital beds, 12 operating rooms and one of America's largest trauma units.
  • - Fifty-two tilt/rotary-wing aircraft are taking part in efforts, according to the Pentagon.
  • - A Defense Logistics Agency shipment of 100 trucks with diesel and fuel will arrive in next few days.
  • - The Defense Logistics Agency is preparing to distribute potentially 160 million meals in 30 days.
  • - By Friday, 15,000 gallons of propane were expected to arrive in Puerto Rico.
  • - On Thursday, a C-5C aircraft landed with a generator to help radar approach operations, the Pentagon said.
  • - There are 4,000 people working to restore electricity and private U.S. companies will be bringing in 1,000 additional workers this weekend, the Puerto Rico Electric Power Authority (PREPA) said.
  • - Only 5 percent of the electricity grid had been restored by Saturday, FEMA officials said.
  • - About 50 percent of people on the island had access to water on Friday, according to FEMA.
  • - The U.S. Army Corps of Engineers has completed a damage assessment at the Guajataca dam and repairs are scheduled to begin on Sunday and Monday.
  • The dam's spillway continues to erode following 2 to 3 inches (5 to 7.5 cm) of rain over the past day, with another 2 to 4 inches each day over the next two days expected, the military said, citing the National Oceanic and Atmospheric Administration.
  • - The Pentagon said eight airports are open and one is still closed.
  • - Five of the six FEMA-priority sea ports are open or open with restrictions, according the U.S. military.
  • - A Pentagon release, citing FEMA, said 851 of 1100 retail gas stations had re-opened by Saturday morning.
  • - About 90 percent of cell phone sites on the island remain out of commission, according to the U.S. Federal Communications Commission.
  • - About 33 percent of the overall telecommunications network had been restored as of Saturday afternoon, FEMA said.
  • - According to a Pentagon update, which cites FEMA, 59 of the island's 69 hospitals were fully or partially open and five were closed. Five other hospitals not yet assessed by the military do not provide emergency care.

The Situation in Puerto Rico: Power, Water, and PROMESA - Lambert Strether - Clinton proposed sending an unfit for purpose hospital ship, which somebody in the administration with an eye for optics promptly did.) Yglesias, for example, focuses on Trump’s failings as a man and a President, rather than using his undoubted wonkish skills to propose an alternative plan. To the extent the political class focuses on operations at all, it’s at the level of “Treat Puerto Rico like D-Day!” or “If America can put a man on the moon, we can help Puerto Rico!” One likes a can-do attitude, but one can’t help feeling that these hot takes are a bit light on detail. With that said, here’s a handy dashboard from the Puerto Rican goverment that shows the status of various systems on the island. In this post, I’m going to focus on the two systems that are in the worst shape: Power, at 5% coverage of the island, and water, where coverage differs by region: Metro, 57%; Norte, 29%; Oeste, 20%; Sur, 67%; and Este, 50%. But first, I’m going to look at one factor that differentiates the “natural” disaster of Maria in Puerto Rico from others on the mainland; then I’ll show how that factor affects the power system, and then cascades to affect the water supply.  That one factor is, of course, finance. One difference between New Orleans (Katrina), Florida (Irma), and Texas (Harvey) on the one hand, and Puerto Rico (Maria), on the other, is that only Puerto Rico is under an austerity regime, imposed, during the Obama administration. José A. Laguarta Ramírez described this regime (PROMESA) at Naked Capitalism in 2016:The U.S. House of Representatives approved PROMESA on the evening of June 9, following a strong endorsement by President Barack Obama. The bill, which would also impose an unelected and unaccountable federal oversight board and allow court-supervised restructuring of part of the island’s $73 billion debt, now awaits consideration by the Senate…. Puerto Rico is not the only place, under the global regime of austerity capitalism to face predatory creditors and the imposition of unelected rulers —as illustrated by cases like Argentina, Greece, and post-industrial U.S. cities such as Flint, Mich.— but its century-old colonial status has made it particularly vulnerable and defenseless.The House vote followed a concerted, carefully timed media push by the Democratic establishment, on the premise that “despite its flaws” PROMESA represents a bipartisan compromise that is, in Obama’s words, “far superior to the status quo.” PROMESA’s oversight board, which will be staffed by San Juan and Washington insiders with the bondholders’ best interests at heart, is sure to continue to impose draconian austerity measures that have already slashed much-needed social services.

Fed's emergency cash plan swings into action in Puerto Rico -- More than a week after Hurricane Maria ripped through Puerto Rico, downing power lines and washing away homes, public attention has been directed toward the federal response, as the Defense Department and other agencies address an escalating humanitarian crisis. Less visible, but also vital, in the recovery effort is the Federal Reserve. The Federal Reserve's nationwide preparedness plan for cash emergencies is being put to a unique test in Puerto Rico. Stocks are being replenished with daily flights, but the lack of power to ATMs and branches is contributing to reports of cash shortages.

Trump To Seek Additional $10-$15 Billion In Disaster Funds Amid Puerto Rico Fallout --Following a disagreement with San Juan mayor Carmen Yulin Cruz that seemingly turned into a full-blown political feud over the weekend, Politico is now reporting that the Trump administration will seek an incremental $10-$15 billion in disaster relief funding to help with recovery efforts in Texas, Florida and Puerto Rico.The Trump administration will ask Congress to approve another between $10 billion and $15 billion for the FEMA disaster relief fund this week, according to sources with knowledge of the request. We hear the magic number will be $13 billion. This is meant to begin to cover the cost of the spate of recent natural disasters, including the storm in Puerto Rico.For those who may have missed the chaos, Trump's feud with Cruz escalated on Friday after the mayor took to the airwaves to make an emotional plea for help...a plea that was interpreted by the Trump administration to be nothing more than a cleverly planned political stunt to exploit the ongoing crisis in Puerto Rico.  Per Politico:It was a direct response to her emotional news conference Friday night, in which she begged the president for more help. “We are dying here,” Cruz said, slamming down two thick binders of documentation that San Juan had provided to the Federal Emergency Management Agency to obtain help.In another world, Cruz’s frustration with the layers of bureaucracy standing between her wiped-out city and food and water delivery might have been in line with Trump’s own interest in cutting regulations and red tape.The props she used were similar to charts Trump has wielded at news conferences to demonstrate how obtuse the country’s permitting and regulatory process can be. But Cruz’s plea was interpreted by Trump as a personal insult.

Trump Tells Puerto Rico "You've Thrown Our Budget A Little Out Of Whack" -  (video)For the first time since Hurricane Maria battered Puerto Rico with flash floods and 160 mph+ winds two weeks ago, President Donald Trump and first lady Melania traveled to San Juan on Tuesday to survey the damage and hold meetings about the relief effort with military and local officials.The appearance was meant to be tightly scripted, the Washington Post reported. But as is his custom, the president at the last minute decided to deliver some off the cuff remarks that were seemingly intended to stoke controversy.As the Hill reports, during the meeting, the president appeared in good spirits as he circled the room praising officials in his administration and Puerto Rican officials. When he arrived at OMB Director Mick Mulvaney, Trump ribbed his budget director by saying “Mick is in charge of a thing called the budget.”Then, in what was probably intended as a humorous jab at Mulvaney’s expense but will probably provoke outrage from the president’s detractors, who’ve already criticized his remarks about Puerto Rico’s finances, Trump joked that Hurricane Maria had thrown the federal budget “a little out of whack.”“I hate to tell you, Puerto Rico, but you've thrown our budget a little out of whack because we spent a lot of money on Puerto Rico, and that's fine,” Trump said. “We saved a lot of lives.”Later in the meeting, the president compared the Hurricane Maria favorably with Hurricane Katrina, saying that that first responders should be “very proud” of the low death count.  “Every death is a horror, but if you look at a real catastrophe like Katrina, and you look at the tremendous — hundreds and hundreds and hundreds of people that died, and you look at what happened here, with really a storm that was just totally overpowering, nobody’s ever seen anything like this,” Trump said, before turning to a local official to ask how many people had died in storm. “What is your death count as of this moment? 17? 16 people certified, 16 people versus in the thousands.”

San Juan mayor tells President Trump 'it's not about politics' -- San Juan, Puerto Rico Mayor Carmen Yulin Cruz told President Donald Trump Tuesday that hurricane relief efforts on the island were "not about politics," days after Trump sparred with Cruz via Twitter over her criticism of the federal government's response. "It’s all about saving lives, it’s not about politics," said Cruz to Trump as they shook hands following a briefing earlier in the day. Trump accused Cruz of “poor leadership” and speculated that "Democrats" told her to "be nasty to Trump" in a barrage of tweets over the weekend after the mayor denounced a comment by the acting Homeland Security Secretary Elaine Duke, who said last week she thought the federal government's reach in Puerto Rico was "a good news story." It was originally unclear if Trump and Cruz would meet, but on Tuesday morning Cruz announced that she had been invited to the briefing and had accepted."I will use this opportunity to reiterate the primary message: This is about saving lives, not about politics; this is also about giving the people of Puerto Rico the respect we deserve; and recognizing the moral imperative to do both," said Cruz prior to the meeting in a statement. Trump touted the response to Hurricane Maria as he attended the briefing on relief efforts, noting that the territory's officials "can be proud" of the relatively low death toll on the island compared to Hurricane Katrina in 2005.

Trump says Puerto Rico officials should be 'proud' more haven't died like in Katrina - President Donald Trump on Tuesday told Puerto Rican officials they should feel "very proud" they haven't lost hundreds of lives like in "a real catastrophe like Katrina," while adding that the devastated island territory has thrown the nation's budget "a little out of whack." Trump's remarks came as he touched down in San Juan for his first visit to Puerto Rico since the storm ravaged the island nearly two weeks ago. He has faced criticism for the slow federal response to the natural disaster, although he praised himself earlier in the day for his administration's "great job" and "A-plus" response to Hurricane Maria. "Every death is a horror, but if you look at a real catastrophe like Katrina, and you look at the tremendous - hundreds and hundreds and hundreds of people that died, and you look at what happened here, with really a storm that was just totally overpowering, nobody's ever seen anything like this," Trump said, before turning to a local official to ask how many people had died in storm. "What is your death count as of this moment? 17? 16 people certified, 16 people versus in the thousands." Trump then praised officials in the room over the death toll. "You can be very proud of all of your people, all of our people working together," he said. The president also seemed to fault the small island for imperiling the United States's budget by requiring hurricane relief funds, saying, "I hate to tell you, Puerto Rico, but you've thrown our budget a little out of whack."

Trump brings harsh edge to Puerto Rico trip - President Donald Trump brought a jarring tone to Puerto Rico as he toured the hurricane devastation Tuesday, appearing to blame the U.S. territory for having “thrown our budget a little out of whack” and complimenting officials for sustaining only 16 deaths, compared with the much higher human toll of Hurricane Katrina. “I hate to tell you, Puerto Rico, but you’ve thrown our budget a little out of whack because we’ve spent a lot of money on Puerto Rico,” Trump said as he met with local officials from the island, which declared a form of bankruptcy in May. “And that’s fine.”The president also appeared to boast that the death toll in Puerto Rico pales in comparison to the more than 1,800 fatalities that followed Katrina in 2005. “We saved a lot of lives,” said Trump, who added that “every death is a horror” and broached what he called “a real catastrophe” in Katrina. “Sixteen people versus in the thousands,” the president said, overstating Katrina’s death toll. “You can be very proud of all of your people, all of our people working together,” he told Gov. Ricardo Rosselló. “Sixteen versus literally thousands of people. You can be very proud. Everybody around this table and everybody watching can really be very proud of what’s taken place in Puerto Rico.” A Rosselló spokesman said Tuesday night that the death toll had more than doubled, to 34, news agencies reported. 

San Juan mayor hopes Trump stops ‘spouting’ comments that are ‘hurtful to the people of Puerto Rico’ -- San Juan Mayor Carmen Yulin Cruz speaks to the media as she arrives at the temporary government center setup at the Roberto Clemente stadium in the aftermath of Hurricane Maria Getty Images The mayor of San Juan mayor has said she hopes Donald Trump will “stop spouting out comments that are hurtful to the people of Puerto Rico”. “It doesn’t make you feel good,” Carmen Yulin Cruz told CNN, responding to the President’s controversial comments during his visit to the hurricane-ravaged island. Along with saying Puerto Rico had “thrown our budget a little out of whack”, Mr Trump also claimed officials should be “proud” only 16 people had died as the result of Hurricane Maria, unlike in catastrophes such as Hurricane Katrina. The death toll was later revised upward to 34 casualties on the island. More than 1,200 people died as a result of Katrina, which was one of the deadliest hurricanes in US history. However, the number of confirmed deaths in Puerto Rico due to Maria is expected to rise dramatically in the coming days, according to experts.  Currently, only a small percentage of Puerto Rico’s population has electricity. Around half of residents also do not have access to fresh drinking water, and only a third can make use of their mobile phones.

Trump’s war of words with Puerto Rico is masking the true scale of the disaster -  Upon arriving in San Juan, President Trump himself appeared to use the low death toll to suggest the disaster was not as bad as all that. Nothing like Hurricane Katrina in Louisiana, he piped up.The blame-sharing for the treacle-slow start to the federal government’s recovery efforts in Puerto Rico will not end soon. Even before leaving Washington for San Juan on Tuesday, Donald Trump was again congratulating himself on “what a great job we’ve done” and suggesting it was time that the “truck drivers start driving trucks”. As if they weren’t already. That Trump continues to speak in such divisive terms to the Puerto Ricans is inexcusable. It does him no favours politically. And it certainly doesn’t help the people of the island. All they need to hear is that the United States cares about them and will bring them aid and comfort. The confrontational back and forth, especially between Trump and the spirited mayor of San Juan, Carmen Yulin Cruz, is meanwhile obscuring many of the truths lying behind what went wrong in the early days of the crisis. Why, for example, the USNS Comfort, one of the Navy’s two hospital ships, docked at the port in San Juan only on Tuesday when it could have arrived days ago if the Pentagon had grasped complicating factors behind the catastrophe a little faster.  One is that Puerto Rico is an island. Trump has been widely ridiculed, notably by Alec Baldwin impersonating him on Saturday Night Live, for mentioning this fact. It did sound a little ridiculous from a country who put someone on the moon. Yet, it clearly makes the logistics of getting aid to the territory much more difficult than it was for Texas or for Florida. For days, the airports were almost unusable. Landing radars were out. Terminals were without power and so on. The President moreover forgot all empathy, suggesting the island itself had fallen short in getting things moving. Again, though, the point had some legitimacy, even if it didn’t have to be aired. Governor Ricardo Rossello has not been long in office. He is 36 years old with an inexperienced staff. He would surely admit he was not entirely prepared for the scale of devastation. To put Maria in perspective, past hurricanes have cost Puerto Rico millions of dollars. Irma, which hit days earlier, did damage of about $30m. The damage from Maria will run into the billions. 

Puerto Rico Relief Efforts Pale to that for Just One Wall Street Bank -  Pam Martens - With 3.4 million fellow American citizens undergoing an epic humanitarian crisis in Puerto Rico, a United States territory, as critically-needed food and water remain undistributed for lack of manpower and proper logistical coordination by the Trump administration, there is no better time than the present to assess how corporate welfare trumps the rights of individual citizens of the United States.President Trump, the man who ran on a so-called populist agenda, has Tweeted the following regarding the situation in Puerto Rico (italic emphasis added below):

  • September 25: It’s old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities – and doing well.
  • September 29: The fact is that Puerto Rico has been destroyed by two hurricanes. Big decisions will have to be made as to the cost of its rebuilding!
  • September 30: Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help. They want everything to be done for them when it should be a community effort.

But when the President invoked the “billions of dollars owed to Wall Street and the banks which, sadly, must be dealt with” in the earliest days of this humanitarian disaster, he topped even Romney for his callous disregard for American citizens who were not born with a silver spoon in their mouth. The U.S. government’s treatment of debt-riddled Puerto Rico today and the serially-charged, debt-riddled Wall Street banks before, during and after the 2008 financial crash of their own making, says all we need to know about the fragility of democracy in the U.S. today. In 2007, long before most Americans realized how financially distressed Wall Street had become, the Federal Reserve (the central bank of the U.S.) secretly began funneling money under the table to some of the biggest financial firms in the world at almost zero percent interest. After the media filed Freedom of Information Act lawsuits to find out the extent of this handout to Wall Street and Senator Bernie Sanders added an amendment to the Dodd-Frank financial reform legislation, the bipartisan watchdog for Congress, the Government Accountability Office (GAO), finally revealed in 2011 that the Fed has sluiced $16 trillion in secret cumulative loans to Wall Street banks and their foreign counterparties between 2007 and 2010. Just four banks, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America received $7.8 trillion, almost half of the total $16 trillion. (See chart below from the GAO report.) Senator Bernie Sanders poignantly said about the bailout: “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

 Trump Says Puerto Rico Debt Needs to be Wiped Out -- Yves Smith - Mind you, not only is Trump capable of saying five contradictory things before breakfast, but he very rarely says the same thing over time (save declaring things he says he’s done to be “great”).  Nevertheless, having Trump go off the Wall Street/neoliberal script, likely by virtue of his own experience with bankruptcy, and say that debts that can’t be won’t be, is one of his occasional displays of speaking inconvenient truths. Does anyone want to place a bet as to how long it takes one of Trump’s Goldman operatives to walk his remarks back?  And speaking of Goldman, notice that Trump takes an explicit swipe at the investment bank turned Beltway heavyweight. He must be chafing at have been leashed and collared by the generals and the Goldmanites.  From Reuters:President Donald Trump said on Tuesday while on a trip to Puerto Rico to observe hurricane recovery efforts that the island’s massive debt will have to be wiped out. “They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out. You’re going to say goodbye to that, I don’t know if it’s Goldman Sachs but whoever it is you can wave goodbye to that,” Trump said in an interview with Fox News.  CNBC picked up on the Reuters story quickly and highlighted the bleak fundamentals: Even before the storm brought Puerto Rico to a near standstill, the government there already struggled with an economy in shambles and a default on billions of dollars of public debt. Today, the U.S. territory has nearly $70 billion in debt, an unemployment rate 2.5 times the U.S. average, a 45 percent poverty rate, nearly insolvent pension systems and a chronically underfunded Medicaid insurance program for the poor. Puerto Rico’s job base continues to shrink, taking its economy along with it. Since the recession ended, a lack of job prospects has sent many Puerto Ricans fleeing to the mainland, where the job market is much stronger. However, it is unlikely that Goldman would suffer much, if at all, in a Puerto Rico bankruptcy. It might hold some bonds in its trading inventory, but its big exposure would come via funds it manages. On those, under the Volcker Rule, Goldman is limited to owning a small percentage of the equity investment in the fund (3% is the nominal amount, although there may be some tricks of the trade for increasing the exposure).  But David Dayen has found one of the big owners of Puerto Rico debt, as reported in a new story at the Intercept. If you read the article in full, tracking down the who was behind the shell company used to hide the ultimate owners is very reminiscent of the sort of gumshoe work that Richard Smith does chasing international scammers:

 Puerto Rico GO Bonds Collapse After Trump's "We're Gonna Wipe That Out" Comment - Echoing President Obama's interference in the legal bondholder process of General Motors bankruptcy, President Trump's comments that Puerto Rico's debt "will be wiped out" yesterday has sparked a bloodbath in PR Muni bonds. Puerto Rico GO bonds traded down to 35c this morning on almost zero liquidity, compared to what the smartest guys in the room paid 75c for just 6 months ago as they demanded a par bailout funded by US tax payers.“We are going to work something out. We have to look at their whole debt structure,” Trump said during an interview on Fox News Tuesday.“You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be - you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.” And this is the result...

Puerto Rico’s Debt Is Quietly Sitting in Mom and Pop Mutual Funds as Trump Says It Will Be Wiped Out -  Pam Martens -  There was likely a collective gasp at OppenheimerFunds Inc. yesterday when President Donald Trump made another of those market-moving pronouncements, telling Fox News that Puerto Rico’s debt would have to be wiped out. The President’s remarks suggested he thought the losers would be Wall Street banks. The President stated: “You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.” The reality is that a large percentage of Puerto Rico’s debt is held in tax-free municipal bonds and municipal bond mutual funds, owned not by Wall Street banks or tycoons, but by mom and pop investors seeking tax-free income.  According to a semi-annual report made last month at the Securities and Exchange Commission, Oppenheimer Rochester Fund Municipals, a popular tax-free fund held by many New York investors, was sitting on a boatload of Puerto Rico municipal bonds as of June 30, 2017. The SEC filing shows over 100 different Puerto Rico bonds, issued by the Commonwealth and numerous other Puerto Rico issuers like the Puerto Rico Electric Power Authority and the Puerto Rico Sales Tax Financing Corp. (In July, Reuters reported that Oppenheimer’s various tax-free mutual funds had the largest mutual fund holdings of Puerto Rico bonds as of April 30, totaling a whopping $7.3 billion face amount. According to Oppenheimer’s September SEC filings reviewed by Wall Street On Parade this morning, most of that debt is trading at a large discount to the face amount and the values, reported as of June 30, 2017 to the SEC, do not reflect the new market lows experienced by the bonds since Hurricane Maria made a direct hit to Puerto Rico in late September. (Reuters reported that the second largest mutual fund holder of Puerto Rico debt as of April 30 was Franklin funds, which also provides popular tax-free funds to mom and pop investors. Franklin was reported to be holding approximately $3 billion face amount of Puerto Rico bonds.) In its September SEC filing, OppenheimerFunds notes that it has set up a special web section to provide updates on the situation with its Puerto Rico bond holdings. (See here and here.) Tellingly, those web pages have not been updated since the devastation from Hurricane Maria occurred, suggesting OppenheimerFunds understands it’s now in uncharted waters.  Mutual funds are always supposed to add the caveat: “Past performance is no guarantee of future results.” That would seem to be particularly relevant to the situation today.

White House walks back Trump's Puerto Rico comments as Wall Street reels - POLITICO: — On Tuesday night, President Donald Trump casually told Geraldo Rivera on Fox News that the United States would have to wipe out $75 billion in debt owed by Puerto Rico to bondholders around the world. Wall Street promptly freaked out, sending Puerto Rican bonds into a tailspin and leading the White House to move swiftly to clean up Trump's seemingly offhand remarks.On Wednesday, the Trump administration indicated it has no current plans to take the unprecedented, politically dangerous and probably illegal step of wiping out the owners of Puerto Rico's bonds in the wake of Hurricane Maria's devastation. Trump’s own budget chief quickly walked the president’s comments back. “I wouldn’t take it word for word with that,” OMB Director Mick Mulvaney said on CNN. “We are not going to deal right now with those fundamental difficulties that Puerto Rico had before the storm.” Added Mulvaney: “Puerto Rico's going to have to figure out how to fix the errors that it’s made for the last generation on its own finances.” Numerous senior administration officials and a White House spokesman did not respond to requests on Wednesday morning for further comment on Trump’s remarks. Mulvaney was cleaning up after a remarkable Trump interview that sent Wall Street bond traders and holders of Puerto Rico’s debt scrambling overnight Tuesday. The island’s general obligation bonds dropped from 56 cents on the dollar to just 36 cents early on Wednesday as investors tried to figure out exactly what the White House might actually do. 

Puerto Rico bondholders on Wall Street are 'suicidal,' fear government will wipe them out: Broker - A prominent bond broker says his clients who are holding Puerto Rican debt are just about "suicidal" after President Trump threatened to wipe them out.After visiting the devastated island, Trump said the U.S. territory's $72 billion debt should be wiped away. Most of Puerto Rico's credits are now moving through the Title 3 bankruptcy process.While Trump can't erase the island's debt obligations, the dealer, who wished to remain anonymous, told CNBC that bondholders worry the U.S. will start giving new loans to Puerto Rico, as requested by its governor."The thing to watch is how will FEMA fund Puerto Rico. Will it be grants or new loans? If it's new loans, that could mean current bondholders won't get paid," said the dealer. "The priority will be to pay back the new loans that are needed for immediate reconstruction."Trump did say bondholders would have to take a hit."They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out. You're going to say goodbye to that, I don't know if it's Goldman Sachs, but whoever it is you can wave goodbye to that," Trump said Tuesday in an interview with Fox News.Bondholders were already expected to take a "haircut," or reduced repayments, and bond strategists said it's likely they could get an even bigger hit if the U.S. provides new loans. Puerto Rico's population totals just 3.4 million and its debt burden has long been unwieldy. The commonwealth's debt to GDP is 68 percent, compared with an average 17 percent for a U.S. state. Strategists warn Trump's comments should not necessarily be taken literally. Budget Director Mick Mulvaney said Wednesday not to take the president's comment "word for word."

Meet the $4 Trillion Market that Donald Trump Just Bitch-Slapped - Pam Martens - According to Federal Reserve statistics, as of the end of the first quarter of this year, the U.S. municipal bond market consisted of $3.8 trillion of debt outstanding with retail investors owning 42 percent of the market. Life insurance companies, property and casualty insurers, banks, mutual funds and foreign buyers are also major holders of municipal bonds. Municipal bonds have performed well as a class over a century of booms and busts. They came through the Great Depression with an extremely low default rate. General obligation municipal bonds (GOs) are backed by the full faith and credit and taxing power of a jurisdiction like a state or county or city and GOs with AAA ratings are typically viewed as second in safety to issues of the U.S. government.  Municipal bonds issued to finance a project are classified as revenue bonds and are frequently backed just by the revenues of that project, such as a toll bridge. U.S. states, counties, cities and school districts issue muni bonds to build schools, roads, bridges and other critical infrastructure needs. Municipal bonds are essential to a vibrant U.S. economy and maintaining modern infrastructure and schools across America. Heretofore, it has been unthinkable that holders of general obligation municipal bonds could be “wiped out” by edict. But during his visit to Puerto Rico on Tuesday, President Donald Trump was interviewed by Geraldo Rivera of Fox News. The interview was broadcast during the Sean Hannity program Tuesday evening. The president stated the following: (See video clip below.) “You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.”  Puerto Rico is in the midst of a bankruptcy proceeding in Federal Court and is under the supervision of a Federal oversight board. In this situation, it is unprecedented for a sitting president to effectively declare his plan to wipe out its creditors’ claims — off the cuff on a cable news show.

Puerto Rico Is On Track for Historic Debt Forgiveness — Unless Wall Street Gets Its Way  -- For bondholders sitting on Puerto Rican debt, Hurricane Maria may have come just when they needed it, just as a yearslong battle over the fate of the island’s financial future was beginning to turn against them. Or, depending on how the politics shake out, they could see their entire bet go south.Ahead of Maria, the federally appointed fiscal oversight board now in control of Puerto Rico’s finances had developed a plan that would wipe out 79 percent of the island’s annual debt payments, taking a massive chunk out of the payday hedge funds had been hoping to land from the island.  In the wake of the storm, that fight could go one of two ways: Advocates for Puerto Rico are making the case that the devastation means that 79 percent should be ratcheted up all the way to a full debt cancellation. The hedge funds, meanwhile, see an opening to attack the oversight board and reclaim ownership of the process. While Congress focuses on the size and shape of the relief package, the battle over the much larger debt — at least $74 billion — is being overshadowed. As hedge funds attempt to undermine the board’s legitimacy in the courts, resentment toward the board from a different end of the political spectrum has made the body unpopular for entirely different reasons: It’s colonial and undemocratic. The difference between the two? The left wants debt relief for Puerto Ricans. Many bondholders want the opposite. President Donald Trump joined the fray Tuesday evening, indicating that he wanted to erase Puerto Rico’s debt. “They owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out,” Trump said on Fox News. It wasn’t clear from his statements whether he intended a bailout for Puerto Rico or for its creditors. Office of Management and Budget Director Mick Mulvaney walked back on Trump’s comments to Fox on Wednesday, apparently under the impression it was the latter. He told CNN, “We are not going to bail them out. We are not going to pay off those debts. We are not going to bail out those bondholders.” As of now, though, the decision on how much debt to cancel legally rests with U.S. District Court Judge Laura Taylor Swain, and any formal forgiveness on the total sum wouldn’t happen for at least a year. Still, motions in the direction of cancellation could be reflected in an update to Puerto Rico’s current fiscal plan, freeing up millions of dollars for both short and long-term recovery efforts.

Trump budget chiefs says no bailout for Puerto Rico debt: (AP) The White House's budget director says Puerto Rico shouldn't expect a federal bailout of its debt, even after President Donald Trump spoke of the need to "wipe out" that red ink as part of the island's recovery after Hurricane Maria. Mick Mulvaney tells reporters that the administration plans to send Congress a disaster aid package that'll include money for the U.S. territory. But Mulvaney says: "We are not going to be offering a bailout for Puerto Rico or for its current bondholders." Mr. Trump told Fox News on Tuesday that federal officials would have to look at Puerto Rico's debt structure and "we're going to have to wipe that out." Before the hurricane, Puerto Rico's government was negotiating with creditors to restructure a portion of its $73 billion in debt.

Before Maria, Forcing Puerto Rico to Pay Its Debt Was Odious. Now It’s Pure Cruelty -- On Tuesday, Donald Trump followed up his sadistic attacks on the people of Puerto Rico with a comment out of the blue regarding the territory’s $73 billion debt: “… we’re going to have to wipe that out.” Whether or not Trump can be taken any more seriously on that than he can on any other issue, Hurricane Maria did reveal in the starkest possible way that forgiveness of Puerto Rico’s debt is a moral necessity.The economic vulnerability that set the island up for an unnatural disaster unprecedented in U.S. history was a hybrid between mainland hedge-fund managers’ greed and the island colony’s political powerlessness. Writing more than a year before Maria, legal scholar Natasha Lycia Ora Bannan argued,The colonial status of Puerto Rico both contributes directly to the economic crisis as well as inhibits comprehensive solutions that would address short-term concerns and long-term economic policy changes. The United Nations Special Committee on decolonization issued its annual resolution on the colonial status of Puerto Rico in early 2015, noting that the island needs to be able to make decisions in a sovereign manner to address its urgent economic and social needs, including its twelve percent unemployment rate, marginalization, and the widespread poverty of its residents. The Committee recognized that the economic vulnerability of Puerto Rico is a direct consequence of its colonial status and that Puerto Rico’s lack of political power to affect decision-making in the United States is reflected in the policies and politics that shape and ultimately cripple the island’s economy.Ora Bannan and other legal experts have maintained, based on the doctrine of “odious debt,” that continuing to compel the people of Puerto Rico to repay bondholders is legally and morally indefensible, because national governments “have an obligation towards their citizens to provide their basic needs for clean water, health and education and at least not to frustrate their citizens’ attempts to meet their needs for food, clothing and shelter. The freedom of the population to pursue the meeting of these needs is a fundamental human right.”

So, why does Puerto Rico have more than $70 billion in debt?  Puerto Rico, and domestic entities linked to the U.S. territory, owe creditors more than $70 billion. A double-whammy of devastating hurricanes in recent months, Maria and Irma, only exacerbated the plight of the Caribbean island that sits about 1,150 miles south of Florida. Even before the natural disasters had struck, former Gov. Alejandro García Padilla (who was succeeded by Gov. Ricky Rossello) declared its situation a “humanitarian crisis.”  Why is Puerto Rico in such bad economic shape?  More than a decade of economic decline and ballooning deficits, amplified by an exodus of the territory’s best and brightest, including doctors, to the U.S. has dealt a heavy blow to the Puerto Rican economy. It has been in a recession, defined as at least two consecutive periods of declining growth, since 2006.

  • The Commonwealth had an unemployment rate of 12% before the hurricanes, compared with an unemployment of 4.4% for the U.S., as of August.
  • 43.5% of its residents live below the poverty line, according to U.S. Census Bureau data, more than double that of Louisiana and Mississippi.
  • Its population is 3.4 million as of July 1, 2016, representing a decline of more than 8% since 2010.
  • The island’s debt load represents $12,000 per capita, with its debt representing more than three-quarters of its annual gross national product, which would make it one of the most indebted countries in the world.
  • As a U.S. territory, the island uses the U.S. dollar, That means it can’t devalue its currency in a bid to improve competitiveness.

Special Report: The bankrupt utility behind Puerto Rico’s power crisis  (Reuters) -  Two weeks after the storm plunged the island into a blackout, less than 10 percent of Puerto Rico’s 3.4 million people have seen power restored - and many will wait months. Restoring the grid after the worst storm to hit here in nine decades would be a monumental task even for a well-run utility. It will be much harder for the chronically underfunded Puerto Rico Electric Power Authority (PREPA), which went bankrupt in July amid mounting maintenance problems, years-long battles with creditors, a shrinking workforce and frequent management turnover. Interviews with more than two dozen officials and consultants who work for or with the U.S. territory’s government, PREPA or its creditors reveal a utility that was unprepared for a major storm despite the ever-present risk to this Caribbean island. When Maria hit, PREPA was trying to simultaneously finance an operational overhaul and dig out from about $8 billion in debt. A host of chronic problems at PREPA left the island’s electric grid vulnerable to collapse in a major storm, Reuters found. They include:

  • * Frequent turnover in management and board leadership, which has long failed to prioritize grid maintenance, according to reports prepared in 2015 and 2016 for utility regulators by the consultancy Synapse Energy Associates. The deferred upkeep, according to a PREPA assessment in April, led to a ”degraded and unsafe“ grid that needed at least $4 billion for modernization of an ”isolated system, in challenging terrain“ that is ”subject to natural atmospheric events.”
  • * Falling revenues that failed to cover operating expenses because of poor collection of utility bills and declining energy sales through a decade-long recession.
  • * A lack of regulatory oversight prior to 2014, and a rough transition of power from former utility board members and officials to a new energy commission created that year by legislation, with little handoff of disaster-preparedness plans.
  • * A staff diminished from 8,628 workers in 2012 to 6,042 this year, according to the April PREPA report. The talent drain reflects a larger exodus of residents from Puerto Rico - especially skilled workers - as the U.S. territory lost 300,000 people, or 8 percent of its populace, between 2010 and 2016, according to U.S. Census data.
  • Ricardo Ramos, who took over as the utility’s chief executive in March, told Reuters that the number of employee departures over the past five years is actually closer to 4,000 - with the vast majority being key operational workers such as linemen, power plant operators and mechanics.

They were exactly the kind of workers the utility couldn’t afford to lose.  “PREPA did not invest in new power plants or new generation, so our power plants are very, very old; our distribution system is very, very old,” Ramos said in an interview on Monday. One pivotal question now is whether the United States will work merely to patch the existing network or allocate billions of dollars in federal funds to overhaul it. The government is open to spending money on modernization, Homeland Security Advisor Tom Bossert said at a briefing last week. The White House did not respond to Reuters’ inquiries seeking comment on the short- and long-term U.S. roles in restoring power to this U.S. territory.

"It Will Be A Disaster": Puerto Rico To Run Out Of Cash On October 31 -- While Puerto Rico is way beyond a simple solvency crisis, having already filed for bankruptcy earlier this summer - and courtesy of Donald Trump there is now debate whether or not the island's $74 billion in debt will be forgiven outright - it is now also on the verge of a full-blown liquidity collapse. According to Treasury Secretary Raul Maldonado, Puerto Rico faces a government shutdown on Oct. 31, at which point it will run out of cash, resulting in a halt to its hurricane recovery, unless of course the US doesn’t provide billions in emergency funds. Indeed, while the muni bond market freaked out today after Trump said on Tuesday night that Puerto Rico's debt may need to be "wiped out", focusing attention on the commonwealth’s staggering $74 billion debt, Puerto Rico faces a more immediate crisis in the wake of the storm: it is about to run short of money for fuel, salaries of recovery workers and food aid. Meanwhile, only 8.6% of customers have electricity, mobile-phone service is sharply curtailed and many mountainous rural areas remain inaccessible. According to Bloomberg, the U.S. commonwealth’s bankrupt government is burning through the $1.6 billion it had on hand before Hurricane Maria devastated the island. Furthermore, with widespread damage to telecommunications systems and the electricity grid, the Treasurer said he be unable to begin collecting sales tax for at least another month. “I don’t have any collections, and we are spending a lot of money providing direct assistance for the emergency,” he said in an interview in San Juan. “Without the assistance from Congress, Puerto Rico’s government will not be able to operate next month.”

The Supreme Court’s Blockbuster Term - The Supreme Court term that begins this week is set to be a blockbuster. There’s a reason: When Justice Antonin Scalia died in February 2016, the court hit the pause button on some of the most important issues it was facing. Either because the justices knew they would be deadlocked, or because they preferred not to tackle important questions without a full bench, the court started ducking big cases, and we've now been through two cycles with relatively few landmark decisions. That's about to end. Once Justice Neil Gorsuch took his seat, the court put one big case after another on the calendar, and the term that starts this week is set up to pack the punch of two to three normal Supreme Court terms. When you factor in the Trump administration’s tendency to provoke constitutional litigation, there’s no telling how explosive the new term might be. Some of this term’s docket presents familiar culture-war issues: Prominent in that category is Masterpiece Cakeshop v. Colorado Civil Rights Commission, in which a Christian baker seeks legal vindication for his refusal to sell a wedding cake to a same-sex couple. The legal question is whether the First Amendment protection of religious free exercise permits a business to exempt itself from a generally applicable anti-discrimination law.Another case, Carpenter v. United States, asks whether and how the Fourth Amendment limits the government’s ability to track individuals’ locations by searching their historical cellphone records. Most Americans who carry smartphones leave electronic trails everywhere they take their phones. But the most important developments of all this year could come in election law. In Husted v. A. Philip Randolph Institute, the court confronts Ohio’s effort to purge its voter rolls of voters who have not voted in recent elections. Ohio says it’s doing reasonable housekeeping, and the Randolph Institute says Ohio’s Republican secretary of state is deliberately rescinding the registrations of voters from demographic groups who lean Democratic, in violation of two federal statutes protecting the right to vote.

 Judicial Roadmap for the Supreme Court Veers Right - Get ready for change. After moving to the political center the past three terms, the Supreme Court is poised to take a turn back to the right in its new session, which kicked off Monday. The big question is how abrupt and sharp the turn will be.One reason for the anticipated lurch to the right is that this will be the first full term served by the court’s newest member, Neil Gorsuch. Confirmed by the Senate on a 54-45 vote in April, Gorsuch succeeds Antonin Scalia, the conservative firebrand who died in February 2016. Gorsuch previously held a seat on the 10th Circuit Court of Appeals, and with his addition, the high tribunal now has a full complement of nine justices, and its 5-4 Republican majority has been restored.Like Scalia, Gorsuch is an ardent proponent of the “originalist” school of jurisprudence—the idea popularized by Scalia and think tanks such as The Heritage Foundation and The Federalist Society that the Constitution should be interpreted according to what it presumably meant to the framers at the time of its adoption, rather than on the basis of evolving standards of morality and social justice.As I have pointed out in this column before, during the presidential election campaign, Donald Trump listed 21 federal and state court judges as possible replacements for Scalia. In a comprehensive study led by Mercer University law professor Jeremy Kidd, Gorsuch was ranked second among the 21 in judicial qualities most resembling Scalia’s originalist approach to adjudicating constitutional controversies. Utah Supreme Court Justice Thomas Lee—the brother of Sen. Mike Lee, R-Utah—garnered the top spot. If anything, Gorsuch could prove to be even more regressive than Scalia. According to the SCOTUSblog website, during his short stint on the court last term Gorsuch voted in agreement with Justice Clarence Thomas, long considered the panel’s most right-wing outlier, in every case he reviewed on the merits. He voted in line with Justice Samuel Alito in 94 percent of his cases. On the other hand, he agreed with Justice Sonia Sotomayor, regarded by many as the most liberal associate, at a 58.8 percent clip.

 Latest Fake News Panic Appears to Be Fake News - Matt Taibbi - The headline on the Washington Post story was scary enough: "Lawmaker: Russian trolls trying to sow discord in NFL kneeling debate". The pressures of the presidency have pushed Trump to the edge, but is he crazy enough to be removed from office? The piece was one of many this week warning that foreigners were amplifying political controversies in the United States: "Russian Internet trolls are trying to gin up even more controversy over NFL players taking a knee during the national anthem, a senator said Wednesday – warning that the United States should expect such divisive efforts to escalate in the next election…"The Post cited Oklahoma Senator James Lankford, a toothy, humorless, young Republican who looks like an escapee from a teen zombie movie. Lankford shocked the world this week by revealing that "Russian Internet trolls" were stoking the NFL kneeling debate.Lankford made the revelation, the paper wrote, in a "hearing with the heads of the FBI, Department of Homeland Security and the National Counterterrorism Center."This was the rare sort of story that garnered enthusiastic coverage from both houses of our increasingly bicameral system of media. Conservative outlets like Breitbart and Newsmax and Fox played up the "Russians stoked the kneeling controversy" angle because it was in their interest to suggest that domestic support for kneeling protests is less than what it appears. Meanwhile, outlets like the Post, CBS, Salon, and TPM bit on the story among other things because it furthered a longstanding narrative about Russian interference.  They all liked the story so much, it seemed, that nobody bothered to check it.

British courts may unlock secrets of how Trump campaign profiled US voters - A US professor is trying to reclaim his personal data from the controversial analytics firm that helped Donald Trump to power. In what legal experts say may be a “watershed” case, a US citizen is using British laws to try to discover how he was profiled and potentially targeted by the Trump campaign. David Carroll, an associate professor at Parsons School of Design in New York, has discovered a transatlantic legal mechanism that he hopes will give him access to information being sought by both the FBI and the Senate intelligence committee. In recent weeks, investigators looking at how people acting on behalf of Russia targeted American voters have focused on Trump’s data operation. But although the FBI obtained a court order against Facebook to make it disclose evidence, the exact way in which US citizens were profiled and targeted remains largely unknown.But British data protection laws may provide some transparency on the company at the heart of Trump’s data operation – Cambridge Analytica – and how it created profiles of 240 million Americans. In January, Carroll discovered he – and a group of other citizens – had the right under UK law to ask for his personal data back from the company, and when it failed to supply it, he started filing pre-trial actions to sue the company under British law. The lawsuit is the result of a unique situation, according to Ravi Naik of Irvine Thanvi Natas, the British solicitor who is leading the case. It arose because although Cambridge Analytica is largely owned by Trump’s biggest donor, hedge-fund billionaire Robert Mercer, and though its vice-president at the time of the US election was Trump’s former chief strategist, Steve Bannon, the company was spun out of an older British military and elections contractor, SCL, with which it still shares staff, directors and a London office. Naik says: “It’s this fascinating situation because when it became apparent that Cambridge Analytica had processed Americans’ data in Britain, it suddenly opened up this window of opportunity. In the US, Americans have almost no rights over their data whatsoever, but the data protection framework is set up in such a way that it doesn’t matter where people are: it matters where the data is processed.

Senate Intel Committee Says Investigation Hasn't Determined Whether Russians Supported Trump Or Clinton - Senate Intelligence Committee Chairman Richard Burr and Vice Chairman Mark Warner told reporters on Wednesday that, after conducting more than 100 interviews and reviewing 100,000 pages of documents, it has yet to come to a finding in its probe into whether Russia meddled in the US election to benefit one candidate over the other.So in the spirit of being sufficiently diligent (or in forcing Trump to live under a cloud of unfounded suspicion for as long as possible), Burr and Warner announced that they’re expanding the scope of their inquiry to involve...even more interviews and document review as the fishing expedition enters month nine.“We have interviewed every official of the Obama administration to see what clarity they had on Russian involvement…and more importantly what they did or did not do and what drove those actions.”   “We have interviewed indiviuals from around the world…it’s safe to say that the inquiry has expanded slightly…document review generated hundreds of requests on our part for information and identified leads that expanded our initial inquiry.""Now, it's safe to say that the inquiry has expanded slightly," Sen. Burr says  Burr reminded reporters that the committee had three objectives in mind when it launched the investigation: To determine if there was collusion by either the Clinton or Trump campaign, offer an assessment of the ICA – the intelligence community’s initial assessment that Russia interfered in the US election – and provide an assessment of ongoing efforts by Russia to meddle in the US political process. The committee has concluded that the ICA’s assessment is accurate – though it’s not ready to close that part of the investigation just yet. "But we're not there yet. We're not ready to close them," Sen. Burr says of Russia probe

 Whose Bright Idea Was RussiaGate? Paul Craig Roberts - The answer to the question in the title of this article is that Russiagate was created by CIA director John Brennan. The CIA started what is called Russiagate in order to prevent Trump from being able to normalize relations with Russia. The CIA and the military/security complex need an enemy in order to justify their huge budgets and unaccountable power. Russia has been assigned that role.The Democrats joined in as a way of attacking Trump. They hoped to have him tarnished as cooperating with Russia to steal the presidential election from Hillary and to have him impeached. I don’t think the Democrats have considered the consequence of further worsening the relations between the US and Russia.Public Russia-bashing pre-dates Trump. It has been going on privately in neoconservative circles for years, but appeared publicly during the Obama regime when Russia blocked Washington’s plans to invade Syria and to bomb Iran.Russia bashing became more intense when Washington’s coup in Ukraine failed to deliver Crimea. Washington had intended for the new Ukrainian regime to evict the Russians from their naval base on the Black Sea. This goal was frustrated when Crimea voted to rejoin Russia.The neoconservative ideology of US world hegemony requires the principal goal of US foreign policy to be to prevent the rise of other countries that can serve as a restraint on US unilateralism. This is the main basis for the hostility of US foreign policy toward Russia, and of course there also is the material interests of the military/security complex. Russia bashing is much larger than merely Russiagate. The danger lies in Washington convincing Russia that Washington is planning a surprise attack on Russia. With US and NATO bases on Russia’s borders, efforts to arm Ukraine and to include Ukraine and Georgia in NATO provide more evidence that Washington is surrounding Russia for attack. There is nothing more reckless and irresponsible than convincing a nuclear power that you are going to attack.

White House Close to Ending Mueller Probe Backlog - The White House expects soon to clear a backlog of requests for documents and information from special counsel Robert Mueller related to his investigation of Russian tampering with the 2016 U.S. election, according to two people familiar with the investigation. While Mueller may make additional requests from the White House as the probe proceeds, his existing demands largely should be met as soon as this week, the people said. Mueller has been seeking documents from the White House for months on a range of issues, including Donald Trump’s firings of National Security Adviser Michael Flynn and FBI director James Comey, as well as the preparation of a public statement related to a meeting between Donald Trump Jr. and a Russian lawyer.   The response to Mueller’s requests was slowed because few staffers were assigned to the task, said another person familiar with the process, who like the others discussed the matter on condition of anonymity. Ty Cobb, a lawyer hired to focus on the investigations, initially received no assistance from the office of White House Counsel Don McGahn -- who’s expected to be a witness in Mueller’s inquiry. After pressing White House Chief of Staff John Kelly for staffing help, Cobb eventually got some assistance from McGahn’s office and a budget to hire his own staff, one of the people said.

Mueller Interviews "Trump Dossier" Author Chris Steele - Revelations about the status of the various investigations into whether the Trump campaign actively colluded with the Russian government are making increasingly little sense. Yesterday, leaders of the Senate Intelligence Committee said that they’d “hit a wall” in their efforts to verify the contents of the infamous “Trump dossier.” As has been widely reported, the dossier - which contained several salacious allegations about Trump’s Russia ties - was commissioned by opposition-research firm Fusion GPS and assembled by a man named Christopher Steele, allegedly a former operative who spent time in Russia on behalf of British intelligence.Until today, Steele had remained a cypher; unwilling to meet with investigators, and beyond the reach of their subpoena power.Senator Richard Burr’s revelation that the committee’s investigators had effectively given up on the dossier further supported this impression.Now, a day after Reuters reported that Special Counsel Robert Mueller had assumed control of the FBI’s inquiry into the dossier, CNN is reporting that Mueller and his team caught up with Steele over the summer. However, the contents of their discussion remain a mystery.

Hundreds of White House emails sent to third Kushner family account - POLITICO: White House officials have begun examining emails associated with a third and previously unreported email account on Jared Kushner and Ivanka Trump’s private domain, according to three people familiar with the matter. Hundreds of emails have been sent since January from White House addresses to accounts on the Kushner family domain, these people said. Many of those emails went not to Kushner’s or Ivanka Trump’s personal addresses but to an account they both had access to and shared with their personal household staff for family scheduling.The emails — which include nonpublic travel documents, internal schedules and some official White House materials —were in many cases sent from Ivanka Trump, her assistant Bridges Lamar and others who work with the couple in the White House. The emails to the third account were largely sent from White House accounts but occasionally came from other private accounts, one of these people said. The existence of additional accounts on the family domain beyond the two personal accounts used by Kushner and Ivanka Trump and reported earlier raises new questions about the extent of personal email use by the couple during their time as White House aides. Their use of private email accounts for White House business also raises concerns about the security of potentially sensitive government documents, which have been forwarded to private accounts. The family has declined to say what privacy measures have been placed on the domain, but a person familiar with the setup said some security measures were taken when it was installed. Many of the emails came from Ivanka Trump’s assistant and included work-related “data,” according to a person familiar with the exchanges. Such messages were sent “daily,” this person added. “They’ve pretty much been using it since they got here,” this person said. 

John Kelly's personal cellphone was compromised, White House believes - White House officials believe that chief of staff John Kelly’s personal cellphone was compromised, potentially as long ago as December, according to three U.S. government officials. The discovery raises concerns that hackers or foreign governments may have had access to data on Kelly’s phone while he was secretary of Homeland Security and after he joined the West Wing. Story Continued Below Tech support staff discovered the suspected breach after Kelly turned his phone in to White House tech support this summer complaining that it wasn’t working or updating software properly. Kelly told the staffers the phone hadn’t been working properly for months, according to the officials. White House aides prepared a one-page September memo summarizing the incident, which was circulated throughout the administration.A White House spokesman said Kelly hadn’t used the personal phone often since joining the administration. This official said Kelly relied on his government-issued phone for official communications. The official, who did not dispute any of POLITICO’s reporting on the timeline of events or the existence of the memo, said Kelly no longer had possession of the device but declined to say where the phone is now. 

Trump plans a pivot to deregulation, pushing roll back of Obama-era red-tape - President Donald Trump will hold a "cut the red tape" event at the White House on Monday, highlighting the administration's efforts to eliminate what Trump sees as burdensome government regulation of private businesses. The event will "highlight the president's broader initiatives on regulatory reform," a senior administration official told reporters on Friday, and show that "the regulatory burden is being lifted, that agencies are working hard at accomplishing the president's directives, and that this is making a difference both to the economy and to job creation." Trump will not announce any new initiatives, merely emphasize what's already being done. Later in the day, 10 federal agencies will hold breakout sessions to discuss specific actions they're taking to roll back regulations. Trump, like scores of Republicans before him, campaigned for president on a promise to reduce government regulation on businesses. Since taking office, Trump has largely followed through, either withdrawing or delaying more than 800 proposed regulations in just his first five months, according to the Associated Press. He has also issued a moratorium on new regulations, and a number of executive orders designed to hinder the regulatory rule-making process. Naomi Rao, administrator of the Office of Information and Regulatory Affairs, said that federal agencies are also ahead of schedule in their quest to fulfill one of Trump's signature campaign promises: To eliminate two existing regulations for every new rule his administration enacted. "We are making good on that promise at OIRA," Rao said. "So far, we've finalized four new regulatory rulemakings, and 10 deregulatory rulemakings." The results have been "quite remarkable," she said.

Dodd-Frank thresholds have ‘perverse effect,’ says acting comptroller — Acting Comptroller of the Currency Keith Noreika on Thursday called for steps to ease the asset thresholds that determine whether banks are subject to certain provisions of the Dodd-Frank Act. In prepared remarks to a meeting of bankers in Dallas, Noreika said “arbitrary thresholds often have the perverse effect of acting as competitive barriers.”

Janet Yellen rebukes Trump over plan to lift financial regulations - Donald Trump has been rebuked by the US central bank chief, Janet Yellen, for planning to scrap tough banking regulations that made the system “substantially safer” and did nothing to restrict growth or lending.  Yellen, the Federal Reserve chair, used a speech at the annual meeting of central bankers on Friday in the US ski resort of Jackson Hole to warn that policymakers might have forgotten the terrible damage wreaked on the global economy in 2008 when they seek to lift regulations that prevent risky behaviour.  “Already, for some, memories of this experience may be fading – memories of just how costly the financial crisis was,” she said. “The core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth.”The president, who has vowed to “do a big number” on the Dodd-Frank law at the centre of banker complaints, is backing calls from executives on Wall Street and Republicans in Congress for looser financial regulations to spur growth. The Treasury secretary, Steve Mnuchin, a former Goldman Sachs banker, has said a sustainable growth rate above 3% a year can be achieved once banks are relieved of the shackles imposed on them by Dodd-Frank.In June, he proposed reducing the powers of the main consumer watchdog, the Consumer Financial Protection Bureau, weakening the Fed’s oversight of large financial institutions and looser mortgage lending rules.The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed in 2010 by the then president Barack Obama in response to the financial crisis. It brought in hundreds of new regulations including tougher consumer lending rules and the need for banks to hold bigger capital reserves. Yellen said: “The evidence shows that reforms since the crisis have made the financial system substantially safer. Reforms have boosted the resilience of the financial system. Banks are safer.“[The changes] resulted in a return of lending growth and profitability among US banks. Material adverse effects of capital regulation on broader measures of lending are not readily apparent.”

Senate confirms Quarles as first Fed vice chair of banking supervision -— The Senate on Thursday confirmed Randal Quarles 65-32 to join the Federal Reserve Board as a governor and later by voice vote as the first vice chairman of banking supervision. That position was created by the Dodd-Frank Act of 2010, but was never filled by the Obama administration, which relied on former Fed Gov. Daniel Tarullo to fill the role on a de facto basis.

HSBC to pay $175 million to settle Fed probe of forex practices - HSBC Holdings will pay $175 million to settle Federal Reserve claims stemming from an investigation of the bank’s foreign exchange trading, including accusations that traders misused customer information and were improperly allowed to communicate with competitors. The Fed order released Friday detailed multiple instances of improper behavior, including trading strategies that involved conflicts of interest and traders in the FX spot market conspiring to manipulate benchmark rates using electronic chat rooms. The London-based bank will be required to fix inadequacies in its “governance, risk management, compliance, and audit policies,” the regulator said. “We are pleased to have resolved this matter,” HSBC said in an emailed statement. The Fed said the bank cooperated with the investigation. One of the world’s largest currency traders, HSBC was among seven banks that paid more than $10 billion in fines to U.S. and European regulators for manipulating benchmark exchange rates. And Mark Johnson, HSBC’s former global head of foreign exchange cash trading in London, is currently on trial for accusations that he illegally used his knowledge to profit from a pending $3.5 billion currency transaction in 2011. Also, Law360 reported Friday that Deutsche Bank has agreed to pay $190 million to settle allegations that it rigged foreign exchange rates. Deutsche Bank was the last of several large banks sued for forex manipulation to agree to a settlement with plaintiffs.

The $1.7 Billion Citi-Lehman Derivatives Settlement Doesn’t Technically Contain The Words ‘Told You So,’ But It Might As Well -  As Wall Street plunged headlong into the wreckage left behind by Lehman Brothers in September, 2008, derivatives traders faced a choice. Collectively tasked with valuing 900,000 now-worthless Lehman derivatives, traders could give the deceased bank some leeway. Or they could do what they do best: turn the screws. At Citigroup, which had some 30,000 Lehman-facing derivatives it was suddenly forced to close out, the prevailing attitude was best summed up by Marc Pagano, the bank’s head of emerging markets credits: “Let them come sue us.”Sue them Lehman did. Citi ended up claiming it was justified in keeping $2.1 billion in collateral for the derivatives Lehman left behind when it went bust, a number Lehman’s estate deemed rapacious. Now, more than nine years since the bank’s implosion, the two sides have reached a settlement. On Friday, it was announced that Citi would return $1.74 billion back to Lehman Brothers Holding Co.  Nobody at Lehman is going to say this out loud, since they just signed a bunch of papers officially deeming the matter water under the bridge, but this settlement is sweet vindication for the Lehman estate. At trial, Lehman argued that Citi’s request of $2.1 billion was off by a factor of eight. On Friday they settled for $350 million – a sixth of Citi’s demand and far closer to Lehman’s $266 million ask.

Yahoo: every single account, 3 billion people, affected… Yahoo on Tuesday said that every single Yahoo account was affected by a data breach that took place in 2013.  In 2016, Yahoo disclosed that more than one billion of about three billion accounts had likely been affected by the hack. In its disclosure Tuesday, the company said all accounts were likely victimized.  Yahoo included the finding in a recent update to its Account Security Update page, saying that it found out about the wider breach through new intelligence obtained during the company's integration into Verizon Communications. Outside forensic experts assisted in the discovery, the company said.  “It is important to note that, in connection with Yahoo's December 2016 announcement of the August 2013 theft, Yahoo took action to protect all accounts. The company required all users who had not changed their passwords since the time of the theft to do so. Yahoo also invalidated unencrypted security questions and answers so they cannot be used to access an account," Yahoo said Tuesday.  Yahoo said it will begin alerting accounts that weren't previously notified of the attack. In 2013, a breach allowed attackers to steal email addresses, passwords, birth dates, telephone numbers and more. The new investigation indicated that stolen information didn't include passwords in clear text, payment card data or information about bank accounts.  Verizon finished its acquisition of Yahoo in June and is folding it, with AOL, under a new subsidiary named Oath.

 Hackers target weakest links for insider trading gain -  Cyber security experts believe the US Securities and Exchange Commission was the latest victim of cyber criminals on the hunt for market-moving corporate secrets, following a series of attacks seeking to steal unpublished press releases, deal negotiations and economic data. As banks increase spending on cyber security into the hundreds of millions of dollars and hire thousands of information security specialists, hackers have been looking to more vulnerable targets across the financial sector. The SEC has said it believes its online filing system used by almost 6,000 public companies may have been hacked to reap “illicit” trading gains.  The SEC did not respond to a request for comment. Cyber security experts see parallels between the attack, which took place last year but was only announced this month, and other breaches where hackers were searching for financial information including an attack on PRNewswire, which generated $100m in illegal profits, and an attack last year on two law firms that gained more than $3m using information stolen on planned mergers.  The SEC took action in both cases: indicting more than 40 people in the PRNewswire attack and obtained default judgments against the three Chinese defendants in the law firm hacking case.

The Equifax Hack Has the Hallmarks of State-Sponsored Pros - Nike Zheng, a Chinese cybersecurity researcher from a bustling industrial center near Shanghai, probably knew little about Equifax or the value of the data pulsing through its servers when he exposed a flaw in popular backend software for web applications called Apache Struts. Information he provided to Apache, which published it along with a fix on March 6, showed how the flaw could be used to steal data from any company using the software. The average American had no reason to notice Apache's post but it caught the attention of the global hacking community. Within 24 hours, the information was posted to, a Chinese security website, and showed up the same day in Metasploit, a popular free hacking tool. On March 10, hackers scanning the internet for computer systems vulnerable to the attack got a hit on an Equifax server in Atlanta, according to people familiar with the investigation. Before long, hackers had penetrated Equifax. They may not have immediately grasped the value of their discovery, but, as the attack escalated over the following months, that first group—known as an entry crew—handed off to a more sophisticated team of hackers. They homed in on a bounty of staggering scale: the financial data—Social Security numbers, birth dates, addresses and more—of at least 143 million Americans. By the time they were done, the attackers had accessed dozens of sensitive databases and created more than 30 separate entry points into Equifax's computer systems. The hackers were finally discovered on July 29, but were so deeply embedded that the company was forced to take a consumer complaint portal offline for 11 days while the security team found and closed the backdoors the intruders had set up. The handoff to more sophisticated hackers is among the evidence that led some investigators inside Equifax to suspect a nation-state was behind the hack. Many of the tools used were Chinese, and these people say the Equifax breach has the hallmarks of similar intrusions in recent years at giant health insurer Anthem Inc. and the U.S. Office of Personnel Management; both were ultimately attributed to hackers working for Chinese intelligence.

Equifax says millions more customers affected in cyberattack than previously reported - Equifax Inc. said late Monday that about 2.5 million more U.S customers were affected by a recent cyberattack than previously reported following a forensic analysis by security firm Mandiant. The addition of those customers bring the total U.S. customers potentially affected to 145.5 million. On Monday, Equifax's former chief executive, Richard Smith, apologized in testimony before a House Energy and Commerce subcommittee for allowing a software vulnerability to remain on a company application. Smith retired in late September soon after the incident. In late September, Mandiant, which is owned by FireEye Inc reported that hackers had been roaming on Equifax's network undetected for more than four months. Equifax said that no databases outside the U.S. were affected by the hack and that Mandiant did not identify any evidence of additional or new hacker activity. Equifax said that it will mail written notices to all U.S. customers potentially affected by the hack, which was discovered on Sept. 7. Equifax shares slipped 0.3% to $107.45 after hours.

What Were You Thinking? Equifax GC Probed For Executive Stock Sales Before Public Learned Of Breach - It was bad enough when Equifax announced that millions of people had their financial information hacked. For a general counsel, a data breach of this magnitude — one sure to involve law enforcement, regulators, civil plaintiffs, and even legislators — would be crisis enough. Especially when you realize that Equifax put its chief legal officer in charge of security and paid him $2.8 million to keep just this sort of thing from happening. But soon after the company came forward with the news that they’d managed to lose sensitive financial information, everyone started noticing that a handful of highly placed Equifax executives went on a stock selling spree in the delicate period after the company learned of the breach, but before it disclosed this to the public.That kind of trading is generally frowned upon. Equifax claims these executives, which included the Chief Financial Officer selling 13 percent of his stake in the company, didn’t know of the hack when they all decided to dump around $2 million in shares. Coincidences do happen. Sometimes. That’s why eyes have turned to John Kelley, Equifax’s Chief Legal Officer and the man responsible for signing off on those transactions. Did Kelley, a former King & Spalding partner, know of the hack when he approved these sales? As the head of cybersecurity, one would hope he was on the short list of people in the company to know of one of the largest data breaches in history. And if Kelley knew of the breach, should the requests from these executives have raised red flags? Or at least triggered a concern that the company needed to avoid even the appearance of impropriety once this news got out? Even if nothing untoward happened here, the controversy over these sales is still damaging the company’s reputation, and that’s something a chief legal officer has to consider in protecting his or her client too.

Equifax made major errors that led to hack, Smith concedes - Equifax Inc.’s former chief executive officer said the credit-reporting company didn’t meet its responsibility to protect sensitive consumer information, confirming that the failure to fix a software vulnerability months ago led to the theft of more than 140 million Americans’ personal data.Richard Smith apologized for the breach and outlined a chronology of key events in testimony prepared for House Energy and Commerce Committee hearing set for Tuesday, according to a copy obtained by Bloomberg. He blamed human errors, particularly the failure to repair the problematic software despite warnings from the federal government and the company’s own security team.“To each and every person affected by this breach, I am deeply sorry that this occurred," Smith said. “The company failed to prevent sensitive information from falling into the hands of wrongdoers." Equifax has said hackers exploited a vulnerability in open source Apache software the company was using in one of its systems. The Apache Software Foundation had issued a patch for the flaw in March, two months before hackers began accessing sensitive information on Equifax’s servers on May 13. Smith said officials at the Department of Homeland Security notified Equifax of a vulnerability in certain software on March 8 that needed to be patched. The next day, the company issued a notification internally requesting that the software be upgraded. Consistent with Equifax internal policies, the company’s security department required that the weakness be patched within 48 hours. But that never happened, Smith said.

White House wants to end Social Security numbers as a national ID -- Rob Joyce, the White House cybersecurity czar, said on Tuesday that the government should end using the Social Security number as a national identification method."I believe the Social Security number has outlived its usefulness," said Joyce, while speaking at The Washington Post's Cybersecurity Summit. "Every time we use the Social Security number, you put it at risk." One problem with the Social Security number, he said, is that a victim of identity theft cannot get it changed after it has been stolen.Joyce's comments come a month after the Equifax hack, in which hackers gained access to the Social Security numbers of as many as 143 million Americans. The Social Security number, originally a code for federal retirement benefits, has grown to become a personal identifier used for everything from getting a job to buying auto insurance. Joyce's comments came the same day as Richard Smith, the former Equifax CEO, told the House Energy and Commerce Committee that it is time to move beyond the Social Security number as a national identifier. "The concept of a Social Security number in this environment being private and secure—I think it's time as a country to think beyond that," Smith testified. "What is a better way to identify consumers in our country in a very secure way? I think that way is something different than an SSN, a date of birth, and a name."

Biometric ID Fairy: A Misguided Response to the Equifax Mess that Will Only Enrich Cybersecurity Grifters and Strengthen the Surveillance State -- Jerri-lynn Scofield - Former Equifax CEO Richard Smith is halfway through four days of testimony before various Congressional committees– and he is “deeply sorry” about the data breach that compromised the identities of more than 140 million Americans, as CNN reports. The magnitude of the leak, the company’s cack-handed response, and the massive publicity that’s ensued has convinced the serious people that SOMETHING must be done. Now, we might think that this might lead our Congress critters to a sober and sane assessment of cybersecurity defects, or the consequences of centralizing information collection without due care and oversight (whether it’s collected by a company, or a government agency). Alternatively, dare we hope that the hack might spur a full rethink of the current regulatory realm– in which our personal financial data are available, 24/7, more or less for the asking, so that financial firms can grift us, safeguarded by firms such as Equifax who cannot be bothered to install a basic software patch to protect said data from being compromised. Some members of Congress, such as Janet Schakowsky have proposed a radical break from the current system: shifting credit reporting from a universal system over which a consumer has no control, to one where you could opt out or even, have to opt in for companies to use your data. Depending on how extensive the responses are, such a change would essentially trash the business models of the three major credit reporting agencies, by preventing them from selling your data without your consent. As Bloomberg reports in These Five Data-Security Ideas Emerged in the Equifax Hearing: Schakowsky also said she’d like lawmakers to start a broader discussion about the role of credit-reporting firms. Consumers don’t have the ability to remove their information from Equifax’s databases because it’s furnished by banks and telecommunications companies. “Most Americans really don’t know how much information” the companies have, Schakowsky said. “I don’t want you to have my information anymore. I want to be in control of my information.” Seems sensible, yes? Which is why the serious people have to mount a full court press to make sure that something so sensible doesn’t get implemented.

Washington failed to regulate Big Tech—and now it’s about to discover that it can’t - Dystopian warnings abound that “winter is coming” for the tech industry, in the form of a new era of tough regulations and harsh oversight from Washington. Twitter and Facebook executives are being grilled by Congress over Russia’s use of their platforms to influence the US election.  Consumer advocates are demanding more policing of credit-rating agency Equifax after hackers stole 143 million Americans’ personal data from it. Dozens of senators have signed up to support SESTA, a bill that would make websites liable if people place sex trafficking ads on them.But companies like Facebook, Google, and Amazon dominate their markets, and have deep pockets and armies of lobbyists. That, combined with historical precedent, gridlock in Congress, and the Donald Trump White House’s aversion to regulation in general, means passing new laws or rules to rein them is going to be a tough battle, some government and industry veterans say. There’s a “better chance of Democrats supporting a repeal of Obamacare”—a move that was deeply unpopular even with Trump supporters—than of “cyber enforcement or regulation occur[ring] at the federal level,” predicts James Norton, a former Department of Homeland Security official who worked on cybersecurity in the George W. Bush administration, and now heads Play-Action Strategies, a DC consulting firm.

The Threat of Big Tech Is Real - Why it’s time to panic about the power of big technology - Last week at Books Inc. in San Francisco, I interviewed Franklin Foer, a national correspondent at the Atlantic and the author of a new book, World Without Mind: The Existential Threat of Big Tech. Foer, whom I worked with for many years at the New Republic, has written a polemic that seeks to call attention to the ways technology is changing human beings and human interactions. He couples this critique with another, related one: Big technology companies not only control more and more market share; with their data, they also hold increasing power over our lives. Below is an edited transcript of our conversation. In it, we discuss why this panic over technology is different than previous ones, what the internet is doing to journalism, and whether Facebook can fix some of the problems that bedevil our democratic fabric.

Without Fanfare, Equifax Makes Bankruptcy Change That Affects Hundreds of Thousands - For what appears to be decades, the credit rating agency Equifax has quietly layered three more years of tarnish on the credit histories of hundreds of thousands of people who had filed for bankruptcy under Chapter 13.While its competitors, TransUnion and Experian, placed a flag on such histories for seven years, Equifax left it on the reports of Chapter 13 filers who failed to complete their bankruptcy plans for 10. After ProPublica asked about the difference in its policy, the company said it now leaves the flag on for seven years, but refused to say when and why the change was made.The consequences of Equifax’s harsher policy were likely life-changing for some unlucky people. As Experian warns consumers on its website, “having a bankruptcy in your credit history will seriously affect your ability to obtain credit for as long as it remains on your report. It can also affect your ability to qualify for things like an apartment, utilities, and even employment. Even car insurance rates may be affected.” Without knowing why, consumers could have been turned down for apartments because landlords checked their Equifax report rather than those from Experian or TransUnion.Why Equifax’s policy was different is unclear and the company would not address it. But that such a discrepancy had gone unnoticed and unaddressed for so long underscores how lightly regulated the industry is. ProPublica contacted all of the major credit agencies earlier this year as part of our ongoing series on consumer bankruptcy. The policies of TransUnion and Experian were similar: People who filed under Chapter 7, which wipes out most debts, would have a flag on their report for 10 years; those who filed under Chapter 13, which usually involves five years of payments before debts are forgiven, would have a flag for seven.

IRS awards multimillion-dollar fraud-prevention contract to Equifax - The IRS will pay Equifax $7.25 million to verify taxpayer identities and help prevent fraud under a no-bid contract issued last week, even as lawmakers lash the embattled company about a massive security breach that exposed personal information of as many as 145.5 million Americans.A contract award for Equifax's data services was posted to the Federal Business Opportunities database Sept. 30 — the final day of the fiscal year. The credit agency will "verify taxpayer identity" and "assist in ongoing identity verification and validations" at the IRS, according to the award.The notice describes the contract as a "sole source order," meaning Equifax is the only company deemed capable of providing the service. It says the order was issued to prevent a lapse in identity checks while officials resolve a dispute over a separate contract.Lawmakers on both sides of the aisle blasted the IRS decision."In the wake of one of the most massive data breaches in a decade, it’s irresponsible for the IRS to turn over millions in taxpayer dollars to a company that has yet to offer a succinct answer on how at least 145 million Americans had personally identifiable information exposed," Senate Finance Chairman Orrin Hatch (R-Utah) told POLITICO in a statement. The committee's ranking member, Sen. Ron Wyden (D-Ore.), piled on: "The Finance Committee will be looking into why Equifax was the only company to apply for and be rewarded with this. I will continue to take every measure possible to prevent taxpayer data from being compromised as this arrangement moves forward.”

Watch Live: Former Equifax CEO Faces Congressional "Public Shaming" Over Hack Farce -- Former Equifax CEO Richard Smith (now retired) can expect a serious grilling this morning as he faces a congressional hearing into the utter farce surrounding the company's gross mishandling (and potential insider trading) of a cyber-security breach which has left almost 150 million people at risk. As The Washington Post reports, some lawmakers plan to not only grill the embattled credit reporting agency but also to cue up a fight for tighter data security standards that they and consumer advocates have long wanted.The hearings, which begin Tuesday and are expected to stretch for three days across the House and Senate, will be a fact-finding mission — one peppered with public reprimands and calls for sweeping improvements. Lawmakers said that they want to hold Equifax accountable for what they've described as glaring security lapses, a limp response to widespread outrage and possible insider trading.“Certainly Equifax deserves public shaming,” said Rep. Jan Schakowsky (Ill.), the top Democrat on the Digital Commerce and Consumer Protection subcommittee, the House panel holding the first hearing.“We as members of Congress have an obligation to express our deep dissatisfaction with the company. In addition, we want to get to the bottom of this.”“This unprecedented cyberattack raises serious questions about the security of consumers’ personal information online,” said Rep. Robert E. Latta (R-Ohio), who oversees the Digital Commerce subcommittee.“This reemphasizes the need for data breach legislation, so there is a standard — so you don't have a company decide when they want to disclose when a breach has occurred,” said Sen. Mark R. Warner (Va.).Grab your popcorn:  (video)

‘You Can’t Fix Stupid,’ Lawmaker Tells Equifax’s Former CEO -- Legislation to avert future data breaches like the one at Equifax Inc. will fall short because none can fully prevent human error, a U.S. congressman told the company’s former top executive. “You can’t fix stupid,” Representative Greg Walden, an Oregon Republican, said Tuesday at congressional hearings in Washington featuring former CEO Richard Smith, who stepped down from the credit-monitoring company last month. Smith, who apologized for the breach, testified before the House Energy and Commerce Committee, the first of four hearings this week on Capitol Hill. Lawmakers from both parties expressed outrage over the size the breach as well as the company’s response, and grilled Smith on the timeline of the incident, including when top executives learned about it. Smith said the employee responsible for communicating that vulnerable software needed to be patched didn’t do so. That failure was compounded when a scan of the company’s systems didn’t find that the vulnerability still existed, the former CEO said. “Equifax’s response to this breach has been unacceptable," New Jersey Representative Frank Pallone from New Jersey, the top Democrat on the House panel, said in his prepared remarks. “I appreciate that you’re both sorry. My question is: What now?" Smith said Equifax didn’t meet its responsibility to protect sensitive consumer information, which led to the theft of personal data for almost half of all Americans. The company said Monday that an outside cybersecurity firm has completed its review of the breach and boosted its estimate of affected U.S. consumers to 145.5 million, an increase of 2.5 million. 

As ex-Equifax CEO testifies, all credit bureaus are on trial - — Richard Smith came to Capitol Hill this week to speak about the massive breach at Equifax, where he was until last week the CEO. But it was clear Tuesday that he will have to defend the entire credit bureau industry, not just his former company. In his first of four hearings this week, Smith took bruising questions and criticism from members of the House Energy and Commerce Committee on security lapses leading up to the hack, the company’s response, suspicion about stock sales by Equifax managers and who may have perpetrated the breach. But some lawmakers also appeared to cast the breach, now estimated to have affected over 145 million consumers, as a symptom of more systematic concerns: the credit bureaus’ hold on consumer data, the security risks inherent in that data collection and the agencies’ powerful influence in credit decisions.  On allowing consumers to more easily lock their credit file, former Equifax CEO Richard Smith said, “It's time to change the paradigm and give the power to consumers to control who accesses their data."Bloomberg News “The Equifax data breach was massive in scale. I would call it shocking, but, is it really?” said Rep. Jan Schakowsky, D.-Ill., in her opening remarks for the hearing. “We have these under-regulated, private, for-profit credit reporting agencies collecting detailed personal and financial information about American consumers. It’s a treasure trove for hackers. Consumers don’t have a choice.” Smith, appearing contrite, sought to offer a detailed timeline of the company’s response to the breach while explaining steps Equifax was taking to give consumers the ability to defend themselves against fraud. This includes a new free lifetime service to let customers lock their credit file. “It's time to change the paradigm and give the power to consumers to control who accesses their data,” said Smith. He added that he “would encourage” Transunion and Experian to offer similar free services.

Warren Says Equifax Is Poised to Make Millions Off Its ‘Screw-Up’ - U.S. Senator Elizabeth Warren said one of the biggest injustices of the Equifax Inc. hack is that the company might actually benefit from the fact that a majority of Americans’ personal data is now in the hands of criminals.“Equifax will be just fine,” Warren told former Equifax Chief Executive Officer Richard Smith at a Senate Banking Committee hearing Wednesday. “Heck, it could actually come out ahead.”Warren, one of the finance industry’s most relentless critics, noted that the company advertises fraud-protection services and profits from selling consumer-data that it promises to keep safe. On Equifax and its competitors, the Massachusetts Democrat said she wants the “entire industry to be transformed.”Smith responded that after the breach, Equifax is offering victims free fraud protection tools and other services. Warren said that may be true, but once the free periods expire, many consumers will probably choose to start paying for the services. She said there are several ways Equifax is poised to make “millions of dollars off its own screw-up.”Smith was facing his second of four congressional hearings this week on a breach that led to the theft of 145.5 million Americans personal data, including Social Security numbers and drivers’ license information.After such a staggering intrusion, Senator John Kennedy expressed surprise that Equifax is getting new business, including from the federal government. The Louisiana Republican noted that Equifax had just received an Internal Revenue Service contract that’s estimated to cost more than $7.2 million to verify taxpayer identities and help with fraud prevention.That’s like giving “Lindsay Lohan the keys to the minibar,” Kennedy quipped. Smith said that to his knowledge the IRS deal was a renewal of existing work Equifax does for the agency, and not a no-bid contract.

Senator Warren: Equifax Profits from Data Hack While Consumers Pay the Price - NEP’S Bill Black appears on The Real News Network and says he’s skeptical that either Equifax or its former CEO Richard Smith will be held accountable for the breach that affected an estimated 145.5 million people. You can view here with transcript.

Equifax is tipping point for credit bureau reform, lawmakers say - — Congress may soon try to limit the personal identifiable information that companies and the government can collect on consumers. Senators on both sides of the aisle expressed more outrage Tuesday during former Equifax CEO Richard Smith’s second of four planned hearings on Capitol Hill this week probing the firm’s massive data breach. Speaking after the Senate Banking Committee hearing, Chairman Mike Crapo, R-Idaho, predicted the anger would soon take the form of legislation to revamp the industry. “[The] interest you saw on a bipartisan basis here will generate further discussion and I would expect that legislation would be generated from” that, he said. Sen. Elizabeth Warren, D-Mass., listens during a Senate Banking Committee hearing in Washington on the Equifax cybersecurity breach. Exactly what he and other lawmakers have in mind is unclear. But several lawmakers, particularly Democrats, have taken aim at the credit bureau business model itself, which involves collecting information on consumers without their knowledge or consent and selling it to businesses looking to extend credit or offer other products. During the hearing Tuesday, Sen. Elizabeth Warren, D-Mass., said it is consumers, as well as financial institutions, who pay the cost of a data breach like Equifax, while the credit bureaus may even make a profit. “The incentives in this industry are completely out of whack,” she said. “Because of this breach, consumers will spend the rest of their lives worrying about identity theft. Small banks and credit unions will have to pay to issue new credit cards. Businesses will lose money to thieves, but Equifax will be just fine.” Warren has already introduced two bills to reform the industry—one to force credit bureaus to allow consumers to freeze their credit reports for free and another that would prohibit employers from accessing the credit reports of prospective employees. But she signaled she wanted to go further than that. “Equifax and this whole industry should be completely transformed,” she said.

Tim Sloan Walked Into The Senate Banking Committee Factually Naked And Illogically Unafraid - From what we can gather, Wells Fargo CEO Tim Sloan walked into the Senate Banking Committee hearing room this morning anticipating a back-and-forth conversation with politicians about how things have improved at the scandal-plagued bank since he took over last October. If this is true, Wells Fargo CEO Tim Sloan might be insane. Since he took over, Wells has admitted that the mindbogglingly pervasive opening of fake accounts was actually even worse, used forced arbitration to rectify lawsuits with angry customers, copped to systematically overcharging customers for car insurance, and then found even more fake accounts. All in all, Sloan’s year at the helm has been less about cleaning up a mess that inherited as much as it’s been about realizing the depth of the mess that was made during his 30 years as a Wells Fargo executive. But judging from his level of preparedness for the verbal curb-stomping he received on Capitol Hill today, Tim Sloan thinks that The Stagecoach is rolling forward in truth and light under his leadership. The Senate Banking Committee clearly did not agree.As is now Senate Banking Committee tradition, a cold breeze swept through the chamber as Crapo looked down at his notes and an anticipatory silence gripped the room. Some close to the member’s entrance heard a whistling tune echo down the hallway and the voice of a terrified young Senate staffer yell “Warren comin’!” before the door swung open and Elizabeth Warren strode in bearing a manila folder…and a tacit promise of whooping dat ass. And Warren did not disappoint in putting a show. While her routine of righteous anger pitched immediately to 11 has begun to feel tired and preachy, it seemed to fit the tenor of the room. It also played beautifully against Sloan’s bizarre lack of preparation and sniveling attempts at painting himself as a victim of persecution.

 New CEO, same drubbing for Wells on Capitol Hill - One of the most dramatic moments during Tuesday’s congressional hearing on the Wells Fargo scandal came when CEO Tim Sloan was asked why the bank should be allowed to keep its charter. Until recently, that question would have been unfathomable at a Senate Banking Committee hearing. But in response, Sloan did not present a strong case for why Wells should be permitted to continue operating.  Instead, Sloan noted that one in three U.S. households are Wells Fargo customers, and that the firm has 270,000 employees.  “So you’re too big?” was the blunt response from Sen. Brian Schatz, D-Hawaii.  “No, we’re not too big at all. I’m just reinforcing that every day we have 270,000 team members,” Sloan said, before being cut off. The exchange illustrated that more than a year after the unauthorized-accounts scandal emerged, the once-swaggering big bank remains in a defensive crouch. Throughout the hearing, Sloan absorbed heavy punches from Democrats and somewhat lighter blows from their Republican colleagues. Sloan has worked at Wells Fargo since the 1980s, and he served as the bank’s chief financial officer between 2011 and 2014. Before Tuesday, his own actions prior to September 2016 — some 3.5 million potentially unauthorized customer accounts were opened in the preceding years — had gotten little public attention. But Warren argued that Sloan looked the other way as the abuses mounted because Wells Fargo’s sales prowess was a key selling point to Wall Street. “You say you’ve been making changes at Wells Fargo for 30 years?" the Massachusetts Democrat said. "But you enabled this fake-account scam, you got rich off of it and then you tried to cover it up.” “At best you were incompetent. At worst you were complicit. And either way, you should be fired. Wells Fargo needs to start over, and that won’t happen until the bank rids itself of people like you, who led it into this crisis.”

Dem bill would shut down banks over Wells-caliber abuses - — Rep. Maxine Waters, D-Calif., introduced a bill Wednesday outlining a process to break apart systemically important big banks that engage in widespread consumer abuse. The bill, sparked by Wells Fargo's ongoing fake-accounts scandal, was backed by seven other Democrats. It would establish an automatic review by the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Federal Reserve Board of institutions defined as a "global systemically important bank holding company" for legal violations that may have harmed consumers.

Wells Fargo directors ordered to defend lawsuit on fake accounts - Wells Fargo executives and directors accused of steering the bank into the worst scandal of its modern history were ordered to defend a lawsuit accusing them of profiting from the creation of millions of fake customer accounts.A San Francisco federal judge ruled Wednesday that shareholders can proceed with a suit alleging the company's top brass "repeatedly and brazenly" failed to serve Wells Fargo's best interests. He found the complaint properly laid out evidence showing executives and directors made false statements about the scheme in the bank's filings to the U.S. Securities and Exchange Commission.The ruling came a day after U.S. Senator Elizabeth Warren attacked Wells Fargo Chief Executive Officer Tim Sloan while he testified before Congress, saying he "bragged" about high levels of new accounts even though he was aware of sales-practice problems at the bank. "You should be fired," the Massachusetts Democrat said. "You enabled this fake-account scam, you got rich off it, and you tried to cover it up." Del Galloway, a Wells Fargo spokesman based in Washington, didn't immediately respond to phone and email messages Thursday seeking comment on the case, which was brought by shareholders as a derivative action to seek restitution on behalf of the bank. Wednesday's ruling didn't address the merits of the dispute and is only one of several procedural hoops investors have to jump through to get the case to trial. Tigar last month gave the plaintiffs and the bank permission to try to negotiate a settlement with a private mediator. A California state court judge in May dismissed similar allegations by investors, while allowing them to revise and refile their complaint.

CDO Redux: Credit Spreads & Financial Fraud    – Chris Whalen - For some time now, we have been concerned that the FOMC’s overt manipulation of credit spreads has embedded future credit losses on the balance sheets of US banks.  But now we are starting to see even greater signs of stress as the large Wall Street banks again return to derivatives in order to manufacture the appearance of profitability. The leader of this effort is none other than Citigroup (NYSE:C), which has surpassed JPMorganChase (NYSE:JPM) to become the largest derivatives shop in the world.  Citi has embraced the most notorious product of the roaring 2000s, the synthetic collateralized debt obligation or “CDO” security, a product that fraudulently leverages the real world and literally caused the bank to fail a decade ago. “It’s an astonishing comeback for the roughly $70 billion market for synthetic CDOs, which rose to infamy during the crisis and then faded into obscurity after nearly destroying the financial system,” reports Bloomberg. As we note in a new working paper appropriately entitled “Good Banks, Bad Banks,” large financial institutions are not particularly profitable.  In times of tight credit spreads, the pressure on these banks to “cheat” when it comes to risk taking and disclosure becomes irresistible. The dilemma large banks face when credit spreads are very low is similar to retailers that cannot compete, for example, with the efficiency of Amazon (NASDAQ:AMZN).  Low cost competitors compel other retailers to match prices, even if that forces them to lose money on each sale.  Trying to “make up” the loss by increasing sale volume is the obvious path to retailer insolvency.In banking, high spreads eventually force borrowers to default and must be cured before the economy fails.  Low spreads force banks to “match or lose customers” by cutting prices.  When a “matching” bank’s costs are greater than the spread borrowers pay, the correct result is to shrink the number of deals done, eventually causing spreads to rise.  But that’s disastrous for bank managers.  As in retail, therefore, the initial reaction of bank managers is to make up for the “low yield” on each transaction by writing more deals.  As long as government is willing to “insure” deposits of banks that speculate in this manner, it creates an obvious condition of “heads managers win” and “tails shareholders and taxpayers lose.” The most obvious use for a “synthetic CDO” is to generate a lot of fictional (“synthetic”) transactions that increase the bank’s “deal flow” without need to find actual customers that want “real” loans.

Justice Department gives big banks green light on real-time payments - Following an antitrust review that lasted almost a year, the Department of Justice has greenlighted a real-time payments network being developed jointly by the nation’s largest banks. The government’s approval may boost the prospects of a system that is being built by The Clearing House, the payments firm co-owned by JPMorgan Chase, Citigroup, Bank of America, Wells Fargo and a host of other banks with more than $50 billion of assets.

Bitcoin is not a 'fraud' - Several weeks ago, Jamie Dimon created a stir in the cryptocurrency markets with his pronouncement of bitcoin as a “fraud.” His comments demonstrate a distinct lack of understanding of the reality that bitcoin, in fact, has an incredible value proposition and stands to replace some of the antiquated characteristics of the current financial markets.Bitcoin has been the speculation of much-heated debate recently. It’s been dismissed by critics as a fraud and a Ponzi scheme, while simultaneously being praised as the greatest financial invention in the last century.  Its previous associations with illicit markets and its extreme volatility has commanded the attention of the general public as to the nature and possibilities of cryptocurrencies, as well as the risks.While bitcoin’s value has fluctuated, in general it has risen steadily. Bitcoin veterans know there are many people who hold most of their wealth entirely in crypto. When the price falls, these bitcoin aficionados view it as an opportunity to convert more of their holdings from fiat.The legacy market participants struggle to understand why this might be the case. What gives confidence to bitcoin holders to ride out a downturn without losing confidence? Why are many crypto investors interested in the wild west of ICOs rather than the regulated stable legacy markets?The answer is that the crypto economy has a much greater value proposition than any legacy market. The ability of a third party to delay, censor or monitor transactions is a risk, and the elimination of any risk automatically increases confidence. Risk is also a form of cost, and the crypto ecosystem is always more cost efficient and secure. To understand this value proposition is also to understand that the value differential between the legacy and crypto ecosystem is not just large, but precipitously large. This causes immense economic pressure that will rapidly move capital from legacy systems to the crypto economic system. The progress on this has been slowed by crypto’s cumbersome user interface. Once this is addressed, the dam will break.

IMF Chief Lagarde Tells Central Bankers: "Not Wise to Dismiss Virtual Currencies" - Christine Lagarde, head of the IMF, warns central bankers that bitcoin is rising. She has told them not to discount digital currencies, because they are gaining more adoption and traction. Lagarde addressed this issue in a conference Friday in London. She said digital currencies might give existing currencies “a run for their money.”  An ABC News article quoted her: “In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money. The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.” Lagarde went on to say that digital currencies will not replace the current currencies anytime soon. She believes bitcoin is still too volatile. This is why many institutional investors are still waiting on the sidelines. However, the time will come when they decide to jump in.“For now, Lagarde said, digital currencies are unlikely to replace traditional ones, as they are ‘too volatile, too risky, too energy intensive and because the underlying technologies are not yet scalable.'”She also mentioned that high profile cases of exchange hacks, like the Mt Gox debacle, has caused mainstream investors to be wary of big investments into the space.

Cryptos Fear Credit -  Proposals for monetary reform, whether mild or radical, are always and everywhere informed by some underlying theory of money.  A week ago I spent two days talking with a group of technologists and lawyers–perhaps I should say digital coders and legal coders–and pressed them on this point.  Chatham  So far as I understand, and it is important to emphasize that there was not consensus on the details, the technologists see themselves as creating a form of money more trustworthy than that issued by sovereign states, more trustworthy because the rules of money creation (whether proof-of-work or proof-of-stake or whatever) limit issue to a fixed and finite quantity.  Scarcity of the tokens today, and confidence that scarcity will be maintained in years to come, are supposed to support the value of the tokens today.  Importantly, no such confidence can be attached to state-issued money; quite the contrary states are seen as reliable abusers of money issue for their own purposes.  Cryptocurrency is digital gold while fiat currency is just paper, subject to overissue and hence depreciation. From this point of view, current holders/users of cryptocurrency are just early adopters.  Once everyone else realizes the superiority of cryptocurrency, they will all want to switch over, and the value of fiat currency will collapse.  The (fluctuating) prospect of that eventual switchover shows up today in the (fluctuating) exchange rate between crypto and fiat (as here).  And the (fluctuating) prospects of different cryptocurrencies shows up today in the (fluctuating) exchange rates between different cryptocurrencies (as here).  According to the theory, one of the cryptocurrencies will be the future global currency, replacing the dollar, but no one knows which one.  People who got into Facebook at the beginning are all multimillionaires; early adopters of the future global cryptocurrency will be too, but which one will it be?  That’s what the lack of consensus about the details is all about. One of the most fascinating things about the technologist view of the world is their deep suspicion (even fear) of credit of any kind.  They appreciate all too well the extent to which modern society is constructed as a web of interconnected and overlapping promises to pay, and they don’t like it one bit.   Fiat money is untrustworthy enough, promises to pay fiat money are doubly untrustworthy.  One way around the problem would be to require full collateralization of all such promises, maybe even using so-called “smart contract” technology to ensure that promised payments are made automatically, basically an equity-based rather than debt-based system.

JPMorgan Updates By-laws In Case Of "Nuclear Disaster" Or World War III --In the most bizarre news of the day, Bloomberg's Hugh Son noticed that in a late Thursday filing, the board of JPMorgan approved a series of revisions to the bank's by-laws, including a particularly notable one: a new section defining what constitutes a quorum in an emergency resulting from "an attack on the United States" or a “nuclear or atomic disaster.” That scenario is listed among emergencies that - understandably - might make it hard to hold a normal meeting for board members of America's largest bank.The clause can be activated not just in case of a nuclear disaster or World War III, but also in a variety of situations including "without limitation apparent terrorist activity or the imminent threat of such activity, chemical and biological attacks, natural disasters, or other hazards or causes commonly known as acts of God."In short, JPMorgan's Board has decided it is time to seriously consider a TEOTWAWKI scenario.As Son notes, in such an event, any member of the board or the firm’s operating committee can call a meeting using “any available means of communication.” And, just in case everyone else on the Board happens to die, one person will be sufficient to constitute a quorum. Vacancies can be filled by a majority vote of available directors. And if none are around, then designated officers can stand in. No officer, director or employee can be held liable in such a situation, except for “willful misconduct.” The revised Emergency By-Laws are reposted below (highlights ours):

 September 2017: Unofficial Problem Bank list declines to 119 Institutions, Q3 2017 Transition Matrix  Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources. Here is the unofficial problem bank list for September 2017.  Here are the monthly changes and a few comments from surferdude808: Update on the Unofficial Problem Bank List for September 2017.  During the month, the list fell a bit from 123 institutions to 119 after five removals and one addition.  Assets declined to $27.6 billion from $28.3 billion a month earlier.  A year ago, the list held 177 institutions with assets of $55.5 billion.  This month, actions have been terminated against Community Bank of Pickens County, Jasper, GA ($331 million); Commerce Bank of Arizona, Tucson, AZ ($183 million  Ticker: CBOF); The First Bank of Baldwin, Baldwin, WI ($170 million); The State Bank of Geneva, Geneva, IL ($84 million) and Champion Bank, Parker, CO ($50 million). The addition this month was Markesan State Bank, Markesan, WI ($154 million). With it being the end of the third quarter, we bring an updated transition matrix to detail how banks are moving off the Unofficial Problem Bank List.  Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, a total of 1,722 institutions have appeared on a weekly or monthly list at some point.  Only 6.9 percent of the banks that have appeared on a list remain today.  In all, there have been 1,603 institutions that have transitioned through the list.  Departure methods include 929 action terminations, 405 failures, 252 mergers, and 17 voluntary liquidations.  Of the 389 institutions on the first published list, only 12 or 3.1 percent still remain in a designated troubled status eight years later.  The 405 failures represent 23.5 percent of the 1,722 institutions that have made an appearance on the list.  This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.

Forced arbitration is bad for consumers – EPI - Many financial institutions use forced arbitration clauses in their contracts to block consumers with disputes from banding together in court, instead requiring consumers to argue their cases separately in private arbitration proceedings. Embattled banking giant, Wells Fargo, made headlines by embracing the practice to avoid offering class-wide relief for its practices related to the fraudulent account scandal and another scandal involving alleged unfair overdraft practices.New data helps illuminate why these banks—and Wells Fargo in particular—prefer forced arbitration to class action lawsuits. We already knew that consumers obtain relief regarding their claims in just 9 percent of disputes, while arbitrators grant companies relief in 93 percent of their claims. But not only do companies win the overwhelming majority of claims when consumers are forced into arbitration—they win big.Some crucial background helps illustrate the stakes. In July 2017, the Consumer Financial Protection Bureau (CFPB) issued a final rule to restore consumers’ ability to join together in class action lawsuits against financial institutions. Based on five years of careful study, the final rule stems from a congressional directive instructing the agency to study forced arbitration and restrict or ban the practice if it harms consumers.In recent weeks, members of Congress have introduced legislation to repeal the CFPB rule and take away consumers’ newly restored right to band together in court. Opponents of the rule have suggested that the bureau’s own findings show consumers on average receive greater relief in arbitration ($5,389) than class action lawsuits ($32). As we have previously shown, this is enormously misleading. While the average consumer who wins a claim in arbitration recovers $5,389, this is not even close to a typical consumer outcome. Because consumers win so rarely, the average consumer ends up paying financial institutions in arbitration—a whopping $7,725. A recent report released by the nonprofit Level Playing Field hones in on Wells Fargo’s use of arbitration in consumer claims. Compiling publicly reported data from the American Arbitration Association (AAA) and JAMS (initially named Judicial Arbitration and Mediation Services, Inc.), the report found that just 250 consumers arbitrated claims with Wells Fargo between 2009 and the first half of 2017.1 This number is surprisingly small, since this period spans the prime years of the bank’s fraudulent account scandal.

Letter to U.S. Senate Banking Committee on Wells Fargo arbitration – EPI - Dear Chairman Crapo and Ranking Member Brown: On behalf of the Economic Policy Institute Policy Center (EPI-PC), we write to share important new data about Wells Fargo’s use of arbitration in its consumer disputes, in anticipation of CEO Tim Sloan’s scheduled testimony to the Committee. Many financial institutions use forced arbitration clauses in their contracts to block consumers with disputes from banding together in court, instead requiring each consumer to argue their case separately in private arbitration proceedings. Wells Fargo has made headlines by embracing the practice to avoid offering class-wide relief for its fraudulent account scandal,1 among other allegations of illegal conduct—including ongoing litigation over illegal overdraft practices.2Important new data helps illuminate why these banks—and Wells Fargo in particular—prefer forced arbitration to class action lawsuits. While Wells Fargo touts forced arbitration as “less expensive” for consumers,3 a deeper examination of publicly available data reveals that the average consumer that arbitrates with their bank or lender is saddled with significant costs.In July 2017, the Consumer Financial Protection Bureau (CFPB) issued a rule to restore consumers’ ability to join together in class action lawsuits against financial institutions.4 Based on five years of careful study, the final rule stems from a congressional directive instructing the agency to study forced arbitration and restrict or ban the practice if it harms consumers. The Senate is currently considering a resolution to repeal the CFPB rule and take away consumers’ newly restored right to band together in court, S.J. Res. 47.Opponents of the CFPB rule have suggested that the bureau’s own findings show consumers on average receive greater relief in arbitration ($5,389) than class action lawsuits ($32).5 These figures are enormously misleading. While the average consumer who wins a claim in arbitration recovers $5,389, this is far from a typical consumer outcome, as consumers win just 9 percent of their claims.6 Our recent publication, “Correcting the record,” considered the total amount awarded across claims in the CFPB study to find the average outcome between a consumer and their financial institution, rather than the average award in the sixteen claims consumers won.7 Contrary to the suggestion that consumers receive more money in arbitration than class action lawsuits, EPI found the vast majority of consumers lose money in arbitration. Indeed, on average, consumers are ordered to pay their bank or lender $7,725 in arbitration.8

 U.S. Chamber, banking groups sue over CFPB arbitration rule - — The U.S. Chamber of Commerce along with 13 other business associations and five financial trade associations filed a lawsuit Friday against the Consumer Financial Protection Bureau, arguing that its rule banning mandatory arbitration agreements harms consumers.“Arbitration gives consumers the ability to bring claims that they could not realistically assert in court, including the small and individualized claims that they care the most about,” the lawsuit said.The CFPB finalized the arbitration rule in July and the financial services industry had hoped that Republican lawmakers would be able to reject the rule using a procedure called the Congressional Review Act, which gives Congress 60 session days to roll back an agency rule with a simple majority. The House easily passed a measure nullifying the CFPB’s rule in July, but the Senate has yet to act and with a narrow Republican majority, it is unclear if it will be able to gather the votes before the statutory deadline expires.Without certainty that Congress will eventually be able to reject the rule, the lawsuit serves as an alternative means to fight it.The industry lawsuit argues that the CFPB didn’t follow its own cost-benefit analysis and finalized the rule despite conducting a study that found outlawing arbitration clauses in financial contracts may actually hurt consumers. “The bureau ignored the data before it that demonstrated both the benefits of arbitration to consumers and the failure of class-action lawsuits to provide consumers with meaningful benefits, while also failing to consider the large volume of additional data that confirms both of those points,” the lawsuit said.

Calif. bars financial firms from imposing mandatory arbitration - Wells Fargo's home state of California passed a law aimed at curtailing the bank's use of closed-door arbitration to shroud complaints from aggrieved customers affected by its scandals. Governor Jerry Brown signed a measure inspired by the San Francisco-based lender's fake-accounts scandal. It prohibits financial firms from forcing customers out of court and into arbitration to settle disputes when employees used clients' information to commit fraud. Regulators fined Wells Fargo $185 million last year over its widespread practice of opening checking and credit accounts without customers' authorization to meet aggressive sales goals. The company said in August a more inclusive review found employees may have created 3.5 million bogus accounts. Wells Fargo has also been embroiled in other consumer spats in recent months over unwanted car insurance, mortgage lending and overdraft fees. The bank said it's taking steps to rebuild the trust of its customers. "We are focused on making things right for our customers, fixing the problems, and building a better Wells Fargo," a company spokesman said in a statement. Washington Democrats who railed against the bank's use of mandatory arbitration with harmed customers were infuriated in September when it appeared that Equifax Inc. would try to take the same approach after disclosing that hackers had stolen personal data for almost half of all Americans. Equifax eliminated forced arbitration clauses from its TrustedID free credit monitoring and identity protection services offered to customers after the data breach. The Consumer Financial Protection Bureau finalized a rule in July that would allow more consumers to sue financial firms. Last week, a coalition of corporate lobbying groups, led by the U.S. Chamber of Commerce, sued the agency. They claimed its actions aren't valid because its structure, as created through the 2010 Dodd-Frank Act, is unconstitutional. They also challenged the research the CFPB used to write the arbitration rule, saying it's flawed and that the regulator ignored evidence that shows its regulation will harm consumers. 

As CFPB closes door on payday, OCC opens one for deposit advance — The world of short-term lending was shaken up Thursday as one regulator issued a rule cracking down on payday loans while another made it easier for banks to offer an alternative product.The Consumer Financial Protection Bureau finalized its long-awaited rule to rein in short-term, high-interest loans that are typically due in two to four weeks, requiring lenders to do an ability-to-repay test to ensure borrowers can afford such products. Less than an hour later, the Office of the Comptroller of the Currency surprised the  financial services world by making its own move—rescinding guidance that made it more difficult for banks to offer a payday-like product called deposit advance. The dueling moves effectively mean that the CFPB was closing a door in one area, while the OCC opened its own for national banks. The OCC billed its decision as one intended to avoid duplication with the CFPB’s efforts. “Today, I approved rescission of the OCC’s guidance regarding deposit advance products, effective immediately,” acting Comptroller of the Currency Keith Noreika said in a press release. The CFPB’s payday rule, he added, “necessitates revisiting the OCC guidance.” But the CFPB’s payday rule was never directed at banks or credit unions. Indeed, CFPB Director Richard Cordray said Thursday there was a carve-out for community banks and credit unions that make 2,500 or fewer short-term or balloon payment loans per year and derive less than 10% of their revenue from such loans. “We have no intention of disrupting lending by community banks and credit unions. They have found effective ways to make small-dollar loans that consumer are able to pay without high rates of failures,” Cordray said. Ultimately, the moves will leave the financial services more fragmented. Payday lenders have already begun making longer term loans, ones that are 45 days or longer, which the CFPB rule does not cover, in response to the final rule.

 Small mortgage lenders seek exemption from CFPB exams - — Independent nonbank mortgage lenders are urging policymakers to let them escape from the direct supervision of the Consumer Financial Protection Bureau.In a Sept. 18 letter, two trade groups representing that industry lobbied Treasury Secretary Steven Mnuchin to support a bill that would give oversight of nonbank mortgage lenders exclusively to state regulators.The groups want to "seek your support for targeted regulatory relief for smaller independent mortgage bankers," the letter from the Community Home Lenders Association and the Community Mortgage Lenders of America said. The bill is similar to a recommendation made by the Treasury Department in its June report on regulatory relief."Supervision of nonbanks should be returned to state regulators who have proven experience in this field and an existing process for interstate regulatory cooperation," the report said.Part of the argument is that small nonbank lenders are similar to community banks and credit unions, which are exempt from direct supervision by the CFPB under the Dodd-Frank Act if they have assets of less than $10 billion."But independent mortgage banks aren't exempt, regardless of how small they are," Scott Olson, executive director of the Community Home Lenders Association, said in an interview.The groups argue that the dual regulatory process is "excessive," noting that they operate in a similar manner to community banks. The bill, by Rep. Roger Williams, R-Tex., would create an exemption for independent mortgage lenders with a net worth of less than $50 million and which originate less than 25,000 mortgages a year.

CFPB gives more time to reach troubled borrowers in servicer rule revision -- The Consumer Financial Protection Bureau said Wednesday that it would give mortgage servicers more time to send early intervention notices to distressed borrowers who have asked not to be contacted about the collection of their debts. The CFPB issued an interim final rule to give servicers a longer, 10-day window to provide modified early intervention notices to borrowers facing foreclosure.The CFPB said the 2016 mortgage servicing rules created "unintended challenges" for mortgage servicers because of the timing of notifying borrowers who have invoked their rights to have companies stop calling them to collect debts under the Fair Debt Collection Practices Act.  “Today’s action should make it easier for mortgage borrowers to receive timely information from their mortgage servicers about available options for saving their home, even if they have submitted a request to cease communication,” CFPB Director Richard Cordray said in a press release. Because mortgage servicers subject to the Fair Debt Collection Practices Act are prohibited from sending notices to borrowers more than once during any 180-period, the CFPB found that servicers essentially had too little time to provide the early intervention notices to distressed borrowers. The CFPB found that servicers had to provide notices on exactly the 180th day, after providing a prior notice, which gave them too little margin."The bureau did not intend this result and is concerned that the provision imposes too narrow a window for compliance and may provide insufficient guidance as to when and how servicers comply with the timing requirements under certain circumstances," the interim final rule stated. The bureau said it is issuing the interim final rule to address a provision in Regulation X that takes effect Oct. 19.

Declining capital at Fannie, Freddie 'irresponsible': FHFA's Watt - — The top regulator for Fannie Mae and Freddie Mac signaled Tuesday that he was not prepared for the government-sponsored enterprises to continue to lose their capital cushion, calling the current situation “irresponsible.”Though Federal Housing Finance Agency Director Mel Watt stopped short of saying he would break with a Treasury agreement that forces all profits of the firms to go to the government, he emphasized that it couldn’t continue indefinitely.“We need a buffer because any business to operate effectively needs to have some capital cushion for things that could go wrong or things that really, in our case … fluctuations that take place,” Watt told lawmakers at a House Financial Services Committee hearing. He also warned that a draw on the government-sponsored enterprises’ line of credit would erode investor confidence.“This could stifle liquidity in the mortgage-backed securities market and could increase the cost of mortgage credit for borrowers,” Watt said.

Irma may be the hurricane that hits Ginnie hardest -- Of the three major hurricanes that hit the U.S. recently, Ginnie Mae is finding it may have the most exposure to Hurricane Irma. More than 675,000 loans representing an unpaid principal balance of $111.3 million in outstanding securitized loans from Ginnie pools are in presidentially declared disaster areas affected by Irma, a storm that hit Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. Hurricane Harvey affected more than 275,000 loans and $61.4 million in UPB in Texas. Maria affected more than 115,000 loans and $11.8 million in UPB in Puerto Rico and the U.S. Virgin Islands. In total, a little less than 10% of Ginnie's $1.8 billion portfolio of 10.9 million loans could be affected by the storm, although the extent of the specific property damage in disaster areas remains to be seen. The Ginnie II fixed-rate coupon with the highest exposure to the storms is the 4% coupon. The 4% coupon has a 10.71% exposure to the hurricanes. The 3% coupon, in contrast, has the least exposure to the storms. Only 6.48% of collateral underlying securities with a 3% coupon are in disaster areas. The exposures of other coupons in Ginnie II pools are as follows: 6.86% for the 2.5% coupon, 8.34% for the 3.5% coupon, 9.24% for the 5% coupon and a 10.01% for the 4.5% coupon. Ginnie is giving expanded loan buyout authority to certain issuers in order to help them remove loans affected by the storm from securitized pools.

Wells Fargo to offer fee refunds to 110,000 mortgage customers - Amid allegations that Wells Fargo scammed borrowers who extended mortgage rate lock periods, the embattled bank said that it will refund those who believe they were wronged. The $1.9 trillion-asset bank announced the customer refund plan on Wednesday. Wells Fargo plans to contact all home lending customers who paid fees for rate lock extensions between Sept. 16, 2013, and Feb. 28, 2017, and to refund any who believe they should not have paid the charges. The announcement included an acknowledgment that some customers were improperly charged. “We want to serve our customers as they would expect to be served, and are initiating these refunds as part of our ongoing efforts to rebuild trust,” CEO Tim Sloan said in a press release. Tim Sloan, chief executive officer and president of Wells Fargo, speaks during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington. A rate lock enables a borrower to get a mortgage at a specified interest rate for a discrete period of time, often 30 to 90 days. If the loan does not close within that window, the borrower might be charged an additional fee to extend the rate lock. The fees are commonly charged when the borrower is responsible for the delay. But in August, a homebuyer sued Wells Fargo, alleging that borrowers were charged the fee even when rate locks expired because of the bank’s own processing delays.

Morgan Stanley close to fulfilling mortgage settlement terms - Morgan Stanley is close to finishing the distribution of consumer relief it agreed to in order to settle a residential mortgage-backed-securities-related complaint with New York State. The Wall Street firm's total for distributed relief through Aug. 1 fulfills 93% of the $400 million requirement put in place to settle claims the company's RMBS activity violated state law. The company's settlement monitor previously had determined that it had fulfilled 85% of its obligations through June 30. "Nineteen months after the settlement agreement was signed, Morgan Stanley has nearly completed its obligation to provide relief to New York communities in need of housing assistance," said Eric Green, an independent monitor of the settlement, in a press release. The relief distributed through Aug. 1 includes more than $29 million for a neighborhood stabilization grant used to acquire and remediate nonperforming loans on abandoned properties.

Special Investigation: How America’s Biggest Bank Paid Its Fine for the 2008 Mortgage Crisis—With Phony Mortgages! -- David Dayen -- After JPMorgan’s deceitful activities in the housing market helped trigger the 2008 financial crash that cost millions of Americans their jobs, homes, and life savings, punishment was in order. Among a vast array of misconduct, JPMorgan engaged in the routine use of “robo-signing,” which allowed bank employees to automatically sign hundreds, even thousands, of foreclosure documents per day without verifying their contents. But in the United States, white-collar criminals rarely go to prison; instead, they negotiate settlements. Thus, on February 9, 2012, US Attorney General Eric Holder announced the National Mortgage Settlement, which fined JPMorgan Chase and four other mega-banks a total of $25 billion.2JPMorgan’s share of the settlement was $5.3 billion, but only $1.1 billion had to be paid in cash; the other $4.2 billion was to come in the form of financial relief for homeowners in danger of losing their homes to foreclosure. The settlement called for JPMorgan to reduce the amounts owed, modify the loan terms, and take other steps to help distressed Americans keep their homes. A separate 2013 settlement against the bank for deceiving mortgage investors included another $4 billion in consumer relief.3A Nation investigation can now reveal how JPMorgan met part of its $8.2 billion settlement burden: by using other people’s money.4Here’s how the alleged scam worked. JPMorgan moved to forgive the mortgages of tens of thousands of homeowners; the feds, in turn, credited these canceled loans against the penalties due under the 2012 and 2013 settlements. But here’s the rub: In many instances, JPMorgan was forgiving loans on properties it no longer owned.5 The alleged fraud is described in internal JPMorgan documents, public records, testimony from homeowners and investors burned in the scam, and other evidence presented in a blockbuster lawsuit against JPMorgan, now being heard in US District Court in New York City.6

Incenter brokering $9.6 billion in agency MSRs -- Incenter Mortgage Advisors is brokering on behalf of an unnamed mortgage banker an almost $10 billion mortgage servicing rights package that includes $870 million in loans with hurricane exposure. The bid deadline for emailed offers is noon Eastern on Oct. 11. A total of 5,097 of the 39,852 performing loans in the package are located in federal disaster areas affected by Hurricanes Harvey and Irma, according to Incenter's offering document. Cenlar, which is subservicing the package, is working with IMA and the seller to provide more details on the extent to which the collateral properties sustained damage by the bid deadline. MSR buyers since the storms have been commonly asking for representations and warranties as to the condition of properties in disaster areas to address potential risk from storm exposures in the Southeast and Texas. The greatest concentration is in California where there are 10,520 loans with a more than $3.4 billion current balance. The next largest concentration is in Florida, which was the state hit hardest by Hurricane Irma. Almost 4,000 loans with a current balance of more than $709 million are in Florida. The state with the 12th largest concentration of loans in the portfolio is Texas, where Hurricane Harvey occurred. The current balance of loans in Texas is more than $271.8 million and there are 1,764 loans located in that state. 

Issuers can combine hurricane exposure for relief aid: Ginnie Mae - Ginnie Mae mortgage-backed securities issuers can aggregate their portfolio's exposure to areas hit by the three recent hurricanes to qualify its disaster relief program. Through pass-through advances from Ginnie Mae, issuers get delinquency and default relief for securitized loans in areas where the president declared a major disaster. "It makes an adjustment to our MBS guide's long-standing requirement that 5% of an issuers' book needs to be in a disaster-affected area in order to qualify for short-term liquidity assistance from us," said Ginnie Mae Acting President Michael Bright in a press release. "Today's change allows issuers to meet this 5% requirement using their collective exposures to Hurricanes Harvey, Irma and Maria. While we cannot alter the core, fundamental requirements for issuers in our program, these adjustments recognize that last month's confluence of disasters requires some extraordinary measures." Approximately 10% of Ginnie Mae's total MBS portfolio — 1.07 million loans with an unpaid principal balance of $184.5 billion — is in areas hit by the three storms.

Tide of foreclosures is rising in Houston's flooded housing market -- Houston's housing market will be in recovery mode for a while following epic floods from Hurricane Harvey.But the Bayou City's residential market was already sinking before Hurricane Harvey hit.Foreclosure postings in the Houston area were up by a staggering 67% even before the storm blew in, according to a new report by Attom Data Solutions. Nationwide foreclosures were over 21% below where they were a year earlier in August.Economists and real estate agents predict that Houston foreclosures will rise as some owners walk mortgages on properties that were heavily damaged by flooding and had no insurance."The Houston housing market was already showing signs of distress even before Hurricane Harvey hit," said Attom Data Solutions' economist Daren Blomquist."Hurricane Harvey will mean even more distress in the Houston housing market over the next year or two, although it may take some time for that to show up in the foreclosure numbers given the foreclosure moratoriums in place." "Based on sales data that has come in for August so far, we are projecting a 27% year-over-year decline in Houston home sales in August," he said. "By comparison we are projecting a 2% increase in Dallas."

Harvey-impacted borrowers have healthier equity than those of Irma - The majority of borrowers impacted by Hurricane Harvey have a significant amount ofequity, while about 350,000 in Hurricane Irma disaster areas have either limited or negative equity, according to Black Knight Financial Services.Less than 0.5% of borrowers impacted by Hurricane Harvey were in negative equity positions before the storm hit, and less than 4% have below 10% equity. Regarding borrowers in counties impacted by Hurricane Irma, 5.3% still owe more than the value of their home, and an additional 5.6% have less than 10% equity.Nationwide, 1.4 million borrowers, or 2.8% of homeowners with mortgages, had negative equity in August. "Before Hurricane Harvey made landfall, the average combined loan-to-value ratio for homeowners with mortgages in what became FEMA-designated disaster areas was 53%. Right on par with the national average, that's the lowest we've seen since prior to 2004," Ben Graboske, Black Knight's data and analytics executive vice president, said in a press release."This equates to approximately $131,000 in equity per borrower. That works out to a lot of skin in the game, and will likely serve as strong motivation for borrowers not to walk away from a storm-damaged home," he continued. Notably, more than 75% of mortgages for properties in Harvey-affected areas are held in Fannie Mae, Freddie Mac or Ginnie Mae securities, meaning the majority of borrowers affected by the storm will be able to find assistance under the various programs that have been instituted.In Florida, the 48 FEMA-declared Irma disaster areas include over 90% of the state's mortgaged properties, meaning that more than 5% of mortgages in the country are included in Hurricane Irma's disaster areas, according to Graboske. Unlike Houston, where higher-than-ever home prices have helped reduce negative equity, Florida home prices are 17% below their 2006 peak.

Black Knight Mortgage Monitor: "350,000 in Hurricane Irma Disaster Areas Have Negative or Limited Equity" - Black Knight released their Mortgage Monitor report for August today. According to Black Knight, 3.93% of mortgages were delinquent in August, down from 4.24% in August 2016. Black Knight also reported that 0.76% of mortgages were in the foreclosure process, down from 1.04% a year ago.This gives a total of 4.69% delinquent or in foreclosure.Press Release: Black Knight’s Mortgage Monitor: Most Borrowers Impacted by Hurricane Harvey Have Significant Equity; 350,000 in Hurricane Irma Disaster Areas Have Negative or Limited Equity   On the heels of reporting an early, 16 percent spike in mortgage delinquencies in Hurricane Harvey-related disaster areas, Black Knight examined the equity outlook for mortgage holders impacted by either Hurricane Harvey or Hurricane Irma. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, despite the extent of the damage in Texas, Hurricane Harvey-impacted borrowers have a greater equity stake, which may bode well for long-term recovery. “Before Hurricane Harvey made landfall, the average combined loan-to-value ratio (CLTV) for homeowners with mortgages in what became FEMA-designated disaster areas was 53 percent,” said Graboske. “Right on par with the national average, that’s the lowest we’ve seen since prior to 2004. This equates to approximately $131,000 in equity per borrower. That works out to a lot of skin in the game, and will likely serve as strong motivation for borrowers not to walk away from a storm-damaged home. In addition, over 75 percent of mortgages in the Hurricane Harvey footprint are held in Fannie Mae, Freddie Mac or Ginnie Mae securities. Therefore, the bulk of borrowers affected by the storm will be able to find assistance under the various foreclosure moratoriums and forbearance programs that have been instituted. While we have already seen an early spike in delinquencies in Hurricane Harvey-impacted disaster areas, with many more likely to follow in September’s data, the combination of available assistance and healthy equity stakes on the part of borrowers are both very positive signs for the long term.“In Florida, Hurricane Irma impacted a much larger portion of the state. The 48 FEMA-declared Hurricane Irma disaster areas include over 90 percent of the state’s mortgaged properties. To put this in perspective, that means that by balance, over five percent of all mortgages in the U.S. are included in Hurricane Irma’s disaster areas. Unlike Houston, though, where all-time-high home prices have contributed to a significant reduction in negative equity, home prices in Florida remain 17 percent below their 2006 peak. On average, borrowers in Hurricane Irma-related disaster areas have a CLTV of 57 percent, somewhat higher than the national average. Of the 3.2 million borrowers impacted by Irma, an estimated 170,000 were still in negative equity positions before the storm, with another 180,000 having less than 10 percent equity in their homes. Due to lackluster home price recovery since the housing crisis, the negative equity rate in Irma’s disaster area is nearly twice the national average.”

For some elderly Americans, mortgage rules herald harder struggle (Reuters) - Lloyd Nicholas, 82, and his wife Gloria Hitchcock, 69, sat next to each other as they received counseling on a reverse mortgage, a loan that would allow them to cash out the equity in their home, pay off a mountain of bills and live comfortably as they age in the house they built 50 years ago. But a change in rules on Monday by President Donald Trump’s administration will shrink the amount they are set to get by more than $20,000. Without that money, they said, they will not be able to keep up with property taxes that they are already struggling to pay, afford increasingly frequent trips to the hospital and deal with unexpected expenses. The couple are among many elderly Americans who scrambled to secure reverse mortgages ahead of new restrictions that could put the loans out of reach for some or deliver substantially less money to others. As a result, more than a dozen mortgage counselors and lenders told Reuters they expect a significant drop in the loans from Monday. The loans allow homeowners age 62 or older to borrow against the value of a home, with no need to repay the loan until the borrower dies or sells the home. Borrowers receive payments on a monthly basis, in a lump sum, as a line of credit or a combination of the two -- often to pay bills, manage medical costs and supplement retirement income. They also have been blamed for a rise in foreclosures among seniors. The uncertainty of home sale prices and rising interest rates, among other factors, have put the program itself under strain. In the 2016 fiscal year, it was valued at negative $7.7 billion. In response, HUD is raising upfront premiums to 2 percent of the amount of a home’s value, from 0.5 percent. The amount of money seniors can borrow against their home falls by about 10 percent.

How the Elderly Lose Their Rights -  For years, Rudy North woke up at 9 A.M. and read the Las Vegas Review-Journal while eating a piece of toast.  Rennie, his wife of fifty-seven years, was slower to rise. On the Friday before Labor Day, 2013, the Norths had just finished their toast when a nurse, who visited five times a week to help Rennie bathe and dress, came to their house, in Sun City Aliante, an “active adult” community in Las Vegas.  Rudy chatted with the nurse in the kitchen for twenty minutes, joking about marriage and laundry, until there was a knock at the door. A stocky woman with shiny black hair introduced herself as April Parks, the owner of the company A Private Professional Guardian. She was accompanied by three colleagues, who didn’t give their names. Parks told the Norths that she had an order from the Clark County Family Court to “remove” them from their home. She would be taking them to an assisted-living facility. “Go and gather your things,” she said. Rennie began crying. “This is my home,” she said. One of Parks’s colleagues said that if the Norths didn’t comply he would call the police. Rudy remembers thinking, You’re going to put my wife and me in jail for this? But he felt too confused to argue. Parks drove a Pontiac G-6 convertible with a license plate that read “CRTGRDN,” for “court guardian.” In the past twelve years, she had been a guardian for some four hundred wards of the court. Owing to age or disability, they had been deemed incompetent, a legal term that describes those who are unable to make reasoned choices about their lives or their property. As their guardian, Parks had the authority to manage their assets, and to choose where they lived, whom they associated with, and what medical treatment they received. They lost nearly all their civil rights. Without realizing it, the Norths had become temporary wards of the court. Parks had filed an emergency ex-parte petition, which provides an exception to the rule that both parties must be notified of any argument before a judge. She had alleged that the Norths posed a “substantial risk for mismanagement of medications, financial loss and physical harm.” She submitted a brief letter from a physician’s assistant, whom Rennie had seen once, stating that “the patient’s husband can no longer effectively take care of the patient at home as his dementia is progressing.” She also submitted a letter from one of Rudy’s doctors, who described him as “confused and agitated.”

Lenders originate riskier mortgages in the second quarter - Mortgage lenders took on more risk in the second quarter as the share of loans to real estate investors and condominium owners increased, according to CoreLogic.Its second-quarter Housing Credit Index increased 20 points year-over-year to 117. Even with the increase, it was still in the 90-to-120 range of the HCI from between 2001 and 2003, a period that's considered to be the normal baseline for credit risk.The first-quarter 2017 HCI was 105. In this quarter, CoreLogic revised the index calculation to include a more comprehensive source of loan-level nonagency mortgage-backed securities data. Investor and condominium/co-operative apartment loans have slightly higher-risk attributes than purchase loans for owner-occupied single-family homes, said CoreLogic Chief Economist Frank Nothaft in a press release. "Despite the somewhat higher risk of new origination loans, purchase mortgage underwriting remains relatively clean with an average credit score of 745 and low delinquency risk."  The increases in the shares of investor and condominium purchase loans outweighed a nine-point year-over-year rise in the average credit score, the average debt-to-income ratio remaining at 36% and the average loan-to-value ratio falling to 85.5% from 87.4%.

"Innovative Mortgages": Lennar Lures Millennials With Offer To Repay Student Loans -- Homebuilder Lennar has come up with a genius strategy to partially eliminate the massive bubble in student loans that has crippled recent graduates and forced them into a life devoid of the American dream of home's a "two birds with one stone" kind of solution.  Yes, rather than struggle to make those monthly student loan payments, Lennar has developed an "innovative mortgage" designed to allow millennials the opportunity to convert their student debt into an "investment" in America's "Housing Bubble 2.0."So how does it work?  According to the Wall Street Journal, Lennar is set to introduce the new promotion tomorrow that will make a payment on a buyer's student loans, equal to 3% of their purchase price up to $13,000, in return for purchasing a new Lennar's as simple as that.Student-loan debt has been an obstacle for many potential home buyers. Now, Lennar Corp. is trying to do something about it.A subsidiary called Eagle Home Mortgage plans to introduce on Tuesday a program under which Miami-based Lennar will pay off a significant chunk of the student loan of a borrower who purchases a home from them.Housing observers said other builders are likely to look to mimic the program, which could help lure more of the critical first-time-buyer segment into home purchases.“Obviously there’s a benefit to bringing more people into the home buying market. We’re trying to design something here that supports affordability and creates that path to homeownership,” said Doug Cropsey, a senior vice president at Eagle.Lennar will make a payment to a buyer’s student loans of as much as 3% of the purchase price, up to $13,000. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan.

Why more millennials with student debt are qualifying for mortgages - A recent push by Fannie Mae to enable more millennials who are burdened by student debt to buy homes appears to be having its intended effect. Bankers said that they are finding it easier to qualify young homebuyers as a result of the policy changes.Fannie announced the new rules back in April. Perhaps the most consequential change was a revision to the formula that banks use to calculate a borrower’s debt-to-income ratio, which is a gauge of the person’s ability to make monthly payments.Under the previous guidance, a lender would consider the higher of either a borrower’s amortizing student loan payment, or 1% of their student loan. A borrower whose monthly payment was reduced from $500 to $100 on an income-based repayment plan might be rejected under those rules because the lender had to use a more conservative measure than the actual monthly payment.Under the revised rules, the lender can use the borrower’s actual monthly student loan payment for the purpose of calculating the debt-to-income ratio.Fannie also expanded a cash-out refinance option, which may enable some existing home owners to pay off their student loans. In addition, the government-sponsored enterprise allowed mortgage lenders to take into account the fact that borrowers’ parents sometimes cover certain nonmortgage debt payments.

Mortgage rates jump to a six-week high -- Mortgage rates ticked up to their highest mark in six weeks, reflecting the 20-basis-point rise in the 10-year Treasury yield during September, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 3.85% for the week ending Oct. 5, up from last week when it averaged 3.83%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.42%."After holding steady last week, rates ticked up this week. The 10-year Treasury yield rose 8 basis points, while the 30-year mortgage rate increased 2 basis points," Sean Becketti, Freddie Mac's chief economist, said in a press release. The yield on the benchmark 10-year Treasury note ended the month of September at 2.328%, compared with 2.122% at the end of August, capping its biggest one-month gain since last November. The 15-year fixed-rate mortgage averaged 3.15%, up from last week when it averaged 3.13%. A year ago at this time, the 15-year fixed-rate mortgage averaged 2.72%.

National Housing Market Index release for Q2 2017 - The National Housing Market Index (NHMI) combines International Center on Housing Risk (ICHR) data on the federal agency market with data provided by First American via for the private side of the market and for cash and non-institutionalized lender sales. The combined data covers an estimated 90% of the entire home purchase (sales) market and are grossed up to cover the entire market.National housing market demand continued to surge and the NHMI (by count) stood at 126 in 2017:Q2. This compares to 115 in 2016:Q2 and 107 in 2015:Q2. On an annualized basis, 6,160,000 sales transactions were reported, which is up 490,000 transactions, or 8.6%, from a year earlier. Other key takeaways include:

  • The national home purchase market continued its rally in the second quarter of 2017. Sales transactions increased 10.1% in the second quarter compared to a year ago marking the 11th consecutive quarter of such increases.
  • Nationally, loan counts in 2017:Q2 increased 5% and dollar volume 7% compared to 4 quarters earlier. The NHMI home purchase loan counts have been trending up for the past 13 quarters. Second Home/Investor purchases are up strongly indicating a likely revival of housing flipping and investor purchases.
  • San Francisco, Boston, and St. Louis are beginning to buck the national trend of healthy year-over-year sales growth while Detroit, Riverside, and Phoenix continue to surge.
  • The FHA/RHS NMRI index set another series high at 25.0%. Unless houshold income accelerates, future support for the housing market is likely to involve an increase in leverage from an already high level.

MBA: Mortgage Applications Decrease Slightly in Latest Weekly Survey -- From the MBA: Purchase Apps Up, Refi Apps Down in Latest MBA Weekly Survey Mortgage applications decreased 0.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 29, 2017.... The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 5 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.12 percent from 4.11 percent, with points increasing to 0.45 from 0.40 (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%.

 CoreLogic: House Prices up 6.9% Year-over-year in August - The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).  From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.9 Percent in August 2017CoreLogic® ... today released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for August 2017, which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 6.9 percent from August 2016 to August 2017, and on a month-over-month basis, home prices increased by 0.9 percent in August 2017 compared with July 2017, according to the CoreLogic HPI. While growth in home sales has stalled due to a lack of inventory during the last few months, the tight inventory has actually helped stabilize price growth,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Over the last three years, price growth in the CoreLogic national index has been between 5 percent and 7 percent per year, and CoreLogic expects home prices to increase about 5 percent by this time next year.”  This graph from Corelogic shows the YoY change in the national CoreLogic HPI data since 2002.

Construction Spending increased in August -- Earlier today, the Census Bureau reported that overall construction spending increased in August:  Construction spending during August 2017 was estimated at a seasonally adjusted annual rate of $1,218.3 billion, 0.5 percent above the revised July estimate of $1,212.3 billion. The August figure is 2.5 percent above the August 2016 estimate of $1,189.1 billion.Private and public spending both increased in August: Spending on private construction was at a seasonally adjusted annual rate of $954.8 billion, 0.4 percent above the revised July estimate of $950.5 billion. ... In August, the estimated seasonally adjusted annual rate of public construction spending was $263.5 billion, 0.7 percent above the revised July estimate of $261.7 billion.  This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been increasing, but is still 23% below the bubble peak. Non-residential spending is now 5% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 19% below the peak in March 2009, and only slightly above the austerity low in February 2014.  The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 12%. Non-residential spending is down 2% year-over-year. Public spending is down 5% year-over-year. This was above the consensus forecast of a 0.3% increase for August, and spending for previous months were revised up slightly. A solid report.

Will residential construction spending confirm the housing slowdown?: With one exception, I don't find construction spending a particularly useful metric. The overall measure gives us almost no information about where the economy is going. Further, government construction spending has generally been steady over the long term, once we adjust for inflation. And nonresidential spending (for things like office buildings and plants) typically is only cut back once it dawns on the executives of the company involved that we might actually already be in a recession! The one useful measure is residential construction spending. A house gets built after the permit is taken out and/or after the buyer signs a construction contract, so while it is a leading indicator, it is not as leading as either of those two measures: Typically the statistic has risen and fallen at the same time as the metric of "dwellings under construction" from the survey of permits and starts, and diverges depending on the mix of single family vs multi-unit residences, and the cost mix of those residences (but note the recent divergence): The special value of the residential construction metric is that there is very little "noise" in the number -- even less than that of single family permits. Its trajectory, whether at turning points or on trend, has typically been smooth for the 25 year duration of the series: So we can use residential construction to verify, with a few months' delay, what we are seeing in permits and in particular single family permits. Here's what that looks like over the past few years: The longer term trend has still been rising, but since JUne residential construction spending has been basically flat. In the next several months it should confirm (or not) if the peak we saw in single family permits and new home sales from late winter is real. 

Hotel Occupancy Rate just Behind Record Year - From STR: US hotel results for week ending 30 September The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 24-30 September 2017, according to data from STR. In comparison with the week of 25 September through 1 October 2016, the industry recorded the following:
• Occupancy: +0.4% to 70.3%
• Average daily rate (ADR): +0.8% to US$128.29
• Revenue per available room (RevPAR): +1.2% to US$90.13
Among the Top 25 Markets, Houston, Texas, reported the largest year-over-year increases in occupancy (+42.9% to 86.7%) and RevPAR (+55.6% to US$100.59). Amid recovery from Hurricane Harvey, Houston also posted the second-largest ADR increase (+8.9% to US$116.08). Orlando, Florida, posted the second-highest lift in occupancy (+18.0% to 83.3%), that coupled with the only double-digit increase in ADR (+17.9% to US$125.34), led the second-largest jump in RevPAR (+39.0% to US$104.36).  The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

 Reis: Mall Vacancy Rate increased in Q3 2017 -- Reis reported that the vacancy rate for regional malls was 8.3% in Q3 2017, up from 8.1% in Q2, and up from 7.8% in Q3 2016. This is down from a cycle peak of 9.4% in Q3 2011.For Neighborhood and Community malls (strip malls), the vacancy rate was 10.0% in Q3, unhanged from 10.0% in Q2, and up from 9.9% in Q3 2016. For strip malls, the vacancy rate peaked at 11.1% in Q3 2011. Comments from Reis Economist Barbara Byrne Denham: The increase in the Mall vacancy rate was due to confirmed closings of JC Penney and Sears stores. This only increased vacancy by 0.2% to 8.3%. Since the third quarter of 2016, the mall vacancy rate has increased 50 basis points from 7.8% which was the lowest since 2008. Rents increased only 0.2% as most owners kept rents flat.The [strip mall] retail statistics continued to defy the otherwise negative reports of store closures, posting positive net absorption (occupancy growth) in the quarter and holding vacancy at 10.0%. Asking rents increased 0.4%, low by any standard but still positive and contrary to the sentiment expressed in the media.New construction of 1.6 million square feet was the lowest level of completions since 2014. Net absorption was 578,000 square feet, the lowest since 2010 and the second quarter in a row of less than 1.0 million square feet occupancy growth. The underlying data shows that absorption was positive in July and August but negative in September as a number of stores in the Reis survey pool closed in the month.

Delinquencies remain low even as household debt climbs -- American consumers continue to pay their bills on time even as they take on more and more debt.In its quarterly consumer delinquency bulletin, released Thursday, the American Bankers Association said that the delinquency rate on consumer loans held steady at 1.56% in the second quarter, unchanged from the prior quarter and still well below the 15-year average of 2.16%. While delinquencies on auto loans ticked up slightly in the quarter, they fell across most other loan categories the ABA tracks. The results are yet another sign that the U.S. economy is strengthening, said James Chessen, the ABA’s chief economist.  “I had expected, now with an economic cycle in its ninth year, that there would be some movement back to more normal levels of delinquencies,” he said. “But we seem to be in a period where we’re not moving very quickly back to normal levels.”  It’s not that Americans aren’t borrowing. The Federal Reserve Bank of New York said in August that household debt hit a record $12.84 trillion in the second quarter, driven by gains in automobile, mortgage and credit card debt.  Auto loan delinquencies of 30 days or more continued to rise in the second quarter, but at a considerably slower pace — likely because some lenders have pulled back from amid growing concerns about risk in the sector. Delinquencies for both direct and indirect auto loans increased 1 basis point from the previous quarter to 1.04% and 1.84%, respectively.

 Gallup US ECI October 3, 2017: Confidence in the economy declined slightly to plus 4 in September, down from August's plus 6. While the ECI climbed past the plus 10 mark in January, September's score of plus 4 represents a continuation of economic attitudes that have held since May, apart from a brief increase in early August after the Dow hit 22,000. Even if overall confidence in the economy has stagnated recently, confidence remains notably higher compared with any month between 2008 and November 2016. In particular, Americans' ratings of current economic conditions have remained at or near post-recession highs virtually all year, including last month. Moreover, the current conditions component has averaged plus 10 or higher every month this year, a level it had never hit in the nine years prior. The component was either positive or non-negative in only a handful of months during that period. The current conditions component measured plus 13 in September, the result of 34 percent describing the economy as "excellent" or "good" minus the 21 percent describing the economy as "poor." September's current conditions score essentially ties the plus 14 observed in August -- the highest monthly reading in the 2008-2017 Gallup Daily tracking trend. However, economic expectations dimmed slightly in September. Over the course of the month, half of Americans said economic conditions were "getting worse," while 44 percent said conditions were "getting better," resulting in an economic outlook score of minus 6. This is down four points from August's minus 2 outlook score.While economic confidence faltered somewhat in September, it essentially reverted to the level seen consistently since May. 

US Consumer Comfort Plunges Most In 13 Months As 'Personal Finance' Fears Mount -- Americans' confidence suffered its biggest weekly setback in more than a year as optimism about personal finances slumped according to Bloomberg's Consumer Comfort Index figures. Highlights include:

  • Consumer comfort measure dropped to 49.9 from 51.6, the sharpest decline since September 2016
  • Index of personal finances fell to 57.1 from 60.1, the biggest decrease since August 2016
  • Gauge of current views on the economy slipped to 50.9 from 51.8
  • Index of buying climate deteriorated to 41.5 from 42.8

The headline index is down 4 of the last 5 weeks... the biggest drop since Sept 2016. As 'Personal Finances' plunge (despite soaring record highs in stocks... However, one interesting data point is that sentiment among black respondents rose to its highest level since November and fell among whites to the lowest since mid-July... Bloomberg highlights the key takeaways as:The data marked the fourth decline in the last five weeks following a 16-year high at the end of August. The index, now the lowest since July, is down 3.4 points from that peak.The weakness was driven by a sudden drop in optimism about personal finances, which had reached a three-month high a week earlier. The result may partly reflect what Americans are paying at the gas pump, as prices remain elevated after climbing sharply in response to Hurricane Harvey. Sentiment was particularly weak among women, with the gauge falling to the lowest level since January on more concern about personal finances and the economy. In contrast, male respondents were more upbeat, leading to the widest gender gap since December 2006.

How Is Online Shopping Affecting Retail Employment? - NY Fed - It’s been said that if you want to know how the economy is doing, look at how many people are carrying shopping bags. That adage may not hold so well today. The rise of the internet and e-commerce over the past two decades has chipped away at the market share of “brick and mortar” retailers. But it’s only been in the past few years that this shift in market share has had a noteworthy effect on retail employment. In this post, we focus on national and local employment trends in two categories of retail—department stores and nonstore retailers—and try to assess how the surge in online shopping has affected local labor markets across the United States.  First, let’s look at trends in online retail sales over the past two decades. As shown in the chart below, online sales have grown strongly, with their share of total retail sales increasing from 2.5 percent in the mid-1990s to around 5 percent in the mid-2000s, then doubling again to exceed 10 percent today.

Tariffs On Washing Machines Coming Up; Mish Rages "Let's Tax The Sun And The Rain Too" - Whirpool bitched to the Trump administration and the International Trade Commission about unfair pricing on Samsung and LG-brand washing machines. The ITC panel ruled U.S. washing machine makers hurt by South Korean imports, so your price is guaranteed to go up. The U.S. International Trade Commission on Thursday found that imports of large residential washing machines were harming domestic producers, in a major step the imposition of duties or quotas on foreign-made Samsung- and LG-brand washers. The case, brought by U.S. appliance giant Whirlpool Corp, asked the ITC to recommend to President Donald Trump “global safeguard” restrictions on imported washing machines to stop South Korean rivals Samsung Electronics Co Ltd and LG Electronics Inc from flooding the U.S. market with cheap washers. The commission, which voted 4-0 in finding that large residential washers were being imported in such quantities to create injury to domestic producers, will recommend remedies by Dec. 4 to Trump, who is expected to make a final decision by early next year. The ITC ruling will not save a single US job. But it will drive up costs on US consumers. When corporations cannot compete, they bitch. They also pad the pockets of politicians so the politicians see things their way.

Top three gun manufacturers have received more than $100 million in subsidies - While the country mourns yet another mass-shooting, little attention is being paid to the fact that the companies producing the weapons are being subsidized by taxpayers. The nation’s top three gun manufacturers have received more than $100 million in taxpayer subsidies, most often as inducements to move their manufacturing plants.  Most of those subsidies came in the wake of the school massacre in Newtown, Connecticut. When legislators in Connecticut and other northeastern states that are part of "Gun Valley" passed more restrictive gun laws, firearm makers let it be known they wanted to move to more friendly locales. Southern states with loose gun regulations launched a bidding war to lure the companies. The biggest beneficiary of these auctions was Remington, which received $68.9 million to relocate a plant from New York to Alabama. Another big winner was Sturm, Ruger & Co., which received $9.4 million in subsidies to open a plant in North Carolina. These subsidy packages may have been unnecessary. If the main point of the moves was to escape from states seen as being unfriendly to guns, then the companies would presumably have ended up in those Southern states even without the financial incentives.  Here’s a break-down of subsidy totals, according to Good Jobs First’s Subsidy Tracker;

Facebook’s Fake Numbers: Parsing Facebook’s “Reach” Inflation Yves Smith - This is such a straightforward presentation on Facebook’s significant and systematic exaggeration of how many people see its ads that we’ve decided to embed the analysis by the Video Advertising Bureau and give only a short intro so as to encourage you to read it in full. You can also read it here.  It is remarkable that advertisers and investors have not come down harder on Facebook for the grotesque overstatement of its audience. As the report shows, every way you cut the data, Facebook claims to have considerably more viewers in every age group than exists in the population. For instance, Facebook’s “potential reach” for the 18-34 year old cohort in the US is 97 million, versus an actual population of a mere 75.3 million. That means Facebook says it can get ads in front of 34.2% more people in that age group than actually exists. And the exaggeration looks even more dodgy when you see that the overstatement occurs most in large cities, which generally have higher incomes than the US overall. This overstatement is even more flagrant when you factor in that Facebook does not have everyone as its customer. Pew found that 84% of all American adults use the Internet as of 2015, so the 16% that don’t clearly cannot be Facebook targets. Facebook makes it impossible to delete an account; many users who have tried to report that the tech company reactivates it down the road and tries to re-enlist them as users. And there is a vocal but indeterminate-in-size contingent of Facebook refusniks. Advertisers may be unduly jaundiced by virtue of the fact that publishers have a great deal of difficulty stating with any degree of accuracy how many unique viewers they have. There aren’t good ways to tell that a user who visits a site from his phone, his work computer, and his home computer is one person and not three. But Facebook makes very forceful claims about how much it knows about its users, down to saying that it has their real world identity. The fact that it so grossly overstates how many users it has should lead any advertiser to doubt all of Facebook’s other claims. Facebook’s verifiable whoppers should also give investors pause.  Facebooks-Reach

August 2017 Headline Wholesale Sales Improve: The headlines say wholesale sales were up month-over-month with inventory levels remaining elevated. Our analysis shows the rolling averages modestly decelerated.. The improvement this month in the headline data was primarily due to automotive and petroleum. Overally, I believe the rolling averages tell the real story - and they declined this month. The current trends appear flat (little acceleration or deceleration). Inventory levels remain elevated but below recessionary levels.. To add to the confusion, year-over-year employment changes and sales growth do not match. Note that Econintersect analysis is based on the change from one year ago. Econintersect Analysis:

  • unadjusted sales rate of growth accelerated 1.5 % month-over-month.
  • unadjusted sales year-over-year growth is up 7.5 % year-over-year (it was +6.0 % last month)
  • unadjusted sales (but inflation adjusted) up 4.5 % year-over-year
  • the 3 month rolling average of unadjusted sales decelerated 0.4 % month-over-month, and up 7.0 % year-over-year.
  • unadjusted inventories grew 4.4 % year-over-year up 1.2 % month-over-month), unadjusted inventory-to-sales ratio is 1.2 which is above normal but below recessionary levels.
  • US Census Headlines based on seasonally adjusted data:
  • sales up 1.7 % month-over-month, up 7.2 % year-over-year
  • inventories up 0.9 % month-over-month, inventory-to-sales ratios were 1.32 one year ago - and are now 1.28.
  • Expectations for inventory growth from Bloomberg / Econoday were between 0.3 % to 1.0 % (consensus +0.7 %)
AAR: Rail Carloads decreased, Intermodal Increased, in September -- From the Association of American Railroads (AAR) Rail Time Indicators.  Total U.S. rail carloads were down 2.3% (24,106 carloads) in September 2017 from September 2016, their third straight monthly decline following eight straight monthly gains. Those eight months of gains usually involved double-digit percentage gains in carloads of coal, but over the past couple of months, comparisons to last year have become much more difficult for coal. In September, in fact, coal carloads were down compared with last year, their first decline in 10 months. ... Intermodal had a good September: the last two weeks of September were the two top intermodal weeks in history for U.S. and Canadian railroads. U.S. intermodal volume in September was up 3.8% (39,482 units) over last September; for the first nine months, intermodal was up 3.5% (348,784 units) in 2017 over 2016.This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Dark blue is 2017.
Rail carloads have been weak over the last decade due to the decline in coal shipments.U.S. railroads originated 1,044,563 carloads in September 2017, down 24,106 carloads, or 2.3%, from September 2016. Average weekly carloads of 261,141 in September 2017 were the fewest for September since sometime prior to 1988, when our data begin. September was the third straight year-over-year monthly decline in total carloads following eight straight increases. The second graph is for intermodal traffic (using intermodal or shipping containers): September 2017 was a solid intermodal month for U.S. railroads. Volume was 1,080,444 containers and trailers, up 3.8%, or 39,482 units, over September 2016. Average weekly volume in September 2017 was 270,111 units, the second most (behind 2015) for September in history. Hurricanes helped prevent a record from being set this year. As it is, the last two weeks in September were the top two intermodal weeks in history for U.S. railroads.

Trade Deficit at $42.4 Billion in August -- Earlier from the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $42.4 billion in August, down $1.2 billion from $43.6 billion in July, revised. August exports were $195.3 billion, $0.8 billion more than July exports. August imports were $237.7 billion, $0.4 billion less than July imports. Exports increased, and imports decreased, in August. Exports are 18% above the pre-recession peak and up 4% compared to August 2016; imports are 2% above the pre-recession peak, and up 4% compared to August 2016. In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $44.11 in August, up from $43.20 in July, and up from $39.38 in August 2016. The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. The trade deficit with China increased to $34.9 billion in August, from $33.9 billion in August 2016.

US Trade Balance Shrinks More Than Expected As Deficits With China, EU Decline --The U.S. trade deficit shrank 2.7% in August 2017, declining from a downward revised $43.6 billion in July  to to $42.4 billion in August, better than the $42.7 billion expected, as exports increased by 0.4% to $195.3 billion and imports decreased by 0.1% to $238.1 billion. This was the smallest trade deficit since last September, and was the result of a decline in the goods deficit by $0.9 billion to $64.4 billion, offset by an increase in the service surplus $0.3 billion to $22.0 billion. The US trade deficit excluding petroleum products was $37.55 billion.Breaking down the details, Exports of goods and services increased $0.8 billion, or 0.4 percent, in August to $195.3 billion. Exports of goods increased $0.6 billion and exports of services increased $0.2 billion.

  • The increase in exports of goods mostly reflected increases in consumer goods ($1.0 billion) and in capital goods ($0.4 billion). Decreases in industrial supplies and materials ($1.0 billion) and in food, feeds, and beverages ($0.4 billion) partly offset the increases.
  • The increase in exports of services mostly reflected increases in travel (for all purposes including education) ($0.1 billion), in other business services ($0.1 billion), which includes research and development services; professional and management services; and technical, trade-related, and other services, and in financial services ($0.1 billion). A decrease in transport ($0.2 billion), which includes freight and port services and passenger fares, partly offset the increases.
  • Imports of goods and services decreased $0.4 billion, or 0.1 percent, in August to $237.7 billion. Imports of goods decreased $0.3 billion and imports of services decreased $0.1 billion.
  • The decrease in imports of goods mostly reflected decreases in industrial supplies and materials ($0.5 billion) and in capital goods ($0.5 billion). An increase in automotive vehicles, parts, and
    engines ($0.7 billion) partly offset the decreases.
  • The decrease in imports of services mostly reflected a decrease in transport ($0.2 billion). An increase in travel (for all purposes including education) ($0.1 billion) partly offset the decrease.

Finally, broken down by geography, the August figures show surpluses with South and Central America ($2.7), Hong Kong ($2.5), Singapore ($0.8), United Kingdom ($0.6), and Brazil ($0.4). Meanwhile, deficits were recorded with China ($29.7), European Union ($10.9), Japan ($6.3), Mexico ($5.8), Germany ($4.8), Italy ($2.5), South Korea ($2.1), India ($1.6), Taiwan ($1.5), France ($0.8), OPEC ($0.8), Canada ($0.4), and Saudi Arabia ($0.1). However, what may be more interesting to Trump will be that in the last report, the US deficit with China actually decreased by $2.1 billion to $29.7 billion, as exports increased $0.8 billion to $11.6 billion while imports decreased $1.2 billion to $41.3 billion. In more good news for US manufacturers, the deficit with the European Union decreased $1.2 billion to $10.9 billion in August. Exports increased $1.4 billion to $24.2 billion and imports increased $0.2 billion to $35.1 billion.

Welcome To The Age Of Cheap Overseas Information - As ad dollars that used to fund journalism pour into the coffers of Facebook and Google, the information business is experiencing a trend familiar to other American industries: The product they produce is now competing with cheaper versions coming from overseas. Content farmers in the Philippines, Pakistan, Macedonia (of course), and beyond are launching websites and Facebook pages aimed at Americans in niches such as politics, mental health, marijuana, American muscle cars, and more.One surprising area where the impact of this trend is being felt is with Native American news and content.A few weeks ago, Indian Country Today Media Network, an online and print publisher for Native Americans, announced that it was suspending operations due to the lack of a sustainable business model.   “ICTMN has faced the same challenges that other media outlets have faced,” said a letter from publisher Ray Halbritter. “It is no secret that with the rise of the Internet, traditional publishing outlets have faced unprecedented adversity.” But while ICTMN had to stop operations, a raft of overseas-based publishers of content about Native Americans continue to forge ahead and experience growth and revenue primarily thanks to, which has two associated Facebook pages with close to half a million fans between them, is run by a man in Kosovo. The website also pumps out Native American news for visitors coming from its Indigenous People Of America Facebook page, which is approaching 1 million fans, almost twice the number of ICTMN’s. The page has experienced steady growth: It added roughly 200,000 new fans since BuzzFeed News first wrote about it in a December story that identified a slew of Native American publishers based in Kosovo and Vietnam.

U.S. Light Vehicle Sales at 18.4 million annual rate in September -- Based on a preliminary estimate from WardsAuto (ex-Porsche and Hyundai), light vehicle sales were at a 18.4 million SAAR in September. That is up 4% from September 2016, and up 14.8% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for August (red, light vehicle sales of 18.4 million SAAR mostly from WardsAuto).  This was well above the consensus forecast of 16.7 million for September (Note: Hurricane Harvey pushed down sales at the end of August - and this was part of the bounce back).  Still, after two consecutive years of record sales, vehicle sales will be down in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967.Note: dashed line is current estimated sales rate.

Hurricane Harvey Surge-Nado: Auto SAAR Soars To 30-Year High On Hurricane Replacements -  Last month, when we reported auto sales data, we noted that this month would be all about replacement demand from Hurricane Harvey and thus largely irrelevant.  Fast forward 30 days and that appears to be exactly what has happened as annualized auto sales for the month of September suddenly surged to a 30-year high of 18.5mm units, up 15.2% sequentially from a 16.0mm run-rate last month. That is, of course, unless you believe CNBC's Phil LeBeau who took to the airwaves earlier today to argue that a substantial portion of the sudden surge in auto sales was not necessarily attributable to the fact that a couple hundred thousand cars were destroyed in last month's hurricanes but rather just a reflection of an abrupt rebound in consumer demand after months of weak data... Not surprisingly, almost every OEM, with the exception of Fiat Chrysler, managed to post a significant YoY increase in sales courtesy of Hurricane Harvey.  The only surprising takeaway was just how wrong wall street was in their estimates for the quarter.

Which Automakers Got Crushed, Which Boomed? - After eight months in a row of year-over-year sales declines, September was finally the month everyone has been waiting for. It was powered by sharply higher fleet sales and soaring truck sales, much of it related to Hurricane Harvey, and it was fueled by the highest incentives ever in the history of US auto sales. GM, Ford, and Toyota were the biggest winners. Fiat-Chrysler and Hyundai got crushed.  What we got…

  • Total new vehicle sales rose 6.1% year-over-year to 1.52 million units (sold and delivered by dealers to their customers, or delivered by automakers directly to large fleet customers).
  • Year-to-date sales are still down 1.8%. Despite the 88,174-unit sales gain in September, year-to-date sales remain down by 232,614 units compared to last year.
  • Sales of cars fell 3.3%. The relentless decline continues, as Americans are shifting from cars to trucks, particularly small SUVs (crossovers). Year-to-date, car sales are down 10.5%.
  • Sales of trucks – pickups, SUVs, crossovers, and vans – soared 12.4% to 967,547 units, accounting for 63.4% of total sales. Year-to-date, truck sales are up 4.4%.
  • The seasonally adjusted sales rate (SAAR) rose to 18.6 million vehicles in September, the highest by far over the past 12 months.
  • Incentives averaged $4,048 per vehicle in September, the highest ever, according to research firm J.D. Power.

Durable Goods, Factory Orders Rebound From July Tumble, But... US manufacturers saw factory orders rebound from their 3.3% plunge in July with a 1.2% rise in August (better than the 1% expectation), but still remains down 2.2% across the two months - the biggest consecutive drop since June 2016.  Additionally, final Durable Goods data for August also saw a modest increase from preliminary and July data but as the chart shows we have gone nowhere for 5 years and still remain below the 2007 peak...  And all of this was before the storms struck!

US factory orders rise; core capital goods orders revised higher -- New orders for U.S.-made goods rose in August and orders for core capital goods were stronger than previously reported, suggesting robust business spending could help offset some of the economic drag of Hurricanes Harvey and Irma. Factory goods orders increased 1.2 percent as demand for a range of goods rose, the Commerce Department said on Thursday. Orders fell by an unrevised 3.3 percent in July. Economists had forecast factory orders increasing 1.0 percent in August. The Commerce Department said it was unable to isolate the impact of Harvey and Irma on the data as the survey is "designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas." Orders for non-defense capital goods excluding aircraft - seen as a measure of business spending plans - jumped 1.1 percent in August instead of the 0.9 percent increase reported last month. Orders for these so-called core capital goods advanced 1.3 percent in July. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, shot up 1.1 percent instead of the previously reported 0.7 percent rise. Strong business spending on equipment is helping to underpin manufacturing, which makes up about 12 percent of the U.S. economy. Business investment in equipment grew at its fastest pace in nearly two years in the second quarter. Spending is rising despite signs of slowing oil and gas drilling as ample supplies restrain crude oil prices. In August, orders for machinery gained 0.3 percent after rising 0.2 percent in July. Mining, oil field and gas field machinery orders dropped 5.1 percent after leaping 3.7 percent in July. Orders for transportation equipment advanced 5.1 percent, reflecting a 44.8 percent surge in civilian aircraft orders. Motor vehicle orders rose 0.7 percent after declining 2.2 percent in July. Further gains are likely in September as residents in the areas ravaged by Harvey and Irma replace flood-damaged vehicles. Major automakers on Tuesday posted higher U.S. new motor vehicle sales for September. 

ISM Manufacturing index increased to 60.8 in September -- The ISM manufacturing index indicated expansion in September. The PMI was at 60.8% in September, up from 56.3% in August. The employment index was at 60.3%, up from 59.9% last month, and the new orders index was at 64.6%, up from 60.3%. From the Institute for Supply Management: September 2017 Manufacturing ISM® Report On Business®: "The September PMI® registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8 percent. The New Orders Index registered 64.6 percent, an increase of 4.3 percentage points from the August reading of 60.3 percent. The Production Index registered 62.2 percent, a 1.2 percentage point increase compared to the August reading of 61 percent. The Employment Index registered 60.3 percent, an increase of 0.4 percentage point from the August reading of 59.9 percent. The Supplier Deliveries Index registered 64.4 percent, a 7.3 percentage point increase from the August reading of 57.1 percent. The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent. The Prices Index registered 71.5 percent in September, a 9.5 percentage point increase from the August level of 62, indicating higher raw materials prices for the 19th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all growing in September; as well as, supplier deliveries slowing (improving) and inventories growing at a slower rate during the period. The Customers’ Inventories Index remains at low levels."  Here is a long term graph of the ISM manufacturing index. This was above expectations of 58.0%, and suggests manufacturing expanded at a faster pace in September than in August.

ISM Survey Says Manufacturing In America Is The Greatest In 13 Years -- Following modest drops in UK and EU PMIs (and a mixed picture in China), Markit's US Manufacturing PMI inched higher in September amid schizophrenic collapse in output growth (14mo lows) and surge in employment (9mo highs). ISM, on the other hand, reported that US Manufacturing has not been this awesome since June 2004.  Prices Paid are soaring helping Make Manufacturing in America Great Again.  As New Orders jump (but remain well below early 2017 highs...The surge in prices paid and deliveries stand out... As a reminder, ISM and Markit have seen very different views of the US Manufacturing 'recovery' in recent months, as 'real' economic data has actually collapsed... While ISM headline seems awesome, at least half of the respondents mentioned problems associated with the hurricanes...

Markit Manufacturing PMI: Improvement in September  - The September US Manufacturing Purchasing Managers' Index conducted by Markit came in at 53.1, up from the 52.8 final August figure. Today's headline number was above the forecast of 53.0. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release:“While the headline PMI remained resiliently elevated in September, despite disruption from hurricanes Harvey and Irma, the details of the survey are more worrying. Output growth was unchanged on August’s 14-month low, and translates into stagnation at best in terms of the official manufacturing output data. Firms’ expectations of future output growth also slipped to a four-month low."“There was better news on the hiring front, with job creation perking up to a nine-month high. However, with employment rising faster than output, productivity may be slipping."“Although the hurricanes appear to have made little overall impact on production, supply delays were widely reported and prices for many inputs rose, suggesting some near-ter m upward pressure on inflation.” [Press Release]  Here is a snapshot of the series since mid-2012.

ISM Non-Manufacturing Index increased to 59.8% in September -- The September ISM Non-manufacturing index was at 59.8%, up from 55.3% in August. The employment index increased in September to 56.8%, from 56.2%. Note: Above 50 indicates expansion, below 50 contraction.  From the Institute for Supply Management: September 2017 Non-Manufacturing ISM Report On Business®  "The NMI® registered 59.8 percent, which is 4.5 percentage points higher than the August reading of 55.3 percent. This represents continued growth in the non-manufacturing sector at a faster rate. This is the highest reading since August 2005 when the index registered 61.3 percent. The Non-Manufacturing Business Activity Index increased to 61.3 percent, 3.8 percentage points higher than the August reading of 57.5 percent, reflecting growth for the 98th consecutive month, at a faster rate in September. The New Orders Index registered 63 percent, 5.9 percentage points higher than the reading of 57.1 percent in August. The Employment Index increased 0.6 percentage point in September to 56.8 percent from the August reading of 56.2 percent. The Prices Index increased substantially by 8.4 percentage points from the August reading of 57.9 percent to 66.3 percent, indicating prices increased in September for the fourth consecutive month. This is the highest reading since February 2012 when the index registered 67.6 percent. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector has reflected strong growth in the month of September despite the impact on the supply chain from the recent hurricanes. Respondents’ comments indicate a good outlook for business conditions."

ISM Services Spikes To 12-Year Highs - Beats Expectations By 5 Standard Deviations (As PMI Slides) --After the schizophrenic manufacturing data (ISM 13yr highs, PMI unch YoY), Services data was just as fucking ridiculous!UK and EU Services PMIs rose (and beat expectations) but US' September PMI dropped from 56.0 to 55.3.Markit's Services PMI dropped to 55.3 (dragging the composite index lower) asinflationary pressures intensify (highest in 3 years), and future optimism is at its lowest since February.  ISM Services, however, saw the same idiocy as with manufacturing, exploded higher to 59.8 - the highest since Aug 2005 (3rd highest data print ever for ISM Services) That is a 5 standard deviation beat of expectations...Just as with PMI data, ISM also showed a huge inflationary spike in Prices. Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“Given the disruption caused by recent hurricanes, some pull-back in business activity was understandable, so the resilient reading of the September services PMI makes for encouraging reading.“While rebuilding and a return to normal business conditions after the hurricanes will hopefully boost growth in the fourth quarter, it’s worrying to see business expectations about activity levels over the coming year drop in September. Measured across both manufacturing and services,future optimism is at its lowest since February, suggesting companies have become increasingly cautious about the outlook. “However, while optimism has slipped, the ‘hard’ survey data on recent output, new orders and hiring trends remain solid. Combined with the further upturn in price pressures seen in September, the survey data will further fuel expectations that the Fed will be keen to hike interest rates again before the year is out. “Looked at alongside the manufacturing PMI, the survey data point to GDP rising at an annualised rate of just over 2% in the third quarter.

Markit Services PMI: Growth Remains Strong In September - The September US Services Purchasing Managers' Index conducted by Markit came in at 55.3 percent, down 0.7 from the August estimate. The consensus was for 55.1 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from the latest press release:September survey data signalled a further rise in business activity across the US service sector. Although the rate of growth eased slightly compared with August, upturns in both activity and inflows of new work were strong compared to the average seen over the past two years. Sustained growth of output and new orders supported solid increases in staffing levels. Additional payroll numbers helped to alleviate capacity pressures.Meanwhile, inflationary pressures continued to intensify. Input price inflation was the fastest since June 2015, and charge inflation accelerated to the quickest in three years.The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 55.3 in September, down slightly from 56.0 in August. This indicated a strong end to the third quarter, and the fastest average quarterly growth so far this year. A number of survey respondents linked the rise in business activity to strong client demand in domestic markets. [Press Release] Here is a snapshot of the series since mid-2012.

Weekly Initial Unemployment Claims decrease to 260,000 - The DOL reported: In the week ending September 30, the advance figure for seasonally adjusted initial claims was 260,000, a decrease of 12,000 from the previous week's unrevised level of 272,000. The 4-week moving average was 268,250, a decrease of 9,500 from the previous week's unrevised average of 277,750. Hurricanes Harvey and Irma impacted this week's claims. The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

ADP: Private Employment increased 135,000 in September  -- From ADP:Private sector employment increased by 135,000 jobs from August to September according to the September ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “In September, small businesses experienced a dip in hiring,” said Ahu Yildirmaz, vice president and cohead of the ADP Research Institute. “This is in part due to Hurricane’s Harvey and Irma which significantly impacted smaller retailers. “In addition, the continued slow down we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent.”Mark Zandi, chief economist of Moody’s Analytics, said, “Hurricanes Harvey and Irma hurt the job market in September. Looking through the storms the job market remains sturdy and strong.”  This was below the consensus forecast for 150,000 private sector jobs added in the ADP report. 

 A Closer Look at This Morning's ADP Employment Report -  In this morning's ADP employment report we got the September estimate of 135K new nonfarm private employment jobs from ADP, a decrease over August's 228K, which was a downward revision of 9K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail.  Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend. As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011. ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016. For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high. There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above began drifting higher in early 2015, only to decrease slightly and level off in 2017. For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing.  Another view of the relative trends of the five select industries is an overlay of the year-over-year comparison. For a longer-term perspective on the Goods Producing and Service Providing employment, see our periodic analysis, Secular Trends in Employment: Goods Producing Versus Services Providing, which is based on data from the Department of Labor reaching back to 1939.

September Payrolls Tumble 33,000, First Drop In Seven Years As Hourly Earning Surge -- As noted earlier, Wall Street was completely clueless ahead of today's payroll, with most expecting a small positive print but two brave forecasters went so far as to predict that the recent hurricanes would result in a negative print, and sure enough, moments ago the BLS reported that in September, the US economy lost 33,000 hurricane distorted jobs, the first payrolls decline since September 2010. While the September number was expected to be noise, the historical revisions were more problematic: total nonfarm payroll employment for July was revised down from +189,000 to +138,000,  while August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. After revisions, job gains have averaged  91,000 over the past 3 months. Meanwhile, the BLS also reported that the unemployment rate tumbled  from 4.4% to 4.2%... ... because some 1.47 million people were not at work due to bad weather. Developing

September Employment Report: 33,000 Jobs Lost, 4.2% Unemployment Rate - From the BLS: The unemployment rate declined to 4.2 percent in September, and total nonfarm payroll employment changed little (-33,000), the U.S. Bureau of Labor Statistics reported today. A sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey. . Hurricane Irma made landfall in Florida on September 10--during the reference period for both the establishment and household surveys--causing severe damage in Florida and other parts of the Southeast. Hurricane Harvey made landfall in Texas on August 25--prior to the September reference periods--resulting in severe damage in Texas and other areas of the Gulf Coast. Our analysis suggests that the net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate.The change in total nonfarm payroll employment for July was revised down from +189,000 to +138,000, and the change for August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported.In September, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents to $26.55. Over the past 12 months, average hourly earnings have increased by 74 cents, or 2.9 percent.The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).Total payrolls decreased by 33 thousand in September (private payrolls decreased 40 thousand).Payrolls for July and August were revised down by a combined 38 thousand. This graph shows the year-over-year change in total non-farm employment since 1968.In September the year-over-year change was 1.78 million jobs.  This is the smallest year-over-year gain since 2012.The third graph shows the employment population ratio and the participation rate.The Labor Force Participation Rate was increased in September at 63.1%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio decreased to 60.4% (black line).The fourth graph shows the unemployment rate. The unemployment rate decreased in September to 4.2%.  This was below expectations of 95,000 jobs, and the previous two months combined were revised down. The headline jobs number was weak - mostly due to the impact of the hurricanes - but wages picked up and the unemployment rate declined further.

September jobs report: establishment survey stinks, but household survey rocks! HEADLINES:

  • -33,000 jobs lost
  • U3 unemployment rate down -0.2% from 4.4% to 4.2% (new low)
  • U6 underemployment rate down -0.3% from 8.6% to 8.3% (new low)
  • Not in Labor Force, but Want a Job Now:  down -216,000 from 5.844 million to 5.628 million   
  • Part time for economic reasons: down -133,000 from 5.255 million to 5.122 million (new low)
  • Employment/population ratio ages 25-54: up +0.5% from 78.4% to 78.9% (new high) 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.0.09 from $22.14,  to $22.23, up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
  • Manufacturing jobs fell by -1,000 for an average of  +9,800 a month vs. the last seven years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.   
  • Coal mining jobs rose by 500 for an average of +133 a month vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
July was revised downward by -51,000. August was revised upward by +13,000, for a net change of -38,000.  The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly flat.
  • the average manufacturing workweek was unchanged at 40.7 hours.  This is one of the 10 components of the LEI. 
  • construction jobs increased by +8,000. YoY construction jobs are up 184,000. 
  • temporary jobs increased by +5,900.
  • the number of people unemployed for 5 weeks or less increased by +4,000 from 2,222,000 to 2,226,000.  The post-recession low was set al,ost two years ago at 2,095,000.Overtime was flat at 3.3 hours.
  • Professional and business employment (generally higher- paying jobs) increased by +13,000 and  is up +528,000 YoY.
  • the index of aggregate hours worked in the economy fell  by  -0.1 from 107.4 to 107.3  
  • the index of aggregate payrolls rose  by +0.5 from 134.7 to 135.2.  

US Payrolls Shrink In September – First Monthly Decline Since 2010 - US companies shed 33,000 workers in September, marking the first monthly decline in seven years, the Labor Department reports. The prevailing wisdom is that hurricanes temporarily derailed hiring. A review of macro data from other corners supports the case for dismissing today’s unusually weak employment data as a temporary setback due to weather. The Labor Department’s on board with the view that the numbers du jour are an anomaly, explaining in today’s release that “the net effect of [hurricanes Irma and Harvey] was to reduce the estimate of total nonfarm payroll employment for September.”Whatever the source of the slide, last month’s tumble was anything but subtle relative to recent history. The sharp reversal of fortunes last month dragged down the year-over-year change in private payrolls to a weak 1.4% advance, the slowest growth rate since 2011. Despite the worrisome profile for September, economists are inclined to dismiss the decline as transitory. “I don’t think this is indicative of problems in the labor market — it’s because of the hurricanes,” Gus Faucher, chief economist at PNC Financial Services Group, tells Bloomberg. The weather issues aside, “the economy is in decent shape, the labor market continues to improve, and we’ll bounce back to job growth in the final three months of 2017.”“The numbers were certainly blown around a lot by the storms,” notes Carl Tannenbaum, chief economist for Northern Trust, via The New York Times. “The interruptions created in the hurricane regions were seen in leisure and hospitality especially, which had a huge decline.” But “as winds calm, my guess is the employment figures will stabilize.”The case for optimism for the US economy’s outlook still looks encouraging from other data perspectives. Some examples:

    • * Job cuts fell 26% in September vs. the year-earlier level, according to Challenger, Gray & Christmas. John Challenger, chief executive officer at the firm, advises that “job cuts have remained low since the second half of last year. As companies grapple with potential deregulation and changes to health care costs in a tight labor market, employers are holding on to their existing workforces while many positions requiring skilled labor go unfilled.”
    • * Initial jobless claims, after spiking higher in early September due to hurricanes, have been falling recently, dipping to 260,000 (seasonally adjusted) last week, well below the latest peak of 298,000 for the week through Sep. 2.
    • * Employment data for Sep. from other sources reflect a brighter profile than today’s so-called establishment numbers. The ADP Employment Report for last month shows a sharply softer gain, but one that’s still positive via a 135,000 increase. Note, too, that the year-over-year change for ADP’s estimate remains healthy via a nearly 2.0% increase. Also, today’s employment data via the household survey reflects a considerably firmer profile for last month: the number of employed persons in Sep. grew by a strong 906,000, according to this dataset.

September Jobs Report – The Numbers - U.S. employers shed jobs in September, the first negative reading on payrolls in seven years, and the unemployment rate dropped to a new business-cycle low. Here are some of the key figures from Friday’s Labor Department report. For the first time since September 2010, U.S. nonfarm employers shed jobs last month. But that could reflect hurricane-related disruptions more than an actual change in underlying labor-market conditions. More broadly, employers have added an average of 148,000 jobs per month so far in 2017, which is down from last year’s average monthly pace of 187,000, but still solid. The unemployment rate dropped to 4.2% in September, a level not seen since early 2001, because more Americans found jobs even as the labor force expanded. That’s based on a survey of households, which diverged last month from the separate survey of businesses used to generate the monthly payrolls figure. The jobless rate has hovered below 4.5% for the past six months and remains below the level that Federal Reserve officials consider normal in the long run. Their median longer-run projection in September was 4.6%. The Labor Department said the hurricanes didn’t appear to affect the unemployment rate for last month. The Labor Department had earlier warned the hurricane-affected areas of Texas and Florida accounted for about 7.7% of national nonfarm employment, and on Friday the agency said that “a sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.” Puerto Rico and the U.S. Virgin Islands, which both sustained heavy hurricane damage, weren’t covered by Friday’s report. Another sign of hurricane-related distortions in Friday’s report: Nearly 1.5 million people reported in September that they had a job but weren’t at work due to bad weather. That was the highest number since January 1996, when a powerful blizzard hit the East Coast. The figure wasn’t adjusted for seasonal variations. Average hourly earnings for private-sector workers were $26.55 in September, jumping 0.45% from the prior month and rising 2.9% over the past year. The pop could reflect, in part, low-wage workers dropping out of the sample because they weren’t working due to the hurricanes. Wage growth has firmed since earlier in the expansion, but pay raises remain modest compared with historical levels. The labor-force participation rate has stabilized in recent years, though the aging U.S. population and other headwinds may send it lower in the future. It was 63.1% last month, up 0.2 percentage point from a month earlier. A broad measure of unemployment and underemployment known as the U-6, which includes people stuck in part-time jobs and others, was 8.3% in September. That was down from 8.6% a month earlier and 9.7% a year earlier.

The Labor Market Remains Robust - (9 graphs) The BLS announced a 33,000 decline in in payroll employment. Employment in the food services and drinking places sector fell by 104,000. Several disruptions occurred during the past month, including hurricane Irma that occurred at the beginning of the BLS survey week. This is the first decline in employment since September, 2010 as the economy was recovering from the Great Recession. The drop in employment in food services and drinking places was the largest since the series started. This decline was largely responsible for the overall decline in payroll employment. Average hours worked remained at 34.4 for the third straight month. Average hourly earnings rose 0.5% over the month and are up 2.9% year over year. Given the changes in the CPI and PCE, real earnings have grown between .5% and 1%, respectively. The decline in payroll employment seems to be a little misleading due to the disruptions from the hurricanes. The household survey looks much more positive. The labor force participation rate was up from 62.9 to 63.1. The employment to population ratio was also up, from 60.1 to 60.4. The number of unemployed fell by 331,000 and the unemployment rate fell from 4.44% to 4.22%. While the “headline” employment decline shows up first in most reports, a deeper look shows continued strength in the labor market. The coming months are likely to show a bounce back from the hurricane’s effects and a stimulus as rebuilding gets underway.  

Hurricanes Cause Job Loss, But Household Survey Points to New Low in Unemployment Rate - Dean Baker -- Employment fell by 33,000 in September, according to the Bureau of Labor Statistics establishment survey, the first decline since September of 2010. The drop was due to the effects of the hurricanes in Texas and Florida. This is shown clearly from the loss of 104,700 jobs in restaurants. Offsetting this bad news, the household survey showed the unemployment rate falling to 4.2 percent, a new low for the recovery. This was due to a reported surge in employment of 906,000. This increased the employment-to-population ratio (EPOP) to 60.4 percent, a new high for the recovery. The household data are erratic (reported employment fell 74,000 in August), so this jump is likely to be at least partially reversed next month.  Trying to pull out the effects of the hurricane is difficult. One item that is disturbing was a downward revision to the August job growth number by 51,000, going from 189,000 to 138,000. Since the reference period was the middle of the month, this was not the result of the hurricanes. The rate of job growth was already substantially below the 193,000 monthly average for 2016 and 226,000 for 2015. The downward revision for August and the decline in September pushes the pace down further, although October is virtually certain to show a sharp rebound. There does appear to be a substantial uptick in wage growth in the data, with the average hourly wage rising 12 cents in September. This brings the year-over-year increase to 2.9 percent. The average over the last three months compared with the average for the prior three months rose at an even more rapid 3.6 percent annual rate.However these numbers should be viewed with some caution. The hurricanes reduced hiring in the month across the board and the newly hired are generally the lowest paid. This compositional effect can be seen with the loss of restaurant jobs. Since these jobs pay over $10 below the overall average, the loss of more than 100,000 restaurant jobs has the effect of raising the average hourly wage by roughly 1 cent. This compositional effect is occurring within every industry.There appears to have been a similar, albeit smaller effect, in January of 1996 when severe snowstorms across the Midwest and Northeast led to a loss of 15,000 jobs. The average hourly wage for production and nonsupervisory workers (the only series available for that period) jumped by 0.5 percent that month compared with 0.3 percent in December. It was flat the following month. It is worth noting in this respect that the pay of production and nonsupervisory workers rose by 9 cents in September and is up by 2.5 percent over the last year.  In addition to the fall in overall unemployment, other data in the household survey was overwhelmingly positive. The unemployment rate for blacks fell to 7.0 percent, tying the low hit in April of 2000, which is the lowest number on record. The EPOP rose to 58.2 percent, half a percentage point higher than the prior peak for the recovery. The unemployment rate for black women fell to 6.0 percent, the lowest on record. The employment rate for prime age (ages 25–54) workers rose by 0.5 percentage points to 78.9 percent — a new high for the recovery but a level that is still 1.4 percentage points below the prerecession peak and 3.0 percentage points below the peak hit in 2000. The 85.5 percent EPOP for prime-age men is a new high for the recovery, while the 72.4 percent rate for women ties the peak hit in July. The number of people who are incorporated and self-employed jumped by 145,000 to a new high. The average for 2017 is 460,000, or 8.6 percent, above the average for 2013.

What Hurricane: Full-Time Jobs Soar By 935,000, Biggest Increase In The 21st Century --Not only was there much confusion ahead of the September payrolls report, there was just as much confusion inside it, because while the market decided to ignore the 33,000 drop in payrolls (as per the Establishment Survey), the first monthly decline in 7 years and instead focus on the just as widely expected spike in average hourly earnings, a result of hurricane-induced labor shortages, what it appears to have forgotten is the "other" Household Survey, which showed a vastly different picture. Here, according to the BLS the number of employed Americans soared by 906,000 one of the biggest monthly increases on record.However, an even more dramatic observation was revealed when digging into the components of this increase, because according to the BLS, while the number of part-time workers increased last month by 81,000... ... it was the full-time increase that was an absolute outlier: at 935,000 this was the single biggest monthly increase in the 21st century (excluding the bizarro Jan 2000 print), and one of the 4 highest monthly prints in history. Which begs the question: if three hurricanes can result in a near-record increases in full-time jobs, maybe it's time for a few strategically placed tactical nukes above the US: surely that will remove all the slack in the economy overnight, and unleash the long-awaited wage hyperinflation.

Thanks to Harvey and Irma, payrolls fell last month, but underlying job market remains strong - Jared Bernstein - Payrolls contracted by 33,000 last month due to the impacts of hurricanes Harvey and Irma. The unemployment rate, which BLS tells us was not affected by the storms, fell to 4.2 percent, its lowest rate in over 16 years, and it fell for “good reasons” last month, i.e., not because discouraged workers left the labor force. In fact, the closely watched labor force participation rate rose to 63.1 percent, its highest level since March of 2014. Thus, to evaluate the strength of the current US job market, look at the unemployment rate, not the negative payroll number. The former is on trend; the latter is a weather-induced outlier. Another important and strong indicator from September, also one that was unlikely to be influenced by the storms, was the healthy bump to employment rates of prime-age (25-54 year-old) workers, a closely watched indicator in this recovery. Overall, it climbed from 78.4 to 78.9 percent, the highest since July of 2008. For men, it went from 84.9 to 85.5, the highest since August 2008. For women, the employment rate went from 72.1 to 72.4. Wage growth was above trend last month, as average hourly wages rose 0.5 percent over the month and 2.9 percent over the past year. This spike is also likely hurricane related, reflecting the fact that lower-paid workers tend to be the ones not paid when they can’t get to work, and thus they dropped out of the average wage calculations last month. As I’ll show below, the trend in wage growth remains slightly north of 2.5 percent. More evidence of the storms’ impacts can be seen in restaurant employment. BLS points out that while jobs in food services and drinking places have been rising at a decent clip of around 25,000, last month they declined by 105,000. The Bureau reported that, “In this industry, a large majority of workers are not paid when they are absent from work. Hence, if these employees were unable to work during the September survey reference pay period because they had evacuated, or because their establishments were not open for business due to power failures or other effects of the hurricanes, they were not included on September payrolls.” This dynamic dampened the job numbers and boosted the wage results. Thus, the impact of the storms are the most important message from this month’s report. The Texas and Florida hurricanes were clearly responsible for the negative low topline employment number, a decline that is not indicative of a sharply worsening trend in job growth. Prior to this morning’s report, the BLS pointed out that “about 11.2 million workers were employed in March 2017 in the FEMA-designated disaster counties and represented about 7.7 percent of national employment” (about 70 percent in FL and the rest in TX). Estimates suggest that employment growth last month might have been 100,000-150,000 higher had the hurricane not so severely disrupted commerce directly in Texas and Florida and indirectly in other parts of the country.

Comment: A Hurricane Impacted Employment Report -  McBride - The headline jobs number was well below expectations, and there were downward revisions to the previous two months combined.  However wages were up, and the unemployment rate down (the household survey counts people as employed even if there weren't paid during the reference week - like those in hurricane impacted areas). This negative headline jobs report followed a record 83 consecutive months of positive jobs reports (although this might be revised up - that is what happened following hurricane Katrina). In September, the year-over-year change was 1.777 million jobs. This is the lowest year-over-year job growth since August 2011. On the impact of Hurricane Harvey from the BLS: Hurricane Irma made landfall in Florida on September 10--during the reference period for both the establishment and household surveys--causing severe damage in Florida and other parts of the Southeast. Hurricane Harvey made landfall in Texas on August 25--prior to the September reference periods--resulting in severe damage in Texas and other areas of the Gulf Coast.Our analysis suggests that the net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. The hurricanes were the key reason I took the under versus the consensus view.  This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.9% YoY in September.  Wage growth has generally been trending up. The number of persons working part time for economic reasons decreased in September.  This is the lowest level since March 2008. The number working part time for economic reasons suggests a little slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that declined to 8.3% in September.  This is the lowest level for U-6 since 2007.This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.73 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.74 million in August.This is generally trending down, but still a little elevated.The headline jobs number was disappointing, but that was impacted by the hurricanes.  Wages were up, the unemployment rate down, and U-6 the lowest since 2007 - all positive signs.   Overall this was a hurricane impacted employment report.

Philly Fed: State Coincident Indexes increased in 27 states in August - From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for August 2017. Over the past three months, the indexes increased in 37 states, decreased in 11, and were unchanged in two, for a three-month diffusion index of 52. In the past month, the indexes increased in 27 states, decreased in 18, and remained stable in five, for a one-month diffusion index of 18. 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.

Trump’s White House froze an equal-pay rule. Women are fighting to save it. - A coalition of more than 90 civil rights groups is preparing to challenge the Trump administration’s decision to halt an Obama-era initiative aimed at fighting employer discrimination against women and minorities. Emily Martin, general counsel at the National Women's Law Center, said she and attorneys at the Lawyers' Committee for Civil Rights Under Law have requested copies of emails, voice mails and other communications among the federal officials who opted in August to freeze a rule that would have required companies to file data broken down by race, ethnicity and gender on what they pay workers. The rule compelling companies to submit additional information about employees and wages to the Equal Employment Opportunity Commission was finalized in September 2016 and would have taken effect next year. The U.S. Chamber of Commerce, among other industry groups, opposed the measure from the outset, arguing that it put an unfair burden on employers. Since his election, President Trump has frozen or rolled back dozens of regulations that the White House says cost American businesses and the economy billions of dollars. [How Trump is rolling back Obama's legacy] In the case of the Trump administration's stalling the wage data rule, lawyers say the central concern is whether officials talked to equal-pay advocates or conducted meaningful research before shutting it down. The lawyers say the Office of Management and Budget has the legal right to block the measure but must meet certain legal requirements to do so — namely, demonstrating that the EEOC failed to correctly assess the financial impact of the proposal on businesses, or that the agency did not conduct a proper public review in the first place. 

Bill Black: Marriage and the Jobs Guarantee - naked capitalism  - Yves here. Bill Black’s article is well timed as well as important. Tonight, the Wall Street Journal was flogging “Cheap Sex and the Decline of Marriage,” adapted from a new book, which argues that young men aren’t getting married because it’s so easy for them to get laid. Black takes on this  effort to try to present good old fashioned moralism as the remedy for deeper economic problems in his next column in this series, so let me have a mini-go at its first. It does not appear to occur to author Mark Regnerus that young women might be the ones who aren’t so keen to get married, due among other things to the widely reported immaturity of young men. Moreover, there are now more women than men graduating from college and law schools than men. Women are acculturated to marrying up or at worst sideways, income-wise. Might another problem be a shortage of sufficiently-desirable partners? The book’s findings are also at odds with trends that have been widely reported: more young people, particularly young men, being less keen about having casual sex; the number of sex partners among young people falling and the age when young people on average start having sex rising. Admittedly, some of this change has been attributed to smart phones degrading social skills to the point that it apparently makes young people less adept at flirting and seduction. To give an idea of the caliber of this alleged research, this was the only argument presented to counter the notion that young people aren’t getting married because many aren’t making enough to set up households: A May 2017 study from the National Bureau of Economic Research, focusing on regions enriched by the fracking boom, found that increased wages in those places did nothing to boost marriage rates. Help me. What do you think mining boom towns are like? Answer: they bring in a lot of men, from engineers (yes, petroleum engineers skew male) and oil industry workers like derrickhands. They do risky physical work and are paid well. But most of the men are transients, and aren’t looking to stay and marry local women.

Letter to Senate Committee on Health, Education, Labor and Pensions regarding Cheryl Stanton -- On behalf of the Economic Policy Institute Policy Center, we write to express our strong opposition to the nomination of Ms. Cheryl Stanton to serve as the Administrator of the U.S. Department of Labor’s Wage & Hour Division (WHD).  Since 2013, Ms. Stanton has served as the head of the South Carolina Department of Employment and Workforce (SCDEW), an agency that does not handle wage enforcement for the state. The SCDEW’s responsibilities include managing and providing employment and training services, unemployment insurance, and job-matching services for the state.  The laws enforced by WHD cover over 135 million workers in more than 7.3 million establishments nationwide1, with more than 200 offices located throughout the states and the U.S. territories, with only 1,000 investigators to conduct enforcement activities. For the last few years, the U.S. DOL’s WHD has adopted a principle of strategic enforcement, outreach, and education to focus resources in the areas where enforcement can have the most significant impact, particularly low-wage industries where workers are the most vulnerable. In addition to enforcing fundamental minimum wage and overtime protections, WHD has a full host of responsibilities and enforcement authorities that include labor protections for certain temporary nonimmigrant guest workers; labor standards and wages for federal construction and service contracts; and wage, housing, and transportation standards for migrant agricultural workers. South Carolina has no state-level wage and hour protections more protective than the federal level, nor state-level prevailing wage legislation, and the SCDEW has no wage and hour enforcement authority. We have serious doubts that Ms. Stanton has demonstrated the substantive experience necessary to manage the WHD’s complex responsibilities, programs, and staff under the constraints of limited resources.

Letter to House Committee on Education & the Workforce regarding H.R. 3441 - On behalf of the Economic Policy Institute Policy Center, we write to express our strong opposition the H.R. 3441, the so-called “Save Local Business Act,” which would do nothing to protect small business owners or their workers. The so-called “Save Local Business Act” (H.R. 3441) would roll back the joint employer standards under both the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). It has nothing to do with protecting small businesses. In fact, the bill would ensure that small businesses are left with sole responsibility for business practices often mandated by large corporations like franchisors. It would establish a joint employer standard that lets big corporations avoid liability for labor and employment violations and leaves small businesses on the hook.Given the realities of the modern workplace, in which employees often find themselves subject to more than one employer, working people deserve a joint employer standard that guarantees their rights and protections under basic labor and employment laws. Instead, this bill would establish a standard that makes it nearly impossible for workers whose wages are stolen or who are fired for supporting a union to get justice. By limiting employer responsibility to only those firms who “directly, actually, and immediately” exercise significant control over the essential terms and conditions of employment, the bill would enable large firms that contract for services to evade responsibility under both the NLRA and the FLSA. When two or more businesses co-determine or share control over a worker’s pay, schedule, or job duties, then both of those businesses should be considered employers. A weak joint employer standard robs workers of their rights, making it impossible for them to effectively collectively bargain or litigate workplace disputes—and it leaves small businesses holding the bag when the large corporations that control their business practices and set their employees’ schedules violate labor law and refuse to come to the bargaining table. If this committee wishes to support small businesses and the workers they employ, then it should support a strong joint employer standard rather than this legislation.

Chicago's Bankruptcy Boom – ProPublica - This week we published a deep look at why bankruptcy frequently fails to provide relief to black Americans struggling with debt. The story focused on Memphis, Tennessee — the bankruptcy capital of the nation — where black debtors have for generations been funneled into Chapter 13, which usually requires five years of payments most have no chance of making. Debt-laden consumers outside the South overwhelmingly file under Chapter 7, which wipes away most debts, our story and analysis shows.But in recent years, there’s been one big geographic exception: Chicago. Because of a boom in Chapter 13 filings, the U.S. Bankruptcy Court for the Northern District of Illinois, which includes Chicago, had more consumer filings in 2015 than any other district in the country. Almost exclusively fueling this rise are residents of the district’s black communities, where the rate of filings has doubled since 2009. This racial disparity isn’t unique to the Chicago area, but there’s hardly anywhere else in the country where the gap is quite so wide. Even controlling for income, the odds of a black debtor in the Northern District of Illinois choosing Chapter 13 instead of Chapter 7 were about four times as high as those of a white debtor. And, as we found nationally, black debtors were less likely to successfully complete their Chapter 13 plans and have their debts discharged.Why this is happening can be traced to the sort of run-of-the-mill financial hit many Americans face: traffic-related tickets. In Chicago, the failure to pay such tickets can result in a suspended driver’s license or impounded car, crucial lifelines to many low-income families. In our analysis, we note that the rise in Chapter 13 filings has mainly been driven by black, low-income debtors unable to pay tickets owed to the City of Chicago. By filing under Chapter 13, these people are trying to keep their cars or licenses. Chapter 13 stops seizures and suspensions as long as debtors can keep up payments, but the data shows that most can’t. We also found that the Semrad Law Firm, also known as DebtStoppers, played an outsized role. The firm’s clients are largely black and overwhelmingly file under Chapter 13. From 2012 through 2015, DebtStoppers accounted for about 40 percent of Chapter 13 filings by debtors who lived in mostly black areas.

New York faces a budget deficit of up to $4 billion | WRVO Public Media: New York could be facing its first major shortfall in several years, partly due to falling tax collections and federal health care and other policy changes. That could leave the state with billions less in state aid. Lately, Gov. Andrew Cuomo’s been sharing some bad news with New Yorkers. Twice in recent days he’s said there could be a multibillion-dollar shortfall in the budget next year. The first time was at a briefing on how the state would be affected by potential federal Medicaid cuts. “The state is already facing a $4 billion deficit going into next year,” Cuomo said. The second time was a few days later, at a speech to the state’s business leaders in Lake George. “That is a big hole to fill,” Cuomo said. “We need $4 billion just to get to zero. And that’s without a penny more being spent.” The governor said 2018 is an election year and “everyone is going to want to go back a hero.” He said he expects requests from lawmakers for additional money for schools and economic development projects. Cuomo said there are even more concerns looming, including potential losses of billions of dollars in Medicaid under plans to repeal and replace the Affordable Care Act, and tax overhaul plans.“Any one of them would be devastating, and we don’t even know what they are,” said Cuomo, who added the potential federal cuts could range from $2.6 billion to $17 billion. “Any of these numbers are unmanageable.”

 They thought they were going to rehab. They ended up in chicken plants - The worst day of Brad McGahey’s life was the day a judge decided to spare him from prison.  With a 1.5 GPA, he’d barely graduated from high school. He had two kids and mounting child support debt. Then he got busted for buying a stolen horse trailer, fell behind on court fines and blew off his probation officer. Standing in a tiny wood-paneled courtroom in rural Oklahoma in 2010, he faced one year in state prison. The judge had another plan.“You need to learn a work ethic,” the judge told him. “I’m sending you to CAAIR.” McGahey had heard of Christian Alcoholics & Addicts in Recovery. People called it “the Chicken Farm,” a rural retreat where defendants stayed for a year, got addiction treatment and learned to live more productive lives. Most were sent there by courts from across Oklahoma and neighboring states, part of the nationwide push to keep nonviolent offenders out of prison. Aside from daily cans of Dr Pepper, McGahey wasn’t addicted to anything. The judge knew that. But the Chicken Farm sounded better than prison.A few weeks later, McGahey stood in front of a speeding conveyor belt inside a frigid poultry plant, pulling guts and stray feathers from slaughtered chickens destined for major fast food restaurants and grocery stores.There wasn’t much substance abuse treatment at CAAIR. It was mostly factory work for one of America’s top poultry companies. If McGahey got hurt or worked too slowly, his bosses threatened him with prison.And he worked for free. CAAIR pocketed the pay.“It was a slave camp,” McGahey said. “I can’t believe the court sent me there.” Soon, it would get worse.

Testimony on B22-355, the Bolstering Early Growth Investment Amendment Act of 2017 -- Economic Policy Institute - EPI’s Josh Bivens delivered the following testimony before the Council of the District of Columbia’s Committees on Education, Health, and Finance and Revenue regarding the Bolstering Early Growth Investment Amendment Act of 2017 on September 27, 2017:  […] It is hard to think of any other policy lever that spurs broadly-shared growth more effectively than investments in early child development. Such policies provide both short-term and long-term benefits to economic growth and economic mobility. Because the evidence on these topics is so overwhelming, and time is short, I’d like to submit a 2016 paper into the record that I co-authored with colleagues at EPI that provides the facts and evidence that supports these comments.   In the short-term, providing high-quality childcare and education options to parents who don’t currently have them or cannot afford them is a crucial work support that boosts labor force participation. Because women have traditionally borne the much-larger share of the responsibilities for childcare, policy interventions that provide high-quality options to families with children will disproportionately increase female labor force participation. This has the potential to reverse a troubling decline in women’s labor force participation in the United States relative to many of our advanced industrial peers (as demonstrated in Figure 1 below). In the early 1990s, female labor force participation in the United States was among the highest in the advanced world, ranking 6th out of 22 advanced economies. By 2010, the U.S. ranking had fallen to 17th of 22. Persuasive economic research indicates that this falling relative position of the United States reflects, at least in part, our failure to modernize work supports like public investments in early childcare and education. This means that ambitious proposals to invest in high-quality early childcare and education have a built-in “pay-for”; the economic growth that could be spurred by rising women’s labor force participation.

Santa Fe school board opposes new state science education standards --  The Santa Fe school board has decided in a unanimous vote to oppose the state’s proposed new science education standards and is asking the New Mexico Public Education Department to adopt, instead, an already established set of guidelines created by a coalition of science teachers. Following the board’s 5-0 vote on the action during a public meeting Tuesday, Santa Fe Public Schools is one of the first districts in the state to formally voice opposition to the state’s standards, which have met with harsh criticism from educators, scientists and others since they were released last month. Critics say the teaching guidelines water down important scientific concepts such as evolution and human causes for climate change. The Los Alamos school district approved a similar measure last week, the Los Alamos Monitor reported. Joe Guillen, executive director of the New Mexico School Boards Association, said Tuesday that he expects the Taos school board to follow suit in challenging the science standards. The Santa Fe district will send its letter, signed by Superintendent Veronica García, to the Public Education Department by the end of the week, board members said. Education department spokeswoman Lida Alikhani said Tuesday night that the agency had not yet received the letter but would respond after officials had a chance to review it. The letter, introduced at Tuesday’s meeting, questions the authorship of the new standards, which would replace science guidelines last updated in 2003. The education department has declined to say who helped develop the new collection of benchmarks. “This failure to disclose leaves open for question the authenticity of the proposed replacement,” the letter says.

Will California Bring Back Free College? - When Bernie Sanders, and then Hillary Clinton, made debt-free higher education a byword of the 2016 presidential race, University of California graduates like retired Los Angeles anesthesiologist Steve Auer unexpectedly found themselves the poster children for a time when free college tuition was the norm in California, rather than the radical proposition it seems today.“Education was nearly free,” the 75-year-old Auer recalls in a phone interview with  Capital & Main. “Tuition, of course, was nominal, was just almost nothing. That was the reality of that magical period that I was fortunate enough to grow up under and get my education.” In the 1960s, the state picked up the tuition for residents attending California’s public universities and colleges. Auer was merely charged, according to the 1963-64  UC Berkeley catalogue, $75 per semester for “services other than teaching facilities.” But even that “incidental fee” (roughly $600 in 2017 dollars) didn’t derail his education when the then-21-year-old suddenly left home after a falling out with his “Eastern European control freak” immigrant father. “I rented a room in a house that four other guys were already renting,” he remembers. “I had a couple of part-time jobs. I basically scraped by. But it was adequate to get through college with those. No borrowed money at all.” Graduating with a degree in chemistry, Auer went on to get a tuition-free medical degree from UC San Francisco and, on receiving his medical license, immediately entered the economy by buying a home, raising a family and enjoying a level of prosperity that was then still synonymous with the California Dream. But Golden State tuitions have skyrocketed since former Republican Governor George Deukmejian officially  pulled the plug  on free tuition in 1984. The incidental fees of Auer’s generation have morphed into today’s $34,000 sticker price (including living expenses) for  a year at a UC. At a California State University (CSU),  the price tag  is $25,060. To help pay for it, California families will resort to a patchwork of Cal Grants, federal Pell Grants, university grants and Middle Class Scholarships. Borrowing will fill in the gaps.

Why Is College So Expensive if Professors Are Paid So Little? -- With student debt and tuitions both ballooning across the country, a college degree is in many ways more expensive—or overvalued—today than ever. So why is the cost of academic labor—the kind Sharyn Layfield struggles to provide every day—treated as dirt cheap?  According to a study by the Campaign for the Future of Education (CFHE), overreliance on precariously employed faculty is devaluing higher education for teachers and students alike.  Faculty activists acknowledge the consumer concerns about higher education’s value today, including poor completion rates, but link these to a cycle of underinvestment on the teaching side: The “churning of the faculty workforce…low salaries and over-reliance on part-time appointments” erode the quality and attentiveness of instruction, with long-term impacts on public institutions that have historically served the most challenged populations—the poor, people of color and first-generation college students. And as disinvestment and declining academic outcomes deepen, the overall institutional integrity of higher- education systems erodes.  One example is the California State University system: Between 2004 and 2013, the number of faculty teaching full-time or the equivalent ticked up 8 percent, but the population of full-time-equivalent students simultaneously jumped by 20 percent. SEIU’s adjunct-organizing project estimates that as of 2013, “22 percent of part-time faculty live below the poverty line,” significantly higher than the overall poverty rate nationwide. But the hyperinflated price tag of college has funneled toward another aspect of the higher education system: driving funds into administrative offices—a pattern “reflected in increases in the numbers of administrative positions, increases in those salaries, and increases in the percentage of college budgets going to these functions.”  Twenty-five years ago, a student at a public college or non-research university campus would see twice as many faculty as administrators on average; now the ratio is roughly equal. Just 20 percent of the teaching workforce in 2013 were permanent or tenure track. About half worked part-time or as adjuncts, often stitching together temporary gigs at different institutions. 

Law Schools Rip Bar Exam Cut Score Recommendations - When the California Bar Board of Trustees took on the serious task of recommending a new cut score for the state’s infamously difficult exam, it did what most dedicated public servants do — it conducted a study and then punted responsibility to someone else. Yes, the venerable panel tasked with regulating the legal profession decided that it didn’t want to be in the business of the most basic element of regulating the legal profession, and asked the California Supreme Court to come up with an appropriate cut score based on a set of three recommendations ranging from “doing nothing” to lowering the score to 1390. That must be careful, thorough study to point to the unmistakeable conclusion of “I dunno.”The California cut score controversy stirs up a good deal of emotion. Generally, lowering bar passage scores is a cheap effort by law schools to shuttle more graduates into the profession and provide a quick fix for their precious rankings. It’s important to hold the line against this behavior to protect prospective students from being duped into an expensive degree that they won’t be able to pay off — even if they technically earn a license. But California is a whole other can of worms. To call their current cut score out of whack would be an wild understatement. It’s no accident that the only state with a more aggressive cut score is the cloistered corporate shelter that is Delaware. Cut scores in this range are just naked protectionism, drawn up to keep the profession artificially small to the public’s disadvantage. Which is why the deans of 20 of California’s ABA-accrredited law schools dropped a devastating missive on the state supreme court yesterday, asking them to throw away the bar’s study and get to work on a new review that isn’t plagued by methodological errors. And, of course, to lower the cut score in the meantime to bring it in line with the rest of the country — including New York, where lawyers seem to do just fine with a lower cut score.

Trump vs. Graduate Workers - University of Chicago graduate employees, after more than a decade of organizing, will finally get to vote for our union, Graduate Students United, on October 17-18. But the university administration — helmed by President Robert Zimmer, who led the charge to take away private-sector grads’ bargaining rights more than a decade ago when he was provost of Brown University — is relying on the looming threat by the Trump administration to once again take away our right to organize under the National Labor Relations Act, and is doing everything it can to try and prevent graduate employees from having a voice in their work and their future.The latest move by the administration included petitioning the National Labor Relations Board to stall the grad workers’ union election after weeks of hearings culminated in the board’s regional director finally ordering an election. The problem isn’t that the university is worried about whether they can afford a union for its graduate workers — Zimmer has admitted that unionization wouldn’t significantly impact the university financially, and in any case, UChicago currently pays enough in hedge fund fees each year than it collects in undergraduate tuition. He knows they can afford to provide better health insurance, living wages, and affordable childcare.But for some reason, despite many years of what Provost Daniel Diermeier calls “continuously improv[ing] the graduate experience,” these basic benefits which our colleagues at many other institutions — including public institutions facing severe budget crises — enjoy continue to prove beyond the imagination of the UChicago administration. If graduate employees actually had a meaningful say in the terms of our employment by the university, we could move beyond vague promises of administration support and platitudes about the life of the mind, and actually institute policies that would allow grads — both as students and workers — to reach their full potential without worrying if they will be able to pay the thousands of dollars in medical bills, meet their rising rents, or afford child care.

 Retired teachers won't get pension increases 'for many years,' AG warns -- CBC News: Nova Scotia's auditor general is painting a dark picture of what retired teachers, and those who soon will be, can expect if their pension plan continues to run a huge deficit. The plan currently has a $1.4-billion deficit, which means many pensioners are not eligible for increases tied to cost of living nor, according to the auditor general's office, will they be "for many years to come." Auditor General Michael Pickup told the legislature's public accounts committee Wednesday he wanted to ensure those who are counting on their pensions know where they stand. He said that is particularly important for teachers planning for the future. "To drive home the point to teachers, to say: 'We sure hope you're aware that if you're going to be retiring any time soon you may go a long time — if not your complete retirement — without an increase to your pension plan,'" he said. "Which hopefully they are considering in their own personal sort of financial planning." The office of auditor general examined the province's three largest public-sector pension plans in its latest report, released Wednesday morning. While health workers and civil servants have healthy pension plans with large surpluses, the teachers' plan continues to struggle to dig itself out of a deep financial hole. That's despite efforts in recent years to beef up the plan.

New Hampshire Union Leader: Report: Health Care Premiums Would Increase 52 Percent  — Up to half of middle class or higher-income individuals who get no taxpayer subsidy in buying health care under Obamacare will drop coverage once they face average premium increases of 52 percent in 2018, a health insurance expert told a legislative commission Wednesday.The soaring increases are in contrast to lower-income individuals eligible to get tax credits that offset their premium or they face no cost at all for coverage.In 2018, they will likely pay the same or even have lower out-of-pocket costs, said Bela Gorman with Gorman Actuarial Inc. of Marlborough, Mass.“We think price sensitive healthy individuals may exit the market which could reduce the cost gaps,” Gorman told the commission the Legislature formed to examine the future of the Premium Assistance Program (PAP) under Medicaid expansion.About 25,000 upper income individuals get no subsidy to buy insurance under the federal exchange created by the Affordable Care Act.Another 28,000 get some subsidy, a federal tax credit that reimburses them for some if not much of the premiums they pay for coverage.  And the third individual insurance group under Obamacare are the 43,000 in the PAP who are income eligible so that federal Medicaid dollars sent to New Hampshire cover all their premium costs.

 Many Americans unprepared as long-term care costs surge -  Long-term care costs are surging again and the most expensive option — a private nursing home room — may soon top $100,000 a year. Growing labor expenses and sicker patients helped push the median cost of care that includes adult day care and assisted living communities up an average of 4.5 percent this year, according to a survey released last week by Genworth Financial. That's the second-highest increase since Genworth started its survey in 2004. The cost of home health aide services climbed the most, rising 6 percent, to $21.50 an hour. Private nursing home care now costs more than $97,000 annually. Many Americans don't plan for expenses like these or understand them until they face them, said Joe Caldwell of the National Council on Aging, which is not tied to Genworth's study. "People don't like to think about it and talk about it ahead of time, so they kind of put off planning and saving for it financially because they don't think it's going to happen to them," he said. Long-term care costs can impose a crushing financial burden on individuals or families in part because private health insurance and Medicare, the federal program for people age 65 and older, offer only limited help. That can force people who don't have private coverage to spend down their assets until they qualify for the government's health insurance program for the poor, Medicaid. Genworth Financial Inc. sells long-term care coverage and didn't address that cost in its national study, which was based on information from 15,000 long-term care providers. Coverage costs are rising as well, Caldwell said, noting that few employers offer help with that expense like they do with retirement planning or more common forms of coverage such as health insurance. Initial premiums for long-term care coverage can cost well over $2,000 annually, depending on the customer's age, according to the Bipartisan Policy Center, which researches health care issues.

Las Vegas Shooting Strains Nevada's Doctor Shortage, Prompts Medical Emergency: Almost immediately after the deadliest mass shooting in modern U.S. history, which killed at least 59 and injured more than 500 country music festivalgoers, the Sunrise Hospital and Medical Center in Las Vegas realized that it needed help. It requested physicians from other states to come and treat the victims suffering gunshot wounds and injuries from being trampled while trying to escape the venue where bullets were firing at rapid speed from a room in a high-rise hotel. On Monday evening, Gov. Brian Sandoval issued a public health and medical state of emergency, which will make it easier for out-of-state doctors to get to work. The emergency declaration reflects not just the large scale of this horrific event but also the state's doctor shortage, which puts Nevada in a uniquely vulnerable position when responding to a mass shooting.The state routinely has one of the lowest resident-to-physician ratios in the country. A 2015 white paper from Merritt Hawkins, a physician research and consulting firm, ranked Nevada 49 out of 50 states, with only 180 doctors per 100,000 people. “We need all the medical personnel that are available,” said Amy Shogren, director of communications for the Nevada Hospital Association, which worked with the governor to issue the state of emergency.  A hospital can request emergency services from out-of-state doctors without a statewide emergency declaration, but having the support of the governor’s office helps. Shogren said she doesn't know how many out-of-state doctors to expect. Whenever doctors come in from other states in an emergency, they must prove they are a licensed physician in good standing to both the state’s health department and a high-ranking hospital member. It’s a logistical hoop, but one that can be done quickly in times of crisis, says Janis Orlowski, chief health care officer for the Association of American Medical Colleges (AAMC). It’s necessary because hospitals can’t just have anyone walking in claiming to be a surgeon, she says.

Hurricane Damage in Puerto Rico Leads to Fears of Drug Shortages Nationwide - Federal officials and major drugmakers are scrambling to prevent national shortages of critical drugs for treating cancer, diabetes and heart disease, as well as medical devices and supplies, that are manufactured at 80 plants in hurricane-ravaged Puerto Rico. Pharmaceuticals and medical devices are the island’s leading exports, and Puerto Rico has become one of the world’s biggest centers for pharmaceutical manufacturing. Its factories make 13 of the world’s top-selling brand-name drugs, from Humira, the rheumatoid arthritis treatment, to Xarelto, a blood thinner used to prevent stroke, according to a report released last year. With business of nearly $15 billion a year at stake in Puerto Rico, drug companies and device makers are confronting a range of obstacles on the island: locating enough diesel fuel for generators to run their factories; helping their employees get to work from areas where roads are damaged and blocked, electricity is down and phones don’t work. Companies have taken out radio ads pleading with workers to check in. The pharmaceutical and device industries contribute to the employment of nearly 100,000 people on the island, according to trade groups. “Some of these products are critical to Americans,” Scott Gottlieb, the commissioner of the Food and Drug Administration, told a congressional panel this week. “A loss of access could have significant public health consequences.” Dr. Gottlieb, who visited F.D.A. staff in Puerto Rico last week, told the House Energy and Commerce Committee’s subcommittee on Health: “We have a list of about 40 drugs that we’re very concerned about. It reflects maybe about 10 firms.” Thirteen of the drugs, Dr. Gottlieb said, are “sole-source,” meaning the product is made only by one company. Those include H.I.V. medications, injectable drugs and sophisticated medical devices, although he did not name the products. The biggest problem, he said, was not damage to the factories, but the instability of the electric supply. Manufacturers are worried that a long-term lack of connection to a major power grid could jeopardize their products, and are also wary of relying on the more limited electrical grids that the territory is likely to activate as a first step to restoring power.

FDA chief says agency will take action to lower drug prices | TheHill: The Food and Drug Administration will take action to deal with the rising cost of prescription drugs, the agency’s head said on Monday. FDA Commissioner Scott Gottlieb said high drug prices are “a public health concern that FDA should address.” Gottlieb said the agency will take steps to speed up the regulatory approvals of certain kinds of generic alternatives to pricey “complex” drugs. The goal is to increase competition, which could help to slow the growth or even lower the price of prescription drugs. “[A]ny steps we can take to encourage the development of generic competitors to complex drugs will have an outsized impact on access, and prices,” Gottlieb said in a blog post.“If consumers are priced out of the drugs they need, that’s a public health concern that FDA should address,” he said. Gottlieb's actions are largely unprecedented as the FDA has mostly stayed out of the drug pricing debate. The agency has historically focused on making sure products are “safe and effective,” leaving the pricing issues to Congress. Congressional outrage over rising prescription drug costs has been a bipartisan concern, but the parties are divided over whom to blame and solutions. Democrats want greater price controls and want to allow certain drugs to be imported from overseas. Republicans want to increase competition in the marketplace and encourage the development of generic alternatives. So far, no bills have passed. During his presidential campaign, Trump railed against the pharmaceutical industry and its prices, saying they are “getting away with murder." In June, the Trump administration floated a draft executive order that would have cut regulations in order to speed up drug approvals or lower the price of expensive prescription drugs. 

Over half of new cancer drugs ‘show no benefits’ for survival or wellbeing - Most cancer drugs that have recently arrived on the market have come with little evidence that they boost the survival or wellbeing of patients, research reveals. Forty-eight cancer drugs were approved by the European Medicines Agency between 2009 and 2013 for use as treatments in 68 different situations. But the study, which looked at the clinical trials associated with the drugs, reveals that at the time the therapies became available there was no conclusive evidence that they improved survival in almost two-thirds of the situations for which they were approved. In only 10% of the uses did the drugs improve quality of life. Overall 57% of uses showed no benefits for either survival or quality of life. The team then looked to see whether the picture improved over time. Huseyin Naci, a co-author of the study, published in the British Medical Journal, said: “We wanted to see once [the drugs] were already on the market did they actually generate some evidence to show that they improved or extended life?” The team found that after a follow-up period of between three to eight years, 49% of approved uses were linked to no clear sign of improvement in survival or quality of life. Where survival benefits were shown, the team said these were clinically meaningless in almost half of the cases. “What we find very surprising is that not very many studies are looking at overall survival or quality of life as their [primary] objective,” said Naci. He said that instead most of the studies examined indirect measures, such as x-rays or laboratory tests that were assumed to offer clues as to a drug’s survival benefits. He added: “Unfortunately the expectation is that once the drugs are on the market then companies will be investing in [longer term] trials to then demonstrate overall survival benefits. But unfortunately these trials are not necessarily taken up and conducted.”

Drug company hands patents off to Native American tribe to avoid challenge - A drug company has found a novel way to avoid challenges to some of its most prized patents: handing them off to a Native American tribe for safe-keeping. On Friday, Allergan disclosed that it gave six patents covering its top-selling dry eye drug Restasis to the St. Regis Mohawk Tribe in Northern New York. The deal will provide the tribe with $13.75 million immediately and an annual royalty of $15 million as long as the patents are valid. The new deal was soon reported in both The New York Times and The Wall Street Journal.  Allergan made the unprecedented move because it will prevent any meaningful challenge to the company's patents at the Patent Trial and Appeal Board, or PTAB. Challenging patents at the PTAB in a process called "inter partes review" (IPR) was authorized by the America Invents Act of 2011, and the IPR process has significantly changed the patent landscape since then. While invalidating a patent in district court typically costs millions of dollars, invalidating a patent via IPR can happen for the relative bargain of a few hundred thousand dollars. Lawyers for Allergan and the tribe expect that the concept of "sovereign immunity," which bars lawsuits against certain types of government entities, will protect patents owned by St. Regis from any IPR proceeding. In fact, university patents have already been found to be immune to IPR under the concept of sovereign immunity. That will give Allergan a major edge as it clashes with generic drug companies who are trying to knock out the patent so they can produce a cheaper generic version. "The Saint Regis Mohawk Tribe and its counsel approached Allergan with a sophisticated opportunity to strengthen the defense of our RESTASIS intellectual property in the upcoming inter partes review proceedings before the Patent Trial and Appeal Board," Allergan Chief Legal Officer Bob Bailey said in a statement. Given the potential power of the move, there's little doubt that tech companies, or the "patent trolls" that harangue them, will be next in line. In fact, at least one technology patent-holder has already done so. A lawyer for the St. Regis Mohawk Tribe told The New York Times that even before the Allergan deal, the tribe agreed to hold patents for a "technology company," which he declined to name.

Congress seeks answers on massive painkiller shipments to West Virginia - -- Lawmakers are stepping up an investigation concerning an Ohio wholesaler’s massive opioid shipments to drug-ravaged West Virginia.The House Energy and Commerce Committee wants answers and records from Miami-Luken, which also distributes prescription drugs in Western Pennsylvania.The committee began looking into the Dayton-based distributor after news reports surfaced on high levels of opioids shipped to small towns in West Virginia, where Miami-Luken does most of its business.The Charleston Gazette-Mail reported that the company distributed 14.7 million doses of hydrocodone over six years in Mingo County, which has a population of just 27,000. That amounts to an average of 90 doses per year for every adult and child.“The possible oversupply described in this reporting suggest that such practices may have exacerbated the opioid addiction problem currently facing the state,” according to the letter signed by five committee leaders including U.S. Rep. Tim Murphy, R-Upper St. Clair, who leads the Oversight and Investigations Subcommittee.The letter asks Miami-Luken for records of drug shipments to West Virginia pharmacies, copies of written protocol for identification of suspicious orders, reports the company filed to the Drug Enforcement Administration regarding suspicious orders and personnel records related to terminations over drug compliance issues.“The idea as we go into this is: Where were all those drugs going?” Mr. Murphy said Tuesday after a private briefing on the ongoing investigation.When most people think about drug distribution, “they’re looking for drug sellers on the streets or in back alleys or out of a drug house in the neighborhood,” Mr. Murphy said. They don’t think about “the links between distributors and pharmacies getting an oversupply that could not possibly be legitimately consumed, and that’s the area we want to investigate.”His committee particularly wants Miami-Luken to detail its shipments to four West Virginia pharmacies, including Sav-Rite in Kermit, a town of 400 where it sold $3 million worth of drugs in six years.

Silicon Valley Millennial Offers LSD "Microdosing" Course, But Is There A Hidden Agenda? -- A psychedelic renaissance in Silicon Valley is taking millennials by storm, and it’s called ‘microdosing’ LSD. Millennials in Silicon Valley are ditching their daily cocktail–which contains vitamins, minerals, and protein shakes, for a microdose of LSD with their avocado and toast. Paul Austin, 27, a professional microdosing coach, and the founder of ‘The Third Wave’, now offers 30-minute Skype microdosing “consulting” sessions for $127. So far, around 300 people have enrolled into the program. According Austin’s website, microdosing is the “act of integrating sub-perceptual doses of psychedelics into your weekly routine for higher levels of creativity, more energy, increased focus, and improved relational skills”. The website then describes a typical day when microdosing…. This trend is not alarming considering many of Silicon Valley’s engineers, programmers, writers, and artists have addiction problems with scheduled one drugs. Even Steve Jobs openly talked about his LSD experimentation. According to Business Insider, Many people say it improves their concentration or creativity; others say they use it to help treat symptoms of mental illnesses like depression and anxiety. Yet, there are no published scientific studies on microdosing and many unanswered questions on the long term effects. Every few years a new trend of ‘smart drugs’ sweeps across technologically advanced areas with-in the United States. Claims are made about heightened mental powers and gaining an edge in the workspace. The only issue, LSD is “strictly prohibited worldwide, on the grounds that it poses a major health risk and has no therapeutic value”. University of Cambridge scientists warn about the downsides of microdosing. Here is what they had to say:  Those who microdose incorrectly risk having unwanted, full-blown trips or even experience unpleasant trips. There are even some reports of psychosis-like symptoms in certain vulnerable individuals who use LSD recreationally. However two recent US population surveys found no link between using psychedelics and mental health conditions. In an increasingly competitive world it is tempting to find a quick fix to help us achieve more, better and faster. Yet, is this right? As a society we should consider the reasons as to why healthy people choose to use drugs in the first place. A reliance on cognitive-enhancing technologies to cope with demanding working conditions may ultimately reduce the health and well-being of individuals. So we must take care to ensure that enhancement is not seen as a substitute for a healthy working environment. In recent times, large mainstream media outlets have unanimously embraced the psychedelic trend. We ask why Now?

STD rates hit another record high, with California near the top - The number of Americans diagnosed with chlamydia, gonorrhea or syphilis reached a record high in 2016 for the second year in a row, with more than 2 million cases reported and particularly high rates in California, according to federal data released Tuesday. Cases of these three sexually transmitted diseases have been increasing nationally since 2014, reversing a downward trend that began in 2006. Health officials say the rates reflect decreasing condom usage, a lack of awareness about STDs among doctors and patients, and a falling number of STD clinics. Officials said they were especially concerned that as the number of women with syphilis has jumped, so has the number of babies born with syphilis passed down from their mothers. Congenital syphilis, as it is known, can cause stillbirths or permanent disabilities. Since 2012, the number of babies born with congenital syphilis nationwide nearly doubled, reaching 632 last year. The problem is particularly severe in California, which has the nation’s second-highest rates of congenital syphilis. In 2012, 35 babies were infected. Last year, there were 206. “The number of reported STDs in California is increasing at a concerning rate,” More than a quarter-million Californians were infected with either syphilis, chlamydia or gonorrhea last year, which constitutes a 40% jump compared with five years ago, state officials said. Chlamydia, which is most likely to infect women under 30, made up the majority of those cases. It is the most commonly reported medical condition in the state and the country. There were 1.6 million cases nationwide and more than 198,000 in California last year. The cases in California represent the highest level of the disease since 1990, with the biggest increase last year in the San Francisco region, state officials said. San Francisco also had higher rates of gonorrhea and syphilis than any other part of the state last year.

Obesity Was Rising as Ghana Embraced Fast Food. Then Came KFC. - NYT - Ghana, a coastal African country of more than 28 million still etched with pockets of extreme poverty, has enjoyed unprecedented national prosperity in the last decade, buoyed by offshore oil. Though the economy slowed abruptly not long ago, it is rebounding and the signs of new fortune are evident: millions moving to cities for jobs, shopping malls popping up and fast food roaring in to greet people hungry for a contemporary lifestyle. Chief among the corporate players is KFC, and its parent company, YUM!, which have muscled northward from South Africa — where KFC has about 850 outlets and a powerful brand name — throughout sub-Saharan Africa: to Angola, Tanzania, Nigeria, Uganda, Kenya, Ghana and beyond. The company brings the flavors that have made it popular in the West, seasoned with an intangible: the symbolic association of fast food with rich nations. But KFC’s expansion here comes as obesity and related health problems have been surging. Public health officials see fried chicken, french fries and pizza as spurring and intensifying a global obesity epidemic that has hit hard in Ghana — one of 73 countries where obesity has at least doubled since 1980. In that period, Ghana’s obesity rates have surged more than 650 percent, from less than 2 percent of the population to 13.6 percent, according to the Institute for Health Metrics and Evaluation, an independent research center at the University of Washington.The causes of obesity are widely acknowledged as complex — involving changing lifestyles, genetics, and, in particular, consumption of processed foods high in salt, sugar and fat.KFC’s presence in Ghana so far is relatively modest but rapidly growing, and it underscores the way fast food can shape palates, habits and waistlines. Research shows that people who eat more fast food are more likely to gain weight and become obese, and nutrition experts here express deep concern at the prospect of an increasingly heavy and diabetic population, without the medical resources to address a looming health crisis that some say could rival AIDS.

The high price of the nocebo effect - People receiving an inert treatment believed they experienced more severe adverse side effects when the dummy drug was labeled as expensive, scientists report. The researchers say brain regions responsible for higher-order cognition can influence primal pain sensing at the spinal level. To study the neurological causes for the so-called nocebo effect (where people in clinical trials sometimes report negative side effects even though they received inactive substances), Alexandra Tinnermann and colleagues developed a new functional magnetic resonance imaging (fMRI) method for simultaneous activity measurements in the entire central pain system throughout the cortex, brainstem, and spinal cord. For the nocebo treatment, the scientists enrolled 49 people in a trial for a supposed anti-itch cream that, in reality, contained no active ingredients. All participants were told that increased pain sensitivity was a potential side effect for the inert cream, but some were informed that they were receiving an expensive ointment and others were led to believe that the lotion was cheap (the scientists even created two different packages for the balms, indicating high or low price). People treated with the "expensive" cream reported greater sensitivity on a heat-tolerance test, and the nocebo effects became more pronounced over time. The researchers identified portions of the spinal cord that became activated during nocebo effect pain, and determined that altered sensations due to perceived price were associated with differences in two brain regions - the periaqueductal gray and the rostral anterior cingulate cortex. A related Perspective by Luana Colloca gives additional examples where patients' expectations alter placebo (positive) or nocebo effects, advocating for more research into the physiology underlying these phenomena for better clinical trial design. 

  Air pollution exposure on home-to-school routes reduces the growth of working memory  - A study led by the Barcelona Institute for Global Health has demonstrated that exposure to air pollution on the way to school can have damaging effects on children's cognitive development. The study, published recently in Environmental Pollution, found an association between a reduction in working memory and exposure to fine particulate matter (PM2.5) and black carbon during the walking commute to and from school. The study was carried out in the framework of the BREATHE project. Previous research in the same project found that exposure to traffic-related pollutants in schools was associated with slower cognitive development. The aim of the team undertaking the new study was to assess the impact of exposure to air pollution during the walking commute to school. The findings of an earlier study had shown that 20% of a child's daily dose of black carbon -- a pollutant directly related to traffic -- is inhaled during urban commutes. "The results of earlier toxicological and experimental studies have shown that these short exposures to very high concentrations of pollutants can have a disproportionately high impact on health" explains Mar Álvarez-Pedrerol, ISGlobal researcher and first author of the study. "The detrimental effects may be particularly marked in children because of their smaller lung capacity and higher respiratory rate," she adds. Statistical analysis of the findings revealed that exposure to PM2.5 and black carbon was associated with a reduction in the growth of working memory: an interquartile range increase in PM 2.5 and black carbon levels was associated with a decline of 4.6% and 3.9%, respectively, in expected annual growth of working memory. No significant associations were found with exposure to NO2 and none of the pollutants studied were observed to have any effect on attention capacity. In this study, boys were much more sensitive than girls to the effects of both PM2.5 and black carbon.

The price of water: South Sudan's capital goes thirsty as costs soar | Reuters: South Sudan, home to the Nile, is not considered to be a water-scarce country. But civil war and hyperinflation have created a water crisis. For an average family, spending a third of their earnings on water, the cost relative to income is six times greater than the internationally recognized five percent that the World Health Organization suggests families should be spending on water. In Khor William, a hilly suburb of Juba with red mud roads and small brick houses almost hidden by grasses and maize plants, Jimmy’s family is not the only one forced to make sacrifices since water prices began to rise in recent years. Many families, especially government employees, haven’t received their salaries lately and live on less than 1,000 South Sudanese Pounds a month – a mere $8 - even as prices rise with rampant inflation. “We survive by selling homemade cake and bread. I haven’t received my wages in several months. Water comes first... Some people have died because they couldn’t afford medical treatment and others only eat maize flour and okra,” said Rose Johnson, a social worker, mother of five and one of Mary’s neighbors.  “When someone in our community falls ill, all we can do is hope and pray for the best.”

China diverts 10 billion cubic meters of water from south to north - People's Daily (Xinhua) -- Some 53.1 million people in northern China have benefited from the country's massive water diversion project which has so far transferred 10 billion cubic meters of water from the south to the draught-prone north, authorities announced Tuesday.The water pumped from the Yangtze River has gone to Beijing, Tianjin and the provinces of Henan and Hebei along the middle route of the water diversion project, according to the South-to-North Water Diversion Office under the State Council.The middle route of the project carries water through canals and pipes from Danjiangkou reservoir in central China's Hubei Province. It came into operation in late 2014.The project has supplied 2.7 billion cubic meters of water to Beijing, serving 11 million people.Currently about 70 percent of Beijing's water supply comes from the project. The city's per capita water resources have increased from 100 to 150 cubic meters. Previously the city's water supply came mainly from underground water.Tianjin got 2.2 billion cubic meters of water while Henan and Hebei provinces got 3.5 billion cubic meters of water and 1.1 billion cubic meters of water respectively.

Nestlé pays $200 a year to bottle water near Flint – where water is undrinkable - Flint became synonymous with lead-poisoned water after government officials, looking to save money, switched the city’s water supply from Detroit city water to water from the corrosive Flint river.   Once the city had switched, the number of children with elevated lead exposure doubled; residents reported unexplained rashes and losing hair. An unpublished study recently found fetal deaths in Flint increased by 58% during the crisis. Suddenly, Flint was a cause célèbre. The Democratic presidential candidates Hillary Clinton and Bernie Sanders held a debate in Flint. Barack Obama visited to raise morale. Americans who could afford it started ripping out old lead pipes. Media outlets across the country started examining their own towns for lead. Despite having endured lead-laden tap water for years, Flint pays some of the highest water rates in the US. Several residents cited bills upwards of $200 per month for tap water they refuse to touch. But just two hours away, in the tiny town of Evart, creeks lined by wildflowers run with clear water. The town is so small, the fairground, McDonald’s, high school and church are all within a block. But in a town of only 1,503 people, there are a dozen wells pumping water from the underground aquifer. This is where the beverage giant Nestlé pumps almost 100,000 times what an average Michigan resident uses into plastic bottles that are sold all over the midwest for around $1. To use this natural resource, Nestlé pays $200 per year.

Water 3.0 solves problem of microplastics and pharmaceuticals in wastewater - Last week, Lund University reported that microplastics cross the blood-brain barrier to accumulate in the brains of fish, and this build-up may be related to behavioral disorders in fish, including slower eating and less exploration of their environments.This report adds to news that

Standard wastewater treatment plants cannot deal with the flood of microplastics. Many plastic fibers and particles are too small for cost-effective filtration methods, and they are neutral, having no properties that allow them to be collected easily out of waste waters. Some microplastic gets caught up in the grease and fats skimmed off of wastewater, or settle out into the sludge, but a lot of plastic still gets discharged into surface waters. Options like sand filtration can catch the particles, but they just end up in the water again when the filters are backflushed so they can continue to work effectively.  The problem with drugs arises because very low quantities consumed constantly may still be harmful, so even if only a low percentage of the drugs in wastewater get through, a lifetime of exposure to this dilute cocktail of active chemicals poses a threat. With increased drug use by an aging population, the problem will only worsen. The simple fact is: waster water treatment technology was never designed to manage these complex new challenges. A project called Water 3.0 (Wasser 3.0) is gaining recognition and earning awards for both raising the profile of these serious issues and for working on the chemistry of new solutions to the problems.

House Republicans Advance Five Bills to Cripple Endangered Species Act -- In party-line votes, the U.S. House of Representatives Committee on Natural Resources, led by Rep. Rob Bishop (R-Utah), advanced five bills today that would hamstring the Endangered Species Act and condemn hundreds of species to extinction. The legislation can now move to the full House floor for further consideration.  In December, Rep. Bishop stated that his goal was to repeal the act in its entirety. These bills represent the foundation of this longstanding goal. "These bills would put monarch butterflies, wolverines and hundreds of other imperiled animals on a fast track to extinction," said Brett Hartl, government affairs director at the Center for Biological Diversity. "This legislative onslaught is a brutal, blatant effort to cripple the Endangered Species Act. The only winners would be special interests that put profits ahead of our nation's most cherished wildlife ."  The House Committee on Natural Resources approved the following bills today:

  • H.R. 717 by Rep. Pete Olson (R-Texas) would require consideration of the economic costs of protecting an animal or plant on the endangered species list and remove deadlines for completing the listing process.
  • H.R. 1274 by Rep. Dan Newhouse (R-Wash.) would automatically deem any information submitted by a state or local government to be the "best available" science even if such information were contradictory, out-of-date or fraudulent, weakening the listing process for endangered species.
  • H.R. 3131 by Rep. Bill Huizenga (R-Mich.) would hamper citizen enforcement and participation in the implementation of the act's provisions. Undercutting the ability of citizens to bring lawsuits would make the agency more prone to improperly consider politics in its listing decisions and prevent imperiled species from receiving protections in a timely manner.
  • H.R. 2603 by Rep. Louie Gohmert (R-Texas) attempts to limit the Endangered Species Act's provisions for exotic game species that have been imported into the U.S. for trophy hunting. If taken literally, this legislation would remove the need for conservation permits of exotic game species, eliminating a critical funding source for overseas conservation of those very species.
  • H.R. 424 by Rep. Collin Peterson (D-Minn.) would reinstate a 2011 decision by the U.S. Fish and Wildlife Service to remove federal protections for gray wolves in the western Great Lakes states. In 2014, a federal judge found numerous scientific and legal deficiencies with that 2011 decision and brought back protections for gray wolves. The legislation would invalidate the court opinion and preclude all judicial review into the future.

Since January, congressional Republicans have launched 47 legislative attacks against the Endangered Species Act or particular endangered species. Since the Republican takeover of the House of Representatives in 2011, more than 270 attacks have been instigated.

The end of an epic butterfly journey? -- Monarchs are beloved North American creatures: photographed in meadows, welcomed in butterfly gardens, grown in classrooms, celebrated in art. They also are rapidly dwindling in number. Yet until recently, no one knew just how badly the monarch’s western population was faring. Even a 2014 petition to add the butterfly to the Endangered Species List – which the U.S. Fish and Wildlife Service still is considering – focused on the eastern monarch population, found east of the Rocky Mountains. Partly this was because researchers lacked estimates of the historic western monarch population.Now, a new analysis has quantified the western monarch’s historic population as far back as the early 1980s by combining long-term data sets collected by researchers and citizen scientists. The results both surprised and alarmed butterfly experts. “We knew the population was declining,” says Cheryl Schultz, a conservation biologist at Washington State University and lead author on the study. What surprised her was realizing that the West held, on average, 10 million monarchs in the 1980s – a far cry from recent annual counts of approximately 300,000. If current trends continue, Schultz says, western monarchs could stop migrating in as few as 35 years. Unlike eastern monarchs, famous for their winter travels to Mexico, the western population overwinters along the California coast, taking refuge from cold and wind in groves from Mendocino County to Baja California.  When summer comes, the butterflies travel across the West in search of mates and milkweed plants – where females lay eggs – rarely mixing with their relatives to the east of the Rocky Mountains. Somehow, come the following winter, the descendants of the past winter’s butterflies will return to the coastal regions where their ancestors huddled out the previous year’s cold weather. But without enough monarchs, says Schultz, the butterflies won’t be able to complete the journey. “

Big oil vs bearded seal: Case to test Trump climate stance - As the Supreme Court reconvened on Monday, Donald Trump’s commerce secretary Wilbur Ross was the unlikely principle defender of climate science and an Arctic seal.The case, which oil companies want justices to hear, challenges a 2012 listing of the Pacific bearded seal as threatened due to climate change.Ross inherited the long running case from Barack Obama’s administration, which successfully saw off legal challenges in lower courts. But wildlife advocates fear a u-turn, given US president Trump’s antipathy towards science-based decisions made under Obama.News on Wednesday that the administration had reversed a finding that walrus were threatened by climate change seemed to confirm those fears.Oil companies, native Alaskans and the Alaskan government were unhappy when the National Marine Fisheries Service (NMFS) listed the Pacific bearded seal as threatened under the endangered species act (ESA), due to projections that climate change could erase its habitat by 2095.Branding the decision “literal nonsense”, they are hoping to t ake the case to the Supreme Court in order to have the decision overturned. The court must now decide whether to hear the case. Both sides have been given until 27 October to make their arguments.

Trump Administration Signs 'Death Sentence' For Pacific Walrus - The Trump administration announced Wednesday it would decline to list the Pacific walrus on the endangered species list, reversing an Obama-era finding that the walruses should be protected under the Endangered Species Act. The U.S. Fish and Wildlife Service recommended in 2011 that the walrus be considered for endangered species status in the near future due to increased habitat loss from disappearing Arctic sea ice . While its Wednesday announcement acknowledged the species faced "stressors" due to habitat loss, the U.S. Fish and Wildlife Service said it could not determine if the walrus will become endangered "in the foreseeable future"—a date the agency defines as 2060. "This disgraceful decision is a death sentence for the walrus," Shaye Wolf, climate science director at the Center for Biological Diversity , said in a statement. "Walruses face extinction from climate change , and denying them critical protections will push them closer to the edge."  More:  AP , The Guardian , CBS , USA Today , Washington Examiner

North Atlantic Right Whale Population Dips Below 450 After 'Deadliest Year' Since Whaling Era - Fifteen North Atlantic right whales —one of the most endangered of all large whales —have already died this year in U.S. and Canadian waters, according to researchers.   "This makes it pretty much the deadliest year we've seen for North Atlantic right whales since the days of whaling," Tonya Wimmer, director of Canada's Marine Animal Response Society , told the Toronto Star .  The population of North Atlantic right whales previously stood at 458 but that was before this year's deaths, Scott Kraus, vice president and chief scientist at the Anderson Cabot Center for Ocean Life at the New England Aquarium, explained to the New York Times . Only five calves were born this year. This means there are now fewer than 450 North Atlantic right whales left on the planet.  Unfortunately, new research shows that many of these whales died because of human-related activity.  According to recent study , Incident Report: North Atlantic Right Whale Mortality Event in the Gulf of St. Lawrence 2017, necropsies on seven of the whales showed that four had died of blunt force trauma from ship collisions and two died of entanglement . The cause of death for the seventh whale was inconclusive.  The population of North Atlantic right whales has declined from 482 in 2010 to 458 in 2015, and entanglement is a major threat to the slow-moving creatures. A study published last year found that from 2010 to 2015, 15 percent of right whale deaths were caused by vessel strikes, while 85 percent were caused by entanglements.  A whale trapped in tangled fishing gear such as ropes and nets can suffer and ultimately die from a grisly death, as it can lead to drowning, laceration, infection and starvation.

Mexico Launches 'Risky' Vaquita Roundup to Prevent Extinction of Tiny Porpoise -- Wildlife officials in Mexico next week will attempt to capture and protect some of the last vaquita on Earth in a desperate effort to save these small porpoises from extinction. The operation in the Gulf of California, scheduled to begin Oct. 12, will use trained U.S. Navy dolphins to locate vaquita, whose numbers have dwindled by 90 percent in the past five years. Fewer than 30 remain alive today .  "We support this last-ditch effort to save the vaquita from extinction, but it shouldn't be used as an excuse to allow fishing to continue in its habitat," said Alex Olivera, the Center for Biological Diversity's Mexico representative. "These beautiful animals deserve to live free in the Gulf of California, but that will never happen until the Mexican government eliminates the illegal gillnet fishing that has driven these porpoises to the very brink of extinction."  As part of next week's operation, captured vaquita will be placed in pens in the Gulf to protect them from illegal fishing activities, which have led to the species' near demise. The hope is that, once protected, the porpoise will be able to breed and grow its numbers so that one day it might survive again in the wild.  "This risky option became the only option, but vaquita have never been captured alive before, so this effort is uncertain," Olivera said. "It's a high-stakes operation that's happening because the Mexican government has shown an inability to protect the animals in the wild. That has to change if the vaquita is to have any future."

 WWF: 60% of Global Biodiversity Loss Due to Land Cleared for Meat-Based Diets-- A lot has been said about the many links between the food on our plates to climate change . But a new report from the World Wildlife Fund UK (WWF) highlights how the livestock industry also gobbles up a massive amount of land, leading to wide-scale biodiversity loss. Producing the animal feed for meat- and dairy-heavy Western diets uses up a lot of the planet's precious resources. Simply put, the more animal products we eat, the more feed we need to produce, but growing the crops used for that feed—such as soy and corn—eats up land, the Appetite for Destruction report notes. "Today, protein-rich soy is such an important feed ingredient that the average European consumes approximately 61kg (134lbs) of soy per year, largely indirectly through the animal products that they eat like chicken, pork, salmon, cheese, milk and eggs," the report from the UK-based conservation group states. Not only that, these crops are usually produced in some of the planet's most valuable and vulnerable areas such as the Amazon , Cerrado, Congo Basin, Yangtze, Mekong, Himalayas and the Deccan Plateau forests.  "Many of these high-risk regions already suffer significant pressure on land and water resources, are not adequately covered by conservation schemes," the report points out. "The growing demand for livestock products and the associated intensification and agricultural expansion threaten the biodiversity of these areas and the resource and water security of their inhabitants, as well as the stability of our food supply."

Macron takes risky bet with tough talk on weedkiller - Politico - French President Emmanuel Macron is making a high-stakes political gamble by promising to vote against an EU-wide license for the world’s most commonly used weedkiller: glyphosate.Glyphosate is one of the EU’s most toxic political issues, particularly in the Continent’s Franco-German heartlands. Farmers see the herbicide as vital to preserve bumper harvests of crops ranging from barley to carrots, but there is also an intense public debate over whether it causes cancer.That debate over whether it is safe to use is set to move toward endgame when representatives of the 28 EU member countries meet in Brussels on October 5 and 6 to discuss if they should renew its license for another 10 years.On September 22, France dropped a bombshell and confirmed it would vote against a 10-year renewal of the herbicide. That 11th-hour non from Europe’s farming powerhouse raises the prospect of a doomsday scenario for farmers: that the whole EU could have to stop buying new batches of glyphosate from January 1. At first glance, France’s decision would appear foolhardy. Politically, Macron is putting himself on a collision course with farmers, one of the rowdiest constituencies in the country, who protested the government’s stance on glyphosate on September 22 by blocking the Champs Elysées with tractors and bales of hay. In truth, French politicians and analysts do not believe Macron really wants to force the country to “go organic tomorrow.” Two out of three French farmers use glyphosate, according to an industry-funded study conducted by pollster Ipsos, and seen by POLITICO. A massive 85 percent of large farms rely on the chemical, the same study said, with its removal forecast to cut profits in the cereals sector by a third.

75% of World's Honey Laced With Pesticides - Raising further concerns about the global food production system, a new study found that bees worldwide are being widely exposed to dangerous agricultural chemicals, with 75 percent of honey samples from six continents testing positive for pesticides known to harm pollinators. "What this shows is the magnitude of the contamination," the study's lead author, Edward Mitchell, a biology professor at the University of Neuchatel in Switzerland, told the Denver Post. He said there were "relatively few places where we did not find any" contaminated samples. For the study , published in the journal Science, Mitchell's team of researchers examined nearly 200 samples for the five most commonly used neonicotinoid pesticides or neonics. They found:

  • in North America, 86 percent of samples from contained one or more neonicotinoid;
  • in Asia, 80 percent;
  • in Europe (where there is a partial ban), 79 percent;
  • in Africa 73 percent;
  • in and around Australia, 71 percent;
  • and in South America, 57 percent.

Although researchers believe the measured concentrations of neonicotinoids in the tested honey samples are not enough to harm humans, they warn that "a significant detrimental effect on bees is likely for a substantial proportion of the analyzed samples, as adult bees rely on honey for food, including during periods of overwintering or seasons without blossoming flowers." Study co-author Alexandre Aebi, also from the University of Neuchatel in Switzerland, told BBC News that humans "would have to eat an awful lot of honey and other contaminated products to see an effect," but he thinks "it's a warning and it is a call for a precautionary principle."

 Lethal Pesticide Outbreak in India --- At least fifty Indian cotton farmers are dead and over 800 have been hospitalized after spraying the pesticide Profex Super, a combination of profenofos and cypermethrin. The poison causes vomiting, dizziness, disorientation, trouble breathing, trouble seeing. These farmers grow Monsanto’s Bollgard II cotton which is supposed to kill insect pests and reduce the need for sprayed pesticide. But Bt cotton has been a complete failure all over the world, with target bollworms quickly developing resistance to every toxin the poison plant can serve up for them. Especially in India, there was at most a very brief spraying dividend over ten years ago, even as the seeds required neonic pesticide coatings to enable the crop to grow at all. Farmers soon had to revert to spraying many times a year as the bollworms became more and more impervious. Bt cotton is perhaps the most notorious example of the basic failure and fraud of the entire genre of Bt insecticidal GMOs. It highlights how, contrary to the industry’s lies, GMOs increase pesticide use, and are designed to increase pesticide use. Today we have a new development. Acute illness and sometimes death is nothing new among pesticide applicators, but such a big outbreak is. The system’s “experts” are doing their usual thing of blaming the farmers for not taking proper precautions. But the fact is that the farmers get almost all their advice from the sellers themselves of pesticides and GM seeds, but such advice has little safety value. So the lack of proper safety precautions when spraying is a long-running chronic circumstance which often leads to acute illness (and longer term illness such as cancer) but seldom brings lethal outbreaks.  The takeaway is that this kind of acute lethal outbreak could happen any where, any time that significant amounts of pesticides are injected into the environment. If the Bhopal disaster was a massive chaotic outbreak, this is a mini-Bhopal. We can expect more of them, as the poisonist system deploys ever greater numbers of pesticides in ever greater amounts, with ever greater chaotic effects reverberating among these poisons and between them and the environment.

EPA nominee has ties to WV chemical controversies --  A longtime industry consultant picked by President Donald Trump to head the U.S. Environmental Protection Agency’s chemical safety arm was involved in several major public health controversies in West Virginia.Toxicologist Michael Dourson was involved in the long saga over DuPont Co.’s contamination of Mid-Ohio Valley drinking water supplies with the chemical C8. Dourson also was a contractor for a team that then-Gov. Earl Ray Tomblin appointed to investigate the potential impacts of the January 2014 Elk River chemical spill.The Trump administration nominated Dourson to be assistant administrator in charge of EPA’s Office of Chemical Safety and Pollution Prevention.Dourson has most recently been a professor in the Risk Science Center at the University of Cincinnati.Dourson worked for EPA for about 15 years, and then formed a nonprofit consulting firm, Toxicology Excellence for Risk Assessment, or TERA, that The New York Times has said “became a line of first defense for companies facing health and safety challenges from the EPA.” The EPA has cited “widespread praise” for the Dourson nomination, but environmental groups are strongly opposing his confirmation by the Senate.

Trump EPA nominee refuses to recuse himself from cases involving chemical companies he worked for -  President Donald Trump’s nominee to head the Environmental Protection Agency’s chemical and pesticides office refused Wednesday to pledge that he would recuse himself from decisions connected to the companies for whom he worked during his long career as a toxicologist for the chemical industry.At a contentious confirmation hearing, Democrats on the Senate Environment and Public Works Committee repeatedly asked Michael Dourson, nominated to serve as assistant administrator of the EPA’s Office of Chemical Safety and Pollution Prevention, whether he would recuse himself from decision-making where he saw a conflict with his past work. Dourson balked, saying he would rely on EPA ethics officials to make any decision on recusal.Sen. Tom Carper (D-DE), ranking member of the committee, brought a chart to the hearing room that listed some of the chemicals that companies had paid Dourson to study. “In each and every case, you concluded that the right safety standard for the chemicals should be tens, hundreds, even thousands of times less protective than the federal or state regulators did,” Carper said. “It is regrettably difficult to look at your record and conclude that you could be an impartial regulator.”“One way that you could remedy the perception that you may not be able to be an impartial regulator would be to promise to recuse yourself if confirmed from working on any chemical that industry has paid you to study,” he said. But Dourson declined to promise that he would recuse himself. “If confirmed, I will rely on EPA ethics officials to determine any issues for which I am to be recused,” he said.

How Military Outsourcing Turned Toxic - Barksdale, like many military bases, generates large volumes of hazardous materials, including thousands of pounds of toxic powder left over from cleaning, painting and maintaining airplanes. For years, Barksdale had been sending a portion of its waste to an Ohio company, U.S. Technology Corp., that had sold officials at the base on a seemingly ingenious solution for disposing of it: The company would take the contaminated powder from refurbished war planes and repurpose it into cinderblocks that would be used to build everything from schools to hotels to big-box department stores — even a pregnancy support center in Ohio. The deal would ostensibly shield the Air Force from the liabililty of being a large producer of dangerous hazardous trash.The arrangement was not unique. The military is one of the country’s largest polluters, with an inventory of toxic sites on American soil that once topped 39,000. At many locations, the Pentagon has relied on contractors like U.S. Technology to assist in cleaning and restoring land, removing waste, clearing unexploded bombs, and decontaminating buildings, streams and soil.  Today, records show, some of the most dangerous cleanup work that has been entrusted to contractors remains unfinished, or worse, has been falsely pronounced complete, leaving people who live near former military sites to assume these areas are now safe. What the EPA inspector found when he visited Barksdale was an object lesson in the system’s blind spots. Barrels of the waste hadn’t been shipped off and recycled, but rather were stored in a garage tucked away from the facility’s main operations. Further, shipping documents suggested that what waste had been sent off the base hadn’t gone to U.S. Technology’s recycling plant in Ohio, as an Air Force official first told the EPA, but instead had gone to company warehouses in at least two other states. Storing hazardous waste without a permit — and without immediately recycling it — can be illegal. The inspection findings triggered an investigation to determine if the Air Force had been storing hazardous waste that it was supposed to have been recycling without a permit. It also suggested broader problems with U.S. Technology, which was already the subject of an inquiry in Georgia into whether it was illegally dumping waste — including material that could have come from Barksdale — near a residential neighborhood there.

EPA: Hurricane Harvey compromised cap on toxic waste site - The U.S. Environmental Protection Agency has confirmed that rains from Hurricane Harvey damaged a temporary protective cap on a pit of toxic sludge along the San Jacinto River east of Houston, exposing “underlying waste material.” The San Jacinto River Waste Pits — one of the most hazardous of Houston’s many EPA Superfund sites — is contaminated with carcinogenic waste, including dioxins. In a statement late Thursday, the EPA said samples from 14 different areas “confirmed the protective cap had been damaged and the underlying waste material was exposed. The sample showed dioxins at 70,000 ng/kg. EPA recommended clean up level for the site is 30 ng/kg.” The agency said it had directed companies responsible for the waste — International Paper Co. and Industrial Maintenance Corp. — "to conduct supplemental sampling to ensure that the exposed waste material is isolated.” “The dioxin in the waste material does not dissolve easily in water but it can migrate further out into the surrounding sediments,” the statement said. “The supplemental sampling will determine the extent, if any, of this migration." The announcement comes after the EPA reported the cap didn’t appear to be damaged, although it has said for several weeks that its dive teams were conducting additional inspections. Even before Harvey hit, Administrator Scott Pruitt deemed the cleanup of Superfund sites a priority. In 2011, the companies responsible for the waste installed the temporary cap to contain the sludge, which had festered for more than half a century — wastewater from a now-shuttered paper mill was dumped into Houston-area waters beginning in 1965. But the armored structure has occasionally needed repairs, including a significant fix after divers found a 20-foot hole in it in 2015.

EPA: Houston Superfund Site Leaked Toxic Chemicals After Harvey -- The U.S. Environmental Protection Agency (EPA) confirmed that Hurricane Harvey damaged a protective cap at a Superfund site along the San Jacinto River, near Houston, and caused a spike in chemical levels in the water. Water samples from one of 14 monitoring sites at the San Jacinto waste pits indicated levels of dioxin above 70,000 parts per trillion, more than 2,000 times higher than the site's cleanup goal of 30 parts per trillion. Dioxin is a cancer-causing chemical that stays in the environment for hundreds of years before breaking down.  The risks from flooding were foreseen. In a cleanup plan proposed in 2016, the EPA noted that the protective cap could be damaged by a large hurricane or severe storm that caused the river to rise.  Sea level rise , storm surge, and heavy downpours in combination with the pattern of continued development in coastal areas are increasing damage to U.S. infrastructure and are also increasing risks to ports and other installations. Because the intensity of future storms and flooding may increase, estimates regarding the ability of a cap (even a cap with increased armoring) to contain the dioxin waste material is highly uncertain," the report stated. The pits were built in the 1960s to hold waste material from a paper mill.

In Puerto Rico, acute shortages plunge the masses into survival struggle (Reuters) - Brian Jimenez had burned through dwindling supplies of scarce gasoline on a 45-minute drive in search of somewhere to fill his grandmother’s blood thinner prescription. He ended up in Fajardo, a scruffy town of strip malls on Puerto Rico’s northeastern tip, where a line of 400 waited outside a Walmart.The store had drawn desperate crowds of storm victims who had heard it took credit or debit cards and offered customers $20 cash back – a lifeline in an increasingly cashless society. Store employees allowed customers in, one by one, for rationed shopping trips of 15 minutes each.Then, at noon, the store closed after its generator croaked and before Jimenez could get inside to buy his grandmother’s medicine. By Saturday, 11 days after Hurricane Maria crippled this impoverished U.S. territory, residents scrambled for all the staples of modern society – food, water, fuel, medicine, currency – in a grinding survival struggle that has gripped Puerto Ricans across social classes.For days now, residents have awoken each morning to decide which lifeline they should pursue: gasoline at the few open stations, food and bottled water at the few grocery stores with fuel for generators, or scarce cash at the few operating banks or ATMs. The pursuit of just one of these essentials can consume an entire day – if the mission succeeds at all – as hordes of increasingly desperate residents wait in 12-hour lines.  The severe shortages have thrown even relatively affluent Puerto Ricans into the same plight as the hundreds of thousands of poor residents here. The broad humanitarian crisis highlights the extreme difficulty of getting local or federal disaster relief to a remote U.S. island territory with an already fragile infrastructure and deeply indebted government.  Even those here with money to spend now cannot often access it or find places open and supplied to spend it as stores are shuttered for lack of electric power, diesel for generators, supplies or employees.

Puerto Rico continues to reel two weeks after hurricane struck - "I don't want to live here anymore."  Eyleen Gonzalez, all of 18 years of age, uttered that phrase without hesitating. Gonzalez's house in Toa Baja, Puerto Rico, wasdestroyed by Hurricane Maria nearly two weeks ago. Since then, everyone in her hometown has lived without electricity. Only a quarter of its 80,000 residents have running water. About half of gas stations in town are open, with long queues stretching blocks. Most supermarkets are open but rationing food. The destruction in Toa Baja is the rule, not the exception, in Puerto Rico, where the recovery has moved at a glacial pace, according to over a dozen interviews with residents, local relief workers and small-town mayors across the island. "My people are suffering. This is a disaster," says Carlos Mendez, the mayor of Aguadilla in western Puerto Rico. The Port of San Juan, where much of the humanitarian aid is arriving, doesn't have enough truck drivers. Even if it did, many trucks don't have enough diesel fuel to deliver food, water and other essentials. There's little cell service for those with the aid to communicate with towns, drivers and locals. Banks can't get enough armored trucks to deliver cash too. On top of all that, roads are marred with fallen trees -- or the road just doesn't exist anymore. In one town, residents strung a cable across a river to ford it in knee-deep water because the bridge connecting the two sides had been washed a football field's length downriver.  Meanwhile, hospitals and food banks are running low on fuel for their generators to keep the lights on and preserve fruits, veggies and meat.

After first tour of Puerto Rico, top general calls damage ‘the worst he’s ever seen’ - Lt. Gen. Jeffrey S. Buchanan, the Department of Defense’s primary military liaison with FEMA, toured the damage in Puerto Rico for the first time Saturday during a helicopter ride from San Juan to Ceiba. After landing at a hangar in Ceiba with no power, internet or cellular service, Buchanan spoke with the PBS NewsHour’s Monica Villamizar. “Sometimes we don’t know what’s going to happen until the storm actually hits, and this is the worst I’ve ever seen,” Buchanan said.  The trip occurred hours after President Donald Trump criticized San Juan Mayor Carmen Yulín Cruz for “poor leadership” after she spoke of devastation and “horror” on the island in the aftermath of Hurricane Maria and pleaded for help and support from the government. “We are dying here,” she said during a news conference Friday. Buchanan said the worst problems are on the interior of the island. “And it’s because of roads. The roads are not clear on the outside of the island, and we’re slowly working our way in. But we obviously need to get all the roads cleared so we can get supplies to people who desperately need them.”

Teamsters organize truckers to move supplies in Puerto Rico -- Major U.S. labor unions are organizing truck drivers to help with relief efforts in Puerto Rico as the island continues to grapple with the devastation wrought by Hurricane Maria last week.The Teamsters union and the AFL-CIO, a federation of more than 50 unions, are working together to recruit truckers to travel to Puerto Rico and help distribute a stockpile of relief supplies Thousands of shipping containers full of food, water, and medicines were sitting unused at Puerto Rico's Port of San Juan. Relief workers haven't been able to distribute the goods, in part because only about 20% of Puerto Rico's truck drivers have reported back to work since Hurricane Maria swept through, according to a representative for Puerto Rican Gov. Ricardo Rosselló. On top of that, Puerto Rico has a shortage of diesel fuel, which is needed to power the semi-trucks. Downed power lines and debris still litter roadways, blocking routes. Even contacting local drivers is an issue because cell service blackouts still cover the majority of the island. Teamsters spokesman Galen Munro told CNN that the union hopes to get more drivers on the ground next week. Munro said the union has heard from more than 100 truckers who have offered to help, and The Teamsters is working to vet those drivers and ensure they have the proper licenses and availability. But The Teamsters said it's still facing the other logistical issues that have held up cargo distribution. "At this time, it is unclear if there are trucks available to move the containers, fuel to operate the trucks or road access to the distribution centers," the union said Friday. Eleven days after Hurricane Maria hit, Puerto Rico still looks like a war zone.

Hurricane Maria worsens Puerto Rico's water woes | TheHill: Amid the humanitarian disaster in Puerto Rico, most people can’t drink the water. But even before a Category 4 hurricane slammed the U.S. territory, the island’s water supply was in serious trouble.Some 55 percent of Puerto Ricans still don’t have access to drinking water as of Saturday, and concerns are rising over the potential for waterborne illnesses. Prior to the storm, though, the island had the worst rate of drinking water violations of any state or territory, a result of outdated infrastructure, pollution and underinvestment, experts said. "With the hurricane taking out so much of the island's drinking water infrastructure, we're again seeing the very harsh reality of what years of underinvestment and a failure to address this problem can result in,” Adrianna Quintero, the director of partner engagement for the Natural Resources Defense Council, said.In 2015, nearly 70 percent of the population got their water from sources that violated federal health standards in 2015. These include having high levels of bacteria and other contaminants, according to a May report from the group.  Congressional Democrats have urged President Trump to do more to help out Puerto Rico’s 3.4 million residents. On Tuesday, Trump and other members of the Cabinet traveled to the island after a Twitter feud between the president and San Juan’s mayor.  While there, Trump made a reference to the island’s debt, which totals $74 billion, indicating it could complicate federal budget requests for disaster relief.

After hurricane's wrath, Puerto Rico's green forests turn bare brown - One of the most dramatic sights left by Hurricane Maria is the denuding of Puerto Rico. The lush forests for which this island is famous were stripped bare by the cyclone.The sight is distressing. Puerto Rico's trees are spectacular — or at least they used to be. You could have seen the African tulip tree, with its fiery orange-red, cup-shaped flowers. Or majestic ceiba trees, or giant ficus trees with their woody vines.  Now, much of the island's vegetation has been obliterated."The wind was so strong, most leaves could not stay on the trees," says Dr. Ariel Lugo, the 74-year-old director of the International Institute of Tropical Forestry, a part of the U.S. Department of Agriculture's Forest Service. Lugo has been studying Puerto Rican forests, and the effects of hurricanes, for 54 years. "You asked me who got defoliated, everyone did," he says about the bare trees "Normally you don't see the city," he says. "Normally the city doesn't see us. After a hurricane, everything gets exposed."  Through an accident of weather and geography, Puerto Rico has perhaps the best research on the interaction between hurricanes and tropical forests in the Western Hemisphere.In 1989, Hurricane Hugo passed over the eastern third of the island as a strong Category 3. As it happens, scientists had been studying the same forests that were lashed by Hugo since 1943. What Ariel Lugo and other scientists learned is that regrowth here was two to three times as robust and productive as a normal healthy forest.The trees race upward to regain their choice positions in the canopy and photosynthesize the sunlight. The tallest are the victors. It took the forest three to four years to recover after Hugo, and it probably will for Maria, too.

Desperation grows in Puerto Rico’s poor communities without water or power -  Public health conditions are rapidly deteriorating across Puerto Rico as government agencies struggle to restore basic services such as power and clean drinking water and deliver emergency supplies two weeks after Hurricane Maria ravaged the U.S. territory. The situation is dire across much of the island but even more so for its most vulnerable, low-income minority communities.Only about half the territory's residents had access to potable drinking water, and electricity had been restored to just 5 percent of Puerto Rico as of Tuesday, when President Donald Trump visited the capital, San Juan, according to the Federal Emergency Management Agency."The sense of desperation is only growing with every passing day," said Chris Skopec, executive vice president for global health and emergency response with Project HOPE, a Millwood, Virginia-based nonprofit now working in Puerto Rico. "In these kinds of conditions, the ability for an epidemic to spread is really ripe."In Caño Martín Peña, a densely populated community of mostly wooden homes originally built by impoverished squatters in a flood zone in the heart of San Juan, existing public health issues were exacerbated by the storm.The community is plagued by untreated sewage that flows into the adjacent Martín Peña Channel. Before Hurricanes Irma and Maria, even moderate rainstorms would cause the debris-clogged channel to overflow, sending raw sewage into basements and causing skin rashes and asthma. Outbreaks of mosquito-borne diseases dengue and Zika are common in the community of 23,000, where 25 percent of adults are unemployed and the median household income is $13,500, according to 2010 U.S. Census data. "People are drinking whatever comes from the faucet, and it's turbid," said Lyvia Rodríguez del Valle, executive director of the Caño Martín Peña Land Trust Project Corporation, a public-private partnership working with the community. "People lost their roofs. They cannot close their doors, so we are having issues with mosquito bites and other insects, we are having plagues like rats and everything else."

How Devastated Puerto Rico Really Is, by the Numbers -- When Hurricane Maria — the strongest hurricane to hit Puerto Rico in 89 years — descended on the Caribbean island on Sept. 20 with 30 inches of rain and 155 mph winds, the storm killed 16 people and left hundreds of thousands more without necessities like food, water, or medical care.   Maria struck just weeks after Hurricane Irma, the strongest storm to ever come out of the Atlantic, swept across Puerto Rico and knocked out power for more than one million of the island’s residents.  Here’s what Puerto Ricans are up against: Roughly 8,800 refugees are now living in shelters across the island, Puerto Rican Gov. Ricardo Rosselló said Sunday. The government plans to house them across 139 shelters. Heavy rains from Maria opened a crack multiple feet long in Puerto Rico’s Guajataca Dam, prompting the government to call for 70,000 people living nearby to evacuate, and residents are still under a flash flood watch from theNational Weather Service. Even those who still have homes face dire energy problems: 95 percent of the island remained without power as of Saturday, according to the Pentagon. Key areas like hospitals and San Juan’s airport and ports have power, but officials warn it’ll take months before electricity is fully restored. In addition to the electrical grid, the island’s water systems also weathered massive blows. Only 45 percent of people had access to drinking water as of Saturday, according to the Pentagon. In response, FEMA has delivered two million liters of water.Residents have taken to collecting rainwater in any containers they can, which  scientists warn creates the perfect breeding ground for disease-carrying mosquitoes, which could soon overrun the island.   While FEMA reported that 851 of the island’s 1100 gas stations were open, the agency’s administrator Brock Long later said that only 765 had gas. In addition, long lines persist. The Department of Defense estimates its relief efforts will bring a total of one million barrels of diesel and half-a-million barrels of gasoline in the coming days, alongside a potential 15,000 gallons of propane. As of Sunday, FEMA had assessed all 69 of Puerto Rico’s hospitals, only one is fully operational. Fifty-nine are partially operational, with capacity for current patients or to receive patients. The U.S. Department of Health and Human Services has opened seven temporary medical centers while hospitals are being repaired. A Navy hospital ship, the 1,000-bed USNS Comfort, is also due to the island Oct. 3 or 4. Some have noted it could’ve been deployed sooner. Sixty-five percent of grocery stores were open as of Saturday, according to the Puerto Rican government. Almost 89 percent of sites in Puerto Rico were without cell service, the Federal Communications Commission reported as of Sunday. In some areas, the problem is even worse: 27 of the 78  counties on the island have zero service whatsoever.

Puerto Rico prepares for Trump visit after hurricane - BBC News: The Governor of Puerto Rico, Ricardo Rossello, says US federal support has surged ahead of a planned visit on Tuesday by President Trump. Mr Trump has fiercely rejected criticism of the relief effort after Hurricane Maria struck the island nearly two weeks ago. The governor said over 1.5 million barrels of fuel would reach Puerto Rico in the coming days. He said about half of Puerto Rico now had water supplies. Federal authorities say more than 10,000 relief workers are now on the ground covering the whole island. Mr Rossello said about a quarter of Puerto Rico would regain power by next month with around 10% of households expected to have electricity in the next two weeks. He added that almost half - 47% - of residents had running water and the number would climb to 60% by the end of the week. Mobile phone service has been restored to 40% of the population although some areas are still cut off from communication. The governor said the most pressing issues were getting diesel fuel to hospitals so they could run generators to provide electricity. Around 10 hospitals have power but some have shut down temporarily.Mr Rossello explained that the critical issue was how to distribute water, food and medicines to neighbourhoods and towns with many roads impassable or damaged. 

DOE pushes to repair Puerto Rico power system - The US Department of Energy said in its latest assessment that 1.57 million electricity customers in Puerto Rico were without power nine days after the unincorporated territory of the US was hit by Hurricane Maria in the early morning hours of September 20. The island of approximately 3.4 million people, which is roughly the size of the state of Connecticut, saw its 5,840 MW of power generation that is tied together by 2,478 miles of transmission lines first hit by Hurricane Irma on September 6 then again by Maria. Puerto Rico's system feeds power to approximately 900,000 homes via 31,485 miles of distribution wire. Maria destroyed thousands of homes and left roads and entire towns flooded. It was estimated that 80% of the island's electrical grid was "wiped out." The DOE, which did not release an event analysis on Friday, said late on Thursday it was working with the Federal Emergency Management Agency and the US Corps of Engineers to begin transporting crews to the island located roughly 1,000 miles from Miami. The effort was stepped up going into the weekend. However, also on Thursday, the executive director of the Puerto Rico Electric Power Authority announced that 5% of its customers had had their power restored. The DOE acknowledged that PREPA had begun efforts September 25 to bring back online the 400-MW Central San Juan and 602-MW Palo Seco generation units on the country's north coast that would allow PREPA to energize transmission serving portions of the towns of Bayamon and Monacillos. Much of the urban area of Mayaguez on the west coast was energized by the 80-MW hydro-gas plant that is within the municipality, the DOE's Thursday event report said. PREPA had also focused restoration efforts on energizing San Juan International Airport and a number of hospitals with diesel fired generators.

Much of Puerto Rico has no running water | McClatchy -- In households across Puerto Rico, water has become a precious commodity. Stored in jars, bottles and tubs, it is the once-overlooked essential that now occupies full attention in daily life. Water is used and reused. And its scarcity means that for many Puerto Ricans, their bodies, their homes and their clothes are not as clean as they would like. “The majority of our colleagues are washing their clothes in a creek,” said Linaida Santiago Arroyo, a nurse at a kidney dialysis center. Limited water particularly dismays Santiago because she has two young children, an infant only four months old and a 4-year-old boy, “and I don’t want them getting sick.” “We don’t have enough water to clean things up. There’s mud. There’s garbage that they still haven’t picked up,” she said. “It can attract insects that then come closer to the house.” “When I bathe the baby, I use the same water to flush the toilet,” Santiago said. As the island thirsts for more water, medical experts say it is one of the factors that make them deeply concerned over a possible spike in infectious diseases in coming weeks. Nine out of 10 homes on the island still have no electricity, meaning fans and air conditioning units aren’t available to stave off pesky mosquitos carrying illness in the storm’s aftermath. The Federal Emergency Management Agency says 64 of the island’s 68 hospitals are open, but Gov. Ricardo Rosselló said Thursday only 25 are hooked up to the power grid. Others have generators and rely on erratic diesel supplies and suffer occasional breakdowns. “Their generators aren’t meant to last weeks and months on end. They need fuel. They need logistics support,” 

FEMA Scrubs Data About Puerto Rico's Lack of Water and Electricity -- On Wednesday, roughly two weeks after Hurricane Maria struck, just 50 percent of Puerto Rico had access to drinking water and only 5.4 percent had electricity. That information was clearly displayed on Federal Emergency Management Agency's (FEMA) website on disaster relief efforts in the U.S. territory.  But the next day, as first noticed by the Washington Post , those two critical pieces of information were removed from the website.  FEMA explained to the Post that the information is still available in Spanish on a website maintained by the Puerto Rican government, . However, there was no comment about why the information was deleted from the main FEMA page.  FEMA webpage on Oct. 3 about recovery efforts in Puerto Rico (highlighted section from EcoWatch):   FEMA page as of Oct. 6:   The Environmental Data and Governance Initiative (EDGI), which has been closely tracking changes to federal websites since President Trump took office, confirmed the Post's report and said the webpage was most recently altered some time between Oct. 3, 8:51 p.m. and Oct. 5, 5:16 p.m. Eastern Time, according to the Internet Archive's Wayback Machine.

Puerto Rico’s Hospitals Still in Triage Mode, 2 Weeks After Maria — Two weeks after Hurricane Maria ravaged this island, doctors and nurses are still in nonstop triage, working furiously to save lives and ease pain while struggling to contend with power outages, hospital evacuations, dwindling supplies and even crime outside their doors. "The hospitals are still in crisis," said Dr. Ubaldo Santiago, director of emergency services for several San Juan hospitals and clinics. "Many are still working on generators. It's tough, and the doctors are giving their maximum." Santiago said he has twice had to evacuate the Hospital San Francisco in San Juan, the capital, because of generator failures.“The first thought was, I hope nobody dies because of this," he said. "I hope nobody dies because there’s delicate patients there, ICU patients." The struggles are not confined to the hospital walls. A few days after Maria hit, five men held up an X-ray technician and some paramedics at gunpoint outside the emergency room of the Metro Pavia Clinic in the San Juan neighborhood of Cupey, said Dr. Miguel Rosado Serra, who works there. The technician's husband, a police officer who had come to pick her up, traded gunfire with one of the robbers. The suspect was killed, but the other four escaped. The officer was critically wounded. “What hurt me the most," Rosado said, "is when she came in, so soon after just leaving, and she asked me to save her husband — to please not let him die." In other areas of the island, some hospitals have essentially shut down, stuck without the diesel fuel needed to run generators or the ability to communicate with doctors and staff members.   “What you are seeing around here, it’s heaven compared to some people in the inland, in the mountains.”

UPS resumes service to Puerto Rico; offers rate discounts to individual shippers – UPS Inc. said today it has resumed delivery services from the U.S. to hurricane-ravaged Puerto Rico, and will offer, starting Monday, rate discounts for a limited time on selected shipments into the Commonwealth and selected Caribbean points affected by the storm. Air services to Puerto Rico, as well as small-package and some freight services, have been restored to all but 27 of Puerto Rico's ZIP codes, UPS said. The company is also operating in the domestic Puerto Rico market.. However, in an indication of the havoc Hurricane Maria, and Hurricane Irma before that, have wreaked on Puerto Rico's infrastructure, the company has temporarily suspended its time-in-transit commitments because of continued delivery challenges. Because many residents are living in alternative dwellings, UPS said it has initiated special hours for package pickups at five of the company's seven package centers on the island. The rate discounts will be available through Oct. 31 for individual shippers not currently under contract with UPS, the Atlanta-based company said. The discounts will be applied at the time of shipping, according to the company. Romaine Seguin, president of UPS' Americas region, said in a statement that the situation on the island is "dynamic," and that "power outages, many impassable roads, and damaged communications infrastructure are impacting our ability to operate normally." Many packages shipped prior to the hurricane are just now being transported, UPS said, adding that a shipment backlog exists at facilities throughout the island and on the U.S. mainland.

 What Happens When a Superstorm Hits D.C.? --  The problem D.C. faces is largely one of geography. America’s capital lies on the Potomac, an extremely powerful river that drops from 3,000-foot mountains to the Atlantic Ocean. And like all big rivers, the Potomac produces major floods. In September 1996, Jeff Kelble, the president of the Potomac Riverkeeper Network, watched a set of rapids known as Great Falls, located 17 miles outside D.C., rise in the wake of Hurricane Fran. "The river took houses off their foundations and rammed them into other houses," he says. Steep hills further downstream funnel the Potomac through Little Falls; according to Dean Naujoks, who works for Kelble, kayaking this stretch at flood stage "is like driving a car – you just start accelerating." From the falls, a flooded Potomac could sprint, in a muddy torrent of engorged fury, into D.C. Heavy rains over the headwaters of the Potomac released a deluge into the city 13 times between 1877 and 1996. The most notable floods were 1936, when the Potomac destroyed every single bridge but one along a 185-mile stretch, and 1942, when the river inundated the National Mall. For scientists like Resio, a big concern is if a storm system in the mountains unfolds just before a major hurricane hits near the Outer Banks of North Carolina, then tracks inland, pulling a small mountain of water up the Chesapeake, then up the Potomac. This happened in the Chesapeake-Potomac Hurricane of 1933, which carried a deadly 11-foot storm surge; with Hurricane Hazel in 1954; Hurricane Connie in 1955; and Hurricane Isabel, a Category 2 storm that hit in 2003 with a nearly nine-foot surge that severed power at two of Maryland’s largest sewage treatment plants, sending 96 million gallons of sewage flowing toward D.C. "Isabel is a reminder," wrote David L. Johnson, then assistant administrator for Weather Services, in a government assessment of the storm, "that if the impact of a Category 2 hurricane can be so extensive, then the impact of a major hurricane (Category 3 or higher) could be devastating."

Carbon emissions from warming soils could trigger disastrous feedback loop - 26-year study reveals natural biological factors kick in once warming reaches certain point, leading to potentially unstoppable increase in temperatures. Warming soils are releasing more carbon into the atmosphere than previously thought, suggesting a potentially disastrous feedback mechanism whereby increases in global temperatures will trigger massive new carbon releases in a cycle that may be impossible to break.The increased production of carbon comes from the microbes within soils, according to a report in the peer-review journal Science, published on Friday. The 26-year study is one of the biggest of its kind, and is a groundbreaking addition to our scant knowledge of exactly how warming will affect natural systems.Potential feedback loops, or tipping points, have long been suspected to exist by scientists, and there is some evidence for them in the geological record. What appears to happen is that once warming reaches a certain point, these natural biological factors kick in and can lead to a runaway, and potentially unstoppable, increase in warming. Other tipping points posited by scientists include the disappearance of ice in the Arctic, which creates areas of dark water that absorb more heat, and the release of methane, a powerful greenhouse gas, from thawing permafrost.In the Science study, researchers examined plots of soil in the Harvard Forest in Massachusetts, a mixed hardwood forest in the US. They experimented by heating some of the plots with underground cables to 5C above normal levels, leaving others as a control.  The long-term study revealed that in the first 10 years there was a strong increase in the carbon released from the heated plots, then a period of about seven years when the carbon release abated. But after this second calmer period, which the scientists attribute to the adjustment of the soil microbes to the warmer conditions, the release of carbon resumed its upward path.

The world's tropical forests now emit more CO2 than all US cars and trucks combined - Scientists have a wake-up call for the world.Tropical forests are now a threat in our fight against climate change. They emit more CO2 than all US cars and trucks combined, according to a study recently published in Science. This wasn't always the case.After all, trees absorb CO2 from the atmosphere. But that's not the whole story. When those trees die, they decompose. This process returns some of that CO2 to the atmosphere.Thanks to deforestation and sparser forests, dead trees have helped tip the balance.The devastation is worldwide. The color red on this map indicates annual Co2 emission. Today, tropical forests absorb 1.6 billion metric tons of CO2 per year. But they emit nearly double that, 3.16 billion metric tons per year.So, overall, they emit 1.56 billion total metric tons of CO2 annually. To compare, US cars and trucks emitted 0.9 billion metric tons in 2015. That sounds bad, but scientists say there's a silver lining. If we limit deforestation and restore some of the forests, we could drastically reduce CO2 levels in the atmosphere.

Industry lawsuits try to paint environmental activism as illegal racket --Greenpeace and Stand were hit with an unusual lawsuit brought by Resolute Forest Products, one of Canada's largest logging and paper companies, that could cost the groups hundreds of millions of dollars if Resolute wins.The timber company said the organizations, which for years had campaigned against Resolute's logging in Canada's boreal forest, were conspiring illegally to extort the company's customers and defraud their own donors.Invoking the Racketeer Influenced and Corrupt Organizations Act, or RICO, a federal conspiracy law devised to ensnare mobsters, the suit accuses the organizations, as well as several green campaigners individually and numerous unidentified "co-conspirators," of running what amounts to a giant racket."Maximizing donations, not saving the environment, is Greenpeace's true objective," the complaint says. "Its campaigns are consistently based on sensational misinformation untethered to facts or science, but crafted instead to induce strong emotions and, thereby, donations." Dozens of the group's campaign emails and tweets, it said,constituted wire fraud."As an NGO, that is a deeply chilling argument," said Carroll Muffett, president of the Center for International Environmental Law (CIEL), which joined eight other groups to file an amici curiae brief supporting a move to dismiss Resolute's case. The far-reaching lawsuit has seized attention across the environmental advocacy and legal communities. Arguments are to be heard in court next week.

Hidden Costs of Climate Change Running Hundreds of Billions a Year - Extreme weather, made worse by climate change, along with the health impacts of burning fossil fuels, has cost the U.S. economy at least $240 billion a year over the past ten years, a new report has found. And yet this does not include this past month's three major hurricanes or 76 wildfires in nine Western states. Those economic losses alone are estimated to top $300 billion, the report notes. Putting it in perspective, $300 billion is enough money to provide free tuition for the 13.5 million U.S. students enrolled in public colleges and universities for four years. In the coming decade, economic losses from extreme weather combined with the health costs of air pollution spiral upward to at least $360 billion annually, potentially crippling U.S. economic growth, according to this new report, The Economic Case for Climate Action in the United States, published online Thursday by the Universal Ecological Fund. “Burning fossil fuels comes at a giant price tag which the U.S. economy cannot afford and not sustain," said Sir Robert Watson, coauthor and director at the U.K's Tyndall Center for Climate Change Research.

Global climate impacts of a potential volcanic eruption of Mount Agung -- Recent weeks have seen an increase in the number of earthquakes happening below Mount Agung, a 9,944ft (3,031m) high volcano in eastern Bali, Indonesia. Authorities have evacuated nearly 50,000 people in the vicinity of the volcano in light of a potential eruption. In addition to concern for people’s lives and infrastructure, the tourism industry fears the potential for disrupted flight plans.Mount Agung erupted last in 1963, killing over 1,000 people. As is common with large explosive eruptions, it also injected significant amounts of sulfur dioxide into the stratosphere (at least 16-18km above the surface). There, sulfur dioxide combined with water to form sulfuric acid aerosols. These aerosols reflect incoming solar radiation, causing cooling of the Earth’s climate. In fact, volcanic eruptions have been the most important external driver of interannual to decadal variability in global mean surface temperature for at least the past millennium1.The cooling of global mean temperature from the 1963 eruption amounted to about 0.2 to 0.3°C, although it is difficult to precisely quantify from the noisy observational record where temperature variations unrelated to the volcanic eruption can occur simultaneously2. After such eruptions, global temperature eventually recovers to pre-eruption levels, but both the peak cooling and the recovery time depend on the magnitude and evolution of the eruption; that is, the amount of sulfur dioxide that is emitted and the duration of the eruption.The second half of the 20th century has seen only two other large eruptions of comparable magnitude: El Chichón in 1982, and Pinatubo in 1991. As with the 1963 Agung eruption, all left significant imprints on climate, most prominently in global temperature but also in global ocean heat content and sea level3, the carbon cycle4, precipitation and streamflow5.  However, it has been over 26 years since the last large eruption and the observing systems in place at that time were relatively primitive. Now, there are a number of new observing systems in place (most notably satellites such as the NASA A-Train and ARGO floats that measure ocean conditions at depth) that have never been tested during such an eruption. These systems could provide critical new measurements to improve our understanding of volcanic impacts on climate and the Earth system, which in turn will serve as an important test of climate models.

Sixth mass extinction of wildlife also threatens global food supplies The sixth mass extinction of global wildlife already under way is seriously threatening the world’s food supplies, according to experts.  “Huge proportions of the plant and animal species that form the foundation of our food supply are just as endangered [as wildlife] and are getting almost no attention,” said Ann Tutwiler, director general of Bioversity International, a research group that published a new report on Tuesday.“If there is one thing we cannot allow to become extinct, it is the species that provide the food that sustains each and every one of the seven billion people on our planet,” she said in an article for the Guardian.  “This ‘agrobiodiversity’ is a precious resource that we are losing, and yet it can also help solve or mitigate many challenges the world is facing. It has a critical yet overlooked role in helping us improve global nutrition, reduce our impact on the environment and adapt to climate change.”Three-quarters of the world’s food today comes from just 12 crops and five animal species and this leaves supplies very vulnerable to disease and pests that can sweep through large areas of monocultures, as happened in the Irish potato famine when a million people starved to death. Reliance on only a few strains also means the world’s fast changing climate will cut yields just as the demand from a growing global population is rising.There are tens of thousands of wild or rarely cultivated species that could provide a richly varied range of nutritious foods, resistant to disease and tolerant of the changing environment. But the destruction of wild areas, pollution and overhunting has started a mass extinction of species on Earth. The focus to date has been on wild animals – half of which have been lost in the last 40 years – but the new report reveals that the same pressures are endangering humanity’s food supply, with at least 1,000 cultivated species already endangered.

Scientific Study Predicts Global Mass Extinction Event Possible by 2100 - The planet has experienced five mass extinction events. The worst, the Permian Mass Extinction event 252 million years ago, annihilated more than 95 percent of all life on Earth. It coincided with a significant increase in atmospheric carbon dioxide (CO2).The Permian Mass Extinction is the perfect example of what happens when you inject too much CO2 into the atmosphere. The way in which the oceans absorbed this CO2, and subsequently acidified, was the primary kill mechanism for that event.Disturbingly, a scientific paper published last week in the journal Science Advances, titled "Thresholds of Catastrophe in the Earth System," shows that if humans continue adding carbon to the oceans as we are on course to do, a global mass extinction event could be triggered by 2100.The oceans are where the majority of life on Earth exists. There are more plants and animals in them than anywhere else.The Science Advances study places the carbon threshold necessary to trigger another oceanic mass extinction event at 310 gigatons -- and notes that we are already halfway there. Worst-case predictions show that humans could add 500 gigatons of carbon to the oceans by 2100 if we continue on with business as usual. The paper's lead author, MIT's Daniel Rothman, told Motherboard that if humanity crosses that carbon threshold, it will move the planet "to the other side of the stability boundary." He added that there won't be an apocalyptic and immediate die-off of species the moment that threshold is crossed; it might take 10,000 years for the disaster to unfold.

Capitalism, Infinite Growth, Climate Change & Manufactured Hopelessness - Gaius Publius - The video above comes in two parts — the first four minutes or so deals with the title problem, and the last two minutes offers a solution. Note those two sections and the points they make as you watch. I’ll address each point separately below.   We seem to have turned the corner on American belief that climate change will result in a bad end for us unless we stop it or alter its trajectory. Most Americans, however secretly, have come at last to that conclusion, even if (or perhaps because) they think the “us” in the previous sentence is “other people,” the un- or soon-to-be-born.Even Republican office holders are starting to affirm the obvious trajectory of climate change, not to mention ordinary Republican voters of all stripes and kinds. Yes, there are still deniers and agnostics in the mix, but I don’t think they represent the majority of the nation any more. That tide has turned, if only just.We have also likely turned the tide on the notion that infinite economic growth, defined as “more cans and bottles for you, more and greater wealth for the rich,” can be sustained, though most don’t realize it yet. Watch the first four minutes of the video above and ask yourself — Who doubts the main point made? Is there anyone you know (or know of) who thinks we can have “infinite growth on a finite planet” and survive?  Likely no one. It’s the connection of infinite growth to capitalism that hangs people up. Most don’t see yet that infinite growth — more cans of coke, more terrible fast food restaurants, more smart phones you can’t repair — is required for our present economic system to continue to function. They don’t see the present economy, defined as the production of “things,” as requiring infinite growth. That world has become this one, a world of giant companies eating giant companies in order to grow, absorbing others to ensure they’re not the next prey, because quarterly earnings can never be said to be flat when market analysts come calling.

Why political correctness fails – Why what we know ‘for sure’ is wrong -- Gail Tverberg - Most of us are familiar with the Politically Correct (PC) World View. William Deresiewicz describes the view, which he calls the “religion of success,” as follows:There is a right way to think and a right way to talk, and also a right set of things to think and talk about. Secularism is taken for granted. Environmentalism is a sacred cause. Issues of identity—principally the holy trinity of race, gender, and sexuality—occupy the center of concern.There are other beliefs that go with this religion of success:

  • Wind and solar will save us.
  • Electric cars will make transportation possible indefinitely.
  • Our world leaders are all powerful.
  • Science has all of the answers.

To me, this story is pretty much equivalent to the article, “Earth Is Flat and Infinite, According to Paid Experts,” by Chris Hume in Funny Times. While the story is popular, it is just plain silly. In this post, I explain why many popular understandings are just plain wrong. I cover many controversial topics, including environmentalism, peer-reviewed literature, climate change models, and religion. I expect that the analysis will surprise almost everyone.

Factcheck: Climate models have not ‘exaggerated’ global warming - A new study published in the Nature Geosciences journal this week by largely UK-based climate scientists has led to claims in the media that climate models are “wrong” and have significantly overestimated the observed warming of the planet.Here Carbon Brief shows why such claims are a misrepresentation of the paper’s main results. In reality, the results obtained from the type of model-observation comparisons performed in the paper depend greatly on the dataset and model outputs used by the authors. Much of the media coverage surrounding the paper, Millar et al, has focused on the idea that climate models are overestimating observed temperatures by around 0.3C, or nearly 33% of the observed warming since the late 1800s. For example, the Daily Mail reported:According to these models, temperatures across the world should now be at least 1.3 degrees above the mid-19th century average, which is taken as a base level in such calculations. But the British report demonstrates that the rise is only between 0.9 and 1 degree.Lead author Dr Richard Millar and his co-authors have pushed back against such media coverage, releasing a statement which says:A number of media reports have asserted that our [study] indicates that global temperatures are not rising as fast as predicted by the Intergovernmental Panel on Climate Change (IPCC), and hence that action to reduce greenhouse gas emissions is no longer urgent. Both assertions are false. Our results are entirely in line with the IPCC’s 2013 prediction that temperatures in the 2020s would be 0.9-1.3 degrees above pre-industrial [levels]. [Carbon Brief’s guest post by Dr Millar earlier this week includes the paper’s key figures. Additionally, one of his co-authors, Prof Piers Forster, provides further reaction at the end of this article.] Contrary to media claims, the study found that warming is consistent with the range of IPCC models, albeit a bit lower than the average of all the models. Indeed, as Carbon Brief explains in detail below, the difference between models and observations turns out to depend largely on what climate model outputs and observational temperature series are used. The 0.3C value is based on a misinterpretation of the paper by the media and was not intended by the authors as an estimate of current model/observation temperature differences.

Trump EPA to propose repealing Obama's climate regulation: document (Reuters) - The U.S. Environmental Protection Agency will propose repealing the Clean Power Plan - the Obama administration’s centerpiece regulation to fight climate change - and plans to solicit input on a rule to replace it, according to an EPA document seen by Reuters. The decision marks the agency’s first formal step to sweep away the rule intended to cut carbon emissions from power plants, after President Donald Trump signed an executive order in March launching the EPA’s review. The Republican president has expressed doubts about the science of climate change and has blamed former Democratic President Barack Obama’s efforts to cut carbon emissions for hurting the coal mining and oil drilling industries. The Clean Power Plan, or CPP, was challenged in court by 27 states after Obama’s administration launched it in 2015. It is currently suspended by the D.C. Circuit Court of Appeals, which set a deadline of Friday for a status report from the EPA on how it plans to proceed. The EPA document, distributed to members of the agency’s Regulatory Steering Committee, said the EPA “is issuing a proposal to repeal the rule.” The agency now intends to issue what it calls an Advanced Notice of Proposed Rulemaking to solicit input as it considers “developing a rule similarly intended to reduce CO2 emissions from existing fossil fuel electric utility generating units.” The document did not provide any details of the potential new rule. EPA spokeswoman Liz Bowman said the agency does not “have any updates this time.”

Trump Takes a First Step Toward Scrapping Obama’s Global Warming Policy - The Trump administration will repeal the Clean Power Plan, the centerpiece of President Barack Obama’s effort to fight climate change, and will ask the public to recommend ways it could be replaced, according to an internal Environmental Protection Agency document. The draft proposal represents the administration’s first substantive step toward rolling back the plan, which was designed to curb greenhouse gas emissions from the power sector, after months of presidential tweets and condemnations of Mr. Obama’s efforts to reduce climate-warming pollution. But it also lays the groundwork for new, presumably weaker, regulations by asking for the public and industry to offer ideas for a replacement. The E.P.A. document, “October 2017 Tiering List,” lays out coming policy issues of high priority for the agency’s office of air and radiation, which oversees air pollution policies.“The agency is issuing a proposal to repeal the rule,” the document states. It says the agency will issue a formal notice of its intention to develop a new rule “similarly intended to reduce carbon dioxide emissions from existing fossil-fueled electric utility generating units and to solicit information for the agency to consider in developing such a rule.” The document does not explain how the E.P.A. will justify to the courts the decision to eliminate the regulation. Several industry attorneys familiar with the agency’s plans said they expected Scott Pruitt, the E.P.A. administrator, to argue that the Obama administration relied on an overly broad reading of federal clean air laws in writing the Clean Power Plan. President Trump has vowed since the campaign to “get rid” of the Obama-era environmental regulations. He has called the Clean Power Plan “stupid” and “job killing,” and in an executive order issued in March he directed Mr. Pruitt to dismantle the rules. Last month, Mr. Trump appeared to claim he had already done so, telling a crowd in Alabama: “Did you see what I did to that? Boom, gone.”

Report: EPA to seek industry input to shape Clean Power Plan replacement | Utility Dive: Friday is D-Day for the EPA as it evaluates how to dismantle President Obama's Clean Power Plan. The D.C. Circuit granted a stay on litigation over the climate regulations in April and extended it for 60 days at the beginning of August. Most observers expected Administrator Scott Pruitt to propose a rule that regulates pollution only "inside the fenceline" of existing power plants. The CPP controversially compelled coal plant owners to seek additional emissions abatement from other sources, such as procuring renewables.  The so-called "fenceline provision" was a key argument that CPP critics, including Pruitt, used to challenge the regulations in court last year. Pruitt drafted an "inside the fence" alternative to CPP back in 2014 when he challenged the federal rule as Oklahoma attorney general. EPA may stop short of issuing a full proposed rule by its Friday deadline. According to a document Reuters said was sent to the agency's Regulatory Steering Committee, it will first seek input from industry stakeholders as part of an Advanced Notice of Proposed Rulemaking​ before issuing the more typical Notice of Proposed Rulemaking. This would likely extend the timeline for the finalization of a CPP replacement.  The Clean Power Plan, finalized in 2015, never went into effect, as the Supreme Court stayed the rule in February 2016 until legal challenges concluded. If the Pruitt EPA does opt to replace the CPP with a less stringent regulation, it could mean the agency will delay or abandon efforts to challenge the 2009 carbon endangerment finding, which compels the EPA to regulate carbon as a public health threat.

48 environmental rules on the way out under Trump - Since taking office in January, President Trump has made eliminating federal regulations a priority. His administration — with help from Republicans in Congress — has often targeted environmental rules it sees as overly burdensome to the fossil fuel industry, including major Obama-era policies aimed at fighting climate change. To date, the the Trump administration has sought to reverse nearly 50 environmental rules, according to an analysis by The New York Times. 24 rules have been overturned:

  • Flood building standards
  • Proposed ban on a potentially harmful pesticide
  • Freeze on new coal leases on public lands
  • Methane reporting requirement
  • Anti-dumping rule for coal companies
  • Decision on Keystone XL pipeline
  • Decision on Dakota Access pipeline
  • Third-party settlement funds
  • Offshore drilling ban in the Atlantic and Arctic
  • Ban on seismic air gun testing in the Atlantic
  • Northern Bering Sea climate resilience plan
  • Royalty regulations for oil, gas and coal
  • Inclusion of greenhouse gas emissions in environmental reviews
  • Permit-issuing process for new infrastructure projects
  • Green Climate Fund contributions
  • Mining restrictions in Bristol Bay, Alaska
  • Grizzly bear listing as endangered species
  • Hunting ban on wolves and grizzly bears in Alaska
  • Protection of whales and sea turtles
  • Reusable water bottles rule for national parks
  • National parks climate order
  • Calculation for “social cost” of carbon
  • Planning rule for public lands
  • Copper filter cake listing as hazardous waste

17 rollbacks are in progress

  • Clean Power Plan
  • Paris climate agreement
  • Wetland and tributary protections
  • Car and truck fuel-efficiency standards
  • Status of 10 national monuments
  • Status of 12 marine areas
  • Limits on toxic discharge from power plants
  • Coal ash discharge regulations
  • Emissions standards for new, modified and reconstructed power plants
  • Emissions rules for power plant start-up and shutdown
  • Sage grouse habitat protections
  • Fracking regulations on public lands
  • Oil rig safety regulations
  • Regulations for offshore oil and gas exploration by floating vessels
  • Exploratory drilling in the Arctic Wildlife Refuge
  • Hunting method regulations in Alaska
  • Emissions standards for trailers and glider kits

7 rollbacks are  in limbo

  • Methane emission limits at new oil and gas wells
  • Limits on landfill emissions
  • Mercury emission limits for power plants
  • Hazardous chemical facility regulations
  • Groundwater protections for uranium mines
  • Efficiency standards for federal buildings
  • Rule helping consumers buy fuel-efficient tires

The chart above reflects numbers above reflect three types of policy changes: rules that have been officially reversed; announcements and changes still in progress, pending reviews and other rulemaking procedures; and regulations whose status is unclear because of delays or court actions. (Another five rules were undone but later reinstated after legal challenges.) Regulations have often been reversed as a direct response to petitions from oil, coal and gas companies and other industry groups, which have enjoyed a much closer relationship with key figures in the Trump administration than under President Barack Obama.

 E.P.A. Chief’s Calendar: A Stream of Industry Meetings and Trips Home — For lunch on April 26, Scott Pruitt, the new administrator of the Environmental Protection Agency, dined with top executives from Southern Company, one of the nation’s largest coal-burning electric utilities, at Equinox, a white-tablecloth favorite of Washington power brokers.That evening, it was on to BLT Prime, a steakhouse inside the Trump International Hotel in Washington, for a meal with the board of directors of Alliance Resource Partners, a coal-mining giant whose chief executive donated nearly $2 million to help elect President Trump.Before those two agenda items, Mr. Pruitt met privately with top executives and lobbyists from General Motors to talk about their request to block an Obama administration move to curb emissions that contribute to climate change.It was just a typical day for Mr. Pruitt, the former Oklahoma attorney general. Since taking office in February, Mr. Trump’s E.P.A. chief has held back-to-back meetings, briefing sessions and speaking engagements almost daily with top corporate executives and lobbyists from all the major economic sectors that he regulates — and almost no meetings with environmental groups or consumer or public health advocates, according to a 320-page accounting of his daily schedule from February through May, the most detailed look yet at what Mr. Pruitt has been up to since he took over the agency. Many of those players have high-profile matters pending before the agency, with potentially hundreds of millions of dollars in regulatory costs at stake. Some of these same companies and trade associations were allies of Mr. Pruitt when, as Oklahoma’s attorney general, he sued the E.P.A. at least 14 times to try to block rules Mr. Pruitt is now in charge of enforcing. He also took several trips home to Oklahoma for long weekends, often with one or two brief work meetings, followed by long stretches of downtime.

G.M. and Ford Lay Out Plans to Expand Electric Models — China has said it will eventually ban gasoline-powered cars. California may be moving in the same direction. That pressure has set off a scramble by the world’s car companies to embrace electric vehicles. On Monday, General Motors, America’s largest automaker, staked its claim to leadership. Outlining a fundamental shift in its vision of the industry, it announced plans for 20 new all-electric models by 2023, including two within the next 18 months. G.M.’s announcement came a day before a long-scheduled investor presentation by Ford Motor that was also expected to emphasize electric models. After the G.M. news emerged, Ford let loose with its own announcement, saying it would add 13 electrified models over the next several years, with a five-year investment of $4.5 billion. “General Motors believes in an all-electric future,” said Mark L. Reuss, G.M.’s global product chief. “Although that future won’t happen overnight, G.M. is committed to driving increased usage and acceptance of electric vehicles.” In the first eight months of 2017, even with federal tax incentives, Americans purchased only about 60,000 battery-powered electric vehicles, and about the same number of plug-in hybrid models, according to That amounts to 1 percent of the market. But the upstart automaker Tesla has proved the potential of electric vehicles to generate excitement, with its first mass-market offering, the Model 3 sedan, attracting $1,000 deposits from hundreds of thousands of potential buyers.  More than consumer demand, however, it is regulatory pressure that is revving up the electric push, with officials in China, Europe and the United States ratcheting up emissions standards and setting or discussing deadlines that could eliminate gasoline-powered cars within a generation. The announcements by G.M. and Ford follow pledges by the German automakers Volkswagen and Daimler to build hundreds of thousands of electric vehicles in the coming years, and the decision by Volvo, the Chinese-owned Swedish luxury brand, to convert its entire lineup to either electric cars or hybrid vehicles that are powered by both batteries and gas. 

Brussels wants Airbus-style consortium to lead battery revolution  -- Brussels wants to bring together an Airbus-style consortium of leading European companies to develop battery technology, as the continent tries to play catch-up with the US and Asia in a fast-growing market. Maros Sefcovic, European Commission vice-president in charge of energy, will host a summit on October 11 of executives from chemicals groups such BASF, carmakers including BMW and battery manufacturers to promote co-operation in the sector, with up to €2.2bn of EU funding available to support the plan. Global demand for lithium-ion batteries is expected to rise to $40bn by 2025 as electric cars become commonplace, according to Goldman Sachs. However, the bank expects Asia to dominate the market. European carmakers have ramped up projections for electric cars sales ahead of the introduction of stringent EU emissions rules in 2021. UBS estimates electric car sales will outnumber sales of diesel vehicles within five years. But the continent’s ambitions to produce the batteries to power them has not kept pace. While China, Japan and the US have set-up factories to produce the tiny cells used in electric car batteries, Europe has yet to build a single plant. 

Despite Spike In Accidents, California Allows GM To Expand Self-Driving Car Fleet -- California regulators have largely acquiesced to General Motors’ requests to expand its fleet of self-driving robot cars. But that doesn’t mean there haven’t been a few, uh, bumps in the road for GM’s Cruise Automation division. Reuters reported Thursday that the number of accidents involving GM’s self-driving cars has continued to climb, even as California and one powerful Senate committee have done everything in their power to hasten advances in the technology by allowing companies broad remit to increase the size of their fleets, while simultaneously green lighting a bill that would allow automakers to expand testing programs across the US. To wit, GM’s self-driving cars were involved in 6 accidents during the month of September – a month where the company finished expanding its fleet of self-driving cars from around 30 or 40 cars to more than 100.As the company increases the size of its test fleet, it has also reported more run-ins between its self-driving cars and human-operated vehicles and bicycles, telling California regulators its vehicles were involved in six minor crashes in the state in September. “All our incidents this year were caused by the other vehicle,” said Rebecca Mark, spokeswoman for GM Cruise.

Why lithium, why now? -   A global energy transition, from the burning of fossil fuels for energy and transportation, to using renewable non-polluting solar and wind energy is underway. Lithium powers many of today’s handheld tools, our modern mobile communications, our computing devices and increasingly our transportation system. Lithium-ion is the leading energy storage technology, one cannot understate its importance in transforming not only communications gadgets into marvels of handheld technology but in taking electric cars from a niche curiosity into a major clean energy revolution for the transportation sector.China and India are both going to 100% electric vehicles. Every major car manufacturer has electric models.Volvo has even promised to phase out traditional internal combustion engines (ICE) from 2019. France has promised to end the sale of gasoline and diesel vehicles by 2040, the U.K. quickly followed suit. Gigafactory’s making lithium-ion batteries for electric vehicles are springing up across the globe. Tesla’s Nevada Gigafactory, to be completed in 2018, will produce more lithium-ion batteries than were produced globally in all of 2013. Elon Musk, Tesla’s CEO has already announced plans to build four more Gigafactory’s. By 2021, Chinese Gigafactory’s will provide 3.5 times more gigawatt-hours of battery cells than Tesla’s current Gigafactory. Europe recently announced five Gigafactories will be built. Bloomberg reports that global battery-making capacity is set to more than double by 2021, topping 278 gigawatt-hours a year compared to 103 gigawatt-hours at present. There’s a looming problem. – There isn’t enough lithium currently being mined to supply all those Gigafactory’s. 

Catholic church to make record divestment from fossil fuels - More than 40 Catholic institutions are to announce the largest ever faith-based divestment from fossil fuels, on the anniversary of the death of St Francis of Assisi. The sum involved has not been disclosed but the volume of divesting groups is four times higher than a previous church record, and adds to a global divestment movement, led by investors worth $5.5tn. Christiana Figueres, the former UN climate chief who helped negotiate the Paris climate agreement, hailed Tuesday’s move as “a further sign we are on the way to achieving our collective mission”. She said: “I hope we will see more leaders like these 40 Catholic institutions commit, because while this decision makes smart financial sense, acting collectively to deliver a better future for everybody is also our moral imperative.” Church institutions joining the action include the Archdiocese of Cape Town, the Episcopal Conference of Belgium and the diocese of Assisi-Nocera Umbra-Gualdo Tadino, the spiritual home of the world’s Franciscan brothers. A spokesman for the €4.5bn German Church bank and Catholic relief organisation Caritas said that it was committing to divest from coal, tar sands and shale oil.

UK offshore wind capacity factors – a semi-statistical analysis - The average capacity factor at 28 operating UK offshore wind farms is 33.6% (most recent 12-month average) and 34.5% (lifetime), increasing to 36.1% and 37.5% when four demonstration projects are discarded. There is a dependence of capacity factor on age, with older farms showing capacity factors of around 30% and younger ones factors of around 40%. This is interpreted to be a result of  increased turbine sizes, with taller modern turbines accessing higher wind speeds at higher elevations. There is no evidence for significant degradation of turbine performance with time. A “generic” UK offshore wind farm coming on line in 2017 can be assumed to have a capacity factor of around 41%, although projections indicate that the turbines planned for the Hornsea II farm discussed in previous posts could have capacity factors exceeding 60%.The data used in this post are from Energy Numbers. I have no way of verifying these data but have assumed them to be correct. Two recent posts that attracted considerable interest, one by Euan Mearns and one by me, addressed the subject of UK offshore wind strike prices, and since strike prices are directly related to capacity factor I thought this would be an appropriate time to look into the question of what UK offshore wind farm capacity factors have been, what they are now, what we might expect them to be in the future, and in particular what are the factors that govern what the capacity factor is likely to be. The locations of the 24 offshore wind farms used in the analysis are shown by the red boxes in Figure 1 (the four demonstration projects listed by Energy Numbers bias capacity factors low and are excluded). Ten are on the west coast of the UK and fourteen on the east. Most are close inshore. The map and the accompanying explanation are from this July 2015 UK government publication.

U.S. federal government energy costs at lowest point since fiscal year 2004 - According to the Federal Energy Management Program (FEMP), the total real energy cost for the U.S. federal government to operate its facilities, vehicles, and equipment in fiscal year (FY) 2016 fell to $16.1 billion, the lowest level since FY 2004. Total site-delivered energy consumption by the U.S. federal government fell slightly in FY 2016 to 0.92 quadrillion British thermal units (Btu), the lowest on record since data collection began in FY 1975.  The main contributor to lower total energy costs is the sharp decline in per-unit energy costs. In FY 2016, real per-unit energy costs were $17.56 per million Btu, down 23% from the prior year and at their lowest level since FY 2007.  Petroleum accounted for 63% of the U.S. government’s total energy consumption in FY 2016, and it has generally remained between 63% and 69% for more than two decades. As a result, low crude oil prices over the past three years were a significant contributor to lower energy costs for the U.S. federal government. Jet fuel was the most consumed fuel, accounting for 44% of total U.S. government energy use in FY 2016. The U.S. Department of Defense (DoD) is the primary U.S. government consumer of jet fuel, while the U.S. Department of Homeland Security is the main civilian agency using jet fuel. Overall, the DoD accounted for 77% of total site-delivered energy use in the U.S. federal government in FY 2016, which was a slight decrease from the previous year and is the lowest percentage for that agency on record.  With one main exception, the DoD is the primary consumer of most energy types used by the U.S. federal government. The exception is the U.S. Postal Service’s consumption of gasoline, as the postal service accounted for 40% of the government’s total gasoline consumption in FY 2016.

Energy Secretary proposes rule to make grid managers favor coal, nuclear - US Energy Secretary Rick Perry directed the nation’s federal grid regulator to create rules favoring coal, hydroelectric, and nuclear generators. The Notice of Proposed Rulemaking (NOPR) (PDF) stated that the Federal Energy Regulatory Commission (FERC) must order grid operators to increase how they value “reliability and resilience attributes” in energy generation. Although no specific electricity sources were mentioned as beneficiaries of the rule, generating units that can hold a 90-day supply of fuel on site would be favored. Coal, nuclear, and hydroelectric power plants fit the bill, and variably-generating renewable resources like wind and solar would be left out of whatever compensation scheme comes out of FERC's rulemaking process.   Promoting coal has been a primary goal for the new Trump Administration, echoed fervently by Perry, a former Texas governor with ties to the fossil fuel industry. Although burning coal is one of the most polluting sources of electricity used in the US, and the shale boom has made cheap and cleaner-burning natural gas a popular alternative, the shift away from coal has been resisted by political forces. Trump himself has called climate change a “hoax,” and although Perry has been somewhat more deliberate in choosing his words since taking the secretary's office, he's also called into question the anthropogenic nature of climate change despite exhaustive evidence to support human-caused warming. In today’s NOPR, the DOE justified its request for rulemaking, writing that “the resiliency of the nation’s electric grid is threatened by the premature retirements of power plants that can withstand major fuel supply disruptions caused by natural or man-made disasters.” The NOPR comes after the summer release of a “baseload energy report” that was commissioned by Perry in an April memo. Perry requested his office study the US grid’s reliability and resilience, accusing climate change-focused policies from the previous administration of killing jobs and weakening the grid (despite the solar, wind, and natural gas sectors adding jobs during the previous years). The resulting DOE staff report commissioned by Perry was less overtly political, and it noted that cheap natural gas, not renewable energy, was the primary contributor to coal retirements. The report also recommended compensating power plants for reliability.

Perry seeking to prop up nuclear, coal plants - Energy Secretary Rick Perry is making waves through Washington and the energy world with his unprecedented proposal to prop up coal and nuclear power plants that are at risk of closing. Experts say Perry’s proposal marks the most significant change to the country’s power markets in decades — a polar contrast to the market-based approach the Federal Energy Regulatory Commission (FERC) had been taking. It correlates with President Trump’s promise to save the coal industry and the administration’s argument that a rash of coal and nuclear plant closings is threatening the electric grid. Perry wants to increase the payments to troubled coal and nuclear plants by requiring that certain regional electric grid operations pay power plants their actual costs of operating plus a “fair rate of return.” It would be a significant shift from the bidding process now allowed and would almost certainly raise electricity costs for consumers, critics say of the plan. But Perry’s idea has garnered significant praise from coal and nuclear industry leaders, who say it could revive plants they say deserve to be paid more. They argue that because these plants build up larger fuel supplies than competitors producing electricity from wind and solar power, they should be paid more. “We commend Secretary Perry for initiating a rulemaking by FERC that will finally value the on-site fuel security provided by the coal fleet,” said Paul Bailey, president of the American Coalition for Clean Coal Electricity. “The coal fleet has large stockpiles of coal that help to ensure grid resilience and reliability,” he said.

Rick Perry wants you to pay more to support coal, nuclear industries - Houston Chronicle: – Energy Secretary Rick Perry is using the lesser-known corridors of power to prop up the coal and nuclear power industries, striking a blow against natural gas, wind and solar companies.In an unprecedented move, Perry called on President Donald Trump's new appointees to the Federal Energy Regulatory Commission to guarantee that consumers will pay extra for electricity from coal and nuclear power plants. Over the last few months, I have written several columns on how some coal and nuclear companies were begging Trump and Perry to pass an emergency rule that would require utilities to buy more of their expensive electricity. They argue that coal and nuclear power are more reliable and resilient, therefore worthy of a higher price than natural gas, wind and solar sources.Perry ordered his staff in April to report on whether increased reliance on natural gas and renewable sources of energy was weakening the U.S. electric grid. When the report came out in August and accurately reported no reliability problems, I praised Perry for allowing the wholesale electricity markets to work. I spoke too soon.In his letter, Perry goes beyond demanding reliability and requires utilities to buy a particular mix of energy sources, no matter how much more it may cost consumers. "This diverse mix of resources must include traditional baseload generation with on-site fuel storage that can withstand major fuel supply disruptions caused by natural and man-made disasters," Perry wrote. "But the resiliency of the grid is threatened by premature retirements of those fuel-secure traditional baseload resources." Poppycock. His own experts just weeks ago explained how the free market is doing an excellent job of keeping the grid stable. And major energy companies, many with coal plants, are also calling foul. 

Trump May Have Found Paths to Save Coal and Hobble Clean Energy - President Donald Trump may soon have a chance to prove wrong the notion that economics will kill the U.S. coal industry and keep clean energy thriving. Two initiatives pending in Washington -- one to prop up large traditional power plants and a second to impose tariffs on solar panels -- could let Trump upend wholesale electricity markets and tip the advantage away from renewables.The moves, which invoke laws that haven’t been used in a decade, come as Congress weighs a White House tax plan that may undermine a key source of financing for clean energy. Together, they raise questions about whether falling costs will be enough to keep wind and solar thriving under a president intent on supporting fossil fuels. The most recent development came Friday, when U.S. Energy Secretary Rick Perry called on the Federal Energy Regulatory Commission to help coal and nuclear plants compete in wholesale power markets. The request, citing an obscure, 30-year-old statute, is designed to promote national security by rewarding plants capable of storing 90 days of fuel on site.The proposal may help coal and nuclear plants remain in operation even if they’re not economical to run, leaving fewer opportunities for developers to build new wind and solar farms, analysts said. It would be a significant shift from FERC’s largely free-market approach to governing, and it’s unclear if the three-member commission -- two of whom were nominated by Trump -- will agree. Meanwhile, there’s the push to impose tariffs on imported solar panels, which didn’t come from the White House though the issue will soon be on the president’s desk. Suniva Inc., a bankrupt panel manufacturer, filed a trade complaint in April under a law that hadn’t been successfully used since 2002. Most of the U.S. solar industry opposes the effort, arguing that inexpensive foreign panels have driven a boom in clean energy projects and created tens of thousands of jobs. If panel prices rise, development will slow, companies say.

An Obscure Statute Is Helping Trump Save U.S. Coal, Nuclear - The Trump administration is taking advantage of an obscure 30-year-old statute to make good on a promise to help America’s ailing coal industry. Rick Perry is using an authority granted to him as U.S. energy secretary to call on the independent Federal Energy Regulatory Commission to change its rules and help coal and nuclear plants compete in wholesale power markets. Perry said he’s seeking to ensure dependable power plants recover “a fair rate of return.” Those capable of storing 90 days of fuel supplies at their sites, such as coal and nuclear generators, would be eligible. The move underscores the Trump administration’s determination to aid fossil fuels and rescue money-losing coal and nuclear power plants that have seen their profits squeezed by cheaper natural gas and renewables. Federal Register filings show a U.S. energy secretary hasn’t used this authority to direct the energy commission’s work since at least 1994. "Ensuring a reliable and resilient electric supply and corresponding supply chain are vital to national security," Perry said in a letter to the commission, which will consider the proposal. He pointed to a recent Energy Department report that emphasized the importance of so-called baseload plants capable of running around the clock. FirstEnergy Corp., an Ohio utility owner that has said it may place some coal and nuclear plants into bankruptcy, gained the most since July 28. Exelon Corp., which runs the biggest fleet of nuclear plants in the U.S., rose as much as 1.4 percent. Coal plant owners Dynegy Inc. and NRG Energy Inc. were also up. The proposal could essentially prevent coal and nuclear plants from closing even if they’re not economic to run, said William Nelson, an analyst at Bloomberg New Energy Finance. “It would be a huge departure from FERC’s predominately pro-market pro-competition approach to governing,” he said. 

FERC seeks fast track on DOE baseload compensation proposal - Days after the Department of Energy proposed the most significant reforms to wholesale power markets in a generation, energy industry groups are taking sides. On Sept. 29, DOE filed a Notice of Proposed Rulemaking at FERC asking the commission to provide cost recovery for power plants that keep a 90-day supply of fuel onsite. The proposal sparked outcry among other power interests who worry it could unravel competitive electricity markets. Coal and nuclear interests moved quickly to praise the proposed rule. Exelon, the nation's largest nuclear generator, said it was "pleased" DOE moved to "ensure that attributes of nuclear generation are fully and appropriately valued." But a larger contingent of power sector interests expressed dismay at the proposal. In a filing at FERC, a broad array of power sector interests argued that the DOE proposal offered no justification for its directive that FERC conclude its rulemaking on market reforms within 60 days. "To the extent the [NOPR] implies that an emergency exists to justify the proposed interim final rule (although it provides no justification for this action whatsoever), publicly available information from the Department of Energy (“DOE”) and North American Electric Reliability Corporation (“NERC”), as well as other experts, all demonstrate that no emergency exists that would justify such an action," they wrote.  That timeframe, the groups pointed out, would leave only 15 days for commissioners to consider the final rule after a 45-day comment period. The trade associations requested 90 days for initial comments on any proposed rule, as well as time for reply comments and the convening of a technical conference on the proposal.

Gas, renewable groups oppose DOE's call to support nuclear, coal (Reuters) - The main U.S. oil and gas lobbying group joined forces with 10 other energy industry groups on Monday to oppose a call by the U.S. energy secretary for federal regulators to offer incentives for struggling nuclear and coal power plants. Energy Secretary Rick Perry on Friday called on the Federal Energy Regulatory Commission to issue a rule within 60 days to give many coal and nuclear plants incentives for providing reliable electricity to the nation’s grid. The Trump administration has pushed a policy of “energy dominance” for energy companies to produce as much fossil fuel as possible to supply domestic markets and allies abroad. But the opposition to Perry’s call by the 11 groups that include lobbyists for natural gas, solar and wind power and power consumers is an indication the Trump policy could put industries in direct competition with one another. The American Petroleum Institute, the Natural Gas Supply Association, the American Wind Energy Association and eight other industry groups filed a motion at the FERC opposing Perry’s request. The motion says the deadlines in Perry’s request for a so-called interim final rule are “wholly unreasonable and insufficient” and should be extended should FERC “decide to proceed with a rulemaking of this type at all.” It calls for a 90-day comment period followed by a conference for stakeholders to understand Perry’s proposal and provide input. Dena Wiggins, president of the Natural Gas Supply Association, one of the groups that filed the motion, said that Perry’s request of FERC was a “dramatic departure” from normal rulemaking procedures and she did not see an easy way for him to “short circuit” the process. Both nuclear and coal power plants have suffered a rash of permanent shutdowns in the face of competition from cheap, plentiful natural gas and stagnant electricity demand. Perry’s plan said that coal and nuclear power have fared well in recent storms and that they should be rewarded for reliability. The Trump administration has criticized wind and solar power, both expanding rapidly, as being too dependent on weather. 

Oil, renewable industries join forces to oppose Trump's grid plan at FERC --An unlikely coalition of fossil fuel and renewable energy groups are pushing back against the Trump administration's plan to create new rules to prop up nuclear and coal-fired power plants, which have been suffering economically from increased competition from low-cost natural gas.The coalition on Monday formally opposed the proposed plan that Energy Secretary Rick Perry sent to the Federal Energy Regulatory Commission Friday. Perry directed the commission to enact new pricing rules for the electricity market to preserve the nation's diverse mix of energy resources to keep the grid afloat, citing the recent hurricanes in Texas and Florida as reasons for creating new rate structures for coal and nuclear. The industry's message to the administration was firm, laying out a plethora of problems with Perry's proposed action in a motion that resembled a legal filing. The crux of the industry's opposition involves the pace at which Perry suggests the commission must act. The coalition argues that if FERC were to follow Perry's guidance, it would be violating the Administrative Procedures Act, a law governing regulatory process and procedure. "The [Perry] letter does not justify its suggestion that the commission should issue an interim final rule within the narrow provision for such rules in the Administrative Procedure Act ... and as a result, the commission should not pursue this alternative," the motion read. "To demonstrate good cause, an agency must establish: the existence of an emergency; that prior notice would subvert the underlying statutory scheme; or that Congress intended to waive notice and comment rulemaking requirements,,’ the motion added."None of these circumstances exists such that the extraordinary use of an interim final rule would be justified, and the letter does not even attempt to suggest they do," the industry motion argued.

Perry's proposed grid rule scrambles energy alliances: Kemp (Reuters) - U.S. Energy Secretary Rick Perry's attempt to save the coal and nuclear industries by proposing a new grid resiliency rule is making for some odd bedfellows across the energy sector. The proposed grid resiliency rule threatens to turn two of the Trump administration's most loyal groups of supporters against one another, as the gas and coal industries square off for a fight over market share.The disagreement over grid resiliency highlights some of the central tensions within the Trump administration's energy policy:

  • * The White House has celebrated the growth in domestic gas production and associated reduction in greenhouse emissions but also wants to rescue coal and nuclear producers.
  • * The White House wants cheap electricity for households and manufacturing companies but needs higher prices in the power market to support coal-fired and nuclear power plants.
  • * The White House draws support from pro-business groups that support a free-market approach to energy production as well as those that want a more interventionist and protectionist strategy.

As a result, the president's coalition of energy supporters is deeply divided over the proposed grid rule, with many of the administration's most prominent supporters remaining silent or issuing only noncommittal statements. Lobbyists and journalists tend to write about energy policy as if it was a Manichean struggle between clean energy (wind, solar) and dirty energy (oil, gas, coal) with nuclear somewhere between (depending on the observer's viewpoint). But the reality is much more complicated and the proposed grid resiliency rule pits the coal and nuclear sectors against an eclectic alliance of wind, solar and gas companies as well as rural electric cooperatives and major energy consumers. Perry's proposed rule has been warmly welcomed by the Nuclear Energy Institute and the American Coalition for Clean Coal Energy as well as power generators with lots of coal and nuclear plants. But it has already drawn fierce push back from the American Council on Renewable Energy (ACORE), the American Petroleum Institute (API) and nine other energy industry associations from across the spectrum.

Rick Perry's Order to FERC is Fraudulent -- Energy Secretary Rick Perry’s ukase to the Federal Energy Regulatory Commission (FERC) last week—undo over 20 years of federal policy on national electric markets to aid coal and nuclear generation—is a joke. It is an entirely political screed devoid of intellectual content. That pretty much describes Perry. In an administration that bills itself as committed to federal deregulation, Perry’s proposal is a massive case of reregulation, telling FERC that it should substitute cost-of-service regulations (in states where that is no longer the case) for the competitive wholesale bidding that has lowered customer costs, increased investment, and improved reliability for over half of the United States. The tipoff to the lack of seriousness is that Perry wants FERC to act in 60 days to upset competitive markets to favor coal and nuclear generation. The Department of Energy (DOE) called on FERC to not only take action in 60 days, but also consider issuing an immediate interim “final rule,” with “later modifications” after public comment. That’s the typical Trump administration approach to governing: shoot first, ask questions later. Not going to happen. No serious federal regulatory agency would attempt to kowtow to the pressure from DOE. Surely DOE officials below Perry know about the Administrative Procedures Act, even if the Trumpeters don’t. Nor does FERC owe any deference to the administration. It operates under law, which establishes FERC as an independent agency. Unless the new Republican majority on the commission decides to abandon 40 years of independent, non-political history, Perry’s push is likely to stall. The hook for Perry’s reregulation endeavor is “fuel security,” the notion that plants that typically serve base loads have fuel supplies in hand that natural gas and renewables don’t (despite the fact that plentiful natural gas storage is common in most regions of the U.S., save New England). The DOE proposal says FERC should put the federal government’s thumb on the wholesale market price scale in favor of resources that have a 90-day fuel supply at the generating site. That 90-day period works for nukes. It’s unclear how well it works for coal-fired plants. And, particularly for coal, it’s an economically expensive proposition. On-site fuel inventory is costly, driving up costs that DOE would have FERC order recovered in rates, along with a return. 

The Real Electricity Reliability Crisis --By publishing a NOPR in the Federal Register, Sec. Perry is taking advantage of a section of the Department of Energy Organization Act that allows DOE to propose rules for FERC consideration, and set a timetable in which they must do so.  Sec. Perry has given FERC 60 days to address what he sees as the electricity reliability emergency created by the retirement of “fuel-secure generation” – namely coal and nuclear power plants that can store large quantities of fuel on-site.  Natural gas plants can’t store much fuel onsite and rely on a consistent stream of pipeline delivery. Absent large-scale battery or other storage, generation from wind and solar is limited to times of the day when the wind is blowing and sun is shining. Has the growth in these generation sources in recent years and simultaneous retirement of coal and nuclear plants created the reliability crisis Sec. Perry warns of? Is it urgent enough that FERC needs to intervene in wholesale markets in the next 60 days? Fortunately, the career staff that work for Sec. Perry collect data that can help us answer this question empirically. Whenever a utility experiences a major disturbance in electricity delivery to customers, they are required by law to fill out form OE-417, and submit it to the Department of Energy. On that form, the utility is required to list the cause of the disturbance, its duration, and the number of customers affected. These data are then published in the Energy Information Administration’s Electric Power Monthly. We tabulated all the OE-417 reports since the beginning of 2012 to see how big of a reliability threat “fuel supply emergencies” have been. This is a period in which 32% of the country’s coal-fired power generating units and 6% of its nuclear generating units were retired. The answer is, not much of a problem at all. Between 2012 and 2016, there were roughly 3.4 billion customer-hours impacted by major electricity disruptions. Of that, 2,815 hours, or 0.0007% of the total, was due to fuel supply problems (Figure 1).  Interestingly, 2,333 of those customer hours were due to one event in Northern Minnesota in 2014. And it involved a coal-fired power plant.

Powelson: FERC 'will not destroy the marketplace' in DOE cost recovery rulemaking-   - One of FERC's newest members sought to quell anxiety in the power sector over DOE's cost recovery proposal on Wednesday, telling an audience at the annual meeting of the Organization of PJM States that he would rather quit than vote for a reform that destroys competitive power markets.  "I did not sign up to go blow up the markets," he said, according to SNL. That sentiment appears to be shared by at least one other commissioner. Shortly after SNL's story was published, Commissioner Cheryl LaFleur posted it on Twitter, writing "great message!"Great message!SNL: FERC's Powelson pledges "not to destroy" energy markets despite DOE directive — Cheryl LaFleur  (@CLaFleurFERC) October 4, 2017    Powelson's comments echo warnings from former FERC regulators in the days following DOE's cost recovery filing last Friday. Earlier this week, former FERC Chairman Jon Wellinghoff told Utility Dive the rule would "blow the market up," and former Commissioner Tony Clark said enacting the rule would be "very challenging for the markets." LaFleur's endorsement of Powelson's pledge suggests that at least two of the three sitting FERC commissioners are open to significant changes to the DOE's Notice of Proposed Rulemaking, which would move merchant power plants with a 90-day fuel supply back to cost-of-service regulation.  Acting FERC Chairman Neil Chatterjee, also confirmed to his position at FERC in August, has not yet weighed in on the NOPR. Last month he told House lawmakers that reforming power markets to better value resilient baseload generators is a top priority for FERC, but said it was premature to detail how the commission would approach the issue.  “We'd have to have a record, we'd have to have a docket, analysis, and then make that determination going forward,” Chatterjee said.  On Wednesday, FERC took a step toward establishing that record, requesting industry input on a variety of issues relating to the DOE NOPR. In a list of 30 questions, the commission queried stakeholders on whether market reform is needed, as well as more specific issues, like how a 90-day supply of fuel should be defined.  Energy lawyers say the DOE proposal is more vague than usual FERC rulemakings, so industry input to the commission could have a significant impact on the final rule. Renewable energy and gas groups told House lawmakers on Tuesday they are opposed to the DOE proposal, while coal and nuclear groups expressed qualified support. All stakeholders agreed, however, that more work will be needed to define specific provisions of the rules, such as the 90-day fuel supply requirement.  Industry groups will have to hurry to compile responses to FERC. The deadline for initial comments is Oct. 23 and reply comments are due Nov. 7.

Federal moves unlikely to 'make coal great again,' experts say at Ohio panel -  The Trump administration’s shifts in energy and environmental policy likely won’t change the downward trajectory of America’s coal sector, industry experts reported at a panel in Cleveland this week.The program at Case Western Reserve University delved into reasons why the United States’ coal industry has declined and the impacts of legal developments over the last quarter of a century.Most of those legal developments cannot easily be reversed, panelists said. Nor is the Department of Energy’s latest move to give support to coal and nuclear plants for baseload purposes likely to become law anytime soon, they suggested. “Coal is on its downward slope,” said Walter Culver of the Great Lakes Energy Institute at Case Western Reserve University. “There’s little you’re going to do.” About 93 percent of U.S. coal production goes to produce electricity, Culver noted. As energy demands increased, so did coal production until about 2008. “And then suddenly the wheels dropped off,” he said.By that time, natural gas production was climbing, thanks to technological advances in horizontal drilling and fracking. And coal ran into “a serious competitor with jet engines” that could burn that natural gas to make electricity, Culver said. Ohio particularly benefits from the availability of natural gas from the Marcellus and Utica shale plays. “It’s some of the cheapest in the world and some of the most plentiful in the world,” Culver said. Productivity is now three-and-a-half times better than it was just five years ago, he added. And wells can now start producing in just about four weeks. In contrast, Appalachian coal costs more to mine than western plays, which have a lower sulfur content.

Trump Nominates a Coal Lobbyist to Be No. 2 at E.P.A. - President Trump on Thursday nominated Andrew R. Wheeler, a coal lobbyist with links to outspoken deniers of established science on climate change, to help lead the Environmental Protection Agency. In announcing Mr. Wheeler, a former aide to Senator James M. Inhofe, to be deputy administrator of the agency, the White House tapped an experienced legislative hand reviled by environmental activists but hailed by industry as having the know-how to dismantle Obama-era fossil fuel regulations. The nomination comes at a critical moment for the E.P.A. as the agency prepares to repeal a sweeping climate change regulation known as the Clean Power Plan. It would also fill a key high-level position at the agency, where many top offices remain vacant. If confirmed by the Senate, Mr. Wheeler would become the most powerful person at the agency behind its administrator, Scott Pruitt.

 Federal utility appeals order to remove coal ash at plant  (AP) — A federal utility is appealing a judge's order to excavate and move its coal ash at a Tennessee power plant. In Nashville federal court Monday, the Tennessee Valley Authority filed an appeal notice over its Gallatin Fossil Plant outside Nashville. Spokesman Scott Brooks says TVA will comply with the order during appeal. TVA says it would take 24 years and cost $550 million using a lined landfill onsite or up to $2 billion and possibly a different timeline if it's offsite. The Southern Environmental Law Center, representing one environmental group that sued, says TVA overestimated the numbers. In August, the judge said coal ash storage is leaking pollutants into the Cumberland River and violating the Clean Water Act, but with scant evidence of concrete harm beyond risk and presence of pollutants. 

We are all at risk from poisonous mercury. It's time to take action - Mercury is far more pervasive than most people realise, and we have no idea how many people are at risk. It can be found in everything from mascara and dental amalgam to thermometers and skin whitening creams – and that’s before it reaches the food chain.There is no safe level of exposure, and everyone is at risk when mercury is released without safeguards. Children and newborn and unborn babies are most vulnerable, along with populations who eat contaminated fish. Studies have shown that children as far afield as Brazil, Canada, China, Columbia and Greenland all suffer cognitive impairment from eating fish containing mercury.  Then there are those who use mercury at work, and people who live near a source of mercury pollution, or in colder climates where the dangerous heavy metal tends to accumulate.  While we have historically been quick to use mercury, too few countries are equipped to deal with the fallout from that use. And far too few of the opportunities that could be created to bring it under control are being grasped. That’s why the first conference of the parties to the Minamata convention, taking place this week, is so important. The convention has now been ratified by 83 countries – four this week alone – and the list is growing. It matters because with every new party there is more opportunity for the convention to ensure mercury does no more harm. It is a chance for the world to work towards the safe handling, storage, treatment and disposal of mercury products and waste. It is the first major step towards ending mercury production and use in mining and industry. And it will make it easier to hold people to account when they break laws prohibiting mercury production and illegal disposal and dumping. But there is still a huge gap between the provisions of the Minamata convention and current practices. The need to scale up awareness of and action on mercury is huge. The plight of more than 14 million miners exposed to mercury through its use in small-scale gold mining in more than 70 countries should be enough to prompt us to drastically reduce its use.

World's largest coal miner looking to buy metal mines abroad (Reuters) - Coal India Ltd, the world’s largest coal miner, has held internal talks to discuss buying metal mines abroad amid faltering revenues and rising employee costs, potentially signaling a strategy shift to cut reliance on the fossil fuel. The state-run company plans to form two units: one to manage its local mining of iron ore, bauxite and manganese, and another to expand into copper and nickel mining overseas, two company officials involved in the planning told Reuters. “The plans of Coal India to enter into metal mining business both in India and abroad are in a very nascent stage, and of strategic and confidential nature,” the company said. Coal India, which has so far been unsuccessful in buying stakes in overseas coal mines, is banking on government to government deals for its overseas foray into metal mining, company officials said, adding that any proposal that follows will be subject to board approval. The plan to diversify into mining metals such as copper and nickel with no prior experience is being seen by analysts as a long-term strategy to firm up revenues, with no immediate results in sight. “It may not happen for at least the next couple of years, given the track record of Indian PSUs (public sector undertakings) investing in other countries,” said Gautam Chakraborty, an analyst at Emkay Global Financial Services Ltd. The company has had little luck with overseas deals, and is still scouting for deals to buy a minority stake in “prime coking coal” mines in Queensland in Australia, one of the officials said, adding that a majority stake looks unlikely.

China to revoke over 1,000 iron ore mining licences amid pollution crackdown - Iron ore prices resumed their downward trend Wednesday after China announced it would revoke about a third of its iron ore mining licences, mostly belonging to small polluting operations amid a government-led crackdown on smog and outdated steelmaking capacity.Lei Pingxi, chief engineer at China’s Metallurgical Mines Association, said the measure would affect about 1,000 small mines, most of which have tried bypassing Beijing’s efforts to improve air quality by closing briefly and so survive inspections.Those operations, however, will now be forced to upgrade their production processes or face permanent closure, Reuters reports. China's mines produce some 350 million – 400 million tonnes a year on a 62% Fe-basis. Around one-third of the many small mines struggling with low iron ore content (average close to 20%) have costs per tonne of more than $100.The bulk of Chinese fines require a process called sintering (fines are mixed with coking coal and partially smelted) before being fed into blast furnaces, which greatly adds to the steel industry's environmental impact. In the past year, the nation's steelmakers have been substituting domestic supply and reducing the percentage of fines in favour of pellets and so-called "lump" ore from Australia, South Africa and South America, which lowers costs and cuts pollution by reducing the need for sintering.

In the heart of China's coal country, a city bans most coal: Xinhua (Reuters) - Taiyuan, the capital of China’s northern province of Shanxi, which is known for its coal production, has banned the sale, transport and use of most coal as it tries to cut air pollution, the state news agency Xinhua reported on Monday. The ban took effect from Sunday, restricting companies and individuals “other than major steel and power plants” from selling, transporting or burning coal in the urban area of Taiyuan, it said. The ban was expected to cut coal use by more than 2 million tonnes, or 90 percent of the city’s total consumption, it said. China has ordered Beijing and nearby provinces, including Shanxi, to limit concentrations of airborne pollutants and meet key smog targets in more than two dozen cities starting this month and lasting until March. That period is when air pollution typically increases as more coal is burned to provide heat during the winter. Coal is the biggest source of air pollution in Taiyuan in winter, Xinhua quoted Dou Lifen, head of the city’s environmental protection bureau, as saying. The city was replacing coal-burning household heating equipment with electric and natural gas heaters, Xinhua said. Taiyuan, which has also acted to control automobile exhaust and dust, was expected to see a reduction in the number of days of heavy air pollution to 22 days this year, 40 percent less than a year ago, it said.

SCE&G, Santee Cooper stuck with $244 million of unpaid bills left over from failed nuclear project - SCANA Corp. and Santee Cooper face nearly a quarter of a billion dollars in unpaid bills for work on their unfinished nuclear reactors.Dozens of business have filed claims against the power companies, saying they're owed some $244 million for everything from architectural designs and electric work to the hammers and wrenches thousands of workers put down in July when the project was called off.It's not clear how much SCANA and Santee Cooper will ultimately have to pay to satisfy the claims, known as mechanics' liens. But those costs would be piled on top of the roughly $9 billion the utilities have already paid in an attempt to complete the first new reactor projects launched in the United States in decades.That sum, more than the state’s $8 billion annual budget, is baked into the power bills millions of South Carolinians pay each month, including customers of SCANA subsidiary South Carolina Electric & Gas and the state's 20 cooperatives, which buy power from state-owned Santee Cooper.  SCE&G, for example, is collecting $37 million a month from its customers, or 18 percent of the average electric bill, to fund the now failed project.

 TEPCO Admits Contaminated Water Leaked Into Fukushima Groundwater "Due To Erroneous Gauges" -- In a revelation that, for some, will dredge up memories of TEPCO’s stunning admission back in 2013 that nearly 300 tonnes of radioactive material had leaked from the ruins of the Fukushima Daiichi nuclear-power plant into the water outside, contaminating virtually theentire Pacific Ocean, officials at the Japanese power company told the Associated Press that contaminated water may have leaked into the soil surrounding the plant after human error caused safety mechanisms to fail. TEPCO officials said the settings on six of the dozens of wells surrounding the plant’s ruined reactors were accidentally set 70 centimeters below the required levels, briefly causing groundwater at one well to sink below the contaminated water inside in May, possibly allowing radioactive water to leak into the soil. Fortunately, groundwater samples have shown no abnormal increase in radioactivity and leaks to the outside are unlikely, according to TEPCO spokesman Shinichi Nakakuki.  The problem with the wells – most of which were drilled in April to help pump groundwater, reducing the possibility that it would be exposed to contamination -  was discovered earlier this week while the company was preparing to drill another well. While Tepco maintained several wells around the plant before the disaster, many more have been drilled since to try and stanch the flow of radioactive materials from the plant. It has been six-and-a-half years since a massive earthquake and tsunami critically damaged the Fukushima-Daiichi nuclear-power plant, located about 200 miles away from Tokyo, triggering the worst nuclear accident since Chernobyl – and the Japanese people are still uncovering new evidence of TEPCO's dishonesty and incompetence demonstrated during the aftermath of the disaster.

Fukushima Operator Given Green Light To Restart Nuclear Reactors --  The Japanese utility Tokyo Electric Power Company (TEPCO) has received approval to operate reactors for the first time since the 2011 Fukushima meltdown. On Wednesday, the Nuclear Regulation Authority said TEPCO’s two reactors in northern Japan met new and stricter safety standards.The authority unanimously approved the draft certificate for reactors number 6 and 7 at the Kashiwazaki-Kariwa plant, marking the first step in the process toward restarting them. Portions of the plant’s reactors were damaged in a 2007 earthquake. Much of the Japanese public is opposed to granting TEPCO permission to once again operate reactors, and rightfully so.TEPCO was blamed for safety lapses in the Fukushima nuclear plant disaster after a major earthquake in March of 2011, and the tsunami that followed damaged the power supply and cooling system of three reactors at the Fukushima Daiichi plant, resulting in an unprecedented nuclear accident.The area around the plant will be closed for the foreseeable future, with extremely high levels of radiation still being recorded in 2017. Radiation from the damaged plant has found its way into the ocean and surrounding areas, including groundwater. The long-term effects of the disaster are still unknown. TEPCO said in a statement that it will continue improving safety standards at its plants while focusing on Fukushima’s decommissioning in addition to compensation for the thousands of evacuees.

Scientists Find New Source of Radioactivity from Fukushima Disaster : Woods Hole Oceanographic Institution: Scientists have found a previously unsuspected place where radioactive material from the Fukushima Dai-ichi nuclear power plant disaster has accumulated—in sands and brackish groundwater beneath beaches up to 60 miles away. The sands took up and retained radioactive cesium originating from the disaster in 2011 and have been slowly releasing it back to the ocean. “No one is either exposed to, or drinks, these waters, and thus public health is not of primary concern here,” the scientists said in a study published October 2 in the Proceedings of the National Academy of Sciences. But “this new and unanticipated pathway for the storage and release of radionuclides to the ocean should be taken into account in the management of coastal areas where nuclear power plants are situated.” The research team hypothesize that high levels of radioactive cesium-137 released in 2011 were transported along the coast by ocean currents. Days and weeks after the accident, waves and tides brought the cesium in these highly contaminated waters onto the coast, where cesium became “stuck” to the surfaces of sand grains. Cesium-enriched sand resided on the beaches and in the brackish, slightly salty mixture of fresh water and salt water beneath the beaches. But in salt water, cesium no longer “sticks” to the sand. So when more recent waves and tides brought in salty seawater from the ocean, the brackish water underneath the beaches became salty enough to release the cesium from the sand, and it was carried back into the ocean. 

Spike In Airborne Radioactivity Detected In Europe, Source Located In Southern Urals -- In late February, concerns about a potential nuclear "incident", reportedly in the vicinity of the Arctic circle, emerged when trace amounts of radioactive Iodine-131 of unknown origin were detected in January over large areas in Europe, according to a report by the Institute for Radiological Protection and Nuclear Safety, the French national public expert in nuclear and radiological risks. And while Norway was the first to measure the radioactivity, France was the first to officially inform the public about it."Iodine-131 a radionuclide of anthropogenic origin, has recently been detected in tiny amounts in the ground-level atmosphere in Europe. The preliminary report states it was first found during week 2 of January 2017 in northern Norway. Iodine-131 was also detected in Finland, Poland, Czech Republic, Germany, France and Spain, until the end of January", the IRSN wrote in a press release.Ultimately, the radioactive I-131 faded away, and the incident was forgotten with the source of radioactivity never discovered, even as the US military's "Constant Phoenix" nuke sniffer plane was deployed in the vicinity.Fast forward to today when French nuclear watchdog ISRN reported that another spike in airborne radioactivity has been detected in the air in Western and Central Europe: "Ruthenium-106 has been detected by several European networks involved in the monitoring of atmospheric radioactive contamination, at levels of a few milliBecquerels per cubic meter of air."According to IRSN calculations, based on the concentration levels measured in several European countries and on the meteorological conditions of the last few days, the contaminated air could have been generated from southern regions of Ural or located close to those. "IRSN is continuing its investigations to try to confirm the origin of this atmospheric pollution."

Cold War radiation testing in US widespread, author claims - - Three members of Congress are demanding answers after a St. Louis scholar's new book revealed details of secret Cold War-era U.S. government testing in which countless unsuspecting people, including many children, pregnant women and minorities, were fed, sprayed or injected with radiation and other dangerous materials. The health ramifications of the tests are unknown. Lisa Martino-Taylor, an associate professor of sociology at St. Louis Community College who wrote "Behind the Fog: How the U.S. Cold War Radiological Weapons Program Exposed Innocent Americans," acknowledged that tracing diseases like cancer to specific causes is difficult. But three House Democrats who represent areas where testing occurred — William Lacy Clay of Missouri, Brad Sherman of California and Jim Cooper of Tennessee — said they were outraged by the revelations. Martino-Taylor used Freedom of Information Act requests to obtain previously unreleased documents, including Army records. She also reviewed already public records and published articles. She told The Associated Press that she found that a small group of researchers, aided by leading academic institutions, worked to develop radiological weapons and later "combination weapons" using radioactive materials along with chemical or biological weapons. Her book, published in August, was a follow-up to her 2012 dissertation, which found that the government conducted secret testing of zinc cadmium sulfide in a poor area of St. Louis in the 1950s and 1960s. The book focuses on the mid-1940s to the mid-1960s.

 Known Unknowns: The Dangers Of North Korea's H-Bomb Threat - North Korea’s six nuclear tests over the past decade have steadily grown more powerful. Whether it could build an H-bomb in the near future and would test it in the atmosphere—such tests were prohibited by the international 1963 Limited Test Ban Treaty—is an open question. The environmental and health impacts this kind of test are also unpredictable and would largely depend on how the bomb is built, where it is detonated and how the weather patterns at that time affect the radioactive fallout. But the U.S. is well-versed in those uncertainties, having presided over history’s most catastrophic nuclear weapons test to date. The March 1954 Castle Bravo H-bomb test has been studied extensively over the past six decades, and its lessons provide some clues about the potential impact and lingering effects of such a detonation if North Korea were to test an H-bomb somewhere in the Pacific. The Castle Bravo bomb—code-named “Shrimp”—remains the most powerful nuclear weapon ever tested by the U.S., about 1,000 times stronger than the atomic bombs dropped on Hiroshima and Nagasaki during World War II. Shrimp’s detonation unleashed a 15-megaton blast that was two-and-a-half times greater than expected. (A megaton has the explosive force of one million tons of TNT.) It also resulted in the largest nuclear contamination accident in U.S. history, as shifting winds carried radioactive fallout across the inhabited atolls of Rongelap, Ailinginae and Utirik as well as Rongerik—where U.S. servicemen were stationed—in the central Pacific’s Marshall Islands.  The yield of Castle Bravo’s Shrimp was much larger than expected because its designers at Los Alamos National Laboratory underestimated how much of the bomb’s fuel would become reactive during the fusion process. This was apparently because they did not fully understand the physics involved, says Edwin Lyman, a senior scientist in the Union of Concerned Scientists’ Global Security Program. Even today, “North Korea or some other immature nuclear weapons state may not even be able to accurately predict the yield that [they’re] going to get, which is a little scary,” Lyman adds. The location of any North Korean H-bomb test may be even more important than the weapon itself, says Patrick Cronin, senior director of the Asia–Pacific Security Program at the Center for a New American Security think tank in Washington, D.C.

Natural gas drillers spend more than $60 million to woo Pa. legislature - — Over the last seven years, Pennsylvania lawmakers have introduced no fewer than 67 bills to tax natural-gas drilling companies.In nearly every instance, those measures have died.Supporters of a tax say few other interests have managed to thwart legislation in the Capitol so successfully and for so long, earning Pennsylvania the distinction of being the only major gas-producing state without a severance tax. They point to one reason: the industry’s ability to spend tens of millions of dollars on influence.  An Inquirer and Pittsburgh Post-Gazette analysis of lobbying disclosure and campaign finance records since 2010 shows that natural gas drilling companies and their industry groups have spent at least $46.6 million on lobbying and another $14.5 million on political donations — many of the latter going to legislative leaders who control the flow of bills in the Capitol and the heads of committees that regulate their business. That does not include donations from related industries, such as pipeline construction or utilities, which also spend generously on lobbying and political donations. “It’s difficult to walk through the halls of the Capitol on a session day and not see [natural-gas industry] lobbyists there,” said Rep. Greg Vitali (D., Delaware), a longtime supporter of a severance tax. “Their presence is constant.” Last week, Republicans who control the House of Representatives blocked yet another push for a tax on gas drilling, this time with higher political stakes: a $2.2 billion deficit and three months without a complete budget. The drilling industry pushes back, arguing that its companies are unfairly singled out despite a track record of creating jobs and other opportunities in once-depressed communities across Pennsylvania. The advocacy, an industry spokeswoman says , is necessary in part to ensure the industry is “not held hostage by outside special interest groups.”

Police ask landowners along Atlantic Sunrise gas pipeline if they will allow protesters on properties - Lancaster County residents whose land will be crossed by the controversial Atlantic Sunrise pipeline are being asked by police if they intend to allow protesters. And, if they don’t plan to do so, landowners are requested to give police permission to remove protesters and bring criminal charges. The questionnaires were first sent by mail recently to landowners by the West Hempfield Township Police Department. Manor Township police followed suit and Southern Regional police, who patrol Conestoga and Pequea townships, haven’t decided whether to send the questionnaires by mail or to contact landowners in person, Chief John Michener said Thursday."The bottom line is we just want to protect everybody’s rights — both sides. We’re neutral,” said Manor police Chief Todd Graeff. “It’s just a planning stage for us to figure out where we may have protesters and where we probably won’t,” added Mark Pugliese, West Hempfield’s police chief. 

US Northeast gas pipeline capacity increasing, easing flow beyond region -- Natural gas pipeline constraints are easing in the US Northeast as its traditionally high-demand winter heating season approaches, with new infrastructure coming online and better positioning operators to move Appalachian Basin supplies out of the region, according to an S&P Global Platts market outlook released Tuesday. The balancing of supply and demand will help keep a lid on prices over the long term, though there still may be volatility during the coldest months even under normal weather conditions if stockpiles in storage together with existing output are not enough to keep up with consumption. Researchers and analysts gathered Tuesday at Platts' Houston Energy Forum highlighted the importance of being able to move more gas from key producing areas to market as demand increases for exports to Mexico via pipeline and as LNG shipments to other countries via tanker. Pipeline operators, producers and midstream companies will be issuing their own winter forecasts over the next several weeks as they report third-quarter financial results.   The Northeast for several years has been impacted by pipeline capacity constraints, which occur when pipelines reach their upper flow limits and must therefore curtail, in certain cases, significant nominated quantities. This in effect reduces the optionality for where gas from the region may flow, and adds a risk discount to the price of gas as buyers devalue a product that's not guaranteed to be delivered. This has been a primary driver behind deep price discounts at US Northeast supply pools in recent years, and has been on full display this month. Next-day gas at the Tennessee Zone 4-300 leg, for example, settled at just 62 cents/MMBtu for gas day Tuesday, a discount of $2.185 to benchmark Henry Hub, data compiled by Platts Analytics' Bentek Energy show.

Maryland becomes third state to ban fracking | NWADG: Maryland will become the third U.S. state to permanently ban hydraulic fracturing today, ending several years of debate over whether to allow the gas-extraction method. Passage of the fracking ban was one of the surprises of the 2017 legislative session in Annapolis, coming after Republican Gov. Larry Hogan announced that he had changed his position on the bill and would support it. It is one of several high-profile laws that take effect in Maryland today. Fracking, which has shown the greatest potential in Garrett and Allegany counties, involves injecting water, sand and chemicals deep into the ground at high pressure to fracture rock formations, thereby releasing natural gas trapped in pockets in the rock. Advocates say the practice provides an energy source that is cleaner than coal, but opponents have raised concerns about the potential for water contamination, greenhouse-gas emissions and earthquakes. New York and Vermont are the other states that have banned fracking, with an executive order and with legislation, respectively. Maryland is the first state with gas reserves to pass a ban through legislative action. 

Disputed East Coast pipeline likely to expand  — Remarks from an energy company executive and interviews with others in the industry suggest that the developers of a disputed natural gas pipeline on the East Coast are considering a major expansion into South Carolina. A Dominion Energy executive told attendees of a clean-energy conference in South Carolina recently that “everybody knows” the project won’t end in North Carolina, as the plans currently describe. Instead, he said it will expand — and could do so in South Carolina, where it could bring in almost 1 billion cubic feet (28 million cubic meters) of natural gas a day. The Associated Press obtained an audio recording of Dan Weekley’s remarks from a conference attendee. A Dominion spokeswoman says no decision’s been made about expanding the about $5 billion project beyond West Virginia, Virginia and North Carolina.

Contrary to original plan, Atlantic Coast Pipeline may extend beyond North Carolina (WUNC) When Dominion Energy applied for approval from the Federal Energy Regulatory Commission to build the Atlantic Coast Pipeline, the publicly-unveiled plan indicated that the natural gas line would end in the middle of a field in Robeson County, North Carolina. But according to a new Associated Press report, developers are considering extending the pipeline through Lumbee territory and into South Carolina. Host Frank Stasio speaks with Triangle Business Journal reporter Lauren Ohnesorge, and Ryan Emanuel, professor in the Department of Forestry and Environmental Resources at North Carolina State University, an enrolled member of Lumbee Tribe, and a member of the North Carolina Commission of Indian Affairs Environmental Justice Committee Member about the economic and cultural impact of the potential change.

 The fake news about natural gas - It looks like Russia may be at it again — this time with a different target in mind. Russia is now using some of the same tools and tactics to spur opposition to hydraulic fracturing, or “fracking,” a controversial technology used in the production of natural gas.Russia has run anti-fracking stories on its state-funded news outlet and possibly has purchased anti-fracking online ads. Russia’s efforts have earned the attention of Texas Republican Lamar Smith, who found it necessary to launch a probe into the matter, even though he dismissed Russia’s influence on last year’s election.Here’s why Russia, a natural-gas superpower, is spreading anti-fracking messages and why Smith, who has largely kept mum on Russia, wants to investigate. Russia enjoys the largest reserves of natural gas, and for years it reigned as the world’s top producer. That was until the U.S. natural gas boom. In 2005, natural gas production took off in the United States, thanks to improvements in hydraulic fracturing and horizontal drilling that allowed producers to access previously inaccessible stores of shale gas at low cost. Gas output surged and prices fell. Over the next few years, gas overtook coal as the largest source of electricity in the country, and the United States surpassed Russia as the world’s most prolific producer of natural gas. Russia still ranks as the world’s top gas exporter, supplying around one-thirdof the gas consumed by the European Union. The United States lags behind in exports, trading largely with Mexico and Canada. Because gas must be conveyed by pipeline, both the United States and Russia do most of their business with neighboring countries. Until recently, there was little risk of a turf war. Now, however, the United States is trying to break into the European market by upping exports of liquefied natural gas (LNG), which can by shipped overseas. European countries would certainly welcome another supplier of natural gas, given their history with Russia, which cut exports to Europe amid a 2008 dispute with Ukraine.

Delfin LNG onshore facilities tied to floating terminal get US FERC nod - A project to build the first US offshore LNG export terminal has been given the go-ahead by federal regulators to construct the onshore metering, compression and pipeline facilities that would deliver feedgas to the deepwater production facility.The key milestone for the closely watched Delfin LNG project, notched in an order from the US Federal Energy Regulatory Commission late Thursday, comes as export developers that have facilities that are not expected to come online until early next decade face pressure to prove their financial viability amid persistent talk about a global supply glut. Delfin, owned by Fairwood Peninsula Energy, is proposing a novel approach -- to build four floating gas liquefaction vessels about 40 miles off the coast of Louisiana that would be capable of producing 13 million mt/year, or 1.7 Bcf/d, of LNG. In June, it announced a joint development agreement with floating vessel operator Golar LNG to facilitate the financing, marketing, construction and operation of the project. The tie-up offers the potential for medium-term offtake agreements of roughly 10 years, compared with the traditional 20-year deals that have been hard to come by of late.A final investment decision for the first floating LNG vessel is expected in 2018, with additional units depending on market demand, project officials have said. First LNG from the project is planned for 2021 or 2022. The offshore portion of the project is subject to the jurisdiction of the US Coast Guard and the US Department of Transportation's Maritime Administration, which approved the project in March. Delfin LNG later received US Department of Energy authorization to export to countries with which the US does not have a free-trade agreement.

U.S. refiners struggle to keep up with demand for distillates: Kemp (Reuters) - U.S. refiners are struggling to meet the strong demand for heating oil and other distillates despite operations returning to near normal after Hurricane Harvey.Stocks of distillate fuel oil fell by another 2.6 million barrels to 135 million barrels last week, according to the Energy Information Administration (  Stocks have declined by 27 million barrels since the start of the year compared a 3 million barrel increase in the same period last year and an average rise of 4 million barrels over the last decade.  Inventories, which were 11 million barrels above the prior-year level and 31 million above the 10-year average at the end of January, are now 26 million barrels below 2016 and 8 million below average. Distillate stocks continued to dwindle despite near-record run rates by U.S. refineries as operations returned to normal along the U.S. Gulf Coast. U.S. refiners processed an average of over 16.0 million barrels per day of crude last week, only just under last year's seasonal record of 16.1 million bpd.Refiners ramped up distillate production to more than 4.9 million bpd, only just under last year's seasonal record of 5.0 million bpd.  But with domestic demand running at a relatively high 4.0 million bpd, and exports at almost 1.4 million bpd, refiners were unable to prevent a further slide in inventories.As the winter heating season and peak distillate demand approaches, many traders are speculating heating oil stocks will be tight and prices will rise further. Hedge funds and other money managers had amassed a record net long position of 62 million barrels in heating oil futures and options on the New York Mercantile Exchange by Sept. 26.Hedge funds' long positions outnumbered short positions by a ratio of 4.9:1, according to records published by the U.S. Commodity Futures Trading Commission. Current hedge fund bullishness towards heating oil and other distillates marks a sharp turnaround from the end of June when they held a bearish net short position of 32 million barrels. Refiners now have a strong incentive to maximise distillate production. The gross refining margin for making heating oil from U.S. light crude for delivery in December has climbed to more than $24 per barrel from $15 in June.

Chevron, BHP shut several US Central Gulf of Mexico oil production platforms -  The NYMEX November natural gas futures contract slid 1.7 cents Thursday to settle at $2.93/MMBtu, despite the US Energy Information Administration announcing a smaller-than-expected storage build for last week, which nudged estimated national stocks below the five-year average for the first time since January. Stocks in the week ended September 29 built by 42 Bcf, the EIA estimated, less than the 47 Bcf consensus estimate of analysts surveyed by S&P Global Platts and well below the 91-Bcf build averaged over the past five years. This put estimated national gas stocks at 3.508 Tcf, 0.2% below the five-year average. The prior surplus to the five-year average had been tightening since the beginning of May, with 17 of the past 22 injections coming in below average, according to EIA data. Though the build had a bullish tone, immediate market reaction to the below-average injection was tempered. Prices did not show any noticeable upticks when the number was announced, remaining around levels seen before the news. That tempered reaction took a bearish turn in the afternoon, with the front-month contract ultimately settling at a decline on the day. Daniel Flynn, energy analyst at Price Futures Group, said he was "shocked the market isn't motoring," after the announced injection. Gene McGillian, manager of market research at Tradition Energy, said the bullish build "could have been priced in yesterday," as the market climbed 4.5 cents Wednesday. McGillian also said the latest build "looks to be the last below-average storage injection for a while," adding that with short-term outlooks for mild weather, the "market will find pretty strong resistance near $3[/MMBtu]."

 Hurricane Nate Heads For Gulf Coast: Goldman Projects Dramatic Refining Slowdown -- Confirming an earlier projection by Accuweather that showed Hurricane Nate will likely make landfall as a cateogry one storm somewhere between Louisiana and the Florida panhandle on Sunday, the NHC has issued a hurricane warning - the highest-priority of the agency's alert levels - for a broad swath of the Southern US stretching from Grand Isle Louisiana to the Florida-Alabama border. Here are the key messages for Tropical Storm #Nate for Advisory 9. — NHC Atlantic Ops (@NHC_Atlantic) October 6, 2017 As we noted earlier, unlike with Hurricane Irma, most of the models for Hurricane Nate consistently see the storm moving directly north through the Gulf before turning to northeast to follow the eastern U.S. shoreline.  Like they did with Hurricane Harvey, energy traders will be hyper focused this weekend on how the massive network of Gulf drilling platforms might be impacted by the storm.As Goldman Sachs explains, a new storm, Nate, is heading for the US Gulf Coast and is expected to land as a category 1 hurricane in Louisiana on Sunday.While the overall impact on the US oil sector is likely to be more modest than for Harvey (category 4 at landfall), it may have a similar s upply impact given the path threatens more US Gulf Coast platforms. The demand impact is likely to be much smaller than Harvey given the lower intensity of the storm, the smaller amount of downstream capacity at risk and finally the smaller population impacted. On the refining side, 2.4 mb/d of refining capacity is at risk (13% of US capacity).

Upstream oil, gas industry sees little lasting impacts from Hurricane Harvey: analyst - Although Texas upstream oil and gas and oilfield services companies saw their operations negatively impacted in the immediate aftermath of Hurricane Harvey, which struck the Texas Gulf Coast August 25, the negative effects were largely short-lived, an analyst with the Federal Reserve Bank of Dallas said Wednesday. The Dallas Fed included several questions about the impacts that Harvey had on exploration and production and service companies in its quarterly Dallas Fed Energy Survey, which gauges the attitudes of executives of these businesses, Kunal Patel, a senior research analyst with the bank, said. "Respondents reported widespread but generally limited impact on their operations due to Hurricane Harvey and most believe these effects will be gone six months from now," Patel said. The survey received 142 responses from energy company executives in Texas and parts of Louisiana and New Mexico, split about 50:50 between E&P and service companies, he said. Asked whether the hurricane had an impact on their business, 53% of respondents said it had "a slight negative impact on their business, 18% were moderately impacted and 28% were not impacted at all," Patel said. In response to a question as to whether the executives expected a continued impact from the storm within six months, the majority of respondents, 62%, said they expect that their business will not be affected six months from now. Meanwhile, 30% expected it to have a slight negative impact, 7% foresaw an impact that was moderately negative, and only 1% of respondents foresaw an impact that was severely negative. Respondents were also asked whether they thought the broader energy sector -- including the midstream and downstream segments -- would be negatively affected six months from now by Hurricane Harvey. Fifty-five percent of respondents said they expected that the broader energy sector would be affected slightly, 24% said moderately, and 18% said they saw no severe effect at all, while only 2% of respondents said they thought the entire energy complex would still be affected severely by the storm six months out.

Permian pipelines key to production growth -- When Willie Chiang, chief executive officer of Plains All American, rose to address an audience at the Houston Petroleum Club in mid-September, his message was clear: crude production from the Permian Basin will continue to grow and timing will be a critical factor to build pipelines. Delays will result in widening of price discounts for Permian crudes and prove to be counterproductive for producers, he noted. Despite operators reducing breakevens in the Permian, they will always be wary of reducing exposure to wide variations in differentials. Like in August 2014, Midland WTI averaged a $12.10/b discount to Cushing WTI primarily due to a lack of pipeline capacity, compared to a discount of 35 cents/b late last week, according to Platts data. Permian additional pipeline capacity Five pipelines have been proposed by leading midstream players from the prolific basin in southwest Texas to the Port of Corpus Christi in the US Gulf Coast, potentially offering a total of some 2.14 million b/d of new takeaway capacity starting in stages from late 2019/early 2020. The planned major projects include a 650,000 b/d pipeline announced in May by Magellan Midstream; a second phase of the Plains-backed Cactus pipeline to add another 500,000 b/d of throughout; Buckeye Partners’ 400,000 b/d South Texas Gateway pipeline; and the 400,000-b/d EPIC pipeline. Capacity additions are also planned by fellow midstream player NuStar Energy and an expansion of the EPIC pipeline, to name a few, that will add in excess of another 400,000 b/d post-2020. Growth in Permian Basin output has been largely a case of a moving goal post that continues to challenge all forecasts, Chiang said. While 800,000 b/d of new production has already been added between June 2014 and June 2017, the industry will see another 2.3 million b/d being added by 2022 in the Permian, he said.

Crude oil shuttle pipelines in the Permian's Delaware and Midland basins, Part 2. -  Shuttle pipelines in the Permian provide high-volume, straight-shot links between crude oil gathering systems and multiple takeaway pipelines out of the play ­­— giving producers and shippers critically important destination optionality. Assuming the shuttles are well-positioned and tied to increasing production on one end and multiple takeaway pipes on the other, existing intra-basin shuttles are highly valued and being gobbled up by major midstream players. And to keep pace with Permian production growth, existing shuttle systems are being expanded and new ones are being planned. Today, we continue our review of key crude-related infrastructure in the nation’s hottest oil production region. As we said in Part 1, the build-out of Permian crude oil pipelines over the past several decades has occurred in fits and starts, always in response to the dual requirements to move increasing volumes out of the play and to help producers gain the highest possible price per barrel. During the Pre-Shale Era, most of the oil produced in the Permian flowed north (on either Plains All American’s Basin Pipeline or Occidental Petroleum’s Centurion Pipeline) to the crude storage and distribution hub in Cushing, OK. By 2011-12, though, surging crude production in the Bakken and western Canada exceeded Midwest refinery demand and because there was very little pipeline capacity from the Mid-Continent to the Gulf Coast (where half of all U.S. refining capacity resides) supplies started backing up in Cushing. The Cushing supply glut — exacerbated by rising shale production in the Permian itself — resulted in heavy discounting for benchmark West Texas Intermediate (WTI) versus Louisiana Light Sweet (LLS) and other crudes at the Gulf Coast, as well as the development of new pipeline takeaway capacity from the Permian and Cushing to Houston and other coastal destinations.

Drillers choke off dollars to Permian Basin operations - Houston Chronicle: Rising production costs, high acreage prices and a shareholder push for financial discipline have dramatically slowed the land rush in the Permian Basin, one of the world's most active oil fields.Drillers spent $35 billion in West Texas over a nine-month period that ended in early spring. By comparison, the collective value of land deals of the last six months is less than $5 billion, energy research firm Wood Mackenzie reports. Shortly after OPEC announced plans to curb global crude supplies, oil prices rose and drillers made a flurry of acquisitions in the Permian, willing to pay high prices to lease land that sits atop multiple stacked layers of oil-soaked rock that could ultimately yield another 70 billion barrels of crude in coming decades. But that multibillion-dollar push, prodded along by outside investors, couldn't last forever."The market was throwing money at them to buy things," said Greig Aitken, head of upstream oil and gas mergers and acquisitions at Wood Mackenzie.Land prices rose so high that new entrants found it difficult to make returns on their investments, often paying more than $30,000 an acre. As a surge of drilling got underway and companies dispatched more rigs and fracking equipment across the vast plains, labor and equipment costs also began to climb, eating into the industry's bottom line.Plus, companies faced labor shortages after the oil downturn and much of their functioning equipment had been cannibalized for parts. Investors, meanwhile, have grown impatient with an industry that has prioritized rapid growth over returns, and some of those groups have begun pushing companies to spend within their means, rather than relying on debt or other outside capital to drill new wells.

The Permian Boom Is Coming To An End | - The pressure on shale drillers to throttle back on their aggressive drilling continues to crop up in new places, and there are growing signs that the Permian is slowing down. Shale companies spent just $5 billion on land deals in West Texas in the last six months, a fraction of the $35 billion spent in the prior nine-month period, according to the Houston Chronicle, citing Wood Mackenzie data. It’s the latest piece of evidence to suggest that “Permania” might be easing. The hottest shale basin on the planet has suffered from rising costs as too many companies pour money into West Texas. The crowded field has pushed up the price of land, labor, oilfield services, rigs and more. That has led to a rude awakening for a lot of shale drillers. "It's just taken the edge off the Permian," said Greig Aitken, head of upstream oil and gas mergers and acquisitions at Wood Mackenzie, according to the Houston Chronicle. Many signs suggest that the falling costs of production have stopped falling. In fact, production costs are on the rise again, for a few reasons. First, the low hanging fruit of cost cutting has ended—there’s no fat left to cut and deeper reductions would mean cutting into bone. Second, as mentioned before, there is cost inflation in a lot of areas, including labor, fracking crews and acreage. But arguably the most troubling development for shale drillers would be if the production figures from the oil well disappoint—and there are pieces of evidence that indicate there is cause for concern. Over the summer, Pioneer Natural Resources reported a much higher than expected gas-to-oil ratio (GOR), raising alarm bells for investors worried about Permian production problems. But as The Wall Street Journal notes, the “solution” added an additional $400,000 to each well. In other words, costs are adding up in many places, which will ultimately push up the breakeven price for shale drilling. Meanwhile, other E&Ps have had to lower their production guidance because of the backlog for oilfield services, which are delaying operations. There’s a growing consensus that the pace of shale drilling needs to slow down, or else E&Ps will destroy value. “All these factors are pointing to slower, more methodical development,” said David Pursell, managing director at Tudor Pickering Holt, according to the WSJ. “That needs to happen.”

Texas’ Eagle Ford awaits time in spotlight: (Argus) — Oil investors and producers priced out of the Permian basin could be looking to the neighbouring Eagle Ford as an alternative and future driver of US output growth. But questions surrounding the basin's productivity could prevent it from having its moment in the spotlight. Texas' Eagle Ford is the US' second-largest shale oil basin behind the Permian. The EIA puts Permian October production at 2.64mn b/d, up by 55,000 b/d on the month, driving total US shale oil output to 6.08mn b/d. Eagle Ford produced about 1.27mn b/d for the same month, but with a fall of 9,000 b/d seen as temporary after flooding in the shale caused by Hurricane Harvey. Chesapeake, EOG and others lowered their output guidance for the third quarter as a result of temporary shutdowns. But the Federal Reserve Bank of Dallas says most producers expect only a slight and temporary impact. The Eagle Ford faces bigger concerns over the longer term productivity of its wells. In terms of drilled but uncompleted wells, the Permian accounted for a third of the total in August — up by 133 to 2,297 — increasing the US total by 231 to 7,048. Eagle Ford had the second highest increase, of 47 to 1,401. The gap between the two is unlikely to narrow much, even given concerns surrounding a recent rise in gas output from Permian wells. That is because Eagle Ford productivity has largely held flat from 2013-17, with oil output in its wells' first year of production at around 20 bl for every foot drilled. Well productivity doubled over the period in the Permian's Delaware basin to over 30 bl/ft and from less than 10 bl/ft to around 20 bl/ft in the Permian's Midland basin. In the Bakken shale of North Dakota, oil production has risen to 15 bl/ft from 10 bl/ft.

Fracking Is Green Energy | The Daily Caller: Hydraulic fracturing has done more to cut U.S. carbon dioxide emissions in the last decade than all renewable energy sources and nuclear power combined, according to data from the Energy Department’s statistical arm. The shift from coal to natural gas alone cut CO2 emissions more than 2 billion metric tons in the last decade, which is about 72 percent more than emissions reduced through increased “non-fossil generation.” “Between 2005 and 2016, CO2 emissions declined by a cumulative 3,176 [million metric tons] as a result of these two factors,” the Energy Information Administration notes in a new report on U.S. emissions. Utilities have been investing more in power plants, and converting many coal-fired plants, to burn natural gas in recent years, spurred by the massive increase in shale gas production. Hydraulic fracturing, or fracking, and horizontal drilling has allowed drillers to unlock once out of reach shale gas reserves. The fracking boom collapses the price of natural gas since 2008, giving utilities a low-cost alternative fuel as environmental regulations forced coal plants to install expensive equipment or retire. “It is now clearer than ever that if we are interested in addressing climate change, natural gas must play a significant role,” Steve Everley, spokesman for the industry-backed Texans for Natural Gas, said in a statement. Environmentalists have given natural gas a mixed reception. Many groups see the shift from coal to lower-emitting natural gas as a positive step, but at the same time oppose fracking into shale.

Shale Boom's Dark Secret, Ruined Old Oil Wells in Oklahoma -- Not every oilman is gaining from the U.S. shale boom. Just ask Joe Warren. Warren, a partner at Brown & Borelli Inc., is caught in a historical hiccup, of sorts. More than a third of the 65 to 70 old-line vertical wells his company operates in Oklahoma are negatively affected by horizontal drilling, he says. The new-style wells can run sideways for miles in a shale play, carrying sand, water and chemicals that can leak into older wells, gumming up the works. The cost: For Warren’s company, it’s about $250,000 a year in lost production and $150,000 in added operating expenses, he said. It’s an issue spurring rising anxiety among small drillers. Already, several lawsuits have been filed while a group representing old-guard drillers is gathering data, aiming to force legislation guaranteeing compensation when damages occur. "We should not be sacrificing our property to these guys for horizontal development," Warren said by telephone. "We don’t want to stop horizontal development -- we just want to make the rules fair." Some of Warren’s wells saw a slight drop in output while others, hit multiple times, weren’t salvageable, he said. Warren hasn’t been involved in litigation himself but expects more legal action to occur in the region moving forward, even though cases can be costly and take several years to resolve. Already, a study by the Oklahoma Energy Producers Alliance, the group representing conventional drillers, has found 451 vertical wells in one county that were negatively affected by horizontal drilling, 80 percent of which were located outside of horizontal well unit boundaries. The damage can add costs to replace equipment, clean out water or sand, or address environmental damage, according to Mike Cantrell, a board co-chair for the group. It can also kill a well outright, he said. "I’m afraid when we look into further, we’re going to find out it’s much worse," he said.

 BLM proposes suspending implementation of venting and flaring rule - The US Bureau of Land Management proposed a temporary suspension or delay of certain requirements in its 2016 oil and gas methane venting and flaring rule until Jan. 27, 2019. Comments on the proposal, which is scheduled to appear in the Oct. 5 Federal Register, will be accepted through Nov. 7.Officially known as the Methane Waste and Prevention Rule, the Independent Petroleum Association of America and Western Energy Alliance—along with the states of Wyoming, North Dakota, and Montana—legally challenged it in federal court soon after the rule became final on Nov. 18, 2016. The case now is pending in US District Court for Wyoming.The plaintiffs essentially argued that BLM exceeded its authority by imposing regulation of airborne emissions that falls under the US Environmental Protection Agency’s purview. BLM contended that its authority includes controlling and regulating the waste of federal resources, which it said was the rule’s purpose.BLM reviewed the 2016 final rule as part of Sec. of the Interior Ryan Zinke’s Secretarial Order No. 3349, American Energy Independence, which he issued on Mar. 29. The agency found that some parts of it appear to be unnecessarily burdensome on the oil and gas industry. “Our proposal would give BLM sufficient time to review the 2016 final rule and consider revising or rescinding its requirements,” Acting Director Michael D. Nedd said on Oct. 4.As it prepared to review the rule further, BLM said it determined that a temporary suspension or delay of some requirements would avoid making operators pay costs to comply with requirements that may be rescinded or significantly revised in the near future.The proposal would suspend requirements that already are in effect and postpone implementation of requirements that are not until Jan. 27, 2019, while the agency conducts its additional review. “During this time, existing federal, state, and tribal regulations will ensure energy development is done in an environmentally sound, safe and responsible manner,” BLM said.

What The Frack Is Up With BLM’s Fracking Rule? - Last week, the 10th Circuit Court of Appeals dismissed as prudentially unripe appeals of last year’s District Court decision striking down BLM’s 2015 fracking rule.  The District Court ruled that BLM had no authority to issue the rule.  At the time, I thought that the District Court was on shaky ground.  So did BLM and various environmental groups.  They appealed. Now, in a refrain being replayed in what seems like dozens of cases in multiple courtrooms, BLM moved to dismiss the appeals as unripe, because Secretary Zinke has announced his intention to rescind the fracking rule. The Court concluded quite reasonably that there was not much point in litigating BLM’s authority to promulgate the 2015 rule when the current administration has already announced its intention to get rid of the rule. Fair enough, but the Court then had to decide what to do about the District Court’s decision.  Noting the similarity to cases involving mootness, the Court stated that: we generally vacate the district court’s judgment to prevent it “from spawning any legal consequences.”The Court thus vacated the District Court decision and dismissed the underlying case.  That certainly prevents it from “spawning any legal consequences.”  It is now as though the case never happened and the District Court decision carries no weight. Of course, there is one practical legal consequence to the Court of Appeals’ decision.  The 2015 fracking rule – the same one that lost in District Court and that Secretary Zinke has said he wants to rescind – is now, at least temporarily, back in effect. Be careful what you wish for.

Trump Interior Department will delay methane emissions rules for oil and gas industry - The Interior Department will propose a one-year delay to methane emissions rules while it considers weakening or rescinding the oil and gas industry regulations.The rules in question, finalized under President Barack Obama, are meant to reduce leaking, venting and flaring of planet-warming methane from drilling activity. The Trump administration is seeking to roll back the Bureau of Land Management rules as part of a wider agenda of energy sector deregulation.The BLM "wants to avoid imposing temporary or permanent compliance costs on operators for requirements that may be rescinded or significantly revised in the near future," the Interior Department said in a document it will publish in the Federal Register on Thursday.It is also seeking to "avoid expending scarce agency resources on implementation activities ... for such potentially transitory requirements." Among the rules that BLM plans to delay until January 2019 are requirements that oil and gas producers submit plans to cut waste, measure and report gas flared from wells and dispose of gas that reaches the surface during drilling and well completion. The Interior Department says some of the rules impose unacceptable financial costs on oil and gas companies and asserts that several overlap with EPA regulations. The bureau will open a period of public comment on the regulations.Methane accounts for 10 percent of U.S. greenhouse gas emissions, according to the Environmental Protection Agency. It lingers in the atmosphere for a shorter period than carbon dioxide, but its radiation-trapping impact is more than 25 times greater than CO2.Environmentalist groups decried the move to delay implementation. "By suspending the BLM methane rule, Interior Secretary [Ryan] Zinke and the Trump Administration make clear that they're fine with wasting taxpayer dollars and polluting our air so long as it helps their billionaire and lobbyist cronies," Lauren Pagel, policy director at Earthworks, said in a statement.

Congress decided against repealing this climate rule. So the Trump administration is undoing it. -- After Congress failed five months ago to repeal an Obama administration measure meant to mitigate the emissions of a potent greenhouse gas, the Interior Department on Wednesday took a step toward suspending the rule. This week, Interior Secretary Ryan Zinke will issue a proposal to formally delay a Bureau of Land Management (BLM) rule that requires oil and gas companies operating on federal and tribal lands to capture methane that would otherwise be vented or burned off. BLM had already stayed the rule in June, but on Wednesday a federal judge struck down that delay by Interior for violating the Administrative Procedure Act, which governs how agencies write regulations. With its submission to the Federal Register this week, the Interior Department is kicking off the formal rulemaking process needed to permanently rewrite or undo the rule. Methane, the main component of natural gas underground, is a powerful accelerant of climate change. Through rules issued by the Interior Department and the Environmental Protection Agency, President Barack Obama sought to slow methane emissions from natural-gas wells as part of a multipronged effort to meet the U.S. emissions-reduction targets under the Paris climate accord. But President Trump has announced he will pull the United States out of the Paris agreement, while at the same time rolling back many of the regulatory actions the previous administration took to address climate change. Environmentalists who support the BLM rule, which addresses new and existing gas wells on public and tribal lands, say fiscal conservatives should take issue scraping the rule as well. That’s because states, tribes and the federal government get royalty payments from oil and gas firms drilling on publicly owned lands. The more methane that is captured, the more money flows into government coffers. 

These Suburbanites May Have No Fracking Choice -  When Bill Young peers out the window of his $700,000 home in Broomfield, Colo., he drinks in a panoramic view of the Rocky Mountains. Starting next year, he may also glimpse one of the 99 drilling rigs that Extraction Oil & Gas Inc. wants to use to get at the oil beneath his home. There’s little that Young and his neighbors can do about the horizontal drilling. Residents of the Wildgrass neighborhood own their patches of paradise, but they don’t control what’s under them. An obscure Colorado law allows whole neighborhoods to be forced into leasing the minerals beneath their properties as long as one person in the area consents. The practice, called forced pooling, has been instrumental in developing oil and gas resources in Denver’s rapidly growing suburbs. It’s law in other states, too, but Colorado’s is the most favorable to drilling. Now fracking is coming to an upscale suburb, and the prospect of the Wildgrass homeowners being made by state law to do something they don’t want to do has turned many of them into lawyered-up resisters. “It floors me that a private entity could take my property,” says Young, an information security director. Many states require 51 percent of owners in a drilling area to consent before the others have to join.  Despite its founding cowboy ethos of rugged individualism, Colorado has one of the lowest thresholds. “There’s a tension in oil and gas law between allowing private property owners to develop their mineral estates on their own and the state’s desire to ensure that ultimate recovery of oil and gas is maximized,” The rise of horizontal drilling and hydraulic fracturing over the past decade has ushered in a modest oil boom on Colorado’s Front Range by enabling companies to wring crude more cheaply from the stubborn shale that runs beneath Denver’s northern suburbs. From 2010 to 2015, Colorado’s crude output almost quadrupled. This year the state is pumping more than 300,000 barrels a day, most of it from the Wattenberg oil field beneath Wildgrass and beyond.

Brine spill heightens tribe concern about pipeline material | The Olympian: A North Dakota American Indian tribe no longer wants fiberglass-based pipelines on its reservation after recent spills. Last month, a pipeline spilled more than 33,000 gallons of brine in a pasture on the Fort Berthold Indian Reservation. The spill occurred on a segment of pipeline that was scheduled to be replaced. The pipeline is made of a material called Fiberspar LinePipe. That's the same fiberglass-reinforced material tied to two of the largest brine spills in North Dakota history, The Bismarck Tribune reported Sunday. Three Affiliated Tribes Pipeline Authority Travis Hallam said the tribe's business council is no longer allowing fiberglass-based materials for new pipelines that carry waste water, a byproduct of oil production. Instead, the tribe wants coated steel lines, he said. "It was involved in far too many failures to be considered an acceptable material to protect us from the produced water it was transporting," Hallam said. Crestwood Midstream owns the pipeline involved in the Sept. 3 spill on the reservation. Crestwood also owns the pipeline that contaminated Lake Sakakawea in July 2014 after 1 million gallons of brine spilled near Mandaree and is replacing Fiberspar pipelines in environmentally sensitive areas on Fort Berthold. A spokesman for Fiberspar LinePipe, a division of National Oilwell Varco, said the pipeline material is safe for transporting produced water if installed according to the manufacturer's guidelines. The company says improper installation is the main source of damage to the product.

Senate GOP sets path for Alaska refuge drilling | TheHill: Senate Republicans introduced a budget proposal Friday that could pave the way for allowing drilling in the Arctic National Wildlife Refuge (ANWR) for the first time in decades. The budget blueprint asks the Senate Energy and Natural Resources Committee, which has jurisdiction over the refuge, to develop policies that would save at least $1 billion over the next decade. Lawmakers widely expect that that gap is meant to be filled with the revenues from allowing drilling in ANWR, a federal reserve in northeastern Alaska that was protected in 1960 but has a small coastal area that Congress designated for possible oil and gas drilling.Through the budget reconciliation process, having a $1 billion figure in the budget would allow the refuge to be opened for drilling with a 51-vote majority. Republicans hold 52 seats in the Senate. By contrast, most legislation in the Senate requires 60 votes to overcome a potential filibuster. Sen. Lisa Murkowski(R-Alaska), who chairs the Energy Committee, is a leading proponent of ANWR drilling and has introduced legislation every year to allow drilling in the 1.5 billion-acre coastal area, known as the 1002 area. Murkowski applauded the budget in a statement Friday, though did not say whether she would work to allow ANWR drilling to fulfill the requirement. “This provides an excellent opportunity for our committee to raise $1 billion in federal revenues while creating jobs and strengthening our nation’s long-term energy security. I am confident that our committee is prepared to meet the instruction in this resolution,” she said in a statement. 

TransCanada Terminates Energy East Pipeline -- TransCanada , the same company behind the controversial Keystone XL , is abandoning its proposed Energy East pipeline and Eastern Mainline projects. President and CEO Russ Girling said Thursday morning in Calgary that the company will inform Canada's pipeline regulator, the National Energy Board (or NEB), and Quebec's Environment Department that "we will no longer be proceeding" with the projects. The decision is expected to cost the pipeline giant C$1 billion (US$801 million). "TransCanada was forced to make the difficult decision to abandon its project, following years of hard work and millions of dollars in investment," the Canadian Energy Pipeline Association, an industry group, said in a statement to Bloomberg . "The loss of this major project means the loss of thousands of jobs and billions of dollars for Canada, and will significantly impact our country's ability to access markets for our oil and gas." The shuttering of the Energy East pipeline, however, is a major victory for environmental groups, who have long fought against the so-called Keystone XL on steroids . According to the Natural Resources Defense Council , the US$15.7-billion pipeline would have transported 1.1 million barrels per day of mostly tar sands oil from Alberta to St. John and would bring a significant increase in carbon pollution—equivalent to the annual emissions of as many as 54 million passenger vehicles—and lock in high-carbon infrastructure expected to operate for at least 50 years. Oil Change International estimated that the pipeline's construction would have created up to an additional 236 million tons of carbon pollution each year, multiplied over decades of operation.

Major Canadian Pipeline Project Is Abandoned - — TransCanada, the company behind the Keystone XL pipeline in the United States, on Thursday abandoned a plan for a pipeline that would have sent oil from the province of Alberta in western Canada to Ontario, Quebec and New Brunswick. The company, based in Calgary, Alberta, offered little explanation for its decision beyond citing “changed circumstances” in a brief statement. Terry Cunha, a spokesman for TransCanada, declined to elaborate.But environmental and indigenous groups cheered the demise of the project, which would have cost 15.7 billion Canadian dollars (almost $12.5 billion).“The world is grateful to the Canadians and indigenous peoples who organized against this project,” Bill McKibben, the founder of, an environmental group, said in a statement. “The climate math is sadly simple — the carbon contained in Alberta’s tar sands must stay there.” In addition to facing opposition from advocacy groups, analysts said, the company was probably put off by an expanded review process recently introduced by Canada’s regulator, as well as by the economics of building a pipeline in what seems to be an era of extended, low oil prices.Although the pipeline made economic sense, said Tim Pickering, chief investment officer at Auspice Capital Advisors in Calgary, “it had regulatory layers put on it.”The project, Energy East, would have converted and extended a natural gas pipeline, forming a link between Alberta’s oil sands and refineries in Ontario, Quebec and New Brunswick. The company had anticipated that some of the bitumen shipped from the oil sands would be loaded onto tankers at ports in eastern Canada for shipment to the United States.

New North American On-Shore Conventional Oil Play -- October 4, 2017 -- Data points from Bloomberg via Rigzone:

  • the play is located between Alberta's Nipisi Lake and an area called Marten Hills; along the western edge of the Athabasca Oil Sands region
  • the formation: within the Clearwater shale and sandstone formation
  • location: Alberta, Canada; 125 miles southwest of the Fort McMurray oil sands; near Slave Lake
  • low cost: can be pumped with conventional gear
  • well costs: C$1.1 million to C$1.5 million; will produce as much as four times more crude oil as a conventional horizontal well
  • depth: 2,000 feet (wow -- that is incredibly shallow (middle Bakken, 9,000 feet deep)
  • crude can be produced from the area for about $8/bbl (US dollar)
  • land rush
  • off the radar scope because most drillers are closely held like Deltastream
  • recently, under the name Stomp Energy Ltd, the land company Scott Land & Lease Ltd paid C$10.15 million or C$1,101 per hectare
  • cheap by Permian standards, but it was the most paid for a single section of exploration land in Alberta since December, 2011
  • companies named: Deltastream, Cenovus Energy Inc., and Spur Petroleum Ltd
  • size of play not mentioned
  • small potatoes so far: just 1.46 million bbls in all of 2015 (North Dakota produces that much oil in less than two days)

Panama Canal Authority, shippers work to double LNG capacity - The Panama Canal Authority is working with LNG shippers towards doubling the capacity set aside for LNG vessels by next October, the PCA said Wednesday. The PCA is working towards allowing two LNG vessels a day to transit the canal, from the single slot currently available. "Currently all LNG transits are limited to daylight hours. We are working towards lifting some transit restrictions by the third quarter of next year," the PCA said in a statement, adding that there are currently no transit delays. LNG transit slots have been booked through the third quarter of next year by counter-parties, with offtake from the US Gulf including Shell, Cheniere, Gas Natural Fenosa and Kogas, according to one shipping source. These slots can be canceled with advanced notice at the higher of varying discount percentages to the booking fee of $35,000 or a fixed amount. According to a Panama-based port agent, only one or two LNG vessels have shown up without a booking in anticipation of a canceled slot. Over 171 LNG carriers have so far transited the Panama Canal, or some 8.6% of transits through the Neopanamax locks.

U.S. Shale Isn’t As Strong As It Appears - The extraordinary cost reductions achieved by North American oil and gas companies have likely reached their limit, and any boost in profitability for much of the U.S. shale and Canadian oil sands industries will have to come from higher oil prices, according to a new report from Moody’s Investors Service.Moody’s studied 37 oil and gas companies in Canada and the U.S., concluding that although the oil industry has dramatically slashed its cost of production in the past three years and is currently in the midst of posting much better financials this year, there is little room left for more progress.“After substantially improving their cost structures through 2015 and 2016, North American exploration and production (E&P) companies will demonstrate meaningful capital efficiency to the extent the West Texas Intermediate (WTI) oil price is above $50 per barrel and the Henry Hub natural gas price is at least $3.00 per MMBtu,” Moody’s said. In other words, WTI will need to rise further if the industry is to improve its financial position.The report is another piece of evidence that suggests the U.S. shale industry is perhaps struggling a bit more than is commonly thought. U.S. shale has been portrayed as nimble, lean and quick to respond to oil price changes. And while that is largely true, strong profits remain elusive, despite the huge uptick in production.Shale drillers have substantially lowered their breakeven prices, but further reductions will be difficult to achieve, Moody’s Vice President Sreedhar Kona said in a statement.“Higher than $50 per barrel WTI essential for a meaningful return on capital,” Moody’s said. The findings are important for a few reasons. First, it suggests that if WTI remains stuck at about $50 per barrel, U.S. shale drillers might be forced to reign in their ambitions, because they won’t generate enough cash to reinvest in growth. Second, shale drillers might actually worsen their financial position if they pursue growth. Spending more to produce more—while that could lead to more oil sales—might not necessarily be the wisest strategy.

High Oil Subsidies Ensure Profit for Nearly Half New U.S. Investments, Study Shows  -- Government subsidies to American energy companies are generous enough to ensure that almost half of new investments in untapped domestic oil projects would be profitable, creating incentives to keep pumping fossil fuels despite climate concerns, according to a new study.  The study, in Nature Energy, examined the impact of federal and state subsidies at recent oil prices that hover around $50 a barrel and estimated that the support could increase domestic oil production by a total of 17 billion barrels "over the next few decades."Using that oil would put the equivalent of 6 billion tonnes of CO2 into the atmosphere, the authors calculated. Taxpayers give fossil fuel companies in the U.S. more than $20 billion annually in federal and state subsidies, according to a separate reportr eleased today by the environmental advocacy group Oil Change International. The study in Nature Energy focused on the U.S. because it is the world's largest producer of fossil fuels and offers hefty subsidies. The authors said they looked at the oil industry specifically because it gets double the amount of government support that coal does, in the aggregate. Written by scientists and economists from the Stockholm Environment Institute and Earth Track, which monitors energy subsidies, the study "suggests that oil resources may be more dependent on subsidies than previously thought."   The subsidies fell into three groups: revenue that the government decides to forgo, such as taxes; the government's assumption of accident and environmental liability for industry's own actions, and the state's below-market rate provision of certain services.The authors then assumed a minimum rate of return of 10 percent for a project to move forward. The question then becomes "whether the subsidies tip the project from being uneconomic to economic," clearing that 10 percent rate-of-return threshold.   The authors discovered that many of the not-yet-developed projects in the country's largest oil fields would only be economically feasible if they received subsidies. In Texas's Permian Basin, 40 percent of those projects would be subsidy-dependent, and in North Dakota's Williston Basin, 59 percent would be, according to the study. 

Tax Breaks Make $50 Oil Profitable in the U.S. -  While the U.S. administration is pushing for a tax code overhaul and supports American “energy dominance”, an environmental group suggests in a new study that at the current oil prices of $50, the development of U.S. oil resources may be much more dependent on tax deductions and provisions than previously thought. The study, conducted by researchers at the Stockholm Environment Institute and Earth Track, concludes that at a $50 oil price, around half of discovered and yet-to-be developed oil resources in the U.S. would depend on existing tax deductions to go from unprofitable to profitable. The researchers found that “tax preferences and other subsidies push nearly half of new, yet-to-be-developed oil investments into profitability, potentially increasing U.S. oil production by 17 billion barrels over the next few decades.” The lowest “subsidy dependence” for new projects at $50 oil is found, not surprisingly, in the Permian, where 40 percent of the economic oil resource is “subsidy-dependent”. This compares with 73 percent in the Gulf of Mexico and with 59 percent in the Williston Basin. The high Gulf of Mexico ‘subsidy-dependence’ isn’t a surprise either, considering that mostly integrated oil companies operate there, and they’re not enjoying as much tax deductions as the independent producers that are doing business in shale basins. “About 10 billion barrels of Permian oil are in fields that would be profitable at $50 per barrel even without subsidies, but subsidies bring on enough extra fields to produce an additional 6.5 billion barrels of oil,” the study says. The effects of the tax deductions are highly connected with oil prices. At $30 per barrel oil, almost no new fields would be profitable to develop, even with those tax provisions, the researchers say. Of course, at $100 oil, revenues from new projects would be enough to sanction nearly all developments without any tax provisions. “In such a case, nearly all of the subsidy value would go to extra profits,” the study says. “Our findings show that removal of tax incentives and other fossil fuel support policies could both fulfill G20 commitments and yield climate benefits,” researchers say.

Investors push U.S. shale firms to separate executive pay from drilling (Reuters) - Activist investors are taking aim at U.S. shale producers, the companies most responsible for turning the nation into a global energy powerhouse, pushing them to stop rewarding executives for spending billions of dollars on new wells when crude prices are depressed. U.S. crude output has surged past 9 million barrels a day largely because of the shale sector, whose output this year is up 27.5 percent. The gains are fueled by a boost of about 50 percent in capital spending, benefiting executives come bonus time but crimping shareholder returns. Investors want the higher spending to go to dividends and buybacks, not more drilling. The shift they are seeking could dampen spending on new wells, chilling a shale boom that has benefited U.S. motorists and consumers. It could help the Organization of the Petroleum Exporting Countries, Russia and other producers who are trying to drain a global crude surplus. Booming U.S. shale production has largely thwarted OPEC output cuts aimed at lifting prices. Low oil prices, in turn, have hurt shareholder returns. [O/R] Activists point to the lopsided split between pay and returns. The 10 biggest U.S. shale producers paid their chief executives $2.2 billion over the past decade despite shareholder returns of 1.7 percent. These companies include Apache Corp and Devon Energy Corp. Contrast this with Exxon Mobil Corp and other integrated oil companies that produce, transport and refine oil all over the globe. These companies as a group paid their executives a total of $600 million during the same period and achieved a stronger 3.5 percent return, according to analysts at Evercore ISI. 

ExxonMobil Dethroned As World's Top Energy Company - Gazprom dethroned ExxonMobil as the top energy company in the world, according to the 2017 S&P Global Platts Top 250 Global Energy Company Rankings. The rankings measure the financial performance of energy firms on four key metrics: asset worth, revenues, profits, and return on invested capital. The list only includes companies that have assets greater than $5.5 billion. For 12 years, ExxonMobil was second to none. But that changed this year – Exxon was ejected from the top spot, and fell all the way to ninth place.Gazprom’s surge reflects its state ownership, its captured market in Europe for its natural gas, as well as the fall of some of its peers. But the Russian gas giant’s ability to weather sanctions, regulatory threats from the EU, low oil and gas prices, and the rise of competition from new supplies of LNG is impressive.The reshuffling was the result of some dramatic changes underway in the energy industry, according to S&P Global Platts. Typically, the companies topping the list have been integrated oil companies. But this year, utilities and pipeline companies moved up the list.That, combined with the stumble by Exxon, marks a “changing of the guard, the most profound in the Rankings history,” S&P Global Platts said in a press release.Still, to some degree, the shakeup is not surprising. After all, oil prices have languished for a third year, weighing on the oil industry. That doesn’t necessarily affect utilities and pipeline companies. While oil producers have stumbled, revenues for regulated utilities are pretty stable, and the same is true for pipeline companies that typically ink long-term deals with relatively inflexible pricing.

What Does the Sale of Venezuelan Oil in Currencies Other Than the US Dollar Mean? - The petrodollar is more important for US global domination than either arms exports or Hollywood culture, because it allows the US to be the biggest exporter of the dollar bills the rest of the world, which needs to be able to buy oil. Venezuela has decided to start de-dollarizing its economy.To understand what this means, it’s necessary to look at the geopolitical context in which the move takes place. After President Nicolas Maduro announced last Thursday that every business signing contracts with the Venezuelan State should do so in a foreign currency other than the US dollar, Vice President Tareck El Aissami sought to ensure the country’s productive sector gets the necessary mechanisms via public and private banks to be able to migrate to a new basket of foreign currencies. In a working meeting with business people on the Constituent Plan for Peace and Economic Prosperity, Aissami said, “We have to throw off the yoke of the dollar”, arguing that anyone wanting to bid in auctions of the Floating Exchange Rate System (DICOM) should switch their bank accounts to another currency. Aissami added, “We’re doing no more auctions in dollars, those auctions are over”. He emphasized that these measures are meant to counteract economic sanctions imposed by the US. Aissami also said that Venezuelan citizens promoting the sanctions would face trial, adding that Venezuela is closing existing bank accounts and migrating them to other banks around the world, whom he thanked for their assistance. He reported that, “In the public banking system we already have partner banks in all those countries” (Russia, China, India, Europe).

The Next Big Offshore Boom Is About To Happen Here - Say what you will about offshore oil and gas exploration, but it’s still alive and kicking—high production costs and all. The latest demonstration of the viability of deepwater projects, even in the post-2014 oil industry era, comes from none other than Brazil.On Wednesday, the country’s National Petroleum Agency put 287 oil and gas blocks up for auction, and only 37 found buyers. Too few, it might seem at first. But the proceeds came in at more than US$1.2 billion—a hefty share of this pledged by heavyweight Exxon. The NPA’s expectations for the proceeds were much more modest, at $157 million.The 287 blocks auctioned are just the first portion of a number of deposits that hold an estimated 10 billion barrels of crude in proven reserves. No wonder, then, that as many as 30 companies took part in the bidding round—the first of a total nine rounds, to take place between now and 2019. The auction was closely watched as a gauge of sentiment towards Brazilian oil exploration projects after a decade of Petrobras’ reign in the country’s continental shelf. After the oil price collapse and a huge corruption scandal, Petrobras has struggled to stay afloat, let alone find the billions of investments needed to develop new deposits. Some Big Oil majors are already in Brazil, including Statoil, Shell, and Total. The Norwegian state oil company is developing the Carcara field—part of the prolific Santos Basin. Shell is a strategic partner of Petrobras in the pre-salt layer, holding minority interests in the Libra and Lula fields and in other areas such as Sapinhoá, Lapa, and Iara, all of which are located in the Santos Basin. Total is partner of Shell, Petrobras, and CNPC in the Libra field, also in the Santos Basin and considered one of the biggest offshore discoveries in the Brazilian pre-salt zone. Related: $60 Oil Could Revive The Eagle Ford Exxon will now join these fellow supermajors in the Brazilian shelf, partnering with Petrobras on six of the ten licenses it won. This should be indication enough that Brazil’s deposits hold enough appeal for an industry that has suffered a worrying shortage of new discoveries in the last few years. Wood Mackenzie estimated the capital spending cuts for the global oil and gas industry at a stunning $1 trillion, and that estimate was made in the middle of last year.

Scotland's papers: Scottish government 'to ban fracking'  -- The Scottish government is set to announce a permanent ban on fracking in Scotland, replacing the moratorium started in January 2015, according to the Sunday Herald.Scottish Conservatives leader Ruth Davidson is to criticise the UK for being "far too London-centric", claiming Scotland must get more out of being part of the Union, reports Scotland on Sunday.The University of St Andrews has suspended a student and disciplined six others in an investigation into an acid attack threat, says the Sunday Mail.The Sunday Times says Buckingham Palace was left "infuriated" with Theresa May after the general election result plunged the prime minister into a personal "crisis of confidence".Middle class Scots could see their council tax "more than double" under proposals for a new land value tax which is being "driven forward" by the SNP, according to The Scottish Mail on Sunday.Elvis impersonator Anthony Bradley has said he "forgives" Hibs striker Anthony Stokes for the headbutt that "ruined his career", but is demanding compensation, reports the Scottish Sun on Sunday. And The Sunday Post says Ryanair has been "secretly" training pilots after cancelling the travel plans of thousands of Scots.

Scotland Rejects Fracking, Citing Overwhelming Public Opposition  (Reuters) - Scotland will block fracking indefinitely after a public consultation found overwhelming opposition to the practice, the British region's energy minister said on Tuesday in a victory for environmentalists. Scotland imposed a moratorium on fracking, the process of fracturing underground shale rock to release gas and oil, in 2015 and that will now remain for the foreseeable future. "The decision taken today means fracking cannot and will not take place in Scotland," Paul Wheelhouse told the Scottish parliament in Edinburgh. "Taking account of available evidence and the strength of public opinion, my judgment is that Scotland should say 'no' to fracking." The method has run into stiff opposition in many countries. Environmentalists say it causes problems including pollution of the water table, and residents of areas where fracking is being considered fear increased noise, traffic and other impacts. Britain is estimated to have substantial amounts of shale gas trapped in underground rocks but despite support from the central government in London, progress has been slow as environmentalists and local communities lobby against fracking. The London government approved a shale gas fracking permit for a site in Lancashire, northern England, a year ago, using new powers that allowed it to overturn a local authority decision against the permit the previous year. In Scotland, advocates of fracking say it could offset the decline in North Sea oil reserves and boost the Scottish economy. But Wheelhouse told parliament the government's consultation had attracted more than 60,000 responses, of which about 99 percent were to oppose fracking.

Scotland and fracking: How did we get here? - BBC News: The Scottish government has confirmed that it wants to effectively ban fracking in Scotland. Energy Minister Paul Wheelhouse told the Scottish Parliament that the current moratorium on fracking will be continued indefinitely - which he said means that fracking "cannot and will not take place in Scotland". Here's a look at the background to the announcement.Hydraulic fracturing, or fracking, is a technique used to recover gas and oil from shale rock by drilling down into the earth before directing a high-pressure water mixture at the rock to release the gas inside. Fracking allows drilling firms to access difficult-to-reach resources of oil and gas, and has been credited with significantly boosting US oil production. But opponents point to environmental concerns raised by the extensive use of fracking in the US. They say potentially carcinogenic chemicals used in the process may escape and contaminate drinking water supplies around the fracking site, although the industry argues any pollution incidents are the results of bad practice, rather than an inherently risky technique. There have also been concerns that the fracking process can cause small earth tremors. And campaigners say the transportation of the huge amounts of water needed for fracking comes at a significant environmental cost. According to a British Geological Survey report published in 2014, there are "modest" shale reserves under east Glasgow, North Lanarkshire, South Lanarkshire, West Lothian, Midlothian, north Edinburgh, East Lothian and Fife - many of which include some of Scotland's largest towns.There was estimated to be about 80 trillion cubic feet of shale gas in central Scotland compared to 1,300 trillion cubic feet in the north of England.The report also said the amount of oil and gas which could be commercially recovered was likely to be substantially lower. Ineos, which operates the huge Grangemouth petrochemical plant in central Scotland, holds fracking exploration licences across 700 square miles of the country.

Nicola Sturgeon: 'Fracking will be banned in Scotland - end of story' - HeraldScotland: Nicola Sturgeon has insisted that fracking is being banned in Scotland “end of story” as she made her personal opposition to the practice clear. The First Minister had previously said she was “highly sceptical” about the process. After Scottish Energy Minister Paul Wheelhouse announced on Tuesday that the Scottish Government would extend its moratorium into a permanent ban, the SNP leader told MSPs she did not believe it should be permitted. Supporters, including the Scottish Conservatives, highlight the economic opportunities fracking could bring to Scotland, where the North Sea oil and gas sector is in decline. But the SNP move was also backed widely, including by Friends Of The Earth and Hollywood actor Mark Ruffalo. Ms Sturgeon made her views clear after Green MSP Mark Ruskell challenged Holyrood ministers to go further and “get this ban properly over the line” by legislating to outlaw hydraulic fracturing. 

Roman Catholics show support at Preston New Road fracking site - Fleetwood Weekly News: Around 50 Roman Catholics staged a procession and service at the Preston New Road fracking site to show their support for the ongoing protest there. The group, including two priests, was at the gas drilling site to call for fossil fuels to be left in the ground to prevent further global warming and the potentially devastating effects on the planet this could have. Pope Francis has written on the subject in his Laudato Si papal circular letter and has called on all people of the world to take ‘swift and unified global action’.The Catholic campaigners said they were following his example. Fr Hugh Pollock from Kendal and a member of the Lancaster Diocesan Faith and Justice Commision, said: “Today is the feast day of St Francis of Assisi and it is fitting that we should be doing this to protect the Earth and Creation. “Pope Francis has called us to heed the cry of the Earth and the cry of the poor and where the Earth is damaged in any way he calls us to protect and to heal where possible. “We do not accept that any more extraction of fossil fuels is necessary and we have to change our ways of life to live in a more sustainable way in harmony with creation rather than further damaging it.” One of the organisers of the event from the Catholic Climate Movement, Bob Turner a parishioner from St Alban’s in Blackburn said: “People are already suffering the effects of global warming because of the way we have misused the resources on the planet. “Pope Francis in Laudato Si has told how bad things are. People want everything to be all right and to carry on as we are, but we cannot, we have to stop further fossil fuel extraction and at this site here we must keep the gas in the ground.” 

Onshore fracking to begin in UK 'within weeks' | The Independent: Fracking for shale gas will begin in the UK within weeks, the company undertaking it for the first time has announced. Third Energy said it plans to complete five fracks in North Yorkshire before the end of 2017. The controversial technique involves injecting liquid into underground rock at high pressures in order to create cracks that release trapped gas. This is then collected and used to generate electricity.Fracking has been vocally opposed by environmental campaigners but permits to use the technique have been approved by government ministers. Alan Linn, Third Energy’s technical director, said the final sign-off needed for fracking to begin was “imminent”. He said: "We're beginning to prepare for the work-over phase of the well and that should commence shortly. It will probably take us about two weeks. Once we've completed that successfully then we would begin to move into the frack. "We can't do that until we've got our final regulatory approvals in place and we hope those will happen imminently. We expect to be finished and wrapped up with the actual fracking before the end of the year.” 

 Victoria, NSW penalized for outlawing fracking under Grants Commission plan | Newcastle Herald: States that fail to permit coal seam gas mining would be penalised under a fresh proposal from the Grants Commission to change the method of distributing goods and services tax revenue.The adjustment would hurt Victoria, New South Wales, Western Australia, Tasmania and the Northern Territory, each of whom has complete or partial bans on coal seam gas exploration or development or has a moratorium on fracking. The proposal, in a position paper prepared for the commission's review of the principles behind the GST distribution, is to treat royalties from coal seam gas in the same way as taxes on gambling. It would apply from 2020.  States that choose not to allow poker machines and collect poker machine revenue are regarded as having voluntarily forgone income and not compensated for earning less than the states that do. The commission wants to consider whether "similar considerations arise in certain potential mineral and energy developments". "In these circumstances, the commission could take the view that all states that have coal seam gas have the opportunity to exploit it and whether they do or not solely reflects policy choice," the position paper says. Victoria imposed a moratorium on coal seam gas exploration in 2012. NSW banned all activity within 2 kilometres of residential areas in 2013. The Victorian decision was taken by the Coalition government of Ted Baillieu. The NSW decision was taken by the Coalition government of Barry O'Farrell. The Baird government in NSW temporarily froze new exploration in 2015 while implementing a report designed to ensure the safety of coal seam gas mining by the NSW chief scientist Mary O'Kane. "The idea that Victorians are going to have to pay the cost of shipping gas from the Middle East or from Louisiana or from north-west Australia because they have a government that is not prepared to access the gas resources in Victoria is extraordinary," Prime Minister Malcolm Turnbull said.

 LNG's Asian price rally may become victim of its own success (Reuters) - The spot price of liquefied natural gas (LNG) in Asia is enjoying its traditional surge ahead of peak winter demand, and the near 40 percent rally over the past six weeks probably has further to go. While exporters of the super-chilled fuel will no doubt be trying to maximise the number of spot cargoes they offer, of more interest to them may be how steep the post-winter drop is likely to be. Much of the current boost to prices is due to stronger-than-expected Chinese demand, as Beijing expands use of the cleaner-burning fuel in place of coal for winter heating. The government is spending huge amounts to build out its natural gas infrastructure to change some 4 million homes from coal to natural gas heating, with consultants Wood Mackenzie estimating that China’s natural gas demand could be boosted by 10 billion cubic metres this winter, equivalent to about 5 percent of last year’s total consumption. China’s LNG imports for the first eight months of the year are up a massive 44.3 percent to 22.1 million tonnes, according to customs data, increasing every month since May. China still ranks third behind Japan and South Korea in global LNG imports, although it is the country with the fastest growth, and the most potential for steadily rising demand. Spot LNG prices LNG-AS have responded to the increased demand from China, jumping 39 percent to end at $8.40 per million British thermal units (mmBtu) for the week to Sept. 29, up from a recent low of $6.05 for the week ended Aug. 25. By way of comparison, the spot priced surged 86 percent between September last year and the winter peak of $9.75 per mmBtu, reached in the first week of January this year.

China's Oil Demand Is Far Ahead Of Last Year's Pace -  OPEC recently released its Monthly Oil Market Report which covers the global oil supply and demand picture through July. OPEC crude oil production decreased by 79,000 BPD in August to average 32.8 million BPD.This marks the first OPEC production decline since April and was primarily driven by sizable outages in Libya.The cartel revised global oil demand growth for 2017 upward by 50,000 barrels per day (BPD) to 1.42 million BPD. The group reports strong growth from the OECD Americas, Europe, and China. Global oil demand for 2018 is expected to grow by 1.35 million BPD, an upward revision of 70,000 BPD from the previous report. Growth next year is expected to be driven by OECD Europe and China. China’s oil demand rose by 690,000 BPD in July, marking a 6 percent year-over-year (YOY) increase. China’s total oil demand reached 11.67 million BPD in July. Year-to-date data indicates an average growth of 550,000 BPD, more than double the 210,000 BPD growth recorded during the same period in 2016.China’s gasoline demand was higher by around 0.10 million BPD YOY, driven by robust sports utility vehicle (SUV) sales, which were around 17 percent higher than one year ago.China’s overall vehicle sales in July rose by 4 percent YOY, with total sales reaching 1.7 million units.The numbers from China are interesting given the constant refrain of weakening Chinese demand. This seems to be wishful thinking based on China’s investments in clean technology. China is the world’s top market for electric vehicles, and they recently announced that they have started “relevant research” and are working on a timetable for implementation of a ban on vehicles powered by fossil fuels. That news followed previous announcements by France and the U.K. that they would ban the sale of vehicles powered by fossil fuels by 2040.  China may indeed join the ranks of countries banning fossil fuel vehicles. This news helps drive the narrative that the age of oil is nearing its end, but China is a long way from reining in its oil consumption growth.

China crude oil import data show winners and losers from rebalancing (Reuters) - China’s imports of crude oil offer a picture of which exporters are doing the heavy lifting of reducing supplies, and which countries are benefiting the most from the efforts of OPEC and its allies to rebalance the market. While looking at customs data from the world’s biggest crude importer isn’t a definitive study of global oil market dynamics, it’s important as exporters are well aware that China has been leading demand-growth in recent years, a trend likely to continue. China imported 281.1 million tonnes of crude in the first eight months of this year, equivalent to 8.44 million barrels per day (bpd), according to customs data. This is up 12.3 percent on the same period in 2016, or about 950,000 bpd. This makes China the major contributor to global demand-growth so far this year, given that the International Energy Agency expects world oil consumption to rise 1.6 million bpd in 2017 from 2016. The breakdown of the Chinese import numbers shows who is gaining market share and who is not. Saudi Arabia was China’s leading supplier in the first eight months of 2016, but has slipped to third place behind Russia and Angola in the January-August period this year. The kingdom’s exports to China were 1.03 million bpd in the first eight months, down 1.7 percent from the same period last year.While this looks like a relatively small decline, it becomes far more significant if you assume that the Saudis had been able to grow their exports at the same pace as overall imports by China. If China’s imports of Saudi crude were up at the 12.8 percent overall growth rate, it would have meant that the kingdom supplied 1.18 million bpd. 

Oil Production Vital Statistics September 2017 - Drilling activity as measured using rig counts remains close to a cyclical high in OPEC. The return of drillers in the USA has stalled with US total rigs on 940 on 29th September, well up from the recent low of 469 seen in May last year but still well below the high of >2000 seen in December 2011. Drilling activity everywhere else remains firmly stuck in the doldrums. The following totals compare August 2016 with August 2017:

  • World Total Liquids 96.77/97.67 +900,000 bpd
  • OPEC 12: 32.54/32.36 -180,000 bpd
  • Russia + FSU 13.61/14.14 +530,000 bpd
  • Europe OECD  3.36/3.31 -50,000 bpd
  • Asia 7.30/7.37 +70,000
  • North America 19.34/19.91 +570,000 bpd

With global total liquids production up 0.9 Mbpd on a year ago despite OPEC+Russia cuts, it is little surprise that the oil price remains depressed. There are four main reasons for the continued growth in supply: 1) the return of US drillers and frackers to work that has pushed US production higher, 2) Russia ramped up production in September last year in anticipation of the October production datum, 3) higher production from Libya and Nigeria that was not included in the OPEC+ production constraint deal  and 4) global biofuels are on an annual cycle high (chart below). Each of these factors is now running out of the system. This combined with 3 years of low investment in non-OPEC oil will see a swift rebalancing in the year ahead and a rise in oil price muted by the actions of US drillers.

Hedge funds amass record bullish position in distillates: Kemp (Reuters) - Hedge funds have accumulated a record bullish position in middle distillates such as diesel, heating oil and gasoil, anticipating stocks will be relatively tight this winter.Hedge funds and other money managers held a record net long position in U.S. heating oil futures and options equivalent to 62 million barrels on Sept. 26, according to regulatory data ( managers’ net position has risen by almost 95 million barrels over the last 13 weeks, transforming a position that was net short by 32 million barrels as recently as June 27.Fund managers have also established a record net long position in European gasoil futures and options equivalent to almost 18 million tonnes, up from less than 1 million tonnes at the end of June.Stocks of mid-distillates have been dwindling since February as refinery problems and a strong synchronised upturn in industrial activity and freight demand around the world has caused consumption to exceed supply.After two exceptionally mild winters in North America in 2015/16 and 2016/17, the coming winter is likely to be colder, on the balance of probabilities, in which case heating oil stocks could prove tight.But hedge fund positions now appear stretched, with fund managers holding almost 5 long positions in heating oil and 19 long positions in gasoil for every short position.Big concentrations of positions often precede an abrupt price reversal when fund managers try to realise some profits by closing them out (“Predatory trading and crowded exits”, Clunie, 2010).Adding to the danger, refinery processing has picked up significantly over the last week as refineries along the U.S. Gulf Coast have returned to near-normal operations.Margins remain exceptionally high which provides a strong incentive to maximise crude throughput and the yield to distillates.Heavy run rates, if sustained, should reduce the prospect of distillate shortages this winter. The main unknown is the weather. In response to the same refining problems and strong demand, fund managers have also amassed a large net long position in U.S. gasoline futures and options.

Oil drillers, not forecasters, are responsible for WTI weakness: Kemp  (Reuters) - The U.S. Energy Information Administration (EIA) is distorting oil prices by being far too optimistic in its forecasts for U.S. production, according to Harold Hamm, the chief executive of Continental Resources. Hamm, who also chairs the Domestic Energy Producers Alliance (DEPA), a lobbying group, blames EIA for both the outright decline in U.S. oil prices and their underperformance compared with Brent since June. Hamm faults EIA for being too optimistic about U.S. production, creating an impression there will be surplus of crude and depressing futures prices for West Texas Intermediate (WTI). EIA currently forecasts U.S. crude production will climb to 9.69 million barrels per day (bpd) by December while DEPA predicts output will total no more than 9.35 million bpd ("They need to get it right. If they don't we see distortion happen. And we are seeing distortion happen right now," Hamm said in an interview with Argus ("Continental CEO says EIA forecast caps WTI", Sept. 27). Hamm reiterated his view that prices below $50 are not sustainable and producers would need prices closer to $60 to meet rapidly growing global demand. So is Hamm right to blame EIA for the decline in WTI prices and the big discount to Brent which emerged in the third quarter of 2017?The relationship between front-month WTI and Brent prices was fairly stable between January and June, with WTI trading at a discount of around $2. As recently as June 30, WTI was trading at a discount of just $1.88. Since then, however, the discount has widened consistently to reach $6.80. On Sept. 25, U.S. producers were receiving just $52.22 for benchmark crude while their counterparts in the North Sea were realising $59. But it is not obvious that the market has reacted to EIA forecasts or that the agency should be blamed for the weakness of WTI.There has been little change in EIA forecasts since June. In fact, EIA has recently trimmed its predictions for output in both 2017 and 2018.

Oil falls more than two percent on signs of higher output (Reuters) - Oil fell more than $1 a barrel on Monday as a rise in U.S. drilling and higher OPEC output put the brakes on a rally that helped prices notch their biggest third-quarter gain in 13 years. Iraq announced its exports rose slightly in September while a Reuters survey showed OPEC overall boosted output. [OPEC/M] U.S. drillers added six oil rigs in the week to Sept. 29, bringing the total count to 750, data from General Electric Co’s Baker Hughes energy services firm showed on Friday. “We’ve seen them add rigs for the first time in seven weeks, so that changes sentiment as well,” said John Tjornehoj, energy market analyst at CHS Hedging. Brent crude, the global benchmark, settled down 67 cents or 1.2 percent to $56.12 a barrel. It had notched a third-quarter gain of about 20 percent, the biggest increase for that quarter since 2004, and traded as high as $59.49 last week. U.S. crude closed down $1.09 or 2.1 percent to $50.58. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016. Oil prices climbed last week on tension in Iraqi Kurdistan after the region’s independence vote. “The big short-term risk is obviously the pipeline,” said James Williams, president of energy consultant WTRG Economics. “So far Turkey hasn’t closed the Kurdish pipeline.” The rally had also been driven by signs that a three-year crude glut is easing, helped by a production cut deal among global producers led by the Organization of the Petroleum Exporting Countries. But a Reuters survey on Friday found OPEC oil output rose last month, mostly because of higher production in Iraq and also Libya, an OPEC member exempt from cutting output.

Traders Are Betting On $100 Oil In 2018 - While oil industry executives are preparing to live and profit in the world of $50 oil over the next few years, some enthusiast investors have been betting on $100 oil for December 2018 options.Open interest in $100 call options for December 2018 has tripled in one week to exceed 30,000 lots, according to Reuters. Open interest in that contract is now equal to the most active contract of the December 2017 options—$60 call options. The $100 December 2018 options is the largest strike for all of 2018. Although bullish reports over the past few weeks point to stronger-than-expected oil demand growth, and although global oversupply has reduced over the summer, the bets for $100 oil at the end of next year are still way above estimates and forecasts. But that hasn’t stopped some traders from shooting the moon.After oil prices entered bull-market territory at the beginning of this week, analysts started weighing in again on the future price of oil: How much could it rise? Could the increase be sustained?Over the past week alone, we’ve seen one analyst predict prices of $80 per barrel. A panel of several other analysts forecast a price drop if OPEC were to end its production cut deal as planned in March 2018.Citi added its two cents: whatever OPEC does, supply will likely get tighter next year, suggesting that prices would head upward.  Three years of low oil prices have constrained investments in conventional projects, and the IEA has just recently reiterated its warning that an oil price spike is in the cards in 2020, citing growing demand for oil that could outstrip the pace of new conventional supply.

Oil Markets Fear An OPEC Compliance Collapse - Oil prices have retreated in recent days, with Brent pulling back after hitting $58 per barrel. By midday trading on Tuesday, Brent was hovering around $55 per barrel and WTI had fallen back to $50.  Last week Reuters reported that OPEC’s production likely ticked up in September above the group’s production target, rising to 32.86 million barrels per day. Oil prices likely suffered some downward pressure from the report. “One can only conclude that unless OPEC approaches the original production target of its 14 members of just below 32 million barrels per day, rebalancing will suffer a major and possibly prolonged setback,” Tamas Varga, analyst at brokerage PVM, told the WSJ.  A Wall Street Journal poll in September of 15 major investment banks found another dip in expectations for oil prices. The average price in the forecasts for Brent crude in 2018 fell to just $53 per barrel, down $1 from a month earlier. It was the fifth consecutive month that the banks lowered their forecasts. They expect WTI to average just $50 per barrel in 2018. “We think the demand forecasts are, perhaps, a little too optimistic and as a result we are left with all the bearish factors that come from the supply side,” Harry Tchilinguirian, head of commodity strategy at BNP Paribas, told the WSJ. Many of the banks see the recent run up in prices as potentially self-defeating if it brings more shale supply online.. Moody’s Investors Service says that even as the finances of much of the shale industry have improved over the past year, any further progress will likely only come from higher oil prices. In other words, the “efficiency gains” are bumping up against their limits, and for shale companies to post meaningful returns on capital invested, they will need oil prices to move higher than $50 per barrel. The report offers some warnings to investors expecting huge profits from shale. According to Reuters, a group of activists investors are trying to change the incentives for shale companies, separating out CEO compensation from aggressively drilling. As Reuters notes, U.S. oil production is surging, aided by a 50 percent increase in capital spending. While shale executives rake in hefty bonuses, shareholders are only earning a pittance on this model because it is not one that prioritizes profitability.

Oil Prices Under Pressure After API Reports Large Gasoline Build -- The American Petroleum Institute (API) reported a draw of 4.079 million barrels in United States crude oil inventories, compared to more modest analyst expectations that inventories would draw only 756,000 barrels for the week ending September 29. Gasoline inventories, on the other hand, delivered a blow with a larger than expected build of 4.19 million barrels for the week ending September 29, against an expected build of only 1.088 million barrels. Last week, too, saw a large gasoline build.Both WTI and Brent benchmarks fell again on Tuesday after a bad Monday, both down more than a dollar week on week as reports that OPEC raised production in September by as much as 120,000 barrels per day, according to a Bloomberg survey. WTI hitting a 7-month high last Monday at $52.22.At 2:56pm EST, WTI was trading down 0.04% (-$0.02) at $50.44, while Brent crude traded down 0.27% (-$0.15) at $55.97.Gasoline was trading up on Tuesday, at $1.56, down .44% on the day, but down almost 8 cents from last week. While the inventory draws keep piling on the United States, the global supply/demand situation for crude oil is still not balanced, and fears are that OPEC’s currently proposed end date of March 2018 for the cuts will prove to be too soon. For the US, the total draw for crude oil in 2017 now stands at just shy of 26.5 million barrels, according to API data. EIA data show a 15-million-barrel draw for year-to-date 2017, through last week’s report.

WTI/RBOB Extend Losses After Another Big Gasoline Inventory Build -- WTI and RBOB have trended lower since last week's inventory data hit and today's API inventory prints (showing a decent crude draw but a relatively large gasoline build -biggest since January compared to DOE data) sparked some more weakness in both oil and gasoline prices. API

  • Crude -4.079mm (-500k exp)
  • Cushing +2.048mm (+1.8mm exp) - biggest build since March
  • Gasoline +4.19mm (+1mm exp) - biggest build since Jan
  • Distillates -584k

After last week's surprise build in gasoline, things got a little worse this week with another major build, biggest since January (and restocking at Cushing, biggest since March).  WTI had drfted back from recent highs to hover around $50.50 which seems like a comfortable range for crude for now (even as RBOB has tumbled)... Both WTI and RBOB are extending losses after the API data but the move is small...

 OPEC/non-OPEC bloc recruiting up to 16 oil producers to join output cuts: Venezuela - The OPEC/non-OPEC coalition will try to recruit at least 10 and up to 16 more oil producing countries to join in output cuts to bolster market rebalancing efforts, Venezuelan oil minister Eulogio del Pino said Wednesday. If the coalition is able to get more participants, that could obviate the need to extend the production cut agreement or implement deeper cuts, as ministers are discussing, he said. "Maybe we don't need to expect another extension, we could have actions to accelerate that balancing," Del Pino told reporters on the sidelines of the Russian Energy Week conference. "But that's something we need consensus on among all the countries." The current deal, which runs through March, calls on OPEC and 10 non-OPEC countries led by Russia to cut a combined 1.8 million b/d. Del Pino said that he had talked with Egypt on Tuesday, and fellow OPEC member Equatorial Guinea was recruiting seven African countries, including Uganda, Chad and Congo. Russian energy minister Alexander Novak on Tuesday said Turkmenistan could join. Russian President Vladimir Putin on Monday led a delegation to Turkmenistan, where officials discussed cooperation on gas production and marketing. The countries that the coalition is targeting have a combined production of some 24 million to 25 million b/d, Del Pino said. That would be on top of the approximately 50 million b/d that the 24 current members of the OPEC/non-OPEC coalition currently produce, more than half of global supply.

Huge Decline In US Crude Oil Inventories; Re-Balancing Drops To 41 Weeks -- October 4, 2017 –- US crude oil inventories: the original estimates were way off (posted last night). The EIA weekly petroleum report (a dynamic link) shows that there was a significant decline in US crude oil inventories: declining by 6.0 million bbls. The number of weeks to "re-balance" decreased from 46 weeks to 41 weeks with that data:   Other data from the weekly report:

  • refineries are still operating well below maximum capacity; currently at 88.1%
  • gasoline production virtually unchanged at almost 10 million bbls/day
  • again, distillate fuel production increased, average almost 5 million bbls/day
  • US crude oil imports were down a bit but more than 10% below last year
  • at 465.0 million bbls of crude oil in US inventories, this is in the upper half of the average range
  • distillate fuel inventories are in the lower half of the average range despite increased production

 WTI/RBOB Jump After Big Crude Inventory Draw, Exports Hit Record High --WTI/RBOB prices recovered from their drop after API reported a big surprise gasoline build overnight ahead of the DOE data which showed a major crude draw (and smaller than API-reported build in gasoline). Along with no change in production, this sparked buying in both WTI/RBOB as the kneejerk reaction. DOE:

  • Crude -6.023mm (-500k exp) - biggest draw since August
  • Cushing +1.525mm (+1.8mm exp) - biggest build since March
  • Gasoline +1.644mm (+1mm exp) - biggest build since August
  • Distillates -2.606mm

Major draw in crude (considerably larger than API and expectations) is dominating the headlines but the continued restocking in Cushing and another big build in gasoline is likely weighing on prices.

US ULSD monthly exports hit highest point recorded by EIA – US ultra low sulfur diesel exports surged 5.075 million barrels in July, driven mainly by demand in Europe and Latin America, according to the most recent Energy Information Administration data. The July export total of 45.882 million barrels, released by the EIA on Monday, represents the highest mark reported by the agency, which tracks the data back to January 2009. It bested a previous monthly high of 40.807 barrels in June. From June to July, exports to Finland rose 300,000 barrels, France rose 1.556 million barrels, Germany rose 302,000 barrels and the Netherlands rose 3.239 million barrels. Exports to Italy and the UK, however, fell by 407,000 barrels and 435,000 barrels respectively. The 7.144 million barrels exported to the Netherlands is the most the country has taken from the US since 8.744 million barrels in October 2013. Comparatively, the July Netherlands exports are nearly as much as April, May and June exports to the country combined, 7.282 million barrels. The surge to Europe slightly predated an upset at Shell's 404,000 barrels refinery in Pernis, the Netherlands, the largest refinery on the continent. A fire shut the refinery on July 29. It began the restart process on August 24. US volumes rarely make it past the Adriatic, tending to discharge into the West Mediterranean. July exports to Peru rose 698,000 barrels, Panama rose 316,000 barrels, Mexico rose 415,000 barrels, Honduras rose 359,000 barrels, Guatemala rose 1.101 million barrels, Brazil rose 629,000 barrels and Chile rose 1.645 million barrels.

NYMEX Nov gas slides 1.7 cents despite storage falling below 5-year average - Chevron and BHP said late Thursday they have shut several deepwater US Central Gulf of Mexico oil production platforms in advance of Tropical Storm Nate, including the former's Jack/St Malo and Tahiti facilities and BHP's Shenzi and Neptune. Earlier Thursday, Chevron said it was preparing to shut its Blind Faith and Petronius platforms as Nate moved along a track that would place it ashore in eastern Louisiana, along the central US Gulf Coast, this weekend, according to the National Hurricane Center. Later Thursday, the company began to shut the Genesis, Tahiti and Jack/St Malo platforms, and evacuate all associated personnel, Chevron spokeswoman Veronica Flores-Paniagua said in a statement. Total daily production from the Jack and St. Malo fields in 2016 averaged 94,000 barrels of liquids and 14 million cubic feet of natural gas, Chevron has said. Tahiti in 2016 averaged a total of about 56,000 b/d of liquids and 22,000 Mcf/d of natural gas. In addition, BHP is "in the process of shutting in and securing our Green Canyon production platforms, Shenzi and Neptune," BHP spokesman Jimmy Baker said late Thursday. "We intend to fully evacuate tomorrow morning and our crews will remain onshore until the storm has passed." At 5 pm EDT Thursday, Nate's center was over eastern Honduras and was expected to move near or over the northeast Yucatan Peninsula in Mexico, still as a tropical storm, late Friday or Friday night, and move into the US Gulf on Saturday, the NHC said. It is forecast to reach the northern Gulf Coast this weekend as a hurricane.

Platts JKM Weekly: Nov LNG at $8.60/MMBtu extends weekly gains on firm demand -- The Platts JKM for LNG cargo deliveries in November ended the week at $8.60/MMBtu, up 20 cents/MMBtu on the week and its highest level since January, as steady demand from end-users and traders helped support prices. Portfolio players were reported to be scouring the market to fill short positions in North Asia while demand from India bolstered the market's bullish sentiment. Offers remained around $8.70/MMBu for H2 November throughout the week while bids were seen at around $8.50/MMBtu for H2 November. The results of a few buy tenders underlined the bullishness of the market. China's CNOOC was heard later in the week to have more than four cargoes initially reported, draining the Q4 spot supply pool. The Association of Southeast Asian Nations is set to have a significant impact on energy and commodities in the coming decades, as the region’s demand climbs due to favorable geography and demographics. Download our latest special report to read about the challenges and opportunities in ASEAN's commodity landscape The top Chinese importer had purchased up to seven cargoes from mostly trading houses and portfolio players, multiple sources said. Expectations that Chinese buyers would continue to show strong appetite after their long holiday also offered support. LNG importers from India moved back into the spot market after the end of the country's monsoon season. Reliance was seeking October and November cargoes while Gail was looking for November and H1 December cargoes. Both were heard this week awarded their tenders, although details remained unknown. Market sources said Indian buyers were tapping the spot market, driven by power demand growth post-monsoon as well as replacements for coal power generation as domestic coal mining production had been hampered by the monsoon rains.

Oil supply, demand divergence 'now broken': Saudi minister Falih - The divergence between oil supply and demand had been "markedly broken," and the market had moved into backwardation less than a year into OPEC's agreement with major non-OPEC producers to curtail oil output, Saudi oil minister Khalid al-Falih said Thursday. Related article -- No pressure on Iran to join OPEC output cuts: Zanganeh Inventories were steadily being reduced, and it was now clear supply is less than demand, Falih told delegates at the Russian Energy Week conference in Moscow. "Floating inventories have almost vanished. The structure of the forward curve has flipped into backwardation," Falih said. After saying he was no more optimistic on oil market fundamentals than he had been for the last two or three years, Falih added that OPEC would continue to look at supply, demand and inventories as the three "key controllables." Demand had increased by 1.5 million b/d in 2017, and this would be sustained into 2018, Falih said, adding that this was a "good planning basis." He also welcomed the contribution of US shale oil to global output, but warned that it was unreasonable to expect shale oil production to "somehow spring up at certain places and grow exponentially." This had been proven to be unrealistic, he said, and "we are well over the hump." As the world's two largest oil producers, Saudi Arabia and Russia have led the 24-country OPEC/non-OPEC coalition in its 1.8 million b/d supply cut, which is scheduled to end in March. Falih paid tribute to his Russian counterpart, Alexander Novak, for his role in "bringing the industry towards understanding that this is not a zero- sum game." The agreement had breathed life back into OPEC, Falih said, with the group previously finding itself unable to cope with surging supplies and rising global inventories.

  WTI Tumbles Below $50 To 3-Week Lows --On the heels of continued dollar strength, output increases by OPEC (and US production at 2 year highs), and Libya restarting its biggest oilfield, WTI prices are tumbling for the 3rd time this week, back below $50 to their lowest in 3 weeks... As Bloomberg notes, while oil rallied into a bull market last month on the prospect of stronger demand, prices struggled to hold above $52 a barrel as supply grew from the U.S. and two members of the Organization of Petroleum Exporting Countries that are exempt from making cuts. Saudi Arabia and Russia reaffirmed their cooperation during a visit from King Salman bin Abdulaziz this week, with President Vladimir Putin saying he is open to extending the agreement with OPEC until the end of 2018 if required. “Higher OPEC production in September as well as the prompt return of supplies from Libya after the brief closure of their biggest field weighed on oil futures this week,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. The result is clear - 3 legs lower and back to 3-week lows... Companies from BP Plc to Chevron Corp. are shutting platforms in the Gulf of Mexico to prepare for Tropical Storm Nate, which is forecast to become a hurricane south of Louisiana on Saturday.

WTI discount to Brent reflects logistics constraints: Kemp (Reuters) - Even as crude stocks decline elsewhere in the United States, stocks are rising in the Midwest, especially around the delivery point for the New York Mercantile Exchange’s light sweet crude contract at Cushing in Oklahoma. Crude stocks at Cushing hit a low of 56 million barrels on July 28 but have since risen by almost 7 million barrels, according to the U.S. Energy Information Administration (EIA). In the rest of country, commercial crude stocks stood at 426 million barrels on July 28 but have since fallen by almost 24 million (“Weekly Petroleum Status Report”, EIA, Oct. 4).Stocks on the U.S. Gulf Coast, which includes the major refining centres, have declined by 13 million barrels over the same period. Stocks on the East and West Coasts have each fallen by 4 million barrels. Crude stocks on the East, West and Gulf Coasts, where refineries are mostly supplied by sea, have all fallen in line with the tightening of the global oil market. But the landlocked Midwest, which is mostly supplied by domestic shale producers as well as pipelines from Canada, has behaved differently ( The diverging regional trend in crude stocks since late July has coincided with the emergence of a big discount in WTI futures prices compared with Brent.The discount for front-month WTI futures compared with Brent, which had been stable at about $2-$3 a barrel between April and July, began to increase sharply from the end of July and is now almost $6. While Brent futures have moved into backwardation, indicating a tightening market, WTI prices began to diverge from late July and have remained in contango. But the stocks build-up at Cushing, and to a lesser extent in the rest of the Midwest, is real and a more likely explanation for the disconnect between WTI and Brent.  Spot prices and calendar spreads point to local oversupply in the Midwest and specifically around Cushing while the rest of the global market is tightening. The price disconnect has proved surprisingly long-lived, despite a surge in crude exports from the U.S. Gulf Coast in recent weeks, which suggests logistical constraints are preventing the Midwest glut from clearing quickly. The Brent-WTI gap is another example of the periodic disconnect between landlocked WTI and seaborne Brent, rather than the result of flawed forecasts.

U.S. Oil Rig Count Falls As Prices Falter - The number of active oil and gas rigs in the United States fell this week by 4 rigs.The total oil and gas rig count in the United States now stands at 936 rigs, up 412 rigs from the year prior, with the number of oil rigs in the United States decreasing by 2 this week and the number of natural gas rigs decreasing by 2. The oil rig count now stands 320 above the count one year ago.The spot price for WTI fell earlier on Friday as traders feared further rises in U.S. crude oil inventories as refineries in the US once again brace for stormy weather, preparing evacuations and shuttering in anticipation—this time—of Tropical Storm Nate. Prices were weighed down a day earlier as well, after the EIA reported that US oil exports had reached an all-time high of 1.98 million bpd for week ending September 29.WTI is down 2.91% to the ever-important $50 mark, at $49.31 at 12:18pm EST on Friday—still more than $2 under over last week’s price of $51.67. Brent crude was trading down today at 2.79% on the day at $55.41— more than $1 under last week.Oil rigs in the United States now number 748—320 rigs above this time last year. Although the number of oil rigs are still up significantly year on year, the increases slowed in the Q2 2017, and have reversed in Q3. The first quarter 2017 saw 137 oil rigs added in the United States, while the second quarter 2017 saw 97 rigs added. Q3, on the other hand, saw a net decrease in the active number of rigs, ending the quarter down by 6. Q4 is now starting off in the red as well.Related: Oil Prices May Hit $60 By End Of 2017Still, US crude oil production is continuing its ascent, now at 9.561 million barrels per day for the week ending September 29, 2017—with almost new 2017 highs with each week except for a couple of weeks that had stumbled due to Hurricane Harvey. At 10 minutes after the hour, WTI had fallen further and was trading at $49.24. Brent crude had rallied somewhat, trading at $55.53 but still down 2.58% on the day.

WTI /RBOB Plunge On Saudi, Russia Comments; Rig Count Resumes Decline -- WTI and RBOB are plunging following comments from the Saudi minister that "he doesn't know" if November meeting will agree on a production cut deal extension, and Russia's Novak confirmed that there is "no clarity" on a deal extension.Saudi Arabia will work with Russia to reach a consensus in the next few weeks before the Nov. 30 OPEC/non-OPEC meeting in Vienna, Saudi Energy Minister Khalid Al-Falih says at a meeting with Russian counterpart Alexander Novak in Moscow.OPEC and non-OPEC producers will discuss “what to do beyond March” at that meeting: Al-FalihBoth ministers say it’s too early to say whether or not the November meeting will yield an agreement to extend the production cutsAmid higher OPEC production and the prompt return of supplies from Libya, futures prices are under pressure.After last week's surprise rise (+6) in the rig count, the US Oil rig count declined by 2 this week to 748...   Technically, WTI just plunged below its 200DMA ($49.53) for the first time since September... There was a feeling that some refiners could be shut but as the forecast for Nate shifts to the East, it doesn’t seem as though many refineries will be affected as it shifts “away from generally the bulk of production, so you have the corresponding pull-back here,”according to Bob Yawger, director of the futures division at Mizuho Securities USA.  Saudi Energy Minister Khalid Al-Falih concluded: “Our job is not done and there are still uncertainties and headwinds in global oil markets. We have to keep our eyes clearly on the road” to proceed with rebalancing the market.

 Oil Markets Brace For Another Hurricane - Tropical storm Nate is making its way through the Gulf of Mexico, forcing a range of oil producers to shut in production and evacuate staff. Nate is expected to strengthen into a hurricane before it makes landfall in Louisiana this weekend. About 15 percent of U.S. Gulf of Mexico production was forced offline, or a little more than 250,000 bpd. An estimated 6.4 percent of the Gulf’s natural gas was also idled. Disruptions and/or evacuations were reported by Royal Dutch Shell, BP, Chevron. Anadarko. ExxonMobil, and Statoil.  The Washington Post reports that President Trump could announce his plans to decertify the Iran nuclear deal next week. That move will kick the issue to the U.S. Congress, which would have 60 days to decide to reimpose sanctions on Iran, ultimately leading to the unraveling of the deal. But Trump is reportedly also supposed to announce a new strategy intended to confront Iran next week. The move will likely leave the U.S. isolated even from its key allies on the deal because there is not a lot of evidence to suggest Iran is violating the terms of the accord.. The U.S. Department of Interior tried to delay enacting Obama-era regulations on methane emissions from public lands, but a U.S. District Court said the agency violated federal law by doing so. As a result, the regulations will go into effect immediately, forcing oil and gas companies operating on federal land to capture their methane emissions. Interior had tried to delay the rules until 2019. LNG prices typically rise ahead of winter months, but demand is much stronger than expected due to fuel switching underway in China. Spot LNG prices were up 39 percent to $8.40 per MMBtu at the end of September, compared to just $6.05/MMBtu in August.  OPEC cohesion has been bolstered by the inclusion of Russia in the production cuts, and the growing relationship between two of the world’s largest oil producers suggests coordination will continue through next year. OPEC and Russia have refrained from endorsing a course of action, but the first state visit by a Saudi monarch to Russia highlights the degree to which they are working together. Russian President Vladimir Putin said this week that if the group decides to extend the cuts, it should extend through the end of 2018. The two countries also signed a range of deals that will deepen their energy relationship, including cooperation on drilling technology between Saudi Aramco and Gazprom Neft, as well as preliminary agreements on sizable investments in petrochemical projects.

Oil Cuts Add to Saudi Pain as GDP Contracts for Second Quarter - Saudi Arabia’s economy contracted for two quarters in a row for the first time since the global financial crisis, as the kingdom grapples with low oil prices and its businesses struggle to cope with economic reforms. The kingdom’s gross domestic product shrank 1 percent in the second quarter from the same period a year earlier, when it expanded 0.9 percent, according to official data released on Saturday. The economy had contracted 0.5 percent in the first three months of 2017. Crown Prince Mohammed Bin Salman is leading the push to transform the biggest Arab economy at a time when crude prices are at about half their 2014 peak. But as authorities seek to reduce the kingdom’s reliance on oil, they’re also leading efforts among OPEC members and some other major producers to bolster prices by cutting output. The kingdom’s oil GDP shrank 1.8 percent in the second quarter, weighing on overall activity. The data also showed how non-oil industries are still struggling with efforts to overhaul the economy and shore up public finances. The non-oil GDP, the main engine of job creation, expanded below 1 percent, driven mainly by the government sector, the data show.   The Saudi economy hasn’t contracted for two quarters in a row since at least 2010, official data show. The kingdom doesn’t publish quarterly seasonally-adjusted data, which is used by some economists to define a recession. 

Wheels And Deals: Trouble Is Brewing In The House Of Saud - Suddenly, the ideological matrix of all strands of Salafi-jihadism is being hailed by the West as a model of progress – because Saudi women will finally be allowed to drive. Only next year. Only some women. And still subject to many restrictions. The diversionary tactic masks serious trouble in the court. A Gulf business source with intimate knowledge of the House of Saud, having held a number of personal meetings with members, told Asia Times that “the Fahd, Nayef, and Abdullah families, the descendants of King Abdulaziz al Saud and his wife Hassa bin Ahmed al-Sudairi, are forming an alliance against the ascendancy to the Kingship of the Crown Prince.”No wonder, considering that the ousted Crown Prince Mohammed bin Nayef – highly regarded in the Beltway, especially Langley – is under house arrest. His massive web of agents at the Interior Ministry has largely been “relieved of their authority”. The new Interior Minister is Abdulaziz bin Saud bin Nayef, 34, the eldest son of the governor of the country’s largely Shi’ite Eastern Province, where all the oil is. Curiously, the father is now reporting to his son. MBS is surrounded by inexperienced thirty-something princes, and alienating just about everyone else.Former King Abdulaziz set up his Saudi succession based on the seniority of his sons; in theory, if each one lived to the same age all would have a shot at the throne, thus avoiding the bloodletting historically common in Arabian clans over lines of succession. Now, says the source, “a bloodbath is predicted to be imminent.” Especially because “the CIA is outraged that the compromise worked out in April, 2014 has been abrogated wherein the greatest anti-terrorist factor in the Middle East, Mohammed bin Nayef, was arrested.” That may prompt “vigorous action taken against MBS possibly in early October.” And it might even coincide with the Salman-Trump get together.

U.N. blacklists Saudi-led coalition for killing children in Yemen : (Reuters) - The United Nations blacklisted a Saudi Arabia-led military coalition on Thursday for killing and injuring 683 children in Yemen and attacking dozens of schools and hospitals in 2016, even as it said the coalition had taken action to improve child protection. The blacklist attached to the U.N. annual report on children in armed conflict also named the Iran-allied Houthi rebel group, Yemen government forces, pro-government militia and Al Qaeda in the Arabian Peninsula for violations against children in 2016. The U.N. report said the Houthis and affiliated forces killed and injured 414 children in 2016. The report from U.N. Secretary-General Antonio Guterres was submitted to the Security Council on Thursday and seen by Reuters. A draft of the blacklist was reported by Reuters on Tuesday. The actions of the Saudi-led coalition “objectively led” to it being blacklisted for killing and injuring 683 children and for 38 attacks on schools and hospitals last year, the report said, adding that all incidents were verified by the U.N. The coalition had been briefly added to the blacklist in 2016 and then removed by then-U.N. chief Ban Ki-moon pending review. At the time, Ban accused Saudi Arabia of exerting “unacceptable” undue pressure after sources told Reuters that Riyadh threatened to cut some U.N. funding. Saudi Arabia denied threatening Ban. 

Saudi king heads to Russia, with oil, investment and Syria on agenda (Reuters) - The leaders of Saudi Arabia and Russia, the world’s biggest oil exporters, are expected to discuss cooperation on oil production and differences over Syria and Iran on Thursday during the first visit to Moscow by a reigning Saudi Monarch. A slew of investment deals, including on a liquefied natural gas project and petrochemical plants, could also be signed during King Salman’s trip and plans for a $1-billion fund to invest in energy projects are likely to be finalised. The visit, including talks in the Kremlin with President Vladimir Putin, reflects a rapid deepening of ties between Russia and Saudi Arabia, driven by a mutual need to stem a drop in global oil prices. The two countries helped secure a deal between OPEC and other producers to cut output until the end of March 2018, but back competing sides in Syria’s civil war. Riyadh supports rebels fighting President Bashar al-Assad’s forces while Russian troops and Iranian militias have sided with Assad. This leaves Moscow aligned with Saudi Arabia’s arch-rival Iran, whose influence Riyadh fears is growing in the region. “The Saudis want help on Iran, and Russia wants trade and investment,” said Mark N. Katz, an expert on Russia-Middle East relations at George Mason University. “In the Saudi mind, they’re definitely linked and the Russians are going to try to separate these.” Billboards have been erected on the road from the airport to central Moscow welcoming King Salman in Arabic and Russian. His son, Prince Mohammed bin Salman, visited in May just before his elevation to crown prince, and in 2015 the countries’ sovereign wealth funds agreed to $10 billion in investments.

Putin Hosts Saudi King on ‘Landmark’ Russia Visit - Russia and Saudi Arabia struck a deal on weapons sales during an historic visit to Moscow by King Salman bin Abdulaziz as the two energy superpowers also consider extending a pact to curb oil supplies. President Vladimir Putin said the Kremlin talks on Thursday with King Salman, the first monarch of the Gulf kingdom to come to Russia, were a “landmark event.” The king told him that Saudi Arabia wants to continue cooperation with Russia in order to maintain stability on the oil market. Russia signed contracts to provide advanced S-400 air-defense systems as well as anti-tank weapons and multiple-rocket launchers, Saudi Arabian Military Industries said in an emailed statement Thursday. The two countries will also set up a joint military-technical cooperation commission, Russian Foreign Minister Sergei Lavrov said. King Salman’s journey to Moscow, ahead of planned talks with President Donald Trump in Washington early next year, is a recognition by Riyadh of the changing political balance in the Middle East after Putin successfully countered indecisive U.S. efforts to topple Syrian leader Bashar al-Assad. The Saudi courtship of Russia also reflects a convergence of interests between the world’s two largest oil exporters as output cuts negotiated by the Organization of Petroleum Exporting Countries and non-OPEC producers has spurred a recovery in crude prices. “Is there really anything in the world that’s absolutely permanent?” Putin told an energy forum in Moscow on Wednesday, in response to a question about whether Saudi Arabia will always align with the U.S. on geopolitical issues. “It seems to me, on the contrary, that everything’s changing.” King Salman, who arrived for the four-day state visit late Wednesday, called Russia a “friendly” country. He told Putin, who accepted the king’s invitation to visit Saudi Arabia, that their talks will boost the global economy as well as aid international stability and security. Putin said Wednesday that Russia may agree to extend the oil-supply agreement with OPEC to the end of 2018, though he’ll wait to make a decision until nearer the expiry of the existing pact in March. 

One Day After Historic Saudi-Russian Summit, US Suspends Military Exercises With "Arab Allies" -- Russia no longer even has to lift a finger (or buy a few thousands dollars worth of Facebook ads) to steal influence from the US in key geopolitical hotspots: the US can do so on its own. According to the WSJ, the Pentagon halted military exercises with Gulf allies in a symbolic rebuke to countries caught in the ongoing diplomatic spat with Qatar that has eroded counterterrorism cooperation in the region, soured relations between historical allies, and allowed outside powers to establish substantial footholds in the region Having failed at direct diplomacy, the US has decided to take a "passive aggressive" approach, and U.S. Central Command said that some exercises would be suspended in an effort to send a signal that the U.S. military seeks to work together with other nations in the region and encourage them to do so as well.“We are opting out of some military exercises out of respect for the concept of inclusiveness and shared regional interests,” said Col. John Thomas, a Centcom spokesman.What is even more ironic, is that having initially sent a signal of support for the Gulf nations, and isolated Qatar as an "evil sponsor of terrorism", the Pentagon has now flipflopped, and its latest move to curb military drills in the region represents a shift for the U.S., which initially threw its qualified support behind the Gulf nations in an attempt to put pressure on Qatar. As reported here previously, that attempt failed.Top U.S. officials have tried to coax Arab allies to end a blockade of Qatar, which began in June and has been led by Saudi Arabia, the United Arab Emirates and Bahrain. The blockade has closed off the energy-rich country’s land borders and its air and sea routes, squeezing its economy.Yet the four countries at the heart of the dispute each host some of the Pentagon’s largest military bases outside the U.S. The Pentagon relies on cooperation between its Gulf allies for its global counterterrorism efforts and to check Iran’s influence in the region.

Putin Is Filling the Middle East Power Vacuum - The Israelis and Turks, the Egyptians and Jordanians -- they’re all beating a path to the Kremlin in the hope that Vladimir Putin, the new master of the Middle East, can secure their interests and fix their problems. The latest in line is Saudi King Salman, who on Wednesday is due to become the first monarch of the oil-rich kingdom to visit Moscow. At the top of his agenda will be reining in Iran, a close Russian ally seen as a deadly foe by most Gulf Arab states. Until very recently, Washington stood alone as the go-to destination for such leaders. Right now, American power in the region is perceptibly in retreat -- testimony to the success of Russia’s military intervention in Syria, which shored up President Bashar al-Assad after years of U.S. insistence that he must go. “It changed the reality, the balance of power on the ground,” said Dennis Ross, who was America’s chief Mideast peace negotiator and advised several presidents from George H. W. Bush to Barack Obama. “Putin has succeeded in making Russia a factor in the Middle East. That’s why you see a constant stream of Middle Eastern visitors going to Moscow.” Success brings its own problems. As conflicting demands pile up, it’s not easy to send all those visitors home satisfied. “The more you try to adopt a position of dealing with all sides, the more you find that it’s hard to play that game,’’ Ross said. 

Why Despite Threats, Turkey Won't Impose Sanctions On Kurdistan After The Referendum - High-ranking sources in Kurdistan (Erbil) said that the Kurdish leader Masoud Barzani “expected the sanctions already announced by Baghdad and expects many more sanctions to come in the future”. Nevertheless, “the referendum was an essential step to undertake,” otherwise Barzani would no longer be considered the Kurdish leader. “We are not afraid of Turkish sanctions because Ankara would lose more than it will gain if the common borders are closed. The Turkish representative promised us (months before the referendum) that harsh political measures will be adopted against Kurdistan but that no economic sanctions would be seriously considered. After all it is up to Turkey to stop sending its oil tankers to recover our oil production at a cheap price if Erdogan considers it a practical move within his own economy,” said the source.  The Erbil leadership knows that the Kurds lived through hunger and genocide throughout the years, sometimes living in the mountains for decades. Therefore, although any threat to their existence won’t be taken lightly, it cannot affect the process of independence that has been put on their desired track. The Kurdish leaders will agree to allow Baghdad to control airports (Erbil and Suleymaniyeh) as requested by Prime Minister Haidar Abadi, and would like to reestablish good neighbor relationships with all surrounding countries, particularly since the declaration of independence may require two or three years to put into concrete effect.

Iran Deploys Tanks To Border With Iraqi Kurdistan  ---Days before last week's Kurdistan referendum, Iran took steps to isolate and punish the Iraqi Kurdistan region and the government in Erbil (KRG). This included closing Iranian airspace to northern Iraq's two international airports and sending Iran's elite Revolutionary Guard forces to conduct drills along the northwest border with Kurdistan, but in the early hours of Monday Iran dramatically escalated its military build-up along the border by deploying dozens of tanks supported by artillery - this according to a Kurdish government official and Iranian state television.The Kurdish official confirmed the tank build-up, saying "The tanks can be seen from the Kurdish side.” And Iranian state TV on Saturday indicated that Iran and Iraq would cooperate in joint drills and the establishment of heightened border security, to the point that Iran would "receive Iraqi forces that are to be stationed at border posts”.#Iran|ian military drill on Kurdistan Region border (Haji Omaran Crossing Border) despite business being conducted as usual.— Kurdistan 24 English (@K24English) October 2, 2017  Iranian government officials had warned just prior to last week's referendum that, “The republic of Iran has opened its legitimate border gates on the premise of the consent of the federal government of the Iraqi state. If such an event [referendum] happens, these border gates from the perspective of the Islamic Republic of Iran would lose its legitimacy." It appears Iran is now making good on its threats as it worries that an independent Kurdistan at its border would be a destabilizing force concerning Iran's own sizable Kurdish minority.

Iran, Iraq, And Turkey Unite To Block Kurdish Oil Exports - Iraq, Iran, and Turkey are taking a unified stance against Kurdistan’s oil sector after the region elected to seek independence from Baghdad in a referendum in September, according to a new report by Rudaw.“In the case of northern Iraq; Iran, Iraq and Turkey will form a tripartite mechanism and will decide on shutting down the oil,” Turkish President Recep Tayyip Erdogan said after a meeting with leaders from the other two nations on Thursday.A day before the vote, the Iraqi central government issued a statement calling on “neighboring countries and countries of the world” to stop buying crude oil directly from Kurdistan and only deal with Baghdad.Turkey’s Ceyhan port provides an outlet for the Kurdish Kirkuk oil to meet international markets without interference from Baghdad. Erdogan, Tehran and other members of the international community had censured Erbil for proceeding with the independence referendum as Iraq recovers from a three-year war against the Islamic State (ISIS). The Turkish leader had previously threatened to cut Kirkuk off from Ceyhan, but did not provide details on how such a measure would be carried out.Russia’s oil majors side with Kurdistan in its quest for an independent fossil fuel establishment. Rosneft signed off on a $1 billion gas pipeline deal with the Kurdistan Regional Government (KRG) a week prior to the historic vote, signaling Moscow’s approval of a hypothetically separate Kurdistan.Both Iran and Turkey house sizeable Kurdish populations, so the referendum raises fears that Kurds from other nations may seek similar political solutions. Kurdistan produces around 600,000 bpd of crude oil, or about 15 percent of Iraq’s total output. After the votes were counted, the KRG said that the ‘Yes’ to independence option won at the polls, with 92.73 percent of voters opting to grant Erbil its own regime.

Kurdish Referendum Roils the Mideast – One week after Kurdish leader Masud Barzani held his referendum on Kurdish independence from Iraq (with both the referendum and independence being contrary to the Iraqi constitution), the blowback has been fierce, angry and almost universal. What may have been conceived as a clever ploy by Masud’s eldest son, Masrour, to bolster the Barzani family’s flagging popularity by posing as a nationalist leader looks increasingly like a misstep. (Michel Rubin of AEI, has noted that “some [U.S.] Congressional staff and leaders with whom [Masrour] has met, came away from their meeting convinced that Masrour sought independence more to be heir apparent, in what will become hereditary [Kurdish] leadership, than out of sincere nationalistic concerns.”)And now, presidential and parliamentary elections — hastily called in the wake of the Oct. 3 death of former Iraqi President and Kurdish political leader Jalal Talibani — have descended into a mess. Rather than settle “the succession” upon his eldest son, Masud Barzani may instead have opened a wider struggle over leadership of the Kurdish people. Yes, the KRG is reported as being a democracy, but in practice it is run, explains, Michael Rubin, as a (corrupt) family enterprise in which “both the Barzanis (and Talabanis) confuse personal, party, and public funds.” Rubin explains: “Masud Barzani is president and lives in a palace complex in a resort inherited from Saddam Hussein. His nephew, Nechirvan Barzani, is prime minister. His uncle, Hoshyar Zebari, was Iraq’s foreign minister and is now finance minister. Masud’s eldest son, Masrour Barzani, leads the intelligence service; and his second son, Mansour is a general, as is Masud’s brother Wajy. Barzani’s nephew Sirwan owns the regional cell phone company which, while purchased with public money, remains a private holding. Barzani’s sons are frequently in Washington D.C … [where] Masrour Barzani has acquired an $11 million mansion in McLean, Virginia”.

If US reimposes sanctions, Iran's major oil consumers could sway success - What happens if the US reimposes sanctions on Iran's oil sector without the support of Europe, China and Russia — all big players in the international energy landscape? Elizabeth Rosenberg, director of the energy economics and security program at the Center for New American Security, talks with Capitol Crude about the possible implications. Rosenberg, a former Treasury Department adviser on sanctions, tells senior oil editors Meghan Gordon and Brian Scheid that it would be difficult to enforce reimposed sanctions. Further, it could damage the US' economic leverage on a global stage, especially in light of other sanction situations, such as with North Korea, Russia and Venezuela.

The UAE Secretly Picked Up the Tab for the Egyptian Dictatorship’s D.C. Lobbying -- The emails obtained by The Intercept also show Otaiba lecturing journalists and think tank staffers on the benefits of repressive leader Abdel Fattah el-Sisi’s rule, acting as a sort of de facto second ambassador for the country.   Sisi, as chief general of the Egyptian army, led a 2013 coup against then-President Mohamed Morsi. The military man was elected president with 97 percent of the vote in a 2014 election that was largely decried as undemocratic. The UAE and Saudi Arabia were chief backers of the military takeover, providing billions of dollars in support to Egypt.When Politico’s Michael Crowley penned a piece titled “Trump to welcome Egypt’s dictator” in April 2017 with quotes from human rights experts about Sisi’s brutal crackdown, Otaiba wrote him an email accusing him of having “something against Sisi,” despite being “one of the smartest and most thoughtful journalists in the business.”He specifically objected to Crowley’s citation of Tom Malinowski, a former Obama administration diplomat who also served as Human Rights Watch’s Washington director from 2001 to 2013. (Human Rights Watch has issued several damning reports about Egypt in recent years, including one that called for an investigation into Sisi’s role in the 2013 mass killings of more than 1,000 protesters in what “probably amounts to crimes against humanity.” Sisi was Egypt’s minister of defense at the time of the killings.) Crowley pushed back, warning that Sisi’s crackdowns against Egyptian civil society could produce more radicalization. The two went back and forth, and when they concluded, Otaiba forwarded the email chain to U.S. Deputy National Security Adviser Dina Powell. “FYI. This is generally what we’re up against,” he wrote. Crowley declined to comment on his exchanges with Otaiba.

Russia Military Accuses U.S. Of Supporting ISIS - Two week after Russia released a set of satellite photos from Syria, which allegedly showed US special ops located in immediate proximity to ISIS positions, the Russian defence ministry doubled down on Wednesday and again accused the United States of supporting Islamic State jihadists, enabling them to mount counter-offensive attacks in eastern Syria. "The main thing preventing the final defeat of ISIS in Syria is not the terrorists' military capability but support and pandering to them by American colleagues," Russian military spokesman Igor Konashenkov said in a statement.Quoted by AFP, he said recent attacks on Syrian regime forces were all made "from a 50-kilometre zone around At-Tanf on the Syrian-Jordan border" where the US-led coalition is operating a garrison.As we first noted at the end of September, in recent weeks Moscow has repeatedly accused the US of hindering the offensive in the east of the country against IS jihadists mounted by Syrian regime forces with the support of Russian airstrikes and special forces on the ground.The Russian military also said the regime forces "neutralised mobile IS groups on the road from Palmyra to Deir-Ezzor" and freed the captured villages. "If the US side views such operations as unforeseen 'accidents', Russian aviation in Syria is ready to begin complete eradication of all such 'accidents' in the zone they control," Konashenkov said.Russia has been flying a bombing campaign in Syria since 2015, when it stepped in to support the regime of President Bashar al-Assad and tipped the conflict in his favour.  Two weeks ago, the Russian Defense Minister released a trove of photos which were meant to demonstrate the cooperation between the US and the Islamic State in Syria.

North Korean Ship Carrying 30,000 Rocket Launchers Seized By Egypt -- In a fascinating report that provides a glimpse into the shadowy North Korean black-market economy, the Washington Post has published a story about a 2016 incident in which Egyptian authorities intercepted a North Korean ship bearing a Cambodian flag after being alerted by US authorities. After searching the ship, Egyptian law enforcement discovered something unexpected: a trove of nearly 24,000 rocket launchers, and components for 6,000 more weapons, hidden below a large pile of loose iron ore.But perhaps the biggest surprise for the Egyptian authorities emerged when they tried to determine for whom the weapons were intended, and discovered that they had been secretly purchased by the Egyptian military in violation of international sanctions against NK arms sales. Further compounding the irony, Egypt had recently joined the UN Security Council – the international body sponsoring said sanctions – before deciding to circumvent them and buy the weapons. As has been widely reported in the US media, North Korea reaps profits from several illegal rackets, believed to include counterfeiting of US dollars to the sale and distribution of methamphetamine. Now, we can add to that list the clandestine sale of Soviet-area conventional weapons, of which the North retains a massive stockpile, though it also manufactures its own copies.

Escalating tension has experts simulating a new Korean War, and the scenarios are sobering - This is the way a nuclear war begins. Simulations of a war on the Korean peninsula usually start with a relatively minor incident at the demilitarized zone between South Korea and its hostile northern neighbor, or a provocation that develops into a conventional war and then escalates. President Trump’s threatening posture toward North Korea — most recently exhibited at the United Nations, where he warned that the U.S. could “totally destroy” the country — has prompted military strategists to examine what would actually happen if a war broke out. The scenarios are a sobering corrective to the notion that North Korea’s nuclear capacity could be taken out in a single strike, or that the regime would prove as fragile as that of Saddam Hussein in Iraq or Moammar Kadafi in Libya.“Too many Americans have the view that it would be like the invasion of Iraq or Afghanistan, or like combat operations in Libya or Syria, but it wouldn’t remotely resemble that,’’ said Rob Givens, a retired Air Force brigadier general who spent four years stationed on the Korean peninsula.And that is before the North Koreans turn to nuclear weapons. “There is only one way that this war ends,” Givens said. “With North Korea’s defeat — but at what cost?” James Stavridis, a retired Navy admiral and dean of the Fletcher School of Law and Diplomacy at Tufts University, said the horrific war many have long feared with North Korea is a distinct possibility. He puts the chances of conventional conflict with North Korea at 50-50 and the chances of nuclear war at 10%. “We are closer to a nuclear exchange than we have been at any time in the world's history with the single exception of the Cuban missile crisis,’’ Stavridis said.

The Truth About Nuclear Proliferation And North Korea --The U.S. is communicating with North Korea about its nuclear program and testing Pyongyang’s appetite for negotiations, Secretary of State Rex Tillerson said in the first public acknowledgment by a senior administration official of direct contact on the matter. As Bloomberg reports,Tillerson, speaking to reporters on Saturday after meeting Chinese officials in Beijing, insisted that the U.S. would never accept a nuclear-armed North Korea. His remarks offered the clearest glimpse so far into U.S. strategy, and suggested a willingness to get to the negotiating table with Kim Jong Un’s regime -- even after President Donald Trump tweeted in August that “talking is not the answer!”  “We are probing, so stay tuned,” Tillerson said. “We can talk to them, we do talk to them directly, through our own channels,” adding that the U.S. has “a couple, three channels open to Pyongyang.”  All of which was 'good' news in a time when we need some. However, a few hours later, the State Department commented that... "North Korean officials have shown no indication that they are interested in or are ready for talks regarding denuclearization." And that, as Jim Rickards warns below, is why war is coming...   This brings us to the topic of nuclear proliferation. Nuclear proliferation of the kind we are seeing in North Korea is nothing new. The U.S., Soviet Union (now Russia), U.K. and France all had nuclear weapons by 1960. China joined the club in the mid-1960s. India and Pakistan started becoming nuclear powers in the 1970s. Israel has never officially announced it has nuclear weapons, but it is well-known that Israel possesses them. At various times, South Africa, Brazil, Iran, Syria, Iraq and Libya have pursued nuclear weapons development.

US, North Korea balk at using back channels to discuss a halt to Pyongyang’s nuclear weapons programme | South China Morning Post: The US and North Korea have three direct back-channels to talk about American prisoners and broad bilateral relations, but have not used them for formal negotiations on Pyongyang’s nuclear weapons programme, analysts say. The channels include Pyongyang’s representative at the United Nations in New York, informal dialogue between US civilian experts and North Korean diplomats in a third country, and the Swedish embassy’s representing the US’s interests in Pyongyang. Douglas Paal, vice-president for studies at Carnegie Endowment for International Peace in Washington, said in an email to the South China Morning Post that the three channels have not been used for formal US-North Korea bilateral talks because “the North is not quite far enough in its weaponisation to believe it has enough leverage to force concessions from the US”. “The US believes its new sanctions need to bite before the North will yield,” Paal said. “But the moment is coming faster than most estimate will be needed for the sides to realise they need to talk seriously.” There are no formal diplomatic relations between the two countries. After two self-claimed successful intercontinental ballistic missile tests and the sixth nuclear test in July and September, North Korean Foreign Minister Ri Yong-ho told world leaders at the UN summit on September 23 in New York that his nation is “finally only a few steps away from the final gate of completion of the state nuclear force”.

Kim Jong-nam murder: Women plead not guilty in Malaysia trial - Two women have pleaded not guilty to murdering Kim Jong-nam, the half-brother of North Korea's leader, as their trial in Malaysia got under way.The brazen nature of his killing, using the highly toxic VX nerve agent as he waited for a flight at Kuala Lumpur airport in February, shocked the world.Vietnamese Doan Thi Huong, 29, and Indonesian Siti Aisyah, 25, are accused of rubbing the chemical on his face.The pair say it was a TV prank and they were tricked by North Korean agents. Pyongyang has denied any involvement in the killing, but in court prosecutors said that four men - believed to be four North Koreans who fled Malaysia on the day of murder - were also charged in the case.  The incident led to a bitter diplomatic row and strained the once cordial ties between North Korea and Malaysia, which expelled each other's ambassadors.

China calls for calm over North Korea as US flexes military muscle and clock ticks down to key congress | South China Morning Post: The United States is preparing to flex its military muscle while China has called for restraint over the crisis on the Korean peninsula, just two weeks out from a key political meeting in Beijing. The biggest American aircraft carrier based in Asia, the USS Ronald Reagan, powered into Hong Kong waters on Monday, a day after US President Donald Trump tweeted that his top diplomat was “wasting his time” trying to talk to Pyongyang. Trump’s missive took direct aim at US Secretary of State Rex Tillerson’s commitment in Beijing on Saturday that the US would keep channels open for dialogue with North Korea. The US president’s comment appeared to narrow the prospects for talks, a point that could be underlined later this week when the US supercarrier Ronald Reagan is expected to head to waters off the Korean peninsula for joint exercises with the South Korean navy. South Korean media reports said the warship would take part in the drills in the middle of this month. Rear Admiral Marc Dalton, the aircraft carrier’s strike group commander, said only that the vessels would conduct “scheduled operational training” with a “partner in the region”. But with preparations under way for a changing of the leadership line-up at the Communist Party’s five-yearly national congress this month, Beijing has continued to call on all parties to exercise restraint. “We hope all parties remain restrained and avoid provocations, and prevent confrontation and tension from rising,” the foreign ministry said in a statement on Monday. It also said it had given permission for the carrier’s port call in Hong Kong, despite the “highly sensitive nature of the current situation on the Korean peninsula”. 

How to ensure Trump's upcoming China visit is a success - (Xinhua) -- As Beijing and Washington are preparing for U.S. President Donald Trump's visit to China later this year, the event will surely be a special one for the world's most important bilateral relationship.U.S. Secretary of State Rex Tillerson Sunday wrapped up his whirlwind China visit, during which he and Chinese President Xi Jinping discussed Trump's visit in November.Xi said currently President Trump's visit to China is the most important event in China-U.S. relations and the teams on both sides should work closely to make it "successful and special."Indeed, Trump's scheduled visit will come at a significant moment in time only days after the 19th National Congress of the Communist Party of China.The upcoming meeting will be the third between Xi and Trump this year, with two previous meetings in the U.S. state of Florida in April and in the German city of Hamburg in July. In those meetings, Xi and Trump exchanged views on bilateral relations.Since the U.S. president took office in January, the two leaders have maintained close contact on issues of common concern, including the nuclear issue on the Korean Peninsula.The two have held eight phone conversations so far, a record number in the history of the two countries.Frequent communication between the two presidents is crucial since it can help avoid misunderstandings, smoothly manage differences and strengthen bilateral cooperation.No doubt the world's two largest economies don't see eye-to-eye on every issue. Therefore, negotiations are key to properly handling differences and disputes, and such talks must be based on mutual respect for each other's core interests.Just as President Xi has observed, the common interests of the two countries far outweigh their differences, and "cooperation is the only correct choice."

Does Chinese leader Xi Jinping plan to hang on to power for more than 10 years? | South China Morning Post: The leader of China’s Communist Party, Xi Jinping, will begin a second five-year term this month. Many observers say it’s unlikely to be his last. Ahead of the party’s national congress, due to start in Beijing on October 18, the ranks of potential successors have been thinning out. Former Chongqing party boss Sun Zhengcai, 54, who had been regarded as a rising star, was expelled from the party last Friday after being taken away for questioning by party anti-graft inspectors on July 14. If, after the congress, no ­putative heir is elevated to the Politburo Standing Committee, the party’s highest decision-making body, it will be the clearest sign yet that Xi is eyeing a third term as the party boss, possibly as general secretary or under ­another title, that would start in 2022. Leadership transitions in the party have historically been a difficult process, with the only the past two – in 2002 and 2012 – having any resemblance to an institutionalised process. The first of those was when Jiang Zemin made way for Hu Jintao, Xi’s predecessor. But Hu had been a Politburo Standing Committee member for 10 years by then, having been elevated to that position by late paramount leader Deng Xiaoping in 1992 as successor in waiting. And Jiang only fully handed over power two years later when he vacated from the post of Central Military Commission chairman, which commands the People’s Liberation Army. “When Jiang stepped down, that was a momentous event,” said Susan Shirk, chairwoman of the 21st Century China Centre at the University of California, San Diego. “Achieving leadership succession in a Leninist state has been very difficult, and the Chinese Communist Party is the first to do that.”

China’s plan for massive cyber-warrior expansion | Asia Times: Chinese mastery in cyber-warfare was without a doubt on General Joseph Dunford’s mind when as chairman of the US Joint Chiefs of Staff he named China as the greatest future threat to US security at a congressional hearing last week. Serious cases of hacking in recent years have demonstrated China’s growing cyber-warfare capability. In the past few months, China announced grand plans to expand its dominance massively in the cyber realm.In February 2014, President Xi Jinping took personal control of cyber policies by creating the Central Cyberspace Affairs Leading Group. At a cybersecurity symposium in April 2016, Xi pledged greater state commitment, both financially and policy-wise, to upping China’s cybersecurity capabilities – particularly the identification, recruitment and cultivation of talented individuals. The Chinese government views cybersecurity and national security as equals. State, social, infrastructure and personal security are all deeply affected by events in the cyber domain. A war between China and the US, if it ever occurs, will witness many cyberspace duels. To fight and win this war, China needs more highly trained cyber-warriors. On August 15 this year, the Central Cyberspace Affairs Leading Group and the Chinese Education Ministry issued a joint decree formalizing a set of rules on constructing first-rate cybersecurity schools. In 10 years’ time, the plan seeks to establish four to six world-class cybersecurity schools in Chinese universities as training grounds for cyber-warriors. All resources at these institutions – from teaching staff to incentive structures – will be dedicated solely to fostering top-notch cyber-warriors. Universities must meet certain criteria before they can apply for state support.

China now owns 10 times the amount of Australian land it did last year: The amount of Australian farm land owned by Chinese interests has surged tenfold in the past year, climbing above 14 million hectares or 2.5 per cent of all agricultural land. The findings from the Australian Tax Office's Agricultural Land Register, released this week, show the UK and China are the largest owners of foreign-held land in Australia, owning 27 per cent and 25 per cent respectively. Foreigners now own up to a quarter of all agricultural land in the Northern Territory and Tasmania, and 14 per cent of all farms across the country. In NSW and Victoria, foreign interests own more than 3 million hectares. In Queensland it is six times that, with more than 17 million hectares in the state now owned by other countries through cattle stations, crops and abattoirs. In the Northern Territory, 75 properties now own more than 13 million hectares, among them Yiang Xiang Assets' 205,000-hectare Elizabeth Downs station.  But concerns remain over the accuracy of the system which relies on individuals to self-register and imposes only a $9000 fine on those who fail to do so. In November, Fairfax Media revealed the amount of agricultural land owned by Chinese interests had soared above 3 million hectares, more than double the 1.46 million declared by the Australian Taxation Office at the time.

CDB channels more than 50 billion USD to Africa in first half 2017 - People's Daily (Xinhua) -- China Development Bank (CDB) accumulatively extended loans of more than 50 billion U.S. dollars to 43 African countries in the first half of this year.Wang Yongsheng, vice president of CDB, said Thursday that the capital has been used to support the development of agriculture, manufacturing industry, infrastructure and to improve people's livelihood.The bank has so far reached consultation agreements with 18 African countries and used its advantages in long-term and larger loans to help African countries grow domestic financial markets.It also initiated the China-Africa Development Fund and launched a special loan targeting Africa's small and medium-sized enterprises.The bank's outstanding loans to Africa total 36.8 billion U.S. dollars, according to Wang.

India’s Troubling and Official Growth Numbers Are Only the Tip of the Iceberg - Alarm bells have been set off by the latest quarterly GDP growth figure of 5.7%. Growth has been declining for six quarters. GST, supposedly the biggest tax reform in the country since independence, was expected to boost growth but that expectation has been belied. Most analysts agree that the adverse impact of demonetisation and GST is manifesting i tself.Recent reports of job losses in the organised sectors and rising inflation rates have added to the sense of crisis. Rainfall has been inadequate in about 250 districts, which means the kharif crop is likely to be less than last year and this could worsen the crisis in the farm sector. Due to the poor design and implementation of GST, there is much confusion and the trading community and small producers are agitated. The youth has also been protesting against the lack of employment opportunities.If the economy does not revive soon, the ruling party could face a difficult task in the coming elections and the 2019 general election. The only silver lining for the BJP is the absence of a coherent opposition to take advantage of the adverse economic situation. The problem is bigger than what official data indicates. A 5.7% growth rate is not bad compared to what other major economies of the world are experiencing. It is also healthy compared to India’s own 70-year record. So, what is the problem? The 5.7% figure is an estimate of the quarterly rate of economic growth, which is largely based on the data provided by the corporate sector and some other organised sectors of the economy. Data from the unorganised sectors of the economy is not included. The non-agriculture component of this sector contributes to 31% of the GDP. It is this sector that has been hit hard by demonetisation and GST. If almost one-third of the economy is hit hard, the growth rate ought to be far lower than 5.7%.

Is India’s Economic Growth Slowdown Temporary or Technical? - India’s GDP growth has fallen linearly over the last six quarters, from a high of 9.2% in Q3-2016 to 5.7% in Q4-2017. Going by the definition of the National Bureau of Economic Research, a US economics research organisation, and comparing India’s macroeconomic data it would not be inappropriate to say that we are currently in a recession. The UK and the European Union however, consider an economy in recession only when real GDP growth actually turns negative over two consecutive quarters; by this criterion, with a positive growth rate of 5.7%, we are far off from being in a recession. Whatever definition of a recession one may abide by, the predicament that we now face requires the attention of policymakers. But what policy options do we have to counter the present downward trend in the Indian economy? The answer to this question depends on how we view the cause of the problem. While some, especially those supporting the economic policies of government, see it as a temporary or “technical” issue whose effects will soon wane, others view this as a more serious crisis created by a barrage of supply-side shocks to the economy; a stressed banking sector, demonetisation and GST implementation as well as disruptions in the agrarian sector that have all contributed in strong measure to the ongoing economic slide.  With reference to the latter, I identify two standpoints; first, that while the longer-term story of structural reforms remains intact, there is a need for immediate stabilisation policy – fiscal and/or monetary policy – so that the short-term shock does not pull the economy into a deflationary spiral and second, that these shocks have impacted agriculture and industry so severely, especially the informal sector, that the crisis is now a deep structural issue rather than merely a short-run one. In this case, India’s growth story has been derailed and the pain must be endured by the masses for a long while to come. The blame for ending up in this mess rests on the government because of its poor understanding of economic realities and adventurism in policymaking and implementation.

 U.S. pressing India to avoid capping medical device prices, allow withdrawals - (Reuters) - The United States is pressing India not to extend price caps on medical devices and wants New Delhi to allow firms to withdraw products from the market if they do not wish to sell at government determined rates, a U.S. trade official told Reuters.   Indian Prime Minister Narendra Modi’s government has in recent months slashed prices of medical devices such as knee implants and heart stents by up to 75 percent to make them more affordable. But the $5 billion Indian medical-technology industry - which counts U.S. firms such as Abbott Laboratories, Boston Scientific Corp  Johnson & Johnson as key players - has protested these moves, saying they hurt innovation, profits and future investment. A senior United States Trade Representative (USTR) official said they were pressing India to not extend price caps to other devices, allow for higher pricing for technologically advanced equipment and let companies withdraw their products if they wish to. India last month issued orders which effectively barred companies from any immediate withdrawals of heart stents or knee implants following price capping to ensure adequate supply of devices for patients. Abbott, for example, wants to withdraw one of its stents saying it’s not commercially viable under government set prices, but India has rejected its plea.

Universities in India Are Criminalizing Student Protests - Last month, the campus and area outside the Banaras Hindu University erupted again, in what has now become a pattern of a repressive Modi-led regime. Such universities, governed by central government statute, have been at the receiving end of unprofessional appointments and a retrogressive education policy that is cutting back on affirmative action and scholarships for students from deprived backgrounds. There has been sharp condemnation all around, and protests in many cities.But the most vibrant and vocal were the protests in Banaras itself, the constituency of Prime Minister Narendra Modi. He was in the city to visit on September 21-22, but changed his route to avoid the messy business of having a dialogue with protesting students.The high-handed behavior of the state police at BHU against women students (and some women professors), who are demanding a sexual violence-free campus and urging criminal action against BHU’s vice chancellor, has been rightly condemned. (BHU is located in the populous northern Indian state of Uttar Pradesh, which is now governed by the same political party Modi belongs to.) Protesters are seeking a university space with equal rights for women and freedom from sexual harassment and violence. Longstanding and legitimate demands of the students were not being addressed, and survivors of sexual harassment were repeatedly being shamed by the male proctors, even as the identified perpetrators were being allowed to go free. This compelled the students to embark on a peaceful mass protest, in the wake of relentless incidents of sexual harassment on the campus. Students have been also protesting BHU’s actions including the limiting of library hours, early closure of college gates, curbs on late-evening usage of mobile phones by women students, and embargo on serving of non-vegetarian food. BHU also coerced students to sign affidavits not to participate in political activity. These ultimately hurt the objective of higher education, which is the promotion of scientific and secular temper, succinctly laid out in the Indian Constitution. In the first week of September 2017, a differently abled student was traumatized and suspended after being labeled "homosexual" by the university authorities.

Indian farmers bury themselves to protest land acquisition deal  - Scores of farmers in western India have buried themselves neck-deep in the ground or are sitting in trenches to protest against what they say is meager financial compensation from authorities keen to build housing on their land. More than 50 farmers - men and women - from the desert state of Rajasthan began their protest two days ago, claiming local authorities had forcibly acquired their land at rates dating back to 2010 and called for increased compensation. Television pictures from Nindar village, about 15 km (10 miles) from the fort city of Jaipur, showed about a dozen men standing in narrow pits dug up to their necks, and scores of women sitting in trenches as crowds gathered round. “We are here to demand (a) better rate for our land. What the government is offering us is not enough. The cost of land is much higher than it was before,” an elderly farmer, wearing a colorful turban and standing in a narrow pit, told the NDTV news channel on Wednesday. Officials from the Jaipur Development Authority, which has acquired the land to build a housing project as part of the expansion of the popular tourist city, were not immediately available to comment on the protest. The villagers have been holding demonstrations for better compensation since mid-September, but there has been no response from the government, they said. This is not the first time farmers have staged dramatic protests to draw attention to their plight. In March, drought-hit and debt-ridden farmers from the southern state of Tamil Nadu traveled to New Delhi in a protest where they displayed the skulls of fellow farmers believed to have committed suicide, and placed live rats in their mouths. 

Erdogan Says Turkey No Longer Needs EU Membership, Son Slams European "Infidels" - President Recep Tayyip Erdogan said on Sunday that Turkey no longer needs EU membership.His son Bilal who plays an important role in Turkey’s politics went even further and described the Europeans as “gavur” (indifels).The comments come after 12-year-long accession talks with Brussels grind to a halt. “We will not be the side which gives up. To tell the truth, we don’t need EU membership anymore,” Erdogan said. Turkey’s 12-year-long accession talks have ground to a halt, with the EU especially critical of Ankara’s crackdown following a failed coup last year. Tens of thousands of people including teachers and journalists have been detained. Erdogan’s government says EU states failed to appreciate the gravity of the threat which Turkey faced, and did not respond to requests to extradite coup suspects. “The EU failed us in a fight against terrorism,” Erdogan said on Sunday, though he also suggested the bloc still needed Turkey. “If the EU is going to leap forward, there is only one way to do so. And it is to grant Turkey membership and start an action of cultural and economic growth,” Erdogan said. German Chancellor Angela Merkel said in an election debate last month it was clear Turkey should not join the EU and entry talks should end, despite it being a crucial NATO ally. His son Bilal Erdogan lashed out against against the European -the West- way of life in general and and called “gavur” (infidels) those Turks who “wear clothes, watch films, listen to music and eat Western food.” “In this country, nothing was allowed to be done nationally. Now, we produce our own aircraft, our tank, our rifle. […]. Why are we looking for these infidel attitudes? […] We are the grandsons of an ancestor with swords, rides, arrows, ” Erdogan’s son stirred told a crowd of western-suits wearing men. The term Gavur  infidel in English – is an offensive term, a slur, historically used in the Ottoman Empire for Christians, such as Orthodox Christians in the Balkans (non-Muslims).

Someone is hacking NATO soldiers’ phones in Eastern Europe -- NATO soldiers deployed to eastern Europe are scrambling to defend against smartphone hacks. The Wall Street Journal is reporting a new string of phone and account hacks launched against deployed US troops, targeting iCloud, Facebook, and even individual devices. Most of the attacks are not particularly sophisticated, but they could be enough to give away troop movements or other sensitive data if successful. So far, the attacks have focused on the 4,000 NATO troops currently deployed in eastern Europe near the Russian border, suggesting a geopolitical motive behind the attacks. The Journal confirmed at least six individual soldiers who have suffered hacks, ranging from a compromised Facebook account to a phony “Find my iPhone” request. Another attack seemed to indicate a Stingray-like device harvesting contact information and deleting data from nearby phones.  The Journal attributes the attack to Russian state actors, citing U.S. officials who believe drones and other sophisticated techniques were involved. However, many of the specific attacks described in the piece would be within reach for a common criminals. Find my iPhone attacks are common among online vandals, often wiping or locating phones once an iCloud password is compromised.  It wouldn’t be the first time one of Russia’s enemies found themselves overwhelmed by low-level digital attacks. Earlier this year, a Russia-linked campaign sent malware-laced Twitter messages to more than 10,000 employees of the Department of Defense, allowing attackers to take control of any device that followed the attached link.

Russia Does Not Exclude Possibility Of War With NATO - Just days after the conclusion of Russia's largest military exercise ever (which US military chiefs believe broke 'observer rules') and NATO's massive war games, Pravda reports a recent Russian Defense Ministry report says that Russia is preparing for the possibility of a military conflict with NATO countries. While Russia's defense ministry said the Zapad exercises would involve 12,700 Russian and Belarusian troops, about 70 aircraft, up to 250 tanks, 200 artillery systems and 10 warships; reports that the U.S. Army's commander in Europe says Russia broke up its Zapad war games with Belarus into parts to avoid having international monitors watch the weeklong exercises last month. Lieutenant General Ben Hodges said Monday that the two countries deployed "way over 12,700" personnel, the limit beyond which Europe's OSCE security organization should be allowed to send observers.Hodges said: "My guess is that there probably were over 40,000 service members."He told reporters at NATO headquarters that Russia and Belarus "broke it up into all these little exercises" but that "these were all connected, because this was a whole of government effort." Meanwhile, what the NATO commander forgot to mention is that just days before the dreaded Russian "Zapad 2017" exercise was set to begin, NATO's own Steadfast Pyramid 2017 military exercise kicked off in Latvia on Sunday, with 40 senior commanders from NATO states, as well as Finland and Sweden. They are expected to train how to “plan and conduct operations” amid the bloc’s buildup in the region.

Catalans Occupy Schools, Blockade Roads Amid Police/Government Threats, "History's About To Be Written" - The Spanish ambassador to UK, Carlos Bastarreche, has warned Catalan government’s move will have ‘serious implications’ for European stability...“This is not a dispute between Madrid and Catalonia. On the one side is a democratic Spain and its independent judicial system, and on the other side not Catalonia, but a group of radical nationalists and leftwing extremists in the regional power that are not complying with the law,” The Civil Guard, acting on orders from the High Court in Catalonia, entered and shut down 29 database and census applications at the Catalan government's telecommunications centre on Saturday. Additionally, as DPA reports, the central authorities in Madrid have shut down the electronic vote-counting system in Catalonia in a further effort to prevent Sunday's planned vote on independence for the region.By blocking the counting system, Madrid had effectively "cancelled" the referendum which it had already declared illegal, government spokesman Inigo Mendez de Vigo told journalists on Saturday.This "further strike against the illegal proclamation" of the referendum "was carried out within the scope of the law," the spokesman said. But as tensions come to a boiling point across Catalonia, separatists are occupying more than 160 schools designated as polling stationson Saturday in an attempt to keep them open ahead of Sunday’s referendum on independence from Spain.“The history of my country is going to be decided in the next few hours, so there’s no way I’m going to be staying at home in bed and watch it on TV,” said Eduard Elías, 50, a computer science engineer at a school in the Raval neighborhood of Barcelona, adding that he would leave only if the confrontation became violent.“Imagine you would have been offered the chance to fight alongside George Washington,” Mr. Elías said.“At that time, revolution meant weapons and war, but we’re now in the 21st century and we will have our paper ballots instead to bring about real change.”

Why Madrid Will Never Let Go - Catalonia Is Closer To The Eurozone Than Spain -- As we have detailed previously, the Spanish region of Catalonia in the North-Eastern corner of Spain will attempt to hold an independence referendum tomorrow, against the will of the central government in Madrid. Apart from the Baleares and the Madrid region itself, Catalonia together with its capital Barcelona is one of the most economically-powerful parts of the country. Notably, as Statista's infographic below shows that the gross domestic product (GDP) per capita of Catalonia lies closer to that of the Eurozone than of Spain as a whole.This in mind, it comes as no surprise that Madrid is by all means opposed to letting go of Catalonia.As The BBC notes, Catalonia, a wealthy region of 7.5 million people in north-eastern Spain, has its own language and culture. It also has a high degree of autonomy, but is not recognised as a separate nation under the Spanish constitution. Pressure for a vote on self-determination has grown over the past five years as a usterity has hit the Spanish economy and people hard.Why is Madrid so opposed?Spanish Prime Minister Mariano Rajoy stared down Catalan secessionists when they held a trial referendum in 2014, offering no concessions to their demand for a legal vote.He has pledged to stop the 2017 vote, saying it goes against the constitution which refers to "the indissoluble unity of the Spanish Nation, the common and indivisible homeland of all Spaniards".Which brings to mind the biggest question, what would happen to Spain in case of Catalonia’s secession? As GEFIRA explains, in terms of the debt sustainability parameters laid down by the Treaty of Maastricht, it’d be the Eurozone debt crisis 2.0.

Why Rajoy Is Panicking - Last Minute Poll Shows Huge 80% Surge For Catalan Independence -- We noted yesterday that "if Catalonia secedes from terms of the debt sustainability parameters laid down by the Treaty of Maastricht, it’d be the Eurozone debt crisis 2.0..." and it is clear by the thuggish brutality of Spain's police that Rajoy will do anything to ensure this vote does not go ahead as the latest poll data shows a massive surge in favor of independence, as government fascism has clearly triggered unintended consequences that look set to spirtal out of control. As's Mike Shedlock notes, numerous sites keep posting stats that claim a majority in Catalonia want a vote but do not support independence. I have stated those polls are old and likely wrong thanks to the pitiful tactics of prime minister Mariano Rajoy.A new last-minute poll suggests I have this correct. Please consider Huge upsurge in support for independence is revealed in world exclusive final Catalan poll.A SENSATIONAL new poll which The National is publishing on the eve of the Catalan independence referendum shows an upsurge in support for independence that varies dramatically depending on whether or not Spain’s central government boycotts the vote.The telephone poll was carried out over the last three weeks and completed on Thursday, but the results could not be published in Catalonia. They were released to The National yesterday. Two scenarios were put to a sample of nearly 3300 voters: “With the current situation in Catalonia, with Spanish government and main Spanish political parties calling for a boycott of the referendum,” and “a referendum agreed with the Spanish authorities”.

Crackdown in Catalonia - Yves Smith -- It looks as if the government in Madrid is succeeding in shutting down enough of the voting in the independence referendum in Catalonia today as to make it impossible to treat any vote count as being sufficiently representative as to be valid. Recall that the central government has already interfered in the vote by seizing ballots and taking the unprecedented step of arresting the officials who organized the elections. News reports say the police are confiscating more ballots (replacements? or one that they hadn’t seized in earlier raids?)Turnout is critical to whether the vote today can be seen as legitimate from a political, as opposed to legal, perspective. Citizens in Catalonia are left with the question of “What next?” Polls indicated that only a minority backed a referendum that the central government did not support, but the aggressiveness of the crackdown has increased sympathy for the separatists. But how much has it moved opinion in Catalonia overall? And does the Catalan government have any chess moves other than the nuclear option of defaulting on its debt, which would trigger a default on the national debt and produce a financial crisis? Due to the hour, plus the fact that Spanish language reports are likely to be more complete, forgive me for providing only this update from the Financial Times, which is currently the lead story:Spanish police disrupted polling places across Catalonia on Sunday morning, with widespread reports that authorities were using rubber bullets to disperse crowds, as many people sought to vote in an independence referendum the country’s constitutional court has ruled illegal.Just before voting was scheduled to begin at 9am local time, police confiscated voting papers and ballot boxes in Barcelona and fired rubber bullets to disperse crowds at the Ramon Llull school in the city, according to local media.In the town of Sant Julià da Ramis, some 60 national police forcibly removed voters and demonstrators from the polling place where Catalan leader Carles Puigdemont was scheduled to vote.As they dragged away voters who had locked arms in front of the Sant Julià da Ramis polling station, the assembled crowd chanted “Votarem” — ”We will vote.”The vote threatens to trigger one of the gravest political and constitutional crises in Spain’s 40-year-old democracy.Elsewhere in Catalonia there were reports of voting happening peacefully, with the 17,000 strong local police force apparently being less interventionist in stopping the voting at certain stations. They have orders to stop voting, but not provoke unrest…

Catalan Leader: "We Have Earned The Right To Form An Independent State"  --Though the results of today's referendum have yet to be announced, separatists in Catalonia are urging the government to declare independence from Spain, citing today's violent crackdown as the reason. In a rousing speech following the close of voting, Carles Puigdemont, the leader of the Catalan government, said his citizens have earned the right to form an independent state and that the results of the referendum, to be announced shortly, will be sent to the local parliament for ratification.Though the central government in Spain declared the refendum illegal, and sent federal Civil Guard and National Police forces to try and suppress the vote in a dramatic crackdown that sent shockwaves around the globe, police only managed to shut down a small sliver of polling stations, allowing many in the region of more than 7 million people which has a larger economy than Portugal, to cast ballots.(1) A vosaltres, que heu ensenyat al món el civisme d'un poble pacífic, que heu resistit vexacions i repressió, us dono les gràcies— Carles Puigdemont (@KRLS) October 1, 2017 In his public remarks, delivered shortly after a speech from Spanish Prime Minister Mariano Rajoy, Puigdemont also said that "with this day of hope and suffering, the citizens of Catalonia have won the right to an independent state in the form a republic." He also said that the EU could no longer “continue to look the other way” from human rights violations around the referendum, according to a translation in the Guardian."The Spanish government has today written a shameful page in its relationship with Catalonia," adding that there had been abuses of human rights committed by Spanish police.Puigdemont added that he will keep his pledge to declare independence unilaterally if the "Yes" side wins.

The Results Are In: 89% Of Catalans Vote For Independence -  In further proof that Spain's brutal crackdown on today's Catalan independence referendum only helped bolster the seccessionist cause, the regional government announced that voters had overwhelmingly voted in favor of independence, with 89% voting to separate from Spain. Shortly after midnight on Sunday, Catalan government spokesman Jordi Turull announced that 2,262,424 ballot papers had been counted. There were 2,020,144 "yes" votes, or just under 90% of  the total, and just 176,565 "no" votes.The regional government has promised to officially declare independence within 48 hours.Even though Spanish authorities ruled that the vote was illegal, Dimitrij Rupel, head of the International Parliamentary delegation on Catalonia’s referendum, said at a news conference in Barcelona on Sunday that the referendum on independence was prepared in agreement with Spanish existing legislation, potentially setting up the regional government for a legal battle.All eyes now turn to Catalan leader Carles Puigdemont as tensions between Spain and its restive state are expected to come to a head, as the prospect of intensifying street violence looms.

Catalan independence referendum: Region votes overwhelmingly for secession from Spain - Catalonia has overwhelmingly voted for independence from Spain, with 90 per cent of over two million votes counted saying "yes", the regional government has said. According to voting figures issued early on Monday morning, 90.9 per cent of the votes now counted, or 2,020,144 were in favour of independence, and 7.87 per cent, just 176,565, were against. The regional government spokesman, Jordi Turull, said 15,000 votes were still due to be counted and that total voting figures remain incomplete and provisional because a much larger number, an estimated 770,000, are either inaccessible or lost after some polling stations were closed and ballot boxes were seized by police.  “There have been enormous difficulties, but the vote has happened and we’ve gone from ‘votarem’ [we will vote] to ‘hem votat’ [voting has happened.]”; Mr Turull said.“We will respect the mandate which the citizens have given us,” regional Vice President Oriol Junqueras said.Even before the figures were made public, Catalan premier Carles Puigdemont had already hinted strongly at a potential unilateral declaration of independence when he promised the results of the referendum will be sent to Catalonia’s parliament within the next few days.As the results of  town after town in Catalonia came through, the pro-independence vote in the referendum looked on track for a landslide victory.  In Girona, a nationalist stronghold and the first of Catalonia’s four provincial capitals to declare its vote, the pro-independence vote was 27,786 votes in favour of secession out of a total of 29,717 votes cast, whilst only 1,086 voted to remain in Spain. With a narrow separatist majority in power in the regional parliament, it is hard to see how Mr Puigdemont’s promise to act on these results would not increase the possibility of a unilateral declaration of independence (UDI). “With this day of hope and suffering, Catalonia has earned the right to be an independent state,”

Catalonia’s Independence Vote Descends Into Chaos and Clashes - Catalonia’s defiant attempt to stage an independence referendum descended into chaos on Sunday, with hundreds injured in clashes with police in one of the gravest tests of Spain’s democracy since the end of the Franco dictatorship in the 1970s.National police officers in riot gear, sent by the central government in Madrid from other parts of Spain, used rubber bullets and truncheons in some places as they fanned out across Catalonia, the restive northeastern region, to shut down polling stations and seize ballot boxes.The clashes quickly spoiled what had been a festive, if expectant, atmosphere among voters, many of whom had camped inside polling stations and stayed on into late Sunday night, fearful that officers might seize ballot boxes. Hundreds of people were hurt as the Spanish police closed polling stations and seized ballot boxes during Catalonia’s independence vote on Sunday. By the day’s end, both sides were claiming victory. Voting went ahead in many towns and cities, with men and women, young and old, singing and chanting as they lined up for hours to cast ballots. Just after midnight, the Catalan government said that the referendum had been approved by 90 percent of some 2.3 million voters. Those figures could not be independently confirmed. The Spanish government declared that the referendum had been disrupted.More than 750 people were injured in the crackdown, Catalan officials said, while dozens of Spanish police officers were hurt, according to Spain’s interior ministry. The day’s events left nothing clear except that the clashes over the status of the region — Spain’s economic powerhouse, where yearnings for a separate nation have ebbed and flowed for generations — had left supporters on both sides more hardened and polarized than before.

 Violent Catalan referendum jolts Spain's financial markets (Reuters) - The Spanish government’s borrowing costs surged and its stock market tumbled on Monday as investors weighed up the political fallout from the violent police crackdown on an independence vote in the wealthy region of Catalonia. The euro also drifted lower against the dollar after local officials said 90 percent of voters favored secession in Sunday’s referendum, which Madrid declared illegal. That opened the door to a unilateral declaration of independence in a region that accounts for a fifth of Spain’s economy and whose tax revenues are crucial to the national budget. While many analysts expect the crisis to be resolved with an offer of more autonomy, they said the uncertainty could have an impact on the country’s economic growth and taint the reputation of Prime Minister Mariano Rajoy, who heads a minority government. “This is probably the worst outcome for Madrid - there was violence but they didn’t stop the vote either and public opinion in Catalonia is more polarized,” said Federico Santi, an analyst at Eurasia Group in London, referring to reports of nearly 900 injured in the clashes with police. “It is clear that risks to government stability are increasing.” Mainstream parties largely back Rajoy’s opposition to Catalan independence, but the premier faces criticism over his handling of the issue. Spanish government bond yields rose as much as 10 basis points to 1.713 percent ES10YT=TWEB, expanding the gap with the benchmark German equivalents DE10YT=TWEB to its widest in nearly four months. 

Catalan leader calls for international mediation in Madrid stand-off  (Reuters) - The secessionist leader of Catalonia called for international mediation on Monday in the region’s dispute with Madrid, a day after hundreds of people were hurt as police swung truncheons and fired rubber bullets to disrupt an independence referendum. Results showed voters had overwhelmingly backed independence in the referendum, which Spain has ruled illegal and which opponents of secession mostly boycotted. The vote was valid and must be implemented, said Catalan leader Carles Puigdemont. “It is not a domestic matter,” he told a news conference on Monday. He said it was “obvious that we need mediation”, adding: “We don’t want a traumatic break ... We want a new understanding with the Spanish state.” Prime Minister Mariano Rajoy met leaders of other political parties and his conservative government issued a statement saying he was seeking a joint response to the crisis. He also spoke to other European leaders and thanked them for supporting Spain’s constitutional order, the statement said. In Barcelona, hundreds of students gathered in a central square to protest at Sunday’s police crackdown, chanting pro-independence slogans and waving Catalan flags. The government crackdown had “provoked an unacceptable totalitarian situation using state violence,” student Albert Lopez said. Another protest was held later outside the headquarters of the Spanish National Police in Barcelona.

Catalonia Blinks in Secession Staredown - I imagine this reading will make a lot of readers unhappy, but the Catalonia’s secessionist leaders made clear they hold a weak set of cards in dealing with Mariano Rajoy’s government. The European Commission washed its hand of the matter, saying Catalonia and Spain needed to settle their hash on their own….within the constitutional framework that allows Catalonia no exit. The full text of its press release:Under the Spanish Constitution, yesterday’s vote in Catalonia was not legal.For the European Commission, as President Juncker has reiterated repeatedly, this is an internal matter for Spain that has to be dealt with in line with the constitutional order of Spain.We also reiterate the legal position held by this Commission as well as by its predecessors. If a referendum were to be organised in line with the Spanish Constitution it would mean that the territory leaving would find itself outside of the European Union.Beyond the purely legal aspects of this matter, the Commission believes that these are times for unity and stability, not divisiveness and fragmentation.We call on all relevant players to now move very swiftly from confrontation to dialogue. Violence can never be an instrument in politics. We trust the leadership of Prime Minister Mariano Rajoy to manage this difficult process in full respect of the Spanish Constitution and of the fundamental rights of citizens enshrined therein. Yet after having threatened to declare independence within 48 hours of a favorable referendum vote (and press reports indicated that the total number of voted lodged favoring departure was higher than the threshold Catalonian separatists had set), officials in Catalonia are now retreating from their threat of a speedy exodus. Instead they want to negotiate and have the EU moderate. But you can’t have talks unless the other side wants to talk too.

"Total Stoppage": Barcelona Paralyzed By General Strike, Barricades As Protesters Take To The Streets  - The Catalan rebellion escalated on Tuesday, resulting in a day of "total stoppage" for the Catalan capital, in which Barcelona metro stations were closed, pickets blocked main roads and civil servants walked out on Tuesday in response to a strike called by pro-independence groups as separatist activists took to the streets of Barcelona to press home their demands for independence after winning an referendum on Sunday which despite a violent crackdown by the Spanish government, saw nearly 90% of the vote cast for splitting away from Madrid. According to Bloomberg, public transport and shops were closed as demonstrators gathered in the center of the Catalan capital to protest the police violence that marked Sunday’s vote and reinforce their demands for a split with Spain. Photographs showed traffic backed up behind protesters on one of the main highways connecting Catalonia with the rest of Spain. Roads are blocked in 48 places in the region, the Spanish traffic agency said.

Thousands protest and strike over Catalonia referendum violence - Several thousand demonstrators gathered outside the Barcelona headquarters of Spain’s national police force on Tuesday amid strikes in protest at police violence during the disputed referendum on Catalonian independence. As Madrid comes under growing international pressure to resolve its worst political crisis in decades, the crowd gathered in the Catalan capital, chanting “independence”, calling Spanish police an “occupying force” and urging them to leave the region. In Barcelona, municipal police said about 15,000 people had stopped traffic as they rallied, many draped in the blue, yellow and red Estelada flag used by Catalan separatists, shouting: “The streets will always be ours.” The protest came as several small labour unions and grassroots pro-independence groups urged workers throughout Catalonia to go on partial or full-day strikes. “An attack on democracy without precedent in recent times calls for a united response,” said Javier Pacheco, the secretary general in Catalonia of the Comisiones Obreras (CCOO) union. “We have called on all sectors to take part.” However, while the Catalan sections of the CCOO and UGT unions are supporting the strike, the two organisations’ national leaderships are not. Schools and universities were shut on Tuesday and most small businesses were closed after unions called for the stoppage to “vigorously condemn” the police response to the poll, in which Catalonia’s leader said 90% of voters had backed independence from Spain. Metro stations in Barcelona that are usually busy were deserted as services were cut back sharply, and the Boqueria market was almost empty. Elsewhere, the response to the strike call was patchy. There were no reports of disruptions affecting big industry or Barcelona’s airport. “People are angry, very angry,” said Josep Llavina, 53, a self-employed worker who had travelled to Barcelona from a nearby town to participate in the protest outside the police building. “They brought violence with them. They have beaten people who were holding their hands up. How can we not be outraged?” 

Catalan referendum: Anti-police strike hits public services - BBC News: Thousands of people in Catalonia are rallying and blocking roads in protest over Spanish police violence during Sunday's independence referendum. There is little public transport across the region, after local trade unions called a strike. Spain's King Felipe VI is to address the nation at 19:00 GMT. Almost 900 people were hurt as police tried to prevent the vote. Thirty-three police officers were also injured. The central government in Madrid said the referendum was illegal. On Tuesday, about 300,000 people took to the streets of Barcelona, city police were quoted as saying by the AFP news agency. Some demonstrators were marching towards the Catalan parliament. More than 50 roadblocks in the city caused big traffic jams. Barcelona's metro traffic was cut to a 25% service during rush hour and no trains at all at other times. Barcelona's port was at a standstill, trade union sources said. Top tourist attractions were also closed, including the city's famous Sagrada Familia church. Mercabarna - Barcelona's massive wholesale market - was left deserted as some 770 food businesses closed for the day. However, the city's El Prat airport and its taxis are operating normally. Protest rallies are also taking place in other major cities and towns of the north-eastern autonomous region. Many small businesses have shut for the day. Schools, universities and medical services are also closed or operating at a minimum level.

Spain's King Felipe Condemns Catalan "Disloyalty" As Rajoy Mulls "Nuclear Option" --Echoing the sentiment from his prime minister Mariano Rajoy, in a nationwide address on Tuesday night, Spain's King Felipe VI said that Spanish democracy is in a serious moment, and accuses Catalan separatist leaders of violating constitution."For some time now, certain officials in Catalonia have repeatedly, consciously and purposefully breached the constitution and their statute of autonomy"Toeing the government line, the King said referendum plans were illegal, and that it is "irresponsible" to conduct risks economy.The King appealed for calm, says he remains committed to unity and, without a trace of irony, the unelected monarch said that Catalan separatists have "shattered Spain's democratic principles."Some more highlights of his speech, courtesy of The Spain Report:

  • King Felipe says Spain living through "very grave" moments for country because of Catalan crisis.
  • King Felipe says Catalan government seeking to illegally proclaim independence.
  • King Felipe says Catalan society today is fractured and divided, says economic stability of Spain at risk
  • King Felipe says Catalan authorities "totally outside law and democracy. They have meant to fracture Spain".
  • King Felipe says Spanish state must ensure constitutional order in Catalonia.
  • King Felipe says "very complex moments" but "we will come through" and "our democratic principles are solid".
  • King Felipe says Spanish crown firmly committed to constitutional order.

Below is the Full Text Of King Felipe's Statement To Country On Catalan Crisis: Meanwhile, in what some have called would be the equivalent of Spain's "nuclear option", Bloomberg reported that Spain's PM Rajoy was mulling whether to use Article 155 of constitution to take control from the administration in Barcelona. Needless to say, it would not go over well in Spain's wealthiest region.

Catalan referendum: Region's independence 'in matter of days' - BBC News: Catalonia will declare independence from Spain in a matter of days, the leader of the autonomous region has told the BBC. In his first interview since Sunday's referendum, Carles Puigdemont said his government would "act at the end of this week or the beginning of next". Meanwhile, Spain's King Felipe VI said organisers of the vote put themselves "outside the law". He said the situation in Spain was "extremely serious", calling for unity. Hundreds of thousands of people across Catalonia have been protesting over Spanish police violence during the vote, during which nearly 900 people were hurt. During the vote, 33 police officers were also injured, local medical officials said.In the BBC interview, Catalonia's President Carles Puigdemont said his government would "act at the end of this week or the beginning of next". When asked what he would do if the Spanish government were to intervene and take control of Catalonia's government, Mr Puigdemont said it would be "an error which changes everything". Mr Puigdemont said there was currently no contact between the government in Madrid and his devolved administration. He disagreed with the European Commission's statement on Monday that events in Catalonia were an internal issue for Spain. 

Spain may have succeeded in crushing Catalan independence dreams for now – but at a high price - Europe has had a rocky ride with referendums in recent years: think of Greece’s anti-austerity vote in 2015, or the Brexit shock and Italy’s failed constitutional referendum in December 2016. As the UK found with the 2014 Scottish independence vote, even holding a referendum at all can be highly destabilising to the traditional political order and political party systems.  But something different happened in Catalonia on October 1: a referendum that in practice wasn’t a referendum at all. It was considered a referendum by the supporters of Catalan independence, but not their opponents – the Spanish government – who called it “illegal” for the EU, or any known government in the world. The reported 42.3% turnout and near-90% vote for independence do not carry any meaningful legitimacy. Even for those who did turn out, anything approaching normal voting was prevented by a heavy and at times violent Spanish police presence. Still, this doesn’t mean the vote isn’t destabilising. The events of October 1 mark a turning point in the ever-growing – but containable – dispute between the government in Madrid, led by the conservative Popular Party, and the pro-independence coalition of parties in Catalonia’s regional government. Since mass pro-independence protests of 2012, the dispute between Madrid and Barcelona has simmered along as a low-intensity political conflict. The Catalan elections of September 2015 gave an ambiguous result, and the referendum on independence was launched as the mechanism to break the deadlock. But Madrid refused to accept the legitimacy of any such vote, and promised to block it by all legal means. Even as tensions rose to their highest level yet in September, the Madrid stock market seemed impervious to the apparent turbulence in the weeks leading up to the referendum. This was because nobody seriously believed Spain really was about to lose a fifth of its economy, which is what Catalonian independence would really mean. Yet still, the independence side made a serious noise, and Madrid was rattled enough to send thousands of police officers to Catalonia with the express intention of stopping the vote.

Catalonia to declare independence from Spain in coming days, after king slams leaders for ‘unacceptable disloyalty’ | South China Morning Post: Catalonia will move as soon as this weekend to declare independence from Spain, the region’s leader said, moving the European Union country closer to a rupture that threatens the foundations of its young democracy. The constitutional crisis has hit the euro, Spanish stocks and bonds while Volkswagen’s Spanish unit SEAT warned of disrupted activity on Tuesday because of protests. Catalonia’s Caixabank and Spain’s economy minister have meanwhile sought to assure bank customers that their deposits are secure. Catalan President Carles Puigdemont told the BBC in remarks published on Wednesday that his government would ask the region’s parliament to declare independence after tallying votes from last weekend’s referendum, which Madrid deems illegal.His comment came after Spain’s King Felipe VI accused secessionist leaders of shattering democratic principles and dividing Catalan society, as tens of thousands protested against a violent police crackdown on Sunday’s vote. “We are to declare independence 48 hours after all the official results are counted,” Puigdemont said in remarks posted on the BBC’s website. “This will probably finish once we get all the votes in from abroad at the end of the week and therefore we shall probably act over the weekend or early next week.” 

Catalonia: Puigdemont Promises Secession in Days as King Censures Officials Acting Outside the Law - Yves Smith - After looking like it was suing for peace with Spain, Catalonia’s government, buoyed by a pro-secession protest called “the stoppage of the country, resumed its defiant stance.In an interview with BBC, President of the Generalitat of Catalonia, Carles Puigdemont, said that Catalonia would declare independence within days. This bold pronunciation took place shortly before the King of Spain denounced the separatist leaders. A key section of his remarks, as translated by the Financial Times:For some time, certain authorities in Catalonia, repeatedly, consciously and deliberately, have been failing to comply with the constitution and the statute on autonomy, which is the law that recognises and protects its historic institutions and its self-government.“With these decisions they have systematically infringed the approved legal framework, showing an unacceptable disloyalty to the powers of the state. A state that those authorities represent in Catalonia.“They have broken the democratic principles of the rule of law and have undermined the harmony and coexistence of Catalan society, to the point — unhappily — of dividing it. Today Catalan society is fractured and conflicted. Those authorities have ignored the feelings and sentiments of solidarity that have united and will unite all Spanish; and with their irresponsible conduct are even putting at risk the economic and social stability of Catalonia and all of Spain.Catalonia’s separatists don’t appear to have a realistic end-game, particularly in the time frame they have set up. Punching the Catalans is seen as sport in much of the rest of the country, so even if Rajoy made less than optimal use of the political opportunity presented by cracking down on the referendum in an unnecessarily brutal manner, it’s not clear that he has come out a net loser. Reader St. Jacques argued that it had weakened Rajoy’s party, the Popular Party, to the benefit of PSOE, but the King’s denunciation may have limited the damage. If nothing else, the conflict over Catalonia’s future has diverted attention from a corruption scandal.If Catalonia delivers, or looks like it is going to deliver on its threat, one course of action by Madrid may be to arrest or otherwise isolate the separatist leaders.

How Did Things Get So Bad in Catalonia? - Unless concrete measures are taken to calm tensions between Madrid and Catalonia, one of Spain’s richest, safest and most visited regions could soon be plunged into chaos. With neither side willing for now to take even a small step back from the brink, the hopes of any kind of negotiated settlement being reached are virtually nil, especially with the European Commission refusing to mediate. But how did things get so bad in Catalonia? While the standoff between Madrid and Barcelona has been on the cards for years, it’s been brewing so slowly that many people were caught off guard when riot units of Spain’s National Police and the Civil Guard began using brutal violence to prevent people from voting in Catalonia’s banned referendum. Now, what we have on our hands is a full-frontal clash between two diametrically opposed nationalisms that has roots dating back centuries. The most recent tensions were inflamed in 2010, when Spain’s highly politicized Supreme Court, at the urging of the now governing People’s Party, annulled many of the articles of Catalonia’s recently agreed Statue of Autonomy, effectively stripping the agreement of any meaning. Gone was any chance of any fiscal autonomy. That this happened just as the Financial Crisis was beginning to bite in Catalonia hardly helped matters. Since then, the Rajoy administration has refused to offer greater fiscal autonomy for Catalonia, or the chance to hold a legitimate referendum on national independence. The argument is always the same: the 1978 constitution forbids it from doing so and it can’t change the constitution, although the Rajoy’s party voted to change the constitution to enable Spain’s bailout of its savings banks while in opposition in 2011. Catalonia’s regional government, the Generalitat, in the face of such intransigence and seeking to deflect public attention from the brutal austerity cuts it was making, began to take matters into its own hands. Little by little, disobedience became defiance, which gradually evolved into open rebellion.

Spain high court investigating Catalonia officials for sedition Jurist - Spain's High Court [official website] announced on Wednesday that Calalonia's police and organizers are under investigation for sedition, most notably Catalonia's regional police, Josep Lluis Trapero. Trapero is being called to testify [Reuters report] in relation to arrests of high-ranking officials over the organization of a banned independence vote. The accusations refer to the unrest that broke out after police raided Catalan government offices and arrested officials September 20 to halt a banned October 1 independence referendum [JURIST report]. That police action was met with protests, and the Catalan regional police are accused of failing to intervene. Tensions between Spain and the north-eastern Catalonia region continue to increase, days after the referendum. The vote, which drew a turnout of 42.3 percent of registered voters, was in favor of Independence by a margin of 90 percent to 10. In his first interview since the October 1 referendum, Carles Puigdemo of the Catalonia government, told BBC [video] that they will declare independence 48 hours after the final votes have been counted.

Brussels defends use of ‘proportionate force’ in Catalonia - Politico— The Spanish government’s “proportionate use of force” in Catalonia was necessary to uphold the rule of law, the European Commission declared on Wednesday. As the European Parliament opened a debate on the Catalonia crisis, Commission First Vice President Frans Timmermans sided unequivocally with the Madrid government.Timmermans minced no words in condemning the effort to hold an independence referendum as a violation of the Spanish constitution and, therefore, as a threat to the rule of law in all EU countries.His comments were met by the continuing fury and disbelief of Catalans who insist the referendum was intended as a democratic expression of free speech and self-determination. The debate in Strasbourg was allowed to proceed only after Parliament leaders agreed to narrowly define the subject as “the rule of law and fundamental rights in Spain in light of the events in Catalonia” — a demand made by the European People’s Party, the largest political group, which includes Spanish Prime Minister Mariano Rajoy’s Popular Party.  Timmermans, in the opening address, said, “We have shaped our democratic societies based on three principles: democracy, respect for the rule of law and human rights … The three need each other, they cannot exclude each other.” He continued, “If you remove one pillar, then the others will fall too.”“The regional government of Catalonia has chosen to ignore the law in organizing the referendum of last Sunday,” he said. Perhaps most strikingly, Timmermans defended the use of force by the Spanish police on Sunday. The police action resulted in jarring images of voters, including women and elderly citizens, being dragged away from polling stations — a stunning scene of unrest in a large Western democracy.

 Spanish court suspends Catalan parliament session, throwing independence call in doubt (Reuters) - Spain’s Constitutional Court on Thursday ordered the suspension of Monday’s session of the regional Catalan parliament, throwing into doubt its plans to declare unilateral independence from Spain. The speaker of the Catalan parliament, Carme Forcadell, accused the Madrid government of using the courts to deal with political problems and said the regional assembly would not be censored. But she said parliamentary leaders had not yet decided whether to defy the central court and go ahead with the session. The suspension order further aggravated one of the biggest crises to hit Spain since the establishment of democracy on the 1975 death of General Francisco Franco. But Spanish markets rose on perceptions the order might ward off, at least for now, an outright independence declaration. Spanish Prime Mariano Rajoy called on Catalan leader Carles Puigdemont to drop independence plans or risk “greater evils”. Secessionist Catalan politicians have pledged to unilaterally declare independence at Monday’s session after Sunday’s referendum, banned by Madrid and marked by violent scenes where Spanish police sought to hinder voting. The constitutional court said it had agreed to consider a legal challenge filed by the anti-secessionist Catalan Socialist Party. Spanish shares and bonds, hit by the political turmoil in Catalonia, strengthened after the news of the court’s decision. The main IBEX stock index rose 2.5 percent and the yield on Spain’s 10-year bond fell. Spain’s Economy Minister Luis de Guindos told Reuters in an interview the turmoil was damaging Catalonia. Spain to make it easier for firms to move base from Catalonia as business alarm deepens “This is generating uncertainty that is paralyzing all investment projects in

CONFIRMED: Spanish lender Banco Sabadell to move from Catalonia to Alicante - Spanish lender Banco Sabadell has decided to transfer its legal base from Catalonia to Alicante, according to a bank spokeswoman.Sabadell had said earlier that its board was holding an extraordinary meeting on Thursday (October 5) to consider the possibility of relocation. The political crisis — triggered by the region’s referendum for independence — has also prompted Spain’s third-biggest lender Caixabank to think about shifting its Catalan base into another Spanish region. That decision has not been taken, and would need to be made at a meeting of shareholders. Spanish newspaper El Pais reported that telecoms operator Eurona is moving from Barcelona to Madrid, as is biotech company Oryzon. Catalonia is a centre of industry and tourism that accounts for one-fifth of Spain’s economy. Seven thousand internationals are based in the region, including major multinationals like Volkswagen and Nestle.  If the rift between Madrid and Barcelona is not resolved through dialogue, analysts suggest an external mediator may need to step in.

Spain's de Guindos Says Catalonia's Independence Push Is Doomed

       - Spanish Economy Minister Luis de Guindos ruled out any sort of mediated talks with separatist leaders and said Catalan banks have signaled they may move out of the region if the push for independence continues. Speaking on Thursday in a Bloomberg Television interview, de Guindos slammed the Catalan administration for its illegal actions and said independence is out of the question. Spain has nothing to discuss with the secessionists until rule of law is restored, he said. The instability may persuade Catalan banks to shift out of the region, he added.“They have indicated that if this process goes on, they are totally open to relocating their headquarters to other places in Spain,” de Guindos said. “This is a clear indication of how insane is the regional government of Catalonia.”Catalan President Carles Puigdemont on Wednesday night called for outside mediators to help broker a settlement with the Spanish government and said the regional government in Barcelona will soon apply the results of Sunday’s makeshift vote. He stopped short of saying how or when he would trigger the process to leave Spain.“This is not a question of arbitration or mediation, it is a question of a government that has to enforce the law,” de Guindos said. “There is nothing to negotiate without the full respect of the rule of law.” The prospect of secession is piling pressure on Prime Minister Mariano Rajoy and his minority government and unnerving Spanish financial markets. The premier has been seeking cross-party political support for his hard-line approach after police stormed polling stations and triggered mass demonstrations. The next move could involve suspending the regional government and implementing direct rule from Madrid.

Catalonia Versus Spain: Conflict Escalates as Constitutional Court Nixes Independence Declaration Preemptively -- Yves Smith - Wednesday, the head of Catalonia’s separatist movement, Carles Puigdemont, reiterated his stance that Catalonia was on the verge of seceding from Spain. In a televised speech, he rejected the fierce criticism made by Spain’s king King Felipe VI the day before, when he decried the independence referendum as illegal, anti-democratic, and as undermining the unity of Catalonians and Spain generally. Puigdemont criticized the monarch for backing the central government and rejecting compromise, and maintained that Catalonia was on track to declaring independence. The parliament’s earlier bill stipulated that it would withdraw from Spain within 48 hours of getting final referendum results approving the split. The Financial Times indicated yesterday that the expected timetable was for an official declaration this week or early next week. Member of Catalonia’s parliament indicate that it would take place shortly after a vote this Monday. Spain’s constitutional court reaffirmed its position that any moves towards secession were illegal by pre-emptively suspending the Monday parliamentary session in Catalonia. From the Guardian: Spain’s constitutional court has moved to stop the Catalan government making a unilateral declaration of independence by suspending the regional parliament session in which the results of Sunday’s referendum were due to be discussed.On Thursday, the court upheld a challenge by Catalonia’s Socialist party – which opposes secession from Spain – ruling that allowing the Catalan parliament to meet on Monday and potentially declare independence would violate the rights of the party’s MPs.The court warned that any session carried out in defiance of its ban would be “null”, and added that the parliament’s leaders could face criminal action if they ignored the court order.This ruling gives Rajoy’s government the leeway to bar Catalonia’s parliament from convening Monday and arresting separatist leaders then. Reader Sue had thought earlier that the procedural mechanism for authorizing the crackdown on the separatists would be via having the Spanish Senate invoke Section 155 of Spanish Constitution, where Rajoy’s Popular Party has the votes to pass the measure via the support of Ciudadanos and perhaps the PSOE but I am no longer certain that nicety is necessary.If the separatists do not back down (and they have signaled they won’t), on Monday, the central government will at some point apply Section 155 to take over the Catalonia government. It will also, either using the Constitutional Court ruling or Section 155, arrest the leaders of the independence movement, declare the secessionist parties to be illegal, and crack down on protestors. The ones who try to interfere in arrests and try to allow passage of legislators to the parliament building will be roughed up the most.

Catalonia referendum: Thousands rally for Spanish unity - BBC News: Thousands of people calling for Spanish unity have attended rallies in the capital Madrid after Sunday's disputed referendum for Catalan independence. Other demonstrations - including in the Catalan city Barcelona - have also been held urging political dialogue. Protesters dressed in white gathered with signs saying "Spain is better than its leaders" and "let's talk". Businesses have continued to announce their departure from the Catalan region amid the ongoing political uncertainty. The Caixa Foundation, which controls one of the Spain's largest banks, announced it was moving its headquarters to Palma de Mallorca while the crisis continues.The country is waiting for a speech on Tuesday by Catalan President Carles Puigdemont amid speculation he will declare independence. The final results showed 90% of the 2.3 million people who voted backed independence. Turnout was 43%. There have been several claims of irregularities, and many ballot boxes were seized by the Spanish police. 

ECB tells banks to set aside more cash on bad loans - (Reuters) - The European Central Bank will ask euro zone banks from next year to set aside more cash to cover newly classified bad loans and may also present additional measures to tackle the sector’s huge stock of bad debt, it said on Wednesday. Soured loans are clogging up bank balance sheets and holding back lending, a headache for the ECB as weak credit growth offsets some of the stimulus it is trying to provide through low interest rates. Starting Jan. 1, banks will have at most two years to set aside funds to cover 100 percent of their newly classified non-performing unsecured debt and seven years to cover all secured bad debt, it said in a new proposal, confirming an earlier Reuters report. “In addition, by the end of the first quarter of 2018, ECB Banking Supervision will present its consideration of further policies to address the existing stock of NPLs (non-performing loans), including appropriate transitional arrangements,” it said in a statement. Banks are sitting on nearly 1 trillion euros worth of bad loans, partly a legacy of Europe’s debt crisis, with lenders in places like Italy, Greece, Spain and Cyprus suffering the most. Their problem is that Europe is lacking an effective market for non-performing loans, so selling bad debt would result in big losses and force them to raise capital, a costly exercise given low bank valuations. The provisions will rise gradually, in a linear manner toward 100 percent and actual provisioning in the early part of the given time frame may be higher if local regulations require bigger buffers.

Cabinet is split over how Brexit should happen, Hammond admits -- Philip Hammond has conceded that the cabinet is split over the implementation of Brexit and warned Boris Johnson that his interventions risk weakening the UK’s negotiating position. On the second day of the Conservative party conference, which has been dominated by the issue, the chancellor was unusually frank in admitting that the foreign secretary was not keeping to the agreed cabinet line over Brexit. Asked about a series of newspaper articles and interviews by Johnson in which he set out his personal “red lines” for Brexit, Hammond, who will make his speech to the conference later on Monday, said he accepted that the cabinet was divided.“We know, on this big issue of how we take forward our exit from the European Union, what type of relationship we should have with the European Union in the future, there are differences of view, nobody is denying that,” he told Sky News.“What Boris has been saying is stuff Boris has been saying for the last 18 months. He hasn’t said anything that people didn’t know he was thinking about.”Asked whether he felt Johnson should “shut up” on the issue, Hammond replied: “I think the more we can show unity, the stronger our negotiating position with the European Union would be.”Tory backbenchers and business groups alike have been frustrated by the splits. Adam Marshall, the director general of the British Chambers of Commerce, accused the foreign secretary of destabilising the government and said cabinet divisions were undermining economic confidence.Hammond insisted, however, that Johnson’s interventions would change nothing. Asked about the differences between Theresa May and Johnson over the length of a planned Brexit transition period – she said in her recent speech in Florence this should last “around” two years, while the foreign secretary has argued that 24 months should be the absolute maximum – Hammond said there was no doubt. “The position is very clear,” he said. “I was sitting there in the front row at Florence, and I heard the prime minister very clearly say, a time-limited interim period of around two years. And that’s what the position is.”

Queen’s fury with May: Palace aides claim PM misled monarch by claiming DUP deal was finalised weeks before it was actually signed leaving courtiers ‘alarmed’ at breach of protocol - Daily Mail - Theresa May was offered a pep talk from an SAS soldier in the aftermath of the election disaster, it was claimed today. A wounded Prime Minister was said to be repeatedly crying and at a loss with how to respond to the devastating results. Mrs May angered the Palace by telling the Queen she had a deal with the DUP to hold her Government together a full 17-days before it was struck. The claims all emerged in Sunday Times serialisation of Fall Out: A Year of Political Mayhem. The shocking new detail from Mrs May's botched attempt at securing her own Parliamentary majority exposed the dismay of Palace courtiers. Officials from the Palace were annoyed about Mrs May's speech outside Number 10, where she claimed she had 'formed a Government' and not that the Queen had asked her to form a Government Theresa May (left) broke down in tears after failing to secure a Parliamentary majority, and had to have her make-up redone before meeting the Queen. Her Majesty (right) was said to have been less than impressed with the Conservative Party leader Mrs May was thought to have breached protocol in the manner which she revealed she was going to form a Government. Officials from the Palace were annoyed about Mrs May's speech outside Number 10, where she claimed she had 'formed a Government' and not that the Queen had asked her to form a Government, a Tory peer told the Sunday Times. Advisers to the PM said she had accidentally misled the Queen about her deal with the DUP. A royal source said the 'DUP buggered Mrs May about longer than she thought' and they were 'frustrated' as it was running into Ascot and the state opening of Parliament. A Tory insider said: 'The Palace was irritated. They felt that the deal with the DUP hadn't been done. Gavin (Barwell, Theresa May's new chief of staff) thought he had assurances that he didn't have.' It was also revealed that Mrs May had to have her make-up redone before she visited the Queen because she had been crying.

Sack Boris Johnson for sake of Brexit talks, key MEP urges May - A key ally of the German chancellor has called for Boris Johnson to be sacked to ensure progress in the Brexit talks, as the European commission president, Jean-Claude Juncker, warned of a continuing lack of clarity from Britain’s warring cabinet.Speaking before a vote in the European parliament on Tuesday on the progress of the talks, Manfred Weber, the German leader of the largest political grouping in the chamber, told MEPs that Theresa May should remove the foreign secretary from his post to provide greater certainty on the UK’s positions.“The question for the moment is who shall I call in London [on Brexit]?” Weber said. “Who speaks for the British government – Theresa May, Boris Johnson, or even David Davis? “By reading Johnson’s attacks against his own prime minister he shows the British government is trapped by their own party quarrels and political contradictions … Please sack Johnson because we will have clear answers as to who is responsible for the British position.”

Theresa May faces calls to sack Boris Johnson over Libya comments - Theresa May is facing calls to sack Boris Johnson from her own backbenchers after he said a war-torn Libyan city only had to “clear the dead bodies away” to become a world-class tourist and business destination.Johnson was accused by Labour of being “unbelievably crass, callous and cruel” about those who died in the battle to reclaim Sirte from Islamic State (Isis), after he was asked at the Conservative party conference what it was like visiting Libya as foreign secretary.Speaking about the potential of Sirte, the Libyan city where Muammar Gaddafi was killed, Johnson drew gasps and embarrassed laughter from the audience when he said: “There’s a group of UK business people, wonderful guys who want to invest in Sirte, on the coast, near where Gaddafi was actually captured and executed as some of you may have seen. “And they literally have a brilliant vision to turn Sirte, with the help of the municipality of Sirte, to turn it into the next Dubai. The only thing they’ve got to do is clear the dead bodies away and then they’ll be there.”Heidi Allen was the first Tory MP to call for Johnson to lose his cabinet job over the Libya remarks. She said late on Tuesday that it was “100% unacceptable from anyone, let alone the foreign secretary”, adding: “Boris must be sacked for this. He does not represent my party.”Her Conservative colleague Sarah Wollaston MP joined in the criticism of Johnson, adding: “Demeaning jokes about real people murdered in Libya would be crass even from a standup; appalled to hear this from our foreign secretary.” Anna Soubry, the former Tory cabinet minister, said Johnson was “embarrassing and the PM should sack him”.

Theresa May Could Be Ousted By Christmas As "Quite A Few" MPs "Firmly" Want Her Out: Report -- Following Theresa May's "disastrous" conference speech in Manchester yesterday, in which she had a coughing fit preventing her from speaking for minutes, while a heckler gave her the UK equivalent of a pink slip, and ended with letters falling from the slogan behind the stage and the Prime Minister being comforted by her husband, her political future is reportedly hanging in the balance, leaving her feeling "extremely distraught." Overnight, theTelegraph reported that May could be ousted as Prime Minister as soon as Christmasbecause as many as 30 Tory MPs are said to be preparing a letter calling for May's resignation. In the speech, Mrs May apologised for the election defeat and spoke passionately about Brexit. She said: “We did not get the victory we wanted because our national campaign fell short. It was too scripted, too presidential, and it allowed the Labour Party to paint us as the voice of continuity, when the public wanted to hear a message of change. “I hold my hands up for that. I take responsibility. I led the campaign. And I am sorry.”And while May was "extremely distraught" for all the glitches surrounding her speech, with her Cabinet publicly supported the prime minister, privately Tory MPs said she was “limping like a broken horse into oblivion” and suggested that talks about her departure will have to be “accelerated”. As the Telegraph first reported, May’s apology was well received in the conference hall, but it emerged on Wednesday night that as many as 30 Tory MPs are thought to be prepared to sign a letter calling for the Prime Minister to resign, with one drawing comparisons to Labour’s “sleepwalk into defeat” under Gordon Brown.

Brexit transition deal needed by Christmas, says Bank official - A top official at the Bank of England has warned the government it has less than 12 weeks to agree a transition deal with the EU to prevent City firms starting to move jobs and business out of the UK.Sam Woods, a deputy governor at the Bank, said City firms would activate their Brexit contingency plans if there was no deal on a transition period by Christmas which would mitigate the impact of a hard Brexit in March 2019. Woods also repeated his warning of the strain being put on the Bank’s ability to police the financial sector as a result of the changes firms needed to make.In an annual speech to an audience of financiers at London’s Mansion House, Woods said City firms would become more complicated as a result of the restructuring they would need to undertake. His remarks come after a letter he sent in April to 400 City firms to demand they inform the Bank of England of their plans for Brexit, including if there is a hard exit without any trade deals or access to the single market.A “transition or implementation period” was the most important requirement, Woods said, as he warned that the further away an agreement is from Christmas, the less effective it would be in helping to reassure City firms about the changes they need to cope with Brexit.While the government has acknowledged the need for a transition period, Woods added “the EU’s position on transition is not yet clear – despite some obvious risks to EU financial stability in its absence”. “If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in. Firms would start discounting the likelihood of a transition in the central case of their planning.”

Plan for a very hard Brexit, German firms told - BBC News: German companies with a presence in the UK should be planning for a "very hard Brexit", Germany's biggest industry body has warned. German industry looked "with concern" at the progress of the Brexit talks, said the boss of the Federation of German Industries (BDI), Joachim Lang. Britain "is lacking a clear concept despite talking a lot," he added. Leave campaigners said that if Britain walked away without a deal it would be because of EU negotiating delays. But Britain would thrive nonetheless, said Richard Tice, co-chair of Leave Means Leave. A hard Brexit implies the UK failing to reach a trade deal with the EU, something some UK business lobby groups argue will be highly damaging for the economy. The BDI said it had set up a task force to prepare contingency plans for the UK's departure from the EU, scheduled to take place in March 2019. According to the Reuters news agency, the task force involves major firms including Airbus, Siemens and Deutsche Bank. Mr Lang said the Conservative Party in the UK was deeply divided over Brexit, as shown by this week's conference of the party, held in Manchester. "German companies with a presence in Britain and Northern Ireland must now make provisions for the serious case of a very hard exit," he added. "Anything else would be naive."

EU steps up Brexit talks with Labour over fears Theresa May’s government will fall  --EU negotiators have “significantly” stepped up back-room talks with Labour because they are increasingly concerned Theresa May’s government will collapse before Brexit is complete.Brussels is seeking assurances from Jeremy Corbyn that he will honour agreements reached with the Conservatives if he comes to power.Sources have told The Telegraph there has been “a significant change in tone” from Brussels towards Labour since the general election and meetings since then have been at a higher level and more frequent.Both Mr Corbyn and Sir Keir Starmer, the shadow Brexit secretary, have held meetings with the European Union’s chief negotiator Michel Barnier, the First Vice President of the European Commission Frans Timmermans and others, including members of the Brexit negotiating teams.Meanwhile Sir Nigel Sheinwald, Britain’s former permanent representative in Brussels, said Mrs May’s vulnerability was now a “destabilising” influence on the negotiations.  Mrs May’s calamitous conference speech, and her failure to unite the Conservative Party behind her Brexit plans, has caused concern in Brussels ahead of the resumption of Brexit talks on Monday.

Brexit deadlock CRISIS as UK retaliates against EU's refusal to talk trade -  BRITAIN’S negotiators will refuse to reveal how much they are willing to pay to settle the Brexit divorce bill when they meet their EU counterparts next week, prompting fears the negotiating deadlock has not been broken.  David Davis and his team will keep their cards close to their chest by not disclosing which financial “commitments” the UK will honour, according to senior Whitehall sources.The UK’s new hardline stance was agreed after EU negotiators made it clear that they have no plans to discuss a transitional deal and trade talks at this month’s October European Council summit, despite Mrs May’s generous offer to pay €20billion during a transitional period. The source told the Telegraph: “There won’t be any political movement from the British side on the bill until the EU broadens its package to discuss transition and the future relationship”, but said Britain would still look to hold “technical talks” on the bill.” Relations between David Davis and his Brussels counterpart Michel Barnier appear to have deteriorated and despite both parties describing last month’s talks as “constructive”, both are stubbornly refusing to budge on any of the major stumbling blocks.Sources in Whitehall allegedly privately acknowledged that the deadlock will not be broken next week.EU sources told the paper Michel Barnier would not be satisfied with Britain’s new approach and is set to demand “sufficient progress” on three major areas - the financial settlement, citizens’ rights and Northern Ireland - before discussions move on to trade and transition. One source said: “Two out of the three files is not acceptable. It is three out of three or nothing. You can expect him to be quite tough on that at the beginning of next week.”

EU Dashes UK Fantasy of Talking About “Future Relationship,” Meaning Trade, Soon --Yves Smith - IReaders may recall that the UK wanted to talk about what it calls “the future relationship,” meaning the outlines, and perhaps even the details, of its trade and services deal with the EU in parallel with the negotiation of the other issues now on the table: the so-called exit bill, movement of people, and the Irish border. mWe stressed that this demand amounted to renegotiating the shape of the table, as in the basic parameters of negotiations. This sort of thing is simply not done in negotiations that are already underway. And there were other reasons to expect this push to be rejected:Under EU treaties, the UK cannot negotiate new trade deals until it is out of the EU. The EU has already made a concession (without demanding anything in return, as in a “free concession” which is generous) by being willing to enter into preliminary talks before the UK exitThe UK is acting as if it does not understand that the EU’s chief negotiator, Michel Barnier, is operating under parameters that were approved by all 27 EU members. He does not have the latitude to go outside that without going back and getting their approvalEU leaders made clear what the order of negotiations would be. Whether the UK likes it or not, the EU has all the leverage since the alternative is a disorderly Brexit, which is far more damaging to the UK than the EUThe EU made an additional free concession to the UK in moving the Irish border issue forward into the first set of issues to be consideredThe UK has done nothing to earn the good will of EU leaders or negotiators since the talks have started. UK official have not only continued their pattern of being hostile, often based on claims that show ignorance or deliberate misrepresentation, but have also ignored clear and consistent messages from EU leaders and continue to be shockingly unprepared for negotiations The EU made clear it was unreceptive to the UK’s push at the September round of negotiations, which virtually ground to a halt. Various EU leaders, either in their own name or via leaks, made clear afterwards that the EU was very unlikely to decide, as the UK had hoped, that the EU would decide in October that enough progress had been made on important Brexit issues so as to start talking about “the future relationship”.

No comments: