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

Saturday, November 11, 2017

week ending Nov 11

 Fed Will Keep the Rate Hikes Coming, by Tim Duy - The October employment report came in strong, rebounding from the hurricane-induced weakness of September. Nonfarm payrolls rose 261k while the previous month was revised sharply upward from -33k to 18k. The underlying pace of job growth – currently 167k per month – remains on a downward trend, but at an ever so slight rate of decline. Note also that the consistent, solid gains in temporary help services suggests that despite the gradual softening in the pace of job gains, the overall trajectory looks to remain upward. Importantly, the pace of job growth remains sufficient to drive the unemployment rate lower. The unemployment rate fell to 4.1%, well below the Fed’s estimate of the longer run unemployment rate. To be sure, a fall in the labor force participation rate helped support the fall in the unemployment rate, but note the overall pattern of labor force participation is really just moving mostly sideways. This already is as good as the Fed might hope; the Fed expects demographic forces to weigh on labor force participation over time. The Fed anticipates job growth will slow to something closer to 100k per month before those demographic forces gather more strength in the data. If job growth does not slow by that time, the unemployment rate could make sharper downward moves. The unemployment rate is now further below the Fed’s prediction of 4.3% for the end of this year. In fact, it is currently at the Fed’s prediction for the end of 2018. The Fed’s unemployment forecast was always suspect in my opinion. It never seemed consistent with the growth forecast, which, being above the growth of potential GDP would be likely to support greater unemployment declines than predicted. Indeed, I even argued earlier in the year that the unemployment forecasts were almost reverse-engineered to support an overall forecast consistent with a general path of tightening.

What Could Go Wrong? -- Kunstler - Everybody and his uncle, and his uncle’s mother’s uncle, believes that the stock markets will be zooming to new record highs this week, and probably so, because it is the time of year to fatten up, just as the Thanksgiving turkeys are happily fattening up — prior to their mass slaughter. President Trump’s new Federal Reserve chair, Jerome “Jay” Powell, “a low interest-rate kind of guy,” was obviously picked because he is Janet Yellen minus testicles, the grayest of gray go-along Fed go-fers, going about his life-long errand-boy duties in the thickets of financial lawyerdom like a bustling little rodent girdling the trunks of every living shrub on behalf of the asset-stripping business that is private equity (eight years with the Deep State-ish Carlyle Group) while subsisting on the rich insect life in the leaf litter below his busy little paws. Powell’s contribution to the discourse of finance was his famous utterance that the lack of inflation is “kind of a mystery.” Oh, yes, indeed, a riddle wrapped in an enigma inside a mystery dropped in a doggie bag with half a pastrami sandwich. Unless you consider that all the “money” pumped out of the Fed and the world’s other central banks flows through a hose to only two destinations: the bond and stock markets, where this hot-air-like “money” inflates zeppelin-sized bubbles that have no relation to on-the-ground economies where real people have to make things and trade things. Powell might have gone a bit further and declared contemporary finance itself “a mystery,” because it has been engineered deliberately so by the equivalent of stage magicians devising ever more astounding ruses, deceptions, and mis-directions as they enjoy sure-thing revenue streams their magic tricks generate. This is vulgarly known as “the rich getting richer.” The catch is, they’re getting richer on revenue streams of pure air, and there is a lot of perilous distance between the air they’re suspended in and the hard ground below. Powell noted that the economy is growing robustly and unemployment is supernaturally low. Like his colleagues and auditors in the investment banking community, he’s just making this shit up. As the late Joseph Goebbels used to say describing his misinformation technique, if you’re going to lie, make sure it’s a whopper.

Has Trump Captured the Fed? - Joseph E. Stiglitz - One of the important powers of any US president is to appoint members and heads of the many agencies that are responsible for implementing the country’s laws and regulations and, in many cases, governing the economy. Perhaps no institution is more important in that regard than the Federal Reserve. In exercising that power, Donald Trump has broken a long-standing pattern, going back almost a half-century, whereby the president reappoints (on a non-partisan basis) the incumbent Fed chair, if he or she has been seen to be doing a good job. Probably no chair has done a better job, in a particularly difficult moment, than Janet Yellen.  Whereas her two immediate predecessors greatly tarnished the Fed’s reputation by looking the other way as massive risk was accumulating – and massive fraud occurring – within the financial sector, Yellen restored the Fed’s reputation. Her calm and balanced hand nurtured broad consensus among a Federal Reserve Board characterized by divergent economic philosophies, and she navigated the economy through a slow recovery in a period when fiscal policy was unnecessarily constrained, as duplicitous Republicans hyped the dangers of deficits. The Republicans’ shallow commitment to fiscal rectitude is now being exposed as they advocate massive tax cuts for corporations and billionaires that will add one and half trillion dollars to the deficit over the next decade.  To be fair, Trump chose a moderate, when many in his party were pushing for an extremist. Trump, never shy about conflicts of interest, has an uncanny ability to embrace economic policies, such as the proposed tax cuts, that benefit him personally. He realized that an extremist would raise interest rates – any real-estate developer’s worst nightmare. Trump broke with precedent in another way: he chose a non-economist. The Fed will face great challenges in the next five years, as it reverts to more normal policies. Higher interest rates could give rise to market turmoil, as asset prices undergo a significant “correction.” And many are expecting a major downturn in the next five years; otherwise, the economy would have experienced an almost unheard-of decade-and-a-half expansion. While the Fed’s tool kit has been greatly expanded in the last decade, the Fed’s low interest rates and huge balance sheet – and the possibly massive increase in debt, should Trump get his tax cuts – would challenge even the best-trained economist. Most importantly, there has been a bipartisan (and global) effort to depoliticize monetary policy. The Fed, through its control of the money supply, has enormous economic power, and such power can easily be abused for political purposes – say, to generate more jobs in the short run. But lack of confidence in central banks in a world of fiat money (where central banks can create money at will) weakens long-term economic performance, owing partly to fears of inflation.

NY Fed President Bill Dudley Retiring -- The Federal Reserve's "smooth transition" from Janet Yellen to Jay Powell as Chair, is set for a major speedbump.  Just two short days after Donald Trump confirmed what weekly trial balloons had reported for weeks, namely that Janet Yellen is being replaced with most "dovish" alternative possible in the face of former Carlyle partner and 5 year Fed governor Jerome Powell, the person who according to some is even more instrumental to Fed policy than Janet Yellen, NY Fed president Bill Dudley is reportedly leaving.Late on Saturday evening, CNBC's Steve Liesman reported that Fed vice chairman Bill Dudley, a former Goldman managing director and chief economist, not to mention a key figure in "the unprecedented government response to the financial crisis", is expected to announce his retirement as soon as next week.  Dudley, who has has headed the bank since 2009, will likely retire sometime in the spring or summer of 2018 when his replacement is found and approved, sources told CNBC. His term ends in January 2019. A search committee has already been formed. According to Liesman, Dudley told several colleagues he was planning to leave in 2018, "and his departure is said not to be related to the decision last week by President Donald Trump to name Fed Governor Jerome Powell as the next Fed Chairman." Which probably means that Dudley's departure is precisely that: a protest against Trump's removal of Yellen with whom Dudley had a pristine relationship. Dudley, set to turn 65 next year, became NY Fed president in the immediate aftermath of the Great Financial Crisis and was instrumental in devising the Fed's ZIRP and QE policies.  The New York Fed incumbent always serves as vice chairman of the rate-setting Federal Open Market Committee (FOMC) and always votes at policy meetings, while other regional presidents have a rotating vote. More importantly, before he became NY Fed president, Dudley headed the New York Fed's markets group - also known elsewhere as "the plunge protection team" - which Liesman describes as "a critical job that oversees the trades and market operations required to set the Federal Funds Rate." Liesman is right.

 Does Jerome Powell Hear the Alarm Bells from Flattening Yield Curve? -  Pam Martens -- In November of 2016, there was more than 100 basis points (one percent) difference between the yield on the 2-year and the 10-year U.S. Treasury Note. As of this morning, that difference stood at 68 basis points, a dramatic flattening in the yield curve and harkening to the levels seen during the onset of the financial crisis in 2017. As of 7:48 a.m. this morning, the spread between the 10-year Treasury Note (yielding 2.33 percent) and 30-year Treasury Bond (yielding 2.81 percent) is even smaller, at a meager 48 basis points or less than half of one percent. It is a serious commentary on the bizarre financial times in which we live that a fixed income investor would be rewarded with less than half a percent of additional income to add 20 years of risk to the maturity date on his bond.  A growing economy with related worries about increases in future inflation would typically produce rising yields on longer-term notes and bonds, not declining yields. A dramatic flattening in the yield curve is seen as a red flag for an economic slowdown, sagging inflation and as a potential precursor to the onset of recession. None of that would be consistent with the Federal Reserve continuing to tighten interest rates – which it is expected to do again in December.The dramatic flattening in the yield curve comes at an inopportune time for the Federal Reserve, which is in the midst of passing the baton from a known factor, Chair Janet Yellen, to a less known factor, newly nominated Fed Chair, Jerome Powell. Unlike his recent predecessors, Powell holds no degree in economics. He has a law degree from Georgetown University Law Center and a B.A. in Politics from Princeton University. Powell has served as a member of the Fed Board of Governors since 2012. From 1997 through 2005, Powell was a partner at the private equity firm, the Carlyle Group. He also has significant Wall Street investment bank experience, having previously worked in executive positions at Dillon Reed and Bankers Trust.

The Cost of War for the U.S. Taxpayer Since 9/11 Is Actually Three Times the Pentagon’s Estimate -The United States military has spent more than $5.6 trillion on conflicts since 2001, more than three times the Pentagon’s actual estimate, according to a new study.The Department of Defense reported earlier this year that it had spent around $1.5 trillion on conflicts, including putting putting troops on the ground in Iraq and Afghanistan, air raids in Syria and Iraq to battle the Islamic State militant group (ISIS) and a drone campaign and raids against extremists in Pakistan. But that figure appears to underplay the real cost of war for the American taxpayer, at least according to the Watson Institute of International and Public Affairs at Brown University. It puts the total cost at $5.6 billion, or $23,000 per taxpayer. The Pentagon’s initial estimate put the taxpayer cost at $7,740 per person for the conflicts since the Al-Qaeda-hatched 9/11 attacks in New York that killed almost 3,000 people.“War costs are more than what we spend in any one year on what’s called the pointy end of the spear,” the study’s author, Neta Crawford, told the Wall Street Journal, which first reported its findings. “There are all these other costs behind the spear, and there are consequences of using it, that we need to include.”  The study examines not only the money spent by the Pentagon but also the State Department, the Department of Veterans Affairs and the Department of Homeland Security, for resources dedicated to the “war on terrorism.”  The total costs include financial support for allies in the battle against extremist groups, mostly from eastern Europe, such as Croatia, Georgia, Hungary, Poland, and Romania, and a trillion dollars added for the care of veterans who may have received injuries in the conflicts.  However, the study does not consider U.S. military assistance outside of these countries against ISIS, such as Tunisia, the Philippines or Egypt.

The 'War On Terror' Has Cost American Taxpayers $250 Million A Day For 16 Years --  The U.S. government has spent a staggering $1.46 trillion on wars abroad since September 11, 2001, according to the Department of Defense’s (DoD) periodical “Cost of War” report. As International Business Times reports, this amounts to $250 million a day for 16 years consecutively. The newly released version, published by the Federation of American Scientists’ Secrecy News blog, spans war-related activity from the September 11th terrorist attacks through mid-2017. According to the report, despite the fact that the war on terror is still ongoing rapidly to this day, Operation Iraqi Freedom (2003-2011) and Operation Enduring Freedom (2001-2014) account for the vast majority of the cost, amounting to more than $1.3 trillion collectively.  It must be noted that this analysis only covers direct war-related expenses and is certainly on the lower side of such estimates of the cost of American wars to date.For example, in 2014, a report from Congress’ nonpartisan research arm found that the government had already shelled out over $1.6 trillion for the war on terror. That estimate would amount to approximately $337 million per day every single day for that 13-year period. Last year, a report released by Dr. Neta Crawford, professor of political science at Brown University, found that spending by the United States Departments of Defense, State, Homeland Security, and Veteran Affairs since 9/11 was even higher, reaching almost $5 trillion. That being said, the DoD’s recent report mainly covers the costs of military operational costs, support for deployed troops, and transportation of personnel and equipment. It does not include the expense of veterans’ benefits for troops who served in these wars. The cost of veterans’ benefits alone is projected to be somewhere between $600 billion and $1 trillion. The total also notably does not include “non-DoD classified programs” such as those conducted by the Central Intelligence Agency, which, as we know, has a significant budget of its own. Further, war zones where the U.S. military has been actively engaged in recent years, such as Libya and Somalia, did not even receive specific mentions in the report.

Mattis, Tillerson Want Blank Check to Wage Illegal War - Defense Secretary James Mattis and Secretary of State Rex Tillerson told the Senate Foreign Relations Committee on October 30 that the Trump administration has all the legal authority it needs to kill people anywhere in the world. But just in case Congress wishes to update its old Authorization for the Use of Military Force (AUMF), Mattis and Tillerson told them how to do it: Write a blank check to the president.The October 4 killings of four US soldiers on a "routine training mission" in Niger brought the committee's hearing into sharper focus. It turns out the presence of these troops in Niger was unlawful.  Mattis claimed the four dead US soldiers were just there on a train-and-advise mission. "I think it was reasonable to think they could go out there and train these [Niger] troops without the idea they're going into direct combat; but" he admitted, "that's not a complete answer. I need to wait until I get the investigation to fully appraise it."  Derek Gannon, a former Green Beret, said, "[US military involvement in Africa] is called Low Intensity Irregular Warfare, yet technically, it's not considered war by the Pentagon. But," he added, "warfare is warfare to me."  Mattis insisted that Title 10 of the US Code grants authority for train-and-advise missions anywhere in the world. But the War Powers Resolution (WPR), passed by Congress in the wake of the Vietnam War, specifies that the president's authority to order US troops into hostilities cannot be inferred from any provision of law that does not specifically authorize the use of US forces in hostilities. And Title 10 does not.

US could have almost 16,000 troops in Afghanistan next year - ABC News: The expected deployment of hundreds more U.S. Army trainers to Afghanistan early next year will probably increase the total number of American forces there to almost 16,000, according to U.S. officials. At least 15,000 U.S. forces are in Afghanistan, after President Donald Trump decided to send about 3,800 troops to the country this fall to strengthen efforts to advise Afghan forces and conduct counterterrorism missions. All those extra troops are already in the country, U.S. defense officials said. The Army's new security force assistance brigade is being built and trained at Fort Benning, Georgia, and will head to Afghanistan early next year. Senior U.S. defense officials cited ongoing discussions about whether other American forces would leave when the training unit arrives or whether the trainers would add to the U.S. military footprint already there. The officials said Pentagon leaders, primarily U.S. Defense Secretary Jim Mattis, had initially set a tentative cap of about 15,000 U.S. troops in Afghanistan. But they said Mattis has made clear he is committed to a force level based on military needs, not an arbitrary number. As a result, the officials said they believe the trainers will add to the total U.S. force number in Afghanistan, and not come in as replacements. The officials weren't authorized to publicly discuss the troop numbers and insisted on condition of anonymity.  The Pentagon in August acknowledged having about 11,000 American troops there, after long camouflaging the total in misleading accounting measures and red tape. Under the Obama administration, troops were capped at 8,400. But that limit was routinely exceeded. Commanders shuffled troops in and out, labeled many "temporary" and used other personnel accounting tactics to artificially keep the public count low. Trump has changed the policy, giving Mattis the authority to adjust troops levels based on military requirements and effectively eliminating the cap. Both Trump and Mattis have insisted repeatedly they don't want to talk publicly about troop numbers in Afghanistan because they don't want to give information to the enemy.

Trump Undercuts His Advisers Again With Saudi Tweets - President Donald Trump again showed how quickly his tweets can outrun U.S. foreign policy planning, after he backed Saudi Arabia’s king and crown prince over the arrests of dozens of officials before the State Department had completed its review of the moves. While Trump had talked with Secretary of State Rex Tillerson about Saudi Arabia as they toured Tokyo together Nov. 5 and 6, there was no formal consultation before he tweeted early Tuesday that King Salman and Crown Prince Mohammed Bin Salman “know exactly what they are doing.” I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing.... — Donald J. Trump (@realDonaldTrump) November 6, 2017 A second tweet said “some of those they are harshly treating have been ‘milking’ their country for years!" The tweets were only the latest time Trump has set U.S. foreign policy in 140 characters. It effectively gave the crown prince the full weight of the U.S. backing despite serious questions remaining about Saudi Arabia’s commitment to the rule of law and its ability to guarantee financial transactions. “Having the United States in many ways supporting a position that is seen as quite controversial can be problematic for the region,”  . “Regional instability will continue to spook foreign investors. The Trump administration is seen as erratic.” Trump was responding to King Salman’s order, announced on Nov. 4, to detain 11 princes, four ministers and dozens of former ministers and businessmen, including Prince Alwaleed bin Talal, one of the world’s richest men, as part of an anti-corruption drive led by the crown prince. The move reinforced speculation that he was clearing any remaining obstacles to his son Crown Prince Mohammed bin Salman’s accession to the throne. Trump’s tweeting once again threatens to roil a complex international situation and one of the U.S.’s most critical relationships, and may embolden the crown prince at a time when some administration officials fear he is moving too far too fast.

The Secret Reason Trump Is So Cozy With Saudi Arabia -- As a candidate, Donald Trump used uncommonly harsh language to criticize Saudi Arabia—the world’s largest oil exporter.He called the Saudi regime the world’s biggest funder of terrorism.He also said the Saudi government uses “our petro dollars—our very own money—to fund the terrorists that seek to destroy our people, while the Saudis rely on us to protect them!”At another point, Trump said, “Who blew up the World Trade Center? It wasn’t the Iraqis, it was Saudi [Arabia].”Trump also criticized Hillary Clinton for taking Saudi money for the Clinton Foundation. (They were its biggest “donors.”) He even challenged her to return the money.He also famously got into a Twitter spat with a prominent member of the Saudi royal family, Alwaleed bin Talal. As a candidate, Trump blasted the Saudis countless other times. But, after he took office, Trump did a complete 180.  Mere months after criticizing the Saudis, he was on Air Force One headed to Saudi Arabia to do the sword dance with his new friends.It was his first foreign trip as president. Trump’s about face was astounding. But his newly adopted deference to the Saudis is no different than Obama’s, Baby Bush’s, or any previous president’s. Today, I’ll tell you why Trump made such an abrupt turnaround. I’ll also explain why the Saudis get special treatment from the US Deep State.  After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar. The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce. By the late 1960s, the number of dollars circulating had drastically increased relative to the amount of gold backing them. This encouraged foreign countries to exchange their dollars for gold, draining the US gold supply. It dropped from 574 million ounces at the end of World War 2 to around 261 million ounces in 1971. To plug the drain, President Nixon “temporarily” suspended the dollar’s convertibility into gold in 1971. This ended the Bretton Woods system and severed the dollar’s last tie to gold. At this point, oil-producing countries began to demand payment in gold instead of rapidly depreciating dollars. So, the US government concocted a new scheme—the petrodollar system. It gave foreign countries another compelling reason to hold and use the dollar. The new arrangement preserved the dollar’s special status as the world’s top reserve currency. From 1972 to 1974, the US government made a series of agreements with Saudi Arabia that created the petrodollar system. In essence, the petrodollar system was an agreement that the US would guarantee the House of Saud’s survival.

Iran Blames Jared Kushner For Middle East Turmoil -  Iran’s foreign minister accused President Trump’s senior adviser and son-in-law Jared Kushner of being responsible for the surprise resignation of Lebanon’s prime minister over the weekend, a move that further fueled the regional rivalry between Tehran and Riyadh, and may have resulted in a ballistic missile being fired - and intercepted - near the Saudi capital, Riyadh. As reported on Saturday, Saad Hariri unexpectedly announced his resignation while visiting Riyadh, where he accused Saudi nemesis Iran and its Lebanese proxy Hezbollah of having a “grip” on Lebanon. He also said he feared for his life. In response, the Iranian foreign minister said the US and Saudi Arabia were responsible for Hariri’s resignation, claiming on twitter that the move was meant to sow tension in Lebanon and the Middle East, the The Times of Israel first reported.  “Visits by Kushner & Lebanese PM led to [Saad] Hariri’s bizarre resignation while abroad,” Mohammad Javad Zarif tweeted. “Of course, Iran is accused of interference.” Addressing Saudi Arabia’s intervention in the Yemeni civil war, Zarif accused the kingdom of bombing Yemen “to smithereens, killing 1000’s of innocents including babies.” He also said Saudi Arabia “spreads cholera and famine” in its southern neighbor. The Iranian foreign minister also accused Saudi Arabia of “regional bullying” and destabilizing the Middle East, while trying to pin the blame on Iran. “KSA is engaged in wars of aggression, regional bullying, destabilizing behavior & risky provocations. It blames Iran for the consequences,” he said.’

Lebanon Hariri crisis: Tillerson warns against Saudi-Iran proxy war - BBC News: US Secretary of State Rex Tillerson has warned other countries against using Lebanon for proxy conflicts, following a crisis triggered by the resignation of its prime minister, Saad Hariri. Iran and its Lebanese ally, the militant Shia group Hezbollah, claim the Saudis detained Mr Hariri and forced his resignation. Mr Tillerson said he had received assurances that Mr Hariri was free. Mr Hariri resigned a week ago while in the Saudi capital, Riyadh. "There is no legitimate place or role in Lebanon for any foreign forces, militias or armed elements other than the legitimate security forces of the Lebanese state," Mr Tillerson said in a statement. "The United States strongly supports the sovereignty and independence of the Republic of Lebanon and of its political institutions," he added. Mr Tillerson encouraged the prime minister to return to Lebanon and clarify the situation so the government could function, expressing concern about how the crisis might affect the stability of the fragile coalition.The delay in response from America's top diplomat - it took him six days to respond to the crisis - has renewed criticism that the US lacks a strategy for the crucial region. Under the direction of Saudi Arabia's crown prince and heir to the throne Mohammed bin Salman, a new anti-corruption body last week detained 11 of the kingdom's princes, four sitting ministers and dozens of ex-ministers. President Donald Trump tweeted on Tuesday to say he had "great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing." Appearing to contradict the president, not for the first time, Mr Tillerson said on Friday: "It raises a few concerns until we see more clearly how these particular individuals are dealt with." 

A Small-Time U.S. Mission in Syria is a Dangerous Idea -- After months of fighting, ISIL-held Raqqa has fallen to U.S.-backed and Kurdish-led forces. The military campaign against ISIL as a territorial entity will be over soon, and the United States will have to decide what to do with its troops currently operating in parts of Syria seized from the group. Amid months of administration promises to “roll back” Iranian influence in the region, politicians and experts have called for or articulated strategies for the same. Former Ambassador James Jeffrey has testified to the House Foreign Affairs Committee: U.S. forces should remain in a train-and-equip capacity in Iraq, as well as in Syria. The ostensible purpose of the latter presence is to protect enclaves and U.S. partners from a resurgence of terrorism, but it would also implicitly put military pressure on Damascus and Iran to negotiate seriously in the Geneva process regarding Syria’s future political situation. The Center for a New American Security’s Ilan Goldenberg has outlined a strategy suggesting the use of U.S. and allied forces in those post-ISIL areas to “prevent Iranian shipments of weapons.” Goldenberg notes that taking the eastern province of Deir al-Zour “could mean U.S. troops may well stay in Syria after ISIL is defeated, or that the U.S.-allied Kurdish-led forces could function as a proxy for an anti-Iranian agenda, including cutting Iranian lines of communication.”  There is merit in containing Iranian influence in this critical region, but doing so effectively would require commitment and a tolerance for risk that the current administration seems to lack. Despite its anti-Iranian rhetoric, a frank assessment of interests suggests the administration is likely to pursue dangerous half-measures in Syria. Rather than weaken Iran, such an approach will likely strengthen it by eventually forcing a humiliating U.S. retreat.

Does Russia Now Have Superior Military Technology? -- “Do you think his assessment is accurate?” was the subject line of an email I got from a good friend recently. The email referred to the article by Paul Craig Roberts “One Day Tomorrow Won’t Arrive” which claimed that “the US military is now second class compared to the Russian military“. The article then went on to list a number of Russian weapons systems which were clearly superior to their US counterparts (when those even existed). My reply was short “Basically yes. The US definitely has the quantitative advantage, but in terms of quality and training, Russia is way ahead.It all depends on on specific scenarios, but yes, PCR is basically spot on“. This email exchange took place after an interesting meeting I had with a very well informed American friend who, in total contrast to PCR, insisted that the US had complete military supremacy over any other country and that the only thing keeping the US from using this overwhelming military might was that US leaders did not believe in the “brutal, unconstrained, use of force”. So what is going on here? Why do otherwise very well informed people have such totally contradictory views? First, a disclaimer. To speak with any authority on this topic I would have to have access to a lot of classified data both on the US armed forces and on the Russian ones. Alas, I don’t. So what follows is entirely based on open/public sources, conversations with some personal contacts mixed in with some, shall we say, educated guesswork. Still, I am confident that what follows is factually correct and logically analyzed.

Trump Asks For $4 Billion To Beef Up US Missile-Defense Systems --President Donald Trump is preparing to head to South Korea where he will meet with the country’s president (and purported “fine gentleman”) Moon Jae-in to strategize about their simmering standoff with North Korea. Meanwhile, back home, his allies in Congress are carrying out his instructions to request another $4 billion to expand the US’s missile-defense capabilities in the face of the growing threat from the North. “This request supports additional efforts to detect, defeat, and defend against any North Korean use of ballistic missiles against the United States, its deployed forces, allies or partners,” President Trump wrote in a letter to Congress on Monday.According to the Hill, The supplemental budget request sent to Congress Monday also asks for $1.2 billion more for the administration’s new Afghanistan strategy and almost $700 million to repair the two Navy destroyers that were badly damaged in a series of at-sea collisions this summer.It also reiterates the president’s desire for Congress to pass $1.6 billion in funding for a wall on the border with Mexico.“Providing for the safety and security of the American people is my top priority,” Trump wrote in the letter. “That priority is reflected in both the enclosed DOD Budget amendments and the border wall request, which provides the down payment on what [Customs and Border Protection] needs to secure the southwest border."Spending on ballistic-missile defense enjoys broad bipartisan support (despite providing a false sense of security, at best). Defense hawks have long sought more missile defense in recent years as North Korea’s missile program has steadily advanced. If approved, the money would probably go toward construction of an additional Ground-Based Interceptor field at Fort Greely, Alaska, as well as initial funding to buy 20 new interceptors for the system.

Securing North Korean nuclear sites would require a ground invasion, Pentagon says - WaPo - The only way to locate and secure all of North Korea’s nuclear weapons sites “with complete certainty” is through an invasion of ground forces, and in the event of conflict, Pyongyang could use biological and chemical weapons, the Pentagon told lawmakers in a new, blunt assessment of what war on the Korean Peninsula might look like.The Pentagon, in a letter to lawmakers, said that a full discussion of U.S. capabilities to “counter North Korea’s ability to respond with a nuclear weapon and to eliminate North Korea’s nuclear weapons located in deeply buried, underground facilities” is best suited for a classified briefing.The letter also said that Pentagon leaders “assess that North Korea may consider the use of biological weapons” and that the country “has a long-standing chemical weapons program with the capability to produce nerve, blister, blood and choking agents.” The Pentagon repeated that a detailed discussion of how the United States would respond to the threat could not be discussed in public.The Pentagon said that calculating “best- or worst-case casualty scenarios” was challenging and would depend on the “nature, intensity and duration” of a North Korean attack; how much warning civilians would have to get to the thousands of shelters in South Korea; and the ability of U.S. and South Korean forces to respond to North Korean artillery, rockets and ballistic missiles with their own retaliatory barrage and airstrikes. The letter noted that Seoul, the South Korean capital, is a densely populated area with 25 million residents.

Rep. Nancy Pelosi says she’d support a ground invasion in North Korea as a last resort - In response to a recent report by the Pentagon that a ground invasion would be the only way to eliminate North Korea’s nuclear capabilities, 15 Democratic members of Congress have spoken out against the idea of a military conflict — but one top Democrat says it could be a possibility.When asked about her support for a ground invasion on CNN’s State of the Union Sunday, House Minority Leader Nancy Pelosi said she would be open to it as a last resort.“Well, I think we have to exhaust every other remedy,” Pelosi said. “North Korea’s behavior has to be stopped, reversed — they cannot have a nuclear weapon.”Pelosi went on to say her concerns about North Korea extend to how the country sells its nuclear weapons, in addition to developing them for its own use.“My concern about North Korea is not only what they’re doing, but what they’re advertising, that they may want to sell some of this technology,” Pelosi said, citing a past trip to Pyongyang during which the country said it was developing nuclear technology to sell to other countries.“So it’s not only that they have it, but that they could sell it — and that proliferation ... is a danger to the entire world, and they must be stopped,” Pelosi added.The House leader emphasized her primary support for a diplomatic resolution, telling host Jake Tapper, “I’d like to think that we’d exhaust every diplomatic remedy because ... we’re poking a stick in the eye of a mad dog.”The possibility o f a ground invasion was condemned in stronger terms by many of Pelosi’s Democratic colleagues — and one Republican — who called the Pentagon’s report “deeply disturbing” in a joint statement.

Trump in Asia: On the eve of war -- The conduct of Donald Trump in Japan, the first country visited in his tour of Asia, strongly suggests that he is preparing to launch a war against North Korea. The US president flew into the Yokata Air Base near Tokyo. Instead of beginning his stay in Japan by meeting with the country’s political leaders, he elected first to speak to an assembly of American military personnel, part of the force being readied to make good his threat to “totally destroy” North Korea with “fire and fury.” Amid chants of “USA, USA,” he shed his suit jacket and put on an Air Force bomber jacket. He proceeded to deliver a nationalist rant. The United States, he blustered, deploys “the most fearsome fighting force in the history of the world.” “America’s warriors,” he continued, “are prepared to defend our nation using the full range of our unmatched capabilities. No one—no dictator, no regime and no nation—should underestimate, ever, American resolve.” In the manner of a mafia don, Trump gloated: “Every once in a while, in the past, they underestimated us. It was not pleasant for them, was it?” In Japan, this comment was widely interpreted as a reference to the dropping of atomic bombs on Hiroshima and Nagasaki and the slaughter of tens of thousands of civilians.With his statements and demeanour, Trump personifies the decay of American imperialism and the criminal calculation of its strategists that the destruction of yet another impoverished country will provide some respite from its mounting external and internal crises. In American strategic circles, war with North Korea is considered a way of pushing back against the growing influence of China in Asia and signalling that US capitalism will not give up its position as the dominant power in the region and internationally.

Trump tells Japan to build more cars in the US ‘instead of shipping them over,’ but they already build millions of vehicles in the states  — President Donald Trump on the second day of his trip to Japan urged the country's automakers to build more cars in the US "instead of shipping them over."  At a gathering of US and Japanese business leaders in Tokyo on Monday, Trump lamented that "many millions of cars are sold by Japan into the United States, whereas virtually no cars go from the United States into Japan." He characterized the perceived disparity as an unfair trade advantage in favor of Japan.  "The United States has suffered massive trade deficits at the hands of Japan for many, many years," Trump said according to Reuters, while praising Japan for its spending on US military equipment.  Trump's remarks on Japanese auto manufacturing caught the attention of industry watchers in the US. Some of the top Japanese automakers, including Toyota, Honda, and Nissan, already build millions of their best-selling vehicles in the states annually.  Toyota's largest auto manufacturing plant in the world is in Georgetown, Kentucky. It employs 8,200 people and the company announced in April that it would spend $1.3 billion to upgrade the facility.  At least nine of the Toyota brand's best-selling vehicles are manufactured in the US, including the Toyota Camry sedan, the Highlander and Sequoia SUVs, the Toyota Corolla, and the Lexus ES350 luxury sedan. Those vehicles are assembled at plants in Indiana, Mississippi, Kentucky, and Texas.  In 2016, Honda manufactured nearly 70% of the cars it sold in the US in America, according to the manufacturer. And Nissan builds eight vehicles, including the best-selling Altima family sedan, at its Canton, Mississippi, plant.

Trump says Japan would shoot North Korean missiles ‘out of sky’ if it bought U.S. weaponry (Reuters) - U.S. President Donald Trump said on Monday that Japan would shoot North Korean missiles “out of the sky” if it bought the U.S. weaponry needed for doing so, suggesting Tokyo take a stance it has avoided until now. North Korea is pursuing nuclear weapons and missile programs in defiance of U.N. Security Council sanctions and has made no secret of its plans to develop a missile capable of hitting the U.S. mainland. It has fired two missiles over Japan. Trump, speaking after a summit with Japanese Prime Minister Shinzo Abe, repeated his mantra the “era of strategic patience” with North Korea was over, and said the two countries were working to counter the “dangerous aggressions”. Trump also pressed Japan to lower its trade deficit with the United States and buy more U.S. military hardware. “He (Abe) will shoot them out of the sky when he completes the purchase of lots of additional military equipment from the United States,“ Trump said, referring to the North Korean missiles. ”The prime minister is going to be purchasing massive amounts of military equipment, as he should. And we make the best military equipment by far.” Abe, for his part, said Tokyo would shoot down missiles “if necessary”. Trump was replying to a question that was posed to Abe - namely how he would respond to a quote from Trump from a recent interview in which he said Japan was a “samurai” nation and should have shot down the North Korean missiles. Japan’s policy is that it would only shoot down a missile if it were falling on Japanese territory or if it were judged to pose an “existential threat” to Japan because it was aimed at a U.S. target. 

Trump Softens Tone on North Korea, Urges Deal on Nuclear Weapons -- President Donald Trump toned down his harsh rhetoric toward North Korea during a visit to Seoul, telling reporters the Pyongyang regime should “come to the table” to make a deal and refusing to rule out direct talks. Trump’s remarks were a far cry from his comments in recent months, when he promised “fire and fury” against North Korean leader Kim Jong Un and suggested negotiations with Pyongyang were a waste of time. With his remarks, Trump went further than he has before, amid the recent tensions, in saying he was open to engaging with Kim’s regime. “I really believe that it makes sense for North Korea to come to the table and to make a deal that’s good for the people of North Korea and the people of the world,” Trump said at a briefing alongside South Korean President Moon Jae-in. “I do see certain movement, yes, but let’s see what happens.” Pyongyang’s accelerated missile and nuclear weapons program -- and a war of words between Trump and Kim -- have jangled nerves in Asia and the U.S. and ratcheted up tensions to the highest level in decades. Nowhere is that anxiety felt more acutely than in Seoul, with a metropolitan area of more than 25 million people and a location in striking range of the regime’s hundreds of artillery guns. "Talks and some kind of deal are the only way out of this," said John Delury, an associate professor of Chinese studies at Yonsei University in Seoul. "What really needs to happen now is quiet conversation between American and North Korean officials. For the Americans to be able to talk with any credibility the North Koreans need to know” Trump is on board. It wasn’t immediately clear how far Trump was willing to go on the notion of making a deal with the North Koreans at this time. Also, the long-held U.S. position is that no direct talks can occur until North Korea gives up its nuclear weapons. North Korea has said it won’t negotiate away its nuclear weapons unless the U.S. drops its hostile policy toward the nation and offers security guarantees. 

Donald Trump warns North Korea: 'Do not try us' - BBC News: US President Donald Trump has issued a blunt warning to North Korea's leader Kim Jong-un in an address to South Korea's parliament. "Do not underestimate us. Do not try us," he said, while also condemning the "dark fantasy" of life in the North. He addressed Mr Kim saying "the weapons you are acquiring are not making you safer", and urged other nations to join forces to stop Pyongyang. The US leader is now in China as part of a five-nation tour of Asia. He will meet Chinese counterpart Xi Jinping for talks likely to focus on trade and North Korea. Pyongyang's nuclear ambitions have been high on Mr Trump's agenda throughout this trip. Over the past year North Korea has carried out missile tests in defiance of UN sanctions and in September conducted its sixth and biggest nuclear test.Mr Trump's words to South Korean lawmakers were being closely watched and while his rhetoric was stark, he did not repeat his previous bombast towards the North. In an unexpected move, Mr Trump chose to directly address North Korea's leader in his speech, urging him to discard his nuclear programme and weapons. "They are putting your regime in grave danger," warned Mr Trump. "Every step you take down this dark path increases the peril you face." He also made reference to North Korea's founder and Mr Kim's grandfather, Kim Il-sung, in words likely to inflame Pyongyang. "North Korea is not the paradise your grandfather envisioned. It is a hell that no person deserves."  But Mr Trump also appeared to reiterate Tuesday's offer to reach a deal, saying that "despite every crime you've committed... we will offer you a path for a better future".

China Has Upper Hand, While U.S. Is Hobbled by Trump -- Despite all of America's economic and military power, it's a weakened president who arrived in Asia this weekend. Trump is more unpopular than any previous president at this juncture; neither he nor the U.S. command respect from many countries, and he is besieged by problems at home, especially a wide-ranging criminal investigation of his campaign and possibly him. None of that disappears because he's 10,000 miles away."Trump is not going in with a strong hand," says Graham Allison, the Harvard professor and former national security official who wrote a book on the potential conflict between the two countries. "He may not know that." Moreover, a 12-day, five-nation Asian trip is punishing even for a president in good physical condition, which Trump is not, or who engages in careful preparation, which he does not. There will be too many opportunities for mishaps.There are multiple substantive issues, including trade and real access to Chinese markets, not just a couple of deals likely to be announced, as well as frictions in the South China Sea, amid some indications of a less aggressive Chinese posture there. But North Korea, with its expanding nuclear threat, is the dominant question.Trump plans to pressure Beijing to strong-arm the North to relinquish nuclear weapons. The Chinese have contempt for the regime in Pyongyang. Neither Xi nor Kim Jong Un have visited each other's countries since taking power. Some Chinese officials privately refer to the North Korean as "little fatty." But the most unacceptable outcome for Xi is a regime collapse, a unified Korea. The Chinese won't sit still for that. Earlier this year, in a session at Mar-a-Lago, Xi explained the complexities of the Korean Peninsula to the U.S. president. This time he might offer another history lesson, reminding Trump that in 1950 General Douglas MacArthur assured Washington that a war with China over Korea was "inconceivable."

"He Loves Things Splendid And Magnificent": Beloved Trump Set For Hero's Welcome By Chinese Super Fans - Despite his constant threats to label China a currency manipulator last summer and endless complaints about the U.S. trade deficit with the manufacturing giant, President Trump is apparently a legend in China.  As Reuters notes this morning, Trump is expected to receive a hero's welcome tomorrow when he arrives in Beijing from adoring Chinese fans who admire that "he loves things splendid and magnificent" and that he "loves to show off." On platforms such as the Twitter-like Sina Weibo, Trump’s Chinese supporters, who admire his business success and a free-wheeling style unconstrained by political correctness, are far more prominent than detractors. While no comprehensive survey has been done to assess the size and intensity of Trump’s popularity in China, several pundits suggest he has broad and vocal support. “Chinese people are impressed that he is extremely rich, he loves things splendid and magnificent, and he loves to show off. Not every billionaire is like that."  But the Chinese apparently love Trump for more than just his open willingness to flaunt his wealth, they, like many Americans who threw their support behind the unconventional candidate last year, also have an affinity for his lack of political correctness which they consider "elitist and unrealistic."  Trump’s popularity in China largely comes from his disdain for political correctness and defiance of traditional liberal western views, which many Chinese consider elitist and unrealistic, Chen said. "In China, realists hold a deep-rooted belief that the rule of the jungle means the strong prey on the weak,” Chen said. “For them, the world is not split into right and wrong, good or evil, it is only success or failure, the powerful and the weak.”

 China's Xi fetes Trump on first day of Beijing trip - (Reuters) - With lavish pageantry and an uncharacteristic personal flourish, Chinese President Xi Jinping on Wednesday rolled out a red carpet welcome for U.S President Donald Trump at the Forbidden City, the ancient home of China’s emperors.  While North Korea and trade are set to dominate the formal part of the visit, which ends on Friday, China has been keen to show the importance it puts on Trump’s visit, the first by a foreign leader since the end of a key Communist Party congress last month where Xi cemented his power. Trump and his wife Melania were whisked from Beijing airport - where they were met by China’s top diplomat Yang Jiechi, a key player in the outreach to Trump since he won election a year ago - straight to the Forbidden City. Chatting over cups of tea, Trump showed Xi a video of his granddaughter Arabella Kushner singing in Mandarin and reciting classical Chinese poetry, prompting Xi to compliment her performance as worthy of an “A+”, Chinese state media said. Xi said he hoped Arabella would visit China soon, noting that she was already a “child star” in China, the official Xinhua news agency said. A video of Arabella reciting a Chinese poem went viral on Chinese social media shortly after Trump’s election last year.

 Democrats Now Concerned Trump Is Colluding With China –- After trying (and so far failing) for a year to prove that President Trump and/or members of his campaign team colluded with Russia to throw the 2016 election, Democrats have now decided to pivot to a slightly tweaked new narrative which suggests the President may actually be colluding with China instead. As the Washington Examiner points out today, just as Trump gets set for meetings in China tomorrow, Senator Richard Blumenthal has suddenly taken a new interest in the Industrial and Commercial Bank of China which rents commercial space in Trump Tower. In a call with reporters, Blumenthal said a Chinese bank renting space at Trump Tower in New York is illegal without congressional permission and may be influencing Trump's policy decisions. “To be really blunt, an arm of the Chinese government is paying President Trump rent for his building, and last year as you all know China granted President Trump 40 trademarks,” the Connecticut Democrat said on a conference call.“These approvals of trademarks closely followed the president’s abrupt decision as president to honor the One-China Policy, a reversal of his earlier position," he said. "Shortly after receiving those trademark registrations, President Trump flip-flopped on labeling China a currency manipulator.” “As he travels to China, we’re left wondering, Americans are left wondering if President Trump is representing American interests or his own, and which he’s going to put first," he said.

Trump’s $250 billion China ‘miracle’ adds gloss to ‘off-kilter’ trade (Reuters) - President Donald Trump can return to the United States claiming to have snagged over $250 billion in deals from his maiden trip to Beijing. Whether those deals live up to the lofty price tag is another question altogether. Watched by Trump and China’s President Xi Jinping at a signing ceremony in Beijing, U.S. planemaker Boeing Co, General Electric Co and chip giant Qualcomm Inc sealed lucrative multi-billion dollar deals. “This is truly a miracle,” China’s Commerce Minister Zhong Shan said at a briefing in Beijing. The quarter of a trillion dollar haul underscores how Trump is keen to be seen to address a trade deficit with the world’s second-largest economy that he has long railed against and called “shockingly high” on Thursday. But U.S. businesses still have many long-standing concerns to complain about, including unfettered access to the China market, cybersecurity and the growing presence of China’s ruling Communist Party inside foreign firms. William Zarit, chairman of the American Chamber of Commerce in China, said the deals pointed to “a strong, vibrant bilateral economic relationship” between the two countries. “Yet we still need to focus on leveling the playing field, because U.S. companies continue to be disadvantaged doing business in China.” U.S. tech companies like Facebook Inc and Google are mostly blocked in China. Automakers Ford Motor Co and General Motors must operate through joint ventures, while Hollywood movies face a strict quota system. “(These deals) allow Trump to portray himself as a master dealmaker, while distracting from a lack of progress on structural reforms to the bilateral trade relationship, 

Trump threatens China over North Korea and trade | Defend Democracy Press: Yesterday, the overblown state honors paid by the Chinese regime to Donald Trump, and the latter’s reciprocation with gushing flattery of Chinese President Xi Jinping and his wife, failed to prevent the US president from issuing a new threat against North Korea and delivering an ultimatum to China that it grant massive economic concessions to US corporations. Trump delivered his speech yesterday afternoon, in the Great Hall of the People in Tiananmen Square, to an audience of the Chinese Communist Party elite and flanked by President Xi. While, compared with other Trump speeches, his tone and rhetoric were measured, the content was nonetheless bellicose and ominous. On the spurious pretext that North Korea’s small nuclear arsenal poses an existential danger, US imperialism is preparing to launch a devastating war on the Korean peninsula. Trump declared: “The US is committed to the complete and permanent de-nuclearisation of North Korea … All nations must come together to ensure this rogue regime cannot threaten the world with its nuclear weapons. “Time is quickly running out. We must act fast and hopefully China will act faster and more effectively on this problem than anyone. “I’m also calling on Russia to help rein in this potentially very tragic situation.”

Trump Slams China For Unfair Trade But Blames White House Predecessors; Unveils $250BN In Deals --  President Trump held a press conference with one of the most powerful people in the world and the event was...  underwhelming. It didn’t last long, the two stood fairly far apart at their lecterns and afterwards ignored questions from reporters (presumably in case one asked Xi about press freedoms again). In brief, we were informed about improving Sino-US relations, progress being made on the trade balance and co-operation on the North Korean issue and both leaders said it was a great success. On another sensitive subject, Xi’s asserted that the Pacific Ocean is big enough for both countries. Here is how the press conference was characterised by the South China Morning Post (SCMP). Trade and North Korea predictably topped the bill, but they also discussed security cooperation and the relationship between their citizens. The joint press conference lasted less than 15 minutes, with both leaders staying on-script to speak about further cooperation on a range of bilateral issues, from security on the Korean peninsula to Sino-US trade tensions. Both heralded the trip as a success. The joint press conference ends, with both leaders ignoring shouted questions from reporters. Journalists were told ahead of the conference that they would not be allowed to ask questions, after a New York Times reporter embarrassed Xi during Barack Obama’s 2014 visit with a question about press freedom in China. In one of the more memorable statements by Trump, the US President said China is taking advantage of American workers and American companies with unfair trade practices, but he blamed his predecessors in the White House rather than China for allowing the massive U.S. trade deficit to grow. Right now, unfortunately, it is a very one-sided and unfair [relationship]. But – but – I don’t blame China. After all, who can blame a country for taking advantage of another country for the benefit of its own citizens? I give China great credit. But in actuality I do blame past administrations for allowing this out of control trade deficit to take place and to grow. We have to fix this because it just doesn’t work … it is just not sustainable.”

Trump’s Flashy $250 Billion China Haul Has Little Substance -- The headline number is impressive: A quarter-trillion dollars worth of deals from China that President Donald Trump can use to show he’s creating opportunities for U.S. businesses and jobs for his base. The reality, however, is that the roughly 15 agreements unveiled on Thursday are mostly non-binding memorandums of understanding and could take years to materialize -- if they do at all. A day earlier, Commerce Secretary Wilbur Ross announced $9 billion of deals, many also MOUs with few details, rather than contracts. “To me this is an old-style visit when you pile up all the deals so you can to get a big number,” said James McGregor, China chairman of the consultancy APCO Worldwide. “This was normal when the U.S. and China were just building ties, but now China is a global business power and has very damaging industrial policies and this seems naive. This is all for show for President Trump to demonstrate his deal-making prowess.” Both Trump and Chinese President Xi Jinping hailed the deals on Thursday, calling them examples of “win-win” cooperation between the world’s biggest economies. At the same time, Xi said that China would open its market according to its own “timetable and roadmap” while calling to respect each other’s “differences” -- showing that Trump will find it harder to press him for substantive policy changes. The non-committal nature of many of the deals reflects a lack of planning or advance work ahead of Trump’s visit to pin down significant agreements or concessions from China, according to two administration officials who asked not to be identified to speak about private deliberations. The officials pointed to the fact that there were no agreements on giving U.S. companies more access to Chinese markets, or opening up Chinese financial markets -- something investors have been demanding for years. 

Trump’s “$250 Billion” of China Trade Deals: As Usual, Hype Greatly Exceeds Reality -- Yves Smith - Trump, who said he’d do only “great” trade deals and would designate China a currency manipulator, announced $250 billion of trade deals with China as proof that he has successfully wrestled mano-a-mano with Premier Xi and bringing home lots of goodies for long-suffering American workers. A more accurate point of view might be that Xi appears not to have gone out of his way to put Trump down, as Trump had done during Xi’s Mar-a-Lago visit, by arriving after Xi had landed and other diplomatic snubs.  Instead, Xi engaged in the classic Chinese strategy of overwhelming leaders with ceremony and pampering. Quartz explained that this show is effective: But Chinese president Xi Jinping added a creamy layer of pomp and circumstance to the mix when the White House delegation reached Beijing. Trump has been feted with everything from an unprecedented private dinner in the Forbidden City to a red carpet welcome in Tiananmen Square, the Beijing landmark where hundreds of students were killed by the Chinese military in 1989… China’s government is “playing Trump like a fiddle,” said Jorge Guajardo, Mexico’s ambassador to China from 2007 to 2013. “You don’t have good chemistry with a Chinese leader who doesn’t speak your language and is geared to not develop chemistry,” he said. The Communist Party’s top aides are masterful at making diplomats and foreign businessmen feel special… “I would be lying to you if I tell you I didn’t fall for it when I was there,” he added. Max Bauchus confirmed Guajardo’s take: Max Baucus, a former U.S. ambassador to China, told Bloomberg Television, “This is classic Chinese. They have been doing this for thousands of years.” “It’s their technique to try to suck you in,” Baucus said. “I think all this ceremony here is designed by the Chinese in part to prevent any serious conversation. The more there is pomp and circumstance, the less there is time to talk.” Trump was on good behavior: Trump brought up North Korea but said Xi could solve it. He raised the trade deficit but said it was not China’s fault. He said the Chinese people are very proud of Xi. Trump is hampered not only by being a foreign policy newbie who has a distaste for boning up, but also by having gaps in staffing of his Asia team. And underpreparation didn’t help.  The result was a big headline number – $250 billion! – that is mainly hot air. Many of the actual deals were either already done or largely done or things that China wanted and had previously been denied. The rest were handwaves that may not get done. From Bloomberg:

Trump brings tough trade message in vision for Asia  (Reuters) - U.S. President Donald Trump set out a strong message on trade at a meeting of Asia-Pacific countries in Vietnam on Friday, saying the United States could no longer tolerate chronic trade abuses and would insist on fair and equal policies.  Trump said the United States was ready to make a bilateral deal with any country in the Indo-Pacific region, but only on the basis of “mutual respect and mutual benefit”. “When the United States enters into a trading relationship with other countries or other peoples, we will from now on expect that our partners will faithfully follow the rules,” he said in the seaside resort of Danang. “We expect that markets will be open to an equal degree on both sides and that private investment, not government planners, will direct investment,” he said in a speech ahead of a summit of Asia-Pacific Economic Cooperation (APEC) leaders. Trump arrived in Vietnam from China on the fourth leg of a 12-day trip to Asia. Redressing the balance of trade between Asia and the United States is at the center of Trump’s “America First” policy he says will protect U.S. workers. The difference between Trump’s and China’s approaches was made more stark by comments in a later speech from Chinese President Xi Jinping, who said globalization was an irreversible trend and voiced support for multilateral trade deals. While China has by far the biggest trade surplus with the United States, Vietnam is also on the list of those surpluses the Trump administration seeks to reduce. 

 In APEC Speech, Trump Slams China, WTO And TPP For Holding Back His "Indo-Pacific Dream" -- Trump may have sensed that he appeared too conciliatory towards President Xi and China during his visit to Beijing, and so shortly after doubling down on his parting message to China by tweeting that "I don’t blame China, I blame the incompetence of past Admins for allowing China to take advantage of the U.S. on trade leading up to a point where the U.S. is losing $100's of billions. How can you blame China for taking advantage of people that had no clue? I would've done same!"... ... which prompted countless snarky comments from the blue-check gallery, Trump arrived in Vietnam where he immediately spoke at the APEC (Asia Pacific Economic Cooperation) summit; here the US president went back to his  "roots" of harshly criticizing China, its state-owned enterprises, all manner of anti-competitive practices by the Middle Kingdom, the WTO and the TPP. Trump also added that the United States will no longer tolerate the abuses and, while previous administrations have done nothing about them, he will. In summary, Trump:

  • Slammed China for the unacceptable trade deficit, lack of market access, government-run industrial planning, currency manipulation and other abuses for gaining economic advantage;
  • Slammed China’s subsidised state-owned enterprises which carry out the government’s predatory industrial policy and put private competitors out of business;
  • Slammed China for forcing companies to surrender technology to the state and forcing them into joint ventures to gain market access;
  • Slammed the WTO for unfairly treating the US and allowing countries, notably China, to break the rules;
  • Slammed the TPP (without naming it directly) which would tie America’s hands, remove its sovereignty and prevent the enforcement of WTO rules;
  • Will make bilateral trade agreements with Indo-Pacific nations; and
  • Stated that economic security is national security.

While Trump’s speech was greeted with a standing ovation, we suspect it was less well received by his new “friends” in Beijing.

 White House Moves To Formally Reverse Obama-Era Detente With Cuba -  After months of blustery rhetoric and half measures, the White House is finally taking steps to undo another one of former President Barack Obama’s legacy-defining foreign-policy accomplishments.The Washington Post reports that, in a landmark ruling, the Trump administration is reversing some of Obama detente with Cuba by cracking down on travel and business with the island. Under the new rules, most individual visits to Cuba will no longer be allowed, and U.S. citizens will again have to travel as part of a licensed group, accompanied by a group representative. Americans will also be barred from staying at a long list of hotels and from patronizing restaurants, stores and other enterprises that the State Department has determined are owned by or benefit members of the Cuban government, specifically its security services.

U.S. Proposes Freezing Mexican Trucks Out of New Nafta -  The U.S. has proposed another difficult change to the North American Free Trade Agreement that could eventually restrict long-haul Mexican truckers from operating in the country, according to people familiar with the discussions. American negotiators asked to remove Mexico’s long-haul industry from a Nafta chapter on cross-border services, according to an industry official familiar with the proposal who isn’t authorized to speak publicly. That could open the door to restrictions on truckers, as losing Nafta trade protections and advantages would make it harder for Mexico to challenge any future U.S. requirements on trucks such as new safety checks.One government official familiar with the text said the U.S. proposal would allow restrictions and limitations on Mexican trucking if certain conditions were reached, while another official described it as a broad industry exclusion that came during the last round of talks in October. Neither was authorized to speak publicly. The U.S. Trade Representative’s office declined to comment, and hasn’t made its proposals public. Reuters also reported last month that the U.S. was seeking fresh restrictions on long-haul trucks from Mexico, citing a person familiar with discussions.The U.S. for years after Nafta came into effect resisted giving Mexican truckers the right to operate throughout the country.   It wasn’t until 2015 that the U.S. gave licensed Mexican truckers the right to haul cargo throughout the nation. The U.S. proposal on Mexican trucking adds to a list of contentious demands that President Donald Trump’s team has signaled must be met to keep the 1994 pact alive. The U.S. has also asked to scrap a dispute mechanism that is essential to Canada, the third party to Nafta, and to tighten local content rules for cars.

Perdue hoping for the best, preparing for the worst - Agriculture Secretary Sonny Perdue said his department is working within the administration and with Congress to protect farmers and ranchers from the shock caused by a potential NAFTA withdrawal. "We're talking with the administration and Congress about some mitigation efforts if that were to occur; about how we could protect our producers with that [farm] safety net based on prices that may respond negatively to any kind of NAFTA withdrawal," Perdue told reporters after a USDA ceremony honoring veterans on Wednesday. The statement from Perdue is significant as it is one of the first public, Cabinet-level admissions that preparations are underway to respond to a potential NAFTA withdrawal -- a move President Donald Trump has repeatedly threatened. That’s a shift from when U.S. Trade Representative Robert LIghthizer told reporters after the last round of talks that he had not directed any analysis of what a withdrawal from NAFTA might mean for the U.S. economy. Perdue doesn't think a contingency plan will have to be put into action, however, saying that he believes NAFTA 2.0 will be "successfully" renegotiated. And while he acknowledged that pulling out of NAFTA could have "some tragic consequences" for U.S. producers, he said that farmers can adapt to changes in the market. Read more here from Pro Agriculture’s Catherine Boudreau.

Despite Trump Campaign Promise, Billionaires’ Tax Loophole Survives Again -From early in the 2016 presidential campaign, Donald Trump swore he’d do away with the so-called carried-interest loophole, the notorious tax break that allows highly compensated private-equity managers, real estate investors and venture capitalists to be taxed at a much lower rate than other professionals. “They’re paying nothing, and it’s ridiculous,” Trump said in August 2016. “These are guys that shift paper around and they get lucky.” They were, he concluded, “getting away with murder.”As recently as late September, his chief economic adviser, ex-Goldman Sachs executive Gary Cohn, insisted that the administration was set on closing what’s also referred to as the “hedge-fund loophole,” though hedge funds profit from it less than private-equity firms. “The president remains committed to ending the carried interest deduction,” Cohn told CNBC. “As we continue to evolve on the framework, the president has made it clear to the tax writers and Congress. Carried interest is one of those loopholes that we talk about when we talk about getting rid of loopholes that affect wealthy Americans.”Yet the sweeping tax legislation released by House Republicans leaves the treatment of carried interest untouched. The preservation of the loophole is only the latest and starkest example of how a policy that is increasingly attacked as unfair and unjustified by people on both sides of the aisle has managed to survive through the influence of its well-placed beneficiaries.  When it comes to the new tax bill, that influence surely included Stephen Schwarzman, chief executive of the Blackstone Group, one of the largest private-equity firms in the country. Schwarzman alone is estimated to have saved close to $100 million per year as a result of the treatment of carried interest, which makes up the vast bulk of his roughly $700 million annual income in recent years. A major longtime donor to Republican candidates, Schwarzman quickly emerged earlier this year as a leading and highly influential advisor to Trump.  The loophole has also been very valuable to partners in large-scale real estate investment — such as Trump himself. Estimates of the loophole’s total cost to the Treasury range from $1 billion per year to more than $10 billion.

Goldman On Tax Reform: "Now Comes The Hard Part" - The ink wasn't even dry yet on the just published Republican Tax Cut And Jobs Act, and within the hour UBS was already confident that it has virtually no chance of passing: As UBS chief economist Seth Carpenter wrote shortly after the publication, "to our read, the release confirms our view that tax reform is far from being a done deal. The bill contains several specifics that we believe will prove sticking points, which increase the difficulty of finding the votes to support the plan in both the House and the Senate." Fast forwarding to Carpenter's conclusion: "We maintain our view that tax reform is unlikely this year or next." Goldman CEO's skepticism was obvious in a report released this afternoon by economic Alec Phillips, who looked at the tax plan released on Friday, and said that while Goldman still assigns a two-thirds chance of tax reform passing, it conceded that "now comes the hard part." First, here are the big picture details:

  • The recent release of the House tax reform bill marks the start of the second, harder, stage of tax reform. The plan cuts the corporate tax rate to 20% and reduces taxes on individual and “personal business” income while  staying within the $1.5 trillion (over 10 years) cost limit recently agreed to in the House and Senate. Achieving all three goals had appeared quite difficult in our view but the proposal does it, according to the official estimates.
  • The House proposal includes substantial reforms. However, this greater-than-expected base broadening has already generated some political opposition, which is likely to lead to changes to the House bill as it moves forward.  The Senate is likely to release its own version with even greater differences within the next week or so, in our view.
  • The proposed tax cut is more front-loaded than we have expected; official estimates suggest a tax cut of 0.75% of GDP in 2018. However, we expect the final version to have a smaller near-term effect as competing priorities lead tax-writers to phase in some cuts—particularly corporate rate cuts—over time. Senate Republican centrists have already expressed concerns about the cost and might balk at tax cuts that expire after five years, since the true ten- year fiscal cost would rise if they were extended.
  • The net tax cut appears to be weighted more heavily toward individual and “pass-through” income than to the corporate sector. This is surprising considering the proposed immediate and permanent 20% corporate tax rate, but appears to be the result of substantial base-broadening, new restrictions on cross-border corporate activity, and the fact that several existing tax incentives are set to expire, which offsets a portion of the net tax cut under the legislation.
  • We continue to believe that tax legislation has around a two-thirds chance of becoming law by early 2018. The release of the House legislation is a positive step in that it moves the process forward. It also demonstrates that  meaningful base-broadening might be more achievable than we have believed. However, it does not alter our outlook for the odds of enactment, since the Senate is likely to release its own bill shortly and the vote in that chamber represents the greater obstacle to passing tax reform.

House GOP quietly revises tax bill to tax income at higher rates over time - House Republicans on Friday quietly made changes to their far-reaching tax overhaul: Now its tax cuts would be less generous for many Americans.A day after the GOP unveiled its plan promising middle-class relief, the House's top tax-writer, Rep. Kevin Brady, R-Texas, released a revised version of the bill that would impose a new, lower-inflation "chained CPI" adjustment for tax brackets immediately instead of in 2023. That means more income would be taxed at higher rates over time — and less generous tax cuts for individuals and families. The change, posted on the website of the Ways and Means Committee, reduces the value of the tax cuts for ordinary Americans by $89 billion over 10 years compared with the legislation released with fanfare Thursday. As wages rise, middle-class taxpayers would have more of their income taxed at the 25 percent rate instead of at 12 percent, for instance."The bill's like a dead fish: The more it hangs out in the sunlight, the stinkier it gets," Senate Democratic Leader Chuck Schumer pronounced after word of Brady's change. "The more people learn about this bill, the less they're going to like it." The change to the plan frees up money for Brady, the committee's chairman, to use to address concerns by lawmakers when changing the bill further next week. The Ways and Means panel begins work on Monday, a final bill-writing process expected to take four days.Brady on Friday called it "a challenge of a lifetime legislatively."President Trump and the Republicans are driving to push through a major tax-cutting bill this year to secure a legislative  accomplishment, following their stinging failure to overturn and replace the Obama health care law. The Republicans, facing increasing pressure to produce a marquee legislative victory before next year's elections, are promoting their tax plan as a spark for economic growth and a boon to the stressed middle class.  Brady, in a statement releasing the revised bill, stressed "pro-growth tax reform that will deliver more jobs, fairer taxes, and bigger paychecks for people across our country."

Tax Bill to Run Four-Day Gauntlet on Route to House Floor Vote - The House tax-writing committee begins debate Monday on the GOP’s proposed overhaul, kicking off four frantic days for lobbyists and lawmakers to revise a bill that represents President Donald Trump’s final hope for a signature legislative achievement this year. The head of the tax-writing panel, Kevin Brady, has signaled that he intends to allow revisions during his committee’s meetings this week -- but not when the bill is on the full House floor. That means other House members will have to settle for a take-it-or-leave-it vote -- perhaps as soon as the week of Nov. 13. Lobbyists and lawmakers are going to want to make their preferred changes, but “people are dreaming -- it’s awfully hard to get those tweaks in there,” said John Feehery, a Republican lobbyist and former House leadership aide. White House legislative affairs director Marc Short downplayed concerns a vote would be rushed through, saying in an interview Monday on Bloomberg Television that “it’s not really four days” but rather several weeks, because the legislation also must clear the Senate and a conference process.  Short acknowledged that Republicans have a “very narrow” margin for passage in the Senate but said, “We’re confident we’ll get it done.” The strategy underscores the importance of reaching deals on such divisive provisions as ending most of the individual deductions for state and local taxes -- part of the bill that would affect high-tax states like New York and New Jersey the most. Other points of contention include plans to reduce the cap on the mortgage-interest deduction to $500,000 and to create tough rules for which partnerships, limited liability companies and other so-called pass-through businesses would qualify for a major rate cut. As lawmakers struggle to contain the costs of the tax package, it will be important for House leaders to control what amendments might be attached, Feehery said. “If you tend to pull one strand away then the whole thing collapses,” he said. “So that’s why you don’t want to have amendments on the floor. You have to pay for it somehow. And pretty soon you have this house of cards that’s going to collapse.” 

Multinationals grapple with Republican excise tax surprise (Reuters) - The Republican tax bill unveiled last week in the U.S. Congress could disrupt the global supply chains of large, multinational companies by slapping a 20-percent tax on cross-border transactions they routinely make between related business units. U.S. President Donald Trump talks about a newly unveiled Republican tax plan with House Republican leaders in the Cabinet Room of the White House in Washington, U.S., November 2, 2017. REUTERS/Carlos BarriaEuropean multinationals, some of which currently pay little U.S. tax on U.S. profits thanks to tax treaties and diversion of U.S. earnings to their home countries or other low-tax jurisdictions, could be especially hard hit if the proposed tax becomes law, according to some tax experts. Others said the proposal could run afoul of international tax treaties, the World Trade Organization and other global standards that forbid the double taxation of profits if the new tax did not account for income taxes paid in other countries. The proposed tax, tucked deep in the 429-page bill backed by President Donald Trump, caught corporate tax strategists by surprise and sent them scrambling to understand its dynamics and goals, as well as whether Congress is likely ever to vote on it. Whether the proposed reforms ever become law is uncertain, with weeks and possibly months of debate and intense lobbying still ahead. The House package overall has drawn criticism for adding too much to the federal budget deficit and too heavily favoring the rich and big business. However, the corporate tax part, experts said, included some ambitious proposals worthy of further discussion. They said the 20 percent excise tax is one such proposal targeting the abuses of so-called transfer-pricing where multinationals themselves set prices of goods, services and intellectual property rights that constantly move between their national business units. Under global standards, those prices should resemble those available on the open market. However, if a foreign parent charges U.S. affiliates inflated price, it can reduce its U.S. tax bill and effectively shift profits to a lower-tax country, reducing the entire corporation’s overall tax costs. 

 The Republican tax plan imposes a new divorce penalty - The Republican tax plan hasn't met the expectations of advocates for "family-friendly" tax reform. Its child-credit provision is disappointingly small, in the eyes of Sen. Marco Rubio, and it abolishes the adoption tax credit altogether. But there is one provision that could be construed as "pro-family": a tax penalty for divorce. The tax bill released Thursday would change the tax treatment of alimony. Currently, alimony is tax-deductible for the paying spouse and taxable to the receiving spouse. But if you get divorced after the plan is enacted, that would change: Alimony would be paid out of after-tax dollars and would be tax-free to the recipient. This change would tend to increase the total amount of tax paid by divorced couples, since the ex-spouse who pays alimony is typically the one with the higher income and who faces a higher tax bracket. The bill summary for the tax plan offers this argument: "The provision would eliminate what is effectively a 'divorce subsidy' under current law, in that a divorced couple can often achieve a better tax result for payments between them than a married couple can." That's true for some ex-couples, particularly those who have relatively equal incomes. But if you and your ex-spouse have relatively equal incomes, there's probably not a substantial alimony payment between the two of you anyway. For couples in which one spouse makes much more than the other, the situation in which you would expect substantial alimony, this change doesn't eliminate a divorce tax bonus. It creates a divorce tax penalty.  All told, the change would lead to the federal government collecting an additional $8.3 billion in taxes from divorced couples over the next 10 years, according to the bill summary.

Commercial Real Estate, Which Fueled Trump’s Fortune, Fares Well in Tax Plan — An industry familiar to President Trump appears to have emerged from the Republican tax rewrite relatively unscathed: commercial real estate. For months, commercial real estate developers had been concerned that the tax plan in the works would make it more difficult or expensive for them to take out huge bank loans or would damage demand in the property market.  But if the plan unveiled this week by House Republicans comes to pass, developers like Mr. Trump, who made much of his fortune building skyscrapers, hotels and resorts, will have little to worry about.  “The industry was left whole,” said Thomas J. Bisacquino, president of NAIOP, a commercial real estate development trade group. “The provisions we feel are working will still work.” Developers were fearful that the special tax treatment of “carried interest” — fees that are taxed as capital gains, not income — would be amended, or that they would no longer be able to deduct interest expenses from their taxable profits. They were also concerned that certain exchanges of commercial property, which currently enjoy a tax deferral, would face immediate taxation.  But the bill included no such changes to the industry, and developers are thankful.“I think Trump, having lived through a couple of real estate cycles, probably is in tune with this more than the average policy maker,” said Martin Schuh, the head of government relations at the CRE Finance Council, a commercial real estate advocacy group. “Him being an active industry participant gives him an insight that most folks don’t have.” Companies can now deduct their interest expenses on commercial loans, but under the House bill, certain industries would face a cap on the amount of interest that could be deducted each year. But that cap would not apply to commercial real estate.

Republican House Members Think a $450K Salary is Middle Class  Republicans suddenly believe that one percenters are barely struggling to be in the middle class, party officials revealed. On Thursday, House Republicans issued a fact sheet about their new tax cut plan that referred to Americans earning $450,000 a year as “low- and middle-income” — even though that income level would put those taxpayers in the top 0.5 percent of all individual Americans.The median household income in the United States is $59,039, after all. The GOP made the announcement as part of the rollout of the tax cut plan, saying they would cut tax rates from 39.6 percent to 35 percent for those $450,000-earning middle class members — but the announcement was quickly overshadowed by the Republicans' bizarre understanding of wealth. "Did somebody make a mistake?" laughed AFL-CIO Policy Director Damon Silvers when told of the income classifications by the GOP. "[Republicans] think that the income level of the top one percent is lower- and middle-class. This is a world where if you make less than $500,000, you don't exist." There is no formal definition of the American middle class, but the Tax Policy Center puts its “middle quintile” between $48,300 and $85,600 a year. Sixty percent of Americans say that the tax plan favors the wealthy, according to a new poll. Democrats are calling the bill a “Trojan Horse,” that helps the rich under the guise of aiding the middle class.

John McCain Confirms: Tax Reform Is "DOA In The Senate" - It’s official: The Republican tax reform bill is dead on arrival in the Senate now that John McCain has become the third Republican senator to confirm that he plans to vote against it. What’s worse for the Trump administration, McCain reportedly wants the bill to receive input from both parties – a criticism that he cited as his reason for voting against the Trump administration’s plan to repeal and replace Obamacare. This is particularly problematic because there’s approximately zero chance that any Democratic lawmakers will break ranks to vote with Republicans, despite President Donald Trump repeatedly saying that he expects to win over Democrats. McCain reportedly confirmed his opposition – and also that the bill in its current form is DOA – during an interview with Fox Business’s Charlie Gasparino. #BreakingNews -- senator GOP making it known not happy w house tax plan@SenJohnMcCain telling people its DOA we discuss now @FoxBusiness  Sources: GOP Senators have been privately criticizing the House tax reform bill, including @SenJohnMcCain. I discuss NOW on @FoxBusiness! — Charles Gasparino (@CGasparino) November 6, 2017 In recent weeks, John McCain has reiterated his demand that Republicans pass their tax plan through a bipartisan process that honors the norms of regular order. McCain voted down his party’s Obamacare repeal bill precisely because it failed to meet this standard. And it will be impossible to pass the House plan - or anything close to it - through any but a rushed, secretive, partisan process. On Monday, Susan Collins declared her opposition to repealing the tax on multimillion-dollar estates. The current bill includes such a repeal, and many House conservatives seem deeply attached to the provision for some mysterious reason. And for months now, Bob Corker has also insisted that he wouldn’t vote for any tax plan that adds even a penny to the debt, even during the first ten years, where Congress would legally be allowed to do so. As it stands, the House plan would increase the deficit by a total of $1.5 trillion over ten years.And at this rate, it’s unclear if the plan in its current form will even pass the House.

The Plot Against America’s 99% - Nouriel Roubini - After multiple failed attempts to “repeal and replace” the 2010 Affordable Care Act (Obamacare), US President Donald Trump’s administration now hopes to achieve its first legislative victory with a massive tax giveaway that it has wrapped in the language of “tax reform.” To that end, Republicans in the US Congress have just unveiled a bill that, if enacted, could vastly widen the deficit and increase the public debt by as much as $4 trillion over the next decade. Worse still, the Republican plan is designed to funnel most of the benefits to the rich. It would lower the corporate tax rate from 35% to 20%, reduce the tax on capital gains (investment profits), eliminate the estate tax, and introduce other changes that benefit the wealthy.Like the Republicans’ health-care proposals, their tax plan offers little to struggling middle- and working-class households. Trump continues to govern as a pluto-populist – a plutocrat pretending to be a populist – who has not hesitated to betray the people he conned into voting for him.Before releasing the current plan, congressional Republicans passed resolutions to reduce taxes by $1.5 trillion over the next decade. But the actual tax cut will likely be much larger. The proposal to lower the corporate tax rate to 20%, for example, implies a $2.5 trillion tax cut, once other tax cuts in the plan are considered. To keep the tax cuts below $1.5 trillion, one would have to keep the corporate rate at or above 28% and broaden the tax base.To make up for this difference, the bill proposes a cap on the mortgage-interest deduction for homeowners, and on the deductibility of property tax, as well as eliminating other tax benefits for the middle class. It would eliminate or cap the income-tax deduction for state and local taxes – again, squeezing the middle class to cover tax cuts for the rich. The problem is that eliminating the state and local tax deduction would provide just $1.3 trillion in revenue over the next decade. And if congressional Republicans and the Trump administration end up keeping the state and local tax deduction, their tax cuts will add $3.8 trillion to the public debt over the next decade.

The numbers are in, and the House Republican tax bill raises taxes on nearly a third of Americans - The House Republican tax bill would cause nearly 28 percent of taxpayers to pay more by 2027, according to a new analysis by the widely respected, nonpartisan Tax Policy Center. On average, the analysis finds, every income group would see lower taxes in 2018. About 60.4 percent of the cuts would go to the richest fifth of taxpayers, with 21.9 percent going to the top 1 percent — less regressive than some past GOP plans, but still a noticeable upward tilt. The poorest families, earning less than $10,000 a year, would see a minuscule tax cut of only $10 on average, or 0.1 percent of income. The richest, earning $1 million or more, with get $52,130 on average, for a 2.4 percent raise. However, the averages conceal the fact that a minority of households would see taxes go up right away. About 12 percent of households would pay more taxes, with tax hikes concentrated among the richest Americans. Nearly a third of the top 0.1 percent (families earning $3.4 million or more) would see a tax hike in 2018:  That picture changes dramatically in 2027. The Republican plan slowly phases in some tax increases for the middle class, including a new inflation measure used to change thresholds for tax brackets. A tax credit of $300 per adult, meant to replace personal exemptions, would expire after only five years. It also phases in elimination of the estate tax, a change that exclusively helps the hyperwealthy: Those provisions mean that in 2027, the bill is considerably more regressive, with 75.8 percent of benefits going to the richest fifth and 48.4 percent to the top 1 percent. In 2027, the poorest 40 percent of the country would see a tax increase on average. In total, 27.5 percent of households would pay more in 2027 under the plan than they’re currently set to pay. That includes nearly half of households making between $225,400 and $304,600, the 90th to 95th percentiles.

Republican Plan Would Raise Taxes on Millions - Nearly half of all middle-class families would pay more in taxes in 2026 than they would under current rules if the proposed House tax bill became law, and about one-third would pay more in 2018, according to a New York Times analysis, a striking finding for a bill promoted as a middle-class tax cut.President Trump and congressional Republicans have pitched the plan unveiled last week as a tax cut for most Americans. But millions of middle-class families — particularly those with children — would see an immediate tax increase, averaging about $2,000. Among the hardest-hit under the plan would be some of the most vulnerable taxpayers: those with huge out-of-pocket medical expenses.By 2026, 45 percent of middle-class families would pay more than what they would under the existing tax system.The preliminary Times analysis found that, in 2018, the plan would cut taxes for about 68 percent of families in the middle class, broadly defined as those earning between two-thirds and twice the median household income, or between about $50,000 and $160,000 per year for a family of three. For most of those families, the cut would be about $1,300 in 2018. In order to focus on families, the analysis excluded individual filers and households headed by people 65 or older and is adjusted for the size of each household. The bill is likely to change significantly in coming days. On Monday evening, the House’s tax-writing Ways and Means Committee began the formal process of reviewing the bill, which could involve dozens of amendments, some of them substantial. The bill, which the House could pass as early as this week, is likely to change further in the Senate, where procedural rules place practical limits on how much the plan can add to the federal deficit. The Times analysis looks at the direct effect of the tax changes on Americans’ incomes and does not account for changes in economic growth that Republicans say will amplify the impact of the tax cut and deliver higher wages to Americans across the income spectrum. Economic models disagree about the size of those effects, but generally agree they would be smaller in the initial years after a bill was passed since the tax cuts would take a while to filter throughout the economy.

How a Tax Cut Turns Into a Tax Increase – House Republicans have put forward a plan to fundamentally revamp the tax code and provide large tax breaks to the highest income Americans through rate cuts on business income and repeal of the estate tax. However, House Republicans have also claimed that the plan provides significant tax breaks to middle-income families. It turns out, though, that those tax breaks for the middle are small as compared to what’s offered to the top, and disappearing. In rolling out their plan, House Republicans focused on an example family — a married couple making $59,000 per year and with two kids. They said that family would get a tax cut of over $1,182 in 2018 (compared to what they paid in 2017). But, what they didn’t say is that a family making $59,000 would face a tax increase by 2024 relative to current law, with the tax increase potentially rising to nearly $500 by 2027. This is even as tax cuts for those at the top are maintained. The figure below shows the tax change under the House plan by year relative to current law. It starts with a tax cut of $1,106 in 2018. (This is a bit less than the figure advertised by the House Republicans since this compares apples to apples: their 2018 plan as compared to 2018 current law, as opposed to comparing the plan in 2018 to 2017 liability like the House Republicans did.) But, that tax cut dissipates over time and finally reverses. The pattern of a tax cut turning into a tax hike is the result of several factors:

  • · First, the plan’s “Family Flexibility Credit” ($300 each for the tax filer and spouse) expires after 2022.
  • · Second, the plan repeals personal exemptions which, under current law, would allow a $4,150 write off per person in a household as of 2018. The personal exemption in the plan is, in part, replaced by an expansion of the Child Tax Credit (of $600 per child) and the Family Flexibility Credit. However, the personal exemption is indexed to inflation under current law, and those replacements are not. Further, the Family Flexibility Credit expires.
  • · Third, the plan indexes the tax system to a measure of inflation that would provide somewhat lower cost of living adjustments each year on average. This results in a slowly growing tax increase over time.

Which States Are Givers and Which Are Takers? - For my money, one of the more interesting maps appearing recently came from the personal-finance website WalletHub. Analysts there set out to determine how states compare in terms of their reliance on federal funding. The WalletHub analysts essentially asked how much each state receives back as a return on its federal income-tax investment. They compared the 50 states and the District of Columbia on three metrics: 1) federal spending per capita compared with every dollar paid in federal income taxes; 2) the percentage of a state’s annual revenue that comes from federal funding; and 3) the number of federal employees per capita. The third measure received only half the weight of each of the others in the calculation. What the resulting map shows is that the most “dependent states,” as measured by the composite score, are Mississippi and New Mexico, each of which gets back about $3 in federal spending for every dollar they send to the federal treasury in taxes. Alabama and Louisiana are close behind.  If you look only at the first measure—how much the federal government spends per person in each state compared with the amount its citizens pay in federal income taxes—other states stand out, particularly South Carolina: The Palmetto State receives $7.87 back from Washington for every $1 its citizens pay in federal tax. This bar chart, made from WalletHub's data, reveals the sharp discrepancies among states on that measure. On the other side of this group, folks in 14 states, including Delaware, Minnesota, Illinois, Nebraska, and Ohio, get back less than $1 for each $1 they spend in taxes. It’s not just that some states are getting way more in return for their federal tax dollars, but the disproportionate amount of federal aid that some states receive allows them to keep their own taxes artificially low. That's the argument WalletHub analysts make in their 2014 Report on Best and Worst States to Be a Taxpayer.  This chart tells the story.

Carried Interest Tax Break May Be Changed, House Tax Chief Says - The carried interest tax break that provides an advantage for investment managers would be revised under changes the House’s chief tax writer says he’s planning. House Ways and Means Chairman Kevin Brady said on CNBC Monday morning that he intends to attach a “two-year holding period” to carried interest. The tax break is used widely among private-equity managers, venture capitalists, certain real estate investors and hedge fund managers. Carried interest is the portion of an investment fund’s profit -- usually a 20 percent share -- that is paid to investment managers. Currently, tax authorities treat that income as capital gains, making it eligible for a tax rate as low as 23.8 percent -- on gains from assets held for a year or more. The top tax rate for ordinary income is 39.6 percent. The change would double the length of time an asset would have to be held to qualify for the lower rate. “We will put in the two-year holding period on carried interest to make sure it’s really focused on those long-term, traditional real estate partnerships,” Brady said on CNBC. “Alterations to the treatment of carried interest -- and all other capital gains -- discourages investment and jeopardizes economic growth,” Mike Sommers, the chief executive officer of private equity industry group the American Investment Council, said in an emailed statement. The council “appreciates that comprehensive tax reform is a difficult and complicated process, and we look forward to continued engagement with members of Congress and the administration to ensure pro-growth policies are maintained in a new tax code.” 

House GOP quietly revises tax bill to tax income at higher rates over time - CBS - House Republicans on Friday quietly made changes to their far-reaching tax overhaul: Now its tax cuts would be less generous for many Americans. A day after the GOP unveiled its plan promising middle-class relief, the House's top tax-writer, Rep. Kevin Brady, R-Texas, released a revised version of the bill that would impose a new, lower-inflation "chained CPI" adjustment for tax brackets immediately instead of in 2023. That means more income would be taxed at higher rates over time — and less generous tax cuts for individuals and families. The change, posted on the website of the Ways and Means Committee, reduces the value of the tax cuts for ordinary Americans by $89 billion over 10 years compared with the legislation released with fanfare Thursday. As wages rise, middle-class taxpayers would have more of their income taxed at the 25 percent rate instead of at 12 percent, for instance. "The bill's like a dead fish: The more it hangs out in the sunlight, the stinkier it gets," Senate Democratic Leader Chuck Schumer pronounced after word of Brady's change. "The more people learn about this bill, the less they're going to like it." House Minority Leader Nancy Pelosi blasted the tax bill unveiled by House Republicans as "a terrible assault on opportunity for the middle class" and said her GOP colleagues are "taking American people for suckers." The change to the plan frees up money for Brady, the committee's chairman, to use to address concerns by lawmakers when changing the bill further next week. The Ways and Means panel begins work on Monday, a final bill-writing process expected to take four days. Brady on Friday called it "a challenge of a lifetime legislatively." 

Multinationals Scurry to Defuse House Tax Bill’s ‘Atomic Bomb’ - Multinational companies including Apple Inc., Pfizer Inc. and Ford Motor Co. would face a new tax on payments they make to offshore affiliates under the House Republicans’ tax bill -- a surprise provision that has stunned tax experts.The new 20 percent tax is “the atomic bomb in the draft” legislation, said Ray Beeman, co-leader of Ernst & Young’s Washington Council advisory services group. “We’re trying to get our arms around the implications.”So far, many big U.S. companies have kept quiet on the proposal. But already, House Ways and Means Chairman Kevin Brady has tweaked the provision to lessen its impact, part of a package of changes the tax-writing panel adopted Monday night. The committee will continue debating the bill Tuesday.House tax writers say the proposed excise tax is aimed at preventing U.S. companies from shifting their earnings offshore to subsidiaries in tax shelters -- and it moved into the spotlight this week amid a series of global investigative reports on corporate tax avoidance. But tax practitioners say the provision has far larger implications for consumer prices on a range of goods. “It’s a very big gorilla in the living room,” . Tech companies, pharmaceutical makers, automakers and reinsurers are the companies most likely to be concerned, he said.  A Pfizer spokeswoman said it was premature to comment, and an Apple spokesman declined to comment. Ford did not respond to requests for comments.The tax would apply to billions of dollars in intellectual-property royalties that technology and pharmaceutical firms make to their overseas affiliates each year - - payments often linked to tax-avoidance strategies. But it would also hit U.S. companies’ imports of generic drugs, cars and other products from their affiliates. Global insurers would incur the levy on the cost of “reinsurance” they buy from foreign affiliates.

House Amendment Guts Offshore Tax Provision - House Republican tax writers effectively gutted a proposal to tax U.S. companies’ payments to related foreign affiliates, part of a package of late changes on Monday that punched a $74 billion revenue hole in their tax-overhaul plan, according to a preliminary estimate from Congress’s Joint Committee on Taxation. The change leaves House Ways and Means Chairman Kevin Brady searching for new ways to offset the bill’s tax cuts in order to keep the legislation in line with Congress’s 2018 budget resolution and avoid the threat of a Democratic filibuster in the Senate that could kill it.The panel voted late Monday to approve a group of changes that Brady said “better tailors” provisions aimed at preventing companies from shifting their earnings offshore to avoid U.S. taxes. As a result, the revenue from a proposed 20 percent excise tax on certain corporate payments to related offshore affiliates dropped to about $6.5 billion from $154.5 billion earlier, the JCT found.The excise tax proposal had stirred concern among various tax experts. One called it “the atomic bomb in the draft.”By changing that provision and others, the committee increased the 10-year deficit that the tax bill would produce by $160.7 billion, to $1.57 trillion. Congress has approved a 2018 budget resolution that capped any deficit spending at $1.5 trillion. The JCT document surfaced Tuesday evening.Meanwhile, after fiery clashes on the first day of its tax bill markup, the Ways and Means Committee ended a relatively quiet Tuesday with Republicans voting down a swath of Democratic-led amendments designed to box them in politically. The proposed amendments included calling for limiting the debt increase under the tax bill after the second year, restoring the state and local tax deduction, and ending the SALT deduction for businesses (Democrats argued that if individuals can use it, it’s unfair to allow businesses to). Other proposals sought to raise the corporate tax rate enough to achieve revenue-neutrality under the bill, preserve the Work Opportunity Tax Credit for employers who hire veterans and restore the adoption tax credit.

Tax plan could mean bigger hit from FDIC premiums — Bankers are generally happy with the House Republican tax plan released last week, but one provision of the proposed overhaul is likely to give them pause: a cutback in the deduction for deposit insurance premiums.The tax reform proposal did not include a "bank tax" per se, but the reduction in Federal Deposit Insurance Corp. assessments that can be deducted as a business expense — including eliminating the deduction altogether for banks with over $50 billion in assets — is seen as a definite drawback in a plan the industry is hailing for the most part. "The just-introduced tax reform legislation can be fairly characterized as the ‘screw the big banks, again’ provision,” said Bert Ely, a bank consultant in Alexandria, Va.  The GOP plan estimated that restricting the FDIC-related deduction would result in $13.7 billion in revenue for federal coffers from 2018 through 2027. Banks between $10 and $50 billion in assets would see a gradual decrease in what they could deduct, while the plan would not affect the deduction for banks with less than $10 billion.If the plan is enacted, it would not be the first time lawmakers have looked to big banks to help pay for legislation not specifically tied to financial services. The 2015 Fixing America’s Surface Transportation Act included a measure to cut banks' Federal Reserve dividend to raise money for the highway trust fund.The tax plan provision "is comparable in its intent to the FAST Act,” Ely said.However, while the restriction on the deduction for premiums has drawn industry concerns, the criticism has seemed muted, with industry representatives appearing to take a holistic view that the tax plan is still a win overall — particularly if it makes good on a proposal to lower the overall corporate tax rate.“The 20% rate for corporations in particular promises to generate economic activity and jobs that will benefit the country and our customers,” American Bankers Association President and Chief Executive Rob Nichols said in a statement. He added, “We are encouraged by our initial analysis” of the plan. Howard Headlee, president and CEO of the Utah Bankers Association, said the plan has enough benefits for banks potentially to look beyond a smaller deduction for FDIC premiums.

Tax on banks may be part of Senate plan | American Banker - — Bank lobbyists are increasingly worried that the Senate Republicans may go further than the House in taxing large financial institutions as part of their tax reform push.  Among other things, the House GOP plan would eliminate the deduction for larger banks’ insurance premium assessed by the Federal Deposit Insurance Corp. Banks oppose that idea but may be willing to live with it given the proposed lowering of the overall corporate tax rate. Yet there is concern the Senate plan may widen the scope of a tax on banks in a search for more funds. Details about the Senate plan have been kept close to the vest, but lawmakers indicated that relying on banks to raise additional revenue has been discussed.  A bank tax has been a “concern,” Senate Banking Committee Chairman Mike Crapo said in an interview Wednesday, while emphasizing that he has “consistently opposed applying new taxes, frankly, across industry and in particular to the banking industry.”Ultimately, the Idaho Republican said he doesn’t believe there will be a bank tax in the Senate proposal, which is expected to be released as early as Thursday by the Finance Committee. But analysts pointed to a potential moderating of the House proposal to cap the mortgage interest deduction at $500,000 as creating a need for the Senate find more revenue raisers.“We think it is possible tax-writers might look at additional options, especially if the cap on the [mortgage interest deduction] is raised. This could include additional limits on the business interest deduction, which in the current proposal does not significantly impact banks,” Brian Gardner, an analyst for KBW, wrote in a note to clients.Another fear is that Senate Republicans could breathe new life into a 2014 proposal by former Rep. Dave Camp, R-Mich., that would have tax bank assets above $500 billion. Lawmakers could also look to expand on the House proposal to get rid of the FDIC premium deduction for banks above $50 billion of assets with a phase-in period for banks between $10 billion and $50 billion. They could also look to get rid of the deduction for community banks with less than $10 billion.

Who wins biggest in the GOP tax plan? The lazy rich. - Catherine Rampell - The Republican tax bill is often described as being weighted toward “the rich.” But that’s not the full story.  It’s actually weighted toward the loafer, the freeloader, the heir, the passive investor who spends his time yachting and charity-balling. In short: the idle rich. Republicans claim the opposite, of course. For years the GOP has argued that we need to cut taxes to incentivize work and job creation. If only today’s allegedly sky-high marginal rates were lower, millions of talented, driven Americans would apply more of their talent and drive toward growing the economy. Why? Well, if they got to keep more of their hard-earned cash, there would be a greater payoff from clocking that extra hour, taking on that extra project, seeing that extra patient, scoring that extra client, building that extra business, and so on. Working would look more attractive relative to playing an extra round of golf.  Yet the GOP tax bill offers the biggest windfall to those who sit on their duffs and do nothing. Rich layabouts benefit in multiple ways from the proposal.  The most obvious way is the repeal of the estate tax, which currently affects only estates worth at least $5.49 million, or roughly the wealthiest 0.2 percent of Americans who die each year. Eliminating estate taxes paid by the very wealthy few seems unlikely to improve their work ethic. If anything, increasing the value of their bequests will make it less attractive for heirs and heiresses to hold down a job or start a company that they actually run.But the bill’s differential treatment of those who work and those who don’t is starkest in provisions related to “pass-through” entities. Almost all businesses in the United States are structured as pass-through businesses, such as partnerships, sole proprietorships and S-corporations. This means their incomes are taxed at individual rates, rather than corporate ones. Despite the usual rhetoric, these businesses are not necessarily “small”; the Trump Organization, for instance, is organized as a pass-through.  The Republican tax plan would dramatically slash tax rates for pass-through income, down to no more than 25 percent. This special pass-through rate is much lower than the normal top marginal rate for individual income, which would continue to be 39.6 percent.

How to Improve the Trump Tax Plan - Greg Mankiw -- The business tax plan being promoted by President Trump, and its close cousin released by House leadership this week, start with a good idea but then descend into an unworkable mess. Fortunately, the flaws can be fixed, if policymakers are willing to be bold.The centerpiece of the Trump plan and the House bill is a cut in the tax rate on corporate income to 20 percent from 35 percent. This idea is eminently sensible.Many economists believe the corporate tax is a bad way to fund the government. That is, compared with other taxes, it generates a lot of economic harm for each dollar of revenue it raises. Some economists go so far as to recommend that the tax on capital income should be zero. The case is especially compelling once we recognize that we live in a world where capital flows from country to country, seeking the highest after-tax return. Most other nations have lower corporate tax rates than the United States, and the trend around the world in recent years has been to reduce corporate taxes. When a multinational company is deciding where to put its next capital project, the corporate tax is one factor affecting its decision. Some may worry that a cut in corporate taxes would benefit only the firms’ wealthy owners. But that is not true, especially in the long run. Over time, lower corporate taxes would attract more investment in the corporate sector, increasing workers’ productivity and thus their wages. There remains debate among economists about the size of the wage gains. But most agree that wages would increase and that the effect would grow over time. Yet a problem with the Trump plan starts to become apparent when one notices an inconvenient fact: Not all businesses are corporations.  Many businesses, especially smaller ones, are organized as pass-through entities. This means that these businesses do not pay taxes on their own. They instead attribute their income to their owners, who report this business income on their personal tax returns. Such tax treatment applies to sole proprietorships, partnerships and subchapter S corporations. Here is where the problem arises. Once the pass-through rate is substantially below the tax rate for high-income wage earners, those wage earners have an incentive to reorganize themselves as pass-throughs. There is, however, an easy solution: Cut personal income taxes at the same time. As long as the top tax rate on personal income is close to the tax rate on pass-through entities, the incentive to reorganize to avoid taxes will be minimal.

Another Delay: Senate Won't Release Tax Bill On Thursday As Mnuchin Concedes Tax Cut Delay Likely - Yesterday, the dollar slumped and yields dropped after a WaPo report claimed that the corporate tax cut could - the core piece of GOP tax reform - would be delayed by up to a year, a clear indication that there may be irreconcilable differences in the Senate regarding tax reform. Then, moments ago, Axios confirmed as much, reporting that the Senate "won't release its version of the GOP tax bill tomorrow", citing a senior GOP aide. On Tuesday Mitch McConnell said that the bill would come out on Thursday. That said, the aide reportedly said "this wasn't a delay, because the release of the Senate bill was always going to start after the House Ways and Means Committee finished marking up its bill."As Axios explains, the delaying introduction of the bill is problematic "because it not only gives off the impression that things aren't going well (whether it's true or not), but also removes one more day that could have been spent getting the caucus on board with the bill."Meanwhile, speaking on Bloomberg, Treasury Secretary Mnuchin said that the White House's preference would be to start the corporate tax rate cut next year, which again implies a material probability of delay.“Our strong preference is that the corporate tax rate starts next year. The longer we wait, the worse it is for the economy,” Mnuchin said in interview on Bloomberg TV.Asked whether he rules out delaying corporate tax cuts: “Again, I’d just say, the president’s strong preference -- he feels very strongly that he wants to start this right away. But having said that, we’ll have to look at the entire Senate package -- I assume it’s just a money issue -- as to how they’re moving the different pieces around” “It’s not a philosophical issue; I’m sure they’d like to start this just as soon as they can”

Goldman Still Sees 65% Chance Of Tax Reform Passing; Expects Senate To Make These Changes... After a wave of GOP defections in recent days and waffling on timing, Goldman's economics team apparently still sees a 65% chance of a tax reform bill being enacted by "early 2018,"but warns that the final bill may look nothing like the one recently proposed by the House.As we pointed out yesterday (see: The Republican Tax Plan Will Crush These Housing Markets), Goldman fully expects the Washington D.C. swamp, led by realtors and homebuilders in this case, to attack various components of the House's bill, including efforts to slash the mortgage deduction cap, but don't think those efforts will be enough to tank tax reform altogether. Political opposition to the bill seems likely to result in changes to the bill, particularly in the Senate, but it is less likely to block enactment of a tax bill altogether. The National Association of Realtors (NAR), National Association of Home Builders (NAHB), National Federation of Independent Businesses (NFIB), and anti-tax groups such as the Club for Growth have opposed the current House proposal for various reasons.That said, we believe this is more likely to result in changes to the bill in the Senate rather than a failure to pass a tax bill at all.These changes—for example, raising the proposed principal cap on mortgage interest deductibility and potentially making the treatment of pass-through income more generous than the initial House proposal—could crowd out other priorities, but don’t seem likely to block passage entirely. There is also a more fundamental political motivation, which is that many congressional Republicans would like to enact at least one piece of major legislation prior to the 2018 midterm election.

Stocks Tumble On News Senate Tax Plan To Delay Corporate Tax Cut Until 2019 -- Confirming reports from earlier this week that the Senate GOP tax plan would delay the corporate tax cut for (at least) one year, a move that would strip the proposed tax reform of its most potent benefit, moments ago the Wapo reported that in a few hours, Senate Republicans will propose delaying a cut in the corporate tax rate from 35 percent to 20 percent until 2019. Bloomberg confirmed the news, quoting Bill Cassidy who said in an interview that that Senate Finance Committee tax legislation proposal will include a one-year delay before cutting the corporate tax rate to 20%. The compromise would be a major departure from President Trump’s insistence on immediate changes that he says "are necessary to spur the economy." And while some Senate Republicans objected to the one year delay, they were overruled.  As Bloomberg adds, the Senate tax writers will also propose keeping number of individual income-tax brackets at seven in a departure from the House bill that condenses the number to four, Sen. Bill Cassidy tells reporters. Cassidy also says Senate proposal won’t keep top rate at 39.6%, though doesn’t state what new top individual rate would be In an attempt to offset the delayed economic boost from excess corporate spending, the WaPo explains that to prevent companies from waiting until 2019 to invest, "Senate Republicans will propose to allow companies to immediately deduct all capital investments in 2018 to incentivize them to spend more money immediately, the people said." The reason for the delay is simple: there is not enough revenue. "The one-year delay would lower the cost of the tax cut bill by more than $100 billion, and negotiators are trying to preserve as much revenue as they can for other changes." The revision could also delay decisions by companies to move back to the United States from overseas or have companies hold off on other decisions as they wait for the corporate rate to fall.

Senate tax bill breaks with House over mortgage interest deduction — The Senate tax proposal released Thursday would cap the mortgage interest deduction for properties worth $1 million, a reversal from the House plan that would have limited the deduction to $500,000. The reversal would reduce revenue from tax reform, but could also alleviate concerns for lawmakers in states with high-priced homes. Still, powerful housing trade groups, including the National Association of Realtors and the National Association of Home Builders, may continue to oppose the plan because the Senate bill would double the standard deduction, making the mortgage interest deduction less valuable. (  The Joint Committee on Taxation estimated that the House plan, which capped the mortgage interest deduction at $500,000 and eliminated a number of deductions, would have raised $1.253 trillion in revenue. The taxation committee "does not identify the savings just from capping the [mortgage interest deduction] but we assume the cap on the [mortgage interest deduction] is a material portion of the $1.253 trillion,” Brian Gardner, an analyst at KBW, wrote in a note to clients. “If the cap on the [mortgage interest deduction] is raised (or other adjustments are made), we think lawmakers will turn to other areas for pay-fors,” added Gardner, who noted that tax writers could lean on banks to raise additional revenue. The Senate plan also differs from the House plan in that it preserves low-income housing credits to encourage businesses to invest in affordable housing.

Here Is The Full Text And Summary Of The Amended House GOP Tax Bill --- While we await the full details of the Senate bill, moments ago the House Ways and Means Committee released the Amended House GOP tax bill, as well as its summary.Here are the key highlights from the Amendment (link), first in principle: Amendment to the Amendment in the Nature of a Substitute to H.R. 1 Offered by Mr. Brady of Texas The amendment makes improvements to the amendment in the nature of a substitute relating to the maximum rate on business income of individuals, preserves the adoption tax credit, improves the program integrity of the Child Tax Credit, improves the consolidation of education savings rules, preserves the above-the-line deduction for moving expenses of a member of the Armed Forces on active duty, preserves the current law effective tax rates on C corporation dividends subject to the dividends received deduction, improves the bill’s interest expense rules with respect to accrued interest on floor plan financing indebtedness, modifies the treatment of S corporation conversions into C corporations, modifies the tax treatment of research and experimentation expenditures, modifies the treatment of expenses in contingent fee cases, modifies the computation of life insurance tax reserves, modifies the treatment of qualified equity grants, preserves the current law treatment of nonqualified deferred  compensation, modifies the transition rules on the treatment of deferred foreign income, improves the excise tax on investment income of private colleges and universities, and modifies rules with respect to political statements made by certain tax-exempt entities.

White House, congressional Republicans accelerate drive for corporate tax cut worth trillions - The push is accelerating for an overhaul of the US tax system that will divert trillions of additional dollars to the corporate aristocracy, widen the gap between the rich and the working class and set the stage for the destruction of basic social programs. On Thursday, the Republican-controlled House Ways and Means Committee passed a White House-backed tax bill on a party-line vote, after which House leaders said the measure would come to the House floor for a vote next week. On the same day, the Republican-controlled Senate released its version of the measure, with plans for a floor vote in the upper chamber before the Thanksgiving holiday later this month. The Trump administration and congressional Republicans are pushing for passage of the handout to the richest 5 percent by Christmas. The Democrats are putting on a show of opposition that is cynical to the core. They are denouncing the Republican bills for skewing the tax benefits to the wealthy, while fully supporting the centerpiece of the legislation, a huge tax cut for US corporations. While there are differences between the House and Senate bills, both versions adhere to the same basic framework. The corporate tax rate is to be permanently reduced from the current level of 35 percent to 20 percent, saving US corporations $2 trillion in taxes and generating an additional $6.7 trillion in revenues over the next decade. The House bill enacts the corporate tax cut in 2018, while the Senate bill, in order to reduce the projected deficit from lost federal revenues, delays the corporate tax cut one year, until 2019. The House bill keeps the top federal tax bracket at 39.6 percent (down from 70 percent in 1980), but applies it to households making more than $1 million a year, as compared to the current threshold of $500,000. The Senate version provides a bigger windfall for the very rich by reducing the top bracket to 38.5 percent. Both bills eliminate the alternative minimum tax, which almost exclusively impacts the wealthy, and they both slash the tax rate on so-called “pass-through” income reported by business owners. Each bill allows corporations that have stashed hundreds of billions of dollars overseas to avoid US taxes, such as Apple and Amazon, to repatriate their profits at a sharply discounted tax rate even lower than the new 20 percent corporate rate. The bills either sharply restrict or eliminate outright the estate tax, which is currently paid by the wealthiest 0.2 percent of households. The House bill doubles the exemption for an individual to $11 million and eliminates the estate tax entirely in 2025. The Senate version doubles the exemption but does not repeal the tax. 

McConnell Joins Ryan in Walking Back False Promise on Tax Bill - The top Republicans in the House and Senate have now walked back false promises about their tax bills’ impact on the middle class.Senate Majority Leader Mitch McConnell acknowledged to The New York Times Friday he erred when he said in an MSNBC appearance last week that "nobody in the middle class is going to get a tax increase."Now the Kentucky Republican says every income group would see a tax cut -- on average.“You can’t guarantee that absolutely no one sees a tax increase,” he told the newspaper.McConnell joins House Speaker Paul Ryan of Wisconsin in walking back their statements on taxes. Ryan had said in a radio interview Wednesday, "So actually, even though there’s a lot of false information out there, everybody gets a tax cut."That statement was false, as there are millions of people who would face higher tax bills from the loss of deductions like the one for state and local taxes, which is rolled back in the House bill and eliminated entirely in the Senate bill.A day later, Ryan’s language changed."At every income level, there is a tax cut for the average family," Ryan said in a statement Thursday, citing a study by the Joint Committee on Taxation. AshLee Strong, a Ryan spokeswoman, told The Washington Post that he misspoke.

Senate GOP plan would delay corporate tax cut, protect mortgage interest deduction - Senate Republicans are forging their own path on the effort to overhaul the U.S. tax code, offering a plan Thursday that would delay an immediate corporate tax cut President Trump has demanded and blow up House Republicans’ carefully crafted compromise on a controversial tax deduction. GOP Senate leaders unveiled a tax package that would delay cutting the corporate tax rate from 35 percent to 20 percent until 2019. That’s a major departure from Trump’s insistence on immediate tax cuts that he says are necessary to spur the economy. The one-year delay would lower the cost of the Senate bill by more than $100 billion, giving negotiators more revenue for other changes. But it could also delay companies moving back to the United States from overseas or prompt them to hold off on other decisions as they wait for the corporate rate to fall. The unveiling of the Senate plan, combined with a House committee vote to send a version of its bill to the House floor, is a step forward in the party’s race to rewrite the U.S. tax code before year’s end. Before those bills could become law, however, the House and Senate must pass matching versions of the legislation. And as leaders in each chamber grapple with difficult trade-offs on tax rates, deductions and deficits, the House is making decisions the Senate won’t accept and the Senate is doing the same to the House. “We know we have more work yet to be done, but this is a historic step,” House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said. “Will there be some differences? Of course, that’s the legislative process. We welcome that.” Those differences became more pronounced Thursday, making the path forward more complicated. Republicans face intense pressure to pass a tax bill or face ending a year of near-complete control over the federal government without a a single major legislative achievement to bring voters and donors. 

Hey, Dems, a better tax plan isn’t going to write itself - Democrats never miss an opportunity to miss an opportunity. That was proved again this week on the issue of tax reform. Along with everyone else, Democratic leaders have known for weeks that Republicans in Congress were desperately trying to overcome their own divisions and cobble together a tax “reform” plan that was likely to be more tax cut than genuine reform. In anticipation, Democrats and their allies have been working themselves into a lather about how all the cuts would go to the wealthy and big corporations, how it was all being drawn up by Republicans behind closed doors without even a pretense of bipartisan cooperation, and how it will add at least another $1.5 trillion in deficit spending over the next decade to a federal budget that was already on course to add $9.5 trillion. But here’s what you didn’t hear from Democrats: their own tax reform plan. By offering one, they could have set the terms of the upcoming tax debate and laid down a set of simple principles that voters could easily understand and readily embrace: no increase in the deficit. No shift in the tax burden from businesses to individuals. No change in progressivity — the degree to which the tax code narrows the gap between rich and poor. Better still, by including in their plan some features that Republicans desire most, they could have demonstrated that theirs is the only party serious about governing a divided country and actually getting things done in a genuinely bipartisan way.

GOP unlikely to repeal ObamaCare mandate in tax measure | TheHill: The House is unlikely to repeal the mandate to buy insurance under ObamaCare as part of its tax-reform bill, GOP sources say, though the issue could return down the road. President Trump and conservative lawmakers are pushing for the individual mandate to be repealed in the bill, but House Ways and Means Committee Chairman Kevin Brady (R-Texas) has expressed worry that the controversial measure would jeopardize the broader tax-reform bill, given the Senate’s failure on health care earlier this year. “It hasn’t ever been in the [House] bill,” said one Republican on the Ways and Means Committee who has been taking part in the negotiations. “I expect that it will be added somewhere down the sausage-making venture.” “I agree there is a chance, but I think if it gets included, it would be on the Senate side,” added a second Ways and Means Republican.

 It Begins: Democratic Senator To Introduce Bill For Taxpayer-Funded Pension Bailouts --Over the past year we have provided extensive coverage of what will likely be the biggest, and most significant financial crisis facing the aging U.S. population: a multi-trillion pension storm, which was recently dubbed "one of the most heated battles of a lifetime" by Mauldin. The reason, in a nutshell, why the US public pension problem has stumped so many professionals is simple: for lack of a better word, it is irreconcilable in that to satisfy accrued pension and retirement obligations, it requires fixed income returns, typically in the 6%+ range, which are virtually unfeasible in a world where global debt/GDP is in the 300%+ range.  Which is why we, and many others, have long speculated that it is only a matter of time before the matter receives political attention, and ultimately, a taxpayer bailout.That moment may be imminent. According to Pensions and Investments magazine, Democratic Senator Sherrod Brown from Ohio plans to introduce legislation that would allow struggling multiemployer pension funds to borrow from the U.S. Treasury to remain solvent. The bill, which is co-sponsored by another Democrat, Rep. Tim Ryan, also of Ohio, could be introduced as soon as this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. The one, and painfully amusing, restriction for borrowers is "they could not make risky investments", which of course will be promptly circumvented in hopes of generating outsized returns and repaying the Treasury's "bailout" loan, ultimately leading to massive losses on what is effectively a taxpayer-funded pension bailout.

Puerto Rico Needs as Much as $21 Billion in Aid, Oversight Official Says - Puerto Rico will need an unprecedented rescue from the U.S. government to recover from the hurricane that ravaged it in September, deepening a financial crisis that had already pushed it into a record-setting bankruptcy, the executive director of the island’s federal oversight board said. The territory will need from $13 billion to $21 billion over the next two years to keep the government operating and cover the salaries of police officers, teachers and other employees, Natalie Jaresko said in testimony prepared for the House Natural Resources committee Tuesday. "The hard truth is that the island now needs help -- emergency and restoration funds and assistance on an unprecedented scale," she said. “Before the hurricanes, the board was determined that Puerto Rico and its instrumentalities could achieve balanced budgets, work its way through its debt problems, and develop a sustainable economy without federal aid. That is simply no longer possible.” The devastating blow dealt by Hurricane Maria has upended Puerto Rico’s initial plans for pulling itself out of a fiscal crisis that built over years as it remained mired in a recession and borrowed to keep the government afloat. The damage crippled the economy and left investors wagering that it will be able to repay even less of its $74 billion of debt, causing the price of its most frequently traded bonds to tumble to about 28 cents on the dollar, about half what they were worth before the storm..  

Lawmakers 'chagrined' after Puerto Rico utility chief bails on hearing - Ricardo Ramos, executive director of the Puerto Rico Electric Power Authority, canceled his scheduled Tuesday morning appearance before the House Natural Resources Committee to discuss the canceled $300 million, no-bid contract that the state-run utility gave to small Montana firm Whitefish Energy. The Natural Resources Committee, which has jurisdiction over Puerto Rico, had expected to ask tough questions of Ramos for PREPA’s decision to sign the deal with Whitefish to restore power on the island after Hurricane Maria.Ernesto Sgroi, chairman of PREPA’s governing board, told the committee in a letter Monday night that Ramos could not attend the hearing because of “urgent efforts on the ongoing emergency” power restoration. He said Ramos has been providing documents to the committee and would meet with the panel at a later date.  Committee Chairman Rob Bishop, R-Utah, said at the opening of Tuesday's hearing that he is “very disappointed” Ramos could not attend. “I am a little bit chagrined,” Bishop said. “He was here specifically to talk about Whitefish.”Bishop said he received documents he requested about the contract from PREPA on Friday, which raised more questions that he wants answered. San Juan Mayor Carmen Yulin Cruz didn’t show up for her scheduled testimony, either. She has publicly criticized the Trump administration’s recovery efforts in Puerto Rico.

GOP chairman has ‘more questions’ about Puerto Rico’s Whitefish Energy contract | TheHill: A powerful Republican chairman said Tuesday he has more questions for Puerto Rican authorities about their controversial hurricane recovery contract with a small Montana energy firm. Rep. Rob Bishop (R-Utah) said documents provided to his House Natural Resources Committee last week raised fresh concerns about the island’s $300 million contract with Whitefish Energy. Officials rescinded that deal last month amid questions from lawmakers and government watchdogs. “There are some other circumstances within those documents that add more questions, which means at some point I would like those to be answered, and someone needs to look at that,” Bishop said during a hearing on Hurricane Maria recovery efforts Tuesday. He didn’t expand on what questions the documents raised. Bishop’s committee was due to hear Tuesday from Ricardo Ramos, the executive director of the state-run Puerto Rico Electric Power Authority (PREPA). But Ramos didn’t attend the hearing, with PREPA saying in a letter that “he is unable to participate in the scheduled hearing due to urgent efforts on the ongoing emergency restoration” to bring power back to the island. PREPA entered into the $300 million contract with Whitefish in September. But the size and scope of the contract drew bipartisan backlash last month, leading the territory’s government to cancel the deal. Rep. Raúl Grijalva (D-Ariz.) on Tuesday called it a “sweetheart deal to a fly-by-night company.” 

Seven weeks after Hurricane Maria, Puerto Ricans still can’t access programs that fed millions in Texas and Florida - Thousands of Puerto Ricans struggled to feed themselves in the wake of Hurricane Maria, skipping meals and waiting hours in line for federal shipments of canned goods. But a package of federal programs that could have helped feed thousands — and that channeled hundreds of dollars to needy families in Texas and Florida after hurricanes Harvey and Irma — have not been deployed in Puerto Rico, limiting the reach of the island’s emergency food assistance. Among other things, the government did not issue emergency food stamps to people who lost their homes in the storm and who do not usually receive benefits, a measure that was taken in both Florida and Texas. And additional food stamps were not issued to families who already receive them, a routine step that the Department of Agriculture takes after natural disasters. The disparities are the result of a federal funding system designed to reduce the costs of Puerto Rico’s food stamp program. Unlike the mainland, the island receives a capped annual budget, or block grant, which limits the actions it can take in the event of an emergency or economic downturn. Critics have called the system arbitrary and discriminatory, and some fear that it will worsen long-term food insecurity in Puerto Rico despite the recent passage of a $36.5 billion disaster relief package. About 38 percent of households in Puerto Rico rely on the food stamp program, according to the census. “There is no rationality to Puerto Rico’s treatment in [federal] programs,” said Cesar Conda, an adviser to the Puerto Rico Statehood Council, a nonprofit advocacy group. “The treatment of the Americans of Puerto Rico in nutrition assistance is a particularly illuminating case of their worse-than-equal treatment . . . due to the island’s second-class status and their lack of votes in their national government.” 

Trump’s H-1B Reform Is to Make Life Hell for Immigrants and Companies - Donald Trump came into office promising a restrictive new approach to immigration and there has been little question about his intention to follow through — with one seeming exception. Despite its enthusiastic rhetoric about the H-1B program, which provides temporary visas to high-skilled workers, the administration failed to make significant changes in time to impact the program’s annual lottery this April, leaving some who had anticipated action fuming. It has also declined to take up any of the legislative proposals for H-1B overhaul.   But a crackdown has been in the works, albeit more quietly. Starting this summer, employers began noticing that U.S. Citizenship and Immigration Services was challenging an unusually large number of H-1B applications. Cases that would have sailed through the approval process in earlier years ground to a halt under requests for new paperwork. The number of challenges — officially known as “requests for evidence” or RFEs — are up 44 percent compared to last year, according to statistics from USCIS. The percentage of H-1B applications that have resulted in RFEs this year are at the highest level they’ve been since 2009, and by absolute number are considerably higher than any year for which the agency provided statistics. The H-1B program is controversial largely because IT firms based in India have used it to hire for rote computer programming jobs. These firms, like Infosys Ltd. and Tata Consultancy Services Ltd., have been working to reduce their reliance on the program, in anticipation of a less receptive political landscape. The overall number of H-1B applications dropped this year for the first time in five years. The skeptical eye the government is taking to applications has extended to all types of employers, according to immigration lawyers. Many are rethinking their own use of H-1B as a result.

Trump’s Crazy Choices for the Courts -- Every president selects judges whose legal, social and political views generally reflect his own.  Some of President Trump’s nominees, however, are so far outside the mainstream that even conservative Republicans like Senators John Kennedy of Louisiana and John Cornyn of Texas have expressed dismay. There are 145 vacancies in the federal judiciary, with 18 of those on the Courts of Appeals, and more will surely arise. The Republican-controlled Senate has swiftly confirmed 12 nominees so far. And thanks to life tenure, most of them will serve for decades. Consider some of the least qualified and most bizarre of his selections. Leonard Steven Grasz, a nominee for the Eighth Circuit Court of Appeals, which is based in St. Louis, received a rare “not qualified” rating from the American Bar Association because his “temperament issues, particularly bias and lack of open-mindedness, were problematic.” He serves on the board of an organization that has supported the closing of clinics offering women reproductive care, has condemned Supreme Court decisions that protect women’s rights, and has asserted that abortions put women’s lives at risk. Mr. Grasz, a lawyer in Omaha, has supported “conversion therapy” for gay youth and legislation that would allow employers to discriminate against gay employees under the guise of religious liberty.  Thomas A. Farr has been nominated to serve on the United States District Court for the Eastern District of North Carolina. President Bush recommended him for the same seat in 2006, but the Senate Judiciary Committee did not even advance his nomination to the full Senate, probably because of his longstanding ties to racist politicians, and because of his opposition to voting rights, workers’ rights and economic equality. Nothing has changed since then.  Damien Schiff, a lawyer for the libertarian Pacific Legal Foundation, was nominated to the Court of Federal Claims, which primarily hears suits seeking damages from the government. He has called the Supreme Court justice Anthony Kennedy a “judicial prostitute” because of his role as a swing voter. He also attacked the Supreme Court’s opinion in Grutter v. Bollinger, permitting race to be a consideration in college admissions to further diversity; he said it was akin to the court’s rulings in the Dred Scott decision (upholding fugitive slave laws), Plessy v. Ferguson (upholding states’ rights to require racially segregated public accommodations) and Korematsu v. United States (approving the internment of Japanese-Americans during World War II).

Senate Republicans threaten rules change to clear Trump nominees | TheHill: Republicans are renewing their threat to change the Senate's rules as they eye speeding up the confirmation process for President Trump's nominees. GOP senators want to shrink the amount of debate time needed to confirm hundreds of the president's picks, arguing Democrats are abusing the rules to slow-walk nominees and the GOP agenda. "I believe it is time to change the rules of the Senate. To change the rules so that President Trump can get his team in place," Sen. John Barrasso (R-Wyo.) told reporters. Sen. Roy Blunt (R-Mo.), who like Barrasso is a member of GOP leadership, added that he was "fully supportive" of changing the rules "if the rules are being abused."Republicans for months have privately discussed curbing the amount of debate time needed to confirm non-Cabinet nominees. But the latest push comes amid a fight over circuit court nominees and growing pressure from conservatives to approve Trump's judicial picks as quickly as possible. If Republicans want to make additional changes to the rules — without going "nuclear" for a second time this year — they would need to win the support of roughly 15 Democrats to get the two-thirds vote normally required. 

 Ajit Pai’s New York Times op-ed is concern-trolling local journalism - In an op-ed column in the New York Times on Thursday, Ajit Pai, the Trump-appointed chairman of the Federal Communications Commission, pitched a rather troubling proposal: that the FCC repeal its rule preventing a local broadcaster from also owning a daily newspaper, a radio station, in the same area. In Pai’s view, this is a common-sense thing to do given the punishing, rapidly changing economics of media these days. But he’s practically concern-trolling local media in order to advance a proposal that would chiefly grant more power to already powerful corporations. Pai says he still wants to prevent a company from owning more than two TV stations in a given market, which an FCC rule essentially prohibits right now. But he argues in the Times that its sibling rule, which separates TV, newspaper, and radio ownership, has become archaic, even though it was similarly designed to prevent one company from having too much control over available media in a single market. Perhaps especially an ideologically motivated one on a buying spree, like, oh, Sinclair. Imagine if a major American city had one owner controlling the newspaper, two popular TV stations, and a major radio station. For one thing, that might mean a single newsroom shared between the various properties, a move surely amounting to fewer journalists. And while it might give news consumers the illusion of variety—they may think that when they change the channel or pick up the local paper they’re getting diverse viewpoints—in actuality the owner would be one and the same. And ownership matters. To return to the example of Sinclair, which is currently gunning to buy Tribune Media (Sinclair owns 173 stations; Tribune owns 42), granting it access to more than 70 percent of American households, in March the owner of the network ordered its affiliates to double the amount of air time it gives to segments by its chief political analyst Boris Epshteyn, a former Donald Trump aide who slavishly parrots the administration’s line.

Mueller probe scares the GOP — rightly so | TheHill: Official Washington is now in a state of high tension as special counsel Robert Mueller has begun prosecuting his case by bringing his first two indictments and announcing his first plea bargain, which will almost certainly be followed by more indictments and plea bargains. Here are six scary facts that alarm President Trump and Republicans in Congress: First, Mueller is focusing on collusion between Trump associates and Russia. Collusion is far from proven, but credible evidence of collusion is coming into view.Second, when Trump associates were asked by the media for reaction to disclosure of the New York meeting, the president was personally involved in drafting the response that was apparently untrue. Third, every day brings more evidence of successful attempts by Russian operatives to penetrate Trump’s inner circle and more evidence of a massive Russian project to inject lies into America’s political discourse via social media to further its nefarious purposes. Fourth, it should be scary for Republicans to read stories suggesting that certain congressional Republicans may be working to impede congressional investigations of the Russia scandal or cut the budget of the special counsel, which would be interpreted by voters as an attack against the search for truth on a matter fundamental to American security. Fifth, with the president’s popularity falling to new lows with midterm elections approaching, the news from Monday through 2018 will almost certainly bring new indictments, plea bargains, revelations of Russian attacks against America and a succession of high-intensity criminal trials. Sixth, congressional Republicans may face the ultimate political nightmare if President Trump fires Mueller or issues preemptive pardons to associates suspected of crimes. These actions would generate an intense and unprecedented firestorm from angry American voters. 

Manafort pledges $12 million in assets in bid to avoid house arrest: document (Reuters) - President Donald Trump’s former campaign manager Paul Manafort offered to post more than $12 million in real estate and life insurance assets and to limit his travel in a bid to avoid continued house arrest, according to court documents filed on Saturday. Manafort, who ran Trump’s presidential campaign for several months last year, and associate Richard Gates earlier this week pleaded not guilty to a 12-count indictment by a federal grand jury. The charges include conspiracy to launder money, conspiracy against the United States and failing to register as foreign agents of Ukraine’s former pro-Russian government. They are part of Special Counsel Robert Mueller’s investigation into alleged Russian efforts to tilt the 2016 election in Trump’s favor and potential collusion by Trump associates. In the Saturday court filing, Manafort offered to limit his travel to New York, Washington and Florida and pledged life insurance worth about $4.5 million as well as about $8 million in real estate assets, including a property on Fifth Avenue in New York that was identified by some media outlets as an apartment in Trump Tower. U.S. District Judge Amy Berman Jackson said on Thursday that initial bail terms would remain in place and set a bail hearing for Monday to consider changes. On Friday, she suggested a potential May 7 trial date. Manafort and Gates are under house arrest, under unsecured bonds of $10 million and $5 million, respectively, which means they do not have to post the bail unless they fail to show up for court or violate other conditions. Prosecutors have argued there is a risk of flight and both men are subject to electronic monitoring. As part of the indictment, the special counsel’s office is seeking forfeiture of four of Manafort’s properties in connection with money laundering charges. 

Judge issues gag order in Manafort, Gates case - The federal judge overseeing the criminal case against former Trump campaign chairman Paul Manafort and his associate Rick Gates has issued a gag order limiting comments to the media and the public by lawyers, defendants and witnesses in the case.U.S. District Court Judge Amy Berman Jackson's directive released Wednesday doesn't ban such statements outright, but prohibits any remarks that "pose a substantial likelihood of material prejudice to this case." At a hearing last week, Jackson urged lawyers to make their arguments in court and "not on the courthouse steps." She also appeared to criticize a statement one of Manafort's lawyers made outside court calling the charges against his client "ridiculous.""This is a criminal trial, and it's not a public relations campaign," the judge warned.Jackson offered both defendants and the government a chance to weigh in about the order before she issued it. No one did. Manafort and Gates — who also worked for a time as a top Trump campaign official — were arraigned last week in the first known indictment from Special Counsel Robert Mueller's investigation into alleged Russian interference in the 2016 presidential race and the Trump campaign's potential complicity in that activity. Both men entered not guilty pleas.

Mueller Has Enough Evidence to Bring Charges in Flynn Investigation — Federal investigators have gathered enough evidence to bring charges in their investigation of President Donald Trump's former national security adviser and his son as part of the probe into Russia's intervention in the 2016 election, according to multiple sources familiar with the investigation. Michael T. Flynn, who was fired after just 24 days on the job, was one of the first Trump associates to come under scrutiny in the federal probe now led by Special Counsel Robert Mueller into possible collusion between Moscow and the Trump campaign.  Mueller is applying renewed pressure on Flynn following his indictment of Trump campaign chairman Paul Manafort, three sources familiar with the investigation told NBC News.  The investigators are speaking to multiple witnesses in coming days to gain more information surrounding Flynn's lobbying work, including whether he laundered money or lied to federal agents about his overseas contacts, according to three sources familiar with the investigation. Mueller's team is also examining whether Flynn attempted to orchestrate the removal of a chief rival of Turkish President Recep Erdogan from the U.S. to Turkey in exchange for millions of dollars, two officials said.  A spokesperson for the special counsel had no comment.

Mueller Probes Flynn's Role In $15 Million Plot To Kidnap Erdogan's Arch-Nemesis - Last week, we reported that Special Counsel Robert Mueller is close to asking a grand jury to approve indictments for former National Security Adviser Mike Flynn and his son, Mike Flynn Jr., as investigators believe they have enough evidence to bring charges after speaking to multiple witnesses about Flynn's lobbying work, including whether he laundered money or lied to federal agents about his overseas contacts. Now, we have a somewhat clearer picture of what Mueller has been digging around for in his investigation of Flynn who was fired after just 24 days on the job. According to the Wall Street Journal, Mueller is probing a plot involving Flynn and his son to forcibly, and lucratively, remove Fethullah Gulen, who as most regular readers know is Turkish president Erdogan's arch-nemesis, and the man who - according to Erdogan - controls Turkey's "deep state", and was responsible for the failed (and faked) July 2016 coup attempt against Erdogan. In more practical terms, Gulen is a 76-year-old Muslim cleric currently residing in rural Pennsylvania. And, as is also well-known, Erdogan has for years been attempting, lobbying and threatening the US in hopes of getting him extradited back to Turkey. This is where Flynn allegedly comes in: reportedly he, and his son, were part of a plan to grab Gulen and deliver him to Turkey in return for $15 millions. To wit: Under the alleged proposal, Mr. Flynn and his son, Michael Flynn Jr., were to be paid as much as $15 million for delivering Fethullah Gulen to the Turkish government, according to people with knowledge of discussions Mr. Flynn had with Turkish representatives. President Recep Tayyip Erdogan, who has pressed the U.S. to extradite him, views the cleric as a political enemy.

Leading Democrat Says Jared Kushner Will Be Indicted for Money Laundering -- Former Democratic National Chairman Howard Dean (D-VT) predicted on Sunday that President Donald Trump’s son-in-law Jared Kushner will be indicted for money laundering as a part of Special Counsel Robert Mueller’s Russia investigation. After NBC News reported that Mueller has enough evidence to charge former National Security Adviser Michael Flynn and his son, Trump National Diversity Coalition Director Bruce Levell told MSNBC that he was not concerned about the news.  “I’m totally confident. You know, I believe in the president,” Levell insisted. “I think this whole Russia thing is a waste of time unfortunately. We’ll see how that plays itself out. We’ve moved on.”   Dean, however, had a different take on the news that Flynn and his son could face jail time.“We believe we may well have a criminal in the White House,” Dean lamented as Levell groaned. “Certainly, he has a special interest in the Trump family and their investments. And we think there is substantial likelihood that he has laundered money. That’s what his associates have been charged with.”“You have a prosecutor [in Special Counsel Robert Mueller] who I think everybody on the Republican and Democratic side believes in a straight shooter,” the former Vermont governor continued. “He is playing a very serious hand here. He’s working his way up from the bottom as he’s going to continue to do.”Dean added: “I think you’re going to eventually see either the Flynns are going to plead guilty or… cooperate for some leniency.”According to Dean, “the next step is going to be the Trump family itself.”“There’s a good likelihood Jaren Kushner will be indicted for money laundering,” he stated. “And then we’re going to have to see how far the Russian involvement goes.”“It appears to me what Bob Mueller is investigating is whether the president of the United States engaged with a foreign power in order to get where he got. That’s a very serious matter for this country.” Watch the video below from MSNBC.

Swamp-O-Rama - Kunstler - What America might want to know right now is: how come Hillary Clinton doesn’t have any legal problems? Why aren’t DOJ investigators examining the financial records of the Clinton Foundation? You would think somebody would want to find out how over $120 million of Russian “charitable donations” ended up on its ledgers around the time that Secretary of State HRC approved the Uranium One deal — compared to which, Bill Clinton’s $500,000 payment from a Russian bank for giving a speech around the same time just looks like walking-around money. This is not to mention (well, I will) the flow of donations from Saudi Arabia pending approval of a major arms deal by HRC. Or of myriad other donations from foreign nationals tendered simply for face-time with the Secretary.  And while we’re at this, I would like to know how then-FBI director Robert Mueller and President Obama might have been informed about these activities. Or not? Mr. Mueller also needs to answer about his relationship with former FBI director James Comey — he was apparently Mr. Comey’s mentor — while Mr. Comey needs to answer for his peculiar and probably lawless behavior in dismissing the investigation around HRC’s private email server — that was not his decision to make — and the notorious meeting at the Phoenix airport of former president Bill Clinton and Attorney General Loretta Lynch around the same time the email investigation under Mr. Comey came to a head.Now comes the news from Donna Brazille, on-again-off-again Democrat Party chair, that the primary elections were elaborately rigged by HRC functionaries to buy control of her nomination. Let’s not even go into the bidding for the Christopher Steele “dossier” alleging kinky sexual romps in Moscow by Donald Trump, or the activities in Ukraine of Tony Podesta’s DC lobbying company — that’s Tony, brother of John Podesta, Clinton campaign chief, whose emails remain a truffle cache for the rooting dogs of the DOJ, if they were actually on-the-task. I write this as a still-registered Democrat myself — though I consider myself their enemy now, yet hardly a Trump partisan. Are there any like me out there who would like to see both parties tossed onto the garbage barge of history? Of course, to say that also means throwing out a cargo of terrible ideas and beliefs, not just two clown cars of personalities. Identity politics, zero interest rate policy, American Exceptionalism, endless debt, nation-building in foreign lands, FASB-157, sanctuary cities, Title IX coercion, racketeering in health care and higher ed, market interventions, ambiguous borders… is just some of the cargo that needs to be dumped overboard with both parties.

Donna Brazile Says She "Feared For Her Life" After Seth Rich Was Killed -- Perhaps the most shocking revelation contained in the excerpts from former DNC Chairwoman Donna Brazile’s book was, unsurprisingly, buried in a Washington Post overview of the various allegations (and frankly, we’re surprised the Post, given its status as a protector of the Washington establishment, deigned to publish it).  In the aftermath of Wikileaks’ decision to publish a cache of emails stolen from the DNC’s servers, Donna Brazile says she became increasingly paranoid about both possible Russian efforts to sway the election. Surprisingly, she says top Democrats initially instructed her not to discuss her concerns with others. But even more than the Russians, Brazile says she feared possible retribution from shadowy elements within the campaign and the Democratic Party who might blame her for the leak. Her fears only intensified, she says, after the mysterious shooting of former campaign staffer Seth Rich, who the authorities said was killed during a robbery, though many so-called conspiracy theorists have speculated about a possible Democratic plot to kill Rich for his role in leaking the stash of DNC emails to Wikileaks. Brazile's anxiety eventually spiraled out of control, to the point where she feared for her own life while serving as interim chairwoman of the DNC.

Brazile Fallout: Hillary Privatized the DNC with Help from a Washington Law Firm -- Pam Martens -- Donna Brazile, the former interim Chair of the Democratic National Committee (DNC) during the 2016 presidential campaign, has written a new book, “Hacks: The Inside Story of the Break-ins and Breakdowns that Put Donald Trump in the White House,” and has revealed the secret side agreement that the DNC had with Hillary Clinton’s campaign.In 2015, Hillary Clinton’s campaign set up a joint fundraising committee called the Hillary Victory Fund (HVF) with the DNC and over 30 state democratic committees. The public portion of the agreement indicated that Hillary would raise funds for her own campaign while also allocating a portion to the DNC to help the overall Democratic Party as well as allocating funds to state democratic committees in order to support down-ballot candidates in their local elections. But the secret side agreement that effectively privatized the DNC, giving Hillary and her campaign lawyers control of the DNC and its money, had yet to see the light of day.This is how Brazile describes the secret side agreement in her book:“The agreement—signed by Amy Dacey, the former CEO of the DNC, and Robby Mook [Clinton’s campaign manager] with a copy to Marc Elias [lawyer at Perkins Coie]  — specified that in exchange for raising money and investing in the DNC, Hillary would control the party’s finances, strategy, and all the money raised. Her campaign had the right of refusal of who would be the party communications director, and it would make final decisions on all the other staff. The DNC also was required to consult with the campaign about all other staffing, budgeting, data, analytics, and mailings.” The Clinton camp has now attempted to defend itself by saying these terms are standard because they were not going to kick in until the Democratic Party had chosen its official presidential nominee at its party convention in July 2016. But that’s not what the actual secret side agreement says. It indicates the following: “Beginning October 1, 2015,” the HVF would begin transferring $1.2 million to the DNC at the start of each month with that release “conditioned on” Hillary Clinton’s primary campaign personnel being consulted “and have joint authority over strategic decisions over the staffing, budget, expenditures, and general election related communications, data, technology, analytics, and research. The DNC will provide HFA advance opportunity to review on-line or mass email, communications that features a particular Democratic primary candidate.” Additionally, the secret agreement states that “the DNC agrees that no later than September 11, 2015 it will hire one of two candidates previously identified as acceptable to HFA” (Hillary for America, the primary campaign fund for Clinton) as its Communications Director. All of this is occurring in the fall of 2015 with the official Democratic nominating convention not taking place until July 2016.

DNC’s Donna Brazile Dedicated Her Book to ‘Patriot’ Seth Rich, Whose Death Made Her Fear for Her Own Life  - A new book by Donna Brazile, the former interim chairwoman of the Democratic National Committee (DNC), has been making headlines for its controversial claims about the 2016 presidential election and the Hillary Clinton campaign. But the provocative points start even before the first chapter, as Brazile reportedly dedicated the book in part to Seth Rich, the DNC staffer whose murder launched a conspiracy theory.  Rich, 27, was fatally shot in July 2016 while walking home late at night in Washington, D.C. The police believe the shooting was a robbery gone wrong. But Rich worked for the DNC, and WikiLeaks published thousands of emails from the committee two weeks after his death. That timeline provoked theories that Rich had given the materials to WikiLeaks and that his death was an attempt to stop him from doing so, or to punish him for it. Media reports had characterized Rich as a low-level staffer, and his parents wrote in an opinion piece for The Washington Post in May, “Those who have suggested that Seth’s role as a data analyst at the DNC gave him access to a wide trove of emails are simply incorrect.” Rich appears elsewhere in Brazile’s book, as the Post reported earlier in the weekend. She wrote that Rich’s murder haunted her and that she'd installed surveillance cameras at her home and would keep the blinds in her office window closed so she could not be seen by snipers, according to the Post. Brazile talked about Rich on ABC News’s This Week with George Stephanopoulos on Sunday. She told the host about her critics: “They don’t know what it was like to be over the DNC during this hacking. They don’t know what it’s like to bury a child. I did: Seth Rich.” Through spokesman Brad Bauman, the Rich family said in a statement, “Since Seth was murdered, Donna Brazile has been a great friend to the Rich family and has been extremely supportive of the family’s efforts to find Seth’s killers.”

Report: U.S. Authorities Have Evidence To Charge Six Russian Officials In DNC Hack (Reuters) - The U.S. Justice Department has gathered enough evidence to charge six members of the Russian government in the hacking of Democratic National Committee computers before the 2016 U.S. presidential election, the Wall Street Journal reported on Thursday, citing people familiar with the investigation.Federal agents and prosecutors in Washington, Philadelphia, Pittsburgh and San Francisco have been cooperating on the DNC investigation and prosecutors could bring the case to court next year, it said.By identifying individual Russian military and intelligence hackers with charges, U.S. authorities could make it difficult for them to travel, but arrests and jailing would be unlikely, according to the Journal report.The hacking investigation, conducted by cybersecurity experts, predates the appointment in May of federal special counsel Robert Mueller to oversee the probe of alleged Russian meddling in the 2016 election and possible collusion with President Donald Trump’s campaign.Mueller and the Justice Department agreed to allow the technical cyber investigation to continue under the original team of agents and prosecutors, the Journal said.U.S. intelligence agencies have said Russian intelligence agencies were behind those cyber attacks, which resulted in thousands of emails and other documents being made public by WikiLeaks last year. The intelligence community concluded in January that Russian President Vladimir Putin ordered the campaign to sway the election in Trump’s favor.

He Solved The DNC Hack. Now He’s Telling His Story For The First Time - One late morning in May 2016, the leaders of the Democratic National Committee huddled around a packed conference table and stared at Robert Johnston. The former Marine Corps captain gave his briefing with unemotional military precision, but what he said was so unnerving that a high-level DNC official curled up in a ball on her conference room chair as if watching a horror movie.  At 30, Johnston was already an accomplished digital detective who had just left the military’s elite Cyber Command, where he had helped stanch a Russian hack on the US military’s top leadership. Now, working for a private cybersecurity company, he had to brief the DNC — while it was in the middle of a white-knuckle presidential campaign — about what he’d found in the organization’s computer networks.Their reaction was “pure shock,” Johnston recalled. “It was their worst day.”Although the broad outlines of the DNC hack are now well-known, its details have remained mysterious, sparking sharp and persistent questions. How did the DNC miss the hack? Why did a private security consultant, rather than the FBI, examine its servers? And how did the DNC find Johnston’s firm, CrowdStrike, in the first place? Johnston’s account — told here for the first time, and substantiated in interviews with 15 sources at the FBI, the DNC, and the Defense Department — resolves some of those questions while adding new information about the hack itself.

FBI turns over new Clinton investigation documents to Congress | TheHill: The FBI has begun turning over to Senate investigators hundreds of pages of memos regarding the bureau's probe into Hillary Clinton's private email server, sources told The Hill. The sources said the Justice Department notified the Senate Judiciary Committee late Friday and the FBI began transmitting memos soon after to assist Congress in its review of former Director James Comey's handling of the Clinton email case.The memos detail how and when the bureau's leadership declined to pursue criminal charges against Clinton for transmitting classified information on her private email server as secretary of State, an investigation that has remained controversial since the 2016 presidential campaigns. FBI officials declined to comment. "We don't have any information for you," spokeswoman Carol Cratty told The Hill. The Senate committee has been seeking the memos for some time as it investigates whether Comey chose to absolve Clinton of criminal liability before the election-year probe was complete and before she was even interviewed. Comey ultimately concluded that while Clinton's handling of classified emails was careless, there was not enough evidence of intent to warrant criminal charges. Comey had announced in July 2016 that the FBI was declining to pursue charges against Clinton for what it called the careless transmission of classified documents on her private email server. The FBI then re-opened the email case in late October 2016, shocking the political world because it was so close to Election Day, after a new trove of emails was found on an associate's computer. Comey then announced a second time he did not plan to pursue criminal charges, a move that came just two days before Clinton lost to Trump in the election. The FBI's handling was roundly criticized by both Clinton and Trump, and was one of the reasons cited when Trump fired Comey as director earlier this year. Clinton has also blamed Comey in part for her loss in the election. 

Early Comey draft accused Clinton of gross negligence on emails | TheHill: An early draft of former FBI Director James Comey’s statement closing out the Hillary Clinton email case accused the former secretary of State of having been “grossly negligent” in handling classified information, newly reported memos to Congress show. The tough language was changed to the much softer accusation that Clinton had been “extremely careless” in her handling of classified information when Comey announced in July 2016 there would be no charges against her. The change is significant, since federal law states that gross negligence in handling the nation’s intelligence can be punished criminally with prison time or fines.Spokesmen for the FBI and Clinton did not immediately return phone calls or emails seeking comment. The draft, written weeks before the announcement of no charges, was described by multiple sources who saw the document both before and after it was sent to the Senate Judiciary Committee this past weekend. “There is evidence to support a conclusion that Secretary Clinton, and others, used the email server in a manner that was grossly negligent with respect to the handling of classified information,” reads the statement, one of Comey’s earliest drafts from May 2, 2016. The sources who had seen the early draft, who spoke on condition of anonymity because they were not authorized to speak to the media, said the draft statement was subsequently changed in red-line edits on or around June 10 to conclude that the handling of 110 emails containing classified information that were transmitted by Clinton and her aides over her insecure personal email server was “extremely careless.” The documents turned over to Congress do not indicate who recommended the key wording changes, the sources said. 

  DNC Subpoenaed in ‘Dossier’ Lawsuit - BuzzFeed has subpoenaed the Democratic National Committee for information related to the Democratic hack — its latest salvo in the media company’s efforts to defend itself against an ongoing libel suit connected to its publication of the infamous Steele dossier. The subpoena, a copy of which was reviewed by Foreign Policy, was served on the DNC Friday.Aleksej Gubarev, a Russian technology executive, has sued BuzzFeed for libel for its decision to publish a series of memos authored by the former British spy Christopher Steele. Those memos — part of a so-called “dossier” of information about President Donald Trump’s alleged ties to Russia, include claims strongly denied by Gubarev that his companies were recruited by the Kremlin’s security organs to break into Democratic Party computer systems ahead of the 2016 election.BuzzFeed is trying to figure out if the allegations relating to its libel suit are true as part of its defense strategy that could end up revealing details of the dossier and the DNC hack that have not been made public.“One prong of our strategy is to prove that the dossier was being acted on and circulated by officials at the highest levels of government; but we would be remiss if we didn’t use every tool to determine the truth of what actually happened — and whether, as the dossier claims, Mr. Gubarev’s servers were behind the DNC hack,” Matt Mittenthal, a spokesperson for BuzzFeed News, told FP. Gubarev denies that he or his companies that were named in the Steele dossier — XBT Holdings and Webzilla — played any role in the digital attack on the Democratic Party

Carter Page's testimony is filled with bombshells — and supports key portions of the Steele dossier - The House Intelligence Committee on Monday released the full transcript of the former Trump campaign adviser Carter Page's testimony before the panel last week, portions of which support details in an explosive collection of memos outlining alleged collusion between the campaign and Moscow before the 2016 US election. Page revealed during his testimony that he met with members of Russia's presidential administration and the head of investor relations at the Russian state-owned oil giant Rosneft during his trip to Moscow in July 2016. He also congratulated members of the Trump campaign's foreign-policy team on July 14 for their "excellent work" on the "Ukraine amendment" - a reference to the Trump campaign's decision to "intervene," a representative previously told Business Insider, to water down a proposed amendment to the GOP's Ukraine platform. The original amendment proposed that the GOP commit to sending "lethal weapons" to the Ukrainian army to fend off Russian aggression. But it was ultimately altered to say provide "appropriate assistance" before it was included in the party's official platform. The dossier says the campaign "agreed to sideline" the issue of Russia's invasion of Crimea and interference in eastern Ukraine in exchange for dirt on Hillary Clinton, the 2016 Democratic presidential nominee. Page also disclosed that a Trump campaign adviser named Sam Clovis had asked him to sign a nondisclosure agreement upon joining the campaign - and that he discussed his Moscow trip with Clovis both before he went and after he returned. Clovis has come under intense scrutiny over his correspondence with another early Trump campaign foreign-policy adviser, George Papadopoulos, who recently pleaded guilty to lying to federal agents about his contact with Russia-linked foreign nationals.

Fusion GPS official met with Russian operative before and after Trump Jr. sit-down | Fox News: The co-founder of Fusion GPS, the firm behind the unverified Trump dossier, met with a Russian lawyer before and after a key meeting she had last year with Trump’s son, Fox News has learned. The contacts shed new light on how closely tied the firm was to Russian interests, at a time when it was financing research to discredit then-candidate Donald Trump.The opposition research firm has faced renewed scrutiny after litigation revealed that the DNC and Hillary Clinton’s campaign paid for that research. Congressional Republicans have since questioned whether that politically financed research contributed to the FBI’s investigation of Russian collusion with the Trump campaign – making Fusion’s 2016 contacts with Russian interests all the more relevant. The June 2016 Trump Tower meeting involving Donald Trump Jr. and Russian lawyer Natalia Veselnitskaya occurred during a critical period. At that time, Fox News has learned that bank records show Fusion GPS was paid by a law firm for work on behalf of a Kremlin-linked oligarch while paying former British spy Christopher Steele to dig up dirt on Trump through his Russian contacts. But hours before the Trump Tower meeting on June 9, 2016, Fusion co-founder and ex-Wall Street Journal reporter Glenn Simpson was with Veselnitskaya in a Manhattan federal courtroom, a confidential source told Fox News. Court records reviewed by Fox News, email correspondence and published reports corroborate the pair’s presence together. The source told Fox News they also were together after the Trump Tower meeting. Simpson’s presence with Veselnitskaya during this critical week in June -- together with revelations about Fusion’s simultaneous financial ties to the DNC, Clinton campaign and Russian interests -- raise new questions about the company’s role in the 2016 election. Special Counsel Robert Mueller is investigating the Trump Tower meeting as part of his probe of Russian interference in last year’s election. 

Russian Lawyer Says Trump Jr. Offered Her a Deal: Hillary Dirt for a Change to U.S. Law -- The Russian lawyer who met Donald Trump Jr. during last year’s election campaign says he offered her a clear quid pro quo at the meeting: dirt on Hillary Clinton in exchange for changes to a U.S. law. In an interview with Bloomberg, Natalia Veselnitskaya gave details for the first time of what passed between her and Trump Jr. in a meeting at Trump Tower in Manhattan on June 9th last year. The meeting was also attended by Paul Manafort (at the time, Donald Trump senior’s campaign manager) and Jared Kushner, the future president’s son-in-law and senior advisor. Veselnitskaya had engineered the meeting by offering proof that Democratic donors had evaded U.S. taxes. In return, by her own account, she was trying to lobby for changes to the so-called 2012 Magnitsky Law that imposed travel bans and sanctions on Russian officials accused of conspiring in the murder of an accountant, Sergey Magnitsky, who had accused officials of corruption.“Looking ahead, if we come to power, we can return to this issue and think what to do about it,’’ Trump Jr. said of the 2012 law, Bloomberg cited Veselnitskaya as saying. “I understand our side may have messed up, but it’ll take a long time to get to the bottom of it.” She also said that Trump Jr. had asked her for written proof of her claim that Ziff Brothers Investments had evaded U.S. taxes while donating heavily to Clinton and other Democratic candidates. As she didn’t have that, the meeting quickly ran into the sand, she said.

The Democratic Money Behind Russia-gate -- The two sources that originated the allegations claiming that Russia meddled in the 2016 election — without providing convincing evidence — were both paid for by the Democratic National Committee, and in one instance also by the Clinton campaign: the Steele dossier and the CrowdStrike analysis of the DNC servers. Think about that for a minute. We have long known that the DNC did not allow the FBI to examine its computer server for clues about who may have hacked it – or even if it was hacked – and instead turned to CrowdStrike, a private company co-founded by a virulently anti-Putin Russian. Within a day, CrowdStrike blamed Russia on dubious evidence.And, it has now been disclosed that the Clinton campaign and the DNC paid for opposition research memos written by former British MI6 intelligence agent Christopher Steele using hearsay accusations from anonymous Russian sources to claim that the Russian government was blackmailing and bribing Donald Trump in a scheme that presupposed that Russian President Vladimir Putin foresaw Trump’s presidency years ago when no one else did.Since then, the U.S. intelligence community has struggled to corroborate Steele’s allegations, but those suspicions still colored the thinking of President Obama’s intelligence chiefs who, according to Director of National Intelligence James Clapper, “hand-picked” the analysts who produced the Jan. 6 “assessment” claiming that Russia interfered in the U.S. election. In other words, possibly all of the Russia-gate allegations, which have been taken on faith by Democratic partisans and members of the anti-Trump Resistance, trace back to claims paid for or generated by Democrats.

Kremlin Cash Behind Billionaire’s Twitter and Facebook Investments - Russian billionaire investor Yuri Milner, whose holdings have included major stakes in Facebook and Twitter, is known for expounding on everything from the future of social media to the frontiers of space travel. But when someone asked a question that had swirled around his Silicon Valley ascent — Who were his investors? — he did not answer.Now, leaked documents examined by The New York Times offer a partial answer: Behind Mr. Milner’s investments in Facebook and Twitter were hundreds of millions of dollars from the Kremlin. A series of stories that reveal the offshore financial dealings of some of the world's biggest corporations and wealthiest people. Nearly 100 news organizations in an international collaboration examined more than 13 million leaked documents from a law firm, an offshore services company and corporate registries from tax havens.Obscured by a maze of offshore shell companies, the Twitter investment was backed by VTB, a Russian state-controlled bank often used for politically strategic deals.And a big investor in Mr. Milner’s Facebook deal received financing from Gazprom Investholding, another government-controlled financial institution, according to the documents. They include a cache of records from the Bermuda law firm Appleby that were obtained by the German newspaper Süddeutsche Zeitung and reviewed by The Times in collaboration with the International Consortium of Investigative Journalists.Ultimately, Mr. Milner’s companies came to own more than 8 percent of Facebook and 5 percent of Twitter, helping earn him a place on various lists of the world’s most powerful business people. His companies sold those holdings several years ago, but he retains investments in several other large technology companies and continues to make new deals. Among Mr. Milner’s current investments is a real estate venture founded and partly owned by Jared Kushner, President Trump’s son-in-law and White House adviser. Facebook, Twitter and other social media sites have become a major focus of federal investigations into Kremlin interference in the 2016 election. Federal prosecutors and congressional investigators are examining how Russians linked to the Kremlin turned the sites into garden hoses of bogus news stories and divisive political ads, and whether they coordinated with the Trump campaign.

WikiLeaks Publishes CIA Hacking Tool Designed To "Impersonate" Russia's Kaspersky Lab -- On September 18th, the US Senate voted to ban the use of products from the Moscow-based cyber security firm Kaspersky Lab by the federal government, citing national security risk. The vote was included as an amendment to an annual defense policy spending bill approved by the Senate on the same day and was written to bar the use of Kaspersky Lab software in government civilian and military agencies.  Alas, according to a new revelation from WikiLeaks this morning, any perceived "national security risk" from Kaspersky could have resulted from the fact that the CIA specifically designed hacking software, code-named 'Hive', which intentionally "impersonated" the Russian cyber security firm so that "if the target organization looks at the network traffic coming out of its network, it is likely to misattribute the CIA exfiltration of data to uninvolved entities whose identities have been impersonated." Here's a summary of the hacking tool posted by WikiLeaks:

Paradise Papers leak reveals secrets of world elite’s hidden wealth -- The world’s biggest businesses, heads of state and global figures in politics, entertainment and sport who have sheltered their wealth in secretive tax havens are being revealed this week in a major new investigation into Britain’s offshore empires. The details come from a leak of 13.4m files that expose the global environments in which tax abuses can thrive – and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth.The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times.   The project has been called the Paradise Papers. It reveals:

— The man formerly in charge of anti-money laundering in the UK has been named in the Paradise Papers leak as a beneficiary of an offshore trust.

Paradise Papers: Massive New Leak Exposes Tax-Haven Secrets, Links Wilbur Ross To Russia - One year after the Panama Papers revealed billions in assets are held in offshore "tax haven" accounts by some of the world's most powerful and wealthy individuals, on Sunday a huge new leak of financial documents disclosed by the International Consortium of Investigative Journalists (ICIJ) - a global network that won the Pulitzer Prize this year for its work on the Panama Papers- and its 94 media partners, has revealed how the powerful and ultra-wealthy, including the Queen's private estate, secretly invest vast amounts of cash in offshore tax havens. Of particular interest will be the discovery that Donald Trump's commerce secretary, Wilbur Ross, is shown to have a stake in a firm dealing with Russians sanctioned by the US, including Vladimir Putin's immediate family, which Ross failed to clearly disclose prior to his confirmation.The leak, dubbed the Paradise Papers, contains 13.4 million documents, mostly from the Bermuda-based offshore finance law firm, Appleby, has been investigated by 95 media groups, with the findings released today.  The records expand on the revelations from the leak of offshore documents that spawned the 2016 Panama Papers investigation. The new files shine a light on a different cast of underexplored island havens, including some with cleaner reputations and higher price tags, such as the Cayman Islands and Bermuda. The year-long investigation exposes offshore interest and activities of more than 120 politicians and world leaders. That includes ties between Russia and U.S President Donald Trump’s billionaire commerce secretary Wilbur Ross. It also highlights the offshore activities of another 12 Trump allies.

Commerce Secretary’s Offshore Ties to Putin ‘Cronies’ - After becoming commerce secretary, Wilbur L. Ross Jr. retained investments in a shipping firm he once controlled that has significant business ties to a Russian oligarch subject to American sanctions and President Vladimir V. Putin’s son-in-law, according to newly disclosed documents. The shipper, Navigator Holdings, earns millions of dollars a year transporting gas for one of its top clients, a giant Russian energy company called Sibur, whose owners include the oligarch and Mr. Putin’s family member. Despite selling off numerous other holdings to join the Trump administration and spearhead its “America first” trade policy, Mr. Ross kept an investment in Navigator, which increased its business dealings with Sibur even as the West sought to punish Russia’s energy sector over Mr. Putin’s incursions into Ukraine. A series of stories that reveal the offshore financial dealings of some of the world's biggest corporations and wealthiest people. Nearly 100 news organizations in an international collaboration examined more than 13 million leaked documents from a law firm, an offshore services company and corporate registries from tax havens.Partnerships used by Mr. Ross, whose private equity firm has long been the biggest shareholder in Navigator, have a 31 percent stake in the company. Though his personal share of that stake was reduced as he took office in February, he retained an investment in the partnerships valued between $2 million and $10 million, and stood to earn a higher share of profits as a general partner, according to his government ethics disclosure and securities filings. Mr. Ross’s stake in Navigator has been held by a chain of companies in the Cayman Islands, one of several tax havens where much of his wealth, estimated at more than $2 billion, has been tied to similar investment vehicles. Details of these arrangements surfaced in a cache of leaked files from Appleby, one of the world’s largest offshore law firms, which administered some 50 companies and partnerships in the Caymans and elsewhere connected to Mr. Ross. The Appleby documents, obtained by the German newspaper Süddeutsche Zeitung, were shared with the International Consortium of Investigative Journalists and other media organizations, including The New York Times. They show how the Bermuda-based Appleby worked to help the wealthy elite, from Russian oligarchs to Middle Eastern princes, as well as multinational corporations like Apple and Nike, avoid billions of dollars in taxes.

Criticized for ship holdings, Ross owns more than previously known and the deals continue - Six years ago, Wilbur Ross thought investing in ships would create valuable financial assets. Today, they've become risky political liabilities. One shipping company is in a partnership with Russia, and another that the U.S. Commerce secretary partially owned is tied to China's largest sovereign wealth fund. His chief of staff served on both boards. Now U.S. senators are calling for an investigation, and ethics experts demand he divest to prevent his policy decisions from being influenced by his business interests.Ross won't say how many ships he owns, and government disclosure laws give him the choice to keep the information secret.An APM Reports investigation reveals Ross has financial ties to 36 previously undisclosed ships that are spread among at least nine companies. Combined with the Russia-tied company — Navigator Holdings Ltd. — Ross has a financial interest in at least 75 ships, most of which move oil and gas products across the globe. The value of those ships stands to grow as Ross negotiates trade deals on behalf of the U.S. and advises on U.S. infrastructure policy. And one fund linked to Ross was still buying and selling ships after Ross was confirmed as Commerce secretary.APM Reports compiled the list by combing through Ross' financial disclosure forms, relying on business filings in the U.S., Luxembourg, Bermuda and the Cayman Islands, searches through shipping trade publications and through the internet domains of major shipping companies across the globe. Since many of Ross' shipping interests are privately held and are established in countries with limited transparency into business filings, it's difficult to determine the full extent of his holdings.  The U.S. Commerce Secretary has a stake in at least 75 ships. APM Reports sorted through Ross' financial disclosure forms, business filings in the U.S., Luxembourg, Bermuda and the Cayman Islands, shipping trade publications, ship-tracking websites and major shipping company sites to determine the number. Ross has reportedly sold his stake in Diamond S. Shipping, despite telling a Senate confirmation committee that he would keep the asset.    Each of Ross' ships is classified below as a crude oil tanker, a bulk carrier, a chemical/oil products tanker, an LPG ship or a container ship. (great graphics)

Trump commerce secretary's business links with Putin family laid out in leaked files - Donald Trump’s commerce secretary, Wilbur Ross, is doing business with Vladimir Putin’s son-in-law through a shipping venture in Russia.  Leaked documents and public filings show Ross holds a stake in a shipping company, Navigator, through a chain of offshore investments. Navigator operates a lucrative partnership with Sibur, a Russian gas company part-owned by Kirill Shamalov, the husband of Putin’s daughter Katerina Tikhonova.  Ross, a billionaire and close friend of Trump, retained holdings in Navigator after taking office this year. The relationship means he stands to benefit from the operations of a Russian company run by Putin’s family and close allies, some of whom are under US sanctions. Corporate records show Navigator ramped up its relationship with Sibur from 2014, as the US and EU imposed sanctions on Russians. The measures followed Putin’s aggression in eastern Ukraine and annexation of Crimea. Navigator has collected $68m in revenue from its Sibur partnership since 2014. Ross, 79, has apparently faced little official scrutiny over the arrangement. He told a US ethics watchdog that he was keeping a pair of obscurely named holding companies, but did not specify whether he would also retain their interests in Navigator and its lucrative contract in Russia.  The Ross interests appear in the Paradise Papers, a trove of millions of leaked offshore files reviewed by the Guardian, the International Consortium of Investigative Journalists and other partners. They join established links between Ross and Russian finance that have raised questions over his selection by Trump to head the US Department of Commerce.Analysts said the arrangement was troubling. Daniel Fried, an assistant secretary of state for European and Eurasian affairs under George W Bush, said Ross’s connection to “cronies of Putin” threatened to undermine US sanctions.  “I don’t understand why anybody would decide to maintain this kind of relationship going into a senior government position,” he said. “What is he thinking?”

Steve Bannon’s Populist Media Empire Is Funded with Offshore Cash - When Breitbart News, the insurgent populist website run by Steve Bannon and funded by billionaires Robert and Rebekah Mercer, learns that a liberal-leaning figure has benefitted from offshore tax havens, it inevitably goes on the attack. The site lambasted the Southern Poverty Law Center for “stashing cash overseas,” and Clinton Cash author Peter Schweizer’s central criticism of the Clinton family’s foundation is that it relies on foreign investors and offshore bank accounts. But the publication of the Paradise Papers over the weekend revealed that Breitbart itself is largely funded by up to $60 million that, thanks to the Mercers’ use of an offshore investment vehicle in Bermuda, is not taxed in the U.S.According to The Guardian, Bob Mercer—the billionaire hedge-fund manager and Trump supporter who until recently held a majority stake in Breitbart (he announced last week that he would transfer that stake to his children)—created a network of offshore accounts in Bermuda to fund the Mercer Family Foundation, which dumps money into conservative causes. The foundation reportedly draws its money from “feeder funds”—offshoots of the main hedge fund Renaissance Technologies—registered to Bermuda law firm Appleby. (A similar system was set up to manage the retirement accounts of Renaissance employees.) The Mercers then sold off their Bermuda investments to finance the foundation, avoiding the up-to-39-percent U.S. tax rate normally levied on nonprofits funded by investments financed through debt. “This is simple, but ingenious,” an investment adviser told the Guardian. “You take retirement plans or foundations, you invest them in a hedge fund, and even if the value rises 100 percent, you can sell off the investments with no tax consequences.” Over the years, the Mercer Family Foundation’s activities have come to rival those of the Koch brothers; the organization has poured money into conservative think tanks, political campaigns, and, more recently, media and cultural ventures like Breitbart and Milo Inc. (In a public statement last week, Mercer severed ties with Milo Yiannopoulos, citing recent reports about his links to white nationalists.) Bannon, already a multi-millionaire thanks to his stake in Seinfeld, made even more money from his work with Mercer-funded organizations:

After a Tax Crackdown, Apple Found a New Shelter for Its Profits - It was May 2013, and Mr. Cook, the chief executive of Apple, appeared before a United States Senate investigative subcommittee.  “We pay all the taxes we owe, every single dollar,” Mr. Cook declared at the hearing. “We don’t depend on tax gimmicks,” he went on. “We don’t stash money on some Caribbean island.” True enough. The island Apple would soon rely on was in the English Channel. Five months after Mr. Cook’s testimony, Irish officials began to crack down on the tax structure Apple had exploited. So the iPhone maker went hunting for another place to park its profits, newly leaked records show. With help from law firms that specialize in offshore tax shelters, the company canvassed multiple jurisdictions before settling on the small island of Jersey, which typically does not tax corporate income. Apple has accumulated more than $128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was made over the past decade. The previously undisclosed story of Apple’s search for a new tax haven and its use of Jersey is among the findings emerging from a cache of secret corporate records from Appleby, a Bermuda-based law firm that caters to businesses and the wealthy elite.The records, shared by the International Consortium of Investigative Journalists with The New York Times and other media partners, were obtained by the German newspaper Süddeutsche Zeitung. The documents reveal how big law firms help clients weave their way through the gaps between different countries’ tax rules. Appleby clients have transferred trademarks, patent rights and other valuable assets into offshore shell companies, avoiding billions of dollars in taxes. The rights to Nike’s Swoosh trademark, Uber’s taxi-hailing app, Allergan’s Botox patents and Facebook’s social media technology have all resided in shell companies that listed as their headquarters Appleby offices in Bermuda and Grand Cayman, the records show.

What the Paradise Papers Tell Us About Global Business and Political Elites -- The so-called Paradise Papers may sound familiar – leaked documents from a law firm that specialises in offshore services reveal how the global elite avoids paying taxes. Even the name has the same ring to it as last year’s Panama Papers expose. But the Paradise Papers are different, reflecting the complexity of the global offshore tax system.  Panama is generally considered among tax haven experts as one of the least reformed corners of the offshore world. International rules regarding tax evasion and avoidance are intended to help national governments to pursue their own offenders, but the Panama Papers revealed that the country was being used primarily by the business and political elites of countries like Russia, China and many more in Latin America and Asia; countries where the governments are closely linked to business and which are less likely to use tools provided by new international rules to pursue offenders. Hence, relatively few Americans or Europeans were caught in the Panama story. And Mossack Fonseca, the law firm at the centre of the leak has since been discredited.The Paradise Papers reveal the goings on of the elites of the offshore world – this time in the supposedly highly-regulated havens of the Cayman Islands, Bermuda, Singapore and the like. All places that received a fairly clean bill of health during the OECD peer review process only a few years ago. The law firm at the centre of this new leak, Appleby, insists there is “no evidence of wrongdoing” in any of the revelations. Nonetheless, the Paradise Papers will tell us a lot about the activities of business and political elites of well-regulated countries like the US and UK – implicating big multinationals such as Nike and Apple, and individuals including the British Queen. Clearly, jurisdictions such as the Caymans Islands and Bermuda that levy no income tax, capital gains tax, VAT, sales, wealth or corporate tax, still attract a great deal of businesses. Why, for instance, has the Duchy of Lancaster, the Queen’s private portfolio, invested in two offshore funds, in Cayman and Bermuda? After all, the Queen pays tax only voluntarily. A more charitable interpretation is that any big investor who is seeking to diversify their portfolio would inevitably end up using offshore funds. Practically, the entire wealth investment industry – the industry that invests for the rich and the wealthy of our world – operates through the offshore world.  And it’s hidden from public view.

Bernie Sanders warns of ‘international oligarchy’ after Paradise Papers leak - Bernie Sanders has warned that the world is rapidly becoming an “international oligarchy” controlled by a tiny number of billionaires, highlighted by the revelations in the Paradise Papers.In a statement to the Guardian in the wake of the massive leak of documents exposing the secrets of offshore investors, Sanders said that the enrichment of wealthy individuals and companies in tax havens was “the major issue of our time”. He said the Paradise Papers opened the door on a “major problem not just for the US but for governments throughout the world”.“The major issue of our time is the rapid movement toward international oligarchy in which a handful of billionaires own and control a significant part of the global economy. The Paradise Papers shows how these billionaires and multinational corporations get richer by hiding their wealth and profits and avoid paying their fair share of taxes,” the US senator from Vermont said.Sanders, who came in a close second to Hillary Clinton in the race for the Democratic presidential nomination last year, pointed the finger of blame for the flourishing of offshore holdings on both Congress and the Trump administration. He told the Guardian that Republicans in Congress were responsible for providing “even more tax breaks to profitable corporations like Apple and Nike”. The same tax breaks, he said, were being seized upon by super-wealthy members of Trump’s cabinet “who avoid billions in US taxes by shifting American jobs and profits to offshore tax havens. We need to close these loopholes and demand a fair and progressive tax system.”

If you think the Paradise and Panama papers are bad, wait until you hear about Delaware - The exposure of Panamanian law firm Mossack Fonseca’s work helping the global elite hide money from the tax man, and the more recent leak of the “Paradise Papers” from firms Appleby and Estera in Bermuda, have prompted outrage and interest in corporate secrecy. In the US, it also should provide occasion for introspection, because anything Panama does, Delaware, South Dakota, and Nevada can do just as well.In fact, the US is one of the largest recipients of illicit financial flows from developing countries—money often smuggled out by corrupt politicians, drug dealers, or everyday criminals. The key reason is corporate secrecy. When individuals or companies want to hide their assets, they transfer them to shell companies that hide the true owners behind nominee directors who act as the custodian of the firm. Often, and especially in tax havens, the directors of the company are not required to disclose, to the tax authorities or anyone else, who the true owners are.   Mossack Fonseca set up these kinds of shell companies in Panama, and that’s why the leak of its internal records was so damaging to the people who appeared in them, including Iceland’s prime minister.  Comparatively few Americans were found in the Mossack Fonseca’s records, and there’s a reason for that: In the US, corporate registration is handled on the state level, and many states offer generous corporate secrecy rules. Just as small countries tend to breed the political culture that allows corporate secrecy, sparsely populated US states have competed in a race to the bottom to attract corporate investment through lax disclosure requirements. The tiny state of Delaware, called an “on-shore tax haven” by critics, garners more than a quarter of its public revenue—just over a $1 billion—from its business registry. This probably factors into the World Bank’s assessment of the US as one of the worst offenders (pdf) when it comes to corporate secrecy. In fact, a 2012 academic study reports that it is easier to form a shell company(pdf) in the US than it is in Panama—or indeed, anywhere else but Kenya. At the top of their list? Delaware and Nevada.

Major Citi-stakeholder Alwaleed arrested by Saudi authorities -  Prince Alwaleed bin Talal, the billionaire with significant stakes in Citigroup and Twitter, was arrested by Saudi Arabian authorities as part of an alleged anti-corruption purge in the kingdom. Alwaleed was among 11 princes and 38 current or former senior officials that were arrested on orders from a newly established anti-corruption committee headed by Crown Prince Mohammed bin Salman, according to a senior Saudi official who spoke on condition of anonymity. Alwaleed was picked up from his desert camp, the official said. Authorities didn't disclose the allegations that prompted the arrests. Ranked the world's 50th richest person with a net worth of about $19 billion, according to the Bloomberg Billionaires Index, Alwaleed is the founder of Kingdom Holding Co., a Riyadh-based investment company that has holdings in real estate, hotels and stocks such as Apple Inc. around the world. Kingdom Holding shares fell as much as 9.9 percent and closed down 7.6 percent, the lowest since June 2012. In one of his most visible local investments, Alwaleed in September bought a 16.2 percent stake in Banque Saudi Fransi from Credit Agricole SA in a deal valued at $1.54 billion. Kingdom Holding, which is now the bank's single largest shareholder, bought the stake at a discount after the French lender struggled to find an international buyer. Saudi Fransi shares fell as much as 2.8 percent before closing 1 percent higher. The benchmark Tadawul All Share Index erased losses to close up 0.3 percent. Alwaleed has long ranked among Citigroup's largest and most outspoken shareholders, encouraging the lender to rebuild its Saudi Arabian business more than a decade after it lost a key banking license there. The bank will reopen in the kingdom later this year after a 13-year absence and lobbying by Alwaleed.

Citigroup, 21st Century Fox, Twitter: Prince’s Arrest Touches Many - NYT -- With the arrest of Prince Alwaleed bin Talal, the prominent billionaire investor, Saudi Arabia has touched one of the richest and most influential investors in the world. Among Prince Alwaleed’s crown jewels: sizable stakes in Twitter, Lyft and Citigroup. He has gone into business with some of the corporate world’s biggest titans, including Bill Gates, Rupert Murdoch and Michael R. Bloomberg. His investments span the globe, including the Four Seasons Hotel George V in Paris, the Savoy in London and the Plaza in New York. He has also invested in the AccorHotels chain and Canary Wharf, the London business development.  So vast are his investments that he has been referred to as the Warren Buffett of the Middle East. Prince Alwaleed’s arrest is likely to reverberate across dozens of companies around the world that count the investment company that he founded, Kingdom Holding, as a major investor or shareholder. The move was part of a sweeping and unprecedented roundup of at least 10 other princes, four ministers and dozens of former ministers, hours after the Saudi ruler, King Salman, decreed the creation of a powerful new anticorruption committee, led by his favorite son and top adviser, Crown Prince Mohammed bin Salman. The arrests appeared to be the crown prince’s latest step to make good on his ambitious modernization plans and to further consolidate the remarkable degree of power he has amassed at age 32 over military, foreign, economic and social policies. His ascent and brash approach have angered some members of the royal family. Prince Alwaleed, a 62-year-old with an Omar Sharif mustache, ubiquitous sunshades and penchant for publicity, is a relatively flamboyant figure for the royal family and is one of the most prominent Saudis internationally. His arrest seems aimed at demonstrating that no one is beyond the reach of the committee and the crown prince. The confinement of the princes, said to be in the Ritz-Carlton hotel in Riyadh, could be a particularly strange experience for Prince Alwaleed, who owns stakes in a number of Four Seasons hotels. Prince Alwaleed’s style was on display during a trip to the Red Sea resort of Sharm el Sheikh, Egypt, in August. In a turn worthy of President Vladimir V. Putin of Russia, a promotional video from the trip shows the prince, bare-chested and wearing a pair of shorts, leading an entourage of men around the resort — cycling, playing beach volleyball, doing the backstroke, water-skiing, and hiking up a mountain, pumping his arms above his head triumphantly while clutching a cellphone in one hand. Set to action-movie music, much of the video unfolds against the backdrop of his 280-foot yacht, the Kingdom 5KR.

What Is Fat Leonard Scandal? 440 Navy Officials Investigated For Taking Bribes - Investigation into the “Fat Leonard Scandal” has expanded to include 440 active-duty and retired personnel, including 60 current and former admirals, of the U.S. Navy, according to reports.Reports said these personnel might have violated military law or federal ethic rules in their dealings with Leonard Glenn Francis, a Singapore-based maritime tycoon.Francis, 53, the owner of Glenn Defense Marine Asia firm, built relationships with a number of member of the U.S. Navy by enticing them with bribes ranging from thousands of dollars in cash, travel expenses and luxury items to prostitutes in order to extract confidential information from Navy personnel.He was often called "Leonard the Legend" for his wild lifestyle and "Fat Leonard" for being 360-pounds in weight. In exchange for his generous "gifts," Francis was able to find out about the movements of U.S. ships and submarines, navy contracts, and updates regarding active law enforcement investigations into his firm, which was being investigated for profiting from supplying Navy vessels in ports from Vladivostok, Russia to Brisbane, Australia, the Washington Post reported.  Investigations into the scandal began more than four years ago and 28 members of the Navy, including two admirals, have since been indicted.  Francis pleaded guilty in 2015 for bribing dozens of Navy officials and defrauding more than $35 million by overbilling the Navy. He is currently booked in a San Diego prison and awaits sentencing in federal court.

America’s Prosecutors Were Supposed to Be Accountable to Voters. What Went Wrong? -- Cyrus Vance Jr. is suddenly under fire. It began in October, when the New Yorker reported that in 2012 the Manhattan district attorney declined to charge Ivanka Trump and Donald Trump Jr. with fraud—even though investigators in his office believed the Trumps had lied in marketing materials for Trump SoHo, their hotel and condo project in lower Manhattan. Within a week, the New York Times and the New Yorker revealed that in 2015, Vance chose not to prosecute another powerful and wealthy figure, Harvey Weinstein, despite an audio recording in which the Hollywood producer appeared to admit to sexual assault. Furthermore, Vance accepted campaign cash from a lawyer to the Trumps and from a Weinstein attorney not long after dropping each case.  The revelations have sparked an uproar, and Vance has returned the Trump-related money and stopped accepting donations in response to the recent scrutiny. But anyone looking to channel outrage into backing Vance’s opponent on Election Day this week has discovered a hitch: Vance is the only name on the ballot. A longtime critic, Peter Gleason, has jumped in as a write-in challenger, as has Marc Fliedner, a reform-minded figure—but with the vote fast approaching, they face a tough climb, to say the least. Vance’s comfortable position is familiar to him. In his last bid for reelection, in 2013, he ran unopposed in the Democratic primary and, in deep-blue Manhattan, won over 84 percent of the vote in the general election. In all likelihood, he’ll win again on Tuesday.

Bridgewater Paid $1 Million To Settle Sexual Harassment Charge Against Former CEO --Embarrassing revelations about sexual harassment in the workplace continue to emerge in the media as the national conversation about sexual misconduct has spread from tech, to entertainment and media to the constantly surveilled halls of one of America’s most successful and most controversial hedge fund firms.In a report that further tarnishes the workplace culture at Bridgewater Associates - the world’s biggest hedge fund - just as its founder, Ray Dalio, is embarking on a book tour to tout the publication of “Principles”, his book about the various aphoristic imperatives meant to govern Bridgewater employees’ behavior if not the fund's buying/selling signals, the Wall Street Journal’s Rob Copeland has discovered that the firm paid $1 million to settle allegations of inappropriate sexual conduct against former co-CEO Greg Jensen, whom Dalio had briefly anointed as his successor, left the firm under a haze of acrimony a few years back.Jensen was pushed out a few years back, purportedly after having a falling out with Dalio after reportedly criticizing his boss behind his back.Jensen, who is married with three children, also allegedly had an a ffair with a female employee who was junior to him, a controversy which contributed to him leaving the firm.

Taxpayers are subsidizing hush money for sexual harassment and assault -- Many of the recent stories about sexual abuse claims against disgraced Hollywood mogul Harvey Weinstein, former Fox News host Bill O’Reilly and other powerful actors, journalists and executives mention settlements either they or their employers made to silence women who accused them of misconduct. These settlements often require alleged victims to sign a nondisclosure agreement – essentially a pledge of secrecy – in exchange for a cash payment. They are designed to keep the reputations of allegedly abusive high-flyers intact, an arrangement that can allow repeated wrongdoing. As a law professor who focuses on white-collar crime, what I find striking about these contracts is how they can be treated as tax-deductible business expenses. That means American taxpayers are helping foot the bill for keeping despicable behavior in the shadows.I don’t believe that secret payments to settle sexual abuse claims should be tax-deductible. Sexual harassment becomes a crime only when there is a nonconsensual touching or sexual contact that can be prosecuted.Victims of sexual harassment in the workplace usually can pursue personal injury claims by seeking damages from the executive or colleague responsible for it – or their employer – to compensate for emotional distress and any physical injury the abuse caused. These cases are mostly litigated at the state level, if they ever reach a courtroom. The broader cost of these confidential agreements to society is that they leave perpetrators free to prey on new victims who are unaware that they may be walking into a trap when they meet privately with a powerful executive or someone who simply has greater seniority and influence.

FBI Supervisor Walks Into A Bar, Meets A Stripper, Wakes Up With No Gun, No Rolex, No Dignity... With a whole host of controversies surrounding the FBI, from Comey's mishandling of Hillary's email case to Mueller's Uranium One blunders, the last thing the agency needed was yet another scandal.  Unfortunately, thanks to the late night drunken antics of one counterterrorism supervisor and a gaggle of strippers, a new embarrassing scandal is exactly what they have. Sometime back in July, Robert Manson, a unit chief in the FBI’s international terrorism section, walked into a bar at the Westin Hotel in Charlotte, NC with his Glock .40-caliber handgun, a $6,000 Rolex watch, $60 in cash and some portion of his dignity.  But, according to a newly revealed police report, after inviting at least one of the classy young ladies of the night back to his room for the evening, Manson apparently woke up the next morning with none of those things.  Per the New York Times: An F.B.I. counterterrorism supervisor is under internal investigation after a woman stole his gun following a night of heavy drinking in a North Carolina hotel, according to documents and government officials. In July, Robert Manson, a unit chief in the F.B.I.’s international terrorism section,had his Glock .40-caliber handgun, a $6,000 Rolex watch and $60 in cash stolen from his room at the Westin hotel in Charlotte, N.C., according to a police report. At 6:30 the next morning, police officers for the department were called to the hotel. Mr. Manson was incapacitated because of alcohol, according to the police report, which he did not file himself. A fellow agent, Kevin Thuman, gave the report, which says the theft happened from 2 a.m. to 5 a.m. The hotel bar closes at 2 a.m.

 Diplomats fear Tillerson transparency push is linked to Clinton emails - Secretary of State Rex Tillerson’s assignment of as many as several hundred State Department officials to quickly clear a huge backlog of public records requests is being met with deep skepticism by rank-and-file employees. Tillerson says his goal is transparency. But many State workers fear the real reason is political: expediting the public release of thousands of former Secretary of State Hillary Clinton’s official emails.  The staffers also suspect the move — which will reassign many of them from far more substantive duties and has already sparked a union complaint — is meant to force many of them to resign out of frustration with what are essentially clerical positions. The issue spotlights the deepening distrust toward Tillerson at Foggy Bottom, where his attempts to restructure the department, cut its budget and centralize policymaking have already hurt morale. But it is drawing applause from conservative groups, which have been pressuring Tillerson to act on a backlog of 13,000 Freedom of Information Act requests — many of them relating to emails and other records from Clinton’s tenure. “We haven't understood why there's been a slow-walking of releasing records, and we've been quite public in counseling the administration to take an approach of extreme transparency,” said Tom Fitton, president of Judicial Watch, a conservative activist group that has sued the Trump administration for more Clinton documents.

Quarles says Fed taking 'fresh look' at regulation, fintech  -  In his first public statements since being sworn in as vice chairman for supervision at the Federal Reserve, Randal Quarles said the agency is examining its approaches to a wide swath of its regulatory and supervisory activities, including stress tests, capital ratios and living wills.  “As I have come into the job, I have perceived quite an openness in the deep state at the Fed to taking a fresh look … at regulations,” Quarles said. “The regulation part will proceed fairly straightforwardly. There’s a lot of work there to be done, and it won’t be entirely to everyone’s satisfaction, but I think that proceeds fairly straightforwardly.” Quarles' comments were delivered during a question-and-answer panel at the Clearing House Association's annual conference in New York. Among the first items that are likely to emerge from the Fed, Quarles said, is a disclosure of the aggregate performance of certain asset portfolios under the Fed’s stress testing models. That effort was first described by Fed Gov. Jerome Powell — who is now the president’s nominee to serve as chairman beginning next year — in an interview earlier this year.  “In a very short period of time,” Quarles said, the agency will issue a public solicitation for information related to what aspects of the Fed’s internal models and stress testing process ought to be disclosed, and will offer a suggested proposal on what it thinks might be appropriate. But the request for public input, he said, is meant to actually result in meaningful adjustments to the proposal, he said.  The tone Quarles set on stress testing appears less aggressive than some members of Congress would prefer. He made no mention of whether stress tests should continue to be annual exercises, whether qualitative tests should restrict dividend payments, or if the Fed’s models should be subject to notice-and-comment rulemaking processes. He did, however, say that those issues “are very much on the front burner.” Other leading areas of pressing interest include cybersecurity, the potential disruptions posed by fintech firms and the migration of risk out of the regulated banking sector and into the so-called shadow banking sector, he said. With respect to living wills, Quarles said that the idea of having banks undergo some kind of process to ensure there is a plan for resolution "makes a lot of sense," but that he doubted it would remain an annual exercise. It may become an ongoing monitoring process to ensure resolvability, he said.

Under Powell, Wall Street Expects Steady Wins on Regulation - In Jerome Powell, banks won’t get a Federal Reserve chairman who is hell-bent on ripping up financial rules. But in some ways, that’s better for Wall Street.With a resume steeped in industry experience and long-standing relationships with financial executives, Powell is expected to take a measured approach to rolling back regulations adopted in the wake of the 2008 economic crisis. He’s seen as a practical, not ideological, watchdog who will be able to get things done.That gibes with what big banks have long expected from President Donald Trump’s presidency. They want the Fed and other agencies to take the lead in easing post-crisis constraints, particularly because the Republican-controlled Congress has made little headway dismantling the Dodd-Frank Act. “For Wall Street, Powell is a solid choice,” said Ian Katz, an analyst with Capital Alpha Partners in Washington. “He supports deregulation but not to an extreme. He’s a known quantity and he’s regarded as a thoughtful consensus-seeker. The finance industry views him as safer choice than someone who would want to blow up the place and scrap all the Dodd-Frank rules.” While Powell’s views on bank oversight are important, they will take a back seat to his duties steering the U.S. economy. He is likely to support the Fed governor responsible for bank oversight, Randal Quarles, an old friend with a similar outlook. Since joining the Fed board in 2012, Powell, 64, has backed a number of new regulations, even as he sometimes questioned their potential impact on lending and other bank activities. A central theme in his speeches has been that the government should “protect these core reforms,” while making adjustments rather than major changes. He reiterated those views after Trump nominated him Thursday. Powell’s comfort with bank rules prompted some conservative aides in the Trump administration to oppose his candidacy, according to people with knowledge of the matter. In recent weeks, a few GOP lawmakers had also raised concerns to White House officials about Powell’s commitment to deregulation, said people familiar with the overtures.

Cheat sheet: Powell's key banking positions | American Banker - — President Trump’s selection of Jerome “Jay” Powell to head the Federal Reserve early next year means the central bank’s post-crisis regulatory structure — often cited as a damper on economic growth — will be tested under new leadership for the first time. The Fed is not the only bank regulator, but under the Obama administration it played a pivotal role in conceptualizing and executing the new macroprudential rules and processes that have arisen since the financial crisis. Many aspects of those rules and regulations have been the source of considerable opposition from Congressional Republicans for years. So now that a Republican president has made his appointment to lead the Fed, what do we know about the direction he will take the institution and what regulatory changes he will support?It’s important to note that, while Powell has been nominated as Fed chair, Randal Quarles — Trump’s first appointment to the central bank — is already serving as the vice chair of supervision, whose job it is to “develop policy recommendations for the Board” and who “shall oversee the supervision and regulation” of firms subject to Fed oversight.  There isn’t much precedent for how the Fed chair and vice chair for supervision interact on regulatory matters; Quarles is the first to formally hold the position. And what precedent there is — namely between current chair Janet Yellen and former Gov. Daniel Tarullo — suggests that the Fed chair will largely stick to monetary policy while the vice chair will stick to regulatory matters, with each standing by the others' positions in public.  But Powell has opinions of his own on regulatory matters all the same, and has been serving as chair of the board’s supervisory committee since Tarullo resigned in April (Quarles will eventually take this role but it has not been formally handed off yet). And ultimately, Powell will be holding the gavel and what he thinks will make a significant difference for banks under the Fed’s supervision.
Following is a summary of those positions: (12 slides)

 Guidance subject to Hill review could go back decades, lawmaker says — Rep. Blaine Luetkemeyer is calling on bank regulators to draw up a list of guidance going back 20 years to determine whether it should be submitted to Congress for review.The M issouri Republican's letter to the agencies last week came on the heels of the Government Accountability Office determination that the regulators' 2013 leveraged lending guidance was a general policy statement and therefore a rule that should have been submitted to Capitol Hill under the Congressional Review Act.The law allows lawmakers to consider overturning a rule by simple majority if they act within 60 session days of a rule being published. Some have interpreted the GAO’s finding to mean that the guidance is ineffective because it was never submitted for congressional review and that that standard could apply to other existing guidance. Luetkemeyer suggested there were other agency decisions that were not appropriately reviewed by Congress.  “I note that in recent years, your agencies have also issued many other guidance and supervisory letters that were never submitted to the Congress pursuant to the [Congressional Review Act], and therefore are also not yet effective,” Luetkemeyer said in the letter to the heads of the Federal Reserve Board, Federal Deposit Insurance Corp. and the Office of the Comptroller. “I urge you to conduct a ... review of that guidance, which is now presumably ineffective and unenforceable,” he added. He asked the agencies to respond by Dec. 5. The GAO determination, which was in response to a letter from Sen. Pat Toomey, R-Pa., left banks in limbo — uncertain whether the leveraged lending guidance could be ignored or whether the regulators would continue to apply the guidance confidentially in supervisory determinations or exam criticisms.

Bringing Accountability to the Wells Fargo Boardroom - NYT. Gretchen Morgenson - It’s distressingly common for directors of public companies to skate away from liability when corporate misconduct occurs on their watch. That’s why a recent ruling by a federal judge hearing two cases against Wells Fargo’s officers and directors is both unusual and welcome. The cases were filed against the bank by shareholders seeking to recover losses that were sustained, they say, in the wake of Wells Fargo’s widespread creation of fake or unauthorized accounts — a scandal that has besieged the bank, hurt its shares and caused the ouster of its chief executive last year. The defendants in the case recently ruled on by the judge are 15 current or former directors and four current or former officers. It is a so-called derivative action, brought on behalf of Wells Fargo on the grounds that it was harmed by the improprieties. The officers named in the suit include Timothy J. Sloan, Wells Fargo’s current chief executive, and Carrie Tolstedt, the former senior executive vice president of the community banking unit where the account-opening improprieties originated. The defendants had asked the judge to dismiss the case; among their arguments was a claim that the plaintiffs had not presented enough specificity on what each defendant had done wrong. But Jon S. Tigar, the judge hearing the cases in United States District Court in San Francisco, disagreed. In early October, he allowed the case to go forward so the plaintiffs would have a chance to prove their allegations. While that may seem an incremental and mostly procedural step, legal experts not involved in the case said Judge Tigar’s ruling sent a clear message to public company officers and directors: be vigilant for bad behavior in your operations, or else. The court concluded that the complaint’s allegations had plausibly suggested that a majority of the Wells Fargo directors had “consciously disregarded an obligation to be reasonably informed about the business and its risks or consciously disregarded the duty to monitor and oversee the business.” This ruling will resonate among corporate directors, securities lawyers said. “It’s a reminder that you can’t just be a passive figurehead on a board and keep your fingers crossed that nothing will go wrong,” said Lewis D. Lowenfels, an expert in securities law in New York. “You have to be actively involved and cognizant of what’s going on with respect to the company, or you could very well face liabilities.”

New Potential Credit Risk Bombs: Exotic, ‘Nonlinear’ and Private Transactions -  Yves Smith - The Wall Street Journal has a story today on a new type of credit market transaction described as “nonlinear finance”. That label alone should send off alarms, since one assumes it is truth in advertising, a rare commodity in Big Finance. “Nonlinear” says that under certain scenarios, the price of the instrument goes “nonlinear,” as in behaves in a radically different, ungraceful manner or can be expected to have its price gap out if particular conditions are met. That would also suggest the instrument would be hard to hedge. One of the reasons I can’t be as specific as I’d like, as Wall Street Journal readers pointed out, is the actual article is thin on details. These trades sound a lot like the old CDOs, the ones that blew up so spectacularly in the crisis. Technically, those were asset-backed securities, or ABS CDOs.1   CDOs also became large enough as a product that there was some aggregate data, but it wasn’t terribly reliable (one huge problem was the potential for double-counting).  And it also makes sense that financiers would find a new bottle for the old CDO wine, since any investor would probably have a lot of ‘splaining to do if he were to invest in something that was sold as a CDO, even if that was a straight up description.First to the critical bits of the Journal story, then more discussion as to how worried to be about this development. From the Journal:Putting together deals in what some dub “nonlinear finance” is a growth business for investment banks’ big bond-trading arms and is helping clear unwanted assets off some balance sheets. However, such private deals, which aren’t publicly traded and don’t have public credit ratings, are a challenge for regulators keeping track of the growth of shadow banking and understanding whether such activity is driven by regulation or its avoidance. The business isn’t new, but it is heating up as banks hire specialists and commit balance-sheet capacity to feed investor demand. Goldman Sachs Group GS -1.51% said in September that it could double its financing of “bespoke collateral” by giving its fixed-income trading arm an extra $5 billion of balance-sheet capacity. This would bring in at least an extra $100 million of revenue, which likely only counts the net interest income Goldman would earn on debt it keeps and not all the other deal fees involved.

Separating banking and commerce is 'another win for the big guys,' OCC's Noreika says -  Acting Comptroller of the Currency Keith Noreika laid out a case for rethinking, and possibly reversing, the decades-old restrictions keeping commercial firms from owning banks and vice versa, saying the barriers have little practical purpose and may restrict healthy competition. “In practice … a general prohibition on the mixing of banking and commerce has resulted in the very sort of things the prohibition was set up to prevent: advantaging and aggrandizing a few at the expense of the many,” Noreika said. “In sum, [it’s] another win for the big guys.” "A general prohibition on the mixing of banking and commerce has resulted in ... advantaging and aggrandizing a few at the expense of the many," said acting Comptroller of the Currency Keith Noreika.  In his prepared remarks to be delivered Wednesday morning at the Clearing House Association’s annual conference here, Noreika outlined the history of the restriction, which has antecedents to the earliest days after the American Revolution. But the modern restrictions — which can be found in the 1956 Bank Holding Company Act, the Glass-Steagall restrictions between commercial and investment banking and provisions in the 1933 Banking Act — were born more out of a personal vendetta between moneyed interests than out of noble concerns of unfair practices. That is further evidenced by the various grandfathering clauses and loopholes that allow banks and commercial activities to mingle on limited bases, he said. “If facts cannot explain why Congress took up Glass-Steagall, what does?” Noreika asked rhetorically. “Well, it may come down to the Rockefellers wanting to stick it to the Morgans.” Noreika’s comments are the latest in a series of arguments the acting comptroller has been making in recent months in favor of eliminating those barriers between commercial and banking industries. He has also suggested that the OCC’s fintech charter should be open to commercial firms — a policy that the previous Comptroller Thomas Curry had opposed. The comments also come as some online lenders have begun seeking industrial loan company charters to help them compete in the banking industry — a prospect hotly contested by community banks.

Regulators moving quickly on Volcker revisions: OCC's Noreika --  Acting Comptroller of the Currency Keith Noreika said Wednesday that he expects regulators to release some kind of proposal to limit the impact of the Volcker Rule by next spring, though he cautioned that was a tentative timeline. “That’s our aspiration,” Noreika said. “We’re at the stage of digesting the comment letters, putting together a broad outline of what a new rule could look like, and then that’s something all the agencies have to get together and agree on.” His comments came after he delivered a speech to the Clearing House Association’s annual conference focusing on rethinking the longstanding barriers between banking and commercial activities. Noreika, who has occasionally butted heads with his follow regulators over policies, has previously said that the OCC could move forward on its own to make changes to the Volcker Rule, spurring fears of a disjointed effort between bank regulators.  But Noreika signaled that the agencies are largely working from the same playbook — namely the Treasury Department’s June report on banking regulatory reform — and thinks the differences between the agencies are relatively limited.  The primary sticking point, he said, is whether the regulators have enough evidence to support exempting small banks from Volcker compliance. Tucked into the Volcker Rule’s governing statute is a provision that allows the regulators to deem an activity “permissible” if it “would promote and protect the safety and soundness of the banking entity and the financial stability of the United States.” Noreika said that regulators should at least try to demonstrate with data that small banks don’t need a Volcker compliance apparatus rather than assuming that such an exemption wouldn’t work. If a rule that, when applied to small banks, yields “only cost … and no benefit,” he said, then that could support such a determination.  “I think we’re all on the same page in what the statute says, when it can be applied,” Noreika said. “There’s a question of will there can ever be enough data to support using the exemptions, and I am of the view that we should actually ask the question of people to see whether they can give it to us, rather than take it totally off the table and not ask the question in the first place. That would go for things like the small-bank exemption.” Noreika said the spring deadline was dependent on many things, including whether other regulators get on the same page. But he said that time frame is “achievable.”

Senate Democrats oppose effort to quickly confirm Otting to OCC  — Four Democrats on the Senate Banking Committee said Thursday that they will vote against the nomination of Joseph Otting as comptroller of the currency. "We object to rushing the confirmation of Joseph Otting to lead the Office of the Comptroller of the Currency through the Senate,” the senators — Elizabeth Warren of Massachusetts, Catherine Cortez Masto of Nevada, Brian Schatz of Hawaii and Chris Van Hollen of Maryland — said in a joint press release. They were joined by Sen. Jeff Merkley of Oregon, a former member of the banking panel.  The Democrats said they oppose Otting because he is the former chief executive of OneWest, a Pasadena, Calif., bank that was bought by CIT The Democrats called OneWest "a notorious foreclosure mill that booted thousands of families out of their homes, illegally foreclosed on dozens of service members, and forked over $89 million for defrauding the government” and said Otting is “highly unqualified for this job.”Their comments came after Senate Majority Leader Mitch McConnell sought unanimous consent to move quickly on Otting's nomination, a process that is now blocked after Democrats objected. McConnell has now begun the process of full debate on Otting's nomination.In their press release, Democrats also criticized acting Comptroller Keith Noreika for being too close to the banking industry and siding against consumers. However, they said their objection to Noreika doesn’t justify confirming Otting. “The Senate must conduct a real debate before a vote putting someone with a track record in predatory banking into a position so critical to protecting consumers," the release said. Noreika was appointed as a “special government employee” which allows him to serve as the acting OCC head for 130 days without certain obligations such as signing an ethics pledge.

Financial Experts Release Video on How Wall Street Loots the U.S. Economy -- Pam Martens -- If you feel lost in the cacophony of contrasting claims that Wall Street was adequately reformed under the Dodd-Frank legislation of 2010 or that it remains an insidious wealth transfer system for the 1 percent, then you need to invest one-hour of your time to listen carefully to some of the smartest experts in America address the topic. A free one-hour video is now available (see below) which should settle the debate once and for all that the Dodd-Frank legislation of 2010 has failed to deliver the needed reforms to Wall Street’s corrupt culture and fraudulent business models and that nothing short of restoring the Glass-Steagall Act is going to make the U.S. financial system safe again. Don’t let the grainy quality of the video turn you off (it was made from a live webinar): the integrity of the voices will quickly reassure you that you are watching something powerful and critical to the future of the U.S. The background of the participants is as follows:

  • Dr. Marcus Stanley is the Policy Director of Americans for Financial Reform, a coalition of more than 250 national, state, and local groups who have come together to advocate for reform of the financial sector.
  • Nomi Prins is a renowned author whose last book, All the Presidents’ Bankers, is a seminal work on the problematic relationships of Wall Street bankers and U.S. presidents over the past century..
  • Bartlett (Bart) Naylor is the Financial Policy Advocate for the nonprofit, Public Citizen, which since its founding in 1971 has served as the voice of the American people in Washington D.C. .
  • Heather Slavkin Corzo is the director of the AFL-CIO Office of Investment and served as the chair of the Americans for Financial Reform task force on derivatives regulation from 2010 through 2013.
  • Also appearing in the video is Mayo Makinde, representing Our Revolution in NW Ohio. The grassroots organization, an outgrowth of Senator Bernie Sanders campaign for President in 2016, has been an active supporter of the restoration of the Glass-Steagall Act.

Policymakers shouldn’t bail on plan to prevent next ‘flash crash’  --Wall Street and its allies in the House are trying to kill the Consolidated Audit Trail (CAT). The CAT is a supercomputer and a massive database that will allow securities markets regulators to detect market abuses, punish wrongdoers, and better understand how markets work and why they sometimes crash. Just such a crash happened on May 6, 2010. In a matter of minutes, among other inexplicable events, the stock prices of Accenture, CenterPoint Energy and Exelon dropped to a penny, while those of Apple, HP and Sotheby’s shot up to $100,000. Nearly a trillion dollars was temporarily wiped from investors’ portfolios. A confidence-shattering event that took about 18 minutes to unfold took months for regulators to reconstruct and understand. And there have been several other “flash crashes” since. On Oct. 15, 2014, we saw extreme volatility in Treasury markets, and on Aug. 24, 2014 another market boomerang caused the Dow to fall by more than 1,000 points and recover quickly. After the 2010 “flash crash,” many in and out of Congress called on the Securities and Exchange Committee to get a better handle on such events and, more importantly, to fulfill its central mandates of protecting investors and maintaining the integrity of the markets. Hearings were held, blame was cast, reports were issued and promises were made. Ultimately, it took six years for the SEC to approve a final rule. The regulation was far from perfect, but it did set in motion the building of CAT. But now the industry is using the recent hack of the decades-old SEC computer system EDGAR as an excuse to kill the CAT. The CAT is built according to the highest security standards, and this mission-critical system and database would empower regulators to better protect investors and our markets against crashes and manipulations. 

Big Oil Plans Blockchain-Based Trading Platform -- A consortium involving Shell, BP, and Statoil is working on the development of a blockchain-based energy commodity trading platform, along with three large commodity traders—Gunvor, Koch Supply & Trading, and Mercuria, Reuters reports, citing the consortium. The platform, which has financial backing from Dutch ABN Amro, ING, and French Societe Generale, should launch by the end of next year.In January this year, Mercuria, in partnership with ING and Societe Generale, announced it was preparing the first oil trade using blockchain technology. The trade involved an African crude shipment to Mercuria shareholder ChemChina. A month later, Mercuria reported on the success of the test that used its prototype Easy Trading Connect platform to sell the African crude cargo three times on its way to China. The transactions involved the buyer and the seller, an agent, and an inspector, all of whom took part in the deal via the platform.The purpose of digitizing commodity trading is to save costs as well as time, and to simplify the whole process of trading. As a senior ING executive said in February following the successful test trade with the Mercuria shipment, “The commodity finance industry is hampered by nature by inefficiencies and outdated procedures. By applying blockchain technology, we expect that we can eliminate a lot of these, making the overall process faster and more cost effective and the tests we have been able to carry out have proved this.” Blockchain is particularly well suited to this purpose: the distributed ledger technology can—potentially for now—replace a complex clearing and settlement procedure involving an often-cumbersome amount of papers that need to be distributed among customs officials, cargo agents, and surveyors, and on top of that the carrier of the cargo is required to issue letters of indemnity if these documents are not processed in time.

$300 Million In Crypto Currency Lost FOREVER Thanks To A Bug In A Digital Wallet -- $300 million worth of the cryptocurrency Ethereum has been almost definitely lost forever.  The losing of the currency was accidental and due to a bug in a digital wallet. The Ethereum cryptocurrency has been lost after a series of bugs in a popular digital wallet service led one curious developer accidentally taking control of and then locking up the funds, according to reports. The user, “devops199”, triggered the flaw completely accidentally. When they realized that they had taken control of the ether of other, they attempted to undo the damage by deleting the code which had transferred ownership of the funds. Rather than returning the money, however, the program simply locked all the funds in those multisignature wallets permanently, with no way to access them. “This means that currently no funds can be moved out of the multi-sig wallets,” Parity says in a security advisory. Unlike most cryptocurrency hacks, however, the money wasn’t deliberately taken: it was effectively destroyed by accident. According to the Daily Mail, the lost money was in the form of Ether, the tradable currency that fuels the Ethereum distributed app platform, and was kept in digital multi-signature wallets built by a developer called Parity. These wallets require more than one user to enter their key before funds can be transferred.  “We are analyzing the situation and will release an update with further details shortly,” Parity told users. Parity says that it is unable to confirm the exact amount lost and that the $300 million figure is “purely speculative”. The company also disputes that the currency is “lost.” They are arguing that the term “frozen” is more accurate. But if it is frozen, it appears that no-one has the ability to unfreeze the funds and there seems to be no resolution in sight.

Each Bitcoin Transaction Uses As Much Energy As Your House In A Week - While Bitcoin bulls will probably never have it so good as they have in 2017, we wonder whether many of them have stopped to think about the environmental downside of this roaring bull market.  The environmental downside we’re referring to in Bitcoin is, of course, is energy.   We alluded to this in a constructive way here when we noted that a new Bitcoin mining hub is developing in Iceland, where the natural temperature dramatically reduces the cost of cooling computing hardware.   The primary energy requirement, however, goes into the computing power to “mine” the Bitcoins. The Bitcoin mining industry can consume 24 terawatt hours of electricity and still be profitable – the Motherboard website provides some context...    Bitcoin's incredible price run to break over $7,000 this year has sent its overall electricity consumption soaring, as people worldwide bring more energy-hungry computers online to mine the digital currency. An index from cryptocurrency analyst Alex de Vries, aka Digiconomist, estimates that with prices the way they are now, it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to "mine" more Bitcoins. That's about as much as Nigeria, a country of 186 million people, uses in a year… De Vries also estimates that the worldwide Bitcoin mining industry is now using enough electricity to power 2.26 million American homes. A rapid “Google” later and we discovered that there are 125.8 million American households, so almost 2%. Another way of looking at Bitcoin’s energy consumption is divide the electricity use in Bitcoin mining each day by the number of daily Bitcoin transactions. As the Motherboard notes, each Bitcoin transaction now requires the same amount of electricity needed to power the average American household for one week

Cyber threat is what keeps today’s bank CEO up at night --  For years, bank executives presumed that the biggest risk facing the industry was bad credit. But that axiom is changing, as cybercriminals become more sophisticated and data security becomes more essential. “We have been taught as bankers, the No. 1 risk in banking is credit,” U.S. Bancorp CEO Andy Cecere said Tuesday. “I think cyber is closely approaching that.” A few of his peers, participating in a roundtable discussion in New York on the challenges facing large banks, agreed with that assessment. “The only secure network is one that is powered down and shut off,” said Greg Carmichael, CEO of Fifth Third Bancorp in Cincinnati. The CEOs blamed what they described as their intensifying fears about cybersecurity on the massive data breach at Equifax this summer as well as other hacks. Cyber threats, of course, have loomed large over the industry for years. In response, banks have bulked up their defenses, and have been largely successful in fending off the blows of denial-of-service attacks and other attempts to penetrate company hardware. But the mindset articulated by the CEOs suggested that they think the threats have entered a new phase, and that the industry faces a fundamental, longer-term challenge: finding more accurate and innovative ways to verify customer identities. 

Las Vegas Massacre May Add More Than $1 Billion to Insurer Costs - The deadliest mass shooting in modern U.S. history is adding to soaring costs for insurance companies, which are already taking a beating this year from an onslaught of hurricanes, earthquakes and wildfires. The industry may have to shell out more than $1 billion for the Las Vegas massacre, insurance executives say. Acts of a solo gunman, who killed almost 60 people and injured about 500 others when he fired into the crowd of a country music festival last month from his Mandalay Bay hotel room, have resulted in multiple lawsuits. Victims have accused the hotel and its owner, MGM Resorts International, and concert promoter Live Nation Entertainment Inc., of failing to protect people at the event.  The shooting will drive up man-made disaster costs for insurers, after losses for such incidents worldwide totaled $7.8 billion in 2016, according to data from reinsurer Swiss Re. Brokers and lawyers expect claims related to the Las Vegas incident from life and health insurance, and class-action lawsuits, to continue for years. Long-term costs insurers face for incidents like the one in Las Vegas include physical damage, hotel and event planner liability, workers’ compensation and festival refunds, according to Peter Williams, global leader for live events at Allianz SE’s global corporate and specialty unit.Live Nation declined to comment other than to say the company is fully cooperating with the Federal Bureau of Investigation. MGM expects its insurance to cover liabilities tied to the lawsuits, the company said in a filing earlier this week. Chief Executive Officer James Murren said on a conference call Wednesday that MGM saw a spike in cancellations after the Las Vegas incident and bookings initially declined. Liabilities from the massacre add to an already costly insurance season. The industry is facing as much as $120 billion from claims related to hurricanes that raked the Southeastern U.S. this quarter, according to catastrophe-modeling firm RMS. Wildfires that struck Northern California in October may cost insurers as much as $10 billion, Imperial Capital credit analyst David Havens said Wednesday in a note to clients.

The battle over bank customer data may finally be over - The tug-of-war between fintechs and banks over customer information may finally be ending.  For the past few years, fintechs have argued they need to access bank customer account data to provide services like online loans, personal financial management and savings apps. Banks have been cautious about providing such information and unhappy with how fintechs have grabbed it by logging in with customers’ user names and passwords. But there are signs of a resolution in sight. "Over the course of the past nine months in particular, the flywheel is starting to spin," said Brett Pitts, who is head of digital for Wells Fargo virtual channels. "We've been talking about a lot of the mechanics, plumbing, and cross-industry dynamics that are important and we've made some progress. There’s a whole lot more progress to make. In the past year, Wells has signed data-sharing agreements with Intuit, Xero and Finicity.On Monday, it will announce two more, with Expensify and PointServ.The Expensify agreement will make it easier for Wells Fargo credit card customers who use Expensify to report monthly business expenses. Wells Fargo and Expensify will use an application programming interface to share monthly expense data.Under the PointServ agreement, when a Wells Fargo customer applies for a loan with a mortgage company that uses PointServ software to gather financial documents, a Wells Fargo API will deliver customer statements and bank account activity to PointServ.

 LendingClub's pullback amplifies consumer debt-load worries - LendingClub is the latest U.S. lender to tighten its credit standards, amplifying concerns that riskier borrowers are taking on too much debt.Citing worse-than-expected performance on loans to customers with checkered credit histories, the San Francisco company said this week that it plans to start approving a more creditworthy mix of borrowers going forward. The move displeased Wall Street analysts, who worry that that it will shrink loan yields and hurt LendingClub’s bottom line. The company’s shares plunged 16% Wednesday to close at $4.59 after senior executives provided weaker-than-expected revenue guidance for the fourth quarter.LendingClub specializes in making unsecured personal loans of up to $40,000, which its customers often use to refinance their credit card debt. There is nothing to stop such borrowers from racking up new credit card debt, which over time can become unmanageable. U.S. household debt hit $14.8 trillion in the first quarter of 2017, up $1.4 trillion from a decade earlier, according to a recent report by the ratings firm Standard & Poor’s. The S&P report stated that low interest rates have encouraged consumers to shoulder more debt in recent years, and it raised the question of whether borrowers will be able to meet their obligations if rates rise substantially.  The decision by LendingClub to tighten its borrowing criteria for personal loans follows similar actions by competitors Discover Financial Services and Prosper Marketplace.Discover reported that 3.19% of its personal loans were charged off in the third quarter, up from 2.63% in the same period a year earlier. The Riverwoods, Ill.-based firm vowed to curtail originations to certain less-creditworthy borrowers.

Next Phase of Carmageddon: the Banks - Wolf Richter -- Banks are further tightening their lending standards for prime and subprime auto loans. This process started in Q2 2016, when auto lending had reached the apogee of loosey-goosey underwriting that had boosted sales of new and used vehicles to record levels and had ballooned auto loan-balances outstanding to the $1-trillion mark. It also boosted risks for lenders. Inevitably, subprime auto loans started running into trouble in 2016, and it was time to not throw the last trace of prudence into the wind entirely. The chart below — based on data from the Fed’s Senior Loan Officer Survey on bank lending practices for the third quarter — shows the net percentage of banks tightening lending standards. The negative percentages below the red line signify net easing. It shows how loan officers have gradually, in fits and starts, dialed back their easing before Q2 2016 and ratcheted up their tightening after Q2 2016:  During Q3 2017, 10% of the banks tightened underwriting conditions, compared to the prior quarter, but 0% loosened underwriting conditions. In other words, the tightening is proceeding gradually, on a bank-by-bank basis, and the easing has stopped entirely. “Banks reportedly tightened most terms surveyed for auto loans,” the report says. Specifically, here are some of the terms the banks tightened in Q3, which adds to the banks that tightening in prior quarters:

  • 7% net tightened conditions on minimum required down payments.
  • 5% net tightened conditions on credit scores
  • 8% net tightened granting loans to customers that did not meet credit scoring thresholds

In a set of special questions, the October survey asked why banks were changing credit standards or terms for prime and subprime borrowers “this year.” The reasons were nearly the same for both prime and subprime borrowers, but subprime is clearly the bigger concern.

Online loans leave consumers deeper in debt, Fed research says - Online lenders portray themselves in virtuous terms, arguing that digital innovation has enabled underserved U.S. consumers to refinance expensive debt at lower interest rates, while also boosting their credit scores. But provocative new research from the Federal Reserve Bank of Cleveland casts doubt on that rosy outlook. Indeed, the study finds that borrowers who use online loan products end up in deeper debt than similarly situated consumers who do not. “Consumers in the at-risk category — those with lower incomes, less education, and higher existing debt — may be the most vulnerable,” the research states. The study, published Thursday, is likely to spark intense debate. One of its findings is that consumers who take out online loans, sometimes called peer-to-peer loans or marketplace loans, likely have access to traditional banking services. That conclusion is in tension with another recent study by a different team of Fed economists. Those researchers, based at the Philadelphia Fed and the Chicago Fed, found evidence consistent with the argument that online lenders have played a role in filling the credit gap that has been left by banks.  The fledgling industry has generally drawn encouragement from policymakers. Near the end of the Obama administration, the Treasury Department declared that online lending has the potential to broaden access to affordable credit for underserved consumers. The Cleveland Fed study reaches an unhappier conclusion. It finds the online industry’s loans “do not go to the markets underserved by the traditional banking system” and “resemble predatory loans in terms of the segment of the consumer market they serve and their impact on consumers’ finances.”

CFPB sues Freedom Debt Relief for misleading consumers -- The Consumer Financial Protection Bureau filed a lawsuit Wednesday against Freedom Debt Relief, the nation’s largest debt-settlement services provider, and its co-CEO Andrew Housser for allegedly deceiving consumers.  The CFPB said that Freedom Debt Relief charged consumers without settling their debts as promised, made customers negotiate their own settlements and misled customers about its fees.  The company, a unit of Freedom Financial Network in San Mateo, Calif., also failed to inform customers of their rights to funds deposited with the company, the CFPB said.  “Freedom took advantage of vulnerable consumers who turned to the company for help getting out of debt,” CFPB Director Richard Cordray said in a press release. “Freedom deceived consumers about its clout with creditors that it knows do not negotiate with debt-settlement companies, made some customers negotiate on their own, and misled consumers about its fees and their accounts." The lawsuit, filed in U.S. District Court for the Northern District of California, alleges that Housser met with representatives at American Express, JPMorgan Chase and Discover, in an effort to get the companies to reverse their policies against negotiating with debt-settlement companies.  The CFPB said that Housser knows through the failed negotiations that some major creditors will not negotiate with debt-settlement companies and he failed to explain to consumers that they might have to negotiate directly with creditors themselves.  The CFPB said Housser also misled consumers by claiming the company charges a fee only when it negotiates a debt settlement and consumers make a payment. But the CFPB said Freedom charges its full fee, ranging from 18% to 25% of the amount of debt owed, even when creditors stop collections without a settlement and consumers negotiate settlements on their own.

What’s the future of CFPB and Director Richard Cordray? – podcast -  Cordray is still keeping everyone guessing about whether he is staying or running for governor of Ohio. And Republicans could weaken the agency by putting one of their own in charge and rolling back many of the rules it’s set. American Banker reporter Kate Berry explains.

Did CFPB's Cordray fake out Trump and GOP?  -  Despite months of fevered speculation and analysis about Richard Cordray's future, including whether he would be fired by President Trump or choose to quit to run for governor of Ohio, he remains in a somewhat surprising place — the director of the Consumer Financial Protection Bureau.  The Trump administration appears unwilling to oust Cordray even after renewed pleas by top Republicans last week, and Cordray himself has given no sign if he intends to leave. With a Feb. 1 filing deadline fast approaching, some political observers are questioning whether Cordray plans to depart after all.  "As a practical matter, the likelihood that Cordray will declare his candidacy has to be seen as decreasing as time progresses," said Benjamin Saul, a partner at White & Case. "It may point to his willingness to ride out his term."  If Cordray does not leave soon — as has been widely expected — it may be that he has played on his possible political aspirations in order to keep Trump from firing him.  When Trump took office, few expected Cordray to still be at the job 10 months later. But the president and his advisers appeared reluctant to fire the CFPB director for fear of helping his potential candidacy and enraging consumer groups. That reluctance hasn't abated.According to a report last week, Trump polled Republicans at a signing ceremony overturning the CFPB's arbitration rule, asking what he should do about the agency's director. The response was mixed, according to the story, because some feared it would only help Cordray if he were ousted.  If Trump fires Cordray, that would turn him into a martyr and potentially hand him the governorship of Ohio, some attorneys say.

Banks seek level playing field for CRE construction lending - A bill that would ease Basel III capital requirements on commercial real estate loans could level the playing field between depository and nonbank lenders and spur more construction lending.The Clarifying Commercial Real Estate Loans Act, H.R. 2148, codifies and clarifies exemptions to the requirement that high-volatility commercial real estate loans carry a 150% risk weight for capital retention purposes. The bill passed the House on Nov. 7 and now heads to the Senate.HVCRE lending is a subset of acquisition, development and construction loans that applies to commercial properties being built. The current Basel III requirements forces banks to keep more capital on their books for these loans, resulting in higher borrowing costs compared to other lenders not subject to Basel III."Many of these changes are just very practical adjustments to conform the rule better to the way real estate development is conducted," said Gregg Loubier, a partner in Alston & Bird's Finance Group. Some banks were cautious and automatically classified construction loans as HVCRE to avoid regulatory problems. Others, typically smaller banks, only made loans that qualify for the exemption to avoid the capital hit. It also benefits the bridge lending space by removing from HVCRE status loans for improving income-producing properties under certain conditions, such as long as cash flow is sufficient to support the debt service and the expenses, Loubier added.The current exemptions include a loan-to-value test and a separate prerequisite that the borrower has contributed 15% in cash equal to the property's as-completed valuation. If the borrower has those in place, the risk weighting drops to 100%. The bipartisan bill redefines the valuation standard to stabilized value. It also creates an exit ramp that should move loans out of the HVCRE category when they reach certain milestones, allowing them to be reclassified permanent financing. Permanent commercial loans have a 100% risk weighting.

Trump team targets special 'QM' status for GSEs - When the Consumer Financial Protection Bureau finalized its mortgage underwriting rule in 2013, it granted government-backed loans an exemption.  The CFPB rule essentially freed loans backed by the government-sponsored enterprises and other agencies from complying with a debt-to-income maximum imposed on other mortgages. Yet recent growth in loans with higher debt-to-income has prompted a debate over the exemption. The Trump administration says it gives government-backed loans an unfair advantage.  "We are seeing lenders expanding the credit box," said Paul Noring, managing director and practice leader at the financial services and regulatory consulting firm Navigant. "Underwriters are definitely pushing on the DTI limits to try to approve more borrowers. Some lenders are being more aggressive than others."  The CFPB rules required lenders to evaluate borrowers’ ability to repay, except for designated “qualified mortgages” (or QM) that meet criteria for safe loans, including a maximum debt-to-income ratio of 43%. But loans backed by the government-sponsored enterprises Fannie Mae and Freddie Mac as well as other agencies such as the Federal Housing Administration automatically earn QM status even if they have higher DTIs. The exemption that applies to the GSEs — commonly known as the QM Patch — will last as long as Fannie and Freddie are in federal conservatorship, or until January 10, 2021. Agencies such as the FHA and Department of Veterans Affairs, meanwhile, were authorized to write their own QM rules without imposing a DTI limit. For some agencies, higher-DTI loans are already seen as a growing and sizable part of the government-backed portfolio.

 Ben Carson is wrong. Law used to fight FHA fraud is essential  -- Housing and Urban Development Secretary Ben Carson sent the wrong message to the mortgage industry when he said the use of the False Claims Act to stop fraud by companies engaged in Federal Housing Administration loans is a “problem” that “we’re already addressing.” Carson made his comments at a House Financial Services Committee hearing in response to a question from Rep. Dave Trott, R-Mich., who asked if HUD was going to address “the improper use of the False Claims Act to impose outrageous penalties against lenders for immaterial defects in loan origination files on FHA loans.”  Carson characterized use of the False Claims Act to fight fraud in FHA lending as “ridiculous, quite frankly.” That statement may delight the mortgage industry but does not bode well for taxpayers or the federal government’s future fraud enforcement efforts. The False Claims Act is the strongest enforcement weapon the government has to fight civil frauds that cause financial harm to U.S. taxpayers. Indeed, removing the False Claims Act from the Department of Justice’s arsenal of tools to combat fraud involving FHA loans is what is ridiculous, quite frankly.The False Claims Act redresses frauds against federal programs and recovers taxpayer funds lost to fraudulent practices. Both the Department of Justice and private citizen whistleblowers can initiate cases under the FCA. The sanctions are serious, forcing companies to pay three times the amount of damages the government suffered plus penalties for each false claim. The law has been massively effective, returning more than $60 billion to the federal government and states, including related criminal fines.  Carson seems not to understand how important the False Claims Act is to the effort to fight fraud against the government. He apparently has adopted the mortgage industry’s view, which Trott espoused, that FHA lenders have been prosecuted for “immaterial defects” in originating, processing and underwriting FHA loans. That is a false characterization of those cases.

Do Justice and HUD see eye to eye on False Claims Act enforcement?  - Trump administration officials have made clear their intent to reexamine how Federal Housing Administration lenders are cited under the False Claims Act, but whether that means lenders can rest any easier is still an open question.Housing and Urban Development Secretary Ben Carson multiple times has echoed lenders' concerns that the government has used the FCA too aggressively and White House officials are supporting the secretary's initiative. But it is not yet clear that the Department of Justice, which joined HUD under the Obama administration to target FHA lenders for False Claims Act violations, is ready to pull back anytime soon, and industry observers say lenders should not ease up on compliance just yet. "Until the DOJ and ... [HUD's Office of Inspector General] sign on, lenders will need to continue to be vigilant in their quality control and quality assurance practices to make sure their loans are in compliance with FHA standards," said Phillip Schulman, a partner at the Mayer Brown LLP law firm.In the wake of the foreclosure crisis, the DOJ employed the False Claims Act — a Civil War-era law traditionally used to cite contractors for defrauding the government — to levy billions of dollars of fines against major banks and other FHA lenders.But the industry has sharply criticized the extent to which the government brought claims, arguing that it seemed like any defect in an FHA loan could result in a fine. False Claims Act ligation prompted several large banks and other mortgage lenders to exit the FHA program. Lenders face elevated damages under the False Claims Act for loan losses.  Yet the DOJ has not filed a single FCA case since the start of the Trump administration in January.

 FHA losing customers rapidly as premiums spur refinancing — The Federal Housing Administration’s financial health is benefiting from continued reductions in delinquencies and foreclosures, but the FHA is also losing some of its best customers at a fast clip. The “serious” delinquency rate (90 days or more past due) on FHA-insured home loans dropped to 4.28% in the third quarter of fiscal year 2017, according to an FHA quarterly report delivered to Congress late last month. That was down from 5% in a year earlier, and nearly 10% in 2011. The FHA is also enjoying a sharp decline in total claim and loss mitigation expenses. It paid $2.3 billion in total claims expenses in the third quarter, compared with $4.5 billion a year ago. But at the same time, more FHA homeowners than expected are refinancing out of the program and into conventional mortgages, despite an increase in mortgage rates over the past year. The Department of Housing and Urban Development had decided to cut the annual premium last year, but delayed the decision after Secretary Ben Carson said he wanted to study the issue. Bloomberg News The latest data shows that 761,100 FHA borrowers had refinanced over the first three quarters of in fiscal year 2017, as of June 30. That is 125% above what FHA auditors had predicted for the entire fiscal year in last year’s FHA actuarial report. (The fiscal year ended Sept. 30.) More borrowers are leaving the FHA likely because of the annual premium they must pay for government insurance over the life of the loan. Private mortgage insurance on conventional mortgages can be cancelled once the homeowner reaches the 20% equity mark. But the only way homeowners can cancel their FHA mortgage insurance is to refinance into a Fannie Mae or Freddie Mac conventional loan. The Department of Housing and Urban Development had decided to cut the annual premium last year, but delayed the decision after Secretary Ben Carson said he wanted to study the issue. 

Feds accuse Northwest Trustee of illegally foreclosing on veterans - The U.S. Justice Department has sued the largest foreclosure trustee in the Pacific Northwest, claiming it illegally foreclosed on at least 28 military members or veterans in the past six years. The lawsuit filed Thursday in U.S. District Court in Seattle was prompted by the case of Jacob McGreevey, a longtime Marine who lost his Vancouver home to foreclosure between his third and fourth tours of duty in the Middle East. The federal lawsuit comes six months after The Oregonian/OregonLive chronicled McGreevey's legal fight against his former lender. At the time, the Justice Department sided with the bank. Now, in a marked reversal, the U.S. Department of Justice has accused Bellevue, Wash.-based Northwest Trustee Services of repeatedly ignoring the Servicemembers Civil Relief Act, an obscure and often overlooked federal law intended to protect members of the military from foreclosure and other collections efforts while they're on active duty. With Northwest Trustee's help, PHH Mortgage of New Jersey repossessed McGreevey's house in 2010.The Department of Justice alleges that Northwest Trustee checked a federal database to see whether McGreevey was protected due to his service. It proceeded with the foreclosure anyway.No charges have been filed against PHH."The loss of a home is a devastating blow for anyone — but far worse for active duty service members often called to war zones," said Annette Hayes, U.S. Attorney in the Western District of Washington."Our investigation revealed that Northwest Trustee Services repeatedly failed to comply with laws that are meant to ensure our servicemembers do not have to fight a two-front war — one on behalf of all of us, and the other against illegal foreclosures." Sean Riddell, McGreevey's Portland lawyer and a Marine who served for a time as McGreevey's commanding officer in Iraq and still serves in the reserves, offered a less diplomatic view. "I want Northwest Trustee and PHH put out of business, their buildings burned down and the ground salted so that nothing ever grows for what they did to veterans," he said.

Steven Mnuchin, Foreclosure King Of America -  Treasury Secretary Steven Mnuchin doesn’t exactly come across as the guy you’d want in your corner in a playground tussle. In the Trump administration, he’s been more like the kid trying to cop favor with the school bully. That, at least, is the role he seems to have taken in the Trump White House. When he isn’t circling the Sunday shows stooging for the president, he regularly plays the willing fall guy for tax policies guaranteed to stoke further inequality in America and for legislation that will remove just about any consumer protections against Wall Street. Mnuchin, a former Goldman Sachs partner, arrived in Washington with a distinct reputation.  Back in 2009, he had corralled a bundle of rich financiers to take over California’s IndyMac bank, shut down amid the 2008 foreclosure crisis by the Federal Deposit Insurance Corporation (FDIC).  Bought for $13.9 billion (but only $1.3 billion in actual cash), Mnuchin turned it into a genuine foreclosure machine, in the process sealing his own fate when it came to his future reputation. At the time, he didn’t appear concerned about public approval. Something far more valuable was at stake: the $200 million that, according to Bloomberg News, he raked in personally, thanks to the deal. No such luck, of course, for the bank’s ordinary borrowers. During Mnuchin’s reign, IndyMac carried out more than 36,000 foreclosures, tossing former homeowners (including active duty military servicemen and women) onto the street without hesitation or pity by any means necessary. According to a memo obtained by investigative reporter David Dayen, OneWest, the new name that Mnuchin and his billionaire posse coined for Indybank, of which Mnuchin was now CEO and chairman, “rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.” Now, Mnuchin remains bitter and frustrated that he can’t kick the reputation he got in those days.   Such indignation would ring truer if, in May, one of Mnuchin’s banking units, a company called Financial Freedom, hadn’t agreed to pay a more than $89 million settlement to the government for taking unreasonable advantage of thousands of seniors through reverse mortgages which convert equity in a home into a loan. (A few months later, in August, a watchdog group, Campaign for Accountability, called upon the Justice Department to investigate Mnuchin for allegedly making false statements under oath to Congress about his actions at OneWest between 2009 and 2015.)

Black Knight Mortgage Monitor: 2017 Hurricane Impact on Mortgage Performance Worse than Katrina -- Black Knight released their Mortgage Monitor report for September today. According to Black Knight, 4.40% of mortgages were delinquent in September, up from 4.27% in September 2016. Black Knight also reported that 0.7o% of mortgages were in the foreclosure process, down from 1.00% a year ago. This gives a total of 5.10% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Despite Continued Home Price Acceleration, Housing Remains More Affordable Than Long-Term Benchmarks: Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of September 2017. Given continued acceleration in the rate of home price appreciation observed across most of the country, Black Knight thought it pertinent to examine both the current state of home affordability as well as potential impacts of future home price and interest rate increases on the home affordability landscape. “Rising home prices continue to offset the majority of would-be savings from recent interest rate declines, which has kept home affordability near a post-recession low,”  “That being said, when viewing the market through a longer-term lens, affordability across most of the country still remains favorable to long-term benchmarks.” .. In looking at the affordability landscape across the country, we certainly see varying levels of affordability in each market compared to their own long-term benchmarks,” Graboske explained. “But, by and large, the overall theme is that affordability in most areas, while tightening, remains favorable to long-term norms.” When looking at state-level data, payment-to-income ratios in 47 of 50 states remain below their 1995-2003 averages. Only Hawaii, California, Oregon, and Washington, D.C., have higher payment-to-income ratios today than their longer-term benchmarks. ..In addition to affordability, Black Knight also took an in-depth look at the effect of recent hurricanes on mortgage performance and determined that Hurricanes Harvey and Irma have likely accounted for an increase of 135,800 past-due mortgages nationwide. The combined impacts of these two storms, which are being credited with a 27 bps rise in the national non-current rate – has already surpassed that of Hurricane Katrina in 2005 and is expected to increase further in October results, where the heaviest impact from Hurricane Irma is expected to be seen.

 FHA serious delinquency rate shows signs of bottoming out - Serious delinquencies on Federal Housing Administration loans popular among first-time home buyers with affordability constraints have improved this year, but may be reaching a plateau. Loans 90-days delinquent, in foreclosure or involved in bankruptcies remained stable at 4.31% in August. The seasonally adjusted estimate was 5.2% a year ago. Even though delinquencies have been improving, FHA loans continue to make up a large percentage of the distressed loans in the larger market, according to Altisource Portfolio Solutions. FHA product makes up about 17% of new originations but one-third of the distressed loans in the market, Altisource's analysis of FHA and Black Knight data shows. While the FHA share of distressed loans is up, compared to the crisis the amount of distressed FHA product remains low, noted James Harp, director of real estate auction services at the company. "I think the volumes have come down significantly," he said. "It no longer makes sense for servicers to maintain large staffs." As a result, "a single vendor is becoming really appealing to servicers who previously wanted to diversify their vendor base," Harp said. More than 70% of mortgage servicing professionals surveyed predict that the volume of loans that the FHA and the Department of Veterans Affairs insure at their organizations will increase in the next 12 to 24 months, according to the Altisource study, which the company released in September. Independent research firm Ebquity conducted the survey of 205 professionals in the mortgage default servicing industry for Altisource between June 22 and 29. 

MBA: Mortgage Applications "Flat" in Latest Weekly Survey -- From the MBA: Mortgage Applications Flat in Latest MBA Weekly Survey Mortgage applications remained unchanged from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 3, 2017.  ... The Refinance Index decreased 1 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 9 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.18 percent from 4.22 percent, with points decreasing to 0.38 from 0.43 (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%.

Trump Is About To Crush Home Prices In Counties That Voted For Hillary: Here's Why -- Going back to Friday, the biggest surprise was that mortgage interest would only be deductible on mortgage balances up to $500K for new home purchases, down from the current $1mn threshold. Existing mortgages would be grandfathered, such that borrowers with existing loans would still be allowed to deduct interest on the first $1mn of their mortgage balances. In addition, only the first $10K of local and state property taxes would be allowed to be deducted from income.   What is more interesting, however, is a detailed analysis looking at who would be most affected by Trump's real estate tax changes. Here, an interest pattern emerges, courtesy of Barclays. According to CoreLogic, the median home price in the US is around $224K while the average property tax paid by homeowners in the country is around $3,300. This suggests that only a minority of homeowners are likely to be affected by the proposed mortgage interest and property tax deduction caps. Indeed, according to preliminary analysis by the NAHB, only about 7mn homes will be affected by the $500K mortgage interest deduction, and since these homeowners will receive the grandfathering benefit, they will not experience any immediate increase in taxes as a result of the mortgage interest deduction cap. Meanwhile, approximately 3.7mn homeowners pay more than $10K in property taxes according to the NAHB. These homeowners will experience an immediate increase in taxes from the property tax deduction cap; however, to put this number in perspective, the US Census estimates that there are approximately 76mn owner-occupied homes in the country, indicating that fewer than 5% of households may experience a rise in taxes as a result of the property tax cap. As expected, the homeowners who will be most negatively affected by the proposed caps primarily reside along the coasts, particularly in California. Using estimated median home prices provided by the NAR, Barclays found that of the 20 counties in the country with the highest median home prices, eight were located in California (Figure 3). Perhapsnot surprisingly, a majority of voters in all 20 counties voted for Clinton in last year’s presidential election. In fact, Clinton won the vote in the top 45 counties in the country with the highest median home prices. Suddenly the method behind Trump's madness becomes readily apparent...

 CoreLogic: House Prices up 7.0% Year-over-year in September - Notes: The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Reveals Nearly Half of the Nation’s Largest 50 Markets are Overvalued  CoreLogic® ... today released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for September 2017, which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 7 percent from September 2016 to September 2017, and on a month-over-month basis, home prices increased by 0.9 percent in September 2017 compared with August 2017, according to the CoreLogic HPI.  Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.7 percent on a year-over-year basis from September 2017 to September 2018, and on a month-over-month basis home prices are expected to decrease by 0.1 percent from September 2017 to October 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “Heading into the fall, home price growth continues to grow at a brisk pace,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices. The CoreLogic Single-Family Rent Index rose about 3 percent over the last year, less than half the rise in the national Home Price Index.” CR Note: The YoY increase has been in the 5% to 7% range for the last couple of years.  This is the top end of that range.  The year-over-year comparison has been positive for over five consecutive years since turning positive year-over-year in February 2012.

Sluggish construction continues to hold back housing market - As employment and home prices reach and surpass previous levels of normal economic and housing activity, building permits continued holding markets back from hitting historic norms during the third quarter, according to the National Association of Home Builders. Single-unit building permit totals are recovering from declines earlier this year, but still remain sluggish. Permits are expanding though, and the number of markets at or above normal growth levels grew 6% from the previous quarter. Single-unit building permits were highest in Houston, Dallas, Atlanta, Phoenix and Washington, D.C., during the quarter. Permits are one of three indicators used in the NAHB/First American Leading Markets Index, which examines metro areas to determine market performance relative to normal levels of economic and housing activity. Employment levels and home prices are the other two variables used in the index. Employment has reached 99% of normal activity and home prices are well above normal, at 155%. "Home price appreciation remains the strongest component of the HMI, and strong employment numbers also bode well for the continued growth of the housing sector," NAHB Chief Economist Robert Dietz said in a press release. "While permits continue to inch upward, they remain the weakest element of the index and show that builders need to manage supply-side hurdles, such as rising material prices and labor shortages," he added. The last normal period for single-family permits and house prices is considered between the years 2000-2003, and for employment it's considered 2006, the year before the start of the Great Recession. 

Our renter's republic is broken: one in five tenants can't pay the rent  In the waning days of white-picket-fence America, the burgeoning tenant class is faring worse than ever before   Lurking beneath our current crisis lies a remembrance of the home as it once was for some: with a chicken in every pot and a car in every garage. This Levittown promised land, typifying the American Dream, is a powerful myth.  The foreclosure crisis kicked this version of the American Dream to the curb. After reaching a zenith of nearly 70% in 2004, homeownership rates have tumbled to just above 63% – roughly where they stood in 1965, when the statistic was first measured. For millennials, the pot, car and garage feel out of reach. But, in the waning days of white-picket-fence America, the burgeoning tenant class is faring worse than ever before. Rents are rising faster than wages and the math is catching up to us. Tenants who spend more than a third of their income on rent doubled from 24% in 1960 to 48% in 2015.  A recent survey by Apartment List found that nearly one in five renters were unable to pay their rent in full in at least one of the past three months. Mounting costs present millions of families with a cruel choice: put food on the table, pay the medical bills and dress the kids, and in doing so risk losing the roof over your head. An estimated 3.7 million Americans – roughly the population of Los Angeles – have been evicted, according to Apartment List.  Black renters – and specifically black women – are at greatest risk. Apartment List found that a staggering 12% of black households were threatened with eviction in the past year.  In his Pulitzer prize-winning book, Evicted, Matt Desmond found that women from black neighborhoods made up less than 10% of Milwaukee’s population but nearly a third of its evicted tenants. “Poor black men were locked up. Poor black women were locked out,” Desmond writes. As workers, artists and hustlers are priced out, homelessness soars in cities across the country. A 2017 survey counted 5,629 people living on the streets of the Bay Area’s Alameda County, up 39% from just two years before. About half stay on the sidewalks and empty lots of my hometown, Oakland. Their tent camps, under Bart tracks and freeway overpasses, sum up the human cost of the housing crisis.

Leading Index for Commercial Real Estate "Recovers" in October -- Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.  From Dodge Data Analytics: Dodge Momentum Index Recovers in October The Dodge Momentum Index rose in October, climbing 13.2% to 130.9 (2000=100) from the revised September reading of 115.6. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The move higher in October nearly reversed the erosion of the past four months (including September’s 7.9% decline), with October posting healthy gains in both sectors. From September to October the commercial portion of the Momentum Index advanced 16.8%, while the institutional portion grew 8.3%. On a year-over-year basis, the Momentum Index is now 6.1% higher, with the commercial portion up 5.5% and the institutional portion up 6.9%. October’s increase supports the belief that building activity has further room to grow during this cycle. While month-to-month activity could continue to be volatile, there are enough projects in the pipeline to sustain growth into 2018.

Hotel Occupancy Rate increases YoY, On Pace for Record Year --From STR: US hotel results for week ending 28 October: The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 22-28 October 2017, according to data from STR.In comparison with the week of 23-29 October 2016, the industry recorded the following:
• Occupancy: +4.0% to 69.8%
• Average daily rate (ADR): +2.6% to US$129.44
• Revenue per available room (RevPAR): +6.7% to US$90.32
Among the Top 25 Markets, Houston, Texas, reported the largest year-over-year increases in occupancy (+34.9% to 85.9%), ADR (+14.0% to US$120.89) and RevPAR (+53.8% to US$103.82). Post-Hurricane Harvey demand continues to drive performance levels in the market. Tampa/St. Petersburg, Florida, experienced the second-highest increase in occupancy (+13.4% to 77.7%) and the second-largest rise in RevPAR (+23.9% to US$94.42). The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

US Credit Card Debt Rises Above $1 Trillion As Student, Auto Loans Hit All Time High -- Earlier in 2017, using the latest Fed data newspapers and financial media reported that US consumer credit card debt had risen above $1 trillion for the first time since the financial crisis. Ironically, just a few months later the Fed revised its data series sending the revolving credit total back under this "psychological number." At least until today, when the latest consumer credit update from the Fed disclosed that in September, consumer credit rose by $20.8 billion, more than the $17.5 billion expected, of which $14.4 billion was non-revolving, auto and student loans, and $6.4 billion was credit card debt. Total consumer credit rose by 6.6% Y/Y, rising to $3.788 trillion as of Sept. 30. This was the single biggest monthly increase since November 2016. And while nonrevolving credit reached a fresh record high of $2.782 trillion, revolving - or credit card debt - is now back over a trillion dollars, or $1.006 trillion to be precise, and fast approaching the all time bubble high of $1.02 trillion hit in the summer of 2008. And speaking of student and auto loans, the Fed's latest data showed that in the third quarter, these rose to a new all time high, of $1.112 trillion for auto loans, and a record $1.486 trillionn in student loans. The Fed also reported that nonrevolving lending to consumers by the Federal government, which is mainly student loans, rose to $1.137t, on a non-seasonally adjusted basis.

Consumer Confidence Unexpectedly Drops On Inflation, Rate-Hike Fears - UMich consumer sentiment declined from 100.7 to 97.8 in the preliminary November print, disappointing expectations of a small rise as anticipation of a pickup in inflation and higher interest rates weighed on the gauge. Even with the decline, sentiment was the second-highest since January, reinforcing other reports that Americans remain optimistic about employment and the economy. Other highlights include:

  • Consumers saw the inflation rate in the next year at 2.6 percent, up from 2.4 percent the prior month
  • Consumers expected an annual income gain of 2.1 percent for the second straight month, the best two-period average since 2008
  • Inflation rate over next five to 10 years held at 2.5 percent
  • Six in 10 consumers saw stock-market gains as likely in the year ahead
  • References to low mortgage rates fell to 32 percent in early November from 40 percent last month

Consumers (and policy makers) have four key concerns: prospective trends in jobs, wages, inflation, and interest rates. An improving labor market was spontaneously mentioned by a record number of consumers in early November, and anticipated wage gains recorded their highest two-month level in a decade. These favorable trends were countered by a slight rise in year-ahead inflation expectations and a growing consensus that interest rates will increase during the year ahead. “While the majority judged current conditions in the economy favorably and consumers anticipated continued growth on balance, consumers judged the outlook less satisfactory, and were equally divided about whether the expansion would last another five years,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

AAR: Rail Carloads decreased Slightly, Intermodal at Record Levels, in October - From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permissionIf you care about total U.S. rail carloads, October 2017 was not a particularly good month — total carloads were down 0.1%, or 1,220 carloads, from October 2016. Average weekly total carloads in October 2017 (266,444) were the lowest for October since sometime before 1988 when our records begin. Three main reasons for October’s decline? Coal (down 4.9%, or 17,764 carloads); grain (down 11.8%, or 12,528 carloads); and petroleum products (down 4.9%, or 1,989 carloads). But if you care about rail carloads as a gauge for the health of the U.S. economy, October 2017 was actually pretty good. That’s because carloads of coal, grain, and petroleum products tend to rise and fall for reasons that have little to do with the state of the economy. If you exclude them, U.S. rail carloads in October 2017 were up 5.6%, or 31,061 carloads, over October 2016. That’s the biggest such increase since January 2015 and supports the view that the economy has picked up steam lately. The fact that October 2017 was the best month in history for intermodal (in terms of average weekly container and trailer volume) is another good sign.

 Wholesale inventories rise 0.3 percent, meeting expectations - U.S. wholesale inventories increased 0.3 percent in September, on par with analysts' estimates, while the strong growth in August was revised slightly downward from 0.9 percent to 0.8 percent. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - rose 0.42 percent. Sales at wholesalers in September rose 1.3 percent, compared to a upwardly revised 1.9 percent growth rate in August. The figure is slightly stronger than the 0.9 percent growth rate expected by economists polled by Reuters.  Wholesale auto sales rose 0.7 percent after surging at a revised 4.4 percent rate the month before. At the September sales pace it would take wholesalers 1.27 months to clear their stock of goods, down from 1.28 months in August.

Weekly Initial Unemployment Claims increase to 239,000 -- The DOL reported: In the week ending November 4, the advance figure for seasonally adjusted initial claims was 239,000, an increase of 10,000 from the previous week's unrevised level of 229,000. The 4-week moving average was 231,250, a decrease of 1,250 from the previous week's unrevised average of 232,500. This is the lowest level for this average since March 31, 1973 when it was 227,750. Claims taking procedures continue to be severely disrupted in the Virgin Islands. The ability to take claims has improved in Puerto Rico and they are now processing backlogged claims.   The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

BLS: Job Openings Unchanged in September -- From the BLS: Job Openings and Labor Turnover Summary: The number of job openings was little changed at 6.1 million on the last business day of September, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.2 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.2 percent and 1.2 percent, respectively. ... The number of quits was little changed at 3.2 million in September. The quits rate was 2.2 percent. The number of quits was little changed for total private and for government. Quits rose in professional and business services (+82,000) and state and local government, excluding education (+10,000). Quits fell in other services (-45,000) and real estate and rental and leasing (-16,000). ...Hurricane Irma made landfall in Florida during September, the reference month for the preliminary estimates in this release. All possible efforts were made to contact and collect data from survey respondents in the hurricane-affected areas. A review of the data indicated that Hurricane Irma had no discernible effect on the JOLTS estimates for September.The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.  Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for September, the most recent employment report was for October.Jobs openings increased slightly in September to 6.093 million from 6.090 in August.  The number of job openings (yellow) are up 7.5% year-over-year. Quits are up 3.5% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits"). Job openings are mostly moving sideways at a high level, and quits are increasing year-over-year.  This is another strong report.

JOLTS: Hiring Slides To Lowest In 6 Months As Job Openings Remain Near All Time High After a burst of record high job openings which started in June and eased modestly in August, today's September JOLTS report  - Janet Yellen's favorite labor market indicator - showed another modest increase in job openings across most categories in the hurricane-affected month, with the total number rising fractionally 6.090MM to 6.093MM, above the 6.091MM estimate, resulting in an unchanged Sept. job opening rate of 4%. Still, after nearly two years of being rangebound between 5.5 and 6 million, the latest job openings number confirms that there may be a "breakout" about what was the previous resistance level, as increasingly more jobs remain unfilled in a labor market where skill shortages and labor imbalances are becoming structural.The number of job openings was little changed for total private and for government. Job openings increased in professional and business services (+156,000), other services (+52,000), state and local government education (+36,000), and federal government (+15,000). Job openings decreased in accommodation and food services (-111,000) and information (-28,000). The number of job openings was little changed in all four regions. Now if only employers could find potential employees that can pass their drug test...Comment on the impact from the hurricanes, the BLS said that "Hurricane Irma made landfall in Florida during September, the reference month for the preliminary estimates in this release. All possible efforts were made to contact and collect data from survey respondents in the hurricane-affected areas. A review of the data indicated that Hurricane Irma had no discernible effect on the JOLTS estimates for September." One notable change in this report was the sharp slump in hiring, which declined by 147K to 5.273MM in September, the lowest month since April, and further reducing the hiring rate from 3.7% to 3.6% percent. On an annual basis, the pace of hiring slowed down once again, declining to 1.8% in Sept. from 2.5% Y/Y in August, down from 3.6% in July.

Prime Working-Age Population nears 2007 Peak - Bill Mcbride -  The prime working age population peaked in 2007, and bottomed at the end of 2012. As of October 2017, according to the BLS, there were still fewer people in the 25 to 54 age group than in 2007.  At the beginning of this year - based on demographics - it looked like the prime working age (25 to 54) would probably hit a new peak in 2017.  However, since the end of last year, the prime working age population has declined slightly.Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the "baby boomer" generation, the movement of younger cohorts into the prime working age is another key story. Here is a graph of the prime working age population (25 to 54 years old) from 1948 through October 2017.Note: This is population, not work force.  There was a huge surge in the prime working age population in the '70s, '80s and '90s. The prime working age labor force grew even quicker than the population in the '70s and '80s due to the increase in participation of women. In fact, the prime working age labor force was increasing 3%+ per year in the '80s! So when we compare economic growth to the '70s, '80, or 90's we have to remember this difference in demographics (the '60s saw solid economic growth as near-prime age groups increased sharply). The good news is the prime working age group should start growing at 0.5% per year - and this should boost economic activity.

Latina workers make 67 cents for every dollar white men make - November 2nd is Latina Equal Pay Day, the day that marks how long into 2017 a Latina would have to work in order to be paid the same wages as her white male counterpart was paid last year. That’s just over 10 months longer, meaning that Latina workers had to work all of 2016 and then this far—to November 2nd!—into 2017 to get paid the same as white non-Hispanic men did in 2016. Unfortunately, Hispanic women are subject to a double pay gap—an ethnic pay gap and a gender pay gap. On average, Latina workers are paid only 67 cents on the dollar relative to white non-Hispanic men, even after controlling for education, years of experience, and location.The wage gap between Latina workers and white non-Hispanic male workers persists across the wage distribution, within occupations, and among those with the same amount of education. Figure A below shows wages for Hispanic women and white non-Hispanic men at select points in their respective wage distributions. The 10th percentile Latina wage identifies the wage at which 10 percent of Latina workers earn less while 90 percent of Latina workers earn more. At the 10th percentile, Latina workers are paid $8.53 per hour, or 85 percent of the white male wage at the 10th percentile ($10.03 per hour). This wage gap—15 percent—is the smallest the gap gets, likely due to the wage floor set by the minimum wage. The gap rises to 41 percent at the middle of the wage distribution, and to 55 percent at the 95th percentile. That means that even the best paid Latinas are paid half as much as the best paid white non-Hispanic men. Latinas are, thus, vastly over-represented in low-wage jobs and relatively under-represented in high-wage jobs. In fact, Latinas’ median wages are just above those of white men’s 10th percentile wage. In other words, nearly half of all Latina workers are paid less than the 10th percentile white male worker. Meanwhile, by comparing the white male median to the 80th percentile Latinas’ wages, you can see that more than half of white men are paid over $20 an hour while fewer than 20 percent of Latinas are. At the high end, only 1-in-20 Latina workers are paid more than white male workers at the 80th percentile.

Alabama task force performs drug raid, man dies. Officials take his home, split the proceeds - Wayne Bonam jumped up, blinded by a flash-bang grenade, as police swarmed through the door and pointed guns at his head.  Coughing up blood, Wayne Bonam was hospitalized weeks later. He died the following November. Wayne’s death was already a tragedy. But, for his family, it was only compounded by what police and prosecutors did next. Yes, they took the family home. The police did apparently fine some cocaine and about $18,000 in cash in the house. But they never proved the family had anything to do with the drugs, or that the home was bought with drugs. They didn’t need to. They needed only to allege the most spurious of connections, and finding the drugs and the house was more than enough. The family hired an attorney with their life insurance money to try to keep the house. They lost. Then this happened: This past August, the house fetched $76,000 at auction. Together with Wayne’s cash, the seized property was worth $94,282. On Oct. 12, everyone who had a hand in the forfeiture got a cut. The cash-strapped drug task force received $74,612. The prosecutor’s office walked away with $18,653. Even the court overseeing the proceedings collected $1,017. That’s right. The court that was supposed to be neutral and fair in all of this got a cut of the proceeds. Had the family won, the court would have received nothing. Does that sound rigged? It ought to.

How it became a crime to be poor in America - In the United States, a system of modern peonage – essentially, a government-run loan shark operation – has been going on for years. Beginning in the 1990s, the country adopted a set of criminal justice strategies that punish poor people for their poverty. Right now in America, 10 million people, representing two-thirds of all current and former offenders in the country, owe governments a total of $50bn in accumulated fines, fees and other impositions. The problem of “high fines and misdemeanors” exists across many parts of the country: throughout much of the south; in states ranging from Washington to Oklahoma to Colorado; and of course in Ferguson, Missouri, where, in the wake of the killing of Michael Brown, revelations about the systematic criminalization of the city’s poor black residents brought these issues to national attention. As a result, poor people lose their liberty and often lose their jobs, are frequently barred from a host of public benefits, may lose custody of their children, and may even lose their right to vote. Immigrants, even some with green cards, can be subject to deportation. Once incarcerated, impoverished inmates with no access to paid work are often charged for their room and board. Many debtors will carry debts to their deaths, hounded by bill collectors and new prosecutions. Mass incarceration, which has disproportionately victimized people of color from its beginning in the 1970s, set the scene for this criminalization of poverty. But to understand America’s new impulse to make being poor a crime, one has to follow the trail of tax cuts that began in the Reagan era, which created revenue gaps all over the country. The anti-tax lobby told voters they would get something for nothing: the state or municipality would tighten its belt a little, it would collect big money from low-level offenders, and everything would be fine. Deep budget cuts ensued, and the onus of paying for our justice system – from courts to law enforcement agencies and even other arms of government – began to shift to the “users” of the courts, including those least equipped to pay. Exorbitant fines and fees designed to make up for revenue shortfalls are now a staple throughout most of the country. Meanwhile, white-collar criminals get slaps on the wrist for financial crimes that ruin millions of lives. Though wealthy scofflaws owe a cumulative $450bn in back taxes, fines and fees from the justice system hit lower-income people – especially people of color – the hardest. 

Extreme Poverty Cut in Half? Only in the Minds of the Capitalists  -- “Take a bow, capitalism.” That’s from the Economist, a business-happy publication that has every reason to perpetuate the myth that a world run by free enterprise is improving people’s lives. Its story continues with an astounding claim: “The world now knows how to reduce poverty.” Perhaps by presenting questionable data that seems to support what the business community wants us to believe.  Other super-capitalists are similarly exuding hyperbole in defense of their shaky beliefs. Said a spokesman for the American Enterprise Institute: “It was the American free-enterprise system that started to spread around the world. They looked at you and said, ‘I want to have their life, their freedom, and their stuff, and they threw off their chains of poverty and tyranny.'” But it’s clear, when the facts are checked, that the chains of poverty are being wrapped around more and more human beings. According to the Credit Suisse Global Wealth Databook 2016, the median wealth of the world’s adults is $2,222, down from $3,248 at the end of 2007. While the rich people of the world have taken more than their share of the $35 trillion wealth gain since the recession, the world median has dropped by over $1,000! There are other recent indications of rising poverty. Based again on Credit Suisse wealth data, in just seven years the world’s Gini Coefficient, the most widely accepted measure of inequality, has surged from 88.1 to 92.7. Wealth inequality between countries has grown dramatically. It’s a stunning rise, further evidence of a world splitting into two.  Global income inequality is down only in relative terms, in the sense that an income boost from $1 to $2 a day is greater in percentage than an income boost from $1,000 to $1,500 a day. The world poverty threshold was recently increased by the World Bank from $1.25 to $1.90 per day. Numerous sources have recognized the absurdity of this dollar amount for day-to-day survival. The United Nations Conference on Trade and Development argues for a $5 minimum; ActionAid says $10; even the World Bank admits that the $1.90 poverty line is “too miserly for middle-income countries,” and that“more than 50 percent of the population in IDA [the world’s poorest] countries live on less than US $6 a day and are considered at high or moderate risk of relapsing into poverty.” In addition, the poverty threshold has not kept up with inflation. The World Bank set the first poverty threshold to $1.01/day using 1985 purchasing power parity. It eventually raised the threshold to $1.90/day at 2011 purchasing power parity. But with inflation, $1.01 in 1985 is equivalent to $2.10 in 2011. The World Bank’s most recent threshold adjustment falls far short of realistic human needs.

Homelessness soars on West Coast as cities struggle to cope - A homeless crisis of unprecedented proportions is rocking the West Coast, and its victims are being left behind by the very things that mark the region's success: soaring housing costs, rock-bottom vacancy rates and a roaring economy that waits for no one. All along the coast, elected officials are scrambling for solutions. "I've got economically zero unemployment in my city, and I've got thousands of homeless people that actually are working and just can't afford housing," said Seattle City Councilman Mike O'Brien. "There's nowhere for these folks to move to. Every time we open up a new place, it fills up."The rising numbers of homeless people have pushed abject poverty into the open like never before and have overwhelmed cities and nonprofits. The surge in people living on the streets has put public health at risk, led several cities to declare states of emergency and forced cities and counties to spend millions — in some cases billions — in a search for solutions.San Diego now scrubs its sidewalks with bleach to counter a deadly hepatitis A outbreak that has spread to other cities and forced California to declare a state of emergency last month. In Anaheim, home to Disneyland, 400 people sleep along a bike path in the shadow of Angel Stadium. Organizers in Portland lit incense at a recent outdoor food festival to cover up the stench of urine in a parking lot where vendors set up shop.Homelessness is not new on the West Coast. But interviews with local officials and those who serve the homeless in California, Oregon and Washington — coupled with an Associated Press review of preliminary homeless data — confirm it's getting worse. People who were once able to get by, even if they suffered a setback, are now pushed to the streets because housing has become so expensive.All it takes is a prolonged illness, a lost job, a broken limb, a family crisis. What was once a blip in fortunes now seems a life sentence. "Most homeless people I know aren't homeless because they're addicts," said Tammy Stephen, 54, who lives at a homeless encampment in Seattle. "Most people are homeless because they can't afford a place to live."

 Silicon Valley’s ‘car people’ push homeless crisis to the brink — In the same affluent, suburban city where Google built its headquarters, Tes Saldana lives in a crowded but tidy camper that she parks on the street. She concedes it’s “not a very nice living situation,” but it also is not unusual. Until authorities told them to move, more than a dozen other RVs filled with people who can’t afford rent joined Saldana on a tree-lined street in Mountain View, parked between a Target and a luxury apartment complex. Homeless advocates and city officials say it’s outrageous that in the shadow of a booming tech economy — where young millionaires dine on $15 wood-grilled avocado and think nothing of paying $1,000 for an iPhone X — thousands of families can’t afford a home. Many of the homeless work regular jobs, in some cases serving the very people whose sky-high net worth is the reason housing has become unaffordable for so many.Saldana and her three adult sons, who live with her, have looked for less rustic accommodations, but rents are $3,000 a month or more, and most of the available housing is distant. She said it makes more sense to stay in the camper near their jobs and try to save for a brighter future, even if a recent city crackdown chased them from their parking spot. She cooks and serves food at two hotels in nearby Palo Alto, jobs that keep her going most days from 5 in the morning until 10 at night. Two of her sons, all in their 20s, work at a bakery and pay $700 toward the RV each month. They’re all very much aware of the economic disparity in Silicon Valley. “How about for us people who are serving these tech people?” Saldana said. It’s all part of a growing crisis along the West Coast, where many cities and counties have seen a surge in the number of people living on the streets over the past two years. Counts taken earlier this year show 168,000 homeless people in California, Oregon and Washington — 20,000 more than were counted just two years ago. The booming economy, fueled by the tech sector, and decades of under-building have led to a historic shortage of affordable housing. It has upended the stereotypical view of people out on the streets as unemployed: They are retail clerks, plumbers, janitors — even teachers — who go to work, sleep where they can and buy gym memberships for a place to shower. 

Cook County governments owe $139 billion—up 30% in six years -- Local governments in Cook County, including the county itself, now have a whopping $139 billion in debt, most of it unfunded and most of it money owed to municipal and school workers for pensions and retiree health costs.That's the bottom line of the latest Debt Disclosure Report issued by Cook County Treasurer Maria Pappas, with the combined figure that taxpayers are on the hook for rising 30 percent just since 2011. There are some signs that the rate of increase in combined debt has slowed a bit as the city, county and Chicago Public Schools—the biggest governments covered in the report—begin to put more aside for their pension costs. But most of those governments are years away from actually reducing their unfunded liability. In other words, they're still catching up as both annual contributions and total unfunded liability rise.

YouTube’s algorithms are terrorizing a generation of children – Quartz - One of so-far hypothetical questions I ask myself frequently is how I would feel about my own children having the same kind of access to the internet today. And I find the question increasingly difficult to answer. I understand that this is a natural evolution of attitudes which happens with age, and at some point this question might be a lot less hypothetical. I don’t want to be a hypocrite about it. I would want my kids to have the same opportunities to explore and grow and express themselves as I did. I would like them to have that choice. And this belief broadens into attitudes about the role of the internet in public life as whole.I’ve also been aware for some time of the increasingly symbiotic relationship between younger children and YouTube. I see kids engrossed in screens all the time, in pushchairs and in restaurants, and there’s always a bit of a Luddite twinge there, but I am not a parent, and I’m not making parental judgments for or on anyone else. I’ve seen family members and friend’s children plugged into Peppa Pig and nursery rhyme videos, and it makes them happy and gives everyone a break, so OK. But I don’t even have kids and right now I just want to burn the whole thing down. Someone or something or some combination of people and things is using YouTube to systematically frighten, traumatize, and abuse children, automatically and at scale, and it forces me to question my own beliefs about the internet, at every level. Much of what I am going to describe next has been covered elsewhere, although none of the mainstream coverage I’ve seen has really grasped the implications of what seems to be occurring. To begin: Kids’ YouTube is definitely and markedly weird. I’ve been aware of its weirdness for some time. Let’s look at just one video among the piles of kid videos, and try to parse out where it comes from. It’s important to stress that I didn’t set out to find this particular video: It appeared organically and highly ranked in a search for ‘finger family’ in an incognito browser window (i.e., it should not have been influenced by previous searches). This automation takes us to very, very strange places, and at this point the rabbithole is so deep that it’s impossible to know how such a thing came into being. Once again, a content warning: This video is not inappropriate in any way, but it is decidedly off, and contains elements which might trouble anyone. It’s very mild on the scale of such things, but I describe it below if you don’t want to watch it and head down that road. This warning will recur.

Facebook Founder Warns "God Only Knows What It's Doing To Kid's Brains" -- 38-year-old founding president of Facebook, Sean Parker, was uncharacteristically frank about his creation in an interview with Axios. So much so in fact that he concluded, Mark Zuckerberg will probably block his account after reading this.  Confirming every 'big brother' conspiracy there is about the social media giant, Parker explained how social networks purposely hook users and potentially hurt our brains... "When Facebook was getting going, I had these people who would come up to me and they would say, 'I'm not on social media.'   And I would say, ... 'We'll get you eventually.'"   "I don't know if I really understood the consequences of what I was saying, because [of] the unintended consequences of a network when it grows to a billion or 2 billion people and ... it literally changes your relationship with society, with each other ... It probably interferes with productivity in weird ways. God only knows what it's doing to our children's brains."  "The thought process that went into building these applications, Facebook being the first of them, ... was all about: 'How do we consume as much of your time and conscious attention as possible?'" "And that means that we need to sort of give you a little dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever. And that's going to get you to contribute more content, and that's going to get you ... more likes and comments." "It's a social-validation feedback loop ... exactly the kind of thing that a hacker like myself would come up with, because you're exploiting a vulnerability in human psychology." 

LA School Board Ready to Rumble Over Charter Schools -- The stage has been set for an apparent showdown between charter school operators and the Los Angeles Unified School District office charged with charter school oversight, when the LAUSD school board votes on an unprecedented 14 recommendations for charter petition denials at Tuesday’s special board meeting. The meeting had originally been scheduled to consider 34 charter school petitions — including 28 renewals — as part of a routine formality, in which the board signs off on staff recommendations after months of rigorous vetting of the applications by its charter division. Late last week, however, 12 of the 14 denials that were posted on the school board’s website were revealed to have been triggered after four defiant charter operators had refused to include mandated regulatory language in their petitions. The action, which consisted of the charters essentially writing in their own diluted versions of district rules, was widely seen as a signal of charter-industry impatience to get regulatory relief from the recently elected pro-charter board majority, after that industry had spent $9.7 million on the most expensive campaign in LAUSD board history. “We have known that seeking better policies could cause complications for our petitions,” the schools’ CEOs admitted in a joint statement released Wednesday. “This is a risk we have been willing to take. We remain hopeful that the LAUSD board on November 7th will do the right thing for students, make decisions based on the academic, fiscal and governance quality of our schools, and approve our petitions.” The gambit puts at risk eight schools from the district’s largest charter management organization (CMO), the 25-school Alliance College-Ready Public Schools franchise, and two schools from the mid-range Magnolia Public Schools group. Petitions for a new Equitas Academy charter and a new STEM Preparatory Elementary also triggered rejections. Those CMOs are part of a larger, 17-member coalition known as the Los Angeles Advocacy Council that had been negotiating over the past year with the district to roll back so-called District Required Language (DRL).  The language covers everything from admissions policies to expulsion and disciplinary procedures, to compliance with state rules governing English language learners and special education guarantees.

Puerto Ricans Fear Schools Will Be Privatized in the Wake of Hurricane Maria - Aloyo, assistant director of Escuela Adrienne Serrano, said the school opened up immediately. Aloyo said they were determined to take in as many students as possible in the hopes of giving even a bit of order back to their lives.  Right after the hurricane, Escuela Adrienne Serrano had 40 students, a number that steadily increased each week until they managed to bring 80 students back. But then, on October 18, Humacao School District’s regional director told Escuela Adrienne Serrano to suspend classes. School administrators were told they “couldn’t have students until they authorized us to open the school,” Aloyo said.  “Ever since that moment, we didn’t listen to them. We kept receiving the students that arrived but Friday, we ran out of potable water, so we had to start turning down students,” Aloyo said. “We hope tomorrow, if we get water, we can start receiving students. Whoever shows up, we’ll receive them. If there’s no food in the cafeteria, well, we can just cook for them ourselves and make a simple breakfast and lunch.”  People in the community cleaned classrooms themselves   The guerrilla campaign to open schools is running headlong into a separate effort from the top, to use the storm to accomplish the long-standing goal of privatizing Puerto Rico’s public schools, using New Orleans post-Katrina as a model. Last month, Puerto Rico’s Public-Private Partnerships Authority director spoke optimistically about leveraging federal money with companies interested in privatizing public infrastructure.    Puerto Rico’s Education Secretary Julia Keleher has already called New Orleans’s school reform efforts a “point of reference” — tweeting last week that Puerto Ricans “should not underestimate the damage or the opportunity to create new, better schools.” She repeated these sentiments on Monday, saying that the aftermath of Maria provides a “real opportunity to press the reset button.”

13 Baltimore High Schools Have Zero Students That Are Proficient In Math - For the past several weeks, one Fox affiliate in Baltimore has been publishing some staggering stories about the Baltimore public school system under an investigative series called "Project Baltimore."  Just a few weeks ago we noted one of those stories in which an undercover teacher admitted that public schools routinely pass kids that never even bother to show up for class a single day during the school year.Now, a stunning new installment of the Project Baltimore series from Fox 45 reveals that 13 public high schools sprinkled around Baltimore, of the city's 39 total, had exactly 0 kids that tested proficient in math. An alarming discovery coming out of City Schools. Project Baltimore analyzed 2017 state testing data and found one-third of High Schools in Baltimore, last year, had zero students proficient in math.Project Baltimore analyzed 2017 state test scores released this fall. We paged through 16,000 lines of data and uncovered this: Of Baltimore City’s 39 High Schools, 13 had zero students proficient in math. (list of schools)Meanwhile, digging a bit deeper, Fox 45 also found that of the 3,804 students in Baltimore's worst 19 high schools, only 14 of them, or less than 1%, were proficient in math. Digging further, we found another six high schools where one percent tested proficient. Add it up – in half the high schools in Baltimore City, 3804 students took the state test, 14 were proficient in math.(list of schools)

Michigan college changes speech policy after being sued by campus conservatives who praised fossil fuels -   A Michigan college said it would change its speech policy Wednesday after a conservative campus group sued, saying it was silenced after praising fossil fuels. Macomb Community College (MCC) is a school of about 23,000 students in Warren, Mich., about 15 miles north of Detroit. In April, members of a campus chapter of Turning Point USA — a conservative organization whose website says it promotes “the principles of freedom, free markets and limited government” — wanted to tell students about the importance of fossil fuels. One member even donned a Tyrannosaurus rex costume for the occasion. But while pointing out “the value of fossil fuels to human flourishing currently outweighs environmental concerns,” Turning Point was shut down by campus police “because at MCC public expressive activity is strictly prohibited without prior permission and a permit from the administration,” according to a federal lawsuit Turning Point filed against the school in August in U.S. District Court for the Eastern District of Michigan. “Public colleges, far from being immune to the obligations of the First Amendment, are supposed to be ‘the marketplace of ideas,’ where students can freely exchange ideas with one another, learning how to respectfully debate and dialogue with those whose views differ from their own,” the suit said. On Wednesday, the college announced it would change its “expressive activity policy,” and the lawsuit would be dismissed. “The new policy will no longer require students, in most cases, to seek prior approval for engaging in expressive activity on the college’s campuses,” 

About 33% Of Students Drop Out Of College; Here's How Many Go On To Default On Their Student Debt -- Roughly 70% of America's bright-eyed and bushy-tailed high school seniors will go on tobinge drink study at a 4-year college, but, to our complete shock, less than two-thirds of them will manage to graduate with a degree.  Even worse, 30% of the students will drop-out after just one year on campus.Not surprisingly, a survey conducted recently by LendEDU found that college dropouts still manage to rack up an average of nearly $14,000 worth of student debt during their brief college careers and a staggering number of them go on to default on that debt in very short order.LendEDU polled 1,000 respondents that had dropped-out of a four-year higher education institution and also held some amount of student loan debt. We wanted to find out how much student loan debt they owed when the walked away from college.Respondents were given the ability to enter in an exact dollar amount when asked how much student loan debt they held when they made the choice to drop-out of school. After averaging together all 1,000 responses, we found that when the average college dropout finally gave up on college, they owed $13,929.65 in student loan debt.LendEDU pegs the average student loan debt per graduated borrower figure at $27,975, so the aforementioned debt per dropout amount makes good sense. Under the assumption that most dropouts leave campus by the end of their second year, the debt per dropout figure is nearly half of the four-year debt per borrower figure of $27,975. That figure cut in half would equal $13,987.50, a tick above our debt per dropout figure of $13,929.65. Nearly half of college dropouts interviewed by LendEDU admitted they're not currently making payments.

CalPERS’ Three Card Monte: Makes Unheard of Benchmark Change to Hide Expected Poor Private Equity Performance to Help Staff at Expense of Beneficiaries, California Taxpayers  Yves Smith - CalPERS is now engaging in Trump-level intellectual dishonesty and brazen disregard for beneficiaries’ and the public’s interest. At this Monday’s Investment Committee meeting, staff will present its plan to use a measurement gimmick to pretend that private equity is much less risky than it actually is. No independent finance-literate professional would endorse such a move. 1 The apparent motivation is so that the giant public pension fund will hopefully no longer keep falling short of its benchmarks, as it has consistently done over the last ten years. Despite the technical sound of this change, it has huge practical significance. First, CalPeRS is admitting that it expects private equity returns to be significantly lower in the future.Second, this is finance malpractice. This is tantamount to a doctor getting a EKG that shows his patient is at risk of getting a heart attack, but telling his nurse to recalibrate the machine and run the tests again so that it gives a normal reading. And worse, in this case, the doctor is fixing the results because he’ll make more money from the false results, and the patient is, say, running for President and plans to release the deliberately misleading medical records to present himself as being in good health when he isn’t.  The fact that CalPERS has consistently underperformed its private equity benchmarks since 2014 and its own consultants have projected that CalPERS will continue to do so over the next decade means that CalPERS is not making enough in private equity to justify the additional risks.2 That means CalPERS needs to stop investing in private equity or radically revise its approach. Because the fees and costs of investing in private equity funds is so mind-numbingly high, CalPERS has sound alternatives, such as bringing much more of its private equity program in-house (which would admittedly take time) or going to a public markets replication strategy, which several studies have found gives net returns higher than investing in private equity3 (which might only work for a few years since other funds would no doubt copy it but that would give CalPERS some transition breathing room).

 Maine just resoundingly became the first state to expand Medicaid by ballot initiative - Less than two months after Republicans' latest effort to repeal the Affordable Care Act imploded, a purple state just made a decidedly blue-state move to essentially expand Obamacare.On Tuesday, Maine became the first state to expand Medicaid with a ballot initiative. And it passed overwhelmingly: Maine voters agreed to grant health care to an estimated 70,000 low-income residents by a nearly 20-percentage point margin by the time the measure was called by election watchers. In other words, a sizable number of voters in Maine just voted to do the exact opposite of what the state's Republican governor and Republicans in Washington have been trying to do.Maine Gov. Paul LePage vetoed a bipartisan legislative deal to expand Medicaid under the Affordable Care Act at least five times. Since Republicans took control of Washington in January, they've spent more than half the year trying to repeal Obamacare with proposals that would have drastically cut Medicaid. But Maine's Sen. Susan Collins (R) was one of the defining “no” votes that ultimately ended the GOP efforts, saying the plans would pull the rug out from too many in her state.What happened in Maine could provide momentum for progressives to get voters in other states to expand Medicaid, such as Alaska and Idaho, where groups have already started similar Medicaid expansion ballot initiatives next year. “This will send a clear signal to where the rest of the country is on health care,” said Jonathan Schleifer, executive director of the Fairness Project, which helped put together the ballot initiative. As Republicans have tried to roll back Obamacare, public support for an active government role in health care has spiked.

Maine governor will not expand Medicaid, ignoring voters (Reuters) - Maine Governor Paul LePage said on Wednesday he would not carry out an expansion of the state’s Medicaid program under Obamacare that was approved by voters unless it was fully funded by the legislature, calling it “ruinous” for the state’s budget.  About 60 percent of voters in Maine approved the ballot proposal in Tuesday’s election, according to the Bangor Daily News, making the state the first in the country to vote to expand Medicaid, the government health insurance program for the poor and disabled. LePage, a Republican, has staunchly opposed expansion of the program, vetoing legislation to do so on several occasions. In a statement, the governor said he would not implement the expansion until it was fully funded by the Maine legislature, where control is split between Republicans and Democrats. “Credit agencies are predicting that this fiscally irresponsible Medicaid expansion will be ruinous to Maine’s budget,” LePage said in a statement. “I will not support increasing taxes on Maine families, raiding the rainy day fund or reducing services to our elderly or disabled.” LePage said a previous Medicaid expansion in Maine in 2002 created $750 million in debt to hospitals and took resources away from vulnerable people.  Maine Senate Democratic leader Troy Jackson said in a statement that the governor “has the power to put up roadblocks to prevent implementation of the voter-approved Medicaid expansion referendum, and I have no reason to believe he won’t continue to do as he has always done.”

Fragmented Health System Paves Way for CVS-Aetna Merger – video - In what is being called the biggest merger in the history of the health insurance industry, CVS is making a $66 billion bid to buy Aetna. NEP’s Bill Black discusses the merger’s potential consequences with The Real News Network. You can view here with transcript.

US health spending has rocketed $900 BILLION since 1996 - US healthcare spending rocketed $900 billion between 1996 and 2013, staggering new data reveal. Americans spend more money on healthcare than any other population, and increasingly so. By 2013, total healthcare spending hit $2.1 trillion, according to the study published today in the Journal of the American Medical Association. The researchers say that figure has now likely soared to more than $3.2 trillion, which equates to 18 percent of the country's economy.Experts say the figure, which even surprised researchers, boils down to a few things: our ageing population, rising rates of obesity, and increasingly expensive services.While we cannot slow ageing, they say the report is another reminder that 'the United States is on an unsustainable growth path in terms of health care costs and must get costs under control'. To make sense of how spending was changed, they looked at five influencing factors: population size, population aging, disease prevalence or incidence, service utilization, and service price. There were some positives - primarily that gains made in curbing certain diseases like cardiovascular diseases saved the US $28.2 billion. However, pharmaceutical spending, age-related diseases and obesity-related diseases such as diabetes escalated dramatically. After adjusting for inflation, the researchers led by Dr Joseph L Dieleman found that total spending had rocketed to $2.1 trillion by 2013 - up $900 billion from 1996. Diabetes was the most increasingly-costly disease, associated with a $64.4 billion increase in spending since 1996, largely due to rising obesity rates. But a staggering 50 percent of the increase ($583.5 billion) was attributed to rising healthcare costs. In particular, ambulatory care spending rocketed, despite decreases in spending on inpatient care. 

Who Actually Is Reviewing All Those Preauthorization Requests? -- Several months ago, I was invited to give a presentation about heart failure to a group of physicians who meet every month for a lunch meeting.  Among the 25 physicians in the room, nearly all were in their 70s and 80s. All were retired, and none were actively involved in patient care. I guess that explains why they had time in the middle of the day for an hour-long presentation. I had a few moments afterwards to speak to my audience. Since the physicians were not involved in patient care, I wondered why they wanted to hear a talk about new advances in heart failure.The response surprised me: "We no longer care for patients, but we care about what's going on. You see, most of us are employed by insurance companies to do preauthorization for drugs and medical procedures."My jaw dropped: "I just gave a talk about new drugs for heart failure. Are you responsible for preauthorizing their use for individual patients?" The answer was yes.I was really curious now. "So did I say anything today that was helpful? I talked about many new treatments. Did I say anything that you might use to inform your preauthorization responsibilities?" Their answer hit me hard. "Oh, we've heard about those drugs before. We're asked to approve their use for patients all the time. But we don't approve most of the requests. Nearly all of them are outside of the guidelines that we are given." I stammered. "I just showed you evidence that these new drugs and devices make a real positive difference in people's lives. People who get them feel better and live longer."The physicians agreed. "Yes, you were very convincing. But the drugs are too expensive. So we typically reject requests, at least the first time. We figure that, if doctors are really serious, then they should be willing to make the request again and again."I was astonished. "If the drugs will help people, how can you say no?" Then I got the answer I did not expect. "You see, if it weren't for us, the system would go broke. Every time we say yes, healthcare becomes more expensive, and that isn't a good thing. So when we say no, we are keeping the system in balance. Our job is to save our system of healthcare." I responded quickly. "But you are not saving our healthcare system. You are simply making money for the company that you work for. And patients aren't getting the drugs that they need." One physician looked at me as if I were from a different planet. "You really don't understand, do you? If we approve expensive drugs, then the system goes broke. Then no one gets healthcare." Before I had a chance to respond, he continued: "Plus, if I approve too many expensive drugs, I won't get my bonus at the end of the month. So giving out too many approvals wouldn't be a smart thing for me to do. Would it?"

Preterm births are rising in the US again — and it signals a worrying trend - The preterm birth rate in the U.S. has increased for the second consecutive year, according to a new report, and minorities are suffering a disproportionate share of those births. The increases, which follow nearly a decade of declines, raise concerns that gains made in women’s health care are now slipping, experts say. The annual report on preterm births by the March of Dimes, released Wednesday, found that 9.8 percent of U.S. infants were born preterm in 2016, up from 9.6 percent in 2015. And rates found in some parts of the U.S. are on par with those found in undeveloped countries in Africa and the Middle East. Preterm birth is the largest contributor to infant death in the United States and is linked to a range of lifelong disabilities and chronic conditions. The report shows that preterm birth rates grew in 43 states, plus Puerto Rico and Washington, D.C., and among all racial groups.  But not all racial groups saw the same impacts. In 2016, black women were 49 percent more likely to deliver preterm than white women; American Indian and Native Alaskan women were 18 percent more likely than whites to give birth prematurely.  "In many communities of color, there are inequities with respect to health care, housing, jobs, food security — lots of things that put enormous stress on families and especially on pregnant moms," said Stacey Stewart, president of the March of Dimes.  "One of the things we have to be very clear on is that race itself is not a cause of preterm birth," she said. "What we see, though, is that different racial and ethnic groups face different challenges that could impact their ability to have healthy babies."

Rural America’s disappearing maternity care - Life in rural America can be tough, with challenges starting right from birth. Increasingly, rural women lack access to maternity services, jeopardizing their health and that of their newborns at a time when U.S. maternal mortality is rising. Giving birth is hard enough, but racing 100 miles to the nearest hospital down winding country roads is a particularly harrowing way to experience labor. Evidence confirms what common sense suggests: Drive time affects outcomes. A Canadian study shows that the babies of mothers who travel more than an hour to give birth are more likely to require intensive care or to die within their first year of life. Anguishing personal stories underlie the aggregate data that signal pervasive problems. For Whitney Brown of rural Tennessee, hospital staff discovered an amniotic fluid embolism too late. She died after childbirth. Courtney Cross, a mother living in rural Alabama, fell into debt in part because of the cost of her lengthy trips to pregnancy care. And the challenges for rural mothers are getting worse. A recent study in Health Affairs, co-authored by one of us (Kozhimannil), shows that more than half of rural counties lack obstetric services. A wave of rural obstetric unit closures has increased the distance to maternity and delivery services; the least populated and most remote communities have been hit hardest. What’s left are maternity-care deserts in some of the United States’ most vulnerable communities. Because birth is unpredictable, hospitals must have staff and infrastructure in place at all times to offer obstetric services. But sparsely populated areas have few births, making it hard for hospitals to balance their books. In addition, it is difficult for rural areas to recruit and retain maternity clinicians. Many hospitals cut back on their obstetric services. Others close altogether. 

While India tries out price caps on cardiac stents, more evidence emerges on their overuse globally - On Wednesday, medical journal The Lancet published a study that has questioned the common cardiac procedure of inserting stents into blocked arteries of patients with chest pains as one of the symptoms of heart disease. A stent is a short wire-mesh tube that acts as a scaffold to keep a blocked artery of the heart open. The study shows that stents do not necessarily alleviate chest pains when patients exert themselves. The results of the study have stunned cardiologists, The New York Times reported, as it counters decades of clinical practice.The study brings back into focus the practice of irrational use of cardiac stents globally and in India. The study recruited 200 patients with severe artery blood vessel blockage, who experienced ischemic symptoms that arise when blood flow becomes impaired resulting in chest pain, fatigue, dizziness and palpitations. In such patients, doctors recommend angioplasty – a procedure in which a stent is inserted in the narrowed artery using a catheter. The study involved a control group that underwent a placebo procedure, where the catheter was inserted into the body but no stent was placed in the artery. After six weeks of medication to control heart disease as well as to ease chest pain, the patients who had stents placed and the control group both reported no significant difference in their ability to exercise.Blockage in a heart vessel may be treated in three ways – medication, stenting or bypass surgery. A 2012 study showed that bypass was a better treatment modality for patients with diabetes and multivessel blockage as compared to angioplasty.“We have known that a stable patient with stable angina and block need not undergo angioplasty for years now,” said Dr Sundeep Mishra, a consulting cardiologist at All India Institute of M edical Sciences, Delhi. “For some reason, it still continues.”

Overdose victims now account for one-third of organ donations -  Believe it or not, there is a silver lining to the rampant opioid crisis in our area.   The latest numbers from Lifebanc indicate that 33 percent of organ donors in Northeast Ohio are now overdose victims. That's up from just 7 percent only five years ago. But what are the risks associated with these organs? And what are the rights of recipients when it comes to this influx of donations?  The story of Adam Shay is becoming a much too familiar one. The 21-year-old was a musician, an artist, an athlete and an addict. "He had been sober for a year, was engaged, when he fatefully made the choice to use again," said his mother, Marlene Shay. Three years in and out of rehab wasn't enough to kick the heroin habit he'd developed. Friends and first responders kept him alive when he overdosed and got him to a hospital, but it was too late for Adam. However, his family knew he'd already made the choice to give the gift of life when his time came, registering as an organ donor. On that same day in January 2014 when the Shays said tearful goodbyes to Adam, Karen Goodwin got the call she'd been waiting for."I knew it was my last Christmas, my last New Years unless I got a transplant. I was that bad," said Goodwin. She was weak and tired, and losing hope that she'd get the kidney and pancreas she desperately needed. "I was doing peritoneal dialysis four times a day," Goodwin says. She was nervous, but grateful to hear that the person ahead of her in line had rejected Adam's organs because they were labeled "high risk" due to his known heroin use. "It was like a light bulb went off…they're meant for me," she says. Adam's story is one becoming more common as the war against heroin wages on.  According to the United Network of Organ Sharing, or UNOS the number of donors nationwide who died of drug overdoses doubled in a matter of three years, from 625 in 2014, to 1263 in 2016, and they're expecting to set a new record this year. "But these individuals that are waiting for transplant, they don't have any other option and that is something that on the transplant side they are educated on and they have the option whether or not they want to accept an organ that has been labeled increased risk," 

As epidemic rages, ER study finds opioids no better than Advil and Tylenol - The easiest way to avoid getting hooked on opioids may be to never take them in the first place. After all, an initial prescription of just a few days' worth of pills can trap patients into using the highly addictive, often deadly drugs for a year or more. But despite the dangers, many patients don’t have the luxury of passing on potent pain killers—for instance, those stumbling into a hospital emergency room with a broken or badly bloodied limb. In a randomized, double-blind clinical trial—the gold standard of trials—a combination of ibuprofen (Advil) and acetaminophen (Tylenol) was just as effective at treating patients with acute pain in an extremity as three other pain-killer combinations containing opioids. The authors of the study, which was published Tuesday in JAMA, suggest that emergency room doctors may be able to simply skip the opioids during and after urgent treatment. “This change in prescribing habit,” they write, “could potentially help mitigate the ongoing opioid epidemic by reducing the number of people initially exposed to opioids and the subsequent risk of addiction.” Beyond that, the study flings into light the poor data backing current opioid prescription practices and the dwindling scenarios in which the dangerous drugs are firmly warranted. The implications are staggering given the current epidemic of opioid abuse and addiction gripping the country. In 2015, more than 30,000 people died of opioid overdoses, and currently an estimated 91 people die each day from the drugs. The authors of the new trial, led by Andrew Chang of Albany Medical College in New York, note that common medical practice and guidelines, including those championed by the World Health Organization, suggest that opioids are simply more effective at treating acute pain than non-opioid medications—or combinations of them. Yet, the data backing that is shaky. Ibuprofen and acetaminophen have completely different molecular activities in the central nervous system and brain—offering a one-two punch to pain when used in combination. Researchers haven’t done the work to show that the duo are knocked out by opioids in terms of treating extreme pain in a limb. But a handful of studies on dental and post-operative patients clearly indicated that non-opioid drug pairs were just as effective. The studies compared a combination of ibuprofen and acetaminophen to a combo of codeine and acetaminophen and found that no codeine-containing treatment—regardless of the dose—beat out the non-opioid blend.

Cancer cluster at top NYC school near Ground Zero, grad says - Firefighters and other first-responders who worked at Ground Zero aren’t the only ones suffering 16 years later from exposure to toxic debris. Local school kids who are now young adults have come forward, revealing they’ve battled cancers and lung diseases covered by the 9/11 Victim Compensation Fund. Michele Lent Hirsch, 32, was a senior at Stuyvesant HS, on Chambers Street, just a couple blocks from Ground Zero, when she saw the first tower fall from a classroom window. In 2010, she was diagnosed with thyroid cancer, one of 68 cancers eligible for health coverage through the VCF. Hirsch was only 25 when she was diagnosed. “Cancer is so terrifying to deal with when you’re a young person,” she told The Post. “They sent us back to a school that was not safe. We were exposed to toxins that were physically harmful. You don’t send students back to a toxic school before it’s safe.” Stuyvesant was used as a staging area by rescue and recovery workers after 9/11. The elite public high school reopened a month later, on Oct. 9, amid heated debate about whether the building was free of contaminants. One veteran teacher stayed away from the school, telling The Post at the time that dust-filled air in the building was making him sick. “This is just the tip of the iceberg,” said lawyer Michael Barasch, who represents 12 graduates of schools near Ground Zero, half of whom attended Stuyvesant, with cancer or lung disease. “I’m sure there are others who are not aware of it.”

Carbon nanofibres linked to mesothelioma - Carbon nanotubes have been implicated in the onset of mesothelioma in mice, researchers say. In a study published in the journal Current Biology, a team of scientists led by Marion MacFarlane of the UK’s Medical Research Council Toxicology Unit report that up to 25% of mice injected with carbon nanofibres developed mesothelioma, a cancer associated with asbestos. The findings applied only to long, thin carbon nanofibres. Other shapes, such as short fat ones, were expelled successfully by the rodents’ immune systems. The study involved 32 mice, who were injected with the carbon nanotubes directly into the pleura – the membranes that line the thorax and envelope the lungs. The study’s findings have not been replicated in humans. Long carbon nanotubes are widely used in a range of applications. They are lightweight and very strong, so are useful in the manufacture of computer motherboards, cars, aircraft and sporting goods. "Importantly, not all nanofibres pose a hazard," says MacFarlane. "We want our research to inform manufacturers and regulators about safer options when a nanofibre is being selected for the production of nanomaterials for emerging technologies.” As well as sounding a note of caution for manufacturers who use this type of nanotube, the research is also throwing a much-needed light on the way asbestos fibres – which are also long and thin – catalyse mesothelioma. "Because mesothelioma is diagnosed when it's quite advanced, we don't know much about the early mechanisms by which it forms," 

New evidence of brain damage from West Nile virus, scientists say -  Experts who work on the mosquito-borne West Nile virus have long known that it can cause serious neurological symptoms, such as memory problems and tremors, when it invades the brain and spinal cord. Now researchers have found physical evidence of brain damage in patients years after their original infection, the first such documentation using magnetic resonance imaging, or MRI. Brain scans revealed damage or shrinkage in different parts of the cerebral cortex, the outer part of the brain that handles higher-level abilities such as memory, attention and language. “Those areas correlated exactly with what we were seeing on the neurological exams,” said Kristy Murray, an associate professor of pediatric tropical medicine at Texas Children’s Hospital and Baylor College of Medicine and lead author of the study. “The thought is that the virus enters the brain and certain parts are more susceptible, and where those susceptibilities are is where we see the shrinkage occurring.” Results of the study, which has not yet been published, were presented Tuesday at the annual meeting of the American Society of Tropical Medicine and Hygiene. The 10-year study of 262 West Nile patients is one of the largest assessments studying the long-term health problems associated with West Nile infections. Most people who are infected do not develop symptoms. About 20 percent will develop fever, and less than 1 percent have the most severe type of infection that causes inflammation of the brain or surrounding tissues. 

New 'Black Death' FOUND: Deadly virus WORSE than plague and with no CURE breaks out – WHO -- A DEADLY outbreak of a rare and highly fatal virus has broken out in eastern Uganda and five cases have already been identified, the World Health Organisation (WHO) has confirmed.The disease, known as Marburg virus disease (MVD), is similar to Ebola and can be lethal in up to 90 per cent of cases.Emergency screening has begun at the Kenya-Uganda border in Turkana after three members of the same family died of the disease in Uganda.Health workers have been asked to work with communities to stop the deadly Marburg outbreak from devastating communities in the rural region. The outbreak is thought to have started in September when a man in his 30s, who worked as a game hunter and lived near a cave with a heavy presence of bats, was admitted to a local health centre with a high fever, vomiting and diarrhoea. He did not respond to antimalarial treatment and his condition rapidly deteriorated. He was quickly taken to another hospital in the neighbouring district, but died shortly after arriving. His sister, in her 50s, died shortly afterwards and a third victim passed away in the treatment unit of a local health centre. The WHO website reads: “Marburg virus disease is a rare disease with a high mortality rate for which there is no specific treatment. “The virus is transmitted by direct contact with the blood, body fluids and tissues of infected persons or wild animals (e.g. monkeys and fruit bats).” Several hundred people are believed to have been exposed to the virus, which is among the most virulent pathogens known to infect humans. Early symptoms include fever, chills, headache, and myalgia. The news comes as Madagascar faces a deadly outbreak of plague, which has already claimed the lives of 127 people.

Tiny human brain organoids implanted into rodents, triggering ethical concerns - Minuscule blobs of human brain tissue have come a long way in the four years since scientists in Vienna discovered how to create them from stem cells. The most advanced of these human brain organoids — no bigger than a lentil and, until now, existing only in test tubes — pulse with the kind of electrical activity that animates actual brains. They give birth to new neurons, much like full-blown brains. And they develop the six layers of the human cortex, the region responsible for thought, speech, judgment, and other advanced cognitive functions.These micro quasi-brains are revolutionizing research on human brain development and diseases from Alzheimer’s to Zika, but the headlong rush to grow the most realistic, most highly developed brain organoids has thrown researchers into uncharted ethical waters. Like virtually all experts in the field, neuroscientist Hongjun Song of the University of Pennsylvania doesn’t “believe an organoid in a dish can think,” he said, “but it’s an issue we need to discuss.” Those discussions will become more urgent after this weekend. At a neuroscience meeting, two teams of researchers will report implanting human brain organoids into the brains of lab rats and mice, raising the prospect that the organized, functional human tissue could develop further within a rodent. Separately, another lab has confirmed to STAT that it has connected human brain organoids to blood vessels, the first step toward giving them a blood supply. That is necessary if the organoids are to grow bigger, probably the only way they can mimic fully grown brains and show how disorders such as autism, epilepsy, and schizophrenia unfold.  In the previously unreported experiments implanting human brain organoids into lab rodents, most of the transplants survived, in one case for at least two months, according to summaries of the two papers being presented at the annual meeting of the Society for Neuroscience in Washington, D.C. More notably, the human organoids implanted into mice connected to the rodent’s circulatory system, making this the first reported vascularization. And mature neurons from the human brain organoid sent axons, the wires that carry electrical signals from one neuron to another, into “multiple regions of the host mouse brain,”

Human Mini-Brains in Rat Bodies -- Stem cell technology has advanced so much that scientists can grow miniature versions of human brains — called organoids, or mini-brains if you want to be cute about it — in the lab, but medical ethicists are concerned about recent developments in this field involving the growth of these tiny brains in other animals. Those concerns are bound to become more serious after the annual meeting of the Society for Neuroscience starting November 11 in Washington, D.C., where two teams of scientists plan to present previously unpublished research on the unexpected interaction between human mini-brains and their rat and mouse hosts.In the new papers, according to STAT, scientists will report that the organoids survived for extended periods of time — two months in one case — and even connected to lab animals’ circulatory and nervous systems, transferring blood and nerve signals between the host animal and the implanted human cells. This is an unprecedented advancement for mini-brain research.“We are entering totally new ground here,” Christof Koch, president of the Allen Institute for Brain Science in Seattle, told STAT. “The science is advancing so rapidly, the ethics can’t keep up.” That mini-brains can even be grown in the lab is a huge advancement in the first place, as they have many of the same characteristics as living human brains that are in the early stages of development. Though they’re not “alive” in the same sense that you and I are, they grow and are organized into different layers like our brains are. They even react in similar ways to stimuli like psychedelic drugs. Organoids are poised to revolutionize research on the human brain since scientists can perform tests on them that would be unethical to attempt on living humans.

Mail-Order CRISPR Kits Allow Absolutely Anyone to Hack DNA - CRISPR–Cas9 (or CRISPR, for short) has given scientists a powerful way to make precise changes to DNA—in microbes, plants, mice, dogs and even in human cells. The technique may help researchers engineer drought-resistance crops, develop better drugs, cure genetic disorders, eradicate infectious diseases and much more. Ask any biologist, and they’ll likely tell you that CRISPR is revolutionary. It’s cheap and effective, and in many cases, it works much better than older methods for making genetic modifications. Biologists will also tell you that CRISPR is very easy to use. But what does “easy to use” mean? I am not a DIY scientist, much less a professional scientist. You won’t find me swabbing my cheek cells for DNA or tinkering with yeast in a lab on the weekend. But I wondered: Is CRISPR so easy that even amateurs like me can make meaningful contributions to science? And also, does this new technique make gene editing so accessible that we need to worry about DIY scientists cooking up pandemic viruses in their basements? If you Google ‘DIY CRISPR,’ stories such as “What Happens If Someone Uses this DIY Gene Hacking Kit to Make Mutant Bacteria?” pop up. I attempted to find answers to all these questions myself, starting with the plate of bacteria in the DIY CRISPR–Cas9 kit I bought online in the kitchen of my San Francisco apartment.

Global warming threatens nutrition levels in staple crops - New research suggests that declining levels of iron, zinc and protein resulting from high levels of carbon dioxide in the atmosphere are putting human health at risk, especially in the developing world. In a paper published in Nature several years ago, Harvard scientist Dr. Sam Myers and other researchers showed that staple food crops lose between five and ten percent of iron, zinc and protein when grown at 550 parts per million of carbon. This led them to wonder how many people would be at risk of nutrient deficiencies if they maintained their current intake of these crops. They found that 150 to 200 hundred million more people would likely be pushed into nutrient deficiencies, on top of the millions of people who already suffer from this condition. Across the world today, Myers says, around two billion people suffer from micronutrient deficiencies. “In the studies that we've done, we've looked at how many people would become newly deficient, but, of course, there are also hundreds of millions or billions of people who would have their deficiencies further exacerbated,” he points out. Nutrient deficiencies can have a number of negative health effects, Myers says. For example, zinc is an important component of the human immune system and crucial to helping children fight off common diseases. Myers found that children under five who have adequate zinc levels die in much lower numbers from common infections like malaria, pneumonia and diarrheal disease than children who suffer from zinc deficiency. Iron deficiency has a broader array of negative health effects. “Pregnant women die in higher numbers giving birth; there is higher neonatal mortality, meaning death of infants at birth or soon after; and [we see] reductions in IQ, intelligence [and] work capacity,” Myers says.  Nutrient deficiencies are going to be most severe in South Asia and in Africa, Myers says, and India appears to be particularly vulnerable.

The Great Nutrient Collapse - It's been understood for some time that many of our most important foods have been getting less nutritious. Measurements of fruits and vegetables show that their minerals, vitamin and protein content has measurably dropped over the past 50 to 70 years. Researchers have generally assumed the reason is fairly straightforward: We’ve been breeding and choosing crops for higher yields, rather than nutrition, and higher-yielding crops—whether broccoli, tomatoes, or wheat—tend to be less nutrient-packed. In 2004, a landmark study of fruits and vegetables found that everything from protein to calcium, iron and vitamin C had declined significantly across most garden crops since 1950. The researchers concluded this could mostly be explained by the varieties we were choosing to grow.  Loladze and a handful of other scientists have come to suspect that’s not the whole story and that the atmosphere itself may be changing the food we eat. Plants need carbon dioxide to live like humans need oxygen.  Before the industrial revolution, the earth’s atmosphere had about 280 parts per million of carbon dioxide. Last year, the planet crossed over the 400 parts per million threshold; scientists predict we will likely reach 550 parts per million within the next half-century—essentially twice the amount that was in the air when Americans started farming with tractors. If you’re someone who thinks about plant growth, this seems like a good thing. It has also been useful ammunition for politicians looking for reasons to worry less about the implications of climate change. Rep. Lamar Smith, a Republican who chairs the House Committee on Science, recently argued that people shouldn’t be so worried about rising CO2 levels because it’s good for plants, and what’s good for plants is good for us.  But as the zooplankton experiment showed, greater volume and better quality might not go hand-in-hand. In fact, they might be inversely linked. As best scientists can tell, this is what happens: Rising CO2 revs up photosynthesis, the process that helps plants transform sunlight to food. This makes plants grow, but it also leads them to pack in more carbohydrates like glucose at the expense of other nutrients that we depend on, like protein, iron and zinc.

 U.S. farmers tighten belts to compete with cheap LatAm grain -- U.S. farmers are cutting costs any way they can to compete against cheaper producers in Argentina and Brazil. Four years of global oversupply have pushed down grain prices, reduced agricultural revenues and put more expensive producers under financial pressure. In response, U.S. farmers have bought cheaper seeds, spent less on fertilizers and delayed equipment purchases as they seek to ride out the downturn. But more bumper harvest forecasts and rising energy prices herald another tough year for farmers in 2018.  “The logical thing to do is stop farming,” said Giessel, 64, who farms about 5,000 acres and has worked on the land all of his adult life. Giessel has cut spending on what he can control - seeds, chemicals, fertilizer, rented land - and chewed through his farm’s savings. He stands to lose $93 an acre, or nearly $15,000, on one corn field alone this year. “My burn rate is a raging fire. And I am no different than anyone else out here,” Giessel said. Some farmers have had to sell assets to keep afloat. Others have gone into bankruptcy.  U.S. farmers have taken another hit this year because of rising prices of labor, fuel and electricity. Those costs together account for about 14.5 percent of total expenses and are largely out of farmers’ control. Interest expenses have also risen as banks have tightened credit to the agricultural sector.  These items were expected to push overall costs up 1.3 percent in 2017, which would mark the first year since 2014 that farmers have failed to reduce total costs.

Farmers must stop antibiotics use in animals due to human health risk, warns WHO -- Farmers must be prevented from using powerful antibiotics on animals reared for food, the World Health Organisation (WHO) has warned, because of the serious risks to human health that result.New guidelines from the global body suggest farmers should stop using any antibiotics routinely to promote growth and prevent disease in animals that are otherwise healthy, a common practice in some parts of the world, including Asia and the US. Such routine use is banned in Europe, though campaigners fear the rules are sometimes flouted.Using antimicrobial medicines on farm animals is one of the leading causes of the rise of superbugs, resistant to all but the strongest antibiotics. Medical authorities warn that the antibiotics available to treat even relatively minor human diseases are running out because of the rapid rise of such resistance.Dame Sally Davies, chief medical officer for England, has warned repeatedly that, a decade from now, even routine, previously low-risk operations, such as hip replacements, may become dangerous because of the risk of infections resistant to medicines.The WHO reported on Tuesday that in some countries, as much as 80% of antibiotic use is on farm animals. Even in some countries where routine use for enhancing growth is banned, more antibiotics are used on animals than on humans. The use of the strongest antibiotics, a last resort for the most deadly infections affecting humans, should be banned altogether in animals, the guidelines advise. This should apply, according to the WHO, even in cases where an illness has been diagnosed in a food-producing animal. Implementing this could require animals to be quarantined, allowed to die, or for herds to be culled in order to halt the spread of a serious disease rather than attempting to cure it.This recommendation is likely to be unpopular with farmers, who could risk financial loss, but is crucial to protect human health, according to the WHO, because the use of such antibiotics in animals is leading to increased resistance even to last-resort medicines, to the despair of doctors. However, the WHO has no power to enforce its guidelines, which are up to national governments to accept or reject.

GMO Apples Arriving on U.S. Shelves for First Time -- The first commercial harvest of Arctic apples —genetically modified ( GMO ) apples that don't brown when exposed to air—will arrive in 400 Midwestern grocery stores this month, Bloomberg reported.  The product will be sold as 10-ounce bags of sliced Golden Delicious apples. The bags will not have a clear label saying it is a GMO product. Rather, a customer will only know that the fruit is genetically modified by scanning the bag's QR code with a smartphone, a feature that opponents have shunned.  "Not everyone has a smartphone, and even if you have one, are you going to check every item with it?" Bill Freese, a science-policy analyst at the Center for Food Safety , told Nature .   Americans are generally wary of GMOs and recent polls show that the vast majority (89 percent) favor mandatory labels on GMO foods or products containing such ingredients.  The biotech apple, owned by British Columbia-based Okanagan Specialty Fruits , first stirred up controversy back in February 2015 when the U.S. Department of Agriculture deemed both the Arctic Golden Delicious and Arctic Granny varieties safe for human consumption. It was the first time the federal agency approved an aesthetically-improved genetically engineered food.  To prevent the crop from browning, the company silenced an enzyme called polyphenol oxidase (PPO) that drives oxidation in apples. The benefit of these apples, the company says , is that it cuts down food waste —about 40 percent of apples are currently wasted, with much of that waste from superficial bruising and browning.

EPA Approves Release of Mosquito-Killing Mosquitoes in 20 States - Kentucky-based biotechnology startup MosquitoMate was given U.S. government approval to release bacteria-infected mosquitoes in several states.  The company's lab-grown Aedes albopictus (aka ZAP males ) are designed to halt the spread of mosquito-borne diseases.   So how does it work? When ZAP males mate with wild female Aedes aegypti mosquitoes, which can carry yellow fever, dengue and Zika, the resulting eggs do not hatch. That's because MosquitoMate's bugs are infected with Wolbachia , a common and naturally occurring strain of bacterium that Aedes aegypti does not carry. The fertilized eggs never hatch because the paternal chromosomes do not properly form, according to Nature . Mosquitoes infected with Wolbachia are also less likely to carry viruses. The hope is that wild, disease-carrying mosquito populations will eventually die out. And since the ZAP males do not bite, these mozzies shouldn't be a problem to have around.  "It's a non-chemical way of dealing with mosquitoes, so from that perspective, you'd think it would have a lot of appeal," David O'Brochta, an entomologist at the University of Maryland in Rockville, told Nature.  Gizmodo reported that the U.S. Environmental Protection Agency on Nov. 3 registered the lab-grown mosquito as a biopesticide. MosquitoMate will have a five-year license to sell in 20 different states and Washington, DC.

Monsanto accused of ignoring relevant scientific data on glyphosate - Lawyers in a high-profile lawsuit in California say U.S. agri-giant Monsanto asked the court to ignore relevant scientific data and discounted reliable studies as a way of covering up the health effects associated with glyphosate, the main ingredient in its flagship herbicide. The accusations against Monsanto were filed to Judge Vince Chhabria of U.S. District Court for the Northern District of California, as he reviews all of the scientific evidence in a lawsuit brought by farmers who say Monsanto’s herbicide Roundup gave them cancer. Chhabria’s decision on whether there is enough scientific evidence to find a link between cancer and glyphosate will determine whether the case warrants a full trial, potentially opening Monsanto up to having to pay millions of dollars in compensation. “There is overwhelming evidence — whether it be the epidemiology, toxicology or mechanistic data — that exposure to glyphosate-based formulations causes non-Hodgkin lymphoma,” plaintiff lawyers told the court in a response to claims from Monsanto they had failed to prove any link between glyphosate and cancer. Developments in the case are being watched carefully in Europe, where experts are due to gather November 9 in Brussels to vote on a new European Commission proposal to renew glyphosate’s license for use in the EU for five years. France argues that glyphosate should be phased out, while Germany pitched extending glyphosate’s license for as little as three years despite numerous regulatory bodies saying the substance is safe.

Monsanto, BASF weed killers strain U.S. states with damage complaints (Reuters) - U.S. farmers have overwhelmed state governments with thousands of complaints about crop damage linked to new versions of weed killers, threatening future sales by manufacturers Monsanto and BASF.  Monsanto is banking on weed killers using a chemical known as dicamba - and seeds engineered to resist it - to dominate soybean production in the United States, the world’s second-largest exporter.   The United States has faced a weed-killer crisis this year caused by the new formulations of dicamba-based herbicides, which farmers and weed experts say have harmed crops because they evaporate and drift away from where they are applied.  Monsanto and BASF say the herbicides are safe when properly applied. The U.S. Environmental Protection Agency (EPA) last year approved use of the weed killers on dicamba-resistant crops during the summer growing season. Previously, farmers used dicamba to kill weeds before they planted seeds, and not while the crops were growing. However, the EPA approved such use only until Nov. 9, 2018, because “extraordinary precautions” are needed to prevent dicamba products from tainting vulnerable crops, a spokesman told Reuters in a statement last week. The agency wanted to be able to step in if there were problems, he said.  Next year, the EPA will determine whether to extend its approval by reviewing damage complaints and consulting with state and industry experts. States are separately considering new restrictions on usage for 2018.  Major soybean-growing states, including Arkansas, Missouri and Illinois, each received roughly four years’ worth of complaints about possible pesticide damage to crops this year due to dicamba use, state regulators said.   Several states had to reassign employees to handle the load.

 Monsanto In Court Again As Powerful New Herbicide Accidently Kills 3.6 Million Acres Of Crops - Monsanto thought they had developed an amazing scheme to corner the Midwest farming market when they developed new genetically engineered seeds that were resistant to their new herbicide called dicamba.  The resistance of Monsanto's new magical seed crops to dicamba meant that the herbicide could be sprayed liberally by farmers to eradicate weeds and boost yields.Alas, as we pointed out last week (see: Meet Monsanto's Other Herbicide Problem...), a small problem emerged when spray drifts from those liberal herbicide applications began to wipe out the crops of neighboring farmers who didn't plant Monsanto's dicamba-resistant seeds.Now, as the Wall Street Journal points out today, after allegedly wiping out millions of acres of farm ground across the Midwest, Monsanto once again finds itself in a familiar spot: the courtroom. Monsanto’s new version of the herbicide called dicamba is part of a more than$1 billion investment that pairs it with new genetically engineered seeds that are resistant to the spray. But some farmers say their nonresistant crops suffered after neighbors’ dicamba drifted onto their land.The agricultural giant in October sued the Arkansas State Plant Board following the board’s decision to bar Monsanto’s new herbicide and propose tougher restrictions on similar weed killers ahead of the 2018 growing season. Monsanto claims its herbicide is being held to an unfair standard.Arkansas has been a flashpoint in the dispute: About 900,000 acres of crops were reported damaged there, more than in any other state. About 300 farmers, crop scientists and other attendees gathered in Little Rock on Wednesday for a hearing on Arkansas’s proposed stiffer dicamba controls, which Monsanto and some farmers are fighting. The proposed restrictions are subject to the approval of a subcommittee of state legislators.

Undraining the Swamp --  For the 13,000 residents of Glades County, Lake Okeechobee, all 730 square miles of it, can loom large and menacing, bursting against aging levees and control gates managed by the US Army Corps of Engineers. The specter of the 1926 and 1928 hurricanes, both of which burst the dike open and together killed thousands of people, still hangs over communities here. People go about their lives fearing they're one storm away from another devastating breach, as was the case during Hurricane Irma in August. "The more rainwater that increases in Lake Okeechobee, the more pressure is on the lake, and that pressure can continue to build up and build up and build up and one day the levee can go,"  Throughout the twentieth century, its major arteries of fresh water, which flowed from the Kissimmee River south of Orlando to Lake Okeechobee and down to the swampy Everglades, were permanently rerouted by the federal government and landowners to stop flooding, and make room for agriculture and housing in the southern part of the state. Draining the water flow has allowed for bursts of economic growth. Today, Florida's agriculture industry, some of which sits on former swamp land, is worth $104 billion and employs two million people, and a big part of that is the politically influential sugar industry. But tampering with nature has its consequences. The Everglades, the largest swath of subtropical wilderness in the country, is now half of its size circa 1920, and the ecosystem has deteriorated, losing wildlife and native flora. Without a natural place to flow, stagnant water pushes toxic algae blooms into the rivers, and turns pristine ocean into sludgy waste.Now the state is working with the Army Corps of Engineers—the government agency partly responsible for rerouting and draining water to begin with—and the South Florida Water Management District to attempt the largest hydraulic restoration project in the world. And while some say the effort has turned Florida into a battleground, pitting sugar farmers against legislators and environmentalists, others are hoping this will finally right certain man-made wrongs and restore some balance to the state.

Hundreds of Whales and Dolphins Slaughtered in Annual Faroe Islands Hunt - Sea Shepherd Global has documented the grisly annual hunt and slaughter of pilot whales and dolphins in the Danish Faroe Islands.  As part of its ongoing Operation Bloody Fjords campaign, the ocean conservation group sent a crew of volunteers posing as tourists to six different Faroese towns covering 19 designated whaling bays with the aim of "[exposing] the continued barbaric killing of dolphins and pilot whales," campaign leader and Sea Shepherd UK Director Robert Read said.  Over the course of ten weeks from this July to early September, the volunteers documented nine separate grindadráp events (what these yearly hunts are called in Faroese). According to the group, 198 Atlantic white-sided dolphins and 436 pilot whales were killed.    During a grind , island authorities allow a flotilla of boats to drive dolphins and whales into a shallow bay. The animals are then killed with a whaling knife that severs their spinal cord.  "We witnessed the whole process from the driving in of the 50 or so pilot whales through the slaughter, the butchering and the distribution of the meat and blubber," said one volunteer in a statement provided to EcoWatch about the the Aug. 29 grindadráp in the village of Hvannasund.  "As the pilot whales were driven to the shoreline by the small boats the intensity of the thrashing bodies grew. Hooks were sunk into the blowholes and the whales were dragged onto the shore in a sadistic game of 'Tug of War.' We witnessed whales seemingly bashing their heads against the stones in a frenzy."  "As we drove into Sydrugota we knew we were in the right place as the water was blood red, we continued towards the harbor and parked up, walked to the slipway to see 16 Atlantic White Sided Dolphins already had been slaughtered, lined up neatly in two rows, guts already spilled onto the concrete and spines severed, one thing I didn't expect was the stench of blood. A crowd had gathered including small children who were poking the dolphins in the eyes while their parents watched."   Many of the pod still laid on the beaches, blood flowing from the kill wounds, one dolphin with a wound so deep it had almost severed the head completely, parents could be seen taking their children down to see the bodies close up, one we observed even lifting their boy up to sit on the body of a dolphin as they took photos of him, the lack of any empathy for the lives that had just been brutally taken was clear, as was an insight into how future generations are already being exposed to this brutal act."

Breeding-age female vaquita dies after being taken into captivity - Last month, the government of Mexico launched a last-ditch effort to save the Critically Endangered vaquita, a small porpoise known to reside only in the Gulf of California.A team of marine mammal experts assembled by the Mexican government created a project called Vaquita Conservation, Protection and Recovery (VaquitaCPR) that aims to capture the remaining 30 vaquitas (Phocoena sinus) and keep them safe in specially built floating “sea pens” until the species’ survival is no longer threatened by the illegal trade and fishing activities that have driven them to the brink of extinction. Late last month, scientists with VaquitaCPR took the first of the marine mammals into captivity. Though the 6-month-old calf became so stressed by its capture that the team quickly chose to release it back into the wild, Lorenzo Rojas-Bracho, a scientist with the Mexican government who heads the VaquitaCPR program, suggested that the fact that they were able to successfully find and capture a vaquita at all was an encouraging sign.This past weekend, however, it was announced that another vaquita — a breeding-age female — was taken into captivity and subsequently died.  “A mature female vaquita, not pregnant or lactating, had been caught and transported successfully late in the afternoon on Saturday in the Northern Gulf of California and was taken to a specially-modified floating sea pen known as ElNido, or The Nest,” according to a statement from VaquitaCPR. “From the moment of capture, the vaquita was under constant care and observation for its health and safety.”Marine mammal veterinarians that were monitoring the vaquita determined that it, too, had become stressed, to the point that its condition was deteriorating enough that once again the call was made to release the animal. “The release attempt was unsuccessful and life saving measures were administered,” VaquitaCPR reports. “Despite the heroic efforts of the veterinary team, the vaquita did not survive.”

Powerful lawmaker wants to ‘invalidate’ the Endangered Species Act. He’s getting close. WaPo - The congressman who said he “would love to invalidate” the Endangered Species Act is closing in on his goal. Rep. Rob Bishop (R-Utah) recently shepherded five bills out of the Natural Resources Committee he chairs that would dismantle the law piece by piece. Many Republicans on the panel say the proposals are necessary changes that would modernize the 1973 law. Democrats and conservationists say the bills would whittle away the law’s ability to save wildlife from extinction. One measure would force the federal government to consider the economic impact of saving a species rather than make a purely scientific call. Another would require the U.S. Fish and Wildlife Service, which administers the act along with the National Oceanic and Atmospheric Administration, to defer to data collected by states as the “best scientific and commercial data available,” although state funding related to the act accounts for a small fraction of that supported by the federal government. Under a third proposal, citizens and conservation groups would be stripped of a powerful tool that allows them to file court claims against the government when they believe its protections fall short. Among other actions, the remaining bills would also remove protections for gray wolves in Midwestern states and block courts from ruling on the validity of the government’s decisions. The legislation is setting up a titanic clash over a law that forms the foundation of American wildlife protection and has been copied around the world. “You’re going to see a strong, strong movement opposing cuts to the ESA. I don’t want to sound overly confident or cocky that we’re going to defeat this. It’s going to be the fight of my conservation career.” Unlike earlier GOP attempts to weaken the act, Bishop is poised to realize his ambition because of Republicans’ control of both chambers of Congress and the White House. A Senate committee that previously held hearings on modernizing the act is preparing companion legislation, and a president who favors oil-and-gas development on federal land is more likely to sign it into law. 

Sumatran region heats up as forests disappear - The wholesale destruction of rainforests across parts of Indonesia’s Sumatra island to make way for cash-crop plantations has not just devastated animal and plant biodiversity in the region, but may also be driving an alarming rise in temperatures on the ground, a new study suggests.Average temperatures in Jambi province, one of the most heavily deforested regions in Sumatra, rose by 1.05 degrees Celsius (1.89 degrees Fahrenheit) between 2000 and 2015 — and more than half that increase can be attributed to the lack of forest cover, according to the new research published in the European Geosciences Union journal Biogeosciences.The team of researchers from the University of Göttingen in Germany used satellite data collected between 2000 and 2015 by the NASA Landsat missions and the MODIS instrument, as well as data collected on the ground, to compare average land surface temperature increases in Jambi with a site that was covered by forest during the entire period (and thus considered to be unaffected by direct land-use change).They found the temperature of the forest site rose by just 0.45 degrees Celsius during that period, suggesting that at least 0.6 degrees Celsius of the total 1.05 degree increase was due to land-use change.“We see that transformed land uses have a higher land surface temperature compared to forest, particularly bare land and young oil palm plantations, explaining the observed surface temperature increase in the province,” Alexander Knohl, a professor of bioclimatology and one of the research team leaders, said in an interview.On clear-cut land, used mainly for a griculture, the temperature could be up to 10 degrees Celsius hotter than in forests, while young and mature palm oil plantations could be up to 6 degrees and 0.8 degrees Celsius warmer, respectively.

2017 to be the hottest year on record that wasn’t affected by El Nino -- This year will be the hottest ever that wasn't affected by the El Nino weather event, according to the UN. The prediction is a shock because El Nino has been used to explain rising temperatures and occasionally to suggest that the temperature isn't warming at all. The new finding shows that the climate is in fact warming rapidly, even without the effect of the El Nino which pushes up temperatures across the world. Even accounting for that, this year will be one of the three warmest on record. Already, 2016 and 2015 were the hottest years yet.In an announcement as annual UN climate change talks hosted by Fiji begin in Bonn, Germany, the WMO said the average global temperature from January to September 2017 was 1.1C above the pre-industrial era. As a result of a powerful El Nino, 2016 is likely to remain the hottest year on record, but 2017 is expected to join 2015 as the second or third hottest year. The years 2013 to 2017 are likely to be the hottest five-year period on record. Parts of southern Europe including Italy, North Africa, parts of eastern and southern Africa and the Asian part of Russia experienced record warm conditions. Other indicators of rising temperatures include Arctic sea ice, which was well below average throughout 2017 and was at record low-levels for the first four months of the year, while sea ice cover in Antarctica also hit record lows. 

La Niña Declared; Cooldown Nipping the Warmest Autumn on Record in Northeast U.S. - For the second winter in a row, La Niña will be in the driver’s seat. The NOAA/NWS Climate Prediction Center issued a La Niña Advisory on Thursday morning, declaring that La Niña conditions were now in place in both the atmosphere and ocean. NOAA gives odds of around 65-75% that La Niña conditions will extend at least through the upcoming Northern Hemisphere winter of 2017-18.To qualify as ongoing La Niña conditions, sea-surface temperatures (SSTs) across a region in the eastern tropical Pacific defined as Niño3.4 must be at least 0.5°C below the seasonal average, with accompanying changes to the atmospheric circulation. For an El Niño, the SST departure must be at least 0.5°C above average. To qualify as an El Niño or La Niña episode in the historical record, these conditions must be sustained for at least five overlapping three-month periods. As recently as June, long-range forecasts were leaning more toward El Niño vs. La Niña for 2017-18, but such forecasts are often challenging until after the “spring predictability barrier.” . The La Niña of 2016-17 was a marginal event, just long-lived enough to qualify as a La Niña and never even reaching moderate strength. In fact, it’s the only La Niña event in NOAA records going back to 1950 where three-month average SSTs in the Niño3.4 region failed to even get as cool as 0.8°C below average. The current La Niña is expected to be another weak one.As we discussed last month, the plot thickens when we bring in the North Atlantic Oscillation, a semi-cyclic pattern in atmospheric pressure. At The Weather Company, chief meteorologist Dr. Todd Crawford and colleagues have drilled down to see if there’s anything we can deduce on how the NAO might co-evolve with La Niña this autumn and winter. Figure 2 shows a striking difference in month-by-month outcomes during La Niña when the NAO averages negative (center row) versus when it averages positive (bottom row). The cold signal from La Niña tends to materialize over the Pacific Northwest by February. However, as seen in Figure 2, there can also be pronounced colder-than-average weather across the Midwest and Northeast from late autumn into early winter if the NAO is negative (center row).Based on these and other signals, The Weather Company has been leaning a bit more than NOAA toward a chance of early-winter Arctic outbreaks causing colder-than-average conditions over the U.S. Midwest and Northeast.

Threats to human health by great ocean garbage patches - Lancet - However, the long persistence of plastic debris is also problematic for other reasons. Combinations of weathering by ultraviolet light, seawater, and mechanical action partly degrade and fragment larger pieces of plastic down to microplastics (<0·5 mm). When they sink, small plastic pieces and microplastics are colonised by certain marine organisms, which affects submarine organisms and entire ecosystems, including non-human and human food chains. Via the intake of microplastics or their chemical compounds, which are set free in various decomposition processes, ocean garbage has become a latent threat to the health of future generations, and already affects human health on a global scale. Human biomonitoring shows that compounds used for plastic production are already ubiquitous in human blood and cells.Major sources of chemical pollutants are polychlorinated biphenyls, dioxins, perfluorinated carboxylic acids, and perfluoroalkyl acids,6 which cause hepatotoxicity. Xenobiotic compounds are metabolised in the liver by the phase 1–3 detoxification system. Phase 1 consists of oxidation reactions to increase hydrophilicity of xenobiotics and facilitating extrusion. In phase 2, xenobiotics are coupled to transfer carrier molecules and in phase 3, xenobiotic compounds are transported out of liver cells for excretion out of the organism. Plastic debris-related pollutants induce cytochrome P450 monooxygenase isoenzyme 1A (CYP1A) phase 1 enzyme activity.7 Polychlorinated biphenyls, polychlorinated dibenzofurans, and polynuclear aromatic hydrocarbons upregulate CYP1A activity in marine organisms. CYP1A is involved in chemical carcinogenesis, and these compounds form DNA adducts as the first step of tumour development.8

 Frustration mounts over Puerto Rico's 'new normal' as federal troops leave the island -  Army Reserve soldiers led by Captain Angel Morales are hard at work handing out cases of water and ready-to-eat meals from a flatbed truck. Hundreds of people line up in the parking lot of the Jaime Collazo High School.Capt. Morales says distribution points like this one are part of the "new normal" here. More than six weeks after Hurricane Maria hammered Puerto Rico, there's still no running water in Morovis, and the only power available here is supplied by emergency generators. Frustration is rising over the slow pace of recovery.Nonetheless, Army officials say emergency relief efforts on the island are drawing to a close. They're beginning a drawdown of federal troops.In a meeting with federal officials this week, Morovis mayor Carmen Maldonado asked for additional help, calling access to water "the critical issue" in the community. Maldonado says there are at least 400 elderly and bedridden residents who aren't able to lug home the cases of water they need.Lieutenant General Jeff Buchanan is leading the military's relief efforts on the island. In a meeting at the mayor's office, Maldonado tells Buchanan there were problems with the city's aging infrastructure even before the storm.  Buchanan replies that his authority only goes so far. He's confident he can provide at least a temporary measure to restore electricity to the pumps, he says, but longstanding structural issues with the water system may be beyond his purview. The mayor is frustrated by the delays. Without power and water, Maldonado says, her city's economy is nearly at a standstill. The largest business in the city, a paper mill, was forced to shut down after it was damaged in the storm. Maldonado says it's now relocating to another municipality, taking 80 jobs with it.

GOP tax bill would end deduction for wildfire and earthquake victims — but not recent hurricane victims - LA Times -The House Republican tax bill would eliminate the deduction for personal losses from wildfires, earthquakes and other natural disasters, but keep the break for victims of the recent severe hurricanes.If the bill becomes law, the deduction would disappear next year, but would be available for victims of the massive wildfires that struck Northern California last month — as long as they can figure out their uninsured losses and include them on their 2017 tax return.The legislation specifically repeals the deduction for personal casualty losses. The Internal Revenue Service describes casualty losses as including those from “natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.”In the case of a major disaster, Congress still would be able to pass special legislation offering tax breaks for victims, as it has done in the past.But such bills would be difficult to pass for smaller scale incidents that still are devastating to the victims, said Rep. Brad Sherman (D-Porter Ranch).“Let’s say your home burns down and it isn’t a disaster that CNN covers,” he said. “You’re affected the same way, whether it’s nine of your neighbors or 900 of your neighbors that lose homes.”Rep. Mike Thompson (D-St. Helena) called the elimination of the deduction “cruel” and “heartless.” He planned to try to amend the bill and restore the deduction on Tuesday, but that amendment was expected to fail. “There’s never been a fire like this in our country,” Thompson said of the Northern California wildfires.

As California wildfires raged, insurers sent in private firefighters to protect homes of the wealthy: Consumer advocates say programs mean rich get better protections During the worst of last month's wildfires in Northern California, Dick Fredericks got a phone call that passed on "some magical words": His house was safe. The message from a private firefighting service hired by his home insurer, Chubb Ltd.(CB) , was accompanied by an email with some two dozen photos, including one of the service's firefighters pumping water from Fredericks's swimming pool to extinguish a brush fire on his Sonoma Valley property. Increasingly, insurance carriers are finding wildfires, such as those in California, are an opportunity to provide protection beyond what most people get through publicly funded fire fighting. Some insurers say they typically get new customers when homeowners see the special treatment received by neighbors during big fires. The services are complimentary to policyholders in certain ZIP Codes or states that are prone to wildfires. Some insurers require policyholders to enroll in the programs in advance, to give permission for workers to access the property and to obtain contact information. Chubb's service, which began in 2008, is offered in 15 states. American International Group Inc(AIG) launched its Wildfire Protection Unit in 2005 in 14 California ZIP Codes. The unit has since expanded to 385 ZIP Codes in California, Colorado and Texas. Other insurers extending services include Privilege Underwriters Reciprocal Exchange, or PURE, and USAA. 

Breathing Fire — As the deadliest fires in California history swept through leafy neighborhoods here, Kathleen Sarmento fled her home in the dark, drove to an evacuation center and began setting up a medical triage unit. “People were coming in with headaches. I had one. My eyes were burning,” said Sarmento, the director of nursing at Santa Rosa Community Health, which provides health care for those who cannot afford it. But respiratory problems — coughs and shortness of breath — were among the biggest risks. “We made sure everyone had a mask.” More than half of the evacuees at the shelter that October night were elderly, some from nursing homes who needed oxygen 24/7. Sarmento scrambled to find regulators for oxygen tanks that were otherwise useless. It was a chaotic night — but what came to worry her most were the weeks and months ahead. “It looked like it was snowing for days,” Sarmento said of the falling ash. “People really need to take the smoke seriously. You’ve got cars exploding, tires burning. There has to be some long-term effect” on people’s health. From Puget Sound to Disneyland and east over the Rockies, Americans have coughed and wheezed, rushed to emergency rooms and shut themselves indoors this year as pollution from wildfires darkened skies and rained soot across the landscape. Even to healthy people, it can make breathing a miserable, chest-heaving experience. To the elderly, the young and the frail, the pollution can be disabling or deadly. Even though the nation has greatly improved air quality over the last 40 years through environmental regulations and technological improvements, the increasing frequency of large wildfires now undermines that progress, releasing copious pollutants that spread far and wide through the air and linger long after the fires are extinguished.

Man who believes current air quality is ‘too clean’ named to US Environmental Protection Agency advisory board -- A man who once claimed that the air in America was "a little too clean for optimum health", has been appointed to an advisory board of America's Environmental Protection Agency (EPA).  Robert Phalen once claimed that children’s lungs need to breathe irritants so their bodies can learn to fight them. The former director of the Air Pollution Health Effects Laboratory at the University of California Irvine was appointed to the agency’s critical Scientific Advisory Board by ​EPA Director Scott Pruitt. Mr Pruitt has recently removed all the scientists who receive grant money from the agency.  Speaking to the the American Association for the Advancement of Science in 2012, Mr Phalen told the audience: “Modern air is a little too clean for optimum health.”Mr Phalen has also argued that the risks associated with modern particulate matter are “very small and confounded by many factors”. In a 2004 study, he wrote that, “neither toxicology studies nor human clinical investigations have identified the components and/or characteristics of [particulate matter] that might be causing the health-effect associations”.  The appointment is part of Mr Pruitt’s plan to promote advisers who are “financially independent” from the agency.He has barred scientists who receive grant money from the EPA from serving on its advisory boards, saying he will instead focus on “fresh perspectives” and “geographical representation”. As a result, Mr Pruitt has placed 66 new experts on three different EPA scientific committees, according to the Washington Post. Several of these experts come from industries that the agency regulates. New advisers hail from companies such as Dow Chemical, Procter & Gamble, and the French petroleum company Total.

New Delhi pollution hits dangerous level, putting runners at risk (Reuters) - Pollution in the Indian capital hit a dangerous level on Tuesday, putting residents at risk, forcing the closure of schools, and bringing calls from doctors for the city’s half marathon to be canceled. Delhi’s Chief Minister Arvind Kejriwal said the city had once become a “gas chamber”. Schools for younger children were ordered shut on Wednesday and all outdoor activity at high schools suspended. A thick fog that hung over the sprawling city worsened conditions. Residents complained of smarting eyes and irritation in the throat. The air quality index, which measures the concentration of poisonous particulate matter in the air, hit the “severe” level of 451 on a scale where the maximum reading is 500 and where anything above 100 is considered unhealthy by the Central Pollution Control Board. At the severe level, even healthy people will be affected while those who have existing diseases will be severely impacted, it said. In some parts of Delhi, the air quality was so poor that it was beyond the maximum level, according to the U.S. Embassy’s real-time air quality index. It stood at 999 for RK Puram area beyond which no readings are available. That level is equal to smoking 50 cigarettes a day, Dr. Arvind Kumar, chairman for chest surgery at Sir Ganga Ram hospital, said. “We are in a state of medical emergency, schools should be shut, we need to bring these levels down. We are all shortening our lives.” The Indian Medical Association urged Delhi’s biggest running race, due on Nov. 19, to be called off to protect runners and volunteers from exposure to high levels of deadly particulate matter that lodge deep in the lungs. It said the air quality is particularly poor early in the day when the race will be run. 

Delhi Air Pollution Forces Public Health Emergency as Chief Minister Compares City to a 'Gas Chamber' -- Suffocating smog forced the Indian capital of New Delhi, a city of more than 21 million people, to declare a public health emergency on Tuesday. As a thick grey haze settled on the city, the government announced Wednesday morning that schools would be closed for the rest of the week as air pollution worsened and criticism escalated over Indian government's failure to curb pollution levels. By Wednesday afternoon, the U.S. embassy air pollution tracker said the level of PM 2.5—tiny particulate matter that enter the lungs and bloodstream—reached 1010 AQI. Any PM 2.5 level from 301 to 500 is considered "hazardous" to the general population, according to the U.S. embassy tracker. Pollution trackers are showing that smog has reached its most dangerous level of the year, making the air more detrimental to human health than smoking 50 cigarettes a day, according to health officials . "Delhi has become a gas chamber," chief minister of Delhi, Arvin Kejriwal tweeted.  Each year farmers in the northern states of Haryana, Punjab and Rajasthan burn millions of tons of crop waste in October to clear the land for winter planting. An estimated 35 million tons of crops are burned every year in Punjab and Haryana, contributing to New Delhi's smog.  Vehicle emissions, dust from construction sites and industrial pollution also contribute to the crisis.

India Air Pollution Crisis Worsens: Government Plans to Spray Capital With Water -- A four-day old noxious blanket of smog resting on the Indian capital, New Delhi, that officials expect to worsen over the weekend has prompted a plan to spray water over the city.  On Friday, the government announced, in an unprecedented move, it was finalizing plans to spray water from 100 meters above the city, Reuters reported. It remains unclear how much of the densely populated city of 22 million would be sprayed.  Government officials have closed 6,000 schools, banned all but the most essential commercial trucks, and are re-introducing an "odd-even" scheme which allows vehicle with plates ending in an odd number to operate on one day and even-numbered vehicles the next day.  Despite these measures, the air in New Deli has remained "hazardous" for days. Illegal crop burning, vehicle emissions, industrial pollution and dust from sprawling construction sites have contributed to the pollution emergency. By 11 am on Friday, the U.S. embassy air quality data for PM 2.5 showed levels had reached 550, while the safe limit is 50, according to U.S. embassy standards.  PM 2.5 is particulate matter about 30 times finer than human hair that can be inhaled into the lungs and blood stream, causing cardiac arrest, strokes, lung cancer and a host of other respiratory diseases. Residents in New Delhi are reporting burning eyes, headaches and nausea. The air is filled with heavy metals and other carcinogens at 30 times WHO limits . Medical professionals consider those levels of pollution at least as harmful as 50 cigarettes a day.

There's a place at the bottom of the Pacific Ocean where hundreds of giant spacecraft go to die - What happens to a spacecraft once it dies? When a spacecraft completes its mission or runs out of fuel, it's sent to what NASA calls a Spacecraft Cemetery. Three thousand miles off the Eastern coast of New Zealand and more than 2 miles deep, it's the one place farthest from any land mass on Earth. The perfect spot to land giant chunks of spacecraft that are traveling more than 180 mph upon impact. NASA predicts the chance of a spacecraft hitting someone out here to be around 1 in 10,000. Since 1971, over 263 spacecraft from four nations have crashed here. Only the largest spacecraft ever make it here. Smaller satellites burn up completely before reaching the surface. Next on NASA's list is the International Space Station. It's scheduled for decommission in 12 years to finally take its place among sunken space history. 

Carbon cloud hangs heavy over India, Southeast Asia | Asia Times: Coal may no longer be king for many of the world’s economies, but it will remain the fuel of choice in India and Southeast Asia for at least another quarter century, new studies suggest. It is mostly about finding affordable power options, but there are some hidden costs to consider: emission reduction targets will likely be missed and most nations will be locked into a long-term import reliance, even as they fret about the potential blocking of South China Sea trade routes and declining energy security. Demand for coal will increase by 3.7% annually in Southeast Asia through to 2040, when it will comprise 26% of the fuel mix, the International Energy Agency forecast in its 2017 market update. Last year coal comprised only 18% of the combined fuel mix. Oil is expected to have a 29% share in 2040, down from 34% in 2016; gas will contribute 21% of the mix (22% in 2016), bioenergy 13% (20%) and other renewables (including hydro) will comprise 11% of the mix, up from 6%. Provision has also been made for a 0.4% share from nuclear power, but this now appears unlikely. India has been backing off from coal in the face of environmental protests but supply difficulties and a ban on the use of petroleum coke, so far applied only to Delhi, will leave it with little option. Ironically the coke embargo, which will hike demand for smoky coal, is also an environmental measure aimed at sulfur emissions.The world’s third-biggest energy consumer behind China and the US, India gets almost 50% of its fuel mix from coal, with most used for power generation. Biomass fuels like wood, generally used by households, and oil (transport and industry) have 20% shares. Gas and renewables like solar power make fairly small contributions. By 2020 India will have overtaken the US as the second-biggest coal market behind China, which is itself shifting to other fuels.  

Pakistan’s glaciers face new threat: Highway’s black carbon -- At the border outpost on the Karakoram Highway, the highest paved international crossing in the world, more than a dozen diesel semi-trailer trucks now crawl over the pass each day, and hundreds of vehicles crowded with tourists from Pakistan and China clamber up for photos and picnics. But experts say all this exhaust-spewing traffic and increasingly heavy tourism threatens the fragile Khunjerab National Park, which surrounds the high-mountain border post, and particularly its glaciers, already melting faster as a result of rising temperatures linked to climate change. The highway upgrade, part of the ambitious China Pakistan Economic Corridor, “has two impacts – one is positive and the other negative,”  . “It will bring in much-needed infrastructure. But the carbon emissions and the soot going into the atmosphere will definitely increase – and our mountain glaciers will melt. We need to do a comprehensive study on the impacts and then develop a strategy,” he said. Pakistan has more glaciers than any other country outside the polar region – more than 7,200 in the Karakoram, Himalayan and Hindu Kush ranges, according to Pakistan’s meteorological department.They feed the Indus River system, the country’s water lifeline. But data gathered over the last 50 years shows that all but around 120 of the glaciers are showing signs of melting, meteorological officials said. Warming temperatures are to blame for much of the melting but so-called “black carbon” – black soot released from diesel vehicle exhaust, factories, open fires and cookstoves - also is to blame, experts say.The wind-blown pollutants settle onto glaciers, darkening them and reducing their ability to reflect away sunlight, which leads to a faster rate of melting, said Ghulam Rasul, director general of Pakistan’s Meteorological Department. He said a 2013 sampling of five glaciers in northern Pakistan had shown that winds from India were blowing black carbon, largely from coal-fired power plants and steel industries, onto the lower reaches of Pakistan’s mountain glaciers.But because the particles tend to be heavy, “at a higher level our glaciers are not tainted”, he said. That may be changing, however, as the newly expanded China-Pakistan highway brings an army of vehicles through Pakistan’s high mountains each day.

New Greenland maps show more glaciers at risk  -  NASA - New maps of Greenland's coastal seafloor and bedrock beneath its massive ice sheet show that two to four times as many coastal glaciers are at risk of accelerated melting as previously thought. Researchers at the University of California at Irvine (UCI), NASA and 30 other institutions have published the most comprehensive, accurate and high-resolution relief maps ever made of Greenland's bedrock and coastal seafloor. Among the many data sources incorporated into the new maps are data from NASA's Ocean Melting Greenland (OMG) campaign.Lead author Mathieu Morlighem of UCI had demonstrated in an earlier paper that data from OMG's survey of the shape and depth, or bathymetry, of the seafloor in Greenland's fjords improved scientists' understanding not only of the coastline, but of the inland bedrock beneath glaciers that flow into the ocean. That's because the bathymetry where a glacier meets the ocean limits the possibilities for the shape of bedrock farther upstream.The nearer to the shoreline, the more valuable the bathymetry data are for understanding on-shore topography, Morlighem said. "What made OMG unique compared to other campaigns is that they got right into the fjords, as close as possible to the glacier fronts. That's a big help for bedrock mapping." Additionally, the OMG campaign surveyed large sections of the Greenland coast for the first time ever. In fjords for which there are no data, it's difficult to estimate how deep the glaciers extend below sea level.The OMG data are only one of many datasets Morlighem and his team used in the ice sheet mapper, which is named BedMachine. Another comprehensive source is NASA's Operation IceBridge airborne surveys. IceBridge measures the ice sheet thickness directly along a plane's flight path. This creates a set of long, narrow strips of data rather than a complete map of the ice sheet. Besides NASA, nearly 40 other international collaborators also contributed various types of survey data on different parts of Greenland.No survey, not even OMG, covers every glacier on Greenland's long, convoluted coastline. To infer the bed topography in sparsely studied areas, BedMachine averages between existing data points using physical principles such as the conservation of mass.

From Miami to Shanghai: 3C of warming will leave world cities below sea level - Hundreds of millions of urban dwellers around the world face their cities being inundated by rising seawaters if latest UN warnings that the world is on course for 3C of global warming come true, according to a Guardian data analysis. Famous beaches, commercial districts and swaths of farmland will be threatened at this elevated level of climate change, which the UN warned this week is a very real prospect unless nations reduce their carbon emissions. Data from the Climate Central group of scientists analysed by Guardian journalists shows that 3C of global warming would ultimately lock in irreversible sea-level rises of perhaps two metres. Cities from Shanghai to Alexandria, and Rio to Osaka are among the worst affected. Miami would be inundated - as would the entire bottom third of the US state of Florida.  Harsher droughts, more extreme weather, worse disruption of food production, increased migration by climate refugees, heightened storm surges and steadily rising sea levels. That is what we know for sure, then there is the risk of feedback loops - for example the release of methane from melting permafrost - that could quickly push 3C to 6C. It could take decades or centuries, but change will be locked in by a 3C temperature rise, which would extensively melt ice caps, shrink glaciers and thermally expand the oceans so many current coastlines and low-lying plains would be under sea level. Unless massive barriers or water diversions are constructed, many cities, small islands, population centres, economic hubs and iconic sights will be submerged. Imagine a map with giant chunks missing from Florida, Manhattan, Lincolnshire, Rio de Janeiro and the deltas of the Nile, Amazon, Pearl, Mekong, Ganges and Brahmaputra. The Guardian has found, however, that local preparations for a 3C world are as patchy as international efforts to prevent it from happening. At six of the coastal regions most likely to be affected, government planners are only slowly coming to grips with the enormity of the task ahead - and in some cases have done nothing.

US government climate report: Climate change is real and our fault - Information about the science and consequences of climate change has been removed from a number of federal agency websites since the Trump administration took over. But some agencies like NASA seem to have continued their work unhindered. And today saw the release of the fourth National Climate Assessment—an official summary of the current state of knowledge about climate change.The heavily peer-reviewed report, following the last edition in 2014, is coordinated by NOAA, NASA, the Department of Energy, the Environmental Protection Agency, and the US Global Change Research Program. A group of US climate scientists volunteered to write the report, which gathers together the most recent peer-reviewed research into digestible conclusions about the causes and impacts of climate change.  A June 2017 draft was shared with The New York Times by someone who feared it might be censored by federal agencies during the final approval process. But in a call with media, NOAA’s David Fahey (one of three coordinating lead authors of the report) responded to questions about censorship by saying he was “quite confident” that there had been no political interference with the contents of the report. An initial review of the highlighted main points of the report’s “executive summary” shows only a few insignificant wording changes from the June 2017 draft. The topline conclusion is obviously the degree to which observed global warming is human-caused, and the report pulls no punches: “Many lines of evidence demonstrate that it is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century. Over the last century, there are no convincing alternative explanations supported by the extent of the observational evidence.” Specifically, the report quantifies the amount of human-caused warming in the period from 1951 to 2010: between 0.6-0.8 degrees Celsius (1.1-1.4 degrees Fahrenheit). Its best estimate of the total temperature change for that same time period is right within that range, at 0.65 degrees Celsius (1.2 degrees Fahrenheit).

In clash with Trump, U.S. report says humans cause climate change (Reuters) - The rapid pace of global climate change is almost certainly driven by human activity, like burning fossil fuels, according to a U.S. government report that contradicts assertions by President Donald Trump and members of his administration. “For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence,” said the report by a group of more than 50 U.S. government scientists released on Friday. The report, which is required by Congress every four years, was written by scientists from government bodies such as the Environmental Protection Agency and the National Oceanic and Atmospheric Administration. It reinforces the conclusions drawn by an overwhelming majority of scientists around the world in recent years that emissions from burning fossil fuels are the primary driver of global warming, leading to sea level rise, flooding, droughts, and more frequent powerful storms. Trump has repeatedly called climate change a hoax, and in June announced that he would withdraw the United States from a global pact to combat it - calling the deal’s demands for emissions cuts too costly for the U.S. economy.   EPA Administrator Scott Pruitt has also expressed doubts about the causes of climate change, at one point saying he did not believe carbon dioxide from human activity was the primary driver, and calling for further debate on the issue. In an emailed statement, White House spokesman Raj Shah said: “The Administration supports rigorous scientific analysis and debate and encourages public comment on the draft documents being released today.” Officials at the EPA declined to comment. According to the report, global temperatures have increased by about 1.8 degrees Fahrenheit (1 degree Celsius) over the last 115 years, while global average sea levels have risen about 7 inches (17.78 cm) over the same period. Sea levels are expected to rise “at least several inches in the next 15 years” due to rising temperatures, it added.  

That’s Not MY Greenhouse Gas! -- Rich countries are investing vast sums in fossil fuel booms abroad whilst seeking climate brownie points with their home audiences, finds a brand-new report. A focus on ‘territorial’ emissions makes little sense in a globalised economy. Picture the following: a UK investor buys a coal mine in Africa. The coal is shipped to China where it powers factories that produce goods which are shipped to the UK for consumption. Citizens in the UK benefit financially from the coal extraction, and materially from the goods produced.So who’s responsible for tackling the huge amounts of carbon dioxide dumped into the atmosphere along that supply chain? According to UN rules, it’s not the UK.Under the Paris Agreement and the Kyoto Protocol before it, countries are only responsible for the greenhouse gases physically emitted within their borders. Unfortunately, this exclusive focus on ‘territorial’ emissions makes little sense in a globalised economy in which capital and goods flow across borders, and results in a completely misleading picture of where responsibility actually lies.Take the Netherlands as an example. Between 1990 and 2014, the Netherlands reduced its annual domestic emissions by around 15%. That’s not great, and the average emissions for Dutch citizens are still far above the global average. But it’s not a bad direction of travel compared to other countries, and enough for the Dutch to enjoy a reputation of ‘climate leadership’ on the world stage.Yet dig a little deeper, and you find that in 2014, Dutch investors were sat on interests in oil and gas extraction outside the EU of over $400 billion, and earnt $37 billion from these investments. If realised, Dutch investments in oil and gas would result in carbon dioxide emissions between 6.7 and 9.1 billion tonnes – up to fifty times the Netherlands’ annual domestic emissions. Worse, Dutch investors are still increasing their positions in oil and gas extraction abroad. Of course this is not solely a Dutch problem. As revealed in a new report published today by the Trade Justice Movement and Transport and Environment, investors in seven wealthy countries including the UK, Norway and Canada, were sat on investments in oil and gas overseas in 2014 worth an eye-watering $1 trillion. This is 250 times greater than the $4 billion the same seven countries allocated in bilateral aid in 2014 to tackle climate change internationally.

BREAKING: U.S. Now the Only Country Not in Paris Climate Agreement After Syria Signs On - When President Donald Trump decided to withdraw from the Paris climate agreement in June, the U.S. joined Syria and Nicaragua as the only other countries to not agree to the global action plan. The reasons for the other two holdout countries were fair. Nicaragua's leaders felt the accord was not strong enough to fight climate change . Syria has been embroiled in a full-scale civil war for six years. But Tuesday, during the COP 23 climate talks in Bonn, Germany, the Syrian government also decided to sign the Paris climate agreement. Nicaragua officially joined the accord late last month. A Syrian delegate at the Bonn climate talks did not offer an explanation for the government's decision to ratify the pact, the New York Times reported. Syria, which produces only a small percentage of global emissions, has not yet submitted it targets for cutting greenhouse gases. The U.S., under President Trump, is now completely alone in this global consensus to limit temperature rise to well below 2°C to avoid dangerous climate change. Under the terms of the Paris agreement, the earliest the U.S. can officially exit the pact is the day after the 2020 election. "The bottom line is that the Paris accord is very unfair at the highest level to the United States," Trump said about the Paris withdrawal. The United States remains firm in its position, according to White House spokeswoman Kelly Love, who pointed reporters to a prior statement the administration issued after Nicaragua joined the pact, the Times reported.  "As the president previously stated, the United States is withdrawing unless we can re-enter on terms the are more favorable for our country," the statement said.   "As if it wasn't already crystal clear, every single other country in the world is moving forward together to tackle the climate crisis, while Donald Trump has isolated the United States on the world stage in an embarrassing and dangerous position," Sierra Club executive director Michael Brune said in response to Syria's move.

Fiji leads UN climate talks that warming kept it from hosting - Although the climate talks are taking place in Germany’s capital, Fiji’s government is presiding over them, and its prime minister, Frank Bainimarama, is leading the agenda. Since Fiji is still recovering from Tropical Cyclone Winston, which devastated the country last year, Germany stepped in to provide facilities and help foot the huge costs that come with holding the conference. (France spent $197 million to host the climate talks in 2015.)The unusual arrangement underscores the uneven power dynamic Fiji and other small island nations face: The countries that are already most affected by climate change, the ones that most need international action, are unable to actually host the forum — and truly illustrate the scope of the problem to the people responsible for acting on it.“All over the world, vast numbers of people are suffering,” Bainimarama said in his opening speech. “Our job as leaders is to respond to that suffering with all means available to us.”Tropical Cyclone Winston made landfall in Fiji as a Category 5 storm in February of last year. It killed 44 people and plundered more than 30,000 homes. Damage and loss from Winston amounted to 20 percent of the country’s GDP — more than $950 million dollars. There’s a lot on the line for Bainimarama, whose country was recently ranked as having the 15th highest disaster risk, according to the World Risk Report. In addition to forecasts showing an increased frequency of severe storms — an issue also threatening islands, like Puerto Rico and Dominica in the Caribbean — Fiji has seen a rate of sea level increase nearly twice as high as the global average. Rising ocean water infiltrates fresh water supplies and damages farmland. A World Bank report forecasted that these factors will likely cause more than $50 million dollars — roughly four percent of GDP — of damages annually on Fiji’s main island alone. Residents of 64 Fijian villages are already leaving their homes because of encroaching tides, while 830 more settlements face relocation.

African campaigners call for US to be kicked out of climate talks: African campaigners called for US negotiators to be barred from climate talks under way in Bonn, Germany, at a press conference on Tuesday. Members of the Pan African Climate Justice Alliance (PACJA) said they were planning to circulate a petition to show support for kicking the US delegation out. In light of president Donald Trump’s avowed intention to withdraw from the Paris climate agreement, the activists argued the country had no right to be involved in negotiations on how to implement the deal. “Trump’s agenda is to dismantle the Paris Agreement,” Mithika Mwenda, secretary general of PACJA, told reporters. He wanted to send the message: “You’re either with the people or with Trump.”The two-week UN climate summit is the first since Trump announced in June his plan to quit the Paris deal. Under the Paris agreement, 195 countries agreed to limit global warming to 2C and mobilise funds from developed to developing countries for tackling climate change. Trump has reversed the climate policies of his predecessor Barack Obama and cancelled climate finance programmes, including an outstanding $2 billion pledged to the Green Climate Fund. The US cannot officially pull out of the Paris deal until 2020 and Trump has left the door open for “re-engaging” on terms he considers more favourable to the US. In the meantime, the US may continue to take part in discussions. It has 48 delegates at the Bonn meeting. 

Rich countries not talking climate finance seriously, say African officials: The wealthiest countries on earth are failing to take seriously the need to speed up the money they have promised to help the poor cope with climate change, the head of the Africa group of climate negotiators said on Thursday. In 2009, developed countries have promised to deliver $100bn a year by 2020 in public and private fund to help struggling countries cope with climate change. Estimates of current flows range between $17bn and $61bn. Under the Paris Agreement, signed in 2015, rich nations also agreed to create a higher target by 2025. But at UN climate talks in Bonn, Seyni Nafo, who leads the group of African states, said the rich were refusing to advance even on procedural discussions around finance. “Uncertainty on climate finance. That is at the the highest level right now,” he told Climate Home News. The heads of the Africa group and least developed countries (LDCs) group have made climate finance their top priority for the meeting. But progress in the talks and outside is flagging. “Where are we seriously on the $100bn? What’s happening on the ground? Are we seeing any significant change on the ground? The promise of this post-2025 goal. When are we starting that discussion?” said Nafo. “We haven’t reached yet a confidence crisis, but [African heads of state] are becoming a bit anxious now.”

Poor countries spending climate cash on rich world consultants  - Even as they plan to demand more cash at UN talks in Bonn this week, poor countries lack the ability to initiate and implement climate projects, according to a senior African diplomat. That means money is being sent back to rich countries through consultancy fees.Slightly more than $10 billion has been pledged to the Green Climate Fund (GCF), an institution that distributes funds from rich countries to developing countries to help them cope with climate change. But the fund has struggled to get project proposals from developing countries and has rejected others that have reached its board.In an interview with Climate Home News, former chair of the African climate negotiation group Emmanuel Dlamini blamed this on developing countries’ limited ability to prepare applications and carry out the work once they have received the funding.“Developing countries still hire consultants from developed countries, who often don’t even understand the context, to write proposals and implement adaptation projects,” Dlamini said, ahead of climate talks to be held in Bonn, Germany, starting Monday. Dlamini made an example of a $3 million GCF-funded project aimed at making drought-threatened rural industries in Swaziland more resilient to climate change, which he said had been delayed by lack of skilled people in the country. “We need to hire a consultant to help in the implementation of the project and the process is delaying the project,” he said, adding: “A lot of developing countries have a similar experience.”

There’s a huge gap between the Paris climate change goals and reality - David Roberts - In 2015 in Paris, the countries of the world agreed to hold the rise in global average temperatures to “well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”How’s that going?The unavoidably grim answer: not well, and not just because President Donald Trump has promised to pull the United States out of the accord.  Every year, the United Nations Environment Program (UNEP) releases an “Emissions Gap” report, on the remaining disparity between the world’s stated ambitions on climate and the actions it is currently taking. The 2017 edition of the report is out a week before the next round of international climate talks in Bonn, Germany. And it reports that the gap remains ... substantial. Researchers calculate that for a reasonable chance of hitting our goal, global greenhouse gas emissions must peak by 2020 and the gap must be closed by 2030 — in other words, if we are not on the right trajectory by 2030, all hope of 1.5 degrees is lost and 2 degrees is almost certainly out of reach as well. Let’s run through a few of the top-line conclusions of the report, which was assembled by an international team of scientists based on the most recent published science.

New EPA Lawsuit Policy Advances Trump’s Deregulatory Agenda - Jerri-lynn Scofield - The Wall Street Journal featured a piece last week, The Trump Deregulatory Juggernaut Is Rolling, reporting some numbers that support a trend we’ve identified: the Trump administration’s success in advancing a deregulatory agenda, via agency actions, despite its failure to pass major legislation. From the WSJ: While the Republican machine that emerged from the 2016 election may be sputtering on other fronts, it is proving to be a juggernaut on deregulation. And as a priority for the business community, deregulation ranks right up there with tax cuts and tax reform. Deregulation has occurred in areas including financial and environmental regulation, in the form of rolling back regulations, and setting more lax enforcement policies, as I discussed at greater length in discussed further in Financial Regulatory Rollback Proceeds).  The Journal relies on numbers produced by the U.S. Chamber of Commerce.From the WSJ: The business group has been keeping a tally of deregulatory actions this year, and its scorecard lists 29 executive actions—executive orders by Mr. Trump or directives from his White House—to reduce regulatory requirements. In response, executive-branch agencies have issued 100 additional directives that either knock down regulations or begin a process to eliminate or shrink them. Far more important to the deregulatory agenda is the wide use of  the Congressional Review Act (CRA), which allows Congress to use expedited procedures to overturn regulations within 60 session days of their enactment.  Regulation via litigation has managed to survive– barely– these legal reforms, and the related and necessary packing of the courts with business-friendly jurists (especially at the level of the United States Supreme Court). As to the EPA, this will be the case no longer.  .“The days of regulation through litigation are over,” said EPA Administrator Scott Pruitt. “We will no longer go behind closed doors and use consent decrees and settlement agreements to resolve lawsuits filed against the Agency by special interest groups where doing so would circumvent the regulatory process set forth by Congress. Additionally, gone are the days of routinely paying tens of thousands of dollars in attorney’s fees to these groups with which we swiftly settle.”

Final defense policy bill mandates Pentagon climate change study | TheHill: A compromise defense policy bill released by congressional negotiators on Thursday calls for the Defense Department to conduct a study into the impacts of climate change on American military operations. “Climate change is a direct threat to the national security of the United States and is impacting stability in areas of the world both where the United States Armed Forces are operating today, and where strategic implications for future conflict exist,” the final version of the National Defense Authorization Act (NDAA) says. The bill requires the secretary of Defense to submit to Congress “a report on the vulnerability to military installations and combatant commander requirements resulting from climate change over the next 20 years.”ADVERTISEMENTThe legislation cites statements about the impact of climate change from Defense Secretary James Mattis, the chairman of the Joint Chiefs of Staff and former officials. It also includes a list of climate-related issues that the Defense Department has already been forced to tackle, including a $1 billion radar installation in the Marshall Islands projected to be flooded within two decades and threatened facilities in the Arctic, which is feeling the impacts of climate change much faster than the rest of the globe. 

Democrats Assail Environmental Nominees Over Climate Change  — A Senate hearing on nominees for two top environmental posts on Wednesday quickly turned testy over the Trump administration’s ambivalence on climate change science.Andrew R. Wheeler, a lobbyist for Murray Energy, which is owned by Robert E. Murray, an Appalachian coal mining magnate and prominent backer of President Trump, has been nominated to be the deputy administrator of the Environmental Protection Agency.Kathleen Hartnett White, a former Texas environmental regulator who has described belief in global warming as “a kind of paganism,” has been tapped to lead the White House Council on Environmental Quality.Democratic members of the Environment and Public Works Committee focused much of their hostility on Mrs. White, a fellow at the Texas Public Policy Foundation and the former chairwoman of the Texas Commission on Environmental Quality. Democrats assailed her past writings on climate change, including articles in which she called carbon dioxide “the gas of life” and described renewable energy as parasitic. “Your positions are so far out of the mainstream, they are not just outliers, they are outrageous,” said Senator Edward J. Markey, Democrat of Massachusetts. “You have a fringe voice that denies science, economics and reality.” Asked if she stood by her previous statements, Mrs. White replied, “It’s likely that CO2 has some influence on the climate,” but added that carbon dioxide did not have the characteristics of a pollutant that directly affects human health. “It’s a plant nutrient,” she said. The Trump administration last week issued a comprehensive report on climate science that said that the planet was definitely growing warmer and that human activities were the predominant cause. Despite those unambiguous findings, administration officials and nominees continue to question the validity of climate change science.

5 Times Trump's Pick For Top Environmental Adviser Struggled To Defend Her Climate Denial -- Kathleen Hartnett White stammered, sighed and sat silent for seconds on end on Wednesday throughout her Senate hearing to be confirmed as the new head of the White House’s Council on Environmental Quality.   It was an unusually tongue-tied performance for someone who has been a bombastic critic of climate and environmental science.The former Texas environmental state regulator turned climate pundit has argued that “carbon dioxide has none of the attributes of a pollutant,” dismissed it as a “harmless trace gas” and “plant food,” and compared Pope Francis’ public advocacy for action to curb global warming to the Catholic Church’s arrest of Galileo for heresy in 1633. She equated the belief in the overwhelming evidence that man-made greenhouse gas emissions are warming the planet to “paganism,” and accused United Nations leaders calling for climate action of advocating totalitarian communism. Hartnett White deflected those quotes as taken out of context when raised repeatedly by Democratic senators on Wednesday. In a nearly three-hour long hearing on Wednesday, senators probed Hartnett White and Andrew Wheeler, the former coal lobbyist nominated to be the deputy administrator at the Environmental Protection Agency. Both nominees reject the science behind global warming, and have close ties to industries that stand to lose the most money from regulations to curb climate change. Wheeler, a former legislative aide to Sen. Jim Inhofe (R-Okla.), couched many of his objections to climate science in polished, ambiguous legalese, which has earned him a reputation among environmentalists as a competent operator capable of dismantling Obama-era fossil fuel regulations.  But Hartnett White ― who Sen. Ed Markey (D-Mass.) described as “a fringe voice that rejects science, economics, and reality” ― withered under intense questioning from Democratic senators. She struggled on five separate occasions to defend her rejection of mainstream climate science.

GOP Senator 'Worries About Extremist Views' of Kathleen Hartnett White at Confirmation Hearing - Kathleen Hartnett White, the Trump administration’s nominee to the White House Council on Environmental Quality, backtracked on her controversial position on biofuels when pressed by Republicans at a Senate confirmation hearing Wednesday. White, who has previously stated that ethanol policies are causing “massive distortions in the economy” and have “led to food riots in several countries,” said Wednesday she “erred” by not basing her previous position on current data and now “salutes the [ethanol] industry.” White faces a challenging confirmation. Even one Republican defection could cost her the appointment and her position on the Renewable Fuel Standard could be key in winning their support. The standards, which requires that ethanol and other biofuels be blended into fuel supplies, have widespread bipartisan support from legislators from the Midwest, where growing corn, soybeans and other plants used to make biofuels is big business. Ironically, White’s opposition to the ethanol standards may be the sole point of agreement she has with environmentalists, who criticize the policy for producing monocrops, worsening soil erosion and having negligible benefits for climate change.  Republican Senators Deb Fischer, of Nebraska, and Joni Ernst, of Iowa, repeatedly questioned White over her position on ethanol, asking whether she would commit to supporting the Renewable Fuel Standard, always rely on “accurate information” when advising the president on the issue and commit to not ending the Renewable Fuel Standard before 2022.    “I worry about your lack of understanding of the law, which is to provide access for renewable fuels and to promote agriculture and … rural America,” Fischer said. “I worry about your extremist views.”

Senate confirms top air regulator at EPA | TheHill: The Senate on Thursday confirmed William Wehrum to head the Environmental Protection Agency’s (EPA) Office of Air and Radiation, making him one of the most powerful officials in the agency. Wehrum became only the second of President Trump’s EPA nominees to secure Senate confirmation. Senators approved his nomination on a 49-47 vote. Democrats and environmentalists lined up against Wehrum’s nomination, noting both his legal career and a controversial tenure at the EPA under President George W. Bush. Wehrum was the acting director of the Air and Radiation Office during the Bush administration. But Senate Democrats blocked his nomination to hold the position full-time, questioning his ability to write strong environmental rules. During his confirmation process earlier this year, Democrats noted the 27 times federal courts had overturned regulations Wehrum worked on while at the agency. “Mr. Wehrum is essentially applying for the job he already had at EPA, and you would think that would be easy, but Mr. Wehrum's resume shows that a great deal of the work he did in his last job as Acting Assistant Administrator for Air and Radiation was not up to par,” Sen. Tom Carper (D-Del.) said. “In this job, subpar work impacts millions of Americans, especially children and the most vulnerable among us.” Wehrum’s post-government career has also kicked up opposition. As a lawyer, he has worked for firms that represent fossil fuel groups he will soon be regulating, including the American Petroleum Institute, American Fuel & Petrochemical Manufacturers, the American Chemistry Council and the National Association of Manufacturers. 

We have every reason to fear Trump’s pick to head NASA - Unlike past Nasa administrators, Trump nominee Jim Bridenstine doesn’t have a scientific background. He’s a Republican Congressman from Oklahoma and former Navy pilot. He also has a history of denying basic climate science. That’s concerning because Nasa does some of the world’s best climate science research, and Bridenstine previously introduced legislation that would eliminate Earth science from Nasa’s mission statement.  At his Senate hearing last week, Bridenstine tried to remake his image. He said that his previous science-denying, politically polarizing comments came with the job of being a Republican congressman, and that as Nasa administrator he would be apolitical. A kinder, gentler Bridenstine. But while he softened his climate science denial, his proclaimed new views remain in line with the rest of the harshly anti-science Trump administration. That’s very troubling.  The standard Trump administration position on climate change, held by administration officials like EPA Administrator Scott Priutt and Energy Secretary Rick Perry, is that humans are contributing to global warming, but we don’t know how much. Bridenstine repeated that position in a tense exchange with Senator Brian Schatz (D-HI).  In response to Sen. Schatz’s question about the expert consensus that humans are the primary cause of global warming, Bridenstine said: It’s going to depend on a lot of factors and we’re still learning more about that every day. In some years you could say absolutely, in other years, during sun cycles and other things, there are other contributing factors that would have maybe more of an impact. Aside from being wrong about the sun’s influence on recent climate change (which if anything is in the direction of cooling), Bridenstine also displayed a lack of understanding of what climate change is. Climate changes are defined on timescales of several decades, not year-to-year variations.

 Air Force dismantled a $518 million satellite crucial to monitoring global warming -  For 18 years, a fully-built, ready-to-launch weather satellite sat inside a Lockheed Martin facility near Moffett Field in Sunnyvale, California. Scientists were waiting for the spacecraft to be called into active duty since it was completed during the Clinton administration.   A different order from Washington arrived instead. Because of resistance in Congress — particularly from Rep. Michael Rogers of Alabama, who chairs a key House Defense subcommittee — Capitol Hill told the Air Force to take the satellite apart.  Congress simply refused to fund the Air Force's request for $120 million to launch the spacecraft, even though the service said it was needed for weather forecasting, a crucial aspect of battlefield planning. In addition, climate scientists were counting on that satellite to help them monitor Arctic ice melt.  Now, instead of helping scientists and members of the military, the satellite will go on display — stripped of its expensive instruments — next month in a museum at Los Angeles Air Force Base in El Segundo, California.The decision to dismantle the satellite shocked scientists, who were hoping to use a microwave sensor aboard it to help them avoid a dangerous gap in Arctic sea ice data that may open up between now and 2023. That is the estimated year when the next Air Force weather satellite launch is planned. The Arctic is warming at twice the rate of the rest of the planet, and there is also an increasing demand for weather forecasting in this region as shipping and natural resources activities increase, and search and rescue demands grow.  Charts of Arctic sea ice extent since 1979 show a sharp downward trend, as the region warms at about twice the rate of the rest of the world.

Expert: Threat of EMP Attack Is Real and Extremely Dangerous - In a recent podcast interview with Financial Sense, Dr. Peter Vincent Pry, executive director of the Congressional EMP Commission, discusses one well-known but widely ignored threat: an electromagnetic pulse, or EMP. To understand the threat an EMP represents, we have to understand just how reliant we are on a constant supply of electricity.  “The very technological revolution that is feeding our prosperity is also making us more vulnerable,” Pry said. “As electronics get smaller and faster, and operate on lower energy levels, they also become proportionally more vulnerable to EMPs.  ”Basically, an EMP is caused by a moving magnetic field. When the field is in motion, it generates a current in a wire, which can cause problems for the functioning of an electronic system, Pry noted.What this means is, any moving magnetic field has the potential to produce an EMP effect, and we could face both man-made and natural forms that pose different risks. A natural EMP is caused when a coronal mass ejection from the Sun distorts our planet’s magnetic field. This type of EMP is inevitable, Pry noted.“The magnetosphere gets distorted a consequence, you have a natural EMP that’s called a geomagnetic storm,” he said. “And these happen all the time.”We had a significant event in 1989 during the Hydro-Quebec Storm, which caused a blackout across half of Canada for about a day. It also caused billions of dollars in losses, Pry noted, and a few lives were probably lost as a result.  But this is only a small fraction of what a significant event could bring, Pry said. What he’s concerned about is a once-in-a-century super geomagnetic storm, such as the 1859 Carrington Event, which is the most powerful geomagnetic storm on record, about 100 times more powerful than the 1989 storm.“What happens here is you get a coronal mass ejection that has so much energy in it, it’s so big and it’s moving so fast … [that] when one of those things comes slamming into the Earth, you’ve scaled things up … to a planetary level,” said Pry. When it comes to the threat of system-wide failure that an EMP could bring, Dr. Pry doesn’t mince words: he feels it represents an “existential threat″ to our society. “You’re talking about a protracted blackout from which you might never recover,”

What A U.S. Electric Grid Attack Looks Like -  If the nation lost electricity, it would cause an instant and lethal paralysis that would go beyond inconvenience of the kind parts of New England have just experienced—and which left me charging my cell phone in my car.Nonetheless, limited and scattered blackouts of the kind I have been caught in are a reminder of what alarmists (though unsettling, they’re not always wrong) have been warning. If there is no electricity, there is no light, no water, no sewage, no gas and diesel, no heating and cooling—even gas and oil systems rely on electric pumps and fans. If such a blackout were sustained, slow death through starvation, or fast death through disease and armed gangs ravaging the cities and towns for food, would be the result.A curtain-raiser is Puerto Rico. Just look to its agony: The mitigation is that there is help from the rest of the United States—imperfect and maybe inadequate, but still help.In a national blackout, Canada and Mexico might be as affected, and the catastrophe would be complete. Such a blackout—very unlikely but not inconceivable—is posited to come from a hostile power using a nuclear weapon targeting the special vulnerability that comes with electricity and computerization. The hostile power would not target cities, as in the past, but instead would detonate a nuclear bomb high in the atmosphere, creating an electromagnetic pulse (EMP) which would do the damage. It would cause destructive electric surges, fry electronics and render most things, which support daily life in 2017, inoperable. One of the people who takes the EMP threat seriously is nuclear proponent and public policy advocate Richard McPherson of Idaho. He wrote to President Trump proposing that Puerto Rico become a test bed for an EMP-hardened electrical grid. Engineers believe they know how to do this, but the cost would be prohibitive, according to experts I interviewed at the Electric Power Research Institute (EPRI) and the Edison Electric Institute (EEI), respectively the research arm of the electric industry and its trade association. Robin Manning, EPRI vice president of transmission and distribution infrastructure, says they’re studying the EMPs and a progress report is expected in a few weeks.

House approves bill to expand hydropower (AP) — The Republican-controlled House has approved a bill aimed at expanding hydroelectric power, an action supporters said would boost a clean source of renewable energy but opponents denounced as a giveaway to large power companies. The bill, sponsored by Rep. Cathy McMorris Rodgers of Washington state, would define hydropower as a renewable energy source and streamline the way projects are licensed, with primary authority granted to a single federal agency. Lawmakers approved the bill Wednesday, 257-166. Power from rivers and streams makes up nearly 70 percent of electricity generated in Washington state and accounts for more than 50 percent of power in Oregon and Idaho and 36 percent in Montana. But hydropower only accounts for 7 percent of electricity nationwide. McMorris Rodgers, the fourth-highest ranking Republican, said that figure could be doubled without constructing a single dam. While it takes an average of 18 months to license a new natural gas plant, it can take up to 10 years or longer to license a new dam or relicense an existing dam, she and other Republicans said. Only 3 percent of the nation's 80,000 dams now produce electricity. Electrifying some of the larger sites - primarily locks and dams on the Ohio, Mississippi, Alabama and Arkansas Rivers that are operated by the Army Corps of Engineers - would generate electricity for millions of homes and create thousands of jobs, an Energy Department report said. 

Puerto Rico is in blackout again after power line fixed by Whitefish fails - Millions of Puerto Ricans are again without power after a high-voltage transmission line that had been repaired by Whitefish Energy, a Montana contractor now facing an FBI investigation, failed Thursday.  The Puerto Rico Electric Power Authority reported that power generation across the island plummeted from 40 percent to 18 percent on Thursday, a major blow to the island’s recovery after Hurricane Maria struck 50 days ago. PREPA confirms power generation has plummeted to 18% after a failure of Cambalache Manatee 230KV line. Municipalities in the North have been affected. It could be tonight or tomorrow morning before power is restored.— David Begnaud (@DavidBegnaud) November 9, 2017That means that the vast majority of the island’s 3.4 million residents are again without power, extending what was already the longest power outage in US history. The blackout struck the northern part of the island, including parts of the capital, San Juan. Without electricity, many health and sanitation systems will go offline or go back to relying on diesel-powered generators. As Vox has reported, Puerto Rico’s electric grid was vulnerable and dilapidated before the storm due to PREPA’s long history of financial woes and minimal maintenance and investment. But since the storm, the rebuilding of the grid has been further compromised by questionable decisions.  The largest repair contract, valued at $300 million, was awarded to Whitefish, then a two-person company, rather than invoking mutual aid agreements with other utilities as power companies in Florida and Texas did after Hurricanes Irma and Harvey. The power line that has failed in Puerto Rico (Cambalache Mantaí 230KV line) appears to be a line where @WhitefishEnergy did work, as recently as October 25th. Municipalities in the North have been affected.

Can Puerto Rico go 100% solar?  - With seasonal variations in output of only around 30% Puerto Rico is at an ideal latitude for solar power, and despite generally low capacity factors (caused by cloudiness) it can be argued that if solar doesn’t work there it won’t work anywhere. And as the results of this post show 100% solar generation can in fact be made to work in Puerto Rico – but only by installing enormously costly amounts of battery storage. The island could be repowered with gas for a small fraction of the cost. (Inset: Average Puerto Rico annual solar radiation.) Puerto Rico is a Caribbean island with an area of 9,000 square kilometers, a population of 3.4 million and a nominal per-capita income of $29,600, about the same as Italy.  island has historically generated almost all of its electricity from fossil fuels, with 47% coming from petroleum, 34% from natural gas, 17% from coal and only 2% from renewable energy in 2016. Since Puerto Rico’s electricity infrastructure was heavily damaged by Hurricane Maria it has been proposed that the island should take the opportunity to abandon fossil fuel generation and convert entirely to solar. Leading the charge, as usual, is Tesla’s Elon Musk, who has already shipped a small number of storage batteries to Puerto Rico but doesn’t want to stop there: From the BBC Elon Musk says he can rebuild Puerto Rico’s power grid with solar: The company says it has powered small islands, such as Ta’u in American Samoa. There, it installed a solar grid which can power the entire island and store enough electricity for three days without any sun. “The Tesla team has done this for many smaller islands around the world, but there is no scalability limit, so it can be done for Puerto Rico, too,” Mr Musk tweeted. But he added that such a project would need the support of Puerto Rico – something the governor appears to be open to. Whether Tesla will succeed in powering the island of Ta’u remains to be seen, but as I outlined in Solar power on the island of Ta’u, a preliminary appraisal Tesla’s solar/battery storage combination works in theory, and as Mr. Musk notes, there is no scalability limit. Puerto Rico is also at about the same latitude at Ta’u (18N vs. 14S), so if 100% solar works on Ta’u it should work on Puerto Rico too, all other things being equal. As a practical matter it’s unlikely that Puerto Rico will now begin a crash conversion to 100% solar – once it gets its grid back up and its power plants back on line it will be business as usual, with fossil fuels contributing 96% of the energy mix and solar less than 1% – but the question of whether the island could “go solar” is of sufficient academic interest to justify a post.

Icahn Subpoenaed Over Biofuel Policy, RINS Tumble --This just might spoil what has so far been a strong year for Carl Icahn. Bloomberg is reporting that the FBI has issued subpoenas for information on Carl Icahn’s possible lobbying to change biofuel policy while serving as an informal adviser to President Donald Trump, according to regulatory filings.Icahn, who briefly served as an adviser to the president and who was once suspected of being a possible pick for Treasury,  announced in August that he was no longer serving as an adviser to the president regarding regulatory reform. In his curiously worded letter, he specified that he “never had a formal position” in the White House.The Attorney’s office for the Southern District of New York is “seeking production of information” pertaining to Icahn’s activities regarding the Renewable Fuel Standard,according to a Form 10-Q that Icahn Enterprises LP filed on Friday with the U.S. Securities and Exchange Commission.The investigators also want information on Icahn’s role as an adviser to the president, the document says.“We are cooperating with the request and are providing information in response to the subpoena,” Icahn Enterprises said in the filing. “The U.S. Attorney’s office has not made any claims or allegations against us or Mr. Icahn."Neither Icahn nor the DOJ commented for Bloomberg. The news immediately hit shares of Icahn Enterprises.  The price of Renewable Identification Numbers, or RINs, the credits used to show compliance with the biofuel mandate have been volatile in the past year, Bloomberg says. The RIN tracking ethanol consumption, for example, tumbled some 35% in one day after it was reported that Icahn struck a deal for changes with segments of the ethanol industry. That deal never resulted in policy changes.

Chinese ethanol drive to boost imports of the biofuel - and corn too -- China’s plans to bump up ethanol consumption will create scope for fresh imports of the biofuel, Archer Daniels Midland said, seeing scope for purchases of US corn too. China’s plans to roll out so-called E10 – a blend of 10% ethanol in gasoline – will see consumption of the biofuel rise from the current 2.6m tonnes a year to “about” 12m tonnes by 2020, said Juan Luciano, the ADM chairman and chief executive. However, the drive – while prompted in part by a quest to run down the country’s huge corn inventories, besides curb its reliance on fuel imports and reap environmental gains – will prompt a limited increase in corn ethanol production capacity, he said. A target of relaying on advanced or “cellulosic” ethanol, made from the likes of crop waste, by 2025 will curtail the potential for additional output of conventional, crop-based bioethanol, of which China is expected to have 4m tonnes of capacity in 2019. It appeared “difficult to see” why China’s biofuels industry - faced with the idea that “by 2025, they’re going to be 100% cellulosic” - would build the extra 8m tonnes of output of conventional bioethanol needed to meet the 12m-tonne target, Mr Luciano told investors. “Does that make sense to build 8m tonnes of ethanol capacity for a couple of years?” he asked. 

Biofuels Fight Is Brewing Between US and Brazil Over Ethanol | Rigzone: -- The U.S. biofuels industry, fresh off a win against Big Oil, is lining up for a fight with Brazil.American ethanol producers said Thursday in a letter to U.S. Trade Representative Robert Lighthizer that they’re seeking Brazil’s suspension from a trade program allowing duty-free imports into the U.S. The move follows Brazil’s decision in August to slap a 20 percent tariff on ethanol shipments from the U.S. that exceed a 600 million-liter (158 million-gallon) annual quota.The U.S. ethanol lobby was buoyed last month by President Donald Trump’s instruction to Environmental Protection Agency Administrator Scott Pruitt to support the Renewable Fuel Standard, a law mandating the use of fuels such as corn-based ethanol and soy-based biodiesel. Trump’s personal intervention came despite the objections of oil refiners.The spat with Brazil also comes as the White House pursues a protectionist agenda in dealing with international trade. On Thursday, the Commerce Department set import duties on biodiesel from Indonesia and Argentina after U.S. producers said they were harmed by unfair state subsidies given to competitors in those countries.The letter to Lighthizer was signed by three industry groups: The Renewable Fuels Association, Growth Energy and the U.S. Grains Council. Ethanol in the U.S. is made from corn, making the industry an important part of the farm lobby. Trump visited ethanol plants in Iowa during his presidential campaign and told the state’s voters he would stand by the biofuel if he was elected.

Where green incentives led to a surge in palm oil -  What started as a way to cut Japan’s dependence on imported fossil fuels has led to an expected surge in a different and equally controversial shipment: palm oil. Government incentives instituted in the wake of the Fukushima disaster in 2011 guarantee prices for power generated by renewable sources such as solar, wind and biomass. Palm oil, scorned by some environmentalists who say its production destroys rain forests and peatlands, is becoming more popular because facilities that burn it are among the cheapest to build.  Government approvals for projects that utilize “general wood” materials, a category that includes palm oil, almost quadrupled in the year through March. Proponents of burning wood and other biomass say it’s more reliable than solar or wind, because it can supply power continuously, not just when the sun is shining or the wind is blowing. Its use reduces the need for fossil fuels, they say, and carbon released while burning biomass doesn’t harm the environment because it’s offset by carbon removed from the atmosphere when the organic material was growing. “Palm oil is carbon-neutral, while with fossil fuels, the more you use the more CO2 is emitted,” said Masaru Kubo, vice president of Osaka-based Sankei Energy Co., which built a 2-megawatt plant to burn the fuel.    But the impact calculation can get complicated. In deciding the value of palm oil, the math has to account for extra emissions caused by the draining and burning of carbon-rich swamps known as peatlands and tropical forests that are destroyed to make way for oil palm trees, according to the Union of Concerned Scientists. Most of the trees are grown in Malaysia and Indonesia.  Taking into account those land-use changes, emissions from burning palm oil are more than twice as high as coal, according to a report by Takanobu Aikawa, a senior researcher at the Renewable Energy Institute in Tokyo. “What had been anticipated were pellets and chips and maybe palm kernel shells, and they are all solid biomass fuels,” Aikawa said. Liquid biomass such as palm oil is “hardly used in power generation worldwide, so it was totally unexpected.”

EPA seeks to repeal part of Obama emissions rule for big trucks | TheHill: The Trump administration is proposing to repeal a key piece of former President Obama’s regulation limiting greenhouse gas emissions from big trucks. The proposal unveiled Thursday by the Environmental Protection Agency (EPA) would remove so-called glider kits from a major regulation written last year that restricted emissions from heavy-duty trucks. Glider kits are incomplete truck bodies that owners — frequently small businesses or individual truck drivers — can buy and install with older engines, transmissions and axles to form complete trucks.The Trump administration argues that the Clean Air Act, which gave Obama the authority to write the emissions rule, does not allow glider kits to be regulated because they are not motor vehicles or engines. “The previous administration attempted to bend the rule of law and expand the reach of the federal government in a way that threatened to put an entire industry of specialized truck manufacturers out of business,” EPA Administrator Scott Pruitt said in a statement. “Accordingly, the agency is taking comment on an interpretation of the Clean Air Act that recognizes the unique nature of a vehicle made up of both new and used component parts. Gliders not only provide a more affordable option for smaller owners and operators, but also serve as a key economic driver to numerous rural communities,” he said. 

EU Proposes Car Emissions Cuts, Electric Vehicle Incentives - The European Union unveiled proposals Wednesday to cut car and truck emissions by 30 percent by 2030. The plans also include fines for exceeding CO2 limits and financial incentives for automakers to produce more electric vehicles. The European car makers' lobby called the 30 percent target "overly challenging," while some environmental groups criticized the proposals' lack of quotas for electric vehicles. European Commissioner for Climate Action and Energy Miguel Arias Cañete defended the absence of quotas, saying the proposals are designed to "let carmakers decide" on the best new technologies. As reported by the BBC: "The Commission said the incentives for manufacturers to produce more alternative vehicles were designed to boost the EU's competitiveness in the global car manufacturing market.'The EU automotive industry risks losing its technological leadership in particular with respect to zero- and low-emission vehicles, with the U.S., Japan, South Korea and China moving ahead very quickly in this segment,' it said.It noted that China had recently introduced mandatory zero- and low-emission vehicle quotas for manufacturers from 2019, and that some U.S. states had established a 'regulatory instrument to enhance the uptake of zero- and low-emission vehicles.'Internal Market Commissioner Elżbieta Bieńkowska said the EU's car industry was 'at a turning point.' 'To maintain its global leadership, and for the sake of our environment and public health, the car industry needs to invest in new and clean technologies,' she added."

Consumer groups: Coal, nuclear subsidies could cost billions; utilities say Midwest customers could pay twice -- The Trump administration’s plans to subsidize coal and nuclear power could cost American consumers billions of dollars, and the cost could fall disproportionately on Midwestern ratepayers. Utilities and consumer interest groups alike have warned the Federal Energy Regulatory Commission, or FERC, to reject or modify a Department of Energy rule designed to guarantee higher wholesale payments for electricity generated at plants with a 90-day supply of fuel on hand — which translates to coal and nuclear plants. U.S. Secretary of Energy Rick Perry says the measure, first proposed in September, is needed to slow the retirement of those plants, which increasingly struggle to compete as cheaper fuels have driven wholesale prices down. Perry argues that these legacy baseload plants are critical to “grid resiliency” and should be compensated for remaining in service.But the DOE study that Perry cites as the impetus for the new rule doesn’t exactly support that argument. An analysis by the Rhodium Group found that over the past five years just 0.0007 percent of the major power disruptions were caused by fuel supply. Most are the result of weather affecting power lines, not power plants. Because many details of the rule have yet to be written, the exact impact on utility bills is uncertain, but the clean energy policy group Energy Innovation estimates it could cost American consumers up to $10.6 billion a year, with most of the proceeds benefiting five companies. And the vast majority of the subsidies would go to nuclear power plants, not coal. 

Tax Breaks for Oil, Wind, Electric Cars Survive in Senate Bill - Tax breaks cherished by both the fossil fuel and renewable energy industries emerged unscathed in a tax plan unveiled in the U.S. Senate, according to details of the bill released Thursday evening by the chamber’s main tax writing committee. Republicans opted to leave tax subsidies for the energy industry almost entirely in place in their broad re-write of the tax code which the Senate Finance Committee expects to start considering amendments to on Monday. That means drillers would still be allowed to take accelerated deduction of "intangible drilling costs" for expenses such as supplies and repairs. A production tax credit for energy from wind and other renewables worth billions of dollars would also continue as is. That’s a break from a bill in the U.S. House of Representatives expected on the floor as soon as next week that would reduce the value of that credit by more than a third and also includes a provision that would make it harder for wind farms still under construction to receive the credit. The Senate bill allows the subsidy, which provides a $23 per-megawatt-hour credit, to phase down and expire in 2020, in keeping with a deal reached by Congress in 2015 that also included a lifting of the nearly 40-year-old oil export embargo.  "Wind’s okay," South Dakota Senator John Thune, the chamber’s No. 3 Republican and a Finance Committee member, said in an interview. "We think that’s kind of settled now." The Senate strategy also means that a $7,500 tax credit for electric-vehicle purchases that has benefited companies such as Tesla Inc. and General Motors Co., won’t be eliminated, and that a nuclear tax credit seen benefiting Southern Co. won’t be extended. "From an energy standpoint it’s an epic head fake," said Liam Donovan, a tax lobbyist at Bracewell LLP. "I don’t think anybody in town would have guessed the Senate mark would be silent on energy, particularly after the waves that were made in the House."

Industry groups say US coal, nuclear power don’t deserve energy incentives -- A broad coalition of industry groups from oil drillers to solar energy firms say coal and nuclear power producers don’t deserve the new market incentives that Energy Secretary Rick Perry is proposing. The industry coalition said Tuesday that groups representing the coal and nuclear industry had not made a strong enough case before the Federal Energy Regulatory Commission to deserve the incentives, and said the proposal should be swiftly rejected. “The Commission is simply not authorized to provide an entire class of generation with a new payment stream, whether temporary or permanent, based on a desire to keep all options open for the future,” the coalition said in a final round of reply comments on Perry’s proposal submitted to FERC. The reply comments marked the final step before the commission moves to make a final decision on Perry’s incentives proposal sometime next month.

EPA No. 2 nominee was present for crafting of DOE NOPR as Murray Energy lobbyist -- Ever since the Department of Energy issued its Notice of Proposed Rulemaking (NOPR) to provide cost recovery for merchant coal and nuclear plants, power sector insiders have speculated Murray Energy was intimately involved.  Bob Murray, the company CEO, has repeatedly bragged about submitting a confidential, three-page plan to the Trump administration to save the coal industry, telling Bloomberg this month the agency is already through much of the first page and a half.During his nomination hearing, Wheeler said he had seen the plan nearly a year ago in his role as a lobbyist for the coal giant. "I saw it briefly at the beginning of the year," Wheeler said in response to a question from Sen. Sheldon Whitehouse (D-RI), "but I don’t have a copy of it." Wheeler, a former staffer for Sen. James Inhofe (R-OK), was a registered lobbyist until August, listing Murray Energy as a client. Pressed by Whitehouse, Wheeler stressed that he "did not work on" the memo and said he could not remember even basic details about it.  "I don’t even know how many pages it was," he said. "I did not have it my possession. I looked at it, handed it back to [CEO Murray]." Later in the hearing, however, Wheeler revealed that he was also present for meetings that aimed to translate the contents of the Murray plan into the DOE's NOPR. It was Whitehouse who pushed the issue again, asking if Murray or its CEO were involved in making recommendations to DOE."Certainly Murray Energy has been supportive of that effort and I did attend a meeting with Murray Energy at the Department of Energy where this was discussed months ago," Wheeler said, "but I de-registered [as a lobbyist] in August and have not been involved over the last few months on this issue." EPA spokesperson Liz Bowman later confirmed by email that Wheeler attended two meetings, and that the Hill meeting was with members of the House Energy and Commerce Committee. At both meetings, she wrote, "protection of baseload generation" was "one of many issues discussed." DOE did not respond to a request for comment and Murray Energy declined to comment.

Coal rule might help client of ex‑lobbyist who crafted it -- The official who's leading the charge for the Trump administration's effort to subsidize coal plants is a longtime lobbyist who represented a troubled Ohio utility that stands to directly benefit from the proposed change. Sean Cunningham lobbied on behalf of FirstEnergy Corp. for nearly a decade before becoming executive director of the Department of Energy's Office of Energy Policy and Systems Analysis this year. Cunningham has played a key role in crafting the controversial proposal, according to four sources familiar with the proposal who spoke on the condition of anonymity. The former lobbyist has been deployed by DOE to defend the rule in public and private in recent weeks, seeking to smooth over tensions with industry and appearing at a recent Bipartisan Policy Center event to tout the plan. His efforts have failed to assuage some industry critics, who believe the administration's initiatives have gone beyond helping the coal industry to providing advantages to specific businesses. "This is all about serving one or two companies," said one industry official who opposes the rule. "The precedent is so bad on so many levels." The Energy Department proposal, which would pay coal and nuclear plant owners for storing 90 days of fuel on-site, has attracted powerful opponents at some of the nation's largest power generators. NRG Energy Inc. and Dynegy Inc. have come out against the plan, even though they would likely benefit from the new revenue stream it would provide (Energywire, Oct. 25). They argue the rule would distort wholesale markets and send electricity prices soaring. FirstEnergy, meanwhile, has emerged as one of the loudest public champions of the plan. In comments to the Federal Energy Regulatory Commission, the body that will ultimately decide the fate of the Energy Department plan, the company predicted dire consequences if baseload power plant retirements continue. 

Coal stockpiles at U.S. coal power plants have fallen since last year -- In August 2017, coal stockpiles at electric power plants were 144 million tons, the lowest monthly level since late 2014, according to EIA’s Electric Power Monthly. Coal stockpiles at U.S. coal-fired power plants typically follow a seasonal pattern of increasing during the spring and fall, when electricity demand is relatively low, and decreasing during the summer and winter, when electricity demand is relatively high. Coal stockpiles typically reach their lowest point in August.  Coal plants generally stockpile much more coal than they consume in a month. Coal consumed by power plants follows the seasonal pattern in overall electricity generation, meaning coal consumption is typically highest in summer and winter months and lowest in spring and fall months. Coal receipts at power plants fluctuate less than consumption, but they have averaged 53,000 tons in each month of 2017, slightly lower than the average monthly consumption rate of 56,000 tons, based on data through August.  Coal receipts are less variable than consumption because the producing mines and coal transporters (mainly railroads) generally require power plants to receive coal at a roughly constant rate during the year. In addition to surveying coal stockpile levels, EIA also calculates how long these stockpiles would last assuming no additional coal was received. This value, known as days of burn, considers each plant’s current stockpile level and its estimated consumption rate in coming months. EIA estimates the historical burn rate by averaging the most recent three years of historical data and applying that to the upcoming months.  As of August 2017, about 55% of total coal stocks were subbituminous coal, most of which is produced in Wyoming. On average, coal plants using subbituminous coal can operate about 80 days at August 2017 stockpile levels. Another 42% of coal stocks are bituminous coal from states such as West Virginia, Kentucky, and Pennsylvania. Plants using bituminous coal can operate about 90 days at August 2017 stockpile levels. Individual plants may be capable of operating on much shorter or longer timelines, depending on their own stockpile levels and consumption rates.

Pennsylvania coal production running 15 percent higher than 2016 production | TribLIVE: Pennsylvania coal production held steady last week with the year-to-date figure running about 15.1 percent higher than the 2016 figure, according to the Energy Information Administration's weekly coal production report. During the summer, figures ran about 20 percent higher than last year. Coal companies in the state's bituminous coal fields had mined about 42.2 million short tons by Nov. 4 compared to 36.7 million tons by Nov. 4, 2016. Anthracite year-to-date coal production in the state was 1.5 million tons, which is about 8.9 percent higher than 2016 production. National coal production so far this year has been 665 million tons, a 9.5 percent increase over 2016 production figures.

Total Primary Energy Demand to Increase by 35% - Total primary energy demand is set to increase by 35 percent in the period to 2040, according to the 2017 OPEC World Oil Outlook (WOO) report.The rise, which will be driven by expansion in developing countries, will see demand grow from 276 million barrels of oil equivalent per day (MMboepd) to 372 MMboepd.Within the grouping of developing countries, India and China are the two nations with the largest additional energy demand over the forecast period, both in the range of 22 to 23 MMboepd, the report stated.Long-term oil demand has been revised upward by 1.7 million barrels of oil per day (MMbopd), compared to WOO 2016, with total demand at over 111 MMbopd by 2040, and oil is expected to remain the fuel with the largest share in the energy mix throughout the period.The report also forecasts that the demand for OPEC crude is anticipated to expand to 41.4 MMbopd by 2040 and US tight oil will peak just after 2025. In the period to 2040, the required global oil sector investment is estimated at $10.5 trillion.“The past year has been an historic one for OPEC and the global oil industry,” said Mohammad Sanusi Barkindo, OPEC secretary general, in the foreword of the report.“Since publication of the World Oil Outlook 2016 in early November last year, the oil market has undergone significant change and transition. It has been a period where the rebalancing of the global oil market has gathered vital momentum,” he added.“The challenge, of course, is for demand and supply to be evenly matched to ensure we can avoid the price slumps we have experienced, which make it difficult for further investment to take place," 

Fossil fuels will be main energy source for decades – OPEC - OPEC says growth in global oil demand will steadily lessen from an annual average of 1.3 million barrels a day between 2016 and 2020, to 300,000 barrels a day by 2035-2040. But it says fossil fuels will remain the main energy source decades from now.The organization’s annual World Oil Outlook published Tuesday says renewables are projected to record the fastest growth but their share of total energy supply is still anticipated to remain below 5.5 percent by 2040. The report by the 14-nation Organization of the Petroleum Exporting Countries says that the use of fossil fuels — 81 percent of the global energy mix in 2015 — will decline by 2040. But the cartel says they will still account then for 74 percent of all energy used.

Chanting 'Keep It In the Ground,' Thousands Descend on German Coalfields - Demanding an end to coal and all forms of dirty energy extraction, more than 4,000 activists descended on the Rhineland coalfields in Germany early Sunday in a mass demonstration just a day before COP23 climate talks are set to kick off. "On the international stage, politicians and corporations present themselves as climate saviors, while a few miles away, the climate is literally being burned," Janna Aljets, a spokesperson for the environmental alliance Ende Gelände , which helped organize the action, said in a statement . "We do not want to be world champions in extracting and burning lignite anymore. We want to fulfill our historic responsibility. That's why we go to the coal mines, to protect the climate there." "Fossil fuels must stay in the ground," Aljets added. "We are here at the scene of destruction to send out a clear signal for climate justice. Together we are many, together we are determined and strong."  Remarkable images and footage of the mass action quickly spread on social media, with environmentalists hoisting signs calling for "system change, not climate change" and chanting "keep it in the ground!" The Rhineland mines have long been targeted by activists due to the millions of tons of carbon dioxide they emit per year. Activist and author Naomi Klein has called the coalfields "an existential threat to humanity." "Germany's lignite mines are among the biggest coal mines in the world," Zane Sikulu, a Climate Warrior from Tonga, said in a statement. "If we don't shut them down, we have no chance as Pacific Islanders. We're here to protect our land, our culture and our identities as Pacific people." As Common Dreams reported on Saturday, U.S. President Donald Trump is looking to use the COP23 talks as a platform to sell fossil fuels—and coal in particular—as necessary and beneficial.  Demonstrators sought to make clear that any concessions to the fossil fuel industry and to the Trump administration are unacceptable, and that ambitious solutions must be pursued in the face of a rapidly warming planet.

German Greens drop car and coal policies in coalition talks with Merkel -- Germany’s Green party has agreed to compromise on key environmental issues in talks between parties hoping to form a coalition government by the end of the year. The party’s decision to back down on its insistence over a ban on combustion engines and the closing down of coal-fired power plants was welcomed by the other negotiating parties as paving the way for official negotiations to begin. But the news was met with disgruntlement by some Green supporters, who fear the party’s leaders are in danger of watering down some of their core environmental policies in return for entering government. Angela Merkel’s conservative alliance, the pro-business liberal Free Democratic party (FDP) and the Greens are jostling for their positions in what has been dubbed the Jamaica coalition, due to the match between the parties’ colours and the yellow, green and black Jamaican flag. After the latest round of exploratory talks between the parties, the Greens said they were ready to admit that their goal of a ban on combustion engines by 2030 was unrealistic.. “It is clear to me that we will not be able to enforce a ban on internal combustion engines by 2030,” the Greens’ co-leader Cem Özdemir told Stuttgarter Zeitung. The Greens are also prepared to modify their demand that the 20 most polluting coal-fired power plants in Germany should be shut by 2020.

Ukraine Turns to American Coal to Defend Itself Against Russia --- As Ukraine’s infamously cold winter draws near, American companies are incrementally cutting into Russia’s de facto monopoly as a supplier of nuclear fuel and coal to Ukraine, thereby undermining a longtime coercive lever of Russian influence over Kyiv. “In recent years, [Kyiv] and much of Eastern Europe have been reliant on and beholden to Russia to keep the heat on. That changes now,” U.S. Secretary of Energy Rick Perry said in July, announcing an $80 million deal to ship more U.S. coal to Ukraine. “The United States can offer Ukraine an alternative,” Perry said. In the past year, the U.S. has upped its coal exports to Ukraine by more than 40 percent. “It is a significant contribution to our energy security and a vivid proof of mutually beneficial strategic cooperation between our two nations,” Ukrainian President Petro Poroshenko wrote in a Facebook post in September, following the first delivery of U.S. coal to Ukraine under the deal. “While it continues to steal Ukrainian coal from Ukrainian Donbas, Russia has lost yet another tool for its energy blackmailing,” Poroshenko said, referring to Ukraine’s embattled southeastern Donbas region, where Ukrainian forces remain in combat against a combined force of pro-Russian separatists, foreign mercenaries, and Russian regulars.

Bill Gates and China partner on fourth-generation nuclear technology -- Bill Gates’ nuclear firm TerraPower and the China National Nuclear Corporation have signed an agreement to develop a world-first nuclear reactor, using other nuclear reactors’ waste.  This joint venture aims to design and construct multiple nuclear power plants generating around 1150 megawatts over the next two decades which utilise this fourth generation nuclear technology.    It expands a joint technology agreement between the two businesses signed in 2015. Fourth generation Travelling Wave Reactors would differ from third generation, more traditional light water nuclear reactors, as they would not require enriched uranium to generate energy, and could instead use waste uranium. Travelling Wave Reactors would require less fuel per kilowatt-hour of electricity than light-water reactors, due to TWRs higher fuel burn, energy density, and thermal efficiency. It is also safer as spent fuels, such as depleted uranium, from other reactor types could be recycled without separating out plutonium, and could operate without refuelling for up to 40 years.

EIA forecasts growth in world nuclear electricity capacity, led by non-OECD countries - EIA’s International Energy Outlook 2017 (IEO2017) projects that global nuclear capacity will grow at an average annual rate of 1.6% from 2016 through 2040, led predominantly by countries outside of the Organization for Economic Cooperation and Development (OECD). EIA expects China to continue leading world nuclear growth, followed by India. This growth is expected to offset declines in nuclear capacity in the United States, Japan, and countries in Europe.  Electricity demand growth plays a central role in decisions to build new nuclear reactors and retire existing reactors. EIA expects electricity demand growth in China, India, and the Middle East to exceed growth in the United States, Europe, and Japan. EIA’s projected higher electricity demand growth for non-OECD member countries is the result of comparatively higher growth in gross domestic product and population relative to OECD member countries. China currently has 38 operating nuclear reactors with a total capacity of 33 gigawatts (GW), including 2 GW of new capacity added in 2017 with the completion of the Fuqing-4 and Yangjiang-4 reactors. An additional 19 reactors, with a total capacity of 19.9 gigawatts (GW), are currently under construction, accounting for more than a third of all nuclear projects under construction worldwide. In total, China plans to install 58 GW of new nuclear capacity, which EIA expects to be completed by 2024. By 2032, China is expected to surpass the United States as the country with the most nuclear electricity generating capacity. India has the world’s second-largest population, behind China, and the highest projected electricity demand growth. India currently has 22 nuclear reactors with a total of 5.3 GW of capacity, and 6 additional reactors with a combined capacity of 3.9 GW are currently under construction. India recently entered into an agreement with Russia to build two more reactors at India’s Kudankulam plant.  The United States currently operates the world’s largest nuclear fleet, with a total capacity of 100 GW from 99 reactors. However, U.S. nuclear capacity is expected to decrease to 88.2 GW by 2040, as several plants have announced intentions to retire before their scheduled license expirations. Two new reactors, Voglte Units 3 and 4, are currently under construction, while construction on V.C. Summer Units 2 and 3 has been suspended.

French institute suspects nuclear accident in Russia or Kazakhstan in September (Reuters) - A cloud of radioactive pollution over Europe in recent weeks indicates that an accident has happened in a nuclear facility in Russia or Kazakhstan in the last week of September, French nuclear safety institute IRSN said on Thursday. The IRSN ruled out an accident in a nuclear reactor, saying it was likely to be in a nuclear fuel treatment site or center for radioactive medicine. There has been no impact on human health or the environment in Europe, the IRSN said. IRSN, the technical arm of French nuclear regulator ASN, said in a statement it could not pinpoint the location of the release of radioactive material but that based on weather patterns, the most plausible zone lay south of the Ural mountains, between the Urals and the Volga river. This could indicate Russia or possibly Kazakhstan, an IRSN official said. “Russian authorities have said they are not aware of an accident on their territory,” IRSN director Jean-Marc Peres told Reuters. He added that the institute had not yet been in contact with Kazakh authorities. A spokeswoman for the Russian Emergencies Ministry said she could not immediately comment. It was not immediately possible to reach authorities in Kazakhstan or the Kazakh embassy in Moscow.

Don't Worry, Europe, Radioactive Cloud Likely From Russian Nuclear Plant Accident Deemed 'Harmless' - An upsurge in radioactive pollution detected over Europe in recent weeks is likely the result of an accident at a nuclear facility in Russia or Kazakhstan, France's Institute for Radiological Protection and Nuclear Safety (IRSN) said in a new report . The radioactive plume—composed of Ruthenium-106—was detected "in the atmosphere of the majority of European countries" beginning late in September, IRSN observed. While the detection of Ruthenium initially sparked concerns of food contamination, officials claimed that public health is not at risk. "The concentration levels of Ruthenium-106 in the air that have been recorded in Europe and especially in France are of no consequence for human health and for the environment," the agency concluded in a press release. IRSN also ruled out "the possibility of an accident on a nuclear power plant, which would result in the presence of other radionuclides," suggesting that the material likely originated from a radioactive medicine center or nuclear fuel treatment site.  The precise point of release is also not known. IRSN suggested that "the most plausible zone of release lies between the Volga and the Urals" and published a map detailing its findings.

Icebreaker Wind project: The future of clean energy or bird-killer? The two sides weigh in at public hearing (Cleveland Plain Dealer) -- A procession of speakers argued the pros and cons of the Icebreaker Wind project Wednesday night, touting the clean energy and job-creating benefits of North America's first freshwater offshore wind farm versus the potential lethal impact of the twirling turbines on wildlife. For more than three hours, the speakers delivered their emotional pleas to two administrative law judges at Cleveland City Hall's council chambers. The judges will present their impressions from the hearing to the full Ohio Power Siting Board at a later date.Certification by the Siting Board is required before the Lake Erie Energy Development Corp. can proceed with construction of the $126 million, six-turbine wind farm planned for a site about eight to 10 miles northwest of Cleveland.Supporters of the project comprised the clear majority of about 150 people in attendance at the hearing, including more than 60 members of the International Brotherhood of Electrical Workers, Local 38."Icebreaker can help make Northeast Ohio the epicenter of the wind industry in North America," said Dennis Meaney, the union's business manager. "We are here and we're ready to build this project."The Cleveland Foundation has been at the forefront of Icebreaker, and has invested $1.7 million in the project, said Ronn Richard, the foundation's president and CEO. He said Cleveland missed its opportunity to join the high-technology revolution, and he doesn't want to see the city fail like that again. Leading the anti-Icebreaker charge was Kimberly Kaufman, executive director of the Black Swamp Bird Observatory, which successfully blocked the construction of an on-shore wind turbine at Camp Perry near Port Clinton earlier this year. She said the group fears the potential for high mortality rates due to collisions by birds and bats into the spinning fan blades."We see no evidence to support the claim that the project poses little to no risk to birds and bats," Kaufman said in prepared remarks. "We believe the six-turbine Icebreaker project would pose a significant threat to wildlife."But in contrast to Kaufman's birding group, a representative of the National Audubon Society reserved judgment on Icebreaker.Garry George, renewable energy director for Audubon, said fossil fuels and climate change pose greater threats to birds and wildlife than wind turbines. But he contended more onsite data collection is necessary to determine the risk to birds and bats before the project moves forward.

How Fossil Fuel Allies Are Tearing Apart Ohio's Embrace of Clean Energy - On March 30, Bill Seitz, a charismatic Republican, took to the floor of the Ohio House to make a case for gutting a 2008 law designed to speed the adoption of solar and wind as significant sources of electricity in the state. The law, he warned, "is like something out of the 5-Year Plan playbook of Joseph Stalin."  Most important, Seitz insisted, the government had no business telling anyone what kind of energy to buy. By the time he was done, he had secured a veto-proof majority to undo key parts of the law.What happened to turn lawmakers so decisively against a statute they'd adopted 93-to-1 less than a decade ago? As fossil fuel interests mobilized at the national level to fight proposals to mitigate climate change that would undercut their profits, they made Ohio a priority for fighting clean energy policy at the state level. Beginning in earnest in 2011, a network of coal companies, utilities, think tanks, nonprofit foundations and political action committees coalesced to roll back Ohio's alternative energy initiatives. Industry-supported think tanks provided highly questionable research purporting to show big job losses. An industry group claiming to represent consumers—and accused of using fraudulent tactics before regulatory agencies—advised Seitz's staff on how to water down the definition of alternative energy. And industry sources donated to the campaigns of state politicians, like Seitz, who've kept the repeal-and-replace bills coming, even after Republican Gov. John Kasich vetoed a similar effort.This network includes Americans for Prosperity, a foundation funded by the energy magnates Charles and David H. Koch; the Heritage Foundation, a Washington-based advocacy group known for its criticism of climate change science; and the American Legislative Exchange Council (ALEC), another conservative nonprofit in Washington with Koch ties that frequently spoon-feeds draft legislation to state politicians. Seitz is on ALEC's national board of directors, but he bristles at the suggestion that he relies on the council for guidance. "ALEC doesn't drive me," he told InsideClimate News. "If anything I drive ALEC." Either way, in 2012, ALEC adopted an "Electricity Freedom Act" that reads like a declaration of war against the kind of energy rules on the books in Ohio and calls for the effort to reject them that Seitz leads.

Ohio Sues Pipeline Companies Over Pollution, Residential Construction - After months of conflict, the state of Ohio officially filed suit against Energy Transfer Partners Friday for pollution caused by its Rover Pipeline .  Rover has racked more "noncompliance incidents" than any other interstate gas pipeline and leaked more than two million gallons of drilling mud into protected Ohio wetlands this spring, leading the Federal Energy Regulatory Commission to order a temporary halt to construction.  The Ohio EPA claims that Energy Transfer Partners—which also owns the Dakota Access Pipeline —has refused to pay multiple fines from construction of the 713-mile pipeline and owes the state $2.3 million. Elsewhere in Ohio, the AP reported that legal resistance to an Enbridge/DTE Energy natural gas pipeline is growing, led by the city of Green's mayor Gerard Neugebauer.  "I'm not opposing oil and gas," Neugebauer told the AP. "What I'm saying is that you should not go through populated areas when you put in a pipeline."  "It takes just one judge to say you can't build this here because this is wrong," Neugebauer added. "I hold out hope that this will come."

Ohio sues gas pipeline developer over pollution violations (AP) — Ohio is suing the company building a $4.2 billion natural gas pipeline from West Virginia to Michigan over what it says are numerous water pollution violations during construction. The lawsuit filed Friday says work on the Rover Pipeline flooded a protected wetland with drilling mud and has damaged the environment in more than 10 of the 18 Ohio counties where the pipeline is being built. It also said that Rover Pipeline LLC had violated state laws, rules and permits designed to protect water quality. The twin pipelines are being built across Ohio to carry natural gas from Appalachian shale fields to Canada and states in the Midwest and the South. Much of the 700-mile (1,126-kilometer) pipeline is being built across Ohio and will extend into Michigan, Pennsylvania and West Virginia. Dallas-based Energy Transfer Partners, which also was behind the Dakota Access oil pipeline, is the developer backing the Rover project. The company said in a statement it was disappointed the state decided to sue and that it tried work with the Ohio Environmental Protection Agency "for the past six months to resolve this matter in a way that is satisfactory to all parties involved." The head of Ohio's EPA, though, has said several times that the company has been difficult to deal with and unwilling to negotiate a settlement.

Ohio Sues Rover Pipeline To Collect $2.3 Million for Environmental Damage | WKSU - Ohio Attorney General Mike DeWine is suing the Rover pipeline, accusing it of  “a series of calculated business decisions or complete indifference” that led to millions of gallons of drilling fluids and other pollution being dumped into Ohio waterways and wetlands.  The lawsuit repeats allegations the Ohio EPA has made for months and that the state says Rover has ignored. It says the company has dumped sediment-laden storm water and other wastes into streams, lakes and rivers dozens of times since it started laying the 713-mile pipeline early this year.The biggest spill began on April 13, when Rover is accused of discharging several million gallons of drilling fluids into wetlands in southwestern Stark County.The suit demands Rover pay $2.3 million in fines but does not name Rover’s investors:  Energy Transfer Partners and Blackstone Energy Partners. Last week, former Congresswoman Betty Sutton questioned why DeWine had not yet sued over the uncollected fines. She also noted his past investments in Rover. His spokesman told the Columbus Dispatch that DeWine had divested himself in May, before the first referral was made to the EPA.  Both Sutton and DeWine are running for governor.

Shell starts main construction on Pennsylvania petchem complex - Oil & Gas Journal The main construction phase has begun on Shell Chemical Appalachia LLC’s petrochemical complex in Potter Township, Pa.  The start of work the completion of the site preparation and detailed design and engineering work. The final investment decision was taken in June 2016, with commercial production expected to begin early in the next decade (OGJ Online, Apr. 7, 2017). The early works program included building bridges, relocating a state highway, improving existing interchanges, repositioning a rail line, and preparing foundations for the complex.Shell will now progress to the construction of four processing units: an ethane cracker and three polyethylene units. The ethane cracker will be the largest part of the facility with more than 200 major components and 95 miles of pipe. Shell also will build a 900-ft cooling tower, rail and truck loading facilities, a water treatment plant, an office building, and a laboratory.The site will include a 250-Mw natural gas-fired power plant. About a third of the electricity produced will help supply the local electricity grid.The petrochemicals complex will use ethane from shale-gas producers in the Marcellus and Utica basins to produce 1.6 million tonnes/year of polyethylene.As many as 6,000 construction w orkers will be involved in building the facility. Shell expects to create around 600 permanent employee positions when the complex is completed.

Mariner East II NGL pipeline project completion pushed to 2018 -- Energy Transfer Partners may bring on a joint-venture partner for its Mariner East II NGL pipeline project, which has now officially been delayed until next year due to construction and regulatory hurdles, executives said Wednesday. ETP is sticking to its current timeline for completing its Rover gas pipeline.   The comments during a conference call to discuss the company's third-quarter financial results highlight the challenges ETP and some of its peers have faced finishing major infrastructure designed to boost takeaway capacity from production zones in the Northeast, alleviate downstream constraints and serve increasing demand in other parts of the US and for exports.  ME II, in particular, is expected to be an important conduit for growing supplies of NGLs from the Marcellus and Utica shale plays, adding 275,000 b/d of capacity to move propane and butane from plants in western Pennsylvania, Ohio and West Virginia to the Marcus Hook terminal in eastern Pennsylvania for export. Pennsylvania regulators' suspension of construction of a valve station on a portion of the line due to the release of drilling mud and sediment into streams there has presented a setback for the project.  "We will do everything we can to bring it online sometime in the second quarter," Marshall McCrea, ETP's chief operating officer, said.

Anti-pipeline activists gain ground in local elections - Opponents of Sunoco Pipeline’s Mariner East project won seats on the governing boards of two Chester County townships  Tuesday in elections that had become referendums on the controversial pipeline.  Four Democrats, supported by the political arm of a national environmental group, won races for township supervisor in Uwchlan and West Goshen, which are bisected by the Mariner East system that conveys natural-gas liquids to Sunoco’s terminal in Marcus Hook. The candidates — Mayme Baumann and Bill Miller in Uwchlan, and Mary LaSota and Robin Stuntebeck in West Goshen — vowed to use local zoning regulations to prevent construction of the pipeline they say is too close to occupied structures such as schools and homes.  “I think the people spoke loud and clear and want the township to protect its citizens,” said Baumann, who took 60 percent of the vote in her first run at elected office.Sunoco’s construction of the second of three adjacent Mariner East pipes has aroused opposition from residents. The project has been hampered by a series of spills and contamination of private water wells. Energy Transfer Partners LP, Sunoco’s parent company, on Wednesday announced that completion of the Mariner East 2 pipeline will be pushed back from year’s end to the second quarter of 2018 because of regulatory delays.Sunoco began shipping propane on the Mariner East system nearly three years ago in an 80-year-old repurposed pipeline. Construction began this year on the 20-inch-diameter Mariner East 2, which would quintuple the capacity of the system. Sunoco plans to build an additional 16-inch-diameter pipeline next year. The $2.5 billion project, including upgrades to the Marcus Hook terminal, is aimed at creating an eastern outlet for the production of valuable gas liquids such as propane and ethane from the Marcellus and Utica shale formations. Much of the material will be exported to petrochemical plants in Europe. The insurgent candidates joined a Democratic uprising across Chester County to overcome a Republican voter-registration advantage in the townships.

Atlantic Sunrise pipeline build resumes after court lifts work-stoppage order - Heavy earth-moving equipment lumbered into action Thursday morning along the Atlantic Sunrise natural gas pipeline route in West Hempfield Township following the lifting of a work stoppage order Wednesday evening by a federal appeals court. The lifting of the stay marked the latest turn of events in a week of rapid-fire legal action over the controversial project, whose route includes 37 miles in western and southern Lancaster County. On Monday, the U.S. Court of Appeals in Washington, D.C., had granted pipeline opponents’ request for an emergency stay on construction while the court considered the group’s challenge to the Federal Energy Regulatory Commission’s ruling approving the Atlantic Sunrise.Pipeline builder Williams Partners sought clarification of the order. It lambasted the activists as “opponents of American energy” and asked the court to order them to post security of $8 million a day. At first, the court said Wednesday that Williams could not proceed with further construction. It denied the security bond request.But late Wednesday, the court issued a follow-up order ending the emergency stay.The brief document said pipeline opponents “have not satisfied the stringent requirements for a stay pending court review.”In a statement, Williams said it was pleased by the court’s action.“We will promptly resume construction activities on this important pipeline project, which will leverage existing energy infrastructure to deliver economic growth and help millions of Americans gain access to affordable Pennsylvania-produced clean-burning natural gas,” Michael Dunn, Williams Partners’ chief operating officer, said in a statement.The coalition of pipeline opponents is being represented by the Sierra Club and Appalachian Mountain Advocates. The plaintiffs include the local group Lancater Against Pipelines.In a statement, Lancaster Against Pipelines called the court’s action “highly dubious” and said Williams’ actions show both the vulnerability of the Atlantic Sunrise and the company’s “unjust influence” on courts and government.“We’re not done,” spokeswoman Ann Neumann said.

China energy investment signs MOU for $83.7 billion in West Virginia projects  — China Energy Investment Corp, the world's largest power company by asset value, has signed a memorandum of understanding (MOU) to invest $83.7 billion in shale gas, power and chemical projects in West Virginia, the U.S state said on Thursday. The agreement was the biggest among a slew of deals signed during U.S. President Donald Trump's state visit to Beijing. The total value of the deals done during Trump's trip could be as much as $250 billion. The gas and power agreement marks the first overseas investment for newly founded China Energy, which formed from a merger of China Shenhua Group, the country's largest coal producer and China Guodian Corp, one of its top five utilities. Beijing is supporting and encouraging its power companies to expand globally, and the agreement underscores China Energy's ambition to diversify into natural gas and the refining sector. The touted investment would extend over a 20-year period, covering projects for power generation, chemical manufacturing and the underground storage of liquefied natural gas (LNG), West Virginia's Department of Commerce said in its announcement.The deals will likely help create jobs in West Virginia and lift its economy. With an estimated 326,00 staff, China Energy has a workforce almost four times bigger than the entire U.S. coal-fired power industry for 2016. The Chinese energy conglomerate has an installed capacity that tops 225 gigawatts, eclipsing major international rivals EDF and Enel.

Northeast gas pipeline takeaway capacity set to balloon this winter - Marcellus/Utica natural gas production volumes this past Saturday (November 4) set a record high of more than 23 Bcf/d, according to pipeline flow data. As a result, overall Northeast production flows on the same day also posted a milestone, with volumes approaching a record 25.3 Bcf/d. This is up ~2.7 Bcf/d from where they started the year. These gains have been made possible because of the numerous pipeline projects that have added takeaway capacity from the region, about 2.4 Bcf/d since last winter alone. Moreover, another ~4.3 Bcf/d in new takeaway capacity either was approved for in-service last week or is expected online before March 2018. Even at partial utilization through the winter, that’s a lot of capacity that could flood the market with new supply. Where is all that capacity headed? In today’s blog, we look at recent and upcoming capacity additions that will affect the gas market this winter season. At this time last winter, Northeast gas production had just recovered from its seasonal dip that happens in the fall “shoulder season” — the time of the year when summer cooling demand is waning and winter heating demand has yet to show up. After an initial bump in January and February 2016 to more than 20 Bcf/d, gas production flows from the region, based on pipeline flow data from our friends at Genscape, pulled back to around 19.7 Bcf/d and hung right around there for much of the year. Then, storage constraints and mild demand, along with maintenance-related pipeline outages, pushed volumes down to 19 Bcf/d in October 2016. By November, however, they had recovered to that February 2016 level just above 20 Bcf/d, and over the winter months, through March 2017, regional production grew by a little more than 500 MMcf/d to about 20.8 Bcf/d. That compares to a 2.0-Bcf/d uptick in production during the winter of 2015-16 and more than 1.0 Bcf/d the year before that in the winter of 2014-15.

Appalachia pipeline expansions impact increasingly muted -- The upstream price impact from a series of Appalachian pipeline expansion projects scheduled to enter service this winter will be more muted than previously anticipated. That appears to be the forward market's conclusion heading into the month of November. Over the last 60 days, winter-season forward prices at Appalachia's most liquid production hubs have been on the decline, falling anywhere from 28 cents to 34 cents/MMBtu, Platts M2MS data shows. On Friday weaker forwards, most notably for the January-February-March winter strip, pushed internal rates of return or IRRs in the Utica and the Marcellus to fresh lows. At an estimated 8.3%, half-cycle IRRs in the Utica are now at their lowest in 17 months. In the Marcellus, returns estimated at 10.2% in November are mired just above the 2017-annual low, according to data compiled by Platts Well Economics Analyzer. Weaker forward prices and lower internal rates of return in November come as a handful of pipeline expansion projects targeting upstream production now face delays. On Monday, Columbia Gas announced that its 1.5 Bcf/d Leach Xpress project would be delayed until early January 2018. And following a series of construction mishaps and regulatory delays, developer Energy Transfer Partners recently announced that its planned November-1 startup of Rover Pipeline Phase II would be pushed back to early 2018. Weaker prices and record-low IRRs in the Utica this month have done little to deter production there. With some 30 rigs operating there since late-August, roughly twice the number at this time last year, production has been on a sharp upward trend over the last five months. In October, production was estimated just shy of 5.4 Bcf/d, with sample estimates surpassing 5.7 Bcf/d in just the last two days, Platts Analytics data shows.

Environmentalists just gained a new enemy in the fight against natural gas pipelines –-The electric utility sector’s top lobbying group is teaming up with fossil fuel trade associations as part of an effort to intensify the industry’s campaign against citizen and environmental groups opposed to fracking and new natural gas pipelines.A senior official at the Edison Electric Institute (EEI) said at a recent conference in Pittsburgh that her trade group has grown “very aware of the ‘Keep It in the Ground’ movement” as its member companies have become more reliant on natural gas. These activists are opposed to the extraction of all fossil fuels, not just coal, said Karen Obenshain, senior director of fuels, technology, and commercial policy, according to Matt Kasper, research director at the Energy and Policy Institute, who attended the conference. (Kasper worked at the Center for American Progress from 2012-2014. ThinkProgress is an editorially independent project of CAP.)From Keystone XL to Dakota Access to ongoing efforts to curtail oil and gas drilling, anti-fossil fuel activists caught the attention of energy companies and their representatives in Washington years ago. Aside from only a small number of victories, however, the activists have largely been unable to stop pipelines or slow down fracking. And yet the gas industry isn’t taking any chances; it wants to ensure its winning percentage remains strong.EEI brings to the table a budget of $90 million and a strong lobbying network in Washington and state capitals that can be used to help squelch fossil fuel resistance. The trade group plans to join the American Petroleum Institute, the American Gas Association, and the Interstate Natural Gas Association of America to advocate for natural gas, Obenshain said at Platts’ Coal Marketing Days conference in late September, according to Kasper.EEI and the fossil fuel industry groups, Obenshain said, are in the “early stages” of putting together a campaign to counter opposition to fracking and pipelines. “We’re looking at what advocacy platforms we have out there — that the [natural gas] trades have already — to use and push back against the opposition,” she said, according to Kasper.

Why the Line 5 Oil Pipeline Threatens the Great Lakes -  An aging oil pipeline moves 23 million gallons of oil and natural gas liquids per day along the bottomlands of the Straits of Mackinac, where Lake Michigan and Lake Huron crash into each other in the heart of the Great Lakes.  This pipeline—Line 5, built in 1953—is operated by the same company responsible for one of the largest inland oil spills in North American history: Enbridge. During that pipeline rupture, previously known cracks formed into a 6 foot gash which spilled more than 840,000 gallons of oil into the Kalamazoo River in 2010.  There are numerous places along the underwater section of the pipeline where protective coating is missing, and for much of the history of the pipeline, sections of pipe were not properly supported on the Lake Michigan lakebed—where it gets pummeled by oscillating currents. In fact, those supports were not replaced until video from a National Wildlife Federation dive inspection revealed they were lacking. Recently, Enbridge itself confirmed that part of its outer protection coating was missing from sections of the pipeline, and revealed in October 2017 that it has known about missing sections of coating since 2014 but failed to report the easement violation to state officials .  An April 2017 National Wildlife Federation report revealed that the land-based sections of Line 5 have leaked at least 29 times since 1968, spilling more than 1 million gallons of oil . We cannot risk a spill in the Straits, which a 2016 University of Michigan study estimates could put up to 700 miles of shoreline at risk depending on current and weather conditions, with up to 150 miles impacted in any one spill, risking a 17,000-square mile spill zone. Additionally, the pipeline has been operating without an adequate spill response plan, as required by the Clean Water Act.

Study warns chemicals used in fracking could lead to neurological problems in nearby children - A newly released study found that multiple pollutants in the air and water near hydraulic-fracturing wells are linked to brain problems in children. More than 1,000 studies have looked at possible health hazards from fracking, but this is the first to focus on neurological health of children living near fracked wells. “Researchers focused on five types of pollution commonly found near the sites—heavy metals, particulate matter, polycyclic aromatic hydrocarbons, benzene, toluene, ethylbenzene, xylene and endocrine-disrupting compounds—and scrutinized existing health studies of the compounds’ impacts to kids’ brains,” Brian Bienkowski reports for Environmental Health News. Early exposure to those five types of pollutants is associated with a host of problems, from learning and developmental disorders to neurological birth defects. The study’s lead author, Ellen Webb of the Center for Environmental Health, told Bienkowski that the research on children’s health near oil and gas sites is “slowly emerging” but “It’s only reasonable to conclude that young children with frequent exposure to these pollutants would be at high risk for neurological diseases.” Webb recommends an increase in the required distance (at least a mile, she suggests) between fracking wells and places where children live or go frequently, such as schools, parks or hospitals. She also recommends “more research on low level, chronic exposure, mandatory testing of industrial chemicals used on site, and increased transparency of the chemicals used in drilling,” Bienkowski reports.

 Shell Enchilada Oil Platform In Gulf Of Mexico Shut After Fire | Rigzone  - Royal Dutch Shell Plc shut its Enchilada platform in the U.S. Gulf of Mexico on Wednesday after an operational incident that caused injuries to two people.The U.S. Coast Guard said that the platform, along with associated production, was stopped after a fire. It added that the fire had been reduced to a small flame from a pipeline on the platform, located about 112 nautical miles south of Vermilion Bay, Louisiana.Two people were injured and the crew of 46 were evacuated to a nearby platform, the Coast Guard said, adding that there was a report of a light sheen north of the Shell platform.Along with its Enchilada platform, Shell said in a statement that it shut its Salsa and Auger platforms and nearby fields. A 30-inch gas export pipeline was also shut.Shell said it had identified the source of the fire at Enchilada and confirmed it was contained.A spokesman could not immediately be reached for details on the capacity of the platforms.

LOOP Sour becomes heavier, more sour for October -- The US crude blend LOOP Sour was heavier and more sour in October, despite a month-on-month decrease in heavy sour imports of Iraqi and Kuwaiti crude grades. The oil terminal allocates one of its eight underground caverns to a medium sour blend comprised of US Gulf of Mexico grades Mars and Poseidon and a blend of Middle East crudes called Segregation 17, which is comprised of Arab Medium, Basrah Light and Kuwait Export Crude. The LOOP Sour blend in October had an average API gravity of 29.50 degrees and sulfur content of 2.34%. Its minimum-maximum API gravity range was 28.8-30.4 degrees, while sulfur ranged from 1.7% to 3%. API and sulfur are two of many characteristics refiners look at when deciding which crudes to run in order to maximize or minimize production of particular refined products. Other factors include acidity, metals content, presence of asphaltenes and ultimately a distillation curve. More than 1.775 million barrels were delivered ex-cavern in the month, up 525,000 barrels from September and 925,000 barrels from August. LOOP auctions storage in the cavern through monthly capacity allocation contracts, or CACs, sold during an auction. Each CAC gives the owner the right, but not the obligation, to store 1,000 barrels of LOOP Sour in the cavern during the contract month. The cavern holds roughly 7.5 million barrels. LOOP offers up 7.2 million barrels of that amount monthly. LOOP received 6.628 million barrels of crude in October, down 4.616 million barrels from September, according to data from Platts Analytics and the US Customs office.

More U.S. distillate is being exported -- EIA - U.S. distillate exports have continued to increase in 2017, both in volume and as a share of total distillate production. Domestic distillate demand has remained relatively stable, increasing slightly from January through July 2017. Distillate exports from the United States reached a record high in July 2017 of 1.7 million barrels per day (b/d). In August, exports of distillate fell to 1.4 million b/d when Hurricane Harvey resulted in port closures. Based on data through August, distillate exports have accounted for 28% of the total distillate produced in the United States in 2017. U.S. distillate exports in 2017 have been destined primarily for countries in Central and South America, Europe, and North America. The proximity of U.S. Gulf Coast refineries to Mexico and to Central and South America, combined with these regions’ high demand and recent refinery shutdowns, have led to strong U.S. distillate exports to these locations. In addition to increased export demand, the difference between distillate prices and crude oil prices encouraged relatively high refinery runs. The largest single recipient of U.S. distillate exports from January through July 2017 was Mexico (228,000 b/d), followed by Brazil (183,000 b/d) and the Netherlands (102,000 b/d). For North America, although exports to Canada decreased by 15,000 b/d compared with the same months in 2016, exports to Mexico increased by more than 76,000 b/d. January through July distillate exports to Brazil increased by 83,000 b/d from 2016 levels to 183,000 b/d in 2017. Trade press reports indicate that the decision by Brazil’s state-controlled oil company, Petroleo Brasileiro SA, to raise diesel prices in April, combined with competitive tanker rates, supported U.S. exports to Central and South America.  Despite refinery outages in Europe, average U.S. distillate exports to the region decreased in 2017 compared with 2016. January through July 2017 exports to Europe averaged 280,000 b/d, nearly 42,000 b/d lower than the average for the same period last year. According to trade press reports, Europe is receiving distillate from a more diversified group of suppliers. If the United States continues to lose market share among European countries, distillate exports to Central and South America may increase faster than otherwise expected.

U.S. Flexes Refining Muscles to Satisfy Mexico’s Fuel Thirst --- U.S. refiners are setting up for the strongest end-of-year they’ve ever had, and it’s all thanks to Mexico. Nationwide gross oil refinery inputs will rise above 17 million barrels a day before the year ends, according to Energy Aspects, even amid a busy maintenance season and interruptions at plants in the the U.S. Gulf of Mexico that were clobbered by Hurricane Harvey in the third quarter. “We’re going to hit very high runs in the next two months,” Robert Campbell, head of research at Energy Aspects, said by phone. “The balance looks quite bullish. Can the U.S. export it? Yeah. It will.”The chance to skip out on compliance with costly U.S. biofuels regulations by exporting fuel is a huge incentive for overseas sales. Under the Renewable Fuel Standard, refiners aren’t required to buy blending credits called RINs for barrels that are exported. Mexico has potential to demand 600,000 barrels a day of gasoline imports as its own refineries limp. As of last week, total U.S. gasoline stockpiles were about 5 percent lower than the same time last year, and have fallen below the five-year seasonal average. But that’s no reason for Gulf Coast refiners to hold back, according to Campbell. “The U.S. is down 20 million barrels since Hurricane Harvey,” he said, however those draws are showing up in the Midcontinent and East Coast regions. “The capacity is there to supply these markets.”  U.S. gasoline exports rose to a record 936,000 barrels a day last December as Pemex scrambled to buy fuel before its historic energy reform introduced increases in retail prices at the pump.  U.S. refiners can benefit from avoiding the obligation to blend its petroleum-based fuels with biofuels.  The credits for 2017 compliance rose more than 200 percent since the first quarter after President Donald Trump’s perceived promise of relief faded, according to Starfuels Inc. pricing data compiled by Bloomberg. “As long as the price is right, Gulf Coast refiners will favor gasoline exports to Mexico over marginal domestic sales,” . “That’s because exports don’t attract RINs and the volumes are needed to keep refinery throughput at profitable levels.”

The U.S. Export Boom Goes Beyond Crude - The U.S. export boom continues apace. And not only from crude exports, which clambered above 2 million barrels per day in recent weeks, but from the product piece of the pie too. Joining rising gasoline and distillate exports from the U.S. has been LPG. And not just propane or butane, but ethane as well - as our ClipperData illustrate below. With the start up of Enterprise' Morgan's Point terminal on the Gulf Coast last year, as well as Sunoco's Marcus Hook terminal on the East Coast, ethane exports have gradually risen from averaging just under 30,000 bpd in Q3 of last year to nearly 140,000 bpd in Q3 just passed.Ethane production in the U.S is expected to average ~1.45 million bpd this year, up from 1.25 million bpd last year. It is set to maintain its upward trajectory in the coming years, driven by higher domestic consumption (from the petrochemical industry) and increasing demand for exports.  Marcus Hook has export capacity of 35,000 bpd, while Morgan's Point has capacity of 200,000 bpd. The export trade is going so well that Enterprise is planning a second ethane export terminal on the Gulf Coast. India has been the leading destination for U.S. ethane exports this year, followed by the U.K., Norway and Sweden. Propane exports have been on a similar upward trajectory. After averaging just shy of 600,000 bpd in 2015, they rose to 770,000 bpd in 2016, and are currently at 970,000 bpd for the first ten months of the year.   East Asia is the leading destination for U.S. propane, accounting for over 40 percent of exports, with Japan, South Korea and China being the top three recipients of U.S. propane globally. Mexico is fourth. U.S. propane exports have averaged above 1 million barrels per day in five out of ten months of this year.  Gasoline and middle distillate exports join LPG in continuing to push higher. After a blip in September due to hurricane activity, exports of both are on the rise again, pushing to a new combined record. Even with the September blip, exports of the two have averaged over 2.3 million bpd this year, after 2.2 million bpd in 2016, 2.1 million bpd in 2015. As domestic demand ticks higher along with exports, and as imports into the U.S. East Coast drop, total U.S. gasoline and distillate inventories are falling - despite a record year of refinery runs so far in 2017. Gasoline inventories have fallen by 26 million barrels since the start of the year, dropping 11 percent, while distillate inventories have now dropped by 36 million barrels, down 22 percent.  These two retracements make oil's inventory drop of 5 percent drop seem less significant in comparison.

U.S. gasoline and diesel markets look tight: Kemp (Reuters) - U.S. stocks of gasoline and diesel continue to fall, despite record refinery runs, in a sign of strong demand at home and in export markets. U.S. refineries processed a seasonal record 16.3 million barrels per day (bpd) of crude in the week to Nov. 3, according to data published by the U.S. Energy Information Administration ( Refinery runs were 600,000 bpd more than in 2016 and 1.5 million bpd more than the 10-year seasonal average, as they have most weeks since April, with a brief interruption caused by Hurricane Harvey. Despite record runs, refineries are struggling to meet strong demand from gasoline and diesel in the United States and customers in Latin America. Gasoline consumption is being boosted by relatively cheap fuel, strong economic growth, job creation, rising traffic volumes and the purchase of larger vehicles. Diesel is being driven by the rise in industrial activity and freight movements, as well as increases in oil and gas drilling, which relies on off-grid diesel-electric generators. U.S. gasoline stocks fell by 3.3 million barrels compared with the prior week, while distillate stocks were down by 3.4 million barrels. Gasoline stocks have fallen by 27 million barrels since the start of the year, the biggest draw for over a decade, and are now 12 million below year-ago levels. Distillate stocks have fallen by 37 million barrels so far in 2017, compared with a 10-year average of just 4 million, and are now 24 million below the same point in 2016.  Domestic gasoline consumption has been running at record levels most weeks since April, while exports, mostly to Latin America, have remained strong, and spiked higher in recent weeks. Distillate consumption at home has been more mixed but fairly strong and exports have been running at record levels. Stocks of both fuels are now becoming uncomfortably low from an operational perspective once inventories are adjusted for rising demand. If winter temperatures are in line with the long-term average, heating oil consumption will be significantly higher than last winter, but if the winter proves colder than normal, stocks could feel tight.  With refining margins rising steadily, refiners will try to arrest and reverse the decline in fuel inventories by continuing to run at record rates through the end of the year, which should continue to tighten the crude oil market, at least until the end of 2017. 

Major Changes Afoot In Sand Use, Supply And Prices - In the past year, there have been major changes in the frac sand sector. Exploration and production companies in the Permian and other growing areas have significantly ramped up the volume of sand they use in well completions, catching high-quality sand suppliers in the Upper Midwest off-guard and spurring sharply higher frac sand prices due to the tight supply. At the same time, development of regional sand resources has taken off in the Permian — with close to 20 mines announced with upwards of 60 million tons/year of nameplate capacity possible — and, to a lesser extent, in the SCOOP/STACK, Haynesville and the Eagle Ford. That new capacity should begin easing sand-supply shortfalls next year, reducing sand delivered costs and potentially threatening the dominance of traditional Northern White sand. And more changes are ahead in 2018. Today, we begin a new blog series on fundamental shifts in the all-important frac sand market. Frac sand, a primary focus of our recent “Wipe Out!” blog series, is critically important, not only in Shale Era hydrocarbon production, but in production economics. As we said in Part 1 of that series, production in shale plays is founded on a combination of horizontal drilling and the use of proppant (primarily natural sand, but also a bit of ceramics and resin-coated sand) that, when forced out of the horizontal portion of wells at high pressure (using water and other fluids), fractures openings in the surrounding shale. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas and NGLs to flow into the well bore.

Texas oil companies hire 30,000 over the past year amid oil price recovery - Houston Chronicle: Texas oil companies have hired more than 30,000 workers over the past year, a sharp turnaround after they laid off a third of the industry's statewide workforce during the oil bust. The number of Texas oil and gas workers reached more than 222,000 in September, up 16 percent from about 192,000 in the same month last year, the lowest point since the Great Recession in 2009. At the peak of the oil boom in 2014, Texas had more 295,000 jobs, according to Karr Ingham, a Texas economist who studies the oil industry. Ingham's Texas Petro Index, a measure of activity in the business of pumping oil from the earth, rose for the 10th consecutive month in September, to 181.4 points, up 21.4 percent than September 2016. "Crude oil prices in Texas have been the essence of stability for more than a year," Ingham said in a statement. "Demand is beginning to show signs of recovery and foreign oil suppliers led by OPEC appear to be committed to maintaining announced production cuts."

Big Oil Has A Diversity Problem : NPR - The U.S. oil industry is trying to find a new generation of workers in a country that is becoming more diverse. But a history of sexism and racism is making that difficult. The oil industry has struggled to solve its diversity problem despite having some big advantages. It's a wealthy industry accustomed to taking on complicated challenges (think deep-water offshore drilling and fracking). And oil and gas companies already have decades of experience operating all over the world in various environments. Still, the diversity problem persists. In the mid-1980s the U.S. Equal Employment Opportunity Commission tried to address one large case of racism and sexism involving a union — Pipeliners Local 798 based in Tulsa, Okla. The union is a big player in the pipeline construction business. It dispatches welders and their helpers to large projects across much of the U.S.   "This was just the most blatant discrimination on a large scale that I can recall seeing since I started working," says Attorney Bob Harwin.  In his decision, Judge H. Dale Cook noted that Local 798 had about 5,200 members at the time but that there were "no black members and there were no female members until the eve of trial, May 1986, when Local 798 admitted a woman into the membership." Harwin says union members were willing to testify against their own leadership because "they wouldn't hire their mother, their sister, their wife — they wouldn't bring them onto union membership or refer them to jobs."  For 20 years, the union was forced to actively recruit and admit women and African-Americans. In 2007, the EEOC agreed to end its oversight of the union — exactly why isn't clear because the commission can't locate some of its records for the case. At around the same time, Charles Simpson joined the union and says that despite the federal oversight, he experienced racism on a regular basis."You'd walk down the pipe and see epithets 'n***** go home' scribbled on the pipe," says Simpson. He also says nooses were left for him and other black co-workers to find. Nooses at work sites have been reported elsewhere, and they show up repeatedly in court records of discrimination cases (two examples are here and here).

Thousands comment on proposed methane rule suspension -- Environmental advocates in New Mexico hand-delivered to five of the state’s Bureau of Land Management field offices this week more than 4,000 letters voicing objections to the federal government’s proposal to suspend Obama-era methane regulations for two years. Monday was the deadline for comments on the proposal, and members of dozens of state environmental groups weighed in, including the Western Environmental Law Center in Taos, the New Mexico Wildlife Federation and the Sierra Club, which submitted more than 36,000 comments nationwide. Many said the methane regulations were designed to provide crucial climate and health protections for state residents and asked that the BLM not overturn them. Proponents of the delay also submitted comments, including the New Mexico Oil and Gas Association, the American Exploration and Production Council, the Western Energy Alliance and the Independent Petroleum Association of New Mexico. The federal methane rules are among a number of environment- and climate-oriented policies targeted for repeal by the Trump administration since early 2017. Methane, an colorless, odorless gas that is the main component in natural gas, is considered the second-most concentrated greenhouse gas after carbon dioxide and a key contributor to global warming. Natural gas contains methane, ethane and other volatile organic compounds that are released during gas production, including benzene, which is linked to cancer. These compounds contribute to smog pollution and public health concerns. New Mexico’s oil and gas production also has contributed to a 2,500-square-mile collection of methane pooled above the Four Corners, detected by NASA satellites in 2014. Interior Secretary Ryan Zinke wants to revise rules finalized under the Obama administration to prevent methane released by oil and gas companies during operations. He proposed to suspend parts of the regulations this fall, which, if enacted, would allow industry to delay compliance with regulations until 2019. 

Foes of Obama-era fracking chemical reporting rules ask court to reconsider ruling - -Opponents of some Obama-era oil and gas regulations say a decision by a federal appeals court in Denver could allow those rules to go into effect temporarily, even though the Trump administration plans to revoke them. Four states, two industry groups and a Native American tribe filed documents Friday and Monday asking the 10th U.S. Circuit Court of Appeals to reconsider a decision it issued in September. That decision said it would be a waste of time to rule on whether the regulations are legal because the new administration has already begun to overturn them. But the decision cast doubt on whether the regulations are in force in the meantime. Colorado, North Dakota, Utah and Wyoming asked the court reconsider. Two industry groups — the Independent Petroleum Association of America and the Western Energy Alliance — filed another request, as did the Ute Indian Tribe of the Uintah and Ouray Reservation in Utah. The industry groups said that unless the September decision is changed, the federal government could be forced to enact the rules until they are formally revoked. Energy companies would have to spend time and money complying or risk getting sued, the groups said. 

Bakken Oil Production Rises As Oil Prices Jump -- Crude oil production in the Bakken shale in North Dakota has been experiencing some major challenges lately, but it is firmly on the growth path, said the state’s Department of Mineral Resources Director Lynn Helms in an interview for S&P Global Platts. Helms identified as the biggest challenges growing production in the Permian as well as a hypothetical ending of the OPEC production cut agreement. While the first challenge is very real, with the Permian still being the star of the shale patch, the latter challenge is more likely than not to remain hypothetical for the foreseeable future. Of course with oil, the foreseeable future is usually no longer than a couple of months, but according to Helms, E&Ps in the Bakken will continue to pump more than 1 million bpd but less than 1.1 million bpd until the end of the year and into 2018."We should see oil production in a growth mode, 10-15,000 b/d month on month is where we expect to be," Helms said, adding that the North Dakota shale industry would need WTI at US$60 a barrel to start expanding production beyond the 1.1-million-bpd mark. "That's really the magic number that really begins to push us to 1.6 or 2 mil b/d."Helms was optimistic about the medium term, expecting the Bakken to produce close to 1.2 million bpd by 2019, which implies he expects WTI prices to go beyond the US$60 “magic number”. Yet, competition from the Permian with its lower production costs in the sweetest spots is hampering this production growth in North Dakota. This month, the EIA projects oil production in the Permian will hit 2.7 million bpd.

U.S. shale producers promise both higher output and returns - (Reuters) - U.S. shale producers are telling investors impatient for better returns that they can keep boosting oil output aggressively and do so while still making money for shareholders. Investors have pushed top U.S. shale companies to focus on returns, rather than higher output, a move that threatened to slow the breakneck growth in supply sparked by the shale revolution in the world’s top oil consumer. For the Organization of the Petroleum Exporting Countries, slower shale production gains would have been welcome. The cartel this year put caps on its members’ production to end a supply glut and boost oil prices, only to find U.S. shale gains and record exports muting the impact of their curbs. But in comments during recent third-quarter earnings calls, shale executives signaled they expect to deliver both higher returns and output. At least seven of the largest U.S. shale companies, including Noble Energy and Devon Energy, forecast 10 percent or better production gains this quarter in the Permian Basin of West Texas and New Mexico, the largest U.S. oilfield. Underpinning the effort: Rising global oil demand and crude prices that are up about 30 percent since June lows. Shale producers are also proving they can drive output higher even after several last summer reported some Permian wells had begun delivering more natural gas, a sign of aging fields. Devon plans to boost oil production this quarter by 20 percent from the Permian and Oklahoma shale plays and spend less on each new well. U.S. shale output is expected to hit 6.1 million barrels of oil per day (bpd) this month, up 35 percent from a year earlier, according to the U.S. Energy Information Administration. 

Shale oil boom to peak in 2025, decline from 2030 – OPEC -- Tight oil supply from the US and elsewhere will peak in 2025 and start to decline shortly after, with OPEC crude production expected to rise sharply around the same time, the oil cartel said on Tuesday. Shale and sandstone-derived US oil has become the most significant contributor to non-OPEC crude supply growth, and the country is likely to drive additional volumes of around 4.8m bbl/day in the 2016-2022 period, according to OPEC’s World Oil Outlook report. However, OPEC predicts that “heavily front-loaded” high production rates will be followed by output starting to taper off from 2030. The oil group predicts that demand for oil from its member countries will remain relatively flat at a little over 33m bbl/day over the next eight years, but that this will ratchet up quickly from that volume to 41.4m bbl/day by 2040. This would represent an increase in total OPEC market share from 40% to 46% over the period, the cartel added. “Middle Eastern exports [will] increase significantly after 2025 as other exporting regions are either stagnating or in decline,” the group said. The US is likely to remain by far the dominant producer of tight oil, with OPEC projecting that Canada, Argentina and Russia will also become increasingly prominent through the early 2020s. 

  Pembina says Jordan Cove LNG terminal budget to be reviewed in 2018 - The new operator of the proposed Jordan Cove LNG export terminal in Oregon said Friday it has become more positive about its potential with the shorter route it offers to Asia and the interest it continues to receive from prospective buyers of its supply. But Pembina Pipeline cautioned that development and construction costs would play into its decisions about future budgeting for the project. Pembina did not immediately respond to a query for comment on whether the company, which took over the project after acquiring fellow Canadian pipeline operator Veresen last month, is fully committed to seeing Jordan Cove through to completion. "Clearly, it is a huge project and we're looking at it carefully," Pembina CEO Mick Dilger said during a conference call with analysts to discuss third-quarter financial results. "It does have a significant burn rate, and we have to carefully review the risk-to-reward profile." Dilger said that analysis would be done as part of the company's 2018 budget review. Burn rate refers to how quickly a developer spends its development and operating budget for a project, a factor that could lead to cost overruns. Jordan Cove has not yet reached a final investment for the project. Jordan Cove would provide an outlet for Rockies gas producers who have been getting squeezed from all directions as a result of growing Permian production, steadily declining Southwest demand, as well as pushback from US Northeast expansions bringing more gas into the Midwest markets. Basis at Rockies supply hubs has seen steady downward pressure this year as a result of increasing competition from other supply regions, data compiled by Platts Analytics' Bentek Energy show. Basis pricing at the Opal hub in southwest Wyoming averaged a 28 cents/MMBtu discount to Henry Hub through the first 10 months of the year, 10 cents weaker than the same time period in 2016, Platts Analytics data show.

Alaska’s plan to pay for climate change: drill for more oil - With the ground melting beneath them from global warming, Alaskan lawmakers are calling for more oil drilling to deal with the problem.The state is warming nearly twice as fast as the rest of the United States. The permafrost, a layer of frozen soil beneath 85 percent of it, is thawing, causing homes to sink and roads to buckle. Barring a significant reduction in global greenhouse gas emissions, Alaska’s infrastructure will suffer up to $5.5 billion in damages by the end of the century, one study found. The trouble is Alaska is straining even to pay for the immediate toll of climate change on the landscape. State lawmakers were teetering on the brink of a government shutdown this summer, triggered mainly by declining revenue from the oil sector, which provides the state with more than half of its budget and 90 percent of its discretionary spending. (The state has no income tax or a sales tax.)Across the political spectrum, Alaskan officials agree that climate change is real and demands urgent action. But they also believe the best way to shore up the state’s finances is more fossil fuels. In particular, as part of the push to raise $1 billion in revenue for tax reform, they are asking Congress to allow oil and gas drilling in the Arctic National Wildlife Refuge, reigniting one of the longest-running environmental fights in US history. The irony wasn’t lost on Congress members on Thursday at a hearing before the Senate Energy and Natural Resources Committee that featured 12 witnesses, 11 of them Alaskans, across three panels.“Historians will look back at hearings like this and they will ask, ‘What were they thinking about?’” said Sen. Bernie Sanders. “And it is especially surprising that in a beautiful state like Alaska, which has been hit so hard by climate change, that you are not leading the world, leading this country, in telling us the damage that has been done and the need to move away from fossil fuel.”

Alaska Sen. Murkowski Introduces Bill to Drill Arctic Wildlife Refuge - Sen. Lisa Murkowski (R-Alaska) introduced legislation Wednesday night that would open a portion of the Arctic National Wildlife Refuge ( ANWR ) to oil and gas development for the first time. The bill could advance with only 51 votes in the Senate instead of the usual 60 as it complies under Congress' budget resolution instructions for 2018. The Alaskan senator, who chairs the Senate Committee on Energy and Natural Resources, expects her legislation will bring in more than $1 billion in federal revenue over the next decade. "Our instruction is a tremendous opportunity both for our committee and our country," Murkowski said . "The legislation I released tonight will put Alaska and the entire nation on a path toward greater prosperity by creating jobs, keeping energy affordable for families and businesses, generating new wealth and strengthening our security—while reducing the federal deficit not just by $1 billion over ten years, but tens or even hundreds of billions of dollars over the decades to come." ANWR, the largest protected wilderness in the U.S., consists of more than 19 million acres of pristine landscapes and is home to 37 species of land mammals, eight marine mammals, 42 fish species and more than 200 migratory bird species.  Last month , Senate Democrats offered an amendment to the Senate's budget resolution that would block drilling in the Alaskan refuge but the measure failed 48-52 mostly along party lines. Democratic lawmakers and environmental groups criticized the GOP for sneaking the " backdoor drilling provision " through the budget process.

Murkowski bill directs at least 2 major lease sales in Arctic National Wildlife Refuge   - Senate Energy and Natural Resources Committee Chairman Lisa Murkowksi (R-Alaska) released legislation Wednesday that would open Alaska’s Arctic National Wildlife Refuge to oil and gas drilling for the first time in a generation by calling for at least two major lease sales over the next decade. The budget measure directs federal officials to auction off mineral rights in areas encompassing at least 400,000 acres each in the refuge’s coastal plain, also known as its “1002 area.” The measure requires at least a 16.67 percent royalty rate and dictates that the revenue would be evenly split between the federal government and Alaska. Surface development on the coastal plain must not span more than 2,000 acres, according to the bill.  Murkowski, who has scheduled a markup on the bill for Nov. 15, said the measure represents “a tremendous opportunity for both Alaska and our country.” The Congressional Budget Office estimated in a report published Wednesday that such sales, the first of which must take place within four years of the bill’s enactment, would raise nearly $1.1 billion over the next decade. The money would help offset tax cuts Republicans hope to enact as part of a broader tax reform bill. “Estimates of bonus bids for leases in ANWR are uncertain,” the CBO cautioned, noting that potential bidders would compare the opportunity costs of drilling there to other spots around the globe. It added that it did not anticipate the federal government would collect any royalties before 2027, given the time it takes to launch such operations. 

Alaska signs gas pipeline project deal with China (AP) — The state of Alaska will attempt to advance a multibillion dollar natural gas pipeline project with the help of interests from China.Alaska Gov. Bill Walker said the agreement signed late Wednesday is with Sinopec, China Investment Corp. and the Bank of China. Financial terms weren't disclosed.The agreement was signed in Beijing with U.S. President Donald Trump and Chinese President Xi Jinping looking on.Alaska has long dreamed of building a pipeline that would take the vast stores of natural gas on the North Slope and ship it by pipeline 800 miles to the coast, where it would be liquefied and shipped to Asia.  Alaska had previously had a similar agreement with major oil companies to advance the pipeline, but they backed off and let Alaska take the lead.

China signs on for $43bn Alaska LNG development - Three state-owned Chinese companies have signed an agreement to develop liquefied natural gas in Alaska in a move that signals the US may become a key source of energy supply for China. The deal – between China Petrochemical Corp, or Sinopec, China Investment Corporation and Bank of China, the State of Alaska and its Alaska Gasline Development Corporation – was inked while US president Donald Trump visits China president Xi Jinping in Beijing. The Alaskan government said in a brief statement the agreement will see investment of up to $43bn and reduce the trade deficit between the US and Asia by $10bn annually. It was one of a batch of corporate deals with a total face value of $250bn scheduled to be witnessed by the two presidents. The agreement comes as Mr Trump pledged on Thursday to change a US-China trade and economic relationship that he described as “far out of kilter”. Last year the US recorded a $347bn trade deficit in goods with China.

Trump oversees major natural gas deal between Alaska, China -- The state of Alaska has struck a major joint development deal with China on Wednesday to build a natural gas export terminal in the state. The agreement was signed in the presence of President Trump and Chinese President Xi Jinping during his state visit to China on Thursday. The liquefied natural gas project named Alaska LNG will include three trains, or terminals, with the annual capacity of producing 20 million tons of liquefied product for shipment abroad to Asia. The facility will also include an 800-mile-long pipeline, a gas treatment plant on the North Slope of Alaska where much of its energy production takes place. The development corporation and the state government signed the joint liquefied natural gas, or LNG, development agreement with the state-ran China Petrochemical Corporation, or Sinopec, CIC Capital Corporation, and Bank of China. Sinopec said its goal is to help create a “stable” route for purchasing LNG from Alaska.

Analysis: Alaska LNG deal falls short of Trump's Asian ambitions -- With US President Donald Trump's China trip expected to test his administration's "America First Energy Plan", the multi-billion dollar Alaska LNG deal will likely be presented to the electorate at home as a trade success. The non-binding deal does signal the growing role that US LNG plays in Asian energy security, but it is a far cry from the type of commercial agreements the US would need to reduce its trade deficit in goods with Asia and China, in particular. "This kind of commercial agreement allows Trump to portray himself as a master dealmaker, while distracting from a lack of progress on structural reforms to the bilateral trade relationship," Verisk Maplecroft Asia analyst Hugo Brennan said.  Three of China's largest energy and finance companies signed the joint development agreement Wednesday to advance the $40 billion-plus Alaska LNG export project, the parties announced in a statement Thursday.  The agreement was signed by China Petrochemical Corporation or Sinopec, CIC Capital Corporation, Bank of China, Alaska Gasline Development Corporation and the State of Alaska during Trump's China visit.  Alaska LNG is a 20 million mt/year export project comprising three liquefaction trains at Nikiski in south central Alaska, an 800-mile gas pipeline, a gas treatment plant on the North Slope; and various interconnecting facilities to link the Prudhoe Bay gas complex to the treatment plant.

Keystone XL builder optimistic on pipeline’s customer demand | TheHill: The company hoping to build the Keystone XL oil pipeline is optimistic that it has enough demand from potential customers to make it economically viable. TransCanada Corp. executives said Thursday the interest among oil companies in the Canada-to-Oklahoma line is similar to what it was in 2008, when it was first proposed. “Overall, we expect support for the project to be substantially similar to that which existed when we first applied for the Keystone pipeline permit,” TransCanada CEO Russ Girling told investors in a Thursday call. “To be clear, production of Canadian heavy oil continues to grow, and the need for new pipeline transportation capacity remains high.” TransCanada had an “open season” for Keystone XL that ended in October. During that time, it encouraged potential customers to express interest in shipping through the 830,000-barrel-per-day line. The company obtain at least the 500,000-barrel-per-day interest that it judged to be the point necessary to build. “We do have various conditions attached to the interest,” Paul Miller, president of TransCanada’s liquid pipelines business, told investors, adding that the conditions from customers are manageable, related mostly to logistics. “But we’re quite encouraged with the results that we’ve seen.” President Trump approved Keystone XL in March, after the Obama administration rejected it in 2015.The pipeline has long been a flashpoint in national political debates over energy and environmental policy, framed as a choice between increased oil use from a friendly ally and a future with significantly reduced fossil fuel use. But in TransCanada’s last investor call, in July, the company told investors that it has not made the final investment decision to build Keystone XL. Miller told investors that it will likely make that decision as early as December, following a review of customer demand and an approval decision from Nebraska regulators for the route through that state. 

Kinder Morgan Canada denied expedited appeal for oil pipeline (Reuters) - Canada’s National Energy Board (NEB) will take until at least Dec. 4 to review Kinder Morgan Canada Ltd’s appeal over its Trans Mountain oil pipeline expansion, the regulator said on Tuesday, rejecting the company’s proposed “expedited” timeline. The company, a unit of Houston-based Kinder Morgan Inc , last month asked the regulator to intervene after it said it was unable to obtain permits from the city of Burnaby, British Columbia. Burnaby has long opposed the expansion over environmental concerns, and the lack of permits from the city adds to the hurdles facing the C$7.4 billion ($5.9 billion) expansion, as North American energy projects face increasing opposition from activists. Kinder Morgan Canada declined to comment, although in previous regulatory filings it said such cases could result in delays for the expansion, which is scheduled to go online December 2019. In a statement on Tuesday, the NEB said it will hear cross-examinations on affidavits on Nov. 29 and oral summaries on Dec. 4, without saying when it will make a decision. Kinder Morgan had asked for the case to involve only written submissions to the board, and for that process to conclude by Nov. 10. The company had noted a related case was resolved in a month. Canadian oil producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, say they need additional pipeline capacity to fetch better prices. The proposed expansion of the Trans Mountain pipeline from Canada’s oil-rich Alberta province would nearly triple its capacity to 890,000 barrels per day and significantly increase crude tanker traffic off the west coast. Alberta and fellow crude-producing province Saskatchewan have since joined Kinder Morgan in its appeal, while British Columbia has joined on the side of Burnaby. 

Fracking firm to give first households £2,000 payouts - A group of residents in Lancashire will soon receive £2,070 each for living near a fracking site, in the first payments made direct to British householders by a shale gas company. Cuadrilla said that 29 households within a 1km radius of the site would get the payment as part of a £100,000 community benefit fund for the second well it is drilling at a site between Blackpool and Preston that has attracted ongoing anti-fracking protests.People in a further 259 properties who live between 1km and 1.5kms away are eligible for a £150 payment, after locals told a consultation they would like the benefit directly rather than have the money paid into a community fund. Francis Egan, Cuadrilla’s chief executive, said: “Our shale gas exploration work continues to progress in Lancashire, helping to strengthen the county’s economy with more than £4.7m invested in the county since operations began, and now nearly 300 households will directly benefit from our community payments.”The community benefit of £100,000 per well is higher than the industry’s agreed standard of £100,000 per site. But at least one resident will be refusing what he said was “shabby behaviour” by Cuadrilla.John Tootill, who owns nearby Maple Farm Nursery within 1km of the site and has supported anti-fracking campaigners, said: “It is absolutely the most appalling thing. How can you give money to compensate for affecting people’s health and spoiling their environment?“What we want is our health. It’s just blood money really, because no amount of money can compensate for somebody’s health being affected. You can’t buy health. Most certainly I wouldn’t take it.”  Keith Taylor, a Green party MEP for the south-east, said: “These proposals are immoral and tantamount to bribery. Britain and the world is on course to miss climate targets. Kickbacks won’t keep catastrophic climate change at bay.”

TTF natural gas contracts bullish on Brent crude oil, cooler temperatures - TTF natural gas contracts gapped higher on Monday's open on the back of firmer Brent crude and temperature forecasts being revised lower boosting pricing across northwest Europe. The TTF day-ahead contract was seen trading at Eur18.725/MWh Monday morning, 47.5 euro cent higher than the assessment from last Friday, with the NetConnect Germany spot up 37.5 euro cent to Eur18.65/MWh. The prompt also found strong support in early exchanges, with the TTF balance-of-month and December contracts climbing to Eur18.60/MWh and Eur18.75/MWh, respectively, up 52.5 euro cent and 50 euro cent from last Friday's assessments. "I think oil must be supporting," said one UK-based gas trader after Brent crude prices rallied late Friday. "Forecasted drop in temperatures from this weekend also supporting." CustomWeather forecasts show temperatures in Germany hovering close to seasonal averages through to Sunday, with temperatures over France and Belgium due to be below average from Tuesday through to Thursday. With Russian gas flows into Germany and Norwegian flows into Emden-Dornum both close to full capacity, there remains little swing in pipeline gas flows available to cover higher heating demand in the region. Dutch gas production fell back below the 100 million cu m/d mark on Saturday for the first time in two weeks before recovering to 103 million cu m on Sunday, according to Platts Analytics' Eclipse Energy.

Peak Oil? Majors Aren't Buying Into The Threat From Renewables  (Reuters) - Two decades ago, BP set out to transcend oil, adopting a sunburst logo to convey its plans to pour $8 billion over a decade into renewable technologies, even promising to power its gas stations with the sun.That transformation - marketed as "Beyond Petroleum" - led to manufacturing solar panels in Australia, Spain and the United States and erecting wind farms in the United States and the Netherlands.Today, BP might be more aptly branded "Back to Petroleum" after exiting or scaling back its renewable energy investments. Lower-cost Chinese components upended its solar panel business, which the firm shed in 2011. A year later, BP tried to sell its U.S. wind power business but couldn't get a buyer."We made very big bets in the past," BP Chief Executive Bob Dudley told Reuters in an interview. "A lot of those didn't work. We're not sure yet what will be commercially acceptable."The costly lesson of the biggest foray yet by an oil major into renewable energy was not lost on rival firms.Even as governments and environmentalists forecast a peak in oil demand within a generation - and China and India say they may eventually ban gasoline and diesel vehicles - leaders of the world's biggest oil firms are not buying the argument that their traditional business faces any imminent threat.A Reuters analysis of clean energy investments and forecasts by oil majors, along with exclusive interviews with top oil executives, reveal mostly token investments in alternative energy. Today, renewable power projects get about 3 percent of $100 billion in combined annual spending by the five biggest oil firms, according to energy consultancy Wood Mackenzie. BP, Chevron, Exxon Mobil, Royal Dutch Shell and Total are instead milking their drilling and processing assets to finance investor payouts now and bolster balance sheets for the future. They believe they can enter new energy sectors later by acquiring companies or technologies if and when others prove them profitable. 

Shell Gears Up For Peak Gasoline - Royal Dutch Shell is hedging its bets over the next two decades with expectations that motor fuel consumption will be diminishing and other markets rising.Since the oil price plummet it 2014, Shell has transitioned its business model over to refining oil, offering other refined oil products, and producing petrochemicals. The oil giant will produce well beyond gasoline to serve other growing economic sectors, and to offset the role EVs will play by the 2030s.Rapid growth in the global economy, especially Asia, will grow demand for other refined oil products and petrochemicals.Asia will see new roads added, with demand creating economically viable substitutes for asphalt. Shell wants to be poised and ready to provide that supply.The oil giant will also be ready to provide the polymers and chemicals that go into plastics used in vehicles and many other products, said Shell’s head of manufacturing Lori Ryerkerk, who is in charge of refining.Shell will double the size of its chemical operations by the mid-2020s with several new plants coming to Louisiana and Pennsylvania that benefit from access to cheap shale gas. Refining oil will be part of the company’s portfolio to an even larger extent than it was years ago.“Refining will continue to be part of our portfolio for decades to come,” Ryerkerk said. Shell expects that gasoline demand will likely reach its peak by the 2030s, with owners switching over to electric vehicles and traditional engines becoming even more efficient. The supermajor has become the most aggressive oil company in its forecast for gasoline demand reaching its peak by the early 2030s.

Norway's Oil Sector Faces Existential Crisis - Oil companies have recently focused on frontier exploration drilling in the Barents Sea offshore in Norway, neglecting the powerhouse of the Norwegian oil industry, the North Sea. Exploration activity in the North Sea - the most mature area of Western Europe’s biggest oil producer - is at an 11-year low this year, which is a concern for the industry’s regulator, the Norwegian Petroleum Directorate (NPD). Following a continual decline between 2001 and 2013, Norway’s crude oil production rose last year for the third year running, but according to the Norwegian Petroleum Directorate (NPD), oil production this year would be nearly half the volume from the peak in 2000-2001.Two huge fields discovered in 2010 and 2011, Johan Sverdrup in the North Sea, and Johan Castberg in the Barents Sea, are expected to start operations in 2019 and 2022, respectively, and will lift Norway’s oil production in the early 2020s compared to expected declines in 2018 and 2019.But after 2025, production and activity are expected to significantly drop off unless there are new discoveries, according to oil major Statoil.   Norway’s Ministry of Petroleum and Energy, and NPD say:“Production from new fields that come on stream will compensate for the decline in production from ageing fields. However, in the longer term, the level of production will depend on new discoveries being made, the development of discoveries, and the implementation of improved recovery projects on existing fields.” Encouraged by recently opened areas and potentially huge yet-to-be-discovered resources, oil companies launched a record exploration drilling campaign in Norway’s Barents Sea this year. But the drilling campaign was a flop, and even the most promising wildcat yielded no oil.

Exclusive: Venezuela's PDVSA misses debt payments to India's top oil producer  (Reuters) - Venezuelan state oil-firm PDVSA has not made debt payments to India’s top oil producer ONGC  for six months, and has previously used a Russian state-owned bank and another Indian energy company as intermediaries to make payments, two sources familiar with the transactions said on Wednesday.ONGC Videsh, the overseas investment arm of ONGC, confirmed that PDVSA had fallen behind on the payments, but declined to give details on the delays. “They have got certain challenges at this stage,” ONGC Videsh said in an emailed response to Reuters’ questions. “They have assured that they are working on it (payment of dues). In due course it will be settled and follow up steps will be undertaken.” “We have a good working relationship with PDVSA,” ONGC said. PDVSA declined to comment. But the two sources, who requested anonymity, said PDVSA has made no payment since April on what was a $540 million backlog of dividends owed to ONGC for an investment the Indian firm made in a an energy project in Venezuela. Venezuela’s President Nicolas Maduro said last week that the country planned to restructure some $60 billion of bonds, much of it held by PDVSA, as the country struggles to meet debt repayments. 

CNPC Plans to Cut Gas Supplies to Industrial Users-State Media (Reuters) - China National Petroleum Corp (CNPC) plans to reduce natural gas supplies to industrial users as it expects shortages this winter after millions of residential households were switched to gas for heating under a government programme to reduce pollution.CNPC, one of China's top three gas producers, said it will cut supplies to industrial clients by a range of 3 percent to 10 percent, the state-run China Youth Daily reported on Monday citing several unidentified sources. The article was also posted on CNPC's main website.The company did not respond to requests for comment.CNPC expects a 12-percent jump in gas consumption from a year ago because of the residential switch.The oil and gas producer and importer will boost purchases of spot liquefied natural gas (LNG) cargoes and further lift the capacity of LNG receiving terminals, China Youth Daily reported. The company will also try to increase imports from Central Asian countries, such as Kazakhstan.Analysts expect Kazakhstan to supply 1 billion cubic metres (bcm) of gas before the end of the year as part of a supply deal through the Central Asia-China pipeline network operated by CNPC and local partners.CNPC said it can only provide about 76.5 billion cubic metres (bcm) of gas even if it runs its gas fields and LNG terminals at full capacity and fully stocks its underground storage. This is below its expected current demand of 81.3 bcm.CNPC is the first natural gas producer to reduce supplies as China faces a potential supply crisis after the central government switched millions of residents to gas heating rather than coal this winter. Under the new rules, residential users will have priority over industrial users in cases of supply curtailments.

Oil Production Vital Statistics October 2017 - Last month I drew attention to the fact that the WTI-Brent spread had opened to $7 and that this could be a bullish signal for the oil price. A strong rally in Brent has since continued and the price now stands close to $64 / bbl while the spread remains at $6.50 (Figure 3). The main reason for this sustained recovery is that the oil market has been brought back into balance thanks to a high level of compliance in the OPEC-Russia+others production cuts and continued growth in global demand for oil. There are several other factors discussed below which suggest that the oil price rally may continue. The chart below from the October 2017 IEA OMR shows how in the course of 2017 the oil market has been brought back into balance. There is still a vast >3 billion barrels of crude and refined products in storage within the OECD, but the very fact that storage capacity no longer has to grow is bullish since this avoids the scenario where tanker loads have nowhere to go (full storage) which can dump the price. One reason it has taken so long for the production cuts to work is that production in both Libya and Nigeria have recovered from lows (Figure 17), caused by civil unrest, adding over 1 Mbpd to OPEC supply. Both are now on cyclical highs and are unlikely to rise much further. Indeed, the normal direction post-high is downward. At worst, the Libya – Nigeria market drag should now become neutral. According to the IEA, OPEC compliance with the agreed cuts is running at 88% while the non-OPEC countries that were party to the deal are 125% compliant. Talks between Saudi Arabia and Russia about extending the deal, should they come to fruition, will underpin the oil price through 2018. It needs to be noted that Russia and several other countries exercised a production spurt ahead of the October 2016 datum month. Cuts have simply undone that spurt. Thus it will cost Russia little to agree an extension since this simply means Russia proceeding along the pre-deal plateau (Figure 19). With 898 operational oil+gas rigs, US oil production is now trending sideways suggesting that a form of equilibrium has been reached between new supply and declines. While it is impossible for US corporations to participate formally in a production restraint deal, it is possible that a form of voluntary market / price led restraint may prevail. It seems the frackers are now waiting for higher price. The following totals compare September 2016 with September 2017:

  • World Total Liquids 97.21/97.31 +100,000 bpd
  • OPEC 12: 32.65/32.33 -320,000 bpd
  • Russia + FSU 14.21/14.21 ±000 bpd
  • Europe OECD 3.03/3.45 +420,000 bpd
  • Asia 7.35/7.31 -40,000
  • North America 19.23/19.59 +360,000 bpd

OPEC pumps 32.57 mil b/d in Oct, down 90,000 b/d from Sep: Platts survey  - OPEC oil output in October fell 90,000 b/d from the previous month as declines were observed in six member countries, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed Wednesday.OPEC's 14 members saw their collective October output fall to 32.57 million b/d from 32.66 million b/d in September, owing to sharp declines in Iraq and Nigeria, along with slight falls in Algeria, Venezuela, Iran and Qatar.That is some 650,000 b/d above its declared ceiling of about 31.92 million b/d, when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership from December 2016, is subtracted.Steep falls in Iraq and Nigeria were the main two reasons for a decline in OPEC output, with Iraqi oil output falling to its lowest level since March 2016, taking the country just 3,000 b/d above its OPEC output quota of 4.351 million b/d.Iraq produced an average of 4.38 million b/d of crude in October, a fall of 120,000 b/d from the previous month, as output from the fields controlled by the Kurdistan Regional Government fell sharply from October 17 onwards.Production from the semi-autonomous Kurdistan region in Iraq dropped mid-month as Iraqi federal forces captured the key disputed Kirkuk fields, dragging pipeline exports to Ceyhan down significantly.

OPEC seeks consensus on duration of oil cut pact before meeting | Reuters: OPEC is seeking to achieve consensus agreement before a meeting on Nov. 30 on how long to extend a global pact to curb oil production, OPEC’s secretary general said on Tuesday, with no country unwilling to prolong the accord. The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers, are cutting oil output by about 1.8 million barrels per day (bpd) until March 2018 in an effort to eradicate a supply glut that has weighed on prices. The comments indicate an increasing chance that the deal will be extended further into next year at the Nov. 30 meeting. Oil prices are trading at a more than two-year high, but an overhang of stored oil has yet to be fully eradicated. “Extensive consultations are currently ongoing to reach some consensus before Nov. 30 on the duration beyond the March 2018 deadline,” OPEC’s Mohammad Barkindo told reporters. “I have not heard so far any participating country that is violently objecting to extending the decision.” The producers are in the process of inviting other countries to the Nov. 30 meeting, Barkindo said, with a view to joining the deal. He declined to name the countries concerned. Reuters reported last month, citing OPEC sources, that producers are leaning towards extending the deal for a further nine months, though the decision could be postponed until early next year depending on the market. Barkindo, who was speaking at a press conference for OPEC’s latest World Oil Outlook, said the recent rise in prices reflected improved market fundamentals and producers’ high adherence to the supply pact. “As a result of the high level of conformity of the 24 participating countries in the declaration of cooperation, the market has also responded very positively,” he said. 

OPEC's War Against Shale Is Far From Over -- Despite the recent market rally and current bullish streak in oil prices, the years-long competition for market share between OPEC and U.S. shale producers shows no sign of abating, and will likely continue for the next several years at least. That was OPEC’s conclusion in the group’s World Oil Outlook released this week. OPEC believes U.S. shale production will grow faster than previously expected, reaching 7.5 million bpd by 2021, an increase of 56 percent from the group’s estimate last year.According to OPEC calculations, current shale production in North America is approximately 5.1 million bpd—an increase of 25 percent from a year ago.Despite low prices, shale has shown remarkable resilience and an ability to bounce back from downturns.OPEC expects shale to finally taper off by 2025 and decline by 2030, by which point OPEC will have increased output by eight million bpd, from 33 million bpd to 41.4 million bpd.By 2021, oil demand will increase by 2.3 million bpd, a fairly bullish projection. OPEC expects fierce competition with North American shale producers for market share, particularly when regulations on shipping fuel take effect in 2020, increasing refinery demand for fuels that shale producers will be well-positioned to provide.  Total U.S. production will increase by 3.8 million bpd by 2022, chiefly on the back of increased shale output, equal to seventy-five percent of production growth outside the fourteen members of OPEC. That growth will be front-loaded, says OPEC, as drillers seek out new fields and aggressively exploit current shale deposits. Yet OPEC admitted that shale will capture more market share in the short term, likely out-competing OPEC output.

Saudi Arabia to cut crude exports by 120,000 barrels per day (Reuters) - Saudi Arabia plans to cut crude exports by 120,000 barrels per day (bpd) in December from November, reducing allocations to all regions, a spokesman for the energy ministry told Reuters on Thursday. Crude exports to the United States will be more than 10 percent lower than November levels, he said. The world’s top oil exporter said it planned to ship slightly more than 7 million bpd this month, up from low levels during summer when domestic demand was at its peak. Seasonal drops in domestic crude demand free up more oil for export during the winter months. The Organization of the Petroleum Exporting Countries, along with other non-member oil producers led by Russia, agreed to cut output by around 1.8 million bpd from Jan. 1 this year until March 2018.  OPEC is seeking to achieve consensus among the participating countries ahead of its next meeting in Vienna on Nov. 30 on how long to extend the deal beyond March.

Russian energy: playing the long game -- Commodity Pulse video  - Russia has got a seat at the head of the OPEC table, while it continues to deepen ties with Saudi Arabia and appears to be coping with sanctions. Platts editors discuss the outlook for the world's biggest crude oil producer.

Dramatic Footage: Bahrain Oil Pipeline Explodes, Bursts Into Giant Flames -- An oil pipeline in Bahrain exploded, and burst into giant fireball, as numerous videos posted on social media showed. According to the Saudi Gazette, an explosion caused a fire in an oil pipeline near Buri village. It adds that no injuries have been reported, and that civil defense teams are extinguishing the fire. More from Al-bilad Press (google translated): A large explosion of one of the oil pipelines near the area of ??Buri overlooking the market Waqif, and evacuate all houses near the scene of the explosion. The Waqif market was completely closed so firefighters could control the fire. The Ministry of the Interior through its official account on the site "Twitter" there is no casualties at the scene. It also announced the cutting off of traffic on the Crown Prince's road towards Hamad City.The representative of the "country" from the heart of the pipe fire in the village of Buri that a huge fire block devoured a group of cars parked off the village and Souq Waqif.The delegate added that the civil defense mechanisms rushed to the scene of the incident from the area centered in the village of Damastan and began to block the flames of escalating fire and has been strengthened from the number of other centers.Residents of the houses adjacent to the fire site were reported to have been evacuated.

Hedge funds go all-in on oil: Kemp (Reuters) - Hedge funds have built record or near-record bullish positions in almost all parts of the petroleum complex anticipating that prices will keep rising.Hedge funds and other money managers had amassed a net bullish position in crude and refined products amounting to more than 1 billion barrels of oil as of Oct. 31 ( investors held a net long position in the five major petroleum futures and options contracts amounting to 1,022 million barrels, according to records published by exchanges and regulators on Friday.The net long position in the five major contracts covering Brent, WTI, gasoline and heating oil has surged by almost 720 million barrels since the end of June and is now just 3 million below the record of 1,025 million set in February.Bullish records or multi-year highs are being set all over the place:Long positions in Brent are at a record 587 million barrels.Net long position in Brent is at a record 530 million barrels.Long positions in gasoline are at a record 107 million barrels. Net long position in gasoline is the highest since April 2014.Long positions in heating oil are at record 84 million barrels.Net long position in heating oil is at a record 68 million barrels.Fund managers have continued adding to bullish positions even as benchmark Brent prices have climbed to the highest level since July 2015.Most investors appear to believe prices are moving into a new and higher trading range and want to ride the rally until the new price ceiling is discovered.The concentration of long positions creates a significant risk of a sharp price reversal if and when portfolio managers attempt to realise some of their profits.But the bulls can cite some fundamental factors that might drive prices higher first. Global demand is growing strongly. Inventories of both crude and products are declining rapidly. And the U.S. rig count is declining.

BP, Shell, Statoil join forces to develop blockchain-based trading platform - Energy majors BP, Shell and Statoil are to co-develop a blockchain-based digital platform for energy trading. The investor group, which includes trading houses Gunvor, Koch Supply & Trading, and Mercuria, plus banks ABN Amro, ING and Societe Generale, aims to "modernize and transform post-transaction management of physical energy commodities trading," the companies said in a joint statement Monday. The platform is to be managed and operated as an independent entity. It is expected to be operational by the end of 2018. The goal is to create a secure, real-time blockchain-based digital platform to manage physical energy transactions from trade entry to final settlement. Pending regulatory clearance, the platform will be open to the whole commodity industry after it has been tested by the investors. "The intent is to move away from traditional and cumbersome paper contracts and operations documentation to secure, smart contracts and authenticated transfers of electronic documents," the group said. The platform should reduce administrative operational risks and costs of physical energy trading. It should also improve reliability and efficiency of back-end trading operations for all supply chain users, "while also opening the door to innovative funding and financing solutions," the group said. Over time, the venture intends to lead the migration of all forms of energy transaction data to the blockchain, the companies said. In June, BP and Italy's Eni completed a pilot program for European gas trading using blockchain technology developed by Canada's BTL Group.

"We’ll See Some Initial Panic": World Reacts To Billionaire Alwaleed's Stunning Purge -- A shocked world is gradually responding to the stunning news of the Saudi "countercoup" purge that took place overnight - the second in six months -  and which led to the arrest of 11 princes, 38 current and former senior officials on corruption charges from a newly established anti-corruption committee headed by Crown Prince Mohammed bin Salman, and which most notably resulted in the detention of Prince Alwaleed bin Talal, the billionaire Clinton Foundation donor with significant stakes in Citigroup and Twitter, and who famously feuded with president Donald Trump, calling him a "disgrace not only to the GOP but to all America" back in December 2015. Predictably, initial focus has fallen on bin-Talal massive net worth, and specifically his investments. As Bloomberg calculates, the Saudi (ex?) prince is ranked the world’s 50th richest person with a net worth of about $19 billion; he is the founder of Kingdom Holding Co., a Riyadh-based investment company that has holdings in real estate, hotels and stocks such as Apple around the world. A list of bin-Talal's assets compiled by Bloomberg shows that in addition to his equity holdings, the prince also owns $284 million in jewelry, $225 million worth of "plane and yacht", and $120 million in "furniture and fixtures.":

Oil Jumps To $56, Highest Since July 2015 Following Saudi Turmoil - With the launch of electronic trading, WTI crude has jumped from the highest close since July 2015 amid Saudi turmoil which over the weekend included a crackdown on 11 Saudi princes - including billionaire Alwaleed - and dozens of current and former ministers as Saudi Crown Prince Mohammed bin Salman, i.e. MbS, who’s backed policy of capping oil output to raise prices, consolidates power with anti-graft probe, and shortly after a helicopter that carried 8 high-ranking Saudi officials inexplicably crashed near the Yemen border.  As shown in the chart below, December WTI briefly touched $56, and was up +0.5% to $55.87/bbl shortly after 6pm ET, the highest price since July 6, 2015...

Oil prices are surging as a Saudi political purge sparks 'runaway market' -- Oil prices surged to their highest levels since the summer of 2015 on Monday as a major political shakeup in Saudi Arabia underpinned a rally fueled by geopolitical risk, analysts said. Crude futures hit the new highs overnight after the powerful Saudi Crown Prince Mohammad bin Salman coordinated the arrest of several princes and ministers, ostensibly as part of crackdown on corruption.Prices pulled back in morning trade as the market digested a wealth of analysis on the Saudi purge, but futures suddenly shot higher at midday. International benchmark Brent crude oil topped $64 a barrel for the first time since June 2015. Meanwhile U.S. West Texas Intermediate crude broke above $57, a level the market has not seen since July 2015.WTI finished Monday's session $1.71 or 3.1 percent, higher at $57.35. Brent was trading up $2.04, or 3.3 percent, at $64.11 by 2:27 p.m. ET.Analysts cautioned against pinning the surge on any one headline, or even the Saudi arrests alone. Instead, they said a growing cloud of geopolitical uncertainty was unleashing animal spirits in an already bullish market."You can grab all sorts of different headlines when you have a runaway market, and this is a runaway market right now," said Tom Kloza, global head of energy analysis at Oil Price Information Service.In this kind of environment, "people throw caution to the wind, and this is like the grand finale of fireworks," he said. On Monday, Nigeria's oil minister signaled his country might be ready to contribute to OPEC-led output cuts to help bolster the market. OPEC has aimed to keep 1.8 million barrels a day off the market this year to shrink brimming global crude stockpiles. Nigeria, OPEC'a biggest African producer, was exempt because a wave of attacks sidelined much of its oil supply last year.

Oil prices up sharply after Saudi arrests - Oil prices rose sharply on Nov.6 against the backdrop of arrests in Saudi Arabia. The price for January futures of the North Sea Brent oil mix has increased by 0.66 percent to $62.48 per barrel as of 08:26 (EST). This is while the price for December futures of WTI oil rose by 0.56 percent to $55.95 per barrel. On Nov.4, a number of high-profile arrests were made in Saudi Arabia in the wake of the formation of a new anti-corruption committee headed by Crown Prince Mohammed bin Salman (known in diplomatic circles as MbS). A formal list of those arrested has not been released, but is reported to include prominent investor Prince Alwaleed bin Talal and former Finance Minister Ibrahim al-Assaf. At the same time, a minor government reshuffle took place. Notably, Prince Miteb bin Abdullah, son of the late King Abdullah and once considered to be a future king, was sacked as head of the National Guard. Economy Minister Adel Faqih was replaced by his deputy, Mohammed al-Tuwaijri.

U.S. Oil Prices Edge Down From Near Two-And-a-Half Year High — U.S. oil prices edged lower on Tuesday after posting the biggest gains in six weeks a day earlier, buoyed by moves by Saudi Arabia's crown prince to tighten his grip on power and a drop in U.S. drilling rigs. U.S. West Texas Intermediate (WTI) crude slipped 13 cents, or 0.2 percent, to $57.22 a barrel by 0028 GMT. The contract surged 3 percent on Monday, the biggest percentage gain since late September. Brent crude futures were yet to trade. On Monday, they closed 3.5 percent higher, also their biggest percentage gain in about six weeks. Both benchmarks hit their highest since mid-2015 during the session. Saudi Crown Prince Mohammed bin Salman moved to shore up his power base with the arrest of royals, ministers and investors, including billionaire Alwaleed bin Talal and the powerful head of the National Guard, Prince Miteb bin Abdullah. The arrests, which an official described as part of "phase one" of the crackdown, are the latest in a series of dramatic steps by Prince Mohammed to tighten his grip at home. Analysts said they do not see Saudi Arabia, the world's largest oil exporter, changing its policy of boosting crude prices for now. Saudi Energy Minister Khalid al-Falih said that while there is "satisfaction" with a production-cutting deal between the Organization of the Petroleum Exporting Countries and other producers led by Russia, the "job is not done yet." OPEC is expected to extend a cut of around 1.8 million barrels per day into the whole of 2018. U.S. drillers cut eight oil rigs last week, the biggest reduction since May 2016, helping to support prices.

Did Oil Markets Overreact To The Saudi Purge? -Saudi Arabia’s powerful crown prince led a massive purge over the weekend, ousting around a dozen royal cousins in a bid to consolidate power. The removal and detentions of so many members of the royal family were ostensibly the outgrowth of an anti-corruption campaign, but the actions put the top security institutions under the control of the king and the crown prince after having been distributed among different family factions for decades. In essence, Crown Prince Mohammed bin Salman (aka, MBS) has ended decades of tradition and has consolidated power in his own hands, making him the most powerful figure the country has seen in generations. MBS also removed one of his rivals for the throne, Prince Miteb bin Abdullah, son of the late King Abdullah. Many analysts expect the octogenarian King Salman to abdicate the throne in the coming months, and the ouster of Miteb paves the way for MBS to take over.The purge also took down the richest Saudi investor, Prince Alwaleed bin Talal, a move that “would be like arresting Warren Buffet or Bill Gates in the United States,” Robert Jordan, former U.S. ambassador to the kingdom, told CNBC. Favorable interpretations of what is playing out in Riyadh view the actions as a way to push forward with economic reforms. “The new leadership is committed to modernizing the economy and diversifying the economy and addressing the issue of over-reliance on oil,” Khatija Haque, head of Middle East research at Emirates NBD PJSC, told Bloomberg. “What this signals is that the crown prince is strengthening his position to continue with pushing forward with the reforms that are needed.”  But analysts say the actions by MBS could undercut one his own top priorities: Attracting international investment, specifically for the IPO of Saudi Aramco. The arrests without due process “sends a chill down the spine of foreign investors,” Bernard Haykel, a professor at Princeton University, told the New York Times in an interview. Moreover, a Saudi Aramco board member and former finance minister was actually included in the series of detentions.

 Oil Rally Halts As Saudi Purge Continues - Oil prices surged on Monday to their highest levels in more than two and a half years. Brent was up more than 3 percent to $64 per barrel, and WTI jumped to $57 per barrel. Crude prices fell slightly on Tuesday afternoon as markets cooled down a bit. Oil prices are at multiyear highs as a confluence of events have accelerated the rebalancing process, adding to bullish momentum. The U.S. rig count continues to fall even as oil prices have gained strength. The steep drop in oil rigs last week pushed up crude prices. The purge in Saudi Arabia (more below) also added some geopolitical anxiety. The surprise purge of top royal figures in Saudi Arabia has led to a tight consolidation of power in the hands of the crown prince Mohammed bin Salman. The move puts the most powerful institutions in the hands of the young prince, who many expect to claim the throne in the coming months if the current King abdicates. The power grab does not necessarily mean much for the kingdom’s oil policy. If anything, it removes dissent to the crown prince’s policies, which include extending the OPEC deal, aimed at raising oil prices in advance of the Saudi Aramco IPO. The oil market has a renewed sense of bullishness, and energy analysts see $70 oil much more likely for Brent than $50. Strong demand, lower inventories and the OPEC deal have all left the market might tighter than at any point in years. Saudi Arabia also seems intent on boosting prices further ahead of the Aramco IPO, and the purge only adds weight to that sentiment. "The Saudi Situation means $70 before $50," Roberto Friedlander, head of energy trading at Seaport Global Securities, wrote in a research note. "The Saudis CAN'T afford a renewed decline in prices or a decline in oil revenues," Friedlander said, adding "they would certainly prefer to risk tightening the oil market too much and see prices hit $70, rather than risk letting them slip back to $50."

Oil prices step back while investors eye tensions in Saudi Arabia —Traders who have steadily boosted crude since the month began took a deep breath Tuesday, with prices dropping on concerns of an overbought market and rising shale production. On Monday, prices jumped 3.1 per cent, breaching $57 (U.S.) a barrel as arrests of senior officials in Saudi Arabia raised questions about instability there. Prices fell back 0.3 per cent Tuesday as the market lingered at overbought levels, and OPEC said U.S. shale output will soar to 7.5 million barrels a day in 2021, 56 per cent higher than forecast a year earlier. Strength in the dollar also acted as a downward force. “There’s no doubt that we got a little bit overbought,” “The dollar is higher, so that’s acting as a bit of a headwind to prices as well.” Investors remain focused on tensions in Saudi Arabia, as “the market pays more attention to geopolitical risk.” The U.S. benchmark’s 14-day relative strength index hovers above 70, a level that signals the commodity is overbought. Saudi Arabia said it has only frozen the bank accounts of individuals and not those of the companies they own or manage, as the kingdom seeks to ease tension among global investors over a crackdown that’s seen princes and billionaires arrested. “It seems like what you really had was the first time in a while that traders in the crude market (were) nervous enough to cover shorts on a political event, which hasn’t happened in a while,” 

WTI/RBOB Drop After Surprise Gasoline Build -- WTI held above $57 heading into the API print on the heels of Saudi chaos but both WTI/RBOB kneejerked lower after API reported a lower than expected crude draw and a surprise gasoline build.  API:

  • Crude -1.562mm (-2.45mm exp)
  • Cushing +812k
  • Gasoline +520k (-1.85mm exp)
  • Distillates -3.133mm

Following the previous week's big gasoline draw and notable crude draw, the last week  - according to API - saw a surprise gasoline build and smaller than expecred crude draw. Also of note was a big build in stocks at Cushing.

WTI Crude Prices Aren't Going With The Global Oil Flow -  This piece I wrote last week on the dislocation between benchmark U.S. and international oil prices missed something important.While I emphasized the differences in speculative money flows to the Nymex West Texas Intermediate, or WTI, and Brent crude oil contracts, I didn't give the role of logistics the prominence it deserved. So here goes. To recap, the spread between WTI and Brent crude prices began widening in late July and has recently blown out to about $6 or $7 a barrel: Hurricane Harvey's disruptive impact in late August helped push that spread beyond $5. But it had been opening ahead of that and hasn't shown signs of closing since. Besides Brent's international benchmark, Nymex WTI is suddenly trading at wide discounts to other benchmarks within the U.S., too: Those premiums of roughly $5 to $6 for Louisiana Light Sweet and WTI delivered in Houston are big flags that something is up with the way oil is flowing within the U.S. The Nymex WTI contract is settled physically at the pipeline and storage hub in Cushing, Oklahoma, which is hundreds of miles inland from the refining and export facilities along the Gulf Coast. The other barrels, closer to the coast -- and, therefore, global markets -- are priced more in-line with Brent. Their premiums versus Nymex WTI jumped at the end of August as Hurricane Harvey's disruption kept barrels bottled up in Cushing. But their continued strength and that other line on the chart above -- for barrels priced in North Dakota -- hint at other, more structural issues. John Coleman, a senior analyst at Wood Mackenzie, points to the start-up of the Dakota Access pipeline in June. Dakota Access takes barrels from the Bakken down to Patoka, Illinois -- where they compete with barrels coming from Cushing.  Cushing is also being squeezed from the west, where the Permian basin -- the engine of U.S. oil-supply growth -- shows little sign of faltering.  This localized glut has suppressed WTI prices inland at Cushing, even as WTI at Houston sells for about $5 more per barrel. That is more than double the cost of piping oil from Cushing to the coast, a pretty sure sign of bottlenecks A similar, though less pronounced, pricing mismatch affects Permian barrels priced at Midland, Texas, indicating production has outpaced pipeline capacity and created a glut there, too. Meanwhile, the recent surge in U.S. oil exports tells you that any barrel that can make it to the coast, and international pricing, is going there.

Large oil traders escape EU's MIFID II trading rules, for now (Reuters) - Less than two months before strict European Union rules on derivatives come into force, most large oil traders have persuaded regulators to exempt them for now from limits on the positions they can hold, arguing they are not speculators. The EU’s revamped Markets in Financial Instruments Directive (MIFID), known as MIFID II, aims to curb speculative trading and make markets more resilient. It comes into force in January and includes position limits on the volume of commodity derivatives a trader can hold, such as Brent oil futures. Oil majors have repeatedly called on EU regulators to refrain from imposing strict capital requirements and greater disclosure measures on oil trading. Sources at major traders such as Shell, BP. Glencore and Vitol said their firms have so far not registered with Britain’s Financial Conduct Authority, saying they have argued they trade derivatives to hedge large physical positions rather than for speculative purposes. Under the new rules, a firm can be exempt from such limits provided that their paper positions are ancillary, in other words, necessary to support physical trades. But proving who is trading what and for which purposes has long been one of the key debates in the industry. 

Oil Prices Slip After Surprise Build In Crude Inventories - After Brent and WTI both fell yesterday as traders started taking profit on the latest price rally, the EIA reported that U.S. crude oil inventories went up in the week to November 3, by 2.2 million barrels, rejecting API estimates of a 1.562-million-barrel draw.Analysts polled by S&P Platts had forecast a 2.7-million-barrel draw in crude inventories, as well as a 2.25-million-barrel decline in gasoline stockpiles. The EIA said gasoline stockpiles did indeed decline, by 3.3 million barrels, which should provide some support to bulls, especially with the surprise build in crude oil inventories.Gasoline production last week averaged 10.2 million bpd, an increase on the previous week, with refineries operating at 89.6 percent of capacity and processing 16.3 million barrels of crude oil daily.It won’t be surprising if we soon see a greater rise in production and, possibly exports. While WTI continues to trade at a comfortable discount to Brent, buyers will prefer it over  Brent-linked grades. What’s more, with both benchmarks at two-year highs, there is a strong motivation for drillers to drill more.The current rally may prove to be a lasting one, unlike the recent price spike after a variety of comments from both OPEC and Russian energy officials. But this time, the game is different: it’s a Middle Eastern version of Game of Thrones, and even if things don’t come to a head, the hostile exchange of threats would be enough to support oil prices at least until November 30. Both sides in the Saudi-Iran conflict would benefit from higher oil prices, but it would be more meaningful to the Kingdom as it plans to list its national oil company in H2 2018—whether it could keep threatening Iran until then is doubtful, so the possibility of an open conflict is a real one.

WTI Extends Losses After Surprise Build, Crude Production Jumps To Record High -- WTI/RBOB extended losses post-API data overnight, but DOE data sparked some algo chaos as a surprise crude build (+2.24mm vs -2.45mm exp) was offset by a bigger than expected gasoline draw (exactly opposite what API reported). In addition, US crude production jumped to a new all-time high - take that OPEC! DOE: 

  • Crude +2.24mm (-2.45mm exp)
  • Cushing +720k
  • Gasoline -3.31mm (-1.85mm exp)
  • Distilates -3.359mm

Last night's API data showed smaller crude draw and a surprise gasoline build, but DOE surprised with a big crude build and bigger gasoline draw (and a notable build in Cushing stocks)...

Shale Oil Surge Still Hammering OPEC Push to Drain Glut -- U.S. crude output skyrocketed to levels not seen in more than three decades, putting an exclamation point on OPEC’s forecast for untrammeled expansion in American shale fields. The output surge and a surprise jump in U.S. crude stockpiles spooked the market Wednesday, dropping prices below $57 a barrel and spurring dire worries that the historic OPEC-led supply curbs set to expire in March may need to be sustained for an extended period to pierce the market glut. Even as American drillers embrace the new religion of profits-over-production, OPEC’s latest long-term forecast focused on the ability of shale explorers to thrive regardless of prices. On Wednesday, a U.S. government tally showed weekly output at its highest since at least 1983. Meanwhile, ConocoPhillips, the world’s biggest independent explorer, pledged to devote $1 billion more to drilling next year, a 22 percent increase. Although the Organization of Petroleum Exporting Countries’ output limits have fueled a 42 percent price rally since late June, OPEC Secretary-General Mohammad Barkindo on Tuesday signaled the producers’ determination to stay the course through the end of 2018. The bogeyman haunting the Saudis, Russians and other major suppliers: U.S. shale, which shows no signs of backing off until at least 2025. The U.S. rig fleet may be shrinking, but production isn’t. It’s risen 9.7percent this year, on track for its steepest annual increase since 2014. Daily production averaged 9.62 million barrels last week, the highest since the federal government began tracking the data in that format in the early 1980s. That said, monthly government assessments considered by many to be more accurate snapshots showed a slightly higher production tally -- 9.626 million a day -- for April 2015. OPEC surprised investors on Tuesday by boosting its long-term estimate for growth in North American shale production by 56 percent from a year earlier. The 12-nation group now expects output from the continent’s shale wells -- which weren’t even a blip on worldwide markets a decade ago -- to reach 7.5 million barrels a day in four years. 

NYMEX December gas settle 2.5 cents higher, unfazed by storage data -- The NYMEX December natural gas futures contract largely was unfazed by a larger-than-expected US Energy Information Administration build to gas storage stocks Thursday, ultimately holding to pre-report levels and settling at $3.20/MMBtu, up 2.5 cents. The prompt-month contract traded between $3.152/MMBtu and $3.217/MMBtu Thursday. For the week that ended November 3, US gas inventories rose 15 Bcf, EIA said Thursday morning, a build slightly above the 12-Bcf injection a consensus of analysts that S&P Global Platts surveyed expected. As the end of injection season nears, stocks totaled 3.790 Tcf, about 2% below the five-year average. Below-average temperatures in the key Midcontinent market have supported a 28-cent rise in the prompt-month contract over the past six sessions. Midcontinent demand levels hit 17.5 Bcf/d, about 4.3 Bcf/d above the previous seven-day average, according to Platts Analytics' Bentek Energy data. Overall US demand is expected to hit 88.65 Bcf/d Thursday, a level not seen since March 16, when demand topped 90 Bcf/d in the final weeks of the winter season. Demand levels throughout the first 10 days of November averaged 76.5 Bcf/d, nearly 9.7 Bcf/d above the same strip in November 2016, putting the market in the position to see a withdrawal in the upcoming storage report.

U.S. natural gas prices rise as traders reassess gloomy outlook: Kemp (Reuters) - U.S. natural gas prices have bounced by almost 10 percent since the start of the month as traders reassess their earlier bearish view this winter amid signs sentiment had become far too gloomy. Futures prices on the New York Mercantile Exchange for gas delivered to Henry Hub in January 2018 have risen to almost $3.30 per million British thermal units from $3.00 on Nov. 1 ( Prices for January, at the height of the winter heating season, now command a premium of almost 32 cents over April, up from just 16 cents at the start of the month. Both prices and calendar spreads have been in a downtrend since May, with the decline accelerating from the middle of September, but the rally this month has reversed some of the most recent losses. Until recently, hedge funds had become progressively less optimistic about the outlook for gas prices this winter. Hedge funds and other money managers cut their net long position in the two main futures and options contracts by almost half to 1,408 bcf by the end of October from 2,693 bcf in September. Portfolio managers held just 1.58 long positions for every short on Oct. 31, compared with 2.93 on Sept. 19, and the lowest ratio for almost a year. But there appears to have been a reappraisal since the start of the month amid signs this positioning had overshot on the bearish side. Part of the reassessment has come from recent weather patterns which have been mildly positive for gas demand. Significantly warmer than average temperatures in late September and early October, followed by a slightly colder than average late October and early November, have boosted cooling and heating demand respectively. But stocks have been tightening fairly consistently compared with the five-year average since the first week of March in a sign the market is persistently undersupplied. Working stocks in underground storage have built more slowly than the five-year average in 21 out of the last 31 weeks.   The market is tighter than it appears because the underlying demand for gas is much higher than five years ago as a result of LNG exports and the growing number of gas-fired power plants. 

Oil prices rise on supply cuts and political tensions in Saudi Arabia | Reuters: - Oil prices rose nearly 1 percent on Thursday, supported by supply cuts by major exporters as well as continuing concern about political developments in Saudi Arabia.Brent crude oil LCOc1 settled up 44 cents or 0.7 percent at $63.93 a barrel, still close to Tuesday’s intra-day high of $64.65, which was the highest since June 2015. U.S. light crude was up 46 cents or 0.8 percent at $57.27, just shy of this week’s more than two-year high of $57.69 a barrel. “The move is driven by developments in Saudi Arabia in recent days and anticipation that the consolidation of power by King Salman and the Crown Price will continue,” said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London, “Meanwhile, Saudi comments on Lebanon have also highlighted rising tensions between the kingdom and Iran.” “Growing confidence in the market that the upcoming OPEC meeting will result in an extension to the output-cut agreement is also supporting prices,” he said. Saudi Arabia plans to cut crude exports by 120,000 barrels per day in December from November, slashing allocations to all regions, a spokesman for the energy ministry told Reuters. Several traders said prices got a boost from unconfirmed rumors that Saudi King Salman would relinquish the throne to his son Crown Prince Mohammed Bin Salman. Similar rumors were spread in September and October. Prices got a boost this week from a crackdown on corruption by the Saudi crown prince. Still, traders expressed caution that the oil price rally may have run its course after pushing up Brent more than 40 percent since July. 

 As Mideast tensions soar, supertanker tells oil's real story » Seventy miles south-east of the Strait of Hormuz — the world’s most prominent chokepoint for oil supplies as the narrow waterway separating the Sunni Gulf States from Iran — the journey of one of the world’s largest ships shines a light on why many energy traders think oil’s rally may endure, even if the political temperature should cool.The Seaways Laura Lynn, a supertanker as long as the Empire State building is high, has sat laden with oil off the coast of Oman for more than two years, carrying a cargo of more than 3m barrels of crude.This rare vessel has always been a triumph of size over sense. Almost 50 per cent larger than the second biggest (and far more common) size of supertanker, the Seaways Laura Lynn is one of only two ultra-large crude carriers (ULCC) still in ocean-going service, with its unwieldy brethren long ago converted into fixed-position storage and offloading service vessels for offshore oilfields. But its rareness gives it a special place in the oil market, with its movements offering clues to how some of the most powerful traders view the health of supply and demand. Vitol, the private trading house run by British-based executive Ian Taylor, was quick to charter the ship when the oil glut intensified in early 2015, as prices spiralled from above $100 a barrel to below $30 a year later. The trading house parked it near the Strait of Hormuz and stuffed its giant tanks with 3m barrels of cheap crude, with a view to storing it until prices recovered, locking in huge profits in the futures market as similar floating storage plays proliferated in oil hubs across the globe. Two years on, with Opec and Russia having cut 1.8m barrels a day of supply since January from the market in a bid to finally bring the oil glut to an end, most crude stored at sea has since been drawn down as the market has slowly tightened. Vitol, however, had hung on, keeping the Seaways Laura Lynn fully loaded just off the coast of the UAE and Oman, even as the tightening market made it less profitable to store oil — and suggesting they were not yet convinced oil’s recovery in 2017 had solid foundations. This week though, Vitol has finally blinked. The tanker, according to satellite tracking of its movements and draft, shows the trading house has suddenly unloaded the majority of its oil, raising its 380m-long hull out of the water.

OilPrice Intelligence Report: Are Oil Markets Immune To U.S. Shale? - Oil prices showed some weakness mid-week on news that U.S. oil production jumped, but benchmark prices firmed up on Thursday, putting WTI and Brent on track for their fifth consecutive weekly advance. While the Friday rig count build did knock oil prices down, they are still closing in on the longest streak of weekly gains in more than a year.  OPEC released its annual World Oil Outlook this week, in which the group dramatically upgraded its expectations for U.S. shale. OPEC sees U.S. shale output ballooning from 5.1 million barrels per day (mb/d) this year to 7.5 mb/d by 2021. That is an upward revision of more than 50 percent – last year OPEC predicted U.S. shale output would erode under the weight of low oil prices, dipping to just 4.8 mb/d by 2021. In other words, OPEC has essentially acknowledged that it won’t be able to kill off U.S. shale by flooding the market.  In OPEC’s World Oil Outlook, it estimated that oil demand will rise by more than 15 mb/d through 2040, dismissing the growing number of predictions regarding peak demand in the next decade or two.  The political upheaval in Riyadh has given a jolt to oil prices this week, with crown prince Mohammed bin Salman purging his rivals and consolidating power. Oil analysts see this as increasing the odds of an extension of OPEC’s production cuts. “While the likelihood of a disruption to supply remains low, we believe the events raise the probability of Saudi Arabia taking a more aggressive stance on production curbs. The risks now lie towards curbs remaining in place longer than expected,” Daniel Hynes, an analyst at Australia & New Zealand Banking Group, told Bloomberg. Saudi Arabia also said that it would slash oil exports from November to December by 120,000 bpd.  As part of U.S. President Trump’s visit to China, he secured a commitment from China Energy Investment Corp. to invest an estimated $83.7 billion in shale gas development and chemical manufacturing projects in West Virginia, an amount that would be spread out over two decades. The deal is a non-binding memorandum of understanding, but it details investments in power generation, chemical manufacturing and underground storage of natural gas liquids.

Baker Hughes: US rig count breaks downward trend, jumps 9 units - The US rig count ended a 5-week streak of declines with a surprise 9-unit jump to 907 during the week ended Nov. 10, data from Baker Hughes indicate. The cumulative increase reflects gains in land-based and oil-targeting rigs.Sixty rigs had gone offline through the week ended Nov. 3 after a recent peak of 958 on July 28 (OGJ Online, Nov. 3, 2017). In the 15 weeks since that peak, the count has dropped 11 times, and the decline had accelerated over the past few weeks.A 9-unit increase in oil-directed rigs brought their tally to 738, down 30 units since their recent peak on Aug. 11. Gas-directed rigs were unchanged at 169.Onshore rigs now total 888, with rigs drilling horizontally up 12 units to 776, down 34 units since July 28. Rigs drilling directionally rose a unit to 74, while rigs drilling vertically dropped 4 units to 57.Oklahoma led the major oil- and gas-producing states with a 6-unit gain to 123, down 13 units since its recent peak on July 7. The Cana Woodford spiked 7 units to 73, its highest point in Baker Hughes data.New Mexico increased 4 units to 69, while the Permian climbed 6 units to 386. Both New Mexico and the Permian matched their highest count since February 2015. Alaska rose a unit to 6.   West Virginia and the Utica each fell a unit to 12 and 29, respectively. Texas dropped 2 units to 442, down 14 since Aug. 4. The Eagle Ford, however, rose 2 units to 67, down 19 units since June 2. Canada gained 11 units to 203. Oil-directed rigs climbed 8 units to 108, gas-directed rigs rose 4 units to 95, and the country’s only rig considered unclassified went offline.

Oil prices slide after U.S. drillers add rigs | Reuters: - Crude was down slightly on Friday as expectations that OPEC and other producers will extend their production cut agreement were offset by U.S. drillers adding the most oil rigs in a week since June, indicating output will continue to grow.U.S. energy companies added nine oil drilling rigs this week, the second increase in three weeks, bringing the total count up to 738, General Electric Co’s Baker Hughes energy services firm said in its closely followed report. Brent futures fell 41 cents, or 0.6 percent, to $63.52 a barrel, while U.S. West Texas Intermediate crude settled down 43 cents at $56.74 per barrel. Earlier in the week, Brent rose to $64.65, its highest since June 2015, and WTI hit $57.92, its highest since July 2015. Both contracts were rose more than 2 percent this week, which was the fifth consecutive increase. Traders said higher prices in recent weeks were the result of efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to tighten the market by cutting output, as well as strong demand and rising political tensions. There are also expectations in the market that OPEC’s next meeting on Nov. 30 will agree to extend cuts beyond the current expiry date in March 2018. “Market participants expect OPEC to extend the production cuts beyond March 2018 and stocks to decline further,” analysts at Commerzbank said, noting, however, that “the higher price level should lead to a further rise in U.S. shale oil production.” U.S. production was forecast to rise to 9.2 million barrels per day (bpd) in 2017 and a record 10.0 million bpd in 2018 from 8.9 million bpd in 2016, according to federal energy projections this week. Output peaked at 9.6 million bpd in 1970. 

Oil ends strong week on a sour note as rig counts rise - Oil futures ended a strong week on a down note Friday, maintaining losses after data showed U.S. drillers added rigs. Still, geopolitical worries and continued expectations that members of the Organization of the Petroleum Exporting Countries and other major producers will extend output curbs when they meet at the end of the month helped to lift crude futures to healthy weekly gains. Earlier in the week, oil futures hit levels last seen in June 2015. On Friday, Brent crude UK, the global oil benchmark, fell 41 cents, or 0.6%, to end at $63.52 a barrel on the ICE futures exchange. The contract saw a 2% rise for the week, according to WSJ Market Data Group On the New York Mercantile Exchange, West Texas Intermediate crude oil futures CLZ7 -0.47% , the U.S. benchmark, declined 43 cents, or 0.8% to $56.74 a barrel. For the week, WTI rose 2.3%. Both Brent and WTI logged their fifth straight weekly rise. Oil was buoyed this week after Saudi Arabia detained 201 individuals including princes, businessmen and government officials after a three-year investigation, alleging that an estimated $100 billion of state funds have been embezzled. The actions helped to push oil prices to more than two-year highs this week. Analysts said investors were already pricing in an extension to ongoing production cuts from major producers working in concert with OPEC.  Oil remained lower after oil-field services firm Baker Hughes said the number of U.S. oil rigs rose by 9 this week to a total of 738. Compared with the same time last year, the number of rigs is up by 286. While geopolitical turmoil has provided some lift to the market, “concerns surrounding increasing U.S. production, export levels, and drilling rates will likely provide resistance to rising oil prices in the coming months,” wrote analysts at Tradition, in a Friday note. In other energy markets, Nymex December gasoline futures fell 0. 73 cent, or 0.4%, to $1.8124 a gallon, while logging a 1.1% weekly rise, with futures gaining for five consecutive weeks. December heating oil declined 1.2 cents, or 0.6%, to end at $1.9349 a gallon, marking a 2.6% weekly gain and booking its fifth weekly climb in a row. December natural gas rose 1.3 cents, or 0.4%, to close at $3.213 per million British thermal units, contributing to a weekly gain of 7.7%, marking its second straight weekly advance. 

Aramco oil reserves audit two-thirds complete, may not be finished in 2017: sources - (Reuters) - An audit of Saudi Aramco’s oil reserves is unlikely to be completed before the end of 2017 because of the huge scale of the task, sources familiar with the matter said, a later timeframe than previously indicated. The audit has so far confirmed the reserves figures earlier given by Saudi Arabia, the sources said, an important part of the state oil company’s preparatory work for its planned initial public offering next year. Saudi Arabia’s reserves of easily recoverable oil have long been considered the world’s largest. But there have also been questions about their volume and quality, and the audit seeks to provide internationally recognized figures for investors. “It’s a huge task,” a source familiar with the matter said, commenting on the progress of the reserves audit. “They are about two-thirds of the way through. It’s all going well and smoothly - no surprises.” For nearly 30 years - despite rising production, large swings in oil prices and improved technology - Riyadh has annually reported the same number for reserves of 261 billion barrels, according to BP’s statistical review.. Baker Hughes, involved in the auditing, declined to comment on the progress of the work, while DeGolyer did not respond to a request for comment.  Asked to comment, Aramco said: “We do not comment on rumors and speculation. Investors will receive relevant information in due course in connection with the IPO.”  An industry source had told Reuters in March that Aramco aimed to have one of the two reserves auditors wrap up the review this year, long before the planned listing. But this now looks unlikely.

UK to provide Saudi Aramco with $2 billion credit guarantees | Reuters: (Reuters) - Britain will provide $2 billion in credit guarantees to Saudi Aramco so it can buy British goods and services more easily, but denied it was part of efforts to persuade the energy giant to list its shares in London.The loan agreement comes as London Stock Exchange, with backing from Prime Minister Theresa May, competes to host part of Saudi Aramco’s initial public offering (IPO), which is expected to be the biggest float ever. “This builds on previous support for UK exports as part of Saudi Aramco joint venture projects,” the government said in a statement. A spokesman for Britain’s finance ministry said the guarantees were not part of the country’s attempt to secure the IPO for London. The guarantees announced on Thursday were relatively big. Over the past five years combined, previous guarantees have totalled 14 billion pounds ($18 billion), a government spokeswoman said. Asked what specific projects the guarantees would back, the spokeswoman said Britain would work with the company to identify initiatives which could include British exports. Saudi officials have said domestic and international exchanges, including New York, London, Tokyo and Hong Kong, have been considered for a partial listing of the state-run firm. Britain’s financial regulator has proposed new rules to allow sovereign-controlled entities like Saudi Aramco to have their own “premium listing” category while being exempt from requirements such as how much of a company has to be floated. The government and the City of London are keen to win the listing as a boost to the country’s capital markets just as Britain is preparing to leave the European Union. 

Satellite Images Reveal Saudis May Be Lying How Much Oil They Have In Storage -- A little over a year ago, specialized satellite imaging company Orbital Insight which uses its proprietary imaging and algorithms to track above-ground oil storage, confirmed something we had alleged earlier in the year: that China was vastly under-representing the amount of oil it had stored in its Strategic Petroleum Reserve (with significant implications for prices).  The resultant doubt about China's true purchasing capacity was one of the several factors that led to the subsequent swoon in oil prices which OPEC was unable to overcome until nearly a year later, when the market became increasingly confident that the OPEC strategy of eliminating excess inventory, was working and pushed the price of WTI and Brent to two year highs, above $57 and $63 respectively. As the FT's David Sheppard writes, "while the oil market’s attention has been gripped this week by the corruption purge in Saudi Arabia and its tensions with Iran, from miles above the earth’s crust one company is highlighting a different kind of intrigue."  He is, of course, referring to Orbital Insight, whose analysis of Saudi crude inventories in recent months has thrown up an "interesting anomaly.' One can call it an "anomaly", but a better explanation of what the company has done is to catch the Saudi kingdom in lying about its inventories. Here is the official narrative:The kingdom, which has led Opec and Russia in co-ordinated output cuts since January, has for months been reporting to official agencies that its oil held in storage has been falling, which alongside lower production has been one factor that has helped propel Brent crude oil back above $60 a barrel. There is just one problem: it's a lie: "Orbital’s analysis of satellite imagery suggests that Saudi Arabia’s above-ground tanks — whose floating roofs allow them to see when oil inventories are rising or falling by measuring shadows cast across the top of the tanks — have seen no real change in the past 18 months.   How much? Here's the FT's punchline: "While Saudi Arabia has reported to Jodi that its oil stocks have declined by about 70m barrels since early 2016, the Orbital analysis suggests the above-ground tanks have actually seen inventories rise marginally over the same period."

Leaked Documents Expose Stunning Plan to Wage Financial War on Qatar — and Steal the World Cup - A plan for the United Arab Emirates to wage financial war against its Gulf rival Qatar was found in the task folder of an email account belonging to UAE Ambassador to the United States Yousef al-Otaiba and subsequently obtained by The Intercept. The economic warfare involved an attack on Qatar’s currency using bond and derivatives manipulation. The plan, laid out in a slide deck provided to The Intercept through the group Global Leaks, was aimed at tanking Qatar’s economy, according to documents drawn up by a bank outlining the strategy. The outline, prepared by Banque Havilland, a private Luxembourg-based bank owned by the family of controversial British financier David Rowland, laid out a scheme to drive down the value of Qatar’s bonds and increase the cost of insuring them, with the ultimate goal of creating a currency crisis that would drain the country’s cash reserves. Rowland has long had close relationships with UAE leadership, particularly with Abu Dhabi Crown Prince Mohammed bin Zayed, known as MBZ. The bank is currently in the process of creating a new financial institution in cooperation with the UAE’s sovereign wealth fund, Mubadala, according to contracts and correspondence obtained by The Intercept outlining the terms of the deal. That project is separate from the Qatar operation, but it reflects the close relationship between the bank and the UAE. The Qatar debt project would be grandiose in its ambitions. “Control the yield curve, decide the future,” reads the planning document, referring to a standard financial-industry graph showing a country’s borrowing costs for debt that is due at different dates. The height and shape of the yield curve is thought to be a reflection of how healthy an economy is and influences what financing options are available to a country. Targeting a nation’s economy using financial manipulation would be a dramatic break from traditional norms of diplomacy and even warfare. 

Saudis Intercept Ballistic Missile Over Capital Riyadh --Just hours after the previously reported unexpected, and shocking resignation of Lebanon's pro-Saudi prime minister Saad al-Hariri, Saudi defense forces said they had intercepted a ballistic missile over the capital Riyadh, which was fired from Yemen. According to Yemen's Houthi-controlled Defense Ministry, the Yemeni Air Force targeted King Khalid International Airport in the Saudi capital of Riyadh on Saturday with a ballistic missile.Al-Arabiya reported that the missile was intercepted over north-east Riyadh, Saudi Arabia's Ministry of Defense said in a statement, even as Yemen's Defense Ministry said the missile attack "shook the Saudi capital" and the operation was successful.The Riyadh-based newspaper Al Riyadh released a video on its Twitter account showing the interception of a missile. Some analysts have speculated that the ballistic missile could be Iran's response to Hariri's resignation.Al Jazeera reported that Yemen's Houthi rebels claimed responsibility for the attack, saying they launched the Yemeni-made, long-range ballistic missile Burqan 2-H (with a range of 500 kilometers) from the Saudi-Yemeni border before being intercepted.Earlier on Saturday, there were reports of a blast at the King Khalid International Airport in Riyadh, with some twitter users noting that pieces of a missile crashed onto the tarmac. Photos, allegedly pieces of the intercepted missile, have also emerged on the web.

Saudis Call Missile Attack "Blatant Act Of Aggression" By Iran, "Could Be Considered Act Of War" -- This weekend's chaos in the middle east just got considerably more serious. Yesterday we detailed reports that the Saudis intercepted a ballistic missile over the nation's capital Riyadh... At the time, Al Jazeera reported that Yemen's Houthi rebels claimed responsibility for the attack, saying they launched the Yemeni-made, long-range ballistic missile Burqan 2-H (with a range of 500 kilometers) from the Saudi-Yemeni border before being intercepted. But tonight, according to a statement from the Saudi coalition carried by the state-run Saudi Press Agency, the missile that targeted Riyadh has been called "a direct military aggression" by Iran against Sauid Arabia,  that "could rise to be considered an act of war." Furthermore, the Saudi-led coalition has closed all Yemen's land, sea and air ports after missile targeted Riyadh. The Coalition's command considers the Iranian regime's action in supplying the Houthi militias that it commands with these missiles to be a blatant violation of the United Nations Security Council (UNSC) Resolutions that prohibit nations from arming these militias, specifically UNSC Resolution (2216). Further, Iran's role and its direct command of its Houthi proxy in this matter constitutes a clear act of aggression that targets neighboring countries, and threatens peace and security in the region and globally. Therefore, the Coalition's Command considers this a blatant act of military aggression by the Iranian regime, and could rise to be considered as an act of war against the Kingdom of Saudi Arabia, and thus affirms the legitimate right of the Kingdom to defend its territory and people in accordance with Article (51) of the U.N. Charter. The Coalition Command also affirms that the Kingdom reserves its right to respond to Iran in the appropriate time and manner, in accordance with international law and based upon the right of self-defense, including the defense of its territory, its people, and its vital interests, which is enshrined in international agreements and conventions including the UN Charter. The timing is fascinating. What better way to get the price of oil up before an Aramco IPO - which President Trump just happened to mention out of the blue.

In Shocking Purge, Saudi King Arrests Billionaire Prince Bin Talal, Others In "Anti-Money Laundering" Crackdown -- In a shocking development, Saudi press Al Mayadeen reported late on Saturday that prominent billionaire, member of the royal Saudi family, and one of the biggest shareholders of Citi, News Corp. and Twitter - not to mention frequent CNBC guest - Al-Waleed bin Talal, has been arrested for corruption and money laundering charges, along with several other top officials. Among those arrested are also two sons of late King Abdallah, head of national royal guards and former Emir of Mecca (full details below).Mass arrests in Saudi Arabia, among those arrested former King Abdallah chief of staff, prince AlWalid Bin Talal, and head of MBC to Saudi media they were arrested for being involved in corruption and money laundering— Ali Hashem ??? ???? (@alihashem_tv) November 4, 2017As the local press further adds, the supreme committee chaired by Crown Prince and billionaire stops "on charges of money l aundering."   The arrested prince is perhaps best known for his recurring on and off spats with president Trump: […] Others arrested include Meteib Bin Abdullah; Walid bin Talal; Khaled Tuweijri; AlWalid Ibrahim; Turki Bin Naser; Adel Fakih

Osama Bin Laden’s Brother Arrested In Saudi Crackdown -- Among the numerous high-profile figures arrested overnight in Saudi Arabia on “anti-corruption” charges, in addition to the shocking detention of prince Alwalaleed bin-Talal another unexpected name has emerged: that of Bakr bin Laden, chairman of Saudi Binladin Group and brother of Osama bin Laden. The Binladin Group is one of the biggest construction companies, with an annual turnover of $30 billion. It was carrying out the expansion of the Kaaba complex. The family rejected al-Qaeda's former leader, Osama Bin Ladin, because he was involved in terrorist activities in the 1990s. A quick primer on the Binladin Group from the WSJ:Based in Jeddah and [ZH: formerly] favored by Saudi Arabia's royal family, Saudi Binladin Group derives billions in annual revenue from a wide range of enterprises, including mosque construction, telecommunications and selling Snapple soft drinks in Saudi Arabia. Although the family's U.S. spokesman says Saudi Binladin Group is wholly owned by the extended bin Laden family, not including Osama, he said he could provide no information on exactly which members have an equity interest in the company.

Saudi Helicopter Carrying 8 High-Ranking Officials & Prince Bin-Muqrin Crashed - All Dead The shocking latest twists in what has been a chaotic weekend in Saudi Arabia is news that a helicopter transporting 8 high-ranking Saudi officials has crashed in the south of the Kingdom.Sky News Arabia confirms an earlier report from Al-Watan news..."Newsletter: loss of a helicopter carrying a number of officials in the southern Asir, Saudi Arabia" Details are few for now but some headlines report that the high-ranking officials aboard included Crown Prince Mansour bin-Muqrin.  The crash site is reported near Abha, in the south of The Kingdom.  There are sources saying all aboard have died... Just what is going on in Saudi Arabia.

Saudi Crown Prince Consolidates Power With Anti-Corruption Arrests -- Everybody is against corruption, so it has become the new cool way to concentrate power in dictatorial societies to engage in an anti-corruption drive, as Putin and Xi Jinping have done.  Actually corrupt people may well be arrested, but somehow included in the set of those arrested are rivals of the leader who are conveniently disposed of. So we now see it in Saudi Arabia, where Crown Prince Muhammed bin Salman has been leading a special anti-corruption committee approved of by the Saudi ulama, and now it has arrested 11 princes accused of corruption.   As in other countries, many of them, possibly all of them are guilty, but included among them are some rivals of Muhammed’s for power, and, indeed the full set of names has not been released.The most important in terms of being a rival is the now former commander of the SANG, the Saudi Arabian National Guard, which was long commanded by Prince Meti bin Abdullah, son of the long time former King Abdullah.  Before Meti commanded SANG, Abdullah did so for decades and had the HQ of SANG on his own palace grounds within a wall.  SANG has long been the rival military in Saudi Arabia to the regular military under the Defense Department, which has been under the control of the crown prince since his father became king, succeeding Abdullah.  SANG has a base among the tribes, and it was SANG that finally defeated the Muslim Brotherhood (Ikhwan) uprising in 1979 that had led them to seizing control of the Grand Mosque in Mecca.  Abdullah was SANG commander at that time, and he had the reputation of having excellent relations with tribal leaders.  His sone was clearly a threat and rival to the crown prince, and now he is out.  The commander of the Saudi navy has also been replaced, although not clear if he has been arrested.

Saudi Arabia – This ‘Night Of The Long Knives’ Is A Panic-Fueled Move -- Yesterday the ruling Salman clan in Saudi Arabia executed a Night of the Long Knives cleansing the state of all potential competition. The Saudi King Salman and his son Clown Prince Mohammad bin Salman initiated a large arrest wave and purge of high ranking princes and officials. Part of this internal coup was the confiscation of huge financial estates to the advantage of the Salman clan. The earlier forced resignation of the Lebanese Prime Minister Saad al-Hariri is probably related to the last night's events. The Israeli Prime Minister Netanyahoo endorsed the resignation. This guarantees that Hariri will never again be accepted in a leading role in Lebanon. In Saudi Arabia eleven princes, including sons of the deceased King Abdullah, more than thirty former and acting ministers as well as the heads of three major TV stations were taken into custody or put under house arrest. The National Guard Commander Prince Mitieb Bin Abdullah was relieved from his post and replaced with Prince Khalid Bin Abdulaziz al Muqrin. The National Guard was the last intelligence and security power center held by the Abdullah branch of the al-Saud family.  The purged officials were replaced with stooges of the ruling Salman clan. The Salman branch of the current king and clown prince has now eliminated all of potential internal competition. This goes against the consensus model that had been the foundation of the Saudi family rule over the last century. Tens of thousands of clans and people depended on the patronage of the removed princes and officials. They will not just sit back as their fortunes evaporate. One effect of the purges will be the concentration of Saudi wealth in the hands of the Salmans. One of the arrested persons is the allegedly sixth richest man of the world, Prince Al-Waleed Bin Talal (video). He has (had?) an estimated net-worth between $18 and $32 billion. Al-Waleed had publicly clashed with U.S. President Donald Trump. (Al-Waleed is (was?) the largest shareholder of Citygroup which selected Barack Obama's cabinet before receiving a huge government bailout.) Another casualty is Bakr bin Laden, brother of Osama Bin Laden, chairman of the Saudi Binladin Group and fifth richest man of the country.

Saudi Crown Prince’s Mass Purge Upends a Longstanding System — A midnight blitz of arrests ordered by the crown prince of Saudi Arabia over the weekend has ensnared dozens of its most influential figures, including 11 of his royal cousins, in what by Sunday appeared to be the most sweeping transformation in the kingdom’s governance for more than eight decades.The arrests, ordered by Crown Prince Mohammed bin Salman without formal charges or any legal process, were presented as a crackdown on corruption. They caught both the kingdom’s richest investor, Prince Alwaleed bin Talal, and the most potent remaining rival to the crown prince’s power: Prince Mutaib bin Abdullah, a favored son of the late King Abdullah.Prince Mutaib had been removed from his post as chief of a major security service just hours before the arrests announced late Saturday night.All members of the royal family were barred from leaving the country, American officials tracking the developments said on Sunday. With the new detentions, Crown Prince Mohammed, King Salman’s favored son and key adviser, now appears to have established control over all three Saudi security services — the military, internal security services and national guard. For decades they had been distributed among branches of the House of Saud clan to preserve a balance of power in Saudi Arabia, the Middle East’s biggest oil producer and an important American ally.  In the same stroke, the crown prince has cowed businessmen and royals across the kingdom by taking down the undisputed giant of Saudi finance. And over the last several weeks he has ordered enough high-profile arrests of intellectuals and clerics to frighten the remainder of the academic and religious establishment into acceding to his will as well.Apolitical scholars who used to speak freely in cafes now look nervously over their shoulders, as Crown Prince Mohammed has achieved a degree of dominance that no ruler has attained for generations. The history of the House of Saud was sometimes punctuated by violent intrafamily strife in the decades before the founding of the modern dynasty, in 1932. Since then, the family has maintained its unity in part by spreading its top government roles and vast oil wealth among different branches of the sprawling clan. Most important was the division of the three main security services, which constitute the hard power on the ground.

 Saudi Purge Caps Murky Developments in West Asia that Presage Escalation of Conflict -  Saturday, November 4, was an extraordinary day: it witnessed three developments which, taken together, suggest a major escalation in the armed conflict in West Asia is in the offing, even as the region is already groaning under the violence of bloody wars in Syria, Yemen and Iraq, in which half a million people have been killed and several million have been displaced.  Saudi Arabia is at the heart of all these developments. First, in a dramatic coup within the royal family, engineered by King Salman and his son, Crown Prince Mohammed bin Salman, 11 princes have been detained, along with four sitting ministers and several former ministers and officials.  Prince Miteb bin Abdullah, the commander of the National Guard, the country’s powerful domestic security force, has been summarily dismissed, so that force has now also come under the control of the crown prince. The instrument used to effect these changes is the anti-corruption committee set up by the king on Saturday, with the crown prince as its chairman. The second development was the sudden announcement in Riyadh by the Lebanese prime minister, Saad Hariri, that he was resigning. Hariri had taken charge only in December 2016 after entering into a power-sharing agreement with President Michel Aoun. In his public remarks, Hariri said that Iran had planted “disorder and destruction” in his country and had made Hezbollah a “state within a state” in Lebanon. Hariri’s announcement has plunged Lebanon into a fresh crisis, when it has barely recovered from the two-year impasse earlier when it could not agree on a president until Aoun, said to enjoy the backing of Hezbollah, took over in a compromise arrangement and later got Hariri on board. Hariri’s resignation means that the power-sharing arrangement has collapsed, setting the stage for a deep national divide between Hezbollah and its Iranian sponsor on one side and Hariri, with Saudi backing, on the other.  As Saturday came to an end, there was news that the Houthis in Yemen had fired a missile at Saudi Arabia’s international airport in Riyadh. The kingdom announced that the missile had been intercepted by US-supplied Patriot missiles and destroyed before it could do any damage. Houthi sources said the missile was a Burkan-2H, a home-made variant of the Scud missile, which is available to the Houthis in large quantities. Later that day, Saudi airstrikes were launched at Sanaa, the first night attack in several weeks.

Saudi purge takes kingdom into unpredictable new era: Kemp (Reuters) - The wave of arrests and ministerial changes in Saudi Arabia at the weekend has fundamentally transformed the structure of the state as it has existed since the 1960s. Saudi Arabia has practised a form of collective leadership since the death of the founder King Abdulazziz in 1953 and especially since the abdication of his son King Saud in 1964.The crown has descended among the younger sons of Abdulazziz, with each son and his family tending to control one element of the state.Prince Faisal and then his son controlled the foreign ministry for decades. Prince Sultan controlled the defence ministry; Prince Nayef, the interior ministry and security forces.Prince Abdullah controlled the National Guard, a well-armed militia recruited from the royal family’s traditional tribal supporters. And Prince Salman served as governor of Riyadh.The system was intended to avoid the concentration of too much power in any one branch of the family and give all the sons of the founding king a stake in it.While formal power has always resided with the monarch, in practice the king was expected to consult with other senior members of the royal family and rule by consensus.The Saudi system of government has been more prime-ministerial than presidential. In fact, the king has always been concurrently the prime minister, while the crown prince has served as deputy prime minister, and other senior princes have served as ministers in a formal cabinet. For the first time, all three power ministries (defence, interior and National Guard) are under the direct control of one branch of the royal family.Personnel changes for lower-ranked cabinet positions, sub-cabinet posts and provincial governors over the last three years have all removed independent power brokers and reinforced the concentration of power. Control over all elements of the state has steadily consolidated power in the hands of King Salman and Crown Prince Mohammed bin Salman. Saudi Arabia’s internal power dynamics are also changing in other important ways.  The cardinal rule has always been that disputes are settled quietly within the royal family, without the involvement of outsiders. Princes were expected to show loyalty to the king and avoid overt calls for change in the system. In exchange, their personal security and wealth were respected.Corruption has been rife in Saudi Arabia for decades and has drained fabulous amounts of wealth from the state into private hands, with much of it ending up abroad.But corruption exists as part of a vast patronage system which ties together the royal family, the state bureaucracy and large parts of society in patron-client networks.The anti-corruption campaign and decision to arrest senior ministers and even princes is therefore targeting the very structure of the Saudi state.

Second Saudi Prince Confirmed Killed During Crackdown -- Following the death of Prince Mansour bin-Muqrin in a helicopter crash near the Yemen border yesterday, the Saudi Royal Court has confirmed the death of Prince Abdul Aziz bin Fahd - killed during a firefight as authorities attempted to arrest him. The death has been confirmed by the Saudi royal court. The Duran and Al-Masdar News both report that the prince died when his security contingent got into a firefight with regime gunmen attempting to make an arrest. Prince Aziz (44) who was the youngest son of King Fahd. The Duran's Adam Garrie points out that Prince Abdul Aziz was deeply involved in Saudi Oger Ltd, a company which until it ceased operations in the summer of this year, was owned by the Hariri family. Former Lebanese Prime Minister Saad Hariri was punitively in charge of the company until it ceased operations. Prince Abdul Aziz’s strange and sudden death which is said to have occurred during an attempted arrest, sheds light on the theory that the clearly forced resignation of former Lebanese Prime Minister Saad Hariri had more to do with internal Saudi affairs than the Saudi attempt to bring instability to Lebanon. The Saudi Royal family has now lost two princes in 24 hours. As Al Jazeera notes, in this Saudi version of 'Game of Thrones', the 32-year-old Bin Salman shows that he is willing to throw the entire region into jeopardy to wear the royal gown. His actions have already all but destroyed the Gulf Cooperation Council (GCC); Yemen can no longer be referred to as a functioning state; Egypt is a ticking time bomb; and now Lebanon may erupt. There's a lot to worry about.

Saudi Banks Begin Freezing Accounts Of Arrested Royals, Private Jets Grounded -- Two days after the most stunning purge in recent Saudi history, the so-called "anti-corruption probe" - which was really a countercoup - that led to the arrest of dozens of Saudi Arabian royals, ministers and businessmen allowing Mohammed to further cement control over the Kingdom, appeared to be widening on Monday when, as Reuters reports, Saudi banks begun freezing the accounts of those arrested. The Saudi central bank ordered commercial banks to freeze the accounts of people under investigation in the probe, the Reuters sources said, adding that the number of accounts affected could run into the hundreds, although the names of those affected have yet to emerge. “The freezing of accounts has already happened,” said another source. “The freezing is a precautionary measure that will end as soon as the suspects are either charged or pronounced innocent.” Considering that prince Alwaleed alone has over $19 billion in assets, including nearly a billion dollars in jewelry, plans, yachts, furniture and cash..... the local central banks may have "accidentally" found an unexpectedly efficient way of refilling Saudi's dwindling foreign reserve account.At the same time, fears of a broader crackdowns were spreading, and as Bloomberg reported this morning, the Olayan family, which runs one of Saudi Arabia’s biggest conglomerates, is putting plans to sell shares in some of its local assets on hold "amid slow economic growth in the kingdom." What it means is that right now it is a good idea to keep a very low profile.

Saudi Arabia Is About To Confiscate $33 Billion From Four Of Its Richest People -- Earlier today, when discussing the Saudi bank account and asset freeze (and confiscation) of dozens of princes and ministers, we said that just the haul of billionaire prince Alwaleed's $19 billion in various holdings, including nearly a billion dollars in jewelry, plans, yachts, furniture and cash.... would be an efficient way of refilling Saudi's rapidly declining foreign reserves. And refilling they need: as shown in the chart below, Saudi reserves have declined from their peak in 2014 by over a quarter trillion dollars as a result of the roughly 50% drop in gas prices in the past 3 years. Of course, it's not just Alwaleed whose net worth is at risk of becoming nationalized. As Bloomberg writes, "the stunning series of arrests has implicated three of the country’s richest people, including Prince Alwaleed bin Talal, who’s No. 50 on the Bloomberg Billionaires Index ranking of the world’s 500 richest people, with $19 billion. Also being held are the kingdom’s second- and fifth-wealthiest people, as well as a travel-agency mogul and Bakr Binladin, a scion of a one of the country’s biggest construction empires." He is also, of course, Osama bin Laden's brother as discussed yesterday. All told, up to $33 billion in (arrested) royalty wealth is at risk of confiscation.

Saudi Corruption Purge Snares $33 Billion of Net Worth in Riyadh -- Crown Prince Mohammed bin Salman’s crackdown on some of Saudi Arabia’s richest and most powerful men has put $33 billion of personal wealth at risk. The stunning series of arrests has implicated three of the country’s richest people, including Prince Alwaleed bin Talal, who’s No. 50 on the Bloomberg Billionaires Index ranking of the world’s 500 richest people, with $19 billion. Also being held are the kingdom’s second- and fifth-wealthiest people, as well as a travel-agency mogul and Bakr Binladin, a scion of a one of the country’s biggest construction empires.The arrests, which the crown prince said are part of a fight against corruption, reportedly have led the government to freeze the accounts of the more than three dozen men detained and believed to be held at the Riyadh Ritz-Carlton.

Alwaleed bin Talal, $19 billion
  • Owns stakes in Twitter Inc., News Corp. and Citigroup Inc.
  • Nephew of the late Saudi ruler, King Abdullah. Son of Prince Talal and Princess Mona El-Solh, daughter of Lebanon’s first prime minister, Riad El-Solh.
  • Made his first billion dollars trading land and acting as a point man for multinational companies seeking local contracts.
Mohammed Al Amoudi, $10.1 billion
  • Controls an empire that has investments across Africa, Europe and Saudi Arabia. 
  • Born in Ethiopia to a Saudi father and Ethiopian mother.
  • Moved to Saudi Arabia as a young man and made his first billion in the late 1980s through construction, aided by an early government contract to help build the country’s underground oil storage facility.
  • Assets include Sweden’s largest oil refiner, Preem AB, real estate and numerous contracting businesses. In Ethiopia, where he’s said to be the biggest private investor, he owns hotels and a gold mine, and has invested hundreds of millions of dollars in large-scale farms growing coffee and rice.
Saleh Kamel, $3.7 billion
  • Self-made finance and healthcare entrepreneur started running bus services for Hajj pilgrims and later founded the kingdom’s first driving school. 
  • Regarded as one of the pioneers of Islamic finance, a method of banking that complies with Islamic law and is today a $2.2 trillion industry.
  • Kamel founded Manama, Bahrain-based Albaraka Banking Group, an Islamic bank with $23.4 billion in assets at the end of 2016.
  • Carved out an early niche for himself by becoming the first non-government company to sell services to consumers. 
  • Jeddah-based holding group, Dallah Albaraka, owns more than a dozen businesses, spanning hospital operator Dallah Healthcare Company, real estate developments and snack-food factories.

Purge of Saudi princes, businessmen widens, travel curbs imposed (Reuters) - A campaign of mass arrests of Saudi Arabian royals, ministers and businessmen expanded on Monday after a top entrepreneur was reportedly detained in the biggest anti-corruption purge of the kingdom’s affluent elite in its modern history. The reported arrest of Nasser bin Aqeel al-Tayyar followed the detention of dozens of top Saudis including billionaire investor Prince Alwaleed bin Talal in a crackdown that the attorney general described as “phase one”. The purge is the latest in a series of dramatic steps by Crown Prince Mohammed bin Salman to assert Saudi influence internationally and amass more power for himself at home. The campaign lengthens an already daunting list of challenges undertaken by the 32-year-old since his father, King Salman, ascended the throne in 2015, including going to war in Yemen, cranking up Riyadh’s confrontation with arch-foe Iran and reforming the economy to lessen its reliance on oil. Both allies and adversaries are quietly astounded that a kingdom once obsessed with stability has acquired such a taste for assertive - some would say impulsive - policy-making. “The kingdom is at a crossroads: Its economy has flatlined with low oil prices; the war in Yemen is a quagmire; the blockade of Qatar is a failure; Iranian influence is rampant in Lebanon, Syria and Iraq; and the succession is a question mark,” wrote ex-CIA official Bruce Riedel. “It is the most volatile period in Saudi history in over a half-century.” The crackdown has drawn no public opposition within the kingdom either on the street or social media. Many ordinary Saudis applauded the arrests, the latest in a string of domestic and international moves asserting the prince’s authority. But abroad, critics perceive the purge as further evidence of intolerance from a power-hungry leader keen to stop influential opponents blocking his economic reforms or reversing the expansion of his political clout. 

Saudi banks freeze more than 1,200 accounts in probe, number still rising: sources (Reuters) - Saudi Arabian banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom as part of the government’s anti-corruption purge, bankers and lawyers said on Tuesday. They added that the number is continuing to rise. Dozens of royal family members, officials and business executives have been detained in the crackdown and are facing allegations of money laundering, bribery, extorting officials and taking advantage of public office for personal gain. Since Sunday, the central bank has been expanding the list of accounts it is requiring lenders to freeze on an almost hourly basis, one regional banker said, declining to be named because he was not authorized to speak to media. The banker did not name the companies affected but said they included listed and unlisted firms across many sectors. He added that if the freezes stayed in place for long, they could start to hurt day-to-day business activities such as paying staff and creditors or making other transactions. A second banker said, however, that most of the frozen accounts belonged to individuals rather than companies, and that banks were being allowed by the regulator to continue to fund existing commitments. A central bank spokesman was not available to comment.

Real Motive Behind Saudi Purge Emerges: $800 Billion In Confiscated Assets --- From the very beginning, there was something off about the unprecedented countercouppurge unleashed by Mohammad bin Salman on alleged political enemies, including some of Saudi Arabia's richest and most powerful royals and government officials: it was just too brazen to be a simple "power consolidation" move; in fact most commentators were shocked by the sheer audacity, with one question outstanding: why take such a huge gamble? After all, there was little chatter of an imminent coup threat against either the senile Saudi King or the crown prince, MbS, and a crackdown of such proportions would only boost animosity against the current ruling royals further. Things gradually started to make sense when it emerged that some $33 billion in oligarch net worth was "at risk" among just the 4 wealthiest arrested Saudis, which included the media-friendly prince Alwaleed. One day later, a Reuters source reported that in a just as dramatic expansion of the original crackdown, bank accounts of over 1,200 individuals had been frozen, a number which was growing by the minute. Commenting on this land cashgrab, we rhetorically asked "So when could the confiscatory process end? As we jokingly suggested yesterday, the ruling Saudi royal family has realized that not only can it crush any potential dissent by arresting dozens of potential coup-plotters, it can also replenish the country's foreign reserves, which in the past 3 years have declined by over $250 billion, by confiscating some or all of their generous wealth, which is in the tens if not hundreds of billions. If MbS continues going down the list, he just may recoup a substantial enough amount to what it makes a difference on the sovereign account."

Saudi Arabia Charges Iran With ‘Act of War,’ Raising Threat of Military Clash — Saudi Arabia charged Monday that a missile fired at its capital from Yemen over the weekend was an “act of war” by Iran, in the sharpest escalation in nearly three decades of mounting hostility between the two regional rivals. “We see this as an act of war,” the Saudi foreign minister, Adel Jubair, said in an interview on CNN. “Iran cannot lob missiles at Saudi cities and towns and expect us not to take steps.” The accusation, which Iran denied, came a day after a wave of arrests in Saudi Arabia that appeared to complete the consolidation of power by the crown prince, Mohammed bin Salman, 32. Taken together, the two actions signaled a new aggressiveness by the prince both at home and abroad, as well as a new and more dangerous stage in the Saudi cold war with Iran for dominance in the region. “Today confrontation is the name of the game,” said Joseph A. Kechichian, a scholar at the King Faisal Center for Research and Islamic Studies in Riyadh, Saudi Arabia, who is close to the royal family. “This young man, Prince Mohammed bin Salman, is not willing to roll over and play dead. If you challenge him, he is saying, he is going to respond.” The accusations raise the threat of a direct military clash between the two regional heavyweights at a time when they are already fighting proxy wars in Yemen and Syria, as well as battles for political power in Iraq and Lebanon. By the end of the day Monday, a Saudi minister was accusing Lebanon of declaring war against Saudi Arabia as well. 

Saudi Arabia has united with Israel against Iran – and a desert storm is brewing - Until last weekend, the Ritz-Carlton in Riyadh’s exclusive Diplomatic Quarter was colloquially known as the Princes’ Hotel. It was a luxurious retreat from the heat, where royals could engage in the kind of wheeling and dealing with the global business elite that had made them millionaires on the back of the 1970s oil boom. No deal could be brokered without paying a bribe to at least one prince. Last Saturday that era of boundless opportunity and total impunity came to a dramatic end. The VIP guests were booted out, the front doors were shuttered, and heavily armed security forces took up positions around the perimeter. A Saudi who lives nearby sent me a message about what he thought was an unfolding terrorist incident. That’s one way of describing the extraordinary, chaotic events. We have seen a mini-wave of terror orchestrated by the all-powerful 32-year-old heir to the throne, Crown Prince Mohammad bin Salman, who has been given day-to-day control of the kingdom’s affairs by his ailing father, King Salman, 81. Bin Salman’s ascent and methods now promise to change Saudi Arabia forever. Bin Salman’s power grab is in itself spectacular. But the wider significance of this can only be fully understood in conjunction with events in Israel. The Jewish state is hardly a natural ally for Saudi Arabia, but they have long shared a common enemy: Iran. Both fear the latter is exploiting the opening created by the fall of Isis, and the triumph of the Assad regime in Syria, to dominate the region. Iran and its proxies — whether the Houthi rebels in Yemen or Hezbollah in Lebanon — are in the ascendant, and neither Israel nor Saudi Arabia are going to sit on the sidelines. So the two have been working together: close diplomatic cooperation, intelligence sharing and perhaps more. Israeli media recently reported that a senior Saudi prince, possibly Bin Salman himself, paid a secret visit to the Jewish state. The idea of a Saudi-Israeli alliance is still deeply controversial in both countries, but details are starting to leak out.

The Israeli-Saudi alliance beating the drums of war - Over the past 24 hours, the drumbeat of war in the Middle East has risen to a fever-pitch. Saudi Arabia has provoked both an internal domestic, and a foreign crisis to permit Crown Prince Mohammed bin Salman to realise his grandiose vision of the Saudi state.Internally, Salman suddenly created an anti-corruption commission and within four hours it had ordered the arrest of some of the highest level royal princes in the kingdom, including at least four sitting ministers and the son of a former king.The most well-known name on the list, and one of the world's richest men, was Alwaleed bin Talal. Just a few hours earlier, after being summoned to Saudi Arabia for consultations, Lebanese Prime Minister Saad al-Hariri told a Saudi TV audience that he was quitting his job due to "death threats" against him. Why the prime minister of a country would resign in the capital of a foreign nation is inexplicable.Coverage of Hariri's statement noted that he spoke haltingly into the camera and looked off-camera several times, indicating that the statement may have been written for him and that he may have delivered it under duress. Given the strong-arm tactics used by bin Salman to both secure his own title as crown prince, and the subsequent arrest of scores of prominent Saudis deemed insufficiently loyal to him, it would not be at all out of character to summon the leader of a vassal state and offer an ultimatum: either resign or we will cut you off (literally).

Iran Slams Saudi, US Claims It Ordered Ballistic Missile Attack From Yemen -- On Tuesday Iran slammed Saudi and US claims that it was supplying Yemen's Houthi rebels with advanced ballistic missiles that Saudi Arabia says targeted Riyadh international airport on Saturday - which would be a violation of a UN resolution which ensures conformity to the Iran nuclear deal. Iran's state-run IRNA news cited a letter sent to the UN Security Council signed by Iranian ambassador Gholamali Khoshroo, saying that Iran “categorically” rejects Saudi Arabia’s“baseless and unfounded accusations and considers it as destructive, provocative and a ‘threat to use of force”’ against a UN member state in defiance of the UN charter. Iran's foreign minister further called the Saudi claims "contrary to reality and dangerous". Though Saudi Arabia has mounted an aggressive aerial bombing campaign of deeply impoverished and disease-ridden Yemen for over the past two years, killing and woundingtens of thousands of civilians, it is Iran that is coming under intense pressure this week. Yesterday Saudi Arabia charged its regional rival Iran with "an act o f war" while stating through its military coalition executing Yemen operations that, “Iran’s role and its direct command of its Houthi proxy in this matter constitutes a clear act of aggression that targets neighboring countries, and threatens peace and security in the region and globally.” However, the Iranian ambassador's letter to the UN responded directly to the charges with, “Such provocative statements by the Saudis are nothing but an attempt to shift the blame and to distract attention from its war of aggression against Yemen.” Other Iranian officials, according to various reports, called the Saudi claims "fake news".

Setting The Stage For War: US Air Force Says Missile Targeting Saudi Capital Was Iranian - One day after Saudi Arabia and Kuwait ordered their citizens to evacuate Lebanon - a move many suggested telegraphed an imminent "military intervention" - the mainstream media has begun building the case for a new mid-east war, one which will involve Iran and Hezbollah (and potentially Russia, not to mention other Shia Muslims) on one hand, and Saudi Arabia and Israel on the other.For that, it got help from the US Air Force today, and as AP reports this morning, "the ballistic missile fired by Yemeni rebels that targeted the Saudi capital was from Iran and bore “Iranian markings,” the top U.S. Air Force official in the Mideast said Friday." Lt. Gen. Jeffrey L. Harrigian, who oversees the Air Forces Central Command in Qatar, made the comments at a news conference in Dubai.The narrative is familiar: just as European terrorists conveniently commit suicide andalways dutifully bring along their passports so they can be identified, so Iran always makes sure it leaves identifying marks when it illegally sells its weapons to Houthi rebels in Yemen.No really: after the Nov. 4 strike near Riyadh, Saudi Arabia’s Foreign Ministry said investigators examining the remains of the rocket found evidence proving “the role of Iranian regime in manufacturing them.” It did not elaborate, though it also mentioned it found similar evidence after a July 22 missile launch. French President Emmanuel Macron similarly this week described the missile as “obviously” Iranian. "Obviously."

There Are Now 895,000 Cases of Cholera in Yemen - Yemen’s cholera epidemic has now spread to more than 890,000 cases: Already struggling to cope with a dire humanitarian crisis, war-torn Yemen is now facing the fastest-growing cholera epidemic ever recorded, with some 895,000 suspected cases as of 1 November, the United Nations relief wing reported Thursday.  While the epidemic has started to slow somewhat, it remains by far the worst and fastest-spreading cholera outbreak on record. There are still millions of malnourished Yemenis at risk of dying from starvation and preventable disease. The Saudi-led coalition war and blockade continue to deprive the civilian population of essential food and medicine. Yemen’s humanitarian crisis is still the worst in the world, and tens of millions are in need of aid. Even if the cholera epidemic has started waning for now, Yemen’s need for for an end to war and a massive relief effort is as great as ever.

Yemeni Journalist: Saudi Arabia's Total Blockade on Yemen Is "Death Sentence" for All - Democracy Now! - Video Interview with transcript - United Nations officials say Yemen will face the world's largest famine in decades if the Saudi-led coalition refuses to lift its blockade on deliveries of aid. On Monday, the coalition shut air, land and sea routes into Yemen after Houthi rebels fired a missile that was intercepted near the Saudi capital, Riyadh. Saudi Arabia says its blockade is needed to stop Iran from sending weapons to the rebels. The UN says aid agencies were given no prior notice of the Saudi decision to shut down all land, air and seaports in Yemen. Meanwhile, medical experts warn the clampdown will worsen Yemen's cholera epidemic, which has sickened more than 900,000 people. We are joined by Afrah Nasser, an independent Yemeni journalist who is the founder and editor-in-chief of the Sana'a Review. Facing death threats, she is in exile from Yemen but continues to report on human rights violations, women's issues and press freedom there. She is here in the US to receive the International Free Press Award from the Committee to Protect Journalists. Yemen Rebels Threaten Saudi, UAE Ports and Airports -  Yemen's Iran-backed Huthi rebels on Tuesday threatened retaliation against the ports and airports of the United Arab Emirates and Saudi Arabia, which this week closed the Yemeni land, sea and air borders."All airports, ports, border crossings and areas of any importance to Saudi Arabia and the UAE will be a direct target of our weapons, which is a legitimate right," read a statement released by the rebels' political office. Allied with Yemen's government, a military coalition led by Saudi Arabia has been battling the Huthis on Yemeni land since 2015.  The Huthi's statement comes the day after the coalition announced it had closed all of Yemen's borders, after Saudi forces intercepted a ballistic missile headed for the kingdom's international airport in Riyadh. The Huthis have claimed the missile attack.  The United Nations on Monday reported the Saudi-led coalition had prevented two humanitarian aid flights from flying to the war-torn country.

Saudi Arabia says Lebanon declares war, deepening crisis  (Reuters) - Saudi Arabia accused Lebanon on Monday of declaring war against it because of aggression by the Iran-backed Lebanese Shi‘ite group Hezbollah, a dramatic escalation of a crisis threatening to destabilize the tiny Arab country. Lebanon has been thrust to the center of regional rivalry between Saudi Arabia and Iran since the Saudi-allied Lebanese politician Saad al-Hariri quit as prime minister on Saturday, blaming Iran and Hezbollah in his resignation speech. Saudi Gulf affairs minister Thamer al-Sabhan said the Lebanese government would “be dealt with as a government declaring war on Saudi Arabia” because of what he described as aggression by Hezbollah. Faulting the Hariri-led administration for failing to take action against Hezbollah during a year in office, Sabhan said “there are those who will stop (Hezbollah) and make it return to the caves of South Lebanon”, the heartland of the Shi‘ite community. In an interview with Al-Arabiya TV, he added: “Lebanese must all know these risks and work to fix matters before they reach the point of no return.” He did not spell out what action Saudi Arabia might take against Lebanon, a country with a weak and heavily indebted state that is still rebuilding from its 1975-90 civil war and where one-in-four people is a Syrian refugee. There was no immediate comment from the Lebanese government. Hezbollah is both a military and a political organization that is represented in the Lebanese parliament and in the Hariri-led coalition government formed last year. Its powerful guerrilla army is widely seen as stronger than the Lebanese army, and has played a major role in the war in neighboring Syria, another theater of Saudi-Iranian rivalry where Hezbollah has fought in support of the government. 

Where’s Saad Hariri? Lebanon Wants to Know - — Lebanon is used to affronts to its sovereignty. Israel occupied part of the country for years. Syrian troops stayed even longer. Then the Lebanese militant group Hezbollah fought a war with Israel, and waged another in Syria, as the Lebanese government watched. The United States, France and Britain have, over the past century, done their share of meddling. But no one has seen anything quite like the spectacle that has played out over the past few days. Saad Hariri, the prime minister, who had previously shown no signs of planning to quit, unexpectedly flew to Saudi Arabia and announced his resignation from there, to the shock of his own close advisers. He has not been back since, and no one is sure when, or if, he is returning. Hours after Mr. Hariri’s announcement — televised Saturday on a Saudi-controlled channel — Saudi Arabia’s assertive new crown prince, Mohammed bin Salman, presided over the roundup of some 500 people, including 11 princes, on corruption charges. Lebanon broke out the popcorn. In a country where political analysis is a near-universal hobby, and where political power is — to oversimplify a bit — divided between Mr. Hariri’s Sunni, Saudi-backed party and the Shiite, Iran-backed Hezbollah, speculation was immediate that Mr. Hariri was also being held against his will. He holds dual Lebanese and Saudi citizenship and has extensive business dealings in the Persian Gulf kingdom. A front-page headline in Al Akhbar, a newspaper that leans toward Hezbollah, called the Saudi-backed Mr. Hariri a “hostage.” Even his advisers and allies were unwilling to declare unequivocally that he was free to return on his own schedule. Mr. Hariri, perhaps seeking to retake control of the narrative, posted photos on Twitter of his meetings with Saudi Arabia’s new ambassador to Lebanon and later with the king. But Lebanese social media commenters — and the Lebanese-British satirist Karl Sharro — were quick to poke fun, comparing the images to hostage proof-of-life photos.

Saad Hariri’s Saudi Resignation: Good News for Iran and Hezbollah - At the end of October, Sunni Prime Minister of Lebanon Saad Hariri, an ally of the West and of Saudi Arabia, went to Riyadh for an official visit. On November 1, back in Beirut, he announced that the visit was successful, and that the Saudi regime maintains its support for the Lebanese government. This government was established a year ago, after two-and-a-half years of a harsh power struggle between Sunnis and Shias, an institutional crisis that had previously made experts fear the worst for Lebanon. On November 2, Prime Minister Hariri hosted Ali Akbar Velayati, senior foreign policy advisor to Ayatollah Khamenei. After saying that Saad Hariri was “a respectable man,” Velayati reaffirmed Tehran’s support for the Lebanese government and the country’s stability. But on November 3, Hariri indicated that he had to return that same night to Riyadh to meet King Salman. In a detail that turned out later to have a major significance, he was asked by the Saudis to come alone, without his staff, not even with his chief of cabinet. The next morning, Saad Hariri announced his official resignation as prime minister. In an address given live from Riyadh, he stated that he refused to see Lebanon placed under “external and internal” guardianship. His announcement was followed by a strong speech against Hezbollah and Iran, with a hostility that the Lebanese hadn’t heard from him for more than a year. He also threatened to “cut the hands” of Hezbollah and Iran, while also accusing them of plotting to assassinate him. This announcement came as a blow to politicians in Beirut. Even in Hariri’s own party, major political figures denied having any clue of what had just happened. The army, the General Security Directorate, and even the police (who usually benefit from Hariri’s patronage) all denied the rumor of an assassination attempt. Hariri’s attitude was even more confusing because of his lack of communication. Except for a few Sunni radicals, many feared for the country’s stability. Even Hariri’s political allies officially regretted his resignation and expressed a firm refusal to go back to the years of tense rivalry between the various political actors.

Defeated Elsewhere, Saudi Tyrant Declares War On Lebanon -- The Saudi clown prince Mohammed bin Salman is purging all potential internal resistance and solidifies his dictatorial position. (The move includes a huge money grab. All assets of those accused of corruption are confiscated by the state which, in Saudi Arabia, is the tyrant himself.) The internal consolidation of power is the prelude for a larger external venture.At the same time as the internal purges proceed, MbS implements an extremely aggressive foreign policy agenda targeted at Iran and its allies. Having been defeated in Iraq and Syria and at stalemate in Qatar and Yemen the Saudi ruler decided to try his luck in Lebanon. The Saudi declares war on Lebanon and will put enormous economic and political pressure on it. But all of that will be to no avail. The war will only cause Lebanon to move deeper into the "resistance" camp an join its forces with Syria, Iran and Russia.The Saudi plans are well coordinated with the United States and have the full support of the Israeli government. The point man in the Trump administration for all Middle East issues is Trump's son-in-law (and arch Zionist) Jared Kushner. He made three trips to Saudi Arabia this year, the last one very recently. The Washington Post's David Ignatius brown noses:[L]ast month, Jared Kushner, Trump’s senior adviser and son-in-law, made a personal visit to Riyadh. The two princes are said to have stayed up until nearly 4 a.m. several nights, swapping stories and planning strategy. A week ago the Saudi minister (and extremists) Thamer al-Sabhan called for toppling Hizbullah and promised "astonishing developments". Friday night the Lebanese Prime Minister Saad al Hariri was ordered back to his home-country Saudi Arabia and pressed to read a resignation statement on a Saudi TV station. None of his advisors in Lebanon knew that this was coming. It is claimed that Hariri did not voluntarily resign and is now under house arrest. There is even a Free Hariri Clock counting the hours, minutes and seconds of his ordeal. The Lebanese President has not accepted the PM's resignation and demands that Hariri returns to Lebanon. We called the resignation The Opening Shot Of The Saudi War On Hizbullah.

Lebanon's prime minister was reportedly coerced by Saudi Arabia into quitting — and he still hasn't been home to explain himself (Reuters) - Lebanese Prime Minister Saad al-Hariri visited the United Arab Emirates on Tuesday, his first trip outside Saudi Arabia, as regional tensions aggravated by his surprise resignation escalated into a domestic crisis. Hariri, an ally of Saudi Arabia, flew to Abu Dhabi and then returned to Riyadh, his office said. His Future TV channel said he would also visit Bahrain. His resignation has thrust Lebanon back into the frontline of a Middle East rivalry pitting a mostly Sunni bloc led by Saudi Arabia and allied Gulf monarchies against Shi'ite Iran and its allies. On Monday, Saudi Arabia accused Lebanon of declaring war against it because of aggression by Iran's Lebanese ally Hezbollah, dramatically escalating the crisis and threatening to destabilize Lebanon. Lebanese politicians and Hezbollah were on Tuesday silent about the escalation in Saudi rhetoric after a series of consultations with President Michel Aoun, a Hezbollah ally. Hariri's resignation collapses a national unity government agreed last year in a political deal that united Lebanon's opposing sides and led to the country's first budget since 2005 and agreement on a new law for parliamentary elections, which could be derailed by the crisis. Aoun has said he will not accept Hariri's resignation until he returns to Lebanon to explain his thinking -- a move widely seen as a stalling tactic. Hezbollah and its allies will struggle to form a government without Hariri or his blessing. The post of prime minister must be filled by a member of Lebanon's Sunni community, among which he is the most influential politician.  

Saudi Arabia Orders Its Citizens Out of Lebanon, Raising Fears of War — Saudi Arabia ordered its citizens to leave Lebanon on Thursday, escalating a bewildering crisis between the two Arab nations and raising fears that it could lead to an economic crisis or even war. The order came after Saudi Arabia had stepped up its condemnations of Hezbollah, the Iran-backed Shiite militia that is the most powerful political and military force in Lebanon, and asserted that Lebanon had effectively declared war on Saudi Arabia. The developments plunged Lebanon into a state of national anxiety, with politicians, journalists and even parents picking up their children at school consumed with the question of what could come next. While analysts said a war was unlikely — because Saudi Arabia was not capable of waging one and Israel did not want one now — they worried that with so many active conflicts in the region, any Saudi actions that raised the temperature increased the risk of an accidental conflagration.  “There are so many fuses, so little communication, so many risks of something exploding, that there’s little chance of something not going wrong,”  “Everything needs to go right to maintain calm.” The backdrop to the crisis was a series of steps by Saudi Arabia in recent days to confront its ascendant regional rival, Iran, and the surprise arrests of about 200 Saudis, including 11 princes, in what the government describes as an anti-corruption campaign but which critics see as a consolidation of power by the Saudi crown prince, Mohammed bin Salman.Lebanon had already been drawn into the crisis in two ways: After a rocket was fired from Yemen at the Saudi capital, Riyadh, on Saturday, Saudi officials accused Hezbollah and Iran of aiding in the attack. And they declared that the attack amounted to a declaration of war by Lebanon, a leap given that the weak Lebanese state does not control Hezbollah. At the same time, the Lebanese prime minister, Saad Hariri, unexpectedly flew to Riyadh and declared his resignation there on Saturday. Suspicions were growing among officials and diplomats in Beirut on Thursday that he had not only been pressured to do so by Saudi Arabia but was being held there against his will.

Kuwait orders its nationals to leave Lebanon immediately 00 Kuwait’s foreign ministry ordered its nationals to leave Lebanon immediately, according to a statement on Thursday carried by state news agency KUNA. The decision came hours after Saudi Arabia warned its citizens against traveling to Lebanon and asked those in the country to leave as soon as possible. A foreign ministry source, quoted by state news agency SPA, also called on Saudis not to travel to Lebanon. "Due to the situation in the Republic of Lebanon, the kingdom asks its nationals visiting or living in Lebanon to leave as soon as possible, and advises its citizens not to travel there," the source said. Last Sunday, Bahrain urged its citizens to avoid traveling to Lebanon and advised those already in the country to leave immediately for their safety.  It warned its citizens to avoid traveling to Lebanon “for their own safety and to avoid any dangers they might encounter.” Its warning came a day after Lebanese Prime Minister Saad Hariri announced his resignation. Speaking from the Saudi capital Riyadh, Hariri cited Iran’s “grip” on the country and threats to his life. His surprise withdrawal from a government that also includes Lebanese Shiite movement Hezbollah risked plunging the already fragile country deeper into turmoil. Manama has declared Hezbollah a terrorist group and repeatedly accused it of involvement in violent attacks in the tiny Gulf kingdom.

 The US and EU back Lebanon after Saudi Arabia said it had declared war - (Reuters) - The European Union on Wednesday affirmed support for Lebanon following the resignation of Prime Minister Saad al-Hariri, echoing U.S. backing for the Beirut government which Saudi Arabia has accused of declaring war. Statements of support from EU ambassadors to Lebanon and the U.S. State Department on Tuesday struck a sharply different tone to Saudi Arabia, which has lumped Lebanon together with the Iran-backed Lebanese group Hezbollah as parties hostile to it. Lebanon has been pitched into deep crisis since the Saudi-allied Hariri resigned on Saturday in a speech delivered from Saudi Arabia in which he accused Hezbollah and Iran of sowing strife in the Arab world and cited fear of assassination. The circumstances surrounding Hariri's sudden resignation have given rise to speculation in Lebanon that he had been caught up in a high-level anti-corruption purge in Saudi Arabia, where his family made their fortune, and coerced into resigning. Saudi Arabia has denied this along with reports that it has put Hariri under house arrest. It says he quit because Hezbollah was calling the shots in the government. The move has pulled Lebanon back to the forefront of a regional struggle between the Sunni monarchy of Saudi Arabia and the Shi'ite Islamist government of Iran, a rivalry which has also swept through Syria, Iraq, Bahrain and Yemen.In a statement, the EU ambassadors said they reaffirmed "their strong support for the continued unity, stability, sovereignty, and security of Lebanon and its people". 

Stratfor explains this week’s coup in Saudi Arabia - Three days of palace intrigue in Riyadh have captivated Saudis and foreign observers alike as dozens of princes, ministers and former officials were swept up in an anti-corruption campaign led by young Crown Prince Mohammed bin Salman. The crackdown is certainly driven by the legitimate motives of restructuring the royal family’s patronage networks and curtailing corruption. However, it is also designed to cement the powerful prince’s status at the top of the country’s economic and political hierarchy. For years bin Salman and his father, King Salman, have meticulously planned the young ruler’s rapid ascent to the throne. But their quest to consolidate power is as much a product of Saudi Arabia’s geopolitical environment as it is of their personal ambition. The Salmans’ attempt to amass power has been years in the making. Because Saudi Arabia’s founder, King Abdulaziz, had 36 sons, much of the kingdom’s contemporary history has been characterized by competition — and alliance-building, often along maternal lines — among the family’s various branches. Control of certain positions or institutions would often go to specific bases of royal influence. For instance, former Crown Prince Sultan bin Abdulaziz led the Defense Ministry for nearly 50 years before passing it to his brother, the current king. In much the same way, former King Abdullah eventually handed the reins of the Saudi Arabian National Guard to his son. Some princes even managed to carve out their own roles in the kingdom’s economy, though certain sectors, including the all-important oil industry, remained in the hands of technocrats. This patchwork power structure created an informal system of checks and balances that prevented any single royal faction from dominating the country. As a result, sweeping change in Saudi Arabia has historically required consensus among the ruling family. But that system now seems to have run its course. The sons of the kingdom’s founder are aging, and his grandsons are eager to claim their birthright. As they do, King Salman has taken it upon himself to restructure the House of Saud and the balance of power within it.

Saudi Arabia could seize $800bn in assets | Daily Mail Online: Saudi Arabia could seize $800 billion in assets from the kingdom's elite as part of its anti-corruption purge. So far at least 11 princes and 38 former government ministers have been detained in the crackdown ordered by Crown Prince Mohammed bin Salman, though there are said to be more names on the hit list. They have all had their bank accounts frozen and risk having their assets and properties seized by the government as it attempts to flush out fraud in Saudi Arabia. As the net is cast wider by government officials, the hierarchy are said to be eyeing up cash and assets worth around $800billion, according to Wall Street Journal who quoted sources close to the matter. It is believed the number of those detained has now reached more than 60, but that the government is watching more notable figures.  Prince Al-Waleed bin Talal is one of the men who has been detained Saudi billionaire Prince Al-Waleed bin Talal - who is one of the richest men in the world and owns the British capital's top hotel the Savoy - is one of the men who has been detained.He also owns the huge Kingdom Tower in Riyadh - a 99-storey skyscraper which features a Four Seasons hotel, luxury apartments and a shopping maul. The Saudi information ministry stated the government would seize any asset or property related to the alleged corruption, meaning London's Savoy hotel could become state property in the kingdom.Meanwhile, in an astonishing move, Saudi Arabia princes fleeing the purge have been offered asylum in Yemen by the same rebels they are bombing. Houthi rebels have made the offer of political asylum to princes and a source told Al Jazeera on Tuesday that any Saudi prince or national seeking refuge would be 'welcomed' by Yemen, their 'brotherly neighbour'. 'We are ready to offer sanctuary to any member of the Al Saud family or any Saudi national that wants to flee oppression and persecution,' the source said. 

Kingdom Of Fear: Saudi Arabia On Lockdown -- Events in Saudi Arabia are unfolding at a blinding pace, with a radical shift taking place within the upper echelons of government. Last weekend, King Salman announced the set-up of a special anti-corruption force that wasted no time in rounding up more than a dozen government officials—both former and current—five members of the royal family, and several businessmen. Since then, the list has been growing, to more than 60 as of today. Now there are reports about the Riyadh Ritz-Carlton being turned into a luxury prison for the detainees. There are rumors—which Riyadh has denied—that one of the targets of the purge, Prince Abdulaziz bin Fahd, was killed while resisting arrest. There are also reports that the purge could fill the state coffers with as much as US$800 billion in assets seized from those arrested—all members of the Saudi elite.Speculation abounds and there is growing worry that the situation could spiral out of control. There is a constant flow of new information coming from Saudi Arabia, such as that one of the Arab world’s leading broadcasters, MBC, has been put under government control. Part of its management was removed and the owner detained. News is also emerging that even the former Saudi Energy Minister Ali al-Naimi, Saudi Arabia’s media face for decades, has been forcibly confined to his quarters.There is talk that a travel ban has been issued for a number of government officials, including executives from Aramco. That’s on top of reports that Aramco board member Ibrahim al-Assaf, a former Finance Minister in the Kingdom, was also among those arrested. Naturally, in oil industry circles this raises the question over the safety of Aramco’s IPO and, more than that, what will happen to oil prices if the instability intensifies. For now, the news is all bullish for prices. The purge is widely seen as a pre-emptive strike and power grab by Crown Prince Mohammed bin Salman, head of the new anti-corruption agency and heir to the throne, as well as the champion of the Vision 2030 reform program.

Saudi Billionaires Scramble To Move Cash Offshore To Escape Asset Freeze -- Over the weekend, Saudi King Salman shocked the world by abruptly announcing the arrests of 11 senior princes and some 38 ministers, including Prince Al-Waleed bin Talal, the world’s sixty-first richest man and the largest shareholder in Citi, News Corp. and Twitter. The purge was orchestrated by a new “supreme committee” to investigate public corruption created by King Salman but under the control of Crown Prince Mohammed bin Salman, who chairs the committee and is widely suspected of being the driving force behind the purge. In addition to the arrests, two Royals have died since the purge began. Prince Mansour bin-Muqrin reportedly perished in a helicopter crash near the Yemen border earlier this week, and Prince Abdul Aziz bin Fahd - killed during a firefight as authorities attempted to arrest him. For all the chaos, Saudi Arabia is benefiting from the climb in oil prices over the past week. However, signs of stress are showing up elsewhere in regional markets, as Bloomberg points out in a recent piece. Many of the kingdom’s millionaires and billionaires - at least those who haven’t already seen their domestic and foreign accounts frozen by the government - fear that they might be next after WSJ revealed that MbS’s purge may be nothing more than a naked cash grab, as the paper reports that the kingdom is aiming to confiscate cash and assets worth as much as $800 billion. So, they’re doing what any reasonable rich person would do given the circumstances; they’re liquidating their assets as quickly as possible and stashing their cash offshore until things quiet down.  Some Saudi billionaires and millionaires are selling investments in neighboring Gulf Cooperation Council countries and turning them into cash or liquid holdings overseas, the people said. They spoke on condition of anonymity because of the sensitivity of the matter. In Saudi Arabia, some are in talks with banks and asset managers to move money outside the country, the people said.Until the surprise arrests of dozens of people last weekend, Saudi Arabia’s elite was the target of Deutsche Bank AG, UBS Group AG, Credit Suisse Group AG and other global banks seeking to manage their wealth. They now find themselves on the run in the face of a campaign that has targeted some of the kingdom’s most prominent princes, billionaires and officials. To be sure, SAMA - the Saudi Monetary Authority and de facto central bank - has asked lenders in the kingdom to freeze the accounts of dozens of individuals who aren’t under arrest, as well as the assets of those being detained, people familiar with the matter said. The Saudi attorney general said in a statement released Monday that the weekend arrests were only “phase one” of the crackdown.

Why the Saudi “Purge” Is Not What It Seems to Be - This past weekend, Saudi Arabia detained numerous members of the royal family, as well as current and former ministers and prominent businessmen, on charges of corruption. Many argued that the detentions constitute a thinly veiled attempt by the Kingdom’s Crown Prince Mohammed bin Salman (MBS) to consolidate political power. However, this narrative misses the mark; the “purge” is not about removing political rivals who threatened MBS’s position as heir apparent but rather about sending a message to political and economic elites that their entitlement to extreme wealth and privilege, and their impunity, is coming to an end. In insular nondemocratic systems, trumped-up corruption charges are often used as a pretext to eliminate political opponents. . However, a careful examination of the list of detainees belies this assertion. With the exception of Minister of the National Guard Prince Mutaib bin Abdallah, the detainee list is made up entirely of individuals who had no capacity to challenge the succession. Indeed, many of those arrested, such as Prince Waleed, had gone out of their way to publicly express their support for the Crown Prince and curry favor with the new leadership. As for Prince Mutaib, despite leading the national guard, he posed no political threat to the Crown Prince. Saudi watchers have consistently misread a royal family member’s command of key military apparatuses, specifically, the Ministry of Interior, the Ministry of Defense, and the national guard, as something that gives that family member independent control over his respective organization. This is a flawed interpretation. These ministries have always behaved as part of the extended government bureaucracy that looks to the King, rather than to the individual minister, as the ultimate source of authority. This is why no elements in the Ministry of Interior or in the national guard resisted or reacted to the removal of Prince Mohammed bin Nayef (MBN) or Prince Mutaib. For these two men, their individual authority over the entities they were responsible for ended with the loss of their command. Whatever authority they enjoyed had been delegated to them by the king, and once this was withdrawn, that authority ended. In actuality, Saudi Arabia completed its political transition last June when King Salman replaced MBN with MBS as heir to the throne. The transition (mislabeled a coup by some) saw the elder MBN being relieved of all government responsibilities, swearing an oath of allegiance to his younger cousin, and exiting politics. MBN’s removal was swiftly followed by the appointment of a new generation of young princes and technocrats to key ministerial posts and governorates.

Saudi "Deep State" Prince Bandar Bin Sultan Among Those Arrested In Purge: Report = According to a new report by Middle East Eye, Prince Bandar bin Sultan - Saudi Arabia's most famous arms dealer, longtime former ambassador to the US, and recent head of Saudi intelligence - was among those detained as part of Crown Prince Mohammed bin Salman's (MBS) so-called "corruption purge" that started with the initial arrests of up to a dozen princes and other top officials last weekend. If confirmed, the arrest and detention of Bandar would constitute the most significant and high profile figure caught up in the purge - even above that of high profile billionaire investor Prince Alwaleed Bin Talal - given Bandar's closeness to multiple US administrations and involvement in events ranging from Reagan's Nicaraguan Contra program (including direct involvement in the Iran-Contra scandal), to making the case for the Iraq War as a trusted friend of Bush and Cheney, to directing US-Saudi covert operations overseeing the arming of jihadists in Syria. Middle East Eye issued the report based on multiple contacts "inside the royal court" and indicates further that the scale of MBS' aggressive crackdown is much larger than previously reported, and even involves the torture of "senior figures" among those detained:

The Intrigue At The Heart Of The Beijing-Riyadh-Washington Triangle - China is currently the world’s biggest oil importer, knocking the US out of its former first-place position. China is also the Saudi oil industry’s biggest customer, and Beijing does not want to pay extra for that black gold using American currency. A number of oil exporters that sell to China have already partially or entirely transitioned to settling their accounts in renminbi. Topping that list are Nigeria and Iran. Russia has also recently begun to sell some oil to China for renminbi (although only small percentage as yet). Riyadh now finds itself caught between a rock and a hard place. It’s hard to imagine what Saudi Arabia could be hit with from across the Atlantic, should it sell even one barrel of oil for Chinese currency. After all, that would be a direct challenge to the petrodollar, which was born right there in Saudi Arabia in the 1970s, midwifed by the negotiations between Henry Kissinger and King Faisal. Washington has sternly warned Riyadh to refrain from any ill-considered move to replace the dollar with the renminbi in its transactions with China, lest other players in the oil market follow suit (oil might then be traded for rubles, rupees, rials, etc.) And tomorrow that epidemic of transitioning to national currencies could infect other commodity markets. Incidentally, this year Beijing will begin to trade oil futures priced in renminbi on its commodity exchanges and claims that this is only the first step.Voices have already been heard within the US president’s entourage that suggest blocking the listing of Saudi Aramco shares on the New York Stock Exchange. Signs have emerged of an organized campaign to short-sell the Saudi oil company. In light of that development, Riyadh has announced that it will put off its share listing until a later date. But its problem isn’t going to go away - Saudi Arabia will still have to make a choice between the dollar and the renminbi.Although Beijing is upping its pressure on Riyadh, it is also simultaneously offering to directly buy out 5% of Saudi Aramco, while allowing the Saudis to forgo the usual ritual of listing shares on Western stock markets. And China is prepared to shell out a “fair” price (about $100 billion). The Chinese government has already announced that it is forming a consortium of energy and finance companies, plus China’s sovereign wealth fund, in order to purchase a “chunk” of the Saudi company. The Chinese media reports that that consortium is ready to become a cornerstone investor in Saudi Aramco. Beijing’s winning move in its chess game against Washington has neutralized the US threat to disrupt the sale of Saudi Aramco, while simultaneously pushing Riyadh toward a decision to transition Saudi oil sales to the renminbi.

Hamid Karzai: US colluded with ISIL in Afghanistan - Hamid Karzai, the former president of Afghanistan, has accused the US of working with the Islamic State of Iraq and the Levant (ISIL) group in his country.In an exclusive interview with Al Jazeera's UpFront aired on Friday, Karzai said the US government had allowed ISIL, also known as ISIS, to flourish inside Afghanistan."In my view under the full presence, surveillance, military, political, intelligence, Daesh [ISIL] has emerged," he said."And for two years the Afghan people came, cried loud about their suffering, of violations. Nothing was done." Karzai said the US administration of President Donald Trump used ISIL as an excuse to drop a massive bomb on Afghanistan in April 2017. " "And the next day, Daesh takes the next district in Afghanistan," he said referring to the Arabic name of the armed group. "That proves to us that there is a hand in it and that hand can be no one else but them [the US] in Afghanistan."

Remember, Remember the Eighth of November: India’s War on Cash Assessed One Year Later - - Jerri-Lynn Scofield -- The push for a cashless India, along with two other policies– the imposition of the Aadhar universal biometric identification system, and the creation of a comprehensive goods and services tax system– share some characteristics.  Each was imposed with impossibly optimistic deadlines. And as with their counterparts in other countries, such as the US, those in charge seem to combine a touching and naive faith in the technology fairy to create new systems that don’t actually address what they purport to address, combined with a stunning lack of understanding about how things actually  work (see my discussion of how some US policymakers who have more power than sense are looking to biometrics to address cybersecurity shortcomings; this includes a discussion of the Aadhar system Biometric ID Fairy: A Misguided Response to the Equifax Mess that Will Only Enrich Cybersecurity Grifters and Strengthen the Surveillance State)And in India, each of these three policies– demonetization, Aadhar, and the new GST– have neither been well-designed nor  well-rolled out, and have imposed serious inconveniences on individuals and businesses– without remotely achieving their stated goals, as Jayati Ghosh discussed in this recent post, India’s Demonetization Experiment Fails to Demonetize: Cash Comes Full Circle. Many in the government appeared to believe that the introduction of the Goods and Services Tax would be one more force pushing people towards digital transactions. The argument was that the trail of transactions required to claim refunds on GST would make it preferable for producers, suppliers, traders and other businessmen to move to electronic transactions that would be easier to monitor and calculate, and would also make the filing of returns easier. But the GST itself is plagued with massive design flaws and very shoddy implementation, which has even acted as an incentive to rely more on cash transactions. The multiplicity of rates, the complexity of the system, the widespread confusion about different categories, the costs and sheer difficulties in even filing online returns, have all meant that small businesses in particular have reverted to cash. Fairly apparent in the notebandi exercise that those who’d designed the policy, either didn’t know, or didn’t care, about the basics of how cash is used in India. And I mean that on two levels, not understanding the implications for the wider economy of canceling cash in what  was– and remains — a cash-based system. And also, they failed to grasp how cash is actually used in India.  Whlle Ghosh notes that the actual amount of cash in ATMs approaches the level before notebandi was imposed, liquidity remains limited by what notes are actually available.

Paradise Papers: Over 700 Indians Identified in Global Investigation on Offshore Dealings -- A new international journalistic investigation based on data leaks from Bermuda and Singapore based firms has named and identified the secret offshore dealings of over 700 Indians, including politicians Jayant Sinha (MoS, civil aviation ministry) and BJP Rajya Sabha MP Ravindra Kishore Sinha, Bollywood personalities Amitabh Bachchan and Dilnashin Dutt (Sanjay Dutt’s wife) and industrialists such as Vijay Mallya.This investigation involving the scrutiny of over 13.4 million tax documents from Bermuda’s Appleby and Singapore’s Asiaciti by nearly 100 media groups was launched on the basis of a leak from an anonymous source to the German daily Sueddeutsche Zeitung and was shared globally by the International Consortium of Investigative Journalists (ICIJ). The organisation in India responsible for the local-leg of reporting is the Indian Express.While the India portion identifies a number of individuals and Indian corporates, the documents themselves do not as yet point to any evidence of wrongdoing or illegality. Crucially, this time around, when compared to the earlier Panama Papers leak, a number of Indian companies also figure in the documents. According to Indian Express, these “include firms in the Sun-TV-Aircel-Maxis case; Essar-Loop 2G case; SNC-Lavalin in which Kerala Chief Minister Pinarayi Vijayan was named, then cleared; the Rajasthan ambulance scam which has recently been routed to the CBI and which names a company called Ziquista Healthcare (Sachin Pilot and Karti Chidambaram were early Honorary/Independent Directors of the firm respectively)”. Appleby’s second-largest client internationally interestingly is an Indian company called the Sun Group, founded by Nand Lal Khemka; the group has as many as 118 different offshore entities.

A year after cash ban, India’s black money market is thriving (AFP) - When India declared most bank notes unuseable a year ago in an effort to flush out tax cheats, one steel manufacturer was so spooked he resolved to do business by the book in future. But 12 months on from the shock move, the industrialist says he has gone back to cash under the table at the insistence of his buyers -- undermining government claims that the bold scheme has cleaned up India's graft-ridden economy. Prime Minister Narendra Modi's decision last November to withdraw India's high-value rupee bills was intended to root out a culture of tax evasion so widespread it had become the norm. His Bharatiya Janata Party (BJP) had won the 2014 election on a promise to root out corruption, which had led to popular disillusionment with the previous government. But the move wrought havoc on businesses in Asia's third-largest economy, causing growth to slump to levels not seen since Modi was elected. Now, as businesses from streetside stalls to wholesalers rekindle their love affair with cash, Modi is coming under pressure to explain whether the most controversial policy of his tenure was worth the economic pain. The steel producer, who spoke on condition of anonymity, said his efforts to keep business above board backfired when his buyers insisted on paying cash -- and keeping their payments off the books. "They said, 'we have cash at home, and if you want to be paid, we can pay you in cash immediately, but we cannot arrange a bank payment'," he told AFP. 

A year on, Indian demonetization costs outweigh the benefits - Asia Times - Exactly a year after Indian Prime Minister Narendra Modi announced a surprise demonetization of Rs500 and Rs1000 banknotes, the tangible benefits are unclear. The costs are more clear cut, especially in human terms. More than 100 people died while standing in bank queues and more than 50 others committed suicide as the Modi government moved to crack down on the black-market economy and corruption. The economy suffered slower growth. In 2016, Q3 registered year-on-year growth of 7.3%. Q4 2016 was half-way through when demonetization was announced and ended up with growth at 7%. Q1 of 2017 saw growth fall to 6% while it slid to 5.7% in Q2 —  the sixth successive quarter that growth trended lower. Corporate investments have stalled since the measure and bank credit growth dropped to a multi-year low of 5% as of March-end, 2017. It has barely recovered, running at about 8.4% as of October 13. There have been credible accounts of job losses across many sectors. Employment has fallen in the textiles and hosiery business, in real estate and construction, and in agriculture-related businesses like jute and tea. Estimates by the Centre for Monitoring Indian Economy (CMIE) indicate that up to 1.5 million jobs may have been lost from January to April this year. Agricultural prices saw such strong deflation that frustrated farmers dumped produce. The farm sector remains in distress. Central Statistics Office (CSO) data for April-June shows that annual growth in gross value added from agriculture was only 2.3% in real terms (adjusted for inflation or deflation). Nominal growth was only 0.3% in April-June — a clear indication that prices had fallen.November to December is the key period for planting kharif (winter) crops but farmers were short of cash at a critical point before planting. Attempts to relieve agrarian distress have led to the huge farm loan waivers totalling Rs300 billion in Maharashtra and Rs369 billion in Uttar Pradesh. It’s unclear if any of the many stated objectives of demonetization have been met. The RBI estimates that 99.3% of the Rs15.44 trillion worth of demonetized currency notes have returned to the banking system with only Rs160 billion (0.7%) outstanding. The outcome makes a mockery of official predictions that in excess of Rs4 trillion in banknotes would not return to the system.

Demonetisation was arbitrary, says economist Larry Summers -- Demonetisation has been harmful for the Indian economy and Prime Minister Narendra Modi’s commitment to market economy is under a shadow of doubt, American economist Lawrence H. Summers has said, on the first anniversary of the controversial exercise. Mr. Summers, meanwhile, praised the Goods and Services Tax (GST) as a “favourable step” for the country’s economy. He was speaking to The Hindu on the sidelines of a lecture he delivered on rethinking global development for the 21st century, at the Center for Global Development, a think tank working on global poverty and inequality. “I am fairly sceptical of the Indian demonetisation exercise. It seemed to me, someone arbitrarily undermining confidence in the predictability of the economic system… it didn’t hit the wealthiest people in India, and it had a larger impact on upper middle class. I am not an expert, but I don’t think Indian demonetisation is a model for other countries to follow,” the economist said. Mr. Summers, now Professor and President Emeritus at Harvard University, served as Secretary of the Treasury for President Bill Clinton and the Director of the National Economic Council for President Barack Obama. Asked how the rest of the world perceived Mr. Modi’s reform agenda, Mr. Summers said: “Tax reforms [GST] was a very favourable step, there has been some progress on infrastructure issues. I think there has been some increase in the energy and accountability of the civil service…On the other hand, I think that the concern has been that the PM is more of a believer in reform than he is a believer in markets. I think India needs both —reform and liberalisation. And I am more sure that there will be more reform than I am that there will be enough liberalisation.”

Why Indian mobile users must take the initiative to protest against linking their phones to Aadhaar -- It is a truism that citizens can best protect their rights from state infringement through collective action. Their apathetic attitude to citizen solidarity explains, at least partially, why the state cavalierly issued the diktat to mobile phone users earlier this year to link their connections to their Aadhaar numbers or have their services terminated.No qualms about violating an individual’s privacy, no fear that telecom operators could use the data for commercial and other benefits.The state can behave so imperiously because it presumes that a popular blowback is unlikely. Sure, conscionable citizens will appeal to the judiciary, as it indeed has been done in what is called the Aadhaar matters, but the state boasts such formidable resources to battle legal challenges that a set of individuals could never hope to match.  In addition, there is always the possibility that the challenge to the state’s order to link Aadhaar to mobile phone numbers could be set aside. This is why it is sagacious to think of ways to persuade the state to withdraw the order rather than to wait for the judicial verdict. Some might say it is perhaps too late to think of these methods, but citizen solidarity will certainly make the state pause and think whenever it tries to shrink the rights of citizens next.One such method could be to use the mobile phone as a weapon. Might it not be a good idea for mobile phone users to switch off their devices, say, for 30 minutes to express disquiet at the peremptory order to link their numbers to Aadhaar? As a gesture of protest, even 15 minutes would do, as long as the time for switching off mobile phones is synchronised across India. Why would 15 minutes or 30 minutes of protest ruffle the state? The history of protests against the state tells us gestures of protest, regardless of their duration, matter inordinately.

Emboldened by Modi’s ascent, India’s cow vigilantes deny Muslims their livelihood    – The beating that ended Pehlu Khan’s life was televised nationwide. Cell phone video captured a group of men punching and slinging Khan around the middle of a road in north India, stomping on him and then slamming the 55-year-old farmer down on concrete as he begged for mercy. Khan had been stopped by the lynch mob of right-wing Hindus as he rode home from a market in April with two cows and two calves in the back of a truck. The crowd was furious at the sight of a Muslim transporting animals held sacred by Hindus, according to the accounts of his sons and two fellow villagers who were also attacked. Before the men beat Khan so badly that he later died, breaking his ribs in multiple places, they screamed that he was planning to slaughter the cattle for beef. Outside the frame of the video, something else was happening: Pehlu Khan’s cows were seized. They were hauled off to a nearby Hindu-run shelter that takes in cattle snatched from Muslims and sells them.  Assaults meted out in broad daylight against India’s Muslim population, some 14 percent of the country’s 1.3 billion people, have sparked concern about the direction the country is taking under Hindu nationalist Prime Minister Narendra Modi. There has been another, less noted dimension to the violence: The theft from Muslims and redistribution to Hindus of cows that provide crucial income in the Indian countryside.  Such scenes clash with India’s image as an investor darling in Asia and the pro-business message Modi broadcasts to foreign investors.   Having stoked Hindu nationalist passions in his bid for the highest office, it’s unclear to what extent Modi can now control them. The bands of right-wing Hindus who seize the cows are operating essentially as private militias. They are undeterred by the prime minister’s public calls on them to end the violence. States governed by Modi’s party have seen a marked increase in cow theft from Muslims as well as funding for cow shelters that in many cases take in the stolen cattle.

Venezuela agrees to restructuring of $3 billion debt to Moscow: Russian Finance Minister | Reuters: (Reuters) - Venezuela has agreed to the restructuring of $3 billion of its debts to Moscow on the earlier agreed terms, Russian Finance Minister Anton Siluanov said on Wednesday. “We have an agreement on (debt) restructuring with Venezuela,” Siluanov told reporters. “The Venezuelans have confirmed the conditions that we had agreed on.”

Deutsche Bank CEO Says AI Will Help Him Cut Tens Of Thousands Of Jobs -- While many in the financial services industry are dreading the day that AI technology becomes advanced enough to render broad swaths of the human workforce obsolete, Deutsche Bank’s John Cryan ironically sees the technology as something that might help him save his job. The leader of the biggest German lender has been tasked with putting the bank back on sound footing, regaining market share and - of course - reining in costs, including the bank’s bloated headcount. DB has 97,000 employees worldwide, about double the number of employees at many of its European peers. And as the bank has made about half of the 9,000 cuts promised by Cryan in a five-year restructuring plan, the CEO told the Financial Times that machine learning and automation technology could help him cut tens of thousands of additional jobs, particularly in the bank’s back office.Deutsche has made about 4,000 of the 9,000 job cuts promised under a five-year restructuring plan announced in late 2015. Mr Cryan said many of the additional cuts would come through using technology to boost efficiency in the bank’s processes.“There we’ve got the most to gain,” he said. “We’re too manual, which can make you error-prone and it makes you inefficient. There’s a lot of machine learning and mechanisation that we can do."

The Germans are making contingency plans for the collapse of Europe. Let’s hope we are, too - The German defence ministry set out its worst-case scenario for the year 2040 in a secret document that was leaked to Der Spiegel last week: “EU enlargement has been largely abandoned, and more states have left the community … the increasingly disorderly, sometimes chaotic and conflict-prone, world has dramatically changed the security environment.”The 120-page-long paper, entitled Strategic Perspective 2040, is a federal government policy document – and the scenarios it imagines are grimly realistic: an east-west conflict in which some EU states join the Russian side or a “multipolar” Europe, where some states adopt the Russian economic and political model in defiance of the Lisbon treaty.That the document exists at all is a sign of the increased tension in the global system. The German military’s tradition of rigorous logistical planning for every eventuality began with the celebrated German field marshal Moltke in the 1850s and has three times paid off with initial success: in 1871 against France, in 1914 and 1939 against the rest of Europe. In the post-cold war era, as Der Spiegel puts it, allowing German generals to make statements about the future was “too risky”. That changed with Russia’s annexation of Crimea in 2014.Despite the alarmist headlines it has generated, the leaked document is, if anything, overoptimistic. In three out of the six scenarios, things go so well that Europe resembles the Biedermeier era – 1815-1848 – of domestic bliss and military boredom. Its negative scenarios – which see the US struggling to avoid isolationism and China locked in a cultural war with the west – were written before Donald Trump came to power and before Xi Jinping’s strategy of creating a politicised Chinese infrastructure across Asia.The journalists to whom the document was leaked have omitted any details of what Germany is planning to do about the EU’s possible collapse and fragmentation. But this is the problem facing the entire western world. Though the urgent problem is terrorism, the important ones are the decline of consent among populations for the present economic system and high levels of migration. They have begun tearing holes in the fabric of the EU itself – via the Greek crisis of 2015, Brexit and in the standoff between the Polish and Hungarian governments and the European commission.

Euro-area enlargement: a new opening?  - In his State of the Union speech on 13 September, European Commission president Jean-Claude Juncker raised the prospect of further enlargement of the euro area. He noted that all EU countries – apart from Denmark and the United Kingdom, which have opt-outs – are “required and entitled to join the euro once they fulfil all conditions”. He even proposed the idea of a “Euro-accession Instrument” that would offer “technical and even financial assistance” to the current non-euro countries. Juncker provided no detail about the possible Euro-accession Instrument. But his comments were a reminder that the process of euro-area enlargement has come to a halt since Lithuania joined the single currency at the start of 2015. In adopting the euro, Lithuania joined six of the countries that have joined the EU since 2004: Slovenia (adopted the euro in 2007), Cyprus (2008), Malta (2008), Slovakia (2009), Estonia (2011) and Latvia (2014). However, there are no new candidates actively moving in this direction.The European Exchange Rate Mechanism (ERM2), which is a mandatory interim regime for prospective entrants to the Economic and Monetary Union (EMU), currently has only one member – Denmark, which, along with the United Kingdom, has a permanent opt-out in any case. Other ‘outs’ – Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania and Sweden – do not have such an opt-out. However, most are not in a hurry to join the common currency[1], for both political and economic reasons.In terms of politics, there is a reluctance to transfer more national sovereignty to the EU level and to give up the national currencies that are seen as symbols of this sovereignty. In addition, during the euro-area financial crisis of 2010-13, politicians in ‘out’ countries publicly expressed doubts about the sustainability of the euro project, and preferred to take a wait-and-see approach.

 Greece’s membership of the euro is still tenuous - There is almost no precedent for what has happened to Greece since 2008. Yet despite the salutary counterexamples of emerging markets that let their currencies float to provide monetary stimulus, Greece has thus far determined to remain a member of the euro area. Some attribute this to love: the latest Eurobarometer survey shows 64 per cent of Greeks support “a European economic and monetary union with one single currency, the euro”, while only 32 per cent are opposed. Others attribute it to fear: the last time Greeks questioned their membership of the euro — in the summer of 2015 — the result was bank closures and a renewed economic downturn. The darker possibility is that support for the euro is more fragile than the headline numbers suggest. We recently had a chance to hear a presentation from Stefanie Walter of the University of Zurich that touched on some of these issues. First, consider this breakdown of who wanted to keep the euro and who wanted to leave at the end of 2015: More than half of all Greeks agreed it was a mistake to have joined the euro. Barely a third of Greeks thought the euro wasn’t a mistake. Even among those who wanted to remain in the euro area at the end of 2015, fewer than half would have chosen to join again if given the chance to go back in time and warn their fellow citizens. That survey took place almost two years ago. Since then, Walter finds that support for the euro has dropped by 10 percentage points. The shallowness of the support revealed in 2015 presaged the subsequent decline. Now only 55 per cent of Greeks would keep the single currency if it were possible to reintroduce the drachma as a member of the European Union:

Ousted Catalan Leader Turns Himself In To Belgian Police -- Ousted Catalan president Carles Puigdemont and four ex-ministers on Sunday turned themselves in to Belgian authorities to start the process of their possible extradition to Spain. Puigdemont was accompanied by four other former Catalan officials who are also wanted by Spanish authorities after they fled to Belgium last week after their removed from power by Spanish authorities as part of an extraordinary crackdown to impede the region’s illegal declaration of independence. According to AP, a spokesman for the Brussels prosecutor’s office, Gilles Dejemeppe, said the five presented themselves to federal police and have been in custody since 9 a.m. (0800 GMT; 3 a.m. EST). He said that they have not been arrested and that Puigdemont and the four ex-ministers will be heard by an investigative judge Sunday afternoon. The judge will have to decide what the next steps are within 24 hours. They could vary from arrest and imprisonment to conditional release. On Saturday, Belgian federal prosecutors said that they were studying the warrants and that they had shared them with city counterparts in Brussels. The ousted officials and Puigdemont are wanted in Spain on charges of rebellion, sedition and misappropriation of public funds as part of their two-year bid to see Catalonia secede from Spain. On Friday, Spain issued a formal request to Belgium for extradition. Also on Friday Puigdemont suggested he will fight extradition as he doesn’t believe he will get a fair trial in Spain; he also said that he was willing to campaign out of Belgium for the Catalan elections set to take place on Dec. 21. According to Belgian law, his legal battle against extradition can last up to two months.

Spain Just Lit a Fuse Under Catalonia — its Richest Region - Don Quijones - It’s amazing how fast the wheels of the Spanish justice system go round when the establishment wants them to, and how slowly they revolve when it doesn’t, which is usually when members of the same establishment — senior politicians and civil servants, bankers, business owners, or even royalty — are in the dock, which is happening with disturbing regularity these days. On Thursday we saw Spanish justice at its fastest. In the dock was the recently sacked vice president of Catalonia’s separatist government, Oriol Junqueras, and seven other elected representatives of the breakaway region who stand accused of a litany of charges, including rebellion, which carries a maximum sentence of 30 years’ imprisonment. The counsel for the defence had less than 24 hours to prepare the case. After just a few hours of hearing preliminary evidence, the National Court Judge sent half of Catalonia’s suspended government to jail without bail. On Friday,the same judge issued an international arrest warrant for Carles Puigdemont, the disputed Catalan president who fled to Brussels on Monday, as well as four other former ministers who did not show up to court on Thursday. Catalonia’s separatist politicians are paying a very high price for overplaying their hand.  But while jailing Catalonia’s elected government may be justifiable by Spanish law and will probably go some way to placating the more revanchist elements of the Spanish public, it will also further inflame tensions and polarize divisions within Spain’s north eastern region while doing yet more damage to the tattered image of Spanish democracy in the rest of the world. It also risks exacerbating economic uncertainty and instability in Catalonia, Spain’s richest region. Just when things appeared to be returning to some semblance of normality as local people and the region’s political parties turned their attention to the regional elections scheduled for December 21, Rajoy, his government, and the judges they help appoint just lit a fuse under the region.

Sacked Catalonia leader turns himself in, polls show independence strength (Reuters) - Sacked Catalonia leader Carles Puigdemont and four associates turned themselves in to Belgian police on Sunday, following Spain’s issuing of an arrest warrant for rebellion and sedition. All are wanted by Madrid for actions related to the push for the region’s secession from Spain. Puigdemont has become the public face of that move for independence. Other charges are the misuse of public funds, disobedience and breach of trust relating to the secessionist campaign, which has thrown Spain into a political crisis just as its economy has recovered from a sharp downturn and banking stress. Madrid has taken over administrative control in Catalonia, until then an autonomous region, and called new elections on Dec 21. Two polls on Sunday suggested pro-Catalonia independence parties will together win December’s regional election although they may fall just short of a majority of seats in parliament needed to revive the secession campaign. Parties supporting Catalonia staying in Spain would divide seats but garner around 54 percent of the vote, the polls suggested. Puigdemont traveled to Belgium shortly after Madrid took control. On Sunday morning, Puigdemont and four of his former councillors presented themselves to police in Brussels. A judge will hear the defendants case on Sunday afternoon and has until Monday morning to decide whether the formalities for the extradition request have been fulfilled. According to a GAD3 survey of 1,233 people conducted between Oct. 30 and Nov. 3 and published in La Vanguardia newspaper, pro-independence parties ERC, PDeCAT and CUP would take between 66 and 69 seats in the 135-seat parliament. A second poll taken over the same period for the conservative newspaper La Razon echoed the GAD3 survey, showing pro-independence parties would capture the most votes though still fall just shy of a parliamentary majority with 65 seats. Other seats would be generally divided between parties that support the region remaining as part of Spain, though they would run on separate tickets. Voter participation, however, will rise to a record of 83 percent, the GAD3 poll showed. 

Ex-Catalan leader granted freedom to campaign for independence  (Reuters) - Catalonia’s former leader Carles Puigdemont was spared custody on Monday, when a Brussels court ruled he could remain at liberty in Belgium until it had heard Spanish charges against him of rebellion.  The court’s decision means Puigdemont, who left Spain last month after Madrid fired his secessionist government and dissolved the Catalan parliament, is free to campaign for independence in an election in the region on Dec 21. Puigdemont said on Monday his government’s actions were legitimate and criticized the Spanish judicial system for a “clear lack of independence and neutrality”. The December vote is shaping up to be a de facto independence referendum. Puigdemont’s PDeCAT and another secessionist party said at the weekend they might run on a combined ticket, but would need to make a decision on any formal alliance - which might also include other parties - by a deadline of Tuesday. Alliances could however also form after the election. The independence push has dragged Spain into its worst political crisis since its return to democracy four decades ago. It has deeply divided the country, fuelling anti-Spanish feelings in Catalonia and nationalist tendencies elsewhere. Puigdemont turned himself in to Belgian police on Sunday along with four of his ex-ministers, after Spain issued a European arrest warrant on charges of rebellion as well as misuse of public funds. All five are barred from leaving Belgium without a judge’s consent.

Catalan secessionist parties fail to agree on unity ticket for December vote (Reuters) - Catalan secessionist parties on Tuesday failed to agree on a united ticket to contest a December snap regional election, making it more difficult to rule the region after the vote and press ahead with their collective bid to split from Spain.  Catalonia’s secessionist push has plunged Spain into its worst political crisis in four decades, triggered a business exodus, forced Madrid to cut its economic forecast and reopened old wounds from Spain’s civil war in the 1930s. Pro-independence groups have called for a general strike in the restive region on Wednesday. Catalan political parties had until midnight on Tuesday to register coalitions ahead of the Dec. 21 vote, but the two main forces which formed an alliance to rule the region for the last two years did not manage to agree on a new pact in time. While they could still find an agreement after the vote, political analysts say the lack of a deal on a joint campaign may also trigger a leadership fight at the top of the movement. This is because center-right PdeCat (Catalan Democratic Party) of sacked Catalan president Carles Puigdemont is expected to be overtaken by leftist Esquerra Republicana de Catalunya (ERC) of former regional vice president Oriol Junqueras. Puigdemont and Junqueras are the two main leaders behind the current secession bid that last month led to a unilateral declaration of independence which Spain thwarted by imposing direct rule on the region.  Junqueras is currently in custody pending a potential trial on charges of sedition, rebellion and misuse of public funds. Puigdemont, who faces the same charges, is currently in self-imposed exile in Belgium and has said he would oppose extradition.

Catalan strike severs road links as secessionist leader regroups (Reuters) - A general strike called by pro-independence campaigners in Catalonia closed shops and severed transport links on Wednesday, as the region’s deposed leader lost political momentum after failing to seal an electoral pact with another party. Protesters closed roads, causing huge tailbacks into Barcelona, while some public transport ran minimum services and some smaller stores remained shuttered. Reuters saw hundreds of strikers gathered in Barcelona’s main Sant Jaume square to protest the imprisonment of politicians, chanting the name of ex-leader Carles Puigdemont and referring to him as “our president”. But he faces an uphill task to maintain influence after he missed a deadline of midnight on Tuesday to agree a pro-secessionist pact for a regional election with his former vice president Oriol Junqueras. The central government in Madrid called the election for Dec. 21 after last month assuming control of Catalonia following its parliament’s unilateral independence declaration. Spain’s Constitutional Court on Wednesday officially annulled the declaration, which it had suspended, a widely expected ruling. Catalonia’s secessionist push has plunged Spain into its worst political crisis in four decades, leading to a business exodus and reopened old wounds from the civil war in the 1930s. Junqueras is in custody on charges of sedition, rebellion and misuse of public funds. But polls show his leftist ERC party will win three times as many seats next month in the regional assembly than the centre-right PDeCAT of Puigdemont, who is in self-imposed exile in Belgium and facing the same charges. If that forecast proves correct “it represents a very uncomfortable position for Puigdemont,” 

ECB will have 130 billion euros to reinvest over next year (Reuters) - The European Central Bank will have nearly 130 billion euros ($150.6 billion) worth of cash from maturing bonds to invest, providing a key stimulus as its new bond purchases drop, fresh data showed on Monday. Having already bought 2.2 trillion euros worth of bonds to depress borrowing costs, the ECB has started to shift its focus from new purchases, arguing that its bloated balance sheet will provide the bulk of accommodation needed to lift inflation. New buys will be cut in half to 30 billion euros a month from January and markets expect the ECB to end purchases by the end of the year. One reason is that finding enough bonds is becoming increasingly difficult within the legal parameters of the program, commonly known as quantitative easing. October data released on Monday showed that purchases remained skewed towards countries such as France and Italy, with the ECB deviating from the so-called capital key, a rule that requires purchases in line with the size of each country’s economy. Bond buys in Germany, the euro zone’s biggest economy, were about 300 million euros below the capital key. They also trailed in Portugal and dropped to zero in Ireland, where the ECB already has sizable bond holdings. The ECB’s problem is that it cannot hold more than a third of each country’s debt, so once it reaches a the limit, it needs to redistribute purchases among countries with bigger bond markets, facing accusations that it is de facto rewarding more indebted countries.

EU gives UK up to 3 weeks to make Brexit bill offer - Brussels is giving Britain two to three weeks to set out how much it is prepared to pay in the Brexit divorce settlement, warning that the EU will otherwise struggle to prepare this year for a transition deal the UK badly wants.According to the informal deadline, unless London makes a big financial offer this month, the bloc may be unable to adopt guidelines for the transition talks at a crucial summit in December. “There isn’t much time, there are no shortcuts.”The deadline, which seeks to increase pressure on London, will be one of the main points of dispute on Thursday as British and EU negotiators meet for the sixth round of Brexit talks in Brussels.The UK wants talks on transition to start as soon as possible so that businesses’ fears about a cliff-edge Brexit can be allayed at least a year before the departure date of March 29 2019. Theresa May’s government is privately indicating it will offer more clarity on outstanding budget commitments it intends to honour, which the EU puts at roughly €60bn in net terms. But British officials first want more certainty that the EU will reciprocate and simultaneously agree the outlines of a transition deal in December.

The UK minister formerly in charge of anti-money laundering has been named in the Paradise Papers leak - According to documents found in the International Consortium of Journalists' (ICIJ) Paradise Papers database, James Meyers Sassoon, who served as President of the UK's Financial Action Task Force between 2007 and 2008, is the beneficiary of a Cayman Island trust fund called DCR Herschorn Settlement. On Sunday, more than 13 million documents that detail the complex financial arrangements of some of the world's richest individuals were leaked. The documents, dubbed the "Paradise Papers," were stolen from offshore law firm Appleby in a cyber attack last year, and shared with the ICIJ. As President of the Task Force, Sassoon was in charge of combating money laundering and terrorist financing. He has also been a defender of legal tax avoidance (as opposed to illegal evasion), having said in 2010 that minimizing tax payments "is perfectly reasonable." Sassoon, now a member of the House of Lords, was also the Treasury commercial secretary from 2010 to 2013, and was responsible for overseeing economic productivity and industrial strategy.  The fund was established by Sassoon's grandmother several decades ago, and originally operated under Bahamian law, (the Bahamas are also considered an offshore secrecy jurisdiction). Documents show the trust owns Orchard Limited, an investment holding company registered in the Bahamas, which held $124 million in 2002, according to financial statements. By 2007 it was holding $236 million, and the same year distributed $8 million to beneficiaries, records show.

Theresa May under pressure to sack Boris Johnson and Priti Patel over humiliating errors - Theresa May is under increasing pressure to strip two more cabinet ministers of their jobs following separate fiascos involving Priti Patel and Boris Johnson.  Senior Conservatives said both ministers had committed sackable offences which had materially damaged the UK’s interests and those of its citizens.The furore around Ms Patel’s unofficial trip to Israel grew, as it emerged she may have omitted to tell Ms May she discussed funnelling UK aid cash to the country’s army despite Downing Street asking for full details of her visit. Foreign Secretary Mr Johnson tied himself in knots in the House of Commons, denying he made comments that were clearly recorded in Parliament and which led to the Iranian judiciary threatening to double a British woman’s prison sentence.The twin ministerial gaffes come less than a week after the Prime Minister pushed SirMichael Fallon out of her Cabinet, following allegations about sexually inappropriate behaviour, but then damaged her already weakened authority and angered MPs by appointing a loyal lieutenant to replace him with little ministerial experience.It first emerged on Friday that International Development Secretary Priti Patel, often talked of as a future Tory leader, had a string of meetings with Israeli politicians – including Prime Minister Benjamin Netanyahu – while on holiday without telling Downing Street.A senior Conservative told The Independent: “Ministers must uphold collective responsibility and mustn’t engage in activity that undermines the collective work of the Cabinet.

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