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

Saturday, November 4, 2017

week ending Nov 4

Fed Meeting the Nonevent of the Week - Central bankers will meet this week, but only to sign off on the existing policy stance. Although it pains this fedwatcher to admit, the FOMC meeting is arguably the least important event of the week. It competes with a slew of critical data, including the employment report for October, to be released Friday. Plus, we should learn President Trump’s pick to lead the Fed when Yellen’s term expires next February. An FOMC meeting widely expected to yield no change in policy and likely little in the accompanying statement simply can’t compete with this week’s news flow.The Fed continues to follow its well-defined strategy of setting policy via balancing solid employment against weak inflation as the economy settles into full employment. This strategy relies on a basic Phillips curve framework that anticipates intensifying inflationary pressures as the unemployment rate falls below its longer run rate. The Fed will see this as a tried and true strategy; they hesitate to abandon it on the basis of what they view as short-term inflation shortfalls.Following this strategy, I anticipate the Fed will continue to pursue the current projected path of policy as long as job growth remains strong enough to push unemployment lower. In other words, they are likely to continue to turn their attention away from the disappointment of low inflation in favor of the excitement of labor market gains. In practical terms, this means that emphasis on rate hikes will remain as long as the economy looks set to support job growth of more than 100k a month. The third quarter GDP report will confirm their suspicions that this continues to be the case. GDP gained at a 3.0% rate in the second quarter after gaining at a 3.1% rate the previous quarter. This is the strongest back-to-back growth since 2014. Compared to a year ago, the growth was more subdued at a 2.3% gain, albeit still sustaining a trend of steady improvement. Digging into the numbers, the contributions from investment and net exports rose, while the gains attributable to consumption softened. The Fed will be particularly happy with the investment gains (similarly, they will like the story told by the strong durable goods orders report last week). Investment was a significant factor in the slowdown of 2015 and 2016, and the Fed will be relieved that this wound is healing nicely.

FOMC Statement: No Change to Policy -- FOMC Statement: Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions. Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. Gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.  Hurricane-related disruptions and rebuilding will continue to affect economic activity, employment, and inflation in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely. In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

FOMC Leaves Policy Unchanged, Upgrades Economic Outlook To "Rising At A Solid Rate" = In perhaps the least anticipated FOMC statement in months - with expectations of no rate-change and normalization on path - with all eyes on inflation/growth wording. Some feared a more dovish Fed might upset the exuberant growth narrative that is embedded into equity valuations (but not the yield curve), but The Fed seemed slightly more positive (and perhaps hawkish) by upgrading the economy from "rising moderately" to "at a solid rate."The Fed unanimously voted to leave policy unchanged. Additional highlights...

  • Fed says economic activity rising at solid rate despite storms
  • Fed: inflation for items other than food, energy remained soft
  • Fed: storms unlikely to alter economy’s medium-term course
  • Fed: labor mkt continued to strengthen, unemployment declined
  • Fed: spending rising at moderate rate, investment picked up
  • Fed repeats mkt-based inflation compensation gauges still low
  • Fed repeats sees inflation stabilizing around 2% medium term
  • "Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize"   
  • "Near-term risks to the economic outlook appear roughly balanced"   
  • "The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate"

Powell as Fed chair? Five things bankers should know — If President Trump chooses Federal Reserve Board Gov. Jerome Powell as the next head of the central bank this week, as is widely anticipated, it is likely to cause bankers to breathe a sigh of relief.   In many ways, Powell represents the best of all worlds among the five candidates that were the subject of considerable speculation in recent weeks. Powell, who served in George H.W. Bush’s Treasury, has extensive experience in the private sector, and is seen as open to deregulatory efforts by the administration and Congress. But he also provides the continuity and capability with current Fed Chair Janet Yellen, who has been a stabilizing force in the financial markets.   Analysts say Powell would be a shrewd choice. Though Trump has lately talked up the possibility of reappointing Yellen because he approves of the continuance of low interest rates, he has also criticized her in the past for attempting to help his presidential opponent, former Secretary of State Hillary Clinton. Powell is likely to continue Yellen's monetary policy while satisfying demands from Republicans that Trump appoint one of their own.   Moreover, Powell has a long history of working well with new Fed Vice Chair for Supervision Randal Quarles, which suggests the central bank would approach any changes to the Dodd-Frank Act in a united manner. Moreover, unlike some other candidates for the Fed job, Powell has spelled out his views on bank regulation, having served as head of the central bank's banking committee after former Fed Gov. Daniel Tarullo left in April.  If Powell does get the nod from Trump to head the Fed, here’s what banks can expect:  (slides)

Jerome Powell, President Trump's reported choice to head the Federal Reserve, explained - Six or seven years ago, I think it’s safe to say that nobody had Jerome Powell in mind as a likely future chair of the US Federal Reserve. But then again, six or seven years ago, nobody had Donald Trump in mind as a likely future president of the United States. But on Wednesday, the Wall Street Journal’s David Harrison reported that an unlikely president is set to announce the appointment of a new Fed chair whose candidacy has grown to seem increasingly inevitable in recent weeks. Republicans will like that Powell is a Republican, Democrats will like that he isn’t crazy or corrupt in some obvious way, and he’ll likely sail through the confirmation process.The failure to reappoint Janet Yellen marks a break with what’s become a political norm of presidents reappointing competent Fed chairs they inherited from their predecessor.That Yellen was the first woman to hold this post — and has been, for years, the most powerful woman in America — adds sting to her quasi-firing. What’s more, the economy has been performing well under her watch (as Trump himself likes to say), with growth healthy, inflation low, and the unemployment rate falling. The good news is that as best as anyone can tell, Powell doesn’t have noteworthy disagreements with Yellen about macroeconomic management. The bad news is that he’s a considerably less distinguished thinker on monetary policy, with weaker chops to handle a crisis. He also seems to have more business-friendly instincts on financial regulation, which will put him in line with the Trump administration’s overall view that Barack Obama’s time in office was far too unkind to Wall Street.

Trump Announces Jerome Powell as New Fed Chairman— President Trump nominated Jerome H. Powell to chair the Federal Reserve on Thursday, bypassing Janet L. Yellen for a second term but turning to a replacement who is expected to stay the course on monetary policy if the economy continues its steady growth. “He’s strong, he’s committed, he’s smart,” Mr. Trump said in the White House Rose Garden, where he introduced Mr. Powell as his choice. Using Mr. Powell’s nickname, the president said, “I am confident that with Jay as a wise steward of the Federal Reserve, it will have the leadership it needs in the years to come.” Less certain is where Mr. Powell would lead the Fed if the economy falters. Mr. Powell, a member of the Fed’s board of governors since 2012, has consistently voted with Ms. Yellen to slowly raise interest rates and sell off assets that the Fed bought up in the wake of the severe recession of 2008 and 2009. Colleagues consider him a centrist and pragmatist. But he lacks the deep background in economics of some of his predecessors, and he has expressed skepticism in the past about the unconventional measures that the Fed took after the recession. Mr. Powell could also depart from the Fed’s current trajectory when it comes to regulating banks and other financial institutions — rules Mr. Trump has said should be loosened. The nominee offered little hint of his thinking during brief remarks in the Rose Garden. He said the nation’s economy has made “substantial progress toward full recovery” since the financial crisis and that banks are in far better shape. “I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks,” he said.

Trump nominates Jerome Powell as new Federal Reserve chief - Despite railing against the easy money policies of the Federal Reserve under chairwoman Janet Yellen during the 2016 election campaign, US President Donald Trump has ensured their continuity by nominating Jerome (Jay) Powell to head the central bank. Powell, a Republican, who was appointed to the Fed’s board of governors by President Barack Obama in 2012, has voted with Yellen on all policy decisions during her four-year term, which will end next February. He won Trump’s nomination over two other contenders, Stanford economics professor John Taylor and former Fed governor Kevin Warsh, both of whom had made some criticism of the quantitative easing measures that have seen trillions of dollars pumped into the financial system. Powell was described by one financial analyst, cited by Bloomberg, as being a “continuation of the status quo without being named Yellen.” Trump departed from the practice of reappointing Fed chairs for a second term, saying he wanted to make his own “mark,” but described Yellen as an “absolutely spectacular person.” Powell’s nomination, which requires Senate approval, was welcomed on Wall Street. John Silvia, chief economist for Wells Fargo, said while Powell’s selection was a bit of a “surprise,” given Trump’s criticism of Fed policies during the election campaign, it was a reflection of economic and political realities. “Most people in the financial markets would feel a comfortable relationship with Governor Powell,” he said. Goldman Sachs chief executive Lloyd Blankfein praised the selection, saying Powell had a “terrific” background in government service, the Fed and the private sector. The market agreed, with the Dow share index finishing up for the day by some 80 points. While Powell’s assets are not in the realm of some other Trump appointees, he is the richest man on the Fed’s board of governors, with a fortune estimated to be around $55 million. He made his money first at the investment bank Dillon Read and then at the private equity Carlyle group. He will be the wealthiest individual ever appointed as Fed chair.  

Trump makes it official, taps Powell to head Federal Reserve - — President Trump announced Thursday that he will nominate Federal Reserve Gov. Jerome Powell to head the central bank when Fed chair Janet Yellen’s term expires in February. The nomination was widely expected. After Trump narrowed his choices to five in recent weeks, media reports had suggested he was strongly leaning toward Powell. He is also a well-known choice for bankers, who reacted positively to the news. “As president there are few decisions more important than nominating leaders of integrity and good judgment to hold trusted positions in public office,” Trump said during a ceremony Thursday afternoon at the White House. “It is my pleasure and my honor to nominate Jerome Powell as the next chairman of the Federal Reserve. We need strong, sound and steady leadership at the Federal Reserve. He will provide exactly that type of leadership.”Powell said he was honored by the nomination and would use the opportunity to help bolster the nation’s economy while retaining the supervisory protections that helped strengthen the financial system.  leaders of integrity and good judgment," said President Trump as he introduced Fed Gov. Jerome Powell as his choice for the next chair of the central bank. Bloomberg News “In the years since the global financial crisis ended, our economy has made substantial progress toward full recovery,“ Powell said. “While post-crisis improvements in regulation and supervision have helped us to achieve these gains, I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks."  Yellen congratulated Powell in a statement, saying that his “long and distinguished career has been marked by dedicated public service and seriousness of purpose” and that she is “committed to working with him to ensure a smooth transition.”

Will Yellen stay on at Fed as board member? — When President Trump nominated Federal Reserve Gov. Jerome Powell to lead the central bank, many observers presumed that would soon create another vacancy on the board once the current head, Janet Yellen, resigns after her term as chair expires in February. But there are reasons Yellen might stay on, at least temporarily.  The chair is chosen by the president from among the governors of the Fed board, so each has a separate term for their chairmanship and their underlying board membership. Yellen’s term as chair expires in February, but her 14-year term as governor does not expire until 2024. If she wanted to stay on the board, she is free to do so. The question is whether she wants to — and even potentially whether Powell or the administration might ask her to stay on.  On Thursday, Trump had only have positive things to say about Yellen, calling her a “wonderful woman who’s done a terrific job” and saying they have “been working together for 10 months, and she is absolutely a spectacular person.” Yellen has said in the past that she intends to serve out her term as chair, but has repeatedly declined invitations by reporters and members of Congress to expound on whether she would be interested in staying on the board as a governor. But she also has not closed the door on that possibility. “I haven’t made any decision about the future,” Yellen said in December. “I recognize I might or might not be reappointed. It’s a decision that I don’t have to make and don’t have thoughts on at this time. And, as you said, I recognize too that I could stay on as a board member, and that’s a decision for another day.”

PCE Price Index: September Headline & Core - The BEA's Personal Income and Outlays report for September was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.37% month-over-month (MoM) and is up 1.63% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.13% MoM and 1.33% YoY. Core PCE remains below the Fed's 2% target rate. Revisions were made going back to July.  The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target.

Atlanta Fed Now Sees Q4 GDP At Blistering 4.5% -- True to form, the Atlanta Fed - which has a habit of overshooting massively at the start of the quarter based on optimistic estimates only to ease sharply lower on its GDP "nowcast" as the "hard" data comes in - has unveiled its latest Q4 GDP estimate , which the regional Fed expects to print at a blistering 4.5%. The number is more than 50% higher the previous Q4 guesstimate of 2.9%.Why the surge? The Atlanta Fed looked at today's mfg ISM report and effectively doubled its forecast for real consumer spending growth and real private fixed investment growth increased from 2.8% and 4.4% , respectively, to 4.1%  and 8.8%, respectively.Breaking down the estimate, which was boosted by excess hurricane-related spending, by its constituent components:

  • Latest release affecting the model was ISM manufacturing, construction spending
  • PCE contribution est. at 2.80%
  • Nonresidential equipment investment contribution est. at 0.95%
  • Nonresidential intellectual property products investment contribution est. at 0.18%
  • Nonresidential structures investment contribution est. at -0.08%
  • Residential investment contribution est. at 0.37%
  • Government contribution est. at 0.31%
  • Net exports contribution est. at -0.20%

Here is the commentary: The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 4.5 percent on November 1, up from 2.9 percent on October 30. The forecasts of real consumer spending growth and real private fixed investment growth increased from 2.8 percent and 4.4 percent, respectively, to 4.1 percent and 8.8 percent, respectively, after this morning's Manufacturing ISM Report On Business from the Institute for Supply Management. The model's estimate of the dynamic factor for October—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.04 to 1.43 after the ISM report.  If accurate, this would be the highest pace of economic growth since Q3 2014, and the fourth highest quarterly GDP number since the financial crisis.

 Everything Is Going Great, So Let’s Change It - Barkley Rosser - Well, the actual headline on the front page of the Washington Post below the fold today reads, “Economy shows strong growth, could provide GOP momentum.”  The strong growth is the 3.0% annual growth rate of GDP in the third quarter (supported by a strong stock market), with the momentum not being the obvious point that this might lead to general popular electoral support in the future for the GOP, but more specifically that this somehow might aid the GOP in Congress to change the current apparently successful fiscal and monetary policies inherited from Barack Obama.  Everything is going great, so let’s change it.  On fiscal policy, of course, this refers to the still not clearly formulated tax change (“reform” in the words of the GOP).  As we know cutting taxes for the rich is the one thing that seems to unite the party, so gosh darn it, they will probably do it, even if it takes a lot of effort.  As expected all those loud fiscal hawks from the Obama period are now fine with adding at least $1.5 trillion to the national debt, which will probably end up being more as some of the revenue increasing parts of the possible plan look like they may not pass.  After all, while Trump says the middle class will gain, indeed everybody, is going to get the hugest tax cut ever and it will pay for itself somehow.  But estimates have 80% of the cuts going to the top 1 or 2%, given the emphasis on cutting corporate taxes.  The more amusing part of this is the argument apparently been given by Treasury Secretary Mnuchin and others in the last few days that is decidedly ironic.  It is that the stock market increase we have seen has at least partly been fueled by the expectation of a nice big corporate tax cut that will boost profits, along with all the deregulation that has been going on .  So, the argument goes, if the tax plan (or some tax plan, heck, anything) is not passed, well folks, that nice stock market increase might be threatened.  No tax plan passed, well, maybe a sharp decline of the stock market!  I find this hilarious, although it might be true.  The stock market has begun to look a bit elevated, near the boundary of getting into bubble territory by some measures, so, you had better watch out!

DoD is Losing the Budget Endgame -- The fiscal year 2018 budget endgame has begun, and it doesn’t look good for the Department of Defense. There have been hopeful signals all year. The Administration’s base budget request came in at $574.5 billion, $52 billion above the Budget Control Act caps. The House and Senate passed defense authorization bills that far exceeded that mark, and the House even passed an appropriations bill that provided $18 billion more than the request. The casual observer is forgiven for thinking that any of these numbers are likely to be passed into law, but all the while the Budget Control Act has loomed, unflinching and unchanging, capping the defense budget at $522 billion. While that budget may sound huge (and it is), it is also too small to do everything the Defense Department is asked to do. It results in unmet readiness requirements, inadequate maintenance, and deferred investments. When the DoD accepts budget risk, they also risk mishaps and accidents, equipment failures, and they stretch their people to the limit. The bottom line is that when you ask the men and women of the U.S. military to do more with less, you’re adding significant risk to an already dangerous job. All year there have been hopes that another budget deal would be struck, one that would increase funding levels above the BCA caps. Such deals have been struck before, each adjusting the budget caps for two years: one for 2014-15 and one for 2016-17. It turns out that a budget deal has indeed been struck, but it left DoD out in the cold. The House and Senate just passed a concurrent budget resolution for fiscal year 2018, but they focused their negotiations on making sure they could pass a tax reform bill, and designated all of their budget flexibility toward that end. The defense budget was left at the BCA cap level: $52 billion below the budget request. At the same time, the House and Senate Armed Services Committee have been diligently working toward completing their conference negotiations on the National Defense Authorization Act. Both the House and Senate versions of the defense policy bill presume their much higher budget figures, but if their final conference bill adds additional requirements for DoD (e.g. increased pay and benefits, higher troop levels) and the BCA caps are not changed, they will exacerbate the budget crunch, crowding out other programs and priorities that DoD requested within the smaller BCA budget level.

Tillerson, Mattis Say Terror Wars Don’t Need Congress’s Approval - President Donald Trump’s secretaries of state and defense pushed back against lawmakers from both sides of the aisle who questioned whether authorizations for military actions dating back to 2001 give the U.S. legal cover for counterterror operations in more than a dozen countries. In testimony Monday before the Senate Foreign Relations Committee, Secretary of State Rex Tillerson and Pentagon chief Jim Mattis said existing authorizations for the use of military force -- passed after the 2001 terrorist attacks to combat al-Qaeda and its affiliates, and in the run-up to the Iraq war -- are sufficient to continue the U.S. fight against groups such as Islamic State that have emerged since then.But Maryland Senator Ben Cardin, the top Democrat on the committee, pushed back, saying that with U.S. forces in hostile environments in 19 nations, a new or revised AUMF is needed.The fight over the authorization has heated up after the deaths of four U.S. soldiers in an ambush this month in Niger. Lawmakers have said they haven’t been kept informed of U.S. deployments and haven’t received enough information about what happened in the African nation. Some lawmakers have also raised questions about looser restraints on the use of armed drones and increased authority given to commanders in the field to carry out missions. “There needs to be more public discussion and light on these activities because I do not think the American people want the United States conducting a global, endless shadow war under the radar, covert and beyond scrutiny,” Cardin said.While Tillerson and Mattis both defended the current war authorizations, they said any new measure from Congress shouldn’t impose deadlines or geographic restrictions. “Legislation which would arbitrarily terminate the authorization to use force would be inconsistent with a conditions-based approach, and could unintentionally embolden our enemies with the goal of outlasting us,” Tillerson said.

 Watch This Orwellian Pentagon Briefing On Syria: "Over 4000 Troops... No, Sorry... Just 500..."  --Whether it's the Middle East, Africa, or Eastern Europe, the familiar pattern of American military expansion goes something like this: first we are promised that US troops are merely in a country for limited "training" missions with "partner" forces; next we are told of "counter-terror" operations which require an increased "footprint"; after which we are assured once again that there are "no boots on the ground" but a "minimal" increase of train and assist missions; finally, US soldiers begin to come home in body bags at which point the 9/11 era AUMF is cynically invoked (Authorization For Use of Military Force).   On Tuesday the whole Orwellian cycle of American non-deployment to non-wars (by our politicians' standards) was on display during a single Pentagon press briefing, when Army spokesman Maj. Gen. James B. Jarrard told reporters that 4,000 US troops were deployed to Syria, but then awkwardly attempted to walk back the statement less than 30 seconds later:Wow. Question on how many US troops are in Syria. MG initially says 4,000 (!) then apologizes, changes to 500 after a follow-up.— Jake Godin (@JakeGodin) October 31, 2017Army spokesman: I think it's a little over 4,000 US troops in Syria right now that are supporting efforts against Daesh, and supporting the SDF.Reporter: So you have 4,000 US troops in Syria, cause I thought that publicly, previously the number was 1,000. So this would be four times - well it was actually 500, but your saying 4000 US troops are currently in Syria?Army spokesman: I'm sorry I mispoke there - there are approximately 500 troops in Syria....[press pool breaks out in laughter...] Interestingly, Major Jarrard appeared to have thought carefully as he struggled to articulate the initial "over 4,000" number. Though he begins his response by stumbling over his words, he actually appears firm and confident when he finally asserts the 4,000 number. It is only after the incredulous reporter points out the colossal leap in numbers (compared toprevious official Pentagon statements) that the US coalition spokesman quickly walks it back and says, "I'm sorry I mispoke there - there are approximately 500 troops in Syria."

Iran: We Rejected Trump's Push For A Secret Face To Face Meeting -- The White House has denied reports that President Trump requested an unprecedented face-to-face meeting with Iranian President Hassan Rouhani on the sidelines of the United Nations General Assembly in September. On Sunday the Associated Press reported the claim of Iran's foreign ministry, initially issued through Iranian state television, that the White House approached the Iranian delegation with a request for the meeting. The meeting request was said to have been made a day after Trump gave a fiery speech before the UN assembly which included denouncing Iran as a state-sponsor of terror and a "corrupt dictatorship" which spreads violence across the Middle East - a speech which many saw as a closer step toward the unraveling of the Iranian nuclear deal brokered under Obama. Though the two heads of state haven't communicated directly since 2013, when then President Obama spoke to Rouhani by telephone, which provoked a reaction by Iranian hardliners, Iranian foreign ministry spokesman Bahram Ghasemi said over the weekend that, “a request indeed was made by the U.S. side but it wasn’t accepted by President Rouhani.”

Kushner took unannounced trip to Saudi Arabia - President Donald Trump’s son-in-law and senior adviser Jared Kushner returned home Saturday from an unannounced visit to Saudi Arabia — his third trip to the country this year. Kushner left Washington, D.C., via commercial airline on Wednesday for the trip, which was not announced to the public, a White House official told POLITICO. He traveled separately from Treasury Secretary Steven Mnuchin, who led a delegation to Riyadh last week to focus on combating terrorist financing.Kushner was accompanied in the region by deputy national security adviser Dina Powell and Middle East envoy Jason Greenblatt. Greenblatt continued from Saudi Arabia to Amman, Jordan; Cairo; the West Bank city of Ramallah; and Jerusalem, where he was on Sunday. The Trump administration has said its strategy is to try to draw in neighboring Arab leaders to play a role in Middle East peace. “Jared has always been driven to try and solve the Israel-Palestinian dispute,” said billionaire real estate investor Tom Barrack, a longtime friend and close Trump confidant. “The key to solving that dispute is Egypt. And the key to Egypt is Abu Dhabi and Saudi Arabia.” The trip comes at a moment when the president’s son-in-law has played a downsized diplomatic role in other parts of the globe, such as China. But it shows that he is still firmly at the forefront of the administration’s efforts in the Middle East. 

State Department Scraps Sanctions Office - The State Department shuttered an office that oversees sanctions policy, even as the Donald Trump administration faced criticism from lawmakers over its handling of new economic penalties against Russia. Secretary of State Rex Tillerson eliminated the Coordinator for Sanctions Policy office, which had been led by a veteran ambassador-rank diplomat with at least five staff, as part of an overhaul of the department, former diplomats and congressional sources told Foreign Policy.Instead, the role of coordinating U.S. sanctions across the State Department and other government agencies now falls to just one mid-level official — David Tessler, the deputy director of the Policy Planning Office. The Policy Planning Office, which previously operated as a small team providing strategic advice to the secretary but did not manage programs or initiatives, has grown in power under Tillerson’s “redesign” of the department. While the sanctions office was dissolved, the administration missed a key Oct. 1 deadline to implement new penalties against Russia adopted by Congress in August. The move reinforced concerns among both Democratic and Republican lawmakers that the Trump White House is mismanaging the State Department and undercutting the role of U.S. diplomacy. A State Department spokesperson told FP they notified Congress last month the office would be shutting down and moving to the policy planning office. “No movement of funds or personnel has taken place,” the spokesperson added.

How Rex Tillerson Is Remaking the State Department - Secretary of State Rex Tillerson doesn’t know what to make of news reports that morale is low at his agency and that he’s not doing a good job running it. “I walk the halls, people smile,” he says in a recent interview in his spacious office in Washington. “If it’s as bad as it seems to be described, I’m not seeing it, I’m not getting it.”  That’s exactly the complaint many Department of State employees have about Tillerson: He’s not getting it. Early on, many career diplomats were optimistic when the former chairman and chief executive of Exxon Mobil Corp. took over the 75,000-person agency. He knew his way around the world and had decades of experience running a large, sprawling organization. He’d negotiated deals with heads of state in some of the toughest places in the world to do business, and he understood the delicate balance between using soft and hard power. Those skills would be put to the test by the array of urgent global issues awaiting him—including Iran, North Korea, and increasing tensions with China and Russia—when he arrived for his first day on the job in February.Instead of focusing all his attention outward, though, Tillerson has indicated that some of his top priorities are more inward-looking. He wants to cut costs and reorganize the department, in part to meet a White House goal of reducing the agency’s budget by 30 percent. In the eight months since he took over, Tillerson has spent considerable time immersed in the minutiae of head counts and organizational charts while ensconced in his executive suite on the seventh floor of the Harry S Truman Building, where he sat for an interview with Bloomberg Businessweek on Oct. 19. So far he’s traveled less than half as much as John Kerry and Hillary Clinton had at this point in their terms. In Tillerson’s view, the State Department needs a dramatic private-sector-style makeover—a “redesign,” as he calls it. An outline of his plan sent to Congress in August is written in the opaque jargon of corporate management consultants: Tillerson envisions “an evidence-based and data-driven process to enhance policy formulation and execution, as well as optimize and realign our global footprint.”

Are Bannon’s Ongoing Contacts With Trump Illegal? - The latest news in the saga of Steve Bannon is that the former White House senior adviser has reportedly been pushing President Donald Trump to be more forceful against special counsel Robert Mueller. Bannon’s ideas allegedly include urging Trump to cut funding for the probe, telling Trump to withhold documents and pressing Trump to bring in more aggressive lawyers. These latest alleged Bannon-Trump communications come on top of other reported contacts between the two since Bannon left the White House. And it all raises serious questions as to whether Bannon is violating federal ethics laws and perhaps other statutes, including those concerning obstruction of justice. Former White House staff members—whether encamped at Breitbart News or anywhere else—are constrained by 18 USC 207, which governs “restrictions on former officers, employees, and elected officials of the executive and legislative branches.” One provision of this statute prohibits former senior executive branch officials from communicating with their former agency for one year on behalf of other persons, whether their current employers, persons who are targets of a government investigation or anyone else. And former very senior White House officials, such as Bannon, are subject to a two-year cooling off period, which bars them not only from making such communications on behalf of others back to White House staff, but also to other very senior people in the government, such as the attorney general—and also the president. Another provision of the same statute prohibits former executive branch employees from contacting any part of the executive branch, including the president, with the intent to influence official decisions in any particular party matter in which the former official participated personally and substantially while in the government—all on behalf of others.

 Trump's NASA pick faces blistering criticism on Capitol Hill - Democrats pummeled President Donald Trump’s pick to lead NASA at his confirmation hearing Wednesday, criticizing his past controversial statements on gay rights and climate change as well as poking holes in his professional qualifications. Sen. Bill Nelson (D-Fla.), ranking member on the Senate Commerce Committee, commended Rep. Jim Bridenstine (R-Okla.) for his military service but said his experience as a pilot does not alone qualify him to lead NASA and make the budgetary and engineering decisions that come with the job. The senator also slammed Bridenstine for numerous statements he has made, including discriminatory remarks about the LGBT community and a denial that people contribute to climate change. “Your recent public service career does not instill great confidence about your leadership skills or ability to bring people together,” Nelson said. “In fact, your record and behavior in Congress is as divisive and extreme as any in Washington.” In 2013, Bridenstine called the Supreme Court decision declaring same-sex marriage constitutional a “disappointment.” He also called former President Barack Obama’s executive order allowing transgender students to use the bathroom of their identified gender “lawless federal bullying.” 

Donald Trump embarks on marathon tour of Asia - BBC News: US President Donald Trump has embarked on an 11-day trip to Asia during which he will visit Japan, South Korea, China, Vietnam and the Philippines. It will be the longest tour of Asia by a US president in 25 years. The trip comes at a time of heightened tensions with North Korea over its nuclear programme and missile tests. Mr Trump is expected to show a united front with South Korea and Japan while pressing China to take a stronger line with Pyongyang. President Trump flew first to the US state of Hawaii where he visited the USS Arizona Memorial at Pearl Harbor - the scene of the 1941 Japanese attack that drew the US into World War Two. He also took part in a briefing at the US Pacific Command.Mr Trump has previously exchanged some fiery rhetoric with North Korea over its ballistic missile tests but aides said earlier this week that he would not go to the heavily fortified demilitarized zone (DMZ) on the border between the South and North. He is, however, to visit Camp Humphreys, a US military complex south of the capital, Seoul. In Vietnam, Mr Trump will attend the Asia-Pacific Economic Co-operation summit in Da Nang and make a state visit to Hanoi. His final engagement will be a summit of South East Asian nations in the Philippine capital, Manila. 

Ryan loses key ally on tax reform after switch on breaks for homeowners -- Politico - The National Association of Home Builders on Saturday accused House Speaker Paul Ryan of abruptly reversing course on a mortgage tax credit proposal and announced it would oppose the tax-reform proposal that GOP lawmakers expect to unveil on Wednesday. The about-face by the housing-industry lobbying group strips Republicans of a powerful ally. Tax breaks for homeowners have long been one of the flash points of any attempt to rewrite the nation's tax laws.."All the resources we were going to put into supporting are now going to go into opposing the plan," NAHB Chief Executive Officer Jerry Howard told POLITICO. Homebuilders and other groups had been working with Ways and Means Chairman Kevin Brady (R-Texas) on a plan to preserve tax breaks for homeowners. House Republicans have been planning to weaken the deduction that home mortgage borrowers currently get for the interest they pay on their mortgages by raising the standard deduction, leading much of the housing lobby to line up against the plan. As an alternative, Brady had agreed to a tax credit that would combine mortgage interest and local property taxes, Howard said.

Republicans, desperate for a win, already face setbacks as they prepare to unveil tax bill this week - The Republican effort to overhaul the tax code suffered a bruising setback over the weekend when a powerful corporate interest group came out against the proposal just days ahead of when House leaders plan to release it to the public.The National Association of Home Builders, after learning that a “homeownership” tax credit it had wanted will not be in an initial version of the bill, is preparing a nationwide campaign against it. The development underscored just how difficult the prospect of a successful tax overhaul will be, given the complex and competing interests that President Trump and GOP lawmakers are trying to serve.“We will do everything we can to defeat this thing,” said Jerry Howard, chief executive of the National Association of Home Builders. Trump and Republicans have cast the measure as a once-in-a-generation rewrite of the federal tax code, one they say will stimulate the economy, create millions of jobs and give voters a reason to stick with their party in next year’s midterm elections. Rep. Kevin Brady (R-Tex.), the chairman of the House Ways and Means Committee, is scheduled to reveal the bill Wednesday. For the president and House Speaker Paul D. Ryan (R-Wis.), the stakes couldn’t be higher. With the approach of the end of their first year controlling the White House and Congress, and the failure of health-care legislation still fresh, Republicans are desperate to post a win before next year’s midterm election cycle begins in earnest. By many of their own accounts, failure to pass tax legislation could lead to an electoral bloodbath, and the end of Ryan’s political career, in 2018.   Ryan and Brady had been hoping to stave off corporate defections as long as possible, arguing that the plan’s benefits to the economy would outweigh the loss of any industry-specific tax break. But a decision to roll back key itemized deductions has already alienated the home builders as well as the National Association of Realtors, both major lobbying forces on Capitol Hill. Home builders are considered among the most politically influential groups, as they play a large role in the local economy for virtually every congressional district — and contribute millions to political campaigns. Lawmakers have frequently leaned in whatever direction the home builders have taken.

Trump tax overhaul under intensifying fire as Congress readies bill   (Reuters) - President Donald Trump’s plan for overhauling the U.S. tax system faced growing opposition from interest groups on Sunday, as Republicans prepare to unveil sweeping legislation that could eliminate some of the most popular tax breaks to help pay for lower taxes.  Republicans who control the U.S. House of Representatives will not reveal their bill until Wednesday. But the National Association of Home Builders, a powerful housing industry trade group, is already vowing to defeat it over a change that could affect the use of home mortgage deductions, while Republican leaders try to head off opposition to possible changes to individual retirement savings and state and local tax payments. Trump and Republicans have vowed to enact tax reform this year for the first time since 1986. But the plan to deliver up to $6 trillion in tax cuts for businesses and individuals faces challenges even from rank-and-file House Republicans. House and Senate Republicans are on a fast-track to pass separate tax bills before the Nov. 23 U.S. Thanksgiving holiday, iron out differences in December, send a final version to Trump’s desk before January and ultimately hand the president his first major legislative victory. Analysts say there is a good chance the tax overhaul will be delayed until next year. The NAHB, which boasts 130,000 member firms employing 9 million workers, says the bill would harm U.S. home prices by marginalizing the value of mortgage interest deductions as an incentive for buying homes. The trade group wants legislation to offer a tax credit equaling 12 percent of mortgage interest and property tax payments but says it was rebuffed by House Republican leaders. “We’re opposed to the tax bill without the tax credit in there, and we’ll be working very aggressively to see it defeated,” NAHB chief executive Jerry Howard told Reuters.

Trump wants to sign tax bill by Christmas | TheHill: President Trump said Tuesday he wants to sign a tax overhaul by Christmas, setting an aggressive timetable for Congress to deliver his first major legislative victory. “I want the House to pass a bill by Thanksgiving. I want all the people standing by my side when we sign by Christmas, hopefully before Christmas,” Trump said during a meeting with industry leaders at the White House held one day before the House bill is expected to be released. He vowed the signing ceremony will “be the biggest tax event in the history of our country.” House Republicans have plotted a speedy course for their legislation, with a committee markup planned for Nov. 6. Their goal is to complete work on the legislation by Thanksgiving. Senate Republicans have also discussed getting the bill passed by the end of November, though Trump's timeline hints at a slightly longer time frame. There are a series of challenges to that plan, from worries about how tax reform might increase the deficit to battles over specific tax provisions, including possible changes to the tax status of 401(k) plans and the deduction of state and local taxes. Another issue is the special counsel probe of Russia's election meddling, which is hanging over the administration's head. On Monday, special counsel Robert Mueller brought charges against two of Trump's former campaign aides and unveiled a guilty plea by another. Mueller’s charges shook Washington and threatened to throw a wrench into congressional Republicans’ plan to unveil their full tax proposal on Wednesday. 

House GOP tax plan would keep top rate unchanged on highest earners - House Republican leaders plan to propose preserving the top income-tax rate for very wealthy people, a last-minute adjustment to their plan to overhaul the tax code that they hope will assuage concerns that it will mainly benefit the rich, according to four people briefed on the planning Tuesday. GOP leaders had planned to collapse the seven existing income tax brackets into three brackets, lowering the top rate from 39.6 percent to 35 percent, but now will retain the top bracket for people earning more than a certain threshold, perhaps $1,000,000, the people said. The detail was one of several that emerged Tuesday as GOP leaders scrambled to put the final touches on their plan, widely seen as the last best chance for Trump and congressional Republicans to advance a major policy achievement this year. Drafters planned to work through the night on the bill and unveil it Wednesday, but later decided to delay it to Thursday, said House Ways and Means Committee Chairman Kevin Brady (R-Tex.), its lead author. After a closed-door meeting of his panel Tuesday night, Brady issued a statement saying, “In consultation with President Trump and our leadership team, we have decided to release the bill text on Thursday.” He said they “remain on schedule to take action and approve a bill” next week.” The delay raises questions about whether Republicans have resolved all of their differences amid concerns that even a few defections could prevent the bill from passing. President Trump on Oct. 31 held a meeting on tax reform at the White House. (The Washington Post) The bill will aim to slash corporate tax rates, simplify taxes for individuals and families and lure the foreign operations of multinational firms back to the United States with incentives and penalties. The decision to preserve a top rate signals that Republicans are eager to avoid the impression that their plan, which has already come under attack as doing little to boost the middle class, seeks only to reward wealthy Americans and corporations. And the move could attract the support of more moderate Republicans. The House and Senate plan to work on separate tracks to pass legislation by Thanksgiving and send a bill to President Trump for his signature by year’s end, though many expect it will take longer than that, if the effort succeeds at all. 

Don’t believe the news of a new “top rate” in the forthcoming Republican tax plan: their enormous “pass-through” loophole makes it largely irrelevant – EPI - House Republicans look set to unveil their tax bill on November 1. The “Unified Framework” previewing their plan included only three tax brackets: 12, 25, and 35 percent. But given that all independent analysis of their plan shows it adds enormously to deficits, they have publicly contemplated adding a fourth tax bracket above 35 percent to boost revenue. That top bracket may stay at the current 39.6 rate or be lower than the current rate while remaining above 35 percent. But when the tax plan is unveiled, no one should be tricked by this rate. The rate they choose doesn’t really matter all that much thanks to another loophole they’ve added, which all but ensures that that high income households won’t be paying more than 25 percent. They have disguised the loophole as helping small businesses since it’s targeted at so-called “pass-through income.” But while all small businesses are “pass-throughs”, not all pass-throughs are small businesses—lots of them include wildly rich businesses like hedge funds and private equity firms and boutique law firms. 86 percent of households with pass-through income already pay 25 percent or less—think of these as genuine small businesses. But 49 percent of all pass-through income goes to just the top 1 percent of households. This means that lowering the pass-through rate to 25 percent clearly makes this a tax cut for hedge funds, law firms, and private equity partners, not genuine small businesses. But from that egregiously tilted starting point, the loophole will still get worse, as it leads to rich individuals hiring accountants to re-classify other forms of income as pass-through income.This means that rich households won’t be paying the top rate on ordinary income, wherever Republicans set it. Instead, their lawyers and accountants will ensure that the income they earn is routed through pass-through businesses like LLCs. This will allow rich households to pay a 25 percent top rate instead of 35 or 39.6. We’ve seen this before. A lower pass-through rate was part of the failed Kansas “experiment.” And in Kansas, the top individual state income tax rate was only 4.6 percent higher than what was levied on pass-through entities. That difference was enough for the University of Kansas men’s basketball coach and football coach to route their income through LLC’s.

GOP Braces for ‘All Hell’ to Break Loose Over Tax Bill -  House tax writers pushed back the reveal of their highly guarded, long awaited tax bill by a day, a sign that disputes among Republican lawmakers are threatening their effort to pass comprehensive legislation by Thanksgiving. If the bill is released Thursday, one day later than planned, GOP leaders will have just 10 official legislative days before the holiday to do nothing short of rewiring the U.S. economic engine. To succeed, they must gain the support of a caucus that’s grumbling about being left in the dark, avoid lobbyists’ attempts to sidetrack the bill and win House passage on the sort of timetable that’s usually reserved for emergency legislation. For Republicans, who failed to deliver on promises to repeal and replace Obamacare earlier this year, it may already be an emergency. A chaotic, confusing day of meetings and conflicting statements on Tuesday reflected both hope and anxiety, and raised questions about the prospects for swift passage.Internal GOP strife and frustration led to the delay, according to a former House aide who’s familiar with the deliberations. Pushing back the rollout -- even just a day -- makes it more likely Republicans will end up passing simple tax cuts instead of a tax code revamp, said the former aide who asked not to be named because the discussions were private.  House leaders and White House officials sought to downplay the delay, saying speedy passage is still possible. But once a bill drops, the task may become vastly more difficult. “All hell’s going to break loose,” said Senator John Kennedy, a Louisiana Republican. “This is going to have plenty of cheesecake. But it’s going to have plenty of spinach. This is broadening base and lowering rates.” Should lawmakers settle for simple cuts to individual and corporate rates -- measures that would almost certainly have to be temporary under congressional budget rules -- they’ll fall short of what GOP leaders and the Trump administration have promised: a once-in-a-generation permanent overhaul of the U.S. tax code, similar to what happened in 1986 under former President Ronald Reagan. Still, House Ways and Means Chairman Kevin Brady said he was pleased with the progress committee members had made, and his panel remained on schedule to take action and approve a bill beginning next week.

Trump Proposes Repealing Obamacare's Individual Mandate To Pay For Tax Cuts -- In a proposal which will further infuriate Democrats, moments ago Trump suggested repealing Obamacare's individual mandate to fund his proposed tax cut."Wouldn’t it be great to repeal the very unfair and unpopular individual mandate in ObamaCare and use those savings for further tax cuts for the Middle Class. The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER,” President Trump says in series of posts on Twitter.  The Congressional Budget Office has estimated that repealing the mandate would save the government $416 billion over a decade. The mandate requires most people to pay a fine to the IRS if they do not have health insurance.Trump's proposal echoes a similar suggestion from Sen. Tom Cotton, who suggested it could free up to an additional $300 billion in money for tax cuts. Senate Finance Committee Chairman Orrin Hatch said this week that he wouldn’t rule out including the  repeal of the mandate in the legislation, although as Bloomberg notes it is unclear whether such a plan could pass in the Senate, which has struggled to pass Obamacare repeal legislation.  Other top Republicans have rejected the idea, including House Ways and Means Committee Chairman Kevin Brady (R-Texas) and Sen. John Thune (R-S.D.). They fear adding mandate repeal into the mix would jeopardize tax reform. As reported yesterday, the GOP delayed its release of tax bill, as a result of last minute disagreement over the contents.  As discussed previously, this may be just the first of several delays as somehow the proposal, now likely hobbled by over $1 trillion on the revenue side as it appears there will be no significant change to the treatment of local and state tax deductions, has to reconcile a plehtora of conflicting items including:

  • Are middle-class cuts from the budget framework (like doubling the standard deduction and expanded child tax credits) included?
    Is the SALT deduction included (or capped in some way)?
  • What level is the corporate tax rate (over/under Trump’s 20% target)
  • Is there a fourth tax bracket (rumblings suggest incomes above 1mm USD would be affected)
  • Is the tax cut retroactive to Jan. 1, 2017?
  • Is there a repatriation deal for money kept overseas?
  • Does it add to the deficit?  If so, how much?

Republicans unveil multitrillion-dollar tax cut for corporations and the rich - The Republican leadership of the House of Representatives released a tax bill Thursday that will give corporations and the rich in America trillions of dollars in tax cuts and starve the federal government of revenues, setting the stage for a frontal attack on core social programs such as Social Security and Medicare.The Trump White House and congressional Republicans plan to rush the 429-page measure through Congress and have it signed into law by Christmas, using expedited procedures to evade a filibuster in the Senate and dispense with public hearings.The bill amounts to a Wall Street wish list. Its centerpiece is an immediate cut in the corporate tax rate from 35 percent to 20 percent, which will save US corporations $2 trillion over the next ten years.It also effectively reduces the tax rate on corporate income generated by overseas operations from 35 percent to 10 percent, allowing giant companies such as Apple and Amazon to repatriate the hundreds of billions of dollars they have stashed away overseas to avoid US taxes, by charging a one-time rate of 12 percent. It maintains the top personal income tax rate of 39.6 percent (down from 70 percent in 1980), but applies it to households making more than $1 million a year, up from the current threshold of $500,000. It doubles the exemption for estate taxes to $11 million and eliminates the tax entirely in six years, providing a huge windfall for the wealthiest 0.2 percent of the population. By guaranteeing the ability of the financial aristocracy to pass on its wealth in full to succeeding generations, it effectively establishes a dynastic caste at the very top of society that recalls the feudal nobility of the Middle Ages. The bill eliminates the Alternative Minimum Tax, which almost exclusively impacts the wealthy, and reduces to 25 percent the tax on so-called “pass through” income reported by business owners.The proposal roughly doubles the standard tax deduction for middle-income families. However, to keep the loss of federal revenue from handouts to corporations and the wealthy to $1.5 trillion over ten years, as required by the budget resolution passed last month, the measure repeals or reduces current tax deductions that chiefly benefit workers and middle-class people. These include deductions for mortgage interest payments, state and local taxes, student loans, medical expenses, moving costs, adoptions and tax credits for retired and disabled people.As a result, millions of Americans will be forced to pay higher taxes to subsidize the theft of trillions of dollars by the financial oligarchy that controls both political parties and rules the country.The tax bill represents an intensification of the social counterrevolution of the past four decades that has devastated the living standards of millions of workers while increasing social inequality and the wealth of the financial elite to unprecedented levels. It initiates a new stage in the plundering of society by the corporate oligarchy.

Republican Plan Delivers Permanent Corporate Tax Cut - — Republican lawmakers unveiled a sweeping rewrite of the tax code on Thursday, outlining a $1.5 trillion plan that will deliver a significant tax cut for corporations and more modest savings for middle-class families while tilting the United States closer, but not entirely, toward the kind of tax system long championed by businesses. The House plan, released after weeks of internal debate, conflict and delay, immediately ignited a legislative and lobbying fight as business groups, special interests and Democrats began tearing into the text ahead of a Republican sprint to get the legislation passed and to President Trump’s desk by Christmas. Lawmakers appeared unfazed by the blowback and scheduled the first official “markup” of the bill for Monday.“With this plan, we are making pro-growth reforms, so that yes, America can compete with the rest of the world,” said Speaker Paul D. Ryan of Wisconsin.The bill is heavily weighted toward business, which would receive about $1 trillion in net cuts, or two-thirds of the total, according to calculations by the Joint Committee on Taxation that were released Thursday by the Ways and Means Committee. At its center is a proposal to permanently cut the corporate tax rate to 20 percent from 35 percent — a change that is estimated to reduce federal revenues by $1.5 trillion over the next decade alone. For individuals, the plan establishes three tax brackets — 12, 25 and 35 percent — instead of the seven that exist now and maintains a top rate of 39.6 percent for millionaires. The bill would also eliminate the alternative minimum tax, which is expected to hit 4.5 million families in 2017, and would roughly double the standard deduction for middle-class families. It would not, as many had feared, make any changes to the pretax treatment of 401(k) plans. Americans will still be able to make “both traditional, pretax contributions and ‘Roth’ contributions in the way that works best for them,” Republican lawmakers said in their talking points. But the legislation includes several land mines that could complicate its passage, including limits on the popular mortgage interest deduction and caps on the state and local tax deduction, as well as its overall cost. Several Republicans from the high-tax states of New York and New Jersey said the bill would need to change to gain their support, while powerful trade groups representing the real estate industry and small businesses blasted the bill as ineffective and harmful to Americans.

GOP tax bill would eliminate medical expense deductions | TheHill: The House Republican tax bill would eliminate the ability for individuals to deduct qualified medical expenses, a provision that could have major implications for households with extremely high health-care costs. Under current law, the IRS allows individuals to deduct qualified medical expenses that exceed 10 percent of a person’s adjusted gross income for the year. The bill would repeal that itemized deduction, effective in 2018. The cost to repeal the medical expense deduction is about $10 billion per year. The IRS currently allows individuals to deduct preventative care, treatment, surgeries and dental and vision care as qualifying medical expenses. The medical expense deduction can also be used for long-term care expenses for chronically ill patients. The provision could be a flashpoint for Republicans, as the repeal could hit both patients themselves and their families, who sometimes help pay for care.

Tax bill is said to cut mortgage deduction for new home sales - The House GOP talking points for its tax bill says it would cap the mortgage interest deduction for newly purchased homes at $500,000 — a departure from the current cap of $1 million for couples filing jointly.The home mortgage deduction for existing mortgages would be preserved, according to the two-page outline of policy highlights obtained by Bloomberg News.The White House and GOP leaders had said repeatedly that the mortgage interest deduction would be preserved for homeowners.  The SPDR S&P Homebuilders exchange-traded fund, ticker XHB, and an S&P index that tracks builders plunged in early trading. If the losses hold, it would be the worst day for both in more than a year.The luxury homebuilder Toll Brothers Inc. fell as much as 7.3 percent, and the retailer Home Depot Inc. also saw heavy losses. The tax tweak, if implemented, will acutely affect new buyers and builders in the Northeast. According to the U.S. Census Bureau, the median selling price in that region last year was $428,200 — roughly $150,000 more than the Midwest and South, and $60,000 higher than in the West.

Housing groups pan GOP swipe at mortgage deduction in tax plan — Hopes that tax reform might soften a weakening of the mortgage interest deduction were quickly dashed Thursday as the plan from House Republicans appeared to land a double punch on the incentive cherished by the mortgage and housing industries. The plan, as expected, would double the standard deduction, compelling many middle-class consumers to abandon itemized deductions such as that for mortgage interest. Some housing industry advocates had urged policymakers to consider a new housing tax credit as a substitute. Not only did the new proposal leave out the housing tax credit, but it also delivered a tougher blow: halving the loan limit eligible for a mortgage interest deduction to $500,000. That aspect of the plan was immediately attacked by banking and housing industry groups, as well as some lawmakers. “The bill eviscerates existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives,” said Jerry Howard, president of the National Association of Home Builders. “By undermining the nation’s longstanding support for homeownership and threatening to lower the value of the largest asset held by most American families, this tax reform plan will put millions of home owners at risk.”  Even though the plan would allow current mortgage borrowers to apply for the deduction at the higher cap, critics charged that homeowners could still feel the negative effects as their home values rise. At a House hearing Thursday afternoon, Rep. Brad Sherman, D-Calif., said resale values could be suppressed for homes that had previously qualified for the deduction but subsequently lost the tax incentive following years of inflation. 

Republican tax plan may not be so bad for housing after all - A House Republican tax proposal that infuriated housing groups and sent homebuilder stocks sliding on Thursday would only have a modest impact on the market for new homes and could end up being a net positive for the industry, according to analysts at Keefe, Bruyette & Woods.That's because most new homes are priced between $200,000 and $400,000, with the median new-home sale price at $320,000. So while the tax plan cuts the limit on loan amounts eligible for the mortgage interest deduction in half, to $500,000, most new construction would still be eligible for the benefit, the analysts wrote Thursday, citing Census Bureau data."While a lower cap on the mortgage interest deduction may limit deductions on higher-end homes, most homebuilders offer more affordable product below $500,000. Other factors that could impact buy versus rent decisions include a doubling of the standard deduction, which will likely decrease the number of individuals who itemize deductions," said KBW analyst Jade Rahmani. "The doubling of the standard deduction is likely to meaningfully decrease the percentage of borrowers who itemize," according to a second KBW report Thursday by Bose George, Eric Hagen and Thomas McJoynt Griffith. "This would in turn impact the rent versus buy calculation," as the MID incentive to buy a home is rendered moot for consumers who would benefit more by taking the standard deduction."However, we think over time, the tax deduction is not a big driver of the home purchase decision and home buyers will be no worse off with the doubling of the standard deduction," the analysts added.When evaluating both the new and existing home markets on the whole, "the impact on the reduced mortgage deduction is likely to be modest. The median home price is roughly $250,000, so in most markets, the majority of borrowers would not be impacted," the mortgage analysts said.One caveat, though, is in high-cost housing markets such as California, which has a median home price of $550,000, the lower cap would "increase the cost of homeownership for borrowers with mortgages that are larger than that size." Meanwhile, the plan's reduction of the corporate tax rate to 20%, from 35%, "should be a meaningful positive for the mortgage sector, where most of the companies are full taxpayers," the George team said.

 America’s Tax-Cut Peronists - Simon Johnson - Name the country. Its leader rails against foreigners, erects various import barriers, and pushes for low interest rates and lots of cheap credit for favored sectors. Government debt is already high, but the would-be strongman in power decides to pile on even more by increasing the budget deficit, arguing that this will boost prosperity to previously unattainable levels. While the government claims to represent the common people, state contracts are awarded to friends of friends.  The answer, of course, is Argentina under Juan Perón, who was in power from 1946 to 1955 (and again briefly in 1973 and 1974), and many of his successors. One of the richest countries in the world around 1900 was laid low by decades of unsustainable economic policies that made people feel good in the short run but eventually ended in disaster, such as runaway inflation, financial crisis, and periodic debt defaults. But if your answer was the United States under President Donald Trump, you would not be far off. There is reason to fear that the US is now on the path to what was previously known as Latin American populism.Consider the remarkable volte-face of the Republican Party on fiscal responsibility. There used to be a national debt clock in the hearing room of the House Financial Services Committee, and Republicans would rant about government profligacy as it ticked upward. When I was in that room recently, the clock was “under repair.”Self-proclaimed “fiscal conservatives,” such as Mick Mulvaney (a former member of the House of Representatives who now runs government finances as head of the Office of Management and Budget), are close to enacting a massive tax cut, despite knowing that it will drive up the deficit and the national debt. Mulvaney and his colleagues could not care less.Despite  controlling both Houses of Congress and the presidency, the Republicans are beset by internal divisions. As a result, they are finding it hard to “pay for” the tax cuts with any reduction in tax expenditures (incentives for various activities such as corporate borrowing, mortgage financing, or retirement saving). But Republicans are deeply committed to gigantic tax cuts, in large part because their donors are demanding that they enact them. As a result, the US will merely end up with bigger budget deficits.

Democrats are rolling out an old and flimsy argument against tax cuts  - There are a few lines you can take to argue against tax cuts, including the idea that they benefit mostly huge companies and rich Americans. Here's the wrong one: In the weeks leading up to Thursday's reveal of the Republican tax plan, Democrats have been harping on about higher budget deficits and a resulting "entitlement crisis" as a key justification for opposing President Donald Trump's tax plan. It's enough that Ylan Mui of CNBC has taken to calling Democrats the "new deficit hawks." For the Democrats to take this line against the tax cuts is a mistake for three reasons. First, it's hard for voters to understand, even when it's dumbed down into the old trope of "you wouldn't run your household like this." Second, it's bad economics. Unlike households, governments can run big deficits, and they should be doing so especially when inflation is as low as it is today. Doing so can help spur economic growth, and the Democrats know this because it was a key lesson of the post-financial-crisis recovery. Economists can and should argue over the best uses of that deficit — spending that boosts the economy versus tax cuts that line the pockets of the rich — but that's a tangential argument for those not currently in power. Third, there are much better objections about the harm this tax plan could cause — such as leading to greater inequality and more struggles for the middle class — or the false promises (such as that it will lead to higher wages) it's being pitched with. "The deficit is an abstraction that is pretty much meaningless to anyone other than an economist or budget wonk," says Dean Baker, an economist who is the codirector of the liberal Center for Economic and Policy Research in Washington. "To my view, the issue is that the Republicans are looking to take money from programs people care about and need, like Medicare and Medicaid, and use it to give tax breaks to rich people. This is concrete and people can understand it. "The deficit is not. And of course as an economic matter, it is not clear that a larger deficit would be a bad thing — although I do have to say, we are likely getting close to full employment, so we probably don't want too much larger of a deficit." 

Billionaire Republicans Privately Diss Trump - Less than a year ago, the financial Republican elite was making its way through the brass doors of New York City’s Trump Tower to kiss the ring of President-elect Donald Trump.  But these men (and they were almost exclusively men) were hoping that a Republican agenda would give them a big tax cut, if nothing else. Now, behind closed doors, they are expressing disgust, disappointment, trepidation — and deploying no small amount of black humor. The new dark mood was on display at the Robin Hood Investment Conference last week at 50 Varick Street, an event space in downtown Manhattan.  At this year’s event, despite a roaring stock market, the mood was glum. Barry Sternlicht, a billionaire real-estate investor, hotel mogul, and self-described Trump friend and golf partner, seemed to have soured on the president. “I expected him to go to the middle, because I thought he wanted to be great,” he said of Trump, according to an audio of his off-the-record talk obtained by New York. “I played [golf] with Donald Trump and his golf game is like his presidency,” he said, eliciting guffaws. “He’s amusing as my friend, but he’s not very amusing as president of the United States. And I’m a Republican.”Other conference participants sounded the alarm more loudly. Frequent GOP donor Seth Klarman, CEO of $30 billion Baupost Group hedge fund, had already warned his investors about Trump’s protectionist policies and the deficits his tax plan would produce. But at Robin Hood, Klarman — who is widely revered in investing circles — offered a much harsher assessment of Trump to his peers. “The president is a threat to democracy. He has attacked journalists and he’s threatening to take away NBC’s license,” Klarman said, according to an audio recording of his remarks. “He’s attacking judges. He’s violating all sorts of democratic norms, from the emoluments clause to questioning the election and threatening to lock up his opponent. People don’t focus on this but Nazi Germany had a constitution before Hitler came to power and at the end of the war they had the exact same constitution. It lasted all the way through, but democracy didn’t.”

Steve Bannon Declares War On Republican Mega Donor Paul Singer -- Last week, the New York Times confounded the expectations of many rabid followers of the various investigations into the Trump campaign when it revealed that the Washington Free Beacon, a conservative news website funded in large part by hedge fund billionaire Paul Singer, was the Republican-affiliated group that hired Fusion GPS - the opposition research firm that supervised the creation of the ‘Trump dossier’ - to conduct opposition research into then-candidate Donald Trump during the Republican primary.The Free Beacon reportedly ended its relationship with Fusion in May 2016 after Trump clinched the nomination, and has maintained that it didn’t contribute in any way to the Trump dossier. The DNC and Clinton campaigns reportedly hired Fusion in April, via Democratic superlawyer Marc Elias, and quickly realized that Trump’s business ties to Russia could be an important vulnerability. Still, Singer’s push to discredit Trump apparently caught the eye of one of the president’s most loyal former employees, former White House Chief Strategist Steve Bannon, who reportedly told the president in a phone call last week that he was going "off the chain" to destroy Singer, according a report by Axios published today. Bannon reportedly added that Trump had been looking for a long time "to set things right with Singer and his entire crew," according to a source familiar with the conversation.

 Apple’s Exports Aren’t Missing: They Are in Ireland - Brad Setser -- Yuqing Xing notes that Apple sells a lot of iPhones in China, at a high mark-up.* And he also notes, correctly, that Apple’s sales in China don’t really register in the U.S. trade data.  Especially as relatively few of the high value-added components (even the components designed by U.S. companies) are now made in the United States. U.S. semiconductor firms are increasingly fabless, and Corning now makes most of its Gorilla glass in Asia.  So where are Apple's “missing” exports? Easy. In the income line of the balance of payments. Probably in Ireland. They account for a big part of the so-called trapped corporate profits offshore waiting around for a tax holiday and that—going forward—are hoping for to a shift to a pure territorial system. Apple—and Apple here is just the most prominent example of many tech and pharma companies—could structure its affairs so a higher share of its global sales showed up in the U.S. trade data.   But then Apple would pay U.S. corporate income tax on its global iPhones sales, and, given the opportunities it now has to minimize its global tax bill, it would rather not do so. We actually know—because of the reporting of the New York Times and the work done by Senator Carl Levin and his staff back when Levin was the Chairman of the Permanent Subcommittee on Investigations—a fair amount about how Apple’s sales in China enter into the global balance of payments. OK, to be precise, how Apple’s sales used to enter into the balance of payments, as Apple’s tax structure has likely evolved in the past few years. In Apple’s case, a lot of the high-end components are manufactured elsewhere in Asia (see this diagram) though in some cases on the basis of U.S. designs, and thus a substantial share of the iPhone’s manufactured valued-added really accrues to Taiwan, Korea, and similar countries.**  But there is no doubt that Honhai does the bulk of its final assembly in China. However, it does so, technically, in a bonded zone, which is legally offshore.  That matters. According to the New York Times, the iPhones that Foxconn physically assembles in China are technically sold to Apple’s Irish subsidiary before they legally enter China. That allows Apple Ireland to markup the iPhone’s price before it clears Chinese customs (effectively reducing Apple’s Chinese tax burden). Apple then has to pay value-added tax and any duty China charges at the border.

Trump personally pushing GOP leaders to use tax bill to undermine Obamacare - House Republicans grappled Friday with the difficulty of turning their new tax plan into law, making a change that would make the proposal’s tax cuts for individuals less generous and entertaining a controversial proposal from President Trump to use the tax bill to repeal a central element of the Affordable Care Act. Republicans changed the tax overhaul, which was announced Thursday, to cut $81 billion from the tax breaks it would provide to individual taxpayers. The move was made as lawmakers realized their initial effort would run up against the $1.5 trillion in total borrowing over a decade that Congress had authorized to finance the tax cut plan. Party leaders also took a preliminary step to study Trump’s proposal to include language in the tax bill that would scrap the Affordable Care Act’s individual mandate, a change nonpartisan analysts say would save the government more than $400 billion over a decade but would also leave 15 million more Americans without health insurance. Republicans released their proposed overhaul of the personal and corporate tax code on Thursday after months of negotiations, but Friday’s last-minute changes showed how challenging it would be to finalize the law by year’s end. The decision to reduce benefits for individual taxpayers threatens to reinforce perceptions the bill is tilted toward helping the wealthy and corporation at the expense of middle-class Americans. 

Similar to “Alexander – Murray,” CMS Proposal Gives States Authority to Redefine ACA Minimum Benefits -- The CMS is proposing a rule allowing states greater authority in defining the ACA. This comes in addition to Trump’s EO. The new rule would give states greater flexibility in:

  • – Defining the ACA’s minimum essential benefits to increase affordability of coverage,
  • – a larger role in the certification of qualified health plans offered on the federal insurance exchange,
  • – and more leeway in setting medical loss ratios for individual-market plans.

If a state redefines the minimum benefits in the ACA, what we can expect to see is emerging trash plans or mini-plans, which were sold by McDonalds and other companies and are useless in many cases. Granting states a larger role in qualifying healthcare plans on the healthcare exchanges gets back to what I have pointed out before; states failed miserably in defining healthcare requirements and in providing healthcare to citizenry in many cases. Before the ACA, healthcare was the ER due to a lack of insured coverage. Patients were paying Chargemaster rates and often times paid little of the bill due to extremely high bills or low income.  Does the CMS proposal force states to adequately protect the vulnerable as called out in Section 1332 of the ACA? The same as the Senate Bill Alexander-Murray; without a change in Section 1332 of the ACA, underfunded states will have to provide similar coverage. Under Section 1332 States can: “propose a change or eliminate almost all core ACA features, the individual and employer mandates, plan design including the Essential Health Benefits, and the subsidy basis and schedule. For a waiver to be allowed; however, the state must demonstrate that it will cover as many people, with coverage as affordable and comprehensive as the default structure and must not increase the deficit.”  In other words, the state can get a waiver to the ACA requirements as long as the state can show it covers the same numbers of people with just as affordable and comprehensive state coverage as the ACA while not increasing the deficit (to be redundant in stating such in all three cases). I do not see the CMS getting past this part of the ACA law and Alexander-Murray Republican-Democrat alliance proposes to change Section 1332 and the subsequent 2015 guidance.

  White House opioid commission calls for wide-ranging changes to anti-drug policies - President Trump's commission on the opioid crisis called Wednesday for a nationwide system of drug courts and easier access to alternatives to opioids for people in pain, part of a wide-ranging menu of improvements it said are needed to curb the opioid epidemic. The commission, headed by New Jersey Gov. Chris Christie (R), called for expanding drug courts — an alternative system that tries to channel substance abusers accused of crimes into treatment — into all 94 federal court jurisdictions. Currently they are in fewer than half.The more than 50 recommendations in the draft report also include requiring doctors and others who prescribe opioids to show they have received training in the safe provision of those drugs before they can renew their licenses to handle controlled substances with the Drug Enforcement Administration. The panel also wants to mandate that providers check prescription-drug-monitoring databases to ensure that users aren't “doctor shopping” for prescription drugs. In some states, use of that technology is voluntary.The powerful American Medical Association has expressed concern that federally mandated “one-size-fits-all” training would conflict with state requirements for education and do little to speed the end of the crisis.The commission specifically declined to endorse the use of marijuana for pain, despite some studies suggesting that access to marijuana may decrease opioid deaths. Christie said in his cover letter to the president that research by the National Institute on Drug Abuse “found that marijuana use led to a 2½ times greater chance that the marijuana user would become an opioid user and abuser.” Christie said there is also “a lack of sophisticated outcome data on dose, potency and abuse potential for marijuana.” Nor did the commission endorse establishing safe injection sites like those in Canada, where intravenous drug users can inject drugs under the supervision of trained personnel who prevent them from overdosing.

 FEMA chief: Feds spending $200 million a day on hurricane, wildfire recovery | TheHill: The federal government is spending an estimated $200 million per day on recovery efforts following a trio of hurricanes and a severe wildfire season, a top official said Tuesday. Federal Emergency Management Agency (FEMA) Administrator Brock Long told senators that the agency still has “numbers coming in” about the costs associated with Hurricanes Harvey, Irma and Maria, as well as the wildfires in western states. Asked whether the Trump administration would request more emergency funding for the disasters, Long implied that was likely.“I don’t think we have a good handle on the total cost of this, but you can rest assured my guys will be in touch with your staff members to make sure we don’t fumble the ball when it comes to disaster recovery, and we’ll do our best to take care of taxpayer dollars,” Long said at a Senate Homeland Security and Governmental Affairs Committee meeting Tuesday. Lawmakers and the White House have approved two major disaster relief bills this fall to help Texas, Louisiana, Florida, Puerto Rico and other states and territories recover from a record-breaking hurricane season, and to fund wildfire cleanup efforts in California and other western states. The two bills provide $51.5 billion for disaster agencies. An earlier spending deal included $1.1 billion in disaster funding, as well. Long said recovery efforts in Texas and Florida focus on clearing debris and improving the housing situation. California faces similar issues, as well as hazardous material removal and watershed management concerns. Puerto Rico still faces a significant recovery effort after Maria, with electricity still out for most of the territory. 

Whitefish Energy contract bars government from auditing deal - A deal reached between the government and a small Montana energy company located in Interior Secretary Ryan Zinke's hometown prohibits the government from reviewing labor costs or profits related to the company's relief efforts in Puerto Rico, according to a leaked copy of the contract.A copy of the deal highlighted by reporter Ken Klippenstein reveals that the government isn't allowed to "audit or review the cost and profit elements" under the agreement, allowing the company greater discretion and secrecy for how it spends the $300 million to restore power to the island. Puerto Rico is rebuilding after two major hurricanes wiped out most of the island's electrical grid.Whitefish contract states, "In no event shall [government bodies] have the right to audit or review the cost and profit elements." Wow. — Ken Klippenstein (@kenklippenstein) October 27, 2017 Whitefish signed the deal with the Puerto Rico Electric Power Authority (PREPA), which also prohibits the government from making "any claim against Contractor related to delayed completion of work."Incredible: Whitefish contract states Puerto Rican govt "waives any claim against Contractor related to delayed completion of work." — Ken Klippenstein (@kenklippenstein) October 27, 2017  Whitefish has been the target of heavy criticism over questions as to why the small company, which only had two full-time employees when the storm struck, was selected for such a lucrative government contract to help clean up the island.

Puerto Rico Electric Power Authority Cancels Whitefish Energy Deal ― Puerto Rico Electric Power Authority is canceling its controversial $300 million contract with Whitefish Energy Holdings to restore the island’s hurricane-ravaged electrical grid, officials announced Sunday.Ricardo Ramos, executive director of PREPA, said at a press conference he would honor Puerto Rican Gov. Ricardo Rosselló’s Sunday morning request to terminate the business deal, which has raised questions from several lawmakers and government agencies. “I want to clarify, so it’s very clear, that the cancellation of this contract does not respond to an acceptance that there was something outside of the law or out of line with [PREPA’s] procedures of emergency contracts,” Ramos said.The Federal Emergency Management Agency said Friday that it had “significant concerns” over PREPA’s decision to award Whitefish the contract earlier this month and would be conducting a review.Whitefish, a two-year-old firm based in Interior Secretary Ryan Zinke’s Montana hometown and financially backed in part by a major donor to President Donald Trump’s 2016 presidential campaign, had just two full-time employees when Hurricane Maria hit the island more than a month ago. Language in the contract ― a full copy is here ― appeared to give Whitefish a sweetheart deal as the people of Puerto Rico struggle to recover from the devastation of the hurricane.The contract stated that, “In no event shall [government bodies] have the right to audit or review the cost and profit elements.” That gave Whitefish wide discretion and privacy over how it used $300 million in U.S. taxpayer money. It also waived “any claim against Contractor related to delayed completion of the work,” which means the government couldn’t do much if Whitefish dragged out its job restoring electricity to the 3.4 million Americans living on the island.

FBI Is Probing Puerto Rico's $300 Million Power Contract With Whitefish Energy -- Just a day after Puerto Rico's cash-strapped power authority on Sunday canceled its controversial $300 million contract with Whitefish Energy, a small Montana company tasked with rebuilding the island's power grid after it was completely destroyed by Hurricanes Maria and Irma, the WSJ is reporting that the FBI is looking into the circumstances surrounding the contract.  The contract was canceled on orders from Puerto Rico Gov. Ricardo Rossello, who pointed to the burgeoning controversy surrounding the company - including its relationship with Secretary of the Interior Ryan Zinke, who is from the same small Montana town where Whitefish is based. Zinke issued a statement last week denying any involvement in the deal. Zinke is reportedly friends with Whitefish CEO Andy Techmanski. The company has been criticized for moving too slowly in its efforts to restore power to the island. To date, only 30% of power customers on the island have had electricity restored, more than a month after Maria first made landfall along the island's southeastern coast.As WSJ explains, the firm had more than 350 workers and 2,500 tons of heavy equipment on the ground for rebuilding electrical lines destroyed in Hurricane Maria. But the firm’s small size and limited track record, as well as the terms of the contract, ignited concerns around Puerto Rico’s management of the flow of federal disaster-relief dollars to the island. The Federal Emergency Management Agency, multiple congressional committees and local auditors also have raised concerns and begun requesting documents about the deal. Ricardo Ramos, the executive director of Prepa, had defended the selection of Whitefish and said the contracting process was done according to the utility’s regulations for handling emergency situations.

Whitefish Energy hires lobbyist amid Puerto Rico scrutiny | TheHill: Whitefish Energy Holdings has hired a federal lobbyist to represent it amid growing scrutiny of its hurricane recovery contract with Puerto Rico’s electric utility. Dennis Cardoza, a former Democratic California congressman who works for the law and lobbying firm Foley & Lardner, said Monday that he is the main lobbyist on the agreement that Whitefish signed last week. “Right now the effort by Foley is being done so that Whitefish has representation in DC,” Ken Luce, a spokesman for Whitefish, said in a statement. “Whitefish Energy has a reputation to uphold and we felt that Foley would help us in being able to have those conversations in a productive manner,” Luce said. The Puerto Rico Electric Power Authority (PREPA) announced Sunday that it would cancel the contract with Whitefish. Meanwhile, two House committees, Puerto Rico’s government and the Department of Homeland Security’s inspector general are investigating the deal. Whitefish has been embroiled in controversy since it was revealed that PREPA gave the company a $300 million no-bid contract to restore infrastructure after Hurricane Maria wiped out electrical service on the island. The company had little experience in utility repair and only a handful of employees before Maria hit. Whitefish and its CEO, Andy Techmanski, share a hometown with Interior Secretary Ryan Zinke, though both parties have forcefully denied that the connection played any role in Whitefish getting the contract. 

There’s a Shady Puerto Rico Contract You Didn’t Hear About -- National outrage has led to the cancellation of a suspicious $300 million contract doled out to a tiny Montana company that was oddly tasked with rebuilding large parts of Puerto Rico’s electric grid. A separate $200 million contract has faced little scrutiny, but may ultimately be even more scandalous for what it says about the effort to rebuild the island in the aftermath of Hurricane Maria.The deal was inked with a company called Cobra Acquisitions LLC, which didn’t even exist until this year. It’s a subsidiary of an Oklahoma-based fossil fuel company, suggesting that neither the Puerto Rican Electric Power Authority nor the federal government has much interest in seizing the opportunity presented by the storm to rebuild Puerto Rico in a sustainable way that relies on renewable energy rather than imported oil.Unlike the Whitefish contract, the Cobra deal with PREPA involved heavy input from the Federal Emergency Management Agency, which — according to a recent conference call convened by Mammoth Energy Services — was “in the room” and there “every step of the way” as it was being meted out so as to be in line with the agency’s reimbursement requirements. (Neither FEMA nor PREPA representatives have responded to The Intercept’s multiple requests for comment.) “We expect this to be a credit to our corporate margin,” an unidentified Mammoth executive (likely Chief Financial Officer Mark Layton) said on the conference call. “Quite honestly, we wouldn’t have entered this contract if we didn’t think we’d get paid.”

House questions FEMA over Puerto Rico power contracts (Reuters) - The U.S. House of Representatives’ energy committee on Wednesday said it wants the Federal Emergency Management Agency (FEMA) to explain how it is overseeing contracts for rebuilding Puerto Rico’s power grid after it was devastated by Hurricane Maria.In a letter to FEMA, the committee raised questions about contracts between Puerto Rico’s Electric Power Authority (PREPA) and two companies: Whitefish Energy Holdings and Cobra Acquisitions LLC, a subsidiary of Mammoth Energy Services Inc. Six weeks after the hurricane swept across the island, two-thirds of its residents are still without electricity. Washington is preparing to spend billions on relief for the territory, home to 3.4 million Americans, with assistance for the grid seen as one of the most expensive and complex pieces of the aid. The House Energy and Commerce committee - one of several panels of lawmakers keeping a close eye on Puerto Rico projects - said in its letter that “federal leadership and strategic coordination” are needed to restore power, and outlined a series of concerns about the role played so far by FEMA. Usually, power utilities seek help from other utility companies to restore power immediately after disasters. But Puerto Rico first turned to contractors, as utilities were leery about getting paid by PREPA, which declared bankruptcy in July. On Sunday, Puerto Rican Governor Ricardo Rossello and PREPA said they would cancel a $300 million contract with Whitefish Energy Holdings, after a controversy over the deal’s provisions and the Montana company’s lack of experience with projects of such a large size. The committee said it was concerned about FEMA’s oversight of the Whitefish contract. “We have a contract with PREPA, and how PREPA and FEMA are interacting, that is PREPA’s issue,” a spokesman for Whitefish said in a statement. 

FEMA spends $35 million on generators in Puerto Rico that engineers say aren't even needed -- The Federal Emergency Management Agency spent $35.1 million on renting two emergency generators to help power blacked-out San Juan, Puerto Rico. But a group of engineers says existing infrastructure could have been used more effectively at a fraction of the cost. The mobile turbine generators, fully connected as of last week, bring some 50 megawatts to the partially idled Palo Seco plant west of the capital. That’s intended to stabilize power supply, at least in neighborhoods where distribution lines are intact. Graffiti reads "Turn It Back On!" outside the PREPA Palo Seco plant. Photographer: Xavier Garcia/Bloomberg Yet the Puerto Rico Professional College of Engineers and Land Surveyors said a better alternative was to turn on some of Palo Seco’s existing facilities to provide at least five times more power, according to a report delivered to local lawmakers and an interview with the organization’s president. Members of the group toured the plant Oct. 19 with a Senate delegation led by Larry Seilhamer, vice president of the body and an engineer by training. About 70 percent of Puerto Ricans are still without electricity, including vast swaths of the capital of around 350,000 people. Pablo Vazquez Ruiz, president of the engineering college, said last week that the new generators will probably be insufficient for Puerto Rico’s most populous and economically important region. “We’re in an emergency,” Vazquez Ruiz said. “We’re spending a lot of money with this, and we’re not supplying enough power to the metropolitan area." 

Trump boosts disaster aid for Puerto Rico rebuild  (Reuters) - U.S. President Donald Trump on Thursday agreed to expand the use of disaster aid to help rebuild Puerto Rico’s power grid and other infrastructure wrecked by Hurricane Maria, the White House said. In a unique agreement recognizing both the massive devastation on the island and its dire financial problems, aid from the Federal Emergency Management Agency (FEMA) for infrastructure projects will be released in a faster, more flexible way than is typical after disasters, a senior White House official told Reuters. The plan, agreed to with Puerto Rico Governor Ricardo Rossello, will also provide for third-party advisers to estimate how much money is requires for big-ticket projects, and how it is spent - a provision aimed at protecting taxpayer dollars in what is expected to be a massive, long-term effort to rebuild the island. The new agreement will see FEMA cover 90 percent of the costs for rebuilding public infrastructure, up from the typical level of 75 percent. Puerto Rico - home to 3.4 million Americans - is in bankruptcy, struggling with $72 billion in debt. Its finances were put under federal control last year. Six weeks after Hurricane Maria hit, only about 30 percent of Puerto Rico’s power grid has been restored. Private sector estimates of total damage from Maria have ranged as high as $95 billion. The White House is expected to deliver a new request for disaster aid to the U.S. Congress in mid-November to help defray costs from Maria and two other major hurricanes - Harvey and Irma - as well as damage caused by wildfires in the western United States. It is not yet clear how big the federal tab for Puerto Rico will be. “Obviously it’s going to be a big dollar figure,” the official said. “I know there won’t be any balking at the amount of money needed from the administration.” 

More Than 900 Post-Hurricane Deaths In Puerto Rico Won’t Be Physically Examined - More than 900 bodies have been authorized for cremation in Puerto Rico since Hurricane Maria ravaged the island on Sept. 20, the U.S. territory’s Department of Public Safety confirmed to HuffPost Saturday. Medical examiners overseeing the process do not appear to have conducted physical examinations of the bodies.BuzzFeed News was the first to report on the staggering number of unexamined deaths, noting that because the bodies were burned, no one will ever know how many of those deaths were related to the hurricane.In a statement sent to HuffPost by Puerto Rico’s Department of Public Safety, Secretary Héctor Pesquera said the Institute of Forensic Sciences ― an agency of Puerto Rico’s government in charge of certifying deaths related to the hurricane ― has authorized 911 cremations after reviewing medical records.“The Institute of Forensic Science must, by law, authorize all of the cremations that are solicited by relatives of the deceased,” Pesquera explained in a Spanish-language statement, translated by HuffPost, on Saturday. “In this process various documents are analyzed, among them, the death certificate, proof of death, the medical summary or the document that certifies and shows the circumstances of the death.”Based on the documentation, every death was deemed to be related to “natural causes” and none of the cases presented any sort of “suspicion that would stop the solicited process [of cremation],” according to the press statement. 

 DHS expanding national biometrics database to hold details on over 500 million people, including many US citizens - We’ve just written about China’s ambitious plans to add voiceprints to its existing national biometrics databases.. Ideas that are tried out first in China, where there is little hope of organizing resistance to them, have a habit of turning up later in Western countries, despite local and vocal protests. The main difference is that China is generally not shy about announcing ever-more surveillance of its people, on the grounds that it will supposedly make society safer, whereas Western governments do it surreptitiously, for example by gradually extending the reach of systems that they initially present as mainly aimed at foreigners. That’s been the case for the mass surveillance revealed by Edward Snowden, where local laws were sidestepped on the grounds that the spying took place abroad, or only targeted those in other countries. Something similar now seems to be happening with the main biometrics database in the US“The United States Department of Homeland Security (DHS) has contracted one of the world’s largest arms companies to manage a huge expansion of its biometric surveillance programme. According to a presentation seen by Privacy International, the new system, known as Homeland Advanced Recognition Technology (HART), will scoop up a whopping 180 million new biometric transactions per year by 2022.”The $95 million contract awarded to Northrop Grumman envisages two stages of implementation, reported here by Defense Daily: “Increment 1 of HART is scheduled to take 18 months to complete and includes migrating the current biometric capabilities of IDENT [the current Automated Biometric Identification System used by the DHS]. These include storage and matching of fingerprint, face and iris images, as well as latent fingerprint matching, a new data architecture, and a new system development and testing environment. IDENT has limited face and iris matching capabilities.” The second phase will also last 18 months, and requires improvements in the system’s face and iris matching capabilities, as well as “a biometric fusion element that will produce stronger matching results when multiple biometrics are used in a search query”. Future development may introduce additional biometrics such as DNA and voice recognition, as well as distinctive features, including scars and tattoos.

Lawmakers demand tech companies censor journalists and conduct mass surveillance - Wednesday’s hearings by the House and Senate Intelligence committees on “extremist” political views served as the occasion for members of Congress to urge technology companies to flagrantly violate the US Constitution by censoring political speech, carrying out mass surveillance, and muzzling journalists in pursuit of the government’s geopolitical aims. It is a testament to the decay of American democracy that it was left to the representatives of Facebook and Twitter, who have been broadly accused of violating users’ privacy for their own financial gain, to inform members of Congress about the ABC of constitutional law. In an exchange that embodied the total contempt for freedom of speech that pervades the ruling elite, South Carolina Representative Trey Gowdy demanded that Facebook and Twitter block their users from making inaccurate statements about the current day of the week.“Can I ‘say today is Thursday’,” the South Carolinian demanded. “What are you going to do with that?” Gowdy asked which constitutional amendment protects the right of people to make such statements, totally oblivious that almost all false statements are protected under the First Amendment.Colin Stretch, Facebook’s general counsel, fighting back a skeptical smile, replied: “There is Supreme Court precedent on that…”  Gowdy, befuddled, demanded: “On which side?” Stretch answered: “That it is, in most cases, protected.” He continued: “On Facebook, our job is not to decide whether content is true or false.”Although the representatives of the technology companies largely played along with the narrative of “Russian meddling” in American politics, their resistance to the most flagrant censorship demanded by the government piqued the ire of the senators leading the witch-hunt. “I don’t think you get it,” fumed Senator Dianne Feinstein, who said the past year had seen “a cataclysmic change” in American politics. This is “the beginning of cyber warfare,” she declared, and technology companies “have to really take a look at that and what role you play.”

Federal Court Suspends Trump's Ban on Transgender Service Members - A federal judge in Washington, DC has suspended Donald Trump’s executive order which reversed the military’s policy on transgender troops. In July, the president announced on Twitter that he would reinstate a ban preventing transgender people from serving openly in the military. The ban had been lifted under President Obama, a year prior to Trump’s tweet, but remained a target for social conservatives. The Obama-era order was set to be implemented in July but was delayed for six months by the Pentagon. Those plans changed when Trump tweeted. In his July tweet, the president argued that the American military could not afford the “tremendous medical costs and disruption that transgender in the military would entail.” The decision was born of the discriminatory policies that drive the Trump administration since the costs of health care for transgender service members was found to be “negligible.” Trump’s decision was a surprise to the Pentagon and in August, Secretary of Defense James Mattis announced that transgender service members would be allowed to remain in the military while the issue was studied. Today’s decision from District Judge Colleen Kollar-Kotelly granted a preliminary injunction on Trump’s ban but granted the Pentagon that earlier six-month delay. Kollar-Kotelly’s injunction will prevent current service members from being discharged because they are transgender. She argued that transgender service members that challenged Trump’s executive order in a lawsuit were likely to be successful adding that due to that likelihood, the Trump administration was not allowed to go forward with its reversal.

The Supreme Court Has An Ethics Problem Politico -   Elizabeth Warren - - A few days before the Supreme Court returned from its summer break, Justice Neil Gorsuch, the court’s newest member, attended a luncheon at the Trump International Hotel, where he was to give the keynote address. The location of the speech attracted the attention of dozens of protesters and a number of ethics watchdogs, who noted the apparent conflict of interest posed by Justice Gorsuch—a Trump nominee—keynoting an event at a hotel whose revenue goes in part to President Trump. That arrangement was bad enough on its own. But there was another potential conflict of interest created by Justice Gorsuch’s speaking engagement—and it highlights the ongoing ethical issues that threaten the credibility of our nation’s highest court. The same morning that Justice Gorsuch gave his speech, the Supreme Court announced that it would hear Janus v. AFSCME. This is a case that will determine whether public sector unions—which represent teachers, nurses, firefighters and police in states and cities across the country—can collect fees from all employees in the workplaces they represent. Justice Gorsuch is widely expected to deliver the court’s deciding vote to strip unions of this ability. A decision along these lines would seriously undercut workers’ freedom to have a real voice to speak out and fight for higher wages, better benefits and improved working conditions.  Here’s the rub. Justice Gorsuch’s speech at the Trump hotel was hosted by the Fund for American Studies. And who funds the Fund of American Studies? The Charles Koch Foundation and the Bradley Foundation. The Charles Koch Foundation is dedicated to promoting limited government, free markets and weaker unions; and the Bradley Foundation has worked for decades to, in their own words, “reduce the size and power of public sector unions.” In fact, the Bradley Foundation helped pay the litigation expenses for Janus—the case in which Justice Gorsuch is likely to be the deciding vote. Think about that: Just as the ink was drying on the court’s announcement that it would hear Janus, Justice Gorsuch was off to hobnob with some of the biggest supporters for one side of this important case—the side that wants to deny workers the freedom to build a future that doesn’t hang by a thread at the whim of a few billionaires.There are plenty of other examples of ethical conflicts…

Collins: Top Democrats need to come back before intelligence committee - Sen. Susan Collins said Sunday that the Senate intelligence committee should bring senior Democratic Party operatives back for testimony after revelations about the party paying intelligence firm Fusion GPS for opposition research on Donald Trump last year. Some of that research became the now-infamous dossier of allegations about the now-President and Russia. In closed-door meetings with congressional Russia investigators in recent weeks, Clinton campaign chairman John Podesta and former Democratic National Committee chairwoman Debbie Wasserman Schultz denied knowing who funded Fusion's opposition research, three sources familiar with the matter told CNN last week. "They absolutely need to be recalled," the Maine Republican said on CBS's "Face the Nation." "It's difficult to imagine that a campaign chairman, that the head of the DNC would not know of an expenditure of this magnitude and significance, but perhaps there's something more going on here." A source familiar with the matter told CNN on Tuesday that the law firm Perkins Coie, as part of its representation of the Clinton campaign and the DNC, retained Fusion GPS and entered "into an engagement for research services that began in April 2016 and concluded before the election in early November." In her interview Sunday, Collins also said Perkins Coie attorney Marc Elias should be brought back to speak with the intelligence committee. Elias served as Podesta's attorney and was with him during his interview with the committee, multiple sources told CNN. Elias was there in his capacity as Podesta's attorney and not as a witness.

The Democratic Law Firm Behind the Russian Collusion Narrative - The ongoing investigation headed by Special Prosecutor Robert Mueller into alleged collusion between the campaign of then-candidate Donald Trump and the Russian government has moved into a new phase, with a focus on purported money laundering. On Monday, indictments were filed against former campaign chairman Paul Manafort and his longtime associate Rick Gates.But even more is emerging that could take the Russia story in a totally new direction—namely that the infamous dossier compiled by former British Secret Intelligence Service officer Michael Steele was bought and paid for by a law firm, Perkins Coie, working on behalf of both the Clinton campaign and the Democratic National Committee (DNC).  The current controversy isn’t so much over the contents of the dossier—despite some of the reporting, none of the relevant claims contained within have been verified. Rather, the issue in question is how opposition research derived from foreign intelligence sources and paid for by the Clinton campaign and the DNC ended up influencing the decision to prepare the January 2017 Intelligence Community Assessment (ICA) into alleged Russian interference in the 2016 election, the contents of that assessment, and the subsequent investigations by the U.S. Congress and a special prosecutor.    The extent to which the Steele Dossier influenced the intelligence underpinning Mueller’s probe has yet to be determined with any certainty. In January, the U.S. intelligence community published the unclassified ICA, which was derived from a compilation of intelligence reports and assessments conducted by the FBI, CIA, and NSA. Many of the allegations made in the ICA mirror reporting contained in the Steele Dossier. So striking are the similarities that there are real concerns among some senior Republican lawmakers that the ICA merely reflects “echoes” of the Steele Dossier reported back via liaison with foreign intelligence services who had access to it (namely the British Secret Intelligence Service) or whose own sources were also utilized by Steele.

Ex-British spy paid $168,000 for Trump dossier, U.S. firm discloses (Reuters) - A Washington research firm paid a former British spy’s company $168,000 for work on a dossier outlining Russian financial and personal links to Donald Trump’s 2016 election campaign, the U.S. firm said in a statement on Wednesday. Although it was public knowledge that Fusion GPS paid for the work, the amount had not been disclosed. Fusion GPS hired former MI6 officer Christopher Steele to collect information about Trump and his advisers. Fusion GPS’ statement said it had told Congress about how $168,000 was paid last year to Orbis Business Intelligence, Steele’s company. The money paid to Orbis was taken from $1.02 million it received in fees and expenses from the Perkins Coie law firm, the statement said. The law firm represented the Democratic National Committee and Hillary Clinton’s presidential campaign, although initial research by Fusion into Trump and other Republican primary candidates was commissioned by a conservative website. Steele’s reports are central to investigations by a special counsel and congressional committees into U.S. intelligence agency allegations that Russia tried to help Trump’s campaign. Russia had repeatedly denied the allegations. Trump denies any collusion with Moscow officials, calling the probes a witch hunt.

WSJ editorial board calls for Mueller's resignation and accuses Clinton and DNC of collusion - The Wall Street Journal's editorial board called this week for a full Russia investigation — not into President Donald Trump's campaign, but into the Democratic Party, the FBI, and the special counsel Robert Mueller. "It turns out that Russia has sown distrust in the US political system — aided and abetted by the Democratic Party, and perhaps the FBI," the editorial began. "This is an about-face from the dominant media narrative of the last year, and it requires a full investigation." The editorial board argued that a Washington Post report published Tuesday "revealed" that Hillary Clinton's campaign and the Democratic National Committee hired the Perkins Coie law firm, which in turn retained the opposition-research firm Fusion GPS and funded a now infamous dossier containing salacious allegations about Trump's ties to Russia. The dossier was compiled by a former British spy, Christopher Steele, who has several deep Russian sources. "Strip out the middlemen, and it appears that Democrats paid for Russians to compile wild allegations about a US presidential candidate," the editorial said. "Did someone say 'collusion'?" Previous reports have said Democrats took over funding for the opposition research from anti-Trump Republicans after Trump won the GOP nomination. On Friday, lawyers for The Washington Free Beacon, a conservative-leaning publication, told the House Intelligence Committee that the outlet originally funded the dossier's production. The FBI also reportedly reached an agreement before Election Day to continue paying Steele for his work, though the plan was terminated after BuzzFeed published the dossier in January.  The Journal's editorial board said revelations about who had financed the Steele dossier indicated that the "FBI's role in Russia's election interference must now be investigated."

Clinton pushes back on Russian uranium deal reports: 'Baloney' | TheHill: Former Secretary of State Hillary Clinton said Monday that renewed focus on Russian uranium deals approved during her tenure is nothing more than debunked “baloney" and a sign that Republicans are nervous about the current intelligence probe into Moscow's efforts to meddle with last year's election. "I think the real story is how nervous they are about these continuing investigations," the former Democratic presidential nominee said during an interview broadcast on C-SPAN. The renewed interest in the so-called Uranium One deal came after The Hill reported last week that the FBI had gathered solid evidence that Russian nuclear industry officials were engaged in bribery and extortion before the Obama administration approved the sale to Russia of a company that controls 20 percent of America's uranium supply.The Hill further reported Sunday that the FBI had identified a Russian spy ring's attempt in 2009 and 2010 to infiltrate Clinton's inner circle through a donor friend in order to spy on the State Department. Agents arrested and deported the female spy before anything could happen. Though stories in The Hill were based on court documents, declassified law enforcement memos and interviews with career officials, Clinton said any accusations of wrongdoing were partisan in nature. "I would say it’s the same baloney they’ve been peddling for years, and there’s been no credible evidence by anyone. In fact, it’s been debunked repeatedly and will continue to be debunked," she said. 

Details Of "Suspicious" Manafort Wire Transfers Leaked From FBI Probe -- As speculation mounts that Paul Manafort might be the target of the sealed indictments reportedly approved by Special Counsel Robert Mueller’s grand jury, Buzzfeed is reporting new details of Mueller’s probe into Manafort, seemingly a hint that he will in fact be one of, if not the only, target taken into custody tomorrow.The FBI's investigation of Donald Trump's former campaign manager, Paul Manafort, includes a keen focus on a series of suspicious wire transfers in which offshore companies linked to Manafort moved more than $3 million all over the globe between 2012 and 2013.Much of the money came into the United States.These transactions — which have not been previously reported — drew the attention of federal law enforcement officials as far back as 2012, when they began to examine wire transfers to determine if Manafort hid money from tax authorities or helped the Ukrainian regime close to Russian President Vladimir Putin launder some of the millions it plundered through corrupt dealings.The new revelations come as special counsel Robert Mueller’s investigation is tightening, with reports that an indictment may already have been issued. It is not known if Manafort has been indicted, or if he ever will be. Manafort has been the subject of multiple law enforcement and congressional inquiries. A spokesperson for Manafort would not comment for this story about the investigation or any of the specific transactions, but Manafort has previously denied wrongdoing.Manafort took charge of Trump’s campaign in May 2016 and was forced to resign just three months later, amid intense media scrutiny of his ties to the notoriously corrupt former Ukrainian President Viktor Yanukovych, who was supported by the Kremlin. A political operative for decades, the 68-year-old Manafort has worked for Republicans such as Presidents Ronald Reagan and George H. W. Bush, as well as for foreign leaders such as former Philippines President Ferdinand Marcos. To be sure, the subject or subjects of the indictment have not been revealed – and leaking any more details from the grand jury room would only serve to further erode Mueller’s credibility.

These 13 Wire Transfers Are A Focus Of The FBI Probe Into Paul Manafort - The FBI's investigation of Donald Trump's former campaign manager, Paul Manafort, includes a keen focus on a series of suspicious wire transfers in which offshore companies linked to Manafort moved more than $3 million all over the globe between 2012 and 2013.Much of the money came into the United States.These transactions — which have not been previously reported — drew the attention of federal law enforcement officials as far back as 2012, when they began to examine wire transfers to determine if Manafort hid money from tax authorities or helped the Ukrainian regime close to Russian President Vladimir Putin launder some of the millions it plundered through corrupt dealings.The new revelations come as special counsel Robert Mueller’s investigation is tightening, with reports that an indictment may already have been issued. It is not known if Manafort has been charged, or if he ever will be. Manafort has been the subject of multiple law enforcement and congressional inquiries. A spokesperson for Manafort would not comment for this story about the investigation or any of the specific transactions, but Manafort has previously denied wrongdoing.Manafort took charge of Trump’s campaign in May 2016 and was forced to resign just three months later, amid intense media scrutiny of his ties to the notoriously corrupt former Ukrainian president Viktor Yanukovych, who was supported by the Kremlin. A political operative for decades, the 68-year-old Manafort has worked for Republicans such as presidents Ronald Reagan and George H. W. Bush, as well as for foreign leaders such as former Philippines president Ferdinand Marcos. He has emerged as a central figure in special counsel Robert Mueller’s investigation into possible collusion between the Trump campaign and Russia, in part because of Manafort’s many ties to prominent Russians and his work with Yanukovych. Manafort is reportedly also being investigated for money laundering by federal prosecutors in New York City, but there have been no formal charges from that probe. The FBI searched his home during a predawn raid this summer, reportedly as part of Mueller’s probe. Manafort has consistently maintained his innocence.

Attention Deficit NationKunstler  [Published before Mueller's charges were released] I’m obliged to file this blog before Robert Mueller’s office releases the name of the first winner in the Russian Election Meddling tribunal indictment lottery. Most of the betting is on Paul Manafort, the Swamp-creature-fixer-lobbyist-grifter who spent his summer vacation of 2016 managing Donald Trump’s election campaign. Before that unfortunate summer internship, Manafort was just a shadier-than-average influence-peddler. It happened that many of his clients were bigshots in foreign lands - Mobuto Sese Seko (Congo), Jonas Savimbi (Angola), and Ferdinand Marcos (Philippines), as well as interests in Equatorial Guinea, Kenya, the Dominican Republic, Pakistan, Nigeria, Ukraine, and other world beauty spots. Also, most notably, Russia where the wicked Mr. Putin dwells and incessantly plots evil against our shining city of a republic.Over the years, Manafort took large sums of money to the DC laundry room and then distributed bales of it around town to other lobbyist subcontractors, but he left quite a trail. And he overlooked the requirement to register as an agent for foreign interests. So, indicting him looks like a no-brainer. An entry-level US Attorney could, figuratively speaking, hitch him up to the rear bumper of a Chevy Yukon and drag him over five miles of broken Coke bottles.If I am right, his indictment will provoke a five-column headline in The New York Times, Don Lemon will have a multiple orgasm on CNN tonight, and by Halloween the whole Manafort matter will be as forgotten as Hurricane Maria in Puerto Rico and the Las Vegas Country Music Massacre. That’s how we roll in Attention Deficit Nation. I suppose Mueller’s team next will want to charge fired National Security Advisor General Michael Flynn for failing to register as a foreign agent prior to a having conversation with the Russian ambassador - but mightn’t it be a little absurd to outlaw dialogue between incoming White House officials and foreign ambassadors who, after all, are here to have conversations with our people? That’ll be an interesting precedent. Why would other countries even bother to send an ambassador here if that’s our policy?

Paul Manafort, Who Once Ran Trump Campaign, Indicted on Money Laundering and Tax Charges  — Paul Manafort and his former business associate were indicted on Monday on money laundering, tax and foreign lobbying charges, a significant escalation in a special counsel investigation that has cast a shadow over President Trump’s first year in office.Mr. Manafort, the president’s former campaign chairman, and his longtime associate Rick Gates, surrendered to the FBI on Monday. The special counsel, Robert S. Mueller III, said Mr. Manafort laundered more than $18 million to buy properties and services.“Manafort used his hidden overseas wealth to enjoy a lavish lifestyle in the United States without paying taxes on that income,” the indictment reads. Mr. Gates is accused of transferring more than $3 million from offshore accounts. The two are also charged with making false statements.

President Trump Responds To Manafort Indictment --President Trump has responded directly to the charges filed against former Campaign manager Manafort by special counsel Mueller. "Sorry, but this is years ago, before Paul Manafort was part of the Trump campaign. But why aren't Crooked Hillary & the Dems the focus?????" Trump tweeted.  "Also, there is NO COLLUSION!" Sorry, but this is years ago, before Paul Manafort was part of the Trump campaign. But why aren't Crooked Hillary & the Dems the focus????....Also, there is NO COLLUSION!— Donald J. Trump (@realDonaldTrump) October 30, 2017Additionally, Manafort was indicted on counts including conspiracy to launder money, making false statements and failing to file reports of foreign bank and financial accounts.Of course, this will not stop the mainstream media putting 2 and 2 together to make 12 charges of collusion... somehow. Bloomberg has already pointed out that President Trump's claim that the charges pre-dated the campaign are false...Special Counsel Robert Mueller’s indictment alleges that Manafort and another former Trump campaign aide, Rick Gates, engaged in schemes to defraud banks and the U.S. government from 2008 to 2017. Manafort joined Trump’s campaign in March 2016 and resigned in August 2016.Three of the criminal counts charged against Manafort and Gates cover activities through 2017 and another count includes activities through 2016, according to the 12-count indictment.Finally, as Raul Ilargi Meijer points out so eloquently...What’s more interesting to come out of this circus is the picture of Washington -all of it- as an absolute cesspool and shithole. That these are the people, on either side of the aisle, that get to make the decisions is so worrisome it should make people think of leaving the country.

Manafort Pleads Not Guilty; Bail Set At $10 Million - Several hours after they surrendered to the FBI, Paul Manafort and his business partner Rick Gates, pleaded not guilty to a 12-count indictment charging them with making tens of millions of dollars while secretly working for the Ukrainian government and then hiding the money from the U.S. government. Prosecutors asked that bond be set at $10 million for Manafort and $5 million for Gates but said both may be detained at home until they can post bail, according to Politico.According to AP, Trump’s former campaign manager and his “right-hand man” Gates did not speak other than to state their names at the hearing in federal court in Washington, DC. The two former Trump aides are charged with funneling $75 million through offshore shell companies while secretly working with a pro-Russian political party in the Ukraine as well as the country’s ousted President Viktor Yanukovych. They face up to 20 years in prison on conspiracy to launder money charges, which are the result of Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 election.Manafort, who joined Trump’s campaign in March 2016 resigned last August amid mounting questions into his shady ties to the Ukraine; he was replaced by Steve Bannon.Days before departing the Trump campaign, the New York Times reported Manafort’s name appeared on a list of “black ledger” accounts kept by Yanukovych. “The simplest answer is the truth: I am a campaign professional,” Manafort said at the time. “It is well known that I do work in the United States and have done work on overseas campaigns as well. I have never received a single ‘off-the-books cash payment’ as falsely ‘reported’ by The New York Times, nor have I ever done work for the governments of Ukraine or Russia.”

Manafort, Gates Get House Arrest After Not Guilty Pleas - Former Trump campaign manager Paul Manafort and his associate Rick Gates were put under house arrest because they’re seen as a flight risk after they pleaded not guilty to tax crimes, money laundering, conspiracy and lying to the FBI. The two men appeared in Washington federal court Monday. They surrendered to the FBI earlier in the day. Their next court appearance is scheduled for Nov. 2 before U.S. District Court Judge Amy Berman Jackson. QuickTake Your Guide to Understanding the Trump-Russia Saga Prosecutors said the men are flight risks because of their foreign ties, but didn’t seek their detention ahead of a trial. Manafort was required to post a $10 million bond, while Gates had to put up a $5 million bond to be released. They also surrendered their passports. Follow the Trump Administration’s Every Move Prosecutors said Manafort laundered more than $18 million from offshore accounts to support a “lavish lifestyle,” including buying homes, cars and clothing. He and Gates, his longtime deputy, hid foreign accounts from the U.S. government, failed to disclose work for a foreign government and misrepresented their activities to authorities as recently as 2017, according to the indictment. In a statement, Glenn Selig, a spokesman for Gates, said his client “welcomes the opportunity to confront these charges in court.” A lawyer for Manafort, Kevin Downing, told reporters after court that the charges have nothing to do with the Trump campaign and were based on a seldom-used legal theory. 

Newly unsealed court documents: Manafort and Gates received 'millions of dollars' from 'Russian oligarchs' - A newly unsealed docket in the criminal case against Paul Manafort and his longtime business associate Rick Gates says both men had received "millions of dollars" from Ukrainian and Russian oligarchs that would allow them "to live comfortably abroad" and therefore make them a flight risk. The documents, unsealed on Tuesday, include arrest warrants and the terms of Manafort's and Gates' release. They say both men "have connections to Ukrainian and Russian oligarchs, who have provided millions of dollars" to them. "Foreign connections of this kind indicate that the defendants would have access to funds and an ability 'to live comfortably' abroad ... a consideration that strongly suggests risk of flight," the filings said. A grand jury indicted Manafort and Gates on 12 counts on Monday as part of the special counsel Robert Mueller's investigation into Russia's meddling in the 2016 US election and whether Donald Trump's presidential campaign team colluded with Moscow to influence the outcome. Gates and Manafort, who was Trump's campaign chairman, pleaded not guilty on Monday and were placed on house arrest, though Manafort faces "high-intensity supervision."  In the filing, the government argued that they "pose a risk of flight based on the serious nature of the charges, their history of deceptive and misleading conduct, the potentially significant sentences the defendants face, the strong evidence of guilt, their significant financial resources, and their foreign connections."   Manafort and Gates were required to turn over their passports to the FBI and notify the bureau of their movements. A footnote in the filing says Manafort has three passports with different numbers and has "submitted ten United States Passport applications on ten different occasions" over the past decade.. "Within the last year, Manafort has traveled to Dubai, Cancun, Panama City, Havana, Shanghai, Madrid, Tokyo, and Grand Cayman Island ... The investigation has also revealed that Gates and Manafort traveled to Cyprus, the place where many of their foreign accounts are based."

Here’s why Ukraine paid Manafort insane amounts of money - Just as he had done for dictators in the Philippines and Zaire, Paul Manafort found himself in Ukraine in the fall of 2005 to help reshape the public perception of an unpopular, pro-Kremlin political party associated with “oligarchs and mobsters.”For Manafort, the rewards were obvious. According to the federal grand juryindictment unsealed Monday, some $75 million flowed through offshore accounts linked to Manafort and his consulting company’s work with individuals, businesses, and political parties in Ukraine over the course of nine years.For pro-Kremlin Ukrainian politicians who had found themselves on the wrong side of a revolution, Manafort promised to be their best shot at a return to power — and an influential go-between with the United States. At the time, Viktor Yanukovych looked like a spent force in Ukrainian politics.The Orange Revolution that swept through Ukraine that winter had crushed Yanukovych’s hopes of assuming the presidency and marred his reputation in the West.  In the eyes of many young Ukrainians, especially those in the capital and the western parts of the country, Yanukovych stood for everything that was backwards, corrupt, anti-democratic about their own country. In Western diplomatic circles, he was seen as a hapless tool of Russian President Vladimir Putin, who had sought to install Yanukovych in the presidency to keep Ukraine from moving toward Europe.  But the disgraced leader didn’t slink off into obscurity. Instead, he staged one of the greatest political comebacks in modern political history. And to do it, he hired Paul Manafort.

Mueller blindsides Congress’ Russia investigators - The indictments of two former Trump campaign officials and emergence of a third ex-Trump adviser who appears to be cooperating with special counsel Robert Mueller’s investigation into Russian interference in the 2016 election could throw a wrench into Congress' parallel Russia probes. That's in part because neither of Congress' intelligence committees has yet met with George Papadopoulos, a former foreign policy adviser to Donald Trump's campaign who admitted on Monday to lying to the FBI about his efforts to connect Russian entities with Trump's team. It’s unclear whether he or either of the two indicted former campaign officials — Paul Manafort and Rick Gates — can or will continue engaging with the Hill. ..The Senate Intelligence Committee had interviewed Manafort once before his indictment, and committee investigators had been in talks to interview Papadopoulos, but the former campaign aide, according to one source, "wasn't making himself available" for an interview. The House Intelligence Committee has yet to interview Papadopoulos, Manafort or Gates and is "still in discussions with them," an aide said Monday. Papadopoulos had previously provided documents to the Senate Intelligence Committee, including at least some of the emails cited in his plea deal, the source told POLITICO. The Senate panel was not formally notified by Mueller’s team or the Department of Justice before the Manafort and Gates indictments were made public on Monday. 

Tony Podesta Resigns From Lobbying Group Amid Mueller Probe --- As the left and the media ramp up their Manafort-ian mania against Trump, it appears the trail of destruction from special counsel Mueller's probe has spread to Democratic power-lobbyist Tony Podesta.  As we explained in Aug 2016, Paul Manafort - now under indictment on 12 charges - and his deputy Rick gates previously worked with the Podesta Group, run by Tony Podesta, the brother of Hillary Clinton campaign chairman John Podesta....emails obtained by the Associated Press showed that Gates personally directed two Washington lobbying firms, Mercury LLC and the Podesta Group, between 2012 and 2014 to set up meetings between a top Ukrainian official and senators and congressmen on influential committees involving Ukrainian interests. Gates noted in the emails that the official, Ukraine's foreign minister, did not want to use his own embassy in the United States to help coordinate the visits....And this is where the plot thickens, because while the bulk of the press has so far spun the entire Ukraine lobbying scandal, which led to Manafort's resignation, as the latest "proof" that pro-Moscow powers were influencing not only Manafort but the Trump campaign in general (who some democrats have even painted of being a Putin agent), the reality is that a firm closely tied with the Democratic party, the Podesta Group, is just as implicated.  As AP further adds, the European Center for a Modern Ukraine, a Brussels-linked nonprofit entity which allegely ran the lobbying project, paid Mercury and the Podesta Group a combined $2.2 million over roughly two years.   In papers filed in the U.S. Senate, Mercury and the Podesta Group listed the European nonprofit as an independent, nonpolitical client. The firms said the center stated in writing that it was not aligned with any foreign political entity. And now, just hours after Manafort and Gates handed themselves over to the feds, Politico reports, the founder of the Podesta Group, is stepping down from the lobbying shop that bears his name after coming under investigation by Special Prosecutor Robert Mueller.

The sudden fall of Washington’s ultimate powerbroker - Politico - Tony Podesta has epitomized the height of Washington influence and wealth for two decades. He has a home in Washington a few doors down from Barack Obama, a villa in Italy, an apartment in New York and a multimillion-dollar art collection. He’s been a K Street rainmaker, holding fundraisers for the Democratic Party’s top elected officials and mingling with the most powerful liberals in the country. Last week, he attended Hillary Clinton’s 70th birthday party. Some of the world’s largest companies — BAE Systems, Walmart and Lockheed Martin — have paid him piles of cash to represent them in the Capitol. His firm’s receipts reached nearly $30 million in 2010, and his company has swelled to nearly 60 employees. But now, the 74-year-old D.C. fixture is showing this town that what took decades to build can implode in a day. “There’s a lot of shock value because of who it is,” “His personality is mammoth enough, and it has all kinds of implications — I think it will cause people to really take a look at making sure they cross their t’s and dot their i’s, because you never know what could happen.” Podesta announced Monday that he would be stepping down from the firm he founded in 1988 with his brother, John Podesta, amid reports that special counsel Robert Mueller could bring criminal charges against him and his firm. Mueller’s team is investigating work that Podesta did on behalf of Paul Manafort for a Ukrainian nonprofit. 

Mueller Is Investigating Tony Podesta's Ties To Manafort Lobbying Campaign -- In the past, we’ve claimed on numerous occasions that powerful Democrats have as many - if not more – links to Russian business, government and oligarch interests, and that if special counsel Robert Mueller would only investigate, he might discover evidence of collusion between the Clintons and their powerful allies on a level of that recently brought down former Trump campaign manager Paul Manafort.Fast forward to earlier this week when the whole world was focusing on the indictments of Manafort and his Deputy Rick Gates, one powerful Democratic lobbyist, whose firm it was soon revealed was cited as “company A” in the Manafort indictment, decided Monday might be a good time to leave the company bearing his name. The reason? His firm worked on a Ukrainian lobbying campaign organized by Manafort’s firm.At the time, we predicted that Podesta stepping down was only the beginning, and the other shoe would soon drop.   Podesta Group is next — zerohedge (@zerohedge) October 30, 2017   Just a few days later, that tweet proved eerily prescient, because as the Associated Pressreported earlier this evening, Special Counsel Robert Mueller is investigating Tony Podesta for his role in lobbying on behalf of the Russian-aligned former president of Ukraine, Viktor Yanukovich.

A Month and a Half before the June 9 Meeting, Trump Campaign Learned about Hacked Emails – Marcy Wheeler - As I laid out here, the indictment against Paul Manafort is meant to embarrass him, but still pave the way for him to flip. That’s the carrot, if an indictment stripping the money laundered suits off Manafort’s back can be said to be good news. The bad news is this guilty plea, for false statements, by campaign advisor George Papadopoulos, signed on October 5, but only unsealed today. That plea makes it clear that 1) the campaign had, as an explicit goal, making friends with Russia 2) a month and a half before the June 9 Trump Tower meeting, Russian handlers dangled the stolen Hillary emails 3) Papadopoulos has cooperated beyond what has been laid out in the guilty plea. As the plea lays out, Papadopoulos learned in early March he’d be a foreign policy advisor to the Trump campaign. Within weeks, a professor fresh off a trip to Moscow started cultivating him, and introduced him to a woman pretending to be Vladimir Putin’s niece. After meeting that handler, Papadopoulos attended a meeting with Trump and others where he explained “he had connections that could help arrange a meeting between then-candidate Trump and President Putin.” The plea makes clear that Papadopoulos kept the campaign in the loop on his “outreach to Russia.” And it makes it clear that on April 26 — three days before the DNC figured out Russia had hacked them — Papadopoulos’ handler told him Moscow had dirt on Clinton.  After learning the Russians had emails on Clinton even before Clinton learned it, Papadopoulos “continued to correspond with Campaign officials,” including his Senior Policy Advisor and a High-Ranking Campaign Official. (One of these may be Manafort; another almost certainly is Jeff Sessions.)  In response, the campaign decided to send someone low level “so as not to send any signal.” It turns out, Papadopoulos lied about some of this the first time he spoke with the FBI about it on January 27. For example, he claimed he learned about the emails before he joined the campaign, trying to pretend that he didn’t learn about them only because he had just been named a top advisor.

George Papadopoulos’s Plea Deal Is Very, Very Bad News for Attorney General Jeff Sessions - The biggest news of Mueller Monday — the rollout of a money-laundering indictment against Donald Trump’s former campaign adviser, Paul Manafort and campaign aide Rick Gates, and the unsealing of a false-statements plea deal by another campaign volunteer, George Papadopoulos — may involve someone not named explicitly in either indictment: Attorney General Jeff Sessions.That’s because Sessions has repeatedly testified to the Senate that he knows nothing about any collusion with the Russians. (Though in his most recent appearance, he categorized that narrowly by saying he did not “conspire with Russia or an agent of the Russian government to influence the outcome of the 2016 presidential election.”)But the Papadopoulos plea shows that Sessions — then acting as Trump’s top foreign policy adviser — was in a March 31, 2016, meeting with Trump, at which Papadopoulos explained “he had connections that could help arrange a meeting between then-candidate Trump and President Putin.” It also shows that Papadopoulos kept a number of campaign officials in the loop on his efforts to set up a meeting between Trump and Putin, though they secretly determined that the meeting “should be someone low level in the campaign so as not to send any signal,” itself a sign the campaign was trying to hide its efforts to make nice with the Russians. Papadopoulos also learned, on April 26, that the Russians “have dirt” on Hillary Clinton in the form of “thousands of emails.” A key part of Papadopoulos’s cooperation must pertain to what he told the Trump campaign about these emails. According to his complaint, he originally claimed he hadn’t told anyone on the campaign about the dirt on Clinton because he didn’t know if it was real. But as his plea makes clear, after being arrested, he “met with the Government on numerous occasions to provide information and answer questions.” There would be no reason for Papadopoulos to lie about the significance of the emails in January unless he did so to hide his discussions of them with the rest of the campaign. That suggests the campaign knew, a month before Paul Manafort and Donald Trump Jr. took a meeting with a Russian lawyer to get dirt on Clinton, that the Russians had already told Papadopoulos about dirt in thousands of stolen emails.

Papadopoulos Claimed Trump Campaign Approved Russia Meeting - Former Trump adviser George Papadopoulos made a significant claim in an email: Top Trump campaign officials agreed to a pre-election meeting with representatives of Russian President Vladimir Putin. The message, if true, would bolster claims that Trump’s campaign attempted to collude with Russian interests. But it’s unclear whether Papadopoulos, who pleaded guilty to lying to the Federal Bureau of Investigation, was merely boasting when he sent the July 14, 2016, email to a Kremlin-linked contact. There’s also no indication such a meeting ever occurred. The email is cited in an FBI agent’s affidavit supporting criminal charges against Papadopoulos, a young foreign policy volunteer on Trump’s campaign. But it’s not included in court documents that detailed his secret guilty plea and his cooperation with Special Counsel Robert Mueller. The evidence gleaned during Papadopoulos’s three months of cooperation could further advance Mueller’s investigation into possible collusion by Trump’s aides. This latest email, one of many unsealed on Monday, runs counter to the steadfast denials by Trump and his supporters that anyone attempted to work with the Russians. Trump tweeted on Tuesday that Papadopoulos, a low-level adviser that few people on the campaign knew, “has already proven to be a liar.” Prosecutors didn’t explain why the email wasn’t included in the detailed admissions of Papadopoulos’s wrongdoing, and it’s possible they concluded the assertions weren’t true.

Kremlin Responds To Mueller Indictment: "No Accusations Against Russia" -- It's strange how the Muller probe of "Russian collusion" mutated: half a year into the special prosecutor's investigation whether the Trump campaign colluded with the Kremlin to defeat Hillary Clinton (who may have colluded with Moscow herself over the infamous Uranium One deal, a prove is pending), there was not a single mention of Russia or Putin, and instead two former Trump aides were busted for money laundering and tax evasion, as well as receiving funds from Russia's arch nemesis, Ukraine, also known for being the biggest foreign donor to the Clinton foundation. This irony wasn't lost on Russia, and on Tuesday the Kremlin commented on Monday's news, stressing that the indictment handed down in the special counsel’s investigation did not include accusations against Russia for meddling in the U.S. presidential election. Quoted by Reuters, Putin's spokesman Dmitry Peskov said during a call with reporters that Russia has always said that it did not interfere in the election. “Russia does not feature in the charges that were leveled in any way. Other countries and other people feature (in the charges),” Peskov said, according to the news service adding that “Moscow never felt itself guilty so as to feel exonerated now,” when asked whether the Kremlin interpreted the indictment as proof that its denials about meddling in the U.S. presidential election had been confirmed.

It sure looks like there was collusion between the Trump operation and Russia -  Ezra Klein - Two things are true about the indictments unsealed by special counsel Bob Mueller Monday: They don’t provide a “smoking gun” proving collusion between Donald Trump’s operation and Russia.  They make it almost impossible to believe that there wasn’t collusion between Trump’s operation and Russia.  Here is what we now know: The Trump campaign was filled with operatives connected in shady ways to the Russian government. It included individuals who knew that the Russians had obtained Clinton-related emails and who lied about that knowledge to federal investigators. Top campaign officials (and Trump family members) dropped everything to meet with Russian operatives when they believed there was useful opposition research on offer. Trump publicly asked Russia to hack into Clinton’s computers to find and release her missing emails.  We also know the Russians really did hack into John Podesta’s and the DNC’s email accounts and found and released emails that damaged Clinton. They really did conduct social media operations designed help Trump. Both their targets and their timing were extremely sophisticated for a foreign government that has traditionally shown itself to have a poor understanding of American politics. After winning the White House, Trump attacked the CIA and fired the director of the FBI in an effort to discredit or end their investigations into Russia’s role in the election.  Trump, for his part, denies the allegations. But consider what we have learned, and how much disbelief we’re being asked to suspend in accepting that it’s all innocent:

  • 1) Russia stole Democratic emails. US intelligence agencies have confirmed that emails from the Democratic National Committee and from Clinton campaign chair John Podesta were stolen by Russian hackers. The emails were ultimately released in a smartly sequenced way to maximize damage to Hillary Clinton.
  • 2) At least one Trump adviser knew of the theft in advance, and lied about it. Shortly after the emails were hacked, George Papadopoulos, one of Trump’s five listed foreign policy advisers, was told of their existence by a Russian professor whom he knew to have deep contacts in the Russian government. Papadopoulos subsequently lied to investigators about the timing of the revelation.
  • 3) Paul Manafort, Trump’s campaign manager, was a paid operative of a Russia-linked political party in Ukraine. According to Mueller’s indictment, Paul Manafort, who would go on to lead Trump’s campaign, was a longtime paid operative of a Ukrainian political party with deep ties to the Kremlin.
  • 4) In June 2016, Donald Trump Jr., Jared Kushner, and Paul Manafort met with a Russian operative who promised them dirt on Clinton. ‘
  • 5) In July 2016, Trump publicly asked the Russian government to find and release other emails Clinton deleted.
  • 6) Russians released emails to help Trump, planted fake news and social media bots to help Trump, and tried to hack election systems in 21 states.
  • 7) After being elected president, Donald Trump fired the director of the FBI to end his investigation into Russia’s role in the 2016 election.

The Non-Scientist Trump Chose for USDA Chief Scientist Is Now a 'Cooperative Witness' in Russia Probe -- Sam Clovis, President Donald Trump 's pick for the United States Department of Agriculture's ( USDA ) chief scientist, was already a controversial choice from the start. The former Iowa business professor/conservative talk radio host/Trump campaign co-chairman has “embraced unfounded conspiracy theories and espoused racist and homophobic views," Union of Concerned Scientists Senior Analyst Karen Perry Stillerman wrote . Also, he's a climate change denier who believes climate science is "junk" even though he has no scientific training. But it's not just Clovis' dubious credentials raising eyebrows—he also played a role in the Trump-Russia scandal and is now “a fully cooperative witness" in the Senate Intelligence Committee's investigation of Russian meddling with the 2016 election, Senate Agriculture Chairman Pat Roberts told POLITICO . Clovis, while working as Trump's co-chairman and policy adviser during the presidential campaign, supported campaign foreign policy adviser George Papadopoulos' efforts to meet with Russian officials to prop the campaign, the Washington Post reported. Papadopoulos has pleaded guilty to lying to the FBI about his communications with Russia.  Clovis praised Papadopoulos' "great work" after his March 2016 meeting in London with a professor and a woman incorrectly identified as "Putin's niece." There they talked about arranging a meeting "between us and the Russian leadership to discuss U.S.-Russia ties under President Trump," according to Papadopoulos.

Sam Clovis’s ties to Russia probe cooperator renew opposition to his USDA nomination - Former Trump campaign co-chairman Sam Clovis is facing renewed opposition to his nomination to serve as the Agriculture Department’s chief scientist amid revelations that he encouraged a campaign adviser to foster ties with Russian officials. On Tuesday, several thousand scientists and researchers affiliated with two national organizations that have rallied against Clovis’s nomination signed letters urging the Senate Committee on Agriculture, Nutrition and Forestry not to confirm him, calling him unfit for the post. The former conservative radio talk-show host from Iowa was already a controversial choice to be the department’s chief scientist. Clovis, who is not a trained scientist, is a climate change skeptic who has said protecting gay rights could lead to the legalization of pedophilia. “In every aspect, Clovis falls far short of the standards demanded by the position,” the Union of Concerned Scientists wrote in a one-page letter to the committee’s chairman, Sen. Pat Roberts (R-Kan.), and the panel’s top Democrat, Sen. Debbie Stabenow (Mich.). The letter had 3,100 signers. Mike Lavender, senior Washington representative for the Food and Environment Program at the Union of Concerned Scientists, said in a statement that “emerging evidence of Clovis’ potential involvement with the Trump campaign’s Russian connections should be the final nail in the coffin for his confirmation.” The Center for Science in the Public Interest sent the committee a similar letter Tuesday. 

Trump USDA pick, linked to Russia probe, withdraws from consideration for USDA job - Former Trump campaign aide Sam Clovis, who has been swept up in special counsel Robert Mueller's Russia probe, has withdrawn from consideration to be the Department of Agriculture's chief scientist, according to a letter Clovis sent on Wednesday to President Donald Trump. Clovis had been under criticism for months for his lack of science credentials and, in recent days, for his role supervising George Papadopoulos, a Trump campaign foreign policy adviser who struck a plea deal on charges he lied to FBI investigators about his communications with Russia-linked contacts. "The political climate inside Washington has made it impossible for me to receive balanced and fair consideration for this position," Clovis wrote to Trump. "The relentless assaults on you and your team seem to be a blood sport that only increases in intensity each day." Clovis, an Iowan who served as a co-chair and policy adviser to Trump's campaign, notified Agriculture Secretary Sonny Perdue of his decision a few days ago, according to a source familiar with the exchange. "He didn't want to add to Sonny's problems," the source said. Clovis led the Trump transition's beachhead team for USDA and has been serving as the department's liaison to the White House. A USDA official confirmed Clovis will remain in the liaison role — an arrangement that at least one Democratic senator questioned.

Former Trump adviser’s guilty plea could rattle White House — President Donald Trump dismissed George Papadopoulos as a "liar" and a mere campaign volunteer, but newly unsealed court papers outline the former adviser's frequent contacts with senior officials and with foreign nationals who promised access to the highest levels of the Russian government.They also hint at more headaches for the White House and former campaign officials. Papadopoulos is now cooperating with special counsel Robert Mueller as he investigates possible coordination between Russia and Trump's 2016 White House campaign.Records made public Monday in Papadopoulos' case list a gaggle of people who were in touch with him during the campaign but only with such identifiers as "Campaign Supervisor," ''Senior Policy Advisor" and "High-Ranking Campaign Official." Two of the unnamed campaign officials referenced are in fact former campaign chairman Paul Manafort and his business associate Rick Gates. Both were charged with financial crimes in an indictment unsealed Monday. The conversations described in charging documents reflect Papadopoulos' efforts to arrange meetings between Trump aides and Russian government intermediaries and show how he learned the Russians had "dirt" on Hillary Clinton in the form of "thousands of emails." Though the contacts may not by themselves have been illegal, the oblique but telling references to unnamed people — including "Professor" and "Female Russian National" — make clear that Mueller's team has identified multiple people who had knowledge of back-and-forth outreach efforts between Russians and associates of the Trump election effort. It's a reality that challenges the administration's portrait of Papadopoulos as a back-bench operator within the campaign, an argument repeated Tuesday by White House press secretary Sarah Sanders, who dismissed him as a "volunteer" with a minimal role.

John Kelly Says White House Unfazed By Mueller Indictments - White House Press Secretary Sarah Sanders delivered the administration’s official response to yesterday’s developments in Special Counsel Bob Mueller’s probe into collusion between the Trump campaign and Russia during a press conference yesterday, but just in case anybody has any doubts about the Trump administration’s attitude toward the indictments (not to mention Papadopoulos’s guilty plea), Chief of Staff John Kelly took to Fox News last night to echo his boss’s comments on the matter.During an appearance on Fox News' "The Ingraham Angle,” the retired Marine general reminded viewers that everybody is innocent until proven guilty. Kelly said Paul Manafort and Rick Gates’s alleged crimes, which were purportedly carried out between 2006 and 2015, happened long before they joined the Trump campaign. In a 12-count indictment unsealed yesterday, Manafort – a former Trump campaign executive - and Gates – Manafort’s longtime deputy - have been accused of a bevy of offenses, including tax fraud, money laundering, failing to disclose their foreign lobbying work, and conspiring against the US.He also suggested that the administration has no plans to fire Mueller, as was reported yesterday, and also doesn't plan on taking steps to defund the investigation, like Steve Bannon reportedly suggested.   “All of the activities as I understand it that they were indicted for was long before they ever met Donald Trump or had any associated with the campaign. I think the reaction of the administration is let the legal justice system work, everyone is innocent until proven guilty and we’ll see where this goes.”

Manafort Used at Least Three Passports to Travel the World Under an Assumed Name -Trump’s campaign chairman, Paul Manafort, was indicted with his longtime associate Rick Gates on numerous charges related to his relationship with Russian oligarchs, and foreign policy advisor George Papadopoulos pleaded guilty to lying to FBI agents about his efforts to connect the campaign to Putin and Russia.A new, 17-page court filing shows Manafort used at least three passports to travel the world under an assumed name, and former FBI agent Clint Watts said the alleged money-launderer would have been an easy mark for Russian spies.“I think this case looks much worse (Wednesday) than it did yesterday,” Watts said. “For the Russian foreign intelligence, they must look at Manafort and just be licking their lips. This is a person that has multiple avenues in which you can compromise him. There is so much money moving through foreign countries and through his checking account. This is a great opportunity if you want to actually influence a campaign.”Brzezinski expressed shock and alarm that Trump would ever have considered Manafort, who’d been under FBI surveillance since 2014, to run his presidential campaign.“Along with all of this, which is incredible enough, you’ve hired this person to head up your campaign, and the candidate is so unbelievably carefully polite about Russia and about Putin, and you said all along during the campaign, Joe, ‘I don’t get this Russia thing, something doesn’t make sense,” Brzezinski said. “Something is very, very wrong.”

"He's F**ked": Trump Blames Kushner For Mueller Probe As West Wing Increasingly "Fears Impeachment" --In a new bombshell report, Vanity Fair says that for the first time since the Mueller investigation began earlier this year, key Trump allies in the West Wing are starting to worry that the notion of an impeachment might be slightly more than just a Democratic pipe dream.  As former aide Sam Nunberg said, Mueller's indictment of Paul Manafort has sparked concerns in the White House that Mueller has every intention of parsing through every Trump/Kushner financial dealing until he uncovers something incriminating.Until now, Robert Mueller has haunted Donald Trump’s White House as a hovering, mostly unseen menace. But by securing indictments of Paul Manafort and Rick Gates, and a surprise guilty plea from foreign policy adviser George Papadopoulos, Mueller announced loudly that the Russia investigation poses an existential threat to the president. Here’s what Manafort’s indictment tells me: Mueller is going to go over every financial dealing of Jared Kushner and the Trump Organization,” said former Trump campaign aide Sam Nunberg. “Trump is at 33 percent in Gallup. You can’t go any lower. He’s fucked.” The first charges in the Mueller probe have kindled talk of what the endgame for Trump looks like, according to conversations with a half-dozen advisers and friends of the president. For the first time since the investigation began, the prospect of impeachment is being considered as a realistic outcome and not just a liberal fever dream. While he has refrained so far from publicly criticizing Special Counsel Mueller, Vanity Fair says the President is growing increasingly frustrated and privately lashing out at his own legal team and even son-in-law Jared Kushner, who some around Trump have described as the "worst political adviser in the White House in modern history." Trump, meanwhile, has reacted to the deteriorating situation by lashing out on Twitter and venting in private to friends. He’s frustrated that the investigation seems to have no end in sight. “Trump wants to be critical of Mueller,” one person who’s been briefed on Trump’s thinking says. “He thinks it’s unfair criticism. Clinton hasn’t gotten anything like this. And what about Tony Podesta? Trump is like, When is that going to end?”

Trump Can Pardon Manafort. He Shouldn’t. – AEI - The indictments on Monday of the former Trump campaign officials Paul Manafort and Robert Gates has some prominent conservatives openly considering desperate measures. The Wall Street Journal editorial board called on the special counsel who handed up the indictments, Robert Mueller, to resign, arguing that he lacks the “critical distance” to carry out the inquiry. So did the New York Post columnist Michael Goodwin. But the most radical suggestion came from two former Republican administration lawyers. To forestall a deepening crisis that could cripple the Trump White House, these lawyers, David B. Rivkin Jr. and Lee A. Casey, urged the president to issue a blanket pardon to anyone involved with Russian efforts to influence the 2016 presidential election. This isn’t just a fringe possibility. A reporter raised the idea on Tuesday; Mr. Trump didn’t answer the question. Though such a move would not violate the Constitution, it would provoke a political disaster. President Trump has tweeted that he has the “complete power to pardon.” As someone who supported the broadest reading of executive power as a deputy assistant attorney general during the George W. Bush administration, I think that Mr. Trump has the Constitution about right. Article II declares that the president “shall have power to grant reprieves and pardons for offenses against the United States, except in cases of impeachment.” A simple look at this text shows that the framers knew how to make exceptions when they wished. They precluded pardons for impeachments or state crimes. President Trump can clearly issue a pardon, without challenge by Congress or the courts, to anyone — even himself — subject to the Mueller investigation.

The Manafort Indictment: Not Much There, and a Boon for Trump - The Paul Manafort indictment is much ado about nothing . . . except as a vehicle to squeeze Manafort, which is special counsel Robert Mueller’s objective — as we have been arguing for three months (see here, here, and here).  Do not be fooled by the “Conspiracy against the United States” heading on Count One (page 23 of the indictment). This case has nothing to do with what Democrats and the media call “the attack on our democracy” (i.e., the Kremlin’s meddling in the 2016 election, supposedly in “collusion” with the Trump campaign). Essentially, Manafort and his associate, Richard W. Gates, are charged with (a) conspiring to conceal from the U.S. government about $75 million they made as unregistered foreign agents for Ukraine, years before the 2016 election (mainly, from 2006 through 2014), and (b) a money-laundering conspiracy. There are twelve counts in all, but those are the two major allegations. . Manafort and Gates are said to have controlled foreign accounts through which their Ukrainian political-consulting income sluiced, and to have failed to file accurate FBARs and tax returns. In addition, they allegedly failed to register as foreign agents from 2008 through 2014 and made false statements when they belatedly registered. In the money-laundering conspiracy, they are alleged to have moved money in and out of the United States with the intent to promote “specified unlawful activity.” That activity is said to have been their acting as unregistered foreign agents.On first glance, Mueller’s case, at least in part, seems shaky and overcharged.Even though the Ukrainian money goes back to 2006, the counts involving failure to file FBARs (Counts Three through Nine) go back only to 2012. This is likely because the five-year statute of limitations bars prosecution for anything before then. Obviously, one purpose of the conspiracy count (Count One) is to enable prosecutors, under the guise of establishing the full scope of the scheme, to prove law violations that would otherwise be time-barred. The offense of failing to register as a foreign agent (Count Ten) may be a slam-dunk, but it is a violation that the Justice Department rarely prosecutes criminally. There is often ambiguity about whether the person’s actions trigger the registration requirement, so the Justice Department’s practice is to encourage people to register, not indict them for failing to do so. It may well be that Manafort and Gates made false statements when they belatedly registered as foreign agents, but it appears that Mueller’s office has turned one offense into two, an abusive prosecutorial tactic that flouts congressional intent.

In Call With Times Reporter, Trump Projects Air of Calm Over Charges - President Trump during a cabinet meeting at the White House on Wednesday. Mr. Trump said in a brief telephone call on Wednesday that the special counsel investigation had not come near him personally. Credit Doug Mills/The New York Times  President Trump projected an air of calm on Wednesday after charges against his former campaign chief and a foreign policy aide roiled Washington, insisting to The New York Times that he was not “angry at anybody” and that investigations into his campaign’s links to Russia had not come near him personally. “I’m not under investigation, as you know,” Mr. Trump said in a brief telephone call late Wednesday afternoon. Pointing to the indictment of his former campaign chief, Paul Manafort, the president said, “And even if you look at that, there’s not even a mention of Trump in there.” “It has nothing to do with us,” Mr. Trump said. He also pushed back against a report published Monday night by The Washington Post, which the president said described him as “angry at everybody.” “I’m actually not angry at anybody,” Mr. Trump told The Times. The phone call seemed intended to dispel the impression of a president and a White House under siege. The indictment of Mr. Manafort and his longtime deputy, Rick Gates, on Monday came as little surprise to Mr. Trump or his team, and they were relieved that the charges were not directly related to last year’s campaign. Instead, both were indicted on charges including money laundering, tax evasion and failing to properly disclose lobbying on behalf of foreign governments.

Manafort Indictment Underwhelms, Poses No Immediate Threat to Trump --  Jerri-lynn Scofield - On Monday, special counsel Robert Mueller indicted former Trump campaign chairman Paul Manafort and business partner Richard Gates on twelve counts, including conspiracy against the United States and conspiracy to launder money, and various charges of failure to file Reports of Foreign Bank and Financial Accounts (FBAR), and failure to register as a foreign agent, concerning activities in the Ukraine that ended in 2014. (Read the indictment here.) I’m not alone in pointing out that absent Manafort’s involvement in Trump’s campaign,his failure to register as a foreign agent– would not have been targeted, as many lobbyists are not conscientious in fulfilling this reporting requirement. See, for example, this National Review account:  Much has been made of the absence of any tax charges in the present indictment, one which alleges conspiracy to commit money laundering. The lawyers I spoke to weren’t unduly concerned about such seemingly missing counts, pointing out that the indictment  can be amended later to include tax charges, as investigations proceed. In fact, this indictment should probably be read as a warning shot– the first step in  a lengthy, wide-ranging investigation. I was reminded by one lawyer I spoke to yesterday that special prosecutors have virtually limitless powers, and certainly no major lobbyist could expect to survive unscathed the level of scrutiny that will be brought to bear in this investigation. Unsurprisingly, the New York Times published a piece reinforcing that line, Andrew Weissmann, Mueller’s Legal Pit Bull, that reads like the work of a legal fanboy, and the message of which is Be Afraid, Be Very Afraid:  He is a top lieutenant to Robert S. Mueller III on the special counsel investigation into Russian interference in the 2016 election and possible links to the Trump campaign. Significantly, Mr. Weissmann is an expert in converting defendants into collaborators — with either tactical brilliance or overzealousness, depending on one’s perspective. The million dollar question: Will this implicate or threaten Trump? So far, I think no. But we must all stay tuned– and pass the popcorn.

Former Trump official loses White House nomination amid Russia investigation -- President Donald Trump’s pick for chief scientist at the Department of Agriculture has withdrawn his nomination after the Russia investigation raised questions about his time on the Trump campaign. Sam Clovis – Mr Trump’s former campaign co-chair, and his top pick from the agriculture job – withdrew from the nomination shortly after his communications with former campaign stafferGeorge Papadopoulos were revealed as part of Special Counsel Robert Mueller's investigation into Russian election meddling and possible Russian connections to the Trump campaign. Recently released documents show that a number of officials on the Trump campaign who was aware of Mr Papadopoulos’s efforts to reach out to Russian officials. Mr Papadopoulos has pleaded guilty to lying to the FBI about meeting a professor with alleged connections to the Russian government and contact with a woman calling herself "Putin's niece". Questions had already been raised about Mr Clovis' qualifications for the administration post. He is a self-described sceptic of climate change and Democrats have also flagged a number of other views. Mr Clovis has previously been criticised for rejecting the scientific consensus that human-made greenhouse gas emissions are causing climate change as “not proven”, and had been criticised for statements made arguing against gay marriage. In a letter to Trump describing his decision, Mr Clovis made no mention of the Russia controversy, but cited “the political climate inside Washington.”“The relentless assaults on you and your team seem to be a blood sport that only increases in intensity each day,” Mr Clovis wrote in the letter, dated Wednesday. “As I am focused on your success and the success of this Administration, I do not want to be a distraction or negative influence.”

This Is Why You Don’t Fill A Cabinet With Goldmanites - Donald Trump’s decision to fill his cabinet with former employees of Goldman Sachs elicited a range of reactions as diverse as America is. Leftists rolled their eyes. Liberals howled about the hypocrisy of Trump hiring the same people he’d scapegoated and dog-whistled about during the campaign. Breitbart put cute little globes around Gary Cohn’s name because he’s Jewish and hate gets clicks. Meanwhile Wall Street took heart that at least someone with their mien and worldview would be occupying seats of power in the Trump White House. Whether their presence ends up truly helping Wall Street remains to be seen. But Trump’s Goldmanites are definitely making their backgrounds clear to the administration now, and not exactly in ways that scream “team player.” With Special Prosecutor Robert Mueller’s investigation starting to claim scalps, Cohn et al know the heat is on. And that’s a place they’ve been before. See this anecdote from a Vanity Fair peek into a White House under siege: According to a source, advisers in the West Wing are on edge and doing whatever they can not to be ensnared. One person close to Dina Powell and Gary Cohn said they’re making sure to leave rooms if the subject of Russia comes up. Cohn and Powell knew they were taking risks (mostly reputational) when they signed onto the Trump White House. But they didn’t sign up to become targets in an FBI dragnet. So it’s time to revisit that old see-no-evil-hear-no-evil tactic of evading criminal liability in the midst of a government investigation – a skill that has certainly had its uses on Wall Street. If you worked at Goldman for 25 years and didn’t learn when exactly in a conversation it’s best to whistle a tune and amble innocently away, what exactly did you do all those years?

Manafort’s Dirty Deeds Are Business as Usual, but They Shouldn’t Be - Rather than accept the Manafort and Gates indictments as incidental stops along the way to an exposé of Russian interference in the 2016 election, we ought to examine what these men allegedly did and question how they got away with it for so long. For decades, Manafort’s specialty has been to help unsavory and dictatorial leaders whitewash their images. In an interview, veteran journalist and academic Larry Bensky explained to me the nature of Manafort’s clients. “These are people like Mobutu Sese Seko, the dictator and tyrant in the Congo who was responsible for millions of deaths.” A 1993 Atlantic article, which details some of the sordid deeds the despotic leader engaged in, called him “an utterly dependent but indispensable asset to the West.” Mobutu hired Manafort’s lobbying firm back in 1989 to clean up his image in the West. Other leaders Manafort worked for in the 1980s include the notoriousformer Philippines dictator Ferdinand Marcos, who was responsible for the torture and disappearance of thousands and who, like Mobutu, fleeced his country’s treasury. Angolan guerilla leader Jonas Savimbi also hired Manafort to sell himself to the American political elite and win foreign aid from Ronald Reagan’s administration.Mueller’s indictment of Manafort centers on money made through polishing the image of yet another shady leader: Viktor Yanukovych, the disgraced Ukrainian former president. Manafort helped Yanukovych make over his image and win the 2010 election before he was forced to flee to Russia in 2014 amid protests over his policy decisions. Perhaps it was a fitting transition for Manafort to enter American politics as the campaign chair of a presidential candidate whose policy proposals and, possibly, his financial dealings are in line with those of his earlier clients. Indeed, Manafort may well have been partially responsible for Trump’s win last November. But the fact that he did not disclose himself as an agent of a foreign entity when he took the job Trump offered him has now placed him in the federal government’s crosshairs. Had Manafort simply limited his considerable public relations skills to foreign dictators rather than domestic ones, he might not be in the trouble he is in today.

The Real Promise of the Manafort Indictment - The indictment of Paul Manafort will be an enormous source of speculation for weeks and months to come. But Special Counsel Robert Mueller has already achieved something significant, if underappreciated so far: He opened a far more promising line of inquiry into the reasons why the U.S. political establishment is broken -- on both the Republican and the Democratic side. It would take substantial courage and political will to pursue it further.  Manafort and his partner Richard Gates have been indicted for hiding from U.S. authorities their work for former Ukrainian President Viktor Yanukovych and the money they received for this work. That money is part of an avalanche of post-Soviet cash that hit Washington in the last two decades. The Foreign Agent Registration Act database lists a total of 211 "foreign principals" from Russia that have hired U.S. lobbying, public relations and law firms to represent them, 78 "foreign principals" from Ukraine, 54 from Georgia, 44 from Azerbaijan, 34 from Kazakhstan, and 19 from Uzbekistan. That is probably far from the full list. One of the counts of the Manafort indictment is failure to register as a foreign agent under FARA. The countries that hired the high-powered Washington firms and paid them top dollar are well-known for their high levels of corruption.Both government and private entities with government connections in these countries have things to spin and things to cover up. They pay extremely generously for the work, as the indictment shows. It says Manafort and Gates made more than $75 million working for Yanukovych and his Party of Regions between "at least 2006 and 2015."  The Manafort case promises to lead a diligent investigator to stashes of dirty post-Soviet money that represent a bigger threat to U.S. democracy than any leaked emails or Russian-bought Facebook ads.  An investigation into the origins of the money that fed this toxic culture, and efforts to recover it and cut off its circulation, would do the U.S. a world of good by helping to clean up both major parties. Mueller’s mandate is by no means that broad. And it’s hard to imagine a real estate billionaire who keeps his taxes secret and his business private leading the charge. It would be left to U.S. law enforcement agencies to take the lead. American voters and the U.S. political elite need to realize where the real "Russian threat" -- or, more broadly, post-Soviet threat -- lies, and start fighting it.

White House: All the women who accused Trump of sexual harassment are lying | TheHill: The White House’s official position on the women who accused President Trump of sexual harassment is that they are lying, press secretary Sarah Huckabee Sanders affirmed Friday. “Yeah, we’ve been clear on that from the beginning and the president has spoken on it,” Sanders said. Trump said earlier this month that the allegations against him, many of which emerged during the campaign after the leak of a 2005 “Access Hollywood” tape in which he makes lewd comments about women, are “made-up stuff.” “All I can say is it’s totally fake news — just fake,” he said at an impromptu press briefing last week. “It’s fake, it’s made-up stuff. And it’s disgraceful what happens.” At least 11 women came forward to accuse Trump of unwanted touching and kissing last year. When those allegations emerged, Trump called them "total fiction." "These are stories that are made up, these are total fiction. You'll find out that, in the years to come, these women that stood up, it was all fiction," he said. "They were made up. I don't know these women, it's not my thing to do what they say." Trump also said he was the victim of one of the "great political smear campaigns in the history of our country."

Elizabeth Warren: "Yes" The Democratic Primary Was Rigged For Clinton – First it was Donna Brazile; now none other than the woman widely expected to be the Democratic presidential candidate in 2020 - Elizabeth Warren - has thrown Hillary Clinton under the bus.During an interview on Thursday afternoon on CNN, Sen. Elizabeth Warren was asked if she believed the Democratic National Committee was rigged to favor the presidential nomination of Hillary Clinton."Very quickly senator, do you agree with the notion that it was rigged?" CNN's Jake Tapper asked. "Yes," Warren responded. Published in Politico Magazine on Thursday, Brazile’s explosive excerpt from her upcoming book, “Hacks: The Inside Story of the Break-ins and Breakdowns That Put Donald Trump in the White House,” revealed the existence of what she described as an “unethical” agreement between Clinton and the DNC, in which the candidate’s campaign traded funding for increased control of the platform. According to Brazile, by financing the DNC early on and keeping it financially afloat during the latter stages of the campaign, Clinton’s campaign gained substantial control of the committee throughout the election process, a claim that was repeatedly echoed on the campaign trail by Sanders himself."The funding arrangement with HFA and the victory fund agreement was not illegal, but it sure looked unethical,” Brazile wrote, referring to the Hillary for America presidential campaign committee.“If the fight had been fair,” Brazile added, “one campaign would not have control of the party before the voters had decided which one they wanted to lead. This was not a criminal act, but as I saw it, it compromised the party's integrity.”Brazile cited the agreement as proof that, as she suspected prior to joining, “Hillary Clinton’s team had rigged the nomination process.”  Appearing on CNN on Thursday, Warren, a Massachusetts Democrat,  called Brazile’s revelations “a real problem.” Pressed by anchor Jake Tapper on whether she believed the Democratic primary had been “rigged” in Clinton's favor, Warren replied simply: “Yes.”

Team Bernie Chimes In: "DNC Corruption Is Bigger Than One Primary" Former interim DNC Chairwoman Donna Brazile confirmed what many widely suspected in an essay published in Politico today where she called out former DNC Chairwoman Debbie Wasserman Schultz and former Secretary of State Hillary Clinton for unfairly rigging the 2016 primary against Bernie Sanders.In her expose, Brazile described how the Clinton campaign siphoned money from state party chapters, and asserted her control over the DNC by making it financially reliant on her fundraising abilities, even describing the campaign’s actions as “essentially money laundering.”The agreement—signed by Amy Dacey, the former CEO of the DNC, and Robby Mook with a copy to Marc Elias—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.Brazile’s revelations have revived conversations about whether the party has an obligation to ensure a fair primary (one judge who dismissed a lawsuit against the DNC suggested the organization is actually under no obligation to do so, even confirming that it showed a “palpable bias” toward Clinton).  Offering their two cents on the issue, a group of former Bernie Sanders’ presidential campaign staffers chimed in on the debate, claiming that “corruption has plagued” the DNC for years and that the problem stretches far beyond the 2016 campaign, according to theWashington Free Beacon.Saikat Chakrabarti, who was director of organizing strategy for the Sanders campaign and now runs a group aiming to change the Democratic Party, said he wasn't surprised to hear the admission from Brazile."We all knew that the primary was rigged," Chakrabarti said on behalf of Justice Democrats, a group he founded. "But the corruption that plagues the Democratic Party is bigger than one primary—it's become a rot set at the very root of a party [that] claims to be for working people."

Rep. Tulsi Gabbard on Donna Brazile’s DNC Bombshell - naked capitalism - Jerri-lynn Scofield - In this Real News Network interview, Rep. Tulsi Gabbard (D-Hawaii) responds to former interim chair Donna Brazile’s revelation that the Clinton campaign had effective control of the DNC. Gabbard was a vice-chair of the Democratic National Committee until February 28, 2016, when she resigned to endorse Senator Bernie Sanders in the 2016 Democratic Primary. Brazile published her book excerpt in Politico, Inside Hillary Clinton’s Secret Takeover of the DNC. If you’ve yet to read it, don’t miss.

Elizabeth Warren says she believes the DNC rigged the 2016 Democratic primary -- Democratic Sen. Elizabeth Warren of Massachusetts thinks the 2016 Democratic-primary process between Hillary Clinton, the eventual nominee, and Sen. Bernie Sanders of Vermont was rigged, she told CNN's Jake Tapper on Thursday. Tapper asked Warren about the bombshell claims from former Democratic National Committee chair Donna Brazile that the DNC was "unethical" and favored Clinton over Sanders for the party's nomination. Brazile detailed her "proof" in a book excerpt published by Politico on Thursday. Brazile wrote that she came across an agreement between the DNC and two Clinton campaign funds that suggested unethical practice, she wrote, adding that the DNC was also required to consult with the campaign about staffing, budgeting, data, analytics, and mailings long before the primary had wrapped up. "If the fight had been fair, one campaign would not have control of the party before the voters had decided which one they wanted to lead," Brazile added. "This was not a criminal act, but as I saw it, it compromised the party's integrity." Tapper, in his Thursday interview, asked Warren point-blank if she thought the primary process was rigged. "Yes," Warren said. Earlier in the interview, Tapper asked Warren to more broadly address Brazile's claims.   "This is a real problem, but what we've got to do as Democrats now is hold this party accountable," she said. ""This is a test for Tom Perez," she continued. "And either he's going to succeed by bringing Bernie Sanders and Bernie Sanders's representatives into the process, and they're going to say it's fair, it works, we all believe it, or he's going to fail. And I very much hope he succeeds. I hope for Democrats everywhere. I hope for Bernie and all of Bernie's supporters that he's going to succeed."

In defense of cash: why we should bring back the $500 note and other big bills -  A world without cash seems wonderful at first glance since it is convenient and fast. You don’t need to withdraw dollars or euros ahead of time. You don’t have to worry about money being lost or stolen. However, the recent string of natural disasters and security breaches at major financial entities exposes a huge flaw in this trend: When the power goes out, telephone lines shut down or account information is stolen, it is impossible to use ATMs, credit or debit cards or mobile payments – no matter how rich you are.   Kenneth Rogoff, a Harvard professor who was also chief economist of the International Monetary Fund, wrote in the Wall Street Journal that going cashless reduces crime by ensuring tax cheats, drug lords, gangs and terrorists cannot easily fund their activities.  While eliminating high value notes does make illegal transactions harder, it also introduces new risks. A cashless society that solely uses credit cards, debit cards and electronic transfers is dependent on a complex network to replace physical money. This network requires three things to work all the time.First, there always has to be electricity to power the computers and network storage. Second, communication between all parts of the network needs to be available. Finally, the network has to be secure, so only authorized money transactions occur.All three of these fundamental requirements for a cashless society have broken down recently in dramatic fashion.  Hurricanes Irma and Maria devastated Puerto Rico in September. Many weeks later, less than 20 percent of the electricity has been restored, and no one really knows when the rest of the island will regain power. Because the electricity has been cut off to almost all cities and towns, the entire island has reverted to a economy based on cash, which is in very short supply. Credit and debit cards can’t be used because there is no way to process transactions and no power to run credit card terminals and readers. Wildfires are currently ravaging Northern California. One of the problems caused by the fires is that the flames have destroyed numerous cell towers. When the phone network goes down, it is impossible both to reach loved ones and for credit and debit card readers to connect to the network. Without a connection, those without cash can’t buy fuel to flee, pay hotels for temporary shelter or purchase food.

Obama Administration's Bank Regulation Still Widening Gap Between Rich and Poor -  One of the most devastating consequences of the Obama Administration has been that Americans who don’t have the luxury of large bank accounts are continuing to be treated like second-class citizens by the US financial system. The Wall Street Journal this week offered another example this week in an article noting that banks are now paying higher interest rates to keep their wealthiest clients from shopping their services to other institutions. Even though the federal funds rate has remained at historically low levels, in theory the recent string of minor interest rates hike by the Fed should have allowed savers to start seeing marginally higher bank holdings. . Finally it seems that banks are willing to increase interest paid to their depositors, but as WSJ notes, it’s a perk not offered to everyone: Bank executives said that the newest pressure for higher rates is coming primarily from wealth-management customers, typically well-to-do individuals and families who deposit cash as part of their investment accounts. These can range from people with hundreds of thousands of dollars to invest to private banking clients with tens of millions or more. Of course it is not unusual for wealthier clients to receive perks not afforded to smaller customers.   It is still important to recognize, however, the regressive nature of some of the Obama Administration’s most significant bank-related policies. For one, the Dodd-Frank Act made it more expensive for banks to provide services for their customers. Not only did the larger regulatory frame work dramatically increase the cost of compliance per customer, but individual measures like caps on interchange fees and others simply made it more expensive for individuals to use services such as debit cards, ATMs, and other products we all now take for granted. Predictably, these costs have been passed on to consumers. Of course, even cutting back on benefits and increasing fees haven’t been enough for smaller banks to survive. As such, we’ve seen dramatic consolidation of the banking industry: Most destressing, only two new banks have been chartered in the last six years, as opposed to 175 in 2007 alone.

Treasury plan to weaken capital rules has real economic costs – BankThink - In the wake of the financial crisis, new regulations on bank capital and stress tests strengthened the ability of the major U.S. financial institutions to withstand shocks. The Trump administration’s plans to weaken capital requirements threaten to undo these gains. If they go forward, the financial system could again be dangerously vulnerable.  The right amount of capital is a question of insurance: how much output to sacrifice in return for reducing the expected loss from a crisis. Equity capital is the buffer that enables banks to absorb losses without being forced into bankruptcy and damaging the wider economy. But extra capital, as my examination of the evidence shows, comes at a cost, and involves an output penalty. The challenge is to get this balance right.  Over the past 40 years, the probability that a banking crisis would occur in an industrialized country has been 2.6% per year. The long-term damage if a banking crisis did occur amounted to two-thirds of one year’s gross domestic product. So each year the expected loss from a banking crisis was 1.7% of GDP. I calculate the optimal amount of capital in the form of common equity to be between 12-14% of risk-weighted assets (which put a zero risk weight on government bonds, for example) and 7-8% of total assets. This amount of capital would reduce the annual probability of a banking crisis from 2.6% to between 0.2-0.6%, based on a 2010 Basel Committee survey of leading government and academic studies. My optimal range for capital is about one-third higher than the international “Basel III” requirement for “global systemically important banks,” or G-SIBs. The eight G-SIBs in the United States increased their combined ratio of capital to risk-weighted assets from 8.1% in 2007 to 12.9% in 2016. Against total assets, their capital (or leverage) ratio has risen from 4.1% to 7.9%. So the large U.S. banks are now holding about the right amount of capital from the standpoint of the economy. This amount substantially exceeds the Basel III requirement — partly because the U.S. banks voluntarily maintain a cushion, but mainly because the stress tests mandated by the Dodd-Frank Act have been the binding constraint on their capital in recent years.

Can Congress agree on 'systemic' bank label change? — Momentum is building to replace the hard-target $50 billion asset systemic risk threshold for banks with an indicator test, but it remains unclear whether it will be enough to get Congress to act. The Office of Financial Research endorsed such a move in a report last week, suggesting that using a risk-based method of five different measures to determine which banks should be considered a threat to the U.S. economy and therefore subject to tougher rules. Regional banks prefer this method rather than just raising the existing threshold, which they argue is arbitrary and unfair. Yet at the same time, key Democrats signaled they would fight such a maneuver, making it uncertain whether such a provision could be part of a regulatory relief package being developed by the top leaders of the Senate Banking Committee.

As Credit Booms, Citi Says Synthetic CDOs May Reach $100 Billion - The comeback in complex credit derivatives blamed for exacerbating the global financial crisis is picking up pace.That’s according to new research this week from Citigroup Inc., one of the biggest arrangers of so-called synthetic collateralized debt obligations. Sales of the products may jump to as much as $100 billion this year from about $20 billion in 2015, Citigroup analysts wrote in an Oct. 31 report.While investors suffered billions of dollars in losses on similar bets a decade ago, the leverage offered by synthetic CDOs is luring back buyers in an era of low yields and dwindling volatility.  “It would seem as if the low spread-low vol environment, similar to back in 2006-2007 (when investors couldn’t get enough of levered synthetic tranches) has revived some interest in portfolio credit risk,” Citigroup analysts led by Aritra Banerjee wrote. “Investors may not have necessarily wanted to add leverage, but, simply put, they have had to, given the lack of alternatives.”While post-crisis deals are typically tied to corporate credit as opposed to the mortgage debt that helped spur the credit crunch, the return of synthetic CDOs is likely to generate unease among investors who worry that markets are too frothy. The controversial product’s resurgence coincides with a boom in other types of credit wagers, including options on credit derivative indexes and exchange-traded funds that provide quick and easy access to a broad swath of credit.There are some key differences in today’s synthetic CDOs versus the pre-crisis vintage. Citigroup said it has created over 50 “full capital structure” deals in recent years, which vary from the single-tranche bespoke deals that dominated before and just after the crunch. Such full capital structures -- which typically include junior, mezzanine, and senior tranches -- have historically proved harder to sell because banks must find buyers for all the pieces at once. Senior tranches are more insulated from potential losses but also come with lower yields -- one reason that banks created the infamous “leveraged super seniors” before the financial crisis. New banking rules, including higher capital charges, have dented the market for single-tranche deals, according to Citigroup. While full-capital structures may reduce exposures for banks selling the deals, they effectively shift all of the risk to investors.

Moderate Dems try to salvage reg relief after Brown rejects GOP plan — Discussions on a regulatory relief package between the top Democrat and Republican on the Senate Banking Committee broke down late Tuesday night, but members from both sides of the aisle remain hopeful that they can reach a bipartisan deal. Chairman Mike Crapo and Sen. Sherrod Brown, D-Ohio, the panel's ranking member, have been discussing ways to reform parts of the Dodd-Frank Act since the beginning of the year with initial optimism that they could come to an agreement. However, it appears that what Republicans wanted was too much for Brown, who is one of the Senate's more progressive members.“I care about helping the small banks and the credit unions, but I wasn’t willing to gut consumer protections to do it,” Brown said in an interview.  But now with talks between Crapo and Brown being scrapped, moderate Democrats on the banking panel, including Sen. Heidi Heitkamp, D-N.D., plan to negotiate directly with Crapo. Yet it still remains unclear if they would be able to bring along other Democrats to support such a deal. A central piece of regulatory relief discussions is whether and how much to raise the $50 billion asset threshold qualifying "systemically important" banks for tougher supervision, or whether to abandon a hard numeric threshold altogether. “I have long said that I am going to do everything that I can to achieve a bipartisan analysis that helps my community banks and my credit unions and I have not eliminated that goal,” Heitkamp said. “I continue to have that goal, look forward to ongoing conversations.” Some lobbyists doubted that Brown would ever agree to a deal that would be amenable to Republicans and believe that a package negotiated with moderate Democrats will prove to be more fruitful in rolling back Dodd-Frank regulations. However, any deal will need to thread a needle because it will require the support of eight Democrats to get the 60 votes needed to pass, not just the four moderates on the Banking Committee.  Crapo said he and Brown "did both work hard and in good faith" but "we were unable to reach an agreement."

Senate Banking Committee approves SEC nominees Hester Peirce and Robert L. Jackson Jr - The Senate Banking Committee on Wednesday unanimously approved Hester Peirce and Robert L. Jackson Jr. to serve on the Securities and Exchange Commission. If they are confirmed by the Senate, Ms. Peirce, a Republican, and Mr. Jackson, a Democrat, would give the SEC a full complement of five commissioners for the first time in more than two years.  Ms. Peirce, a senior fellow at the conservative Mercatus Center at George Mason University, would replace Daniel Gallagher Jr., who left the SEC in October 2015. Mr. Jackson, a law professor at Columbia University, would take the seat of Luis Aguilar, who departed in December 2015.   It's not clear when a Senate floor vote will be scheduled. But the committee's unanimous voice vote gives the pair momentum. Last year, Ms. Peirce and then-Democratic nominee Lisa Fairfax did not receive a floor vote. Ms. Peirce was renominated this year, while Democrats replaced Ms. Fairfax with Mr. Jackson. "It's important to have a full commission," Sen. Sherrod Brown, D-Ohio and ranking member of the panel, said before the vote. "If confirmed, I expect Ms. Peirce and Mr. Jackson to make investor protection their key concern." The committee chairman, Sen. Mike Crapo, R-Idaho, praised the nominees. "Ms. Peirce and Mr. Jackson both demonstrated their knowledge of the securities markets and their commitment to improving our markets and protecting investors," Mr. Crapo said.

SEC Soon to Have Five Sitting Commissioners; Budget Constraints Will Stymie Enforcement -- Jerri-lynn Scofield - The Senate Banking Committee on Wednesday voted unanimously to approve Hester Peirce and Robert J. Jackson, Jr. as members of the Securities and Exchange Commission (SEC). Their nominations now move to the full Senate for confirmation. If, as expected, these two nominees are soon confirmed,  the five-member bench of SEC commissioners will be up to full strength for the first time in two years.  Chairman Jay Clayton, a former Sullivan & Cromwell partner as chair, has been assertively pursuing a deregulatory agenda, as I discussed in Doubling Down on Deregulation: SEC Extends JOBS Act Benefit in Elusive Quest to Goose IPO Market. With five commissioners seated, it will be much easierfor the agency to meet baseline quorum requirements and to conduct day to day business. Peirce, a Republican, is currently a senior research fellow at the Mercatus Center at George Mason University and director of the Financial Markets Working Group. Prior to the Mercatus gig, she served on Senator Richard Shelby’s staff on the Senate Committee on Banking, Housing, and Urban Affairs. She’s also been an SEC staff attorney and as counsel to (former) commissioner Paul Atkins, according to her biography on the Mercatus Center’s website.Robert J. Jackson Jr., a Democrat, is a professor of law and director of the Program on Corporate Law and Policy at Columbia Law School, according to his biography on the Columbia Law School website. Last week, the WSJ reported that Steven Peikin, the SEC’s current co-director of enforcement, signaled a pivot away from the prosecutorial approach to enforcement that the agency pursued after the financial crisis (see SEC Signals Pullback From Prosecutorial Approach to Enforcement). Peikin’s remarks were made at at Securities Docket’s annual Securities Enforcement Forum in Washington, as reported in SEC Should Clarify Path to Cooperation Perks in Cases: Official. I should mention in passing that Steve Peikin and I were law school classmates (HLS ’91) and were indeed in the same section– meaning we took all our first year core classes together.  I cannot claim I really knew him, nor have I any recollection of even being in the same room as he since our Cambridge days. According to the WSJ: [Peikin] indicated the regulator would drop the “broken windows” strategy of pursuing many cases over even the smallest legal violations, and may also pull back from trying to make some companies admit to wrongdoing as a condition of settling with the SEC. As I’ve discussed further in Financial Regulatory Rollback Proceeds, no new legislation is necessary for in order for financial regulation be loosened  in many key areas– and enforcement priorities will be of major importance.

Equifax Investigation Clears Execs Who Dumped Stock Before Hack Announcement - Equifax discovered on July 29th that it had been hacked, losing the Social Security numbers and other personal information of 143 million Americans—and then just a few days later, several of its executives sold stock worth a total of nearly $1.8 million. When the hack was publicly announced in September, Equifax’s stock promptly tanked, which made the trades look very, very sketchy.  At the time, Equifax claimed that its executives had no idea about the massive data breach when they sold their stock. Today, the credit reporting company released further details about its internal investigation that cleared all four executives of any wrongdoing. The report, prepared by a board-appointed special committee, concludes that “none of the four executives had knowledge of the incident when their trades were made, that preclearance for the four trades was appropriately obtained, that each of the four trades at issue comported with Company policy, and that none of the four executives engaged in insider trading.” The committee says it reviewed 55,000 documents to reach its conclusions, including emails and text messages, and conducted 62 in-person interviews. “The review was designed to pinpoint the date on which each of the four senior officers first learned of the security investigation that uncovered the breach and to determine whether any of those officers was informed of or otherwise learned of the security investigation before his trades were executed,” the report states.  Equifax’s chief financial officer, John Gamble, sold 6,500 shares of his Equifax stock on August 1st. The investigation found that he had previously discussed the sale with a financial advisor because he wanted to pay for a home renovation. He didn’t hear about the hack until August 10th, according to the report.

U.S. regulator wants to loosen leash on Wells Fargo: sources (Reuters) - A leading U.S. regulator wants to make it easier for Wells Fargo to pay employees when they leave, loosening a restriction in place since a phony accounts scandal hit the bank last year, according to people familiar with the matter. The initiative comes as President Donald Trump is trying to lighten rules on Wall Street and the bank regulator, Keith Noreika, acting Comptroller of the Currency (OCC), must weigh whether to vet new Wells Fargo executives. If Noreika’s approach prevails, the OCC could go easier on Wells Fargo and any other large banks sanctioned in the future. Since Noreika took control of the OCC in May, he has advocated easing up on sanctions imposed on Wells Fargo in the wake of the scandal over abusive sales practices, according to current and former officials. Wells Fargo reached a $190 million settlement in September 2016 after admitting that its sales staff opened as many as 2.1 million accounts without customers’ consent. Since then the estimate has climbed to as many as 3.5 million. As part of the deal with regulators, incoming Wells Fargo executives can face a vetting from the OCC while severance payouts must be cleared by the OCC and a sister agency, the Federal Deposit Insurance Corporation. But Noreika wants officials to work faster when they review severance pay and the agency can choose to waive its check on incoming executives. Wells Fargo declined comment on the reviews. Hundreds of Wells Fargo employees have had their severance payouts frozen when they left as regulators tried to determine what role those employees might have had in the scandal. Under one proposal floated by the OCC, departing employees would collect severance automatically if regulators could not finish their review within weeks, according to one current and two former officials who were not authorized to discuss an internal debate. 

Banks drag feet on CECL as critical phase nears -- Many banks and credit unions are still putting off planning for a new accounting standard for loan-loss reserves despite a ticking clock that keeps getting louder and louder.The Financial Accounting Standards Board’s Current Expected Credit Loss Standard, or CECL, will require institutions to assess potential loan losses when they put an asset on their books. Banks and credit unions are currently required to set aside funds only when losses seem likely. While compliance isn’t required until 2020 at the earliest, industry experts believe next year is the optimal time to test systems. As 2017 draws to an end, there is growing evidence that management teams are still procrastinating.

Can blockchain be used to build a better credit bureau? - The Equifax breach has driven Congress and others to rethink two major parts of the current credit system: having credit bureaus store most Americans’ identity data and using Social Security numbers as a primary identifier. But figuring out a new system is challenging. One intriguing idea is adapting distributed ledger technology, a shared database with security and access controls built in, for identities. “There’s no doubt that the blockchain concept, with its power to prevent duplication and divergence from the chain, is highly promising for identity,” said Jo Ann Barefoot, a former deputy comptroller at the Office of the Comptroller of the Currency and now a compliance consultant. “On a distributed ledger, everybody can trust that what’s in the ledger is there and is the only version of it.” Bloom, the Decentralized Identity Foundation, and Open Identity Exchange are all working on protocols and standards that could be used by any entity to create a distributed ledger ID system. When a user creates a new identity in a distributed ledger based on Bloom, a blockchain identity protocol, the user submits information to the network: name, address, phone number, etc. The system sends queries to parties that already have that information to look for matches. “If the name matches the name on your phone account, that’s one verification,” said Jesse Leimgruber, co-founder of Bloom. A second might be a utility company verifying the address. LexisNexis and the credit bureaus already do such verifications. But instead of all the data being stored at credit bureaus, where it’s a target for hackers, with Bloom it’s in a shared, distributed ledger.

R3 to take on Ripple with cross-border payments blockchain - R3 is working with 22 of its member banks to build a real-time, cross-border payments solution on Corda, the consortium’s “blockchain inspired” distributed ledger. The banks include U.S. Bank, TD Bank, Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank and Woori Bank, R3 said Tuesday. T he timing is notable given that New York-based R3 is embroiled in a legal dispute with its former partner Ripple, which already has a distributed ledger for international payments. R3 claims that in September 2016, the companies entered into an agreement that gave R3 the option to purchase 5 billion XRP — Ripple’s homemade cryptocurrency — for $0.0085 by September 2019. XRP now trades at more than 20 cents, making the options worth more than $1 billion, and Ripple does not want to let R3 exercise this option. Ripple countersued R3 in a San Francisco court in September, claiming R3 did not meet its end of their agreement. On Oct. 13, a Delaware court dismissed R3’s suit against Ripple, saying it was not in its jurisdiction.  Charley Cooper, managing director of R3, would not comment on the litigation but said R3’s cross-border payments project has been underway for some time and is different from any other payment-oriented distributed ledger out there. The project started at the beginning of last year and has already been through a number of iterations in R3’s incubator, said Adam Furgal, head of incubator and accelerator at R3.  A year ago, Ripple and R3 were partners.

CME plans to launch bitcoin futures by year-end - CME announced Tuesday it plans to launch bitcoin futures in the fourth quarter, pending regulatory review. Bitcoin rose to a record high above $6,400 Tuesday morning, according to CoinDesk, after the announcement by the world's largest futures exchange. "Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," Terry Duffy, CME Group chairman and CEO, said in a statement.Duffy added on CNBC's "Closing Bell" that he is "confident" the CME's self-certification process at the U.S. Commodity Futures Trading Commission and full application process will go through. "We've been working with the regulator. They understand our application. And they understand our model very, very well," Duffy said. The leading global exchange for options and futures trading is the latest entrant into the business of offering derivatives for bitcoin, the volatile digital currency, which is not listed on a major exchange.

Bitcoin moves toward financial mainstream with futures contracts - The derivatives exchange CME Group plans to begin offering bitcoin futures contracts by the end of 2017, a move that will put the cryptocurrency on an equal footing with other commodities such as gold and oil. With futures, financial institutions that may have been spooked by the volatility of bitcoin and other digital assets, which often gain or lose double-digit percentages of their value in a matter of hours, would have a way to hedge their bets. CME's planned introduction of bitcoin futures "is strong evidence that exchanges, trading firms and investment banks are prepared to trade financial products — including derivatives and [exchange-traded funds] — that are connected to digital currencies," said Rick Levin, chairman of the fintech and regulation team at the law firm Polsinelli. Although a number of global banks are studying or experimenting with cryptocurrencies and their underlying blockchain technology for cross-border payments and other uses, none have yet begun trading it openly. But the $185 billion market is getting harder to ignore. Terry Duffy, CEO and chairman of CME Group, said it was "increasing client interest" in cryptocurrency markets that had spurred his company to introduce bitcoin futures. "As the world's largest regulated [foreign exchange] marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities," Duffy said in a news release. For a broad swath of the American public, cryptocurrencies such as bitcoin and Ethereum are now household names. More than two-thirds of Americans, for instance, have heard of bitcoin, and nearly a third have heard of Ethereum, according to LendEDU surveys conducted in September and October. Some 17% of survey respondents said they plan on investing in bitcoin in the future, while roughly the same number—slightly more than 18%—plan to invest in ether, the token that grants access to the Ethereum network, which powers the smart contracts that have enabled the launch of hundreds of new digital tokens this year. Many others said they were unsure. 

Another One Of The World's Largest ICOs Is Collapsing --Last month, we reported that the world’s largest ICO was imploding after just three months as its developers admitted they wouldn’t be able to deliver the tokens purchased during a $230 million July “presale” by the end of the year, as they had promised, causing an understandable furor among its investors.Now, in the latest sign that the $3 billion ICO market is imploding, Bloomberg report’s that the value of formerly high flying Bancor, the world’s fifth-largest ICO by funds raised,has plunged by more than 50% since the company’s June ICO as investors have become disillusioned with its obscure product.Bancor attracted big name venture capitalists like Tim Draper this year when it published a white paper proposing to create a kind of decentralized digital currency exchange that would allow holders of the Bancor tokens to exchange them for other digital currencies listed on their market-making platform - a functionality, its creators insisted, that would one day render digital currency exchanges obsolete.But while it’s founders delivered a compelling pitch, beneath the surface was a product that was, at best, needless complex, and at worst, downright nonsensical.

Wall Street regulator warns celebrities, individuals touting digital coins  (Reuters) - Wall Street’s main regulator warned on Wednesday that celebrities or other individuals may be breaking U.S. securities law when promoting investments in initial coin offerings (ICOs), a means for companies to raise funds online. ICOs have become an increasingly popular fundraising mechanism for young technology companies, enabling them to quickly raise millions of dollars by creating and selling digital coins online such as bitcoin with little regulatory oversight. Over the past few months some projects have received endorsements on social media by celebrities including hotel heiress Paris Hilton, boxer Floyd Mayweather and rapper The Game. But the U.S. Securities and Exchange Commission said that endorsements may be unlawful if the coins are considered securities and the celebrities do not “disclose the nature, scope, and amount of compensation received in exchange for the promotion.” “A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws,” the SEC’s Enforcement Division and Office of Compliance Inspections and Examinations said in a joint statement. Promoters may also be liable for possible violations of anti-fraud rules and for acting as unregistered brokers, the statement added. “The SEC will continue to focus on these types of promotions to protect investors and to ensure compliance with the securities laws,” the SEC said. The SEC’s notice is the latest warning by a global financial regulator on ICOs, which may make companies and individuals involved in the fundraising schemes more cautious. ICOs have raised $2.2 billion from January to September, according to data provider Novum Insights. 

A surge of sites and apps are exhausting your CPU to mine cryptocurrency - The Internet is awash with covert crypto currency miners that bog down computers and even smartphones with computationally intensive math problems called by hacked or ethically questionable sites.The latest examples came on Monday with the revelation from antivirus provider Trend Micro that at least two Android apps with as many as 50,000 downloads from Google Play were recently caught putting crypto miners inside a hidden browser window. The miners caused phones running the apps to run JavaScript hosted on, a site that harnesses the CPUs of millions of PCs to mine the Monero crypto currency. In turn, Coinhive gives participating sites a tiny cut of the relatively small proceeds. Google has since removed the apps, which were known as Recitiamo Santo Rosario Free and SafetyNet Wireless App.Last week, researchers from security firm Sucuri warned that at least 500 websites running the WordPress content management system alone had been hacked to run the Coinhive mining scripts. Sucuri said other Web platforms—including Magento, Joomla, and Drupal—are also being hacked in large numbers to run the Coinhive programming interface. Earlier this month, political fact-checking site was found hosting Coinhive scripts in a way that exhausted 100 percent of visitors computing resources. A PolitiFact official told Ars the incident occurred when "an unidentified hacker attached a crypto mining script to the PolitiFact code base being stored on a cloud-based server." The code has since been removed and was active only when people had a window open in their browser.

How Many Barrels Of Oil Are Needed To Mine One Bitcoin? - The Bitcoin boom is well and truly underway, and investors are constantly looking for new ways to gain an advantage in this space. The best way to do this, it seems, is by cutting the energy costs of mining this precious commodity.  The Bitcoin mining industry consumes 22.5 TWh of energy annually, which amounts to 13,239,916 barrels of oil equivalent. With 12.5 bitcoins being mined every 10 minutes, that means the average energy cost of one bitcoin would equate to 20 barrels of oil equivalent.  Mining Bitcoin has the potential to be a wildly lucrative business, with a single Bitcoin now valued at more than 100 barrels of oil. That kind of price makes it one of the most valuable commodities on the planet and, just like oil, this commodity is increasingly valuable to mine if the energy costs can be kept down.   Bitcoin transactions are secured by computer miners, who are competing for rewards in the form of coins from the network. The more computation power they use, the better their chances. The drill rig is a computer, and hydraulic fracturing is done with the tip of your fingers. It’s a phenomenally energy-intensive process  To put this in perspective, the total energy consumption of the world’s Bitcoin mining activities is more than 40 times greater than that required to power the entire Visa network.

If you think Washington’s going to regulate Big Tech, I’ve got a bridge I’ll sell you - There's growing talk about regulating Big Tech. But you shouldn't expect that talk to turn into actual action. With more and more details emerging about how people linked to Russia tried to influence last year's election via some of the nation's biggest online services, policymakers have started earnestly entertaining the idea that the government needs to step in and craft new rules to govern those and other tech companies. Next week, congressional representatives will grill the leaders of Facebook, Google, and Twitter about what happened on their networks last year and what should be done about it. Meanwhile, in perhaps the most serious effort yet to put in place new rules on Big Tech, Democratic senators Mark Warner and Amy Klobuchar recently introduced a bill that would regulate political advertising on Google, Facebook, and other widely used online sites in largely the same way as such ads are regulated when they are run on television or in print. But even though there's bipartisan support for Warner and Klobuchar's bill, don't count on Congress passing it. Indeed, even though there is widespread outcry over Russia's alleged meddling and growing concern over the power of the Big Tech companies, you shouldn't expect Washington to do much of anything in the way of placing new rules on how the Facebooks, Apples, and Googles of this world go about their business.   Congress hasn't been doing much of anything on any number of issues lately, so expecting it to do something about Big Tech may have been a stretch no matter what. And with President Trump unwilling to commit to pushing for new rules, it's even less likely Congress will pass something. Even so, Big Tech isn't taking any chances and is doing whatever it can to scuttle any efforts to saddle it with more government oversight. 

Will Hensarling's next job be in Trump administration? — In a somewhat surprising decision, House Financial Services Committee Chairman Jeb Hensarling announced his retirement from Congress on Tuesday, but speculation immediately grew that he could fill a regulatory post in the Trump administration. Hensarling, a Texas Republican, said in a letter to supporters that he plans not to seek re-election next year. “Although service in Congress remains the greatest privilege of my life, I never intended to make it a lifetime commitment, and I have already stayed far longer than I had originally planned,” he said. He added that over the next 14 months he will push for “the causes for which I remain passionate” including housing finance reform and regulatory relief.

When boards are stacked with hot seats, who wants the job? -- Chairman Stephen Sanger had just wrapped up his milquetoast presentation on Wells Fargo's sales-practices woes at the company's annual meeting last April when Bruce Marks, a housing activist and shareholder, jumped up and called on all of the board members to defend themselves. "Tell us what you knew and when you knew it. Were you complicit or incompetent?" Marks demanded before being hauled out by security personnel. "Each one should stand up and explain why they should be reappointed to the board." The directors, sitting in the front row with their backs to the crowd of assembled shareholders, shifted uncomfortably in their seats but remained silent. When the election results were tallied a few hours later, four of the 15 directors, including Sanger, had received fewer than 60% of the votes cast, while another eight garnered less than 80% — an almost unprecedented rebuke for the board of a large company. "What we clearly heard from shareholders was, 'We're sending a message,'" Sanger said after the annual meeting. "We don't view it as being about any individual director. We view it as being dissatisfied with the whole board." Wells officials did not respond to interview requests, but it's difficult to see how the high-powered business leaders who sit on the company's board could not take personally being chastised in a public forum and rebuked by shareholders. 

Wall Street Wins as Senate Blocks Consumer Protection Rule -  The Senate voted 51-50 to repeal a rule that would have made it easier for consumers to sue the financial institutions that defraud them. The move is “outrageous,” NEP’s Bill Black on The Real News Network. “It should be a national scandal, and require resignations in disgrace.” It can be viewed with a transcript here.

How the Senate killed the CFPB arbitration rule (podcast)  Senate Republicans overturned a CFPB rule that would have prevented banks from forcing arbitration on consumers in disputes. American Banker reporter Kate Berry explains what this means and what the CFPB might do next.

Cordray's personal appeal to Trump: Save the arbitration rule - — Consumer Financial Protection Bureau Director Richard Cordray urged President Trump Monday to veto a congressional measure invalidating the bureau's arbitration rule.  The Senate narrowly approved using the Congressional Review Act to overturn the regulation, with Vice President Mike Pence casting the tiebreaking vote. The CFPB rule would have required banks to remove arbitration clauses that prevent consumers from filing class-action lawsuits.  “The resolution is now before you to decide whether it will stand or fall,” Cordray wrote of the rule in a letter to Trump.

Trump signs resolution killing CFPB rule that made it easier for consumers to sue financial firms - It’s official. Financial companies can continue to put language in their contracts that bans consumers from filing class-action lawsuits against them. President Donald Trump on Wednesday signed a resolution that effectively killed a proposed law the Consumer Financial Protection Bureau developed over the past five years. The rule was an effort to give consumers the right to sue financial firms in class-action suits. Currently, many financial firms put language in their contracts that prohibits that, known as “mandatory arbitration clauses” that require consumers to settle complaints with them out of court, through arbiters.The Senate voted to overturn the rule this month, and the House had voted in July against it. CFPB Director Richard Cordray and Democratic Senator Tammy Duckworth are just two of the supporters of the rule who appealed to Trump before he signed it, asking him to reconsider.“You and I have never met or spoken, but I am aware that over the course of your long career in business you often found it necessary to go to court when you thought you were treated unfairly,” Cordray wrote.  “Of course, most Americans cannot afford to do this on their own, so they have to band together to fight companies like Wells Fargo. that opened millions of fake accounts or Equifax when it allowed sensitive personal data to be breached for more than 145 million Americans.”  After Trump did in fact sign the resolution Wednesday, the CFPB issued a statement that said “the president signed away consumers’ right to their day in court.”“This action tips the scales of justice in favor of Wall Street banks less than ten years after they caused the financial crisis,” it said.

RIP, CFPB Mandatory Arbitration Ban -- Jerri-lynn Scofield - On Wednesday, President Trump signed into law H.J.Res. 111, thereby nullifying the Consumer Financial Protection Bureau’s (CFPB) Arbitration Agreements Rule, prohibiting the use of a pre-dispute arbitration agreement to prevent a consumer from filing or participating in certain class action suits. The CFPB’s mandatory arbitration ban was perhaps the most consumer-friendly action that agency had taken to date, and its overturn represents a major setback for the agency. Many financial services companies require their customers to consent to use mandatory arbitration procedures to settle subsequent disputes, thereby  “voluntarily” giving up any right to file or participate in class actions. Courts right up to and including the Supreme Court have generally upheld such agreements. Alas, as regular readers may recall, since procedures authorized by the Congressional Review Act (CRA) were used to overturn the rule, the CFPB is barred from reviving the rule in “substantially the same form”, unless and until Congress passes new authorizing legislation. And, as I discussed further in SEC Punts on Unfinished Dodd-Frank Agenda, Thus Avoiding Congressional Review Act, since Trump was inaugurated and the CRA has been more widely deployed, it has had even greater indirect influence, in having a chilling effect on agency actions. With a CRA challenge virtually inevitable, why even bother going through the motions of rule-making?    What I still fail to understand is why the CFPB didn’t issue this rule until July 2017– well into the Trump era–thus setting itself up for this entirely predictable and inevitable CRA challenge– a subject I addressed at length in House Votes to Overturn CFPB Mandatory Arbitration Ban:After all, way back in December 2013 the CFPB released a preliminary but comprehensive study on the use of mandatory arbitration clauses. Reigning in mandatory arbitration– in the wake of Supreme Court decisions that allowed the practice to continue and spread– has long been a major consumer protection priority. So, I repeat, why did the process take so long? Just a short aside here. Even if the CFPB had not been so tardy in its rule-making, the rule may still have been scuppered. The lawsuit I predicted would be filed was filed, by parties including the American Bankers Association, the Financial Services Roundtable, and the U.S. Chamber of Commerce. Now that the CRA overturn has occurred, the plaintiffs have duly filed a notice of voluntary dismissal.

CFPB’s data-sharing guidelines are a boon for innovation - Earlier this year, the Consumer Financial Protection Bureau called for comments on the many issues associated with how consumers share bank account data with third-party companies like Intuit’s Mint or Kabbage. In response, leaders at financial institutions generally expressed concern about potential security breaches while fintech companies generally supported the demands of consumers having access to all of their bank account data on third-party apps.The result of that inquiry — the CFPB's recently announced non-binding principles on data-sharing — was absolutely the right call. The bureau’s principles made it known that the CFPB is furthering its role as a consumer advocate by permitting bank customers access to their data on the app of their choosing, so long as the process is secure and users have full control over what data does and does not get shared. But the CFPB also did so in the right manner — as guiding principles — rather than as a rule. While the CFPB was careful to note that the principles were not binding, the industry — including banks, data aggregators and fintech companies — should adopt the bureau’s principles going forward because they provide a mutually understood and defined vocabulary that will allow all parties to work together in a broader fashion in these three crucial areas. First, security is deservedly a key priority, as the bureau recognized in its principles. A single data breach causes tremendous damage to financial institutions and consumers alike. Therefore, it is crucial for all parties involved in sharing financial data to embrace the most stringent security measures, including a defense-in-depth model, continuous security vulnerability scans, . Second, as the financial lives of today’s consumers become more complex, it’s increasingly essential to give consumers full access to their own financial data on whatever app they wish.  In addition, the CFPB also says that the data must be accurate.  Third, the principles are flexible in allowing for technological innovation. By establishing broad principles and not mentioning any specific technologies, such as screen-scraping and application programming interfaces, the CFPB is effectively preparing the industry for future innovations that are beyond our current technological understanding. In short, the broadness of the nine principles underscores the CFPB's understanding of an evolving technological landscape while still providing frameworks for security, growth, and innovation.

Success of CFPB data-sharing guidance relies on how it is enforced  -The financial technology revolution, which is being led by entrepreneurs rethinking everything from the way people save to how they apply for a mortgage, has the potential to put consumers in control of their own financial lives — so long as their various financial accounts can work seamlessly together with the third-party app the consumer wishes to use.  This month, the Consumer Financial Protection Bureau took an important step toward making that potential a reality with its release of consumer-authorized data-sharing and aggregation principles. In the principles, the bureau reiterated consumers’ right to share data, recognizing that connectivity is the underlying magic fueling the consumer fintech revolution. The guidelines will promote innovation, competition and consumer control. But the CFPB’s principles are just that — nonbinding statements of CFPB policy. While the ball is largely in the industry’s court to work toward new data-sharing technical standards, regulators still have an important role to play too. First, data sharing can be risky, as the CFPB went to great lengths to make clear. Why? Data sharing often requires consumers to provide their bank account usernames and passwords to third parties. In the guidance, the CFPB clarified that granting consumers access to their data does not necessarily mean sharing login credentials. At the same time, the bureau made it equally clear that if banks and others want to prevent the sharing of credentials, they need to find another, more secure way to provide access. Second, the CFPB should work with the Federal Trade Commission and banking regulators to provide additional guidance on its principles related to informed consent. In the guidelines, the CFPB rightly stated that the terms of data access should be “consistent with the consumer’s reasonable expectations.” Third, banking regulators could update their third-party vendor risk management guidelines to clarify the kinds of due diligence banks are required to conduct on parties with whom they share data. But regulators must tread carefully here. Data aggregation is not a traditional vendor relationship and simply applying current guidance would run counter to the CFPB’s principles by allowing banks — not consumers — to control which third parties can access data, overriding consumer consent.

CFPB sees risks in longer-term auto loans - The sharp increase in longer-term auto loans over the last several years carries added risk for car buyers, the Consumer Financial Protection Bureau said in a report Wednesday.The report said 42% of car loans issued in the last year had a repayment term of six years or more, a huge leap over the 26% of car loans that had longer terms in 2009. Over the same period, five-year loans declined.Longer-term auto loans “are more expensive and can result in consumers continuing to owe even after they are no longer driving their car,” CFPB Director Richard Cordray said in a press release. “Consumers should know before they owe and shop for the best deal based on costs incurred over the life of the loan.”  The report, which is derived from lending trends the bureau tracks using data from the credit bureaus, found that consumers with six-year car loans pay considerably more over the life of the loan than those with five-year terms, and experience higher rates of default. Loans six years or longer have had default rates exceeding 8% in recent years, compared with default rates closer to 4% for shorter-term loans. As an illustration, the CFPB said a borrower with a five-year loan of $20,000, at 5% interest, would have paid nearly $2,200 in interest after three years and have a remaining balance of $8,602.98. But a six-year loan for the same amount and interest rate would have cost $152 more in interest in the same span of time, while leaving a remaining balance that is nearly a quarter higher.

An app that could deal a fresh blow to payday lenders -- A blossoming employee perk has the promise to make biweekly paychecks obsolete — by letting workers control when they get paid. But for that to happen, banks will have to use new technology to overcome an antiquated model mired in bureaucracy. Doing so can help solve short-term liquidity issues for hundreds of thousands of Americans, one of the thorniest problems in consumer finance. “There is a gap between when people need their money and when they actually get paid,” said Steve Barha, chief executive of Instant Financial, a tech company that formed in Vancouver in 2015 to rethink the timing of payroll. “It’s due for disruption.” Earlier this year, Instant Financial partnered with the $480 million-asset Sutton Bank in Attica, Ohio, to expand into the U.S. Together, they are offering Instant Pay, a mobile app that lets employees in the service industries unlock portions of their already earned pay, including tips, onto a companion prepaid card as soon as the employer approves it.  Employee users pay no monthly fees for the app and employers pay $1 per month per opted-in Instant Pay user. Sutton Bank, meanwhile, says it bases its revenue on interchange dollars that are generated from cardholders using the cards at merchants.. Instant Pay’s planned growth represents a small but growing niche in fintech: Even, Activehours, PayActiv and FlexWage are among the upstarts also hoping to disrupt payroll.  While their approaches vary, the big idea is to help someone who needs to pay immediate expenses like groceries or gas but lacks the funds — if only his employer paid up quicker.   It’s a dilemma that doesn’t always hinge on income level. In a 2017 Center for Financial Services Innovation report, Rob Levy and Sohrab Kohli write:

Streamline application process to spur new banks: OCC’s Noreika – by Keith Noreika - On Oct. 27, I proudly signed and presented the first full-service de novo national bank charter since the financial crisis to Winter Park National Bank of Florida. The   The charter symbolizes improvement and optimism in our nation’s banking system and broader economy.    For more than 150 years, the label of “national bank” has helped bestow confidence in individual institutions and the system as a whole because that label is accompanied by value-added supervision and access to the very best experts in regulation, risk management, compliance, legal and economics available.   But, communities, regulators and industry members have complained about the dearth of new banks for years. The processes of chartering a new bank and applying for federal deposit insurance are more onerous, lengthy and costly than they need to be. Making the process more efficient can only accelerate the recent positive trend and create more economic opportunity for consumers, businesses and communities across the nation. Currently, people who want to start a bank have to navigate two bureaucracies — their state or federal chartering authority and the insurance application process of the Federal Deposit Insurance Corp. Applicants typically file with both agencies on the same day and both agencies receive identical information. Since 1997, the OCC has rendered preliminary approval on 68 national bank charters, taking an average of 137 days per application. The OCC will rule favorably if the application is complete and well thought out, the proposed management and board are sound (and background checks come back clean), and the field investigation of the proposed bank goes well. The OCC will deny an application if it finds any issue, such as a weak business plan, inadequate capital or liquidity, or concerns with company officers. Despite the prudential regulator often taking the lead during the evaluation, the FDIC took an additional 89 days on average to make a decision on these applications. During the same period, there were two cases in which the FDIC took a minimum of four additional years, and two examples when the FDIC provided a decision before the OCC. There were also at least 14 additional cases where the FDIC made no decision at all on applications the OCC approved. Fourteen is more than twice the number of deposit insurance approvals granted in the past year.

Community bank small-business loans are undercounted: FDIC survey — Small banks are lending to small businesses much more than previously thought, according to a preview released Wednesday of an upcoming Federal Deposit Insurance Corp. survey. After surveying more than 1,000 banks with less than $10 billion in assets and conducting one-and-one follow-up discussions with 51 institutions, the FDIC concluded that small-business lending by those institutions was actually undercounted by at least $38 billion in the fourth quarter of 2015."Relying on call report proxy understates small business lending by small banks," the agency said in a synopsis of its first-ever small-business lending survey. The agency plans to release the full report on the survey sometime next year. Commercial and industrial loans of less than $1 million are typically a good proxy for calculating small-business loans made by small banks. In the fourth quarter of 2015, those C&I loans totaled $118 billion for banks with less than $10 billion in assets.But after conducting the survey in 2016 and 2017 with the help of the Census Bureau, the FDIC found that many loans secured by one- to four-family residential properties and made by small banks are also often utilized by small businesses, which added roughly $16 billion to the total.The FDIC data suggests small-business loan totals should be revised also because small banks said they often make loans above the normal threshold of $1 million to businesses with less than $1 million in annual revenue, which many would consider a small business. In fact, banks with assets of $1 billion to $10 billion said 20% of all their C&I loans that were greater than $1 million were to small businesses.Using that estimate, the FDIC found that banks with $1 billion to $10 billion in assets made $21 billion in loans of more than $1 million to small businesses in the fourth quarter of 2015.

Leveraged lending guidance in limbo after GAO move — When a government watchdog's decision effectively scrapped federal regulators' guidance on leveraged lending, it was the culmination of a yearslong effort to roll back an action that the industry had long reviled.  A GAO determination has effectively nullified a 2013 leveraged lending guidance. But that leaves the future uncertain about what, if anything, regulators will devise to replace it — and how banks should treat such loans in the meantime.  But the move also left the future uncertain about what, if anything, regulators will devise to replace it and bankers on their own in determining how to treat such lending.  It leaves things kind of in limbo,” said Kevin Petrasic, a partner at White & Case and former Treasury and Office of Thrift Supervision official. “It doesn’t negate the fact that the agencies have safety and soundness authority. [Banks] just don’t have the comfort, if you will, in terms of clearly delineated guidance that was set out in the rule.”

October 2017: Unofficial Problem Bank list declines to 111 Institutions -- Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.
Here is the unofficial problem bank list for October 2017.  Here are the monthly changes and a few comments from surferdude808:Update on the Unofficial Problem Bank List for October 2017.  The list declined by eight to 111 banks.  Aggregate assets dropped by $1.1 billion to $26.6 billion.  A year ago, the list held 173 institutions with assets of $54.9 billion.Actions were terminated against First National Bank of Griffin, Griffin, GA ($260 million); Citizens Commerce National Bank, Versailles, KY ($223 million); First National Bank of Brookfield, Brookfield, IL ($175 million); Delanco Federal Savings Bank, Delanco, NJ ($126 million); Americana Community Bank, Sleepy Eye, MN ($110 million); Gunnison Valley Bank, Gunnison, UT ($81 million); and Citizens First State Bank of Walnut, Walnut, IL ($45 million). The Farmers and Merchants State Bank of Argonia, Argonia, KS ($34 million) failed on October 13, 2017.  This is the seventh bank to fail this year and the 528th bank to fail in the wake of the Great Recession.  Of the 528 failures, ten have been in Kansas.

Housing finance reform not happening soon: Trump official  — Dealing with the future of Fannie Mae and Freddie Mac will be a 2018 or even 2019 issue, a top Trump administration official said Wednesday. Mark Calabria, the chief economic adviser to Vice President Mike Pence and a former GOP Senate Banking Committee staffer, said the administration is currently focused on more pressing housing issues, including addressing damage caused by recent hurricanes. "A large amount of housing in Puerto Rico is uninhabitable," he said at a joint Urban Institute/CoreLogic housing conference. "Our recovery effort is not just getting people back into housing" but to help restore Puerto Rico's economy, he said. The Trump administration also wants to pass tax reform, which will help the housing market. "It is the single best thing we can do for the housing market," Calabria said, because tax reform will increase productivity, wage growth and personal income. As for the government-sponsored enterprises, he said, "we have only begun the process of figuring out the exit path" for Fannie and Freddie conservatorships. "If it was easy, it would have been done already,” Calabria said. He noted the administration plans to hold listening sessions in the future to get input from stakeholders on various plans for getting Fannie and Freddie out of conservatorship. Calabria also noted that the administration is re-evaluating the False Claims Act litigation that has driven so many lenders out of the Federal Housing Administration’s single-family guarantee program. Additionally, he said the administration is re-examining the Consumer Financial Protection Bureau’s “qualified mortgage” rule. 

FHFA’s g-fee calculation ignores the law - In a recent report to Congress, the Federal Housing Finance Agency once again failed to satisfy a fundamental legal requirement. This is a requirement that the FHFA keeps ignoring apparently, perhaps because it doesn’t like it.  The law requires that when the FHFA sets guarantee fees for Fannie Mae and Freddie Mac, the fees must be high enough to cover not only the risk of credit losses, but also the cost of capital that private-sector banks would have to hold against the same risk. This is explicitly not the amount of capital that Fannie and Freddie or the FHFA might think would be right for themselves, but the cost of the capital requirement for regulated private banks.  This requirement created by the Temporary Payroll Tax Cut Continuation Act of 2011 was clear and unambiguous. The law mandated a radical new approach to setting, increasing and analyzing Fannie and Freddie’s g-fees, based on a reference to the private market. In setting “the amount of the increase,” the law said, the FHFA director should consider what will “appropriately reflect the risk of loss, as well as the cost of capital allocated to similar assets held by other fully private regulated financial institutions.” In other words, the director of the FHFA is instructed to calculate how much capital fully private regulated financial institutions have to hold against mortgage credit risk, the required return on that capital for such private banks, and therefore the cost of capital for private banks engaging in the same risk as Fannie and Freddie. This includes the credit losses from taking this risk and operating costs, both of which must be added the private cost of capital. The net sum is the level of Fannie and Freddie’s guarantee fees that the FHFA is required to establish. The law also further requires the FHFA to report to Congress on how Fannie and Freddie’s g-fees “met the requirements” of the statute, that is, how they included the cost of capital of regulated private banks. However, if you read the FHFA’s October 2017 report on guarantee fees, nowhere in it will you find any discussion — not a single word — about private banks’ cost of capital for mortgage credit risk. There is the same amount of discussion — zero — about how that private cost of capital enters the analysis and calculation of Fannie and Freddie’s required g-fees. Yet this is the information and annual analysis that Congress demanded of the FHFA.

Storms drive loan application defect rise in Texas and Florida - Hurricanes Harvey and Irma were responsible for an increase in loan application defects during September in Texas and Florida, according to First American Financial Corp.Nationwide, the frequency of defects, fraud and misrepresentations in mortgage loan applications fell by 1.2% compared with August but rose 20.3% compared with September 2016, First American's Loan Application Defect Index found. The month-to-month drop was the first in 2017, after the index was flat between June and August.In Texas, application defects increased 1.18% from August and 11.69% over September 2016. Florida had a 2.22% month-over-month increase in application defects and a 26.32% year-over-year increase."Unfortunately, historical data indicates that natural disasters and loan application defect risk go hand-in-hand," said First American's Chief Economist Mark Fleming in a p ress release. "Our defect, misrepresentation and fraud risk index identified signs of this risk trend in Texas and Florida this month and particularly in Houston, where risk increased the most among all the major markets we track."Before the hurricanes, the defect risk in both states peaked in June before declining in July and August. However, the index value in both states has been above the national average. September's nationwide index is at 83, while in Texas it is 86 and Florida it is 92."In Houston, which was severely impacted by flooding, defect, fraud and misrepresentation risk surged 7.2%, the largest month-over-month increase among the top 50 metropolitan markets," Fleming said. "Flooding is associated with elevated risk for misrepresentation of collateral risk condition."Only the smaller markets of Scranton, Pa., up 12.1% compared with August, and Lakeland, Fla., with a 9.1% increase, had a larger increase in the risk for application defects than Houston.

Connecticut lone state to see improvement in mortgage defects - Connecticut was the lone state in the nation in September to see a decline in borrowers misrepresenting facts on mortgage loan applications, according to a new study, with the Bridgeport-Stamford region seeing an even greater improvement.First American Financial maintains a running loan application "defect" index that estimates fraudulent and false statements on mortgage applications, to include those addressing collateral or income.As of September, Connecticut's score on the First American Financial index dropped 2.8% from a year earlier — indicating fewer fraudulent applications — even as the index score popped more than 20% for all states nationally. The index overall remains down 18.6% from its all-time peak in October 2013.In the coastal Fairfield County area, loan misrepresentations were down 6.2% both from a year ago and this past August."Last month, based on data from previous natural disasters, we highlighted the potential for increased mortgage loan application fraud risk due to the hurricanes in Florida and Texas," stated Mark Fleming, chief economist for Santa Ana, Calif.-based First American Financial, in a Tuesday statement accompanying the report. "Prior to the hurricanes, defect risk in Florida and Texas was declining, but that trend has reversed in September.""In Houston, which was severely impacted by flooding, defect, fraud and misrepresentation risk surged 7.2%, the largest month-over-month increase among the top 50 metropolitan markets," Fleming added. "Flooding is associated with elevated risk for misrepresentation of collateral." South Dakota had the biggest spike in loan misrepresentations on the index, with Raleigh, N.C., highest among the 50 metropolitan markets studied by First American Financial.

CFPB launches mortgage performance tool to track delinquencies - — The Consumer Financial Protection Bureau has launched a new mortgage performance tool that tracks delinquencies on mortgage loans down to the county level. The online tool features interactive charts and graphs, the CFPB said. “Measuring the number of consumers who have fallen behind on their mortgage payments is a telling barometer of the health of mortgage markets locally and nationally,” CFPB Director Richard Cordray said in a press release Monday.

HUD Explores Temporarily Housing Puerto Ricans on U.S. Mainland - The Trump administration is exploring ways to relocate tens of thousands of Puerto Ricans to the U.S. mainland for an extended period as parts of the territory remain devastated more than a month after Hurricane Maria. Officials at the U.S. Department of Housing and Urban Development late last week started to develop a plan to provide housing to some of Puerto Rico’s displaced population, according to people familiar with the matter. And given the shortage of available options on the island, the possibility of evacuating large numbers to the mainland has emerged as an option. Two of the people who spoke to HUD officials said using large commercial cruise liners had been suggested to move residents en masse. The most recent push for a solution began after a meeting on Friday that included officials from HUD, the Federal Emergency Management Agency, the White House and others, according to the people. But it’s unclear if the White House or any agencies outside of HUD are coordinating with the housing agency, or if the ideas are only being developed within the department for now.Agency officials in the past two days have contacted executives in the housing industry, investment managers with ties to Puerto Rico, and others in an attempt to brainstorm potential solutions, said the people, who asked not to be named because they weren’t authorized to speak to the media. Thousands of Puerto Rico residents have already fled to Florida and elsewhere since Maria struck as a Category Four storm on Sept. 20. Much of the territory, including the outer islands of Vieques and Culebra, remains without electricity. Potable drinking water is scarce in some areas, and thousands of miles of roads are still closed. The evacuation idea is in the earliest stages, and given immense logistical challenges it may never come to pass. An orchestrated mass movement and temporary resettlement would require coordination between various parts of the government and a willingness by local communities to house any evacuees, at a substantial cost.

Booting Detroit residents out of foreclosed homes must end  --Mogk cites several reasons to abolish the property levy on owner-occupied houses. First, the city's property tax on owner-occupied single-family houses represents a relatively small portion of the city's municipal revenue. Property taxes as a whole, including commercial property, contribute no more than 10% to 15% of the city's revenue. The city's income tax, casino tax, and property tax on commercial properties would still be there. So ending the property tax on owner-occupied houses could happen without major loss of cash to the city provided an alternative replaces it. Second, many Detroit homeowners remain just too poor to pay it, even with various assistance programs out there today. With poverty in the city near 40%, paying a couple of thousand dollars in property tax just isn't possible for many Detroit families when food, transportation, child care and other daily needs come first. Third, the displacement of families is driving a transition from owner-occupied housing to a majority rental market in Detroit. That's a worrisome trend, given that some landlords (by no means all or even a majority) are more interested in collecting rent than in providing decent housing. And speculators who snatch up many properties in the county's annual auction are often interested only in flipping the properties as soon as they can, continuing the cycle of abandonment and foreclosure. How to replace the property tax on owner-occupied houses? Mogk suggests some possible alternatives. One is to maintain the property tax only on landlords and commercial property but add a local sales tax to replace the revenue derived from taxing owner-occupied homes. Raising the tax on commercial properties is another possibility. Another idea, admittedly controversial, is to impose a small tax on nonprofit institutions in the city such as hospitals, universities and churches. None of those would be easy to do. But at least Mogk is offering ideas to start the conversation. 

Fannie Mae keeping an eye on servicers' hurricane response - Expected losses from the recent hurricanes put a dent in Fannie Mae's third-quarter earnings and the mortgage agency is keeping a close eye on how its servicers manage the pressures of the recovery effort. "Servicers are having challenges," especially in Puerto Rico, where there are fewer companies that manage loans, Fannie Mae President and CEO Timothy Mayopoulos said in an interview.But he added that, "I haven't heard any servicer say they are not capable."About 80% of the $1 billion that Fannie Mae set aside during the third quarter for hurricane-related expenses is expected to cover losses on single-family loans in Puerto Rico. About two-thirds of the $900 million that Freddie Mac set aside for hurricane losses is earmarked for Puerto Rico."If you put aside the hurricanes, our earnings were very much in line with what we have expected," Mayopoulos said. The agency earned $3 billion in net income during the quarter, down from $3.2 billion in both the previous quarter and a year ago.Despite the increased reserves for the hurricanes, Fannie's combined loss reserve was $20.5 billion in the third quarter, down from $20.7 billion in the second quarter, due to the improving housing market.  The hurricane loss reserve estimates have a high margin of error, and there is no doubt they will be "adjusted up or down" to one degree or another going forward, he said. The storms are putting more stress on the agency's reserves, which are declining.  Fannie is considering extending its broader approach to automating processes for lenders and servicers in order to make their work more efficient to disaster relief in response to the hurricanes. "We're trying to reduce the number of steps involved in any of these processes automate as much as practical," Mayopoulos said. To date, however, existing disaster relief policies that allow servicers to suspend or reduce mortgage payments and the evolution of post-crisis loss mitigation appear effective, Mayopoulos said.

Hurricanes make housing shortage worse in Central Florida -- Central Floridians can expect no reprieve, researchers say, from rising rents and home prices in a metro area deemed one of the nation's hottest by Arch Mortgage Insurance Co. To help meet needs, Osceola, Orange and Seminole county officials say they are seeking a "missing middle" of housing options, such as garage apartments or tiny homes."We created this American dream of owning your own home and owning your own property, and it's not necessarily an appropriate dream for everyone at every stage of their life," said Susan Caswell, community development administrator for Osceola.Until now, Central Florida's housing has consisted mostly of suburban-style houses, town homes and garden apartments. Local governments and the building industry need to work together to create more housing choices, Caswell said. Osceola might suspend new development approvals so it has time to change building rules with options such as small-scale cottage homes, courtyard apartments, "micro unit" rentals and garage apartments embedded in communities designed for residents of diverse incomes and ages, as well as revisit impact fees. Orange County is considering mixed-style housing as it moves forward with a development district that which would include about 500 acres south of downtown Orlando. Buildings with five to eight stories and a mix of residential, office and retail are being considered, said County Planner Alberto Vargas. The county is considering prospects for homes with added rentable living spaces of about 400 square feet. The space could help offset mortgage costs for owners who rent them out while helping meet a need, he added.

County leaders cite ‘confusion and concern’ about Puerto Rico evacuee plans -  As tens of thousands of people from Puerto Rico arrive in Central Florida after Hurricane Maria, the leaders of three counties said both the state and federal government have given them little information on plans for housing them. “Confusion and concern are mounting,” wrote Orange County Mayor Teresa Jacobs and county commission chairs Brandon Arrington of Osceola and John Horan of Seminole in a letter Wednesday to Wesley Maul, interim director of the Florida Division of Emergency Management.“In the absence of a plan, there is the strong potential for chaos, and United States citizens from Puerto Rico deserve better,” the leaders wrote. In the letter, they ask to meet with the state agency and FEMA about the short- and long-term plans for the influx of Puerto Ricans leaving the island, where much of the electric grid is still down. They wrote how state legislators, the news media, their own county agencies and “several of us personally” have reached out to DEM and FEMA and not received responses. Despite their best efforts, the leaders wrote, “we do not have a sufficient supply of housing to accommodate the anticipated influx of U.S. citizens.” Between Oct. 2 and Oct. 24 alone, they said, nearly 40,000 passengers from Puerto Rico arrived at Orlando International Airport and 4,500 at the Orlando Sanford International Airport, numbers they expect to grow significantly in the next few months. Orange has a contract with Heart of Florida United Way to provide short-term housing in about 100 hotel rooms, a relatively small number compared with the total amount of evacuees. But that can’t last as the peak holiday season approaches, the leaders wrote. 

Fannie Mae: Mortgage Serious Delinquency rate increased in September --Fannie Mae reported that the Single-Family Serious Delinquency rate increased to 1.01% in September, from 0.99% in August. The serious delinquency rate is down from 1.24% in September 2016.The increase in September is probably due to the hurricanes. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. By vintage, for loans made in 2004 or earlier (4% of portfolio), 2.75% are seriously delinquent. For loans made in 2005 through 2008 (7% of portfolio), 5.83% are seriously delinquent, For recent loans, originated in 2009 through 2017 (89% of portfolio), only 0.33% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years. In the short term - over the next several months - the delinquency rate will probably increase slightly due to the hurricanes.  After the hurricane bump, maybe the rate will decline another 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.

Fannie taps N.H. law to test 30-year loans for manufactured housing - A Fannie Mae program to offer 30-year financing for manufactured homes in New Hampshire could be a launching point for the government-sponsored enterprises to offer similar conforming loan terms nationwide. The GSE is working with the New Hampshire Housing Finance Authority on the program and is available for manufactured housing located in a resident-owned community, or ROC. The program takes advantage of a New Hampshire law that requires all manufactured homes, whether located on owned land, in an ROC or investor-owned park, to be titled as real property instead of chattel, said Patrick McCarthy, Fannie Mae vice president for community lending. Interest rates and fees are typically lower for conforming loans than on chattel loans. Loans are available up to a 95% loan-to-value ratio with private mortgage insurance. This program is similar to loans secured by an apartment in a co-operative, he said. "The residents own a share of their park, a share of their land," said McCarthy. "They pay for the upkeep in a co-op-type structure."

Millennials jumped on lower interest rates to refinance - Millennials took advantage of lower interest rates in September to refinance their mortgages, according to Ellie Mae's Millennial Tracker. About 14% of all closed loans were made to millennial borrowers in September, the highest this percentage has been since February.  Refinances for conventional loans made to millennial borrowers rose 2 percentage points from August to 17%, and Federal Housing Administration loan refinances rose to 5% from 4%. During this same time, U.S. Department of Veterans Affairs refinances grew to 30%, up from 28% in August.  "With average interest rates falling to their lowest point in 2017, millennials are taking advantage of refinance opportunities,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae, in a press release. "While we are also seeing millennials with more purchase power, the uptick in refinances indicates maturity among those millennials who previously purchased a home and are looking for an opportunity to lower their monthly interest payments," he continued. The average primary millennial borrower for the month of September was about 31.5 years old with a FICO score of 732. About two-thirds of those who refinanced were married and one-third were single, The average FICO score for millennial borrowers fell one point from 724 to 723.

Mortgage rates hold steady as 10-year yield drops  -- Mortgage rates were unchanged or up slightly this week even as the 10-year Treasury yield retreated from its recent gains, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 3.94% for the week ending Nov. 2, the same as last week. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.54%. "Following a strong surge last week, rates held relatively flat this week. The 30-year mortgage rate remained unchanged, while the 10-year Treasury yield dipped roughly 4 basis points. The markets' reaction to the upcoming announcement of the next Fed chair may impact the movement of rates in next week's survey," Sean Becketti, Freddie Mac's chief economist, said in a press release.The 15-year fixed-rate mortgage this week averaged 3.27%, up from last week when it averaged 3.25%. A year ago at this time, the 15-year fixed-rate mortgage averaged 2.84%.The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.23% this week with an average 0.5 point, up from last week when it averaged 3.21%. A year ago at this time, the five-year adjustable-rate mortgage averaged 2.87%."After increasing to their highest levels since mid-July, mortgage rates retreated early this week to near where they were for much of  the past month," Aaron Terrazas, Zillow's senior economist, said when that company released its own rate tracker on Wednesday.

MBA: Mortgage Applications Decrease in Latest Weekly Survey -- From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey: Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 27, 2017.  .. The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 10 percent higher than the same week one year ago. ...The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to its highest level since July 2017, 4.22 percent, from 4.18 percent, with points increasing to 0.43 from 0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

Application volume falls as rates rise to three-month high - Mortgage rates rose to their highest level since July, leading to a 2.6% decrease in loan applications from one week earlier, according to the Mortgage Bankers Association.The MBA's Weekly Mortgage Applications Survey for the week ending Oct. 27 found that the refinance index decreased 5% from the previous week.The refinance application share decreased to 48.7% from 49.5% the previous week.The seasonally adjusted purchase index decreased 1% from one week earlier. The unadjusted purchase index decreased 2% compared with the previous week and was 10% higher than the same week one year ago. The market composite index, a measure of mortgage loan application volume, decreased 3% on an unadjusted basis from one week earlier.Adjustable-rate loan application activity increased to 6.8% from 6.4%, while the share for Federal Housing Administration-guaranteed loans increased to 10.4% from 9.8%.The share of applications for Veterans Affairs-guaranteed loans decreased to 9.9% from 10.1% and the U.S. Department of Agriculture/Rural Development share increased to 0.8% from 0.7%.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased 4 basis points to 4.22%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100), the average contract rate increased 5 basis points to 4.16%.The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 3 basis points to 4.07%.For each of the above loan types, the interest rates were at their highest level since July, the MBA said.For 15-year fixed-rate mortgages the average interest rate increased 4 basis points to 3.52% and the average contract interest rate for 5/1 ARMs increased to 3.33% from 3.29%.

Average U.S. Home Is Selling After Just 3 Weeks On Market; Fastest Pace In At Least 30 Years -- Earlier today Bloomberg shared their thoughts that recent data released by the National Association of Realtors (NAR), namely the fact that homes are sitting on the market for a record low average of just 3 weeks before being scooped up, pointed to a devastating shortage of housing inventory for sale.  Here was Bloomberg's take: Here’s more evidence that the defining characteristic of the U.S. housing market is a shortage of inventory for sale: Homes are sitting on the market for the shortest time in 30 years, according to an annual report on homebuyers and sellers published today by the National Association of Realtors. The typical home spent just three weeks on the market, according to the report, which focused on about 8,000 homebuyers who purchased their home in the year ending in June. That was down from four weeks in the year ending June 2016 and 11 weeks in 2012, when the U.S. housing market was still reeling from the foreclosure crisis. It was the shortest time since the NAR report began including data on how long homes spend on the market, in 1987. Buyers are snapping up homes quickly at a time when for-sale listings are in short supply, forcing them to compete. The number of available properties declined in September, according to NAR's monthly report on existing home sales, marking the 28th consecutive month of year-on-year decline in inventory.

Black Knight: House Price Index up 0.2% in August, Up 6.2% year-over-year -- Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.From Black Knight: Black Knight Home Price Index: U.S. Home Prices Hit Another New Peak, Gaining 0.24 Percent in August 2017 With Year-Over-Year Growth Steady at 6.24 Percent:

• The national-level HPI rose in August ($282K), marking another new high for U.S. home prices
• Home prices rose just 0.24 percent from July, while the annual rate of appreciation remained steady at 6.24 percent
• Year-to-date, U.S. home prices have gained more than six percent
• August’s rate of monthly appreciation fell to less than half that of July’s, marking five consecutive months of slowing growth
• Of the nation’s 40 largest metros, 14 hit new peaks – Boston, MA; Charlotte, NC; Cincinnati, OH; Dallas, TX; Houston, TX; Kansas City, MO; Los Angeles, CA; Nashville, TN; New York, NY; Portland, OR; San Antonio, TX; San Diego, CA; San Francisco, CA and San Jose, CA
The year-over-year increase in this index has been about the same for the last year (close to 6% range).

Home-price gains in 20 U.S. cities showed acceleration - Home-price gains in 20 U.S. cities accelerated in August amid tight inventories and steady economic growth, figures from S&P CoreLogic Case-Shiller showed Tuesday. The 20-city property values index rose 5.9% year-to-year (matching the estimate). The national price gauge increased 6.1% year-to-year, the most since June 2014. The seasonally adjusted 20-city index was up 0.5% month-to-month (the estimate was 0.4%) after a 0.4% rise. Home values have continued to increase steadily across the U.S. as buyers compete for a limited supply of available homes. Asking prices have grown faster than incomes, pushing down homeownership rates across the country. Those trying to enter the market have felt the price increases most acutely, as a separate report showed first-time buyers of previously owned homes matched the lowest in two years in September.The aftermath of Hurricanes Harvey and Irma will probably mean even higher values because of constricted supplies in Texas and Florida. That's on top of unemployment at a 16-year low and still-cheap mortgage costs that support prices and purchases."Home-price increases appear to be unstoppable," David Blitzer, chairman of the S&P index committee, said in a statement. At the same time, "measures of affordability are beginning to slide, indicating that the pool of buyers is shrinking," and the Fed’s interest-rate hikes are likely to push mortgage rates higher over time, "removing a key factor supporting rising home prices," he said.Seattle (up 13.2%), Las Vegas (up 8.6%) and San Diego (up 7.8%) were the top three cities in terms of year-over-year price appreciation; all cities showed gains of at least 3%. After seasonal adjustment, San Diego had the biggest month-over-month increase at 1%, while Atlanta was the only city to show a decline, at 0.2%.

Case-Shiller: National House Price Index increased 6.1% year-over-year in August -- S&P/Case-Shiller released the monthly Home Price Indices for August ("August" is a 3 month average of June, July and August prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: The S&P Corelogic Case-Shiller National Home Price NSA Index Reaches New High as Momentum ContinuesThe S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.1% annual gain in August, up from 5.9% in the previous month. The 10-City Composite annual increase came in at 5.3%, up from 5.2% the previous month. The 20-City Composite posted a 5.9% year-over-year gain, up from 5.8% the previous month. Seattle, Las Vegas, and San Diego reported the highest year-over-year gains among the 20 cities. In August, Seattle led the way with a 13.2% year-over-year price increase, followed by Las Vegas with an 8.6% increase, and San Diego with a 7.8% increase. Nine cities reported greater price increases in the year ending August 2017 versus the year ending July 2017.  Before seasonal adjustment, the National Index posted a month-over-month gain of 0.5% in August. The 10-City and 20-City Composites reported increases of 0.5% and 0.4% respectively. After seasonal adjustment, the National Index recorded a 0.5% month-over-month increase in August. The 10-City Composite and 20-City Composite both posted 0.5% month-over-month increases. Nineteen of 20 cities reported increases in August both before and after seasonal adjustment.   “Home price increases appear to be unstoppable,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “August saw the National Index annual rate tick up to 6.1%; all 20 cities followed in the report were up year-over-year while one, Atlanta, saw the seasonally adjusted monthly number slip 0.2%. Most prices across the rest of the economy are barely moving compared to housing. Over the last year the consumer price index rose 2.2%, driven largely by energy costs. Aside from oil, the only other major item with price gains close to housing was hospital services, which were up 4.6%. Wages climbed 3.6% in the year to August.  The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

Real House Prices and Price-to-Rent Ratio in August -- It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 4.3% above the previous bubble peak. However, in real terms, the National index (SA) is still about 13.3% below the bubble peak (and historically there has been an upward slope to real house prices).  The year-over-year increase in prices is mostly moving sideways now around 5% to 6%. In August, the index was up 6.1% YoY.  Usually people graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $278,000 today adjusted for inflation (39%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation). The first graph shows the monthly Case-Shiller National Index SA, and the monthly Case-Shiller Composite 20 SA (through August) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to November 2005 levels. The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to August 2004 levels, and the Composite 20 index is back to March 2004. In real terms, house prices are back to mid 2004 levels.This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to November 2003 levels, and the Composite 20 index is back to September 2003 levels.

Zillow Case-Shiller Forecast: More Solid House Price Gains in September -- The Case-Shiller house price indexes for August were released this morning. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.  From Svenja Gudell at Zillow: Case-Shiller August Results and September Forecast: Gains to the Horizon The U.S. housing market has settled into a predictable rhythm that shows very few signs of changing. There is incredibly strong demand, driven by a largely healthy overall economy and aging millennials entering their home buying prime, and there is too-low inventory, driven by limited home building activity. Together, those two factors continue to push housing prices up. Our home-price forecast for September, which Case-Shiller will not release until Nov. 28, is for more of the same: We expect the national index to maintain its 0.5 percent month-over-month trend, with both city composites climbing 0.4 percent month-over-month, which is slightly slower than they have been.The year-over-year change for the Case-Shiller National index will be about the same in September as in August.

US Homes Have Never Been More Unaffordable -- Just under a year ago, US home prices finally surpassed their prior all time highs, one decade after the 2006 bubble... ... and haven't looked back since. Which, all else equal, would be great news for America, where the bulk of middle-class wealth is not in the stock market contrary to conventional wisdom, but in its biggest, and most illiquid asset-cum-investment: one's home.  There is just one problem: while house prices are once again hitting new all time highs every month, household incomes have failed to keep up; in fact, as the Political Calculations blog shows, in the past two years there has been a distinct trend in home affordability, or lack thereof. As the first chart below shows, starting in September 2015, the TTM average median new home sale price in the U.S. has been rising at an average rate of $906 per month. That's the good news; the bad news is that in terms of affordability, the ratio of the trailing twelve month averages of median new home sale prices to median household income in the U.S. has risen to an all time high of 5.454, which following revisions in the data for new home sale prices, was recorded in July 2017. The initial value for September 2017 is 5.437. In other words, the median new home in the US has never been more unaffordable in terms of current income.

Home Security Designs for Billionaires - What happens when billionaires want their homes to be safe from all forms of threats? They call Al Corbi, founder of SAFE (Strategically Armored & Fortified Environments). Corbi's a man who designs "secret and secure installations for the U.S. Department of Justice, other U.S. agencies, and governments worldwide" and has been at it since 1971.  Here's an example of a Corbi-designed house that just came on the market. The Rice House, as it's called, is a veritable fortress that will survive the zombie apocalypse. There's also this very unique design feature that ensures no one will ever be able to steal cars out of your garage:  That garage is 5,000 square feet, by the way. The house is fortified with bulletproof protection, which you'll see in the video below. It also includes door closures designed to "withstand an 8-foot Dade County missile D category 5." (According to Engineering Express, a firm that specializes in designing house components, that means "a 9-pound 2×4 lumber missile striking the product end-on at 50 feet per second.") Should someone manage to get inside, however, you can blast them with built-in tear gas dispensers from the safety of the vault-like Safe Room. Another signature Corbi design, though it's not clear if it's in this house, are remote-controlled shotgun shells that fire out of the walls and ceilings. And thermal cameras on the property let you see intruders even at night.

Home Ownership Rate: Up 0.6% YoY -- Over the last decade, the general trend has been consistent: The rate of home ownership continues to decline. The Census Bureau has now released its latest quarterly report with data through Q3 2017. The seasonally adjusted rate for Q3 is 63.8 percent, down from 63.9 in Q2. The nonseasonally adjusted Q3 number is 63.9 percent, fractionally above the Q2 number.  The Census Bureau has been tracking the nonseasonally adjusted data since 1965. Their seasonally adjusted version only goes back to 1980. Here is a snapshot of the nonseasonally adjusted series with a 4-quarter moving average to highlight the trend. The consensus view is that trend away from homeownership is a result of rising residential real estate prices in general and limited supply of entry-level priced homes that would attract first-time buyers.  Here is the YoY version of the chart going back to 1965.

HVS: Q3 2017 Homeownership and Vacancy Rates -- The Census Bureau released the Residential Vacancies and Homeownership report for Q3 2017.  This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates.  This survey might show the trend, but I wouldn't rely on the absolute numbers.  The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend. The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate increased to 63.9% in Q3, from 63.7% in Q2.
I'd put more weight on the decennial Census numbers - and given changing demographics, the homeownership rate has probably bottomed. The HVS homeowner vacancy increased to 1.6% in Q3. 

Here's Why Cities All Across America Are Suddenly Buying Up Trailer Parks --Much like the historic run that nearly resulted in the collapse of the global financial system in 2009, home prices in the U.S. are once again looking more like an Amazon or Facebook stock price chart than a stable store of value that should probably grow roughly inline with overall inflation.  And while these price gains are great news for the private equity firms that scooped up foreclosed homes after the last housing crisis, they're once again making it nearly impossible for the average American family to find affordable housing. As such, as the Pew Charitable Trusts points out, municipalities all across the country are suddenly scooping up trailer parks in an effort to prevent them from being converted to the next McMansion track-housing project and maintain some affordable housing options.Here in the heart of one of Colorado’s most expensive cities, Isabel Sanchez bought a mobile home seven years ago for just $6,000. Her four-bedroom bungalow now sits on a lot she rents for $355 a month.The mobile home park Sanchez and her family live in offers a glimpse of Boulder’s hippie past. Small houses and trailers, many dating to the 1960s and ’70s, sit close together on tree-lined streets. “I love the space, I love the location, I love the community here,” Sanchez, 55, said recently, relaxing in a blue armchair in her spotless living room. Affordable neighborhoods like these have become hard to find in Boulder and cities across the country where home prices are soaring. So Boulder and a handful of other localities, desperate to hang on to homes middle- and working-class people can afford, have stepped in to buy parks, fix them up, and transfer ownership to residents or to a nonprofit on condition that rents be kept low.

The Boomtown That Shouldn’t Exist -- The Raso family moved from Pittsburgh to Cape Coral on September 14, 1960, lured by that sunny vision of affordable utopia. At the time, the vision was just about all there was. The City-in-the-Making was still mostly uninhabitable swampland, with just a few dozen homes along a few mosquito-swarmed dirt roads. The Rasos quickly discovered that in some ways, nature had not been so lavishly generous to Cape Coral. They arrived in town the same hour as Hurricane Donna, which was shredding Southwest Florida with winds of 120 miles per hour. They spent their first night in paradise in a house with no roof, which was breathtaking in a way the ads hadn’t foreseen.“My mom was not a happy camper.  “But my dad was Mr. Positive. He believed in the dream, and nothing could change his mind.” Raso Tate’s true-believing dad soon became a top salesman for Cape Coral’s developer, Gulf American, peddling paradise on layaway, promoting one of the most notorious land scams in Florida’s scammy history. Gulf American unloaded tens of thousands of low-lying Cape Coral lots on dreamseekers all over the world before the authorities cracked down on its frauds and deceptions. It passed off inaccessible mush as prime real estate, sold the same swampy lots to multiple buyers, and used listening devices to spy on its customers. Its hucksters spun a soggy floodplain between the Caloosahatchee River and the Gulf of Mexico as America’s middle-class boomtown of the future, and suckers bought it. The thing is, the hucksters were right, and so were the suckers. Cape Coral is now the largest city in America’s fastest-growing metropolitan area. Its population has soared from fewer than 200 when the Rasos arrived to 180,000 today. Its low-lying swamps have been drained, thanks to an astonishing 400 miles of canals—the most of any city on earth—that serve not only as the city’s stormwater management system but also its defining real estate amenity. Those ditches were an ecological disaster, ravaging wetlands, estuaries and aquifers. Cape Coral was a planning disaster, too, designed without water or sewer pipes, shops or offices, or almost anything but pre-platted residential lots. But people flocked here anyway. The title of a memoir by a Gulf American secretary captured the essence of Cape Coral: Lies That Came True.

Construction Spending increased in September --Earlier today, the Census Bureau reported that overall construction spending increased in September:Construction spending during September 2017 was estimated at a seasonally adjusted annual rate of $1,219.5 billion, 0.3 percent above the revised August estimate of $1,216.0 billion. The September figure is 2.0 percent above the September 2016 estimate of $1,195.6 billion. Private spending decreased, and public spending increased, in September: Spending on private construction was at a seasonally adjusted annual rate of $942.7 billion, 0.4 percent below the revised August estimate of $946.2 billion. ... In September, the estimated seasonally adjusted annual rate of public construction spending was $276.8 billion, 2.6 percent above the revised August estimate of $269.8 billion.  This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been increasing, but is still 24% below the bubble peak. Non-residential spending is now 3% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 15% below the peak in March 2009, and 5% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 10%. Non-residential spending is down 4% year-over-year. Public spending is down 2% year-over-year. This was above the consensus forecast of a 0.1% increase for September, however private spending for previous months was revised down slightly - and public spending revised up.

It Gets Serious: Biggest US Cities Where Rents Are Plunging - Wolf Richter - Over the past few years, commercial real estate prices have boomed, and so has multi-family construction, enticed by dropping and desperately low rental vacancy rates that have pushed up rents. But vacancy rates bottomed out in Q2 2016 and have since turned up. In Q3 2017, the rental vacancy rate rose to 7.5%, the Census Bureau reported on Tuesday. While still low, it’s the highest rate in over three years: In San Francisco, the most expensive major rental market in the US, the median asking rent for a one-bedroom apartment inched up 1.2% year-over-year to $3,420 but is down 6.8% from the peak in October 2015. For a two-bedroom, the median asking rent dropped 5.9% year-over-year to $4,500 and is down 10% from the peak.These are asking rents in multifamily apartment buildings, that Zumper aggregated in its National Rent Report. Single-family houses or condos for rent are not included. And these asking rents do not consider incentives, such as “one month free” or “two months free,” which effectively slash the rent for the first year by another 8% or 17%. The data is based on “over one million active listings,” Zumper explains in its methodology. Importantly, the data also includes asking rents from new construction.So this is not what renters are currently paying, which in many cities includes rent-controlled units. Rather, it’s a measure of the open market, including new construction units.And these new units have an impact. In New York City, the median asking rent for a one-bedroom dropped 4.3% year-over-year to $2,870. For two-bedrooms, it dropped 10.7% to $3,100. Measured from the peak in March 2016, asking rents – not including incentives – have plunged respectively 15% and 22%. After this plunge, New York’s one-bedroom rents are in second place and two-bedroom rents in fourth place behind San Francisco, Los Angeles, and Washington DC – which also says a lot about how expensive DC and LA have become. In Chicago, the median asking rent for a one-bedroom apartment dropped 15.9% year-over-year to $1,530, and 15.6% to $2,110 for a two-bedroom. Whatever the reasons – from Chicago’s declining population to its fiscal woes – median asking rents have plunged by 25% and 20% respectively from their peaks in late 2015.

Stuck! The Law and Economics of Residential Stagnation -- Yale Law Journal -- America has become a nation of homebodies. Rates of interstate mobility, by most estimates, have been falling for decades. Interstate mobility rates are particularly low and stagnant among disadvantaged groups—despite a growing connection between mobility and economic opportunity. Perhaps most importantly, mobility is declining in regions where it is needed most. Americans are not leaving places hit by economic crises, resulting in unemployment rates and low wages that linger in these areas for decades. And people are not moving to rich regions where the highest wages are available.This Article advances two central claims. First, declining interstate mobility rates create problems for federal macroeconomic policymaking. Low rates of interstate mobility make it harder for the Federal Reserve to meet both sides of its “dual mandate”: ensuring both stable prices and maximum employment. Low interstate mobility rates also impair the efficacy and affordability of federal safety net programs that rely on state and local participation, and reduce wealth and growth by inhibiting agglomeration economies. While determining an optimal rate of interstate mobility is difficult, policies that unnaturally inhibit interstate moves worsen national economic problems. Second, the Article argues that governments, mostly at the state and local levels, have created a huge number of legal barriers to interstate mobility. Land-use laws and occupational licensing regimes limit entry into local and state labor markets. Different eligibility standards for public benefits, public employee pension policies, homeownership subsidies, state and local tax regimes, and even basic property law rules inhibit exit from low-opportunity states and cities. Furthermore, building codes, mobile home bans, federal location-based subsidies, legal constraints on knocking down houses, and the problematic structure of Chapter 9 municipal bankruptcy all limit the capacity of failing cities to “shrink” gracefully, directly reducing exit among some populations and increasing the economic and social costs of entry limits elsewhere.

Rent Is Eating Up a Record Share of Americans' Income - If it feels like the rent keeps going up, you’re not alone: The share of U.S. disposable income that went toward such spending totaled 3.81 percent in the third quarter, marking the highest share in data going back almost six decades. Rising shelter costs have accounted for most of the inflation in the U.S. during this economic expansion. While part of the rising rental share of spending may result from falling homeownership in recent years, the price index for rental of tenant-occupied nonfarm housing rose 3.7 percent in the year through September, according to data published Monday by the Commerce Department, near the fastest pace seen in the last decade. Nominal disposable personal income in September was up just 2.9 percent from a year earlier, marking the 22nd straight month in which it grew at a slower rate on a year-over-year basis than rental inflation.

Personal Income increased 0.4% in September, Spending increased 1.0%  - The BEA released the Personal Income and Outlays report for September: Personal income increased $66.9 billion (0.4 percent) in September according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $53.0 billion (0.4 percent) and personal consumption expenditures (PCE) increased $136.0 billion (1.0 percent). ..Real PCE increased 0.6 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.1 percent. The September PCE price index increased 1.6 percent year-over-year and the September PCE price index, excluding food and energy, increased 1.3 percent year-over-year.  The following graph shows real Personal Consumption Expenditures (PCE) through September 2017 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.The dashed red lines are the quarterly levels for real PCE.  The increase in personal income was at expectations,  and the increase in PCE was slightly above expectations.

Real Disposable Income Per Capita Gains in September - With the release of this morning's report on September Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita.At two decimal places, the nominal 0.30% month-over-month change in disposable income was trimmed to -0.07% when we adjust for inflation. The year-over-year metrics are 2.20% nominal and 0.56% real. The trend since 2013 has been one of steady growth. The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013.  The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Nominal disposable income is up 73.5% since then. But the real purchasing power of those dollars is up only 26.1%.

US Savings Rate Crashes To 10 Year Lows As Spending Surges Most Since 'Cash For Clunkers' -- While incomes grew at an expected 0.4% MoM, US consumers spent at an exuberant 1.0% MoM clip - the biggest monthly rise since Aug 2009 (cash for clunkers). To cover this spending surge, the savings rate tumbled.The last time - Aug 09 - that spending surged like this was when the government unleashed 'cash for clunkers', it plummeted the following m onth... Spending on durable goods rose 3.5 percent after adjusting for inflation after a 1.4 percent decline in August.Outlays on services rose 0.3 percent, while spending on non- durable goods also advanced 0.3 percent.Under the hood, the PCE Deflator printed as expected +1.6% YoY. Private workers wage growth continues to outstrip government workers' wage growth YoY and upticked in September... And while outgoings surged with relatively flat incomes, the savings rate plunged to its lowest since Dec 2007 to enable the spending...which just happens to be when the last recession started. As Bloomberg warns, the jump in September outlays was driven by purchases of durable goods including the replacement of motor vehicles lost in recent flooding from hurricanes.That means the latest surge probably overstates the strength of consumer spending.

Consumer Confidence Highest in 17 Years -    The latest Conference Board Consumer Confidence Index was released this morning based on data collected through October 18. The headline number of 125.9 was an increase from the final reading of 120.6 for August, an upward revision from 119.8. Today's number was above the consensus of 121.0.  Here is an excerpt from the Conference Board press release. “Consumer confidence increased to its highest level in almost 17 years (Dec. 2000, 128.6) in October after remaining relatively flat in September,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved, boosted by the job market which had not received such favorable ratings since the summer of 2001. Consumers were also considerably more upbeat about the short-term outlook, with the prospect of improving business conditions as the primary driver. Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.” The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

US trade deficit rose to $43.5 billion in September - (AP) — The U.S. trade deficit rose in September to $43.5 billion as imports grew faster than exports. The Commerce Department said Friday that the September trade gap in goods and services was up from $42.8 billion in August. Exports rose 1.1 percent to $196.8 billion, the highest level since December 2014. But imports rose more: up 1.2 percent to $240.3 billion. A trade deficit means that the United States is buying more goods and services from other countries than it is selling them. A rising trade gap reduces U.S. economic growth. Through September, the United States has run a trade gap this year of $405.2 billion, up more than 9 percent from a year earlier. The gap has widened even though a weaker dollar has made American-made products less expensive in foreign markets and encouraged exports. President Donald Trump views America's massive trade deficits as a sign of economic weakness. He blames them on bad trade deals and abusive practices by China and other trade partners. Conventional economists argue that trade deficits are largely caused not by flawed trade agreements or cheating by particular countries but by a bigger economic force: Americans spend more than they produce, and imports have to fill in the gap. Two politically sensitive trade deficits slipped in September. The U.S. trade gap with China fell 0.7 percent to $34.6 billion, and the gap with Mexico dropped 7.7 percent to $5.7 billion. In September, the United States ran a surplus of $21.9 billion with the rest of the world in the trade of services such as banking and tourism. But that gain was overwhelmed by a $65.4 billion deficit in the trade of goods. 

Trade Deficit at $43.5 Billion in September - Earlier from the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.5 billion in September, up $0.7 billion from $42.8 billion in August, revised. September exports were $196.8 billion, $2.1 billion more than August exports. September imports were $240.3 billion, $2.8 billion more than August imports. Exports and imports increased in September. Exports are 19% above the pre-recession peak and up 5% compared to September 2016; imports are 3% above the pre-recession peak, and up 6% compared to September 2016. In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $45.16 in September, up from $44.11 in August, and up from $39.01 in September 2016. The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. The trade deficit with China increased to $34.6 billion in September, from $32.5 billion in September 2016.

U.S. Light Vehicle Sales at 18.0 million annual rate in October - Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 18.0 million SAAR in October. From WardsAutoAnother month ended well beyond expectations, as replacement sales and inventory clear-out boosted the daily sales rate to a 15-year high. U.S. automakers sold 1.35 million vehicles in October, resulting in a daily sales rate of 53,945, 2.6% above prior-year. A 18.00 million SAAR was ahead of year-ago’s 17.80 million and behind prior-month’s exceptionally high 18.48 million mark. That is up 1% from October 2016, and down 2.6% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for October (red, light vehicle sales of 18.0 million SAAR mostly from WardsAuto).This was above the consensus forecast of 17.5 million for October (Note: Hurricane Harvey pushed down sales at the end of August - and this was part of the bounce back). Still, after two consecutive years of record sales, vehicle sales will be down in year-over-year in 2017.

Pickup Sales Boom, Cars Get Crushed, Tesla Deliveries Plunge -- Wolf Richter - Carmageddon for Tesla, Fiat Chrysler, Hyundai, and Kia. Tesla just reported its worst quarter ever, which means something. It lost $671 million and burned $1.4 billion in cash in the third quarter, on $2.98 billion in revenues. In the three quarters this year, it lost $1.47 billion and burned $3.2 billion in cash. The Model 3 isn’t happening in any appreciable numbers.s. In October, according to Audodata estimates, Tesla sold a total of 3,550 vehicles in the US, down 13.4% from a year ago. Tesla deliveries in the US, after a strong first half, have been declining since July on a year-over-year basis.  Tesla’s market share in the US in October was a minuscule 0.26% of the 1,354,875 total new vehicles sold in the month. Tesla was ahead only of Maserati and Ferrari – tiny niche brands. Among all automakers, total new-vehicle sales in the US fell 1.3% in October to 1.355 million units (delivered by dealers to their customers, or delivered by automakers directly to large fleet customers). On a year-to-date basis, total sales are down 1.7%, which puts the industry 250,000 vehicles behind last year at this time. Of the 10 months so far this year, nine experienced year-over-year sales declines, with September having been the exception. October had one selling day less than last year, so the Seasonally Adjusted Annual Rate (SAAR) of retail sales, which adjusts for seasonal and selling-day differences, was 18.09 million units, weaker than September, but the second highest so far this year. Harvey did push some buttons:

  • Overall truck sales – pickups, vans, SUVs, and small SUVs (“crossovers” because they’re often based on a car chassis) – rose 3.6% to 876,140 units compared to October last year, and are up 4.3% year-to-date.
  • Trucks sales accounted for 64.6% of total sales. Pickup trucks were in high demand.
  • Ford F-Series sales surged 15.9%, their best October since 2004. The average F-series price jumped by $4,000 from a year ago to $47,300! These are high-margin units; Americans don’t mind paying extra for a truck.
  • GM’s Chevrolet Silverado sales rose 6.8%; GMC Sierra sales jumped 25.5%.
  • Fiat Chrysler’s Ram pickup sales rose 1%, producing its best October ever.
  • Nissan’s Titan truck sales surged 29%.
  • Toyota’s Tundra truck sales rose 5.1%.

But car sales sucked. Sales of cars fell 9.1% year-over-year to 478,735 units. The relentless decline continues. Americans are shifting from cars to trucks – as the industry defines “trucks,” which includes crossovers, the cool successor to the station wagon.The industry considers them “trucks” most likely for marketing reasons. Year-to-date, car sales are down 10.4%. Here are new-vehicle sales by automaker, sorted by sales in October. The automakers with declining sales in October are marked in red. Note Tesla’s position near the very bottom of this list:

Heavy-Duty Commercial Truck Orders in North America Soared in October - Orders for heavy-duty commercial trucks in North America soared in October, reaching the highest level in nearly three years as carriers riding a strong freight market stepped up plans to upgrade or expand their fleets. Trucking companies last month ordered 36,200 Class 8 trucks, the big rigs that haul much of the nation’s freight. That was up 60.4% from September, and a 160% gain from a year ago, when truck orders plummeted amid slack shipping demand and tepid manufacturing growth.  The orders came at the beginning of the season when trucking companies typically set their fleet plans for the coming year, and signaled robust confidence in shipping demand for 2018.

US factory orders up 1.4 percent in September - ABC News: Orders to U.S. factories rose 1.4 percent in September, the strongest gain in four months. A key category that tracks business investment plans jumped by the largest amount in more than a year. The September gain followed a 1.2 percent advance in August, the Commerce Department reported Friday. Last month's increase was paced by a 30.8 percent jump in demand for commercial aircraft, which swings widely from month to month. The category that serves as a proxy for business investment plans rose 1.7 percent in August, the best showing since a 2.7 percent surge in July 2016. Economists believe manufacturing is on a sustained rebound that will provide support for the overall economy after a prolonged stretch of weakness. Demand for durable goods, long-lasting items ranging from bicycles to battleships, rose 2 percent in September. That was a slightly smaller gain than the 2.2 percent estimate the government reported last week. Orders for nondurable goods, items not expected to last three years, rose 0.8 percent last month, up from a 0.4 percent increase in August. The gain was led by a rise in petroleum products, a category where the gain in orders likely reflected in large part a rise in energy prices during the month.

US Factory Orders Rise, Core Capital Goods Orders Revised Higher — New orders for U.S.-made goods rose for a second straight month in September and orders for core capital goods were stronger than previously reported, suggesting manufacturing activity was gathering momentum. Factory goods orders increased 1.4 percent as demand for a range of goods rose, the Commerce Department said on Friday. Orders increased by an unrevised 1.2 percent in August.Economists had forecast factory orders increasing 1.3 percent in September. Orders for non-defense capital goods excluding aircraft -seen as a measure of business spending plans - surged 1.7 percent in September instead of the 1.3 percent increase reported last month. September's increase in these so-called core capital goods orders was the largest since July 2016. Orders for core capital goods rose 1.4 percent in August. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.9 percent instead of the previously reported 0.7 percent rise. The Commerce Department said it was unable to isolate the impact of Hurricanes Harvey and Irma on the data as the survey is "designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas." Strong business spending on equipment is helping to underpin manufacturing, which makes up about 12 percent of the U.S. economy. Manufacturing is also being buoyed by a weakening U.S. dollar, replenishing of business inventories and strengthening global demand. Business investment in equipment has contributed to GDP growth for four straight quarters. In September, orders for machinery gained 0.1 percent after being unchanged in August. Mining, oil field and gas field machinery orders rebounded 17.8 percent after tumbling 7.5 percent in August. Orders for transportation equipment rose 4.7 percent, reflecting a 30.8 percent jump in civilian aircraft orders. Motor vehicle orders edged up 0.1 percent after accelerating 2.5 percent in August.

ISM Manufacturing Index: "Expanding Business Conditions" in October - Today the Institute for Supply Management published its monthly Manufacturing Report for October. The latest headline Purchasing Managers Index (PMI) was 58.7 percent, a decrease of 2.1 percent from 60.8 the previous month. Today's headline number was below the forecast of 59.5 percent.  Here is the key analysis from the report: "The October PMI® registered 58.7 percent, a decrease of 2.1 percentage points from the September reading of 60.8 percent. The New Orders Index registered 63.4 percent, a decrease of 1.2 percentage points from the September reading of 64.6 percent. The Production Index registered 61 percent, a 1.2 percentage point decrease compared to the September reading of 62.2 percent. The Employment Index registered 59.8 percent, a decrease of 0.5 percentage point from the September reading of 60.3 percent. The Supplier Deliveries Index registered 61.4 percent, a 3 percentage point decrease from the September reading of 64.4 percent. The Inventories Index registered 48 percent, a decrease of 4.5 percentage points from the September reading of 52.5 percent. The Prices Index registered 68.5 percent in October, a 3 percentage point decrease from the September level of 71.5, indicating higher raw materials prices for the 20th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all continuing to grow in October, supplier deliveries continuing to slow (improving) and inventories contracting during the period. Prices continue to remain under pressure. The Customers’ Inventories Index remains at low levels." [source]  Here is the table of PMI components.

Markit Manufacturing PMI: Continued Improvement in October -- The October US Manufacturing Purchasing Managers' Index conducted by Markit came in at 54.6, up from the 53.1 final September figure. Today's headline number was above the forecast of 54.5. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Here is the opening from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release:“US manufacturing stepped up a gear at the start of the fourth quarter, boding well for higher factory production to support robust economic growth in the closing months of 2017. “Production volumes jumped higher on the back of a substantial improvement in order book inflows, in part due to supply chains returning to normal after the hurricanes but also reflecting a combination of strong underlying demand.“Factory jobs growth has also picked up to one of the strongest since the global financial crisis, underscoring the improvement in optimism about future trading among manufacturers.“An important change in October was the broadening out of the expansion to smaller firms, which have lagged behind the strong growth reported by larger rivals throughout much of the year to date but under-performed to a lesser extent in October.” [Press Release] Here is a snapshot of the series since mid-2012.

Dallas Fed: "Growth in Texas Manufacturing Activity Gains Momentum" in October --From the Dallas Fed: Growth in Texas Manufacturing Activity Gains MomentumTexas factory activity expanded at a faster pace in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose six points to 25.6 and reached its highest reading since April 2014.Other measures of current manufacturing activity also indicated a pickup in growth. The new orders index climbed six points to a 10-year high of 24.8, and the growth rate of orders index moved up to 12.3. The capacity utilization index also pushed to its highest level in a decade at 22.5. Meanwhile, the shipments index moved down several points but remained positive and at a well-above-average level of 20.9.Perceptions of broader business conditions improved in October. The general business activity index increased to 27.6, its highest reading since 2006. The company outlook index posted its 14th consecutive positive reading, holding steady at an elevated 25.8. Labor market measures suggested solid employment growth and longer workweeks this month. The employment index came in at 16.7, unchanged from September and still well above average. Less than 5 percent of firms noted net layoffs—something that has only been seen five other times since the start of the survey more than 13 years ago. The hours worked index moved down but remained positive at 13.7, indicating a continuing lengthening of workweeks. This was the last of the regional Fed surveys for October. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Regional Fed Manufacturing Overview: October Update -  Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia.  Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP.The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated." Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for October is 21.2, up from the previous month's 17.8.

Chicago PMI Sees 6.5 Year High in October -- The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest report for Chicago PMI came in at 66.2, up from 65.2 last month and its highest since March 2011. forecast 61.0.  Here is an excerpt from the press release:  “Firms kicked off Q4 in buoyant mood with only 12% expecting activity to decline between now and the close of the year. Despite the MNI Chicago Business Barometer hitting a six-anda-half year high, and output and demand in seemingly rude health, concerns remain over firms’ inability to attract and retain skilled workers.” said Jamie Satchi, Economist at MNI Indicators. [SourceLet's take a look at the Chicago PMI since its inception.

ISM Services Spikes To 12 Year Highs, PMI Disappoints -- In the hazy and mixed world of 'soft' survey data, October's prints have been 'different'.Manufacturing PMI surged while ISM Manufacturing dropped and now Services PMI has flatlined but ISM Services surged to its highest since Aug 2005.  As good as it gets?   Take your pick... Under the hood we see that despite the rise in the headline, new orders dropped as did prices and backlogs. ISM Respondents noted hurricane impacts...

  • "Increasing commodity pricing along with rising construction cost is a concern in [the] quarter ahead." (Accommodation & Food Services)
  • "The current hurricane damage will result in a shortage of some building materials and draw labor forces away from our area." (Construction)
  • "We continue to struggle with the ‘unknowns’ around Obamacare, and its impacts on our health care and insurance businesses." (Health Care & Social Assistance)
  • "Business activity with oil companies remains flat. Oil field services, midstream, downstream and petrochemical sectors remain strong." (Professional, Scientific & Technical Services)
  • "Business levels increased due to hurricane recovery efforts." (Real Estate, Rental & Leasing)
  • "Outlook is favorable. Labor is in short supply and is constraining growth." (Wholesale Trade)
  • "Uptick based on replacement vehicle activity in hurricane-impacted areas of Texas and Florida." (Retail Trade)

Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “The services PMI survey highlights the dilemma facing the Fed as it seeks to determine the right policy course amid signs of solid growth but soft inflation. “Together with the manufacturing PMI, which rose higher in October as hurricane-related supply chain disruptions eased, the latest services survey is consistent with underlying growth in the economy of approximately 3%, as well as buoyant jobs growth. “However, a drop in inflationary pressures adds an element uncertainty to the picture. Having been buoyed by supply chain disruptions in prior months, input cost pressures eased at the start of the fourth quarter, and the rate of increase of average prices charged for goods and services dropped markedly. “While the Fed may likely tilt towards hiking in December on the back of robust economic growth, much may depend on the data flow in coming weeks for signs that stronger growth is feeding through to higher prices.”

 Weekly Initial Unemployment Claims decrease to 229,000 --The DOL reported:In the week ending October 28, the advance figure for seasonally adjusted initial claims was 229,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 233,000 to 234,000. The 4-week moving average was 232,500, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since April 7, 1973 when it was 232,250. The previous week's average was revised up by 250 from 239,500 to 239,750. 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 revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

U.S. third quarter productivity fastest in three years; jobless claims fall (Reuters) - U.S. worker productivity increased at its fastest pace in three years in the third quarter but the trend remained moderate, suggesting that a recent acceleration in economic growth was unlikely to be sustained. Other data on Thursday showed the number of people filing for unemployment benefits fell to a near 44-1/2-year low last week, offering further evidence that the labor market was tightening despite hurricane-related disruptions in September. The surge in productivity last quarter held down growth in labor costs, indicating that inflation pressures could stay benign for a while. Still, jobs market strength bolsters the case for the Federal Reserve raising interest rates in December. The U.S. central bank kept rates unchanged on Wednesday. “While the data point to a solid economy, they also reinforce the view that growth is not likely to remain strong for an extended period without improved wage gains,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Productivity is still growing too slowly.” The Labor Department said nonfarm productivity, which measures hourly output per worker, rose at a 3.0 percent annualized rate. That was the quickest pace since the third quarter of 2014 and followed an unrevised 1.5 percent rate in the April-June period. The rise outpaced economists’ expectations for a 2.4 percent pace and was flagged in last week’s third-quarter gross domestic product report, which showed the economy growing at a 3.0 percent rate during that period. Productivity increased at a 1.5 percent rate compared to the third quarter of 2016. 

Year-to-Date Job Cuts Fall to Lowest Level in 20 Years -- Employers announced plans to cut 29,831 jobs in October, according to a report issued by Challenger, Gray & Christmas. October’s announced cuts were 3% lower than September’s. The month’s figure was 25.0% lower than October 2016. So far this year, 351,309 job cuts have been announced, the lowest ten-month total since 1997.The retail sector continues to lead the way in job cuts, with 72,600 so far this year. This is 36.7% higher than the same period last year. However, October’s pace slowed as retailers shed 1,543 jobs. The energy sector continued to hold strong, announcing 1,846 cuts in October, which brings the total to 14,843 in 2017. This is an 85.6% decrease from this point last year when the energy sector had shed 103,147 jobs.“Companies are currently holding on to their workforces, but this may be the calm before the storm” cautioned John Challenger, Chief Executive Officer of Challenger, Gray & Christmas, Inc. “Another downturn could be on the horizon for early to mid-2018 and with it, the large-scale layoff announcements that typically follow. Adding to this is the possibility that global factors, including Brexit, could usher in a recession,”Telecommunications companies have reported 13,091 job cuts through October this year, 25.3% less than the 17,516 cuts through this point last year. The services industry shed 3,939 jobs last month, totaling 28,916 through October this year. This is a 201.7% increase from October 2016.

ADP Private Payrolls Highest Since March: Jump 235K In Post-Hurricane Rebound --Following September's big hurricane-precipitated slowdown in the labor market, moments ago ADP reported that in September private payrolls rebounded from a downward revised 110K (from 135K), which was still significantly higher than the BLS' own negative print, to 235K beating expectations of a 200K print (which emerged from a decided wide range of estimates, from 135K to 340K) and the highest since March. Commenting on the stronger than expected print, Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said "The job market remains healthy and hiring bounced back with one of the best performances we’ve seen all year. Although the service providing sector was hard hit last month due to the weather, we saw significant growth in professional services, especially in the higher paid professional technical jobs. Additionally, small businesses rebounded well from the impact of Hurricanes Harvey and Irma, posting very strong gains.” ADP's Mark Zandi, also chief economist at Moody’s Analytics, said, “The job market rebounded strongly from the hit it took from Hurricanes Harvey and Irma. Resurgence in construction jobs shows the rebuilding is already in full swing. Looking through the hurricane-created volatility, job growth is robust.” Some more details, starting with Change in Nonfarm Private Employment:

 A Closer Look at This Morning's ADP Employment Report - In this morning's ADP employment report we got the October estimate of 235K new nonfarm private employment jobs from ADP, an increase over September's 110K, which was a downward revision of 25K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail.  Here is a snapshot of the monthly change in the ADP headline number since the company's earliest published data in April 2002. This is quite a volatile series, so we've plotted the monthly data points as dots along with a six-month moving average, which gives us a clearer sense of the trend.  As we see in the chart above, the trend peaked 20 months before the last recession and went negative around the time that the NBER subsequently declared as the recession start. At present, the six-month moving average has been hovering in a relatively narrow range around 200K new jobs since around the middle of 2011. ADP also gives us a breakdown of Total Nonfarm Private Employment into two categories: Goods Producing and Services. Here is the same chart style illustrating the two. The US is predominantly a services economy, so it comes as no surprise that Services employment has shown stronger jobs growth. The trend in Goods Producing jobs went negative over a year before the last recession. Interestingly, the Goods Producing jobs have seen an uptick since late 2016. For a sense of the relative size of Services over Goods Producing employment, the next chart shows the percentage of Services Jobs across the entire series. The latest data point is just fractionally below the record high. There are a number of factors behind this trend. In addition to our increasing dependence of Services, Goods Production employment continues to be impacted by automation and offshoring. The percentage in the chart above began drifting higher in early 2015, only to decrease slightly and level off in 2017.  For a better sense of the components of the two Goods Producing and Service Providing cohorts, here is a snapshot of the five select industries tracked by ADP. The two things to note here are the relative sizes of the industries and the relative trends. Note that Construction and Manufacturing are Production industries whereas the other three are Service Providing.

October Employment Report: 261,000 Jobs Added, 4.1% Unemployment Rate - From the BLS: Total nonfarm payroll employment rose by 261,000 in October, and the unemployment rate edged down to 4.1 percent, the U.S. Bureau of Labor Statistics reported today. The change in total nonfarm payroll employment for August was revised up from +169,000 to +208,000, and the change for September was revised up from -33,000 to +18,000. With these revisions, employment was 90,000 higher than previously reported. Average hourly earnings for all employees on private nonfarm payrolls, at $26.53, were little changed in October (-1 cent), after rising by 12 cents in September. Over the past 12 months, average hourly earnings have increased by 63 cents, or 2.4 percent.  The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 261 thousand in October (private payrolls increased 252 thousand). Payrolls for August and September were revised up by a combined 90 thousand. The upward revision to the October report keeps the record job streak alive! This graph shows the year-over-year change in total non-farm employment since 1968. In October the year-over-year change was 2.04 million jobs. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate decreased in October to 62.7%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio decreased to 60.2% (black line). The fourth graph shows the unemployment rate. The unemployment rate decreased in October to 4.1%. This was below expectations of 323,000 jobs, however the previous two months combined were revised up. The headline jobs number was strong - mostly due to a bounce back from the impact of the hurricanes - and the unemployment rate declined further. However wages were weak.

October jobs report: great utilization, decent growth, poor wages - HEADLINES:

  • +261,000 jobs added
  • U3 unemployment rate down -0.1% from 4.2% to 4.1%
  • U6 underemployment rate down -0.3 from 8.2% to7.9%
  • Not in Labor Force, but Want a Job Now:  down -443,000 from 5.628 million to 5.135 million   
  • Part time for economic reasons: down -369,000 from 5.122 million to 4.753 million
  • Employment/population ratio ages 25-54:--- 0.--% from 78.9% to 7---%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: down -$.0.1 from $22.23  to $22.22, up +2.4% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.) 
  • Manufacturing jobs rose by +24,000 for an average of  ----00 a month vs. the last seven years of Obama's presidency in which an average of 10,300 manufacturing jobs were added each month.   
  • Coal mining jobs were unchanged for an average of ---- a month vs. the last seven years of Obama's presidency in which an average of -300 jobs were lost each month
  • August was revised upward by +39,000. September was also revised upward by +51,000, for a net change of +90,000.   the average manufacturing workweek rose +0.2 hours from 40.8 hours to 41.0.  This is one of the 10 components of the LEI. 
  • construction jobs increased by +11,000. YoY construction jobs are up +187,000. 
  • temporary jobs increased by +18,300.  
  • the number of people unemployed for 5 weeks or less decreased by -97,000 from 2,226,000 to 2,129,000.  The post-recession low was set almost two years ago at 2,095,000.
  • Overtime rose +0.2 hours to  3.5 hours.
  • Professional and business employment (generally higher- paying jobs) increased by +50,000 and  is up +546,000 YoY.
  • the index of aggregate hours worked in the economy rose by 0.2  from 107.4 to  107.6  
  • the index of aggregate payrolls rose by 0.-- from 135.2 to 13---.   

Unemployment Falls to New Low for Recovery, Hurricane Driven Wage Hike Reversed- Dean Baker - The Labor Department reported the unemployment rate to 4.1 percent in October, another new low for the recovery. The establishment survey showed the economy created 261,000 jobs in the month. The high number is due to a bounce-back from the hurricane-affected growth in September, which has now been revised up to show a small gain of 18,000. The average growth rate for the last three months is 162,000.The bounce-back from the hurricane also had a large effect on the wage data. Last month's reported 12 cent gain in average hourly wages was heavily impacted by the hurricane. Many new hires in low-paying jobs did not take place and lower-paid hourly workers likely saw their time on the job reduced, thereby raising the overall average. The October data showed a 1 cent decline in the average wage. Nonetheless, wages are still rising at a 2.4 percent rate over the year, which is a bit less than a percentage point above the inflation rate. This puts wage growth in line with productivity growth over the last year, although it means that we are still not seeing any evidence of acceleration even as the market has tightened.Other data in the report are mixed. The fall in the unemployment rate was associated with a drop in labor force participation. The employment-to-population ratio fell by 0.2 percentage points, partly reversing a 0.3 percentage point jump in September. On the other side, there was a sharp drop in involuntary part-time employment to 4,753,000, bringing this measure down to pre-recession levels. We also see that less-educated workers continue to be big gainers from the tight labor market. The unemployment rate for workers with just a high school degree fell to 4.3 percent, 1.2 percentage points below its year-ago level. The unemployment rate for workers without a high school degree fell to 5.7 percent, 1.7 percentage points below its year-ago level. In short, the labor market is continuing to improve, but there is no basis for concerns that excessive wage growth will lead to an inflationary spiral. Workers are now seeing respectable wage gains that give them their share of productivity growth, but there is much ground to regain.

Record 95.4 Million Americans Are No Longer In The Labor Force As 968,000 Exit In One Month -- In what was otherwise a mediocre jobs report, in which the establishment survey reported that a lower than expected 261K jobs were added to the post-Hurricane economy, the biggest surprise was not in the Establishment survey, but the household, where the unemployment rate tumbled once more, sliding to a new cycle low of 4.1%, for all the wrong reasons, because a quick look at the participation rate metrics showed that in October there was a sharp decline, with the labor force part. rate sliding from 63.1% to 62.7%, back to 4 decade lows... ... driven by one disturbing metric: the number of people who exited the labor force soared by a near record 968,000 in October - the third highest on record - pushing the total number of people not in the labor force to a record 95.385 million, as the civilian labor force shrunk by whopping 765,000 in one month. This took place as the number of employed Americans declined by 484,000, however since the unemployment rate denominator dropped more, it translated into an actual decline in the unemployment rate! So much for economist hopes that potential workers from the fringes are coming back to the labor force. Of course, the implication is even worse: with more slack being created in the form of workers who are leaving, not entering, the labor force, this creates a buffer for wage growth, and suggests that any hope for rapidly rising wages has once again been derailed.

Where The October Jobs Were: Record Waiters And Bartenders -- Following last month's sharply upward revised jobs report, whose initial negative print of -33,000 was since revised to a positive 18K, there was a sharp jump in October jobs, which while failing to meet consensus estimate of a +310K print, was still a solid +261K. But which jobs contributed the most? The answer, not surprising, is that the single biggest contributor was the same job category which was devastated in the previous month.Readers will recall that last month we pointed out that workers in "food service and drinking places" aka waiters and bartenders, suffered their biggest drop on record, plunging by a whopping 111K. Well, one month later it's payback time, and according to the BLS, 88,500 w aiters and bartenders found jobs in October, as the "plowhorse" sector of the so-called recovery found its spark. As shown in the chart below the monthly increase in waiters and bartenders was a record.Putting this number in context, the record increase in "food service and drinking places"jobs was a whopping third (34%) of all the 261K jobs added in October. There was another amusing observation. As we said last month, "we find it delightfully ironic that in the one month in which waiters/bartenders lost the most jobs on record is when average wages (allegedly) soared" and added that "the September drop will be revised and move higher next month. After all, many people fleeing Florida and Houston had to stay in hotels and motels, for example.  And certainly eat out more."One month later,of course, the other implication is that with tens of thousands of minimum wage jobs coming back, average hourly earnings would tumble, and - lo and behold - that is precisely what happened, with the worst monthly wage print since June 2015, as AHE actually declined by 1 cent in October. Some other October jobs highlights:

  • Goods Producing jobs: +33K, slightly better than expected, with the last month revised higher from +9K to +18K. Much of this is due to damage repairs from the Hurricanes, which has invigorated the manufacturing sector, which added 24K jobs.
  • Trade, Transportation: +6K, weaker than expected, due to an 8.3K drop in retail trade jobs as Amazon continues to decimate the bricks and mortar sector.
  • Professional Services: +50K, better than expected, and driven largely by an 18.3K jump in temp workers, which traditionally is seen as harbinger of strong labor demand, however in recent years this has become a chornic component of the labor force, as increasingly more employers settle for temp workers instead of full-timers.
  • Education: +7.6K, in line with expectations
  • Healthcare: +21.5K, slightly weaker than expected as only 12K social assistance jobs added
  • Government: +9K. No hurricane impact and in line with expectations.
  • Information: -1K. A surprising, continuing decline (following -3K jobs lost in September), in what has traditionally been one of the best paying job sectors.
  • Leisure/Hospitality: +106K, much higher than expected, and very hurricane impacted. The sole contributor here was the abovementioned surge in waiters and bartenders.

Below is a breakdown of the monthly changes across the main job categories in September:

Comment on Employment Report: Hurricane Bounce Back, Record Job Streak Still Alive!  -- McBride - The headline jobs number was strong at 261 thousand  - due to a bounce back from the hurricanes - but below expectations. However a key reason for the "disappointing" headline number was that the previous two months were revised up by a combined 90 thousand jobs.  The upward revision to the September jobs report keeps the record job streak alive at 85 consecutive months (92 months if we remove the decennial Census hiring and firing). This was a strong possibility that I discussed last month, see: The Record Job Streak: A couple of Comments  In October, the year-over-year change was 2.004 million jobs. This is still trending down (excluding the hurricane related drop last month).  This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.4% YoY in October.   Wage growth has generally been trending up, and wages in October were probably impacted by low wage jobs returning following the hurricanes. From the BLS report: The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 369,000 to 4.8 million in October. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs. Over the past 12 months, the number of involuntary part-time workers has decreased by 1.1 million.The number of persons working part time for economic reasons decreased in October.  This is the lowest level since December 2007. The number working part time for economic reasons suggests a little slack still in the labor market.  These workers are included in the alternate measure of labor underutilization (U-6) that declined to 7.9% in October.  This is the lowest level for U-6 since December 2006, and matches the low of the previous cycle. This graph shows the number of workers unemployed for 27 weeks or more.   According to the BLS, there are 1.621 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.73 million in September.

 Wages rose for the bottom 90 percent in 2016 as those for top 1 percent fell - Newly available wage data show that the annual wages of those in the bottom 90 percent grew 0.5 percent from 2015 to 2016, and did so because wage growth disproportionately favored the vast majority of wage earners. At the same time, the highest earners, those in the top 0.1 percent, saw a 6.3 percent drop in their annual wages. How is that for a change! Annual wages averaged over all workers remained basically unchanged in 2016, but the share of all wages earned by the bottom 90 percent increased in 2016, resulting in improved wages for that group. Who says reducing inequality does not matter!  These are the results of EPI’s updated series on wages by earning group developed from Social Security Administration data. These data, unlike the usual source of our wage analyses (the Current Population Survey) allow us to estimate wage trends for the top 1.0 and top 0.1 percent of earners, as well as those for the bottom 90 percent and other categories among the top 10 percent of earners. Looking back further, the top 1.0 percent of earners certainly fared well over the 1979 to 2007 period, seeing their annual wages grow by 156.2 percent (Figure A), with those in the top 0.1 percent seeing more than double that wage growth, 362.5 percent (Table 1). In contrast, wages for the bottom 90 percent only grew 16.7 percent in that time. Since the Great Recession, we have seen very modest wage growth across the board, with wages up just 4.0 percent over the nine years from 2007 to 2016. Wages fell furthest among top 1.0 percent of earners during the financial crisis, declining by 15.6 percent from 2007-09, but then recovered fully by 2015. The fall in top 1.0 and top 0.1 annual wages in 2016 leaves both groups with wages that are below pre-recession 2007 levels. Annual wages for the bottom 90 percent, meanwhile, fell slightly after 2007 and didn’t return to their 2007 level until 2014, and then grew roughly 4 percent since then.

Economic Inequality: It’s Far Worse Than You Think - In a candid conversation with Frank Rich last fall, Chris Rock said, "Oh, people don’t even know. If poor people knew how rich rich people are, there would be riots in the streets." The findings of three studies, published over the last several years in Perspectives on Psychological Science, suggest that Rock is right. We have no idea how unequal our society has become.In their 2011 paper, Michael Norton and Dan Ariely analyzed beliefs about wealth inequality. They asked more than 5,000 Americans to guess the percentage of wealth (i.e., savings, property, stocks, etc., minus debts) owned by each fifth of the population. Next, they asked people to construct their ideal distributions. Imagine a pizza of all the wealth in the United States. What percentage of that pizza belongs to the top 20% of Americans? How big of a slice does the bottom 40% have? In an ideal world, how much should they have?The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%. The Walton family, for example, has more wealth than 42% of American families combined.We don’t want to live like this. In our ideal distribution, the top quintile owns 32% and the bottom two quintiles own 25%. As the journalist Chrystia Freeland put it,  “Americans actually live in Russia, although they think they live in Sweden. And they would like to live on a kibbutz.” Norton and Ariely found a surprising level of consensus: everyone — even Republicans and the wealthy—wants a more equal distribution of wealth than the status quo. This all might ring a bell. An infographic video of the study went viral and has been watched more than 16 million times. 

Crime plummeted in Houston during Harvey. So why do many assume otherwise? - It was perhaps one of the most crime-free days in recent Houston memory — Aug. 27, 2017.For that, the city can thank Hurricane Harvey.On that Sunday — the city’s third and worst day at the mercy of the storm — Houston Police wrote exactly 50 reports for major violent and non-violent crimes, down from the average 300 written on the same dates in 2015 and 2016, according to a Houston Chronicle analysis of police data.Remarkable as it may be, that one-day drop isn’t necessarily an anomaly.As Harvey’s effects were felt from Aug. 25-31, HPD wrote nearly 22 percent fewer reports for major crimes — defined by the FBI as aggravated assault, auto theft, burglary, robbery, theft, rape and murder — than it did over the same periods during the two previous years. Reports made for robberies dropped almost in half; those for assaults and auto thefts fell slightly; and there were 11 reports for rape and three for murder.  There are, of course, some obvious reasons for the precipitous drops in major crime during a powerful storm. For one, people don’t normally venture outside amid torrential downpours or try to drive through flooded streets. And, it’s also possible that some civilians delayed calls to police amid the sustained, city-wide chaos. Houston Police Chief Art Acevedo credited the drops to his department’s “all-hands-on-deck” approach, which he said “increased our visibility and ability to deter crime through visual presence throughout the city.”

Prisons are important pieces in Ohio gerrymandering: Out of Line: Impact 2017 and Beyond  - Ohio's clever gerrymandering - the act of drawing congressional district lines for political gain - goes beyond chasing like-minded voters.In some cases it also involves balancing the size of the districts by carefully assigning areas with thousands of adults who have no say at the ballot box.Ninety-one percent of Ohio's prison inmates are in Republican districts, usually far from where they lived before being imprisoned, according to a analysis based on October prison counts.Felons in Ohio cannot vote while they are serving their time, but they are important pieces of the gerrymandering puzzle. Prisoners help boost rural Ohio's influence in Congress.The census, taken in April every 10 years, counts where people are living at the time - whether it be in a house, a college dormitory or a prison.Most of Ohio's prisons are in rural areas or small towns. Most of the prisoners are from big urban areas, where the state's population is concentrated.In some cases these prisons balance the populations of the districts when the congressional lines are drawn. Federal law requires districts within each state to be the same size in population.Perhaps there is no better example than a corner of Republican Rep. Jim Jordan's 4th congressional district. Jordan, from Urbana west of Columbus, represents a district that weaves from near the Indiana border to Elyria. The most unusual spot may be a hook-shaped area in eastern Lorain County. The hook mostly includes Grafton, the eastern portion of which consists of some fields plus 3,350 state prison inmates, as illustrated below.The series of maps above zoom in on an portion of the 4th congressional district drawn to include two state prisons in Grafton. The illustration uses images from the district's illustration  Jordan's district ranks second in Ohio for prison inmates, the analysis found, with 12,560 inmates as of early October at prisons in Grafton, Lima, Marion and Marysville.But the lines for Jordan's district are not the only ones tracking closely around prison boundaries to provide important numbers of "residents" during redistricting. There are several examples in Ohio.

 After lawsuit targets parent for seeking records, state to audit Portland schools - Oregon's secretary of state announced Monday he will audit Portland Public Schools, an unusual move prompted by his concerns over the district's decision to sue a parent and reporter to keep records secret.  Dennis Richardson said Portland residents have complained loudly to him about the district's high-profile problems. Oregon's largest school district has had such a rough go of it, the search firm for the new superintendent told the school board the next leader would need to address a "great deal of hurt and pain.""We're going to give the district an opportunity to show that the criticism is unfair," Richardson said. Richardson specifically cited the district's decision to sue public records requesters as one reason why it deserves an audit.  Portland Public Schools officials could not immediately be reached for comment.That lawsuit didn't play well with some factions of the community. The Lincoln High newspaper called it "a breach of trust."The reporter and parent asked for records of employees on paid leave, information that the district has released before. Reporter Beth Slovic at the Portland Tribune, who is being sued, has reported that the district put one worker on paid leave for years. The lawsuit drew national scrutiny this past weekend when The Associated Press used the district as an example in a story about how governments have sued records requesters.

The Education of Betsy DeVos - It was the final day of her “Rethink School” tour, the familiar fly-around trip taken by a Cabinet secretary to capture some local news coverage and emphasize priorities—in DeVos’ case, to highlight unique and innovative learning environments across the country. But at this particular stop, tension filled the air. Several hundred protesters gathered outside—vastly outnumbering the 76 students, grades 6 through 12, who attend the school—while a procession of speakers denounced DeVos as a destroyer of public education and an enabler of campus rape. Anyone who witnessed the manic, sky-is-falling opposition to DeVos’ nomination—which grew exponentially via social media during her woefully uneven confirmation hearings—could be excused for believing that DeVos was being handed autocratic power to redraw America’s scholastic landscape. Before coming to Washington, DeVos fought and funded a generation’s worth of education wars on a pair of guiding principles: that parents should be free to send their children wherever they choose, and that tax dollars should follow those students to their new schools. The first enjoys broad public support; it’s the second that made DeVos into a villain in the eyes of public school advocates, who argue she would deplete their classrooms and drain their resources to educate those who remain. “Even the people who believe in charter schools and other private alternatives overwhelmingly believe that you don’t take from one, in a Robin Hood approach, to give to another,” Randi Weingarten, president of the American Federation of Teachers, tells me. “Former secretaries of education—even those who believed in charters and vouchers and the kind of rhetoric and ideology that DeVos subscribes to—there’s one huge difference: They actually believed in public schools.”

Third Way Democrats Double Down on Anti-90% Agenda With More Attacks on Public Schools -- “Here we go again,” was what many left-leaning folks likely felt after seeing a recent announcement about a new effort by wealthy donors to rescue the Democratic Party from its electoral doldrums. Backed by $20 million, the “New Blue” campaign, coming from politically centrist think tank Third Way, promises to lead the  party out of the “wilderness” of its minority status to a pathway to “achieving progressive majorities up and down the ballot.”  Third Way was founded in 2005, mostly with the support of the financial industry and business executives, to cement the “New Democrat” centrism of the 1990s and make Bill Clinton’s presidential administration the permanent leadership of the party. The organization “championed disastrous trade accords, balanced budgets, and cutting the safety net,” writes Robert Borosage, but now swears to mend its elitist ways and “discover how to talk to working people without alienating Wall Street.” Throughout Third Way’s history, its calls for cutting Social Security and Medicare and its reluctance to increase the tax burdens on Wall Street and the rich have not aligned with the views of most voters. While Third Way has long urged Democrats to meet conservatives “in the middle” on issues like health care, trade, a $15 minimum wage, and tuition-free college, most Democrats today want their party to move further to the left and embrace populist grassroots causes. In its education manifesto “The New Normal in K-12 Education,” Third Way declares that the contentious arguments over important education matters — such as charter schools, standardized testing, and how to recruit and retain teachers – are essentially over and that those who are  “fighting in the trenches” just need to get with the program. The “program,” Third Way advances sounds very much like what’s been in place for the past 15 years, especially during the Obama administration under the leadership of Secretary of Education Arne Duncan. The title of Third Way’s document is borrowed from Duncan’s own words to describe the need for schools to go along to get along with the “new normal” of Republican fiscal austerity coupled with ever harsher accountability mandates and more competition from charter schools.

Bill Gates and Steve Jobs Raised Their Kids Tech-Free — And It Should've Been A Red Flag - Psychologists are quickly learning how dangerous smartphones can be for teenage brains. Research has found that an eighth-grader's risk for depression jumps 27% when he or she frequently uses social media. Kids who use their phones for at least three hours a day are much more likely to be suicidal. And recent research has found the teen suicide rate in the US now eclipses the homicide rate, with smartphones as the driving force. But the writing about smartphone risk may have been on the wall for roughly a decade, according to educators Joe Clement and Matt Miles, coauthors of the recent book "Screen Schooled: Two Veteran Teachers Expose How Technology Overuse is Making Our Kids Dumber." It should be telling, Clement and Miles argue, that the two biggest tech figures in recent history — Bill Gates and Steve Jobs — seldom let their kids play with the very products they helped create."What is it these wealthy tech executives know about their own products that their consumers don't?" the authors wrote. The answer, according to a growing body of evidence, is the addictive power of digital technology. In 2007, Gates, the former CEO of Microsoft, implemented a cap on screen time when his daughter started developing an unhealthy attachment to a video game. He also didn't let his kids get cell phones until they turned 14. (Today, the average age for a child getting their first phone is 10.) Jobs, who was the CEO of Apple until his death in 2012, revealed in a 2011 New York Times interview that he prohibited his kids from using the newly-released iPad. "We limit how much technology our kids use at home," Jobs told reporter Nick Bilton.

In Praise of Public Libraries - Public libraries are used by a lot of people. From the Institute of Museum and Library Services 2015 survey:Nearly 311 million Americans lived within a public library service area in 2015, an increase from 306 million in 2014. Libraries offered 4.7 million programs in 2015, attended by 106 million people, 4 million more attendees than the previous year. In addition, the number of electronic materials, including audio, video and e-books, continued to grow, increasing by over 50 percent between 2014 and 2015.  Why are libraries so popular? One reason, especially for the bright young things of today (“millennials”), is that they offer public space. Quartz:According to a new analysis of Pew Research Center data on US library attendance, millennials more than other generations appear to have a use for physical libraries. They may not always come for the books, but the country’s youngest adults show up…. ‘[Pew] found that millennials—arguably the first generation to grow up online—use public libraries more than other, older adults. More than half—53%—of survey respondents ages 18-35 visited a public library or bookmobile within the previous year. One reason they do is that libraries provide (increasingly rare) public space: There are a few reasons for the strong millennial attendance record, says librarian Rachel Clarke, an assistant professor at Syracuse University’s School of Information Studies in New York. She points out that millennials are old enough to have kids now and parents love public libraries…. Younger adults may also have fewer financial resources and be more likely to live in small or shared spaces they long to escape. The stodgy old library seems to be turning into a party animal. Beer and book nights or afternoon coffee klatches are common, says Clarke. The library may not seem like the best place for these sorts of functions, given the existence of bars and cafes, but for a key distinction: money. The library is the rare place where there’s no pressure to pay for anything (except the occasional fine on an overdue book). “Not everyone can go to a book club meeting at Starbucks and pay $5 for a coffee but public libraries are open to everyone and always will be,”

Wealthy Students are Pushing Out Low-Income Students at Top Public Universities - More than half of the country’s top public universities replaced low-income students with affluent ones over the past 14 years, according to a new report.The study provides evidence to back up the sense in many communities that climbing into the middle class has become increasingly difficult for low-income families. It may also help explain some of the pervasive anger and feelings of being “left behind” that has shaped American politics since last year’s presidential election.Since the late 1990s, nearly two-thirds of selective public universities reduced the share of traditional-aged students they enrolled from the bottom 40 percent of the income scale. In addition, two-thirds of these universities increased the share of students from the top 20 percent of the income ladder. And half of them did both at the same time, meaning the wealthiest students took seats at the expense of poorer students.“Public universities were set up to serve the public and to be cheaper alternatives,” said Stephen Burd, a senior policy analyst at New America, a Washington, D.C.-based think tank, who edited the report, titled Moving On Up? “But more and more they are becoming like the privates, and it’s getting worse.” The shift towards enrolling wealthier students is not only occurring at flagship universities and prestigious public research institutions, but also at regional universities that have traditionally provided access to college for a broad range of students, regardless of their socioeconomic background. The trend is not concentrated in one area of the country or in urban centers. Between 1999 and 2013, the share of affluent students at North Dakota State University rose by 17 percentage points, while the share of low-income students fell by 10 points. At the University of Arkansas, wealthier students increased by 15 points while low-income ones dropped by 8 points. And at Iowa State University, affluent students jumped by 10 percentage points while low-income students decreased by 5 points.

Socialism is surging on college campuses - Seizing the means of production is so hot right now.  Long relegated to the fringes of American politics, socialism is surging on college campuses in the aftermath of the presidential campaign of Bernie Sanders — a self-described democratic socialist — and Donald Trump’s victory. The Young Democratic Socialists of America went from 12 chapters at the end of 2016 to 47 in June, and at least 100 are expected by the end of this semester (329 colleges registered for materials in August).  “By losing an election to Donald Trump, the Democrats demonstrated that they aren’t the answer,” 20-year-old Michelle Fisher, the national co-chair of the Young Democratic Socialists of America and a junior at Wesleyan University, told VICE News. But it’s not just because of Trump: Fisher’s disaffection with the Democratic Party has been brewing for some time. “I think when [Barack] Obama was president, I thought he was fine because I didn’t know any better,” she said. “He inherited a lot, but he did a lot to continue the U.S.’ imperial politics and also deported more people than any other president.” While the Democratic Party’s College Democrats of America’s 1,200 chapters still dwarfs the Young Democratic Socialists of America (YDSA), the sudden surge of an alternative progressive movement among the young threatens to further splinter the Democratic Party as it tries to rebuild after the disastrous 2016 election and energize young voters in 2018 and 2020. The Democrats’ narrow presidential-election losses in 2000 and 2016 were due in part to liberal third-party alternatives drawing away votes, and the fast rise of the YDSA could further exacerbate that dynamic.“I think the idea is that we create something within this country that is pure and not tainted by the kind of capitalist, imperialist practices that a lot of organizations in this country are,” said Sanjeev Rao, a 20-year-old at Indiana University Bloomington, who founded the YDSA chapter there last spring.

Millennials: Communism sounds pretty chill -- According to the latest survey from the Victims of Communism Memorial Foundation, a D.C.-based nonprofit, one in two U.S. millennials say they would rather live in a socialist or communist country than a capitalist democracy.What’s more, 22% of them have a favorable view of Karl Marx and a surprising number see Joseph Stalin and Kim Jong Un as “heroes.”Really, that’s what the numbers show.   “Millennials now make up the largest generation in America, and we’re seeing some deeply worrisome trends,” said Marion S mith, executive director of the organization. “Millennials are increasingly turning away from capitalism and toward socialism and even communism as a viable alternative.”But do they even know what it is?The survey, which was conducted by research and data firm YouGov, found that millennials are the least knowledgable generation on the subject, with 71% failing to identify the proper definition of communism. Smith explained that this “troubling turn” highlights pervasive historical illiteracy across the country and “the systemic failure of our education system to teach students about the genocide, destruction, and misery caused by communism since the Bolshevik Revolution one hundred years ago.” Other findings include the belief held by 53% of millennials that America’s economic system works against them, which is the same percentage in the prior study. Meanwhile, 66% of Gen Z, ages 16-20, say the system works for them. When it comes to the wealth divide, Americans seem to be on the same page, with 80% saying it’s a serious issue, up from 78% a year ago. They also mostly agree (68%) that the highest earners don’t pay their fair share in taxes.

Education Today: A Prerequisite for Self-Destruction -- If you really want to understand the problem, you must learn to probe deeper. Read what the average student must read in many of his classes: volumes of irrational nonsense in which clever writers adroitly lead students to their intellectual graveyards; acquaint yourself with some of the “profound” ideas voiced by popular anarchists, presented to students as precepts of “freedom” lovers. And observe the academic routine – the busy-work, the contradictory curricula content, and the historical negationism – conceived to confuse and deaden healthy minds seeking truth and sound principles to guide them. Because of such wide-spread teaching practices, many American students graduate from school intellectually handicapped. The degree of their handicap usually depends on the amount of years they have spent in school – especially in the liberal arts department – and how seriously they took their studies during their school years. Although they may read, write, and speak with some skill, many of them find it difficult to break free of the mental straitjacket they must wear. As a result, they find themselves incapable of thinking deeply and independently. When they are finally released to the world, the majority, sadly, are released like conditioned Pavlovian dogs who are trained to respond to popular political ideas, social fads, and more, on cue, exactly as they were instructed by their teachers and other influential adults.The end result is the typical graduate who lives for the moment irresponsibly, guided by his conditioned reflex. The bright ones, who find conflict with what they are taught and what they perceive as true, are left with the mentally exhausting task of sorting through the mush they have learned in school for an explanation. Unfortunately, all they often discover for their effort is a lot of dead ideas that lead to nihilism. For this reason, many give up and find comfort in some form of self-destruction like drugs and alcohol. This type of education is tragic. Students by nature are rational beings who want to take control of their lives. A student who can’t often finds himself turning to others for guidance. If irresponsibly advised, such students can easily be encouraged to make decisions that will later prove regrettable.

America is facing an epistemic crisis – Vox - Over at the Gothamist, Jake Offenhartz has an astounding and richly symbolic story about the latest bit of “fake news” burped up by the alt-right.  At Columbia University on Monday, alt-right self-promoter Mike Cernovich gave a speech to College Republicans. Other students showed up to protest. And then some alt-right members in attendance, posing as protesters, unfurled this banner: Alt right strikes first at Columbia Cernovich event, plants NAMBLA-branded sign in front of protest march The banner has a NAMBLA (North American Man/Boy Love Association) logo on it, making it look like the protesters are defending pedophilia. Ha ha. Cernovich grabbed the image off Twitter, stripped it of context, and sent it bouncing around the right-o-sphere, which led, in the end, to thousands, possibly tens of thousands, of conservatives believing that students of Columbia University were openly marching in favor of pedophilia. Basically, the alt-right tricked itself into believing even more stupid, wrong things.   The sheer absurdity of the tale is familiar these days, reminiscent of Pizzagate,” the bonkers story about Democrats running a child prostitution ring out of a DC pizza joint. Even after it went viral on Reddit and some jacked-up angry white guy showed up at Comet Pizza with a gun, it still had the scent of parody. It is quite simply impossible for most people to imagine believing all the things that would be required to also believe that DC Democrats are into organized child trafficking.  It is similarly difficult for most people to imagine believing that Hillary Clinton has had multiple people killed, that Obama is a secret Muslim who wasn’t born in the US, that Trump had millions of votes stolen, that Barack Obama wiretapped Trump’s White House, that Seth Rich (the mid-level Democratic staffer who was tragically murdered) was assassinated for stealing DNC emails and giving them to WikiLeaks, or that Antifa, the fringe anti-fascist movement, will begin going door-to-door, killing white people, starting on November 4.  And yet millions of Americans fervently believe these things. Different polls find different things, and it’s always difficult to distinguish what people really believe from what they say on surveys. But if 30 percent of America’s 200 million registered voters are Republicans, and 40 percent of those don’t believe Obama was born in the US, well, that’s 24 million people, among them the most active participants in Republican politics.

Fintech Revolution - Finance Professionals Rushing To Take Courses As Career Hedge --Fintech, blockchain and A.I. are revolutionising the banking industry and have the potential to replace a significant percentage of the human capital, eliminating a chunk of their cost bases. Last month, former Citi CEO, Vikram Pandit, was particularly pessimistic, claiming that 30% of jobs could be lost in the next five years. As CNBC reports, finance professionals, especially “more experienced” ones, are acutely aware of the risk and are rushing to educate themselves via online learning. Financial professionals are taking online financial technology (fintech) courses to fend off competition and stay ahead of disruption. The boost in uptake is due in part to a feeling among those in the industry that financial technology has reached a turning point in its evolution. A report from Citigroup in 2016 caused widespread debate when it estimated that between 2 million and 6 million jobs would be lost in banking across the U.S. and Europe over the next 10 years. That was attributed to both automation and artificial intelligence (AI), innovation and the rise of more efficient and less cost-intensive challenger banks.Santander's fintech-focused venture capital fund, Santander InnoVentures, estimates cost savings for banks that implement blockchain technology as high as $20 billion per year by 2022. Blue chip educational establishments launching new courses and corporate M&A are features of this growth market. Highly-regarded educational institutions are also being forced to innovate and provide the resources to the financial industry to up-skill and stay ahead of an ever-steepening curve. The likes of Oxford University, Princeton and Massachusetts Institute of Technology (MIT) now all offer online courses aimed at busy and high-level banking executives. According to a report from e-learning software provider Docebo, online education in general is set to grow by 5 percent over the next decade and generate over $240 billion by 2023. LinkedIn also joined the sector as early as 2015, buying online education firm Lynda for $1.5 billion. Lynda has finance and technology courses, including ones that aim to help business executives implement tech into their firm…

Student Loans: Teacher Horror Story a Reminder of Failure to Fix Broken Servicing Model --Yves Smith - Any reader who has been with this site for a few years knows that the severity of the post-crisis housing bust was in no small measure due to the refusal of the officialdom to crack down on pervasive mortgage servicing abuses. We are seeing a repeat of this failure with student loan servicing, via a New York Times story, A Student Loan Nightmare: The Teacher in the Wrong Payment Plan. This teacher, Jed Shafer, thought he had enrolled in a debt forgiveness program but after making ten years of payments, found he wan’t. Many people in the comments recounted their own horror stories. The dirty secret is that the donkey work of servicing, as in dealing with the borrowers, collecting, recording, and remitting payments to investors, is done poorly. That is in turn due to the fact that the securitization deals price servicing as a high-volume, low-margin commodity business. It’s also managed that way. That means when anything non-standard comes up, the servicer isn’t set up to do that, plus often has the point of view that it’s not paid to do that.  It is bad enough that student loans have turned colleges into predators. It has been widely reported that college admissions offices give unduly thin information about loan terms and also give graduate earnings forecasts that may not be at all germane to a particular student (particularly in light of the fact that many students don’t finish college). A partial list of some other negative consequences of student loans, from a 2017 post: […] But let’s return to the focus of this post, how lousy servicing makes this sorry situation worse. The New York Times’ story describes long form how Oregon school teacher Jed Shafer enrolled in 2007 in a program that would allow public servants to discharge their student debt if they made ten years of on-time payments. Here is the guts of his problem: In 2015, he discovered that he was enrolled in a particular type of ineligible payment plan and would need to start his decade of payments all over again, even though he had been paying more each month than he would have if he had been in an eligible plan. Because of his 8.25 percent interest rate, which he could not refinance due to loan rules, even those higher payments weren’t putting a dent in his principal. So the $70,000 or so that he did pay over the period amounted to nothing, and he’ll most likely pay at least that much going forward.

The Great College Loan Swindle - Matt Taibb - Beaten down after more than a decade of struggle with student debt, after years of taking false doors and slipping into various puddles of bureaucratic quicksand, Scott Nailor was giving up the fight. "This is it, I'm done," he remembers thinking. "I sat there and just sort of felt like I'm going to take my life. I'm going to find a way to park this car in the garage, with it running or whatever." He graduated summa cum laude and immediately got a job in his field, as an English teacher. But he graduated with $35,000 in debt, a big hill to climb on a part-time teacher's $18,000 salary.   Today, he pays $471 a month toward "rehabilitation," and, like countless other borrowers, he pays nothing at all toward his real debt, which he now calculates would cost more than $100,000 to extinguish. "Not one dollar of it goes to principal," says Nailor. "I will never be able to pay it off. My only hope to escape from this crushing debt is to die."  Horror stories about student debt are nothing new. But this school year marks a considerable worsening of a tale that ought to have been a national emergency years ago. The government in charge of regulating this mess is now filled with predatory monsters who have extensive ties to the exploitative for-profit education industry – from Donald Trump himself to Education Secretary Betsy DeVos, who sets much of the federal loan policy, to Julian Schmoke, onetime dean of the infamous DeVry University, whom Trump appointed to police fraud in education.Americans don't understand the student-loan crisis because they've been trained to view the issue in terms of a series of separate, unrelated problems. They will read in one place that as of the summer of 2017, a record 8.5 million Americans are in default on their student debt, with about $1.3 trillion in loans still outstanding. In another place, voters will read that the cost of higher education is skyrocketing, soaring in a seemingly market-defying arc that for nearly a decade now has run almost double the rate of inflation. Tuition for a halfway decent school now frequently surpasses $50,000 a year. How, the average newsreader wonders, can any child not born in a yacht afford to go to school these days?  But the separateness of these stories clouds the unifying issue underneath: The education industry as a whole is a con. In fact, since the mortgage business blew up in 2008, education and student debt is probably our reigning unexposed nation-wide scam.

AP sources: DeVos may only partly forgive some student loans— The Education Department is considering only partially forgiving federal loans for students defrauded by for-profit colleges, according to department officials, abandoning the Obama administration's policy of erasing that debt. Under President Barack Obama, tens of thousands of students deceived by now-defunct for-profit schools had over $550 million in such loans canceled. But President Donald Trump's education secretary, Betsy DeVos, is working on a plan that could grant such students just partial relief, according to department officials. The department may look at the average earnings of students in similar programs and schools to determine how much debt to wipe away. The officials were not authorized to publicly comment on the issue and spoke on condition of anonymity. If DeVos goes ahead, the change could leave many students scrambling after expecting full loan forgiveness, based on the previous administration's track record. It was not immediately clear how many students might be affected. In August, the department extended its contract with a staffing agency to speed up the processing of a backlog of loan forgiveness claims. In the procurement notice, the department said that "policy changes may necessitate certain claims already processed be revisited to assess other attributes." The department would not further clarify the meaning of that notice. DeVos' review prompted an outcry from student loan advocates, who said the idea of giving defrauded students only partial loan relief was unjustified and unfair because many of their classmates had already gotten full loan cancellation. Critics say the Trump administration, which has ties to the for-profit sector, is looking out for industry interests. 

DeVos may abandon Obama policy of fully forgiving debt of defrauded students: report | TheHill: The Trump administration is considering abandoning an Obama-era policy of fully forgiving federal loans for students defrauded by for-profit colleges, The Associated Press reported Saturday. Education Secretary Betsy DeVos is reportedly working on a plan that would only give students partial relief from the debt. The Obama administration had allowed the debt to be fully forgiven.Tens of thousands of students who were deceived by now-defunct for-profit programs had more than $550 million in loans erased under the Obama administration.The Education Department did not immediately return a request for comment from The Hill.Student loan advocates have criticized the reported moves to only partially forgive the debt, the AP reported.President Trump paid $25 million to settle a lawsuit earlier this year after students claimed they were misled by his own former for-profit program, Trump University.The Education Department has sought to repeal rules as part of the Trump administration’s push to undo regulations it deems unnecessary.A report revealed earlier this month that the department was rescinding dozens of documents outlining the rights of students with disabilities. And last month, DeVos announced that the department was reversing Obama-era policies on sexual assault on college campuses.

Elizabeth Warren Warns: Navient Deal A Danger To Student Loan Borrowers -- U.S. Sen. Elizabeth Warren warned Wednesday that the nation’s largest student loan servicer has positioned itself to stealthily strip consumer protections from unwitting borrowers across the country. In an interview with International Business Times, she also said the loan servicer, Navient, should not be permitted to be a government contractor handling student loans on behalf of the U.S. Department of Education.The Massachusetts Democrat was sounding an alarm about Navient’s recent acquisition of online lender Earnest. She said the transaction opened up the possibility that the company will try to boost its profits by selling debtors on refinancing their current federal student loans with the company’s own private loans — the kind that she said to do not necessarily permit income-based repayment options. “The fear is that Navient will do this because Navient can make money off it, but the difficulty for the people who have been shifted over is that they lose many of the protections that federal law gives to them on federal loans,” said Warren, who has sponsored legislation to let borrowers refinance their federal student loans. “So long as a student holds a loan that is a federal student loan, there is a public service loan forgiveness loan program available, there are income driven repayment options, there is a borrower defense if the college cheated the student — there are protections put in place. But those critical federal protections disappear if the loan is refinanced and taken private. That could matter to many students whose loans, if Navient is successful, are shifted from being federal loans to loans that are held privately.” Navient fired back at Warren, asserting that the lawmaker was distorting its record. As a contractor for the Department of Education, Navient services $300 billion worth of student loans for roughly 12 million Americans. In recent weeks, the company has been unabashed about the potential upside of moving beyond just servicing loans, and into originating private student loans.

Kentucky Teachers Blast Pension Reform Plan; Warn That 401(k) Plans Will "Dismantle Public Education" -- Graves County Superintendent Kim Dublin in Kentucky is apparently concerned that forcing her teachers to accept the same retirement plans offered to almost every private sector employee in the country would literally "dismantle public education" as we know it. Speaking to a local NBC affiliate in Kentucky, Dublin told reporters that she relies on the excessive generosity of Kentucky taxpayers to underwrite her state's lavish defined benefit plans that she uses as a recruiting tool to attract the 'best talent'.  A local school leader says she believes proposed changes to Kentucky’s pension system would dismantle public education.Any day now, Kentucky Republican Gov. Matt Bevin could call for a special session for a vote on pension reform.Some changes include putting new teachers — or teachers who have fewer than five years of experience — onto a 401k style system. Teachers with more than five years in the classroom will still be able to retire with a full pension after 27 years.That would limit how long they could continue paying into a pension after reaching that number of years. The current proposal allows for three additional years.Graves County Superintendent Kim Dublin is concerned by many aspects of the proposal. She says the current pension system allows her to recruit and retain qualified teachers. “Our success is because of people, not programs,” she says.

CMS to allow states to define essential health benefits - The CMS proposed a rule late Friday aimed at giving states more flexibility in stabilizing the Affordable Care Act exchanges and in interpreting the law's essential health benefits as a way to lower the cost of individual and small group health plans. In the 365-page proposed rule issued late Friday, the agency said the purpose is to give states more flexibility and reduce burdens on stakeholders in order to stabilize the individual and small-group insurance markets and improve healthcare affordability. The CMS said the rule would give states greater flexibility in defining the ACA's minimum essential benefits to increase affordability of coverage. States would play a larger role in the certification of qualified health plans offered on the federal insurance exchange. And they would have more leeway in setting medical loss ratios for individual-market plans. "In the individual and small group markets, depending on the selection made by the state in which the consumer lives, consumers with less comprehensive plans may no longer have coverage for certain services. In other states, again depending on state choices, consumers may gain coverage for some services." However, the CMS acknowledged it's unclear how much money the new state flexibility will save. States are not required to make any changes under the policy. The CMS urged states to consider the so-called spillover effects if they choose to pick their own benefits.  The CMS proposes to let states relax the ACA requirement that at least 80% of premium revenue received by individual-market plans be spent on members' medical care. It said states would be allowed to lower the 80% medical loss ratio standard if they demonstrate that a lower MLR could help stabilize their individual insurance market. The CMS also said it intended to consider proposals in future rulemaking that would help cut prescription drug costs and promote drug price transparency.

How the Loss of Cost-Sharing Subsidy Payments is Affecting 2018 Premiums -- Insurers setting rates for health coverage options on the 2018 individual market have faced substantial uncertainty regarding whether or not the federal government would continue to make payments for cost-sharing reduction subsidies to insurers, as well as whether or not the administration would continue to enforce the Affordable Care Act’s individual mandate. Following the September 27th deadline for insurers planning to offer coverage on the ACA’s federal marketplace to finalize premiums and sign contracts, the federal government announced on October 12th that cost-sharing reduction (CSR) payments would end, effective immediately, unless Congress appropriated the funds. In some cases insurers also increased rates due to concerns that the individual mandate might not be enforced, although no formal change in enforcement has been announced. Regardless of whether the federal government reimburses insurers for CSR subsidies, insurers are still legally required under the ACA to offer reduced cost-sharing via silver-level plans to low-income consumers with incomes up to 250% of the poverty level. Many insurers anticipated that the CSR payments might not continue and built the loss of payments into their premiums for 2018. In some cases, state insurance departments directed insurers what to assume regarding CSR payments, and in other cases regulators were silent. Some state insurance regulators approved two sets of rates, one to be used if CSR payments continued and another if they did not. Insurers – often under the guidance or direction of state regulators – have taken one of four general approaches to the end of CSR payments:

  1. Not adjust rates at all in response to the termination of CSR payments. Only two states (North Dakota and Vermont) are known to have prevented insurers from adjusting rates.
  2. Increase premiums for all ACA-compliant individual market policies across-the-board, both inside and outside the marketplace.
  3. Increase premiums for silver-level plans inside and outside the marketplace. Silver plans are relevant because cost-sharing reductions for low-income marketplace enrollees are only available in those plans.
  4. Increase premiums only for silver-level plans inside the marketplace, under the logic that cost-sharing reductions are only available in marketplace silver plans.

Obamacare's Rising Premiums Will Hurt the Middle Class the Most -  For some lower-income people in Obamacare, the rising premiums President Donald Trump has talked so much about will barely be felt at all. Others, particularly those with higher incomes, will feel the sharp increases when insurance sign-ups begin Wednesday. Richard Taylor is one of the people on the wrong end. The 61-year-old, self-employed Oklahoman has meticulously tracked his medical costs since 1994. In 2013, he signed up for an Affordable Care Act plan for the law’s first year offering coverage to millions of Americans. Four years ago, annual premiums for a mid-level “silver” plan to cover his family totaled $10,072.44. For 2017, they were $21,392.40—up 112 percent. Obamacare’s marketplaces are facing their toughest year yet, following Congress’s failed attempts to repeal the health law and Trump’s efforts to roll back or destabilize it through executive action. Health insurers have said those moves are causing premiums to rise for next year. Yet many people won’t feel the increases. About 80 percent of enrollees who pick plans on will be able to get insurance for $75 a month or less, up from 71 percent for this year, according to a report from the Department of Health and Human Services. The subsidies are available to people making as much as four times the poverty level, or $98,400 for a family of four, though the most generous help goes to people with lower incomes.   But higher earners like Taylor don’t benefit. He makes just short of six figures, so he doesn’t receive subsidies to help with premiums. He also has a $5,000-per-person deductible as part of the coverage he does have. “My accountant asked me what happened,” Taylor said. “I said ‘Obamacare’ and she understood.”

Americans Are Officially Freaking Out - For those lying awake at night worried about health care, the economy, and an overall feeling of divide between you and your neighbors, there’s at least one source of comfort: Your neighbors might very well be lying awake, too.Almost two-thirds of Americans, or 63 percent, report being stressed about the future of the nation, according to the American Psychological Association’s Eleventh Stress in America survey, conducted in August and released on Wednesday.This worry about the fate of the union tops longstanding stressors such as money (62 percent) and work (61 percent) and also cuts across political proclivities. However, a significantly larger proportion of Democrats (73 percent) reported feeling stress than independents (59 percent) and Republicans (56 percent).The “current social divisiveness” in America was reported by 59 percent of those surveyed as a cause of their own malaise. When the APA surveyed Americans a year ago, 52 percent said they were stressed by the presidential campaign. Since then, anxieties have only grown. A majority of the more than 3,400 Americans polled, 59 percent, said “they consider this to to be the lowest point in our nation’s history that they can remember.” That sentiment spanned generations, including those that lived through World War II, the Vietnam War, and the terrorist attacks of Sept. 11. (Some 30 percent of people polled cited terrorism as a source of concern, a number that’s likely to rise given the alleged terrorist attack in New York City on Tuesday.)

U.S. states allege broad generic drug price-fixing collusion : (Reuters) - A large group of U.S. states accused key players in the generic drug industry of a broad price-fixing conspiracy, moving on Tuesday to widen an earlier lawsuit to add many more drugmakers and medicines in an action that sent some company shares tumbling.The lawsuit, brought by the attorneys general of 45 states and the District of Columbia, accused 18 companies and subsidiaries and named 15 medicines. It also targeted two individual executives: Rajiv Malik, president and executive director of Mylan NV, and Satish Mehta, CEO and managing director of India’s Emcure Pharmaceuticals. Shares of Pennsylvania-based Mylan, also named as a defendant, closed down 6.6 percent. The states said the drugmakers and executives divided customers for their drugs among themselves, agreeing that each company would have a certain percentage of the market. The companies sometimes agreed on price increases in advance, the states added. The states said Malik and Mehta spoke directly to one another to agree on their companies’ shares of the market for a delayed-release version of a common antibiotic, doxycycline hyclate. “It is our belief that price-fixing is systematic, it is pervasive, and that a culture of collusion exists in the industry,”

Drug Deaths Rose More Last Year Than in the Previous Four Combined   - American drug deaths rose by 21 percent last year, according to early federal data—a one-year spike that amounts to a bigger jump than over the previous four years combined, showing an already troubling crisis accelerating. For every 100,000 residents, almost 20 died in drug overdoses in 2016, compared to 16.3 the year before, according to the data released by the Centers for Disease Control and Prevention. The rate of deaths increased slightly in every quarter of 2016, indicating an accelerating epidemic. That crisis has been driven by opioid abuse, as potent synthetic drugs such as fentanyl and carfentanil, an elephant tranquilizer, circulate more on the black market.The overall rate of American drug-overdose deaths has more than tripled in this century. The analysis for 2016 is based on provisional data from the CDC, which compiles mortality data from death certificates maintained by state and local authorities. More complete data will become available in the months ahead. Mortality from all causes also appeared to be rising. That's part of a recent, troubling trend of stalled gains in life expectancy—and even reversals. In the 12 months ending June 30, 2017, the age-adjusted death rate rose slightly, to 727.8 deaths per 100,000 people, from 723.6 in the prior 12 months. (Age-adjusted rates take into account the changing age distribution of the population.)

Billionaire Charged With Bribing Doctors to Prescribe Opioids -- The billionaire owner of Insys Therapeutics was arrested Thursday and charged with leading a nationwide conspiracy to use bribes and fraud to cause the illegal distribution of a Fentanyl spray intended for cancer patients. Dr. John N. Kapoor, 74, of Phoenix, Arizona, the founder and former CEO of Insys and still a member of its board, faces federal charges of racketeering, conspiracy to commit fraud and conspiracy to violate the Anti-Kickback law. In addition to fines, the racketeering and fraud charges carry possible prison sentences of up to 20 years, while the kickback charge can bring up to five years.  Prosecutors allege the company paid hundreds of thousands of dollars to doctors in exchange for prescribing a spray called Subsys that contained the powerful and addictive synthetic opioid fentanyl. Three top prescribers have already been convicted of taking bribes from Insys. NBC News reported extensively on the company this summer. In her first network interview, Patty Nixon, a company employee turned whistleblower, explained how the company lured doctors into prescribing the drug for patients who didn't need it. "It was absolutely genius," Patty Nixon said of the alleged scheme. "It was wrong, but it was genius."  "What I did, I was instructed to do, I was trained to do," Nixon, who was fired by Insys after she says she felt guilty about lying on the job and stopped showing up for work.

Report highlights ‘shocking’ divide between dental health of rich and poor - There is a “shocking” divide in dental health standards between north and south and rich and poor, a new report says. The report by the Nuffield Trust and the Health Foundation found a “consistent gap” between the dental health of the rich and poor, with people from the most deprived backgrounds twice as likely to be admitted to hospital in need of dental work than those better off. The report, which analyses publicly available data on dental health outcomes, said that there was a pattern of evidence that dental health is better in the south and east than in the north of England. While the authors noted that dental health is improving in general, they added that without action to decrease inequalities, progress in dental health will come to a halt. “As a nation, our dental health is improving,” said Prof John Appleby, the Nuffield Trust’s director of research. “But it is shocking that your income or where you live can still determine your dental health.” The findings showed that 14% of people from deprived backgrounds had been hospitalised in need of dental work, against 7% of the better off. It also said that 18% of parents with children eligible for free school meals found it difficult to find an NHS dentist in 2013, compared with 11% of parents whose children were not. Tooth decay remains the number one cause of child hospital admissions in the country. Eighty-three per cent of five-year-olds in the richest regions of the country had healthy teeth, compared with 70% in the poorest parts in 2014-15.   The report said that dental charges had risen steadily since 2010, with costs rising by over 6% in the past two years, over and above inflation, while the amount of money spent on NHS dentistry had been reduced by up to 15% since 2010-11. It called for dentists to be more integrated in wider healthcare action, arguing that they were “perfectly placed” to help tackle problems linked to poor oral health such as obesity, excessive alcohol consumption and smoking.

Emory University Hospital is refusing a transplant for a 2 year old - A 2-year-old boy named A.J. is fighting for his life. And Emory University Hospital is refusing to perform a life-saving kidney transplant operation because of his father, Anthony Dickerson has a criminal record. Anthony is a 100% match to donate a kidney to his son--but after a probation violation, hospital administrators are denying him the chance.  A.J. was supposed to have the surgery this month, but the hospital canceled, saying  "we need you to be on good behavior for three to four months before you can give your son the kidney. And January 2018 we will think about re-evaluating you." This is a cruel and heartless decision made by Emory University Hospital. A young boy's life is at risk. There is no time for the hospital to push its own agenda and act as its own judge and jury.   The systemic racism that exists in the criminal justice system pours into our communities' abilities to live their lives and make free choices. Everyday returning citizens are making their way out of the vicious confines of the prison industrial complex only to struggle to gain fair access to jobs, housing, education, and healthcare. This also has a lasting impact on families and our entire communities. To put an extreme barrier like denying one's son's right to live is not only devastating but inhumane.

Hospital-Acquired Infections: Can You Avoid Them by Being a “Smart Shopper”? -- Spoiler alert: No. In this post, I want to continue my investigation of our enormous health system, adopting as ever the position of a citizen/patient — and not the “bending the cost curve wonk,” but no longer from the outside, as a single payer advocate, but from the inside, imagining what it would like inside the system, receiving treatment. Last time, I looked at overtreatment; this time, I’ll look at Hospital-Acquired Infections (HAIs), which also have the fancier moniker “nosocomial infections.” Readers will have noticed a tendency to focus on the worst that can happen, rather than the best; but that’s just who I am. And our system provides so many opportunities for the worst to happen! So I will ask four questions:

  • 1) Are Hospital-Acquired Infections (HAIs) significant?
  • 2) Have measures been taken against HAIs?
  • 3) Has HAI been eradicated?
  • 4) Can you avoid HAI by being a “smart shopper”?

Let’s take these questions in order. (Note that I’m not taking about other bad things that can happen in hospitals, like mistakes by doctors, or overdoses, or Kafka-esque bureaucratic nightmares. I’m only talking about infection. Nor am I talking about other medical institutions, like nursing homes; only hospitals.) Is Hospital-Acquired Infection (HAI) Significant? In a word, yes. From the Center for Disease Control (CDC): On any given day, about one in 25 hospital patients has at least one healthcare-associated infection. Those odds seem uncomfortably high to me, all the more because they are unlikely to be evenly distributed. More: In 2014, results of a project known as the HAI Prevalence Survey were published. The Survey described the burden of HAIs in U.S. hospitals, and reported that, in 2011, there were an estimated 722,000 HAIs in U.S. acute care hospitals…. Additionally, about 75,000 patients with HAIs died during their hospitalizations. More than half of all HAIs occurred outside of the intensive care unit.   That seems like a rather high number. To compare: 33,636 deaths due to “injury by firearms” (2013); 37,461 “motor vehicle deaths” (2016).

What's Killing America's New Mothers? - With an estimated 26.4 deaths for every 100,000 live births in 2015, America has the highest maternal mortality rate of all industrialized countries—by several times over. In Canada, the rate is 7.3; in Western Europe, the average is 7.2, with many countries including Italy, Norway, Sweden, and Austria showing rates around 4. More women die of childbirth-related causes in the US than they do in Iran (20.8), Lebanon (15.3), Turkey (15.8), Puerto Rico (15.1), China (17.7), and many more. While most of the world has drastically reduced maternal mortality in the past three decades, the US is one of just a handful of countries where the problem worsened, and significantly. Between 700 and 1,200 women die from complications related to pregnancy or childbirth every year in the US. Fifty times that number—about 50,000 in all—narrowly escape death, while another 100,000 women a year fall gravely ill during or following a pregnancy. The dire state of US data collection on maternal health and mortality is also distressing. Until the early 1990s, death certificates did not note if a woman was pregnant or had recently given birth when she died. It took until 2017 for all US states to add that check box to their death certificates. Calculating the number of near-deaths and severe illnesses related to pregnancy is still guesswork.  Even gathering reliable data for this story was difficult. Quartz was forced to turn to state data where there was a lack of national data, and to supplement gaps of any data with anecdotal evidence. If the US does not know it faces a crisis, how can it reverse the tide, and prevent the needless death of the next Liz Logelin?  Quartz probes the sorry state of US maternal data in a separate story.

Intake of pesticide residue from fruits, vegetables and infertility treatment outcomes - Eating more fruits and vegetables with high-pesticide residue was associated with a lower probability of pregnancy and live birth following infertility treatment for women using assisted reproductive technologies.  Animal studies suggest ingestion of pesticide mixtures in early pregnancy may be associated with decreased live-born offspring leading to concerns that levels of pesticide residues permitted in food by the U.S. Environmental Protection Agency may still be too high for pregnant women and infants.325 women completed a diet questionnaire and subsequently underwent cycles of assisted reproductive technologies as part of the Environment and Reproductive Health (EARTH) study at a fertility center at a teaching hospital in Boston between 2007 and 2016. Researchers categorized fruits and vegetables as having high or low pesticide residues using a method based on surveillance data from the U.S. Department of Agriculture. They counted the number of confirmed pregnancies and live births per cycle of fertility treatment. This is an observational study. In observational studies, researchers observe exposures and outcomes for patients as they occur naturally in clinical care or real life. Because researchers are not intervening for purposes of the study they cannot control natural differences that could explain study findings so they cannot prove a cause-and-effect relationship.

New Study Confirms High-Pesticide Produce Linked to Lower Fertility Rates - News that there may be a correlation between exposure to pesticides and infertility is not new; studies have previously tied higher rates of exposure to decreased male fertility . But a new study , primarily from researchers at Harvard University's T.H. Chan School of Public Health, takes a look specifically at women who are already undergoing infertility treatment. And the results seem to have surprised even the researchers, according to a CNN report . The study looked at 325 women undergoing infertility treatment at Mass General Hospital in Boston. The researchers looked for correlations in whether women successfully got pregnant and gave birth with their diets. The subjects self-reported what they ate, and the researchers took careful note of the amounts of fruits and vegetables associated with very high levels of pesticide residue, based on U.S. Department of Agriculture data. (That data shows up in lists like the EWG's Dirty Dozen ). Among those fruits and vegetables with the highest levels of pesticide residue are spinach, strawberries and peaches; those with low levels of pesticide residue include avocados and onions.  The results are pretty staggering: of those subjects who consumed more than 2.3 servings per day of high-residue fruits and vegetables, the study found an 18 percent lower probability of getting pregnant and a 23 percent lower probability of successfully giving birth. There seemed to be no correlation between those women who consumed lots of low-residue fruits and vegetables.  This study is not a perfect proof of causality; the women surveyed are demographically limited by geographic location (being that they're all seeking treatment from a single hospital), and they were all seeking fertility treatment in the first place, which might skew the findings. And, of course, the study relied on self-reporting, which can have flaws, too. But this could be a serious call to action for those seeking to prove a link between infertility and pesticides in our food, even when that food is objectively healthful stuff like strawberries and spinach.

Sulfur dioxide pollution tied to degraded sperm quality - Men’s sperm counts have plummeted by up to 60% over the last 40 years in Western countries and by nearly 30% since 2001 in China. Experts lack firm answers regarding the cause of the sperm deficit but suspect that behaviors such as smoking or exposures to hormone-disrupting compounds in plastics or pesticides are to blame. A handful of papers have questioned whether air pollution could also affect semen quality. Now, a new study links sulfur dioxide emitted from burning fossil fuels to depressed sperm count and concentration in Chinese men (Environ. Sci. Technol. 2017, DOI: 10.1021/acs.est.7b03289).  Liu and his team decided to study semen samples collected from 1,759 men in Wuhan, China. They had all visited Tongji Hospital from 2013 to 2015 seeking help to conceive a child with their partners. The researchers measured sperm concentration, total sperm, and total motile sperm in each sample, controlling for factors that might affect semen quality such as age and smoking. Then the scientists drew on government data from nine air quality monitoring stations in Wuhan—a transportation hub and manufacturing powerhouse—to estimate exposure to air pollutants such as sulfur dioxide, nitrogen dioxide, carbon monoxide, and ozone.  Because human sperm develops over 90 days, the researchers calculated pollution exposures for the 90 days prior to semen collection so they could look at key periods of sperm development. When Liu and the team used a statistical test to rate semen quality against increasing air pollution, they found no impact from NO2, CO or O3. However, for each 10 µg/m3 increase in SO2 exposure during the first stage of sperm development, sperm concentration dropped by 6.5%, total sperm count by 11.3%, and total motile sperm by 13.2%, Liu says. Levels of SO2 during the later stages of sperm development did not appear to impact sperm quality. The annual mean SO2 concentrations in Wuhan during the study period ranged from a high of 33 µg/m3 in 2013 to 18 µg/m3 in 2015. In the U.S., annual mean SO2 concentration was less than 5 µg/m3 in 2013. “Our results indicate for the first time that SO2 exposure may lower semen quality by affecting the earliest stage of sperm development, 70 to 90 days before ejaculation,” Liu says. He speculates that SO2 could impair sperm by triggering oxidative stress and damage to DNA.  He recommends caution in generalizing the findings to other populations since the men were all from one city in China.

Arsenic and Other Toxins Found in 80% of Baby Formulas - Arsenic, lead, and cadmium are chemicals you'd expect to find in rat poison and batteries—not baby formula. But on Wednesday, the Clean Label Project , an initiative that tests products for industrial and environmental contaminants and rates them, said it found arsenic in 80 percent of infant formulas, according to USA Today . In fact, the study—which has not been published in a peer-reviewed journal —found that certified some organic baby food products had more than twice the amount of arsenic found in the conventional baby foods it tested. The group looked at 86 different types of baby formulas and checked for more than 130 different toxins ranging from heavy metals to cancer-linked chemicals, the Clean Label Project's website says . "It is important for consumers to understand that some contaminants, such as heavy metals like lead or arsenic, are in the environment and cannot simply be removed from food," an FDA spokesperson, told USA Today . Though arsenic was the most common harmful chemical found in baby formulas, cadmium—which is used in batteries and as a plastic stabilizer —was also detected with alarming frequency. The study found that soy-based infant formulas had about seven times more cadmium , used in batteries, than other types of baby formula. Both arsenic and cadmium are carcinogens that may cause cancer , according to the American Cancer Society . Last year, the US Food and Drug Administration proposed a regulation which would limit the amount of arsenic allowed in infant rice cereal, but the limit is not yet being enforced.  The Clean Label Project also found lead in 36 percent of 500 baby food products it tested—a finding that backs up the Environmental Defense Fund's research which detected lead in about 20 percent of baby food samples.

Trump’s Legacy: Damaged Brains - The New York Times -- This is what a common pesticide does to a child’s brain:  The pesticide, which belongs to a class of chemicals developed as a nerve gas made by Nazi Germany, is now found in food, air and drinking water. Human and animal studies show that it damages the brain and reduces I.Q.s while causing tremors among children. It has also been linked to lung cancer and Parkinson’s disease in adults. The colored parts of the image above, prepared by Columbia University scientists, indicate where a child’s brain is physically altered after exposure to this pesticide.This chemical, chlorpyrifos, is hard to pronounce, so let’s just call it Dow Chemical Company’s Nerve Gas Pesticide. Even if you haven’t heard of it, it may be inside you: One 2012 study found that it was in the umbilical cord blood of 87 percent of newborn babies tested.And now the Trump administration is embracing it, overturning a planned ban that had been in the works for many years. The Environmental Protection Agency actually banned Dow’s Nerve Gas Pesticide for most indoor residential use 17 years ago — so it’s no longer found in the Raid you spray at cockroaches (it’s very effective, which is why it’s so widely used; then again, don’t suggest this to Dow, but sarin nerve gas might be even more effective!). The E.P.A. was preparing to ban it for agricultural and outdoor use this spring, but then the Trump administration rejected the ban. That was a triumph for Dow, but the decision stirred outrage among public health experts. They noted that Dow had donated $1 million for President Trump’s inauguration. So Dow’s Nerve Gas Pesticide will still be used on golf courses, road medians and crops that end up on our plate. Kids are told to eat fruits and vegetables, but E.P.A. scientists found levels of this pesticide on such foods at up to 140 times the limits deemed safe.

Black Death Mapped: ‘global outbreak’ warning as NINE new countries place on high alert -- HEALTH chiefs are scrambling to contain a Black Death outbreak after plague warnings were issued for nine countries across south-east Africa. The latest outbreak, which took root in Madagascar, has now killed 124 people and infected around 1,300, but scientists say this figure will definitely rise.South Africa, Mozambique, Tanzania, Kenya, Ethiopia, Comoros, the Seychelles, Mauritius and Reunion have all been placed on high alert by World Health Organisation (WHO) monitors.Experts say the deadly disease is caused by the same bacteria that wiped out 25 million people in Europe in the 13th and 14th centuries.And WHO officials, who have been working with Madagascar’s Ministry of Health, warn the risk of the epidemic spreading is “high”.  Plague - a terrifying bacterial infection transmitted by fleas - is nothing new in Madagascar, where about 600 cases are reported annually.But concerned WHO officials claim there is “something different” about this outbreak and “health officials couldn’t explain it”. Dr Arthur Rakotonjanabelo said: “Plague is a disease of poverty, because it thrives in places with poor sanitary conditions and health services.”But he said the disease has now spread to parts of Madagascar which had not seen the plague since at least 1950.Scientists are now working round the clock to predict the next outbreak and prevent it becoming a global epidemic and putting millions of life at risk. Doctors on the Global Virome Project are trying to find all viruses in birds and mammals that could spill over to humans in the next decade. And the US Agency for International Development has spent the past eight years cataloguing threats, identifying 1,000 new viruses. But Australian researchers have warned it is impossible to predict a global outbreak because there are too many variables.

US Air Force Admits To Harvesting Russian Tissue --A day after Russian President Vladimir Putin surprised members of Russia’s human rights council by informing them that some shadowy entity - possibly with ties to the United States - had been collecting biological tissues from Russians from different ethnic groups, the group responsible for harvesting the tissue has revealed itself. While some initially discounted Putin's remars as another loony conspiracy theory, as it turns out, he was right: The group responsible for the tissue collection was none other than the US Air Force, proving that yet another conspiracy theory has become a conspiracy fact. A representative for the US Air Force Education and Training Command explained to Russia Today that the choice of the Russian population was not intentional, and is related to research the Air Force is conducting on the human musculoskeletal system. Eyebrows were first raised in July when the AETC issued a tender seeking to acquire samples of ribonucleic acid and synovial fluid from Russians, adding that all samples (12 RNA and 27 synovial fluid) “shall be collected from Russia and must be Caucasian.” The Air Force said it wouldn’t collect samples from Ukrainians, but didn’t specify why.   AETC spokesman Capt. Beau Downey told Russian media that the study required two sets of samples: disease and control samples of RNA and synovial membrane. The first set was provided by a “US-based company.” Since the first set of tissue, provided by a US company, was sourced from Russia, the Air Force opted to collect the second set of data from Russians, too, to eliminate any confounding variables that could skew the results of the study. He did not say which set - the control or the diseased set - was collected first, and neglected to provide any further details about the study.

East Chicago residents file lawsuit over contamination -  East Chicago residents on Tuesday sued a group of companies in federal court and are seeking damages because of contamination on their properties. A group of property owners in the Calumet neighborhood, which is within the U.S.S. Lead Superfund site, filed a federal lawsuit against a group of companies the U.S. Environmental Protection Agency has held responsible for contamination in that section of East Chicago.The suit seeks damages to the residents' property caused by the contamination and for causing emotional distress, according to court documents, and that residents have been subjected to decades of toxic contamination. As residents learned about the levels of contamination and about the inaction and failure to inform them of that, it caused anxiety among the residents, according to court documents. Article continues below"Their property values have plummeted and they cannot sell their homes. Worse, they constantly worry about the health and safety of themselves and their families," the lawsuit said. "They no longer let their children play outside or let their grandchildren visit, and they are left to wonder whether the high incidents of respiratory issues, kidney disorders, cancer, asthma and learning disabilities that occur frequently in their community were caused by lead and arsenic poisoning or other contaminants endemic to the Superfund site." The group of residents alleged that the companies never notified them of the discharge of contaminants into the neighborhood, according to court documents, and the contamination has decreased their property values and left them unable to sell or rent their homes. 

How Much Nitrate Is in Rural America’s Water? - On July 26, the Environmental Working Group (EWG) announced the launch of the their Tap Water Database: “Starting today, the vast majority of Americans can learn about every potentially harmful chemical in their drinking water and what scientists say are the safe levels of those contaminants.”  Unfortunately for us, there are a lot of “potentially harmful” chemicals to learn about and scientists don’t always agree on the definition of “safe.” As the largest national effort of its kind, EWG’s database aggregates water quality tests from nearly 50,000 public water utilities in all 50 states (and the District of Columbia) going back to 2010. Of the 500 contaminants these tests were looking for, 267 were detected in our drinking water. These include:

  • 93 linked to an increased risk of cancer
  • 78 associated with brain and nervous system damage
  • 63 connected to developmental harm to children or fetuses
  • 45 linked to hormone disruption
  • 38 that may cause fertility problems

This week, EWG published Trouble in Farm Country—a report based on the database’s findings that focuses specifically on nitrate contamination in rural America. Aside from natural processes, nitrates enter our drinking water via runoff from fields treated with industrial fertilizer and from factory farms. In addition to creating toxic algae blooms that suffocate waterways, drinking water with unsafe levels of nitrate is known to increase a person’s risk of colon, kidney, ovarian and bladder cancers. The cost of treating water to remove nitrates is often far more than the most affected communities can afford. (Note: Cancer is expensive too.)  Nitrate pollution, which can also come from septic systems, afflicts towns and cities in farm country across the United States. And it's just one of the threats industrial agriculture poses to tap water:

  • Fertilizer and manure also contain phosphorus, which can trigger massive blooms of algae in lakes and other drinking water sources. A type of algae called cyanobacteria produce toxins that can end up in drinking water.
  • When utilities treat water with chlorine to remove algae, fecal bacteria and other farm pollutants, it creates chemical byproducts called trihalomethanes, or TTHMs, linked to cancer and reproductive harm.
  • Federal policies do little to keep farm pollution from getting into tap water in the first place. The expensive treatment needed to remove these contaminants can bankrupt small rural communities.

CDC: Backyard Chicken Flocks Lead to Disease Infections - The popular trend of raising backyard chickens in U.S. cities and suburbs is bringing with it a soaring number of illnesses from poultry-related diseases, some of them fatal. Since January, nearly 1,000 people have contracted salmonella poisoning from chickens and ducks in 48 states, according to the Centers for Disease Control. More than 200 were hospitalized and one person died. The toll was four times higher than in 2015. The CDC estimates the actual number of cases from contact with chickens and ducks is likely much higher. "For one salmonella case we know of in an outbreak, there are up to 30 others that we don't know about," CDC veterinarian Megin Nichols said. A "large contributing factor" to the surge, Nichols said, comes from natural food fanciers who have taken up the backyard chicken hobby but don't understand the potential dangers. Some treat their birds like pets, kissing or snuggling them and letting them walk around the house. Poultry can carry salmonella bacteria in their intestines that can be shed in their feces. The bacteria can attach to feathers and dust and brush off on shoes or clothing. The CDC recommends that people raising chickens wash their hands thoroughly after handling the birds, eggs or nesting materials, and leave any shoes worn in a chicken coop outside.

Pollutant emitted by forest fire causes DNA damage and lung cell death - When exposed in a laboratory to pollution levels comparable to those found in the atmosphere of the Amazon region during the forest and crop burning season, human lung cells suffer severe DNA damage and stop dividing. After 72 hours of exposure, over 30% of the cultured cells are dead.The main culprit appears to be retene, a chemical compound that belongs to the class of polycyclic aromatic hydrocarbons (PAHs).These are some of the main findings of a study published by a group of Brazilian researchers on September 7, 2017, in the journal Scientific Reports. "We found no information on the toxicity of retene in the scientific literature. I hope our findings serve as an incentive for the compound to be better studied and for its environmental concentrations to be regulated by health organizations," said Nilmara de Oliveira Alves Brito, first author of the article and awardee of a postdoctoral scholarship from FAPESP. "When I was doing my master's research at UFRN, I noticed that exposure of lung cells to this particulate matter emitted by biomass burning led to mutations in lung cell DNA," Alves Brito said. "This more recent study set out to investigate the mechanisms by which this happens." The study was conducted under the supervision of Carlos Menck, a professor at the University of São Paulo's Biomedical Science Institute (ICB-USP), and Silvia Regina Batistuzzo, a professor at the Federal University of Rio Grande do Norte (UFRN).

States Face Four-Year Backlog to Investigate Dicamba Damage Complaints - Just this year, more than three million acres of crops across the country have been reportedly damaged by a highly volatile and drift-prone herbicide, dicamba . That's on top of the similar, widespread complaints from the year before. States such as Arkansas, Missouri and Illinois have now received so many reports of dicamba-linked crop damage that officials face four years of backlogs of cases to investigate, driving up costs for lab tests and overtime, Reuters reported. "We don't have the staff to be able to handle 400 investigations in a year plus do all the other required work," Paul Bailey, director of the Plant Industries division of the Missouri Department of Agriculture, explained. The controversy surrounding the weedkiller started last year after agritech giant Monsanto —in a highly criticized move —decided to sell its genetically modified , dicamba-tolerant Xtend cotton and soybean seeds several growing seasons before getting federal approval for the corresponding herbicide. Without having the proper herbicide, cotton and soybean growers were suspected of illegally spraying older versions of dicamba onto their crops and inadvertently damaging nearby non-target crops due to drift and volatilization. Off-target crops are often left cupped and distorted when exposed to the chemical.  Take a look at Missouri's Department of Agriculture pesticide drift complaints from the last six years. Notice how dicamba-related complaints have skyrocketed since 2016:

Meet Monsanto's Other Herbicide Problem... Earlier this year we wrote about a series of court documents that were unsealed and seemingly revealed a startling effort on the part of both Monsanto and the Environmental Protection Agency (EPA) to work in concert to kill and/or discredit independent, albeit inconvenient, cancer research conducted by the World Health Organization's International Agency for Research on Cancer (IARC) related to their key herbicidal product, RoundUp.  The efforts to kill the research came even as Monsanto's own lead toxicologist, Donna Farmer, admitted that she "cannot say that Roundup does not cause cancer" because "[w]e [Monsanto] have not done the carcinogenicity studies with Roundup" (see: Monsanto Colluded With EPA, Was Unable To Prove Roundup Does Not Cause Cancer, Unsealed Court Docs Reveal).  But, as Reuters points out today, RoundUp isn't the only Monsanto herbicide causing outrage in the ag community these days as state regulators all across the country say they're being flooded with reports from farmers that Dicamba, Monsanto's other herbicide, is increasingly becoming airborne and killing crops far away from the fields where they were actually applied. 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. Regulators in several major soybean-growing states, including Arkansas, Missouri and Illinois, each say they received roughly four years’ worth of complaints about possible pesticide damage to crops this year due to dicamba use. Of course, Monsanto has bet on dicamba-tolerant soybeans to replace those that withstand glyphosate, the key ingredient in RoundUp, because it has become less effective over the years as weeds develop resistance...and because of that pesky European research which suggests the product causes cancer.

Monsanto Pulls Launch of New Pesticide After Skin Rash Complaints -- Monsanto is halting the commercial launch of its latest pesticide , NemaStrike, after receiving reports of skin irritation, including rashes, that appear to be associated with the handling and application of the product, the company announced . NemaStrike is a seed treatment designed to provide broad-spectrum nematode control for corn, soybeans and cotton. Monsanto said it conducted three years of field trials across the U.S. and noted that 400 growers were able to safely use the technology. "Out of an abundance of caution, we are pausing the 2018 commercialization of NemaStrike Technology while we evaluate the circumstances associated with these cases," Brian Naber, Monsanto's U.S. Commercial Operations Lead, said. Company spokeswoman Christi Dixon explained to Reuters that the users who experienced such problems might not have followed instructions to wear gloves or other protective equipment. The U.S. Environmental Protection Agency ( EPA ) announced approval of the nematicide, also known as tioxazafen , in May 2017. Monsanto said the EPA conducted “extensive evaluations" before it issued registration for tioxazafen. Reuters reported that Monsanto CEO Hugh Grant expected NemaStrike to launch across up to eight million U.S. crop acres in fiscal year 2018.  "This blockbuster technology will be a game-changing addition to our seed applied solutions portfolio by providing a novel solution to a yield robbing pest," Brett Begemann, Monsanto President and Chief Operating Officer, said after the EPA stamped its approval.

An Environmental and Public Health Disaster Awaits—If USDA Gives Organic Label to Hydroponics - naked capitalism - Yves here. I am not quite sure about “public health disaster” but we are running too many experiments on the public at large, starting with GMOs, without consent and even remotely adequate controls. The main reason people prefer organic food (and I have this from a family member who ran a healthy food business and then later became a business coach to entrepreneurs in that niche, so this is from a very large sample of end customers) is that they want to steer clear of pesticides and other nasties. They don’t think organic food has more nutrients (and Big Ag has produced studies that suggest not, although they are also looking at a narrow nutrient profile). But I do recall seeing studies that suggested that crops that relied heavily on fertilizer were more nutrient-poor than ones grown in better soils. This would seem to be analogous to the critique of hydroponically-grown crops. By Alison Rose Levy: Whether food production entails acres of mono-crops, livestock shuttled through assembly lines or orderly tracks of plastic pipelines in factory-scale hydroponics spaces, streamlined production techniques tempt food producers to improve on nature, without necessarily assessing the long-term health or environmental costs. Even an apparently benign innovation, like hydroponics, may convey unexpected downsides. Despite each new agricultural novelty, 17 years after the U.S. Department of Agriculture established the Organic Standards, earth-based farming remains the oldest and most proven method for cultivating organic food. A coalition of farmers, sustainability advocates and foodies wants to keep it that way. “If we want to protect the integrity of the organic seal, we will have to fight for it,” says Lisa Stokke, founder of Next7, which has launched a campaign to raise public awareness about the upcoming decision. Stokke hopes a vote at the October 31 meeting of the USDA’s National Organic Standards Board (NOSB)—which regulates the rules governing organic standards—will rectify what she calls “the wrongful designation of hydroponically grown foods as organic.” The ruling is particularly critical because soon several pre-Trump members will cycle off the NOSB, to be replaced by Trump-era appointees.

Plants cannot live on CO2 alone - An argument made by those who prefer to see a bright side to climate change is that carbon dioxide (CO2) being released by the burning of fossil fuels is actually good for the environment. This conjecture is based on simple and appealing logic: if plants need CO2 for their growth, then more of it should be better. We should expect our crops to become more abundant and our flowers to grow taller and bloom brighter. However, this "more is better" philosophy is not the way things work in the real world. There is an old saying, "Too much of a good thing can be a bad thing." For example, if a doctor tells you to take one pill of a certain medicine, it does not follow that taking four is likely to heal you four times faster or make you four times better. It's more likely to make you sick. It is possible to boost growth of some plants with extra CO2, under controlled conditions inside of greenhouses. Based on this,  'skeptics' make their claims of benefical botanical effects in the world at large. Such claims fail to take into account that increasing the availability of one substance that plants need requires other supply changes for benefits to accrue.  It also fails to take into account that a warmer earth will see an increase in deserts and other arid lands, reducing the area available for crops.  Plants cannot live on CO2 alone; a complete plant metabolism depends on a number of elements. It is a simple task to increase water and fertilizer and protect against insects in an enclosed greenhouse but what about doing it in the open air, throughout the entire Earth?

  • 1. CO2 enhanced plants will need extra water both to maintain their larger growth as well as to compensate for greater moisture evaporation as the heat increases. Where will it come from? In many places rainwater is not sufficient for current agriculture and the aquifers they rely on are running dry throughout the Earth (1, 2).
  • 2. Unlike Nature, our way of agriculture does not self-fertilize by recycling all dead plants, animals and their waste. Instead we have to constantly add artificial fertilizers produced by energy-intensive processes mostly fed by hydrocarbons, particularly from natural gas which will eventually be depleted. Increasing the need for such fertilizer competes for supplies of natural gas and oil, creating competition between other needs and the manufacture of fertilizer.
  • 3. Too high a concentration of CO2 causes a reduction of photosynthesis in certain of plants. There is also evidence from the past of major damage to a wide variety of plants species from a sudden rise in CO2 (See illustrations below). Higher concentrations of CO2 also reduce the nutritional quality of some staples, such as wheat.
  • 4. As is confirmed by long-term  experiments, plants with exhorbitant supplies of CO2 run up against  limited availability of other nutrients. These long term projects show that while some plants exhibit a brief and promising burst of growth upon initial exposure to C02, effects such as the  "nitrogen plateau" soon truncate this benefit
  • 5. Plants raised with enhanced CO2 supplies and strictly isolated from insects behave differently than if the same approach is tried in an otherwise natural setting. For example, when the growth of soybeans is boosted out in the open this creates changes in plant chemistry that makes these specimens more vulnerable to insects, as the illustration below shows.

Report: Global Food Chain Increasingly Threatened by Corporate Consolidation - As the European Commission considers a proposed mega-merger between Bayer and Monsanto , new research published Tuesday illustrates how corporations are monopolizing the global food system—jeopardizing consumer choice, labor conditions and efforts to eradicate world hunger . The Agrifood Atlas (pdf), which was jointly published by two German foundations and Friends of the Earth Europe , found that "two trends coincide in the agrifood sector: ever-fewer corporations are taking control of an ever-bigger market share and are gaining influence in many parts of the world. At the same time, the opportunities for civil society and social movements to oppose such developments are being restricted." "The fight for market share is achieved at the expense of the weakest links in the chain: farmers, and workers," the report explains. "The price pressure exerted by supermarkets and food firms is a major cause of poor working conditions and poverty further back in the chain. It also promotes the onward march of industrial agriculture and its associated effects on the environment and climate ." The atlas warns that further corporate consolidation throughout the global food chain will exacerbate issues that have already been perpetuated, in whole or in part, by past mergers among major companies in the agrifood sector. Those issues include:

  • Less consumer choice;
  • A risk to future food production;
  • Job cuts and low wages;
  • Price pressure through buyers' cartels; and
  • A situation where the poorest stay hungry despite an oversupply of food.

 Whales, Sea Turtles Threatened by Trump Administration Proposal -- The Trump administration proposed a rule Tuesday to federalize regulation of drift gillnets used to catch swordfish on the West Coast. The rule would end California's right to prevent the deadly entanglements of sea turtles, whales and dolphins in these underwater, mile-long nets.  The Obama administration last year proposed a rule that would shut down the fishery for two years if two large whales or sea turtles were harmed by the nets, but the Trump administration withdrew that proposed rule in June. Legislation to phase out drift gillnets was introduced in California in 2014 and 2016, and the new federal rule would preempt such efforts in the future.  "The Trump administration is seizing control of this fishery to stymie efforts to protect sea turtles, whales and dolphins from these deadly nets," said Catherine Kilduff, a senior attorney with the Center for Biological Diversity . "This cynical move perpetuates the status quo. Leatherback sea turtles, humpback whales and sperm whales have to dodge this dirty fishery when they need to feed in the rich waters off California."  The new proposal to federalize oversight was recommended in March by the Pacific Fisheries Management Council, which manages fisheries in California, Oregon and Washington. The recommendation was opposed by the California Department of Fish and Wildlife, Lt. Gov. Gavin Newsom, U.S. Rep. Jared Huffman (D-San Rafael) and a coalition of more than 15 environmental groups, including Turtle Island Restoration Network and the Center for Biological Diversity.  "Trump's move to federalize the drift gillnet fishery is irresponsible and puts reasonable resource management and the well-being of our ocean ecosystem at serious risk," said Cassie Burdyshaw, advocacy and policy director at Turtle Island Restoration Network . "Drift gillnets are walls of death that need to be phased out, not shielded from reasonable state regulations."

Trump Administration Moves to End Ban on New Uranium Mining Near Grand Canyon -- The U.S. Department of Agriculture's Forest Service released a recommendation Wednesday to lift former President Obama's uranium mining ban in the watershed of the Grand Canyon.  The move was made in response to President Trump's sweeping "energy independence" executive order in March to ease regulatory burdens on energy development. “This appalling recommendation threatens to destroy one of the world's most breathtakingly beautiful regions to give free handouts to the mining industry," said Allison Melton, an attorney with the Center for Biological Diversity . “The Trump administration's willingness to sacrifice our natural treasures to polluters knows no bounds. But this reckless, shortsighted proposal won't be allowed to stand."  Amber Reimondo, Energy Program Director with the Grand Canyon Trust , had similar sentiments. "The Forest Service should be advocating for a permanent mining ban, not for advancing private mining interests that threaten one of the natural wonders of the world," Reimondo said. "The Grand Canyon and the people and communities that depend on it cannot be left to bear the risks of unfettered uranium mining, which is what will happen if the moratorium is removed." The 20-year ban was issued in 2012 by former Interior Sec. Ken Salazar. It prohibits new claims for mining in the region, which includes more than one million acres of public land adjacent to the Grand Canyon. The ban, however, does not restrict existing mines, four of which continue within just a few miles of the rim of the Colorado River. Reimondo noted in a blog post that it is currently unclear what part of the ban the Forest Service intends to revise.  "It could mean shrinking the duration of the ban, set to expire in 2032, or reducing the acreage included in the ban, or both," she wrote.

National Forests, Endangered Species Under Attack as House Republicans Pass Reckless Logging Bill - In a partisan vote, Republicans in the U.S. House of Representatives approved legislation Wednesday that would devastate national forests by gutting endangered species protections and rubber-stamping huge logging projects. The final vote was 232 to 188. HR 2936 , sponsored by Rep. Bruce Westerman (R-Ark.), also limits public comment and environmental review under the National Environmental Policy Act. Under the guise of reducing forest fires, the bill would increase unfettered logging across national forests and public lands, increase fire risk and harm forest health, while doing nothing to protect communities. "This bill is a dangerous bait-and-switch that rewards the timber industry. It puts the health of our forests and wildlife in grave danger and ignores real solutions," said Randi Spivak, public lands program director at the Center for Biological Diversity . "It would green-light the worst forest management practices from decades ago, when reckless logging devastated wildlife, degraded rivers and ruined recreation opportunities for countless Americans." Westerman's bill is a timber-industry wish list. Among other harmful provisions, it would allow rushed logging projects up to 30,000 acres—46 square miles—without public notice or scientific assessment of potential harm to the environment as required under the National Environmental Policy Act. The bill would render forest plans meaningless, roll back measures designed to protect old-growth forests in the Pacific Northwest, waive protections for waterways and water quality across the national forest system, promote harmful logging in otherwise protected roadless areas and force the Forest Service to ignore potential harm to thousands of imperiled species. It would also give private landowners with easements on public land full ownership of that land and allow herbicides to be sprayed without reviewing the harm to water, fish and wildlife.

The Chinese 'miracle' elixir that threatens donkeys around the world - The medicine was ejiao, a Chinese medicine made from donkey skins and used for over 2,500 years.   “I took it for a month and the trouble went away.” That was back in 2004, and since then China’s ejiao industry has turned into a global megabusiness. What was once a humble blood tonic for conditions like anemia – a claim supported by no clinical evidence – has been rebranded as a wellness product for China’s ascendant middle class, and now features in face creams, sweets and liqueurs, as well as a wide variety of medicinal preparations. There are claims it will help with anemia and acne, boost your energy, improve your sleep, nourish your yin, prevent cancer, make you look better and even improve your libido. It is billed, in short, as a miracle elixir.  In Dong’e County, a remote province which is home to almost 90% of all Chinese ejiao factories, dozens of ejiao stores flank the town’s streets. There are ejiao adverts on billboards and at bus stops. The nearest airport, in the city of Jinan, has booths selling ejiao and fresh donkey meat, a regional delicacy. Dong-E E-Jiao (Deej), the world’s largest producer, has headquarters that include seven monolithic factory buildings, a giant conference hall, a visitor’s centre that resembles Beijing’s iconic Bird’s Nest stadium, and an immaculately landscaped lake.  But behind the facade of this increasingly glossy sector, with its product placements on Chinese TV shows and shiny packaging, is an international trade that is upending rural economies around the world. According to industry statistics, Chinese ejiao production consumes some 4m donkey skins per year. China’s donkeys numbered 11m two decades ago, but this figure has fallen below 6m, both as a consequence of booming ejiao production and the mass migration of rural Chinese, who formerly raised donkeys, into cities. Domestic supply is capped at less than 1.8 million and this leaves Deej and its smaller competitors heavily reliant on imports.Here is where the problems begin. In less than a decade demand for skins has inflated donkey prices beyond what locals can afford – in Kenya the cost of a donkey has more than trebled in the last year. Communities that rely on donkeys as pack animals no longer have access to a resource that until recently was abundant and cheap. First domesticated in Africa around 5,000 years ago, donkeys have supported subsistence livelihoods around the world for hundreds of generations, adept at drawing heavy loads and temperamentally easy to handle. Their sudden emergence as a globally traded commodity has disrupted traditional cycles of use: around the world donkeys are no longer worth more alive than dead.

Shocking New Investigation Links Berta Cáceres’s Assassination to Executives at Honduran Dam Company - Democracy Now! video - We look at shocking revelations released Tuesday that link the assassination of renowned Honduran indigenous environmental leader Berta Cáceres to the highest levels of the company whose hydroelectric dam project she and her indigenous Lenca community were protesting. We speak with New York Times reporter Elisabeth Malkin, who has read the new report by a team of five international lawyers who found evidence that the plot to kill Cáceres went up to the top of the Honduran energy company behind the dam, Desarrollos Energéticos, known as "DESA." The lawyers were selected by Cáceres's daughter Bertha Zúniga and are independent of the Honduran government's ongoing official investigation. They examined some 40,000 pages of text messages. The investigation also revealed DESA exercised control over security forces in the area, issuing directives and paying for police units' room, board and equipment.

World's Largest Tropical Reforestation to Plant 73 Million Trees in Brazilian Amazon - The largest tropical reforestation effort in history aims to restore 73 million trees in the Brazilian Amazon by 2023. The multimillion dollar, six-year project, led by Conservation International , spans 30,000 hectares of land—the equivalent of the size of 30,000 soccer fields, or nearly 70,000 acres. The effort will help Brazil move towards its Paris agreement target of reforesting 12 million hectares of land by 2030. "This is a breathtakingly audacious project," Dr. M. Sanjayan, CEO of Conservation International, said in a statement . "Together with an alliance of partners, we are undertaking the largest tropical forest restoration project in the world, driving down the cost of restoration in the process. The fate of the Amazon depends on getting this right—as do the region's 25 million residents, its countless species and the climate of our planet." The Amazon is the world's largest rainforest, home to indigenous communities and an immense variety and richness of biodiversity. The latest survey detailed 381 new species discovered in 2014-2015 alone.  But this precious land has been threatened by decades of commercial exploitation of natural resources, minerals and agribusiness, as Conservation International editorial director Bruno Vander Velde writes , "leading to about 20 percent of original forest cover to be replaced by pastures and agricultural crops, without securing the well-being of the local population."

  The changing face of woods work - Of my many seasons of working in the woods of the West, I remember that one best. My work partner, Barry Davis, and I were the only English speakers on that crew. Neither of us minded, since everybody’s wages were more than decent. We were pulling down $500 to $700 a week at a time when the minimum wage was $4.25 an hour, and that crew, run by a company called Evergreen Forestry of Coeur d’Alene, Idaho, was an uncommonly good one: a band of uncomplaining, hard-working, hard-partying and often very funny obreros — workers.  Davis, a wild-haired, wild-bearded man of about 40 who lived in his truck in Montana’s Bitterroot Valley when he wasn’t working, was an anarchist and rabble-rouser who believed in the international brotherhood of laborers, and he fell right in with the obreros, although he didn’t speak Spanish. None of us knew it then, but we were witnessing the end of a long era of Western woods-work, the end of tree-planting, timber-thinning and most other manual labor on the public lands, at least by American citizens like Davis and me. We had gotten on that crew by responding to an ad for planters in a Montana newspaper, driving almost four hours in my gas-hog 1977 Ford 150, loaded with camping gear, hoedads, and groceries. But when we arrived at Evergreen’s offices, the white American man we spoke with grinned and said, “We don’t actually hire Americans for these jobs, you know. The ad was just there because the law says we have to place it.” I was dumbfounded. Davis looked the man dead in the eye. With an almost gleeful smile, he threatened to report him to the local Better Business Bureau. We were hired immediately. But no rabble-rouser could stop the trend, and it became clear that no Better Business Bureau or government agency would try. By the time I quit forestry in the late 1990s, after nearly 20 seasons, few U.S. citizens of any ethnicity were working forestry jobs in the West. A new narrative had entered the American conversation: Tree-planting, like thinning timber, picking cherries or peaches, milking cows, tending strawberries in pesticide-laden fields, and so on, were all declared jobs Americans won’t do. Manual labor, even skilled manual labor, has become the province of desperate men and women imported from foreign lands.

Ganges under threat from climate change - Hundreds of people have converged on the banks of the Ganges to sing hymns in praise of the goddess of the sacred river. But worshippers are worried that the mighty Ganges, so central to the religion, culture and economy for millions of Indians, may in the future be reduced to a trickle. "I have never seen such scanty water in the River Ganges," Gauri Pandey, a cobbler who has been coming here to worship for 45 years, told DW. "I saw people walking in the river to another bank. The water level was below waist height. Some say if this trend continues, there are chances that Ganges may dry in the next 30 years."Scientists and environmentalists have pointed the finger at rising temperatures and receding glaciers. The holy water originates at the Gangotri glacier, which is more than 5,000 meters (16,400 feet) above sea level on the Indian side of the snowy Himalayas, and provides 70 percent of the river's water. But it is now shrinking at a rate of 22 meters per year — nearly twice as fast as 20 years ago. "The glacier has shrunk by almost 40 kilometers in 50,000 years," said Milap Chand Sharma, the country's leading glaciologist and a professor at Jawaharlal Nehru University in New Delhi. But he added that scientists believe human-caused climate change has resulted in a faster retreat. Winter snowfalls, which maintain the glacier, have been declining, affecting the amount of water flowing into the river annually. Mahesh Sharma, a journalist attending the evening prayers on the river, has visited the glaciers more than 50 times in the last three decades and has seen the impact. "The snow range has lessened," he said, adding that even at 5,000 meters, at the source of the Ganges, "you don't feel like wearing very warm clothes." 

India is killing the Ganges, and Modi can do nothing about it - India is killing the Ganges, and the Ganges is killing India. The waterway that has nourished more people than any on earth for millennia is now so polluted it is a menace to public health.  In a blog to mark his nomination, Modi promised to clean up the holy but heavily polluted Ganges, a popular cause in a city that depends on pilgrimages by devout Hindus who come to bathe in the river from its famous ghats, the stairways leading to the water. “The condition of the Ganga [Ganges] in several parts of UP is pitiable,” Modi said in his blog. “We can’t let this go on any more! Need of the hour is to work towards cleaning the Ganga and restoring it to its previous glory.” As he told the crowds in Varanasi: “When I was coming to this city I thought the BJP was sending me, but after I came here I felt mother Ganges had called me. I feel like a child coming to his mother. I want Kashi [Varanasi] to be the spiritual capital of the world.” However, by late 2016 – more than two years after that suggestion of a divine mission to save the Ganges – it was still not clear whether Modi would be able to fulfil his ambitious promises. Disillusioned residents of Varanasi, referring to Modi’s televised launch of a plan to clean tonnes of mud off the city’s famous Assi Ghat, criticised the lack of progress on the more important problem of sewage and resorted to a common lament: that such cosmetic projects were like “putting lipstick on a woman with a dirty sari”. It even seemed possible that Modi would – like other famous politicians before him, including the Congress prime minister Rajiv Gandhi – leave the river in a pitiable state. But Prakash Javadekar, his environment minister, claimed that industrial pollution of the Ganges had been cut by a third in two years. Of the 764 ‘grossly polluting industries’ on the river, 544 installed a so-called OCEM – an online continuous effluent monitoring system – and 150, including 68 tanneries, had been ordered to close for failing to install one. These official declarations were greeted with a mixture of despair and incredulity by scientists, environmentalists and factory owners. At the tanneries in Kanpur, for example, they pointed out that in almost all cases the effluent monitoring devices did no more than measure the quantity of liquid and made no measurement of chromium or any other pollutant.

China wants to build 1,000 km water pipe to turn desert into oasis - Chinese engineers are testing techniques that could be used to build a 1,000km tunnel – the world’s longest – to carry water from Tibet to Xinjiang, experts involved in the project say. The proposed tunnel, which would drop down from the world’s highest plateau in multiple sections connected by waterfalls, would "turn Xinjiang into California", one geotechnical engineer said. China’s longest tunnel is the eight-year-old 85km Dahuofang water project in Liaoning province, while the world’s longest tunnel is the 137km main water supply pipe beneath the city of New York. With new water from Tibet, Xinjiang would boom like California. However, the Chinese government started building a tunnel in the centre of Yunnan province in August that will be more than 600km long, local media reported. Comprising more than 60 sections, each wide enough to accommodate two high-speed trains, it will pass through mountains several thousand metres above sea level in an area plagued by unstable geological conditions. Researchers said building the Yunnan tunnel would be a "rehearsal" of the new technology, engineering methods and equipment needed for the Tibet-Xinjiang tunnel, which would divert the Yarlung Tsangpo River in southern Tibet to the Taklimakan Desert in Xinjiang. Downstream, in India, the river becomes the Brahmaputra, which joins the Ganges in Bangladesh. The earliest proposals to divert water from Tibet to Xinjiang were made by Qing dynasty officials Lin Zexu and Zuo Zongtang in the 19th century. In recent decades, Chinese government branches, including the Ministry of Water Resources, have come up with engineering blueprints involving huge dams, pumps and tunnels. The project’s enormous cost, engineering challenges, possible environmental impact and the likelihood of protests by neighbouring countries have meant it has never left the drawing board, but Zhang Chuanqing, a researcher at the Chinese Academy of Sciences’ Institute of Rock and Soil Mechanics in Wuhan, Hubei province, said China was now taking a quiet, step-by-step approach to bring it to life. 

Pollution Kills 9 Million People a Year (video) Pollution causes far more deaths than tobacco, infectious disease or war, and causes 4.6 trillion dollars of economic damage per year, according to a major new study published in the British medical journal The Lancet. You can view here with a transcript.

If you hold your breath, air quality doesn't matter either »- Citing the risk of conflicts of interest, the EPA administrator instituted a sweeping change to the agency’s core system of advisory panels on Tuesday, restricting membership to scientists who don’t receive EPA grants.In practice, the move represents “a major purge of independent scientists,” Terry F. Yosie, chair of the EPA’s Science Advisory Board during the Reagan administration, told the Washington Post. Their removal paves the way for a fresh influx of industry experts and state government officials pushing for lax regulations.The advisory boards are meant to ensure that health regulations are based on sound science, but that role may be changing. As of Tuesday, the new chair of the Clean Air Safety Advisory Committee is Tony Cox, an independent consultant, who has argued that reductions in ozone pollution have “no causal relation” to public health.The new head of the Science Advisory Board is Michael Honeycutt, the head toxicologist at the Texas Commission on Environmental Quality, who has said that air pollution doesn’t matter because “most people spend more than 90 percent of their time indoors.”  The figureheads of science denial were on hand to celebrate Pruitt’s announcement. Representative Lamar Smith, a Republican from Texas, called the move a “special occasion.”

 Puerto Ricans, washing in contaminated water, face the spread of disease -  Conditions are ripe for disease in Puerto Rico. The storm and subsequent rains left pools of standing water that have become breeding ground for mosquitoes. People are living many to a house or shelter, as they concentrate near sources of power and running water. Those without it resorted to potentially contaminated streams and rivers to wash their clothes and bathe. The piles of debris, which still line many streets, are a haven for vermin. There’s been outbreaks of gastroenteritis and conjunctivitis. There’s also more than 70 suspected cases of Leptospirosis, a disease transmitted by the urine of infected animals, including mice and dogs. It’s still unclear whether Leptospirosis is spreading or not. Samples from the suspected cases have been sent to the US for testing. “The tests are fairly complicated,” says Henry Walke, chief of the bacterial special pathogens branch the US’s Centers for Disease Control and Prevention (CDC.) It takes about four days to conclude them, he adds. The first 10 cases were reported the second week of October; a week later, they had gone up to 73 suspected cases. However, so far officials say they have only obtained confirmed results for four of those cases: two patients died; the other two are hospitalized. Walke, and Puerto Rico’s state epidemiologist, Carmen Deseda, say they are waiting for the rest of the test results to evaluate whether there’s been an outbreak or not. Other illnesses, they point out, including dengue and the flu have the same symptoms, such as fever. Puerto Ricans should be cautious about those diseases as well, they add. In the meantime, they say, they are treating all patients with Leptospirosis symptoms with antibiotics. They are also spreading the word about contamination risks, asking people to avoid walking barefoot and distributing chlorine tablets to disinfect water. Trucks, too, have been distributing water to people with no access to it. 

EPA: Water at Puerto Rico Superfund site is fit for consumption  - Water drawn from wells at a hazardous waste site in hurricane-hit Puerto Rico meets federal drinking water standards and is fit for consumption, the US Environmental Protection Agency said in a news release on Tuesday.The water being pulled from wells at the Dorado Groundwater Contamination Site, which is part of the Superfund program for hazardous waste cleanup, meets federal drinking water standards for certain industrial chemicals, as well as for bacteria, Elias Rodriguez, an EPA spokesman, told CNN.The water is "OK to consume based on the analysis that we've done," Rodriguez said.CNN previously reported that desperate locals had been breaking into wells on the Dorado hazardous waste site in search of water. Following Hurricane Maria, which ravaged the island about six weeks ago, 18% of households in Puerto Rico remain without working taps. Bottled water has been scarce on parts of the Caribbean island, which is a US territory.The EPA listed the area as a hazardous waste site in 2016. "Sampling at the site has found chemical contamination that is impacting wells used to supply drinking water to the local communities," the agency said at the time. "Drinking water with the solvents, which include tetrachloroethylene and trichloroethylene, can have serious health impacts including damage to the liver and increasing the risk of cancer."

Puerto Rico Is Burning Its Dead, And We May Never Know How Many People The Hurricane Really Killed — Funeral home and crematorium directors are being permitted by the Puerto Rican government to burn the bodies of people who they say died as a result of Hurricane Maria — without those people being counted in the official death toll. Those directors say they are unclear on how to classify hurricane-related deaths and whether they should send bodies to the central institute certifying official hurricane deaths, called the Institute of Forensic Sciences. The result is likely suppressing the official death count, which has become a major indicator of how the federal government’s relief efforts are going because President Trump himself made it one. During Trump’s photo-op visit to the US territory — whose residents are US citizens — three weeks ago, he boasted that the death toll was just 16. It doubled by the time he returned to Washington that same day. The death toll is now at 51, a figure widely contradicted by what funeral homes, crematoriums, and hospitals on the ground tell BuzzFeed News. Last week, BuzzFeed News visited 10 funeral homes and crematoriums in two Puerto Rican municipalities on the territory’s western coast, Aguadilla and Mayagüez, at least two hours away from the bustling San Juan. The findings include:

  • Communication between the government and funeral homes or crematorium directors appears to be broken. Directors say guidelines are unclear, and the government saying they should know the proper procedures for identifying a hurricane-related death.
  • The central institute is also giving crematoriums permission to burn bodies of potential hurricane victims — which is happening more because it is cheaper and logistically easier as families rebuild their lives — by examining paperwork but not the bodies, which means they are not being counted in the official death toll.
  • Disaster experts say this lack of a transparent and consistent approach to counting deaths means the toll is likely inaccurate.
  • And experts also say an inaccurate official death toll potentially cheats families out of FEMA relief funds and could hurt how future disasters are handled.

 Puerto Rico's Government Just Admitted 911 People Died After the Hurricane – of ‘Natural Causes’ -- The Puerto Rican government told BuzzFeed News on Friday that it has allowed 911 bodies to be cremated since Hurricane Maria made landfall, and that not one of them were physically examined by a government medical examiner to determine if it should be included in the official death toll.Every one of the 911 died of "natural causes" not related to the devastating storm, said Karixia Ortiz Serrano, a spokesperson for the Department of Public Safety who is also speaking for the Institute of Forensic Sciences, which is in charge of confirming hurricane deaths. The "natural causes" designations were made by reviewing records, not by actually examining the bodies, she said.The government's revelation comes after BuzzFeed News reported earlier Friday that directors of funeral homes and crematoriums in two municipalities were permitted by the government to burn the bodies of many people the directors thought died as a result of the hurricane — without a government pathologist examining the corpses first to determine if they should be counted in the official death toll. The current death toll stands at 51. Twenty of those official deaths were cremations.The death toll has become a critically important indicator of how relief efforts are going — because President Trump made it one. It is also important for families of victims to claim federal relief aid. “These reports are extremely troubling — they provide even more reason to be concerned about the accuracy of the information we’re receiving," Sen. Elizabeth Warren, a Democrat from Massachusetts, told BuzzFeed News. "The Trump Administration needs to cooperate with Puerto Rican authorities and provide all the necessary resources to ensure the death toll is accurately counted.”Sen. Richard Blumenthal, a Democrat from Connecticut, added, "I intend to take any and all available steps to get to the bottom of the increasing appearance of misinformation in Hurricane Maria recovery efforts."

Controversy Remains After Cancellation of Whitefish Energy's Puerto Rico Contract - Puerto Rico 's electric power authority (PREPA) has cancelled Whitefish Energy Holdings' controversial $300 million contract to help rebuild the U.S. territory's Hurricane Maria -wrecked power grid. The small Montana-based power company said it was "very disappointed" with the decision which came after Gov. Ricardo Rosselló called on PREPA to "immediately" cancel the deal. Many questions have been raised about how the two-year-old firm from Interior Sec. Ryan Zinke 's hometown landed such a lucrative, no-bid contract. Whitefish employed only two full-time staff members before the Category 4 storm struck Puerto Rico more than a month ago. "The decision will only delay what the people of Puerto Rico want and deserve—to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster," Whitefish said in a statement. "We will certainly finish any work that PREPA wants us to complete and stand by our commitments knowing that we made an important contribution to the restoration of the power grid since our arrival on the island on October 2." Zinke and the White House have denied playing any role in securing the deal. Whitefish CEO Andy Techmanski, who told NBC News that he first made contact with Puerto Rico officials through LinkedIn, also called it a "witch hunt looking for something that does not exist." PREPA CEO Ricardo Ramos said at a Sunday press conference that the contract is "not canceled as of yet," as it requires 30 days of prior notice.  Ramos said he will need to talk to Whitefish, noting, "the plan is not to demobilize them either, we will let them finish what they have started. As of Sunday , less than 30 percent of Puerto Rico's electricity has been restored.

Puerto Rico to lean on NY, FL for help restoring its grid after scrapping of Whitefish deal-- After days of pointed questions and mounting ouctry, the head of Puerto Rico's beleaguered power utility announced on Sunday that it had put an end to a contract it granted to Whitefish Energy, which was worth up to $300 million.The small, virtually unknown Montana based company landed the heavily scrutinized deal to aid in the restoration of power on the island of Puerto Rico following Hurricane Maria's total destruction of the power grid."We are very disappointed in the decision by Governor Rosselló to ask PREPA to cancel the contract which led to PREPA's announcement this afternoon," Whitefish said in a statement issued on Sunday."The decision will only delay what the people of Puerto Rico want and deserve – to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster," the company added.The Whitefish contract with PREPA—which has $9 billion in outstanding debt and officially entered into a bankruptcy-like preceding in July—sparked outrage among members of U.S. Congress, several of whom called for an investigation into the bidding process. It set off alarm bells among government watchdogs, FEMA and other parts of the Trump administration, which in recent days was forced to distance itself from the increasingly controversial bid.  However, Ricardo Ramos, the CEO of Puerto Rico Electric Power Authority (PREPA) noted that cancelling the contract may set back power restoration efforts an additional 10 to 12 weeks. Maria, a powerful category 4 storm, made landfall on Puerto Rico more than a month ago, and still more than 70 percent of the island's 3.4 million residents are without power.

Source tells WSJ that the FBI is investigating Whitefish Energy and its $300M Puerto Rico contract - Whitefish Energy's had quite a week: last week the two-person company from Whitefish, Montana (hometown of Trump Interior Secretary Ryan Zinke) was awarded a $300M contract to help rebuild the power-grid in Puerto Rico, with some very favorable terms including $462/hour for subcontracted supervisors, no penalties for nonperformance, and a guarantee that the government wouldn't audit its expenditures.Today, it lost that contract after the governor of Puerto Rico demanded that it be canceled. The cancellation came with an announcement that all of Whitefish Energy's government contracts would be audited.  Now, a source has told the Wall Street Journal that the FBI is investigating the circumstances under which Whitefish got its extraordinary deal.If the FBI's preliminary inquiry develops into a full investigation of the contract, it would join several other reviews of the contract already underway.It wasn't immediately clear what about the deal the FBI would be investigating. But members of Congress have raised concerns over the manner in which the contract for essential work to rebuild the island's decimated grid was awarded to the small Montana company. The Federal Emergency Management Agency has also raised concerns over whether the amount of the contract awarded was reasonable.The company also has ties to the Trump administration. The company is based in and named after the small hometown of Interior Secretary Ryan Zinke, and the CEO is an acquaintance of the secretary. An investment firm that owns a major stake in the company is run by a donor to Trump's presidential campaign. Source: FBI opens inquiry into Whitefish's Puerto Rico contract.

Nearly 40 days after Hurricane Maria, one neighborhood in Puerto Rico’s central mountains is still stranded - The cluster of houses perched on a hill overlooking the Arecibo River in Puerto Rico’s central mountain region used to be known as Río Abajo.Then Hurricane Maria hit, turning the river into a ferocious torrent that wiped out the concrete bridge connecting the neighborhood to the nearby town of Utuado. For 15 days, as their water supply dwindled and their health worsened, residents waited for help to arrive. And when it didn’t come, they baptized the neighborhood with a new name: El Campamento de los Olvidados, the Camp of the Forgotten Ones. Now, at the edge of the broken bridge, a Puerto Rican flag flaps in the wind. Below it, on a cardboard sign, the new name has been neatly stenciled in red spray paint. On Friday, 37 days after the storm, the residents of Río Abajo were still stranded. They now have plenty of food and water: the National Guard, the Red Cross, government officials and dozens of volunteers have brought supplies, which residents ferry across the divide using a zip-line they’ve rigged from a cable and a shopping cart.  Rio Abajo residents Carlos Ocasio Borrero, left, and Luis Santiago cleaning debris as a resident waits to climb the ladder to the Rio Abajo neighborhood of Utuado, now known as the Camp of the Forgotten Ones, during the aftermath of Hurricane Maria in Puerto Rico. But there’s still no safe way to cross the river. To get to Utuado, locals have to climb down two wooden ladders leaning against a mound of fallen branches and debris. Then they have to wade through contaminated water, scramble over fallen concrete pylons and climb up a steep riverbank on the other side. And that’s only if it doesn’t rain. On Thursday, a storm caused the river to surge and it became too dangerous to cross. Río Abajo was once again cut off from the rest of the world.

After a $6 Billion Wipeout, Wildfires Still Imperil PG&E - The 911 calls began before midnight, with reports of downed power lines and exploding transformers. What would swiftly grow into the deadliest wildfires in California history were ablaze -- and fingers were soon pointing at PG&E Corp. Investigators may never be able to determine what ignited the wine country fires, but PG&E, one of the nation’s largest utilities, is struggling to fend off catastrophe anyway. The mere suggestion its equipment might be to blame was enough to send shares tumbling, wiping out about $6 billion in value. One reason: Under California law, if it turns out that any PG&E gear provided a spark, the company can be responsible for damages -- even if it did everything by the book. Negligence isn’t required. Investors are spooked, said Deutsche Bank Securities Inc. analyst Jonathan Arnold. “Why would they continue providing capital to a private utility if that utility could be held liable for property damage in a major catastrophe regardless of finding of fault in their operations?” And if PG&E is found to be directly at fault? Bad blood between the state and its largest power provider runs deep, with the utility cited in previous wildfires and still under review for a 2010 natural-gas pipeline explosion that killed eight people. One legislator has already demanded regulators disband it if its carelessness or neglect is discovered to be the culprit.

Richard Branson Vowed to Rebuild the Caribbean After Hurricanes Destroyed It - After surviving two Category 5 hurricanes this fall, the Caribbean resembled something of a war zone, according to Virgin Group founder Richard Branson. And so what the island nations of the region need now is a post-war plan for redevelopment—a plan he's calling the "Disaster Recovery Marshall Plan," named after the Marshall Plan that helped rebuild Europe after World War II. The plan will be focused on bringing a "green energy revolution" to the region, Branson told Reuters . The Caribbean spans 2.8 million square miles and is home to 37 million people—many of whom live in poverty. While poverty levels on islands like Jamaica, Barbuda, Dominica, and the British and U.S. Virgin Islands vary widely, the region as a whole has struggled to build strong economies, according to the Caribbean Development Bank . The billionaire inventor and businessman, who owns a private island in the Caribbean where he rode out Hurricane Irma with his staff, is working with global leaders including the International Monetary Fund to help rebuild the islands, according to the report. Branson is insisting that the islands rebuild their energy grid on sustainable, renewable sources rather than fossil fuels. "Another storm could strike within the coming weeks," Branson told a meeting of leaders in Washington earlier this month. "The Caribbean must seize the opportunity and take the leap from 20th-century technology to 21st-century innovation." 

Richard Branson’s green energy plan for Caribbean may include debt relief | Reuters: - A plan by British billionaire Richard Branson to lead a post-hurricane rebuilding effort in the Caribbean, with a focus on clean energy projects, may include debt relief negotiations mediated by the International Monetary Fund. Branson is spearheading a plan to help Caribbean nations recover after Hurricanes Irma and Maria ravaged several islands. The centerpiece of the plan is a push to replace outdated fossil-fuel power grids with renewable energy systems that can withstand extreme weather and boost economic development in Caribbean. For the past month, the founder of the Virgin Group conglomerate has been in talks with some of the world’s top multilateral lenders and foundations to set up a fund to finance what he called the Disaster Recovery Marshall Plan – a reference to a program to rebuild Western Europe after World War Two. The effort focuses on “a green energy revolution” to make Caribbean economies more sustainable, Branson said. The businessman has lived in the British Virgin Islands for more than a decade and weathered Hurricane Irma inside a cellar on Necker, his private island. “We want to move the Caribbean countries into clean energy and make them more sustainable, which will make dealing with hurricanes much easier,” he told the Thomson Reuters Foundation in an interview in Miami.

Greenhouse Gas Concentrations Hit Record High - Concentrations of atmospheric carbon dioxide (CO2) increased at "record-breaking" speed last year, according to the World Meteorological Organization's (WMO) annual Greenhouse Gas Bulletin released Monday.   According to the report , concentrations of CO2 reached 403.3 parts per million in 2016, up from 400.00 parts per million the year prior. This acceleration was due to a strong El Niño event—which triggered droughts and reduced the capacity of forests, vegetation and the oceans to absorb CO2—as well as human activities, such as the burning of fossil fuels .   "The last time the Earth experienced a comparable concentration of CO2 was 3-5 million years ago, the temperature was 2-3°C warmer and sea level was 10-20 meters higher than now," a press release for the bulletin stated. "Concentrations of CO2 are now 145% of pre-industrial (before 1750) levels."  Methane and nitrous oxide—the two other main greenhouse gases —also hit record levels in 2016.  "Population growth, intensified agricultural practices, increases in land use and deforestation, industrialization and associated energy use from fossil fuel sources have all contributed to increases in concentrations of greenhouse gases in the atmosphere since the industrial era, beginning in 1750," the release continued.  This rapid surge in greenhouse gases could trigger unprecedented climate change and lead to "severe ecological and economic disruptions," the report said.  "The numbers don't lie. We are still emitting far too much and this needs to be reversed," Erik Solheim, the head of the United Nations' environment program, said. "The last few years have seen enormous uptake of renewable energy, but we must now redouble our efforts to ensure these new low-carbon technologies are able to thrive. We have many of the solutions already to address this challenge. What we need now is global political will and a new sense of urgency."

Record surge in atmospheric CO2 seen in 2016 - BBC News: Concentrations of CO2 in the Earth's atmosphere surged to a record high in 2016, according to the World Meteorological Organization (WMO). Last year's increase was 50% higher than the average of the past 10 years. Researchers say a combination of human activities and the El Niño weather phenomenon drove CO2 to a level not seen in 800,000 years. Scientists say this risks making global temperature targets largely unattainable. This year's greenhouse gas bulletin produced by the WMO is based on measurements taken in 51 countries. Research stations dotted around the globe measure concentrations of warming gases including carbon dioxide, methane and nitrous oxide. The figures published by the WMO are what's left in the atmosphere after significant amounts are absorbed by the Earth's "sinks", which include the oceans and the biosphere.2016 saw average concentrations of CO2 hit 403.3 parts per million, up from 400ppm in 2015. "It is the largest increase we have ever seen in the 30 years we have had this network," Dr Oksana Tarasova, chief of WMO's global atmosphere watch programme, told BBC News. "The largest increase was in the previous El Niño, in 1997-1998, and it was 2.7ppm; and now it is 3.3ppm. It is also 50% higher than the average of the last 10 years." El Niño impacts the amount of carbon in the atmosphere by causing droughts that limit the uptake of CO2 by plants and trees. Emissions from human sources have slowed down in the last couple of years according to research, but according to Dr Tarasova, it is the cumulative total in the atmosphere that really matters as CO2 stays aloft and active for centuries. Over the past 70 years, says the report, the increase in CO2 in the atmosphere is nearly 100 times larger than it was at the end of the last ice age. 

Carbon dioxide is gushing into Earth’s atmosphere at record pace - The concentration of CO2, a planet-warming greenhouse gas, set a new record in 2016, according to a report by the U.N. World Meteorological Organization. The year-to-year spike in CO2, from 400 ppm in 2015 to 403.3 ppm in 2016, also represents the biggest annual jump on record, some of which can be attributed to the 2015-2016 El Nino. The atmosphere has as much CO2 in it as it did 3 to 5 million years ago, the report states, when “the Greenland and West Antarctic ice sheets melted and even some of the East Antarctic ice was lost, leading to sea levels that were [33 to 66 feet] higher than those today.”The report starts out The rate of increase of atmospheric carbon dioxide (CO2) over the past 70 years is nearly 100 times larger than that at the end of the last ice age.That in itself is alarming. But here’s the kicker — and the thing that may end up being more important than the total amount of CO2 in the air: As far as direct and proxy observations can tell, such abrupt changes in the atmospheric levels of CO2 have never before been seen.

Carbon dioxide levels reach 1 million-year record — The amount of carbon dioxide in the Earth’s atmosphere grew at a record rate in 2016 to a level not seen for millions of years, potentially fueling a 20-meter (65-foot) rise in sea levels and adding 3 degrees to temperatures, the United Nations said Monday. Atmospheric concentrations of carbon dioxide (CO2), the main man-made greenhouse gas, hit 403.3 parts per million (ppm), up from 400.0 in 2015, the UN World Meteorological Organization said in its annual Greenhouse Gas Bulletin. That growth rate was 50 percent faster than the average over the past decade, driving CO2 levels 45 percent above pre-industrial levels and further outside the range of 180 to 280 ppm seen in recent cycles of ice ages and warmer periods. “Today’s CO2 concentration of ~400 ppm exceeds the natural variability seen over hundreds of thousands of years,” the WMO bulletin said. The latest data adds to the urgency of a meeting in Bonn next month when environment ministers from around the world will work on guidelines for the Paris climate accord backed by 195 countries in 2015. The agreement is already under pressure because US President Donald Trump has said he plans to pull the United States out of the deal, which seeks to limit the rise in temperatures to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial times. Human CO2 emissions from sources such as coal, oil, cement and deforestation reached a record in 2016, and the El Niño weather pattern gave CO2 levels a further boost, the WMO said. As far as scientists can tell, the world has never experienced a rise in carbon dioxide like that of recent decades, which has happened 100 times faster than when the world was emerging from the last ice age. 

World carbon emissions already set to blow Paris deal levels by 30% (Reuters) - Greenhouse gas emissions are on course to be about 30 percent above the level needed to keep global warming to an internationally agreed target in 2030, the United Nations said on Tuesday. "Without enhanced ambition the likely global average temperature increase will be in the range of 3.0-3.2 degrees Celsius by the end of the century," U.N. Environment said as it issued its annual audit of emissions reductions. By 2030, annual emissions are likely to be 53.0-55.5 billion tonnes of carbon dioxide equivalent, far above the 42 billion ton threshold for averting a temperature rise of more than 2 degrees Celsius (3.6 degrees Fahrenheit) this century, the U.N. environment agency said. The latest projection, which assumes all countries meet their commitments, is slightly lower than the gap of 12-14 billion tonnes foreseen a year ago, reflecting new data on national emission reduction programs. The report said there was increasing evidence that carbon dioxide emissions from fossil fuels, cement production and other industrial processes remained stable for the past three years, largely due to slower growth in coal use in China and the United States. But the trend could be reversed, and 80-90 percent of coal reserves must remain in the ground, it said. 

World set to bust global warming goal, but U.N. cool on threat from Trump (Reuters) - Greenhouse gas emissions are on course to be about 30 percent above the 2030 global target, but there are signs of a move away from fossil fuels that not even U.S. President Donald Trump can stop, the United Nations said on Tuesday. Trump has announced he will pull out of the Paris climate agreement under which 195 countries pledged to try to keep global warming to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial times. An annual U.N. audit of progress toward that goal showed emissions are likely to be 53.0-55.5 billion tonnes of carbon dioxide equivalent per year by 2030, far above the 42 billion ton threshold for averting the 2 degree rise. But U.N. Environment chief Erik Solheim hailed signs of progress, with an apparent three-year plateau in carbon dioxide emissions from fossil fuels, cement production and other industrial processes, largely due to slower growth in coal use in China and the United States. “We all know the bad news. In my view however we are at a turning point where the good news is taking precedence from the bad news,” he told an event to launch the report in Geneva. 

BP and Shell planning for catastrophic 5°C global warming despite publicly backing Paris climate agreement -- Companies are trying to 'have their oil and drink it' by committing to 2°C in public while planning for much higher temperature rises, says shareholder campaign group, ShareAction.  Neither company sets targets to reduce emissions and BP’s total investment in renewable and clean technologies has actually shrunk since 2005, the report said.  Oil giants Shell and BP are planning for global temperatures to rise as much as 5°C by the middle of the century. The level is more than double the upper limit committed to by most countries in the world under the Paris Climate Agreement, which both companies publicly support.The discrepancy demonstrates that the companies are keeping shareholders in the dark about the risks posed to their businesses by climate change, according to two new reports published by investment campaign group Share Action. Many climate scientists say that a temperature rise of 5°C would be catastrophic for the planet.ShareAction claims that the companies’ actions put the value of millions of people's pensions at risk. Two years after BP and Shell shareholders voted resoundingly in favour of forcing the companies to make detailed disclosures about climate risks, the companies have made unconvincing steps forward, according to the reports. ShareAction said that Shell and BP are meeting their legal requirements, but are putting shareholders’ capital at risk because of numerous failings in their plans for the future.Neither company sets targets to reduce emissions and BP’s total investment in renewable and clean technologies has actually shrunk since 2005, the reports said. That’s despite the company’s public-facing image of being “beyond petroleum”.

Climate change could force more than a billion people to flee their homes, says major health report - More than a billion people could be forced to flee their homes because of global warming, according to new research. The movement of people, as well as the various effects of climate change, could be about to trigger a major health crisis, according to a new study from The Lancet.Global warming is already leading some to conclude the climate-change migrants are being forced to move because of extreme changes in the amount of rain and temperature changes destroying their ability to farm. It notes that some have blamed the Syrian conflict on migration into the cities that was caused by a drought that seems to have been induced by climate change. It notes that “migration driven by climate change has potentially severe impacts on mental and physical health, both directly and through the disruption of essential health and social services”. That is the conclusion of the sweeping new research, which brings together a range of different studies looking at the health impacts of climate change. It suggests that the possible impact of those changes on people’s health could be vast – and that governments must act quickly to clean up the air and address environmental problems before they begin to kill people. The study concludes that people can adapt to some of the less dramatic changes. But there are powerful limits to the amount people can adapt, it says – and so governments need to work hard both to mitigate the effects of climate change and help people adapt to them, in an attempt to deal with that health crisis.

Coastal Cities at Risk | Climate Central -- Five years ago this month, Sandy made landfall in New Jersey as it transitioned to a non-tropical storm. The catastrophic flooding that followed resulted in an estimated $50+ billion in damage. On the storm’s fifth anniversary, we analyze the 50 largest U.S. populations at risk from coastal flooding from Atlantic basin storms. The number of people at risk in a particular location was calculated by considering locations within FEMA’s 100-year coastal floodplains, which factor in storm surge, tides and waves. Our risk analysis adds sea level rise to these elements and applies the result to coastal cities with populations greater than 20,000. Based on these criteria, coastal cities were ranked by various factors.New York City was ranked first for current exposure, with over 244,000 people at risk. Numerous communities in South Florida also neared the top of the analysis. Cities were ranked again based on floodplain growth by 2050 given sea level rise under the business as usual (RCP 8.5) emissions scenario, which assumes unchecked greenhouse gas emissions. After accounting for these projections, New York City still had the greatest number of people at risk, with the South Florida community of Hialeah moving into second place on the list.The analysis assumed no change in population between now and 2050, but still indicated a growing number of people at risk as seas rise. Outside of New York and Florida, Boston was one of the five cities with the greatest increase of population at risk. Across the top five cities, sea level rise places an additional 450,000 people at risk by 2050.  See the full report here.

Ocean acidification is deadly threat to marine life, finds eight-year study - If the outlook for marine life was already looking bleak – torrents of plastic that can suffocate and starve fish, overfishing, diverse forms of human pollution that create dead zones, the effects of global warming which is bleaching coral reefs and threatening coldwater species – another threat is quietly adding to the toxic soup. Ocean acidification is progressing rapidly around the world, new research has found, and its combination with the other threats to marine life is proving deadly. Many organisms that could withstand a certain amount of acidification are at risk of losing this adaptive ability owing to pollution from plastics, and the extra stress from global warming. The conclusions come from an eight-year study into the effects of ocean acidification which found our increasingly acid seas – a byproduct of burning fossil fuels – are becoming more hostile to vital marine life. “Since ocean acidification happens extremely fast compared to natural processes, only organisms with short generation times, such as micro-organisms, are able to keep up,” the authors of the study Exploring Ocean Change: Biological Impacts of Ocean Acidification found.  Marine life such as crustaceans and organisms that create calcified shelters for themselves in the oceans were thought to be most at risk, because acid seas would hinder them forming shells. However, the research shows that while these are in danger, perhaps surprisingly, some – such as barnacles – are often unaffected, while the damage from acidification is also felt much higher up the food chain, into big food fish species.Ocean acidification can reduce the survival prospects of some species early in their lives, with knock-on effects. For instance, the scientists found that by the end of the century, the size of Atlantic cod in the Baltic and Barents Sea might be reduced to only a quarter of the size they are today, because of acidification.

More acidic oceans 'will affect all sea life' - BBC News: All sea life will be affected because carbon dioxide emissions from modern society are making the oceans more acidic, a major new report will say. The eight-year study from more than 250 scientists finds that infant sea creatures will be especially harmed. This means the number of baby cod growing to adulthood could fall to a quarter or even a 12th of today's numbers, the researchers suggest. The assessment comes from the BIOACID project, which is led from Germany. A brochure summarising the main outcomes will be presented to climate negotiators at their annual meeting, which this year is taking place in Bonn in November. The Biological Impacts of Ocean Acidification report authors say some creatures may benefit directly from the chemical changes - but even these could still be adversely affected indirectly by shifts in the whole food web. What is more, the research shows that changes through acidification will be made worse by climate change, pollution, coastal development, over-fishing and agricultural fertilisers. Ocean acidification is happening because as CO2 from fossil fuels dissolves in seawater, it produces carbonic acid and this lowers the pH of the water. Since 2009, scientists working under the BIOACID programme have studied how marine creatures are affected by acidification during different life stages; how these reactions reverberate through the marine food web; and whether the challenges can be mitigated by evolutionary adaptation. A synthesis of more than 350 publications on the effects of ocean acidification - which will be given to climate delegates at next month's summit - reveals that almost half of the marine animal species tested reacted negatively to already moderate increases in seawater CO2 concentrations. Early life stages were affected in Atlantic cod, blue mussels, starfish, sea urchins and sea butterflies. 

Analysis: How could the Agung volcano in Bali affect global temperatures? - Major volcanic eruptions, in particular, can have a sizable cooling impact on the climate lasting for five years or so. The Mount Agung volcano in Bali, Indonesia, has been showing signs that an eruption is likely to occur this year. Last time Agung erupted, back in 1963, it had a noticeable cooling effect on the Earth’s climate.  Here, Carbon Brief examines how volcanoes influence the climate, and suggests that a new Agung eruption would likely only result in a modest and temporary cooling of global temperatures. Volcanoes generally have a cooling influence on the Earth’s surface. Eruptions send a cloud of ash and dust high into the atmosphere. The sulphur dioxide released combines with water to form sulfuric acid aerosols, which reflect incoming sunlight and influence cloud formation. When eruptions are powerful enough to reach the stratosphere (18 km or more above the surface at the equator), these sulphate aerosols can stay aloft for a number of years and have a strong cooling effect on the climate. Volcanic eruptions also release CO2 into the atmosphere, meaning they contribute to warming by strengthening the greenhouse effect. But this influence is very small, and is outweighed by the cooling impact of the dust and ash. The location of volcanoes also matter. Major volcanic eruptions near the equator are more likely to have a big effect on global temperatures, while high-latitude eruptions (like Laki) will have their effects more limited to the one hemisphere. Sulphate aerosols from high-latitude volcanoes generally will not cross the equator, while tropical volcanoes tend to cool both hemispheres. The figure below shows an example of what might happen if the Agung erupted today. The black dots represent the actual measured temperatures (from Berkeley Earth), while the grey shaded areas show the three major volcanic eruptions since 1960 (Agung, El Chichon, and Pinatubo). The red line shows Carbon Brief’s estimate of the warming that can be attributed to the combination of greenhouse gases, volcanoes, and changes in solar output, and blue dip after 2016 shows what could happen to global temperatures if the expected  Agung eruption is of the same magnitude as the one that occurred in 1963.

As ice retreats, frozen mosses emerge to tell climate change tale - — Some mosses in the eastern Canadian Arctic, long entombed in ice, are now emerging into the sunlight. And the radiocarbon ages of those plants suggest that summertime temperatures in the region are the warmest they’ve been in tens of thousands of years. As the planet warms and the ice retreats on Canada’s Baffin Island, the change is revealing plants long buried beneath the ice. And in some locations, the emerging plants last saw the sun at least 45,000 years ago — and possibly as much as 115,000 years ago. Paleoclimatologist Gifford Miller of the University of Colorado Boulder reported the finding October 22 at the Geological Society of America’s annual meeting. “We were stunned,” Miller said. To track the growth and retreat of ice cover in the region, Miller and colleagues have been hunting for remnants of scraggly mosses along the edges of the island’s retreating ice sheets. Radiocarbon dates of the emerging plants correspond to when the mosses were last exposed to the atmosphere and were photosynthetically active. So far, Miller’s team has determined 370 different ages for plant samples collected on Baffin Island. The ages tend to cluster into groups, each representing a time when the ice expanded across the island and entombed the plants. One large group dates to around 3,700 years ago; another to around 900 years ago; and a third to around A.D. 1450, corresponding to a cold period known as the Little Ice Age. But in a few regions, the plants were so old that they had no radiocarbon left in them. Carbon has three isotopes — forms of the element with the same number of protons but different masses — but only carbon-14 is radioactive. It has a half-life of about 5,730 years, after which about half of the carbon-14 atoms in the original sample will have decayed away. So after about 45,000 to 50,000 years, almost all of an objects’ radiocarbon will have decayed.

Are Antarctica's Ice Sheets Near a Climate Tipping Point? -- If CO2 emissions from fossil fuels continue at their present pace, many Pacific islands and millions of people along low-lying shores like the U.S. Gulf Coast and the Bay of Bengal could be swamped by 1.3 meters (more than 4 feet) of sea level rise before the end of this century, an international team of scientists found in a new study published today in the journal Environmental Research Letters.The researchers said their work supports evidence that global warming of more than 1.9 degrees Celsius could push parts of the West Antarctic Ice Sheet past a melting threshold that would rapidly increase the pace of sea level rise."What we are increasingly seeing is that we have been on the conservative side in estimating sea level rise," said study co-author Carl-Friedrich Schleussner, a climate physicist at Climate Analytics, a climate science and policy institute. "Parts of the West Antarctic Ice Sheet appear to already be in substantial decline. If that continues, it's not a matter of how much, but how fast sea level will rise."Keeping within a strict carbon budget, including steep and rapid reductions of CO2 from fossil fuels, might limit this century's sea level rise to just half a meter, or 1.6 feet—still a hazard for many low-lying communities, but not as catastrophic elsewhere.The new estimate of the worst-case scenario is more alarming than theconsensus view of the Intergovernmental Panel on Climate Change (IPCC) in its 2014 assessment, but closer to the increases anticipated by more recent research, Schleussner said. That's largely because the new study incorporates recent science showing the risk of more severe melting of Antarctic ice under future warming, even if the Paris climate agreement is somewhat successful in keeping warming moderately under control. The study also uses a newer, more sophisticated approach to assessing the various pathways the world could take as governments struggle to keep global warming to less than 2 degrees Celsius above pre-industrial times. Which pathways policy makers follow would influence how much and how fast the planet warms.

Trump Administration Issues Report Concluding That Climate Change Is Real And Man-Made  - "This assessment concludes, based on extensive evidence, that it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century. For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence.   - from "Highlights of the Findings of the U.S. Global Change Research Program Climate Science Special Report", issued on November 3 by a group of more than 50 U.S. government scientistsSurprising many "climate watchers", on Friday the Trump Administration allowed the release of a sweeping federal climate report that began under President Barack Obamaand concludes that humans are the primary driver of climate change, causing higher temperatures, sea level rise, agriculture problems and more. The report -whose executive summary alone is 34 pages - found the Earth is undergoing its warmest period “in the history of modern civilization,” fueled primarily by rising levels of carbon dioxide. It was released by the U.S. Global Change Research Program, which is mandated by Congress to report every four years on the state of climate change.The massive study - which is the first volume of the Fourth National Climate Assessment, was years in the making and involved contributions from more than a dozen federal agencies - is meant to be an authoritative assessment of the current state of climate change science.However, what has caught pundits by surprise, is that many of the report’s conclusions directly contradict the Trump administration’s publicly held positions on climate change.Case in point: Trump officials like EPA chief Scott Pruitt and Energy Secretary Rick Perry have said they can’t be sure whether human-caused greenhouse gases like carbon dioxide are the primary cause of climate change. And yet the Climate Assessment plainly states that is the case. “This assessment concludes, based on extensive evidence, that it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century,” it says. “For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence.”

EPA to hold hearing on climate plan repeal in West Virginia (AP) — The Trump administration announced Thursday it will hold a public hearing in West Virginia on its plan to nullify an Obama-era plan to limit planet-warming carbon emissions. The state is economically dependent on coal mining. The Environmental Protection Agency will take comments on its proposed repeal of the Clean Power Plan in Charleston, the state capital, on Nov. 28 and 29. "The EPA is headed to the heart of coal country to hear from those most impacted by the CPP and get their comments on the proposed repeal rule," said EPA Administrator Scott Pruitt. "The agency looks forward to hearing from all interested stakeholders." No other public hearings have yet been scheduled. EPA will also accept written comments about the proposed repeal through mid-January. "We encourage stakeholders to participate, and submit comments online — including any requests for additional public meetings," said Liz Bowman, an EPA spokeswoman. "As this is a vital issue that affects people across the country, we will do our best to respond to requests for additional meetings."

Will global warming increase or decrease U.S. energy consumption? -- U.S. households and businesses use a whopping 11.5 quadrillion BTUs of energy annually for heating and cooling, about one-third of all residential and commercial energy use. How will this be impacted by global warming? When it comes to electricity, the answer is fairly unambiguous. A growing body of evidence shows that global warming will increase U.S. electricity consumption. My colleague Max Auffhammer, together with Energy Institute alumni Patrick Baylis and Catherine Hausman, for example, have shown that global warming will have large impacts on U.S. summer peak-load electricity consumption.But, of course, global warming also means less energy used for heating. In the United States, most people live above 30° latitude or even above 40° latitude, so heating is at least as important as cooling. In fact, Americans currently use twice as much energy for heating as they do for cooling.Still, if you had asked me a month ago, I would have said that that the net effect on U.S. energy consumption was probably an increase. I informally polled my colleagues about this, and most had the same view.  Now that I’ve looked more closely at this, however, I’m not at all sure. The figure below plots population-weighted average U.S. annual cooling degree days (CDDs), a widely used measure of cooling demand calculated as the sum of daily mean temperatures above 65°F. Since the 1950s, the number of CDDs experienced on average in the United States has increased 30%.  But while CDDs have been going up, heating degree days (HDDs) have been going down. The figure below plots population-weighted average U.S. annual HDDs, calculated as the sum of daily mean temperatures below 65°F. HDDs have fallen steadily since the 1950s, from more than 5000 annually to about 4000 today.  The change in HDDs is smaller in percentage terms, but larger in absolute terms. Consequently, the sum of annual CDDs and HDDs has been steadily decreasing, down 12% since 1950. So, on average, U.S. households and businesses are experiencing less total days with extreme weather.

EPA to Limit Independent Science Advisors - U.S. Environmental Protection Agency ( EPA ) chief Scott Pruitt will announce a new policy Tuesday to limit the presence of researchers who have received EPA research grants on the agency's Scientific Advisory Board (SAB).   The move, which Pruitt has said will promote "objective, independent-minded" advisors, has been promoted by conservative think tanks and industry as a way of including more industry voices on advisory panels.  A list provided to the Washington Post and E&E News of expected new appointees to the advisory board shows several industry representatives, government officials and outspoken proponents of deregulation. The move "bans some independent scientists from providing scientific advice while giving those with conflicts a free pass," Michael Halpern of the Union of Concerned Scientists wrote in a blog post quoted by Politico.  "Collectively, these actions create an abhorrent double standard: scientists who rely on public funding are left out, while industry scientists face no restrictions on service," Halpern added. "Fossil fuel and chemical companies already enjoy undue influence over EPA policy under Pruitt. Now, they're taking control over science advice to the agency."  As reported by the Washington Post :  "The move represents a fundamental shift, one that could change the scientific and technical advice that historically has guided the agency as it crafts environmental regulations. The decision to bar any researcher who receives EPA grant money from serving as an adviser appears to be unprecedented."

In unprecedented move, EPA to block scientists who get agency funding from serving as advisers.Scott Pruitt, the head of the Environmental Protection Agency, is poised to make wholesale changes to the agency’s key advisory group by jettisoning scientists who have received grants from the EPA and replacing them with industry experts and state government officials. The move represents a fundamental shift, one that could change the scientific and technical advice that historically has guided the agency as it crafts environmental regulations. The decision to bar any researcher who receives EPA grant money from serving as an adviser appears to be unprecedented. A list of expected appointees to the EPA’s Science Advisory Board, obtained by The Washington Post from multiple individuals familiar with the appointments, include several categories of experts — voices from regulated industries, academics and environmental regulators from conservative states, and researchers who have a history of critiquing the science and economics underpinning tighter environmental regulations. They would replace a number of scientists who currently have agency grants and whose terms are expiring. The EPA could not immediately be reached for comment, but Pruitt suggested in a speech this month at the Heritage Foundation that he planned to rid the agency’s scientific advisory boards of researchers with EPA funding. He argued that the current structure raises questions about their independence, though he did not voice similar objections to industry-funded scientists.

Stanford professor files $10 million lawsuit against scientific journal over clean energy claims -- Mark Z. Jacobson, a Stanford University professor who has prominently contended that the United States can fully power itself with wind, water and solar energy, is suing the National Academy of Sciences and the lead author of a study published in its flagship journal that criticized Jacobson’s views — pushing an already bitter academic dispute into a courtroom setting. The suit, which asks for more than $10 million in damages and retraction of the study, charges that lead author Christopher Clack “knew and was informed prior to publication that many of the statements in the [paper] were false.” It adds that the NAS “knowingly and intentionally published false statements of fact” in the Proceedings of the National Academy of Sciences despite being aware of Jacobson’s complaints. “I am disappointed that this suit has been filed,” Clack said in an emailed statement. “Our paper underwent very rigorous peer review, and two further extraordinary editorial reviews by the nation’s most prestigious academic journal, which considered Dr. Jacobson’s criticisms and found them to be without merit. It is unfortunate that Dr. Jacobson has now chosen to reargue his points in a court of law, rather than in the academic literature, where they belong.” Clack’s study had 21 authors, but Jacobson’s lawsuit only names him and the academy. The other authors include a number of high-profile academic names in energy and climate change research and policy — a list that Jacobson charges magnified the impact of the article in the media and thus the damage to his reputation. The dispute turns on Jacobson’s idea, itself published in the PNAS and other journals, that it is feasible to construct a grid for the entire country that would be powered entirely by wind, solar and water energy (hydropower), with additional help from forms of energy storage. “No natural gas, biofuels, nuclear power, or stationary batteries are needed,” Jacobson and his colleagues wrote in 2015.

Court halts EPA rule regulating big trucks’ trailers | TheHill: A federal appeals court Friday halted implementation of a portion of an Obama administration regulation that set emissions-reduction standards for trucks’ trailers. In a brief order regarding the Environmental Protection Agency’s (EPA) rule, the Court of Appeals for the District of Columbia said that a trailer industry group “has satisfied the stringent requirements for a stay pending court review.” At issue is a 2016 regulation that increased fuel efficiency and greenhouse gas standards for heavy-duty trucks.For the first time, the EPA asserted authority to regulate the design of trailers. The trailers do not have engines, but their aerodynamics can significantly impact the efficiency of the truck-trailer combination. The standards were due to take effect Jan. 1. The Trump administration is considering repealing the trailer portion of the rule, among other pieces. The regulation as a whole was expected to cut 1.1 billion metric tons of carbon dioxide emissions and make trucks 25 percent more efficient, according to data from the Obama administration. The Truck Trailer Manufacturers Association, which has an ongoing lawsuit against the regulation, asked the court in September to halt the trailer portion. “The [Clean Air] Act only permits regulation of ‘new motor vehicles’ and ‘new motor vehicle engines.’ And the Act expressly defines the term ‘new motor vehicles’ to mean ‘self-propelled’ vehicles,” the group wrote to the court.“Trailers are not self-propelled. They emit nothing, and they lack engines or any other means of propulsion. They can move only when pulled by a tractor or another heavy-duty truck.” 

Republican tax plan kills electric vehicle credit - The nascent market for electric cars will suffer a big setback if the Republican tax plan released on Thursday enters into law. Among the changes to the current tax code would be an end to the Plug-In Electric Drive Vehicle Credit. That's the tax incentive that currently means up to $7,500 back from the IRS when you purchase a new battery or plug-in hybrid electric vehicle. Since the start of 2010, the EV tax credit has been $2,500 for a plug-in vehicle with at least 5kWh battery capacity. Every extra kWh nets another $417 up to a maximum of $7,500, although you would need at least that amount in income tax liability—the IRS won't cut you a check to make up the full amount. It was never meant to be permanent; once an automaker sells 200,000 qualifying vehicles (starting from January 1, 2010) its eligibility is phased out over a matter of months. But in the almost seven years since, no one has reached that limit yet. Tesla will almost certainly be first, with General Motors not far behind; between them, they've sold a lot of Model Ses and Chevrolet Volts. If this tax plan is enacted, it will surely mean pain for both companies, as well as anyone else hoping to sell a lot of EVs here in the US. The data is pretty clear—tax incentives sell electric cars, and the market for EVs can dry up very fast when they're abolished, as Georgia's recent experience shows. GM told Ars that "tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles. Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive." Tesla was not immediately available for comment.

We May Not Have Enough Minerals To Even Meet Electric Car Demand - - Global demand for cobalt and nickel, two of the essential elements in electric car batteries, has never been higher. But where do all those metals come from? And do we even have enough for our electrified future? The answers to those questions are getting increasingly complex.Reuters and Bloomberg both have stories out today on the metals and, as Reuters reports, while demand for nickel keeps increasing, half the world’s nickel supply is too low in quality to use for car batteries.  All of which is going to have seismic effect on the world’s suppliers. In short: There will be winners and losers, and the winners will be the ones with the highest-grade stuff—not unlike, I suppose, the illicit drugs market.From Reuters: Some of the biggest producers of the higher-grade ores, including BHP Norilsk Nickel, Vale and Sumitomo Corp, are moving quickly to take advantage and seal long-term supply deals with battery producers.Smaller producers with ores suitable for batteries, such as Australia’s Independence Group and Western Areas also stand to win. These producers are building p lants to convert the metal into a powder-like sulfate that is particularly suited for use in batteries. Sulfate nickel regularly fetches a price premium over London Metal Exchange-traded nickel. What of cobalt? Bloomberg sent a writer and photographer to Cobalt, Ontario, about 300 miles north of Toronto, to find out. The town, which began life as a silver town, also is believed to have some cobalt, though no one’s really found much yet.  With the silver mines long abandoned, though, the town’s remaining 1,000 residents are holding out some hope. Prospectors, meanwhile, are amping up searches, as they try to find what they think might be undiscovered troves of cobalt beneath the surface.  The search for a new source of cobalt isn’t taking place in just Cobalt, Ontario, of course, as mining companies worldwide try to capitalize on the our electric car future. But the search is ramping up as the world’s biggest source of cobalt—the Democratic Republic of Congo, where about half of all cobalt comes from—is increasingly unstable, making car manufacturers nervous and cobalt all the more valuable.

U.S. trade panel recommends varying solar panel import restrictions (Reuters) - Members of the U.S. International Trade Commission on Tuesday made three different recommendations for restricting solar cell and panel imports on Tuesday, giving President Donald Trump a range of choices to address injury to domestic producers. The recommendations range from an immediate 35 percent tariff on all imported panels to a four-year quota system that allows the import of up to 8.9 gigawatts of solar cells and modules in the first year. The president’s ultimate decision could have a major impact on the price of U.S. power generated by the sun. Both supporters and critics of import curbs on solar products were disappointed by the proposals, which were unveiled at a public meeting in Washington. Trade remedies were requested in a petition earlier this year by two small U.S. manufacturers that said they were unable to compete with cheap panels made overseas, mainly in Asia. The companies, Suniva Inc and the U.S. arm of Germany’s SolarWorld AG (SWVKk.F), said Tuesday’s recommendations did not go far enough to protect domestic producers. “The ITC’s remedy simply will not fix the problem the ITC itself identified,” Suniva said in a statement. The company, which is majority owned by Hong Kong-based Shunfeng International Clean Energy, filed the rare Section 201 petition nine days after seeking Chapter 11 bankruptcy protection in April. It had sought a minimum price on panels of 74 cents a watt, nearly double their current cost. One analyst said the stiffest remedy recommended, a 35 percent tariff on solar panels, would add about 10 percent to the cost of a utility-scale project but would have a negligible impact on the price of residential systems because panels themselves make up a small portion of their overall cost. 

Is The U.S. Solar Boom In Jeopardy? --The U.S. solar industry has surged in recent years, accounting for the largest source of new electric capacity in the past year, with plenty of room to grow. However, the Trump administration is weighing a trade tariff that could seriously curtail the explosive growth figures for U.S. solar.On Tuesday, the U.S. International Trade Commission (ITC) recommended a 35 percent tariff on imported solar panels in response to a complaint from a U.S.-based solar manufacturer over cheap imported panels. The trade case has been cited by the solar industry as one of the most significant dangers to its otherwise bright future, labeling potential tariffs an “existential threat.” Many solar project developers use cheaper panels imported from places like China, and trade barriers could upend the economics of new solar projects.But all is not lost. The 35 percent tariff proposed by the ITC is actually less than what Suniva Inc., the company lodging the complaint, had asked for. Suniva filed for bankruptcy earlier this year, blaming a wave of cheap imported panels for its demise. Suniva wanted tariffs on the order of 32 cents per watt, which is roughly equivalent to the full price for a panel on a per-watt basis. The proposed 35 percent tariff would translate into about 10 to 11 cents per watt, about a third of the 32 cents Suniva wanted.As a result, the solar industry is breathing a sigh of relief, having potentially dodged a massive bullet. “That’s below the price that people have been hoarding panels for,” Jeffrey Osborne, an analyst at Cowen & Co., told Bloomberg. “On the demand side, jobs cuts won’t be as bad as feared, but on the manufacturing side, job creation won’t be as big. This would have a limited effect.” But it’s not as if the tariffs would have no impact. Adding 10 to 11 cents per watt to the price of a solar panel would set the cost structure of developers back to about September 2016, erasing a year’s worth of gains, according to Bloomberg New Energy Finance (BNEF).

White House viewing solar case as a national security issue - President Donald Trump and his administration are worried that foreign dominance in the solar manufacturing sector could pose a national security threat, which might influence the decision of whether to levy import barriers on the technology, POLITICO Pro Energy’s Eric Wolff reports, citing a White House source. The International Trade Commission is set to vote this morning on the potential remedies it will recommend after it ruled last month that U.S. solar cell and panel manufacturers had been harmed by foreign imports. The final decision of whether to implement trade barriers and what type rests with Trump, though he will be guided by recommendations issued today by four ITC members. The White House source said the current thinking favors a simple structure like a tariff or quota. The case’s two petitioners — Suniva, which is in bankruptcy protection, and SolarWorld, whose German parent is in bankruptcy — have both said they would like to see tariffs implemented but that those alone would not do enough to protect the U.S. manufacturing industry. Suniva has proposed establishing a minimum price for imported solar cells, while SolarWorld says it would prefer a quota as well.The two companies have argued that a strong manufacturing base is essential for U.S. security, both for energy supplies and to drive technological innovation. But the industry lobby group Solar Energy Industries Association, which opposes trade barriers, says innovation can come from government support and a thriving market.  "Through investments in solar, the Department of Defense has been leading the way in making America’s energy supply more secure. This case threatens that very progress," said SEIA CEO Abigail Ross Hopper. “It’s hard to see how devastating the American solar industry supports national security or puts us at a competitive advantage against the rest of the world.” Read the full story here.

King of the Washington swamp this month? Big Ethanol -- When news came out that the Environmental Protection Agency was simply gathering data and looking into modest changes to the amount of ethanol that’s forced into the nation’s gasoline supply, Big Ethanol threw a political temper tantrum as if their government-subsidized livelihoods depended on it. In a classic display of Washington putting special interests ahead of American consumers and the public interest, Iowa Republicans, Sens. Chuck Grassley and Joni Ernst, threatened to use their powerful committee positions to block key federal appointments. Despite its promise to drain the Washington swamp, the Trump administration caved to the politically powerful swamp occupants known as Big Ethanol. So here’s how this mandate works and who specifically benefits. Congress – under the dual pretext of reducing America’s dependence on foreign oil and carbon emissions – enacted the Renewable Fuel Standard program in 2005 (and doubled down on the mandate in 2007), requiring greater volumes of corn-based ethanol to be blended into the nation’s gasoline supply. The law directs the EPA to create an elaborate compliance credit scheme called Renewable Identification Numbers that further tips the scales to the financial benefit of ethanol producers. There’s no question that when government picks winners and losers, we always end up with a lot more and bigger losers than winners, and that’s the case this time. The Renewable Fuel Standard’s principal winners are corn-producing states like Iowa and Illinois and ethanol manufacturers who now have a growing government-mandated market for their product.

New Mexico utility seeks electricity options other than coal - New Mexico's largest electric provider on Monday put out a request for proposals for hundreds of megawatts of power to fill a future void as the utility plans ahead for weaning itself from coal-fired generation over the next several years. Public Service Co. of New Mexico plans to close two units at the San Juan Generating Station in northwestern New Mexico before the end of the year to meet a federal mandate aimed at reducing haze-causing pollution in the region. By 2022, the rest of the plant could close. In an announcement late last week, the utility said it is looking for a combination of sources that can ensure the reliability of a system that serves a half-million customers around New Mexico. It pegged the amount at 456 megawatts. The utility is encouraging renewable and battery-storage options. The utility also plans to divest its ownership shares in the nearby Four Corners Power Plant when its coal supply contract runs out in 2031. That would leave the company with no coal resources in its portfolio. Executives at PNM Resources, the utility's parent company, have pointed to the uncertainty surrounding coal given possible future environmental regulations and ongoing pressure to address pollution concerns. They also have said replacing the coal supply with renewable energy and more flexible natural gas-powered plants will save money for customers in the long run.

Rick Perry Tells Africa to Drill, Frack and Dig Coal - Last week, one of the most senior officials in the Trump administration, Energy Sec. Rick Perry travelled to South Africa to represent the U.S. at the Africa Oil Week. During his time at the Oil Week conference in the coastal city of Cape Town, Perry delivered the keynote address on global energy policy, telling his audience that the Trump Administration was keen on "strengthening our African energy partnerships.  It soon became very clear what he actually meant. He quickly criticized the Obama Administration for "discriminating" against the nuclear and coal industries. Perry said he was a "big fan of fossil fuels" and it was time to break the global "culture of shame" around their use.  He was also keen on the formation of "a global clean coal alliance" including traditional coal powers such as the U.S., India, Australia and South Africa. Commentators see Perry's speech as a clear indication that the Trump Administration is taking its pro-fossil fuel agenda to Africa. One press outlet reported Perry as saying, "If you admit you support fossil fuels, it's like saying you've made some huge social error. But it's in fossil fuels that you will see real growth." He continued: "That's my message to Africa. America is truly your friend and your partner. And we're here to help Africa use fossil fuels and use them cleanly with the world's newest and best technology." As one blogger for Platts noted, Perry "urged African producers to emulate the U.S. in its shale oil and gas revolution."

Perry links fossil fuel development to preventing sexual assault | TheHill: Energy Secretary Rick Perry suggested Thursday that expanding the use of fossil fuels could help prevent sexual assault. Speaking during an energy policy discussion about energy policy with “Meet the Press” host Chuck Todd and Axios CEO and founder Jim VandeHei, Perry discussed his recent trip to Africa. He said a young girl told him that energy is important to her because she often reads by the light of a fire with toxic fumes. "But also from the standpoint of sexual assault,” Perry said. “When the lights are on, when you have light that shines, the righteousness, if you will on those types of acts.”  (Full Perry quote on fossil fuels/sexual assault— Timothy Cama (@Timothy_Cama) November 2, 2017)    Perry said that using fossil fuel to push power into remote villages in Africa is necessary and will have a “positive role” in peoples’ lives.  President Trump has called for expanding domestic production of fossil fuels for export.  The Department of Energy says Perry’s statement was meant to highlight the way electricity will improve the lives of people in Africa.“The secretary was making the important point that while many Americans take electricity for granted there are people in other countries who are impacted by their lack of electricity,” Shaylyn Hynes, an agency spokeswoman said.

Fossil Fuel Lobbying means EU Pushes for ‘False Solutions’ at Climate Talks — Report - The European Union is being influenced by big polluters and corporate interests in a way that is “threatening” the realisation of the Paris Agreement, according to a new report. Published days before countries head to Bonn for the next round of international climate talks, it claims that big polluters have infiltrated the negotiations process and are pushing for “false solutions” and lobbying against tougher regulations.Despite media focus on the role of the US since Donald Trump’s decision to withdraw from the Paris Agreement, the report — co-authored by NGOs Corporate Accountability and Corporate Europe Observatory — suggests that the EU is “perhaps worse” than America in “undermining climate policy”, despite often being hailed as “a climate hero”.Last month, the EU Parliament agreed to push to curb the access of fossil fuel lobbyists at the international climate negotiations. But Europe's environment ministers later omitted any mention of stopping vested interests participating in negotiations in a formal statement outlining its priorities for the talks – reducing the chance of the progress on curbing conflicts of interest in Bonn. A particular point of conflict is the mechanism for richer, more polluting countries, to transfer resources to poorer nations: the Green Climate Fund (GCF). UK-based HSBC is one of three European banks including Germany’s Deutsche Bank and the French Crédit Agricole which has a record of financing fossil fuel projects and is accredited by the GCF to channel and receive funds, and propose projects for funding. HSBC is one of five transnational banks and institutions that manages nearly 75 per cent of the GCF’s funds. Last year, a report also found HSBC had given a total of £36bn to finance fossil fuel projects around the world between 2013 and 2015. It was also revealed that HSBC is one of three banks guarantying “green” bonds which are used as loans by the Polish Government under a scheme analysts fear could be used to bolster the coal industry. According to the report, this means that “what little climate finance exists” is exposed “to the risk of corporate seizure”.

Germany Forced To Pay Consumers To Use More Electricity - A stormy weekend led to free electricity in Germany, as Bloomberg reports wind generation reached a record, forcing power producers to pay customers the most since Christmas 2012 to use electricity. Power prices turned negative as wind output reached 39,409 megawatts on Saturday, equivalent to the output of about 40 nuclear reactors.  To keep the grid supply and demand in balance, negative prices encourage producers to either shut power stations or else pay consumers to take the extra electricity off the network. 

Rick Perry's plans to revive coal would kill aspirations for a free market - Dallas News (blog) Coal helped put Trump in the White House.I have to assume that political payback for coal country is the reason behind Energy Secretary Rick Perry's oddly dissonant proposal to require that coal (and nuclear) generating plants be paid higher-than-market rates for electricity. It's beyond strange that Perry, an avowed believer in free markets and a skeptic of regulation, would make such a counterintuitive proposal. Perry's proposal would not affect Texas, since Texas has its own electric power market, regulated by the Electric Reliability Council of Texas. Electric power markets in the rest of the United States are regulated by the Federal Energy Regulatory Commission, and would be affected. So perhaps the best possible spin is that Perry is trying to give Texas an advantage by burdening the rest of the country with harmful policies.It is so common for politicians to say they believe in free markets while promoting government controls that it seems they have forgotten what free means. Free market economics asserts that there is greater cumulative accuracy in the real-time decisions made by millions of Americans through markets than in the decrees of a small handful of bureaucrats. It means bottom-up decision making is smarter than top-down dictates from those who assume themselves to be our betters. And it especially means government shouldn't determine favored outcomes by rigging the rules. Yet that is exactly what Perry's proposal would do to the rest of the country's electrical generation market.By requiring that coal plants be paid higher than market rates and be insulated from competition, Perry proposes that consumers subsidize coal production. This is every bit as wrong as when the Obama administration required taxpayers to subsidize green energy projects such as Solyndra. Actually, it's worse, because taxpayers were only on the hook for temporary loan guarantees for Solyndra. With Perry's coal handout, consumers would be on the hook indefinitely.Yes, it was also anti-market for the Obama administration to rig the rules against fossil fuels, and to favor renewables. But you fix that by moving back to neutral policy and market competition, not by favoring coal. The best energy portfolio for America is whatever combination of gas, oil, coal, nuclear and renewables that is most efficient for a particular geographical area. Prices should be set by supply and demand, not by bureaucrats in Washington.

Subsidy plan for coal and nuclear plants 'will cost US taxpayers $10.6bn a year' -- A Trump administration plan to subsidize coal and nuclear energy would cost US taxpayers about $10.6bn a year and prop up some of the oldest and dirtiest power plants in the country, a new analysis has found. The Department of Energy has proposed that coal and nuclear plants be compensated not only for the electricity they produce but also for the reliability they provide to the grid. The new rule would provide payments to facilities that store fuel on-site for 90 days or more because they are “indispensable for our economic and national security”. Rick Perry, the energy secretary, said the subsidies were needed to avoid power outages “in times of supply stress such as recent natural disasters”. The plan would provide a lifeline to many ageing coal and nuclear plants that would otherwise go out of business, primarily due to the abundance of cheap natural gas and the plummeting cost of renewables. The Department of Energy noted 531 coal-generating units were retired between 2002 and 2016, while eight nuclear reactors have announced retirement plans in the past year. Donald Trump has vowed to arrest this decline and end the “war” on mining communities by repealing various environmental regulations put in place during the Obama administration. Perry’s pro-coal market intervention would cost taxpayers as much as $10.6bn a year over the next decade, according to a joint analysis by the non-partisan groups Climate Policy Initiative and Energy Innovation. Just a handful of companies, operating about 90 plants on the eastern seaboard and the midwest, would benefit from the subsidies, the report found. “The irony of putting costs on consumers for resources that are no longer competitive is really striking,” said Brendan Pierpont, energy finance consultant at Climate Policy Initiative. “It would serve to keep a lot of uneconomic plants in the market that currently can’t compete with the changing dynamics of cheap gas and the falling cost of renewables.” 

Coal News: Judge sides with developers of Washington coal terminal — A Washington state judge on Friday handed a victory to the developers of a massive proposed coal-export terminal on the Columbia River, saying the state acted arbitrarily when it blocked a sublease sought for the project. The decision, by Cowlitz County Superior Court Judge Stephen Warning, followed a series of recent setbacks for Millennium Bulk Terminals, including the state Ecology Department's decision to deny it a needed water-quality permit.The $680 million terminal, which would ship coal from Montana, Wyoming and other states to Asia, could boost U.S. coal exports by 40 percent. The plans are reviled by environmentalists and Indian tribes because of concerns about global warming, coal dust pollution and potential damage to fisheries on the river."This decision validates our argument that when the law is fairly applied and facts are impartially weighed, Millennium's project meets environmental standards and should be approved," Wendy Hutchinson, the company's vice president of government and public affairs, said in a news release after Friday's decision. The ruling overturned a decision made by outgoing Public Lands Commissioner Peter Goldmark early this year. Goldmark, as head of the Department of Natural Resources, had denied permission for the project to use docks at a former aluminum smelter, saying Millennium hadn't provided enough information about its finances, among other concerns.

Judge gives reprieve to Montana coal mine, averting layoffs - (AP) — A large Montana coal mine averted dozens of layoffs on Tuesday after a judge allowed work to proceed on an expansion, even as the government reconsiders the mine's contribution to climate change. The ruling by U.S. District Judge Donald Molloy allows Signal Peak Energy to remove up to 170,000 tons of coal from federal leases adjacent to its Bull Mountain Mine north of Billings. Attorneys for the Trump administration had joined Signal Peak in asking Molloy for a reprieve from an earlier ruling that had blocked the expansion. The company remains barred from selling or shipping fuel from the disputed area, pending a new environmental study by federal officials. Environmentalists who sued over the project said Tuesday's ruling effectively renders the pending study meaningless. Signal Peak executives had said 30 workers would be laid off by the end of October and up to 150 more in coming months as they ran out of work on existing leases. The expansion ultimately would give the company access to an estimated 176 million tons of coal that would take more than a decade to mine.

Awaiting Trump's coal comeback, miners reject retraining - (Reuters) - When Mike Sylvester entered a career training center earlier this year in southwestern Pennsylvania, he found more than one hundred federally funded courses covering everything from computer programming to nursing. He settled instead on something familiar: a coal mining course. ”I think there is a coal comeback,” said the 33-year-old son of a miner. Despite broad consensus about coal’s bleak future, a years-long effort to diversify the economy of this hard-hit region away from mining is stumbling, with Obama-era jobs retraining classes undersubscribed and future programs at risk under President Donald Trump’s proposed 2018 budget. Trump has promised to revive coal by rolling back environmental regulations and moved to repeal Obama-era curbs on carbon emissions from power plants. . But hundreds of coal-fired plants have closed in recent years, and cheap natural gas continues to erode domestic demand. The Appalachian region has lost about 33,500 mining jobs since 2011, according to the Appalachian Regional Commission. Although there have been small gains in coal output and hiring this year, driven by foreign demand, production levels remain near lows hit in 1978. What many experts call false hopes for a coal resurgence have mired economic development efforts here in a catch-22: Coal miners are resisting retraining without ready jobs from new industries, but new companies are unlikely to move here without a trained workforce. The stalled diversification push leaves some of the nation’s poorest areas with no clear path to prosperity. Federal retraining programs have fared better, with some approaching full participation, in the parts of Appalachia where mining has been crushed in a way that leaves little hope for a comeback, according to county officials and recruiters. But in southern Pennsylvania, where the industry still has ample reserves and is showing flickers of life, federal jobs retraining programs see sign-up rates below 20 percent, the officials and recruiters said.

Explosion at Indian power plant kills 26, injures dozens  (AP) — The death toll from an explosion at a thermal power plant in northern India has climbed to 26, officials said Thursday. At least 60 others have been injured when the explosion spewed hot ash over workers at the plant, said Sanjay Khatri, the area's top administrative officer. The death toll could rise as some dozen people have been hospitalized with severe burns after a pipe carrying ash from the burning coal exploded late Wednesday in the newly installed boiler at the power plant in Unchahar in Uttar Pradesh state. The 500-megawatt unit was operating on a trial basis. Khatri said the cause of the accident wasn't immediately known. It also wasn't clear how many workers were in the plant at the time. Witnesses described a massive explosion and thick smoke rising from the plant. Rescue work ended Thursday and the National Thermal Power Corporation, which runs the plant, ordered an investigation. 

Beijing Starts the Biggest Shutdown of Steel Factories in History - Earlier this month and without much comment, dozens of huge steel mills in China stopped or curtailed their operations. In northern China cement plants are preparing to shut down entirely before Christmas. The measures are a part of an aggressive action plan that aims to cut wintertime particulate pollution by 15 percent year-on-year over the next five months. These cuts are badly needed as Beijing and the surrounding industrial provinces have suffered the winter's first serious episode this week, with PM2.5 levels across several provinces reaching "very unhealthy" levels. The shutdowns began ahead of the twice-a-decade party congress where President Xi Jinping outlined his vision of a "beautiful China." They are set to take full effect in mid-November and continue throughout the winter. The operating restrictions affect one quarter of China's total steel-making capacity and approximately 10 percent of cement production .  The measures are expected to cut national steel output by more than 10 percent in the next five months and could avoid as much CO2 as Denmark and Finland emit in one year.

Coal Prices Soar As Demand Heats Up - Coal prices are on the rise again. With benchmark rates in Australia up over 30 percent since July — approaching the $100/t mark that prevailed in November 2016 after a massive run-up last year. And a number of events the past week show that things could get even more heated in coal over the coming months. The biggest story recently has been China. Where a push to restrict coal imports has driven local prices to multi-year highs. With data this week from Platts showing that 102 coal-laden boats are currently anchored offshore of Chinese ports, unable to deliver their loads. That drop in imports has left local user hoarding supplies — with coal stockpiles held by China’s six largest power generators reportedly jumping nearly 16 percent in the past week, to 11.09 million tonnes. But Chinese regulators said this week they’re keeping a close eye on coal users. Stipulating they will impose severe penalties on any groups found to be creating “abnormal fluctuations” in local coal prices. That may mean coal users will have to buy on the open market through the winter, setting up for rising demand over the coming months.  And China isn’t the only place where demand is going up. With South Korea also seeing record coal imports of late — bringing in an all-time high 11.3 million tonnes in September, with October imports expected to set a fresh record at 12 million tonnes. 

North Korea Hit Hard As Coal Exports To China Fall 71% -- According to Chinese customs data released on Tuesday, the country imported 512,000 tonnes of coal – mainly the steelmaking variety – from North Korea in September. Volumes were down 71.6 percent from the same month last year as Beijing institutes the latest round of UN sanctions on the rogue regime. While the UN Security Council ban on Pyongyang’s sale of coal, iron ore, lead, lead ore and seafood are only due to come into force this month, China began to enforce the restrictions in mid-August. The September coal cargoes were valued at $44 million which translates into $86 a tonne, a deep discount to the ruling price for metallurgical coal. In the past China skirted embargoes against North Korea on humanitarian grounds, saying a ban would hurt ordinary citizens of the impoverished country, but pressure on Beijing has increased as Kim Jong-un’s nuclear missile program advances.

Poland Will End Coal Investments, Move Toward Nuclear - Poland’s energy minister in September said the country was ready to shift away from coal-fired power, which provides about 90% of its electricity. Krzysztof Tchorzewski, speaking at the Krynica-Zdroj Economic Forum in Poland, said the country, whose state-run energy companies have three ongoing coal projects, plans no more investments in coal and instead hopes to open its first nuclear plant by 2030. “After completing the investments … now being conducted in big coal-fueled units, we will not be planning new projects based on coal,” Tchorzewski said at the forum on September 6. Poland contemplated investments in nuclear power in 2009 but shelved any plans due to falling energy prices and the backlash against nuclear power after the Fukushima disaster in 2011. Prime Minister Beata Szydlo revived plans, though, after her Law and Justice Party won the country’s last general election in 2015. Poland was building its first nuclear plant in the 1980s, but construction of the Zarnowiec Nuclear Power Plant (Figure 1) was halted and the project canceled in 1990 due to economics, a changing political climate in the country, and ongoing concerns about nuclear power in the wake of the 1986 disaster at Chernobyl.

France to decide by end 2018 how many nuclear plants to shut: minister (Reuters) - France will detail at the end of 2018 how many nuclear reactors will close to meet a target on reducing atomic energy, Environment Minister Nicolas Hulot told French daily Le Monde on Saturday. France aims to cut the share of atomic energy in power generation to 50 percent by 2025 from 75 percent now. Nuclear plant closures represent a touchy topic, as the sector employs thousands of people and renewable energy alternatives struggle to grow fast enough to ensure energy needs are fulfilled. According to France’s National Council of Industry, the nuclear sector supports about 220,000 jobs, directly and indirectly. Hulot will lay out his so-called “green deal” on energy transition in the first half of 2018, he told Le Monde in an interview. “In order to reduce to 50 percent the share of nuclear power, we will have to close a number of reactors,” he said, adding that he would detail the exact figure under a multi-year plan to be presented at end of 2018. Hulot said in July that as many as 17 of France’s 58 reactors may need to close to meet the target, but he did not stick to that forecast in later comments on the subject. The minister said he would take into account the need to avoid any electricity shortage during that transition, given the country’s dependence on nuclear power.

Iran Begins Construction of Two New Nuclear Power Plants -- Iran has started the construction of two new nuclear power plants in the southern province of Bushehr in a joint project with Russia’s Rosatom energy firm. In an agreement between the senior officials of the Atomic Energy Organization of Iran (AEOI) and Rosatom, phases two and three of Iran’s Bushehr nuclear power plant will begin supplying electricity to Iran’s power grid in 10 years. According to the general director of the Rosatom, Iran and Russia will jointly build the two plants on the northern coast of the Persian Gulf. “Twenty percent of the entire phase two and eighty percent of its building construction will be done by the Iranian side. We have signed an agreement to build eight power plant blocks and these blocks could be built in other parts of Iran,” said Rosatom Director General Alexey Likhachev at a Tuesday press conference with the AEOI chief Ali Akbar Salehi in Bushehr. Salehi also expressed hope that the second phase of the project will finish in seven years and the third two years later. The AEOI chief also elaborated on the benefits of the project for Iran, saying, “The first phase of Bushehr nuclear power plant is now operational and as a result, some 11 million barrels of crude oil is saved annually. The production of electricity by a 1,000-megawatt plant will also help diminish up to seven million tons of gas emissions every year.” 

Saudi Arabia to extract uranium for 'self-sufficient' nuclear program (Reuters) - Saudi Arabia plans to extract uranium domestically as part of its nuclear power program and sees this as a step towards “self-sufficiency” in producing atomic fuel, a senior official said on Monday. Extracting its own uranium also makes sense from an economic point of view, said Hashim bin Abdullah Yamani, head of the Saudi government agency tasked with the nuclear plans, the King Abdullah City for Atomic and Renewable Energy (KACARE). In a speech at an international nuclear power conference in Abu Dhabi, he did not specify whether Saudi Arabia seeks to also enrich and reprocess uranium – steps in the fuel cycle which are especially sensitive as they can open up the possibility of military uses of the material. The world’s top oil exporter says it wants to tap atomic power for peaceful purposes only in order to diversify its energy supply and will award a construction contract for its first two nuclear reactors by the end of 2018. “Regarding the production of uranium in the kingdom, this is a program which is our first step towards self-sufficiency in producing nuclear fuel,” Yamani told a conference organized by the International Atomic Energy Agency (IAEA). “We utilize the uranium ore that has been proven to be economically efficient.” Atomic reactors need uranium enriched to around 5 percent purity but the same technology in this process can also be used to enrich the heavy metal to higher, weapons-grade levels. This issue has been at the heart of Western and regional concerns about the nuclear work of Iran, Saudi Arabia’s foe, and led to the 2015 deal in which Iran agreed to freeze the program for 15 years for sanctions relief.

Saudi Arabia plans dramatic shift to nuclear power --Saudi Arabia is planning to become “self-sufficient” in producing nuclear fuel and intends to begin extracting uranium domestically, the head of the country’s nuclear agency said at a conference organized by the UN’s International Atomic Energy Agency. “Regarding the production of uranium in the kingdom, this is a program which is our first step towards self-sufficiency in producing nuclear fuel,” Hashim bin Abdullah Yamani, head of the King Abdullah City for Atomic and Renewable Energy, said Monday at the Abu Dhabi conference on nuclear power, Reuters reported. Get The Times of Israel's Daily Edition by email and never miss our top stories FREE SIGN UP Officials in the famously oil-rich kingdom say nuclear power could fuel an economic boon. “We utilize the uranium ore that has been proven to be economically efficient,” Yamani said. KACARE believes there are about 60,000 tons of uranium ore that can be extracted on Saudi soil. Yamani added that the kingdom would establish a regulatory agency and pass the necessary legislative framework for a nuclear program within roughly a year. According to Reuters, Saudi Arabia is now looking to major nuclear powers, including the US, Russia, and China, to build its first two reactors. Preliminary plans suggest the Saudis may be looking to build as many as 17 reactors in all.

Pakistan looks to expand nuclear power --Pakistan's atomic energy commission chairman has said that the country is looking at adding an additional three to four big reactors to its current strength of five small reactors to increase nuclear power capacity to 8,800 megawatts (MW) by 2030 from its current capacity of 1300 MW. Speaking to Reuters, Muhammad Naeem Chairman of Pakistan Atomic Energy Commission, outlined that work on two of these new reactors should by complete by 2021. "We have the plans in place, we are watching for proven technologies. We could award the contracts before year-end," he said on the sidelines of a nuclear conference in Abu Dhabi. While the Chinese have recently increased their role - the latest made operational last month has been built by China National Nuclear Corp - Naeem did not specify if non-Chinese bidders would be allowed. Pakistan, which has a nuclear weapons programme, has not signed the Nuclear Non-Proliferation Treaty. So, reactor vendors from the West cannot sell here. Therefore, China assumes even more significance. Pakistan's current line of nuclear reactors contribute just five per cent of the total electricity.  . The gap between supply and demand though remains glaring. In March, Dawn reported widespread load-shedding across the country. Several urban parts of the country reported six to eight hours of power shedding while rural areas saw 18 hours of power cut for a number of days. To varying degrees, it is a problem not just in Pakistan but in the entire sub-continent with even India looking to now reduce dependece on non-renewable resources.

Russia to build nuclear power plants in Nigeria - Russia has signed a deal to build two nuclear power plants in Nigeria, as Africa’s largest economy seeks to end its energy crisis. Russian state-owned company Rosatom will build one in the south, the other in the centre, sources at the Nigeria Atomic Energy Commission told the BBC. The deal’s exact worth is unknown, although some reports suggest it is likely in the region of $20bn (£15bn). Nigeria hopes the plants, which will initially be operated by Rosatom before they are handed over, will help deal with the country’s energy deficit.. The company is also involved in discussions in Ghana and South Africa.An initial agreement with the latter to build a plant was ruled unlawful in a South African court earlier this year.The deal in Nigeria was reached after a long period of negotiation, with the two countries signing their first intergovernmental nuclear co-operation agreement in 2009.Nigeria hopes the plants, which will initially be operated by Rosatom before they are handed over, will help deal with the country's energy deficit.According to World Bank figures, more than 40% of the country was without mains electricity in 2014.Nigeria is one of Africa's largest oil producers, but much of its oil wealth has been squandered over the years. Corruption at all levels has left the country out of pocket, and producing a fraction of the energy its 180 million citizens need.

Russia Begins Construction Of Two Nuclear Plants In Iran --Iran has started work on two $10 billion nuclear reactors in the Bushehr nuclear power plant, the Islamic Republic News Agency reported on Monday citing Ali Akbar Salehi, head of Atomic Energy Organization of Iran. Work on the two reactors “will commence next week,” the state television website quoted Behrouz Kamalvandi as saying.Salehi said that Russia will begin construction on the two nuclear reactors, with work set to begin a year after Tehran signed a contract with Moscow to build the two reactors at the existing Russian-built Bushehr power plant in southern Iran. A series of agreements signed between the two countries last year foresees eventually increasing the total number of Russian-built reactors in the country to nine.The start of construction follows a historic deal between Iran and world powers in July that ends a decade-long standoff over Tehran’s nuclear program. According to the deal, Iran agreed to dramatically scale back its nuclear program, making it much more difficult for it to develop nuclear weapons. The accord does not however limit Iran’s development of civilian nuclear sites. Construction of the two reactors will be bankrolled by Iran, Sergei Kiriyenko, head of Russia’s state nuclear company Rosatom, said last year.Iran plans to build 20 more nuclear plants in the future, including   four in Bushehr, to decrease its dependence on oil and gas. Russia had backed Iran during two years of nuclear negotiations with six world powers.

"This Is A Big Problem" - North Korea Nuclear Test Site Headed For A Devastating Collapse - A group of Chinese scientists have joined their North American peers in warning that North Korea’s Punggye-ri nuclear site could be on the verge of a dangerous collapse that could send a dangerous bloom of radiation floating over the border into Northern China. As we’ve previously reported, China has stepped up its radiation monitoring on the border after detecting unsettling seismic activity surrounding the test site. Two weeks ago, a team of American scientists warned that the mountain above Pyungge-ri appeared to be suffering from “tired mountain syndrome” - a phenomenon commonly observed around Soviet Nuclear test sites.And now in an effort to dissuade the North from carrying out another potentially destabilizing test, the South China Morning Post is reporting that a team of Chinese geologists warned their North Korean counterparts of a potentially catastrophic collapse of an underground nuclear test site on China’s doorstep during a briefing in Beijing last month.A day after North Korea said it detonated a hydrogen bomb at the Punggye-ri facility on Sept. 3, a senior Chinese nuclear scientist warned North Korea that future tests could blow the top off the mountain, causing a massive collapse with radiation bleeding from cracks or holes in the mountainside.Meanwhile, a researcher studying the radioactive risk from the North Korean nuclear programme at Peking University said China could no longer tolerate another land-based explosion.“China cannot sit and wait until the site implodes. Our instruments can detect nuclear fallout when it arrives, but it will be too late by then. There will be public panic and anger at the government for not taking action,” the researcher said.

Fears of Radiation Leak Soar After North Korea Nuclear Site Collapse Kills 200 - Experts are issuing urgent warnings of a possible radiation leak following the collapse of a tunnel at North Korea's Punggye-ri nuclear test site, an accident that reportedly killed at least 200 people. "Should [the Punggye-ri site] sink, there is a possibility" that hazardous radioactive gas could be released into the atmosphere, warned South Korea weather agency chief Nam Jae-cheol during a parliamentary meeting on Monday, ahead of reports of the incident. The tunnel's collapse, first reported by the Japanese outlet TV Asahi on Tuesday, is presumed to have occurred as a result of the destabilization caused by Pyongyang's powerful hydrogen bomb test last month . The Telegraph, citing South Korean news agency Yonhap, reported that the original incident took place on Oct. 10 though it remains unclear exactly when the secondary collapse may have occurred. Business Insider's Alex Lockie reported that according to North Korean sources, the tunnel initially "collapsed on 100 workers, and an additional 100 went in to rescue them, only to die themselves under the unstable mountain." Lockie continued: "The tunnels in and out of the test site had been damaged previously, and the workers may have been clearing or repairing the tunnels to resume nuclear testing. Additionally, with the test site compromised, hazardous radioactive material left over from the blast may seep out, which could possibly cause an international incident.  If the debris from the test reaches China, Beijing would see that as an attack on its country, Jenny Town, the assistant director of the U.S.-Korea Institute and a managing editor at 38 North, previously told Business Insider ."

Four-month delay in details of plutonium release at Hanford raises questions --  The announcement this month that 31 Hanford workers were contaminated from a June 8 incident is raising more questions about how government agencies alert the public about the test results of leaks from one of the world’s most polluted sites. The Department of Energy, which oversees the multibillion-dollar contracts paid to private companies tasked with cleaning up Hanford, alerted the public on June 8 of a plutonium release. Then on Oct. 18, it announced that some 31 workers were contaminated with low levels of radiation following the incident that triggered the “take cover” alarm on June 8 at the 580-square-mile site just outside of Richland. Initial testing of contractors, who were working with heavy equipment to dismantle part of the line that produced much of this nation’s plutonium, found no contamination in their protective clothing or skin. However, 305 of the employees were later tested. Of those, 31 were found to have low levels of radiation in their systems. Tom Carpenter, the executive director of watchdog group Hanford Challenge, said the four-month delay in government officials explaining the results of the exposure and testing has become the new norm. “If news does get released about something that’s not good, it’s often half the story. In many cases, the news is actually released by active workers.” Carpenter questioned whether DOE officials required the testing of employees or made it voluntary. He also wanted to know why officials only tested workers’ fecal matter rather than doing a full-body count to test for contaminated particles that could have lodged in their lungs. 

There Is a New Urgency to the Threat of Nuclear Annihilation - Despite Donald Trump's vows to seal the US border and eradicate ISIS, the real terrorists of the world today are the United States and Russia. They possess 94 percent of the nuclear weapons on the planet, and they hold the rest of the world hostage to their provocative and self-serving foreign policies and misadventures. As a result, we are closer to nuclear war now, at the start of the twenty-first century, than we've ever been before, even during the height of the Cold War.  While we must be concerned about global warming -- the other existential threat to the planet -- it is imperative that we do not take our eyes off the nuclear threat. To do so is to risk sleepwalking to Armageddon. Nine countries around the globe are known to have nuclear weapons, many of them on hair-trigger alert. In at least five separate locations in the world, two or more nuclear-armed countries are in actual or proxy wars or standoffs that could escalate at any time. And the United States has elected to the presidency a man who seems to feel that, because they exist, nuclear weapons ought to be used. Donald Trump has implied that he feels tactical nuclear weapons can be effectively employed in battle and seemed to imply in comments about Japan, South Korea, and Saudi Arabia that he had few concerns about proliferation of nuclear weapons to additional countries. Tony Schwartz, the co-writer of Trump's bestselling book Trump: The Art of the Deal, who spent eighteen months "camping out in [Trump's] office, joining him on his helicopter, tagging along at meetings, and spending weekends with him at his Manhattan apartment and his Florida estate," listening in on Trump's business meetings and phone conversations, told Jane Mayer of the New Yorker that if he were titling Trump's book today, instead of The Art of the Deal, Schwartz would call it The Sociopath. Schwartz has tweeted, "Trump is totally willing to blow up the world to protect his fragile sense of self. Please God don't give this man the nuclear codes." And Mayer reports that Schwartz said, "I genuinely believe that if Trump wins and gets the nuclear codes there is an excellent possibility it will lead to the end of civilization."

City Council Rejects NEXUS Offer For Easement - The Oberlin Review - City Council held an emergency meeting Saturday, deciding to reject a $3,500 offer from NEXUS for means of access. The offer would have given NEXUS the legal right to use city property without owning it, granting the company the ability to begin building its pipeline.The Oberlin Community Bill of Rights, which was created in 2013, prohibits the creation of infrastructure relating to fracking in the city. City Councilmember Bryan Burgess added that the city also does not have authorization to allow oil or gas infrastructure in Oberlin.City council also agreed to authorize the City Manager Rob Hillard to negotiate with NEXUS for an easement on the condition that the pipeline would be rerouted so that it would be farther away from Oberlin homes, businesses, and the local fire station. The current pipeline route runs just north of the homes on Reserve Avenue near the edge of the city, close to New Russia Township.John Elder, vice president of Oberlin’s Citizens for Safe and Sustainable Energy, said that this placement would leave the fire station, businesses, and residences in the “blast zone” in the event of a disaster.According to Elder, other concerns include the possible negative environmental impact of the pipeline. It will move through wetlands and have four compression stations, which would contribute to air pollution. He said another concern is the pipeline’s economic viability. The natural gas the pipeline produces will not have a significant customer base in Ohio, and, therefore, won’t serve Ohians, he added. Embridge, a Canadian energy company, owns the pipeline. One of the biggest customers will be Dawn, which is a storage hub in Canada. “It’s a foreign company pumping gas for foreign use,” Elder said. The pipeline, which will run from Ohio into Canada, has been met with resistance and legal battles from some of the towns it will run through. In other towns, court cases have been filed to delay pipeline construction. Oberlin has retained Carolyn Elefant, an eminent domain lawyer based out of Washington, D.C., to represent it. She has been working for the city for over a year and coordinated with some of the communities the pipeline will affect.

Ohio Court Overturns Law Preventing Cities From Voting on Anti-Fracking Measures - DeSmogBlog -- The state Supreme Court ruling, which came on October 19, is a departure from earlier rulings that prevented the Ohio Community Rights Network from placing county charters and a city ordinance to ban fracking from appearing on ballots.  Apparently unfazed by the new law, this year members of the Ohio Community Rights Network advanced county charters in Athens and Medina counties and ballot initiatives for the cities of Bowling Green and Youngstown. These efforts all included “Community Bills of Rights,” which would outlaw fracking, injection wells, and related infrastructure for producing and transporting natural gas in their respective counties and cities. Bowling Green’s ballot initiative, which threatens to complicate the development of the nearby NEXUS natural gas pipeline, proposes an amendment to an existing city charter. Although the NEXUS pipeline is not slated to pass through the city itself, the ordinance would bar the pipeline from a piece of farmland owned by the city, which is key to the pipeline’s proposed route. All of the ballot initiatives gathered the required number of signatures to get on the ballot. And all but Bowling Green’s initiative were opposed and removed by their boards of elections, whom Secretary Husted had appointed. However, Bowling Green’s board voted to allow the people to vote first.Then came the legal challenges. After hearing appeals, the Ohio Supreme Court ruled against the two county charters and the Youngstown initiative. But in each of the rulings the court avoided weighing in on the constitutionality of HB463, instead relying on technical arguments to keep the initiatives off the ballot. But because Bowling Green’s board of elections ruled to allow a vote, in this case it was the board of elections — rather than citizen-petitioners — defending the local ballot process and arguing that HB463 was unconstitutional.  The issue was only brought to the state Supreme Court after a private individual appealed the board’s decision to allow voting to take place. (The challenge was defended by a law firm that last year wrote briefs for the American Petroleum Institute and Affiliated Construction Trades Ohio Foundation to defend the practice of keeping anti-fracking initiatives off local ballots.)  In a 4-3 decision, the Ohio Supreme Court struck down and ruled unconstitutional the section of HB463 that applied to municipal ballot initiatives, but not county charters. The ruling leaves unanswered how future proposed county charters will be treated. And because of how long the court took to make its decision, according to Terry Lodge, an attorney who represented the petitioners in all the cases, there is no time for Youngstown to use the ruling to return its previously removed initiative to this November’s ballot. That means Bowling Green’s “Citizens Right to a Healthy Environment and Livable Climate” initiative will be the only one in Ohio up for a vote in 2017.

Company to spend $150M on ethane storage facility — Mountaineer NGL Storage officials announced Thursday plans to spend $150 million — and potentially as much as $500 million — on its proposed natural gas liquids storage facility along the Ohio River near Clarington. By 2019, company Managing Director David Hooker hopes to store up to 420 million gallons of ethane, propane and butane in caverns along the river, with the goal of allowing the potential PTT Global Chemical cracker plant to access the product via pipelines that would only need to stretch about 10 miles. Also, the Mountaineer NGL Storage project could be the first part of the Appalachian Storage Hub, or “ethane hub,” which American Chemistry Council officials said could eventually lead to $36 billion worth of investment and about 100,000 permanent jobs.Hooker said he already has a permit from the Ohio Department of Transportation, but is still waiting for authorization from the Ohio Environmental Protection Agency and the Ohio Department of Natural Resources. “We feel like we have a pretty good rapport with the Ohio EPA. They are pretty clear about what they want from us. We need permits from Ohio EPA, ODNR and ODOT, and we have secured all permitting with ODOT already,” Hooker said. “We are working on some issues with ODNR, but they have been very accommodating.” Hooker continues work on his underground storage cavern endeavor, which he hopes to open on former coal mine property along the Ohio River. He has said the plan is to operate three pipelines that will run beneath the river, in addition to those that may run toward the PTT site. Preliminary plans called for these lines to run under the river — one carrying ethane from the Marshall County Blue Race Natrium natural gas processing plant to the Monroe County caverns; one transporting a combination of propane and butane from the Natrium plant to the caverns; and one sending salt brine waste from salt brine from Clarington to a West Virginia chlorine plant.“It will be more than a mile underground. We’ve drilled 48 bore-holes into the ground to make sure it is stable,” Hooker said. Monroe County Commissioner Mick Schumacher said the permitting process for the facility has been relatively slow because the Ohio EPA has had to write new regulations for natural gas liquids storage facilities.

Get Ready for an Appalachian Gas Bonanza - For the past six months, construction crews carved their way through the back of David Rheinlanders property. Now when the 57-year-old looks across his backyard, he sees a line of cut trees, piles of dirt, and stacks of steel pipe where he once envisioned a tiny cabin.The roughly 100-foot-wide path they’re cutting through the rolling hills extends about 700 miles to the west, running through neighboring Ohio and all the way up into Michigan. The pathway is for a pipeline that will bring huge amounts of natural gas out of sparsely populated Appalachia and into big cities across the Midwest. The pipeline, called Rover, is being built by Energy Transfer Partners LP, of Dallas, which has spent three years and a total $4.2 billion on the painstaking process of winning permits, clearing miles of rugged terrain, and fighting a pitched legal battle against environmental groups and landowners. Rover is scheduled to begin shipping as much as 3.25 billion cubic feet of natural gas a day in early 2018. When fed through a natural gas-fired power plant, that’s enough to power about 30 million homes. Rover is one of a handful of pipelines set to open next year that will begin moving natural gas from the massive Marcellus and Utica shale formations that lie beneath parts of Ohio, West Virginia, Pennsylvania, and New York.   A relative latecomer to America’s shale revolution, the Marcellus and Utica regions are booming. In the past 10 years, natural gas production there, driven by advances in horizontal drilling, has multiplied by a factor of 10, to about 25 billion cubic feet a day, or roughly a third of U.S. output. Despite the increase in production, the energy companies that drill the wells to produce the gas complain they’ve been bogged down by a thicket of political and regulatory hurdles, as well as opposition from environmentalists and some landowners. These obstacles have prevented the region’s energy industry from reaching its full potential, they argue. Sometimes dubbed the Saudi Arabia of natural gas, the Marcellus is thought to hold a century’s worth of reserves. But after an initial boost of investment and optimism by drilling companies, activity started to stall, mostly because there weren’t enough pipelines to deliver the gas to large markets.  “Natural gas production volumes have exceeded available pipeline capacity for several years.”

Mountain Valley sues landowners to gain pipeline easements and access through eminent domain    - Mountain Valley Pipeline has filed a federal lawsuit against hundreds of landowners in Virginia to initiate acquiring easements through eminent domain across roughly 300 private properties and to seek a court order granting immediate access to the properties. Both Maureen Brady, a professor at the University of Virginia School of Law, and Chuck Lollar, a Norfolk-based lawyer who specializes in eminent domain, said filing suit against multiple landowners and properties at once is standard procedure for similar projects. Lollar said one reason to file condemnation proceedings against hundreds of landowners at once “is to seek one court order granting entry to begin construction, applicable to all property owners who have refused to sign easements, since they would be the remaining obstacle to commencement of construction of the pipeline.” Mountain Valley’s 196-page lawsuit, filed in Roanoke Tuesday, notes that the project received approval Sept. 13 from the Federal Energy Regulatory Commission. FERC’s order grants Mountain Valley Pipeline LLC the authority through the Natural Gas Act to condemn private property to obtain easements for the pipeline and related access roads and workspaces. “Condemnation is necessary because MVP has been unable to negotiate mutually agreeable easement agreements with landowners,” the lawsuit says. Many property owners opposed to the pipeline have refused to even enter such negotiations. Mountain Valley must still obtain other permits and authorizations, from both state and federal agencies, before launching construction. The company’s lawsuit asks the court to grant Mountain Valley the property rights sought by the litigation and an order granting “immediate access and entry prior to the determination of just compensation upon the posting of an appropriate bond.”

West Virginia again approves Mountain Valley Pipeline — West Virginia environmental regulators on Wednesday lifted their suspension of the permit for building the Mountain Valley Pipeline, which would carry natural gas down the center of the state. The pipeline would extend south for 195 miles (315 kilometers) in north-central West Virginia through 11 counties to the Virginia state line and nearly 110 miles (175 kilometers) through six counties in that state. West Virginia's Department of Environmental Protection first issued the water quality certification in March, which followed public hearings and review of the projected impact on the state's waters. In June, five citizen groups asked a federal appeals court to overturn the state approval. In September, the DEP vacated its approval to re-evaluate the application and determine whether it complied with the federal Clean Water Act. "Our agency developed a revised strategy that will better utilize the state storm water permit to provide significantly stronger safeguards for the waters of West Virginia," he said. The state also has decided chosen to waive its individual certification for the pipeline under the federal Clean Water Act. The DEP noted that U.S. Army Corps of Engineers recently reissued its nationwide permit, with provisions that are specific to West Virginia, saying it will allow for better enforcement capabilities and enhanced protection for West Virginia waters. Two weeks ago, a divided The Federal Energy Regulatory Commission granted its approval. Environmentalists said the state agency is failing to do its duty. "This action suggests that DEP does not believe in the laws, including the anti-degradation policy, that it is charged with enforcing," said Derek Teaney, senior attorney at Appalachian Mountain Advocates. "It also makes you wonder whether DEP intends to give the Atlantic Coast Pipeline, the other ill-conceived pipeline project it is currently reviewing, the same free pass it has just given to MVP."

Lawmakers Hold Hearing on Pocono Fracking | -- Republican state lawmakers held a public hearing over a proposed permanent fracking ban in part of the Poconos. While the lawmakers will have no say on the ban itself, the hearing near Waymart could be used to influence public opinion. "I'm so pleased to have all of you here today that share in that frustration and disdain," said Republican State Representative Jonathan Fritz at a hearing regarding a proposed permanent ban on natural gas drilling in Wayne and Pike Counties. It's a decision that's up to the Delaware River Basin Commission. Fritz cohosted the hearing near Waymart helping choose who testified before the House GOP policy committee. "We need the jobs that will not just be created within the industry," said Debbie Gillette, Chamber of the Northern Poconos. The Chamber of the Northern Poconos, a lobbyist, and a Republican county commissioner spoke about the potential economic benefits if the region were allowed to have fracking. The Delaware River Basin Commission already has an unofficial ban on natural gas drilling. More than a month ago, the commission started the process of a making that ban permanent.Wayne County Commissioner Brian Smith believes it's a property-rights issue and an opportunity for farmers. "Our farms cannot simply survive today on the price we get for milk. Our farm is suffering,"

Dominion says Cove Point LNG production to start in November -  Dominion Energy Monday said it expected to begin production in November at its long-awaited Cove Point LNG export terminal in Maryland, as buyers in Asia look for greater access to growing US supplies.Dominion specified the timing of production at its liquefaction plant in a slide presentation that accompanied the release of its third-quarter financial results. It did not say exactly when it would ship its first cargo, and executives did not address the issue during a conference call to discuss quarterly results. The company has said previously it expects feedgas to flow to the facility by Tuesday. The plant was still not flowing any feedgas to the liquefaction plant as of Monday. However, once flows begin, receipt volumes at both the Loudoun and Pleasant Valley interconnects with Columbia Gas Transmission and Transcontinental Gas Pipeline, respectively, can be expected to increase as the two points are the main supply meters for the liquefaction plant. "The Cove Point Liquefaction construction is effectively complete and the facility is going through its advanced-commissioning phase," CEO Thomas Farrell said.

Court rejects greens’ plea to stop natural gas export projects | TheHill: A federal appeals court Wednesday rejected an environmental group’s lawsuits trying to overturn federal approval for three liquefied natural gas (LNG) export projects. The Court of Appeals for the District of Columbia said that the Sierra Club’s challenges to export facilities in Maryland, Louisiana and Texas, fail for the same reasons that the same court ruled against the group in a similar case concerning a different project in August. “In a very recent case, Sierra Club v. U.S. Department of Energy (Freeport), this court denied a petition by Sierra Club challenging, under the same two statutes, the Department [of Energy]’s approval of an LNG export application from a fourth facility. The court’s decision in Freeport largely governs the resolution of the instant cases,” the court’s three judges wrote in the brief judgment.The cases decided Wednesday were part of a collection of cases the Sierra Club and other groups filed to try to stop approvals of LNG export facilities by the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC). The greens generally argued that the federal agencies did not sufficiently consider environmental impacts of the approvals, like increases in hydraulic fracturing and greenhouse gas emissions. In June 2016, the D.C. Circuit Court rejected the green’s arguments regarding FERC. And in August, the same court rejected the DOE arguments. “Under our limited and deferential review, we cannot say that the Department failed to fulfill its obligations under [The National Environmental Policy Act] by declining to make specific projections about environmental impacts stemming from specific levels of export-induced gas production,” the court wrote in the August case. While that same argument applied to the three cases in Wednesday’s decision, the judges said that there were some small issues remaining in the Sierra Club’s challenges, regarding environmental reviews and the impacts on low-income households. But none of those issues were convincing, they ruled. The projects at issue in Wednesday’s cases were Dominion Energy’s Cove Point facility in Maryland, scheduled to open within weeks; Cheniere Energy Inc.’s Sabine Pass facility in Louisiana, which opened last year; and Cheniere’s Corpus Christi, Texas, project, due to open next year. 

DC Circuit upholds DOE LNG export approvals for three terminals --A US federal appeals court cast aside Sierra Club arguments challenging Department of Energy approval of exports from three more LNG terminals, in a decision further setting back the environmental group's argument that agencies have failed to adequately assess greenhouse gas emissions from upstream production induced by the projects. In a judgment issued Wednesday, a three-judge panel of the US District of Columbia Circuit Court of Appeals Monday denied Sierra Club's petitions challenging authorization of LNG exports from Dominion Energy Cove Point LNG in Maryland, Sabine Pass LNG in Louisiana and Corpus Christi LNG in Texas. Combined, the three facilities will represent peak liquefaction capacity of 5.4 Bcf/d by 2020, more than half of all liquefaction capacity currently under construction. The court said it considered as precedent its own recent ruling denying Sierra Club's petition related to the Freeport LNG facility in Texas, and ruled in DOE's favor on three other remaining "narrow issues." In the August 15 Freeport decision, the court found that indirect effects of gas production induced by the project were not reasonably foreseeable and that DOE did its best to determine the environmental impacts of the project. The decisions add to prior rulings in which the DC Circuit upheld FERC approvals of the terminals. In those cases, the court found FERC's analysis "did not have to address the indirect effects of the anticipated export of natural gas because the Department of Energy and not the commission, has sole authority to license the export of natural gas."

 This coastal town banned tar sands and sparked a war with the oil industry --  Can communities say no to energy companies?Hundreds of miles from the nearest oil field or fracking well, the answer to this question is playing out here, as a longrunning David-and-Goliath battle over plans to pipe tar sands oil from Canada to Maine for export nears a pivotal moment.On one side is South Portland, a picturesque waterfront city of 25,000, which approved an ordinance in 2014 to outlaw heavy crude exports from its harbor in an overwhelming City Council vote.On the other is the Portland Pipe Line Corporation, the company behind the project, and its allies, including the American Petroleum Institute, whose members include most major oil and gas companies. API spent hundreds of thousands of dollars to defeat a ballot measure in 2013 that would have blocked the project. The City Council approved the ordinance a year later. The Portland Pipe Line Corporation is now suing the city, with support from API and the U.S. Chamber of Commerce, arguing the ban was unconstitutional. A federal judge is expected to rule in the coming weeks. A decision in favor of the company could effectively open a gateway for the flow of carbon-heavy tar sands oil to one of the East Coast's largest oil ports.For other cities seeking to restrict oil and gas activities, South Portland's four-year fight to fend off the oil industry offers perhaps a cautionary tale.  South Portland, with an operating budget of $32.6 million, had spent $1.1 million as of August in legal fees to defend its ban, and the costs continue to rise. "They're getting killed," said Sean Mahoney, executive vice president of the Conservation Law Foundation, who has advised the city on the case.At issue is local control, the right of communities to make their own rules when it comes to oil and gas operations and infrastructure. "This has always been seen by the companies as a beachhead," Mahoney said. "They can't allow communities to pass this kind of ordinance because it could be a model for communities everywhere."

How has air quality been affected by the US fracking boom -- Urban air pollution in the U.S. has been decreasing near continuously since the 1970s.  But about 10 years ago, the picture on air pollutants in the U.S. started to change. The "fracking boom" in several different parts of the nation led to a new source of hydrocarbons to the atmosphere, affecting abundances of both toxic benzene and ozone, including in areas that were not previously affected much by such air pollution.   In the age of fracking, the large operations at conventional well sites have been replaced by hundreds of well pads dotting the landscape. Each requires the transportation of water, chemicals and equipment to and from these pads as well as the removal of wastewater, and none is regulated like any larger facility would be.  As a result, unconventional production has not only increased truck traffic and related emissions in shale areas, but also established a renewed source of hydrocarbons. They enter the atmosphere from leaks at valves, pipes, separators and compressors, or through exhaust vents on tanks. Together with nitrogen oxides emissions, largely from diesel engines in trucks, compressors and drilling rigs, these hydrocarbons can form significant amounts of harmful, ground-level ozone during daytime. The EPA keeps track of methane emissions in its greenhouse gas inventory, but the numbers are based upon estimates developed in the 1980s and 1990s and are compiled through calculations and self-reporting by the industry. In fact, both satellite and atmospheric measurements suggest that the EPA estimates could be underestimating real-world methane emissions by up to a factor of two. And if this is true for methane, co-emitted hydrocarbon gases are likely underestimated as well.

Enbridge: Pipeline had coating gaps for years — Engineers at Enbridge knew about damage to a pipeline running through the Straits of Mackinac for years while the company remained silent about the issue, a company spokesman said Friday.Enbridge spokesman Ryan Duffy said company engineers realized in 2014 that Line 5’s coating was damaged by the installation of a support anchor that year, but they did not inform other company staffers that there was a problem because they did not deem it a safety issue.The news spread after others at the company reviewed documents that were sent to the state on Friday, Duffy said. State officials demanded more detailed information about sections missing coating after learning about the gaps in August.He said the pipe has since been repaired and never presented a safety issue, but Michigan Attorney General Bill Schuette said Enbridge’s disclosure erodes trust in the company, and U.S. Rep. Debbie Dingell called it “disturbing.”“This latest revelation by Enbridge means that the faith and trust Michigan has placed in Enbridge has reached an even lower level,” Schuette said in a Friday statement. “Enbridge needs to do more than apologize, Enbridge owes the citizens of Michigan a full and complete explanation of why they failed to truthfully report the status of the pipeline.” Schuette has called for an eventual discontinuation of the twin 65-year-old pipelines that run under the Straits of Mackinac. The Canadian energy company came under fire in August after Gov. Rick Snyder ordered an “aggressive” review of its Line 5 maintenance following revelations that multiple areas of the pipeline were missing enamel coating. State officials later accused the company of lying to them when they learned that the sections where bare metal was exposed to lake water were much larger than Enbridge had originally said.

Enbridge says it knew about oil pipeline damage 3 years ago  - Enbridge Inc., the company that operates twin oil pipelines running under the Straits of Mackinac, said it knew three years ago that protective coating had been damaged but didn't inform regulatory agencies.Enbridge said four gaps were opened in enamel coating on one section of Line 5 as a support anchor was being installed in 2014. The coating gap is one of several that have exposed bare metal on parts of the pipelines.The gaps are being repaired and haven't compromised the pipelines' safety, company spokesman Ryan Duffy said.But state officials are criticizing Enbridge's failure to disclose the damage earlier.Michigan Agency for Energy Director Valerie Brader says her office's trust in Enbridge "has been seriously eroded."The Straits of Mackinac links Lakes Huron and Michigan.Enbridge recently began making repairs to the protective layer of enamel coating on the 64-year-old pipelines.The state Pipeline Safety Advisory Board had said in September it recommended Michigan universities analyze the worst-case scenario of an oil pipeline failure. The two 20-inch pipelines running along the bed of Lake Michigan just west of the Mackinac Bridge carry 23 million gallons of light crude oil daily through the environmentally-sensitive area.

Illinois’ first fracking permit withdrawn -- Hydraulic fracturing -- the controversial oil-and-gas drilling method once promoted as a major new source of jobs, tax revenue and domestic energy -- is again on indefinite hold in Illinois.Woolsey Companies Inc., the Kansas firm awarded the first permit under the state’s 2013 “fracking” law, released a statement Friday citing regulatory compliance costs in the decision to drop drilling plans near the southeast Illinois community of Enfield. The practice relies on high pressure chemical and water injections to release oil and gas from deep-rock formation.“The process we have gone through to receive a permit was burdensome, time consuming and costly due to the current rules and regulations of Illinois,” the company stated, “and it appears that this process would continue for future permit applications.”The company said the area of southeast Illinois known as New Albany Shale had significant energy production potential, but that stringent Illinois rules combined with low oil and gas prices made the project too costly compared with other states.“It is a difficult decision, as the resources we invested were substantial,” the company stated. The Illinois Department of Natural Resources approved the company permit in September.Opponents declared the Woolsey decision a victory in the fight to slow fracking, and vowed to continue work for outright state and federal bans.“They promised all these jobs, and the Illinois legislature fell for that. Now, we think it’s time to put this practice to rest once and for all,” said Dawn Dannenbring with Illinois People’s Action in Bloomington. Enactment of Illinois’ fracking law in 2013 was followed by months of controversy over regulations, including thousands of opponent comments. Jessica Fujan, Midwest Region director for Food and Water Watch, said the Woolsey decision reflected growing public awareness of fracking’s dangers.

Judge OKs environmental assessment of proposed Enbridge pipeline - The state’s environmental assessment of Enbridge’s proposed new Line 3 oil pipeline — heavily criticized by pipeline opponents — has been approved by a state judge.The environmental impact statement (EIS), done by the Minnesota Department of Commerce, was deemed “adequate” in a ruling released Wednesday by Eric Lipman, an administrative law judge.The EIS made no recommendations. Rather, the August report assessed potential environmental damage from the proposed 340-mile pipeline that would replace Enbridge’s current Line 3. The pipeline transports Canadian oil across northern Minnesota to Enbridge’s terminal in Superior, Wis.Administrative law judges rule on aspects of contested cases before the Minnesota Public Utilities Commission (PUC). The PUC itself still must approve the EIS on the way to voting on Line 3 as a whole, but the judge’s decision is likely to play a significant role in that process. A separate administrative law judge is weighing whether a new Line 3 is needed and, if so, which route it should take, based on a separate Commerce Department report plus testimony at public hearings.The EIS has been labeled deficient on several fronts by environmental groups and Indian bands that oppose the pipeline.But in his ruling, Lipman concluded that the EIS met the requirements of Minnesota law and “addressed the potentially significant adverse or beneficial environmental, economic, employment and sociological impacts generated by the project and its alternatives.” The EIS also “adequately presents methods by which adverse environmental impacts can be mitigated,” Lipman wrote.Calgary, Alberta-based Enbridge said the $2.6 billion project is necessary to replace its current Line 3, a 1960s-vintage pipeline that operates at slightly more than half of its capacity due to safety concerns. A new pipeline would allow the company to restore the full flow of 760,000 barrels of oil per day. The new Line 3 would run on a new route that is south of the current Line 3. Opponents said it would cut through an area of pristine lakes, rivers and wild rice waters, exposing them to oil spill damage.

The Rationale For Reversing The Crude Oil Flow On Capline - The three co-owners of the 1.2-MMb/d Capline Pipeline from St. James, LA, to Patoka, IL, have begun assessing whether there is sufficient shipper interest in reversing the flow of one of the U.S.’s largest crude oil pipelines in the early 2020s. There are good reasons both for ending Capline’s long run as a northbound-flowing pipe and for repurposing the pipeline to help transport heavy western Canadian oil and other crudes south to refineries in eastern Louisiana and Mississippi and to export markets. But there also are logical questions to ask, such as why Capline’s owners envision sending only 300 Mb/d south on the pipe, and why they don’t see the reversal occurring for five years. Today, we examine the forces behind Capline’s possible reversal and the benefits that flipping the pipe’s direction might provide. There was also a sense of inevitability in the October 17, 2017, announcement that Capline co-owners Plains All American (which holds a ~54% stake), Marathon Petroleum (~33%) and BP (~13%) had agreed to launch a non-binding open season to assess shipper interest in the proposed reversal of the pipeline. Through the open season, which runs until November 17, 2017, the co-owners and Capline operator Marathon Pipe Line (MPL) are gauging interest to begin southbound service on the pipeline in the second half of 2022 with an initial capacity of 300 Mb/d — only one-quarter of Capline’s northbound capacity. The possible reversal of Capline (yellow line in Figure 1) has been a frequent topic in the RBN blogosphere for several years. The 633-mile, 40-inch-diameter pipeline for a quarter century played a critical role in moving imported, Gulf Coast and Gulf of Mexico-sourced crude oil north to Midwest refineries. But as we said in Livin’ on the Edge, rising production in the Bakken and the Canadian oil sands reduced the need for northbound flows on Capline, which according to Louisiana Department of Natural Resources data have fallen from just over 1 MMb/d in 2000 to an average of 336 Mb/d in the first nine months 2017. Further declines are imminent — within the next few weeks, Plains and Valero Energy Corp. expect to start commercial operation of their new 200-Mb/d Diamond Pipeline (light green line) from the crude oil storage and distribution hub at Cushing, OK, to Valero’s 195-Mb/d refinery in Memphis…

Exxon to pay $300 million on Gulf Coast plants in EPA settlement - Exxon Mobil will shell out $300 million outfitting eight energy facilities in Texas and Louisiana with technology that monitors and controls air pollution, as part of a settlement with the U.S. government announced by the Environmental Protection Agency on Tuesday. The Irving, Texas oil company's settlement with the EPA and other agencies comes after it faced allegations that it failed to monitor flaring at Gulf Coast petrochemical facilities, potentially violating the Clean Air Act. The EPA said the anti-pollution equipment will curb harmful pollution from 26 industrial flares at five of the company's facilities in Texas, near Baytown, Beaumont and Mont Belvieu, and three others in Baton Rouge, Louisiana. Exxon has agreed to cut down on waste gases it sends through its flares and improve the efficiency of the flares. The project could reduce the company's emissions of volatile organic compounds by 7,000 tons a year, and curb toxic air pollutants like benzene by 1,500 tons a year. "This settlement means cleaner air for communities across Texas and Louisiana, and reinforces EPA's commitment to enforce the law and hold those who violate it accountable," EPA Administrator Scott Pruitt said in a written statement.

 Exxon Refinery Catches Fire Day After Government Settles Over Pollution From Other Gulf Plants -- Early morning skies Wednesday in Baton Rouge, Louisiana, were alight from a fire that started around 2:30 a.m. at an ExxonMobil refinery, a reminder to the surrounding community of yet another danger of living next to refineries and chemical plants. Exxon's refinery is located along the stretch of Mississippi River between Baton Rouge and New Orleans known as "Cancer Alley" due to the high number of chemical plants and refineries—and illnesses possibly connected to emissions—along the river's banks. Exxon issued a statement to CBS affiliate WAFB while the fire smoldered, saying the community was not impacted by emissions from the refinery fire and that air quality readings were "below detectable limits." Mary Lee Orr, executive director of The Louisiana Environmental Action Network (LEAN), questions the possibility of making such a determination so fast. Her group has been working with Cancer Alley communities, helping to reduce their exposure to pollution f  rom the area's oil and petrochemical industry.   Exxon's Baton Rouge refinery is adjacent to one of the company's eight facilities named in a settlement reached with the U.S. Environmental Protection Agency (EPA) and the Department of Justice (DOJ) and announced Oct. 31.  Last year LEAN filed a lawsuit against an Exxon chemical facility in Baton Rouge, next to the refinery that caught on fire Wednesday. That suit alleges the facility has been violating the Clean Air Act by failing to report pollution releases correctly. Lisa Jordan, director of Tulane University's Environmental Legal Clinic and representing LEAN in this case, said it is too early to say how the recent agreement between the federal government and Exxon will impact their own case. Jordan said LEAN's case encompasses a broader range of issues than those in the one recently settled.  According to the DOJ , the settlement "resolves allegations that ExxonMobil violated the Clean Air Act by failing to properly operate and monitor industrial flares at their petrochemical facilities, which resulted in excess emissions of harmful air pollution."

 How a 672,000-gallon oil spill was nearly invisible -  Mention oil spills, and images of birds coated in black slime and a shiny slick on the ocean’s surface come to mind. But not all oil spills are the same. About 672,000 gallons of oil spilled when a pipeline fractured about a mile below the ocean’s surface this month in the Gulf of Mexico southeast of Venice, La., which is about 65 miles south of New Orleans. Hardly any of it was visible. “The thing that sort of confused people about this one is that we weren’t seeing any oil,” Lt. Cmdr. Steven Youde of the Coast Guard said in a phone interview on Wednesday. Aside from a few areas with a light sheen on the surface of the ocean, the oil seemed to have completely disappeared, and it was not expected to affect the shoreline. The oil spill appeared to be the largest since the Deepwater Horizon explosion in 2010, when four million barrels of oil leaked over nearly three months. This month’s episode was far smaller: 16,000 barrels in less than two days. Even so, 16,000 barrels is “a pretty substantial leak,” said Edward B. Overton, an emeritus professor of environmental sciences at Louisiana State University who is studying the environmental effects of Deepwater Horizon. “But it was not enough on the surface to warrant a cleanup response.” In this case, the oil degraded quickly, in part because of environmental forces. The company that operates the pipeline, LLOG Exploration, believes the pipe fractured in the early morning hours of Oct. 11, a company spokesman, Rick Fowler, said in an email. On Oct. 12, LLOG discovered that the amount of oil leaving its wells was different from the amount of oil leaving the company’s floating production system, Delta House, which is in the Gulf of Mexico, about 40 miles southeast of Venice, La. The small crack in the pipeline has not yet been fixed, Mr. Fowler said, but the wells were shut and the flow through the pipe was stopped. What caused the fracture was unclear. The federal Bureau of Safety and Environmental Enforcement, which has regulatory oversight of the offshore energy industry, is investigating. 

Booming US crude oil exports raises questions about infrastructure capability - Tankers carrying record levels of crude are leaving in droves from Texas and Louisiana ports, and more growth in the fledgling US oil export market may before long test the limits of infrastructure like pipelines, dock space, and ship traffic. US crude exports have boomed since the decades-old ban was lifted less than two years ago, with shipments recently hitting a record of 2 million barrels a day. But shippers and traders fear the rising trend is not sustainable, and if limits are hit, it could pressure the price of US oil. How much crude the United States can export is a mystery. Most terminal operators and companies will not disclose capacity, and federal agencies like the US Energy Department do not track it. Still, oil export infrastructure will probably need further investment in coming years. Bottlenecks would hit not only storage and loading capacity, but also factors such as pipeline connectivity and shipping traffic. Analysts believe operators will start to run into bottlenecks if exports rise to 3.5 million to 4 million barrels a day. RBC Capital analysts put the figure lower, around 3.2 million b.p.d. The US has not come close to that yet. A total of the highest loading days across Houston, Port Arthur, Corpus Christi, and St. James/New Orleans – the primary places where crude can be exported – comes to about 3.2 million b.p.d, according to Kpler, a cargo tracking service.But with total US crude production currently at 9.5 million barrels a day and expected to add 800,000 to 1 million b.p.d annually, export capacity could be tested before long. Over the past four weeks, exports averaged 1.7 million b.p.d, more than triple a year earlier. "Right now, there seems to be a little more wiggle room for export levels," said Michael Cohen, head of energy markets research at Barclays. "Two to three years down the road, if US production continues to grow like current levels, the market will eventually signal that more infrastructure is needed. But I don't think a lot of those plans are in place right now." If exports do hit a bottleneck, it would put a ceiling on how much oil shippers get out of the country. Growing domestic oil production and limited export avenues could sink US crude prices. 

  An increasingly large share of U.S. distillate production is exported – EIA - U.S. distillate exports have continued to increase significantly over the first part of 2017, setting record highs for three consecutive months from May through July (Figure 1) before declining in August (at least partially as the result of hurricane activity). At the same time, U.S. distillate demand was relatively stable, increasing only slightly from January through July 2017 compared with 2016 levels.Although January through July 2017 average exports of distillate to Europe fell compared with the same period in 2016, U.S. refineries in the Gulf Coast are geographically well positioned to export to Mexico and to countries in Central and South America, and distillate exports to these locations increased. In addition to increased export demand, high distillate crack spreads (the difference between distillate prices and crude oil prices) encouraged refinery runs. During this period, overall demand outpaced production and inventories fell.  While the January-through-July average distillate product supplied (a proxy for demand) increased slightly, from 3.8 million barrels per day (b/d) in 2016 to 3.9 million b/d in 2017, the growth in exports increased more quickly. From January through July 2017, U.S. distillate exports averaged 1.4 million b/d, nearly 195,000 b/d more than in the same period in 2016. Distillate exports from the United States set record highs in May, June, and July 2017, reaching 1.5 million b/d, 1.6 million b/d, and 1.7 million b/d, respectively. In August, exports of distillate fell to 1.4 million b/d, due at least partially to Hurricane Harvey, which made landfall in Texas as a Category 4 hurricane on August 25 and resulted in port closures. August data reflects the significant impact of hurricanes this year and may not be indicative of distillate demand or export trends. As exports of distillate have increased, they have accounted for a larger share of net production (Figure 2). As of October 30, 2017, residential heating oil prices averaged $2.70 per gallon, nearly 3 cents per gallon more than last week and 36 cents per gallon higher than last year’s price at this time. The average wholesale heating oil price for this week is over $1.95 per gallon, 6 cents per gallon more than last week and 34 cents per gallon higher than a year ago.

 Permian Gas Prices Get Spooked As Pipelines To Gulf Coast Markets Fill -- Permian natural gas production recently topped 7 Bcf/d and shows no signs of slowing its growth trajectory. While new pipelines are expected to move additional Permian gas volumes to the Gulf Coast markets by the beginning of 2020, the current paths to those markets are full. Over time, Mexico is expected to export significant volumes directly from Waha, but current amounts are relatively small. As a result, increasing volumes of gas are leaving the Permian on the pipelines that head west to California and north to the Midcontinent. However, the pricing in these markets is downright ghoulish compared to the Gulf Coast and Permian gas is increasingly finding itself in scary market conditions. Today, we analyze recent pricing and flow trends in the Permian natural gas market. Permian natural gas has been a frequent subject in the RBN blogosphere in 2017. This summer we posted a four-part blog series on Waha in which we outlined our view that Permian gas production is set to grow to almost 9 Bcf/d by the end of 2019 and create gas takeaway constraints in the process. Nothing has changed from that general view, but with a few months of time having passed, we thought we’d check in on Permian gas to see how things are playing out.

Crude oil shuttle pipelines and gathering systems in the Permian, Part 5 - Permian crude oil production now tops 2.5 million barrels a day (MMb/d) and is expected to increase to 3.5 MMb/d by 2022 under RBN’s least optimistic price scenario. If prices hold steady or rise, production in the play could easily surpass 4 MMb/d within five years. But the Permian’s output isn’t just dependent on price. It’s also critically important that sufficient gathering capacity is in place to efficiently transport crude from the lease to central points where oil can flow onto shuttle pipelines or takeaway pipes. Today, we continue our blog series on key infrastructure in the nation’s hottest shale region with a look at a number of existing and planned gathering systems. As we said in Part 1, with Permian production on the rise, there’s been a big push on to expand regional pipeline networks’ capacity to move more crude oil out of the play’s Delaware and Midland basins and — just as important — to give producers and shippers as many destination options as possible. Until a few years ago, most of the oil produced in the Permian flowed north to the crude storage and distribution hub in Cushing, OK. By 2011-12, though, rising crude production in the Bakken, western Canada and the Permian itself — combined with too little pipeline capacity from Cushing to the Gulf Coast — caused a supply glut at Cushing. That, in turn, caused heavy discounting for Cushing benchmark West Texas Intermediate (WTI) versus Louisiana Light Sweet (LLS) at the Gulf Coast, and spurred development of new takeaway capacity from the Permian to Houston and other coastal destinations.

Critical U.S. Fracking Equipment Shortages Mean Higher Oil Prices In 2018 - The primary bear thesis on oil currently is that U.S. shale is a new global swing producer, capable of rapidly responding to price and inventory changes to ensure market balance. This thesis, however, is fatally flawed as evidenced by flat-lining Texas and New Mexico production (the two key shale states), and an increase in drilled-but-uncompleted wells. The myth of rapid response U.S. shale production, or the “call on shale” thesis, will be disproven in 2018 as investors realize shale output is dictated by service sector capacity. Shale production is currently constrained by pressure pumping equipment shortages. Aging pressure pumping fleets will only compound this over the next year & significant investment is still required. These are not issues that are solved quickly, and will prove to be a major headwind to shale growth in 2018.  The fact is that U.S. shale producers cannot control their output, as it is determined by the capacity, capital availability, and labor market constraints of the oil service industry. These constraints will persist deep into 2018 as fracking horsepower demand exceeds supply by 2 to 4 million hydraulic horsepower, and as companies lack capital to replace & add capacity to quickly remedy the imbalance. The end result is a limited pace of well completions, and another year of disappointing shale growth in 2018. As of the latest EIA Petroleum Supply Monthly with data for July 2017, U.S. production has grown by 467,000 bpd for the first 7 months of the year. This would annualize to 800,000 bpd, far below consensus expectations of 1 - 1.2 million bpd from earlier this year. Most of this growth, however, is from earlier in the year, and production was essentially flat from March-June. Most importantly, however, is that Texas & New Mexico production has disappointing. These two states are home to the Permian & Eagle Ford, the two growth engines of U.S. shale: This is not the surge of production that was anticipated under the paradigm that the U.S. is a rapid response swing producer. The EIA's Drilling & Productivity Report estimates production monthly by shale region. Below is what the EIA's DPR predicted in each months report from January to July, compared to actual growth: The reasoning for why becomes clear when looking at drilled versus completed wells in the Permian. Wells drilled has been adequate, but completions have severely lagged, and the reason is that there is a significant equipment under-supply in the fracking & completions sector. These shortages are not simply,cheaply, or quickly resolved, as I will demonstrate:

China's Sinopec mulls U.S. oil projects ahead of Trump's visit: sources : (Reuters) - China’s state oil major Sinopec is evaluating two projects in the United States that could boost Gulf Coast crude oil exports and also expand storage facilities in the Caribbean, two people familiar with the matter said on Tuesday, with U.S. President Donald Trump set to visit Beijing next week. With U.S.-China energy trade likely to feature prominently during Trump’s visit, the people said one of the projects could see Sinopec partnering with U.S. commodities trader Freepoint Commodities LLC and U.S. private equity firm ArcLight Capital Partners LLC. The trio is mulling building a pipeline to move shale oil from the Permian basin in Texas to the U.S. Gulf Coast for export, the people said. This project also includes the construction of a terminal that can load 2 million barrels of crude onboard a Very Large Crude Carrier (VLCC), they said. This will reduce a big chunk of logistics costs incurred for U.S. crude exports, making the oil more competitive in Asia, the sources said. ArcLight and Freepoint are among the U.S. energy and commodities firms that will make up a major part of a business delegation visiting Beijing when Trump goes to China next week. Sinopec and the U.S. firms have also been exploring an expansion of oil storage at Limetree Bay (LB) Terminals in St. Croix, U.S. Virgin Islands, in the Caribbean, and restarting an idled refinery at the same site, the people said. They declined to be identified because they were not authorized to speak to media.

Now It's Oilmen Who Say Fracking Could Harm Groundwater -- It's no longer just environmentalists who suspect hydraulic fracturing is contaminating groundwater.Oil companies here in Oklahoma — ones that produce from older vertical wells — have raised that prospect as they complain about the practices of their larger brethren.They say hundreds of their wells have been flooded by high-pressure fracturing of horizontal wells that blast fluid a mile or more underground. Some of those "frack hits," they suspect, have reached groundwater."I'm convinced we're impacting fresh water here," Mike Majors, a small producer from Holdenville, said as he drove from well to well on a September afternoon. "If they truly impact the groundwater, we can kiss hydraulic fracturing goodbye."Majors found a burbling mess two years ago when he showed up at his friends' oil well outside Holdenville.Water was bubbling up around the wellhead of the well, named the I. Davis No. A-1, but also flowing out of a nearby embankment leading to a drainage.A company called Silver Creek Oil & Gas LLC had been fracking a well about 2,000 feet away from the well. The frack fluid leaked out of its intended path and flooded into the well, which belongs to a company called Rayland Operating LLC.The older wellbore, drilled in 1928, was not sealed off with cement casing deep enough to prevent the surging flow from reaching groundwater. Majors, a lanky, chain-smoking veteran of the oil field, leaned on the hood of his pickup parked at the well site and explained that with thousands of pounds of upward pressure, there was nothing to stop the fluid from flooding into groundwater. It took months and the threat of a contempt charge to get the monitoring well drilled. The results, filed with the state and obtained by E&E News through state open records laws, shows that chlorides, sometimes a sign of oil and gas contamination, are low.  But there wasn't a baseline to measure the chlorides against. And there was no test for fracking chemicals. A list of frack fluid ingredients Silver Creek filed with the FracFocus registry included chemicals such as isopropanol and naphthenic solvents.

Fracking Protesters Wear Face Masks During Oil & Gas Meeting - Dozens of people concerned about the impact of fracking took their message to state regulators on Monday. Some even wore face masks to to the Colorado Oil And Gas Conservation Commission to protest fracking near homes. They want the commission and Gov. John Hickenlooper to do something about fracking near homes and encroaching on neighborhoods, specifically to curb drilling. Several protesters wore medical face masks with messages written on them like “Stop Fracking Us.” They hoped to make a statement about toxic air they say their families breathe every day as a result of fracking. COGCC heard testimony from residents along the Front Range on how fracking has exposed them to hazardous toxins.  One of the most powerful comments during the meeting wasn’t made at the podium. During the testimony one commissioner asked a woman who was quietly holding a photo of homes right next to a fracking well to put away the photo.  She refused and told him, “We have to look at this every day. Why can’t you?” The meeting comes amid concerns about proposed construction of dozens of drilling sites near homes and schools in Broomfield, Boulder, Erie, Greeley, Longmont and Thornton.  This year, the American Lung Association gave 10 counties on the Front Range a failing grade on their clean air report. Weld County, which already has more than 23,000 wells, received an ‘F.’  “Fracking is in my neighborhood. It’s near my backyard, it’s near my children’s favorite playground. Which I don’t take them to much anymore because their asthma has gotten worse in the last few years,” said Weld County resident Megan Meyer.

Congress Works with Big Oil on Letter Suggesting Anti-Pipeline Activists Face Terrorism Charges - Steve Horn -  On October 23, 84 Congressional representatives made a splash when they published a letter to U.S. Attorney General Jeff Sessions asking if those engaged in activism disrupting or damaging pipeline operations should face criminal prosecution as an act of terrorism under the USA PATRIOT ACT. Spearheaded by U.S. Rep. Ken Buck (R-CO) and co-signed by dozens of other, primarily Republican, representatives, the letter pays homage to the First Amendment, while also noting that “violence toward individuals and destruction of property are both illegal and potentially fatal.” The letter, covered by several media outlets, was championed by the industry lobbying and trade association, the American Petroleum Institute (API), which said it “welcomed” the letter. But according to a DeSmog review, API and other industry groups were a key part of bolstering the letter itself. API, along with the Association of Oil Pipe Lines (AOPL) and the Interstate Natural Gas Association of America (INGAA), is listed as among the “supporting groups” on the website, which tracks congressional letters and their backers.   This letter’s publishing comes in the aftermath of last year’s major uprising against the Dakota Access pipeline at the Standing Rock Indian Reservation in North Dakota. Emails and memoranda previously obtained and reported on by DeSmog show that law enforcement and contract public relations professionals described those who participated in the Standing Rock protests as potential “terrorists.” Greenpeace USA and activists the organization collaborated with at Standing Rock are likewise being described as partaking in “eco-terrorist” activities in a recent lawsuit filed against the organization for alleged “racketeering,” as defined by the Racketeering Influenced Corrupt Organizations Act (RICO). Importantly, it also follows other anti-pipeline actions by the “valve turners,” or those who participated in acts of non-violent civil disobedience to shut down the flow of Canadian tar sands into the U.S. at several pipeline pump stations. The activists affiliated with the Climate Disobedience Center, in those cases, have used the “necessity defense” to say that their activism was the last line of defense they had to halt runaway climate change which could ensue from the combustion of oil and gas flowing through pipelines.

Trump to Shrink Utah National Monuments to Allow Drilling, Mining - The Trump administration will shrink two national monuments in Utah including the 1.3 million-acre Bears Ears National Monument , opening the lands up for potential industry use. Sen. Orrin Hatch (R-Utah) confirmed in a Friday statement that Trump called the senator to inform him of the Bears Ears decision and that he will also shrink Utah's Grand Staircase-Escalante National Monument, which is thought to contain more than 60 billion tons of coal . Interior Sec. Ryan Zinke recommended downsizing Bears Ears in June, saying that the Antiquities Act should be used to protect the "smallest area" needed to cover important sites. The president will travel to Utah to announce plans to trim the monuments in December.  As reported by the Salt Lake Tribune: " ... Sen. Jim Dabakis, D-Salt Lake City, called the move an 'ugly violation of stewardship responsibility' that will undermine Utah's fastest growing industry: tourism. 'Trump, with the conniving help of the Utah congressional delegation, just strangled the golden goose of Utah's future jobs—the outdoor recreation industry,' Dabakis said. 'The winners in the president's decision are the fossil fuels industry, giant international coal companies and the pollution industry. The losers are Utah families, outdoor enthusiasts, hunters, campers, climbers and all who appreciate the unspeakable beauty of our state.'"

Industry tries again to delay federal methane rules in Wyoming court - Industry groups are asking a federal judge in Wyoming to delay some aspects of federal regulations meant to reduce methane emissions from oil and gas operations. In a filing with the U.S. District Court in Wyoming on Friday, the Independent Petroleum Association of America and the Western Energy Alliance argued that key provisions of the Bureau of Land Management’s methane waste rules, including the use of leak detection and repair equipment to find fugitive leaks, would be too costly for industry to implement by an upcoming January deadline. The Obama-era regulations are currently under review by the Interior Department. The regulations are disliked by a number of companies in Wyoming that argue such federal limits affect a wide range of current and potential oil and gas operations in the state. Wyoming regulators wrote the playbook on the venting and flaring rules now being implemented by the BLM, but thus far the state has only applied its strongest provisions in the Upper Green River Basin, an area with a history of ground level ozone spikes.Attempts at a quick solution in industry’s favor have failed so far.Industry unsuccessfully bid for an injunction last January, days before the first compliance date for the Obama-era regs.The Senate could not secure a simple majority vote to axe the rules months later, and a California court invalidated the Interior Department’s initial attempt to stay the rules, because the agency didn’t follow the Administrative Procedures Act.

 Fracking Boom Hits Midlife Crisis as Investors, Geologists See Shale Limits - Crude prices bouncing around $50 to $60 a barrel have kept U.S. shale producers stuck on the edge of profitability. That hasn’t been enough to shut down the oil boom in places such as North Dakota, Texas, and New Mexico—at least not yet. Drillers are heading into 2018 on the defensive as they face skepticism from shareholders who want to see less investment and more profit. They may also be finding that much of the easy oil has already been pumped. Output has recently failed to meet expectations. As of June, the U.S. Energy Information Administration expected an average of about 9.3 million barrels a day, more than 220,000 barrels a day higher than companies reported. Investors are demanding that companies sell off weaker holdings, pare spending, and pay down their debt. Shale producers traditionally market themselves as growth companies. With few exceptions, they eschew paying dividends and buying back shares, and instead plow their money into more drilling. Many are still outspending their cash flow. But their shares haven’t cooperated with this strategy: While the stock market has reached record highs this year, an S&P index of oil and gas explorers and producers has plunged about 17 percent. Executive pay incentives for exploration and production companies are under scrutiny from investors, too. “The compensation plans laid out by E&P corporate boards encourage these companies to grow production at almost any cost,”   For example, pay may be tied to sales volumes or additions to reserves, rather than measures of cash flow. The strategy “builds the personal net worth of the CEOs but does nothing for the shareholders for whom they are legally fiduciaries,” says Holt. Drillers also face technical questions about the shale boom’s sustainability. Pioneer Natural Resources Co. and Parsley Energy Inc. reported higher-than-expected natural gas output from their wells in August. That sent shares tumbling, because traders took it as a sign that oil flows, which are more lucrative, might peak more quickly than the industry expected. (As wells age, they tend to produce more gas and less oil.) The companies said their oil production hadn’t diminished, while analysts dismissed the worries as overblown.

ExxonMobil's output climbs as it plans to boost capex in 2018 -- ExxonMobil's liquids and natural gas production climbed to nearly 3.88 million b/d of oil equivalent in the third quarter, up nearly 70,000 boe/d from the same quarter last year, the company said Friday. That climb led the company to earn $3.97 billion in the quarter, up $1.32 billion from Q3 2016, despite the impacts of Hurricane Harvey and relatively stagnant global economic growth. Harvey, which made landfall in Texas on August 25, had a roughly $160 million impact on Exxon Mobil in Q3 as the company shut down refining and chemical operations in Baytown, Mont Belvieu and Beaumont. "We acted quickly to bring in gasoline, diesel and jet fuel from other regions in the US and abroad to supplement our production," said Jeff Woodbury, Exxon Mobil's vice president of investor relations, during an earnings call Friday, adding that the company's upstream operations were only minimally impacted by the hurricane. Bolstered by higher crude oil prices, up roughly $6.50/b from Q3 2016, lower operating expenses and higher realizations, Exxon Mobil plans to increase its capital and exploration spending to about $25 billion in 2018, up from an estimated $17 billion this year, he said. Exxon Mobil's capex was nearly $14.1 billion through the first nine months of this year, down nearly $400 million from the first three quarters of 2016. 

Alaska orders review of all North Slope oil wells after spill linked to permafrost - Alaska's main oil and gas regulatory body has ordered a review of all North Slope wells after a spill last spring was connected to thawing permafrost, subsidence and a cracked casing.The emergency order, issued Monday by the Alaska Oil and Gas Conservation Commission (AOGCC), said the outer casing that cracked had been set in the permafrost.In April, one of BP's older wells leaked oil and gas for days before it could be shut down. The company reported that roughly 45,000 kilograms of gas and 63 gallons of crude leaked. According to Alaska Public Media, BP blamed the failure then on a piece of a well casing that buckled under pressure from thawing permafrost.As a result, the AOGCC said it has ordered all companies on the North Slope to review their wells to look for similar issues and to shut down any wells that have the same construction.In parts of the Arctic, permafrost is thawing as temperatures warm due to climate change. But on the North Slope, the thawing that can cause problems at oil wells is likely to be attributed to human error.Tim Robertson, an oil spill response and prevention consultant who has worked on the North Slope, said that companies typically use a packing fluid between the pipe that carries the oil or gas and its outer casing. "That fluid is intended to protect the heat transfer from the products being produced so it doesn't transfer out to the permafrost," he said. "It's like an insulation." Failing to protect the permafrost can have extreme consequences. "A well goes thousands of feet through the permafrost, and that whole layer has to be protected or the integrity of the well itself is threatened if the heat transfers and melts."

Canada's Trans Mountain Pipeline expansion faces opposition - These are the Tsleil-Waututh Nation's ancestral lands. Their name means 'people of the inlet' and their creation story is about these waters, just east of Vancouver; they have inhabited this place for thousands of years.. The Trans Mountain Pipeline ends here, filled with oil from the landlocked Alberta Tar Sands, 700 miles away. Kinder Morgan, the Houston-based company which runs the pipeline, is planning to expand it, increasing its capacity threefold.  The expansion would mean many more oil tankers moving through these waters, waters the Tsleil-Waututh harvested until the 20th century, when industrial pollution made it impossible."The concerns are the pipeline expansion terminates right — I don't say in our backyard, I say in our's not if a spill happens, it's when it happens," Aleck says. At first contact with Europeans, this community was decimated by small pox and at one point dwindled to a handful of members, though their population was able to recover some. When the original oil pipeline was built in the 1950s, First Nations had no say in how the land was used. "It was against the law for First Nations to speak to a lawyer, to speak our language, to practice our culture," says Reuben George, another Tsleil-Waututh leader. That has changed. Now, they are actively trying to stop the pipeline expansion, partnering with environmental groups and taking the project to court. The Tseil Waututh is not anti-development and profit from real estate development on their land. But they are against fossil fuels and they've joined a lawsuit with other First Nations on the grounds that they weren't meaningfully consulted about the pipeline. Kinder Morgan says it made good-faith efforts to work with the first nation. But the Tsleil-Waututh is not the only group opposed to the expansion, local and regional governments are also speaking out against it. They say they are assuming the all the risks of the project while the province of Alberta gets the financial benefit

Mexico's "Legendary" Oil Hedging Desk Spent $1.25 Billion On 2018 Puts -- Mexico’s "legendary" oil hedgers (profiled her emost recently one year ago and by Bloomberg in this exhaustive article) are confident that prices won’t linger above $50 a barrel, because this summer, which is why the world’s most-active sovereign oil-trading desk spent a near record $1.25 billion on put options to lock in export prices for next year, Bloomberg reported, citing data from the country’s Ministry of Finance. The news is especially notable because, as we pointed out yesterday, with WTI prices holding at 6-month highs around $54 (and Brent at $60), hedge funds have never been more bullish on the entire energy complex, having accumulated a record 1.189 billion barrel equivalent long positions in the five major petroleum contracts (Brent, WTI (x2), RBOB, HO)... ...and that surge comes as oil analysts are following the trend and raising their oil-price forecasts. Last year, Mexican hedging desk spent $1.03 billion to protect itself from a downturn in prices, according to data released in the quarterly budget balance. In recent years,Mexico has spent an average $1 billion buying the hedges. The hedge first appeare in 2001, when Mexico made a tentative showing, spending just $217.3 million on put options, a fraction of the approximately $1 billion a year it would spend later. In 2003 and 2004, with oil prices rising, the country opted not to hedge at all.  The strategy came into its own in 2005: Mexico has hedged every year since without interruption. Agustín Carstens, who later became head of the central bank, was finance minister when a massive $5.1 billion payout came in 2009; some government officials also refer to the annual oil bet as “the Agustínian hedge.”

 Pemex gas distribution to lowest level since 1996; production rebounds - The volume of natural gas Mexico's Pemex distributed in October to its processing plants and the country's pipeline network reached its lowest level since 1996, the state company has reported. Pemex distributed 3.48 Bcf/d of gas in October, down just 25 MMcf/d from the month before, but down 13.38% year on year, Pemex said in a report. Of this total, the state company only injected 371 MMcf/d into Mexico's pipeline network, up 10 MMcf/d from the month before, but down 17.37% year on year. The volume of gas Pemex distributes has been on a continuous decline since it peaked at 5.78 Bcf/d in 2009. That year Pemex injected 1.32 Bcf/d into the country's pipeline network. The state company's gas production excluding nitrogen recovered in October, reaching 4.27 Bcf/d, up 470 MMcf/d from September, but down 8.4% year on year. In September, Pemex's associated gas production fell as output was constrained by low domestic refinery demand, crimped demand from Hurricane-hit Gulf Coast refiners, as well as export issues at Salina Cruz. The company produced 1.9 million b/d of crude in October, down 9.65% year on year. Production fell to 1.73 million b/d in September, the lowest since 1980. Pemex was able to increase its gas production in October by 100 Mcf/d over August levels despite its overall gas production including nitrogen decreased from 5 Bcf/d during the same period. The increase in Pemex's natural gas production comes hand on hand with a decrease in its nitrogen production. The state company's nitrogen production was 493 MMcf/d in October, the same volume as for September but down 372 MMcf/d from August.

The Return Of Deepwater Oil  - In a historic auction for deepwater oil assets in Brazil, the oil majors showed up on October 27 and bought several offshore blocks, indicating a high level of interest in the country after a major policy overhaul allowed private investment.Royal Dutch Shell won half of the blocks that were offered, and Shell was already one of Brazil’s largest foreign investors. After purchasing BG Group for around $50 billion, Shell took a large presence in Brazil. The logic behind Shell’s strategy is that the company argues it can breakeven with oil at $40 per barrel, making Brazil one of the most attractive places to drill offshore in the world.“These winning bids were submitted after our thorough evaluation and add strategic acreage to our ... global deep-water growth options,” Shell Upstream Director Andy Brown said.ExxonMobil took one block, expanding its position after winning six offshore blocks a few weeks earlier. BP added two blocks as well.But what makes the most recent auction different is that it will allow international firms to not only take stakes in offshore projects, but also lead on them. It is the fruit of a major policy overhaul from 2016, which scrapped a law that required Brazil’s state-owned oil company Petrobras to be the operator on all offshore projects in the pre-salt – Brazil’s deepwater reserves located beneath a thick layer of salt. That law also said that Petrobras had to own 30 percent of pre-salt projects. Related: Venezuela Avoids Default With Critical PaymentAfter that law was repealed in 2016, the oil majors started to express a lot more interest in stepping up investments in Brazil.Brazil’s President Michel Temer, instrumental in liberalizing the energy sector, said the latest auction would lead to $30 billion in new investment in Brazil’s oil sector. “We see the government of Brazil being more supportive of foreign companies entering Brazil,” BP Latin America President Felipe Arbelaez said after the latest auction, according to Reuters. “There are high quality assets. We believe that the assets here will be resilient in any price environment.” “Brazil’s offshore is one of the last major plays out there that’s in its infancy,” said Brian Youngberg, an oil industry analyst at Edward Jones, according to Reuters. “Companies that are still interested in the big elephants out there, like Exxon and Shell, are aggressively pursuing them.”

Six years after tremors halted fracking, Britain ready to try again | Reuters: (Reuters) - Six years after Britain’s first fracking operation was stymied by earth tremors, its shale gas industry is poised to try again with a technology that could transform the UK gas market and drastically reduce its reliance on imports. While environmental and community concerns about fracking have not gone away, changes to the energy landscape since 2011 have added even more complexity to the effort to exploit Britain’s shale gas. On the one hand, imports are cheaper, at least for now. Global liquefied natural gas (LNG) prices LNG-AS have more than halved from 2014 peaks as new supply from Australia and the United States saturated key Asian markets. At the same time, last year’s vote to leave the European Union has stoked fears about the security of Britain’s energy supplies. Britain’s main gas storage site is also due to close, which means the market may be vulnerable to price shocks over the winter months. “Not a lot of people think about where gas comes from and what happens if (Russian president Vladimir) Putin or others fall out with us,” said Francis Egan, the CEO of shale gas developer Cuadrilla, the first company to attempt fracking in the UK, near Blackpool in the northwest of England. “They only begin to think about that when the prices are going up,” he said. Natural gas is used to heat as much as 80 percent of British homes, which make up 35 percent of demand, closely followed by electricity generation at 33 percent and 17 percent by industry. Around 60 percent of that gas is currently imported, up from 40 percent less than 10 years ago. The figure is tipped to reach almost 95 percent by 2040 as known reserves in the North Sea run out. 

‘Govt fracking jobs figures out by a factor of 10’ - A report released last night by the NT Fracking Inquiry reveals a massive drop in projected jobs figures if fracking goes ahead across the Northern Territory.The previous Deloitte’s report that has been used to push the fracking industry showed that in 2040 there would be 6,321 jobs in the highest possible fracking scenario.In stark contrast, the new ACIL Allen report shows there will be only 558 jobs in their highest possible development scenario by the year 2043.This new economic report shows will get less than 10% of the jobs we were told we would get in the previous Deloitte’s report if we allow fracking across the NT.  The 13,000 jobs figure in the ACIL Allen report is based on adding up the jobs required each year over 25 years. It assumes that every person loses their job after just one year, and then a new position is created. It’s a misleading figure.The report shows that total employment in the Northern Territory was 132,200 in August 2017. So even if we go with the highest number of fracking wells, we’re still only getting an extra 500 jobs in a year. That’s a tiny 0.4% increase in the number of jobs in the Northern Territory. The report shows that even if this risky fracking industry were to proceed, there would be less than half a percent extra jobs created each year in the Territory, and most of these would be for fly in fly out workers from other parts of Australia.

Europe-bound USGC distillates cargoes jump on LR1s: cFlow - Distillates flows to Northwest Europe and the Mediterranean from the US Gulf Coast for November arrival saw a sharp increase over the last seven days, with around 500,000 mt leaving the region, the majority 10 ppm ultra low sulfur diesel, according to data from S&P Global Platts trade flow software cFlow. The high volume is due to a more workable arbitrage on Long Range tankers, which can carry around 60,000 mt cargoes. Three such vessels were observed to leave the US's refining and storage hub, out of a total of 11 departures from the region. The total volume now expected to arrive in November is around 700,000 mt, the highest since August, after the USGC was plagued by disruptions in September due to hurricanes. The majority of the current volume sailing trans-Atlantic is heading to Northwest Europe where the product is likely to go into CIF shorts, according to one source, rather than break-bulked into the Amsterdam-Rotterdam-Antwerp barge market. "Have seen a bit more [US volume], not so much being shown on the market though, looks like they more or less all have a home and mainly into the CIF shorts so far," the source said. .

Indonesia eyes buying more LPG from Saudi Arabia, UAE amid rising demand --Indonesia plans to increase LPG imports from Saudi Arabia and the UAE in a bid to meet rising domestic demand, Energy and Mines Ministry spokesman Dadan Kusdiana said Tuesday. State-owned oil and gas company Pertamina's LPG requirements are currently around 6 million mt/year, he said. "The government of Saudi Arabia is expected to help with a direct purchase of LPG from Saudi Aramco to Pertamina; the portion of Aramco's LPG is only 13% of the company's total needs," he said. Discussions were held between Energy and Mines Deputy Minister Archandra Tahar and Saudi Arabia and UAE officials recently, he said. Indonesia has asked the government of the UAE to facilitate the direct purchase by Pertamina of LPG from ADNOC, Kusdiana said. Indonesia's consumption quota for subsidized LPG was set at 7.06 million mt in the 2017 state budget, up from 6.25 million mt for 2016, SP Global Platts reported earlier. Indonesia and Saudi Arabia had earlier agreed to set up a joint ministerial level commission to help speed up planned investments by Saudi companies in Indonesia, including cooperation between Pertamina and Saudi Aramco in an oil refinery project in Cilacap in Central Java, Kusdiana said.

 Iraqi Pipeline Disruption Takes 250,000 Bpd Off The Market --Crude oil from northern Iraq, including from the Kurdistan region, stopped flowing from the oil pipeline between Kirkuk and the Turkish Mediterranean port of Ceyhan early on Monday local time, Bloomberg reports, citing a port agent.According to a Kurdish shipping source who spoke to Reuters, the flows resumed on Monday after a technical stoppage for several hours that had completely halted the flow of crude.The flow was still reduced to 200,000-220,000 bpd, according to the source.The typical flow of the pipeline is some 600,000 bpd, and it has been used by both the Kurdistan Regional Government (KRG) and the central Iraqi government and its North Oil Company (NOC) for exports of crude oil from the fields in northern Iraq.However, following the Kurdistan region’s referendum which Iraq did not recognize, Iraq’s government forces completed in mid-October an operation to seize control of all oil fields that Iraqi state-held North Oil Company operates in the oil-rich Kirkuk region from Kurdish forces. A day later, disruptions in oil flows started, with reports that the flow of crude oil from Kirkuk to Ceyhan had plummeted to some 225,000 bpd, from around 500,000 bpd the previous day.Disruptions continued throughout the following week, and as of October 24, exports were estimated to have been down by 200,000 bpd since the beginning of the month.In the middle of last week, Iraq’s central government started pumping oil from Kirkuk to Ceyhan, as it started exporting from the Avana field in Kirkuk via the Kurd-operated pipeline to Ceyhan. North Oil Company was then said they would also work to begin exporting from the nearby Bai Hassan oil field.  Most of Iraq’s crude oil production is shipped from the southern port of Basra, but in the north, the government must rely on the Kurdish Kirkuk-to-Ceyhan route for exports from its fields in the Kirkuk area until a pipeline that bypasses Kurdistan is repaired.

Chad wants to cut off Glencore's oil supplies in debt row (Reuters) - Chad is on a collision course with top creditor Glencore as it wants to divert oil from the Swiss trading house to U.S. energy company ExxonMobil from the new year amid a dispute over debt restructuring. A government document showed that Chad wants to hand over crude oil marketing rights currently held by Glencore under a $1.4 billion loan agreement to Exxon, the biggest oil producer in the Central African country. Three government and industry sources confirmed the details. Sources close to Glencore say they believe the contract does not allow such a change. Under pressure from the International Monetary Fund, Chad is renegotiating its hefty external commercial debt, namely to Glencore, which eats up nearly all of its oil profits - the country’s main source of revenue. The near $1.4 billion debt to Glencore is being restructured for a second time since the 2014 oil price crash, in a move expected to be completed by the year-end or early next year. Weighed down by drought, a refugee crisis and militant group Boko Haram, the government has become frustrated with Glencore and its handling of the debt restructuring, sources in the administration say. Since 2014, Exxon has been paying royalties to the government in physical crude cargoes that were subsequently allocated by state firm SHT to Glencore. But this process will end in early January as the government has asked Exxon to pay royalties in cash instead, according to a letter from the company dating from mid-October. “In this context, we wish to levy in cash, and not in kind, the royalties due by the Consortium on January 2, 2018,” the letter stated. The change will see Exxon replace Glencore as the marketer of the royalty oil.

Saudi oil-to-chemicals project to take first tentative step this year: reports -- Saudi Arabia is close to completing a feasibility study for a pioneering new facility to convert crude oil directly to petrochemicals, bypassing the need for the refining process, senior officials said Wednesday.The study is being jointly carried out by Saudi Aramco and Saudi Basic Industries Corp. Once concluded, the kingdom's two industrial giants will form a joint venture to take the project forward.They are expected to sign a memorandum of understanding for the fully integrated complex's development before the end of the year, and then to appoint a project management consultant for its design.Saudi Aramco's CEO Amin Nasser said Tuesday he expects a final decision to be made by the end of the year, according to media reports from Riyadh. Neither Aramco or Sabic would comment on the project, and its details are still sparse. A member of the project's research team told S&P Global Platts soon after it was first formed last year, the proposed facility would use super-light crude from a field south of Riyadh, possibly the 100,000 b/d capacity Nuayyim field, about 250 km south of the capital. The process involves purifying the crude before sending it to a catalytic cracking unit to maximize light-olefin output, the building blocks for globally important plastics including polyethylene and polypropylene.

New U.S. Sanctions Threaten Russian Oil Projects - Washington’s newest round of sanctions against Moscow’s oil and gas industry targets Russia’s upcoming projects worldwide, according to drafts of the measures introduced at the United Nations by the U.S.The punitive measures – designed to be a political reaction to Russia’s annexation of Crimea in 2014 – will have a limited effect on Moscow’s current operations abroad, experts said.A new provision in a preexisting sanction levied by the U.S. Department of Treasury now prohibits companies from assisting in exploration and production activities in deep waters, the Arctic Ocean, or shale projects initiated after January 29th, 2018. Projects that boast Russian holdings of 33 percent or higher are singled out in the fine print.“Projects currently being implemented do not fall under the sanctions. This includes Lukoil’s projects in Romania and Ghana offshore as well as Rosneft’s projects in Venezuela,” Fitch Ratings analyst Dmitry Marinchenko told Reuters.American sanctions on Russia oil and gas companies have had little effect on Moscow’s leverage in securing lucrative exploration and production deals so far. Current production stands at 10.92 million bpd, which is close to a 30-year record. “The (33 percent) threshold leaves the possibility for sanctioned Russian companies to take part, even in new projects,” Marinchenko said. There are signs that the sanctions are showing limited effectiveness. The measures made the offshore Yuzhno-Chernomorsky oil field economically unfeasible, and Rosneft will now suspend exploration in the area for five years, the company said earlier this week. The EU’s sanctions contain a grandfather clause allowing existing partnerships to continue, but this is not the case with the U.S. sanctions, so Exxon has had to pull out of its joint projects with Rosneft. Earlier this year, the supermajor asked Washington for a sanction waiver in a bid to continue its work in Russia, with a special focus on Arctic drilling, but the request was denied.

Russia Wields Oil Diplomacy, Pushing In on U.S. Interests (NYT) Russia is increasingly wielding oil as a geopolitical tool, spreading its influence around the world and challenging the interests of the United States. But Moscow risks running into trouble, as it lends money and makes deals in turbulent economies and shaky political climates. The strategy faces a crucial test this week in Venezuela, a Russian ally that must come up with a billion dollars to avert defaults on its debts. Russia has been making a flurry of loans and deals all centered on the Venezuelan oil business, money that could make the difference between the government’s collapse and its survival. In return, Moscow is getting a strategic advantage in Washington’s backyard. President Nicolás Maduro of Venezuela was all smiles this month on a visit to Moscow seeking fresh financial backing, thanking Vladimir V. Putin “for your support, both political and diplomatic.” Moscow, through the state oil giant Rosneft, is trying to build influence in places where the United States has stumbled or power is up for grabs. Its efforts are also driven out of necessity, as American and European sanctions have forced Rosneft to find new partners and investments elsewhere. The company, which Russia has long relied on to finance its government and social programs, has been pushing deeply into politically sensitive countries like Cuba, China, Egypt and Vietnam, as well as tumultuous places where American interests are at stake. Rosneft is looking for deals around the eastern Mediterranean and Africa, areas of tactical importance beyond the energy picture. It is wielding economic and political sway in northern Iraq, by making big oil and natural-gas deals in Kurdish territory. And it is angling to bid for control of Iranian oil fields as tensions between Tehran and Washington escalate. 

Oil market set to move from rebalancing to tightening: Kemp (Reuters) - The oil market is now well into a cyclical upswing and within the next year the narrative about “rebalancing” is likely to be replaced by one about “tightening”.  Rebalancing started well before the production pact between the Organization of the Petroleum Exporting Countries (OPEC) and its allies went into effect in January.  OPEC has been open about the fact that the rebalancing process pre-dated its agreement, with officials repeatedly noting the accord was intended to “accelerate” a process that was already underway. The spot price of Brent has been rising since January 2016 and the six-month calendar spread has been increasing since January 2015 ( Depending on which turning point is used, the rebalancing process has already been underway for 21 months (spot prices) or 32 months (spreads).Like any rebalancing process, adjustment is barely perceptible at first, which is why the turning point is often missed, but tends to accelerate over time.The current rebalancing started with an acceleration in global oil consumption, which was already evident in the first half of 2015 in response to lower prices.Oil production did not decelerate until 2016, because of the lags in the system, and OPEC’s own output restraint did not start until 2017.But with consumption now running faster than production the market is steadily whittling away the excess inventories accumulated in 2015/2016.During the last two rebalancing processes, after oil slumps in 1998/99 and 2008/09, front-month Brent prices took roughly 21 months and 26 months respectively to reach their first major peak.Meanwhile, the calendar spread took 21 months and 34 months respectively to reach its first cyclical peak after each episode.The recent slump was in some ways deeper, and the recovery has certainly been more prolonged, but it can no longer be described as being in its early stages. The current rebalancing process is already therefore fairly mature and at some point in the next six to nine months will be more accurately described as tightening.

 ICE Brent crude stays at 27-month highs in Asia trade - ICE Brent crude futures remained at 27-month highs in mid-morning trade in Asia Monday, following the gains last week on the expectation that planned supply cuts will be extended to the end of 2018. At 11:21 am Singapore time (0321 GMT), the ICE December Brent crude futures were down 6 cents/b (0.1%) from Friday's settle at $60.38/b, while the NYMEX December light sweet crude contract was up 4 cents/b (0.07%) at $53.94/b. The expectation that output cuts by OPEC and non-OPEC producers will be extended have firmed up in recent days, amid comments by key officials that the group was inching closer to a consensus. Over the weekend, Saudi Arabia's crown prince Muhammad bin Salman reaffirmed his backing for an extension beyond the current March 2018 deadline. "The kingdom affirms its readiness to extend the production cut agreement, which proved its feasibility by rebalancing supply and demand," the crown prince said in a statement. Similar remarks by him late last week sent crude prices soaring by more than 3% over October 26-27, with ICE Brent now at highs not seen since July 2015. Nonetheless, an agreement is far from certain. Russian energy minister Alexander Novak, who is due to meet Saudi oil minister Khalid al-Falih in Riyadh this week, has said he does not see a need to announce any extension at the November 30 meeting.

Brent crude tries new trading range as funds stay bullish: Kemp - (Reuters) - Hedge funds have added to bullish positions in oil and most refined products even as prices hit their highest since 2015, in a sign investors expect prices to move into a higher range. Hedge funds and other money managers had accumulated bullish long positions in crude, gasoline and heating oil totalling 1.189 billion barrels by Oct. 24, according to regulatory and exchange data. Portfolio managers have increased long positions in the five main petroleum contracts by almost 374 million barrels (46 percent) since the end of June and the number of paper barrels now comfortably exceeds the previous peak set in February.From a pure positioning perspective, the concentration of long positions has become a significant source of downside risk to prices in the event funds attempt to realise some profits.Nonetheless, managers have continued adding to rather than reducing their positions, which strongly suggests many investors see oil prices moving into a new and higher range.For the last 16 months, Brent prices have been trading in a range of about $45 to $55 per barrel, with hedge funds alternately buying and shorting the market when prices move towards the extremes.But hedge fund managers amassed a near-record net long position of 507 million barrels in Brent by Oct. 24 even as prices were on their way to breaking through the $60-mark for the first time since 2015.Sentiment towards Brent remained overwhelmingly bullish, with long positions outnumbering short ones by a ratio of 9.48:1, the biggest imbalance for eight months ( managers held 567 million barrels of Brent long positions, just 11 million below the record set at the end of September, but less than 60 million barrels of shorts, the lowest since February.The position data indicate fund managers see little risk of Brent prices dropping back below $50 per barrel, or maybe even $55, but a good chance prices will remain above $60, and maybe even climb towards $65.

 Saudi crown prince reiterates backing for OPEC oil output cut extension - Saudi Arabia's powerful crown prince Mohammed bin Salman reaffirmed his backing for an extension to OPEC's crude oil output cut beyond its current March 2018 deadline to rebalance the global market. "The kingdom affirms its readiness to extend the production cut agreement, which proved its feasibility by rebalancing supply and demand," the crown prince said in a statement. OPEC members and 10 non-OPEC producers led by Russia, have committed to cut a combined 1.8 million b/d from the market in a bid to lower record high crude oil inventories. The initial six-month deal was extended in May to March 2018. Mohammed bin Salman, the son of the reigning monarch King Salman al-Saud is the key driver of the OPEC kingpin's oil policy. "The high demand for oil has absorbed the increase in shale oil production," he added. "The journey towards restoring balance to markets, led by the kingdom, is proving successful despite the challenges," he said. While he has backed an extension, the details of any deal, including its length, allocations or any other new terms, will have to be negotiated before the coalition's next meeting November 30 in Vienna. An agreement is far from certain. Russian energy minister Alexander Novak, who is due to meet Saudi oil minister Khalid al-Falih in Riyadh this week, has said he does not see a need to announce any extension at the November 30 meeting.

Crude Oil Prices Settle Higher as Optimism on Opec Deal Extension Grows  – Crude oil prices settled higher on Monday as concerns over an uptick in Iraqi exports were offset by ongoing speculation that Opec will agree to extend output cuts beyond March. On the New York Mercantile Exchange crude futures for December delivery rose 0.5% to settle at $54.15 a barrel, while on London's Intercontinental Exchange, Brent added 0.45% to trade at $60.59 a barrel. Crude oil prices continued their march higher, rising to an eight-month high amid bullish talk from Opec and non-Opec members on a possible extension to the output-cut agreement. OPEC Secretary General Mohammad Barkindo said Russian-Saudi backing for an extension cleared the fog ahead of the group's meeting in Vienna on Nov. 30. “OPEC welcomes the clear guidance from the crown prince of Saudi Arabia on the need to achieve stable oil markets and sustain it beyond the first quarter of 2018,” Barkindo said weekend. “Together with the statement expressed by President Putin, this clears the fog on the way to Vienna on Nov.30”, he added. Barkindo’s comments came just a few days after Saudi Prince Mohammed bin Salman told Reuters on Thursday, the kingdom would support extending output cuts in order to rid the market of excess supplies. In May, Opec producers agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.2 million bpd agreed in November last year. Growing expectations that Opec will continue to comply with output cuts has forced analysts to lift their forecasts on oil prices amid signs that the Opec-led deal to cut output is narrowing the gap between demand and supply. JP Morgan raised its 2018 Brent and WTI forecasts by $11 and $11.40 to $58 and $54.63 per barrel, respectively. Investor concerns over a potential uptick in global supply, however, capped gains in oil prices after Iraq's southern ports ramp up export capacity by 900,000 barrels per day (bpd) to 4.6 million bpd.

Brent oil ends above $60 on expected OPEC cut extension | Reuters: Brent oil closed on Monday at its highest level since July 2015 and U.S. crude closed at a peak not seen since February on expectations OPEC-led production cuts would be extended beyond March, although such gains are likely to spur more U.S. production.Brent crude futures LCOc1 settled at $60.90 a barrel, up 46 cents. Brent has gained 9.5 percent in the last 16 trading days. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled up 25 cents at $54.15 a barrel, highest since Feb. 23, 2017. The U.S. contract has been strong of late as well, gaining 10 percent in the last 16 trading days. “The market has now held over $49/bbl for over a month, establishing that as the low end of the new range,” wrote analysts at The Organization of the Petroleum Exporting Countries plus Russia and nine other producers agreed to cut 1.8 million barrels per day from January 2016 to clear a supply glut. The pact, already renewed once, runs to March 2018. But Saudi Arabia and Russia, which are leading the effort, have voiced support for a further extension. OPEC Secretary General Mohammad Barkindo said Russian-Saudi backing for an extension cleared the fog before the group’s meeting in Vienna on Nov. 30. 

 Are Higher Oil Prices Here To Stay? - Oil jumped to $60 per barrel on Friday, and held those gains on Monday, an early sign that the oil market could be entering a new phase. Brent topped $60 per barrel for the first time in nearly two and a half years. The strong assurances from OPEC and Russian officials has the market assuming that the upcoming OPEC meeting in November will result in an extension of the production cuts, perhaps through the end of 2018. With that extension in hand, the oil bears are in retreat.    The powerful crown prince said that he supports an extension of the OPEC cuts, the strongest signal yet that the November OPEC meeting will lead to an extension of the production limits.     Third quarter profits for the oil majors jumped, a sign that they have adapted to a world of $50 oil. ExxonMobil, Chevron, BP, Total SA reported strong profit growth, proof that cost-cutting is bearing fruit. The majors have slashed a combined $80 billion in spending since 2013. BP said that it would restart its share buyback program after reporting a replacement cost profit – similar to net income – of $1.4 billion in the third quarter, down a bit from $1.7 billion a year earlier. The company declined to reveal a value on its buyback plans. The British oil giant had scrapped share repurchasing back in 2014 amid falling oil prices, but has made strides in adapting to lower oil prices. BP said that it can breakeven with oil prices at $49 per barrel.  Reuters argues that falling U.S. oil inventories are a sign of a shift towards backwardation for WTI, a state in which near-term oil contracts trade at a premium to longer-dated oil futures. With Brent already in a state of backwardation, the downward sloping futures curve for WTI would be another signal that the oil market is tightening. Backwardation tends to appear during periods of market tightening and would suggest higher oil prices are possible.

3 Potential OPEC Deal Killers -- The Middle East isn’t yet ready to agree on the future of OPEC’s output reduction deal as the bloc’s November 30 summit approaches, during which the cartel is set to decide on the depth and length of the cuts one year from their initial approval. Here are the three key geopolitical issues wreaking havoc on the region’s ability to collectively raise the price of oil.

  • 1. The Trump Administration’s Ongoing Iran Nuclear Deal Drama. From the day that Donald Trump declared he would run for president, he made it clear that he is firmly against the current deal with Tehran to reintegrate Iran’s economy into the international community in exchange for a smaller and monitored nuclear energy program. Earlier this month, Trump officially decertified the nuclear deal, which doesn’t do much in the way of dismantling the agreement, but does give Congress leeway to authorize further sanctions against Iran. The uncertainty surrounding the U.S. sanctions on Iran leads to uncertainty regarding OPEC’s third largest oil producer’s ability to contribute to or maintain oil output. Tehran’s participation in the oil game has been contingent upon the success of the nuclear deal since January 2016. New sanctions from a Republican congress could undo much of the progress made by engaging the economic pariah.
  • 2. Iraq’s Intense Struggle with Kurdistan. The Kurdistan independence referendum last month caused Baghdad to take over key oil fields formerly controlled by the Kurdistan Regional Government (KRG). A fraction of former output (half, or less than half, by most measures) is currently flowing through a pipeline in the area due to a deal between the Iraqi government and the Kurdish KAR group. Last weekend, Iraqi authorities said they increased oil exports from the southern Basra region by 200,000 barrels per day to make up for a shortfall from the northern Kirkuk fields. But this doesn’t promise future output rebuttals if the KRG or its Peshmerga decide to strike back to regain its oil might. A significant loss in output from OPEC’s No. 2 producer could cause an unexpected spike in oil prices, which is what Saudi Arabia, the bloc’s leader, craves.
  • 3. A Gulf Blockade Entering its Sixth Month. Despite its standing as top exporter of liquefied natural gas, Qatar is not a significant oil producer. The geopolitical impact of the Gulf’s economic blockade against Doha, however, could have significant geopolitical consequences as it enters into its sixth month with no end in sight. Instead of limiting its ties to Iran, Qatar has spent its political capital strengthening ties with the Shi’ite nation, which rivals Saudi Arabia politically and economically. Escalating tensions between the Gulf and Qatar will further increase the angst between Iran and Saudi Arabia, impacting the future of Iran as a political player and as a major oil producer.

This trio of major regional disputes plaguing the Middle East heavily involve the top three oil producers in the bloc. Iran has been in economic recovery mode since sanctions were lifted back in January, while Iraq’s stability over the course of 2016 and most of 2017 had allowed production to rise steadily.  With the trajectory of future output for the neighboring nations unclear, it remains to be seen whether the bloc will find it necessary to tighten quotas. After all, if the production cannot be summoned due to tangential political issues, there may be no need to limit it directly.

U.S. Shale Could Bring Bearishness Back To Markets - Brent oil has breached the technical and psychological barrier of $60, while WTI inched up to $54. The bulls are relishing in the excitement of rising prices. But there’s one pressing question: Is this rally sustainable? The bulls might have to proceed with caution. Recent figures indicate a build-up of 856,000 barrels in crude inventories, with U.S production surging by 1.1 million bpd last week, to a total of 9.5 million barrels per day (bpd). Despite rising production, Baker and Hughes reported a fall in rig count by 4. The total rig count now stands at 737.A driving factor behind the price rally was comments from Saudi Oil Minister Khalid Al-Falih, as he told the world that they will do “whatever it takes” to bring crude inventories back to normal and rebalance the oil markets. The comments were echoed by Crown Prince Mohammed bin Salman and Russian President Vladimir Putin. Subsequently, many observers and traders now think it’s safe to bet on the rising oil prices.When the members of the Vienna accord meet in November, many observers agree that they’ll reach an agreement to extend the deal further than March 2018. Russia and Saudi Arabia are on good terms and the Saudi monarch’s recent visit to Russia cements the fact that with both prime players of the deal on the same page, the extension is almost certain. The extension will likely translate into a price hike. The case could be made, however, that the markets have already discounted the impact of the extension, given its certainty.There’s another side of this bullish development: its impact on shale production. Recently, there have been concerns regarding U.S. shale producer’s profitability and growth, but the news of prices reaching and edging above $60 will certainly be music to the ears of U.S. drillers. This could result in greater production and hence amplify the supply glut.The effect of shale growth and inventory reports after the deal is extended will be more potent than without it. Why? Because market sentiment and expectation play a momentous role in guiding the prices. In this case, the market will, evidently, expect inventories to drain. However, this balance between rising U.S. production and the Vienna extension will certainly have an impact on these expectations. 

WTI/RBOB Jump After Major Inventory Draws Across Entire Energy Complex - WTI posted a 5.2% gain in October, the first back-to-back monthly advance this year, and held up near the highs of the day into the API print. WTI/RBOB kneejerked higher as the data hit showing large inventory draws across everything... API:

  • Crude -5.087mm (-1.3mm exp)
  • Cushing -263k
  • Gasoline -7.697mm (-1.55mm exp)
  • Distillates -3.106mm

Big product draws in the previous week - and a modest crude build - bucked the recent trend but tonight's API data shows huge draws across everything...Expectations that OPEC’s cuts are “tightening the market supply-demand fundamentals continues to drive prices higher,”

 Oil up near two-year highs, analysts see more U.S. crude exports -   (Reuters) - Oil prices settled higher again on Tuesday, notching a monthly gain of more than 5 percent, but analysts said bullish sentiment that has driven Brent crude to its highest in more than two years could encourage U.S. producers to export more oil.  Brent settled up 47 cents or 0.7 percent to $61.37, close to its July 2015 highs reached earlier this week, and up around 37 percent from its 2017 lows hit in June. U.S. West Texas Intermediate crude (WTI) settled up 23 cents or 0.4 percent to $54.38, still near its highest since February and close to its highest in more than two years. Traders and brokers said investors were adjusting positions after price rises of around 5 percent in October. For the month, Brent was up 6.7 percent, while WTI rose 5.2 percent. WTI’s discount to Brent CL-LCO1=R has widened to nearly $7, making it attractive to exporters. “The large differential has opened the door on regional arbitrage, driving a spike in U.S. crude exports over recent weeks,” BMI Research said in a note.  U.S. crude exports have jumped to close to 2 million barrels per day (bpd) and production has risen almost 13 percent since mid-2016 to 9.5 million bpd.  “The problem is as soon as prices move up it’s too easy for U.S. producers to add another rig or another completion crew,” , “Then they increase production and you’re back where you started.”U.S. crude and gasoline futures extended gains in post-settlement trade after industry group the American Petroleum Institute said that U.S. oil inventories fell far more than expected. Crude inventories fell 5.1 million barrels in the week to Oct. 27 to 456.8 million, compared with analysts’ expectations for a decrease of 1.8 million barrels. Gasoline stocks plunged 7.7 million barrels, versus forecasts of a 1.5 million-barrel draw, the API said.

US crude oil exports hit all-time high as output closes in on record - Oil prices pulled back on Wednesday after data showed U.S. crude exports surged to an all-time high and American drillers pumped near record levels. The United States exported 2.13 million barrels a day of oil in the week through Oct. 27, the first time the nation has crossed the 2 million-barrels-per-day mark.Meanwhile, weekly figures showed total U.S. crude production at 9.55 million barrels a day, just short of the Sept. 29 high going back to July 10, 2015. The week's total output was not far off the all-time high of 9.61 million barrels per day, struck the week ended June 5, 2015. The preliminary weekly figures are later revised. U.S. West Texas Intermediate crude was trading at $54.52 a barrel, 14 cents higher, after topping out at $55.22 earlier in the session. WTI's discount to international benchmark Brent crude has made U.S. oil more attractive to overseas buyers. Brent was trading at $61.06, up 12 cents, on Wednesday.  "Brent above $60 will keep WTI higher as they export it and replace that expensive Brent," Bob Iaccino, chief market strategist at Path Trading Partners, told CNBC's "Futures Now" on Tuesday. American drillers have filled some of the supply gap left this year by OPEC and other oil exporters, who have cut production since January in order to drain a global glut of crude. Oil prices have been rallying on expectations that the producers will extend the deal, which is set to expire in March, through the end of 2018.  U.S. oil shipments have surged from roughly 400,000 barrels a day at the end of 2015, when the United States lifted a 40-year ban on crude exports. The trade has been fueled by a boom in U.S. oil output from shale fields, where producers use advanced drilling methods to coax fossil fuels from rock formations.

WTI/RBOB Sink As Inventory Draws Disappoint --WTI/RBOB held on to gains overnight following major draws reported by API and more OPEC jawboning (this time from UAE), but the DOE data disappointed compared to API's huge draws with Crude and Gasoline drawing down but considerably less than API reported (and Distillates barely drawing down at all). DOE:

  • Crude -2.44mm (-1.3mm exp)
  • Cushing +90k
  • Gasoline -4.02mm (-1.55mm exp)
  • Distillates -320k (-2.5mm exp)

Following API's major draws, DOE was a big disappointment with smaller draws in crude, gasoline, and distillates than API reported and a build at Cushing... Bloomberg Intelligence energy analysts Fernando Valle and Vince Piazza note that it's the time of year when oil inventories begin to build, and supplies are already almost 17% above the five-year norm. While benchmarks have rallied on heightened geopolitical concerns, sentiment remains unsteady. Oil production is resilient, but exports are offering a key outlet for elevated stockpiles. US Crude production rebounded the prior week from Gulf storm shut-ins and increased once again this week...

Oil slips, erases gains as US crude draw shy of API report (Reuters) - Oil prices dipped in see-saw trade on Wednesday, hitting their highest in more than two years and then retreating after weekly U.S. government inventory data showed the latest crude stock draw was not as big as an industry trade group had reported. While oil settled lower, both global marker Brent and U.S. crude benchmarks remained near the highest levels since July 2015, as lower global supply pushed markets higher. The U.S. Energy Information Administration (EIA) said crude stocks fell 2.4 million barrels last week, exceeding the 1.8 million barrel draw analysts forecast in a Reuters poll, but short of the 5.1 million barrel decline reported late on Tuesday by the American Petroleum Institute (API). "Oil prices fell since the release of the (EIA) report," said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany, noting that the crude draw was "significantly less than the API numbers." Brent futures settled down 45 cents, or 0.74 percent, at $60.49 a barrel, while U.S. West Texas Intermediate crude was down 8 cents, or 0.15 percent at $54.30 a barrel. Before the EIA report, Brent was trading at its highest since July 2015 on data showing OPEC had significantly improved compliance with its pledged supply cuts and Russia was widely expected to keep to the deal. Meanwhile, the WTI "Dec Red" - the spread between December 2017 and 2018 U.S. crude - traded to as high as $1.83 a barrel, the strongest level since February 2014 before the oil price crash. WTI Dec 2017's premium to 2018 suggested that the end of the crude glut may be in sight.

ICE Brent/WTI spread narrows as US crude exports hit record high -- The front-month ICE Brent/WTI spread narrowed below $6/b Wednesday after Energy Information Administration data showed US crude exports exceeded 2 million b/d last week, a record-high. With the premium for Brent over WTI around $5-$7/b most of the time since September, versus a premium of $3/b in mid-August, US crude producers have taken advantage higher prices abroad. Crude exports rose 209,000 b/d to 2.133 million b/d, beating the previous all-time high of 1.984 million b/d set the week ending September 29. The Brent/WTI spread was around $5.98/b Wednesday afternoon, in from $6.99/b Tuesday. The rollover to January as the front-month contract also contributed to the day-on-day decline. US exports should remain solid considering a $6/b spread is still more than enough to cover the related transportation costs, said Kyle Cooper, consultant at ION Energy. "There really isn't an economic justification" for the size of the current spread, he said. Greater exports have helped draw barrels out of storage. US crude stocks fell by 2.435 million barrels last week to 454.906 million barrels, marking the fifth decline over the last six weeks. Crude futures failed to rally, however. NYMEX December crude fell 8 cents to $54.30/b. ICE January Brent declined 45 cents to settle at $60.49/b. Profit-taking likely played a role a day after prompt NYMEX crude settled Tuesday at its highest level since February and prompt ICE Brent settled at its highest level since summer 2015.

Booming oil demand is eroding inventories: Kemp (Reuters) - Global oil consumption is growing rapidly, helping account for the decline in reported inventories, the recent surge in prices and the shift in futures markets from contango to backwardation.Consumption is much harder to measure than production, which is why the demand side of the market receives less attention. Even in the advanced economies, consumption data is only available with a delay of two months or more, and reliable data from emerging economies often not at all.   Global demand assessments are therefore often educated guesswork, as analysts try to calculate how much oil has been used and how much is in storage.  But strong consumption growth has been at least as important as the restraint of production by OPEC and non-OPEC oil exporters in helping rebalance the oil market. Global consumption rose by 1.6 million barrels per day (bpd) in 2016 and 2.0 million bpd in 2015 as low prices and a synchronised economic expansion in most areas of the world spurred demand (“Statistical Review of World Energy”, BP, 2017).Consumption is forecast to increase by a further 1.6 million bpd this year and 1.4 million bpd in 2018, according to the International Energy Agency (“Oil Market Report”, IEA, Oct 2017).  And predictions have been consistently revised higher as demand data has come in stronger than forecast.  U.S. gasoline consumption hit a seasonal record in four of the five months between April and August, according to the U.S. Energy Information Administration (“Petroleum Supply Monthly”, EIA, Oct 2017). Strong economic growth, cheap fuel, more driving and purchases of bigger vehicles have offset improvements in fuel economy since 2015. U.S. consumption of diesel has also been running consistently higher than last year, reflecting the increase in oil and gas drilling as well as more freight movements.,With demand growing at home, U.S. refineries have been exporting record quantities of fuel to markets in Latin America and the rest of the world reflecting strong demand overseas as well as refinery problems in some emerging markets.

U.S. oil prices mark highest settlement since 2015 -- U.S. benchmark oil eked out a modest gain Thursday, with concerns surrounding a potential rise in domestic production leaving prices vulnerable to a drop, but recent data showing a decline in crude and product stockpiles help prices rise to their highest finish since 2015.  December West Texas Intermediate crude tacked on 24 cents, or 0.4%, to settle at $54.54 a barrel on the New York Mercantile Exchange. That was the highest finish for a front-month contract since July 2015, according to FactSet data. Brent oil for January rose 13 cents, or 0.2%, to $60.62 a barrel on the ICE Futures Europe exchange, but held below the more than 2-year high of $60.94 it hit on Tuesday. Oil prices settled lower Wednesday (, after U.S. benchmark WTI touched a more than two-year intraday high above $55 a barrel and Brent crude, the global benchmark, retreated from July 2015 highs to post its first decline in seven sessions. A report from the Energy Information Administration on Wednesday ( offered a supportive inventory picture," with "fairly strong draws to both crude and product stocks," including distillates "holding noticeably below the five-year average," said Robbie Fraser, commodity analyst at Schneider Electric. The EIA report showed that U.S. crude supplies fell by 2.4 million barrels for the week ended Oct. 27, while gasoline stockpiles dropped by 4 million barrels for the week and distillate stockpiles fell by 300,000 barrels. On Nymex Thursday, December gasoline added 1.7% to $1.770 a gallon while December heating oil lost 0.5% to $1.854 a gallon. The impact of the petroleum supplies declines was "countered by rising oil production with lower 48 [states] producers adding nearly 50,000 of new output" for the week, 

 Top OPEC Ministers Back Longer Cuts But Duration Undecided -- OPEC and its allies agree they need to prolong their output-cut deal as bloated inventories won’t shrink to normal levels by March, but they’ve yet to reach a consensus on how long to extend the pact, according to ministers from three of the top producers. Global stockpiles are declining and demand is increasing, but there’s still a significant inventory overhang in the market, Khalid Al-Falih, Saudi Arabia’s oil minister, said at the Asian Ministerial Energy Roundtable in Bangkok on Thursday. Issam Almarzooq, his Kuwaiti counterpart, said producers are discussing and finalizing a decision on the extension of output curbs by the Organization of Petroleum Exporting Countries and partners such as Russia. “We are looking now for the mechanism for the time, how long that would be and what would be more suitable to achieve the re-balancing of the market,” Almarzooq said in an interview with Bloomberg in Bangkok. While he expects an extension of the output curbs to be announced at OPEC’s Nov. 30 meeting, details about the duration or any changes in conditions may come only in February or March when more information is available, he said. Almarzooq’s comments echo those from the United Arab Emirates’ Energy Minister Suhail Al Mazrouei in Bangkok on Wednesday. In Baghdad, Iraqi Oil Minister Jabbar al-Luaibi told reporters that his country, OPEC’s second-biggest producer after Saudi Arabia, supports extending the cuts accord for nine months and backs any decision by the group to prop up prices. Crude has surged into a bull market amid speculation that OPEC and its allies will prolong their deal as well as a revival in demand. Saudi Arabian Crown Prince Mohammed bin Salman said last month that he backed the extension of the curbs beyond their expiry in March 2018. Russian President Vladimir Putin also gave provisional backing to lengthening the restrictions, a signal that Riyadh and Moscow are ready to prolong their collaboration to lift energy prices. 

OPEC likely to keep oil supply curbs for whole of 2018: sources (Reuters) - OPEC is likely to stay the course by keeping its current curb on oil production in place for the whole of 2018 despite potential output disruptions next year, Gulf OPEC sources said. The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers, have cut overall output by about 1.8 million bpd since January. The pact runs to March 2018, but the producers are considering extending it. OPEC is scheduled to next meet at its headquarters in Vienna on Nov. 30. Venezuela’s oil production, which has been falling by about 20,000 barrels per day per month since last year, is on track to fall an additional 240,000 bpd next year as U.S. sanctions and a lack of infrastructure investment hobbles operations. Oil flow from other OPEC members such as Nigeria and Libya continue to see supply disruption. But Saudi Arabia and OPEC are unlikely to raise output elsewhere next year to compensate for this decline as the exporting group wants to remain focused on reducing the level of oil stocks in OECD industrialized countries to their five-year average, one OPEC source familiar with Saudi thinking on its oil policy said. “OPEC is likely to stay the course for the rest of 2018. We want to see commercial stocks going down,” the source said. Another OPEC source said there was a high risk of a supply drop from Venezuela next year but that does not necessarily mean that OPEC will raise output elsewhere to make up for the decline. The first OPEC source said that output from the Latin American OPEC nation could fall in 2018 by 300,000-600,000 bpd, adding that the risk of supply disruptions from other OPEC producers such as Libya and Nigeria also remained high. “The feeling in OPEC is that $60 (a barrel) should be the floor for oil prices next year,”

OilPrice Intelligence Report: OPEC Takes The Lead In Rampant Bull Market: Oil prices were mostly flat this week, but held onto their gains at a roughly two-year high. It is not clear if the gains can continue, but the fact that Brent has avoided a retracement back below $60 per barrel is good news for oil bulls. A strong rig count on Friday drove oil prices higher still – but OPEC will likely be the main driving force behind the oil price narrative for the next few weeks, until their meeting on November 30. The flurry of comments in recent weeks from OPEC officials has steadily ratcheted up expectations for what they will agree to at their upcoming meeting in Vienna. The latest report, from Reuters, suggests that OPEC is likely set to agree to an extension through the end of 2018 rather than just for three months beyond March. “OPEC is likely to stay the course for the rest of 2018. We want to see commercial stocks going down,” a source within OPEC told Reuters. Even more bullish, from the perspective of oil prices, is that OPEC officials want prices to rise even higher. “The feeling in OPEC is that $60 (a barrel) should be the floor for oil prices next year,” the source said.  The Venezuelan government said on Thursday that it wants to restructure its debt as the clock ticks on massive debt payments. President Nicolas Maduro promised to pay the $1.1 billion payment due on Thursday, but he vowed that it would be the last. “Venezuela has had to face a genuine financial blockade," Maduro said, referring to U.S. sanctions. Action from the U.S. Treasury has made it extremely difficult for Venezuela to restructure its debt. Confusion reigned, however, as bondholders were unsure if he intended to default on coming debt payments or not. Meanwhile, Reuters estimates Venezuela could lose an additional 240,000 bpd in output next year, in part because of U.S. sanctions, after losing 20,000 bpd each month over the past year.  Royal Dutch Shell reported earnings of $3.7 billion in the third quarter, up more than double from the $1.4 billion a year earlier. That rounded out the earnings season for the oil majors, which will go down as the best quarter in years for them. Shell has focused on paying down its massive pile of debt, and it has succeeded in lowering its total debt from $77 billion last year to just $67.7 billion at the end of the third quarter.

US Oil Rig Count Drops Most Since May 2016 To 5-Month Lows - The number of US oil rigs continues to track the lagged price of WTI (lower). For the 4th week in the last 5 (and 10th of last 12), oil rigs declined (down 8 to 729).  This is the biggest absolute rig count drop since May 2016 to the lowest total rig count since May 2017.

WTI Soars As U.S. Oil Rigs See Biggest Decline Of The Year - Baker Hughes has reported that the number of oil and gas rigs in the United States fell for yet another week, this time dipping 11 rigs—most of which was a loss to the number of oil rigs—the largest decline in the number of oil rigs this year.WTI and Brent continue on their upward trend as even more analysts agree on the increased likelihood that OPEC will extend their production cut agreement throughout all of 2018, and as EIA reports a continued drawdown of crude oil inventories in the US. Prices will likely increase even more as the Iraq/Kurd situation drags on, and as Baker Hughes reports even further reductions to the number of active rigs in the United States.The total oil and gas rig count in the United States now stands at 898 rigs, up 329 rigs from the year prior, with the number of oil rigs in the United States decreasing by 8 this week and the number of natural gas rigs decreasing by 3. The US oil rig count now stands at 729.The spot price for WTI is also trading up to its highest level in six months, up .86% on the day at $55.01 at 11:05am EST—more than $1 up from last week. Brent crude was trading up 1.02% at $61.24 at that time—also $1 over last week’s price at the same time.Despite the falling oil rig count, US crude oil production was up for the week ending October 27 at 9.553 million barrels per day—a new high for 2017.At 10 minutes after the hour, WTI was trading at $55.01, with Brent crude trading at $61.24.

U.S. oil rig count falls by most in week since May 2016 - (Reuters) - U.S. energy companies cut eight oil rigs this week, the biggest reduction since May 2016, extending a drilling decline that started over the summer when prices slipped below $50 a barrel. The oil rig count fell to 729 in the week to Nov. 3, the lowest level since May, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.  The rig count, an early indicator of future output, is still much higher than a year ago when only 450 rigs were active after energy companies boosted spending plans for 2017 in the second half of last year as crude started recovering from a two-year price crash. The increase in drilling lasted 14 months before stalling in August, September and October after some producers started trimming spending plans when prices turned softer over the summer. U.S. oil production dipped to 9.2 million barrels per day (bpd) in August, according to federal energy data released this week. Overall, however, exploration and production (E&P) companies expect to increase the amount of money they plan to spend on U.S. drilling and completions in 2017 by about 53 percent over 2016, according to U.S. financial services firm Cowen & Co. That was up from 50 percent in the firm's prior capital expenditure tracking report last week. That expected 2017 spending increase followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said. U.S. crude futures , which reached a high of $55.22 a barrel this week, which put them within a few cents of their highest since July 2015, have averaged almost $50 a barrel so far in 2017, easily topping last year's $43.47 average. Looking ahead, futures were trading around $55 for the balance of the year and calendar 2018 . Cowen, which has its own U.S. rig count, said it expects a gradual decline in rigs in the fourth quarter of 2017 and in 2018. There were 898 oil and natural gas rigs active on Nov. 3. The average number of rigs in service so far in 2017 was 868. That compares with 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.

Oil extends surge as OPEC signals deal, supply threats mount - Houston Chronicle - Oil closed at its highest in more than two years for a second day as support grew for OPEC to prolong output cuts, while supply threats abounded. Futures jumped 2 percent in New York, closing above $55 a barrel for the first time since July 2015. While Nigerian militants and Venezuela’s debt woes imperil crude output from two of the world’s chief suppliers, the overarching bullish factor remained the increasing prospects for an extension of the OPEC-led curbs to be decided as early as this month. In the U.S., oil rigs declined by the most in more than a year, and WTI surpassing Thursday’s intraday high also provided upward momentum later in the session. OPEC has indicated “they are looking to extend the agreement through the end of 2018,” Andrew Lebow, senior partner at Commodity Research Group, said by telephone. “We’ve made a new high and the fundamentals have finally improved.” Oil has surged on signs that global inventories are shrinking and the Organization of Petroleum Exporting Countries and allied producers may stick to their glut-killing accord beyond its March expiration. Saudi Arabia, Iraq and Kuwait -- which together pump more than 50 percent of OPEC’s crude -- signaled firm support for an extension that would forestall a re-emergence of the glut next year. “OPEC chatter also sounds like both the Saudis and Kuwait are both game for extending the deal sooner rather than later,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. West Texas Intermediate for December delivery advanced $1.10 to settle at $55.64 a barrel on the New York Mercantile Exchange and climbed for a fourth week. Total volume traded was about 13 percent below the 100-day average. Prices rose as high as $54.84 a barrel on Thursday intraday. Brent for January settlement added $1.45 to end the session at $62.07 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.21 to January WTI. 

Is Saudi Arabia's Oil Strategy Working? -- The IMF estimated that Saudi Arabia will need oil prices to trade at about $70 per barrel in 2018 for its budget to breakeven, a dramatic improvement from the $96.60 per barrel it needed just last year. Saudi’s improvement is the most dramatic out of all the Middle Eastern oil producers, and it also suggests the combination of austerity, cuts to wasteful subsidies, new taxes and economic reforms are starting to bear fruit.  The improvement is all the more important because Saudi Arabia and its fellow OPEC members are restraining output as a way to boost oil prices. Selling fewer barrels means less revenue, although that is offset by the coordinated production cuts through the OPEC deal, which has helped raise prices. Nevertheless, there is something glaring about Saudi Arabia’s breakeven price: It is still far higher than the current oil price, which means Riyadh is still feeling the economic and fiscal pressure from low crude prices. “The reality of lower oil prices has made it more urgent for oil exporters to move away from a focus on redistributing oil receipts through public sector spending and energy subsidies,” the IMF said in its report. Saudi Arabia and other Middle East oil producers “have outlined ambitious diversification strategies, but medium-term growth prospects remain below historical averages amid ongoing fiscal consolidation,” the IMF added. In other words, austerity might help narrow the budget deficit to some degree, but it can also be self-defeating if it slows growth. Saudi Arabia may have posted the largest drop in its breakeven price, but several of its peers have even lower budgetary thresholds. Iran, Iraq, Kuwait and Qatar all breakeven at $60 per barrel or less in 2018, meaning they will likely avoid a fiscal deficit. Saudi Arabia, on the other hand, will take much longer to balance its budget, the IMF warned. It is expected to post a $53 billion deficit this year. That means it will likely have to continue to turn to international and domestic debt markets to plug its budgetary gap, while also burning through cash reserves. Last year, Saudi Arabia issued $17.5 billion in international debt, the largest debt issuance ever sold in emerging markets. Earlier this year it sold $9 billion sukuk, or Islamic bonds. In September, Riyadh sold another $12.5 billion in bonds, the largest global debt sale in 2017. It also has burned through over $200 billion in cash reserves since it hit a peak a few years ago.

Saudi Arabia needs $70 oil to break even - Saudi Arabia needs oil prices at $70 per barrel in 2018 in order to breakeven, the International Monetary Fund (IMF) said on Tuesday in its Regional Economic Outlook on the Middle East and Central Asia. The Saudi breakeven oil price to achieve zero deficit in 2017 is $73.10, according to the IMF, compared to $96.60 for 2016. Among the oil exporters in the region, Saudi Arabia has cut its breakeven oil price by the most between 2016 and 2017, but its budget breakeven price of oil is not the lowest in the region. The lowest breakeven price for 2017 is in Kuwait, $46.50, followed closely by Qatar at $46.80, according to IMF estimates. The medium-term oil price assumption, based on the futures market, is that oil prices will remain broadly with current levels of $50-$60, the IMF says. “Spillovers from the low oil price environment continue to weigh on non-oil growth, which is expected to remain below historical averages,” the IMF noted. Budget deficits in the oil exporters soared to a combined 10.6 percent of GDP last year from 1.1 percent of GDP in 2014. Deficits are now expected to halve in 2017, thanks to a modest recovery in the price of oil and the countries’ efforts to cut budget deficits. “But since oil prices are expected to remain in the range of $50-60 a barrel, oil exporters will need to sustain—and in some cases intensify—their budget deficit-reduction efforts,” the IMF said. Estimates for both oil and non-oil growth of the oil exporters in the Middle East, North Africa and Pakistan (MENAP) region are now “slightly weaker” than IMF’s projections from May this year. Not only are low oil prices leading to deficits, but they are also seen as dampening economic growth in the medium term. Non-oil growth in the Gulf Cooperation Council (GCC) members—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE—is seen at 3.4 percent in 2020, compared to 6.7 percent in the period 2000-2015, the IMF said. 

 NSA Document Says Saudi Prince Directly Ordered Coordinated Attack By Syrian Rebels On Damascus --A loosely knit collection of Syrian rebel fighters set up positions on March 18, 2013, and fired several barrages of rockets at targets in the heart of Damascus, Bashar al-Assad’s capital. The attack was a brazen show of force by rebels under the banner of the Free Syrian Army, targeting the presidential palace, Damascus International Airport, and a government security compound. It sent a chilling message to the regime about its increasingly shaky hold on the country, two years after an uprising against its rule began.Behind the attacks, the influence of a foreign power loomed. According to a top-secret National Security Agency document provided by whistleblower Edward Snowden, the March 2013 rocket attacks were directly ordered by a member of the Saudi royal family, Prince Salman bin Sultan, to help mark the second anniversary of the Syrian revolution. Salman had provided 120 tons of explosives and other weaponry to opposition forces, giving them instructions to “light up Damascus” and “flatten” the airport, the document, produced by U.S. government surveillance on Syrian opposition factions, shows.The Saudis were long bent on unseating Assad. Salman was one of the key Saudi officials responsible for prosecuting the war in Syria, serving as a high-ranking intelligence official before being promoted to deputy minister of defense later in 2013. The NSA document provides a glimpse into how the war had evolved from its early stages of popular uprisings and repression. By the time of the March 2013 attack, arguably the most salient dynamic in the conflict was the foreign powers on both sides fueling what appeared to be a bloody, entrenched stalemate. The document points to how deeply these foreign powers would become involved in parts of the armed uprising, even choosing specific operations for their local allies to carry out.

All Of Iraq About To Be Liberated As ISIS Enters The Dustbin Of History --Iraqi forces continue to advance on al-Qaem, the last "Islamic State" (ISIS) stronghold in Iraq,which will put the last stone over the terrorist group’s grave and on the so-called “Islamic State Caliphate” that so much occupied the world’s headlines over the last few years and indeed, large parts of Iraqi and Syrian territories.ISIS is aware that al-Qaem will fall very soon - the city won’t be able to hold for very long. Therefore, many of the group's leaders and militants have fled to the numerous refugee camps which have emerged in the last years – according to intelligence reports – in the Iraqi Anbar desert and the Syrian al-Badiya where ISIS can hide along the tens of thousands of kilometers of sprawling Syrian-Iraqi border areas among refugees.ISIS is expected to lick its wounds to try and re-organize its group following the defeat inflicted upon it as indicated by its shrinking territory (which it has occupied since 2014), as well as its shrinking numbers. Many foreign fighters were either killed or mostly left the group, which has remained largely incapable of recruiting new forces. Moreover, ISIS resources have dried up: no more oil and gas fields under its control, no more taxes to be imposed, no more arts and crafts to steal and sell, and no more “donations” from the Arab world. Furthermore, the terror group has lost its very powerful, efficient, and unique propaganda tools and machine as after the liberation of Mosul and most of Iraq, the liberation of Palmyra, Raqqah, Deir-ezzour, most of al-Badiya, the Syrian Army liberated the city of al-Mayadeen, where ISIS kept its media base. Forces in al-Mayadeen seized a huge stock of ISIS propaganda tools and apparatus, reducing the group’s capability to produce online and offline propaganda.  Nevertheless, it must be borne in mind that terrorism can never be totally defeated and it is obvious that cells remain active and will always find societies to host it or cover its back. Therefore, ISIS terrorist attacks in Mesopotamia, the Levant, West Africa, Asia and other parts of the world are expected to take place from time to time. This certainly doesn’t mean ISIS is returning or will become strong again, but on the contrary, it will be the group’s way of saying: “You think I am dead, but can still cause harm.”

Kurds' aims in Syria far more likely to succeed than in Iraq | Asia Times: As planned, three days before Iraqi Kurds went to the polls in a referendum over their own political future, elections for local Kurdish communes in northern Syria took place on September 22. While the latter vote – in which an overwhelming 92% voted in favor of independence – sent shockwaves throughout the Middle East, the Syrian vote passed very smoothly, and Damascus did nothing of any consequence to prevent or obstruct it.Following elections in their communes, Syrian Kurds plan to vote for representatives to their local councils on November 3. Parliamentary elections for the three Kurdish districts of the Syrian north, which the Kurds are calling the Democratic Federal System of Northern Syria, are due to happen on January 19. These back-to-back developments in Syria and Iraq have undoubtedly raised the ambitions of 30 million Kurds throughout the region, whose unconditional support has flooded in. Meanwhile, authorities in Baghdad are determined to prevent Iraqi Kurdistan – which is already a federal part of the country, with its own flag, government and parliament – from becoming an independent entity. Saad al-Hadithi, an adviser to Premier Haidar al-Abadi, said: “All Iraqis must have a say in defending the future of their homeland. No single party can determine the future of Iraq in isolation from the others.” 

As Kurdish President Announces Resignation, Supporters Storm Parliament With Knives And Guns -- Iraqi Kurdish leader Masoud Barzani announced his resignation Sunday after the biggest gamble of his 12 years as president of the Kurdistan Regional Government (KRG) not only failed, but utterly backfired as territorial reversals reduced KRG power to its weakest position in decades. Though his push for an independence referendum had overwhelming support among Iraq's Kurds, and with even the encouragement of some external allies, the decisive military response by the Iraqi national government resulted in rapid forced handover of Kurdish-held oil rich areas and a return to pre-2014 borders, prior to the blitz by ISIS which aided Kurdish political expansion. Barzani will step down effective November 1.  And now the future of the KRG is itself under threat as reports of inter-Kurdish fighting emerged Sunday night. Multiple international reports characterized Barzani's speech as "bitter" and it further appears that violence erupted during or after his televised speech before parliament. During the speech Barzani proclaimed that, "three million votes for Kurdistan independence created history and cannot be erased" while alsodenouncing rivals who abandoned the fight for Kirkuk as committing "high treason." His supporters, angry at what is essentially a forced resignation after rival Kurdish factions failed to oppose Iraqi national forces as they advanced in Kirkuk and other areas earlier this month, reportedly stormed parliament brandishing knives sticks, and guns. There are also unverified reports emerging that opposition party members were attacked during the chaos, as well as arson attacks on opposition offices in various parts of Erbil.

US Launches First Airstrike Against ISIS Fighters In Somalia -- The Pentagon’s gradually escalating combat mission in Somalia reached another important milestone Friday - one of many that have occurred since the inauguration of President Donald Trump - when the military revealed that it had carried out the first airstrikes against Islamic State-linked fighters in Somalia.The news comes as ISIS forces in Syria were driven out of their last remaining patch of territory as Syrian Army forces retook the eastern city of Deir Ezzor, inspiring even anti-Assad pundits to marvel at the Army’s advance against seemingly insurmountable odds.A US official told the Associated Press the strikes were carried out in northeastern Somalia, with the first around midnight local time and the second later in the morning. The official was not authorized to discuss the mission publicly so spoke on condition of anonymity. But one Somali security official said at least six missiles struck Buqa, a remote mountainous village roughly 60 kilometers (37 miles) north of Qandala town in Somalia's northern state of Puntland. The official spoke on condition of anonymity because he was not authorized to speak to the media.

Russia to Build an Iran-India Gas Pipeline, Empire Loses Again - For those who follow geopolitics closely you will know something about the IPI pipeline. IPI stands for Iran-Pakistan-India. I could write a book detailing the twists and turns of U.S. and Russian foreign policy on the history of the delays to this pipeline. They stretch back a decade at least. So to see RT today run the story that:Moscow and Tehran are about to sign a memorandum of understanding to back a new gas pipeline project, according to Russian Energy Minister Aleksandr Novak. The countries will build a 1,200-kilometer long pipeline from Iran to India with the Russian energy major Gazprom developing several Iranian deposits along the route of the future pipeline.While details are sketchy, it looks like this will not be the classic IPI pipeline that linked Eastern Iran with northern India via the Pakistani port at Gwadar, traversing Baluchistan.There will, apparently, be an underwater segment that goes through the Persian Gulf. While I hate to keep flogging a dead horse, one of the main obstacles to the IPI pipeline of yore was none other than Hillary Clinton. She was a major shareholder in the company that was promoting the competing (and nowhere near as economically viable) TAPI pipeline — Turkmenistan, Afghanistan, Pakistan, India.The TAPI pipeline was a major U.S. foreign policy objective going back to the Clinton Administration and a priority under Bush the Lesser. Clinton made it a major focus of her term as Secretary of State to get the TAPI pipeline finished. But it never happened. In fact, neither IPI nor TAPI have been built. TAPI is the main reason for our sanctioning Iran in 2012 and cutting it out of the SWIFT system, not its nuclear program. After nearly 20 years of wrangling, including invading Afghanistan, TAPI is finally being built. Turkmenistan started constructing its TAPI section in December 2015 and the construction is expected to take three years. Time frame of the Afghan and Pakistani sections’ construction has not been determined yet. Note that this boondoggle won’t get completed for at least another 7 years, if ever. It was never viable which was why it was so hard to put a deal together. In the same way that Iran built its leg of the IPI pipeline during the time of U.S. sanctions, that Clinton stood to make millions from TAPI and the U.S. devoted the resources of nearly three administrations to its construction. It is one of the main reasons why we cannot leave Afghanistan. The costs of the Afghan War are borne on its shoulders as this excerpt from a Wall St. Journal Op-Ed from 2012 makes so clear: After the U.S. military withdrawal next year, the government of Afghanistan will have few legitimate income streams. TAPI can provide Kabul with hundreds of millions of dollars annually and create an estimated 50,000 jobs for Afghans. It will do so in a way that gives three of the key states in the region—Pakistan, India and Iran—a strategic interest in Afghanistan’s success.

 Iran, Russia Should Cooperate to Isolate US, Foster Middle East Stability: Khamenei - Iranian Supreme Leader Ayatollah Ali Khamenei told visiting Russian President Vladimir Putin on Wednesday that Tehran and Moscow must step up cooperation to isolate the US and help stabilise the Middle East, state TV reported. Iran and Russia are the main allies of Syrian President Bashar al-Assad, while the US, Turkey and most Arab states support rebel groups fighting to overthrow him. Putin met Iranian political leaders in an effort to nurture a warming relationship strengthened since US President Donald Trump threatened to abandon the international nuclear deal with Iran reached in 2015. “Our cooperation can isolate America … The failure of US-backed terrorists in Syria cannot be denied but Americans continue their plots,” Khamenei told Putin, according to Iranian state television. Since Russia‘s military intervention in Syria’s war in 2015, and with stepped-up Iranian military assistance, Assad has taken back large amounts of territory from rebels as well as swathes of central and eastern Syria from ISIS militants. Moscow is now trying to build on that success with a new diplomatic initiative, including a congress of Syria’s rival parties it plans in the Black Sea resort of Sochi on November 18, though a major opposition bloc has refused to take part. Pragmatist Iranian President Hassan Rouhani echoed Khamenei, saying Iran and Russia together could tackle “regional terrorism” – an allusion to Sunni Muslim armed groups hostile to Iran, Assad and many other Arab states. 

 America Losing Afghanistan by Every Metric that Matters - The national conversation has been focused on North Korea and Russia lately, while talk about counterinsurgency tactics has centered on fighting the Islamic State in Iraq, Syria, and northern Africa. Meanwhile, you hardly hear anything about the centerpiece of the counterinsurgency strategy that kicked off this Global War on Terror: Afghanistan.The news out of there is grim. A report released today by a watchdog U.S. government agency details what’s been happening in Afghanistan as the United States’ attention has been fixated elsewhere: The coalition is losing Afghanistan by every metric that matters.The report comes from the Special Inspector General for Afghanistan Reconstruction, or SIGAR. This is the Congressionally empowered group formed to watch over the $121 billion the U.S. has spent since 2001 to rebuild Afghanistan, and to try to ensure it isn’t lost to the widespread corruption in the country. SIGAR’s quarterly report doubles as a thermometer to gauge what’s happening in Afghanistan. Progress is always elusive here, but this latest report paints a picture of a reconstruction gone awry. Grim news, waste, and scandal is typical of SOIGAR reports. But in the past six months, the trends are even worse than usual.  According to USFOR-A, 3.7 million Afghans now live in districts “under insurgent control or influence, an increase of 700,000 people over the last six months.”

Almost 40% of global liquefied natural gas trade moves through the South China Sea - The South China Sea is a major route for liquefied natural gas (LNG) trade, and in 2016, almost 40% of global LNG trade, or about 4.7 trillion cubic feet (Tcf), passed through the South China Sea. The South China Sea is an important trade route for Malaysia and Qatar. The two LNG exporters collectively accounted for more than 60% of total South China Sea LNG volumes in 2016. Almost half of Qatar’s global LNG shipments traveled through the South China Sea in 2016. All of Malaysia’s LNG exports pass through the South China Sea, as the country’s one LNG export complex lies on the South China Sea coast. Several other LNG exporters also use South China Sea trade routes to reach LNG importers. In 2016, Oman, Brunei, and the United Arab Emirates shipped between 84% and 100% of their total LNG exports through the South China Sea. Other LNG exporters in the region, such as Australia and Indonesia, make more use of other trade routes to reach LNG markets. In 2016, about 23% of total Australian LNG exports and about 29% of Indonesian LNG exports were shipped by way of the South China Sea. Much of the remainder of Australia’s and Indonesia’s LNG exports passed to the east of the Philippines and Taiwan, avoiding the South China Sea on the way to customers in Japan, South Korea, and northern China.  The four LNG importers with the largest volumes passing through the South China Sea are Japan, South Korea, China, and Taiwan, collectively accounting for 94% of total LNG volumes going through the South China Sea in 2016. Japan is the world’s largest LNG importer, and slightly more than half of all of Japan’s LNG imports in 2016 were shipped by way of the South China Sea. Similarly, about two-thirds of the LNG imported by South Korea—the world’s second-largest LNG importer—was shipped through the South China Sea that year.  More than two-thirds of China’s LNG imports and more than 90% of Taiwan’s LNG imports passed through the South China Sea in 2016. EIA projects that China will surpass South Korea as the world’s second-largest LNG importer by 2018 and nearly match Japan’s level of LNG imports by 2040.

China Has Practiced Bombing Runs On Guam -- Just as President Donald Trump is preparing to embark on a nearly two-week tour of Asia – his first since taking office – where he is expected to discuss, among other topics, the regional threat posed by North Korea, Defense News is reporting that China has reportedly been conducting bombing drills targeting the US territory of Guam. Reports of China’s aggressive expansion of its air force – an attempt to exert its dominance over contested territories in the South China and East China seas – were relayed by Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford during a briefing with reporters. China “is very much the long-term challenge in the region,” Dunford said. “When we look at the capabilities China is developing, we’ve got to make sure we maintain the ability to meet our alliance commitments in the Pacific.” The notion that both North Korea and China have threatened Guam, either explicitly or tacitly, speaks to the fact that China is the biggest threat to US security in the Pacific, nuclear standoff with North Korea notwithstanding, Dunford said.

Trump’s China Trip to Broker Billions of Dollars in Energy Deals - Representatives from about 40 companies are expected to accompany President Donald Trump on the first presidential trade mission to China Nov. 8-10 and sign deals for billions of dollars in U.S. investments. One of the biggest deals the Trump administration is currently negotiating is a multibillion-dollar energy investment from Chinese oil and gas giant China Petroleum & Chemical Corp. that would bring thousands of new jobs to hurricane-ravaged areas in Texas and the U.S. Virgin Islands. Many of the deals, including the China Petroleum investment, are expected be in the form of nonbinding memorandums of understanding, not contracts. Among the companies tentatively listed as working on China-related deals in conjunction with the trip, according to a government document obtained by Bloomberg News, are General Electric Co., Honeywell International Inc., Westinghouse Electric Co. , Alaska Gasline Development Corp., the Boeing Co. and Qualcomm Inc. The companies represent a variety of sectors from life sciences to heavy machinery. Other companies that may have deals in progress, according to the document, include Cheniere Energy Inc., Terex Corp., Thermo Fisher Scientific Inc., Applied Materials Inc., Caterpillar Inc. and Blackstone Group. Not all of the companies are expected to travel with Trump as part of the trade mission. A Caterpillar spokeswoman, Rachel Potts, said the company had not applied to participate. Details of the project in the hurricane zones in Texas and the Virgin Islands are yet to be finalized, but the Chinese company, known as Sinopec, is expected to partner with ArcLight Capital, a Boston-based infrastructure investment firm, and Freepoint Commodities LLC, a Connecticut commodity trading firm. The deal is expected to be worth more than $7 billion in investments in the U.S. 

China PMIs Disappoint, Tumble In October --China manufacturing PMI tumbled from 5-year highs in October as officials increasingly prioritize a campaign to clamp down on polluting industries and rein in debt. Non-manufacturing took an even bigger hit, also disappointing expectations, as the lagged impact of China's deteriorating credit impulse begins to weigh... As Bloomberg reporets, factories closed and others reduced production in some regions to curb pollution as the winter heating season approaches. With the economytransitioning away from a growth-at-all-costs model, officials are prioritizing the environment and a push to tame credit growth, key policy directions highlighted during the twice-a-decade Communist Party Congress this month.

China Speeds Ahead of U.S. as Quantum Computing Race Escalates: - U.S. and other Western scientists voice awe, and even alarm, at China’s quickening advances and spending on quantum communications and computing, revolutionary technologies that could give a huge military and commercial advantage to the nation that conquers them.The concerns echo — although to a lesser degree — the shock in the West six decades ago when the Soviets launched the Sputnik satellite, sparking a space race.In quick succession, China in recent months has utilized a quantum satellite to transmit ultra-secure data, inaugurated a 1,243-mile quantum link between Shanghai and Beijing, and announced a $10 billion quantum computing center.“To me, what is alarming is the level of coordination of what they’ve done,” said Christopher Monroe, a physicist and pioneer in quantum communication at the University of Maryland.Perhaps more than the accomplishments of the Chinese scientists, it is the resources that China is pouring into the research into how atoms, photons and other basic molecular matter can harness, process and transmit information.“It doesn’t necessarily mean that their scientists are better,” said Martin Laforest, a physicist and senior manager at the Institute for Quantum Computing at the University of Waterloo in Ontario, Canada. “It’s just that when they say, ‘We need a billion dollars to do this,’ bam, the money comes.”The engineering hurdles that China has cleared for quantum communication means that the United States will lag in that area for years.“The general feeling is that they’ll get there before us,” said Rene Copeland, a high-performance computer expert who is president of D-Wave (Government) Inc., a Vancouver-area company that uses aspects of quantum computing in its systems.

When China Leads - For the last 40 years, China has implemented a national strategy that, despite its many twists and turns, has produced the economic and political juggernaut we see today. It would be reckless to assume, as many still do in the US, Europe, and elsewhere, that China’s transition to global preeminence will somehow simply implode, under the weight of the political and economic contradictions they believe to be inherent to the Chinese model. NEW YORK – The West, by and large, has no idea what awaits it as China continues its rise. The United States, under President Donald Trump, has become a global laughingstock in less than a year. Europe, with the notable exception of French President Emmanuel Macron, remains a rolling seminar on itself, oblivious to its declining relevance to the rest of the world. And the less said about Britain’s collective act of national political and economic suicide in last year’s Brexit referendum, the better.In short, the West has turned decisively inward, while China, breaking with its 3,000 years of dynastic history, has turned decisively outward, so that today few corners of the world are untouched by its influence. Deng Xiaoping’s maxim, “hide your strength, bide your time, and never take a lead” has already been dead for some years. The just-completed 19th National Congress of the Communist Party of China (CPC) was its state funeral. Xi is now proclaiming explicitly to his own people and the world that it is time for China to take center stage within the global order, and to create a new type of international relations. So, beyond the pomp and ceremony of the 19th National Congress, it is crucial to understand what its outcomes will mean for China and the world.

China, South Korea agree to mend ties after THAAD standoff (Reuters) - Seoul and Beijing on Tuesday agreed to move beyond a year-long stand-off over the deployment of a U.S. anti-missile system in South Korea, a dispute that has been devastating to South Korean businesses that rely on Chinese consumers.  The unexpected detente comes just days before U.S. President Donald Trump begins a trip to Asia, where the North Korean nuclear crisis will take center stage, and helped propel South Korean stocks to a record high. The installation of the U.S. Terminal High Altitude Area Defense (THAAD) system had angered China, with South Korea’s tourism, cosmetics and entertainment industries bearing the brunt of a Chinese backlash, although Beijing has never specifically linked that to the THAAD deployment. Beijing worries the THAAD system’s powerful radar can penetrate into Chinese territory. “Both sides shared the view that the strengthening of exchange and cooperation between Korea and China serves their common interests and agreed to expeditiously bring exchange and cooperation in all areas back on a normal development track,” South Korea’s foreign ministry said in a statement. Before the THAAD dispute, bilateral relations flourished, despite Beijing’s historic alliance with North Korea and Seoul’s close ties with Washington, which includes hosting 28,500 U.S. troops. China is South Korea’s biggest trading partner.  

Chinese Police Foil Plot To Assassinate Kim Jong Un's Nephew -- As the two women who fatally poisoned Kim Jong Nam with a toxic nerve agent face the gallows in a Malaysian murder trial, Bloomberg is reporting that Chinese police have broken up a plot purportedly masterminded in North Korea whereby a group of men were dispatched to Beijing to murder Jong Nam’s son, 22-year-old Kim Han Sol, who is also the nephew of North Korean leader Kim Jong Un. Since taking the reins of the North Korean state following the death of his father in 2011, Jong Un has readily murdered members of his family to eliminate any potential challenges to his rule. Chinese police arrested two of seven North Korean agents suspected of involvement with the plot. Jong Un executed his uncle Jang Song Thaek in 2013 on charges of graft and factionalism.Earlier this month, the leader promoted his 28-year-old sister to the ruling party’s political wing, bringing her closer to the center of power, Bloomberg reported.

Collapse at North Korea nuclear test site 'leaves 200 dead' - As many as 200 North Korean labourers have been killed after a mine shaft being dug at the regime's nuclear test site collapsed, according to Japan's Asahi TV.Sources in North Korea told the news channel that a tunnel being excavated by around 100 workers at the Punggye-ri test site collapsed earlier this month.An additional 100 labourers sent to rescue their colleagues were reportedly killed when the tunnel suffered a second collapse.An exact date for the disaster has not been provided, but it comes shortly after North Korea conducted its sixth - and most powerful - underground nuclear test at the site.North Korea claims the September 3 test beneath Mount Mantap was of a hydrogen bomb, with monitors suggesting the detonation was equivalent to an earthquake with a magnitude of 6.1 on the Richter scale.Some analysts put the yield of the weapon as high as 280 kilotons, while seismologists picked up signs of underground collapses in the hours and days after the blast. Satellite images of the Punngye-ri site taken immediately after the test revealed significant damage to surface features, including landslips.

North Korea Conducts Mass Evacuation Drills, Blackout Exercises --A rare blackout exercise and mass evacuation drill took place in North Korea last week according to NK News, citing "multiple sources." The wartime preparations were not visible in Pyongyang, but were seen in “secondary, tertiary cities and towns” on the eastern coast of the country. NK News and "multiple sources" stressed these drills are "extremely rare."  Such "blackout and evacuation" drills are extremely rare in North Korea, multiple other sources with long experience working inside or on the country told NK News, making it difficult to gauge their purpose amid the current atmosphere. Chun In-bum, a retired three star lieutenant general from the South Korean army, said "I have never heard of this type of training exercises before in North Korea, but am not surprised. They must realize how serious the situation is." An NK News confidential "source" with-in North Korea added to the gravity of the situation: "I have never heard of evacuation exercises happening before.""There used to be air raid drills in 2003, but not since then,” the source said, who didn’t want to be identified due to the sensitivities of talking about military issues to the media. “A mass evacuation would be impossible not to notice.” The North Korean war preparation exercise drill takes place as the U.S. Navy plans to stage an extremely rare, three-carrier exercise in the next few weeks off the Korean Peninsula, which could coincide with President Trump's visit to South Korea, Japan, and China next month. The joint drills, the first in 10 years, are possible because of a rare confluence of carrier deployment schedules, according to the Pentagon.

North Korea Rouses Neighbors to Reconsider Nuclear Weapons - As North Korea races to build a weapon that for the first time could threaten American cities, its neighbors are debating whether they need their own nuclear arsenals. The North’s rapidly advancing capabilities have scrambled military calculations across the region, and doubts are growing the United States will be able to keep the atomic genie in the bottle. For the first time in recent memory, there is a daily argument raging in both South Korea and Japan — sometimes in public, more often in private — about the nuclear option, driven by worry that the United States might hesitate to defend the countries if doing so might provoke a missile launched from the North at Los Angeles or Washington. In South Korea, polls show 60 percent of the population favors building nuclear weapons. And nearly 70 percent want the United States to reintroduce tactical nuclear weapons for battlefield use, which were withdrawn a quarter-century ago. There is very little public support for nuclear arms in Japan, the only nation ever to suffer a nuclear attack, but many experts believe that could reverse quickly if North and South Korea both had arsenals. Prime Minister Shinzo Abe has campaigned for a military buildup against the threat from the North, and Japan sits on a stockpile of nuclear material that could power an arsenal of 6,000 weapons. Last Sunday, he won a commanding majority in parliamentary elections, fueling his hopes of revising the nation’s pacifist Constitution. This brutal calculus over how to respond to North Korea is taking place in a region where several nations have the material, the technology, the expertise and the money to produce nuclear weapons. Beyond South Korea and Japan, there is already talk in Australia, Myanmar, Taiwan and Vietnam about whether it makes sense to remain nuclear-free if others arm themselves — heightening fears that North Korea could set off a chain reaction in which one nation after another feels threatened and builds the bomb. 

Bangladesh is now home to almost 1 million Rohingya refugees -- Wednesday marks the two-month anniversary of attacks in Burma, carried out by a small band of Rohingya militants, that triggered a massive and indiscriminate retaliation from the Burmese military and the exodus of most of the Muslim minority ethnic group from the country. Some 604,000 people, mostly Rohingya, have fled to neighboring Bangladesh since Aug. 25, where they have joined more than 300,000 who fled in earlier waves of ethnic violence over the past three decades. With thousands still crossing the border each day, the total number of Rohingya refugees is expected to cross the 1 million mark in the coming days or weeks.Roughly half a million Rohingya are thought to still be in Burma, where many live in camps for displaced people. Human rights organizations have documented the wholesale incineration of Rohingya villages across three townships (akin to counties) of Burma's Rakhine State, where the majority of Rohingya once lived. In interviews in Bangladesh refugee camps and over the phone while still in Burma, Rohingya have offered searing testimony of extensive crimes against humanity carried out by the Burmese military. On Wednesday, Reuters reported a new version of a story that has been repeated numerous times over the past two months: Aid workers were hounded away from a camp for displaced Rohingya by people from the local Buddhist majority.“The simple fact here is that lifesaving aid is being blocked from reaching vulnerable people who desperately need it, including children and the elderly,” Pierre Peron, spokesman for the United Nations’ Office for the Coordination of Humanitarian Affairs in Burma, told Reuters.The Burmese government has warned in the past that it will only allow those Rohingya with proof of land ownership in Burma to return — documents that most Rohingya do not have, or lost in the chaos of the crackdown. Reports in Burmese state media seem to indicate that the Burmese government plans on appropriating land vacated by the Rohingya and may even harvest unattended crops. Most of the 604,000 new arrivals in Bangladesh are children, thousands of whom are unaccompanied. Many are acutely malnourished.

Bangladesh eyes voluntary sterilization to curb Rohingya population - Bangladesh is planning to introduce voluntary sterilization in its overcrowded Rohingya camps, where nearly a million refugees are fighting for space, after efforts to encourage birth control failed. More than 600,000 Rohingya have arrived in Bangladesh since a military crackdown in neighboring Myanmar in August triggered an exodus, straining resources in the impoverished country. The latest arrivals have joined hundreds of thousands of Rohingya refugees who fled in earlier waves from Myanmar’s Rakhine state, where the stateless Muslim minority has endured decades of persecution. Most live in desperate conditions with limited access to food, sanitation or health facilities and local officials fear a lack of family planning could stretch resources even further. Pintu Kanti Bhattacharjee, who heads the family planning service in the district of Cox’s Bazar where the camps are based, said there was little awareness of birth control among the Rohingya. “The whole community has been deliberately left behind,” he told AFP, citing a lack of education in Myanmar, where the Rohingya are viewed as illegal immigrants and denied access to many services. Bhattacharjee said large families were the norm in the camps, where some parents had up to 19 children and many Rohingya men have more than one wife. 

Illicit Financial Outflows from Developing Countries Grow --Although quite selective, targeted, edited and carefully managed, last year’s Panama Papers highlighted some problems associated with illicit financial flows, such as tax evasion and avoidance. The latest Global Financial Integrity (GFI) report shows that illicit financial outflows (IFFs) from developing countries, already at alarming levels, continue to grow rapidly. With international financial liberalization enabling investments abroad, ‘legitimate outflows’ have also been growing rapidly, heightening macro-financial risks to countries. Many of today’s financial centres compete intensely to attract customers by offering lower tax rates and banking secrecy.It is generally presumed that IFFs are related to tax evasion and corruption. Such financial flows largely involve financial service providers, law offices and companies with transnational activities, often involving investments in real estate and other assets worth billions. Besides enabling governments and legislation, legal and accounting firms as well as shell companies have been crucial. The GFI report estimates that developing countries lost somewhere between $620 billion (bn) and $970 bn in illicit outflows in 2014. The Washington-based think tank found IFFs from the South to be 4.2-6.6% of total developing country trade for 2014, while inflows were 9.5-17.4%. Total IFFs of all developing countries in 2014 were estimated at $2,010-3,507 bn. Illicit financial flows of all developing countries, 2004-2013

Africa's Public Debt Seen Exceeding 50% of GDP in 2017, IMF says --The median level of government debt in sub-Saharan Africa will probably rise to more than 50 percent of gross domestic product this year, increasing strain on the financial sector and limiting much-needed stimulation for growth, the International Monetary Fund said.Public debt will increase from a median level of 34 percent of GDP in 2013, the Washington-based lender said in its Regional Economic Outlook released Monday. Government liabilities increased in all but four countries in the region since 2013, driven by slow economic growth, a slump in commodity prices, widening fiscal deficits, and in some cases, sharp exchange-rate depreciation, according to the IMF.Slowing growth last year put pressure on government revenues on the continent, while countries that are heavily reliant on commodity exports saw dollar inflows shrink. Expansion in the region may quicken to 2.6 percent in 2017 from 2016’s 22-year low of 1.4 percent, according to the lender’s report. The economies of South Africa and Nigeria, which together account for about half of the region’s GDP, will still grow at less than 1 percent. “The debt sustainability outlook has worsened considerably since 2013,” the IMF said. “The number of low-income countries in debt distress or facing a high risk of debt distress increased from seven in 2013 to 12 in 2016. Consistent with the broader trend of credit downgrades in emerging markets, several sub-Saharan African frontier markets or other countries with sovereign-credit ratings have been downgraded.”

Congo humanitarian crisis 'something like you'd see in a horror movie' - The head of the UN's World Food Program is making an urgent appeal for aid to stave off a humanitarian crisis in Congo, formerly known as Zaire, where millions are struggling with food shortages brought on by conflict. David Beasley began a four-day mission to the country on Friday and said more than three million people face severe hunger in the south-central Greater Kasai region. He said several hundred thousand children could die within the next few months. "It is heartbreaking to see 3.2. million people severely food insecure, who don't know where they will get their next meal," Beasley told CBC News. "And we're talking about several hundred thousand children there that will die in the next few months if we don't get: first funds, and then second food, and then third, access in the right locations." On Saturday, Beasley met with conflict-displaced families in the region, where violence erupted in August 2016 after clashes between security forces and the Kamwina Nsapu armed group. Beasley said the violence is "something like you'd see in a horror movie." "I've never seen anything like this. We literally have 12-year-olds and 10-year-olds killing others and chopping their heads off," he said. "We're asking for the government and all parties involved to bring peace so that we can save innocent children and try to bring some stability to the region." 

NATO General Threatens "Consequences" For Turkey Buying Russian Air Defense System --In looking to upgrade their air defense system, Turkey had a choice: buying the advanced Russian S-400 systems, or more expensive, US-made alternatives. Turkey chose to buy Russian, and NATO isn’t happy.  While NATO was initially just complaining the S-400 was incompatible with their own systems, top NATO General Petr Pavel told reporters this week that Turkey is likely to be punished by the alliance for not buying American.“The principal of sovereignty obviously exists in acquisition of defense equipment, but the same way that nations are sovereign in making their decision, they are also sovereign in facing the consequences of that decision,” Pavel insisted.Pavel dismissed reporter questions about the Turkish government’s recent anti-democracy moves, insisting nobody is perfect.“When it comes to democratic deficits, show me one single nation that is perfect. No one is perfect,” Pavel said.“No one challenges the role of Turkey as an important ally at the very difficult crossroads of challenges to the alliance.”Apparently the same leeway does not apply for the question of buying American weapons.The missile deal with Russia “is a clear sign that Turkey is disappointed in the U.S. and Europe,” said Konstantin Makienko, an analyst at the Center for Analysis of Strategies and Technologies, a Moscow think-tank.“But until the advance is paid and the assembly begins, we can’t be sure of anything.”Russia’s S-400, and its predecessor the S-300, have been praised as advanced, cost-effective alternatives to American anti-aircraft systems. The US is used to having a virtual monopoly on this market, by ensuring that no one buys Russian without facing some very public criticism.

Greece Plans 30 Billion Euro Debt Swap As It Prepares For The End Of Bailouts - Greece is planning a 30 billion euros debt swap which will convert 20 existing bonds into 5 (or less) new issues in the next few weeks (although the exact timing remains uncertain). The bonds are expected to have similar maturities to the existing notes from 2023-2042.According to Bloomberg, the Greek government is planning an unprecedented debt swap worth 29.7 billion euros ($34.5 billion) aimed at boosting the liquidity of its paper and easing the sale of new bonds in the future. Under a project that could be launched in mid-November, the government plans to swap 20 bonds issued after a restructuring of Greek debt held by private investors in 2012 with as many as five new fixed-coupon bonds, according to two senior bankers with knowledge of the swap plan. The bank officials requested anonymity as the plan has yet to be made public. Markets have responded well to the news as Bloomberg reported.

Catalonia: Madrid warns of Puigdemont jailing as thousands rally for unity -  The Spanish government has said the deposed Catalan president, Carles Puigdemont, could be jailed within the next two months over his part in the regional parliament’s unilateral declaration of independence.The warning came on Sunday afternoon as hundreds of thousands of people took to the streets of Barcelona to call for Spanish unity two days after some Catalan MPs voted for independence and the Spanish government assumed control of the region.Spain’s prime minister, Mariano Rajoy, has sacked Puigdemont and his government and called regional elections for 21 December. In an interview with the Associated Press, the country’s foreign minister, Alfonso Dastis, said Puigdemont could “theoretically” run for re-election in the vote if the courts decide he should remain free until then. Spanish prosecutors said on Friday that they would file charges of rebellion against Puigdemont, a crime punishable with up to 30 years in prison. “I don’t know what kind of judicial activity will happen between now and 21 December,” said Dastis. “If he is not put in jail at that time I think he is not ineligible.”

Tension for Catalan police caught up in separatist push - Catalonia's homegrown police force faces a dilemma -- obey caretaker bosses imposed by Madrid, or stay loyal to the now-deposed regional government? As Spain imposes direct rule on the semi-autonomous region after an independence declaration by Catalan lawmakers, with its interior ministry taking control of the Mossos d'Esquadra, the force's roughly 16,000 members are in turmoil. "There's a lot of tension. There is a lot of fear and anxiety in the entire force, regardless of whether people back independence or oppose it -- as in my case," Vicente, a Mossos officer who declined to give his real name, told AFP. "The force is split pretty much down the middle," added Manel, a colleague with over a decade of experience who would also not be fully identified. "Some are delighted that Madrid takes control, but others are worried." "The atmosphere is difficult, there are arguments, shouting, very tense situations between colleagues," said Vicente. Besides the Mossos, the only armed force that fell directly under the region's control before it was taken over, some 6,000 members of the national police are based permanently in Catalonia. Since the beginning of the standoff between Madrid and Catalonia over an unauthorised independence referendum on October 1, that number has been boosted by about 10,000 -- also including members of the Guardia Civil police force. 

‘We can’t recognize the coup d’état against Catalonia,’ vice president Junqueras says - Oriol Junqueras, the Catalan vice president and minister of Economy, rejected on Sunday the measures against Catalonia’s self-rule imposed by Mariano Rajoy’s cabinet this weekend. Junqueras, who was dismissed on Saturday under Spanish law, wrote in an article in El Punt Avui newspaper that Puigdemont’s cabinet “can’t recognize the coup d’état against Catalonia and any of the antidemocratic decisions that the People’s Party is taking, through remote control from Madrid.” He added that “the president of the country is and will be Carles Puigdemont.”  Besides, he called for a “common” strategy of all the parties and movements rejecting Rajoy’s measures, as the leader of far-left Podemos in Catalonia also demanded. Junqueras did not disclose whether he thinks pro-independence parties should take part in the snap election of December 21 in Catalonia imposed by Mariano Rajoy.However, he hinted the possibility of voting in order to ratify the declared Republic. Junqueras suggested “gathering forces, sharing concerns and joy, fails and hopes, knowing to face blows in order to raise again, without rejecting the ballot boxes in order to validate the Republic.” Puigdemont’s vice president also expressed outrage at his government being accused of making a coup d’état by parties such as Ciudadanos. “The only coups are the blows to the face of citizens who wanted to vote (on October 1) or from far-right groups, who have attacked citizens only because of their ideas,” he claimed. “Today it is those political parties closer to Francoism the ones who have stood up as interpreters and guarantors of the Spanish Constitution,” he added.

Catalonia crisis: Charges sought for deposed leaders -- Spain's state prosecutor is seeking charges of rebellion, sedition and misuse of public funds against Catalan leaders involved in the region's disputed independence bid that has thrown the country into political turmoil.The prosecutor, Jose Manuel Maza, said he was seeking charges against a range of senior Catalan figures, including deposed President Carles Puigdemont and all members of his former cabinet, after the Catalan parliament voted to issue a unilateral declaration of independence last week. The crime of rebellion carries a maximum jail sentence of 30 years, while sedition has a maximum of 15 years.  Maza said the leaders had "created an institutional crisis that culminated with the declaration of unilateral independence, with total disregard for our Constitution." He said his office had filed documents with the High Court and Supreme Court, which will consider the charges. A document laying out the charges says that several of the leaders had misused public funds by holding an independence referendum on October 1, which it described as illegal. Catalan leaders have argued that there is no legal way to give their people a choice on secession.

Catalan leader Carles Puigdemont has fled the country amid rebellion charges -- Ousted Catalan leader Carles Puigdemont has left Spain and travelled to Brussels, Spanish government officials have said.Mr Puigdemont is facing sedition charges from the Spanish government after Catalonia declared independence under his leadership.The move comes after Belgium's asylum and migration affairs minister Theo Francken said the former president could seek asylum in the country. The Spanish media reports that the former leader is accompanied by an unspecified number of other members of the Catalan government.The group are expected to make a joint statement later today.Spain's prosecutor José Manuel Maza said on Monday morning that rebellion, sedition, and provocation charges would be levelled at the former leaders of the Catalan government, which has been suspended by the Spanish central government in Madrid.In accordance with Spanish law a judge will not assess the charges.Spain has refused to recognise the result of an independence referendum held by Catalonia's regional government at the start of the month on the basis that it is illegal under Spanish law. After the Catalan regional parliament voted to declare independence on Friday, the Spanish government said it would revoke the region's autonomy and rule it directly from Madrid.

 Hundreds of thousands march for unified Spain, poll shows depths of division -  (Reuters) - Hundreds of thousands of supporters of a unified Spain filled Barcelona’s streets on Sunday in one of the biggest shows of force yet by the so-called silent majority that has watched as regional political leaders push for Catalan independence. Political parties opposing a split by Catalonia from Spain had a small lead in an opinion poll published on Sunday, the first since Madrid called a regional election to try to resolve the country’s worst political crisis in four decades. Polls and recent elections have shown that about half the electorate in the wealthy northeastern region, which is already autonomous, oppose secession from Spain, but a vocal independence movement has brought the current crisis to a head. Spain’s central government called an election for Dec. 21 on Friday after sacking Catalonia’s president Carles Puigdemont, dissolving its parliament and dismissing its government. That followed the assembly’s unilateral declaration of independence in a vote boycotted by three national parties. The regional government claimed it had a mandate to push ahead with independence following an unofficial referendum on Oct. 1 which was ruled illegal under Spanish law and mostly boycotted by unionists. Waving thousands of Spanish flags and singing “Viva España”, protesters on Sunday turned out in the largest display of support for a united Spain since the beginning of the crisis -- underlining the depth of division in Catalonia itself.

Catalonia Secession Become Damp Squib as Catalans Accept Direct Rule -- Yves Smith - Well, that was fast. From Politico’s daily European news summary: Catalonia’s deposed President Carles Puigdemont is coming to this year’s Halloween party dressed as the EU’s worst nightmare. He will be trick or treating today at 12:30 p.m. at a Brussels press conference, expected to be held at Residence Palace, with up to five fellow ex-ministers: Joaquim Forn (interior), Meritxell Borràs (public administration), Dolors Bassa (employment), Antoni Comín (health) and Meritxell Serret (agriculture), in Belgium on the run from Spanish authorities. And despite the threats of a general strike and fulminations about Catalonian civil servants refusing to take orders from Madrid, Catalans appeared overwhelmingly to accept the new status quo. From ReutersOn Friday, Spanish Prime Minister Mariano Rajoy dismissed Catalonia’s secessionist government, called a regional election for Dec. 21 and said the central government would take direct control.That process began smoothly on Monday as employees ignored calls for civil disobedience and turned up for work, while secessionist parties agreed to stand in the December poll…. Some of the most prominent ousted Catalan leaders, including Puigdemont and Vice President Oriol Junqueras, had said they would not accept their dismissal.But their respective parties, PdeCat and Esquerra Republicana de Catalunya, said on Monday they would take part in the election called by Rajoy, a tacit acceptance of direct rule from Madrid. The regional parliament canceled a meeting for Tuesday, another signal lawmakers accepted they had been dismissed. As the Financial Times put it more tersely: The dream of Catalan separatists of creating Europe’s newest state appeared to crumble on Monday as Madrid moved swiftly to take control of the breakaway region following the decision by its parliament on Friday to declare independence from Spain…Some former Catalan ministers had said that moves by the Spanish government to assume control would be met with rebellion on the streets and a campaign of civil disobedience. But that failed to materialise, and Spain re-established its authority over the region with ease.

Spanish prosecutor accuses sacked Catalan leader of rebellion (Reuters) - Spain’s state prosecutor accused sacked Catalan leader Carles Puigdemont on Monday of rebellion and sedition as the former regional president traveled to Belgium with other members of his ousted administration and hired a lawyer there. As Madrid began direct rule of Catalonia, Attorney General Jose Manuel Maza called for charges of rebellion, sedition, fraud and misuse of funds to be brought against Catalan leaders who organized an illegal referendum on independence from Spain. The Oct. 1 vote in the prosperous region with its own language and culture has triggered Spain’s biggest crisis in decades. On Friday, Spanish Prime Minister Mariano Rajoy dismissed Catalonia’s secessionist government, called a regional election for Dec. 21 and said the central government would take direct control. That process began smoothly on Monday as employees ignored calls for civil disobedience and turned up for work, while secessionist parties agreed to stand in the December poll. A senior Spanish government official said on Monday that Puigdemont had traveled to Belgium. He drove to the French city of Marseilles to catch a flight to Belgium with five other members of his sacked administration, Spanish media reported. Belgian lawyer Paul Bekaert, whose website says he is involved in a human rights organization, said he had taken on Puigdemont as a client but would not confirm whether he was working with him on a political asylum claim. “I can confirm Carles Puigdemont has appointed me as his legal representative, as he is currently in Belgium,” Bekaert told Reuters. “At the moment there are no specific dossiers I am preparing for him.” Bekaert told Belgian broadcaster VTM that Puigdemont had not fled Catalonia, was not hiding and would make a public appearance in Brussels on Tuesday. 

Puigdemont Claims He’s Legitimate President Of Catalonia, Not Seeking Belgian Asylum -- Having fled to Brussels to escape rebellion charges and perhaps a lengthy prison sentence, Catalan (ex?) leader Carles Puigdemont, who quietly fled Catalonia over the past few days, held a press conference at the Brussels Press Club. Puigdemont said that the Catalan government sees the upcoming regional elections, called after the imposition of Article 155, as a “democratic challenge” and will accept the results. In a multi-lingual, rambling speech, Puigdemont - who appears to have almost capitulated in his crusade against Madrid - said he would respect the results of the snap election called by Madrid in response to the declaration of independence by the province’s parliament. He then called on the Spanish PM Mariano Rajoy to say if he would do the same. Puigdemont also reiterated his support for democracy and peaceful resistance to Madrid’s pressure on Catalonia, and said he arrived in the Belgian capital to put the issue of Catalan independence “in the heart” of the European Union.Confirming that beggars can at least pretend to be choosers, Puigdemont said that "I want a clear commitment from the State, will you respect the results or not?” Puigdemont said he and his government, which has been sacked by the central government in Madrid, were denouncing “the polarization of the Spanish justice system” in dealing with the political crisis and wanted to “show the world the serious democratic deficit that exists in the Spanish state.”He said the province’s deposed leadership would submit to Madrid’s order to hold an emergency parliamentary election on December 21, and respect its result. “I would like to ask the Spanish government a question: Will it do the same?”

Catalan Chess Game Gives Rajoy Upper Hand With Endgame Unclear - In the final days of Spain’s complex political chess match with Catalan separatism, Prime Minister Mariano Rajoy made the best tactical moves. The longer game of keeping the country’s economic powerhouse in Spain may prove harder to win. Rajoy lined up backing from the opposition Socialists for his plan to sweep out the Catalan government while his diplomats ensured the European Union supported his stance all the way. The concurrent dismissal of the Catalan government and the announcement of elections in the region for Dec. 21 disoriented the independence movement and reasserted Spain’s authority. After the early missteps in his Catalan strategy when a clumsy deployment of riot police to hinder an illegal independence referendum produced violence and sparked outrage around the world, Rajoy staged a comeback in recent days by peacefully removing the government of President Carles Puigdemont, who has decamped to Brussels to try to run the secession campaign in exile. For all that, however, the challenge for Rajoy and his successors will be to deal with deep divisions within Catalonia that may take decades to heal. “This will have huge consequences for the political life of Spain and particularly Catalonia,”  “Its effects could last a generation.” The halting of Catalonia’s independence movement, even if temporarily, also poses some thorny questions for the EU, which papered over reservations among some of the region’s leaders at Rajoy’s refusal to enter into dialogue with the separatists. In doing so, the bloc managed to anger democracy activists and has ended up with the embarrassing spectacle of a political exile from one of its core member states fleeing to Brussels.   On the domestic front, the Catalan crisis may have strengthened Rajoy’s political position by shoring up support for the alliance that keeps him in power.  That said, his policies have managed at best to contain the Catalan issue. They have not addressed the root causes of separatist anger, “He didn’t conquer any hearts and minds,”  

Catalan independence: Spain high court summons dismissed leader - BBC News: Spain's high court has summoned sacked Catalan leader Carles Puigdemont and 13 other members of his dismissed government to appear later this week. It also gave them three days to pay a deposit of €6.2m ($7.2m) to cover potential liabilities. The summons comes after Spain's chief prosecutor on Monday said he would press charges including rebellion. Mr Puigdemont is in Belgium with several former ministers. He earlier said he was not there to seek asylum. Carles Puigdemont triggered a crisis in Spain by holding an independence referendum in early October in the semi-autonomous region despite Madrid's opposition and the Constitutional Court declaring the vote illegal. Spain's central government has now taken direct control of Catalonia. Mr Puigdemont turned up in Brussels on Monday as Spanish Attorney-General José Manuel Maza called for Catalan leaders to face charges of rebellion, sedition and misuse of public funds.The Audiencia National has now summoned the sacked Catalan officials - who are yet to be formally charged - to testify on Thursday and Friday. If they do not appear, prosecutors could order their arrest. Meanwhile, the speaker of Catalan's dissolved parliament Carme Forcadell and other former lawmakers have been summoned to the Supreme Court because they still have parliamentary immunity. Mr Puigdemont earlier said he would return to Spain if guaranteed a fair hearing. Several of Mr Puigdemont's former colleagues who remain inside the country may decide to accept the summons and appear in court, reports the BBC's James Reynolds from Barcelona. Prosecutors' arguments against the group were "serious, rational and logical", Judge Carmen Lamela said in a ruling, according to the AFP news agency. 

Catalonia: Puigdemont ‘will not return’ to Spain for questioning -- Sacked Catalan leader Carles Puigdemont will not return to Spain to answer charges including rebellion, his Belgian lawyer has said. Speaking to the Associated Press, Paul Bekaert suggested Mr Puigdemont should instead be questioned in Belgium where he has been since Monday. He has been summoned to court in Madrid on Thursday, alongside 13 deputies. They face charges including sedition and misuse of public funds over last month's banned independence referendum. Spanish prosecutors could order their arrest if they fail to appear in court for questioning. But Mr Bekaert told Dutch and Belgian media that his client would "wait and see" further reaction from the Spanish authorities before returning because of the "high" risk of detention. He also suggested he would fight any extradition ordered by the Spanish national government. Spain has been gripped by a constitutional crisis since a referendum, organised by Mr Puigdemont's separatist government, was held on 1 October in defiance of a constitutional court ruling that had declared it illegal. 

Spain issues arrest warrant for sacked Catalan president as eight of his ministers are jailed | South China Morning Post: A Spanish judge has issued an arrest warrant for ousted Catalan president Carles Puigdemont, his lawyer told Belgian state broadcaster VRT on Thursday, after eight of his separatist ex-ministers were ordered jailed pending trial over the region’s ill-fated independence push. “I have just heard from my client that the warrant has been issued for the president and four of his ministers who are in Belgium,” lawyer Paul Bekaert told VRT. “Mr Puigdemont will stay here. He has said that he will fully cooperate with Belgian authorities during the procedure,” Bekaert said. Catalan political parties and civic groups denounced the court’s decision to “jail the legitimate government of Catalonia” and hundreds of people gathered outside the Catalan regional parliament calling for the eight ministers to be freed. Prime Minister Mariano Rajoy sacked Puigdemont and his government on Friday, hours after the Catalan parliament made a unilateral declaration of independence – a vote boycotted by the opposition and declared illegal by Spanish courts. Puigdemont’s lawyer in Belgium said his client would stay away from Spain while the political climate was “not good”.

An international arrest warrant has been filed for Catalan's leader - An international arrest warrant has reportedly been issued for the sacked Catalan President Carles Puigdemont. His lawyer, Paul Bekaert, made the announcement to the Belgian state broadcaster on Thursday. "I have just heard from my client that the warrant has been issued for the president and four of his ministers who are in Belgium," Bekaert said. A court source with knowledge of the situation told Reuters, however, that an arrest warrant had not yet been issued but was likely to on Friday. Puigdemont, who previously said he was not afraid of being arrested, is in Brussels. He fled Spain just hours after charges of rebellion, sedition, and embezzlement were filed against him and 14 Catalan politicians. The Spanish government fired Puigdemont and the Catalan parliament after the region of Catalonia declared independence from Spain a week ago. The declaration was the result of a divisive Catalan independence referendum held in early October — a vote Spanish courts deemed illegal. An extradition request for Puigdemont would place Brussels, the headquarters of the European Union, in an uncomfortable position. The EU has remained largely silent on Catalonia's push for independence, but Belgium allows EU citizens to seek political asylum. The country also has its own Flemish separatists to contend with. Earlier this week, Puigdemont said he would endeavor to run Catalonia from Brussels.  On Thursday, a Spanish judge dismissed bail for eight former Catalan ministers, sending them to jail. If found guilty of rebellion, the ministers could be imprisoned for up to 30 years.

Puigdemont and his Catalan disappearing act | Opinion | DW | 02.11.2017Fleeing never looks good — that's particularly true if you want to be a hero and chase lofty goals. Carles Puigdemont cuts a pathetic figure in Brussels as a runaway from Spanish authorities, writes DW's Barbara Wesel. There are definitely frustrated supporters, angry party colleagues and an unsettled economy back in Catalonia. Madrid is temporarily ruling the autonomous region directly, which has surrendered to this "foreign rule" in a remarkably pragmatic manner. Puigdemont has probably overestimated the revolutionary potential of his fellow Catalans who can easily get fired up. Marching in nice weather is fun, but sacrificing wealth and employment for a nationalist dream if you live comfortably and quite autonomously from Spain — it seems silly just writing it down.  Catalonia's top political figure should have known that a leader's grand convictions demand similarly grand gestures. That definitely includes stating your case in court in Madrid with your head held high, accompanied by Catalan freedom anthems. What looks very bad indeed is leaving your ministers with all responsibility and sneaking out under the cover of night to munch on fries and chocolates in Brussels.    The whole drama surrounding Catalan independence — with Puigdemont in the title role — resembles a cheap soap opera, a telenovela. His comparing the Spanish government to Francisco Franco's dictatorial regime is either ridiculous or ignorant, depending on one's perspective. Constantly trotting out democracy appears hollow if the leaders don't follow its rules themselves.

 Germany Loses Track Of 30,000 Failed Asylum Seekers -- Having reported on a leaked document overnight that exposed the spiralling violence in Germany's refugee shelters, news this morning, via Die Welt, that more than 30,000 migrants due for deportation have gone missing under Merkel’s watch, just adds to anxiety and division in the nation. And as TruthRevolt's Vijeta Uniyal reports, the government has no clue to their whereabouts, German newspapers report.Putting a spin on the situation, a spokesman for the Interior Ministry told reporters thatsome of these migrants may have self-deported. Despite this wishful thinking, it is more likely that most of these illegal immigrants are still within the country and have simply gone underground.The news comes as Germany faces an imported crime wave. This year, police registereda more than 50 percent rise in crimes committed by immigrants. Going by the prevalent trend of underreporting migrant crime in Germany, the actual figures may be much higher. Not just the law enforcement, but the German judiciary, too, has been clogged by asylum seekers. Courts are struggling to deal with the wave of cases filed by the migrants appealing the rejection of their asylum application. “The number of asylum cases being dealt with by German courts has risen by almost 500 percent in the past year,” reported the German public broadcaster Deutsche Welle.German newspaper Die Welt covered the ‘missing-migrant’ story:More than 30,000 refugees, whose asylum applications had failed and were due for deportation, have gone missing without informing the authorities, media reports say. A s pokesperson for the Interior Ministry told the Bild Zeitung,“It cannot be ruled out that some of these people, due for deportation according to the Central Foreigners Register, have left the country or have gone underground without the Immigration Office noting the change in their status.”

Eurozone Inflation Unexpectedly Cools - In the latest headache for Mario Draghi, the Eurozone's closely watched CPI weakened to 1.40% year-on-year in October 2017 versus expectations of 1.50% and a reading of 1.50% the previous month. As a reminder, according to the ECB's September forecast, HICP inflation is expected to rise to 1.5%, leaving little margin for deflation in the next few months, especially if Draghi's tightening overtures are to be taken seriously. The miss in core CPI (excluding energy, food, alcohol and tobacco) was bigger, with core prices printing at 0.90% , below expectations of 1.10% and down from 1.10% in September.  In contrast, data on growth of the Eurozone economy beat expectations, with Q3 GDP growth rising 0.6% Q/Q versus the consensus of 0.5%. Eurozone unemployment for September 2017 was 8.9%, below both the consensus of 8.9% and the prior month of 9.0%. More details from Bloomberg which notes that "Euro-area inflation unexpectedly slowed in October despite the bloc’s strengthening economy, underlining why the European Central Bank last week kept its exit from monetary stimulus wide open. Price growth cooled to 1.4 percent from 1.5 percent in September, falling short of the median forecast of economists in a Bloomberg survey. In a further blow to the ECB’s drive to boost inflation, the core rate dropped below 1 percent for the first time in five months. The euro stayed lower against the dollar after the report and was down 0.2 percent at $1.1631 as of 11:02 Frankfurt time. The inflation data was published alongside third-quarter gross domestic product figures, which showed faster-than-forecast 0.6 percent growth. That’s an 18th quarterly expansion. On a year-on-year basis, GDP hit 2.5 percent, the best since early 2011."

Falling Pound Might Not Bring UK Trade Balance Boost - The Pound Sterling depreciated by 14% against a basket of world currencies in the four months after the referendum vote to leave the EU. A number of pundits claimed that this would improve the UK trade balance and boost the economy. But the data do not show any visible improvement in the trade balance to date. Could it be that currency depreciations have less impact on trade balances than before? The British Pound has lost ten percent of its value since the UK voted to leave the EU. The general wisdom is that this fall should make imports more expensive and exports cheaper, reducing the UK’s trade deficit. But there is still little evidence that such a trend is emerging. Indeed, could it be that we are witnessing a breakdown in the relationship between exchange rates and trade balances around the world? Figure 1 displays time series plots of the UK real effective exchange rate, trade balance as a fraction of GDP, and domestic demand. Two trends stand out. First, and perhaps most strikingly, the two large deprecations since 2000 have had no obvious effect on the trade balance. After the large real depreciation brought on by Brexit, the trade balance has yet to meaningfully change. After its slide to -3% in Q3 2016, it jumped to -1% in Q4 2016. But, it then fell again in Q1 and Q2 2017. Second, general movements in the trade balance may be more strongly driven by domestic demand conditions than by the real effective exchange rate. The large improvements in the trade balance in 2008 and 2011 coincided with pronounced negative growth in domestic demand. And from 2008 to 2015, during a period of weak demand growth, the trade balance seems to have been on a slightly positive trajectory despite an appreciating exchange rate.

Terrorism, UK Today, France Yesterday --From a story in Daily Mail:Terror suspects including jihadis returning from fighting in Syria are to be offered taxpayer-funded homes, counselling and help finding jobs to stop them carrying out attacks in Britain.The top-secret Government strategy, codenamed Operation Constrain, could even allow fanatics to jump to the top of council house waiting lists.Official documents seen by The Mail on Sunday reveal that up to 20,000 extremists previously investigated by MI5 will be targeted with what critics last night described as ‘bribes’ aimed at turning them away from extremism.The highly contentious nationwide programme is due to start next year, with police and cash-strapped councils hoping the Home Office will pay for it out of its £900 million counter-terrorism budget.The article goes on:The move comes amid growing concern at the huge number of radical Islamists living in Britain who the security services are unable to track effectively.Fanatics who had been under surveillance by MI5 in the past were among the perpetrators of the two terror attacks in London and one in Manchester this year that left 35 people dead. The intelligence agencies fear as many as 20,000 former ‘subjects of interest’ – people who had been monitored but later dropped off the radar – could be plotting fresh atrocities. It is this group that will be targeted by the new scheme. Now here is an article about France in Deutsche Welle  (Deutsche Welle is Germany’s equivalent to the BBC International Service or Voice of America) from a few weeks ago:  France is about to pass a new anti-terror law as it eases its way out of the state of emergency. But civil rights campaigners say it will put citizens under general suspicion. Lisa Louis reports from Paris. The state of emergency was declared in the immediate aftermath of the November 2015 terror attacks, in which 130 people were killed. France has since been hit by various other attacks and martial law has been renewed several times. It will now expire in early November, just like President Emmanuel Macron had promised during his election campaign. But first, parts of it will be enshrined in general law.

A Brexit transition deal will be harder to reach than Britain thinks - The Economist -- BRITAIN is running out of time to finish negotiations before it is due to leave the European Union on March 29th 2019. Theresa May insisted in Parliament this week that the recent EU summit had made important progress. Yet the start of talks on a framework for future trade may not happen until after December. Hence a favourite idea for averting a “cliff-edge” Brexit: transition. This week Britain’s five biggest business lobbies demanded the government seek early agreement on a transitional deal to form a bridge between Brexit and a new trading arrangement. Mrs May has conceded this in principle, although she still insists on calling it an “implementation” period. This is not just semantic. She upset businesses this week by suggesting that, unless a trade deal is done by next autumn, there may be nothing to implement. In practice, the need for transition is clear to all, which is why it is covered in the EU’s own negotiating guidelines. Yet the work on it that has now started will quickly hit problems that may cause delays. And timing matters. Philip Hammond, the chancellor, has noted that the value to business of a transition plan will diminish the longer it takes to agree.A first issue concerns what rules to follow during transition. Mrs May has promised that businesses will not have to adjust twice to Brexit, which implies keeping current arrangements for now. The EU will insist that any transition prolong the acquis (ie, all existing laws) and the jurisdiction of the European Court of Justice (ECJ), but without British participation in EU institutions. Jean-Claude Piris, a former EU legal adviser, calls this a “full monty” transition, and suggests it will be the only version on offer. Yet it leaves questions. Will Britain be subject to future laws that it has no say in making? Could it temporarily retain a judge on the ECJ? What about annual EU budget decisions (including on Britain’s budget rebate) that are taken without any British vote? Or the controversial annual carve-up of fishing quotas?

UK personal insolvencies hit five-year high in gloomy sign for economy (Reuters) - The number of people registering as insolvent in England and Wales hit a five-year high in the third quarter, according to figures on Friday that hinted at trouble brewing in Britain’s consumer economy.  The government’s Insolvency Service said 27,807 people in England and Wales registered as insolvent between July and September, up from 22,389 in the three months to June and marking the biggest total since the third quarter of 2012. On a seasonally adjusted basis, the figure was just short of a three-year high struck in the first quarter of 2017. Personal insolvencies have been rising over the past couple of years, largely due to changes in regulation that have made debt relief for consumers easier to obtain, according to experts in the field. But debt charities and the Institute of Chartered Accounts in England and Wales (ICAEW) warned that the latest sharp increase indicated wider problems in Britain’s consumer-led economy. Household budgets have been strained by rising prices caused by the pound’s drop after last year’s Brexit vote, and wage growth has failed to keep pace. The insolvency figures are likely to bolster the view of economists who worry that even a small rise in Bank of England interest rates could have an outsized impact on consumers.  A clear majority of economists in a Reuters poll published on Tuesday expect the BoE will raise interest rates next Thursday to 0.5 percent from 0.25 percent - although most also said it would be a mistake to act now.

Tory donors tell May: no deal is better than a bad Brexit - Senior Tory donors have warned that Theresa May should walk away from Brexit talks rather than accept an “unsatisfactory and unfavourable deal” that would poison relations with Europe for another generation. In a sign of growing frustration among pro-Brexit Tories over the lack of progress made in talks with Brussels, one donor said he feared some pro-Remain cabinet ministers were suffering from “Stockholm syndrome” – when hostages develop a bond with their captors. The calls for May to be prepared to walk away comes amid new warnings that a “no deal” outcome will lead to foreign firms leaving, steep price rises, widespread job losses and disaster for the Irish economy. In submissions to a parliamentary inquiry seen by the Observer, retailers, the City, universities, the freight industry, overseas investors and food suppliers all sound the alarm over the consequences of crashing out. However, some Tory Brexiters are concerned at the slow pace of negotiations and want the option of walking away to be a viable one. Michael Farmer, a Tory peer and former party treasurer who has given millions to the Conservatives and the Leave campaign, told the Observer that former prime minister David Cameron’s failure to secure major concessions over Britain’s EU membership before last year’s referendum showed the dangers of accepting a bad deal. “It is worth recalling the paltry offer that Cameron came back with from Europe at the beginning of last year, which was an important factor in persuading people to vote out,” he said. “If another unsatisfactory and unfavourable deal is done with the EU negotiators, the exasperating and divisive issue of Europe will not go away but smoulder on for another generation. “No deal would free us – and challenge us – to rise to and take advantage of the many opportunities that would become open to Britain.” 

Tory Aides’ Spreadsheet Names 36 Sex Pest MPs -- Tory aides have compiled a spreadsheet accusing 36 serving Conservative MPs of inappropriate sexual behaviour, Guido can reveal. The dossier includes specific allegations against MPs, including one minister who is “handsy with women at parties”, an MP on the government payroll who had “sexual relations with a researcher”, one backbencher who is “perpetually intoxicated and very inappropriate with women”, and another who allegedly “paid a woman to be quiet”. It was produced by a number of current and former Tory staffers in the wake of the Harvey Weinstein scandal. Guido has redacted names and identifying details above. Several of the allegations on the list are already in the public domain, for example Mark Garnier asking his researcher to buy sex toys. The vast majority of the others will come as little surprise to anyone who regularly speaks to staffers in Westminster. Guido had heard all but three of the stories before. Many of the allegations are historic, others are ongoing. The breakdown includes:

  • 2 serving Cabinet ministers accused of inappropriate behaviour towards women
  • 18 serving ministers accused of various forms of inappropriate sexual behaviour
  • 12 MPs who are said to have behaved inappropriately towards female researchers
  • 4 MPs who are alleged to have behaved inappropriately towards male researchers

Senior Tories have spent the last 72 hours denying such concerns were being circulated by researchers, tonight Guido has the proof they are. 36 MPs is 11% of the Tory parliamentary party. This is not just a Tory problem and there are a significant number of Labour and LibDem sex pests as well. Though this spreadsheet is going to send shockwaves through the Tory party and government…

Bank of England believes Brexit could cost 75,000 finance jobs - BBC News: The Bank of England believes that up to 75,000 jobs could be lost in financial services following Britain's departure from the European Union. The BBC understands senior figures at the Bank are using the number as a "reasonable scenario", particularly if there is no specific UK-EU financial services deal. The number could change depending on the UK's post-Brexit trading deal. But the bank still expects substantial job losses. I am told the Bank believes that many jobs will move to the continent. The Bank of England has asked banks and other financial institutions, such as hedge funds, to provide it with contingency plans in the event of Britain trading with the EU under World Trade Organization rules - what some have described as a "hard Brexit". That would mean banks based in the UK losing special passporting rights to operate across the EU. The EU could also impose other "locations specific" regulations such as where trading in trillions of pounds worth of euro-denominated financial insurance products has to be based. That could mean trading jobs moving to Paris or Frankfurt. There have been a number of studies on the potential employment impact of Brexit. A poll of more than 100 finance firms by Reuters suggested the number of job losses would be just below 10,000 in the "few years" following Brexit. I understand the bank believes the 10,000 jobs figure is likely on "day one" of Brexit if there is no deal. The Brussels-based think tank, Bruegel, said that over time 30,000 jobs could move to the continent or be lost as London's financial sector shrinks. 

UK to push for more flexibility in Brexit talks - Before the negotiations come negotiations about the negotiations.In Brussels Tuesday, U.K. and EU negotiators will thrash out a format for the next round of Brexit talks ahead of a  December meeting of the European Council, when EU leaders will decide if “sufficient progress” has been made to warrant moving to the next stage.Officials in Brussels accuse the U.K. of dragging its feet on the question of the format. They claim that if both sides had agreed earlier, there might have been three full rounds of talks.British officials argue that the Commission has been inflexible about how negotiations are conducted.They want to change the format, arguing that a change would give both sides a better chance to break deadlocks over a financial settlement between Britain and the EU, Northern Ireland and citizens’ rights.The U.K. has proposed one “single open-ended” set of talks to replace the formal, one-round-per-month set-up preferred by Brussels, officials familiar with the process said. Other options put forward include a less formal, rolling format under which David Davis and the EU’s chief negotiator Michel Barnier would be called into Brussels whenever a political decision was needed.British officials are concerned that by sticking to the same four-day format for talks neither side will be able to make a breakthrough in time for the December meeting.“The usual monthly rounds won’t be enough to deliver what we need,” said one senior U.K. official.

Bank Of England Hikes Rates To 0.5% In 7-2 Vote; First Rate Increase In Over 10 years -- Over ten years since the last rate hike by the Bank of England in July 2007 (when incidentally, cable was trading above $2.00), and following years of market expectations of an imminent rate hike that failed to materialize..... moments ago the BOE - which had telegraphed the move extensively in recent months despite some dovish misgivings - finally pulled the trigger, and raised rates by 25bps to 0.5% in order to curb the effect of high inflation brought about by the post-Brexit plunge in the pound, squeezing local households and pressuring the UK economy. However, while cable initially spiked higher on the news, it subsequently slumped on the news that the vote was not a unanimous 9-0 decision as some had expected, and as would telegraph a normal rate hike cycle, but a far more contested 7-2, with Cunliffe and Ramsden dissenting.   Is this the start of a more traditional hiking cycle or just a one-off correction from last year's rate cut? This is what the market expected just prior to the announcement…developing

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